As filed with the Securities and Exchange Commission on April 29, 1998
Registration No. 33-6793
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 14
TO
FORM S-6
UNDER THE SECURITIES ACT OF 1933
------------------------
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 ADDRESS OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
MICHAEL BERENSON, ESQ. EDWIN L. KERR, ESQ.
JORDEN BURT BOROS CICCHETTI BERENSON & JOHNSON LLP COUNSEL
1025 THOMAS JEFFERSON STREET N.W. PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
SUITE 400 EAST ONE AMERICAN ROW
WASHINGTON, D.C. 20007-0805 HARTFORD, CONNECTICUT 06115
</TABLE>
------------------------
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a) (1) or
[ ] on pursuant to paragraph (a) (1) of Rule 485.
[ ] this Post-Effective Amendment designates a new effective
date for a previously filed post-effective amendment.
------------------------
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
<TABLE>
<CAPTION>
N-8B-2 ITEM CAPTION IN PROSPECTUS
----------- ---------------------
<S> <C> <C>
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 Premium Payment; Allocation of Issue Premium; Right to Cancel Period
15 Allocation of Issue Premium; Transfer of Policy Value
16 Investments of the VUL Account
17 Surrenders
18 Allocation of Issue Premium; 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
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 Value
45 Not Applicable
46 Determination of Subaccount Values
47 Allocation of Issue Premium; Determination of Subaccount Values
48 Not Applicable
49 Not Applicable
50 Not Applicable
51 Phoenix Home Life Mutual Insurance Company; The Policy; Charges and Deductions
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-8B-2 ITEM CAPTION IN PROSPECTUS
----------- ---------------------
<S> <C> <C>
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
</TABLE>
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
HOME OFFICE: PHOENIX VARIABLE PRODUCTS
One American Row MAIL OPERATIONS ("VPMO"):
Hartford, Connecticut PO Box 8027
Boston, MA 02266-8027
VARIABLE LIFE INSURANCE POLICY
PROSPECTUS
May 1, 1998
This Prospectus describes a Variable Life Insurance Policy (the "Policy"),
offered by Phoenix Home Life Mutual Insurance Company ("Phoenix"). An applicant
chooses the amount of Issue Premium desired and, within a range, the Target Face
Amount. Under limited circumstances, the Policyowner may choose to pay
additional premiums. Because the Policyowner may pay additional premiums only
under certain limited circumstances, Policy loans, surrenders or decreases in
death benefits may have certain tax consequences. UNDER MOST CIRCUMSTANCES, THE
POLICY WILL BE CONSIDERED TO BE A MODIFIED ENDOWMENT CONTRACT; ACCORDINGLY,
LOANS AND FULL AND PARTIAL SURRENDERS RECEIVED UNDER THE POLICY MAY BE SUBJECT
TO TAX AND/OR PENALTIES WITH RESPECT TO INCOME EARNED IN EXCESS OF PREMIUMS
PAID. SEE "FEDERAL TAX CONSIDERATIONS." Generally, the minimum Issue Premium
Phoenix will accept is $10,000. Phoenix may, in some cases, accept less than
that amount.
The Issue Premium is allocated to one or more of the Subaccounts of the
Phoenix Home Life Variable Universal Life Account (the "VUL Account") or to the
Guaranteed Interest Account ("GIA"), as specified in the applicant's application
for insurance. Each Subaccount of the VUL Account invests in a corresponding
series of The Phoenix Edge Series Fund or Wanger Advisors Trust (each the "Fund"
or collectively, the "Funds"). For certain Policyowners, the Issue Premium is
first allocated to the Money Market Subaccount before being allocated according
to the instructions in the application.
There is no guaranteed minimum Cash Value for a Policy except for that
portion of Cash Value invested in the GIA, which has a 4% minimum interest rate
guarantee. The Cash Value of a Policy not invested in the GIA will vary to
reflect the investment experience of the Subaccounts to which premiums have been
allocated. A Policyowner bears the investment risk for all amounts so allocated.
The Policy will remain in effect so long as the Surrender Value is sufficient to
pay certain monthly charges imposed in connection with the Policy.
During the first Policy Month, the death benefit under the Policy equals the
Target Face Amount designated by the applicant. Thereafter, the death benefit
may vary up or down based upon Cash Value and other factors.
A Policyowner may cancel the Policy within 10 days (or longer in some
states) after the Policyowner receives it, or 10 days after Phoenix mails or
delivers a written notice of withdrawal right to the Policyowner, or within 45
days of completing the application, whichever is latest.
It may not be advantageous to purchase a Policy as a replacement for an
existing life insurance policy or annuity contract. You should recognize that a
policy that has been in existence for a period of time might have certain
advantages to you over a new policy. On the other hand, the proposed Policy may
offer new features which are more important to you.
It is in your best interest to have adequate information before a decision
to replace your present life insurance coverage becomes final so that you may
understand the basic features of both the proposed Policy and your existing
coverage.
If you are replacing an annuity contract, it is important for you to
understand the fundamental differences between annuities and life insurance and
how they are treated differently under the tax laws.
In all cases it is important to know if the replacement will result in
current tax liability.
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.
THE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION OR CREDIT UNION AND ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC") OR ANY OTHER AGENCY.
INVESTMENTS IN THE POLICIES ARE SUBJECT TO INVESTMENT RISK INCLUDING THE
FLUCTUATION OF POLICY VALUES AND THE POSSIBLE LOSS OF PRINCIPAL.
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
SPECIAL TERMS............................................. 3
SUMMARY .................................................. 4
PERFORMANCE HISTORY....................................... 5
PHOENIX AND THE VUL ACCOUNT............................... 7
Phoenix................................................ 7
The VUL Account ....................................... 7
The GIA ............................................... 7
THE POLICY ............................................... 8
Introduction .......................................... 8
Eligible Purchasers ................................... 8
Premium Payment ....................................... 8
Allocation of Issue Premium............................ 8
Right to Cancel Period................................. 8
Temporary Insurance Coverage........................... 9
Transfer of Policy Value............................... 9
Determination of Subaccount Values..................... 10
Death Benefit.......................................... 10
Surrenders............................................. 11
Policy Loans........................................... 12
Lapse.................................................. 12
INVESTMENTS OF THE VUL ACCOUNT............................ 12
Participating Mutual Funds............................. 12
Investment Advisers.................................... 13
Reinvestment and Redemption............................ 14
Substitution of Investments............................ 14
CHARGES AND DEDUCTIONS.................................... 14
Monthly Deduction...................................... 14
Cost of Insurance...................................... 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........................................ 17
Business-Owned Policies................................ 18
Penalty Tax............................................ 18
Material Change Rules.................................. 18
Serial Purchase of Modified Endowment Contracts........ 19
Limitations on Unreasonable Mortality and
Expense Charges...................................... 19
Qualified Plans........................................ 19
Diversification Standards.............................. 19
Change of Ownership or Insured or Assignment........... 19
Other Taxes............................................ 19
VOTING RIGHTS............................................. 19
The Funds.............................................. 19
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
YEAR 2000 ISSUE .......................................... 22
FINANCIAL STATEMENTS ..................................... 22
APPENDIX A ............................................... 67
APPENDIX B................................................ 68
------------------------
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.
------------------------
The Policy is not available in all States.
2
<PAGE>
SPECIAL TERMS
- --------------------------------------------------------------------------------
As used in this Prospectus, the following terms have the indicated meanings:
ACQUISITION EXPENSE (ACQUISITION EXPENSE ALLOWANCE): The amount set forth on the
Schedule Pages of a Policy. It equals the aggregate of the sales load, issue
administration charge and premium taxes assessed under the Policy. The
Acquisition Expense (also referred to as Acquisition Expense Allowance) is
deducted from the Issue Premium and recredited to Policy Value. A pro rata
portion of the Acquisition Expense is deducted from Policy Value monthly during
the first 10 Policy Years. Upon Policy lapse or full surrender, any unpaid
Acquisition Expense is paid.
ADDITIONAL NET PREMIUM: Additional premium reduced by the Premium Tax Charge
and, for additional premiums received during a grace period, by the amount
needed to cover any monthly deductions made during the grace period.
BENEFICIARY: The person or persons specified by the Policyowner as entitled to
receive the death benefits under a Policy.
CASH VALUE: The Policy Value less the balance of any unpaid Acquisition Expense
Allowance.
DEATH BENEFIT ADJUSTMENT RATES: Rates used to calculate the variable death
benefit under a Policy as set forth in a table in the Schedule Pages of the
Policy.
FUND(S): The Phoenix Edge Series Fund and Wanger Advisors Trust.
GENERAL ACCOUNT: The general asset account of Phoenix.
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: Condition under which the coverage under a Policy is in effect and the
Insured's life remains insured.
INSURED: The person upon whose life the Policy is issued.
IN WRITING (WRITTEN REQUEST): In a written form satisfactory to Phoenix and
delivered to VPMO.
ISSUE PREMIUM: The premium payment made in connection with the issue of the
Policy.
LOAN ACCOUNT: An account within the General Account to which amounts are
transferred for Policy loans.
MATURITY DATE: The anniversary of the Policy nearest the Insured's 95th
birthday, if the Insured is living.
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.
PAYMENT DATE: The Valuation Date on which a premium payment or loan repayment is
received at VPMO unless it is received after the close of the New York Stock
Exchange ("NYSE"), in which case it will be the next Valuation Date.
PHOENIX: Phoenix Home Life Mutual Insurance Company, Hartford, Connecticut.
POLICY ANNIVERSARY: Each anniversary of the Policy Date.
POLICY DATE: The Policy Date as shown on the Schedule Page of the Policy.
POLICY MONTH: The period from one Monthly Calculation Day up to but not
including the next Monthly Calculation Day.
POLICYOWNER (OWNER): The Owner of a Policy.
POLICY VALUE: The sum of a Policy's share in the value of each Subaccount plus
the Policy's share in the values of the GIA and the Loan Account.
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: Amounts allocated to Subaccounts on a proportionate basis are
allocated by increasing (or decreasing) a Policy's share in the value of the
affected Subaccounts so that such shares maintain the same ratio to each other
before and after the allocation.
SERIES: A separate investment portfolio of the Fund.
SUBACCOUNTS: Accounts within Phoenix's VUL Account to which nonloaned assets
under a Policy are allocated.
SURRENDER VALUE: The Cash Value less any indebtedness under the Policy.
TARGET FACE AMOUNT: The Target Face Amount as shown in the Schedule Pages of a
Policy or as later changed in accordance with the Partial Surrender Provision of
a Policy.
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.
VPMO: The Variable Products Mail Operation Division of Phoenix that receives and
processes incoming mail for Variable Products
Operations.
VULA: Variable and Universal Life Administration Division of Phoenix.
3
<PAGE>
SUMMARY
- --------------------------------------------------------------------------------
1. WHAT IS THE DIFFERENCE BETWEEN THE POLICY AND A CONVENTIONAL FIXED BENEFIT
LIFE INSURANCE POLICY?
Like conventional fixed benefit life insurance, so long as the Policy
remains In Force, the Policy will provide for: (1) the payment of a death
benefit to a Beneficiary upon the Insured's death; (2) the accumulation of Cash
Value; and (3) surrender rights and Policy loan privileges.
The Policy differs from conventional fixed-benefit life insurance by
allowing Policyowners to allocate premiums to one or more Subaccounts of the VUL
Account or to the GIA. Each Subaccount invests in a designated portfolio of the
available Funds. Also, under the Policy, the amount and duration of the life
insurance coverage and its Policy Value are not guaranteed and may increase or
decrease depending upon the investment experience of the Subaccounts of the VUL
Account. Accordingly, the Policyowner bears the investment risk of any
depreciation in value of the underlying assets but reaps the benefits of any
appreciation in value. See "Policy Value."
In addition, unlike conventional fixed benefit life insurance, a Policyowner
has the flexibility, under certain limited circumstances, to make additional
premium payments and to thereby adjust the variable death benefit. Thus, unlike
conventional fixed benefit life insurance, the Policy does not require a
Policyowner to adhere to a fixed premium payment schedule. Moreover, after the
payment of the Issue Premium, the failure to make additional premium payments
will not in itself cause the Policy to lapse. Conversely, the payment of
additional premiums will not guarantee that the Policy will remain In Force.
Lapse will occur when the Surrender Value is insufficient to pay certain charges
deducted on the Monthly Calculation Day, and a grace period expires without
payment of the additional amount required. See "Lapse."
2. IS THERE A GUARANTEED OPTION?
Yes. A Policyowner may elect to have premium payments allocated to the GIA.
Amounts allocated to the GIA earn a fixed rate of interest and Phoenix also may,
in its sole discretion, credit excess interest. See Appendix A.
3. WHAT IS THE DEATH BENEFIT UNDER THE POLICY?
The Policy provides for the payment of benefits upon the death of the
Insured. Upon application for a Policy, an applicant designates, within limits
set by Phoenix, an Issue Premium and amount of the initial Target Face Amount.
During the first Policy Month, the death benefit under the Policy equals the
Target Face Amount. Thereafter, the death benefit is equal to a variable death
benefit.
The variable death benefit in any Policy Month is equal to the Death Benefit
Adjustment Rate for that month, multiplied by the Policy's Cash Value on the
Monthly Calculation Day during that Policy Month (determined without regard to
the monthly deduction on that day). The Death Benefit Adjustment Rates are set
forth in the Schedule Pages of the Policy.
A Minimum Face Amount Rider is optionally available to applicants. It may be
obtained as part of the Policy by electing the rider in the application for the
Policy. The Minimum Face Amount is the amount designated in the application for
a Policy, or as later changed by any partial surrenders. The Minimum Face Amount
may not exceed the Target Face Amount. For Policies that include the rider, the
death benefit during the first Policy Month equals the Target Face Amount.
Thereafter, the death benefit equals the variable death benefit, or the Minimum
Face Amount if higher. See "Death Benefit."
4. MAY A POLICYOWNER PAY ADDITIONAL PREMIUMS?
Yes, if there has been a decrease in the variable death benefit, or if the
Policy would otherwise lapse, and within certain other limits imposed by
Phoenix. Payment of additional premiums generally will have the same effect on
the Policy's variable death benefit as would an increase in Policy Value because
of favorable investment performance in an amount equal to the Additional Net
Premium applied to the Subaccounts. See "Premium Payment" and "Lapse."
5. HOW LONG WILL THE POLICY REMAIN IN FORCE?
The Policy will lapse only when the Surrender Value is insufficient to pay
the monthly deduction (see "Charges and Deductions-- Monthly Deductions"), and a
grace period expires without payment of the additional amount required. In this
respect, the Policy differs in two important respects from a conventional life
insurance policy. First, the failure to pay additional premiums will not
automatically cause the Policy to lapse. Second, the payment of premiums of any
pre-specified amount does not guarantee that the Policy will remain In Force
until the Maturity Date.
6. WHAT CHARGES ARE THERE IN CONNECTION WITH THE POLICY?
MONTHLY DEDUCTION. Once each month, an amount is deducted from the Policy
Value (excluding the value of the Loan Account) equal to the monthly cost of
insurance charge. Additionally, each month during the first 10 Policy Years, a
deduction is made equal to the monthly pro rata share of the balance of any
unrepaid Acquisition Expense. The Acquisition Expense is equal to 6.5% of the
Issue Premium plus the percentage necessary to cover the applicable state
premium taxes. See "Charges and Deductions."
OTHER CHARGES. A charge equal to the lesser of $25 or 2% of the partial
surrender amount paid is deducted from the Policy Value for each partial
surrender.
No charges are currently made from the VUL Account or the GIA for federal or
state income taxes. If Phoenix determines that such taxes may be imposed, it may
make deductions from the VUL Account and the GIA to pay these taxes.
Phoenix charges each Subaccount of the VUL Account the daily equivalent of
0.50% on an annual basis of the current value of the Subaccount's net assets for
its assumption of certain mortality and expense risks incurred in connection
with the Policy.
Additional premium amounts are reduced by any applicable state premium tax
based on the Policyowner's last known address on record with VULA and, for
payments made during a grace period, by the amount needed to cover any monthly
deductions made during the grace period.
In addition, certain charges are deducted from the assets of the Funds. For
investment advisory services, each Series of a Fund pays the adviser a separate
monthly fee calculated on the basis of its
4
<PAGE>
average daily net assets during the year. See "Charges and Deductions--Other
Charges."
7. IS THERE A RIGHT TO CANCEL PERIOD?
Yes. The Policyowner may cancel the Policy within 10 days after the
Policyowner receives it, or 10 days after Phoenix mails or delivers a written
notice of withdrawal right to the Policyowner, or within 45 days of completing
the application, whichever is latest.
8. HOW ARE PREMIUMS ALLOCATED?
If the applicant elects the Temporary Money Market Allocation Amendment in
the application, Phoenix will allocate the entire Issue Premium to the Money
Market Subaccount of the VUL Account. Phoenix requires this election for all
applicants in certain states and for applicants in certain states who indicate
on their application that they intend the Policy to replace existing insurance.
At the expiration of the Right to Cancel Period for such Policyowners, the
Policy Value will be allocated among the Subaccounts of the VUL Account or to
the GIA in accordance with the Policyowner's allocation instructions in the
application for insurance. All other Policyowners will have their Issue Premium
allocated on the Policy Date according to the instruction in the application
without first having the premium placed in the Money Market Subaccount. The
Policy Value may be allocated among the Subaccounts of the VUL Account or to the
GIA.
9 AFTER THE INITIAL ALLOCATION, MAY I CHANGE THE ALLOCATION OF POLICY VALUE?
Yes. A Policyowner may transfer amounts among the Subaccounts of the VUL
Account or the GIA. Only one transfer per Policy Year is permitted from the GIA.
The amount of that transfer is limited to the higher of $1,000 or 25% of the
value of the Policy in the GIA. While Phoenix reserves the right to limit the
number of transfers permitted in any Policy Year, the Policyowner always will be
permitted at least six transfers per Policy Year. Also, Phoenix reserves the
right to set a minimum transfer amount, not to exceed $500, for each transfer. A
transfer is effective as of the day appropriate Written Request for such
transfer is received at VPMO. A systematic transfer program also is available.
See "Transfer of Policy Value."
10. MAY THE POLICY BE SURRENDERED?
Yes. A Policyowner may totally surrender the Policy at any time and receive
the Surrender Value. Subject to certain limitations, the Policyowner also may
partially surrender the Policy at any time prior to the Maturity Date. In the
future, Phoenix may set a minimum surrender amount, not to exceed $500. See
"Surrenders--Partial Surrenders." A partial surrender will result in a decrease
in the death benefit under the Policy. See "Death Benefit." In addition, there
will, in most instances, be certain tax consequences as the result of surrenders
because the Policy generally will be considered to be a modified endowment
contract. A Policy is a modified endowment contract if the amount of premium
paid during the first seven Policy Years is more than the amount that would have
been paid if the Policy had provided for paid-up benefits after the payment of
seven level annual premiums. Distributions such as loans and full or partial
surrenders under a modified endowment contract may be taxable income to the
extent they exceed the premiums paid. If such income is distributed before the
Policyowner attains age 59 1/2, a 10% penalty tax may be imposed. See "Federal
Tax Considerations."
11. WHAT IS THE POLICY'S LOAN PRIVILEGE?
During the first three Policy Years, a Policyowner may obtain Policy loans
in an amount up to 75% of the Cash Value. Thereafter, loans may be obtained up
to 90% of the Cash Value. The interest rate on a loan is at an effective annual
rate of 8.00%, compounded daily and payable on each Policy Anniversary in
arrears. The requested loan amount is transferred from the VUL Account or the
GIA to a Loan Account within Phoenix's General Account and is credited with
interest at an effective annual rate of 7.25% per year compounded daily. Phoenix
may impose a minimum loan amount, not to exceed $500. However, any such minimum
loan amount will not apply to loans, the proceeds of which are used to pay
premiums on another Policy issued by Phoenix. See "The Policy--Policy Loans."
The proceeds of Policy loans may be subject to federal income tax because the
Policy generally will be considered to be a modified endowment contract as
discussed above. See "Federal Tax Considerations."
12. WHAT OPTIONAL INSURANCE BENEFITS ARE THERE UNDER THE POLICY?
Optional insurance benefits offered under the Policy include a Minimum Face
Amount Rider. See "Minimum Face Amount Rider."
13. HOW ARE INSURANCE BENEFITS PAID?
Surrender and death benefits under the Policy may be paid in a lump sum or
under one of the payment options set forth in the Policy. See "Payment Options."
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. 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 BECAUSE THEY DO NOT REFLECT
COST OF INSURANCE, PREMIUM TAX CHARGES AND SURRENDER CHARGES, IF APPLICABLE. FOR
THIS INFORMATION SEE APPENDIX B "ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES
AND CASH SURRENDER VALUES." 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 7-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 Mortality and
Expense Risk charge on the Account level.
5
<PAGE>
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 7-day period, which
period will end on the date of the most recent financial statements. The yield
for the Subaccount during this 7-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
7-day period ending December 31, 1997.
Assumptions:
Value of hypothetical pre-existing account with
exactly one Unit at the beginning of the period:............. 1.741679
Value of the same account (excluding capital
changes) at the end of the 7-day period:..................... 1.742998
Calculation:
Ending account value......................................... 1.742998
Less beginning account value................................. 1.741679
Net change in account value.................................. 0.001320
Base period return:
(adjusted change/beginning account value).................... 0.000758
Current yield = return x (365/7) =.............................. 3.95%
Effective yield = [(1 + return)(365/7)] -1 =.................... 4.03%
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 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 the Mortality and Expense Risk, Issue Expense and Monthly
Administrative charges.
For those Subaccounts within the VUL Account that have not been available
for one of the quoted periods, the 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 average annual total return calculated as described
above. POLICY CHARGES (INCLUDING COST OF INSURANCE, PREMIUM TAX CHARGES, PREMIUM
SALES CHARGES AND SURRENDER CHARGES) ARE NOT REFLECTED.
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED 12/31/97
-----------------------------
COMMENCE- LIFE OF
SUBACCOUNT MENT DATE 1 YEAR 5 YEARS 10 YEARS FUND
- ---------- --------- ------ ------- -------- ----
Multi-Sector...... 1/1/83 3.35% 9.04% 9.54% 9.97%
Balanced.......... 5/1/92 9.72% 9.13% N/A 9.71%
Allocation........ 9/17/84 12.33% 9.21% 10.89% 12.06%
Growth............ 1/1/83 12.65% 14.59% 16.14% 17.40%
International..... 5/1/90 4.24% 12.97% N/A 7.48%
Money Market......10/10/82 (2.14%) 2.60% 4.45% 5.41%
Real Estate....... 5/1/95 13.56% N/A N/A 23.80%
Theme............. 1/29/96 9.01% N/A N/A 9.84%
Asia.............. 9/17/96 (37.10%) N/A N/A (30.25%)
Enhanced Index.... 7/15/97 N/A N/A N/A (1.26%)*
U.S. Small Cap.... 5/1/95 20.41% N/A N/A 30.73%
Int'l. Small Cap.. 5/1/95 (8.32%) N/A N/A 19.76%
ANNUAL TOTAL RETURN**
---------------------
MULTI- ALLO- INTER- MONEY
YEAR SECTOR BALANCED CATION GROWTH NATIONAL MARKET
- ---- ------ -------- ------ ------ -------- ------
1983.... 5.47% N/A N/A 32.22% N/A 7.79%
1984.... 10.78% N/A (1.21%) 10.11% N/A 9.67%
1985.... 20.00% N/A 26.69% 34.24% N/A 7.49%
1986.... 18.69% N/A 15.10% 19.86% N/A 5.98%
1987.... 0.60% N/A 12.16% 6.48% N/A 5.97%
1988.... 9.89% N/A 1.83% 3.39% N/A 6.90%
1989.... 7.70% N/A 19.27% 35.39% N/A 8.65%
1990.... 4.67% N/A 5.22% 3.55% (8.74%) 7.67%
1991.... 18.97% N/A 28.64% 42.00% 19.07% 5.45%
1992.... 9.52% 8.44% 10.10% 9.75% (13.26%) 3.06%
1993.... 15.33% 8.06% 10.46% 19.09% 37.72% 2.35%
1994.... (5.93%) (3.32%) (1.89%) 0.96% (0.44%) 3.31%
1995.... 22.91% 22.72% 17.61% 30.23% 9.04% 5.16%
1996.... 11.86% 10.01% 8.50% 12.02% 18.06% 4.50%
1997.... 10.53% 17.35% 20.13% 20.48% 11.49% 4.66%
REAL ENHANCED U.S. INT'L.
YEAR ESTATE THEME ASIA INDEX SMALL CAP SMALL CAP
- ---- ------ ----- ---- ----- --------- ---------
1995.... 17.42% N/A N/A N/A 16.24% 34.23%
1996.... 32.60% 9.89% 0.01% N/A 46.08% 31.54%
1997.... 21.45% 16.59% (32.73%) 5.61%* 28.78% (1.95%)
*Since inception.
**Sales Charges have not been deducted from the Annual Total Return.
A Subaccount's performance may be compared to that of the Consumer Price
Index or various unmanaged equity or bond indices such as the Dow Jones
Industrial Average, the Standard & Poor's 500 Composite Stock Price Index ("S&P
500") and the Europe Australia Far East Index ("EAFE"), and also may be compared
to the performance of other variable life accounts as reported by services such
as Lipper Analytical Services, Inc. ("Lipper"), CDA Investment Technologies,
Inc. ("CDA") and Morningstar, Inc., or in other various publications. Lipper and
CDA are widely recognized independent rating/ranking services. A Subaccount's
performance also may be compared to that of other investment or savings
vehicles.
Advertisements, sales literature and other communications may contain
information about any Series' or Adviser's 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
illustrate components of
6
<PAGE>
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, Dow Jones Industrial
Average, First Boston High Yield Index and Solomon Brothers Corporate and
Government Bond Indices.
The Funds 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, CDA, Weisenberger Financial Services, Inc.,
Morningstar, Inc. and Tillinghast. 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, Barron's, Business
Week, Investor's Business 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 S&P 500, Dow Jones
Industrial Average, EAFE, Consumer Price Index, Shearson Lehman Corporate Index
and Shearson Lehman T-Bond Index. The S&P 500 is a 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 1941-43. The S&P 500 is
composed almost entirely of common stocks of companies listed on the NYSE,
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 500 represents about 70-80% of the market value of all issues on the
NYSE.
The Fund's Annual Report, available upon request and without charge,
contains a discussion of the performance of the Funds and a comparison of that
performance to a securities market index.
PHOENIX AND THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PHOENIX
Phoenix is a mutual life insurance company originally chartered in
Connecticut in 1851 and redomiciled to New York in 1992. 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 10 Krey Boulevard, East Greenbush, New York
12144. Phoenix is the nation's 9th largest mutual life insurance company and has
consolidated assets of approximately $18.5 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 formed on June 17, 1985 and
governed under the laws of New York. It is registered as a unit investment trust
under the Investment Company Act of 1940 ("1940 Act"), 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 currently has 17 Subaccounts available for allocation of
Policy Value. In the future, if 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 the
Funds allocable to one of the available Series, each 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 depends on the investment performance
of the Fund. Thus, the Policyowner bears the full investment risk for all monies
invested in the VUL Account.
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 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. Interest on the GIA will be credited at an effective annual
rate of not less than 4%.
Biweekly, Phoenix sets the interest rate that will apply to any premium or
transferred 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 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. For more complete
information concerning the GIA, see Appendix A.
7
<PAGE>
THE POLICY
- --------------------------------------------------------------------------------
INTRODUCTION
The Policy is a variable life insurance policy. 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 in 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 portfolio of the Fund. The Policy's death benefit and Cash
Value vary reflecting the investment performance of the Series to which the
Policy Value has been allocated.
ELIGIBLE PURCHASERS
Any person up to the age of 75 is eligible to be insured under a newly
purchased Policy after providing acceptable evidence of insurability. A person
can purchase a Policy to insure the life of another person provided that the
Policyowner has an insurable interest in the life of the Insured and the Insured
consents.
PREMIUM PAYMENT
The minimum Issue Premium for a Policy is $10,000. After the first Policy
Year, the Policyowner may pay, within certain limits, additional premiums if the
variable death benefit on the first day of the Policy Year is less than the
highest variable death benefit during the previous Policy Year and less than the
current Target Face Amount. Additional premiums may be paid only during the
first 60 days of a Policy Year.
The maximum amount of an additional premium payment (when permitted) is the
lesser of (i) A minus B or (ii) C, where:
A = The premium payment which would have increased the variable death
benefit at the beginning of the current Policy Year to the highest
variable death benefit during the previous Policy Year.
B = The amount of any reduction in Cash Value due to partial surrenders
made during the previous Policy Year.
C = The premium payment which would have increased the variable death
benefit at the beginning of the current Policy Year to the current
Target Face Amount.
Example: Assume that a male age 45, nonsmoker, pays an initial premium of
$10,000 and has a Target Face Amount of $28,236. Assume also a net
investment rate of return of 9% for the first Policy Year and a net
investment rate of return of 0% for the second and third Policy Years. At
the beginning of the third Policy Year, this Policyowner would have a
variable death benefit of $28,952. This variable death benefit is less than
the highest death benefit in the previous year, which would have been
$29,772. However, since $28,952 is higher than the initial Target Face
Amount of $28,236, this Policyowner would not be permitted to pay an
additional premium.
At the beginning of the fourth Policy Year, the Policyowner would have a
variable death benefit of $27,940. This variable death benefit is less than
the highest death benefit in the previous year, which would have been
$28,952. This death benefit also is less than the initial Target Face
Amount of $28,236 and, therefore, this Policyowner would be permitted to
pay an additional premium. The premium necessary to increase the death
benefit to $28,236 (the initial Target Face Amount) is $105.66 for this
Policyowner. Phoenix also may agree to allow this Policyowner to pay a
higher premium amount.
The Policyowner may wish to pay this additional premium to maintain his
originally targeted level of death benefit protection despite adverse
market experience. In addition, some Policyowners may view depressed market
values as an opportunity to buy additional Units at the depressed value in
anticipation of future market improvement.
Additional premium payments are reduced by any applicable state premium tax
based on the Policyowner's last known address on record at VULA. See "Monthly
Deduction--Acquisition Expense." Also, a further deduction is made from
additional premiums when paid during a grace period. See "Lapse."
The additional premiums less applicable deductions are called Additional Net
Premium and are applied to Policy Value based on the then current premium
allocation schedule.
The payment of additional premiums will have an effect on the Policy's
variable death benefit. See "Death Benefit--Additional Premiums and Partial
Surrenders: Effect on Death Benefit."
ALLOCATION OF ISSUE PREMIUM
Within seven business days after the later of receipt of the Issue Premium
and Phoenix's approval of a completed application for processing, Phoenix
allocates the Issue Premium to the VUL Subaccounts or the GIA. Generally, the
Issue Premium is directly allocated in accordance with the allocation
instructions in the application for a Policy. However, Policies issued in
certain states, and Policies issued in certain states pursuant to applications
which state 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 (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 the applicant's
allocation instructions in the application for insurance.
RIGHT TO CANCEL PERIOD
A Policy may be returned by mailing or delivering it to Phoenix within 10
days after the Policyowner receives it; within 10 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 insurance, 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 Amendment, Phoenix will return the sum of the following
as of the date Phoenix receives the returned Policy: (i)
8
<PAGE>
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.
Phoenix reserves the right to disapprove an application for processing
within seven days of receipt at Phoenix 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.
TEMPORARY INSURANCE COVERAGE
On the date the application for a Policy is signed and submitted with the
Issue Premium, Phoenix issues a Temporary Insurance Receipt in connection with
the application. Under the Temporary Insurance Receipt ("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
A Policyowner may transfer all or a portion of Policy Value among
Subaccounts or the GIA by Written Request or by telephone request. However, for
Policies issued with the Temporary Money Market Allocation Amendment, transfers
may not be made until the Right to Cancel Period expires.
A Policyowner may request transfers among available Subaccounts or the GIA
In Writing or by calling (800) 892-4885, between the hours of 8:30 a.m. and 4:00
p.m. Eastern Time. Unless the Policyowner elects In Writing not to authorize
telephone transfers, telephone transfer orders also will be accepted on behalf
of the Policyowner from his or her registered representative. Phoenix and
Phoenix Equity Planning Corporation ("PEPCO") will employ reasonable procedures
to confirm that telephone instructions are genuine. They will require address
verification, identical account registrations and will record telephone
instructions on tape. All telephone exchanges will be confirmed In Writing to
the Policyowners. 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, the Policyowner would bear the risk of loss resulting from instructions
entered by an unauthorized third party that Phoenix and PEPCO reasonably believe
to be genuine. The telephone transfer privilege may be modified or terminated at
any time, and during times of extreme market volatility, it may be difficult to
exercise. In such cases, the Policyowner should submit a Written Request.
A Policyowner also may elect to transfer funds automatically among the
Subaccounts or 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. A Policyowner must have an initial value of
$1,000 in the GIA or the Subaccount that funds will be transferred from
("Sending Subaccount"), 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 Sending Subaccount or the GIA, but may be allocated to
multiple Subaccounts ("Receiving Subaccounts"). Under the Systematic Transfer
Program, Policyowners may make more than one transfer per Policy Year from the
GIA in approximately equal amounts over a minimum 18-month period.
Only one Systematic Transfer Program can be active per Policy. After the
completion of the program, you can call VULA at (800) 892-4885 to begin a new
Systematic Transfer Program.
All transfers under the Systematic Transfer Program will be executed on the
basis of the respective value of each Subaccount as of the first of the month
rather than on the basis of the respective values next determined after 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.
Unless Phoenix agrees otherwise or the Systematic Transfer Program has been
elected, a Policyowner may make only one transfer per Policy Year from the GIA.
Transfers will be effectuated on the date the transfer request was received at
VPMO, unless made pursuant to the Systematic Transfer Program, as noted above.
For nonsystematic transfers, the amount that may be transferred from the GIA at
any one time cannot exceed the greater of $1,000 or 25% of the Policy Value in
the GIA at the time of transfer. THERE ARE ADDITIONAL RESTRICTIONS ON TRANSFERS
FROM THE GIA AS DESCRIBED ABOVE AND IN APPENDIX A.
Phoenix reserves the right to limit the number of transfers made during a
Policy Year. However, Policyowners will be permitted at least six transfers per
Policy Year. Also, Phoenix reserves the right to set a minimum transfer amount
not to exceed $500. A nonsystematic transfer will take effect on the date the
request is received at VPMO.
Because excessive trading can hurt Fund performance and harm Policyowners,
Phoenix reserves the right to temporarily or permanently terminate exchange
privileges or reject any specific order from anyone whose transactions seem to
follow a timing pattern, including those who request more than one exchange out
of a Subaccount within any 30-day period. Phoenix will not accept batch transfer
instructions from registered representatives (acting under powers of attorney
for multiple Policyowners), unless the registered representative's broker-dealer
firm and Phoenix have entered into a third party transfer service agreement.
Phoenix reserves 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.
9
<PAGE>
DETERMINATION OF SUBACCOUNT VALUES
On each Valuation Date, the Policy's share in the value of each Subaccount
is determined separately, but the valuation method used is the same for each
Subaccount. A Policy's share in the value of a Subaccount on any Valuation Date
equals:
(a) The Policy's share in the value of that Subaccount as of the immediately
preceding Valuation Date multiplied by the "Net Investment Factor" of
that Subaccount for the current Valuation Period; plus
(b) All amounts transferred to the Policy's share in the value of that
Subaccount from another Subaccount or from the Loan Account during the
current Valuation Period; plus
(c) All Additional Net Premiums allocated to that Subaccount during the
current Valuation Period; minus
(d) All amounts transferred from the Policy's share in the value of that
Subaccount to another Subaccount or to the Loan Account during the
current Valuation Period; minus
(e) Any portion of the monthly deduction allocated to the Policy's share in
the value of that Subaccount during the current Valuation Period; minus
(f) All reductions in the Policy Value allocated to the Policy's share in
the value of that Subaccount due to any partial surrenders made during
the current Valuation Period.
The Net Investment Factor for each Subaccount for any Valuation Period is
determined by dividing (a) by (b), and subtracting (c) from the result where:
(a) is the result of:
(i) the asset value of the Fund shares held by that Subaccount
determined as of the end of the current Valuation Period (exclusive
of the net value of any transactions during the current Valuation
Period); plus
(ii) the amount of any dividend (or, if applicable, any capital gain
distribution) made by the Fund on shares held by that Subaccount if
the "ex-dividend" date occurs during the current Valuation Period;
plus/minus
(iii)the charge or credit for any taxes incurred by, or provided for,
in that Subaccount for the current Valuation Period.
(b) the net asset value of the Fund shares held by that Subaccount
determined as of the end of the immediately preceding Valuation Period;
(c) is a factor, equal to the sum of 0.50% on an annual basis held by that
Subaccount, representing the Mortality and Expense Risk Charge deducted
from that Subaccount during the Valuation Period.
The Net Investment Factor may be greater than, less than, or equal to one.
Therefore, the Policy Value may increase, decrease or remain unchanged.
DEATH BENEFIT
GENERAL
In the application for insurance, an applicant designates an amount as the
Policy's initial Target Face Amount. During the first Policy Month, the death
benefit equals this Target Face Amount. After the first Policy Month the death
benefit is equal to the variable death benefit.
During any Policy Month after the first, the variable death benefit under
the Policy is equal to:
(i) the Cash Value on the last preceding Monthly Calculation Day,
multiplied by
(ii) the applicable Death Benefit Adjustment Rate (as defined below) on the
last preceding Monthly Calculation Day.
The Death Benefit Adjustment Rates assume an interest rate ranging from 4%
to 5%. The assumed interest rate used to calculate the Death Benefit Adjustment
Rates under a particular Policy depends on the Policy's Initial Premium and its
Target Face Amount. In the event the net investment rate of return (gross
investment return net of mortality and expense risk charge and investment
management fee) applied to the Policy Value exceeds the assumed interest rate
used to calculate the Death Benefit Adjustment Rates, the variable death benefit
under the Policy will be greater than its Target Face Amount. Conversely, if the
net investment rate of return applied to the Policy Value is less than the
assumed interest rate, then the variable death benefit will be less than the
Target Face Amount. Finally, if the net investment rate of return applied to the
Policy Value equals the assumed interest rate, then the variable death benefit
will approximately equal the Target Face Amount.
EXAMPLE: Death Benefit Adjustment Rates which assume a 4% interest rate
apply to a male age 45 nonsmoker who pays an initial premium of $25,000 and
has a Target Face Amount of $70,591. Five years after the Issue Date of this
Policy, the following variable death benefits would apply for the specified
net rates of return:
--assuming a 5% net investment rate of return: $75,144
--assuming a 4% net investment rate of return: $71,514
--and assuming a 3% net investment rate of return: $68,019
EXAMPLE: A male age 45, nonsmoker, pays an initial premium of $10,000. For
this initial premium, this Policyowner can choose an initial Target Face
Amount ranging from $28,236 to $35,980. This range of Target Face Amount
represents Death Benefit Adjustment Rates which assume interest rates
ranging from 4% to 5% and a 2% state premium tax. Generally, selection of
the highest Target Face Amount available for a given premium will result in
the highest death benefit adjustment rate, variable death benefit and
resulting cost of insurance charges. Conversely, selection of the lower
Target Face Amount available for a given premium will result in the lowest
death benefit adjustment rate, variable death benefit and resulting cost of
insurance charges.
10
<PAGE>
Assuming that this Policyowner selects an initial Target Face Amount of
$35,980, and that the net rate of return achieved is 5% per year, this
Policyowner will have a variable death benefit of $36,826 and Cash Value of
$36,826 when he reaches age 95. The variable death benefit and Cash Value
are slightly larger than the initial Target Face Amount due to the fact that
the Acquisition Expense is deducted and then re-credited to the Policyowner
and taken out in monthly installments over the first 10 Policy Years. While
a portion of this Acquisition Expense Allowance remains in the Policy Value,
it also is earning a net rate of return.
ADDITIONAL PREMIUMS AND PARTIAL SURRENDERS: EFFECT ON DEATH BENEFIT
Additional premium payments are permitted under certain circumstances. See
"The Policy--Premium Payment." Such a payment does not result in an immediate
increase in the variable death benefit. However, on the next Monthly Calculation
Day the variable death benefit will be larger as a consequence of the larger
Cash Value.
A partial surrender decreases the Target Face Amount and the Minimum Face
Amount (if provided by appropriate rider). The Target Face Amount and Minimum
Face Amount are reduced by a fraction equal to the result of dividing the
partial surrender amount paid plus the partial surrender fee by the Cash Value
(determined without regard to the partial surrender). Moreover, the death
benefit under a Policy is reduced on the next Monthly Calculation Day due to the
reduced Cash Value. A partial surrender or decrease in the death benefit may
have certain tax consequences. See "Federal Tax Considerations."
In addition, if the Insured dies during any Policy Month in which additional
premium had been paid, the death proceeds paid will equal the death benefit for
that month plus the additional premium paid, minus any premium paid during a
grace period necessary to keep the Policy in effect.
MINIMUM FACE AMOUNT RIDER
An applicant in the application for a Policy may elect to have a Minimum
Face Amount Rider issued in connection with the Policy. If this Rider is
elected, the applicant designates in the application an amount to be the Minimum
Face Amount. The amount designated as the Minimum Face Amount cannot exceed the
Policy's Target Face Amount.
The death benefit under a Policy issued with the Minimum Face Amount Rider
equals the Target Face Amount during the first Policy Month. Thereafter, the
Policy's death benefit equals the higher of (i) the variable death benefit or
(ii) the Minimum Face Amount.
Under the Minimum Face Amount Rider, when the death benefit is calculated
with reference to the Minimum Face Amount, the death benefit under the Policy
may be greater than it otherwise would have been had the Rider not been issued.
Accordingly, when the Minimum Face Amount is used to calculate the death
benefit, there is a greater "net amount at risk" under the Policy and,
therefore, a larger amount is deducted from Policy Value to pay for cost of
insurance than would be deducted under an identical Policy without the Rider.
SURRENDERS
GENERAL
At any time during the lifetime of the Insured and 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 VPMO, along
with the Policy if Phoenix so requires. The amount available for surrender is
the Cash Value at the end of the Valuation Period during which the surrender
request is received at VPMO less any indebtedness.
Upon partial or full surrender, Phoenix generally will pay the amount
surrendered to the Policyowner 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 VPMO, 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. See "Payment Options."
PARTIAL SURRENDERS
For a partial surrender, the amount paid plus the partial surrender fee will
be deducted from the Policy Value at the end of the Valuation Period during
which the request is received. The Policy Value will be reduced by the partial
surrender amount paid, the partial surrender fee (see "Charges and
Deductions--Other Charges"), and a portion of any unrepaid Acquisition Expense.
The portion of any unrepaid Acquisition Expense paid in connection with a
partial surrender is equal to the result of dividing the partial surrender
amount paid plus the partial surrender fee by the Cash Value (determined without
regard to the partial surrender). The reduction in Policy Value caused by
partial surrenders is deducted from the Subaccounts of the VUL Account based on
the allocation schedule for monthly deductions, unless the Policyowner directs
otherwise. Cash Value is reduced to equal the resulting Policy Value less the
balance of any remaining unpaid Acquisition Expense Allowance.
Partial surrenders will decrease the Target Face Amount and the Minimum Face
Amount (if provided by rider), as well as the variable death benefit. See "Death
Benefit--Additional Premiums and Partial Surrenders: Effect on Death Benefit"
and "Federal Tax Considerations."
In the future, Phoenix may set a minimum partial surrender amount not to
exceed $500. Also, partial surrenders will be permitted only if the death
benefit under the Policy after the requested partial surrender would equal or
exceed the minimum death benefit amount set by Phoenix from time to time.
Furthermore, partial surrenders will not be allowed if the Surrender Value of
the Policy after the requested partial surrender would equal zero or less.
11
<PAGE>
POLICY LOANS
During the first three Policy Years, the Policyowner may borrow under the
Policy an amount up to 75% of the Cash Value. Thereafter, Policyowners may
borrow an amount not exceeding 90% of the Cash Value. The requested loan amount
is transferred to the Loan Account from the Subaccounts of the VUL Account or
the GIA based on the allocation schedule for monthly deductions, unless the
Policyowner requests a different allocation in the loan request. The debt under
the Policy and the balance of the Loan Account is increased by the amount of the
Policy loan.
The proceeds of a Policy loan may be subject to federal income tax. 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.
The loan debt will bear interest at an effective annual rate of 8.00%,
compounded daily and payable in arrears. The Loan Account Value is credited with
interest at an effective annual rate of 7.25%, compounded daily and payable in
arrears. At the end of each Policy Year, the difference between any unpaid
interest on the debt and the interest earned on the Loan Account Value will be
offset by a transfer from the Policyowner's Subaccount or GIA values to the
value of the Policyowner's Loan Account.
A Policy loan, whether or not repaid, has a permanent effect on the Cash
Value because the investment results of the Subaccounts or the GIA will apply
only to the amount remaining in the Subaccounts or 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 GIA earn more than 7.25% per
annum, which is the annual interest rate for funds held in the Loan Account,
Cash Value does not increase as rapidly as it would have had no loan been made.
If the Subaccounts or the GIA earn less than 7.25% per annum, Cash 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 variable death benefit due to any
resulting differences in Cash Value. While the loan is outstanding, any payment
on the loan will be treated as a repayment (not subject to the premium tax).
The Policyowner may repay part or all of the debt at any time. If the value
of the Loan Account on the Payment Date of the debt repayment is greater than
the reduced remaining debt, then the value of the Loan Account will be reduced
to equal the remaining debt. On the Payment Date, the share of Policy Value in
the Subaccounts or the GIA is increased based on the allocation requested upon
repayment. The amount of the increase equals the amount of reduction in value of
the Loan Account. If no allocation request is made, the allocation will be based
on the then current premium allocation schedule.
LAPSE
Unlike conventional fixed benefit 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. Lapse
will only occur where the Surrender Value is insufficient to cover the monthly
deduction and a grace period expires without payment of the additional amount
required. If the Surrender Value is insufficient to cover the monthly deduction,
the Policyowner must pay, during the grace period, the amount needed to increase
the Surrender Value to equal three times the required monthly deduction. See
"Charges and Deductions."
If on any Monthly Calculation Day the Surrender Value is insufficient to
cover the monthly deduction, Phoenix will notify the Policyowner of the
additional payment required. The Policyowner will then have a grace period of 61
days, measured from the date notice is sent to the Policyowner, to pay the
additional amount. Failure to pay the additional amount within the grace period
will result in lapse of the Policy. If a premium payment for the additional
amount is received by Phoenix during the grace period, any Additional Net
Premium will be allocated among the Subaccounts of the VUL Account or the GIA in
accordance with the then current premium allocation schedule. In determining the
Additional Net 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
made during the grace period. If the 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.
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 available Series and their fundamental investment
objectives are as follows:
MONEY MARKET SERIES: The investment objective of the Money Market Series
is to provide maximum current income consistent with capital preservation
and liquidity.
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: 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: 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).
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' investments are made based on combined
considerations of risk, income, capital enhancement and protection of
capital value.
12
<PAGE>
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.
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
Strategic Theme Series is to seek long-term appreciation of capital through
investing in securities of companies that the adviser believes are
particularly well positioned to benefit from cultural, demographic,
regulatory, social or technological changes worldwide.
ABERDEEN NEW ASIA ("ASIA") SERIES: The investment objective of the Asia
Series is to seek long-term capital appreciation. The New Asia Series will
invest primarily in a diversified portfolio of equity securities of issuers
organized and principally operating in Asia, excluding Japan.
RESEARCH ENHANCED INDEX ("ENHANCED INDEX") SERIES: The investment
objective of the Enhanced Index Series is to seek high total return by
investing in a broadly diversified portfolio of equity securities of large
and medium capitalization companies within market sectors reflected in the
S&P 500. It is intended that this Series will invest in a portfolio of
undervalued common stocks and other equity securities which appear to offer
growth potential and an overall volatility of return similar to that of the
S&P 500.
ENGEMANN NIFTY FIFTY ("NIFTY FIFTY") SERIES: The investment objective of
the Nifty Fifty Series is to seek long-term capital appreciation by
investing in approximately 50 different securities which offer, in the
opinion of the Adviser, the best potential for long-term growth of capital.
At least 75% of the Series' assets will be invested in common stocks of high
quality growth companies. The remaining portion will be invested in common
stocks of small corporations with rapidly growing earnings per share or
common stocks believed to be undervalued.
SENECA MID-CAP GROWTH ("SENECA MID-CAP") SERIES: The investment
objective of the Seneca Mid-Cap Series is to seek capital appreciation
primarily through investments in equity securities of companies that have
the potential for above average market appreciation. The Series seeks to
outperform the Standard & Poor's Mid-Cap 400 Index.
PHOENIX GROWTH AND INCOME ("GROWTH & INCOME") SERIES: The investment
objective of the Growth & Income Series is to seek dividend growth, current
income and capital appreciation by investing in common stocks. The Series
seeks to achieve its objective by selecting securities primarily from equity
securities of the 1,000 largest companies traded in the United States,
ranked by market capitalization.
PHOENIX VALUE EQUITY ("VALUE") SERIES: The primary investment objective
of the Value Series is long-term capital appreciation, with a secondary
investment objective of current income. The Series seeks to achieve its
objective by investing in a diversified portfolio of common stocks that meet
certain quantitative standards that indicate above average financial
soundness and intrinsic value relative to price.
SCHAFER MID-CAP VALUE ("SCHAFER MID-CAP") SERIES: The primary investment
objective of the Schafer Mid-Cap Series is to seek long-term capital
appreciation, with current income as the secondary investment objective. The
Series will invest in common stocks of established companies having a strong
financial position and a low stock market valuation at the time of purchase
which are believed to offer the possibility of increase in value.
INVESTMENT ADVISERS
The investment adviser to all series except the Real Estate and Asia Series
is Phoenix Investment Counsel, Inc. ("PIC"). Pursuant to subadvisory agreements
with the Fund, PIC delegates certain investment decisions and research functions
with respect to the following series to the subadviser indicated:
Enhanced Index Series J.P. Morgan Investment
Management, Inc.
Nifty Fifty Series Roger Engemann &
Associates, Inc. ("Engemann")
Seneca Mid-Cap Series Seneca Capital Management,
LLC ("Seneca")
Schafer Mid-Cap Series Schafer Capital Management, Inc.
The investment adviser to the Real Estate Series is Duff & Phelps Investment
Management Co. ("DPIM").
The investment adviser to the Asia Series is Phoenix-Aberdeen International
Advisors LLC ("PAIA"). Pursuant to subadvisory agreements with the Fund, PAIA
delegates certain investment decisions and research functions with respect to
the Asia Series to PIC and Aberdeen Fund Managers, Inc.
PIC, DPIM, Engemann and Seneca are indirect, less than wholly-owned
subsidiaries of Phoenix Home Life. PAIA is jointly owned and managed by PM
Holdings, Inc., a subsidiary of Phoenix Home Life, and Aberdeen Fund Managers,
Inc.
WANGER ADVISORS TRUST
Certain Subaccounts of the VUL Account invest in corresponding Series of the
Wanger Advisors Trust. The investment adviser is Wanger Asset Management, L.P.
The available Series and their fundamental investment 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
13
<PAGE>
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.
Shares of the Funds may be sold to other separate accounts of Phoenix or its
affiliates or of other insurance companies funding variable annuity or variable
life insurance contracts. It is conceivable that in the future it may be
disadvantageous for variable life insurance separate accounts and variable
annuity separate accounts to invest in the Funds simultaneously. Although
neither Phoenix nor the Funds currently foresee 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 Funds, 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.
SERVICES OF THE ADVISERS
The Advisers continuously furnish 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 detailed
discussion of the investment advisers and subadvisers, and the investment
advisory and subadvisory agreements, is contained in the accompanying prospectus
for the Funds.
REINVESTMENT AND REDEMPTION
All dividend distributions of the Funds are automatically reinvested in
shares of the Funds at their net asset value on the date of distribution; all
capital gains distributions of the Funds, 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 Funds 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 Funds 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.
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 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 combined amount of items (1), (2) and (3) is referred to as
the Acquisition Expense (or the Acquisition Expense Allowance). The nature and
amount of these charges are described more fully below.
MONTHLY DEDUCTION
GENERAL
A charge is deducted monthly from the Policy Value under a Policy ("monthly
deduction") during the first 10 Policy Years, to repay the Acquisition Expense
Allowance (as described below). A charge also is deducted monthly to compensate
Phoenix for the cost of insurance. The monthly deduction is deducted on each
Monthly Calculation Day. It is allocated among the Subaccounts of the VUL
Account and 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. 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.
ACQUISITION EXPENSE (ACQUISITION EXPENSE ALLOWANCE)
The Acquisition Expense Allowance equals the sales charge, issue
administration charge and premium taxes deducted from the Issue Premium and
recredited by Phoenix as part of the allocation of the Issue Premium to the
Policy Value on the Date of Issue. A monthly pro rata share of the allowance is
repaid to Phoenix as part of the monthly deduction during the first 10 Policy
Years. Any unpaid balance is fully repaid to Phoenix upon Policy lapse or full
surrender.
The Acquisition Expense Allowance consists of the following elements:
1. SALES CHARGE. A sales charge of 5.5% of the Issue Premium paid is
assessed to compensate Phoenix for distribution expenses incurred in connection
with the Policy. These expenses include agent sales commissions, the cost of
printing prospectuses and sales
14
<PAGE>
literature, and any advertising costs. The sales charge in any Policy is not
necessarily related to actual distribution expenses incurred in the year the
Policy is issued.
2. ISSUE ADMINISTRATION CHARGE. A cost-based issue administration charge of
1% of the Issue Premium paid is assessed to compensate Phoenix for underwriting
and start-up expenses in connection with issuing a Policy.
3. PREMIUM TAXES. Various states and subdivisions impose a tax on premiums
received by insurance companies. Premium taxes vary from state to state. The
assessment made for each premium paid is based on the state where the
Policyowner resides according to Phoenix's records at the time of the payment.
The assessment represents an amount Phoenix considers necessary to pay all
premium taxes imposed by such states and any subdivisions thereof. 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 by these
states.
By deducting these charges in monthly installments instead of deducting them
all at once from the Issue Premium, more funds are available for investment
during the first ten Policy Years. As a result, if the Net Investment Factor is
positive, the Policyowner will enjoy greater increases in Cash Value, but if the
Net Investment Factor is negative, the Policyowner will experience greater
decreases in Cash Value.
Additional premiums are not subject to an Acquisition Expense Allowance (a
sales or issue administration charge). However, prior to allocation of
Additional Net Premiums among the Subaccounts of the VUL Account or the GIA,
additional premiums paid will be reduced by the premium tax charge and, for
additional premiums paid during a grace period, by the amount needed to cover
any monthly deductions made during the grace period.
Phoenix may reduce the sales charge or issue administration charge component
of the Acquisition Expense Allowance for Policies issued under group or
sponsored arrangements. Generally, sales and administrative 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
amounts of any reductions will be considered on a case-by-case basis and will
reflect the reduced sales or administration costs expected as a result of sales
to a particular group or sponsored arrangement.
COST OF INSURANCE
Because the cost of insurance depends upon a number of variables, this
charge can vary from month to month. The cost of insurance charge is equal to
the applicable cost of insurance rate divided by 1,000 multiplied by the "net
amount at risk" for each Policy Month. The net amount at risk for a Policy
Month is (a) the death benefit on the Monthly Calculation Day, less (b) the
Cash Value on such day.
Cost of insurance rates are based on the sex (in most states), attained age
and risk class of the Insured. The actual monthly cost of insurance rates are
based on Phoenix's expectations of future experience. They will not, however, be
greater than the guaranteed cost of insurance rates set forth in the Policy.
These guaranteed rates are based on the 1980 Commissioners Standard Ordinary
Mortality Table with appropriate adjustment for the Insured's risk
classification. Any change in the cost of insurance rates will apply to all
persons of the same insurance age, sex 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 risk classes involving a
higher mortality risk. 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 two categories: smokers and nonsmokers. Nonsmoking Insureds will generally
incur a lower cost of insurance than similarly situated Insureds who smoke.
MORTALITY AND EXPENSE RISK CHARGE
Phoenix will deduct a daily charge from the VUL Account at an annual rate of
0.50% of the average daily net assets of the VUL Account to compensate for
certain risks assumed in connection with the Policy. This charge is not deducted
from the GIA.
The mortality risk assumed by Phoenix is that 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, Phoenix may
profit from this charge. Phoenix also assumes risks with respect to other
contingencies including the incidence of Policy loans, which may cause Phoenix
to incur greater costs than anticipated when it designed the Policies. To the
extent Phoenix profits from this charge, it 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.
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.
These Fund charges and other expenses are described more fully in the
accompanying Fund prospectuses.
OTHER CHARGES
PARTIAL SURRENDER FEE
A fee equal to the lesser of $25 or 2% of the partial surrender amount paid
is deducted from the Policy Value upon a partial surrender of the Policy. A
fraction of the balance of any unpaid Acquisition Expense also is deducted from
the Policy Value upon a partial surrender. The fraction is equal to the result
of dividing the partial surrender amount paid plus the partial surrender fee by
the Cash Value (determined without regard to the partial surrender).
15
<PAGE>
TAXES
Currently no charge is made to the VUL Account for federal income taxes that
may be attributable to the VUL Account. Phoenix may, however, make such a charge
in the future. Charges for other taxes, if any, attributable to the VUL Account
also may be made.
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
POSTPONEMENT OF PAYMENTS
GENERAL
Payment of any amount upon complete or partial surrender, Policy loan, or
benefits payable at death 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 NYSE is closed other than for customary weekend and
holiday closings, or trading on the NYSE 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 the Insured commits suicide within two years after the Policy's Date of
Issue, Phoenix will pay only the Cash Value, plus the Acquisition Expense, plus
any mortality and expense risk charges, monthly deductions and investment
management charges, less any outstanding indebtedness.
INCONTESTABILITY
Phoenix cannot contest this Policy or any attached rider after it has been
In Force during the lifetime of the Insured for two years from its effective
date.
CHANGE OF OWNER OR BENEFICIARY
The Beneficiary, as named in the Policy application or subsequently changed,
will receive the Policy benefits at the Insured's death. If the named
Beneficiary dies before the Insured, the contingent Beneficiary, if named,
becomes the Beneficiary. If no Beneficiary survives the Policyowner, the
benefits payable at the Insured's death will be paid to the Policyowner's
estate.
As long as the Policy is In Force, the Policyowner may be changed by Written
Request, satisfactory to Phoenix, and the Beneficiary may be changed by written
notice. A change in Beneficiary will take effect as of the date the notice is
signed, whether or not the Insured is living when the notice is received by
Phoenix. Phoenix will not, however, be liable for any payment made or action
taken before receipt of the notice.
ASSIGNMENT
The Policy may be assigned. Phoenix 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. Phoenix assumes no responsibility for
determining whether an assignment is valid.
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Insured 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.
SURPLUS
Policyowners 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 because
Policyowners will be participating directly in investment results.
PAYMENT OF PROCEEDS
- --------------------------------------------------------------------------------
SURRENDER AND DEATH BENEFIT PROCEEDS
Proceeds of full or partial surrenders and the death benefit proceeds
usually will be paid in one lump sum within seven days after Phoenix receives
the request for surrender and due proof of death, unless another payment option
has been elected. Payment of the death benefit proceeds, however, may be delayed
if the claim for payment of the death benefit 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
consistent with insurance practices customary in the life insurance industry.
While the Insured is living, the Policyowner may elect a payment option for
payment of the death benefit proceeds to the Beneficiary. The Policyowner 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 benefit
proceeds, unless the Policyowner has made an election which does not permit such
further election or changes by the Beneficiary.
A written form satisfactory to Phoenix is required to elect, change or
revoke a payment option.
The minimum amount of surrender or death benefit proceeds that may be
applied under any option is $1,000.
If the Policy is assigned as collateral security, Phoenix will pay any
amount due the assignee in one lump sum. Any remaining proceeds will remain
under the option elected.
16
<PAGE>
PAYMENT OPTIONS
All or part of the surrender or death benefit proceeds of a Policy may be
applied under one or more of the following payment options (except for Option 7
which is not available for death benefit proceeds), or such other payment
options as Phoenix 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. Upon death of the payee, payment of the principal
amount along with any accrued and unpaid interest.
OPTION 3--PAYMENT FOR A SPECIFIC PERIOD. Equal income installments are paid
for a specified period of years. 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. Upon death of the named payee, the remaining payments
will continue to the contingent Beneficiary as designated in the written form
electing the options.
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) 10 years; (B) 20 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.
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. Under this
option, the payee may receive only one payment, if the payee dies before the due
date for the second payment; only two payments, if the payee dies before the due
date for the third payment, etc.
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 be
at least equal 3% per 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. This
payment option is not available for death proceeds. This option is available
only if the Policy is surrendered within six months of the Policy anniversary
nearest the Insured's 55th, 60th or 65th birthday. 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.
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 the Policyowner or 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 Phoenix's understanding of federal income tax
laws as they are currently interpreted, Phoenix 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 (the "Service"). Phoenix
reserves the right to make changes to the Policy in order to assure that it will
continue to qualify as a life insurance policy for federal income tax purposes.
PHOENIX'S TAX STATUS
Phoenix is taxed as a life insurance company under the Internal Revenue Code
of 1986 (the "Code"), as amended. For federal income tax purposes, neither the
VUL Account nor the GIA is a separate entity from Phoenix and its operations
form a part of Phoenix.
Investment income and realized capital gains on the assets of the VUL
Account are reinvested and taken into account in determining the Cash 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
The Policy, which is essentially a single premium policy, is a modified
endowment contract within the meaning of the Code.
GENERAL
Pursuant to Code Section 72(e), loans and other amounts received under
modified endowment contracts will, in general, be
17
<PAGE>
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 amount 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.
Classification of the Policy as a modified endowment contract does not
affect the exclusion of death benefit proceeds under the Policy from the gross
income of the Beneficiary under Code Section 101(a)(1) and also does not cause
the Policyowner to be deemed to be in constructive receipt of the Cash Value,
including increments or "inside build-up" thereon. 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
actually received under the Policy, via full surrender, partial surrender or
loan.
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 had
originally 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.
DISTRIBUTION 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 loans will generally not be subject to the modified endowment
contract rules.
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 may result in the imposition of an additional 10% tax
on any income received.
PARTIAL SURRENDERS
Since the Policy is a modified endowment contract under Section 7702A of the
Code, partial surrenders will be fully taxable to the extent of income in the
Policy and will possibly be subject to an additional 10% tax. Phoenix suggests
that you consult with your tax adviser in advance of a partial surrender
concerning the tax implications of a partial surrender to you.
LOANS
Phoenix believes that any loan received under a Policy will be treated as
indebtedness of the Policyowner. Since the Policy is a modified endowment
contract, however, loans are fully taxable to the extent of income in the Policy
and possibly will be subject to an additional 10% tax.
Under the "personal" interest limitation provisions of the Code, interest on
Policy loans used for personal purposes is not tax deductible. However, other
rules will 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 a tax upon the inside build-up of
corporate-owned life insurance policies through the corporate alternative
minimum tax.
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 7 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
18
<PAGE>
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 policy 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 these limitations in calculating the
premium it is permitted to receive from the Policyowner.
QUALIFIED PLANS
A Policy may be used in conjunction with certain qualified plans. Since the
rules governing such use are complex, a purchaser should not use the Policy in
conjunction with a qualified plan until he has consulted a competent pension
consultant or tax adviser.
DIVERSIFICATION STANDARDS
To comply with the Diversification Regulations under Code Section 817(h)
("Diversification Regulations"), each Series of the Funds 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 Funds' 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 Funds as an asset of the VUL Account; therefore, each Series of the
Funds 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 Treasury. In this case, there
is no limit on the investment that may be made in Treasury securities, and for
purposes of determining whether assets other than Treasury securities are
adequately diversified, the generally applicable percentage limitations are
increased based on the value of the VUL Account's investment in Treasury
securities. Notwithstanding this modification of the general diversification
requirements, the portfolios of the Funds 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 Policyowners may direct their 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 pronouncements. For these reasons,
Phoenix reserves the right to modify the Policy, as necessary, to prevent the
Policyowner 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 life insurance policies for federal
income tax purposes.
CHANGE OF OWNERSHIP OR INSURED OR ASSIGNMENT
Changing the Policyowner or the Insured or an exchange or assignment of the
Policy may have tax consequences depending on the circumstances. Code Section
1035 provides that a life insurance policy 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 Insured. 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 one or more of these 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. Phoenix does not make any
representations or guarantees regarding the tax consequences of any Policy with
respect to these types of taxes.
VOTING RIGHTS
- --------------------------------------------------------------------------------
THE FUNDS
Phoenix will vote the Fund 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 the Policyowner. However, if the 1940 Act or any regulation thereunder
should be amended or if the present interpretation thereof should change, and
19
<PAGE>
as a result Phoenix determines that it is permitted to vote the Fund shares
at its own discretion, it may elect to do so.
The number of votes that a Policyowner has the right to cast will be
determined by applying the Policyowner's 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 Fund 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.
Each Policyowner will receive proxy materials, reports, and other materials
relating to the Funds.
Phoenix 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 Series 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 Fund if Phoenix
reasonably disapproves such changes. A change would be disapproved only if the
proposed change is contrary to state law or prohibited by state regulatory
authorities or Phoenix determined that the change would have an adverse effect
on the General Account because the proposed investment policy for a portfolio
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
A Policyowner (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, a Policyholder (or payee) may cast
only one vote as the holder of a Policy, irrespective of Policy value or the
number of the Policies held.
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 President and Chief Operating
Officer, Sunoco Products Company
Hartsville, South Carolina
Arthur P. Byrne Chairman, President and Chief
Executive Officer, The Wiremold
Company
West Hartford, Connecticut
Richard N. Cooper Professor of International
Economics, Harvard University;
formerly Chairman, National
Intelligence Council, Central
Intelligence Agency
McLean, Virginia
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 Limited Managing Director, Lazard
Freres & Company
New York, New York
Philip R. McLoughlin Executive Vice President and Chief
Investment Officer, Phoenix Home
Life Mutual Insurance Company
Hartford, Connecticut
Indra K. Nooyi Senior Vice President,
PepsiCo, Inc.
Purchase, New York
Charles J. Paydos Executive Vice President, Phoenix
Home Life Mutual Insurance Company
Hartford, Connecticut
20
<PAGE>
Robert F. Vizza President and Chief Executive
Officer, St. Francis Hospital
Roslyn, New York
Robert G. Wilson Chief Executive Officer,
CreditSource USA, Inc., Charlotte,
North Carolina; formerly Chairman and President,
Ziani International Capital, Inc., Miami, Florida,
Vice Chairman, Carter Kaplan & Company, Richmond,
Virginia and Chairman and Chief Executive Officer,
Ecologic Waste Services, Inc., Miami, Florida
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
Carl T. Chadburn Executive Vice President
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,
Distribution Planning
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,
Underwriting and Operations
Robert G. Lautensack, Jr. Senior Vice President , Individual
Financial
Maura L. Melley Senior Vice President, Public Affairs
Scott C. Noble Senior Vice President
Robert E. Primmer Senior Vice President, Individual
Distribution
Frederick W. Sawyer, III Senior Vice President
Richard C. Shaw Senior Vice President
Simon Y. Tan Senior Vice President, Market and
Product Development
Anthony J. Zeppetella Senior Vice President, Corporate
Portfolio Management
Walter H. Zultowski Senior Vice President, Marketing
and Market Research; formerly
Senior Vice President, LIMRA
International,
Hartford, Connecticut
The above positions reflect the last held position in the organization.
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 ("1934
Act") and are members 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 ("PD&P"). Phoenix owns a majority interest
in PD&P. Policies also may be purchased from other broker-dealers registered
under the 1934 Act whose representatives are authorized by applicable law to
sell Policies under terms of agreement 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 six percent of
premiums will be made 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 short fall 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
Funds 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.
State regulation of Phoenix includes certain limitations on the investments
which it may make, including investments for the
21
<PAGE>
Account. It does not include, however, any supervision over the investment
policies of the Account.
REPORTS
- --------------------------------------------------------------------------------
All Policyowners will be furnished with those reports required by the 1940
Act 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 Edwin L. Kerr,
Counsel, Phoenix. Legal matters relating to the federal securities and income
tax laws have been passed upon for Phoenix by Jorden Burt Boros Cicchetti
Berenson & Johnson LLP.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
A Registration Statement has been filed with the SEC, under the Securities
Act of 1933 ("1933 Act") 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 hereby 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.
YEAR 2000 ISSUE
- --------------------------------------------------------------------------------
Many existing computer programs use only two digits to identify the year in
a date field. Commonly referred to as the "Year 2000 Issue," companies must
consider the impact of the upcoming change in the century on their computer
systems. The Year 2000 Issue, if not adequately addressed, could result in
computer system failures or miscalculations causing disruptions of operations
and the possible inability of companies to process transactions. Phoenix
believes that the Year 2000 Issue is an important business priority requiring
careful analysis of every business system in order to be assured that all
information systems applications are century compliant.
Phoenix has been addressing the Year 2000 Issue in earnest since 1995 when,
with consultants, a comprehensive inventory and assessment of all business
systems, including those of its subsidiaries, was conducted. Phoenix has
identified and is now actively pursuing a number of strategies to address the
issue, including:
-- upgrading systems with compliant versions;
-- developing or acquiring new systems to replace those that are obsolete;
-- and remediating existing systems by converting code or hardware.
Based on current assessments, Phoenix expects to have its computer systems
compliant by the end of 1998, with testing to continue through 1999. In
addition, Phoenix is examining the status of its third-party vendors, obtaining
assurances that their software and hardware products will be century compliant
by 1999.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The consolidated financial statements of Phoenix as 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
for the Subaccounts available as of the period ended December 31, 1997.
22
<PAGE>
PHOENIX HOME LIFE MUTUAL
INSURANCE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
23
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Report of Independent Accountants ............................................25
Consolidated Balance Sheet at December 31, 1997 and 1996 .....................26
Consolidated Statement of Income and Equity for the Years Ended
December 31, 1997, 1996 and 1995 ...........................................27
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 ............................................28
Notes to Consolidated Financial Statements ................................29-55
24
<PAGE>
One Financial Plaza Telephone 860 240 2000
Hartford, CT 06103
[LOGO] PRICE WATERHOUSE LLP [LOGO]
REPORT OF INDEPENDENT ACCOUNTANTS
February 11, 1998
To the Board of Directors
and Policyholders of
Phoenix Home Life Mutual Insurance Company
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income and equity and of cash flows present fairly,
in all material respects, the financial position of Phoenix Home Life Mutual
Insurance Company and its subsidiaries at December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/Price Waterhouse LLP
25
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Investments:
Held-to-maturity debt securities, at amortized cost $ 1,554,905 $ 1,555,685
Available-for-sale debt securities, at fair value 5,659,061 4,895,393
Equity securities, at fair value 373,388 235,351
Mortgage loans 927,501 947,076
Real estate 321,757 410,945
Policy loans 1,986,728 1,667,784
Other invested assets 262,675 218,119
Short-term investments 1,078,276 164,967
------------------ -----------------
Total investments 12,164,291 10,095,320
Cash and cash equivalents 159,307 172,895
Accrued investment income 149,566 135,475
Deferred policy acquisition costs 1,038,407 926,274
Premiums, accounts and notes receivable 99,468 79,354
Reinsurance recoverables 66,649 46,251
Property and equipment, net 156,190 137,231
Goodwill and other intangible assets, net 541,499 313,507
Other assets 61,087 134,589
Separate account assets 4,082,255 3,412,152
------------------ -----------------
Total assets $ 18,518,719 $ 15,453,048
================== =================
LIABILITIES
Policy liabilities and accruals $ 11,334,014 $ 9,462,039
Securities sold subject to repurchase agreements 137,473
Other indebtedness 471,085 490,430
Deferred income taxes 143,821 61,934
Other liabilities 585,467 499,940
Separate account liabilities 4,082,255 3,412,152
------------------ -----------------
Total liabilities 16,754,115 13,926,495
Contingent liabilities (Note 17)
MINORITY INTEREST IN NET ASSETS OF CONSOLIDATED SUBSIDIARIES 136,514 129,084
POLICYHOLDERS' EQUITY 1,628,090 1,397,469
------------------ -----------------
Total liabilities and policyholders' equity $ 18,518,719 $ 15,453,048
================== =================
</TABLE>
The accompanying notes are an integral part of these statements.
26
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
CONSOLIDATED STATEMENT OF INCOME AND EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Premiums $ 1,640,606 $ 1,518,822 $ 1,456,875
Insurance and investment product fees 468,030 421,058 324,459
Net investment income 736,874 689,890 662,468
Net realized investment gains 142,770 95,265 74,738
--------------- --------------- --------------
Total revenues 2,988,280 2,725,035 2,518,540
--------------- --------------- --------------
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss
adjustment expenses 1,633,633 1,529,573 1,471,030
Policyholder dividends 343,725 311,739 289,469
Policy acquisition expenses 248,726 242,363 221,339
Other operating expenses 531,597 452,399 419,231
--------------- --------------- --------------
Total benefits, losses and expenses 2,757,681 2,536,074 2,401,069
--------------- --------------- --------------
OPERATING INCOME 230,599 188,961 117,471
NON-OPERATING INCOME
Gain on merger transactions 40,580
--------------- --------------- --------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 230,599 188,961 158,051
Income taxes 57,069 79,331 43,352
--------------- --------------- --------------
INCOME BEFORE MINORITY INTEREST 173,530 109,630 114,699
Minority interest in net income of consolidated subsidiaries 8,882 8,902 950
--------------- --------------- --------------
NET INCOME 164,648 100,728 113,749
Change in net unrealized investment gains, net of income taxes 65,973 15,154 99,518
--------------- --------------- --------------
INCREASE IN POLICYHOLDERS' EQUITY 230,621 115,882 213,267
POLICYHOLDERS' EQUITY, BEGINNING OF YEAR 1,397,469 1,281,587 1,068,320
--------------- --------------- --------------
POLICYHOLDERS' EQUITY, END OF YEAR $ 1,628,090 $ 1,397,469 $ 1,281,587
=============== =============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
27
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 164,648 $ 100,728 $ 113,749
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATIONS
Net realized investment gains (142,770) (95,265) (74,738)
Net gain on mergers (40,580)
Amortization and depreciation 90,565 64,870 58,912
Deferred income taxes (benefit) 2,555 14,774 (16,236)
(Increase) decrease in receivables (49,172) 5,955 (30,130)
Increase in deferred policy acquisition costs (48,860) (61,985) (26,370)
Increase in policy liabilities and accruals 512,476 559,724 537,919
Increase (decrease) in other assets/other liabilities, net 44,269 (66,337) 95,880
Other, net 5,832 (652) 4,203
-------------- ----------------- --------------
Net cash provided by operating activities 579,543 521,812 622,609
-------------- ----------------- --------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from maturities or repayments of
available-for-sale debt securities 1,187,943 1,348,809 1,145,146
Proceeds from maturities or repayments of
held-to-maturity debt securities 217,302 118,596 143,773
Proceeds from disposals of equity securities 51,373 382,359 329,104
Proceeds from mortgage loan maturities or repayments 164,213 151,760 186,172
Proceeds from sale of other invested assets 218,874 127,440 148,546
Purchase of available-for-sale debt securities (1,689,479) (1,909,086) (1,614,387)
Purchase of held-to-maturity debt securities (225,722) (385,321) (247,354)
Purchase of equity securities (88,573) (215,104) (282,488)
Purchase of subsidiaries (246,400)
Purchase of mortgage loans (140,831) (200,683) (93,097)
Purchase of other invested assets (90,593) (157,077) (73,482)
Change in short term investments, net 58,384 110,503 (166,445)
Increase in policy loans (59,699) (49,912) (32,387)
Capital expenditures (41,504) (3,543) (18,449)
Other investing activities, net (1,750) (5,898) (12,704)
-------------- ----------------- --------------
Net cash used for investing activities (686,462) (687,157) (588,052)
-------------- ----------------- --------------
CASH FLOW FROM FINANCING ACTIVITIES
Withdrawals of contractholder deposit funds,
net of deposits and interest credited (17,902) (6,301) (154,100)
Proceeds from securities sold subject to
repurchase agreements 137,472
Proceeds from borrowings 215,359 226,082 177,922
Repayment of borrowings (234,703) (2,400) (12,726)
Dividends paid to minority shareholders (6,895) (6,245) (31,215)
-------------- ----------------- --------------
Net cash provided by (used for) financing activities 93,331 211,136 (20,119)
-------------- ----------------- --------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (13,588) 45,791 14,438
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 172,895 127,104 112,666
-------------- ----------------- --------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 159,307 $ 172,895 $ 127,104
============== ================= ==============
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid, net $ 76,167 $ 76,157 $ 33,399
Interest paid on indebtedness $ 32,300 $ 19,214 $ 8,100
</TABLE>
The accompanying notes are an integral part of these statements.
28
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
Phoenix Home Life Mutual Insurance Company (Phoenix) and its subsidiaries
market a wide range of insurance and investment products and services
including individual participating life insurance, variable life insurance,
group life and health insurance, life and health reinsurance, annuities,
investment advisory and mutual fund distribution services, insurance agency
and brokerage operations, primarily based in the United States. These
products and services are distributed among seven segments: Individual
Insurance, Group Life and Health Insurance, Life Reinsurance, General Lines
Brokerage, Securities Management, Real Estate Management and Other
Operations. See Note 10 for segment information.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Phoenix and
significant subsidiaries. Less than majority-owned entities in which
Phoenix has at least a 20% interest or those where Phoenix has significant
influence are reported on the equity basis.
These consolidated financial statements have been prepared in accordance
with generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates. Significant estimates used in
determining insurance and contractholder liabilities, related reinsurance
recoverables, income taxes, contingencies and valuation allowances for
investment assets are discussed throughout the Notes to Consolidated
Financial Statements. Significant intercompany accounts and transactions
have been eliminated. Certain reclassifications have been made to the 1996
and 1995 amounts to conform with the 1997 presentation.
VALUATION OF INVESTMENTS
Investments in debt securities include bonds, asset-backed securities
including collateralized mortgage obligations and redeemable preferred
stocks. Phoenix classifies its debt securities as either held-to-maturity
or available-for-sale investments. Debt securities held-to-maturity consist
of private placement bonds reported at amortized cost, net of impairments,
that management intends and has the ability to hold until maturity. Debt
securities available-for-sale are reported at fair value with unrealized
gains or losses included in policyholders' equity and consist of public
bonds and preferred stocks that management may not hold until maturity.
Debt securities are considered impaired when a decline in value is
considered to be other than temporary.
Equity securities are reported at fair value based principally on their
quoted market prices with unrealized gains or losses included in
policyholders' equity. Equity securities are considered impaired when a
decline in value is considered to be other than temporary.
Mortgage loans on real estate are stated at unpaid principal balances, net
of valuation reserves on impaired mortgages. A mortgage loan is considered
to be impaired if management believes it is probable that Phoenix will be
unable to collect all amounts of contractual interest and principal as
scheduled in the loan agreement. An impaired mortgage loan's fair value is
measured based on the present value of future cash flows discounted at the
loan's observable market price or at the fair value of the collateral. If
the fair value of a mortgage loan is less than the recorded investment in
the loan, the difference is recorded as a valuation reserve.
29
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Real estate, all of which is held for sale, is carried at the lower of cost
or current fair value less costs to sell. Fair value for real estate is
determined taking into consideration one or more of the following factors:
property valuation techniques utilizing discounted cash flows at the time
of stabilization including capital expenditures and stabilization costs;
sales of comparable properties; geographic location of the property and
related market conditions; and disposition costs.
Policy loans are generally carried at their unpaid principal balances and
are collateralized by the cash values of the related policies.
Short-term investments are carried at amortized cost, which approximates
fair value.
Other invested assets (primarily partnership interests) are carried at cost
adjusted for Phoenix's equity in undistributed earnings or losses since
acquisition, less allowances for other than temporary declines in value.
Realized investment gains and losses, other than those related to separate
accounts for which Phoenix does not bear the investment risk, are
determined by the specific identification method and reported as a
component of revenue. A realized investment loss is recorded when an
investment valuation reserve is determined. Valuation reserves are netted
against the asset categories to which they apply and changes in the
valuation reserves are included in realized investment gains and losses.
Unrealized investment gains and losses on debt securities and equity
securities classified as available-for-sale are included as a separate
component of policyholders' equity, net of deferred income taxes and
deferred policy acquisition costs.
FINANCIAL INSTRUMENTS
In the normal course of business, Phoenix enters into transactions
involving various types of financial instruments, including debt,
investments such as debt securities, mortgage loans and equity securities,
and off-balance sheet financial instruments such as investment and loan
commitments, financial guarantees, and interest rate swaps. These
instruments have credit risk and also may be subject to risk of loss due to
interest rate and market fluctuations.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand and money market
instruments.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions, underwriting,
distribution and policy issue expenses, all of which vary with and are
primarily related to the production of revenues, are deferred. Deferred
policy acquisition costs are subject to recoverability testing at the time
of policy issue and loss recognition at the end of each accounting period.
For individual participating life insurance business, deferred policy
acquisition costs are amortized in proportion to historical and anticipated
gross margins. Deviations from expected experience are reflected in
earnings in the period such deviations occur.
For universal life, limited pay and investment type contracts, deferred
policy acquisition costs are amortized in proportion to total estimated
gross profits over the expected average life of the contracts using
estimated gross margins arising principally from investment, mortality and
expense margins and surrender charges based on historical and anticipated
experience, updated at the end of each accounting period.
30
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill represents the excess of the cost of businesses acquired over the
fair value of their net assets. These costs are amortized on a
straight-line basis over periods, not exceeding 40 years, that correspond
with the benefits expected to be derived from the acquisitions. Other
intangible assets are amortized on a straight-line basis over the estimated
lives of such assets. Management periodically reevaluates the propriety of
the carrying value of goodwill and other intangible assets by comparing
estimates of future undiscounted cash flows to the carrying value of
assets. Assets are considered impaired if the carrying value exceeds the
expected future undiscounted cash flows.
SEPARATE ACCOUNTS
Separate account assets and liabilities are funds maintained in accounts to
meet specific investment objectives of contractholders who bear the
investment risk. Investment income and investment gains and losses accrue
directly to such contractholders. The assets of each account are legally
segregated and are not subject to claims that arise out of any other
business of Phoenix. The assets and liabilities are carried at market
value. Deposits, net investment income and realized investment gains and
losses for these accounts are excluded from revenues, and the related
liability increases are excluded from benefits and expenses. Amounts
assessed to the contractholders for management services are included in
revenues.
POLICY LIABILITIES AND ACCRUALS
Future policy benefits are liabilities for life, health and annuity
products. Such liabilities are established in amounts adequate to meet the
estimated future obligations of policies in force. Policy liabilities for
traditional life insurance are computed using the net level premium method
on the basis of actuarial assumptions as to assumed rates of interest,
mortality, morbidity and withdrawals. Liabilities for universal life
include deposits received from customers and investment earnings on their
fund balances, less administrative charges. Universal life fund balances
are also assessed mortality charges.
Liabilities for outstanding claims, losses and loss adjustment expenses are
amounts estimated to cover incurred losses. These liabilities are based on
individual case estimates for reported losses and estimates of unreported
losses based on past experience.
Unearned premiums relate primarily to individual participating life
insurance as well as group life, accident and health insurance premiums.
The premiums are reported as earned on a pro-rata basis over the contract
period. The unexpired portion of these premiums is recorded as unearned
premiums.
PREMIUM AND FEE REVENUE AND RELATED EXPENSES
Life insurance premiums, other than premiums for universal life and certain
annuity contracts, are recorded as premium revenue on a pro-rata basis over
each policy year. Benefits, losses and related expenses are matched with
premiums over the related contract periods. Revenues for investment-related
products consist of net investment income and contract charges assessed
against the fund values. Related benefit expenses primarily consist of net
investment income credited to the fund values after deduction for
investment and risk charges. Revenues for universal life products consist
of net investment income and mortality, administration and surrender
charges assessed against the fund values during the period. Related benefit
expenses include universal life benefit claims in excess of fund values and
net investment income credited to universal life fund values.
31
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
POLICYHOLDERS' DIVIDENDS
Certain life insurance policies contain dividend payment provisions that
enable the policyholder to participate in the earnings of Phoenix. The
amount of policyholders' dividends to be paid is determined annually by
Phoenix's board of directors. The aggregate amount of policyholders'
dividends is related to the actual interest, mortality, morbidity and
expense experience for the year and Phoenix's judgment as to the
appropriate level of statutory surplus to be retained. At the end of the
reporting period, Phoenix establishes a dividend liability for the pro-rata
portion of the dividends payable on the next anniversary of each policy.
Phoenix also establishes a liability for termination dividends.
INCOME TAXES
Phoenix and its eligible affiliated companies have elected to file a
life/nonlife consolidated federal income tax return for the years ended
December 31, 1997, 1996 and 1995. Entities included within the consolidated
group are segregated into either a life insurance or non-life insurance
company subgroup. The consolidation of these subgroups is subject to
certain statutory restrictions in the percentage of eligible non-life tax
losses that can be applied to offset life company taxable income.
Deferred income taxes result from temporary differences between the tax
basis of assets and liabilities and their recorded amounts for financial
reporting purposes. These differences result primarily from policy
liabilities and accruals, policy acquisition expenses, investment
impairment reserves, reserves for postretirement benefits and unrealized
gains or losses on investments.
As a mutual life insurance company, Phoenix is required to reduce its
income tax deduction for policyholder dividends by the differential
earnings amount, defined as the difference between the earnings rates of
stock and mutual companies applied against an adjusted base of
policyholders' surplus.
3. SIGNIFICANT TRANSACTIONS
CONFEDERATION LIFE
On December 31, 1997, Phoenix acquired the individual life and
single-premium deferred annuity business of the former Confederation Life
Insurance Company. Confederation Life, a Canadian mutual life insurer, was
placed in liquidation during August of 1994. The blocks of business
acquired were part of Confederation Life's U.S. branch operations and were
covered under the rehabilitation plan approved by a Michigan circuit court.
Approximately 40,000 policies with annualized premium of $122.8 million
were included in the acquisition under an assumption reinsurance contract.
Pursuant to initiation of the contract and the closing on December 31,
1997, Phoenix recorded all balances reinsured using the purchase accounting
method. The value of reserves and liabilities acquired totaled $1.4 billion
and exceeded the assets received, principally cash and short-term
investments. The difference of $141.3 million was recorded as deferred
acquisition costs.
PHOENIX DUFF & PHELPS CORPORATION
On September 3, 1997, Phoenix Duff & Phelps acquired Pasadena Capital
Corporation, the parent company of Roger Engemann & Associates, Inc.
Pasadena Capital manages $6.3 billion in assets, primarily individual
accounts.
32
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
On July 17, 1997, Phoenix Duff & Phelps acquired a majority interest in
GMG/Seneca Capital Management LLC, renamed Seneca Capital Management.
Seneca Capital Management manages $4.2 billion in assets.
Effective January 1, 1995, the money management businesses of Phoenix were
completely transferred to Phoenix Securities Group, Inc. an indirect
wholly-owned subsidiary. Phoenix Securities Group entered into contracts to
manage the investments of the general and separate accounts of Phoenix. On
November 1, 1995, Phoenix, through its subsidiary, PM Holdings, Inc.,
merged Phoenix Securities Group into Duff & Phelps Corporation, forming
Phoenix Duff & Phelps Corporation. The transaction was accounted for as a
reverse merger with the purchase accounting method applied to Duff &
Phelps' assets and liabilities. The purchase price was $190.7 million and
Phoenix Duff & Phelps recorded $93.1 million of goodwill, which is being
amortized over forty years using the straight-line method. PM Holdings owns
approximately 60% of the outstanding Phoenix Duff & Phelps common stock. In
addition, PM Holdings owns 45% of Phoenix Duff & Phelps' series A
convertible exchangeable preferred stock. PM Holdings recognized a
non-operating, non-cash, tax free gain on this transaction of $36.9 million
resulting from the realization of the appreciation of the stock exchanged
which is included in the gain on merger transactions in the Consolidated
Statement of Income and Equity.
SURPLUS NOTES
On November 25, 1996, Phoenix issued $175 million of surplus notes with a
6.95% interest rate scheduled to mature on December 1, 2006. There are no
sinking fund provisions in the notes. The notes are classified as debt in
the Consolidated Balance Sheet.
The notes were issued in accordance with Section 1307 of the New York
Insurance Law and, accordingly, interest and principal payments cannot be
made without the approval of the New York Insurance Department.
The notes were issued pursuant to Rule 144A under the Securities Act of
1933 underwritten by Bear, Stearns & Co. Inc., Chase Securities Inc. and
Merrill Lynch & Co. and are administered by Bank of New York as
registrar/paying agent.
ABERDEEN ASSET MANAGEMENT PLC
On March 25, 1996, Phoenix purchased common shares of Aberdeen Asset
Management PLC, a Scottish asset management firm for $26.4 million. Phoenix
transferred these shares to PM Holding in 1996. As of December 31, 1997, PM
Holdings owned 10% of Aberdeen Asset Management's outstanding common stock.
The investment is reported on the equity basis and classified as other
invested assets in the Consolidated Balance Sheet.
In addition, on April 15, 1996, Phoenix purchased a 7% convertible
subordinated note issued by Aberdeen Asset Management for $37.5 million.
The note, which matures on March 29, 2003, may be converted into shares
which would be equivalent to approximately 11% of Aberdeen Asset
Management's then outstanding common stock. The note is classified as
equity securities in the Consolidated Balance Sheet.
In the spring of 1996, Phoenix and Aberdeen Asset Management joined
together to form Phoenix-Aberdeen International Advisors, LLC, an SEC
registered investment advisor that, in conjunction with Phoenix Duff &
Phelps and Aberdeen Asset Management, develops and markets investment
products in the United States and the United Kingdom.
33
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. INVESTMENTS
Information pertaining to Phoenix's investments, net investment income and
realized and unrealized investment gains and losses follows:
DEBT AND EQUITY SECURITIES
The amortized cost and fair value of investments in debt and equity
securities as of December 31, 1997 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DEBT SECURITIES
HELD-TO-MATURITY:
State and political subdivision bonds $ 11,041 $ 569 $ (8) $ 11,602
Foreign government bonds 3,032 15 (115) 2,932
Corporate securities 1,521,033 103,267 (2,042) 1,622,258
Mortgage-backed securities 19,799 949 20,748
---------------- --------------- --------------- ----------------
Total 1,554,905 104,800 (2,165) 1,657,540
---------------- --------------- --------------- ----------------
AVAILABLE-FOR-SALE:
U.S. government and agency bonds 501,190 25,020 (636) 525,574
State and political subdivision bonds 474,123 32,896 (3,477) 503,542
Foreign government bonds 248,831 26,303 (5,992) 269,142
Corporate securities 1,384,503 97,943 (4,403) 1,478,043
Mortgage-backed securities 2,786,278 99,785 (3,303) 2,882,760
---------------- --------------- --------------- ----------------
Total 5,394,925 281,947 (17,811) 5,659,061
---------------- --------------- --------------- ----------------
TOTAL DEBT SECURITIES $ 6,949,830 $ 386,747 $ (19,976) $ 7,316,601
================ =============== =============== ================
EQUITY SECURITIES $ 195,717 $ 190,669 $ (12,998) $ 373,388
================ =============== =============== ================
</TABLE>
34
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The amortized cost and fair value of investments in debt and equity
securities as of December 31, 1996 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DEBT SECURITIES
HELD-TO-MATURITY:
State and political subdivision bonds $ 11,685 $ 5 $ (375) $ 11,315
Corporate securities 1,525,999 61,692 (13,405) 1,574,286
Mortgage-backed securities 18,001 1,037 (15) 19,023
----------------- ----------------- ----------------- -----------------
Total 1,555,685 62,734 (13,795) 1,604,624
----------------- ----------------- ----------------- -----------------
AVAILABLE-FOR-SALE:
U.S. government and agency bonds 561,017 13,970 (1,610) 573,377
State and political subdivision bonds 406,679 13,831 (1,154) 419,356
Foreign government bonds 174,298 31,441 (1,457) 204,282
Corporate securities 1,092,163 70,432 (7,968) 1,154,627
Mortgage-backed securities 2,509,232 60,321 (25,802) 2,543,751
----------------- ----------------- ----------------- -----------------
Total 4,743,389 189,995 (37,991) 4,895,393
----------------- ----------------- ----------------- -----------------
TOTAL DEBT SECURITIES $ 6,299,074 $ 252,729 $ (51,786) $ 6,500,017
================= ================= ================= =================
EQUITY SECURITIES $ 137,907 $ 100,258 $ (2,814) $ 235,351
================= ================= ================= =================
</TABLE>
35
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The amortized cost and fair value of debt securities, by contractual
maturity, as of December 31, 1997 are shown below. Actual maturities may
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties, or
Phoenix may have the right to put or sell the obligations back to the
issuers.
<TABLE>
<CAPTION>
HELD-TO-MATURITY AVAILABLE-FOR-SALE
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less $ 113,850 $ 116,684 $ 78,768 $ 79,054
Due after one year through five years 477,101 499,155 329,529 347,240
Due after five years through ten years 625,518 670,597 651,878 683,747
Due after ten years 318,637 350,357 1,548,472 1,666,260
Mortgage-backed securities 19,799 20,747 2,786,278 2,882,760
---------------- ---------------- ---------------- ----------------
Total $ 1,554,905 $ 1,657,540 $ 5,394,925 $ 5,659,061
================ ================ ================ ================
</TABLE>
Carrying values for investments in mortgage-backed securities, excluding
U.S. government guaranteed investments, were as follows:
DECEMBER 31,
1997 1996
(IN THOUSANDS)
Planned amortization class $ 554,425 $ 618,953
Asset-backed 594,128 490,018
Mezzanine 328,539 322,812
Commercial 556,155 413,571
Sequential pay 680,397 552,512
Pass through 132,522 105,282
Other 56,393 58,604
-------------- --------------
Total mortgage-backed securities $ 2,902,559 $ 2,561,752
============== ==============
Phoenix had 30% and 37% at December 31, 1997 and 1996, respectively, in
planned amortization class and mezzanine mortgage-backed securities which
have reasonably predictable cash flows and a relatively high degree of
prepayment protection.
36
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
MORTGAGE LOANS AND REAL ESTATE
Phoenix's mortgage loans and real estate are diversified by property type
and location and, for mortgage loans, by borrower. Mortgage loans are
collateralized by the related properties and are generally 75% of the
properties' value at the time the original loan is made.
Mortgage loans and real estate investments comprise the following property
types and geographic regions:
<TABLE>
<CAPTION>
MORTGAGE LOANS REAL ESTATE
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
PROPERTY TYPE:
Office buildings $ 246,500 $ 251,526 $ 180,743 $ 246,644
Retail 231,886 257,721 108,907 121,813
Apartment buildings 303,990 241,286 20,560 26,286
Industrial buildings 162,008 197,013 39,810 56,134
Other 18,917 47,929 238 7,577
Valuation allowances (35,800) (48,399) (28,501) (47,509)
--------------- -------------- ---------------- -------------
Total $ 927,501 $ 947,076 $ 321,757 $ 410,945
=============== ============== ================ =============
GEOGRAPHIC REGION:
Northeast $ 222,975 $ 260,146 $ 92,513 $ 103,761
Southeast 257,376 261,957 85,781 110,746
North central 189,163 158,902 63,751 86,070
South central 79,092 57,507 58,954 85,532
West 214,695 256,963 49,259 72,345
Valuation allowances (35,800) (48,399) (28,501) (47,509)
--------------- -------------- ---------------- -------------
Total $ 927,501 $ 947,076 $ 321,757 $ 410,945
=============== ============== ================ =============
</TABLE>
At December 31, 1997, scheduled mortgage loan maturities were as follows:
1998 - $151 million; 1999 - $88 million; 2000 - $97 million; 2001 - $92
million; 2002 - $41 million; and $494 million thereafter. Actual maturities
will differ from contractual maturities because borrowers may have the
right to prepay obligations with or without prepayment penalties and loans
may be refinanced. Phoenix refinanced $8.6 million and $28.9 million of its
mortgage loans during 1997 and 1996, respectively, based on terms which
differed from those granted to new borrowers.
37
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INVESTMENT VALUATION ALLOWANCES
Investment valuation allowances which have been deducted in arriving at
investment carrying values as presented in the Consolidated Balance Sheet
and changes thereto were as follows:
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
JANUARY 1, ADDITIONS DEDUCTIONS DECEMBER 31,
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1997
Mortgage loans $ 48,399 $ 6,731 $ (19,330) $ 35,800
Real estate 47,509 4,201 (23,209) 28,501
-------------- -------------------- --------------- --------------------
Total $ 95,908 $ 10,932 $ (42,539) $ 64,301
============== ==================== =============== ====================
1996
Mortgage loans $ 65,807 $ 7,640 $ (25,048) $ 48,399
Real estate 83,755 2,526 (38,772) 47,509
-------------- -------------------- --------------- --------------------
Total $ 149,562 $ 10,166 $ (63,820) $ 95,908
============== ==================== =============== ====================
</TABLE>
NON-INCOME PRODUCING MORTGAGE LOANS AND BONDS
The net carrying values of non-income producing mortgage loans were $7.0
million and $4.5 million at December 31, 1997 and 1996, respectively. There
were no non-income producing bonds at December 31, 1997 or 1996.
INTEREST RATE SWAPS
Phoenix enters into interest rate swap agreements, generally having
maturities of seven years or less, to hedge certain variable rate
investment income streams matched against fixed rate liability streams. The
notional amounts of these investments were $272.9 million and $73.1 million
at December 31, 1997 and 1996, respectively. Average received and average
paid rates were 7.00% and 6.63% for 1997.
These agreements do not require the exchange of underlying principal
amounts, and accordingly Phoenix's maximum exposure to credit risk is the
difference in interest payments exchanged. Management of Phoenix considers
the likelihood of any material loss on interest rate swaps to be remote.
38
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
OTHER INVESTED ASSETS
Other invested assets, consisting primarily of partnership interests and
equity in unconsolidated affiliates, were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
(IN THOUSANDS)
<S> <C> <C>
Venture capital equity partnerships $ 88,228 $ 66,284
Transportation and equipment leases 59,111 46,950
Investment in Aberdeen Asset Management 32,817 29,980
Investment in Beutel, Goodman & Co. Ltd. 31,214 34,541
Seed money in separate accounts 41,297 35,747
Other 10,008 4,617
------------- ------------
Total other invested assets $ 262,675 $ 218,119
============= ============
</TABLE>
NET INVESTMENT INCOME
The components of net investment income for the year ended December 31,
were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
(in thousands)
<S> <C> <C> <C>
Debt securities $ 509,702 $ 469,713 $ 437,521
Equity securities 4,277 4,689 1,787
Mortgage loans 85,662 84,318 92,283
Policy loans 122,562 117,742 115,055
Real estate 18,939 21,799 20,910
Other invested assets (415) 332 871
Short-term investments 18,768 18,688 21,974
------------ ------------ -------------
Sub-total 759,495 717,281 690,401
Less investment expenses 22,621 27,391 27,933
------------ ------------ -------------
Net investment income $ 736,874 $ 689,890 $ 662,468
============ ============ =============
</TABLE>
Investment income of $.7 million was not accrued on certain delinquent
mortgage loans and defaulted bonds at December 31, 1997. Phoenix does not
accrue interest income on impaired mortgage loans and impaired bonds when
the likelihood of collection is doubtful.
The payment terms of mortgage loans may from time to time be restructured
or modified. The investment in restructured mortgage loans, based on
amortized cost, amounted to $51.3 million and $61.5 million at December 31,
1997 and 1996, respectively. Interest income on restructured mortgage loans
that would have been recorded in accordance with the original terms of such
loans amounted to $5.3 million, $3.1 million and $6.6 million in 1997, 1996
and 1995, respectively. Actual interest income on these loans included in
net investment income was $3.8 million, $5.2 million and $6.4 million in
1997, 1996 and 1995, respectively.
39
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INVESTMENT GAINS AND LOSSES
Unrealized gains and losses on investments carried at fair value for the
year ended December 31, were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $ 112,194 $ (70,986) $ 476,352
Equity securities 74,547 40,803 24,527
Deferred policy acquisition costs (77,985) 51,528 (341,836)
Deferred income taxes 38,064 7,432 55,692
Other (Note 9) (4,719) 1,241 (3,833)
-------------- ------------------ ---------------
Net unrealized investment gains $ 65,973 $ 15,154 $ 99,518
============== ================== ===============
</TABLE>
Realized investment gains and losses for the year ended December 31, were
as follows:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $ 19,315 $ (10,476) $ 8,080
Equity securities 26,290 59,794 29,276
Mortgage loans 3,805 2,628 (262)
Real estate 44,668 24,711 20,535
Other invested assets 48,692 18,608 17,109
-------------- ------------------ ---------------
142,770 95,265 74,738
Income taxes 49,970 33,343 26,158
-------------- ------------------ ---------------
Net realized investment gains after taxes $ 92,800 $ 61,922 $ 48,580
============== ================== ===============
</TABLE>
The proceeds from sales of available-for-sale debt securities and the gross
realized gains and gross realized losses on those sales for the year ended
December 31, were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Proceeds from disposals $ 1,206,744 $ 1,348,809 $ 1,145,146
Gross gains on sales $ 48,100 $ 17,429 $ 27,980
Gross losses on sales $ 28,785 $ 27,905 $ 19,900
</TABLE>
40
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets were as follows:
DECEMBER 31,
1997 1996
(IN THOUSANDS)
Goodwill $ 387,517 $ 231,135
Investment management contracts 167,788 56,700
Client listings 45,441 41,410
Non-compete covenants 5,000 5,000
Intangible asset related to
pension plan benefits 18,032 19,835
Other 1,499 1,220
------------ ------------
625,277 355,300
Accumulated amortization (83,778) (41,793)
------------ ------------
Total $ 541,499 $ 313,507
============ ============
Phoenix Duff & Phelps' amounts included above were as follows:
DECEMBER 31,
1997 1996
(IN THOUSANDS)
Goodwill $ 321,932 $ 179,406
Investment management contracts 167,788 56,700
Non-compete covenants 5,000 5,000
Other 1,220 1,220
------------ ------------
495,940 242,326
Accumulated amortization (27,579) (13,198)
------------ ------------
Total $ 468,361 $ 229,128
============ ============
In 1997, American Phoenix Corporation wrote down the carrying value of its
goodwill and other intangible assets by $18.8 million. This impairment loss
is included in other operating expenses in the Consolidated Statement of
Income and Equity.
41
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS
Other than debt securities being held-to-maturity, financial instruments
that are subject to fair value disclosure requirements (insurance contracts
are excluded) are carried in the financial statements at amounts that
approximate fair value. The fair values presented for certain financial
instruments are estimates which, in many cases, may differ significantly
from the amounts which could be realized upon immediate liquidation. In
cases where market prices are not available, estimates of fair value are
based on discounted cash flow analyses which utilize current interest rates
for similar financial instruments which have comparable terms and credit
quality.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
CASH AND CASH EQUIVALENTS
For these short-term investments, the carrying amount approximates fair
value.
DEBT SECURITIES
Fair values are based on quoted market prices, where available, or quoted
market prices of comparable instruments. Fair values of private placement
debt securities are estimated using discounted cash flows that apply
interest rates currently being offered with similar terms to borrowers of
similar credit quality.
EQUITY SECURITIES
Fair values are based on quoted market prices, where available. If a quoted
market price is not available, fair values are estimated using independent
pricing sources or internally developed pricing models.
MORTGAGE LOANS
Fair values are calculated as the present value of scheduled payments, with
the discount based upon the Treasury rate comparable for the remaining loan
duration, plus a spread of between 175 and 450 basis points, depending on
the internal quality rating of the loan. For loans in foreclosure or
default, values were determined assuming principal recovery was the lower
of the loan balance or the estimated value of the underlying property.
POLICY LOANS
Fair values are estimated as the present value of loan interest and policy
loan repayments discounted at the ten year Treasury rate. Loan repayments
were assumed only to occur as a result of anticipated policy lapses, and it
was assumed that annual policy loan interest payments were made at the
guaranteed loan rate less 17.5 basis points. Discounting was at the ten
year Treasury rate, except for policy loans with a variable policy loan
rate. Variable policy loans have an interest rate that is reset annually
based upon market rates and therefore, book value is a reasonable
approximation of fair value.
42
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INVESTMENT CONTRACTS
In determining the fair value of guaranteed interest contracts, a discount
rate equal to the appropriate Treasury rate, plus 150 basis points, was
assumed to determine the present value of projected contractual liability
payments through final maturity.
The fair value of deferred annuities and supplementary contracts without
life contingencies with an interest guarantee of one year or less is valued
at the amount of the policy reserve. In determining the fair value of
deferred annuities and supplementary contracts without life contingencies
with interest guarantees greater than one year, a discount rate equal to
the appropriate Treasury rate, plus 150 basis points, was used to determine
the present value of the projected account value of the policy at the end
of the current guarantee period.
Deposit type funds, including pension deposit administration contracts,
dividend accumulations, and other funds left on deposit not involving life
contingencies, have interest guarantees of less than one year for which
interest credited is closely tied to rates earned on owned assets. For such
liabilities, fair value is assumed to be equal to the stated liability
balances.
DEBT
The carrying value of debt reported on the balance sheet approximates fair
value.
The estimated fair values of the financial instruments as of December 31,
were as follows:
<TABLE>
<CAPTION>
1997 1996
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 159,307 $ 159,307 $ 172,895 $ 172,895
Short-term investments 1,078,276 1,078,276 164,967 164,967
Debt securities 7,213,966 7,316,601 6,451,078 6,500,017
Equity securities 373,388 373,388 235,351 235,351
Mortgage loans 927,501 956,041 947,076 986,900
Policy loans 1,986,728 2,104,704 1,667,784 1,645,899
--------------- ---------------- -------------- --------------
Total financial assets $ 11,739,166 $ 11,988,317 $ 9,639,151 $ 9,706,029
=============== ================ ============== ==============
Financial liabilities:
Policy liabilities $ 902,200 $ 902,200 $ 875,200 $ 875,100
Securities sold subject to repurchase
agreements 137,473 137,473
Other indebtedness 471,085 471,085 490,430 490,430
--------------- ---------------- -------------- --------------
Total financial liabilities $ 1,510,758 $ 1,510,758 $ 1,365,630 $ 1,365,530
=============== ================ ============== ==============
</TABLE>
43
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
7. OTHER INDEBTEDNESS
DECEMBER 31,
1997 1996
(IN THOUSANDS)
Short-term debt $ 15,539 $ 12,455
Bank borrowings 263,732 280,845
Notes payable 14,632 19,522
Surplus notes 175,000 175,000
Secured debt 2,182 2,608
------------ ------------
Total other indebtedness $ 471,085 $ 490,430
============ ============
Phoenix has various lines of credit established with major commercial
banks. As of December 31, 1997, Phoenix had outstanding balances totaling
$264.5 million. The total unused credit was $145.3 million. Interest rates
ranged from 5.42% to 6.63% in 1997.
On November 25, 1996, Phoenix issued $175 million of surplus notes (See
Note 3).
Maturities of other indebtedness are as follows: 1998 - $15.5 million; 1999
- $55 million; 2000 - $4 million; 2001 - $29 million; 2002 - $192 million;
2003 and thereafter - $175.5 million.
Interest expense was $32.5 million, $18.0 million and $7.7 million for the
years ended December 31, 1997, 1996 and 1995, respectively.
8. INCOME TAXES
A summary of income taxes (benefits) in the Consolidated Statement of
Income and Equity for the year ended December 31, was as follows:
1997 1996 1995
(IN THOUSANDS)
Income taxes
Current $ 54,514 $ 59,673 $ 59,590
Deferred 2,555 19,658 (16,238)
----------- ---------- ------------
Total $ 57,069 $ 79,331 $ 43,352
=========== ========== ============
44
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The income taxes attributable to the consolidated results of operations are
different than the amounts determined by multiplying income before taxes by
the statutory income tax rate. The sources of the difference and the tax
effects of each for the year ended December 31, were as follows (in
thousands, aside from the percentages):
<TABLE>
<CAPTION>
1997 1996 1995
% % %
<S> <C> <C> <C> <C> <C> <C>
Income tax expense at statutory rate $ 80,710 35 $ 66,136 35 $ 55,318 35
Non-taxable gain on Phoenix Duff &
Phelps merger (14,203) (9)
Dividend received deduction and
tax-exempt interest (2,513) (1) (2,107) (1) (623)
Other, net (8,017) (4) 2,736 1 2,860 1
------------ ----- ------------ ----- ------------ -----
70,180 30 66,765 35 43,352 27
Differential earnings (equity tax) (13,111) (5) 12,566 7
------------ ----- ------------ ----- ------------ -----
Income taxes $ 57,069 25 $ 79,331 42 $ 43,352 27
============ ===== ============ ===== ============ =====
</TABLE>
45
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The deferred income tax liability (asset) represents the tax effects of
temporary differences attributable to the consolidated tax return group.
The components were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
(IN THOUSANDS)
<S> <C> <C>
Deferred policy acquisition costs $ 303,500 $ 220,135
Unearned premium/deferred revenue (139,817) (131,513)
Impairment reserves (26,102) (43,331)
Pension and other postretirement benefits (56,643) (58,230)
Investments 77,202 50,219
Future policyholder benefits (140,980) (37,904)
Other 45,053 15,633
------------- -------------
62,213 15,009
Net unrealized investment gains 84,134 48,320
Minimum pension liability (2,526) (1,395)
Foreign tax credit (1,109)
------------- -------------
Deferred income tax liability, net
before valuation allowance 143,821 60,825
Valuation allowance 1,109
------------- -------------
Deferred income tax liability, net $ 143,821 $ 61,934
============= =============
</TABLE>
Gross deferred income tax assets totaled $366 million and $274 million at
December 31, 1997 and 1996, respectively. Gross deferred income tax
liabilities totaled $510 million and $336 million at December 31, 1997 and
1996, respectively. It is management's assessment, based on Phoenix's
earnings and projected future taxable income, that it is more likely than
not that deferred income tax assets at December 31, 1997 and 1996, with the
exception of the foreign tax credit, will be realized.
The Internal Revenue Service is currently examining Phoenix's tax returns
for 1995 and 1996. Management does not believe that there will be a
material adverse effect on the financial statements as a result of pending
tax matters.
46
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. PENSION AND OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT PLANS
PENSION PLANS
Phoenix has a multi-employer, non-contributory, defined benefit pension
plan covering substantially all of its employees. Retirement benefits are a
function of both years of service and level of compensation. Phoenix also
sponsors a non-qualified supplemental defined benefit plan to provide
benefits in excess of amounts allowed pursuant to Internal Revenue Code.
Phoenix's funding policy is to contribute annually an amount equal to at
least the minimum required contribution in accordance with minimum funding
standards established by the Employee Retirement Income Security Act of
1974. Contributions are intended to provide not only for benefits
attributable to service to date, but also for service expected to be earned
in the future.
Components of net periodic pension cost for the year ended December 31,
were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost - benefits earned during the year $ 10,278 $ 10,076 $ 9,599
Interest accrued on projected benefit obligation 22,650 22,660 19,880
Actual return on assets (53,093) (38,788) (62,567)
Net amortization and deferral 30,488 17,318 45,807
------------ ------------- ------------
Net periodic pension cost $ 10,323 $ 11,266 $ 12,719
============ ============= ============
</TABLE>
In 1996, Phoenix offered an early retirement program which granted an
additional benefit of five years of age and service. As a result of the
early retirement program, Phoenix recorded an additional pension expense of
$8.7 million for the year ended December 31, 1996.
47
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The funded status of the plan for which assets exceeded accumulated benefit
obligations was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of vested benefit obligation $ 236,443 $ 213,148
Actuarial present value of non-vested benefit obligation 16,312 14,828
------------- ------------
Accumulated benefit obligation 252,755 227,976
Present value effect of future salary increases 32,316 33,910
------------- ------------
Projected benefit obligation $ 285,071 $ 261,886
============= ============
Plan assets at fair value $ 321,555 $ 292,070
============= ============
Plan assets in excess of projected benefit obligation $ (36,484) $ (30,184)
Unrecognized net gain from past experience 60,759 52,312
Unrecognized prior service benefit 52 240
Unamortized transition asset 16,586 19,745
------------- ------------
Net pension liability (included in other liabilities) $ 40,913 $ 42,113
============= ============
</TABLE>
At December 31, 1997 and 1996, the non-qualified plan was unfunded and had
projected benefit obligations of $50.4 million and $50.0 million,
respectively. The accumulated benefit obligations as of December 31, 1997
and 1996 related to this plan were $42.8 million and $37.4 million,
respectively, and are included in other liabilities.
Phoenix recorded, as a reduction of policyholders' equity, an additional
minimum pension liability of $4.7 million and $2.8 million, net of income
taxes, at December 31, 1997 and 1996, respectively, representing the excess
of accumulated benefit obligations over the fair value of plan assets and
accrued pension liabilities for the non-qualified plan. Phoenix has also
recorded an intangible asset of $18.0 million and $19.8 million as of
December 31, 1997 and 1996 related to the non-qualified plan.
The discount rate and rate of increase in future compensation levels used
in determining the actuarial present value of the projected benefit
obligation were 7.0% and 4.0%, for 1997 and 7.5% and 4.5% for 1996. The
discount rate assumption for 1997 was determined based on a study that
matched available high quality investment securities with the expected
timing of pension liability payments. The expected long-term rate of return
on retirement plan assets was 8.0%.
The pension plan's assets include corporate and government debt securities,
equity securities, real estate, venture capital funds, and shares of mutual
funds.
Phoenix also sponsors savings plans for its employees and agents which are
qualified under Internal Revenue Code Section 401(k). Employees and agents
may contribute a portion of their annual salary, subject to limitation, to
the plans. Phoenix contributes an additional amount, subject to limitation,
based on the voluntary contribution of the employee or agent. Company
contributions charged to expense with respect to these plans during the
years ended December 31, 1997, 1996 and 1995 were $3.8 million, $4.2
million and $4.2 million, respectively.
48
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
OTHER POSTRETIREMENT BENEFIT PLANS
In addition to Phoenix's pension plans, Phoenix currently provides certain
health care and life insurance benefits to retired employees, spouses and
other eligible dependents through various plans sponsored by Phoenix. A
substantial portion of Phoenix's employees may become eligible for these
benefits upon retirement. The health care plans have varying copayments and
deductibles, depending on the plan. These plans are unfunded.
Phoenix recognizes the costs and obligations of postretirement benefits
other than pensions over the employees' service period ending with the date
an employee is fully eligible to receive benefits.
The plan's funded status reconciled with amounts recognized in Phoenix's
Consolidated Balance Sheet, was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees $ 35,900 $ 30,576
Fully eligible active plan participants 6,889 11,466
Other active plan participants 23,829 21,614
------------ -----------
Total accumulated postretirement benefit obligation 66,618 63,656
Unrecognized net gain from past experience 28,037 29,173
------------ -----------
Accrued postretirement benefit liability $ 94,655 $ 92,829
============ ===========
</TABLE>
The components of net periodic postretirement benefit cost for the year
ended December 31, were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost - benefits earned during year $ 3,136 $ 2,765 $ 3,366
Interest cost accrued on benefit obligation 4,441 4,547 5,275
Net amortization (1,527) (1,577) (458)
---------- ---------- ---------
Net periodic postretirement benefit cost $ 6,050 $ 5,735 $ 8,183
========== ========== =========
</TABLE>
49
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In addition to the net periodic postretirement benefit cost, Phoenix
expensed an additional $3.0 million for postretirement benefits related to
the early retirement program for the year ended December 31, 1996.
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.0% at December 31, 1997 and 7.5% at December 31,
1996.
For purposes of measuring the accumulated postretirement benefit obligation
at December 31, 1997, health care costs were assumed to increase 9.5% in
1997, declining thereafter until the ultimate rate of 5.5% is reached in
2002 and remains at that level thereafter. For purposes of measuring the
accumulated postretirement benefit obligation at December 31, 1996, health
care costs were assumed to increase 9.5% in 1996, declining thereafter
until the ultimate rate of 5.5% is reached in 2002 and remained at that
level thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rates by one percentage point in each year
would increase the accumulated postretirement benefit obligation by $5.3
million and the annual service and interest cost by $.8 million, before
taxes. Gains and losses that occur because actual experience differs from
the estimates are amortized over the average future service period of
employees.
OTHER POSTEMPLOYMENT BENEFITS
Phoenix recognizes the costs and obligations of severance, disability and
related life insurance and health care benefits to be paid to inactive or
former employees after employment but before retirement. Postemployment
benefit expense was $.4 million for 1997, $.4 million for 1996 and $.5
million for 1995.
50
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
10. SEGMENT INFORMATION
Phoenix operates principally in seven segments: Individual Insurance, Group
Life and Health Insurance, Life Reinsurance, General Lines Brokerage,
Securities Management, Real Estate Management and Other Operations. Other
Operations includes unallocated investment income, expenses and realized
investment gains related to capital in excess of segment requirements;
assets include equity securities.
Summarized below is financial information with respect to the business
segments:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Individual Insurance $ 2,028,230 $ 1,796,572 $ 1,752,338
Group Life and Health Insurance 459,405 462,551 421,771
Life Reinsurance 162,843 143,314 128,813
General Lines Brokerage 64,093 61,809 40,977
Securities Management 177,894 164,966 112,206
Real Estate Management 15,319 13,550 13,562
Other Operations 80,496 82,273 48,873
----------------- ----------------- -----------------
Total $ 2,988,280 $ 2,725,035 $ 2,518,540
================= ================= =================
OPERATING INCOME
Individual Insurance $ 132,308 $ 63,013 $ 43,094
Group Life and Health Insurance 31,276 11,220 19,921
Life Reinsurance 10,592 8,078 17,656
General Lines Brokerage (21,652) (2,935) (1,887)
Securities Management 38,813 44,440 23,667
Real Estate Management (2,433) (3,783) (184)
Other Operations 41,695 68,928 15,204
----------------- ----------------- -----------------
Total $ 230,599 $ 188,961 $ 117,471
================= ================= =================
IDENTIFIABLE ASSETS
Individual Insurance $ 15,679,598 $ 12,961,648
Group Life and Health Insurance 655,800 596,800
Life Reinsurance 313,500 304,300
General Lines Brokerage 111,900 117,300
Securities Management 615,112 376,000
Real Estate Management 278,500 319,400
Other Operations 864,309 777,600
----------------- -----------------
Total $ 18,518,719 $ 15,453,048
================= =================
</TABLE>
51
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
11. LEASES AND RENTALS
Rental expenses for operating leases, principally with respect to
buildings, amounted to $14.9 million, $14.8 million and $14.6 million in
1997, 1996, and 1995, respectively. Future minimum rental payments under
non-cancelable operating leases were approximately $51.0 million as of
December 31, 1997, payable as follows: 1998 - $15.7 million; 1999 - $12.9
million; 2000 - $10.1 million; 2001 - $5.6 million; 2002 - $3.6 million;
and $3.1 million thereafter.
12. PROPERTY AND EQUIPMENT
Property, equipment and leasehold improvements, consisting primarily of
office buildings occupied by Phoenix, are stated at depreciated cost. Real
estate occupied by Phoenix was $109.0 million and $97.2 million,
respectively, at December 31, 1997 and 1996. Phoenix provides for
depreciation using straight line and accelerated methods over the estimated
useful lives of the related assets which generally range from five to forty
years. Accumulated depreciation and amortization was $164.4 million and
$144.1 million at December 31, 1997 and 1996, respectively.
13. DIRECT BUSINESS WRITTEN AND REINSURANCE
As is customary practice in the insurance industry, Phoenix assumes and
cedes reinsurance as a means of diversifying underwriting risk. The maximum
amount of individual life insurance retained by Phoenix on any one life is
$8 million for single life and joint first-to-die policies and $10 million
for joint last-to-die policies, with excess amounts ceded to reinsurers.
For reinsurance ceded, Phoenix remains liable in the event that assuming
reinsurers are unable to meet the contractual obligations. Amounts
recoverable from reinsurers are estimated in a manner consistent with the
claim liability associated with the reinsured policy.
Additional information on direct business written and reinsurance assumed
and ceded for the years ended December 31, was as follows:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Direct premiums $ 1,592,800 $ 1,473,869 $ 1,455,459
Reinsurance assumed 329,927 276,630 271,498
Reinsurance ceded (282,121) (231,677) (270,082)
----------------- -------------------- -----------------
Net premiums $ 1,640,606 $ 1,518,822 $ 1,456,875
================= ==================== =================
Direct policy and contract claims incurred $ 626,834 $ 575,824 $ 605,545
Reinsurance assumed 410,704 170,058 256,529
Reinsurance ceded (373,127) (160,646) (292,357)
----------------- -------------------- -----------------
Net policy and contract claims incurred $ 664,411 $ 585,236 $ 569,717
================= ==================== =================
Direct life insurance in force $ 120,394,664 $ 108,816,856 $ 102,606,749
Reinsurance assumed 84,806,585 61,109,836 36,724,852
Reinsurance ceded (74,764,639) (51,525,976) (34,093,090)
----------------- -------------------- -----------------
Net insurance in force $ 130,436,610 $ 118,400,716 $ 105,238,511
================= ==================== =================
</TABLE>
52
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Irrevocable letters of credit aggregating $134.8 million at December 31,
1997 have been arranged with United States commercial banks in favor of
Phoenix to collateralize the ceded reserves.
14. PARTICIPATING LIFE INSURANCE
Participating life insurance in force was 79.6% and 80.0% of the face value
of total individual life insurance in force at December 31, 1997 and 1996,
respectively. The premiums on participating life insurance policies were
83.5%, 84.1% and 84.7% of total individual life insurance premiums in 1997,
1996 and 1995, respectively.
15. DEFERRED POLICY ACQUISITION COSTS
The following reflects the amount of policy acquisition costs deferred and
amortized for the years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $ 926,274 $ 816,128 $ 1,128,227
Acquisition cost deferred 295,189 153,873 143,519
Amortized to expense during the year (105,071) (95,255) (113,788)
Adjustment to equity during the year (77,985) 51,528 (341,830)
----------------- -------------- ----------------
Balance at end of year $ 1,038,407 $ 926,274 $ 816,128
================= ============== ================
</TABLE>
16. MINORITY INTEREST
Phoenix's interests in Phoenix Duff & Phelps Corporation and American
Phoenix Corporation, through its wholly-owned subsidiary PM Holdings are
represented by ownership of approximately 60% and 92%, respectively, of the
outstanding shares of common stock at December 31, 1997. Earnings and
policyholders' equity attributable to minority shareholders are included in
minority interest in the consolidated financial statements along with
Phoenix Duff & Phelps' preferred stock.
17. CONTINGENCIES
FINANCIAL GUARANTEES
Phoenix is contingently liable for financial guarantees provided in the
ordinary course of business on the repayment of principal and interest on
certain industrial revenue bonds. The contractual amounts of financial
guarantees reflect Phoenix's maximum exposure to credit loss in the event
of nonperformance. The principal amount of bonds guaranteed by Phoenix at
December 31, 1997 and 1996 was $88.7 million and $88.8 million,
respectively. Management believes that any loss contingencies which may
arise from Phoenix's financial guarantees would not have a material adverse
effect on Phoenix's liquidity or financial condition.
53
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
LITIGATION
In 1996, Phoenix announced the settlement of a class action suit which was
approved by a New York State Supreme Court judge on January 3, 1997. The
suit related to the sale of individual participating life insurance and
universal life insurance policies from 1980 to 1995. An after tax provision
of $25 million was recorded in 1995. In addition, $7 million after-tax was
expensed in 1996. Phoenix estimates the cost of settlement to be $40
million after tax. Management believes, after consideration of the
provisions made in these financial statements, this suit will not have a
material effect on Phoenix's consolidated financial position.
Phoenix is a defendant in various legal proceedings arising in the normal
course of business. In the opinion of management, based on the advice of
legal counsel after consideration of the provisions made in these financial
statements, the ultimate resolution of these proceedings will not have a
material effect on Phoenix's consolidated financial position.
18. STATUTORY FINANCIAL INFORMATION
The insurance subsidiaries are required to file annual statements with
state regulatory authorities prepared on an accounting basis prescribed or
permitted by such authorities. As of December 31, 1997, there were no
material practices not prescribed by the Insurance Department of the State
of New York. Statutory surplus differs from policyholders' equity reported
in accordance with GAAP for life insurance companies primarily because
policy acquisition costs are expensed when incurred, investment reserves
are based on different assumptions, surplus notes are not included in
policyholders' equity, postretirement benefit costs are based on different
assumptions and reflect a different method of adoption, life insurance
reserves are based on different assumptions and income tax expense reflects
only taxes paid or currently payable.
The following reconciles the statutory net income of Phoenix as reported to
regulatory authorities to the net income as reported in these financial
statements for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory net income $ 60,702 $ 72,961 $ 64,198
Deferred policy acquisition costs, net 48,821 58,618 29,766
Future policy benefits (9,145) (16,793) (15,763)
Pension and postretirement expenses (7,955) (23,275) (12,691)
Investment valuation allowances 88,813 76,631 56,745
Interest maintenance reserve 17,544 (5,158) 5,829
Deferred income taxes (36,250) (67,064) (10,021)
Other, net 2,118 4,808 (4,314)
------------ ------------- ------------
Net income, as reported $ 164,648 $ 100,728 $ 113,749
============ ============= ============
</TABLE>
54
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following reconciles the statutory surplus and asset valuation reserve
(AVR) of Phoenix as reported to regulatory authorities to policyholders'
equity as reported in these financial statements:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
(IN THOUSANDS)
<S> <C> <C>
Statutory surplus, surplus notes and AVR $ 1,152,820 $ 1,102,200
Deferred policy acquisition costs, net 1,227,782 1,037,664
Future policy benefits (395,436) (379,820)
Pension and postretirement expenses (169,383) (152,112)
Investment valuation allowances (40,032) (139,562)
Interest maintenance reserve 33,794 6,897
Deferred income taxes (12,051) 82,069
Surplus notes (157,500) (157,500)
Other, net (11,904) (2,367)
-------------- --------------
Policyholders' equity, as reported $ 1,628,090 $ 1,397,469
============== ==============
</TABLE>
The New York State Insurance Department recognizes only statutory
accounting practices for determining and reporting the financial condition
and results of operations of an insurance company, for determining its
solvency under New York Insurance Law, and for determining whether its
financial condition warrants the payment of a dividend to its
policyholders. No consideration is given by the Department to financial
statements prepared in accordance with generally accepted accounting
principles in making such determinations.
55
<PAGE>
PHOENIX HOME LIFE VARIABLE
UNIVERSAL LIFE ACCOUNT
FINANCIAL STATEMENTS
DECEMBER 31, 1997
56
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
Multi-Sector
Money Market Growth Fixed Income
Sub-Account Sub-Account Sub-Account
---------------- ---------------- ---------------
<S> <C> <C> <C>
Assets
Investments at cost ........................................... $ 508,173 $ 27,329,082 $ 3,527,899
============ ============ ===========
Investment in The Phoenix Edge Series Fund, at market ......... $ 508,173 $ 33,208,994 $ 3,722,616
------------ ------------ -----------
Total assets ................................................. 508,173 33,208,994 3,722,616
Liabilities
Accrued expenses to related party ............................. 216 13,843 1,570
------------ ------------ -----------
Net assets ..................................................... $ 507,957 $ 33,195,151 $ 3,721,046
============ ============ ===========
Accumulation units outstanding ................................. 291,427 7,653,211 1,451,093
============ ============ ===========
Unit value ..................................................... $ 1.742998 $ 4.337415 $ 2.564306
============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
Strategic Allocation International Balanced
Sub-Account Sub-Account Sub-Account
---------------------- --------------- --------------
<S> <C> <C> <C>
Assets
Investments at cost ........................................... $ 16,061,647 $ 862,272 $ 161,730
============ ============ ==========
Investment in The Phoenix Edge Series Fund, at market ......... $ 17,509,418 $ 1,206,463 $ 192,540
------------ ------------ ----------
Total assets ................................................. 17,509,418 1,206,463 192,540
Liabilities
Accrued expenses to related party ............................. 7,334 502 81
------------ ------------ ----------
Net assets ..................................................... $ 17,502,084 $ 1,205,961 $ 192,459
============ ============ ==========
Accumulation units outstanding ................................. 6,055,691 650,153 107,226
============ ============ ==========
Unit value ..................................................... $ 2.890188 $ 1.854890 $ 1.794889
============ ============ ==========
</TABLE>
<TABLE>
<CAPTION>
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account Sub-Account Sub-Account
------------- ----------------- --------------
<S> <C> <C> <C>
Assets
Investments at cost ........................................... $ 101,004 $ 440,974 $ 30,585
========== ========== ==========
Investment in The Phoenix Edge Series Fund, at market ......... $ 113,104 $ 427,183 $ 20,015
---------- ---------- ----------
Total assets ................................................. 113,104 427,183 20,015
Liabilities
Accrued expenses to related party ............................. 47 179 8
---------- ---------- ----------
Net assets ..................................................... $ 113,057 $ 427,004 $ 20,007
========== ========== ==========
Accumulation units outstanding ................................. 71,147 365,357 29,593
========== ========== ==========
Unit value ..................................................... $ 1.589050 $ 1.168732 $ 0.676069
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Wanger Wanger
Enhanced International U.S.
Index Small Cap Small Cap
Sub-Account Sub-Account Sub-Account
------------ --------------- ------------
Assets
Investments at cost ........................................... $ 58,399 $ 155,309 $ 445,184
============ ========= =========
Investment in The Phoenix Edge Series Fund, at market ......... $ 58,674 -- --
Investment in Wanger Advisors Trust, at market ................ -- $ 146,440 $ 506,408
------------ --------- ---------
Total assets ................................................. 58,674 146,440 506,408
Liabilities
Accrued expenses to related party ............................. 25 63 212
------------ --------- ---------
Net assets ..................................................... $ 58,649 $ 146,377 $ 506,196
============ ========= =========
Accumulation units outstanding ................................. 57,784 145,518 384,787
============ ========= =========
Unit value ..................................................... $ 1.014977 $ 1.005906 $ 1.315522
============ ========== ==========
</TABLE>
See Notes to Financial Statements
57
<PAGE>
STATEMENT OF OPERATIONS
For the period ended December 31, 1997
<TABLE>
<CAPTION>
Multi-Sector
Money Market Growth Fixed Income
Sub-Account Sub-Account Sub-Account
-------------- ------------- -------------
<S> <C> <C> <C>
Investment income
Distributions ............................................... $36,354 $ 194,665 $253,825
Expenses
Mortality and expense risk charges .......................... 3,606 154,848 17,447
------- ---------- --------
Net investment income ........................................ 32,748 39,817 236,378
------- ---------- --------
Net realized gain from share transactions .................... -- 25,845 1,533
Net realized gain distribution from Fund ..................... -- 5,232,320 94,635
Net unrealized appreciation on investment .................... -- 406,199 13,298
------- ---------- --------
Net gain on investments ...................................... -- 5,664,364 109,466
------- ---------- --------
Net increase in net assets resulting from operations ......... $32,748 $5,704,181 $345,844
======= ========== ========
</TABLE>
<TABLE>
<CAPTION>
Strategic
Allocation International Balanced
Sub-Account Sub-Account Sub-Account
------------- --------------- ------------
<S> <C> <C> <C>
Investment income
Distributions ................................................... $ 361,833 $ 20,726 $ 7,594
Expenses
Mortality and expense risk charges .............................. 82,631 6,980 1,259
---------- --------- ---------
Net investment income ............................................ 279,202 13,746 6,335
---------- --------- ---------
Net realized gain from share transactions ........................ 34,932 51,837 13,692
Net realized gain distribution from Fund ......................... 2,162,711 122,100 21,954
Net unrealized appreciation (depreciation) on investment ......... 531,049 (41,169) (10,412)
---------- --------- ---------
Net gain on investments .......................................... 2,728,692 132,768 25,234
---------- --------- ---------
Net increase in net assets resulting from operations ............. $3,007,894 $ 146,514 $ 31,569
========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account Sub-Account Sub-Account(1)
------------- ----------------- ---------------
<S> <C> <C> <C>
Investment income
Distributions .......................................................... $ 2,974 $ 1,291 $ 902
Expenses
Mortality and expense risk charges ..................................... 416 1,494 159
------- --------- ---------
Net investment income (loss) ............................................ 2,558 (203) 743
------- --------- ---------
Net realized gain (loss) from share transactions ........................ (107) 2,884 (715)
Net realized gain distribution from Fund ................................ 3,817 49,324 20
Net unrealized appreciation (depreciation) on investment ................ 9,852 (15,711) (10,570)
------- --------- ---------
Net gain (loss) on investments .......................................... 13,562 36,497 (11,265)
------- --------- ---------
Net increase (decrease) in net assets resulting from operations ......... $16,120 $ 36,294 $ (10,522)
======= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Wanger Wanger
Enhanced International U.S.
Index Small Cap Small Cap
Sub-Account(2) Sub-Account Sub-Account
---------------- --------------- ------------
<S> <C> <C> <C>
Investment income
Distributions .......................................................... $283 $ 2,612 $ 5,514
Expenses
Mortality and expense risk charges ..................................... 76 649 1,534
---- -------- -------
Net investment income ................................................... 207 1,963 3,980
---- -------- -------
Net realized gain (loss) from share transactions ........................ (8) (68) 814
Net realized gain distribution from Fund ................................ 266 -- --
Net unrealized appreciation (depreciation) on investment ................ 275 (9,128) 60,894
----- -------- -------
Net gain (loss) on investments .......................................... 533 (9,196) 61,708
----- -------- -------
Net increase (decrease) in net assets resulting from operations ......... $740 $ (7,233) 65,688
===== ======== =======
</TABLE>
(1) From inception January 6, 1997 to December 31, 1997
(2) From inception September 22, 1997 to December 31, 1997
See Notes to Financial Statements
58
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1997
<TABLE>
<CAPTION>
Multi-Sector
Money Market Growth Fixed Income
Sub-Account Sub-Account Sub-Account
-------------- --------------- -------------
<S> <C> <C> <C>
From operations
Net investment income .......................................... $ 32,748 $ 39,817 $ 236,378
Net realized gain .............................................. -- 5,258,165 96,168
Net unrealized appreciation .................................... -- 406,199 13,298
----------- ----------- ----------
Net increase in net assets resulting from operations ........... 32,748 5,704,181 345,844
----------- ----------- ----------
From accumulation unit transactions
Participant deposits ........................................... 20,734 31,261 1,248
Participant transfers .......................................... (485,415) (14,615) 102,450
Participant withdrawals ........................................ (38,213) (863,532) (58,294)
----------- ----------- ----------
Net increase (decrease) in net assets resulting from participant
transactions .................................................. (502,894) (846,886) 45,404
----------- ----------- ----------
Net increase (decrease) in net assets .......................... (470,146) 4,857,295 391,248
Net assets
Beginning of period ............................................ 978,103 28,337,856 3,329,798
----------- ----------- ----------
End of period .................................................. $ 507,957 $33,195,151 $3,721,046
=========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Strategic
Allocation International Balanced
Sub-Account Sub-Account Sub-Account
--------------- --------------- --------------
<S> <C> <C> <C>
From operations
Net investment income ................................................... $ 279,202 $ 13,746 $ 6,335
Net realized gain ....................................................... 2,197,643 173,937 35,646
Net unrealized appreciation (depreciation) .............................. 531,049 (41,169) (10,412)
----------- ----------- ----------
Net increase in net assets resulting from operations .................... 3,007,894 146,514 31,569
----------- ----------- ----------
From accumulation unit transactions
Participant deposits .................................................... 109,277 7,986 1,666
Participant transfers ................................................... (317,620) (241,204) (30,741)
Participant withdrawals ................................................. (557,654) (74,579) (176,265)
----------- ----------- ----------
Net decrease in net assets resulting from participant transactions ...... (765,997) (307,797) (205,340)
----------- ----------- ----------
Net increase (decrease) in net assets ................................... 2,241,897 (161,283) (173,771)
Net assets
Beginning of period ..................................................... 15,260,187 1,367,244 366,230
----------- ----------- ----------
End of period ........................................................... $17,502,084 $ 1,205,961 $ 192,459
=========== =========== ==========
</TABLE>
See Notes to Financial Statements
59
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1997
(Continued)
<TABLE>
<CAPTION>
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account Sub-Account Sub-Account(1)
------------- ----------------- ---------------
<S> <C> <C> <C>
From operations
Net investment income (loss) ............................................ $ 2,558 $ (203) $ 743
Net realized gain (loss) ................................................ 3,710 52,208 (695)
Net unrealized appreciation (depreciation) .............................. 9,852 (15,711) (10,570)
-------- --------- ---------
Net increase (decrease) in net assets resulting from operations ......... 16,120 36,294 (10,522)
-------- --------- ---------
From accumulation unit transactions
Participant deposits .................................................... 1,571 12,472 --
Participant transfers ................................................... 85,333 212,505 30,856
Participant withdrawals ................................................. (2,416) (43,070) (327)
-------- --------- ---------
Net increase in net assets resulting from participant transactions ...... 84,488 181,907 30,529
-------- --------- ---------
Net increase in net assets .............................................. 100,608 218,201 20,007
Net assets
Beginning of period ..................................................... 12,449 208,803 --
-------- --------- ---------
End of period ........................................................... $113,057 $ 427,004 $ 20,007
======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Wanger Wanger
Enhanced International U.S.
Index Small Cap Small Cap
Sub-Account(2) Sub-Account Sub-Account
---------------- --------------- ------------
<S> <C> <C> <C>
From operations
Net investment income ................................................... $ 207 $ 1,963 $ 3,980
Net realized gain (loss) ................................................ 258 (68) 814
Net unrealized appreciation (depreciation) .............................. 275 (9,128) 60,894
------- -------- ---------
Net increase (decrease) in net assets resulting from operations ......... 740 (7,233) 65,688
------- -------- ---------
From accumulation unit transactions
Participant deposits .................................................... -- 1,559 2,102
Participant transfers ................................................... 58,145 149,460 450,846
Participant withdrawals ................................................. (236) (7,607) (27,955)
------- -------- ---------
Net increase in net assets resulting from participant transactions ...... 57,909 143,412 424,993
------- -------- ---------
Net increase in net assets .............................................. 58,649 136,179 490,681
Net assets
Beginning of period ..................................................... -- 10,198 15,515
------- -------- ---------
End of period ........................................................... $58,649 $146,377 $ 506,196
======= ======== =========
</TABLE>
(1) From inception January 6, 1997 to December 31, 1997
(2) From inception September 22, 1997 to December 31, 1997
See Notes to Financial Statements
60
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1996
<TABLE>
<CAPTION>
Multi-Sector
Money Market Growth Fixed Income
Sub-Account Sub-Account Sub-Account
-------------- --------------- -------------
<S> <C> <C> <C>
From operations
Net investment income .......................................... $ 36,421 $ 123,897 $ 219,969
Net realized gain .............................................. -- 1,905,888 96,636
Net unrealized appreciation .................................... -- 1,035,122 33,342
------------ ----------- ----------
Net increase in net assets resulting from operations ........... 36,421 3,064,907 349,947
------------ ----------- ----------
From accumulation unit transactions
Participant deposits ........................................... 634,438 452,681 14,305
Participant transfers .......................................... (1,421,417) 969,934 199,755
Participant withdrawals ........................................ (40,436) (760,557) (79,930)
------------ ----------- ----------
Net increase (decrease) in net assets resulting from participant
transactions .................................................. (827,415) 662,058 134,130
------------ ----------- ----------
Net increase (decrease) in net assets .......................... (790,994) 3,726,965 484,077
Net assets
Beginning of period ............................................ 1,769,097 24,610,891 2,845,721
------------ ----------- ----------
End of period .................................................. $ 978,103 $28,337,856 $3,329,798
============ =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Strategic
Allocation International Balanced
Sub-Account Sub-Account Sub-Account
--------------- --------------- ------------
<S> <C> <C> <C>
From operations
Net investment income .......................................... $ 249,585 $ 13,019 $ 7,825
Net realized gain .............................................. 956,839 35,973 34,619
Net unrealized appreciation (depreciation) ..................... 9,110 165,636 (10,943)
----------- ---------- ---------
Net increase in net assets resulting from operations ........... 1,215,534 214,628 31,501
----------- ---------- ---------
From accumulation unit transactions
Participant deposits ........................................... 86,027 10,839 3,413
Participant transfers .......................................... (186,193) 183,042 (1,861)
Participant withdrawals ........................................ (514,891) (190,854) (20,610)
----------- ---------- ---------
Net increase (decrease) in net assets resulting from participant
transactions .................................................. (615,057) 3,027 (19,058)
----------- ---------- ---------
Net increase in net assets ..................................... 600,477 217,655 12,443
Net assets
Beginning of period ............................................ 14,659,710 1,149,589 353,787
----------- ---------- ---------
End of period .................................................. $15,260,187 $1,367,244 $ 366,230
=========== ========== =========
</TABLE>
See Notes to Financial Statements
61
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Real Estate Strategic Theme
Sub-Account(1) Sub-Account(1)
---------------- ----------------
<S> <C> <C>
From operations
Net investment income ................................................... $ 137 $ 307
Net realized gain ....................................................... 135 1,731
Net unrealized appreciation ............................................. 2,248 1,918
------- ---------
Net increase in net assets resulting from operations .................... 2,520 3,956
------- ---------
From accumulation unit transactions
Participant deposits .................................................... 7,496 14,491
Participant transfers ................................................... 2,604 231,488
Participant withdrawals ................................................. (171) (41,132)
------- ---------
Net increase in net assets resulting from participant transactions ...... 9,929 204,847
------- ---------
Net increase in net assets .............................................. 12,449 208,803
Net assets
Beginning of period ..................................................... -- --
------- ---------
End of period ........................................................... $12,449 $ 208,803
======= =========
</TABLE>
<TABLE>
<CAPTION>
Wanger Wanger
International U.S.
Small Cap Small Cap
Sub-Account(2) Sub-Account(2)
---------------- ---------------
<S> <C> <C>
From operations
Net investment loss ..................................................... $ (2) $ (2)
Net unrealized appreciation ............................................. 259 329
------- -------
Net increase in net assets resulting from operations .................... 257 327
------- -------
From accumulation unit transactions
Participant deposits .................................................... -- --
Participant transfers ................................................... 9,941 15,188
Participant withdrawals ................................................. -- --
------- -------
Net increase in net assets resulting from participant transactions ...... 9,941 15,188
------- -------
Net increase in net assets .............................................. 10,198 15,515
Net assets
Beginning of period ..................................................... -- --
------- -------
End of period ........................................................... $10,198 $15,515
======= =======
</TABLE>
(1) From inception May 1, 1996 to December 31, 1996
(2) From inception December 19, 1996 to December 31, 1996
See Notes to Financial Statements
62
<PAGE>
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
Note 1--Organization
Phoenix Home Life Variable Universal Life Account (the "Account") is a
separate investment account of Phoenix Home Life Mutual Insurance Company
(Phoenix). The Account is registered as a unit investment trust under the
Investment Company Act of 1940, as amended. Policies offered by the Account
have a death benefit, cash surrender value and loan privileges. The Account was
established January 1, 1987 and currently consists of twelve Sub-Accounts, that
invest in a corresponding series of The Phoenix Edge Series Fund and Wanger
Advisors Trust ("the Funds").
Each series has distinct investment objectives. The Money Market Series is
a short-term investment fund. The Growth Series is a growth common stock fund.
The Multi-Sector Fixed Income Series is a long-term debt fund. The Strategic
Allocation Series (formerly Total Return) invests in equity securities and long
and short-term debt. The International Series invests primarily in an
internationally diversified portfolio of equity securities. The Balanced Series
is a balanced fund which invests in growth stocks and at least 25% of its
assets in fixed income senior securities. The Real Estate Series invests in
marketable securities of publicly traded Real Estate Investment Trusts
("REITs") and companies that are principally engaged in the real estate
industry. The Strategic Theme Series invests in securities of companies
believed to benefit from specific trends. The Aberdeen New Asia Series invests
primarily in diversified equity securities of issuers organized and principally
operating in Asia, excluding Japan. The Research Enhanced Index ("Enhanced
Index") Series invests in a broadly diversified portfolio of equity securities
of large and medium capitalization companies within market sectors reflected in
the S&P 500. The Wanger International Small Cap Series invests in securities of
non-U.S. companies with a stock market capitalization of less than $1 billion
and the Wanger U.S. Small Cap Series invests in growth common stock of U.S.
companies with stock market capitalization of less than $1 billion.
Additionally, policyowners may also direct the allocation of their investments
between the Account and the Guaranteed Interest Account of the general account
of Phoenix.
Note 2--Significant Accounting Policies
A. Valuation of investments: Investments are made exclusively in the Funds
and are valued at the net asset values per share of the respective Series.
B. Investment transactions and related income: Realized gains and losses
include capital gain distributions from the Funds as well as gains and losses
on sales of shares in the Funds determined on the LIFO (last in, first out)
basis.
C. Income taxes: The Account is not a separate entity from Phoenix and,
under current federal income tax law, income arising from the Account is not
taxed since reserves are established equivalent to such income. Therefore, no
provision for related federal taxes is required.
D. Distributions: Distributions are recorded on the ex-dividend date.
Note 3--Purchases and Sales of Shares of the Funds
Purchases and sales of shares of the Funds for the period ended December
31, 1997 aggregated the following:
<TABLE>
<CAPTION>
Sub-Account Purchases Sales
- ------------------------------------ ------------ ------------
<S> <C> <C>
The Phoenix Edge Series Fund:
Money Market ...................... $ 372,630 $ 842,975
Growth............................. 5,848,413 1,421,499
Multi-Sector Fixed Income ......... 474,590 98,013
Strategic Allocation .............. 2,573,981 897,260
International ..................... 311,662 483,680
Balanced .......................... 47,827 224,952
Real Estate ....................... 94,768 3,862
Strategic Theme ................... 284,941 53,825
Aberdeen New Asia ................. 41,159 9,859
Enhanced Index .................... 58,694 287
Wanger Advisors Trust:
International Small Cap ........... 168,151 22,715
U.S. Small Cap .................... 458,822 29,640
</TABLE>
Note 4--Participant Accumulation Unit Transactions (in units)
<TABLE>
<CAPTION>
Sub-Account
-----------------------------------------------------------------------------------
Money Multi-Sector Strategic
Market Growth Fixed Income Allocation International Balanced
------------- --------------------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding, beginning of period ......... 587,306 7,871,230 1,433,300 6,343,059 821,781 239,440
Participant deposits ........................... 12,139 7,908 497 41,721 4,471 943
Participant transfers .......................... (285,566) (9,603) 41,253 (123,714) (133,765) (18,183)
Participant withdrawals ........................ (22,452) (216,324) (23,957) (205,375) (42,334) (114,974)
-------- --------- --------- --------- -------- --------
Units outstanding, end of period ............... 291,427 7,653,211 1,451,093 6,055,691 650,153 107,226
======== ========= ========= ========= ======== ========
</TABLE>
63
<PAGE>
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
Note 4--Participant Accumulation Unit Transactions (in units) (continued)
<TABLE>
<CAPTION>
Sub-Account
--------------------------------------------------------------------------
Wanger
Real Strategic Aberdeen Enhanced International Wanger U.S.
Estate Theme New Asia Index Small Cap Small Cap
----------- ----------- ---------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding, beginning of period ......... 9,514 208,296 -- -- 9,941 15,188
Participant deposits ........................... 1,011 10,927 -- -- 1,469 1,554
Participant transfers .......................... 62,289 184,545 29,947 58,025 141,238 392,405
Participant withdrawals ........................ (1,667) (38,411) (354) (241) (7,130) (24,360)
------ ------- ------ ------ ------- -------
Units outstanding, end of period ............... 71,147 365,357 29,593 57,784 145,518 384,787
====== ======= ====== ====== ======= =======
</TABLE>
Note 5--Policy Loans
Transfers are made to Phoenix's general account as a result of policy
loans. Policy provisions allow policyowners to borrow up to 75% of a policy's
cash value during the first three policy years and up to 90% of cash value
thereafter, with interest of 8% due and payable on each policy anniversary. At
the time a loan is granted, an amount equivalent to the amount of the loan is
transferred from the Account to Phoenix's general account as collateral for the
outstanding loan. These transfers are included in participant withdrawals in
the accompanying financial statements. Amounts in the general account are
credited with interest at 7.25%. Loan repayments result in a transfer of
collateral back to the Account.
Note 6--Investment Advisory Fees and Related Party Transactions
Phoenix and its indirect, majority owned subsidiary, Phoenix Equity
Planning Corporation, a registered broker/dealer in securities, provide all
services to the Account.
The cost of insurance is charged to each policy on a monthly basis by a
withdrawal of participant units prorated among the elected Sub-accounts. The
amount charged to each policy depends on a number of variables including sex,
age and risk class as well as the death benefit and cash value of the policy.
Such costs aggregated $535,760 during the period ended December 31, 1997.
Upon partial surrender of a policy, a surrender fee of the lesser of $25
or 2% of the partial surrender amount paid and a fraction of the balance of any
unpaid acquisition expense allowance is deducted from the policy value and paid
to Phoenix.
Phoenix Equity Planning Corporation is the principal underwriter and
distributor for the Account. Phoenix Equity Planning Corporation is reimbursed
for its distribution and underwriting expenses by Phoenix.
An acquisition expense allowance is paid to Phoenix over a ten year period
from contract inception by a withdrawal of units. The acquisition expense
allowance consists of a sales load of 5.5% of the issue premium to compensate
Phoenix for distribution expenses incurred, an issue administration charge of
1.0% of the issue premium to compensate Phoenix for underwriting and start-up
expenses and premium taxes which currently range from 0.75% to 4% of premiums
paid based on the state where the policyowner resides. In the event of a
surrender before ten years, the unpaid balance of the acquisition expense
allowance is deducted and paid to Phoenix.
Phoenix assumes the mortality risk that insureds may live for a shorter
time than projected because of inaccuracies in the projecting process and,
accordingly, that an aggregate amount of death benefits greater than 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. In return for the assumption of these mortality and expense risks,
Phoenix charges the Account an annual rate of 0.50% of the average daily net
assets of the Account for mortality and expense risks assumed.
Note 7--Diversification Requirements
Under the provisions of Section 817(h) of the Internal Revenue Code (the
"Code"), a variable universal life contract, other than a contract issued in
connection with certain types of employee benefit plans, will not be treated as
a universal life contract for federal tax purposes for any period for which the
investments of the segregated asset account on which the contract is based are
not adequately diversified. The Code provides that the "adequately diversified"
requirement may be met if the underlying investments satisfy either a statutory
safe harbor test or diversification requirements set forth in regulations
issued by the Secretary of Treasury.
The Internal Revenue Service has issued regulations under Section 817(h)
of the Code. Phoenix believes that the Account satisfies the current
requirements of the regulations, and it intends that the Account will continue
to meet such requirements.
64
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[Price Waterhouse LLP logotype] [LOGO]
To the Board of Directors of Phoenix Home Life Mutual Insurance Company and
Participants of Phoenix Home Life Variable Universal Life Account
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets present fairly,
in all material respects, the financial position of the Money Market
Sub-Account, Growth Sub-Account, Multi-Sector Fixed Income Sub-Account,
Strategic Allocation Sub-Account, International Sub-Account, Balanced
Sub-Account, Real Estate Sub-Account, Strategic Theme Sub-Account, Aberdeen New
Asia Sub-Account, Enhanced Index Sub-Account, Wanger International Small Cap
Sub-Account and Wanger U.S. Small Cap Sub-Account (constituting the Phoenix
Home Life Variable Universal Life Account, hereafter referred to as the
"Account") at December 31, 1997 and the results of each of their operations and
the changes in each of their net assets for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Account's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits which included confirmation of investments at
December 31, 1997 by correspondence with the Funds' custodians, provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Hartford, Connecticut
February 19, 1998
<PAGE>
PHOENIX HOME LIFE
VARIABLE UNIVERSAL LIFE ACCOUNT
Phoenix Home Life Mutual Insurance Company
One American Row
Hartford, Connecticut 06115
Underwriter
Phoenix Equity Planning Corporation
P.O. Box 2200
100 Bright Meadow Boulevard
Enfield, Connecticut 06083-2200
Custodians
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
Floor 3B
New York, New York 10081
Brown Brothers Harriman & Co.
(International Series)
40 Water Street
Boston, Massachusetts 02109
State Street Bank and Trust
(Real Estate Series, Enhanced Index Series)
P.O. Box 351
Boston, Massachusetts 02101
Independent Accountants
Price Waterhouse LLP
One Financial Plaza
Hartford, Connecticut 06103
66
<PAGE>
APPENDIX A
THE GUARANTEED INTEREST ACCOUNT
Contributions to the GIA under the Policy and transfers to the GIA become
part of the Phoenix 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 1933 Act nor is the General
Account registered as an investment company under the 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 SEC 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 GIA. 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.
Biweekly, 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 to the GIA at that time. 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 POLICYOWNER 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, ONE TRANSFER PER CONTRACT YEAR IS ALLOWED FROM THE GIA. THE AMOUNT
WHICH CAN BE TRANSFERRED IS LIMITED TO THE GREATER OF $1,000 OR 25% OF THE
CONTRACT VALUE IN THE GIA AT THE TIME OF THE TRANSFER. UNDER THE SYSTEMATIC
TRANSFER PROGRAM, TRANSFERS OF APPROXIMATELY EQUAL AMOUNTS MAY BE MADE OVER A
MINIMUM 18-MONTH PERIOD. NON-SYSTEMATIC TRANSFERS FROM THE GIA WILL BE
EFFECTUATED ON THE DATE OF RECEIPT BY VPMO, UNLESS OTHERWISE REQUESTED BY THE
CONTRACT OWNER.
67
<PAGE>
APPENDIX B
ILLUSTRATIONS OF DEATH BENEFITS, ACCUMULATION VALUES,
CASH VALUES AND ACCUMULATED PREMIUMS.
The tables illustrate how a Policy's death benefits, accumulation values and
cash values may vary over time assuming hypothetical gross (after tax)
investment return rates of 0%, 6% and 12%, i.e., the investment income and
capital gains and losses, realized or unrealized of the Fund is equivalent to
the assumed hypothetical gross annual investment return rates of 0%, 6% and 12%.
The tables are based on current or guaranteed mortality charges as indicated,
and on a single premium of $10,000.
1. The illustration on pages 69 and 70 is for a policy issued to a male
nonsmoker age 35 with the maximum amount of insurance under the contract.
2. The illustration on pages 71 and 72 is for a policy issued to a female
nonsmoker age 35 with the maximum amount of insurance under the contract.
3. The illustration on pages 73 and 74 is for a policy issued to a male
nonsmoker age 35 with the minimum amount of insurance under the contract.
4. The illustration on pages 75 and 76 is for a policy issued to a female
nonsmoker age 35 with the minimum amount of insurance under the contract.
The death benefits, accumulation values and cash values would be different
from those shown if the actual gross investment return averaged 0%, 6% or 12%,
but fluctuated above or below the averaged rate at various points in time. These
benefits and values also would change if the assumptions underlying the
illustrations (for example age of the Insured, Insured's smoking status, premium
amount paid or Target Face Amount selected) were different.
The death benefit, accumulation value and cash value amounts reflect the
following current or guaranteed maximum charges:
1. Acquisition Expense Charge (see "Charges and Deductions--Acquisition
Expense").
2. Cost of Insurance Charge (see "Charges and Deductions--Cost of Insurance").
3. Mortality and Expense Risk Charge, which is equal to .50%, on an annual
basis, of the net asset value of the VUL Account (see "Charges and
Deductions--Mortality and Expense Risk Charge").
These illustrations also assume an average investment advisory fee of .72%
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 .21%. All other Fund expenses, except capital expenses, are assumed
by the Advisers or by Phoenix. Management may decide to limit the amount of
expense reimbursement in the future. If expense reimbursement had not been in
place for the fiscal year ended December 31, 1997, average total operating
expenses for the Series would have been approximately .93% of the average net
assets.
Taking into account the Mortality and Expense Risk Charge and the investment
advisory fees and expenses, the gross annual investment return rates of 0%, 6%
and 12% on the Funds' assets are equivalent to net annual investment return
rates of approximately -1.42%, 4.56% and 10.52%, respectively.
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%, 6% 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 Single Premium were invested to earn interest, after taxes,
at 5% compounded annually.
A comparable illustration based on a proposed Insured's age and sex and a
proposed Death Benefit and single premium is available upon request. 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 are nonsmokers.
68
<PAGE>
<TABLE>
<CAPTION>
PAGE 1 OF 2
PREMIUM: $10,000
TARGET FACE AMOUNT: $53,813
MINIMUM FACE AMOUNT RIDER: $0
MALE 35 NONSMOKER
THE PHOENIX EDGE--A VARIABLE UNIVERSAL LIFE POLICY
ASSUMING CURRENT CHARGES
CASH CASH CASH
PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR @ 5% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
- -------- --------- ---------- --------- --------- ----------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,734 8,947 50,914 10,326 9,539 53,995 10,918 10,131 57,061
2 11,025 9,473 8,774 47,931 10,666 9,966 54,159 11,929 11,229 60,725
3 11,576 9,217 8,604 45,129 11,019 10,406 54,298 13,040 12,428 64,534
4 12,155 8,964 8,439 42,498 11,385 10,860 54,412 14,263 13,738 68,501
5 12,763 8,714 8,277 40,029 11,766 11,328 54,506 15,606 15,169 72,642
6 13,401 8,462 8,112 37,681 12,150 11,800 54,538 17,069 16,720 76,911
7 14,071 8,213 7,950 35,477 12,548 12,286 54,550 18,675 18,413 81,373
8 14,775 7,953 7,778 33,354 12,938 12,763 54,457 20,402 20,227 85,905
9 15,513 7,697 7,610 31,359 13,339 13,252 54,341 22,293 22,205 90,633
10 16,289 7,446 7,446 29,492 13,754 13,754 54,213 24,364 24,364 95,588
11 17,103 7,271 7,271 27,693 14,245 14,245 53,990 26,675 26,675 100,632
12 17,959 7,099 7,099 26,001 14,751 14,751 53,762 29,198 29,198 105,928
13 18,857 6,929 6,929 24,413 15,270 15,270 53,534 31,953 31,953 111,503
14 19,799 6,762 6,762 22,921 15,805 15,805 53,308 34,960 34,960 117,373
15 20,789 6,598 6,598 21,522 16,354 16,354 53,084 38,240 38,240 123,554
16 21,829 6,436 6,436 20,208 16,918 16,918 52,861 41,819 41,819 130,062
17 22,920 6,276 6,276 18,974 17,496 17,496 52,641 45,718 45,718 136,916
18 24,066 6,118 6,118 17,817 18,089 18,089 52,425 49,965 49,965 144,141
19 25,270 5,961 5,961 16,731 18,694 18,694 52,212 54,585 54,585 151,753
20 26,533 5,806 5,806 15,713 19,311 19,311 52,003 59,607 59,607 159,776
@ 65 43,219 4,357 4,357 8,433 26,088 26,088 50,252 140,320 140,320 269,040
</TABLE>
Death benefit, accumulation value and Cash Value are based on the hypothetical
gross percentage rates shown, assume current and guaranteed mortality charges,
no policy loans or withdrawals have been made, and are calculated at the end of
the Policy Year. Values shown reflect an effective annual asset charge of 1.43%
(includes average fund operating expenses of 0.93% and mortality and expense
risk charge of 0.5%). Hypothetical gross percentage rates are illustrative only
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 rates illustrated.
Assumes premium tax of 2.25%.
69
<PAGE>
<TABLE>
<CAPTION>
PAGE 2 OF 2
PREMIUM: $10,000
TARGET FACE AMOUNT: $53,813
MINIMUM FACE AMOUNT RIDER: $0
MALE 35 NONSMOKER
THE PHOENIX EDGE--A VARIABLE UNIVERSAL LIFE POLICY
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR @ 5% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
- -------- --------- ---------- --------- --------- ----------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,698 8,911 50,725 10,288 9,501 53,795 10,878 10,090 56,850
2 11,025 9,403 8,703 47,560 10,586 9,886 53,742 11,839 11,139 60,259
3 11,576 9,112 8,500 44,597 10,894 10,281 53,662 12,891 12,279 63,781
4 12,155 8,827 8,302 41,824 11,211 10,686 53,555 14,043 13,518 67,428
5 12,763 8,546 8,109 39,228 11,537 11,100 53,425 15,302 14,865 71,209
6 13,401 8,270 7,920 36,799 11,873 11,523 53,273 16,679 16,329 75,137
7 14,071 7,997 7,735 34,525 12,219 11,956 53,100 18,184 17,921 79,222
8 14,775 7,729 7,554 32,396 12,573 12,398 52,909 19,828 19,653 83,477
9 15,513 7,464 7,377 30,403 12,938 12,850 52,701 21,623 21,535 87,912
10 16,289 7,204 7,204 28,538 13,312 13,312 52,477 23,584 23,584 92,543
11 17,103 7,034 7,034 26,790 13,785 13,785 52,245 25,817 25,817 97,396
12 17,959 6,866 6,866 25,148 14,271 14,271 52,015 28,254 28,254 102,503
13 18,857 6,701 6,701 23,607 14,771 14,771 51,785 30,914 30,914 107,878
14 19,799 6,538 6,538 22,161 15,285 15,285 51,557 33,816 33,816 113,536
15 20,789 6,378 6,378 20,803 15,813 15,813 51,329 36,982 36,982 119,489
16 21,829 6,219 6,219 19,529 16,355 16,355 51,103 40,433 40,433 125,755
17 22,920 6,063 6,063 18,332 16,910 16,910 50,877 44,192 44,192 132,350
18 24,066 5,909 5,909 17,209 17,477 17,477 50,653 48,282 48,282 139,290
19 25,270 5,756 5,756 16,155 18,055 18,055 50,429 52,728 52,728 146,594
20 26,533 5,604 5,604 15,165 18,643 18,643 50,207 57,555 57,555 154,282
@ 65 43,219 4,162 4,162 8,059 24,933 24,933 48,034 134,128 134,128 257,209
</TABLE>
Death benefit, accumulation value and Cash Value are based on the hypothetical
gross percentage rates shown, assume current and guaranteed mortality charges,
no policy loans or withdrawals have been made, and are calculated at the end of
the Policy Year. Values shown reflect an effective annual asset charge of 1.43%
(includes average fund operating expenses of 0.93% and mortality and expense
risk charge of 0.5%). Hypothetical gross percentage rates are illustrative only
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 rates illustrated.
Assumes premium tax of 2.25%.
70
<PAGE>
<TABLE>
<CAPTION>
PAGE 1 OF 2
PREMIUM: $10,000
TARGET FACE AMOUNT: $61,544
MINIMUM FACE AMOUNT RIDER: $0
1035 EXCHANGE FUND APPLIED (INCL. IN PREM.): $0
FEMALE 35 NONSMOKER
THE PHOENIX EDGE--A VARIABLE UNIVERSAL LIFE POLICY
ASSUMING CURRENT CHARGES
CASH CASH CASH
PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR @ 5% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
- -------- --------- ---------- --------- --------- ----------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,734 8,946 58,234 10,326 9,538 61,757 10,917 10,130 65,264
2 11,025 9,472 8,772 54,829 10,664 9,964 61,954 11,926 11,226 69,465
3 11,576 9,213 8,601 51,634 11,014 10,402 62,124 13,035 12,423 73,836
4 12,155 8,958 8,433 48,635 11,378 10,853 62,270 14,254 13,729 78,393
5 12,763 8,707 8,269 45,822 11,755 11,318 62,395 15,592 15,155 83,156
6 13,401 8,451 8,101 43,146 12,135 11,785 62,449 17,048 16,698 88,067
7 14,071 8,198 7,936 40,634 12,527 12,264 62,481 18,643 18,380 93,205
8 14,775 7,934 7,759 38,210 12,907 12,732 62,387 20,353 20,178 98,415
9 15,513 7,673 7,586 35,932 13,298 13,210 62,265 22,223 22,135 103,851
10 16,289 7,417 7,417 33,796 13,700 13,700 62,127 24,269 24,269 109,543
11 17,103 7,236 7,236 31,731 14,176 14,176 61,863 26,545 26,545 115,307
12 17,959 7,058 7,058 29,787 14,666 14,666 61,591 29,030 29,030 121,355
13 18,857 6,884 6,884 27,963 15,170 15,170 61,319 31,743 31,743 127,719
14 19,799 6,713 6,713 26,250 15,688 15,688 61,049 34,702 34,702 134,418
15 20,789 6,544 6,544 24,641 16,221 16,221 60,780 37,931 37,931 141,467
16 21,829 6,380 6,380 23,134 16,771 16,771 60,516 41,454 41,454 148,898
17 22,920 6,218 6,218 21,720 17,336 17,336 60,260 45,299 45,299 156,733
18 24,066 6,060 6,060 20,396 17,919 17,919 60,013 49,496 49,496 165,005
19 25,270 5,905 5,905 19,157 18,519 18,519 59,781 54,074 54,074 173,753
20 26,533 5,754 5,754 17,996 19,137 19,137 59,560 59,069 59,069 182,995
@ 65 43,219 4,366 4,366 9,585 26,143 26,143 57,114 140,616 140,616 305,783
</TABLE>
Death benefit, accumulation value and Cash Value are based on the hypothetical
gross percentage rates shown, assume current and guaranteed mortality charges,
no policy loans or withdrawals have been made, and are calculated at the end of
the Policy Year. Values shown reflect an effective annual asset charge of 1.43%
(includes average fund operating expenses of 0.93% and mortality and expense
risk charge of 0.5%). Hypothetical gross percentage rates are illustrative only
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 rates illustrated.
Assumes premium tax of 2.25%.
71
<PAGE>
<TABLE>
<CAPTION>
PAGE 2 OF 2
PREMIUM: $10,000
TARGET FACE AMOUNT: $61,544
MINIMUM FACE AMOUNT RIDER: $0
1035 EXCHANGE FUND APPLIED (INCL. IN PREM.): $0
FEMALE 35 NONSMOKER
THE PHOENIX EDGE--A VARIABLE UNIVERSAL LIFE POLICY
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR @ 5% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
- -------- --------- ---------- --------- --------- ----------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,697 8,909 58,013 10,286 9,499 61,524 10,876 10,089 65,018
2 11,025 9,399 8,699 54,393 10,581 9,882 61,464 11,834 11,134 68,917
3 11,576 9,105 8,493 51,005 10,885 10,273 61,372 12,881 12,269 72,946
4 12,155 8,816 8,291 47,833 11,197 10,672 61,521 14,026 13,501 77,117
5 12,763 8,531 8,094 44,865 11,517 11,079 61,102 15,275 14,838 81,443
6 13,401 8,250 7,900 42,087 11,845 11,495 60,929 16,639 16,289 85,936
7 14,071 7,972 7,709 39,486 12,180 11,917 60,732 18,125 17,863 90,609
8 14,775 7,697 7,522 37,051 12,522 12,347 60,514 19,747 19,572 95,476
9 15,513 7,427 7,340 34,773 12,873 12,786 60,276 21,516 21,428 100,551
10 16,289 7,161 7,161 32,639 13,234 13,234 60,020 23,446 23,446 105,847
11 17,103 6,987 6,987 30,640 13,693 13,693 59,756 25,645 25,645 111,398
12 17,959 6,815 6,815 28,763 14,166 14,166 59,492 28,046 28,046 117,241
13 18,857 6,647 6,647 27,001 14,653 14,653 59,230 30,667 30,667 123,389
14 19,799 6,482 6,482 25,347 15,154 15,154 58,969 33,526 33,526 129,861
15 20,789 6,319 6,319 23,794 15,669 15,669 58,709 36,645 36,645 136,671
16 21,829 6,160 6,160 22,336 16,198 16,198 58,450 40,046 40,046 143,840
17 22,920 6,003 6,003 20,968 16,741 16,741 58,193 43,753 43,753 151,383
18 24,066 5,848 5,848 19,683 17,298 17,298 57,936 47,790 47,790 159,323
19 25,270 5,696 5,696 18,477 17,867 17,867 57,681 52,182 52,182 167,678
20 26,533 5,546 5,546 17,346 18,450 18,450 57,427 56,961 56,961 176,473
@ 65 43,219 4,199 4,199 9,218 25,150 25,150 54,945 135,300 135,300 294,223
</TABLE>
Death benefit, accumulation value and Cash Value are based on the hypothetical
gross percentage rates shown, assume current and guaranteed mortality charges,
no policy loans or withdrawals have been made, and are calculated at the end of
the Policy Year. Values shown reflect an effective annual asset charge of 1.43%
(includes average fund operating expenses of 0.93% and mortality and expense
risk charge of 0.5%). Hypothetical gross percentage rates are illustrative only
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 rates illustrated.
Assumes premium tax of 2.25%.
72
<PAGE>
<TABLE>
<CAPTION>
PAGE 1 OF 2
PREMIUM: $10,000
TARGET FACE AMOUNT: $39,392
MINIMUM FACE AMOUNT RIDER: $0
1035 EXCHANGE FUND APPLIED (INCL. IN PREM.): $0
MALE 35 NONSMOKER
THE PHOENIX EDGE--A VARIABLE UNIVERSAL LIFE POLICY
ASSUMING CURRENT CHARGES
CASH CASH CASH
PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR @ 5% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
- -------- --------- ---------- --------- --------- ----------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,746 8,959 37,553 10,339 9,551 39,826 10,931 10,144 42,087
2 11,025 9,496 8,796 35,647 10,692 9,992 40,279 11,958 11,258 45,161
3 11,576 9,250 8,638 33,843 11,059 10,446 40,717 13,088 12,476 48,392
4 12,155 9,007 8,482 32,135 11,441 10,916 41,142 14,333 13,808 51,794
5 12,763 8,768 8,331 30,520 11,838 11,401 41,555 15,703 15,266 55,381
6 13,401 8,527 8,177 28,976 12,244 11,894 41,935 17,202 16,852 59,136
7 14,071 8,289 8,027 27,514 12,666 12,403 42,303 18,850 18,588 63,102
8 14,775 8,045 7,870 26,102 13,087 12,912 42,613 20,638 20,463 67,218
9 15,513 7,804 7,716 24,764 13,523 13,435 42,907 22,599 22,512 71,561
10 16,289 7,566 7,566 23,500 13,974 13,974 43,194 24,753 24,753 76,156
11 17,103 7,408 7,408 22,278 14,512 14,512 43,427 27,174 27,174 80,939
12 17,959 7,253 7,253 21,117 15,068 15,068 43,657 29,826 29,826 86,014
13 18,857 7,099 7,099 20,016 15,642 15,642 43,888 32,730 32,730 91,407
14 19,799 6,947 6,947 18,973 16,235 16,235 44,121 35,910 35,910 97,140
15 20,789 6,797 6,797 17,985 16,846 16,846 44,355 39,390 39,390 103,233
16 21,829 6,649 6,649 17,048 17,477 17,477 44,592 43,199 43,199 109,710
17 22,920 6,503 6,503 16,161 18,127 18,127 44,830 47,365 47,365 116,595
18 24,066 6,358 6,358 15,320 18,796 18,796 45,072 51,917 51,917 123,918
19 25,270 6,214 6,214 14,524 19,484 19,484 45,316 56,890 56,890 131,705
20 26,533 6,071 6,071 13,769 20,190 20,190 45,564 62,316 62,316 139,987
@ 65 43,219 4,717 4,717 8,113 28,243 28,243 48,338 151,903 151,903 258,781
</TABLE>
Death benefit, accumulation value and Cash Value are based on the hypothetical
gross percentage rates shown, assume current and guaranteed mortality charges,
no policy loans or withdrawals have been made, and are calculated at the end of
the Policy Year. Values shown reflect an effective annual asset charge of 1.43%
(includes average fund operating expenses of 0.93% and mortality and expense
risk charge of 0.5%). Hypothetical gross percentage rates are illustrative only
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 rates illustrated.
Assumes premium tax of 2.25%.
73
<PAGE>
<TABLE>
<CAPTION>
PAGE 2 OF 2
PREMIUM: $10,000
TARGET FACE AMOUNT: $39,392
MINIMUM FACE AMOUNT RIDER: $0
1035 EXCHANGE FUND APPLIED (INCL. IN PREM.): $0
MALE 35 NONSMOKER
THE PHOENIX EDGE--A VARIABLE UNIVERSAL LIFE POLICY
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR @ 5% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
- -------- --------- ---------- --------- --------- ----------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,721 8,934 37,459 10,313 9,525 39,725 10,904 10,116 41,981
2 11,025 9,448 8,748 35,459 10,637 9,937 40,068 11,896 11,197 44,925
3 11,576 9,178 8,566 33,570 10,973 10,361 40,392 12,986 12,373 48,007
4 12,155 8,913 8,388 31,786 11,321 10,796 40,699 14,181 13,656 51,238
5 12,763 8,651 8,214 30,100 11,680 11,243 40,989 15,493 15,055 54,630
6 13,401 8,393 8,044 28,508 12,052 11,702 41,265 16,931 16,581 58,196
7 14,071 8,139 7,876 27,004 12,435 12,173 41,526 18,507 18,244 61,948
8 14,775 7,888 7,713 25,583 12,832 12,657 41,774 20,235 20,060 65,901
9 15,513 7,640 7,552 24,240 13,240 13,153 42,009 22,128 22,040 70,070
10 16,289 7,395 7,395 22,972 13,662 13,662 42,233 24,202 24,202 74,470
11 17,103 7,240 7,240 21,772 14,186 14,186 42,451 26,566 26,566 79,129
12 17,959 7,087 7,087 20,635 14,728 14,728 42,671 29,155 29,155 84,080
13 18,857 6,936 6,936 19,557 15,287 15,287 42,891 31,989 31,989 89,340
14 19,799 6,787 6,787 18,535 15,864 15,864 43,112 35,092 35,092 94,930
15 20,789 6,639 6,639 17,567 16,459 16,459 43,335 38,488 38,488 100,867
16 21,829 6,494 6,494 16,650 17,072 17,072 43,559 42,203 42,203 107,180
17 22,920 6,349 6,349 15,780 17,704 17,704 43,784 46,263 46,263 113,886
18 24,066 6,206 6,206 14,956 18,353 18,353 44,010 50,698 50,698 121,011
19 25,270 6,064 6,064 14,174 19,020 19,020 44,237 55,540 55,540 128,582
20 26,533 5,923 5,923 13,434 19,702 19,702 44,466 60,818 60,818 136,626
@ 65 43,219 4,567 4,567 7,856 27,351 27,351 46,816 147,119 147,119 250,660
</TABLE>
Death benefit, accumulation value and Cash Value are based on the hypothetical
gross percentage rates shown, assume current and guaranteed mortality charges,
no policy loans or withdrawals have been made, and are calculated at the end of
the Policy Year. Values shown reflect an effective annual asset charge of 1.43%
(includes average fund operating expenses of 0.93% and mortality and expense
risk charge of 0.5%). Hypothetical gross percentage rates are illustrative only
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 rates illustrated.
Assumes premium tax of 2.25%.
74
<PAGE>
<TABLE>
<CAPTION>
PAGE 1 OF 2
PREMIUM: $10,000
TARGET FACE AMOUNT: $44,121
MINIMUM FACE AMOUNT RIDER: $0
1035 EXCHANGE FUND APPLIED (INCL. IN PREM.): $0
FEMALE 35 NONSMOKER
THE PHOENIX EDGE--A VARIABLE UNIVERSAL LIFE POLICY
ASSUMING CURRENT CHARGES
CASH CASH CASH
PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR @ 5% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
- -------- --------- ---------- --------- --------- ----------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,746 8,959 42,062 10,339 9,551 44,607 10,931 10,144 47,140
2 11,025 9,496 8,796 39,929 10,691 9,991 45,118 11,957 11,257 50,587
3 11,576 9,249 8,636 37,912 11,057 10,445 45,613 13,086 12,474 54,211
4 12,155 9,005 8,480 36,004 11,438 10,913 46,095 14,329 13,804 58,029
5 12,763 8,764 8,327 34,199 11,833 11,396 46,565 15,697 15,259 62,057
6 13,401 8,522 8,172 32,474 12,237 11,887 46,998 17,191 16,841 66,275
7 14,071 8,282 8,020 30,841 12,655 12,392 47,419 18,834 18,571 70,732
8 14,775 8,035 7,860 29,261 13,070 12,895 47,771 20,611 20,436 75,354
9 15,513 7,790 7,703 27,765 13,500 13,413 48,107 22,561 22,473 80,232
10 16,289 7,550 7,550 26,350 13,945 13,945 48,432 24,700 24,700 85,391
11 17,103 7,388 7,388 24,976 14,473 14,473 48,688 27,100 27,100 90,744
12 17,959 7,229 7,229 23,672 15,020 15,020 48,940 29,729 29,729 96,422
13 18,857 7,073 7,073 22,435 15,584 15,584 49,193 32,608 32,608 102,456
14 19,799 6,918 6,918 21,264 16,167 16,167 49,447 35,760 35,760 108,866
15 20,789 6,766 6,766 20,153 16,770 16,770 49,703 39,211 39,211 115,678
16 21,829 6,617 6,617 19,101 17,392 17,392 49,963 42,989 42,989 122,923
17 22,920 6,470 6,470 18,106 18,036 18,036 50,227 47,125 47,125 130,630
18 24,066 6,325 6,325 17,164 18,701 18,701 50,498 51,653 51,653 138,836
19 25,270 6,183 6,183 16,274 19,388 19,388 50,779 56,610 56,610 147,581
20 26,533 6,044 6,044 15,432 20,099 20,099 51,068 62,035 62,035 156,896
@ 65 43,219 4,744 4,744 9,040 28,403 28,403 53,860 152,764 152,764 288,342
</TABLE>
Death benefit, accumulation value and Cash Value are based on the hypothetical
gross percentage rates shown, assume current and guaranteed mortality charges,
no policy loans or withdrawals have been made, and are calculated at the end of
the Policy Year. Values shown reflect an effective annual asset charge of 1.43%
(includes average fund operating expenses of 0.93% and mortality and expense
risk charge of 0.5%). Hypothetical gross percentage rates are illustrative only
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 rates illustrated.
Assumes premium tax of 2.25%.
75
<PAGE>
<TABLE>
<CAPTION>
PAGE 2 OF 2
PREMIUM: $10,000
TARGET FACE AMOUNT: $44,121
MINIMUM FACE AMOUNT RIDER: $0
1035 EXCHANGE FUND APPLIED (INCL. IN PREM.): $0
FEMALE 35 NONSMOKER
THE PHOENIX EDGE--A VARIABLE UNIVERSAL LIFE POLICY
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR @ 5% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
- -------- --------- ---------- --------- --------- ----------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,721 8,934 41,956 10,312 9,525 44,494 10,903 10,116 47,021
2 11,025 9,447 8,747 39,716 10,635 9,936 44,878 11,895 11,195 50,319
3 11,576 9,176 8,563 37,601 10,970 10,357 45,241 12,982 12,369 53,771
4 12,155 8,908 8,384 35,602 11,315 10,790 45,585 14,174 13,649 57,390
5 12,763 8,644 8,207 33,715 11,671 11,233 45,911 15,480 15,042 61,190
6 13,401 8,384 8,034 31,931 12,038 11,688 46,220 16,911 16,561 65,184
7 14,071 8,126 7,863 30,247 12,415 12,153 46,513 18,477 18,214 69,388
8 14,775 7,871 7,696 28,655 12,804 12,629 46,791 20,192 20,017 73,817
9 15,513 7,619 7,532 27,152 13,205 13,118 47,055 22,069 21,982 78,487
10 16,289 7,371 7,371 25,731 13,619 13,619 47,306 24,126 24,126 83,415
11 17,103 7,214 7,214 24,387 14,135 14,135 47,550 26,470 26,470 88,635
12 17,959 7,059 7,059 23,114 14,669 14,669 47,796 29,038 29,038 94,181
13 18,857 6,906 6,906 21,906 15,220 15,220 48,044 31,850 31,850 100,074
14 19,799 6,755 6,755 20,762 15,790 15,790 48,292 34,929 34,929 106,336
15 20,789 6,607 6,607 19,678 16,378 16,378 48,542 38,300 38,300 112,989
16 21,829 6,460 6,460 18,650 16,985 16,985 48,793 41,987 41,987 120,059
17 22,920 6,316 6,316 17,676 17,611 17,611 49,045 46,021 46,021 127,571
18 24,066 6,174 6,174 16,753 18,256 18,256 49,299 50,431 50,431 135,554
19 25,270 6,033 6,033 15,878 18,920 18,920 49,554 55,248 55,248 144,036
20 26,533 5,893 5,893 15,048 19,603 19,603 49,810 60,511 60,511 153,048
@ 65 43,219 4,618 4,618 8,801 27,658 27,658 52,447 148,772 148,772 280,807
</TABLE>
Death benefit, accumulation value and Cash Value are based on the hypothetical
gross percentage rates shown, assume current and guaranteed mortality charges,
no policy loans or withdrawals have been made, and are calculated at the end of
the Policy Year. Values shown reflect an effective annual asset charge of 1.43%
(includes average fund operating expenses of 0.93% and mortality and expense
risk charge of 0.5%). Hypothetical gross percentage rates are illustrative only
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 rates illustrated.
Assumes premium tax of 2.25%.
76
<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 judgment 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.
REPRESENTATION PURSUANT TO SECTION 26(E)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940.
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 services rendered, the expenses expected to be incurred and the
risks to be assumed thereunder by Phoenix Home Life Mutual Insurance Company.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
The cross-reference sheet to Form N-8B-2.
The Prospectus, consisting of 76 pages.
The undertaking to file reports.
The Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A) under the Investment Company
Act of 1940.
The signatures.
The Powers of Attorney.
Written consent of the following persons:
(a) Edwin L. Kerr, Esq.
(b) Jorden Burt Boros Cichetti Berenson & Johnson LLP
(c) Independent Accountants
(d) Paul M. Fischer, FSA, CLU, ChFC
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 Phoenix Mutual
establishing the VUL Account filed with registrant's Registration
Statement on June 26, 1986 and is filed via Edgar with
Post-Effective Amendment No. 14 on April 29, 1998, incorporated
herein by reference.*
(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 filed via Edgar with Post-Effective
Amendment No. 14 on April 29, 1998.*
(b) Form of Agreement between Phoenix Equity Planning Corporation
and Independent Brokers with respect to the sale of Policies
filed via Edgar with Post-Effective Amendment No. 14 on April
29, 1998.*
(c) Not Applicable.
(4) Not Applicable.
(5) Specimen Variable Life Insurance Policy Form Number 5000 (Phoenix
Edge) with optional rider (VR101) filed via Edgar herewith.
(6) (a) Charter of Phoenix Home Life filed with registrant's
Post-Effective Amendment No. 7 on June 22, 1992 and filed via
Edgar with Post-Effective Amendment No. 14 on April 29, 1998,
is incorporated herein by reference.*
(b) By-Laws of Phoenix Home Life filed with registrant's
Post-Effective Amendment No. 7 on June 22, 1992 and filed via
Edgar with Post-Effective Amendment No. 14 on April 29, 1998,
is incorporated herein by reference.*
(7) Not Applicable.
(8) Not Applicable.
(9) Form of Application for Variable Life Insurance Policy filed via
Edgar with Post-Effective Amendment No. 14 on April 29, 1998.*
(10) Memorandum describing transfer and redemption procedures and method
of computing adjustments in payments and cash values upon
conversion to fixed benefit policies filed via Edgar herewith.*
2. See Exhibit 1.A.(5).
3. Opinion of Counsel as to the legality of the securities being registered.
(See number 8 below.)
II-2
<PAGE>
4. No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
5. Not Applicable.
6. Consent of Jorden Burt Boros Cicchetti Berenson & Johnson LLP.*
7. Consent of Independent Accountants.*
8. Consent of Edwin L. Kerr, Esq.*
9. Opinion of Paul M. Fischer, FSA, CLU, ChFC*
- ----------
* 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, certifies that it meets all
of the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Hartford,
State of Connecticut on the 29th day of April, 1997.
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
(Registrant)
By: PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
---------------------------------------------
(Sponsor)
By: /s/ Dona D. Young
---------------------------------------------
Dona D. Young, Executive Vice President,
Individual Insurance and General Counsel
ATTEST: /s/John H. Beers
-------------------------------------
John H. Beers, Assistant 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 on
this 29th day of April, 1997.
<TABLE>
<S> <C>
SIGNATURE TITLE
- --------- -----
Director
- ---------------------------------------------------
*Sal H. Alfiero
Director
- ---------------------------------------------------
*J. Carter Bacot
Director
- ---------------------------------------------------
*Carol H. Baldi
Director
- ---------------------------------------------------
*Peter C. Browning
Director
- ---------------------------------------------------
*Arthur P. Byrne
Director
- ---------------------------------------------------
*Richard N. Cooper
Director
- ---------------------------------------------------
*Gordon J. Davis, Esq.
Chairman of the Board, President and
- ---------------------------------------------------
*Robert W. Fiondella Chief Executive Officer
(Principal Executive Officer)
Director
- ---------------------------------------------------
*Jerry J. Jasinowski
</TABLE>
S-1
<PAGE>
<TABLE>
<S> <C>
SIGNATURE TITLE
- --------- -----
Director
- ---------------------------------------------------
*John W. Johnstone
Director
- ---------------------------------------------------
*Marilyn E. LaMarche
Director
- ---------------------------------------------------
*Philip R. McLoughlin
Director
- ---------------------------------------------------
*Indra K. Nooyi
Director
- ---------------------------------------------------
*Charles J. Paydos
Director
- ---------------------------------------------------
*Robert F. Vizza
Director
- ---------------------------------------------------
*Robert G. Wilson
Executive Vice President and
- --------------------------------------------------- Chief Financial Officer
*David W. Searfoss (Principal Accounting and Financial Officer)
</TABLE>
By: /s/Dona D. Young
--------------------------
*Dona D. Young as Attorney in Fact pursuant to Powers of Attorney, copies of
which are filed herewith.
S-2
EXHIBIT 1.A.(1)
RESOLUTION OF THE BOARD OF DIRECTORS
OF PHOENIX MUTUAL
ESTABLISHING THE VUL ACCOUNT
<PAGE>
VOTED: That the Company, pursuant to the provisions of Sections 38-33a and
38-154a of the Connecticut General Statutes Annotated hereby
establishes a separate account designated initially as the "Phoenix
Mutual Variable Universal Life Account" (hereinafter "the Account"),
for the following use and purposes, and subject to such conditions as
hereinafter set forth; said use, purposes, and conditions to be in
full compliance with Sections 38-33a and 38-154a and all rules and
regulations of the Commissioner of Insurance of the State of
Connecticut; and
FURTHER
VOTED: That the Account shall be established for the purpose of providing for
the issuance by the Company of such variable life insurance contracts
("Variable Contracts") as the President may designate for such purpose
and shall constitute a separate account into which are allocated
amounts paid to the Company which are to be applied under the terms of
such Variable Contracts; and
FURTHER
VOTED: That the income, gains and losses, whether or not realized, from
assets allocated to the Account shall, in accordance with the terms of
the Variable Contracts, be credited to or charged against such Account
without regard to other income, gains, or losses of the Company; and
FURTHER
VOTED: That the fundamental investment policy of the Account shall be to
invest or reinvest the assets of the Account in securities issued by
investment companies registered under the Investment Company Act of
1940 as may be specified in the respective Variable Contracts; and
FURTHER
VOTED: That six separate investment divisions be, and hereby are, established
within the Account to which payments under the Variable Contracts will
be allocated in accordance with instructions received from
contractowners, and that the President be, and hereby is, authorized
to increase or decrease the number of investment divisions in the
Account as he deems necessary or appropriate; and
FURTHER
VOTED: That each such investment division shall invest only in the shares of
a single registered investment company, or a single portfolio of a
registered investment company organized as a series fund pursuant to
the Investment Company Act of 1940; and
FURTHER
VOTED: That the President or any Executive Officer of the Company be, and
each hereby is, authorized to transfer funds from time to time between
the Company's general account and the Account in order to establish
the Account, facilitate the commencement of the Account's operations
or to support the operation of the Variable Contracts with respect to
the Account as deemed necessary or appropriate and consistent with the
terms of the Contracts; and
<PAGE>
- 2 -
FURTHER
VOTED: That the President of the Company be, and hereby is, authorized to
change the designation of the Account to such other designation as he
may deem necessary or appropriate; and
FURTHER
VOTED: That the President or any Executive Officer of the Company and each of
them with full power to act without the others, and with such
assistance from the Company's auditors, legal counsel and independent
consultants or others as such Officer may require, be, and each hereby
is, authorized, empowered and directed to take all action necessary,
on behalf of the Account, and by the Company to: (a) register the
Account as a unit investment trust under the Investment Company Act of
1940, as amended; (b) register the Variable Contracts in such amounts,
which may be an indefinite amount, as such officers of the Company
shall from time to time deem appropriate under the Securities Act of
1933; and (c) take all other actions which are necessary in connection
with the offering and sale of said Contracts and for the operation of
the Account in order to comply with the Investment Company Act of
1940, the Securities Act of 1933 and other applicable Federal laws
including the filing of any amendments to registration statements, any
undertakings, any applications for exemptions from the Investment
Company Act of 1940 or other applicable Federal laws, and any and all
amendments to the foregoing as such Officers of the Company shall deem
necessary or appropriate; and
FURTHER
VOTED: That the Company be authorized and directed to obtain any required
approvals with respect to the establishment of the Account and
marketing of the Variable Contracts, from the Commissioner of
Insurance of Connecticut and any other statutory or regulatory
approvals which may be required; and
FURTHER
VOTED: That the Executive Officers of the Company be, and each hereby is,
authorized on behalf of the Account and on behalf of the Company to
take any and all action they may deem necessary or advisable in order
to sell the Variable Contracts, including any registrations, filings,
and qualifications of the Company, its officers, agents, employees,
and the Contracts, under the insurance and securities laws of any of
the states of the United States of America or other jurisdictions, and
in connection therewith to prepare, execute, deliver, and file all
such applications, reports, covenants, resolutions, applications for
exemptions, consents to service of process, and other papers and
instruments as may be required under such laws, and to take any and
all further action which said Officers may deem necessary or desirable
(including entering into whatever agreements may be necessary) in
order to maintain such registrations or qualifications for as long as
said officers or counsel deem it to be in the best interests of the
Account and the Company; and
<PAGE>
- 3 -
FURTHER
VOTED: That upon declaration of effectiveness of the Account's Registration
Statement by the Securities and Exchange Commission, or at such later
date as may be determined by the Executive Officers of the Company
acting with the advice of the Account's Underwriter, the Account will
offer and sell its Contracts on the terms set forth in the Prospectus
forming a part of said Registration Statement, as from time to time
supplemented or amended, and that such Contracts, when issued and paid
for in accordance with the terms of the Prospectus, shall be validly
issued, fully paid and nonassessable; and
FURTHER
VOTED: That the General Counsel of the Company is hereby appointed as agent
for service under registration statement filed with the Securities and
Exchange Commission and is duly authorized to receive communications
and notices from the Securities and Exchange Commission with respect
thereto; and
FURTHER
VOTED: That the Executive Officers of the Company be, and each hereby is,
authorized to execute and deliver all agreements, documents and papers
and to do or cause to be done all acts and things as they may deem
necessary or desirable to carry out the foregoing resolutions and the
intents and purposes thereof.
4.53
EXHIBIT 1.A.(3)(a)
MASTER SERVICE AND DISTRIBUTION
COMPLIANCE AGREEMENT
BETWEEN DEPOSITOR AND PEPCO
<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 here to 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 shall 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-dealer firms 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 17a-3 and 17a-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 party.
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 party 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 party hereto may terminate this Agreement on any
date by giving the other party 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
<PAGE>
-6-
insurance 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:
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Philip R. McLoughlin
-------------------------------
Title:
<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.(3)(b)
FORM OF AGREEMENT BETWEEN PEPCO AND
INDEPENDENT BROKERS WITH RESPECT TO
THE SALES OF POLICIES
<PAGE>
[ logo ] Phoenix BROKER-DEALER VARIABLE CONTRACT
SUPERVISORY AND SERVICE AGREEMENT
- --------------------------------------------------------------------------------
Phoenix Equity Planning Corporation ("PEPCO"), the master servicer and
distributor for the Contracts hereunder described and the undersigned
broker-dealer (the "Broker-Dealer"), enter into this Agreement as of the date
indicated, for the purpose of appointing the Broker-Dealer to perform the
services hereunder described, subject to the following provisions:
1. Except as provided below, PEPCO hereby appoints the Broker-Dealer to provide
sales assistance with respect to, and to cause applications to be solicited
for the purchase of variable annuity contracts and/or variable life policies
issued by Phoenix Home Life Mutual Insurance Company, Phoenix Life and
Annuity Company and/or PHL Variable Insurance Company (the "Insurer")
through Separate Accounts including the Phoenix Home Life Variable
Accumulation Account, Phoenix Home Life Variable Universal Life Account,
Phoenix Life and Annuity Variable Universal Life Account and PHL Variable
Accumulation Account and listed on Schedules A1, A2, B and C. Broker-Dealer
accepts such appointment and agrees to use its best efforts to provide sales
assistance to producers of the Insurer and to cause applications for the
purchase of contracts and/or policies to be solicited by such producers.
Broker-Dealer agrees to pay a commission to such producers.
2. The Broker-Dealer will promptly forward to the appropriate office of
Phoenix, or its authorized designee, all contract and/or policy applications
along with other documents, if any, and any payments received with such
applications and will have no rights of set off for any reason. Any Contract
application which is rejected, together with any payment made and other
documents submitted, shall be returned to the Broker-Dealer.
3. PEPCO shall pay the Broker-Dealer service payments relating to applications
submitted by Broker-Dealer. The amount to be paid by PEPCO is specified on
Schedule A1, A2, B and C of this Agreement. The Broker-Dealer agrees to
return promptly to PEPCO, all compensation received for any Contract
returned within the "free look" period as specified in the Contract.
4. The Broker-Dealer represents that it is a registered broker-dealer under the
Securities Exchange Act of 1934, a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), and is registered as a
broker-dealer under state law to the extent required in order to provide the
services described in this Agreement. Broker-Dealer agrees to abide by all
rules and regulations of the NASD, including its Rules of Fair Practice, and
to comply with all applicable state and federal laws and the rules and
regulations of authorized regulatory agencies affecting the sale of the
contracts and/or policies, including the prospectus delivery requirements
under the Securities Act of 1933 for the contracts and/or policies and any
underlying mutual fund. The Broker-Dealer agrees to notify PEPCO promptly of
any change, termination, or suspension of its status. Broker-Dealer shall
immediately notify PEPCO with respect to: i) the initiation and disposition
of any form of disciplinary action by the NASD or any other agency or
instrumentality having jurisdiction with respect to the subject matter
hereof against Broker-Dealer or any of its employees or agents; ii) the
issuance of any form of deficiency notice by the NASD or any such agency
regarding Broker-Dealer's training, supervision or sales practices; and/or
iii) the effectuation of any consensual order with respect thereto.
5. In connection with the solicitation of applications for the purchase of
contracts and/or policies, Broker-Dealer agrees to indemnify and hold
harmless PEPCO and the Insurer from any damage or expense as a result of:
(a) the negligence, misconduct or wrongful act of Broker-Dealer or any
employee, representative or agent of the Broker-Dealer; and/or (b) any
actual or alleged violation of any securities or insurance laws, regulations
or orders. Any indebtedness or obligation of the Broker-Dealer to PEPCO or
the Insurer, whether arising hereunder or otherwise, and any liabilities
incurred or monies paid by PEPCO or the Insurer to any person as a result of
any misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of Broker-Dealer or its employees, producers, and registered
representatives to comply with this Agreement, shall be set off against any
compensation payable under this Agreement. Notwithstanding the foregoing,
Broker-Dealer shall not indemnify and hold harmless PEPCO and the Insurer
from any damage or expense on account of the negligence, misconduct or
wrongful act of Broker-Dealer or any employee, representative or producer of
Broker-Dealer if such negligence, misconduct or wrongful act arises out of
or is based upon any untrue statement or alleged untrue statement of
material fact, or the omission or alleged omission of a material fact in:
(i) any registration statement, including any
1
HO3272 4-97
<PAGE>
prospectus or any post-effective amendment thereto; or (ii) any material
prepared and/or supplied by PEPCO or the Insurer for use in conjunction with
the offer or sale of Contracts; or (iii) any state registration or other
document filed in any state or jurisdiction in order to qualify any contract
and/or policy under the securities laws of such state or jurisdiction. The
terms of this provision shall not be impaired by termination of this
Agreement.
In connection with the solicitation of applications for the purchase of
contracts and/or policies, PEPCO and the Insurer agree to indemnify and hold
harmless Broker-Dealer from any damage or expense on account of the
negligence, misconduct or wrongful act of PEPCO or the Insurer or any
employee, representative or producer of PEPCO or the Insurer, including but
not limited to, any damage or expense which arises out of or is based upon
any untrue statement or alleged untrue statement of material fact, or the
omission or alleged omission of a material fact in: (i) any registration
statement, including any prospectus or any post-effective amendment thereto;
or (ii) any material prepared and/or supplied by PEPCO or the Insurer for
use in conjunction with the offer or sale of the contracts and/or policies;
or (iii) any state registration or other document filed in any state or
other jurisdiction in order to qualify any contract and/or policy under the
securities laws of such state or jurisdiction. The terms of this provision
shall not be impaired by termination of this Agreement.
6. The Broker-Dealer will itself be, or will select persons associated with it
who are, trained and qualified to solicit applications for purchase of
contracts and/or policies in conformance with applicable state and federal
laws. Any such persons shall be registered representatives of the
Broker-Dealer in accordance with the rules of the NASD, be licensed to offer
the contract and/or policy in accordance with the insurance laws of any
jurisdiction in which such person solicits applications, be licensed with
and appointed by the Insurer to solicit applications for the contracts
and/or policies and have entered into the appropriate Variable Contracts
Insurance Commission Agreement with the Insurer, if applicable. Under the
Variable Contracts Insurance Commission Agreement, the Insurer will make
payments to insurance producers. Broker-Dealer will train and supervise its
representatives to insure that purchase of a contract and/or policy is not
recommended to an applicant in the absence of reasonable grounds to believe
that the purchase of a contract and/or policy is suitable for that
applicant. Broker-Dealer shall pay the fees to regulatory authorities in
connection with obtaining necessary securities licenses and authorizations
for registered representatives to solicit applications for the purchase of
contracts and/or policies. Broker-Dealer is not responsible for fees in
connection with the appointment of registered representatives as insurance
agents of the Insurer.
7. The activities of all producers referred to in Paragraph 6 will be under the
direct supervision and control of the Broker-Dealer. The right of such
producers to solicit applications for the purchase of contracts and/or
policies is subject to their continued compliance with the rules and
procedures which may be established by the Broker-Dealer, PEPCO or the
Insurer, including those set forth in this Agreement.
8. The Broker-Dealer shall ensure that applications for the purchase of
contracts and/or policies are solicited only in the states where the
contracts and/or policies are qualified for sale, and only in accordance
with the terms and conditions of the then current prospectus applicable to
the contracts and/or policies and will make no representations not included
in the prospectus, Statement of Additional Information, or in any authorized
supplemental material supplied by PEPCO. With regard to the contracts and/or
policies, the Broker-Dealer shall not use or permit its producers to use any
sales promotion materials or any form of advertising other than that
supplied or approved by PEPCO. Broker-Dealer shall ensure that the
prospectus delivery requirements under the Securities Act of 1933 and all
other applicable securities and insurance laws, rules and regulations are
met and that delivery of any prospectus for the contracts and/or policies
will be accompanied by delivery of the prospectus for the underlying mutual
funds.
9. The Broker-Dealer understands and agrees that in performing the services
covered by this Agreement, it is acting in the capacity of an independent
contractor and not as an agent or employee of PEPCO, and that it is not
authorized to act for, or make any representation on behalf of, PEPCO or the
Insurer except as specified herein. Broker-Dealer understands and agrees
that PEPCO shall execute telephone transfer orders only in accordance with
the terms and conditions of the then current prospectus applicable to the
contracts and/or policies and agrees that, in consideration for the
Broker-Dealer's right to exercise the telephone transfer privilege, neither
PEPCO nor the Insurer will be liable for any loss, injury or damage incurred
as a result of acting upon, nor will they be held responsible for the
authenticity of, any telephone instructions containing unauthorized,
incorrect or incomplete information. Broker-Dealer agrees to indemnify and
hold harmless PEPCO and the Insurer against any loss, injury or damage
resulting from any telephone exchange instruction containing
2
<PAGE>
unauthorized, incorrect or incomplete information received from
Broker-Dealer or any of its registered representatives. (Telephone
instructions are recorded on tape.)
10. This Agreement may not be assigned by the Broker-Dealer without the prior
consent of PEPCO. Any party hereto may cancel this Agreement at any time
upon written notice. This Agreement shall automatically terminate if the
Broker-Dealer voluntarily or involuntarily ceases to be or is suspended from
being, a member in good standing of the NASD. Provided further, PEPCO
reserves the right to terminate this Agreement in the event that any
employee or agent of Broker-Dealer is suspended, disciplined or found to be
in violation of governing insurance or securities laws, rules or
regulations. Furthermore, PEPCO reserves the right to revise the payments
for services described in this Agreement as set forth in Paragraph 3 at any
time upon the mailing of written notice to the Broker-Dealer. Failure of any
party to terminate this Agreement for any of the causes set forth in this
Agreement shall not constitute a waiver of the right to terminate this
Agreement at a later time for any such causes.
11. This Agreement on the part of the Broker-Dealer runs to PEPCO and the
Insurer and is for the benefit of and enforceable by each. This Agreement
shall be governed by and construed in accordance with the laws of the State
of Connecticut. This Agreement supersedes any agreement in effect prior to
May 1, 1995. Your first contract/policy sale after receipt of this Agreement
shall constitute your acceptance of its terms. If Agreement is not returned,
"default" Commission Option 1 will be applied. If you do not wish to
participate in solicitating applications for one of the available products,
you must complete Section 12.
12. Applications for the following products will not be solicited by any
representative, employee or agent of the Broker-Dealer:
A. [ ] Phoenix Home Life Mutual Insurance Company
[ ] Variable Annuities
[ ] Variable Universal Life
B. [ ] PHL Variable Insurance Company
[ ] Variable Annuities
C. [ ] Phoenix Life and Annuity Company
[ ] Variable Universal Life
Broker-Dealer Firm:
Name of Firm: _____________________________________________________________
By: _______________________________________________________________________
Print Name & Title: _______________________________________________________
Date: __________________________ NASD CRD Number __________________________
Phoenix Equity Planning Corporation
By: _______________________________________________________________________
Title: ____________________________________________________________________
Date: _____________________________________________________________________
3
<PAGE>
[ Phoenix logo goes here ]
PHOENIX IS:
Phoenix Home Life Mutual Insurance Company
Phoenix Life and Annuity Company
PHL Variable Insurance Company
Phoenix Equity Planning Corporation
MAIN ADMINISTRATIVE OFFICE:
Hartford, Connecticut
<PAGE>
[ logo ] Phoenix Schedule A-1 (Variable Annuities)
Phoenix Home Life Mutual Insurance Company
- --------------------------------------------------------------------------------
Broker-Dealer has been appointed by PEPCO to provide sales assistance to
producers of Phoenix Home Life Mutual Insurance Company and to cause to be
solicited applications for the purchase of the following contracts ("Contracts")
issued by Phoenix Home Life Mutual Insurance Company:
THE BIG EDGE - INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS (FORM 2545) issued
by the Phoenix Home Life Variable Accumulation Account of Phoenix Home Life
Mutual Insurance Company. PEPCO, as paying agent for Phoenix Home Life Mutual
Insurance Company, shall pay the Broker-Dealer a service payment equal to 5.0%
of premiums paid under The Big Edge contracts.
THE BIG EDGE AND BIG EDGE PLUS - INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
(FORMS 2645 & 2646, RESPECTIVELY) issued by the Phoenix Home Life Variable
Accumulation Account of Phoenix Home Life Mutual Insurance Company. PEPCO, as
paying agent for Phoenix Home Life Mutual Insurance Company, shall pay the
Broker-Dealer a service payment equal to 6.0% of premiums paid under The Big
Edge contracts.
THE GROUP STRATEGIC EDGE - UNALLOCATED GROUP DEFERRED VARIABLE ANNUITY CONTRACTS
(FORM GD603) issued by the Phoenix Home Life Variable Accumulation Account of
Phoenix Home Life Mutual Insurance Company. PEPCO, as paying agent for Phoenix
Home Life Mutual Insurance Company, shall pay the Broker-Dealer a service
payment equal to 5% of first $20,000 of premiums paid, 4% of the next $30,000 of
premiums paid, and 3.5% of such premiums paid over $50,000. Banded compensation
will be processed on a calendar year basis, based upon aggregate premiums paid
under the contract in that calendar year. A persistency bonus is payable on a
calendar quarterly basis, beginning in the second calendar year for each
contract, at an effective annual rate of .20% of net assets.
THE GROUP STRATEGIC EDGE - ALLOCATED GROUP DEFERRED VARIABLE ANNUITY CONTRACTS
(FORM GD601) issued by the Phoenix Home Life Variable Accumulation Account of
Phoenix Home Life Mutual Insurance Company. PEPCO, as paying agent for Phoenix
Home Life Mutual Insurance Company shall pay the Broker-Dealer a service payment
from one of the three Commission Options available as described below. If more
than one Commission Option is chosen, Broker-Dealer agrees that its
representatives may select from the specified Commissions Options at the time a
Contract is purchased. Once a Commission Option has been selected it cannot be
changed in the future. Broker-Dealer may also allow specified representatives to
utilize a Commission Option other than what is selected below on a contract by
contract basis by completing the section on the Commission Election form titled
"Exception." Option 1 shall apply: if a Commission Option is not selected by the
Broker-Dealer; in the event that the Broker-Dealer has approved more than one
Commission Option and an application is received without a Commission Election
form; a Commission Election form is submitted with an Option not approved by the
Broker-Dealer; or an Exception Section of the Commission Election form is not
signed by the Broker Dealer. If only one Commission Option is selected by the
Broker-Dealer, that Option will always be invoked.
Please check one or more of the following Commission Options:
OPTION NUMBER OPTION DESCRIPTION
[ ] 1. 5% of first $20,000 of premiums paid, 4% of the
next $30,000 of premiums paid, and 3.5% of such
premiums paid over $50,000.
[ ] 2. 3% of first $20,000 of premiums paid, 2.5% of
such premiums paid over $20,000 with an annual
trail commission of .25% beginning in the 2nd
year.
[ ] 3. 1% of premiums paid plus a trail commission of
.50% beginning in the 2nd year.
Banded compensation will be processed on a calendar year basis, based upon
aggregate premiums paid under the contract in that calendar year.
Trail commissions will be paid on the Contract Value on a calendar quarter basis
on deposits held under the Contract for a year or more.
HO3272VA 4-97
<PAGE>
[ logo ] Phoenix SCHEDULE A-2 (VARIABLE LIFE)
Phoenix Home Life Mutual Insurance Company
- --------------------------------------------------------------------------------
THE PHOENIX EDGE - INDIVIDUAL VARIABLE LIFE INSURANCE POLICIES (FORM 5000)
issued by the Phoenix Variable Universal Life Account of Phoenix Home Life
Mutual Insurance Company. PEPCO, as paying agent for Phoenix Home Life Mutual
Insurance Company, shall pay the Broker-Dealer a service payment equal to 5% of
premium payments made under The Phoenix Edge policies.
FLEX EDGE SUCCESS (FORM V603) AND FLEX EDGE (FORM 2667) - FLEXIBLE PREMIUM
INDIVIDUAL VARIABLE LIFE INSURANCE POLICIES issued by the Phoenix Variable
Universal Life Account of Phoenix Home Life Mutual Insurance Company. PEPCO, as
paying agent for Phoenix Home Life Mutual Insurance Company, shall pay the
Broker-Dealer a service payment equal to 50% of premium payments made under The
Flex Edge policies, up to the commissionable premium amount, and 4% of such
payments after the commissionable premium has been paid, in the first Policy
Year. However, if the Broker-Dealer or a registered representative of the
Broker-Dealer is a career producer of Phoenix Home Life Mutual Insurance
Company, then PEPCO, as paying agent for Phoenix Home Life Mutual Insurance
Company, shall pay the Broker-Dealer a service payment equal to 50% of premium
payments made, up to the commissionable premium amount, and 5% of such payments
after the commissionable premium has been paid, in the first Policy Year.
Commissionable premium is the lesser of (1) the Policy's target premium and (2)
the subsequent premium specified on the application.
ESTATE EDGE (FORM V604) - SECOND TO DIE VARIABLE UNIVERSAL LIFE INSURANCE
POLICIES AND JOINT EDGE (FORM V601) - FLEXIBLE PREMIUM MULTIPLE VARIABLE LIFE
INSURANCE POLICIES issued by the Phoenix Variable Universal Life Account of
Phoenix Home Life Mutual Insurance Company. PEPCO, as paying agent for Phoenix
Home Life Mutual Insurance Company, shall pay the Broker-Dealer a service
payment equal to 50% of premium payments made under the policies, up to the
commissionable premium amount, and 4% of such payments after the
commissionable premium has been paid, in the first Policy Year. However, if the
Broker-Dealer or a registered representative of the Broker-Dealer is a career
producer of Phoenix Home Life Mutual Insurance Company, then PEPCO, as paying
agent for Phoenix Home Life Mutual Insurance Company, shall pay the
Broker-Dealer a service payment equal to 50% of premium payments made, up to the
commissionable premium amount, and 5% of such payments after the commissionable
premium has been paid, in the first Policy Year. Commissionable premium is the
lesser of (1) the Policy's target premium and (2) the subsequent premium
specified on the application.
HO3272VL 5-97
<PAGE>
[ logo ] Phoenix SCHEDULE B
PHL Variable Life Insurance Company
- --------------------------------------------------------------------------------
THE BIG EDGE CHOICE - INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT (FORM D601)
issued by the PHL Variable Accumulation Account of PHL Variable Insurance
Company. PEPCO, as paying agent for PHL Variable Insurance Company, shall pay
the Broker-Dealer a service payment from one of the three Commission Options
available as described below. If more than one Commission Option is chosen,
Broker-Dealer agrees that its representatives may select from the specified
Commission Options at the time a contract is purchased. Once a Commission Option
has been selected, it cannot be changed in the future. Broker-Dealer may also
allow specified representatives to utilize a Commission Option other than what
is selected below on a contract by contract basis by completing the section on
the Commission Election form titled, "Exception." Option 1 shall apply: if a
Commission Option is not selected by the Broker-Dealer; in the event that the
Broker-Dealer has approved more than one Commission Option and an application is
received without a Commission Election form; a Commission Election form is
submitted with an Option not approved by the Broker-Dealer; or an Exception
Section of the Commission Election form is not signed by the Broker-Dealer. If
only one Commission Option is selected by the Broker-Dealer, that Commission
Option will always be invoked.
Please check one or more of the following Commission Options:
OPTION NUMBER OPTION DESCRIPTION*
[ ] 1. 5.75% of premiums paid plus an annual trail
commission of .25% of Contract Value beginning in
the 8th year.**
[ ] 2. 5% of premiums paid plus an annual trail
commission of .30% of Contract Value beginning
the 2nd year and increasing to .50% beginning the
8th year.
[ ] 3. 3% of premiums paid plus an annual trail
commission of .50% of Contract Value beginning the
2nd year and increasing to 1.00% beginning the
8th year.
Trail commissions will be paid on the Contract Value on a calendar quarter basis
on deposits held under the Contract for a year or more.
* Sales of the contract to applicants over age 80 will be paid at 50% of the
Commission Option selected. Trail commissions will be paid at the full
percentage amounts listed.
** This Option 1 will be effective January 1, 1998. The current Option 1
which provides for the payment of 6% of premiums paid (no trail
commission) will be discontinued at that time. Broker-Dealers who had
previously elected Option 1 will continue to be compensated under its
terms.
HO3272B 5-97
<PAGE>
[ logo ] Phoenix SCHEDULE C
Phoenix Home Life Mutual Insurance Company
- --------------------------------------------------------------------------------
THE BIG EDGE CHOICE (NY) - INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT (FORM
D602) issued by the Phoenix Home Life Variable Accumulation Account of Phoenix
Home Life Mutual Insurance Company. PEPCO, as paying agent for Phoenix Home Life
Mutual Insurance Company, shall pay the Broker-Dealer a service payment from one
of the three Commission Options available as described below. If more than one
Commission Option is chosen, Broker-Dealer agrees that its representatives may
select from the specified Commission Options at the time a contract is
purchased. Once a Commission Option has been selected, it cannot be changed in
the future. Broker-Dealer may also allow specified representatives to utilize a
Commission Option other than what is selected below on a contract by contract
basis by completing the section on the Commission Election form titled,
"Exception." Option 1 shall apply: if a Commission Option is not selected by the
Broker-Dealer; in the event that the Broker-Dealer has approved more than one
Commission Option and an application is received without a Commission Election
form; a Commission Election form is submitted with an Option not approved by the
Broker-Dealer; or an Exception Section of the Commission Election form is not
signed by the Broker-Dealer. If only one Commission Option is selected by the
Broker-Dealer, that Commission Option will always be invoked.
Please check one or more of the following Commission Options:
OPTION NUMBER* OPTION DESCRIPTION**
[ ] 1. 5.75% of premiums paid plus an annual trail
commission of .25% of Contract Value beginning in
the 8th year.
[ ] 2. 5% of premiums paid plus an annual trail
commission of .20% of Contract Value beginning the
2nd year and increasing to .30% beginning the
8th year.
[ ] 3. 3% of premiums paid plus an annual trail
commission of .35% of Contract Value beginning the
2nd year and increasing to .65% beginning the
8th year.
Trail commissions will be paid on the Contract Value on a calendar quarter basis
on deposits held under the Contract for a year or more.
* Sales of the contract to applicants over age 80 will be paid at 50% of the
Commission Option(s) chosen. Trail commissions will be paid at the full
percentage amount as listed.
** Contingent upon your Representative's Commission Contract with Phoenix a
different compensaiton schedule may apply.
HO3272E 4-97
EXHIBIT 1.A.(5)
SPECIMEN VARIABLE LIFE INSURANCE POLICY
<PAGE>
PHOENIX MUTUAL LIFE INSURANCE COMPANY
Home Office: One American Row, Hartford, Connecticut 06115
Insured : John Doe 45 Male : Issue Age and Sex
Policy Number : 0000001 Aug. 1, 1985 : Policy Date
Target Face Amount : $50,000 Aug. 1, 2035 : Policy Maturity Date
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 Investment Products
Division at the following address:
Phoenix Mutual Life Insurance Company
Investment Products Division
One American Row
Hartford, Ct. 06115
RIGHT TO CANCEL. You have a right to return this policy. If for any reason you
are not satisfied with this policy, you may return it to us at our Investment
Products Division 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
Investment Products Division.
Signed for Phoenix Life Insurance Company at its Home Office in Hartford,
Connecticut.
Sincerely yours,
Secretary President
Registrar
Variable Life Insurance Policy
The death benefit and other values provided by this policy are based on the
rates of investment experience of the underlying sub-accounts. Thus, the death
benefit and other values may increase or decrease in amount. See Part 5 for a
description of how the death benefit is determined.
Eligible for Annual Dividends
<PAGE>
SCHEDULE PAGE
BASIC INFORMATION
Insured John Doe 45 - Male : Issue Age and Sex
Policy Number 0000001 Jan. 1, 1986 : Policy Date
Target Face Amount $50,000 Jan. 1, 2035 : Policy Maturity Date*
OWNER: John Doe
BENEFICIARY: AS STATED ON THE APPLICATION OR LATER CHANGED
RISK CLASSIFICATION: MALE SMOKER
ISSUE PREMIUM: $21,191.27
SUB-ACCOUNT CHARGES
-------------------
MAXIMUM DAILY MORTALITY AND EXPENSE RISK CHARGE: 0.00001370 (BASED ON ANNUAL
RATE OF 0.50%)
MAXIMUM DAILY TAX CHARGE: 0 OR SUCH GREATER AMOUNT AS MAY BE ASSESSED AS A
RESULT OF A CHANGE IN TAX LAWS
POLICY CHARGES
--------------
MONTHLY DEDUCTION: INCLUDES COST OF INSURANCE AS DESCRIBED IN PART 2 AND
REPAYMENT OF ACQUISITION EXPENSE ALLOWANCE OF $1,801.20
PRORATED MONTHLY OVER FIRST 10 POLICY YEARS.
OTHER RATES
-----------
LOAN INTEREST RATE: 8.00%
LOAN ACCOUNT ACCUMULATION RATE: 7.25%
SUB-ACCOUNT ALLOCATION SCHEDULE ON THE POLICY DATE:
---------------------------------------------------
MONTHLY
SUB-ACCOUNT**` PREMIUMS DEDUCTIONS***
MONEY MARKET 50 % PROPORTIONATE
----------------
STOCK 50 % PROPORTIONATE
----------------
BOND % NONE
----------------
TOTAL-VEST % NONE
----------------
ZERO COUPON BOND A % NONE
----------------
ZERO COUPON BOND B % NONE
----------------
* THE POLICY MATURITY DATE IS THE LATEST DATE THAT THE POLICY WILL TERMINATE
EVEN IF PREMIUMS ARE PAID IN SUFFICIENT AMOUNTS TO MAKE ALL REQUIRED
MONTHLY DEDUCTIONS. ANY SURRENDER VALUE ON THE MATURITY DATE WILL BE PAID
TO YOU AS PROVIDED IN THE SECTION ENTITLED POLICY MATURITY LOCATED IN PART
4: LIFETIME BENEFITS.
** SEE NEXT PAGE FOR DESCRIPTION OF SUB-ACCOUNTS
*** SEE PART 1 FOR DEFINITION OF PROPORTIONATE. SUB-ACCOUNTS MARKED "NONE" WILL
BE CHARGED WITH A PORTION OF THE MONTHLY DEDUCTION ONLY IF THE SUB-ACCOUNTS
MARKED PROPORTIONATE ARE NOT SUFFICIENT TO MAKE THE FULL MONTHLY DEDUCTION.
Date Prepared: January 1, 1986
---------------
<PAGE>
SCHEDULE PAGE (continued)
Insured : John Doe 00000001: Policy Number
DESCRIPTION OF SUB-ACCOUNTS
MONEY MARKET The investment objective of the MONEY MARKET
sub-account is to provide maximum current income
consistent with capital preservation and liquidity.
STOCK The investment objective of the STOCK sub-account is
to achieve intermediate and long-term growth of
capital, with income as a secondary consideration.
BOND The primary investment objective of the BOND
sub-account is to seek high current income. It is
intended that this sub-account will invest primarily
in diversified portfolio of high yield fixed income
securities. Capital growth is a secondary objective
which will also be considered when consistent with
the objective of high current income.
TOTAL-VEST The investment objective of the TOTAL-VEST
sub-account is to realize as high a level of the
total return over an extended period of time as is
considered consistent with prudent investment risk.
ZERO COUPON BOND The investment objective of the ZERO COUPON BOND is
to obtain safety of capital and income through
investment in and appreciation of fixed portfolios
consisting of dept obligations of the United States
of America with fixed maturities of approximately
three (Zero Bond I) and five Zero Bond II) years
after the initial creation of the Series. Additional
portfolios of debt obligations with fixed maturities
may be offered in the future.
Sub-account Maturity Date
ZERO COUPON BOND I 01/01/1989
ZERO COUPON BOND II 01/01/1991
Date Prepared: January 1, 1986
---------------
<PAGE>
SCHEDULE PAGE (continued)
Insured : John Doe 0000001 : Policy Number
Risk
Classification : Male-Smoker
TABLE OF DEATH BENEFIT ADJUSTMENT RATES
This table shows the death benefit adjustment rates on each policy anniversary
based on the insured's attained age on that anniversary. Adjustment rates
between anniversaries are calculated by monthly interpolation between the rates
for the immediately preceding and immediately following anniversaries.
The death benefit during each policy month after the first is equal to the cash
value on the Monthly Calculation Day (determined without regard to the monthly
deduction for that policy month) multiplied by the death benefit adjustment rate
for that month. See Part 5.
Attained Attained Attained
Age* Rate Age* Rate Age* Rate
45 2.57864 65 1.55602 85 1.17301
46 2.50361 66 1.52603 86 1.16196
47 2.43164 67 1.49756 87 1.15092
48 2.36262 68 1.47046 88 1.13953
49 2.29637 69 1.44457 89 1.12754
50 2.23283 70 1.41979 90 1.11442
51 2.17170 71 1.39612 91 1.09949
52 2.11332 72 1.37357 92 1.08190
53 2.05747 73 1.35222 93 1.06050
54 2.00418 74 1.33215 94 1.03393
55 1.95340 75 1.31334 95 1.00000
56 1.90499 76 1.29583
57 1.85883 77 1.27946
58 1.81472 78 1.26405
59 1.77253 79 1.24937
60 1.73209 80 1.23529
61 1.69336 81 1.22174
62 1.65637 82 1.20871
63 1.62114 83 1.19625
64 1.58770 84 1.18438
*Attained age is defined in Part 1.
Date Prepared: January 1, 1986
---------------
<PAGE>
SCHEDULE PAGE (continued)
Insured : John Doe 0000001 : Policy Number
Risk
Classification : Male-Smoker
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
PER $1,000 OF NET AMOUNT AT RISK
Attained Attained Attained
Age* Rate Age* Rate Age* Rate
45 .5225 65 3.0242 85 14.5167
46 .5692 66 3.2975 86 15.4817
47 .6200 67 3.5842 87 16.4217
48 .6734 68 3.8792 88 17.4475
49 .7334 69 4.1934 89 18.4600
50 .7917 70 4.5400 90 19.4742
51 .8700 71 4.9242 91 20.5100
52 .9517 72 5.3609 92 21.6109
53 1.0450 73 5.8525 93 23.0250
54 1.1500 74 6.3884 94 24.8459
55 1.2617 75 6.9809
56 1.3825 76 7.5917
57 1.5075 77 8.2100
58 1.6409 78 8.8259
59 1.7792 79 9.4575
60 1.9325 80 10.1325
61 2.1050 81 10.8675
62 2.2992 82 11.6834
63 2.5192 83 12.5859
64 2.7617 84 13.5409
*Attained age is defined in Part 1.
Date Prepared: January 1, 1986
---------------
<PAGE>
TABLE OF CONTENTS
Part Page
Schedule Page
Basic Information
Description of Sub-accounts
Table of Death Benefit Adjustment Rates
Table of Guaranteed Maximum Cost of
Insurance Rates
Table of Contents
1 Definitions................................... 1
2 Premiums and Monthly Deductions............... 2
Premiums.................................. 2
Premium Allocation to Sub-Accounts........ 2
Additional Premiums, Grace
Period, and Lapse....................... 3
Policy Value.............................. 4
Monthly Deduction......................... 4
3 The Separate Account and
Sub-account Values............................ 5
Separate Account.......................... 5
Sub-accounts.............................. 5
Voting Rights............................. 6
Share of Sub-account Values............... 6
Unit Value................................ 6
Net Investment Factor..................... 6
4 Lifetime Benefits............................. 7
Transfers................................. 7
Available Loan Value...................... 7
Loans..................................... 7
Loan Interest............................. 8
Cash and Surrender Value.................. 8
Full Surrender............................ 8
Partial Surrender......................... 9
Dividends................................. 10
Policy Maturity........................... 10
5 Death Benefits................................ 10
Death Benefit............................. 10
Suicide Exclusion......................... 10
Death Proceeds............................ 10
Interest on Death Benefits................ 11
<PAGE>
TABLE OF CONTENTS (cont.)
Part Page
6 General Provisions............................ 11
Effective Date............................ 11
Policy and Application.................... 11
Contestability............................ 11
Misstatement of Age or Sex................ 12
Assignments............................... 12
Annual Reports............................ 12
Owner..................................... 12
Rights of Owner........................... 12
How to Change Owner....................... 13
Beneficiary............................... 13
How to Change Beneficiary................. 13
Exchange of Plan.......................... 14
Transaction Rules......................... 15
7 Payment Options............................... 15
Who May Elect Payment Options............. 15
How to Elect a Payment Option............. 16
What Payment Options are Available........ 16
(1) Payment in one sum............... 16
(2) Left to earn interest............ 16
(3) Payments for a specified period.. 16
(4) Life annuity with specified
period certain................. 16
(5) Life annuity..................... 17
(6) Payments of a specified amount... 17
(7) Joint survivorship annuity with
10-year period certain......... 17
Other Payment Options..................... 18
Additional Interest....................... 18
8 Table of Payment Option Amounts............... 19
Adjusted Age.............................. 19
<PAGE>
PART 1. DEFINITIONS
ATTAINED AGE Age of the insured on the birthday nearest the
most recent policy anniversary.
CASH VALUE The policy value as defined in Part 2 less the
balance of any unrepaid acquisition expense.
DEBT Unpaid policy loans with accrued interest.
GENDER The terms "he", "his", and "him", are applicable
without regard to sex. Where proper, "she", or
"her" may be substituted.
IN WRITING (WRITTEN In a written form satisfactory to us and filed at
REQUEST) our IPD.
IPD Our Investment Products Division. The address
shown on the cover page of this policy.
MONTHLY CALCULATION DAY The first Monthly Calculation Day is the same day
as the Policy Date. Subsequent Monthly Calculation
Days are the same day for 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. 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 next Valuation Date.
PAYMENT DATE The Valuation Date on which a premium payment or
loan repayment is received at our IPD 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
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 2.
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 year is
the one-year period from the policy anniversary up
to but not including the next policy anniversary.
PROPORTIONATE Amounts are allocated to sub-accounts on a
proportionate basis are allocated by increasing
(or decreasing) this policy's share in the value
of the affected sub-accounts so that such shares
maintain the same ratio to each other before and
after the allocation.
- 1 -
<PAGE>
SUB-ACCOUNTS Accounts within Phoenix Mutual's Variable
Universal Life Separate Account to which non-
loaned assets under this policy are allocated as
described in Part 3.
TARGET FACE AMOUNT The Target Face Amount shown on the Schedule Page,
or as later changed as provided in the Partial
Surrender provision in Part 4.
UNIT A standard of measurement, as described in Part 2,
used to determine the share of this policy in the
value of each sub-account.
VALUATION DATE For any sub-account, every day the New York Stock
Exchange is open for business except such days on
which transactions are postponed in accordance
with the Transaction Rules stated in Part 6.
VALUATION PERIOD For any sub-account, the period in days from the
end of one Valuation Date through the next
Valuation Date.
WE (OUR, US) Phoenix Mutual Life Insurance Company, Hartford,
Connecticut.
YOU (YOUR) The owner of this policy.
PART 2. PREMIUMS AND MONTHLY DEDUCTIONS
PREMIUMS The Issue Premium shown on the Schedule Page is
due on the Policy Date. The insured must be alive
when the Issue Premium is paid.
All premiums are payable in advance at our IPD,
except that the Issue Premium may be paid to an
authorized agent of ours for forwarding to our
IPD. No benefit associated with such premium will
be provided until it is actually received by us at
our IPD. Any payment received by us while debt
exists under this policy will be applied as a debt
repayment unless identified in writing as a
premium payment.
PREMIUM ALLOCATION The Issue Premium will be applied on the Payment
TO SUB-ACCOUNTS Date to the various sub-accounts based on the
premium allocation schedule elected in the
application. You may change the allocation
schedule for future premium payments by written
request. Unless we agree otherwise, allocations to
each sub-account must be expressed in wholes of a
percent.
The number of units credited to each sub-account
will be determined by dividing the premium applied
to that sub-account by the unit value of that
sub-account on the Payment Date. The number of
units credited to each sub-account is carried to 4
decimal places.
- 2 -
<PAGE>
ADDITIONAL PREMIUMS, If the variable death benefit at the beginning of
GRACE PERIOD, AND LAPSE any policy year after the first is less than the
highest death benefit provided at any time during
the prior policy year, you may elect to increase
the variable death benefit by paying us an
additional premium up to such maximum amount as we
may permit. Any such additional premium payments
must be paid while the insured is alive and
received by us at our IPD within 61 days of the
beginning of the policy year for which the payment
is made. The maximum amount permitted by us, when
added to the reduction in the cash value due to
any partial surrenders made during the prior
policy year, will at least equal the premium
needed to increase the variable death benefit at
the beginning of the current policy year to the
highest variable death benefit provided at any
time during the prior policy year, or to the
current Target Face Amount if lower. Evidence of
insurability will not be required.
If on any Monthly Calculation Day this policy's
surrender value is less than the required monthly
deduction, a grace period will be allowed for the
payment of the additional amount needed to
increase such value to an amount equal to three
times the required monthly deduction. The policy
will continue in force during such grace period
for the same death benefit provided in the policy
month just prior to such grace period. We will
mail a written notice to you and any assigns at
the post office addresses last known to us stating
the additional amount required. The grace period
ends 61 days after the day we mail the written
notice. If such additional amount is not paid to
us by the end of the grace period the policy will
terminate and lapse without value as of the first
monthly Calculation Day on which the policy's
surrender value was less than the required monthly
deduction.
While the death proceeds will be increased on the
Payment Date of an additional premium, as
described in Part 5, the death benefit will not be
increased until the first Monthly Calculation Day
to occur on or next following the Payment Date.
Additional premium amounts received by us at our
IPD will be reduced by any applicable state
premium tax based on your last known address on
record with us at our IPD. Payments received by us
during a grace period will also be reduced by the
amount needed to cover any monthly deductions made
during the grace period. The remainder will be
applied on the Payment Date to the various
sub-accounts based on the current premium
allocation schedule.
The number of units credited to each sub-account
will be determined by dividing the net additional
premium applied to that sub-account by the unit
value of that sub-account on the Payment Date. The
number of units credited to each sub-account is
carried to 4 decimal places.
- 3 -
<PAGE>
POLICY VALUE The policy value on the Policy Date is the Issue
Premium received by us on or before the Policy
Date less the monthly deduction for the first
policy month.
The policy value on any other day is the sum of
the shares of this policy in the value of each
sub-account plus the value of the loan account.
See Part 3 for explanation as to how this policy's
share in the value of each sub-account is
determined.
MONTHLY DEDUCTION A deduction is made each month from the policy
value (excluding the value of the loan account) to
pay:
(A) during the first 10 policy years, the
monthly pro-rata share of the balance of any
unrepaid acquisition expense prorated over
the number of policy months remaining to the
end of the 10th policy year;
(B) the cost of insurance provided under this
policy; and
(C) the cost of any rider benefits provided.
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 next valuation
date.
You may request in the application that monthly
deductions not be taken from certain specified
sub-accounts. 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 sub-accounts on a proportionate basis.
In the event this policy's share in the value of
such sub-accounts 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 share of each of the other
sub-accounts.
The number of units deducted from each sub-account
will be determined by dividing the portion of the
monthly deduction allocated to each such
sub-account by the unit value of that sub-account
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
insurance rate for the current policy month
divided by 1000 and then multiplied by the result
of:
(a) the death benefit on the Monthly Calculation
Day; minus
(b) the cash value on the Monthly Calculation
Day.
- 4 -
<PAGE>
The cost of insurance rate for the current policy
month is based on the insured's attained age and
risk classification. The rate used in computing
the cost of insurance is obtained from the Table
of Guaranteed Maximum Cost of Insurance Rates for
the risk classification(s) 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 an insured will not be
affected by a change in the insured's health or
occupation.
PART 3: THE SEPARATE ACCOUNT AND SUB-ACCOUNT
VALUES
SEPARATE ACCOUNT Assets under this policy, except for loans, will
be allocated to the Phoenix Mutual Variable
Universal Life Separate Account (Vul Account) to
support the operation of that account. Amounts
borrowed by you under this policy are accounted
for as a loan account within our General Account.
The loan account is not included in the term
"sub-account" as used in this policy.
The VUL Account has been established by us as a
separate account pursuant to Connecticut 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 VUL Account are credited to or
charged against it, without regard to our other
income, gains or losses. We own the VUL Account
assets and they are kept separate from the assets
of our General Account. VUL Account assets will be
valued on each valuation date. The portion of the
VUL Account equal to reserves and liabilities of
the for policies supported by the VUL Account will
not be charged with any liabilities arising out of
our other business. We reserve the right to use
assets of the VUL Account in excess of these
reserves and liabilities for any purpose.
SUB-ACCOUNTS The VUL Account has several sub-accounts as shown
on the Schedule Page. We have the right to add
additional sub-accounts subject to approval by the
Securities and Exchange Commission and, where
required, other regulatory authority. We use the
assets of the VUL Account to buy shares of the Big
Edge Series Fund (the "Fund") 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
sub-accounts of the VUL Account. Assets of each
sub-account 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 receive notice of the change. In
addition, no change will be made in the investment
policy of any of the sub-accounts without approval
of the appropriate insurance supervisory official
of our domiciliary state of Connecticut. Where
required, the approval process is on file with the
insurance supervisory official of the state where
the policy is delivered.
- 5 -
<PAGE>
VOTING RIGHTS If, in our judgment, a Portfolio of the Fund
becomes unsuitable for investment by a sub-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, other regulatory authority.
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 The share of this policy in the value of each
SUB-ACCOUNT VALUES sub-account on a valuation date is the unit value
of that sub-account on that day multiplied by the
number of units under this policy in that sub-
account 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 sub-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 sub-account was set by us
at 1.000000 on the first valuation date under each
sub-account. The unit value of a sub-account on
any other valuation date is determined by
multiplying the unit value of the sub-account on
the just prior valuation date by the Net
Investment Factor for that sub-account for the
then current valuation period. The unit value of
each sub-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 sub-account on a valuation
date is determined at the end of that day.
NET INVESTMENT FACTOR The Net Investment Factor for each sub-account is
determined by the investment performance of the
assets held by the sub-account 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 sub-account
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.
- 6 -
<PAGE>
(B) The amount of any dividend (or, if
applicable, any capital gain distribution)
received by the sub-account if the
"ex-dividend" date for shares of the Big
Series Fund occurs during the current
valuation period.
(C) The value of the assets in the sub-account
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 4: LIFETIME BENEFITS
TRANSFERS You may transfer all or a portion of this policy
in the value of each sub-account among one or more
of the other sub-accounts. We reserve the right to
require that such transfers be made by written
request. We further reserve the right not to allow
transfers of an amount less than $500 and to limit
the number of transfers made during a policy year.
You will be permitted at least 6 transfers per
policy year. The number of units deducted from the
sub-account from which the funds are transferred
will be determined by dividing the amount
transferred from the sub-account by the unit value
of that sub-sccount on the date of transfer. The
number of units credited to the sub-account to
which the funds are transferred will be determined
by dividing the amount transferred to that
sub-account by the unit value of that sub-account
on the date of transfer.
AVAILABLE LOAN VALUE The loan value of the policy on any day during the
first 3 policy years is 75% of the cash value. The
loan value on any day after the first 3 policy
years is 90% of the cash value. The "available
loan value" is the loan value on the current day
less any outstanding debt.
LOANS While the policy is in force a policy loan may be
obtained up to the available loan value. To obtain
a loan the policy must be properly assigned to us
as security. We need no other collateral. We
reserve the right not to allow policy loans of
less than $500 unless the loan is to pay premiums
on another policy issued by us.
- 7 -
<PAGE>
The amount of the loan will be added to the loan
account and subtracted from this policy's share of
the sub-accounts based on the allocation you
request at the time of the loan. The total
reduction will equal the amount added to the loan
account. Unless we agree otherwise, allocations to
each sub-account must be expressed in wholes of a
percent. If no allocation request is made, the
amount subtracted from the share of each
sub-account will be determined in the same manner
as provided for monthly deductions.
The loan account will increase at an effective
annual rate equal to the loan account accumulation
rate shown on the Schedule Page and will be
compounded daily.
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. Loan
interest will be due on each policy anniversary.
Interest will accrue on a daily basis from the
date of the loan and is included as part of the
debt. On any policy anniversary that the debt
exceeds the value of the loan account, the
outstanding accrued interest on that date will be
charged as a loan against the policy, except that
the available loan value for this purpose will
equal the surrender value and the loan account
will be increased only by the amount needed for it
to equal the debt. The sub-accounts will be
reduced by the same amount by which the loan
account is increased. The reduction will be
allocated in the same manner as provided for
monthly deductions.
Debt may be repaid at any time during the lifetime
of the insured while this policy is in force. A
debt repayment will reduce the amount of debt on
its Payment Date by the amount of the repayment.
If the value of the loan account on the Payment
Date is greater than the reduced remaining debt,
then the value of the loan account will be reduced
to equal the remaining debt. On the same date we
will increase the share of this policy in the
value of each sub-account based on the allocation
you request upon repayment. The total increase
will equal the amount of the reduction in the loan
account. If no allocation request is made, we will
use the current premium allocation schedule.
CASH AND SURRENDER The cash value is the policy value as defined in
VALUE Part 2 less the balance of any unrepaid
acquisition expense. The surrender value is the
cash value on the date of surrender less any debt.
FULL SURRENDER You may fully surrender the policy for its
surrender value by returning the policy to us at
our IPD along with a written release and surrender
of all claims under the policy signed by you and
any assigns. You may do this at any time during
the lifetime of the insured while the 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
the policy will terminate.
- 8 -
<PAGE>
You may direct that we apply the surrender
proceeds under any of the Payment Options
described in Part 7.
PARTIAL SURRENDER You may obtain a partial surrender of the policy
by requesting that a part of the policy's
surrender value be paid to you. You may do this at
any time during the lifetime of the insured while
this policy is in force with a written request
signed by you and any assigns. We reserve the
right to require that the policy first be returned
to us before payment is made. A partial surrender
will be effective on the date we receive the
written request or, if required, 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 7.
We reserve the right not to allow a partial
surrender for an amount less than $500 and to
limit the number of partial surrenders in any
12-month period. A partial surrender will not be
allowed if the resulting variable death benefit
would be less than our then current published
minimums for partial surrenders, or if the
resultant surrender value would be less than or
equal to zero.
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 the share
of this policy in the value of each
sub-account based on the allocation you
request at the time of the partial
surrender. If no allocation request is made,
the assessment to each sub-account 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 fraction of the balance of any unrepaid
acquisition expense allowance. The fraction
is equal to the result of dividing the
partial surrender amount plus the partial
surrender fee paid by the cash value
(determined without regard to the partial
surrender). This amount is assessed against
the sub-accounts in the same manner as
provided for the partial surrender amount
paid.
On the effective date of the partial surrender,
the remaining acquisition expense allowance, if
any, will be adjusted to reflect the fraction
repaid as described in (C) above. On the Monthly
Calculation Day on or next following the effective
date of the partial surrender, the Target Face
Amount will be reduced by the same fraction
described in (C) above. We will send you a Revised
Schedule Page showing the reduced Target Face
Amount and the balance of any unrepaid acquisition
expense.
- 9 -
<PAGE>
The death proceeds payable for deaths occurring
during a policy month in which a partial surrender
is made will be affected as described in Part 5.
DIVIDENDS While we do not expect any dividends to be
apportioned to this policy, the share to be
apportioned, if any, will be determined annually
by us and credited as a dividend payable in cash.
POLICY MATURITY Unless the policy has already terminated, it will
mature on its Policy Maturity Date. Upon written
request we will pay you the surrender value on
that date in one sum, or you may direct that we
apply the surrender value under any of the various
payment options described in Part 7 subject to the
conditions stated in that part.
PART 5: DEATH BENEFITS
DEATH BENEFIT During the first policy month, the death benefit
is equal to the Target Face Amount.
After the first policy month, the death benefit
will be a variable death benefit. It will vary
with the cash value, and may be greater or less
than the Target Face Amount. To determine the
variable death benefit we use the Death Benefit
Adjustment Rates shown on the Schedule Page. The
variable death benefit during each policy month
after the first is equal to the cash value on the
Monthly Calculation Day during that policy month,
determined without regard to the monthly deduction
for that policy month, multiplied by the Death
Benefit Adjustment Rate for that policy month.
SUICIDE EXCLUSION If within two years of the Policy Date of this
policy the insured dies by suicide, while sane or
insane, the death benefit will be limited to an
amount calculated in the same manner as provided
in the Contestability provision in Part 6.
DEATH PROCEEDS Upon receipt of due proof at our IPD that the
insured died while the policy was in force, we
will pay the death proceeds of this policy. The
death proceeds equal the death benefit on the date
of death, with the following adjustments.
(A) We will deduct any outstanding debt.
(B) We will deduct any monthly deductions to and
including the policy month of death not
already made.
(C) We will deduct an amount equal to the
reduction in the cash value attributable to
any partial surrenders made during the
policy month of death.
(D) We will add any increase, or deduct any
decrease, in the cash value between the date
of death and the date we receive due proof
of death.
- 10 -
<PAGE>
(E) We will add any monthly deductions made
after the policy month of death.
(F) Except for the Issue Premium, we will add
any premium amount received by us at our IPD
after the Monthly Calculation Day just prior
to the date of death unless the date of
death falls on a Monthly Calculation Day.
INTEREST ON DEATH We will pay interest on any death proceeds from
PROCEEDS the date of our receipt of due proof of death 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.
PART 6: GENERAL PROVISIONS
EFFECTIVE DATE This policy will begin in force on the Policy
Date, provided the Issue Premium shown on the
Schedule Page is paid while the insured is alive.
POLICY AND APPLICATION This policy, including its Schedule Page and any
Revised Schedule Pages resulting from a partial
surrender, and the written application are the
entire contract between you and us. A copy of the
written application is attached to and made a part
of this policy when issued. 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 at our
Home Office in Hartford, Connecticut. Any benefits
payable under this policy are payable at our Home
Office.
CONTESTABILITY We rely on all statements made by or for the
insured 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 a copy of the application
must be attached to this policy when issued.
We cannot contest the this policy after it has
been in force during the insured's lifetime for
two years form its Policy Date.
If we contest the policy, the death benefit
associated with such coverage will be limited to
the policy value adjusted by the following
amounts:
(A) We add any monthly deductions, partial
surrender fees, and other charges made under
this policy.
(B) We subtract any debt owed us.
- 11 -
<PAGE>
MISSTATEMENT OF If the age or sex of the insured has been
AGE OR SEX misstated, this policy will be adjusted to reflect
the correct age and sex as follows:
(A) For adjustments made prior to the insured's
death, no change will be made to the then
current policy rates, but subsequent cost of
insurance rates and death benefit adjustment
factors will be adjusted to such rates that
would apply had this policy been issued
based on the correct age and sex.
(B) For adjustments made at the time of the
insured's 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 rates for
the correct age and sex.
ASSIGNMENTS Except as otherwise provided in this policy, 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 IPD. We are not
responsible for the validity of any assignment.
ANNUAL REPORTS We will annually send you a report showing:
(A) the then current policy value, cash
surrender value, and death benefit;
(B) the premiums paid, and deductions and
partial surrenders made since the last
report;
(C) any outstanding loans and loan interest;
(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.
OWNER The owner is the person named as owner in the
application, unless later changed as provided in
this policy. If you are the owner, but you are not
the insured and you die before the insured,
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 first remain with the surviving joint owners
until death of the survivor unless otherwise
provided. The insured will be the owner, while no
other person is designated as owner. If more than
one person is named as owner, they must act
jointly unless you and we agree otherwise.
RIGHTS OF OWNER You control this policy during the insured's
lifetime, but not until this policy begins in
force. Unless you and we agree otherwise, you may
exercise all rights provided under this policy
without the consent of anyone else. Your rights
include the following:
(A) Receive any amounts payable under this
policy during the insured's lifetime.
- 12 -
<PAGE>
(B) Change the owner or the interest of any
owner.
(C) Change the sub-account allocation schedule
for premium payments and monthly deductions.
See Part 2.
(D) Transfer amounts between and among
sub-accounts. See Part 4.
(E) Obtain policy loans. See Part 4.
(F) Obtain a partial surrender. See Part 4.
(G) Surrender this policy for its full surrender
value. See Part 4.
(H) Select a payment option for payment of
surrender values. See Part 7.
(I) Change the beneficiary of the death benefit.
See Part 6.
(J) Assign, release, or surrender any interest
in this policy. See Part 6.
You may exercise these rights only while the
insured is alive. Exercise of any of these rights
will to the extent thereof assign, release, or
surrender the interest of the insured and all
beneficiaries and successive owners under this
policy.
HOW TO CHANGE OWNER You may change the owner by written request,
satisfactory to us, and filed at our IPD.
BENEFICIARY Unless another payment option is elected as
described in Part 7, any death proceeds that
become payable will be paid in equal shares to
such beneficiaries living at the death of the
insured as stated in the application or as later
changed. 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
death of the insured.
(C) You or your executor or administrator,
provided no primary or contingent
beneficiary is living at the death of the
insured or if no beneficiary has been
designated.
Unless otherwise stated the relationship of a
beneficiary is the relationship to the insured.
HOW TO CHANGE You may change the beneficiary by written notice
BENEFICIARY signed by you and filed with us at our IPD. When
we receive it, the change will relate back and
take effect as of the date it was signed by you.
However the change will be subject to any payments
made or actions taken by us before we receive the
notice at our IPD.
- 13 -
<PAGE>
EXCHANGE OF PLAN Any time during the first two policy years you may
exchange this policy without evidence of
insurability for a life insurance policy on the
life of the insured on such plan as is offered by
us for exchanges from this policy. The new policy
will not have death benefits that vary with the
investment experience of sub-accounts in a
separate account. It will have the same policy
date, issue age and risk classification as this
policy.
You may elect that the new policy either have the
same death benefit initially or the same net
amount at risk initially as this policy has on the
last day it is in force.
To effect this exchange, you must return this
policy to us at our IPD along with a completed
application for exchange. It must be signed by
you. We must also receive:
a. The release of any lien against or
assignment of this policy. You may instead
submit written approval by the lienholder or
assigns of this policy;
b. The surrender and release of this policy.
c. Payment of any exchange adjustments due us
as described below.
The Date of Exchange will be the first day to
occur, on or after receipt at our IPD of all the
items required for the exchange, that is the same
day of the month as this policy's anniversary.
If the surrender value of the new policy on the
Date of Exchange is greater than the surrender
value of this policy on that date, then the
exchange will be subject to your payment to us of
an exchange adjustment equal to the difference.
Otherwise, we will pay you an exchange adjustment
equal to the excess on the Date of Exchange of the
surrender value of this policy over the surrender
value of the new policy.
The new policy will take effect on the Date of
Exchange. When the new policy takes effect, this
policy terminates and is no longer in force.
To the extent the loan value of the new policy is
sufficient security, the new policy will be
subject to any loans against the exchange policy.
The loan rate under the new policy will be the
rate used by us in the jurisdiction in which the
new policy is issued on the Date of Exchange.
Unless otherwise provided in the exchange
application, the owner and the beneficiary under
the new policy will be the same as under this
policy. Any subsequent changes will be governed by
the printed provisions of the new policy. The
application and evidences of insurability
submitted for issuance of this policy shall be
included as part of the exchange application for
the new policy.
4807a - 14 -
<PAGE>
Any rider benefits included in this policy will be
included in the new policy according to our rules
applicable to the new policy on its policy date.
The new policy will conform to all of the
requirements of the jurisdiction in which it is
issued regardless of any terms of this provision
providing to the contrary.
TRANSACTION RULES Requests for transactions involving sub-accounts
will usually be processed within 7 days after we
receive the written request at our IPD. However,
we may at our discretion postpone the processing
of transactions for any of the following
exceptions to this rule as allowed under the
Investment Company Act of 1940:.
(A) activities are closed or restricted on the
New York Stock Exchange;
(B) an emergency exists during which it is not
reasonably practicable for us to value or
dispose of securities held in a sub-account;
or
(C) the Securities and Exchange Commission
permits suspension of activities to protect
the holder of securities held in a
sub-account.
All transactions that would otherwise have been
processed during such a period will be processed
on the first valuation date after the period ends.
PART 7: 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,
the death or surrender proceeds may be applied
under one or more of the alternative income
payment options as described in this part.
However, 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 required for election by any assigns or an
owner other than the insured if the owner has been
changed.
Except for Option 7 which is not available for
death proceeds, you may elect any payment option
for payment of the death or surrender proceeds.
You may also designate or change one or more
beneficiaries who will be the payee or payees
under that option. You may only do this during the
lifetime of the insured. If no election is in
effect when the death proceeds become payable, the
beneficiary may elect any payment option other
than Option 7. Unless we agree otherwise, all
payments under any option chosen will be made to
the designated payee or to his or her executor or
administrator. We may require proof of age of any
payee or payee on whose life payments depend as
well as proof of the continued survival of any
such payee(s).
4807a - 15 -
<PAGE>
HOW TO ELECT A The election of an income payment option must be
PAYMENT OPTION in a written form satisfactory to us. You can
elect that the payments 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.
WHAT PAYMENT OPTIONS This section provides a brief description of the
ARE AVAILABLE various payment options that are available. In
Part 8 you will find tables illustrating the
guaranteed installment amount provided by several
of the options described in this section. The
amounts shown for Option 4, Option 5 and Option 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 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 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 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.
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:
4807a - 16 -
<PAGE>
(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.
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.
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 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 a 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. That annuitant
must have an adjusted age as defined in
Part 8 of at least 40.
4807a - 17 -
<PAGE>
OTHER PAYMENT OPTIONS 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 8: TABLE 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 shown
and for older ages than shown it will be the same
amount as for the last age shown.
ADJUSTED AGE 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 nearest birthday 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
nearest birthday to the policy anniversary nearest
the date of surrender. The table for Option 7 only
shows the amounts for annuitants of the opposite
sex. Rates for annuitants of the same sex will be
furnished upon request.
4807a - 18 -
<PAGE>
Option 3 - Payments for a Specified period
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Number of Years 5 6 7 8 9 10 11 12 13 14 15
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Installment $211.99 179.22 155.83 138.31 124.69 113.82 104.93 97.54 91.29 85.95 81.33
- -------------------------------------------------------------------------------------------------------------------------------
Monthly Installment $17.91 15.14 13.16 11.68 10.53 9.61 8.86 8.24 7.71 7.26 6.87
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Option 3 - Payments for a Specified period (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Number of Years 16 17 18 19 20 25 30
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Annual Installment 77.29 73.74 70.59 67.78 65.26 55.76 49.53
- ------------------------------------------------------------------------------------------
Monthly Installment 6.53 6.23 5.96 5.73 5.51 4.71 4.18
- ------------------------------------------------------------------------------------------
</TABLE>
Option 4 - Life annuity with specified period certain
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Installment Refund 10 Years Certain 20 Years Certain
Age of Payee --------------------------------------------------------------------
Male Female Male Female Male Female
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 $3.08 $3.03 $3.08 $3.04 $3.00 $2.94
15 3.14 3.09 3.15 3.10 3.07 3.00
20 3.22 3.16 3.24 3.17 3.15 3.07
25 3.33 3.24 3.34 3.25 3.25 3.15
30 3.45 3.35 3.47 3.36 3.38 3.25
35 3.61 3.48 3.64 3.50 3.55 3.38
40 3.80 3.64 3.86 3.67 3.74 3.54
45 4.05 3.85 4.14 3.90 3.99 3.74
50 4.36 4.12 4.50 $4.19 4.28 $3.99
55 4.76 4.47 4.95 4.57 4.61 4.31
60 5.28 4.93 5.54 5.09 4.97 4.67
65 5.97 5.54 6.30 5.79 5.29 5.06
70 6.91 6.39 7.24 6.70 5.43 5.31
75 8.21 7.57 8.26 7.79 5.44 5.40
80 10.04 9.26 9.12 8.83 5.46 5.46
85 12.61 11.68 9.60 9.50 5.46 5.46
- --------------------------------------------------------------------------------------
</TABLE>
*Option 5 - Life annuity
Age of Payee Male Female
- -------------------------------------------------
10 3.17 3.12
15 3.24 3.18
20 3.32 3.25
25 3.42 3.34
30 3.56 3.44
35 3.73 3.58
40 3.95 3.75
45 4.24 3.98
50 4.62 4.28
55 5.12 4.68
60 5.79 5.24
65 6.75 6.04
70 8.15 7.22
75 10.26 9.03
80 13.54 11.88
85 18.72 16.54
- -------------------------------------------------
19
<PAGE>
*Option 7 - Joint survivorship annuity with 10-year period certain
<TABLE>
<CAPTION>
Age of Age of
Other Age of Insured Other Age of Insured
Annuitant ------------------------ Annuitant -------------------------
Male Female
F 55 60 65 M 55 60 65
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
40 3.62 3.64 3.65 40 3.72 3.77 3.80
45 3.80 3.83 3.86 45 3.89 3.97 4.03
50 4.00 4.07 4.12 50 4.06 4.19 4.31
55 4.22 4.34 4.44 55 4.22 4.43 4.61
60 4.43 4.64 4.82 60 $4.34 $4.64 $4.93
65 4.61 4.93 5.23 65 4.44 4.82 5.23
70 4.75 5.18 5.63 70 4.50 4.95 5.48
75 4.86 5.36 5.96 75 4.54 5.03 5.65
- -------------------------------------------------------------------------------------
</TABLE>
* Minimum Monthly Income For Each $1,000 Applied.
4897a - 20 -
<PAGE>
Temporary Money Market Allocation Amendment
This amendment is issued as part of the policy to
which it is attached if it is listed on the
Schedule Page of the policy or in an endorsement
after that page. You should therefore review the
policy's Schedule Page for applicability.
REFUND RIGHT AND The refund right stated in the Right to Cancel
TEMPORARY MONEY MARKET provision on the cover page of the policy is
SUB-ACCOUNT ALLOCATION amended to provide for a full amended to provide
for a full refund of any premium paid less any
unpaid loans and loan interest and less any
partial surrender amounts paid, if the returned
policy is received by us at our Investment
Products Division prior to termination of the
Right to Cancel period.
PREMIUM ALLOCATION The provision in Part 2, entitled "Premium
Allocation to Sub-accounts", is amended to provide
that the issue premium will temporarily be applied
on its Payment Date entirely to the Money Market
sub-account until termination of the Right to
Cancel period stated on the cover page of the
policy. Upon termination of such period without
prior receipt at our Investment Products Division
of the returned policy for a refund, the then
value of this policy's share in the Money Market
sub-account will automatically be reallocated
based on the premium allocation schedule elected
in the application or as later changed by you. The
resultant share of this policy in the value of
each of the respective sub-accounts on the date of
transfer shall be in the same percentages of the
then total policy value as the premium allocation
percentages elected in the application or as later
changed by you.
MONTHLY DEDUCTION The provision in Part 2, entitled "Monthly
Deduction", is amended to provide that until
termination of the Right to Cancel period stated
on the cover page of the policy, the monthly
deduction will be taken entirely from the Money
Market sub-account.
TRANSFERS The provision in Part 4, entitled "Transfers", is
amended to provide that no transfers may be made
until termination of the Right to Cancel period
stated on the cover page.
LOAN INTEREST The provision in Part 4, entitled "Loan Interest"
is amended to provide that, until termination of
the Right to Cancel period, any debt repayments
will temporarily be applied to the Money Market
sub-account and reallocated in the same manner as
provided above for the issue premium.
Phoenix Mutual Life Insurance Company
Secretary President
Registrar
VR101
EXHIBIT 1.A.(6)(a)
CHARTER OF
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
<PAGE>
CHARTER
OF
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
<TABLE>
<S> <C>
ARTICLE I. The name of the Corporation shall hereafter be "Phoenix Home Life CORPORATE NAME
Mutual Insurance Company". The Corporation shall be a continuation of the
corporate existence of Phoenix Mutual Life Insurance Company (originally
incorporated under the name American Temperance Life Insurance Company) by the
Connecticut General Assembly at its 1851 session and, immediately prior hereto,
redomesticated as a New York corporation pursuant to Article 71 of the Insurance
Law of the State of New York following its merger pursuant to Article 71 of the
Insurance Law of the State of New York with Home Life Insurance Company.
ARTICLE II. The Corporation shall have a principal office in East PRINCIPAL OFFICE
Greenbush, County of Rensselaer in the State of New York.
ARTICLE III. The business of the Corporation shall be life insurance, BUSINESS OF THE
endowments, annuities, accident insurance, health insurance and any other CORPORATION
business or type of business as may be authorized by and under Paragraphs 1, 2
and 3 of Section 1113(a) of the Insurance Law of the State of New York; and the
Corporation is specifically empowered to accept and to cede reinsurance of any
such risks or hazards. The Corporation may undertake such other reinsurance
business as may be permitted to it by Section 1114 of said Insurance Law and
such other kinds of business as permitted under Section 4205 of said Insurance
Law. The Corporation shall also have the power and authority to provide general
investment advisory and financial management services and to conduct and carry
on any other kind or kinds of business permitted to be conducted by mutual life
insurance companies under the Insurance Law of the State of New York, and to
invest in affiliated entities to the extent permitted by said Insurance Law, and
shall have the right and authority to undertake and provide such additional
kinds of reinsurance and other coverages as may hereafter be permitted by said
Insurance Law, as well as the general rights, powers and privileges now or
hereafter granted by the Insurance Law of the State of New York or any other law
applicable to mutual life insurance companies having power to do the kinds of
business herein above referred to and any and all other rights, powers and
privileges of the Corporation as the same may now or hereafter be declared by
applicable law.
The Corporation may exercise such powers outside of New York to the extent
permitted by the laws of the particular jurisdiction. Policies or other
contracts may be issued stipulated to be participating or non-participating; and
they may be with or without seal.
ARTICLE IV. The Corporation shall have no capital stock but shall be a mutual MUTUAL COMPANY
company.
</TABLE>
-1-
<PAGE>
<TABLE>
<S> <C>
ARTICLE V. The care and direction of the affairs, business and property of the
Corporation shall be vested in a Board of Directors consisting of not fewer than
thirteen (13) nor more than thirty (30) Directors, as may be determined from
time to time by the Board of Directors.
Each Director shall be at least eighteen (18) years of age and at all times the
majority shall be citizens and residents of the United States. Not fewer than
three (3) Directors shall be residents of the State of New York.
The Board of Directors will have the power to make from time to time such
bylaws, rules and regulations for the transaction of the business of the
Corporation and the conduct of its affairs, not inconsistent with this Charter
and the laws of the State of New York, as may be deemed expedient, and to amend
or repeal such bylaws, rules and regulations.
ARTICLE VI. The Directors of the Corporation shall be elected by those persons ELECTION OF
entitled to vote as prescribed by law, voting by ballot alone and not by proxy. DIRECTORS
The Officers of the Corporation shall be elected or appointed by the Board of
Directors.
An annual election of Directors shall be held on the third Tuesday of February
each year at the home office of the Corporation in the manner prescribed by law.
The Directors shall be divided into three (3) classes, as nearly equal in number
as may be, so that each class shall be elected for terms of three (3) years and
the terms of office of only one (1) class shall expire at each annual election
of Directors, and as the respective terms of office of Directors shall expire,
their successors shall be elected for terms of three (3) years, except as
otherwise contemplated by this Article VI. Any newly created Directorships or
any decrease in Directorships shall be so apportioned by the Board of Directors
among the classes of Directors as to make all classes as nearly equal number as
may be. Whenever the number of Directors is increased by the Board of Directors
and any vacancies resulting from the newly created Directorships are filled by
the Board of Directors, there shall not be any classification of the additional
Directors until the next annual election of Directors.
Vacancies on the Board of Directors, including vacancies resulting from any
increase in the authorized number of Directors, may be filled by the Board of
Directors.
ARTICLE VII. The duration of the Corporation shall be perpetual. PERPETUAL DURATION
ARTICLE VIII. No Director shall be personally liable to the Corporation or any LIMITATION OF
of its of policyholders for damages for any breach of duty as a Director; LIABILITY
provided, however, that the foregoing provision shall not eliminate or limit (i)
the liability of a Director if a judgment or other final adjudication adverse to
the Director establishes that the Director personally gained in fact a financial
profit or other advantage to which he or she was not legally entitled or that
the Director's acts or omissions were in bad faith or involved intentional
misconduct or were acts or omissions (a) which the Director knew or reasonably
should have known violated the Insurance Law of the State of New York, or (b)
which violated a specific standard of care imposed on Directors directly, and
not by reference, by a provision of the Insurance Law of
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
the State of New York (or any regulations promulgated thereunder), or (c) which
constituted a knowing violation of any other law; or (ii) the liability of a
Director for any act or omission prior to the adoption of this Article VIII.
</TABLE>
-3 -
EXHIBIT 1.A.(6)(b)
BYLAWS OF
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
<PAGE>
BYLAWS
OF
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
ARTICLE I
Meetings of the Comnany
-----------------------
<TABLE>
<S> <C>
ANNUAL MEETING;
SECTION 1.1 The Annual Meeting of the Company for the transaction of such SPECIAL MEETINGS
business as the Board of Directors shall from time to time prescribe, shall be
held on the fourth Monday of February of each year and at such time and place as
the Board of Directors by resolution adopted at least sixty (60) days prior to
such Annual Meeting shall specify. Special meetings may be called at any time at
the direction of the Chief Executive Officer and shall be called at any time in
accordance with the vote of the Directors, or at the written request of any six
(6) of them.
SECTION 1.2 At each Annual Meeting there shall be presented to the policyholders STATEMENTS OF
of the Company a report of the operations of the Company for the preceding OPERATIONS AND
calendar year and a statement of its financial condition. CONDITIONS
SECTION 1.3 Notice of the Annual Meeting or any special meeting shall be given NOTICE OF
to policyholders of the Company by publication in the same manner as prescribed MEETINGS
by the New York Insurance Law for notice of the election of Directors or by such
other means as the Board may from time to time prescribe.
SECTION 1.4 At any meeting of the Company those policyholders present in person QUORUM
shall constitute a quorum.
SECTION 1.5 The person designated pursuant to Section 2.10 hereof to preside at CHAIRMAN AND
meetings of the Board of Directors shall act as Chairman of the meeting. The SECRETARY OF
Secretary of the Board of Directors, unless he or she is absent or elects not to MEETINGS
serve, shall act as the secretary of the meeting. Unless otherwise voted, the
order of business at the meeting shall be as prescribed by the Chief Executive
Officer or by such other person as may be presiding.
ARTICLE II
Board of Directors
------------------
SECTION 2.1 The authorized number of Directors of the Company shall be such NUMBER,
number, not less than thirteen (13) nor more than thirty (30), as may be QUORUM AND
determined by a majority of the authorized number of Directors immediately prior ADJOURNMENTS
to any such determination. No decrease in the authorized number of Directors
shall shorten the term of any incumbent Director. At least two (2) of the
principal Officers of the Company shall be Directors but the number of officers
and salaried employees who are Directors shall at all time be less than a quorum
of the Board of Directors. A majority of the authorized number of Directors, at
least one (1)
</TABLE>
-1-
<PAGE>
<TABLE>
<S> <C>
of whom shall be a person as described in Section 1202(b)(1) of the New York
Insurance Law (hereinafter referred to in these Bylaws as "Independent
Director(s)"), shall constitute a quorum for the transaction of business. Except
as otherwise provided by law or these Bylaws, the vote of a majority of the
Directors present at the time of the vote, if a quorum is present at such time,
shall be the act of the Board. A majority of the Directors present, whether or
not a quorum shall be present, may adjourn any meeting. Notice of the time and
place of an adjourned meeting of the Board shall be given if and as determined
by a majority of the Directors present at the time of the adjournment.
SECTION 2.2 No fewer than four (4) regular meetings of the Board of Directors REGULAR BOARD
shall be held each year at such place within the State of New York, on such MEETINGS
dates and at such hours as the Board may from time to time determine. Additional
regular meetings of the Board for the transaction of any business shall be held
at such places and on such dates and at such hours as the Board may from time to
time determine. Provided that no fewer than four (4) regular meetings of the
Board shall have been or will be held in the State of New York during any
calendar year, one (1) of such additional regular meetings during such calendar
year may be held elsewhere within the United States or Canada in a jurisdiction
in which the Company is licensed to do business. Except as otherwise required by
law or these Bylaws, notice of regular meetings need not be given.
SECTION 2.3 Special meetings of the Board shall be held whenever called SPECIAL
by the Chief Executive Officer or by any three (3) Directors. Notice of each BOARD
such special meeting shall be mailed to each Director at such Director's MEETINGS
residence or usual place of business or other address filed with the Secretary WAIVER OF
to the Board for such purpose, or shall be sent to such Director by any form of NOTICE
telecommunication, or be delivered or given to such Director personally or by
telephone, not later than the second day preceding the day on which such meeting
is to be held. Notice of any meeting of the Board need not, however, be given to
any Director who submits a signed waiver of notice, whether before or after the
meeting, or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice. Every such notice shall state the time and
place but, except as otherwise required by law or these Bylaws, need not state
the purpose of the meeting.
SECTION 2.4 The annual election of Directors shall be held on the third Tuesday ELECTION OF
of February of each year. The Directors of the Company shall be elected by DIRECTORS
policyholders as prescribed by law.
SECTION 2.5 No person may stand for election or re-election or be appointed as a QUALIFICATION
Director if during the three (3) years following election he or she would attain OF DIRECTORS
the age of seventy (70) years. All Directors shall serve through the third AND TERM
Annual Meeting of the Company following their election, unless elected or
appointed for a lesser term, and until their successors are elected and
qualified, provided, however, that with the exception of the Chief Executive
Officer, the term of a Director who is an Officer of the Company shall expire on
the date that such Director retires or resigns as an Officer of the Company. The
foregoing notwithstanding, to the extent any Director fails to conduct himself
or herself in accordance with such written standards as may be established from
time to time by the Board of Directors, then such Director may be removed
through affirmative vote of at least two-thirds of the remaining Directors.
SECTION 2.6 As soon as practicable following the Annual Meeting of the Company, ORGANIZATION
theDirectors shall commence a regular meeting of the Board which shall be the MEETING OF
Organization
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
Meeting of the Board. At such meeting the Board shall elect Officers and take DIRECTORS
such other actions as they deem appropriate, including a review of the annual
report, appointment of auditor, and appointment of Directors to Board
committees.
SECTION 2.7 Any one (1) or more members of the Board or any committee thereof PARTICIPATION
may participate in any meeting of the Board or such committee by means of a BY TELEPHONE
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting of the Board or
such committee for quorum and voting purposes.
SECTION 2.8 If in the opinion of the Chief Executive Officer circumstances exist ACTION WITHOUT
which require the immediate taking of any action which is required or permitted A BOARD
to be taken by the Board or any committee thereof, such action may be taken MEETING
without a meeting if all members of the Board or such committee consent in
writing to the adoption of a resolution authorizing the action. The resolution
and the written consents thereto by the members of the Board or such committee
shall be filed with the minutes of the proceedings of the Board or committee.
SECTION 2.9 Any vacancy in the Board, including any vacancy resulting from an BOARD
increase in the authorized number of Directors, may be filled, until the next VACANCIES
annual election of Directors, at any regular or special meeting of the Board by
the affirmative vote of a majority of the remaining Directors.
SECTION 2.10 At the Organization Meeting, the Board may elect a Chairman of the CHAIRMAN OF THE
Board of Directors or a Chairman and Vice Chairman of the Board of Directors, BOARD; VICE
who shall be Officers of the Company and each of whom shall discharge such CHAIRMAN;
duties as may be assigned from time to time by the Directors. The Chairman shall SECRETARY
preside at the meetings of the Board and, in his or her absence, the Vice
Chairman, if any, shall preside. In all other cases the President of the Company
shall preside. In the absence of the persons above designated to preside at a
meeting, the Board shall appoint a Chairman pro tem.
At the Organization Meeting, the Board of Directors shall elect a
Secretary of the Board, who shall attend the meetings of the Board of Directors,
shall keep the minutes of such meetings, shall send notices thereof, if any, and
shall perform such other duties as may be attendant to such office. The
Secretary of the Board need not be a member of the Board. In case the Secretary
is absent or unable to discharge such duties, the Board shall appoint a
Secretary pro tem.
ARTICLE III
Committees
----------
SECTION 3.1 The Board shall have the following standing committees, each STANDING
consisting of not fewer than five (5) Directors, as shall be determined by the COMMITTEES
Board:
Executive Committee
Investment Committee
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C>
Audit Committee
Human Resources Committee
Policyholder and External Affairs Committee
Nominating Committee
All members of the Audit Committee, the Human Resources Committee and the
Nominating Committee shall be Independent Directors. At least one-third of the
members of any other committee shall be Independent Directors.
SECTION 3.2 At its Organization Meeting each year, the Board, by resolution DESIGNATION
adopted by a majority of the then authorized number of Directors, shall OF MEMBERS
designate from among the Directors the members of the standing committees and AND CHAIRMEN
from among the members of each such committee a chairperson thereof, each of OF STANDING
whom shall serve as such, at the pleasure of the Board, so long as they shall COMMITTEES
continue in office as Directors, and through the next succeeding Annual Meeting
of the Company. The Board may by similar resolution designate one (1) or more
Directors as alternate members of such committees, who may replace any absent
member or members at any meeting of such committees, but only an Independent
Director may be designated as an alternate member of the Audit Committee, the
Human Resources Committee or the Nominating Committee. Vacancies in the
membership or chair of any standing committee may be filled in the same manner
as the original designations at any regular or special meeting of the Board, and
the Chief Executive Officer may designate from among the remaining members of
any standing committee whose chair is vacant a chairperson who shall serve until
a successor is designated by the Board.
SECTION 3.3 Meetings of each standing committee shall be held upon call of the NOTICE OF
Chief Executive Officer, or upon call of the chairperson of such standing TIMES OF
committee or of two members of such standing committee. Meetings of each MEETINGS OF
standing committee may also be held at such other times as such committee may STANDING
determine. Meetings of a standing committee shall be held at such places and COMMITTEES
upon such notice as such committee may determine or as may be specified in the AND PRESIDING
calls of such meetings. Any such chairperson, if present, or such member or MEMBERS
members of each committee as may be designated by the Chief Executive Officer,
shall preside at meetings thereof or, in the event of the absence or disability
of any thereof or failing such designation, the committee shall select from
among its members present a presiding Member.
SECTION 3.4 At each meeting of any standing committee there shall be present to QUORUM
constitute a quorum for the transaction of business at least a majority of the
members of such committee, at least one (1) of whom is an Independent Director.
Any alternate member who is replacing an absent member shall be counted in
determining whether a quorum is present. The vote of a majority of the members
present at a meeting of any standing committee at the time of the vote, if a
quorum is present at such time, shall be the act of such committee.
SECTION 3.5 Each of the standing committees shall keep minutes of its meetings, STANDING
which shall be reported to the Board at its regular meetings and, if called for COMMITTEE
by the Board, at any special meeting. MINUTES
SECTION 3.6 The Executive Committee shall consist of five (5) or more Directors, EXECUTIVE
as the Board of Directors may determine from time to time, a majority of whom COMMITTEE
shall be
</TABLE>
-4-
<PAGE>
<TABLE>
<S> <C>
Independent Directors. This Committee shall have general power to act for the
Board of Directors in the intervals between meetings of the Board on all matters
of policy and direction relating to the conduct of the affairs of the Company,
subject to such limitations as the Board may from time to time impose.
SECTION 3.7 The Investment Committee shall consist of five (5) or more INVESTMENT
Directors, as the Board of Directors may determine from time to time, a majority COMMITTEE
of whom shall be Independent Directors. This Committee shall review the
investment policies and programs of the Company, including, but not limited to,
the purchase and sale of bonds, stocks, other securities, real estate, mortgages
and all other investments. The Investment Committee shall supervise the
financial affairs of the Company. Except as otherwise ordered by the Board (i)
no investment or loan, other than a policy loan, and no sale, assignment,
exchange, extension or transfer thereof, shall be made unless the same has been
authorized or approved by the Investment Committee; and (ii) the Investment
Committee shall designate from time to time depositories of the Company's funds.
SECTION 3.8 The Audit Committee shall consist of five (5) or more Directors, as AUDIT
the Board of Directors may determine from time to time, all of whom shall be COMMITTEE
Independent Directors. The Audit Committee shall, prior to the last meeting of
the Board of Directors in each calendar year, recommend to the Board of
Directors the selection of independent certified public accountants for the
ensuing fiscal year. This Committee shall engage such independent certified
public accountants selected by the Board of Directors to audit and examine the
financial position of the Company and shall prescribe the scope of such audit
and of any internal audit. It shall review the Company's financial condition,
and the scope and results of the independent audit and any internal audit, and
shall from time to time confer with such independent certified public
accountants and with management and review recommendations of such independent
accountants and management with respect to the business of the Company and the
business of any majority-owned subsidiary of the Company. The Audit Committee
shall report to the Board of Directors upon the annual report of such
independent certified public accountants and at such other times as the Audit
Committee may deem necessary.
SECTION 3.9 The Human Resources Committee shall consist of five (5) or more HUMAN
Directors, as the Board of Directors may determine from time to time, all of RESOURCES
whom shall be Independent Directors. This Committee shall exercise general COMMITTEE
supervision of compensation and personnel administration and all activities
conducted by the Company in the interest of the health, welfare and safety of
field and office personnel, shall evaluate the performance of Officers deemed by
such Committee to be principal Officers, and shall make recommendations to the
Board of Directors as to the selection of and compensation payable to such
principal Officers.
SECTION 3.10 The Policyholder and External Affairs Committee shall consist of POLICYHOLDER AND
five (5) or more Directors as the Board of Directors may determine from time to EXTERNAL AFFAIRS
time, a majority of whom shall be Independent Directors. This Committee shall be COMMITTEE
responsible for matters relating to the interest of the policyholders and
customers of the Company and shall exercise general supervision of the dividend
and surplus policies and practices of the Company. Annually the Committee shall
make a written report to the Board recommending for the ensuing year the
apportionment of divisible surplus on participating policies issued by the
Company and interest rates payable on funds held by the Company under policies
or other
</TABLE>
-5-
<PAGE>
<TABLE>
<S> <C>
contracts entitled by their terms to such interest. This Committee shall review
generally the activities of the various businesses conducted by the Company and
shall also exercise general supervision of the Company's external activities
including, but not limited to, government relations, charitable contributions,
public benefit programs and compliance with policies on ethical business conduct
and other corporate responsibility matters.
SECTION 3.11 The Nominating Committee shall consist of five (5) or more NOMINATING
Directors, as the Board of Directors may determine from time to time, all of COMMITTEE
whom shall be Independent Directors. This Committee shall have responsibility
for nominating candidates for Director for election by policyholders and shall
make recommendations to the Board with respect to the filling of vacancies on
the Board.
ARTICLE IV
Officers
--------
SECTION 4.1 The Board shall determine who shall act as Chief Executive Officer PRINCIPAL
of the Company. In its discretion, the Board may also designate a Chief OFFICERS
Operating Officer. The Board in its discretion may also from time to time
designate one or more other Officers as Principal Officers.
SECTION 4.2 The Chief Executive Officer of the Company shall have the general CHIEF
executive management of its affairs, and may decide upon and execute all matters EXECUTIVE
not otherwise covered by action of the Board of Directors or Executive Committee OFFICER
or more specifically provided for in the Bylaws. In the absence of action by the
Board of Directors, the Chief Executive Officer may from time to time prescribe
and assign such duties, functions and authority among Officers or other
employees and representatives as he or she shall determine are necessary or
desirable for the proper conduct of the business of the Company.
SECTION 4.3 The Chief Operating Officer, if any, shall assist the Chief CHIEF
Executive Officer in the execution of his or her duties and shall have such OPERATING
other duties as the Board of Directors or the Chief Executive Officer may from OFFICER
time to time determine.
SECTION 4.4 At each Organization Meeting, the Board shall elect a President, who PRESIDENT
shall holdoffice until the next Organization Meeting and until the election of a AND OTHER
successor or until his or her earlier death, removal or resignation. The OFFICERS
President may also serve as the Chief Executive Officer or Chief Operating
Officer. If a vacancy occurs in the office of the President for any reason, such
vacancy shall be filled by the Board at any regular or special meeting of the
Board.
In addition to the President, the Board shall elect or appoint such other
Officers, including a Secretary, one (1) or more Assistant Secretaries and one
(1) or more Vice Presidents as it may determine for the conduct of the business
of the Company. Any two (2) or more offices may be held by the same person,
except the offices of President and Secretary. Officers other than the Chief
Executive Officer shall have such powers and perform such duties as may be
assigned to them by these Bylaws or by or pursuant to authorization of the Board
or the Chief Executive Officer.
</TABLE>
-6-
<PAGE>
<TABLE>
<S> <C>
The Board of Directors may, in its discretion, delegate to the Chief Executive
Officer authority to appoint and discharge any Officers other than principal
Officers. Notwithstanding any such delegation to the Chief Executive Officer,
all Officers shall hold office at the pleasure of the Board of Directors, which
retains authority to terminate any Officer at any time. A vacancy in any office
may be filled by the Board at any meeting.
</TABLE>
ARTICLE V
Execution of Papers
-------------------
<TABLE>
<S> <C>
SECTION 5.1 Any employee designated for the purpose by the Chief Executive INSTRUMENTS
Officer or the Board, and any Officers designated by the Board shall have power
to execute all instruments in writing necessary or desirable for the Company to
execute in the transaction and management of its business and affairs and to
affix the corporate seal.
SECTION 5.2 All funds of the Company deposited in its name shall be subject to DISPOSITION
disposition by check or other means, in such manner as the Board may from time OF FUNDS
to time determine.
SECTION 5.3 The Chief Executive Officer may appoint one (1) or more CAPTION SIGNATURES
Registrars. All policies of insurance and annuity contracts shall be signed by ON POLICIES AND
the Chairman of the Board of Directors (if any), the Vice Chairman of the Board CERTAIN OTHER
of Directors (if any), the President, a Vice President, the Secretary, or an CONTRACTS
Assistant Secretary. Such signatures may be in facsimile, provided such policies
and contracts are countersigned by a Registrar or a Vice President. All policy
endorsements and modifications (other than endorsement of the exercise of a
right or option provided for in a policy) and all contracts incident, related or
supplementary to policies of insurance and annuity contracts shall be signed by
the Chairman of the Board of Directors (if any), the Vice Chairman of the Board
of Directors (if any), the President, a Vice President, the Secretary, or an
Assistant Secretary. Any such signature may be in facsimile provided there is a
countersignature by a Registrar or a Vice President.
ARTCLE VI
General
-------
SECTION 6.1 To the full extent permitted by the laws of the State of New York, INDEMNIFICATION
the Company shall indemnify any person made or threatened to be made a party to OF DIRECTORS
any action, proceeding or investigation, whether civil or criminal, by reason of AND OFFICERS
the fact that such person, or such person's testator or intestate:
(1) is or was a Director or Officer of the Company; or
(2) 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
</TABLE>
-7-
<PAGE>
<TABLE>
<S> <C>
against judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
or as a result of such action or proceeding, or any appeal therein.
The Company shall also indemnify any person made or threatened to be made such
party by reason of the fact that such person or such person's testator or
intestate is or was an employee of the Company or serves another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise at
the request of the Company and also is an employee of the Company to the same
extent as if such person were an Officer or Director of the Company. The
indemnification provided in this Article VI shall not be deemed to be exclusive
of any other rights to which a Director or Officer of the Company seeking
indemnification may be entitled whether contained in (i) a resolution of
Directors, or (ii) an agreement providing for such indemnification, provided
that no indemnification may be made to or on behalf of any Director or Officer
if a judgment or other final adjudication adverse to the Director or Officer
establishes that his or her acts were committed in bad faith or were the result
of active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he or she personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled. The Company may
indemnify persons other than Officers or Directors of the Company, to such
greater extent as the Board of Directors may from time to time by resolution
prescribe.
ARTICLE VII
AMENDMENT OF BYLAWS
-------------------
SECTION 7.1 These Bylaws or any of them may be amended, altered or repealed by a
vote of two-thirds of the Directors present at any regular or special meeting,
provided that any such proposed amendment, alteration or repeal shall have been
submitted in writing and filed with the Secretary of the Board at least sixty
(60) days before being presented at such a meeting. The notice of the meeting at
which action may be taken upon such proposal to amend, change or repeal these
Bylaws shall contain a statement in general terms that such action has been
proposed. Notwithstanding the foregoing, Section 6.1 of these Bylaws may not be
amended, altered or repealed by the Board so as to effect adversely any then
existing rights of any Director, Officer or other persons designated therein.
</TABLE>
-8-
EXHIBIT 1.A.(9)
FORM OF APPLICATION FOR
VARIABLE LIFE INSURANCE POLICY
<PAGE>
`<TABLE>
<S> <C>
[LOGO} PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY APPLICATION FOR LIFE INSURANCE
100 Bright Meadow Boulevard
P. O. Box 1900
Enfield, CT 06083-1900
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION I - PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
Print Name as it is to appear on policy (First, Middle, Last) Sex Birthdate (Month, Day, Year)
/ / Male / / Female
- ------------------------------------------------------------------------------------------------------------------------------------
Birthplace (State or Country) United States Citizen Social Security Number
/ / Yes / / No
- ------------------------------------------------------------------------------------------------------------------------------------
Home Telephone Number Business Telephone Number (Include Extension) Driver's License Number (Include State)
( ) ( ) ext.
- ------------------------------------------------------------------------------------------------------------------------------------
Home Address (Include Street, Apt. Number, City, State, and ZIP Code)
- ------------------------------------------------------------------------------------------------------------------------------------
Give Prior Address if at address less than 2 years (Include Street, Apt. Number, City, State, and ZIP Code)
- ------------------------------------------------------------------------------------------------------------------------------------
Current Occupation and Duties Employer Length of Employment
- ------------------------------------------------------------------------------------------------------------------------------------
Business Address (Include Street, Apt. Number, City, State, and ZIP Code)
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION II - OWNERSHIP
- ------------------------------------------------------------------------------------------------------------------------------------
/ / A. Insured / / D. Partnership (Include Name of all Partners - if partnership
/ / B. Successive Owners OR / / Owners Jointly is limited, indicate which partners are general partners)
/ / C. Corporation its successors or assigns (Include state / / E. Sole Proprietorship (Include Name of Sole Proprietor)
of incorporation) / / F. Trust (Include Name and Date of Trust, Name of Trustee(s)
and of Grantor)
IF OWNER IS OTHER THAN PROPOSED INSURED, give Owner's name, Mailing Address, Relationship to Proposed Insured, and Social Security
Number or Tax Identification Number:
Name: ___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
Address: ___________________________________________________________________________________________________________________________
Social Security or Tax I.D. Number ____________________ Relationship: ___________________________________ Date of Birth_____________
CONTINGENT OWNER
Name: ___________________________________________________________________________________________________ Date of Birth_____________
Relationship: ______________________________________________________________________________________________________________________
ULTIMATE OWNER, Check one. If none checked, insured will be ultimate owner.
/ / Insured / / Executor or administrator of the survivor of the primary and contingent owners
- ------------------------------------------------------------------------------------------------------------------------------------
Send premium notices to: (in addition to owner)
/ / Proposed Insured: / / Home Address / / Business Address
/ / Other (Name and Address) _______________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
Confirm Statements and Proxies (in addition to owner)
/ / Insured / / Other __________________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION III - BENEFICIARY FOR THE PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
Primary Beneficiary Relationship to Proposed Insured Date of Birth Social Security No.
(If Available) (If known)
- ------------------------------------------------------------------------------------------------------------------------------------
Contingent Beneficiary Relationship to Proposed Insured Date of Birth Social Security No.
(If Available) (If known)
- ------------------------------------------------------------------------------------------------------------------------------------
Trust
/ / Trust under insured's will
/ / Inter vivos - Provide name of Trustee ____________________________________________________________ Date of Trust _______________
- ------------------------------------------------------------------------------------------------------------------------------------
A beneficiary to qualify for payment must be living: (Check A or B, otherwise A will apply)
/ / A. at the Proposed Insured's death.
/ / B. on the 30th day after the date of the Proposed Insured's death.
- ------------------------------------------------------------------------------------------------------------------------------------
OL2140 1 of 5 10-95
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION IV - COVERAGE APPLIED FOR
- ------------------------------------------------------------------------------------------------------------------------------------
Plan of Insurance For Proposed Insured's Age 18 Years and Older ONLY Basic Policy Amount
/ / Smoker / / Nonsmoker / / Neversmoke $
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION V - RIDERS AND FEATURES FOR TRADITIONAL PLANS OF INSURANCE
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Accidental Death Benefit Dividend Option
/ / Disability Waiver of Premium on Insured ----------------------------------------------------------
/ / Conditional Exchange / / Optionterm
/ / Guaranteed Renewability Rider Optionterm Death Benefit $ ___________________________
/ / Purchase Protector ___________________ units ----------------------------------------------------------
/ / Family Protection Premium Paying Coverage / / Yes / / No OR
/ / Children's Protection % of Increase ________________________________________
/ / Living Benefit Rider / / Accumulate at Interest
/ / Other __________________________________________________________ / / Paid-up Additional Insurance (PUA)
- --------------------------------------------------------------------- / / One Year Term with Balanced to:
Additional Death Benefit Riders: / / Cash / / PUA / / ACCUM
PITR $ ____________ / / Reduce Premium
Other Rider Name ____________ Amount $ ____________ / / Cash
/ / Other ________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
/ / PAPOR (check one) Automatic Premium Loan, if applicable (If none checked
/ / A-Flexible / / B-Flexible with Option term "Yes" will apply.)
Number of years payable ________________ / / Yes / / No
Intended premium payments for the first 7 years: ----------------------------------------------------------
Year 1 ____________ Year 5 ____________ Policy Loan Interest Rate, if applicable (If none
Year 2 ____________ Year 6 ____________ checked, "Variable" will apply.)
Year 3 ____________ Year 7 ____________ / / Variable / / Fixed
Year 4 ____________ MAXIMUM AMOUNT $ ____________ ----------------------------------------------------------
Total Insurance Face Amount (Total of all shaded areas)
$ ________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION VI - RIDERS AND FEATURES FOR VARIABLE OR UNIVERSAL PLANS OF INSURANCE
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Disability Payment of a specified Annual Premium Amount. Death Benefit Option (check one): If none checked
Annual Amount $ ____________________________________ Option 1 will apply.
/ / Accidental Death Benefit / / Option 1 - Level Face Amount
/ / Enhanced Flex Edge (Guaranteed Death Benefit) / / Option 2 - Increasing Face Amount
/ / Age 70 / / Age 80 / / Age 95 / / Living Benefit Rider
/ / Other Insured Person Rider (VistaFlex ONLY) / / Purchase Protector _____________________________ units
/ / Guaranteed Insurability Option Rider (VistaFlex and UNIVISTA / / Other_________________________________________________
ONLY) Amount $ ___________________________________________ __________________________________________________________
__________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
First Year Anticipated, BILLED Premium (Excluding 1035 Exchange, Subsequent Planned Annual Premium
Lump Sum Funds, etc.)
- ------------------------------------------------------------------------------------------------------------------------------------
Sub-Account Allocation Do Not Use Fractional Percentages. (Must total 100%)
______ % Growth ______ % Total Return ______ % GIA ______ % Other
______ % International ______ % Balanced ______ % Other ______ % Other
______ % Money Market ______ % Multi-Sector ______ % Other ______ % Other
Fixed Income Series
TEMPORARY MONEY MARKET ALLOCATION / / Yes / / No If yes, I elect to temporarily allocate my premiums to the Money Market
sub-account until termination of the Right to Cancel period as stated in the policy. (Yes will apply to all states which require
Temporary Money Market.)
- ------------------------------------------------------------------------------------------------------------------------------------
Telephone Transfers/Exchanges
/ / Yes / / No Telephone transfers and changes in payment allocation are subject to the terms of the prospectus. If you check
the "yes" box, telephone orders will be accepted from you and your registered representative and you agree that,
because we cannot verify the authenticity of telephone instructions, we will not be liable for any loss caused
by our acting on telephone instructions, unless caused by our gross negligence.
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION VII - MODE OF PREMIUM PAYMENT
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Annual / / PCS (Phoenix Check-O-Matic Service) / / Quarterly / / Semi-Annual / / Monthly (Variable Life Insurance Only)
Multiple Billing Option - Give # or Details ________________________________________________________________________________________
________________________________________________________________________________________
/ / List Bill / / EICS / / Salary Allotment / / Pension / / Money Purchase Pension
/ / Other
- ------------------------------------------------------------------------------------------------------------------------------------
OL2140 2 of 5 10-95
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION VIII - EXISTING LIFE INSURANCE FOR THE PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Yes / / No With this policy, do you plan to replace (in whole or in part, now or in the future) any existing insurance
or annuity in force?
/ / Yes / / No Do you plan to borrow or otherwise use values from an existing insurance policy or annuity to pay any initial
or subsequent premium(s) for this policy?
For all Yes answers above, please provide the following information.
- ------------------------------------------------------------------------------------------------------------------------------------
Company Insured Year Issued Policy Number Amount Personal/Business
$ / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
$ / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
$ / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
Describe all additional coverage in force for proposed insured. Include individual and group. If none, write none.
Company Year Issued Policy Number Amount Personal/Business
$ / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
$ / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
$ / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
Total Accidental Death Benefit Amount $_________________
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION IX - ADDITIONAL INFORMATION REGARDING THE PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Insured's Earned Income Independent Income Net Worth
- ------------------------------------------------------------------------------------------------------------------------------------
YES NO
/ / / / 1. Have you smoked any cigarettes in the past 12 months?
/ / / / 2. Have you used tobacco or nicotine products in any form in the past 12 months?
/ / / / 3. Have you used tobacco or nicotine products in any form in the past 15 years?
/ / / / 4. Have you ever applied for life, accident, or health insurance and been declined, postponed, or been offered a
policy differing in plan, amount or premium rate from that applied for? (If "Yes," give date, company and
reason.)
/ / / / 5. Are you negotiating for other insurance? (If "Yes," name companies and total amount to be placed in force.)
/ / / / 6. Do you intend to live or travel outside the United States or Canada? (If "Yes," state where and for how long.)
/ / / / 7. Have you flown during the past three years as a pilot, student pilot or crew member? (If "Yes," complete
Aviation Questionnaire, form FN 7.)
/ / / / 8. Have you participated in the past 3 years or plan to engage in any hazardous activity such as motor vehicle,
motorcycle or motorboat racing, parachute jumping, skin or scuba diving or other underwater activity, hang
gliding or other hazardous avocation? (If "Yes," complete Avocation Questionnaire.)
/ / / / 9. Have you in the past three years been the driver of a motor vehicle involved in an accident, or charged with a
moving violation of any motor vehicle law, or had your driver's license suspended or revoked?
- ------------------------------------------------------------------------------------------------------------------------------------
Give full details for all "Yes" answers.
____________________________________________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION X - COMPLETE FOR INSURED IF TEMPORARY INSURANCE IS REQUESTED
- ------------------------------------------------------------------------------------------------------------------------------------
If either of the following questions are answered "Yes" or left blank, no agent or broker is authorized to accept money and a
Temporary Insurance Agreement MAY NOT be issued, and no coverage will take effect.
Have you:
/ / Yes / / No a. Within the past two years been treated for heart disease, stroke, or cancer or had such treatment recommended?
/ / Yes / / No b. Been advised within the past 60 days by a physician or other practitioner to have any diagnostic test
or surgery not yet performed?
- ------------------------------------------------------------------------------------------------------------------------------------
FOR HOME OFFICE OR ADMINISTRATIVE OFFICE USE ONLY
- ------------------------------------------------------------------------------------------------------------------------------------
Minor Correction. (No change will be made in amount, amount of premium, age at issue, class, plan or benefits unless agreed to in
writing.)
- ------------------------------------------------------------------------------------------------------------------------------------
OL2140 3 of 5 10-95
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION XI - MEDICAL HISTORY OF PROPOSED INSURED (If Proposed Insured Is Less Than Age 15, Questions Are To Be Answered By The
Parent)
- ------------------------------------------------------------------------------------------------------------------------------------
Height Weight Has Your Weight Decreased By 10 or More Pounds In The Past 2 Years? If "yes,"
how much? __________ lbs. / / Yes / / No
- ------------------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(s) of Personal Physician(s) or Health Care Facility(s). / / None
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
Date and Reason for Last Consultation:
____________________________________________________________________________________________________________________________________
Did Your Mother, Father or Any Sibling Die Prior To The Age Of 60?
/ / Yes / / No If "yes," give cause.
- ------------------------------------------------------------------------------------------------------------------------------------
YES NO
Have you within the past 10 years been treated for or had any indication of:
/ / / / 1. Heart disease, abnormal heart rhythm, heart murmur, chest pain, angina, high blood pressure, or other disorder
of the heart or blood vessels?
/ / / / 2. Skin disease, cancer, tumor, anemia or blood or lymph gland disorder?
/ / / / 3. Epilepsy, fainting spells, stroke, nervous or mental condition, paralysis or any other abnormality of the brain
or nervous system?
/ / / / 4. Colitis or Crohns disease, ulcer, hepatitis, liver or digestive disorder?
/ / / / 5. Asthma, shortness of breath, emphysema, or other lung disorder?
/ / / / 6. Diabetes or elevated blood sugar, bladder, kidney or other urinary disorder?
/ / / / 7. Arthritis, or any other disorder of the back, spine, neck or joints?
In the past 5 years, have you:
/ / / / 8. Had an electrocardiogram, x-ray, or blood, urine or other medical tests?
/ / / / 9. Been advised to have any diagnostic test, hospitalization or surgery that was not completed?
/ / / / 10. Other than noted above, have you in the last 5 years seen a doctor, counselor, therapist or had any illness,
injury or surgery?
/ / / / 11. Have you ever been diagnosed or treated by a medical professional for Acquired Immune Deficiency Syndrome
(AIDS) or AIDS Related Complex (ARC)?
/ / / / 12. Are you currently taking any medication, treatment, therapy or under medical observation?
/ / / / 13. During the past 10 years, have you used narcotics, amphetamines, cocaine or any prescription drug except in
accordance with a physician's instructions?
/ / / / 14. During the past 10 years, have you been advised or has treatment been recommended to limit or stop your intake
of alcohol?
- ------------------------------------------------------------------------------------------------------------------------------------
Give details to any "Yes" answers to questions. Use OL 1590 if additional space is necessary to record all details.
- ------------------------------------------------------------------------------------------------------------------------------------
Question Date of Each Current Name and Addresses of
Diagnosis / Duration /
Number Occurrence Status Doctors and Medical Facilities
- ------------------------------------------------------------------------------------------------------------------------------------
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
OL2140 4 of 5 10-95
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
$__________ has been paid by ______________________________ to the producer
named below for proposed insurance applied for in this application. This sum is
to be applied in accordance with and subject to the terms of the Temporary
Insurance Receipt bearing the same number as this application.
I understand that i) no statement made to, or information acquired by any
producer who takes this application, shall bind the Company unless stated in
Part I and/or Part II of this application; ii) the producer has no authority to
make, modify, alter or discharge any contract hereby applied for and ; iii) the
insurance applied for shall not take effect until the issuance of a contract and
payment of the issue premium due.
I have reviewed this application, and I hereby verify that all information given
here and any in Part II of this application is true and complete to the best of
my knowledge and belief, and has been fully and correctly recorded.
Under penalty of perjury, I certify that the number given is my correct social
security or taxpayer identification number and that I am not subject to backup
withholding (strike this out and initial if not true).
Any person who, with intent to defraud or knowing that he/she is facilitating a
fraud against an insurer, submits an application or files a claim containing a
false or deceptive statement is guilty of insurance fraud as determined by a
court of competent jurisdiction. This application should be carefully reviewed
by the undersigned to verify that any and all information given to the producer
taking this application has been fully and correctly entered.
The right is reserved to the Company to call for a medical examination by an
appointed medical examiner should further evidence of insurability be deemed
necessary. The producer taking this application certifies that he/she has truly
and accurately recorded on the application the information supplied by the
proposed insured(s).
THE DEATH BENEFIT AND CASH VALUES UNDER ANY VARIABLE POLICY MAY INCREASE OR
DECREASE IN AMOUNT OR DURATION BASED ON THE INVESTMENT EXPERIENCE OF THE
UNDERLYING SUB-ACCOUNTS.
If I have purchased a Variable Life Policy, I certify that I have received the
prospectus for that policy and its underlying funds.
AUTHORIZATION REQUEST FOR INTERVIEW
/ / I do / / I do not (check one only) require that I be interviewed in
connection with any investigative consumer report that may be prepared.
AUTHORIZATION TO OBTAIN INSURANCE (NONMEDICAL) INFORMATION
I hereby authorize any insurance company to which I have applied for or inquired
about insurance coverage or benefits to give to the Phoenix Home Life Mutual
Insurance Company or its reinsurers any information relating to or obtained in
connection with such application or inquiry including the dollar amounts and
status of any policies or claims.
AUTHORIZATION TO OBTAIN HEALTH CARE (MEDICAL) INFORMATION
I hereby authorize any physician, hospital, clinic or other health care provider
or any persons who have health care information about me, including insurance
companies and MIB, Inc., to give that information to the Phoenix Home Life
Mutual Insurance Company. If the record contains information relating to
alcohol or drug abuse or mental health care, enough of this information is also
to be released to accomplish the purposes for which the information is
requested. This information may be used only for the purpose of risk evaluation,
the administration of claims and implementation of policy provisions and for
insurance statistical studies.
Phoenix may then redisclose it to other persons, including MIB, Inc.; legal
representatives, medical consultants, reinsurance companies and consumer
reporting agencies, only to the extent required to perform their services for
the Company (MIB information is not disclosed to consumer reporting agencies).
They may disclose certain information to a person or organization for use in
risk evaluation, administration of claims or implementation of policy
provisions. Phoenix may also be required to provide certain information to a
state insurance or health department. The information may also be redisclosed
as otherwise required or permitted by law, but no information will be given,
sold or transferred to any other person not mentioned in this authorization.
This authorization or a true photocopy thereof shall continue to be valid for 30
months from the date signed below unless otherwise required by law. It may be
revoked in writing to the company at any time until the insurance coverage has
been placed in force. I may receive a copy of it on request.
I acknowledge that I have received a copy of the Pre-Notification to applicants
regarding the Medical Information Bureau, Investigative Consumer Reports and the
Underwriting Process.
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Insured Parent (for minor insured)
X
____________________________________________________________________________________________________________________________________
Owner (if other than proposed insured) Witness Date
____________________________________________________________________________________________________________________________________
Signed At
X
____________________________________________________________________________________________________________________________________
The Producer hereby certifies that the Applicant signed this application in his/her presence; that he/she has truly and accurately
recorded on the application the information supplied by the proposed insured(s); and that he/she is qualified and authorized to
discuss the contract herein applied for.
WILL THE APPLICANT UTILIZE VALUES FROM ANOTHER INSURANCE POLICY (THROUGH LOANS, SURRENDERS OR OTHERWISE) TO PAY FOR THE INITIAL OR
SUBSEQUENT PREMIUM(S) FOR THE POLICY APPLIED FOR? / / YES / / NO
- ------------------------------------------------------------------------------------------------------------------------------------
Producer's Signature Date Producer I.D. Number
X
____________________________________________________________________________________________________________________________________
Broker/Dealer Name and Address Broker/Dealer Number
____________________________________________________________________________________________________________________________________
OL2140 5 of 5 10-95
</TABLE>
EXHIBIT 1.A.(10)
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 Premium is due on the Policy Date. The Insured 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.
All premiums are paid to the Variable Products Operations ("VPO") of Phoenix,
except that the Issue Premium may be paid to an authorized agent of Phoenix for
forwarding to VPO. 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
<PAGE>
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.
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 applicant is insurable. This process may involve such
verification procedures as medical examinations and may require that further
information be provided by the proposed Insured before a determination can be
made. A Policy 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 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
2
<PAGE>
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 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 unrepaid 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 6.5% difference is the unrepaid Acquisition Expense Allowance. The
Acquisition Expense Allowance consists of a deferred sales charge equal to 6.5%
of premium designed to recover expenses for the distribution of Policies that
are terminated by surrender before distribution expenses have been recouped, and
the premium tax for the state of issue. These referred charges are paid at a
rate of 1/120 per month over the first 10 policy years. If the policy is
surrendered during this period, the remaining unrepaid Acquisition Expense
Allowance is charged.
(c) Repayment of Indebtedness
-------------------------
Debt may be repaid at any time during the lifetime of the Insured 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
loaned amounts taken from such Account have not been previously repaid.
3
<PAGE>
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 during the lifetime
of the Insured while the Policy is in force.
(d) Correction of Misstatement of Age or Sex
----------------------------------------
If the age or sex of the Insured 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.
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 during the lifetime of the Insured and 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 fraction of the unrepaid Acquisition
Expense. The applicable fraction of the unrepaid Acquisition Expense is equal to
4
<PAGE>
the applicable surrender charge multiplied by a fraction. This fraction is equal
to the partial surrender amount payable divided by the Policy Value.
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 be surrendered.
After a partial surrender, 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.
(b) 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 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.
(c) 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 Loan Accumulation Account
and subtracted from the Policy's share of the subaccounts or the GIA, based on
the allocation requested at
- --------
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.)
5
<PAGE>
the time of the loan. The total reduction will equal the amount added to the
Loan Accumulation Account.
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 GIA will be determined in the same manner as provided for
monthly deductions. Interest will be credited and the Loan Accumulation Account
will increase at an effective annual rate of 7.25%, 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 Loan Accumulation Account will be transferred to 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 rate is 8%. 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.
(d) 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 the Cash Surrender Value is 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
6
<PAGE>
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
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.
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.
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") on the
life of the Insured at any time, 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 Insured's insurability is required for this transfer. The
Policy
7
<PAGE>
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.
8
EXHIBIT 6
Consent of Jorden Burt Boros Cicchetti
Berenson and Johnson LLP
<PAGE>
JordenBurt [letterhead]
April 20, 1998
Phoenix Home Life Mutual Insurance Company
One American Row
Hartford, Connecticut 06115
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters' in the Prospectus contained in Post-Effective Amendment No. 14 to the
Registration Statement on Form S-6 (File No. 33-6793) filed by Phoenix Home Life
Variable Universal Life Account with the Securities and Exchange Commission
under the Securities Act of 1933.
Very truly yours,
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
By /s/ Michael Berenson
--------------------------------
EXHIBIT 7
Consent of Independent Accounts
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 14 to the Registration Statement on Form S-6 of our
reports dated February 19, 1998 and February 11, 1998, relating to the financial
statements of Phoenix Home Life Variable Universal Life Account and the
consolidated financial statements of Phoenix Home Life Mutual Insurance Company,
respectively, which appear in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Hartford, Connecticut
April 28, 1998
EXHIBIT 8
Consent of Edwin L. Kerr, Esq.
<PAGE>
April 29, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: REGISTRATION STATEMENT NO. 33-6793
Gentlemen:
As Counsel to the depositor, I am familiar with the flexible premium
variable life insurance policies (the "Policies") which are the subject of the
above-captioned Registration Statement on Form S-6.
In connection with this opinion, I have reviewed the Policies, the
Registration Statement, the Charter and By-Laws of the Company, relevant
proceedings of the Board of Directors, and the provisions of New York insurance
law relevant to the issuance of the Policies.
Based upon this review, I am of the opinion that each of the Policies,
when issued, will have been validly issued, and will constitute a legal and
binding obligation of Phoenix Life Mutual Insurance Company.
I further consent to the use of this opinion as an exhibit to the
above-captioned Registration Statement and to my being named under "Legal
Matters" therein.
Very truly yours,
/s/ Edwin L. Kerr
Edwin L. Kerr, Counsel
Phoenix Home Life
Mutual Insurance Company
EXHIBIT 9
Consent of Paul M. Fischer, FSA, CLU, ChFC
<PAGE>
April 29, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
This opinion is furnished in connection with the registration of
flexible premium variable life insurance policies ("Policies") under the
Securities Act of 1933. The prospectus included in the Registration Statement on
Form S-6 (SEC File No. 33-6793) describes the Policies. The forms of Policies
were prepared under my direction, and I am familiar with the Registration
Statement and Exhibits thereto.
In my opinion, the illustrations of death benefits and cash values
included in the section entitled "Illustrations of Death Benefits, Accumulation
Values and Accumulated Premiums" in Appendix B of the prospectus, based on the
assumptions stated in the illustrations, are consistent with the provisions of
the respective forms of the Policies.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Paul M. Fischer
Paul M. Fischer, FSA, CLU, ChFC
Vice President
