As filed with the Securities and Exchange Commission on __________, 1997
REGISTRATION NO. ___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-6
----------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8 B-2
----------------------
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
(EXACT NAME OF TRUST)
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
(NAME OF DEPOSITOR)
----------------------
ONE AMERICAN ROW
HARTFORD, CONNECTICUT 06115
(COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
DONA D. YOUNG, ESQUIRE
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
ONE AMERICAN ROW
HARTFORD, CONNECTICUT 06115
(NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE)
----------------------
COPIES TO:
MICHAEL BERENSON, ESQ. RICHARD J. WIRTH, ESQ.
JORDEN BURT BERENSON & JOHNSON LLP COUNSEL
1025 THOMAS JEFFERSON ST. N.W. PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
SUITE 400 EAST ONE AMERICAN ROW
WASHINGTON, D.C. 20007-0805 HARTFORD, CONNECTICUT 06115
----------------------
DECLARATION REQUIRED BY RULE 24F-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has chosen to register an indefinite amount of securities being offered.
----------------------
Amount of filing fee:
Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration
Statement.
----------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
----------------------
Registrant is relying on the exemptive relief provided by Rule 6e-3(T) under the
Investment Company Act of 1940 and the relief granted to separate accounts
issuing variable contracts by Section 27i of the Investment Company Act of 1940.
================================================================================
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
N-8B-2 ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
1 The VUL Account
2 Phoenix Home Life Mutual Insurance Company
3 Not Applicable
4 Sales of Policies
5 The VUL Account
6 The VUL Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 The Policy
11 Investments of the VUL Account
12 Investments of the VUL Account
13 Charges and Deductions; Investments of the
VUL Account
14 Flexible Premiums; Allocation of Premium and Policy
Value; Right to Cancel Period
15 Allocation of Premium and Policy Value; Transfer of
Policy Value
16 Investments of the VUL Account
17 Surrenders
18 Allocation of Premium and Policy Value; Transfer of
Policy Value; Reinvestment and Redemption
19 Voting Rights; Reports
20 Not Applicable
21 Policy Loans
22 Not Applicable
23 Safekeeping of the VUL Account's Assets
24 Not Applicable
25 Phoenix Home Life Mutual Insurance Company
26 Charges and Other Deductions; Investments of the
VUL Account
27 Phoenix Home Life Mutual Insurance Company
28 Phoenix Home Life Mutual Insurance Company;
The Directors and Executive Officers of
Phoenix Home Life Mutual Insurance Company
29 Not Applicable
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Phoenix Home Life Mutual Insurance Company
36 Not Applicable
37 Not Applicable
38 Sales of Policies
39 Sales of Policies
40 Not Applicable
41 Sales of Policies
42 Not Applicable
43 Not Applicable
44 Determination of Subaccount Values
45 Not Applicable
46 Determination of Subaccount Values
47 Allocation of Premium and Policy Value; Determination
of Subaccount Values
48 Not Applicable
49 Not Applicable
50 Not Applicable
<PAGE>
N-8B-2 ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
51 Phoenix Home Life Mutual Insurance Company; The
Policy; Charges and Deductions
52 Investments of the VUL Account
53 Federal Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Not Applicable
<PAGE>
VARIABLE LIFE INSURANCE POLICY
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
101 MUNSON STREET
GREENFIELD, MASSACHUSETTS 01301
TELEPHONE: (800) 892-4885
---------------------------
mailing address:
PHOENIX VARIABLE PRODUCTS MAIL OPERATION
P.O. BOX 8027
BOSTON, MASSACHUSETTS 02266-8027
PROSPECTUS
SEPTEMBER 1, 1997
This Prospectus describes a last survivor flexible premium variable life
insurance policy (the "Policy" or "Policies"), offered by Phoenix Home Life
Mutual Insurance Company ("Phoenix"). The Policy provides lifetime insurance
protection on the lives of two Insureds, with a death benefit payable when the
last surviving insured person dies. You may select either a fixed benefit equal
to the Face Amount of the Policy or a variable benefit which is equal to the
Face Amount plus the Policy Value. Within limits, you may reduce the Face Amount
and change the death benefit option. The Policy also may provide a Cash
Surrender Value if the Policy is surrendered during the lifetime of either
Insured.
You decide the amount and timing of premiums within limits. There are no
required premiums other than the Issue Premium. You may allocate premium
payments and Policy Value to the Guaranteed Interest Account ("GIA") and or one
or more of the Subaccounts of the Phoenix Home Life Variable Universal Life
Account (the "VUL Account"). The assets of the Subaccounts are used to purchase,
at Net Asset Value, shares of a designated underlying mutual fund (collectively,
the "Funds") in the following series of underlying VUL Account Fund options:
<TABLE>
<CAPTION>
FUNDS ADVISERS
=============================================================================================================
THE PHOENIX EDGE SERIES FUND
<S> <C>
o Money Market Series o Phoenix Investment Counsel, Inc.
o Growth Series o Phoenix Investment Counsel, Inc.
o Multi-Sector Fixed Income Series o Phoenix Investment Counsel, Inc.
o Strategic Allocation Series o Phoenix Investment Counsel, Inc.
o International Series o Phoenix Investment Counsel, Inc.
o Balanced Series o Phoenix Investment Counsel, Inc.
o Real Estate Securities Series o Phoenix Realty Securities, Inc. & ABKA/LaSalle Securities LP
o Strategic Theme Series o Phoenix Investment Counsel, Inc.
o Aberdeen New Asia Series o Phoenix-Aberdeen International Advisors LLC
WANGER ADVISORS TRUST
o U.S. Small Cap Series o Wanger Asset Management, L.P.
o International Small Cap Series o Wanger Asset Management, L.P.
==============================================================================================================
</TABLE>
The Policy Value allocated to the VUL Account is not guaranteed and will
vary with the investment performance of the underlying Fund. The Policy Value
allocated to the GIA will accumulate at rates we determine. The guaranteed rate
credited to the Policy Value in the GIA will, in no event, be less than 4%. The
Policy will remain in effect so long as the Policy Value or Cash Surrender Value
is sufficient to pay certain monthly charges imposed in connection with the
Policy.
The Policy has a free look period during which you may return the Policy if
you are not satisfied for any reason. (See "Right to Cancel Period.")
Ask your registered representative if replacing your existing insurance or
supplementing an existing life insurance policy with this Policy is to your
advantage.
This Prospectus is valid only if accompanied by or preceded by current
prospectuses for the Funds. This Prospectus and the prospectuses for the Funds
should be read and retained for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE>
TABLE OF CONTENTS
Heading Page
- ---------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICY ........................... 1
TABLE OF CONTENTS ........................................ 2
SUMMARY .................................................. 3
SPECIAL TERMS ............................................ 4
PHOENIX AND THE VUL ACCOUNT .............................. 5
Phoenix ............................................... 5
The VUL Account ....................................... 5
The GIA................................................ 6
THE POLICY ............................................... 6
Introduction .......................................... 6
Eligible Purchasers ................................... 6
Flexible Premiums ..................................... 6
Allocation of Premium and Policy Value 7
Right to Cancel Period ................................ 7
Temporary Insurance Coverage .......................... 7
Transfer of Policy Value .............................. 7
Determination of Subaccount Values .................... 8
Death Benefit ......................................... 8
Surrenders ............................................ 9
Policy Loans .......................................... 9
Lapse ................................................. 10
Additional Insurance Options .......................... 10
Additional Rider Benefits ............................. 10
INVESTMENTS OF THE VUL ACCOUNT ........................... 10
Participating Mutual Funds ............................ 10
Investment Advisers.................................... 11
Investment Advisers to The Phoenix Edge Series Fund ... 11
Investment Adviser to the Wanger Advisors Trust ....... 12
Reinvestment and Redemption ........................... 12
Substitution of Investments ........................... 12
Performance History.................................... 12
CHARGES AND DEDUCTIONS ................................... 13
Sales Charge........................................... 14
Monthly Deduction ..................................... 14
Premium Taxes ......................................... 14
Federal Tax Charge..................................... 15
Mortality and Expense Risk Charge ..................... 15
Investment Management Charge .......................... 15
Other Charges ......................................... 15
GENERAL PROVISIONS ....................................... 16
Postponement of Payments .............................. 16
The Contract .......................................... 16
Suicide ............................................... 16
Incontestability ...................................... 16
Change of Owner or Beneficiary ........................ 16
Assignment ............................................ 16
Misstatement of Age or Sex ............................ 16
Surplus ............................................... 16
PAYMENT OF PROCEEDS ...................................... 16
Surrender and Death Benefit Proceeds .................. 16
Payment Options ....................................... 17
FEDERAL TAX CONSIDERATIONS ............................... 17
Introduction .......................................... 17
Phoenix's Tax Status .................................. 17
Policy Benefits ....................................... 18
Business-Owned Policies................................ 18
Modified Endowment Contracts .......................... 18
Limitations on Unreasonable Mortality
and Expense Charges ................................ 19
Qualified Plans ....................................... 19
Diversification Standards ............................. 19
Change of Ownership or Insured or Assignment .......... 19
Other Taxes ........................................... 20
VOTING RIGHTS ............................................ 20
The Funds ............................................. 20
Phoenix ............................................... 20
THE DIRECTORS AND EXECUTIVE OFFICERS OF PHOENIX........... 20
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS................... 21
SALES OF POLICIES ........................................ 21
STATE REGULATION ......................................... 21
REPORTS .................................................. 22
LEGAL PROCEEDINGS ........................................ 22
LEGAL MATTERS ............................................ 22
REGISTRATION STATEMENT ................................... 22
FINANCIAL STATEMENTS ..................................... 22
APPENDIX A ............................................... 25
APPENDIX B ............................................... 26
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
2
<PAGE>
SUMMARY
- --------------------------------------------------------------------------------
The following summary of Prospectus information of the Policy should be read
in conjunction with the detailed information appearing elsewhere in this
Prospectus. (See Table of Contents and Special Terms.)
INVESTMENT FEATURES
FLEXIBLE PREMIUMS
You select a payment plan but are not required to pay premiums according to
the plan. You can vary the amount and frequency of your premium payments, within
limits. Other than the Issue Premium, there are no scheduled or required premium
payments. (However, under certain conditions, additional premiums may be
required to keep a Policy In Force.) See Flexible Premiums on page __.
ALLOCATION OF PREMIUMS AND POLICY VALUE
After certain charges are deducted from your premium payment, the balance
will be invested in one or more of the Subaccounts of the VUL Account and/or the
GIA. The assets of the Subaccounts are used to purchase, at Net Asset Value,
shares of a designated Fund. You also may change your allocation to the various
investment options by changing your allocation percentages or by making
transfers among the Subaccounts of the VUL Account and the GIA.
IN GENERAL, YOU CAN ONLY MAKE ONE TRANSFER PER YEAR FROM THE GIA. THE AMOUNT
THAT CAN BE TRANSFERRED OUT IS LIMITED TO THE GREATER OF $1,000 OR 25% OF THE
POLICY VALUE IN THE GIA AS OF THE DATE OF THE TRANSFER. IF YOU ELECT THE
SYSTEMATIC TRANSFER PROGRAM, APPROXIMATELY EQUAL AMOUNTS MAY BE TRANSFERRED OUT
OF THE GIA. ALSO, THE TOTAL POLICY VALUE ALLOCATED TO THE GIA MAY BE TRANSFERRED
OUT OF THE GIA TO ONE OR MORE OF THE SUBACCOUNTS OF THE VUL ACCOUNT OVER A
CONSECUTIVE FOUR-YEAR PERIOD ACCORDING TO THE FOLLOWING SCHEDULE:
YEAR ONE: 25% YEAR TWO: 33.3%
YEAR THREE: 50% YEAR FOUR: 100%
Transfers into the GIA and among the Subaccounts of the VUL Account may be
made at any time. Transfers from the GIA are subject to the rules discussed in
Appendix A on page __ and under Transfer of Policy Value on page __.
The Policy Value allocated to the VUL Account is not guaranteed and will
vary with the investment performance of the underlying Fund. The Policy Value
allocated to the GIA will depend on deductions taken from the GIA and accumulate
at rates we determine (4% minimum).
REDEMPTIONS
o Generally, loans may be taken against 90% of the Policy's Cash Surrender
Value subject to certain conditions, at a net interest rate of 2%,
declining to 1% after the first 10 Policy Years and .50% after Policy Year
15. Loan interest accrues daily at a rate determined annually and is
payable in arrears. See Policy Loans on page __.
o Partial surrenders may be taken at any time, provided there is
sufficient Cash Surrender Value remaining. An administrative
transaction charge of the lesser of $25 or 2% of the partial
surrender amount will apply.
o You may fully surrender this Policy at any time for its Cash
Surrender Value (Policy Value less any applicable surrender
charge and any loan and accrued interest). See Surrenders on
page __.
INSURANCE PROTECTION FEATURES
DEATH BENEFITS
o Both a fixed and variable benefit is available under the Policy. The fixed
benefit is equal to the Policy's Face Amount (Option A), and the variable
benefit equals the Face Amount plus the Policy Value (Option B).
o After the first year, you may reduce the Face Amount, within limits.
Generally, the minimum Face Amount is $250,000.
o The death benefit is payable when the last surviving insured
person dies while the Policy is in effect. See Death Benefit on
page __.
DEATH BENEFIT GUARANTEE
You may elect a guaranteed death benefit. The amount of the guaranteed death
benefit is equal to the initial Face Amount provided that certain minimum
payments are paid. The death benefit guarantee may not be available in some
jurisdictions. You should check with your registered representative to determine
if the minimum guaranteed death benefit is available in your state.
DEATH BENEFIT AT ENDOWMENT
After age 100 of the younger Insured, the death benefit equals the Policy
Value, and no further monthly deductions will be made. This allows you to keep
the Policy in force until the second death (if desired).
ADDITIONAL BENEFITS
The following additional benefits are available by rider: Disability
Benefit, Four Year Survivorship Term, Conditional Exchange Option and Policy
Split Option. Rider availability is subject to state approval.
DEDUCTIONS AND CHARGES
FROM PREMIUM PAYMENTS
o A 2.25% charge will be imposed on premiums for state premium taxes and
1.50% assessed against premiums for federal taxes. See Premium Taxes on
page __.
o Premium Sales Charge in the first Policy Year is equal to 20% of premiums
paid up to one target annual premium ("TAP") and 5% of premiums paid in
excess of the TAP. The Premium Sales Charge in Policy Years 2 through 10
is equal to 5% of premiums, declining to 0% after the 10th Policy Year.
See Deductions and Charges on page __ for a detailed discussion, including
an explanation of target annual premium.
FROM POLICY VALUE
o An issue expense charge of $600 is assessed in the first Policy Year only,
payable in monthly installments of $50.
o In Policy Years 1 through 10 only, a monthly administrative charge of $20
per month for policies with Face Amounts of less than or equal to
$400,000; $0.50 per $1,000 for Face Amounts
3
<PAGE>
of $400,000 up to $1,600,000 and $80 per month for Face
Amounts greater than $1,600,000.
o A monthly cost of insurance charge will be assessed and, where applicable,
a monthly charge for any additional rider benefits.
o A transaction charge may be imposed for partial withdrawals
and certain transfers.
o A Surrender Charge will apply if the Policy is surrendered within the
first 10 Policy Years. See Surrender Charge on page __.
o After the first 10 Policy Years there will be a monthly guaranteed minimum
death benefit charge equal to $0.01 per $1,000 of Face Amount for Policies
issued with a Guaranteed Death Benefit rider.
FROM THE VUL ACCOUNT
A charge for certain mortality and expense risks of .80% annually for Policy
Years 1 through 15 declining to .25% in Policy Year 16 and thereafter.
FROM THE FUND
The assets of the VUL Account are used to purchase, at Net Asset Value,
shares of a designated underlying Fund. This Net Asset Value reflects investment
management fees and other direct expenses. See Investment Management Charge on
page __.
VARIATIONS
Phoenix is subject to laws and regulations in every state in which the
Policy is sold. As a result, the terms of the Policy may vary from state to
state.
ADDITIONAL INFORMATION
CANCELLATION RIGHT
You have the right to examine the Policy. If you are not satisfied with it,
you may cancel the Policy within 10 days (or longer in some states), after you
receive the Policy, or 10 days after we mail or deliver a written notice telling
you about your right to cancel or within 45 days of completing the application,
whichever is latest. See Right to Cancel Period on page __.
LAPSE
The Policy will remain in effect so long as the Policy Value or Cash
Surrender Value is sufficient to pay certain monthly charges imposed in
connection with the Policy. You will be notified of an impending lapse situation
and be given the opportunity to maintain the Policy In Force by paying the
amount specified in the notice.
TAX EFFECTS
Generally, under current federal income tax law, death benefits are not
subject to income tax and Policy Value earnings are not subject to income tax
until there is a distribution from the Policy. Loans, partial surrenders or
Policy termination may result in recognition of income for tax purposes.
SPECIAL TERMS
- --------------------------------------------------------------------------------
As used in this Prospectus, the following terms have the indicated meanings:
ATTAINED AGE: The age of the Insured on the birthday nearest the most recent
Policy Anniversary.
BENEFICIARY: The person or persons specified by the Policyowner as entitled to
receive the death benefits under a Policy.
CASH SURRENDER VALUE: The Policy Value less any surrender charge that would
apply on the date of surrender and less any Debt.
DEATH BENEFIT GUARANTEE: An additional benefit rider available with the Policy
that guarantees a death benefit equal to the initial Face Amount or the Face
Amount as later increased or decreased, provided that Minimum Required Premiums
are paid. See "Additional Rider Benefits."
DEBT: Outstanding loans against a Policy, plus accrued interest on any
outstanding loans.
FACE AMOUNT: The initial amount of insurance coverage.
GENERAL ACCOUNT: The general asset account of Phoenix.
GUARANTEED INTEREST ACCOUNT (GIA): An allocation option under which amounts
deposited are guaranteed to earn a fixed rate of interest. Excess interest also
may be credited, in the sole discretion of Phoenix.
IN FORCE: Conditions under which the coverage under a Policy is in effect and
the Insureds' lives remain insured.
INSUREDS: The two persons on whose lives the Policy is issued.
ISSUE PREMIUM: The premium payment made in connection with the issue of the
Policy.
MINIMUM REQUIRED PREMIUM: The required premium as specified in the Policy. An
increase or decrease in the Face Amount of the Policy will change the Minimum
Required Premium amount.
MONTHLY CALCULATION DAY: The first Monthly Calculation Day is the same day as
the Policy Date. Subsequent Monthly Calculation Days are the same day of each
month thereafter or, if such day does not fall within a given month, the last
day of that month will be the Monthly Calculation Day.
NET ASSET VALUE: The worth of one share of a Series of a Fund at the end of a
valuation period. Net Asset Value is computed by adding the value of all a
Series' holdings plus other assets, minus liabilities and then dividing the
result by the number of shares outstanding.
OWNER (POLICYOWNER, YOU, YOUR): The person(s) who purchase(s) a Policy.
PAYMENT DATE: The Valuation Date on which a premium payment or loan repayment is
received at Phoenix, unless it is received after the close of the New York Stock
Exchange, in which case it will be the next Valuation Date.
PHOENIX VARIABLE PRODUCTS MAIL OPERATION (VPMO): The division of Phoenix that
receives and processes incoming mail for Variable Products Operations.
PLANNED ANNUAL PREMIUM: The premium amount that the Policyowner agrees to pay
each Policy Year. It must be at least equal to the minimum premium required for
the Face Amount of insurance selected and must be no greater than the maximum
premium allowed for the Face Amount selected.
4
<PAGE>
POLICY ANNIVERSARY: Each anniversary of the Policy Date.
POLICY DATE: The Policy Date as shown on the Schedule Page of the Policy. It is
the date from which Policy Years and Policy Anniversaries are measured.
POLICY MONTH: The period from one Monthly Calculation Day up to, but not
including, the next Monthly Calculation Day.
POLICY VALUE: The sum of a Policy's share in the values of each Subaccount of
the VUL Account plus the Policy's share in the values of the GIA.
POLICY YEAR: The first Policy Year is the one-year period from the Policy Date
up to, but not including, the first Policy Anniversary. Each succeeding Policy
Year is the one-year period from the Policy Anniversary up to, but not
including, the next Policy Anniversary.
PROPORTIONATE (PRO RATA): Amounts allocated to Subaccounts on a pro rata basis
are allocated by increasing (or decreasing) a Policy's share in the value of the
affected Subaccounts and GIA so that such shares maintain the same ratio to each
other before and after the allocation.
SUBACCOUNTS: Accounts within the VUL Account to which non-loaned assets under a
Policy are allocated.
UNIT: A standard of measurement used in determining the value of a Policy. The
value of a Unit for each Subaccount will reflect the investment performance of
that Subaccount and will vary in dollar amount.
VALUATION DATE: For any Subaccount, each date on which the net asset value of
the Fund is determined.
VALUATION PERIOD: For any Subaccount, the period in days from the end of one
Valuation Date through the next.
VPO: Variable Products Operations.
VUL ACCOUNT (ACCOUNT): Phoenix Home Life Variable Universal Life Account.
WE (OUR, US, COMPANY, PHOENIX): Phoenix Home Life Mutual Insurance Company,
Hartford, Connecticut.
PHOENIX AND THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PHOENIX
Phoenix is a mutual life insurance company originally chartered in
Connecticut in 1851. Its executive office is at One American Row, Hartford,
Connecticut 06115, and its main administrative office is at 100 Bright Meadow
Boulevard, Enfield, Connecticut 06083-1900. Its New York principal office is at
99 Troy Road, East Greenbush, New York 12061. Phoenix is the nation's 13th
largest mutual life insurance company and has admitted assets of approximately
$13.2 billion. Phoenix sells insurance policies and annuity contracts through
its own field force of full time agents and through brokers. Its operations are
conducted in all 50 states, the District of Columbia, Canada and Puerto Rico.
THE VUL ACCOUNT
The VUL Account is a separate account of Phoenix registered as a unit
investment trust under the Investment Company Act of 1940, as amended, and it
meets the definition of a "separate account" under that Act. Such registration
does not involve supervision of the management of the VUL Account or Phoenix by
the Securities and Exchange Commission ("SEC").
The VUL Account is divided into Subaccounts, each of which is available for
allocation of Policy Value. If in the future Phoenix determines that marketing
needs and investment conditions warrant, Phoenix may establish additional
Subaccounts, which will be made available to existing Policyowners to the extent
and on a basis determined by Phoenix. Each Subaccount will invest solely in
shares of a corresponding series of a mutual fund, each Series having the
specified investment objective set forth under "Investments of the VUL
Account--Participating Mutual Funds."
Phoenix does not guarantee the investment performance of the VUL Account or
any of its Subaccounts. The Policy Value allocated to the VUL Account depends on
the investment performance of the chosen Fund. Thus, the Policyowner bears the
full investment risk for all monies invested in the VUL Account.
Advertisements, sales literature and other communications may contain
information about any Series' or Advisers' current investment strategies and
management style. Current strategies and style may change to respond to a
changing market and economic conditions. From time to time, the Series may
discuss specific portfolio holdings or industries in such communications. To
iIlustrate components of overall performance, the Series may separate their
cumulative and average annual returns into income results and capital gains or
losses; or cite separately, as a return figure, the equity or bond portion of a
Series' portfolio; or compare a Series' equity or bond return figure to
well-known indices of market performance including, but not limited to, the S&P
500 Index, Dow Jones Industrial Average, First Boston High Yield Index and
Solomon Brothers Corporate and Government Bond Indices.
The VUL Account may, from time to time, include in advertisements containing
total return the ranking of those performance figures relative to such figures
for groups of Subaccounts having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Funds may compare a Series performance results to other
investment or savings vehicles (such as certificates of deposit) and may refer
to results published in various publications such as Changing Times, Forbes,
Fortune, Money, Barrons, Business Week, Investor's Daily, The Stanger Register,
Stanger's Investment Adviser, The Wall Street Journal, The New York Times,
Consumer Reports, Registered Representative, Financial Planning, Financial
Services Weekly, Financial World, U.S. News and World Report, Standard & Poor's,
The Outlook and Personal Investor. The Funds may, from time to time, illustrate
the benefits of tax deferral by comparing taxable investments to investments
made through tax-deferred retirement plans. The total return also may be used to
compare the performance of a Series against certain widely acknowledged outside
standards or indices for stock and bond market performance, such as the Standard
& Poor's 500 Stock Index (the "S&P 500"), Dow Jones Industrial Average, Europe
Australia Far East Index (EAFE), Consumer's Price Index, Shearson Lehman
Corporate Index and Shearson Lehman T-Bond Index. The S&P 500 is a
5
<PAGE>
commonly quoted market value-weighted and unmanaged index showing the changes in
the aggregate market value of 500 common stocks relative to the base period
1940-43. The S&P is composed almost entirely of common stocks of companies
listed on the New York Stock Exchange, although the common stocks of a few
companies listed on the American Stock Exchange or traded over the counter are
included. The 500 companies represented include 400 industrial, 60
transportation and 40 financial services concerns. The S&P represents about 80%
of the market value of all issues traded on the New York Stock Exchange.
The VUL Account is administered and accounted for as part of the general
business of Phoenix, but the income, gains or losses of the VUL Account are
credited to or charged against the assets held in the VUL Account, without
regard to other income, gains or losses of any other business Phoenix may
conduct. Under New York law, the assets of the VUL Account are not chargeable
with liabilities arising out of any other business Phoenix may conduct.
Nevertheless all obligations arising under the Policy are general corporate
obligations of Phoenix.
THE GIA
The GIA is not part of the VUL Account. It is accounted for as part of the
General Account. Phoenix reserves the right to limit cumulative deposits,
including transfers, to the unloaned portion of the GIA to no more than $250,000
during any one-week period. Phoenix will credit interest daily on the amounts
allocated under the Policy to the GIA. The credited rate will be uniform by
class. The loaned portion of the GIA will be credited interest at an effective
annual fixed rate of 2% (4% in New York). Interest on the unloaned portion of
the GIA will be credited at an effective annual rate of not less than 4%.
Bi-weekly, Phoenix sets the interest rate that will apply to any net premium
or transferred amounts deposited to the unloaned portion of the GIA. That rate
will remain in effect for such deposits for an initial guarantee period of one
full year from the date of deposit. Upon expiration of the initial one-year
guarantee period (and each subsequent one-year guarantee period thereafter), the
rate to be applied to any deposits whose guarantee period has just ended shall
be the same rate as is applied to new deposits allocated to the GIA at the time
that the guarantee period expired. This rate will likewise remain in effect for
a guarantee period of one full year from the date the new rate is applied.
In general, you can only make one transfer per year from the GIA. The amount
that can be transferred out is limited to the greater of $1,000 or 25% of the
Policy Value in the GIA as of the date of the transfer. If you elect the
Systematic Transfer Program, approximately equal amounts may be transferred out
of the GIA. Also, the total Policy Value allocated to the GIA may be transferred
out of the GIA to one or more of the Subaccounts of the VUL Account over a
consecutive four-year period according to the following schedule:
Year One: 25% Year Two: 33.3%
Year Three: 50% Year Four: 100%
Transfers into the GIA and among the Subaccounts of the VUL Account may be
made at any time. Transfers from the GIA are subject to the rules discussed in
Appendix A and Transfer of Policy Value.
THE POLICY
- --------------------------------------------------------------------------------
INTRODUCTION
The Policy is a flexible premium variable life insurance policy issued on
the lives of two Insureds. The Policy has a death benefit, Cash Surrender Value
and loan privilege such as is associated with a traditional fixed benefit whole
life policy. The Policy differs from a fixed benefit whole life policy, however,
because the Policyowner specifies into which of several Subaccounts of the VUL
Account or the GIA net premium is to be allocated. Each Subaccount of the VUL
Account, in turn, invests its assets exclusively in a Series of the Funds. The
Policy Value varies according to the investment performance of the Series to
which Policy Value has been allocated.
ELIGIBLE PURCHASERS
Any person between the ages of 18 and 85 is eligible to be insured under a
newly purchased Policy after providing acceptable evidence of insurability. You
can purchase a Policy to insure the lives of two other individuals, provided
that you have an insurable interest in their lives, and the Insureds consent.
Such a Policy could be purchased on the lives of spouses, family members,
business partners or other related groups.
FLEXIBLE PREMIUMS
The Issue Premium required depends on a number of factors, such as the ages,
sexes and rate class of the proposed Insureds, the desired Face Amount, any
supplemental benefits and the planned premiums you propose to make. The minimum
Issue Premium generally must be at least 1/6 of the Planned Annual Premium. Both
Insureds must be alive when the Issue Premium is paid, and it is due on the
Policy Date. After the Issue Premium is paid, although premiums are flexible,
the amount and frequency of Planned Annual Premiums are as shown on the schedule
page of the Policy. You determine the Planned Annual Premium (within limits set
by us) when you apply for the Policy. The Issue Premium should be paid to your
registered representative for forwarding to our Underwriting Department.
Additional payments should be sent to VPMO.
Any premium payments will be reduced by a 2.25% charge for state premium tax
and also reduced by a federal tax charge of 1.50%. The Issue Premium also will
be reduced by the Issue Expense Charge on a pro rata basis in equal monthly
installments over a 12-month period. Any unpaid balance of the Issue Expense
Charge will be paid to Phoenix upon Policy Lapse or termination.
Premium payments received during a grace period also will be reduced by the
amount needed to cover any monthly deductions during the grace period. The
remainder will be applied on the Payment Date to the various Subaccounts of the
VUL Account or to the GIA, based on the premium allocation schedule elected in
the application for the Policy or as later changed. See "Non-Systematic
Transfers and Changes in Payment Allocations."
The number of units credited to a Subaccount of the VUL Account will be
determined by dividing the portion of the net premium applied to that Subaccount
by the unit value of the Subaccount on the Payment Date.
6
<PAGE>
You may increase or decrease the Planned Annual Premium amount (within
limits) or payment frequency at any time by written notice to VPMO. We reserve
the right to limit increases to such maximums as may be established from time to
time. Additional premium payments may be made at any time. Each premium payment
must at least equal $25 or, if made during a grace period, the payment must
equal the amount needed to prevent lapse of the Policy.
The Policy contains a total premium limit as shown on the Schedule Page.
This limit is applied to the sum of all premiums paid under the Policy. If the
total premium limit is exceeded, the Policyowner will receive the excess, with
interest at an annual rate of not less than 4%, not later than 60 days after the
end of the Policy Year in which the limit was exceeded. The Policy Value then
will be adjusted to reflect the refund. The amount to be taken from each
Subaccount or the GIA will be allocated in the same manner as provided for
monthly deductions unless you request otherwise in writing. The total premium
limit may be exceeded if additional premium is needed to prevent lapse or if we
determine that additional premium would be permitted by federal laws or
regulations.
You may authorize your bank to draw $25 or more monthly from your personal
checking account to be allocated among the available Subaccounts or the GIA. The
amount you choose automatically will be invested in accordance with your most
recent allocation schedule on file at VPO.
Policies sold to officers, directors and employees of Phoenix (and their
spouses and children) will be credited with an amount equal to the first-year
commission that would apply on the amount of premium contributed. This option
also is available to career agents of Phoenix (and their spouses and children).
ALLOCATION OF PREMIUM AND POLICY VALUE
We will generally allocate the Issue Premium less applicable charges to the
VUL Account or to the GIA upon receipt of a completed application, in accordance
with the allocation instructions in the application for the Policy. However,
Policies issued in certain states, and Policies issued which are intended to
replace existing insurance, are issued with a Temporary Money Market Allocation
Amendment. Under this Amendment, we temporarily allocate the entire Issue
Premium paid less applicable charges (along with any other premiums paid during
the Right to Cancel Period) to the Money Market Subaccount of the VUL Account,
and, at the expiration of the Right to Cancel Period, the Policy Value of the
Money Market Subaccount is allocated among the Subaccounts of the VUL Account or
to the GIA in accordance with your allocation instructions in the application
for insurance.
RIGHT TO CANCEL PERIOD
You may return a Policy by mailing or delivering it to us within 10 days
after you receive it (or longer in some states); within 10 days after we mail or
deliver a written notice of withdrawal right to you; or within 45 days after you
sign the application for insurance, whichever occurs latest (the "Right to
Cancel Period"). The returned Policy is treated as if we never issued the Policy
and, except for Policies issued without a Temporary Money Market Allocation
Amendment, we will return the sum of the following as of the date we receive the
returned Policy: (i) the then current Policy Value less any unpaid loans and
loan interest; plus (ii) any monthly deductions, partial surrender fees and
other charges made under the Policy, including investment advisory fees or any
Fund expenses deducted. The amount returned for Policies issued with the
Amendment will equal any premiums paid less any unrepaid loans and loan
interest, and less any partial surrender amounts paid.
We reserve the right to disapprove an application for processing within
seven days of our receipt of the completed application for insurance, in which
event we will return the premium paid. Even after approval of the application
for processing, we reserve the right to decline issuance of the Policy, in which
event we will refund to you the same amount as would have been refunded under
the Policy had it been issued but returned for refund during the Right to Cancel
Period.
TEMPORARY INSURANCE COVERAGE
On the date the application for a Policy is signed and submitted with the
Issue Premium, we issue a Temporary Insurance Receipt in connection with the
application. Under the Temporary Insurance Receipt, the insurance protection
applied for (subject to the limits of liability and in accordance with the terms
set forth in the Policy and in the Receipt) takes effect on the date of the
application.
TRANSFER OF POLICY VALUE
SYSTEMATIC TRANSFER PROGRAM
You may elect to transfer funds automatically among the Subaccounts or the
unloaned portion of the GIA on a monthly, quarterly, semi-annual or annual basis
under the Systematic Transfer Program for Dollar Cost Averaging ("Systematic
Transfer Program"). Under this Systematic Transfer Program, the minimum initial
and subsequent transfer amounts are $25 monthly, $75 quarterly, $150
semi-annually or $300 annually. You must have an initial value of $1,000 in the
GIA or the Subaccount that funds will be transferred from and if the value in
that Subaccount or the GIA drops below the elected transfer amount, the entire
remaining balance will be transferred and no more systematic transfers will be
processed. Funds may be transferred from only one Subaccount or the GIA, but may
be allocated to multiple Subaccounts. Under the Systematic Transfer Program, you
may make more than one transfer per Policy Year from the GIA, in approximately
equal amounts over a minimum 18-month period. All transfers under the Systematic
Transfer Program will be executed on the basis of the respective values as of
the first of the month following receipt of the transfer request. If the first
of the month falls on a holiday or weekend, then the transfer will be processed
on the next succeeding business day.
NON-SYSTEMATIC TRANSFERS AND CHANGES IN PAYMENT ALLOCATIONS Transfers among
available Subaccounts or the GIA and changes
in premium payment allocations may be requested in writing or by calling
1-800-892-4885, between the hours of 8:30 a.m. and 4:00 p.m. Eastern Time.
Written requests for transfers will be executed on the date the request is
received at VPMO. Telephone transfers will be effective on the date the request
is made except as noted below. Unless you elect in writing not to authorize
telephone transfers or allocation changes, telephone transfer orders and
allocation changes also will be accepted on behalf of you from your registered
representative. Phoenix and Phoenix Equity Planning Corporation ("PEPCO"), the
national distributor for Phoenix, will employ reasonable procedures to confirm
that telephone instructions are
7
<PAGE>
genuine. They will require verification of account information and will record
telephone instructions on tape. All telephone transfers will be confirmed in
writing to you. To the extent that procedures reasonably designed to prevent
unauthorized transfers are not followed, Phoenix and PEPCO may be liable for
following telephone instructions for transfers that prove to be fraudulent.
However, you will bear the risk of loss resulting from instructions entered by
an unauthorized third party that Phoenix and PEPCO reasonably believe to be
genuine. These telephone privileges may be modified or terminated at any time
and during times of extreme market volatility, may be difficult to exercise. In
such cases, the Policyowner should submit a written request.
Although currently there is no charge for transfers, in the future, we may
charge a fee of $10 for each transfer after the first two transfers in a Policy
Year.
We reserve the right to permit transfers of less than $500 only if the
entire balance in the Subaccount or the GIA is transferred or if the Systematic
Transfer Program has been elected.
We also reserve the right to prohibit a transfer to any Subaccount of the
VUL Account where the resultant value of the Policy's share in that Subaccount
immediately after the transfer would be less than $500. We further reserve the
right to require that the entire balance of a Subaccount or the GIA be
transferred if the share of the Policy in the value of that Subaccount would,
immediately after the transfer, be less than $500.
Unless we agree otherwise or the Systematic Transfer Program has been
elected, you may make only one transfer per Policy Year from the unloaned
portion of the GIA. The amount you may transfer cannot exceed the greater of
$1,000 or 25% of the value of the Policy in the unloaned portion of the GIA at
the time of the transfer. Also, the total Policy Value allocated to the unloaned
portion of the GIA may be transferred out of the GIA to one or more of the
Subaccounts over a consecutive four-year period according to the following
schedule:
Year One: 25% Year Two: 33.3%
Year Three: 50% Year Four: 100%
Non-systematic transfers from the unloaned portion of the GIA will be
processed on the date of receipt by VPMO.
Transfers into the GIA and among the Subaccounts of the VUL Account may be
made at any time. We reserve the right to limit the number of Subaccounts you
may elect to a total of 18 at any one time and/or over the life of the Policy
unless required to be less to comply with changes in federal and/or state
regulation, including tax, securities and insurance law. As of the date of this
Prospectus, this limitation has no effect because fewer than 18 Subaccounts are
offered.
For policies issued with the Temporary Money Market Allocation Amendment,
transfers may not be made until termination of the Right to Cancel Period.
DETERMINATION OF SUBACCOUNT VALUES
The unit value of each Subaccount of the VUL Account was set by Phoenix on
the first valuation date of each such Subaccount. The unit value of a Subaccount
of the VUL Account on any other Valuation Date is determined by multiplying the
unit value of that Subaccount on the just prior Valuation Date by the Net
Investment Factor for that Subaccount for the then current Valuation Period. The
unit value of each Subaccount of the VUL Account on a day other than a Valuation
Date is the unit value on the next Valuation Date. Unit values are carried to
six decimal places. The unit value of each Subaccount of the VUL Account on a
Valuation Date is determined at the end of that day.
The Net Investment Factor for each Subaccount of the VUL Account is
determined by the investment performance of the assets held by the Subaccount
during the Valuation Period. Each valuation will follow applicable law and
accepted procedures. The Net Investment Factor is equal to item (D) below
subtracted from the result of dividing the sum of items (A) and (B) by item (C).
(A) The value of the assets in the Subaccount on the current Valuation Date,
including accrued net investment income and realized and unrealized
capital gains and losses, but excluding the net value of any
transactions during the current Valuation Period.
(B) The amount of any dividend (or, if applicable, any capital gain
distribution) received by the Subaccount if the "ex-dividend" date for
shares of the Fund occurs during the current Valuation Period.
(C) The value of the assets in the Subaccount as of the just prior Valuation
Date, including accrued net investment income and realized and
unrealized capital gains and losses, and including the net value of all
transactions during the Valuation Period ending on that date.
(D) The sum of the following daily charges multiplied by the number of days
in the current Valuation Period:
1. the mortality and expense risk charge; and
2. the charge, if any, for taxes and reserves for taxes on
investment income, and realized and unrealized capital
gains.
DEATH BENEFIT
GENERAL
The death benefit under Option A equals the Policy's Face Amount on the date
of the last surviving Insured's death or, if greater, the minimum death benefit
on their date of death. Under Option B, the death benefit equals the Policy's
Face Amount on the date of the last surviving Insured's death plus the Policy
Value. Under either Option, the minimum death benefit is the Policy Value on the
date of death of the last surviving Insured increased by the applicable
percentage from the table contained in the Policy, based on the Insured's
attained age at the beginning of the Policy Year in which the death occurs. If
no option is elected, Option A will apply.
GUARANTEED DEATH BENEFIT OPTION
A guaranteed death benefit rider is available. Under this Policy rider, if
you pay the required premium each year as specified in the rider, the death
benefit selected will be guaranteed for a certain specified number of years,
regardless of the investment performance of the Policy, and will equal either
the initial Face Amount or the Face Amount as later changed by decreases. In
order to keep this guaranteed death benefit In Force, there may be limitations
on the amount of partial surrenders or decreases in Face Amount permitted.
8
<PAGE>
After the first 10 Policy Years, there will be a monthly guaranteed minimum
death benefit charge equal to $0.01 per $1,000 of Face Amount for policies
issued with a Guaranteed Death Benefit rider.
PARTIAL SURRENDER AND DECREASES IN FACE AMOUNT: EFFECT ON
DEATH BENEFIT
A partial surrender or a decrease in Face Amount generally
decreases the death benefit. Upon a decrease in Face Amount or partial
surrender, a partial surrender charge will be deducted from Policy Value based
on the amount of the decrease or partial surrender. With a decrease in Face
Amount, the death benefit under a Policy would be reduced on the next Monthly
Calculation Day. With a partial surrender, the death benefit under a Policy
would be reduced immediately. A decrease in the death benefit may have certain
tax consequences. See "Federal Tax Considerations."
REQUESTS FOR DECREASE IN FACE AMOUNT
You may request a decrease in Face Amount at any time after the first Policy
Year. Unless we agree otherwise, the decrease must at least equal $25,000 and
the Face Amount remaining after the decrease must at least equal $250,000. All
Face Amount decrease requests must be in writing and will be effective on the
first Monthly Calculation Day following the date we approve the request. A
partial surrender charge will be deducted from the Policy Value based on the
amount of the decrease. The charge will equal the applicable surrender charge
that would apply to a full surrender multiplied by a fraction (the decrease in
Face Amount divided by the Face Amount of the Policy before the decrease).
SURRENDERS
GENERAL
At any time during the lifetime of the Insureds and while the Policy is In
Force, you may partially or fully surrender the Policy by sending a written
release and surrender in a form satisfactory to us to VPMO, along with the
Policy if we so require. The amount available for surrender is the Cash
Surrender Value at the end of the Valuation Period during which the surrender
request is received at VPO.
Upon partial or full surrender, we generally will pay the amount surrendered
to you within seven days after Phoenix receives the written request for the
surrender. Under certain circumstances, the surrender payment may be postponed.
See "General Provisions--Postponement of Payments." For the federal tax effects
of partial and full surrenders, see "Federal Tax Considerations."
FULL SURRENDERS
If the Policy is being fully surrendered, the Policy itself must be returned
to us at VPMO, along with the written release and surrender of all claims in a
form satisfactory to us. You may elect to have the amount paid in a lump sum or
under a payment option. See "Surrender Charge" and "Payment Options."
PARTIAL SURRENDERS
You may obtain a partial surrender of the Policy by requesting that part of
the Policy's Cash Surrender Value be paid. You may do this at any time during
the lifetime of the Insureds while the Policy is In Force with a written request
to VPMO. We reserve the right to require that the Policy be returned before
payment is made. A partial surrender will be effective on the date the written
request is received or, if required, the date the Policy is received. Surrender
proceeds may be applied under any of the payment options described under
"Payment of Proceeds--Payment Options."
Phoenix reserves the right not to allow partial surrenders of less than
$500. In addition, if the share of the Policy Value in any Subaccount or in the
GIA that would be reduced as a result of a partial surrender would, immediately
after the partial surrender, be less than $500, we reserve the right to require
that as part of any partial surrender, the entire remaining balance in that
Subaccount or the GIA be surrendered.
Upon a partial surrender, the Policy Value will be reduced by the sum of the
following:
(i) The Partial Surrender Amount Paid. This amount comes from a reduction in
the Policy's share in the value of each Subaccount or the GIA based on
the allocation requested at the time of the partial surrender. If no
allocation request is made, the assessment to each Subaccount will be
made in the same manner as that provided for monthly deductions.
(ii) The Partial Surrender Fee. This fee is the lesser of $25 or 2% of the
partial surrender amount paid. The assessment to each Subaccount or the
GIA will be made in the same manner as provided for the partial
surrender amount paid.
(iii) A Partial Surrender Charge. This charge is equal to a pro rata
portion of the applicable surrender charge that would apply to
a full surrender, determined by multiplying the applicable
surrender charge by a fraction (equal to the partial surrender
amount payable divided by the result of subtracting the
applicable surrender charge from the Policy Value). This
amount is assessed against the Subaccount or the GIA in the
same manner as provided for the partial surrender amount
paid.
The Cash Surrender Value will be reduced by the partial surrender amount
paid plus the partial surrender fee. The Face Amount of the Policy also will be
reduced by the same amount as the Policy Value is reduced as described above.
POLICY LOANS
Generally, while the Policy is In Force, a loan may be obtained against the
Policy up to the available loan value. The loan value on any day is 90% of the
result of subtracting the then remaining surrender charge from the Policy Value.
The available loan value is the loan value on the current day less any
outstanding Debt.
The amount of any loan will be added to the loaned portion of the GIA and
subtracted from the Policy's share of the Subaccounts or the unloaned portion of
the GIA, based on the allocation requested at the time of the loan. The total
reduction will equal the amount added to the loaned portion of the GIA.
Allocations generally must be expressed in terms of whole percentages. If no
allocation request is made, the amount subtracted from the share of each
Subaccount or the unloaned portion of the GIA will be determined in the same
manner as provided for monthly deductions. Interest will be credited and the
loaned portion of the GIA will increase at an effective annual rate of 2%,
compounded daily and payable in arrears. At the end of each Policy Year and at
the time of any Debt repayment, interest credited to
9
<PAGE>
the loaned portion of the GIA will be transferred to the unloaned portion of
the GIA.
Debt may be repaid at any time during the lifetime of the Insureds while the
Policy is In Force. Any Debt repayment received by us during a grace period will
be reduced to cover any overdue monthly deductions and only the balance will be
applied to reduce the Debt. Such balance, in excess of any outstanding accrued
loan interest, will be applied to reduce the loaned portion of the GIA and will
be transferred to the unloaned portion of the GIA to the extent that loaned
amounts taken from the GIA have not been previously repaid. Otherwise, such
balance will be allocated among the Subaccounts as you request upon repayment
and, if no allocation request is made, according to the most recent premium
allocation schedule on file.
WHILE THERE IS OUTSTANDING DEBT ON THE POLICY, ANY PAYMENTS RECEIVED BY US
FOR THE POLICY WILL BE APPLIED DIRECTLY TO REDUCE THE DEBT UNLESS SPECIFIED AS A
PREMIUM PAYMENT BY YOU. Until the Debt is fully repaid, additional Debt
repayments may be made at any time during the lifetime of the Insureds while the
Policy is In Force.
Failure to repay a policy loan or to pay loan interest will not terminate
the Policy except as otherwise provided under the terms of the Policy concerning
the grace period and lapse.
The proceeds of Policy loans may be subject to federal income tax
under certain circumstances. See "Federal Tax Considerations."
In the future, Phoenix may not allow Policy loans of less than $500, unless
such loan is used to pay a premium on another Phoenix policy.
You will pay interest on the loan at an effective annual rate, compounded
daily and payable in arrears. The loan interest rates in effect are as follows:
FOR POLICIES ISSUED IN ALL STATES EXCEPT NEW YORK
- -------------------------------------------------
Policy Years 1-10: 4%
Policy Years 11-15: 3%
Policy Years 16 and thereafter: 2 1/2%
FOR POLICIES ISSUED IN NEW YORK ONLY
- ------------------------------------
Policy Years 1-10: 6%
Policy Years 11-15: 5%
Policy Years 16 and thereafter: 4 1/2%
At the end of each Policy Year, any interest due on the Debt will be treated
as a loan and will be offset by a transfer from your values to the value of the
loaned portion of the GIA.
A Policy loan, whether or not repaid, has a permanent effect on the Policy
Value because the investment results of the Subaccounts or unloaned portion of
the GIA will apply only to the amount remaining in the Subaccounts or the
unloaned portion of the GIA. The longer a loan is outstanding, the greater the
effect is likely to be. The effect could be favorable or unfavorable. If the
Subaccounts or the unloaned portion of the GIA earn more than the annual
interest rate for funds held in the loaned portion of the GIA, Policy Value does
not increase as rapidly as it would have had no loan been made. If the
Subaccounts or the GIA earn less than the annual interest rate for funds held in
the loaned portion of the GIA, Policy Value is greater than it would have been
had no loan been made. A Policy loan, whether or not repaid, also has an effect
on the Policy's Death Benefit due to any resulting differences in Cash Surrender
Value.
LAPSE
Unlike conventional life insurance policies, the payment of the Issue
Premium, no matter how large, or the payment of additional premiums will not
necessarily continue the Policy In Force to its Maturity Date.
If on any Monthly Calculation Day during the first three Policy Years the
Policy Value, or the Cash Surrender Value thereafter, is insufficient to cover
the monthly deduction, a grace period of 61 days will be allowed for the payment
of an amount equal to three times the required monthly deduction.
The Policy will continue In Force during any such grace period although,
Subaccount transfers, loans, partial or full surrenders will not be permitted.
Failure to pay the additional amount within the grace period will result in
lapse of the Policy, but not before 30 days have elapsed since we mail written
notice to you. If a premium payment for the additional amount is received by us
during the grace period, any amount of premium over what is required to prevent
lapse will be allocated among the Subaccounts of the VUL Account or to the GIA
in accordance with the then current premium allocation schedule. In determining
the amount of "excess" premium to be applied to the Subaccounts or the GIA, we
will deduct the premium tax and the amount needed to cover any monthly
deductions made during the grace period. If the last surviving Insured dies
during the grace period, the death benefit will equal the amount of the death
benefit immediately prior to the commencement of the grace period.
ADDITIONAL INSURANCE OPTIONS
While the Policy is In Force you will have the option to purchase additional
insurance on the same Insureds with the same guaranteed rates as the Policy
without being assessed an Issue Expense Charge. We will require evidence of
insurability and charges will be adjusted for the Insured's new attained age and
any change in risk classification.
ADDITIONAL RIDER BENEFITS
A Policyowner may purchase additional benefits under a Policy. These
benefits are cancellable by the Policyowner at any time. A charge may be
deducted monthly from the Policy Value for each additional rider benefit chosen.
More details will be included in the form of a rider to the Policy if any of
these benefits is chosen. Additional riders may be available as described in the
Policy.
INVESTMENTS OF THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PARTICIPATING MUTUAL FUNDS
THE PHOENIX EDGE SERIES FUND
Certain Subaccounts of the VUL Account invest in corresponding Series of The
Phoenix Edge Series Fund. The Fund currently has the following Series available
through the Policies:
MONEY MARKET SERIES: The investment objective of the Money Market Series is
to provide maximum current income consistent with capital preservation and
liquidity.
10
<PAGE>
GROWTH SERIES: The investment objective of the Growth Series is to achieve
intermediate and long-term growth of capital, with income as a secondary
consideration.
MULTI-SECTOR FIXED INCOME ("MULTI-SECTOR") SERIES, FORMERLY THE BOND SERIES:
The investment objective of the Multi-Sector Series is to seek long-term total
return by investing in a diversified portfolio of high yield (high risk) and
high quality fixed income securities. For a discussion of the risks associated
with investing in high yield bonds, please see the accompanying Fund prospectus.
STRATEGIC ALLOCATION ("ALLOCATION") SERIES, FORMERLY THE TOTAL RETURN
SERIES: The investment objective of the Allocation Series is to realize as high
a level of total rate of return over an extended period of time as is considered
consistent with prudent investment risk (total rate of return consists of
capital appreciation, current income, including dividends and interest, possible
premiums and short-term gains from purchasing and selling options and financial
futures).
INTERNATIONAL SERIES: The investment objective of the International Series
is to seek a high total return consistent with reasonable risk. The
International Series intends to invest primarily in an internationally
diversified portfolio of equity securities. It intends to reduce its risk by
engaging in hedging transactions involving options, futures contracts and
foreign currency transactions. The International Series provides a means for
investors to invest a portion of their assets outside the United States.
BALANCED SERIES: The investment objective of the Balanced Series is to seek
reasonable income, long-term capital growth and conservation of capital. The
Balanced Series intends to invest based on combined considerations of risk,
income, capital enhancement and protection of capital value.
REAL ESTATE SECURITIES ("REAL ESTATE") SERIES: The investment objective of
the Real Estate Series is to seek capital appreciation and income with
approximately equal emphasis. It intends under normal circumstances to invest in
marketable securities of publicly traded real estate investment trusts (REITs)
and companies that operate, develop, manage and/or invest in real estate located
primarily in the United States.
STRATEGIC THEME ("THEME") SERIES: The investment objective of the Theme
Series is to seek long-term appreciation of capital by identifying securities
benefiting from long-term trends present in the United States and abroad. The
Theme Series intends to invest primarily in common stocks believed to have
substantial potential for capital growth.
ABERDEEN NEW ASIA ("ASIA") SERIES: The investment objective of the Asia
Series is to seek long-term capital appreciation. The Asia Series will invest
primarily in a diversified portfolio of equity securities of issuers organized
and principally operating in Asia, excluding Japan.
WANGER ADVISORS TRUST
Certain Subaccounts of the VUL Account invest in corresponding Series of the
Wanger Advisors Trust. The available Series and their fundamental objectives are
as follows:
WANGER U.S. SMALL CAP ("U.S. SMALL CAP") SERIES: The investment objective of
the U.S. Small Cap Series is to provide long-term growth. The U.S. Small Cap
Series will invest primarily in securities of U.S. companies with total common
stock market capitalization of less than $1 billion.
WANGER INTERNATIONAL SMALL CAP ("INTERNATIONAL SMALL CAP") SERIES: The
investment objective of the International Small Cap Series is to provide
long-term growth. The International Small Cap Series will invest primarily in
securities of non-U.S. companies with total common stock market capitalization
of less than $1 billion.
Each Series will be subject to the market fluctuations and risks inherent in
the ownership of any security and there can be no assurance that any Series'
stated investment objective will be realized.
In addition to being sold to the VUL Account, shares of the Funds also are
sold to the Phoenix Home Life Variable Accumulation Account, a separate account
utilized by Phoenix to receive and invest premiums paid under certain variable
annuity contracts issued by Phoenix. Shares of the Fund also may be sold to
other separate accounts of Phoenix or its affiliates or of other insurance
companies.
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Fund(s) simultaneously. Although neither Phoenix nor the Fund(s)
currently foresees any such disadvantages either to variable life insurance
Policyowners or to variable annuity Contract Owners, the Funds' Trustees intend
to monitor events in order to identify any material conflicts between variable
life insurance Policyowners and variable annuity Contract Owners and to
determine what action, if any, should be taken in response thereto. Material
conflicts could result from, for example, (1) changes in state insurance laws,
(2) changes in federal income tax laws, (3) changes in the investment management
of any portfolio of the Fund(s) or (4) differences in voting instructions
between those given by variable life insurance Policyowners and those given by
variable annuity Contract Owners. Phoenix will, at its own expense, remedy such
material conflict including, if necessary, segregating the assets underlying the
variable life insurance policies and the variable annuity contracts and
establishing a new registered investment company.
INVESTMENT ADVISERS
The Advisers furnish continuously an investment program for each Series and
manage the investment and reinvestment of the assets of each Series subject at
all times to the authority and supervision of the Trustees. A more detailed
discussion of the Advisers and the Investment Advisory Agreements is contained
in the accompanying prospectus for the Fund.
INVESTMENT ADVISERS TO THE PHOENIX EDGE SERIES FUND
The Phoenix Edge Series Fund's investment advisers are Phoenix Investment
Counsel, Inc. ("PIC"), Phoenix Realty Securities, Inc. ("PRS") and
Phoenix-Aberdeen International Advisors LLC, ("PAIA") (collectively, the
"Advisers"), which are located at 56 and 38 Prospect Street and One American
Row, respectively, Hartford, Connecticut 06115. PIC was originally organized in
1932 as John P. Chase, Inc. In addition to the Fund, it also serves as
investment adviser to the Phoenix Series Fund, Phoenix Strategic Allocation
Fund, Inc., Phoenix Multi-Portfolio Fund and Phoenix Strategic Equity Series
Fund and as subadviser to American Skandia, Chubb America Fund, Inc., Sun
11
<PAGE>
America Series Trust and JNL Series Trust. PIC also serves as subadviser to
the Asia Series.
PRS was formed in 1994 as an indirect subsidiary of Phoenix. In addition to
the Fund, it also serves as investment adviser to the Real Estate Portfolio of
the Phoenix Multi-Portfolio Fund.
PAIA, a Delaware limited liability company formed in 1996 and jointly owned
and managed by PM Holdings, Inc., is a direct subsidiary of Phoenix and Aberdeen
Fund Managers, Inc., a wholly-owned subsidiary of Aberdeen Trust plc. Aberdeen
Fund Managers, Inc. has its principal offices located at 1 Financial Plaza,
Suite 2210, NationsBank Tower, Fort Lauderdale, Florida 33394. While many of the
officers and directors of the PAIA have extensive experience as investment
professionals, due to its recent formation, the PAIA has no prior operating
history. Aberdeen Fund Managers also serves as subadviser to the Asia Series.
Aberdeen Trust was founded in 1983 and through subsidiaries operating from
offices in Aberdeen, Scotland; London, England; Singapore; and Fort Lauderdale,
Florida, provides investment management services to unit and investment trusts,
segregated pension funds and other institutional and private portfolios. As of
September 30, 1996, Aberdeen Trust, and its advisory subsidiaries, had
approximately $4 billion in assets under management.
ABKB/LaSalle Securities Limited Partnership (ABKB), a subsidiary of LaSalle
Partners, serves as subadviser to the Real Estate Series. ABKB's principal place
of business is located at 100 East Pratt Street, Baltimore, Maryland 21202. ABKB
has been a registered investment adviser since 1979.
All of the outstanding stock of PIC is owned by PEPCO, an indirect
subsidiary of Phoenix. PEPCO also performs bookkeeping, pricing and
administrative services for the Fund. PEPCO is registered as a broker-dealer in
50 states. The executive offices of Phoenix are located at One American Row,
Hartford, Connecticut 06115, and the principal offices of PEPCO are located at
100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
INVESTMENT ADVISER TO THE WANGER ADVISORS TRUST The investment adviser to the
Wanger Advisors Trust is Wanger
Asset Management, L.P. ("Wanger"). Wanger's principal place of business is
located at 227 West Monroe Street, Suite 3000, Chicago, Illinois
60606.
REINVESTMENT AND REDEMPTION
All dividend distributions of the Fund are automatically reinvested in
shares of the Fund at their net asset value on the date of distribution; all
capital gains distributions of the Fund, if any, are likewise reinvested at the
net asset value on the record date. Phoenix redeems Fund shares at their net
asset value to the extent necessary to make payments under the Policy.
SUBSTITUTION OF INVESTMENTS
Phoenix reserves the right, subject to compliance with the law as currently
applicable or subsequently changed, to make additions to, deletions from or
substitutions for the investments held by the VUL Account. In the future,
Phoenix may establish additional Subaccounts within the VUL Account, each of
which will invest in shares of a designated portfolio of the Fund with a
specified investment objective. These portfolios will be established if, and
when, in the sole discretion of Phoenix, marketing needs and investment
conditions warrant, and will be made available under existing Policies to the
extent and on a basis to be determined by Phoenix.
If shares of any of the portfolios of the Fund should no longer be available
for investment, or if in the judgment of Phoenix's management further investment
in shares of any of the portfolios should become inappropriate in view of the
objectives of the Policy, then Phoenix may substitute shares of another mutual
fund for shares already purchased, or to be purchased in the future, under the
Policy. No substitution of mutual fund shares held by the VUL Account may take
place without prior approval of the SEC and prior notice to the Policyowner. In
the event of a substitution, the Policyowner will be given the option of
transferring the Policy Value of the Subaccount in which the substitution is to
occur to another Subaccount.
PERFORMANCE HISTORY
From time to time, the VUL Account may include the performance history of
any or all Subaccounts, in advertisements, sales literature or reports.
PERFORMANCE INFORMATION ABOUT EACH SUBACCOUNT IS BASED ON PAST PERFORMANCE ONLY
AND IS NOT AN INDICATION OF FUTURE PERFORMANCE. Performance information may be
expressed as yield and effective yield of the Money Market Subaccount, as yield
of the Multi-Sector Subaccount and as total return of any Subaccount. Current
yield for the Money Market Subaccount will be based on the income earned by the
Subaccount over a given seven-day period (less a hypothetical charge reflecting
deductions for expenses taken during the period) and then annualized, i.e., the
income earned in the period is assumed to be earned every seven days over a
52-week period and is stated in terms of an annual percentage return on the
investment. Effective yield is calculated similarly but reflects the compounding
effect of earnings on reinvested dividends. Yield and effective yield reflect
the recurring charges on the VUL Account level including the monthly
administrative charge.
Yield calculations of the Money Market Subaccount used for illustration
purposes are based on the consideration of a hypothetical participant's account
having a balance of exactly one Unit at the beginning of a seven-day period,
which period will end on the date of the most recent financial statements. The
yield for the Subaccount during this seven-day period will be the change in the
value of the hypothetical participant's account's original Unit. The following
is an example of this yield calculation for the Money Market Subaccount based on
a seven-day period ending December 31, 1995.
Example:
Assumptions:
Value of hypothetical pre-existing account with exactly
one unit at the beginning of the period:....... 1.324187
Value of the same account (excluding capital changes)
at the end of the seven-day period:............. 1.325408
Calculation:
Ending account value ........................... 1.325408
Less beginning account value ................... 1.324187
Net change in account value .................... 0.001221
Base period return:
(adjusted change/beginning account value) ...... 0.000922
Current yield = return x (365/7) = ............... 4.81%
Effective yield = [(1 + return)365/7] -1 = ....... 4.92%
12
<PAGE>
The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield for
a stated period of time, or other investment companies, due to charges which
will be deducted on the VUL Account level.
For the Multi-Sector Subaccount, quotations of yield will be based on all
investment income per unit earned during a given 30-day period (including
dividends and interest), less expenses accrued during the period ("net
investment income"), and are computed by dividing net investment income by the
maximum offering price per unit on the last day of the period.
When a Subaccount advertises its total return, it usually will be calculated
for one year, five years, and ten years or since inception if the Subaccount has
not been in existence for at least ten years. Total return is measured by
comparing the value of a hypothetical $10,000 investment in the Subaccount at
the beginning of the relevant period to the value of the investment at the end
of the period, assuming the reinvestment of all distributions at net asset value
and the deduction of applicable Policy charges except for the cost of insurance
and any surrender charges and charges for premium taxes (which vary by Insured
and state).
For those Subaccounts within the VUL Account that have not been available
for one of the quoted periods, the standardized average annual total return
quotations will show the investment performance such Subaccount would have
achieved (reduced by the applicable charges) had it been available to invest in
shares of the Fund for the period quoted.
Below are quotations of standardized average annual total return of Series
of the Phoenix Edge Series Fund. POLICY CHARGES ARE NOT REFLECTED.
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED 12/31/95
-----------------------------
COMMENCEMENT LIFE OF
SERIES DATE 1 YEAR 5 YEARS 10 YEARS FUND
- ------ ---- ------ ------- -------- ----
Multi-Sector.... 1/1/83
Balanced........ 5/1/92
Allocation...... 9/17/84
Growth.......... 1/1/83
International... 5/1/90
Money Market.... 1/1/83
Real Estate..... (to be filed by Amendment)
Theme...........
Asia............
U.S. Small Cap..
Int'l. Small Cap
ANNUAL TOTAL RETURNS*
---------------------
MULTI- ALLO- INTER- MONEY
YEAR SECTOR BALANCED CATION GROWTH NATIONAL MARKET
- ---- ------ -------- ------ ------ -------- ------
1983......... 5.1% N/A N/A 31.7% N/A 7.4%
1984......... 10.3% N/A (1.4%) 9.7% N/A 9.2%
1985......... 19.5% N/A 26.2% 33.7% N/A 7.1%
1986......... 18.2% N/A 14.7% 19.4% N/A 5.6%
1987......... 0.2% N/A 11.6% 6.0% N/A 5.6%
1988......... 9.5% N/A 1.4% 3.0% N/A 6.5%
1989......... 6.9% N/A 18.4% 34.4% N/A 7.9%
1990......... 4.4% N/A 5.1% 3.2% (8.9%) 7.4%
1991......... 18.5% N/A 28.1% 41.5% 18.7% 5.0%
1992......... 9.1% 8.8% 9.7% 9.3% (13.6%) 2.7%
1993......... 15.0% 7.8% 10.1% 18.8% 37.3% 2.1%
1994......... (6.2%) (3.6%) (2.2%) 0.7% (0.7%) 3.0%
1995......... 22.6% 22.4% 17.3% 29.9% 8.7% 4.9%
1996......... (to be filed by Amendment)
REAL U.S. SMALL INT'L. SMALL
YEAR ESTATE THEME ASIA CAP CAP
- ---- ------ ----- ---- --- ---
1983.........
1984.........
1985.........
1986.........
1987.........
1988.........
1989......... (to be filed by Amendment)
1990.........
1991.........
1992.........
1993.........
1994.........
1995.........
1996.........
*Sales charges have not been deducted from the Annual Total Returns
THESE RATES OF RETURN ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE
PERFORMANCE. THEY DO NOT ILLUSTRATE HOW ACTUAL PERFORMANCE WILL AFFECT THE
BENEFITS UNDER A POLICY; FOR THIS INFORMATION SEE APPENDIX B "ILLUSTRATIONS OF
DEATH BENEFITS, POLICY VALUES AND CASH SURRENDER VALUES."
The Funds' Annual Reports, available upon request and without charge,
contain a discussion of the performance of the Funds and a comparison of that
performance to a securities market index.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
Charges are deducted in connection with the Policy to compensate Phoenix
for: (1) incurring expenses in distributing the Policy; (2) issuing the Policy;
(3) premium and federal taxes incurred on premiums received; (4) providing the
insurance benefits set forth in the Policy; and (5) assuming certain risks in
connection with the Policy. The nature and amount of these charges are described
more fully below.
We may reduce or eliminate the following charges for Policies issued under
group or sponsored arrangements: Sales Charge, Issue Expense Charge,
Administrative Charge and Surrender Charge. Generally, costs per Policy vary
with the size of the group or sponsored arrangement, its stability as indicated
by its term of existence and certain characteristics of its members, the
purposes for which the Policies are purchased and other factors. The amount of
13
<PAGE>
reduction will be considered on a case-by-case basis and will reflect the
reduced costs to Phoenix expected as a result of sales to a particular group or
sponsored arrangement.
1. SALES CHARGE
A charge is made to compensate Phoenix for the cost of selling the Policy.
This cost includes registered representative's commissions, commission
overrides, advertising, the printing of the Policy Prospectus and sales
literature. The amount of the charge in any Policy Year cannot specifically be
tied to sales expenses for that year. We expect to recover our total sales
expenses over the period the Policy is In Force. To the extent that sales
charges are insufficient to cover total sales expenses, these expenses may be
recovered from other sources including gains from the charge for mortality and
expense risks and other gains with respect to the Policies, or from our general
assets.
The sales charge is assessed according to the following schedule:
Policy Year One: 20% of premiums paid up to the
first target annual premium ("TAP");
5% of premiums in excess of the
TAP
Policy Years Two-Ten: 5% of premium
Policy Years Eleven and over: 0% of premium
The TAP is established at issue and is the greater of: (a) the level premium
required to mature the Policy, calculated at an interest rate of 6.5% assuming
current mortality and expenses; and (b) $1,200.
2. MONTHLY DEDUCTION
A charge is deducted monthly from the Policy Value under a Policy ("monthly
deduction") to pay: the cost of insurance provided under the Policy, the cost of
any rider benefits provided, the Issue Expense Charge and an administrative
charge. The monthly deduction is deducted on each Monthly Calculation Day. It is
allocated among Subaccount of the VUL Account and the unloaned portion of the
GIA based on the allocation schedule for monthly deductions specified by the
applicant in the application for a Policy or as later changed by the
Policyowner. In the event that the Policy's share in the value of a Subaccount
or the unloaned portion of the GIA is insufficient to permit the withdrawal of
the full monthly deduction, the remainder will be taken on a proportionate basis
from the Policy's share of each of the other Subaccounts and the unloaned
portion of the GIA. The number of units deducted will be determined by dividing
the portion of the monthly deduction allocated to each Subaccount or to the
unloaned portion of the GIA by the unit value on the Monthly Calculation Day.
Because portions of the monthly deduction, such as the cost of insurance, can
vary from month to month, the monthly deduction itself may vary in amount from
month to month.
(A) ISSUE EXPENSE CHARGE. A cost-based issue charge is assessed on a pro
rata basis in equal monthly installments of $50 over a 12-month period
to compensate Phoenix for underwriting and start-up expenses in
connection with issuing a Policy. The issue expense charge is $600.
(B) ADMINISTRATIVE CHARGE. A charge also is assessed to cover our variable
administrative costs such as the preparation of billings, statements
and mailings to Policyholders. The administrative charge is only
assessed in Policy Years one through ten and varies by the Face Amount
of the Policy as follows:
$20 per month for Policies with Face Amounts of less than or equal to
$400,000; $0.05 per $1,000 for Policies with Face Amounts of $400,000
up to $1,600,000; and $80 per month for Policies with Face Amounts of
greater than $1,600,000
(C) COST OF INSURANCE. In order to calculate the cost of insurance charge,
Phoenix multiplies the applicable cost of insurance rate by the
difference between the death benefit selected (death benefit Option A
if no selection is made) and the Policy Value. Generally, cost of
insurance rates are based on the sex, attained age and risk class of
the Insureds. However, in certain states and for policies issued in
conjunction with certain qualified plans, cost of insurance rates are
not based on sex. The actual monthly cost of insurance rates are based
on our expectations of future mortality experience. They will not,
however, be greater than the guaranteed cost of insurance rates set
forth in the Policy. These guaranteed maximum rates are equal to 100%
of the 1980 Commissioners Standard Ordinary ("CSO") Mortality Table,
with appropriate adjustment for the Insureds' risk classification. Any
change in the cost of insurance rates will apply to all persons of the
same sex, insurance age and risk class whose Policies have been In
Force for the same length of time. The risk class of an Insured may
affect the cost of insurance rate. Phoenix currently places Insureds
into a standard risk class or a risk class involving a higher mortality
risk, depending upon the health of the Insureds as determined by
medical information that Phoenix requests. In an otherwise identical
Policy, Insureds in the standard risk class will have a lower cost of
insurance than those in the risk class with the higher mortality risk.
The standard risk class also is divided into categories: smokers,
nonsmokers and those who have never smoked. Non-smokers will generally
incur a lower cost of insurance than similarly situated Insureds who
smoke.
3. PREMIUM TAXES
Various states and subdivisions impose a tax on premiums received by
insurance companies. Premium taxes vary from state to state. Currently, the
taxes imposed by states on premiums range from 0.75% to 4% of premiums paid.
Moreover, certain municipalities in Louisiana, Kentucky and South Carolina also
impose taxes on premiums paid, in addition to the state taxes imposed. The
premium tax charge represents an amount we consider necessary to pay all premium
taxes imposed by such states and any subdivisions thereof, and we do not expect
to derive a profit from this charge. Policies will be assessed a tax charge
equal to 2.25% of the premiums paid. These charges are deducted from the Issue
Premium, and from each subsequent premium payment.
14
<PAGE>
4. FEDERAL TAX CHARGE
A charge equal to 1.50% of each premium will be deducted from each premium
payment to cover the estimated cost to Phoenix of the federal income tax
treatment of deferred acquisition costs.
5. MORTALITY AND EXPENSE RISK CHARGE
We will deduct a daily charge from the VUL Account at an annual rate of
0.80% of the average daily net assets of the VUL Account to compensate for
certain risks assumed in connection with the Policy. After the 15th Policy Year,
a reduced annual rate of .25% will apply. This charge is not deducted from the
GIA.
The mortality risk assumed by Phoenix is that the Insureds may live for a
shorter time than projected because of inaccuracies in that projecting process
and, accordingly, that an aggregate amount of death benefits greater than that
projected will be payable. The expense risk assumed is that expenses incurred in
issuing the Policies may exceed the limits on administrative charges set in the
Policies. If the expenses do not increase to an amount in excess of the limits,
or if the mortality projecting process proves to be accurate, we may profit from
this charge. We also assume risks with respect to other contingencies including
the incidence of Policy loans, which may cause us to incur greater costs than
anticipated when designing the Policies. To the
extent we profit from this charge, we may use those profits for any proper
purpose, including the payment of sales expenses or any other expenses that may
exceed income in a given year.
6. INVESTMENT MANAGEMENT CHARGE
As compensation for investment management services to the Funds, the
Advisers are entitled to fees, payable monthly and based on an annual percentage
of the average aggregate daily net asset values of each Series as summarized in
the following tables:
PHOENIX INVESTMENT COUNSEL, INC.
--------------------------------
RATE FOR
RATE FOR FIRST RATE FOR NEXT EXCESS OVER
SERIES $250,000,000 $250,000,000 $500,000,000
- ------ ------------ ------------ ------------
Money Market........ .40% .35% .30%
Multi-Sector........ .50% .45% .40%
Balanced............ .55% .50% .45%
Allocation.......... .60% .55% .50%
Growth.............. .70% .65% .60%
International....... .75% .70% .65%
Theme............... .75% .70% .65%
PHOENIX-ABERDEEN INTERNATIONAL ADVISORS, LLC
--------------------------------------------
SERIES
- ------
Asia................ 1.00%
PHOENIX REALTY SECURITIES, INC.
-------------------------------
RATE FOR
RATE FOR FIRST RATE FOR NEXT EXCESS OVER
SERIES $1,000,000,000 $1,000,000,000 $2,000,000,000
- ------ -------------- -------------- --------------
Real Estate......... .75% .70% .65%
WANGER ASSET MANAGEMENT, L.P.
-----------------------------
RATE FOR
RATE FOR FIRST RATE FOR NEXT EXCESS OVER
SERIES $100,000,000 $150,000,000 $250,000,000
- ------ ------------ ------------ ------------
U.S. Small Cap...... 1.00% .95% .90%
International
Small Cap........... 1.30% 1.20% 1.10%
In addition, each Series pays a portion or all of its other annual operating
expenses other than the management fees; the Growth, Multi-Sector, Allocation,
Money Market and Balanced Series will pay up to .15%; the Real Estate, Theme and
Asia Series will pay up to .25%; the International Series will pay up to .40%;
the U.S. Small Cap Series will pay up to .50%; and the International Small Cap
Series will pay up to .60% of its average net assets annually. See "Charges and
Deductions."
7. OTHER CHARGES
SURRENDER CHARGE
During the first 10 Policy Years, there is a difference between the amount
of Policy Value and the amount of Cash Surrender Value of the Policy. This
difference is the surrender charge, consisting of a contingent deferred sales
charge designed to recover expenses for the distribution of Policies that are
terminated by surrender before distribution expenses have been recouped. These
are contingent charges because they are paid only if the Policy is surrendered
(or the Face Amount is reduced or the Policy lapses) during this period. They
are deferred charges because they are not deducted from premiums.
During the first 10 Policy Years, the full Surrender Charge as described
below will apply if you either surrender the Policy for its Cash Surrender Value
or let the Policy lapse. The applicable Surrender Charge in any Policy Month is
the full Surrender Charge minus any surrender charges that have been previously
paid. There is no Surrender Charge after the 10th Policy Year. During the first
10 Policy Years, the maximum Surrender Charge that you can pay while you own the
Policy is equal to the percentage amount shown in the Surrender Charge Table as
defined below.
SURRENDER CHARGE TABLE
----------------------
SURRENDER SURRENDER SURRENDER
POLICY CHARGE POLICY CHARGE POLICY CHARGE
MONTH % OF TAP MONTH % OF TAP MONTH % OF TAP
----- -------- ----- -------- ----- --------
1-70 100% 87 66% 104 32%
71 98% 88 64% 105 30%
72 96% 89 62% 106 28%
73 94% 90 60% 107 26%
74 92% 91 58% 108 24%
75 90% 92 56% 109 22%
76 88% 93 54% 110 20%
77 86% 94 52% 111 18%
78 84% 95 50% 112 16%
79 82% 96 48% 113 14%
80 80% 97 46% 114 12%
81 78% 98 44% 115 10%
82 76% 99 42% 116 8%
83 74% 100 40% 117 6%
84 72% 101 38% 118 4%
85 70% 102 36% 119 2%
86 68% 103 34% 120 0%
PARTIAL SURRENDER FEE
A fee equal to the lesser of $25 or 2% of the amount withdrawn from the
Policy is deducted from the Policy Value upon a partial surrender of the Policy
to recover the actual costs of processing the partial surrender request. The
assessment to each Subaccount or to the GIA will be made in the same manner as
provided for the partial surrender amount paid. That is, that the Policy's share
in the value of each Subaccount or the GIA will be reduced based on the
allocation
15
<PAGE>
made at the time of the partial surrender. If no allocation request is made, the
assessment to each Subaccount and to the GIA will be made in the same manner as
provided for monthly deductions.
PARTIAL SURRENDER CHARGE
A charge as described below is deducted from the Policy Value upon a partial
surrender of the Policy. The charge is equal to a pro rata portion of the
applicable surrender charge that would apply to a full surrender, determined by
multiplying the applicable surrender charge by a fraction (equal to the partial
surrender amount payable divided by the result of subtracting the applicable
surrender charge from the Policy Value). This amount is assessed against the
Subaccounts or the GIA in the same manner as provided for with respect to the
partial surrender amount paid.
A partial surrender charge also is deducted from Policy Value upon a
decrease in Face Amount. The charge is equal to the applicable surrender charge
multiplied by a fraction (equal to the decrease in Face Amount divided by the
Face Amount of the Policy prior to the decrease).
TAXES
Currently no charge is made to the VUL Account for federal income taxes that
may be attributable to the VUL Account. We may, however, make such a charge in
the future. Charges for other taxes, if any, attributable to the VUL Account
also may be made. See "Charges and Deductions--Other Charges."
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
POSTPONEMENT OF PAYMENTS
GENERAL
Payment of any amount upon complete or partial surrender, Policy loan or
benefits payable at death (in excess of the initial Face Amount) or maturity may
be postponed: (i) for up to six months from the date of the request, for any
transactions dependent upon the value of the GIA; (ii) whenever the New York
Stock Exchange is closed other than for customary weekend and holiday closings
or trading on the New York Stock Exchange is restricted as determined by the
SEC; or (iii) whenever an emergency exists, as determined by the Commission as a
result of which disposal of securities is not reasonably practicable or it is
not reasonably practicable to determine the value of the VUL Account's net
assets. Transfers also may be postponed under these circumstances.
PAYMENT BY CHECK
Payments under the Policy of any amounts derived from premiums paid by check
may be delayed until such time as the check has cleared the Policyowner's bank.
THE CONTRACT
The Policy and attached copy of the application are the entire contract.
Only statements in the application can be used to void the Policy. The
statements are considered representations and not warranties. Only an executive
officer of Phoenix can agree to change or waive any provisions of the Policy.
SUICIDE
If either of the Insureds commits suicide within two years after the
Policy's Date of Issue, the Policy will cease and become void. We will pay you
the Policy Value adjusted by the addition of any monthly deductions and other
fees and charges, minus any Dept owed to us under the Policy.
INCONTESTABILITY
We cannot contest this Policy or any attached rider after it has been In
Force during the Insureds' lifetimes for two years from the Policy Date.
CHANGE OF OWNER OR BENEFICIARY
The Beneficiary, as named in the Policy application or subsequently changed,
will receive the Policy benefits at the death of the last surviving Insured. If
the named Beneficiary dies before the death of the last surviving Insured, the
contingent Beneficiary, if named, becomes the Beneficiary. If no Beneficiary
survives the last surviving Insured, the death benefit payable under the Policy
will be paid to you or your estate.
As long as the Policy is In Force, the Policyowner and the Beneficiary may
be changed by written request, satisfactory to us. A change in Beneficiary will
take effect as of the date the notice is signed, whether or not the last
surviving Insured is living when the notice is received by us. We will not,
however, be liable for any payment made or action taken before receipt of the
notice.
ASSIGNMENT
The Policy may be assigned. We will not be bound by the assignment until a
written copy has been received and will not be liable with respect to any
payment made prior to receipt. We assume no responsibility for determining
whether an assignment is valid.
MISSTATEMENT OF AGE OR SEX
If the age or sex of either of the Insureds has been misstated, the death
benefit will be adjusted based on what the cost of insurance charge for the most
recent monthly deduction would have purchased based on the correct age and sex
of the Insureds.
SURPLUS
You may share in divisible surplus of Phoenix to the extent determined
annually by the Phoenix Board of Directors. However, it is not currently
anticipated that the Board will authorize these payments since Policyowners will
be participating directly in investment results.
PAYMENT OF PROCEEDS
- --------------------------------------------------------------------------------
SURRENDER AND DEATH BENEFIT PROCEEDS
Death benefit proceeds and the proceeds of full or partial surrenders will
be processed at unit values next computed after we receive the request for
surrender or due proof of death, provided such request is complete and in good
order. Payment of surrender or death proceeds usually will be made in one lump
sum within seven days, unless another payment option has been elected. Payment
of the death proceeds, however, may be delayed if the claim for payment of the
death proceeds needs to be investigated; e.g., to ensure payment of the proper
amount to the proper payee. Any such delay will not be beyond that reasonably
necessary to investigate such claims
16
<PAGE>
consistent with insurance practices customary in the life insurance industry.
Under this Policy, the death proceeds will be paid upon the death of the last
surviving Insured.
You may elect a payment option for payment of the death proceeds to the
Beneficiary. You may only do this before the second death. You may revoke or
change a prior election, unless such right has been waived. The Beneficiary may
make or change an election prior to payment of the death proceeds, unless you
have made an election which does not permit such further election or changes by
the Beneficiary.
A written request in a form satisfactory to us is required to elect, change
or revoke a payment option.
The minimum amount of surrender or death proceeds that may be applied under
any income option is $1,000.
If the Policy is assigned as collateral security, we will pay any amount due
the assignee in one lump sum. Any remaining proceeds will remain under the
option elected.
PAYMENT OPTIONS
All or part of the surrender or death proceeds of a Policy may be applied
under one or more of the following payment options or such other payment options
or alternative versions of the options listed as we may choose to make available
in the future.
OPTION 1--LUMP SUM.
Payment in one lump sum.
OPTION 2--LEFT TO EARN INTEREST.
A payment of interest during the payee's lifetime on the amount payable as a
principal sum. Interest rates are guaranteed to be at least 3% per year.
OPTION 3--PAYMENT FOR A SPECIFIC PERIOD.
Equal income installments are paid for a specified period of years whether
the payee lives or dies. The first payment will be on the date of settlement.
The assumed interest rate on the unpaid balance is guaranteed not to be less
than 3% per year.
OPTION 4--LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN.
Equal installments are paid until the later of: (A) The death of the
payee; (B) The end of the period certain. The first payment will be on the date
of settlement. The period certain must be chosen at the time this option is
elected. The periods certain that may be chosen are as follows: (A) Ten years;
(B) Twenty years; (C) Until the installments paid refund the amount applied
under this option; and if the payee is not living when the final payment falls
due, that payment will be limited to the amount which needs to be added to the
payments already made to equal the amount applied under this option. If, for the
age of the payee, a period certain is chosen that is shorter than another period
certain paying the same installment amount, Phoenix will deem the longer period
certain as having been elected. Any life annuity provided under Option 4 is
calculated using an interest rate guaranteed to be no less than 3 3/8% per year,
except that any life annuity providing a period certain of 20 years or more is
calculated using an interest rate guaranteed to be no less than 3 1/4% per year.
OPTION 5--LIFE ANNUITY.
Equal installments are paid only during the lifetime of the payee. The first
payment will be on the date of settlement. Any life annuity as may be provided
under Option 5 is calculated using an interest rate guaranteed to be no less
than 3 1/2% per year.
OPTION 6--PAYMENTS OF A SPECIFIED AMOUNT.
Equal installments of a specified amount, out of the principal sum and
interest on that sum, are paid until the principal sum remaining is less than
the amount of the installment. When that happens, the principal sum remaining
with accrued interest will be paid as a final payment. The first payment will be
on the date of settlement. The payments will include interest on the principal
sum remaining at a rate guaranteed to at least equal 3% per year. This interest
will be credited at the end of each year. If the amount of interest credited at
the end of the year exceeds the income payments made in the last 12 months, that
excess will be paid in one sum on the date credited.
OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10 YEAR PERIOD
CERTAIN.
The first payment will be on the date of settlement. Equal income
installments are paid until the latest of: (A) The end of the 10-year period
certain; (B) The death of the Insured; (C) The death of the other named
annuitant. The other annuitant must be named at the time this option is elected
and cannot later be changed. The other annuitant must have an attained age of at
least 40. Any joint survivorship annuity as may be provided under this option is
calculated using an interest rate guaranteed to be no less than 3 3/8% per year.
For additional information concerning the above payment options, see the
Policy.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
INTRODUCTION
The ultimate effect of federal income taxes on values under the VUL Account
and on the economic benefit to you or your Beneficiary depends on Phoenix's tax
status and upon the tax status of the individual concerned. The discussion
contained herein is general in nature and is not intended as tax advice. For
complete information on federal and state tax considerations, a qualified tax
adviser should be consulted. No attempt is made to consider any estate and
inheritance taxes, or any state, local or other tax laws. Because the discussion
herein is based upon our understanding of federal income tax laws as they are
currently interpreted, we cannot guarantee the tax status of any Policy. No
representation is made regarding the likelihood of continuation of current
federal income tax laws, Treasury regulations or of the current interpretations
by the Internal Revenue Service. We reserve the right to make changes to the
Policy in order to assure that it will continue to qualify as a life insurance
contract for federal income tax purposes.
PHOENIX'S TAX STATUS
Phoenix is taxed as a life insurance company under the Internal Revenue Code
of 1986, as amended (the "Code"). For federal income tax purposes, neither the
VUL Account nor the GIA is a separate entity from Phoenix and their operations
form a part of Phoenix.
17
<PAGE>
Investment income and realized capital gains on the assets of the VUL
Account are reinvested and taken into account in determining the value of the
VUL Account. Investment income of the VUL Account, including realized net
capital gains, is not taxed to Phoenix. Due to Phoenix's tax status under
current provisions of the Code, no charge currently will be made to the VUL
Account for Phoenix's federal income taxes which may be attributable to the VUL
Account. Phoenix reserves the right to make a deduction for taxes if the federal
tax treatment of Phoenix is determined to be other than what Phoenix currently
believes it to be, if changes are made affecting the tax treatment to Phoenix of
variable life insurance contracts, or if changes occur in Phoenix's tax status.
If imposed, such charge would be equal to the federal income taxes attributable
to the investment results of the VUL Account.
POLICY BENEFITS
DEATH BENEFIT PROCEEDS. The Policy, whether or not it is a "modified
endowment contract" (see the discussion on modified endowment contracts below),
should be treated as meeting the definition of a life insurance contract for
federal income tax purposes, under Section 7702 of the Code. As such, the death
benefit proceeds thereunder should be excludable from the gross income of the
Beneficiary under Code Section 101(a)(1). Also, the Policyowner should not be
deemed to be in constructive receipt of the Cash Value, including increments
thereon. See, however, the sections below on possible taxation of amounts
received under the Policy, via full surrender, partial surrender or loan.
Code Section 7702 imposes certain conditions with respect to premiums
received under a Policy. Phoenix intends to monitor the premiums to assure
compliance with such conditions. However, in the event that the premium
limitation is exceeded during the year, Phoenix may return the excess premium,
with interest, to the Policyowner within 60 days after the end of the Policy
Year, and maintain the qualification of the Policy as life insurance for federal
income tax purposes.
FULL SURRENDER. Upon full surrender of a Policy for its Cash Value, the
excess, if any, of the Cash Value (unreduced by any outstanding indebtedness)
over the premiums paid will be treated as ordinary income for federal income tax
purposes. The full surrender of a Policy which is a "modified endowment
contract" may result in the imposition of an additional 10% tax on any income
received.
PARTIAL SURRENDER. If the Policy is a "modified endowment contract," partial
surrenders are fully taxable to the extent of income in the Policy and are
possibly subject to an additional 10% tax. See the discussion on "modified
endowment contracts" below. If the Policy is not a "modified endowment
contract," partial surrenders still may be taxable, as follows. Code Section
7702(f)(7) provides that where a reduction in death benefits occurs during the
first 15 years after a Policy is issued and there is a cash distribution
associated with that reduction, the Policyowner may be taxed on all or a part of
the amount distributed. A reduction in death benefits may result from a partial
surrender. After 15 years, the proceeds will not be subject to tax, except to
the extent such proceeds exceed the total amount of premiums paid but not
previously recovered. Phoenix suggests you consult with your tax adviser in
advance of a proposed decrease in death benefits or a partial surrender as to
the portion, if any, which would be subject to tax, and in addition as to the
impact such partial surrender might have under the new rules affecting "modified
endowment contracts."
LOANS. Phoenix believes that any loan received under a Policy will be
treated as indebtedness of the Policyowner. If the Policy is a "modified
endowment contract," loans are fully taxable to the extent of income in the
Policy and are possibly subject to an additional 10% tax. See the discussion on
"modified endowment contracts" below. If the Policy is not a "modified endowment
contract," Phoenix believes that no part of any loan under a Policy will
constitute income to the Policyowner.
The deductibility by the Policyowner of loan interest under a Policy may be
limited under Code Section 264, depending on the circumstances. Any Policyowner
intending to fund premium payments through borrowing should consult a tax
adviser with respect to the tax consequences thereof. Under the "personal"
interest limitation provisions of the Code, interest on Policy loans used for
personal purposes is not tax deductible. Other rules may apply to allow all or
part of the interest expense as a deduction if the loan proceeds are used for
"trade or business" or "investment" purposes. See your tax adviser for further
guidance.
BUSINESS-OWNED POLICIES
If the Policy is owned by a business or a corporation, the Code may impose
additional restrictions. The Code limits the interest deduction on
business-owned Policy loans and may impose tax upon the inside build-up of
corporate-owned life insurance policies through the corporate alternative
minimum tax.
MODIFIED ENDOWMENT CONTRACTS
GENERAL. Pursuant to Code Section 72(e), loans and other amounts received
under "modified endowment contracts" will, in general, be taxed to the extent of
accumulated income (generally, the excess of Cash Value over premiums paid).
Policies are "modified endowment contracts" if they meet the definition of life
insurance, but fail the "7-pay test." This test essentially provides that the
cumulative premiums paid under the Policy at any time during the Policy's first
seven years cannot exceed the sum of the net level premiums that would have been
paid on or before that time had the Policy provided for paid-up future benefits
after the payment of seven level annual premiums. In addition, a modified
endowment contract includes any life insurance contract that is received in
exchange for a modified endowment contract. Premiums paid during a Policy Year
that are returned by Phoenix (with interest) within 60 days after the end of the
Policy Year will not cause the Policy to fail the 7-pay test.
REDUCTION IN BENEFITS DURING THE FIRST SEVEN YEARS. If there is a reduction
in benefits during the first seven Policy Years, the premiums are redetermined
for purposes of the 7-pay test as if the Policy originally had been issued at
the reduced death benefit level and the new limitation is applied to the
cumulative amount paid for each of the first seven Policy Years.
DISTRIBUTIONS AFFECTED. If a Policy fails to meet the 7-pay test, it is
considered a modified endowment contract only as to distributions in the year in
which the death benefit reduction takes effect and all subsequent Policy Years.
However, distributions made in anticipation of such failure (there is a
presumption that distributions made within two years prior to such failure were
"made in anticipation") also are considered distributions under a modified
endowment contract. If the Policy satisfies the "7-pay test" for seven years,
distributions and
18
<PAGE>
loans generally will not be subject to the modified endowment contract rules.
PENALTY TAX. Any amounts taxable under the modified endowment contract rule
will be subject to an additional 10% excise tax, with certain exceptions. This
additional tax will not apply in the case of distributions: (i) made on or after
the taxpayer attains age 59 1/2; (ii) which are attributable to the taxpayer's
disability (within the meaning of Code Section 72(m)(7)); or (iii) which are
part of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the taxpayer or the
joint lives (or life expectancies) of the taxpayer and his Beneficiary.
MATERIAL CHANGE RULES. Any determination of whether the Policy meets the
"7-pay test" will begin again any time the Policy undergoes a "material change,"
which includes any increase in death benefits or any increase in or addition of
a qualified additional benefit, with the following two exceptions. First, if an
increase is attributable to premiums paid "necessary to fund" the lowest death
benefit and qualified additional benefits payable in the first seven Policy
Years or to the crediting of interest or dividends with respect to these
premiums, the "increase" does not constitute a material change. Second, to the
extent provided in regulations, if the death benefit or qualified additional
benefit increases as a result of a cost-of-living adjustment based on an
established broad-based index specified in the Policy, this does not constitute
a material change if (1) the cost-of-living determination period does not exceed
the remaining premium payment period under the Policy, and (2) the
cost-of-living increase is funded ratably over the remaining premium payment
period of the Policy. A reduction in death benefits is not considered a material
change unless accompanied by a reduction in premium payments.
A material change may occur at any time during the life of the Policy
(within the first seven years or thereafter), and future taxation of
distributions or loans would depend upon whether the Policy satisfied the
applicable "7-pay test" from the time of the material change. An exchange of
policies is considered to be a material change for all purposes.
SERIAL PURCHASE OF MODIFIED ENDOWMENT CONTRACTS. All modified endowment
contracts issued by the same insurer (or affiliated companies of the insurer) to
the same Policyowner within the same calendar year will be treated as one
modified endowment contract in determining the taxable portion of any loans or
distributions made to the Policyowner. The Treasury has been given specific
legislative authority to issue regulations to prevent the avoidance of the new
distribution rules for modified endowment contracts. A qualified tax adviser
should be consulted about the tax consequences of the purchase of more than one
modified endowment contract within any calendar year.
LIMITATIONS ON UNREASONABLE MORTALITY AND EXPENSE CHARGES
The Code imposes limitations on unreasonable mortality and expense charges
for purposes of ensuring that a Policy qualifies as a life insurance contract
for federal income tax purposes. The mortality charges taken into account to
calculate permissible premium levels may not exceed those charges required to be
used in determining the federal income tax reserve for the Policy, unless
Treasury regulations prescribe a higher level of charge. In addition, the
expense charges taken into account under the guideline premium test are required
to be reasonable, as defined by the Treasury regulations. Phoenix intends to
comply with the limitations in calculating the premium it is permitted to
receive from you.
QUALIFIED PLANS
A Policy may be used in conjunction with certain qualified plans. Since the
rules governing such use are complex, you should not use the Policy in
conjunction with a qualified plan until you have consulted a competent pension
consultant or tax adviser.
DIVERSIFICATION STANDARDS
To comply with the diversification regulations under Code Section 817(h),
("Diversification Regulations") each Portfolio of the Fund is required to
diversify its investments. The Diversification Regulations generally require
that on the last day of each quarter of a calendar year no more than 55% of the
value of the Fund's assets is represented by any one investment, no more than
70% is represented by any two investments, no more than 80% is represented by
any three investments and no more than 90% is represented by any four
investments. A "look-through" rule applies to treat a pro rata portion of each
asset of the Fund as an asset of the VUL Account; therefore, each Series of the
Fund will be tested for compliance with the percentage limitations. For purposes
of these diversification rules, all securities of the same issuer are treated as
a single investment, but each United States Government agency or instrumentality
is treated as a separate issuer.
The general diversification requirements are modified if any of the assets
of the VUL Account are direct obligations of the United States Treasury. In this
case, there is no limit on the investment that may be made in United States
Treasury securities, and for purposes of determining whether assets other than
United States Treasury securities are adequately diversified, the generally
applicable percentage limitations are increased based on the value of the VUL
Account's investment in United States Treasury securities. Notwithstanding this
modification of the general diversification requirements, the portfolios of the
Fund will be structured to comply with the general diversification standards
because they serve as an investment vehicle for certain variable annuity
contracts which must comply with these standards.
In connection with the issuance of the Diversification Regulations, the
Treasury announced that such regulations do not provide guidance concerning the
extent to which you may direct your investments to particular divisions of a
separate account. It is possible that a revenue ruling or other form of
administrative pronouncement in this regard may be issued in the near future. It
is not clear, at this time, what such a revenue ruling or other pronouncement
will provide. It is possible that the Policy may need to be modified to comply
with such future Treasury announcements. For these reasons, Phoenix reserves the
right to modify the Policy, as necessary, to prevent you from being considered
the owner of the assets of the VUL Account.
Phoenix intends to comply with the Diversification Regulations to assure
that the Policies continue to qualify as a life insurance contract for federal
income tax purposes.
CHANGE OF OWNERSHIP OR INSURED OR ASSIGNMENT
Changing the Policyowner, or one or both of the Insureds or an exchange or
assignment of the Policy may have tax consequences
19
<PAGE>
depending on the circumstances. Code Section 1035 provides that a life insurance
contract can be exchanged for another life insurance contract, without
recognition of gain or loss, assuming that no money or other property is
received in the exchange, and that the Policies relate to the same Insureds. If
the surrendered Policy is subject to a policy loan, this may be treated as the
receipt of money on the exchange. Phoenix recommends that any person
contemplating such actions seek the advice of a qualified tax consultant.
OTHER TAXES
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary. We do not make any
representations or guarantees regarding the tax consequences of any Policy with
respect to these types of taxes.
VOTING RIGHTS
- --------------------------------------------------------------------------------
THE FUNDS
We will vote the Funds' shares held by the Subaccounts of the VUL Account at
any regular and special meetings of shareholders of the Funds. To the extent
required by law, such voting will be in accordance with instructions received
from you. However, if the Investment Company Act of 1940 or any regulation
thereunder should be amended or if the present interpretation thereof should
change, and as a result we determine that we are permitted to vote the Funds'
shares at our own discretion, we may elect to do so.
The number of votes that you have the right to cast will be determined by
applying your percentage interest in a Subaccount to the total number of votes
attributable to the Subaccount. In determining the number of votes, fractional
shares will be recognized.
Funds shares held in a Subaccount for which no timely instructions are
received, and Funds shares which are not otherwise attributable to Policyowners,
will be voted by Phoenix in proportion to the voting instructions that are
received with respect to all Policies participating in that Subaccount. Voting
instructions to abstain on any item to be voted upon will be applied to reduce
the votes eligible to be cast by Phoenix.
You will receive proxy materials, reports and other materials relating to
the Funds.
We 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 one or
more of the portfolios of the Funds or to approve or disapprove an investment
advisory contract for the Funds. In addition, Phoenix itself may disregard
voting instructions in favor of changes initiated by a Policyowner in the
investment policies or the Investment Adviser of the Funds if Phoenix 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
we determine that the change would have an adverse effect on the General Account
because the proposed investment policy for a Series may result in overly
speculative or unsound investments. In the event Phoenix does disregard voting
instructions, a summary of that action and the reasons for such action will be
included in the next periodic report to Policyowners.
PHOENIX
You (or the payee entitled to payment under a payment option if a different
person) will have the right to vote at annual meetings of all Phoenix
policyholders for the election of members of the Board of Directors of Phoenix
and on other corporate matters, if any, where a policyholder's vote is taken. At
meetings of all of the Phoenix policyholders, you (or payee) may cast only one
vote as the holder of a Policy, irrespective of Policy Value or the number of
the Policies you hold.
THE DIRECTORS AND EXECUTIVE OFFICERS OF PHOENIX
- --------------------------------------------------------------------------------
Phoenix is managed by its Board of Directors, the members of which are
elected by its Policyholders, including Owners of the Policies. See "Voting
Rights."
The following are the Directors and Executive Officers of Phoenix:
DIRECTORS PRINCIPAL OCCUPATION
--------- --------------------
Sal H. Alfiero Chairman and Chief Executive
Officer, Mark IV Industries, Inc.
Amherst, New York
J. Carter Bacot Chairman and Chief Executive
Officer, The Bank of New York
New York, New York
Carol H. Baldi President, Carol H. Baldi, Inc.
New York, New York
Peter C. Browning Executive Vice President, Sunoco
Products Company
Hartsville, South Carolina
Richard N. Cooper Chairman, National Intelligence
Council, Central Intelligence Agency
McLean, Virginia; formerly
Professor of International
Economics, Harvard University
Gordon J. Davis, Esq. Partner, LeBoeuf, Lamb, Greene &
MacRae; formerly Partner, Lord Day
& Lord, Barret Smith
New York, New York
Robert W. Fiondella Chairman of the Board, President
and Chief Executive Officer, Phoenix
Home Life Mutual Insurance
Company
Hartford, Connecticut
Jerry J. Jasinowski President, National Association of
Manufacturers
Washington, D.C.
John W. Johnstone Chairman, President and Chief
Executive Officer, Olin Corporation
Norwalk, Connecticut
Marilyn E. LaMarche General Partner, Lazard Freres &
Company
New York, New York
20
<PAGE>
Philip R. McLoughlin Executive Vice President and Chief
Investment Officer, Phoenix Home
Life Mutual Insurance Company
Hartford, Connecticut
Charles J. Paydos Executive Vice President, Phoenix
Home Life Mutual Insurance
Company
Hartford, Connecticut
Herbert Roth, Jr. Former Chairman, LFE Corporation
Clinton, Massachusetts
Robert F. Vizza President and Chief Executive
Officer, St. Francis Hospital
Roslyn, New York
Wilson Wilde Chairman, Executive Committee,
Hartford Steam Boiler Inspection
and Insurance Company
Hartford, Connecticut
Robert G. Wilson Former General Partner, Goldman
Sachs
New York, New York
EXECUTIVE OFFICERS PRINCIPAL OCCUPATION
------------------ --------------------
Robert W. Fiondella Chairman of the Board, President
and Chief Executive Officer
Richard H. Booth Executive Vice President, Strategic
Development; formerly President,
Traveler's Insurance Company
Philip R. McLoughlin Executive Vice President and Chief
Investment Officer
Charles J. Paydos Executive Vice President
David W. Searfoss Executive Vice President and Chief
Financial Officer
Dona D. Young Executive Vice President, Individual
Insurance and General Counsel
Kelly J. Carlson Senior Vice President, Career
Organization
Carl T. Chadburn Senior Vice President
Robert G. Chipkin Senior Vice President and Corporate
Actuary
Martin J. Gavin Senior Vice President
Randall C. Giangiulio Senior Vice President, Group Sales
Joan E. Herman Senior Vice President
Edward P. Hourihan Senior Vice President, Information
Systems
Joseph E. Kelleher Senior Vice President
Robert G. Lautensack, Jr. Senior Vice President
Scott C. Noble Senior Vice President, Real Estate
Robert E. Primmer Senior Vice President,
Brokerage and PPGA Distribution
Frederick W. Sawyer, III Senior Vice President
Richard C. Shaw Senior Vice President, International
and Corporate Development
Simon Y. Tan Senior Vice President, Individual
Market Development
Anthony J. Zeppetella Senior Vice President
The above positions reflect the last held position in the organization
during the past five years.
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS
- --------------------------------------------------------------------------------
The assets of the VUL Account are held by Phoenix. The assets of the VUL
Account are kept physically segregated and held separate and apart from the
General Account of Phoenix. Phoenix maintains records of all purchases and
redemptions of shares of the Fund.
SALES OF POLICIES
- --------------------------------------------------------------------------------
Policies may be purchased from registered representatives of W.S. Griffith &
Co., Inc. ("W. S. Griffith"), a corporation formed under the laws of the state
of New York on August 7, 1970, licensed to sell Phoenix insurance policies as
well as policies, annuity contracts and funds of companies affiliated with
Phoenix. W.S. Griffith, an indirect subsidiary of Phoenix, is registered as a
broker-dealer with the SEC under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. PEPCO serves as
national distributor of the Policies. PEPCO is an indirect subsidiary of Phoenix
Duff & Phelps Corporation. Phoenix owns a majority interest in Phoenix Duff &
Phelps Corporation. Policies also may be purchased from other broker-dealers
registered under the Securities Exchange Act of 1934 whose representatives are
authorized by applicable law to sell Policies under terms of agreements provided
by PEPCO. Sales commissions will be paid to registered representatives on
purchase payments received by Phoenix under these Policies. Total sales
commission of a maximum of 50% of premiums will be paid by Phoenix to PEPCO. To
the extent that the sales charge under the Policies is less than the sales
commissions paid with respect to the Policies, Phoenix will pay the shortfall
from its general account assets, which will include any profits it may derive
under the Policies.
Phoenix through PEPCO will sponsor sales contests, training and educational
meetings and provide to all qualifying dealers, from its own profits and
resources, additional compensation in the form of trips, merchandise or expense
reimbursement. Brokers and dealers other than PEPCO also may make customary
additional charges for their services in effecting purchases, if they notify the
Fund of their intention to do so.
STATE REGULATION
- --------------------------------------------------------------------------------
Phoenix is subject to the provisions of the New York insurance laws
applicable to mutual life insurance companies and to regulation and supervision
by the New York Superintendent of Insurance. Phoenix also is subject to the
applicable insurance laws of all the other states and jurisdictions in which it
does an insurance business.
21
<PAGE>
State regulation of Phoenix includes certain limitations on the investments
which it may make, including investments for the VUL Account and the GIA. It
does not include, however, any supervision over the investment policies of the
VUL Account.
REPORTS
- --------------------------------------------------------------------------------
All Policyowners will be furnished with those reports required by the
Investment Company Act of 1940 and regulations promulgated thereunder, or under
any other applicable law or regulation.
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The VUL Account is not engaged in any litigation. Phoenix is not involved in
any litigation that would have a material adverse effect on the ability of
Phoenix to meet its obligations under the Policies.
LEGAL MATTERS
- --------------------------------------------------------------------------------
The organization of Phoenix, its authority to issue variable life insurance
Policies, and the validity of the Policy have been passed upon by Richard J.
Wirth, Counsel, Phoenix. Legal matters relating to the federal securities and
income tax laws have been passed upon for Phoenix by Jorden Burt Berenson &
Johnson, LLP.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
A Registration Statement has been filed with the SEC, under the Securities
Act of 1933 as amended, with respect to the securities offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement and amendments thereto and exhibits filed as a part thereof, to all of
which reference is made for further information concerning the VUL Account,
Phoenix and the Policy. Statements contained in this Prospectus as to the
content of the Policy and other legal instruments are summaries. For a complete
statement of the terms thereof, reference is made to such instruments as filed.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The consolidated financial statements of Phoenix contained herein should be
considered only as bearing upon Phoenix's ability to meet its obligations under
the Policy, and they should not be considered as bearing on the investment
performance of the VUL Account. The financial statements of the VUL Account are
not yet available.
22
<PAGE>
PHOENIX HOME LIFE MUTUAL
INSURANCE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(TO BE FILED BY AMENDMENT)
23
<PAGE>
PHOENIX HOME LIFE
VARIABLE UNIVERSAL LIFE ACCOUNT
FINANCIAL STATEMENTS
The Subaccounts of Phoenix Home Life Variable Universal Life Account to which
allocations under the Policy may be made will be activated upon the effective
date of this registration statement, therefore, financial data with respect to
these Subaccounts is not available.
24
<PAGE>
APPENDIX A
THE GUARANTEED INTEREST ACCOUNT
Contributions to the Guaranteed Interest Account ("GIA") under the Policy
and transfers to the GIA become part of the Phoenix General Account (the
"General Account"), which supports insurance and annuity obligations. Because of
exemptive and exclusionary provisions, interest in the General Account has not
been registered under the Securities Act of 1933 ("1933 Act") nor is the General
Account registered as an investment company under the Investment Company Act of
1940 ("1940 Act"). Accordingly, neither the General Account nor any interest
therein is specifically subject to the provisions of the 1933 or 1940 Acts and
the staff of the Securities and Exchange Commission has not reviewed the
disclosures in this Prospectus concerning the GIA. Disclosures regarding the GIA
and the General Account, however, may be subject to certain generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
The General Account is made up of all of the general assets of Phoenix other
than those allocated to any separate account. Premium payments will be allocated
to the GIA and, therefore, the General Account, as elected by the Policyowner at
the time of purchase or as subsequently changed. Phoenix will invest the assets
of the General Account in assets chosen by it and allowed by applicable law.
Investment income from General Account assets is allocated between Phoenix and
the contracts participating in the General Account, in accordance with the terms
of such contracts.
Investment income from the General Account allocated to Phoenix includes
compensation for mortality and expense risks borne by it in connection with
General Account contracts.
The amount of investment income allocated to the Policies will vary from
year to year in the sole discretion of Phoenix. However, Phoenix guarantees that
it will credit interest at a rate of not less than 4% per year, compounded
annually, to amounts allocated to the unloaned portion of the GIA. The loaned
portion of the GIA will be credited interest at an effective annual rate of 2%
(4% on Policies issued in New York). Phoenix may credit interest at a rate in
excess of 4% per year; however, it is not obligated to credit any interest in
excess of 4% per year.
Bi-weekly, Phoenix will set the excess interest rate, if any, that will
apply to amounts deposited to the GIA. That rate will remain in effect for such
deposits for an initial guarantee period of one full year from the date of
deposit. Upon expiration of the initial one-year guarantee period (and each
subsequent one-year guarantee period thereafter), the rate to be applied to any
deposits whose guaranteed period has just ended will be the same rate as is
applied to new deposits allocated at that time to the GIA. This rate will
likewise remain in effect for a guarantee period of one full year from the date
the new rate is applied.
Excess interest, if any, will be determined by Phoenix based on information
as to expected investment yields. Some of the factors that Phoenix may consider
in determining whether to credit interest to amounts allocated to the GIA and
the amount thereof, are general economic trends, rates of return currently
available and anticipated on investments, regulatory and tax requirements and
competitive factors. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE GIA IN
EXCESS OF 4% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF PHOENIX AND
WITHOUT REGARD TO ANY SPECIFIC FORMULA. THE CONTRACT OWNER ASSUMES THE RISK THAT
INTEREST CREDITED TO GIA ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 4%
FOR ANY GIVEN YEAR.
Phoenix is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Board of Directors has set no limitations.
However, inherent in Phoenix's exercise of discretion in this regard is the
equitable allocation of distributable earnings and surplus among its various
Policyholders and Contract Owners.
Excess interest, if any, will be credited on the GIA Policy Value. Phoenix
guarantees that, at any time, the GIA Policy Value will not be less than the
amount of premium payments allocated to the GIA, plus interest at the rate of 4%
per year, compounded annually, plus any additional interest which Phoenix may,
in its discretion, credit to the GIA, less the sum of all annual administrative
or surrender charges, any applicable premium taxes, and less any amounts
surrendered or loaned. If the Policyowner surrenders the Policy, the amount
available from the GIA will be reduced by any applicable surrender charge and
annual administration charge. See "Deductions and Charges."
IN GENERAL, YOU CAN MAKE ONLY ONE TRANSFER PER YEAR FROM THE GIA. THE AMOUNT
THAT CAN BE TRANSFERRED OUT IS LIMITED TO THE GREATER OF $1,000 OR 25% OF THE
POLICY VALUE IN THE GIA AS OF THE DATE OF THE TRANSFER. IF YOU ELECT THE
SYSTEMATIC TRANSFER PROGRAM, APPROXIMATELY EQUAL AMOUNTS MAY BE TRANSFERRED OUT
OF THE GIA. ALSO, THE TOTAL POLICY VALUE ALLOCATED TO THE GIA MAY BE TRANSFERRED
OUT OF THE GIA TO ONE OR MORE OF THE SUBACCOUNTS OF THE VUL ACCOUNT OVER A
CONSECUTIVE FOUR-YEAR PERIOD ACCORDING TO THE FOLLOWING SCHEDULE:
YEAR ONE: 25% YEAR TWO: 33.3%
YEAR THREE: 50% YEAR FOUR: 100%
25
<PAGE>
APPENDIX B
ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES ("ACCOUNT VALUES")
AND CASH SURRENDER VALUES
The tables on the following pages illustrate how a Policy's death benefits,
acount values and Cash Surrender Value could vary over time assuming constant
hypothetical gross (after tax) annual investment returns of 0% and 12%. The
Policy benefits will differ from those shown in the tables if the annual
investment returns are not absolutely constant. That is, the figures will be
different if the returns averaged 0% to 12% over a period of years but went
above or below those figures in individual Policy Years. The Policy benefits
also will differ, depending on your premium allocations to each Subaccount of
the VUL Account, if the overall actual rates of return averaged 0% to 12% but
went above or below those figures for the individual Subaccounts. The tables are
for standard risk males and females who have never smoked. In states where cost
of insurance rates are not based on the Insured's sex, the tables designated
"male" apply to all standard risk Insureds who have never smoked. Account values
and Cash Surrender Values may be lower for smokers or former smokers or for risk
classes involving higher mortality risk. Planned premium payments are assumed to
be paid at the beginning of each Policy Year. The difference between the Policy
Value and the Cash Surrender Value in the first 10 years is the surrender
charge. Tables are included for death benefit Option 1 and Option 2. Tables also
are included to reflect the blended cost of insurance charge applied under a
multiple life Policy.
The death benefit, account value and Cash Surrender Value amounts reflect
the following current charges:
1. Issue Charge of $600.
2. Monthly Administrative Charge of $20 per month for Face Amounts of less
than or equal to $400,000; $0.05 per thousand for Face Amounts of $400,000
up to $1,600,000; and $80 per month for Face Amounts over $1,600,000.
3. Premium Tax Charge of 2.25%.
4. A Federal Tax Charge of 1.5%.
5. Cost of Insurance Charge. The tables illustrate cost of insurance at both
the current rates and at the maximum rates guaranteed in the Policies. (See
"Charges and Deductions--Cost of Insurance.")
6. Mortality and Expense Risk Charge, which is a daily charge equivalent to
.80% on an annual basis (.25% on an annual basis after the 15th Policy
Year), against the VUL Account for mortality and expense risks. (See
"Charges and Deductions--Mortality and Expense Risk Charge.")
These illustrations also assume an average investment advisory fee of .75%
on an annual basis, of the average daily net asset value of each of the Series
of the Funds. These illustrations also assume other ongoing average Fund
expenses of .22%. Management may decide to limit the amount of expense
reimbursement in the future. If this reimbursement had not been in place for the
fiscal year ended December 31, 1995, total operating expenses for the
Multi-Sector, Real Estate, Theme, Asia, U.S. Small Cap and International Small
Cap Series would have been approximately 0.73%, 1.98%, 1.33%, 2.40%, 2.35% and
4.20%, respectively, of the average net assets of the Series. (See "Charges and
Deductions--Investment Management Charge.")
Taking into account the Mortality and Expense Risk Charge and the investment
advisory fees and expenses, the gross annual investment return rates of 0% and
12% on the Funds' assets are equivalent to net annual investment return rates of
approximately -1.76% and 10.15%, respectively (applicable for the first 15
Policy Years for Single Life Policies and -1.22% and 10.75%, respectively, after
the 15th Policy Year for Single Life Policies). For individual illustrations,
interest rates ranging between 0% and 12% may be selected in place of the 12%
rate.
The hypothetical returns shown in the tables are without any tax charges
that may be attributable to the VUL Account in the future. If such tax charges
are imposed in the future, then in order to produce after tax returns equal to
those illustrated for 0% and 12%, a sufficiently higher amount in excess of the
hypothetical interest rates would have to be earned. (See "Charges and
Deduction--Other Charges--Taxes.")
The second column of each table shows the amount that would accumulate if an
amount equal to the premiums paid were invested to earn interest, after taxes,
at 5% compounded annually. These tables show that if a Policy is returned in its
very early years for payment of its Cash Surrender Value, that Cash Surrender
Value may be low in comparison to the amount of the premiums accumulated with
interest. Thus, the cost of owning a Policy for a relatively short time may be
high.
On request, we will furnish the Policyowner with a comparable illustration
based on the age and sex of the proposed insured person(s), standard risk
assumptions and the initial face amount and planned premium chosen.
26
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 1
MALE 35 NEVERSMOKE
FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
THE FLEX EDGE SUCCESS --
A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
<CAPTION>
ASSUMING
------------------------------------------------------------------------------
CURRENT CHARGES GUARANTEED CHARGES
------------------------------------ -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSUMED CASH CASH
ANNUAL PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @12.00% @ 12.00% @12.00% @ 0.0% @ 0.0% @ 0.0%
- ------- -------- -------- --------- --------- -------- -------- --------- ----------
[To be filed by amendment.]
</TABLE>
Based on 0% interest rate and guaranteed charges, the policy will lapse in year
33.
Death benefit, account value, and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
premium payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.64%
(includes mortality and expense risk charge of 0.8% for fifteen years, then
0.25% and average fund operating expenses of 0.84% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 4% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
27
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY Page 1 of 1
FEMALE 35 NEVERSMOKE
FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
THE FLEX EDGE SUCCESS --
A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
<CAPTION>
ASSUMING
------------------------------------------------------------------------------
CURRENT CHARGES GUARANTEED CHARGES
------------------------------------ -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSUMED CASH CASH
ANNUAL PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @12.00% @ 12.00% @12.00% @ 0.0% @ 0.0% @ 0.0%
- ------- -------- -------- --------- --------- -------- -------- --------- ----------
[To be filed by amendment.]
</TABLE>
Based on 0% interest rate and guaranteed charges, the policy will lapse in year
39.
Death benefit, account value, and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
premium payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.64%
(includes mortality and expense risk charge of 0.8% for fifteen years, then
0.25% and average fund operating expenses of 0.84% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 4% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
28
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE Page 1 of 1
MALE 35 NEVERSMOKE
FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
THE FLEX EDGE SUCCESS --
A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
<CAPTION>
ASSUMING
------------------------------------------------------------------------------
CURRENT CHARGES GUARANTEED CHARGES
------------------------------------ -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSUMED CASH CASH
ANNUAL PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @12.00% @ 12.00% @12.00% @ 0.0% @ 0.0% @ 0.0%
- ------- -------- -------- --------- --------- -------- -------- --------- ----------
[To be filed by amendment.]
</TABLE>
Based on 0% interest rate and guaranteed charges, the policy will lapse in year
33.
Death benefit, account value, and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
premium payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.64%
(includes mortality and expense risk charge of 0.8% for fifteen years, then
0.25% and average fund operating expenses of 0.84% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 4% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
29
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE PAGE 1 OF 1
FEMALE 35 NEVERSMOKE
FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
THE FLEX EDGE SUCCESS --
A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
<CAPTION>
ASSUMING
------------------------------------------------------------------------------
CURRENT CHARGES GUARANTEED CHARGES
------------------------------------ -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSUMED CASH CASH
ANNUAL PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @12.00% @ 12.00% @12.00% @ 0.0% @ 0.0% @ 0.0%
- ------- -------- -------- --------- --------- -------- -------- --------- ----------
[To be filed by amendment.]
</TABLE>
Based on 0% interest rate and guaranteed charges, the policy will lapse in year
38.
Death benefit, account value, and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
premium payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.64%
(includes mortality and expense risk charge of 0.8% for fifteen years, then
0.25% and average fund operating expenses of 0.84% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 4% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
30
<PAGE>
PART II. OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.
RULE 484 UNDERTAKING
Section 723 of the New York Business Corporation Law, as made applicable to
insurance companies by Section 108 of the New York Insurance Law, provides that
a corporation may indemnify any director or officer of the corporation made, or
threatened to be made, a party to an action or proceeding other than one by or
in the right of the corporation to procure a judgement in its favor, whether
civil or criminal, including an action by or in the right of any other
corporation of any type or kind, by reason of the fact that he, his testator or
intestate, served such other corporation in any capacity at the request of the
indemnifying corporation.
Article VI Section 6.1 of the By-Laws of Phoenix Home Life provides that:
"To the full extent permitted by the laws of the State of New York, the Company
shall indemnify any person made or threatened to be made a party to any action,
proceeding or investigation, whether civil or criminal, by reason of the fact
that such person ... is or was a Director or Officer of the Company; or ...
serves or served another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity at the request of the
Company, and also is or was a Director or Officer of the Company ... The Company
shall also indemnify any [such] person ... by reason of the fact that such
person or such person's testator or intestate is or was an employee or agent of
the Company ...."
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE>
Pursuant to Section 26(e)(2)(A) of the Investment Company Act of 1940, as
amended, Phoenix Home Life Mutual Insurance Company represents that the fees and
charges deducted under the Policies, in the aggregate, are reasonable in
relation to the expenses expected to be incurred and the risks to be assumed
thereunder by Phoenix Home Life Mutual Insurance Company.
CONTENTS OF REGISTRATION STATEMENT
This Form S-6 Registration Statement comprises the following papers and
documents:
The facing sheet.
The cross-reference sheet to Form N-8B-2.
The Prospectus describing Phoenix Home Life Mutual Insurance Company Policy
Form V602 and riders thereto "Variable Second To Die" (Marketing name to be
determined)), consisting of 30 pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signature page.
The powers of attorney are incorporated herein by reference to
Post-Effective Amendment No. 13 to Form S-6, Registration No. 33-23251,
filed on April 26, 1996.
Written consents of the following persons:
(a) Richard J. Wirth, Esq.
(b) Jorden Burt Berenson & Johnson LLP
(c) Price Waterhouse, LLP
(d) M. Spencer Hamilton, F.S.A.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A to the
instructions as to exhibits in Form N-8B-2:
A. (1) Resolution of the Board of Directors of Depositor establishing
the VUL Account is incorporated herein by reference to
Registration Statement on Form S-6, Registration No. 33-23251,
filed on July 21, 1988.
(2) Not Applicable.
(3) Distribution of Policies:
(a) Master Service and Distribution Compliance Agreement between
Depositor and Phoenix Equity Planning Corporation dated
December 31, 1996.*
(b) Form of Agreement between Phoenix Equity Planning Corporation
and Independent Brokers with respect to the sale of Policies.
(c) Not Applicable.
(4) Not Applicable.
(5) Specimen Policies with optional riders.
Flexible Premium Variable Universal Life Insurance Policy Form
Number V602 of Depositor.*
(6) (a) Charter of Phoenix Home Life Mutual Insurance Company is
incorporated herein by reference to Post-Effective Amendment
No. 12 to Form S-6, Registration No. 33-23251, filed on
February 13, 1996.
(b) By-Laws of Phoenix Home Life Mutual Insurance Company is
incorporated herein by reference to Post-Effective Amendment
No. 12 to Form S-6, Registration No. 33-23251, filed on
February 13, 1996.
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) Form of application for Variable Second To Die. (Marketing name
to be determined.)
(11) Memorandum describing transfer and redemption procedures and
method of computing adjustments in payments and cash values upon
conversion to fixed benefit policies.*
II-2
<PAGE>
2. Opinion of Richard J. Wirth, Esq., Counsel of Depositor as to the
legality of the securities being registered. (See number 9 below.)
3. Not Applicable. No financial statement will be omitted from the Prospectus
pursuant to Instruction 1(b) or (c) of Part I.
4. Not Applicable.
5. Financial Data Schedule.
6. Consent of Jorden Burt Berenson & Johnson, LLP.
7. Consent of Price Waterhouse, LLP.
8. Opinion and Consent of Richard J. Wirth, Esq.
9. Consent of M. Spencer Hamilton, F.S.A.
--------------
* Filed herewith.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Phoenix Home Life Variable Universal Life Account has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of Hartford, State of Connecticut on the 12th day
of March, 1997.
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
-------------------------------------------------
(Registrant)
By: PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
------------------------------------------
(Depositor)
By: /s/ Dona D. Young
---------------------------------------------
*Dona D. Young, Executive Vice President,
Individual Insurance and General Counsel
ATTEST: /s/Keith D. Robbins
----------------------------------
Keith D. Robbins, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Director March 12, 1997
- ---------------------------------------
*Sal H. Alfiero
Director March 12, 1997
- ---------------------------------------
*J. Carter Bacot
Director March 12, 1997
- ---------------------------------------
*Carol H. Baldi
Director March 12, 1997
- ---------------------------------------
*Peter C. Browning
Director March 12, 1997
- ---------------------------------------
*Richard N. Cooper
Director March 12, 1997
- ---------------------------------------
*Gordon J. Davis
Chairman of the Board, President and Chief March 12, 1997
- ---------------------------------------
*Robert W. Fiondella Executive Officer (Principal Executive Officer)
Director March 12, 1997
- ---------------------------------------
*Jerry J. Jasinowski
Director March 12, 1997
- ---------------------------------------
*Marilyn E. LaMarche
Director March 12, 1997
- ---------------------------------------
*Philip R. McLoughlin
Director March 12, 1997
- ---------------------------------------
*Charles J. Paydos
</TABLE>
S-1(c)
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Director March 12, 1997
- ---------------------------------------
*Herbert Roth, Jr.
Director March 12, 1997
- ---------------------------------------
*Robert F. Vizza
Director March 12, 1997
- ---------------------------------------
*Wilson Wilde
Director March 12, 1997
- ---------------------------------------
*Robert G. Wilson
Executive Vice President and Chief Financial March 12, 1997
- ---------------------------------------
*David W. Searfoss Officer (Principal Accounting and Financial
Officer)
</TABLE>
By: /s/ Dona D. Young
-------------------------------------
*Dona D. Young as Attorney-in-Fact pursuant to Powers of Attorney,
previously filed. (Refer to page II-2.)
S-1(c)
EXHIBIT 1.A.3(A)
MASTER SERVICE AND DISTRIBUTION COMPLIANCE AGREEMENT
BETWEEN DEPOSITOR AND PHOENIX EQUITY PLANNING CORPORATION
<PAGE>
MASTER SERVICE AND DISTRIBUTION COMPLIANCE AGREEMENT
THIS AGREEMENT, made THIS 31ST day of December, 1996, by and among
Phoenix Home LIFE MUTUAL INSURANCE COMPANY ("Phoenix"), a New York company, on
behalf of itself and the following Separate Accounts: Phoenix Home Life Variable
Accumulation Account and Phoenix Home Life Variable Universal Life Account
("Separate Accounts") and Phoenix Equity PLANNING Corporation ("PEPCO"), a
Connecticut corporation.
WITNESSETH:
WHEREAS, Phoenix offers for sale variable annuity and variable life
contracts/policies funded through Separate Accounts of Phoenix registered as
unit investment trusts under the Investment Company Act of 1940, as amended
("1940 Act"), and pursuant to registration statements filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended
("Securities Act"), and listed on Schedule A of this Agreement (the
"Contracts/Policies"), and
WHEREAS, PEPCO is registered as a broker-dealer with the Securities
and Exchange commission ("SEC") under the Securities Exchange Act of 1934, as
amended ("1934 Act") and is a member of the National Association of Securities
Dealers, Inc. ("NASD"), and
WHEREAS, Phoenix desires to engage PEPCO to perform certain services
with respect to the books and records to be maintained in connection with the
sale of Contracts/Policies and certain administrative and other functions as set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
I. SERVICES OF PEPCO
A. APPOINTMENT. Phoenix hereby appoints PEPCO, and PEPCO hereby
accepts the appointment as, Master Service and Distributor of the
Contracts/Policies.
B. DUTIES. PEPCO sh~ perform those administrative, compliance
and other services with respect to the Contracts/Policies as described herein.
PEPCO agrees to use its best efforts in performing the
activities outlined in paragraphs I. C and I. F of this Agreement.
C. WRITTEN AGREEMENTS. PEPCO has and shall enter into written
agreements with broker-dealerfirms whose registered representatives have been
or shall be properly licensed to sell registered securities and
insurance products including variable annuity and life licensed if required,
and appointed as life insurance agents of Phoenix. Phoenix shall pay all fees
associated with the appointments of such selected representatives as insurance
agents of Phoenix. Such agreements with broker-dealers shall provide that such
broker-dealer shall cause applications to be solicited for the purchase of the
Contracts/Policies. Such agreements shall include such terms and conditions as
PEPCO may determine not inconsistent with this Agreement, provided, however,
that any broker-
<PAGE>
-2-
dealer with whom PEPCO has entered into a written agreement must comply with
the following terms which shall be included in all such agreements:
The broker-dealer must -
(a) be a registered broker-dealer under the 1934 Act and be
a member of the NASD; and
(b) agree that, in connection with the solicitation of
applications for the purchase of Contracts/Policies,
the broker-dealer will in all respects conform to
the requirements of all state and federal laws and
the Rules of Fair Practice of the NASD relating to
the sale of the Contracts/Policies and will
indemnify and hold harmless PEPCO and Phoenix from
any damage or expense of any nature whatsoever on
account of the negligence, misconduct or wrongful
act of such broker-dealer or any employee,
representative or agent of such broker-dealer.
In obtaining and entering into written agreements with broker-dealers,
PEPCO will in all respects conform to the requirements of all state and federal
law, and the Rules of Fair Practice of the NASD.
D. RECORDKEEPING. PEPCO shall maintain and preserve, or cause to be
maintained and preserved, such accounts, books, and other documents as are
required of it under this Agreement, the 1934 Act and any other applicable laws
and regulations, including without limitation and to the extent applicable,
Rules 1 7a-3 and I 7a-4 under the 1934 Act. The books, accounts and records of
PEPCO as to services provided hereunder, shall be maintained so as to disclose
clearly and accurately the nature and details of the transactions.
E. SUPERVISION. PEPCO shall select associated persons, who are
trained and qualified persons, to solicit applications for purchase of
Contracts/Policies in conformance with applicable state and federal laws. Any
such persons shall be registered representatives of PEPCO in accordance with the
rules of the NASD, be licensed to offer the Contract/Policy in accordance with
the insurance laws of any jurisdiction in which such person solicits
applications, be licensed with and appointed by Phoenix as an insurance agent to
solicit applications for the Contracts/Policies and have entered into the
appropriate Variable Contract/Policy Insurance Commission Agreement with
Phoenix. PFPCO will train and supervise its registered representatives to insure
that the purchase of a Contract/Policy is not recommended to an applicant in the
absence of reasonable grounds to believe that the purchase is suitable for that
applicant. PEPCO shall pay the fees to regulatory authorities in connection with
obtaining necessary securities licenses and authorizations for its registered
representatives to solicit applications for the purchase of Contracts/Policies.
PEPCO is
<PAGE>
-3-
not responsible for fees in connection with the appointment of registered
representatives as insurance agents of Phoenix.
F. SALES MATERIALS AND OTHER DOCUMENTS.
(a) PEPCO's RESPONSIBILITIES. PEPCO shall be responsible for
the approval of promotional material by the SEC and the
NASD, where required.
(b) PHOENIX'S RESPONSIBILITIES. Phoenix shall be responsible
for:
(I) the design, preparation and printing of all
promotional material to be used in the distribution
of the Contracts/Policies;
(ii) the approval of promotional material by state and
other local insurance regulatory authorities.
(iii) confirming the issuance of the Contract/Policy to
the Contract/Policy Owner.
(c) RIGHT TO APPROVE. Neither party hereto nor any of its
agents or affiliates shall print, publish or distribute any
advertisement, circular or any document relating to the
Contracts/Policies or relating to the other party unless
such advertisement, circular or document shall have been
approved in writing by the other parry. However, nothing
herein shall prohibit any party from advertising annuities
or life insurance in general or on a generic basis, subject
to compliance with all applicable laws, rules and
regulations. Each party reserves the right to require
modification of any such material to comply with applicable
laws, rules and regulations and agrees to provide timely
responses regarding material submitted to it by the other
party.
G. PAYMENTS TO BROKER-DEALERS. PEPCO shall serve as paying agent for
amounts due broker-dealers for sales commissions. Phoenix shall forward to
PEPCO any such amounts due broker-dealers from Phoenix and PEPCO shall be
responsible to pay such amounts to the persons entitled thereto as set forth in
the applicable written agreements with such broker-dealers, subject to all
applicable state insurance laws and regulations and all applicable federal
and/or state securities
<PAGE>
-4-
laws and NASD rules. PEPCO shall reflect such amounts on its books and records
as required by Paragraph D hereto.
H. COMPLIANCE. PEPCO shall, at all times, when performing its
functions under this Agreement, be registered as a securities broker-dealer with
the SEC and the NASD and be licensed or registered as a securities broker-dealer
in any jurisdiction where the performance of the duties contemplated by this
Agreement would require such licensing or registration. PEPCO represents and
warrants that it shall otherwise comply with provisions of federal and state law
in performing its duties hereunder.
I. PAYMENT OF EXPENSES BY PEPCO. PEPCO shall pay the expenses
incurred in connection with its provision of services hereunder and the
distribution of the Contracts/Policies.
II. GENERAL PROVISIONS
A. INSPECTION OF BOOKS AND RECORDS. PEPCO and Phoenix agree that all
records relating to services provided hereunder shall be subject to reasonable
periodic, special or other audit or examination by the SEC, NASD, or any state
insurance commissioner or any other regulatory body having jurisdiction. PEPCO
and Phoenix agree to cooperate fully in any securities or insurance regulatory
or judicial investigation, inspection, inquiry or proceeding arising in
connection with the services provided under this Agreement, or with respect to
PEPCO or Phoenix or their affiliates, to the extent related to the distribution
of the Contracts/Policies. PEPCO and Phoenix will notify each other promptly of
any customer compliant or notice of regulatory or judicial proceeding, and, in
the case of a customer complaint, will cooperate in arriving at a mutually
satisfactory resolution thereof.
B. INDEMNIFICATION. PEPCO will indemnify and hold harmless Phoenix
and the Separate Accounts, from any and all expenses, losses, claims, damages or
liabilities (including attorney fees) incurred by reason of any
misrepresentation, wrongful or unauthorized act or omission, negligence of, or
failure of PEPCO, including any employee of PEPCO, to comply with the terms of
this Agreement, provided however, PEPCO shall not be required to indemnify for
any such expenses, losses, claims, damages or liabilities which have resulted
from the negligence, misconduct or wrongful act of the party seeking
indemnification. PEPCO shall also hold harmless and indemnify Phoenix and the
Separate Accounts for any and all expenses, losses, claims, damages, or
liability (including attorneys fees) arising from any misrepresentation,
wrongful or unauthorized act or omission, negligence of, or failure of a
broker-dealer or its employees, agents or registered representatives, to comply
with the terms of the written agreement entered into between PEPCO and such
broker-dealer but only to the extent that PEPCO is indemnified by the
broker-dealer under the terms of the written agreement. Phoenix will indemnify
and hold harmless PEPCO, for any expenses, losses, claims, damages or
liabilities (including attorneys fees) incurred by reason of any material
misrepresentation or omission in a registration statement or prospectus for the
<PAGE>
-5-
Contracts/Policies, or on account of any other misrepresentation, wrongful or
unauthorized act or omission, negligence of, or failure of Phoenix, including
any employee of Phoenix, to comply with the terms of this Agreement, provided
however, Phoenix shall not be required to indemnify for any expenses, losses,
claims, damages or liabilities which have resulted from the negligence,
misconduct or wrongful act of the parry seeking indemnification.
C. COMPENSATION. Phoenix shall compensate PEPCO for the services
PEPCO performs hereunder as the parties shall agree from time to time and as
listed on Schedule A of this Agreement. PEPCO agrees to return promptly to
Phoenix all compensation received for any Contract/Policy returned within the
"free look" period as specified in the Contract/Policy.
D. TERMINATION. This Agreement shall become effective on the date of
this Agreement and shall continue to be in effect, except that:
(a) Any parry hereto may terminate this Agreement on any
date by giving the other parry at least thirty (30)
days prior written notice of such termination
specifying the date fixed therefor.
(b) This Agreement may not be assigned by PEPCO without the
consent of Phoenix.
E. REGISTRATION. Phoenix agrees to use its best efforts to effect and
maintain the registration of the Contracts/Policies under the Securities Act
and the Separate Accounts under the 1940 Act, and to qualify the
Contracts/Policies under the state securities and insurance laws, and to
qualify the Contracts/Policies as annuities/life insurance under the Internal
Revenue Code. Phoenix will pay or cause to be paid expenses (including the fees
and disbursements of its own counsel) of the registration and maintenance of the
Contracts/Policies under the Securities Act and of the Separate Accounts under
the 1940 Act, and to qualify the Contracts/Policies under the state securities
and insurance laws.
F. AUTHORITY. PEPCO shall have authority hereunder only as expressly
granted in this Agreement.
G. MISCELLANEOUS. Phoenix agrees to advise PEPCO immediately in the
case of an issuance by the SEC of any stop order suspending the effectiveness of
any prospectus for the Contracts/Policies, of all actions of the SEC with
respect to any amendments to the registration statement(s) which may from time
to time be filed with the SEC and of any material event which makes untrue any
statement made in the registration statements for the Contracts/Policies, or
which requires the making of a change in the registration statements in order to
make the statement therein not misleading. Phoenix agrees to advise PEPCO in the
event that formal administrative proceedings are instituted against Phoenix by
the SEC, or any state securities or insurance
<PAGE>
-6-
department or any other regulatory body regarding Phoenix's duties under this
Agreement, unless Phoenix determines in its sole judgment, exercised in good
faith, that any such administrative proceeding will not have a material adverse
effect upon its ability to perform its obligations under this Agreement. PEPCO
agrees to advise Phoenix in the event that formal administrative proceedings are
instituted against PEPCO by the SEC, NASD, or any state securities or insurance
department or any other regulatory body regarding PEPCO's duties under this
Agreement, unless PEPCO determines in its sole judgment exercised in good faith,
that any such administrative proceedings will not have a material adverse effect
upon its ability to perform its obligations under this Agreement.
H. INDEPENDENT CONTRACTOR PEPCO shall undertake and discharge its
obligations hereunder as an independent contractor and nothing herein shall be
construed as establishing; (i)an employer-employee relation between the parties
hereto; or (ii) a joint venture.
I. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the parties have hereunto set their hands on the
date first above written.
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
For itself and PHOENIX HOME LIFE VARIABLE ACCUMULATION ACCOUNT
And PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
By: /s/ Dona D. Young
----------------------------------------
Title: Executive Vice President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Philip R. McLoughlin
----------------------------------------
Title: President
<PAGE>
SCHEDULE A
PEPCO has been appointed by Phoenix to perform certain administrative,
compliance and other services with respect to the following variable annuity
Contracts/Policies ("Contracts/Policies") issued by Phoenix insurance Company:
THE BIG EDGE AND BIG EDGE PLUS - individual Deferred Variable
Accumulation Annuity Contracts issued by the Phoenix Home
Life Variable Accumulation Account of Phoenix. PEPCO shall
receive payments for services performed under this Agreement
equal to up to 7.25% of purchase payments made under The Big
Edge and Big Edge Plus Contracts. in addition, PEPCO shall
receive an underwriting fee of 75-100 bps on deposits under
The Big Edge and Big Edge Plus Contracts, for sales
assistance attributable to broker-dealers, other than WS
Griffith and Co. inc. and PLANCO Financial Services Inc.
GROUP STRATEGIC EDGE - A Group Deferred Variable Accumulation
Contract issued by the Phoenix Home Life Variable
Accumulation Account of Phoenix. PEPCO shall receive payments
for services performed under this Agreement equal to up to 5%
of purchase payments made under the Group Strategic Edge
Contracts. in addition, PEPCO shall receive an underwriting
fee of 75-100 bps on deposits under Group Strategic Edge
Contracts, for sales assistance attributable to
broker-dealers, other than WS Griffith and Co.
Inc. and PLANCO Financial Services Inc.
FLEX EDGE, FLEX EDGE SUCCESS AND JOINT EDGE - Variable
Universal Life Insurance Policies issued by the Phoenix Home
Life Variable Universal Life Account of Phoenix. PEPCO shall
receive payment for services performed under this agreement
equal to up to 50% of premium payments made under the
Policies up to the commissionable premium amount, and up to
5% of such payments after the commissionable premium has been
paid in the first Policy Year.
PHOENIX EDGE - Variable Universal Life Insurance Policy
issued by the Phoenix Home Life Variable Universal Life
Account of Phoenix. PEPCO shall receive payment for services
performed under this agreement equal to 5% of premium
payments made under the Policy.
EXHIBIT 1.A.5
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
FORM NUMBER V602 OF DEPOSITOR
<PAGE>
PHOENIX HOME LIFE Main Administrative Office: Statutory Home Office:
Mutual Insurance Company One American Row 99 Troy St.
Hartford, CT 06115 East Greenbush, NY 12061
- --------------------------------------------------------------------------------
FIRST INSURED: John M. Phoenix Mary A. Phoenix :SECOND INSURED
ISSUE AGE & SEX: 35 - Male 35 - Female :ISSUE AGE & SEX
POLICY NUMBER: 3000000 March 1, 1997 :POLICY DATE
FACE AMOUNT: $250,000
Dear Policyowner:
We agree to pay the benefits of this policy in accordance with its provisions.
It is important to us that you are satisfied with your policy and that it meets
your insurance goals. For service or information on this policy, contact the
agent who sold the policy, any of our agency offices, or our Variable and
Universal Life Administration at the following address:
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
VARIABLE AND UNIVERSAL LIFE ADMINISTRATION
101 MUNSON STREET
P.O. BOX 942
GREENFIELD, MA 01302-0942
RIGHT TO CANCEL. You have the right to cancel this policy within a limited time
after the policy is delivered to you. The policy may be canceled by returning
the policy to us at our Variable and Universal Life Administration before the
later of:
1. 10 days after the policy is delivered to you; or
2. 10 days after a Notice of Right to Cancel is delivered to you; or
3. 45 days after Part 1 of the application is signed
for a refund of:
1. the policy value less debt, if any; plus
2. any monthly deductions, partial surrender fees, and other charges made
under the policy.
The policy value and debt will be determined as of the nearest Valuation Date
coincident with or following the date we receive the returned policy at our
Variable and Universal Life Division.
Signed for Phoenix Home Life Mutual Insurance Company at its Main Administrative
Office in Hartford, Connecticut.
Sincerely yours,
Secretary Chief Executive Officer
Registrar
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICY
INSURANCE PAYABLE AT SECOND DEATH
PREMIUMS PAYABLE UNTIL SECOND DEATH
THE DEATH BENEFIT AND OTHER VALUES PROVIDED UNDER THIS POLICY ARE BASED ON THE
RATES OF INTEREST CREDITED ON ANY AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST
ACCOUNT AND THE INVESTMENT EXPERIENCE OF THE SUB-ACCOUNTS WITHIN OUR SEPARATE
ACCOUNT TO WHICH YOUR PREMIUMS ARE ALLOCATED. THUS, THE DEATH BENEFIT AND OTHER
VALUES MAY INCREASE OR DECREASE IN AMOUNT OR DURATION. SEE PART 7 FOR A
DESCRIPTION OF HOW THE DEATH BENEFIT IS DETERMINED.
V602 ELIGIBLE FOR ANNUAL DIVIDENDS
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
SCHEDULE PAGE
BASIC INFORMATION
-----------------
POLICY NUMBER: 3000000 MARCH 1, 1997 :POLICY DATE
FACE AMOUNT: $250,000
DEATH BENEFIT OPTION: Death Benefit Option 1 or as later changed as provided
herein
OWNER: OWNER AS STATED ON THE APPLICATION UNLESS LATER
CHANGED.
BENEFICIARY: AS STATED ON THE APPLICATION UNLESS LATER CHANGED.
INSUREDS
--------
INSURED ISSUE AGE & SEX RISK CLASSIFICATION
------- --------------- -------------------
FIRST INSURED: JOHN M. PHOENIX 35 MALE NONSMOKER
SECOND INSURED: MARY A. PHOENIX 35 FEMALE NONSMOKER
PREMIUMS
--------
ISSUE PREMIUM: $1,200.00 due on March 1, 1997
SUBSEQUENT PLANNED ANNUAL
PREMIUM: $1,200.00
TOTAL PREMIUM LIMIT: Greater of $20,782.86 and result of $1,988.72
multiplied by the number of policy elapsed years
(or fraction thereof) ending on March 1, 2062.
PREMIUM DUE DATES: The amount and time of premium payments following
the Policy Date are flexible. Subsequent planned
premiums are payable on the first day of each
March thereafter until the second death of the
insureds, but not beyond March 1, 2062.
V602 DATE PREPARED: MARCH 1, 1997 1 of 8
<PAGE>
SCHEDULE PAGE
(CONTINUED)
POLICY NUMBER: 3000000
SUBACCOUNT ALLOCATION SCHEDULE ON THE POLICY DATE
-------------------------------------------------
MONTHLY
SUBACCOUNT* PREMIUMS DEDUCTIONS**
Money Market 100% Proportionate
* See next page for description of subaccounts.
** See Part 1 for definition of Proportionate. Subaccounts marked
"NONE" will be charged with a portion of the monthly deduction only
if the subaccounts marked "PROPORTIONATE" are not sufficient to make
the full monthly deduction.
V602 DATE PREPARED: MARCH 1, 1997 2 of 8
<PAGE>
SCHEDULE PAGE
(CONTINUED)
POLICY NUMBER: 3000000
SEPARATE ACCOUNT SUBACCOUNTS
FUND: THE PHOENIX EDGE SERIES FUND
MONEY MARKET The investment objective of the Money Market Subaccount
is to provide maximum current income consistent with
capital preservation and liquidity.
GROWTH The investment objective of the Growth Subaccount is to
achieve intermediate and long-term growth of capital,
with income as a secondary consideration.
MULTI-SECTOR FIXED The investment objective of the Multi-Sector Subaccount
INCOME is to seek long-term total return by investing in a
diversified portfolio of high yield (high risk) and
high quality fixed income securities.
STRATEGIC ALLOCATION The investment objective of the Allocation Subaccount
is to realize as high a level of total rate of return
over an extended period of time as is considered
consistent with prudent investment risk.
INTERNATIONAL The investment objective of the International
Subaccount is to seek a high total return consistent
with reasonable risk. The International Subaccount
intends to invest primarily in an internationally
diversified portfolio of equity securities. The
International Portfolio provides a means for investors
to invest a portion of their assets outside the United
States.
BALANCED The investment objective of the Balanced Subaccount is
to seed a reasonable income, long-term capital growth
and conservation of capital. The Balanced Subaccount
intends to invest based on combined considerations of
risk, income, capital enhancement and protection of
capital value.
REAL ESTATE The investment objective of the Real Estate Securities
SECURITIES Subaccount is to seek capital appreciation and income
with approximately equal emphasis. It intends under
normal circumstances to invest in marketable securities
of publicly traded Real Estate Investment Trusts
(REITS) and companies operate, develop, manage and/or
invest in real estate located primarily in the United
States.
STRATEGIC THEME The investment objective of the Strategic Theme
Subaccount is to seek long-term appreciation of capital
by identifying securities benefiting from long-term
trends present in the United States and abroad. The
Strategic Theme Subaccount intends to invest primarily
in common stocks believed to have substantial potential
for capital growth.
ABERDEEN NEW ASIA The investment objective of the Asia Series is to seek
long-term capital appreciation. The Asia Series will
invest primarily in a diversified portfolio of equity
securities of issuers organized and principally
operating in Asia, excluding Japan.
FUND: WANGER ADVISORS TRUST:
WANGER SMALL CAP: The investment objective of the Wanger Small Cap
Subaccount is to provide long-term growth. The Wanger
Small Cap Subaccount will invest in a series that
invests primarily in securities of U.S. companies with
capitalization of less than $1 billion.
V602 DATE PREPARED: MARCH 1, 1997 3 of 8
<PAGE>
SCHEDULE PAGE
(CONTINUED)
POLICY NUMBER: 3000000
WANGER INTERNATIONAL The investment objective of the Wanger International
SMALL CAP Small Cap Subaccount is to provide long-term growth.
The Wanger International Small Cap Subaccount will
invest in a series that invests primarily in securities
of Non-U.S. Companies with capitalization of less than
$1 billion.
GENERAL ACCOUNT SUBACCOUNTS
GUARANTEED INTEREST The Guaranteed Interest Account is not part of the
ACCOUNT Separate Account. It is part of our General Account. We
reserve the right to limit cumulative deposits,
including transfers, to the unloaned portion of the
Guaranteed Interest Account during any one-week period
to not more than $250,000. We will credit interest
daily on the amounts allocated under this policy to the
Guaranteed Interest Account.
The loaned portion of the Guaranteed Interest Account
will be credited interest at an effective annual fixed
rate of 2%.
Twice each calendar month, we will set the interest
rate that will apply to to any deposit made to the
unloaned portion of the Guaranteed Interest Account,
during the applicable period of that month. In no event
will the effective annual rate of interest on such
portion be less than 4%. That rate will remain in
effect for such deposits for an initial guarantee
period of one full year. Upon expiry of the initial
one-year guarantee period, and for any deposits whose
guarantee has just ended, the applicable rate shall be
the same rate that applies to new deposits made at the
time the guarantee period expires. Such rate shall
likewise remain in effect for such deposits for a
subsequent guarantee period of one full year.
V602 DATE PREPARED: MARCH 1, 1997 4 of 8
<PAGE>
SCHEDULE PAGE
(CONTINUED)
POLICY NUMBER: 3000000
SUBACCOUNT FEES
---------------
MAXIMUM DAILY MORTALITY AND EXPENSE RISK FEE:
0.0000219 (Based on Annual Rate of 0.80% for first 15
Policy Years)
0.0000068 (Based on Annual Rate of 0.25% after 15
Policy Years)
MAXIMUM DAILY TAX FEE: 0 or such greater amount as may be assessed as a result
of a change in tax laws.
POLICY CHARGES
--------------
ISSUE EXPENSE CHARGE: $600
SALES CHARGE: 20% of first 1,200.00 of premium paid in the first
policy year
5% of any premium paid in excess of 1,200.00 in the
first policy year
5% of all premiums paid in policy years 2-10
PREMIUM TAX CHARGE: 2.25% of premiums paid in all years
FEDERAL TAX CHARGE: 1.50% of premiums paid in all years
MONTHLY DEDUCTION: See Part 4, "Monthly Deduction". Includes cost of
insurance, any rider charges, any flat extra mortality
charges, and a monthly administrative charge. The
monthly administrative charge will be $20 in policy
years 1-10, and $0 thereafter.
MAXIMUM TRANSFER $0 - First two transfers per policy year
CHARGE: $10 - Subsequent transfers per policy year
PARTIAL SURRENDER FEE: Lesser of $25.00 or 2% of partial surrender amount
paid.
SURRENDER CHARGE: See Table on next page.
OTHER RATES
-----------
GUARANTEED INTEREST ACCOUNT:
UNLOANED PORTION: Minimum Rate 4%
LOANED PORTION: 2%
LOANED INTEREST RATE: 4% for the first 10 policy years, 3% for policy years
11-15, and 2.5% thereafter.
V602 DATE PREPARED: MARCH 1, 1997 5 of 8
<PAGE>
SCHEDULE PAGE
(CONTINUED)
POLICY NUMBER: 3000000
SURRENDER CHARGE
----------------
In Policy years 1 through 10, the full Surrender Charge is given in the table
below. The applicable Surrender Charge in any Policy Month is the full Surrender
Charge minus any Surrender Charges previously paid, but not less than zero. In
all policy years after the 10th policy year, the Surrender Charge is zero.
MAXIMUM SURRENDER CHARGE TABLE
Policy Surrender Policy Surrender Policy Surrender
Month Charge Month Charge Month Charge
----- ------ ----- ------ ----- ------
1-70 1,200.00 85 840.00 100 480.00
71 1,176.00 86 816.00 101 456.00
72 1,152.00 87 792.00 102 432.00
73 1,128.00 88 768.00 103 408.00
74 1,104.00 89 744.00 104 384.00
75 1,080.00 90 720.00 105 360.00
76 1,056.00 91 696.00 106 334.00
77 1,032.00 92 672.00 107 310.00
78 1,008.00 93 648.00 108 288.00
79 984.00 94 624.00 109 264.00
80 960.00 95 600.00 110 240.00
81 936.00 96 576.00 111 216.00
82 912.00 97 552.00 112 192.00
83 888.00 98 528.00 113 168.00
84 864.00 99 504.00 114 144.00
115 120.00
116 96.00
117 72.00
118 48.00
119 24.00
120 0.00
V602 DATE PREPARED: MARCH 1, 1997 6 of 8
<PAGE>
SCHEDULE PAGE
(CONTINUED)
POLICY NUMBER: 3000000
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
PER $1,000 OF NET AMOUNT AT RISK
BASED ON 1980 CSO MORTALITY TABLE
Policy Surrender Policy Surrender Policy Surrender
Month Charge Month Charge Month Charge
----- ------ ----- ------ ----- ------
1 .0002 21 .0739 41 2.1300
2 .0007 22 .0879 42 2.5135
3 .0012 23 .1040 43 2.9439
4 .0019 24 .1222 44 3.4207
5 .0027 25 .1435 45 3.9532
6 .0036 26 .1688 46 4.5584
7 .0048 27 .1988 47 5.2529
8 .0061 28 .2356 48 6.0557
9 .0078 29 .2810 49 6.9808
10 .0096 30 .3365 50 8.0149
11 .0118 31 .4020 51 9.1497
12 .0144 32 .4784 52 10.3643
13 .0175 33 .5657 53 11.6548
14 .0210 34 .6645 54 13.0003
15 .0252 35 .7777 55 14.4127
16 .0301 36 .9116 56 15.8921
17 .0360 37 1.0718 57 17.4599
18 .0431 38 1.2677 58 19.1569
19 .0517 39 1.5072 59 21.0548
20 .0618 40 1.7948 60 23.3682
61 26.5171
62 31.3547
63 39.5952
64 54.6527
65 83.3333
V602 DATE PREPARED: MARCH 1, 1997 7 of 8
<PAGE>
SCHEDULE PAGE
(CONTINUED)
POLICY NUMBER: 3000000
TABLE OF FACE AMOUNTS OF INSURANCE
----------------------------------
ISSUE DATE FACE AMOUNT
March 1, 1997 $250,000
RIDERS AND RIDER BENEFITS
-------------------------
RIDER PAYABLE MONTHLY
RIDER DESCRIPTION DATE AMOUNT PREMIUM TO CHARGE
- ----------------- ---- ------ ------- -- ------
No Riders Attached
V602 DATE PREPARED: MARCH 1, 1997 8 of 8
<PAGE>
TABLE OF CONTENTS
Part Page
Schedule Page(s)
Basic Information
Description of Sub-accounts
Policy Charges and Rates
Table of Surrender Charges
Table of Guaranteed Maximum
Insurance Rates
Table of Face Amounts of Insurance
and Riders
Table of Contents
1. Definitions 1
2. About the Policy 3
Effective Date of Insurance 3
Entire Contract 3
Dividends 3
Contestability 3
Suicide 3
Misstatement of Age or Sex 4
Assignments 4
Annual Reports 4
Transaction Rules 4
3. Rights of Owner 5
Who is the Owner 5
What are the Rights of the Owner 5
How to Change the Owner 6
4. Premiums 6
Premium Payments 6
Premium Deductions 6
Net Premium Allocation to
Subaccounts 6
Premium Flexibility 7
Total Premium Limit 7
Grace Period and Lapse 7
Policy Value 8
Monthly Deduction 8
5. The Accounts 9
Guaranteed Interest Accounts 9
Separate Account 10
Voting Rights 11
Share of Separate Account
Subaccount Values 11
Unit Value 11
Net Investment Factor 11
6. Lifetime Benefits 12
Transfers 12
Loans 13
Loan Interest 14
Cash Surrender Value 14
Full Surrender 14
Partial Surrender 14
Additional Insurance Option 15
7. Death Benefits 16
Death Benefit Option A 17
Death Benefit Option B 17
Minimum Death Benefit 18
Death Benefit Following Younger
Insured's Age 100 18
How to Change the Death Benefit
Option 18
Request for a Decrease in Face
Amount 18
Death Proceeds 19
Interest on Death Proceeds 19
The Beneficiary 19
How to Change the Beneficiary 19
8. Payment Options 20
Who May Elect Payment Options 20
How to Elect a Payment Option 20
Payment Options 20
(1) Payment in One Sum 20
(2) Left to Earn Interest 20
(3) Payments for a Specified Period 21
(4) Life Annuity with Specified Period
Certain 21
(5) Life Annuity 21
(6) Payments of a Specified Amount 22
(7) Joint Survivorship Annuity with
10-year Period Certain 22
Additional Interest 22
9. Tables of Payment Option Amounts 23
<PAGE>
POLICY SUMMARY
ABOUT THIS SUMMARY This summary briefly highlights some of the major
policy provisions. Since this is a summary, only
the detailed provisions of the policy will
control. Those provisions contain full information
and any limits or restrictions that apply. To
locate this policy's provisions, use the Table of
Contents. Your policy is a legal contract between
You and Us. You should, therefore, READ YOUR
POLICY CAREFULLY.
Check the Schedule Page of this policy to make
sure it reflects the type and amount of insurance
requested. Please call on your agent or Us at any
time you have questions about your policy.
THE TYPE OF POLICY This is a variable universal life policy based on
the lives of two Insureds. It provides certain
benefits during the lifetime of each of the
Insureds and certain benefits at the Second Death.
LIFETIME BENEFITS The lifetime benefits include:
the right to make policy loans;
the right to assign the policy;
the right to change the owner or beneficiary;
the right to surrender the policy;
the right to change the death benefit option;
Each of these rights is subject to some
limitations or requirements as described by the
particular provisions contained in the policy and
its riders.
DEATH BENEFITS We will pay a death benefit to the beneficiary if
both Insureds die while the policy is In Force.
Payment of benefits may be affected by other
provisions in this policy. For example, see the
provisions in Part 2 about suicide, contestability
and misstatement of age or sex.
RIDERS This policy may contain riders which include added
benefits or limitations.
V602 Policy Summary
<PAGE>
PART 1: DEFINITIONS
ASSIGNS Any persons to whom You assign an interest in this
policy if We have notice of the assignment in
accordance with the provisions stated in Part 2.
ATTAINED AGE Age of the insured on the birthday nearest the
most recent policy anniversary.
BASIC POLICY The policy as it exists, without any additional
rider benefits.
DEBT Unpaid loans against this policy plus accrued
interest.
GENDER The terms "he", "his" and "him" are applicable
without regard to sex. Where proper, "she", "hers"
or "her" may be substituted.
IN FORCE The policy has not terminated.
IN WRITING (WRITTEN REQUEST) In a written form satisfactory to Us and filed at
Our VULA.
INSUREDS The First Insured and the Second Insured, as named
on the Schedule Page.
MONTHLY CALCULATION DAY The first Monthly Calculation Day of a policy is
the same day as its Policy Date as shown on the
Schedule Page. Subsequent Monthly Calculation Days
are the same day for each month thereafter or, if
such does not fall within a given month, the last
day of that month will be the Monthly Calculation
Day.
OLDER INSURED The older insured is the person among the Insureds
on Page 1 of the Schedule Pages who was born
first.
PAYMENT DATE The Valuation Date on which a premium payment or
loan repayment is received at Our VULA unless it
is received after the close of the New York Stock
Exchange in which case it will be the next
Valuation Date.
POLICY ANNIVERSARY The anniversary of the Policy Date.
POLICY DATE The policy date as shown on the Schedule Page. It
is the date from which Policy Years and policy
anniversaries are measured.
POLICY MONTH The period from one Monthly Calculation Day up to,
but not including, the next Monthly Calculation
Day.
POLICY VALUE The policy value as defined in Part 4.
POLICY YEAR The first Policy Year is the one-year period from
the Policy Date to, but not including, the first
Policy Anniversary. Each succeeding Policy
V602 1
<PAGE>
Year is the one-year period from the Policy
Anniversary to, but not including, the next Policy
Anniversary.
PROPORTIONATE Amounts are allocated to Subaccounts on a
proportionate basis such that the ratios of this
policy's Subaccounts values to each other are the
same before and after the allocation.
SECOND DEATH The death of the last of the Insureds to die.
Unless You and We agree otherwise, if We are
unable to determine which of the Insureds was the
last of the Insureds to die on the basis of the
proofs of death furnished to Us, the First Insured
shall be considered the last of the Insureds to
die.
SEPARATE ACCOUNT Phoenix Home Life Variable Universal Life Account.
SUBACCOUNTS The Guaranteed Interest Account (exclusive of the
loaned portion of such account) and the accounts
within Our Separate Account to which non-loaned
assets under the policy are allocated as described
in Part 5.
UNIT A standard or measurement, as described in Part 4,
used to determine the share of this policy in the
value of each Subaccount of the Separate Account.
VALUATION DATE Every day the New York Stock Exchange is open for
trading and Phoenix Home Life is open for
business.
VALUATION PERIOD The period in days from the end of one Valuation
Date through the next Valuation Date.
VULA Our Variable and Universal Life Administration.
The address is shown on the cover page of this
policy.
WE (OUR, US) Phoenix Home Life Mutual Insurance Company.
YOU (YOUR) The owner of this policy.
YOUNGER INSURED The younger insured is the person among the
Insureds listed on Page 1 of the Schedule Pages
who was born last.
V602 2
<PAGE>
PART 2: ABOUT THE POLICY
EFFECTIVE DATE OF INSURANCE This policy will begin In Force on the Policy
Date, provided the issue premium is paid while
both Insureds are alive.
ENTIRE CONTRACT This policy and the written application of the
policyholder, a copy of which is attached to and
made a part of the policy, are the entire contract
between You and Us. Any change in the provisions
of the contract, to be in effect, must be signed
by one of Our executive officers and countersigned
by Our registrar or one of Our executive officers.
This policy is issued by Us at Our Main
Administrative Office in Hartford, Connecticut.
Any benefits payable under this policy are payable
at Our Main Administrative Office.
DIVIDENDS While this policy is In Force it will share in Our
divisible surplus to the extent that We may
provide. We do not expect any dividends to be
apportioned to this policy. The share to be
apportioned to this policy, if any, will be
determined annually by Us and credited no later
than the end of the Policy Year for which it was
determined. You may elect that the dividend be
paid to You in cash or applied under any method
mutually agreed to by You and Us.
CONTESTABILITY We rely on statements made by or for the Insureds
in the written application. These statements are
considered to be representations and not
warranties. We can contest the validity of this
policy and any coverage under it for any material
misrepresentation of fact. To do so, however the
misrepresentation must be contained in an
application and the application must be attached
to this policy when issued or made a part of this
policy when a change is made.
We cannot contest the validity of the original
face amount of this policy after it has been In
Force during the Insureds' lifetime for two years
from its Policy Date. If We contest the policy, it
will be based on the application for this policy.
If We contest the validity of the face amount
provided under this policy, the amount We pay with
respect to such face amount will be limited to the
higher of a return of any paid premium required by
Us for the contested face amount, or the sum of
any monthly deductions made under this policy for
the contested face amount.
SUICIDE If within two years from the Policy Date, either
of the Insureds die by suicide, while sane or
insane and while the policy is In Force, this
policy will cease and become void.
We will pay to you the Policy Value adjusted by
the following amounts:
a. We add any monthly deductions and any other
fees and charges made under this policy;
V602 3
<PAGE>
b. We subtract any Debt owed Us under this
policy.
MISSTATEMENT OF AGE If the age or sex of either insured has been
OR SEX misstated, any benefits payable under this policy
will be adjusted to reflect the correct ages and
sexes as follows:
(A) For adjustments made prior to the Second
Death, no change will be made to the then
current cost of insurance rates, but
subsequent cost of insurance rates will be
adjusted to such rates that would apply had
this policy been issued based on the correct
ages and sexes.
(B) For adjustments made at the time of the Second
Death, the death benefit payable will be
adjusted to reflect the amount of coverage
that would have been supported by the most
recent monthly deduction based on the then
current cost of insurance rate for the correct
ages and sexes.
ASSIGNMENTS Except as otherwise provided herein , any or all
of the rights in this policy may be assigned. We
will not be considered to have notice of any
assignment until We receive the original or copy
of the assignment at Our VULA. We are not
responsible for the validity of the assignment.
ANNUAL REPORTS We will annually send You a report showing for
this policy:
a. the then current Policy Value, cash surrender
value, death benefit and face amount;
b. the premiums paid, and deductions and partial
surrenders made since the last report;
c. any outstanding Debt;
d. an accounting of the change in Policy Value
since the last report; and
e. such additional information as required by
applicable law or regulation.
TRANSACTION RULES Requests for transactions involving Subaccounts
will usually be processed within 7 days after We
receive the Written Request at Our VULA. However,
We may, at Our discretion, postpone the payment of
any death benefit in excess of the initial face
amount, any policy loans, partial withdrawals,
surrenders or transfers:
(A) For up to six months from the date of request,
for any transactions dependent upon the value
of the Guaranteed Interest Account; or
V602 4
<PAGE>
(B) Otherwise, for any period during which the New
York Stock Exchange is closed for trading
(except for normal holiday closing) or when
the Securities and Exchange Commission has
determined that a state of emergency exists
which may make processing such transactions
impractical.
PART 3: RIGHTS OF OWNER
WHO IS THE OWNER The owner is the person named as owner in the
application, unless later changed as provided in
this policy. If no other person is named as owner,
the First Insured shall be the owner while living,
and after his or her death, the Second Insured
shall be the owner. If You are the owner, but You
are not one of the Insureds and You die before the
Second Death, ownership rights in this policy will
pass to the successive owner, if one has been
named, except that if joint owners are designated,
ownership will remain with the surviving joint
owners until death of the survivor unless
otherwise provided. If more than one person is
named as owner, they must act jointly unless You
and We agree otherwise.
WHAT ARE THE RIGHTS You control this policy until the second death,
OF THE OWNER but not until this policy begins In Force. Unless
You and We agree otherwise, You may exercise all
rights provided under this policy without consent
of anyone else. Your rights include the right to:
a. Receive any amounts payable under this policy
before the Second Death.
b. Change the owner or the interest of any owner.
c. Change the planned premium payment amount and
frequency. See Part 4.
d. Change the Subaccount allocation schedule for
premium payments and monthly deductions. See
Part 4.
e. Transfer amounts between and among
Subaccounts. See Part 6.
f. Obtain policy loans. See Part 6.
g. Obtain a partial surrender. See Part 6.
h. Surrender this policy for its cash surrender
value. See Part 6.
i. Select a payment option for any cash surrender
value that becomes payable. See Part 6.
j. Request changes in the insurance amount. See
Part 7.
V602 5
<PAGE>
k. Change the beneficiary of the death benefit.
See Part 7.
l. Assign, release, or surrender any interest in
the policy.
m. Change the death benefit option. See Part 7.
You may exercise these rights only until the
Second Death. Your exercise of any of these rights
will, to the extent thereof, assign, release, or
surrender the interest of either or both of the
Insureds and all beneficiaries and successive
owners under this policy.
HOW TO CHANGE THE OWNER You may change the owner by Written Request,
satisfactory to Us, filed at Our VULA.
PART 4: PREMIUMS
PREMIUM PAYMENTS The issue premium as shown on the Schedule Page is
due on the Policy Date. Both Insureds must be
alive when the issue premium is paid. Thereafter,
the amount and payment frequency of planned
premiums are as shown on the Schedule Page unless
later changed as described below. All premiums are
payable at Our VULA, except that the issue premium
may be paid to an authorized agent of ours for
forwarding to Our VULA. No benefit associated with
any premium shall be provided until it is actually
received by Us at Our VULA.
PREMIUM DEDUCTIONS Premium tax charges, federal tax charges, and
sales charges as stated on the Schedule Page, will
be deducted from any premiums received by Us at
Our VULA. If the issue premium is received by Us
at Our VULA after the Policy Date, then it will
also be reduced by the amount necessary to cover
any past unpaid monthly deductions described
below. In addition, payments received by Us during
a grace period will also be reduced by the amount
needed to cover any monthly deductions during the
grace period.
NET PREMIUM ALLOCATION The premiums, net of these charges, will be
TO SUBACCOUNTS applied on the Payment Date to the various
Subaccounts based on the premium allocation
schedule elected in the application for this
policy or as later changed by You. You may change
the allocation schedule for premium payments by
written notice filed with Us at Our VULA.
Allocations to each Subaccount must be expressed
in whole percentages unless We agree otherwise. We
reserve the right to limit the number of
Subaccounts you may elect at any one time and/or
over the life of the Policy.
The number of Units credited to each Subaccount of
the Separate Account will be determined by
dividing the net premium applied to that
Subaccount by the unit value of that Subaccount on
the Payment Date.
V602 6
<PAGE>
The number of Units credited to each Subaccount of
the Separate Account is carried to four decimal
places.
PREMIUM FLEXIBILITY Subject to the total premium limit described in
the next section and except for the issue premium,
You may change the amount and frequency of premium
payments while this policy is In Force as follows:
a. You may increase or decrease the planned
premium amount or payment frequency at any
time by written notice to Us. We reserve the
right to limit increases to such maximums as
We may establish from time to time.
b. Additional premium payments may be made at any
time.
c. Each premium payment made must at least equal
$25 or, if during a grace period, the amount
needed to prevent lapse of this policy. We
reserve the right to reduce or increase the
limit.
TOTAL PREMIUM LIMIT The total premium limit is shown on the Schedule
Page and is applied to the sum of all premiums
received by Us for this policy to date, reduced by
the sum of all partial surrender amounts paid by
Us to date. If the total premium limit is
exceeded, We will pay You the excess, with
interest at an annual rate of not less than 4%,
not later than 60 days after the end of the Policy
Year in which the limit was exceeded. The Policy
Value will be adjusted to reflect such refund. The
amount to be taken from the Subaccount will be
allocated in the same manner as provided for
monthly deductions unless You request another
allocation In Writing.
The total premium limit may be exceeded if
additional premium is needed to prevent lapse
under the grace period and lapse provision. The
total premium limit may change due to:
a. a partial surrender or a decrease in face
amount
b. addition, cancellation, or change of a rider;
or
c. a change in federal tax laws or regulations.
If the total premium limit changes, We will send
You a revised Schedule Page reflecting the change.
However, We reserve the right to require that this
policy be returned to Us so that We may endorse
the change.
GRACE PERIOD AND LAPSE During the first three Policy Years, if on any
Monthly Calculation Day, the required monthly
deduction exceeds the Policy Value, less any Debt,
a grace period of 61 days will be allowed for the
payment of an amount equal to three times the
required monthly deduction.
V602 7
<PAGE>
After the third Policy Year, if on any Monthly
Calculation Day, the required monthly deduction
exceeds the cash surrender value, a grace period
of 61 days will be allowed for the payment of an
amount equal to three times the required monthly
deduction.
This policy will continue In Force during any such
grace period. We will mail to you and any Assigns
at the post office addresses last known to Us, a
written notice as to the amount of premium
required. If such premium is not paid to Us by the
end of the grace period this policy will lapse
without value, but not before 30 days have elapsed
since We mailed Our written notice to You. The
"date of lapse" will be the Monthly Calculation
Day on which the deduction was to be made, and any
insurance and rider benefits provided under this
policy will terminate as of that date.
POLICY VALUE The Policy Value is the sum of this policy's share
in the value of each Subaccount of the Separate
Account and the value of this policy's Guaranteed
Interest Account. See Part 5 for an explanation as
to how this policy's share in the value of each
Subaccount of the Separate Account is determined
and for a description of the Guaranteed Interest
Account.
MONTHLY DEDUCTION A deduction is made each Policy Month from the
Policy Value (excluding the value of the loaned
portion of the Guaranteed Interest Account) to
pay:
(a) the cost of insurance provided under this
policy;
(b) the cost of any rider benefits provided;
(c) an administrative charge as shown on the
Schedule Page; and
(d) for the first Policy Year, one twelfth of the
Issue Expense charge shown on the Schedule
Page. Any unpaid balance of the Issue Expense
Charge will be paid to Us upon policy lapse or
termination.
Deductions are made on each Monthly Calculation
Day. If the Monthly Calculation Day is not a
Valuation Date, the monthly deduction for that
Policy Month will be made on the Valuation Date.
You may request in the application for this policy
that monthly deductions not be taken from certain
specified Subaccounts. Such a request may later be
changed by notifying Us In Writing, but only with
respect to future monthly deductions. Monthly
deductions will be taken from this policy's share
of the remaining Subaccounts exclusive of the
loaned portion of the Guaranteed Interest Account,
on a Proportionate basis. In the event this
policy's share in the value of such Subaccounts is
not sufficient to permit the withdrawal of the
full monthly deduction, the remainder will be
taken on a Proportionate basis from this policy's
V602 8
<PAGE>
share of each of the other Subaccounts exclusive
of the loaned portion of the Guaranteed Interest
Account. The number of units deducted from each
Subaccount of the Separate Account will be
determined by dividing the portion of the monthly
deduction allocated to each such Subaccount by the
unit value of that Subaccount on the Monthly
Calculation Day.
Each monthly deduction will pay the cost of
insurance from the Monthly Calculation Day on
which the deduction is made up to, but not
including, the next Monthly Calculation Day. The
cost of insurance is equal to the cost of insur-
ance rate for the current Policy Month divided by
1,000 and then multiplied by the result of:
(a) the death benefit on the Monthly Calculation
Day; minus
(b) the Policy Value on the Monthly Calculation
Day.
The cost of insurance rate for the current Policy
Month is based on the Insureds' Attained Ages and
risk classifications. The rate used in computing
the cost of insurance is obtained from the Table
of Guaranteed Maximum Cost of Insurance Rates on
the Schedule Page for the risk classifications
shown, or such lower rate as We may declare. Any
change We make in the declared cost of insurance
rates will be uniform by class and based on Our
future mortality, expense and lapse expectations.
The declared cost of insurance rates for any of
the Insureds will not be affected by changes in
any of the Insureds' health or occupation.
PART 5: THE ACCOUNTS
Assets under this policy may be allocated either
to the Guaranteed Interest Account or to any of
the Subaccounts of the Separate Account.
GUARANTEED INTEREST The Guaranteed Interest Accounts are not part
ACCOUNTS of the Separate Account. It is part of Our General
Account. We reserve the right to limit cumulative
deposits, including transfers, to the unloaned
portion of the Guaranteed Interest Accounts during
any one-week period to no more than $250,000. We
will credit interest daily on the amounts
allocated under this policy to the Guaranteed
Interest Accounts. The loaned portion of the
Guaranteed Interest Accounts will be credited
interest at an effective annual fixed rate as
shown on the Schedule Page. We will credit
interest on the unloaned portion of the Guaranteed
Interest Accounts at such rates as We shall
determine but in no event will the effective
annual rate of interest on such portion be less
than the minimum interest rate shown on the
Schedule Page.
Twice each calendar month We will set the interest
rate that will apply to any net premium or
transferred amounts deposited to the unloaned
portion of the Guaranteed Interest Accounts during
the applicable period
V602 9
<PAGE>
of that month. That rate will remain in effect for
such deposits, for an initial guaranteed period of
one full year. Upon expiry of the initial one-year
guarantee period thereafter, the rate applicable
for any deposits in the unloaned portion of the
Guaranteed Interest Accounts whose guarantee
period has just ended shall be the same rate that
applies to new deposits to such Subaccount at the
time the guaranteed period expires. Such rate
shall likewise remain in effect for such deposits
for a subsequent guarantee period of one full
year.
All transfers, partial surrenders, and deductions
from the unloaned portion of the Guaranteed
Interest Accounts will be assessed on a Last-In,
First-Out basis based on the date the deposit was
initially made to the unloaned portion of such
Subaccount. At the end of each Policy Year and at
the time of any Debt repayment, interest credited
to the loaned portion of the Guaranteed Interest
Accounts will be transferred to the unloaned
portion of the Guaranteed Interest Accounts. We
reserve the right to add other Guaranteed Interest
Accounts, subject, where required, to approval by
the insurance supervisory official of the state
where this policy is delivered.
SEPARATE ACCOUNT The Separate Account has been established by Us as
a Separate Account pursuant to New York law and is
registered as a Unit investment trust under the
Investment Company Act of 1940 (1940 Act). Income
and realized and unrealized gains and losses from
assets in the Separate Account are credited to or
charged against it without regard to other income,
gains or losses. We own the Separate Account
assets and they are kept separate from the Assets
of Our General Account. Separate Account assets
will be valued on each Valuation Date. The portion
of the Separate Account equal to reserves and
liabilities for policies supported by the Separate
Account will not be charged with any liabilities
arising out of Our other business. We reserve the
right to use assets of Our Separate Account in
excess of these reserves and liabilities for any
purposes.
The Separate Account has several Subaccounts
available under this policy as shown on the
Schedule Page. We have the right to add or delete
additional Subaccounts of the Separate Account
subject to approval by the Securities and Exchange
Commission and, where required, by the insurance
supervisory official of the state where the policy
is delivered. We use the assets of the Separate
Account to buy shares of the Fund identified on
the Schedule Page according to Your allocation
instructions. The Fund is registered under the
1940 Act as an open-end, diversified management
investment company. The Fund has separate
Portfolios that correspond to the Subaccounts of
the Separate Account. Assets of each such
Subaccount are invested in shares of the
corresponding Fund Portfolio.
A Portfolio of the fund might make a material
change in its investment policy. If that occurs,
You will be notified of the change. In addition,
V602 10
<PAGE>
no change will be made in the investment policy of
any of the Subaccounts of the Separate Account
without approval of the appropriate insurance
supervisory official of Our domiciliary state of
New York. The approval process is on file with the
insurance supervisory official of the state where
the policy is delivered. If, in Our judgment, a
Portfolio of the Fund becomes unsuitable for
investment by a Subaccount of the Separate Account
for any reason, We may substitute shares of
another Portfolio of the Fund or shares of another
mutual fund. Any such change will be subject to
approval by the Securities and Exchange Commission
and, where required, by the insurance supervisory
official of the state where this policy is
delivered.
VOTING RIGHTS Although We are the legal owner of the Fund
shares, We will vote the shares at regular and
special meetings of the shareholders of the Fund
in accordance with instructions received from You
and the other owners of the policies. Any shares
held by Us will be voted in the same proportion as
voted by You and the other owners of the policies.
However, We reserve the right to vote the shares
of the Fund without direction from You if there is
a change in the law which would permit this to be
done.
SHARE OF SEPARATE The share of this policy in the value of each
ACCOUNT SUBACCOUNT Subaccount of the Separate Account on a valuation
VALUES date is the Unit value of that Subaccount on that
date multiplied by the number of this policy's
Units in that Subaccount after all transactions
for the Valuation Period ending on that day have
been processed. For any day which does not fall on
a Valuation Date, the share of this policy in the
value of each Subaccount of the Separate Account
is determined using the number of Units on that
day after all transactions for that day have been
processed and the unit values on the next
Valuation Date.
UNIT VALUE The unit value of each Subaccount of the Separate
Account was set by Us on the first Valuation Date
of each Subaccount. The unit value of a Subaccount
of the Separate Account on any other Valuation
Date is determined by multiplying the unit value
of that Subaccount on the just prior Valuation
Date by the Net Investment Factor for that
Subaccount for the then current Valuation Period.
The unit value of each Subaccount of the Separate
Account on a day other than a Valuation Date is
the unit value on the next Valuation Date. unit
values are carried to 6 decimal places. The unit
value of each Subaccount of the Separate Account
on a Valuation Date is determined at the end of
that day.
NET INVESTMENT FACTOR The Net Investment Factor for each Subaccount of
the Separate Account is determined by the
investment performance of the assets held by the
Subaccount during the Valuation Period. Each
valuation will follow applicable law and accepted
procedures. The Net Investment Factor is equal to
item (D) below subtracted from the result of
dividing the sum of items (A) and (B) by item (C)
as defined below.
V602 11
<PAGE>
(A) The value of the assets in the Subaccount on
the current valuation date, including accrued
net investment income and realized and
unrealized capital gains and losses, but
excluding the net value of any transactions
during the current Valuation Period.
(B) The amount of any dividend (or, if applicable,
any capital gain distribution) received by the
Subaccount if the "ex-dividend" date for
shares of the Fund occurs during the current
Valuation Period.
(C) The value of the assets in the Subaccount as
of the just prior Valuation Date, including
accrued net investment income and realized and
unrealized capital gains and losses, and
including the net value of all transactions
during the Valuation Period ending on that
date.
(D) The sum of the following daily charges as
shown on the Schedule Page, multiplied by the
number of days in the current valuation
period:
(1) the mortality and expense risk charge; and
(2) the charge, if any, for taxes and reserves
for taxes on investment income, and
realized and unrealized capital gains.
PART 6: LIFETIME BENEFITS
TRANSFERS You may transfer all or a portion of this policy's
value among one or more of the Subaccounts of the
Separate Account and the unloaned portion of the
Guaranteed Interest Account. We reserve the right
to limit the number of transfers You may make,
however, You can make up to six transfers per
contract year from Subaccounts of the Separate
Account and only one transfer per contract year
from the unloaned portion of the Guaranteed
Interest Account unless the Systematic Transfer
Program is elected. Under that program, funds may
be transferred automatically among the Subaccounts
on a monthly, quarterly, semi-annual or annual
basis. Unless We agree otherwise, the minimum
initial and subsequent transfer amounts are $25
monthly, $75 quarterly, $150 semi-annually or $300
annually. Except as otherwise provided under the
Systematic Transfer Program, the amount that may
be transferred from the Guaranteed Interest
Account at any one time cannot exceed the higher
of $1,000 or 25% of the value of the Guaranteed
Interest Account.
We reserve the right to prohibit transfers from a
Subaccount of less than the lesser of $500 and the
Subaccount balance.
Transfers may be made by written or telephone
request. The maximum transfer charge is shown on
the Schedule Page. There is no transfer
V602 12
<PAGE>
charge for the Systematic Transfer Program. Any
such charge will be deducted from the Subaccounts
from which the amounts are to be transferred in
the same proportion as the amounts to be
transferred bear to the total amount transferred.
The value of each Subaccount will be determined on
the Valuation Date that coincides with the date of
transfer.
LOANS While this policy is In Force, a loan may be
obtained against this policy in any amount up to
the available loan value. To obtain a loan, this
policy must be properly assigned to Us as
security. We need no other collateral. We reserve
the right not to allow loans of less than $500
unless the loans are to pay premiums on another
policy issued by Us.
The maximum loan value is 90% of the result of
subtracting the then applicable surrender charge
from the then Policy Value. The "available loan
value" is the maximum loan value on the current
day less any outstanding Debt.
The amount of the loan will be added to the loaned
portion of the Guaranteed Interest Account and
subtracted from this policy's share of the
Subaccounts based on the allocation You request at
the time of the loan. The total reduction will
equal the amount added to the loaned portion of
the Guaranteed Interest Account. Unless We agree
otherwise, allocations to each Subaccount must be
expressed in whole percentages. If no allocation
request is made, the amount subtracted from the
share of each Subaccount will be determined in the
same manner as provided for monthly deductions.
Debt may be repaid at any time before the Second
Death while this policy is In Force. Such
repayment, in excess of any outstanding accrued
loan interest, will be applied to reduce the
loaned portion of the Guaranteed Interest Account
and will be transferred to the unloaned portion of
the Guaranteed Interest Account to the extent that
loaned amounts taken from such account have not
previously been repaid. Otherwise, such balance
will be transferred among the Subaccounts You
request upon repayment and, if no allocation
request is made, We will use Your most recent
premium allocation schedule on file with Us. Any
Debt repayment received by Us during a grace
period as described in Part 4 will be reduced to
cover any overdue monthly deductions and only the
balance applied to reduce the Debt. Such balance
will also be applied as described to reduce the
loaned portion of the Guaranteed Interest Account.
While there is an outstanding Debt against this
policy, any payments received by Us for this
policy will be applied directly to reduce the Debt
unless specified as a premium payment. Until the
Debt is fully repaid, additional Debt repayments
may be made at any time during the lifetime of the
insured while this policy is In Force.
V602 13
<PAGE>
Failure to repay a policy loan or to pay loan
interest will not terminate this policy except as
otherwise provided under Grace period and Lapse in
Part 4 when the policy does not have sufficient
remaining value to pay the monthly deductions, in
which event, that grace period provision will
apply.
LOAN INTEREST Loans will bear interest at an effective annual
rate equal to the loan interest rate shown on the
Schedule Page and will be compounded daily.
Interest will accrue on a daily basis from the
date of the loan and is included as part of the
Debt under this policy. Loan interest will be due
on each Policy Anniversary. If not paid when due,
the outstanding accrued interest on that date will
be charged as a loan against this policy.
CASH SURRENDER VALUE The cash surrender value of this policy is the
Policy Value as defined in Part 4 less any
applicable surrender charge on the date of
surrender and less any Debt. The surrender charge
for a full surrender is as stated on the Schedule
Pages, or Revised Schedule Pages if there has been
an increase in face amount.
FULL SURRENDER You may fully surrender this policy for its cash
surrender value by returning this policy to Us at
Our VULA along with a written release and
surrender of all claims under this policy signed
by You and any Assigns. You may do this at any
time before the Second Death while this policy is
In Force. The written surrender must be in a form
satisfactory to Us and must include such tax
withholding information as We may reasonably
require. The surrender will be effective on the
"date of surrender" which is the later of the
dates on which We receive the returned policy and
the written surrender. Upon full surrender all
insurance and any rider benefits provided under
this policy will terminate. You may direct that We
apply the surrender proceeds under any of the
Payment Options described in Part 8.
PARTIAL SURRENDER You may obtain a partial surrender of this policy
by requesting that a part of this policy's cash
surrender value be paid to You. You may do this at
any time before the Second Death while this policy
is In Force with a Written Request signed by You
and any Assigns. We reserve the right to require
that this policy first be returned to Us before
payment is made. A partial surrender will be
effective on the date We receive this policy if
later. You may direct that We apply the surrender
proceeds under any of the Payment Options
described in Part 8.
A partial surrender will be denied if the
resultant cash surrender value would be less than
or equal to zero. We reserve the right not to
allow partial surrenders if the resulting death
benefit would be less than $25,000 or if the
amount of the partial surrender is less than $500.
We further reserve the right to require that the
entire balance of a Subaccount be surrendered and
withdrawn if the share of this policy in the value
of that Subaccount would, immediately after a
partial surrender, be less than $500.
V602 14
<PAGE>
Upon a partial surrender, the Policy Value will be
reduced by the sum of the following:
(A) The partial surrender amount paid. This amount
comes from a reduction in this policy's share
in the value of each Subaccount based on the
allocation You request at the time of the
partial surrender. If no allocation request is
made, the assessment to each Subaccount will
be made in the same manner as provided for
monthly deductions.
(B) The partial surrender fee. The fee is the
lesser of $25 and 2% of the partial surrender
amount paid. The assessment to each
sub-account will be made in the same manner as
provided for the partial surrender amount
paid.
(C) A partial surrender charge. This charge is
equal to a pro-rata portion of the applicable
surrender charge that would apply to a full
surrender, determined by multiplying such
applicable surrender charge by a fraction
equal to the partial surrender amount payable
divided by the result of subtracting the
applicable surrender charge from the Policy
Value. This amount is assessed against the
Subaccounts in the same manner as provided for
the partial surrender amount paid.
The face amount of this policy will be reduced by
the same amount as the Policy Value is reduced as
described above. We will send You a Revised
Schedule Page reflecting the change.
ADDITIONAL INSURANCE While this policy is In Force and subject to the
OPTION terms of this provision, including Our receipt of
evidence satisfactory to Us of both of the
Insureds' then insurability, You have the option
to purchase additional insurance on the same
Insureds under the same plan of insurance as this
policy without Our assessment of any issue expense
charge under the new policy. Except for Our waiver
of the issue expense charge, the new policy will
be based on the same guaranteed rates and charges
as are in effect for this plan on the Policy Date
of this policy as adjusted for the Insureds' new
Attained Ages and changes, if any, in risk
classifications. The new policy will only include
such rider benefits as We may agree based on Our
rules and practices in effect on the Policy Date
of the new policy. The amount of insurance under
the new policy, when added to all other insurance
with Our company on the lives of either of the
Insureds, cannot exceed Our total insurance amount
limitations in effect on the Policy Date of the
new policy.
To elect this option, You must file a written
application with Our VULA. It must be signed by
You and both of the Insureds. We must also
receive:
V602 15
<PAGE>
(A) Evidence that You have satisfactory insurable
interest in the lives of the Insureds.
(B) Evidence, satisfactory to Us, that both
Insureds are then insurable under Our
established practice in the selection of risks
for this plan of insurance, including the new
amount applied for and rider benefits
requested. Selection of risks includes health
and non-health factors.
(C) Payment, while both Insureds are alive, of the
full issue premium for the new policy. The
payment must equal or exceed Our minimum issue
premium requirements in effect for this plan
on the Policy Date of the new policy.
Any exclusions applicable to the new policy will
be determined in accordance with Our rules and
practices in effect on the Policy Date of the new
policy. The new policy will not be subject to any
assignments or liens against this policy. The
owner and the beneficiary under the new policy
shall be as requested in the application for the
new policy. Any subsequent changes will be
governed by the printed provisions of the new
policy.
The new policy will begin in effect as of the
later of:
a. Our approval of the application for the new
policy;
b. payment of the full issue premium due on the
new policy.
The Policy Date of the new policy will be as shown
on the schedule pages of the new policy based on
Our rules and practices then in effect. The time
periods for the suicide and contestability
provisions in the new policy will be measured from
the Policy Date of the new policy.
PART 7: DEATH BENEFITS
While the policy is in effect, You have the right
to elect either of the two death benefit options
as described below. The death benefit option shall
be as elected in the original application unless
later changed as provided below. If no option is
elected, Death Benefit Option A shall apply.
DEATH BENEFIT OPTION A Under this option, during all Policy Years until
the Policy Anniversary which is nearest the
Younger Insured's 100th birthday, the death
benefit is equal to the greater of (a) or (b) as
defined below:
a. the policy's face amount on the date of the
Second Death.
b. the minimum death benefit on the date of the
Second Death as described below.
V602 16
<PAGE>
DEATH BENEFIT OPTION B Under this option, during all Policy Years until
the Policy Anniversary which is nearest the
Younger Insured's 100th birthday, the death
benefit is equal to the greater of (a) or (b) as
defined below:
a. the policy's face amount on the date of the
Second Death plus the Policy Value.
b. the minimum death benefit on the date of the
Second Death as described below.
Under Death Benefit Option B, on the later of the
tenth Policy Anniversary and the Policy
Anniversary nearest the oldest insured's 65th
birthday, the face amount will be increased by an
amount equal to the Policy Value. From that date
on, the death benefit will be equal to the greater
of the face amount and the minimum death benefit
as defined below.
MINIMUM DEATH BENEFIT The minimum death benefit is the Policy Value on
the date of the Second Death increased by the
applicable percentage from the table below, based
on the Younger Insured's Attained Age at the
beginning of the Policy Year in which the Second
Death occurs.
Attained Attained Attained Attained
Age Pct Age Pct Age Pct Age Pct
--- --- --- --- --- --- --- ---
V602 ` 17
<PAGE>
Under 40 150% 53 64% 67 18% 81 5%
40 150 54 57 68 17 82 5
41 143 55 50 69 16 83 5
42 136 56 46 70 15 84 5
43 129 57 42 71 13 85 5
44 122 58 38 72 11 86 5
45 115 59 34 73 9 87 5
46 109 60 30 74 7 88 5
47 103 61 28 75 5 89 5
48 97 62 26 76 5 90 5
49 91 63 24 77 5 91 4
50 85 64 22 78 5 92 3
51 78 65 20 79 5 93 2
52 71 66 19 80 5 94 1
95 0
Over 95 0
DEATH BENEFIT FOLLOWING After the policy anniversary which is nearest to
YOUNGER INSURED'S AGE 100 the Younger Insured's 100th birthday, the death
benefit will equal the Policy Value.
HOW TO CHANGE THE While this policy is In Force You may request In
DEATH BENEFIT OPTION Writing that the Death Benefit Option be changed
from Option 1 to Option 2, or from Option 2 to
Option 1. No evidence of insurability is required.
If the request is to change from Option 1 to
Option 2, the face amount will be decreased by the
Policy Value; if the request is to change from
Option 2 to Option 1, the face amount will be
increased by the Policy Value. Any such change
will be in effect on the Monthly Calculation Day
coincident with or next following the day We
approve the request.
REQUEST FOR A DECREASE You may request a decrease in face amount at any
IN FACE AMOUNT time after the first Policy Year. Unless We agree
otherwise, the decrease requested must at least
equal $10,000 and the face amount remaining after
the decrease must at least equal $25,000. All
requests to decrease the face amount must be In
Writing and will be effective on the first Monthly
Calculation Day following the date We approve the
request. We reserve the right to require that this
policy first be returned to Us before the decrease
is made. Upon a decrease in face amount, a partial
surrender charge will be deducted from the Policy
Value based on the amount of the decrease. The
charge will equal the applicable surrender charge
that would then apply to a full surrender
multiplied by the result of dividing the decrease
in face amount by the face amount of the policy
before the decrease. We will send You a Revised
Schedule Page reflecting the change.
DEATH PROCEEDS Upon receipt of due proof at Our VULA that both
Insureds died while this policy is In Force, We
will pay the death proceeds of this policy. The
death proceeds equal the death benefit on the date
of the Second Death, with the following
adjustments;
V602 18
<PAGE>
(A) We will deduct any Debt outstanding against
this policy.
(B) We will deduct any monthly deductions to and
including the Policy Month of death not
already made.
(C) We will add any premiums received by Us after
the Monthly Calculation Day just prior to the
date of the Second Death and on or before the
date of the Second Death.
INTEREST ON DEATH We will pay interest on any death proceeds from
PROCEEDS the date of the second death of the Insureds to
the date of payment. The amount of interest will
be the same as would be paid were the death
proceeds left for that period of time to earn
interest under Payment Option 2.
THE BENEFICIARY Unless You provide otherwise, any death benefit
that becomes payable under this policy will be
paid in equal shares to the beneficiaries living
at the Second Death. Payments will be made
successively in the following order:
a. Primary Beneficiaries.
b. Contingent Beneficiaries, if any, provided no
primary beneficiary is living at the Second
Death.
c. You or Your executor or administrator,
provided no primary or contingent beneficiary
is living at the Second Death.
Unless otherwise stated, the relationship of a
beneficiary is the relationship to the First
Insured.
HOW TO CHANGE THE You may change the beneficiary under this policy
BENEFICIARY by written notice signed by You and filed with Us
at Our VULA. When We receive it, the change will
relate back and take effect as of the date it was
signed. However, the change will be subject to any
payments made or actions taken by Us before We
received the notice at Our VULA.
PART 8: PAYMENT OPTIONS
WHO MAY ELECT The proceeds of this policy will be paid in one
PAYMENT OPTIONS sum unless otherwise provided. As an alternative
to payment in one sum as provided under Option 1,
any surrender or death proceeds that become
payable under an account may be applied under one
or more of the alternative income payment options
as described in this part or such other payment
options as may then be currently available for the
policy.
Our consent is required for the election of an
income payment option by a fiduciary or any entity
other than a natural person. Our consent is also
V602 19
<PAGE>
required for elections by any Assigns or an owner
other than the insured if the owner has been
changed. You may designate or change one or more
beneficiaries who will be the payee or payees
under the option elected. You may only do this
until the Second Death. For death proceeds, if no
election is in effect when the death benefit
becomes payable, the beneficiary may elect a
payment option.
Unless We agree otherwise, all payments under any
option chosen will be made to the designated payee
or to his executor or administrator. We may
require proof of age of any payee or payees on
whose life payments depend as well as proof of the
continued survival of any such payee(s).
HOW TO ELECT A The election of an income payment option must be
PAYMENT OPTION in a written form satisfactory to Us. Payments may
be made on an annual, semi-annual, quarterly, or
monthly basis provided that each installment will
at least equal $25. We also require that at least
$1,000 be applied under any income option chosen.
PAYMENT OPTIONS This section provides a brief description of the
various payment options that are available. In
Part 9 You will find tables illustrating the
guaranteed installment amount provided by several
of the options described in this section. The
amount shown for Options 4, 5, and 7 are the
minimum monthly payments for each $1,000 applied.
The actual payments will be based on the monthly
payment rates We are using when the first payment
is due. They will not be less than shown in the
tables.
Option 1 - Payment in one sum
Option 2 - Left to earn interest
We pay interest during the payee's lifetime on
the amount left with Us under this option as a
principal sum. We will guarantee that at least
one of the versions of this option will provide
interest at a rate of at least 3% per year.
Option 3 - Payments for a specified period
Equal income installments are paid for a
specified period of years whether the payee
lives or dies. The first payment will be on the
date of settlement. The Option 3 Table shows the
guaranteed amount of each installment for
monthly and annual payment frequencies. The
table assumes an interest rate of 3% per year on
the unpaid balance. The actual interest rate is
guaranteed not to be less than this minimum
rate.
V602 20
<PAGE>
Option 4 - Life annuity with specified period
certain
Equal installments are paid until the later of:
(A) The death of the payee.
(B) The end of the period certain.
The first payment will be on the date of
settlement. The period certain must be chosen at
the time this option is elected. The periods
certain that may be chosen are as follows:
(A) Ten years
(B) Twenty years
(C) Until the installments paid refund the
amount applied under this option. If the
payee is not living when the final
payment falls due, that payment will be
limited to the amount which needs to be
added to the payments already made to
equal the amount applied under this
option.
If, for the age of the payee, a period certain is
chosen that is shorter than another period certain
paying the same installment amount, We will deem
the longer period certain as having been elected.
The life annuity provided under this option is
calculated using an interest rate of 3-3/8%,
except that any life annuity providing a period
certain of twenty years or more is calculated
using an interest rate of 3-1/4%.
Option 5 - Life Annuity
Equal installments are paid only during the
lifetime of the payee. The first payment will be
on the date of settlement. Any life annuity as
may be provided under this option is calculated
using an interest rate of 3-1/2%.
Option 6 - Payments of specified amount
Equal installments of a specified amount, out of
the principal sum and interest on that sum, are
paid until the principal sum remaining is less
than the amount of the installment. When that
happens, the principal sum remaining with
accrued interest will be paid as a final
payment. The first payment will be on the date
of settlement. The payments will include
interest on the principal sum remaining at a
rate guaranteed to at least 3% per year. This
interest will be credited at the end of each
year. If the amount of interest credited at the
V602 21
<PAGE>
end of a year exceeds the income payments made
in the last 12 months, the excess will be paid
in one sum on the date credited.
Option 7 - Joint survivorship annuity with 10-year
period certain
The first payment will be on the date of
settlement. Equal income installments are paid
until the latest of:
(A) The end of the 10-year period certain.
(B) The death of the insured.
(C) The death of the other named annuitant.
The other annuitant must be named at the time this
option is elected and cannot later be changed.
That annuitant must have an adjusted age as
defined in Part 9 of at least 40. The joint
survivorship annuity provided under this option is
calculated by using an interest rate of 3-3/8%.
We may offer other payment options or alternative
versions of the options listed in the above
section.
ADDITIONAL INTEREST In addition to:
(A) the interest of 3% per year guaranteed on
the principal sum remaining with Us under
Options 2 or 6; and
(B) the interest of 3% per year included in the
installments payable under Option 3.
We will pay or credit at the end of each year such
additional interest as We may declare.
PART 9: TABLES OF PAYMENT OPTION AMOUNTS
The installment amounts shown in the tables that
follow are shown for each $1,000 applied. Amounts
for payment frequencies, periods or ages not shown
will be furnished upon request. Under Options 4
and 5, the installment amount for younger ages
than shown will be the same as for the first age
shown and for older ages than shown it will be the
same amount as for the last age shown.
V602 22
<PAGE>
The term "age" as used in the tables refers to the
adjusted age. Under Options 4 and 5, the adjusted
age is defined as follows:
(A) For surrender values, the age of the payee
on the payee's birthday nearest to the
Policy Anniversary nearest the date of
surrender.
(B) For death proceeds, the age of the payee on
the payee's birthday nearest the effective
date of the payment option elected.
Under Option 7, the adjusted age is the age on the
birthday nearest the Policy Anniversary nearest
the date of surrender.
OPTION 3 - PAYMENTS FOR A SPECIFIED PERIOD
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Years 5 6 7 8 9 10 11 12 13
- ------------------- ------- ------ ------ ------ ------ ------ ------ ----- -----
Annual Installments $211.99 179.22 155.80 138.31 124.89 113.82 104.93 97.54 91.29
Mo. Installments $17.91 15.14 13.16 11.68 10.53 9.61 8.86 8.24 7.71
OPTION 3 - PAYMENTS FOR A SPECIFIED PERIOD (CONTINUED)
Number of Years 14 15 16 17 18 19 20 25 30
- ------------------- ------- ------ ------ ------ ------ ------ ------ ----- -----
Annual Installments $85.95 81.33 77.29 73.74 70.59 67.78 65.26 55.76 49.53
Mo. Installments $7.26 6.87 6.53 6.23 5.96 5.73 5.51 4.71
</TABLE>
*OPTION 4 - LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN
<TABLE>
<CAPTION>
Age Installment Refund 10 Yrs. Certain 20 Yrs. Certain Age Installment Refund 10 Yrs. Certain 20 Yrs. Certain
of ------------------ --------------- --------------- of ------------------ --------------- ---------------
Payee Male Female Male Female Male Female Payee Male Female Male Female Male Female
- ----- ----- ------ ----- ------ ----- ------ ----- ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 $3.08 $3.03 $3.08 $2.99 $3.00 $2.94 50 $4.36 $4.12 $4.50 $4.10 $4.28 $3.99
15 3.14 3.09 3.15 3.04 3.07 3.00 55 4.76 4.47 4.95 4.47 4.61 4.31
20 3.22 3.16 3.24 3.11 3.15 3.07 60 5.28 4.93 5.54 4.96 4.97 4.67
25 3.33 3.24 3.34 3.20 3.25 3.15 65 5.97 5.54 6.30 5.63 5.29 5.06
30 3.45 3.35 3.47 3.30 3.38 3.25 70 6.91 6.39 7.24 6.50 5.43 5.31
35 3.61 3.48 3.64 3.43 3.55 3.38 75 8.21 7.57 8.26 7.56 5.44 5.40
40 3.80 3.64 3.86 3.60 3.74 3.54 80 10.04 9.26 9.12 8.60 5.46 5.46
45 4.05 3.85 4.14 3.82 3.99 3.74 85 12.61 11.68 9.60 9.31 5.46 5.46
</TABLE>
OPTION 5 - LIFE ANNUITY
Age of Age of
Payee Male Female Payee Male Female
------ ---- ------ ------ ---- ------
10 3.17 3.12 50 4.62 4.28
15 3.24 3.18 55 5.12 4.68
20 3.32 3.25 60 5.79 5.24
25 3.42 3.34 65 6.75 6.04
30 3.56 3.44 70 8.15 7.22
35 3.73 3.58 75 10.26 9.03
40 3.95 3.75 80 13.54 11.88
45 4.24 3.98 85 18.72 16.54
*OPTION 7 - JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN
Age of Age of Insured Age of Age of Insured
Other ------------------ Other ------------------
Annuitant Male Annuitant Male
F 55 60 65 F 55 60 65
- --------- ---- ---- ---- --------- ---- ---- ----
40 3.62 3.64 3.65 60 4.43 4.64 4.82
45 3.80 3.83 3.86 65 4.61 4.93 5.23
50 4.00 4.07 4.12 70 4.75 5.18 5.63
55 4.22 4.34 4.44 75 4.86 5.36 5.96
*OPTION 7 - JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN (CONTINUED)
Age of Age of Insured Age of Age of Insured
Other ------------------ Other ------------------
Annuitant Female Annuitant Female
------------------ ------------------
F 55 60 65 F 55 60 65
- --------- ---- ---- ---- --------- ---- ---- ----
40 3.72 3.77 3.80 60 4.34 4.64 4.93
45 3.89 3.97 4.03 65 4.44 4.82 5.23
50 4.06 4.19 4.31 70 4.50 4.95 5.48
55 4.22 4.43 4.61 75 4.54 5.03 5.65
* Minimum monthly income for each $1,000 applied.
V602 23
EXHIBIT 1.A.11
MEMORANDUM DESCRIBING TRANSFER AND REDEMPTION PROCEDURES AND METHOD
OF COMPUTING ADJUSTMENTS IN PAYMENTS AND CASH VALUES UPON
CONVERSION TO FIXED BENEFIT POLICIES.
<PAGE>
Phoenix Home Life Mutual Insurance Company's
Redemption and Transfer Procedures and Method
of Computing Adjustments in Payments and
Cash Values Upon Conversion to Fixed Benefit Policies
-----------------------------------------------------
This document sets forth, as required by Rule 6e-3(T)(b)(12)(ii), the
administrative procedures that will be followed by Phoenix Home Life Mutual
Insurance Company ("Phoenix") in connection with the issuance of the Policies
described in this Registration Statement, the transfer of assets held
thereunder, and the redemption by Policyowners of their interests in the
Policies. This document also describes, as required by Rule
6e-3(T)(b)(13)(v)(B), the method that Phoenix will use in adjusting the payments
and cash values when a Policy is exchanged for a fixed benefit insurance policy.
- --------------------------------------------------------------------------------
1. "Public Offering Price":
(a) Purchase and Related Transactions
---------------------------------
Set out below is a summary of the principal Policy provisions and
administrative procedures that might be deemed to constitute, either directly or
indirectly, a "purchase" transaction. The summary shows that, because of the
insurance nature of the Policies, the procedures involved necessarily differ in
certain significant respects from the purchase procedures for mutual funds and
contractual plans.
The minimum Issue Premium for a Policy is generally 1/6 of the Planned
Annual Premium. The Planned Annual Premium is the premium amount that the
Policyowner agrees to pay each Policy Year. It must be at least equal to the
minimum premium for the face amount of insurance selected and must be no greater
than the maximum premium (described below) allowed for the face amount selected.
The Issue Premium is due on the Policy Date. Both Insureds must be alive when
the Issue Premium is paid. Thereafter, the amount and payment frequency of
planned premiums are as shown on the Schedule Page of the Policy. However, after
the Issue Premium is paid, the amount and timing of subsequent premiums is
completely flexible within the limitations of the maximum premium as described
below and a minimum premium of $25. All premiums are paid to the Variable
Products Operations ("VPO") of Phoenix,
<PAGE>
except that the Issue Premium may be paid to an authorized agent of Phoenix for
forwarding to VPO.
A Policyowner may increase or decrease the Planned Annual Premium or
payment frequency at any time by written notice to VPO. Phoenix reserves the
right to limit increases to such maximums as may be established from time to
time. Additional premium payments may be made at any time. Each premium payment
must be at least equal to $25 or, if made during a grace period, the payment
must equal the amount needed to prevent lapse of the Policy.
The Policy contains a total premium limit as shown on the Schedule Page.
This limit is applied to the sum of all premiums paid under the Policy and is
reduced by the sum of all partial surrender amounts paid out by Phoenix. If the
total premium limit is exceeded, the Policyowner will receive the excess,
together with any interest at an annual rate of not less than 4%, not later than
sixty days after the end of the Policy Year in which the limit was exceeded. The
Policy Value will then be adjusted to reflect the refund. The amount to be taken
from each subaccount or the GIA will be allocated in the same manner as provided
for monthly deductions unless the Policyowner requests otherwise in writing. The
total premium limit may be exceeded if additional premium is needed to prevent
lapse or if Phoenix determines that additional premium would be permitted by
Federal laws or regulations.
Any premium payments will be reduced by a premium tax charge of 2.25% and a
Federal Tax charge of 1.50%.
Premium payments received during a grace period will also be reduced by the
amount needed to cover any monthly deductions during the grace period. The
remainder will be applied on the Payment Date to the various subaccounts of the
Phoenix Home Life Variable Universal Life Account (the "Account") or to the
Guaranteed Interest Account ("GIA"), based on the premium allocation schedule
elected in the application for the Policy or as later changed by the
Policyowner. The allocation schedule for premium payments may be changed by
calling or by written notice to VPO. Allocations to the Account subaccounts or
to the GIA must be expressed in terms of whole percentages.
2
<PAGE>
The Policies will be offered and sold pursuant to established underwriting
standards and in accordance with state insurance laws. State insurance laws
generally prohibit unfair discrimination among Insureds but recognize that
premiums may be based upon factors such as age, sex, and health.
(b) Application and Initial Premium Processing
------------------------------------------
Upon receipt of a completed application, Phoenix will follow certain
insurance underwriting (i.e., evaluation of risks) procedures designed to
determine whether the applicants are insurable. This process may involve such
verification procedures as medical examinations and may require that further
information be provided by the proposed Insureds before a determination can be
made. A Policy will not be issued until this underwriting procedure has been
completed.
Phoenix will generally, allocate the Issue Premium less applicable charges
to the Account or GIA upon receipt of a completed application, in accordance
with the allocation instructions in the application for the Policy. However,
Policies issued in certain states, and, if applicable, in certain states
pursuant to applications on which the Applicant notes that the Policy is
intended to replace existing insurance, are issued with a Temporary Money Market
Allocation Amendment. Under this Amendment, Phoenix temporarily allocates the
entire Issue Premium paid less applicable charges (along with any other premiums
paid during the Right to Cancel Period) to the Money Market Subaccount of the
Separate Account until the expiration of the Right to Cancel Period. At the end
of the Right to Cancel Period, the Policy Value of the Money Market Subaccount
is allocated among the subaccounts of the Account or to the GIA in accordance
with the applicant's allocation instructions as set forth in the application for
insurance.
A Policy may be returned by mailing or delivering it to VPO within ten days
after the Policyowner receives it (or longer in some states); within ten days
after Phoenix mails or delivers a written notice of withdrawal right to the
Policyowner; or within 45 days after the applicant signs the application for a
Policy, whichever occurs latest (the "Right to Cancel Period"). The returned
Policy is treated as if Phoenix never issued the Policy and, except for Policies
issued with a Temporary Money Market Allocation (TMMA) Amendment, Phoenix will
3
<PAGE>
return the sum of the following as of the date Phoenix receives the returned
Policy: (i) the then current Policy Value less any unpaid loans and loan
interest; plus (ii) any monthly deductions, partial surrender fees, and other
charges made under the Policy, including investment advisory fees deducted. The
amount returned for Policies issued with the TMMA Amendment will equal the
premium paid less any unpaid loans and loan interest, and less any partial
surrender amounts paid.
Phoenix reserves the right to disapprove an application for processing
within 7 days of receipt at the Investment Products Division of the completed
application for insurance, in which event Phoenix will return the premium paid.
Even after approval of the application for processing, Phoenix reserves the
right to decline issuance of the Policy, in which event Phoenix will refund the
applicant the same amount as would have been refunded under the Policy had it
been issued but returned for refund during the Right to Cancel period.
During the first ten Policy Years, there is a difference between the amount
of Policy Value and the amount of Cash Surrender Value of the Policy. This
difference is the surrender charge, consisting of a contingent deferred sales
charge designed to recover expenses for the distribution of Policies that are
terminated by surrender before distribution expenses have been recouped, and a
contingent deferred issue charge designed to recover expenses for the
administration of Policies that are terminated by surrender before
administrative expenses have been recouped. These are contingent charges because
they are paid only if the Policy is surrendered (or the face amount is reduced
or the Policy lapses) during this period. They are deferred charges because they
are not deducted from premiums. The contingent deferred issue charge is set at a
level designed to recover actual costs and is not designed to result in any
profit for Phoenix.
(c) Repayment of Indebtedness
-----------------------------
Debt may be repaid at any time before the Second Death while the Policy is
in force. Any Debt repayment received by Phoenix during a grace period will be
reduced to cover any overdue monthly deductions and the balance will be applied
to reduce the Debt. Such balance, in excess of any outstanding accrued loan
interest, will be applied to reduce the loaned portion of the GIA and will be
transferred to the unloaned portion of the GIA to the extent that
4
<PAGE>
loaned amounts taken from such Account have not been previously repaid.
Otherwise, such balance will be transferred among the subaccounts as the
Policyowner requests upon repayment and, if no allocation request is made,
Phoenix will use the most recent premium allocation schedule on file.
While there is outstanding Debt on the Policy, any payments received by
Phoenix for the Policy will be applied directly to reduce the Debt unless they
are specified as a premium payment by the Policyowner. Until the Debt is fully
repaid, additional Debt repayments may be made at any time before the Second
Death while the Policy is in force.
(d) Correction of Misstatement of Age or Sex
---------------------------------------
If the age or sex of either Insured has been misstated, any benefits
payable under this policy will be adjusted to reflect the correct ages and sexes
as follows:
(1) For adjustments made prior to the Second Death, no change will be
made to the then current cost of insurance rates, but subsequent
cost of insurance rates will be adjusted to such rates that would
apply had this policy been issued based on the correct ages and
sexes.
(2) For adjustments made at the time of the Second Death, the death
benefit payable will be adjusted to reflect the amount of coverage
that would have been supported by the most recent monthly
deduction based on the then current cost of insurance rate for the
correct ages and sexes.
(e) Additional Insurance Options
----------------------------
While the Policy is in force and the Policyowner is insurable, the
Policyowner will have the option to purchase additional insurance on the same
Insureds with the same guaranteed rates as the Policy without being assessed an
Issue Expense Charge. Phoenix will require evidence of insurability and charges
will be adjusted for the Insureds' new attained ages and any change in risk
classifications. The amount of insurance under the new policy, when added to all
other insurance with our company on the lives of either of the Insureds, cannot
exceed our total insurance amount limitations in effect on the Policy Date of
the new policy.
5
<PAGE>
2. "Redemption Procedures":
Surrender and Related Transactions
----------------------------------
This section outlines those procedures which might be deemed to constitute
redemption's under the Policy. These procedures differ in certain significant
respects from the redemption procedures for mutual funds and contractual plans.
(a) Cash Values
-----------
At any time before the Second Death while the Policy is in force, the
Policyowner may partially or fully surrender the Policy by sending a written
release and surrender in a form satisfactory to Phoenix to VPO, along with the
Policy if Phoenix so requires. The amount available for surrender is the Cash
Surrender Value at the end of the Valuation Period during which the surrender
request is received at VPO.
If the Policy is being fully surrendered, the Policy itself must be
returned to the VPO, along with the written release and surrender of all claims
in a form satisfactory to Phoenix. A Policyowner may elect to have the amount
paid in a lump sum or under a payment option.
If the Policy is being partially surrendered, the Policy Value will be
reduced by the sum of the following: (i) partial surrender amount paid; (ii) a
partial surrender fee equal to the lesser of $25 or 2% of the partial surrender
amount paid; and (iii) the applicable partial surrender charge. The partial
surrender charge is equal to a pro rata portion of the applicable surrender
charge that would apply to a full surrender, and is determined by multiplying
the applicable surrender charge by a fraction. This fraction is equal to the
partial surrender amount payable divided by the result of subtracting the
applicable surrender charge from the Policy Value. The partial surrender charge
is assessed against the subaccounts or the GIA in the same manner as provided
for the partial surrender amount paid.
Phoenix reserves the right not to allow partial surrenders of less than
$500. In addition, if the share of the Policy Value in any subaccount or in the
GIA that would be reduced as a result of a partial surrender would, immediately
after the partial surrender, be less than $500, Phoenix reserves the right to
require that as part of any partial surrender the entire remaining balance in
that subaccount or the GIA will be surrendered.
6
<PAGE>
The face amount of the Policy also will be reduced by the same amount as
the Policy Value is reduced as described above.
(b) Benefit Claims
--------------
The death benefit (under Option A) equals the Policy's face amount on the
date of the Second Death or, if greater, the minimum death benefit on the date
of death. Under Option B, the death benefit equals the Policy's face amount on
the date of the Second Death plus the Policy Value. If no Option has been
chosen, Option A will apply.
The minimum Death Benefit is the Policy Value on the date of the Second
Death increased by the applicable percentage from the table contained in the
Policy, based on the Younger Insured's attained age at the beginning of the
Policy Year in which the Second Death occurs.
A Policyowner may request a decrease in Face Amount at any time after the
first Policy Year. Unless Phoenix agrees otherwise, the decrease must at least
equal $25,000 and the Face Amount remaining after the decrease must at least
equal $250,000. All Face Amount decrease requests must be in writing and will be
effective on the first Monthly Calculation Day following the date Phoenix
approves the request. A partial surrender charge will be deducted from the
Policy Value based on the amount of the decrease. The charge will equal the
applicable surrender charge that would apply to a full surrender multiplied by a
fraction, (the decrease in Face Amount divided by the Face Amount of the Policy
before the decrease).
A partial surrender or a decrease in Face Amount generally decreases the
Death Benefit.
(c) Payment of Proceeds
-------------------
Proceeds of full or partial surrenders and the death benefit proceeds will
usually be paid in one lump sum within seven days after Phoenix receives the
request for surrender or due proof of death, unless another payment option has
been elected. (1) Payment of the death
- ----------
(1) Payment from the Account may be postponed whenever: (1) the New York Stock
Exchange is closed other than for customary week-end and holiday closings,
or trading on the New York Stock Exchange is restricted as determined by
the SEC; (ii) the SEC by order permits postponement for the protection of
Policyowners; or (iii) 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 Account's net
assets. (Payments under the Policy of any amount derived from premiums paid
by check may be postponed until such time as the check has cleared the
Policyowner's bank.)
7
<PAGE>
proceeds, however, may be delayed if the claim for payment of the death proceeds
needs to be investigated to ensure payment of the proper amount to the proper
payee. Any such delay will not be beyond that reasonably necessary to
investigate such claims consistent with insurance practices customary in the
life insurance industry.
(d) Policy Loans
------------
While the Policy is in force, a loan may be obtained against the Policy up
to the available loan value. The loan value on any day is 90% of the result of
subtracting the then remaining surrender charge from the Policy Value. The
available loan value is the loan value on the current day less any outstanding
Debt.
The amount of any loan will be added to the loaned portion of the GIA and
subtracted from the Policy's share of the subaccounts or the unloaned portion of
the GIA, based on the allocation requested at the time of the loan. The total
reduction will equal the amount added to loaned portion of the GIA.
Allocations must generally be expressed in terms of whole percentages. If
no allocation request is made, the amount subtracted from the share of each
subaccount or the unloaned portion of the GIA will be determined in the same
manner as provided for monthly deductions. Interest will be credited and the
loaned portion of the GIA will increase at an effective annual rate of 2.00%,
compounded daily and payable in arrears. At the end of each Policy year and at
the time of any debt repayment interest credited to the loaned portion of the
GIA will be transferred to the unloaned portion of the GIA.
Failure to repay a policy loan or to pay loan interest will not terminate
the Policy except as otherwise provided under the terms of the Policy concerning
the grace period and lapse. In the future, Phoenix may not allow Policy loans of
less than $500, unless such loan is used to pay a premium due on another Phoenix
policy.
The Policyowner will pay interest on the loan at an effective annual rate,
compounded daily and payable in arrears. The loan interest rates in effect are:
4% for Policy years 1-10; 3% through Policy year 15; and 22% for Policy years 16
and thereafter. At the end of each Policy Year, any unpaid interest due on the
Debt will be treated as a loan and will be offset by a transfer from the
Policyowner's values to the value of the loaned portion of the GIA.
8
<PAGE>
(e) Policy Lapse
------------
Unlike conventional life insurance policies, the payment of the Issue
Premium no matter how large, or the payment of additional premiums will not
necessarily continue the Policy in force to its Maturity Date.
If on any Monthly Calculation Day during the first three Policy Years, the
Policy Value, less any debt, is insufficient to cover the monthly deduction, a
grace period of 61 days will be allowed for the payment of an amount equal to
three times the required monthly deduction. If on any Monthly Calculation Day
during any subsequent Policy Year, the Cash Surrender is less than the required
monthly deduction, a grace period of 61 days will be allowed for the payment of
an amount equal to three times the required monthly deduction.
The Policy will continue in force during any such grace period. Failure to
pay the additional amount within the grace period will result in lapse of the
Policy, but not before thirty days have elapsed since Phoenix mailed written
notice to the Policyowner. If a premium payment for the additional amount is
received by Phoenix during the grace period, the amount of any premium over what
is required to prevent lapse will be allocated among the subaccounts of the
Account or to the GIA in accordance with the then current premium allocation
schedule.
In determining the amount of "excess' premium to be applied to the
subaccounts or the GIA, Phoenix will deduct the premium tax and the amount
needed to cover any monthly deductions not made during the grace period. If the
Second Death occurs during the grace period, the Death Benefit will equal the
amount of the Death Benefit immediately prior to the commencement of the grace
period.
3. Transfers of Policy Value
-------------------------
The Policyowner may transfer all or a portion of the Policy Value among
each subaccount of the Account and the unloaned portion of the GIA. Generally, a
Policyowner may make only one transfer per Policy Year from the unloaned portion
of the GIA and the amount transferred cannot exceed the greater of $1,000 or 25%
of the value of the Policy in the unloaned portion of the GIA at the time of
transfer. Transfers from the unloaned portion of the GIA will be effectuated
upon receipt by VPO.
9
<PAGE>
Phoenix reserves the right to permit transfers of less than $500 only if
the entire balance in the subaccount or the GIA is transferred.
Phoenix reserves the right to prohibit a transfer to any subaccount of the
Account where the resultant value of the Policy's share in that subaccount
immediately after the transfer would be less than $500. It further reserves the
right to require that the entire balance of a Subaccount or the GIA be
transferred if the share of the Policy in the value of that subaccount would,
immediately after the transfer, be less than $500.
For policies issued with the Temporary Money Market Allocation Amendment,
transfers may not be made until termination of the Right to Cancel Period.
4. Conversion Procedures
---------------------
The Policyowner may effectively exchange the Policy for a non-variable life
insurance policy offered by Phoenix ("Non-Variable Life Policy") at any time
before the Second Death, by transferring the Policy Value to the GIA. The
benefits under the GIA do not vary with the investment experience of subaccounts
in a separate account. Otherwise the Policy benefits are unchanged. No evidence
of the Insureds' insurabilities is required for this transfer. The Policy will
have the same Death Benefit after the transfer. The Policy Date, issue age, and
risk class will remain the same.
The transfer will be effective as outlined above under "Transfers of Policy
Value." Any Policy loans outstanding on the date of transfer will remain
outstanding
10
