Registration No. 33-3243
811-4602
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 22
TO
FORM S-6
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
LBVIP VARIABLE INSURANCE ACCOUNT
(Exact Name of Unit Investment Trust)
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
(Name of Depositor)
625 Fourth Avenue South, Minneapolis, Minnesota 55415
(Complete Address of Depositor's Principal Executive Offices)
David J. Larson
Vice President and Secretary
Lutheran Brotherhood Variable Insurance Products Company
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(612) 340-7215
(Name and Complete Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
LBVIP VARIABLE INSURANCE ACCOUNT
CROSS REFERENCE SHEET
(Reconciliation and Tie Sheet)
Item Number of
Form N-8B-2 Heading in the Prospectus
- -------------- -------------------------
1 Cover Page
2 Cover Page
3 Not Applicable
4 Sales and Other Agreements
5 The Variable Account
6 The Variable Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Summary; Contract Benefits; Payment and
Allocation of Premiums; Death Benefit
Guarantee; Contract Rights; General
Provisions; Voting Rights
11 Summary; LB Series Fund, Inc.
12 LB Series Fund, Inc.; Sales and Other
Agreements
13 Summary; Charges and Deductions; LB Series
Fund, Inc.
14 LBVIP, Lutheran Brotherhood and the Variable
Account; Issuance of a Contract; General
Provisions
15 Payment and Allocation of Premiums
16 LBVIP, Lutheran Brotherhood and the Variable
Account; Payment and Allocation of Premiums
17 Summary; LB Series Fund, Inc.; Contract
Benefits; Charges and Deductions; Contract
Rights; General Provisions
18 LBVIP, Lutheran Brotherhood and the Variable
Account; Contract Benefits; Payment and
Allocation of Premiums; Contract Rights;
Safekeeping of the Variable Account's Assets
19 General Provisions; Voting Rights
20 Not Applicable
21 Loan Privileges
22 Not Applicable
23 Safekeeping of the Variable Account's
Assets; Sales and Other Agreements
24 Definitions; General Provisions
25 LBVIP, Lutheran Brotherhood and the Variable
Account
26 Not Applicable
27 LBVIP, Lutheran Brotherhood and the Variable
Account
28 LBVIP, Lutheran Brotherhood and the Variable
Account; Directors and Officers of LBVIP
29 LBVIP, Lutheran Brotherhood and the Variable
Account
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Sales and Other Agreements
36 Not Applicable
37 Not Applicable
38 Summary; Sales and Other Agreements
39 Summary; Sales and Other Agreements
40 Not Applicable
41 Summary; Sales and Other Agreements
42 Not Applicable
43 Not Applicable
44 Summary; LBVIP, Lutheran Brotherhood and the
Variable Account; Accumulated Value and Cash
Surrender Value; Payment and Allocation of
Premiums; Charges and Deductions; Employment-
Related Benefit Plans
45 Not Applicable
46 Summary; LB Series Fund, Inc.; Charges and
Deductions
47 LBVIP, Lutheran Brotherhood and the Variable
Account; Payment and Allocation of Premiums
48 Not Applicable
49 Not Applicable
50 LBVIP, Lutheran Brotherhood and the Variable
Account
51 Cover Page; Summary; LBVIP and Lutheran
Brotherhood; Contract Benefits; Payment and
Allocation of Premiums; Charges and Deductions;
Contract Rights; General Provisions
52 Addition, Deletion or Substitution of Investments
53 Federal Tax Matters
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
<PAGE>
Prospectus
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Flexible Premium
Variable Life Insurance Contract
Issued By
Lutheran Brotherhood Variable
Insurance Products Company
625 Fourth Avenue South * Minneapolis, Minnesota 55415 *
(800) 423-7056 * (612) 340-7210
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This Prospectus describes a flexible premium variable life insurance
contract (the "Contract") being offered by Lutheran Brotherhood Variable
Insurance Products Company ("LBVIP"), a stock life insurance company that is
an indirect subsidiary of Lutheran Brotherhood. LBVIP is offering the
Contract only to persons who are eligible for membership in Lutheran
Brotherhood, unless otherwise required by state law.
This Contract is designed to provide maximum flexibility in connection with
premium payments and death benefits by giving the Contract owner the
opportunity to allocate net premiums among investment alternatives with
different investment objectives. A Contract owner may, subject to certain
restrictions, including limitations on premium payments, vary the frequency
and amount of premium payments and increase or decrease the level of death
benefits payable under the Contract. This flexibility allows a Contract
owner to provide for changing insurance needs under a single insurance
contract.
Prior to May 1, 1997, LBVIP issued a class of flexible premium variable
contract ("prior contract" or "VUL 1" contracts), which will no longer be
issued as various states approve the Contract. The VUL 1 contracts were
sold from January 1987 until at least May 1, 1997, and until various states
approve the Contract. Your LBVIP representative will be able to inform you
whether the Contract has become available after May 1, 1997. Even though
the VUL 1 contracts will no longer be issued, premium payments are still
made under the VUL 1 contracts. This prospectus principally describes the
Contract but also describes the VUL 1 contracts. The principal differences
between the Contract and the VUL 1 contracts relate to the charges made by
LBVIP, different premium classes, issue ages and maturity ages, and
different ranges of face amounts. See the section entitled "APPENDIX D -
PRIOR CONTRACTS" in the Prospectus.
In general, net premiums will be allocated to one or more of the Subaccounts
of the Variable Account according to the Contract owner's instructions. The
assets of each Subaccount will be invested solely in a corresponding
Portfolio of LB Series Fund, Inc. (the "Fund"), which is a diversified,
open-end management investment company (commonly known as a "mutual fund").
The accompanying Prospectus for the Fund describes the investment objectives
and attendant risks of the seven Portfolios of the Fund, the Growth
Portfolio, the High Yield Portfolio, the Income Portfolio, the Opportunity
Growth Portfolio, the Mid Cap Growth Portfolio, the World Growth Portfolio,
and the Money Market Portfolio. The Contract owner bears the entire
investment risk for all amounts allocated to the Variable Account; no
minimum Accumulated Value is guaranteed.
Because the charges imposed upon early surrender or lapse may be
significant, you should purchase a Contract only if you have the financial
capability to keep it in force for a substantial period of time. Also,
charges imposed upon surrender or lapse of the Contract will usually exceed
the Accumulated Value of the Contract during the early Contract years, which
means that payments sufficient to maintain the Death Benefit Guarantee will
usually be required to avoid lapse during this period of time. Moreover,
because additional charges may be imposed upon surrender or lapse after a
requested increase in Face Amount, the Death Benefit Guarantee may be
required to avoid lapse after a requested increase whenever the Accumulated
Value is not sufficient to cover these additional charges.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------
This Prospectus should be read and kept for future reference. It is valid
only when accompanied or preceded by the current prospectus of LB Series
Fund, Inc.
----------------------------------
The date of this Prospectus is May 1, 1998.
TABLE OF CONTENTS
Page
DEFINITIONS 5
SUMMARY 9
The Contract 9
Subaccounts of the Variable Account; Portfolios of the Fund 9
Death Proceeds and Death Benefit Options 10
Additional Insurance Benefits 10
Amount of Accumulated Value and Cash Surrender Value 11
Flexibility to Adjust Amount of Death Benefit 11
Contract Issuance 12
Allocation of Net Premiums 12
Contract Lapse and Reinstatement 13
Death Benefit Guarantee Protection 13
Charges Assessed in Connection with the Contract 14
Free Look Privileges 15
Loan Privileges 16
Exchange Privileges 16
Surrender of the Contract 17
Tax Treatment of Accumulated Value 17
Tax Treatment of Death Benefits Received by the Beneficiary 17
Employment-Related Benefit Plans 17
LBVIP, LUTHERAN BROTHERHOOD AND THE VARIABLE ACCOUNT 18
LBVIP and Lutheran Brotherhood 18
The Variable Account 18
LB Series Fund, Inc. 18
Performance Information 20
Addition, Deletion or Substitution of Investments 20
CONTRACT BENEFITS 21
Death Benefits 21
Accumulated Value and Cash Surrender Value 26
Payment of Contract Benefits 27
PAYMENT AND ALLOCATION OF PREMIUMS 29
Issuance of a Contract 29
Amount and Timing of Premiums 29
Allocation of Premiums and Accumulated Value 31
Contract Lapse and Reinstatement 32
CHARGES AND DEDUCTIONS 34
Premium Expense Charges 34
Accumulated Value Charges 35
Decrease Charge 35
Monthly Deduction 39
Partial Surrender Charge 42
Charges Against the Variable Account 42
DEATH BENEFIT GUARANTEE 43
CONTRACT RIGHTS 45
Loan Privileges 45
Surrender Privileges 47
Free Look Privileges 49
Exchange Privileges 50
GENERAL PROVISIONS 51
Postponement of Payments 51
Date of Receipt 51
The Contract 51
Suicide 51
Incontestability 52
Change of Owner or Beneficiary 52
Assignment as Collateral 52
Misstatement of Age or Gender 52
Due Proof of Death 52
Reports to Contract Owners 52
Additional Insurance Benefits 53
Charitability for Life 53
Accelerated Benefits Rider 54
Reservation of Certain Rights 54
FEDERAL TAX MATTERS 55
Contract Proceeds 55
Taxation of the Company 57
EMPLOYMENT-RELATED BENEFIT PLANS 58
VOTING RIGHTS 58
DIRECTORS AND OFFICERS OF LBVIP 59
Directors 59
Executive Officers 59
SALES AND OTHER AGREEMENTS 60
YEAR 2000 61
LEGAL PROCEEDINGS 62
LEGAL MATTERS 62
EXPERTS 62
FURTHER INFORMATION 62
FINANCIAL STATEMENTS 62
APPENDIX A - Illustrations of Death Benefits, Accumulated Values
and Cash Surrender Values A-1
APPENDIX B - Deferred Administrative Charges Per $1,000 of Face Amount B-1
APPENDIX C - Initial Monthly Administrative Charges Per $1,000 of
Face Amount C-1
APPENDIX D - PRIOR CONTRACTS D-1
Replacing existing insurance with a Contract described in this Prospectus
may not be to your advantage. In addition, it may not be to your advantage
to purchase this Contract to obtain additional insurance protection if you
already own another life insurance contract.
This Prospectus does not constitute an offering or solicitation in any
jurisdiction in which such offering or solicitation may not be lawfully
made. No person is authorized to give any information or to make any
representations in connection with this offering other than those contained
in this Prospectus or the accompanying Fund prospectus and, if given or
made, such information or representations must not be relied upon as having
been authorized.
This entire Prospectus should be read to completely understand the Contract
being offered.
The primary purpose of the Contract is to provide insurance protection for
the beneficiary named in the Contract. No claim is made that the Contract is
in any way similar or comparable to a systematic investment plan of a mutual
fund.
DEFINITIONS
Accumulated Value. The total amount of value held under a Contract at any
time (which equals the sum of the amounts held in the Loan Account and
Variable Account). The Accumulated Value should be distinguished from the
Cash Surrender Value. The Accumulated Value, unlike the Cash Surrender
Value, is not reduced by any Decrease Charge or Contract Debt.
Attained Age. On any day during the first Contract Year, the age of the
Insured on the Date of Issue, and then, on any day during each succeeding
Contract Year, the age of the Insured on the Contract Anniversary on or
immediately prior to that day.
Beneficiary. The Beneficiary designated by the applicant in the
application. If changed, the Beneficiary is as shown in the latest change
filed with LBVIP. If no Beneficiary survives and unless otherwise provided,
the Insured's estate will be the Beneficiary.
Cash Surrender Value. The Accumulated Value less any Contract Debt and any
Decrease Charge.
CDSC Premium. An annual premium amount determined by LBVIP and used solely
for the purpose of calculating the maximum Contingent Deferred Sales Charge.
Contingent Deferred Sales Charge. A contingent deferred sales charge to
compensate LBVIP for the cost of selling the Contract, including sales
commissions, the printing of prospectuses and sales literature, and
advertising. The Contingent Deferred Sales Charge will be imposed if the
Contract is surrendered or lapses, or will be imposed in part if the
Contract Owner requests a decrease in Face Amount, in each case at any time
before 180 Monthly Deductions have been made. A separate Contingent Deferred
Sales Charge will also be calculated, and then reduced over a 15-year
period, in a similar manner upon a requested increase in Face Amount.
Contract. The flexible premium variable life insurance contract offered by
LBVIP and described in this Prospectus.
Contract Anniversary. The same date in each succeeding year as the Date of
Issue.
Contract Date. The latest of (i) the Date of Issue; (ii) the date LBVIP
receives the first premium payment on the Contract at its Home Office; and
(iii) any other date mutually agreed upon by LBVIP and the Contract Owner.
The Contract Date is the date on which the initial Net Premium payment(s)
will be allocated to the Variable Account.
Contract Month. The period from one Monthly Anniversary to the next. The
first Contract Month will be the period beginning on the Date of Issue and
ending on the first Monthly Anniversary.
Contract Owner. The Insured, unless otherwise designated in the
application. If a Contract has been absolutely assigned, the assignee
becomes the Contract Owner. A collateral assignee is not the Contract
Owner.
Contract Year. The period from one Contract Anniversary to the next. The
first Contract Year will be the period beginning on the Date of Issue and
ending on the first Contract Anniversary.
Date of Issue. The date shown on page 3 of the Contract that is used to
determine Contract Anniversaries, Monthly Anniversaries, Contract Years and
Contract Months, each of which is measured from the Date of Issue.
Death Benefit. The amount calculated under the applicable Death Benefit
Option (Option A or Option B). The Death Benefit should be distinguished
from the cash proceeds payable on the Insured's death, which will be the
Death Benefit less Contract Debt and any unpaid Monthly Deductions.
Death Benefit Guarantee. A feature of the Contract guaranteeing that the
Contract will not lapse if on each Monthly Anniversary the total cumulative
premiums paid under the Contract, less any partial surrenders and Contract
Loan Amount, equal or exceed the sum of the Death Benefit Guarantee Premiums
in effect for each Monthly Anniversary since the issuance of the Contract.
Death Benefit Guarantee Premium. A monthly premium amount specified in the
Contract. The Death Benefit Guarantee Premium determines the payments
required to maintain the Death Benefit Guarantee.
Death Benefit Option. Either of two death benefit options available under
the Contract (Option A and Option B).
Death Benefit Option A, or Option A. One of two Death Benefit Options
available under the Contract. Under this option, the Death Benefit is the
greater of (a) the Face Amount plus the Accumulated Value and (b) the
applicable percentage of Accumulated Value (with the Accumulated Value in
each case being determined on the Valuation Date on or next following the
date of the Insured's death).
Death Benefit Option B, or Option B. One of two Death Benefit Options
available under the Contract. Under this option, the Death Benefit is the
greater of (a) the Face Amount and (b) the applicable percentage of
Accumulated Value on the Valuation Date on or next following the date of the
Insured's death.
Debt. The sum of all unpaid Contract loans (including any unpaid loan
interest added to the loan balance) outstanding on a relevant date, less any
unearned prepaid loan interest. Contract Debt should be distinguished from
the Loan Amount (see definition of "Loan Amount" below), in that the Loan
Amount includes any unearned prepaid loan interest.
Decrease Charge. A deferred Contract charge consisting of the Contingent
Deferred Sales Charge and the Deferred Administrative Charge. The Decrease
Charge is deducted from the Subaccounts of the Variable Account and paid to
LBVIP upon full lapse or surrender of the Contract, or in part upon a
requested decrease in Face Amount. A separate amount of Decrease Charge is
determined for the initial Face Amount and for each requested increase in
Face Amount.
Deferred Administrative Charge. A deferred administrative charge to
reimburse LBVIP for administrative expenses incurred in issuing the
Contract. The Deferred Administrative Charge will be imposed if the
Contract is surrendered or lapses, or will be imposed in part if the
Contract Owner requests a decrease in the Face Amount, in each case at any
time before 180 Monthly Deductions have been made. The maximum amount of
the Deferred Administrative Charge is determined at Contract issuance. A
separate Deferred Administrative Charge will also be calculated, and then
reduced over a 15-year period, in a similar manner upon a requested increase
in Face Amount. The sum of the Deferred Administrative Charge and the
Contingent Deferred Sales Charge equals the Decrease Charge. See "CHARGES
AND DEDUCTIONS--Accumulated Value Charges--Decrease Charge".
Face Amount. The minimum Death Benefit under the Contract as long as the
Contract remains in force. The Face Amount will be specified in the
Contract.
Free Look Period. A period which follows the application for the Contract
and its issuance to the Contract Owner (the "initial Free Look Period") and
which also follows any application for and approval of an increase in Face
Amount. During the initial Free Look Period, the Contract Owner may cancel
the Contract and receive a refund. During a Free Look Period that applies
following a requested increase in Face Amount, the Contract Owner has a
right to cancel the increase in Face Amount and, in effect, receive a credit
or refund of charges and deductions attributable to such increase.
Fund. LB Series Fund, Inc., which is described in the accompanying
Prospectus.
General Account. The assets of LBVIP other than those allocated to the
Variable Account or any other separate account.
Home Office. LBVIP's office at 625 Fourth Avenue South, Minneapolis,
Minnesota 55415 or such other office as LBVIP shall specify in a notice to
the Contract Owner.
Initial Monthly Charge. An initial monthly charge to reimburse LBVIP for
administrative expenses incurred in issuing the Contract. The Initial
Monthly Charge will be deducted as part of the first 180 Monthly Deductions.
A separate Initial Monthly Charge for Increases will also be calculated in a
similar manner upon a requested increase in Face Amount or the issuance of a
rider providing additional insurance benefits on the Insured's spouse.
Insured. The person upon whose life the Contract is issued.
LBVIP. Lutheran Brotherhood Variable Insurance Products Company, which is
an indirect subsidiary of Lutheran Brotherhood.
LBVIP Representative. A person who is licensed by state insurance officials
to sell the Contracts and who is also a registered representative of
Lutheran Brotherhood Securities Corp.
Loan Account. The funds transferred from the Subaccount(s) of the Variable
Account to LBVIP's General Account as security for Contract loans.
Loan Amount. The sum of all unpaid Contract loans (including any unpaid
loan interest added to the loan balance) outstanding on a relevant date. The
Loan Amount should be distinguished from Contract Debt (see definition of
"Debt" above), in that Contract Debt excludes any unearned prepaid loan
interest.
Lutheran Brotherhood ("LB"). Lutheran Brotherhood, a fraternal benefit
society organized under the laws of the State of Minnesota and owned by and
operated for its members, and which acts as investment adviser to the Fund.
Minimum Conditional Insurance Premium. The premium required to put
temporary insurance coverage into effect on a conditional basis.
Minimum Contract Issuance Premium. The minimum premium required for
issuance of the Contract.
Minimum Face Amount. The minimum Face Amount for a Contract at issuance and
after any requested decrease in Face Amount.
Monthly Anniversary. The same date in each succeeding month as the Date of
Issue.
Monthly Deduction. Monthly charges deducted from the Accumulated Value of
the Contract. These charges include the cost of insurance charge; a basic
monthly administrative charge ($10.00 per month); the Initial Monthly
Charge; and charges for additional insurance benefits. The definition of
"Monthly Deduction" in the Contract also includes any Decrease Charge being
deducted for a requested decrease in Face Amount during the preceding
Contract Month.
Net Premium. The premium paid less the Premium Expense Charges.
Planned Annual Premium. The initial Scheduled Premium under the Contract on
an annualized basis as selected by the Contract Owner at the time of issue.
The Planned Annual Premium will be shown in the Contract.
Portfolio. A Portfolio of the Fund. Each Subaccount invests exclusively in
the shares of a corresponding Portfolio of the Fund.
Premium Expense Charges. An amount deducted from each premium payment,
which consists of a percent-of-premium charge of 5% of each premium payment
(a 3% sales charge and a 2% premium tax charge) and a premium processing
charge of $1.00 per premium payment ($.50 for automatic payment plans).
LBVIP reserves the right to increase the premium processing charge in the
future to an amount not exceeding $2.00 per premium payment ($1.00 for
automatic payment plans).
Scheduled Premium(s). The scheduled periodic premium payments selected by
the Contract Owner. This premium payment can be changed by the Contract
Owner at any time. Scheduled Premiums are relevant only in determining how
much a Contract Owner will be billed periodically and determining the
Minimum Contract Issuance Premium.
Subaccount. A subdivision of the Variable Account. Each Subaccount invests
exclusively in the shares of a corresponding Portfolio of the Fund.
Unit. The measure by which the value of the Contract's interest in each
Subaccount is determined.
Unit Value. The value of each Unit representing the Contract's interest in
each Subaccount.
Valuation Date. Each day the New York Stock Exchange is open for trading
and any other day on which there is sufficient trading in the securities of
a Portfolio of the Fund to affect materially the Unit Value in the
corresponding Subaccount of the Variable Account.
Valuation Period. The period commencing at the close of business of a
Valuation Date and ending at the close of business of the next Valuation
Date.
Variable Account. LBVIP Variable Insurance Account, which is a separate
account of LBVIP. The Subaccounts are subdivisions of the Variable Account.
Written Notice. A written request signed by the Contract Owner and received
by LBVIP at its Home Office.
SUMMARY
The Contract
This flexible premium variable life insurance contract (the "Contract")
issued by Lutheran Brotherhood Variable Insurance Products Company ("LBVIP")
allows the Contract Owner, subject to certain limitations, to make premium
payments in any amount up to the Insured's Attained Age 100 and at any
frequency. As long as the Contract remains in force, it will provide for
(1) life insurance coverage on the named Insured; (2) Accumulated Value; (3)
surrender rights and Contract loan privileges; and (4) a variety of
additional insurance benefits. The Contract described in this Prospectus is
being offered by LBVIP to provide protection against economic loss when the
Insured dies, and not primarily as an investment.
The Contract is called "flexible premium" because, unlike many other
insurance contracts, there is no fixed schedule for premium payments, even
though each Contract Owner may establish a schedule of periodic premium
payments ("Scheduled Premiums") which may be changed by the Contract Owner
at any time. See "PAYMENT AND ALLOCATION OF PREMIUMS--Amount and Timing of
Premiums". The Contract is called "variable" because, unlike a conventional
fixed-benefit whole life insurance contract, the Death Benefit under the
Contract may, and the Accumulated Value and the Cash Surrender Value will,
vary to reflect the investment performance of the selected Subaccounts of
the Variable Account, as well as other factors. See "CONTRACT BENEFITS".
The failure to pay Scheduled Premiums will not itself cause the Contract to
lapse. Conversely, the payment of premiums in any amount of frequency
(including Scheduled Premiums) will not necessarily guarantee that the
Contract will remain in force, except to the extent these premium payments
are sufficient to maintain the Death Benefit Guarantee. See "DEATH BENEFIT
GUARANTEE". In general, subject to the Death Benefit Guarantee, the
Contract will lapse when (a) Cash Surrender Value is insufficient to pay the
Monthly Deduction (for insurance and administration charges) or (b) Contract
Debt exceeds Accumulated Value less any Decrease Charge, and in either case
if a grace period expires without sufficient additional payments. See
"PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement".
LBVIP will require satisfactory evidence of insurability before issuing any
Contract.
LBVIP is offering the Contract only to Insureds who are eligible for
membership in Lutheran Brotherhood (of which LBVIP is an indirect
subsidiary), unless otherwise required by state law.
Subaccounts of the Variable Account;
Portfolios of the Fund
Each Contract Owner allocates the Net Premium payments made under such
owner's Contract to one or more of the seven Subaccounts of the Variable
Account--the Growth Subaccount, the High Yield Subaccount, the Income
Subaccount, the Opportunity Growth Subaccount, the Mid Cap Growth
Subaccount, the World Growth Subaccount, and the Money Market Subaccount.
The assets of each such Subaccount will be invested in the corresponding
Portfolio (the Growth Portfolio, the High Yield Portfolio, the Income
Portfolio, the Opportunity Growth Portfolio, the Mid Cap Growth Portfolio,
the World Growth Portfolio, or the Money Market Portfolio) of the Fund.
Subject to certain restrictions, the Contract Owner may transfer amounts
among the Subaccounts of the Variable Account (see "PAYMENT AND ALLOCATION
OF PREMIUMS--Allocation of Premiums and Accumulated Value").
The investment objectives of the Portfolios of the Fund (individually a
"Portfolio" and collectively the "Portfolios") are:
Growth Portfolio. To achieve long-term growth of capital through investment
primarily in common stocks of established corporations that appear to offer
attractive prospects of a high total return from dividends and capital
appreciation.
High Yield Portfolio. To achieve a higher level of income through a
diversified portfolio of high yield securities ("junk bonds") which involve
greater risks than higher quality investments, while also considering growth
of capital as a secondary objective.
Income Portfolio. To achieve a high level of income over the longer term
while providing reasonable safety of capital through investment primarily in
readily marketable intermediate and long-term fixed income securities.
Opportunity Growth Portfolio. To achieve long-term growth of capital by
investing primarily in a professionally managed diversified portfolio of
smaller capitalization common stocks.
Mid Cap Growth Portfolio. To achieve long term growth of capital by
investing primarily in a professionally managed diversified portfolio of
common stocks of companies with medium market capitalizations.
World Growth Portfolio. To achieve long-term growth of capital by investing
primarily in a professionally managed diversified portfolio of common stocks
of established, non-U.S. companies.
Money Market Portfolio. To achieve the maximum current income that is
consistent with stability of capital and maintenance of liquidity through
investment in high-quality, short-term debt obligations.
No assurance can be given that the Portfolios of the Fund will achieve their
respective investment objectives.
The Fund is a diversified, open-end management investment company (commonly
called a "mutual fund"), for which Lutheran Brotherhood acts as investment
adviser. The investment adviser is paid a daily fee by the Fund for its
investment management services equal to an annual rate of .40% of the
aggregate average daily net assets of the Money Market, Income, High Yield,
Growth, Mid Cap Growth and Opportunity Growth Portfolios. The investment
adviser also receives a daily investment advisory fee from the Fund equal to
.85% of the aggregate average daily net assets of the World Growth
Portfolio, as described in the accompanying current prospectus for the Fund.
See "LBVIP, LUTHERAN BROTHERHOOD AND THE VARIABLE ACCOUNT--LB Series Fund,
Inc." The accompanying prospectus of the Fund contains detailed information
about the Fund, its Portfolios, the investment advisory arrangement, and
other matters relating to the Fund and its investment objectives and
policies.
Death Proceeds and Death Benefit Options
As long as the Contract remains in force, LBVIP will pay the proceeds from
the Contract to the Beneficiary upon receipt of due proof of death of the
Insured. If the Insured dies before age 100, the proceeds from the Contract
will consist of the Contract's Death Benefit, plus any insurance proceeds
provided by additional insurance benefits on the Insured's life, less any
outstanding Debt and any unpaid Monthly Deductions. If the Insured dies at
or after age 100, the amount payable will be the Cash Surrender Value on the
date of death. See "CONTRACT BENEFITS--Death Benefits" and "GENERAL
PROVISIONS--Additional Insurance Benefits".
There are two Death Benefit Options. Death Benefit Option A provides for
the greater of (a) the Face Amount plus the Accumulated Value and (b) the
applicable percentage of Accumulated Value (with Accumulated Value in each
case being determined on the Valuation Date on or next following the
Insured's date of death). Death Benefit Option B provides for the greater
of (a) the Face Amount and (b) the applicable percentage of Accumulated
Value on the Valuation Date on or next following the date of the Insured's
death. As long as the Contract remains in force, the Death Benefit will not
be less that the Contract's Face Amount in force.
Additional Insurance Benefits
Additional insurance benefits offered under the Contract include: waiver of
Monthly Deductions in the event of total disability; waiver of selected
amount in the event of total disability; additional insurance coverage for
accidental death; term insurance on the Insured's spouse; term insurance on
the Insured's children; a right to increase the Face Amount of the Contract
on certain specified dates or life events without proof of insurability; and
a cost of living insurance adjustment without proof of insurability. See
"GENERAL PROVISIONS--Additional Insurance Benefits". The cost of these
additional insurance benefits will be deducted from the Accumulated Value as
part of the Monthly Deduction. See "CHARGES AND DEDUCTIONS--Accumulated
Value Charges--Monthly Deduction".
Charitability for Life (SM) is a benefit that enables Contract Owners to
increase their charitable gifts to Lutheran charitable organizations and
congregations. Charitability for Life is available for no additional premium
whenever a Contract Owner has designated a Lutheran charitable organization
or congregation as a beneficiary for at least $1,000 of Death Benefit on his
or her Contract. See "GENERAL PROVISIONS -- Charitability for Life."
Under certain circumstances, an Accelerated Benefits Rider allows a Contract
Owner residing in a state that has approved such rider to receive benefits
from the Contract that would be otherwise payable upon the death of the
Insured. See "GENERAL PROVISIONS--Accelerated Benefits Rider". The tax
treatment of benefits paid under the Accelerated Benefits Rider is currently
uncertain. See "FEDERAL TAX MATTERS--Contract Proceeds--Benefits Paid under
the Accelerated Benefits Rider".
Amount of Accumulated Value and Cash Surrender Value
The Accumulated Value of the Contract is the total amount of the value held
under the Contract at any time (which equals the sum of the amounts held in
the Loan Account and the Variable Account). The Contract's Accumulated
Value in the Variable Account will reflect the investment performance of the
chosen Subaccounts of the Variable Account, any Net Premiums paid, any
partial surrenders, any loans, any loan repayments, any loan interest paid
or credited, and any charges assessed in connection with the Contract
(including any Decrease Charge previously imposed upon a requested decrease
in Face Amount). The Contract Owner bears the entire investment risk for
amounts allocated to the Variable Account. LBVIP does not guarantee a
minimum Accumulated Value. See "CONTRACT BENEFITS--Accumulated Value and
Cash Surrender Value". The Accumulated Value is relevant to continuation of
the Contract, to Cash Surrender Value (which determines various other rights
under the Contract), to determining the amount available for Contract loans,
and to computation of cost of insurance charges, and may be relevant to the
computation of Death Benefits.
The Contract's Cash Surrender Value will be the Accumulated Value less any
Contract Debt and any Decrease Charge. The Cash Surrender Value is relevant
to continuation of the Contract and to determining the amount available upon
partial or total surrender of the Contract.
Flexibility to Adjust Amount of Death Benefit
The Contract Owner has significant flexibility to adjust the Death Benefit
by increasing or decreasing the Face Amount of the Contract. Any change in
the Face Amount may affect the charges under the Contract. Any increase in
the Face Amount will result in an increase in the Monthly Deduction, and any
requested increase in Face Amount will also increase the Decrease Charge,
which is imposed upon lapse or surrender of the Contract or in part upon a
requested decrease in Face Amount. For any requested decrease in Face
Amount, that part of the Decrease Charge reflecting the decrease will reduce
the Accumulated Value attributable to the Contract, and the Decrease Charge
will be reduced by this amount. See "CONTRACT BENEFITS--Death Benefits--
Changes in Face Amount".
The minimum requested increase in Face Amount is $25,000 and any requested
increase may require additional evidence of insurability. See "CONTRACT
BENEFITS--Death Benefits--Changes in Face Amount". Any requested increase
in Face Amount is subject to a limited "free look" privilege (see "CONTRACT
RIGHTS--Free Look Privileges"), and, during the first 24 months following
the increase, to an exchange privilege (see "CONTRACT RIGHTS--Exchange
Privileges").
Any requested decrease in Face Amount cannot result in a Face Amount less
than the Minimum Face Amount. The minimum Face Amount ("Minimum Face
Amount") at issue for a Contract is $50,000 for Insureds with an Attained
Age of 18 through 50, and $25,000 for all other Insureds. After issuance of
the Contract, the Minimum Face Amount at issue continues to apply to the
Contract, except that if a Contract has a Minimum Face Amount of $50,000 the
Minimum Face Amount will be reduced to $25,000 after an Insured reaches
Attained Age 51. LBVIP reserves the right to establish a different Minimum
Face Amount for Contracts issued in the future.
To the extent that a requested decrease in Face Amount would result in
cumulative premiums exceeding the maximum premium limitations applicable
under the Internal Revenue Code for life insurance, LBVIP will not effect
the decrease. See "PAYMENT AND ALLOCATION OF PREMIUMS--Amount and Timing of
Premiums--Premium Limitations".
Contract Issuance
If the applicant desires to have temporary insurance pending Contract
issuance, LBVIP will require a premium payment (the "Minimum Conditional
Insurance Premium") equal to three initial Death Benefit Guarantee Premiums,
or, in the case of automatic monthly payment plans, two initial Death
Benefit Guarantee Premiums. If LBVIP subsequently determines that the
proposed Insured is not an acceptable risk under LBVIP's underwriting
standards and rules, even if the Minimum Conditional Insurance Premium has
been paid, no temporary insurance coverage will have been provided and any
premium paid will be refunded (without interest). Upon delivery of the
Contract, the balance (if any) of the premium required before issuance of
the Contract (the "Minimum Contract Issuance Premium") must be paid. The
Minimum Contract Issuance Premium will equal the initial Scheduled Premium
selected by the Contract Owner (e.g., the quarterly, semi-annual or annual
premium payment selected by the Contract Owner), or, in the case of
automatic monthly payment plans, the greater of the Minimum Conditional
Insurance Premium or the initial Scheduled Premium. If the Date of Issue
precedes the Contract Date and the Minimum Contract Issuance Premium
otherwise required would not provide a premium payment sufficient to cover
the next Contract Month, additional Scheduled Premium payment(s) sufficient
to cover through the next Contract Month will be required. See "PAYMENT AND
ALLOCATION OF PREMIUMS--Amount and Timing of Premiums".
Until the Contract Date, premium payments will be held in LBVIP's General
Account. If a Contract is issued, interest will be credited on premium
payments held in the General Account at a rate of interest determined by
LBVIP; no interest will be credited on these premium payments if no Contract
is issued (but the full amount of any premiums paid, without deduction of
any Contract charges, would be refunded). On the Contract Date, the Premium
Expense Charges attributable to the premiums paid will be deducted and the
balance of the amount of such premiums held in the General Account, together
with any interest credited on premiums held in the General Account (on which
no Premium Expense Charges will be imposed), will be transferred from the
General Account and allocated to the Variable Account among the
Subaccount(s) pursuant to the Contract Owner's instructions. See "PAYMENT
AND ALLOCATION OF PREMIUMS--Issuance of a Contract".
Allocation of Net Premiums
Net Premiums are the premiums paid less the Premium Expense Charges. See
"CHARGES AND DEDUCTIONS--Premium Expense Charges". Net Premiums will
generally be allocated to the Subaccount(s) of the Variable Account in
accordance with the Contract Owner's instructions (as specified in the
Application for the Contract or as subsequently changed). Each Subaccount
invests in a corresponding Portfolio of the Fund. The Contract Owner will
bear the investment risk of Net Premiums allocated to the Subaccount(s).
Subject to certain restrictions, a Contract Owner may transfer amounts among
the Subaccounts of the Variable Account. See "PAYMENT AND ALLOCATION OF
PREMIUMS--Allocation of Premiums and Accumulated Value".
The Contract Owner must notify LBVIP if payment is a premium payment;
otherwise, it will be considered a loan repayment.
Contract Lapse and Reinstatement
The failure to make a Scheduled Premium payment will not itself cause a
Contract to lapse. Subject to the Death Benefit Guarantee (see "DEATH
BENEFIT GUARANTEE"), lapse will only occur when (a) the Cash Surrender Value
(that is, the Accumulated Value less any Contract Debt and any Decrease
Charge) is insufficient to cover the Monthly Deduction or (b) Contract Debt
exceeds the Accumulated Value less any Decrease Charge, and in either case
if a 61-day grace period expires without a sufficient payment. See "PAYMENT
AND ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement".
Subject to certain conditions (including evidence of insurability
satisfactory to LBVIP and the payment of a sufficient premium), a Contract
may be reinstated at any time within 5 years after the expiration of the
grace period. See "PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and
Reinstatement".
Death Benefit Guarantee Protection
The Contract will not lapse if sufficient premium payments have been made to
maintain the Death Benefit Guarantee. In general, in order to maintain the
Death Benefit Guarantee, as of each Monthly Anniversary the total cumulative
premiums paid under the Contract, less any partial surrenders and Contract
Loan Amount must equal or exceed the sum of the Death Benefit Guarantee
Premiums in effect for each Monthly Anniversary since the issuance of the
Contract. If the Death Benefit Guarantee requirement is not met on a
Monthly Anniversary but the Cash Surrender Value less any unearned prepaid
loan interest is greater than or equal to the sum of Death Benefit Guarantee
Premiums from the Date of Issue through that Monthly Anniversary, then the
sum of premiums paid as used above will be deemed to increase through that
date to the amount necessary to meet the Death Benefit Guarantee
requirement. In addition, a portion of any partial surrender or Contract
Loan Amount may be excluded when determining if the Death Benefit Guarantee
requirement is met. The Death Benefit Guarantee applies until the specified
Attained Age of the Insured shown in the Contract, which Attained Age will
be the later of (a) the Insured's Attained Age 71 and (b) the Attained Age
of the Insured at the end of a period ranging from 8 to 34 years (varying
with the Insured's Attained Age at issue) from the Date of Issue. The Death
Benefit Guarantee terminates immediately as of any Monthly Anniversary when
these cumulative premium requirements are not satisfied. LBVIP will send
written notice to the Contract Owner indicating that the Death Benefit
Guarantee has terminated, and the Contract Owner will have 31 days from the
date such notice is sent by LBVIP to reinstate the Death Benefit Guarantee,
after which the Death Benefit Guarantee can never be reinstated. During
this 31 day reinstatement period, the Contract Owner will not have the
protection of the Death Benefit Guarantee. The written notice of
termination from LBVIP to the Contract Owner will indicate the premium
payment required to reinstate the Death Benefit Guarantee. See "DEATH
BENEFIT GUARANTEE".
Whenever the Monthly Deduction to be made would result in a Cash Surrender
Value less than zero, any excess of Accumulated Value over Contract Debt
will be used to pay the Monthly Deduction. If available Accumulated Value
is less than the Monthly Deduction then due and the Death Benefit Guarantee
is in effect, LBVIP will pay the deficiency.
The Death Benefit Guarantee provides significant protection against lapse of
the Contract. First, the Death Benefit Guarantee can prevent lapse of the
Contract due to a decrease in Cash Surrender Value resulting from poor
investment performance. Also, the Death Benefit Guarantee will probably be
necessary to avoid lapse of the Contract during the early Contract Years
because the Cash Surrender Value will probably not be sufficient to cover
the Monthly Deduction. Finally, because the Decrease Charge will increase
after a requested increase in Face Amount, thereby reducing the Cash
Surrender Value, the Death Benefit Guarantee may also be necessary to avoid
lapse after a requested increase in Face Amount. See "DEATH BENEFIT
GUARANTEE".
Charges Assessed in Connection with the Contract
Premium Expense Charges. Certain charges (the "Premium Expense Charges")
will be deducted from each premium payment. The Premium Expense Charges
will consist of a percent-of-premium charge of 5% of each premium payment (a
3% sales charge and a 2% premium tax charge) and a premium processing charge
of $1.00 per premium payment ($.50 for automatic payment plans). LBVIP
reserves the right to increase the premium processing charge in the future
to an amount not exceeding $2.00 per premium payment ($1.00 for automatic
payment plans).
Monthly Deduction. On the Contract Date and on each Monthly Anniversary
thereafter, the Accumulated Value will be reduced by a Monthly Deduction
equal to the sum of the monthly cost of insurance charge, monthly
administration charges, and a charge for any additional insurance benefits
added by rider. The monthly cost of insurance charge will be determined by
multiplying the net amount at risk (that is, in general, the Death Benefit
less Accumulated Value) by the applicable cost of insurance rate(s), which
will depend upon the gender, Attained Age and premium class of the Insured
and upon LBVIP's expectation as to future mortality experience, but which
will not exceed the guaranteed cost of insurance rates set forth in the
Contract based on the Insured's Attained Age and the 1980 Commissioners
Standard Ordinary Mortality Table. See "CHARGES AND DEDUCTIONS--Accumulated
Value Charges--Monthly Deduction". The monthly administration charges will
include (1) a basic monthly administrative charge equal to $10.00 per month
and (2) the Initial Monthly Charge, which applies until 180 Monthly
Deductions have been made following Contract issuance or a requested
increase in Face Amount and which will be computed as a charge per $1,000 of
Face Amount (with the amount of this charge depending upon the initial Face
Amount and the Insured's Attained Age at issue and, except for Insureds with
an Attained Age at Contract issuance under 18, upon the Insured's gender,
and whether the Insured is a tobacco user or not). If the Face Amount is
increased, a separate Initial Monthly Charge for Increases will be deducted
from Accumulated Value as part of the first 180 Monthly Deductions after the
increase. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Monthly
Deduction--Monthly Administration Charge". The charge for additional
insurance benefits added by rider will be specified in the Contract or in a
supplement to the Contract. See "GENERAL PROVISIONS--Additional Insurance
Benefits". The cost of insurance rate and the Initial Monthly Charge per
$1,000 of Face Amount will be lower for Contracts having a Face Amount at
issuance or after requested increases that equal or exceed the following
amounts: $500,000-$999,999; and $1,000,000. Montana has enacted legislation
that requires that cost of insurance rates and other charges applicable to
Contracts purchased in Montana cannot vary on the basis of the Insured's
gender, and so, in Montana, this charge will not be based on the gender of
the Insured.
Decrease Charge. A deferred charge (the "Decrease Charge") will be deducted
upon Contract lapse or surrender, or in part upon a requested decrease in
Face Amount, if these events occur before 180 Monthly Deductions have been
made (that is, approximately 15 years) following Contract issuance or a
requested increase in Face Amount. The Decrease Charge consists of a
contingent deferred sales charge (the "Contingent Deferred Sales Charge")
and a deferred administrative charge (the "Deferred Administrative Charge").
The term "Decrease Charge" is used to describe this charge because, during
the applicable 15-year period, the charge is imposed in connection with a
decrease in the Face Amount, either as the result of a requested decrease in
Face Amount or as the result of lapse or full surrender of the Contract
(which can be viewed as a decrease in the Face Amount to zero).
The Decrease Charge will be deducted from the Accumulated Value in
determining the Contract's Cash Surrender Value (which is the Accumulated
Value less any Contract Debt and any Decrease Charge). The Cash Surrender
Value determines various rights under the Contract (including how long the
Contract remains in effect). See "CONTRACT BENEFITS--Accumulated Value and
Cash Surrender Value".
Subject to an additional limitation keyed to actual premium payments
(described below), the maximum Contingent Deferred Sales Charge will be
determined at issuance of the Contract and will equal 25% of an annual
premium amount used solely for the purpose of calculating the Contingent
Deferred Sales Charge (the "CDSC Premium"). The maximum Contingent Deferred
Sales Charge based upon the CDSC Premium will be shown in the Contract.
(For further information concerning the determination of the CDSC Premium
and the calculation of the Contingent Deferred Sales Charge, see "CHARGES
AND DEDUCTIONS--Accumulated Value Charges--Decrease Charge".) The maximum
Contingent Deferred Sales Charge calculated in this manner will remain level
until the fifth Contract Anniversary and will then be reduced on each
Monthly Anniversary commencing on the fifth Contract Anniversary. After the
120th Monthly Deduction following the fifth Contract Anniversary, the
Contingent Deferred Sales Charge will be zero. The actual Contingent
Deferred Sales Charge will, however, never exceed 25% of premiums paid
(before deducting the Premium Expense Charges) during the first Contract
Year.
The maximum Deferred Administrative Charge will be determined at issuance of
the Contract and will equal an amount per $1,000 of Face Amount based upon
the initial Face Amount, the Insured's Attained Age at Contract issuance,
and, except for Insureds with an Attained Age at Contract issuance under 18,
the Insured's gender and whether the Insured is a tobacco user or not. (For
further information concerning the calculation of the Deferred
Administrative Charge, see "CHARGES AND DEDUCTIONS--Accumulated Value
Charges--Decrease Charge.") The Deferred Administrative Charge is reduced
on the Date of Issue and on each subsequent Monthly Anniversary so that it
reaches zero when 180 Monthly Deductions have been made. See "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Decrease Charge". Montana has enacted
legislation that requires that cost of insurance rates and other charges
applicable to Contracts purchased in Montana cannot vary on the basis of the
Insured's gender, and so, in Montana, this charge will not be based on the
gender of the Insured.
A separate Decrease Charge will also be calculated, and then reduced over a
15-year period, in a similar manner upon a requested increase in Face
Amount. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Decrease
Charge".
Partial Surrender Charge. A charge equal to $25 or 2% of the surrender
amount requested, whichever is less, will be deducted by LBVIP from the
amount withdrawn to compensate it for costs upon partial surrenders--that
is, partial Accumulated Value withdrawals--by the Contract Owner. See
"CHARGES AND DEDUCTIONS--Accumulated Value Charges--Partial Surrender
Charge".
Daily Charges Against the Variable Account. A daily charge for LBVIP's
assumption of certain mortality and expense risks incurred in connection
with the Contract will be imposed. LBVIP has determined that a Mortality
and Expense Risk Charge (see "CHARGES AND DEDUCTIONS--Charges Against the
Variable Account") at an annual rate of .75% of the average daily net assets
of each Subaccount of the Variable Account is reasonable in relation to the
mortality and expense risks assumed by LBVIP under the Contract. LBVIP
will, however, initially impose the Mortality and Expense Risk Charge at an
annual rate of .60% of the average daily net assets of each Subaccount of
the Variable Account. See "CHARGES AND DEDUCTIONS--Charges Against the
Variable Account".
No charges are currently made against the Variable Account for Federal or
state income taxes. Should LBVIP determine that such taxes may be imposed,
deductions from the Variable Account to pay these taxes may be made. See
"FEDERAL TAX MATTERS".
In addition, because the Variable Account purchases shares of the Fund, the
value of Units in the Subaccount(s) of the Variable Account will reflect the
net asset value of the shares of the Fund held therein, and therefore the
investment advisory fee incurred by the Fund. See "LBVIP, LUTHERAN
BROTHERHOOD AND THE VARIABLE ACCOUNT--LB Series Fund, Inc." and "CONTRACT
BENEFITS--Accumulated Value and Cash Surrender Value".
Free Look Privileges
The Contract provides for an initial Free Look Period. The Contract Owner
may cancel the Contract until the latest of (a) 45 days after Part I of the
application for the Contract is signed, (b) 10 days after the Contract Owner
receives the Contract, and (c) 10 days after LBVIP mails or personally
delivers a notice of withdrawal right to the Contract Owner. Upon returning
the Contract, the Contract Owner will receive a refund equal to the sum of
(i) the Accumulated Value (as of the date the returned Contract is received
by LBVIP at its Home Office or by the LBVIP Representative from whom the
Contract was purchased), without any deduction of the Decrease Charge, plus
(ii) the amount of any Premium Expense Charges, plus (iii) any Monthly
Deductions charged against the Contract's Accumulated Value, plus (iv) any
Mortality and Expense Risk Charges deducted from the value of the net assets
or the Variable Account attributable to the Contract, plus (v) the advisory
fees charged by the Fund against net asset value in the Fund Portfolios
attributable to the Contract's value in the corresponding Subaccount(s) of
the Variable Account. See "CONTRACT RIGHTS--Free Look Privileges". When
state law requires a minimum refund equal to gross premiums paid, the refund
will instead equal the gross premiums paid on the Contract and will not
reflect the investment experience of the Variable Account.
Similar free look privileges apply after a requested increase in Face
Amount. See "CONTRACT RIGHTS--Free Look Privileges".
Loan Privileges
The Contract Owner may at any time after the Contract Date obtain Contract
loans in an amount not exceeding in the aggregate 90% of the excess of
Accumulated Value over any Decrease Charge on the date of any loan. See
"CONTRACT RIGHTS--Loan Privileges".
Contract loans will bear interest at a fixed rate of 8.0% per year, which is
7.4% per year when paid in advance. Loan interest is calculated on a
prepaid basis, and is payable in advance at the time any Contract loan is
made (for the rest of the Contract Year) and at the beginning of each
Contract Year thereafter (for that entire Contract Year). If interest is
not paid when due, it will be added to the loan balance. Contract loans may
be repaid at any time. Each repayment must be at least $25. When Contract
loans are repaid, any prepaid interest attributable to the repaid amount
will be credited to the Subaccount(s) in the same manner as the repayment.
Contract loans are allocated against the Subaccounts of the Variable Account
in proportion to the Accumulated Value in the respective Subaccounts or,
with LBVIP's approval, in accordance with the Contract Owner's instructions.
The loan amount is, in effect, treated as part of the Contract's Accumulated
Value, but the proceeds payable under the Contract will be reduced by the
Debt. Accumulated Value equal to the Contract loan will be transferred from
the appropriate Subaccount(s) to LBVIP's General Account (such amounts being
herein called the "Loan Account"). This amount in the Loan Account will
earn interest for the Contract Owner at an effective annual rate of 6%.
This interest will be credited monthly to the Contract's Accumulated Value
held in the Subaccount(s).
The Contract Owner must notify LBVIP if a payment is a premium payment;
otherwise, it will be considered a loan repayment.
Any partial or full repayment of Debt by the Contract Owner, as well as any
interest credited from the Loan Account, will be allocated to the
Subaccount(s) in proportion to the Accumulated Value in the respective
Subaccounts. Subject to LBVIP's approval, a Contract Owner may choose a
different allocation. A loan taken from a Contract may have Federal income
tax consequences. See "CONTRACT RIGHTS--Loan Privileges".
Exchange Privileges
During the first 24 Contract Months after the Date of Issue, subject to
certain restrictions, the Contract Owner may exchange the Contract for a
fixed benefit permanent life insurance contract issued by Lutheran
Brotherhood, of which LBVIP is an indirect subsidiary. The new contract
will have the same Date of Issue and issue age as the Contract. The new
contract will also have, at the option of the Contract Owner, either a death
benefit equal to the Death Benefit under the Contract on the effective date
of the exchange or a net amount at risk equaling the net amount at risk
under the Contract on the effective date of the exchange. An additional
premium payment may be required. See "CONTRACT RIGHTS--Exchange
Privileges". An exchange may have tax consequences. See "FEDERAL TAX
MATTERS--Contract Proceeds".
Surrender of the Contract
The Contract Owner may at any time fully surrender the Contract and receive
in cash the Cash Surrender Value, if any. The Cash Surrender Value will
equal the Accumulated Value of the Contract, less any Contract Debt and any
Decrease Charge. The Cash Surrender Value will include any unearned prepaid
loan interest. As unearned prepaid loan interest is earned, the Cash
Surrender Value will decrease. See "CONTRACT RIGHTS--Surrender Privileges".
Subject to certain restrictions (including a minimum surrender amount of
$500 and a remaining Cash Surrender Value of at least $500), and a partial
surrender charge of $25 or 2% of the surrender amount requested, whichever
is less, the Contract Owner may also partially surrender the Contract and
withdraw part of the Contract's Accumulated Value at any time while the
Insured is living. If Death Benefit Option B is in effect, a partial
surrender may result in a reduction in the Face Amount in force. Under
either Death Benefit Option, a partial surrender will reduce the Death
Benefit. A surrender taken from a Contract may have federal income tax
consequences. See "CONTRACT RIGHTS--Surrender Privileges".
Tax Treatment of Accumulated Value
Under current tax law, Accumulated Value under a Contract should be subject
to the same Federal income tax treatment as cash value in a conventional
fixed-premium, fixed-benefit whole life insurance contract. A change of
Contract Owners or a partial or total surrender may have tax consequences
depending on the circumstances. See "FEDERAL TAX MATTERS--Contract
Proceeds".
Tax Treatment of Death Benefits Received by the Beneficiary
Under current tax law, like death benefits payable under conventional life
insurance contracts, Death Benefit proceeds payable under the Contract
should ordinarily be completely excludable from the gross income of the
Beneficiary. As a result, the Beneficiary will generally not be taxed on
the proceeds. See "FEDERAL TAX MATTERS--Contract Proceeds".
Employment-Related Benefit Plans
The cost of insurance rates applicable to Contracts purchased under
employment-related insurance or benefit programs may in some cases not vary
depending on the Insured's gender, as is the case generally (except for
Contracts issued in the state of Montana) under the Contracts. In addition,
different limitations with respect to the minimum Face Amount, increases in
Face Amount, additional insurance benefits, and issue ages may apply to
Contracts issued in connection with employment-related insurance or benefit
programs. SEE "EMPLOYMENT-RELATED BENEFIT PLANS".
--------------------------------
For further information, please read the following detailed description.
Illustrations of how investment performance of the Variable Account may
cause Death Benefits, Accumulated Values and Cash Surrender Values under the
Contract to vary are included in Appendix A commencing on page A-1.
Each Contract Owner should retain a copy of the Contract. The document,
together with the application attached to the Contract and any supplemental
applications and any Contract supplements, constitutes the entire agreement
between the Contract Owner and LBVIP.
LBVIP, LUTHERAN BROTHERHOOD AND THE VARIABLE ACCOUNT
LBVIP and Lutheran Brotherhood
The Contracts are issued by LBVIP. LBVIP, organized in 1982, is a stock
life insurance company incorporated under the laws of the State of
Minnesota. LBVIP is currently licensed to transact life insurance business
in 42 states and the District of Columbia.
LBVIP is an indirect subsidiary of Lutheran Brotherhood, a fraternal benefit
society owned by and operated for its members. Lutheran Brotherhood was
founded in 1917 under the laws of the State of Minnesota, and at the end of
1997 had total assets of nearly $13.2 billion.
Lutheran Brotherhood has invested approximately $115.8 million in LBVIP, to
help LBVIP meet capitalization requirements of various states, and may
invest additional amounts in LBVIP in the future (although it is not
currently legally obligated to do so). The assets of Lutheran Brotherhood
do not support the benefits payable under the Contracts described in this
Prospectus.
LBVIP is subject to regulation by the Insurance Division of the State of
Minnesota as well as by the insurance departments of all the other states
and jurisdictions in which it does business. LBVIP submits annual reports
on its operations and finances to insurance officials in such states and
jurisdictions. The forms of Contracts described in the Prospectus are filed
with and (where required) approved by insurance officials in each state and
jurisdiction in which Contracts are sold. LBVIP is also subject to certain
Federal securities laws and regulations.
Financial Statements of LBVIP are included elsewhere in this Prospectus.
The Variable Account
The Variable Account is a separate account of LBVIP, established by the
Board of Directors of LBVIP in 1984 pursuant to the laws of the State of
Minnesota. The Variable Account meets the definition of a "separate account"
under the federal securities laws. LBVIP has caused the Variable Account to
be registered with the Securities and Exchange Commission (the "SEC") as a
unit investment trust under the Investment Company Act of 1940 (the "1940
Act"). Such registration does not involve supervision by the SEC of the
management or investment policies or practices of the Variable Account.
The assets of the Variable Account are owned by LBVIP, and LBVIP is not a
trustee with respect to such assets. However, the Minnesota laws under
which the Variable Account was established provide that the Variable Account
shall not be chargeable with liabilities arising out of any other business
LBVIP may conduct. LBVIP may transfer to its General Account assets of the
Variable Account which exceed the reserves and other liabilities of the
Variable Account.
Income and realized and unrealized gains and losses from each Subaccount of
the Variable Account are credited to or charged against that Subaccount
without regard to any of LBVIP's other income, gains or losses. LBVIP may
accumulate in the Variable Account the charge for expense and mortality
risks, mortality gains and losses and investment results applicable to those
assets that are in excess of net assets supporting the Contracts.
LB Series Fund, Inc.
Each Subaccount of the Variable Account will invest only in the shares of a
corresponding Portfolio of the Fund. The Fund is registered with the SEC
under the 1940 Act as a diversified, open-end management investment company.
This registration does not involve supervision by the SEC of the management
or investment practices or policies of the Fund. The Fund is designed to
provide an investment vehicle for variable life insurance and variable
annuity contracts. Shares of the Fund are sold to other insurance company
separate accounts of LBVIP and its indirect parent, Lutheran Brotherhood
("LB"), and the Fund may in the future create new Portfolios. It is
conceivable that in the future it may be disadvantageous for both variable
insurance separate accounts and variable annuity separate accounts, and for
LBVIP and LB to invest simultaneously in the Fund, although LBVIP does not
foresee any such disadvantages to either variable life insurance or variable
annuity contract owners. The management of the Fund intends to monitor
events in order to identify any material conflicts between such contract
owners and to determine what action, if any, should be taken in response.
Such action could include the sale of Fund shares by one or more of the
separate accounts, which could have adverse consequences. Material conflicts
could result from, for example, (1) changes in state insurance laws, (2)
changes in Federal income tax law, (3) changes in the investment management
of the Fund, or (4) differences in voting instructions between those given
by the contract owners from the different separate accounts. In addition, if
LBVIP believes the Fund's response to any of those events or conflicts
insufficiently protects Contract Owners, it will take appropriate action on
its own.
The Variable Account will purchase and redeem shares from the Fund at net
asset value. Shares will be redeemed to the extent necessary for LBVIP to
collect charges under the Contracts, to pay Cash Surrender Value upon full
surrenders of the Contracts, to pay partial surrenders, to make Contract
loans, to provide benefits under the Contracts, or to transfer assets from
one Subaccount to another as requested by Contract Owners. Any dividend or
capital gain distribution received from a Portfolio of the Fund will be
reinvested immediately at net asset value in shares of that Portfolio and
retained as assets of the corresponding Subaccount.
The Fund receives investment advice with respect to each of its Portfolios
from LB, which acts as investment adviser to the Fund. LB is a registered
investment adviser under the Investment Advisers Act of 1940. As investment
adviser to the Fund, LB charges the Fund a daily investment advisory fee
equal to an annual rate of .40% of the aggregate average daily net assets of
the Money Market, Income, High Yield, Growth, Mid Cap Growth and Opportunity
Growth Portfolios. LB also charges the Fund an annual investment advisory
fee equal to .85% of the aggregate average daily net assets of the World
Growth Portfolio.
LB has engaged T. Rowe Price Associates, Inc. ("T. Rowe Price") as
investment sub-adviser for the Opportunity Growth Portfolio. T. Rowe Price
was founded in 1937 and has its principal offices in Baltimore, Maryland.
As of December 31, 1997, T. Rowe Price and its affiliates managed over $124
billion. Richard T. Whitney, Managing Director of T. Rowe Price, is
primarily responsible for day-to-day management of the Opportunity Growth
Portfolio and developing and executing the Portfolio's investment program.
LB pays the Sub-adviser for the Opportunity Growth Portfolio an annual sub-
advisory fee for the performance of sub-advisory services. The fee payable
is equal to .30% of that Portfolio's average daily net assets.
LB has engaged Rowe Price-Fleming International, Inc., ("Price-Fleming") as
investment sub-adviser for the World Growth Portfolio. Price-Fleming was
founded in 1979 as a joint venture between T. Rowe Price Associates, Inc.
and Robert Fleming Holdings Limited. Price-Fleming is one of the world's
largest international mutual fund asset managers with approximately the U.S.
equivalent of $30 billion under management as of December 31, 1997 in its
offices in Baltimore, London, Tokyo and Hong Kong. Price-Fleming has an
investment advisory group that has day-to-day responsibility for managing
the World Growth Portfolio and developing and executing the Portfolio's
investment program. LB pays the Sub-adviser for the World Growth Portfolio
an annual sub-advisory fee for the performance of sub-advisory services. The
formula for determining the sub-advisory fee is described fully in the
prospectus for the Fund.
The investment objectives of the current Portfolios available to Contract
Owners through corresponding Subaccounts of the Variable Account are set
forth in the accompanying prospectus for the Fund. There is no assurance
that these objectives will be met.
Each Contract Owner should periodically consider the allocation among the
Subaccounts in light of current market conditions and the investment risks
attendant to investing in the Fund's various Portfolios. A full description
of the Fund, its investment objectives, policies and restrictions, its
expenses, the risks attendant to investing in the Fund's Portfolios and
other aspects of its operation is contained in the accompanying prospectus
for the Fund, which should be read together with this Prospectus.
Performance Information
Performance information for the Variable Account and the Fund may appear in
advertisements, sales literature, or reports to Contract Owners.
Performance information for the Fund will appear only when accompanied by
performance information for the Variable Account. Performance information
for the Variable Account will reflect the deduction of applicable charges to
the Contract. Quotations of performance information for the Fund will not
take into account charges or deductions against the Variable Account to
which Fund shares are sold or deductions against the Contract. Performance
information reflects only the performance of a hypothetical investment
during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the Portfolios of
the Fund in which the Variable Account invests, and the market conditions
during the given period of time, and should not be considered as a
representation of what may be achieved in the future.
Performance for the Variable Account and/or the Fund as reported from time
to time in advertisements and sale literature may be compared with that of
other insurance company separate accounts or mutual funds included in the
generally accepted indices, analyses or rankings prepared by Lipper
Analytical Service, Inc., Standard & Poor's Corporation Morningstar, Inc.,
VARDS, Dow Jones or similar independent rating or statistical investment
services that monitor the performance of insurance company separate accounts
or mutual funds. Performance of the Variable Account may be quoted or
compared to rankings, yields or returns as published or prepared by
independent rating or statistical services or publishers or publications
such as THE BANK RATE MONITOR NATIONAL INDEX, BARRON'S, BUSINESS WEEK,
DONOGHUE'S MONEY MARKET FUND REPORT, FINANCIAL SERVICES WEEK, FINANCIAL
TIMES, FINANCIAL WORLD, FORBES, FORTUNE, GLOBAL INVESTOR, INSTITUTIONAL
INVESTOR, INVESTOR'S DAILY, KIPLINGER'S PERSONAL FINANCE, LIPPER ANALYTICAL
SERVICES, MONEY, MUTUAL FUND FORECASTER, NEWSWEEK, THE NEW YORK TIMES,
PERSONAL INVESTOR, STANGER REPORT, SYLVIA PORTER'S PERSONAL FINANCE, USA
TODAY, U.S. NEWS AND WORLD REPORT, THE WALL STREET JOURNAL and WIESENBERGER
INVESTMENT COMPANIES SERVICE.
Addition, Deletion or Substitution of Investments
LBVIP reserves the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares that are held in the
Variable Account or that the Variable Account may purchase. If the shares
of a Portfolio of the Fund are no longer available for investment or if in
LBVIP's judgment further investment in any Portfolio should become
inappropriate in view of the purposes of the Variable Account, LBVIP may
redeem the shares, if any, of that Portfolio and substitute shares of
another registered open-end management company. LBVIP will not substitute
any shares attributable to a Contract interest in a Subaccount of the
Variable Account without notice and prior approval of the SEC and state
insurance authorities, to the extent required by applicable law. The
Variable Account may to the extent permitted by law purchase other
securities for other contracts or permit a conversion between contracts upon
request by the Contract Owners.
LBVIP also reserves the right to establish additional Subaccounts of the
Variable Account, each of which would invest in shares corresponding to a
new Portfolio of the Fund or in shares of another investment company having
a specified investment objective. Subject to applicable law and any
required SEC approval, LBVIP may, in its sole discretion, establish new
Subaccounts or eliminate one or more Subaccounts if marketing needs tax
considerations or investment conditions warrant. Any new Subaccounts may be
made available to existing Contract Owners on a basis to be determined by
LBVIP.
If any of these substitutions or changes are made, LBVIP may by appropriate
endorsement change the Contract to reflect the substitution or change. If
LBVIP deems it to be in the best interest of Contract Owners, and subject to
any approvals that may be required under applicable law, the Variable
Account may be operated as a management company under the 1940 Act, it may
be deregistered under that Act if registration is no longer required, or it
may be combined with other LBVIP separate accounts.
CONTRACT BENEFITS
Death Benefits
General. As long as the Contract remains in force (see "PAYMENT AND
ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement"), the death
proceeds of the Contract will, upon due proof of the Insured's death, be
paid to the named Beneficiary in accordance with the designated Death
Benefit Option. The proceeds may be paid in cash or under one of the
settlement options set forth in the Contract. See "CONTRACT BENEFITS--
Payment of Contract Benefits". The amount payable under the designated
Death Benefit Option will be reduced by any outstanding Contract Debt and
any due and unpaid Monthly Deduction(s), and will be increased by any
additional insurance benefits on the Insured's life provided for in the
Contract.
If the Insured dies at or after age 100, the amount payable will be the Cash
Surrender Value on the date of death.
Death Benefit Options. The Contract provides two Death Benefit Options:
Option A and Option B. The Contract Owner designates the Death Benefit
Option in the application.
Option A. The Death Benefit is equal to the greater of (a) the Face Amount
of the Contract plus the Accumulated Value of the Contract and (b) the
Accumulated Value multiplied by the specified percentage shown in the
following table (with the Accumulated Value in each case being determined on
the Valuation Date on or next following the Insured's date of death):
Specified Specified
Attained Age Percentage Attained Age Percentage
40 or less 250% 61 128%
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 to 90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 101
59 134 95 100
60 130
Illustration of Option A. For purposes of this illustration, assume that
the Insured is under the age of 40 and that there is no Contract Debt. (The
specified percentage is 250% for an Insured aged 40 or below on the Contract
Anniversary prior to the date of death.)
Under Option A, a Contract with a Face Amount of $50,000 will generally pay
a Death Benefit of $50,000 plus Accumulated Value. Thus, for example, a
Contract with an Accumulated Value of $5,000 will have a Death Benefit of
$55,000 ($50,000 + $5,000); an Accumulated Value of $10,000 will yield a
Death Benefit of $60,000 ($50,000 + $10,000); and an Accumulated Value of
$25,000 will yield a Death Benefit of $75,000 ($50,000 + $25,000). The
Death Benefit, however, will be at least 2.50 times the Accumulated Value.
As a result, if the Accumulated Value of the Contract exceeds $33,333, the
Death Benefit will be greater than the Face Amount plus Accumulated Value.
Each additional dollar added to Accumulated Value above $33,333 will
increase the Death Benefit by $2.50. An Insured with an Accumulated Value
of $35,000 will therefore have a Death Benefit of $87,500 (2.50 X $35,000);
an Accumulated Value of $40,000 will yield a Death Benefit of $100,000 (2.50
X $40,000); and an Accumulated Value of $50,000 will yield a Death Benefit
of $125,000 (2.50 X $50,000).
Similarly, any time Accumulated Value exceeds $33,333 each dollar taken out
of Accumulated Value will reduce the Death Benefit by $2.50. If at any
time, however, Accumulated Value multiplied by the specified percentage is
less than the Face Amount plus the Accumulated Value of the Contract, the
Death Benefit will be the Face Amount plus the Accumulated Value.
Option B. The Death Benefit is the greater of (a) the Face Amount of the
Contract and (b) the Accumulated Value on the Valuation Date on or next
following the Insured's date of death multiplied by the specific percentage
shown in the table above.
Illustration of Option B. For purposes of this illustration, assume that
the Insured is under the age of 40 and that there is no Contract Debt.
Under Option B, a Contract with a Face Amount of $50,000 will generally pay
a Death Benefit of $50,000. However, because the Death Benefit must be
equal to or be greater than 2.50 times the Accumulated Value, any time the
Accumulated Value of the Contract exceeds $20,000, the Death Benefit will
exceed the Face Amount. Each additional dollar added to Accumulated Value
above $20,000 will increase the Death Benefit by $2.50. Thus, a 40-year-old
Insured with an Accumulated Value of $25,000 will have a Death Benefit of
$62,500 (2.50 X $25,000); an Accumulated Value of $30,000 will yield a Death
Benefit of $75,000 (2.50 X $30,000); and an Accumulated Value of $40,000
will yield a Death Benefit of $100,000 (2.50 X $40,000).
Similarly, any time Accumulated Value exceeds $20,000 each dollar taken out
of Accumulated Value will reduce the Death Benefit by $2.50. If at any
time, however, the Accumulated Value multiplied by the specified percentage
is less than the Face Amount, the Death Benefit will be the Face Amount of
the Contract.
Which Death Benefit Option to Choose. If a Contract Owner prefers to have
premium payments and favorable investment performance reflected partly in
the form of an increasing Death Benefit, the Contract Owner should choose
Option A. If the Contract Owner is satisfied with the amount of the
Insured's existing insurance coverage and prefers to have premium payments
and favorable investment performances reflected to the maximum extent in the
Accumulated Value, the Contract Owner should select Option B.
Change in Death Benefit Option. At any time when the Death Benefit would be
the Face Amount plus the Accumulated Value (if Option A is in effect) or the
Face Amount (if Option B is in effect), the Death Benefit Option in effect
may be changed by sending LBVIP a Written Notice of change. No charges will
be imposed to make a change in Death Benefit Option. The effective date of
any such change will be the Monthly Anniversary on or next following the
date LBVIP receives the Written Notice.
If the Death Benefit Option is changed from Option A to Option B, the Face
Amount will not change and the Death Benefit will be decreased by the
Accumulated Value of the Contract on the effective date of the change.
These changes will generally have the effect of decreasing the net amount at
risk under the Contract. In addition, if a Contract Owner changed from
Option A to Option B, and then back to Option A from Option B, the resulting
Face Amount and net amount at risk under Option A would generally be lower
as a result of the intervening change to Option B.
If the Death Benefit Option is changed from Option B to Option A, the Death
Benefit will not change and the Face Amount will be decreased by the
Accumulated Value of the Contract on the effective date of the change;
however, this change may not be made if it would reduce the Face Amount to
less than $5,000.
The effects of these Death Benefit Option changes on the Face Amount, Death
Benefit and net amount at risk (that is, the difference between the Death
Benefit and Accumulated Value) can be illustrated as follows. Assume that a
Contract under Option A has a Face Amount of $100,000 and an Accumulated
Value of $10,000, and therefore a Death Benefit of $110,000 ($100,000 +
$10,000) and a net amount at risk of $100,000 ($110,000 - $10,000). If the
Death Benefit Option is changed from Option A to Option B, the Face Amount
would remain the same, the Death Benefit (which equals the Face Amount under
Option B) would be reduced from $110,000 to $100,000, and the net amount at
risk would be reduced from $100,000 to $90,000 ($100,000 - $10,000). If the
Death Benefit Option were then changed back to Option A, the Death Benefit
would remain the same, the Face Amount would be reduced from $100,000 to
$90,000 (that is, reduced by the amount of the Accumulated Value), and the
net amount at risk would remain the same ($100,000 - $10,000 = $90,000).
The overall effect of changing from Option A to Option B and then back to
Option A would be to have reduced the Face Amount from $100,000 to $90,000,
to have reduced the Death Benefit from $110,000 to $100,000, and to have
reduced the net amount at risk from $100,000 to $90,000.
If a change in Death Benefit Option would result in cumulative premiums
exceeding the maximum premium limitations under the Internal Revenue Code
for life insurance, LBVIP will not effect the change in Death Benefit
Option. See "PAYMENT AND ALLOCATION OF PREMIUMS--Amount and Timing of
Premiums--Premium Limitations".
A change in Death Benefit Option may affect the monthly cost of insurance
charge because this charge varies with the net amount at risk--that is, in
general, the Death Benefit less the Accumulated Value. See "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Monthly Deduction". Changing from
Option A to Option B will generally decrease the net amount at risk, thereby
reducing the cost of insurance charges. Changing from Option B to Option A
will generally result in a net amount at risk that remains level. Such a
change from Option B to Option A, however, will result in an increase in the
cost of insurance charges over time because the net amount at risk will
(unless the Death Benefit is based on the applicable percentage of
Accumulated Value) remain level rather than decreasing as the Accumulated
Value increases.
How Death Benefits May Vary in Amount. The Death Benefit may vary with the
Contract's Accumulated Value. The Death Benefit under Option A will always
vary with the Accumulated Value because the Death Benefit equals the greater
of (a) the Face Amount plus the Accumulated Value and (b) the Accumulated
Value multiplied by the specified percentage shown in the foregoing table.
Under Option B, the Death Benefit will only vary with the Contract's
Accumulated Value whenever the specified percentage of Accumulated Value
exceeds the Face Amount of the Contract.
Ability to Change Face Amount. Subject to certain limitations (see
"Decreases" and "Increases" below), generally a Contract Owner may, at any
time before the Insured's Attained Age 100, increase or decrease the
Contract's Face Amount in force by submitting a written application to
LBVIP. The effective date of the increase or decrease will be the Monthly
Anniversary on or next following approval of the request. An increase in
Face Amount may have tax consequences. See "TAX MATTERS--Contract
Proceeds". The effect of changes in Face Amount on Contract charges, as
well as certain additional considerations, are described below:
Decreases. A decrease in the Face Amount may affect the total net amount at
risk and the portion of the net amount at risk covered by various premium
classes, both of which may affect a Contract Owner's monthly insurance
charges. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Monthly
Deduction".
A decrease in the Face Amount will result in the partial imposition of the
Decrease Charge as of the Monthly Anniversary on which the decrease becomes
effective. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Decrease
Charge". Whenever the Decrease Charge is imposed in part in connection with
a requested decrease in Face Amount, the Initial Monthly Charge included in
the first 180 Monthly Deductions will be reduced proportionately to take
into account the amount of the Deferred Administrative Charge included in
the Decrease Charge then imposed. See "CHARGES AND DEDUCTIONS--Accumulated
Value Charges--Monthly Deduction--Initial Monthly Charge".
See Appendix D for information about differences in charges on VUL 1
contracts.
If the Death Benefit Guarantee is in force, then on the effective date of
any requested decrease in Face Amount the Accumulated Value less any
Contract Debt must be sufficient to cover the Decrease Charge imposed in
connection with the requested decrease and the Monthly Deduction due on that
date. If the Death Benefit Guarantee is not in force, then the Cash
Surrender Value must be sufficient to cover the Monthly Deduction due on
that date. If these requirements are not satisfied, then the requested
decrease in Face Amount will not be effected.
The Face Amount in force after any requested decrease may not be less than
the Minimum Face Amount. Also, to the extent a decrease in Face Amount
would result in cumulative premiums exceeding the maximum premium
limitations applicable under the Internal Revenue Code for life insurance,
LBVIP will not effect the decrease (see "PAYMENT AND ALLOCATION OF PREMIUMS-
- -Amount and Timing of Premiums--Premium Limitations"). As discussed
previously (see "CONTRACT BENEFITS--Death Benefit--Change in Death Benefit
Option"), if the Death Benefit Option is changed from Option B to Option A,
the Death Benefit will not change and the Face Amount will be decreased by
the Accumulated Value of the Contract on the effective date of the change;
however, this change may not be made if it would reduce the Face Amount to
less than $5,000.
A request for partial surrender will not be implemented if or to the extent
the requested partial surrender would reduce the Face Amount below $5,000.
Also, if a partial surrender would decrease the Face Amount, to the extent
that the partial surrender would result in cumulative premiums exceeding the
maximum premium limitations applicable under the Internal Revenue Code for
life insurance, LBVIP will not effect such partial withdrawal. See "PAYMENT
AND ALLOCATION OF PREMIUMS--Amount and Timing of Premiums--Premium
Limitations".
For purposes of determining the cost of insurance charge, any decrease in
the Face Amount will reduce the Face Amount in force in the following order:
(a) the Face Amount provided by the most recent increase; (b) the next most
recent increases successively; and (c) the initial Face Amount. See
"CHARGES AND DEDUCTIONS--Accumulated Value Charges--Monthly Deduction". If
the Contract Owner requests a decrease in Face Amount, that part of any
Decrease Charge applicable to the decrease will reduce the Accumulated Value
attributable to the Contract and the Decrease Charge will be reduced by this
amount. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Decrease
Charge".
Increases. An increase in the Face Amount will generally affect the total
net amount at risk and may affect the portion of the net amount at risk
covered by various premium classes (if multiple premium classes apply), both
of which may affect a Contract Owner's monthly insurance charges. See
"CHARGES AND DEDUCTIONS--Accumulated Value Charges--Monthly Deduction".
An increase in the Face Amount will also increase the Decrease Charge and
will result in the imposition of a new Initial Monthly Charge for Increases
(which is included in the monthly Deduction) as of the Monthly Anniversary
when the increase becomes effective. See "CHARGES AND DEDUCTIONS--
Accumulated Value Charges--Decrease Charge--Monthly Deduction".
A request for an increase in Face Amount may not be for less than $25,000.
The Contract Owner may not increase the Face Amount after the Insured's
Attained Age 85. To obtain the increase, the Contract Owner must submit an
application for the increase. LBVIP may require that additional evidence of
insurability be submitted with any request for an increase. An increase
need not be accompanied by an additional premium, but LBVIP will continue to
deduct the Premium Expense Charges from any premiums paid and will deduct
other charges associated with the increase from Accumulated Value. After
increasing the Face Amount, the Contract Owner will have the right (i)
during a Free Look Period, to have the increase cancelled and receive a
credit or refund (see "CONTRACT RIGHTS--Free Look Privileges"), and (ii)
during the first 24 months following the increase to exchange the increase
in Face Amount for a fixed benefit permanent life insurance contract issued
by Lutheran Brotherhood, subject to the same conditions and principles as
apply to an exchange of the entire Contract for such a new contract (see
"CONTRACT RIGHTS--Exchange Privileges").
See Appendix D for information about changes in face amounts for VUL 1
contracts.
Unless the Death Benefit Guarantee is in effect, on the effective date of an
increase the Accumulated Value must be sufficient to cover any Contract Debt
and any Decrease Charge (including the additional Decrease Charge arising
from the requested increase) and the Monthly Deduction due on that date--in
other words, on that date, and taking the increase into account, the Cash
Surrender Value before the Monthly Deduction must be equal to or greater
than the amount of the Monthly Deduction then due. If the existing
Accumulated Value at the time of a requested increase does not result in a
sufficient Cash Surrender Value after the increase, a Contract Owner may
have to make additional premium payments to increase the Accumulated Value
and thereby increase the Cash Surrender Value sufficiently. If the Death
Benefit Guarantee is in effect, the Cash Surrender Value after the increase
before the Monthly Deduction may be less than the Monthly Deduction then
due, even though the Death Benefit Guarantee Premium will be increased as a
result of any requested increase in Face Amount (see "DEATH BENEFIT
GUARANTEE--Death Benefit Guarantee Premium").
Insurance Protection. A Contract Owner may increase or decrease the pure
insurance protection provided by the Contract (that is, the net amount at
risk, which is, in general, the difference between the Death Benefit and the
Accumulated Value) in one of several ways as insurance needs change. These
ways include increasing or decreasing the Face Amount, changing the level of
premium payments, and, to a lesser extent, making a partial surrender under
the Contract. Although the consequences of each of these methods will
depend upon the individual circumstances, they may be generally summarized
as follows:
(a) A decrease in the Face Amount will, subject to the applicable
percentage limitations (see "CONTRACT BENEFITS--Death Benefits--Death
Benefit Options"), decrease the pure insurance protection without reducing
the Accumulated Value (except for the deduction of any Decrease Charge
applicable to the decrease). If the Face Amount is decreased, the Monthly
Deduction generally will decrease as well, but any Decrease Charge then
applicable will be imposed in part upon a requested decrease in Face Amount
(see "Charges and Deductions--Decrease Charge--Monthly Deduction").
(b) An increase in the Face Amount (which may require satisfactory evidence
of insurability--see "Increases--Additional Considerations" above) will
likely increase the amount of pure insurance protection, depending on the
amount of Accumulated Value and the resultant applicable percentage
limitation. If the insurance protection is increased, the Monthly Deduction
will increase as well.
(c) Under Death Benefit Option A, until the applicable percentage of
Accumulated Value exceeds the Face Amount plus the Accumulated Value, the
level of premium payments will not affect the amount of pure insurance
protection.
(d) Under Death Benefit Option B, until the applicable percentage of
Accumulated Value exceeds the Face Amount, an increased level of premium
payments will generally reduce the amount of pure insurance protection.
(e) Under either Death Benefit Option, if the Death Benefit is the
applicable percentage of Accumulated Value, then an increased level of
premium payments will increase the amount of pure insurance protection.
(f) A partial surrender will reduce the Death Benefit. See "CONTRACT
RIGHTS--Surrender Privileges". However, it has a limited effect on the pure
insurance protection and charges under the Contract, because the partial
surrender will affect the net amount at risk only when the Death Benefit is
based on the applicable percentage of Accumulated Values (see "CONTRACT
RIGHTS--Surrender Privileges--Partial Surrender"). The primary use of a
partial surrender is to withdraw Accumulated Value. Furthermore, it results
in a reduced amount of Accumulated Value and increases the possibility that
the Contract will lapse.
The techniques described in this section for changing the amount of pure
insurance protection under the contract (for example, changing the face
amount, making a partial surrender, and changing the amount of premium
payments) must be considered together with the other restrictions and
considerations described elsewhere in this prospectus.
How the Duration of the Contract May Vary. Subject to the Death Benefit
Guarantee (which depends upon the level of premium payments, partial
surrenders and the Contract Loan Amount--see "DEATH BENEFIT GUARANTEE"), the
duration of the Contract depends upon the Cash Surrender Value (that is, the
Accumulated Value less any Contract Debt and any Decrease Charge). The
Contract will remain in force as long as (a) the Cash Surrender Value of the
Contract is sufficient to pay the Monthly Deduction and (b) Contract Debt
does not exceed Accumulated Value less any Decrease Charge. In general,
however, when Cash Surrender Value is insufficient to pay the Monthly
Deduction or when Contract Debt exceeds Accumulated Value less any Decrease
Charge, and a grace period expires without an adequate payment by the
Contract Owner, the Contract will lapse and terminate without value. The
Contract Owner has certain rights to reinstate the Contract. See "PAYMENT
AND ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement".
Accumulated Value and Cash Surrender Value
The Accumulated Value of the Contract is the total amount of value held
under the Contract at any time. The Accumulated Value is used in
determining the Cash Surrender Value (the Accumulated Value less any
Contract Debt and any Decrease Charge). See "CONTRACT RIGHTS--Surrender
Privileges". There is no guaranteed minimum Accumulated Value, and because
a Contract's Accumulated Value on any future date depends upon a number of
variables, it cannot be predetermined.
A Contract's Accumulated Value and Cash Surrender Value will reflect the
investment performance of the chosen Subaccounts of the Variable Account,
any Net Premiums paid, any partial surrenders, any loans, any loan
repayments, any loan interest paid or credited, and any charges assessed in
connection with the Contract (including any Decrease Charge previously
imposed on a requested decrease in Face Amount).
Calculation of Accumulated Value. The Accumulated Value of the Contract is
determined first on the Contract Date and thereafter on each Valuation Date.
On the Contract Date, the Accumulated Value will be the New Premiums
received, plus any interest earned during the period when premiums are held
in LBVIP's General Account (before being transferred to the Variable
Account) (see "PAYMENT AND ALLOCATION OF PREMIUMS--Issuance of a Contract"),
less any Monthly Deductions due on the Contract Date. On each Valuation
Date after the Contract Date, the Contract's Accumulated Value will be:
(1) the aggregate of the values attributable to the Contract in each of the
Subaccounts on the Valuation Date, determined for each Subaccount by
multiplying the Subaccount's Unit Value on the date by the number of
Subaccount Units allocated to the Contract; plus
(2) the value attributable to the Contract in the Loan Account (see
"CONTRACT RIGHTS--Loan Privileges") on the Valuation Date.
Determination of Number of Units. Any amounts allocated to the Subaccounts
will be converted into Units of the Subaccount. The number of Units to be
credited to the Contract is determined by dividing the dollar amount being
allocated by the Unit Value as of the end of the Valuation Period during
which the amount was allocated. The number of Subaccount Units in any
Subaccount will be increased by: (i) any Net Premiums allocated to the
Subaccount during the current Valuation Period; (ii) any Accumulated Value
transferred to the Subaccount from the General Account or another Subaccount
during the current Valuation Period; (iii) any repayments of the Contract
Debt during the current Valuation Period; and (iv) any interest earned on
the amount in the Loan Account and transferred to the Variable Account
during the current Valuation Period. The number of Subaccount Units in any
Subaccount will be decreased by: (i) any Monthly Deduction allocated to the
Subaccount during the current Valuation Period to cover the Contract Month
following a Monthly Anniversary; (ii) any Accumulated Value transferred from
the Subaccount to another Subaccount or the General Account; (iii) the
amount of any partial surrender (including the partial surrender charge)
during the current Valuation Period; and (iv) any Contract loans allocated
to the Subaccount and transferred to the Loan Account during the current
Valuation Period.
In computing the Contract's Accumulated Value the number of Subaccount Units
allocated to the Contract is determined before any Contract transactions on
the Valuation Date that would affect the number of Subaccount Units (see
immediately preceding paragraph). If the Contract's Accumulated Value in
the Variable Account is to be calculated for a day that is not a Valuation
Date, the next following Valuation Date will be used.
Determination of Unit Value. The Unit Value for a Subaccount is calculated
on each Valuation Date by dividing (1) by (2):
Where:
(1) is the net result of:
(a) the net asset value of the corresponding Portfolio of the Subaccount at
the end of the current Valuation Period, plus
(b) the amount of any dividend or capital gain distribution by the
Portfolio if the "ex-dividend" date occurs during the Valuation Period, plus
or minus
(c) a charge or credit or any taxes reserved which LBVIP determines a
result of the investment operation of the Portfolio, minus
(d) the Mortality and Expense Risk Charge (see "CHARGES and DEDUCTIONS--
Charges Against the Variable Account--Mortality and Expense Risk Charge")
for each day during the current Valuation Period (a current charge of
.001644%, but never to exceed .002055%, of the net assets for each day
during the current Valuation Period), and
(2) is the number of Units for the Subaccount attributable to all
Contracts.
Payment of Contract Benefits
If the Insured dies before age 100, the proceeds from the Contract will
consist of the Contract's Death Benefit, plus any insurance proceeds
provided by additional insurance benefits on the Insured's life, less any
outstanding Debt and any unpaid Monthly Deductions. If the Insured dies at
or after age 100, the amount payable will be the Cash Surrender Value on the
date of death.
See Appendix D for information about benefits at maturity date on VUL 1
contracts, which is the Contract Anniversary on or next following the
Insured's 96th birthday.
Death proceeds under a Contract will ordinarily be paid within seven days
after LBVIP receives due proof of death. The Cash Surrender Value
(Accumulated Value less any Contract Debt and any Decrease Charge), partial
surrenders and Contract loans will ordinarily be paid within seven days of
receipt of a Written Notice. Payments may be postponed in certain
circumstances. See "GENERAL PROVISIONS--Postponement of Payments". The
Contract Owner may decide the form in which the proceeds will be paid.
During the Insured's lifetime, the Contract Owner may arrange for the death
proceeds to be paid in a lump sum or under one of the settlement options
described below. These choices are also available if the Contract is
surrendered. If no election is made, the proceeds will be paid in a lump
sum.
For an option to be used, the proceeds to be applied must be at least
$2,000. Election of an option is also subject to the conditions that (a)
payments must not be less than $50 each and (b) payments must be made only
at annual, semi-annual, quarterly or monthly intervals.
Settlement options currently offered under a Contract are as follows:
Option 1--Interest Income. The proceeds may be left on deposit. Interest
will be paid at a rate of not less than 3% per year. These proceeds may be
withdrawn upon request.
Option 2--Income of a Fixed Amount. Income of a fixed amount will be paid
at agreed upon intervals. This income is subject to the conditions that (a)
income per year must not be less than 6% of the proceeds, and (b) income is
paid until the proceeds, with interest credited at the rate of 3 1/2% per
year on the unpaid balance, are paid in full (this income may be increased
by the crediting of additional interest).
Option 3--Income for a Fixed Period. Income for a fixed number of years
will be paid, not to exceed 30 (the income will not be less than the amounts
set forth in a table in the Contract relating to this option).
Option 4--Life Income with Guaranteed Period. Income for the lifetime of
the payee will be paid. If the payee dies during the guaranteed period,
payments will be continued to the payee's named beneficiary to the end of
that period. A period of 10 or 20 years may be elected (the income will not
be less than the amounts set forth in tables in the Contract relating to
this option). After the first payment is made, this option may not be
revoked or changed.
Option 5--Other Options. The proceeds may be paid under any other
settlement option agreeable to LBVIP.
A Contract Owner may elect an option by Written Notice to LBVIP during the
Insured's lifetime. The option must be elected before proceeds become
payable. Assignees and third-party owners may elect an option only with
LBVIP's consent. Election of Option 4 may be made only if the payee is a
natural person who is the Insured or a Beneficiary.
If it is the death proceeds under a Contract that are payable, the
Beneficiary may elect a settlement option within one year from the Insured's
date of death provided that (a) the manner of settlement has not been
restricted before the Insured's death, and (b) the death proceeds have not
been paid.
Under certain circumstances, an Accelerated Benefits Rider allows a Contract
Owner to receive benefits from the Contract that would be otherwise payable
upon the death of the Insured. An LBVIP representative should be consulted
as to whether and to what extent the rider is available in a particular
state and on any particular Contract. See "GENERAL PROVISIONS--Accelerated
Benefits Rider". The tax treatment of benefits paid under the Accelerated
Benefits Rider is currently uncertain. See "FEDERAL TAX MATTERS--Contract
Proceeds--Benefits Paid under the Accelerated Benefits Rider".
PAYMENT AND ALLOCATION OF PREMIUMS
Issuance of a Contract
In order to purchase a Contract, an individual must make application to
LBVIP through a licensed LBVIP Representative, who is also a registered
representative of Lutheran Brotherhood Securities Corp. LBVIP is offering
Contracts only to Insureds who are eligible for membership in Lutheran
Brotherhood (of which LBVIP is an indirect subsidiary), unless otherwise
required by state law. At issue the Minimum Face Amount of a Contract under
LBVIP's rules is currently $50,000 for Insureds with an Attained Age of 18
through 50, and $25,000 for all other Insureds. LBVIP reserves the right to
revise its rules from time to time to specify a different Minimum Face
Amount at issue for subsequently issued Contracts. A Contract will be
issued only on Insureds who have an Attained Age of 85 or less and who
provide satisfactory evidence of insurability to LBVIP. Acceptance is
subject to LBVIP's underwriting rules. LBVIP reserves the right to reject
an application for any reason permitted by law.
At the time an application for a Contract is accepted, subject to LBVIP's
underwriting rules, an applicant can obtain temporary insurance protection
pending issuance of the Contract by submitting payment of the Minimum
Conditional Insurance Premium. The Minimum Conditional Insurance Premium
will equal three initial Death Benefit Guarantee Premiums, or, in the case
of automatic monthly payment plans, two initial Death Benefit Guarantee
Premiums. If LBVIP subsequently determines that the proposed Insured is not
an acceptable risk under LBVIP's underwriting standards and rules, even if
the Minimum Conditional Insurance Premium has been paid, no temporary
insurance coverage will have been provided and any premium paid will be
refunded (without interest).
Upon delivery of the Contract, the balance (if any) of the Minimum Contract
Issuance Premium must be paid. The Minimum Contract Issuance Premium will
equal the initial Scheduled Premium selected by the Contract Owner (see
"Amount and Timing of Premiums" below), or, in the case of automatic monthly
payment plans, the greater of the Minimum Conditional Insurance Premium or
the initial Scheduled Premium. If the Date of Issue precedes the Contract
Date and the Minimum Contract Issuance Premium otherwise required would not
provide a premium payment sufficient to cover the next Contract Month,
additional Scheduled Premium payment(s) sufficient to cover through the next
Contract Month will be required.
The Date of Issue is the date used to determine Contract Months, Contract
Years, Monthly Anniversaries and Contract Anniversaries and will be shown on
page 3 of the Contract. The Contract Date is the date on which the initial
Net Premium(s) will be allocated to the Variable Account. The Contract Date
will be the latest of (i) the Date of Issue; (ii) the date LBVIP receives
the first premium payment on the Contract at its Home Office; and (iii) any
other date mutually agreed upon by LBVIP and the Contract Owner.
Until the Contract Date, premium payments will be held in LBVIP's General
Account. If a Contract is issued, interest will be credited on premium
payments held in LBVIP's General Account at a rate of interest determined by
LBVIP; no interest will be credited on these premium payments if no Contract
is issued (but the full amount of any premiums paid, without deduction of
any Contract charges, will be refunded). Any interest on these premium
payments will be credited to the Contract on the Contract Date in the same
manner as a premium payment, except without deduction of any Premium Expense
Charge. On the Contract Date, the Premium Expense Charges attributable to
the premiums paid will be deducted and the balance of the amount held in the
General Account (on which no Premium Expense Charges will be imposed) will
be transferred from the General Account and allocated to the Variable
Account and allocated among the Subaccount(s) pursuant to the Contract
Owner's instructions.
Amount and Timing of Premiums
A Contract Owner has considerable flexibility in determining the frequency
and amount of premiums.
Scheduled Premiums. Each Contract Owner will select a periodic premium
payment schedule (based on a periodic billing mode of annual, semi-annual,
or quarterly payment) which provides for the billing of a level premium at
the specified interval. Also, under several automatic payment plans, the
Contract Owner can select a monthly payment schedule pursuant to which
premium payments will be automatically deducted from a bank account or other
payment source rather than being billed. The periodic payment selected by
the Contract Owner is called the "Scheduled Premium". The initial Scheduled
Premium on an annualized basis will be shown in the Contract as the "Planned
Annual Premium". The Contract Owner is not, however, required to pay
Scheduled Premiums in accordance with the specified schedule. The Contract
Owner has the flexibility to alter the amount, frequency and time period
over which the premiums are paid. Payment of Scheduled Premiums will not,
however, guarantee that the Contract will remain in force. Instead, the
duration of the Contract depends upon the Contract's Accumulated Value and
Cash Surrender Value and upon whether the Death Benefit Guarantee is in
effect. See "CONTRACT BENEFITS--Death Benefits" and "DEATH BENEFIT
GUARANTEE". Thus, even if Scheduled Premiums are paid by the Contract Owner,
unless the Death Benefit Guarantee is in effect, the Contract will lapse
whenever (a) Cash Surrender Value is insufficient to pay the Monthly
Deduction or (b) Contract Debt exceeds Accumulated Value less any Decrease
Charge, and in either case if a grace period expires without an adequate
payment by the Contract Owner. See "Contract Lapse and Reinstatement"
below.
Minimum Conditional Insurance Premium. The Minimum Conditional Insurance
Premium is the minimum premium required to provide temporary insurance
protection pending issuance of the Contract. See "Issuance of a Contract"
above.
Minimum Contract Issuance Premium. The Minimum Contract Issuance Premium is
the minimum premium required upon delivery of the Contract. See "Issuance
of a Contract" above.
Death Benefit Guarantee Premium. The Death Benefit Guarantee Premium is a
monthly premium amount specified in the Contract and determined by LBVIP.
The Death Benefit Guarantee Premium may change as the result of Contract
changes. The Death Benefit Guarantee Premium determines the payments
required to maintain the Death Benefit Guarantee. See "DEATH BENEFIT
GUARANTEE".
Premium Flexibility. Unlike some insurance contracts, the Contract frees
the owner from the requirement that premiums be paid in accordance with a
fixed premium schedule. Although each Contract Owner determines a Scheduled
Premium (initially, on an annualized basis, this premium will be called the
Planned Annual Premium), a Contract Owner need not make premium payments in
accordance with this schedule and the failure to make such payments will not
in itself cause the Contract to lapse. See "Contract Lapse and
Reinstatement" below. Moreover, subject to the requirements described above
regarding the Minimum Conditional Insurance Premium and the Minimum Contract
Issuance Premium (see "Issuance of a Contract" above), and to the minimum
and maximum premium limitations described below, a Contract Owner may make
premium payments at any time before age 100 in any amount. The Contract,
therefore, provides the owner with the flexibility to vary the frequency and
amount of premium payments.
Premium Limitations. The Internal Revenue Code provides for exclusion of
the Death Benefit from gross income if total premium payments do not exceed
certain stated limits. In no event can the total of all premiums paid under
a Contract exceed such limits. If at any time a premium is paid which would
result in total premiums exceeding such limits, LBVIP will only accept that
portion of the premium which will make total premiums equal that amount.
Any part of the premium in excess of that amount will be refunded, and no
further premiums will be accepted until allowed by the current maximum
premium limitations set forth in the Internal Revenue Code.
The maximum premium limitations set forth in the Internal Revenue Code
depend in part upon the amount of the Death Benefit at any time. As a
result, Contract changes that affect the amount of the Death Benefit may
affect whether cumulative premiums paid under the Contract exceed these
maximum premium limitations. For example, a decrease in Face Amount made at
the Contract Owner's request (see "CONTRACT BENEFITS--Death Benefits--
Ability to Change Face Amount") or made as a result of a partial surrender
(see "CONTRACT RIGHTS--Surrender Privileges--Partial Surrender"), or a
change in the Death Benefit Option (see "CONTRACT RIGHTS--Death Benefits--
Change in Death Benefit Option"), could result in cumulative premiums paid
exceeding these maximum premium limitations. To the extent that any such
Contract change would result in cumulative premiums exceeding these maximum
premium limitations, LBVIP will not effect such change.
Allocation of Premiums and Accumulated Value
Net Premiums. The Net Premium equals the premium paid less the Premium
Expense Charges. See "CHARGES AND DEDUCTIONS--Premium Expense Charges".
Allocation of Net Premiums. The Contract Owner will, in the application for
the Contract, indicate how Net Premiums should be allocated to the
Subaccount(s) of the Variable Account. Until the Contract Date, premium
payments will be allocated to LBVIP's General Account. If a Contract is
issued, interest will be credited on premium payments held in the General
Account at a rate of interest determined by LBVIP; no interest will be
credited on these premium payments if no Contract is issued (but the full
amount of any premiums paid will be refunded). On the Contract Date, Net
Premiums, together with any interest credited on premiums held in the
General Account, will be transferred from LBVIP's General Account and
allocated to the Variable Account among the Subaccount(s) of the Variable
Account chosen by the Contract Owner. Any Net Premiums received after the
Contract Date will be allocated to the Subaccount(s) chosen by the Contract
Owner.
The percentages of each Net Premium that may be allocated to any Subaccount
of the Variable Account must be in whole numbers and the sum of the
allocation percentages must be 100%. LBVIP reserves the right to adjust
allocation percentages to eliminate fractional percentages. The allocation
for future Net Premiums may be changed without charge at any time by
providing LBVIP with Written Notice or by telephone (if the Contract Owner
has completed the Telephone Transaction Authorization Form).
The values of the Subaccount(s) of the Variable Account will vary with the
investment experience of the Subaccount(s) and the Contract Owner bears the
entire investment risk. Contract Owners should periodically review their
allocations of premiums in light of market conditions and the Contract
Owner's overall financial objectives.
The Contract Owner must notify LBVIP if a payment is a premium payment;
otherwise, it will be considered a loan repayment.
Transfers. Accumulated Value may be transferred among the Subaccounts of
the Variable Account upon receipt of Written Notice or by telephone (if the
Contract Owner has completed the Telephone Transaction Authorization Form).
The total amount transferred each time must be at least $500 (unless the
total cash value in a Subaccount is less than $500, in which case the entire
amount may be transferred). No fees are currently charged for transfers.
Transfers may be postponed in certain circumstances. See "GENERAL
PROVISIONS--Postponement of Payments". Under present law, transfers are not
taxable transactions.
The provisions described above can be illustrated as follows. If a Contract
Owner wishes to transfer a total of $500 or more, any amount can be
transferred from the various Subaccounts (for example, $300 from the Money
Market Subaccount and $200 from the Income Subaccount, or any other
combination that totals $500 or more). A Contract Owner may transfer a
total of less than $500 only if the amount transferred from each Subaccount
equals the total Accumulated Value in that Subaccount (for example, a $300
total transfer taken totally from the Money Market Subaccount when $300
represents the total Accumulated Value in that Subaccount, or a $300 total
transfer taken $200 from the Money Market Subaccount and $100 from the
Income Subaccount when these amounts represent the total Accumulated Value
in these Subaccounts).
Telephone Transfers. Telephone transfers are available when the Contract
Owner completes the Telephone Transaction Authorization Form. If the
Contract Owner elects to complete the Telephone Transaction Authorization
Form, the Contract Owner thereby agrees that LBVIP, its agents and employees
will not be liable for any loss, liability cost or expense when LBVIP, its
agents and employees act in accordance with the telephone transfer
instructions that have been properly received and recorded on voice
recording equipment. If a telephone authorization or instruction, processed
after the Contract Owner has completed the Telephone Transaction
Authorization Form, is later determined not to have been made by the
Contract Owner or was made without the Contract Owner's authorization, and a
loss results from such unauthorized instruction, the Contract Owner bears
the risk of this loss. LBVIP will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. In the event LBVIP
does not employ such procedures, LBVIP may be liable for any losses due to
unauthorized or fraudulent instructions. Such procedures may include, among
others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of such instructions
and/or tape recording telephone instructions.
Contract Owners should periodically review their allocations of Accumulated
Value in light of market conditions and the Contract Owner's overall
financial objectives.
Special Transfer Service--Dollar Cost Averaging. LBVIP administers a dollar
cost averaging program which enables a Contract Owner to pre-authorize a
periodic exercise of the transfer rights described above. A Contract Owner
entering into a dollar cost averaging agreement will instruct LBVIP to
periodically transfer predetermined dollar amounts from the Money Market
Subaccount to as many of the three other Subaccounts as specified by the
Contract Owner until the amount in the Money Market Subaccount is exhausted
or the agreement is terminated by the Contract Owner. The dollar cost
averaging program is generally suitable for Contract Owners making a
substantial deposit to the Contract and who wish to use the other
Subaccounts investment option, but desire to control the risk of investing
at the top of a market cycle. The dollar cost averaging program allows such
investments to be made in equal installments over time in an effort to
reduce such risk. Dollar cost averaging does not guarantee that the Variable
Account will gain in value, nor will it protect against a decline in value
if market prices fall. However, if a Contract Owner can continue to invest
regularly throughout changing market conditions, it can be an effective
strategy to help meet long-term goals. Contract Owners interested in the
dollar cost averaging program may obtain an application and full information
concerning the program and its restrictions from LBVIP.
Contract Lapse and Reinstatement
Lapse. The failure to make a Scheduled Premium payment will not itself
cause a Contract to lapse. Subject to the Death Benefit Guarantee (see
"DEATH BENEFIT GUARANTEE"), lapse will only occur when (a) the Cash
Surrender Value is insufficient to cover the Monthly Deduction or (b)
Contract Debt exceeds the Accumulated Value less any Decrease Charge, and in
either case if a grace period expires without a sufficient payment. Even if
the Cash Surrender Value is insufficient to cover the Monthly Deduction, the
Contract will not lapse if the Death Benefit Guarantee is in effect.
Because unearned prepaid loan interest will not be included in Contract Debt
(see definition of "Contract Debt" in section entitled "DEFINITIONS"), the
Cash Surrender Value (which is Accumulated Value less any Contract Debt and
any Decrease Charge) will always include any unearned prepaid loan interest.
This means that, in effect, unearned prepaid loan interest will be applied
to keep the Contract in force because this amount will be available to pay
the Monthly Deduction and because the grace period for the Contract does not
commence until the Cash Surrender Value is insufficient to cover the Monthly
Deduction. Any payment made by the Contract Owner after unearned prepaid
loan interest has been applied in this manner will first be used to replace
unearned prepaid loan interest so applied.
The Contract provides for a 61-day grace period that is measured from the
date on which notice is sent by LBVIP. Thus, the Contract does not lapse,
and the insurance coverage continues, until the expiration of this grace
period. This notice will be sent by LBVIP on or after the Monthly
Anniversary on which (a) Cash Surrender Value is insufficient to pay the
Monthly Deduction chargeable on the Monthly Anniversary or (b) Contract Debt
exceeds the Accumulated Value less any Decrease Charge.
In order to prevent lapse, the Contract Owner must during the grace period
make a premium payment or make a loan repayment sufficient to (a) increase
the Cash Surrender Value (that is, Accumulated Value less any Contract Debt
and any Decrease Charge) to an amount sufficient to cover any unpaid Monthly
Deductions or (b) reduce Contract Debt to an amount equal to or less than
the Accumulated Value less any Decrease Charge.
When the Contract enters the grace period, LBVIP will notify the Contract
Owner. The Contract Owner will then have 61 days, measured from the date
notice is mailed to the Contract Owner, to make sufficient payments. The
notice will specify the payment required to keep the Contract in force and
the length of the grace period. Failure to make a sufficient payment within
the grace period will result in lapse of the Contract without value.
At the commencement of the grace period, LBVIP will transfer the Contract's
Accumulated Value attributable to the Variable Account (that is, Accumulated
Value in excess of the amount held in the Loan Account) into LBVIP's General
Account. If sufficient payments are made during the grace period to avoid
lapse of the Contract, then any Accumulated Value in excess of the amount to
be held in the Loan Account will be reallocated to the Variable Account upon
receipt of such payments. The amount reallocated to the Variable Account
will be reduced by the amount of any Monthly Deductions not paid during the
grace period. The amount allocated to the Variable Account will be
allocated among the Subaccount(s) in the same proportion as the Accumulated
Value was transferred to the General Account from the Subaccount(s) at the
commencement of the grace period.
If a sufficient payment is made during the grace period, Net Premiums will
be allocated among the Subaccount(s) according to the current Net Premium
allocation and then any amount required to pay unpaid Contract charges will
be deducted. See "Allocations of Premiums and Accumulated Value" above.
If the Insured dies during the grace period, the proceeds under the Contract
will equal the amount of the Death Benefit and any additional life insurance
benefits on the Insured provided by rider as of the Monthly Anniversary on
or immediately preceding the commencement of the grace period, reduced by
any Contract Debt and any unpaid Monthly Deductions.
If a sufficient payment is not made during the grace period, the Contract
will lapse without value and insurance coverage will end as of the
expiration of the grace period. The Contract will have no Accumulated Value
or Cash Surrender Value upon termination of the Contract.
On any Monthly Anniversary when the Death Benefit Guarantee is in effect,
the Contract will not lapse. See "DEATH BENEFIT GUARANTEE".
Reinstatement. A Contract that lapses without value may be reinstated at
any time within 5 years after the expiration of the grace period by
submitting the following items to LBVIP:
(1) Written application for reinstatement;
(2) Evidence of insurability satisfactory to LBVIP;
(3) Payment or reinstatement of any Contract Debt (including interest earned
during the grace period) that existed on the date the grace period expired;
(4) A payment that is sufficient to cover: (a) payment of any unpaid
Monthly Deductions for the grace period; and (b) a premium repayment
sufficient to increase Cash Surrender Value (that is, Accumulated Value less
any Contract Debt and any Decrease Charge) to an amount at least equal to
the Monthly Deductions and interest on Contract loans for the next two
Contract Months, based on Unit Values on the date of reinvestment.
The amount of Cash Surrender Value on the date of reinstatement will equal
the Accumulated Value on that date less any reinstated Contract Debt and any
reinstated Decrease Charge (discussed below). The amount of Accumulated
Value on the date of reinstatement will equal: (a) the Accumulated Value as
of the expiration of the grace period before termination of the Contract;
plus (b) any premiums received at the time of reinstatement, reduced by the
Premium Expense Charges; less (c) any Monthly Deductions and any loan
interest due for the grace period; less (d) the Monthly Deduction for the
next Contract Month.
Contract charges will, in effect, be calculated and reinstated on a
reinstated Contract as if the Contract had been reinstated effective as of
the expiration of the grace period. Any Decrease Charge and any Initial
Monthly Charge that applied to the Contract at the expiration of the grace
period will be reinstated. The period of time from Contract lapse until
Contract reinstatement will not be taken into account in determining when
the 15-year-time periods for the Decrease Charge and the Initial Monthly
Charge expire or in determining when the first Contract Year expires for the
purpose of calculating the Contingent Deferred Sales Charge (see "CHARGES
AND DEDUCTIONS--Accumulated Value Charges--Decrease Charge--Amount of
Contingent Deferred Sales Charge"). Moreover, the Monthly Deductions and
any loan interest that would have otherwise been payable during the grace
period must be paid before reinstatement, which is also consistent with
treating a reinstated Contract as if the Contract has been reinstated
effective as of the expiration of the grace period.
See Appendix D for information about differences in the Decrease Charge and
the Deferred Administrative Charge on VUL 1 contracts.
The effective date of reinstatement will be the date on which the
reinstatement application was approved.
The Death Benefit Guarantee cannot be reinstated after lapse of the
Contract. See "DEATH BENEFIT GUARANTEE".
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Contract to compensate LBVIP
for: (a) providing the insurance benefits set forth in the Contract and any
additional insurance benefits added by rider; (b) administering the
Contract; (c) assuming certain risks in connection with the Contract; and
(d) incurring expenses in distributing the Contract. The nature and amount
of these charges are described more fully below.
Premium Expense Charges
Sales Charges. Sales charges, generally called "sales load", will be
deducted to compensate LBVIP for the costs of selling the Contract. These
costs include sales commissions, the printing of prospectuses and sales
literature, and advertising. There are two types of sales load under the
Contract. The first, a front-end sales load, will be 3% of each premium
payment, and will be deducted from each premium payment upon receipt prior
to allocation of the Net Premium to the Variable Account. The second, the
Contingent Deferred Sales Charge which is part of the Decrease Charge, will
reduce the Accumulated Value in the Variable Account attributable to the
Contract in the event of full surrender or lapse of the Contract, or in part
upon a requested decrease in the Face Amount. See "Charges Against
Accumulated Value--Decrease Charge" below.
The sales charges in any Contract year are not necessarily related to actual
distribution expenses incurred during that Contract Year. Instead, LBVIP
expects to incur the majority of distribution expenses in the early Contract
Years and to recover any deficiency over the life of the Contract. To the
extent that sales and distribution expenses exceed sales loads (both front-
end and deferred) in any year, LBVIP will pay them from its other assets or
surplus in its General Account, which includes amounts derived from the
Mortality and Expense Risk Charge deducted from the net assets held in the
Variable Account (see "Accumulated Value Charges--Mortality and Expense Risk
Charge" below).
Premium Taxes. Various states and their subdivisions impose a tax on
premiums received by insurance companies. Premium taxes vary from state to
state. A deduction of 2% of the premium will be made from each premium
payment. The deduction represents an amount LBVIP considers necessary to
pay all premium taxes imposed by the states and any subdivisions thereof.
Premium Processing Charge. LBVIP will deduct an amount equal to $1.00 per
premium payment ($.50 for automatic payment plans) to compensate it for the
cost of collecting and processing premiums. This amount will be deducted
from each premium payment prior to allocation of the net proceeds to the
Variable Account. LBVIP reserves the right to increase this charge to an
amount not exceeding $2.00 per premium payment ($1.00 for automatic payment
plans).
Accumulated Value Charges
Decrease Charge
The Contract provides for the Decrease Charge, which is a deferred charge
that will be imposed if the Contract is surrendered or lapses, or in part if
the Contract Owner requests a decrease in the Face Amount, in each case at
any time before 180 Monthly Deductions have been made after issuance of a
Contract or after a requested increase in Face Amount. The term "Decrease
Charge" is used to describe this charge because, during the applicable 15-
year period, the charge is imposed in connection with a decrease in the Face
Amount, either as a result of a requested decrease in Face Amount or as the
result of lapse or full surrender of the Contract (which can be viewed as a
decrease in the Face Amount to zero). The Decrease Charge consists of the
Contingent Deferred Sales Charge (described below) and the Deferred
Administrative Charge (described below). The Contingent Deferred Sales
Charge compensates LBVIP for the cost of selling the Contracts, including
sales commissions, the printing of prospectuses and sales literature, and
advertising. The Deferred Administrative Charge reimburses LBVIP for
administrative expenses in connection with the issuance of the Contract,
including medical exams, review of applications for insurance underwriting
decisions, and processing of the applications and establishing Contract
records. (Similar administrative and sales expenses are expected in
connection with future changes in the Contract initiated by the Contract
Owner which involve "insurability" decisions, such as applications for
increases in Face Amount.)
The following sections describe how the amount of the Contingent Deferred
Sales Charge and the Deferred Administrative Charge will be determined and
how these charges will be deducted from Accumulated Value.
Amount of Contingent Deferred Sales Charge--Initial Face Amount. At
Contract issuance, LBVIP will compute a maximum Contingent Deferred Sales
Charge equal to 25% of the CDSC Premium, which is a premium amount used
solely for the purpose of calculating the Contingent Deferred Sales Charge.
As described below, the Contingent Deferred Sales Charge calculated in this
manner will be reduced beginning on the fifth Contract Anniversary and will
be subject to an additional limitation keyed to actual premiums paid during
the First Contract Year. The Contingent Deferred Sales Charge actually
imposed will equal this maximum Contingent Deferred Sales Charge calculated
as 25% of the CDSC Premium (subject to the scheduled reductions) unless the
limitation keyed to 25% of actual premiums paid applies to the Contract. In
other words, the Contingent Deferred Sales Charge for the initial Face
Amount, if imposed, would never exceed the lesser of (a) 25% of the CDSC
Premium and (b) 25% of actual premiums paid during the First Contract Year.
The maximum Contingent Deferred Sales Charge calculated as described above
(and subject to the additional limitation keyed to 25% of actual premiums
paid), will remain at that level until the fifth Contract Anniversary.
Commencing on the fifth Contract Anniversary, and then on each subsequent
Monthly Anniversary until 120 Monthly Deductions have been made on and after
the fifth Contract Anniversary, this maximum Contingent Deferred Sales
Charge determined during the first Contract Year will be reduced as of each
Monthly Anniversary in level amounts equal to approximately .83% (10% on an
annual basis) of the maximum Contingent Deferred Sales Charge, which means
that the actual Contingent Deferred Sales Charge would be reduced to 80% of
the maximum Contingent Deferred Sales Charge after approximately 7 Contract
Years, 60% of the maximum after approximately 9 Contract Years, 40% of the
maximum after approximately 11 Contract Years, 20% of the maximum after
approximately 13 Contract Years, and zero after approximately 15 Contract
Years.
The CDSC Premium is an annual premium amount determined by LBVIP on the same
basis as the Death Benefit Guarantee Premium (see "DEATH BENEFIT
GUARANTEE"), except that the CDSC Premium, unlike the Death Benefit
Guarantee Premium, will not take into account any additional charge for an
Insured in a substandard premium class, any charge for additional insurance
benefits added by rider, or the basic monthly administrative charge of
$10.00 per month, or any premium processing charge. The maximum Contingent
Deferred Sales Charge based on the applicable CDSC Premium will be shown in
the Contract. Even though the Death Benefit Guarantee Premium may change
after issuance of the Contract, once the CDSC Premium is determined for
purposes of calculating the Contingent Deferred Sales Charge on the initial
Face Amount or on any increase, as the case may be, the CDSC Premium will
not change. The CDSC Premium will never exceed the "guideline annual
premium", as that term is defined under SEC Rule 6e-3(T), for the Contract.
The Contingent Deferred Sales Charge calculated as described above will be
subject to an additional limitation keyed to actual premiums paid. The
actual Contingent Deferred Sales Charge will never exceed 25% of premiums
paid (before deducting Premium Expense Charges) during the first Contract
Year.
Amount of Contingent Deferred Sales Charge--Increases in Face Amount. If
the Face Amount is increased, LBVIP will compute a maximum Contingent
Deferred Sales Charge for the increase equal to 25% of the CDSC Premium for
the increase. The Contingent Deferred Sales Charge actually imposed will
equal this maximum Contingent Deferred Sales Charge calculated as 25% of the
CDSC Premium for the increase (subject to the scheduled reductions) unless
the limitation keyed to 25% of the amount of premiums attributable to the
increase applies. Like the similar limitation for the initial Face Amount,
the CDSC Premium for the increase will never exceed the "guideline annual
premium", as that term is defined under SEC Rule 6e-3(T), for the increase.
In other words, the Contingent Deferred Sales Charge for an increase, if
imposed, would never exceed the lesser of (a) 25% of the CDSC Premium for
the increase and (b) 25% of the amount of premiums attributable to the
increase made during the 12 Contract Months after the effective date of the
increase.
The maximum Contingent Deferred Sales Charge for an increase calculated as
described above will be subject to an additional limitation keyed to 25% of
"the amount of premiums attributable to the increase". The Contingent
Deferred Sales Charge actually imposed for an increase will never exceed 25%
of the "amount of premiums attributable to the increase" made during the 12
Contract Months after the effective date of the increase.
A special rule applies to determine "the amount of premiums attributable to
the increase" because additional premium payments are not required to fund a
requested increase in Face Amount. The premiums attributable to the
increase will equal the sum of a proportionate share of the Cash Surrender
Value on the effective date of the increase plus a proportionate share of
premium payments made on the effective date of the increase or during the 12
Contract Months after the effective date of the increase. This means that,
in effect, a portion of the existing Cash Surrender Value will be deemed to
be a premium payment for the increase, and subsequent premium payments will
be prorated. The proportion of existing Cash Surrender Value and subsequent
premium payments attributable to the increase will equal the ratio of the
increase in Face Amount to the resulting total Face Amount after the
increase. For example, if the Face Amount is increased from $100,000 to
$200,000, the ratio of the increase to the resulting total Face Amount is
1/2 ($100,000/$200,000). If the Cash Surrender Value on the effective date
of the increase is $5,000 and premium payments totaling $3,000 are made
during the 12 Contract Months after the effective date of the increase, the
premiums attributable to the increase would be 1/2 ($5,000) + 1/2 ($3,000),
or a total of $4,000.
The part of the Contingent Deferred Sales Charge attributable to the
increase will be charged and reduced in accordance with the same principles
as applicable to the basic Contingent Deferred Sales Charge. It will remain
at the maximum level through approximately five years from the effective
date of the increase in Face Amount. It will then be reduced in level
monthly amounts equal to approximately.83% (10% on an annual basis) of the
maximum Contingent Deferred Sales Charge for the increase on the fifth
anniversary of the increase and on each subsequent monthly anniversary of
the increase until 120 Monthly Deductions have been taken on and after the
fifth anniversary of the increase. Thus, after the 120th Monthly Deduction
following the fifth anniversary of the increase, the Contingent Deferred
Sales Charge on the increase will be reduced to zero.
Amount of Deferred Administrative Charge. At Contract issuance, LBVIP will
compute a Deferred Administrative Charge. In general, this charge will
equal an amount per $1,000 of Face Amount based upon the initial Face
Amount, the Insured's Attained Age at Contract issuance, the Insured's
gender and whether the Insured is a tobacco user or not. For Insureds with
an Attained Age under 18, the Deferred Administrative Charge will equal an
amount per $1,000 of Face Amount based upon the initial Face Amount and the
Insured's Age at Contract issuance. The maximum Deferred Administrative
Charge per $1,000 of Face Amount will be determined from Appendix B. As
shown in Appendix B, the Deferred Administrative Charge per $1,000 of Face
Amount will be less for Contracts having a Face Amount at issuance that
equal or exceed the following amounts: $500,000-$999,999; and $1,000,000.
Montana has enacted legislation that requires that cost of insurance rates
and other charges applicable to Contracts purchased in Montana cannot vary
on the basis of the Insured's gender, and so, in Montana, this charge will
not be based on the gender of the Insured.
The maximum Deferred Administrative Charge, as determined at Contract
issuance, will be reduced as Monthly Deductions are made. Beginning on the
Date of Issue, and continuing on each Monthly Anniversary until 180 Monthly
Deductions have been made, this Deferred Administrative Charge determined at
Contract issuance will be reduced in level amounts equal to approximately
.55% of the maximum Deferred Administrative Charge (or a 6 2/3% reduction of
the maximum Deferred Administrative Charge on an annual basis). In this
way, the Deferred Administrative Charge will be reduced to zero as of the
Monthly Anniversary when the 180th Monthly Deduction is made.
If the Face Amount is increased, a separate Deferred Administrative Charge
will be calculated for the increase in an amount determined in the same
manner as for the initial Face Amount (except that the Insured's Attained
Age on the effective date of the increase will be used and the charge per
$1,000 of Face Amount to be applied to the increase will be based on the
amount of the entire new Face Amount after giving effect to the increase).
The part of the Deferred Administrative Charge attributable to the increase
will be charged and reduced in accordance with the same principles as
applicable to the basic Deferred Administrative Charge. The maximum
Deferred Administrative Charge for an increase will be determined on the
effective date of the increase and will then be reduced in level amounts
equal to .55% of the maximum Deferred Administrative Charge (or a 6 2/3%
reduction of the maximum Deferred Administrative Charge on an annual basis)
as Monthly Deductions are taken on the effective date of the increase and as
of each succeeding Monthly Anniversary until 180 Monthly Deductions have
been made after the effective date of the increase, when the Deferred
Administrative Charge on the increase will be reduced to zero.
The administrative expenses covered by the Deferred Administrative Charge
are the same expenses covered by the Initial Monthly Charge included in the
Monthly Deduction. See "Accumulated Value Charges--Monthly Deduction"
below. Even though the same administrative expenses are covered by both
charges, LBVIP will not be reimbursed twice for these issuance expenses.
Except as described below for spouse riders, these two charges have been
calculated so that these administrative expenses related to issuance will
generally be collected either through the Monthly Deduction (which covers
these charges through the Initial Monthly Charge) or through the Decrease
Charge (which covers these charges through the Deferred Administrative
Charge). Each of these charges applies until 180 Monthly Deductions have
been made, and the scheduled reductions in the Deferred Administrative
Charge described above over this period have been calculated to take into
account the amount of issuance expenses that would have already been
collected through the Initial Monthly Charge. In effect, the collection of
the Deferred Administrative Charge included in the Decrease Charge, which
would be collected only upon lapse or surrender of the Contract or in part
upon a requested decrease in Face Amount, would be an "acceleration" of the
amounts that otherwise would have been paid during this 15-year period
through the Initial Monthly Charge included in the Monthly Deduction. If
the Deferred Charge is imposed in part due to a requested decrease in Face
Amount, the amount of the Initial Monthly Charge will be reduced accordingly
(see "CHARGES AND DEDUCTIONS--Monthly Deduction--Initial Monthly Charge").
The discussion in the immediately preceding paragraph does not apply to
spouse riders. The Deferred Administrative Charge is not an "acceleration"
of the Initial Monthly Charge applicable to any spouse rider providing
insurance benefits on the Insured's spouse. An Initial Monthly Charge for
Increases will arise upon issuance of a spouse rider, but no Deferred
Administrative Charge will be calculated. If the Contract lapses or is
surrendered when the Initial Monthly Charge applies for a spouse rider, this
charge will not be collected through the Deferred Administrative Charge or
otherwise, unless the Contract is reinstated (see "PAYMENT AND ALLOCATION OF
PREMIUMS--Contract Lapse and Reinstatement").
Method of Deduction and Effect of Decrease Charge. The Decrease Charge will
be treated as a deduction against the Contract Owner's Accumulated Value,
and will compensate LBVIP for sales and issuance expenses described above
upon surrender or lapse of the Contract or in part upon a requested decrease
in Face Amount. Otherwise, the Decrease Charge will not be taken out of the
Accumulated Value held for investment under the Contract, and the
Accumulated Value will continue to reflect the investment experience of the
selected Subaccount(s), though the Decrease Charge will be treated as a
deduction for purposes of determining the Contract's Cash Surrender Value,
which will affect various Contract rights. Deducting the Decrease Charge in
determining the Cash Surrender Value will affect (a) the amount available
for Contract loans (see "CONTRACT RIGHTS--Loan Privileges"), (b) the Cash
Surrender Value available in connection with full or partial surrenders (see
"CONTRACT RIGHTS--Surrender Privileges"), and (c) the Cash Surrender Value
available to pay Monthly Deductions, which will, subject to the Death
Benefit Guarantee (see "DEATH BENEFIT GUARANTEE"), determine the Contract's
duration and possible lapse (see "PAYMENT AND ALLOCATION OF PREMIUMS--
Contract Lapse and Reinstatement").
If the Face Amount is decreased at the Contract Owner's request, that part
of any existing Decrease Charge amount attributable to the decrease will
reduce the Accumulated Value attributable to the Contract, and the Decrease
Charge will be reduced by this amount. The amount by which the Decrease
Charge is reduced will be allocated against the Subaccount(s) of the
Variable Account in the same manner that Monthly Deductions are allocated
against the Subaccount(s). See "Charges Against Accumulated Value--Monthly
Deductions" below. If the Cash Surrender Value is not sufficient to cover
the Decrease Charge imposed in connection with the requested decrease, the
requested decrease will not be made.
The Decrease Charge imposed for a requested decrease in Face Amount will be
determined by using the Decrease Charge then applicable to various parts of
the current Face Amount in the following order: (a) the Decrease Charge for
the most recent increase; (b) the Decrease Charge for the next most recent
increases successively; and (c) the Decrease Charge for the initial Face
Amount.
The calculation of the Decrease Charge for requested decreases can be
illustrated as follows. Assume that a Contract has an initial Face Amount
of $100,000, and the Face Amount is first increased by $20,000, and then
increased by $30,000, and then the Face Amount is decreased by $40,000. The
Decrease Charge imposed for the $40,000 decrease would be determined by
using the Decrease Charge for the most recent increase in Face Amount
($30,000) and then adding a proportionate part of the Decrease Charge for
the next most recent increase ($10,000/$20,000, or one-half of the Decrease
Charge for that increase). If, instead, the requested decrease was $60,000,
the Decrease Charge imposed for the $60,000 decrease would be determined by
using the Decrease Charge for the two increases (which were $30,000 and
$20,000, respectively) and then adding a proportionate part of the Decrease
Charge for the initial Face Amount ($10,000/$100,000, or one-tenth of the
Decrease Charge for the initial Face Amount).
If, alternatively, it is assumed that a Contract has an initial Face Amount
of $100,000, and the Face Amount is first decreased by $20,000, then
increased by $50,000, and then decreased by $30,000, the Decrease Charge on
the requested decreases would be as follows. The Decrease Charge imposed
for the first decrease ($20,000) would be determined by using a
proportionate part of the Decrease Charge for the initial Face Amount
($20,000/$100,000, or one-fifth of the Decrease Charge for the initial Face
Amount). The Decrease Charge imposed for the second decrease ($30,000),
would be determined by using a proportionate part of the Decrease Charge for
the most recent increase ($30,000/$50,000, or six-tenths of the Decrease
Charge for that increase.
Reinstatement of Decrease Charge. If a Contract lapses and is then
reinstated, any Decrease Charge applicable at the time of lapse will also be
reinstated. See "PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and
Reinstatement".
See Appendix D for information about differences in the Decrease Charge and
the Deferred Administrative Charge on VUL 1 contracts.
Monthly Deduction
Charges will be deducted on the Contract Date and each Monthly Anniversary
from the Accumulated Value of the Contract (the "Monthly Deduction") to
compensate LBVIP for administrative expenses and the insurance provided by
the Contract. The Monthly Deduction consists of three components--(a) the
cost of insurance, (b) insurance underwriting and expenses in connection
with issuing the Contract or any increase in Face Amount, and the costs of
ordinary administration of the Contract, and (c) the cost of any additional
benefits added by rider. Because portions of the Monthly Deduction, such as
the cost of insurance, can vary from month to month, the Monthly Deduction
itself will vary in amount from month to month.
The Monthly Deduction will be deducted on the Contract Date and on each
subsequent Monthly Anniversary prior to the Insured's Attained Age 100. (On
the Contract Date, a Monthly Deduction covering the period of time from the
Date of Issue until the first Monthly Anniversary will be deducted and, if
any Monthly Anniversary occurs prior to the Contract Date, the Monthly
Deduction(s) for such Monthly Anniversaries will also be made on the
Contract Date.) The Monthly Deduction will be deducted from the Accumulated
Value of the Contract by redeeming units from the Subaccounts of the
Variable Account and will be allocated against each Subaccount of the
Variable Account in the same proportion that the Contract's Accumulated
Value in each Subaccount bears to the total Accumulated Value of the
Contract, less Accumulated Value in the Loan Account, at the Monthly
Anniversary. Subject to LBVIP's approval, the Contract Owner may specify a
different allocation for the Monthly Deduction.
Cost of Insurance. Because the cost of insurance depends upon several
variables, the cost for each Contract Month can vary from month to month.
LBVIP will determine the monthly cost of insurance charge by multiplying the
applicable cost of insurance rate or rates by the net amount at risk for
each Contract Month. The net amount at risk on any Monthly Anniversary is
the amount by which the Death Benefit which would have been payable on that
Monthly Anniversary exceeds the Accumulated Value on that Monthly
Anniversary. For the purposes of this calculation, the Death Benefit will
be divided by 1.0040741, which reduces the net amount at risk by taking into
account assumed monthly earnings at an annual rate of 5%. In general, the
actual cost of insurance rate will be lower for Contracts having a Face
Amount at issuance or after a requested increase that equal or exceed the
following amounts: $500,000-$999,999; and $1,000,000.
The monthly cost of insurance will be determined separately for each
component of the net amount at risk, using the cost of insurance rate
applicable to the component, in the following order: (1) the initial Face
Amount; (2) successively, each increase in Face Amount up to the Face Amount
in force, in the order in which the increase took effect; and (3) any Death
Benefit that would be payable by reason of Accumulated Value calculations
(that is, whenever the Death Benefit is based on the applicable percentage
of Accumulated Value) over the Face Amount in force. For example, when a
Contract Owner has elected to make an increase in the Face Amount, the
monthly cost of insurance would be computed separately on the initial Face
Amount using the cost of insurance rate for the premium class determined
upon Contract issuance, and to each increase in Face Amount using the cost
of insurance rate for the premium class determined for such increase as
specified in the supplement to the Contract evidencing that increase.
Because the monthly cost of insurance must be determined separately for each
component of the net amount at risk described above, the Accumulated Value
must be allocated to each component. For purposes of determining the net
amounts at risk for each component if Option B is in effect, Accumulated
Value will first be considered a part of the initial Face Amount, and then
each successive increase in the Face Amount. If the Accumulated Value is
greater than the initial Face Amount, it will be considered a part of each
increase in order, starting with the first increase. When Option A is in
effect, the Accumulated Value is not included within the Face Amount.
Accordingly, the cost of insurance rates applicable will be the rate(s)
applicable to the Face Amount (and any increases in Face Amount). The cost
of insurance rate applicable to the remaining Death Benefit, if any, that
would be payable by reason of Accumulated Value calculations (which is the
remainder of the net amount at risk) will be that applicable to the initial
Face Amount.
Any change in the net amount at risk will affect the total cost of insurance
paid by the Contract Owner. For example, because generally the net amount
at risk equals the excess of the Death Benefit over the Accumulated Value,
the net amount at risk may be affected by changes in the Accumulated Value,
in the Face Amount, or in the Death Benefit Option in effect. See "CONTRACT
BENEFITS--Death Benefits--Accumulated Value and Cash Surrender Value".
Cost of Insurance Rate. Cost of insurance rates will be based on the Face
Amount and the gender, issue age, Attained Age and premium class of the
Insured. The actual monthly cost of insurance rates will be based on
LBVIP's expectations as to future mortality experience. They will not,
however, be greater than the guaranteed cost of insurance rates set forth in
the Contract. These guaranteed rates are based on the Insured's Attained
Age and the 1980 Commissioners Standard Ordinary Mortality Table. Any
change in the cost of insurance rates will be based on the Initial Face
Amount and any requested increases in Face Amount, and will apply to all
Insureds of the same premium class, gender , issue age and Attained Age. In
general, the actual cost of insurance rate will be lower for Contracts
having a Face Amount at issuance or after a requested increase that equal or
exceed the following amounts: $500,000-$999,999; and $1,000,000. Montana
has enacted legislation that requires that cost of insurance rates
applicable to Contracts purchased in Montana cannot vary on the basis of the
Insured's gender, and so, for Contracts issued in the state of Montana, the
cost of insurance rate will not be based on the basis of gender. In
connection with certain employment-related plans, cost of insurance rates
may in some circumstances not distinguish between men and women. See
"EMPLOYMENT-RELATED BENEFIT PLANS".
Premium Class. The premium class of an Insured will affect the cost of
insurance rates. LBVIP currently places Insureds into standard premium
classes and into rated premium classes, which involve a higher mortality
risk. In an otherwise identical Contract, an Insured in the standard
premium class will have a lower cost of insurance than an Insured in a
premium class with higher mortality risks. The premium classes are also
divided into two categories: tobacco users and non-tobacco users. Non-
tobacco user Insureds will generally incur lower cost of insurance rates
than Insureds who are classified as tobacco users. In addition, certain
Insureds over Attained Age 18 and less than Attained Age 75 who are non-
tobacco users and who meet special underwriting requirements may be
classified as preferred. An Insured in a preferred premium class will have
a lower cost of insurance than an Insured in a standard or rated premium
class.
Any Insured with an Attained Age at issuance under 18 will not be classified
initially as a tobacco user or a non-tobacco user and then will be
classified as a tobacco user at Attained Age 18 unless the Insured provides
satisfactory evidence that the Insured is a non-tobacco user. (LBVIP will
provide notice to the Contract Owner of the opportunity for the Insured to
be classified as a non-tobacco user when the Insured reaches Attained Age
18.)
Monthly Administration Charge. LBVIP has primary responsibility for the
administration of the Contract and the Variable Account. As a result, LBVIP
expects to incur certain ordinary administrative expenses and certain
issuance expenses. A monthly administration charge included in the Monthly
Deduction will be used to reimburse LBVIP for these expenses, except to the
extent that these expenses are reimbursed through the collection of the
Deferred Administrative Charge included in the Decrease Charge, which is, in
effect, an "acceleration" of the initial administrative charge described
below.
There are two administrative charges included in the monthly administration
charge--a basic monthly administrative charge that is collected every
Contract Month and an initial monthly charge that is deducted as part of the
first 180 Monthly Deductions (the "Initial Monthly Charge") following
Contract issuance and following any requested increase in Face Amount.
Basic Monthly Administrative Charge. A basic monthly administrative charge
of $10.00 will be deducted from Accumulated Value on the Contract Date and
each Monthly Anniversary prior to the Insured's Attained Age 100 as part of
the Monthly Deduction. This charge is intended to reimburse LBVIP for
ordinary administrative expenses expected to be incurred, including record
keeping, processing Death Benefit claims, certain Contract changes,
preparing and mailing reports, and overhead costs.
Initial Monthly Charge. The Initial Monthly Charge will be deducted from
Accumulated Value as part of the first 180 Monthly Deductions following
Contract issuance, commencing with the Monthly Deduction(s) collected on the
Contract Date. This monthly charge will equal an amount per $1,000 of Face
Amount based upon the Insured's Attained Age at Contract issuance and,
except for Insureds with an Attained Age at Contract issuance under 18, the
Insured's gender and upon whether the Insured is a tobacco user or not. The
Initial Monthly Charge per $1,000 of Face Amount will be determined from
Appendix C. As shown in Appendix C, the Initial Monthly Charge will be less
for Contracts having a Face Amount at issuance that equal or exceed the
following amounts: $500,000-$999,999; and $1,000,000.
If the Face Amount is increased, a separate Initial Monthly Charge for
increases will be deducted from Accumulated Value as part of the first 180
Monthly Deductions after the increase beginning with the Monthly Anniversary
on which the increase becomes effective. This separate Initial Monthly
Charge for Increases will be determined in the same manner as for the
initial Face Amount, except that the Insured's Attained Age on the effective
date of the increase will be used and the charge per $1,000 of Face Amount
to be applied to the increase will be based on the amount of the entire new
Face Amount after giving effect to the increase.
If a spouse rider providing additional insurance benefits on the Insured's
spouse is added, a separate Initial Monthly Charge will be deducted from
Accumulated Value as part of the first 180 Monthly Deductions after the
issuance of the spouse rider, beginning with the Monthly Anniversary on
which the spouse rider becomes effective. This additional Initial Monthly
Charge will be determined in the same manner as for the initial Face Amount,
except that the spouse's Attained Age and tobacco user status and gender on
the effective date of the rider will be used.
Montana has enacted legislation that requires that cost of insurance rates
and other charges applicable to Contracts purchased in Montana cannot vary
on the basis of the Insured's gender, and so, in Montana, this charge will
not be based on the gender of the Insured.
The Initial Monthly Charge is intended to reimburse LBVIP for administrative
expenses in connection with the issuance of the Contract, including medical
exams, review of applications for insurance underwriting decisions, and
processing of the applications and establishing Contract records. Similar
expenses are expected in connection with future changes in the Contract
initiated by the Contract Owner which involve "insurability" decisions, such
as applications for increases in Face Amount and the issuance of spouse
riders.
The issuance expenses covered by the Initial Monthly Charge are the same
expenses covered by the Deferred Administrative Charge included in the
Decrease Charge. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--
Decrease Charge" above. LBVIP will not, however, be reimbursed twice for
these expenses. As described above (see "CHARGES AND DEDUCTIONS--
Accumulated Value Charge--Decrease Charge"), and except in the case of
charges attributable to spouse riders (see discussion below), if a Contract
lapses or is totally surrendered during the 15-year period when the Initial
Monthly Charge applies, or if a requested decrease in Face Amount occurs
during the 15-year period when the Initial Monthly Charge generally applies,
the Initial Monthly Charge will, in effect, generally be "accelerated" and
collected in the form of the Deferred Administrative Charge included in the
Decrease Charge.
Because the Deferred Administrative Charge included in the Decrease Charge
is in effect an "acceleration" of the Initial Monthly Charge, the imposition
of the Deferred Administrative Charge will generally eliminate or reduce the
Initial Monthly Administrative Charge. If the Contract lapses or is totally
surrendered during the 15-year period when the Initial Monthly Charge
applies so that the Decrease Charge is imposed, the Initial Monthly Charge
will not be collected. If the Face Amount is decreased at the Contract
Owner's request during this 15-year period so that the Decrease Charge
(including the Deferred Administrative Charge) is imposed in part, the
Initial Monthly Charge will be reduced because of the Deferred
Administrative Charge imposed (being applied to reduce proportionately or
eliminate the Initial Monthly Charge attributable to that portion of the
Face Amount covered by the Decrease Charge).
If a Contract lapses and is then reinstated, the Initial Monthly Charge will
be reinstated until a total of 180 Monthly Deductions have been taken. See
"PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement".
No Deferred Administrative Charge will be calculated for the issuance of a
spouse rider, even though a separate Initial Monthly Charge will be
calculated for spouse riders. As a result, the Initial Monthly Charge
attributable to a spouse rider will not be "accelerated" and collected in
the form of the Deferred Administrative Charge included in the Decrease
Charge upon surrender or lapse or upon a requested decrease in Face Amount.
If a lapse or total surrender of the Contract or a cancellation of the
spouse rider occurs during the 15-year period when an Initial Monthly Charge
applies for a spouse rider, the charge will not be collected. If a
requested decrease on a spouse rider occurs during this 15-year period, the
Initial Monthly Charge attributable to the spouse rider will be reduced
proportionately.
Additional Insurance Benefits Charges. The Monthly Deduction will include
charges for any additional insurance benefits added to the Contract by
rider. These charges are for insurance protection, and the monthly amounts
will be specified in the Contract. See "GENERAL PROVISIONS--Additional
Insurance Benefits".
See Appendix D for information about differences in the Monthly Deduction,
including the cost of insurance rates, basic monthly administrative charge,
and the Initial Monthly Charge on VUL 1 contracts.
Partial Surrender Charge
A partial surrender charge of $25 or 2% of the surrender amount requested,
whichever is less, will be deducted from the amount withdrawn for each
partial surrender to compensate LBVIP for the administrative costs in
effecting the requested payment and in making necessary calculations for any
reductions in Face Amount which may be required by reason of the partial
surrender. This charge is guaranteed not to increase.
Charges Against the Variable Account
Mortality and Expense Risk Charge. A daily charge (the "Mortality and
Expense Risk Charge") will be deducted from the value of the net assets of
the Variable Account to compensate LBVIP for mortality and expense risks
assumed in connection with the Contract. LBVIP has determined that a
Mortality and Expense Risk Charge at an annual rate of .75% of the average
daily net assets of each Subaccount of the Variable Account would be
reasonable in relation to the mortality and expense risks assumed by LBVIP
under the Contract. LBVIP will, however, initially impose a Mortality and
Expense Risk Charge at an annual rate of .60% (or a daily rate of .001644%)
of the average daily net assets of each Subaccount of the Variable Account.
The Mortality and Expense Risk Charge is guaranteed not to increase above an
annual rate exceeding .75%. The daily charge will be deducted from the new
asset value of the Variable Account, and therefore the Subaccounts, on each
Valuation Date. When the previous day or days was not a Valuation Date, the
deduction on the Valuation Date will be .001644% multiplied by the number of
days since the last Valuation Date.
The mortality risk assumed by LBVIP is that Insureds may live for a shorter
time than projected because of inaccuracies in the projections, and that an
aggregate amount of Death Benefits greater than that projected accordingly
will be payable. The expense risk assumed is that expenses incurred in
issuing and administering the Contracts will exceed the administrative
charges provided in the Contracts.
Taxes. Currently, no charge will be made against the Variable Account for
Federal income taxes. LBVIP may, however, make such a charge in the future
if income or gains within the Variable Account will incur any Federal income
tax liability. Charges for other taxes, if any, attributable to the
Variable Account may also be made. See "FEDERAL TAX MATTERS".
Investment Advisory Fee of the Fund. Because the Variable Account purchases
shares of the Fund, the net assets of the Variable Account will reflect the
investment advisory fee incurred by the Fund. As investment adviser to the
Fund, LB charges the Fund a daily investment advisory fee equal to an annual
rate of .40% of the aggregate average daily net assets of the Money Market,
Income, High Yield, Growth, Mid Cap Growth and Opportunity Growth
Portfolios. LB also charges the Fund an annual investment advisory fee
equal to .85% of the aggregate average daily net assets of the World Growth
Portfolio. See "LBVIP, LUTHERAN BROTHERHOOD AND THE VARIABLE ACCOUNT--LB
Series Fund, Inc.", and the accompanying current prospectus for the Fund.
DEATH BENEFIT GUARANTEE
General. If a Contract Owner meets the requirement described below for the
Death Benefit Guarantee, LBVIP guarantees that the Contract will not lapse.
Whenever the Monthly Deduction to be made would result in a Cash Surrender
Value less than zero, any excess of Accumulated Value over Contract Debt
will be used to pay the Monthly Deduction. If available Accumulated Value
is less than the Monthly Deduction then due and the Death Benefit Guarantee
is in effect, LBVIP will pay the deficiency.
If the Death Benefit Guarantee terminates, the Contract will not necessarily
lapse. For a discussion of the circumstances under which the Contract may
lapse, see "PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and
Reinstatement". The Death Benefit Guarantee does, however, provide
additional protection against the possibility of lapse.
The Death Benefit Guarantee provides significant protection against lapse of
the Contract. First, to the extent Cash Surrender Value declines due to
poor investment performance, the Death Benefit Guarantee may be necessary to
avoid lapse of the Contract. Second, during the early Contract Years, the
Cash Surrender Value will generally not be sufficient to cover the Monthly
Deduction, so that the Death Benefit Guarantee will be necessary to avoid
lapse of the Contract. This occurs because the Decrease Charge usually
exceeds the Accumulated Value in these years. In this regard, a Contract
Owner should consider that if an increase in Face Amount is requested, an
additional Decrease Charge would apply for the 15 years following the
increase, which could create a similar possibility of lapse as exists during
the early Contract Years. THUS, EVEN THOUGH THE CONTRACT PERMITS PREMIUM
PAYMENTS LESS THAN THE PAYMENTS REQUIRED TO MAINTAIN THE DEATH BENEFIT
GUARANTEE, THE CONTRACT OWNER WILL LOSE THE SIGNIFICANT PROTECTION PROVIDED
BY THE DEATH BENEFIT GUARANTEE BY PAYING LESS THAN THE PREMIUMS REQUIRED TO
MAINTAIN THE GUARANTEE.
WHEN CONSIDERING CONTRACT LOANS (see "CONTRACT RIGHTS--Loan Privileges") OR
PARTIAL SURRENDERS (see "CONTRACT RIGHTS--Surrender Privileges"), A CONTRACT
OWNER SHOULD KEEP IN MIND THAT A CONTRACT LOAN OR PARTIAL SURRENDER COULD
CAUSE TERMINATION OF THE DEATH BENEFIT GUARANTEE BECAUSE THE AMOUNT OF ANY
PARTIAL SURRENDER OR CONTRACT LOAN AMOUNT WILL, SUBJECT TO CERTAIN
EXCEPTIONS, BE DEDUCTED FROM CUMULATIVE PREMIUM PAYMENTS IN DETERMINING
WHETHER THE REQUIREMENTS FOR THE DEATH BENEFIT GUARANTEE HAVE BEEN MET.
Death Benefit Guarantee Requirement. The Death Benefit Guarantee applies if
the total cumulative premiums paid (before deduction of the Premium Expense
Charges) under the Contract, less any partial surrenders and the Loan
Amount, equals or exceeds the sum of the Death Benefit Guarantee Premiums
(described below) on each Monthly Anniversary since the issuance of the
Contract. However, if the Death Benefit Guarantee requirement is not met on
a Monthly Anniversary but the Cash Surrender Value less any unearned
interest is greater than or equal to the sum of Death Benefit Guarantee
Premiums from the Date of Issue through that Monthly Anniversary, then the
sum of premiums paid as used above will be deemed to increase through that
date to the amount necessary to meet the Death Benefit Guarantee
requirement.
In addition, a portion of any partial surrender or Contract Loan Amount may
be excluded when determining if the Death Benefit Guarantee requirement is
met. The amount excluded is calculated on the date of the partial surrender
or Contract loan and is equal to the lesser of:
1) The amount of the partial surrender or unpaid Contract loan; and
2) The excess, if any, of the Cash Surrender Value less unearned prepaid
loan interest over the greater of (a) and (b) where:
a) Is the sum of premiums paid less the amount of any partial surrenders and
Contract loans not previously excluded when determining if the Death Benefit
Guarantee requirement was met; and
b) Is the sum of Death Benefit Guarantee Premiums from the Date of Issue
through the Monthly Anniversary on or next after the date of the partial
surrender or Contract loan.
These calculations for Death Benefit Guarantee compliance are intended to
provide the Contract Owner with the flexibility to take advantage of certain
increases in Cash Surrender Value without losing the benefit of the Death
Benefit Guarantee. First, by "deeming" the sum of premiums paid to be
increased under the circumstances described above for purposes of the Death
Benefit Guarantee, the Contract Owner can take advantage of increases in
Cash Surrender Value by reducing or suspending actual premium payments so
long as Cash Surrender Value, less any unearned prepaid loan interest,
remains at a sufficient level to maintain the Death Benefit Guarantee under
the formula described above. Second, by excluding part of a partial
surrender or a Contract loan under the circumstances described above for
purposes of the Death Benefit Guarantee, the Contract Owner can take
advantage of increases in Cash Surrender Value by withdrawing a part of such
increases by means of a partial surrender or Contract loan, provided that on
the date of such surrender or loan the Cash Surrender Value, less any
unearned prepaid loan interest, is at a sufficient level under the formula
described above. Of course, any such actions by a Contract Owner will have
the effect (directly or indirectly) of reducing Cash Surrender Value, which
may mean that less Cash Surrender Value will be available for future
Contract charges and for determining future compliance with the requirements
for the Death Benefit Guarantee. A Contract Owner should also consider the
other effects of varying the amount and frequency of premium payments (see
"PAYMENT AND ALLOCATION OF PREMIUMS") and of partial surrenders and Contract
loans (see "CONTRACT RIGHTS--Loan Privileges" and "CONTRACT RIGHTS--
Surrender Privileges").
If sufficient premium payments have been made, the Death Benefit Guarantee
will apply until the specified Attained Age of the Insured shown in the
Contract, which Attained Age will be the later of (a) the Insured's Attained
Age 71 and (b) the Attained Age of the Insured at the end of a period
ranging from 8 to 34 years (varying with the Insured's Attained Age at
issue) from the Date of Issue.
LBVIP will determine on each Monthly Anniversary whether the requirements
for the Death Benefit Guarantee have been satisfied, but premiums need not
be paid on a monthly basis. If, as of any Monthly Anniversary, the Contract
Owner has not made sufficient premium payments to maintain the Death Benefit
Guarantee, the Death Benefit Guarantee will terminate immediately, subject
to only a limited right of reinstatement, as described below under
"Reinstatement".
See Appendix D for information about differences in the Death Benefit
Guarantee on VUL 1 contracts.
Reinstatement. After termination of the Death Benefit Guarantee, LBVIP will
send written notice to the Contract Owner that the Death Benefit Guarantee
has terminated and the Contract Owner will have 31 days from the date such
notice is sent by LBVIP to reinstate the Death Benefit Guarantee. The
written notice of termination from LBVIP to the Contract Owner will indicate
the premium payment required to reinstate the Death Benefit Guarantee. If
LBVIP does not receive this required premium payment within 31 days after
this written notice is sent to the Contract Owner by LBVIP, the Death
Benefit Guarantee will remain terminated and can never be reinstated.
During this 31 day reinstatement period, the Contract Owner will not have
the protection of the Death Benefit Guarantee.
WHEN DETERMINING THE AMOUNT AND FREQUENCY OF PREMIUM PAYMENTS, A CONTRACT
OWNER SHOULD CAREFULLY CONSIDER THAT THE DEATH BENEFIT GUARANTEE TERMINATES
IMMEDIATELY WHEN THE REQUIREMENTS DESCRIBED ABOVE ARE NOT SATISFIED, AND THE
ABILITY TO REINSTATE THE DEATH BENEFIT GUARANTEE PERMANENTLY EXPIRES ON THE
FOLLOWING MONTHLY ANNIVERSARY OF THE CONTRACT 31 DAYS AFTER LBVIP SENDS
WRITTEN NOTICE OF TERMINATION.
Death Benefit Guarantee Premium. A monthly premium amount required to
maintain the Death Benefit Guarantee (the "Death Benefit Guarantee Premium")
will be set forth in the Contract. The Death Benefit Guarantee Premium is
determined by LBVIP based upon a formula taking into account the applicable
cost of insurance charge for the Insured, using the Insured's actual premium
class (see "CHARGES AND DEDUCTIONS--Monthly Deduction--Cost of Insurance");
a percentage of assumed monthly Death Benefit Guarantee Premium payment
together with an assumed premium processing charge; the applicable Initial
Monthly Charge (see "CHARGES AND DEDUCTIONS--Monthly Deduction--Initial
Monthly Charge"); the charge for any additional insurance benefits added by
rider (see "GENERAL PROVISIONS--Additional Insurance Benefits"); and the
basic monthly administrative charge of $10.00 per month (see "CHARGES AND
DEDUCTIONS--Monthly Deduction--Basic Monthly Administrative Charge"). Due
to the factors considered in calculating these charges, the Death Benefit
Guarantee Premium will vary depending upon, among other things, the
Insured's gender, the Insured's Attained Age, the Insured's premium class,
the Face Amount, the Death Benefit Option, and which additional insurance
benefits, if any, are added by rider. The Death Benefit Guarantee Premium
will change as the result of certain Contract changes, including an increase
or decrease in Face Amount; a change in Death Benefit Option; a change in
premium class; and an increase, decrease, addition or deletion of additional
insurance benefits. Whenever the Death Benefit Guarantee Premium changes,
the Contract Owner will be notified promptly of the new Death Benefit
Guarantee Premium.
CONTRACT RIGHTS
Loan Privileges
General. The Contract Owner may at any time after the Contract Date borrow
money from LBVIP using the Contract as the only security for the loan. The
Contract Owner may at any time after the Contract Date obtain Contract loans
in an amount not exceeding in the aggregate 90% of the excess of Accumulated
Value over any Decrease Charge on the date of any loan. Loans have priority
over the claims of any assignee or other person. The loan may be repaid in
full or in part at any time while the Insured is living.
See Appendix D for information about differences in Loan Privileges on VUL 1
contracts.
As used in this Prospectus, the term "Loan Amount" means the sum of all
unpaid Contract loans (including any prepaid loan interest added to the then
outstanding Loan Amount), and the term "Debt" means the sum of all unpaid
Contract loans less any unearned prepaid loan interest). The Loan Amount is
used in calculating whether the requirement for the Death Benefit Guarantee
has been satisfied (see "DEATH BENEFIT GUARANTEE"). Contract Debt is used
in calculating the Contract's Cash Surrender Value (see "CONTRACT BENEFITS--
Accumulated Value and Cash Surrender Value") the amount of Death Benefit
proceeds payable to the beneficiary (see "CONTRACT BENEFITS--Death
Benefits"), and (in some cases) in determining whether the Contract will
lapse (see "PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and
Reinstatement).
Allocation of Contract Loan. LBVIP will allocate a Contract loan among the
Subaccounts of the Variable Account in the same proportion that the
Contract's Accumulated Value in each Subaccount bears to the Contract's
total Accumulated Value in the Variable Account, as of the day on which the
request is received or, if that is not a Valuation Date, on the next
following Valuation Date. With LBVIP's approval, the Contract Owner can
select a different allocation.
Loans will normally be paid within seven days after receipt of Written
Notice. Postponement of loans may take place under certain circumstances.
See "GENERAL PROVISIONS--Postponement of Payments".
Interest. The interest rate charged on Contract loans accrues daily at an
annual rate of 7.4%, payable in advance, which is equivalent to a fixed rate
of 8% per year. Loan interest is calculated on a prepaid basis, and is
payable in advance at the time any Contract loan is made (for the rest of
the Contract Year) and at the beginning of each Contract Year thereafter
(for that entire Contract Year). If interest is not paid when due, it will
be added to the loan balance and will bear interest at the same rate. If
death or full surrender occurs before the next Contract Anniversary,
unearned interest will be added to the proceeds payable.
Effect of Contract Loans. Accumulated Value equal to the portion of the
Contract loan allocated to each Subaccount will be transferred from the
Subaccount to the Loan Account, thereby reducing the Contract's Accumulated
Value in that Subaccount.
As long as the Contract is in force, Accumulated Value in the Loan Account
will be credited with interest at an effective annual rate of 6%. NO
ADDITIONAL INTEREST WILL BE CREDITED TO THESE ASSETS. The interest earned
during a Contract Month will be credited at the end of the Contract Month.
Any interest credited will be allocated to the Subaccount(s) in proportion
to the Accumulated Value in the respective Subaccounts. See "PAYMENT AND
ALLOCATION OF PREMIUMS--Allocation of Premiums and Accumulated Value".
Although Contract loans may be repaid at any time, Contract loans will
permanently affect the Contract's potential Accumulated Value and Cash
Surrender Value and may permanently affect the Death Benefit under the
Contract. The effect on Accumulated Value and Death Benefit could be
favorable or unfavorable depending on whether the investment performance of
the Accumulated Value in the Subaccount(s) is less than or greater than the
interest being credited on the assets in the Loan Account while the loan is
outstanding. Compared to a Contract under which no loan is made, values
under the Contract will be lower when such interest credited is less than
the investment performances of assets held in the Subaccount(s). In
addition, the Death Benefit proceeds will be reduced by the amount of any
outstanding Contract Debt.
THE AMOUNT OF ANY CONTRACT LOAN WILL, SUBJECT TO CERTAIN EXCEPTIONS, BE
DEDUCTED FROM CUMULATIVE PREMIUM PAYMENTS IN DETERMINING WHETHER THE
REQUIREMENTS FOR THE DEATH BENEFIT GUARANTEE HAVE BEEN SATISFIED. AS A
RESULT, A CONTRACT LOAN COULD RESULT IN TERMINATION OF THE DEATH BENEFIT
GUARANTEE. See "DEATH BENEFIT GUARANTEE".
Repayment of Contract Debt. Debt may be repaid any time while the Insured
is living. Each repayment must be at least $25. If not repaid, LBVIP will
deduct Debt from any proceeds payable under the Contract. As Debt is
repaid, the Contract's Accumulated Value held in the Subaccount(s) of the
Variable Account will be restored and any prepaid interest attributable to
the repaid amount will likewise be allocated to the Subaccount(s) in the
same proportion as Debt repayments will be allocated. LBVIP will allocate
the amount of such repayment (as well as any prepaid loan interest that was
unearned by LBVIP at the time of repayment) to the Subaccount(s) of the
Variable Account in the same proportion that the Contract's Accumulated
Value in a Subaccount bears to the Contract's total Accumulated Value in the
Variable Account (the Contract Owner may select a different allocation basis
with LBVIP's approval). See "PAYMENT AND ALLOCATION OF PREMIUMS--Allocation
of Premiums and Accumulated Value". When the entire Debt is repaid,
interest that would be credited upon the assets held in the Loan Account
during the period from the last Monthly Anniversary to the date of repayment
will also be allocated to the Subaccount(s) in the same proportion as Debt
repayments will be allocated. LBVIP will allocate the repayment of Debt as
of the date on which the repayment is received or, if that is not a
Valuation Date, on the next following Valuation Date.
The Contract Owner must notify LBVIP if a payment is a premium payment;
otherwise, it will be considered a loan repayment.
Tax Considerations. Under the Technical and Miscellaneous Revenue Act of
1988, any loans taken from a "modified endowment contract" will be treated
as a taxable distribution. In addition, with certain exceptions, a ten
percent (10%) additional income tax penalty would be imposed on the portion
of any loan that is included in income. See "FEDERAL TAX MATTERS--Contract
Proceeds".
Surrender Privileges
At any time before the death of the Insured, the Contract Owner may
partially or totally surrender the Contract by sending Written Notice to
LBVIP. The Cash Surrender Value will equal the Accumulated Value less any
Contract Debt and any Decrease Charge. A Contract Owner may elect to have
the amount paid in cash or under a settlement option. See "CONTRACT
BENEFITS--Payment of Contract Benefits".
Full Surrender. If the Contract is fully surrendered, the Contract Owner
will be paid the Cash Surrender Value of the Contract determined as of the
date a Written Notice requesting surrender is received by LBVIP (or as of
such later date as the Contract Owner shall specify in the Written Notice),
or, if this date is not a Valuation Date, the next following Valuation Date.
To surrender the Contract fully, the Contract must be delivered to LBVIP
along with the Written Notice requesting surrender.
Partial Surrender. The Contract may be surrendered in part for any amount,
as long as the amount of the partial surrender is at least $500 and as long
as the remaining Cash Surrender Value is not less than $500 (in each case
with the Cash Surrender Value being determined on the day Written Notice is
received by LBVIP, or if this is not a Valuation Date, the next following
Valuation Date). The amount surrendered, including any surrender charge,
will be deducted from the Subaccount(s) of the Variable Account in the same
proportion that the Contract Owner's Accumulated Value in the respective
Subaccount(s) bears to the Contract's total Accumulated Value in the
Subaccount(s) at that time (the Contract Owner may select a different
allocation basis with LBVIP's approval). A surrender charge of $25 or 2% of
the surrender amount requested, whichever is less, will be deducted by LBVIP
from the amount withdrawn. For a discussion of certain limitations and
considerations applicable to partial surrenders, see "Partial Surrenders--
Certain Other Considerations" below.
Effect of Partial Surrenders on Face Amount and Death Benefit. A partial
surrender will always decrease the Death Benefit and may also decrease the
Face Amount. As described below, the effect of a partial surrender on the
Death Benefit and the Face Amount may vary depending upon the Death Benefit
Option in effect and whether the Death Benefit is based on the applicable
percentage of Accumulated Value.
Option A--Effect of Partial Surrenders. The effect of a partial surrender
on the Face Amount and Death Benefit under Option A can be described as
follows. The Face Amount will never be decreased by a partial surrender. A
partial surrender will, however, always decrease the Death Benefit under
Option A by one of the following amounts:
(bullet) If the Death Benefit equals the Face Amount plus the Accumulated
Value, a partial surrender will reduce the Accumulated Value by the amount
of the partial surrender and thus the Death Benefit will also be reduced by
the amount of the partial surrender.
Illustration. For the purpose of this illustration (and any following
illustrations of partial surrenders), assume that the Attained Age of the
Insured is under 40, and there is no Contract Debt. (The applicable
percentage is 250% for an Insured with an Attained Age of 40 or below. See
"CONTRACT BENEFITS--Death Benefits".)
Under Option A, a Contract with a Face Amount of $100,000 and an Accumulated
Value of $60,000 will have a Death Benefit of $160,000 ($100,000 + $60,000).
Assume that the Contract Owner wishes to take a partial surrender of
$20,000. Because the Death Benefit equals the Face Amount plus the
Accumulated Value, the partial surrender will reduce the Accumulated Value
to $40,000 ($60,000 - $20,000 = $40,000) and the Death Benefit to $140,000
($100,000 + $40,000). The Face Amount is not changed.
(bullet) If the Death Benefit immediately prior to the partial surrender is
based on the applicable percentage of Accumulated Value, the Death Benefit
will be reduced to equal, the greater of (a) the Face Amount plus
Accumulated Value after deducting the partial surrender and (b) the Death
Benefit based on the applicable percentage of Accumulated Value after
deducting the partial surrender.
Illustration. Under Option A, a Contract with a Face Amount of $100,000 and
an Accumulated Value of $80,000 will have a Death Benefit of $200,000
($80,000 X 2.5). Assume that the Contract Owner wishes to take a partial
surrender of $20,000. Because the Death Benefit is based on the applicable
percentage of Accumulated Value, the partial surrender will reduce the
Accumulated Value to $60,000 ($80,000 - $20,000) and the Death Benefit to
the greater of (a) the Face Amount plus the Accumulated Value ($100,000 +
$60,000 = $160,000), and (b) the Death Benefit based on the applicable
percentage of Accumulated Value ($60,000 X 2.5 = $150,000). Therefore, the
Death Benefit will be $160,000. The Face Amount is not changed.
Option B--Effect of Partial Surrenders. The effect of a partial surrender
on the Face Amount and Death Benefit under Option B can be described as
follows:
(bullet) If the Death Benefit equals the Face Amount, a partial surrender
will reduce the Face Amount and the Death Benefit by the amount of the
partial surrender.
Illustration. Under Option B, a Contract with a Face Amount of $100,000 and
an Accumulated Value of $30,000 will have a Death Benefit of $100,000 (that
is, the Face Amount). Assume that the Contract Owner wishes to take a
partial surrender of $10,000. The partial surrender will reduce the
Accumulated Value to $20,000 ($30,000 - $10,000) and the Death Benefit and
Face Amount to $90,000 ($100,000 - $10,000).
(bullet) If the Death Benefit is based on the applicable percentage of
Accumulated Value and the amount of the partial surrender multiplied by the
applicable percentage is less than the Death Benefit immediately prior to
the partial surrender minus the Face Amount at that time, the Face Amount
will not be reduced and the Death Benefit will be reduced by the amount of
the partial surrender multiplied by the applicable percentage.
Illustration. Under Option B, a Contract with a Face Amount of $100,000 and
an Accumulated Value of $60,000 will have a Death Benefit of $150,000
($60,000 X 2.5). Assume that the Contract Owner wishes to take a partial
surrender of $10,000. The amount of the partial surrender multiplied by the
applicable percentage ($10,000 X 2.5 = $25,000) is less than the Death
Benefit minus the Face Amount prior to the partial surrender ($150,000 -
$100,000 = $50,000). Because the Death Benefit is based on the applicable
percentage of Accumulated Value and the amount of the partial surrender
multiplied by the applicable percentage is less than the Death Benefit minus
the Face Amount, the Face Amount will not be reduced and the Death Benefit
will be reduced by the amount of the partial surrender multiplied by the
applicable percentage ($150,000 - ($10,000 X 2.5) = $125,000). This is also
the Death Benefit based on the applicable percentage of Accumulated Value
after the partial surrender (($60,000 - $10,000) X 2.5 = $125,000).
(bullet) If the Death Benefit immediately prior to the partial surrender is
based on the applicable percentage of Accumulated Value and the amount of
the partial surrender multiplied by the applicable percentage exceeds the
Death Benefit immediately prior to the partial surrender minus the Face
Amount at that time, the Face Amount will be reduced by an amount equal to
(a) the amount of the partial surrender, less (b) the result obtained by
dividing (i) the difference between the Death Benefit and the Face Amount
immediately prior to the partial surrender by (ii) the applicable
percentage. The Death Benefit will be reduced to equal the Face Amount
after the partial surrender.
Illustration. Under Option B, a Contract with a Face Amount of $100,000 and
an Accumulated Value of $60,000 will have a Death Benefit of $150,000
($60,000 X 2.5). Assume that the Contract Owner wishes to take a partial
surrender of $30,000. The amount of the partial surrender multiplied by the
applicable percentage ($30,000 X 2.5 = $75,000) exceeds the Death Benefit
minus the Face Amount prior to the partial surrender ($150,000 - $100,000 =
$50,000). Because the Death Benefit is based on the applicable percentage
of Accumulated Value and the amount of the partial surrender multiplied by
the applicable percentage exceeds the Death Benefit minus the Face Amount,
the Face Amount will be reduced by an amount equal to (1) the amount of the
partial surrender, less (2) the result obtained by dividing (A) the
difference between the Death Benefit and the Face Amount prior to the
partial surrender by (B) the specified percentage ($30,000 - (($150,000 -
$100,000) (divided by) 2.5)) = $10,000). The Face Amount after the partial
surrender will be $90,000 ($100,000 - $10,000) and the Death Benefit will be
$90,000.
Partial Surrenders--Certain Other Considerations. THE AMOUNT OF ANY PARTIAL
SURRENDER WILL, SUBJECT TO CERTAIN EXCEPTIONS, BE DEDUCTED FROM CUMULATIVE
PREMIUM PAYMENTS IN DETERMINING WHETHER THE REQUIREMENTS FOR THE DEATH
BENEFIT GUARANTEE HAVE BEEN SATISFIED. AS A RESULT, A PARTIAL SURRENDER
COULD RESULT IN TERMINATION OF THE DEATH BENEFIT GUARANTEE. See "DEATH
BENEFIT GUARANTEE".
Because a partial surrender can affect the Face Amount and the Death Benefit
(as described above), a partial surrender may also affect the net amount at
risk under a Contract. The net amount at risk is, in general, the
difference between the Death Benefit and the Accumulated Value and will be
used in calculating the cost of insurance protection provided under the
Contract. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Monthly
Deduction--Cost of Insurance".
A request for partial surrender will not be implemented if or to the extent
the requested partial surrender would reduce the Face Amount below $5,000.
Also, if a partial surrender would decrease the Face Amount, to the extent
that the partial surrender would result in cumulative premiums exceeding the
maximum premium limitations applicable under the Internal Revenue Code for
life insurance, LBVIP will not effect such partial withdrawal. See "PAYMENT
AND ALLOCATION OF PREMIUMS--Amount and Timing of Premiums--Premium
Limitations".
Tax Considerations. Under the Technical and Miscellaneous Revenue Act of
1988, any surrender of a "modified endowment contract" will be treated as a
taxable distribution. In addition, with certain exceptions, a ten percent
(10%) additional income tax penalty would be imposed on the portion of any
loan that is included in income. See "FEDERAL TAX MATTERS--Contract
Proceeds".
Free Look Privileges
The Contract provides for two types of "free look" privileges, one after the
application and issuance of the Contract and the other after any increase in
Face Amount.
Free Look for Contract. The Contract provides for an initial Free Look
Period. The Contract Owner may cancel the Contract until the latest of (a)
45 days after Part I of the application for the Contract is signed, (b) 10
days after the Contract Owner receives the Contract, and (c) 10 days after
LBVIP mails or personally delivers a notice of withdrawal right to the
Contract Owner. Upon giving notice of cancellation and returning the
Contract (if it has been delivered), the Contract Owner will receive a
refund equal to the sum of (i) the Accumulated Value (as of the date the
returned Contract is received by LBVIP at its Home Office or by the LBVIP
representative from whom the Contract was purchased), without any deduction
of the Decrease Charge, plus (ii) the amount of any Premium Expense Charges,
plus (iii) any Monthly Deductions charged against the Contract's Accumulated
Value, plus (iv) any Mortality and Expense Risk Charges deducted from the
value of the net assets of the Variable Account attributable to the
Contract, plus (v) the advisory fees charged by the Fund against net asset
value in the Fund Portfolios attributable to the Contract's value in the
corresponding Subaccount(s) of the Variable Account. When state law
requires a minimum refund equal to gross premiums paid, the refund will
instead equal the gross premiums paid on the Contract and will not reflect
the investment experience of the Variable Account. The notice of withdrawal
right for the Contract will include a statement of the Decrease Charge and
of the Initial Monthly Charge (included in the Monthly Deduction--see
"CHARGES AND DEDUCTIONS--Accumulated Value Charges--Monthly Deduction")
attributable to the Contract, as well as a form for requesting cancellation
of the Contract during the Free Look Period.
Free Look for Increase in Face Amount. Any requested increase in Face
Amount is also subject to a "free look" privilege. The Contract Owner may
cancel a requested increase in Face Amount until the latest of (a) 45 days
after Part I of the application for increase is signed, (b) 10 days after
the Contract Owner receives a Contract supplement for the increase in Face
Amount, and (c) 10 days after LBVIP mails or personally delivers a notice of
withdrawal right to the Contract Owner. Upon requesting cancellation of the
increase, the Contract Owner will receive a refund, if he or she so
requests, or otherwise a restoration of the Contract's Accumulated Value
allocated among the Subaccount(s) of the Variable Account as if it were a
Net Premium, equal to all Monthly Deductions attributable to the increase in
Face Amount (including rider costs arising from the increase). This refund
or credit will be made within seven days after LBVIP receives the request
for cancellation on the appropriate form. In addition, the Decrease Charge
will be adjusted, if necessary, so that it will be as though no increase in
Face Amount had occurred. The notice of withdrawal right upon an increase
in Face Amount will include a statement of the increase in the Decrease
Charge and of the Initial Monthly Charge for Increases (included in the
Monthly Deduction--see "CHARGES AND DEDUCTIONS--Accumulated Value Charges--
Monthly Deduction") attributable to the increase in Face Amount, as well as
a form for requesting cancellation of the increase during the Free Look
Period.
Net Premiums paid after an increase in Face Amount will be allocated to the
Subaccount(s) of the Variable Account and will not be refunded following
cancellation of the increase. Contract Owners who request an increase in
Face Amount should consider this in deciding whether to make any premium
payments during the Free Look Period for the increase.
Exchange Privileges
Exchange of the Contract. During the first 24 months following the Date of
Issue, the Contract Owner may on one occasion, without evidence of
insurability, exchange any Contract still in force for a fixed benefit
permanent life insurance contract issued by Lutheran Brotherhood, of which
LBVIP is an indirect subsidiary. This new contract will not be dependent
upon future investment results of the Variable Account or any separate
account of Lutheran Brotherhood. In order to make this exchange for such a
contract, the Contract Owner must surrender the Contract to LBVIP at its
Home Office, the Insured must be living on the exchange date, and any
assignee must agree in writing to the exchange. In addition, any Debt under
the Contract must be repaid and any amount required to pay the first premium
on the new contract must be paid.
The new contract will have the same issue age, and premium class as the
Contract. The exchange will become effective on the date (the "exchange
date") that LBVIP receives the exchange request and the Contract at its Home
Office. The Contract will end at the end of the day before the exchange
date, and the new contract will become effective on the exchange date. On
the exchange date, the new contract will have, at the option of the Contract
Owner, either a death benefit equaling the Death Benefit under the Contract
on the effective date of the exchange or a net amount at risk equaling the
net amount at risk under the Contract on the effective date of the exchange.
(An additional premium payment may be required.) The Accumulated Value of
the new contract on the exchange date will vary depending upon the type of
contract for which the Contract is being exchanged. The conversion will be
subject to an equitable adjustment in payments and Contract values to
reflect variances, if any, in the payments and Contract values under the
existing Contract and the new contract. The new contract's provisions and
charges will be those that would have been applicable under Lutheran
Brotherhood's standard practices if the fixed benefit permanent life
insurance contract had been issued on the Date of Issue. See "FEDERAL TAX
MATTERS" for a discussion of the Federal income tax consequences of an
exchange.
Exchange of Increase in Face Amount. During the first 24 months following
an increase in Face Amount, the Contract Owner may on one occasion, without
evidence of insurability, exchange the amount of the increase in Face Amount
for a fixed benefit permanent life insurance contract. Premiums under this
new contract will be based on the same issue age and premium class of the
Insured as were applied on the effective date of the increase in the Face
Amount of the Contract. The conditions and principles applicable to an
exchange of the entire Contract for such a contract which are described
immediately above will be equally applicable to this exchange of an increase
in Face Amount for such a new contract. See "FEDERAL TAX MATTERS" for a
discussion of the Federal income tax consequences of an exchange.
GENERAL PROVISIONS
Postponement of Payments
General. LBVIP may defer payment of maturity proceeds, any loan or
surrender and any portion of the death proceeds in excess of the Face Amount
if (a) the New York Stock Exchange is closed other than customary week-end
and holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the SEC, or (b) an emergency exists, as
determined by the SEC, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Variable Account's net assets. Transfers and allocations of
Accumulated Value to and against the Subaccounts of the Variable Account may
also be postponed under these circumstances.
Payment by Check. Payments under the Contract of any amounts derived from
premiums paid by check may be delayed until such time as the check has
cleared the Contract Owner's bank.
Date of Receipt
Except as otherwise stated herein, the date of receipt by LBVIP of any
Written Notice, premium payment, telephonic instructions or other
communication is the actual date it is received at LBVIP's Home Office in
proper form unless received (1) after the close of the New York Stock
Exchange, or (2) on a date which is not a Valuation Date. In either of
these two cases, the date of receipt will be deemed to be the next Valuation
Date.
The Contract
The Contract and attached copy of the Application and any supplemental
Applications are the entire contract. Only statements in the Application
and any supplemental Applications can be used to void the Contract or defend
a claim. The statements are considered representations and not warranties.
Any change to the Contract must be in writing and signed by the President
and the Secretary of LBVIP. Pursuant to various applicable state laws,
certain of the provisions of the Contract may vary from state to state.
Suicide
If the Insured dies by suicide within two years (or such shorter period
provided by applicable state law) from the Date of Issue, LBVIP will pay an
amount equal to premiums paid, less any partial surrenders (and partial
surrender charges) and Contract Debt. If the Insured commits suicide within
two years after the effective date of any increase in Face Amount requiring
evidence of insurability (or such shorter period required by applicable
state law), the amount LBVIP will pay with respect to the increase will be
only an amount equal to the Monthly Deductions previously made for the
increase.
Incontestability
LBVIP cannot contest the validity of a Contract after it has been in force
during the Insured's lifetime for two years from its Date of Issue, except
for any provisions granting benefits in the event of total disability.
Similar incontestability will apply to an increase in Face Amount or any
reinstatement after it has been in force during the Insured's lifetime for
two years from its effective date.
Change of Owner or Beneficiary
As long as the Contract is in force, the Contract Owner or Beneficiary may
be changed by Written Notice to LBVIP. The Contract need not be returned
unless requested by LBVIP. The change will take effect as of the date the
request is signed, whether or not the Insured is living when the request is
received by LBVIP. LBVIP will not, however, be liable for any payment made
or action taken before receipt of the Written Notice.
Assignment as Collateral
The Contract may be assigned as collateral. LBVIP will not be bound by the
assignment until a copy has been received at its Home Office, and LBVIP
assumes no responsibility for determining whether an assignment is valid or
the extent of the assignee's interest. All assignments will be subject to
any Contract Debt. The interest of any Beneficiary or other person will be
subordinate to any assignment.
Misstatement of Age or Gender
If the age or gender of the Insured has been misstated, the Accumulated
Value and/or Death Benefit will be adjusted, using the most recent cost of
insurance rates, to the amounts that would have been provided based on the
correct age and gender.
Due Proof of Death
LBVIP will accept as due proof of death of the Insured a completed
claimant's statement, which will be furnished by LBVIP, together with either
a certified death certificate or an attending physician's statement. In
some circumstances, LBVIP may require an attending physician's statement
even though a death certificate is furnished.
Reports to Contract Owners
LBVIP will mail to Contract Owners, at their last known address of record,
within 30 days after each Contract Anniversary, annual reports confirming
the status of each Contract's values and benefits. These reports will show
the following as of the beginning and end of the Contract Year: the Face
Amount; the Death Benefit; the Accumulated Value; any outstanding Decrease
Charge; any Contract Debt; and Cash Surrender Value. The annual reports
will show how future Net Premiums will be allocated among the Subaccount(s)
pursuant to the Contract Owner's current allocation instructions. In
addition, LBVIP will mail to Contract Owners quarterly reports that will
show all Contract transactions since the last Contract Anniversary,
including, but not limited to, the amount and dates of premium payments
(including those paid under an automatic payment plan offered by LBVIP or
those paid prior to the initial transfer to the Subaccount(s) on the
Contract Date), monthly charges deducted, loans (as well as the loan
interest that became due, interest credited from the General Account and
loan repayments), partial surrenders, transfers, exchanges or an exercise of
a free look privilege.
Within seven days of the following transactions, LBVIP will mail a
confirmation statement or letter to the Contract Owner confirming such
transactions, in addition to showing them in the quarterly and annual
reports: any premium payment (other than those paid under an automatic
payment plan offered by LBVIP or those paid prior to the initial transfer to
the Subaccount(s) on the Contract Date, which will be confirmed by LBVIP in
the annual report), any Contract loan, interest payment or loan repayment,
any change in instructions for allocation of Net Premiums or other Contract
transactions, any transfer of amounts among Subaccount(s) (including the
initial transfer on the Contract Date), any partial surrender, any decrease
in Face Amount that results in a reduction of the Decrease Charge and thus
the assets attributable to the Contract in the Subaccount(s), any
restoration to Accumulated Value following an exercise of a free-look
privilege for an increase in the Face Amount and the manner in which such
amount is allocated among the Subaccount(s), any exercise of the free-look
privilege for an increase in the Face Amount when a refund is made, any
exercise of the free look privilege for the Contract, any exchange of the
Contract, any full surrender of the Contract, payment of a Death Benefit and
payment at Maturity Date. Upon request, any Contract Owner will be sent a
receipt for any premium payment.
LBVIP will maintain all records relating to the Variable Account. LBVIP
will mail to Contract Owners, at their last known address of record, any
reports required by any applicable law or regulation. Each Contract Owner
will also be sent an annual and a semi-annual report for the Fund as
required by the Investment Company Act of 1940.
Additional Insurance Benefits
Subject to certain requirements, one or more of the following additional
insurance benefits may be added to the Contract at the option of the
Contract Owner by rider at the time the Contract is applied for or at a
later date. At present, these options include: waiver of Monthly
Deductions in the event of total disability, additional insurance coverage
for accidental death, waiver of selected amount in the event of total
disability, term insurance on the Insured's spouse, term insurance on the
Insured's children, a right to increase the Face Amount of the Contract on
certain specified dates or life events without proof of insurability, and a
cost of living insurance adjustment without proof of insurability. LBVIP
may offer additional optional benefits in the future. The cost of any
additional insurance benefits will be deducted as part of the Monthly
Deduction. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Monthly
Deduction". The amounts of these benefits do not vary with the investment
experience of the Variable Account. Certain restrictions apply and are
clearly described in the applicable rider. Any LBVIP Representative
authorized to sell the Contract can explain these extra benefits further.
Samples of the provisions are available from LBVIP upon written request.
Any additional insurance benefits purchased will be described in a rider
attached to the Contract. The charge for additional insurance benefits
added by rider will be specified in the Contract or in a supplement to the
Contract. An additional charge will apply for any insurance benefits added
by rider at any time after issuance of the Contract. Cost of insurance
rates for additional term insurance benefits added by spouse rider for
Contracts issued in the state of Montana will be based on unisex rates.
The issuance of a rider providing insurance coverage on the Insured's spouse
will result in an additional Initial Monthly Charge. See "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Monthly Deduction--Initial Monthly
Charge".
Adding insurance benefits may have Federal income tax consequences. See
"FEDERAL TAX MATTERS--Contract Proceeds."
Charitability for Life
Charitability for Life (SM) is a benefit that enables Contract Owners to
increase their charitable gifts to Lutheran charitable organizations and
congregations. Charitability for Life is available for no additional premium
whenever a Contract Owner has designated a Lutheran charitable organization
or congregation as a beneficiary for at least $1,000 of Death Benefit on his
or her Contract.
Upon the death of the Insured, the Lutheran charitable organization or
congregation will receive the Death Benefit proceeds as designated, and
LBVIP will contribute an additional 10% of that amount to the charitable
organization or congregation, up to $25,000 per insured. Any legally
incorporated nonprofit Lutheran organization that qualifies under Internal
Revenue Code Section 170(c) is eligible to receive Charitability for Life
benefits. The benefit may vary state-by-state and an LBVIP representative
should be consulted as to whether and to what extent the benefit is
available in a particular state and on any particular Contract.
Accelerated Benefits Rider
For newly issued Contracts, entered into on or after May 1, 1992, under
certain circumstances, the Accelerated Benefits Rider allows a Contract
Owner residing in a state that has approved such rider to receive benefits
from the Contract that would be otherwise payable upon the death of the
Insured. The benefit may vary state-by-state and an LBVIP representative
should be consulted as to whether and to what extent the rider is available
in a particular state and on any particular Contract.
The Accelerated Benefits Rider allows the Contract Owner to elect an
accelerated payment of all or part of the Contract's Death Benefit, adjusted
to reflect current value, at a time when certain special needs exist. The
benefits paid under the Accelerated Benefits Rider are available when LBVIP
has received Written Notice request and proof satisfactory (a certification
by a doctor) that the Insured has a life expectancy of 12 months or less (or
such shorter period provided by state law), or has been confined in a
nursing home due to a condition which usually requires continuous
confinement, for at least 6 consecutive months and confinement is expected
to continue for the lifetime of the Insured. The amount of the benefit will
always be less than the Death Benefit, but will generally be greater than
the Contracts' Accumulated Value.
LBVIP will determine the amount available as an accelerated benefit. All or
part of the eligible amount may be accelerated under the Accelerated
Benefits Rider. The benefit payable for any person must be at least
$10,000, or if smaller, that person's entire eligible amount. If the entire
amount is paid, the Contract will terminate. If only a portion of the
eligible amount is paid, the Contract will remain in force. The amount of
insurance, the Loan Amount and Accumulated Value of the Contract will be
reduced by the same percentage as the percentage of the eligible amount
received under the Accelerated Benefits Rider. The benefit will be paid in
a lump sum, unless otherwise agreed to by LBVIP. With LBVIP's approval, the
Contract Owner may instead elect to have the benefit paid in equal periodic
payments over a fixed period, and the minimum periodic payment must be at
least $500. If the Insured dies before all periodic payments have been
made, LBVIP will pay the beneficiary the present value of the remaining
payments, based on the same interest rate as that used to determine the
periodic payments.
The Accelerated Benefits Rider is available only in states where and to the
extent regulatory approval has been obtained. If desired by a Contract
Owner, the benefit must be requested on the Contract's application. There
is no charge for adding the benefit to the Contract. However, an
administrative fee (not to exceed $150) will be charged at the time the
benefit is paid.
LBVIP agrees that unless otherwise required by law, no benefit will be paid
if the Contract Owner is required to elect it in order to meet the claims of
creditors or to obtain a government benefit. In addition, receipt of
payment of the Accelerated Benefits rider may affect eligibility for
government sponsored benefits programs, including Medicaid. LBVIP can
furnish details about the amount of the Accelerated Benefits Rider available
to an eligible Contract Owner under a particular Contract, and the adjusted
premium payments that would be in effect if less than the entire amount
eligible for payment is paid. See "GENERAL PROVISIONS--Accelerated Benefits
Rider". The tax treatment of benefits paid under the Accelerated Benefits
Rider is currently uncertain. See "FEDERAL TAX MATTERS--Contract Proceeds--
Benefits Paid under the Accelerated Benefits Rider".
Reservation of Certain Rights
LBVIP reserves the right, to the extent permitted or required by law
(including SEC rules under the 1940 Act), to eliminate or modify certain
rights provided under the Contract:
(1) the withdrawal rights during the initial Free Look Period (see "CONTRACT
RIGHTS--Free Look Privileges--Free Look for Contract");
(2) the withdrawal rights during any Free Look Period after an increase in
Face Amount (see "CONTRACT RIGHTS--Free Look Privileges--Free Look for
Increase in Face Amount");
(3) the exchange rights during the first 24 months following the Date of
Issue (see "CONTRACT RIGHTS--Exchange Privileges--Exchange of the
Contract"); and
(4) the exchange rights during the first 24 months following an increase in
Face Amount (see "CONTRACT RIGHTS--Exchange Privileges--Exchange of Increase
in Face Amount").
LBVIP will provide Contract Owners with written notice if it exercises its
right to eliminate or modify any of these rights.
FEDERAL TAX MATTERS
The following discussion is general and is not intended as tax advice. Any
person concerned about these tax implications should consult a competent tax
adviser. This discussion is based on LBVIP's understanding of the present
Federal income tax laws as they are currently interpreted by the Internal
Revenue Service. No representation is made as to the likelihood of
continuation of these current laws and interpretations. It should be
further understood that the following discussion is not exhaustive and that
special rules not described in this Prospectus may be applicable in certain
situations. Moreover, no attempt has been made to consider any applicable
state or other tax laws. LBVIP does not make any guarantee regarding the
tax status of any Contract.
Contract Proceeds
General. The Contract will qualify as a life insurance contract under
Section 7702 of the Internal Revenue Code of 1986, as amended (the "Code").
Section 7702 of the Code provides that the Contract will so qualify if it
satisfies a cash value accumulation test or a guideline premium requirement
and falls within a cash value corridor. The qualification of the Contract
under Section 7702 depends in part upon the Death Benefit payable under the
Contract at any time. To the extent a change in the Contract, such as a
decrease in Face Amount or a change in Death Benefit Option, would cause the
Contract not to qualify, LBVIP will not make the change. See "PAYMENT AND
ALLOCATION OF PREMIUMS--Amount and Timing of Premiums--Premium Limitations".
Although the Secretary of the Treasury is authorized to prescribe
regulations interpreting the manner in which these tests are to be applied,
such regulations have not been issued. In addition, the Technical and
Miscellaneous Revenue Act of 1988 (the "Act") provides additional
requirements under Section 7702 for mortality and other expense charges of
life insurance contracts. Nonetheless, LBVIP believes that the Contract
should meet the statutory definition in Section 7702 of a life insurance
contract.
Death Benefits. The Death Benefit proceeds payable under either Option A or
Option B will be excludable from the gross income of the Beneficiary under
Section 101(a) of the Code.
Distributions. The Contract Owner will not be taxed upon the increase in
Accumulated Value of the Contract unless and until there is a taxable
distribution from the Contract. The Act was enacted on November 10, 1988
and makes certain changes to the income tax treatment of distributions from
Contracts classified as "modified endowment contracts" under the Code. A
modified endowment contract is any Contract that fails a special premium
limitation test set forth in the Code. This test requires that the
cumulative amount paid during the first seven years since the Date of Issue
(or date of certain increases in coverage) not exceed the cumulative amount
of the level annual premium which, in theory, would provide a paid-up
Contract after seven years. If this test is ever violated, LBVIP will
notify the Contract Owner, who may then take certain timely steps to return
the Contract to non-modified endowment contract status. This premium
limitation test does not supersede the premium limitations previously
established by the Code as discussed under "Premium Limitations" at page __
of the Prospectus.
The Act involves complex considerations and unresolved interpretive issues.
It should be understood, however, that if there is material change in the
Contract, the Contract is treated as a new Contract as of the date of the
material change for purposes of determining whether it will be treated as a
modified endowment contract. Such a change will create a modified endowment
contract only if cumulative amounts paid in the seven years following the
change violate the new cumulative premium limitation test. Certain
increases in Contract benefits (including increases in Face Amount and in
additional insured benefits) will trigger the start of a new seven year
period from the date of this change, along with a new level annual premium
to be used in the test. In addition, a reduction in Contract benefits at
any time while the test is applicable could in itself create a modified
endowment contract, depending on certain factors. In this case, the premium
limitation test will be applied as though the Contract were originally
issued at the lower benefit unless the benefits are reinstated in a timely
manner.
Tax Treatment of Modified Endowment Contracts. Under the Act, distributions
from a Contract treated as a modified endowment contract are taxable up to
the amount equal to the excess (if any) of the Accumulated Value immediately
before the distribution over the investment in the Contract at such time.
Investment in the Contract is generally defined as the premiums paid for the
Contract (plus or minus any loss or gain, respectively, transferred into the
Contract as a result of a tax-free exchange), minus any non-taxable
distributions (where taxable gain calculations are based on surrender values
net of loans). Loans taken from such a Contract, as well as surrenders and
benefits paid at maturity (other than the Death Benefit), will be treated as
taxable distributions. (The assignment or pledge of a Contract with a
maximum death benefit of $25,000 or less made to secure only burial or
prearranged funeral expenses is not treated as a distribution). A ten
percent (10%) additional income tax will be imposed on the portion of any
distribution from such a Contract that is included in income except where
the distribution is made on or after the date on which the Contract Owner
attains age 59 1/2, or is attributable to the Contract Owner becoming
disabled, or is a part of a series of substantially equal periodic payments
for the life or life expectancy of the Contract Owner or the joint lives or
joint life expectancies of the Contract Owner and Beneficiary.
Any withdrawal or loan proceeds that were paid 24 months prior to such a
Contract becoming a modified endowment contract will also potentially be a
taxable distribution.
Generally, interest on such Contract loans, even if paid, will not be tax
deductible.
Under the Act, all modified endowment contracts, issued by LBVIP (or its
affiliates) to the same Contract Owner during any calendar year are treated
as one modified endowment contract for purposes of determining the amount
includible in the gross income under Section 72(e) of the Code.
Tax Treatment of Contracts that are NOT Modified Endowment Contracts. The
Act does not apply to Contracts entered into prior to June 21, 1988,
provided that the Contract Owner does not request an increase in Contract
benefits (although certain increases in Face Amount are exempted) on or
after that date. These pre-June 21, 1988, Contracts (as well as Contracts
entered into after June 20, 1988, that are not modified endowment contracts)
remain subject to the taxation provisions described below.
A full surrender distribution of the Contract will, under Section 72(e)(5)
of the Code, be included in the Contract Owner's gross income to the extent
it exceeds the Contract Owner's investment in the Contract.
A partial surrender distribution from the Contract will be taxed under the
"cost recovery" rule in that, the distribution will be included in the
Contract Owner's gross income to the extent it exceeds the investment in the
Contract. However, certain cash distributions received as a result of
certain Contract benefit changes will be taxed under the "interest-first"
rule if the distribution occurs during the first fifteen years after issue.
The amount of the cash distribution to be included in gross income will be
limited to the minimum of the taxable gain and the applicable recapture
ceiling as defined in Section 7702. No ten percent (10%) additional penalty
will apply.
In addition, under Section 72(e)(5) of the Code, loans received under the
Contract will not be included in gross income. (However, loans may or may
not be taxable at the time of a full or partial surrender.) Interest paid
to LBVIP with respect to the loan may or may not be deductible. Due to the
complexity of these factors, a Contract Owner should consult a competent tax
adviser as to the deductibility of interest paid on any Contract loans.
Benefits Paid under the Accelerated Benefits Rider. Adding the Accelerated
Benefits Rider to a newly issued Contract has no adverse consequences;
however, electing to use it could. If certain requirements are satisfied,
however, accelerated death benefits paid under the Accelerated Benefits
Rider to a terminally or chronically ill insured individual, as defined in
the Code, may not be subject to tax. A competent tax adviser should be
consulted for further information.
Withholding. The taxable portion of a distribution to an individual is
subject to Federal income tax withholding unless the taxpayer elects not to
have withholding. LBVIP will provide the Contract Owner with the election
form and further information as to withholding prior to the first
distribution.
Changes in Contract Owners. The right to change Contract Owners may have
tax consequences, depending on a number of factors. Due to the complexity
of these factors, a Contract Owner should consult a competent tax adviser as
to the tax consequences of such a change.
Exchanges. The right to exchange the Contract for a fixed benefit permanent
life insurance contract (see "CONTRACT RIGHTS--Exchange Privileges") will be
treated as a tax-free exchange under Section 1035. A life insurance
contract received in exchange for a modified endowment contract will also be
treated as a modified endowment contract. Also, if a Contract Owner
exchanges any life insurance contract entered into before June 21, 1988, for
a Contract described in this prospectus, then the new provisions regarding
modified endowment contracts described above may apply. Accordingly, a
Contract Owner should consult a tax adviser before effecting an exchange of
any life insurance contract, including the Contract.
Other Taxes. Federal estate taxes and the state and local estate,
inheritance and other taxes may become due depending on applicable law and
the circumstances of each Contract Owner or Beneficiary, if the Contract
Owner or Insured dies. Any person concerned about the estate implications
of the Contract should consult a competent tax adviser.
Diversification Requirements. Flexible premium variable life insurance
policies such as the Contracts will be treated as life insurance contracts
under the Code, among other things, so long as the separate accounts funding
them are "adequately diversified". The Code contains a safe harbor provision
which provides that insurance contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the
underlying assets of the Variable Account meet the diversification
requirements applicable to regulated investment companies and no more than
fifty-five percent (55%) of the total assets underlying the Variable Account
consist of cash, cash items, U.S. government securities and securities of
other regulated investment companies.
On March 1, 1989, the Treasury Department adopted regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investments
underlying variable contracts such as the Contract. The regulations amplify
the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described
above. Under the regulations, the Variable Account will be deemed
adequately diversified if: (1) no more than 55% of the value of the total
assets of the account is represented by any one investment; (2) no more than
70% of the value of the total assets of the account is represented by any
two investments; (3) no more than 80% of the value of the total assets of
the account is represented by any three investments; and (4) no more than
90% of the value of the total assets of the account is represented by any
four investments.
The assets of the Fund are expected to meet the diversification
requirements. LB will monitor the Contracts and the regulations of the
Treasury Department to insure that the Contract will continue to qualify as
a life insurance contract under Sections 7702 and 817.
Pension and Profit-Sharing Plans. If a Contract is purchased by a trust
which forms part of a pension or profit-sharing plan qualified under Section
401(a) of the Code for the benefit of participants covered under the plan,
the Federal income tax treatment of such Contracts will be somewhat
different from that described above. A competent tax adviser should be
consulted on these matters.
Taxation of the Company
LBVIP does not initially expect to incur any income tax burden upon the
earnings or the realized capital gains attributable to the Variable Account.
Based on this expectation, no charge is being made currently to the Variable
Account for Federal income taxes which may be attributable to the Account.
If, however, LBVIP determines that it may incur such tax burden, it may
assess a charge for such burden from the Variable Account.
LBVIP may also incur state and local taxes, in addition to premium taxes, in
several states. At present, these taxes are not significant. If there is a
material change in state or local tax laws, charges for such taxes, if any,
attributable to the Variable Account, may be made.
EMPLOYMENT-RELATED BENEFIT PLANS
The Contracts described in this Prospectus (except for Contracts issued in
the state of Montana) contain guaranteed and current cost of insurance rates
that distinguish between men and women. On July 6, 1983, the Supreme Court
held in ARIZONA GOVERNING COMMITTEE V. NORRIS that optional annuity benefits
provided under an employer's deferred compensation plan could not, under
Title VII of the Civil Rights Act of 1964, vary between men and women on the
basis of gender. Because of this decision, the cost of insurance rates
applicable to Contracts purchased under an employment-related insurance or
benefit program may in some cases not vary on the basis of the Insured's
gender. Any unisex rates to be provided by LBVIP will apply for tax-
qualified plans and those plans where an employer believes that the NORRIS
decision applies. Contracts issued in connection with employment-related
insurance benefit plans may also be subject to different limitations with
respect to the Minimum Face Amount, increases in Face Amount, additional
insurance benefits, and issues ages.
Employers and employee organizations should consider, in consultation with
legal counsel, the impact of NORRIS, and Title VII generally, and any
comparable state laws that may be applicable, on any employment-related
insurance or benefit plan for which a Contract may be purchased.
VOTING RIGHTS
General. As stated above, all of the assets held in the Subaccounts of the
Variable Account will be invested in shares of the corresponding Portfolios
of the Fund. LBVIP is the legal owner of those shares and as such has the
right to vote to elect the Board of Directors of the Fund, to vote upon
certain matters that are required by the 1940 Act to be approved or ratified
by the shareholders of a mutual fund and to vote upon at a shareholders'
meeting. However, LBVIP will, as required by law, vote the shares of the
Fund at regular and special meetings of the shareholders of the Fund in
accordance with instructions received from Contract Owners. If, however,
the 1940 Act or any regulation thereunder should be amended or if the
present interpretation thereof should change, and as a result LBVIP
determines that it is permitted to vote the Fund shares in its own right, it
may elect to do so. The Fund's Bylaws provided that regular meetings of the
shareholders of the Fund may be held on an annual or less frequent basis as
determined by the Board of Directors of the Fund. For a more complete
discussion, see the accompanying prospectus for the Fund.
The number of votes which a Contract Owner has the right to instruct will be
calculated separately for each Subaccount. The number of votes which each
Contract Owner has right to instruct will be determined by dividing a
Contract's Accumulated Value in a Subaccount by the net asset value per
share of the corresponding Portfolio in which the subaccount invests.
Fractional shares will be counted. The number of votes of the Portfolio
which the Contract Owner has right to instruct will be determined as of the
date coincident with the date established by that Portfolio for determining
shareholders eligible to vote at the meeting of the Fund. Voting
instructions will be solicited by written communications prior to such
meeting in accordance with procedures established by the Fund.
Any Portfolio shares held in the Variable Account for which LBVIP does not
receive timely voting instructions, or which are not attributable to
Contract Owners, will be voted by LBVIP in proportion to the instructions
received from all Contract Owners. Any Portfolio shares held by LBVIP or
its affiliates in general accounts will, for voting purposes, be allocated
to all separate accounts of LBVIP and its affiliates having a voting
interest in that Portfolio in proportion to each such separate account's
voting interest in that Portfolio, and will be voted in the same manner as
are such separate account's votes. Voting instructions to abstain on any
item to be voted upon will be applied on a pro rata basis to reduce the
votes eligible to be cast.
Each person having a voting interest in a Subaccount will receive proxy
materials, reports and other materials relating to the appropriate
Portfolio.
Disregard of Voting Instructions. LBVIP may, when required by state
insurance regulatory authorities, disregard voting instructions if the
instructions require that the shares be voted so as to cause a change in the
subclassification or investment objective of the Fund or one or more of its
Portfolios or to approve or disapprove an investment advisory contract for a
Portfolio of the Fund. In addition, LBVIP itself may disregard voting
instructions in favor of changes initiated by a Contract Owner in the
investment policy or the investment adviser of a Portfolio of the Fund if
LBVIP reasonably disapproves of such changes. A change would be disapproved
only if the proposed change is contrary to state law or prohibited by state
regulatory authorities or LBVIP determined that the change would have an
adverse effect on its General Account in that the proposed investment policy
for a Portfolio may result in overly speculative or unsound investments. In
the event LBVIP does disregard voting instructions, a summary of that action
and the reasons for such action will be included in the next annual report
of the Fund to Contract Owners.
<TABLE>
<CAPTION>
DIRECTORS AND OFFICERS OF LBVIP
Directors
<S> <C>
Name Principal Occupation
Robert P. Gandrud President and Chief Executive Officer of Lutheran Brotherhood
Bruce J. Nicholson Executive Vice President and Chief Financial Officer of Lutheran Brotherhood
Rolf F. Bjelland Executive Vice President of Lutheran Brotherhood
David W. Angstadt Executive Vice President and Chief Marketing Officer of Lutheran Brotherhood
David J. Larson Senior Vice President, Secretary and General Counsel of Lutheran Brotherhood
Jennifer H. Martin Senior Vice President of Lutheran Brotherhood
Jerald E. Sourdiff Vice President and Chief Financial Officer of Lutheran Brotherhood
Executive Officers
Robert P. Gandrud President, Chairman and Chief Executive Officer
Bruce J. Nicholson Chief Operating Officer
Jerald E. Sourdiff Vice President and Chief Financial Officer (Senior Vice President of Lutheran
Brotherhood)
David K. Stewart Treasurer
David W. Angstadt Vice President and Chief Marketing Officer
Rolf F. Bjelland Vice President and Chief Investment Officer
David J. Larson Vice President and Secretary (Senior Vice President,
Secretary and General Counsel of Lutheran Brotherhood)
David J. Christianson Vice President--Insurance Services (Vice President of Lutheran
Brotherhood)
Otis F. Hilbert Vice President and Assistant Secretary (Vice President
and Associate General Counsel of Lutheran Brotherhood)
Randall L. Boushek Vice President
James R. Olson Vice President (Vice President of Lutheran Brotherhood)
Susan Oberman Smith Vice President
Richard B. Ruckdashel Vice President
James M. Walline Vice President--Investments (Vice President of Lutheran Brotherhood)
</TABLE>
All of the foregoing directors and executive officers except Mr. Angstadt
and Ms. Martin have been employees or officers of Lutheran Brotherhood for
the past five years. Mr. Angstadt has been with Lutheran Brotherhood since
1990, having served as an Associate General Agent and a General Agent until
being elected Executive Vice President in December 1997. Ms. Martin has
been a Senior Vice President of Human Resources of Lutheran Brotherhood
since July 1995. Prior to that time, she was the Director of Human
Resources for Unisys/Loral Corp. in Minneapolis, Minnesota.
SALES AND OTHER AGREEMENTS
Lutheran Brotherhood Securities Corp., 625 Fourth Avenue South,
Minneapolis, Minnesota 55415 an indirect subsidiary of Lutheran
Brotherhood, acts as the principal underwriter of the Contracts pursuant to
a Distribution Agreement to which LBVIP and the Variable Account are also
parties.
Lutheran Brotherhood Securities Corp. is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. Lutheran Brotherhood
Securities Corp. is also named as distributor of the stock of The Lutheran
Brotherhood Family of Funds, consisting of the following series: Lutheran
Brotherhood Money Market Fund, Lutheran Brotherhood Opportunity Growth
Fund, Lutheran Brotherhood Fund, Lutheran Brotherhood Mid Cap Growth Fund,
Lutheran Brotherhood World Growth Fund, Lutheran Brotherhood Income Fund,
Lutheran Brotherhood High Yield Fund, and Lutheran Brotherhood Municipal
Bond Fund, all of which are diversified open-end investment companies.
The Contracts are sold through LBVIP Representatives who are licensed by
state insurance officials to sell the Contracts. These LBVIP
Representatives are also registered representatives of Lutheran Brotherhood
Securities Corp. The Contracts are offered in all states where LBVIP is
authorized to sell variable life insurance.
When an application for a Contract is completed, it is submitted to LBVIP.
Under a service agreement between LBVIP and Lutheran Brotherhood (described
below), Lutheran Brotherhood performs insurance underwriting reviews and
determines whether to accept or reject the application for the Contract and
determines the Insured's premium class.
Under the Distribution Agreement, Lutheran Brotherhood Securities Corp.
will perform suitability review.
Under the Distribution Agreement, LBVIP Representatives receive commissions
and service fees from Lutheran Brotherhood Securities Corp. for selling and
servicing the Contracts. LBVIP reimburses Lutheran Brotherhood Securities
Corp. for such compensation. LBVIP also reimburses Lutheran Brotherhood
Securities Corp. for other expenses incurred in marketing and selling the
Contracts. These include general agent compensation, LBVIP
Representatives' training allowances and agency expense allowances.
Compensation of LBVIP Representatives. LBVIP Representatives selling the
Contracts will receive a 3% service fee of all premiums paid on the
Contract. In addition to the service fee, commissions will be paid to the
LBVIP Representatives based on a commission schedule summarized below.
Further, LBVIP Representatives may be eligible to receive certain benefits
based on the account of earned commissions.
During the first Contract Year, commissions will be not more than 52% of
the Death Benefit Guarantee Premium for the Contract. In the second and
third Contract Years, commissions will equal, in general, 7% of the Death
Benefit Guarantee Premium for the Contract. The Death Benefit Guarantee
Premium at issue will include premiums attributable to riders and
supplemental benefits included in the Contract.
For the first year following an increase in Face Amount, commissions will
be not more than 52% of the Death Benefit Guarantee Premium for the
increase. In the second and third year following an increase, commissions
will equal, in general, 7% of the Death Benefit Guarantee Premium for the
increase.
For Contracts with an initial Face Amount greater than or equal to $500,000
but less than $1,000,000, during the first Contract Year after issue or
following an increase in Face Amount, the commissions will be not more than
42% of the applicable Death Benefit Guarantee Premium. For Contracts with
an initial Face Amount greater than or equal to $1,000,000, during the
first Contract Year after issue or following an increase in Face Amount,
the commissions will be not more than 32% of the applicable Death Benefit
Guarantee Premium. In the second and third year after issue or following an
increase, the commissions will equal, in general, 6% of the applicable
Death Benefit Guarantee Premium.
For the first year following the addition of a spouse rider or an increase
in the Face Amount of a spouse rider, the commission will be not more than
52% of the Death Benefit Guarantee Premium for the rider or the increase.
In the second and third year following the addition of a spouse rider or an
increase, commissions will equal, in general, 7% of the Death Benefit
Guarantee Premium for the rider or the increase.
For a spouse rider with an initial Face Amount greater than or equal to
$500,000 but less than $1,000,000, during the first Contract Year after
issue or following an increase in Face Amount, the commissions will be not
more than 42% of the applicable Death Benefit Guarantee Premium. For spouse
rider with an initial Face Amount greater than or equal to $1,000,000,
during the first Contract Year after issue or following an increase in Face
Amount, the commissions will be not more than 32% of the applicable Death
Benefit Guarantee Premium. In the second and third year after issue or
following an increase, the commissions will equal, in general, 6% of the
applicable Death Benefit Guarantee Premium.
For the first year following the addition of a child rider, the commission
will be not more than 52% of the Death Benefit Guarantee Premium for the
increase in Face Amount of the rider. In the second and third year
following the increase, commissions will equal, in general, 7% of the Death
Benefit Guarantee Premium for the rider.
Service Agreement. Lutheran Brotherhood performs certain investment and
administrative duties for LBVIP pursuant to a written agreement. The
agreement is automatically renewed each year, unless either party
terminates it. Under this agreement, LBVIP pays Lutheran Brotherhood for
salary costs and other services and an amount for indirect costs incurred
through LBVIP's use of Lutheran Brotherhood's personnel and facilities.
YEAR 2000
LBVIP has conducted a review of its computer systems to identify systems
that could be affected by the "Year 2000" problem and is developing an
implementation plan to resolve the issue. The Year 2000 problem is the
result of computer programs being written using two digits (rather than
four) to define the applicable year. Any of LBVIP's computer programs that
have time-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a major system
failure or miscalculations. LBVIP presently believes that, with
modifications to its existing software and conversion to new software, the
Year 2000 problem will not pose significant operational problems for its
computer systems as so modified and converted. If, however, such
modifications and conversions are not completed timely, the Year 2000
problem may have a material impact on the operations of LBVIP. The Year
2000 readiness of other third parties whose system failures could have an
impact on LBVIP's operations is currently being evaluated. The potential
materiality of any such impact is not known at this time. A description of
the Fund's preparations for the "Year 2000" is contained in the
accompanying prospectus for the Fund.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party or
to which the assets of the Variable Account are subject. Neither LBVIP nor
LBSC are involved in any litigation that is of material importance in
relation to their total assets or that relates to the Variable Account.
LEGAL MATTERS
All matters of applicable state law pertaining to the Contracts, including
LBVIP's right to issue the Contracts thereunder, have been passed upon by
James M. Odland, counsel for LBVIP.
EXPERTS
The financial statements of the Variable Account and LBVIP included in this
Prospectus have been so included in reliance of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
Actuarial matters included in this Prospectus have been examined by Kenneth
A. Dahlberg, FSA, MAAA, Actuary of LBVIP, whose opinion is filed as an
exhibit to the Registration Statement.
FURTHER INFORMATION
A Registration Statement under the Securities Act of 1933 has been filed
with the SEC, with respect to the Contracts described herein. This
Prospectus does not contain all of the information set forth in the
Registration Statement and exhibits thereto, to which reference is hereby
made for further information concerning the Account, LBVIP and the
Contracts. The information so omitted may be obtained from the SEC's
principal office in Washington, D.C., upon payment of the fee pre-scribed
by the SEC, or examined there without charge. The Securities and Exchange
Commission also maintains a website (http://www.sec.gov) that contains all
of the material incorporated by reference herein, and other information
regarding the Contract. Statements contained in this Prospectus as to the
provisions of the Contracts and other legal documents are summaries, and
reference is made to the documents as filed with the SEC for a complete
statement of the provisions thereof.
FINANCIAL STATEMENTS
The audited financial statements of LBVIP which are included in this
Prospectus should be distinguished from the financial statements of the
Variable Account and should be considered only as bearing upon the ability
of LBVIP to meet its obligations under the Contracts. They should not be
considered as bearing on the investment performance of the
assets held in the Variable Account.
3100 Multifoods Tower
33 South Sixth Street
Minneapolis, MN 55402-3795
Price Waterhouse
[GRAPHIC OMITTTED: LOGO]
Report of Independent Accountants
To Lutheran Brotherhood Variable Insurance
Products Company and Contract Owners of
LBVIP Variable Insurance Account
In our opinion, the accompanying statement of assets and liabilities and
the related statements of operations and of changes in net assets
present fairly, in all material respects, the financial position of the
Opportunity Growth, World Growth, Growth, High Yield, Income, and Money
Market, subaccounts of LBVIP Variable Insurance Account at December 31,
1997, the results of each of their operations for the year then ended
and the changes in each of their net assets for each of the two years in
the period then ended, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of
Lutheran Brotherhood Variable Insurance Products Company's management;
our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
/s/Price Waterhouse LLP
March 20, 1998
<TABLE>
<CAPTION>
LBVIP Variable Insurance Account
Opportunity Growth Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 983,456
shares at net asset value of $11.55 per share
(cost $11,358,106) $11,357,459
Receivable from LBVIP for units issued 6,620
------------
Total assets 11,364,079
------------
LIABILITIES:
Payable to LBVIP for mortality and expense
risk charge 6,019
------------
Total liabilities 6,019
------------
NET ASSETS $11,358,060
============
Number of units outstanding 955,440
============
Unit Value (net assets divided by units outstanding) $11.89
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $61,443
Mortality and expense risk charge (56,508)
------------
Net investment income 4,935
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 3,863
Net change in unrealized appreciation
of investments 111,359
------------
Net gain on investments 115,222
------------
Net increase in net assets resulting
from operations $120,157
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
<S> <C> <C>
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $4,935 $(15,037)
Net realized gain on investments 3,863 330,441
Net change in unrealized appreciation or depreciation
of investments 111,359 (112,007)
------------ ------------
Net increase in net assets resulting from operations 120,157 203,397
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 3,472,368 3,072,084
Net asset value of units redeemed (885,357) (1,101,486)
Transfers from other subaccounts 2,337,675 5,704,090
Transfers to other subaccounts (998,248) (566,620)
------------ ------------
Net increase in net assets from unit transactions 3,926,438 7,108,067
------------ ------------
Net increase in net assets 4,046,595 7,311,465
NET ASSETS:
Beginning of period 7,311,465 --
------------ ------------
End of period $11,358,060 $7,311,465
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LBVIP Variable Insurance Account
World Growth Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 655,251
shares at net asset value of $11.12 per share
(cost $7,012,123) $7,286,777
Receivable from LBVIP for units issued 7,236
------------
Total assets 7,294,013
------------
LIABILITIES:
Payable to LBVIP for mortality and expense
risk charge 3,891
------------
Total liabilities 3,891
------------
NET ASSETS $7,290,122
============
Number of units outstanding 649,823
============
Unit Value (net assets divided by units outstanding) $11.22
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $82,500
Mortality and expense risk charge (37,382)
------------
Net investment income 45,118
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 17,590
Net change in unrealized depreciation
of investments (13,251)
------------
Net gain on investments 4,339
------------
Net increase in net assets resulting
from operations $49,457
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
<S> <C> <C>
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $45,118 $21,786
Net realized gain on investments 17,590 13,138
Net change in unrealized appreciation or depreciation
of investments (13,251) 287,905
------------ ------------
Net increase in net assets resulting from operations 49,457 322,829
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 2,332,730 2,066,890
Net asset value of units redeemed (600,497) (827,171)
Transfers from other subaccounts 1,509,382 3,362,618
Transfers to other subaccounts (669,257) (256,859)
------------ ------------
Net increase in net assets from unit transactions 2,572,358 4,345,478
------------ ------------
Net increase in net assets 2,621,815 4,668,307
NET ASSETS:
Beginning of period 4,668,307 --
------------ ------------
End of period $7,290,122 $4,668,307
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LBVIP Variable Insurance Account
Growth Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 4,440,101
shares at net asset value of $21.58 per share
(cost $68,823,152) $95,833,545
Receivable from LBVIP for units issued 14,113
------------
Total assets 95,847,658
------------
LIABILITIES:
Payable to LBVIP for mortality and expense
risk charge 51,280
------------
Total liabilities 51,280
------------
NET ASSETS $95,796,378
============
Number of units outstanding 2,353,934
============
Unit Value (net assets divided by units outstanding) $40.70
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $929,143
Mortality and expense risk charge (507,798)
------------
Net investment income 421,345
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments $10,716,591
Net change in unrealized appreciation
of investments $10,124,056
------------
Net gain on investments $20,840,647
------------
Net increase in net assets resulting
from operations $21,261,992
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
<S> <C> <C>
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $421,345 $497,251
Net realized gain on investments 10,716,591 8,265,078
Net change in unrealized appreciation or depreciation
of investments 10,124,056 3,663,632
------------ ------------
Net increase in net assets resulting from 21,261,992 12,425,961
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 12,781,223 13,357,943
Net asset value of units redeemed (7,945,404) (6,997,719)
Transfers from other subaccounts 3,321,252 3,910,699
Transfers to other subaccounts (4,317,617) (8,867,897)
------------ ------------
Net increase in net assets from unit transactions 3,839,454 1,403,026
------------ ------------
Net increase in net assets 25,101,446 13,828,987
NET ASSETS:
Beginning of period 70,694,932 56,865,945
------------ ------------
End of period $95,796,378 $70,694,932
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LBVIP Variable Insurance Account
High Yield Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 3,482,579
shares at net asset value of $10.44 per share
(cost $34,963,130) $36,346,516
Receivable from LBVIP for units issued 8,592
------------
Total assets 36,355,108
------------
LIABILITIES:
Payable to LBVIP for mortality and expense
risk charge 19,579
------------
Total liabilities 19,579
------------
NET ASSETS $36,335,529
============
Number of units outstanding 1,152,787
============
Unit Value (net assets divided by units outstanding) $31.52
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $3,160,134
Mortality and expense risk charge (199,405)
------------
Net investment income 2,960,729
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 30,809
Net change in unrealized appreciation
of investments 1,227,246
------------
Net gain on investments 1,258,055
------------
Net increase in net assets resulting
from operations $4,218,784
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
<S> <C> <C>
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $2,960,729 $2,632,160
Net realized gain on investments 30,809 12,638
Net change in unrealized appreciation or depreciation
of investments 1,227,246 326,982
------------ ------------
Net increase in net assets resulting from operations 4,218,784 2,971,780
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 5,485,102 5,637,311
Net asset value of units redeemed (3,245,526) (3,111,396)
Transfers from other subaccounts 1,526,642 1,914,400
Transfers to other subaccounts (2,115,284) (3,900,814)
------------ ------------
Net increase in net assets from unit transactions 1,650,934 539,501
------------ ------------
Net increase in net assets 5,869,718 3,511,281
NET ASSETS:
Beginning of period 30,465,811 26,954,530
------------ ------------
End of period $36,335,529 $30,465,811
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LBVIP Variable Insurance Account
Income Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 1,672,107
shares at net asset value of $9.92 per share
(cost $16,426,444) $16,581,963
------------
Total assets 16,581,963
------------
LIABILITIES:
Payable to LBVIP for units redeemed 614
Payable to LBVIP for mortality and expense
risk charge 8,950
------------
Total liabilities 9,564
------------
NET ASSETS $16,572,399
============
Number of units outstanding 722,946
============
Unit Value (net assets divided by units outstanding) $22.92
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $1,053,148
Mortality and expense risk charge (94,577)
------------
Net investment income 958,571
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investments (7,163)
Net change in unrealized appreciation
of investments 285,966
------------
Net gain on investments 278,803
------------
Net increase in net assets resulting
from operations $1,237,374
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
<S> <C> <C>
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $958,571 $907,979
Net realized loss on investments (7,163) (32,608)
Net change in unrealized appreciation or depreciation
of investments 285,966 (488,846)
------------ ------------
Net increase in net assets resulting from operations 1,237,374 386,525
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 2,440,767 2,689,600
Net asset value of units redeemed (1,584,950) (1,656,820)
Transfers from other subaccounts 705,011 548,400
Transfers to other subaccounts (1,646,190) (2,358,320)
------------ ------------
Net decrease in net assets from unit transactions (85,362) (777,140)
------------ ------------
Net change in net assets 1,152,012 (390,615)
NET ASSETS:
Beginning of period 15,420,387 15,811,002
------------ ------------
End of period $16,572,399 $15,420,387
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LBVIP Variable Insurance Account
Money Market Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 2,584,590
shares at net asset value of $1.00 per share
(cost $2,584,590) $2,584,590
------------
Total assets 2,584,590
------------
LIABILITIES:
Payable to LBVIP for units redeemed 7,074
Payable to LBVIP for mortality and expense
risk charge 1,410
------------
Total liabilities 8,484
------------
NET ASSETS $2,576,106
============
Number of units outstanding 1,481,096
============
Unit Value (net assets divided by units outstanding) $1.74
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $133,079
Mortality and expense risk charge (15,160)
------------
Net investment income $117,919
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
<S> <C> <C>
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $117,919 $98,806
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 801,328 876,398
Net asset value of units redeemed (995,687) (973,280)
Transfers from other subaccounts 1,927,265 1,762,829
Transfers to other subaccounts (1,580,632) (1,252,526)
------------ ------------
Net increase in net assets from unit transactions 152,274 413,421
------------ ------------
Net increase in net assets 270,193 512,227
NET ASSETS:
Beginning of period 2,305,913 1,793,686
------------ ------------
End of period $2,576,106 $2,305,913
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
LBVIP Variable Insurance Account
Notes to Financial Statements
December 31, 1997
(1) ORGANIZATION
The LBVIP Variable Insurance Account (the Variable Account), a unit
investment trust registered under the Investment Company Act of 1940,
was established as a separate account of Lutheran Brotherhood Variable
Insurance Products Company (LBVIP) in 1984, pursuant to the laws of the
State of Minnesota. LBVIP offers financial services to Lutherans and
through its parent, Lutheran Brotherhood Financial Corporation, is a
wholly, owned subsidiary of Lutheran Brotherhood, a fraternal benefit
society. The Variable Account contains six subaccounts -- Opportunity
Growth, World Growth, Growth, High Yield, Income and Money Market --
each of which invests only in a corresponding portfolio of the LB Series
Fund, Inc. (the Fund). The Fund is registered under the Investment
Company Act of 1940 as a diversified open-end investment company.
The Variable Account is used to support only flexible premium variable
life ("Variable Universal Life") insurance contracts issued by LBVIP.
Under applicable insurance law, the assets and liabilities of the
Variable Account are clearly identified and distinguished from the other
assets and liabilities of LBVIP. The assets of the Variable Account will
not be charged with any liabilities arising out of any other business
conducted by LBVIP.
(2) SIGNIFICANT ACCOUNTING POLICIES
Investments
The investments in shares of the Fund are stated at the net asset value
of the Fund. The cost of shares sold and redeemed is determined on the
average cost method. Dividend distributions received from the Fund are
reinvested in additional shares of the Fund and recorded as income by
the Variable Account on the ex-dividend date.
Federal Income Taxes
LBVIP is taxed as a life insurance company and includes its flexible
premium variable life insurance operations in its tax return. LBVIP
anticipates no tax liability resulting from the operations of the
Variable Account. Consequently, no provision for income taxes has been
charged against the Variable Account.
Other
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financia statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those
estimates.
(3) RELATED PARTY TRANSACTIONS
Proceeds received by the Variable Account from units issued represent
gross contract premiums received by LBVIP less deductions for sales
distribution expenses of 3% and premium taxes of 2% of the gross
contract premium. Total deductions from gross contract premiums received
were $1,491,810 and $1,471,047 in 1997 and 1996, respectively.
A monthly charge is deducted from the cash value of the contract by
LBVIP for the cost of insurance, insurance administration of the
contract and the cost of any optional benefits added by riders. This
charge is deducted by redeeming units of the subaccounts of the Variable
Account. Total monthly charges were $8,681,560 and $7,790,993 in 1997
and 1996, respectively.
A daily charge is deducted from the value of the net assets of the
Variable Account to compensate LBVIP for mortality and expense risks
assumed in connection with the contract and is equivalent to an annual
rate of 0.6% of the average daily net assets of the Variable Account.
Mortality and expense risk charges of $910,830 and $696,499 were
deducted in 1997 and 1996, respectively.
A deferred charge is deducted from the cash value of the contract to
compensate LBVIP for certain selling and administrative expenses if: (1)
within the first ten years a contract is in force, it is surrendered or
lapses, or (2) a contract owner requests a decrease in the face amount
either within the first ten years a contract is in force, or within ten
years after a requested increase in face amount. The deferred charge
remains at a level amount during the first five years of the applicable
ten year period, and then is reduced on a monthly basis by equal amounts
until the deferred charge is zero after ten years. This charge is
deducted by redeeming units of the subaccounts of the Variable Account.
Deferred charges of $348,048 and $415,474 were deducted in 1997 and
1996, respectively.
(4) UNIT ACTIVITY
Transactions in units (including transfers among subaccounts) were as
follows:
<TABLE>
<CAPTION>
Subaccounts
-------------------------------------------------------------------------------------------------
Opportunity World High Money
Growth Growth Growth Yield Income Market
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1995 N/A N/A 2,200,589 1,076,934 765,457 1,129,845
Units issued 715,879 489,251 667,271 311,345 172,194 1,575,569
Units redeemed (98,859) (64,007) (619,768) (291,239) (210,454) (1,316,407)
------------ ------------ ------------ ------------ ------------ ------------
Units outstanding at
December 31, 1996 617,020 425,244 2,248,092 1,097,040 727,197 1,389,007
Units issued 542,952 368,148 490,792 261,120 157,707 1,480,498
Units redeemed (204,532) (143,569) (384,950) (205,373) (161,957) (1,388,408)
------------ ------------ ------------ ------------ ------------ ------------
Units outstanding at
December 31, 1997 955,440 649,823 2,353,934 1,152,787 722,947 1,481,097
============ ============ ============ ============ ============ ============
(5) PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
in the LB Series Fund, Inc. were as follows:
Subaccounts
-------------------------------------------------------------------------------------------------
Opportunity World High Money
Growth Growth Growth Yield Income Market
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Purchases $8,014,007 $4,900,553 $13,926,976 $5,454,122 $1,916,472 $1,845,655
Sales 705,723 559,655 4,541,768 2,165,707 1,756,895 1,330,800
For the year ended
December 31, 1997
Purchases 4,285,106 2,805,601 17,177,817 6,014,007 2,268,207 1,704,755
Sales 327,587 160,871 2,836,512 1,406,133 1,397,474 1,425,786
</TABLE>
COMMENT ON FINANCIAL STATEMENTS OF LBVIP
The financial statements of LBVIP included in this Prospectus should be
considered as bearing only upon the ability of LBVIP to meet its obligations
under the Contracts. The value of the interests of owners and beneficiaries
under the Contracts are affected primarily by the investment results of the
Subaccounts of the Variable Account.
Report of Independent Accountants
March 12, 1998
To The Board of Directors and Stockholder
of Lutheran Brotherhood Variable
Insurance Products Company
In our opinion, the accompanying balance sheet and the related statements of
income, of stockholder's equity and of cash flows present fairly, in all
material respects, the financial position of Lutheran Brotherhood Variable
Insurance Products Company (the Company) at December 31, 1997 and 1996, and
the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1997 in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Price Waterhouse
1997 1996
Assets
Investments:
Fixed income securities available
for sale, at fair value $ 230,063 $ 170,500
Loans to contract holders 5,617 4,322
---------- ----------
Total investments 235,680 174,822
Cash and cash equivalents 6,747 18,535
Deferred policy acquisition costs 160,697 144,493
Investment income due and accrued 2,733 2,001
Other assets 5,244 4,881
Separate account assets 3,580,001 2,903,551
---------- ----------
Total assets $3,991,102 $3,248,283
========== ==========
Liabilities and Stockholder's Equity
Liabilities:
Contract reserves $ 222,243 $ 180,092
Benefits in the process of payment 7,516 5,166
Other liabilities 19,398 14,972
Separate account liabilities 3,580,001 2,903,551
---------- ----------
Total liabilities 3,829,158 3,103,781
Stockholder's equity:
2,000,000 shares authorized,
issued and outstanding 2,000 2,000
Additional paid-in capital 113,800 118,800
Net unrealized gains 2,501 292
Retained earnings 43,643 23,410
---------- ----------
Total stockholder's equity 161,944 144,502
---------- ----------
Total liabilities and stockholder's equity $3,991,102 $3,248,283
========== ==========
The accompanying notes are an
integral part of these financial statements.
1997 1996 1995
Revenues:
Net investment income $14,771 $11,402 $10,666
Net realized investment gains 374 2,751 49
Contract charges 46,523 38,983 32,664
Other income 3,332 2,717 1,106
------- ------- -------
Total revenues 65,000 55,853 44,485
Benefits and other deductions:
Net additions to contract reserves 2,121 2,567 275
Contractholder benefits 13,718 11,763 10,241
Commissions 17,076 16,960 11,395
Operating expenses 22,561 18,513 15,310
Increase in deferred policy
acquisition costs (17,799) (15,757) (13,599)
------- ------- -------
Total benefits and other deductions 37,677 34,046 23,622
Income (loss) from operations before
income taxes 27,323 21,807 20,863
Provision for income taxes 7,090 7,479 3,722
------- ------- -------
Net income (loss) $20,233 $14,328 $17,141
======= ======= =======
The accompanying notes are an
integral part of these financial statements.
<TABLE>
<CAPTION>
Additional Unrealized Total
Common Paid-in Gains Retained Stockholder's
Stock Capital (Losses) Earnings Equity
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $2,000 $118,800 $ (33) $ (8,059) $112,708
1995 transactions:
Net income 17,141 17,141
Unrealized gains 1,988 1,988
------ -------- ------ -------- --------
Balance at December 31, 1995 2,000 118,800 1,955 9,082 131,837
1996 transactions:
Net income 14,328 14,328
Unrealized losses (1,663) (1,663)
------ -------- ------ -------- --------
Balance at December 31, 1996 2,000 118,800 292 23,410 144,502
1997 transactions:
Net income 20,233 20,233
Return of capital (5,000) (5,000)
Unrealized gains 2,209 2,209
------ -------- ------ -------- --------
Balance at December 31, 1997 $2,000 $113,800 $2,501 $43,643 $161,944
====== ======== ====== ======= ========
The accompanying notes are an
integral part of these financial statements.
</TABLE>
1997 1996 1995
Cash flows from operating activities:
Net income (loss) $20,233 $14,328 $17,141
Adjustments to reconcile net
income to net cash provided by
operating activities:
Deferred policy acquisition costs (17,799) (15,757) (13,599)
Realized net investment gains (374) (2,751) (49)
Change in operating assets and liabilities:
Loans to contract holders (1,294) (1,633) (1,009)
Other assets (1,095) 1,705 (4,321)
Contract reserves 42,151 16,307 55,765
Other liabilities 3,288 9,572 2,047
Increase in benefits in process of payment 2,350 1,545 147
Bond amortization 99 59 22
------- ------- -------
Net cash provided by operating activities 47,559 23,375 56,144
------- ------- -------
Cash flows from investing activities:
Proceeds from sale of fixed income
securities available for sale 27,888 63,535 2,911
Purchase of fixed income securities
available for sale (82,235) (93,737) (54,411)
------- ------- -------
Net cash used in investing activities (54,347) (30,202) (51,500)
------- ------- -------
Cash flows from financing activities:
Return of capital (5,000)
------- ------- -------
Net cash used in financing activities (5,000)
------- ------- -------
Net (decrease) increase in cash
and cash equivalents (11,788) (6,827) 4,644
Cash and cash equivalents, beginning of year 18,535 25,362 20,718
------- ------- -------
Cash and cash equivalents, end of year $ 6,747 $18,535 $25,362
======= ======= =======
The accompanying notes are an
integral part of these financial statements.
1. Organization
Lutheran Brotherhood Variable Insurance Products Company (the Company)
offers financial services to Lutherans. The Company, through its parent,
Lutheran Brotherhood Financial Corporation (LBFC or Parent), is a wholly
owned subsidiary of Lutheran Brotherhood, a fraternal benefit organization.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with an original maturity of 90 days or less.
Investments
See disclosures regarding the determination of fair value of financial
instruments at Note 10.
Carrying value of investments is determined as follows:
Fixed income securities Fair value
Loans to contractholders Amortized cost
Fixed income securities which may be sold prior to maturity are classified
as available for sale.
Realized investment gains and losses on sales of securities are determined
on a first in, first out method for fixed income securities and are reported
in the Statement of Income. Unrealized investment gains and losses on fixed
income securities classified as available for sale, net of the impact of
unrealized investment gains and losses on deferred policy acquisitions
costs, are excluded from net income and reported in a separate component of
stockholder's equity.
Deferred Policy Acquisition Costs
Those costs of acquiring new business, which vary with and are primarily
related to the production of new business, have been deferred to the extent
that such costs are deemed recoverable from future profits. Such costs
include commissions, certain costs of contract issuance and underwriting,
and certain variable agency expenses.
For universal life-type and investment-type contracts, deferred acquisition
costs are amortized in proportion to estimated gross profits from mortality,
investment, and expense margins. The effects of revisions to experience on
previous amortization of deferred acquisition costs are reflected in
earnings and change in unrealized investment gains (losses) in the period
estimated gross profits are revised.
Separate Accounts
Separate account assets include segregated funds invested by the Company for
the benefit of variable life insurance and variable annuity contract owners.
The assets (principally investments) and liabilities (principally to
contractholders) of each account are clearly identifiable and
distinguishable from other assets and liabilities of the Company. Assets
are valued at market. The investment income, gains and losses of these
accounts generally accrue to the contractholders, and, therefore, are not
included in the Company's net income.
Future Contract Benefits
Liabilities for future contract and contract benefits on universal life-type
and investment-type contracts are based on the contract account balance.
Premium Revenue and Benefits to Contractholders
Recognition of Universal Life-Type Contracts Revenue and Benefits to
Contractholders
Universal life-type contracts are insurance contracts with terms that are
not fixed and guaranteed. The terms that may be changed could include one
or more of the amounts assessed the contractholder, premiums paid by the
contractholder or interest accrued to contractholder balances. Amounts
received as payments for such contracts are not reported as premium
revenues.
Revenues for universal-type contracts consist of investment income, charges
assessed against contract account values for deferred contract loading, the
cost of insurance and contract administration. Contract benefits and claims
that are charged to expense include interest credited to contracts and
benefit claims incurred in the period in excess of related contract account
balances.
Recognition of Investment Contract Revenue and Benefits to Contractholders
Contracts that do not subject the Company to risks arising from
contractholder mortality or morbidity are referred to as investment
contracts. Certain deferred annuities are considered investment contracts.
Amounts received as payments for such contracts are not reported as premium
revenues.
Revenues for investment products consist of investment income and contract
administration charges. Contract benefits that are charged to expense
include benefit claims incurred in the period in excess of related contract
balances, and interest credited to contract balances.
3. Income Taxes
The Company's tax provision and related balance sheet accounts are
determined in accordance with a tax sharing agreement with its Parent, which
allocates federal income taxes to the Company as if it filed a separate tax
return. Federal income taxes are charged or credited to operations based on
amounts estimated to be payable or recoverable as a result of taxable
operations for the current year. Deferred income tax assets and liabilities
are recognized based on the temporary differences between financial
statement carrying amounts and income tax bases of assets and liabilities
using enacted income tax rates and laws.
The 1997 and 1996 provisions for income taxes reflected on the Statement of
Income consisted entirely of deferred federal and state income tax expense.
Net deferred income tax liabilities are included on the balance sheet in
"Other Liabilities" and consist of the following:
1997 1996
Deferred policy acquisition costs $(49.4) $(43.6)
Reserves for future benefits 25.4 26.9
Net operating loss carryforwards 9.1 9.4
Other (4.7) (3.7)
------ ------
Net deferred income tax liability $(19.6) $(11.0)
During 1997, the Company utilized $3 million of its net operating loss
carryforward and $3 million of its alternative minimum tax net operating
loss carryforward. The Company has net operating loss carryforwards for tax
purposes of approximately $26 million at December 31, 1997, which expire
between 2005 and 2009. For alternative minimum tax calculation purposes,
the Company has net operating loss carryforwards of $27 million at December
31, 1997, which expire between 2005 and 2009.
The Company's effective tax rate of 26% differs from the statutory rate due
to dividends received deductions.
4. Investments
Fixed Income Securities
Investments in fixed income securities are primarily intended to back long-
term liabilities; therefore, care should be exercised in drawing any
conclusions from market value information.
Investments in fixed income securities at December 31, 1997 and 1996 follow:
Available for Sale (Carried at Fair Value)
December 31, 1997
-----------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Fixed income securities:
U.S. government $113,407 $3,990 $ 70 $117,327
Mortgage-backed securities 32,398 487 32,885
All other corporate bonds 78,523 1,412 84 79,851
-------- ------ ---- --------
Total available for sale $224,328 $5,889 $154 $230,063
======== ====== ====== ========
Available for Sale (Carried at Fair Value)
December 31, 1998
-----------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Fixed income securities:
U.S. government $96,080 $2,128 $ 715 $97,493
Mortgage-backed securities 29,718 -- 292 29,426
All other corporate bonds 43,909 53 381 43,581
-------- ------ ---- --------
Total available for sale $169,707 $2,181 $1,388 $170,500
======== ====== ====== ========
Contractual Maturity of Fixed Income Securities
The amortized cost and fair value of fixed income securities available for
sale as of December 31, 1997 are shown below by contractual maturity.
Actual maturities may differ from contractual maturities because securities
may be restructured, called or prepaid.
Amortized Fair
Years to Maturity Cost Value
One year or less $ 12,007 $ 12,086
After one year through five years 57,881 59,556
After five years through ten years 86,817 89,245
After ten years 35,225 36,291
Mortgage-backed securities 32,398 32,885
-------- --------
Total available for sale $224,328 $230,063
======== ========
5. Investment Income and Realized Gains and Losses
Investment income summarized by type of investment was as follows:
Year Ended December 31,
---------------------------
1997 1996 1995
Fixed income securities $13,472 $ 9,061 $ 8,582
Contract loans 367 267 165
Cash and cash equivalents 952 2,093 1,940
------- ------- -------
Gross investment income 14,791 11,421 10,687
Investment expenses 20 19 21
------- ------- -------
Net investment income $14,771 $11,402 $10,666
======= ======= =======
Gross realized investment gains and losses on sales of all types of
investments are as follows:
Year Ended December 31,
------------------------
1997 1996 1995
Fixed income securities:
Realized gains $426 $2,913 $57
Realized losses 53 160 2
Other investments:
Realized gains 1 1 -
Realized losses 3 6
---- ------ ---
Total net realized investment gains $374 $2,751 $49
==== ====== ===
6. Statutory Deposit
Bonds with a carrying value of $2.5 million and $2.2 million and a market
value of $2.7 million and $2.3 million at December 31, 1997 and 1996,
respectively, are on deposit with various state insurance departments as
required by law.
7. Separate Account Business
Separate account assets include segregated funds invested by the Company for
the benefit of variable life insurance and variable annuity contract owners.
A portion of the contract owner's premium payments are invested by the
Company into the LBVIP Variable Insurance Account, the LBVIP Variable
Insurance Account II, or the LBVIP Variable Annuity Account I (the Variable
Accounts). The Company records these payments as assets in the separate
accounts. Separate account liabilities represent reserves held related to
the separate account business.
The Variable Accounts are unit investment trusts registered under the
Investment Company Act of 1940. Each Variable Account has six subaccounts,
each of which invests only in a corresponding portfolio of the LB Series
Fund, Inc. (the Fund). The Fund is a diversified, open-end management
investment company. The shares of the Fund are carried in the Variable
Accounts' financial statements at the net asset value.
Effective January 22, 1991, a fixed account was added as an investment
option for variable annuity contract owners. Net premiums allocated to the
fixed account are invested in the assets of the Company.
The assets and liabilities of the Variable Accounts are clearly identified
and distinguished from the other assets and liabilities of the Company. The
assets of the Variable Accounts will not be applied to the liabilities
arising out of any other business conducted by the Company.
The Company assumes the mortality and expense risk associated with these
contracts for which it is compensated by the separate accounts. The daily
charges to the separate accounts are based on the average daily net assets
at the following annual rates:
1997 1996 1995
Rate Charges Charges Charges
Variable Insurance Account .06% $ 911 $ 696 $ 516
Variable Insurance Account II 2.3% 55 52 48
Variable Annuity Account I 1.1% 34,251 27,568 21,891
------- ------- -------
$35,217 $28,316 $22,455
======= ======= =======
Income from these charges is included in the Statement of Income.
In addition, the Company deducts certain amounts from the cash value of the
accounts invested in the separate accounts for surrender charges and annual
administrative charges as follows:
1997 1996 1995
Variable Insurance Account $ 9,030 $8,206 $7,307
Variable Insurance Account II - - -
Variable Annuity Account I 1,807 1,569 1,861
------- ------ ------
$10,837 $9,775 $9,168
======= ====== ======
8. Related Party Transactions
Lutheran Brotherhood provides administrative services to and collects
premiums for the Company. The net payable at December 31, 1997 represents
the unpaid balance of these administrative services net of the premiums
collected but not transferred to the Company.
Lutheran Brotherhood allocated approximately $18.2 million, $12.8 million
and $13.6 million of operating expenses to the Company in 1997, 1996 and
1995, respectively, which includes the costs for corporate officers, human
resources, and other administrative and operating functions. Lutheran
Brotherhood has agreed to provide the Company with capital requirements, if
necessary.
Payables to affiliates includes the following:
1997 1996
Lutheran Brotherhood:
Operating expenses payable $ 1,620 $ 1,523
Premium income (1,159) (1,264)
Lutheran Brotherhood Securities Corp.:
Operating expenses payable 10 11
------- -------
$ 471 $ 270
======= =======
Lutheran Brotherhood Securities Corp. (LBSC) is an affiliate of the Company.
The payable represents operating expenses of the Company paid by LBSC that
have not been reimbursed as of December 31, 1997 and 1996.
LBSC allocated $.4 million, $0.3 million and $0.4 million of operating
expenses to the Company in 1997, 1996 and 1995, respectively, which includes
the costs for various administrative and operating functions. In addition,
LBSC, as principal underwriter of the Company's variable products, received
commission income from the Company of approximately $17 million, $16.9
million and $11.5 million in 1997, 1996 and 1995, respectively.
9. Disclosures About Fair Value of Financial Instruments
The following methods and assumptions were used in estimating fair value
disclosures for financial instruments. In cases where quoted market prices
are not available, fair values are based on estimates using present value or
other valuation techniques. Those techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future
cash flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could
not be realized in immediate settlement of the instrument.
The following methods and assumptions were used in estimating its fair value
disclosures for financial instruments.
FIXED INCOME SECURITIES: Fair values for fixed income securities are based
on quoted market prices, where available. For fixed maturities not actively
traded in the market, fair values are estimated using market quotes from
brokers or internally developed pricing methods.
LOANS ON INSURANCE CONTRACTS: The carrying amount reported in the balance
sheet approximates fair value since loans on insurance contracts reduce the
amount payable at death or at surrender of the contract.
CASH AND CASH EQUIVALENTS: The carrying amounts for these assets
approximate the assets' fair values.
OTHER FINANCIAL INSTRUMENTS REPORTED AS ASSETS: The carrying amounts for
these financial instruments (primarily premiums and other accounts
receivable and accrued investment income), approximate those assets' fair
values.
INVESTMENT CONTRACT LIABILITIES: The fair value for deferred annuities was
estimated to be the amount payable on demand at the reporting date as those
investment contracts have no defined maturity and are similar to a deposit
liability. The amount payable at the reporting date was calculated as the
account balance less applicable surrender charges.
The fair values for supplementary contracts without life contingencies and
immediate annuities were estimated using discounted cash flow analyses using
similar maturities or by using cash surrender value.
The carrying amounts and estimated fair values of the Company's financial
instruments are as follows:
1997 1996
---------------------- -----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial instruments
recorded as assets:
Fixed income securities $ 230,063 $ 230,063 $ 170,500 $ 170,500
Contract loans 5,617 5,617 4,322 4,322
Cash and cash equivalents 6,747 6,747 18,535 18,535
Other financial instruments
recorded as assets 7,977 7,977 6,882 6,882
Financial instruments recorded
as liabilities:
Investment contracts:
Deferred annuities 3,510,194 3,442,622 2,876,818 2,804,151
Supplementary contracts
and immediate annuities 41,068 41,068 22,258 22,258
10. Statutory Financial Information
Accounting practices used to prepare statutory financial statements for
regulatory filing of fraternal life insurance companies differ from GAAP.
The following reconciles the Company's statutory net change in surplus and
statutory surplus determined in accordance with accounting practices
prescribed or permitted by the Insurance Department of the State of
Minnesota with net income and stockholder's equity on a GAAP basis (in
thousands).
Year Ended
December 31,
------------------
1997 1996
Net change in statutory accumulated deficit $ 8,642 $ 13,316
Change in asset valuation reserves 118 176
------- --------
Net change in statutory accumulated deficit and
asset valuation reserves 8,760 13,492
Adjustments:
Future contract benefits and contractholders'
account balances 1,739 (4,232)
Deferred policy acquisition costs 17,799 15,756
Investment losses (132) 2,465
Other, net (7,933) (13,153)
------ -------
Net income $20,233 $14,328
======= =======
Year Ended
December 31,
-------------------
1997 1996
Statutory stockholder's equity $ 80,583 $ 76,941
Asset valuation reserves 417 299
-------- --------
Statutory stockholder's equity and asset
valuation reserves 81,000 77,240
Adjustments:
Future contract benefits and contractholders'
account balances (64,060) (65,798)
Deferred policy acquisition costs 160,696 144,843
Interest maintenance reserves 2,583 2,714
Valuation of investments 5,735 792
Unearned revenue liability (4,825) (3,801)
Tax adjustment (19,580) (11,351)
Other, net 395 (137)
-------- --------
Stockholder's equity $161,944 $144,502
======== ========
<PAGE>
APPENDIX A
Illustration of Death Benefits,
Accumulated Values and Cash Surrender Values
The following tables illustrate how the Death Benefits, Accumulated Values
and Cash Surrender Values of a Contract may change with the investment
experience of the Variable Account. The tables show how the Death Benefits,
Accumulated Values and Cash Surrender Values of a Contract issued to an
Insured of a given age would vary over time if the investment return on the
assets held in each Portfolio of the Fund were a uniform, gross, after-tax
annual rate of 0 percent, 6 percent and 12 percent. The tables on pages A-3
through A-8 illustrate a Contract issued to a male age 35, in the non-
tobacco preferred premium class. The Death Benefits, Accumulated Values and
Cash Surrender Values would be lower if the Insured were in a special
premium class or if the Insured were a tobacco user because the cost of
insurance would be increased. Also, the Death Benefits, Accumulated Values
and Cash Surrender Values would be different from those shown if the gross
annual investment returns averaged 0 percent, 6 percent and 12 percent over
a period of years, but fluctuated above and below those averages for
individual Contract Years.
The second column of the tables shows the Accumulated Value of the premiums
paid at a 5% interest rate. The third and sixth columns illustrate the Death
Benefit of a Contract over the designated period. The fourth and seventh
columns illustrate the Accumulated Value of the Contract over the designated
period. (The Accumulated Value is the total amount held under a Contract at
any time.) The fifth and eighth columns illustrate the Cash Surrender Value
of a Contract over the designated period. (The Cash Surrender Value is equal
to the Accumulated Value less any Decrease Charge, Contract Debt (assumed to
be 0 in these illustrations) and unpaid Monthly Deductions (also assumed to
be 0 in these illustrations).) The sixth through the eighth columns assume
that throughout the life of the Contract, the monthly charge for the cost of
insurance is based on the current cost of insurance rates and the current
Mortality and Expense Risk Charge. The third through the fifth columns
assume that the Mortality and Expense Risk Charge and also that the monthly
charge for the cost of insurance are based on the maximum level permitted
under the Contract. These maximum allowable cost of insurance rates are
based on the 1980 Commissioners Standard Ordinary Mortality Table.
Because the Death Benefit values vary depending on the Death Benefit Option
in effect, Option A and Option B are illustrated separately. (Option A
provides for a Death Benefit equal to the greater of (a) the Face Amount
plus the Accumulated Value and (b) the applicable percentage of Accumulated
Value and Option B provides for a Death Benefit equal to the greater of (a)
the Face Amount and (b) the applicable percentage of Accumulated Value.)
Any amounts held in the Loan Account would not participate in the investment
experience illustrated in these tables. Instead, such amounts will be
credited with interest as described in the Prospectus in the section
entitled, "CONTRACT RIGHTS--Loan Privileges".
The amounts shown for Death Benefits, Accumulated Values and Cash Surrender
Values reflect the fact that the net investment return of the Subaccounts of
the Variable Account is lower than the gross, after-tax return on the assets
held in the Fund as a result of the advisory fee paid by the Fund and
charges made against the Subaccounts. The values shown take into account the
following fees and charges: the daily investment advisory fee paid by the
Fund, which is assumed to be equivalent to an annual rate of .46% of the
aggregate average daily net assets of the Fund, based on the following fees:
Growth (0.40%); High Yield (0.40%); Income (0.40%); Money Market (0.40%);
Opportunity Growth (0.40%); Mid Cap Growth (0.40%) and World Growth (0.85%);
and the daily charge to each Subaccount for assuming mortality and expense
risks, which is equivalent to a charge at an annual current rate of .60% of
the average assets of the Subaccounts and which is guaranteed never to
exceed an annual rate of .75%. After deduction of these amounts, the
illustrated gross annual investment rates of return 0%, 6% and 12%
correspond to (a) net annual rates of -1.23%, 4.77% and 10.77%,
respectively, assuming an advisory fee of .46% and a Mortality and Expense
Risk Charge of .75% and (b) net annual rates of -1.08%, 4.92% and 10.92%,
respectively, assuming an advisory fee of .46% and a Mortality and Expense
Risk Charge of .60%.
The amounts shown for Death Benefits, Accumulated Values and Cash Surrender
Values do not reflect a deduction for operating expenses of the Fund, other
than the investment advisory fee, because LBVIP and LB have agreed to
reimburse the Fund for these operating expenses pursuant to a separate
written agreement (the "Expense Reimbursement Agreement"). For the fiscal
year of the Fund ended December 31, 1997, the Fund was reimbursed
approximately $2,631,150 for such operating expenses. The Expense
Reimbursement Agreement could be terminated at any time by the mutual
agreement of the Fund, LB and LBVIP, but the Fund, LB and LBVIP currently
contemplate that the Expense Reimbursement Agreement will continue so long
as the Fund remains in existence. If the Expense Reimbursement Agreement
were terminated, the Fund would be required to pay these operating expenses,
which would reduce the net investment return on the shares of the Fund held
by the Subaccounts of the Variable Account.
The hypothetical values shown in the tables do not reflect any charges for
Federal income taxes attributable to the Variable Account because LBVIP does
not currently make any such charges. However, such charges may be made in
the future and, in that event, the gross annual investment return would have
to exceed 0%, 6% or 12% by an amount sufficient to cover the tax charges in
order to produce the Death Benefits and values illustrated. (See section
entitled "FEDERAL TAX MATTERS" in the Prospectus.)
The tables illustrate the Contract values that would result based upon the
hypothetical investment rates of return if premiums are paid as indicated,
if all Net Premiums are allocated to the Variable Account and if no Contract
loans have been made. The tables are also based on the assumptions that the
Contract Owner has not requested an increase or decrease in the Face Amount,
that no partial surrenders have been made.
Upon request, LBVIP will provide a comparable illustration based upon the
proposed Insured's age, gender (except for Contracts issued in the state of
Montana) and premium class, the Death Benefit Option, Face Amount, Scheduled
Premium and any available riders requested. Montana has enacted legislation
that requires that cost of insurance rates applicable to Contracts purchased
in Montana cannot vary on the basis of the insured's gender.
See Appendix D for Illustrations of Death Benefits, Accumulated Values and
Cash Surrender Values on VUL 1 contracts.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $ 1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 0%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- --------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,605 605 0 * 100,629 629 0 *
2 2,152 101,192 1,192 244 101,251 1,251 303
3 3,310 101,761 1,761 873 101,856 1,856 968
4 4,525 102,313 2,313 1,485 102,453 2,453 1,625
5 5,801 102,846 2,246 2,078 103,033 3,033 2,265
6 7,142 103,362 3,362 2,671 103,606 3,606 2,915
7 8,549 103,849 3,849 3,235 104,173 4,173 3,559
8 10,026 104,318 4,318 3,780 104,723 4,723 4,185
9 11,577 104,759 4,759 4,298 105,266 5,266 4,805
10 13,206 105,172 5,172 4,788 105,792 5,702 5,408
11 14,917 105,544 5,544 5,237 106,301 6,301 5,994
12 16,712 105,877 5,877 5,647 106,780 6,780 6,550
13 18,598 106,183 6,183 6,029 107,231 7,231 7,077
14 20,578 106,450 6,450 6,373 107,653 7,653 7,576
15 22,657 106,678 6,678 6,678 108,047 8,047 8,047
16 24,840 106,928 6,928 6,928 108,472 8,472 8,472
17 27,132 107,128 7,128 7,128 108,846 8,846 8,846
18 29,539 107,266 7,266 7,266 109,168 9,168 9,168
19 32,065 107,343 7,343 7,343 109,439 9,439 9,439
20 34,719 107,349 7,349 7,349 109,671 9,671 9,671
Age
60 50,113 106,132 6,132 6,132 110,118 10,118 10,118
65 69,760 101,852 1,852 1,852 108,933 8,933 8,933
70 94,836 100,000 0 0 * 105,105 5,105 5,105
75 126,839 100,000 0 0 * 100,000 0 0 *
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the
Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 0% over a period of years, but also fluctuated above or below
the average for individual Contract Years. No representation can be made by
us or by the Fund that these hypothetical returns can be achieved for any one
year, or sustained over any one year, or sustained over any period of time.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 0%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 606 0 * 100,000 630 0 *
2 2,152 100,000 1,196 248 100,000 1,254 306
3 3,310 100,000 1,768 880 100,000 1,861 973
4 4,525 100,000 2,324 1,496 100,000 2,463 1,635
5 5,801 100,000 2,864 2,096 100,000 3,047 2,279
6 7,142 100,000 3,387 2,696 100,000 3,626 2,935
7 8,549 100,000 3,883 3,269 100,000 4,200 3,586
8 10,026 100,000 4,364 3,826 100,000 4,757 4,219
9 11,577 100,000 4,819 4,358 100,000 5,310 4,849
10 13,206 100,000 5,247 4,863 100,000 5,846 5,462
11 14,917 100,000 5,638 5,331 100,000 6,367 6,060
12 16,712 100,000 5,993 5,763 100,000 6,860 6,630
13 18,598 100,000 6,324 6,170 100,000 7,328 7,174
14 20,578 100,000 6,619 6,542 100,000 7,770 7,693
15 22,657 100,000 6,879 6,879 100,000 8,187 8,187
16 24,840 100,000 7,164 7,164 100,000 8,638 8,638
17 27,132 100,000 7,404 7,404 100,000 9,043 9,043
18 29,539 100,000 7,588 7,588 100,000 9,402 9,402
19 32,065 100,000 7,716 7,716 100,000 9,716 9,716
20 34,719 100,000 7,778 7,778 100,000 9,996 9,996
Age
60 50,113 100,000 6,927 6,927 100,000 10,763 10,763
65 69,760 100,000 3,060 3,060 100,000 10,062 10,062
70 94,836 100,000 0 0 * 100,000 6,848 6,848
75 126,839 100,000 0 0 * 100,000 0 0 *
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the
Cash Surrender Value is zero. The $1,000.00 premium illustrated is greater
than the Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 0% over a period of years, but also fluctuated above or below
the average for individual Contract Years. No representation can be made by
us or by the Fund that these hypothetical returns can be achieved for any one
year, or sustained over any one year, or sustained over any period of time.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 6%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,651 651 0 * 100,676 676 0 *
2 2,152 101,323 1,323 375 101,385 1,385 437
3 3,310 102,015 2,015 1,127 102,118 2,118 1,230
4 4,525 102,730 2,730 1,902 102,886 2,886 2,058
5 5,801 103,467 3,467 2,699 103,680 3,680 2,912
6 7,142 104,229 4,229 3,538 104,514 4,514 3,823
7 8,549 105,003 5,003 4,389 105,388 5,388 4,774
8 10,026 105,804 5,804 5,266 106,294 6,294 5,756
9 11,577 106,620 6,620 6,159 107,244 7,244 6,783
10 13,206 107,451 7,451 7,067 108,229 8,229 7,845
11 14,917 108,287 8,287 7,980 109,251 9,251 8,944
12 16,712 109,127 9,127 8,897 110,298 10,298 10,068
13 18,598 109,985 9,985 9,831 111,373 11,373 11,219
14 20,578 110,848 10,848 10,771 112,476 12,476 12,399
15 22,657 111,716 11,716 11,716 113,609 13,609 13,609
16 24,840 112,653 12,653 12,653 114,835 14,835 14,835
17 27,132 113,586 13,586 13,586 116,073 16,073 16,073
18 29,539 114,505 14,505 14,505 117,323 17,323 17,323
19 32,065 115,408 15,408 15,408 118,585 18,585 18,585
20 34,719 116,281 16,281 16,281 119,874 19,874 19,874
Age
60 50,113 119,960 19,960 19,960 126,576 26,576 26,576
65 69,760 121,055 21,055 21,055 133,263 33,263 33,263
70 94,836 116,345 16,345 16,345 138,667 38,667 38,667
75 126,839 100,241 241 241 140,135 40,135 40,135
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the
Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 6% over a period of years, but also fluctuated above or below
the average for individual Contract Years. No representation can be made by
us or by the Fund that these hypothetical returns can be achieved for any one
year, or sustained over any one year, or sustained over any period of time.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 6%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 652 0 * 100,000 677 0 *
2 2,152 100,000 1,327 379 100,000 1,388 440
3 3,310 100,000 2,023 1,135 100,000 2,124 1,236
4 4,525 100,000 2,744 1,916 100,000 2,897 2,069
5 5,801 100,000 3,489 2,721 100,000 3,698 2,930
6 7,142 100,000 4,261 3,570 100,000 4,540 3,849
7 8,549 100,000 5,050 4,436 100,000 5,424 4,810
8 10,026 100,000 5,869 5,331 100,000 6,343 5,805
9 11,577 100,000 6,707 6,246 100,000 7,308 6,847
10 13,206 100,000 7,566 7,182 100,000 8,311 7,927
11 14,917 100,000 8,436 8,129 100,000 9,355 9,048
12 16,712 100,000 9,319 9,089 100,000 10,430 10,200
13 18,598 100,000 10,228 10,074 100,000 11,540 11,386
14 20,578 100,000 11,152 11,075 100,000 12,685 12,608
15 22,657 100,000 12,093 12,093 100,000 13,869 13,869
16 24,840 100,000 13,116 13,116 100,000 15,156 15,156
17 27,132 100,000 14,152 14,152 100,000 16,469 16,469
18 29,539 100,000 15,193 15,193 100,000 17,812 17,812
19 32,065 100,000 16,241 16,241 100,000 19,187 19,187
20 34,719 100,000 17,287 17,287 100,000 20,607 20,607
Age
60 50,113 100,000 22,380 22,380 100,000 28,390 28,390
65 69,760 100,000 26,440 26,440 100,000 37,369 37,369
70 94,836 100,000 27,454 27,454 100,000 47,544 47,544
75 126,839 100,000 20,884 20,884 100,000 58,916 58,916
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the
Cash Surrender Value is zero. The $1,000.00 premium illustrated is greater
than the Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 6% over a period of years, but also fluctuated above or below
the average for individual Contract Years. No representation can be made by us
or by the Fund that these hypothetical returns can be achieved for any one
year, or sustained over any one year, or sustained over any period of time.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 12%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,697 697 0 * 100,723 723 0 *
2 2,152 101,459 1,459 511 101,525 1,525 577
3 3,310 102,291 2,291 1,403 102,403 2,403 1,515
4 4,525 103,202 3,202 2,374 103,376 3,376 2,548
5 5,801 104,200 4,200 3,432 104,443 4,443 3,675
6 7,142 105,294 5,294 4,603 105,627 5,627 4,936
7 8,549 106,483 6,483 5,869 106,941 6,941 6,327
8 10,026 107,789 7,789 7,251 108,386 8,386 7,848
9 11,577 109,212 9,212 8,751 109,989 9,989 9,528
10 13,206 110,766 10,766 10,382 111,754 11,754 11,370
11 14,917 112,453 12,453 12,146 113,700 13,700 13,393
12 16,712 114,285 14,285 14,055 115,834 15,834 15,604
13 18,598 116,293 16,293 16,139 118,176 18,176 18,022
14 20,578 118,483 18,483 18,406 120,748 20,748 20,671
15 22,657 120,875 20,875 20,875 123,577 23,577 23,577
16 24,840 123,554 23,554 23,554 126,754 26,754 26,754
17 27,132 126,475 26,475 26,475 130,228 30,228 30,228
18 29,539 129,653 29,653 29,653 134,031 34,031 34,031
19 32,065 133,115 33,115 33,115 138,200 38,200 38,200
20 34,719 136,881 36,881 36,881 142,787 42,787 42,787
Age
60 50,113 161,334 61,334 61,334 173,597 73,597 73,597
65 69,760 198,333 98,333 98,333 223,276 123,276 123,276
70 94,836 253,534 153,534 153,534 303,223 203,223 203,223
75 126,839 334,850 234,850 234,850 431,452 331,452 331,452
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the
Cash Surrender Value is zero. The $1,000.00 premium illustrated is greater
than the Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 12% over a period of years, but also fluctuated above or
below the average for individual Contract Years. No representation can be made
by us or by the Fund that these hypothetical returns can be achieved for any
one year, or sustained over any one year, or sustained over any period of
time.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 12%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 699 0 * 100,000 724 0 *
2 2,152 100,000 1,463 515 100,000 1,528 580
3 3,310 100,000 2,300 1,412 100,000 2,410 1,522
4 4,525 100,000 3,219 2,391 100,000 3,389 2,561
5 5,801 100,000 4,227 3,459 100,000 4,465 3,697
6 7,142 100,000 5,336 4,645 100,000 5,661 4,970
7 8,549 100,000 6,546 5,932 100,000 6,989 6,375
8 10,026 100,000 7,879 7,341 100,000 8,454 7,916
9 11,577 100,000 9,339 8,878 100,000 10,081 9,620
10 13,206 100,000 10,940 10,556 100,000 11,878 11,494
11 14,917 100,000 12,689 12,382 100,000 13,865 13,558
12 16,712 100,000 14,602 14,372 100,000 16,051 15,821
13 18,598 100,000 16,712 16,558 100,000 18,461 18,307
14 20,578 100,000 19,031 18,954 100,000 21,122 21,045
15 22,657 100,000 21,584 21,584 100,000 24,061 24,061
16 24,840 100,000 24,465 24,465 100,000 27,376 27,376
17 27,132 100,000 27,639 27,639 100,000 31,030 31,030
18 29,539 100,000 31,136 31,136 100,000 35,064 35,064
19 32,065 100,000 34,997 34,997 100,000 39,527 39,527
20 34,719 100,000 39,262 39,262 100,000 44,478 44,478
Age
60 50,113 100,000 68,727 68,727 105,688 78,871 78,871
65 69,760 144,835 118,717 118,717 166,738 136,670 136,670
70 94,836 232,601 200,518 200,518 269,569 232,387 232,387
75 126,839 358,453 335,003 335,003 418,739 391,345 391,345
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the
Cash Surrender Value is zero. The $1,000.00 premium illustrated is greater
than the Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 12% over a period of years, but also fluctuated above or
below the average for individual Contract Years. No representation can be made
by us or by the Fund that these hypothetical returns can be achieved for any
one year, or sustained over any one year, or sustained over any period of
time.
<PAGE>
APPENDIX B
DEFERRED ADMINISTRATIVE CHARGES
PER $1,000 OF FACE AMOUNT
The following tables include the maximum Deferred Administrative Charge Per
$1,000 of Face Amount that will apply under a Contract. The specific maximum
charge applicable to a Contract at issuance can be determined from the
attached tables based upon the initial Face Amount, the Insured's Attained Age
at Contract issuance, and, except for Insured's with an Attained Age under 18,
the Insured's gender and whether the Insured is a tobacco user or not. For an
Insured with an Attained Age under 18, reference should be made to the column
entitled "Standard" in each table, rather than to the columns entitled
"Tobacco User" or "Non-Tobacco User".
In general, the maximum Deferred Administrative Charge applicable to a
Contract will be determined from Table 1. The lower maximum charges shown in
Table 2 apply to a Contract with a Face Amount of $500,000 or more, but less
than a 1,000,000. The lower maximum charges shown in Table 3 apply to a
Contract with a Face Amount of $1,000,000 ore more. Subsequent requested
increases in Face Amount result in a total Face Amount that equals or exceeds
the next range of Face Amount will qualify for the lower maximum charges shown
in Tables 2 or 3.
If the Face Amount is increased, an additional Deferred Administrative Charge
will be calculated for the increase in an amount determined in the same manner
as for the initial Face Amount, except that the Insured's Attained Age on the
effective date of the increase and the resulting total Face Amount will be
used.
The Deferred Administrative Charge does not apply to spouse riders.
As described in the Prospectus in the section entitled "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Decrease Charge", the sum of the
Deferred Administrative Charge and the Contingent Deferred Sales Charge will
equal the Decrease Charge.
<TABLE>
<CAPTION>
TABLE 1
FACE AMOUNTS LESS THAN $500,000
Maximum Deferred
Administrative Charges Per $1,000 of Face Amount
Standard
(Attained Age
Attained Age under 18) Tobacco User Non Tobacco User
------------ ------------- ------------ ----------------
Male Female Male Female Male Female
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $7.20 $7.20
5-9 $7.20 $7.20
10-14 $7.20 $7.20
15-17 $7.20 $7.20
18-24 $ 9.00 $5.40 $ 9.00 $ 5.40
25-29 $ 9.00 $5.40 $ 9.00 $ 5.40
30-34 $10.80 $7.20 $10.80 $ 5.40
35-39 $12.60 $9.00 $10.80 $ 5.40
40-44 $14.40 $10.80 $12.60 $ 7.20
45-49 $16.20 $12.60 $12.60 $ 7.20
50-54 $18.00 $14.40 $14.40 $ 9.00
55-59 $18.00 $14.40 $14.40 $10.80
60-64 $18.00 $14.40 $14.40 $10.80
65-69 $18.00 $14.40 $14.40 $10.80
70-74 $18.00 $14.40 $14.40 $10.80
75- 79 $18.00 $14.40 $14.40 $10.80
80-85 $18.00 $14.40 $14.40 $10.80
</TABLE>
<TABLE>
<CAPTION>
TABLE 2
FACE AMOUNTS OF $500,000 OR MORE, BUT LESS THAN $1,000,000
Maximum Deferred
Administrative Charges Per $1,000 of Face Amount
Standard
(Attained Age
Attained Age under 18) Tobacco User Non Tobacco User
------------ ------------- ------------ ----------------
Male Female Male Female Male Female
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $1.80 $1.80
5-9 $1.80 $1.80
10-14 $1.80 $1.80
15-17 $1.80 $1.80
18-24 $ 3.60 $3.60 $ 1.80 $1.80
25-29 $ 3.60 $3.60 $ 1.80 $1.80
30-34 $ 5.40 $5.40 $ 3.60 $1.80
35-39 $ 7.20 $5.40 $ 3.60 $1.80
40-44 $ 9.00 $7.20 $ 5.40 $3.60
45-49 $10.80 $7.20 $ 7.20 $3.60
50-54 $12.60 $9.00 $10.80 $5.40
55-59 $14.40 $9.00 $12.60 $5.40
60-64 $16.20 $9.00 $14.40 $5.40
65-69 $16.20 $9.00 $14.40 $5.40
70-74 $16.20 $9.00 $14.40 $5.40
75-79 $16.20 $9.00 $14.40 $5.40
80-85 16.20 9.00 $14.40 $5.40
</TABLE>
<TABLE>
<CAPTION>
TABLE 3
FACE AMOUNTS OF $1,000,000 OR MRE
Maximum Deferred
Administrative Charges Per $1,000 of Face Amount
Standard
(Attained Age
under 18) Tobacco User Non Tobacco User
Attained Age Male Female Male Female Male Female
----------- ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $1.80 $1.80
5-9 $1.80 $1.80
10-14 $1.80 $1.80
15-17 $1.80 $1.80
18-24 $1.80 $1.80 $1.80 $1.80
25-29 $1.80 $1.80 $1.80 $1.80
30-34 $3.60 $3.60 $1.80 $1.80
35-39 $3.60 $3.60 $1.80 $1.80
40-44 $5.40 $3.60 $3.60 $1.80
45-49 $7.20 $3.60 $3.60 $1.80
50-54 $9.00 $5.40 $5.40 $1.80
55-59 $9.00 $5.40 $5.40 $1.80
60-64 $9.00 $5.40 $5.40 $1.80
65-69 $9.00 $5.40 $5.40 $1.80
70-74 $9.00 $5.40 $5.40 $1.80
75-79 $9.00 $5.40 $5.40 $1.80
80-85 $9.00 $5.40 $5.40 $1.80
</TABLE>
<PAGE>
APPENDIX C
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
The following tables include the Initial Monthly Administrative Charge for
$1,000 of Face Amount that will apply under a Contract. The specific charge
applicable to a Contract at issuance can be determined from the attached
tables based upon the initial Face Amount, the Insured's Attained Age at
Contract issuance, and, except for Insureds with an Attained Age under 18 the
Insured's gender and whether the Insured is a tobacco user or not. For an
Insured with an Attained Age under 18, reference should be made to the column
entitled "Standard" in each table, rather than to the columns entitled
"Smoker" or "Nonsmoker".
In general, the Initial Monthly Administrative Charge applicable to a Contract
will be determined from Table 1. The lower maxmimum charges shown in Table 2
apply to a Contract with a Face Amount of $500,000 or more, but less than a
1,000,000. The lower maximum charges shown in Table 3 apply to a Contract
with a Face Amount of $1,000,000 ore more. Subsequent requested increases in
Face Amount that result in a total Face Amount that equals or exceeds the next
range of Face Amount, will qualify for the lower charges shown in Tables 2 or
3.
If the Face Amount is increased, an additional Initial Monthly Charge will be
calculated for the increase in an amount determined in the same manner as for
the initial Face Amount, except that the Insured's Attained Age on the
effective date of the increase and the resulting total Face Amount will be
used.
If a spouse rider providing life insurance benefits on the Insured's spouse is
included in the original Contract or added subsequently, an additional Initial
Monthly Charge will be calculated for the spouse rider in an amount determined
in the same manner as for the initial Face Amount, except that the spouse's
Attained Age and tobacco user or non-tobacco user status on the effective date
of the rider will be used.
<TABLE>
<CAPTION>
TABLE 1
FACE AMOUNTS LESS THAN $500,000
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
Standard
(Attained Age
Attained Age under 18) Tobacco User Non Tobacco User
------------ ------------- ------------ ----------------
Male Female Male Female Male Female
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $0.04 $0.04
5-9 $0.04 $0.04
10-14 $0.04 $0.04
15-17 $0.04 $0.04
18-24 $0.05 $0.05 $0.03 $0.03
25-29 $0.05 $0.05 $0.03 $0.03
30-34 $0.06 $0.06 $0.04 $0.03
35-39 $0.07 $0.06 $0.05 $0.03
40-44 $0.08 $0.07 $0.06 $0.04
45-49 $0.09 $0.07 $0.07 $0.04
50-54 $0.10 $0.08 $0.08 $0.05
55-59 $0.10 $0.08 $0.08 $0.06
60-64 $0.10 $0.08 $0.08 $0.06
65-69 $0.10 $0.08 $0.08 $0.06
70-74 $0.10 $0.08 $0.08 $0.06
75-79 $0.10 $0.08 $0.08 $0.06
80-86 $0.10 $0.08 $0.08 $0.06
</TABLE>
<TABLE>
<CAPTION>
TABLE 2
FACE AMOUNTS $500,000 OR MORE, BUT LESS THAN $1,000,000
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
Standard
(Attained Age
Attained Age under 18) Tobacco User Non Tobacco User
------------ ------------- ------------ ----------------
Male Female Male Female Male Female
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $0.01 $0.01
5-9 $0.01 $0.01
10-14 $0.01 $0.01
15-17 $0.01 $0.01
18-24 $0.02 $0.02 $0.01 $0.01
25-29 $0.02 $0.02 $0.01 $0.01
30-34 $0.03 $0.03 $0.02 $0.01
35-39 $0.04 $0.03 $0.02 $0.01
40-44 $0.05 $0.04 $0.03 $0.02
45-49 $0.06 $0.04 $0.04 $0.02
50-54 $0.07 $0.05 $0.06 $0.03
55-59 $0.08 $0.05 $0.07 $0.03
60-64 $0.09 $0.05 $0.08 $0.03
65-69 $0.09 $0.05 $0.08 $0.03
70-74 $0.09 $0.05 $0.08 $0.03
75-79 $0.09 $0.05 $0.08 $0.03
80-85 $0.09 $0.05 $0.08 $0.03
</TABLE>
<TABLE>
<CAPTION>
TABLE 3
FACE AMOUNTS OF $1,000,000 OR MRE
Initial Monthly Charges
Per $1,000 of Face Amount
Standard
(Attained Age
under 18) Tobacco User Non Tobacco User
Attained Age Male Female Male Female Male Female
----------- ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $0.01 $0.01
5-9 $0.01 $0.01
10-14 $0.01 $0.01
15-17 $0.01 $0.01
18-24 $0.01 $0.01 $0.01 $0.01
25-29 $0.01 $0.01 $0.01 $0.01
30-34 $0.02 $0.02 $0.01 $0.01
35-39 $0.02 $0.02 $0.01 $0.01
40-44 $0.03 $0.02 $0.02 $0.01
45-49 $0.04 $0.02 $0.02 $0.01
50-54 $0.05 $0.03 $0.03 $0.01
55-59 $0.05 $0.03 $0.03 $0.01
60-64 $0.05 $0.03 $0.03 $0.01
65-69 $0.05 $0.03 $0.03 $0.01
70-74 $0.05 $0.03 $0.03 $0.01
75-79 $0.05 $0.03 $0.03 $0.01
80-85 $0.05 $0.03 $0.03 $0.01
</TABLE>
<PAGE>
APPENDIX D
PRIOR CONTRACTS
Prior to May 1, 1997, LBVIP issued another class of flexible premium
variable life insurance contract ("prior contract" or "VUL 1" contracts),
which will no longer be issued as various states approve the Contract.
However, premium payments may still be made under the VUL 1 contracts.
The principal differences between the Contracts and the VUL 1 contracts
relate to the charges made by LBVIP, issue ages and maturity date, and
different ranges of Face Amounts, and the length of the Death Benefit
Guarantee period.
Charges and Deductions
Generally speaking, the Decrease Charge under VUL 1 contracts is assessed
for 10 years (120 months) as opposed to the Decrease Charge under the
Contract, which is generally assessed for 15 years (180 months). In
addition, the basic monthly administration charge for VUL 1 contracts is
$4.00, as opposed to $10.00 for the Contract. The VUL 1 contracts also use
different premium classes and may have different cost of insurance charges.
The prospectus descriptions of the Decrease Charge, Monthly Administration
Charges, Cost of Insurance Rate and Premium Class are modified by the
following discussion applicable to the VUL 1 contracts.
Decrease Charge
Decrease Charge. A deferred charge (the "Decrease Charge") will be deducted
upon VUL 1 contract lapse or surrender, or in part upon a requested decrease
in Face Amount, if these events occur before 120 Monthly Deductions have
been made (that is, approximately ten years) following Contract issuance or
a requested increase in Face Amount. The Decrease Charge consists of a
contingent deferred sales charge (the "Contingent Deferred Sales Charge")
and a deferred administrative charge (the "Deferred Administrative Charge").
The term "Decrease Charge" is used to describe this charge because, during
the applicable 10-year period, the charge is imposed in connection with a
decrease in the Face Amount, either as the result of a requested decrease in
Face Amount or as the result of lapse or full surrender of the Contract
(which can be viewed as a decrease in the Face Amount to zero).
For information concerning the Contingent Deferred Sales Charge, except for
the figures based on a 15, as opposed to 10, year assessment period, see the
discussion under the caption "Decrease Charge", commencing on page 35 of the
Prospectus.
Deferred Administrative Charge. At the time of contract issuance for a VUL 1
contract, LBVIP will compute a Deferred Administrative Charge. In general,
this charge will equal an amount per $1,000 of Face Amount based upon the
initial Face Amount, the Insured's Attained Age at Contract issuance, and
whether the Insured is a smoker or nonsmoker. For Insureds with an Attained
Age under 20, the Deferred Administrative Charge will equal an amount per
$1,000 of Face Amount based upon the initial Face Amount and the Insured's
Age at the time of VUL 1 contract issuance. The maximum Deferred
Administrative Charge per $1,000 of Face Amount will be determined from
Appendix D-2. As shown in Appendix D-2, the Deferred Administrative Charge
per $1,000 of Face Amount will be less for VUL 1 contracts having a Face
Amount at issuance that equals or exceeds $250,000.
The maximum Deferred Administrative Charge, as determined at the time of the
VUL 1 contract issuance, will be reduced as Monthly Deductions are made.
Beginning on the Date of Issue, and continuing on each Monthly Anniversary
until 120 Monthly Deductions have been made, this Deferred Administrative
Charge will be reduced in level amounts equal to approximately .83% of the
maximum Deferred Administrative Charge (or a 10% reduction of the maximum
Deferred Administrative Charge on an annual basis). In this way, the
Deferred Administrative Charge will be reduced to zero as of the Monthly
Anniversary when the 120th Monthly Deduction is made.
If the Face Amount is increased, a separate Deferred Administrative Charge
will be calculated for the increase in an amount determined in the same
manner as for the initial Face Amount, (except that the Insured's Attained
Age on the effective date of the increase will be used and the charge per
$1,000 of Face Amount to be applied to the increase will be based on the
amount of the entire new Face Amount after giving effect to the increase).
The part of the Deferred Administrative Charge attributable to the increase
will be charged and reduced in accordance with the same principles as
applicable to the basic Deferred Administrative Charge. The maximum Deferred
Administrative Charge for an increase will be determined on the effective
date of the increase and will then be reduced in level amounts equal to .83%
of the maximum Deferred Administrative Charge (or a 10% reduction of the
maximum Deferred Administrative Charge on an annual basis) as Monthly
Deductions are taken on the effective date of the increase and as of each
succeeding Monthly Anniversary until 120 Monthly Deductions have been made
after the effective date of the increase, when the Deferred Administrative
Charge on the increase will be reduced to zero.
For information concerning the method of deducting the Decrease Charge, see
the discussion under the caption "Method of Deduction and Effect of Decrease
Charge", commencing on page 38 of the Prospectus.
Monthly Deduction
Basic Monthly Administrative Charge. A basic monthly administrative charge
of $4.00 will be deducted from Accumulated Value on the Contract Date and
each Monthly Anniversary as part of the Monthly Deduction.
Initial Monthly Administrative Charge. The Initial Monthly Administrative
Charge will be deducted from Accumulated Value as part of the first 120
Monthly Deductions following Contract issuance, commencing with the Monthly
Deduction(s) collected on the Contract Date. This monthly charge will equal
an amount per $1,000 of Face Amount based upon the Insured's Attained Age at
Contract issuance and, except for Insureds with an Attained Age at Contract
issuance under 20, upon whether the Insured is a smoker or a nonsmoker. The
Initial Monthly Administrative Charge per $1,000 of Face Amount will be
determined from Appendix D-3. As shown in Appendix D-3, the Initial Monthly
Administrative Charge will be less for Contracts having a Face Amount at
issuance that equals or exceeds $250,000.
If the Face Amount is increased, a separate Initial Monthly Administrative
Charge will be deducted from Accumulated Value as part of the first 120
Monthly Deductions after the increase beginning with the Monthly Anniversary
on which the increase becomes effective. This separate Initial Monthly
Administrative Charge will be determined in the same manner as for the
initial Face Amount, except that the Insured's Attained Age on the effective
date of the increase will be used and the charge per $1,000 of Face Amount
to be applied to the increase will be based on the amount of the entire new
Face Amount after giving effect to the increase.
See the discussion under "Accumulated Value Charges -- Decrease Charge --
Amount of Deferred Administrative Charge" in the Prospectus for application
of the Deferred Administrative Charge to spouse riders.
The issuance expenses covered by the Initial Monthly Administrative Charge
are the same expenses covered by the Deferred Administrative Charge included
in the Decrease Charge. LBVIP will not, however, be reimbursed twice for
these expenses. If a Contract lapses or is totally surrendered during the
10-year period when the Initial Monthly Administrative Charge applies, or if
a requested decrease in Face Amount occurs during the 10-year period when
the Initial Monthly Administrative Charge generally applies, the Initial
Monthly Administrative Charge will, in effect, generally be "accelerated"
and collected in the form of the Deferred Administrative Charge included in
the Decrease Charge.
Because the Deferred Administrative Charge included in the Decrease Charge
is in effect an "acceleration" of the Initial Monthly Administrative Charge,
the imposition of the Deferred Administrative Charge will generally
eliminate or reduce the Initial Monthly Administrative Charge. If the
Contract lapses or is totally surrendered during the 10-year period when the
Initial Monthly Administrative Charge applies so that the Decrease Charge is
imposed, the Initial Monthly Administrative Charge will not be collected. If
the Face Amount is decreased at the Contract Owner's request during this 10-
year period so that the Decrease Charge (including the Deferred
Administrative Charge) is imposed in part, the Initial Monthly
Administrative Charge will be reduced because of the Deferred Administrative
Charge imposed (being applied to reduce proportionately or eliminate the
Initial Monthly Administrative Charge attributable to that portion of the
Face Amount covered by the Decrease Charge).
If a Contract lapses and is then reinstated, the Initial Monthly
Administrative Charge will be reinstated until a total of 120 Monthly
Deductions have been taken. See "PAYMENT AND ALLOCATION OF PREMIUMS--
Contract Lapse and Reinstatement".
Cost of Insurance Rate
Under VUL 1 contracts, cost of insurance rates are be based on the initial
Face Amount and the gender, Attained Age and premium class of the Insured.
The actual monthly cost of insurance rates will be based on LBVIP's
expectations as to future mortality experience. They will not, however, be
greater than the guaranteed cost of insurance rates set forth in the VUL 1
contract. These guaranteed rates are based on the Insured's Attained Age and
the 1980 Commissioners Standard Ordinary Mortality Table. Any change in the
cost of insurance rates will generally apply to all persons of the same
Attained Age, gender and premium class. In general, the actual cost of
insurance rate will be lower for VUL 1 contracts having a Face Amount at
issuance or after a requested increase that equals or exceeds $250,000.
Premium Class
Under VUL 1 contracts, LBVIP places Insureds into standard premium classes
and into substandard premium classes, which involve a higher mortality risk.
In an otherwise identical VUL 1 contract, an Insured in the standard premium
class will have a lower cost of insurance than an Insured in a premium class
with higher mortality risks. The premium classes are also divided into two
categories: smokers and nonsmokers. Nonsmoking Insureds will generally incur
lower cost of insurance rates than Insureds who are classified as smokers.
Any Insured with an Attained Age at issuance under 20 will not be classified
initially as a smoker or nonsmoker and then will be classified as a smoker
at Attained Age 20 unless the Insured provides satisfactory evidence that
the Insured is a nonsmoker. (LBVIP will provide notice to the Contract Owner
of the opportunity for the Insured to be classified as a nonsmoker when the
Insured reaches Attained Age 20.)
Maturity Date
As long as VUL 1 contracts remain in force, VUL 1 contracts provide life
insurance coverage on the named Insured up to the Insured's Attained Age 96.
The Maturity Date under VUL 1 contracts is the Contract Anniversary on or
next following the Insured's 96th birthday. If the Insured is living on the
Maturity Date of the VUL 1 contract, LBVIP will pay the Accumulated Value
for the VUL 1 contract on the Maturity Date, reduced by any Contract Debt
and any unpaid Monthly Deductions and the VUL 1 contract will be terminated.
The Maturity Date is shown in the VUL 1 contract.
Issue Age and Minimum Face Amounts
VUL 1 contracts will be issued only on Insureds who have an Attained Age of
80 or less and who provide satisfactory evidence of insurability. The
Minimum Face Amount of a VUL 1 contract is $50,000 for Insureds with an
Attained Age of 20 through 50, and $25,000 for all other Insureds. The
Minimum Face Amount for a requested increase is $10,000 and a VUL 1 contract
owner may not increase the Face Amount after the Insured's Attained Age 80.
Ranges of Face Amounts
VUL 1 contracts have two ranges of Face Amounts: Face Amounts of less that
$250,000; and Face Amounts of $250,000 or more.
Death Benefit Guarantee Duration
For VUL 1 contracts, if sufficient premium payments have been made, the
Death Benefit Guarantee will apply until the latter of the Insured's
Attained Age 71 and the Attained Age of the Insured at the end of a period
ranging from 6 to 31 years after the Date of Issue.
Other Provisions
Under VUL 1 contracts, a loan request must be made in a minimum amount of
$100.
Sales and Other Agreements
For VUL 1 contracts with an initial Face Amount greater than or equal to
$1,000,000, during the first Contract Year after issue or following an
increase in Face Amount, the commissions will be not more than 40% of the
applicable Death Benefit Guarantee Premium.
<PAGE>
APPENDIX D-1
Illustration of Death Benefits,
Accumulated Values and Cash Surrender Values
For VUL 1 Contracts
The following tables illustrate how the Death Benefits, Accumulated Values
and Cash Surrender Values of a VUL 1 contract may change with the investment
experience of the Variable Account. The tables show how the Death Benefits,
Accumulated Values and Cash Surrender Values of a VUL 1 contract issued to
an Insured of a given age (who pays a Scheduled Premium of $1,000) would
vary over time if the investment return on the assets held in each Portfolio
of the Fund were a uniform, gross, after-tax annual rate of 0 percent, 6
percent and 12 percent. The tables on pages D-1(a) through D-1(?) illustrate
a VUL 1 contract issued to a male age 35 in the nonsmoker premium class. The
Death Benefits, Accumulated Values and Cash Surrender Values would be lower
if the Insured were in a special premium class or if the Insured were a
smoker because the cost of insurance would be increased. Also, the Death
Benefits, Accumulated Values and Cash Surrender Values would be different
from those shown if the gross annual investment returns averaged 0 percent,
6 percent and 12 percent over a period of years, but fluctuated above and
below those averages for individual Contract Years.
The second column of the tables shows the Accumulated Value of the premiums
paid at a 5% interest rate. The third and sixth columns illustrate the Death
Benefit of a VUL 1 contract over the designated period. The fourth and
seventh columns illustrate the Accumulated Value of the VUL 1 contract over
the designated period. (The Accumulated Value is the total amount held under
a VUL 1 contract at any time.) The fifth and eighth columns illustrate the
Cash Surrender Value of a VUL 1 contract over the designated period. (The
Cash Surrender Value is equal to the Accumulated Value less any Decrease
Charge, Contract Debt (assumed to be 0 in these illustrations) and unpaid
Monthly Deductions (also assumed to be 0 in these illustrations).) The sixth
through the eighth columns assume that throughout the life of the VUL 1
contract, the monthly charge for the cost of insurance is based on the
current cost of insurance rates and the current Mortality and Expense Risk
Charge. The third through the fifth columns assume that the Mortality and
Expense Risk Charge and also that the monthly charge for the cost of
insurance are based on the maximum level permitted under the VUL 1 contract.
These maximum allowable cost of insurance rates are based on the 1980
Commissioners Standard Ordinary Mortality Table.
Because the Death Benefit values vary depending on the Death Benefit Option
in effect, Option A and Option B are illustrated separately. (Option A
provides for a Death Benefit equal to the greater of (a) the Face Amount
plus the Accumulated Value and (b) the applicable percentage of Accumulated
Value and Option B provides for a Death Benefit equal to the greater of (a)
the Face Amount and (b) the applicable percentage of Accumulated Value.)
Any amounts held in the Loan Account would not participate in the investment
experience illustrated in these tables. Instead, such amounts will be
credited with interest as described in the Prospectus in the section
entitled, "CONTRACT RIGHTS--Loan Privileges".
The amounts shown for Death Benefits, Accumulated Values and Cash Surrender
Values for the VUL 1 contract reflect the fact that the net investment
return of the Subaccounts of the Variable Account is lower than the gross,
after-tax return on the assets held in the Fund as a result of the advisory
fee paid by the Fund and charges made against the Subaccounts. The values
shown take into account the following fees and charges: the daily investment
advisory fee paid by the Fund, which is assumed to be equivalent to an
annual rate of .46% of the aggregate average daily net assets of the Fund,
based on the following fees: Growth (0.40%); High Yield (0.40%); Income
(0.40%); Money Market (0.40%); Opportunity Growth (0.40%); Mid Cap Growth
(0.40%); and World Growth (0.85%); and the daily charge to each Subaccount
for assuming mortality and expense risks, which is equivalent to a charge at
an annual current rate of .60% of the average assets of the Subaccounts and
which is guaranteed never to exceed an annual rate of .75%. After deduction
of these amounts, the illustrated gross annual investment rates of return
0%, 6% and 12% correspond to (a) net annual rates of -1.23%, 4.77% and
10.77%, respectively, assuming an advisory fee of .46% and a Mortality and
Expense Risk Charge of .75% and (b) net annual rates of -1.08%, 4.92% and
10.92%, respectively, assuming an advisory fee of .46% and a Mortality and
Expense Risk Charge of .60%.
The amounts shown for Death Benefits, Accumulated Values and Cash Surrender
Values do not reflect a deduction for operating expenses of the Fund, other
than the investment advisory fee, because LB and LBVIP have agreed to
reimburse the Fund for these operating expenses pursuant to a separate
written agreement (the "Expense Reimbursement Agreement"). For the fiscal
year of the Fund ended December 31, 1997, the Fund was reimbursed
approximately $2,631,150 for such operating expenses. The Expense
Reimbursement Agreement could be terminated at any time by the mutual
agreement of the Fund, LB and LBVIP, but the Fund, LB and LBVIP currently
contemplate that the Expense Reimbursement Agreement will continue so long
as the Fund remains in existence. If the Expense Reimbursement Agreement
were terminated, the Fund would be required to pay these operating expenses,
which would reduce the net investment return on the shares of the Fund held
by the Subaccounts of the Variable Account.
The hypothetical values shown in the tables do not reflect any charges for
Federal income taxes attributable to the Variable Account because LBVIP does
not currently make any such charges. However, such charges may be made in
the future and, in that event, the gross annual investment return would have
to exceed 0%, 6% or 12% by an amount sufficient to cover the tax charges in
order to produce the Death Benefits and values illustrated. (See section
entitled "FEDERAL TAX MATTERS" in the Prospectus.)
The tables illustrate the VUL 1 contract values that would result based upon
the hypothetical investment rates of return if premiums are paid as
indicated, if all Net Premiums are allocated to the Variable Account and if
no Contract loans have been made. The tables are also based on the
assumptions that the Contract Owner has not requested an increase or
decrease in the Face Amount, that no partial surrenders have been made and
that no transfers above two have been made in any Contract Year.
Upon request, LBVIP will provide a comparable illustration based upon the
proposed Insured's age, gender (except for Contracts issued in the state of
Montana) and premium class, the Death Benefit Option, Face Amount, Scheduled
Premium and any available riders requested. Montana has enacted legislation
that requires that cost of insurance rates applicable to Contracts purchased
in Montana cannot vary on the basis of the insured's sex.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 0%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- --------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,675 675 63 100,712 712 100
2 2,152 101,331 1,331 767 101,406 1,406 842
3 3,310 101,967 1,967 1,451 102,080 2,080 1,564
4 4,525 102,584 2,584 2,116 102,735 2,735 2,267
5 5,801 103,181 3,181 2,761 103,371 3,371 2,951
6 7,142 103,759 3,759 3,423 103,989 3,989 3,653
7 8,549 104,307 4,307 4,055 104,588 4,588 4,336
8 10,026 104,835 4,835 4,667 105,169 5,169 5,001
9 11,577 105,334 5,334 5,250 105,732 5,732 5,648
10 13,206 105,803 5,803 5,803 106,277 6,277 6,277
11 14,917 106,290 6,290 6,290 106,841 6,841 6,841
12 16,712 106,736 6,736 6,736 107,374 7,374 7,374
13 18,598 107,153 7,153 7,153 107,878 7,878 7,878
14 20,578 107,529 7,529 7,529 108,353 8,353 8,353
15 22,657 107,864 7,864 7,864 108,788 8,788 8,788
16 24,840 108,161 8,161 8,161 109,182 9,182 9,182
17 27,132 108,406 8,406 8,406 109,537 9,537 9,537
18 29,539 108,589 8,589 8,589 109,852 9,852 9,852
19 32,065 108,710 8,710 8,710 110,104 10,104 10,104
20 34,719 108,759 8,759 8,759 110,294 10,294 10,294
Age
60 50,113 107,753 7,753 7,753 110,126 10,126 10,126
65 69,760 103,693 3,693 3,693 107,766 7,766 7,766
70 94,836 100,000 0 0 * 102,146 2,146 2,146
75 126,839 100,000 0 0 * 100,000 0 0
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 0%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 677 65 100,000 713 101
2 2,152 100,000 1,335 771 100,000 1,409 845
3 3,310 100,000 1,975 1,459 100,000 2,086 1,570
4 4,525 100,000 2,597 2,129 100,000 2,746 2,278
5 5,801 100,000 3,202 2,782 100,000 3,389 2,969
6 7,142 100,000 3,788 3,452 100,000 4,014 3,678
7 8,549 100,000 4,347 4,095 100,000 4,623 4,371
8 10,026 100,000 4,889 4,721 100,000 5,215 5,047
9 11,577 100,000 5,403 5,319 100,000 5,791 5,707
10 13,206 100,000 5,890 5,890 100,000 6,351 6,351
11 14,917 100,000 6,398 6,398 100,000 6,932 6,932
12 16,712 100,000 6,869 6,869 100,000 7,487 7,487
13 18,598 100,000 7,314 7,314 100,000 8,015 8,015
14 20,578 100,000 7,722 7,722 100,000 8,518 8,518
15 22,657 100,000 8,094 8,094 100,000 8,985 8,985
16 24,840 100,000 8,431 8,431 100,000 9,416 9,416
17 27,132 100,000 8,723 8,723 100,000 9,813 9,813
18 29,539 100,000 8,958 8,958 100,000 10,174 10,174
19 32,065 100,000 9,139 9,139 100,000 10,481 10,481
20 34,719 100,000 9,253 9,253 100,000 10,733 10,733
Age
60 50,113 100,000 8,685 8,685 100,000 11,003 11,003
65 69,760 100,000 5,176 5,176 100,000 9,266 9,266
70 94,836 100,000 0 0 * 100,000 4,286 4,286
75 126,839 100,000 0 0 * 100,000 0 0 *
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 6%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,724 724 112 100,762 762 150
2 2,152 101,471 1,471 907 101,550 1,550 986
3 3,310 102,241 2,241 1,725 102,364 2,364 1,848
4 4,525 103,036 3,036 2,568 103,206 3,206 2,738
5 5,801 103,857 3,857 3,437 104,078 4,078 3,658
6 7,142 104,705 4,705 4,369 104,981 4,981 4,645
7 8,549 105,569 5,569 5,317 105,916 5,916 5,664
8 10,026 106,462 6,462 6,294 106,884 6,884 6,716
9 11,577 107,373 7,373 7,289 107,889 7,889 7,805
10 13,206 108,304 8,304 8,304 108,931 8,931 8,931
11 14,917 109,303 9,303 9,303 110,049 10,049 10,049
12 16,712 110,314 10,314 10,314 111,197 11,197 11,197
13 18,598 111,349 11,349 11,349 112,378 12,378 12,378
14 20,578 112,397 12,397 12,397 113,593 13,593 13,593
15 22,657 113,458 13,458 13,458 114,831 14,831 14,831
16 24,840 114,534 14,534 14,534 116,094 16,094 16,094
17 27,132 115,612 15,612 15,612 117,382 17,382 17,382
18 29,539 116,680 16,680 16,680 118,697 18,697 18,697
19 32,065 117,738 17,738 17,738 120,015 20,015 20,015
20 34,719 118,773 18,773 18,773 121,338 21,338 21,338
Age
60 50,113 123,366 23,366 23,366 127,782 27,782 27,782
65 69,760 125,596 25,596 25,596 133,444 33,444 33,444
70 94,836 122,333 22,333 22,333 136,767 36,767 36,767
75 126,839 108,139 8,139 8,139 134,556 34,556 34,556
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 6%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 725 113 100,000 763 151
2 2,152 100,000 1,475 911 100,000 1,553 989
3 3,310 100,000 2,250 1,734 100,000 2,372 1,856
4 4,525 100,000 3,052 2,584 100,000 3,220 2,752
5 5,801 100,000 3,882 3,462 100,000 4,100 3,680
6 7,142 100,000 4,743 4,407 100,000 5,014 4,678
7 8,549 100,000 5,623 5,371 100,000 5,962 5,710
8 10,026 100,000 6,536 6,368 100,000 6,949 6,781
9 11,577 100,000 7,473 7,389 100,000 7,975 7,891
10 13,206 100,000 8,436 8,436 100,000 9,043 9,043
11 14,917 100,000 9,474 9,474 100,000 10,194 10,194
12 16,712 100,000 10,533 10,533 100,000 11,383 11,383
13 18,598 100,000 11,625 11,625 100,000 12,613 12,613
14 20,578 100,000 12,742 12,742 100,000 13,886 13,886
15 22,657 100,000 13,885 13,885 100,000 15,196 15,196
16 24,840 100,000 15,058 15,058 100,000 16,544 16,544
17 27,132 100,000 16,252 16,252 100,000 17,935 17,935
18 29,539 100,000 17,459 17,459 100,000 19,371 19,371
19 32,065 100,000 18,682 18,682 100,000 20,836 20,836
20 34,719 100,000 19,912 19,912 100,000 22,334 22,334
Age
60 50,113 100,000 26,118 26,118 100,000 30,285 30,285
65 69,760 100,000 31,784 31,784 100,000 39,146 39,146
70 94,836 100,000 35,392 35,392 100,000 48,945 48,945
75 126,839 100,000 33,697 33,697 100,000 59,653 59,653
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 12%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,772 772 160 100,812 812 200
2 2,152 101,616 1,616 1,052 101,700 1,700 1,136
3 3,310 102,538 2,538 2,022 102,673 2,673 2,157
4 4,525 103,547 3,547 3,079 103,739 3,739 3,271
5 5,801 104,653 4,653 4,233 104,910 4,910 4,490
6 7,142 105,864 5,864 5,528 106,196 6,196 5,860
7 8,549 107,182 7,182 6,930 107,610 7,610 7,358
8 10,026 108,629 8,629 8,461 109,166 9,166 8,998
9 11,577 110,206 10,206 10,122 110,880 10,880 10,796
10 13,206 111,929 11,929 11,929 112,769 12,769 12,769
11 14,917 113,863 13,863 13,863 114,890 14,890 14,890
12 16,712 115,968 15,968 15,968 117,218 17,218 17,218
13 18,598 118,275 18,275 18,275 119,775 19,775 19,775
14 20,578 120,793 20,793 20,793 122,586 22,586 22,586
15 22,657 123,545 23,545 23,545 125,668 25,668 25,668
16 24,840 126,556 26,556 26,556 129,048 29,048 29,048
17 27,132 129,841 29,841 29,841 132,761 32,761 32,761
18 29,539 133,418 33,418 33,418 136,842 36,842 36,842
19 32,065 137,318 37,318 37,318 141,306 41,306 41,306
20 34,719 141,563 41,563 41,563 146,196 46,196 46,196
Age
60 50,113 169,202 69,202 69,202 178,587 78,587 78,587
65 69,760 211,258 111,258 111,258 230,108 130,108 130,108
70 94,836 274,513 174,513 174,513 312,272 212,272 212,272
75 126,839 368,707 268,707 268,707 443,073 343,073 343,073
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 12%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 774 162 100,000 813 201
2 2,152 100,000 1,621 1,057 100,000 1,704 1,140
3 3,310 100,000 2,549 2,033 100,000 2,682 2,166
4 4,525 100,000 3,566 3,098 100,000 3,756 3,288
5 5,801 100,000 4,684 4,264 100,000 4,937 4,517
6 7,142 100,000 5,913 5,577 100,000 6,238 5,902
7 8,549 100,000 7,255 7,003 100,000 7,673 7,421
8 10,026 100,000 8,733 8,565 100,000 9,257 9,089
9 11,577 100,000 10,352 10,268 100,000 11,006 10,922
10 13,206 100,000 12,129 12,129 100,000 12,939 12,939
11 14,917 100,000 14,132 14,132 100,000 15,119 15,119
12 16,712 100,000 16,328 16,328 100,000 17,522 17,522
13 18,598 100,000 18,748 18,748 100,000 20,176 20,176
14 20,578 100,000 21,410 21,410 100,000 23,109 23,109
15 22,657 100,000 24,343 24,343 100,000 26,346 26,346
16 24,840 100,000 27,579 27,579 100,000 29,923 29,923
17 27,132 100,000 31,148 31,148 100,000 33,882 33,882
18 29,539 100,000 35,081 35,081 100,000 38,270 38,270
19 32,065 100,000 39,426 39,426 100,000 43,123 43,123
20 34,719 100,000 44,228 44,228 100,000 48,503 48,503
Age
60 50,113 103,780 77,448 77,448 115,009 85,827 85,827
65 69,760 161,984 132,773 132,773 180,696 148,112 148,112
70 94,836 258,169 222,560 222,560 290,992 250,855 250,855
75 126,839 395,024 369,181 369,181 450,575 421,098 421,098
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
period of time.
<PAGE>
APPENDIX D-2
DEFERRED ADMINISTRATIVE CHARGES
PER $1,000 OF FACE AMOUNT
VUL 1 CONTRACTS
The following tables include the maximum Deferred Administrative Charge Per
$1,000 of Face Amount that will apply under a VUL 1 contract. The specific
maximum charge applicable to a VUL 1 contract at issuance can be determined
from the attached tables based upon the initial Face Amount, the Insured's
Attained Age at VUL 1 contract issuance, and, except for Insured's with an
Attained Age under 20, whether the Insured is a smoker or nonsmoker. For an
Insured with an Attained Age under 20, reference should be made to the
column entitled "Standard" in each table, rather than to the columns
entitled "Smoker" or "Nonsmoker".
In general, the maximum Deferred Administrative Charge applicable to a VUL 1
contract will be determined from Table 1. The lower maximum charges shown
in Table 2 apply to VUL 1 contracts with a Face Amount that equals or
exceeds $250,000 at issuance. Subsequent requested increases in Face Amount
result in a total Face Amount that equals or exceeds $250,000 will qualify
for the lower maximum charges shown in Table 2.
If the Face Amount is increased, an additional Deferred Administrative
Charge will be calculated for the increase in an amount determined in the
same manner as for the initial Face Amount, except that the Insured's
Attained Age on the effective date of the increase and the resulting total
Face Amount will be used.
The Deferred Administrative Charge does not apply to spouse riders.
As described in the Prospectus in the section entitled "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Decrease Charge", the sum of the
Deferred Administrative Charge and the Contingent Deferred Sales Charge will
equal the Decrease Charge.
TABLE 1
FACE AMOUNTS OF LESS THAN $250,000
Maximum Deferred
Administrative Charges Per $1,000 of Face Amount
Attained Age at Date of Issuance Standard
or Effective Date of Requested (Attained Age
Increase, As Appropriate under 20) Smoker
Nonsmoker
-------------------------------- ------------ ------ --------
- -
0-4 $3.60
5-9 $3.60
10-14 $4.80
15-19 $4.80
20-24 $6.00 $4.80
25-29 $6.00 $4.80
30-34 $7.20 $4.80
35-39 $7.20 $4.80
40-44 $7.20 $6.00
45-49 $8.40 $6.00
50-54 $8.40 $7.20
55-59 $8.40 $7.20
60-64 $8.40 $8.40
65-69 $8.40 $8.40
70-74 $8.40 $8.40
75-80 $8.40 $8.40
TABLE 2
FACE AMOUNTS OF $250,000 OR MORE
Maximum Deferred
Administrative Charges Per $1,000 of Face Amount
Attained Age at Date of Issuance Standard
or Effective Date of Requested (Attained Age
Increase, As Appropriate under 20) Smoker
Nonsmoker
-------------------------------- ------------ ------ --------
- -
0-4 $2.40
5-9 $2.40
10-14 $3.60
15-19 $3.60
20-24 $4.80 $3.60
25-29 $4.80 $3.60
30-34 $6.00 $3.60
35-39 $6.00 $3.60
40-44 $6.00 $4.80
45-49 $6.00 $4.80
50-54 $6.00 $6.00
55-59 $6.00 $6.00
60-64 $6.00 $6.00
65-69 $6.00 $6.00
70-74 $6.00 $6.00
75-80 $6.00 $6.00
<PAGE>
APPENDIX D-3
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
VUL 1 Contracts
The following tables include the Initial Monthly Administrative Charge for
$1,000 of Face Amount that will apply under a VUL 1 contract. The specific
charge applicable to a VUL 1 contract at issuance can be determined from the
attached tables based upon the initial Face Amount, the Insured's Attained
Age at contract issuance, and, except for Insureds with an Attained Age
under 20, whether the Insured is a smoker or non-smoker. For an Insured
with an Attained Age under 20, reference should be made to the column
entitled "Standard" in each table, rather than to the columns entitled
"Smoker" or "Nonsmoker".
In general, the Initial Monthly Administrative Charge applicable to a VUL 1
contract will be determined from Table 1. The lower charges shown in Table 2
apply to contracts with a Face Amount that equals or exceeds $250,000 at
issuance. Subsequent increases in Face Amount that result in a total Free
Amount that equals or exceeds $250,000, will qualify for the lower charges
shown in Table 2.
If the Face Amount is increased, an additional Initial Monthly
Administrative Charge will be calculated for the increase in an amount
determined in the same manner as for the initial Face Amount, except that
the Insured's Attained Age on the effective date of the increase and the
resulting total Face Amount will be used.
If a spouse rider providing life insurance benefits on the Insured's spouse
is included in the original contract or added subsequently, an additional
Initial Monthly Administrative Charge will be calculated for the spouse
rider in an amount determined in the same manner as for the initial Face
Amount, except that the spouse's Attained Age and smoker or nonsmoker status
on the effective date of the rider will be used. For a spouse with an
Attained Age under 20, reference should be made to the column entitled
"Standard", rather than to the columns entitled "Smoker" or "Nonsmoker".
Spouse riders do not qualify for the lower rates in Table 2.
<PAGE>
TABLE 1
FACE AMOUNTS OF LESS THAN $250,000
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
Attained Age at Date of Issuance Standard
or Effective Date of Requested (Attained Age
Increase, As Appropriate under 20) Smoker Nonsmoker
-------------------------------- ------------ ------ ---------
0-4 $0.03
5-9 $0.03
10-14 $0.04
15-19 $0.04
20-24 $0.05 $0.04
25-29 $0.05 $0.04
30-34 $0.06 $0.05
35-39 $0.06 $0.04
40-44 $0.06 $0.05
45-49 $0.07 $0.05
50-54 $0.07 $0.06
55-59 $0.07 $0.06
60-64 $0.07 $0.07
65-69 $0.07 $0.07
70-74 $0.07 $0.07
75-80 $0.07 $0.07
TABLE 2
FACE AMOUNTS OF $250,000 OR MORE
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
Attained Age at Date of Issuance Standard
or Effective Date of Requested (Attained Age
Increase, As Appropriate under 20) Smoker Nonsmoker
-------------------------------- ------------ ------ ---------
0-4 $0.02
5-9 $0.02
10-14 $0.03
15-19 $0.03
20-24 $0.04 $0.03
25-29 $0.04 $0.03
30-34 $0.05 $0.03
35-39 $0.05 $0.03
40-44 $0.05 $0.04
45-49 $0.05 $0.04
50-54 $0.05 $0.05
55-59 $0.05 $0.05
60-64 $0.05 $0.05
65-69 $0.05 $0.05
70-74 $0.05 $0.05
75-80 $0.05 $0.05
<PAGE>
Part II
UNDERTAKINGS
Undertaking required by Section 26(e)(1) of the Investment Company Act of
1940.
Lutheran Brotherhood Variable Insurance Products Company hereby represents
that, as to the flexible premium variable life contracts that are the
subject of this registration statement, File Number 33-3243, that the fees
and charges deducted under the contracts, in the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be incurred
and the risks assumed by Lutheran Brotherhood Variable Insurance Products
Company.
CONTENTS OF AMENDMENT TO REGISTRATION STATEMENT
This Post-Effective Amendment No. 22 to the Registration Statement comprises
the following papers and documents:
The facing sheet.
The general form of Prospectus.
The signatures (including Powers of Attorney). (1)
Written consents of the following persons:
Actuary - filed as Exhibit 6. (1)
Accountant - filed as Exhibit 10. (1)
Counsel - filed as Exhibit 11. (1)
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
A. (1) Resolutions of Board of Directors of Lutheran Brotherhood
Variable Insurance Products Company ("LBVIP") establishing the
LBVIP Variable Insurance Account ("the Account"). (1)
(2) Not Applicable.
(3) (a) Sales Agreement between Lutheran Brotherhood Securities
Corp. ("LBSC") and LBVIP. (1)
(b) Form of Agreement between LBSC and agents with respect to
the sale of the Contracts. (1)
(c) Schedules of sales commissions. (1)
(4) Service Agreement between Lutheran Brotherhood and LBVIP. (1)
(5) (a) Form of Contract. (1)(2)
(b) Available Contract Riders. (1)(2)
(6) (a) Articles of Incorporation of LBVIP. (1)
(b) Bylaws of LBVIP. (1)
(7) Not Applicable.
(8) See Exhibit 1.A.(3)(a).
(9) Not Applicable.
(10) Contract Application Form. (1)
2. See Exhibit 1.A.(5)(a).
3. Opinion of Counsel as to the legality of the securities being registered
(including written consent). (1)
4. None.
5. Not Applicable.
6. Actuarial Opinion and Consent. (1)
7. Not Applicable.
8. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(ii) under the 1940
Act. (1)
9. Not Applicable.
10. Accountant's Consent. (1)
11. Counsel's Consent. (1)
12. Powers of Attorney (1)
________________________________
(1) Filed herewith.
(2) Included in post-effective amendment No. 20 to the Registration
Statement on Form S-6, Registration No. 33-3243, filed by the Account
pursuant to the Securities Act of 1933, as amended, on February 28, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all of the requirements for effectiveness of this
amendment to the Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis and State of Minnesota
on the 29th day of April 1998.
LBVIP VARIABLE INSURANCE ACCOUNT
(Registrant)
By LUTHERAN BROTHERHOOD VARIABLE
INSURANCE PRODUCTS COMPANY
(Depositor)
By /s/ Robert P. Gandrud
----------------------------
Robert P. Gandrud, President
Pursuant to the requirements of the Securities Act of 1933, the Depositor
has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis and State of Minnesota on the 29th day of April, 1998.
LUTHERAN BROTHERHOOD VARIABLE
INSURANCE PRODUCTS COMPANY
(Depositor)
By /s/ Robert P. Gandrud
----------------------------
Robert P. Gandrud, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed on the 29th day of April, 1998
by the following directors and officers of Depositor in the capacities
indicated:
/s/ Robert P. Gandrud President, Chairman (Chief Executive
---------------------- Officer)
Robert P. Gandrud
/s/ Jerald E. Sourdiff Chief Financial Officer (Principal
---------------------- Financial Officer
Jerald E. Sourdiff
/s/ David K. Stewart Treasurer (Principal Accounting Officer)
----------------------
David K. Stewart
Robert P. Gandrud
Bruce J. Nicholson A Majority of the
Rolf F. Bjelland Board of Directors
David W. Angstadt
David J. Larson
Jennifer H. Martin
Jerald E. Sourdiff
Otis F. Hilbert, by signing his name hereto, does hereby sign this document
on behalf of each of the above-named directors of Lutheran Brotherhood
Variable Insurance Products Company pursuant to powers of attorney duly
executed by such persons.
/s/ Otis F. Hilbert
---------------------------------
Otis F. Hilbert, Attorney-in-Fact
<PAGE>
LBVIP VARIABLE INSURANCE ACCOUNT
INDEX TO EXHIBITS
Exhibit
Number Exhibit
--------- -------
1A(1) Resolutions of Board of Directors of Lutheran Brotherhood
Variable Insurance Products Company ("LBVIP") establishing the
LBVIP Variable Insurance Account ("the Account").
1A(3)(a) Sales Agreement between Lutheran Brotherhood Securities
Corp. ("LBSC") and LBVIP.
1A(3)(b) Form of Agreement between LBSC and agents with respect to the
sale
of the Contracts.
1A(3)(c) Schedules of sales commissions.
1A(4) Service Agreement between Lutheran Brotherhood and LBVIP.
1A(5)(a) Form of Contract.
1A(5)(b) Available Contract Riders.
1A(6)(a) Articles of Incorporation of LBVIP.
1A(6)(b) Bylaws of LBVIP.
1A(10) Contract Application Form.
3 Opinion of Counsel as to the legality of the securities being
registered (including written consent).
6 Actuarial Opinion and Consent.
8 Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(ii) under
the 1940 Act.
10 Accountant's Consent.
11 Counsel's Consent.
12 Powers of Attorney.
625 Fourth Avenue South
Minneapolis, Minnesota 55415
[logo] LUTHERAN BROTHERHOOD
VARIABLE INSURANCE
PRODUCTS COMPANY EXHIBIT 6
April 29, 1998
To Whom It May Concern:
This opinion is furnished in connection with the registration by Lutheran
Brotherhood Variable Insurance Products Company of a flexible premium
variable life insurance contract ("Contract") under the Securities Act of
1933. The prospectus included in Post-effective Amendment Number 22 to
Registration Statement No. 33-3243 on Form S-6 describes the Contract. The
form of the Contract was designed under my supervision, and I am familiar
with the Registration Statement and Exhibits attached thereto.
In my opinion:
The illustration of Death Benefits, Accumulated Values and Cash Surrender
Values included in the section entitled, "Illustration of Death Benefits,
Accumulated Values and Cash Surrender Values" in Appendix A of the
prospectus, based on the assumptions stated on the illustrations, are
consistent with the provisions of the Contract. The pricing of the Contract
was not completed so as to make the relationship between premiums and
benefits, as shown in the illustrations, appear more favorable to a
prospective purchaser of the Contract for a male in the preferred class aged
35, than to prospective purchasers of the Contract for other premium
classes, for other ages, or for females.
The illustration of Death Benefits, Accumulated Values and Cash Surrender
Values included in the section entitled, "Illustration of Death Benefits,
Accumulated Values and Cash Surrender Values" in Appendix D of the
prospectus, based on the assumptions stated on the illustrations, are
consistent with the provisions of the Contract. The pricing of the Contract
was not completed so as to make the relationship between premiums and
benefits, as shown in the illustrations, appear more favorable to a
prospective purchaser of the Contract for a nonsmoker male aged 35, than to
prospective purchasers of the Contract for other premium classes, for other
ages, or for females.
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.
Sincerely,
/s/ Kenneth A. Dahlberg
Kenneth A. Dahlberg, FSA, MAAA
Managing Actuary
#20629
<PAGE>
EXHIBIT 10
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 22 to the registration statement on Form S-6
(the "Registration Statement") of our report dated March 20, 1998, relating
to the financial statements of LBVIP Variable Insurance Account which
appears in such Prospectus. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
We also consent to the use in such Prospectus of our report dated March 12,
1998, relating to the financial statements of Lutheran Brotherhood Variable
Insurance Products Company which appear in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
April 28, 1998
#20630
625 Fourth Avenue South
Minneapolis, Minnesota 55415
[logo] LUTHERAN BROTHERHOOD
VARIABLE INSURANCE
PRODUCTS COMPANY EXHIBIT 11
April 29, 1998
Lutheran Brotherhood Variable
Insurance Products Company
625 Fourth Avenue South
Minneapolis, MN 55415
Ladies and Gentlemen:
I consent to the use of my name under the heading "Legal Matters" in the
Prospectuses constituting part of the Registration Statement, on Form S-6
(File No. 33-3243), of LBVIP Variable Insurance Account.
Very truly yours,
/s/ James M. Odland
James M. Odland
Assistant Secretary
(612) 340-5727
JMO:jkr\#20631
EXHIBIT 12
----------
LUTHERAN BROTHERHOOD VARIABLE
INSURANCE PRODUCTS COMPANY
LBVIP VARIABLE INSURANCE ACCOUNT
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the each of the undersigned
directors and/or officers of LUTHERAN BROTHERHOOD VARIABLE INSURANCE
PRODUCTS COMPANY, a Minnesota corporation (the "Company"), the Depositor of
LBVIP VARIABLE INSURANCE ACCOUNT, does hereby make, constitute and appoint
Randall L. Wetherille, James M. Odland, Otis F. Hilbert and John C. Bjork,
and each or any of them, the undersigned's true and lawful attorneys-in-
fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Company to a Registration
Statement or Registration Statements, on Form S-6 or other applicable form,
and all amendments, including post-effective amendments, thereto, to be
filed by such Company with the Securities and Exchange Commission,
Washington, D.C., in connection with the registration under the Securities
Act of 1933, as amended, and the Investment Company Act of 1940, as amended,
of shares of such Company, and to file the same, with all exhibits thereto
and other supporting documents, with such Commission, granting unto such
attorneys-in-fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
or her hand this 28th day of April, 1998.
/s/ROBERT P. GANDRUD
- --------------------------
Robert P. Gandrud President, Chief Executive Officer,
Chairman (Principal Executive Officer)
and Director
/s/BRUCE J. NICHOLSON
- --------------------------
Bruce J. Nicholson Chief Operating Officer (Principal
Financial Officer) and Director
/s/DAVID K. STEWART
- --------------------------
David K. Stewart Treasurer (Principal Accounting Officer)
/s/ROLF F. BJELLAND
- --------------------------
Rolf F. Bjelland Director
/s/DAVID W. ANGSTADT
- --------------------------
David W. Angstadt Director
/s/DAVID J. LARSON
- --------------------------
David J. Larson Director
/s/JENNIFER H. MARTIN
- --------------------------
Jennifer H. Martin Director
/s/JERALD E. SOURDIFF
- --------------------------
Jerald E. Sourdiff Director
#20517
EXHIBIT 1.A(1)
--------
LUTHERAN BROTHERHOOD VARIABLE
INSURANCE PRODUCTS COMPANY
MINUTES OF SPECIAL MEETING OF THE
BOARD OF DIRECTORS
July 27, 1984
Pursuant to call, consent to and waiver of notice signed by all of the
Directors, a special meeting of the Board of Directors of Lutheran
Brotherhood Variable Insurance Products Company was held at the offices of
the Company in Minneapolis, Minnesota on July 27, 1984.
The following, being all of the Directors of the Company, were
present: Messrs. Clair E. Strommen, Rolf F. Bjelland, Luther O. Forde,
Robert P. Gandrud, and David J. Larson.
Mr. Strommen presided as Chairman of the meeting and Mr. Larson was
Secretary.
The Chairman, declaring that a quorum was present for the holding of
the meeting, called the meeting to order.
The purpose of the meeting was to establish the separate account
necessary for the Company's planned flexible premium variable life insurance
and to authorize management of the Company to proceed with the development
of this product and obtain the necessary state and federal approvals for the
issuance of such product. After general discussions about the various
aspects of this Company's marketing plans and strategies, it was, upon
motion duly made, seconded and unanimously passed:
RESOLVED that, pursuant to Minnesota Statutes, Sections 61A.13 to
61A.22, the Company establish and operate, and the Company hereby
establishes, a separate account under the name "LBVIP Variable
Insurance Account" (the "Account"), for assets to be held and applied
exclusively for the benefit of the holders of flexible premium
variable life insurance contracts issued by the Company and designated
by the Company as contracts under which the dollar amount of death
benefits may and the cash value thereof shall vary so as to reflect
the investment results of the Account, and the assets held in the
Account shall not be chargeable with liabilities arising out of any
other business the Company may conduct but shall be held and applied
exclusively for the benefit of the holders of such contracts.
RESOLVED that the Account be registered as an investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and
that application be made for exemptions from such provisions of the
1940 Act as the President, and Vice President, the Secretary or the
Treasurer of the Company may deem necessary or advisable.
RESOLVED that the President, any Vice President, the Secretary or the
Treasurer of the Company is hereby authorized, for and on behalf of
the Company and with respect to the Account, to execute and file with
the Securities and Exchange Commission a notification of registration
and a registration statement on Forms N-8A and N-8B-2, respectively,
or other applicable forms, for the registration of the Account under
the 1940 Act and to execute and file notification of claim of
exemptions, or application for exemptions, from provisions of the
1940 Act, all in such form as such officer may approve, with such
amendments, exhibits and other supporting documents thereto, and to
execute and deliver all such other and further instruments, and to
take such other and further action in connection therewith, as such
officer may deem necessary or advisable.
RESOLVED that the President, any Vice President, the Secretary or the
Treasurer of the Company is hereby authorized, for and on behalf of
the Company, to execute and file with the Securities and Exchange
Commission a registration statement on Form S-6, or other applicable
form, for the registration under the Securities Act of 1933, as
amended (the "1933 Act"), of variable life insurance contracts to be
issued by the Company in connection with the Account and other
interests in the Account, in such form as such officer may approve,
with such amendments, exhibits and other supporting documents thereto,
and to execute and deliver all such other and further instruments, and
to take such other and further action in connection therewith, as such
officer may deem necessary or advisable.
RESOLVED that David J. Larson is hereby designated as the person
authorized to receive notices and communications from the Securities
and Exchange Commission with respect to such registration statements
to be filed under the 1933 Act, with the powers conferred upon him as
such person by the 1933 Act and the rules and regulations of such
Commission issued thereunder.
RESOLVED that the President, any Vice President, the Secretary or the
Treasurer of the Company, and such other officers and employees of the
Company as the President of the Company may designate, and each of
them, are hereby authorized, for and on behalf of the Company, to
execute such other and further instruments (including, without
limitation, a distribution agreement with respect to sale of the
contracts and a service agreement with Lutheran Brotherhood), and to
take such other and further action, as they, or any of them, may deem
necessary or advisable to carry out the purposes of the foregoing
resolutions.
There being no further business to come before the meeting, it was,
upon motion, adjourned.
/s/CLAIR E. STROMMEN
----------------------------
Clair E. Strommen
/s/ROLF F. BJELLAND
----------------------------
Rolf F. Bjelland
/s/LUTHER O. FORDE
----------------------------
Luther O. Forde
/s/ROBERT P. GANDRUD
----------------------------
Robert P. Gandrud
/s/DAVID J. LARSON
----------------------------
David J. Larson
#20494
EXHIBIT 1.A.(3)(a)
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made this ______ day of ______________, by and between
Lutheran Brotherhood Variable Insurance Products Company, a Minnesota
corporation ("LBVIP"), on its own behalf and on behalf of the LBVIP Variable
Insurance Account (the "Variable Account"), and Lutheran Brotherhood
Securities Corp., a Pennsylvania corporation ("LBSC").
WITNESSETH:
-----------
WHEREAS, LBVIP has established and maintains the Variable Account, a
separate investment account, pursuant to the laws of Minnesota for the
purpose of selling flexible premium variable life insurance contracts
("Contracts"), to commence after the effectiveness of the Registration
Statement relating thereto filed with the Securities and Exchange Commission
on Form S-6 pursuant to the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Variable Account will be registered as a unit investment
trust under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, LBSC is registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "Securities Exchange Act") and is a member of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, LBVIP and LBSC wish to enter into an agreement to have LBSC
act as the Company's principal underwriter for the sale of the Contracts
through the Variable Account;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR
LBVIP agrees that during the term of this Agreement it will take
all action which is required to cause the Contracts to comply as
an insurance product and a registered security with all applicable
federal and state laws and regulations. LBVIP appoints LBSC and
LBSC agrees to act as the principal underwriter for the sale of
Contracts to the public, during the term of this Agreement, in
each state and other jurisdiction in which such Contracts may
lawfully be sold. LBSC shall offer the Contracts for sale and
distribution at premium rates set by LBVIP. Applications for the
Contracts shall be solicited only by representatives duly and
appropriately licensed or otherwise qualified for the sale of such
Contracts in each state or other jurisdiction. LBVIP shall
undertake to appoint LBSC's qualified registered representatives
as life insurance agents of LBVIP. Completed applications for
Contracts shall be transmitted directly to LBVIP for acceptance or
rejection in accordance with underwriting rules established by
LBVIP. Initial premium payments under the Contracts shall be made
by check payable to LBVIP and shall be held at all times by LBSC
or its registered representatives in a fiduciary capacity and
remitted promptly to LBVIP. Anything in this Agreement to the
contrary notwithstanding, LBVIP retains the ultimate right to
control the sale of the Contracts and to appoint and discharge
life insurance agents of LBVIP. LBSC shall be held to the
exercise of reasonable care in carrying out the provisions of this
Agreement.
2. SALES AGREEMENTS
LBSC is hereby authorized to enter into separate written
agreements, on such terms and conditions as LBSC may determine not
inconsistent with this Agreement, with one or more registered
representatives who agree to participate in the distribution of
Contracts. Such registered representatives shall be registered as
securities agents with the NASD. LBSC and its registered
representatives soliciting applications for Contracts shall also
be duly and appropriately licensed, registered or otherwise
qualified for the sale of such Contracts (and the riders and other
policies offered in connection therewith) under the insurance laws
and any applicable blue sky laws of each state or other
jurisdiction in which LBVIP is authorized to offer the Contracts.
LBSC shall have the responsibility for ensuring that its
registered representatives are properly supervised. LBSC shall
assume any legal responsibilities of LBVIP for the acts,
commissions or defalcations of such registered representatives
insofar as they relate to the sale of the Contracts. Applications
for Contracts solicited by LBSC through its registered
representatives shall be transmitted directly to LBVIP. All
premium payments under the Contracts shall be made by check to
LBVIP and, if received by LBSC, shall be held at all times in a
fiduciary capacity and remitted promptly to LBVIP.
3. LIFE INSURANCE LICENSING
LBVIP shall be responsible for ensuring that the registered
representatives are duly qualified under the insurance laws of the
applicable jurisdictions to sell the Contracts.
4. SUITABILITY
LBVIP wishes to ensure that Contracts sold by LBSC will be issued
to purchasers for whom the Contract will be suitable. LBSC shall
take reasonable steps to ensure that the various registered
representatives appointed by it shall not make recommendations to
an applicant to purchase a Contract in the absence of reasonable
grounds to believe that the purchase of the Contract is suitable
for such applicant. While not limited to the following, a
determination of suitability shall be based on information
furnished to a registered representative after reasonable inquiry
of such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and the
likelihood that the applicant will continue to make the premium
payments contemplated by the Contracts.
5. PROMOTION MATERIALS
LBVIP shall have the responsibility for furnishing to LBSC and its
registered representatives sales promotion materials and
individual sales proposals related to the sale of the Contracts.
LBSC shall not use any such materials that have not been approved
by LBVIP.
6. COMPENSATION
LBVIP shall arrange for the payment of commissions directly to
those registered representatives of LBSC who are entitled thereto
in connection with the sale of the Contracts on behalf of LBSC, in
the amounts and on such terms and conditions as LBVIP and LBSC
have determined in the FLEXIBLE PREMIUM VARIABLE LIFE SCHEDULE OF
COMMISSION RATES attached hereto as Exhibit A and Exhibit B and
incorporated by reference herein; provided, however, that such
terms, conditions and commissions as are set forth in or as are
not inconsistent with the Prospectus included as part of the
Registration Statement for the Contracts and effective under the
1933 Act. LBVIP may, at its option, adjust the FLEXIBLE PREMIUM
VARIABLE LIFE SCHEDULE OF COMMISSION RATES for contracts and
riders hereafter sold, by giving written notice to LBSC thirty
days in advance of such change.
LBVIP shall reimburse LBSC for the costs and expenses incurred by
LBSC in furnishing or obtaining the services, materials and
supplies required by the terms of this Agreement, in the initial
sales efforts and the continuing obligations hereunder.
7. RECORDS
LBSC shall have the responsibility for maintaining the records of
representatives licensed, registered and otherwise qualified to
sell the Contracts. LBSC shall maintain such other records as are
required of it by applicable laws and regulations. The books,
accounts and records of LBVIP, the Variable Account and LBSC shall
be maintained so as to clearly and accurately disclose the nature
and details of the transactions. All records maintained by LBSC
or in connection with this Agreement shall be the property of
LBVIP and shall be returned to LBVIP upon termination of this
Agreement, free from any claims or retention of rights by LBSC.
LBSC shall keep confidential any information obtained pursuant to
this Agreement and shall disclose such information, only if LBVIP
has authorized such disclosure, or if such disclosure is expressly
required by applicable federal or state regulatory authorities.
8. INVESTIGATIONS AND PROCEEDINGS
(a) LBSC and LBVIP agree to cooperate fully in any insurance
regulatory investigation, proceeding or judicial proceeding
arising in connection with the Contracts distributed under
this Agreement. LBSC and LBVIP further agree to cooperate
fully in any securities regulatory investigation, proceeding
or judicial proceeding with respect to LBVIP, LBSC, their
affiliates and their agents or representatives to the extent
that such investigation or proceeding is in connection with
Contracts distributed under this Agreement. LBSC shall
furnish applicable federal and state regulatory authorities
with any information or reports in connection with its
services under this Agreement which such authorities may
request in order to ascertain whether the LBVIP's operations
are being conducted in a manner consistent with any
applicable law or regulation.
(b) In the case of a written customer complaint, LBSC and LBVIP
will cooperate in investigating such complaint and any
response to such complaint will be sent to the other party to
this Agreement for approval not less than five business days
prior to its being sent to the customer or regulatory
authority, except that if a more prompt response is required,
the proposed response shall be communicated by telephone or
telegraph.
9. TERMINATION
This Agreement shall terminate automatically upon its assignment
by either party without the prior written consent of both parties.
This Agreement may be terminated at any time by either party on
60 days' written notice to the other party, without the payment of
any penalty. Upon termination of this Agreement all
authorizations, rights and obligations shall cease except the
obligation to settle accounts hereunder, including commissions on
premiums subsequently received for Contracts in effect at time of
termination, and the agreements contained in paragraph 8 hereof.
10. REGULATION
This Agreement shall be subject to the provisions of the 1933 Act,
the 1940 Act and the Securities Exchange Act and the rules,
regulations and rulings promulgated thereunder and of the
applicable rules and regulations of the NASD, from time to time in
effect, and the terms hereof shall be interpreted and construed in
accordance therewith.
11. SEVERABILITY
If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
12. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
LUTHERAN BROTHERHOOD VARIABLE INSURANCE
PRODUCTS COMPANY
By
-------------------------------------
LUTHERAN BROTHERHOOD SECURITIES CORP.
By
-------------------------------------
#20524
EXHIBIT 1.A.(3)(b)
GENERAL AGENT'S AGREEMENT
-------------------------
AGREEMENT dated _________________, by and between Lutheran Brotherhood
Securities Corp. hereinafter referred to as "LBSC", a Pennsylvania
corporation, and ___________________ hereinafter referred to as "General
Agent", an individual.
WHEREAS, General Agent is a registered representative of LBSC pursuant
to a General Agent's Agreement; and
WHEREAS, General Agent is a General Agent of Lutheran Brotherhood, a
Minnesota Corporation, the parent of LBSC and of Lutheran Brotherhood
Variable Insurance Products Company, hereinafter referred to as "LBVIP", a
Minnesota Corporation; and
WHEREAS, the parties hereto desire that General Agent represent LBSC
and LBVIP in the sale of LBVIP's products;
WITNESSETH: In consideration of the mutual promises contained herein,
the parties hereto agree as follows:
A. DEFINITIONS
(1) Contracts - The variable universal life insurance contracts which
LBVIP proposes to issue and for which LBSC has been appointed the
principal underwriter pursuant to a Distribution Agreement, a copy
of which has been furnished to General Agent.
(2) The Variable Account - The separate account established and
maintained by LBVIP pursuant to the laws of Minnesota to fund the
benefits under the Contracts.
(3) The Fund - An open-end management investment company registered
under the 1940 Act, shares of which are sold to the Variable
Account in connection with the sale of the Contracts.
(4) Registration Statement - The registration statements and
amendments thereto relating to the Contracts, the Variable Account,
and the Fund, including financial statements and all exhibits.
(5) Prospectus - The prospectuses included within the registration
statements referred to herein.
(6) 1933 Act - The Securities Act of 1933, as amended.
(7) 1934 Act - The Securities Exchange Act of 1934, as amended.
(8) SEC - The Securities and Exchange Commission.
B. AGREEMENTS OF LBSC
(1) Pursuant to the authority delegated to it by LBVIP, LBSC hereby
authorizes General Agent during the term of this Agreement to
solicit and obtain applications for Contracts directly or through
LBSC Registered Representatives obtained by and holding under
General Agent a written selected Registered Representative
Agreement and appointed by LBVIP from eligible persons provided
that there is an effective Registration Statement relating to such
Contracts and provided further that General Agent has been notified
by LBSC that the Contracts are qualified for sale under all
applicable securities and insurance laws of the state or
jurisdiction in which the application will be solicited. In
connection with the solicitation of applications for Contracts,
General Agent is hereby authorized to offer riders and benefits
that are available with the Contracts in accordance with
instructions furnished by LBSC or LBVIP.
(2) LBSC, during the term of this Agreement, will notify General Agent
of the issuance by the SEC of any stop order with respect to the
Registration Statement or any amendments thereto or the initiation
of any proceedings for that purpose or for any other purpose
relating to the registration and/or offering of the Contracts and
of any other action or circumstances that may prevent the lawful
sale of the Contracts in any state or jurisdiction.
(3) During the term of this Agreement, LBSC shall advise General Agent
of any amendment to the Registration Statement of any amendment or
supplement to any Prospectus.
C. AGREEMENTS OF GENERAL AGENT
(1) It is understood and agreed that General Agent is a duly registered
representative of LBSC pursuant to a General Agent's Agreement.
General Agent agrees to comply with all of the terms and agreements
of said General Agent's Agreement which is hereby incorporated
herein by reference to the extent it is not inconsistent with the
terms herein.
(2) Commencing at such time as LBSC and General Agent shall agree upon,
General Agent agrees to use his/her best efforts to find purchasers
for the contracts acceptable to LBVIP. In meeting his/her
obligation to use his/her best efforts to solicit applications for
Contracts, General Agent shall, during the term of this Agreement,
engage in the following activities:
(a) Continuously utilize training, sales and promotional
materials which have been approved by LBVIP;
(b) Permit periodic inspection and supervision of his/her
sales practices and submit periodic reports to LBSC as may
be requested on the results of such inspections and the
compliance with procedures.
(c) General Agent shall not make recommendations to an
applicant to purchase a Contract in the absence of
reasonable grounds to believe that the purchase of the
Contract is suitable for such applicant. While not
limited to the following, a determination of suitability
shall be based on information furnished to General Agent
after reasonable inquiry of such applicant concerning the
applicant's insurance and investment objectives, financial
situation and needs, and the likelihood that the applicant
will continue to make the premium payments contemplated by
the Contract.
(3) All payments for Contracts collected by General Agent shall be held
at all times in a fiduciary capacity and shall be remitted promptly
in full together with such applications, forms and other required
documentation to LBVIP as designated by LBSC. Checks or money
orders in payment of initial premiums shall be drawn to the order
of "Lutheran Brotherhood Variable Insurance Products Company."
General Agent acknowledges that the LBVIP retains the ultimate
right to control the sale of the Contracts and that the LBSC or
LBVIP shall have the unconditional right to reject, in whole or in
part, any application for the Contract. In the event LBVIP or LBSC
rejects an application, LBVIP immediately will return all payments
directly to the purchaser and General Agent will be notified of
such action. In the event that any purchaser of a Contract elects
to return such Contract pursuant to Rule 6e-3T(b)(13)(viii) of the
1940 Act, any premium paid will be refunded to the purchaser and
General Agent will be notified of such action. General Agent will
comply with Lutheran Brotherhood's policy on Field Force Fiduciary
Responsibility.
(4) General Agent shall act at all times as an independent contractor
in carrying out the duties hereunder and shall not be considered an
employee of LBVIP or LBSC. As such General Agent shall have full
control of his or her daily activities, with the right to exercise
independent judgment as to the time, place, and manner of
soliciting applications, servicing Contracts, and otherwise
carrying out the provisions of this Agreement. General Agent and
his/her employees and Registered Representatives obtained by and
holding under General Agent shall not hold themselves out to be
employees of LBVIP or LBSC in this connection or in any dealings
with the public.
(5) General Agent agrees that any material he or she develops, approves
or uses for sales, training, explanatory or other purposes in
connection with the solicitation of applications for Contracts
hereunder (other than generic advertising materials which do not
make specific reference to the Contracts) will not be used without
the prior written consent of LBSC and, where appropriate, the
endorsement of LBVIP to be obtained by LBSC.
(6) Solicitation and other activities by General Agent shall be
undertaken only in accordance with applicable laws and regulations.
General Agent shall not solicit applications for the contracts
until duly licensed and appointed by LBVIP as a life insurance and
variable contract agent of LBVIP in the appropriate states or other
jurisdictions. General Agent shall fulfill any training
requirements necessary to be licensed. General Agent understands
and acknowledges that he/she is not authorized by LBSC or LBVIP to
give any information or make any representation in connection with
this Agreement or the offering of the Contracts other than those
contained in the Prospectus or other solicitation material
authorized in writing by LBSC or LBVIP.
(7) General Agent shall not represent himself or herself as having any
nor shall he or she have authority on behalf of LBSC or LBVIP to:
make, alter or discharge any Contract or other form; waive any
forfeiture, extend the time of paying any premium, or to alter,
waive, or forfeit any of the rights of the LBVIP or LBSC; receive
any monies or premiums due, or to become due, to LBVIP, except as
set forth in Section C(3) of this Agreement. General Agent shall
not expend, nor contract for the expenditure of the funds of LBSC
or LBVIP, nor shall General Agent possess or exercise any authority
on behalf of LBSC or LBVIP by this Agreement.
(8) General Agent shall maintain such records as are required of
him/her by applicable laws and regulations. The books, accounts
and records of LBVIP, the Variable Account, LBSC and General Agent
relating to the sale of the Contracts shall be maintained so as to
clearly and accurately disclose the nature and details of the
transactions. All records maintained by General Agent in
connection with this Agreement shall be the property of LBVIP and
shall be returned to LBVIP upon termination of this Agreement, free
from any claims or retention of rights by General Agent. General
Agent shall keep confidential any information obtained pursuant to
this Agreement and shall disclose such information, only if LBVIP
has authorized such disclosure, or if such disclosure is expressly
required by applicable federal or state regulatory authorities.
(9) All business produced and serviced under this Agreement is the
property of LBVIP and no attempt will be made by General Agent to
prejudice the Contract Owners or interfere with the collection of
premiums or transfer any existing Contracts to another company or
organization. Information regarding names, addresses, ages and all
other information and records of Contract owners acquired from
LBVIP or LBSC and coming into the possession of General Agent
during the effective period of this Agreement, or any prior
Agreement, are trade secrets wholly owned by LBVIP. All forms and
other material, including electronic data, whether furnished by
LBVIP or LBSC or purchased by General Agent, upon which this
information is recorded shall be the sole and exclusive property of
LBVIP. General Agent shall return any part or all of such
information and records upon the request of LBVIP or LBSC. General
Agent will safeguard and protect all such information within his or
her control from any unauthorized access and use.
(10) LBVIP and LBSC may furnish to General Agent, without charge,
certain manuals, forms, records, electronic data, and such other
materials and supplies as they may deem advisable to provide. All
such property furnished by them shall remain the property of LBVIP.
In addition, they may offer at General Agent's expense such
additional materials and supplies as they believe may be helpful to
General Agent.
(11) The expense of any office, including rental, furniture, and
equipment; signs; supplies not furnished by LBVIP or LBSC; the
salaries of the employees of General Agent; automobile;
transportation; telephone; postage; advertising; and all other
charges or expense incurred by General Agent in the performance of
this Agreement shall be incurred at his/her discretion and paid for
by him/her.
(12) General Agent expressly covenants and agrees that after termination
of this Agreement, for any reason, he/she shall not for a period of
one year thereafter, nor shall he/she assist, encourage or induce
others to do, any of the following things: induce, or attempt to
induce, any of the Contract owners to whom he/she or any Registered
Representative in his/her General Agency was assigned while this
Agreement was in effect, to cancel, lapse, or surrender their
contracts with LBVIP.
(13) Upon termination of this Agreement, General Agent will deliver to
LBVIP, or its authorized representatives, all records, materials,
supplies, advertising, licenses, and all other documents pertaining
to LBVIP, used in carrying out this Agreement.
(14) General Agent will, at the option of LBVIP or LBSC, furnish a
fidelity bond for such sum and with such surety as they may
require.
(15) General Agent shall maintain an errors and omissions insurance
policy in an amount, form, and surety acceptable to LBVIP for the
performance of his or her professional services, duties, and
obligations.
C. COMPENSATION
(1) Pursuant to the Distribution Agreement between LBSC and LBVIP, LBSC
shall cause LBVIP to arrange for the payment of commissions to
General Agent as compensation for the sale of each contract sold by
General Agent or Registered Representative obtained by and holding
under General Agent. The amount of such compensation shall be
based on a schedule to be determined by agreement of LBVIP and
LBSC.
(2) General Agent shall have no right to withhold or deduct any part of
any premium he/she shall receive for purposes of payment of
commission or otherwise. General Agent shall have no interest in
any compensation paid by LBVIP to LBSC, now or hereafter, in
connection with the sale of any Contracts hereunder.
(3) LBVIP is hereby given a paramount and prior lien and security
interest upon any commissions payable under or as a result of this
or any previous agreement and under all agreements amendatory
hereof or supplementary hereto, as security for the payment of any
claim or indebtedness or reimbursement whatsoever due or to become
due to LBVIP, LBSC, or Lutheran Brotherhood or any of its
subsidiaries or affiliates, from General Agent. Any sums becoming
due to General Agent at any time may be applied, directly, by the
LBVIP to the liquidation of any indebtedness or obligation of
General Agent to any of the secured parties, but the failure to so
apply any sum shall not be deemed a waiver of LBVIP's lien on or
security interest in any other sums becoming due nor impair its
right to so apply such sums.
(4) Notwithstanding the vesting provisions provided for in the
Distribution Agreement and/or the schedule referred to in
section D(1) herein, General Agent will forfeit all compensation
and any other payments which have otherwise been vested or reserved
to General Agent by this or any previous or related Agreement, if
this Agreement terminates and any of the following events have
occurred or subsequently occur:
(a) General Agent engages in any form of rebating, directly or
indirectly, or if General Agent defaults in the payment to
LBVIP of any premiums collected by him/her, demands or
accepts any remuneration from a Contract Owner,
beneficiary, or their representative for services in
connection with the payment of any claim under any
contract issued by LBVIP;
(b) General Agent fails to deliver to LBVIP or its authorized
representative any of the following: all records,
including electronic data, materials, supplies,
advertising, licenses, and all other documents containing
LBVIP confidential information and/or trade secrets, upon
the written request of LBVIP;
(c) General Agent violates any of the applicable federal and
state laws, regulations or rules, or commits any fraud, in
connection with his or her duties as a General Agent or as
a registered representative; or
(d) General Agent violates any of the covenants set forth in
section C(12) herein.
E. COMPLAINTS AND INVESTIGATIONS
General Agent and LBSC jointly agree to cooperate fully in any
insurance regulatory investigation or proceeding or judicial proceeding
arising in connection with the Contracts marketed under this Agreement.
General Agent and LBSC further agree to cooperate fully in any
securities regulatory investigation or proceeding or judicial
proceeding with respect to General Agent, LBSC, or their affiliates and
their agents or representatives to the extent that such investigation
or proceeding is in connection with Contracts marketed under this
Agreement.
F. TERM OF AGREEMENT
(1) This Agreement shall continue in force for one year from its
effective date and thereafter shall automatically be renewed every
year for a further one year period; provided that either party may
unilaterally terminate this Agreement upon thirty (30) days'
written notice to the other party of its intention to do so.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations under this agreement shall cease except (a) the
agreements contained in Section E hereof; (b) the indemnity set
forth in Section G hereof; (c) the obligations to settle accounts
hereunder, including payments on premiums subsequently received for
Contracts in effect at the time of termination or issued pursuant
to applications received by General Agent prior to termination;
and (d) the covenants set forth in Sections C(9), C(12) and C(13).
(3) This Agreement will automatically terminate on the first day of the
month next following the seventieth birthday of General Agent.
(4) In the event that the General Agent's Agreement between General
Agent and Lutheran Brotherhood or the General Agent's Agreement
between General Agent and LBSC is terminated, this Agreement will
also terminate.
(5) LBSC may immediately terminate this agreement for breach of any of
the covenants and agreements herein by General Agent.
G. INDEMNITY
(1) General Agent shall be held to the exercise of reasonable care in
carrying out the provisions of this Agreement.
(2) General Agent agrees to indemnify and hold harmless LBVIP and LBSC
and each of their current and former directors and officers and
each person, if any, who controls or has controlled LBVIP or LBSC
within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages or liabilities to which LBVIP or LBSC and
any such director or officer or controlling person may become
subject, under the 1933 Act or otherwise insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(a) Any unauthorized use of sales materials or any verbal or
written misrepresentations or any unlawful sales practices
concerning the Contracts by General Agent; or
(b) The failure of General Agent, his/her employees or
Registered Representatives obtained by and holding under
General Agent, to comply with the provisions or this
Agreement; and General Agent will reimburse LBVIP, LBSC,
or such director, officer or controlling person in
connection with investigating or defending any such loss,
claims, damage, liability or action. This indemnity
agreement will be in addition to any liability which
General Agent may otherwise have.
H. GENERAL TERMS
(1) This Agreement shall not be assigned by either party without the
written consent of the other.
(2) This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.
(3) The forbearance or neglect of LBSC to insist upon strict compliance
by General Agent with any of the provisions of this Agreement,
whether continuing or not, shall not be construed as a waiver of
LBSC's rights or privileges hereunder. No waiver of any right or
privilege of LBSC arising from any default or failure of
performance by General Agent shall affect the LBSC's rights or
privileges in the event of a further default or failure of
performance.
(4) Whenever required for proper interpretation of this Agreement, the
singular number shall include the plural, the plural the singular,
and the use of any gender shall include all genders.
(5) The unenforceability or invalidity of any provisions hereof shall
not render any other provision or provisions herein contained
unenforceable or invalid.
(6) This Agreement contains the entire understanding of the parties
hereto, and no modification hereof or addition hereto shall be
binding unless the same is in writing and signed by the parties
hereto.
(7) This Agreement shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permissive
assigns, and General Agent's estate, heirs and personal
representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
LUTHERAN BROTHERHOOD SECURITIES CORP. (LBSC)
By
-----------------------------------------
-----------------------------------------
(General Agent)
<PAGE>
EXHIBIT 1.A.3(b)
SELECTED REGISTERED REPRESENTATIVE AGREEMENT
--------------------------------------------
AGREEMENT dated _____________, by and between Lutheran Brotherhood
Securities Corp. hereinafter referred to as "LBSC", a Pennsylvania
corporation, and ______________________ hereinafter referred to as
"Registered Representative", an individual.
WHEREAS, Registered Representative is a registered representative of
LBSC pursuant to a Registered Representative's Agreement; and
WHEREAS, Registered Representative is a District Representative of
Lutheran Brotherhood, a Minnesota Corporation, the parent of LBSC and of
Lutheran Brotherhood Variable Insurance Products Company, hereinafter
referred to as "LBVIP", a Minnesota Corporation; and
WHEREAS, the parties hereto desire that Registered Representative
represent LBSC and LBVIP in the sale of LBVIP's products;
WITNESSETH: In consideration of the mutual promises contained herein,
the parties hereto agree as follows:
A. DEFINITIONS
(1) Contracts - The variable universal life insurance contracts which
LBVIP proposes to issue and for which LBSC has been appointed the
principal underwriter pursuant to a Distribution Agreement, a copy
of which has been furnished to Registered Representative, together
with the Registered Representative Commission Schedule.
(2) The Variable Account - The separate account established and
maintained by LBVIP pursuant to the laws of Minnesota to fund the
benefits under the Contracts.
(3) The Fund - An open-end management investment company registered
under the 1940 Act, shares of which are sold to the Variable
Account in connection with the sale of the Contracts.
(4) Registration Statement - The registration statements and
amendments thereto relating to the Contracts, the Variable Account,
and the Fund, including financial statements and all exhibits.
(5) Prospectus - The prospectuses included within the registration
statements referred to herein.
(6) 1933 Act - The Securities Act of 1933, as amended.
(7) 1934 Act - The Securities Exchange Act of 1934, as amended.
(8) SEC - The Securities and Exchange Commission.
B. AGREEMENTS OF LBSC
(1) Pursuant to the authority delegated to it by LBVIP, LBSC hereby
authorizes Registered Representative during the term of this
Agreement to solicit applications for Contracts from eligible
persons provided that there is an effective Registration Statement
relating to such Contracts and provided further that Registered
Representative has been notified by LBSC that the Contracts are
qualified for sale under all applicable securities and insurance
laws of the state or jurisdiction in which the application will be
solicited. In connection with the solicitation of applications for
Contracts, Registered Representative is hereby authorized to offer
riders and benefits that are available with the Contracts in
accordance with instructions furnished by LBSC or LBVIP.
(2) LBSC, during the term of this Agreement, will notify Registered
Representative of the issuance by the SEC of any stop order with
respect to the Registration Statement or any amendments thereto or
the initiation of any proceedings for that purpose or for any other
purpose relating to the registration and/or offering of the
Contracts and of any other action or circumstances that may prevent
the lawful sale of the Contracts in any state or jurisdiction.
(3) During the term of this Agreement, LBSC shall advise Registered
Representative of any amendment to the Registration Statement of
any amendment or supplement to any Prospectus.
C. AGREEMENTS OF REGISTERED REPRESENTATIVE
(1) It is understood and agreed that Registered Representative is a
duly registered representative of LBSC pursuant to a Registered
Representative's Agreement. Registered Representative agrees to
comply with all of the terms and agreements of said Registered
Representative's Agreement which is hereby incorporated herein by
reference to the extent it is not inconsistent with the terms
herein.
(2) Commencing at such time as LBSC and Registered Representative shall
agree upon, Registered Representative agrees to use his/her best
efforts to find purchasers for the contracts acceptable to LBVIP.
In meeting its obligation to use its best efforts to solicit
applications for Contracts, Registered Representative shall, during
the term of this Agreement, engage in the following activities:
(a) Continuously utilize training, sales and promotional
materials which have been approved by LBVIP;
(b) Permit periodic inspection and supervision of his/her
sales practices and submit periodic reports to LBSC as may
be requested on the results of such inspections and the
compliance with procedures.
(c) Registered Representative shall not make recommendations
to an applicant to purchase a Contract in the absence of
reasonable grounds to believe that the purchase of the
Contract is suitable for such applicant. While not
limited to the following, a determination of suitability
shall be based on information furnished to Registered
Representative after reasonable inquiry of such applicant
concerning the applicant's insurance and investment
objectives, financial situation and needs, and the
likelihood that the applicant will continue to make the
premium payments contemplated by the Contract.
(3) All payments for Contracts collected by Registered Representative
shall be held at all times in a fiduciary capacity and shall be
remitted promptly in full together with such applications, forms
and other required documentation to LBVIP as designated by LBSC.
Checks or money orders in payment of initial premiums shall be
drawn to order of "Lutheran Brotherhood Variable Insurance Products
Company." Registered Representative acknowledges that the LBVIP
retains the ultimate right to control the sale of the Contracts and
that the LBSC or LBVIP shall have the unconditional right to
reject, in whole or in part, any application for the Contract. In
the event LBVIP or LBSC rejects an application, LBVIP immediately
will return all payments directly to the purchaser and Registered
Representative will be notified of such action. In the event that
any purchaser of a Contract elects to return such Contract pursuant
to Rule 6e-3T(b)(13)(viii) of the 1940 Act, any premium paid will
be refunded to the purchaser and Registered Representative will be
notified of such action. Registered Representative will comply
with Lutheran Brotherhood's policy on Field Force Fiduciary
Responsibility.
(4) Registered Representative shall act at all times as an independent
contractor in carrying out the duties hereunder and shall not be
considered an employee of LBVIP or LBSC, except for purposes of the
Federal Insurance Contributions Act (26 U.S.C. 3101 et. seq.), and
Title II, of the Social Security Act (42 U.S.C. 401 et. seq.). As
such Registered Representative shall have full control of his or
her daily activities, with the right to exercise independent
judgment as to the time, place, and manner of soliciting
applications, servicing Contracts, and otherwise carrying out the
provisions of this Agreement. Registered Representative and
his/her employees shall not hold themselves out to be employees of
LBVIP or LBSC in this connection or in any dealings with the
public.
(5) Registered Representative agrees that any material he or she
develops, approves or uses for sales, training, explanatory or
other purposes in connection with the solicitation of applications
for Contracts hereunder (other than generic advertising materials
which do not make specific reference to the Contracts) will not be
used without the prior written consent of LBSC and, where
appropriate, the endorsement of LBVIP to be obtained by LBSC.
(6) Solicitation and other activities by Registered Representative
shall be undertaken only in accordance with applicable laws and
regulations. Registered Representative shall not solicit
applications for the contracts until duly licensed and appointed by
LBVIP as a life insurance and variable contract agent of LBVIP in
the appropriate states or other jurisdictions. Registered
Representative shall fulfill any training requirements necessary to
be licensed. Registered Representative understands and
acknowledges that he/she is not authorized by LBSC or LBVIP to give
any information or make any representation in connection with this
Agreement or the offering of the Contracts other than those
contained in the Prospectus or other solicitation material
authorized in writing by LBSC or LBVIP.
(7) Registered Representative shall not represent himself or herself as
having any nor shall he or she have authority on behalf of LBSC or
LBVIP to: make, alter or discharge any Contract or other form;
waive any forfeiture, extend the time of paying any premium, or
to alter, waive, or forfeit any of the rights of LBVIP or LBSC;
receive any monies or premiums due, or to become due, to LBVIP,
except as set forth in Section C(3) of this Agreement. Registered
Representative shall not expend, nor contract for the expenditure
of the funds of LBSC or LBVIP, nor shall Registered Representative
possess or exercise any authority on behalf of LBSC or LBVIP by
this Agreement.
(8) Registered Representative shall maintain such records as are
required of him/her by applicable laws and regulations. The books,
accounts and records of LBVIP, the Variable Account, LBSC and
Registered Representative relating to the sale of the Contracts
shall be maintained so as to clearly and accurately disclose the
nature and details of the transactions. All records maintained by
Registered Representative in connection with this Agreement shall
be the property of LBVIP and shall be returned to LBVIP upon
termination of this Agreement, free from any claims or retention of
rights by Registered Representative. Registered Representative
shall keep confidential any information obtained pursuant to this
Agreement and shall disclose such information, only if LBVIP has
authorized such disclosure, or if such disclosure is expressly
required by applicable federal or state regulatory authorities.
(9) All business produced and serviced under this Agreement is the
property of LBVIP and no attempt will be made by Registered
Representative to prejudice the Contract Owners or interfere with
the collection of premiums or transfer any existing Contracts to
another company or organization.
Information regarding names, addresses, ages and all other
information and records of Contract Owners acquired from LBVIP or
LBSC and coming into the possession of Registered Representative
during the effective period of this Agreement, or any prior
Agreement, are trade secrets wholly owned by LBVIP. All forms and
other material, including electronic data, whether furnished by
LBVIP or LBSC or purchased by Registered Representative, upon which
this information is recorded shall be the sole and exclusive
property of LBVIP. Registered Representative shall return any part
or all of such information and records upon the request of LBVIP or
LBSC. Registered Representative will safeguard and protect all
such information within his or her control from any unauthorized
access and use.
(10) LBVIP and LBSC may furnish to Registered Representative, without
charge, certain manuals, forms, records, electronic data, and such
other materials and supplies as they may deem advisable to provide.
All such property furnished by them shall remain the property of
LBVIP. In addition, they may offer at Registered Representative's
expense such additional materials and supplies as they believe may
be helpful to Registered Representative.
(11) The expense of any office, including rental, furniture, and
equipment; signs; supplies not furnished by LBVIP or LBSC; the
salaries of the employees of Registered Representative; automobile;
transportation; telephone; postage; advertising; and all other
charges or expense incurred by Registered Representative in the
performance of this Agreement shall be incurred at his/her
discretion and paid for by him/her.
(12) Registered Representative expressly covenants and agrees that after
termination of this Agreement, for any reason, he/she shall not for
a period of one year thereafter, nor shall he/she assist, encourage
or induce others to do, any of the following things: induce, or
attempt to induce, any of the Contract holders to whom he/she was
the "Writing Registered Representative" or was assigned as the
"Servicing or Correspondent Registered Representative" while this
Agreement was in effect, to cancel, lapse, or surrender their
contracts with LBVIP.
(13) Upon termination of this Agreement, Registered Representative will
deliver to LBVIP, or its authorized representatives, all records,
materials, supplies, advertising, licenses, and all other documents
pertaining to LBVIP, used in carrying out this Agreement.
(14) Registered Representative will, at the option of LBVIP or LBSC,
furnish a fidelity bond for such sum and with such surety as they
may require.
(15) Registered Representative shall maintain an errors and omissions
insurance policy in an amount, form, and surety acceptable to LBVIP
for the performance of his or her professional services, duties,
and obligations.
D. COMPENSATION
(1) Pursuant to the Distribution Agreement between LBSC and LBVIP, LBSC
shall cause LBVIP to arrange for the payment of commissions to
Registered Representative as compensation for the sale of each
contract sold by Registered Representative. The amount of such
compensation shall be based on a schedule to be determined by
agreement of LBVIP and LBSC.
(2) Registered Representative shall have no right to withhold or deduct
any part of any premium he/she shall receive for purposes of
payment of commission or otherwise. Registered Representative
shall have no interest in any compensation paid by LBVIP to LBSC,
now or hereafter, in connection with the sale of any Contracts
hereunder.
(3) LBVIP is hereby given a paramount and prior lien and security
interest upon any commissions payable under or as a result of this
or any previous agreement and under all agreements amendatory
hereof or supplementary hereto, as security for the payment of any
claim or indebtedness or reimbursement whatsoever due or to become
due to LBVIP, LBSC, or Lutheran Brotherhood or any of its
subsidiaries or affiliates, from Registered Representative. Any
sums becoming due to Registered Representative at any time may be
applied, directly, by LBVIP to the liquidation of any indebtedness
or obligation of Registered Representative to any of the secured
parties, but the failure to so apply any sum shall not be deemed a
waiver of LBVIP's lien on or security interest in any other sums
becoming due nor impair its right to so apply such sums.
(4) Notwithstanding the vesting provisions provided for in the
Distribution Agreement and/or the schedule referred to in
section D(1) herein, Registered Representative will forfeit all
compensation and any other payments which have otherwise been
vested or reserved to Registered Representative by this or any
previous or related Agreement, if this Agreement terminates and any
of the following events have occurred or subsequently occur:
(a) Registered Representative engages in any form of rebating,
directly or indirectly, or if Registered Representative
defaults in the payment to LBVIP of any premiums collected
by him/her, demands or accepts any remuneration from a
Contract Owner, beneficiary, or their representative for
services in connection with the payment of any claim under
any contract issued by LBVIP;
(b) Registered Representative fails to deliver to LBVIP or its
authorized representative any of the following: all
records, including electronic data, materials, supplies,
advertising, licenses, and all other documents containing
LBVIP confidential information and/or trade secrets, upon
the written request of LBVIP;
(c) Registered Representative violates any of the applicable
federal and state laws, regulations or rules, or commits
any fraud, in connection with his or her duties as a
Registered Representative; or
(d) Registered Representative violates any of the covenants
set forth in section C(12) herein.
E. COMPLAINTS AND INVESTIGATIONS
Registered Representative and LBSC jointly agree to cooperate fully in
any insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the Contracts marketed under this
Agreement. Registered Representative and LBSC further agree to
cooperate fully in any securities regulatory investigation or
proceeding or judicial proceeding with respect to Registered
Representative, LBSC, or their affiliates and their agents or
representatives to the extent that such investigation or proceeding is
in connection with Contracts marketed under this Agreement.
F. TERM OF AGREEMENT
(1) Either party may unilaterally terminate this Agreement upon
thirty (30) days' written notice to the other party of its
intention to do so.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations under this agreement shall cease except (a) the
agreements contained in Section E hereof; (b) the indemnity set
forth in Section G hereof; (c) the obligations to settle accounts
hereunder, including payments on premiums subsequently received for
Contracts in effect at the time of termination or issued pursuant
to the applications received by Registered Representative prior to
termination; and (d) the covenants set forth in Sections C(9),
C(12) and C(13).
(3) This Agreement will automatically terminate on the first day of the
month next following the seventieth birthday of Registered
Representative.
(4) In the event that either the District Representative's Agreement
between Registered Representative and Lutheran Brotherhood or the
Registered Representative's Agreement between Registered
Representative and LBSC is terminated, this Agreement will also
terminate.
(5) LBSC may immediately terminate this agreement for breach of any of
the covenants and agreements herein by Registered Representative.
G. INDEMNITY
(1) Registered Representative shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement.
(2) Registered Representative agrees to indemnify and hold harmless
LBVIP and LBSC and each of their current and former directors and
officers and each person, if any, who controls or has controlled
LBVIP or LBSC within the meaning of the 1933 Act or the 1934 Act,
against any losses, claims, damages or liabilities to which LBVIP
or LBSC and any such director or officer or controlling person may
become subject, under the 1933 Act or otherwise insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon:
(a) Any unauthorized use of sales materials or any verbal or
written misrepresentations or any unlawful sales practices
concerning the Contracts by Registered Representative; or
(b) The failure of Registered Representative or his/her
employees, to comply with the provisions of this
Agreement; and Registered Representative will reimburse
LBVIP, LBSC, or such director, officer or controlling
person in connection with investigating or defending any
such loss, claims, damage, liability or action. This
indemnity agreement will be in addition to any liability
which Registered Representative may otherwise have.
H. GENERAL TERMS
(1) This Agreement shall not be assigned by either party without the
written consent of the other.
(2) This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.
(3) The forbearance or neglect of LBSC to insist upon strict compliance
by Registered Representative with any of the provisions of this
Agreement, whether continuing or not, shall not be construed as a
waiver of LBSC's rights or privileges hereunder. No waiver of any
right or privilege of LBSC arising from any default or failure of
performance by Registered Representative shall affect the LBSC's
rights or privileges in the event of a further default or failure
of performance.
(4) Whenever required for proper interpretation of this Agreement, the
singular number shall include the plural, the plural the singular,
and the use of any gender shall include all genders.
(5) The unenforceability or invalidity of any provisions hereof shall
not render any other provision or provisions herein contained
unenforceable or invalid.
(6) This Agreement contains the entire understanding of the parties
hereto, and no modification hereof or addition hereto shall be
binding unless the same is in writing and signed by the parties
hereto.
(7) This Agreement shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permissive
assigns, and Registered Representative's estate, heirs and personal
representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
LUTHERAN BROTHERHOOD SECURITIES CORP. (LBSC)
By
------------------------------------------
------------------------------------------
(Registered Representative)
#20526
EXHIBIT 1. A(3)(c)
SCHEDULE OF COMMISSION RATES
EXHIBIT I
EXHIBIT IA
LUTHERAN BROTHERHOOD
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS
Minneapolis, Minnesota
Please file in Compensation Section 7, of the DR Planner
<PAGE>
THIS PAGE IS INTENTIONALLY BLANK
<PAGE>
SCHEDULE OF COMMISSION RATES
TABLE OF CONTENTS
Cover Page and Table of Contents
EXHIBIT I:
I Payment Provisions
II. Life Insurance Contracts (Excluding Flexible Premium Adjustable Life)
A. Permanent
Life; Presidential Plus, Life Paid-Up at 96;
Partners Presidential Plus, Survivor Presidential Plus
B. Renewable and Convertible Term
C. Other Term
Juvenile Protection
III. Life Insurance Riders (Excluding Riders on Flexible Premium
Adjustable Life)
A. Issued with Basic Contract
Renewable and Convertible Term
Other Term: Child Term Life Ins. Benefit
Additional Premium Option (PUA Rider)
B. Issued after Basic Contract
Renewable and Convertible Term
Other Term: Child Term Life Ins. Benefit
Additional Premium Option (PUA Rider)
IV. Flexible Premium Adjustable Life (UL) - Series I
A. 1st Year Commission
B. Service Commission
C. Special Renewal Commission
D. Increase Commission per $1,000
E. Cost of Living Increase Commission per $1,000
F. Riders Added After Issue Commission per $1,000
V. Flexible Premium Adjustable Life (UL) - Series II
A. 1st Year Commission
B. Service Commission
C. Renewal Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
3. Spouse Insurance Benefit
D. Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
E. Cost of Living Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
F. Riders Increased/Added After Issue Commission per $1,000
VI. Flexible Premium Adjustable Life Series (UL) - III, IV and
Juvenile-Issue
A. 1st Year Commission
B. Additional Commission (Based on Premium)
C. Renewal Commission per $1,000 of face amount
1. Face Amount Less Than $250,000 and Juvenile-Issue
2. Face Amount More Than $249,999 and Less Than $500,000
3. Face Amount More Than $499,000
4. Spouse Insurance Benefit
D. Increase Commission per $1,000
1. Face Amount Less Than $250,000 and Juvenile-Issue
2. Face Amount More Than $249,999 and Less Than $500,000
3. Face Amount More Than $499,000
E. Cost of Living Increase Commission per $1,000
1. Face Amount Less Than $250,000 and Juvenile-Issue
2. Face Amount More Than $249,999 and Less Than $500,000
3. Face Amount More Than $499,999
F. Riders Increased/Issued After Basic Contract
VII. Flexible Premium Variable Life (VUL)
A. 1st Year Commission
B. Additional Commission (Based on Premium)
C. Renewal Commission per $1,000 of face amount
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
3. Spouse Insurance Benefit
D. Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
E. Cost of Living Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
F. Riders Increased/Issued After Basic Contract
VIII. Annuity Contracts
A. Single Premium
B. Flexible Premium Deferred Annuity '89
Variable Annuity
C. Flexible Premium Deferred Annuity - TSA Qualified
D. FPDA other than FPDA '89 - Nonqualified
IX. Health Insurance
A. Contracts
B. Riders
X. Supplemental Benefits
XI. Settlement Options
EXHIBIT IA: Target Premiums
I. Flexible Premium Adjustable Life - Series II
A. Face Amount Less Than $250,000
B. Face Amount More Than $249,999
II. Flexible Premium Adjustable Life - Series III, IV and Juvenile-Issue
A. Face Amount Less Than $250,000 and Juvenile-Issue
B. Face Amount More Than $249,000 and Less Than $500,000
C. Face Amount More Than $499,999
III. Riders and Supplemental Benefits
IV. Special Class
V. Flexible Premium Variable Life Insurance Riders
Amendments
<PAGE>
[BLANK PAGE]
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
I. PAYMENT PROVISIONS
A. First Year Commissions, Renewal Commissions, Increase Commissions,
Rider Commissions and for Flexible Premium Variable Life contracts
written on or after June 1, 1990, Rollover Commissions are payable
to the Representative* who sold the coverage.
B. Service Commissions, Special Service Commissions, Rollover
Commissions for all products except Flexible Premium Variable Life
(VUL) written after June 1, 1990, and Cost of Living Increase
Commissions are payable to the Representative* who is assigned to
service the contract at the time the commission is payable.
C. FREQUENCY OF COMMISSION PAYMENTS
Commissions will be paid at the same frequency as the related
premiums are paid except
1) First Year Commissions that are expressed as a percent of
premiums and all Increase Commissions on contracts for which
premiums are paid by Pre-Authorized Collection will be
annualized and payable when the contract is issued or increased;
except that the additional 3% of all premium paid on Flexible
Premium Adjustable Life and Flexible Premium Variable Life and
the First Year Commissions on Flexible Premium Annuity and
Variable Annuity contracts paid by Pre-Authorized Collection
will not be annualized.
2) Renewal Commissions which are expressed as an amount per $1,000
will be paid monthly.
D. Recovery of Commissions Previously Paid
1) If the Society returns all or any portion of a premium payment,
any commissions paid to the Representative* on this premium
shall be repaid to the Society and the Society shall have the
right to recover such commission from any compensation
thereafter due and payable to the Representative*.
2) On Flexible Premium Adjustable Life and Flexible Premium
Variable Life Insurance contracts which terminate during the
first contract year, First Year Commission will not exceed the
sum of a) 3% of all premium paid plus b) the pro rata portion
of the First Year Commission based on premium up to target that
would be paid if the contract remained in force for the year.
On Flexible Premium Adjustable Life Insurance Series II, III, IV
and Juvenile-Issue and Flexible Premium Variable Life contracts
which terminate during the first contract year, First Year
Commissions based on premiums up to target will be the product
of the First Year Commission rate and the lesser of
(1) premiums paid and credited on the contract, and
(2) one-twelfth of the Target Premium times the number of full
months the contract remained in force.
First year Commissions paid will be reduced by the amounts, if
any, in excess of those determined above.
E. Contract Changes and Conversions
The Society will determine the amount of compensation and which
Representative* will be paid the compensation on contract changes
(except for the addition of term insurance and health insurance
riders) and conversions, the continuation of Juvenile Term
Insurance contracts and the rollover of Modified Premium Whole Life
contracts. If a contract replaces in whole or in part a contract
previously issued by Lutheran Brotherhood or any subsidiary or
affiliate, the Society shall have the right to determine what, if
any, compensation shall be allowed.
F. All variable products will be subject to the vesting provisions of
Section II.C. of the District Representative Agreement.
- ---------------------------------------
* All references to a Representative include a District Representative
and/or a Registered Representative. An appropriate Registered
Representative license is required before the sale of any variable
product.
II. LIFE INSURANCE CONTRACTS (Excluding Flexible Premium Adjustable Life)
Commissions are a percentage of the premium due and payable on the
basic contract during each contract year (excluding any extra premium
paid for aviation or temporary extra premium).
A. Permanent Life
<TABLE>
<CAPTION>
WHOLE LIFE
(Presidential Plus)
LIFE PAID UP AT 96 Survivor
$50,000 AND OVER Presidential Plus
LIFE* PARTNER PRES.PLUS (SPLUS)
================ ===================== =====================
Number of
Annual 1st Year 1st Renewal 1st Year 1st Renewal 1st Year 1st Renewal
Premiums Commission Commission Commission Commission Commission Commission
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
45 and over 65 % 17 % 55 % 17 % 50 % 13 %
42-44 65 16.5 55 16.5 50 13
35-41 65 16 55 16 50 13
32-34 65 15.5 55 15.5 47.5 13
30-31 62.5 15.5 53 15.5 45 12.5
27-29 62.5 15 53 15 42.5 12.5
25-26 60 14.5 51 14.5 40 12
23-24 57.5 14.5 49 14.5 40 12
22 55 14.5 47 14.5 40 12
21 52.5 14.5 46 14.5 40 12
20 52.5 14.5 45 14.5 40 12
18-19 50 14 44 14 40 12
17 50 14 43 14 40 12
15-16 47.5 14 41 14 40 12
14 44.5 13.5 39 13.5 40 12
13 42.5 13.5 37 13.5 N/A N/A
12 39 13.5 35 13.5 N/A N/A
11 37 13.5 33 13.5 N/A N/A
10 35 13.5 31 13.5 N/A N/A
9 33 13.0 29 13.0 N/A N/A
8 31 13.0 27 13.0 N/A N/A
7 29 13.0 25 13.0 N/A N/A
6 27 13.0 23 13.0 N/A N/A
5 25 13.0 21 13.0 N/A N/A
*Except as otherwise provided in this schedule.
</TABLE>
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMM.: 5%
5TH, 6TH AND 7TH RENEWAL COMM.: 2%
On any plan other than Survivor Presidential Plus with premium
payable beyond age 85, the number of annual premiums to be paid is
determined as though premiums were payable to age 85.
On a Survivor Presidential Plus plan the number of annual premiums
to be paid is the number of annual premiums payable from the joint
issue age to age 100.
1st Year Renewal
Commission Commissions
---------- -----------
Single Premium Life 3% None
B. Renewable and Convertible Term Insurance Contracts
<TABLE>
<CAPTION>
Commission Rates
Commission Rates for Initial Face Commission Rates
for Initial Face Amount More for Initial Face
Amount Less Than Than $499,999 and Amount More
$500,000 Less Than $1,000,000 Than $999,999
================= ===================== ====================
First First First 1st - 7th First 1st - 7th
Issue Year Renewal Year Renewal Year Renewal
Age Commission Commission Commission Commissions Commission Commissions
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
16-40 45 % 14 % 30 % 10 % 25 % 10 %
41-43 45 13.5 30 10 25 10
44-53 45 13 30 10 25 10
54 43 13 30 10 25 10
55 43 13 28 10 23.5 10
56-58 43 12.5 28 10 23.5 10
59 41.5 12 28 10 23.5 10
60 41.5 12 26 10 21.5 10
61-62 40 12 26 10 21.5 10
63 38.5 12 26 10 21.5 10
64 37 12 26 10 21.5 10
65 37 12 24 10 20 10
66-68 35.5 12 24 10 20 10
69-70 34 12 24 10 20 10
</TABLE>
Renewal Commission Rates for Initial Face Amount Less
Than $500,000:
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
C. Other Term Insurance Contracts
First Year First Renewal
Commission Commission
---------- ----------
Juvenile Protector 45% 14%
At Attained Age 5 At Attained Age 6
----------------- -----------------
JumpStart 45% 14%
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
III. LIFE INSURANCE RIDERS (Excluding Riders On
Flexible Premium Adjustable Life)
Commissions are a percentage of the premium due and payable on the
rider during the rider year (excluding any extra premium paid for
aviation or temporary extra premium).
A. Riders issued with the basic contract.
RENEWABLE AND CONVERTIBLE TERM INSURANCE RIDER: BASIC AND SPOUSE
<TABLE>
Commission Rates
Commission Rates for Initial Face Commission Rates
for Initial Face Amount More for Initial Face
Amount Less Than Than $499,999 and Amount More
$500,000 Less Than $1,000,000 Than $999,999
================ ====================== ==================
First First First 1st - 7th First 1st - 7th
Issue Year Renewal Year Renewal Year Renewal
Age Commission Commission Commission Commissions Commission Commissions
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
16-40 45 % 14 % 30 % 10 % 25 % 10 %
41-43 45 13.5 30 10 25 10
44-53 45 13 30 10 25 10
54 43 13 30 10 25 10
55 43 13 28 10 23.5 10
56-58 43 12.5 28 10 23.5 10
59 41.5 12 28 10 23.5 10
60 41.5 12 26 10 21.5 10
61-62 40 12 26 10 21.5 10
63 38.5 12 26 10 21.5 10
64 37 12 26 10 21.5 10
65 37 12 24 10 20 10
66-68 35.5 12 24 10 20 10
69-70 34 12 24 10 20 10
</TABLE>
Issue
Age of First Year First Renewal
Rider Commission Commission
----- ---------- ----------
CHILD TERM LIFE INSURANCE BENEFIT: All Ages 45% 14%
Renewal Commission rates for Renewable and Convertible Term
Insurance Riders with Initial Face Amount Less Than $500,000 and
Child Term Life Insurance Benefit issued with the basic contract:
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
ADDITIONAL PREMIUM OPTION (PUA RIDER)
The commission is a service commission equal to 3% of all premium
paid and credited by the Society whenever paid and credited.
B. Riders added after issue of the basic contract.
RENEWABLE AND CONVERTIBLE TERM INSURANCE RIDER: BASIC AND SPOUSE
<TABLE>
Commission Rates
Commission Rates for Initial Face Commission Rates
for Initial Face Amount More for Initial Face
Amount Less Than Than $499,999 and Amount More
$500,000 Less Than $1,000,000 Than $999,999
================ ====================== ==================
First First First 1st - 7th First 1st - 7th
Issue Year Renewal Year Renewal Year Renewal
Age Commission Commission Commission Commissions Commission Commissions
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
16-53 41.5 % 8 % 27.5 % 9 % 22.5 % 9 %
54 40 8 27.5 9 22.5 9
55-58 40 8 25.5 9 21 9
59 38 8 25.5 9 21 9
60 38 8 23.5 9 19 9
61-62 36.5 8 23.5 9 19 9
63 34.5 8 23.5 9 19 9
64 33 8 23.5 9 19 9
65 33 8 21.5 9 17.5 9
66-68 31.5 8 21.5 9 17.5 9
69-70 30 8 21.5 9 17.5 9
</TABLE>
Issue
Age of First Year First Renewal
Rider Commission Commission
----- ---------- ----------
CHILD TERM LIFE
INSURANCE BENEFIT: All Ages 45% 14%
Renewal Commission rates for Renewable and Convertible Term
Insurance Riders with Initial Face Amount less than $500,000, Child
Term Life Insurance Benefit added after the basic contract:
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 4% except Child Rider. Child Rider = 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
ADDITIONAL PREMIUM OPTION (PUA RIDER):
The commission is a service commission equal to 3% of the premium
paid to and credited by the Society whenever paid and credited.
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES I
A. First Year Commission
Issue Age Commission Rate
--------- ---------------
0-63 50 %
64-68 47.5
69-70 45
71-72 42.5
73 40
74-75 37.5
First Year Commission is a percentage of all premium paid and
credited in the first contract year up to but not exceeding the
amount required to pay the annual cost of insurance, the cost of
any supplemental benefits and riders issued with the basic contract
and first year loads. Premium paid and credited includes amounts
paid for supplemental benefits and riders issued with the basic
contract.
B. Service Commission
5% of all premium paid and credited whenever paid and credited.
C. Special Renewal Commission
This Commission is payable only upon termination of this Agreement
on or after the Qualified Early Retirement Date or upon termination
of this Agreement due to death as specified in the District
Representative Agreement.
Issue Age Commission Per $1,000*
--------- ----------------------
0-25 $.12
26-50 .24
51-75 .36
* One-twelfth of the Special Renewal Commission is paid monthly on
the portion of the initial face amount remaining in force each
month during the first four renewal years.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES ICONTINUED
D. Increase Commission per $1,000* of increase in face amount
<TABLE>
Attained Male Female Attained Male Female
Age Std. Nsmkr. Std. Nsmkr. Age Std. Nsmkr. Std. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.68 1.56 38 2.88 2.52 2.28 2.04
1 1.44 1.32 39 3.12 2.76 2.52 2.16
2 1.20 1.20 40 3.36 2.88 2.64 2.28
3 1.08 1.08 41 3.60 3.00 2.88 2.40
4 .96 .96 42 3.96 3.24 3.12 2.64
5 .84 .84 43 4.32 3.48 3.36 2.76
6 .72 .72 44 4.80 3.72 3.60 3.00
7 .72 .72 45 5.16 3.96 3.84 3.24
8 .72 .72 46 5.64 4.32 4.20 3.48
9 .72 .72 47 6.12 4.68 4.44 3.84
10 .72 .72 48 6.60 5.16 4.80 4.08
11 .84 .72 49 7.08 5.64 5.16 4.44
12 .96 .84 50 7.56 6.00 5.52 4.68
13 1.08 .84 51 8.04 6.36 5.88 4.92
14 1.20 .84 52 8.40 6.72 6.12 5.16
15 1.32 .96 53 8.88 7.08 6.48 5.40
16 1.44 1.08 54 9.36 7.56 6.72 5.76
17 1.44 1.08 55 9.84 7.92 7.08 6.00
18 1.44 1.20 56 10.32 8.40 7.44 6.36
19 1.56 1.32 57 10.92 8.76 7.80 6.60
20 1.56 1.44 1.32 1.08 58 11.52 9.24 8.28 6.96
21 1.56 1.44 1.32 1.20 59 12.12 9.84 8.64 7.32
22 1.56 1.44 1.32 1.20 60 12.72 10.32 9.12 7.80
23 1.68 1.56 1.32 1.32 61 13.32 10.92 9.72 8.40
24 1.68 1.56 1.32 1.32 62 13.92 11.40 10.32 9.00
25 1.68 1.56 1.32 1.32 63 14.52 12.12 11.04 9.72
26 1.68 1.56 1.32 1.32 64 15.12 12.72 11.76 10.44
27 1.80 1.68 1.44 1.32 65 15.84 13.44 12.48 11.16
28 1.92 1.80 1.56 1.44 66 16.68 14.40 13.20 12.00
29 1.92 1.80 1.56 1.44 67 17.52 15.36 14.04 12.72
30 2.04 1.80 1.56 1.44 68 18.48 16.32 14.76 13.56
31 2.16 1.92 1.68 1.56 69 19.20 17.28 15.36 14.28
32 2.16 1.92 1.68 1.56 70 19.68 17.88 15.84 14.76
33 2.16 1.92 1.68 1.56 71 19.44 17.76 15.60 14.64
34 2.28 2.04 1.80 1.68 72 19.32 17.64 15.48 14.64
35 2.40 2.16 1.92 1.80 73 19.08 17.64 15.36 14.64
36 2.52 2.28 2.04 1.90 74 18.84 17.64 15.24 14.64
37 2.76 2.40 2.16 1.92 75 18.72 17.52 15.12 14.52
Age used is attained age of the insured on the effective date of the
increase in face amount of contract or attained age of spouse on the
effective date of the increase in the Spouse Insurance Benefit rider. Std.
includes contracts and riders with increased face amounts having premium
class "Standard" or "Special"; Nsmkr. includes contracts and riders with
increased face amounts having premium class "Nonsmoker" or Nonsmoker
Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES I
E. Cost of Living Increase Commission per $1,000* of increase in face amount
<TABLE>
Attained Male Female Attained Male Female
Age Std. Nsmkr. Std. Nsmkr. Age Std. Nsmkr. Std. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 .48 .36 36 .84 .72 .60 .60
2 .36 .36 37 .96 .84 .72 .60
3 .36 .36 38 .96 .84 .72 .60
4 .24 .24 39 1.08 .96 .84 .72
5 .24 .24 40 1.08 .96 .84 .72
6 .24 .24 41 1.20 .96 .96 .72
7 .24 .24 42 1.32 1.08 .96 .84
8 .24 .24 43 1.44 1.20 1.08 .96
9 .24 .24 44 1.56 1.20 1.20 .96
10 .24 .24 45 1.68 1.32 1.32 1.08
11 .24 .24 46 1.80 1.44 1.44 1.20
12 .36 .24 47 1.92 1.56 1.56 1.32
13 .36 .36 48 2.04 1.68 1.56 1.32
14 .48 .36 49 2.28 1.92 1.68 1.44
15 .48 .36 50 2.52 2.04 1.80 1.56
16 .48 .36 51 2.76 2.16 1.92 1.68
17 .48 .36 52 2.88 2.28 2.04 1.80
18 .48 .48 53 3.00 2.40 2.16 1.80
19 .48 .48 54 3.12 2.52 2.28 1.92
20 .48 .48 .48 .36 55 3.24 2.64 2.40 2.04
21 .48 .48 .48 .36 56 3.48 2.76 2.52 2.16
22 .48 .48 .48 .36 57 3.60 3.00 2.64 2.28
23 .60 .48 .48 .48 58 3.84 3.24 2.76 2.40
24 .60 .48 .48 .48 59 4.08 3.36 2.88 2.52
25 .60 .48 .48 .48 60 4.20 3.48 3.00 2.64
26 .60 .48 .48 .48 61 4.32 3.60 3.12 2.76
27 .72 .60 .48 .48 62 4.32 3.60 3.24 2.76
28 .72 .60 .48 .48 63 4.32 3.60 3.24 2.88
29 .72 .60 .48 .48 64 4.32 3.60 3.36 3.00
30 .72 .60 .48 .48 65 4.32 3.60 3.36 3.00
31 .72 .60 .48 .48 66 4.32 3.72 3.36 3.12
32 .72 .60 .48 .48 67 4.44 3.72 3.48 3.12
33 .84 .72 .60 .60 68 4.44 3.72 3.48 3.12
34 .84 .72 .60 .60 69 4.20 3.60 3.36 3.00
35 .84 .72 .60 .60 70 3.96 3.60 3.12 3.00
* One-twelfth of Cost of Living Increase Commission on the portion of the
increase remaining in force each month after the effective date of the
increase is paid monthly for one year after the effective date of the
increase. Age used is attained age of the insured on the effective
date of the increase in face amount. Std. includes increased face
amounts with premium class "Standard" or "Special"; Nsmkr. includes
increased face amounts with premium class "Nonsmoker" or "Nonsmoker
Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES I
F. Riders Issued After Basic Contract
Spouse Insurance Benefit Commission per $1,000* of face amount
<TABLE>
Issue Male Female Issue Male Female
Age Std. Nsmkr. Std. Nsmkr. Age Std. Nsmkr. Std. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
18 2.16 1.80 47 9.00 7.08 6.72 5.64
19 2.28 1.80 48 9.84 7.80 7.20 6.12
20 2.28 2.16 1.92 1.68 49 10.56 8.40 7.80 6.60
21 2.28 2.16 1.92 1.80 50 11.28 9.00 8.28 7.08
22 2.40 2.16 2.04 1.80 51 12.00 9.60 8.76 7.44
23 2.40 2.16 2.04 1.80 52 12.60 10.08 9.12 7.80
24 2.52 2.28 2.04 1.92 53 13.32 10.68 9.60 8.16
25 2.52 2.28 2.04 1.92 54 14.04 11.28 10.08 8.64
26 2.64 2.40 2.04 1.92 55 14.76 11.88 10.56 9.00
27 2.64 2.40 2.16 2.04 56 15.60 12.48 11.04 9.48
28 2.76 2.52 2.16 2.04 57 16.32 13.20 11.64 9.84
29 2.88 2.52 2.16 2.04 58 17.28 13.92 12.24 10.32
30 3.00 2.64 2.28 2.16 59 18.12 14.64 12.84 10.92
31 3.12 2.76 2.40 2.28 60 19.08 15.48 13.68 11.64
32 3.24 2.88 2.52 2.28 61 20.04 16.44 14.64 12.60
33 3.36 3.00 2.64 2.40 62 21.12 17.40 15.72 13.68
34 3.48 3.12 2.76 2.52 63 22.20 18.36 16.92 14.88
35 3.60 3.2 2.88 2.64 64 23.28 19.56 18.12 16.08
36 3.84 3.36 3.00 2.76 65 24.48 20.76 19.32 17.28
37 4.08 3.60 3.24 2.88 66 25.80 22.20 20.52 18.60
38 4.32 3.84 3.48 3.12 67 27.36 23.88 21.84 19.92
39 4.68 4.08 3.72 3.24 68 28.80 25.56 23.16 21.24
40 5.04 4.32 3.96 3.48 69 30.24 27.12 24.36 22.56
41 5.52 4.56 4.32 3.72 70 31.44 28.56 25.32 23.64
42 6.00 4.92 4.56 3.96 71 32.52 29.88 26.28 24.72
43 6.48 5.16 4.92 4.20 72 33.48 30.96 27.00 25.56
44 7.08 5.52 5.40 4.44 73 34.20 31.92 27.60 26.28
45 7.68 6.00 5.76 4.80 74 34.56 32.40 27.96 26.76
46 8.40 6.48 6.24 5.16 75 34.68 32.64 28.08 27.00
* One-twelfth of the commission on the portion of the face amount of the
rider remaining in force each month is paid monthly for one year after
the effective date of the rider. Age used is issue age of the spouse.
Std. includes riders issued with premium class "Standard" or
"Special"; Nsmkr. includes riders issued with premium class "Nonsmoker"
or "Nonsmoker Special".
Child Insurance Benefit Commission per $1,000 of face amount
Commission is $2.76 per $1,000. One-twelfth of the commission is paid
monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
A. First Year Commission
First Year Commission is a percentage of all premiums paid and
credited in the first contract year up to but not exceeding the
Target Premium. (Target Premiums are illustrated in Exhibit IA).
Issue Age Commission Rate
--------- ---------------
0-53 52%
54-58 50
59-60 48
61-62 46
63 44
64 43
65 42
66-67 41
68 40
69-70 38
71 36
72 34
73 32
74 30
75 28
B. Service Commission
3% of all premium paid and credited whenever paid and credited.
<PAGE>
<TABLE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
C. Renewal Commission per $1,000* of face amount (initial or increase)
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.12 0.12 38 0.36 0.36 0.36 0.24
1 0.12 0.12 39 0.36 0.36 0.36 0.24
2 0.12 0.12 40 0.48 0.36 0.36 0.24
3 0.12 0.12 41 0.48 0.36 0.36 0.36
4 0.12 0.12 42 0.48 0.36 0.36 0.36
5 0.12 0.12 43 0.60 0.48 0.48 0.36
6 0.12 0.12 44 0.60 0.48 0.48 0.36
7 0.12 0.12 45 0.60 0.48 0.48 0.36
8 0.12 0.12 46 0.72 0.48 0.48 0.36
9 0.12 0.12 47 0.72 0.48 0.60 0.48
10 0.12 0.12 48 0.84 0.60 0.6 0.48
11 0.12 0.12 49 0.84 0.60 0.60 0.48
12 0.12 0.12 50 0.84 0.60 0.60 0.48
13 0.12 0.12 51 0.96 0.72 0.72 0.60
14 0.12 0.12 52 0.96 0.72 0.72 0.60
15 0.12 0.12 53 1.08 0.84 0.84 0.60
16 0.12 0.12 54 1.20 0.84 0.84 0.72
17 0.12 0.12 55 1.20 0.96 0.84 0.72
18 0.12 0.12 56 1.32 0.96 0.96 0.72
19 0.12 0.12 57 1.44 1.08 0.96 0.84
20 0.12 0.12 0.12 0.12 58 1.44 1.08 1.08 0.84
21 0.24 0.12 0.12 0.12 59 1.56 1.20 1.08 0.96
22 0.24 0.12 0.12 0.12 60 1.68 1.32 1.20 0.96
23 0.24 0.12 0.12 0.12 61 1.80 1.32 1.32 1.08
24 0.24 0.24 0.12 0.12 62 1.80 1.44 1.44 1.20
25 0.24 0.24 0.12 0.12 63 1.92 1.56 1.44 1.32
26 0.24 0.24 0.12 0.12 64 2.04 1.68 1.56 1.32
27 0.24 0.24 0.12 0.12 65 2.16 1.80 1.68 1.44
28 0.24 0.24 0.24 0.12 66 2.28 1.92 1.80 1.56
29 0.24 0.24 0.24 0.12 67 2.40 2.04 1.80 1.68
30 0.24 0.24 0.24 0.12 68 2.52 2.16 1.92 1.80
31 0.24 0.24 0.24 0.24 69 2.64 2.28 2.04 1.80
32 0.24 0.24 0.24 0.24 70 2.76 2.40 2.16 1.92
33 0.24 0.24 0.24 0.24 71 2.88 2.64 2.28 2.04
34 0.24 0.24 0.24 0.24 72 3.12 2.76 2.40 2.16
35 0.36 0.24 0.24 0.24 73 3.24 3.00 2.52 2.28
36 0.36 0.24 0.24 0.24 74 3.48 3.12 2.64 2.40
37 0.36 0.24 0.24 0.24 75 3.60 3.24 2.76 2.64
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
C. Renewal Commission per $1,000* of face amount (initial or increase)
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.12 0.12 46 0.48 0.36 0.36 0.36
17 0.12 0.12 47 0.60 0.36 0.36 0.36
18 0.12 0.12 48 0.60 0.48 0.48 0.36
19 0.12 0.12 49 0.60 0.48 0.48 0.36
20 0.12 0.12 0.12 0.12 50 0.72 0.48 0.48 0.36
21 0.12 0.12 0.12 0.12 51 0.72 0.48 0.48 0.36
22 0.12 0.12 0.12 0.12 52 0.84 0.60 0.60 0.48
23 0.12 0.12 0.12 0.12 53 0.84 0.60 0.60 0.48
24 0.12 0.12 0.12 0.12 54 0.84 0.60 0.60 0.48
25 0.12 0.12 0.12 0.12 55 0.96 0.72 0.72 0.60
26 0.12 0.12 0.12 0.12 56 0.96 0.72 0.72 0.60
27 0.12 0.12 0.12 0.12 57 1.08 0.84 0.72 0.60
28 0.24 0.12 0.12 0.12 58 1.20 0.84 0.84 0.72
29 0.24 0.12 0.12 0.12 59 1.20 0.96 0.84 0.72
30 0.24 0.12 0.12 0.12 60 1.32 0.96 0.96 0.72
31 0.24 0.12 0.12 0.12 61 1.32 1.08 0.96 0.84
32 0.24 0.24 0.12 0.12 62 1.44 1.08 1.08 0.96
33 0.24 0.24 0.12 0.12 63 1.56 1.20 1.20 0.96
34 0.24 0.24 0.12 0.12 64 1.56 1.32 1.20 1.08
35 0.24 0.24 0.24 0.12 65 1.68 1.32 1.32 1.08
36 0.24 0.24 0.24 0.12 66 1.80 1.44 1.32 1.20
37 0.24 0.24 0.24 0.24 67 1.80 1.56 1.44 1.32
38 0.24 0.24 0.24 0.24 68 1.92 1.68 1.56 1.32
39 0.36 0.24 0.24 0.24 69 2.04 1.80 1.56 1.44
40 0.36 0.24 0.24 0.24 70 2.16 1.80 1.68 1.44
41 0.36 0.24 0.24 0.24 71 2.28 2.04 1.80 1.56
42 0.36 0.36 0.36 0.24 72 2.40 2.16 1.80 1.68
43 0.48 0.36 0.36 0.24 73 2.52 2.28 1.92 1.80
44 0.48 0.36 0.36 0.24 74 2.64 2.40 2.04 1.92
45 0.48 0.36 0.36 0.24 75 2.76 2.52 2.16 2.04
* One-twelfth of the Renewal Commission on the portion of the initial
face amount or increase in face amount remaining in force each month is
paid monthly during the first four renewal years after issue or
requested increase. Age used is issue age of contract or, for
increases in face amount, attained age of the insured on the effective
date of the increase. Smkr. includes contracts with face
amounts/increased face amounts having premium class "Smoker" or
"Smoker Special"; Nsmkr. includes contracts with face amounts/increased
face amounts having premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
C. Renewal Commission per $1,000* of face amount (initial or increase)
3. Spouse Insurance Benefit
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.12 0.00 46 0.24 0.12 0.12 0.12
17 0.12 0.00 47 0.24 0.12 0.24 0.12
18 0.12 0.00 48 0.36 0.12 0.24 0.12
19 0.12 0.00 49 0.36 0.12 0.24 0.12
20 0.12 0.12 0.00 0.00 50 0.36 0.24 0.24 0.12
21 0.12 0.12 0.00 0.00 51 0.36 0.24 0.24 0.12
22 0.12 0.12 0.00 0.00 52 0.48 0.24 0.24 0.24
23 0.12 0.12 0.00 0.00 53 0.48 0.24 0.36 0.24
24 0.12 0.12 0.12 0.00 54 0.48 0.24 0.36 0.24
25 0.12 0.12 0.12 0.00 55 0.60 0.36 0.36 0.24
26 0.12 0.12 0.12 0.00 56 0.60 0.36 0.36 0.24
27 0.12 0.12 0.12 0.00 57 0.72 0.36 0.36 0.24
28 0.12 0.12 0.12 0.00 58 0.72 0.48 0.36 0.24
29 0.12 0.12 0.12 0.00 59 0.84 0.48 0.48 0.24
30 0.12 0.12 0.12 0.00 60 0.84 0.48 0.48 0.36
31 0.12 0.12 0.12 0.00 61 0.96 0.60 0.48 0.36
32 0.12 0.12 0.12 0.00 62 0.96 0.60 0.60 0.36
33 0.12 0.12 0.12 0.12 63 1.08 0.72 0.60 0.48
34 0.12 0.12 0.12 0.12 64 1.08 0.72 0.60 0.48
35 0.12 0.12 0.12 0.12 65 1.20 0.84 0.72 0.48
36 0.12 0.12 0.12 0.12 66 1.32 0.96 0.72 0.60
37 0.12 0.12 0.12 0.12 67 1.44 1.08 0.84 0.60
38 0.12 0.12 0.12 0.12 68 1.56 1.08 0.84 0.72
39 0.12 0.12 0.12 0.12 69 1.68 1.20 0.96 0.72
40 0.12 0.12 0.12 0.12 70 1.80 1.32 0.96 0.84
41 0.12 0.12 0.12 0.12 71 1.92 1.56 1.08 0.96
42 0.24 0.12 0.12 0.12 72 2.04 1.68 1.20 0.96
43 0.24 0.12 0.12 0.12 73 2.28 1.80 1.32 1.08
44 0.24 0.12 0.12 0.12 74 2.40 2.04 1.32 1.20
45 0.24 0.12 0.12 0.12 75 2.64 2.16 1.44 1.20
* One-twelfth of the Renewal Commission on the portion of the initial
rider face amount or increase in rider face amount remaining in force
each month is paid monthly during the first four renewal years after
issue of the rider or increase of the rider. Age used is issue age of
spouse or, for increases in face amount, attained age of the spouse on
the effective date of the increase. Smkr. includes riders with face
amounts/increased face amounts having premium class "Smoker" or
"Smoker Special"; Nsmkr. includes riders with face amounts/increased
face amounts having premium class "Nonsmoker" or Nonsmoker Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
D. Increase Commission per $1,000* of increase in face amount
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.56 1.56 38 5.04 4.08 3.96 3.48
1 1.56 1.56 39 5.28 4.20 4.20 3.72
2 1.56 1.56 40 5.64 4.44 4.44 3.84
3 1.56 1.56 41 6.12 4.80 4.80 4.08
4 1.56 1.56 42 6.72 5.16 5.16 4.32
5 1.56 1.56 43 7.20 5.52 5.52 4.44
6 1.56 1.56 44 7.68 5.76 5.76 4.80
7 1.56 1.56 45 8.28 6.12 6.12 4.92
8 1.56 1.56 46 8.88 6.60 6.60 5.28
9 1.56 1.56 47 9.60 6.96 7.08 5.52
10 1.56 1.56 48 10.20 7.44 7.44 5.88
11 1.68 1.56 49 10.80 7.92 7.92 6.24
12 1.68 1.56 50 11.52 8.40 8.28 6.60
13 1.68 1.68 51 12.36 9.00 8.88 7.08
14 1.80 1.68 52 13.20 9.72 9.60 7.56
15 1.80 1.68 53 14.16 10.32 10.20 8.16
16 1.92 1.68 54 14.52 10.68 10.44 8.28
17 2.04 1.68 55 15.36 11.28 11.04 8.76
18 2.16 1.68 56 16.44 12.24 11.76 9.48
19 2.16 1.80 57 17.52 13.20 12.60 10.20
20 2.28 2.04 1.80 1.56 58 18.60 14.04 13.44 10.92
21 2.40 2.16 1.80 1.68 59 18.84 14.40 13.68 11.04
22 2.52 2.16 1.92 1.80 60 19.92 15.24 14.40 11.76
23 2.52 2.28 2.04 1.80 61 20.16 15.72 14.88 12.36
24 2.64 2.40 2.16 1.92 62 21.36 16.80 15.96 13.44
25 2.76 2.40 2.16 2.04 63 21.48 17.16 16.32 13.92
26 2.88 2.52 2.28 2.04 64 22.08 17.76 16.92 14.52
27 3.00 2.64 2.28 2.16 65 22.56 18.36 17.52 15.24
28 3.00 2.64 2.40 2.16 66 23.28 19.32 18.00 15.84
29 3.24 2.76 2.52 2.28 67 24.48 20.76 18.96 16.92
30 3.36 2.88 2.52 2.28 68 25.20 21.60 19.44 17.52
31 3.48 3.00 2.64 2.40 69 25.08 21.72 19.44 17.52
32 3.60 3.00 2.76 2.52 70 26.28 23.04 20.28 18.48
33 3.72 3.24 2.88 2.64 71 26.40 23.40 20.28 18.72
34 3.84 3.24 3.00 2.64 72 26.28 23.64 20.16 18.72
35 3.96 3.36 3.12 2.76 73 26.16 23.52 20.04 18.60
36 4.32 3.60 3.36 3.00 74 25.80 23.40 19.68 18.48
37 4.56 3.84 3.60 3.24 75 25.20 23.04 19.20 18.12
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
D. Increase Commission per $1,000* of increase in face amount
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 1.44 1.20 46 6.84 5.04 5.16 4.08
17 1.56 1.32 47 7.32 5.40 5.40 4.32
18 1.68 1.32 48 7.92 5.76 5.76 4.56
19 1.68 1.32 49 8.40 6.12 6.00 4.80
20 1.80 1.68 1.32 1.20 50 8.88 6.48 6.48 5.04
21 1.92 1.68 1.44 1.20 51 9.60 6.96 6.84 5.40
22 1.92 1.68 1.44 1.32 52 10.20 7.44 7.32 5.88
23 2.04 1.80 1.56 1.44 53 10.92 8.04 7.92 6.24
24 2.16 1.92 1.68 1.44 54 11.16 8.28 8.04 6.48
25 2.16 1.92 1.68 1.56 55 11.88 8.76 8.52 6.84
26 2.28 1.92 1.80 1.68 56 12.72 9.48 9.12 7.32
27 2.28 2.04 1.80 1.68 57 13.56 10.20 9.72 7.92
28 2.40 2.16 1.92 1.68 58 14.40 10.92 10.32 8.40
29 2.52 2.16 1.92 1.80 59 14.62 11.16 10.56 8.52
30 2.52 2.28 2.04 1.80 60 15.36 11.76 11.16 9.12
31 2.64 2.28 2.16 1.92 61 15.60 12.12 11.52 9.60
32 2.76 2.40 2.16 1.92 62 16.44 13.08 12.36 10.32
33 2.88 2.52 2.28 2.04 63 16.68 13.32 12.60 10.80
34 3.00 2.52 2.28 2.16 64 16.92 13.68 12.96 11.16
35 3.12 2.64 2.40 2.16 65 17.40 14.28 13.56 11.76
36 3.36 2.76 2.64 2.28 66 17.88 14.88 13.92 12.24
37 3.60 2.88 2.76 2.52 67 18.84 15.96 14.64 13.08
38 3.84 3.12 3.00 2.64 68 19.56 16.68 15.12 13.56
39 4.08 3.36 3.24 2.88 69 19.08 16.68 14.88 13.44
40 4.32 3.48 3.48 3.00 70 20.04 17.64 15.48 14.16
41 4.80 3.72 3.72 3.12 71 20.52 18.24 15.84 14.52
42 5.16 3.96 3.96 3.36 72 20.16 18.00 15.48 14.28
43 5.52 4.20 4.20 3.48 73 20.04 18.12 15.36 14.28
44 6.00 4.44 4.44 3.72 74 19.80 18.00 15.12 14.16
45 6.36 4.80 4.80 3.84 75 19.32 17.76 14.76 13.92
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
E. Cost of Living Increase Commission per $1,000* of increase in face amount
1. Highest Total Face Amount** Less Than $250,000 (Band 1)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.48 0.48 33 1.08 0.96 0.84 0.72
1 0.48 0.48 34 1.08 0.96 0.84 0.72
2 0.48 0.48 35 1.20 0.96 0.84 0.84
3 0.48 0.48 36 1.20 1.08 0.96 0.84
4 0.48 0.48 37 1.32 1.08 1.08 0.96
5 0.48 0.48 38 1.44 1.20 1.08 0.96
6 0.48 0.48 39 1.56 1.20 1.20 1.08
7 0.48 0.48 40 1.56 1.32 1.32 1.08
8 0.48 0.48 41 1.80 1.44 1.44 1.20
9 0.48 0.48 42 1.92 1.44 1.44 1.20
10 0.48 0.48 43 2.04 1.56 1.56 1.32
11 0.48 0.48 44 2.28 1.68 1.68 1.32
12 0.48 0.48 45 2.40 1.80 1.80 1.44
13 0.48 0.48 46 2.52 1.92 1.92 1.56
14 0.48 0.48 47 2.76 2.04 2.04 1.56
15 0.48 0.48 48 2.88 2.16 2.16 1.68
16 0.60 0.48 49 3.12 2.28 2.28 1.80
17 0.60 0.48 50 3.36 2.40 2.40 1.92
18 0.60 0.48 51 3.60 2.64 2.52 2.04
19 0.60 0.48 52 3.84 2.76 2.76 2.16
20 0.72 0.60 0.48 0.48 53 4.08 3.00 2.88 2.28
21 0.72 0.60 0.48 0.48 54 4.20 3.12 3.00 2.40
22 0.72 0.60 0.60 0.48 55 4.44 3.24 3.12 2.52
23 0.72 0.72 0.60 0.48 56 4.68 3.48 3.36 2.76
24 0.72 0.72 0.60 0.60 57 5.04 3.84 3.60 2.88
25 0.84 0.72 0.60 0.60 58 5.40 4.08 3.84 3.12
26 0.84 0.72 0.60 0.60 59 5.40 4.20 3.96 3.24
27 0.84 0.72 0.72 0.60 60 5.76 4.44 4.20 3.36
28 0.84 0.72 0.72 0.60 61 5.88 4.56 4.32 3.60
29 0.96 0.84 0.72 0.60 62 6.12 4.80 4.56 3.84
30 0.96 0.84 0.72 0.72 63 6.24 4.92 4.68 3.96
31 0.96 0.84 0.72 0.72 64 6.36 5.16 4.92 4.20
32 1.08 0.84 0.84 0.72
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special.
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the next
higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
E. Cost of Living Increase Commission per $1,000* of increase in face amount
2. Highest Total Face Amount** More Than $249,999 (Band 2)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.48 0.36 41 1.32 1.08 1.08 0.84
17 0.48 0.36 42 1.44 1.20 1.20 0.96
18 0.48 0.36 43 1.56 1.20 1.20 0.96
19 0.48 0.36 44 1.68 1.32 1.32 1.08
20 0.48 0.48 0.36 0.36 45 1.80 1.32 1.44 1.08
21 0.48 0.48 0.36 0.36 46 1.92 1.44 1.44 1.20
22 0.60 0.48 0.48 0.36 47 2.16 1.56 1.56 1.20
23 0.60 0.48 0.48 0.36 48 2.28 1.68 1.68 1.32
24 0.60 0.48 0.48 0.48 49 2.40 1.80 1.80 1.44
25 0.60 0.48 0.48 0.48 50 2.52 1.92 1.80 1.44
26 0.60 0.60 0.48 0.48 51 2.76 2.04 1.92 1.56
27 0.72 0.60 0.48 0.48 52 3.00 2.16 2.16 1.68
28 0.72 0.60 0.48 0.48 53 3.12 2.28 2.28 1.80
29 0.72 0.60 0.60 0.48 54 3.24 2.40 2.28 1.80
30 0.72 0.60 0.60 0.48 55 3.36 2.52 2.40 1.92
31 0.72 0.72 0.60 0.48 56 3.60 2.76 2.64 2.16
32 0.84 0.72 0.60 0.60 57 3.84 2.88 2.76 2.28
33 0.84 0.72 0.60 0.60 58 4.08 3.12 3.00 2.40
34 0.84 0.72 0.72 0.60 59 4.20 3.24 3.00 2.40
35 0.84 0.72 0.72 0.60 60 4.44 3.36 3.24 2.64
36 0.96 0.84 0.72 0.72 61 4.56 3.48 3.36 2.76
37 1.08 0.84 0.84 0.72 62 4.80 3.72 3.60 3.00
38 1.08 0.84 0.84 0.72 63 4.80 3.84 3.60 3.12
39 1.20 0.96 0.96 0.84 64 4.92 3.96 3.72 3.24
40 1.20 0.96 0.96 0.84
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the next
higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
F. Riders Increased/Issued After Basic Contract
Spouse Insurance Benefit Commission per $1,000* of face amount
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.96 0.48 46 3.36 1.92 2.28 1.44
17 0.96 0.48 47 3.60 1.92 2.40 1.68
18 0.96 0.48 48 3.96 2.16 2.52 1.68
19 0.96 0.48 49 4.32 2.16 2.64 1.80
20 1.08 0.84 0.60 0.48 50 4.68 2.40 2.88 1.92
21 1.08 0.84 0.60 0.48 51 5.16 2.52 3.12 2.28
22 1.08 0.84 0.60 0.48 52 5.76 3.00 3.48 2.40
23 1.20 0.84 0.60 0.48 53 6.36 3.36 3.96 2.64
24 1.20 0.84 0.84 0.60 54 6.72 3.60 4.20 2.76
25 1.20 0.84 0.84 0.60 55 7.32 3.96 4.44 3.00
26 1.20 0.84 0.84 0.60 56 7.92 4.44 4.80 3.12
27 1.20 0.84 0.84 0.60 57 8.52 4.92 5.04 3.24
28 1.20 0.84 0.84 0.60 58 9.24 5.28 5.28 3.36
29 1.32 0.96 0.84 0.60 59 9.48 5.52 5.16 3.48
30 1.44 0.96 0.96 0.60 60 10.32 6.24 5.52 3.60
31 1.44 0.96 0.96 0.60 61 10.68 6.72 5.88 3.84
32 1.56 0.96 0.96 0.72 62 11.40 7.32 6.36 4.32
33 1.56 0.96 1.08 0.84 63 11.64 7.68 6.48 4.68
34 1.56 0.96 1.20 0.96 64 12.24 8.16 6.96 5.04
35 1.68 1.08 1.20 0.96 65 12.84 8.76 7.32 5.40
36 1.68 1.08 1.32 0.96 66 13.56 9.48 7.68 5.88
37 1.80 1.08 1.44 1.08 67 14.52 10.44 8.28 6.48
38 1.92 1.20 1.56 1.20 68 15.36 11.28 8.64 6.96
39 2.04 1.20 1.56 1.20 69 15.72 11.76 8.88 7.20
40 2.16 1.32 1.56 1.20 70 17.04 13.08 9.60 7.92
41 2.28 1.32 1.68 1.20 71 17.52 13.56 9.84 8.16
42 2.40 1.44 1.68 1.20 72 17.76 14.04 9.96 8.28
43 2.64 1.56 1.80 1.20 73 18.00 14.52 10.08 8.52
44 2.88 1.68 1.92 1.20 74 18.36 14.88 10.20 8.64
45 3.12 1.68 2.04 1.32 75 18.48 15.36 10.20 8.76
Age used is issue age of the spouse or, for increases in face amount,
attained age of the spouse on the effective date of the increase.
Smkr. includes riders with face amounts/increased face amounts having
premium class "Smoker" or "Smoker Special"; Nsmkr. includes riders with
face amounts/increased face amounts having premium class "Nonsmoker" or
"Nonsmoker Special".
Child Insurance Benefit Commission per $1,000 of face amount
Commission is $3.00 per $1,000.
One-twelfth of the commission is paid monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES III, IV AND
JUVENILE-ISSUE
A. First Year Commission
First Year Commission is a percentage of all premium paid and
credited in the first contract year up to but not exceeding the
Target Premium. (Target Premiums are illustrated in Exhibit IA).
Issue Age Commission Rate
--------- ---------------
0-53 52 %
54-58 50
59-60 48
61-62 46
63 44
64 43
65 42
66-67 41
68 40
69-70 38
71 36
72 34
73 32
74 30
75 28
76 26
77 24.5
78 23
79 21.5
80 20
For contracts issued on or after June 1, 1990, an additional First
Year Commission is 3% of all premium paid and credited whenever
paid and credited during the first year.
B. Additional commission based on premium
1. For contracts issued on or after June 1, 1990, a Renewal
Commission based on premium is paid equal to 3% of all premium
paid and credited whenever paid and credited in contract
year 2 or later.
2. For contracts issued before June 1, 1990, a Service Commission
is paid equal to 3% of all premium paid and credited whenever
paid and credited.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
C. Renewal Commission per $1,000* of face amount (initial or increase)
1. Basic Contract - Highest Total Face Amount** of
Series III and IV Less Than $250,000
(No limit on face amount of Juvenile-Issue contract)
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.12 0.12 41 0.48 0.36 0.36 0.36
1 0.12 0.12 42 0.48 0.36 0.36 0.36
2 0.12 0.12 43 0.60 0.48 0.48 0.36
3 0.12 0.12 44 0.60 0.48 0.48 0.36
4 0.12 0.12 45 0.60 0.48 0.48 0.36
5 0.12 0.12 46 0.72 0.48 0.48 0.36
6 0.12 0.12 47 0.72 0.48 0.60 0.48
7 0.12 0.12 48 0.72 0.60 0.60 0.48
8 0.12 0.12 49 0.84 0.60 0.60 0.48
9 0.12 0.12 50 0.84 0.60 0.60 0.48
10 0.12 0.12 51 0.96 0.72 0.72 0.60
11 0.12 0.12 52 0.96 0.72 0.72 0.60
12 0.12 0.12 53 1.08 0.72 0.84 0.60
13 0.12 0.12 54 1.20 0.84 0.84 0.72
14 0.12 0.12 55 1.20 0.84 0.84 0.72
15 0.12 0.12 56 1.32 0.96 0.96 0.72
16 0.12 0.12 57 1.44 0.96 0.96 0.84
17 0.12 0.12 58 1.44 1.08 1.08 0.84
18 0.12 0.12 59 1.56 1.20 1.08 0.96
19 0.12 0.12 60 1.68 1.32 1.20 0.96
20 0.12 0.12 0.12 0.12 61 1.80 1.32 2.04 1.08
21 0.24 0.12 0.12 0.12 62 1.80 1.44 1.44 1.20
22 0.24 0.12 0.12 0.12 63 1.92 1.56 1.44 1.32
23 0.24 0.12 0.12 0.12 64 2.04 1.68 1.56 1.32
24 0.24 0.24 0.12 0.12 65 2.16 1.80 1.68 1.44
25 0.24 0.24 0.12 0.12 66 2.28 1.92 1.80 1.56
26 0.24 0.24 0.12 0.12 67 2.40 2.04 1.80 1.68
27 0.24 0.24 0.12 0.12 68 2.52 2.16 1.92 1.80
28 0.24 0.24 0.24 0.12 69 2.64 2.28 2.04 1.80
29 0.24 0.24 0.24 0.12 70 2.76 2.40 2.16 1.92
30 0.24 0.24 0.24 0.12 71 2.88 2.64 2.28 2.04
31 0.24 0.24 0.24 0.24 72 3.12 2.76 2.40 2.16
32 0.24 0.24 0.24 0.24 73 3.24 3.00 2.52 2.28
33 0.24 0.24 0.24 0.24 74 3.48 3.12 2.64 2.40
34 0.24 0.24 0.24 0.24 75 3.60 3.24 2.76 2.64
35 0.36 0.24 0.24 0.24 76 3.72 3.48 2.88 2.76
36 0.36 0.24 0.24 0.24 77 3.96 3.60 3.00 2.88
37 0.36 0.24 0.24 0.24 78 4.08 3.84 3.12 3.00
38 0.36 0.36 0.36 0.24 79 4.32 3.96 3.24 3.12
39 0.36 0.36 0.36 0.24 80 4.44 4.20 3.36 3.24
40 0.48 0.36 0.36 0.24
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
C. Renewal Commission per $1,000* of face amount (initial or increase)
2. Basic Contract - Highest Total Face Amount**
More Than $249,999 and Less Than $500,000
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.12 0.12 0.12 0.12 51 0.72 0.48 0.48 0.36
21 0.12 0.12 0.12 0.12 52 0.72 0.60 0.60 0.48
22 0.12 0.12 0.12 0.12 53 0.84 0.60 0.60 0.48
23 0.12 0.12 0.12 0.12 54 0.84 0.60 0.60 0.48
24 0.12 0.12 0.12 0.12 55 0.96 0.72 0.72 0.60
25 0.12 0.12 0.12 0.12 56 0.96 0.72 0.72 0.60
26 0.12 0.12 0.12 0.12 57 1.08 0.84 0.72 0.60
27 0.12 0.12 0.12 0.12 58 1.08 0.84 0.84 0.72
28 0.24 0.12 0.12 0.12 59 1.20 0.96 0.84 0.72
29 0.24 0.12 0.12 0.12 60 1.32 0.96 0.96 0.72
30 0.24 0.12 0.12 0.12 61 1.32 1.08 0.96 0.84
31 0.24 0.12 0.12 0.12 62 1.44 1.08 1.08 0.96
32 0.24 0.24 0.12 0.12 63 1.56 1.20 1.20 0.96
33 0.24 0.24 0.12 0.12 64 1.56 1.32 1.20 1.08
34 0.24 0.24 0.12 0.12 65 1.68 1.32 1.32 1.08
35 0.24 0.24 0.24 0.12 66 1.80 1.44 1.32 1.20
36 0.24 0.24 0.24 0.12 67 1.80 1.56 1.44 1.32
37 0.24 0.24 0.24 0.24 68 1.92 1.68 1.56 1.32
38 0.24 0.24 0.24 0.24 69 2.04 1.80 1.56 1.44
39 0.36 0.24 0.24 0.24 70 2.16 1.80 1.68 1.44
40 0.36 0.24 0.24 0.24 71 2.28 2.04 1.80 1.56
41 0.36 0.24 0.24 0.24 72 2.40 2.16 1.80 1.68
42 0.36 0.36 0.36 0.24 73 2.52 2.28 1.92 1.80
43 0.48 0.36 0.36 0.24 74 2.64 2.40 2.04 1.92
44 0.48 0.36 0.36 0.24 75 2.76 2.52 2.16 2.04
45 0.48 0.36 0.36 0.24 76 2.88 2.64 2.16 2.04
46 0.48 0.36 0.36 0.36 77 3.00 2.76 2.28 2.16
47 0.60 0.36 0.36 0.36 78 3.12 3.00 2.40 2.28
48 0.60 0.48 0.48 0.36 79 3.24 3.12 2.52 2.40
49 0.60 0.48 0.48 0.36 80 3.48 3.24 2.64 2.52
50 0.72 0.48 0.48 0.36
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
C. Renewal Commission per $1,000* of face amount (initial or increase)
3. Basic Contract - Highest Total Face Amount** More Than $499,999
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.12 0.12 0.12 0.12 51 0.48 0.36 0.36 0.24
21 0.12 0.12 0.12 0.12 52 0.48 0.36 0.36 0.36
22 0.12 0.12 0.12 0.12 53 0.60 0.36 0.36 0.36
23 0.12 0.12 0.12 0.12 54 0.60 0.48 0.48 0.36
24 0.12 0.12 0.12 0.12 55 0.60 0.48 0.48 0.36
25 0.12 0.12 0.12 0.12 56 0.72 0.48 0.48 0.36
26 0.12 0.12 0.12 0.12 57 0.72 0.60 0.48 0.48
27 0.12 0.12 0.12 0.12 58 0.84 0.60 0.60 0.48
28 0.12 0.12 0.12 0.12 59 0.84 0.60 0.60 0.48
29 0.12 0.12 0.12 0.12 60 0.96 0.72 0.60 0.48
30 0.12 0.12 0.12 0.12 61 0.96 0.72 0.72 0.60
31 0.12 0.12 0.12 0.12 62 0.96 0.84 0.72 0.60
32 0.12 0.12 0.12 0.12 63 1.08 0.84 0.84 0.72
33 0.12 0.12 0.12 0.12 64 1.08 0.96 0.84 0.72
34 0.12 0.12 0.12 0.12 65 1.20 0.96 0.96 0.84
35 0.12 0.12 0.12 0.12 66 1.20 1.08 0.96 0.84
36 0.12 0.12 0.12 0.12 67 1.32 1.08 0.96 0.96
37 0.24 0.12 0.12 0.12 68 1.32 1.20 1.08 0.96
38 0.24 0.12 0.12 0.12 69 1.44 1.20 1.08 0.96
39 0.24 0.12 0.12 0.12 70 1.56 1.32 1.20 1.08
40 0.24 0.24 0.12 0.12 71 1.68 1.44 1.20 1.20
41 0.24 0.24 0.24 0.12 72 1.80 1.56 1.32 1.20
42 0.24 0.24 0.24 0.12 73 1.92 1.68 1.44 1.32
43 0.24 0.24 0.24 0.24 74 2.04 1.80 1.56 1.44
44 0.36 0.24 0.24 0.24 75 2.16 2.04 1.68 1.56
45 0.36 0.24 0.24 0.24 76 2.28 2.16 1.80 1.68
46 0.36 0.24 0.24 0.24 77 2.40 2.28 1.92 1.80
47 0.36 0.24 0.24 0.24 78 2.64 2.40 1.92 1.92
48 0.36 0.24 0.24 0.24 79 2.76 2.52 2.04 1.92
49 0.48 0.36 0.36 0.24 80 2.88 2.64 2.16 2.04
50 0.48 0.36 0.36 0.24
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
C. Renewal Commission per $1,000* of face amount (initial or increase)
4. Spouse Insurance Benefit
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.00 0.00 49 0.24 0.12 0.12 0.12
17 0.00 0.00 50 0.36 0.24 0.24 0.12
18 0.12 0.00 51 0.36 0.24 0.24 0.12
19 0.12 0.00 52 0.36 0.24 0.24 0.12
20 0.12 0.00 0.00 0.00 53 0.36 0.24 0.24 0.12
21 0.12 0.00 0.00 0.00 54 0.48 0.24 0.24 0.12
22 0.12 0.00 0.00 0.00 55 0.48 0.24 0.24 0.12
23 0.12 0.00 0.00 0.00 56 0.48 0.24 0.24 0.24
24 0.12 0.00 0.00 0.00 57 0.60 0.36 0.24 0.24
25 0.12 0.00 0.00 0.00 58 0.60 0.36 0.36 0.24
26 0.12 0.00 0.00 0.00 59 0.60 0.36 0.36 0.24
27 0.12 0.00 0.00 0.00 60 0.72 0.36 0.36 0.24
28 0.12 0.00 0.00 0.00 61 0.72 0.48 0.36 0.24
29 0.12 0.00 0.00 0.00 62 0.84 0.48 0.36 0.24
30 0.12 0.00 0.12 0.00 63 0.84 0.48 0.36 0.24
31 0.12 0.00 0.12 0.00 64 0.84 0.48 0.48 0.36
32 0.12 0.12 0.12 0.00 65 0.96 0.60 0.48 0.36
33 0.12 0.12 0.12 0.00 66 0.96 0.60 0.48 0.36
34 0.12 0.12 0.12 0.00 67 1.08 0.72 0.48 0.36
35 0.12 0.12 0.12 0.00 68 1.20 0.72 0.60 0.36
36 0.12 0.12 0.12 0.00 69 1.32 0.84 0.60 0.48
37 0.12 0.12 0.12 0.12 70 1.44 0.96 0.72 0.48
38 0.12 0.12 0.12 0.12 71 1.56 1.08 0.72 0.60
39 0.12 0.12 0.12 0.12 72 1.68 1.20 0.84 0.60
40 0.12 0.12 0.12 0.12 73 1.80 1.32 0.84 0.72
41 0.12 0.12 0.12 0.12 74 1.92 1.44 0.96 0.72
42 0.24 0.12 0.12 0.12 75 2.16 1.56 0.96 0.84
43 0.24 0.12 0.12 0.12 76 2.52 1.80 1.20 0.84
44 0.24 0.12 0.12 0.12 77 2.76 1.92 1.44 0.96
45 0.24 0.12 0.12 0.12 78 3.00 2.16 1.56 1.08
46 0.24 0.12 0.12 0.12 79 3.24 2.28 1.68 1.20
47 0.24 0.12 0.12 0.12 80 3.48 2.52 1.92 1.44
48 0.24 0.12 0.12 0.12
* The twelfth of the Renewal Commission on the portion of the rider face
amount or increase in rider face amount remaining in force each month is
paid monthly during the first four renewal years after issue of the rider
or increase of the rider. Age used is issue age of spouse or, for
increases in face amount, attained age of the spouse on the effective
date of the increase. Smkr. includes riders with face amounts/increased
face amounts having premium class "Smoker" or "Smoker Special"; includes
riders with face amounts/increased face amounts having premium class
"Nonsmoker" or "Nonsmoker Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
D. Increase Commission per $1,000* of increase in face amount
1. Basic Contract - Highest Total Face Amount** of
Series III and IV Less Than $250,000
(No limit on face amount of Juvenile-Issue contract)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.32 1.32 41 6.12 4.80 4.80 4.08
1 1.32 1.32 42 6.60 5.16 5.16 4.32
2 1.32 1.32 43 7.08 5.52 5.52 4.44
3 1.32 1.32 44 7.68 5.76 5.76 4.80
4 1.32 1.32 45 8.28 6.12 6.12 4.92
5 1.32 1.32 46 8.88 6.60 6.60 5.28
6. 1.32 1.32 47 9.48 6.96 7.08 5.52
7. 1.32 1.32 48 9.96 7.44 7.44 5.88
8 1.32 1.32 49 10.56 7.92 7.92 6.24
9 1.32 1.32 50 11.28 8.40 8.28 6.60
10 1.32 1.32 51 12.12 8.88 8.88 7.08
11 1.32 1.32 52 12.96 9.36 9.60 7.56
12 1.44 1.32 53 13.92 9.96 10.20 8.16
13 1.44 1.32 54 14.52 10.20 10.44 8.28
14 1.68 1.44 55 15.36 10.92 11.04 8.76
15 1.80 1.44 56 16.44 11.76 11.76 9.48
16 1.92 1.56 57 17.52 12.60 12.60 10.20
17 2.04 1.68 58 18.60 13.56 13.44 10.92
18 2.16 1.68 59 18.84 14.04 13.68 11.04
19 2.16 1.80 60 19.92 15.24 14.40 11.76
20 2.28 2.04 1.80 1.56 61 20.16 15.72 14.88 12.36
21 2.40 2.16 1.80 1.68 62 21.36 16.80 15.96 13.44
22 2.52 2.16 1.92 1.80 63 21.48 17.16 16.32 13.92
23 2.52 2.28 2.04 1.80 64 22.08 17.76 16.92 14.52
24 2.64 2.40 2.16 1.92 65 22.56 18.36 17.52 15.24
25 2.76 2.40 2.16 2.04 66 23.28 19.32 18.00 15.84
26 2.88 2.52 2.28 2.04 67 24.48 20.76 18.96 16.92
27 3.00 2.64 2.28 2.16 68 25.20 21.60 19.44 17.52
28 3.00 2.64 2.40 2.16 69 25.08 21.72 19.44 17.52
29 3.24 2.76 2.52 2.28 70 26.28 23.04 20.28 18.48
30 3.36 2.88 2.52 2.28 71 26.40 23.40 20.28 18.72
31 3.48 3.00 2.64 2.40 72 26.28 23.64 20.16 18.72
32 3.60 3.00 2.76 2.52 73 26.16 23.52 20.04 18.60
33 3.72 3.24 2.88 2.64 74 25.80 23.40 19.68 18.48
34 3.84 3.24 3.00 2.64 75 25.20 23.04 19.20 18.12
35 3.96 3.36 3.12 2.76 76 24.48 22.56 18.60 17.64
36 4.32 3.60 3.36 3.00 77 24.12 22.32 18.24 17.40
37 4.56 3.84 3.60 3.24 78 23.64 21.96 17.88 17.04
38 5.04 4.08 3.96 3.48 79 22.92 21.48 17.28 16.56
39 5.28 4.20 4.20 3.72 80 22.20 20.88 16.68 16.08
40 5.64 4.44 4.44 3.84
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
D. Increase Commission per $1,000* of increase in face amount
2. Basic Contract - Highest Total Face Amount**
More Than $249,999 and Less Than $500,000
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 1.80 1.68 1.32 1.20 51 9.36 6.96 6.84 5.40
21 1.92 1.68 1.44 1.20 52 10.08 7.32 7.32 5.88
22 1.92 1.68 1.44 1.32 53 10.80 7.68 7.92 6.24
23 2.04 1.80 1.56 1.44 54 11.16 7.92 8.04 6.48
24 2.16 1.92 1.68 1.44 55 11.88 8.52 8.52 6.84
25 2.16 1.92 1.68 1.56 56 12.72 9.12 9.12 7.32
26 2.28 1.92 1.80 1.68 57 13.56 10.20 9.72 7.92
27 2.28 2.04 1.80 1.68 58 14.40 10.92 10.32 8.40
28 2.40 2.16 1.92 1.68 59 14.52 11.04 10.56 8.52
29 2.52 2.16 1.92 1.80 60 15.36 11.76 11.16 9.12
30 2.52 2.28 2.04 1.80 61 15.60 12.12 11.52 9.60
31 2.64 2.28 2.16 1.92 62 16.44 13.08 12.36 10.32
32 2.76 2.40 2.16 1.92 63 16.68 13.32 12.60 10.80
33 2.88 2.52 2.28 2.04 64 16.92 13.68 12.96 11.16
34 3.00 2.52 2.28 2.16 65 17.40 14.28 13.56 11.76
35 3.12 2.64 2.40 2.16 66 17.88 14.88 13.92 12.24
36 3.36 2.76 2.64 2.28 67 18.84 15.96 14.64 13.08
37 3.60 2.88 2.76 2.52 68 19.56 16.68 15.12 13.56
38 3.84 3.12 3.00 2.64 69 19.08 16.68 14.88 13.44
39 4.08 3.36 3.24 2.88 70 20.04 17.64 15.48 14.16
40 4.32 3.48 3.48 3.00 71 20.52 18.24 15.84 14.52
41 4.80 3.72 3.72 3.12 72 20.16 18.00 15.48 14.28
42 5.16 3.96 3.96 3.36 73 20.04 18.12 15.36 14.28
43 5.52 4.20 4.20 3.48 74 19.80 18.00 15.12 14.16
44 6.00 4.44 4.44 3.72 75 19.32 17.76 14.76 13.92
45 6.36 4.80 4.80 3.84 76 18.84 17.40 14.28 13.56
46 6.84 5.04 5.16 4.08 77 18.60 17.16 14.04 13.44
47 7.20 5.40 5.40 4.32 78 18.24 16.92 13.80 13.20
48 7.68 5.76 5.76 4.56 79 17.64 16.56 13.44 12.84
49 8.28 6.12 6.00 4.80 80 17.16 16.08 12.96 12.48
50 8.76 6.48 5.04
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker" or
"Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
D. Increase Commission per $1,000* of increase in face amount
3. Basic Contract - Highest Total Face Amount** More Than $499,999
<TABLE>
Attained Male Female Attained Male Female
Age Smkr Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 1.32 1.08 0.96 0.84 51 6.36 4.68 4.68 3.72
21 1.32 1.20 0.96 0.84 52 6.84 5.04 5.04 3.96
22 1.32 1.20 1.08 0.96 53 7.32 5.28 5.28 4.20
23 1.32 1.20 1.08 0.96 54 7.68 5.52 5.52 4.44
24 1.44 1.32 1.20 1.08 55 8.16 5.88 5.88 4.68
25 1.44 1.32 1.20 1.08 56 8.76 6.36 6.24 5.04
26 1.44 1.32 1.20 1.08 57 9.36 6.84 6.72 5.40
27 1.56 1.44 1.32 1.20 58 10.08 7.44 7.20 5.76
28 1.68 1.44 1.32 1.20 59 10.20 7.68 7.32 5.88
29 1.68 1.44 1.32 1.20 60 10.80 8.28 7.80 6.36
30 1.80 1.44 1.32 1.20 61 11.04 8.52 8.04 6.72
31 1.80 1.56 1.44 1.32 62 11.64 9.12 8.64 7.32
32 1.92 1.68 1.44 1.32 63 11.64 9.24 8.88 7.56
33 1.92 1.68 1.44 1.32 64 12.00 9.72 9.24 8.04
34 2.04 1.68 1.56 1.44 65 12.36 10.08 9.60 8.40
35 2.16 1.80 1.68 1.44 66 12.72 10.56 9.84 8.76
36 2.28 1.92 1.80 1.68 67 13.32 11.16 10.32 9.24
37 2.40 2.04 1.92 1.80 68 13.68 11.76 10.56 9.60
38 2.52 2.16 2.04 1.92 69 13.68 11.88 10.68 9.60
39 2.76 2.28 2.16 2.04 70 14.52 12.72 11.16 10.32
40 2.88 2.40 2.28 2.04 71 14.64 13.08 11.28 10.44
41 3.24 2.52 2.52 2.16 72 14.76 13.32 11.40 10.56
42 3.48 2.64 2.64 2.28 73 15.00 13.56 11.52 10.68
43 3.72 2.88 2.88 2.40 74 15.12 13.92 11.64 10.92
44 4.08 3.00 3.12 2.52 75 15.36 14.04 11.64 11.04
45 4.32 3.24 3.24 2.52 76 15.12 13.92 11.52 10.80
46 4.56 3.48 3.48 2.76 77 15.00 13.92 11.40 10.80
47 4.92 3.60 3.72 2.88 78 14.88 13.80 11.28 10.68
48 5.16 3.84 3.84 3.00 79 14.64 13.68 11.04 10.56
49 5.52 4.08 4.08 3.24 80 14.28 13.32 10.80 10.32
50 5.88 4.32 4.32 3.48
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
E. Cost of Living Increase Commission per $1,000* of increase in face amount
1. Highest Total Face Amount** of
Series III and IV Less Than $250,000 (Band 1)
(No limit on face amount of Juvenile-Issue contract)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.36 0.36 33 1.08 0.96 0.84 0.72
1 0.36 0.36 34 1.08 0.96 0.84 0.72
2 0.36 0.36 35 1.20 0.96 0.96 0.84
3 0.36 0.36 36 1.20 1.08 0.96 0.84
4 0.36 0.36 37 1.32 1.08 1.08 0.96
5 0.36 0.36 38 1.44 1.20 1.08 0.96
6 0.36 0.36 39 1.56 1.20 1.20 1.08
7 0.36 0.36 40 1.68 1.32 1.32 1.08
8 0.36 0.36 41 1.80 1.44 1.44 1.20
9 0.36 0.36 42 1.92 1.44 1.44 1.20
10 0.36 0.36 43 2.04 1.56 1.56 1.32
11 0.36 0.36 44 2.28 1.68 1.68 1.32
12 0.36 0.36 45 2.40 1.80 1.80 1.44
13 0.48 0.36 46 2.52 1.92 1.92 1.56
14 0.48 0.36 47 2.76 2.04 2.04 1.56
15 0.48 0.48 48 2.88 2.16 2.16 1.68
16 0.60 0.48 49 3.00 2.28 2.28 1.80
17 0.60 0.48 50 3.24 2.40 2.40 1.92
18 0.60 0.48 51 3.48 2.52 2.52 2.04
19 0.60 0.48 52 3.72 2.76 2.76 2.16
20 0.72 0.60 0.48 0.48 53 3.96 2.88 2.88 2.40
21 0.72 0.60 0.48 0.48 54 4.20 3.00 3.00 2.40
22 0.72 0.60 0.60 0.48 55 4.44 3.12 3.12 2.52
23 0.72 0.72 0.60 0.48 56 4.68 3.36 3.36 2.76
24 0.72 0.72 0.60 0.60 57 5.04 3.60 3.60 2.88
25 0.84 0.72 0.60 0.60 58 5.40 3.96 3.84 3.12
26 0.84 0.72 0.60 0.60 59 5.40 4.08 3.96 3.24
27 0.84 0.72 0.72 0.60 60 5.76 4.44 4.20 3.36
28 0.84 0.72 0.72 0.60 61 5.88 4.56 4.32 3.60
29 0.96 0.84 0.72 0.60 62 6.12 4.80 4.56 3.84
30 0.96 0.84 0.72 0.72 63 6.24 4.92 4.68 3.96
31 0.96 0.84 0.72 0.72 64 6.36 5.16 4.92 4.20
32 1.08 0.84 0.84 0.72
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr, includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
E. Cost of Living Increase Commission per $1,000* of increase in face amount
2. Highest Total Face Amount** More Than $249,999 and
Less Than $500,000 (Band 2)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.48 0.48 0.36 0.36 42 1.44 1.20 1.20 0.96
21 0.60 0.48 0.36 0.36 43 1.56 1.20 1.20 0.96
22 0.60 0.48 0.48 0.36 44 1.68 1.32 1.32 1.08
23 0.60 0.48 0.48 0.36 45 1.80 1.32 1.44 1.08
24 0.60 0.60 0.48 0.48 46 1.92 1.44 1.44 1.20
25 0.60 0.60 0.48 0.48 47 2.04 1.56 1.56 1.20
26 0.60 0.60 0.48 0.48 48 2.28 1.68 1.68 1.32
27 0.72 0.60 0.48 0.48 49 2.40 1.80 1.80 1.44
28 0.72 0.60 0.60 0.48 50 2.52 1.92 1.80 1.44
29 0.72 0.60 0.60 0.48 51 2.76 2.04 2.04 1.56
30 0.72 0.60 0.60 0.48 52 2.88 2.16 2.16 1.68
31 0.72 0.72 0.60 0.60 53 3.12 2.28 2.28 1.80
32 0.84 0.72 0.60 0.60 54 3.24 2.28 2.28 1.80
33 0.84 0.72 0.60 0.60 55 3.36 2.40 2.40 1.92
34 0.84 0.72 0.72 0.60 56 3.60 2.64 2.64 2.16
35 0.96 0.72 0.72 0.60 57 3.84 2.88 2.76 2.28
36 0.96 0.84 0.72 0.72 58 4.08 3.12 3.00 2.40
37 1.08 0.84 0.84 0.72 59 4.20 3.12 3.00 2.40
38 1.08 0.96 0.84 0.72 60 4.44 3.36 3.24 2.64
39 1.20 0.96 0.96 0.84 61 4.56 3.48 3.36 2.76
40 1.32 0.96 0.96 0.84 62 4.80 3.72 3.60 3.00
41 1.32 1.08 1.08 0.96 63 4.80 3.84 3.60 3.12
64 4.92 3.96 3.72 3.24
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker" or Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please Note: A COLA increase will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
E. Cost of Living Increase Commission per $1,000* of increase in face amount
3. Highest Total Face Amount** More Than $499,999 (Band 3)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.36 0.36 0.24 0.24 42 0.96 0.72 0.72 0.60
21 0.36 0.36 0.24 0.24 43 1.08 0.84 0.84 0.72
22 0.36 0.36 0.36 0.24 44 1.20 0.84 0.84 0.72
23 0.36 0.36 0.36 0.24 45 1.20 0.96 0.96 0.72
24 0.36 0.36 0.36 0.36 46 1.32 0.96 0.96 0.84
25 0.36 0.36 0.36 0.36 47 1.44 1.08 1.08 0.84
26 0.48 0.36 0.36 0.36 48 1.44 1.08 1.08 0.84
27 0.48 0.36 0.36 0.36 49 1.56 1.20 1.20 0.96
28 0.48 0.36 0.36 0.36 50 1.68 1.32 1.32 0.96
29 0.48 0.48 0.36 0.36 51 1.80 1.32 1.32 1.08
30 0.48 0.48 0.36 0.36 52 2.04 1.44 1.44 1.20
31 0.48 0.48 0.36 0.36 53 2.16 1.56 1.56 1.20
32 0.60 0.48 0.48 0.36 54 2.16 1.56 1.56 1.32
33 0.60 0.48 0.48 0.36 55 2.40 1.68 1.68 1.32
34 0.60 0.48 0.48 0.36 56 2.52 1.80 1.80 1.44
35 0.60 0.48 0.48 0.48 57 2.76 1.92 1.92 1.56
36 0.60 0.60 0.48 0.48 58 2.88 2.16 2.04 1.68
37 0.72 0.60 0.60 0.48 59 3.00 2.28 2.16 1.68
38 0.72 0.60 0.60 0.60 60 3.12 2.40 2.28 1.80
39 0.84 0.60 0.60 0.60 61 3.12 2.52 2.28 1.92
40 0.84 0.72 0.72 0.60 62 3.36 2.64 2.52 2.16
41 0.96 0.72 0.72 0.60 63 3.36 2.64 2.52 2.16
64 3.48 2.76 2.64 2.28
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
F. Riders Increased/Issued after Basic Contract
Spouse Insurance Benefit Commission per $1,000* of face amount
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.60 0.36 49 3.60 2.28 2.28 1.68
17 0.72 0.36 50 3.96 2.40 2.40 1.80
18 0.84 0.36 51 4.32 2.52 2.64 1.80
19 0.84 0.48 52 4.80 2.64 2.88 1.92
20 0.96 0.60 0.48 0.36 53 5.28 2.88 3.12 2.04
21 0.96 0.60 0.48 0.36 54 5.52 3.00 3.12 2.04
22 0.96 0.60 0.48 0.48 55 6.12 3.36 3.36 2.16
23 0.96 0.72 0.48 0.48 56 6.60 3.60 3.48 2.28
24 0.96 0.72 0.48 0.48 57 6.96 3.84 3.72 2.40
25 0.96 0.72 0.48 0.48 58 7.56 4.20 3.96 2.64
26 1.08 0.72 0.60 0.48 59 7.80 4.32 3.96 2.64
27 1.08 0.72 0.60 0.48 60 8.28 4.68 4.08 2.76
28 1.08 0.72 0.60 0.48 61 8.40 4.92 4.20 2.76
29 1.08 0.72 0.72 0.48 62 9.00 5.28 4.56 3.12
30 1.08 0.72 0.84 0.48 63 9.00 5.28 4.56 3.12
31 1.20 0.72 0.84 0.48 64 9.36 5.52 4.80 3.36
32 1.20 0.84 0.84 0.60 65 9.72 5.76 4.92 3.48
33 1.32 0.84 0.96 0.60 66 10.20 6.24 5.04 3.60
34 1.44 0.84 0.96 0.60 67 11.16 6.84 5.40 3.96
35 1.56 0.84 1.08 0.60 68 11.88 7.44 5.76 4.20
36 1.56 0.96 1.08 0.72 69 12.24 7.92 5.88 4.44
37 1.68 0.96 1.20 0.84 70 13.32 8.88 6.48 4.92
38 1.80 1.08 1.20 0.84 71 13.68 9.36 6.60 5.28
39 1.92 1.08 1.32 0.84 72 14.16 9.96 6.84 5.40
40 2.16 1.20 1.32 0.96 73 14.52 10.44 6.96 5.64
41 2.28 1.20 1.56 0.96 74 14.76 10.80 6.96 5.76
42 2.40 1.32 1.68 1.08 75 15.00 11.16 6.96 5.76
43 2.52 1.56 1.80 1.20 76 16.56 11.40 8.16 5.76
44 2.64 1.56 1.80 1.20 77 16.92 11.88 8.52 6.00
45 2.88 1.68 1.92 1.32 78 17.16 12.24 8.88 6.24
46 3.00 1.92 2.16 1.44 79 17.28 12.48 9.12 6.60
47 3.24 1.92 2.16 1.56 80 17.28 12.72 9.36 6.96
48 3.36 2.16 2.28 1.56
Age used is issue age of the spouse or, for increases in face amount,
attained age of the spouse on the effective date of the increase. Smkr.
includes riders issued with face amounts/increased face amounts having
premium class "Smoker" or "Smoker Special"; Nsmkr. includes riders with face
amounts/increased face amounts having premium class "Nonsmoker" or
"Nonsmoker Special".
Child Insurance Benefit Commission per $1,000 of face amount
Commission is $3.00 per $1,000. One-twelfth of the commission is
paid monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
A. First Year Commission
1. First year commission is a percentage of all premiums paid and
credited in the first contract year up to but not exceeding the
Target Premium.*
Commission Rate for Initial
Face Amount Less than Commission Rate
$250,000; Spouse and Child for Initial Face
Riders Issued with the Amount Greater
Issue Age** Basic Contract Than $249,999
--------- -------------- -------------
0-51 47 % 40 %
52-53 47 39
54-55 45 38
56-57 45 37
58-59 45 36
60 45 35
61 43 35
62 43 34
63 41 34
64-65 41 33
66-67 40 32
68 39 31
69 37 30
70 36 29
71 34 28
72 32 27
73 30 26
74 28 25
75 27 24
76 25.5 22
77 24 20.5
78 22.5 19
79 21.5 17.5
80 20 16
* The total Target Premium is equal to the initial Death Benefit
Guarantee Premium for the contract excluding any extra premium paid
for aviation or temporary extra premium. Target Premiums for the
rider coverages are found in Exhibit IA. The Target Premium that
is apportioned to the basic coverage is the total Target Premium
less any rider Target Premium.
** Issue Age is the issue age of the insured for the basic coverage;
the age at issue of the spouse for the spouse rider.
2. For contracts issued on or after June 1, 1990, an additional
First Year Commission is 3% of all premium paid and credited in
the first contract year.
B. Additional commission based on premium
1. For contracts issued on or after June 1, 1990, a Renewal
Commission based on premium is paid equal to 3% of all premium
paid and credited whenever paid and credited in contract year
two or later.
2. For contracts issued before June 1, 1990, a Service Commission
is paid equal to 3% of all premium paid and credited whenever
paid and credited.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
C. Renewal Commissions per $1,000* of Face Amount (Initial or Increase)
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.24 0.12 41 0.96 0.72 0.60 0.48
1 0.24 0.12 42 1.08 0.72 0.60 0.48
2 0.24 0.12 43 1.08 0.72 0.72 0.48
3 0.24 0.12 44 1.20 0.84 0.72 0.60
4 0.24 0.12 45 1.32 0.84 0.72 0.60
5 0.24 0.12 46 1.32 0.96 0.84 0.60
6 0.24 0.12 47 1.44 0.96 0.84 0.72
7 0.24 0.12 48 1.56 1.08 0.84 0.72
8 0.24 0.24 49 1.68 1.20 0.96 0.72
9 0.24 0.24 50 1.68 1.20 0.96 0.72
10 0.36 0.24 51 1.80 1.32 1.08 0.84
11 0.36 0.24 52 1.92 1.32 1.08 0.84
12 0.36 0.24 53 2.04 1.44 1.20 0.96
13 0.36 0.24 54 2.16 1.56 1.20 0.96
14 0.36 0.24 55 2.28 1.68 1.32 1.08
15 0.36 0.24 56 2.40 1.80 1.32 1.08
16 0.36 0.24 57 2.52 1.92 1.44 1.20
17 0.36 0.24 58 2.64 2.04 1.44 1.20
18 0.36 0.24 59 2.88 2.28 1.56 1.32
19 0.48 0.24 60 3.00 2.40 1.68 1.44
20 0.48 0.36 0.24 0.24 61 3.24 2.52 1.80 1.56
21 0.48 0.36 0.24 0.24 62 3.36 2.64 1.92 1.56
22 0.48 0.36 0.36 0.24 63 3.60 2.88 1.92 1.68
23 0.48 0.36 0.36 0.24 64 3.84 3.12 2.16 1.80
24 0.48 0.36 0.36 0.24 65 3.96 3.24 2.16 1.92
25 0.48 0.36 0.36 0.24 66 4.20 3.36 2.28 2.04
26 0.48 0.36 0.36 0.24 67 4.56 3.72 2.52 2.28
27 0.60 0.36 0.36 0.24 68 4.68 3.84 2.64 2.40
28 0.60 0.36 0.36 0.24 69 4.92 4.08 2.76 2.52
29 0.60 0.36 0.36 0.24 70 5.28 4.44 3.00 2.76
30 0.60 0.36 0.36 0.36 71 5.64 4.68 3.12 2.88
31 0.60 0.48 0.48 0.36 72 5.88 5.04 3.36 3.00
32 0.72 0.48 0.48 0.36 73 6.36 5.40 3.60 3.36
33 0.72 0.48 0.48 0.36 74 6.60 5.64 3.84 3.48
34 0.72 0.48 0.48 0.36 75 6.96 6.00 3.96 3.72
35 0.72 0.48 0.48 0.36 76 7.32 6.36 4.20 3.96
36 0.84 0.48 0.48 0.36 77 7.68 6.72 4.44 4.20
37 0.84 0.60 0.48 0.36 78 8.04 6.96 4.68 4.44
38 0.84 0.60 0.60 0.36 79 8.40 7.32 4.92 4.68
39 0.84 0.60 0.60 0.48 80 8.76 7.68 5.16 4.92
40 0.96 0.60 0.60 0.48
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first two renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
contracts with face amounts/increased face amounts having premium class
"Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
C. Renewal Commissions per $1,000* of Face Amount (Initial or Increase)
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.24 0.12 41 0.84 0.60 0.48 0.36
1 0.24 0.12 42 0.84 0.60 0.48 0.36
2 0.24 0.12 43 0.96 0.60 0.60 0.48
3 0.24 0.12 44 0.96 0.60 0.60 0.48
4 0.24 0.12 45 1.08 0.72 0.60 0.48
5 0.24 0.12 46 1.08 0.72 0.60 0.48
6 0.24 0.12 47 1.20 0.84 0.72 0.48
7 0.24 0.12 48 1.20 0.84 0.72 0.60
8 0.24 0.12 49 1.32 0.96 0.72 0.60
9 0.24 0.12 50 1.44 0.96 0.84 0.60
10 0.24 0.12 51 1.44 1.08 0.84 0.72
11 0.24 0.12 52 1.56 1.08 0.84 0.72
12 0.24 0.12 53 1.68 1.20 0.96 0.72
13 0.24 0.24 54 1.80 1.32 0.96 0.84
14 0.24 0.24 55 1.92 1.44 1.08 0.84
15 0.36 0.24 56 1.92 1.44 1.08 0.84
16 0.36 0.24 57 2.16 1.56 1.20 0.96
17 0.36 0.24 58 2.16 1.68 1.20 0.96
18 0.36 0.24 59 2.40 1.80 1.32 1.08
19 0.36 0.24 60 2.52 1.92 1.32 1.20
20 0.36 0.24 0.24 0.24 61 2.64 2.04 1.44 1.20
21 0.36 0.24 0.24 0.24 62 2.76 2.16 1.56 1.32
22 0.36 0.24 0.24 0.24 63 2.88 2.28 1.56 1.32
23 0.36 0.24 0.24 0.24 64 3.12 2.52 1.68 1.56
24 0.36 0.24 0.24 0.24 65 3.24 2.64 1.80 1.56
25 0.36 0.24 0.24 0.24 66 3.48 2.76 1.92 1.68
26 0.48 0.24 0.24 0.24 67 3.72 3.00 2.04 1.80
27 0.48 0.36 0.24 0.24 68 3.84 3.24 2.16 1.92
28 0.48 0.36 0.36 0.24 69 4.08 3.36 2.28 2.04
29 0.48 0.36 0.36 0.24 70 4.32 3.60 2.40 2.16
30 0.48 0.36 0.36 0.24 71 4.56 3.84 2.52 2.40
31 0.48 0.36 0.36 0.24 72 4.80 4.08 2.76 2.52
32 0.60 0.36 0.36 0.24 73 5.16 4.44 3.00 2.76
33 0.60 0.36 0.36 0.24 74 5.40 4.68 3.12 2.88
34 0.60 0.36 0.36 0.24 75 5.64 4.92 3.24 3.00
35 0.60 0.36 0.36 0.24 76 6.00 5.16 3.48 3.24
36 0.60 0.48 0.36 0.36 77 6.24 5.40 3.60 3.36
37 0.72 0.48 0.48 0.36 78 6.60 5.76 3.84 3.60
38 0.72 0.48 0.48 0.36 79 6.84 6.00 4.08 3.72
39 0.72 0.48 0.48 0.36 80 7.08 6.24 4.20 3.96
40 0.72 0.48 0.48 0.36
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first two renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
contracts with face amounts/increased face amounts having premium class
"Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
C. Renewal Commissions per $1,000* of Face Amount (Initial or Increase)
3. Spouse Insurance Benefit
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.36 0.24 49 1.68 1.20 0.84 0.72
17 0.36 0.24 50 1.68 1.20 0.96 0.72
18 0.36 0.24 51 1.92 1.32 0.96 0.72
19 0.36 0.24 52 1.92 1.32 0.96 0.84
20 0.48 0.24 0.24 0.24 53 2.16 1.56 1.08 0.84
21 0.48 0.24 0.24 0.24 54 2.16 1.56 1.08 0.84
22 0.48 0.36 0.24 0.24 55 2.40 1.68 1.20 0.96
23 0.48 0.36 0.24 0.24 56 2.52 1.80 1.20 0.96
24 0.48 0.36 0.24 0.24 57 2.64 1.92 1.32 1.08
25 0.48 0.36 0.36 0.24 58 2.76 2.04 1.32 1.08
26 0.48 0.36 0.36 0.24 59 3.00 2.28 1.44 1.20
27 0.48 0.36 0.36 0.24 60 3.12 2.40 1.44 1.32
28 0.60 0.36 0.36 0.24 61 3.24 2.52 1.56 1.32
29 0.60 0.36 0.36 0.24 62 3.60 2.76 1.68 1.44
30 0.60 0.36 0.36 0.24 63 3.72 2.88 1.68 1.56
31 0.60 0.36 0.36 0.24 64 3.84 3.00 1.80 1.56
32 0.60 0.48 0.36 0.36 65 4.20 3.24 1.92 1.68
33 0.72 0.48 0.48 0.36 66 4.32 3.48 2.04 1.80
34 0.72 0.48 0.48 0.36 67 4.56 3.60 2.16 1.92
35 0.72 0.48 0.48 0.36 68 4.92 3.96 2.28 2.16
36 0.72 0.48 0.48 0.36 69 5.16 4.20 2.52 2.16
37 0.84 0.48 0.48 0.36 70 5.40 4.44 2.64 2.40
38 0.84 0.48 0.48 0.36 71 5.76 4.80 2.76 2.52
39 0.84 0.60 0.48 0.36 72 6.12 5.04 3.00 2.76
40 0.96 0.60 0.60 0.48 73 6.36 5.28 3.12 2.88
41 0.96 0.72 0.60 0.48 74 6.84 5.76 3.48 3.24
42 1.08 0.72 0.60 0.48 75 7.44 6.36 3.84 3.60
43 1.20 0.72 0.60 0.48 76 7.80 6.72 4.08 3.84
44 1.20 0.84 0.72 0.48 77 8.16 6.96 4.32 4.08
45 1.32 0.84 0.72 0.60 78 8.52 7.32 4.56 4.32
46 1.32 0.96 0.72 0.60 79 8.76 7.68 4.80 4.56
47 1.44 0.96 0.84 0.60 80 9.12 8.04 5.04 4.80
48 1.56 1.08 0.84 0.60
* One-twelfth of the Renewal Commission on the portion of the initial rider
face amount or increase in rider face amount remaining in force each
month is paid monthly during the first two renewal years after issue of
the rider or increase of the rider. Age used is issue age of spouse or,
for increases in face amount, attained age of the spouse on the effective
date of the increase. Smkr. includes riders with face amounts/increased
face amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes riders with face amounts/increased face amounts/increased face
amounts having premium class "Nonsmoker" or "Nonsmoker Special". Std.
includes riders with face amounts/increased face amounts having premium
class "Standard" or "Standard Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
D. Increase Commissions per $1,000* of Increase in Face Amount
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.44 1.08 41 6.72 4.56 4.20 3.24
1 1.56 1.08 42 7.08 4.80 4.44 3.36
2 1.56 1.08 43 7.56 5.16 4.68 3.60
3 1.56 1.08 44 7.92 5.40 4.80 3.72
4 1.68 1.08 45 8.52 5.88 5.16 3.96
5 1.68 1.08 46 9.00 6.24 5.40 4.08
6 1.80 1.20 47 9.60 6.72 5.76 4.44
7 1.80 1.20 48 10.08 7.08 6.00 4.68
8 1.92 1.20 49 10.92 7.68 6.36 4.92
9 1.92 1.32 50 11.40 8.04 6.60 5.16
10 2.04 1.32 51 12.24 8.76 7.08 5.64
11 2.16 1.44 52 12.84 9.24 7.32 5.76
12 2.16 1.44 53 13.80 10.08 7.80 6.36
13 2.28 1.56 54 13.80 10.08 7.68 6.24
14 2.40 1.56 55 14.76 11.04 8.28 6.84
15 2.52 1.56 56 15.48 11.52 8.64 7.08
16 2.52 1.68 57 16.56 12.60 9.24 7.68
17 2.64 1.68 58 17.28 13.20 9.60 8.04
18 2.76 1.80 59 18.60 14.40 10.32 8.64
19 2.88 1.80 60 19.44 15.12 10.68 9.12
20 2.88 2.04 1.92 1.44 61 19.92 15.72 11.04 9.48
21 3.00 2.04 1.92 1.56 62 20.88 16.56 11.52 9.96
22 3.12 2.16 2.04 1.56 63 20.88 16.56 11.52 9.96
23 3.24 2.16 2.04 1.68 64 22.32 18.00 12.36 10.80
24 3.36 2.28 2.16 1.68 65 23.40 18.96 12.96 11.40
25 3.48 2.28 2.28 1.68 66 24.00 19.44 13.20 11.64
26 3.60 2.40 2.40 1.80 67 25.68 21.12 14.40 12.72
27 3.72 2.52 2.40 1.92 68 26.40 21.72 14.64 13.08
28 3.84 2.64 2.52 1.92 69 26.28 21.72 14.64 13.08
29 3.96 2.76 2.64 1.92 70 27.48 22.92 15.48 14.04
30 4.20 2.76 2.76 2.04 71 27.24 22.92 15.36 13.92
31 4.32 2.88 2.88 2.04 72 27.00 22.80 15.24 13.92
32 4.56 3.00 2.88 2.16 73 27.12 23.16 15.48 14.28
33 4.68 3.12 3.00 2.28 74 26.64 22.80 15.24 14.04
34 4.80 3.24 3.12 2.40 75 26.88 23.16 15.48 14.40
35 5.04 3.36 3.24 2.40 76 26.64 22.56 15.48 14.28
36 5.28 3.60 3.36 2.52 77 26.28 22.32 15.24 14.28
37 5.52 3.72 3.60 2.64 78 25.68 21.96 15.12 14.04
38 5.76 3.84 3.72 2.76 79 25.68 21.48 15.24 14.04
39 6.00 3.96 3.84 2.88 80 24.96 20.88 14.88 13.92
40 6.24 4.20 3.96 3.00
* One-twelfth of the Increase Commission on the portion of the increase
remaining in force each month is paid monthly for one year after the
effective date of the requested increase in face amount. Age used is
attained age of the insured on the effective date of the increase in face
amount. Smkr. includes increased face amounts with premium class
"Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts with
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
increased face amounts with premium class "Standard" or
"Standard "Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
D. Increase Commissions per $1,000* of Increase in Face Amount
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.20 0.84 41 5.52 3.72 3.36 2.52
1 1.20 0.84 42 5.76 3.84 3.60 2.64
2 1.20 0.84 43 6.12 4.20 3.72 2.88
3 1.32 0.84 44 6.48 4.32 3.84 3.00
4 1.32 0.96 45 6.96 4.80 4.20 3.12
5 1.44 0.96 46 7.20 5.04 4.32 3.36
6 1.44 0.96 47 7.80 5.52 4.56 3.60
7 1.44 0.96 48 8.16 5.76 4.80 3.72
8 1.56 0.96 49 8.88 6.24 5.04 3.96
9 1.56 1.08 50 9.24 6.60 5.28 4.20
10 1.68 1.08 51 9.96 7.20 5.64 4.56
11 1.68 1.08 52 10.20 7.32 5.76 4.56
12 1.80 1.20 53 10.92 7.92 6.12 4.92
13 1.92 1.20 54 11.04 8.16 6.24 5.04
14 1.92 1.20 55 11.88 8.88 6.60 5.40
15 2.04 1.32 56 12.12 9.12 6.72 5.52
16 2.04 1.32 57 12.96 9.84 7.20 6.00
17 2.16 1.44 58 13.20 10.08 7.32 6.00
18 2.16 1.44 59 14.16 10.92 7.80 6.60
19 2.28 1.44 60 14.40 11.16 7.80 6.72
20 2.40 1.56 1.56 1.20 61 15.48 12.24 8.52 7.32
21 2.40 1.68 1.56 1.20 62 15.72 12.48 8.64 7.44
22 2.52 1.68 1.68 1.20 63 16.56 13.08 9.00 7.80
23 2.64 1.68 1.68 1.32 64 17.16 13.80 9.48 8.28
24 2.64 1.80 1.80 1.32 65 18.00 14.52 9.96 8.76
25 2.76 1.92 1.80 1.44 66 18.36 14.88 10.08 8.88
26 2.88 1.92 1.92 1.44 67 19.68 16.08 10.92 9.72
27 3.00 2.04 1.92 1.44 68 20.04 16.44 11.04 9.96
28 3.12 2.04 2.04 1.56 69 20.40 16.80 11.28 10.08
29 3.24 2.16 2.16 1.56 70 21.12 17.64 11.88 10.68
30 3.36 2.28 2.16 1.68 71 21.48 18.00 12.00 10.92
31 3.48 2.28 2.28 1.68 72 21.72 18.36 12.24 11.16
32 3.60 2.40 2.40 1.68 73 22.44 19.08 12.84 11.76
33 3.84 2.52 2.40 1.80 74 22.68 19.44 12.96 12.00
34 3.96 2.64 2.52 1.92 75 22.80 19.56 13.08 12.12
35 4.08 2.76 2.64 1.92 76 21.96 18.96 12.60 11.76
36 4.32 2.88 2.76 2.04 77 21.36 18.60 12.48 11.52
37 4.44 3.00 2.88 2.16 78 20.76 18.12 12.12 11.28
38 4.68 3.12 3.00 2.16 79 19.92 17.52 11.76 11.04
39 4.80 3.24 3.12 2.28 80 18.96 16.80 11.28 10.56
40 5.04 3.36 3.24 2.40
* One-twelfth of the Increase Commission on the portion of the increase
remaining in force each month is paid monthly for one year after the
effective date of the requested increase in face amount. Age used is
attained age of the insured on the effective date of the increase in face
amount. Smkr. includes increased face amounts with premium class
"Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts with
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
increased face amounts with premium class "Standard" or
"Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
E. Cost of Living Increase Commissions per $1,000* of
Increase in Face Amount
1. Highest Total Face Amount** Less Than $250,000
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.48 0.36 41 2.16 1.44 1.32 1.08
1 0.48 0.36 42 2.28 1.56 1.44 1.08
2 0.48 0.36 43 2.40 1.68 1.44 1.08
3 0.48 0.36 44 2.52 1.68 1.56 1.20
4 0.48 0.36 45 2.76 1.92 1.68 1.32
5 0.60 0.36 46 2.88 2.04 1.68 1.32
6 0.60 0.36 47 3.12 2.16 1.80 1.44
7 0.60 0.36 48 3.24 2.28 1.92 1.44
8 0.60 0.36 49 3.48 2.40 2.04 1.56
9 0.60 0.36 50 3.60 2.52 2.16 1.68
10 0.72 0.48 51 3.96 2.76 2.28 1.80
11 0.72 0.48 52 4.08 3.00 2.28 1.80
12 0.72 0.48 53 4.44 3.24 2.52 2.04
13 0.72 0.48 54 4.56 3.36 2.52 2.04
14 0.72 0.48 55 4.92 3.72 2.76 2.28
15 0.84 0.48 56 5.16 3.84 2.88 2.40
16 0.84 0.48 57 5.52 4.20 3.12 2.52
17 0.84 0.60 58 5.76 4.44 3.24 2.64
18 0.84 0.60 59 6.24 4.80 3.48 2.88
19 0.96 0.60 60 6.48 5.04 3.60 3.00
20 0.96 0.60 0.60 0.48 61 6.96 5.52 3.84 3.24
21 0.96 0.72 0.60 0.48 62 7.32 5.76 3.96 3.48
22 0.96 0.72 0.60 0.48 63 7.68 6.12 4.20 3.60
23 1.08 0.72 0.72 0.48 64 8.16 6.60 4.56 3.96
24 1.08 0.72 0.72 0.60 65 8.52 6.96 4.68 4.20
25 1.08 0.72 0.72 0.60 66 9.00 7.32 4.92 4.32
26 1.08 0.72 0.72 0.60 67 9.60 7.92 5.40 4.80
27 1.20 0.84 0.72 0.60 68 10.08 8.40 5.64 5.04
28 1.20 0.84 0.84 0.60 69 10.68 8.88 5.88 5.28
29 1.32 0.84 0.84 0.60 70 11.40 9.60 6.48 5.88
30 1.32 0.84 0.84 0.60 71 12.00 10.08 6.72 6.12
31 1.44 0.96 0.96 0.72 72 12.60 10.68 7.08 6.48
32 1.44 0.96 0.96 0.72 73 13.56 11.52 7.80 7.20
33 1.44 0.96 0.96 0.72 74 14.28 12.24 8.16 7.56
34 1.56 1.08 0.96 0.72 75 15.00 12.84 8.64 7.92
35 1.68 1.08 1.08 0.72 76 15.72 13.56 9.12 8.40
36 1.68 1.08 1.08 0.84 77 16.44 14.28 9.60 8.88
37 1.80 1.20 1.08 0.84 78 17.16 15.00 10.08 9.36
38 1.80 1.20 1.20 0.84 79 17.88 15.72 10.56 9.96
39 1.92 1.32 1.20 0.96 80 18.72 16.56 11.16 10.44
40 2.04 1.32 1.32 0.96
* One-twelfth of the Cost of Living Increase Commission on the portion of
the increase remaining in force each month is paid monthly for one year
after the effective date of the increase. Age used is attained age of
the insured on the effective date of the increase in face amount. Smkr.
includes increased face amounts with premium class "Smoker" or
"Smoker Special"; Nsmkr. includes increased face amounts with premium
class "Nonsmoker" or "Nonsmoker Special". Std. includes increased face
amounts with premium class "Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
E. Cost of Living Increase Commissions per $1,000* of
Increase in Face Amount
2. Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.48 0.36 41 2.04 1.44 1.32 0.96
1 0.48 0.36 42 2.16 1.44 1.32 0.96
2 0.48 0.36 43 2.28 1.56 1.44 1.08
3 0.48 0.36 44 2.40 1.68 1.44 1.08
4 0.48 0.36 45 2.64 1.80 1.56 1.20
5 0.48 0.36 46 2.76 1.92 1.68 1.20
6 0.60 0.36 47 2.88 2.04 1.68 1.32
7 0.60 0.36 48 3.12 2.16 1.80 1.44
8 0.60 0.36 49 3.36 2.40 1.92 1.44
9 0.60 0.36 50 3.48 2.52 2.04 1.56
10 0.60 0.36 51 3.72 2.64 2.16 1.68
11 0.60 0.36 52 3.96 2.76 2.16 1.80
12 0.72 0.48 53 4.20 3.12 2.40 1.92
13 0.72 0.48 54 4.32 3.24 2.40 2.04
14 0.72 0.48 55 4.68 3.48 2.64 2.16
15 0.72 0.48 56 4.92 3.72 2.76 2.28
16 0.72 0.48 57 5.28 3.96 2.88 2.40
17 0.84 0.48 58 5.52 4.20 3.00 2.52
18 0.84 0.60 59 5.88 4.56 3.24 2.76
19 0.84 0.60 60 6.24 4.80 3.36 2.88
20 0.84 0.60 0.60 0.48 61 6.60 5.28 3.60 3.12
21 0.96 0.60 0.60 0.48 62 6.96 5.52 3.84 3.24
22 0.96 0.60 0.60 0.48 63 7.32 5.76 3.96 3.48
23 0.96 0.60 0.60 0.48 64 7.80 6.24 4.32 3.72
24 0.96 0.72 0.72 0.48 65 8.16 6.60 4.56 3.96
25 1.08 0.72 0.72 0.48 66 8.64 6.96 4.68 4.20
26 1.08 0.72 0.72 0.60 67 9.24 7.56 5.16 4.56
27 1.08 0.72 0.72 0.60 68 9.72 7.92 5.40 4.80
28 1.20 0.72 0.72 0.60 69 10.20 8.40 5.64 5.04
29 1.20 0.84 0.84 0.60 70 10.92 9.12 6.12 5.52
30 1.32 0.84 0.84 0.60 71 11.52 9.60 6.48 5.88
31 1.32 0.84 0.84 0.60 72 12.12 10.20 6.72 6.12
32 1.32 0.96 0.84 0.60 73 12.96 11.04 7.44 6.84
33 1.44 0.96 0.96 0.72 74 13.56 11.64 7.80 7.20
34 1.44 0.96 0.96 0.72 75 14.28 12.24 8.16 7.56
35 1.56 1.08 0.96 0.72 76 15.00 12.96 8.64 8.04
36 1.56 1.08 1.08 0.72 77 15.60 13.56 9.12 8.52
37 1.68 1.08 1.08 0.84 78 16.32 14.28 9.60 8.88
38 1.80 1.20 1.08 0.84 79 17.04 15.00 10.08 9.36
39 1.80 1.20 1.20 0.84 80 17.88 15.72 10.56 9.96
40 1.92 1.32 1.20 0.96
* One-twelfth of the Cost of Living Increase Commission on the portion of
the increase remaining in force each month is paid monthly for one year
after the effective date of the increase. Age used is attained age of
the insured on the effective date of the increase in face amount. Smkr.
includes increased face amounts with premium class "Smoker" or
"Smoker Special"; Nsmkr. includes increased face amounts with premium
class "Nonsmoker" or "Nonsmoker Special". Std. includes increased face
amounts with premium class "Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
F. Riders Increased/Issued After Basic Contract
Spouse Insurance Benefit Commissions per $1,000* of Face Amount
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 2.52 1.56 49 11.16 7.68 5.88 4.56
17 2.64 1.56 50 11.64 8.04 6.12 4.80
18 2.76 1.68 51 12.60 8.76 6.48 5.16
19 2.76 1.68 52 13.20 9.24 6.72 5.40
20 2.88 1.92 1.80 1.32 53 14.16 10.08 7.08 5.76
21 3.00 1.92 1.80 1.44 54 14.16 10.20 7.08 5.76
22 3.00 2.04 1.92 1.44 55 15.24 11.04 7.56 6.12
23 3.12 2.04 1.92 1.44 56 15.96 11.64 7.80 6.48
24 3.24 2.16 1.92 1.56 57 17.28 12.72 8.28 6.96
25 3.36 2.16 2.04 1.56 58 18.00 13.32 8.64 7.20
26 3.48 2.28 2.16 1.68 59 19.44 14.64 9.12 7.68
27 3.60 2.40 2.16 1.68 60 20.28 15.36 9.48 8.16
28 3.72 2.40 2.28 1.80 61 20.28 15.48 9.48 8.16
29 3.84 2.52 2.40 1.80 62 21.72 16.80 10.20 8.88
30 4.08 2.64 2.52 1.92 63 21.72 16.80 10.20 8.88
31 4.20 2.76 2.64 1.92 64 22.68 17.76 10.68 9.36
32 4.44 2.88 2.76 2.04 65 24.36 19.20 11.52 10.20
33 4.56 2.88 2.88 2.04 66 24.96 19.80 11.76 10.44
34 4.68 3.00 2.88 2.16 67 26.04 20.76 12.36 11.04
35 4.92 3.12 3.00 2.28 68 27.36 22.08 12.96 11.76
36 5.16 3.36 3.12 2.28 69 27.24 22.08 12.96 11.76
37 5.40 3.48 3.24 2.40 70 27.72 22.56 13.32 12.12
38 5.64 3.60 3.36 2.52 71 28.20 23.28 13.68 12.48
39 6.00 3.84 3.60 2.76 72 27.84 23.04 13.68 12.48
40 6.36 4.08 3.72 2.88 73 27.36 22.80 13.56 12.48
41 6.84 4.56 3.96 3.00 74 27.60 23.28 13.92 12.84
42 7.08 4.68 4.08 3.12 75 28.68 24.48 14.64 13.68
43 7.68 5.16 4.32 3.36 76 28.32 24.36 14.64 13.80
44 8.04 5.40 4.56 3.48 77 27.84 24.00 14.64 13.80
45 8.64 5.76 4.80 3.72 78 27.24 23.52 14.52 13.68
46 9.12 6.12 5.04 3.84 79 27.12 23.52 14.52 13.68
47 9.84 6.60 5.28 4.08 80 26.16 22.92 14.40 13.56
48 10.32 6.96 5.52 4.32
* One-twelfth of the Spouse Insurance Benefit Commission on the portion of
the rider face amount remaining in force each month is paid monthly for
one year after the effective date on increases in face amount of the
rider and on riders issued after the basic contract. Age used is issue
age of the spouse or, for increases in face amount, attained age of the
spouse on the effective date of the increase. Smkr. includes riders with
face amounts/increased face amounts having premium class "Smoker" or
"Smoker Special"; Nsmkr. includes riders with face amounts/increased face
amounts having premium class "Nonsmoker" or "Nonsmoker Special". Std.
includes riders with face amounts/increased face amounts having premium
class "Standard" or "Standard Special".
CHILD INSURANCE BENEFIT COMMISSION PER $1,000 OF FACE AMOUNT
Commission is $2.76 per $1,000. One-twelfth of
the commission is paid monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VIII. ANNUITY CONTRACTS
A. SINGLE PREMIUM ANNUITY CONTRACTS
First Year Renewal
Commission Commissions
---------- -----------
1. Single Premium Immediate Annuity
a. Life Annuity 2.50% None
b. Fixed Period Installment Annuity
Tier One
(Fixed period: 5-9 yrs.) 1.00% None
Tier Two
(Fixed period: 10-14 yrs.) 1.75 None
Tier Three (Fixed
period: 15 or more yrs.) 2.50 None
2. Single Premium Deferred Annuity 3.00% None
The commission is a percentage of the single premium paid and
credited to the contract.
B. FLEXIBLE PREMIUM DEFERRED ANNUITY '89 CONTRACTS
VARIABLE ANNUITY CONTRACTS
Qualified (other than TSA) and Non-qualified
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ================
First Year Service
Commission Commission
---------- ----------
3% 3%
The commission is a percentage of all premium paid and credited to
the contract whenever paid and credited.
C. FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACTS -- TSA QUALIFIED
PRE-FPA '89 QUALIFIED
1. On Rollover Premium
3% of any premiums paid to and credited by the Society which are
transfers of distribution from other tax-qualified plans
(Rollover Premium).
2. On premiums not in excess of the Stipulated Annual Premium or
the premium paid during the first contract year, whichever is
less (excluding Rollover Premium).
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ==============================
1st Year Renewal Service
Age* Commission Commission Commission
--- ----------- ---------- ----------
0-59 6 Continuous at 1% 1%
60 and up 3 Continuous at 1% 1%
3. On premiums in excess of the Stipulated Annual Premium or the
premium paid in the first contract year, whichever is less
(excluding Rollover Premium).
CONTRACT YEAR 1 SUCCEEDING YEARS
======================== =========================
Special
Renewal Service Service Service
Age* Commission Commission Commission Commission**
--- ---------- ---------- ---------- ----------
0-59 1% 1% 2% 6%
60 and up 1 1 2 3
D. FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACTS -- NONQUALIFIED
(PRE-FPA '89)
1. On premiums not in excess of the Stipulated Annual Premium or
the premium paid during the first contract year, whichever is
less.
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ================
1st Year Service
Age* Commission Commission
--- ---------- ----------
0-59 3% 3%
60 and up 3 2
2. On premiums in excess of the Stipulated Annual Premium or the
premium paid in the first contract year, whichever is less.
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ===============================
Service Service Special Service
Age* Commission Commission Commission**
--- ---------- ---------- ----------
0-59 3% 3% 3%
60 and up 2 2% 3%
* Age of annuitant on contract anniversary prior to date of premium
payment for Service Commission. Age at issue for Renewal
Commission and 1st year Commission.
** Paid in lieu of any other Service Commission on premium paid to
and credited by the Society in a renewal contract year in excess
of the highest total premium paid in any prior contract year.
The total premium paid in the first contract year is the lesser
of the Stipulated Annual Premium and the premiums paid in that
year. Rollover premium is excluded from consideration in all
contract years.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IX. HEALTH INSURANCE
Commissions are a percentage of the premium due and payable on the
coverage during each year (excluding any extra premium paid for
aviation or temporary extra premium).
A. Health Contracts
Disability Income and BOE (1988 Series)
1st - 4th Continuous
Level Premium First Renewal Renewals
Contracts: DI/BOE Year Commission Thereafter
------------------ ---- ---------- ----------
Noncancellable - DI/BOE
Occ Classes 4A, 5A 50 10 3
Occ Classes 1A*, 2A, 3A 45 8 3
Guaranteed Renewable - DI/BOE
Occ Classes 4A, 5A 45 10 3
Occ Classes 1A*, 2A, 3A 40 8 3
*BOE available for Occ. Class 2A through 5A only.
Renewal Continuous
Step Rate First Commission Commission Renewals
Contracts: DI Year Until Step At Step Thereafter
-------------- ---- ---------- ------- ----------
Noncancellable-
All Classes 45 3 35** 3
Guaranteed Renewable-
All Classes 40 3 35** 3
** The commission at the step and the renewal commissions thereafter
are paid to the DR assigned at the time of the step.
<PAGE>
THIS PAGE IS
INTENTIONALLY BLANK
<PAGE>
THIS PAGE IS
INTENTIONALLY BLANK
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IX. HEALTH INSURANCE
Surrender Value:
Combined DI Contract and SV Rider
---------------------------------
Commissions for the SV product are calculated using Level Premium
Commission rates for the base contract and at least a 3% commission
rate for the surrender value rider. Blended commission rates are
listed below.
<TABLE>
Occ. Class 4A,5A Occ. Class 1A,2A,3A
================ ===================
1st-4th 1st-4th
First Year Renewal First Year Renewal
---------- ------- ---------- -------
Issue
Age NC GR NC&GR NC GR NC&GR
--- -- -- ----- -- -- -----
<S> <C> <C> <C> <C> <C> <C>
18-26 37 33 8 33 30 7
27 36 33 8 33 29 7
28 36 32 8 32 29 7
29 35 32 8 32 28 7
30 35 31 8 31 28 7
31 34 31 8 31 28 7
32 34 31 8 31 27 7
33 34 30 8 30 27 7
34 33 30 8 30 27 7
35 33 30 8 30 27 7
36 32 29 8 29 26 7
37 32 29 8 29 26 6
38 31 28 8 28 25 6
39 31 28 8 28 25 6
40 30 27 7 27 24 6
41 29 27 7 27 24 6
42 28 26 7 26 23 6
43 28 25 7 25 23 6
44 27 24 7 24 22 6
45 26 23 7 23 21 6
46 25 23 7 23 20 6
47 24 22 6 22 20 6
48 23 21 6 21 19 6
49 22 20 6 20 18 5
50 21 19 6 19 17 5
51 20 18 6 18 16 5
52 19 17 6 17 16 5
53 18 17 6 17 15 5
54 17 16 6 16 14 5
55 17 15 5 15 14 5
Renewals thereafter are continuous at 3%.
NC = Noncancellable Disability Income
GR = Guaranteed Renewable Disability Income
SV = Surrender Value
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IX. HEALTH INSURANCE
CONTRACT YEAR 1 RENEWAL YEARS
=============== =============================
Continuous***
1st Renewal
First Year Renewal Commissions
Commission Commission Thereafter
---------- ---------- -----------
Disability Income (1980 Series)
Noncancellable -
Occ. Classes 4A,5A 50% l7% 5%
Occ. Classes 3A,2A 45 17 5
Guaranteed Renewable
Occ. Classes 2A,1A 40 10 4
Business Overhead (1980 Series) 45 17 5
Long Term Care (1992 Series)* 35** 5 3
Long Term Care (1990 Series)* 35** 5 5***
Long Term Care (1987 Series) 35 5 5***
Family Hospital
Issue Ages 60 and Under 40 10 4
Issue Age 61 35 10 4
Issue Age 62 30 10 4
Issue Age 63 25 10 4
Issue Age 64 20 10 4
MagniMed
Issue Ages 60 and Under 15 None 7
Issue Age 61 13 None 7
Issue Age 62 11 None 7
Issue Age 63 9 None 7
Issue Age 64 7 None 7
MagniMed ElectaCare
Issue Ages 60 and Under 20 None 5
Issue Age 61 18 None 5
Issue Age 62 15 None 5
Issue Age 63 12 None 5
Issue Age 64 9 None 5
InterMed 15 None None
InterMed ElectaCare 15 None None
SuppliMed - 83 Series 15 None 5
SupliMed, SuppliMed Plus,
and SuppliMed Premiere 20 None 3
* State variations are given in the Amendment section at the end of
this Schedule.
** The Long Term Care (1992 and 1990 Series) First Year Commission Rate
for issue ages higher than 70 reduces 1% per year until it reaches 21%
at issue age 84. (The first year commission percent = 35-(Issue
Age - 70) for issue ages higher than 70.)
*** Exception: Renewal commissions for Long Term Care (1987 and 1990
Series) are paid through renewal year 4; zero thereafter.
B. Health Insurance Riders
The First Year, Renewal and Service Commission rates for any Health
Insurance riders, except the Maternity Benefit rider, attached to a
Health Insurance contract will be the same as the corresponding
commission rates for the Health Insurance contract. No commission
is paid on the Maternity Benefit rider.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
X. SUPPLEMENTAL BENEFITS
Commission rates for supplemental benefits issued with the basic
contract will be the same as the corresponding commission rates for
the basic contract.
Commission rates for supplemental benefits issued after the basic
contract will be determined by the Society.
XI. SETTLEMENT OPTIONS
The commission is a percentage of the proceeds applied under one of
the following Income Settlement Options.
First Year
Commission
----------
A. Current Life Income Settlement Options 2.50%
B. Non-withdrawable Fixed Period Settlement Options
Tier One (Fixed period: 5 through 9 yrs.) 1.00%
Tier Two (Fixed period: 10 through 14 yrs.) 1.75
Tier Three (Fixed period: 15 or more yrs.) 2.50
No commission is payable on amounts left on Deposit or on amounts
applied under withdrawable Fixed Amount or Fixed Period Settlement
Options.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
I. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES II
A. Basic Contract* - Highest Total Face Amount** Less Than $250,000
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 3.00 3.00 38 9.60 7.80 7.56 6.60
1 3.00 3.00 39 10.20 8.16 8.04 7.08
2 3.00 3.00 40 10.80 8.64 8.52 7.44
3 3.00 3.00 41 11.76 9.24 9.24 7.80
4 3.00 3.00 42 12.84 9.84 9.84 8.28
5 3.00 3.00 43 13.80 10.56 10.56 8.64
6 3.00 3.00 44 14.88 11.16 11.16 9.12
7 3.00 3.00 45 15.84 11.76 11.88 9.48
8 3.00 3.00 46 17.04 12.60 12.72 10.08
9 3.00 3.00 47 18.36 13.44 13.56 10.68
10 3.00 3.00 48 19.56 14.40 14.28 11.40
11 3.12 3.00 49 20.88 15.24 15.12 12.00
12 3.24 3.00 50 22.08 16.08 15.96 12.60
13 3.24 3.12 51 23.76 17.40 17.16 13.56
14 3.36 3.12 52 25.44 18.72 18.36 14.52
15 3.48 3.12 53 27.24 19.92 19.56 15.60
16 3.72 3.12 54 28.92 21.24 20.76 16.56
17 3.84 3.24 55 30.60 22.56 21.96 17.52
18 4.08 3.24 56 32.76 24.36 23.52 18.96
19 4.20 3.36 57 34.92 26.28 25.20 20.28
20 4.44 3.96 3.36 3.00 58 37.50 28.08 26.76 21.72
21 4.56 4.08 3.48 3.12 59 39.36 30.00 28.44 23.04
22 4.80 4.20 3.72 3.36 60 41.52 31.80 30.00 24.48
23 4.92 4.44 3.84 3.48 61 43.92 34.20 32.28 26.88
24 5.16 4.56 4.08 3.72 62 46.32 36.60 34.68 29.16
25 5.28 4.68 4.20 3.84 63 48.84 39.00 36.96 31.56
26 5.52 4.80 4.32 3.96 64 51.24 41.40 39.36 33.84
27 5.76 5.04 4.44 4.08 65 53.64 43.80 41.64 36.24
28 5.88 5.16 4.68 4.20 66 56.76 47.16 44.04 38.76
29 6.12 5.40 4.80 4.32 67 59.76 50.52 46.32 41.28
30 6.36 5.52 4.92 4.44 68 62.88 53.88 48.72 43.68
31 6.60 5.76 5.16 4.68 69 65.88 57.24 51.00 46.20
32 6.84 5.88 5.40 4.80 70 69.00 60.60 53.40 48.72
33 7.20 6.12 5.52 5.04 71 73.20 64.92 56.40 51.84
34 7.44 6.24 5.76 5.16 72 77.40 69.36 59.40 55.08
35 7.68 6.48 6.00 5.40 73 81.60 73.68 62.52 58.20
36 8.28 6.96 6.48 5.76 74 85.80 78.12 65.52 61.44
37 8.88 7.32 6.96 6.24 75 90.00 82.44 68.52 64.56
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $31.56 per contract to cover the monthly expense.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
I. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES II
B. Basic Contract* - Highest Total Face Amount** More Than $249,999
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 2.88 2.40 46 13.20 9.72 9.84 7.80
17 3.00 2.52 47 14.16 10.44 10.44 8.28
18 3.24 2.52 48 15.12 11.16 11.04 8.88
19 3.24 2.64 49 16.08 11.76 11.64 9.24
20 3.48 3.12 2.64 2.40 50 17.04 12.48 12.36 9.72
21 3.60 3.24 2.76 2.40 51 18.36 13.44 13.20 10.44
22 3.72 3.24 2.88 2.64 52 19.68 14.40 14.16 11.28
23 3.84 3.48 3.00 2.76 53 21.00 15.36 15.12 12.00
24 4.08 3.60 3.24 2.88 54 22.32 16.44 16.08 12.84
25 4.08 3.60 3.24 3.00 55 23.64 17.40 16.92 13.56
26 4.32 3.72 3.36 3.12 56 25.32 18.84 18.12 14.64
27 4.44 3.96 3.48 3.24 57 27.00 20.28 19.44 15.72
28 4.56 4.08 3.60 3.24 58 28.68 21.72 20.64 16.80
29 4.80 4.20 3.72 3.36 59 30.36 23.16 21.96 17.76
30 4.92 4.32 3.84 3.48 60 32.04 24.60 23.16 18.96
31 5.16 4.44 4.08 3.60 61 33.96 26.40 24.96 20.76
32 5.28 4.56 4.20 3.72 62 35.76 28.32 26.88 22.56
33 5.64 4.80 4.32 3.96 63 37.80 30.24 28.56 24.48
34 5.76 4.80 4.44 4.08 64 39.36 31.80 30.24 26.04
35 6.00 5.04 4.68 4.20 65 41.52 33.96 32.28 28.08
36 6.48 5.40 5.04 4.44 66 43.68 36.24 33.84 29.88
37 6.84 5.64 5.40 4.80 67 45.96 38.88 35.64 31.80
38 7.44 6.00 5.88 5.16 68 48.84 41.76 37.80 33.96
39 7.92 6.36 6.24 5.52 69 50.28 43.80 39.00 35.28
40 8.40 6.72 6.60 5.76 70 52.68 46.32 40.80 37.20
41 9.12 7.20 7.20 6.00 71 57.00 50.52 43.92 40.32
42 9.96 7.68 7.68 6.48 72 59.28 53.04 45.48 42.12
43 10.68 8.16 8.16 6.72 73 62.52 56.52 47.88 44.64
44 11.52 8.64 8.64 7.08 74 65.88 60.00 50.28 47.16
45 12.24 9.12 9.24 7.32 75 69.12 63.36 52.68 49.68
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $31.56 per contract to cover the monthly expense.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
II. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
A. Basic Contract* - Highest Total Face Amount** of
Series III and IV Less Than $250,000
(No limit on face amount of Juvenile-Issue Contract)
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 2.52 2.52 41 11.76 9.24 9.24 7.80
1 2.52 2.52 42 12.72 9.84 9.84 8.28
2 2.52 2.52 43 13.68 10.56 10.56 8.64
3 2.52 2.52 44 14.88 11.16 11.16 9.12
4 2.52 2.52 45 15.84 11.76 11.88 9.48
5 2.52 2.52 46 17.04 12.60 12.72 10.08
6 2.52 2.52 47 18.12 13.44 13.56 10.68
7 2.52 2.52 48 19.20 14.40 14.28 11.40
8 2.52 2.52 49 20.40 15.24 15.12 12.00
9 2.52 2.52 50 21.72 16.08 15.96 12.60
10 2.52 2.52 51 23.28 17.04 17.16 13.56
11 2.64 2.52 52 24.96 18.00 18.36 14.52
12 2.76 2.52 53 26.76 19.20 19.56 15.60
13 2.88 2.64 54 28.92 20.40 20.76 16.56
14 3.12 2.76 55 30.60 21.84 21.96 17.52
15 3.36 2.88 56 32.76 23.40 23.52 18.96
16 3.60 3.00 57 34.92 25.08 25.20 20.28
17 3.84 3.12 58 37.20 27.12 26.76 21.72
18 4.08 3.24 59 39.36 29.28 28.44 23.04
19 4.20 3.36 60 41.52 31.80 30.00 24.48
20 4.44 3.96 3.36 3.00 61 43.92 34.20 32.28 26.88
21 4.56 4.08 3.48 3.12 62 46.32 36.60 34.68 29.16
22 4.80 4.20 3.72 3.36 63 48.84 39.00 36.96 31.56
23 4.92 4.44 3.84 3.48 64 51.24 41.40 39.36 33.84
24 5.16 4.56 4.08 3.72 65 53.64 43.80 41.64 36.24
25 5.28 4.68 4.20 3.84 66 56.76 47.16 44.04 38.76
26 5.52 4.80 4.32 3.96 67 59.76 50.52 46.32 41.28
27 5.76 5.04 4.44 4.08 68 62.88 53.88 48.72 43.68
28 5.88 5.16 4.68 4.20 69 65.88 57.24 51.00 46.20
29 6.12 5.40 4.80 4.32 70 69.00 60.60 53.40 48.72
30 6.36 5.52 4.92 4.44 71 73.20 64.92 56.40 51.84
31 6.60 5.76 5.16 4.68 72 77.40 69.36 59.40 55.08
32 6.84 5.88 5.40 4.80 73 81.60 73.68 62.52 58.20
33 7.20 6.12 5.52 5.04 74 85.80 78.12 65.52 61.44
34 7.44 6.24 5.76 5.16 75 90.00 82.44 68.52 64.56
35 7.68 6.48 6.00 5.40 76 94.20 86.88 71.64 67.80
36 8.28 6.96 6.48 5.76 77 98.40 91.20 74.64 70.92
37 8.88 7.32 6.96 6.24 78 102.60 95.64 77.64 74.16
38 9.60 7.80 7.56 6.60 79 106.80 99.96 80.64 77.28
39 10.20 8.16 8.04 7.08 80 111.00 104.28 83.64 80.40
40 10.80 8.64 8.52 7.44
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $22.08 per Juvenile-Issue contract and $28.32 per "Series III or IV"
contract to cover the monthly administrative charge.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
II. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
B. Basic Contract* - Highest Total Face Amount** More
Than $249,999 and Less Than $500,000
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 3.48 3.12 2.64 2.40 51 18.00 13.32 13.20 10.44
21 3.60 3.24 2.76 2.40 52 19.32 14.04 14.16 11.28
22 3.72 3.24 2.88 2.64 53 20.76 14.88 15.12 12.00
23 3.84 3.48 3.00 2.76 54 22.20 15.84 16.08 12.84
24 4.08 3.60 3.24 2.88 55 23.64 16.92 16.92 13.56
25 4.08 3.60 3.24 3.00 56 25.32 18.24 18.12 14.64
26 4.32 3.72 3.36 3.12 57 27.00 20.28 19.44 15.72
27 4.44 3.96 3.48 3.24 58 28.68 21.72 20.64 16.80
28 4.56 4.08 3.60 3.24 59 30.36 22.92 21.96 17.76
29 4.80 4.20 3.72 3.36 60 32.04 24.60 23.16 18.96
30 4.92 4.32 3.84 3.48 61 33.96 26.40 24.96 20.76
31 5.16 4.44 4.08 3.60 62 35.76 28.32 26.88 22.56
32 5.28 4.56 4.20 3.72 63 37.80 30.24 28.56 24.48
33 5.64 4.80 4.32 3.96 64 39.36 31.80 30.24 26.04
34 5.76 4.80 4.44 4.08 65 41.52 33.96 32.28 28.08
35 6.00 5.04 4.68 4.20 66 43.68 36.24 33.84 29.88
36 6.48 5.40 5.04 4.44 67 45.96 38.88 35.64 31.80
37 6.84 5.64 5.40 4.80 68 48.84 41.76 37.80 33.96
38 7.44 6.00 5.88 5.16 69 50.28 43.80 39.00 35.28
39 7.92 6.36 6.24 5.52 70 52.68 46.32 40.80 37.20
40 8.40 6.72 6.60 5.76 71 57.00 50.52 43.92 40.32
41 9.12 7.20 7.20 6.00 72 59.28 53.04 45.48 42.12
42 9.96 7.68 7.68 6.48 73 62.52 56.52 47.88 44.64
43 10.68 8.16 8.16 6.72 74 65.88 60.00 50.28 47.16
44 11.52 8.64 8.64 7.08 75 69.12 63.36 52.68 49.68
45 12.24 9.12 9.24 7.32 76 72.48 66.84 55.08 52.20
46 13.08 9.72 9.84 7.80 77 75.72 70.20 57.48 54.72
47 13.92 10.44 10.44 8.28 78 79.08 73.68 59.88 57.24
48 14.88 11.16 11.04 8.88 79 82.32 77.04 62.28 59.76
49 15.84 11.76 11.64 9.24 80 85.56 80.40 64.56 62.16
50 16.80 12.48 12.36 9.72
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $28.32 per contract to cover the monthly administrative charge.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
II. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
C. Basic Contract* - Highest Total Face Amount** More Than $499,999
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 2.64 2.16 1.80 1.56 51 12.24 9.00 9.00 7.08
21 2.64 2.28 1.92 1.68 52 13.20 9.60 9.60 7.68
22 2.64 2.40 2.04 1.80 53 14.16 10.20 10.20 8.16
23 2.64 2.40 2.16 1.92 54 15.24 10.92 10.92 8.76
24 2.76 2.52 2.28 2.04 55 16.32 11.64 11.64 9.36
25 2.76 2.52 2.28 2.04 56 17.52 12.60 12.48 10.08
26 2.88 2.64 2.40 2.16 57 18.72 13.68 13.32 10.80
27 3.00 2.76 2.52 2.28 58 20.04 14.88 14.28 11.52
28 3.12 2.76 2.52 2.28 59 21.36 16.08 15.36 12.36
29 3.24 2.88 2.64 2.40 60 22.56 17.28 16.32 13.32
30 3.36 2.88 2.64 2.40 61 23.88 18.60 17.52 14.52
31 3.48 3.00 2.76 2.52 62 25.20 19.80 18.84 15.84
32 3.60 3.12 2.88 2.64 63 26.52 21.12 20.16 17.16
33 3.72 3.12 2.88 2.64 64 27.96 22.56 21.48 18.60
34 3.96 3.24 3.00 2.76 65 29.40 24.00 22.80 19.92
35 4.08 3.36 3.12 2.88 66 30.96 25.68 24.12 21.24
36 4.32 3.60 3.36 3.12 67 32.40 27.36 25.20 22.56
37 4.68 3.84 3.60 3.36 68 34.08 29.28 26.52 23.88
38 4.92 4.08 3.84 3.60 69 36.00 31.20 27.96 25.32
39 5.28 4.32 4.20 3.84 70 38.16 33.60 29.52 27.00
40 5.64 4.56 4.44 3.96 71 40.68 36.24 31.44 28.92
41 6.12 4.92 4.80 4.20 72 43.56 39.24 33.48 31.08
42 6.60 5.16 5.16 4.32 73 46.80 42.48 35.88 33.48
43 7.20 5.52 5.52 4.56 74 50.52 46.20 38.64 36.24
44 7.80 5.76 6.00 4.80 75 54.72 50.16 41.64 39.24
45 8.28 6.12 6.24 4.92 76 58.08 53.52 44.16 41.76
46 8.88 6.60 6.72 5.28 77 61.44 56.88 46.56 44.16
47 9.36 6.96 7.08 5.52 78 64.68 60.12 48.96 46.68
48 9.96 7.44 7.44 5.88 79 68.04 63.48 51.36 49.08
49 10.56 7.92 7.92 6.24 80 71.28 66.72 53.76 51.48
50 11.28 8.40 8.40 6.60
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $28.32 per contract to cover the monthly administrative charge.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
III. RIDERS AND SUPPLEMENTAL BENEFITS
Target Premium equals the annual cost of the rider or supplemental
benefit divided by 0.95.
IV. SPECIAL CLASS
Target Premium for a special class table rating equals the extra
annual cost for the table rating divided by 0.95.
Premiums paid for aviation coverage and temporary extra premiums are
not commissionable.
<PAGE>
EXHIBIT IA
SCHEDULE OF COMMISSION RATES
V. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE RIDERS
TARGET PREMIUMS
A. SPOUSE RIDER
<TABLE>
Male Female Male Female
Issue Std./ Std./ Issue Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 5.40 3.24 49 23.76 16.32 12.48 9.72
17 5.52 3.36 50 24.84 17.16 12.96 10.20
18 5.76 3.48 51 26.76 18.72 13.68 10.92
19 5.88 3.60 52 27.96 19.68 14.28 11.40
20 6.12 4.08 3.72 2.88 53 30.24 21.48 15.12 12.24
21 6.36 4.20 3.84 3.00 54 31.56 22.56 15.72 12.72
22 6.48 4.32 3.96 3.12 55 33.96 24.60 16.68 13.68
23 6.72 4.44 4.08 3.12 56 35.52 25.92 17.28 14.28
24 6.96 4.56 4.20 3.24 57 38.28 28.20 18.36 15.36
25 7.08 4.68 4.44 3.36 58 39.96 29.64 19.08 15.96
26 7.44 4.80 4.56 3.48 59 43.08 32.40 20.28 17.16
27 7.68 5.04 4.68 3.60 60 45.00 34.08 21.12 18.12
28 7.92 5.16 4.92 3.72 61 47.04 35.88 22.08 18.96
29 8.28 5.40 5.04 3.84 62 50.64 39.12 23.76 20.64
30 8.64 5.52 5.28 3.96 63 52.92 41.04 24.84 21.72
31 9.00 5.76 5.52 4.20 64 55.32 43.20 26.16 22.80
32 9.36 6.00 5.76 4.32 65 59.52 46.92 28.08 24.84
33 9.72 6.24 6.00 4.44 66 62.28 49.44 29.40 26.16
34 10.08 6.48 6.12 4.56 67 65.16 51.96 30.96 27.60
35 10.56 6.72 6.36 4.80 68 70.20 56.64 33.36 30.00
36 10.92 7.08 6.72 4.92 69 73.56 59.64 35.16 31.68
37 11.40 7.32 6.96 5.16 70 77.04 62.76 37.08 33.60
38 11.88 7.68 7.20 5.40 71 82.92 68.40 40.20 36.72
39 12.84 8.28 7.68 5.76 72 86.88 72.12 42.60 39.00
40 13.44 8.76 7.92 6.00 73 91.08 75.84 45.00 41.52
41 14.52 9.60 8.40 6.36 74 98.52 83.04 49.56 45.96
42 15.12 9.96 8.76 6.60 75 106.20 90.72 54.36 50.88
43 16.32 10.92 9.24 7.08 76 111.00 95.28 57.60 54.12
44 17.04 11.40 9.60 7.32 77 115.92 99.96 61.08 57.36
45 18.48 12.36 10.32 7.92 78 120.84 104.76 64.56 60.84
46 19.44 12.96 10.68 8.16 79 125.88 109.68 68.28 64.44
47 21.00 14.16 11.28 8.76 80 130.92 114.84 72.12 68.04
48 21.96 14.88 11.76 9.12
* Smkr. includes premium class "Smoker" or "Smoker Special";
Nsmkr. includes premium class "Nonsmoker" or "Nonsmoker Special".
Std. includes premium class "Standard" or "Standard Special".
CHILD RIDER
TARGET PREMIUM EQUALS $5.76 PER $1,000 OF FACE AMOUNT.
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
AMENDMENT TO EXHIBIT I, IA
SCHEDULE OF COMMISSION RATES
FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV, AND JUVENILE-ISSUE
Exhibit I, Section VI and Exhibit IA, Section II
1. All columns headed by "Male" are amended to read "Male/Unisex**"
2. Add a footnote which reads:
**Unisex rates are used for contracts which prohibit discrimination on
the basis of gender.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Exhibit I, Section VII. C1,C2,D1,D2,E1,E2 -- Basic Contract
C3, F-Spouse Insurance Benefit (except in Montana)
and Exhibit IA, Section V.
1. All columns headed by "Male" are amended to read "Male/Unisex**"
2. Add a footnote which reads:
**Unisex rates are used for contracts which prohibit discrimination on
the basis of gender.
C3, F-SPOUSE INSURANCE BENEFIT: MONTANA ONLY
1. All columns headed by "Female" are amended to read "Female/Unisex**"
2. Add a footnote which reads:
**Unisex rates are used for contracts which prohibit discrimination on
the basis of gender.
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
SCHEDULE OF COMMISSION RATES
AMENDMENT TO EXHIBIT I
Section VIII. HEALTH INSURANCE
The following rates apply to Long Term Care (1992 Series) contracts sold to
residents of the indicated state.
INDIANA WISCONSIN MICHIGAN
COMMISSIONS COMMISSIONS COMMISSIONS
Continuous Continuous Continuous
Issue Renewal Renewal Renewal
Age Year 1 Year 2+ Year 1 Year 2+ Year 1-3 Year 4+
--- ------ ------- ------ ------- -------- -------
50-71 18% 9% 24% 7% 18% 3%
72 18 9 24 7 17 3
73 17 9 23 7 17 3
74 16 9 23 7 16 3
75 16 9 23 6 16 3
76 16 8 23 6 16 3
77 16 8 23 6 15 3
78 16 8 22 6 15 3
79 16 8 21 6 14 3
80 15 8 20 6 14 3
81 15 8 20 5 14 3
82 14 8 20 5 13 3
83 14 7 20 5 13 3
84 14 7 19 5 12 3
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
SCHEDULE OF COMMISSION RATES
AMENDMENT TO EXHIBIT I
Section VIII. HEALTH INSURANCE
The following rates apply to Long Term Care (1990 Series) contracts sold to
residents of the indicated state.
Commissions Commissions
MICHIGAN Issue Ages Years 1,2&3 Years 4&5
---------- -------------- -----------
50-70 17% 5%
71-73 16 5
74-76 15 5
77-79 14 5
80-82 13 5
82-84 12 5
1st Year Commissions
WISCONSIN Issue Ages Commissions Years 2,3,4,5&6
---------- ----------- -----------------
50-70 27% 7%
71 26 7
72 25 7
73-74 24 7
75-76 24 6
77 23 6
78 22 6
79 21 6
80-81 20 6
82-83 20 5
84 19 5
1st Year Commissions
INDIANA Issue Ages Commissions Years 2,3,4,5&6
---------- ----------- -----------------
50-70 18% 10%
71-72 18 9
73 17 9
74-75 16 9
76-77 16 8
78-79 15 8
80 14 8
81-82 14 7
83-84 13 7
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
SCHEDULE OF COMMISSION RATES
AMENDMENT TO EXHIBIT I
Section VIII. HEALTH INSURANCE
The following rates apply to Long Term Care (1992 Series) contracts sold to
residents of the indicated state.
DELAWARE
COMMISSIONS
Issue
Age Year 1 Year 2 Year 3 Year 4 Year 5+
--- ------ ------ ------ ------ -------
50-72 16% 16% 16% 8% 3%
73 16 16 16 5 3
74 16 16 16 3 3
75 16 16 13 3 3
76 16 16 11 3 3
77 16 16 10 3 3
78 16 16 9 3 3
79 16 16 7 3 3
80 16 16 5 3 3
81 16 16 4 3 3
82 16 16 3 3 3
83 16 13 3 3 3
84 16 12 3 3 3
<PAGE>
THIS PAGE IS
INTENTIONALLY BLANK
#20774
</TABLE>
EXHIBIT 1.A.(4)
LUTHERAN BROTHERHOOD VARIABLE
INSURANCE PRODUCTS COMPANY
MANAGEMENT SERVICE AGREEMENT
----------------------------
This contract is made among Lutheran Brotherhood, a Minnesota
corporation ("LB"), Lutheran Brotherhood Securities Corp., a Pennsylvania
corporation ("LBSC") and Lutheran Brotherhood Variable Insurance Products
Company, a Minnesota corporation, ("LBVIP"), this _______ day of
____________, 1986.
WHEREAS, LB, LBSC and LBVIP each seek to reduce their operation costs
and obtain certain efficiencies available in the equitable and practicable
sharing among them of certain common management and administrative
procedures, and
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, do agree as follows:
1. LB and LBSC shall furnish to LBVIP in such quantities and at such
times as shall be necessary for the efficient and viable operation
of LBVIP, all corporate management and administrative services of
every nature, including but not limited to, the following
categories:
A. General professional, including management, investment, legal,
accounting, and administrative services;
B. General administrative, including purchasing, receiving,
disbursement, bookkeeping, word processing, data processing,
graphics, mail, and secretarial services;
C. Marketing support, including field management, field
compensation, promotion, conferences, education, and training
services; and,
D. Other services which the parties shall from time to time agree
to be necessary and appropriate for the efficient operations of
the parties, including to the extent they are not covered
above, but not limited to, the following:
(1) Compensation procedures, systems and administration of
all management, employees and agents;
(2) Field Force commissions;
(3) Investment procedures, systems and administration;
(4) Taxes and the applicable reporting thereof to local,
state and federal authorities;
(5) Expenses of examination and other governmental expenses,
and fees and expenses of trade associations and bureaus;
(6) Underwriting;
(7) Claims adjustment;
(8) Claims payments;
(9) General books of account;
(10) Appointment and cancellation of agencies;
(11) Policies, endorsements, and related matters;
(12) Accounting, statistics, and records;
(13) Collection and handling of premiums and moneys;
(14) Reinsurance;
(15) General overhead;
(16) Housing, space and furniture and fixtures;
(17) Preparation of financial and other reports;
(18) Advertising, sales promotion and agency development;
(19) Employment and discharge of personnel;
(20) Competition among LB, LBSC and LBVIP;
(21) Allocations of expenses between company operations of
LBVIP and other activities, if any;
(22) Cancellation of policies;
(23) Refusal of risks;
(24) Allocated and unallocated loss adjustment expense;
(25) Amendments to this Agreement.
2. In consideration of receipt of the above described services, LBVIP
shall pay to LB and/or to LBSC in such manner and at such times as
the parties shall agree, but at least annually, the actual costs of
such services.
3. This is a management service agreement only and does not purport to
transfer from one party to another any items of property, either
tangible or intangible and all parties shall continue to own, hold,
completely control and remain in custody of all items of property
to which they are now or in the future entitled without respect to
how such properties or the values thereof were created or enhanced.
4. Notwithstanding anything to the contrary, LBVIP shall:
A. Have custody of, responsibility for and complete control of all
of its investments;
B. Own, have custody of and keep its general corporate accounts
and records;
C. Own all the records of its business;
D. Have an ultimate veto right on underwriting;
E. Have the ultimate right to cancel any risk;
F. Have an ultimate veto on appointment of agents and the ultimate
power to cancel any agency;
G. Have an ultimate responsibility for and general control of
claims adjustment and claims payments;
H. Be entitled to any premiums collected by LB or LBSC which shall
be held in a fiduciary capacity and be paid over to LBVIP
immediately following collection;
I. Retain an adequate right of cancellation of the contract and
discharge of the manager in the event LB or LBSC fails to
satisfactorily perform;
J. Retain the ultimate veto right over commission rates.
5. This Agreement may not be assigned, transferred or amended without
the express written consent of each party.
6. The duration of this Agreement shall be perpetual provided that any
party may at any time call, in writing for a renegotiation of its
provisions and that any party may cancel this agreement upon
reasonable written notice to the other parties.
IN WITNESS WHEREOF, the parties have signed in Minneapolis, Minnesota,
on the date first above written.
LUTHERAN BROTHERHOOD
(SEAL)
By
-----------------------------------
Luther O. Forde
Its President
LUTHERAN BROTHERHOOD SECURITIES CORP.
(SEAL)
By
-----------------------------------
Mitchell F. Felchle
Its President
LUTHERAN BROTHERHOOD VARIABLE
INSURANCE PRODUCTS COMPANY
(SEAL)
By
-----------------------------------
Luther O. Forde
Its President
#20527
EXHIBIT 1A5(a)
------
[LOGO]
LUTHERAN BROTHERHOOD
VARIABLE INSURANCE
PRODUCTS COMPANY
A Stock Life Insurance Company FLEXIBLE PREMIUM
Minneapolis, Minnesota 55415 VARIABLE LIFE INSURANCE
============================================================================
This is a legal contract between the contract owner and Lutheran Brotherhood
Variable Insurance Products Company. We issue this contract based on the
Application signed by the applicant and the payment of the initial premium.
We will pay you the Maturity Proceeds if the Insured is living on the
Maturity Date (see page 3). We will pay the Death Proceeds (see Section
2.3) to the beneficiary upon receiving proof that the death of the Insured
occurred before the Maturity Date. Maturity Proceeds and Death Proceeds
will be paid according to the provisions of this contract.
THE AMOUNT OR DURATION OF THE DEATH BENEFIT MAY VARY WITH THE ACCUMULATED
VALUE. AS LONG AS THIS CONTRACT REMAINS IN FORCE AND THERE IS NO DEBT OR
UNPAID MONTHLY DEDUCTIONS, THE DEATH PROCEEDS WILL ALWAYS BE A LEAST EQUAL
TO THE FACE AMOUNT. IF YOU MEET THE DEATH BENEFIT GUARANTEE REQUIREMENT
(SEE SECTION 4.6), THIS CONTRACT WILL REMAIN IN FORCE AT LEAST UNTIL THE
DEATH BENEFIT GUARANTEE TERMINATION AGE SHOWN ON PAGE 3.
THE ACCUMULATED VALUE MAY INCREASE OR DECREASE DAILY BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT.
RIGHT TO CANCEL. PLEASE READ THIS CONTRACT CAREFULLY. We want you to be
satisfied with your contract. If you are not satisfied, you may cancel the
contract before midnight of the latest of: (1) The 10th day after you first
receive it; (2) The 45th day after you complete Part I of the Application;
and (3) The 10th day after a notice of withdrawal right is mailed or
delivered to you. Do this by (1) sending a telegram or mailing or
delivering written notice to Lutheran Brotherhood Variable Insurance
Products Company, 625 Fourth Avenue South, Minneapolis, MN 55415 or to the
representative through whom you bought it, and (2) returning the contract.
Notice given by mail and return of the contract by mail are effective on
being postmarked, properly addressed and postage prepaid. If you cancel the
contract, it will be deemed void from the beginning. Within 7 days after we
receive notice of cancellation and the returned contract, we will refund the
sum of: (1) The Accumulated Value on the day the contract is first received
by us or our representative; (2) The Premium Payment Charges and Percent of
Premium Charges deducted; (3) The Monthly Deductions made; and (4) The
amount attributable to this contract for the risk charges and taxes, if any,
deducted from the Variable Account and for advisory fees charged against the
net asset value in the Fund portfolios.
Death Proceeds payable at death prior to Maturity Date.
Adjustable death benefit.
Flexible premiums.
Return on investments reflected in contract benefits.
Nonparticipating.
Settlement options to provide retirement income.
Signed for the Company at Minneapolis, Minnesota
============================================================================
President /s/Robert P. Gandrud [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
INSURED: JOHN DOE AGE: 35 SEX: MALE
CONTRACT NUMBER: V1234567 DATE OF ISSUE: JULY 1, 1991
FACE AMOUNT: $50,000
<PAGE>
Contract Number: v1234567
============================================================================
TABLE OF CONTENTS
============================================================================
Cover Page
Index
Contract Schedule, Contract Data
Section 1 Definitions
Section 2 General Provisions
Section 3 Ownership and Beneficiary
Section 4 Premiums and Reinstatement
Section 5 Insurance Coverage
Section 6 Accumulated Value and Surrender Provisions
Section 7 Monthly Deduction
Section 8 Loans
Section 9 Variable Account and Unit Value
Section 10 Exchange of Contract
Section 11 Settlement Provisions
Additional Benefits, Amendments Application
============================================================================
INDEX
============================================================================
Section
Accumulated Value ....................................................... 6
Allocation of Net Premiums .............................................. 9
Annual Report ........................................................... 2
Assignment .............................................................. 3
Beneficiary ............................................................. 3
Cash Surrender Value .................................................... 6
Change of Death Benefit Option .......................................... 5
Change of Investment Policy ............................................. 9
Continuation of Insurance ............................................... 6
Cost of Insurance ....................................................... 7
Death Benefit ........................................................... 5
Death Benefit Guarantee ................................................. 4
Death Benefit Guarantee Premium ......................................... 4
Death Benefit Guarantee Requirement ..................................... 4
Death Proceeds .......................................................... 2
Decrease Charge ......................................................... 7
Decrease in Face Amount ................................................. 5
Deferment ............................................................... 2
Entire Contract ......................................................... 2
Exchange Privilege ...................................................... 10
Grace Period ............................................................ 4
Incontestability ........................................................ 2
Increase in Face Amount ................................................. 5
Loan Account ............................................................ 8
Loans ................................................................... 8
Maturity Proceeds ....................................................... 2
Misstatement of Age or Sex .............................................. 2
Monthly Deduction ....................................................... 7
Net Premium ............................................................. 4
Ownership ............................................................... 3
Premium in Default and Grace Period ..................................... 4
Premiums ................................................................ 4
Reinstatement ........................................................... 4
Settlement Options ...................................................... 11
Suicide ................................................................. 2
Surrender ............................................................... 6
Cash Surrender Value ................................................. 6
Partial Surrender .................................................... 6
Full Surrender ....................................................... 6
Termination ............................................................. 2
Transfers Among Subaccounts ............................................. 9
Unit Value .............................................................. 9
Variable Account ........................................................ 9
<PAGE>
[LOGO]
LUTHERAN BROTHERHOOD For information about this contract,
VARIABLE INSURANCE consult your Lutheran Brotherhood
PRODUCTS COMPANY Variable Insurance Products Company
625 Fourth Avenue South Representative or write to us at our
Minneapolis, Minnesota 55415 Home Office.
============================================================================
CONTRACT SCHEDULE PLANNED
ANNUAL
PREMIUM
BASIC BENEFIT
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE $1,000.00
PREMIUMS PAYABLE TO THE CONTRACT ANNIVERSARY AFTER AGE 96
MATURITY DATE: JULY 1, 2052
PREMIUM CLASS: NONSMOKER
COVERAGE MAY TERMINATE PRIOR TO MATURITY DATE. ACCUMULATED VALUES DEPEND ON
INVESTMENT PERFORMANCE OF THE VARIABLE ACCOUNT AND, EXCEPT AS PROVIDED IN
SECTION 4.6, COVERAGE WILL TERMINATE IF THE CASH SURRENDER VALUE IS LESS
THAN THE MONTHLY DEDUCTION REQUIRED. INVESTMENT PERFORMANCE OR PAYMENT OF
PLANNED ANNUAL PREMIUMS MAY NOT BE SUFFICIENT TO CONTINUE COVERAGE TO
MATURITY DATE.
- ----------------------------------------------------------------------------
DEATH BENEFIT OPTION B (SEE SECTION 5.1)
LOAN INTEREST RATE 7.4% PER YEAR PAYABLE IN ADVANCE
DEATH BENEFIT GUARANTEE PREMIUM $35.03 PER MONTH (SEE SECTION 4.6)
AND TERMINATION AGE CONTRACT ANNIVERSARY AFTER AGE 71
- ----------------------------------------------------------------------------
INSURED: JOHN DOE AGE: 35 SEX: MALE
CONTRACT NUMBER: V1234567 DATE OF ISSUE: JULY 1, 1991
INITIAL FACE AMOUNT: $50,000
<PAGE>
Date of Issue: JULY 1, 1991 Contract Number: V1234567
INSURED: JOHN DOE
AGE: 35 SEX: MALE FLEXIBLE PREMIUM
INITIAL FACE AMOUNT: $50,000 VARIABLE LIFE INSURANCE
============================================================================
CONTRACT CHARGES
MONTHLY ADMINISTRATIVE CHARGES
BASIC CHARGE $4.00 PER MONTH
INITIAL CHARGE $ .04 PER $1,000 OF FACE AMOUNT, CHARGED
IN FIRST 120 MONTHLY DEDUCTIONS ONLY
PARTIAL SURRENDER CHARGE $25.00 OR 2% OF AMOUNT SURRENDERED, IF LESS
PERCENT OF PREMIUM CHARGE 5.0% OF EACH PREMIUM
CURRENT CHARGE MAXIMUM CHARGE
PREMIUM PROCESSING CHARGE
AUTOMATIC PAYMENT PLANS $ .50 PER PAYMENT $ 1.00 PER PAYMENT
ALL OTHER PAYMENTS $ 1.00 PER PAYMENT $ 2.00 PER PAYMENT
TRANSFER CHARGE $10.00 PER TRANSFER $20.00 PER TRANSFER
(FOR EACH TRANSFER IN EXCESS
OF TWO IN A CONTRACT YEAR)
CURRENT PREMIUM PROCESSING CHARGES AND TRANSFER CHARGES ARE SUBJECT TO
CHANGE. HOWEVER, THESE CHARGES WILL NEVER EXCEED THE MAXIMUM CHARGES SHOWN
ABOVE. YOU WILL BE NOTIFIED OF ANY CHANGE IN CURRENT CHARGES.
DECREASE CHARGE #
MAXIMUM
BEGINNING OF DEFERRED CONTINGENT
CONTRACT ADMINISTRATIVE DEFERRED
YEAR CHARGE SALES CHARGE
1 $ 238.00 $ 90.00
2 214.00 90.00
3 190.00 90.00
4 166.00 90.00
5 142.00 90.00
6 118.00 88.50
7 94.00 70.50
8 70.00 52.50
9 46.00 34.50
10 22.00 16.50
THEREAFTER 0.00 0.00
# DECREASE CHARGE IF THE INITIAL FACE AMOUNT IS DECREASED. DEFERRED
ADMINISTRATIVE CHARGE REDUCES BY $2.00 ON EACH MONTHLY ANNIVERSARY THAT THE
CONTRACT IS IN FORCE. BEGINNING IN CONTRACT YEAR 6, THE MAXIMUM CONTINGENT
DEFERRED SALES CHARGE REDUCES ON EACH MONTHLY ANNIVERSARY THAT THE CONTRACT
IS IN FORCE. ADDITIONAL DECREASE CHARGES WILL APPLY TO INCREASES IN FACE
AMOUNT.
<PAGE>
Date of Issue: JULY 1, 1991 Contract Number: V1234567
INSURED: JOHN DOE
AGE: 35 SEX: MALE FLEXIBLE PREMIUM
INITIAL FACE AMOUNT: $50,000 VARIABLE LIFE INSURANCE
============================================================================
INITIAL MONTHLY
BEGINNING COST OF ADMINISTRATIVE
ON CONTRACT ATTAINED INSURANCE CHARGE FOR
ANNIVERSARY AGE RATE* INCREASES#
JUL 1,
1991 35 $ 0.14 $ 0.04
1992 36 0.15 0.04
1993 37 0.16 0.04
1994 38 0.17 0.04
1995 39 0.18 0.04
1996 40 0.19 0.05
1997 41 0.21 0.05
1998 42 0.22 0.05
1999 43 0.24 0.05
2000 44 0.26 0.05
2001 45 0.28 0.05
2002 46 0.31 0.05
2003 47 0.33 0.05
2004 48 0.36 0.05
2005 49 0.39 0.05
2006 50 0.42 0.06
2007 51 0.46 0.06
2008 52 0.51 0.06
2009 53 0.56 0.06
2010 54 0.62 0.06
2011 55 0.68 0.06
2012 56 0.75 0.06
2013 57 0.82 0.06
2014 58 0.91 0.06
2015 59 1.00 0.06
2016 60 1.10 0.07
2017 61 1.22 0.07
2018 62 1.35 0.07
2019 63 1.50 0.07
2020 64 1.67 0.07
2021 65 1.85 0.07
2022 66 2.05 0.07
2023 67 2.26 0.07
2024 68 2.49 0.07
2025 69 2.74 0.07
2026 70 3.03 0.07
2027 71 3.36 0.07
2028 72 3.74 0.07
2029 73 4.17 0.07
2030 74 4.64 0.07
2031 75 5.15 0.07
2032 76 5.68 0.07
2033 77 6.24 0.07
2034 78 6.82 0.07
2035 79 7.46 0.07
2036 80 8.15 0.07
2037 81 8.93
2038 82 9.81
2039 83 10.79
2040 84 11.84
2041 85 12.95
2042 86 14.09
2043 87 15.26
2044 88 16.44
2045 89 17.65
2046 90 18.92
2047 91 20.26
2048 92 21.73
2049 93 23.47
2050 94 25.81
2051 95 29.32
* MAXIMUM MONTHLY COST PER $1,000 INSURANCE FOR NONSMOKER PREMIUM
CLASS, BASED ON COMMISSIONERS 1980 STANDARD ORDINARY MORTALITY TABLE
FOR NONSMOKERS.
# MONTHLY CHARGE PER $1,000 OF INCREASE IN FACE AMOUNT UNDER SECTION 5.3 OR
UNDER ANY GUARANTEED INCREASE OPTION BENEFIT RIDER, CHARGED ONLY IN THE
FIRST 120 MONTHLY DEDUCTIONS ON OR AFTER THE EFFECTIVE DATE OF THE
INCREASE.
<PAGE>
Date of Issue: JULY 1, 1991 Contract Number: V1234567
INSURED: JOHN DOE
AGE: 35 SEX: MALE FLEXIBLE PREMIUM
INITIAL FACE AMOUNT: $50,000 VARIABLE LIFE INSURANCE
============================================================================
VARIABLE ACCOUNT INFORMATION
Investment Company -- LBVIP Series Fund, Inc.
Variable Account -- LBVIP Variable Insurance Account
Each subaccount of the LBVIP Variable Insurance Account invests in a
specific portfolio of the LBVIP Series Fund, Inc. Subaccounts of the
Variable Account and the portfolios in which they invest are as follows:
GROWTH SUBACCOUNT -- Amounts credited to this subaccount are
invested in the Growth Portfolio. This
portfolio invests primarily in equity
securities.
HIGH YIELD SUBACCOUNT -- Amounts credited to this subaccount are
invested in the High Yield Portfolio.
This portfolio invests primarily in
high yield securities.
INCOME SUBACCOUNT -- Amounts credited to this subaccount are
invested in the Income Portfolio. This
portfolio invests primarily in fixed
income securities.
MONEY MARKET SUBACCOUNT -- Amounts credited to this subaccount are
invested in the Money Market Portfolio.
This portfolio invests primarily in
money market instruments.
The LBVIP Series Fund, Inc. receives investment advice for each
portfolio from Lutheran Brotherhood Research Corp. As investment
advisor, Lutheran Brotherhood Research Corp. charges the LBVIP Series
Fund, Inc. a daily investment advisory fee equal to an annual rate
of 0.4% of the aggregate average daily net assets of the LBVIP Series
Fund, Inc.
For a complete description of the Variable Account and the designated
portfolios, please refer to the current prospectus for the LBVIP Series
Fund, Inc.
<PAGE>
Contract Number: V1234567
============================================================================
1. DEFINITIONS
============================================================================
APPLICATION. The application(s) and all amendments and supplements.
ATTAINED AGE. Attained Age on any day is the age last birthday of the
Insured on the Contract Anniversary on or immediately prior to that day.
CONTRACT ANNIVERSARY. The Date of Issue on page 3 and the same month and
day for years after issue as in the Date of Issue.
CONTRACT DATE. The latest of (1) The Date of Issue; (2) The date we
receive at our Home Office the first premium payment on this contract; and
(3) Any other date agreed upon by you and us.
CONTRACT MONTH. The period from one Monthly Anniversary to the next
Monthly Anniversary.
CONTRACT YEAR. The first Contract Year begins on the Date of Issue and
continues until the end of the period for which the 12th Monthly Deduction
is made. Thereafter, Contract Years are successive periods during which 12
Monthly Deductions are made, each year beginning at the end of the prior
Contract Year and continuing to the end of the period for which the 12th
deduction is made.
DEBT. All unpaid contract loans less any unearned interest.
INCREASE YEAR. An Increase Year begins on the effective date of each
increase in Face Amount according to Section 5.3 and continues until the end
of the period for which the 12th Monthly Deduction on or after the effective
date of the increase is made. Thereafter, Increase Years are successive
periods during which 12 Monthly Deductions are made, each year beginning at
the end of the prior Increase Year and continuing to the end of the period
for which the 12th deduction is made.
INSURED. The person named as Insured on page 3.
MONTHLY ANNIVERSARY. The same day for months after issue as in the Date of
Issue.
SEC. Securities and Exchange Commission.
VALUATION DAY. Any day, except the day after Thanksgiving Day and the day
before Christmas Day, that the New York Stock Exchange is open for trading
or there is sufficient trading in a Fund portfolio's securities to affect
the Unit Value of the corresponding subaccount of the Variable Account.
VALUATION PERIOD. The period of time from the end of one Valuation Day to
the end of the next Valuation Day.
WE, OUR, US. Lutheran Brotherhood Variable Insurance Products Company.
WRITTEN NOTICE. A written request signed by you and received by us at our
Home Office in Minneapolis, Minnesota.
YOU, YOUR, YOURS. The owner of this contract.
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2. GENERAL PROVISIONS
============================================================================
2.1 ENTIRE CONTRACT. The Entire Contract consists of:
1) This contract including any attached riders or amendments; and
2) The Application attached to this contract.
No change in this contract is valid unless it is made in writing and
signed by our President and Secretary.
2.2 MATURITY PROCEEDS. The amount payable if the Insured is living on
the Maturity Date will be the Accumulated Value less the sum of:
1) Any Debt; and
2) The amount, if any, needed to cover Monthly Deductions through
the Maturity Date.
2.3 DEATH PROCEEDS. The amount payable on the Insured's death before the
Maturity Date will be the sum, on the date of death, of:
1) The Death Benefit (see Section 5.1); and
2) Any insurance on the Insured's life provided by Additional
Benefits in this contract;
Less the sum of:
3) Any Debt; and
4) The amount, if any, needed to cover Monthly Deductions through
the month of death.
2.4 STATEMENTS IN THE APPLICATION. We will not use any statement to
contest a claim or to have this contract declared invalid unless the
statement is contained in the Application. All statements made in the
Application are representations, not warranties.
2.5 INCONTESTABILITY. We will not contest the validity of this contract
after it has been in force during the Insured's lifetime for two years
from the Date of Issue except for any provisions granting benefits in
the event of total disability.
If the Face Amount is increased according to Section 5.3, this
provision will apply to the increase from its effective date with
regard to statements made in the application for the increase. This
provision will apply from the date this contract is reinstated with
regard to statements made in the application for reinstatement.
2.6 MISSTATEMENT OF AGE OR SEX. If the Insured's age or sex has been
misstated, any contract values will be adjusted using the most recent
Cost of Insurance Rates to the amounts that would have been provided
based on the correct age and sex.
2.7 EXCLUSION: SUICIDE. If the Insured dies by suicide, while sane or
insane, within two years after the Date of Issue, the Death Proceeds
of this contract are limited to premiums paid less the sum of:
1) Any Debt; and
2) Any Partial Surrenders.
If the Insured dies by suicide, while sane or insane, within two years
after the effective date of an increase in Face Amount according to
Section 5.3, the Death Proceeds with respect to the increase are
limited to the Cost of Insurance for the increase (see Section 7.2)
plus the Initial Monthly Administrative Charge for the increase
included in any Monthly Deduction(s) made.
2.8 EXEMPTIONS FROM CLAIMS OF CREDITORS. To the extent permitted by
law, the proceeds of this contract and any payments under it will not
be subject to the claims of creditors or to any legal proceedings.
2.9 DEFERMENT. Death Proceeds will normally be paid within 7 days after
we receive at our Home Office due proof of the Insured's death and all
other requirements necessary for us to make payment. Maturity
Proceeds will normally be paid within 7 days of the Maturity Date.
The Cash Surrender Value, Partial Surrenders and contract loans will
normally be paid within 7 days after we receive Written Notice of
surrender or loan. However, we may defer payment of Maturity
Proceeds, any loan or surrender and any portion of the Death Benefit
in excess of the Face Amount while:
1) The New York Stock Exchange is closed for trading; or
2) The SEC requires that trading be restricted or declares an
emergency.
2.10 ANNUAL REPORT. We will mail you a statement of the value of this
contract within 30 days after each Contract Anniversary. The report
will show the Accumulated Value, Cash Surrender Value, Death Benefit,
all payments and deductions since the last report and any outstanding
Debt. Any further information required by law will also be given to
you.
2.11 PROJECTION OF VALUES. In any year that you so request, we will give
you one projection of the illustrated future values under the
contract.
2.12 RESERVATION OF RIGHTS. To the extend permitted or required by law
(including SEC rules under the Investment Company Act of 1940), we
reserve the right to eliminate or modify:
1) The withdrawal rights provided in the Right to Cancel provision
(page 1) and in Section 5.4; and
2) The exchange rights provided in Sections 10.1 and 10.2.
2.13 TERMINATION. This contract will terminate on the earliest of:
1) The date of death of the Insured;
2) The Maturity Date;
3) The end of the grace period if the premium required to keep this
contract in force has not been paid;
4) The date you surrender this contract; and
5) The date this contract terminates from excess loan under
Section 8.5.
============================================================================
3. OWNERSHIP AND BENEFICIARY
============================================================================
3.1 OWNERSHIP. The Insured is the owner unless another person is named
as the owner in the Application. Ownership may be changed through
assignment. While the Insured is living, the owner may exercise all
rights set out in this contract.
3.2 ASSIGNMENT. You may assign this contract. We are not bound by the
assignment unless it is in writing and filed at our Home Office. We
are not responsible for the validity or effect of any assignment. Any
Debt on this contract will have prior claim over any assignment.
3.3 BENEFICIARY. The beneficiary is named in the Application. You may
change the beneficiary by giving Written Notice. The change will
become effective if:
1) We receive Written Notice; and
2) We acknowledge the change.
The effective date of the change will be the date the notice was
signed. We will not be liable for any payment made or action taken by
us before we receive the notice.
3.4 SUCCESSION OF BENEFICIARIES. You may designate one or more
beneficiaries to receive the Death Proceeds. You will classify each
beneficiary as primary or contingent. Upon the Insured's death, we
will pay the Death Proceeds to the primary beneficiaries who survive
the Insured. If none survive, the Proceeds will be paid to the
surviving contingent beneficiaries. In the event no beneficiary
survives the Insured, proceeds will be paid to the Insured's estate.
Other designations or successions of beneficiaries may be arranged
with us.
3.5 SHARE OF PROCEEDS. Unless you specify otherwise, each beneficiary
receiving proceeds will have an equal share in any Death Proceeds
payable.
============================================================================
4. PREMIUMS AND REINSTATEMENT
============================================================================
4.1 PREMIUM PAYMENTS. The amount of the Planned Annual Premium is shown
on page 3. The initial premium is due and payable on the Date of
Issue.
You may pay more or less than the Planned Annual Premium in any
Contract Year. However, except as provided in Section 4.6, to
continue the contract in force on each Monthly Anniversary the Cash
Surrender Value must be sufficient to cover the Monthly Deduction.
Premiums may be paid at any time before the Maturity Date and in any
amount.
Premiums are payable at our Home Office. Upon request we will give
you a receipt, signed by an officer of the company, for the premium
paid.
4.2 NET PREMIUM. The Net Premium is the portion of each premium which is
applied to the subaccounts of the Variable Account. The Net Premium
is equal to the premium paid less the sum of:
1) The Percent of Premium Charge applied to the premium paid. The
Percent of Premium Charge is shown on page 4; and
2) The Premium Processing Charge. We reserve the right to change
the amount of this charge. However, the Premium Processing
Charge will never exceed the maximum charge shown on page 4.
4.3 CUMULATIVE PREMIUM LIMIT. The Internal Revenue Code provides for
exclusion of the Death Benefit from gross income. To qualify for the
exclusion, total premium payments must not exceed the limit stated in
the Code. The portion of any premiums paid in excess of that limit
will be refunded to you.
4.4 PREMIUM BILLING. We will send premium billings based on the amount
and frequency of premium payments which you request. You may change
the amount and, subject to our published rules, the frequency or
method billing by giving Written Notice. If we do not receive any
premium payments for 24 consecutive months, we will stop billings.
4.5 PREMIUM IN DEFAULT AND GRACE PERIOD. If the Death Benefit Guarantee
is not in effect under Section 4.6, a premium is in default on a
Monthly Anniversary if the Cash Surrender Value is less than the
Monthly Deduction to be made on that day. Notice of the premium
required to keep this contract in force will be mailed to you at the
address last known to us. You will have a grace period of 61 days
after the date we mail the notice in which to pay the premium
required. This contract will remain in force during the grace period,
but not beyond the Maturity Date. Any accumulated value in the
subaccounts for this contract will be transferred to the general
account until we receive the required premium. If the required
premium is paid within the grace period, any accumulated value for
this contract in the general account but not in the Loan Account will
be transferred back to the subaccounts and we will deduct any Monthly
Deductions not made while a premium was in default. Otherwise, this
contract will terminate without value at the end of the grace period.
4.6 DEATH BENEFIT GUARANTEE. The Death Benefit Guarantee protects
against premium default due to investment experience. If, on a
Monthly Anniversary:
1) The Death Benefit Guarantee Requirement is met; and
2) The Death Benefit Guarantee has not terminated;
then no premium will be in default even if the Cash Surrender Value is
less than the Monthly Deduction to be made on that day. If the Cash
Surrender Value is less than the Monthly Deduction, the deduction made
will not exceed the Accumulated Value less any Debt and we will pay
the balance of the Monthly Deduction.
4.6a DEATH BENEFIT GUARANTEE REQUIREMENT. On any Monthly Anniversary, the
Death Benefit Guarantee Requirement is met if the sum of premiums paid
less any Partial Surrenders and any unpaid contract loans is greater
than or equal to the sum of Death Benefit Guarantee Premiums from the
Date of Issue through that Monthly Anniversary.
However, if the Death Benefit Guarantee Requirement is not met on a
Monthly Anniversary but the Cash Surrender Value less any unearned
interest is greater than or equal to the sum of Death Benefit
Guarantee Premiums from the Date of Issue through that Monthly
Anniversary, then the sum of premiums paid as used above will be
deemed to increase to the amount necessary to meet the Death Benefit
Guarantee Requirement.
In addition, a portion of any Partial Surrender or contract loan may
be excluded when determining if the Death Benefit Guarantee
Requirement is met. The amount excluded is calculated on the date of
the Partial Surrender or contract loan and is equal to the lesser of:
1) The amount of Partial Surrender or unpaid contract loan; and
2) The excess, if any, of the Cash Surrender Value less unearned
interest on any unpaid contract loans over the greater
of (a) and (b) where:
a) Is the sum of premiums paid less the amount of any Partial
Surrenders and unpaid contract loans not previously excluded
when determining if the Death Benefit Guarantee Requirement
was met; and
b) Is the sum of Death Benefit Guarantee Premiums from the Date
of Issue through the Monthly Anniversary on or next after the
date of Partial Surrender or contract loan.
4.6b DEATH BENEFIT GUARANTEE PREMIUM. The Death Benefit Guarantee Premium
on the Date of Issue is shown on page 3. If the Death Benefit
Guarantee has not terminated, a new Death Benefit Guarantee Premium
will be determined whenever:
1) The Death Benefit Option is changed;
2) The Face Amount is increased or decreased (An increase in Face
Amount according to Section 5.3 may also result in a new Death
Benefit Guarantee Termination Age.);
3) The Premium Class is changed; or
4) Additional Benefits are increased, decreased, or added to or
deleted from this contract.
The new Death Benefit Guarantee Premium will be shown on the
supplemental contract schedule that we will mail to you. For purposes
of the Death Benefit Guarantee Requirement, the Death Benefit
Guarantee Premium will be zero for any Monthly Anniversary that a
premium is credited to this contract under a disability waiver benefit
rider.
4.6c TERMINATION OF DEATH BENEFIT GUARANTEE. The Death Benefit Guarantee
will terminate on the earlier of:
1) Any Monthly Anniversary that the Death Benefit Guarantee
Requirement is not met; and
2) The Death Benefit Guarantee Termination Age shown on page 3.
In the event of termination under (1), we will mail to you at the
address last known to us a notice of the premium needed to meet the
Death Benefit Guarantee Requirement and reinstate the Death Benefit
Guarantee. If this amount is not received at our Home Office within
31 days after the date we mail the notice, the Death Benefit Guarantee
cannot be reinstated.
4.7 REINSTATEMENT. This contract may be reinstated within five years
after the end of the grace period but before the Maturity Date, unless
it has been surrendered. To reinstate we require:
1) Evidence of insurability which meets our standards;
2) Payment to cover the Monthly Deductions that were not made
during the grace period;
3) Payment of an amount to keep the contract in force for at least
two months, based on unit values on the date of reinstatement;
and
4) Payment or reinstatement of all Debt existing at the end of the
grace period.
The effective date of a reinstatement is the date the application for
reinstatement is approved by us. The Accumulated Value on that date
will be the sum of:
1) The accumulated values for this contract which were transferred
to the general account at the time of premium default (see
Section 4.5);
2) The accumulated value for this contract in the Loan Account; and
3) The accumulated values provided by the payment made to
reinstate;
Less the sum of:
4) Monthly Deductions that were not made during the grace period;
and
5) The Monthly Deduction made on the date of reinstatement.
Section 2.5 Incontestability will apply from the date the contract is
reinstated with regard to statements made in the application for
reinstatement. The Death Benefit Guarantee cannot be reinstated under
this provision.
<PAGE>
Contract Number: V1234567
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5. INSURANCE COVERAGE
============================================================================
5.1 DEATH BENEFIT. We will pay the Death Benefit to the beneficiary upon
receiving proof that the death of the Insured occurred before the
Maturity Date. It is payable as part of the Death Proceeds. The
benefit is determined as follows:
1) OPTION A. The Death Benefit on any day is the greater of:
a) The sum of the Face Amount and the Accumulated Value; and
b) The Accumulated Value multiplied by the Factor for the
Attained Age on that day (see Table of Factors)
2) OPTION B. The Death Benefit on any day is the greater of:
a) The Face Amount; and
b) The Accumulated Value multiplied by the Factor for the
Attained Age on that day (see Table of Factors).
The Death Benefit Option at issue of this contract is shown on page 3.
TABLE OF FACTORS
Attained Age Factor Attained Age Factor
------------ ------ ------------ ------
40 or less 2.50 61 1.28
41 2.43 62 1.26
42 2.36 63 1.24
43 2.29 64 1.22
44 2.22 65 1.20
45 2.15 66 1.19
46 2.09 67 1.18
47 2.03 68 1.17
48 1.97 69 1.16
49 1.91 70 1.15
50 1.85 71 1.13
51 1.78 72 1.11
52 1.71 73 1.09
53 1.64 74 1.07
54 1.57 75 to 90 1.05
55 1.50 91 1.04
56 1.46 92 1.03
57 1.42 93 1.02
58 1.38 94 1.01
59 1.34 95 1.00
60 1.30
5.2 CHANGE OF DEATH BENEFIT OPTION. You may change the Death Benefit
Option at any time except when the Death Benefit is a multiple of the
Accumulated Value according to Section 5.1(1)(b) or 5.1(2)(b). The
change is subject to the following:
1) You must give Written Notice.
2) If you change from Option B to Option A, the Death Benefit will
not change and the Face Amount will be decreased by the
Accumulated Value on the effective date of the change. The
decrease in Face Amount will be applied in the order specified
in Section 5.5(2). However, this change may not be made if it
would reduce the Face Amount to less than $5,000.
3) If you change from Option A to Option B, the Face Amount will
not change and the Death Benefit will be decreased by the
Accumulated Value on the effective date of the change.
4) The change may not be made if it would cause total premium
payments already made to exceed the Cumulative Premium Limit of
the Internal Revenue Code.
5) The effective date of the change will be the Monthly
Anniversary on or next after the date we receive Written
Notice.
5.3 INCREASE IN FACE AMOUNT. You may increase the Face Amount any time
before the Contract Anniversary on or next after the Insured's 80th
birthday. The increase is subject to the following:
1) You must make written application to us at our Home Office.
2) We will require evidence of insurability which meets our
standards.
3) The increase must be at least $10,000.
4) The Cash Surrender Value must not be less than the Monthly
Deduction on the effective date of the increase (unless the
Death Benefit Guarantee is in force).
5) The Initial Monthly Administrative Charge for the increase (see
Section 7.1(3)) will be charged on the effective date of the
increase and then on each Monthly Anniversary until 120 charges
have been made.
6) A new schedule of Decrease Charges will apply to the increase in
Face Amount.
7) The effective date of the increase will be the date shown on the
supplemental contract schedule that we will mail to you.
Section 2.5 Incontestability will apply to the increase from its
effective date with regard to statements made in the application for
the increase in Face Amount. Section 2.7 Exclusion: Suicide will
apply to the increase from its effective date.
5.4 RIGHT TO CANCEL INCREASE IN FACE AMOUNT. You may cancel any increase
in Face Amount by notifying your representative or giving Written
Notice before the latest of:
1) 10 days after you receive the supplemental contract schedule
showing the increase;
2) 45 days after you complete the application for the increase in
Face Amount; and
3) 10 days after a notice of withdrawal right is mailed or
delivered to you.
If you cancel any increase in Face Amount under this provision, the
portion of any Monthly Deduction(s) made which is due to the increase
will be applied as a Net Premium or, if you request, refunded to you.
5.5 DECREASE IN FACE AMOUNT. You may decrease the Face Amount at any
time. The decrease is subject to the following:
1) You must give Written Notice.
2) The decrease and Decrease Charge (see Section 7.3) will be
applied, in successive order, against:
a) The most recent increase in Face Amount;
b) The next most recent increase(s); then
c) The Initial Face Amount.
3) The decrease may not be made if the Accumulated Value less Debt
on the effective date of the decrease is less than the Decrease
Charge for the decrease.
4) The Face Amount after the decrease must not be less than the
minimum required. That minimum is $50,000 for decreases
made before the Contract Anniversary after the Insured's
50th birthday and $25,000 for decreases made after that date.
5) The decrease may not be made if it would cause total premium
payments already made to exceed the Cumulative Premium Limit of
the Internal Revenue Code.
6) The effective date of the decrease will be the Monthly
Anniversary on or next after the date we receive Written Notice.
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6. ACCUMULATED VALUE AND SURRENDER PROVISIONS
============================================================================
6.1 ACCUMULATED VALUE. On the Contract Date, the Accumulated Value is
equal to the Net Premium(s)received plus any interest earned on
premiums for this contract held in the general account less the
Monthly Deduction(s) made on that date. On any later date that this
contract is not in the grace period, the Accumulated Value of this
contract is equal to the sum of the accumulated values for this
contract in the subaccounts and the Loan Account (see Section 8.3).
The accumulated value in any subaccount on a Valuation Day is equal
to:
1) The number of units for this contract in that subaccount (see
Section 9.4); multiplied by
2) The unit value for that subaccount (see Section 9.5).
The accumulated value in the Loan Account on any date is the sum of:
1) Any Debt;
2) Any interest on loans on this contract payable in advance to the
next Contract Anniversary, provided that interest has not been
applied to pay any Monthly Deductions; and
3) Any interest accrued in the Loan Account on loans on this
contract.
The accumulated value for any day that is not a Valuation Day will be
determined on the next Valuation Day. During the grace period, the
Accumulated Value of this contract is equal to the sum of any
accumulated value for this contract transferred to the general account
at the time of premium default plus any accumulated value for this
contract in the Loan Account.
6.2 FULL SURRENDER. You may surrender this contract for its Cash
Surrender Value by giving Written Notice before the Maturity Date and
while the Insured is alive. The surrender will be effective on the
later of:
1) The date we receive Written Notice; and
2) The date you specify.
Insurance coverage ceases on the effective date of the surrender.
6.3 CASH SURRENDER VALUE. The Cash Surrender Value on any date is equal
to the Accumulated Value less the sum of:
1) Any Debt; and
2) The Decrease Charges, if any, applied on that date to the Face
Amount and to any prior decreases in Face Amount due to Partial
Surrender or change of Death Benefit Option.
6.4 PARTIAL SURRENDER. You may surrender a portion of the Accumulated
Value by giving Written Notice before the Maturity Date and while the
Insured is alive. We will deduct a Partial Surrender Charge from
every Partial Surrender. The amount of this charge is shown on
page 4.
A Partial Surrender;
1) Must be at least $500;
2) May be made only once each Contract Month;
3) Will reduce the Accumulated Value by the amount of the Partial
Surrender. The reduction will be applied against each
subaccount of the Variable Account according to the ratio for
this contract of the accumulated value in the subaccount to the
sum of the accumulated values in all the subaccounts. With our
approval, you may choose other allocations to the subaccounts;
4) Must not reduce the remaining Cash Surrender Value to less
than $500;
5) If the Death Benefit Option is B, will affect the Face Amount as
follows:
a) If the Death Benefit on the effective date of the Partial
Surrender is equal to the Face Amount, then the surrender
will reduce the Face Amount by the amount of the Partial
Surrender.
b) If the Death Benefit on the effective date of the Partial
Surrender is a multiple of the Accumulated Value according to
Section 5.1(2)(b), then the Face Amount will be reduced only
if, on that day, the amount of the surrender multiplied by
the Factor for the Attained Age on that day (see Table of
Factors on page 12) exceeds the Death Benefit minus the Face
Amount. In that case, the Face Amount will be reduced by:
i) The amount of the Partial Surrender; less
ii) The Death Benefit less the Face Amount prior to the
surrender, divided by the Factor applied.
Any decrease in Face Amount will be applied in the order
specified in Section 5.5(2). The Face Amount may not be reduced
to less than $5,000; and
6) Will be effective on the date we receive Written Notice.
A Partial Surrender may cause the Death Benefit Guarantee to
terminate.
6.5 CONTINUATION OF INSURANCE COVERAGE. If you stop premium payments,
this contract will remain in force until the earliest of:
1) The date of death of the Insured;
2) The Maturity Date;
3) The end of the grace period if the premium required to keep this
contract in force has not been paid;
4) The date you surrender this contract; and
5) The date this contract terminates from excess loan under
Section 8.5.
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7. MONTHLY DEDUCTION
============================================================================
7.1 MONTHLY DEDUCTION. The Monthly Deduction is made on the Contract Date
and on each subsequent Monthly Anniversary. If any Monthly
Anniversary occurs prior to the Contract Date, the deduction(s) for
such day(s) will also be made on the Contract Date. The Monthly
Deduction made from the subaccounts of the Variable Account is the
sum of:
1) The Cost of Insurance (see Section 7.2);
2) The Monthly Administrative Charge. This charge is the sum of:
a) The Basic Monthly Administrative Charge shown on page 4; and
b) Any Initial Monthly Administrative Charge. This is a charge
per $1,000 of Initial Face Amount. However, if the Initial
Face Amount is decreased according to Section 5.5, the charge
will be based on the Face Amount remaining after the
decrease. The charge is made on the Contract Date and then
on each Monthly Anniversary until 120 charges have been made.
The charge per $1,000 is shown on page 4;
3) Any Initial Monthly Administrative Charge for increases. This
is a charge per $1,000 of increase in Face Amount. However, if
the increased Face Amount is later decreased according to
Section 5.5, the charge will be based on the amount of the
increased Face Amount remaining after the decrease. The charge
is made on the effective date of each increase according to
Section 5.3 and then on each Monthly Anniversary until
120 charges have been made. The charge is based on Attained Age
on the date of the increase. The charge per $1,000 is shown on
page 5;
4) Any Decrease Charge which results from a decrease in Face Amount
according to Section 5.5; and
5) The monthly cost of any Additional Benefits.
However, if the Monthly Deduction is greater than the Cash Surrender
Value and the requirements of the Death Benefit Guarantee are met, the
deduction made will not exceed the Accumulated Value less any Debt.
We will pay the balance of the Monthly Deduction.
The Monthly Deduction is taken from each subaccount according to the
ratio for this contract of the accumulated value in the subaccount to
the sum of the accumulated values in all the subaccounts. With our
approval, you may choose other allocations of the Monthly Deduction.
7.2 COST OF INSURANCE. The Cost of Insurance is determined on the
Contract Date and on each Monthly Anniversary. It is equal to the
Cost of Insurance Rate multiplied by the Risk Amount.
7.2a COST OF INSURANCE RATE. We will determine the Cost of Insurance
Rate monthly. The rate is based on the Insured's Premium Class, sex,
Initial Face Amount and Attained Age.
The Premium Class for the Initial Face Amount is shown on page 3. The
Premium Class for any increase in Face Amount according to Section 5.3
will be determined on the effective date of the increase. If the
Death Benefit is a multiple of the Accumulated Value according to
Section 5.1(1)(b) or 5.1(2)(b), the Premium Class of the resulting
increase in Death Benefit will be the Premium Class shown on page 3.
The Cost of Insurance Rate for the Initial Face Amount and for any
increase in Face Amount with the same Premium Class as shown on page 3
will not exceed the rates shown on page 5. For any Face Amount with
Premium Class other than "standard," "smoker" or "nonsmoker," the
maximum cost is increased in one or both of the following ways as
specified in the contract schedule pages:
1) The maximum Cost of Insurance Rate is multiplied by a percentage
rating.
2) An extra monthly premium is added to the Cost of Insurance.
We may charge less than the maximum rate. Any change in Cost of
Insurance Rates will apply to all insureds of the same Premium Class,
sex, Initial Face Amount and Attained Age.
7.2b RISK AMOUNT. The Risk Amount is equal to:
1) The Death Benefit divided by 1.0040741;
Less
2) The Accumulated Value (before the Cost of Insurance and the cost
of the disability waiver benefit, if any, is deducted).
If the Death Benefit Option is B and the Initial Face Amount has been
increased, the Accumulated Value will be considered part of the
Initial Face Amount. If the Accumulated Value is greater than the
Initial Face Amount, the excess will be considered to be part of
successive increases in Face Amount starting with the first increase.
7.3 DECREASE CHARGE. The Decrease Charge is charged on:
1) The effective date of each decrease in Face Amount you make
according to Section 5.5; and
2) Termination of this contract other than by death or maturity
(Face Amount decreases to zero).
The Decrease Charge is applied as in Section 5.5(2).
If the Initial Face Amount is decreased, the Decrease Charge is the
product of:
1) The ratio of the decrease in Face Amount to the Initial Face
Amount; and
2) The sum of:
a) The Deferred Administrative Charge; and
b) The lesser of:
i) The Maximum Contingent Deferred Sales Charge; and
ii) 25% of premiums paid in the first Contract Year.
The Deferred Administrative Charge and the Maximum Contingent Deferred
Sales Charge are shown on page 4.
If an increase in Face Amount is decreased, the Decrease Charge is the
product of:
1) The ratio of the amount of the increase being decreased to the
initial amount of the increase in Face Amount; and
2) The sum of:
a) The Deferred Administrative Charge for the increase in Face
Amount; and
b) The lesser of
i) The Maximum Contingent Deferred Sales Charge for the
increase in Face Amount; and
ii) 25% of the premium attributable to the increase in Face
Amount which is decreased (see Section 7.4).
For any increase in Face Amount, the Deferred Administrative Charge
and the Maximum Contingent Deferred Sales Charge will be shown on
supplemental schedule pages that we will mail to you.
7.4 ATTRIBUTABLE PREMIUM. For purposes of the Contingent Deferred Sales
Charge, the premium attributable to an increase in Face Amount is
equal to (1) multiplied by (2 + 3) where:
1) Is the ratio of the increase in Face Amount to the total Face
Amount including that increase;
2) Is the Cash Surrender Value on the effective date of the
increase; and
3) Is premiums paid during the Increase Year which begins on the
effective date of the increase.
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8. LOANS
============================================================================
8.1 CONTRACT LOANS. After the first Contract Year, you may obtain a loan
from us with this contract as sole security if:
1) You give Written Notice;
2) The loan with interest does not increase the total loan to more
than 90% of the excess of the Accumulated Value over any
Decrease Charge on the date of the loan; and
3) The amount of the loan is at least $100.
Accumulated value equal to the amount of the loan will be transferred
from the subaccounts to the Loan Account. The amount taken from each
subaccount will be according to the ratio for this contract of the
accumulated value in the subaccount to the sum of the accumulated
values in all the subaccounts. With our approval, you may choose
other allocations from the subaccounts. Contract loans may cause the
Death Benefit Guarantee to terminate.
8.2 LOAN INTEREST. The loan interest rate is 7.4% per year. Interest on
any loan will be charged at that rate. It is payable in advance on
the date of the loan and on each Contract Anniversary. Interest is
computed to the next Contract Anniversary. If interest is not paid
when due, it will be added to the loan and bear interest at the same
rate.
8.3 LOAN ACCOUNT. The Loan Account is an account of the company. Assets
from the Variable Account are transferred to the Loan Account in
amounts equal to contract loans on this and similar contracts.
Interest will be credited to this account at the rate of 0.48676% per
month. This is an effective rate of 6.0% per year. Loans on this
contract will be credited with interest while this contract is in
force. Interest credited will be transferred to the subaccounts on
each Monthly Anniversary and on the date the entire Debt is repaid in
full. The amount transferred to each subaccount will be according to
the ratio for this contract of the accumulated value in the subaccount
to the sum of the accumulated values in all the subaccounts.
8.4 REPAYMENT OF DEBT. All or part of the Debt may be repaid at any time
before the Maturity Date and while the Insured is alive. Each
repayment must be at least $25. You must notify us if a payment to us
is a repayment of Debt. Otherwise, it will be considered a premium
payment. No charges are deducted from Debt repayments. Repayments of
Debt, and any unearned loan interest that was paid in advance on that
portion of the Debt, will be deducted from the Loan Account and
transferred to each subaccount of the Variable Account according to
the ratio for this contract of the accumulated value in the subaccount
to the sum of the accumulated values in all the subaccounts at the
time of repayment or, if that sum is zero, according to the Premium
Allocation Percentages. With our approval, you may choose other
allocations to the subaccounts.
8.5 TERMINATION FROM EXCESS LOAN. If the Death Benefit Guarantee is not
in force, this contract will terminate when:
1) The Debt exceeds the Accumulated Value less the Decrease Charge
applied to the Face Amount and to any decreases in Face Amount
due to Partial Surrender or change of Death Benefit Option; and
2) 61 days have elapsed since we mailed a notice to you at the
address last known to us.
============================================================================
9. VARIABLE ACCOUNT AND UNIT VALUE
============================================================================
9.1 VARIABLE ACCOUNT. We have established the Variable Account shown on
page 6 as a separate investment account according to Minnesota laws.
The Variable Account is registered with the SEC as a unit investment
trust under the Investment Company Act of 1940.
The Variable Account has subaccounts which invest in shares of the
LBVIP Series Fund, Inc. (the Fund). The Fund is registered with the
SEC under the Investment Company Act of 1940 as a diversified open-end
management investment company. Each subaccount purchases shares in a
specified portfolio of the Fund. Amounts allocated to each subaccount
buy shares of the portfolio for that subaccount at net asset value.
The portfolios and subaccounts are shown on page 6. We may add
additional subaccounts to invest in a new portfolio of the Fund or in
a different investment company.
We own the assets of the Variable Account. Assets equal to the
reserves and other liabilities of the Variable Account may not be
charged with liabilities from any other business we conduct. However,
we may transfer assets of the Variable Account in excess of account
reserves and liabilities to our general account. (The general account
includes all assets we own that are not in the Variable Account.)
Income and realized and unrealized gains and losses from each
subaccount of the Variable Account are credited to or charged against
that subaccount. The value of the assets in the Variable Account is
determined at the end of each Valuation Day.
9.2 ALLOCATION OF NET PREMIUMS. Any premiums received before the
Contract Date are applied entirely to the general account. On the
Contract Date, the amount in that account equal to the premium
payments received will be applied as a premium payment. Any balance
remaining for this contract will be applied as a Net Premium on that
date. After the Contract Date, payments are applied on the date we
receive them.
Each Net Premium will be applied to the subaccounts of the Variable
Account according to the Premium Allocation Percentages for this
contract. The Premium Allocation Percentages are specified in the
Application. You may change these percentages by giving Written
Notice. The change will be effective for each premium received with
or after your notice. The sum of the Premium Allocation Percentages
must be 100%, and each Premium Allocation Percentage must be a whole
number not more than 100%. We reserve the right to adjust your
allocation to eliminate fractional percentages.
9.3 TRANSFERS AMONG SUBACCOUNTS. You may transfer some or all of the
accumulated values among the subaccounts of the Variable Account. You
do this by giving Written Notice. The transfer of accumulated value
is subject to the following:
1) The total amount transferred cannot be less than the smaller of:
a) $500; and
b) The accumulated value in the subaccount(s) from which the
transfer is being made.
2) The transfer will occur at the end of the day on which we
receive Written Notice.
3) After you have made two transfers in a Contract Year, a Transfer
Charge will be deducted from each subsequent amount you transfer
during the remainder of that Contract Year. The charge will be
deducted from the total amount transferred in proportion to the
amounts transferred from each subaccount. We reserve the right
to change the amount of this charge or to waive the charge for
transfers made under an automatic transfer plan. However, the
Transfer Charge will never exceed the maximum charge shown on
page 4.
We may defer making transfers subject to the same conditions as in
Section 2.9 Deferment.
9.4 NUMBER OF UNITS. On the Contract Date, the number of units for this
contract in any subaccount is equal to:
1) The accumulated value for this contract in that subaccount;
divided by
2) The unit value for that subaccount.
The number of units for this contract in any subaccount may increase
or decrease at the end of each Valuation Period. The number of units
increases when, during the period:
1) Net Premiums are allocated to the subaccount;
2) Accumulated value is transferred to the subaccount from another
subaccount or from the general account;
3) Repayments of Debt are transferred to the subaccount; or
4) Interest is transferred from the Loan Account to the subaccount.
The number of units decreases when, during the Valuation Period:
1) Monthly Deductions are taken from the subaccount;
2) Accumulated value is transferred from the subaccount to another
subaccount or to the general account;
3) Partial Surrenders are applied against the subaccount; or
4) Contract loans are transferred from the subaccount.
The increase or decrease in the number of units for this contract in
any subaccount is equal to:
1) The dollar amount allocated or transferred to or from that
subaccount; divided by
2) The unit value for that subaccount at the end of the Valuation
Period during which the amounts are allocated or transferred.
9.5 UNIT VALUE. The unit value for a subaccount is equal to (1) divided
by (2) where:
1) Is the sum of:
a) The net asset value of the corresponding portfolio of the
subaccount at the end of the current Valuation Period; plus
b) The amount of any dividend or capital gain distribution made
by the portfolio if the "ex-dividend" date occurs during the
Valuation Period; plus or minus
c) A charge or credit for any taxes reserved for which we
determine to be a result of the investment operation of the
portfolio;
Less
d) The risk charge we deduct for each day in the Valuation
Period. This charge for mortality and expense risks is
guaranteed not to exceed, on an annual basis, 0.75% of the
daily value of the subaccount.
2) Is the number of units of that subaccount for all contracts.
Unit values are determined at the end of each Valuation Day before the
transfer or allocation of any amounts to or from the subaccounts. The
unit values may increase or decrease on each Valuation Day.
9.6 CHANGE OF INVESTMENT POLICY. The investment policy for the Variable
Account is described on page 6. We may change the investment policy
of the Variable Account with the approval of the insurance supervisory
officials of the State of Minnesota. The approval process has been
filed with the insurance department of the state in which this
contract is delivered. We will notify you if there is a material
change in investment policy.
9.7 CHANGE OF PORTFOLIO. We may determine that a portfolio has become
unsuitable for investment by a subaccount or shares of a portfolio may
cease to be available for investment. In such event, we may
substitute another portfolio of the investment company or invest in a
different investment company. This change would not be made unless
approved by:
1) The SEC; and
2) If required, the insurance supervisory officials in the state
where this contract is delivered.
============================================================================
10. EXCHANGE CONTRACT
============================================================================
10.1 EXCHANGE PRIVILEGE. Within 24 months after the Date of Issue, you
may exchange this contract for any fixed benefit permanent life
insurance contract issued by Lutheran Brotherhood. The new contract
will be on the Insured's life with no evidence of insurability
required. The exchange is subject to the following:
1) You must make written application to us at our Home Office and
surrender this contract.
2) The exchange must be made while this contract is in force.
3) The issue age and date of issue of the new contract are the same
as the issue age and Date of Issue for this contract. Premiums
will be based on rates in effect on the Date of Issue.
4) The new contract will be issued in the same Premium Class as the
Initial Face Amount for this contract. The Premium Class for
amounts in excess of the Initial Face Amount will be according
to Section 10.2(5). If this contract has an exclusion rider,
the new contract will also have such an exclusion rider.
5) The new contract will have, at your election, either:
a) A death benefit equal to the Death Benefit of this contract
on the effective date of the exchange; or
b) A net amount at risk equal to the Death Benefit of this
contract on the effective date of the exchange less the
Accumulated Value on that date.
6) The new contract may include a disability waiver benefit rider
if:
a) This contract has a disability waiver benefit rider;
b) Exchange is made before the Contract Anniversary after the
Insured's 65th birthday; and
c) The new contract has premiums payable to at least age 85.
7) Any outstanding Debt on this contract must be repaid.
8) The effective date of the exchange will be the date we receive
this contract and your written application.
10.2 EXCHANGE OF INCREASE IN FACE AMOUNT. Within 24 months after the
effective date of any increase in Face Amount according to
Section 5.3, you may exchange the increase in Face Amount for any
fixed benefit permanent life insurance contract issued by Lutheran
Brotherhood. The new contract will be on the Insured's life with no
evidence of insurability required. The exchange is subject to the
following:
1) You must make written application to us at our Home Office.
2) The exchange must be made while this contract is in force.
3) No premium may be in default at the time of the exchange.
4) The issue age and date of issue of the new contract are the same
as the attained age and effective date for the increase in Face
Amount. Premiums will be based on rates in effect on the
effective date of the increase.
5) The new contract will be issued in the same Premium Class as the
increase in Face Amount. If this contract has an exclusion
rider, the new contract will also have such an exclusion rider.
6) The new contract will have, at your election, either:
a) A death benefit equal to the amount of the increase in Face
Amount; or
b) A net amount at risk equal to the increase in Face Amount
less the Accumulated Value of this contract on the effective
date of the exchange which is considered to be part of the
increase in Face Amount (see Section 7.2).
7) The new contract may include a disability waiver benefit rider
if:
a) This contract has a disability waiver benefit rider;
b) Exchange is made before the Contract Anniversary after the
Insured's 65th birthday; and
c) The new contract has premiums payable to at least age 85.
8) The effective date of the exchange will be the date we receive
your written application.
10.3 CASH ADJUSTMENT ON EXCHANGE. Upon exchange, a cash adjustment may be
necessary to reflect differences between the accumulated values of
this contract and the new contract. The adjustment will be determined
as of the date we receive at our Home Office your written application
for exchange. If the cash adjustment is to be paid to you, we will
make the payment when the new contract is issued. If the adjustment
is to be paid by you to us, we will mail you notice of the amount due.
If this amount is not paid within 31 days of the date we mail the
notice, the exchanged coverage will terminate.
============================================================================
11. SETTLEMENT PROVISIONS
============================================================================
11.1 PAYMENT OF PROCEEDS. Proceeds from death, maturity or surrender are
payable in a lump sum unless otherwise provided. On Death Proceeds,
we will pay interest at the rate payable in Option 1 - Interest Income
or, if greater, the rate required by law. Interest is payable from
the date of death until the date of settlement. Instead of a lump
sum, proceeds of $2,000 or more may be paid under any settlement
option in Section 11.2 by means of a supplementary contract which we
will issue.
11.2 OPTIONAL PLANS OF SETTLEMENT.
OPTION 1 - INTEREST INCOME. The proceeds may be left on deposit. We
will pay interest at a rate of not less than 3% per year. These
proceeds may be withdrawn upon request.
OPTION 2 - INCOME OF A FIXED AMOUNT. We will pay an income of a
fixed amount at agreed upon intervals. This income is subject to
these conditions:
1) Income per year must not be less than 6% of the proceeds.
2) Income is paid until the proceeds, with interest credited at the
rate of 3 1/2% per year on the unpaid balance, are paid in full.
This income may be increased by the crediting of additional
interest.
OPTION 3 - INCOME FOR A FIXED PERIOD. We will pay an income for a
fixed number of years, not to exceed 30. The income will not be less
than the amounts shown in the table for this option below.
OPTION 4 - LIFE INCOME WITH GUARANTEED PERIOD. We will pay an income
for the lifetime of the payee. If the payee dies during the
guaranteed period, payments will be continued to the end of that
period. A period of 10 or 20 years may be elected. The income will
not be less than the amounts shown in the table for this option on
page 24. After the first payment is made, this option may not be
revoked or changed.
OPTION 5 - OTHER OPTIONS. The proceeds may be paid under any other
settlement option agreeable to us.
11.3 ELECTION OF AN OPTION. You may elect an option by Written Notice
during the Insured's lifetime. The option must be elected before
proceeds become payable. Assignees and third-party owners may elect
an option only with our consent. Election of Option 4 may be made
only if the payee is a natural person who is the Insured or a
beneficiary.
If Death Proceeds are payable, the beneficiary may elect a settlement
option within one year from the date of death provided that:
1) The manner of settlement has not been restricted before the
Insured's death; and
2) The Death Proceeds have not been paid.
Election of an option is subject to these conditions:
1) Payments must not be less than $25;
2) Payments are made only at annual, semiannual, quarterly or
monthly intervals; and
3) The first payment, except under Option 1 - Interest Income, is
payable as of the date the option becomes effective. Under
Option 1, interest is payable at the end of the first payment
interval.
<PAGE>
<TABLE>
<CAPTION>
Contract Number: V1234567
OPTION 3
GUARANTEED MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS
========================================================================================================================
Years Monthly Years Monthly Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable Payment Payable Payment Payable Payment
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 84.65 7 13.37 13 7.93 19 5.96 25 4.96
2 43.05 8 11.89 14 7.48 20 5.75 26 4.84
3 29.19 9 10.75 15 7.10 21 5.56 27 4.73
4 22.26 10 9.83 16 6.76 22 5.39 28 4.62
5 18.11 11 9.08 17 6.46 23 5.23 29 4.53
6 15.34 12 8.46 18 6.20 24 5.09 30 4.44
- ------------------------------------------------------------------------------------------------------------------------
Annual, Semiannual or Quarterly payments are 11.813, 5.957 and 2.991 respectively, times the Monthly payments.
========================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Contract Number: V1234567
OPTION 4
MALE PAYEE - MONTHLY LIFE INCOME
========================================================================================================================
GUARANTEED MONTHLY LIFE INCOME FOR EACH $1,000 OF PROCEEDS
========================================================================================================================
Payments Payments Payments Payments Payments Payments
Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed
on Date of for for on Date of for for on Date of for for
First Payment 10 years 20 years First Payment 10 years 20 years First Payment 10 years 20 years
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
40 3.94 3.89 65 6.08 5.28 75 7.75 5.65
45 4.20 4.11 66 6.23 5.33 76 7.92 5.65
67 6.38 5.38 77 8.09 5.65
50 4.51 4.36 68 6.54 5.43 78 8.26 5.65
55 4.91 4.66 69 6.71 5.48 79 8.42 5.65
- ------------------------------------------------------------------------------------------------------------------------
60 5.42 4.97 70 6.87 5.52 80 8.57 5.65
61 5.54 5.04 71 7.05 5.55 85 9.20 5.65
62 5.67 5.10 72 7.22 5.59
63 5.80 5.16 73 7.40 5.62 90 9.59 5.65
64 5.94 5.22 74 7.57 5.64 95 9.73 5.65
========================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Contract Number: V1234567
OPTION 4
FEMALE PAYEE - MONTHLY LIFE INCOME
========================================================================================================================
GUARANTEED MONTHLY LIFE INCOME FOR EACH $1,000 OF PROCEEDS
========================================================================================================================
Payments Payments Payments Payments Payments Payments
Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed
on Date of for for on Date of for for on Date of for for
First Payment 10 years 20 years First Payment 10 years 20 years First Payment 10 years 20 years
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
40 3.72 3.70 65 5.50 5.05 75 7.14 5.60
45 3.92 3.88 66 5.63 5.12 76 7.34 5.63
67 5.77 5.19 77 7.54 5.65
50 4.18 4.11 68 5.91 5.25 78 7.74 5.65
55 4.51 4.38 69 6.07 5.32 79 7.94 5.65
- ------------------------------------------------------------------------------------------------------------------------
60 4.93 4.70 70 6.23 5.37 80 8.13 5.65
61 5.03 4.77 71 6.40 5.43 85 8.97 5.65
62 5.14 4.84 72 6.58 5.48
63 5.25 4.91 73 6.76 5.52 90 9.48 5.65
64 5.37 4.98 74 6.95 5.57 95 9.73 5.65
========================================================================================================================
</TABLE>
<PAGE>
LUTHERAN BROTHERHOOD
[LOGO] VARIABLE INSURANCE
PRODUCTS COMPANY
A Stock Life Insurance Company FLEXIBLE PREMIUM
Minneapolis, Minnesota 55415 VARIABLE LIFE INSURANCE
============================================================================
Death Proceeds payable at death prior to Maturity Date.
Adjustable death benefit.
Flexible premiums.
Return on investments reflected in contract benefits.
Nonparticipating.
Settlement options to provide retirement income.
<PAGE>
============================================================================
AMENDATORY AGREEMENT
============================================================================
PAGE 1
On page 1 of this contract, the sentence:
IF YOU PAY PREMIUMS SUFFICIENT TO MEET THE DEATH BENEFIT GUARANTEE
PREMIUM REQUIREMENT, THIS CONTRACT WILL REMAIN IN FORCE AT LEAST UNTIL
THE DEATH BENEFIT GUARANTEE TERMINATION AGE SHOWN ON PAGE 3.
Is amended to read:
IF YOU MEET THE DEATH BENEFIT GUARANTEE PREMIUM REQUIREMENT (SEE
SECTION 4.6), THIS CONTRACT WILL REMAIN IN FORCE AT LEAST UNTIL THE
DEATH BENEFIT GUARANTEE TERMINATION AGE SHOWN ON PAGE 3.
4.2 NET PREMIUM
In Section 4.2 NET PREMIUM, the sentence:
The Percent of Premium Charge is shown on page 4;
Is amended to read:
The Percent of Premium Charge is 5.0% of each premium;
4.6 DEATH BENEFIT GUARANTEE AND DEATH BENEFIT GUARANTEE PREMIUM.
In Section 4.6 DEATH BENEFIT GUARANTEE AND DEATH BENEFIT GUARANTEE
PREMIUM, paragraph (1) is amended to read as follows:
1) The Death Benefit Guarantee Premium Requirement is met. On any
Monthly Anniversary, this requirement is met if the sum of premiums
paid less any Partial Surrenders and any unpaid contract loans is
greater than or equal to the sum of Death Benefit Guarantee
Premiums from the Date of Issue through that Monthly Anniversary.
However, if the Death Benefit Guarantee Premium Requirement is not
met on a Monthly Anniversary but the Cash Surrender Value less any
unearned interest is greater than or equal to the sum of Death
Benefit Guarantee Premiums from the Date of Issue through that
Monthly Anniversary, then the sum of premiums paid as used above
will be deemed to increase to the amount necessary to meet the
Death Benefit Guarantee Premium Requirement.
In addition, a portion of any Partial Surrender or contract loan
may be excluded when determining if the Death Benefit Guarantee
Premium Requirement is met. The amount excluded is calculated on
the date of the Partial Surrender or contract loan and is equal to
the lesser of:
a) The amount of Partial Surrender or unpaid contract loan; and
b) The excess, if any, of the Cash Surrender Value less unearned
interest on any unpaid contract loans over the greater of (i)
and (ii) where:
i) Is the sum of premiums paid less the amount of any Partial
Surrenders and unpaid contract loans not previously
excluded when determining if the Death Benefit Guarantee
Premium Requirement was met; and
ii) Is the sum of Death Benefit Guarantee Premiums from the
Date of Issue through the Monthly Anniversary on or next
after the date of Partial Surrender or contract loan.
5.2 CHANGE OF DEATH BENEFIT OPTION.
In Section 5.2 CHANGE OF DEATH BENEFIT OPTION, the sentence:
However, this change may not be made if it would reduce the Face
Amount to less than the Minimum Face Amount shown on page 3.
Is amended to read:
However, this change may not be made if it would reduce the Face
Amount to less than $5,000.
5.3 INCREASE IN FACE AMOUNT.
In Section 5.3 INCREASE IN FACE AMOUNT, the sentence:
You may increase the Face Amount any time before the Contract
Anniversary on or next after the Insured's 75th birthday.
Is amended to read:
You may increase the Face Amount any time before the Contract
Anniversary on or next after the Insured's 80th birthday.
6.4 PARTIAL SURRENDER.
In Section 6.4 PARTIAL SURRENDER, the sentence:
The Face Amount may not be reduced to less than the Minimum Face
Amount;
Is amended to read:
The Face Amount may not be reduced to less than $5,000;
INCREASE IN SPOUSE TERM INSURANCE.
If a Spouse Adjustable Term Insurance Benefit is attached to this
contract, then in Paragraph 4 INCREASE IN SPOUSE TERM INSURANCE, the
sentence:
You may increase the amount of Spouse Term Insurance any time before
the Rider Anniversary next after the Spouse's 75th birthday.
Is amended to read:
You may increase the amount of Spouse Term Insurance any time before
the Rider Anniversary next after the Spouse's 80th birthday.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/Robert P. Gandrud [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/David J. Larson [The word-SAMPLE-is stamped over signature]
============================================================================
#20528
EXHIBIT 1A5(b)
------
[VR2-EW-WMD-1]
RIDER Contract Number: V1234567
============================================================================
WAIVER OF MONTHLY DEDUCTION BENEFIT
============================================================================
1. CONSIDERATION. We include this rider as part of this contract based
on the Application signed by the applicant and the deduction of the
monthly cost as stated on page 5-WMD.
2. DATE OF ISSUE OF THIS RIDER. Unless otherwise stated on page 5-WMD,
the date of issue of this rider is the Date of Issue of this contract.
3. THE BENEFIT. Upon receiving proof that Total Disability has continued
for six consecutive months, we will credit premiums to this contract on
each Monthly Anniversary during the Benefit Period while Total
Disability continues. The premium credited on each Monthly Anniversary
will be equal to the amount which provides the Monthly Deduction for
that Monthly Anniversary.
In addition, for each Monthly Anniversary that occurred during the
Benefit Period but before we received proof of Total Disability, we
will credit a Net Premium equal to the Monthly Deduction on that
Monthly Anniversary. This amount will be credited on the day your
claim for waiver of Monthly Deductions is approved by us.
4. BENEFIT PERIOD. The Benefit Period is defined below:
1) If Total Disability begins at or after Age 5, but before Age 60,
the Benefit Period starts on the date Total Disability begins
and continues to the Maturity Date.
2) If Total Disability begins at or after Age 60, but before Age
65, the Benefit Period starts on the date Total Disability
begins and continues until the later of:
a) Age 65 of the Insured; and
b) The date two years after Total Disability begins.
5. DEFINITION OF AGE. For purposes of this rider, "Age 5", "Age 60" and
"Age 65" mean the Contract Anniversary after the Insured's 5th, 60th,
and 65th birthday, respectively.
6. DEFINITION OF TOTAL DISABILITY. Total Disability is a disability of
the Insured:
1) Which begins at or after Age 5, but before Age 65;
2) Which results from bodily injury sustained or disease which
first appears while both this contract and this rider are in
force; and
3) Which completely prevents the Insured from engaging in an
Occupation for gain or profit. During the first 24 months of
disability, Occupation is the Insured's regular occupation when
disability begins. After this, it is any occupation for which
the Insured is or becomes qualified by reason of education,
training or experience. However:
a) If the Insured is a full-time student under age 18 when Total
Disability begins, Occupation for gain or profit means
attending school outside the home. This definition applies
until the disabled Insured reaches age 18, or for 24 months
if later.
b) If the Insured is primarily a homemaker when Total Disability
begins, Occupation for gain or profit means performing
household duties.
7. PRESUMPTIVE TOTAL DISABILITY. Total Disability is presumed upon the
total and permanent loss at or after Age 5, but before Age 65, of:
1) Use of both hands or feet; or
2) Use of one hand and one foot; or
3) Sight in both eyes.
This presumption will continue for 60 months from the date of loss.
However, benefits are payable only as provided in Paragraph 3 The
Benefit. After the 60 month period, Total Disability is no longer
presumed.
8. RISKS NOT ASSUMED. No premiums will be credited under this rider if
the Total Disability results from:
1) Intentionally self-inflicted injury, while sane or insane; or
2) Any act of war, declared or undeclared, or any act incident to
war.
9. NOTICE AND PROOF OF CLAIM. Written notice and proof of claim must be
given to us at our Home Office while the Insured is living and Total
Disability continues or as soon as reasonably possible.
10. PROOF OF CONTINUANCE OF TOTAL DISABILITY. Proof of continuance of
Total Disability, at your expense, will be required at reasonable
intervals. If you do not give proof, no further premiums will be
credited under this rider. After premiums have been credited for two
full years, we will not require proof more than once a year. As part
of any proof we may require the Insured, at our expense, to have an
examination by a physician whom we will name.
11. BENEFITS AFTER PREMIUM IN DEFAULT. No premiums will be credited under
this rider until your claim for waiver of Monthly Deductions is
approved. If a premium is in default, your claim for waiver of Monthly
Deductions will be approved only if:
1) Total Disability began before the end of the grace period of the
first premium in default;
2) Written notice of claim is given within one year from the end of
the grace period of the first premium in default, or as soon as
reasonably possible; and
3) All other conditions of this rider are met.
If Total Disability began during the grace period of the first premium
in default, no claim will be considered until the required premium is
paid.
12. CONTRACT BENEFITS NOT REDUCED. Premiums credited under this rider
will not reduce any other contract benefits. Accumulated Values and
all other benefits will be the same as if the credited premiums had
been paid in cash.
13. TERMINATION. This rider will terminate on the earliest of:
1) The date the Insured reaches Age 65;
2) The date this contract terminates; and
3) The date you give Written Notice to cancel this rider.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/ROBERT P. GANDRUD [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
<PAGE>
[VR2-EW-5]
Date of Issue of this Rider: JULY 1, 1991 Contract Number: V1234567
============================================================================
WAIVER OF MONTHLY DEDUCTION BENEFIT
============================================================================
INSURED: JOHN DOE FORM VR2-EW-WMD-1
AGE: 35 SEX: MALE
TABLE OF MONTHLY COSTS
BEGINNING ON RIDER
ANNIVERSARY ATTAINED AGE* MONTHLY COST#
JUL 1,
1991 35 7.0%
1992 36 7.0
1993 37 7.0
1994 38 7.0
1995 39 7.0
1996 40 8.0
1997 41 8.0
1998 42 8.0
1999 43 9.0
2000 44 9.0
2001 45 10.0
2002 46 10.0
2003 47 10.0
2004 48 10.0
2005 49 10.0
2006 50 11.0
2007 51 12.0
2008 52 14.0
2009 53 16.0
2010 54 18.0
2011 55 20.0
2012 56 22.0
2013 57 25.0
2014 58 27.0
2015 59 30.0
2016 60 7.0
2017 61 6.0
2018 62 5.0
2019 63 5.0
2020 64 5.0
* AGE LAST BIRTHDAY ON RIDER ANNIVERSARY ON OR IMMEDIATELY PRIOR TO MONTHLY
ANNIVERSARY.
# PERCENTAGE OF THE SUM OF THE MONTHLY COST OF INSURANCE, THE MONTHLY
ADMINISTRATIVE CHARGES, ANY INITIAL MONTHLY ADMINISTRATIVE CHARGES FOR
INCREASES AND THE MONTHLY COST OF ANY OTHER ADDITIONAL BENEFITS.
<PAGE>
[VR2-EZ-WSA-1]
RIDER Contract Number: V1234567
============================================================================
WAIVER OF SELECTED AMOUNT BENEFIT
============================================================================
1. CONSIDERATION. We include this rider as part of this contract based
on the Application signed by the applicant and the deduction of the
monthly cost as stated on page 5-WSA.
2. DATE OF ISSUE OF THIS RIDER. Unless otherwise stated on page 5-WSA,
the date of issue of this rider is the Date of Issue of this contract.
3. THE BENEFIT. Upon receiving proof that Total Disability has continued
for six consecutive months, we will credit premiums to this contract on
each Monthly Anniversary during the Benefit Period while Total
Disability continues. The premium credited on a Monthly Anniversary
will be equal to the greater of:
1) One-twelfth of the Selected Amount on the date Total Disability
began; and
2) The amount which provides the Monthly Deduction for that Monthly
Anniversary.
In addition, for each Monthly Anniversary that occurred during the
Benefit Period but before we received proof of Total Disability, we
will credit the greater of:
1) A premium equal to one-twelfth of the Selected Amount on the
date Total Disability began; and
2) A Net Premium equal to the Monthly Deduction on that Monthly
Anniversary.
This amount will be credited on the day your claim for waiver is
approved by us.
4. BENEFIT PERIOD. The Benefit Period is defined below:
1) If Total Disability begins at or after Age 5, but before Age 60,
the Benefit Period starts on the date Total Disability begins
and continues to the Maturity Date.
2) If Total Disability begins at or after Age 60, but before
Age 65, the Benefit Period starts on the date Total Disability
begins and continues until the later of:
a) Age 65 of the Insured; and
b) The date two years after Total Disability begins.
5. DEFINITION OF AGE. For purposes of this rider, "Age 5", "Age 60" and
"Age 65" mean the Contract Anniversary after the Insured's 5th, 60th,
and 65th birthday, respectively.
6. DEFINITION OF TOTAL DISABILITY. Total Disability is a disability of
the Insured:
1) Which begins at or after Age 5, but before Age 65;
2) Which results from bodily injury sustained or disease which
first appears while both this contract and this rider are in
force; and
3) Which completely prevents the Insured from engaging in an
Occupation for gain or profit. During the first 24 months of
disability, Occupation is the Insured's regular occupation when
disability begins. After this, it is any occupation for which
the Insured is or becomes qualified by reason of education,
training or experience. However:
a) If the Insured is a full-time student under age 18 when Total
Disability begins, Occupation for gain or profit means
attending school outside the home. This definition applies
until the disabled Insured reaches age 18, or for 24 months
if later.
b) If the Insured is primarily a homemaker when Total Disability
begins, Occupation for gain or profit means performing
household duties.
7. PRESUMPTIVE TOTAL DISABILITY. Total Disability is presumed upon the
total and permanent loss at or after Age 5, but before Age 65, of:
1) Use of both hands or both feet; or
2) Use of one hand and one foot; or
3) Sight in both eyes.
This presumption will continue for 60 months from the date of loss.
However, benefits are payable only as provided in Paragraph 3 The
Benefit. After the 60 month period, Total Disability is no longer
presumed.
8. RISKS NOT ASSUMED. No premiums will be credited under this rider if
the Total Disability results from:
1) Intentionally self-inflicted injury, while sane or insane; or
2) Any act of war, declared or undeclared, or any act incident
to war.
9. NOTICE AND PROOF OF CLAIM. Written notice and proof of claim must be
given to us at our Home Office while the Insured is living and Total
Disability continues or as soon as reasonably possible.
10. PROOF OF CONTINUANCE OF TOTAL DISABILITY. Proof of continuance of
Total Disability, at your expense, will be required at reasonable
intervals. If you do not give proof, no further premiums will be
credited under this rider. After premiums have been credited for two
full years, we will not require proof more than once a year. As part
of any proof we may require the Insured, at our expense, to have an
examination by a physician whom we will name.
11. BENEFITS AFTER PREMIUM IN DEFAULT. No premiums will be credited under
this rider until your claim for waiver is approved. If a premium is in
default, your claim for waiver will be approved only if:
1) Total Disability began before the end of the grace period of the
first premium in default;
2) Written notice of claim is given within one year from the end of
the grace period of the first premium in default, or as soon as
reasonably possible; and
3) All other conditions of this rider are met.
If Total Disability began during the grace period of the first premium
in default, no claim will be considered until the required premium is
paid.
12. CONTRACT BENEFITS NOT REDUCED. Premiums credited under this rider
will not reduce any other contract benefits. Accumulated Values and
all other benefits will be the same as if the credited premiums had
been paid in cash.
13. TERMINATION. This rider will terminate on the earliest of:
1) The date the Insured reaches Age 65;
2) The date this contract terminates; and
3) The date you give Written Notice to cancel this rider.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/ROBERT P. GANDRUD [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
<PAGE>
[VR2-EZ-5]
Date of Issue of this Rider: JULY 1, 1991 Contract Number: V1234567
============================================================================
WAIVER OF SELECTED AMOUNT BENEFIT
============================================================================
INSURED: JOHN DOE FORM VR2-EZ-WSA-1
AGE: 35 SEX: MALE SELECTED AMOUNT $1,200.00
TABLE OF MONTHLY COSTS
BEGINNING ON RIDER
ANNIVERSARY ATTAINED AGE* MONTHLY COST#
JUL 1,
1991 35 3.0%
1992 36 3.0
1993 37 3.0
1994 38 3.0
1995 39 3.0
1996 40 3.5
1997 41 3.5
1998 42 3.5
1999 43 4.0
2000 44 4.5
2001 45 4.5
2002 46 5.0
2003 47 5.0
2004 48 5.0
2005 49 5.0
2006 50 6.0
2007 51 6.5
2008 52 8.0
2009 53 10.0
2010 54 12.5
2011 55 15.0
2012 56 18.0
2013 57 23.0
2014 58 27.0
2015 59 30.0
2016 60 7.0
2017 61 6.0
2018 62 5.0
2019 63 5.0
2020 64 5.0
* AGE LAST BIRTHDAY ON RIDER ANNIVERSARY ON OR IMMEDIATELY PRIOR TO MONTHLY
ANNIVERSARY.
# PERCENTAGE OF THE GREATER OF (1) THE SUM OF THE MONTHLY COST OF
INSURANCE, THE MONTHLY ADMINISTRATIVE CHARGES, ANY INITIAL MONTHLY
ADMINISTRATIVE CHARGES FOR INCREASES AND THE MONTHLY COST OF ANY OTHER
ADDITIONAL BENEFITS AND (2) ONE-TWELFTH OF THE SELECTED AMOUNT.
<PAGE>
[VR2-EC-CIB-1]
RIDER Contract Number: V1234567
============================================================================
CHILD TERM LIFE INSURANCE BENEFIT
============================================================================
1. CONSIDERATION. We include this rider as part of this contract based
on the Application signed by the applicant and the deduction of the
monthly cost as stated on page 5-CIB.
2. DEFINITIONS.
2a. DATE OF ISSUE OF THIS RIDER. Unless otherwise stated on page 5-CIB,
the date of issue of this rider is the Date of Issue of this contract.
2b. RIDER ANNIVERSARY. The same month and day for years after issue of
this rider as in the date of issue of this rider.
2c. CHILD. A Child insured under this rider is:
1) Any child named in the Application for this rider;
2) Any live child born to the Insured after the date of issue of
this rider; and
3) Any child legally adopted by the Insured after the date of issue
of this rider and prior to the Rider Anniversary after the
Child's 18th birthday.
3. THE BENEFIT. We will provide the benefits described below upon each
of the following events:
3a. DEATH OF A CHILD. We will pay the amount of Child Term Insurance
shown for this rider on page 5-CIB to the Child's beneficiary upon
receiving proof that the death of the Child occurred before:
1) This rider has terminated; and
2) The Rider Anniversary next after the Child's 21st birthday.
3b. DEATH OF THE INSURED. Upon receiving proof that the death of the
Insured occurred before this rider terminated, any Child Term
Insurance then in force will become Child Paid-Up Term Insurance to
the Rider Anniversary after the Child's 21st birthday. The amount of
Child Paid-Up Term Insurance is the same as the amount of Child Term
Insurance.
4. MONTHLY COST. The monthly cost for this rider is shown on page 5-CIB.
It is deducted only while at least one child is Insured under this
rider. If no children are insured on the date of birth or adoption of
any child, you must give us Written Notice of birth or adoption before
the sixth Monthly Anniversary after that date. The monthly cost will
be then be deducted beginning on the sixth Monthly Anniversary after
the date of birth or adoption. If the required notice is not given,
Insurance on that Child will terminate on that sixth Monthly
Anniversary.
5. OPTION TO PURCHASE INSURANCE. On the Rider Anniversary after a
Child's 21st birthday, that Child will have the option to purchase an
insurance contract issued by us or Lutheran Brotherhood on his or her
life with no evidence of insurability required. This option to
purchase will be effective for 31 days. If the Child dies while this
option is in effect and before the option has been exercised, we will
pay the amount of Child Term Insurance or Child Paid-Up Term Insurance
to the Child's beneficiary. This option is subject to the following:
1) Written application must be made to us at our Home Office.
2) No premium may be in default on the date of purchase.
3) The new contract's date of issue is the date of purchase. The
issue age is the Child's age last birthday on that date.
Premiums will be based on standard rates in effect on the date
of purchase.
4) The amount of the new contract may not exceed five times the
amount of the Child Term Insurance.
5) The new contract may be any life insurance contract offered at
the time of purchase.
6) If the new contract is a whole life insurance contract with
premiums payable to at least age 85, then the new contract may
contain a disability waiver benefit rider. However, the
disability waiver benefit rider on the new contract will not
cover disability resulting from injury or disease occurring
prior to the date of purchase.
6. INCONTESTABILITY. With respect to each Child, we will not contest the
validity of this rider after it has been in force during the lifetime
of that Child for two years from the date of issue of this rider. This
provision will apply from the date this rider is reinstated with regard
to statements made in the application for reinstatement.
7. EXCLUSION: SUICIDE. If the Insured dies by suicide, while sane or
insane, within two years after the date of issue of this rider, this
rider will terminate and Paragraph 3b of this rider will not apply.
8. REINSTATEMENT. This rider may be reinstated if the contract is
reinstated. To reinstate this rider we require evidence of each
Child's insurability which meets our standards. Paragraph 6
Incontestability will apply from the date the rider is reinstated with
regard to statements made in the application for reinstatement.
9. BENEFICIARY. The beneficiary of the insurance on the children is
named in the Application. You may change the beneficiary for a Child
by giving us Written Notice while the Child is living. If the owner
dies and the Child has attained age 18, the Child may change the
beneficiary by making a written request to us. If the owner dies and
the Child has not attained age 18, the Child's legal guardian may
change the beneficiary by making a written request to us.
The change will become effective if we receive the notice or request at
our Home Office and we acknowledge the change. The effective date of
the change will be the date the notice or request was signed. We will
not be liable for any payment made or action taken by us before we
receive the notice or request.
10. SURRENDER OF CHILD PAID-UP TERM INSURANCE. If this rider is in force
as Child Paid-Up Term Insurance, you may surrender the Child Paid-Up
Term Insurance for its accumulated value by giving Written Notice while
the Child is alive. The surrender will be effective on the date the
notice is signed. The accumulated value is the net single premium for
the Child Paid-Up Term Insurance. Values are not less than the minimum
values required by law. Information on applicable accumulated values
will be furnished upon request.
If we receive Written Notice to surrender the Child Paid-Up Term
Insurance within 30 days after a Rider Anniversary, the accumulated
value will not be less than it was on that anniversary.
11. TERMINATION. This rider will terminate on the earlier of:
1) The date this contract terminates; and
2) The date you give Written Notice to cancel this rider.
However, if this contract terminates due to the death of the Insured,
this rider will remain in force until all Child Paid-Up Term Insurance
under this rider terminates.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/ROBERT P. GANDRUD [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
<PAGE>
[VR2-EC-5]
Date of Issue of this Rider: JULY 1, 1991 Contract Number: V1234567
============================================================================
CHILD TERM LIFE INSURANCE BENEFIT
============================================================================
FORM VR2-EC-CIB-1
CHILD TERM INSURANCE
BIRTH TO 15 DAYS $0
15 DAYS TO 6 MONTHS $5,000
6 MONTHS TO RIDER ANNIVERSARY
AFTER 21ST BIRTHDAY $10,000
MONTHLY COST: $4.50
MONTHLY COST APPLIES ONLY WHILE AT LEAST ONE CHILD IS INSURED UNDER THIS
RIDER. SEE PARAGRAPH 4 OF FORM VR2-EC-CIB-1
<PAGE>
[VR2-ES-SIB-1]
RIDER Contract Number: V1234567
============================================================================
SPOUSE ADJUSTABLE TERM LIFE INSURANCE BENEFIT
============================================================================
1. CONSIDERATION. We include this rider as part of this contract based
on the Application signed by the applicant and the deduction of the
monthly cost as stated on page 5-SIB.
2. DEFINITIONS.
2a. DATE OF ISSUE OF THIS RIDER. Unless otherwise stated on page 5-SIB,
the date of issue of this rider is the Date of Issue of this contract.
2b. RIDER ANNIVERSARY. The same month and day for years after issue of
this rider as in the date of issue of this rider.
2c. SPOUSE. The Spouse is the Insured's Spouse named on page 5-SIB.
2d. SPOUSE'S ATTAINED AGE. The Spouse's Attained Age on any day is the
Spouse's age last birthday on the Rider Anniversary on or immediately
prior to that day.
3. THE BENEFIT. Upon receiving proof that the death of the Spouse
occurred before this rider terminated, we will pay to the Spouse's
beneficiary the amount of Spouse Term Insurance shown on page 5-SIB.
4. INCREASE IN SPOUSE TERM INSURANCE. You may increase the amount of
Spouse Term Insurance any time before the Rider Anniversary next after
the Spouse's 80th birthday. The increase is subject to the following:
1) You must make written application to us at our Home Office.
2) We will require evidence of insurability which meets our
standards.
3) The increase must be at least $10,000.
4) The Cash Surrender Value of this contract must not be less than
the Monthly Deduction on the effective date of the increase
(unless the Death Benefit Guarantee is in force).
5) The Spouse Initial Monthly Administrative Charge for the
increase (see Paragraph 6(3)) will be charged on the effective
date of the increase and then on each Monthly Anniversary until
120 charges have been made.
6) The effective date of the increase will be the date shown on the
supplemental contract schedule that we will mail to you.
Paragraph 10 Incontestability and Paragraph 11 Exclusion: Suicide will
apply to the increase from its effective date with regard to statements
made in the application for increased insurance.
5. DECREASE IN SPOUSE TERM INSURANCE. You may decrease the amount of
Spouse Term Insurance at any time. The decrease is subject to the
following:
1) You must give Written Notice.
2) The decrease will be applied, in successive order, against:
a) The most recent increase in the amount of Spouse Term
Insurance;
b) The next most recent increase(s); then
c) The initial amount of Spouse Term Insurance.
3) The remaining amount of Spouse Term Insurance must not be less
than $25,000.
4) The effective date of the decrease will be the Monthly
Anniversary on or next after the date we receive Written Notice.
6. MONTHLY COST. The monthly cost of this benefit to be deducted on each
Monthly Anniversary is the sum of:
1) The Spouse Cost of Insurance. The amount is determined on each
Monthly Anniversary. It is equal to the Spouse Cost of
Insurance Rate multiplied by the amount of Spouse Term
Insurance;
2) The Spouse Monthly Administrative Charge. This charge is the
sum of:
a) The Spouse Basic Monthly Administrative Charge shown on
page 5-SIB; and
b) The Spouse Initial Monthly Administrative Charge. This is a
charge per $1,000 of the initial amount of Spouse Term
Insurance. However, if the initial amount of Spouse Term
Insurance is decreased, the charge will be based on the
amount of Spouse Term Insurance remaining after the decrease.
The charge is made on the Date of Issue of this Rider and
then on each Monthly Anniversary until a total of 120 charges
have been made. The charge per $1,000 is shown on
page 5-SIB; and
3) Any Spouse Initial Monthly Administrative Charge for increases.
This is a charge per $1,000 of increase in Spouse Term
Insurance. However, if the increased insurance is later
decreased, the charge will be based on the amount of the
increase in Spouse Term Insurance remaining in force after the
decrease. The charge is made on the effective date of the
increase and then on each Monthly Anniversary until 120 charges
have been made. The charge is based on the Spouse's Attained
Age on the date of increase. The charge per $1,000 is shown on
page 5-SIB.
7. SPOUSE COST OF INSURANCE RATE. We will determine the Spouse Cost of
Insurance Rate monthly. The rate is based on the Spouse's Premium
Class, sex, Issue Age and Attained Age.
The Premium Class for the initial amount of Spouse Term Insurance is
shown on page 5-SIB. The Premium Class for any increase in Spouse Term
Insurance will be determined on the effective date of the increase.
The Cost of Insurance Rate for the initial amount of Spouse Term
Insurance and for any increase in Spouse Term Insurance with the same
Premium Class as shown on page 5-SIB will not exceed the rates shown on
page 5-SIB. For any amount of Spouse Term Insurance with Premium Class
other than "standard," "smoker" or "nonsmoker," the maximum cost is
increased in one or both of the following ways, as specified in the
contract schedule pages:
1) The maximum Spouse Cost of Insurance Rate is multiplied by a
percentage rating.
2) An extra monthly premium is added to the Spouse Cost of
Insurance.
We may charge less than the maximum rate. Any change in Cost of
Insurance Rates will apply to all Spouses of the same Premium Class,
sex, Issue Age and attained age.
8. CONVERSION PRIVILEGE. You may convert this rider to any life
insurance contract, other than term insurance, that is offered by us or
Lutheran Brotherhood at the time of conversion. The new contract will
be on the life of the Spouse with no evidence of insurability required.
Conversion is subject to the following:
1) Written application must be made to us at our Home Office and
this rider must be surrendered.
2) Conversion must be made while this rider is in force and before
the Rider Anniversary after the 75th birthday of the Spouse.
However, if the Insured dies at any time while this rider is in
force, you may convert this rider within 60 days of the date of
the Insured's death. If the Insured is the owner of this
contract, then the Spouse may convert this rider within 60 days
of that date.
3) No premium may be in default at the time of conversion.
4) The new contract's date of issue is the date of conversion. The
issue age is the Spouse's age last birthday on that date.
Premiums will be based on rates in effect on the date of
conversion.
5) The new contract will have its own Incontestability and Suicide
provisions measured from the date of issue. As used in these
provisions, if an increase in Spouse Term Insurance is
converted, the date of issue will be the effective date of the
increase. Otherwise, the date of issue will be the date of
issue of this rider.
6) The new contract will be issued on the same Premium Class as
this rider. If any exclusion rider applies to this rider, the
new contract will also have such an exclusion rider.
7) The amount of the new contract may not exceed the amount of the
Spouse Term Insurance.
9. MISSTATEMENT OF AGE OR SEX. If the Spouse's age or sex has been
misstated, contract values will be adjusted using the most recent
Spouse Cost of Insurance Rates to the amounts that would have been
provided based on the correct age and sex.
10. INCONTESTABILITY. We will not contest the validity of this rider
after it has been in force during the lifetime of the Spouse for two
years from the date of issue of this rider.
If the amount of Spouse Term Insurance is increased according to
Paragraph 4 this provision will apply to the increase from its
effective date with regard to statements made in the application for
increased insurance. This provision will apply from the date this
rider is reinstated with regard to statements made in the application
for reinstatement.
11. EXCLUSION: SUICIDE. If the Spouse dies by suicide, while sane or
insane, within two years after the date of issue of this rider, the
benefit of this rider is limited to the sum of the monthly cost
deductions made for this rider.
If the Spouse dies by suicide, while sane or insane, within two years
from the effective date of an increase in the amount of Spouse Term
Insurance according to Paragraph 4, the benefit with respect to the
increase is limited to the sum of the monthly cost deductions made for
the increase.
12. REINSTATEMENT. This rider may be reinstated if the contract is
reinstated. To reinstate this rider we require evidence of the
Spouse's insurability which meets our standards. Paragraph 10
Incontestability will apply from the date the rider is reinstated with
regard to statements made in the application for reinstatement.
13. BENEFICIARY. The beneficiary of this rider is named in the
Application. You may change the beneficiary by making a written
request to us. The change will become effective if we receive the
notice or request at our Home Office and we acknowledge the change.
The effective date of the change will be the date the notice or request
was signed. We will not be liable for any payment made or action taken
by us before we receive the notice or request.
14. TERMINATION. This rider will terminate on the earliest of:
1) The Rider Anniversary after the 96th birthday of the Spouse;
2) The date this contract terminates; and
3) The date you give Written Notice to cancel this rider.
However, if this contract terminates due to the death of the Insured,
this rider will remain in force until the earlier of:
1) 60 days after the death of the Insured; and
2) The date this rider is converted.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/ROBERT P. GANDRUD [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
<PAGE>
[VR2-ES-5]
Date of Issue of this Rider: JULY 1, 1991 Contract Number: V1234567
============================================================================
SPOUSE ADJUSTABLE TERM LIFE INSURANCE BENEFIT
============================================================================
SPOUSE: JANE DOE FORM VR2-ES-SIB-1
SPOUSE AGE: 35 SPOUSE SEX: FEMALE
SPOUSE TERM INSURANCE: $50,000
PREMIUM CLASS: NONSMOKER
SPOUSE MONTHLY ADMINISTRATIVE CHARGES:
BASIC CHARGE: $2.00
INITIAL CHARGE: $0.04 PER $1,000 OF SPOUSE TERM INSURANCE, CHARGED ONLY
IN THE FIRST 120 MONTHLY DEDUCTIONS ON OR AFTER THE
DATE OF ISSUE OF THIS RIDER.
SPOUSE INITIAL MONTHLY
BEGINNING ON RIDER SPOUSE'S SPOUSE COST OF ADMINISTRATIVE CHARGE
ANNIVERSARY ATTAINED AGE INSURANCE RATE* FOR INCREASES#
JUL 1,
1991 35 $ 0.12 $ 0.04
1992 36 0.13 0.04
1993 37 0.14 0.04
1994 38 0.15 0.04
1995 39 0.16 0.04
1996 40 0.18 0.05
1997 41 0.19 0.05
1998 42 0.21 0.05
1999 43 0.22 0.05
2000 44 0.24 0.05
2001 45 0.25 0.05
2002 46 0.27 0.05
2003 47 0.29 0.05
2004 48 0.31 0.05
2005 49 0.33 0.05
2006 50 0.36 0.06
2007 51 0.38 0.06
2008 52 0.42 0.06
2009 53 0.45 0.06
2010 54 0.49 0.06
2011 55 0.53 0.06
2012 56 0.56 0.06
2013 57 0.60 0.06
2014 58 0.64 0.06
2015 59 0.68 0.06
2016 60 0.73 0.07
2017 61 0.79 0.07
2018 62 0.87 0.07
2019 63 0.96 0.07
2020 64 1.07 0.07
2021 65 1.18 0.07
2022 66 1.30 0.07
2023 67 1.42 0.07
2024 68 1.55 0.07
2025 69 1.69 0.07
2026 70 1.85 0.07
2027 71 2.05 0.07
2028 72 2.29 0.07
2029 73 2.59 0.07
2030 74 2.92 0.07
2031 75 3.30 0.07
2032 76 3.71 0.07
2033 77 4.14 0.07
2034 78 4.61 0.07
2035 79 5.14 0.07
2036 80 5.73 0.07
2037 81 6.41
2038 82 7.20
2039 83 8.09
2040 84 9.07
2041 85 10.13
2042 86 11.26
2043 87 12.46
2044 88 13.74
2045 89 15.09
2046 90 16.54
2047 91 18.11
2048 92 19.87
2049 93 21.94
2050 94 24.60
2051 95 28.41
* MAXIMUM MONTHLY COST PER $1,000 INSURANCE FOR NONSMOKER PREMIUM CLASS,
BASED ON COMMISSIONERS 1980 STANDARD ORDINARY MORTALITY TABLE FOR
NONSMOKERS.
# MONTHLY CHARGE PER $1,000 OF INCREASE IN SPOUSE TERM INSURANCE, CHARGED
ONLY IN THE FIRST 120 MONTHLY DEDUCTIONS ON OR AFTER THE EFFECTIVE DATE
OF THE INCREASE.
<PAGE>
[VR2-EA-ADB-1]
RIDER Contract Number: V1234567
============================================================================
ACCIDENTAL DEATH BENEFIT
============================================================================
1. CONSIDERATION. We include this rider as part of this contract based
on the Application signed by the applicant and the deduction of the
monthly cost as stated on page 5-ADB.
2. DATE OF ISSUE OF THIS RIDER. Unless otherwise stated on page 5-ADB,
the date of issue of this rider is the Date of Issue of this contract.
3. THE BENEFIT. We will pay to the beneficiary as part of the Death
Proceeds the Accidental Death Benefit shown on page 5-ADB upon
receiving proof that the death of the Insured:
1) Resulted from accidental bodily injury directly and
independently of all other causes;
2) Occurred within 120 days of the date of injury; and
3) Occurred before this rider terminated.
4. DEATHS NOT COVERED. The Accidental Death Benefit is not payable if
the Insured's death results directly or indirectly, in whole or in
part, from:
1) Infirmity or disease of the body or mind; or
2) Infection, unless it is a result of an accidental bodily
injury; or
3) Suicide, while sane or insane; or
4) Intentionally self-inflicted injury, while sane or insane; or
5) Committing or attempting to commit a felony; or
6) Any act of war, declared or undeclared, or any act incident to
war; or
7) Voluntarily taking, inhaling or absorbing into the body any
hallucinogen, narcotic or other drug except as prescribed by the
Insured's physician; or
8) Operating, descending from, or riding in any aircraft. "Riding
in any aircraft" does not apply to a passenger with no duties
aboard an aircraft being operated:
a) Commercially to transport passengers for hire; or
b) By a private business to transport its personnel or guests.
5. INCONTESTABILITY. We will not contest the validity of this rider
after it has been in force during the Insured's lifetime for two years
from the date of issue of this rider.
6. TERMINATION. This rider will terminate on the earliest of:
1) The Contract Anniversary after the Insured's 70th birthday;
2) The date this contract terminates; and
3) The date you give Written Notice to cancel this rider.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/ROBERT P. GANDRUD [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
<PAGE>
[VR2-EA-5]
Date of Issue of this Rider: JULY 1, 1991 Contract Number: V1234567
============================================================================
ACCIDENTAL DEATH BENEFIT
============================================================================
INSURED: JOHN DOE AGE 35 SEX: MALE
ACCIDENTAL DEATH BENEFIT $50,000 FORM VR2-EA-ADB-1
TABLE OF MONTHLY COSTS
BEGINNING ON RIDER
ANNIVERSARY ATTAINED AGE* MONTHLY COST
JUL 1,
1991 35 $ 2.50
1992 36 2.50
1993 37 2.50
1994 38 2.50
1995 39 2.50
1996 40 2.50
1997 41 2.50
1998 42 2.50
1999 43 2.50
2000 44 2.50
2001 45 2.50
2002 46 2.50
2003 47 3.00
2004 48 3.00
2005 49 3.00
2006 50 3.00
2007 51 3.00
2008 52 3.00
2009 53 3.00
2010 54 3.00
2011 55 3.00
2012 56 3.50
2013 57 3.50
2014 58 3.50
2015 59 3.50
2016 60 4.00
2017 61 4.00
2018 62 4.00
2019 63 4.50
2020 64 4.50
2021 65 5.00
2022 66 5.00
2023 67 5.50
2024 68 6.00
2025 69 6.00
* AGE LAST BIRTHDAY ON RIDER ANNIVERSARY ON OR IMMEDIATELY PRIOR TO MONTHLY
ANNIVERSARY.
<PAGE>
[VR2-EL-COL-1]
RIDER Contract Number: V1234567
============================================================================
COST OF LIVING BENEFIT
============================================================================
1. CONSIDERATION. We include this rider as part of this contract based
on the Application signed by the applicant and the deduction of the
monthly cost as stated on page 5-COL.
2. DATE OF ISSUE OF THIS RIDER. Unless otherwise stated on page 5-COL,
the date of issue of this rider will be the Date of Issue of this
contract.
3. THE BENEFIT. This rider increases the Face Amount of this contract.
Increases are effective on each Contract Anniversary after the date of
issue of this rider, provided this rider is then in force. The amount
of the increase is determined on each Contract Anniversary. It is the
smallest of:
1) The CPI Increase;
2) 10% of the Eligible Face Amount on the day before the increase,
rounded to the nearest $1,000. The Eligible Face Amount is that
part of the Face Amount with Premium Class which is "standard,"
"smoker" or "nonsmoker"; and
3) $50,000.
However, no increase will be made if the amount determined above is
less than $1,000. The Premium Class for the increase in Face Amount
will be the same as for this rider.
4. THE CPI INCREASE. The CPI Increase is equal to:
1) The percentage increase in Consumer Price Index from the Base
Index Month to the Current Index Month; multiplied by
2) The Eligible Face Amount on the day before the increase.
The CPI Increase is rounded to the nearest $1,000. If this increase
before rounding is less than $500, the CPI Increase for that Contract
Anniversary will be zero. The index used is the Consumer Price Index
for All Urban Consumers. If this index is discontinued or changed we
will use a similar index.
5. INDEX MONTHS. The Current Index Month is the third calendar month
before the Contract Anniversary. The Base Index is the month one year
before the Current Index Month.
6. MONTHLY DEDUCTION. The Cost of Insurance for this contract will
increase according to the increase in Face Amount. Your premium
billing will be increased by the greater of:
1) The percentage increase in Face Amount; and
2) The increase in the Death Benefit Guarantee Premium due to the
increase in Face Amount. This amount will be zero if the Death
Benefit Guarantee is not in effect on the effective date of the
increase in Face Amount.
We will mail you a supplemental contract schedule one month before any
Contract Anniversary in which an increase will occur. You may reject
the increase in Face Amount by giving Written Notice before that
Contract Anniversary.
7. INCONTESTABILITY. We will not contest the validity of this rider
after it has been in force during the Insured's lifetime for two years
from the date of issue of this rider.
8. TERMINATION. This rider will terminate on the earliest of:
1) The expiration date for this rider shown on page 5-COL;
2) The date this contract terminates;
3) The date you reject an increase in Face Amount under this rider;
4) The date you decrease the Face Amount;
5) The date the sum of the increases in Face Amount due to this
rider equals or exceeds two times the Initial Face Amount; and
6) The date you give Written Notice to cancel this rider.
9. REINSTATEMENT. If this rider terminates other than under
paragraphs 8(1) and 8(5), it may be reinstated any time before the
expiration date for this rider. To reinstate we require evidence of
insurability which meets our standards. The effective date of the
reinstatement is the Monthly Anniversary on or next after the date the
application for reinstatement is approved by us. Paragraph 7
Incontestability will apply from the date of reinstatement with regard
to statements made in the application for reinstatement.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/ROBERT P. GANDRUD [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
<PAGE>
[VR2-EL-5]
Date of Issue of this Rider: JULY 1, 1991 Contract Number: V1234567
============================================================================
COST OF LIVING BENEFIT
============================================================================
FORM VR2-EL-COL-1
INSURED: JOHN DOE
AGE: 35 SEX: MALE
EXPIRATION DATE: JULY 1, 2011
MONTHLY COST: NONE
<PAGE>
[VR2-EG-GIO-1]
RIDER Contract Number: V1234567
============================================================================
GUARANTEED INCREASE OPTION BENEFIT
============================================================================
1. CONSIDERATION. We include this rider as part of this contract based
on the Application signed by the applicant and the deduction of the
monthly cost as stated on page 5-GIO.
2. DATE OF ISSUE OF THIS RIDER. Unless otherwise stated on page 5-GIO,
the date of issue of this rider is the Date of Issue of this contract.
3. RIDER ANNIVERSARY. The Rider Anniversary is the same month and day
for years after issue of this rider as in the date of issue of this
rider.
4. THE BENEFIT.
1) You may increase the Face Amount of this contract as provided in
Paragraph 5 Increase Option.
2) We will pay the amount of any Term Insurance (see Paragraph 6)
in force under this rider to the beneficiary as part of the
Death Proceeds upon receiving proof that the death of the
Insured occurred before this rider terminated.
5. INCREASE OPTION.
5a. INCREASE IN FACE AMOUNT. An option to increase the Face Amount of
this contract will become effective on each Fixed Increase Option Date
and each Additional Increase Option Date (see paragraphs 5c and 5d) if
less than the Maximum Number of Options have been used to increase the
Face Amount. Each option will be in effect for 90 days after the
effective date of the option but will terminate earlier upon:
1) The date the Face Amount is increased under this rider; or
2) The date this contract is terminated; or
3) The date this rider is terminated.
5b. MAXIMUM NUMBER OF OPTIONS. The Maximum Number of Options that may be
used to increase the Face Amount is the number of Fixed Increase
Option Dates occurring after the date of issue of this rider.
5c. FIXED INCREASE OPTION DATES. Fixed Increase Option Dates occur on
the Rider Anniversary after the 18th, 22nd, 25th, 28th, 31st, 34th,
37th and 40th birthdays of the Insured.
5d. ADDITIONAL INCREASE OPTION DATES. An Additional Increase Option Date
occurs upon each of the following events which takes place between the
date of issue of this rider and the Rider Anniversary after the
Insured's 40th birthday:
1) Marriage of the Insured;
2) Birth of each live child born to the Insured; and
3) Legal adoption of a child by the Insured.
5e. CONDITIONS OF INCREASE. The Face Amount of this contract may be
increased with no evidence of insurability required. The increase is
subject to the following:
1) You must make written application to us at our Home Office.
2) Premium Class for the increase in Face Amount will be the same
as for this rider.
3) The amount of the increase must be at least $10,000 and may not
exceed the Option Amount for this rider as shown on page 5-GIO.
4) The Cash Surrender Value of this contract must not be less than
the Monthly Deduction on the effective date of the increase
(unless the Death Benefit Guarantee is in force).
5) The Initial Monthly Administrative Charge for the increase will
be charged on the effective date of the increase and then on
each Monthly Anniversary until 120 charges have been made.
6) A new schedule of Decrease Charges will apply to the increase in
Face Amount.
7) The effective date of the increase will be the Monthly
Anniversary on or next after the date we receive your written
application.
6. TERM INSURANCE. We will provide Term Insurance on the Insured's life
during the period while at least one Increase Option is in effect.
(Periods during which Increase Options are in effect are specified in
Paragraph 5a.) The amount of insurance will be the Option Amount for
this rider as shown on page 5-GIO.
7. PREMIUM CREDITS. We will credit a premium to this contract on the
effective date of each increase under this rider. The amount of the
credit will be $1.25 per $1,000 of increase in Face Amount.
8. INCONTESTABILITY. We will not contest the validity of this rider
after it has been in force during the Insured's lifetime for two years
from the date of issue of this rider.
9. TERMINATION. This rider will terminate on the earliest of:
1) The date 90 days following the Rider Anniversary after the
Insured's 40th birthday;
2) The date the cumulative total of options used to increase the
Face Amount equals the Maximum Number of Options;
3) The date this contract terminates; and
4) The date you give Written Notice to cancel this rider.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/ROBERT P. GANDRUD [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
<PAGE>
[VR2-EG-5]
Date of Issue of this Rider: JULY 1, 1991 Contract Number: V1234567
============================================================================
GUARANTEED INCREASE OPTION BENEFIT
============================================================================
FORM VR2-EG-GIO-1
INSURED: JOHN DOE
AGE: 35 SEX: MALE
OPTION AMOUNT $50,000
PREMIUM CLASS: NONSMOKER
MONTHLY COST: $7.50
MONTHLY COST IS DEDUCTED TO THE CONTRACT ANNIVERSARY AFTER AGE 40.
<PAGE>
[V-EX-Amend.Av Excl]
AMENDATORY AGREEMENT Contract Number: V1234567
============================================================================
AVIATION EXCLUSION
============================================================================
1. CONFLICT WITH OTHER PROVISIONS. This agreement takes precedence over
any provision of this contract with which it is in conflict.
2. EXCLUSION. The Death Proceeds of this contract are limited if the
Insured dies as a result of operating, descending from, or riding in
any aircraft where the Insured:
1) Is a pilot, officer, or member of the crew of that aircraft; or
2) Is giving or receiving any kind of training or instruction
aboard that aircraft; or
3) Has any duties aboard that aircraft; or
4) Is being flown for the purpose of descent from that aircraft
while in flight.
3. LIMITED DEATH PROCEEDS. If the Insured dies as in Paragraph 2, the
Death Proceeds of this contract are limited to the greater of:
1) The premiums paid on this contract less the sum of any Debt and
any Partial Surrenders; and
2) The Cash Surrender Value.
In no case will this agreement increase the amount payable under this
contract. Any amount payable will be paid in a lump sum.
4. SCOPE OF THIS AGREEMENT. If this contract is changed or converted,
this agreement will be included in the new contract.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/ROBERT P. GANDRUD [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
<PAGE>
[V-ER-Amend.AF Av Excl]
AMENDATORY AGREEMENT Contract Number: V1234567
============================================================================
ARMED FORCES AVIATION EXCLUSION
============================================================================
1. CONFLICT WITH OTHER PROVISIONS. This agreement takes precedence over
any provision of this contract with which it is in conflict.
2. EXCLUSION. The Death Proceeds of this contract are limited if the
Insured dies as a result of operating, descending from, or riding in
any aircraft where the Insured:
1) Is a pilot, officer, or member of the crew of that aircraft; or
2) Is giving or receiving any kind of training or instruction
aboard that aircraft; or
3) If being flown for the purpose of descent from that aircraft
while in flight.
This exclusion will apply only while the Insured is:
1) Acting as an advisor; or
2) On full or part-time duty; or
3) In training,
for the armed forces of one or more countries.
3. LIMITED DEATH PROCEEDS. If the Insured dies as in Paragraph 2, the
Death Proceeds of this contract are limited to the greater of:
1) The premiums paid on this contract less the sum of any Debt and
any Partial Surrenders; and
2) The Cash Surrender Value.
In no case will this agreement increase the amount payable under this
contract. Any amount payable will be paid in a lump sum.
4. SCOPE OF THIS AGREEMENT. If this contract is changed or converted,
this agreement will be included in the new contract.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/ROBERT P. GANDRUD [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
<PAGE>
Contract
RIDER Number: V1234567
============================================================================
ACCELERATED BENEFITS
============================================================================
We include this rider as part of this contract. If you so elect, we will
pay the Accelerated Benefit according to the provisions of this rider.
IF WE PAY YOU AN ACCELERATED BENEFIT, THE AMOUNT OF INSURANCE AND THE
ACCUMULATED VALUE FOR THIS CONTRACT WILL BE REDUCED OR ELIMINATED.
BENEFIT PAYMENTS UNDER THIS RIDER MAY BE TAXABLE. CONSULT YOUR TAX ADVISOR.
1. DEFINITIONS.
1a. DOCTOR. A physician having the designation M.D. or a doctor of
osteopathy having the designation D.O. acting within the legal scope
of his or her license. Doctor does not include you or the Insured
or a member of your family or the Insured's family.
2b. NURSING HOME. A facility or that part of one which provides room,
board and inpatient care and:
1) Is licensed by the state in which it operates;
2) Provides nursing services under the supervision of a Doctor or a
registered graduate nurse (RN), licensed practical nurse (LPN)
or licensed vocational nurse (LVN);
3) Has an RN, LPN or LVN on duty or on call at all times and at
least one RN, LPN or LVN who is employed full time on the day
shift; and
4) Keeps a daily medical record of each patient.
Nursing Home does not include that part of any facility which is
primarily:
1) A sheltered living accommodation, a residence home or a similar
living arrangement; or
2) A home or facility for the treatment of alcoholism, drug
addiction or mental illness.
1c. WE, OUR, US. Lutheran Brotherhood Variable Insurance Products
Company.
1d. WRITTEN NOTICE. A written request signed by you and received by us
at our Home Office in Minneapolis, Minnesota.
1e. YOU, YOUR, YOURS. The owner of this contract.
2. EFFECTIVE DATE OF THIS RIDER. Unless a different date is shown above,
the effective date of this rider is the Date of Issue of this contract.
3. THE BENEFIT. We will pay an Accelerated Benefit if you give us Written
Notice requesting the benefit and we receive proof satisfactory to us
that the Insured:
1) Has a life expectancy of twelve months or less; or
2) Has been confined in a Nursing Home for at least six consecutive
months and confinement is expected to continue for the lifetime
of the Insured.
Proof must include certification by a Doctor. We may, at our expense,
require independent medical verification.
You may elect to receive all or part of the Eligible Amount (see
Paragraph 4) as an Accelerated Benefit. Payment of an Accelerated
Benefit is subject to the Conditions of Payment (Paragraph 7). The
benefit will be paid in a lump sum. With our approval, you may instead
elect to have the Accelerated Benefit paid in equal periodic payments
over a fixed period. The minimum periodic payment is $500. If the
Insured dies before all periodic payments have been made, we will pay to
the beneficiary the present value of the remaining payments, calculated
based on the same interest rate as that used to determine the periodic
payments.
4. ELIGIBLE AMOUNT. The amount available as an Accelerated Benefit will
be calculated based on:
1) The amount that would be payable under this contract upon the
death of the Insured;
2) The sex, attained age and reduced life expectancy of the
Insured;
3) Expected future costs of insurance;
4) Expected future charges against this contract;
5) An administrative fee which will not exceed $150.
The Eligible Amount will be calculated on the date we receive
satisfactory proof that the Insured meets the requirements for the
benefit (see Paragraph 3). Items 3 and 4 will be determined using the
scales in effect on that date.
5. EFFECT OF ACCELERATION. If you elect to have all of the Insured's
Eligible Amount paid as an Accelerated Benefit, all insurance provided
by this contract on the Insured's life will terminate. Any riders on
this contract that provide insurance on the life of any other person
will be administered according to the rider provisions regarding the
death of the Insured.
If only a portion of the Eligible Amount is paid as an Accelerated
Benefit, this contract will remain in force and the cost of Insurance,
amount of insurance, amount of any loan and Accumulated Value of the
contract will be reduced. The amount of insurance, loan amount and
accumulated value in each subaccount will be reduced by the same
percentage as the percentage of the Eligible Amount that you elect to
receive as an Accelerated Benefit. The new cost of insurance will be
that which would have been charged for the new face amount based on the
Date of Issue of this contract and the Insured's issue age. Any
insurance not included in the calculation of the Eligible Amount will
not be affected. We will send you information showing the new cost of
insurance, amount of insurance, contract loan amount and Accumulated
Value.
6. OTHER INSUREDS. If a rider on this contract provides life insurance on
a person other than the Insured, that insurance may be used to provide
an Accelerated Benefit on that person if we receive proof satisfactory
to us that he or she:
1) Has a life expectancy of twelve months or less; or
2) Has been confined in a Nursing Home for at least six consecutive
months and confinement is expected to continue for the lifetime
of that person.
Proof must include certification by a Doctor. we may, at our expense,
require independent medical verification.
The Accelerated Benefit for any person other than the Insured is subject
to the provisions and conditions of this rider except that:
1) The Eligible Amount is calculated based on:
a) The amount of life insurance provided on that person;
b) The sex, attained age and reduced life expectancy of that
person;
c) Expected future monthly costs or other charges for
that person's life insurance; and
d) An administrative fee which will not exceed $150.
2) If you elect to have all of that person's Eligible Amount paid
as an Accelerated Benefit, all insurance on that person's life
will terminate. If only a portion of the Eligible Amount is
paid as an Accelerated Benefit, the rider will remain in force
and the monthly cost and amount of insurance for the rider will
be reduced. The amount of insurance will be reduced by the same
percentage as the percentage of the person's Eligible Amount
that you elect to receive as an Accelerated Benefit. Insurance
provided on the Insured or on any other person will not be
affected. We will send you information for the rider showing
the new monthly cost and the new amount of insurance.
7. CONDITIONS OF PAYMENTS. Payment of an Accelerated Benefit is subject
to the following conditions:
1) This contract must be in force.
2) Any assignee, irrevocable beneficiary or other party with
ownership rights must consent to payment of the Accelerated
Benefit.
3) You may not elect an Accelerated Benefit if:
a) You are required by law to use this rider to meet the claims
of creditors; or
b) You are required by a government agency to use this benefit
in order to apply for, obtain or keep a government benefit or
entitlement.
4) The Accelerated Benefit payable for any person must be $10,000
or, if smaller, that person's entire Eligible Amount.
5) If you elect to have only part of any person's Eligible Amount
paid as an Accelerated Benefit, the amount of insurance
remaining in force on that person after payment of the benefit
must be at least $10,000.
8. TERMINATION. This rider will terminate on the earliest of:
1) The date any premium on this contract remains in default at the
end of the grace period;
2) The date this contract is terminated; and
3) The date you give Written Notice to cancel this rider.
Signed for Lutheran Brotherhood Variable Insurance Products Company
at Minneapolis, Minnesota
============================================================================
President /s/ROBERT P. GANDRUD [The word-SAMPLE-is stamped over signature]
============================================================================
Secretary /s/DAVID J. LARSON [The word-SAMPLE-is stamped over signature]
============================================================================
#20694
4/8/82
[4712806]
EXHIBIT 1.A(6)(a)
-----------
ARTICLES OF INCORPORATION
OF
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
The undersigned, for the purpose of forming a corporation under
the provisions of Chapter 300 of the Minnesota Statutes, do hereby establish
a body corporate and adopt the following Articles of Incorporation:
ARTICLE I.
The name of this Corporation shall be Lutheran Brotherhood
Variable Insurance Products Company. The principal office and place for the
transaction of its business shall be in the City of Minneapolis, State of
Minnesota.
ARTICLE II.
This Corporation is formed for the purpose of doing, and shall
have the power to do, any and all of the kinds of insurance business
specified in clauses (4) and (5)(a) of Section 60A.06, Subdivision 1 of the
Minnesota Statutes, and any amendments to such clauses or provisions in
substitution therefor which may be hereafter adopted, together with any kind
or kinds of business to the extent necessarily or properly incidental to the
kinds of insurance business which this Corporation is so authorized to do.
In furtherance of the foregoing, and not in limitation thereof,
this Corporation shall have the power:
1. To make contracts of life and endowment insurance, to
grant, purchase or dispose of annuities or endowments of any kind, and, in
such contracts, or in contracts supplemental thereto, to provide for
additional benefits in event of death of the insured by accidental means,
total permanent disability of the insured, or specific dismemberment or
disablement suffered by the insured;
2. To establish and operate one or more separate accounts and
issue contracts on a variable basis as provided in Sections 61A.13 to 61A.21
of the Minnesota Statutes, and any amendments thereto or provisions in
substitution therefor which may be hereafter adopted.
3. To insure against loss or damage by the sickness, bodily
injury or death by accident of the insured or his dependents;
4. To acquire and carry on all or any part of the business or
property of any corporation engaged in a business similar to that authorized
to be conducted by this Corporation, and to merge or consolidate with any
corporation with which this Corporation shall be authorized to merge or
consolidate under the laws of the State of Minnesota;
5. To acquire, own, hold, buy, sell, lease, mortgage and in
every other manner deal in real and personal property of every kind and
description, wherever situated, including the shares of stock, bonds,
debentures, notes, evidences of indebtedness and other securities, contracts
or obligations of any corporation or corporations, association or
associations, domestic or foreign, and to pay therefor other assets of this
Corporation, stocks, bonds, or other evidences of indebtedness or securities
of this or any other corporation; and
6. To make such investments, borrow such money and own such
property as may now or hereafter be permitted to insurance companies under
the laws of the State of Minnesota.
The business of this Corporation may be conducted in all states,
territories and dependencies of the United States of America, in all
provinces of the Dominion of Canada, and in any other foreign country.
This Corporation shall also have the general rights, powers and
privileges of a corporation as the same now or hereafter are declared by the
laws of the State of Minnesota and any and all other rights, powers and
privileges now or hereafter granted by the laws relating to insurance
adopted by the State of Minnesota or any law or laws of the State of
Minnesota applicable to stock life insurance companies having power to do
the kinds of business hereinabove referred to.
ARTICLE III
The management of this Corporation shall be exercised by a Board
of Directors and by such committees, officers, employees and agents as the
Board of Directors may authorize, elect or appoint. The Board of Directors
shall consist of not less than three (3) nor more than twenty (20)
directors, all of whom shall be stockholders of this Corporation and a
majority of whom shall always be residents of the State of Minnesota.
Directors shall be elected in such manner as the By-Laws of this Corporation
may provide.
The names and addresses of the first directors of this
Corporation are as follows:
NAME ADDRESS
Luther O. Forde 5500 Vagabond Lane
Plymouth, Minnesota 55446
Robert P. Gandrud 2000 Orkla Drive
Golden Valley, Minnesota 55427
David J. Larson 6055 Manchester Drive
Golden Valley, Minnesota 55427
Clair E. Strommen 2215 South Rosewood Lane
St. Paul, Minnesota 55113
David R. Zetzman 5700 Garfield Avenue
Minneapolis, Minnesota 55419
The term of office of such first directors shall be for one year or until
the first annual meeting of the stockholders of this Corporation.
ARTICLE IV.
The total authorized capital of this Corporation shall be
$1,000,000 and shall be evidenced by 1,000,000 shares of Common Stock of the
par value of $1 per share. The holders of shares of this Corporation shall
not have any preemptive or preferential right of subscription to any of the
shares of this Corporation, and the issuance and sale of such shares and the
terms and conditions of such issuance and sale shall be as authorized and
determined by the Board of Directors of this Corporation.
Voting by the holders of shares of Common Stock of this
Corporation for the election of directors shall not be cumulative.
ARTICLE V.
In addition to the contingent and accrued contract liabilities
of this Corporation, the maximum indebtedness to which this Corporation
shall be subject at any one time shall not exceed one billion dollars
($1,000,000,000).
ARTICLE VI.
The business of this Corporation shall be transacted on the
stock plan; and this Corporation may issue contracts upon both the
participating plan and the non-participating plan.
The following persons shall be eligible to purchase contracts
issued by this Corporation:
1. Any member of Lutheran Brotherhood, or any person eligible
for membership in Lutheran Brotherhood;
2. Any Lutheran Church organization, trust, or employee
benefit plan; and
3. Such other persons as may from time to time be approved by
the Board of Directors of this Corporation.
ARTICLE VII.
This Corporation shall have the power to make gifts or
contributions as provided in Section 300.66 of the Minnesota Statutes, and
any amendments thereto or provisions in substitution therefor.
ARTICLE VIII.
The duration of this Corporation shall be perpetual.
ARTICLE IX.
The names and places of residence of the persons forming this
Corporation are:
NAME PLACE OF RESIDENCE
Luther O. Forde 5500 Vagabond Lane
Plymouth, Minnesota 55446
Robert P. Gandrud 2000 Orkla Drive
Golden Valley, Minnesota 55427
David J. Larson 6055 Manchester Drive
Golden Valley, Minnesota 55427
IN WITNESS WHEREOF, we have hereunto set our hands this
20th day of April, 1982.
- -----
/s/LUTHER O. FORDE
---------------------------
/s/ROBERT P. GANDRUD
---------------------------
/s/DAVID J. LARSON
---------------------------
STATE OF MINNESOTA)
) SS.
COUNTY OF HENNEPIN)
On this 20th day of April, 1982, personally appeared before me,
------
Luther O. Forde, Robert P. Gandrud and David J. Larson, to me known to be
the persons described in and who executed the foregoing Articles of
Incorporation, and they acknowledged that they were persons of full age and
that they executed the foregoing Articles of Incorporation for the uses and
purposes therein expressed.
/s/FRANK B. BUTLER
----------------------------------
[SEAL] FRANK B. BUTLER
NOTARY PUBLIC - MINNESOTA
HENNEPIN COUNTY
My Commission Expires Mar. 5, 1987
The within Articles of Incorporation are hereby approved this
20th day of April, 1982.
- ----
[SEAL] /s/
(Insurance Division Seal) ---------------------------------
Commissioner of Insurance
/initials/ State of Minnesota
STATE OF MINNESOTA
DEPARTMENT OF STATE
I hereby certify that the within instrument
was filed for record in this office on
the 20 day of April A.D. 1982
---- ------
at 4:30 o'clock P M and was duly recorded in
------ ---
Book B57 of Incorporations, on page 661
----- -----
/s/
/initials/ Secretary of State
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
We, the undersigned, Clair E. Strommen and David J. Larson,
respectively the President and the Secretary of Lutheran Brotherhood
Variable Insurance Products Company, a Minnesota corporation, do hereby
certify and declare as follows:
1. That a special meeting of the shareholders of said Company
was duly held on November 8, 1982 at 11:30 o'clock A.M. at the offices of
Lutheran Brotherhood, Minneapolis, Minnesota.
2. That, pursuant to action of the Board of Directors of said
Company, one of the purposes of said meeting was to consider and vote upon
an amendment to the Articles of Incorporation of said Company, and that the
Board of Directors of said Company proposed said amendments and approved the
same subject to approval and adoption thereof by the shareholders.
3. That each of the shareholders consented to and waived
notice of said meeting and attended said meeting.
4. That at the date of said meeting said Company had issued an
outstanding 1,000,000 shares of capital stock of the par value of $1 per
share, each of which was entitled to one vote aggregating 1,000,000 votes,
and that 1,000,000 shares, entitled to 1,000,000 votes, were represented in
person or by proxy at said meeting.
5. That at said meeting, by the unanimous affirmative vote of
all of the 1,000,000 votes to which all shareholders were entitled, the
following resolutions were adopted:
RESOLVED, that Article IV of the Articles of Incorporation
of the Corporation is hereby amended to be and read, in its
entirety, as follows:
"ARTICLE IV."
"The total authorized capital of this Corporation
shall be $2,000,000 and shall be evidenced by 2,000,000
shares of Common Stock of the par value of $1 per share.
The holders of shares of this Corporation shall not have
any preemptive or preferential right of subscription to any
of the shares of this Corporation, and the issuance and
sale of such shares and the terms and conditions of such
issuance and sale shall be as authorized and determined by
the Board of Directors of this Corporation."
"Voting by the holders of shares of Common Stock of
this Corporation for the election of directors shall not
be cumulative."
RESOLVED, that these resolutions shall be embraced in a
certificate duly executed by the President and the Secretary of the
Corporation, under its corporate seal, and approved, filed and
published in the manner prescribed for the execution, approval,
filing and publishing of an original certificate of incorporation
under the applicable laws of the State of Minnesota.
IN TESTIMONY WHEREOF, we, as the President and the Secretary,
respectively, of said Company, have hereunto set our hands and affixed the
corporate seal of said Company this Eighth day of November, 1982.
/s/CLAIR E. STROMMEN
CLAIR E. STROMMEN
President
/s/DAVID J. LARSON
(Corporate Seal) Secretary
STATE OF MINNESOTA)
) SS.
COUNTY OF HENNEPIN)
On this Eighth day of November, 1982, before me, a Notary Public
within and for said County, personally appeared Clair E. Strommen and
David J. Larson, to me personally known and known to be the persons
described in and who executed the foregoing certificate, who, being each by
me duly sworn, did say that they are the President and the Secretary,
respectively, of Lutheran Brotherhood Variable Insurance Products Company,
the corporation named in and on behalf of which the foregoing certificate
was made; that the statements contained in the foregoing certificate are
true in substance and in fact; that the seal affixed to the foregoing
certificate is the corporate seal of said corporation, and that said
certificate was executed on behalf of said corporation by authority of its
shareholders and its Board of Directors; and the said Clair E. Strommen and
David J. Larson each acknowledged that he executed the same as his free act
and deed and acknowledged the same to be the free act and deed of said
corporation.
[SEAL] OTIS F. HILBERT
NOTARY PUBLIC - RAMSEY COUNTY, MINN. /s/OTIS F. HILBERT
My commission Expires Sept. 11, 1987 -------------------------------
(Notarial Seal)
The within Amendments to the Articles of Incorporation of
Lutheran Brotherhood Variable Insurance Products Company are hereby approved
this 22nd day of November, 1982.
------
/s/THOMAS O'MALLEY
--------------------------------
/Temporary - Initials/ Commissioner of Insurance
State of Minnesota
(Insurance Division Seal)
#20496
EXHIBIT 1.A(6)(b)
-----------------
BY-LAWS
OF
LUTHERAN BROTHERHOOD VARIABLE
INSURANCE PRODUCTS COMPANY
ARTICLE I. OFFICES
====================
The principal office of the Corporation shall be located in the
City of Minneapolis, State of Minnesota. The Corporation may have such
other offices, either within or without the State of Minnesota, as the Board
of Directors may designate or as the business of the Corporation may require
from time to time.
ARTICLE II. STOCKHOLDERS
==========================
Section 1. ANNUAL MEETINGS. The annual meeting of the
stockholders shall be held on the last Wednesday in the month of May in each
year commencing 1983, at the hour of ten o'clock a.m., or at such other time
on such other day within such month as shall be fixed by the Board of
Directors, for the purpose of electing directors and for the transaction of
such other business as may come before the meeting.
Section 2. SPECIAL MEETINGS. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute, may be called by the President or by the Board of Directors, and
shall be called by the President at the request of the holders of not less
than one-tenth of all outstanding shares of the Corporation entitled to vote
at the meeting.
Section 3. PLACE OF MEETINGS. The Board of Directors may
designate any place, either within or without the State of Minnesota, as the
place of meeting for any annual meeting or for any special meeting called by
the Board of Directors. If no designation is made, or if a special meeting
is otherwise called, the place of meeting shall be the principal office of
the Corporation in the State of Minnesota.
Section 4. NOTICE OF MEETINGS. Written notice stating the
place, day and hour of the meeting and, in case of special meeting, the
purpose or purposes for which the meeting is called, shall, unless otherwise
prescribed by statute, be delivered not less than ten (10) nor more than
fifty (50) days before the date of the meeting, either personally or by
mail, by or at the direction of the President, the Secretary, or the other
officer or persons calling the meeting, to each stockholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail, addressed to the
stockholder at his address as it appears on the stock transfer books of the
Corporation, with postage thereon prepaid.
Section 5. WAIVER OF NOTICE. Notice of the place, day, hour
and purpose or purposes of any meeting of the stockholders may be waived in
writing by any stockholder. Such waiver may be given before or after the
meeting and shall be filed with the Secretary or entered upon the records of
the meeting.
Section 6. QUORUM. A majority of the outstanding shares of
the Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at any meeting of stockholders. The stockholders
present, though less than a quorum, may adjourn the meeting to a later day
or hour or to another place without further notice other than by
announcement at the meeting, until a quorum shall be present. At such
adjourned meeting at which a quorum shall be present any business may be
transacted which might have been transacted at the meeting as originally
noticed.
Section 7. PROXIES. At all meetings of stockholders, a
stockholder may vote in person or by proxy executed in writing by the
stockholder or by his duly authorized attorney-in-fact. Such proxy shall be
filed with the Secretary of the Corporation before or at the time of the
meeting.
Section 8. VOTING OF SHARES. Each outstanding share shall be
entitled to one vote upon each matter submitted to a vote at any meeting of
stockholders.
Section 9. CONDUCT OF MEETINGS. The President, or, in his
absence, the Chairman of the board, shall act as chairman, and the Secretary
shall act as secretary, of each meeting of stockholders. In the absence of
the Secretary, the chairman of the meeting may appoint any person to act as
secretary of the meeting. All matters brought before the meeting shall,
unless otherwise prescribed by statute, be decided by a majority of the
votes represented at the meeting. In the event of a tie vote, the deciding
vote may be cast by the chairman of the meeting in his capacity as chairman,
but this section shall not be construed to prevent the chairman from casting
the number of votes to which he is otherwise entitled.
ARTICLE III. BOARD OF DIRECTORS
=================================
Section 1. GENERAL POWERS. The management of the Corporation
shall be exercised by the Board of Directors and by such committees,
officers, employees and agents as the Board of Directors may authorize,
elect or appoint.
Section 2. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The
Board of Directors shall consist of not less than three (3) nor more than
twenty (20) directors, all of whom shall be stockholders of the Corporation.
The number of directors to constitute the Board of Directors for the ensuing
year shall be determined by the Board of Directors prior to the annual
meeting of stockholders at which the directors are to be elected, or, in the
absence of such determination, by the stockholders at such annual meeting,
provided that thereafter the authorized number of directors may be increased
by the stockholders or the Board of Directors and decreased by the
stockholders. Directors shall be elected by ballot.
Each director shall be elected to hold office for one year and
until such director's successor is elected and has qualified.
Section 3. REGULAR MEETINGS. A regular meeting of the Board
of Directors shall be held without notice other than this By-Law immediately
after, and at the same place as, the annual meeting of the stockholders.
The Board of Directors may provide, by resolution, the time and place,
either within or without the State of Minnesota, for the holding of
additional regular meetings without notice other than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board
of Directors may be called by or at the request of the Chairman of the Board
or the President and, upon request by any two members of the Board of
Directors, shall be called by the Chairman of the Board or the President.
Section 5. NOTICE. Notice of any special meeting of the
Board of Directors shall be given by written notice mailed to or served upon
each director at least two days in advance of the day when the meeting is to
be held, and such meeting shall be held at such time and place as shall be
specified in such written notice. Waiver of notice of any special meeting
shall be in writing and may be given before, at or after such meeting, and
attendance at a meeting by a director without protesting prior thereto or at
its commencement the lack of notice to such director shall constitute waiver
of such notice. A special meeting of the Board of Directors may also be
held without written notice at such time and place as shall be fixed by the
consent in writing of all directors given before, at or after such meeting.
Section 6. QUORUM. A majority of the members of the entire
Board of Directors shall constitute a quorum for the transaction of
business, but if less than such majority is present at a meeting a majority
of the Directors present may adjourn the meeting from time to time without
further notice other than by announcement at the meeting, until a quorum
shall be present.
Section 7. MANNER OF ACTING. The act of a majority of the
directors present at any meeting of the Board of Directors at which a quorum
is present shall be the act of the Board of Directors, unless a greater
number is required by statute or by the Articles of Incorporation or by
these By-Laws. Any action that might be taken at a meeting of the Board of
Directors may be taken without a meeting if done in writing signed by all of
the directors.
Section 8. VACANCIES. Any vacancy occurring in the Board of
Directors may be filled for the remainder of that term by the affirmative
vote of a majority of the remaining directors though less than a quorum of
the Board of Directors. Newly created directorships resulting from an
increase in the authorized number of directors may be filled by a vote of a
majority of the directors serving at the time of such increase.
Section 9. COMMITTEES. The Board of Directors may, by
resolution or resolutions adopted by a majority of the entire Board of
Directors, designate one or more committees, in addition to the Executive
Committee and the Finance Committee, each committee to consist of two or
more directors, which to the extent provided in such resolutions or
resolutions, or in the By-Laws, shall have and may exercise the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation. Such committee of committees shall have such
name or names as may be stated in these By-Laws, or as may be determined
from time to time by resolutions adopted by the Board of Directors. All
committees shall keep regular minutes of their proceedings. Vacancies in
any committee shall be filled by the Board of Directors. All actions of any
committee shall be reported to the Executive Committee or to the Board of
Directors. All such reports shall be rendered no later than at the second
meeting of the Executive Committee or the Board of Directors, as the case
may be, next succeeding the taking of such actions. Each committee shall
fix its own rules of procedure, and shall meet where and as provided by such
rules, or by resolution of the Board of Directors. Any action that might be
taken at a meeting of any committee may be taken without a meeting if done
in writing signed by all of the members of such committee.
Section 10. GENERAL POWERS. In addition to the powers and
authorities expressly conferred by these By-Laws, the Board of Directors may
exercise all such powers and do all such lawful acts and things as are not
by statute or by the Articles of Incorporation or by these By-Laws directed
or required to be exercised or done by the stockholders.
ARTICLE IV. OFFICERS
======================
Section 1. NUMBER. The executive officers of the Corporation
shall be the Chairman of the Board, the President, one or more Executive
Vice Presidents, Senior Vice Presidents, Vice Presidents and Assistant Vice
Presidents (the number and titles of such vice presidents to be determined
by the Board of Directors), a Secretary and a Treasurer. The Chairman of
the Board shall be elected from among the members of the Board of Directors.
At its discretion, the Board of Directors may decline to designate and elect
a Chairman of the Board. Such other executive officers as may be deemed
necessary may be elected by the Board of Directors. Any two or more
offices, except those of President and Secretary, may be held by the same
person.
Section 2. ELECTION AND TERM OF OFFICE. The executive
officers of the Corporation to be elected by the Board of Directors shall be
elected annually at the regular meeting of the Board of Directors held after
each annual meeting of stockholders. If the election of executive officers
shall not be held at such meeting, such election of executive officers shall
be held as soon thereafter as conveniently practicable. Each executive
officer shall be elected to hold office until such executive officer's
successor is elected and has qualified.
Section 3. APPOINTIVE OFFICERS. The President may appoint
such additional appointive officers as may be approved by the Board of
Directors.
Section 4. REMOVAL. An executive officer may be removed
either for or without cause by majority vote of the Board of Directors
present at any meeting of the Board of Directors.
Section 5. VACANCIES. Any vacancy occurring in any executive
office may be filled for the remainder of the term by the affirmative vote
of a majority of the Board of Directors.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the board
shall preside at all meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors from time
to time. In the event the Board of Directors has not designated a Chairman
of the Board, or in the event the Chairman of the Board is not present, the
President shall preside at any such meeting of the Board of Directors.
Section 7. PRESIDENT. The President shall be the Chief
Executive Officer of the Corporation and, subject to the control of the
Board of Directors, shall in general supervise and control all of the
business and affairs of the Corporation. In general, the President shall
perform all duties usually vested in the office of the Chief Executive
Officer and such other duties as may be prescribed by the Board of Directors
from time to time.
Section 8. EXECUTIVE VICE PRESIDENT. The Executive Vice
President, or in the event there shall be more than one Executive Vice
President, the Executive Vice Presidents, shall generally assist the
President in the management of the Corporation. In the event of the death,
resignation or inability of the President to act, the Executive Vice
President shall assume and discharge PRO TEMPORE the powers and duties of
the President. In the event there is more than one Executive Vice
President, the Board of Directors, or the Executive Committee, shall
designate which Executive Vice President shall assume and discharge
PRO TEMPORE the powers and the duties of the President.
Section 9. SENIOR VICE PRESIDENTS, VICE PRESIDENTS AND
ASSISTANT VICE PRESIDENTS. The Senior Vice Presidents, Vice Presidents,
and Assistant Vice Presidents and appointive officers shall perform such
duties as may be prescribed by the President or the Board of Directors from
time to time.
Section 10. SECRETARY. The Secretary shall keep the minute
books and seal of the Corporation, record the minutes of the meetings of
stockholders and the Board of Directors, and, in general, perform all duties
and have all powers incident to the office of secretary and perform such
other duties and have such other powers as may be prescribed by the
President or the Board of Directors from time to time.
Section 11. TREASURER. The Treasurer shall have supervision
over the funds, securities, receipts and disbursements of the Corporation,
and, in general, perform all duties and have all powers incident to the
office of Treasurer and perform such other duties and have such other powers
as may be prescribed by the President or the Board of Directors from time to
time.
Section 12. COMPENSATION. The executive officers and the
appointive officers shall receive such salary or other compensation as may
be determined by the Board of Directors. The Board of Directors may
delegate to the President the power to determine the salary or other
compensation of any appointive officer.
Section 13. SURETY BONDS. If the Board of Directors shall so
require, any officer or agent of the Corporation shall execute to the
Corporation a bond in such sum and with such surety or sureties as the Board
of Directors may direct, conditioned upon the faithful performance of such
officer's or agent's duties to the Corporation, including responsibility for
negligence and for the accounting of all property, funds or securities of
the Corporation which may come into such officer's or agent's hands.
ARTICLE V. EXECUTIVE COMMITTEE
================================
The Board of Directors may, by resolution or resolutions adopted
by a majority of the entire Board of Directors, designate three or more of
its members to constitute an Executive Committee and shall designate a
member of the Committee to serve as Chairman of such Executive Committee.
The President shall be a member of the Executive Committee. Vacancies in
the Executive Committee shall be filled by the Board of Directors.
Between meetings of the Board of Directors, the Executive
Committee shall have and may exercise all of the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation with the exception of such limitations as may be imposed by the
Board of Directors or by statute. All actions of the Executive Committee
shall be reported to the Board of Directors. All such reports shall be
rendered no later than at the second meeting of the Board of Directors next
succeeding the taking of such actions.
A majority of the members of the entire Executive Committee
shall constitute a quorum for the transaction of business at any meeting of
the Executive Committee. The act of a majority of the Executive Committee
present at any meeting of the Executive Committee at which a quorum is
present shall be the act of the Executive Committee. Any action which might
be taken at a meeting of the Executive Committee may be taken without a
meeting if done in writing signed by all of the members of the Executive
Committee.
ARTICLE VI. FINANCE COMMITTEE
===============================
The Board of Directors may, by resolution or resolutions adopted
by a majority of the entire Board of Directors, designate three or more of
its members to constitute a Finance Committee. The President shall be a
member of the Finance Committee. The Board of Directors may also designate
one or more of its members as alternate members of the Finance Committee to
serve at meetings of the Finance Committee in the absence of any regular
member or members, and, in case more than one alternate is designated, the
Board of Directors shall designate at the time of such designation the
priorities as between them. Vacancies in the Finance Committee shall be
filled by the Board of Directors.
The Finance Committee shall exercise general control and
supervision of the financial affairs and accounts of the Corporation. It
shall supervise all investments and loans of the Corporation, including
investments in real estate, policy loans, real estate mortgage loans and
investments in housing company securities. Directly, or through such
regulations as it may establish, it shall authorize or approve the making of
all such investments or loans and all sales of such investments or loans.
A majority of the members of the entire Finance Committee shall
constitute a quorum for the transaction of business at any meeting of the
Finance Committee. The act of a majority of the Finance Committee present
at any meeting of the Finance Committee at which a quorum is present shall
be the act of the Finance Committee. Any action which might be taken at a
meeting of the Finance Committee may be taken without a meeting if done in
writing signed by all of the members of the Finance Committee.
ARTICLE VII. CERTIFICATES FOR SHARES AND THEIR TRANSFER
=========================================================
Section 1. CERTIFICATES FOR SHARES. Certificates
representing shares of the Corporation shall be in such form as shall be
determined by the Board of Directors. Such certificates shall be signed by
the President or an Executive Vice President and by the Secretary or an
Assistant Secretary and sealed with the corporate seal or a facsimile
thereof. The signatures of such officers upon a certificate may be
facsimile if the certificate is manually signed on behalf of a transfer
agent and a registrar, other than the Corporation itself or one of its
employees. Each certificate for shares shall be consecutively numbered or
otherwise identified. The mane and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be cancelled
and no new certificate shall be issued until the former certificate for a
like number of shares shall have been surrendered and cancelled, except that
in case of a lost, destroyed or mutilated certificate a new one may be
issued therefor upon such terms and indemnity to the Corporation as the
Board of Directors may prescribe. In the event any officer's signature or
facsimile signature shall appear on any certificate and such officer shall
have ceased to be such officer prior to the issue of such certificate, such
certificate shall be a valid certificate and may, nevertheless, be issued
and delivered.
Section 2. TRANSFER OF SHARES. Transfer of shares of the
Corporation shall be made only on the stock transfer books of the
Corporation by the holder of record thereof or by his legal representative,
who shall furnish proper evidence of authority to transfer, or by his
attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary of the Corporation, and on surrender for cancellation of
the certificate for such shares. The person in whose name shares stand on
the books of the Corporation shall be deemed by the Corporation to be the
owner thereof for all purposes.
ARTICLE VIII. EXECUTION OF INSTRUMENTS
========================================
All documents, instruments or writings of any nature shall be
signed, executed, verified, acknowledged and delivered by such officers,
agents or employees of the Corporation, or any one of them, and in such
manner, as from time to time may be determined by the Board of Directors.
ARTICLE IX. CORPORATE SEAL
============================
The seal of the Corporation shall be in the form of a circle and
shall bear the name of the Corporation and the words "Corporate Seal".
ARTICLE X. INDEMNIFICATION
============================
To the full extent permitted by Minnesota Statutes, Section
300.082, as amended from time to time, or by other provisions of law, each
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, wherever
brought, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director, officer or employee of the
Corporation, or he is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified by the
Corporation against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually incurred by him in connection with
such action, suit or proceeding. The indemnification provided by hereby
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
ARTICLE XI. AMENDMENTS
========================
The Board of Directors shall have authority to make and alter
the By-Laws of the Corporation, subject to the power of the stockholders to
change or repeal such By-Laws.
#20498
EXHIBIT 1.A.(10)
============================================================================
LUTHERAN BROTHERHOOD
VARIABLE INSURANCE PRODUCTS COMPANY
625 Fourth Avenue South PART I
Minneapolis, Minnesota 55415 APPLICATION FOR INSURANCE OR ANNUITY
============================================================================
COMPLETE THIS SECTION FOR ALL APPLICATIONS
============================================================================
1. Print full name of Proposed Insured
- ----------------------------------------------------------------------------
LAST FIRST MIDDLE SOC SEC NO.
- ----------------------------------------------------------------------------
STREET ADDRESS (ENTER OTHER BILLING INSTRUCTIONS IN NO. 20)
- ----------------------------------------------------------------------------
CITY STATE ZIP
- ----------------------------------------------------------------------------
a. BIRTHDATE b .AGE c. SEX d. BIRTH STATE e. MARITAL STATUS
MO DA YR
2.
============================================================================
QUESTIONS 3-7 AGES 18 & OVER
============================================================================
3. EMPLOYER
- ----------------------------------------------------------------------------
4. BUSINESS ADDRESS
- ----------------------------------------------------------------------------
5. OCCUPATIONAL DUTIES
- ----------------------------------------------------------------------------
6. GROSS INCOME 7. HOW LONG AT THIS OCCUPATION?
$ YEARS MONTHS
============================================================================
8. IS EACH PERSON TO BE INSURED (OR ANNUITANT) AN ADULT OR JUVENILE CONTRACT
MEMBER OF LUTHERAN BROTHERHOOD?
/ / YES / / NO
(IF NO, COMPLETE MEMBERSHIP APPLICATION IF APPLICABLE)
============================================================================
9. Insurance in force on persons proposed for life coverage
Answer all items. If none, state "None"
============================================================================
NAME OF PERSON COMPANY LIFE AMOUNT ACC. DEATH AMT.
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
10. Do you intend replacement or change of or borrowing on any existing
life, annuity or health insurance because of this application for
insurance?
/ / Yes / / No
If "Yes" give details in number 20 and complete
Disclosure Statement if applicable
============================================================================
11. COMPLETE THIS SECTION FOR FAMILY MEMBER(S) INCLUDED ON LIFE COVERAGE
============================================================================
FULL NAME SEX BIRTHDATE AGE HEIGHT WEIGHT RELATIONSHIP
MO DA YR
- ----------------------------------------------------------------------------
SPOUSE
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Unless otherwise requested in number 20, life insurance proceeds for covered
family members will be paid to the Insured, if living; otherwise to the
covered family member's estate.
Child Rider -- Reduced Death Benefits:
Birth through 14 days - $0
15 days to Age 6 months - 50% of the Child Rider amount
Age 6 months and up - amount of the Child Rider.
============================================================================
12. COMPLETE FOR LIFE AGE 16 AND OVER
============================================================================
Give details for "Yes" answers under number 20. Yes No
Has any person to be insured:
a. Applied elsewhere, either currently
or within the past 6 months, for Life
or Health Insurance? / / / /
b. Flown in the past 3 years, or have any
intent to fly as a pilot, co-pilot,
student pilot, or crew member? / / / /
(If "Yes", complete an Aviation Supplement).
c. In the past 3 years been refused a drivers
license, had a license suspended or had a
moving violation or accident? / / / /
If "Yes", Drivers license No.
-----------------
d. Participated in skydiving, skin or scuba
diving, hang gliding, or vehicle racing or
does any person intend to? / / / /
============================================================================
13. Complete for Persons Smoke Formerly Smoke If Yes, Use other form
20 and Over Cigarettes? Cigarettes? Date of tobacco?
Discontinued
============================================================================
First Name Yes No Yes No Yes No Details
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
============================================================================
14. In the past 10 years, has any person to be insured had or been told they
had Acquired Immune Deficiency Syndrome ("AIDS"), AIDS Related Complex
("ARC") or any other immunosuppressive condition or had a positive test
for antibodies to the AIDS Virus?
/ / Yes / / No
If "Yes" give details in number 20.
============================================================================
15. COMPLETE FOR ALL APPLICATIONS
============================================================================
a. Plan b. Amount $ c. / / Nonsmoker
------------- -------------
d. Death Benefit Option / / A / / B
e. Planned Annual Premium $
------------------------------------------------
f. Additional Benefits
/X/ Waiver of Monthly Deduction
/ / Accidental Death
/ / Guaranteed Increase Option $
--------------------------------------
/X/ COLA
---------------------------------------------------
---------------------------------------------------
g. / / Spouse Rider $
-------------------------------
/ / Child Rider $
-------------------------------
h. / / Other
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
16. Premium Allocation
a. Growth Subaccount %
------------
b. Income Subaccount %
------------
c. Money Market Subaccount %
------------
d. %
----------------------- ------------
Allocations must total 100 %
============================================================================
17. SUITABILITY
============================================================================
a. Has the Proposed Insured and has the Applicant Owner, if other than
the Proposed Insured, received a current prospectus for the contract
applied for?
/ / Yes / / No
b. Do you understand that under the contract applied for the amount of
the Accumulated Value may increase or decrease daily based on the
investment experience of the Separate Account and that the amount or
duration of the Death Benefit may vary with the Accumulated Value?
/ / Yes / / No
c. With this in mind, is the contract in accord with your investment
objectives and your anticipated insurance and financial needs?
/ / Yes / / No
- ------------------------------------------------- ----------------
Applicant/Owner Signature Date
- ------------------------------------------------- ----------------
Registered Principal Signature Date
(Home Office use only)
============================================================================
18. BENEFICIARY
============================================================================
BASIC INSURED ONLY
For other covered family members, see number 11. (Unless otherwise directed,
proceeds will be paid equally to those living at the death of insured.)
Primary Relationship
First Contingent
Second Contingent
I include as part of my beneficiary: CHECK ONLY ONE CLASS DESIGNATION
/ / 1st Contingent -- My children born by my spouse named above or
legally adopted by us
/ / 2nd Contingent -- My children born by my spouse named above or
legally adopted by us.
/ / 1st Contingent -- My brothers and sisters born by my parents named
above or legally adopted by them.
/ / 2nd Contingent -- My brothers and sisters born by my parents named
above or legally adopted by them.
/ / Add Interest Income Settlement Option
/ / Add Day Survival Provision
---------
/ / Primary / / Entire Beneficiary
============================================================================
19. ENDORSEMENTS
============================================================================
(Home Office use only. Acceptance of the contract shall ratify changes
entered here.)
============================================================================
20. DETAILS & INSTRUCTIONS
============================================================================
/ / Third Party Owner (Complete Third Party App.)
<PAGE>
============================================================================
LUTHERAN BROTHERHOOD
VARIABLE INSURANCE PRODUCTS COMPANY
625 Fourth Avenue South THIRD PARTY
Minneapolis, Minnesota 55415 OWNERSHIP APPLICATION
============================================================================
21. COMPLETE FOR THIRD PARTY OWNERSHIP - LIFE OR ANNUITY
============================================================================
OWNER: Except as stated in Ownership -- Juvenile Insurance of Part I, the
Proposed Insured or Annuitant will be the Owner of any contract issued on
this application, unless another owner is listed below. The Owner has every
right and privilege otherwise given the Insured or Annuitant under any such
contract except the right to purchase additional insurance under any
Guaranteed Insurability Benefit included in any contract. The Insured will
retain this right. Contract transactions between Lutheran Brotherhood
Variable Insurance Products Company and the Owner do not require the
Insured's or Annuitant's notice or consent.
APPLICANT/OWNER NAME(S)
(If corporation give state and date of incorporation)
Social Security or
Name Tax ID Number
------------------------------------- ------------------
Address Birthdate Sex
--------------------------------- ----------- ------
Social Security or
Name Tax ID Number
------------------------------------- ------------------
Address Birthdate Sex
--------------------------------- ----------- ------
If more than one Applicant/Owner * indicate type of ownership
/ / Joint tenancy with right of survivorship, or / / Tenancy in common
ENTER PREMIUM BILLING INSTRUCTIONS UNDER DETAILS AND INSTRUCTIONS PART I
In states where applicable, the Applicant/Owner herein represents that he or
she is (check only one)
/ / a. Eligible for membership in Lutheran Brotherhood, the same as if
application were being made for insurance or annuity in
Lutheran Brotherhood on the Applicant/Owner; or
/ / b. A trustee or custodian, its successors or assigns purchasing
the contract for a qualified retirement plan; or
/ / c. An employer purchasing the contract pursuant to a deferred
compensation or split dollar plan; or
/ / d. An employer or individual purchasing the contract pursuant to a
keyperson or business continuation agreement; or
/ / e. The trustee of a trust or custodial account, its successors or
assigns, established for the benefit of the Insured/Annuitant
and or the Insured/Annuitant's family; or
/ / f. An Internal Revenue Code Section 501(c)(3) organization
purchasing the contract in order to complete a charitable gift
by the Insured/Annuitant to the Applicant/Owner.
Applicant/Owner Signature(s)
(if corporation, give title of officer)
- ------------------------------------
Proposed Insured/Annuitant Signature (1)
-----------------------------------
- ------------------------------------
Date (2)
-----------------------------------
- ------------------------------------
Dated at
(3)
- ------------------------------------ -----------------------------------
Reg. Rep Signature No.
* If more than one Applicant/Owner, all must act
in concert to exercise ownership rights.
<PAGE>
PART I (Continued)
============================================================================
COMPLETE FOR LIFE INSURANCE AGES 0 - 17
============================================================================
22. Present Height Weight
------------------- --------------------
23. Birth Weight (if under age 1)
--------------------------------
24. Name/Address -- child's personal physician
------------------------------------------------------------------------
------------------------------------------------------------------------
25. Date/Reason last consulted
------------------------------------------------------------------------
------------------------------------------------------------------------
26. Treatment given or medication prescribed.
------------------------------------------------------------------------
------------------------------------------------------------------------
Yes No
27. Does child have, or in the past five years had,
any physical, mental or nervous disorder or
abnormality or attended a special school? / / / /
28. In the past five years has child had (or had
medical advice to have) any examination, X-ray,
EKG, heart study, blood test or other diagnostic
test or ever had an operation? / / / /
29. In the past five years, has child had any
medical care, consulted a physician or been
hospitalized for any illness, disease or injury
or for any reason not already noted? / / / /
30. Is child taking treatment or medicine? / / / /
- ----------------------------------------------------------------------------
DETAILS OF "YES" ANSWERS
- ----------------------------------------------------------------------------
Question No.
============================================================================
Parent Signature (Only if parent not applicant)
Date
- ------------------------------------------------- -------------------
============================================================================
OWNERSHIP -- JUVENILE INSURANCE
============================================================================
31. If Proposed Insured is a minor, Applicant will be owner to Proposed
Insured's age 18. If the applicant dies before the Proposed Insured's
age 18, the owner will be the surviving beneficiary, or if none survive,
a surviving parent or legally appointed guardian of the Proposed Insured
Ownership will pass to the Proposed Insured at age 18 unless amended by
the applicant owner.
============================================================================
COMPLETE FOR ALL APPLICATIONS
============================================================================
32. Premiums will be paid / / A / / SA / / Q / / New PAC
/ / Existing PAC #
-------------------------
33. Payment with the application $ / / None
----------------------
34. IT IS UNDERSTOOD THAT UNDER THE CONTRACT APPLIED FOR THE AMOUNT OF THE
ACCUMULATED VALUE MAY INCREASE OR DECREASE DAILY BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT AND THAT THE AMOUNT OR DURATION OF
THE DEATH BENEFIT MAY VARY WITH THE ACCUMULATED VALUE.
35. I have read the statements and answers recorded on this Part I 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 contract issued. I also agree that
a. Except as provided in the Conditional Life Insurance Agreement,
issued if the full first premium is paid in advance, no insurance
will take effect unless and until:
1. A contract of insurance is issued and delivered;
2. The full first premium is paid; and
3. The health of all Proposed Insureds remains as stated in
Part I and Part II of the application.
b. No Registered Representative has the authority to waive any
question contained in the application or to modify the
application in any way.
c. Changes in amount, plan, benefits, classification, or issue age
applied for must be agreed to in writing by me.
- ----------------- -------------------------------------------
Date Proposed Insured/Annuitant Signature
(Age 18 or over) or Applicant Signature if
Proposed Insured below age 18
- ---------------------- -------------------------------------------
Dated at Spouse Signature (if coverage applied for)
- ------------------------------ -------------------------------------------
Reg. Rep. Signature No. Third Party Applicant/Owner Signature
<PAGE>
============================================================================
LUTHERAN BROTHERHOOD
VARIABLE INSURANCE PRODUCTS COMPANY
625 4th Ave. South
Minneapolis, Minnesota 55415 APPLICATION -- PART II
============================================================================
1. Proposed Insured
LAST FIRST MIDDLE
- ----------------------------------------------------------------------------
2. Height ft. in. Weight lbs.
--------- --------- -------------
3. List below (a.) name & address of personal physician,
(b.) date & reason last consulted, and
(c.) results.
Proposed Insured
a.
------------------------------------------------------------------
b.
------------------------------------------------------------------
c.
------------------------------------------------------------------
Spouse (If coverage applied for)
a.
------------------------------------------------------------------
b.
------------------------------------------------------------------
c.
------------------------------------------------------------------
============================================================================
COMPLETE THIS SECTION FOR ALL PERSONS TO BE INSURED.
DETAILS
OF
"YES" ANSWERS
============================================================================
YES NO QUES. PERSON
NO.
4. IN THE PAST 10 YEARS HAS ANY PERSON
TO BE INSURED BEEN TREATED FOR OR
HAD ANY INDICATION OF:
a. Disorder of eyes, ears, nose,
throat or skin? / / / /
b. Dizziness, fainting, convulsions,
epilepsy, paralysis, stroke, mental
or any nervous disorder? / / / /
c. Shortness of breath, blood spitting,
allergies, asthma, emphysema, or
other respiratory disorder? / / / /
d. Chest pain, high blood pressure,
heart attack, heart murmur, or
heart disorder? / / / /
e. Anemia, varicose veins, disorder
of blood or blood vessels, or
immune disorder? / / / /
f. Intestinal bleeding, ulcer,
colitis, hernia, hemorrhoids,
chronic diarrhea, or other
disorder of stomach, pancreas,
intestines, liver or gallbladder? / / / /
g. Diabetes, thyroid, or other
glandular disorder? / / / /
h. Sugar, albumin, blood in urine;
stone or other disorder of the
kidneys, bladder, or prostate? / / / /
i. Disorder of reproductive
organs, (male or female), breasts,
menstruation, pregnancy (including
complications of pregnancy and
caesarean section)? / / / /
j. Arthritis, gout, back disorder,
sciatica, disorder of muscles,
bones, nerves, joints, or
chiropractic or therapist
consultations? / / / /
k. Cancer, tumor, cyst, growth
or disorder of lymph glands? / / / /
- ----------------------------------------------------
5. OTHER THAN ABOVE, WITHIN THE PAST
5 YEARS, HAS ANY PERSON TO BE INSURED:
a. Had a checkup, physical,
consultation, or any other
illness or surgery? / / / /
(state specific reason why done
or what prompted)
b. Been treated or evaluated at a
hospital, clinic or other facility,
or been advised to have any test or
surgery not completed? / / / /
c. Had an EKG, X-ray, blood
studies or other tests? / / / /
d. Received treatment or any
medication for any reason? / / / /
- ----------------------------------------------------
6. IN THE PAST 10 YEARS, HAS ANY
PERSON TO BE INSURED:
a. Ever requested or received a
pension, benefits or payment
because of any injury, sickness,
or disability? / / / /
b. Been treated or advised to seek
counseling or treatment or joined
a support organization because of
alcohol or drug usage? / / / /
7. HAVE PROPOSED INSURED'S PARENTS,
BROTHERS, OR SISTERS EVER HAD DIABETES,
CANCER, HIGH BLOOD PRESSURE, HEART
DISEASE OR CONGENITAL DISORDER? / / / /
(Give relationship, condition,
current age or age at death)
============================================================================
I have read the statements and answers recorded above. They are, to the
best of my knowledge and belief, true and complete and correctly recorded
and shall be a basis of any contract issued.
- ----------- ------------------ ------------------------------------------
Date Dated at Proposed Insured Signature
- ------------------------------- ------------------------------------------
Reg. Rep. Signature No. Spouse Signature (If coverage applied for)
<PAGE>
============================================================================
REGISTERED REPS. REPORT (AGES 16 & OVER - COMPLETE 1 THRU 15)
============================================================================
YES NO
1. Were all proposed insureds present
when non-medical was completed? / / / /
2. If family coverage applied for has
any family member, who qualifies by
age, been omitted? / / / /
If yes, give details under No. 14.
3. How long have you known proposed insured? How well?
------------- ---------
4. Former address (if not at present address at least 2 years)
------------------------------------------------------------------------
------------------------------------------------------------------------
5. Former employer and address
(if not with present employer at least 2 years)
------------------------------------------------------------------------
------------------------------------------------------------------------
6. Maiden name:
------------------------------------------------------------
7. If proposed insured is now in military service
Branch Rank
---------------------------- ------------------------------
Duties
---------------------------------------------------------------
Alerted for overseas duty?
-------------------------------------------
If yes, include details in No. 14.
8. Proposed Insured Only.
Alternate / /
(LBVIP Products only)
Additional / /
=========================================================================
LIFE PLAN
ADD. BENEFITS
=========================================================================
9. Is application the result of proposed insured's inquiry? / / Yes / / No
10. Does any member of the household receive the BOND? / / Yes / / No
11. I have arranged for:
/ / Medical by the following examiner/Para Med.
/ / Fees have been discussed
Name
-------------------------------------------------
City/State
------------------------------------------------
/ / Urine Specimen / / X-Ray / / EKG / / Blood Chemistry
12. Split Commissions (if applicable)
% Reg. Rep of Record No.
------ -------------------------------- ------------
% Reg. Rep of Record No.
------ -------------------------------- ------------
% Reg. Rep of Record No.
------ -------------------------------- ------------
Signatures of all Registered Reps
Reg. Rep
----------------------------------------------------------------
Reg. Rep
----------------------------------------------------------------
Reg. Rep
----------------------------------------------------------------
13. Phone Interview Information
Telephone Numbers Home ( ) Work ( )
----------------- ---------------
Most convenient time and place for the phone interview:(your time AM/PM)
------------------------------------------------------------------------
May we talk to the Proposed Insured's spouse?
---------------------------
Comments or special instructions
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
14. Details and Instructions
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
15. SOURCE OF BUSINESS (Complete for all cases -- Check box)
/1/ ELNA /H/ SPLIT DOLLAR
/5/ BUY-SELL /I/ KEY PERSON
/7/ FSA /J/ PENSION
/D/ LEAP /K/ DEFERRED COMP.
/E/ FEE PLAN /L/ CH. GIVE-CAP. REPLACE
/F/ PENSION MAX /M/ CH. GIVE-GIFT LIFE INS.
/G/ FSNAR /N/ TSA/IRA
============================================================================
COMPLETE FOR LIFE INS. AGES 0 - 15
ALSO COMPLETE 1, 9, 10 AND 15
============================================================================
16. If other than child's parent, what is applicant's relationship?
------------------------------------------------------------------------
17. Does child reside with both parents? / / Yes / / No
18. Is child being adopted? / / Yes / / No
============================================================================
I CERTIFY THAT I PERSONALLY SOLICITED AND SECURED THIS APPLICATION; THAT I
HAVE READ EACH QUESTION ON IT TO ALL PERSONS TO BE INSURED AND HAVE TRULY
AND ACCURATELY RECORDED THE ANSWERS EXACTLY AS GIVEN. THE UNDERSIGNED
REPRESENTATIVE STATES TO THE BEST OF HIS/HER KNOWLEDGE THIS APPLICATION IS
(NOT) FOR THE PURCHASE OF INSURANCE THAT WILL REPLACE OR CHANGE EXISTING
INSURANCE OR ANNUITY.
--------------------- -------------------------------------------
DATE REG. REP. SIGNATURE
<PAGE>
============================================================================
LUTHERAN BROTHERHOOD
VARIABLE INSURANCE PRODUCTS COMPANY
625 Fourth Avenue South AUTHORIZATION TO OBTAIN
Minneapolis, Minnesota 55415 AND DISCLOSE INFORMATION
============================================================================
A. Lutheran Brotherhood Variable Insurance Products Company (LBVIP), its
reinsurers, insurance support organizations and their authorized
representatives, may obtain medical and other information in order to
evaluate my (our) application for insurance or to determine eligibility
for benefits.
B. Any physician, practitioner, hospital, clinic, other medical or medically
related facility, the Veterans Administration, the Medical Information
Bureau, Inc., my employer and consumer reporting agency or insurance
company who possesses information of care, treatment or advice of me or
my children may furnish such information to LBVIP upon presenting this
authorization or a photocopy.
C. This authorization includes information about drugs, alcoholism, or
mental illness.
D. LBVIP or its reinsurers may make a brief report regarding me or my
children to other companies to whom I have applied or may apply.
E. This authorization will be valid from the date signed for a period of two
and one half years.
F. I have read this authorization and know that I may request to receive a
copy. I have received Lutheran Brotherhood Variable Insurance Products
Company's Notice regarding Consumer Reports and the Medical Information
Bureau, Inc.
G. In connection with any investigative consumer report which may be
obtained, I ( / / do or / / do not ) request a personal interview.
- -------------- ------------------------------------------------------
Date Signature of Applicant/Proposed Insured
------------------------------------------------------
Spouse Signature (If coverage applied for)
------------------------------------------------------
Names of Minor Children to be Insured
<PAGE>
============================================================================
CERTIFICATION OF AGE
============================================================================
This is to certify that
-----------------------------------------------------
(Print) First Middle Last
was born on
-----------------------------------------------------------------
Month Day Year
- ---------------------- -------------------------------------
Dated Signature of Annuitant
Age certified by (Registered Representative review of)
/ / Birth Certificate / / Baptism Record
If neither available - two of the following:
/ / Life Insurance Contract / / Passport
/ / Driver's License / / Hospital Record
/ / Confirmation Record / /
------------------------
/ / Marriage Record / /
------------------------
- ----------------------------------------------- ------------------------
Reg. Rep. Signature No. Dated
============================================================================
LUTHERAN BROTHERHOOD
VARIABLE INSURANCE PRODUCTS COMPANY
625 Fourth Ave South RECEIPT FOR
Minneapolis, Minnesota 55415 ANNUITY APPLICATION
============================================================================
NAME OF ANNUITANT DATE OF RECEIPT AMOUNT RECEIVED
============================================================================
DATED AT SIGNATURE OF REG. REP.
============================================================================
<PAGE>
============================================================================
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY
625 Fourth Avenue South, Minneapolis, Minnesota 55415
============================================================================
APPLICATION FOR ASSOCIATE MEMBERSHIP IN LUTHERAN BROTHERHOOD
============================================================================
Name(s) Basis for Membership Identify Organization or Service
- ----------------------------------------------------------------------------
No.
- -------------------- ---------------------- --------------------------------
No.
- -------------------- ---------------------- --------------------------------
No.
- -------------------- ---------------------- --------------------------------
No.
- -------------------- ---------------------- --------------------------------
No.
- -------------------- ---------------------- --------------------------------
BASIS FOR MEMBERSHIP
1. Current Adult or Juvenile Contract Member of Lutheran Brotherhood.
2. Current Associate member of Lutheran Brotherhood.
3. Current member of a Lutheran church congregation.
4. Baptized in the Christian faith under the auspices of a Lutheran
church and professes to be Lutheran. Adult applicant declares that
proposed members below age 18 are Lutheran.
5. Baptized in the Christian faith, confirmed Lutheran and professes to
be Lutheran. Adult applicant declares that proposed members below
age 18 are Lutheran.
6. Baptized in the Christian faith, prior member of a Lutheran church
congregation and professes to be Lutheran. Adult applicant declares
that proposed members below age 18 are Lutheran.
7. Affiliated with a Lutheran church organization and professes to be
Lutheran. Adult applicant declares that proposed members below age 18
are Lutheran.
8. Is a juvenile under six (6) months of age who will be baptized in the
Christian faith under the auspices of a Lutheran church.
It is understood and agreed that if the concurrent application for
insurance, annuity or other service for a proposed member is declined or if
the contract issued as a result of such application is not accepted, then
this application for membership shall be deemed to be amended to exclude
such proposed member.
I hereby recommend the above person(s) for associate membership.
- -------------------- ------------------------------------------
Date Applicant/Annuitant Signature
- ------------------------------ ------------------------------------------
Reg. Rep. Signature No. Spouse Signature (If coverage applied for)
<PAGE>
============================================================================
LUTHERAN BROTHERHOOD
VARIABLE INSURANCE PRODUCTS COMPANY
625 Fourth Avenue South APPLICATION FOR LIMITED MEMBERSHIP
Minneapolis, Minnesota 55415 SUPPLEMENT TO APPLICATION PART I
============================================================================
APPLICATION FOR LIMITED MEMBERSHIP IN LUTHERAN BROTHERHOOD
============================================================================
1. I am sponsoring the following person(s) for limited membership. I am
sponsoring these person(s) based on my membership in Lutheran Brotherhood
as described in number 2 below.
Last Name First Name Middle Name Relationship to Applicant
Spouse
- ------------ ----------------- ----------------
Dependent Child
- ------------ ----------------- ----------------
Dependent Child
- ------------ ----------------- ----------------
Dependent Child
- ------------ ----------------- ----------------
Dependent Child
- ------------ ----------------- ----------------
2. My membership basis in Lutheran Brotherhood is:
a./ / I am an Adult Benefit Contract Member under Contract number
--------
b./ / I am applying for adult benefit contract membership. If I do not
become a member because my application is declined or because I do
not accept the contract issued, this application for limited
membership will be considered withdrawn.
c./ / I am an Adult Associate Member under contract number or
--------
fund account number .
--------------------
d./ / I am applying for adult associate membership. If I do not become
an associate member because I do not accept the contract issued,
this application for limited membership will be considered
withdrawn.
3. Notwithstanding any provisions in the application and the contract being
applied for, membership of the named spouse and/or dependent children is
limited by the terms of this limited membership application.
a. The membership rights provided to the Adult Benefit Contract Member or
the Adult Associate Member are not provided to the Limited Member.
b. Limited membership will not entitle the Limited Member to any other
rights or privileges of membership in Lutheran Brotherhood except as
granted by resolution of the Lutheran Brotherhood Board of Directors.
c. Limited membership will not entitle the Limited Member to purchase
additional insurance or annuity unless a new application for limited
membership is completed.
d. Limited membership may be changed to adult benefit contract membership
or adult associate membership if the Limited Member later qualifies
under the rules of Lutheran Brotherhood.
On the basis of the above, I hereby make limited membership application on
behalf of the above named person(s).
Dated , 19
------------------------- ---- -----------------------------------
Signature of Sponsor
- --------------------------------------
Signature of Registered Representative
<PAGE>
============================================================================
LUTHERAN BROTHERHOOD
VARIABLE INSURANCE PRODUCTS COMPANY RECEIPT AND
625 Fourth Avenue South CONDITIONAL LIFE INSURANCE
Minneapolis, Minnesota 55415 AGREEMENT
============================================================================
NAME OF PROPOSED INSURED DATE OF RECEIPT AMOUNT RECEIVED
============================================================================
IMPORTANT -- READ CAREFULLY
THE LIFE INSURANCE CONTRACT YOU HAVE APPLIED FOR WILL NOT BECOME EFFECTIVE
UNLESS AND UNTIL A CONTRACT IS DELIVERED TO YOU AND YOU ACCEPT IT. HOWEVER,
IF YOU HAVE PAID US THE MINIMUM CONDITIONAL INSURANCE PREMIUM, WE WILL
PROVIDE THE FOLLOWING CONDITIONAL INSURANCE. IN NO EVENT WILL ANY INSURANCE
EVER BE IN FORCE UNLESS THE PROPOSED INSURED IS AN ACCEPTABLE RISK UNDER OUR
RULES.
CONDITIONAL LIFE INSURANCE
We will pay the beneficiary the amount of life insurance applied for (not
including any Accidental Death Benefit applied for), if:
1. Part I and Part II of the application and the first of any medical
examinations required for the Proposed Insured by our published
underwriting rules have been completed;
2. All representations on Part I and Part II are true and complete;
3. The Proposed Insured is acceptable under our rules for the plan and
amount of insurance applied for;
4. The Proposed Insured dies as the result of any cause other than
suicide; and
5. The agreement has not terminated.
We will pay the beneficiary an amount equal to any Accidental Death Benefit
applied for, if the above conditions are met and the Insured's death results
solely from accidental causes but not including death resulting from
operating or descending from any aircraft.
INSURANCE APPLIED FOR:
In determining whether we will issue the insurance applied for, we agree
that if Part I and Part II of the application are fully completed and if all
representations are true and correct, we will determine the insurability of
each Proposed Insured as of the date of the application. However, if one or
more medical examinations are initially required for a Proposed Insured by
our published underwriting rules, we will determine the insurability of that
Proposed Insured as of the date of the first such examination, if that date
is later than the date of the application. When we determine the
insurability of each Proposed Insured, we will not consider any change in
health that occurs after the date upon which we agree to determine that
person's insurability. Each Proposed Insured's insurability will be
determined at our Home Office according to our underwriting rules.
TERMINATION OF CONDITIONAL INSURANCE:
This agreement will terminate on the earliest of:
1. The date we refund your premium payment or notify you that we have
rejected your application for life insurance.
2. The date we issue a contract of life insurance.
3. 30 days after a contract is mailed from our Home Office if the plan
and amount of insurance applied for can be issued only at a higher
premium stated in the receipt or issued on a basis other than as you
applied for or you accept or reject such a contract.
In no event will coverage exist under both this agreement and the contract
we offer you.
OTHER CONDITIONS:
No Registered Representative can determine the insurability of any Proposed
Insured, or bind us by making any promise or representation other than as
contained in this agreement.
We make this agreement in consideration of receiving the first full premium
payment.
We will refund your premium payment unless you accept delivery of the
contract we offer or unless we pay a claim under this agreement.
DEFINITIONS:
YOU, YOUR -- the Applicant.
WE, OUR, US -- Lutheran Brotherhood Variable Insurance Products Company
(LBVIP)
DATE OF THE APPLICATION -- the date shown on Part I or Part II, whichever
is later.
BENEFICIARY -- the beneficiary or beneficiaries named in the application.
============================================================================
I UNDERSTAND AND AGREE TO ALL THE TERMS AND CONDITIONS SATED.
============================================================================
ALL PREMIUM CHECKS MUST BE MADE PAYABLE TO LBVIP; DO NOT MAKE CHECKS PAYABLE
TO THE REGISTERED REPRESENTATIVE OR LEAVE THE PAYEE BLANK.
============================================================================
DATED AT SIGNATURE OF REG. REP. SIGNATURE OF APPLICANT
============================================================================
<PAGE>
To be delivered to Proposed Insureds/Applicant when Application is written
============================================================================
LUTHERAN BROTHERHOOD
VARIABLE INSURANCE PRODUCTS COMPANY
625 Fourth Avenue South
Minneapolis, Minnesota 55415
============================================================================
NOTICE OF INFORMATION PRACTICES, CONSUMER REPORTS
AND MEDICAL INFORMATION BUREAU, INC.
============================================================================
ARE YOU CONCERNED WITH YOUR PRIVACY? WE ARE.
============================================================================
WELCOME TO THE LUTHERAN BROTHERHOOD FAMILY
============================================================================
Lutheran Brotherhood Variable Insurance Products Company (LBVIP) is a wholly
owned subsidiary of Lutheran Brotherhood. Welcome to the Lutheran
Brotherhood family.
Thank you for providing us with information necessary to complete your
application. Are you wondering why we asked so many questions? They were
necessary to calculate the cost of insurance you applied for. We'll take
care to use the information for that purpose. We take that responsibility
and your rights seriously.
============================================================================
WHERE OUR INFORMATION COMES FROM
============================================================================
The application you just completed is our main source. Your health history
and lifestyle are two of the most important factors we work with in
evaluating your application. Sometimes it is necessary that we verify or
secure more information in addition to what you provide us. Information may
be obtained by correspondence, telephone or personal contact - at our
expense we may:
* Ask you to take an examination, have a special test such as an
electrocardiogram, x-ray, or blood study completed.
* Write to your doctor or any clinic or hospital you may have received
health care from.
* Obtain information from the Medical Information Bureau (MIB) and/or
a consumer reporting agency. More about these organizations later.
* We may correspond with other insurance or reinsurance companies only
to aid us properly in evaluating your application. Your LBVIP
registered representative may ask you questions to help us improve
your insurance program.
* We may contact you by telephone for additional or clarifying
information.
============================================================================
GUARDING YOUR PRIVACY
============================================================================
The information we obtain about you is considered confidential and is
gathered only for the purpose of establishing your insurability.
There will be some rare instances where it would be required of us to
furnish information without your consent. For example, a state insurance
department or law enforcement facility might request information as part of
their regulatory or enforcement duties.
If a medical condition is discovered by us that you are not aware of, we may
inform your physician.
Information on you may be used for statistical purposes or marketing
research but you would not be identified individually.
It may be necessary to provide information to certain industry-support
organizations to allow them to perform their functions. An example would be
a consumer reporting agency that may need some basic identifying data before
it may collect information for us that is needed to evaluate your
application or process your claim.
============================================================================
CAN I REVIEW MY FILE INFORMATION?
============================================================================
Yes, on your written request, LBVIP will send you a summary of relevant
information we obtained in connection with your application. Detailed
medical record information will only be provided to your physician. We will
not send you information gathered in expectation or in connection with any
claim, civil or criminal proceeding.
============================================================================
CAN I CORRECT INFORMATION?
============================================================================
If after reviewing our information you feel it is not correct or complete,
you may ask us for a review. If we agree to make a change, we will make the
necessary correction or addition. We will also inform anyone else to whom
we have disclosed the original information of this correction.
If we don't agree to make any changes, you may file a statement with us
which states what you believe to be correct. We'll send that statement to
anyone to whom we sent the information in the past and include it in any
future disclosures.
============================================================================
CONSUMER REPORTS
============================================================================
An investigative consumer report may be requested to help us determine your
insurability. This report would include information on your lifestyle,
character, general reputation and personal characteristics such as health,
occupation and finances. The consumer reporting agency would gather this
information through interviews with you, your family, business associates,
friends and financial institutions.
You have the right, upon written request, to be informed if an investigative
consumer report was or was not made. If a report was ordered, we'll provide
you with the name and address of the consumer reporting agency. You may
then contact that agency and they will let you inspect and receive a copy of
that report. They will also explain their retention and release practices.
============================================================================
THE MEDICAL INFORMATION BUREAU, INC. (MIB)
============================================================================
The MIB is a non-profit organization which operates as an information
exchange for its members. Lutheran Brotherhood Variable Insurance Products
Company (LBVIP) is a member of the MIB.
We make reports to the MIB on factors affecting your insurability. We will
not inform them of our decision on your application. If you subsequently
apply to another Bureau member company for life or health insurance or
submit a claim for benefits, MIB will, upon request, supply that company
with information in its file. LBVIP or its reinsurer(s) may also release
information in its files to other life insurance companies to whom you may
apply for life or health insurance, or to whom a claim for benefits may be
submitted.
Upon written request, the MIB will arrange for a disclosure to you of any
information it may have on you on file (medical information will be
disclosed only to your physician). If you feel the information in the MIB
file is not correct, you may contact the MIB and seek a correction in
accordance with procedures outlined in the Federal Fair Credit Reporting
Act.
MIB's address is: MIB, Inc., Post Office Box 105 Essex Station,
Boston, Massachusetts 02112. (617)426-3660.
============================================================================
HAVE ANY MORE QUESTIONS?
============================================================================
If you have any further questions about our collection and handling of
information about you as one of our applicants, your LBVIP registered
representative will be happy to assist you or you may write to us at our
Home Office. The address is:
Lutheran Brotherhood
Variable Insurance Products Company
625 Fourth Ave. So.
Minneapolis, Minnesota 55415
<PAGE>
TABLE OF CONTENTS
=================
Part I
Third Party Ownership
Part II
Reg. Rep. Report
Authorization
Certification of Age
Annuity Receipt
Membership Applications
Conditional Receipt
Privacy Information
IMPORTANT REMINDERS
===================
Motor Vehicle Record --
Include details and dates of violations.
Note handling of beneficiaries --
Form 57 (Request for Change Beneficiary and/or Name) and Form 1684
(Beneficiary Change Trustee Designation) can be used if necessary.
Suitability --
These questions must be completed for every application.
Investment Allocation --
Include in whole numbers the percentages of the premium payment to be
allocated to each of the subaccounts. The total of the allocations to
the subaccounts must be equal to 100%.
Money taken with the application?
If so, Receipt and Conditional Insurance Agreement must be delivered to
applicant. If Life amount applied for exceeds $300,000 call the Home
Office Underwriting Department before accepting premium.
Notice of Information Practices, Consumer Reports
and Medical Information Bureau, Inc. --
This must be delivered to the Applicant/Proposed Insured on all
applications and annuities.
#20702
EXHIBIT 8
DESCRIPTION OF
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS COMPANY'S
PURCHASE, REDEMPTION AND TRANSFER PROCEDURES FOR CONTRACTS
PURSUANT TO RULE 6e-3(T)(b)(12)(ii)
This document sets forth the administrative procedures that will be followed
by Lutheran Brotherhood Variable Insurance Products Company (LBVIP) in
connection with the issuance of its flexible premium variable life insurance
contract (the 'Contract') described in this Registration Statement, the
transfer of the Contract's assets, and the redemption by the Contract Owners
of their interest in the Contracts. Capitalized terms that are not defined
herein shall have the same meaning as such terms are defined in the Flexible
Premium Variable Life Insurance Contract Prospectus.
"PUBLIC OFFERING PRICE":
PURCHASE AND RELATED TRANSACTIONS
The following is a summary of the principle Contract provisions and
administrative procedures which constitute either direct or indirect
purchase transactions. The insurance aspects of the Contract cause
procedures to differ in certain significant respects from purchase
procedures for mutual funds or contractual plans.
PREMIUM SCHEDULES AND UNDERWRITING STANDARDS
Premiums for the Contract will not be the same for all Contract Owners.
LBVIP requires payment of the minimum Contract Issuance Premium before the
Contract will be issued. The Minimum Contract Issuance Premium will
generally equal the initial Scheduled premium selected by the Contract
Owner, or, for automatic payment plans, the greater of two Death Benefit
Guarantee Premiums or the initial Scheduled Premium. If the Date of Issue
precedes the Contract Date and the Minimum Contract Issuance Premium
otherwise required would not provide a premium payment sufficient for the
next Contract Month, additional Scheduled Premium payment(s) sufficient for
the next Contract Month will be required.
The Contract has a Death Benefit Guarantee if the Contract Owner chooses to
pay premiums sufficient to maintain the Death Benefit Guarantee. This
premium is set forth in the Contract. If the Death Benefit Guarantee is in
effect, LBVIP guarantees the Contract will stay in force until the later of
(a) the Insured's Attained Age 71 and (b) the Attained Age of the Insured
at the end of a period ranging from 11 to 31 years (varying with the
Insured's Attained Age at issue) from the Date of Issue. The Accumulated
Value is not guaranteed.
The Contract Owner will determine a Scheduled Premium that provides for a
level premium payable at a fixed interval. Payment of the Scheduled Premium
is not, however, mandatory and failure to do so will not in itself cause the
Contract to lapse. Instead, Contract Owners may determine the amount and
timing of subsequent premiums subject to the following restrictions:
- In most cases, payment of a cumulative premium sufficient to maintain
the Death Benefit Guarantee will be required to keep the Contract in
force during the first few Contract Years.
- LBVIP will return to the Contract Owner any premium paid that would
exceed the current maximum premium payments allowed for life
insurance under Federal Law.
The Contract will stay in force as long as the Cash Surrender Value is
sufficient to pay the Monthly Deduction (the charges imposed in connection
with the Contract.) The amount of premium, if any, required to keep the
Contract in force depends on the Cash Surrender Value which in turn depends
on such factors as the investment experience, the amount of any outstanding
loans, and the Decrease Charge. The Monthly Deduction varies with the cost
of insurance charge. The cost of insurance is based on the principle of
pooling and distribution of mortality risks, which assumes that each
Contract Owner pays cost of insurance charges commensurate with his or her
mortality risk which is actuarially determined based on the Insured's sex,
Attained Age, and premium class. The same rate applies to all Insureds in a
given actuarial category and within the same initial Face Amount category.
The rate is based on LBVIP's expectations as to future mortality experience.
The Contract will be sold according to established underwriting standards
and state insurance laws. State insurance laws prohibit unfair
discrimination among Contract Owners but recognize that premiums must be
based on factors such as age, sex, health, and occupation.
APPLICATION AND INITIAL PREMIUM PROCESSING
LBVIP will follow certain insurance underwriting procedures to determine
whether the proposed Insured is insurable. The process of underwriting
evaluates risks from the information provided on the application,
verification procedures such as medical examinations, and additional
information furnished by the applicant on request. LBVIP will not issue the
Contract until the underwriting procedure has been completed.
At the time an Application is accepted, subject to LBVIP's underwriting
rules, an applicant can obtain temporary insurance protection pending
issuance of the Contract by submitting payment of the Minimum Conditional
Insurance Premium. The Minimum Conditional Insurance Premium will equal
three initial Death Benefit Guarantee Premiums, or, in the case of automatic
monthly plans, two initial Death Benefit Guarantee Premiums. If LBVIP
subsequently determines that the proposed Insured is not an acceptable risk
under LBVIP's underwriting standards or rules, even if the Minimum
Conditional Insurance Premium has been paid, no temporary insurance coverage
will have been provided and any premium paid will be refunded (without
interest).
Upon delivery of the Contract, the balance (if any) of the Minimum Contract
Issuance Premium must be paid. The Minimum Contract Issuance Premium will
generally equal the initial Scheduled Premium selected by the Contract
Owner, or, in the case of automatic monthly payment plans, the greater of
the Minimum Conditional Insurance Premium or the initial Schedule Premium.
If the Date of Issue precedes the Contract Date and the Minimum Contract
Issuance Premium otherwise required would not provide a premium payment
sufficient for the next Contract Month, additional Schedule Premium
payment(s) sufficient for the next Contract Month will be required.
The Date of Issue is the date used to determine Contract Months, Contract
Years, Monthly Anniversaries, and Contract Anniversaries. The Contract Date
is the date on which the initial Net Premium(s) will be allocated to the
Variable Account. The Contract Date will be the latest of (i) the Date of
Issue; (ii) the date LBVIP receives the first premium payment on the
Contract at its Home Office; and (iii) any other date mutually agreed upon
by LBVIP and the Contract Owner.
ALLOCATION OF NET PREMIUMS
The Contract owner will, in the Application, indicate how Net Premiums
should be allocated to the Subaccount(s) of the Variable Account. Until the
Contract Date, premium payments will be allocated to LBVIP's General
Account. If a Contract is issued, interest will be credited on premium
payments held in the General Account at a rate of interest determined by
LBVIP; no interest will be credited on these premium payments if no Contract
is issued (but the full amount of any premiums paid will be refunded). On
the Contract Date, Net Premiums, together with any interest credited on
premiums held in the General Account, will be transferred to the
Subaccount(s) of the Variable Account according to the following procedures.
If the Contract is being issued in a state where the Contract Owner has a
right for a period of time to receive a minimum refund equal to the gross
premiums paid, then the amount held in the General Account on the Contract
Date will be transferred on the Contract Date from the General Account and
allocated to the Money Market Subaccount for a period of 60 days, at which
time the amount held in the Money Market Subaccount will be reallocated
among the Subaccount(s) pursuant to the Contract Owner's instructions. If,
instead, the Contract is being issued in a state where the Contract Owner
may receive a refund that reflects the investment performance of the
Variable Account, the amount held in the General Account on the Contract
Date will be transferred on the Contract Date from the General Account and
allocated among the Subaccount(s) pursuant to the Contract Owner's
instructions. Any Net Premiums received after the Contract Date will be
allocated to the Subaccount(s) chosen by the Contract Owner, except that any
Net Premiums received while amounts are being held in the Money Market
Subaccount pending expiration of the 60-day period will be allocated to that
Subaccount until that 60-day period expires.
The percentages of each Net Premium that may be allocated to any Subaccount
of the Variable Account must be in whole numbers and the sum of the
allocation percentages must be 100%. The allocation for future Net Premiums
may be changed without charge at any time by providing LBVIP with Written
Notice.
PREMIUM PROCESSING
Premium Expense Charges will be deducted from each premium payment. The
Premium Expense Charges will consist of a sales charge of 5% of each premium
payment; a premium tax charge of 2.5% of each premium payment; and a premium
processing charge of $1.00 per premium payment ($.50 for automatic payment
plans). LBVIP reserves the right to increase the premium processing charge
in the future to an amount not exceeding $2.00 per premium payment ($1.00
for automatic payment plans). The net premium is allocated to the Variable
Account on the Valuation Date on or next following the date LBVIP receives
the premium payment.
REINSTATEMENT
A Contract that lapses without value may be reinstated at any time within 5
years after the expiration of the grace period and before the Maturity Date
by submitting the following items to LBVIP:
1. Written application for reinstatement;
2. Evidence of insurability satisfactory to LBVIP;
3. Payment or reinstatement of the Contract Debt (including any loan
interest earned during the grace period) that existed on the date
the grace period expired;
4. A payment that is sufficient to cover: (a) payment of any unpaid
Monthly Deductions for the grace period; and (b) a premium payment
or loan repayment sufficient to increase Cash Surrender Value (that
is, Accumulated Value less any Contract Debt and any Decrease
Charge) to an amount equal to Monthly Deductions and interest on
Contract loans for the next two Contract Months based on Unit
Values on the date of reinstatement.
The amount of Cash Surrender Value on the date of reinstatement will equal
the Accumulated Value on that date less any reinstated Contract Debt and any
reinstated Decrease Charge (discussed below). The amount of Accumulated
Value on the date of reinstatement will equal: (a) the Accumulated Value as
of the expiration of the grace period before termination of the Contract;
PLUS (b) any premiums received at the time of reinstatement, reduced by the
Premium Expense Charges; LESS (c) any Monthly Deductions and any loan
interest due for the grace period; LESS (d) the Monthly Deduction for the
next Contract Month.
Contract charges will, in effect, be calculated and reinstated on a
reinstated Contract as if the Contract had been reinstated effective as of
the expiration of the grace period. Any Decrease Charge and any Initial
Monthly Administrative Charge that applied to the Contract at the expiration
of the grace period will be reinstated. The period of time from Contract
termination until Contract reinstatement will not be taken into account in
determining when the ten year time periods for the Decrease Charge and the
Initial Monthly Administrative Charge expire or in determining when the
first Contract Year expires for the purpose of calculating the Contingent
Deferred Sales Charge. The cost of insurance after reinstatement will be
based on the Attained Age of the Contract Owner. The Monthly Deductions and
any loan interest that would have otherwise been payable during the grace
period must be paid before reinstatement, which is also consistent with
treating a reinstated Contract as if the Contract has been reinstated
effective as of the expiration of the grace period. No contract charges are
made for the period of time from Contract termination to Contract
reinstatement.
The effective date of reinstatement will be the date the reinstatement
application was approved.
The Death Benefit Guarantee cannot be reinstated after lapse of the
Contract.
LOAN REPAYMENTS
Accumulated Value in the Loan Account will be credited with interest at an
effective annual rate of 6%. NO ADDITIONAL INTEREST WILL BE CREDITED TO
THESE ASSETS. The interest earned during a Contract Month will be credited
at the end of the Contract Month. Any interest credited will be allocated
to the Subaccount(s) in proportion to the Accumulated Value in the
respective Subaccounts.
Debt may be repaid any time before the Maturity Date while the Insured is
living. If not repaid, LBVIP will deduct Debt from any proceeds payable
under the Contract. As Debt is repaid, the Contract's Accumulated Value
held in the Subaccount(s) of the Variable Account will be restored. LBVIP
will transfer the amount of such repayment (as well as any prepaid loan
interest that was unearned by LBVIP at the time of repayment) from the Loan
Account to the Subaccount(s) of the Variable Account in the same proportion
that the Contract's Accumulated Value in a Subaccount bears to the
Contract's total Accumulated Value in the Variable Account (the Contract
Owner may select a different transfer basis with LBVIP's approval). When
the entire Debt is repaid, interest that would be credited upon the assets
held in the Loan Account during the period from the last Monthly Anniversary
to the date of repayment, as well as any unearned prepaid loan interest,
will also be allocated to the Subaccount(s) in the same proportion as Debt
repayments will be allocated. LBVIP will allocate the repayment of Debt as
of the date on which the repayment is received or, if that is not a
Valuation Date, on the next following Valuation Date.
The Contract Owner must notify LBVIP if a payment is a loan repayment;
otherwise, it will be considered a premium payment.
CORRECTING A MISSTATEMENT OF AGE OR SEX
If the Insured's age or sex was misstated, the Accumulated Value and the
Death Benefit will be adjusted, using the most recent Cost of Insurance
Rates, to the amount that would have been provided based on the correct age
and sex.
"REDEMPTION PROCEDURES"
SURRENDER AND RELATED TRANSACTIONS
The following is a summary of the principle Contract provisions and
administrative procedures which constitute redemptions under the Contract.
These procedures differ in certain significant respects from redemption
procedures for mutual funds or contractual plans.
CASH SURRENDER VALUE
At any time before the earlier of the death of the Insured and the Maturity
Date, the Contract Owner may totally surrender the Contract by giving
Written Notice to LBVIP. The Cash Surrender Value will equal the
Accumulated Value less any Contract Debt and any Decrease Charge.
The Accumulated Value of the Contract is the total amount of value held
under the Contract at any time (which equals the sum of the amounts held in
the Loan Account and the Variable Account). The Contract's Accumulated
Value in the Variable Account will reflect the investment performance of the
chosen Subaccounts of the Variable Account, any Net Premiums paid, any
partial surrenders, any loans, any loan repayments, any loan interest paid
or credited, and any charges assessed in connection with the Contract
(including any Decrease Charge previously imposed upon a requested decrease
in Face Amount). The Contract Owner bears the entire investment risk for
amounts allocated to the Variable Account. LBVIP does not guarantee a
minimum Accumulated Value.
The Contract's Cash Surrender Value will be the Accumulated Value less any
Contract Debt and any Decrease Charge. The Cash Surrender Value is relevant
to continuation of the Contract, to determining the amount available for
Contract loans, and to determining the amount available upon partial or
total surrender of the Contract.
PARTIAL SURRENDER
The Contract Owner may also partially surrender the Contract by sending
Written Notice to LBVIP. The amount of any Partial Surrender must be at
least $500 and the remaining Cash Surrender Value must not be less than $500
(in each case with the Cash Surrender Value being determined on the day
Written Notice is received by LBVIP, or if this is not a Valuation Date, the
next following Valuation Date). The amount surrendered will be deducted
from the Subaccount(s) of the Variable Account in the same proportion that
the Contract Owner's Accumulated Value in the respective Subaccount(s) bears
to the Contract's total Accumulated Value in the Subaccount(s) at that time
(the Contract Owner may select a different deduction basis with LBVIP's
approval). A surrender charge of $25 or 2% of the amount withdrawn,
whichever is less, will be deducted by LBVIP from the amount withdrawn.
DEATH BENEFITS AND BENEFIT AT MATURITY
As long as the Contract remains in force, LBVIP will, upon due proof of the
Insured's death, pay the death proceeds of the Contract to the named
Beneficiary in accordance with the designated Death Benefit Option. The
proceeds may be paid in cash or under one of the settlement options set
forth in the Contract. The amount payable under the designated Death
Benefit Option will be reduced by any outstanding Contract Debt and any due
and unpaid Contract charges, and will be increased by any additional
insurance benefits provided for in the Contract.
The Contract provides two Death Benefit Options: Option A and Option B.
The Contract Owner designates the Death Benefit Option in the application.
The Option A Death Benefit is equal to the greater of (a) the Face Amount
of the Contract plus the Accumulated Value of the Contract and (b) the
Accumulated Value multiplied by the specified percentage set forth in the
Contract (with the Accumulated Value in each case being determined on the
Valuation Date on or next following the Insured's date of death).
The Option B Death Benefit is the greater of (a) the Face Amount of the
Contract and (b) the Accumulated Value on the Valuation Date on or next
following the Insured's date of death multiplied by the specified percentage
set forth in the Contract.
If the Insured is living on the Maturity Date of the Contract, LBVIP will
pay the Accumulated Value of the Contract on the Maturity Date, reduced by
any Contract Debt. The Maturity Date will be shown in the Contract and will
be the Contract Anniversary on or next following the Insured's 96th
birthday.
LOANS
The Contract Owner may at any time after the first Contract Year borrow
money from LBVIP using the Contract as the only security for the loan. The
Contract Owner may at any time after the first Contract Year obtain Contract
loans in a minimum amount of $100 but Contract loans can not exceed in the
total 90% of the excess of Accumulated Value over any Decrease Charge on the
date of any loan. Loans have priority over the claims of any assignee or
other person. The loan may be repaid in full or in part at any time while
the Insured is living.
LBVIP will allocate a Contract loan among the Subaccounts of the Variable
Account in the same proportion that the Contract's Accumulated Value in each
Subaccount bears to the Contract's total Accumulated Value in the Variable
Account, as of the day on which the request is received or, if that is not a
Valuation Date, on the next following Valuation Date. With LBVIP's
approval, the Contract Owner can select a different allocation.
Loans will normally be paid within seven days after receipt of Written
Notice. Postponement of loans may take place under certain circumstances.
The interest rate charged on Contract loans accrues daily at an annual rate
of 7.4%, payable in advance, which is equivalent to 8% per year. Loan
interest is calculated on a prepaid basis, and is payable in advance at the
time any Contract loan is made (for the remainder of the Contract Year) and
at the beginning of each Contract Year thereafter (for that entire Contract
Year). If interest is not paid when due, it will be added to the loan
balance and will bear interest at the same rate. If death or full surrender
occurs before the next Contract Anniversary, unearned interest will be added
to the proceeds payable.
Accumulated Value equal to the portion of the Contract loan allocated to
each Subaccount will be transferred from the Subaccount to the Loan Account,
thereby reducing the Contract's Accumulated Value in that Subaccount.
Like total or partial surrenders, Contract loans are a means of withdrawing
Accumulated Value from the Contract. LBVIP believes that under current
laws, Contract loans should be treated as debt owed by the Contract Owner
and not as taxable income. A total or partial surrender may, however, have
tax consequences depending on the circumstances of such withdrawal.
CONTRACT LAPSE
The failure to make a Schedule Premium payment will not itself cause a
Contract to lapse. Subject to the Death Benefit Guarantee, lapse will only
occur when (a) the Surrender Value is insufficient to cover the Monthly
Deduction or (b) Contract Debt exceeds the Accumulated Value less any
Decrease Charge, and in either case if a grace period expires without a
sufficient payment. Even if the Cash Surrender Value is insufficient to
cover the Monthly Deduction, the Contract will not lapse if the Death
Benefit Guarantee is in effect.
Because unearned prepaid loan interest will not be included in Contract
Debt, the Cash Surrender Value (which is Accumulated Value less any Contract
Debt and any Decrease Charge) will always include any unearned prepaid loan
interest. This means that, in effect, unearned prepaid loan interest will
be applied to keep the Contract in force because this amount will be
available to pay the Monthly Deduction and because the grace period for the
Contract does not commence until the Cash Surrender Value is insufficient to
cover the Monthly Deduction. Any payment made by the Contract Owner after
unearned prepaid loan interest has been applied in this manner will first be
used to replace unearned prepaid loan interest so applied.
The Contract provides for a 61-day grace period. Thus, the Contract does
not lapse, and the insurance coverage continues, until the expiration of a
grace period after the Monthly Anniversary on which (a) Cash Surrender
Value is insufficient to pay the Monthly Deduction chargeable on that
Monthly Anniversary or (b) Contract Debt exceeds the Accumulated Value less
any Decrease Charge.
When the Contract enters the grace period, LBVIP will notify the Contract
Owner. Any Accumulated Value in the Subaccounts for this contract will be
transferred to the general account until we receive the required payment.
The Contract Owner will then have 61 days, measured from the date notice is
mailed to the Contract Owner, to make sufficient payments. The notice will
specify the payment required to keep the Contract in force and the length of
the grace period. Failure to make a sufficient payment within the grace
period will result in lapse of the Contract without value.
If the Insured dies during the grace period, the proceeds under the Contract
will equal the amount of the Death Benefit and any additional life insurance
benefits on the Insured provided by rider as of the Monthly Anniversary on
or immediately preceding the commencement of the grade period, reduced by
any Contract Debt and any unpaid Monthly Deductions.
If a sufficient payment is not made during the grace period, the Contract
will lapse without value and insurance coverage will end as of the
expiration of the grace period. The Contract will have no Accumulated Value
or Cash Surrender Value upon lapse.
On any Monthly Anniversary when the Death Benefit Guarantee is in effect,
the Contract will not lapse.
TRANSFERS
Accumulated Value may be transferred among the Subaccounts of the Variable
Account. The total amount transferred each time must be at least $500
(unless the total Accumulated Value in a Subaccount is less than $500, in
which case the entire amount may be transferred). LBVIP will process
transfers and determine all values in connection with transfers on the day
on which the transfer request is received.
After two transfers have been made in any Contract Year, a transfer charge
of $10 will be deducted from each subsequent amount transferred during the
remainder of such Contract Year. LBVIP may increase this charge to an
amount not exceeding $20. Transfers resulting from Contract loans, the
exercise of exchange privileges, the initial reallocation of Accumulated
Value from LBVIP's General Account to the Variable Account, or the
reallocation of Accumulated Value from the Money Market Subaccount following
the 60-day period after the Contract Date, will not be subject to a transfer
charge and will not count against the two free transfers in any Contract
Year. All transfers included in a request are treated as one transfer
transaction. Under present law, transfers are not taxable transactions.
#20705
625 Fourth Avenue South
Minneapolis, Minnesota 55415
LUTHERAN BROTHERHOOD
[LOGO] VARIABLE INSURANCE EXHIBIT 3
PRODUCTS COMPANY
April 27, 1994
Lutheran Brotherhood Variable
Insurance Products Company
625 Fourth Avenue South
Minneapolis, MN 55415
Gentlemen:
In connection with the proposed registration under the Securities Act of
1933, as amended, of individual flexible premium variable life insurance
contracts (the "Contracts") and interests in LBVIP Variable Insurance
Account (the "Variable Account"), I have examined documents relating to the
establishment of the Variable Account by the Board of Directors of Lutheran
Brotherhood Variable Insurance Products Company (the "Company") as a
separate account for assets applicable to variable life insurance contracts,
pursuant to Minnesota Statutes Sections 61A.13 to 61A.21, as amended, and
the Registration Statement, on Form S-6, as amended by Post-Effective
Amendment No. 16 thereto, File No. 33-3243 (the "Registration Statement"),
and I have examined such other documents and have reviewed such matters of
law as I have deemed necessary for this opinion, and I advise you that in my
opinion:
1. The Variable Account is a separate account of the Company duly created
and validly existing pursuant to the laws of the State of Minnesota.
2. The Contracts, when issued in accordance with the Prospectus
constituting a part of the Registration Statement and upon compliance
with applicable local law, will be legal and binding obligations of
the Company in accordance with their respective terms.
3. The portion of the assets held in the Variable Account equal to
reserves and other contract liabilities with respect to the Variable
Account are not chargeable with liabilities arising out of any other
business the Company may conduct.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Legal Opinions" in
the Prospectus constituting a part of the Registration Statement and to the
references to me wherever appearing therein.
Very truly yours,
/s/JAMES M. ODLAND
James M. Odland
Assistant Secretary and
Assistant Counsel
(612)340-5257
#20703
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<LEGEND>
This schedule contains summary financial information extracted from the LBVIP
Variable Insurance Accout Annual Report to Shareholders dated December 31,
1997 and is qualified in its entirety by reference to such Annual Report.
</LEGEND>
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<CURRENCY> U.S. DOLLARS
<S> <C>
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<PERIOD-END> DEC-31-1997
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<INVESTMENTS-AT-COST> 141,167,544
<INVESTMENTS-AT-VALUE> 169,990,850
<RECEIVABLES> 36,561
<ASSETS-OTHER> 0
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<TOTAL-ASSETS> 170,027,411
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<OTHER-ITEMS-LIABILITIES> 98,817
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<NET-ASSETS> 169,928,594
<DIVIDEND-INCOME> 5,419,447
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 910,830
<NET-INVESTMENT-INCOME> 4,508,617
<REALIZED-GAINS-CURRENT> 10,761,690
<APPREC-INCREASE-CURRENT> 11,735,376
<NET-CHANGE-FROM-OPS> 27,005,683
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,301,217
<NUMBER-OF-SHARES-REDEEMED> 2,488,789
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 39,061,778
<ACCUMULATED-NII-PRIOR> 0
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