As filed with the Securities and Exchange Commission on September 10, 1999
Registration Nos.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
(Exact Name of Registrant )
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
(Name of Depositor)
---------------
One American Row, Hartford, Connecticut 06102-5056
(Address of Depositor's Principal Executive Offices) (Zip Code)
(800) 447-4312
(Depositor's Telephone Number, including Area Code)
---------------
Dona D. Young, Esq.
Phoenix Life and Annuity Company
One American Row
Hartford, CT 06102-5056
(Name and Address of Agent for Service)
---------------
Copy to:
Edwin L. Kerr, Esq.
Phoenix Home Life Mutual Insurance Company
One American Row
Hartford, CT 06102-5056
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
Registrant is relying on the exemptive relief provided by Rule 6e-3(T) under the
Investment Company Act of 1940 and the relief granted to separate accounts
issuing variable contracts by Section 27I of the Investment Company Act of 1940.
Approximate date of proposed public offering: as soon as practicable after the
effective date of the Registration Statement.
[ ] Check if it is proposed that this filing will become effective on (date) at
(time) pursuant to Rule 487.
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<PAGE>
[VERSION A]
PHOENIX
CORPORATE EDGE
VARIABLE UNIVERSAL LIFE
INSURANCE POLICY
Issued by
PHOENIX HOME LIFE
MUTUAL INSURANCE COMPANY
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT US AT:
[envelope] ANDESA TPA, INC.
1605 N CEDAR CREST BLVD, SUITE 502
ALLENTOWN, PA 18104
[telephone] 610/439-5256
PROSPECTUS
This Prospectus describes an individual flexible premium variable universal
life insurance policy. The Policy provides lifetime insurance protection for as
long as it remains in force.
You may allocate net premiums and cash value to one or more of the
Subaccounts of the VUL Account and the Guaranteed Interest Account. The assets
of each Subaccount will be used to purchase, at Net Asset Value, shares of a
series in the following designated underlying Funds.
THE PHOENIX EDGE SERIES FUND
- ----------------------------
MANAGED BY PHOENIX INVESTMENT COUNSEL, INC.
[diamond] Phoenix Research Enhanced Index Series
[diamond] Phoenix-Aberdeen International Series
[diamond] Phoenix-Engemann Nifty Fifty Series
[diamond] Phoenix-Goodwin Balanced Series
[diamond] Phoenix-Goodwin Growth Series
[diamond] Phoenix-Goodwin Money Market Series
[diamond] Phoenix-Goodwin Multi-Sector Fixed Income Series
[diamond] Phoenix-Goodwin Strategic Allocation Series
[diamond] Phoenix-Goodwin Strategic Theme Series
[diamond] Phoenix-Hollister Value Equity Series
[diamond] Phoenix-Oakhurst Growth and Income Series
[diamond] Phoenix-Schafer Mid-Cap Value Series
[diamond] Phoenix-Seneca Mid-Cap Growth Series
MANAGED BY PHOENIX-ABERDEEN INTERNATIONAL ADVISORS, LLC
[diamond] Phoenix-Aberdeen New Asia Series
MANAGED BY DUFF & PHELPS INVESTMENT MANAGEMENT CO.
[diamond] Phoenix-Duff & Phelps Real Estate Securities Series
BT INSURANCE FUNDS TRUST
- ------------------------
MANAGED BY BANKERS TRUST COMPANY
[diamond] EAFE[registered trademark] Equity Index Fund
FEDERATED INSURANCE SERIES
- --------------------------
MANAGED BY FEDERATED INVESTMENT MANAGEMENT COMPANY
[diamond] Federated Fund for U.S. Government Securities II
[diamond] Federated High Income Bond Fund II
TEMPLETON VARIABLE PRODUCTS SERIES FUND
- ---------------------------------------
MANAGED BY TEMPLETON INVESTMENT COUNSEL, INC.
[diamond] Templeton Asset Allocation Fund -- Class 2
[diamond] Templeton International Fund -- Class 2
[diamond] Templeton Stock Fund -- Class 2
MANAGED BY TEMPLETON ASSET MANAGEMENT, LTD.
[diamond] Templeton Developing Markets Fund -- Class 2
MANAGED BY FRANKLIN MUTUAL ADVISERS, INC.
[diamond] Mutual Shares Investments Fund -- Class 2
WANGER ADVISORS TRUST
- ---------------------
MANAGED BY WANGER ASSET MANAGEMENT, L.P.
[diamond] Wanger Foreign Forty
[diamond] Wanger International Small Cap
[diamond] Wanger Twenty
[diamond] Wanger U.S. Small Cap
1
<PAGE>
IT MAY NOT BE IN YOUR BEST INTEREST TO PURCHASE A POLICY TO REPLACE AN
EXISTING LIFE INSURANCE POLICY OR ANNUITY CONTRACT. YOU MUST UNDERSTAND THE
BASIC FEATURES OF THE PROPOSED POLICY AND YOUR EXISTING COVERAGE BEFORE YOU
DECIDE TO REPLACE YOUR PRESENT COVERAGE. YOU MUST ALSO KNOW IF THE REPLACEMENT
WILL RESULT IN ANY TAXES.
THE POLICY IS NOT A DEPOSIT OR OBLIGATION OF, UNDERWRITTEN OR GUARANTEED BY,
ANY FINANCIAL INSTITUTION OR CREDIT UNION. IT IS NOT FEDERALLY INSURED OR
ENDORSED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER STATE OR
FEDERAL AGENCY. POLICY INVESTMENTS ARE SUBJECT TO RISK, INCLUDING THE
FLUCTUATION OF POLICY VALUES AND POSSIBLE LOSS OF PRINCIPAL INVESTED OR PREMIUMS
PAID.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES, NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED OR PRECEDED BY CURRENT
PROSPECTUSES FOR THE FUNDS. YOU SHOULD READ AND KEEP THESE PROSPECTUSES FOR
FUTURE REFERENCE.
2
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Heading Page
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PART I--GENERAL POLICY PROVISIONS.......................................................................................... 6
SUMMARY ............................................................................................................... 6
Availability....................................................................................................... 6
Underwriting....................................................................................................... 6
Charges Under the Policy........................................................................................... 6
Deductions From Premiums........................................................................................... 8
Sales Charge................................................................................................... 8
State Premium Tax Charge....................................................................................... 8
Deferred Acquisition Cost ("DAC") Tax Charge................................................................... 8
Policy Value Charges............................................................................................... 8
Administrative Charge.......................................................................................... 8
Cost of Insurance.............................................................................................. 8
Mortality and Expense Risk Fee................................................................................. 8
Rider Charge................................................................................................... 8
Charges for Federal Income Taxes............................................................................... 8
Fund Charges................................................................................................... 8
Other Charges...................................................................................................... 10
Partial Surrender Fee.......................................................................................... 10
Loan Interest Rate Expense Charge.............................................................................. 10
Reduction in Charges............................................................................................... 10
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY AND THE VUL ACCOUNT......................................................... 11
Phoenix............................................................................................................ 11
The VUL Account.................................................................................................... 11
PERFORMANCE HISTORY.................................................................................................... 11
INVESTMENTS OF THE VUL ACCOUNT......................................................................................... 11
Participating Investment Funds..................................................................................... 11
The Phoenix Edge Series Fund................................................................................... 11
BT Insurance Funds Trust....................................................................................... 12
Federated Insurance Series..................................................................................... 12
Templeton Variable Products Series Fund........................................................................ 12
Wanger Advisors Trust.......................................................................................... 13
Investment Advisors................................................................................................ 13
Services of the Advisors........................................................................................... 14
Reinvestment and Redemption........................................................................................ 14
Substitution of Investments........................................................................................ 14
The Guaranteed Interest Account.................................................................................... 14
PREMIUMS............................................................................................................... 15
Minimum Premiums................................................................................................... 15
Allocation of Issue Premium........................................................................................ 15
Free Look Period................................................................................................... 15
Account Value...................................................................................................... 16
Transfer of Policy Value....................................................................................... 16
Systematic Transfers for Dollar Cost Averaging................................................................. 16
Automatic Asset Re-Balancing....................................................................................... 16
Determination of Subaccount Values................................................................................. 16
Death Benefit Under the Policy..................................................................................... 17
Minimum Face Amount............................................................................................ 17
Death Benefit Options.......................................................................................... 17
Changes in Face Amount of Insurance................................................................................ 18
Requests for Increase in Face Amount........................................................................... 18
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Decreases in Face Amount and Partial Surrender: Effect on Death Benefit............................................ 18
Requests for Decrease in Face Amount........................................................................... 18
Surrenders......................................................................................................... 18
General........................................................................................................ 18
Full Surrenders................................................................................................ 18
Partial Surrenders............................................................................................. 18
Policy Loans....................................................................................................... 18
Source of Loan................................................................................................. 19
Interest....................................................................................................... 19
Interest Credited on Loaned Value.............................................................................. 19
Repayment...................................................................................................... 19
Effect of Loan................................................................................................. 19
Lapse.............................................................................................................. 19
Additional Insurance Option........................................................................................ 19
Additional Rider Benefits.......................................................................................... 20
PART II--ADDITIONAL POLICY PROVISIONS...................................................................................... 20
Postponement of Payments........................................................................................... 20
Payment by Check................................................................................................... 20
The Contract....................................................................................................... 20
Suicide............................................................................................................ 20
Incontestability................................................................................................... 20
Change of Owner or Beneficiary..................................................................................... 20
Assignment......................................................................................................... 21
Misstatement of Age or Sex......................................................................................... 21
Surplus............................................................................................................ 21
PAYMENT OF PROCEEDS.................................................................................................... 21
Surrender and Death Benefit Proceeds............................................................................... 21
Payment Options.................................................................................................... 21
Option 1--Lump sum............................................................................................. 21
Option 2--Left to earn interest................................................................................ 21
Option 3--Payment for a specific period........................................................................ 21
Option 4--Life annuity with specified period certain........................................................... 21
Option 5--Life annuity......................................................................................... 22
Option 6--Payments of a specified amount....................................................................... 22
Option 7--Joint survivorship annuity with 10-year period certain............................................... 22
PART III--OTHER IMPORTANT INFORMATION...................................................................................... 22
FEDERAL TAX CONSIDERATIONS............................................................................................. 22
Introduction....................................................................................................... 22
Phoenix's Tax Status............................................................................................... 22
Policy Benefits.................................................................................................... 22
Death Benefit Proceeds......................................................................................... 22
Full Surrender................................................................................................. 23
Partial Surrender.............................................................................................. 23
Loans.......................................................................................................... 23
Business-Owned Policies............................................................................................ 23
Modified Endowment Contracts....................................................................................... 23
General........................................................................................................ 23
Reduction in Benefits During the First Seven Years............................................................. 23
Distributions Affected......................................................................................... 23
Penalty Tax.................................................................................................... 24
Material Change Rules.......................................................................................... 24
Serial Purchase of Modified Endowment Contracts................................................................ 24
Limitations on Unreasonable Mortality and Expense Charges.......................................................... 24
Diversification Standards.......................................................................................... 24
Change of Ownership or Insured or Assignment....................................................................... 25
Other Taxes........................................................................................................ 25
VOTING RIGHTS ......................................................................................................... 25
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
THE DIRECTORS AND EXECUTIVE OFFICERS OF PHOENIX........................................................................ 25
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS ............................................................................... 27
SALES OF POLICIES ..................................................................................................... 27
STATE REGULATION ...................................................................................................... 27
REPORTS ............................................................................................................... 27
LEGAL PROCEEDINGS ..................................................................................................... 27
LEGAL MATTERS ......................................................................................................... 27
REGISTRATION STATEMENT ................................................................................................ 27
YEAR 2000 ISSUE........................................................................................................ 27
FINANCIAL STATEMENTS .................................................................................................. 28
APPENDIX A--GLOSSARY OF SPECIAL TERMS.................................................................................. 68
APPENDIX B--PERFORMANCE HISTORY........................................................................................ 69
APPENDIX C--ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES ("ACCOUNT VALUES") AND CASH SURRENDER VALUES................ 73
</TABLE>
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.
5
<PAGE>
PART I--GENERAL POLICY PROVISIONS
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SUMMARY
- --------------------------------------------------------------------------------
This is a summary that describes the general provisions of the policy.
Certain provisions of the policy described in this prospectus may differ in
a particular state because of specific state requirements.
Throughout the prospectus, Phoenix Home Life Mutual Insurance Company is
referred to as Phoenix, we, us, or our and the policyholder is referred to as
you or your.
We define the following terms in the Glossary of Appendix A:
ATTAINED AGE POLICY ANNIVERSARY
BENEFICIARY POLICY DATE
DEBT POLICY VALUE
FUNDS POLICY YEAR
GENERAL ACCOUNT SERIES
ISSUE PREMIUM SUBACCOUNTS
MONTHLY CALCULATION DATE TARGET PREMIUM
NET ASSET VALUE VALUATION DATE
PAYMENT DATE VALUATION PERIOD
PLANNED ANNUAL PREMIUM VUL ACCOUNT (ACCOUNT)
If there is ever a difference between the provisions within this prospectus
and the provisions of the policy, the policy provisions will control.
AVAILABILITY
The policy is available on a "case" basis. We may consider one person as a
case. All policies within a case are aggregated for purposes of determining
policy dates, loan rates and underwriting requirements. If an individual owns
the policy as part of a case, he or she may exercise all rights under the policy
through their employer or sponsoring organization. After termination of
employment or other such relationship, the individual may exercise such rights
directly with us.
For fully underwritten policies, the age of the insured at the time of issue
generally must be between ages 18 through 85 as of his or her birthday nearest
the Policy Anniversary.
For policies that are underwritten using simplified or guaranteed issue
programs, generally the maximum age of the insured at the time of issue is age
70 for simplified and 64 for guaranteed issue.
The minimum face amount of insurance per policy issued is $50,000.
You can purchase a Policy to insure the life of another person provided that
you have an insurable interest in that life and the prospective Insured
consents.
UNDERWRITING
Currently, we offer three types of underwriting:
[diamond] Fully underwritten;
[diamond] Simplified issue underwriting; and
[diamond] Guaranteed issue underwriting.
Your cost of insurance charges will vary based on the type of underwriting
we use.
CHARGES UNDER THE POLICY
We deduct certain charges from your Policy to compensate us for:
1. our expenses in selling the Policy;
2. underwriting and issuing the Policy;
3. premium and federal taxes incurred on premiums received;
4. providing insurance benefits under your Policy; and
5. assuming certain risks in connection with the Policy.
These charges are summarized below. These charges are described more fully
following this chart.
6
<PAGE>
CHARGES UNDER THE POLICY
<TABLE>
<CAPTION>
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CHARGES CURRENT RATE GUARANTEED RATE
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<S> <C> <C> <C>
DEDUCTIONS FROM SALES CHARGE Policy years 1 - 7: 7.0% of premiums up Policy years 1 - 7: 9.0% of premiums.
PREMIUMS to the Target Premium and 0% on amounts Policy year 8+: 3.0% of all
in excess of the Target Premium. premiums.
Policy year 8+: 0% of all premiums.
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STATE PREMIUM 0.75% to 4.0% of each premium depending This charge will always equal the
TAX on your state's applicable rate. applicable state rate.
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DEFERRED 1.5% of each premium up to the This charge will always equal the
ACQUISITION COST Target Premium. actual cost to Us for the DAC tax.
TAX CHARGE
(DAC TAX)
- ---------------------------------------------------------------------------------------------------------------------------------
POLICY VALUE CHARGES ADMINISTRATIVE CHARGE $5 per month ($60 annually) $10 per month ($120 annually) except
New York, $7.50 per month ($90
annually)
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COST OF INSURANCE A per thousand rate multiplied by the The maximum monthly cost of
CHARGE amount at risk each month. This insurance charge for each $1,000 of
charge varies by the Insured's insurance is shown on your policy's
issue age, policy duration, gender schedule pages.
and underwriting class.
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MORTALITY AND EXPENSE 0.50% annually in policy years 1-10 0.90% annually in all policy years
RISK CHARGE 0.25% annually in policy years 11+
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FUND CHARGES SEE FUND CHARGE TABLE SEE FUND CHARGE TABLE
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OTHER CHARGES PARTIAL SURRENDER FEE None 2.0% of the amount withdrawn, but not
greater than $25.
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TRANSFERS BETWEEN None $10 per transfer after the first 2
SUBACCOUNTS transfers in any given policy year,
(after 12 transfers in New York).
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LOAN INTEREST RATE The rates in effect before the 16th The Guaranteed rates before the
CHARGED policy year and before the Insured Insured reaches 65 for all states are:
reaches age 65 in all states except Policy year 1 - 10: 4.75%
New York and New Jersey are: Policy year 11 - 15: 4.50%
Policy year 1 - 10: 2.75% Policy year 16+: 4.25%
Policy year 11 - 15: 2.50%
Policy year 16+: 2.25%
The rates in effect before the 16th
policy year and before the Insured
reaches age 65 in New York and
New Jersey are:
Policy year 1 - 10: 4.75%
Policy year 11 - 15: 4.50%
Policy year 16+: 4.25%
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</TABLE>
7
<PAGE>
DEDUCTIONS FROM PREMIUMS
Before we allocate your premium to the Subaccounts or the Guaranteed
Interest Account we deduct a sales charge, a state premium tax and a federal tax
to cover the estimated cost to us for deferred acquisition costs.
SALES CHARGE
We deduct a sales charge from your premium for the costs we incur in the
sales and distribution of the policies.
STATE PREMIUM TAX CHARGE
States assess premium taxes at various rates. We deduct the applicable state
rate from each premium to cover the cost of the premium taxes assessed against
us by the state.
We may increase or decrease this charge if there is a change in the tax or
change of residence.
DEFERRED ACQUISITION COST ("DAC") TAX CHARGE
This tax is associated with our federal tax liability under Internal Revenue
Code Section 848.
POLICY VALUE CHARGES
On each Monthly Calculation Day, we deduct from your policy value the
following charges:
1. Administrative Charge
2. Cost of Insurance Charge
3. Mortality and Expense Risk Fee
4. A charge for the cost of riders if applicable
The amount deducted is allocated among the Subaccounts and the unloaned
portion of the Guaranteed Interest Account based on an allocation schedule
specified by you. You initially choose this schedule in your application.
1. ADMINISTRATIVE CHARGE
We assess a monthly charge for the expenses we incur in administering the
policy. This charge reimburses us for the cost of daily administration for
services such as billing and collections, monthly processing, updating daily
values and communicating with policyholders.
2. COST OF INSURANCE
We deduct a charge to cover the cost of insurance coverage on each monthly
calculation date. This charge is based on:
[diamond] Insured's gender;
[diamond] Insured's age at issue;
[diamond] Policy year in which we make the deduction;
[diamond] Insured's tobacco use classification;
[diamond] Rating class of the policy; and
[diamond] Underwriting classification of the case.
To determine the monthly cost of insurance, we multiply the appropriate cost
of insurance rate by the difference between your Policy's death benefit and the
policy value. Any change in the cost of insurance rates will apply to all
persons of the same sex, insurance age and risk class whose policies have been
in force for the same length of time.
3. MORTALITY AND EXPENSE RISK FEE
We charge the Subaccounts for the mortality and expense risks we assume.
This charge is deducted from the value of each Subaccount's assets attributable
to the policies.
The mortality risk we assume is that the group of lives we insure under our
policies may, on average, live for a shorter period of time than we estimated.
The expense risk we assume is that our cost of issuing and administering the
policies may be more than we estimated.
If all the money we collect from this charge is not required to cover the
cost of death benefits and other expenses, it will be a gain to us. If the money
we collect is not enough to cover our costs, we will still provide for death
benefits and expenses.
4. RIDER CHARGE
We will deduct any applicable monthly rider charges for the additional
benefit provided to you by the rider.
CHARGES FOR FEDERAL INCOME TAXES
We currently do not charge the VUL Account for federal income taxes
attributable to it. In the future, we may charge to cover these or any other tax
liability of the VUL Account.
FUND CHARGES
Please refer to the following chart for a listing of Fund Charges.
8
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ANNUAL FUND EXPENSES FOR THE YEAR ENDING DECEMBER 31, 1998 AFTER REIMBURSEMENT
<TABLE>
<CAPTION>
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INVESTMENT OTHER OPERATING TOTAL ANNUAL
SERIES MANAGEMENT FEE RULE 12b-1 FEES EXPENSES FUND EXPENSES(1)
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<S> <C> <C> <C> <C>
Phoenix Research Enhanced Index .45% 0% .10% .55%
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Phoenix-Aberdeen International .75% 0% .23% .98%
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Phoenix-Aberdeen New Asia 1.00% 0% .25% 1.25%
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Phoenix-Duff & Phelps Real Estate Securities .75% 0% .25% 1.00%
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Phoenix-Engemann Nifty Fifty .90% 0% .15% 1.05%
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Phoenix-Goodwin Balanced .55% 0% .13% .68%
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Phoenix-Goodwin Growth .62% 0% .07% .69%
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Phoenix-Goodwin Money Market .40% 0% .15% .55%
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Phoenix-Goodwin Multi-Sector Fixed Income .50% 0% .14% .64%
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Phoenix-Goodwin Strategic Allocation .58% 0% .10% .68%
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Phoenix-Goodwin Strategic Theme .75% 0% .24% .99%
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Phoenix-Hollister Value Equity .70% 0% .15% .85%
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Phoenix-Oakhurst Growth and Income .70% 0% .15% .85%
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Phoenix-Schafer Mid-Cap Value 1.05% 0% .15% 1.20%
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Phoenix-Seneca Mid-Cap Growth .80% 0% .25% 1.05%
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EAFE[registered trademark] Equity Index 0% 0% .65% .65%
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Federated High Income Bond .60% 0% .18% .78%
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Federated Fund for U.S. Government Securities .52% 0% .33% .85%
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Mutual Shares Investments (Templeton) 0% .25% 1.00% 1.25%
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Templeton Asset Allocation .60% .25% .18% 1.03%
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Templeton Developing Markets 1.25% .25% .41% 1.91%
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Templeton International .69% .25% .17% 1.11%
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Templeton Stock .70% .25% .19% 1.14%
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Wanger Foreign Forty .95% 0% .50% 1.45%
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Wanger International Small Cap 1.27% 0% .28% 1.55%
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Wanger Twenty .90% 0% .45% 1.35%
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Wanger U.S. Small Cap .96% 0% .06% 1.02%
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</TABLE>
(1) Each Series pays a portion or all of its total annual expenses other than
the management fee. The Phoenix Research Enhanced Index Series will pay up
to .10%; the Phoenix-Goodwin Growth, Phoenix-Goodwin Multi-Sector Fixed
Income, Phoenix-Goodwin Strategic Allocation, Phoenix-Goodwin Money Market,
Phoenix-Goodwin Balanced, Phoenix-Engemann Nifty Fifty, Phoenix-Oakhurst
Growth and Income, Phoenix-Hollister Value Equity and Phoenix-Schafer
Mid-Cap Value Series will pay up to .15%; the Phoenix-Duff & Phelps Real
Estate Securities, Phoenix-Goodwin Strategic Theme, Phoenix-Aberdeen New
Asia and Phoenix-Seneca Mid-Cap Growth Series will pay up to .25%; and the
Phoenix-Aberdeen International Series will pay up to .40% for the fiscal
year ending December 31, 1998. Absent expense reimbursement, Total Annual
Expenses were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Phoenix Research Enhanced Index .82% Phoenix-Goodwin Multi-Sector Fixed Income .64%
Phoenix-Aberdeen International .98% Phoenix-Goodwin Strategic Allocation .68%
Phoenix-Aberdeen New Asia 2.50% Phoenix-Goodwin Strategic Theme .99%
Phoenix-Duff & Phelps Real Estate Securities 1.01% Phoenix-Hollister Value Equity 2.46%
Phoenix-Engemann Nifty Fifty 2.58% Phoenix-Oakhurst Growth and Income 1.46%
Phoenix-Goodwin Balanced .68% Phoenix-Schafer Mid-Cap Value 2.77%
Phoenix-Goodwin Growth .69% Phoenix-Seneca Mid-Cap Growth 2.81%
Phoenix-Goodwin Money Market .55%
</TABLE>
The Wanger Foreign Forty will pay up to .45%, the Wanger U.S. Small Cap
Series will pay up to .50%, the Wanger International Small Cap will pay up
to .60%, and the Wanger Twenty will pay up to .40%. Absent expense
reimbursement, Total Annual Expenses are estimated to be approximately 1.45%
for Wanger Foreign Forty, 1.55% for Wanger International Small Cap, 1.35%
for Wanger Twenty and 1.02% for Wanger U.S. Small Cap for the fiscal year
ending December 31, 1999. Expenses may be higher or lower than those shown
but are subject to expense limitations as noted.
9
<PAGE>
OTHER CHARGES
PARTIAL SURRENDER FEE
We reserve the right to deduct a charge from each withdrawal.
LOAN INTEREST RATE EXPENSE CHARGE
We deduct a charge from the loan interest rate. This charge reimburses us
for expenses we incur in administering your loan. This rate varies by policy
year.
REDUCTION IN CHARGES
The Policy is available for purchase by individuals, corporations and other
groups. For group or sponsored arrangements (including our employees and their
family members) and for special exchange programs that we may make available, we
reserve the right to reduce or eliminate the sales load, mortality and expense
risk charge, monthly administrative charge, monthly cost of insurance charges or
other charges normally assessed on certain multiple life cases where it is
expected that the size or nature of such cases will result in savings of sales,
underwriting, administrative or other costs.
Eligibility for the amount of these reductions will be determined by a
number of factors, including the number of Insureds, the total premium expected
to be paid, the total assets under management for the Policyowner, the nature of
the relationship among individual Insureds, the purpose for which the Policies
are being purchased, the expected persistency of individual Policies, and other
circumstances which in our opinion are rationally related to the expected
reduction in expenses. Any variations in the charge structure will be determined
in a uniform manner reflecting differences in costs of services and not unfairly
discriminatory to policyholders.
10
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY AND THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PHOENIX
We are a mutual life insurance company originally chartered in Connecticut
in 1851 and redomiciled to New York in 1992. Our executive office is at One
American Row, Hartford, Connecticut 06102-5056 and our main administrative
office is at 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-1900. Our
New York principal office is at 10 Krey Boulevard, East Greenbush, New York
12144. We sell insurance policies and annuity contracts through our own field
force of full-time agents and through brokers.
THE VUL ACCOUNT
The VUL Account is a separate account of Phoenix, established 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 (the "1940 Act"), as
amended, and meets the definition of a "separate account" under that Act. This
registration does not involve supervision of the management of the VUL Account
or Phoenix by the SEC.
The VUL Account is divided into Subaccounts each of which is available for
allocation of policy value. Each Subaccount will invest solely in shares of a
specific series of a mutual fund. In the future, we may establish additional
Subaccounts which will be made available to existing Policyowners to the extent
and on a basis decided by us. See "Investments of the VUL Account--Participating
Investment Funds."
We do not guarantee the investment performance of the VUL Account or any of
its Subaccounts. Contributions to the overall policy value allocated to the VUL
Account depend on the chosen Fund's investment performance. Thus, you bear the
full investment risk for all monies invested in the VUL Account.
The VUL Account is part of the general business of Phoenix, but the gains or
losses of the VUL Account belong solely to the VUL Account. The gains or losses
of any other business we may conduct do not affect the VUL Account. Under New
York law, the assets of the VUL Account may not be taken to pay liabilities
arising out of any other business we may conduct. Nevertheless, all obligations
arising under the Policy are general corporate obligations of Phoenix.
PERFORMANCE HISTORY
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We may include the performance history of the VUL Account 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. See "Appendix B" for more information.
INVESTMENTS OF THE VUL ACCOUNT
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PARTICIPATING INVESTMENT FUNDS
THE PHOENIX EDGE SERIES FUND
Certain Subaccounts invest in corresponding Series of The Phoenix Edge
Series Fund. The following Series are currently available:
PHOENIX RESEARCH ENHANCED INDEX SERIES: The investment objective of the
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. The Series invests 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.
PHOENIX-ABERDEEN INTERNATIONAL SERIES: The investment objective of the
Series is to seek a high total return consistent with reasonable risk. The
Series invests 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
Phoenix-Aberdeen International Series provides a means for investors to invest a
portion of their assets outside the United States.
PHOENIX-ABERDEEN NEW ASIA SERIES: The investment objective of the Series is
to seek long-term capital appreciation. The Series invests primarily in a
diversified portfolio of equity securities of issuers organized and principally
operating in Asia, excluding Japan.
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES: The investment
objective of the Series is to seek capital appreciation and income with
approximately equal emphasis. Under normal circumstances, it invests 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.
PHOENIX-ENGEMANN NIFTY FIFTY SERIES: The investment objective of the Series
is to seek long-term capital appreciation by investing in approximately 50
different securities which offer 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.
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PHOENIX-GOODWIN BALANCED SERIES: The investment objective of the Series is
to seek reasonable income, long-term capital growth and conservation of capital.
The Phoenix-Goodwin Balanced Series invests based on combined considerations of
risk, income, capital enhancement and protection of capital value.
PHOENIX-GOODWIN GROWTH SERIES: The investment objective of the Series is to
achieve intermediate and long-term growth of capital, with income as a secondary
consideration. The Phoenix-Goodwin Growth Series invests principally in common
stocks of corporations believed by management to offer growth potential.
PHOENIX-GOODWIN MONEY MARKET SERIES: The investment objective of the Series
is to provide maximum current income consistent with capital preservation and
liquidity. The Phoenix-Goodwin Money Market Series invests exclusively in high
quality money market instruments.
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES: The investment objective
of the Series is to seek long-term total return. The Phoenix-Goodwin
Multi-Sector Fixed Income Series seeks to achieve its investment objective by
investing in a diversified portfolio of high yield and high quality fixed income
securities.
PHOENIX-GOODWIN STRATEGIC ALLOCATION SERIES: The investment objective of the
Series is to realize as high a level of total return over an extended period of
time as is considered consistent with prudent investment risk. The
Phoenix-Goodwin Strategic Allocation Series invests in stocks, bonds and money
market instruments in accordance with the Investment Advisor's appraisal of
investments most likely to achieve the highest total return.
PHOENIX-GOODWIN STRATEGIC THEME SERIES: The investment objective of the
Series is to seek long-term appreciation of capital by identifying securities
benefiting from long-term trends present in the United States and abroad. The
Phoenix-Goodwin Strategic Theme Series invests primarily in common stocks
believed to have substantial potential for capital growth.
PHOENIX-HOLLISTER VALUE EQUITY SERIES: The primary investment objective of
the Series is long-term capital appreciation, with a secondary investment
objective of current income. The Phoenix-Hollister Value Equity 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.
PHOENIX-OAKHURST GROWTH AND INCOME SERIES: The investment objective of the
Series is to seek dividend growth, current income and capital appreciation by
investing in common stocks. The Phoenix-Oakhurst Growth and Income 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-SCHAFER MID-CAP VALUE SERIES: The primary investment objective of
the Series is to seek long-term capital appreciation, with current income as the
secondary investment objective. The Phoenix-Schafer Mid-Cap Value 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.
PHOENIX-SENECA MID-CAP GROWTH SERIES: The investment objective of the 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.
BT INSURANCE FUNDS TRUST
A certain Subaccount invests in a corresponding Series of the BT Insurance
Funds Trust. The following Series is currently available:
EAFE[registered trademark] EQUITY INDEX FUND: The Series seeks to match the
performance of the Morgan Stanley Capital International EAFE[registered
trademark] Index ("EAFE[registered trademark] Index"), which emphasizes major
market stock performance of companies in Europe, Australia and the Far East. The
Series invests in a statistically selected sample of the securities found in the
EAFE[registered trademark] Index.
FEDERATED INSURANCE SERIES
Certain Subaccounts invest in corresponding Series of the Federated
Insurance Series. The following Series are currently available:
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II: The investment objective
of the Series is to seek current income by investing primarily in U.S.
government securities, including mortgage-backed securities issued by U.S.
government agencies.
FEDERATED HIGH INCOME BOND FUND II: The investment objective of the Series
is to seek high current income by investing primarily in a diversified portfolio
of high-yield, lower-rated corporate bonds.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Certain Subaccounts invest in Class 2 Shares of a corresponding Series of
the Templeton Variable Products Series Fund. The following Series are currently
available:
MUTUAL SHARES INVESTMENT FUND: The primary investment objective of the
Series is capital appreciation with income as a secondary objective. The Mutual
Shares Investments Series invests in domestic equity securities that the manager
believes are significantly undervalued.
TEMPLETON ASSET ALLOCATION FUND: The investment objective of the Series is a
high level of total return. The Templeton Asset Allocation Series invests in
stocks of
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companies of any nation, bonds of companies and governments of any
nation and in money market instruments. Changes in the asset mix will be made in
an attempt to capitalize on total return potential produced by changing economic
conditions throughout the world.
TEMPLETON DEVELOPING MARKETS FUND: The investment objective of the Series is
long-term capital appreciation. The Templeton Developing Markets Series invests
primarily in emerging market equity securities.
TEMPLETON INTERNATIONAL FUND: The investment objective of the Series is
long-term capital growth. The Templeton International Series invests primarily
in stocks of companies located outside the United States, including emerging
markets. Any income realized will be incidental. It also may invest in debt
securities of governments and companies located anywhere in the world.
TEMPLETON STOCK FUND: The investment objective of the Series is long-term
capital growth. The Templeton Stock Series invests primarily in common stocks
issued by companies in various nations throughout the world, including the U.S.
and emerging markets.
WANGER ADVISORS TRUST
Certain Subaccounts invest in corresponding Series of the Wanger Advisors
Trust. The following Series are currently available:
WANGER FOREIGN FORTY: The investment objective of the Series is to seek
long-term capital growth. The Wanger Foreign Forty Series invests primarily in
equity securities of foreign companies with market capitalization of $1 billion
to $10 billion and focuses its investments in 40 to 60 companies in the
developed markets.
WANGER INTERNATIONAL SMALL CAP: The investment objective of the Series is to
seek long-term capital growth. The Wanger International Small Cap Series invests
primarily in securities of non-U.S. companies with total common stock market
capitalization of less than $1 billion.
WANGER TWENTY: The investment objective of the Series is to seek long-term
capital growth. The Wanger Twenty Series invests primarily in the stocks of U.S.
companies with market capitalization of $1 billion to $10 billion and ordinarily
focuses its investments in 20 to 25 U.S. companies.
WANGER U.S. SMALL CAP: The investment objective of the Series is to seek
long-term capital growth. The Wanger U.S. Small Cap Series invests primarily in
securities of U.S. companies with total common stock market capitalization of
less than $1 billion.
Each Series will be subject to market fluctuations and the risks that come
with the ownership of any security, and there can be no assurance that any
Series will achieve its stated investment objective.
In addition to being sold to the Account, shares of all of the Funds also
may be sold to other separate accounts of Phoenix or its affiliates and shares
of certain Funds also may be sold to the separate accounts of other insurance
companies.
It is possible that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Fund(s) simultaneously. Although neither Phoenix nor the Fund(s)
trustees currently foresee any such disadvantages either to variable life
insurance Policyowners or to variable annuity Contractowners, the Funds'
trustees intend to monitor events in order to identify any material conflicts
between variable life insurance Policyowners and variable annuity Contractowners
and to determine what action, if any, should be taken in response to such
conflicts. Material conflicts could, for example, result from:
[diamond] changes in state insurance laws;
[diamond] changes in federal income tax laws;
[diamond] changes in the investment management of any portfolio of the Fund(s);
or
[diamond] differences in voting instructions between those given by variable
life insurance Policyowners and those given by variable annuity
Contractowners.
We will, at our expense, remedy such material conflicts including, if
necessary, segregating the assets underlying the variable life insurance
policies and the variable annuity contracts and establishing a new registered
investment company.
INVESTMENT ADVISORS
Phoenix Investment Counsel, Inc. ("PIC") is the investment advisor to all
Series in The Phoenix Edge Series Fund except the Phoenix-Duff & Phelps Real
Estate Securities and Phoenix-Aberdeen New Asia Series. Based on Subadvisory
agreements with the Fund, PIC delegates certain investment decisions and
research functions to subadvisors for the following Series:
[diamond] J.P. Morgan Investment Management, Inc.
[bullet] Phoenix Research Enhanced Index Series
[diamond] Roger Engemann & Associates, Inc. ("Engemann")
[bullet] Phoenix-Engemann Nifty Fifty Series
[diamond] Seneca Capital Management, LLC ("Seneca")
[bullet] Phoenix-Seneca Mid-Cap Growth Series
[diamond] Schafer Capital Management, Inc.
[bullet] Phoenix-Schafer Mid-Cap Value Series
The investment advisor to the Phoenix-Duff & Phelps Real Estate Securities
Series is Duff & Phelps Investment Management Co. ("DPIM").
The investment advisor to the Phoenix-Aberdeen New Asia Series is
Phoenix-Aberdeen International Advisors
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LLC ("PAIA"). Pursuant to subadvisory agreements with the Fund, PAIA delegates
certain investment decisions and research functions with respect to the
Phoenix-Aberdeen New Asia Series to PIC and Aberdeen Fund Managers, Inc.
PIC, DPIM, Engemann and Seneca are indirect, less than wholly-owned
subsidiaries of Phoenix. PAIA is jointly owned and managed by PM Holdings, Inc.,
a subsidiary of Phoenix, and by Aberdeen Fund Managers, Inc.
The other investment advisors are:
[diamond] Bankers Trust Company
[bullet] EAFE[registered trademark] Equity Index Fund
[diamond] Federated Investment Management Company
[bullet] Federated Fund for U.S. Government Securities II
[bullet] Federated High Income Bond Fund II
[diamond] Templeton Investment Counsel, Inc.
[bullet] Templeton Asset Allocation Fund
[bullet] Templeton International Fund
[bullet] Templeton Stock Fund
[diamond] Templeton Asset Management, Ltd.
[bullet] Templeton Developing Markets Fund
[diamond] Franklin Mutual Advisers, Inc.
[bullet] Mutual Shares Investments Fund
[diamond] Wanger Asset Management, L.P.
[bullet] Wanger Foreign Forty
[bullet] Wanger International Small Cap
[bullet] Wanger Twenty
[bullet] Wanger U.S. Small Cap
SERVICES OF THE ADVISORS
The Advisors 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 of each Fund. A
detailed discussion of the investment advisors and subadvisors, and the
investment advisory and subadvisory agreements, is contained in the accompanying
prospectus for the Funds.
REINVESTMENT AND REDEMPTION
All dividend distributions of the Fund are automatically reinvested in
shares of the Fund at their net asset value on the date of distribution.
Likewise, all capital gains distributions of the Fund, if any, are reinvested at
the net asset value on the record date. We redeem Fund shares at their net asset
value to the extent necessary to make payments under the Policy.
SUBSTITUTION OF INVESTMENTS
We reserve the right to make additions to, deletions from, or substitutions
for the investments held by the VUL Account, subject to compliance with the law
as currently applicable or as subsequently changed. In the future, we may
establish additional Subaccounts within the VUL Account, each of which will
invest in shares of a designated portfolio of the Fund with a specified
investment objective. If and when marketing needs and investment conditions
warrant, and at our discretion, we may establish additional portfolios. These
will be made available under existing Policies to the extent and on a basis
determined by us.
If shares of any of the portfolios of the Fund should be no longer available
for investment or, if in the judgment of our management, further investment in
shares of any of the portfolios become inappropriate due to Policy objectives,
we may then substitute shares of another mutual fund for shares already
purchased, or to be purchased in the future. No substitution of mutual fund
shares held by the VUL Account may take place without prior approval of the
Securities and Exchange Commission and prior notice to you. In the event of a
change, you will be given the option of transferring the Policy Value of the
Subaccount in which the substitution is to occur to another Subaccount.
THE GUARANTEED INTEREST ACCOUNT
In addition to the VUL Account, you may allocate premium or transfer policy
value to the Guaranteed Interest Account. Amounts you allocate or transfer to
the Guaranteed Interest Account become part of Phoenix's general account assets.
You do not share in the investment experience of those assets. Rather, we
guarantee a 3% rate of return on your allocated amount. For amounts transferred
to the Guaranteed Interest Account due to a policy loan, the guaranteed rate is
2% in all states except New York and New Jersey. In New York and New Jersey the
rate credited to the Guaranteed Interest Account due to a policy loan is 4%.
Although we are not obligated to credit interest at a higher rate than the
minimum, we will credit excess interest, if any, as determined by us based on
information as to expected investment yields.
Because of exemptive and exclusionary provisions, we have not registered
interests in our general account under the Securities Act of 1933. Also, we have
not registered our general account as an investment company under the Investment
Company Act of 1940, as amended. Therefore, neither the general account nor any
of its interests are subject to these Acts, and the Securities and Exchange
Commission has not reviewed the general account disclosures. These disclosures
may, however, be subject to certain provisions of the federal securities law as
to the accuracy and completeness of statements made in this prospectus.
We reserve the right to limit total deposits, including transfers, to the
Guaranteed Interest Account to no more than $250,000 during any one-week period
per policy.
In general, you can make only one transfer per year from the Guaranteed
Interest Account. The amount that can be transferred out is limited to the
greater of $1,000 or 25% of the Policy Value in the Guaranteed Interest Account
as of the date of the transfer. If you elect the
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Systematic Transfer Program, approximately equal amounts may be transferred out
of the Guaranteed Interest Account. Also, the total Policy Value allocated to
the Guaranteed Interest Account may be transferred out of the Guaranteed
Interest Account to one or more of the Subaccounts of the VUL Account over a
consecutive four-year period according to the following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of remaining value
[diamond] Year Three: 50% of remaining value
[diamond] Year Four: 100% of remaining value
Transfers into the Guaranteed Interest Account and among the Subaccounts of
the VUL Account may be made at any time. Transfers from the Guaranteed Interest
Account are subject to the rules discussed in "Appendix C" and "Transfer of
Policy Value" and "Systematic Transfers for Dollar Cost Averaging."
PREMIUMS
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MINIMUM PREMIUMS
The Minimum Premium is determined by case size as follows:
[diamond] 5 or more lives: $100,000 annually for the first five Policy Years
[diamond] Fewer than 5 lives: $250,000 annually for the first five Policy Years
The Issue Premium is due on the Policy Date. The Insured must be alive when
the Issue Premium is paid. After that, premiums may be paid at any time while
the Policy is in force. Each premium payment must be at least $100. Additional
payments should be sent to the:
VUL COLI UNIT
PO BOX 22012
ALBANY, NY 12201-2012
The number of units credited to a Subaccount of the VUL Account will be
determined by dividing the portion of the net premium applied to that Subaccount
by the unit value of the Subaccount on the Payment Date.
Regardless of whether you choose the Guideline Premium Test or the Cash
Value Accumulation Test (see "Minimum Face Amount"), we reserve the right to
refund a premium paid in any year if it will exceed the maximum premium limit.
The maximum limit is established by law to qualify the Policy contract as life
insurance. This limit is applied to the sum of all premiums paid under the
Policy. If the total premium limit is exceeded, the Policyowner will receive the
excess, with interest at an annual rate of not less than 4%, not later than 60
days after the end of the Policy Year in which the limit was exceeded. The
Policy Value then will be adjusted to reflect the refund. The total premium
limit may be exceeded if additional premium is needed to prevent lapse or if we
subsequently determine that additional premium would be permitted by federal
laws or regulations.
ALLOCATION OF ISSUE PREMIUM
We will generally allocate the Issue Premium less applicable charges to the
VUL Account or to the Guaranteed Interest Account upon receipt of a completed
application, 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, we temporarily allocate the entire issue
premium paid less applicable charges (along with any other premiums paid during
the Free Look period) to the Phoenix-Goodwin Money Market Subaccount of the VUL
Account, and, at the expiration of the Free Look period, the policy value of the
Money Market Subaccount is allocated among the Subaccounts of the VUL Account or
to the Guaranteed Interest Account in accordance with the applicant's allocation
instructions in the application for insurance.
FREE LOOK PERIOD
You have the right to review the Policy. If you are not satisfied with it,
you may cancel the Policy:
[diamond] by mailing it to us within 10 days after you receive it (or longer in
some states);
[diamond] within 10 days after we mail or deliver a written notice telling you
about your free look period; or
[diamond] within 45 days after completing the application, whichever occurs
latest (the "Free Look Period").
We treat a returned Policy as if we never issued it and, except for Policies
issued with a Temporary Money Market Allocation Amendment, we will return the
sum of the following as of the date we receive the returned Policy: (1) the then
current Policy Value less any unpaid loans and loan interest; plus (2) any
monthly deductions, partial surrender fees and other charges made under the
Policy. For Policies issued with the Temporary Money Market Amendment, the
amount returned will equal any premiums paid less any unrepaid loans and loan
interest, and less any partial surrender amounts paid.
We retain the right to decline to process an application within seven days
of our receipt of the completed application for insurance. If we decline to
process the application, we will return the premium paid. Even if we have
approved the application for processing, we retain the right to decline to issue
the Policy. If we decline to issue the Policy, we will refund to you the same
amount as would have been refunded under the Policy had it been issued but
returned for refund during the Free Look Period.
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ACCOUNT VALUE
TRANSFER OF POLICY VALUE
Transfers among available Subaccounts or the Guaranteed Interest Account and
changes in premium payment allocations may be requested in writing. Requests for
transfers will be executed on the date the request is received at Andesa, TPA,
Inc.
Although currently there is no charge for transfers, in the future, we may
charge a fee of $10 for each transfer after the first two transfers in a Policy
Year (after twelve transfers in New York).
You may make only one transfer per Policy Year from the unloaned portion of
the Guaranteed Interest Account unless (1) the transfer(s) are made as part of a
Dollar Cost Averaging Program, or (2) we agree to make an exception to this
rule. Unless you have elected a Dollar Cost Averaging Program, the amount you
may transfer cannot exceed the greater of $1,000 or 25% of the value of the
unloaned portion of the Guaranteed Interest Account at the time of the transfer.
In addition, you may transfer the total value allocated to the unloaned portion
of the Guaranteed Interest Account out of the Guaranteed Interest Account to one
or more of the Subaccounts over a consecutive four-year period according to the
following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of the remaining value
[diamond] Year Three: 50% of the remaining value
[diamond] Year Four: 100% of the remaining value
Transfers into the Guaranteed Interest Account and among the Subaccounts may
be made anytime. We reserve the right to limit the number of Subaccounts you may
invest in at any one time or over the life of the Policy, if we are required to
do so by any federal or state law.
Because excessive exchanges between Subaccounts can hurt Fund performance,
we reserve the right to temporarily or even permanently terminate exchange
privileges or reject any specific exchange order from anyone whose transactions
appear to us to follow a timing pattern, including those who request more than
one exchange out of a Subaccount within any 30-day period. We will not accept
batched 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.
If a policy has been issued with a Temporary Money Market Allocation
Amendment, no transfers may be made until the end of the Free Look Period.
SYSTEMATIC TRANSFERS FOR DOLLAR COST AVERAGING
You may elect to transfer funds automatically among the Subaccounts or the
unloaned portion of the Guaranteed Interest Account on a monthly, quarterly,
semiannual or annual basis under the Systematic Transfers for Dollar Cost
Averaging Program ("Dollar Cost Averaging Program"). Under the Dollar Cost
Averaging Program, the minimum transfer amounts are $25 monthly, $75 quarterly,
$150 semiannually or $300 annually. You must have an initial value of $1,000 in
the Guaranteed Interest Account or the Subaccount from which funds will be
transferred ("Sending Subaccount"), and if the value in that Subaccount or the
Guaranteed Interest Account drops below the amount to be transferred, the entire
remaining balance will be transferred and all systematic transfers stop. Funds
may be transferred from only one Sending Subaccount or the Guaranteed Interest
Account, but may be allocated to more than one Subaccount ("Receiving
Subaccounts"). Under the Dollar Cost Averaging Program, Policyowners may make
more than one transfer per Policy Year from the Guaranteed Interest Account.
These transfers must be in approximately equal amounts and made over a minimum
18-month period.
Only one Dollar Cost Averaging Program can be active at any time. All
transfers under the Dollar Cost Averaging Program will be made on the basis of
the Guaranteed Interest Account and Subaccount on the first day of the month
following our receipt of the transfer request. If the first day of the month
falls on a holiday or weekend, then the transfer will be processed on the next
business day.
AUTOMATIC ASSET RE-BALANCING
Automated account re-balancing permits you to maintain a specified whole
number percentage of your account value in any combination of Subaccounts and
the Guaranteed Interest Account. We must receive a written request in order to
begin your automated asset re-balancing program ("Asset Re-Balancing"). Then, we
will make transfers at least quarterly to and from the Subaccounts and the
Guaranteed Interest Account to re-adjust your account value to your specified
percentage. Asset Re-Balancing allows you to maintain a specific fund
allocation. Quarterly re-balancing is based on your policy year. We will
re-balance your account value only on a monthly calculation date.
The effective date of the first Asset Re-Balancing will be the first monthly
calculation date after we receive your request at Andesa TPA, Inc. If we receive
your request before the end of the free look period, your first re-balancing
will occur at the end of the free look period.
You may not participate in both the Dollar Cost Averaging Program and the
Asset Re-Balancing at the same time.
DETERMINATION OF SUBACCOUNT VALUES
We establish the unit value of each Subaccount of the VUL Account on the
first Valuation Date of that Subaccount. The unit value of a Subaccount on any
other
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Valuation Date is determined by multiplying the unit value of that Subaccount on
the just prior Valuation Date by the Net Investment Factor for that Subaccount
for the then current Valuation Period. The unit value of each Subaccount on a
day other than a Valuation Date is the unit value on the next Valuation Date.
Unit values are carried to six decimal places. The unit value of each Subaccount
on a Valuation Date is determined at the end of that day.
The Net Investment Factor for each Subaccount is determined by the
investment performance of the assets held by the Subaccount during the Valuation
Period. Each valuation will follow applicable law and accepted procedures. The
Net Investment Factor is determined by the formula:
(A) + (B) - (D) where:
---------
(C)
(A) The value of the assets in the Subaccount on the current Valuation Date,
including accrued net investment income and realized and unrealized
capital gains and losses, but excluding the net value of any transactions
during the current Valuation Period.
(B) The amount of any dividend (or, if applicable, any capital gain
distribution) received by the Subaccount if the "ex-dividend" date for
shares of the Fund occurs during the current Valuation Period.
(C) The value of the assets in the Subaccount as of the just prior Valuation
Date, including accrued net investment income and realized and unrealized
capital gains and losses, and including the net value amount of any
deposits and withdrawals made during the Valuation Period ending on that
date.
(D) The charge, if any, for taxes and reserves for taxes on investment income,
and realized and unrealized capital gains.
DEATH BENEFIT UNDER THE POLICY
The death benefit is the amount we pay to the designated beneficiary(ies)
when the Insured dies. Upon receiving due proof of death, we pay the beneficiary
the death benefit amount determined as of the date the Insured dies. The
beneficiary may direct us to pay all or part of the benefit in cash or to apply
it under one or more of our payment options.
MINIMUM FACE AMOUNT
To qualify as life insurance under current federal tax laws, the Policy has
a minimum face amount of insurance. The minimum face is determined using one of
two allowable definitions of life insurance: (1) the Cash Value Accumulation
Test or (2) the Guideline Premium Test. You chose which test to use on the
application prior to the issuance of your Policy. You cannot change the way we
determine your minimum face amount after your policy is issued.
The Cash Value Accumulation Test determines the minimum face amount by
multiplying the account value plus the refund of sales load, if applicable, by
the minimum face amount percentage. The percentages depend upon the Insured's
age, gender and underwriting classification.
Under the Guideline Premium Test, the minimum face amount is also equal to
an applicable percentage of the account value plus refund of sales load, if
applicable, but the percentage varies only by age of insured.
DEATH BENEFIT OPTIONS
In your application you chose a face amount of insurance coverage and the
death benefit option. We offer three death benefit options:
[diamond] Option 1: the death benefit is the greater of the Policy's face amount
on the date of death, or the minimum face amount in effect on the date
of death.
[diamond] Option 2: the death benefit is the greater of: (a) the Policy's face
amount on the date of death plus the policy value on the date of
death, or (b) the minimum face amount in effect on the date of death.
[diamond] Option 3: the death benefit is the greater of: (a) the Policy's face
amount on the date of death plus the sum of all premiums paid, less
withdrawals, or (b) the Policy's face amount on the date of death, or
(c) the minimum face amount in effect on the date of death.
If the Insured dies while the policy is in force, we will pay the death
benefit based on the option in effect on the date of death, with the following
adjustments:
[diamond] Add back in any charges taken against the account value for the
period beyond the date of death;
[diamond] Deduct any policy debt outstanding on the date of death; and
[diamond] Deduct any charges accrued against the account value unpaid as of the
date of death.
You may change the Death Benefit Option from Option 1 to Option 2 or from
Option 2 to Option 1. You may not make a change either to or from Option 3.
Under death benefit Options 1 and 3, the death benefit is not affected by
your policy's investment experience. Under death benefit Option 2, the death
benefit amount may increase or decrease by the investment experience.
We pay interest on the death benefit from the date of death to the date the
death benefit is paid or a payment option becomes effective.
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CHANGES IN FACE AMOUNT OF INSURANCE
REQUESTS FOR INCREASE IN FACE AMOUNT
Any time while this policy is in force, you may request an increase in the
face amount of insurance provided under the Policy. Requests for face amount
increases must be made in writing, and we require additional evidence of
insurability. The effective date of the increase generally will be the policy
anniversary following approval of the increase. The increase may not be less
than $25,000. We will deduct any charges associated with the increase (the
increases in cost of insurance charges), from the policy value, whether or not
you pay an additional premium in connection with the increase. Also, a new Free
Look Period (see "Premiums--Free Look Period") will be established for the
amount of the increase. For a discussion of possible implications of a material
change in the Policy resulting from the increase, see "Material Change Rules."
DECREASES IN FACE AMOUNT AND PARTIAL SURRENDER: EFFECT ON DEATH BENEFIT
REQUESTS FOR DECREASE IN FACE AMOUNT
You may request a decrease in Face Amount at any time after the first Policy
Year. Unless we agree otherwise, the decrease must be at least equal to $10,000
and the face amount remaining after the decrease must be at least $25,000. All
face amount decrease requests must be in writing and will be effective on the
first Monthly Calculation Day following the date we approve the request.
A partial surrender or a decrease in Face Amount generally decreases the
death benefit. If the change is a decrease in Face Amount, the death benefit
under a Policy would be reduced on the next Monthly Calculation Day. If the
change is a partial surrender, the death benefit under a Policy would be reduced
immediately. A decrease in the death benefit may have certain tax consequences
(see "Federal Tax Considerations").
SURRENDERS
GENERAL
At any time during the lifetime of the Insured and while the Policy is in
force, you may partially or fully surrender the Policy by sending a written
request to Andesa TPA, Inc. We may also require you to send the Policy to us.
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 Andesa TPA,
Inc.
The cash surrender value is:
[bullet] Policy Value; less
[bullet] Any outstanding debt.
There is no surrender charge.
FULL SURRENDERS
If the Policy is being fully surrendered, the Policy itself must be returned
to Andesa TPA, Inc., along with the written release and surrender of all claims
in a form satisfactory to us. You may elect to have the amount paid in a lump
sum or under a payment option (see "Payment Options").
PARTIAL SURRENDERS
You may obtain a partial surrender of the Policy by requesting payment of
the Policy's Cash Surrender Value. It is possible to do this at any time during
the lifetime of the Insured, while the Policy is in force, with a written
request to Andesa TPA, Inc. We may require the return of the Policy before
payment is made. A partial surrender will be effective on the date the written
request is received or, if required, the date the Policy is received by us.
Surrender proceeds may be applied under any of the payment options described
under "Payment of Proceeds--Payment Options."
We reserve the right to deny partial surrenders of less than $500. In
addition, if the share of the Policy Value in any Subaccount or in the
Guaranteed Interest Account is reduced as a result of a partial surrender and is
less than $500, we reserve the right to require surrender of the entire
remaining balance in that Subaccount or the Guaranteed Interest Account.
Upon a partial surrender, the Policy Value will be reduced by the sum of the
partial surrender amount paid. This amount comes from a reduction in the
Policy's share in the value of each Subaccount or the Guaranteed Interest
Account based on the allocation requested at the time of the partial surrender.
If no allocation request is made, the withdrawals from each Subaccount will be
made in the same manner as that provided for monthly deductions.
The Cash Surrender Value will be reduced by the partial surrender amount
paid. The Face Amount of the Policy will be reduced by the same amount as the
Policy Value is reduced as described above.
Upon partial or full surrender, we generally will pay to you the amount
surrendered within seven days after we receive the written request for the
surrender. Under certain circumstances, the surrender payment may be postponed.
See "Additional Policy Provisions--Postponement of Payments." For the federal
tax effects of partial and full surrenders, see "Federal Tax Considerations."
POLICY LOANS
You can take a loan against your policy any time while the policy is in
force. The maximum loan is:
[bullet] 90% of your Policy Value at the time the loan is taken; less
[bullet] any outstanding policy debt before the loan is taken; less
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[bullet] interest on the loan being made and on any outstanding policy debt
to the next policy anniversary date.
Your policy must be assigned to us as collateral for the loan.
SOURCE OF LOAN
We deduct your requested loan amount from the Subaccounts and the Guaranteed
Interest Account, based on the allocation requested at the time of the loan. We
liquidate shares taken from the Subaccounts and transfer the resulting dollars
to the Guaranteed Interest Account. These dollars become part of the loaned
portion of the Guaranteed Interest Account.
INTEREST
You will pay interest on the loan at the following noted effective annual
rates, compounded daily and payable in arrears:
In all states except New York and New Jersey, the loan interest rate in
effect following the policy anniversary nearest the Insured's 65th birthday will
be 2.25%. The rates in effect before the Insured reaches age 65 follow:
[diamond] Policy years 1-10: 2.75%
[diamond] Policy years 11-15: 2.50%
[diamond] Policy years 16 and thereafter: 2.25%
In New York and New Jersey only, the loan interest rate in effect following
the policy anniversary nearest the Insured's 65th birthday will be 4.25%. The
rates in effect before the Insured reaches age 65 follow:
[diamond] Policy years 1-10: 4.75%
[diamond] Policy years 11-15: 4.50%
[diamond] Policy years 16 and thereafter: 4.25%
Interest accrues daily, becoming part of the policy debt. Interest is due
and payable on the policy anniversary. If you do not pay the interest when due,
we will add it to your loan. We treat any interest which has been capitalized
the same as if it were a new loan. We deduct this capitalized interest from the
Subaccounts and the Guaranteed Interest Account in proportion to the nonloaned
account value in each.
INTEREST CREDITED ON LOANED VALUE
The amount equal to any policy loan is held in the Guaranteed Interest
Account. This amount is credited with interest at a rate of 2% (4% in New York
and New Jersey).
REPAYMENT
You may repay all or part of your policy debt at anytime while the policy is
in force.
If you do not repay the loan, we deduct the loan amount due from the cash
surrender value or the death benefit.
Failure to repay a policy loan or to pay loan interest will not terminate
the Policy unless the policy value becomes insufficient to maintain the Policy
in force.
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.
EFFECT OF LOAN
Your policy loan reduces the death benefit and cash surrender value under
the policy by the amount of the loan. Your repayment of the loan increases the
death benefit and cash surrender value by the amount of the repayment.
As long as a loan is outstanding, a portion of your policy value equal to
the loan held in the Guaranteed Interest Account. The Subaccount's investment
performance does not affect this amount. Also, you may be subject to tax
consequences if you surrender your policy while there is outstanding debt.
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 Policy Value is less than the
required monthly deduction, a grace period of 61 days will be allowed for the
payment of an amount equal to three times the required monthly deduction.
During the grace period, the Policy will continue in force but Subaccount
transfers, loans, partial or full surrenders will not be permitted. Failure to
pay the additional amount within the grace period will result in lapse of the
Policy, but not before 30 days after we have mailed written notice to you. If a
premium payment for the additional amount is received by us during the grace
period, any amount of premium over what is required to prevent lapse will be
allocated among the Subaccounts or to the Guaranteed Interest Account according
to the current premium allocation schedule. In determining the amount of
"excess" premium to be applied to the Subaccounts or the Guaranteed Interest
Account, we 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.
ADDITIONAL INSURANCE OPTION
While the Policy is in force and the Insured is insurable, the Policyowner
will have the option to purchase additional insurance on the same Insured with
the same guaranteed rates as the Policy. We will require evidence of
insurability and charges will be adjusted for the Insured's new attained age and
any change in risk classification.
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ADDITIONAL RIDER BENEFITS
You may elect additional benefits under a Policy, and you may cancel these
benefits at any time. A charge will be deducted monthly from the policy value
for each additional rider benefit chosen except where noted below. More details
will be included in the form of a rider to the Policy if any of these benefits
are chosen. The following benefits are currently available and additional riders
may be available as described in the Policy (if approved in your state).
[diamond] FLEXIBLE TERM INSURANCE RIDER--This rider provides annually renewable
term insurance coverage to age 100 for the Insured under the base
policy. The initial rider death benefit cannot exceed 10 times the
initial base Policy. There is no charge for this rider.
[diamond] EXCHANGE OF INSURED RIDER--This rider allows the Policyowner to
exchange the insured on a given contract. There is no charge for this
rider.
Future charges against the policy will be based on the life of the
substitute insured.
The incontestability and suicide exclusion periods, as they apply to
the substitute insured, run from the date of the exchange. Any
assignments will continue to apply.
The exchange is subject to the following adjustments:
1. If the policy value of the original policy is insufficient to
produce a positive cash surrender value for the new policy, the
owner must pay an exchange adjustment in an amount that, when
applied as premium, will make the policy value of the new policy
greater than zero.
2. In some cases, the amount of policy value which may be applied to
the new policy may result in a death benefit which exceeds the
limit for the new policy. In that event, we will apply such excess
policy value to reduce any loan against the policy, and the
residual amount will be returned to you in cash.
3. The exchange will also be subject to our receipt of repayment of
the amount of any policy debt under the exchange policy in excess
of the loan value of the new policy on the date of exchange.
The Internal Revenue Service has ruled that an exchange of
Insureds does not qualify for tax deferral under Code Section
1035. Therefore, you must include in current gross income all
previously unrecognized gain in the Policy upon an exchange of the
Insured.
PART II--ADDITIONAL POLICY PROVISIONS
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POSTPONEMENT OF PAYMENTS
Payment of any amount upon complete or partial surrender, Policy loan, or
benefits payable at death (in excess of the initial face amount) or maturity may
be postponed:
[diamond] for up to six months from the date of the request, for any
transactions dependent upon the value of the Guaranteed Interest
Account;
[diamond] 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
[diamond] whenever an emergency exists, as decided 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 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 your 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, the Policy will stop and become void. We will pay you the Policy Value
adjusted by the addition of any monthly deductions and other fees and charges,
minus any debt owed to us under the Policy.
INCONTESTABILITY
We cannot contest this Policy or any attached rider after it has been in
force during the Insured's lifetime or for two years from the policy date.
CHANGE OF OWNER OR BENEFICIARY
The Beneficiary, as named in the Policy application or subsequently changed,
will receive the Policy benefits at the Insured's death. If the named
Beneficiary dies before the Insured, the contingent Beneficiary, if named,
becomes the Beneficiary. If no Beneficiary survives the Insured, the
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death benefit payable under the Policy will be paid to your estate.
As long as the Policy is in force, the Policyowner and the Beneficiary may
be changed in writing, satisfactory to us. A change in Beneficiary will take
effect as of the date the notice is signed, whether or not the Insured is living
when we receive the notice. We will not, however, be liable for any payment made
or action taken before receipt of the notice.
ASSIGNMENT
The Policy may be assigned. We will not be bound by the assignment until a
written copy has been received and we will not be liable with respect to any
payment made prior to receipt. We assume no responsibility for determining
whether an assignment is valid.
MISSTATEMENT OF AGE OR SEX
If the age or sex of 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
This Policy is non-participating and does not pay dividends. Your policy
will not share in Phoenix's profits or surplus earnings.
PAYMENT OF PROCEEDS
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SURRENDER AND DEATH BENEFIT PROCEEDS
Death benefit proceeds and the proceeds of full or partial surrenders will
be processed at unit values next computed after we receive the request for
surrender or due proof of death, provided such request is complete and in good
order. Payment of surrender or death proceeds usually will be made in one lump
sum within seven days, unless another payment option has been elected. Payment
of the death proceeds, however, may be delayed if the claim for payment of the
death proceeds needs to be investigated, e.g., to ensure payment of the proper
amount to the proper payee. Any such delay will not be beyond that reasonably
necessary to investigate such claims consistent with insurance practices
customary in the life insurance industry.
You may elect a payment option for payment of the death proceeds to the
Beneficiary. You may revoke or change a prior election, unless such right has
been waived. The Beneficiary may make or change an election before payment of
the death proceeds, unless you have made an election that does not permit such
further election or changes by the Beneficiary.
A written request in a form satisfactory to us is required to elect, change
or revoke a payment option.
The minimum amount of surrender or death benefit proceeds that may be
applied under any payment option is $1,000.
If the Policy is assigned as collateral security, we will pay any amount due
the assignee in one lump sum. Any remaining proceeds will remain under the
option elected.
PAYMENT OPTIONS
All or part of the surrender or death proceeds of a Policy may be applied
under one or more of the following payment options or such other payment options
or alternative versions of the options listed as we may choose to make available
in the future.
OPTION 1--LUMP SUM.
Payment in one lump sum.
OPTION 2--LEFT TO EARN INTEREST.
A payment of interest during the payee's lifetime on the amount payable as a
principal sum. Interest rates are guaranteed to be at least 3% per year.
OPTION 3--PAYMENT FOR A SPECIFIC PERIOD.
Equal installments are paid for a specified period of years whether the
payee lives or dies. The first payment will be on the date of settlement. The
assumed interest rate on the unpaid balance is guaranteed not to be less than 3%
per year.
OPTION 4--LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN.
Equal installments are paid until the later of:
[diamond] the death of the payee; or
[diamond] 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 you may choose from are as follows:
[diamond] ten years;
[diamond] twenty years; or
[diamond] 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 consider
the longer period certain as having been elected.
Any life annuity provided under Option 4 is computed using an interest rate
guaranteed to be no less than 3-3/8% per year, but any life annuity providing a
period certain of
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20 years or more is computed using an interest rate guaranteed to be no less
than 3-1/4% per year.
OPTION 5--LIFE ANNUITY.
Equal installments are paid only during the lifetime of the payee. The first
payment will be on the date of settlement. Any life annuity as may be provided
under Option 5 is computed using an interest rate guaranteed to be no less than
3-1/2% per year.
OPTION 6--PAYMENTS OF A SPECIFIED AMOUNT.
Equal installments of a specified amount, out of the principal sum and
interest on that sum, are paid until the principal sum remaining is less than
the amount of the installment. When that happens, the principal sum remaining
with accrued interest will be paid as a final payment. The first payment will be
on the date of settlement. The payments will include interest on the remaining
principal at a guaranteed rate of at least 3% per year. This interest will be
credited at the end of each year. If the amount of interest credited at the end
of the year exceeds the income payments made in the last 12 months, that excess
will be paid in one sum on the date credited.
OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN.
The first payment will be on the date of settlement. Equal installments are
paid until the latest of:
[diamond] the end of the 10-year period certain;
[diamond] the death of the Insured; or
[diamond] the death of the other named annuitant.
The other annuitant must have attained age 40, must be named at the time
this option is elected and cannot later be changed. Any joint survivorship
annuity that may be provided under this option is computed using a guaranteed
interest rate to equal at least 3-3/8% per year.
For additional information concerning the above payment options, see the
Policy.
PART III--OTHER IMPORTANT INFORMATION
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FEDERAL TAX CONSIDERATIONS
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INTRODUCTION
The ultimate effect of federal income taxes on values under the VUL Account
and on the economic benefit to you or your Beneficiary depends on our 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 advisor
should be consulted. No attempt is made to consider any estate and inheritance
taxes, or any state, local or other tax laws. Because the discussion herein is
based upon our understanding of federal income tax laws as they are currently
interpreted, we cannot guarantee the tax status of any Policy. The Internal
Revenue Service (the "IRS") makes no representation regarding the likelihood of
continuation of current federal income tax laws, Treasury regulations or of the
current interpretations. We reserve the right to make changes to the Policy to
assure that it will continue to qualify as a life insurance contract for federal
income tax purposes.
PHOENIX'S TAX STATUS
We are taxed as a life insurance company under the Internal Revenue Code of
1986, as amended (the "Code"). For federal income tax purposes, neither the VUL
Account nor the Guaranteed Interest Account is a separate entity from Phoenix
and their 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 value of the
VUL Account. Investment income of the VUL Account, including realized net
capital gains, is not taxed to us. Due to our tax status under current
provisions of the Code, no charge currently will be made to the VUL Account for
our federal income taxes which may be attributable to the VUL Account. We
reserve the right to make a deduction for taxes if our federal tax treatment is
determined to be other than what we currently believe it to be, if changes are
made affecting the tax treatment to our variable life insurance contracts, or if
changes occur in our tax status. If imposed, such charge would be equal to the
federal income taxes attributable to the investment results of the VUL Account.
POLICY BENEFITS
DEATH BENEFIT PROCEEDS
The Policy, whether or not it is a "modified endowment contract" (see
"Modified Endowment Contracts"), should be treated as meeting the definition of
a life insurance contract for federal income tax purposes under Section 7702 of
the Code. As such, the death benefit proceeds thereunder should be excludable
from the gross income of the Beneficiary under Code Section 101(a)(1). Also, a
Policyowner should not be considered to be in constructive receipt of the cash
value, including investment income. See, however, the sections below on possible
taxation of amounts received under the Policy, via full surrender, partial
surrender or loan.
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Code Section 7702 imposes certain conditions with respect to premiums
received under a Policy. We monitor the premiums to assure compliance with such
conditions. However, if the premium limitation is exceeded during the year, we
may return the excess premium, with interest, to the Policyowner within 60 days
after the end of the Policy Year, and maintain the qualification of the Policy
as life insurance for federal income tax purposes.
FULL SURRENDER
Upon full surrender of a Policy for its cash value, the excess, if any, of
the cash value (unreduced by any outstanding indebtedness) over the premiums
paid will be treated as ordinary income for federal income tax purposes. The
full surrender of a Policy that is a modified endowment contract may result in
the imposition of an additional 10% tax on any income received.
PARTIAL SURRENDER
If the Policy is a modified endowment contract, partial surrenders are fully
taxable to the extent of income in the Policy and are possibly subject to an
additional 10% tax. See the discussion on modified endowment contracts below. If
the Policy is not a modified endowment contract, partial surrenders still may be
taxable, as follows. Code Section 7702(f)(7) provides that where a reduction in
death benefits occurs during the first 15 years after a Policy is issued and
there is a cash distribution associated with that reduction, the Policyowner may
be taxed on all or a part of the amount distributed. A reduction in death
benefits may result from a partial surrender. After 15 years, the proceeds will
not be subject to tax, except to the extent such proceeds exceed the total
amount of premiums paid but not previously recovered. We suggest you consult
with your tax advisor in advance of a proposed decrease in death benefits or a
partial surrender as to the portion, if any, which would be subject to tax, and
in addition as to the impact such partial surrender might have under the new
rules affecting modified endowment contracts.
LOANS
We believe that any loan received under a Policy will be treated as your
indebtedness. If the Policy is a modified endowment contract, loans are fully
taxable to the extent of income in the Policy and are possibly subject to an
additional 10% tax. See the discussion on modified endowment contracts. If the
Policy is not a modified endowment contract, we believe that no part of any loan
under a Policy will constitute income to you.
The deductibility by a Policyowner of loan interest under a Policy may be
limited under Code Section 264, depending on the circumstances. A Policyowner
intending to fund premium payments through borrowing should consult a tax
advisor with respect to the tax consequences thereof. Under the "personal"
interest limitation provisions of the Code, interest on Policy loans used for
personal purposes is not tax deductible. Other rules may apply to allow all or
part of the interest expense as a deduction if the loan proceeds are used for
"trade or business" or "investment" purposes. See your tax advisor for further
guidance.
BUSINESS-OWNED POLICIES
If a business or a corporation owns the Policy, the Code may impose
additional restrictions. The Code limits the interest deduction on
business-owned Policy loans and may impose tax upon the inside build-up of
corporate-owned life insurance policies through the corporate alternative
minimum tax.
MODIFIED ENDOWMENT CONTRACTS
GENERAL
Pursuant to Code Section 72(e), loans and other amounts received under
modified endowment contracts will, in general, be taxed to the extent of
accumulated income (generally, the excess of cash value over premiums paid).
Life insurance policies can be modified endowment contracts if they fail to meet
what is known as "the 7-pay test." The measuring stick for this test is a
hypothetical life insurance policy of equal face amount which requires 7 equal
annual premiums but which, after the seventh year is "fully paid-up," continuing
to provide a level death benefit without the need for any further premiums. A
Policy becomes a modified endowment contract, if, at any time during the first
seven years, the cumulative premium paid on the Policy exceeds the cumulative
premium that would have been paid under the hypothetical policy. Premiums paid
during a Policy Year but which are returned by us with interest within 60 days
after the end of the Policy Year will be excluded from the 7-pay test. A life
insurance policy received in exchange for a modified endowment contract will be
treated as a modified endowment contract.
REDUCTION IN BENEFITS DURING THE FIRST SEVEN YEARS
If there is a reduction in death benefits during the first seven Policy
Years, the premiums are redetermined for purposes of the 7-pay test as if the
Policy originally had been issued at the reduced death benefit level and the new
limitation is applied to the cumulative amount paid for each of the first seven
Policy Years.
DISTRIBUTIONS AFFECTED
If a Policy fails to meet the 7-pay test, it is considered a modified
endowment contract only as to distributions in the year in which the test is
failed 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 generally will
not be subject to the modified endowment contract rules.
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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 that are:
[diamond] made on or after the taxpayer attains age 59 1/2;
[diamond] attributable to the taxpayer's disability (within the meaning of Code
Section 72(m)(7)); or
[diamond] part of a series of substantially equal periodic payments (not less
often 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 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.
[diamond] First, if an increase is attributable to premiums paid "necessary to
fund" the lowest death benefit and qualified additional benefits
payable in the first seven Policy Years or to the crediting of
interest or dividends with respect to these premiums, the "increase"
does not constitute a material change.
[diamond] 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:
[bullet] the cost-of-living determination period does not exceed the
remaining premium payment period under the Policy; and
[bullet] the cost-of-living increase is funded ratably over the remaining
premium payment period of the Policy.
A reduction in death benefits is not considered a material change unless
accompanied by a reduction in premium payments.
A material change may occur at any time during the life of the Policy
(within the first seven years or thereafter), and future taxation of
distributions or loans would depend upon whether the Policy satisfied the
applicable 7-pay test from the time of the material change. An exchange of
policies is considered to be a material change for all purposes.
SERIAL PURCHASE OF MODIFIED ENDOWMENT CONTRACTS
All modified endowment contracts issued by the same insurer (or affiliated
companies of the insurer) to the same Policyowner within the same calendar year
will be treated as one modified endowment contract in determining the taxable
portion of any loans or distributions made to the Policyowner. The Treasury has
been given specific legislative authority to issue regulations to prevent the
avoidance of the new distribution rules for modified endowment contracts. A
qualified tax advisor should be consulted about the tax consequences of the
purchase of more than one modified endowment contract within any calendar year.
LIMITATIONS ON UNREASONABLE MORTALITY AND EXPENSE CHARGES
The Code imposes limitations on unreasonable mortality and expense charges
for purposes of ensuring that a Policy qualifies as a life insurance contract
for federal income tax purposes. The mortality charges taken into account to
compute 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. We will comply with
the limitations for calculating the premium we are permitted to receive from
you.
DIVERSIFICATION STANDARDS
To comply with the Diversification Regulations under Code Section 817(h),
("Diversification Regulations") each Series of the Fund is required to diversify
its investments. The Diversification Regulations generally require that on the
last day of each calendar quarter the Series assets be invested in no more than:
[diamond] 55% in any 1 investment
[diamond] 70% in any 2 investments
[diamond] 80% in any 3 investments
[diamond] 90% in any 4 investments
A "look-through" rule applies to treat a pro rata portion of each asset of a
Series as an asset of the VUL Account; therefore, each Series of the Fund will
be tested for compliance with the percentage limitations. For purposes of these
diversification rules, all securities of the same issuer are treated as a single
investment, but each United States government agency or instrumentality is
treated as a separate issuer.
The general diversification requirements are modified if any of the assets
of the VUL Account are direct obligations of the United States Treasury. In this
case, there is no limit on the investment that may be made in 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
24
<PAGE>
investment vehicle for certain variable annuity contracts that must comply with
these standards.
In connection with the issuance of the Diversification Regulations, the
Treasury announced that such regulations do not provide guidance concerning the
extent to which you may direct your investments to particular divisions of a
separate account. It is possible that a revenue ruling or other form of
administrative pronouncement in this regard may be issued in the near future. It
is not clear, at this time, what such a revenue ruling or other pronouncement
would provide. It is possible that the Policy may need to be modified to comply
with such future Treasury announcements. For these reasons, we reserve the right
to modify the Policy, as necessary, to prevent you from being considered the
owner of the assets of the VUL Account.
We intend to comply with the Diversification Regulations to assure that the
Policies continue to qualify as a life insurance contract for federal income tax
purposes.
CHANGE OF OWNERSHIP OR INSURED OR ASSIGNMENT
Changing the Policyowner or 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 contract can be exchanged for another life
insurance contract, without recognition of gain or loss, assuming that no money
or other property is received in the exchange, and that the Policies relate to
the same Insured. If the surrendered Policy is subject to a policy loan, this
may be treated as the receipt of money on the exchange. We recommend that any
person contemplating such actions seek the advice of a qualified tax consultant.
OTHER TAXES
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary. We do not make any
representations or guarantees regarding the tax consequences of any Policy with
respect to these types of taxes.
VOTING RIGHTS
- --------------------------------------------------------------------------------
We will vote the Funds' shares held by the Subaccounts at any regular and
special meetings of shareholders of the Funds. To the extent required by law,
such voting will be pursuant to instructions received from you. However, if the
1940 Act or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as a result, we decide that we are
permitted to vote the Funds' shares at our own discretion, we may elect to do
so.
The number of votes that you have the right to cast will be determined by
applying your percentage interest in a Subaccount to the total number of votes
attributable to the Subaccount. In determining the number of votes, fractional
shares will be recognized.
Funds' shares held in a Subaccount for which no timely instructions are
received, and Funds' shares which are not otherwise attributable to
Policyowners, will be voted by Phoenix in proportion to the voting instructions
that are received with respect to all Policies participating in that Subaccount.
Instructions to abstain on any item to be voted upon will be applied to reduce
the votes eligible to be cast by Phoenix.
You will receive proxy materials, reports and other materials related to the
Funds.
We may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that the shares be voted so as
to cause a change in the subclassification or investment objective of one or
more of the portfolios of the Funds or to approve or disapprove an investment
advisory contract for the Funds. In addition, Phoenix itself may disregard
voting instructions in favor of changes initiated by a Policyowner in the
investment policies or the Investment Advisor of the Funds if Phoenix reasonably
disapproves of such changes. A change would be disapproved only if the proposed
change is contrary to state law or prohibited by state regulatory authorities or
we decide that the change would have an adverse effect on the General Account
because the proposed investment policy for a Series may result in overly
speculative or unsound investments. In the event Phoenix does disregard voting
instructions, a summary of that action and the reasons for such action will be
included in the next periodic report to Policyowners.
You (or the payee entitled to payment under a payment option if a different
person) will have the right to vote at annual meetings of all Phoenix
policyholders for the election of members of the Board of Directors of Phoenix
and on other corporate matters, if any, where a policyholder's vote is taken. At
meetings of all the Phoenix policyholders, you (or payee) may cast only one vote
as the holder of a Policy, irrespective of policy value or the number of the
Policies you hold.
THE DIRECTORS AND
EXECUTIVE OFFICERS OF PHOENIX
- --------------------------------------------------------------------------------
Phoenix is managed by its Board of Directors. The 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
25
<PAGE>
John C. Bacot Chairman and Chief Executive
Officer, The Bank of New York
New York, New York
Richard H. Booth Executive Vice President,
Strategic Development, Phoenix
Home Life Mutual Insurance
Company, Hartford, Connecticut;
formerly President, Travelers
Insurance Company
Arthur P. Byrne Chairman, President and Chief
Executive Officer, The Wiremold
Company
West Hartford, Connecticut
Richard N. Cooper Professor of International
Economics, Harvard University,
Cambridge, Massachusetts;
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
John E. Haire President of
The Fortune Group
New York, New York
Jerry J. Jasinowski President, National Association
of Manufacturers
Washington, D.C.
John W. Johnstone Chairman, Governance & Nominating
Committees, Arch Chemicals, Inc.,
Westport, Connecticut; formerly
Chairman, President and Chief
Executive Officer, Olin
Corporation
Norwalk, Connecticut
Marilyn E. LaMarche Limited Managing Director, Lazard
Freres & Company, L.L.C.
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
Robert F. Vizza President and Chief Executive
Officer, St. Francis Hospital
Roslyn, New York
Robert G. Wilson Retired, formerly Chairman
and Chief Executive Officer,
Ecologic Waste Services, Inc.
Miami, Florida
Dona D. Young Executive Vice President,
Individual Insurance and General
Counsel
EXECUTIVE OFFICERS PRINCIPAL OCCUPATION
Robert W. Fiondella Chairman of the Board, President
and Chief Executive Officer
Philip R. McLoughlin Executive Vice President and
Chief Investment Officer
Richard H. Booth Executive Vice President
Carl T. Chadburn 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, Business
Practices
Robert G. Chipkin Senior Vice President and
Corporate Actuary
Martin J. Gavin Senior Vice President, Trust
Operations
Randall C. Giangiulio Senior Vice President, Group Life
and Health
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
David R. Pepin Senior Vice President
Robert E. Primmer Senior Vice President, Individual
Distribution
Frederick W. Sawyer, III Senior Vice President
26
<PAGE>
Jack F. Solan, Jr. Senior Vice President,
Strategic Development
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 Phoenix during the
last five years.
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS
- --------------------------------------------------------------------------------
We hold the assets of the VUL Account. The assets of the VUL Account are
kept physically segregated and held separate and apart from our General Account.
We maintain records of all purchases and redemptions of shares of the Funds.
SALES OF POLICIES
- --------------------------------------------------------------------------------
Policies may be purchased from registered representatives of W.S. Griffith &
Co., Inc. ("WSG"), a New York corporation incorporated on August 7, 1970,
licensed to sell Phoenix insurance policies as well as policies, annuity
contracts and funds of companies affiliated with Phoenix. WSG, an indirect
subsidiary of Phoenix, is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and is a member of the National
Association of Securities Dealers, Inc. Phoenix Equity Planning Corporation
("PEPCO") serves as national distributor of the Policies. PEPCO is an indirect
subsidiary of Phoenix Investment Partners, Ltd. ("PXP"), in which Phoenix owns a
majority interest.
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 agreements provided by PEPCO. Sales commissions will be
paid to registered representatives on purchase payments we receive under these
Policies. Phoenix will pay a maximum total sales commission of 19% of premiums
to PEPCO. Additionally, agents or selling brokers may receive asset-based
compensation. The maximum asset-based compensation is 0.90% of the policy value.
To the extent that the sales charge under the Policies is less than the sales
commissions paid with respect to the Policies, we will pay the shortfall from
our General Account assets, which will include any profits we may derive under
the Policies.
STATE REGULATION
- --------------------------------------------------------------------------------
We are subject to the provisions of the Connecticut insurance laws
applicable to stock life insurance companies and to regulation and supervision
by the Connecticut Superintendent of Insurance. We also are subject to the
applicable insurance laws of all the other states and jurisdictions in which we
do insurance business.
State regulation of Phoenix includes certain limitations on the investments
which we may make, including investments for the VUL Account and the Guaranteed
Interest Account. This regulation does not include, however, any supervision
over the investment policies of the VUL Account.
REPORTS
- --------------------------------------------------------------------------------
All Policyowners will be furnished with those reports required by the 1940
Act and related regulations or by 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 our ability to meet
our obligations under the Policies.
LEGAL MATTERS
- --------------------------------------------------------------------------------
Edwin L. Kerr, Counsel of Phoenix Home Life Mutual Insurance Company, has
passed upon the organization of Phoenix, its authority to issue variable life
insurance Policies and the validity of the Policy, and upon legal matters
relating to the federal securities and income tax laws for Phoenix.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
A Registration Statement has been filed with the SEC, under the Securities
Act of 1933 ("1933 Act") with respect to the securities offered. This Prospectus
is a summary of the contents of the Policy and other legal documents and does
not contain all the information set forth in the Registration Statement and its
exhibits. We refer you to the registration statement and its exhibits for
further information concerning the VUL Account, Phoenix and the Policy.
YEAR 2000 ISSUE
- --------------------------------------------------------------------------------
Many existing computer programs use only two digits to identify the year in
a date field. This is 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
27
<PAGE>
failures or miscalculations causing disruptions of operations and the possible
inability of companies to process transactions. We believe 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 our subsidiaries, was conducted. Phoenix has
identified and pursued a number of strategies to address the issue, including:
[diamond] upgrading systems with compliant versions;
[diamond] developing or acquiring new systems to replace those that are
obsolete;
[diamond] repairing existing systems by converting code or hardware; and
[diamond] preparing contingency plans to address difficulties that may arise.
Based on current assessments, those computer systems deemed critical to
customer service and business continuity are compliant. Testing will continue
through 1999. Additionally Phoenix has obtained Year 2000 assurances from
business partners.
THE BOTTOM LINE IS THAT PHOENIX WILL BE BOTH READY AND TESTED FOR THE NEW
MILLENNIUM.
More details about our Year 2000 program are available on our Web site:
www.phl.com.
- ------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements of Phoenix contained herein should be considered
only as bearing upon Phoenix's ability to meet its obligations under the Policy,
and they should not be considered as bearing on the investment performance of
the VUL Account. The financial statements of the VUL Account are for the
Subaccounts available for the period ended December 31, 1998.
28
<PAGE>
PHOENIX HOME LIFE
MUTUAL INSURANCE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
29
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Report of Independent Accountants...........................................31
Consolidated Balance Sheet at December 31, 1998 and 1997....................32
Consolidated Statement of Income, Comprehensive Income and Equity
for the Years Ended December 31, 1998, 1997 and 1996 ......................33
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996...........................................34
Notes to Consolidated Financial Statements ..............................35-66
30
<PAGE>
[PRICEWATERHOUSECOOPERS logo and address]
REPORT OF INDEPENDENT ACCOUNTANTS
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, comprehensive 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,
1998 and 1997, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1998, 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.
As indicated in Note 19, the company has revised the accounting for leveraged
leases.
/s/ PricewaterhouseCoopers LLP
February 11, 1999, except as to Note 20, which is as of April 27, 1999
31
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Investments:
Held-to-maturity debt securities, at amortized cost $ 1,881,687 $ 1,554,905
Available-for-sale debt securities, at fair value 6,693,540 5,659,061
Equity securities, at fair value 304,545 335,888
Mortgage loans 797,343 927,501
Real estate 91,975 321,757
Policy loans 2,008,260 1,986,728
Other invested assets 377,326 319,088
Short-term investments 240,911 1,078,276
----------- -----------
Total investments 12,395,587 12,183,204
Cash and cash equivalents 132,634 159,307
Accrued investment income 173,312 149,566
Deferred policy acquisition costs 1,076,635 1,038,407
Premiums, accounts and notes receivable 120,928 99,468
Reinsurance recoverables 96,676 66,649
Property and equipment, net 153,425 156,190
Goodwill and other intangible assets, net 527,029 541,499
Other assets 46,060 61,087
Separate account assets 4,798,949 4,082,255
----------- -----------
Total assets $19,521,235 $18,537,632
=========== ===========
LIABILITIES
Policy liabilities and accruals $11,810,202 $11,334,014
Securities sold subject to repurchase agreements 137,473
Notes payable 449,252 471,085
Deferred income taxes 111,912 150,440
Other liabilities 555,352 585,467
Separate account liabilities 4,798,949 4,082,255
----------- -----------
Total liabilities 17,725,667 16,760,734
----------- -----------
Contingent liabilities (Note 17)
MINORITY INTEREST IN NET ASSETS
OF CONSOLIDATED SUBSIDIARIES
91,884 136,514
----------- -----------
EQUITY
Retained earnings 1,609,393 1,484,620
Accumulated other comprehensive income 94,291 155,764
----------- -----------
Total equity 1,703,684 1,640,384
----------- -----------
Total liabilities and equity $19,521,235 $18,537,632
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
32
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
CONSOLIDATED STATEMENT OF INCOME, COMPREHENSIVE INCOME AND EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Premiums $1,852,801 $1,640,606 $1,518,822
Insurance and investment product fees 619,476 468,030 421,058
Net investment income 898,884 771,346 711,595
Net realized investment gains 63,562 111,465 77,422
---------- ---------- ----------
Total revenues 3,434,723 2,991,447 2,728,897
---------- ---------- ----------
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss
adjustment expenses 1,930,384 1,633,633 1,529,573
Policyholder dividends 351,805 343,725 311,739
Policy acquisition expenses 290,585 192,886 172,379
Amortization of goodwill and other intangible assets 29,248 16,393 15,610
Interest expense 29,889 28,147 17,570
Other operating expenses 592,420 542,897 489,203
---------- ---------- ----------
Total benefits, losses and expenses 3,224,331 2,757,681 2,536,074
---------- ---------- ----------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 210,392 233,766 192,823
Income taxes 75,152 58,177 80,683
---------- ---------- ----------
INCOME BEFORE MINORITY INTEREST 135,240 175,589 112,140
Minority interest in net income of consolidated subsidiaries 10,467 8,882 8,902
---------- ---------- ----------
NET INCOME 124,773 166,707 103,238
---------- ---------- ----------
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAXES
Unrealized (losses) gains on securities (46,967) 98,287 42,493
Reclassification adjustment for net realized gains
included in net income (12,980) (30,213) (28,580)
Minimum pension liability adjustment (1,526) (2,101) 1,241
---------- ---------- ----------
Total other comprehensive income (loss) (61,473) 65,973 15,154
---------- ---------- ----------
COMPREHENSIVE INCOME 63,300 232,680 118,392
---------- ---------- ----------
EQUITY, BEGINNING OF YEAR - RESTATED (NOTE 19) 1,640,384 1,407,704 1,289,312
---------- ---------- ----------
EQUITY, END OF YEAR $1,703,684 $1,640,384 $1,407,704
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
33
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 124,773 $ 166,707 $ 103,238
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATIONS
Net realized investment gains (63,562) (111,465) (77,422)
Amortization and depreciation 60,580 90,565 64,870
Equity in undistributed earnings of affiliates and partnerships (25,110) (34,057) (22,037)
Deferred income taxes (benefit) (9,274) 3,663 16,126
(Increase) decrease in receivables (75,233) (49,172) 5,955
Increase in deferred policy acquisition costs (31,534) (48,860) (61,985)
Increase in policy liabilities and accruals 487,312 512,476 559,724
Increase (decrease) in other assets/other liabilities, net 53,194 44,269 (66,337)
Other, net 3,412 5,417 (320)
--------- ---------- ----------
Net cash provided by operating activities 524,558 579,543 521,812
--------- ---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sales, maturities or repayments
of available-for-sale debt securities 1,446,990 1,187,943 1,348,809
Proceeds from maturities or repayments of held-to-maturity
debt securities 306,183 217,302 118,596
Proceeds from disposals of equity securities 45,204 51,373 382,359
Proceeds from mortgage loan maturities or repayments 200,419 164,213 151,760
Proceeds from sale of real estate and other invested assets 458,467 218,874 127,440
Purchase of available-for-sale debt securities (2,568,971) (1,689,479) (1,909,086)
Purchase of held-to-maturity debt securities (631,974) (225,722) (385,321)
Purchase of equity securities (86,472) (88,573) (215,104)
Purchase of subsidiaries (6,647) (246,400)
Purchase of mortgage loans (75,974) (140,831) (200,683)
Purchase of real estate and other invested assets (201,424) (90,593) (157,077)
Change in short-term investments, net 837,365 58,384 110,503
Increase in policy loans (21,532) (59,699) (49,912)
Capital expenditures (23,935) (41,504) (3,543)
Other investing activities, net (6,540) (1,750) (5,898)
--------- ---------- ----------
Net cash used for investing activities (328,841) (686,462) (687,157)
--------- ---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES
Withdrawals of contractholder deposit funds,
net of deposits and interest credited (11,124) (17,902) (6,301)
(Repayment of)/proceeds from securities sold
subject to repurchase agreements (137,472) 137,472
Proceeds from borrowings 136 215,359 226,082
Repayment of borrowings (63,328) (234,703) (2,400)
Dividends paid to minority shareholders in consolidated subsidiaries (4,938) (6,895) (6,245)
Other financing activities (5,664)
--------- ---------- ----------
Net cash provided by (used for) financing activities (222,390) 93,331 211,136
--------- ---------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (26,673) (13,588) 45,791
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 159,307 172,895 127,104
--------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 132,634 $ 159,307 $ 172,895
========= ========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid, net $ 44,508 $ 76,167 $ 76,157
Interest paid on indebtedness $ 32,834 $ 32,300 $ 19,214
</TABLE>
The accompanying notes are an integral part of these statements.
34
<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 and insurance
agency and brokerage operations, primarily based in the United States. These
products and services are distributed among five reportable segments:
Individual Insurance, Life Reinsurance, Group Life and Health Insurance,
Securities Management and All Other. 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 significant influence over operating and financial policies and
generally at least a 20% ownership interest 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.
Amounts for 1997 and 1996 have been retroactively restated to account for
income from leveraged lease investments (see Note 19). Certain
reclassifications have been made to the 1997 and 1996 amounts to conform
with the 1998 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 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 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.
35
<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.
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. These earnings or losses are
included in investment income. Prior to 1998, for venture capital
partnerships, this activity was reflected in capital gains and losses. Such
earnings and losses included in prior year financial statements have been
reclassified to reflect this change.
Beginning in 1998, leveraged lease investments represent the net of the
estimated residual value of the lease assets, rental receivables, and
unearned and deferred income to be allocated over the lease term. Investment
income is calculated using the interest method and is recognized only in
periods in which the net investment is positive. Prior to 1998, leveraged
lease investments were carried at cost adjusted for Phoenix's equity in
undistributed earnings or losses since acquisition, less allowances for
other than temporary declines in value. Prior years have been restated to
reflect these changes (see Note 19).
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 component of 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, off-balance sheet
financial instruments such as investment and loan commitments, financial
guarantees, interest rate swaps and interest rate floors. These instruments
have credit risk and also may be subject to risk of loss due to interest
rate and market fluctuations.
Phoenix also uses interest rate swaps and futures contracts as hedges for
asset/liability management of fixed income investments and certain
liabilities. Realized gains and losses on these contracts are deferred and
amortized over the life of the hedged asset or liability.
Phoenix enters into interest rate floor contracts to hedge against
significant declines in interest rates by locking in a minimum interest rate
amount that will be received on future reinvestments in terms of an
underlying treasury yield. Phoenix does not enter into interest rate floor
contracts for trading purposes. The excess of a predetermined (strike) rate
over a reference (index) rate is recognized in investment income when
received or paid.
36
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
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.
37
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
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 1998 and prior
years. Entities included within the consolidated group are segregated into
either a life insurance or nonlife insurance company subgroup. The
consolidation of these subgroups is subject to certain statutory
restrictions in the percentage of eligible nonlife 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.
RECENT ACCOUNTING PRONOUNCEMENTS
Phoenix adopted Statement of Financial Accounting Standard (SFAS) No. 130,
"Reporting Comprehensive Income," as of January 1, 1998. This statement
establishes standards for the reporting and display of comprehensive income
and its components in a full set of financial statements. This statement
defines the components of comprehensive income as those items that were
previously reported only as components of equity and were excluded from net
income.
In 1998, Phoenix adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement supersedes SFAS No. 14,
"Financial Reporting for Segments of a
38
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Business Enterprise," replacing the "industry segment" approach with the
"management" approach. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of Phoenix's reportable segments. The
adoption of this statement did not affect the results of operations or
financial position but did affect the disclosure of segment information.
In 1998, Phoenix adopted SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which amends SFAS No. 87,
"Employers' Accounting for Pensions," No. 88, "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits," and No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions." The new statement revises and
standardizes employers' disclosures about pension and other postretirement
benefit plans. Adoption of this statement did not affect the results of
operations or financial position of the company.
On June 15, 1998, The Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." This
statement, effective for all years beginning after June 15, 1999, requires
that all derivative instruments be recorded on the balance sheet at their
fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on
whether a derivative is designed as part of a hedge transaction and, if it
is, the type of hedge transaction. Management anticipates that, due to its
limited use of derivative instruments, the adoption of this statement will
not have a significant effect on Phoenix's results of operations or its
financial position.
3. SIGNIFICANT TRANSACTIONS
DIVIDEND SCALE REDUCTION
Due to the decline of interest rates in the financial markets to historic
lows and the strong likelihood that such levels will be sustained, Phoenix
carefully reviewed and considered a change in its dividend scale. As a
result, in October 1998, Phoenix's Board of Directors voted to adopt a
reduced dividend scale, effective for dividends payable on or after January
1, 1999. Dividends for individual participating policies are being reduced
60 basis points in most cases, an average reduction of approximately 8%. The
effect was a decrease of approximately $15.7 million in the policyholder
dividends expense in 1998.
REAL ESTATE SALES
On December 15, 1998, Phoenix sold 47 commercial real estate properties with
a carrying value of $269.8 million, and 4 joint venture real estate
partnerships with a carrying value of $10.5 million, for approximately $309
million in cash. This transaction, along with the sale of 18 other
properties and partnerships during the year, which had a carrying value of
$36.7 million, resulted in after-tax gains of approximately $49.6 million.
As of December 31,1998, Phoenix has 7 commercial real estate properties
remaining with a carrying value of $55.7 million and 10 joint venture real
estate partnerships with a carrying value of $36.3 million.
PHOENIX INVESTMENT PARTNERS, LTD.
On December 3, 1998, Phoenix Investment Partners completed the sale of its
49% interest in Canadian investment firm Beutel, Goodman & Company, Ltd. for
$47 million. Phoenix Investment Partners received $37 million in cash and a
$10 million three-year interest bearing note. The transaction resulted in a
before-tax gain of approximately $17.5 million. Phoenix's interest
represents an after-tax realized gain of approximately $6.8 million.
39
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
On September 3, 1997, Phoenix Investment Partners acquired Pasadena Capital
Corporation, the parent company of Roger Engemann & Associates, Inc. for
approximately $214 million. Pasadena Capital managed over $7 billion in
assets at December 31, 1998, primarily individual accounts.
On July 17, 1997, Phoenix Investment Partners acquired a majority interest
in GMG/Seneca Capital Management LLC, renamed Seneca Capital Management, for
approximately $37.5 million. Seneca Capital Management managed $6 billion in
assets at December 31, 1998.
The purchase price for Pasadena Capital and Seneca Capital Management
represented the consideration paid and the direct costs incurred by Phoenix
Investment Partners to purchase Pasadena Capital and a majority interest in
Seneca Capital Management. The excess of the purchase price over the fair
value of the acquired net tangible assets of these companies totaled
approximately $212.8 million. Of this excess purchase price, $110.2 million
was classified as identifiable intangible assets, primarily associated with
investment management contracts, which are being amortized over their
estimated average useful life of 13 years using the straight line method.
The remaining excess purchase price of $142.5 million was classified as
goodwill and is being amortized over 40 years using the straight line
method.
Phoenix owns approximately 60% of the outstanding Phoenix Investment
Partners' common stock. In addition, Phoenix owns 45% of Phoenix Investment
Partners' convertible subordinated debentures.
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 $141.3 million difference, which does not exceed the
estimated present value of future profits of the acquired business, was
recorded as deferred acquisition costs.
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 notes
payable in the Consolidated Balance Sheet.
The notes were issued in accordance with Section 1307 (Contingent Liability
for Borrowings) 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 (Private Resales of Securities
to Institutions) 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
As of December 31, 1998, PM Holdings owned 10% of the outstanding common
stock of Aberdeen Asset Management, a Scottish asset management firm. The
investment is reported on the equity basis and classified as other invested
assets in the Consolidated Balance Sheet.
40
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 10% of Aberdeen Asset Management's then
outstanding common stock. The note is also classified as other invested
assets 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 Investment Partners and
Aberdeen Asset Management, develops and markets investment products in the
United States and the United Kingdom.
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, 1998 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 $ 10,562 $ 643 $ (78) $ 11,127
Foreign government bonds 3,036 (743) 2,293
Corporate securities 1,695,789 98,896 (13,823) 1,780,862
Mortgage-backed securities 172,300 6,201 (12) 178,489
---------- ---------- ----------- ----------
Total 1,881,687 105,740 (14,656) 1,972,771
---------- ---------- ----------- ----------
AVAILABLE-FOR-SALE:
U.S. government and agency bonds 497,089 34,454 (422) 531,121
State and political subdivision bonds 529,977 43,622 (104) 573,495
Foreign government bonds 293,968 28,814 (18,691) 304,091
Corporate securities 1,993,720 110,525 (36,656) 2,067,589
Mortgage-backed securities 3,121,690 110,172 (14,618) 3,217,244
---------- ---------- ----------- ----------
Total 6,436,444 327,587 (70,491) 6,693,540
---------- ---------- ----------- ----------
TOTAL DEBT SECURITIES $8,318,131 $ 433,327 $ (85,147) $8,666,311
---------- ---------- ----------- ----------
EQUITY SECURITIES $ 223,915 $ 102,018 $ (21,388) $ 304,545
========== ========== =========== ==========
</TABLE>
41
<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, 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 $ 158,217 $ 190,669 $ (12,998) $ 335,888
========== ========= ========== ==========
</TABLE>
The amortized cost and fair value of debt securities, by contractual sinking
fund payment and maturity, as of December 31, 1998 are shown below. Actual
maturity may differ from contractual maturity 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 $ 75,505 $ 66,367 $ 58,513 $ 59,953
Due after one year through five years 512,131 535,084 460,182 481,790
Due after five years through ten years 672,533 710,988 948,676 983,590
Due after ten years 449,218 481,843 1,847,383 1,950,963
Mortgage-backed securities 172,300 178,489 3,121,690 3,217,244
----------- ----------- ----------- -----------
Total $ 1,881,687 $ 1,972,771 $ 6,436,444 $ 6,693,540
=========== =========== =========== ===========
</TABLE>
42
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Carrying values for investments in mortgage-backed securities, excluding
U.S. government guaranteed investments, were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Planned amortization class $ 433,668 $ 554,425
Asset-backed 910,594 594,128
Mezzanine 280,162 328,539
Commercial 641,485 556,155
Sequential pay 982,576 680,397
Pass through 119,065 132,522
Other 21,994 56,393
---------- ----------
Total mortgage-backed securities $3,389,544 $2,902,559
========== ==========
</TABLE>
43
<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,
1998 1997 1998 1997
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
PROPERTY TYPE:
Office buildings $221,244 $246,500 $ 38,343 $180,743
Retail 203,927 231,886 36,858 108,907
Apartment buildings 261,894 303,990 21,553 20,560
Industrial buildings 121,789 162,008 1,600 39,810
Other 19,089 18,917 32 238
Valuation allowances (30,600) (35,800) (6,411) (28,501)
-------- -------- -------- --------
Total $797,343 $927,501 $ 91,975 $321,757
======== ======== ======== ========
GEOGRAPHIC REGION:
Northeast $169,368 $222,975 $ 47,709 $ 92,513
Southeast 213,916 257,376 32 85,781
North central 176,683 189,163 11,453 63,751
South central 98,956 79,092 22,649 58,954
West 169,020 214,695 16,543 49,259
Valuation allowances (30,600) (35,800) (6,411) (28,501)
-------- -------- -------- --------
Total $797,343 $927,501 $ 91,975 $321,757
======== ======== ======== ========
</TABLE>
At December 31, 1998, scheduled mortgage loan maturities were as follows:
1999--$99 million; 2000--$81 million; 2001--$87 million; 2002--$29 million;
2003--$107 million; and $394 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 $2.3 million and $8.6 million of its mortgage
loans during 1998 and 1997, respectively, based on terms which differed from
those granted to new borrowers.
44
<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>
1998
Mortgage loans $ 35,800 $ 50,603 $(55,803) $30,600
Real estate 28,501 5,108 (27,198) 6,411
-------- -------- -------- -------
Total $ 64,301 $ 55,711 $(83,001) $37,011
======== ======== ======== =======
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>
NONINCOME-PRODUCING MORTGAGE LOANS AND BONDS
The net carrying values of nonincome-producing mortgage loans were $15.6
million and $7.0 million at December 31, 1998 and 1997, respectively. The
net carrying value of nonincome-producing bonds was $22.3 million at
December 31, 1998. There were no nonincome-producing bonds at December 31,
1997.
INTEREST RATE SWAPS AND INTEREST RATE FLOORS
The notional amounts of Phoenix's interest rate swaps were $416.0 million
and $272.9 million at December 31, 1998 and 1997, respectively. Weighted
average received and paid rates were 6.24% and 5.79%, for 1998. The increase
in net investment income related to interest rate swap contracts was $1.9
million and $.7 million for the years ended December 31, 1998 and 1997,
respectively. The fair value of these interest rate swap agreements as of
December 31, 1998 and 1997 were $11.0 million and $9.4 million,
respectively. 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.
During 1998, Phoenix entered into several interest rate floor contracts. The
notional amount of Phoenix's interest rate floor contracts was $570.0
million at December 31, 1998. The weighted average strike rate was 4.59% for
1998. The excess of the strike rates over the index rates (5- and 10-year
constant maturity treasury yields) was not significant. The fair value of
these interest rate floors at December 31, 1998 was $1.4 million. These
contracts do not require payment of notional principal.
Management of Phoenix considers the likelihood of any material loss on these
guarantees or interest rate swaps or floors to be remote.
45
<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,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Venture capital equity partnerships $140,591 $ 88,228
Transportation and equipment leases 80,953 78,024
Affordable housing partnerships 10,854
Investment in Aberdeen Asset Management 72,257 70,317
Investment in Beutel, Goodman & Co. Ltd. 31,214
Investment in other affiliates 23,387 5,453
Seed money in separate accounts 26,587 41,297
Other partnership interests 22,697 4,555
-------- --------
Total other invested assets $377,326 $319,088
======== ========
</TABLE>
NET INVESTMENT INCOME
The components of net investment income for the year ended December 31, were
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $598,892 $509,702 $469,713
Equity securities 6,469 4,277 4,689
Mortgage loans 83,101 85,662 84,318
Policy loans 146,477 122,562 117,742
Real estate 38,338 18,939 21,799
Leveraged leases 2,746 2,692 3,286
Other invested assets 22,364 31,365 18,751
Short-term investments 23,825 18,768 18,688
-------- -------- --------
Sub-total 922,212 793,967 738,986
Less investment expenses 23,328 22,621 27,391
-------- -------- --------
Net investment income $898,884 $771,346 $711,595
======== ======== ========
</TABLE>
Investment income of $8.4 million was not accrued on certain delinquent
mortgage loans and defaulted bonds at December 31, 1998. 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 $40.8 million and $51.3 million at December 31,
1998 and 1997, respectively. Interest income on restructured
46
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
mortgage loans that would have been recorded in accordance with the original
terms of such loans amounted to $4.9 million, $5.3 million and $3.1 million
in 1998, 1997 and 1996, respectively. Actual interest income on these loans
included in net investment income was $4.0 million, $3.8 million and $5.2
million in 1998, 1997 and 1996, respectively.
INVESTMENT GAINS AND LOSSES
Net unrealized gains and (losses) on securities available-for-sale and
carried at fair value for the year ended December 31, were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $ (7,040) $112,194 $(70,986)
Equity securities (91,880) 74,547 40,803
Deferred policy acquisition costs 6,694 (80,603) 51,528
Deferred income taxes (32,279) 38,064 7,432
-------- -------- --------
Net unrealized investment (losses) gains
on securities available-for-sale $(59,947) $ 68,074 $ 13,913
======== ======== ========
</TABLE>
Realized investment gains and losses for the year ended December 31, were as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $(4,295) $ 19,315 $(10,476)
Equity securities 11,939 26,290 59,794
Mortgage loans (6,895) 3,805 2,628
Real estate 67,522 44,668 24,711
Other invested assets (4,709) 17,387 765
-------- -------- --------
Net realized investment gains $ 63,562 $111,465 $ 77,422
======== ======== ========
</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>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Proceeds from disposals $912,696 $821,339 $1,118,594
Gross gains on sales $ 17,442 $ 27,954 $ 12,547
Gross losses on sales $ 33,641 $ 5,309 $ 25,575
</TABLE>
47
<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:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Phoenix Investment Partners' gross amounts:
Goodwill $321,793 $321,932
Investment management contracts 169,006 167,788
Noncompete covenant 5,000 5,000
Other 472 1,220
-------- --------
Totals 496,271 495,940
-------- --------
Other gross amounts:
Goodwill 79,217 65,585
Client listings 48,111 45,441
Intangible asset related to pension plan benefits 16,229 18,032
Other 1,690 279
-------- --------
Totals 145,247 129,337
-------- --------
Total gross goodwill and other intangible assets 641,518 625,277
Accumulated amortization - Phoenix Investment Partners (49,615) (27,579)
Accumulated amortization - other (64,874) (56,199)
-------- --------
Total net goodwill and other intangible assets $527,029 $541,499
======== ========
</TABLE>
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, Comprehensive Income and Equity.
48
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. NOTES PAYABLE
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Short-term debt $ 20,463 $ 15,539
Bank borrowings 205,778 263,732
Notes payable 5,438 14,632
Subordinated debentures 41,359
Surplus notes 175,000 175,000
Secured debt 1,214 2,182
-------- --------
Total notes payable $449,252 $471,085
======== ========
</TABLE>
Phoenix has various lines of credit established with major commercial banks.
As of December 31, 1998, Phoenix had outstanding balances totaling $219.7
million. The total unused credit was $190.7 million. Interest rates ranged
from 5.24% to 7.98% in 1998.
Maturities of other indebtedness are as follows: 1999--$20.5 million;
2000--$38.3 million; 2001--$29.2 million; 2002--$318.3 million; 2003--$1.1
million; 2004 and thereafter--$41.9 million.
Interest expense was $29.9 million, $32.5 million and $18.0 million for the
years ended December 31, 1998, 1997 and 1996, respectively.
7. INCOME TAXES
A summary of income taxes (benefits) applicable to income before income
taxes and minority interest for the year ended December 31, was as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Income taxes
Current $80,322 $54,514 $59,673
Deferred (5,170) 3,663 21,010
------- ------- -------
Total $75,152 $58,177 $80,683
======= ======= =======
</TABLE>
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
49
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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>
1998 1997 1996
% % %
<S> <C> <C> <C> <C> <C> <C>
Income tax expense at statutory rate $73,637 35 $81,818 35 $67,488 35
Dividend received deduction and
tax-exempt interest (3,691) (1) (2,513) (1) (2,107) (1)
Other, net 5,206 2 (8,017) (4) 2,736 1
------- -- ------- -- ------ --
75,152 36 71,288 30 68,117 35
Differential earnings (equity tax) (13,111) (5) 12,566 7
------- -- ------- -- ------ --
Income taxes $75,152 36 $58,177 25 $80,683 42
======= == ======= == ======= ==
</TABLE>
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,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Deferred policy acquisition costs $ 301,337 $ 303,500
Unearned premium/deferred revenue (148,112) (139,817)
Impairment reserves (23,393) (26,102)
Pension and other postretirement benefits (59,164) (56,643)
Investments 105,395 83,821
Future policyholder benefits (141,130) (140,980)
Other 28,730 45,053
---------- ----------
63,663 68,832
Net unrealized investment gains 51,597 84,134
Minimum pension liability (3,348) (2,526)
---------- ----------
Deferred income tax liability, net $ 111,912 $ 150,440
========== ==========
</TABLE>
Gross deferred income tax assets totaled $375 million and $366 million at
December 31, 1998 and 1997, respectively. Gross deferred income tax
liabilities totaled $487 million and $516 million at December 31, 1998 and
1997, 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, 1998 and 1997 will be
realized.
The Internal Revenue Service is currently examining Phoenix's tax returns
for 1995 through 1997. Management does not believe that there will be a
material adverse effect on the financial statements as a result of pending
tax matters.
50
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. PENSION AND OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT PLANS
PENSION PLANS
Phoenix has a multi-employer, noncontributory, 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 nonqualified supplemental defined benefit plan to provide
benefits in excess of amounts allowed pursuant to the 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 years ended December 31,
were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Components of net periodic benefit cost
Service cost $ 11,046 $ 10,278 $ 10,076
Interest cost 22,958 22,650 22,661
Expected return on plan assets (25,083) (22,055) (20,847)
Amortization of net transition asset (2,369) (2,369) (2,468)
Amortization of prior service cost 1,795 1,795 (22)
Amortization of net (gain) loss (1,247) 25 1,867
-------- -------- --------
Net periodic benefit cost $ 7,100 $ 10,324 $ 11,267
======== ======== ========
</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.
51
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The aggregate change in projected benefit obligation, change in plan assets,
and funded status of the plan were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Change in projected benefit obligation
Projected benefit obligation at beginning of year $ 335,436 $ 301,245
Service cost 11,046 10,278
Interest cost 22,958 22,650
Plan amendments 171
Actuarial loss 1,958 18,644
Benefit payments (17,936) (17,552)
--------- ---------
Benefit obligation at end of year $ 353,462 $ 335,436
========= =========
Change in plan assets
Fair value of plan assets at beginning of year $ 321,555 $ 283,245
Actual return on plan assets 58,225 53,093
Employer contributions 2,975 2,769
Benefit payments (17,936) (17,552)
--------- ---------
Fair value of plan assets at end of year $ 364,819 $ 321,555
========= =========
Funded status of the plan $ 11,357 $ (13,881)
Unrecognized net transition asset (14,217) (16,586)
Unrecognized prior service cost 16,185 17,980
Unrecognized net gain (75,921) (45,986)
--------- ---------
Net amount recognized $ (62,596) $ (58,473)
========= =========
Amounts recognized in the Consolidated Balance
Sheet consist of:
Accrued benefit liability $ (88,391) $ (83,724)
Intangible asset 16,229 18,032
Accumulated other comprehensive income 9,566 7,219
--------- ---------
$ (62,596) $ (58,473)
========= =========
</TABLE>
At December 31, 1998 and 1997, the nonqualified plan was unfunded and had
projected benefit obligations of $57.2 million and $50.4 million,
respectively. The accumulated benefit obligations as of December 31, 1998
and 1997 related to this plan were $48.4 million and $42.8 million,
respectively, and are included in other liabilities.
52
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Phoenix recorded, as a reduction of equity, an additional minimum pension
liability of $6.2 million and $4.7 million, net of income taxes, at December
31, 1998 and 1997, respectively, representing the excess of accumulated
benefit obligations over the fair value of plan assets and accrued pension
liabilities for the nonqualified plan. Phoenix has also recorded an
intangible asset of $16.2 million and $18.0 million as of December 31, 1998
and 1997 related to the nonqualified 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 1998 and 1997. The discount rate assumption for 1998
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% in 1998 and 1997.
The pension plan's assets include corporate and government debt securities,
equity securities, real estate, venture capital partnerships, 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, 1998, 1997 and 1996 were $4.1 million, $3.8 million
and $4.2 million, respectively.
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 components of net periodic postretirement benefit cost for the year
ended December 31, were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Components of net periodic benefit cost
Service cost $3,436 $3,136 $2,765
Interest cost 4,572 4,441 4,547
Amortization of net gain (1,232) (1,527) (1,576)
------ ------ ------
Net periodic benefit cost $6,776 $6,050 $5,736
====== ====== ======
</TABLE>
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.
53
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The plan's change in projected benefit obligation, change in plan assets,
and funded status were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Change in projected postretirement benefit obligation
Projected benefit obligation at beginning of year $ 66,618 $ 63,656
Service cost 3,436 3,136
Interest cost 4,572 4,441
Actuarial (gain) loss 397 (518)
Benefit payments (4,080) (4,098)
-------- --------
Projected benefit obligation at end of year $ 70,943 $ 66,617
-------- --------
Change in plan assets
Employer contributions $ 4,080 $ 4,098
Benefit payments (4,080) (4,098)
-------- --------
Fair value of plan assets at end of year $ $
-------- --------
Funded status of the plan $(70,943) $(66,617)
Unrecognized net gain (26,408) (28,037)
-------- --------
Accrued benefit liability $(97,351) $(94,654)
======== ========
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation was 7.0% at December 31, 1998 and 1997.
54
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
For purposes of measuring the accumulated postretirement benefit obligation
the 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. Based on this assumption the health care costs were
assumed to increase 8.5% in 1998.
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 $4.6 million and the annual service and
interest cost by $.7 million, before taxes. Decreasing the assumed health
care cost trend rates by one percentage point in each year would decrease
the accumulated postretirement benefit obligation by $4.3 million and the
annual service and interest cost by $.6 million, before taxes. Gains and
losses that occur because actual experience differs from the estimates are
amortized over the average future service period of employees.
OTHER POSTEMPLOYMENT BENEFITS
Phoenix recognizes the costs and obligations of severance, disability and
related life insurance and health care benefits to be paid to inactive or
former employees after employment but before retirement. Other
postemployment benefit expense was ($.5) million for 1998, $.4 million for
1997 and $.4 million for 1996.
55
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. COMPREHENSIVE INCOME
The components of, and related tax effects for, other comprehensive income
for the years ended December 31, were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
UNREALIZED (LOSSES) GAINS ON SECURITIES
AVAILABLE-FOR-SALE:
Before-tax amount $(72,255) $151,210 $ 65,374
Tax expense (benefit) (25,288) 52,923 22,881
-------- -------- --------
Totals (46,967) 98,287 42,493
-------- -------- --------
RECLASSIFICATION ADJUSTMENT FOR NET GAINS
REALIZED IN NET INCOME:
Before-tax amount (19,970) (46,481) (43,969)
Tax (benefit) (6,990) (16,268) (15,389)
-------- -------- --------
Totals (12,980) (30,213) (28,580)
-------- -------- --------
NET UNREALIZED (LOSSES) GAINS ON SECURITIES
AVAILABLE-FOR-SALE:
Before-tax amount (92,225) 104,729 21,405
Tax expense (benefit) (32,278) 36,655 7,492
-------- -------- --------
Totals $(59,947) $ 68,074 $ 13,913
======== ======== ========
MINIMUM PENSION LIABILITY ADJUSTMENT:
Before-tax amount $ (2,347) $ (3,232) $ 1,910
Tax expense (benefit) (821) (1,131) 669
-------- -------- --------
Totals $ (1,526) $ (2,101) $ 1,241
======== ======== ========
</TABLE>
56
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following table summarizes accumulated other comprehensive income for
the years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
NET UNREALIZED (LOSSES) GAINS ON SECURITIES
AVAILABLE-FOR-SALE:
Balance, beginning of year $160,457 $ 92,383 $ 78,470
Change during period (59,947) 68,074 13,913
-------- -------- --------
Balance, end of year 100,510 160,457 92,383
-------- -------- --------
MINIMUM PENSION LIABILITY ADJUSTMENT:
Balance, beginning of year (4,693) (2,592) (3,833)
Change during period (1,526) (2,101) 1,241
-------- -------- --------
Balance, end of year (6,219) (4,693) (2,592)
-------- -------- --------
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Balance, beginning of year 155,764 89,791 74,637
Change during period (61,473) 65,973 15,154
-------- -------- --------
Balance, end of year $ 94,291 $155,764 $ 89,791
======== ======== ========
</TABLE>
10. SEGMENT INFORMATION
Phoenix is organized by lines of business that include similar product
groupings. Lines of businesses have been grouped into the following
reportable segments: Individual Insurance, Life Reinsurance, Group Life and
Health Insurance and Securities Management. The category "Individual
Insurance" aggregates the Individual Traditional, Universal Life, Variable
Universal Life and Variable Annuity lines of business. The category "All
Other" includes the combined financial results of segments that individually
are below the quantitative thresholds. Those segments include General Lines
Brokerage and several small individual insurance lines. In addition, the
category "All Other" contains unallocated investment income, unallocated
expenses and realized investment gains related to capital in excess of
segment requirements, as well as certain assets such as equity securities
and venture capital. Phoenix calculates taxes at a flat rate of 35% on the
operating income of its insurance line segments and therefore, does not
allocate permanent tax differences to these segments. Also, Phoenix does not
allocate unusual or extraordinary items to its segments.
57
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following table summarizes significant financial amounts by reportable
segment:
<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED
DECEMBER 31, 1998 GROUP LIFE
(IN MILLIONS) INDIVIDUAL LIFE & HEALTH SECURITIES ALL
INSURANCE REINSURANCE INSURANCE MANAGEMENT OTHER TOTALS
---------- ----------- ---------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues from external sources $ 1,354 $ 64 $440 $214 $400 $ 2,472
Intersegment revenues 18 41 59
Net investment income 708 19 45 2 75 849
Interest expense 15 1 16
Policyholder dividends 344 344
Increase in DAC (9) (5) (5) (19)
Depreciation and amortization expense 4 1 26 14 45
Other noncash items:
Increase in policy liabilities and accruals 596 38 16 36 686
Minority interest in operating income 14 5 19
Segment operating income (a) $ 50 $ 12 $ 26 $ 23 $ 1 $ 112
======= ==== ==== ==== ==== =======
Deferred policy acquisition costs $ 1,035 $ 27 $ 18 $ 1,080
Total segment assets $16,177 $398 $701 $557 $938 $18,771
======= ==== ==== ==== ==== =======
AT AND FOR THE YEAR ENDED
DECEMBER 31, 1997 GROUP LIFE
(IN MILLIONS) INDIVIDUAL LIFE & HEALTH SECURITIES ALL
INSURANCE REINSURANCE INSURANCE MANAGEMENT OTHER TOTALS
---------- ----------- ---------- ---------- ----- ------
Revenues from external sources $ 1,200 $ 57 $428 $124 $ 298 $ 2,107
Intersegment revenues 16 30 46
Net investment income 586 19 42 2 101 750
Interest expense 4 1 5
Policyholder dividends 328 328
Increase in DAC (32) (5) (13) (50)
Depreciation and amortization expense 3 1 12 36 52
Other noncash items:
Increase in policy liabilities and accruals 508 3 24 50 585
Minority interest in operating income 12 2 14
Segment operating income (a) $ 59 $ 10 $ 33 $ 16 $ (17) $ 101
======= ==== ==== ==== ==== =======
Deferred policy acquisition costs $ 1,014 $ 22 $ 6 $ 1,042
Total segment assets $14,946 $318 $656 $615 $1,101 $17,636
======= ==== ==== ==== ====== =======
</TABLE>
(a) Before income taxes and after policyholder dividends on Individual
Insurance.
58
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED
DECEMBER 31, 1996 GROUP LIFE
(IN MILLIONS) INDIVIDUAL LIFE & HEALTH SECURITIES ALL
INSURANCE REINSURANCE INSURANCE MANAGEMENT OTHER TOTALS
---------- ----------- ---------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues from external sources $ 1,111 $121 $415 $153 $ 140 $ 1,940
Intersegment revenues 14 33 47
Net investment income 562 16 37 2 91 708
Interest expense 3 2 5
Policyholder dividends 297 297
Increase in DAC (39) (2) (20) (61)
Depreciation and amortization expense 3 1 11 11 26
Other noncash items:
Increase in policy liabilities and
accruals 465 8 40 49 562
Minority interest in operating income 17 (3) 14
Segment operating income (a) $ 59 $ 9 $ 12 $ 28 $ (9) $ 99
======= ==== ==== ==== ====== =======
Deferred policy acquisition costs $ 905 $ 18 $ 21 $ 944
Total segment assets $12,302 $304 $597 $366 $ 965 $14,534
======= ==== ==== ==== ====== =======
</TABLE>
(a) Before income taxes and after policyholder dividends on Individual
Insurance.
59
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SEGMENT RECONCILIATION
The following is a reconciliation of the totals of reportable segment
revenues, operating income and assets to Phoenix's consolidated totals:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Total revenues for reportable segments $ 3,380 $ 2,903 $ 2,695
Realized investment gains 64 111 77
Unallocated net investment income 50 24 4
Elimination of intersegment revenues (59) (47) (47)
------- ------- -------
Total consolidated revenues $ 3,435 $ 2,991 $ 2,729
======= ======= =======
OPERATING INCOME
Total operating income for reportable segments $ 112 $ 101 $ 99
Realized investment gains 64 111 77
Unallocated amounts:
Net investment income 50 22 4
Interest expense (14) (23) (13)
Other unallocated amounts (14) 9 9
Reclassification of minority interest 12 14 17
------- ------- -------
Total consolidated operating income $ 210 $ 234 $ 193
======= ======= =======
ASSETS
Total assets for reportable segments $18,771 $17,636 $14,534
Unallocated amounts:
Investments and accrued investment income
attributable to unallocated capital 725 846 859
Goodwill and other intangible assets 15 21 20
Other unallocated amounts 10 35 41
------- ------- -------
Total consolidated assets $19,521 $18,538 $15,454
======= ======= =======
</TABLE>
11. 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 $106.7 million and $109.0 million,
respectively, at December 31, 1998 and 1997. 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 $173.5 million and
$164.4 million at December 31, 1998 and 1997, respectively.
Rental expenses for operating leases, principally with respect to buildings,
amounted to $14.5 million, $14.9 million and $14.8 million in 1998, 1997,
and 1996, respectively. Future minimum rental payments under noncancelable
operating leases were approximately $45.3 million as of December 31, 1998,
payable as follows: 1999--$14.8 million; 2000--$12.0 million; 2001--$7.9
million; 2002--$5.8 million; 2003--$3.2 million; and $1.6 million
thereafter.
60
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
12. 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. For direct
issues, the maximum of individual life insurance retained by Phoenix on any
one life is $8 million for single life and joint first-to-die policies and
to $10 million for joint last-to-die policies, with excess amounts ceded to
reinsurers. Phoenix reinsures 80% of the mortality risk on the inforce block
of the Confederation Life business acquired on December 31, 1997, and 90% of
the mortality risk on certain new issues of term and universal life
products. In addition, Phoenix entered into a separate reinsurance agreement
on October 1, 1998 to reinsure 80% of the mortality risk on a substantial
portion of its otherwise retained individual life insurance business.
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>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Direct premiums $ 1,719,393 $ 1,592,800 $ 1,473,869
Reinsurance assumed 505,262 329,927 276,630
Reinsurance ceded (371,854) (282,121) (231,677)
------------ ------------ ------------
Net premiums $ 1,852,801 $ 1,640,606 $ 1,518,822
============ ============ ============
Direct policy and contract claims incurred $ 728,062 $ 626,834 $ 575,824
Reinsurance assumed 433,242 410,704 170,058
Reinsurance ceded (407,780) (373,127) (160,646)
------------ ------------ ------------
Net policy and contract claims incurred $ 753,524 $ 664,411 $ 585,236
============ ============ ============
Direct life insurance in force $121,442,041 $ 120,394,664 $108,816,856
Reinsurance assumed 110,632,110 84,806,585 61,109,836
Reinsurance ceded (135,817,986) (74,764,639) (51,525,976)
------------ ------------ ------------
Net insurance in force $ 96,256,165 $130,436,610 $118,400,716
============ ============ ============
</TABLE>
Irrevocable letters of credit aggregating $5.3 million at December 31, 1998
have been arranged with United States commercial banks in favor of Phoenix
to collateralize the ceded reserves.
13. PARTICIPATING LIFE INSURANCE
Participating life insurance in force was 72.3% and 79.6% of the face value
of total individual life insurance in force at December 31, 1998 and 1997,
respectively. The premiums on participating life insurance policies were
75.7%, 83.5% and 84.1% of total individual life insurance premiums in 1998,
1997 and 1996, respectively.
61
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
14. DEFERRED POLICY ACQUISITION COSTS
The following reflects the amount of policy acquisition costs deferred and
amortized for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $1,038,407 $ 926,274 $ 816,128
Acquisition cost deferred 171,618 295,189 153,873
Amortized to expense during the year (140,084) (105,071) (95,255)
Adjustment to net unrealized investment
gains (losses) included in other
comprehensive income 6,694 (77,985) 51,528
---------- ---------- ---------
Balance at end of year $1,076,635 $1,038,407 $ 926,274
========== ========== =========
</TABLE>
15. MINORITY INTEREST
Phoenix's interests in Phoenix Investment Partners and American Phoenix
Corporation, through its wholly-owned subsidiary PM Holdings, are
represented by ownership of approximately 60% and 85%, respectively, of the
outstanding shares of common stock at December 31, 1998. Earnings and equity
attributable to minority shareholders are included in minority interest in
the consolidated financial statements.
16. 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.
62
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 130 and 800 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.
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.
63
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FAIR VALUE SUMMARY
The estimated fair values of the financial instruments as of December 31,
were as follows:
<TABLE>
<CAPTION>
1998 1997
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 132,634 $ 132,634 $ 159,307 $ 159,307
Short-term investments 240,911 240,911 1,078,276 1,078,276
Debt securities 8,575,227 8,666,311 7,213,966 7,316,601
Equity securities 304,545 304,545 335,888 335,888
Mortgage loans 797,343 831,919 927,501 956,041
Policy loans 2,008,260 2,122,389 1,986,728 2,104,704
----------- ----------- ----------- -----------
Total financial assets $12,058,920 $12,298,709 $11,701,666 $11,950,817
=========== =========== =========== ===========
Financial liabilities:
Policy liabilities $ 783,400 $ 783,400 $ 902,200 $ 902,200
Securities sold subject to repurchase
agreements 137,473 137,473
Notes payable 449,252 449,252 471,085 471,085
----------- ----------- ----------- -----------
Total financial liabilities $ 1,232,652 $ 1,232,652 $ 1,510,758 $ 1,510,758
=========== =========== =========== ===========
</TABLE>
17. CONTINGENCIES
FINANCIAL GUARANTEES
As a result of the sale of real estate properties, in December 1998, Phoenix
is no longer 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 principal amount of bonds guaranteed
by Phoenix at December 31, 1997 was $88.7 million.
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. Phoenix estimates the
cost of settlement to be $40 million after tax. A $25 million after tax
liability was recorded in 1995. In addition, $7 million after tax was
expensed in 1996. The after tax costs of $12.5 million for 1997 and $6.7
million for 1998 were directly offset by a release of the liability in those
years. 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.
64
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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, 1998, 1997 and 1996, there
were no material practices not prescribed by the Insurance Department of the
State of New York. Statutory surplus differs from 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 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>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory net income $108,652 $ 66,599 $ 70,261
Deferred policy acquisition costs, net 18,538 48,821 58,618
Future policy benefits (53,847) (9,145) (16,793)
Pension and postretirement expenses (17,334) (7,955) (23,275)
Investment valuation allowances 94,873 84,975 81,841
Interest maintenance reserve 1,415 17,544 (5,158)
Deferred income taxes (39,983) (36,250) (67,064)
Other, net 12,459 2,118 4,808
-------- -------- --------
Net income, as reported $124,773 $166,707 $103,238
======== ======== ========
</TABLE>
The following reconciles the statutory surplus and asset valuation reserve
(AVR) of Phoenix as reported to regulatory authorities to equity as reported
in these financial statements:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Statutory surplus, surplus notes and AVR $1,205,635 $1,152,820
Deferred policy acquisition costs, net 1,259,316 1,227,782
Future policy benefits (465,268) (395,436)
Pension and postretirement expenses (174,273) (169,383)
Investment valuation allowances 2,002 (27,738)
Interest maintenance reserve 35,303 33,794
Deferred income taxes (25,593) (12,051)
Surplus notes (157,500) (157,500)
Other, net 24,062 (11,904)
---------- ----------
Equity, as reported $1,703,684 $1,640,384
========== ==========
</TABLE>
65
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
19. PRIOR PERIOD ADJUSTMENT
In 1998, Phoenix revised the accounting for partnerships involved in
leveraged lease arrangements for 1997 and 1996. Opening retained earnings at
December 31, 1995 has been increased by $7.7 million. The Consolidated
Balance Sheet as of December 31, 1997 was revised by increasing the
following balances: other invested assets by $18.9 million, deferred income
taxes by $6.6 million and retained earnings by $12.3 million. The effect on
the Consolidated Statement of Income, Comprehensive Income and Equity was an
increase in net income of $2.1 million and $2.5 million for the years ended
1997 and 1996, respectively.
20. SUBSEQUENT EVENTS
PHOENIX INVESTMENT PARTNERS, LTD.
On March 2, 1999, Phoenix Investment Partners completed its acquisition of
the retail mutual fund and closed-end fund business of the New York City
based Zweig Group. Under the terms of the agreement, Phoenix Investment
Partners paid $135.0 million at closing and will pay up to an additional
$29.0 million over the next three years based on revenue growth of the Zweig
funds. The acquisition increases Phoenix Investment Partners' assets under
management by approximately $4.4 billion.
OCCUPATIONAL ACCIDENT REINSURANCE
Effective March 1, 1995, Phoenix became a participant in an occupational
accident reinsurance pool. In addition, effective October 1, 1996, Phoenix
and American Phoenix Life and Reassurance Company, an indirect wholly owned
subsidiary of Phoenix, became a participant in a reinsurance facility of
occupational accident reinsurance. A significant portion of the risk
associated with the occupational accident reinsurance pool and the
reinsurance facility is further retroceded by Phoenix and American Phoenix
Life to several other unaffiliated insurance entities. Phoenix has
terminated membership in the pool effective March 1, 1999 while American
Phoenix Life and Phoenix terminated participation in the reinsurance
facility effective October 1, 1998.
Management's assessment of the reinsurance arrangements and related
financial exposure to Phoenix and American Phoenix Life is ongoing. Based on
current facts and circumstances, management believes these transactions will
not materially affect the financial condition of Phoenix or American Phoenix
Life.
66
<PAGE>
PHOENIX HOME LIFE
VARIABLE UNIVERSAL LIFE ACCOUNT
As of December 31, 1998, there had been no sales of the product described in
this Prospectus and, therefore, no deposits were made to Phoenix Home Life
Variable Universal Life Account. Accordingly, no financial statements are
available for the VUL Account.
67
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------
GLOSSARY OF SPECIAL TERMS
The following is a list of terms and their meanings when used in this
prospectus.
ATTAINED AGE: The age of the Insured on the birthday nearest the most recent
Policy Anniversary.
BENEFICIARY: The person or persons specified by the Policyowner as entitled to
receive the death benefits under a Policy.
DEATH BENEFIT GUARANTEE: An additional benefit rider available with the Policy
that guarantees a death benefit equal to the initial face amount or the face
amount as later increased or decreased, provided that Minimum Required Premiums
are paid. See "Additional Rider Benefits."
DEBT: Outstanding loans against a Policy, plus accrued interest.
FUNDS: The Phoenix Edge Series Fund, BT Insurance Funds Trust, Federated
Insurance Series, Templeton Variable Products Series Fund and Wanger Advisors
Trust.
GENERAL ACCOUNT: The general asset account of Phoenix.
ISSUE PREMIUM: The premium payment made in connection with issuing the 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 of each
month thereafter or, if such day does not fall within a given month, the last
day of that month will be the Monthly Calculation Day.
NET ASSET VALUE: The worth of one share of a Series of a Fund at the end of a
valuation period. Net Asset Value is computed by adding the value of a Series'
holdings plus other assets, minus liabilities and then dividing the result by
the number of shares outstanding.
PAYMENT DATE: The Valuation Date on which we receive a premium payment or loan
repayment, unless it is received after the close of the New York Stock Exchange
("NYSE"), in which case it will be the next Valuation Date.
PLANNED ANNUAL PREMIUM: The premium amount that the Policyowner agrees to pay
each Policy Year. It must be at least equal to the minimum required premium for
the face amount of insurance selected but may be no greater than the maximum
premium allowed for the face amount selected.
POLICY ANNIVERSARY: Each anniversary of the Policy Date.
POLICY DATE: The Policy Date as shown on the Schedule Page of the Policy. It is
the date from which we measure Policy Years and Policy Anniversaries.
POLICY VALUE: The sum of a Policy's share in the values of each Subaccount of
the VUL Account plus the Policy's share in the values of the Guaranteed Interest
Account.
POLICY YEAR: The first Policy Year is the 1-year period from the Policy Date up
to, but not including, the first Policy Anniversary. Each succeeding Policy Year
is the 1-year period from the Policy Anniversary up to, but not including, the
next Policy Anniversary.
SERIES: A separate investment portfolio of the Fund.
SUBACCOUNTS: Accounts within the VUL Account to which nonloaned assets under a
Policy are allocated.
TARGET PREMIUM: The level annual premium at which the sales load is reduced on a
current basis.
VALUATION DATE: For any Subaccount, each date on which we calculate the net
asset value of a Fund.
VALUATION PERIOD: For any Subaccount, the period in days from the end of one
Valuation Date through the next.
VUL ACCOUNT (ACCOUNT): Phoenix Home Life Variable Universal Life Account, a
separate account of the company.
68
<PAGE>
APPENDIX B
PERFORMANCE HISTORY
- --------------------------------------------------------------------------------
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, PREMIUM SALES CHARGES AND SURRENDER CHARGES, IF APPLICABLE. FOR
THIS INFORMATION SEE APPENDIX C "ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES
AND CASH SURRENDER VALUES." Performance information may be expressed as yield
and effective yield of the Phoenix-Goodwin Money Market Subaccount, as yield of
the Phoenix-Goodwin Multi-Sector Fixed Income Subaccount and as total return of
any Subaccount. Current yield for the Phoenix-Goodwin 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 VUL Account level.
Yield calculations of the Phoenix-Goodwin 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 Phoenix-Goodwin
Money Market Subaccount based on a 7-day period ending December 31, 1998.
Example:
Assumptions:
Value of hypothetical pre-existing account with exactly one
unit at the beginning of the period:................ 1.501512
Value of the same account (excluding capital changes) at the
end of the 7-day period:............................ 1.50245
Calculation:
Ending account value ............................... 1.50245
Less beginning account value ....................... 1.501512
Net change in account value ........................ 0.000938
Base period return:
(adjusted change/beginning account value) .......... 0.000625
Current yield = return x (365/7) = ................... 3.26%
Effective yield = [(1 + return)(365/7)] - 1 = ........ 3.31%
The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield for
a stated period of time, or other investment companies, due to charges which
will be deducted on the VUL Account level.
For the Phoenix-Goodwin Multi-Sector Fixed Income 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.
The following performance tables display historical investment results of
the Subaccounts of the VUL Account. This information may be useful in helping
potential investors in deciding which Subaccounts to choose and in assessing the
competence of the investment advisors. The performance figures shown should be
considered in light of the investment objectives and policies, characteristics
and quality of the Subaccounts and market conditions during the periods of time
quoted. The performance figures should not be considered as estimates or
predictions of future performance. Investment return of the Subaccounts are not
guaranteed and will fluctuate. Below are quotations of average annual total
return calculated as described above for all Subaccounts with at least one year
of results. POLICY CHARGES (INCLUDING COST OF INSURANCE, PREMIUM TAX CHARGES,
PREMIUM SALES CHARGES AND SURRENDER CHARGES) ARE NOT REFLECTED.
69
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED DECEMBER 31, 1998(1,3)
- -----------------------------------------------------------------------------------------------------------------------------------
SERIES INCEPTION DATE 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series..................... 7/15/97 27.99% N/A N/A 22.48%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series...................... 5/1/90 24.38% 11.47% N/A 9.41%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series........................... 9/17/96 -7.25% N/A N/A -19.21%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate Securities Series........ 5/1/95 -23.54% N/A N/A 10.03%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series........................ 3/2/98 N/A N/A N/A 22.97%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Balanced Series............................ 5/1/92 15.64% 11.41% N/A 11.00%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Growth Series.............................. 1/1/83 26.35% 16.84% 18.67% 17.90%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series........................ 10/10/82 2.09% 3.24% 3.93% 4.97%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income Series........... 1/1/83 -6.92% 5.20% 7.78% 8.67%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Allocation Series................ 9/17/84 17.36% 11.33% 12.59% 12.34%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Theme Series..................... 1/29/96 40.62% N/A N/A 21.65%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series...................... 3/2/98 N/A N/A N/A 7.87%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series.................. 3/2/98 N/A N/A N/A 17.31%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series....................... 3/2/98 N/A N/A N/A -13.78%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series....................... 3/2/98 N/A N/A N/A 18.57%
- -----------------------------------------------------------------------------------------------------------------------------------
EAFE[registered trademark]Equity Index Fund................ 8/22/97 18.18% N/A N/A 7.07%
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II........... 3/28/94 4.58% N/A N/A 4.89%
- -----------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II......................... 3/1/94 -0.25% N/A N/A 7.72%
- -----------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(2)............... 5/1/98 N/A N/A N/A 0.98%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2(2).............. 11/28/88 3.07% 9.64% 10.40% 10.24%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund -- Class 2(2)............ 9/15/96 -23.45% N/A N/A -24.14%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2)................. 5/1/92 5.95% 9.77% N/A 12.28%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2)......................... 11/4/88 -1.86% 9.18% 10.48% 10.18%
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty....................................... 2/1/99 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap............................. 5/1/95 13.06% N/A N/A 19.55%
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger Twenty.............................................. 2/1/99 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Small Cap...................................... 5/1/95 5.59% N/A N/A 25.06%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average annual total return is the annual compound return that results
from holding an initial investment of $10,000 for the time period
indicated. Returns are net of $150 Issue Expense Charge, $5 Monthly
Administrative Fee, Investment Management Fees and Mortality and Expense
Risk Charges.
(2) Because Class 2 shares were not offered until May 1, 1997 (November 10,
1998 for Mutual Shares Investments), performance shown for periods prior to
that date represent the historical results of Class 1 shares. Performance
since that date reflect Class 2's high annual fees and expenses resulting
from its Rule 12b-1 plan. Maximum annual plan expenses are 0.25%.
(3) Performance data quoted represents the investment return of the appropriate
Series adjusted for the Phoenix Flex Edge Success charges had the
Subaccount started on the inception date of the appropriate Series.
Advertisements, sales literature and other communications may contain
information about any Series' or Advisor'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 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
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"), Dow Jones
Industrial Average, First Boston High Yield Index and Salomon Brothers Corporate
and Government Bond Indices.
Occasionally, The VUL Account may include in advertisements containing total
return, the ranking of those performance figures relating to such figures for
groups of Subaccounts having similar investment objectives as categorized by
ranking services such as:
Lipper Analytical Services, Inc. Morningstar, Inc.
CDA Investment Technologies, Inc. Weisenberger Financial Services, Inc.
70
<PAGE>
Additionally, the Funds may compare a Series' performance results to other
investment or savings vehicles (such as certificates of deposit) and may refer
to results published in various publications such as:
Changing Times Forbes
Fortune Money
Barrons Business Week
Investor's Business Daily The Stanger Register
Stanger's Investment Advisor 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 Personal Investor
The Funds may occasionally 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:
S&P 500 Dow Jones Industrial Average
Europe Australia Far East Index (EAFE) Consumers Price Index
Shearson Lehman Corporate Index 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 1940-43. 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 traded on the NYSE.
The Funds' Annual Reports, available upon request and without charge,
contain a discussion of the performance of the Funds and a comparison of that
performance to a securities market index.
71
<PAGE>
ANNUAL TOTAL RETURN(1,3)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SERIES
1983 1984 1985 1986 1987 1988 1989 1990 1991
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series N/A N/A N/A N/A N/A N/A N/A -8.63% 18.79%
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate N/A N/A N/A N/A N/A N/A N/A N/A N/A
Securities Series
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Balanced Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Growth Series 31.84% 9.79% 33.85% 19.51% 6.08% 3.09% 34.53% 3.32% 41.60%
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 7.51% 9.34% 7.17% 5.66% 5.67% 6.60% 8.03% 7.51% 5.14%
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income 5.16% 10.45% 19.65% 18.34% 0.28% 9.61% 6.92% 4.54% 18.66%
Series
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Allocation Series N/A -1.31% 26.33% 14.77% 11.66% 1.53% 18.53% 5.15% 28.27%
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Theme Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A N/A N/A N/A N/A N/A N/A N/A N/A
Securities II
- ------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2(2) N/A N/A N/A N/A N/A 0.21% 12.13% -8.95% 26.42%
- ------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2) N/A N/A N/A N/A N/A -0.99% 13.48% -11.99% 26.22%
- ------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL TOTAL RETURN(1,3)(continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
SERIES
1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A 5.46% 30.64%
- --------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series 37.33% 0.73% 8.72% 17.71% 11.16% 26.92%
- --------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A -0.06% -32.94% -5.21%
- --------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate N/A N/A 17.19% 32.10% 21.09% -21.83%
Securities Series
- --------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A 25.45%
- --------------------------------------------------------------------------------------------
Phoenix-Goodwin Balanced Series 7.75% -3.61% 22.37% 9.68% 17.00% 18.07%
- --------------------------------------------------------------------------------------------
Phoenix-Goodwin Growth Series 18.75% 0.66% 29.85% 11.69% 20.12% 28.98%
- --------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 2.06% 3.01% 4.86% 4.19% 4.35% 4.26%
- --------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income 14.99% -6.21% 22.56% 11.52% 10.21% -4.91%
Series
- --------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Allocation Series 10.12% -2.19% 17.27% 8.18% 19.78% 19.84%
- --------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Theme Series N/A N/A N/A 9.55% 16.25% 43.55%
- --------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A 10.07%
- --------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A 19.67%
- --------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A -11.95%
- --------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A 20.97%
- --------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund N/A N/A N/A N/A -6.87% 20.64%
- --------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A 1.99% 7.90% 3.37% 7.71% 6.80%
Securities II
- --------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A -4.26% 19.42% 13.40% 12.92% 1.88%
- --------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(2) N/A N/A N/A N/A N/A 2.62%
- --------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2(2) 24.86% -4.00% 21.29% 17.64% 14.37% 5.27%
- --------------------------------------------------------------------------------------------
Templeton Developing Markets Fund -- Class 2(2) N/A N/A N/A 1.05% -29.95% -21.69%
- --------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2) 45.85% -3.27% 14.56% 22.77% 12.76% 8.17%
- --------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2) 32.68% -3.25% 23.97% 21.17% 10.75% 0.24%
- --------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A 33.96% 31.15% -2.24% 15.41%
- --------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A 16.01% 45.64% 28.41% 7.83%
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Rates are net of Mortality and Expense Risk Charges and Investment
Management fees for the Subaccounts.
(2) Because Class 2 shares were not offered until May 1, 1997 (November 10, 1998
for Mutual Shares Investments), performance shown for periods prior to that
date represent the historical results of Class 1 shares. Performance since
that date reflect Class 2's high annual fees and expenses resulting from
its Rule 12b-1 plan. Maximum annual plan expenses are 0.25%.
(3) Performance data quoted represents the investment return of the
appropriate Series adjusted for the Phoenix Flex Edge Success charges had
the Subaccount started on the inception date of the appropriate Series.
THESE RATES OF RETURN ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
72
<PAGE>
APPENDIX C
ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES ("ACCOUNT VALUES") AND CASH
SURRENDER VALUES
- --------------------------------------------------------------------------------
The tables on the following pages illustrate how a Policy's death benefits,
account values and cash surrender value could vary over time assuming constant
hypothetical gross (after tax) annual investment returns of 0%, 6% and 12%. The
Policy benefits will differ from those shown in the tables if the annual
investment returns are not absolutely constant. That is, the figures will be
different if the returns averaged 0%, 6% or 12% over a period of years but went
above or below those figures in individual Policy Years. The Policy benefits
also will differ, depending on your premium allocations to each Subaccount of
the VUL Account, if the overall actual rates of return averaged 0%, 6% or 12%,
but went above or below those figures for the individual Subaccounts. The tables
are for standard risk males and females who are nonsmokers. 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. Account values
and cash surrender values may be lower for risk classes involving higher
mortality risk. Planned premium payments are assumed to be paid at the beginning
of each Policy Year.
The death benefit, account value and cash surrender value amounts reflect
the following current charges:
1. Monthly Administrative Charge of $5 per month ($10 per month guaranteed
maximum in all states except New York and New Jersey. In New York and
New Jersey guaranteed maximum is $7.50 per month.).
2. An average Premium Tax Charge of 2.25%.
3. A Federal Tax Charge of 1.5%.
4. Cost of Insurance Charge. The tables illustrate cost of insurance at
both the current rates and at the maximum rates guaranteed in the
Policies.
5. Mortality and Expense Risk Charge, which is a monthly charge equivalent
to .40% on an annual basis (or .25% on an annual basis after the 10th
Policy Year) of your policy value.
These illustrations also assume an average investment advisory fee of .70%
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 .30%. All other Fund expenses, except capital items such as
brokerage commissions, are paid by the Advisor or 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, 1998,
average total operating expenses for the Series would have been approximately
1.43% 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 -1.00%, 5.00% and 11.00%, respectively. For individual
illustrations, interest rates ranging between 0% and 12% may be selected in
place of the 0%, 6% and 12% rates.
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.
The second column of each table shows the amount that would accumulate if an
amount equal to the premiums paid were invested to earn interest, after taxes,
at 5% compounded annually. These tables show that if a Policy is returned in its
very early years for payment of its Cash Surrender Value, that Cash Surrender
Value may be low in comparison to the amount of the premiums accumulated with
interest. Thus, the cost of owning a Policy for a relatively short time may be
high.
On request, we will furnish the Policyowner with a comparable illustration
based on the age and sex of the proposed insured person(s), standard risk
assumptions and the initial face amount and planned premium chosen.
73
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 739 739 100,000 788 788 100,000 837 837 100,000
2 1,000 2,153 1,464 1,464 100,000 1,608 1,608 100,000 1,758 1,758 100,000
3 1,000 3,310 2,175 2,175 100,000 2,461 2,461 100,000 2,772 2,772 100,000
4 1,000 4,526 2,871 2,871 100,000 3,348 3,348 100,000 3,887 3,887 100,000
5 1,000 5,802 3,550 3,550 100,000 4,269 4,269 100,000 5,113 5,113 100,000
6 1,000 7,142 4,213 4,213 100,000 5,226 5,226 100,000 6,461 6,461 100,000
7 1,000 8,549 4,858 4,858 100,000 6,216 6,216 100,000 7,943 7,943 100,000
8 1,000 10,027 5,551 5,551 100,000 7,314 7,314 100,000 9,647 9,647 100,000
9 1,000 11,578 6,222 6,222 100,000 8,449 8,449 100,000 11,518 11,518 100,000
10 1,000 13,207 6,869 6,869 100,000 9,622 9,622 100,000 13,572 13,572 100,000
11 1,000 14,917 7,544 7,544 100,000 10,894 10,894 100,000 15,902 15,902 100,000
12 1,000 16,713 8,196 8,196 100,000 12,213 12,213 100,000 18,471 18,471 100,000
13 1,000 18,599 8,823 8,823 100,000 13,580 13,580 100,000 21,303 21,303 100,000
14 1,000 20,579 9,426 9,426 100,000 14,996 14,996 100,000 24,429 24,429 100,000
15 1,000 22,657 10,002 10,002 100,000 16,463 16,463 100,000 27,879 27,879 100,000
16 1,000 24,840 10,551 10,551 100,000 17,983 17,983 100,000 31,689 31,689 100,000
17 1,000 27,132 11,072 11,072 100,000 19,557 19,557 100,000 35,901 35,901 100,000
18 1,000 29,539 11,562 11,562 100,000 21,187 21,187 100,000 40,558 40,558 100,000
19 1,000 32,066 12,021 12,021 100,000 22,875 22,875 100,000 45,710 45,710 103,761
20 1,000 34,719 12,447 12,447 100,000 24,623 24,623 100,000 51,386 51,386 113,564
@ 65 1,000 69,761 13,933 13,933 100,000 48,311 48,311 100,000 166,339 166,339 276,123
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
29.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
74
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 533 533 100,000 574 574 100,000 616 616 100,000
2 1,000 2,153 1,045 1,045 100,000 1,162 1,162 100,000 1,284 1,284 100,000
3 1,000 3,310 1,536 1,536 100,000 1,761 1,761 100,000 2,007 2,007 100,000
4 1,000 4,526 2,003 2,003 100,000 2,371 2,371 100,000 2,788 2,788 100,000
5 1,000 5,802 2,444 2,444 100,000 2,989 2,989 100,000 3,632 3,632 100,000
6 1,000 7,142 2,858 2,858 100,000 3,613 3,613 100,000 4,544 4,544 100,000
7 1,000 8,549 3,240 3,240 100,000 4,241 4,241 100,000 5,527 5,527 100,000
8 1,000 10,027 3,652 3,652 100,000 4,936 4,936 100,000 6,656 6,656 100,000
9 1,000 11,578 4,029 4,029 100,000 5,635 5,635 100,000 7,877 7,877 100,000
10 1,000 13,207 4,372 4,372 100,000 6,336 6,336 100,000 9,201 9,201 100,000
11 1,000 14,917 4,690 4,690 100,000 7,057 7,057 100,000 10,661 10,661 100,000
12 1,000 16,713 4,970 4,970 100,000 7,780 7,780 100,000 12,252 12,252 100,000
13 1,000 18,599 5,210 5,210 100,000 8,503 8,503 100,000 13,984 13,984 100,000
14 1,000 20,579 5,410 5,410 100,000 9,225 9,225 100,000 15,875 15,875 100,000
15 1,000 22,657 5,563 5,563 100,000 9,943 9,943 100,000 17,940 17,940 100,000
16 1,000 24,840 5,670 5,670 100,000 10,653 10,653 100,000 20,197 20,197 100,000
17 1,000 27,132 5,720 5,720 100,000 11,348 11,348 100,000 22,664 22,664 100,000
18 1,000 29,539 5,708 5,708 100,000 12,022 12,022 100,000 25,363 25,363 100,000
19 1,000 32,066 5,626 5,626 100,000 12,665 12,665 100,000 28,317 28,317 100,000
20 1,000 34,719 5,464 5,464 100,000 13,270 13,270 100,000 31,554 31,554 100,000
@ 65 1,000 69,761 -- -- -- 14,385 14,385 100,000 96,379 96,379 159,990
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
29.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
75
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 767 767 100,000 816 816 100,000 866 866 100,000
2 1,000 2,153 1,517 1,517 100,000 1,665 1,665 100,000 1,818 1,818 100,000
3 1,000 3,310 2,251 2,251 100,000 2,545 2,545 100,000 2,863 2,863 100,000
4 1,000 4,526 2,968 2,968 100,000 3,459 3,459 100,000 4,012 4,012 100,000
5 1,000 5,802 3,666 3,666 100,000 4,406 4,406 100,000 5,272 5,272 100,000
6 1,000 7,142 4,346 4,346 100,000 5,386 5,386 100,000 6,656 6,656 100,000
7 1,000 8,549 5,005 5,005 100,000 6,401 6,401 100,000 8,175 8,175 100,000
8 1,000 10,027 5,713 5,713 100,000 7,524 7,524 100,000 9,920 9,920 100,000
9 1,000 11,578 6,400 6,400 100,000 8,687 8,687 100,000 11,839 11,839 100,000
10 1,000 13,207 7,066 7,066 100,000 9,894 9,894 100,000 13,949 13,949 100,000
11 1,000 14,917 7,761 7,761 100,000 11,201 11,201 100,000 16,342 16,342 100,000
12 1,000 16,713 8,439 8,439 100,000 12,563 12,563 100,000 18,986 18,986 100,000
13 1,000 18,599 9,100 9,100 100,000 13,983 13,983 100,000 21,908 21,908 100,000
14 1,000 20,579 9,743 9,743 100,000 15,461 15,461 100,000 25,139 25,139 100,000
15 1,000 22,657 10,369 10,369 100,000 17,003 17,003 100,000 28,713 28,713 100,000
16 1,000 24,840 10,977 10,977 100,000 18,609 18,609 100,000 32,667 32,667 100,000
17 1,000 27,132 11,566 11,566 100,000 20,282 20,282 100,000 37,042 37,042 100,000
18 1,000 29,539 12,135 12,135 100,000 22,025 22,025 100,000 41,886 41,886 100,000
19 1,000 32,066 12,682 12,682 100,000 23,841 23,841 100,000 47,245 47,245 107,247
20 1,000 34,719 13,206 13,206 100,000 25,731 25,731 100,000 53,157 53,157 117,479
@ 65 1,000 69,761 17,096 17,096 100,000 52,587 52,587 100,000 175,593 175,593 291,484
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
76
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 578 578 100,000 621 621 100,000 664 664 100,000
2 1,000 2,153 1,137 1,137 100,000 1,259 1,259 100,000 1,387 1,387 100,000
3 1,000 3,310 1,677 1,677 100,000 1,915 1,915 100,000 2,174 2,174 100,000
4 1,000 4,526 2,194 2,194 100,000 2,586 2,586 100,000 3,029 3,029 100,000
5 1,000 5,802 2,688 2,688 100,000 3,270 3,270 100,000 3,957 3,957 100,000
6 1,000 7,142 3,156 3,156 100,00 3,967 3,967 100,000 4,964 4,964 100,000
7 1,000 8,549 3,598 3,598 100,000 4,676 4,676 100,000 6,057 6,057 100,000
8 1,000 10,027 4,071 4,071 100,000 5,459 5,459 100,000 7,311 7,311 100,000
9 1,000 11,578 4,517 4,517 100,000 6,258 6,258 100,000 8,680 8,680 100,000
10 1,000 13,207 4,937 4,937 100,000 7,073 7,073 100,000 10,173 10,173 100,000
11 1,000 14,917 5,343 5,343 100,000 7,926 7,926 100,000 11,836 11,836 100,000
12 1,000 16,713 5,723 5,723 100,000 8,800 8,800 100,000 13,662 13,662 100,000
13 1,000 18,599 6,077 6,077 100,000 9,695 9,695 100,000 15,669 15,669 100,000
14 1,000 20,579 6,401 6,401 100,000 10,611 10,611 100,000 17,875 17,875 100,000
15 1,000 22,657 6,695 6,695 100,000 11,547 11,547 100,000 20,303 20,303 100,000
16 1,000 24,840 6,957 6,957 100,000 12,502 12,502 100,000 22,976 22,976 100,000
17 1,000 27,132 7,184 7,184 100,000 13,476 13,476 100,000 25,923 25,923 100,000
18 1,000 29,539 7,373 7,373 100,000 14,468 14,468 100,000 29,173 29,173 100,000
19 1,000 32,066 7,520 7,520 100,000 15,473 15,473 100,000 32,760 32,760 100,000
20 1,000 34,719 7,624 7,624 100,000 16,493 16,493 100,000 36,724 36,724 100,000
@ 65 1,000 69,761 5,283 5,283 100,000 28,664 28,664 100,000 118,365 118,365 196,486
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
77
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 738 738 100,739 787 787 100,788 836 836 100,836
2 1,000 2,153 1,462 1,462 101,463 1,606 1,606 101,606 1,755 1,755 101,756
3 1,000 3,310 2,171 2,171 102,172 2,457 2,457 102,457 2,766 2,766 102,767
4 1,000 4,526 2,864 2,864 102,864 3,340 3,340 103,341 3,877 3,877 103,878
5 1,000 5,802 3,540 3,540 103,540 4,257 4,257 104,257 5,097 5,097 105,098
6 1,000 7,142 4,198 4,198 104,199 5,207 5,207 105,207 6,437 6,437 106,437
7 1,000 8,549 4,837 4,837 104,838 6,189 6,189 106,189 7,906 7,906 107,906
8 1,000 10,027 5,524 5,524 105,524 7,276 7,276 107,276 9,593 9,593 109,594
9 1,000 11,578 6,186 6,186 106,186 8,397 8,397 108,397 11,442 11,442 111,443
10 1,000 13,207 6,821 6,821 106,822 9,551 9,551 109,552 13,466 13,466 113,467
11 1,000 14,917 7,486 7,486 107,487 10,805 10,805 110,805 15,762 15,762 115,763
12 1,000 16,713 8,126 8,126 108,126 12,100 12,100 112,101 18,287 18,287 118,287
13 1,000 18,599 8,738 8,738 108,739 13,437 13,437 113,438 21,061 21,061 121,062
14 1,000 20,579 9,323 9,323 109,323 14,817 14,817 114,817 24,112 24,112 124,112
15 1,000 22,657 9,878 9,878 109,878 16,238 16,238 116,239 27,466 27,466 127,466
16 1,000 24,840 10,402 10,402 110,403 17,703 17,703 117,704 31,154 31,154 131,155
17 1,000 27,132 10,895 10,895 110,895 19,211 19,211 119,212 35,211 35,211 135,212
18 1,000 29,539 11,353 11,353 111,353 20,761 20,761 120,761 39,673 39,673 139,673
19 1,000 32,066 11,774 11,774 111,775 22,353 22,353 122,353 44,580 44,580 144,581
20 1,000 34,719 12,157 12,157 112,157 23,985 23,985 123,986 49,978 49,978 149,979
@ 65 1,000 69,761 12,653 12,653 112,653 43,733 43,733 143,734 159,872 159,872 265,388
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
28.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
78
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 531 531 100,532 573 573 100,573 614 614 100,615
2 1,000 2,153 1,041 1,041 101,042 1,157 1,157 101,158 1,279 1,279 101,279
3 1,000 3,310 1,528 1,528 101,529 1,752 1,752 101,752 1,996 1,996 101,996
4 1,000 4,526 1,990 1,990 101,990 2,355 2,355 102,355 2,769 2,769 102,769
5 1,000 5,802 2,423 2,423 102,424 2,963 2,963 102,963 3,600 3,600 103,601
6 1,000 7,142 2,828 2,828 102,829 3,575 3,575 103,575 4,494 4,494 104,495
7 1,000 8,549 3,200 3,200 103,200 4,186 4,186 104,187 5,453 5,453 105,454
8 1,000 10,027 3,598 3,598 103,599 4,860 4,860 104,861 6,550 6,550 106,550
9 1,000 11,578 3,960 3,960 103,960 5,533 5,533 105,533 7,729 7,729 107,729
10 1,000 13,207 4,284 4,284 104,285 6,202 6,202 106,203 8,997 8,997 108,997
11 1,000 14,917 4,581 4,581 104,581 6,883 6,883 106,883 10,386 10,386 110,386
12 1,000 16,713 4,836 4,836 104,837 7,558 7,558 107,559 11,885 11,885 111,885
13 1,000 18,599 5,049 5,049 105,050 8,224 8,224 108,225 13,502 13,502 113,503
14 1,000 20,579 5,218 5,218 105,218 8,879 8,879 108,879 15,249 15,249 115,249
15 1,000 22,657 5,338 5,338 105,338 9,516 9,516 109,517 17,133 17,133 117,134
16 1,000 24,840 5,406 5,406 105,407 10,132 10,132 110,133 19,166 19,166 119,167
17 1,000 27,132 5.415 5.415 105,416 10,717 10,717 110,718 21,355 21,355 121,356
18 1,000 29,539 5,359 5,359 105,359 11,262 11,262 111,263 23,709 23,709 123,710
19 1,000 32,066 5,228 5,228 105,229 11,756 11,756 111,757 26,236 26,236 126,237
20 1,000 34,719 5,015 5,015 105,015 12,186 12,186 112,187 28,944 28,944 128,945
@ 65 1,000 69,761 -- -- -- 9,000 9,000 109,000 74,813 74,813 174,814
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
28.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
79
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 766 766 100,767 816 816 100,816 865 865 100,866
2 1,000 2,153 1,516 1,516 101,517 1,663 1,663 101,664 1,816 1,816 101,817
3 1,000 3,310 2,248 2,248 102,249 2,542 2,542 102,542 2,859 2,859 102,860
4 1,000 4,526 2,963 2,963 102,963 3,453 3,453 103,453 4,004 4,004 104,005
5 1,000 5,802 3,658 3,658 103,659 4,396 4,396 104,396 5,260 5,260 105,260
6 1,000 7,142 4,334 4,334 104,334 5,371 5,371 105,371 6,636 6,636 106,637
7 1,000 8,549 4,988 4,988 104,988 6,378 6,378 106,379 8,145 8,145 108,145
8 1,000 10,027 5,689 5,689 105,690 7,492 7,492 107,492 9,876 9,876 109,876
9 1,000 11,578 6,369 6,369 106,369 8,643 8,643 108,643 11,775 11,775 111,775
10 1,000 13,207 7,026 7,026 107,027 9,833 9,833 109,834 13,859 13,859 113,860
11 1,000 14,917 7,712 7,712 107,713 11,125 11,125 111,126 16,223 16,223 116,224
12 1,000 16,713 8,380 8,380 108,380 12,467 12,467 112,468 18,830 18,830 118,830
13 1,000 18,599 9,029 9,029 109,029 13,862 13,862 113,863 21,704 21,704 121,705
14 1,000 20,579 9,658 9,658 109,659 15,312 15,312 115,313 24,876 24,876 124,876
15 1,000 22,657 10,269 10,269 110,269 16,819 16,819 116,820 28,375 28,375 128,376
16 1,000 24,840 10,858 10,858 110,859 18,384 18,384 118,384 32,236 32,236 132,236
17 1,000 27,132 11,426 11,426 111,427 20,008 20,008 120,008 36,495 36,495 136,496
18 1,000 29,539 11,972 11,972 111,972 21,693 21,693 121,694 41,195 41,195 141,195
19 1,000 32,066 12,493 12,493 112,493 23,439 23,439 123,440 46,380 46,380 146,380
20 1,000 34,719 12,987 12,987 112,988 25,248 25,248 125,249 52,099 52,099 152,100
@ 65 1,000 69,761 16,202 16,202 116,203 49,514 49,514 149,514` 171,193 171,193 284,180
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
80
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 577 577 100,577 620 620 100,620 663 663 100,663
2 1,000 2,153 1,134 1,134 101,134 1,256 1,256 101,256 1,383 1,383 101,383
3 1,000 3,310 1,670 1,670 101,670 1,907 1,907 101,907 2,165 2,165 102,165
4 1,000 4,526 2,183 2,183 102,183 2,572 2,572 102,572 3,012 3,012 103,013
5 1,000 5,802 2,670 2,670 102,671 3,248 3,248 103,249 3,930 3,930 103,930
6 1,000 7,142 3,131 3,131 103,131 3,934 3,934 103,935 4,921 4,921 104,922
7 1,000 8,549 3,562 3,562 103,563 4,629 4,629 104,629 5,994 5,994 105,994
8 1,000 10,027 4,024 4,024 104,024 5,393 5,393 105,394 7,220 7,220 107,220
9 1,000 11,578 4,457 4,457 104,457 6,169 6,169 106,170 8,551 8,551 108,551
10 1,000 13,207 4,860 4,860 104,861 6,957 6,957 106,957 9,997 9,997 109,997
11 1,000 14,917 5,248 5,248 105,248 7,775 7,775 107,775 11,598 11,598 111,598
12 1,000 16,713 5,606 5,606 105,607 8,607 8,607 108,607 13,345 13,345 113,346
13 1,000 18,599 5,936 5,936 105,936 9,453 9,453 109,453 15,253 15,253 115,254
14 1,000 20,579 6,233 6,233 106,234 10,310 10,310 110,311 17,337 17,337 117,337
15 1,000 22,657 6,497 6,497 106,498 11,178 11,178 111,178 19,612 19,612 119,612
16 1,000 24,840 6,725 6,725 106,726 12,052 12,052 112,053 22,096 22,096 122,096
17 1,000 27,132 6,915 6,915 106,916 12,932 12,932 112,932 24,809 24,809 124,810
18 1,000 29,539 7,065 7,065 107,065 13,814 13,814 113,814 27,773 27,773 127,773
19 1,000 32,066 7,167 7,167 107,168 14,691 14,691 114,691 31,006 31,006 131,007
20 1,000 34,719 7,223 7,223 107,223 15,563 15,563 115,563 34,538 34,538 134,538
@ 65 1,000 69,761 4,168 4,168 104,169 23,882 23,882 123,882 104,286 104,286 204,286
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
81
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 738 738 101,000 787 787 101,000 836 836 101,000
2 1,000 2,153 1,462 1,462 102,000 1,605 1,605 102,000 1,755 1,755 102,000
3 1,000 3,310 2,170 2,170 103,000 2,456 2,456 103,000 2,766 2,766 103,000
4 1,000 4,526 2,862 2,862 104,000 3,339 3,339 104,000 3,877 3,877 104,000
5 1,000 5,802 3,537 3,537 105,000 4,255 4,255 105,000 5,097 5,097 105,000
6 1,000 7,142 4,194 4,194 106,000 5,203 5,203 106,000 6,436 6,436 106,000
7 1,000 8,549 4,830 4,830 107,000 6,184 6,184 107,000 7,906 7,906 107,000
8 1,000 10,027 5,514 5,514 108,000 7,270 7,270 108,000 9,595 9,595 108,000
9 1,000 11,578 6,172 6,172 109,000 8,390 8,390 109,000 11,447 11,447 109,000
10 1,000 13,207 6,804 6,804 110,000 9,544 9,544 110,000 13,477 13,477 110,000
11 1,000 14,917 7,464 7,464 111,000 10,796 10,796 111,000 15,781 15,781 111,000
12 1,000 16,713 8,098 8,098 112,000 12,091 12,091 112,000 18,316 18,316 112,000
13 1,000 18,599 8,704 8,704 113,000 13,429 13,429 113,000 21,108 21,108 113,000
14 1,000 20,579 9,280 9,280 114,000 14,809 14,809 114,000 24,182 24,182 114,000
15 1,000 22,657 9,825 9,825 115,000 16,233 16,233 115,000 27,570 27,570 115,000
16 1,000 24,840 10,337 10,337 116,000 17,701 17,701 116,000 31,306 31,306 116,000
17 1,000 27,132 10,814 10,814 117,000 19,214 19,214 117,000 35,426 35,426 117,000
18 1,000 29,539 11,254 11,254 118,000 20,772 20,772 118,000 39,975 39,975 118,000
19 1,000 32,066 11,654 11,654 119,000 22,375 22,375 119,000 44,997 44,997 119,000
20 1,000 34,719 12,011 12,011 120,000 24,022 24,022 120,000 50,548 50,548 120,000
@ 65 1,000 69,761 11,529 11,529 131,000 44,643 44,643 131,000 163,874 163,874 272,032
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
26.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
82
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 531 531 101,000 572 572 101,000 614 614 101,000
2 1,000 2,153 1,039 1,039 102,000 1,155 1,155 102,000 1,277 1,277 102,000
3 1,000 3,310 1,523 1,523 103,000 1,747 1,747 103,000 1,992 1,992 103,000
4 1,000 4,526 1,981 1,981 104,000 2,346 2,346 104,000 2,761 2,761 104,000
5 1,000 5,802 2,408 2,408 105,000 2,949 2,949 105,000 3,588 3,588 105,000
6 1,000 7,142 2,804 2,804 106,000 3,553 3,553 106,000 4,476 4,476 106,000
7 1,000 8,549 3,165 3,165 107,000 4,155 4,155 107,000 5,428 5,428 107,000
8 1,000 10,027 3,550 3,550 108,000 4,817 4,817 108,000 6,517 6,517 108,000
9 1,000 11,578 3,894 3,894 109,000 5,474 5,474 109,000 7,686 7,686 109,000
10 1,000 13,207 4,197 4,197 110,000 6,126 6,126 110,000 8,945 8,945 110,000
11 1,000 14,917 4,467 4,467 111,000 6,784 6,784 111,000 10,324 10,324 111,000
12 1,000 16,713 4,691 4,691 112,000 7,433 7,433 112,000 11,814 11,814 112,000
13 1,000 18,599 4,865 4,865 113,000 8,067 8,067 113,000 13,425 13,425 113,000
14 1,000 20,579 4,987 4,987 114,000 8,684 8,684 114,000 15,168 15,168 114,000
15 1,000 22,657 5,052 5,052 115,000 9,278 9,278 115,000 17,054 17,054 115,000
16 1,000 24,840 5,055 5,055 116,000 9,842 9,842 116,000 19,097 19,097 116,000
17 1,000 27,132 4,985 4,985 117,000 10,366 10,366 117,000 21,307 21,307 117,000
18 1,000 29,539 4,835 4,835 118,000 10,839 10,839 118,000 23,697 23,697 118,000
19 1,000 32,066 4,593 4,593 119,000 11,246 11,246 119,000 26,282 26,282 119,000
20 1,000 34,719 4,245 4,245 120,000 11,573 11,573 120,000 29,077 29,077 120,000
@ 65 1,000 69,761 -- -- -- 4,293 4,293 131,000 83,148 83,148 138,027
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
26.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
83
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 766 766 101,000 816 816 101,000 865 865 101,000
2 1,000 2,153 1,516 1,516 102,000 1,663 1,663 102,000 1,816 1,816 102,000
3 1,000 3,310 2,248 2,248 103,000 2,541 2,541 103,000 2,859 2,859 103,000
4 1,000 4,526 2,962 2,962 104,000 3,452 3,452 104,000 4,004 4,004 104,000
5 1,000 5,802 3,656 3,656 105,000 4,394 4,394 105,000 5,260 5,260 105,000
6 1,000 7,142 4,330 4,330 106,000 5,369 5,369 106,000 6,637 6,637 106,000
7 1,000 8,549 4,983 4,983 107,000 6,376 6,376 107,000 8,146 8,146 107,000
8 1,000 10,027 5,682 5,682 108,000 7,489 7,489 108,000 9,879 9,879 108,000
9 1,000 11,578 6,358 6,358 109,000 8,639 8,639 109,000 11,781 11,781 109,000
10 1,000 13,207 7,012 7,012 110,000 9,829 9,829 110,000 13,871 13,871 110,000
11 1,000 14,917 7,695 7,695 111,000 11,121 11,121 111,000 16,242 16,242 111,000
12 1,000 16,713 8,358 8,358 112,000 12,463 12,463 112,000 18,859 18,859 112,000
13 1,000 18,599 9,002 9,002 113,000 13,859 13,859 113,000 21,748 21,748 113,000
14 1,000 20,579 9,626 9,626 114,000 15,310 15,310 114,000 24,940 24,940 114,000
15 1,000 22,657 10,229 10,229 115,000 16,820 16,820 115,000 28,466 28,466 115,000
16 1,000 24,840 10,811 10,811 116,000 18,388 18,388 116,000 32,364 32,364 116,000
17 1,000 27,132 11,370 11,370 117,000 20,018 20,018 117,000 36,673 36,673 117,000
18 1,000 29,539 11,904 11,904 118,000 21,710 21,710 118,000 41,438 41,438 118,000
19 1,000 32,066 12,412 12,412 119,000 23,467 23,467 119,000 46,708 46,708 119,000
20 1,000 34,719 12,892 12,892 120,000 25,289 25,289 120,000 52,539 52,539 120,000
@ 65 1,000 69,761 15,626 15,626 131,000 50,269 50,269 131,000 173,758 173,758 288,440
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
33.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
84
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 576 576 101,000 619 619 101,000 662 662 101,000
2 1,000 2,153 1,132 1,132 102,000 1,254 1,254 102,000 1,382 1,382 102,000
3 1,000 3,310 1,666 1,666 103,000 1,904 1,904 103,000 2,162 2,162 103,000
4 1,000 4,526 2,176 2,176 104,000 2,566 2,566 104,000 3,008 3,008 104,000
5 1,000 5,802 2,659 2,659 105,000 3,239 3,239 105,000 3,922 3,922 105,000
6 1,000 7,142 3,114 3,114 106,000 3,920 3,920 106,000 4,910 4,910 106,000
7 1,000 8,549 3,537 3,537 107,000 4,607 4,607 107,000 5,978 5,978 107,000
8 1,000 10,027 3,989 3,989 108,000 5,364 5,364 108,000 7,200 7,200 108,000
9 1,000 11,578 4,409 4,409 109,000 6,130 6,130 109,000 8,527 8,527 109,000
10 1,000 13,207 4,798 4,798 110,000 6,906 6,906 110,000 9,970 9,970 110,000
11 1,000 14,917 5,166 5,166 111,000 7,710 7,710 111,000 11,569 11,569 111,000
12 1,000 16,713 5,503 5,503 112,000 8,526 8,526 112,000 13,317 13,317 112,000
13 1,000 18,599 5,807 5,807 113,000 9,353 9,353 113,000 15,230 15,230 113,000
14 1,000 20,579 6,073 6,073 114,000 10,190 10,190 114,000 17,323 17,323 114,000
15 1,000 22,657 6,301 6,301 115,000 11,033 11,033 115,000 19,616 19,616 115,000
16 1,000 24,840 6,487 6,487 116,000 11,880 11,880 116,000 22,128 22,128 116,000
17 1,000 27,132 6,628 6,628 117,000 12,729 12,729 117,000 24,884 24,884 117,000
18 1,000 29,539 6,720 6,720 118,000 13,576 13,576 118,000 27,909 27,909 118,000
19 1,000 32,066 6,756 6,756 119,000 14,414 14,414 119,000 31,228 31,228 119,000
20 1,000 34,719 6,733 6,733 120,000 15,241 15,241 120,000 34,877 34,877 120,000
@ 65 1,000 69,761 1,497 1,497 131,000 22,481 22,481 131,000 110,980 110,980 184,228
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
33.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
85
<PAGE>
PHOENIX
EXECUTIVE BENEFIT
DEVELOPED FOR CLARK BARDES
VARIABLE UNIVERSAL LIFE
INSURANCE POLICY
Issued by
PHOENIX HOME LIFE
MUTUAL INSURANCE COMPANY
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT US AT:
[envelope] ANDESA TPA, INC.
1605 N CEDAR CREST BLVD, SUITE 502
ALLENTOWN, PA 18104
[telephone] 610/439-5256
PROSPECTUS
This Prospectus describes an individual flexible premium variable universal life
insurance policy. The Policy provides lifetime insurance protection for as long
as it remains in force.
You may allocate net premiums and cash value to one or more of the Subaccounts
of the VUL Account and the Guaranteed Interest Account. The assets of each
Subaccount will be used to purchase, at Net Asset Value, shares of a series in
the following designated underlying Funds.
THE PHOENIX EDGE SERIES FUND
- ----------------------------
MANAGED BY PHOENIX INVESTMENT COUNSEL, INC.
[diamond] Phoenix Research Enhanced Index Series
[diamond] Phoenix-Aberdeen International Series
[diamond] Phoenix-Engemann Nifty Fifty Series
[diamond] Phoenix-Goodwin Balanced Series
[diamond] Phoenix-Goodwin Growth Series
[diamond] Phoenix-Goodwin Money Market Series
[diamond] Phoenix-Goodwin Multi-Sector Fixed Income Series
[diamond] Phoenix-Goodwin Strategic Allocation Series
[diamond] Phoenix-Goodwin Strategic Theme Series
[diamond] Phoenix-Hollister Value Equity Series
[diamond] Phoenix-Oakhurst Growth and Income Series
[diamond] Phoenix-Schafer Mid-Cap Value Series
[diamond] Phoenix-Seneca Mid-Cap Growth Series
MANAGED BY PHOENIX-ABERDEEN INTERNATIONAL ADVISORS, LLC
[diamond] Phoenix-Aberdeen New Asia Series
MANAGED BY DUFF & PHELPS INVESTMENT MANAGEMENT CO.
[diamond] Phoenix-Duff & Phelps Real Estate Securities Series
BT INSURANCE FUNDS TRUST
- ------------------------
MANAGED BY BANKERS TRUST COMPANY
[diamond] EAFE[registered trademark] Equity Index Fund
FEDERATED INSURANCE SERIES
- --------------------------
MANAGED BY FEDERATED INVESTMENT MANAGEMENT COMPANY
[diamond] Federated Fund for U.S. Government Securities II
[diamond] Federated High Income Bond Fund II
TEMPLETON VARIABLE PRODUCTS SERIES FUND
- ---------------------------------------
MANAGED BY TEMPLETON INVESTMENT COUNSEL, INC.
[diamond] Templeton Asset Allocation Fund -- Class 2
[diamond] Templeton International Fund -- Class 2
[diamond] Templeton Stock Fund -- Class 2
MANAGED BY TEMPLETON ASSET MANAGEMENT, LTD.
[diamond] Templeton Developing Markets Fund -- Class 2
MANAGED BY FRANKLIN MUTUAL ADVISERS, INC.
[diamond] Mutual Shares Investments Fund -- Class 2
WANGER ADVISORS TRUST
- ---------------------
MANAGED BY WANGER ASSET MANAGEMENT, L.P.
[diamond] Wanger Foreign Forty
[diamond] Wanger International Small Cap
[diamond] Wanger Twenty
[diamond] Wanger U.S. Small Cap
1
<PAGE>
IT MAY NOT BE IN YOUR BEST INTEREST TO PURCHASE A POLICY TO REPLACE AN
EXISTING LIFE INSURANCE POLICY OR ANNUITY CONTRACT. YOU MUST UNDERSTAND THE
BASIC FEATURES OF THE PROPOSED POLICY AND YOUR EXISTING COVERAGE BEFORE YOU
DECIDE TO REPLACE YOUR PRESENT COVERAGE. YOU MUST ALSO KNOW IF THE REPLACEMENT
WILL RESULT IN ANY TAXES.
THE POLICY IS NOT A DEPOSIT OR OBLIGATION OF, UNDERWRITTEN OR GUARANTEED BY,
ANY FINANCIAL INSTITUTION OR CREDIT UNION. IT IS NOT FEDERALLY INSURED OR
ENDORSED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER STATE OR
FEDERAL AGENCY. POLICY INVESTMENTS ARE SUBJECT TO RISK, INCLUDING THE
FLUCTUATION OF POLICY VALUES AND POSSIBLE LOSS OF PRINCIPAL INVESTED OR PREMIUMS
PAID.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES, NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED OR PRECEDED BY CURRENT
PROSPECTUSES FOR THE FUNDS. YOU SHOULD READ AND KEEP THESE PROSPECTUSES FOR
FUTURE REFERENCE.
2
<PAGE>
TABLE OF CONTENTS
Heading Page
- --------------------------------------------------------------------------------
PART I--GENERAL POLICY PROVISIONS.......................................... 6
SUMMARY ............................................................... 6
Availability....................................................... 6
Underwriting....................................................... 6
Charges Under the Policy........................................... 6
Deductions From Premiums........................................... 8
Sales Charge................................................... 8
State Premium Tax Charge....................................... 8
Deferred Acquisition Cost ("DAC") Tax Charge................... 8
Policy Value Charges............................................... 8
Administrative Charge.......................................... 8
Cost of Insurance.............................................. 8
Mortality and Expense Risk Fee................................. 8
Rider Charge................................................... 8
Charges for Federal Income Taxes............................... 8
Fund Charges................................................... 8
Other Charges...................................................... 10
Partial Surrender Fee.......................................... 10
Loan Interest Rate Expense Charge.............................. 10
Reduction in Charges............................................... 10
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY AND THE VUL ACCOUNT......... 11
Phoenix............................................................ 11
The VUL Account.................................................... 11
PERFORMANCE HISTORY.................................................... 11
INVESTMENTS OF THE VUL ACCOUNT......................................... 11
Participating Investment Funds..................................... 11
The Phoenix Edge Series Fund................................... 11
BT Insurance Funds Trust....................................... 12
Federated Insurance Series..................................... 12
Templeton Variable Products Series Fund........................ 12
Wanger Advisors Trust.......................................... 13
Investment Advisors................................................ 13
Services of the Advisors........................................... 14
Reinvestment and Redemption........................................ 14
Substitution of Investments........................................ 14
The Guaranteed Interest Account.................................... 14
PREMIUMS............................................................... 15
Minimum Premiums................................................... 15
Allocation of Issue Premium........................................ 15
Free Look Period................................................... 15
Account Value...................................................... 16
Transfer of Policy Value....................................... 16
Systematic Transfers for Dollar Cost Averaging................. 16
Automatic Asset Re-Balancing....................................... 16
Determination of Subaccount Values................................. 16
Death Benefit Under the Policy..................................... 17
Minimum Face Amount............................................ 17
Death Benefit Options.......................................... 17
Changes in Face Amount of Insurance................................ 18
Requests for Increase in Face Amount........................... 18
3
<PAGE>
Decreases in Face Amount and Partial Surrender: Effect on
Death Benefit...................................................... 18
Requests for Decrease in Face Amount........................... 18
Surrenders......................................................... 18
General........................................................ 18
Full Surrenders................................................ 18
Partial Surrenders............................................. 18
Policy Loans....................................................... 19
Source of Loan................................................. 19
Interest....................................................... 19
Interest Credited on Loaned Value.............................. 19
Repayment...................................................... 19
Effect of Loan................................................. 19
Lapse.............................................................. 19
Additional Insurance Option........................................ 20
Additional Rider Benefits.......................................... 20
PART II--ADDITIONAL POLICY PROVISIONS...................................... 20
Postponement of Payments........................................... 20
Payment by Check................................................... 20
The Contract....................................................... 21
Suicide............................................................ 21
Incontestability................................................... 21
Change of Owner or Beneficiary..................................... 21
Assignment......................................................... 21
Misstatement of Age or Sex......................................... 21
Surplus............................................................ 21
PAYMENT OF PROCEEDS.................................................... 21
Surrender and Death Benefit Proceeds............................... 21
Payment Options.................................................... 21
Option 1--Lump sum............................................. 21
Option 2--Left to earn interest................................ 21
Option 3--Payment for a specific period........................ 21
Option 4--Life annuity with specified period certain........... 22
Option 5--Life annuity......................................... 22
Option 6--Payments of a specified amount....................... 22
Option 7--Joint survivorship annuity with 10-year
period certain....................................... 22
PART III--OTHER IMPORTANT INFORMATION...................................... 22
FEDERAL TAX CONSIDERATIONS............................................. 22
Introduction....................................................... 22
Phoenix's Tax Status............................................... 22
Policy Benefits.................................................... 23
Death Benefit Proceeds......................................... 23
Full Surrender................................................. 23
Partial Surrender.............................................. 23
Loans.......................................................... 23
Business-Owned Policies............................................ 23
Modified Endowment Contracts....................................... 23
General........................................................ 23
Reduction in Benefits During the First Seven Years............. 24
Distributions Affected......................................... 24
Penalty Tax.................................................... 24
Material Change Rules.......................................... 24
Serial Purchase of Modified Endowment Contracts................ 24
Limitations on Unreasonable Mortality and Expense Charges.......... 24
Diversification Standards.......................................... 24
Change of Ownership or Insured or Assignment....................... 25
Other Taxes........................................................ 25
VOTING RIGHTS ......................................................... 25
4
<PAGE>
THE DIRECTORS AND EXECUTIVE OFFICERS OF PHOENIX........................ 26
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS ............................... 27
SALES OF POLICIES ..................................................... 27
STATE REGULATION ...................................................... 27
REPORTS ............................................................... 27
LEGAL PROCEEDINGS ..................................................... 27
LEGAL MATTERS ......................................................... 27
REGISTRATION STATEMENT ................................................ 28
YEAR 2000 ISSUE........................................................ 28
FINANCIAL STATEMENTS .................................................. 28
APPENDIX A--GLOSSARY OF SPECIAL TERMS.................................. 68
APPENDIX B--PERFORMANCE HISTORY........................................ 69
APPENDIX C--ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES ("ACCOUNT
VALUES") AND CASH SURRENDER VALUES..................................... 73
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.
5
<PAGE>
PART I--GENERAL POLICY PROVISIONS
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
This is a summary that describes the general provisions of the policy.
Certain provisions of the policy described in this prospectus may differ in
a particular state because of specific state requirements.
Throughout the prospectus, Phoenix Home Life Mutual Insurance Company is
referred to as Phoenix, we, us, or our and the policyholder is referred to as
you or your.
We define the following terms in the Glossary of Appendix A:
ATTAINED AGE POLICY ANNIVERSARY
BENEFICIARY POLICY DATE
DEBT POLICY VALUE
FUNDS POLICY YEAR
GENERAL ACCOUNT SERIES
ISSUE PREMIUM SUBACCOUNTS
MONTHLY CALCULATION DATE TARGET PREMIUM
NET ASSET VALUE VALUATION DATE
PAYMENT DATE VALUATION PERIOD
PLANNED ANNUAL PREMIUM VUL ACCOUNT (ACCOUNT)
If there is ever a difference between the provisions within this prospectus
and the provisions of the policy, the policy provisions will control.
AVAILABILITY
The policy is available on a "case" basis. We may consider one person as a
case. All policies within a case are aggregated for purposes of determining
policy dates, loan rates and underwriting requirements. If an individual owns
the policy as part of a case, he or she may exercise all rights under the policy
through their employer or sponsoring organization. After termination of
employment or other such relationship, the individual may exercise such rights
directly with us.
For fully underwritten policies, the age of the insured at the time of issue
generally must be between ages 18 through 85 as of his or her birthday nearest
the Policy Anniversary.
For policies that are underwritten using simplified or guaranteed issue
programs, generally the maximum age of the insured at the time of issue is age
70 for simplified and 64 for guaranteed issue.
The minimum face amount of insurance per policy issued is $50,000.
You can purchase a Policy to insure the life of another person provided that
you have an insurable interest in that life and the prospective Insured
consents.
UNDERWRITING
Currently, we offer three types of underwriting:
[diamond] fully underwritten;
[diamond] simplified issue underwriting; and
[diamond] guaranteed issue underwriting.
Your cost of insurance charges will vary based on the type of underwriting
we use.
CHARGES UNDER THE POLICY
We deduct certain charges from your Policy to compensate us for:
1. our expenses in selling the Policy;
2. underwriting and issuing the Policy;
3. premium and federal taxes incurred on premiums received;
4. providing insurance benefits under your Policy; and
5. assuming certain risks in connection with the Policy.
These charges are summarized below. These charges are described more fully
following this chart.
6
<PAGE>
<TABLE>
CHARGES UNDER THE POLICY
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CHARGES CURRENT RATE GUARANTEED RATE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DEDUCTIONS FROM SALES CHARGE Policy years 1 - 7: 5.0% of premiums up Policy years 1 - 7: 5.0% of premiums up
PREMIUMS to the Target Premium and 0% on amounts to the Target Premium and 3.0% on
in excess of the Target Premium. amounts in excess of the Target Premium.
Policy year 8+: 0% of all premiums. Policy year 8+: 2.0% of all premiums.
----------------------------------------------------------------------------------------------------------
STATE PREMIUM 0.75% to 4.0% of each premium up to This charge will always equal the
TAX the Target Premium depending on your applicable state rate.
state's applicable rate.
----------------------------------------------------------------------------------------------------------
DEFERRED ACQUISITION 1.5% of each premium up to the This charge will always equal the
COST TAX CHARGE Target Premium. actual cost to Us for the DAC tax.
(DAC TAX)
- ---------------------------------------------------------------------------------------------------------------------------------
POLICY VALUE CHARGES ADMINISTRATIVE CHARGE $5 per month ($60 annually) $10 per month ($120 annually) except
New York, $7.50 per month ($90
annually)
- ---------------------------------------------------------------------------------------------------------------------------------
COST OF INSURANCE A per thousand rate multiplied by the The maximum monthly cost of insurance
CHARGE amount at risk each month. This charge charge for each $1,000 of insurance is
varies by the Insured's issue age, shown on your policy's schedule pages.
policy duration, gender and
underwriting class.
----------------------------------------------------------------------------------------------------------
MORTALITY AND EXPENSE 0.40% annually in policy years 1-10 0.90% annually in all policy years
RISK CHARGE 0.25% annually in policy years 11+
----------------------------------------------------------------------------------------------------------
FUND CHARGES SEE FUND CHARGE TABLE SEE FUND CHARGE TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER CHARGES PARTIAL SURRENDER FEE None 2.0% of the amount withdrawn, but not
greater than $25.
- ---------------------------------------------------------------------------------------------------------------------------------
TRANSFERS BETWEEN None $10 per transfer after the first 2
SUBACCOUNTS transfers in any given policy year,
(after 12 transfers in New York).
----------------------------------------------------------------------------------------------------------
LOAN INTEREST RATE The rates in effect before the 16th The Guaranteed rates before the Insured
CHARGED policy year and before the Insured reaches 65 for all states are:
reaches age 65 in all states except New Policy year 1 - 10: 4.75%
York and New Jersey are: Policy year 11 - 15: 4.50%
Policy year 1 - 10: 2.75% Policy year 16+: 4.25%
Policy year 11 - 15: 2.50%
Policy year 16+: 2.25%
The rates in effect before the 16th
policy year and before the Insured
reaches age 65 in New York and New
Jersey are:
Policy year 1 - 10: 4.75%
Policy year 11 - 15: 4.50%
Policy year 16+: 4.25%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
DEDUCTIONS FROM PREMIUMS
Before we allocate your premium to the Subaccounts or the Guaranteed
Interest Account we deduct a sales charge, a state premium tax and a federal tax
to cover the estimated cost to us for deferred acquisition costs.
SALES CHARGE
We deduct a sales charge from your premium for the costs we incur in the
sales and distribution of the policies. We will refund a portion of the sales
charge to you as part of the cash surrender value if you surrender your policy
within the first three policy years according to the following schedule:
Policy Year 1: 100.00%
Policy Year 2: 66.67%
Policy Year 3: 33.33%
STATE PREMIUM TAX CHARGE
States assess premium taxes at various rates. We deduct the applicable state
rate from each premium to cover the cost of the premium taxes assessed against
us by the state.
We may increase or decrease this charge if there is a change in the tax or
change of residence.
DEFERRED ACQUISITION COST ("DAC") TAX CHARGE
This tax is associated with our federal tax liability under Internal Revenue
Code Section 848.
POLICY VALUE CHARGES
On each Monthly Calculation Day, we deduct from your policy value the
following charges:
1. Administrative Charge
2. Cost of Insurance Charge
3. Mortality and Expense Risk Fee
4. A charge for the cost of riders if applicable
The amount deducted is allocated among the Subaccounts and the unloaned
portion of the Guaranteed Interest Account based on an allocation schedule
specified by you. You initially choose this schedule in your application.
1. ADMINISTRATIVE CHARGE
We assess a monthly charge for the expenses we incur in administering the
policy. This charge reimburses us for the cost of daily administration for
services such as billing and collections, monthly processing, updating daily
values and communicating with policyholders.
2. COST OF INSURANCE
We deduct a charge to cover the cost of insurance coverage on each monthly
calculation date. This charge is based on:
[diamond] Insured's gender;
[diamond] Insured's age at issue;
[diamond] Policy year in which we make the deduction;
[diamond] Insured's tobacco use classification;
[diamond] Rating class of the policy; and
[diamond] Underwriting classification of the case.
To determine the monthly cost of insurance, we multiply the appropriate cost
of insurance rate by the difference between your Policy's death benefit and the
policy value. Any change in the cost of insurance rates will apply to all
persons of the same sex, insurance age and risk class whose policies have been
in force for the same length of time.
3. MORTALITY AND EXPENSE RISK FEE
We charge the Subaccounts for the mortality and expense risks we assume.
This charge is deducted from the value of each Subaccount's assets attributable
to the policies.
The mortality risk we assume is that the group of lives we insure under our
policies may, on average, live for a shorter period of time than we estimated.
The expense risk we assume is that our cost of issuing and administering the
policies may be more than we estimated.
If all the money we collect from this charge is not required to cover the
cost of death benefits and other expenses, it will be a gain to us. If the money
we collect is not enough to cover our costs, we will still provide for death
benefits and expenses.
4. RIDER CHARGE
We will deduct any applicable monthly rider charges for the additional
benefit provided to you by the rider.
CHARGES FOR FEDERAL INCOME TAXES
We currently do not charge the VUL Account for federal income taxes
attributable to it. In the future, we may charge to cover these or any other tax
liability of the VUL Account.
FUND CHARGES
Please refer to the following chart for a listing of Fund Charges.
8
<PAGE>
ANNUAL FUND EXPENSES FOR THE YEAR ENDING DECEMBER 31, 1998 AFTER REIMBURSEMENT
<TABLE>
<CAPTION>
INVESTMENT OTHER OPERATING TOTAL ANNUAL
SERIES MANAGEMENT FEE RULE 12b-1 FEES EXPENSES FUND EXPENSES(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Phoenix Research Enhanced Index .45% 0% .10% .55%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International .75% 0% .23% .98%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia 1.00% 0% .25% 1.25%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate Securities .75% 0% .25% 1.00%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty .90% 0% .15% 1.05%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Balanced .55% 0% .13% .68%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Growth .62% 0% .07% .69%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market .40% 0% .15% .55%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income .50% 0% .14% .64%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Allocation .58% 0% .10% .68%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Theme .75% 0% .24% .99%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity .70% 0% .15% .85%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income .70% 0% .15% .85%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value 1.05% 0% .15% 1.20%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth .80% 0% .25% 1.05%
- --------------------------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index 0% 0% .65% .65%
- --------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond .60% 0% .18% .78%
- --------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities .52% 0% .33% .85%
- --------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments (Templeton) 0% .25% 1.00% 1.25%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation .60% .25% .18% 1.03%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets 1.25% .25% .41% 1.91%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton International .69% .25% .17% 1.11%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Stock .70% .25% .19% 1.14%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty .95% 0% .50% 1.45%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap 1.27% 0% .28% 1.55%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger Twenty .90% 0% .45% 1.35%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Small Cap .96% 0% .06% 1.02%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Each Series pays a portion or all of its total annual expenses other than
the management fee. The Phoenix Research Enhanced Index Series will pay up
to .10%; the Phoenix-Goodwin Growth, Phoenix-Goodwin Multi-Sector Fixed
Income, Phoenix-Goodwin Strategic Allocation, Phoenix-Goodwin Money Market,
Phoenix-Goodwin Balanced, Phoenix-Engemann Nifty Fifty, Phoenix-Oakhurst
Growth and Income, Phoenix-Hollister Value Equity and Phoenix-Schafer
Mid-Cap Value Series will pay up to .15%; the Phoenix-Duff & Phelps Real
Estate Securities, Phoenix-Goodwin Strategic Theme, Phoenix-Aberdeen New
Asia and Phoenix-Seneca Mid-Cap Growth Series will pay up to .25%; and the
Phoenix-Aberdeen International Series will pay up to .40% for the fiscal
year ending December 31, 1998. Absent expense reimbursement, Total Annual
Expenses were:
<TABLE>
<S> <C> <C> <C> <C>
Phoenix Research Enhanced Index .82% Phoenix-Goodwin Multi-Sector Fixed Income .64%
Phoenix-Aberdeen International .98% Phoenix-Goodwin Strategic Allocation .68%
Phoenix-Aberdeen New Asia 2.50% Phoenix-Goodwin Strategic Theme .99%
Phoenix-Duff & Phelps Real Estate Securities 1.01% Phoenix-Hollister Value Equity 2.46%
Phoenix-Engemann Nifty Fifty 2.58% Phoenix-Oakhurst Growth and Income 1.46%
Phoenix-Goodwin Balanced .68% Phoenix-Schafer Mid-Cap Value 2.77%
Phoenix-Goodwin Growth .69% Phoenix-Seneca Mid-Cap Growth 2.81%
Phoenix-Goodwin Money Market .55%
</TABLE>
The Wanger Foreign Forty will pay up to .45%, the Wanger U.S. Small Cap
Series will pay up to .50%, the Wanger International Small Cap will pay up
to .60%, and the Wanger Twenty will pay up to .40%. Absent expense
reimbursement, Total Annual Expenses are estimated to be approximately 1.45%
for Wanger Foreign Forty, 1.55% for Wanger International Small Cap, 1.35%
for Wanger Twenty and 1.02% for Wanger U.S. Small Cap for the fiscal year
ending December 31, 1999. Expenses may be higher or lower than those shown
but are subject to expense limitations as noted.
9
<PAGE>
OTHER CHARGES
PARTIAL SURRENDER FEE
We reserve the right to deduct a charge from each withdrawal.
LOAN INTEREST RATE EXPENSE CHARGE
We deduct a charge from the loan interest rate. This charge reimburses us
for expenses we incur in administering your loan. This rate varies by policy
year.
REDUCTION IN CHARGES
The Policy is available for purchase by individuals, corporations and other
groups. For group or sponsored arrangements (including our employees and their
family members) and for special exchange programs that we may make available, we
reserve the right to reduce or eliminate the sales load, mortality and expense
risk charge, monthly administrative charge, monthly cost of insurance charges
or other charges normally assessed on certain multiple life cases where it is
expected that the size or nature of such cases will result in savings of sales,
underwriting, administrative or other costs.
Eligibility for the amount of these reductions will be determined by a
number of factors, including the number of Insureds, the total premium expected
to be paid, the total assets under management for the Policyowner, the nature of
the relationship among individual Insureds, the purpose for which the Policies
are being purchased, the expected persistency of individual Policies, and other
circumstances which in our opinion are rationally related to the expected
reduction in expenses. Any variations in the charge structure will be determined
in a uniform manner reflecting differences in costs of services and not unfairly
discriminatory to policyholders.
10
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY AND THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PHOENIX
We are a mutual life insurance company originally chartered in Connecticut
in 1851 and redomiciled to New York in 1992. Our executive office is at One
American Row, Hartford, Connecticut 06102-5056 and our main administrative
office is at 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-1900. Our
New York principal office is at 10 Krey Boulevard, East Greenbush, New York
12144. We sell insurance policies and annuity contracts through our own field
force of full-time agents and through brokers.
THE VUL ACCOUNT
The VUL Account is a separate account of Phoenix, established 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 (the "1940 Act"), as
amended, and meets the definition of a "separate account" under that Act. This
registration does not involve supervision of the management of the VUL Account
or Phoenix by the SEC.
The VUL Account is divided into Subaccounts each of which is available for
allocation of policy value. Each Subaccount will invest solely in shares of a
specific series of a mutual fund. In the future, we may establish additional
Subaccounts which will be made available to existing Policyowners to the extent
and on a basis decided by us. See "Investments of the VUL Account--Participating
Investment Funds."
We do not guarantee the investment performance of the VUL Account or any of
its Subaccounts. Contributions to the overall policy value allocated to the VUL
Account depend on the chosen Fund's investment performance. Thus, you bear the
full investment risk for all monies invested in the VUL Account.
The VUL Account is part of the general business of Phoenix, but the gains or
losses of the VUL Account belong solely to the VUL Account. The gains or losses
of any other business we may conduct do not affect the VUL Account. Under New
York law, the assets of the VUL Account may not be taken to pay liabilities
arising out of any other business we may conduct. Nevertheless, all obligations
arising under the Policy are general corporate obligations of Phoenix.
PERFORMANCE HISTORY
- --------------------------------------------------------------------------------
We may include the performance history of the VUL Account 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. See "Appendix B" for more information.
INVESTMENTS OF THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PARTICIPATING INVESTMENT FUNDS
THE PHOENIX EDGE SERIES FUND
Certain Subaccounts invest in corresponding Series of The Phoenix Edge
Series Fund. The following Series are currently available:
PHOENIX RESEARCH ENHANCED INDEX SERIES: The investment objective of the
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. The Series invests 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.
PHOENIX-ABERDEEN INTERNATIONAL SERIES: The investment objective of the
Series is to seek a high total return consistent with reasonable risk. The
Series invests 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
Phoenix-Aberdeen International Series provides a means for investors to invest a
portion of their assets outside the United States.
PHOENIX-ABERDEEN NEW ASIA SERIES: The investment objective of the Series is
to seek long-term capital appreciation. The Series invests primarily in a
diversified portfolio of equity securities of issuers organized and principally
operating in Asia, excluding Japan.
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES: The investment
objective of the Series is to seek capital appreciation and income with
approximately equal emphasis. Under normal circumstances, it invests 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.
PHOENIX-ENGEMANN NIFTY FIFTY SERIES: The investment objective of the Series
is to seek long-term capital appreciation by investing in approximately 50
different securities which offer 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.
11
<PAGE>
PHOENIX-GOODWIN BALANCED SERIES: The investment objective of the Series is
to seek reasonable income, long-term capital growth and conservation of capital.
The Phoenix-Goodwin Balanced Series invests based on combined considerations of
risk, income, capital enhancement and protection of capital value.
PHOENIX-GOODWIN GROWTH SERIES: The investment objective of the Series is to
achieve intermediate and long-term growth of capital, with income as a secondary
consideration. The Phoenix-Goodwin Growth Series invests principally in common
stocks of corporations believed by management to offer growth potential.
PHOENIX-GOODWIN MONEY MARKET SERIES: The investment objective of the Series
is to provide maximum current income consistent with capital preservation and
liquidity. The Phoenix-Goodwin Money Market Series invests exclusively in high
quality money market instruments.
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES: The investment objective
of the Series is to seek long-term total return. The Phoenix-Goodwin
Multi-Sector Fixed Income Series seeks to achieve its investment objective by
investing in a diversified portfolio of high yield and high quality fixed income
securities.
PHOENIX-GOODWIN STRATEGIC ALLOCATION SERIES: The investment objective of the
Series is to realize as high a level of total return over an extended period of
time as is considered consistent with prudent investment risk. The
Phoenix-Goodwin Strategic Allocation Series invests in stocks, bonds and money
market instruments in accordance with the Investment Advisor's appraisal of
investments most likely to achieve the highest total return.
PHOENIX-GOODWIN STRATEGIC THEME SERIES: The investment objective of the
Series is to seek long-term appreciation of capital by identifying securities
benefiting from long-term trends present in the United States and abroad. The
Phoenix-Goodwin Strategic Theme Series invests primarily in common stocks
believed to have substantial potential for capital growth.
PHOENIX-HOLLISTER VALUE EQUITY SERIES: The primary investment objective of
the Series is long-term capital appreciation, with a secondary investment
objective of current income. The Phoenix-Hollister Value Equity 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.
PHOENIX-OAKHURST GROWTH AND INCOME SERIES: The investment objective of the
Series is to seek dividend growth, current income and capital appreciation by
investing in common stocks. The Phoenix-Oakhurst Growth and Income 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-SCHAFER MID-CAP VALUE SERIES: The primary investment objective of
the Series is to seek long-term capital appreciation, with current income as the
secondary investment objective. The Phoenix-Schafer Mid-Cap Value 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.
PHOENIX-SENECA MID-CAP GROWTH SERIES: The investment objective of the 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.
BT INSURANCE FUNDS TRUST
A certain Subaccount invests in a corresponding Series of the BT Insurance
Funds Trust. The following Series is currently available:
EAFE[registered trademark] EQUITY INDEX FUND: The Series seeks to match the
performance of the Morgan Stanley Capital International EAFE[registered
trademark] Index ("EAFE[registered trademark] Index"), which emphasizes major
market stock performance of companies in Europe, Australia and the Far East. The
Series invests in a statistically selected sample of the securities found in the
EAFE[registered trademark] Index.
FEDERATED INSURANCE SERIES
Certain Subaccounts invest in corresponding Series of the Federated
Insurance Series. The following Series are currently available:
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II: The investment objective
of the Series is to seek current income by investing primarily in U.S.
government securities, including mortgage-backed securities issued by U.S.
government agencies.
FEDERATED HIGH INCOME BOND FUND II: The investment objective of the Series
is to seek high current income by investing primarily in a diversified portfolio
of high-yield, lower-rated corporate bonds.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Certain Subaccounts invest in Class 2 Shares of a corresponding Series of
the Templeton Variable Products Series Fund. The following Series are currently
available:
MUTUAL SHARES INVESTMENT FUND: The primary investment objective of the
Series is capital appreciation with income as a secondary objective. The Mutual
Shares Investments Series invests in domestic equity securities that the manager
believes are significantly undervalued.
TEMPLETON ASSET ALLOCATION FUND: The investment objective of the Series is a
high level of total return. The Templeton Asset Allocation Series invests in
stocks of
12
<PAGE>
companies of any nation, bonds of companies and governments of any nation and in
money market instruments. Changes in the asset mix will be made in an attempt to
capitalize on total return potential produced by changing economic conditions
throughout the world.
TEMPLETON DEVELOPING MARKETS FUND: The investment objective of the Series is
long-term capital appreciation. The Templeton Developing Markets Series invests
primarily in emerging market equity securities.
TEMPLETON INTERNATIONAL FUND: The investment objective of the Series is
long-term capital growth. The Templeton International Series invests primarily
in stocks of companies located outside the United States, including emerging
markets. Any income realized will be incidental. It also may invest in debt
securities of governments and companies located anywhere in the world.
TEMPLETON STOCK FUND: The investment objective of the Series is long-term
capital growth. The Templeton Stock Series invests primarily in common stocks
issued by companies in various nations throughout the world, including the U.S.
and emerging markets.
WANGER ADVISORS TRUST
Certain Subaccounts invest in corresponding Series of the Wanger Advisors
Trust. The following Series are currently available:
WANGER FOREIGN FORTY: The investment objective of the Series is to seek
long-term capital growth. The Wanger Foreign Forty Series invests primarily in
equity securities of foreign companies with market capitalization of $1 billion
to $10 billion and focuses its investments in 40 to 60 companies in the
developed markets.
WANGER INTERNATIONAL SMALL CAP: The investment objective of the Series is to
seek long-term capital growth. The Wanger International Small Cap Series invests
primarily in securities of non-U.S. companies with total common stock market
capitalization of less than $1 billion.
WANGER TWENTY: The investment objective of the Series is to seek long-term
capital growth. The Wanger Twenty Series invests primarily in the stocks of U.S.
companies with market capitalization of $1 billion to $10 billion and ordinarily
focuses its investments in 20 to 25 U.S. companies.
WANGER U.S. SMALL CAP: The investment objective of the Series is to seek
long-term capital growth. The Wanger U.S. Small Cap Series invests primarily in
securities of U.S. companies with total common stock market capitalization of
less than $1 billion.
Each Series will be subject to market fluctuations and the risks that come
with the ownership of any security, and there can be no assurance that any
Series will achieve its stated investment objective.
In addition to being sold to the Account, shares of all of the Funds also
may be sold to other separate accounts of Phoenix or its affiliates and shares
of certain Funds also may be sold to the separate accounts of other insurance
companies.
It is possible that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Fund(s) simultaneously. Although neither Phoenix nor the Fund(s)
trustees currently foresee any such disadvantages either to variable life
insurance Policyowners or to variable annuity Contractowners, the Funds'
trustees intend to monitor events in order to identify any material conflicts
between variable life insurance Policyowners and variable annuity Contractowners
and to determine what action, if any, should be taken in response to such
conflicts. Material conflicts could, for example, result from:
[diamond] changes in state insurance laws;
[diamond] changes in federal income tax laws;
[diamond] changes in the investment management of any portfolio of the Fund(s);
or
[diamond] differences in voting instructions between those given by variable
life insurance Policyowners and those given by variable annuity
Contractowners.
We will, at our expense, remedy such material conflicts including, if
necessary, segregating the assets underlying the variable life insurance
policies and the variable annuity contracts and establishing a new registered
investment company.
INVESTMENT ADVISORS
Phoenix Investment Counsel, Inc. ("PIC") is the investment advisor to all
Series in The Phoenix Edge Series Fund except the Phoenix-Duff & Phelps Real
Estate Securities and Phoenix-Aberdeen New Asia Series. Based on Subadvisory
agreements with the Fund, PIC delegates certain investment decisions and
research functions to subadvisors for the following Series:
[diamond] J.P. Morgan Investment Management, Inc.
[bullet] Phoenix Research Enhanced Index Series
[diamond] Roger Engemann & Associates, Inc. ("Engemann")
[bullet] Phoenix-Engemann Nifty Fifty Series
[diamond] Seneca Capital Management, LLC ("Seneca")
[bullet] Phoenix-Seneca Mid-Cap Growth Series
[diamond] Schafer Capital Management, Inc.
[bullet] Phoenix-Schafer Mid-Cap Value Series
The investment advisor to the Phoenix-Duff & Phelps Real Estate Securities
Series is Duff & Phelps Investment Management Co. ("DPIM").
The investment advisor to the Phoenix-Aberdeen New Asia Series is
Phoenix-Aberdeen International Advisors
13
<PAGE>
LLC ("PAIA"). Pursuant to subadvisory agreements with the Fund, PAIA delegates
certain investment decisions and research functions with respect to the
Phoenix-Aberdeen New Asia Series to PIC and Aberdeen Fund Managers, Inc.
PIC, DPIM, Engemann and Seneca are indirect, less than wholly-owned
subsidiaries of Phoenix. PAIA is jointly owned and managed by PM Holdings, Inc.,
a subsidiary of Phoenix, and by Aberdeen Fund Managers, Inc.
The other investment advisors are:
[diamond] Bankers Trust Company
[bullet] EAFE[registered trademark] Equity Index Fund
[diamond] Federated Investment Management Company
[bullet] Federated Fund for U.S. Government Securities II
[bullet] Federated High Income Bond Fund II
[diamond] Templeton Investment Counsel, Inc.
[bullet] Templeton Asset Allocation Fund
[bullet] Templeton International Fund
[bullet] Templeton Stock Fund
[diamond] Templeton Asset Management, Ltd.
[bullet] Templeton Developing Markets Fund
[diamond] Franklin Mutual Advisers, Inc.
[bullet] Mutual Shares Investments Fund
[diamond] Wanger Asset Management, L.P.
[bullet] Wanger Foreign Forty
[bullet] Wanger International Small Cap
[bullet] Wanger Twenty
[bullet] Wanger U.S. Small Cap
SERVICES OF THE ADVISORS
The Advisors 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 of each Fund. A
detailed discussion of the investment advisors and subadvisors, and the
investment advisory and subadvisory agreements, is contained in the accompanying
prospectus for the Funds.
REINVESTMENT AND REDEMPTION
All dividend distributions of the Fund are automatically reinvested in
shares of the Fund at their net asset value on the date of distribution.
Likewise, all capital gains distributions of the Fund, if any, are reinvested at
the net asset value on the record date. We redeem Fund shares at their net asset
value to the extent necessary to make payments under the Policy.
SUBSTITUTION OF INVESTMENTS
We reserve the right to make additions to, deletions from, or substitutions
for the investments held by the VUL Account, subject to compliance with the law
as currently applicable or as subsequently changed. In the future, we may
establish additional Subaccounts within the VUL Account, each of which will
invest in shares of a designated portfolio of the Fund with a specified
investment objective. If and when marketing needs and investment conditions
warrant, and at our discretion, we may establish additional portfolios. These
will be made available under existing Policies to the extent and on a basis
determined by us.
If shares of any of the portfolios of the Fund should be no longer available
for investment or, if in the judgment of our management, further investment in
shares of any of the portfolios become inappropriate due to Policy objectives,
we may then substitute shares of another mutual fund for shares already
purchased, or to be purchased in the future. No substitution of mutual fund
shares held by the VUL Account may take place without prior approval of the
Securities and Exchange Commission and prior notice to you. In the event of a
change, you will be given the option of transferring the Policy Value of the
Subaccount in which the substitution is to occur to another Subaccount.
THE GUARANTEED INTEREST ACCOUNT
In addition to the VUL Account, you may allocate premium or transfer policy
value to the Guaranteed Interest Account. Amounts you allocate or transfer to
the Guaranteed Interest Account become part of Phoenix's general account assets.
You do not share in the investment experience of those assets. Rather, we
guarantee a 3% rate of return on your allocated amount. For amounts transferred
to the Guaranteed Interest Account due to a policy loan, the guaranteed rate is
2% in all states except New York and New Jersey. In New York and New Jersey the
rate credited to the Guaranteed Interest Account due to a policy loan is 4%.
Although we are not obligated to credit interest at a higher rate than the
minimum, we will credit excess interest, if any, as determined by us based on
information as to expected investment yields.
Because of exemptive and exclusionary provisions, we have not registered
interests in our general account under the Securities Act of 1933. Also, we have
not registered our general account as an investment company under the Investment
Company Act of 1940, as amended. Therefore, neither the general account nor any
of its interests are subject to these Acts, and the Securities and Exchange
Commission has not reviewed the general account disclosures. These disclosures
may, however, be subject to certain provisions of the federal securities law as
to the accuracy and completeness of statements made in this prospectus.
We reserve the right to limit total deposits, including transfers, to the
Guaranteed Interest Account to no more than $250,000 during any one-week period
per policy.
In general, you can make only one transfer per year from the Guaranteed
Interest Account. The amount that can be transferred out is limited to the
greater of $1,000 or 25% of the Policy Value in the Guaranteed Interest Account
as of the date of the transfer. If you elect the
14
<PAGE>
Systematic Transfer Program, approximately equal amounts may be transferred out
of the Guaranteed Interest Account. Also, the total Policy Value allocated to
the Guaranteed Interest Account may be transferred out of the Guaranteed
Interest Account to one or more of the Subaccounts of the VUL Account over a
consecutive four-year period according to the following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of remaining value
[diamond] Year Three: 50% of remaining value
[diamond] Year Four: 100% of remaining value
Transfers into the Guaranteed Interest Account and among the Subaccounts of
the VUL Account may be made at any time. Transfers from the Guaranteed Interest
Account are subject to the rules discussed in "Appendix C," "Transfer of Policy
Value" and "Systematic Transfer Program."
PREMIUMS
- --------------------------------------------------------------------------------
MINIMUM PREMIUMS
The Minimum Premium is determined by case size as follows:
[diamond] 5 or more lives: $100,000 annually for the first
five Policy Years
[diamond] Fewer than 5 lives: $250,000 annually for the first
five Policy Years
The Issue Premium is due on the Policy Date. The Insured must be alive when
the Issue Premium is paid. After that, premiums may be paid at any time while
the Policy is in force. Each premium payment must be at least $100. Additional
payments should be sent to the:
VUL COLI UNIT
PO BOX 22012
ALBANY, NY 12201-2012
The number of units credited to a Subaccount of the VUL Account will be
determined by dividing the portion of the net premium applied to that Subaccount
by the unit value of the Subaccount on the Payment Date.
Regardless of whether you choose the Guideline Premium Test or the Cash
Value Accumulation Test (see "Minimum Face Amount"), we reserve the right to
refund a premium paid in any year if it will exceed the maximum premium limit.
The maximum limit is established by law to qualify the Policy contract as life
insurance. This limit is applied to the sum of all premiums paid under the
Policy. If the total premium limit is exceeded, the Policyowner will receive the
excess, with interest at an annual rate of not less than 4%, not later than 60
days after the end of the Policy Year in which the limit was exceeded. The
Policy Value then will be adjusted to reflect the refund. The total premium
limit may be exceeded if additional premium is needed to prevent lapse or if we
subsequently determine that additional premium would be permitted by federal
laws or regulations.
ALLOCATION OF ISSUE PREMIUM
We will generally allocate the Issue Premium less applicable charges to the
VUL Account or to the Guaranteed Interest Account upon receipt of a completed
application, 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, we temporarily allocate the entire issue
premium paid less applicable charges (along with any other premiums paid during
the Free Look period) to the Phoenix-Goodwin Money Market Subaccount of the VUL
Account, and, at the expiration of the Free Look period, the policy value of the
Money Market Subaccount is allocated among the Subaccounts of the VUL Account or
to the Guaranteed Interest Account in accordance with the applicant's allocation
instructions in the application for insurance.
FREE LOOK PERIOD
You have the right to review the Policy. If you are not satisfied with it,
you may cancel the Policy:
[diamond] by mailing it to us within 10 days after you receive it (or longer in
some states);
[diamond] within 10 days after we mail or deliver a written notice telling you
about your free look period; or
[diamond] within 45 days after completing the application,
whichever occurs latest (the "Free Look Period").
We treat a returned Policy as if we never issued it and, except for Policies
issued with a Temporary Money Market Allocation Amendment, we will return the
sum of the following as of the date we receive the returned Policy: (1) the then
current Policy Value less any unpaid loans and loan interest; plus (2) any
monthly deductions, partial surrender fees and other charges made under the
Policy. For Policies issued with the Temporary Money Market Amendment, the
amount returned will equal any premiums paid less any unrepaid loans and loan
interest, and less any partial surrender amounts paid.
We retain the right to decline to process an application within seven days
of our receipt of the completed application for insurance. If we decline to
process the application, we will return the premium paid. Even if we have
approved the application for processing, we retain the right to decline to issue
the Policy. If we decline to issue the Policy, we will refund to you the same
amount as would have been refunded under the Policy had it been issued but
returned for refund during the Free Look Period.
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ACCOUNT VALUE
TRANSFER OF POLICY VALUE
Transfers among available Subaccounts or the Guaranteed Interest Account and
changes in premium payment allocations may be requested in writing. Requests for
transfers will be executed on the date the request is received at Andesa, TPA,
Inc.
Although currently there is no charge for transfers, in the future, we may
charge a fee of $10 for each transfer after the first two transfers in a Policy
Year (after twelve transfers in New York).
You may make only one transfer per Policy Year from the unloaned portion of
the Guaranteed Interest Account unless (1) the transfer(s) are made as part of a
Dollar Cost Averaging Program, or (2) we agree to make an exception to this
rule. Unless you have elected a Dollar Cost Averaging Program, the amount you
may transfer cannot exceed the greater of $1,000 or 25% of the value of the
unloaned portion of the Guaranteed Interest Account at the time of the transfer.
In addition, you may transfer the total value allocated to the unloaned portion
of the Guaranteed Interest Account out of the Guaranteed Interest Account to one
or more of the Subaccounts over a consecutive four-year period according to the
following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of the remaining value
[diamond] Year Three: 50% of the remaining value
[diamond] Year Four: 100% of the remaining value
Transfers into the Guaranteed Interest Account and among the Subaccounts may
be made anytime. We reserve the right to limit the number of Subaccounts you may
invest in at any one time or over the life of the Policy, if we are required to
do so by any federal or state law.
Because excessive exchanges between Subaccounts can hurt Fund performance,
we reserve the right to temporarily or even permanently terminate exchange
privileges or reject any specific exchange order from anyone whose transactions
appear to us to follow a timing pattern, including those who request more than
one exchange out of a Subaccount within any 30-day period. We will not accept
batched 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.
If a policy has been issued with a Temporary Money Market Allocation
Amendment, no transfers may be made until the end of the Free Look Period.
SYSTEMATIC TRANSFERS FOR DOLLAR COST AVERAGING
You may elect to transfer funds automatically among the Subaccounts or the
unloaned portion of the Guaranteed Interest Account on a monthly, quarterly,
semiannual or annual basis under the Systematic Transfers for Dollar Cost
Averaging Program ("Dollar Cost Averaging Program"). Under the Dollar Cost
Averaging Program, the minimum transfer amounts are $25 monthly, $75 quarterly,
$150 semiannually or $300 annually. You must have an initial value of $1,000 in
the Guaranteed Interest Account or the Subaccount from which funds will be
transferred ("Sending Subaccount"), and if the value in that Subaccount or the
Guaranteed Interest Account drops below the amount to be transferred, the entire
remaining balance will be transferred and all systematic transfers stop. Funds
may be transferred from only one Sending Subaccount or the Guaranteed Interest
Account, but may be allocated to more than one Subaccount ("Receiving
Subaccounts"). Under the Dollar Cost Averaging Program, Policyowners may make
more than one transfer per Policy Year from the Guaranteed Interest Account.
These transfers must be in approximately equal amounts and made over a minimum
18-month period.
Only one Dollar Cost Averaging Program can be active at any time. All
transfers under the Dollar Cost Averaging Program will be made on the basis of
the Guaranteed Interest Account and Subaccount on the first day of the month
following our receipt of the transfer request. If the first day of the month
falls on a holiday or weekend, then the transfer will be processed on the next
business day.
AUTOMATIC ASSET RE-BALANCING
Automated account re-balancing permits you to maintain a specified whole
number percentage of your account value in any combination of Subaccounts and
the Guaranteed Interest Account. We must receive a written request in order to
begin your automated asset re-balancing program ("Asset Re-Balancing"). Then, we
will make transfers at least quarterly to and from the Subaccounts and the
Guaranteed Interest Account to re-adjust your account value to your specified
percentage. Asset Re-Balancing allows you to maintain a specific fund
allocation. Quarterly re-balancing is based on your policy year. We will
re-balance your account value only on a monthly calculation date.
The effective date of the first Asset Re-Balancing will be the first monthly
calculation date after we receive your request at Andesa TPA, Inc. If we receive
your request before the end of the Free Look Period, your first re-balancing
will occur at the end of the Free Look Period.
You may not participate in both the Dollar Cost Averaging Program and the
Asset Re-Balancing at the same time.
DETERMINATION OF SUBACCOUNT VALUES
We establish the unit value of each Subaccount of the VUL Account on the
first Valuation Date of that Subaccount. The unit value of a Subaccount on any
other
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Valuation Date is determined by multiplying the unit value of that Subaccount on
the just prior Valuation Date by the Net Investment Factor for that Subaccount
for the then current Valuation Period. The unit value of each Subaccount on a
day other than a Valuation Date is the unit value on the next Valuation Date.
Unit values are carried to six decimal places. The unit value of each Subaccount
on a Valuation Date is determined at the end of that day.
The Net Investment Factor for each Subaccount is determined by the
investment performance of the assets held by the Subaccount during the Valuation
Period. Each valuation will follow applicable law and accepted procedures. The
Net Investment Factor is determined by the formula:
(A) + (B)
--------- - (D) where:
(C)
(A) The value of the assets in the Subaccount on the current Valuation Date,
including accrued net investment income and realized and unrealized
capital gains and losses, but excluding the net value of any transactions
during the current Valuation Period.
(B) The amount of any dividend (or, if applicable, any capital gain
distribution) received by the Subaccount if the "ex-dividend" date for
shares of the Fund occurs during the current Valuation Period.
(C) The value of the assets in the Subaccount as of the just prior Valuation
Date, including accrued net investment income and realized and unrealized
capital gains and losses, and including the net value amount of any
deposits and withdrawals made during the Valuation Period ending on that
date.
(D) The charge, if any, for taxes and reserves for taxes on investment income,
and realized and unrealized capital gains.
DEATH BENEFIT UNDER THE POLICY
The death benefit is the amount we pay to the designated beneficiary(ies)
when the Insured dies. Upon receiving due proof of death, we pay the beneficiary
the death benefit amount determined as of the date the Insured dies. The
beneficiary may direct us to pay all or part of the benefit in cash or to apply
it under one or more of our payment options.
MINIMUM FACE AMOUNT
To qualify as life insurance under current federal tax laws, the Policy has
a minimum face amount of insurance. The minimum face is determined using one of
two allowable definitions of life insurance: (1) the Cash Value Accumulation
Test or (2) the Guideline Premium Test.
You chose which test to use on the application prior to the issuance of your
Policy. You cannot change the way we determine your minimum face amount after
your policy is issued.
The Cash Value Accumulation Test determines the minimum face amount by
multiplying the account value plus the refund of sales load, if applicable, by
the minimum face amount percentage. The percentages depend upon the Insured's
age, gender and underwriting classification.
Under the Guideline Premium Test, the minimum face amount is also equal to
an applicable percentage of the account value plus refund of sales load, if
applicable, but the percentage varies only by age of insured.
DEATH BENEFIT OPTIONS
In your application you chose a face amount of insurance coverage and the
death benefit option. We offer three death benefit options:
[diamond] Option 1: the death benefit is the greater of the Policy's face amount
on the date of death, or the minimum face amount in effect on the date
of death.
[diamond] Option 2: the death benefit is the greater of: (a) the Policy's face
amount on the date of death plus the policy value on the date of
death, or (b) the minimum face amount in effect on the date of death.
[diamond] Option 3: the death benefit is the greater of: (a) the Policy's face
amount on the date of death plus the sum of all premiums paid, less
withdrawals, or (b) the Policy's face amount on the date of death, or
(c) the minimum face amount in effect on the date of death.
If the Insured dies while the policy is in force, we will pay the death
benefit based on the option in effect on the date of death, with the following
adjustments:
[diamond] Add back in any charges taken against the account value for the period
beyond the date of death;
[diamond] Deduct any policy debt outstanding on the date of death; and
[diamond] Deduct any charges accrued against the account value unpaid as of the
date of death.
You may change the Death Benefit Option from Option 1 to Option 2 or from
Option 2 to Option 1. You may not make a change either to or from Option 3.
Under death benefit Options 1 and 3, the death benefit is not affected by
your policy's investment experience. Under death benefit Option 2, the death
benefit amount may increase or decrease by the investment experience.
We pay interest on the death benefit from the date of death to the date the
death benefit is paid or a payment option becomes effective.
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CHANGES IN FACE AMOUNT OF INSURANCE
REQUESTS FOR INCREASE IN FACE AMOUNT
Any time while this policy is in force, you may request an increase in the
face amount of insurance provided under the Policy. Requests for face amount
increases must be made in writing, and we require additional evidence of
insurability. The effective date of the increase generally will be the policy
anniversary following approval of the increase. The increase may not be less
than $25,000. We will deduct any charges associated with the increase (the
increases in cost of insurance charges), from the policy value, whether or not
you pay an additional premium in connection with the increase. Also, a new Free
Look Period (see "Premiums--Free Look Period") will be established for the
amount of the increase. For a discussion of possible implications of a material
change in the Policy resulting from the increase, see "Material Change Rules."
DECREASES IN FACE AMOUNT AND PARTIAL SURRENDER: EFFECT ON DEATH BENEFIT
REQUESTS FOR DECREASE IN FACE AMOUNT
You may request a decrease in Face Amount at any time after the first Policy
Year. Unless we agree otherwise, the decrease must be at least equal to $10,000
and the face amount remaining after the decrease must be at least $25,000. All
face amount decrease requests must be in writing and will be effective on the
first Monthly Calculation Day following the date we approve the request.
A partial surrender or a decrease in Face Amount generally decreases the
death benefit. If the change is a decrease in Face Amount, the death benefit
under a Policy would be reduced on the next Monthly Calculation Day. If the
change is a partial surrender, the death benefit under a Policy would be reduced
immediately. A decrease in the death benefit may have certain tax consequences.
See "Federal Tax Considerations."
SURRENDERS
GENERAL
At any time during the lifetime of the Insured and while the Policy is in
force, you may partially or fully surrender the Policy by sending a written
request to Andesa TPA, Inc. We may also require you to send the Policy to us.
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 Andesa TPA,
Inc.
The cash surrender value is:
[bullet] Policy Value; less
[bullet] Any outstanding debt; plus
[bullet] The refund of sales charge, if applicable.
There is no surrender charge.
If the policy is surrendered within the first three policy years, you will
receive a refund of sales charge as part of your cash surrender value. A portion
of the first year sales charge will be returned to you according to the
following schedule:
[diamond] Full surrender in Policy Year 1: 100.00%
[diamond] Full surrender in Policy Year 2: 66.67%
[diamond] Full surrender in Policy Year 3: 33.33%
FULL SURRENDERS
If the Policy is being fully surrendered, the Policy itself must be returned
to Andesa TPA, Inc., along with the written release and surrender of all claims
in a form satisfactory to us. You may elect to have the amount paid in a lump
sum or under a payment option. See "Payment Options."
PARTIAL SURRENDERS
You may obtain a partial surrender of the Policy by requesting payment of
the Policy's Cash Surrender Value. It is possible to do this at any time during
the lifetime of the Insured, while the Policy is in force, with a written
request to Andesa TPA, Inc. We may require the return of the Policy before
payment is made. A partial surrender will be effective on the date the written
request is received or, if required, the date the Policy is received by us.
Surrender proceeds may be applied under any of the payment options described
under "Payment Options."
We reserve the right to deny partial surrenders of less than $500. In
addition, if the share of the Policy Value in any Subaccount or in the
Guaranteed Interest Account is reduced as a result of a partial surrender and is
less than $500, we reserve the right to require surrender of the entire
remaining balance in that Subaccount or the Guaranteed Interest Account.
Upon a partial surrender, the Policy Value will be reduced by the sum of the
partial surrender amount paid. This amount comes from a reduction in the
Policy's share in the value of each Subaccount or the Guaranteed Interest
Account based on the allocation requested at the time of the partial surrender.
If no allocation request is made, the withdrawals from each Subaccount will be
made in the same manner as that provided for monthly deductions.
The Cash Surrender Value will be reduced by the partial surrender amount
paid plus the partial surrender fee. The Face Amount of the Policy will be
reduced by the same amount as the Policy Value is reduced as described above.
Upon partial or full surrender, we generally will pay to you the amount
surrendered within seven days after we receive the written request for the
surrender. Under certain circumstances, the surrender payment may be postponed.
See "Additional Policy Provisions--Postponement of Payments."
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For the federal tax effects of partial and full surrenders, see "Federal Tax
Considerations."
POLICY LOANS
You can take a loan against your policy any time while the policy is in
force. The maximum loan is:
[bullet] 90% of your Policy Value at the time the loan is taken; less
[bullet] any outstanding policy debt before the loan is taken; less
[bullet] interest on the loan being made and on any outstanding policy debt
to the next anniversary date.
Your policy must be assigned to us as collateral for the loan.
SOURCE OF LOAN
We deduct your requested loan amount from the Subaccounts and the Guaranteed
Interest Account, based on the allocation requested at the time of the loan. We
liquidate shares taken from the Subaccounts and transfer the resulting dollars
to the Guaranteed Interest Account. These dollars become part of the loaned
portion of the Guaranteed Interest Account.
INTEREST
You will pay interest on the loan at the following noted effective annual
rates, compounded daily and payable in arrears:
In all states except New York and New Jersey, the loan interest rate in
effect following the policy anniversary nearest the Insured's 65th birthday will
be 2.25%. The rates in effect before the Insured reaches age 65 follow:
[diamond] Policy years 1-10: 2.75%
[diamond] Policy years 11-15: 2.50%
[diamond] Policy years 16 and thereafter: 2.25%
In New York and New Jersey only, the loan interest rate in effect following
the policy anniversary nearest the Insured's 65th birthday will be 4.25%. The
rates in effect before the Insured reaches age 65 follow:
[diamond] Policy years 1-10: 4.75%
[diamond] Policy years 11-15: 4.50%
[diamond] Policy years 16 and thereafter: 4.25%
Interest accrues daily, becoming part of the policy debt. Interest is due
and payable on the policy anniversary. If you do not pay the interest when due,
we will add it to your loan. We treat any interest which has been capitalized
the same as if it were a new loan. We deduct this capitalized interest from the
Subaccounts and the Guaranteed Interest Account in proportion to the nonloaned
account value in each.
INTEREST CREDITED ON LOANED VALUE
The amount equal to any policy loan is held in the Guaranteed Interest
Account. This amount is credited with interest at a rate of 2% (4% in New York
and New Jersey).
REPAYMENT
You may repay all or part of your policy debt at anytime while the policy is
in force.
If you do not repay the loan, we deduct the loan amount due from the cash
surrender value or the death benefit.
Failure to repay a policy loan or to pay loan interest will not terminate
the Policy unless the policy value becomes insufficient to maintain the Policy
in force.
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.
EFFECT OF LOAN
Your policy loan reduces the death benefit and cash surrender value under
the policy by the amount of the loan. Your repayment of the loan increases the
death benefit and cash surrender value by the amount of the repayment.
As long as a loan is outstanding, a portion of your policy value equal to
the loan is held in the Guaranteed Interest Account. The Subaccount's investment
performance does not affect this amount. Also, you may be subject to tax
consequences if you surrender your policy while there is outstanding debt.
LAPSE
Unlike conventional life insurance policies, the payment of the Issue
Premium, no matter how large, or the payment of additional premiums will not
necessarily continue the Policy in force to its maturity date.
If on any Monthly Calculation Day during the first three Policy Years, the
Policy Value plus the refund of any applicable sales charge is insufficient to
cover the monthly deduction, a grace period of 61 days will be allowed for the
payment of an amount equal to three times the required monthly deduction. If on
any Monthly Calculation Day during any subsequent Policy Year, the Policy Value
is less than the required monthly deduction, a grace period of 61 days will be
allowed for the payment of an amount equal to three times the required monthly
deduction.
During the grace period, the Policy will continue in force but Subaccount
transfers, loans, partial or full surrenders will not be permitted. Failure to
pay the additional amount within the grace period will result in lapse of the
Policy, but not before 30 days after we have mailed written notice to you. If a
premium payment for the additional amount is received by us during the grace
period, any amount of premium over what is required to prevent lapse will be
allocated among the Subaccounts or to the Guaranteed Interest Account according
to the
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current premium allocation schedule. In determining the amount of "excess"
premium to be applied to the Subaccounts or the Guaranteed Interest Account, we
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.
ADDITIONAL INSURANCE OPTION
While the Policy is in force and the Insured is insurable, the Policyowner
will have the option to purchase additional insurance on the same Insured with
the same guaranteed rates as the Policy. We will require evidence of
insurability and charges will be adjusted for the Insured's new attained age and
any change in risk classification.
ADDITIONAL RIDER BENEFITS
You may elect additional benefits under a Policy, and you may cancel these
benefits at any time. A charge will be deducted monthly from the policy value
for each additional rider benefit chosen except where noted below. More details
will be included in the form of a rider to the Policy if any of these benefits
are chosen. The following benefits are currently available and additional riders
may be available as described in the Policy (if approved in your state).
[diamond] FLEXIBLE TERM INSURANCE RIDER--This rider provides annually renewable
term insurance coverage to age 100 for the Insured under the base
policy. The initial rider death benefit cannot exceed 10 times the
initial base Policy. There is no charge for this rider.
[diamond] EXCHANGE OF INSURED RIDER--This rider allows the Policyowner to
exchange the insured on a given contract. There is no charge for this
rider.
Future charges against the policy will be based on the life of the
substitute insured.
The incontestability and suicide exclusion periods, as they apply to the
substitute insured, run from the date of the exchange. Any assignments will
continue to apply.
The exchange is subject to the following adjustments:
1. If the policy value of the original policy is insufficient to produce a
positive cash surrender value for the new policy, the owner must pay an
exchange adjustment in an amount that, when applied as premium, will
make the policy value of the new policy greater than zero.
2. In some cases, the amount of policy value which may be applied to the
new policy may result in a death benefit which exceeds the limit for the
new policy. In that event, we will apply such excess policy value to
reduce any loan against the policy, and the residual amount will be
returned to you in cash.
3. The exchange will also be subject to our receipt of repayment of the
amount of any policy debt under the exchange policy in excess of the
loan value of the new policy on the date of exchange.
The Internal Revenue Service has ruled that an exchange of Insureds does
not qualify for tax deferral under Code Section 1035. Therefore, you
must include in current gross income all previously unrecognized gain in
the Policy upon an exchange of the Insured.
PART II--ADDITIONAL POLICY PROVISIONS
- --------------------------------------------------------------------------------
POSTPONEMENT OF PAYMENTS
Payment of any amount upon complete or partial surrender, Policy loan, or
benefits payable at death (in excess of the initial face amount) or maturity may
be postponed:
[diamond] for up to six months from the date of the request, for any
transactions dependent upon the value of the Guaranteed Interest
Account;
[diamond] 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
[diamond] whenever an emergency exists, as decided 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 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 your bank.
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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, the Policy will stop and become void. We will pay you the Policy Value
adjusted by the addition of any monthly deductions and other fees and charges,
minus any debt owed to us under the Policy.
INCONTESTABILITY
We cannot contest this Policy or any attached rider after it has been in
force during the Insured's lifetime or for two years from the policy date.
CHANGE OF OWNER OR BENEFICIARY
The Beneficiary, as named in the Policy application or subsequently changed,
will receive the Policy benefits at the Insured's death. If the named
Beneficiary dies before the Insured, the contingent Beneficiary, if named,
becomes the Beneficiary. If no Beneficiary survives the Insured, the death
benefit payable under the Policy will be paid to your estate.
As long as the Policy is in force, the Policyowner and the Beneficiary may
be changed in writing, satisfactory to us. A change in Beneficiary will take
effect as of the date the notice is signed, whether or not the Insured is living
when we receive the notice. We will not, however, be liable for any payment made
or action taken before receipt of the notice.
ASSIGNMENT
The Policy may be assigned. We will not be bound by the assignment until a
written copy has been received and we will not be liable with respect to any
payment made prior to receipt. We assume no responsibility for determining
whether an assignment is valid.
MISSTATEMENT OF AGE OR SEX
If the age or sex of 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
This Policy is nonparticipating and does not pay dividends. Your policy
will not share in Phoenix's profits or surplus earnings.
PAYMENT OF PROCEEDS
- --------------------------------------------------------------------------------
SURRENDER AND DEATH BENEFIT PROCEEDS
Death benefit proceeds and the proceeds of full or partial surrenders will
be processed at unit values next computed after we receive the request for
surrender or due proof of death, provided such request is complete and in good
order. Payment of surrender or death proceeds usually will be made in one lump
sum within seven days, unless another payment option has been elected. Payment
of the death proceeds, however, may be delayed if the claim for payment of the
death proceeds needs to be investigated, e.g., to ensure payment of the proper
amount to the proper payee. Any such delay will not be beyond that reasonably
necessary to investigate such claims consistent with insurance practices
customary in the life insurance industry.
You may elect a payment option for payment of the death proceeds to the
Beneficiary. You may revoke or change a prior election, unless such right has
been waived. The Beneficiary may make or change an election before payment of
the death proceeds, unless you have made an election that does not permit such
further election or changes by the Beneficiary.
A written request in a form satisfactory to us is required to elect, change
or revoke a payment option.
The minimum amount of surrender or death benefit proceeds that may be
applied under any payment option is $1,000.
If the Policy is assigned as collateral security, we will pay any amount due
the assignee in one lump sum. Any remaining proceeds will remain under the
option elected.
PAYMENT OPTIONS
All or part of the surrender or death proceeds of a Policy may be applied
under one or more of the following payment options or such other payment options
or alternative versions of the options listed as we may choose to make available
in the future.
OPTION 1--LUMP SUM.
Payment in one lump sum.
OPTION 2--LEFT TO EARN INTEREST.
A payment of interest during the payee's lifetime on the amount payable as a
principal sum. Interest rates are guaranteed to be at least 3% per year.
OPTION 3--PAYMENT FOR A SPECIFIC PERIOD.
Equal installments are paid for a specified period of years whether the
payee lives or dies. The first payment will be on the date of settlement. The
assumed interest rate on the unpaid balance is guaranteed not to be less than 3%
per year.
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OPTION 4--LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN. Equal installments are
paid until the later of:
[diamond] the death of the payee; or
[diamond] 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 you may choose from are as follows:
[diamond] ten years;
[diamond] twenty years; or
[diamond] 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 consider
the longer period certain as having been elected.
Any life annuity provided under Option 4 is computed using an interest rate
guaranteed to be no less than 3-3/8% per year, but any life annuity providing a
period certain of 20 years or more is computed using an interest rate guaranteed
to be no less than 3-1/4% per year.
OPTION 5--LIFE ANNUITY.
Equal installments are paid only during the lifetime of the payee. The first
payment will be on the date of settlement. Any life annuity as may be provided
under Option 5 is computed using an interest rate guaranteed to be no less than
3-1/2% per year.
OPTION 6--PAYMENTS OF A SPECIFIED AMOUNT.
Equal installments of a specified amount, out of the principal sum and
interest on that sum, are paid until the principal sum remaining is less than
the amount of the installment. When that happens, the principal sum remaining
with accrued interest will be paid as a final payment. The first payment will be
on the date of settlement. The payments will include interest on the remaining
principal at a guaranteed rate of at least 3% per year. This interest will be
credited at the end of each year. If the amount of interest credited at the end
of the year exceeds the income payments made in the last 12 months, that excess
will be paid in one sum on the date credited.
OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN.
The first payment will be on the date of settlement. Equal installments are
paid until the latest of:
[diamond] the end of the 10-year period certain;
[diamond] the death of the Insured; or
[diamond] the death of the other named annuitant.
The other annuitant must have attained age 40, must be named at the time
this option is elected and cannot later be changed. Any joint survivorship
annuity that may be provided under this option is computed using a guaranteed
interest rate to equal at least 3-3/8% per year.
For additional information concerning the above payment options, see the
Policy.
PART III--OTHER IMPORTANT INFORMATION
- --------------------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
INTRODUCTION
The ultimate effect of federal income taxes on values under the VUL Account
and on the economic benefit to you or your Beneficiary depends on our 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 advisor
should be consulted. No attempt is made to consider any estate and inheritance
taxes, or any state, local or other tax laws. Because the discussion herein is
based upon our understanding of federal income tax laws as they are currently
interpreted, we cannot guarantee the tax status of any Policy. The Internal
Revenue Service (the "IRS") makes no representation regarding the likelihood of
continuation of current federal income tax laws, Treasury regulations or of the
current interpretations. We reserve the right to make changes to the Policy to
assure that it will continue to qualify as a life insurance contract for federal
income tax purposes.
PHOENIX'S TAX STATUS
We are taxed as a life insurance company under the Internal Revenue Code of
1986, as amended (the "Code"). For federal income tax purposes, neither the VUL
Account nor the Guaranteed Interest Account is a separate entity from Phoenix
and their 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 value of the
VUL Account. Investment income of the VUL Account, including realized net
capital gains, is not taxed to us. Due to our tax status under current
provisions of the Code, no charge currently will be made to the VUL Account for
our federal income taxes which may be attributable to the VUL
22
<PAGE>
Account. We reserve the right to make a deduction for taxes if our federal tax
treatment is determined to be other than what we currently believe it to be, if
changes are made affecting the tax treatment to our variable life insurance
contracts, or if changes occur in our tax status. If imposed, such charge would
be equal to the federal income taxes attributable to the investment results of
the VUL Account.
POLICY BENEFITS
DEATH BENEFIT PROCEEDS
The Policy, whether or not it is a "modified endowment contract" (see
"Modified Endowment Contracts"), should be treated as meeting the definition of
a life insurance contract for federal income tax purposes under Section 7702 of
the Code. As such, the death benefit proceeds thereunder should be excludable
from the gross income of the Beneficiary under Code Section 101(a)(1). Also, a
Policyowner should not be considered to be in constructive receipt of the cash
value, including investment income. See, however, the sections below on possible
taxation of amounts received under the Policy, via full surrender, partial
surrender or loan.
Code Section 7702 imposes certain conditions with respect to premiums
received under a Policy. We monitor the premiums to assure compliance with such
conditions. However, if the premium limitation is exceeded during the year, we
may return the excess premium, with interest, to the Policyowner within 60 days
after the end of the Policy Year, and maintain the qualification of the Policy
as life insurance for federal income tax purposes.
FULL SURRENDER
Upon full surrender of a Policy for its cash value, the excess, if any, of
the cash value (unreduced by any outstanding indebtedness) over the premiums
paid will be treated as ordinary income for federal income tax purposes. The
full surrender of a Policy that is a modified endowment contract may result in
the imposition of an additional 10% tax on any income received.
PARTIAL SURRENDER
If the Policy is a modified endowment contract, partial surrenders are fully
taxable to the extent of income in the Policy and are possibly subject to an
additional 10% tax. See the discussion on modified endowment contracts below. If
the Policy is not a modified endowment contract, partial surrenders still may be
taxable, as follows. Code Section 7702(f)(7) provides that where a reduction in
death benefits occurs during the first 15 years after a Policy is issued and
there is a cash distribution associated with that reduction, the Policyowner may
be taxed on all or a part of the amount distributed. A reduction in death
benefits may result from a partial surrender. After 15 years, the proceeds will
not be subject to tax, except to the extent such proceeds exceed the total
amount of premiums paid but not previously recovered. We suggest you consult
with your tax advisor in advance of a proposed decrease in death benefits or a
partial surrender as to the portion, if any, which would be subject to tax, and
in addition as to the impact such partial surrender might have under the new
rules affecting modified endowment contracts.
LOANS
We believe that any loan received under a Policy will be treated as your
indebtedness. If the Policy is a modified endowment contract, loans are fully
taxable to the extent of income in the Policy and are possibly subject to an
additional 10% tax. See the discussion on modified endowment contracts. If the
Policy is not a modified endowment contract, we believe that no part of any loan
under a Policy will constitute income to you.
The deductibility by a Policyowner of loan interest under a Policy may be
limited under Code Section 264, depending on the circumstances. A Policyowner
intending to fund premium payments through borrowing should consult a tax
advisor with respect to the tax consequences thereof. Under the "personal"
interest limitation provisions of the Code, interest on Policy loans used for
personal purposes is not tax deductible. Other rules may apply to allow all or
part of the interest expense as a deduction if the loan proceeds are used for
"trade or business" or "investment" purposes. See your tax advisor for further
guidance.
BUSINESS-OWNED POLICIES
If a business or a corporation owns the Policy, the Code may impose
additional restrictions. The Code limits the interest deduction on
business-owned Policy loans and may impose tax upon the inside build-up of
corporate-owned life insurance policies through the corporate alternative
minimum tax.
MODIFIED ENDOWMENT CONTRACTS
GENERAL
Pursuant to Code Section 72(e), loans and other amounts received under
modified endowment contracts will, in general, be taxed to the extent of
accumulated income (generally, the excess of cash value over premiums paid).
Life insurance policies can be modified endowment contracts if they fail to meet
what is known as "the 7-pay test." The measuring stick for this test is a
hypothetical life insurance policy of equal face amount which requires 7 equal
annual premiums but which, after the seventh year is "fully paid-up," continuing
to provide a level death benefit without the need for any further premiums. A
Policy becomes a modified endowment contract, if, at any time during the first
seven years, the cumulative premium paid on the Policy exceeds the cumulative
premium that would have been paid under the hypothetical policy. Premiums paid
during a Policy Year but which are returned by us with interest within 60 days
after the end of the Policy Year will be excluded from the 7-pay test. A life
insurance policy
23
<PAGE>
received in exchange for a modified endowment contract will be treated as a
modified endowment contract.
REDUCTION IN BENEFITS DURING THE FIRST SEVEN YEARS
If there is a reduction in death benefits during the first seven Policy
Years, the premiums are redetermined for purposes of the 7-pay test as if the
Policy originally had been issued at the reduced death benefit level and the new
limitation is applied to the cumulative amount paid for each of the first seven
Policy Years.
DISTRIBUTIONS AFFECTED
If a Policy fails to meet the 7-pay test, it is considered a modified
endowment contract only as to distributions in the year in which the test is
failed 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 generally will
not be subject to the modified endowment contract rules.
PENALTY TAX
Any amounts taxable under the modified endowment contract rule will be
subject to an additional 10% excise tax, with certain exceptions. This
additional tax will not apply in the case of distributions that are:
[diamond] made on or after the taxpayer attains age 59 1/2;
[diamond] attributable to the taxpayer's disability (within the meaning of Code
Section 72(m)(7)); or
[diamond] part of a series of substantially equal periodic payments (not less
often 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.
[diamond] First, if an increase is attributable to premiums paid "necessary to
fund" the lowest death benefit and qualified additional benefits
payable in the first seven Policy Years or to the crediting of
interest or dividends with respect to these premiums, the "increase"
does not constitute a material change.
[diamond] 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:
[bullet] the cost-of-living determination period does not exceed the
remaining premium payment period under the Policy; and
[bullet] the cost-of-living increase is funded ratably over the
remaining premium payment period of the Policy.
A reduction in death benefits is not considered a material change unless
accompanied by a reduction in premium payments.
A material change may occur at any time during the life of the Policy
(within the first seven years or thereafter), and future taxation of
distributions or loans would depend upon whether the Policy satisfied the
applicable 7-pay test from the time of the material change. An exchange of
policies is considered to be a material change for all purposes.
SERIAL PURCHASE OF MODIFIED ENDOWMENT CONTRACTS
All modified endowment contracts issued by the same insurer (or affiliated
companies of the insurer) to the same Policyowner within the same calendar year
will be treated as one modified endowment contract in determining the taxable
portion of any loans or distributions made to the Policyowner. The Treasury has
been given specific legislative authority to issue regulations to prevent the
avoidance of the new distribution rules for modified endowment contracts. A
qualified tax advisor should be consulted about the tax consequences of the
purchase of more than one modified endowment contract within any calendar year.
LIMITATIONS ON UNREASONABLE MORTALITY AND EXPENSE CHARGES
The Code imposes limitations on unreasonable mortality and expense charges
for purposes of ensuring that a Policy qualifies as a life insurance contract
for federal income tax purposes. The mortality charges taken into account to
compute 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. We will comply with
the limitations for calculating the premium we are permitted to receive from
you.
DIVERSIFICATION STANDARDS
To comply with the Diversification Regulations under Code Section 817(h),
("Diversification Regulations") each Series of the Fund is required to diversify
its investments. The Diversification Regulations generally require that on the
last day of each calendar quarter the Series assets be invested in no more than:
24
<PAGE>
[diamond] 55% in any 1 investment
[diamond] 70% in any 2 investments
[diamond] 80% in any 3 investments
[diamond] 90% in any 4 investments
A "look-through" rule applies to treat a pro rata portion of each asset of a
Series as an asset of the VUL Account; therefore, each Series of the Fund will
be tested for compliance with the percentage limitations. For purposes of these
diversification rules, all securities of the same issuer are treated as a single
investment, but each United States government agency or instrumentality is
treated as a separate issuer.
The general diversification requirements are modified if any of the assets
of the VUL Account are direct obligations of the United States Treasury. In this
case, there is no limit on the investment that may be made in 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 that must comply with
these standards.
In connection with the issuance of the Diversification Regulations, the
Treasury announced that such regulations do not provide guidance concerning the
extent to which you may direct your investments to particular divisions of a
separate account. It is possible that a revenue ruling or other form of
administrative pronouncement in this regard may be issued in the near future. It
is not clear, at this time, what such a revenue ruling or other pronouncement
would provide. It is possible that the Policy may need to be modified to comply
with such future Treasury announcements. For these reasons, we reserve the right
to modify the Policy, as necessary, to prevent you from being considered the
owner of the assets of the VUL Account.
We intend to comply with the Diversification Regulations to assure that the
Policies continue to qualify as a life insurance contract for federal income tax
purposes.
CHANGE OF OWNERSHIP OR INSURED OR ASSIGNMENT
Changing the Policyowner or 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 contract can be exchanged for another life
insurance contract, without recognition of gain or loss, assuming that no money
or other property is received in the exchange, and that the Policies relate to
the same Insured. If the surrendered Policy is subject to a policy loan, this
may be treated as the receipt of money on the exchange. We recommend that any
person contemplating such actions seek the advice of a qualified tax consultant.
OTHER TAXES
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary. We do not make any
representations or guarantees regarding the tax consequences of any Policy with
respect to these types of taxes.
VOTING RIGHTS
- --------------------------------------------------------------------------------
We will vote the Funds' shares held by the Subaccounts at any regular and
special meetings of shareholders of the Funds. To the extent required by law,
such voting will be pursuant to instructions received from you. However, if the
1940 Act or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as a result, we decide that we are
permitted to vote the Funds' shares at our own discretion, we may elect to do
so.
The number of votes that you have the right to cast will be determined by
applying your percentage interest in a Subaccount to the total number of votes
attributable to the Subaccount. In determining the number of votes, fractional
shares will be recognized.
Funds' shares held in a Subaccount for which no timely instructions are
received, and Funds' shares which are not otherwise attributable to
Policyowners, will be voted by Phoenix in proportion to the voting instructions
that are received with respect to all Policies participating in that Subaccount.
Instructions to abstain on any item to be voted upon will be applied to reduce
the votes eligible to be cast by Phoenix.
You will receive proxy materials, reports and other materials related to the
Funds.
We may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that the shares be voted so as
to cause a change in the subclassification or investment objective of one or
more of the portfolios of the Funds or to approve or disapprove an investment
advisory contract for the Funds. In addition, Phoenix itself may disregard
voting instructions in favor of changes initiated by a Policyowner in the
investment policies or the Investment Advisor of the Funds if Phoenix reasonably
disapproves of such changes. A change would be disapproved only if the proposed
change is contrary to state law or prohibited by state regulatory authorities or
we decide that the change would have an adverse effect on the General Account
because the proposed investment policy for a Series may result in overly
speculative or unsound investments. In the event Phoenix does disregard voting
instructions, a summary of
25
<PAGE>
that action and the reasons for such action will be included in the next
periodic report to Policyowners.
You (or the payee entitled to payment under a payment option if a different
person) will have the right to vote at annual meetings of all Phoenix
policyholders for the election of members of the Board of Directors of Phoenix
and on other corporate matters, if any, where a policyholder's vote is taken. At
meetings of all the Phoenix policyholders, you (or payee) may cast only one vote
as the holder of a Policy, irrespective of policy value or the number of the
Policies you hold.
THE DIRECTORS AND
EXECUTIVE OFFICERS OF PHOENIX
- --------------------------------------------------------------------------------
Phoenix is managed by its Board of Directors. The 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
John C. Bacot Chairman and Chief Executive
Officer, The Bank of New York
New York, New York
Richard H. Booth Executive Vice President,
Strategic Development, Phoenix
Home Life Mutual Insurance
Company, Hartford, Connecticut;
formerly President, Travelers
Insurance Company
Arthur P. Byrne Chairman, President and Chief
Executive Officer, The Wiremold
Company
West Hartford, Connecticut
Richard N. Cooper Professor of International
Economics, Harvard University,
Cambridge, Massachusetts;
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
John E. Haire President of The Fortune Group
New York, New York
Jerry J. Jasinowski President, National Association
of Manufacturers
Washington, D.C.
John W. Johnstone Chairman, Governance and Nominating
Committees, Arch Chemicals, Inc.,
Westport, CT; formerly Chairman,
President and Chief Executive Officer,
Olin Corporation
Norwalk, Connecticut
Marilyn E. LaMarche Limited Managing Director, Lazard
Freres & Company, L.L.C.
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
Robert F. Vizza President and Chief Executive
Officer, St. Francis Hospital
Roslyn, New York
Robert G. Wilson Retired; formerly Chairman and
Chief Executive Officer of
Ecologic Waste Services, Inc.
Miami, Florida
Dona D. Young Executive Vice President,
Individual Insurance and General
Counsel
EXECUTIVE OFFICERS PRINCIPAL OCCUPATION
Robert W. Fiondella Chairman of the Board, President
and Chief Executive Officer
Philip R. McLoughlin Executive Vice President and
Chief Investment Officer
Richard H. Booth Executive Vice President
Carl T. Chadburn 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, Business
Practices
26
<PAGE>
Robert G. Chipkin Senior Vice President and
Corporate Actuary
Martin J. Gavin Senior Vice President, Trust
Operations
Randall C. Giangiulio Senior Vice President, Group Life
and Health
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
David R. Pepin Senior Vice President
Robert E. Primmer Senior Vice President, Individual
Distribution
Frederick W. Sawyer, III Senior Vice President
Jack F. Solan, Jr. Senior Vice President,
Strategic Development
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 Phoenix during the
last five years.
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS
- --------------------------------------------------------------------------------
We hold the assets of the VUL Account. The assets of the VUL Account are
kept physically segregated and held separate and apart from our General Account.
We maintain records of all purchases and redemptions of shares of the Funds.
SALES OF POLICIES
- --------------------------------------------------------------------------------
Policies may be purchased from registered representatives of W.S. Griffith &
Co., Inc. ("WSG"), a New York corporation incorporated on August 7, 1970,
licensed to sell Phoenix insurance policies as well as policies, annuity
contracts and funds of companies affiliated with Phoenix. WSG, an indirect
subsidiary of Phoenix, is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and is a member of the National
Association of Securities Dealers, Inc. Phoenix Equity Planning Corporation
("PEPCO") serves as national distributor of the Policies. PEPCO is an indirect
subsidiary of Phoenix Investment Partners, Ltd. ("PXP"), in which Phoenix owns a
majority interest.
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 agreements provided by PEPCO. Sales commissions will be
paid to registered representatives on purchase payments we receive under these
Policies. Phoenix will pay a maximum total sales commission of 15% of premiums
to PEPCO. Additionally, agents or selling brokers may receive asset-based
compensation. The maximum asset-based compensation is 0.90% of the policy value.
To the extent that the sales charge under the Policies is less than the sales
commissions paid with respect to the Policies, we will pay the shortfall from
our General Account assets, which will include any profits we may derive under
the Policies.
STATE REGULATION
- --------------------------------------------------------------------------------
We are subject to the provisions of the Connecticut insurance laws
applicable to stock life insurance companies and to regulation and supervision
by the Connecticut Superintendent of Insurance. We also are subject to the
applicable insurance laws of all the other states and jurisdictions in which we
do insurance business.
State regulation of Phoenix includes certain limitations on the investments
which we may make, including investments for the VUL Account and the Guaranteed
Interest Account. This regulation does not include, however, any supervision
over the investment policies of the VUL Account.
REPORTS
- --------------------------------------------------------------------------------
All Policyowners will be furnished with those reports required by the 1940
Act and related regulations or by 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 our ability to meet
our obligations under the Policies.
LEGAL MATTERS
- --------------------------------------------------------------------------------
Edwin L. Kerr, Counsel of Phoenix Home Life Mutual Insurance Company, has
passed upon the organization of
27
<PAGE>
Phoenix, its authority to issue variable life insurance Policies and the
validity of the Policy, and upon legal matters relating to the federal
securities and income tax laws for Phoenix.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
A Registration Statement has been filed with the SEC, under the Securities
Act of 1933 ("1933 Act") with respect to the securities offered. This Prospectus
is a summary of the contents of the Policy and other legal documents and does
not contain all the information set forth in the Registration Statement and its
exhibits. We refer you to the registration statement and its exhibits for
further information concerning the VUL Account, Phoenix and the Policy.
YEAR 2000 ISSUE
- --------------------------------------------------------------------------------
Many existing computer programs use only two digits to identify the year in
a date field. This is 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. We believe 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 our subsidiaries, was conducted. Phoenix has
identified and pursued a number of strategies to address the issue, including:
[diamond] upgrading systems with compliant versions;
[diamond] developing or acquiring new systems to replace those that are
obsolete;
[diamond] repairing existing systems by converting code or hardware; and
[diamond] preparing contingency plans to address difficulties that may arise.
Based on current assessments, those computer systems deemed critical to
customer service and business continuity are compliant. Testing will continue
through 1999. Additionally Phoenix has obtained Year 2000 assurances from
business partners.
THE BOTTOM LINE IS THAT PHOENIX WILL BE BOTH READY AND TESTED FOR THE NEW
MILLENNIUM.
More details about our Year 2000 program are available on our Web site:
www.phl.com.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements of Phoenix contained herein should be considered
only as bearing upon Phoenix's ability to meet its obligations under the Policy,
and they should not be considered as bearing on the investment performance of
the VUL Account. The financial statements of the VUL Account are for the
Subaccounts available for the period ended December 31, 1998.
28
<PAGE>
PHOENIX HOME LIFE
MUTUAL INSURANCE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
29
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Report of Independent Accountants...........................................31
Consolidated Balance Sheet at December 31, 1998 and 1997....................32
Consolidated Statement of Income, Comprehensive Income and Equity
for the Years Ended December 31, 1998, 1997 and 1996 ......................33
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996...........................................34
Notes to Consolidated Financial Statements ..............................35-66
30
<PAGE>
[PRICEWATERHOUSECOOPERS logo and address]
REPORT OF INDEPENDENT ACCOUNTANTS
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, comprehensive 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,
1998 and 1997, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1998, 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.
As indicated in Note 19, the company has revised the accounting for leveraged
leases.
/s/ PricewaterhouseCoopers LLP
February 11, 1999, except as to Note 20, which is as of April 27, 1999
31
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Investments:
Held-to-maturity debt securities, at amortized cost $ 1,881,687 $ 1,554,905
Available-for-sale debt securities, at fair value 6,693,540 5,659,061
Equity securities, at fair value 304,545 335,888
Mortgage loans 797,343 927,501
Real estate 91,975 321,757
Policy loans 2,008,260 1,986,728
Other invested assets 377,326 319,088
Short-term investments 240,911 1,078,276
----------- -----------
Total investments 12,395,587 12,183,204
Cash and cash equivalents 132,634 159,307
Accrued investment income 173,312 149,566
Deferred policy acquisition costs 1,076,635 1,038,407
Premiums, accounts and notes receivable 120,928 99,468
Reinsurance recoverables 96,676 66,649
Property and equipment, net 153,425 156,190
Goodwill and other intangible assets, net 527,029 541,499
Other assets 46,060 61,087
Separate account assets 4,798,949 4,082,255
----------- -----------
Total assets $19,521,235 $18,537,632
=========== ===========
LIABILITIES
Policy liabilities and accruals $11,810,202 $11,334,014
Securities sold subject to repurchase agreements 137,473
Notes payable 449,252 471,085
Deferred income taxes 111,912 150,440
Other liabilities 555,352 585,467
Separate account liabilities 4,798,949 4,082,255
----------- -----------
Total liabilities 17,725,667 16,760,734
----------- -----------
Contingent liabilities (Note 17)
MINORITY INTEREST IN NET ASSETS
OF CONSOLIDATED SUBSIDIARIES
91,884 136,514
----------- -----------
EQUITY
Retained earnings 1,609,393 1,484,620
Accumulated other comprehensive income 94,291 155,764
----------- -----------
Total equity 1,703,684 1,640,384
----------- -----------
Total liabilities and equity $19,521,235 $18,537,632
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
32
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
CONSOLIDATED STATEMENT OF INCOME, COMPREHENSIVE INCOME AND EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Premiums $1,852,801 $1,640,606 $1,518,822
Insurance and investment product fees 619,476 468,030 421,058
Net investment income 898,884 771,346 711,595
Net realized investment gains 63,562 111,465 77,422
---------- ---------- ----------
Total revenues 3,434,723 2,991,447 2,728,897
---------- ---------- ----------
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss
adjustment expenses 1,930,384 1,633,633 1,529,573
Policyholder dividends 351,805 343,725 311,739
Policy acquisition expenses 290,585 192,886 172,379
Amortization of goodwill and other intangible assets 29,248 16,393 15,610
Interest expense 29,889 28,147 17,570
Other operating expenses 592,420 542,897 489,203
---------- ---------- ----------
Total benefits, losses and expenses 3,224,331 2,757,681 2,536,074
---------- ---------- ----------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 210,392 233,766 192,823
Income taxes 75,152 58,177 80,683
---------- ---------- ----------
INCOME BEFORE MINORITY INTEREST 135,240 175,589 112,140
Minority interest in net income of consolidated subsidiaries 10,467 8,882 8,902
---------- ---------- ----------
NET INCOME 124,773 166,707 103,238
---------- ---------- ----------
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAXES
Unrealized (losses) gains on securities (46,967) 98,287 42,493
Reclassification adjustment for net realized gains
included in net income (12,980) (30,213) (28,580)
Minimum pension liability adjustment (1,526) (2,101) 1,241
---------- ---------- ----------
Total other comprehensive income (loss) (61,473) 65,973 15,154
---------- ---------- ----------
COMPREHENSIVE INCOME 63,300 232,680 118,392
---------- ---------- ----------
EQUITY, BEGINNING OF YEAR - RESTATED (NOTE 19) 1,640,384 1,407,704 1,289,312
---------- ---------- ----------
EQUITY, END OF YEAR $1,703,684 $1,640,384 $1,407,704
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
33
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 124,773 $ 166,707 $ 103,238
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATIONS
Net realized investment gains (63,562) (111,465) (77,422)
Amortization and depreciation 60,580 90,565 64,870
Equity in undistributed earnings of affiliates and partnerships (25,110) (34,057) (22,037)
Deferred income taxes (benefit) (9,274) 3,663 16,126
(Increase) decrease in receivables (75,233) (49,172) 5,955
Increase in deferred policy acquisition costs (31,534) (48,860) (61,985)
Increase in policy liabilities and accruals 487,312 512,476 559,724
Increase (decrease) in other assets/other liabilities, net 53,194 44,269 (66,337)
Other, net 3,412 5,417 (320)
--------- ---------- ----------
Net cash provided by operating activities 524,558 579,543 521,812
--------- ---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sales, maturities or repayments
of available-for-sale debt securities 1,446,990 1,187,943 1,348,809
Proceeds from maturities or repayments of held-to-maturity
debt securities 306,183 217,302 118,596
Proceeds from disposals of equity securities 45,204 51,373 382,359
Proceeds from mortgage loan maturities or repayments 200,419 164,213 151,760
Proceeds from sale of real estate and other invested assets 458,467 218,874 127,440
Purchase of available-for-sale debt securities (2,568,971) (1,689,479) (1,909,086)
Purchase of held-to-maturity debt securities (631,974) (225,722) (385,321)
Purchase of equity securities (86,472) (88,573) (215,104)
Purchase of subsidiaries (6,647) (246,400)
Purchase of mortgage loans (75,974) (140,831) (200,683)
Purchase of real estate and other invested assets (201,424) (90,593) (157,077)
Change in short-term investments, net 837,365 58,384 110,503
Increase in policy loans (21,532) (59,699) (49,912)
Capital expenditures (23,935) (41,504) (3,543)
Other investing activities, net (6,540) (1,750) (5,898)
--------- ---------- ----------
Net cash used for investing activities (328,841) (686,462) (687,157)
--------- ---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES
Withdrawals of contractholder deposit funds,
net of deposits and interest credited (11,124) (17,902) (6,301)
(Repayment of)/proceeds from securities sold
subject to repurchase agreements (137,472) 137,472
Proceeds from borrowings 136 215,359 226,082
Repayment of borrowings (63,328) (234,703) (2,400)
Dividends paid to minority shareholders in consolidated subsidiaries (4,938) (6,895) (6,245)
Other financing activities (5,664)
--------- ---------- ----------
Net cash provided by (used for) financing activities (222,390) 93,331 211,136
--------- ---------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (26,673) (13,588) 45,791
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 159,307 172,895 127,104
--------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 132,634 $ 159,307 $ 172,895
========= ========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid, net $ 44,508 $ 76,167 $ 76,157
Interest paid on indebtedness $ 32,834 $ 32,300 $ 19,214
</TABLE>
The accompanying notes are an integral part of these statements.
34
<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 and insurance
agency and brokerage operations, primarily based in the United States. These
products and services are distributed among five reportable segments:
Individual Insurance, Life Reinsurance, Group Life and Health Insurance,
Securities Management and All Other. 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 significant influence over operating and financial policies and
generally at least a 20% ownership interest 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.
Amounts for 1997 and 1996 have been retroactively restated to account for
income from leveraged lease investments (see Note 19). Certain
reclassifications have been made to the 1997 and 1996 amounts to conform
with the 1998 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 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 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.
35
<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.
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. These earnings or losses are
included in investment income. Prior to 1998, for venture capital
partnerships, this activity was reflected in capital gains and losses. Such
earnings and losses included in prior year financial statements have been
reclassified to reflect this change.
Beginning in 1998, leveraged lease investments represent the net of the
estimated residual value of the lease assets, rental receivables, and
unearned and deferred income to be allocated over the lease term. Investment
income is calculated using the interest method and is recognized only in
periods in which the net investment is positive. Prior to 1998, leveraged
lease investments were carried at cost adjusted for Phoenix's equity in
undistributed earnings or losses since acquisition, less allowances for
other than temporary declines in value. Prior years have been restated to
reflect these changes (see Note 19).
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 component of 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, off-balance sheet
financial instruments such as investment and loan commitments, financial
guarantees, interest rate swaps and interest rate floors. These instruments
have credit risk and also may be subject to risk of loss due to interest
rate and market fluctuations.
Phoenix also uses interest rate swaps and futures contracts as hedges for
asset/liability management of fixed income investments and certain
liabilities. Realized gains and losses on these contracts are deferred and
amortized over the life of the hedged asset or liability.
Phoenix enters into interest rate floor contracts to hedge against
significant declines in interest rates by locking in a minimum interest rate
amount that will be received on future reinvestments in terms of an
underlying treasury yield. Phoenix does not enter into interest rate floor
contracts for trading purposes. The excess of a predetermined (strike) rate
over a reference (index) rate is recognized in investment income when
received or paid.
36
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
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.
37
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
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 1998 and prior
years. Entities included within the consolidated group are segregated into
either a life insurance or nonlife insurance company subgroup. The
consolidation of these subgroups is subject to certain statutory
restrictions in the percentage of eligible nonlife 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.
RECENT ACCOUNTING PRONOUNCEMENTS
Phoenix adopted Statement of Financial Accounting Standard (SFAS) No. 130,
"Reporting Comprehensive Income," as of January 1, 1998. This statement
establishes standards for the reporting and display of comprehensive income
and its components in a full set of financial statements. This statement
defines the components of comprehensive income as those items that were
previously reported only as components of equity and were excluded from net
income.
In 1998, Phoenix adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement supersedes SFAS No. 14,
"Financial Reporting for Segments of a
38
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Business Enterprise," replacing the "industry segment" approach with the
"management" approach. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of Phoenix's reportable segments. The
adoption of this statement did not affect the results of operations or
financial position but did affect the disclosure of segment information.
In 1998, Phoenix adopted SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which amends SFAS No. 87,
"Employers' Accounting for Pensions," No. 88, "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits," and No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions." The new statement revises and
standardizes employers' disclosures about pension and other postretirement
benefit plans. Adoption of this statement did not affect the results of
operations or financial position of the company.
On June 15, 1998, The Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." This
statement, effective for all years beginning after June 15, 1999, requires
that all derivative instruments be recorded on the balance sheet at their
fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on
whether a derivative is designed as part of a hedge transaction and, if it
is, the type of hedge transaction. Management anticipates that, due to its
limited use of derivative instruments, the adoption of this statement will
not have a significant effect on Phoenix's results of operations or its
financial position.
3. SIGNIFICANT TRANSACTIONS
DIVIDEND SCALE REDUCTION
Due to the decline of interest rates in the financial markets to historic
lows and the strong likelihood that such levels will be sustained, Phoenix
carefully reviewed and considered a change in its dividend scale. As a
result, in October 1998, Phoenix's Board of Directors voted to adopt a
reduced dividend scale, effective for dividends payable on or after January
1, 1999. Dividends for individual participating policies are being reduced
60 basis points in most cases, an average reduction of approximately 8%. The
effect was a decrease of approximately $15.7 million in the policyholder
dividends expense in 1998.
REAL ESTATE SALES
On December 15, 1998, Phoenix sold 47 commercial real estate properties with
a carrying value of $269.8 million, and 4 joint venture real estate
partnerships with a carrying value of $10.5 million, for approximately $309
million in cash. This transaction, along with the sale of 18 other
properties and partnerships during the year, which had a carrying value of
$36.7 million, resulted in after-tax gains of approximately $49.6 million.
As of December 31,1998, Phoenix has 7 commercial real estate properties
remaining with a carrying value of $55.7 million and 10 joint venture real
estate partnerships with a carrying value of $36.3 million.
PHOENIX INVESTMENT PARTNERS, LTD.
On December 3, 1998, Phoenix Investment Partners completed the sale of its
49% interest in Canadian investment firm Beutel, Goodman & Company, Ltd. for
$47 million. Phoenix Investment Partners received $37 million in cash and a
$10 million three-year interest bearing note. The transaction resulted in a
before-tax gain of approximately $17.5 million. Phoenix's interest
represents an after-tax realized gain of approximately $6.8 million.
39
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
On September 3, 1997, Phoenix Investment Partners acquired Pasadena Capital
Corporation, the parent company of Roger Engemann & Associates, Inc. for
approximately $214 million. Pasadena Capital managed over $7 billion in
assets at December 31, 1998, primarily individual accounts.
On July 17, 1997, Phoenix Investment Partners acquired a majority interest
in GMG/Seneca Capital Management LLC, renamed Seneca Capital Management, for
approximately $37.5 million. Seneca Capital Management managed $6 billion in
assets at December 31, 1998.
The purchase price for Pasadena Capital and Seneca Capital Management
represented the consideration paid and the direct costs incurred by Phoenix
Investment Partners to purchase Pasadena Capital and a majority interest in
Seneca Capital Management. The excess of the purchase price over the fair
value of the acquired net tangible assets of these companies totaled
approximately $212.8 million. Of this excess purchase price, $110.2 million
was classified as identifiable intangible assets, primarily associated with
investment management contracts, which are being amortized over their
estimated average useful life of 13 years using the straight line method.
The remaining excess purchase price of $142.5 million was classified as
goodwill and is being amortized over 40 years using the straight line
method.
Phoenix owns approximately 60% of the outstanding Phoenix Investment
Partners' common stock. In addition, Phoenix owns 45% of Phoenix Investment
Partners' convertible subordinated debentures.
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 $141.3 million difference, which does not exceed the
estimated present value of future profits of the acquired business, was
recorded as deferred acquisition costs.
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 notes
payable in the Consolidated Balance Sheet.
The notes were issued in accordance with Section 1307 (Contingent Liability
for Borrowings) 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 (Private Resales of Securities
to Institutions) 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
As of December 31, 1998, PM Holdings owned 10% of the outstanding common
stock of Aberdeen Asset Management, a Scottish asset management firm. The
investment is reported on the equity basis and classified as other invested
assets in the Consolidated Balance Sheet.
40
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 10% of Aberdeen Asset Management's then
outstanding common stock. The note is also classified as other invested
assets 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 Investment Partners and
Aberdeen Asset Management, develops and markets investment products in the
United States and the United Kingdom.
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, 1998 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 $ 10,562 $ 643 $ (78) $ 11,127
Foreign government bonds 3,036 (743) 2,293
Corporate securities 1,695,789 98,896 (13,823) 1,780,862
Mortgage-backed securities 172,300 6,201 (12) 178,489
---------- ---------- ----------- ----------
Total 1,881,687 105,740 (14,656) 1,972,771
---------- ---------- ----------- ----------
AVAILABLE-FOR-SALE:
U.S. government and agency bonds 497,089 34,454 (422) 531,121
State and political subdivision bonds 529,977 43,622 (104) 573,495
Foreign government bonds 293,968 28,814 (18,691) 304,091
Corporate securities 1,993,720 110,525 (36,656) 2,067,589
Mortgage-backed securities 3,121,690 110,172 (14,618) 3,217,244
---------- ---------- ----------- ----------
Total 6,436,444 327,587 (70,491) 6,693,540
---------- ---------- ----------- ----------
TOTAL DEBT SECURITIES $8,318,131 $ 433,327 $ (85,147) $8,666,311
---------- ---------- ----------- ----------
EQUITY SECURITIES $ 223,915 $ 102,018 $ (21,388) $ 304,545
========== ========== =========== ==========
</TABLE>
41
<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, 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 $ 158,217 $ 190,669 $ (12,998) $ 335,888
========== ========= ========== ==========
</TABLE>
The amortized cost and fair value of debt securities, by contractual sinking
fund payment and maturity, as of December 31, 1998 are shown below. Actual
maturity may differ from contractual maturity 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 $ 75,505 $ 66,367 $ 58,513 $ 59,953
Due after one year through five years 512,131 535,084 460,182 481,790
Due after five years through ten years 672,533 710,988 948,676 983,590
Due after ten years 449,218 481,843 1,847,383 1,950,963
Mortgage-backed securities 172,300 178,489 3,121,690 3,217,244
----------- ----------- ----------- -----------
Total $ 1,881,687 $ 1,972,771 $ 6,436,444 $ 6,693,540
=========== =========== =========== ===========
</TABLE>
42
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Carrying values for investments in mortgage-backed securities, excluding
U.S. government guaranteed investments, were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Planned amortization class $ 433,668 $ 554,425
Asset-backed 910,594 594,128
Mezzanine 280,162 328,539
Commercial 641,485 556,155
Sequential pay 982,576 680,397
Pass through 119,065 132,522
Other 21,994 56,393
---------- ----------
Total mortgage-backed securities $3,389,544 $2,902,559
========== ==========
</TABLE>
43
<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,
1998 1997 1998 1997
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
PROPERTY TYPE:
Office buildings $221,244 $246,500 $ 38,343 $180,743
Retail 203,927 231,886 36,858 108,907
Apartment buildings 261,894 303,990 21,553 20,560
Industrial buildings 121,789 162,008 1,600 39,810
Other 19,089 18,917 32 238
Valuation allowances (30,600) (35,800) (6,411) (28,501)
-------- -------- -------- --------
Total $797,343 $927,501 $ 91,975 $321,757
======== ======== ======== ========
GEOGRAPHIC REGION:
Northeast $169,368 $222,975 $ 47,709 $ 92,513
Southeast 213,916 257,376 32 85,781
North central 176,683 189,163 11,453 63,751
South central 98,956 79,092 22,649 58,954
West 169,020 214,695 16,543 49,259
Valuation allowances (30,600) (35,800) (6,411) (28,501)
-------- -------- -------- --------
Total $797,343 $927,501 $ 91,975 $321,757
======== ======== ======== ========
</TABLE>
At December 31, 1998, scheduled mortgage loan maturities were as follows:
1999--$99 million; 2000--$81 million; 2001--$87 million; 2002--$29 million;
2003--$107 million; and $394 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 $2.3 million and $8.6 million of its mortgage
loans during 1998 and 1997, respectively, based on terms which differed from
those granted to new borrowers.
44
<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>
1998
Mortgage loans $ 35,800 $ 50,603 $(55,803) $30,600
Real estate 28,501 5,108 (27,198) 6,411
-------- -------- -------- -------
Total $ 64,301 $ 55,711 $(83,001) $37,011
======== ======== ======== =======
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>
NONINCOME-PRODUCING MORTGAGE LOANS AND BONDS
The net carrying values of nonincome-producing mortgage loans were $15.6
million and $7.0 million at December 31, 1998 and 1997, respectively. The
net carrying value of nonincome-producing bonds was $22.3 million at
December 31, 1998. There were no nonincome-producing bonds at December 31,
1997.
INTEREST RATE SWAPS AND INTEREST RATE FLOORS
The notional amounts of Phoenix's interest rate swaps were $416.0 million
and $272.9 million at December 31, 1998 and 1997, respectively. Weighted
average received and paid rates were 6.24% and 5.79%, for 1998. The increase
in net investment income related to interest rate swap contracts was $1.9
million and $.7 million for the years ended December 31, 1998 and 1997,
respectively. The fair value of these interest rate swap agreements as of
December 31, 1998 and 1997 were $11.0 million and $9.4 million,
respectively. 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.
During 1998, Phoenix entered into several interest rate floor contracts. The
notional amount of Phoenix's interest rate floor contracts was $570.0
million at December 31, 1998. The weighted average strike rate was 4.59% for
1998. The excess of the strike rates over the index rates (5- and 10-year
constant maturity treasury yields) was not significant. The fair value of
these interest rate floors at December 31, 1998 was $1.4 million. These
contracts do not require payment of notional principal.
Management of Phoenix considers the likelihood of any material loss on these
guarantees or interest rate swaps or floors to be remote.
45
<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,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Venture capital equity partnerships $140,591 $ 88,228
Transportation and equipment leases 80,953 78,024
Affordable housing partnerships 10,854
Investment in Aberdeen Asset Management 72,257 70,317
Investment in Beutel, Goodman & Co. Ltd. 31,214
Investment in other affiliates 23,387 5,453
Seed money in separate accounts 26,587 41,297
Other partnership interests 22,697 4,555
-------- --------
Total other invested assets $377,326 $319,088
======== ========
</TABLE>
NET INVESTMENT INCOME
The components of net investment income for the year ended December 31, were
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $598,892 $509,702 $469,713
Equity securities 6,469 4,277 4,689
Mortgage loans 83,101 85,662 84,318
Policy loans 146,477 122,562 117,742
Real estate 38,338 18,939 21,799
Leveraged leases 2,746 2,692 3,286
Other invested assets 22,364 31,365 18,751
Short-term investments 23,825 18,768 18,688
-------- -------- --------
Sub-total 922,212 793,967 738,986
Less investment expenses 23,328 22,621 27,391
-------- -------- --------
Net investment income $898,884 $771,346 $711,595
======== ======== ========
</TABLE>
Investment income of $8.4 million was not accrued on certain delinquent
mortgage loans and defaulted bonds at December 31, 1998. 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 $40.8 million and $51.3 million at December 31,
1998 and 1997, respectively. Interest income on restructured
46
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
mortgage loans that would have been recorded in accordance with the original
terms of such loans amounted to $4.9 million, $5.3 million and $3.1 million
in 1998, 1997 and 1996, respectively. Actual interest income on these loans
included in net investment income was $4.0 million, $3.8 million and $5.2
million in 1998, 1997 and 1996, respectively.
INVESTMENT GAINS AND LOSSES
Net unrealized gains and (losses) on securities available-for-sale and
carried at fair value for the year ended December 31, were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $ (7,040) $112,194 $(70,986)
Equity securities (91,880) 74,547 40,803
Deferred policy acquisition costs 6,694 (80,603) 51,528
Deferred income taxes (32,279) 38,064 7,432
-------- -------- --------
Net unrealized investment (losses) gains
on securities available-for-sale $(59,947) $ 68,074 $ 13,913
======== ======== ========
</TABLE>
Realized investment gains and losses for the year ended December 31, were as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $(4,295) $ 19,315 $(10,476)
Equity securities 11,939 26,290 59,794
Mortgage loans (6,895) 3,805 2,628
Real estate 67,522 44,668 24,711
Other invested assets (4,709) 17,387 765
-------- -------- --------
Net realized investment gains $ 63,562 $111,465 $ 77,422
======== ======== ========
</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>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Proceeds from disposals $912,696 $821,339 $1,118,594
Gross gains on sales $ 17,442 $ 27,954 $ 12,547
Gross losses on sales $ 33,641 $ 5,309 $ 25,575
</TABLE>
47
<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:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Phoenix Investment Partners' gross amounts:
Goodwill $321,793 $321,932
Investment management contracts 169,006 167,788
Noncompete covenant 5,000 5,000
Other 472 1,220
-------- --------
Totals 496,271 495,940
-------- --------
Other gross amounts:
Goodwill 79,217 65,585
Client listings 48,111 45,441
Intangible asset related to pension plan benefits 16,229 18,032
Other 1,690 279
-------- --------
Totals 145,247 129,337
-------- --------
Total gross goodwill and other intangible assets 641,518 625,277
Accumulated amortization - Phoenix Investment Partners (49,615) (27,579)
Accumulated amortization - other (64,874) (56,199)
-------- --------
Total net goodwill and other intangible assets $527,029 $541,499
======== ========
</TABLE>
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, Comprehensive Income and Equity.
48
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. NOTES PAYABLE
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Short-term debt $ 20,463 $ 15,539
Bank borrowings 205,778 263,732
Notes payable 5,438 14,632
Subordinated debentures 41,359
Surplus notes 175,000 175,000
Secured debt 1,214 2,182
-------- --------
Total notes payable $449,252 $471,085
======== ========
</TABLE>
Phoenix has various lines of credit established with major commercial banks.
As of December 31, 1998, Phoenix had outstanding balances totaling $219.7
million. The total unused credit was $190.7 million. Interest rates ranged
from 5.24% to 7.98% in 1998.
Maturities of other indebtedness are as follows: 1999--$20.5 million;
2000--$38.3 million; 2001--$29.2 million; 2002--$318.3 million; 2003--$1.1
million; 2004 and thereafter--$41.9 million.
Interest expense was $29.9 million, $32.5 million and $18.0 million for the
years ended December 31, 1998, 1997 and 1996, respectively.
7. INCOME TAXES
A summary of income taxes (benefits) applicable to income before income
taxes and minority interest for the year ended December 31, was as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Income taxes
Current $80,322 $54,514 $59,673
Deferred (5,170) 3,663 21,010
------- ------- -------
Total $75,152 $58,177 $80,683
======= ======= =======
</TABLE>
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
49
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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>
1998 1997 1996
% % %
<S> <C> <C> <C> <C> <C> <C>
Income tax expense at statutory rate $73,637 35 $81,818 35 $67,488 35
Dividend received deduction and
tax-exempt interest (3,691) (1) (2,513) (1) (2,107) (1)
Other, net 5,206 2 (8,017) (4) 2,736 1
------- -- ------- -- ------ --
75,152 36 71,288 30 68,117 35
Differential earnings (equity tax) (13,111) (5) 12,566 7
------- -- ------- -- ------ --
Income taxes $75,152 36 $58,177 25 $80,683 42
======= == ======= == ======= ==
</TABLE>
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,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Deferred policy acquisition costs $ 301,337 $ 303,500
Unearned premium/deferred revenue (148,112) (139,817)
Impairment reserves (23,393) (26,102)
Pension and other postretirement benefits (59,164) (56,643)
Investments 105,395 83,821
Future policyholder benefits (141,130) (140,980)
Other 28,730 45,053
---------- ----------
63,663 68,832
Net unrealized investment gains 51,597 84,134
Minimum pension liability (3,348) (2,526)
---------- ----------
Deferred income tax liability, net $ 111,912 $ 150,440
========== ==========
</TABLE>
Gross deferred income tax assets totaled $375 million and $366 million at
December 31, 1998 and 1997, respectively. Gross deferred income tax
liabilities totaled $487 million and $516 million at December 31, 1998 and
1997, 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, 1998 and 1997 will be
realized.
The Internal Revenue Service is currently examining Phoenix's tax returns
for 1995 through 1997. Management does not believe that there will be a
material adverse effect on the financial statements as a result of pending
tax matters.
50
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. PENSION AND OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT PLANS
PENSION PLANS
Phoenix has a multi-employer, noncontributory, 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 nonqualified supplemental defined benefit plan to provide
benefits in excess of amounts allowed pursuant to the 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 years ended December 31,
were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Components of net periodic benefit cost
Service cost $ 11,046 $ 10,278 $ 10,076
Interest cost 22,958 22,650 22,661
Expected return on plan assets (25,083) (22,055) (20,847)
Amortization of net transition asset (2,369) (2,369) (2,468)
Amortization of prior service cost 1,795 1,795 (22)
Amortization of net (gain) loss (1,247) 25 1,867
-------- -------- --------
Net periodic benefit cost $ 7,100 $ 10,324 $ 11,267
======== ======== ========
</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.
51
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The aggregate change in projected benefit obligation, change in plan assets,
and funded status of the plan were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Change in projected benefit obligation
Projected benefit obligation at beginning of year $ 335,436 $ 301,245
Service cost 11,046 10,278
Interest cost 22,958 22,650
Plan amendments 171
Actuarial loss 1,958 18,644
Benefit payments (17,936) (17,552)
--------- ---------
Benefit obligation at end of year $ 353,462 $ 335,436
========= =========
Change in plan assets
Fair value of plan assets at beginning of year $ 321,555 $ 283,245
Actual return on plan assets 58,225 53,093
Employer contributions 2,975 2,769
Benefit payments (17,936) (17,552)
--------- ---------
Fair value of plan assets at end of year $ 364,819 $ 321,555
========= =========
Funded status of the plan $ 11,357 $ (13,881)
Unrecognized net transition asset (14,217) (16,586)
Unrecognized prior service cost 16,185 17,980
Unrecognized net gain (75,921) (45,986)
--------- ---------
Net amount recognized $ (62,596) $ (58,473)
========= =========
Amounts recognized in the Consolidated Balance
Sheet consist of:
Accrued benefit liability $ (88,391) $ (83,724)
Intangible asset 16,229 18,032
Accumulated other comprehensive income 9,566 7,219
--------- ---------
$ (62,596) $ (58,473)
========= =========
</TABLE>
At December 31, 1998 and 1997, the nonqualified plan was unfunded and had
projected benefit obligations of $57.2 million and $50.4 million,
respectively. The accumulated benefit obligations as of December 31, 1998
and 1997 related to this plan were $48.4 million and $42.8 million,
respectively, and are included in other liabilities.
52
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Phoenix recorded, as a reduction of equity, an additional minimum pension
liability of $6.2 million and $4.7 million, net of income taxes, at December
31, 1998 and 1997, respectively, representing the excess of accumulated
benefit obligations over the fair value of plan assets and accrued pension
liabilities for the nonqualified plan. Phoenix has also recorded an
intangible asset of $16.2 million and $18.0 million as of December 31, 1998
and 1997 related to the nonqualified 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 1998 and 1997. The discount rate assumption for 1998
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% in 1998 and 1997.
The pension plan's assets include corporate and government debt securities,
equity securities, real estate, venture capital partnerships, 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, 1998, 1997 and 1996 were $4.1 million, $3.8 million
and $4.2 million, respectively.
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 components of net periodic postretirement benefit cost for the year
ended December 31, were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Components of net periodic benefit cost
Service cost $3,436 $3,136 $2,765
Interest cost 4,572 4,441 4,547
Amortization of net gain (1,232) (1,527) (1,576)
------ ------ ------
Net periodic benefit cost $6,776 $6,050 $5,736
====== ====== ======
</TABLE>
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.
53
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The plan's change in projected benefit obligation, change in plan assets,
and funded status were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Change in projected postretirement benefit obligation
Projected benefit obligation at beginning of year $ 66,618 $ 63,656
Service cost 3,436 3,136
Interest cost 4,572 4,441
Actuarial (gain) loss 397 (518)
Benefit payments (4,080) (4,098)
-------- --------
Projected benefit obligation at end of year $ 70,943 $ 66,617
-------- --------
Change in plan assets
Employer contributions $ 4,080 $ 4,098
Benefit payments (4,080) (4,098)
-------- --------
Fair value of plan assets at end of year $ $
-------- --------
Funded status of the plan $(70,943) $(66,617)
Unrecognized net gain (26,408) (28,037)
-------- --------
Accrued benefit liability $(97,351) $(94,654)
======== ========
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation was 7.0% at December 31, 1998 and 1997.
54
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
For purposes of measuring the accumulated postretirement benefit obligation
the 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. Based on this assumption the health care costs were
assumed to increase 8.5% in 1998.
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 $4.6 million and the annual service and
interest cost by $.7 million, before taxes. Decreasing the assumed health
care cost trend rates by one percentage point in each year would decrease
the accumulated postretirement benefit obligation by $4.3 million and the
annual service and interest cost by $.6 million, before taxes. Gains and
losses that occur because actual experience differs from the estimates are
amortized over the average future service period of employees.
OTHER POSTEMPLOYMENT BENEFITS
Phoenix recognizes the costs and obligations of severance, disability and
related life insurance and health care benefits to be paid to inactive or
former employees after employment but before retirement. Other
postemployment benefit expense was ($.5) million for 1998, $.4 million for
1997 and $.4 million for 1996.
55
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. COMPREHENSIVE INCOME
The components of, and related tax effects for, other comprehensive income
for the years ended December 31, were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
UNREALIZED (LOSSES) GAINS ON SECURITIES
AVAILABLE-FOR-SALE:
Before-tax amount $(72,255) $151,210 $ 65,374
Tax expense (benefit) (25,288) 52,923 22,881
-------- -------- --------
Totals (46,967) 98,287 42,493
-------- -------- --------
RECLASSIFICATION ADJUSTMENT FOR NET GAINS
REALIZED IN NET INCOME:
Before-tax amount (19,970) (46,481) (43,969)
Tax (benefit) (6,990) (16,268) (15,389)
-------- -------- --------
Totals (12,980) (30,213) (28,580)
-------- -------- --------
NET UNREALIZED (LOSSES) GAINS ON SECURITIES
AVAILABLE-FOR-SALE:
Before-tax amount (92,225) 104,729 21,405
Tax expense (benefit) (32,278) 36,655 7,492
-------- -------- --------
Totals $(59,947) $ 68,074 $ 13,913
======== ======== ========
MINIMUM PENSION LIABILITY ADJUSTMENT:
Before-tax amount $ (2,347) $ (3,232) $ 1,910
Tax expense (benefit) (821) (1,131) 669
-------- -------- --------
Totals $ (1,526) $ (2,101) $ 1,241
======== ======== ========
</TABLE>
56
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following table summarizes accumulated other comprehensive income for
the years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
NET UNREALIZED (LOSSES) GAINS ON SECURITIES
AVAILABLE-FOR-SALE:
Balance, beginning of year $160,457 $ 92,383 $ 78,470
Change during period (59,947) 68,074 13,913
-------- -------- --------
Balance, end of year 100,510 160,457 92,383
-------- -------- --------
MINIMUM PENSION LIABILITY ADJUSTMENT:
Balance, beginning of year (4,693) (2,592) (3,833)
Change during period (1,526) (2,101) 1,241
-------- -------- --------
Balance, end of year (6,219) (4,693) (2,592)
-------- -------- --------
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Balance, beginning of year 155,764 89,791 74,637
Change during period (61,473) 65,973 15,154
-------- -------- --------
Balance, end of year $ 94,291 $155,764 $ 89,791
======== ======== ========
</TABLE>
10. SEGMENT INFORMATION
Phoenix is organized by lines of business that include similar product
groupings. Lines of businesses have been grouped into the following
reportable segments: Individual Insurance, Life Reinsurance, Group Life and
Health Insurance and Securities Management. The category "Individual
Insurance" aggregates the Individual Traditional, Universal Life, Variable
Universal Life and Variable Annuity lines of business. The category "All
Other" includes the combined financial results of segments that individually
are below the quantitative thresholds. Those segments include General Lines
Brokerage and several small individual insurance lines. In addition, the
category "All Other" contains unallocated investment income, unallocated
expenses and realized investment gains related to capital in excess of
segment requirements, as well as certain assets such as equity securities
and venture capital. Phoenix calculates taxes at a flat rate of 35% on the
operating income of its insurance line segments and therefore, does not
allocate permanent tax differences to these segments. Also, Phoenix does not
allocate unusual or extraordinary items to its segments.
57
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following table summarizes significant financial amounts by reportable
segment:
<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED
DECEMBER 31, 1998 GROUP LIFE
(IN MILLIONS) INDIVIDUAL LIFE & HEALTH SECURITIES ALL
INSURANCE REINSURANCE INSURANCE MANAGEMENT OTHER TOTALS
---------- ----------- ---------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues from external sources $ 1,354 $ 64 $440 $214 $400 $ 2,472
Intersegment revenues 18 41 59
Net investment income 708 19 45 2 75 849
Interest expense 15 1 16
Policyholder dividends 344 344
Increase in DAC (9) (5) (5) (19)
Depreciation and amortization expense 4 1 26 14 45
Other noncash items:
Increase in policy liabilities and accruals 596 38 16 36 686
Minority interest in operating income 14 5 19
Segment operating income (a) $ 50 $ 12 $ 26 $ 23 $ 1 $ 112
======= ==== ==== ==== ==== =======
Deferred policy acquisition costs $ 1,035 $ 27 $ 18 $ 1,080
Total segment assets $16,177 $398 $701 $557 $938 $18,771
======= ==== ==== ==== ==== =======
AT AND FOR THE YEAR ENDED
DECEMBER 31, 1997 GROUP LIFE
(IN MILLIONS) INDIVIDUAL LIFE & HEALTH SECURITIES ALL
INSURANCE REINSURANCE INSURANCE MANAGEMENT OTHER TOTALS
---------- ----------- ---------- ---------- ----- ------
Revenues from external sources $ 1,200 $ 57 $428 $124 $ 298 $ 2,107
Intersegment revenues 16 30 46
Net investment income 586 19 42 2 101 750
Interest expense 4 1 5
Policyholder dividends 328 328
Increase in DAC (32) (5) (13) (50)
Depreciation and amortization expense 3 1 12 36 52
Other noncash items:
Increase in policy liabilities and accruals 508 3 24 50 585
Minority interest in operating income 12 2 14
Segment operating income (a) $ 59 $ 10 $ 33 $ 16 $ (17) $ 101
======= ==== ==== ==== ==== =======
Deferred policy acquisition costs $ 1,014 $ 22 $ 6 $ 1,042
Total segment assets $14,946 $318 $656 $615 $1,101 $17,636
======= ==== ==== ==== ====== =======
</TABLE>
(a) Before income taxes and after policyholder dividends on Individual
Insurance.
58
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED
DECEMBER 31, 1996 GROUP LIFE
(IN MILLIONS) INDIVIDUAL LIFE & HEALTH SECURITIES ALL
INSURANCE REINSURANCE INSURANCE MANAGEMENT OTHER TOTALS
---------- ----------- ---------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues from external sources $ 1,111 $121 $415 $153 $ 140 $ 1,940
Intersegment revenues 14 33 47
Net investment income 562 16 37 2 91 708
Interest expense 3 2 5
Policyholder dividends 297 297
Increase in DAC (39) (2) (20) (61)
Depreciation and amortization expense 3 1 11 11 26
Other noncash items:
Increase in policy liabilities and
accruals 465 8 40 49 562
Minority interest in operating income 17 (3) 14
Segment operating income (a) $ 59 $ 9 $ 12 $ 28 $ (9) $ 99
======= ==== ==== ==== ====== =======
Deferred policy acquisition costs $ 905 $ 18 $ 21 $ 944
Total segment assets $12,302 $304 $597 $366 $ 965 $14,534
======= ==== ==== ==== ====== =======
</TABLE>
(a) Before income taxes and after policyholder dividends on Individual
Insurance.
59
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SEGMENT RECONCILIATION
The following is a reconciliation of the totals of reportable segment
revenues, operating income and assets to Phoenix's consolidated totals:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Total revenues for reportable segments $ 3,380 $ 2,903 $ 2,695
Realized investment gains 64 111 77
Unallocated net investment income 50 24 4
Elimination of intersegment revenues (59) (47) (47)
------- ------- -------
Total consolidated revenues $ 3,435 $ 2,991 $ 2,729
======= ======= =======
OPERATING INCOME
Total operating income for reportable segments $ 112 $ 101 $ 99
Realized investment gains 64 111 77
Unallocated amounts:
Net investment income 50 22 4
Interest expense (14) (23) (13)
Other unallocated amounts (14) 9 9
Reclassification of minority interest 12 14 17
------- ------- -------
Total consolidated operating income $ 210 $ 234 $ 193
======= ======= =======
ASSETS
Total assets for reportable segments $18,771 $17,636 $14,534
Unallocated amounts:
Investments and accrued investment income
attributable to unallocated capital 725 846 859
Goodwill and other intangible assets 15 21 20
Other unallocated amounts 10 35 41
------- ------- -------
Total consolidated assets $19,521 $18,538 $15,454
======= ======= =======
</TABLE>
11. 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 $106.7 million and $109.0 million,
respectively, at December 31, 1998 and 1997. 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 $173.5 million and
$164.4 million at December 31, 1998 and 1997, respectively.
Rental expenses for operating leases, principally with respect to buildings,
amounted to $14.5 million, $14.9 million and $14.8 million in 1998, 1997,
and 1996, respectively. Future minimum rental payments under noncancelable
operating leases were approximately $45.3 million as of December 31, 1998,
payable as follows: 1999--$14.8 million; 2000--$12.0 million; 2001--$7.9
million; 2002--$5.8 million; 2003--$3.2 million; and $1.6 million
thereafter.
60
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
12. 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. For direct
issues, the maximum of individual life insurance retained by Phoenix on any
one life is $8 million for single life and joint first-to-die policies and
to $10 million for joint last-to-die policies, with excess amounts ceded to
reinsurers. Phoenix reinsures 80% of the mortality risk on the inforce block
of the Confederation Life business acquired on December 31, 1997, and 90% of
the mortality risk on certain new issues of term and universal life
products. In addition, Phoenix entered into a separate reinsurance agreement
on October 1, 1998 to reinsure 80% of the mortality risk on a substantial
portion of its otherwise retained individual life insurance business.
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>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Direct premiums $ 1,719,393 $ 1,592,800 $ 1,473,869
Reinsurance assumed 505,262 329,927 276,630
Reinsurance ceded (371,854) (282,121) (231,677)
------------ ------------ ------------
Net premiums $ 1,852,801 $ 1,640,606 $ 1,518,822
============ ============ ============
Direct policy and contract claims incurred $ 728,062 $ 626,834 $ 575,824
Reinsurance assumed 433,242 410,704 170,058
Reinsurance ceded (407,780) (373,127) (160,646)
------------ ------------ ------------
Net policy and contract claims incurred $ 753,524 $ 664,411 $ 585,236
============ ============ ============
Direct life insurance in force $121,442,041 $ 120,394,664 $108,816,856
Reinsurance assumed 110,632,110 84,806,585 61,109,836
Reinsurance ceded (135,817,986) (74,764,639) (51,525,976)
------------ ------------ ------------
Net insurance in force $ 96,256,165 $130,436,610 $118,400,716
============ ============ ============
</TABLE>
Irrevocable letters of credit aggregating $5.3 million at December 31, 1998
have been arranged with United States commercial banks in favor of Phoenix
to collateralize the ceded reserves.
13. PARTICIPATING LIFE INSURANCE
Participating life insurance in force was 72.3% and 79.6% of the face value
of total individual life insurance in force at December 31, 1998 and 1997,
respectively. The premiums on participating life insurance policies were
75.7%, 83.5% and 84.1% of total individual life insurance premiums in 1998,
1997 and 1996, respectively.
61
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
14. DEFERRED POLICY ACQUISITION COSTS
The following reflects the amount of policy acquisition costs deferred and
amortized for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $1,038,407 $ 926,274 $ 816,128
Acquisition cost deferred 171,618 295,189 153,873
Amortized to expense during the year (140,084) (105,071) (95,255)
Adjustment to net unrealized investment
gains (losses) included in other
comprehensive income 6,694 (77,985) 51,528
---------- ---------- ---------
Balance at end of year $1,076,635 $1,038,407 $ 926,274
========== ========== =========
</TABLE>
15. MINORITY INTEREST
Phoenix's interests in Phoenix Investment Partners and American Phoenix
Corporation, through its wholly-owned subsidiary PM Holdings, are
represented by ownership of approximately 60% and 85%, respectively, of the
outstanding shares of common stock at December 31, 1998. Earnings and equity
attributable to minority shareholders are included in minority interest in
the consolidated financial statements.
16. 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.
62
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 130 and 800 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.
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.
63
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FAIR VALUE SUMMARY
The estimated fair values of the financial instruments as of December 31,
were as follows:
<TABLE>
<CAPTION>
1998 1997
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 132,634 $ 132,634 $ 159,307 $ 159,307
Short-term investments 240,911 240,911 1,078,276 1,078,276
Debt securities 8,575,227 8,666,311 7,213,966 7,316,601
Equity securities 304,545 304,545 335,888 335,888
Mortgage loans 797,343 831,919 927,501 956,041
Policy loans 2,008,260 2,122,389 1,986,728 2,104,704
----------- ----------- ----------- -----------
Total financial assets $12,058,920 $12,298,709 $11,701,666 $11,950,817
=========== =========== =========== ===========
Financial liabilities:
Policy liabilities $ 783,400 $ 783,400 $ 902,200 $ 902,200
Securities sold subject to repurchase
agreements 137,473 137,473
Notes payable 449,252 449,252 471,085 471,085
----------- ----------- ----------- -----------
Total financial liabilities $ 1,232,652 $ 1,232,652 $ 1,510,758 $ 1,510,758
=========== =========== =========== ===========
</TABLE>
17. CONTINGENCIES
FINANCIAL GUARANTEES
As a result of the sale of real estate properties, in December 1998, Phoenix
is no longer 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 principal amount of bonds guaranteed
by Phoenix at December 31, 1997 was $88.7 million.
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. Phoenix estimates the
cost of settlement to be $40 million after tax. A $25 million after tax
liability was recorded in 1995. In addition, $7 million after tax was
expensed in 1996. The after tax costs of $12.5 million for 1997 and $6.7
million for 1998 were directly offset by a release of the liability in those
years. 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.
64
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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, 1998, 1997 and 1996, there
were no material practices not prescribed by the Insurance Department of the
State of New York. Statutory surplus differs from 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 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>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory net income $108,652 $ 66,599 $ 70,261
Deferred policy acquisition costs, net 18,538 48,821 58,618
Future policy benefits (53,847) (9,145) (16,793)
Pension and postretirement expenses (17,334) (7,955) (23,275)
Investment valuation allowances 94,873 84,975 81,841
Interest maintenance reserve 1,415 17,544 (5,158)
Deferred income taxes (39,983) (36,250) (67,064)
Other, net 12,459 2,118 4,808
-------- -------- --------
Net income, as reported $124,773 $166,707 $103,238
======== ======== ========
</TABLE>
The following reconciles the statutory surplus and asset valuation reserve
(AVR) of Phoenix as reported to regulatory authorities to equity as reported
in these financial statements:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Statutory surplus, surplus notes and AVR $1,205,635 $1,152,820
Deferred policy acquisition costs, net 1,259,316 1,227,782
Future policy benefits (465,268) (395,436)
Pension and postretirement expenses (174,273) (169,383)
Investment valuation allowances 2,002 (27,738)
Interest maintenance reserve 35,303 33,794
Deferred income taxes (25,593) (12,051)
Surplus notes (157,500) (157,500)
Other, net 24,062 (11,904)
---------- ----------
Equity, as reported $1,703,684 $1,640,384
========== ==========
</TABLE>
65
<PAGE>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
19. PRIOR PERIOD ADJUSTMENT
In 1998, Phoenix revised the accounting for partnerships involved in
leveraged lease arrangements for 1997 and 1996. Opening retained earnings at
December 31, 1995 has been increased by $7.7 million. The Consolidated
Balance Sheet as of December 31, 1997 was revised by increasing the
following balances: other invested assets by $18.9 million, deferred income
taxes by $6.6 million and retained earnings by $12.3 million. The effect on
the Consolidated Statement of Income, Comprehensive Income and Equity was an
increase in net income of $2.1 million and $2.5 million for the years ended
1997 and 1996, respectively.
20. SUBSEQUENT EVENTS
PHOENIX INVESTMENT PARTNERS, LTD.
On March 2, 1999, Phoenix Investment Partners completed its acquisition of
the retail mutual fund and closed-end fund business of the New York City
based Zweig Group. Under the terms of the agreement, Phoenix Investment
Partners paid $135.0 million at closing and will pay up to an additional
$29.0 million over the next three years based on revenue growth of the Zweig
funds. The acquisition increases Phoenix Investment Partners' assets under
management by approximately $4.4 billion.
OCCUPATIONAL ACCIDENT REINSURANCE
Effective March 1, 1995, Phoenix became a participant in an occupational
accident reinsurance pool. In addition, effective October 1, 1996, Phoenix
and American Phoenix Life and Reassurance Company, an indirect wholly owned
subsidiary of Phoenix, became a participant in a reinsurance facility of
occupational accident reinsurance. A significant portion of the risk
associated with the occupational accident reinsurance pool and the
reinsurance facility is further retroceded by Phoenix and American Phoenix
Life to several other unaffiliated insurance entities. Phoenix has
terminated membership in the pool effective March 1, 1999 while American
Phoenix Life and Phoenix terminated participation in the reinsurance
facility effective October 1, 1998.
Management's assessment of the reinsurance arrangements and related
financial exposure to Phoenix and American Phoenix Life is ongoing. Based on
current facts and circumstances, management believes these transactions will
not materially affect the financial condition of Phoenix or American Phoenix
Life.
66
<PAGE>
PHOENIX HOME LIFE
VARIABLE UNIVERSAL LIFE ACCOUNT
As of December 31, 1998, there had been no sales of the product described in
this Prospectus and, therefore, no deposits were made to Phoenix Home Life
Variable Universal Life Account. Accordingly, no financial statements are
available for the VUL Account.
67
<PAGE>
APPENDIX A
GLOSSARY OF SPECIAL TERMS
- --------------------------------------------------------------------------------
The following is a list of terms and their meanings when used in this
prospectus.
ATTAINED AGE: The age of the Insured on the birthday nearest the most recent
Policy Anniversary.
BENEFICIARY: The person or persons specified by the Policyowner as entitled to
receive the death benefits under a Policy.
DEBT: Outstanding loans against a Policy, plus accrued interest.
FUNDS: The Phoenix Edge Series Fund, BT Insurance Funds Trust, Federated
Insurance Series, Templeton Variable Products Series Fund and Wanger Advisors
Trust.
GENERAL ACCOUNT: The general asset account of Phoenix.
ISSUE PREMIUM: The premium payment made in connection with issuing the 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 of each
month thereafter or, if such day does not fall within a given month, the last
day of that month will be the Monthly Calculation Day.
NET ASSET VALUE: The worth of one share of a Series of a Fund at the end of a
valuation period. Net Asset Value is computed by adding the value of a Series'
holdings plus other assets, minus liabilities and then dividing the result by
the number of shares outstanding.
PAYMENT DATE: The Valuation Date on which we receive a premium payment or loan
repayment, unless it is received after the close of the New York Stock Exchange
("NYSE"), in which case it will be the next Valuation Date.
PLANNED ANNUAL PREMIUM: The premium amount that the Policyowner agrees to pay
each Policy Year. It must be at least equal to the minimum required premium for
the face amount of insurance selected but may be no greater than the maximum
premium allowed for the face amount selected.
POLICY ANNIVERSARY: Each anniversary of the Policy Date.
POLICY DATE: The Policy Date as shown on the Schedule Page of the Policy. It is
the date from which we measure Policy Years and Policy Anniversaries.
POLICY VALUE: The sum of a Policy's share in the values of each Subaccount of
the VUL Account plus the Policy's share in the values of the Guaranteed Interest
Account.
POLICY YEAR: The first Policy Year is the 1-year period from the Policy Date up
to, but not including, the first Policy Anniversary. Each succeeding Policy Year
is the 1-year period from the Policy Anniversary up to, but not including, the
next Policy Anniversary.
SERIES: A separate investment portfolio of the Fund.
SUBACCOUNTS: Accounts within the VUL Account to which nonloaned assets under a
Policy are allocated.
TARGET PREMIUM: The level annual premium at which the sales load is reduced on a
current basis.
VALUATION DATE: For any Subaccount, each date on which we calculate the net
asset value of a Fund.
VALUATION PERIOD: For any Subaccount, the period in days from the end of one
Valuation Date through the next.
VUL ACCOUNT (ACCOUNT): Phoenix Home Life Variable Universal Life Account, a
separate account of the company.
68
<PAGE>
APPENDIX B
PERFORMANCE HISTORY
- --------------------------------------------------------------------------------
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, PREMIUM SALES CHARGES AND SURRENDER CHARGES, IF APPLICABLE. FOR
THIS INFORMATION SEE APPENDIX C "ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES
("ACCOUNT VALUES") AND CASH SURRENDER VALUES." Performance information may be
expressed as yield and effective yield of the Phoenix-Goodwin Money Market
Subaccount, as yield of the Phoenix-Goodwin Multi-Sector Fixed Income Subaccount
and as total return of any Subaccount. Current yield for the Phoenix-Goodwin
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 VUL Account level.
Yield calculations of the Phoenix-Goodwin 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 Phoenix-Goodwin
Money Market Subaccount based on a 7-day period ending December 31, 1998.
Example:
Assumptions:
Value of hypothetical pre-existing account with exactly one
unit at the beginning of the period:...................... 1.501512
Value of the same account (excluding capital changes) at the
end of the 7-day period:.................................. 1.50245
Calculation:
Ending account value ..................................... 1.50245
Less beginning account value ............................. 1.501512
Net change in account value .............................. 0.000938
Base period return:
(adjusted change/beginning account value) ................ 0.000625
Current yield = return x (365/7) = ......................... 3.26%
Effective yield = [(1 + return)(365/7)] - 1 = .............. 3.31%
The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield for
a stated period of time, or other investment companies, due to charges which
will be deducted on the VUL Account level.
For the Phoenix-Goodwin Multi-Sector Fixed Income 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.
The following performance tables display historical investment results of
the Subaccounts of the VUL Account. This information may be useful in helping
potential investors in deciding which Subaccounts to choose and in assessing the
competence of the investment advisors. The performance figures shown should be
considered in light of the investment objectives and policies, characteristics
and quality of the Subaccounts and market conditions during the periods of time
quoted. The performance figures should not be considered as estimates or
predictions of future performance. Investment return of the Subaccounts are not
guaranteed and will fluctuate. Below are quotations of average annual total
return calculated as described above for all Subaccounts with at least one year
of results. POLICY CHARGES (INCLUDING COST OF INSURANCE, PREMIUM TAX CHARGES,
PREMIUM SALES CHARGES AND SURRENDER CHARGES) ARE NOT REFLECTED.
69
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED DECEMBER 31, 1998(1,3)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SERIES INCEPTION DATE 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series..................... 7/15/97 27.99% N/A N/A 22.48%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series...................... 5/1/90 24.38% 11.47% N/A 9.41%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series........................... 9/17/96 -7.25% N/A N/A -19.21%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate Securities Series........ 5/1/95 -23.54% N/A N/A 10.03%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series........................ 3/2/98 N/A N/A N/A 22.97%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Balanced Series............................ 5/1/92 15.64% 11.41% N/A 11.00%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Growth Series.............................. 1/1/83 26.35% 16.84% 18.67% 17.90%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series........................ 10/10/82 2.09% 3.24% 3.93% 4.97%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income Series........... 1/1/83 -6.92% 5.20% 7.78% 8.67%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Allocation Series................ 9/17/84 17.36% 11.33% 12.59% 12.34%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Theme Series..................... 1/29/96 40.62% N/A N/A 21.65%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series...................... 3/2/98 N/A N/A N/A 7.87%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series.................. 3/2/98 N/A N/A N/A 17.31%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series....................... 3/2/98 N/A N/A N/A -13.78%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series....................... 3/2/98 N/A N/A N/A 18.57%
- -----------------------------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund............... 8/22/97 18.18% N/A N/A 7.07%
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II........... 3/28/94 4.58% N/A N/A 4.89%
- -----------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II......................... 3/1/94 -0.25% N/A N/A 7.72%
- -----------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(2)............... 5/1/98 N/A N/A N/A 0.98%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2(2).............. 11/28/88 3.07% 9.64% 10.40% 10.24%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund -- Class 2(2)............ 9/15/96 -23.45% N/A N/A -24.14%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2)................. 5/1/92 5.95% 9.77% N/A 12.28%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2)......................... 11/4/88 -1.86% 9.18% 10.48% 10.18%
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty....................................... 2/1/99 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap............................. 5/1/95 13.06% N/A N/A 19.55%
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger Twenty.............................................. 2/1/99 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Small Cap...................................... 5/1/95 5.59% N/A N/A 25.06%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average annual total return is the annual compound return that results
from holding an initial investment of $10,000 for the time period indicated.
Returns are net of $150 Issue Expense Charge, $5 Monthly Administrative Fee,
Investment Management Fees and Mortality and Expense Risk Charges.
(2) Because Class 2 shares were not offered until May 1, 1997 (November 10, 1998
for Mutual Shares Investments), performance shown for periods prior to that
date represent the historical results of Class 1 shares. Performance since
that date reflect Class 2's high annual fees and expenses resulting from its
Rule 12b-1 plan. Maximum annual plan expenses are 0.25%.
(3) Performance data quoted represents the investment return of the appropriate
Series adjusted for the Phoenix Flex Edge Success charges had the Subaccount
started on the inception date of the appropriate Series.
Advertisements, sales literature and other communications may contain
information about any Series' or Advisor'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 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
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"), Dow Jones
Industrial Average, First Boston High Yield Index and Salomon Brothers Corporate
and Government Bond Indices.
Occasionally, The VUL Account may include in advertisements containing total
return, the ranking of those performance figures relating to such figures for
groups of Subaccounts having similar investment objectives as categorized by
ranking services such as:
Lipper Analytical Services, Inc. Morningstar, Inc.
CDA Investment Technologies, Inc. Weisenberger Financial Services, Inc.
70
<PAGE>
Additionally, the Funds may compare a Series' performance results to other
investment or savings vehicles (such as certificates of deposit) and may refer
to results published in various publications such as:
Changing Times Forbes
Fortune Money
Barrons Business Week
Investor's Business Daily The Stanger Register
Stanger's Investment Advisor 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 Personal Investor
The Funds may occasionally 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:
S&P 500 Dow Jones Industrial Average
Europe Australia Far East Index (EAFE) Consumers Price Index
Shearson Lehman Corporate Index 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 1940-43. 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 traded on the NYSE.
The Funds' Annual Reports, available upon request and without charge,
contain a discussion of the performance of the Funds and a comparison of that
performance to a securities market index.
71
<PAGE>
<TABLE>
ANNUAL TOTAL RETURN(1,3)
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
SERIES 1983 1984 1985 1986 1987 1988 1989 1990
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series N/A N/A N/A N/A N/A N/A N/A -8.63%
- -------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate N/A N/A N/A N/A N/A N/A N/A N/A
Securities Series
- -------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Balanced Series N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Growth Series 31.84% 9.79% 33.85% 19.51% 6.08% 3.09% 34.53% 3.32%
- -------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 7.51% 9.34% 7.17% 5.66% 5.67% 6.60% 8.03% 7.51%
- -------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income 5.16% 10.45% 19.65% 18.34% 0.28% 9.61% 6.92% 4.54%
Series
- -------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Allocation Series N/A -1.31% 26.33% 14.77% 11.66% 1.53% 18.53% 5.15%
- -------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Theme Series N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A N/A N/A N/A N/A N/A N/A N/A
Securities II
- -------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2(2) N/A N/A N/A N/A N/A 0.21% 12.13% -8.95%
- -------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2) N/A N/A N/A N/A N/A -0.99% 13.48% -11.99%
- -------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
ANNUAL TOTAL RETURN(1,3) (continued)
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
SERIES 1991 1992 1993 1994 1995 1996 1997 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A 5.46% 30.64%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series 18.79% -13.52% 37.33% -0.73% 8.72% 17.71% 11.16% 26.92%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A -0.06% -32.94% -5.21%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate N/A N/A N/A N/A 17.19% 32.10% 21.09% -21.83%
Securities Series
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A 25.45%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Balanced Series N/A 9.06% 7.75% -3.61% 22.37% 9.68% 17.00% 18.07%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Growth Series 41.60% 9.41% 18.75% 0.66% 29.85% 11.69% 20.12% 28.98%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 5.14% 2.75% 2.06% 3.01% 4.86% 4.19% 4.35% 4.26%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income 18.66% 9.23% 14.99% -6.21% 22.56% 11.52% 10.21% -4.91%
Series
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Allocation Series 28.27% 9.79% 10.12% -2.19% 17.27% 8.18% 19.78% 19.84%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Strategic Theme Series N/A N/A N/A N/A N/A 9.55% 16.25% 43.55%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A 10.07%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A 19.67%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A -11.95%
- ---------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A 20.97%
- ---------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund N/A N/A N/A N/A N/A N/A -6.87% 20.64%
- ---------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A N/A N/A 1.99% 7.90% 3.37% 7.71% 6.80%
Securities II
- ---------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A N/A -4.26% 19.42% 13.40% 12.92% 1.88%
- ---------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A N/A 2.62%
- ---------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2(2) 26.42% 6.97% 24.86% -4.00% 21.29% 17.64% 14.37% 5.27%
- ---------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund -- Class 2(2) N/A N/A N/A N/A N/A 1.05% -29.95% -21.69%
- ---------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2) N/A -6.80% 45.85% -3.27% 14.56% 22.77% 12.76% 8.17%
- ---------------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2) 26.22% 6.02% 32.68% -3.25% 23.97% 21.17% 10.75% 0.24%
- ---------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A 33.96% 31.15% -2.24% 15.41%
- ---------------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A 16.01% 45.64% 28.41% 7.83%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Rates are net of Mortality and Expense Risk Charges and Investment
Management fees for the Subaccounts.
(2) Because Class 2 shares were not offered until May 1, 1997 (November 10, 1998
for Mutual Shares Investments), performance shown for periods prior to that
date represent the historical results of Class 1 shares. Performance since
that date reflect Class 2's high annual fees and expenses resulting from its
Rule 12b-1 plan. Maximum annual plan expenses are 0.25%.
(3) Performance data quoted represents the investment return of the appropriate
Series adjusted for the Phoenix Flex Edge Success charges had the Subaccount
started on the inception date of the appropriate Series.
THESE RATES OF RETURN ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
72
<PAGE>
APPENDIX C
ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES ("ACCOUNT VALUES") AND
CASH SURRENDER VALUES
- --------------------------------------------------------------------------------
The tables on the following pages illustrate how a Policy's death benefits,
account values and cash surrender value could vary over time assuming constant
hypothetical gross (after tax) annual investment returns of 0%, 6% and 12%. The
Policy benefits will differ from those shown in the tables if the annual
investment returns are not absolutely constant. That is, the figures will be
different if the returns averaged 0%, 6% or 12% over a period of years but went
above or below those figures in individual Policy Years. The Policy benefits
also will differ, depending on your premium allocations to each Subaccount of
the VUL Account, if the overall actual rates of return averaged 0%, 6% or 12%,
but went above or below those figures for the individual Subaccounts. The tables
are for standard risk males and females who are nonsmokers. 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. Account Values
and Cash Surrender Values may be lower for risk classes involving higher
mortality risk. Planned premium payments are assumed to be paid at the beginning
of each Policy Year.
The death benefit, account value and Cash Surrender Value amounts reflect
the following current charges:
1. Monthly Administrative Charge of $5 per month ($10 per month guaranteed
maximum in all states except New York and New Jersey. In New York and
New Jersey guaranteed maximum is $7.50 per month.).
2. An average Premium Tax Charge of 2.25%.
3. A Federal Tax Charge of 1.5%.
4. Cost of Insurance Charge. The tables illustrate cost of insurance at
both the current rates and at the maximum rates guaranteed in the
Policies.
5. Mortality and Expense Risk Charge, which is a monthly charge equivalent
to .40% on an annual basis (or .25% on an annual basis after the 10th
Policy Year) of your policy value.
These illustrations also assume an average investment advisory fee of .70%
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 .30%. All other Fund expenses, except capital items such as
brokerage commissions, are paid by the Advisor or 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, 1998,
average total operating expenses for the Series would have been approximately
1.43% 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 -1.00%, 5.00% and 11.00%, respectively. For individual
illustrations, interest rates ranging between 0% and 12% may be selected in
place of the 0%, 6% and 12% rates.
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.
The second column of each table shows the amount that would accumulate if an
amount equal to the premiums paid were invested to earn interest, after taxes,
at 5% compounded annually. These tables show that if a Policy is returned in its
very early years for payment of its Cash Surrender Value, that Cash Surrender
Value may be low in comparison to the amount of the premiums accumulated with
interest. Thus, the cost of owning a Policy for a relatively short time may be
high.
On request, we will furnish the Policyowner with a comparable illustration
based on the age and sex of the proposed insured person(s), standard risk
assumptions and the initial face amount and planned premium chosen.
73
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 760 810 100,000 810 860 100,000 860 910 100,000
2 1,000 2,153 1,506 1,539 100,000 1,653 1,687 100,000 1,807 1,840 100,000
3 1,000 3,310 2,238 2,255 100,000 2,532 2,549 100,000 2,851 2,868 100,000
4 1,000 4,526 2,955 2,955 100,000 3,447 3,447 100,000 4,001 4,001 100,000
5 1,000 5,802 3,657 3,657 100,000 4,398 4,398 100,000 5,267 5,267 100,000
6 1,000 7,142 4,343 4,343 100,000 5,387 5,387 100,000 6,661 6,661 100,000
7 1,000 8,549 5,011 5,011 100,000 6,412 6,412 100,000 8,193 8,193 100,000
8 1,000 10,027 5,708 5,708 100,000 7,526 7,526 100,000 9,934 9,934 100,000
9 1,000 11,578 6,383 6,383 100,000 8,680 8,680 100,000 11,847 11,847 100,000
10 1,000 13,207 7,034 7,034 100,000 9,873 9,873 100,000 13,950 13,950 100,000
11 1,000 14,917 7,708 7,708 100,000 11,158 11,158 100,000 16,322 16,322 100,000
12 1,000 16,713 8,358 8,358 100,000 12,490 12,490 100,000 18,936 18,936 100,000
13 1,000 18,599 8,984 8,984 100,000 13,871 13,871 100,000 21,820 21,820 100,000
14 1,000 20,579 9,585 9,585 100,000 15,301 15,301 100,000 25,002 25,002 100,000
15 1,000 22,657 10,159 10,159 100,000 16,783 16,783 100,000 28,514 28,514 100,000
16 1,000 24,840 10,706 10,706 100,000 18,319 18,319 100,000 32,395 32,395 100,000
17 1,000 27,132 11,226 11,226 100,000 19,910 19,910 100,000 36,684 36,684 100,000
18 1,000 29,539 11,715 11,715 100,000 21,558 21,558 100,000 41,428 41,428 100,000
19 1,000 32,066 12,173 12,173 100,000 23,265 23,265 100,000 46,673 46,673 105,948
20 1,000 34,719 12,597 12,597 100,000 25,033 25,033 100,000 52,448 52,448 115,911
@ 65 1,000 69,761 14,074 14,074 100,000 49,047 49,047 100,000 169,394 169,394 281,194
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
29.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
74
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 573 623 100,000 617 667 100,000 661 711 100,000
2 1,000 2,153 1,126 1,159 100,000 1,250 1,283 100,000 1,379 1,413 100,000
3 1,000 3,310 1,657 1,674 100,000 1,897 1,914 100,000 2,159 2,176 100,000
4 1,000 4,526 2,165 2,165 100,000 2,558 2,558 100,000 3,005 3,005 100,000
5 1,000 5,802 2,646 2,646 100,000 3,230 3,230 100,000 3,921 3,921 100,000
6 1,000 7,142 3,100 3,100 100,000 3,912 3,912 100,000 4,913 4,913 100,000
7 1,000 8,549 3,523 3,523 100,000 4,602 4,602 100,000 5,986 5,986 100,000
8 1,000 10,027 3,935 3,935 100,000 5,320 5,320 100,000 7,173 7,173 100,000
9 1,000 11,578 4,314 4,314 100,000 6,043 6,043 100,000 8,459 8,459 100,000
10 1,000 13,207 4,659 4,659 100,000 6,772 6,772 100,000 9,855 9,855 100,000
11 1,000 14,917 4,974 4,974 100,000 7,515 7,515 100,000 11,390 11,390 100,000
12 1,000 16,713 5,252 5,252 100,000 8,262 8,262 100,000 13,062 13,062 100,000
13 1,000 18,599 5,491 5,491 100,000 9,011 9,011 100,000 14,886 14,886 100,000
14 1,000 20,579 5,688 5,688 100,000 9,761 9,761 100,000 16,880 16,880 100,000
15 1,000 22,657 5,840 5,840 100,000 10,507 10,507 100,000 19,059 19,059 100,000
16 1,000 24,840 5,945 5,945 100,000 11,248 11,248 100,000 21,445 21,445 100,000
17 1,000 27,132 5,993 5,993 100,000 11,976 11,976 100,000 24,056 24,056 100,000
18 1,000 29,539 5,980 5,980 100,000 12,684 12,684 100,000 26,916 26,916 100,000
19 1,000 32,066 5,897 5,897 100,000 13,365 13,365 100,000 30,052 30,052 100,000
20 1,000 34,719 5,735 5,735 100,000 14,010 14,010 100,000 33,493 33,493 100,000
@ 65 1,000 69,761 -- -- -- 15,866 15,866 100,000 92,905 92,905 157,939
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
29.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
75
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 787 837 100,000 838 888 100,000 889 939 100,000
2 1,000 2,153 1,559 1,592 100,000 1,710 1,743 100,000 1,867 1,901 100,000
3 1,000 3,310 2,314 2,331 100,000 2,616 2,633 100,000 2,943 2,960 100,000
4 1,000 4,526 3,053 3,053 100,000 3,558 3,558 100,000 4,126 4,126 100,000
5 1,000 5,802 3,774 3,774 100,000 4,534 4,534 100,000 5,426 5,426 100,000
6 1,000 7,142 4,476 4,476 100,000 5,547 5,547 100,000 6,855 6,855 100,000
7 1,000 8,549 5,158 5,158 100,000 6,597 6,597 100,000 8,426 8,426 100,000
8 1,000 10,027 5,870 5,870 100,000 7,737 7,737 100,000 10,208 10,208 100,000
9 1,000 11,578 6,561 6,561 100,000 8,919 8,919 100,000 12,169 12,169 100,000
10 1,000 13,207 7,233 7,233 100,000 10,147 10,147 100,000 14,330 14,330 100,000
11 1,000 14,917 7,926 7,926 100,000 11,467 11,467 100,000 16,764 16,764 100,000
12 1,000 16,713 8,602 8,602 100,000 12,842 12,842 100,000 19,453 19,453 100,000
13 1,000 18,599 9,261 9,261 100,000 14,274 14,274 100,000 22,426 22,426 100,000
14 1,000 20,579 9,903 9,903 100,000 15,767 15,767 100,000 25,713 25,713 100,000
15 1,000 22,657 10,527 10,527 100,000 17,324 17,324 100,000 29,350 29,350 100,000
16 1,000 24,840 11,133 11,133 100,000 18,946 18,946 100,000 33,373 33,373 100,000
17 1,000 27,132 11,720 11,720 100,000 20,635 20,635 100,000 37,826 37,826 100,000
18 1,000 29,539 12,287 12,287 100,000 22,396 22,396 100,000 42,756 42,756 100,050
19 1,000 32,066 12,833 12,833 100,000 24,230 24,230 100,000 48,207 48,207 109,430
20 1,000 34,719 13,356 13,356 100,000 26,140 26,140 100,000 54,219 54,219 119,824
@ 65 1,000 69,761 17,232 17,232 100,000 53,230 53,230 100,000 178,723 178,723 296,681
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
76
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 618 668 100,000 664 714 100,000 709 759 100,000
2 1,000 2,153 1,218 1,251 100,000 1,347 1,381 100,000 1,483 1,516 100,000
3 1,000 3,310 1,798 1,814 100,000 2,051 2,068 100,000 2,327 2,343 100,000
4 1,000 4,526 2,356 2,356 100,000 2,773 2,773 100,000 3,246 3,246 100,000
5 1,000 5,802 2,890 2,890 100,000 3,512 3,512 100,000 4,246 4,246 100,000
6 1,000 7,142 3,399 3,399 100,000 4,267 4,267 100,000 5,333 5,333 100,000
7 1,000 8,549 3,881 3,881 100,000 5,037 5,037 100,000 6,517 6,517 100,000
8 1,000 10,027 4,355 4,355 100,000 5,843 5,843 100,000 7,829 7,829 100,000
9 1,000 11,578 4,803 4,803 100,000 6,667 6,667 100,000 9,263 9,263 100,000
10 1,000 13,207 5,225 5,225 100,000 7,510 7,510 100,000 10,830 10,830 100,000
11 1,000 14,917 5,629 5,629 100,000 8,385 8,385 100,000 12,566 12,566 100,000
12 1,000 16,713 6,006 6,006 100,000 9,283 9,283 100,000 14,474 14,474 100,000
13 1,000 18,599 6,357 6,357 100,000 10,203 10,203 100,000 16,571 16,571 100,000
14 1,000 20,579 6,680 6,680 100,000 11,145 11,145 100,000 18,878 18,878 100,000
15 1,000 22,657 6,971 6,971 100,000 12,109 12,109 100,000 21,419 21,419 100,000
16 1,000 24,840 7,231 7,231 100,000 13,094 13,094 100,000 24,218 24,218 100,000
17 1,000 27,132 7,456 7,456 100,000 14,099 14,099 100,000 27,305 27,305 100,000
18 1,000 29,539 7,643 7,643 100,000 15,124 15,124 100,000 30,713 30,713 100,000
19 1,000 32,066 7,789 7,789 100,000 16,165 16,165 100,000 34,475 34,475 100,000
20 1,000 34,719 7,891 7,891 100,000 17,222 17,222 100,000 38,635 38,635 100,000
@ 65 1,000 69,761 5,543 5,543 100,000 30,019 30,019 100,000 123,983 123,983 205,663
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
77
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 759 809 100,760 809 859 100,810 859 909 100,860
2 1,000 2,153 1,504 1,537 101,505 1,651 1,684 101,652 1,805 1,838 101,806
3 1,000 3,310 2,234 2,251 102,235 2,528 2,544 102,528 2,846 2,863 102,847
4 1,000 4,526 2,949 2,949 102,949 3,439 3,439 103,440 3,991 3,991 103,992
5 1,000 5,802 3,647 3,647 103,648 4,385 4,385 104,386 5,251 5,251 105,252
6 1,000 7,142 4,328 4,328 104,329 5,367 5,367 105,368 6,635 6,635 106,636
7 1,000 8,549 4,989 4,989 104,990 6,384 6,384 106,384 8,155 8,155 108,156
8 1,000 10,027 5,679 5,679 105,680 7,487 7,487 107,488 9,879 9,879 109,879
9 1,000 11,578 6,346 6,346 106,347 8,626 8,626 108,627 11,769 11,769 111,770
10 1,000 13,207 6,986 6,986 106,987 9,801 9,801 109,802 13,841 13,841 113,842
11 1,000 14,917 7,649 7,649 107,650 11,066 11,066 111,068 16,178 16,178 116,179
12 1,000 16,713 8,286 8,286 108,287 12,374 12,374 112,374 18,747 18,747 118,748
13 1,000 18,599 8,897 8,897 108,898 13,724 13,724 113,725 21,571 21,571 121,571
14 1,000 20,579 9,480 9,480 109,481 15,117 15,117 115,118 24,676 24,676 124,677
15 1,000 22,657 10,033 10,033 110,034 16,553 16,553 116,554 28,090 28,090 128,091
16 1,000 24,840 10,555 10,555 110,556 18,033 18,033 118,033 31,846 31,846 131,847
17 1,000 27,132 11,046 11,046 111,047 19,556 19,556 119,557 35,977 35,977 135,977
18 1,000 29,539 11,502 11,502 111,503 21,122 21,122 121,123 40,520 40,520 140,521
19 1,000 32,066 11,921 11,921 111,922 22,731 22,731 122,732 45,519 45,519 145,519
20 1,000 34,719 12,302 12,302 112,303 24,382 24,382 124,383 51,017 51,017 151,018
@ 65 1,000 69,761 12,779 12,779 112,780 44,393 44,393 144,394 163,040 163,040 270,647
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
28.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
78
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 571 621 100,572 615 665 100,616 659 709 100,661
2 1,000 2,153 1,122 1,155 101,123 1,245 1,278 101,246 1,374 1,407 101,375
3 1,000 3,310 1,648 1,665 101,649 1,887 1,904 101,888 2,148 2,164 102,149
4 1,000 4,526 2,150 2,150 102,151 2,541 2,541 102,541 2,984 2,984 102,985
5 1,000 5,802 2,624 2,624 102,625 3,202 3,202 103,203 3,886 3,886 103,887
6 1,000 7,142 3,068 3,068 103,069 3,871 3,871 103,872 4,859 4,859 104,860
7 1,000 8,549 3,479 3,479 103,480 4,542 4,542 104,544 5,907 5,907 105,907
8 1,000 10,027 3,877 3,877 103,879 5,238 5,238 105,239 7,058 7,058 107,059
9 1,000 11,578 4,240 4,240 104,241 5,933 5,933 105,934 8,299 8,299 108,299
10 1,000 13,207 4,565 4,565 104,566 6,628 6,628 106,628 9,636 9,636 109,637
11 1,000 14,917 4,857 4,857 104,859 7,329 7,329 107,329 11,094 11,094 111,095
12 1,000 16,713 5,110 5,110 105,111 8,025 8,025 108,026 12,669 12,669 112,669
13 1,000 18,599 5,319 5,319 105,321 8,713 8,713 108,715 14,370 14,370 114,372
14 1,000 20,579 5,484 5,484 105,485 9,391 9,391 109,392 16,210 16,210 116,211
15 1,000 22,657 5,601 5,601 105,602 10,052 10,052 110,054 18,197 18,197 118,198
16 1,000 24,840 5,666 5,666 105,667 10,694 10,694 110,695 20,344 20,344 120,346
17 1,000 27,132 5,672 5,672 105,673 11,306 11,306 111,307 22,660 22,660 122,661
18 1,000 29,539 5,612 5,612 105,613 11,878 11,878 111,879 25,153 25,153 125,154
19 1,000 32,066 5,478 5,478 105,479 12,402 12,402 112,402 27,835 27,835 127,836
20 1,000 34,719 5,262 5,262 105,263 12,862 12,862 112,863 30,715 30,715 130,716
@ 65 1,000 69,761 -- -- -- 10,125 10,125 110,126 80,243 80,243 180,244
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
28.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
79
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 787 837 100,787 838 888 100,838 889 939 100,890
2 1,000 2,153 1,558 1,591 101,558 1,709 1,742 101,710 1,866 1,899 101,867
3 1,000 3,310 2,311 2,328 102,312 2,613 2,629 102,614 2,939 2,956 102,941
4 1,000 4,526 3,048 3,048 103,049 3,551 3,551 103,553 4,119 4,119 104,120
5 1,000 5,802 3,766 3,766 103,767 4,524 4,524 104,525 5,414 5,414 105,415
6 1,000 7,142 4,464 4,464 104,464 5,532 5,532 105,532 6,835 6,835 106,836
7 1,000 8,549 5,141 5,141 105,142 6,574 6,574 106,575 8,395 8,395 108,396
8 1,000 10,027 5,846 5,846 105,847 7,704 7,704 107,705 10,162 10,162 110,163
9 1,000 11,578 6,530 6,530 106,531 8,874 8,874 108,875 12,103 12,103 112,105
10 1,000 13,207 7,192 7,192 107,193 10,085 10,085 110,086 14,237 14,237 114,238
11 1,000 14,917 7,876 7,876 107,877 11,388 11,388 111,389 16,641 16,641 116,643
12 1,000 16,713 8,541 8,541 108,543 12,743 12,743 112,744 19,293 19,293 119,294
13 1,000 18,599 9,188 9,188 109,189 14,151 14,151 114,152 22,217 22,217 122,218
14 1,000 20,579 9,816 9,816 109,817 15,615 15,615 115,615 25,443 25,443 125,444
15 1,000 22,657 10,424 10,424 110,425 17,136 17,136 117,137 29,003 29,003 129,004
16 1,000 24,840 11,012 11,012 111,013 18,715 18,715 118,716 32,931 32,931 132,932
17 1,000 27,132 11,578 11,578 111,579 20,355 20,355 120,356 37,265 37,265 137,266
18 1,000 29,539 12,122 12,122 112,122 22,057 22,057 122,058 42,048 42,048 142,049
19 1,000 32,066 12,641 12,641 112,641 23,820 23,820 123,822 47,324 47,324 147,325
20 1,000 34,719 13,134 13,134 113,134 25,647 25,647 125,648 53,145 53,145 153,146
@ 65 1,000 69,761 16,330 16,330 116,330 50,178 50,178 150,179 174,371 174,371 289,457
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
80
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 617 667 100,618 662 712 100,663 708 758 100,709
2 1,000 2,153 1,214 1,248 101,215 1,343 1,377 101,344 1,478 1,512 101,480
3 1,000 3,310 1,790 1,807 101,791 2,043 2,059 102,044 2,317 2,334 102,318
4 1,000 4,526 2,343 2,343 102,345 2,758 2,758 102,760 3,228 3,228 103,229
5 1,000 5,802 2,871 2,871 102,872 3,489 3,489 103,489 4,216 4,216 104,218
6 1,000 7,142 3,371 3,371 103,373 4,232 4,232 104,232 5,288 5,288 105,289
7 1,000 8,549 3,843 3,843 103,844 4,986 4,986 104,988 6,449 6,449 106,450
8 1,000 10,027 4,305 4,305 104,306 5,773 5,773 105,774 7,731 7,731 107,732
9 1,000 11,578 4,738 4,738 104,740 6,573 6,573 106,573 9,125 9,125 109,126
10 1,000 13,207 5,143 5,143 105,144 7,386 7,386 107,387 10,641 10,641 110,642
11 1,000 14,917 5,527 5,527 105,528 8,224 8,224 108,225 12,311 12,311 112,312
12 1,000 16,713 5,882 5,882 105,883 9,077 9,077 109,079 14,135 14,135 114,136
13 1,000 18,599 6,208 6,208 106,209 9,946 9,946 109,947 16,128 16,128 116,129
14 1,000 20,579 6,502 6,502 106,503 10,827 10,827 110,827 18,306 18,306 118,307
15 1,000 22,657 6,763 6,763 106,764 11,718 11,718 111,719 20,685 20,685 120,686
16 1,000 24,840 6,987 6,987 106,988 12,618 12,618 112,619 23,284 23,284 123,285
17 1,000 27,132 7,175 7,175 107,175 13,525 13,525 113,526 26,125 26,125 126,125
18 1,000 29,539 7,320 7,320 107,322 14,435 14,435 114,436 29,229 29,229 129,230
19 1,000 32,066 7,420 7,420 107,421 15,342 15,342 115,342 32,618 32,618 132,620
20 1,000 34,719 7,472 7,472 107,473 16,244 16,244 116,245 36,323 36,323 136,324
@ 65 1,000 69,761 4,385 4,385 104,386 25,015 25,015 125,016 109,760 109,760 209,761
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
81
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 759 809 101,000 809 859 101,000 859 909 101,000
2 1,000 2,153 1,503 1,537 102,000 1,651 1,684 102,000 1,804 1,838 102,000
3 1,000 3,310 2,233 2,250 103,000 2,527 2,544 103,000 2,846 2,862 103,000
4 1,000 4,526 2,947 2,947 104,000 3,438 3,438 104,000 3,991 3,991 104,000
5 1,000 5,802 3,644 3,644 105,000 4,383 4,383 105,000 5,250 5,250 105,000
6 1,000 7,142 4,323 4,323 106,000 5,364 5,364 106,000 6,635 6,635 106,000
7 1,000 8,549 4,983 4,983 107,000 6,380 6,380 107,000 8,157 8,157 107,000
8 1,000 10,027 5,670 5,670 108,000 7,483 7,483 108,000 9,882 9,882 108,000
9 1,000 11,578 6,333 6,333 109,000 8,622 8,622 109,000 11,777 11,777 109,000
10 1,000 13,207 6,969 6,969 110,000 9,795 9,795 110,000 13,855 13,855 110,000
11 1,000 14,917 7,628 7,628 111,000 11,060 11,060 111,000 16,200 16,200 111,000
12 1,000 16,713 8,260 8,260 112,000 12,368 12,368 112,000 18,781 18,781 112,000
13 1,000 18,599 8,864 8,864 113,000 13,719 13,719 113,000 21,623 21,623 113,000
14 1,000 20,579 9,439 9,439 114,000 15,114 15,114 114,000 24,754 24,754 114,000
15 1,000 22,657 9,982 9,982 115,000 16,553 16,553 115,000 28,205 28,205 115,000
16 1,000 24,840 10,493 10,493 116,000 18,037 18,037 116,000 32,010 32,010 116,000
17 1,000 27,132 10,968 10,968 117,000 19,567 19,567 117,000 36,209 36,209 117,000
18 1,000 29,539 11,407 11,407 118,000 21,143 21,143 118,000 40,844 40,844 118,000
19 1,000 32,066 11,805 11,805 119,000 22,764 22,764 119,000 45,963 45,963 119,000
20 1,000 34,719 12,161 12,161 120,000 24,432 24,432 120,000 51,621 51,621 120,000
@ 65 1,000 69,761 11,670 11,670 131,000 45,378 45,378 131,000 166,984 166,984 277,195
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
26.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
82
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
MALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 571 621 101,000 615 665 101,000 659 709 101,000
2 1,000 2,153 1,120 1,153 102,000 1,243 1,277 102,000 1,373 1,406 102,000
3 1,000 3,310 1,644 1,661 103,000 1,884 1,900 103,000 2,144 2,161 103,000
4 1,000 4,526 2,142 2,142 104,000 2,533 2,533 104,000 2,978 2,978 104,000
5 1,000 5,802 2,610 2,610 105,000 3,190 3,190 105,000 3,876 3,876 105,000
6 1,000 7,142 3,046 3,046 106,000 3,852 3,852 106,000 4,845 4,845 106,000
7 1,000 8,549 3,447 3,447 107,000 4,515 4,515 107,000 5,887 5,887 107,000
8 1,000 10,027 3,833 3,833 108,000 5,200 5,200 108,000 7,033 7,033 108,000
9 1,000 11,578 4,179 4,179 109,000 5,882 5,882 109,000 8,267 8,267 109,000
10 1,000 13,207 4,483 4,483 110,000 6,561 6,561 110,000 9,599 9,599 110,000
11 1,000 14,917 4,751 4,751 111,000 7,242 7,242 111,000 11,052 11,052 111,000
12 1,000 16,713 4,972 4,972 112,000 7,914 7,914 112,000 12,624 12,624 112,000
13 1,000 18,599 5,145 5,145 113,000 8,574 8,574 113,000 14,326 14,326 113,000
14 1,000 20,579 5,265 5,265 114,000 9,219 9,219 114,000 16,172 16,172 114,000
15 1,000 22,657 5,328 5,328 115,000 9,841 9,841 115,000 18,172 18,172 115,000
16 1,000 24,840 5,329 5,329 116,000 10,436 10,436 116,000 20,343 20,343 116,000
17 1,000 27,132 5,258 5,258 117,000 10,992 10,992 117,000 22,697 22,697 117,000
18 1,000 29,539 5,107 5,107 118,000 11,500 11,500 118,000 25,249 25,249 118,000
19 1,000 32,066 4,864 4,864 119,000 11,945 11,945 119,000 28,015 28,015 119,000
20 1,000 34,719 4,515 4,515 120,000 12,312 12,312 120,000 31,014 31,014 120,000
@ 65 1,000 69,761 -- -- -- 5,772 5,772 131,000 89,942 89,942 149,304
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
26.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
83
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 787 837 101,000 838 888 101,000 889 939 101,000
2 1,000 2,153 1,557 1,591 102,000 1,708 1,742 102,000 1,866 1,899 102,000
3 1,000 3,310 2,311 2,328 103,000 2,613 2,629 103,000 2,939 2,956 103,000
4 1,000 4,526 3,047 3,047 104,000 3,551 3,551 104,000 4,119 4,119 104,000
5 1,000 5,802 3,764 3,764 105,000 4,523 4,523 105,000 5,414 5,414 105,000
6 1,000 7,142 4,460 4,460 106,000 5,530 5,530 106,000 6,836 6,836 106,000
7 1,000 8,549 5,136 5,136 107,000 6,572 6,572 107,000 8,397 8,397 107,000
8 1,000 10,027 5,839 5,839 108,000 7,702 7,702 108,000 10,167 10,167 108,000
9 1,000 11,578 6,520 6,520 109,000 8,871 8,871 109,000 12,112 12,112 109,000
10 1,000 13,207 7,179 7,179 110,000 10,082 10,082 110,000 14,252 14,252 110,000
11 1,000 14,917 7,860 7,860 111,000 11,386 11,386 111,000 16,664 16,664 111,000
12 1,000 16,713 8,521 8,521 112,000 12,741 12,741 112,000 19,326 19,326 112,000
13 1,000 18,599 9,163 9,163 113,000 14,150 14,150 113,000 22,266 22,266 113,000
14 1,000 20,579 9,785 9,785 114,000 15,616 15,616 114,000 25,514 25,514 114,000
15 1,000 22,657 10,387 10,387 115,000 17,140 17,140 115,000 29,103 29,103 115,000
16 1,000 24,840 10,967 10,967 116,000 18,725 18,725 116,000 33,071 33,071 116,000
17 1,000 27,132 11,524 11,524 117,000 20,371 20,371 117,000 37,457 37,457 117,000
18 1,000 29,539 12,057 12,057 118,000 22,081 22,081 118,000 42,308 42,308 118,000
19 1,000 32,066 12,563 12,563 119,000 23,856 23,856 119,000 47,673 47,673 119,000
20 1,000 34,719 13,041 13,041 120,000 25,698 25,698 120,000 53,611 53,611 120,000
@ 65 1,000 69,761 15,762 15,762 131,000 50,981 50,981 131,000 176,926 176,926 293,698
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
33.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
84
<PAGE>
<TABLE>
<CAPTION>
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
FEMALE 35 ADVANTAGE SELECT INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 617 667 101,000 662 712 101,000 708 758 101,000
2 1,000 2,153 1,213 1,246 102,000 1,342 1,376 102,000 1,478 1,511 102,000
3 1,000 3,310 1,787 1,804 103,000 2,040 2,057 103,000 2,315 2,332 103,000
4 1,000 4,526 2,338 2,338 104,000 2,754 2,754 104,000 3,224 3,224 104,000
5 1,000 5,802 2,861 2,861 105,000 3,480 3,480 105,000 4,210 4,210 105,000
6 1,000 7,142 3,356 3,356 106,000 4,219 4,219 106,000 5,279 5,279 106,000
7 1,000 8,549 3,820 3,820 107,000 4,968 4,968 107,000 6,438 6,438 107,000
8 1,000 10,027 4,273 4,273 108,000 5,748 5,748 108,000 7,717 7,717 108,000
9 1,000 11,578 4,695 4,695 109,000 6,539 6,539 109,000 9,110 9,110 109,000
10 1,000 13,207 5,085 5,085 110,000 7,342 7,342 110,000 10,626 10,626 110,000
11 1,000 14,917 5,451 5,451 111,000 8,169 8,169 111,000 12,298 12,298 111,000
12 1,000 16,713 5,786 5,786 112,000 9,008 9,008 112,000 14,128 14,128 112,000
13 1,000 18,599 6,087 6,087 113,000 9,861 9,861 113,000 16,131 16,131 113,000
14 1,000 20,579 6,351 6,351 114,000 10,723 10,723 114,000 18,326 18,326 114,000
15 1,000 22,657 6,577 6,577 115,000 11,595 11,595 115,000 20,731 20,731 115,000
16 1,000 24,840 6,761 6,761 116,000 12,471 12,471 116,000 23,369 23,369 116,000
17 1,000 27,132 6,900 6,900 117,000 13,352 13,352 117,000 26,265 26,265 117,000
18 1,000 29,539 6,990 6,990 118,000 14,232 14,232 118,000 29,447 29,447 118,000
19 1,000 32,066 7,024 7,024 119,000 15,105 15,105 119,000 32,941 32,941 119,000
20 1,000 34,719 7,000 7,000 120,000 15,970 15,970 120,000 36,786 36,786 120,000
@ 65 1,000 69,761 1,756 1,756 131,000 23,835 23,835 131,000 116,859 116,859 193,986
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
33.
Death benefit, account value and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no Policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.00%
(includes average fund operating expenses of 0.30% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
85
<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 5.9 of the Connecticut Corporation Law & Practice, 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 V of the Bylaws of the Company provides that: "Each person who is or
was a director or officer of the Company (including the heirs, executors,
administrators or estate of such person) shall be indemnified by the Company as
of right to full extent permitted or authorized by the laws of the State of
Connecticut against any liability, cost or expense asserted against him and
incurred by him by reason of his capacity as a director or officer, or arising
out of his status as a director or officer."
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) UNDER
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.
CONTENTS OF REGISTRATION STATEMENT
This Form S-6 Registration Statement comprises the following papers and
documents:
The facing sheet.
The Prospectus describing Phoenix Home Life Mutual Insurance Company Policy
Form V609 (Phoenix Corporate Edge) consisting of 85 pages.
The Prospectus describing Phoenix Home Life Mutual Insurance Company Policy
Form V607 and riders thereto (Phoenix Executive Benefit), consisting of 85
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 signature page.
The powers of attorney.
Written consents of the following persons:
(a) Edwin L. Kerr, Esq., to be filed by Amendment.
(c) PricewaterhouseCoopers, LLP, to be filed by Amendment.
(d) Paul M. Fischer, FSA, CLU, ChFC, to be filed by Amendment.
II-1
<PAGE>
The following exhibits:
1. The following exhibits correspond to those required by paragraph A to the
instructions as to exhibits in Form N-8B-2:
A. (1) Resolution of the Board of Directors of Depositor of Phoenix Home
Life Mutual Insurance Company establishing the VUL Account filed
with Registrant's Registration Statement on July 21, 1988 and
filed via Edgar, is 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. 15 to its Form S-6 Registration Statement
(Registration No. 33-23251) on April 30, 1998, is
incorporated herein by reference.
(b) Form of Broker Dealer Supervisory and Service Agreement
between Phoenix Equity Planning Corporation and Independent
Brokers with respect to the sale of Policies, filed via Edgar
with Post-Effective Amendment No. 15 to its Form S-6
Registration Statement (Registration No. 33-23251) on April
30, 1998, is incorporated herein by reference.
(c) Not Applicable.
(4) Not Applicable.
(5) Specimen Policies with optional riders.
(a) Phoenix Corporate Edge - Flexible Premium Variable Universal
Life Insurance Policy Form Number V609 of Depositor, filed
via Edgar herewith.
(b) Phoenix Executive Benefit - Flexible Premium Variable
Universal Life Insurance Policy Form Number V607 of
Depositor, together with Variable Policy Exchange Option
Rider VR35 and Flexible Term Insurance Rider Form VR37 of
Depositor, filed via Edgar herewith.
(6) (a) Charter of Phoenix Home Life Mutual Insurance Company,
filed via Edgar with Post-Effective Amendment No. 12 to its
Form S-6 Registration Statement (Registration No. 33-23251)
and is incorporated herein by reference.
(b) By-Laws of Phoenix Home Life Mutual Insurance Company filed
via Edgar with Post-Effective Amendment No. 12 to its Form S-6
Registration Statement (Registration No. 33-23251) and is
incorporated herein by reference.
(7) Not Applicable.
(8) (a) Participation Agreement(s) between Phoenix Home Life Mutual
Insurance Company and Wanger Advisors Trust, to be filed
by Amendment.
(b) Participation Agreement between Phoenix Home Life Mutual
Insurance Company and Franklin Templeton Distributors, Inc.,
to be filed by Amendment.
(c) Participation Agreement between Phoenix Home Life Mutual
Insurance Company and Federated Securities Corp., to be filed
by Amendment.
(d) Participation Agreement between Phoenix Home Life Mutual
Insurance Company and Bankers Trust Company, to be filed by
Amendment.
(9) Not Applicable.
(10) Forms of application for Phoenix Corporate Edge and Phoenix
Executive Benefit filed via Edgar herewith.
(11) 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 with
Registrant's Registration Statement (Registration No. 333-23171)
on Form S-6 filed on March 12, 1997, and is incorporated herein by
reference.
2. Opinion of Edwin L. Kerr, Esq., Counsel of Depositor, as to the legality of
the securities being registered, to be filed by Amendment.
3. Not Applicable. No financial statement will be omitted from the Prospectus
pursuant to Instruction 1(b) or (c) of Part I.
4. Not Applicable.
5. Not Applicable.
6. Not Applicable.
7. Consent of PricewaterhouseCooper, LLP, to be filed by Amendment.
II-2
<PAGE>
8. Consent of Edwin L. Kerr, Esq., to be filed by Amendment.
9. Consent of Paul M. Fischer, FSA, CLU, ChFC, to be filed by Amendment.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Phoenix Home Life Variable Universal Life Account has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of Hartford, State of Connecticut on the 10th day
of September, 1999.
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
-------------------------------------------------
(Registrant)
By: PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
-----------------------------------------------
(Depositor)
By: /s/ Dona D. Young
--------------------------------------------------
*Dona D. Young, Executive Vice President and General Counsel
Individual Insurance
ATTEST: /s/ John H. Beers
---------------------
John H. Beers, 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 indicated on the 10th day of September, 1999.
SIGNATURE TITLE
--------- -----
Director
- ----------------------------------------
*Sal H. Alfiero
Director
- ----------------------------------------
*John C. Bacot
Director
- ----------------------------------------
*Richard H. Booth
Director
- ----------------------------------------
*Arthur P. Byrne
Director
- ----------------------------------------
*Richard N. Cooper
Director
- ----------------------------------------
*Gordon J. Davis
Director
- ----------------------------------------
*Robert W. Fiondella Chairman of the Board, President
and Chief Executive Officer
Director
- ----------------------------------------
*John E. Haire
Director
- ----------------------------------------
*Jerry J. Jasinowski
Director
- ----------------------------------------
*John W. Johnstone
Director
- ----------------------------------------
*Marilyn E. LaMarche
S-1
<PAGE>
Director
- ----------------------------------------
*Philip R. McLoughlin
Director
- ----------------------------------------
*Indra K. Nooyi
Director
- ----------------------------------------
*Robert F. Vizza
Director
- ----------------------------------------
Dona D. Young
Executive Vice President and
- ----------------------------------------
*David W. Searfoss Chief Financial Officer
By: /s/ Dona D. Young
-----------------
* Dona D. Young as Attorney-in-Fact pursuant to Powers of Attorney, copies of
which were previous filed.
S-2
EXHIBIT 1.A.(5)(a)
PHOENIX CORPORATE EDGE
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
<PAGE>
[logo]PHOENIX EXECUTIVE OFFICES: STATUTORY HOME OFFICE:
ONE AMERICAN ROW 10 KREY BOULEVARD
HARTFORD, CT 06102 EAST GREENBUSH, NY 12144
================================================================================
INSURED: John Doe 35 - Male :ISSUE AGE AND SEX
POLICY NUMBER: 2 000 000 November 1, 2000 :POLICY DATE
FACE AMOUNT: $100,000.00
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 at the following
address:
Phoenix VUL COLI Unit
c/o Andesa TPA, Inc.
1605 N. Cedar Crest Boulevard, Suite 502
Allentown, PA 18104-2351
Telephone (610) 439-5256
RIGHT TO CANCEL. You have the right to cancel this policy within a limited time
after the policy is delivered to You. The policy may be cancelled by returning
the policy to Us at the above address 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 the
above address.
Signed for Phoenix Home Life Mutual Insurance Company at its Home Office in
Hartford, Connecticut.
Sincerely yours,
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
/s/John H. Beers /s/Robert W. Fiondella
Secretary Chief Executive Officer
Registrar
CORPORATE FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
THE DEATH BENEFIT AND OTHER VALUES PROVIDED UNDER THIS POLICY ARE BASED ON THE
RATES OF INTEREST CREDITED ON ANY AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST
ACCOUNT AND THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS WITHIN OUR SEPARATE
ACCOUNT TO WHICH YOUR PREMIUMS ARE ALLOCATED. THUS, THE DEATH BENEFIT AND OTHER
VALUES MAY INCREASE OR DECREASE IN AMOUNT OR DURATION. SEE PART 7 FOR A
DESCRIPTION OF HOW THE DEATH BENEFIT IS DETERMINED.
NOT ELIGIBLE FOR ANNUAL DIVIDENDS
V609
<PAGE>
SCHEDULE PAGE
BASIC INFORMATION
INSURED: [John Doe] [35 - MALE] : ISSUE AGE AND SEX
POLICY NUMBER: [2 000 000] [November 1, 2000] : POLICY DATE
FACE AMOUNT: [$100,000.00]
OWNER AS STATED IN THE APPLICATION UNLESS LATER CHANGED.
DEATH BENEFIT OPTION: Death Benefit Option [1] or as later changed as provided
herein.
BENEFICIARY AS STATED IN THE APPLICATION UNLESS LATER CHANGED.
INTERNAL REVENUE CODE LIFE INSURANCE QUALIFICATION TEST: Guideline Premium/Cash
Value Corridor Test
PREMIUMS
--------
ISSUE PREMIUM: [$15,000.00]
SUBSEQUENT PLANNED ANNUAL PREMIUM: [$15,000.00]
SUBACCOUNT ALLOCATION SCHEDULE ON THE POLICY DATE
-------------------------------------------------
SUBACCOUNT PREMIUMS DEDUCTIONS*
---------- -------- -----------
Money Market [100%] Proportionate
* See Part 1 for definition of Proportionate. Subaccounts marked "NONE" will
be charged with a portion of the monthly deduction only if the Subaccounts
marked "PROPORTIONATE" are not sufficient to make the full monthly deduction.
V609 PAGE 1 OF 5
<PAGE>
SCHEDULE PAGE (CONTINUED)
INSURED: [JOHN DOE] POLICY NUMBER: [2 000 000]
SUBACCOUNT FEES
---------------
MAXIMUM DAILY TAX FEE: [0] or such greater amount as may be assessed
as a result of a change in tax laws.
POLICY EXPENSE CHARGES
----------------------
MAXIMUM MONTHLY MORTALITY AND
EXPENSE RISK FEE: 0.00075 (Based on Annual Rate of 0.90%)
PREMIUM TAX CHARGE: x.xx% of premiums (based on actual state tax)
FEDERAL TAX CHARGE: [1.50%] of premiums
MAXIMUM SALES LOAD: 9.00% of premiums (Policy Years 1 to 7)
3.00% of premiums (Policy Years 8+)
MAXIMUM TRANSFER CHARGE: $ 0 - First two transfers per Policy Year.
$10 - Subsequent transfers per Policy Year.
MAXIMUM PARTIAL SURRENDER FEE: Lesser of $25.00 or 2% of partial surrender
amount paid.
MAXIMUM MONTHLY POLICY
ADMINISTRATION CHARGE: $10
OTHER RATES
-----------
GUARANTEED INTEREST ACCOUNT:
----------------------------
UNLOANED PORTION: Minimum Rate 3.00%
LOANED PORTION: [2.00%]
MAXIMUM LOAN INTEREST RATE: [2.75%] for the first 10 Policy Years or
until age 65, whichever is sooner;
[2.50%] thereafter, until the end of the 15th
Policy Year or until age 65,
whichever is sooner;
[2.25%] thereafter
V609 PAGE 2 OF 5
<PAGE>
SCHEDULE PAGE (CONTINUED)
INSURED: [JOHN DOE] POLICY NUMBER: [2 000 000]
TABLE OF CORRIDOR FACTORS
This policy complies with section 7702 of the Internal Revenue Code under the
[Guideline Premium/Cash Value Corridor Test], which requires the death benefit
is greater than or equal to the product of the Cash Value and the Applicable
Percentages from the following table.
<TABLE>
<CAPTION>
Attained Age of Applicable Attained Age of Applicable
Insured Percentage Insured Percentage
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
30-40 250% 70 115%
41 243% 71 113%
42 236% 72 111%
43 229% 73 109%
44 222% 74 107%
45 215% 75 105%
46 209% 76 105%
47 203% 77 105%
48 197% 78 105%
49 191% 79 105%
50 185% 80 105%
51 178% 81 105%
52 171% 82 105%
53 164% 83 105%
54 157% 84 105%
55 150% 85 105%
56 146% 86 105%
57 142% 87 105%
58 138% 88 105%
59 134% 89 105%
60 130% 90 105%
61 128% 91 104%
62 126% 92 103%
63 124% 93 102%
64 122% 94 101%
65 120% 95 101%
66 119% 96 101%
67 118% 97 101%
68 117% 98 101%
69 116% 99 101%
100 100%
</TABLE>
V609 PAGE 3 OF 5
<PAGE>
SCHEDULE PAGE (CONTINUED)
INSURED: [JOHN DOE] POLICY NUMBER: [2 000 000]
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
PER $1,000 OF NET AMOUNT AT RISK
<TABLE>
<CAPTION>
Monthly Monthly Monthly
Attained Age Rate Attained Age Rate Attained Age Rate
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
35 .1758 57 1.0408 79 7.5875
36 .1867 58 1.1325 80 8.2367
37 .2000 59 1.2308 81 8.9567
38 .2150 60 1.3400 82 9.7708
39 .2325 61 1.4617 83 10.6883
40 .2517 62 1.5992 84 11.6875
41 .2742 63 1.7550 85 12.7458
42 .2967 64 1.9283 86 13.8408
43 .3225 65 2.1183 87 14.9625
44 .3492 66 2.3208 88 16.1058
45 .3792 67 2.5367 89 17.2742
46 .4100 68 2.7658 90 18.4808
47 .4433 69 3.0142 91 19.7483
48 .4783 70 3.2925 92 21.1208
49 .5175 71 3.6083 93 22.6758
50 .5592 72 3.9708 94 24.6583
51 .6083 73 4.3867 95 27.4967
52 .6633 74 4.8492 96 32.0458
53 .7258 75 5.3492 97 40.0167
54 .7967 76 5.8775 98 54.8317
55 .8725 77 6.4267 99 83.3333
56 .9550 78 6.9917
</TABLE>
BASIS OF COMPUTATION:
MORTALITY: Commissioner's 1980 Male Standard Ordinary Mortality Table,
Aggregate as to Tobacco, Age Nearest Birthday.
V609 PAGE 4 OF 5
<PAGE>
SCHEDULE PAGE (CONTINUED)
INSURED: [JOHN DOE] POLICY NUMBER: [2 000 000]
TABLE OF FACE AMOUNTS OF INSURANCE
----------------------------------
<TABLE>
<CAPTION>
ISSUE DATE FACE AMOUNT RISK CLASSIFICATION
- ---------- ----------- -------------------
<S> <C> <C>
[November 1, 1999] [$178,000.00] [Male Advantage]
</TABLE>
RIDERS AND RIDER BENEFITS
-------------------------
<TABLE>
<CAPTION>
PAYABLE MONTHLY
RIDER DESCRIPTION RIDER DATE AMOUNT PREMIUM TO CHARGE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VR35 - Exchange of Insured May 1, 2000 $0.00 $0.00 $0.00
VR37 - Policy Term Rider May 1, 2000 $100,000 $0.00 $3.88
</TABLE>
V609 PAGE 5 OF 5
<PAGE>
TABLE OF CONTENTS
PART PAGE
- --------------------------------------------------------------
Schedule Pages
Table of Contents
1. Definitions...............................................1
2. About the Policy..........................................2
Effective Date of Insurance............................2
Entire Contract........................................2
Non-Participating......................................2
Contestability.........................................2
Suicide................................................3
Misstatement of Age or Sex.............................3
Assignments............................................3
Annual Reports.........................................4
Transaction Rules......................................4
3. Rights of Owner...........................................4
Who Is the Owner.......................................4
What Are the Rights of the Owner.......................4
How to Change the Owner................................5
4. Premiums..................................................5
Premium Payments.......................................5
Premium Deductions.....................................5
Net Premium Allocation
to Subaccounts.......................................6
Premium Flexibility....................................6
Total Premium Limit....................................6
Grace Period and Lapse.................................7
Policy Value...........................................7
Monthly Deduction......................................8
5. The Accounts..............................................9
Guaranteed Interest Account............................9
Separate Account......................................10
Additional Subaccounts................................11
Substitution of Subaccounts...........................11
Voting Rights.........................................11
Share of Separate Account
Subaccount Values...................................11
Unit Value............................................11
Net Investment Factor.................................12
6. Lifetime Benefits........................................12
Transfers.............................................12
Loans.................................................13
Loan Interest.........................................14
Cash Surrender Value..................................14
Full Surrender........................................14
Partial Surrender.....................................15
Additional Insurance Option...........................15
7. Death Benefits...........................................17
Death Benefit Option 1................................17
Death Benefit Option 2................................17
Death Benefit Option 3................................17
Minimum Death Benefit.................................17
Death Benefit Following
Insured's Age 100...................................17
How to Change the Death
Benefit Options.....................................18
Request for an Increase in
Face Amounts........................................18
Right to Cancel Face
Amount Increases....................................18
Request for a Decrease in
Face Amount.........................................19
Death Proceeds........................................19
Interest on Death Proceeds............................19
The Beneficiary.......................................19
How to Change the Beneficiary.........................20
8. Payment Options..........................................20
Who May Elect Payment Options.........................20
How to Elect a Payment Option.........................20
Payment Options.......................................21
(1) Payment in one sum...............................21
(2) Left to earn interest ...........................21
(3) Payments for a specified period..................21
(4) Life annuity with specified
period certain...................................21
(5) Life annuity.....................................22
(6) Payments of a specified amount...................22
(7) Joint survivorship annuity
with a 10-year period certain....................22
Additional Interest..................................23
9. Tables of Payment Option Amounts......................23-24
V609
<PAGE>
PART 1: DEFINITIONS
ATTAINED AGE Age of the insured on the birthday
nearest the most recent Policy
Anniversary.
DEBT Unpaid loans against this policy plus
accrued interest.
GENDER The terms "he," "his" and "him" are
applicable without regard to sex. Where
proper, "she," "hers" or "her" may be
substituted.
IN FORCE The policy has not terminated.
IN WRITING (WRITTEN In a written form satisfactory to Us and
REQUEST) filed at Our Phoenix VUL COLI Unit, at
the address shown on the cover page of
this policy.
MONTHLY CALCULATION The first Monthly Calculation Day of a
DAY policy is the same day as its Policy Date
as shown on the Schedule Page. Subsequent
Monthly Calculation Days are the same day
for each month thereafter or, if such 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
Our VUL unless it is received after the
close of the New York Stock Exchange in
which case it will be the next Valuation
Date.
POLICY ANNIVERSARY The anniversary of the Policy Date.
POLICY DATE The Policy Date as shown on the Schedule
Page. It is the date from which Policy
Years and Policy Anniversaries are
measured.
POLICY MONTH The period from one Monthly Calculation
Day up to, but not including, the next
Monthly Calculation Day.
POLICY VALUE The Policy Value as defined in Part 4.
POLICY YEAR The first Policy Year is the one-year
period from the Policy Date to, but not
including, the first Policy Anniversary.
Each succeeding Policy Year is the
one-year period from the period from the
Policy Anniversary to, but not including,
the next Policy Anniversary.
PROPORTIONATE Amounts are allocated to Subaccounts on a
proportionate basis such that the ratios
of this policy's Subaccount values to
each other are the same before and after
the allocation.
SEPARATE ACCOUNT PLAC Variable Universal Life Account.
SUBACCOUNTS The Guaranteed Interest Account
(exclusive of the loaned portion of such
account) and the accounts within Our
Separate Account to which non-loaned
assets under the policy are allocated as
described in Part 5.
V609 1
<PAGE>
UNIT A standard of measurement, as described
in Part 4, used to determine the share of
this policy in the value of each
Subaccount of the Separate Account.
VALUATION DATE Every day the New York Stock Exchange is
open for trading.
VALUATION PERIOD The period in days from the end of one
Valuation Date through the next Valuation
Date.
VUL Our VUL COLI Unit at P.O. Box 22012,
Albany, NY, 12201-2012.
WE (OUR, US) Phoenix Home Life Mutual Insurance
Company (Phoenix).
YOU (YOUR) The owner of this policy.
PART 2: ABOUT THE POLICY
EFFECTIVE DATE OF This policy will begin In Force on the
INSURANCE Policy Date, provided the issue premium
is paid while the insured is alive.
ENTIRE CONTRACT This policy and the written application
of the policyholder, a copy of which is
attached to and made a part of the
policy, are the entire contract between
You and Us. Any change in the provisions
of the contract, to be in effect, must be
signed by one of Our executive officers
and countersigned by Our registrar or one
of Our executive officers. This policy is
issued by Us at Our Home Office in
Hartford, Connecticut. Any benefits
payable under this policy are payable at
Our VUL.
NON-PARTICIPATING This is a non-participating policy which
does not pay any dividends. Your policy
will not share in Our profits or surplus
earnings.
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 the
application, must be attached to this
policy when issued or made a part of this
policy when a change is made.
We cannot contest the validity of the
original face amount of this policy after
it has been In Force during the insured's
lifetime for two years from its Policy
Date. If We contest the policy, it will
be based on the application for this
policy.
We cannot contest the validity of any
increase in face amount after the policy
has been In Force during the insured's
lifetime for two years from the issue
date of the increase. Any such contest
will be based on the supplemental
application for the increase.
V609 2
<PAGE>
If We contest the validity of all or a
portion of the face amount provided under
this policy, the amount We pay with
respect to such portion of the face
amount will be limited to the higher of a
return of any paid premium required by Us
for the contested Face Amount, or the sum
of any monthly deductions made under this
policy for the contested face amount.
SUICIDE If within two years from the Policy Date
the insured dies by suicide, while sane
or insane, and while this policy is In
Force, the amount of death benefit will
be limited to the Policy Value adjusted
as follows:
a. We will add any monthly deductions
made under this policy;
b. We will subtract any Debt owed Us
under this policy.
If within two years from the issue date
of an increase in face amount the insured
dies by suicide, while sane or insane,
and while the policy is In Force, the
death benefit for that increase will be
limited to a pro rata portion of the
Policy Value corresponding to such
increase adjusted as follows:
a. We will add the sum of the monthly
deductions corresponding to such
increase;
b. We will subtract any Debt owed Us
under this policy.
MISSTATEMENT OF If the age or sex of the insured has been
AGE OR SEX misstated, any benefits payable under
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 cost of
insurance rates, but subsequent cost
of insurance rates will be adjusted
to such rates that would apply had
this policy been issued based on the
correct 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 herein, any
or all of the rights in this policy may
be assigned. We will not be considered to
have notice of any assignment until We
receive the original or copy of the
assignment In Writing. We are not
responsible for the validity of any
assignment.
V609 3
<PAGE>
ANNUAL REPORTS Each year We will send You a report for
this policy showing:
a. the then current Policy Value, cash
surrender value, death benefit and
face amount;
b. the premiums paid, and deductions and
partial surrenders made since the
last report;
c. any outstanding Debt;
d. an accounting of the change in Policy
Value since the last report; and
e. such additional information as
required by applicable law or
regulation.
TRANSACTION RULES Requests for transactions involving
Subaccounts will usually be processed
within 7 days after We receive the
Written Request. However, We may, at Our
discretion, postpone the payment of any
death benefit in excess of the initial
face amount, any policy loans, partial
withdrawals, surrenders or transfers:
a. For up to six months from the date of
request, for any transactions
dependent upon the value of the
Guaranteed Interest Account; or
b. Otherwise, for any period during
which the New York Stock Exchange is
closed for trading (except for normal
holiday closing) or when the
Securities and Exchange Commission
has determined that a state of
emergency exists which may make
processing such transactions
impractical.
PART 3: RIGHTS OF OWNER
WHO IS THE OWNER The Owner has all the rights under this
policy and is named in the application
unless later changed and endorsed on this
policy.
WHAT ARE THE RIGHTS You control this policy during the
OF THE OWNER 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. These rights
include the right to:
a. Receive any amounts payable under
this policy during the insured's
lifetime.
b. Change the owner or the interest of
any owner.
c. Change the planned premium amount and
frequency. See Part 4.
V609 4
<PAGE>
d. Change the Subaccount allocation
schedule for premium payments and
monthly deductions. See Part 4.
e. Transfer amounts between and among
Subaccounts. See Part 6.
f. Obtain policy loans. See Part 6.
g. Obtain a partial surrender. See Part
6.
h. Surrender this policy for its cash
surrender value. See Part 6.
i. Select a payment option for any cash
surrender value that becomes payable.
See Part 6.
j. Request changes in the insurance
amount. See Part 7.
k. Change the beneficiary of the death
benefit. See Part 7.
l. Assign, release or surrender any
interest in the policy.
m. Change the death benefit option. See
Part 7.
You may exercise these rights only 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 other
beneficiaries and owners under this
policy.
HOW TO CHANGE You may change the owner by Written
THE OWNER Request.
PART 4: PREMIUMS
PREMIUM PAYMENTS The issue premium as shown on the
Schedule Page is due on the Policy Date.
The insured must be alive when the issue
premium is paid. Premiums other than the
Issue Premium may be paid at any time
while this policy is In Force subject to
the limits described below. All premiums
are payable at Our VUL, except that the
issue premium may be paid to an
authorized agent of Ours for forwarding
to Us. No benefit associated with any
premium shall be provided until it is
actually received by Us at Our VUL.
PREMIUM DEDUCTIONS A premium tax may be required based on
the laws of the state of issue. The
premium tax rate, if any, as of the
Policy Date, is shown on the Schedule
Page. This rate may change for subsequent
premium payments in accordance with
applicable state law.
A federal tax charge as stated on the
Schedule Page will also be deducted from
any premiums received by Us at Our VUL.
In addition, a sales load expressed as a
percent of premium will be deducted from
any premiums received by Us at Our VUL.
The maximum sales load is shown on the
Schedule Page. If the issue premium is
received by Us
V609 5
<PAGE>
at Our VUL after the Policy Date, then it
will also be reduced by the amount
necessary to cover any past unpaid
monthly deductions described below. In
addition, payments received by Us during
a grace period will also be reduced by
the amount needed to cover any monthly
deductions during the grace period.
NET PREMIUM ALLOCATION The premiums, net of any premium and
TO SUBACCOUNTS federal tax charges, will be applied on
the Payment Date to the various
Subaccounts based on the premium
allocation schedule elected in the
application for this policy or as later
changed by You. You may change the
allocation schedule for premium payments
by Written Request. Allocations to each
Subaccount must be expressed in whole
percentages unless We agree otherwise.
The number of units credited to each
Subaccount of the Separate Account will
be determined by dividing the net premium
applied to that Subaccount by the unit
value of that Subaccount on the Payment
Date. The number of units credited to
each Subaccount is carried to four
decimal places.
PREMIUM FLEXIBILITY Subject to the total premium limit
described in the next section and except
for the issue premium, You may change the
amount and frequency of premium payments
while this policy is In Force during the
lifetime of the insured as follows:
a. You may increase or decrease the
planned premium amount or payment
frequency at any time by Written
Request. We reserve the right to
limit increases to such maximums as
We may establish from time to time.
b. Additional premium payments may be
made at any time up to the Policy
Anniversary nearest the Insured's
100th birthday. However, We reserve
the right to require satisfactory
evidence of insurability before
accepting any additional premium
payment which results in any increase
in the net amount at risk.
c. Each premium payment made must at
least equal $100 or, if during a
grace period, the amount needed to
prevent lapse of this policy. We
reserve the right to reduce this
limit.
TOTAL PREMIUM LIMIT We will refund any portion of any premium
payment which is determined to be in
excess of the premium limit established
by law to qualify your Policy as a
contract for life insurance.
V609 6
<PAGE>
The total premium limit is applied to the
sum of all premiums received by Us for
this policy to date, reduced by the sum
of all partial surrender amounts paid by
Us to date. If the total premium limit is
exceeded, We will pay You the excess,
with interest at an annual rate of not
less than 3%, not later than 60 days
after the end of the Policy Year in which
the limit was exceeded. The Policy Value
will be adjusted to reflect such refund.
The amount to be taken from the
Subaccount will be allocated in the same
manner as provided for monthly deductions
unless You request another allocation in
writing.
The total premium limit may be exceeded
if additional premium is needed to
prevent lapse under the grace period and
lapse provision. The total premium limit
may change due to:
a. a partial surrender or a decrease in
face amount;
b. addition, cancellation or change of a
rider; or
c. a change in federal tax laws or
regulations.
We reserve the right to not accept any
premium payment which would increase the
Death Benefit by more than it would
increase the Policy Value.
If the total premium limit changes, We
will send You a Revised Schedule Page
reflecting the change. However, We
reserve the right to require that this
policy be returned to Us so that We may
endorse the change.
GRACE PERIOD AND LAPSE If, on any Monthly Calculation Day, the
required monthly deduction exceeds the
Policy Value during the first three
Policy Years, or the cash surrender value
after the third Policy Year, a grace
period of 61 days will be allowed for the
payment of an amount equal to three times
the required monthly deduction. This
policy will continue In Force during any
such grace period. We will mail a written
notice to You and any assigns at the post
office addresses last known to Us as to
the amount of premium required. If such
premium is not paid to Us by the end of
the grace period this policy will lapse
without value, but not before 30 days
have elapsed since We mailed Our written
notice to You. The "date of lapse" will
be the Monthly Calculation Day on which
the deduction was to be made, and any
insurance and rider benefits provided
under this policy will terminate as of
that date.
POLICY VALUE The Policy Value is the sum of this
policy's share in the value of each
Subaccount of the Separate Account and
the value of this policy's Guaranteed
Interest Account. See Part 5 for an
explanation as to how this policy's share
in the value of each Subaccount of the
Separate Account is determined and for a
description of the Guaranteed Interest
Account.
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MONTHLY DEDUCTION A deduction is made each Policy Month
from the Policy Value (excluding the
value of the loaned portion of the
Guaranteed Interest Account) to pay:
a. the cost of insurance provided under
this policy;
b. any flat extra mortality charges;
c. the cost of any rider benefits
provided;
d. an administrative charge. The
administrative charge may vary but in
no event will it exceed the maximum
administrative charge amount shown on
the Schedule Page. We will send You a
written notice of any change at least
30 days in advance of such change;
and
e. a mortality and expense risk charge.
The mortality and expense risk charge
may vary but in no event will it
exceed the maximum mortality and
expense risk charge amount shown on
the Schedule Page. In general, the
mortality and expense risk charge is
based on Our current rate for
policies in this same class of
business, and on the level of
commission determined by You and your
agent.
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 for
this policy that monthly deductions not
be taken from certain specified
Subaccounts. Such a request may later be
changed by notifying Us In Writing, but
only with respect to future monthly
deductions. Monthly deductions will be
taken from this policy's share of the
remaining Subaccounts exclusive of the
loaned portion of the Guaranteed Interest
Account, on a proportionate basis. In the
event this policy's share in the value of
such Subaccounts is not sufficient to
permit the withdrawal of the full monthly
deduction, the remainder will be taken on
a proportionate basis from this policy's
share of each of the other Subaccounts
exclusive of the loaned portion of the
Guaranteed Interest Account. The number
of units deducted from each Subaccount of
the Separate Account will be determined
by dividing the portion of the monthly
deduction allocated to each such
Subaccount by the unit value of that
Subaccount on the Monthly Calculation
Day.
V609 8
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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 1,000
and then multiplied by the result of:
a. the death benefit on the Monthly
Calculation Day; minus
b. the Policy Value on the Monthly
Calculation Day.
The cost of insurance rate for the
current Policy Month is based on the
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 on the
Schedule Page 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 5: THE ACCOUNTS
Assets under this policy may be allocated
either to the Guaranteed Interest Account
or to any of the Subaccounts of the
Separate Account. Any allocation You make
must be at least 1%; You may not choose a
fractional percent. The sum of the Fund
allocation factors must equal 100%.
GUARANTEED INTEREST The Guaranteed Interest Account is not
ACCOUNT part of the Separate Account. It is part
of Our General Account. We reserve the
right to limit cumulative premiums,
including transfers, to the unloaned
portion of the Guaranteed Interest
Account during any one-week period to no
more than $250,000. We will credit
interest daily on the amounts allocated
under this policy to the Guaranteed
Interest Account. The loaned portion of
the Guaranteed Interest Account will be
credited interest at an effective annual
fixed rate as shown on the Schedule Page.
We will credit interest on the unloaned
portion of the Guaranteed Interest
Account at such rates We shall determine
but in no event will the effective annual
rate of interest on such portion be less
than the minimum interest rate shown on
the Schedule Page.
On the last working day of each calendar
week, We will set the interest rate that
will apply to any net premium or
transferred amounts made to the unloaned
portion of the Guaranteed Interest
Account during the following calendar
week. That rate will remain in effect for
such premiums, for an initial guarantee
period of one full year. Upon expiry of
the initial one-year guarantee period,
and each subsequent one-year guarantee
period thereafter, the rate applicable
for any premiums in the unloaned portion
of the Guaranteed Interest Account whose
guarantee period has just ended shall be
the same
V609 9
<PAGE>
rate that applies to new premiums to such
Subaccount at the time the guarantee
period expires. Such rate shall likewise
remain in effect for such premiums for a
subsequent guarantee period of one full
year.
All transfers, partial surrenders and
deductions from the unloaned portion of
the Guaranteed Interest Account will be
assessed on a Last-In, First-Out basis
based on the date the deposit was
initially made to the unloaned portion of
such Subaccount. At the end of each
Policy Year and at the time of any Debt
repayment, interest credited to the
loaned portion of the Guaranteed Interest
Account will be transferred to the
unloaned portion of the Guaranteed
Interest Account. We reserve the right to
add other Guaranteed Interest Accounts,
subject where required, to approval by
the insurance supervisory official of the
state where this policy is delivered.
SEPARATE ACCOUNT The Separate Account has been established
by Us as a Separate Account pursuant to
New York law and is registered as a unit
investment trust under the Investment
Company Act of 1940 (1940 Act). Income
and realized and unrealized gains and
losses from assets in the Separate
Account are credited to or charged
against it without regard to Our other
income, gains or losses. We own the
Separate Account assets and they are kept
separate from the Assets of Our General
Account. Separate Account assets will be
valued on each Valuation Date. The
portion of the Separate Account equal to
reserves and liabilities for policies
supported by the Separate Account will
not be charged with any liabilities
arising out of Our other business. We
reserve the right to use assets of the
Separate Account in excess of these
reserves and liabilities for any
purposes.
The Separate Account has several
Subaccounts available under this policy.
We use the assets of the Separate Account
to buy shares of the Fund identified
according to Your allocation
instructions. The Fund is registered
under the 1940 Act as an open-end,
diversified management investment
company. The Fund has separate Portfolios
that correspond to the Subaccounts of the
Separate Account. Assets of each such
Subaccount are invested in shares of the
corresponding Fund Portfolio.
A Portfolio of the Fund might make a
material change in its investment policy.
If that occurs, You will be notified of
the change. In addition, no change will
be made in the investment policy of any
of the Subaccounts of the Separate
Account without approval of the
appropriate insurance supervisory
official of Our domiciliary state of New
York. The approval process is on file
with the insurance supervisory official
of the state where the policy is
delivered.
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ADDITIONAL SUBACCOUNTS We have the right to add Subaccounts of
the Separate Account subject to approval
by the Securities and Exchange Commission
and, where required, other regulatory
authority.
SUBSTITUTION OF If the shares of the Funds of this
SUBACCOUNTS contract should no longer be available
for investment by the Separate Account or
if in Our judgment further investment in
such Funds becomes inappropriate for use
with this policy, We reserve the right to
substitute Units of another Subaccount
for Units already purchased or to be
purchased in the future by premium
payments under this policy. Any such
change will be subject to approval by the
Securities Exchange Commission and, where
required, by the insurance supervisory
official of the state where this policy
is issued.
VOTING RIGHTS Although We are the legal owner of the
Fund shares, We will vote the shares at
regular and special meetings of the
shareholders of the Fund in accordance
with instructions received from You and
the other owners of the policies. Any
shares held by Us will be voted in the
same proportion as voted by You and the
other owners of the policies. However, We
reserve the right to vote the shares of
the Fund without direction from You if
there is a change in the law which would
permit this to be done.
SHARE OF SEPARATE The share of this policy in the value of
ACCOUNT SUBACCOUNT each Subaccount of the Separate Account
VALUES on a Valuation Date is the unit value of
that Subaccount on that date multiplied
by the number of this policy's units in
that Subaccount after all transactions
for the Valuation Period ending on that
day have been processed. For any day
which does not fall on a Valuation Date,
the share of this policy in the value of
each Subaccount of the Separate Account
is determined using the number of units
on that day after all transactions for
that day have been processed and the unit
values on the next Valuation Date.
UNIT VALUE The unit value of each Subaccount of the
Separate Account was set by Us on the
first Valuation Date of each such
Subaccount. The unit value of a
Subaccount of the Separate Account on any
other Valuation Date is determined by
multiplying the unit value of that
Subaccount on the just prior Valuation
Date by the Net Investment Factor for
that Subaccount for the then current
Valuation Period. The unit value of each
Subaccount of the Separate Account on a
day other than a Valuation Date is the
unit value on the next Valuation Date.
Unit values are carried to 6 decimal
places. The unit value of each Subaccount
of the Separate Account on a Valuation
Date is determined at the end of that
day.
V609 11
<PAGE>
NET INVESTMENT FACTOR The Net Investment Factor for each
Subaccount of the Separate Account is
determined by the investment performance
of the assets held by the Subaccount
during the Valuation Period. Each
valuation will follow applicable law and
accepted procedures. The net Investment
Factor is equal to item (d) below
subtracted from the result of dividing
the sum of items (a) and (b) by item (c)
as defined below.
a. The value of the assets in the
Subaccount on the current Valuation
Date, including accrued net
investment income and realized and
unrealized capital gains and losses,
but excluding the net value of any
transactions during the current
Valuation Period.
b. The amount of any dividend (or, if
applicable, any capital gain
distribution) received by the
Subaccount if the "ex-dividend" date
for shares of the Fund occurs during
the current Valuation Period.
c. The value of the assets in the
Subaccount as of the just prior
Valuation Date, including accrued net
investment income and realized and
unrealized capital gains and losses,
and including the net value of all
transactions during the Valuation
Period ending on that date.
d. The daily charges, if any, for taxes
and reserves for taxes on investment
income, and realized and unrealized
capital gains as shown on the
Schedule Page, multiplied by the
number of days in the current
Valuation Period.
PART 6: LIFETIME BENEFITS
TRANSFERS You may transfer all or a portion of the
Policy Value among one or more of the
Subaccounts of the Separate Account and
the unloaned portion of the Guaranteed
Interest Account. We reserve the right to
limit the number of transfers You may
make, however, You can make up to six
transfers per contract year from
Subaccounts of the Separate Account and
only one transfer per contract year from
the unloaned portion of the Guaranteed
Interest Account unless the Systematic
Transfer Program is elected. Under that
program, funds may be transferred
automatically among the Subaccounts on a
monthly, quarterly, semiannual or annual
basis. Unless We agree otherwise, the
minimum initial and subsequent transfer
amounts are $25 monthly, $75 quarterly,
$150 semiannually or $300 annually.
Except as otherwise provided under the
Systematic Transfer Program, the amount
that may be transferred from the
Guaranteed Interest Account at any one
time cannot exceed the higher of $1,000
or 25% of the value of the Guaranteed
Interest Account.
V609 12
<PAGE>
Transfers may be made by Written Request.
The maximum transfer charge is shown on
the Schedule Page. There is no transfer
charge for the Systematic Transfer
Program. Any such charge will be deducted
from the Subaccounts from which the
amounts are to be transferred in the same
proportion as the amounts to be
transferred bear to the total amount
transferred. The value of each Subaccount
will be determined on the Valuation Date
that coincides with the date of transfer.
LOANS While this policy is In Force, a loan may
be obtained against this policy in any
amount up to the available loan value. To
obtain a loan, this policy must be
properly assigned to Us as security. We
need no other collateral. We reserve the
right not to allow loans of less than
$500 unless the loans are to pay premiums
on another policy issued by Us.
The loan value is 90% of the Policy
Value. The "available loan value" is the
loan value on the current day less any
outstanding Debt.
The amount of the loan will be added to
the loaned portion of the Guaranteed
Interest Account and subtracted from this
policy's share of the Subaccounts based
on the allocation You request at the time
of the loan. The total reduction will
equal the amount added to the loaned
portion of the Guaranteed Interest
Account. Unless We agree otherwise,
allocations to each Subaccount must be
expressed in whole percentages. If no
allocation request is made, the amount
subtracted from the share of each
Subaccount will be determined in the same
manner as provided for monthly
deductions.
Debt may be repaid at any time during the
lifetime of the insured while this policy
is In Force. Such repayment, in excess of
any outstanding accrued loan interest,
will be applied to reduce the loaned
portion of the Guaranteed Interest
Account and will be transferred to the
unloaned portion of the Guaranteed
Interest Account to the extent that
loaned amounts taken from such account
have not previously been repaid.
Otherwise, such balance will be
transferred among the Subaccounts You
request upon repayment and, if no
allocation request is made, We will use
Your most recent premium allocation
schedule on file with Us. Any Debt
repayment received by Us during a grace
period as described in Part 4 will be
reduced to cover any overdue monthly
deductions and only the balance applied
to reduce the Debt. Such balance will
also be applied as described to reduce
the loaned portion of the Guaranteed
Interest Account.
V609 13
<PAGE>
While there is any outstanding Debt
against this policy, any payments
received by Us for this policy will be
applied directly to reduce the Debt
unless specified as a premium payment.
Until the Debt is fully repaid,
additional Debt repayments may be made at
any time during the lifetime of the
insured while this policy is In Force.
Failure to repay a policy loan or to pay
loan interest will not terminate this
policy except as otherwise provided under
the Grace Period and Lapse in Part 4 when
the policy does not have sufficient
remaining value to pay the monthly
deductions, in which event, that grace
period provision will apply.
LOAN INTEREST Loans will bear interest at an effective
annual rate equal to the loan interest
rate shown on the Schedule Page and will
be compounded daily. Interest will accrue
on a daily basis from the date of the
loan and is included as part of the Debt
under this policy. Loan interest will be
due on each Policy Anniversary. If not
paid when due, the outstanding accrued
interest on that date will be charged as
a loan against this policy. Interest less
than the maximum guaranteed may be
charged.
CASH SURRENDER VALUE A loan will have a permanent effect on
any death benefit and Cash Surrender
Value of this policy. The Cash Surrender
Value is the policy value as defined in
Part 4 less any outstanding policy debt;
plus the refund of sales load if
applicable. There is no surrender charge.
FULL SURRENDER You may fully surrender this policy for
its cash surrender value by Written
Request and returning this policy to Us
along with a written release and
surrender of all claims under this policy
signed by You and any assigns. You may do
this at any time during the lifetime of
the insured while this policy is In
Force. The written surrender must be in a
form satisfactory to Us and must include
such tax withholding information as We
may reasonably require. The surrender
will be effective on the "date of
surrender" which is the later of the
dates on which We receive the returned
policy and the written surrender. Upon
full surrender, all insurance and any
rider benefits provided under this policy
will terminate. You may direct that We
apply the surrender proceeds under any of
the Payment Options described in Part 8.
V609 14
<PAGE>
PARTIAL SURRENDER You may obtain a partial surrender of
this policy by requesting that a part of
this policy's cash surrender value be
paid to You. You may do this at any time
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 this
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 8.
A partial surrender will be denied if the
resultant cash surrender value would be
less than or equal to zero. We reserve
the right not to allow partial surrenders
if the resulting death benefit would be
less than $50,000 or if the amount of the
partial surrender is less than $500. We
further reserve the right to require that
the entire balance of a Subaccount be
surrendered and withdrawn if the share of
this policy in the value of that
Subaccount would, immediately after a
partial surrender, be less than $500.
Upon a partial surrender, the Policy
Value will be reduced by the sum of the
following:
a. The partial surrender amount paid.
This amount comes from a reduction in
this policy's share in the value of
each Subaccount based on the
allocation You request at the time of
the partial surrender. If no
allocation request is made, the
assessment to each Subaccount will be
made in the same manner as provided
for monthly deductions.
b. We reserve the right to charge a
partial surrender fee. This fee, if
any, will be the lessor of $25 or 2%
of the partial surrender amount paid.
The assessment to each Subaccount
will be made in the same manner as
provided for the partial surrender
amount paid.
The cash surrender value will be reduced
by the partial surrender amount paid plus
the partial surrender fee. The face
amount of this policy will be reduced by
the same amount as the Policy Value is
reduced as described above. We will send
You a Revised Schedule Page reflecting
this change.
ADDITIONAL INSURANCE While this policy is In Force and subject
OPTION to the terms of this provision, including
Our receipt of evidence satisfactory to
Us of the insured's then insurability,
You have the option to purchase
additional insurance on the same insured
under the same plan of insurance as this
policy. The new policy will be based on
the same guaranteed rates and charges as
are in effect for this plan on the Policy
Date of this policy as adjusted for the
insured's new attained age and change, if
any, in risk classification. The new
policy will only include
V609 15
<PAGE>
such rider benefits as We may agree based
on Our rules and practices in effect on
the Policy Date of the new policy. The
amount of insurance under the new policy,
when added to all other insurance with
Our company on the life of the insured,
cannot exceed Our total insurance amount
limitations in effect on the Policy Date
of the new policy.
To elect this option, You must file a
written application In Writing. It must
be signed by You and the insured. We must
also receive:
a. Evidence that You have a satisfactory
insurable interest in the life of the
insured.
b. Evidence, satisfactory to Us, that
the insured is then insurable under
Our established practice in the
selection of risks for this plan of
insurance, including the new amount
applied for and rider benefits
requested. Selection of risks
includes health and non-health
factors.
c. Payment, while the insured is alive,
of the full issue premium for the new
policy. The payment must equal or
exceed Our minimum issue premium
requirements in effect for this plan
on the Policy Date of the new policy.
Any exclusions applicable to the new
policy will be determined in accordance
with Our rules and practices in effect on
the Policy Date of the new policy. The
new policy will not be subject to any
assignments or liens against this policy.
The owner and the beneficiary under the
new policy shall be as requested in the
application for the new policy. Any
subsequent changes will be governed by
the printed provisions of the new policy.
The new policy will begin in effect as of
the later of:
a. Our approval of the application for
the new policy;
b. payment of the full issue premium due
on the new policy.
The Policy Date of the new policy will be
as shown on the Schedule Pages of the new
policy based on Our rules and practices
then in effect. The time periods for the
suicide and contestability provisions in
the new policy will be measured from the
Policy Date of the new policy.
V609 16
<PAGE>
PART 7: DEATH BENEFITS
While the policy is In Force, You have
the right to elect one of the death
benefit options as described below. The
death benefit option shall be as elected
in the original application unless later
changed as provided below. If no option
is elected, Death Benefit Option 1 shall
apply.
DEATH BENEFIT OPTION 1 Under this option, during all Policy
Years until the Policy Anniversary which
follows the insured's 100th birthday, the
death benefit is equal to the greater of
(a) or (b) as defined below:
a. the policy's face amount on the date
of death;
b. the minimum death benefit on the date
of death as defined below.
DEATH BENEFIT OPTION 2 Under this option, during all Policy
Years until the Policy Anniversary which
follows the insured's 100th birthday, the
death benefit is equal to the greater of
(a) or (b) as defined below:
a. the policy's face amount on the date
of death plus the Policy Value;
b. the minimum death benefit on the date
of death as defined below.
DEATH BENEFIT OPTION 3 Under this option, during all Policy
Years until the Policy Anniversary which
follows the insured's 100th birthday, the
death benefit is equal to the greater of
(a) or (b) as defined below:
a. the policy's face amount on the date
of death plus the greater of:
i. all premium payments made to the
date of death less any partial
surrenders made to the date of
death; or
ii. zero.
b. the minimum death benefit on the date
of death as defined below.
MINIMUM DEATH BENEFIT The minimum death benefit is the Policy
Value on the date of death of the
insured, multiplied by the applicable
percentage from the Table of Corridor
Factors shown on the Schedule Page.
DEATH BENEFIT FOLLOWING After the Policy Anniversary which
INSURED'S AGE 100 follows the insured's 100th birthday, the
death benefit will equal the Policy
Value.
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<PAGE>
HOW TO CHANGE THE You may not make a change from or to
DEATH BENEFIT OPTION Option 3. While this policy is In Force,
You may make a Written Request to change
the Death Benefit Option from Option 1 to
Option 2, or from Option 2 to Option 1.
No evidence of insurability is required.
If the request is to change from Option 1
to Option 2, the face amount will be
decreased by the Policy Value and if the
request is to change from Option 2 to
Option 1, the face amount will be
increased by the Policy Value. Any such
change will be in effect on the Monthly
Calculation Day coincident with or next
following the day We approve the request.
REQUEST FOR AN INCREASE Anytime that this policy is In Force, You
IN FACE AMOUNT may make a Written Request to increase
its face amount. Unless We agree
otherwise, the minimum of such face
amount increase is $25,000, and the
increase will be effective on the first
Policy Anniversary on or following the
date that We approve the request. Such
date will be shown as the issue date for
such increase on the Revised Schedule
Pages We send You reflecting the change.
We reserve the right to limit increases
in face amount. All requests to increase
the face amount must be applied for on a
supplemental application and will be
subject to evidence of the insured's
insurability satisfactory to Us. The
insured must be alive on the issue date,
and You must also pay to Us in advance
such issue premium for the increase as We
may require according to Our published
rules then in effect. If no issue premium
is required, the increase will not take
effect unless the cash surrender value on
the issue date at least equals the
monthly deduction for the total combined
face amount. The Issue Expense Charge for
Face Amount increases is as stated on the
Schedule Page.
We will send You Revised Schedule Pages
reflecting the change. We reserve the
right to further require that the policy
be returned to Us so that We may
incorporate the change.
RIGHT TO CANCEL FACE You have the right to cancel any increase
AMOUNT INCREASES in the face amount provided by Us under
this policy by Written Request and
returning the policy to Us within a
limited time as stated below.
To cancel, You must return the policy,
including the Revised Schedule Pages,
before the latest of:
1. 10 days after the new Revised
Schedule Page showing such
increase in the face amount is
delivered to You; or
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<PAGE>
2. 10 days after a Notice of Right
to Cancel is delivered to You; or
3. 45 days after Part 1 of the
supplementary application for
such increased face amount is
signed.
Upon any such cancellation, We will
refund the higher of any paid premium
required by Us for the increase or the
sum of any monthly deductions and any
other fees and charges made under this
policy for the increase in face amount.
REQUEST FOR A DECREASE You may request a decrease in face amount
IN FACE AMOUNT at any time after the first Policy Year.
Unless We agree otherwise, the decrease
requested must at least equal $10,000 and
the face amount remaining after the
decrease must at least equal $25,000. All
requests to decrease the face amount must
be in writing and will be effective on
the first Monthly Calculation Day
following the date We approve the
request. We reserve the right to require
that this policy first be returned to Us
before the decrease is made. We will send
You a Revised Schedule Page reflecting
the change.
DEATH PROCEEDS Upon receipt In Writing of due proof that
the insured died while this policy is In
Force, We will pay the death proceeds of
this policy. The death proceeds equal the
death benefit on the date of death, with
the following adjustments:
a. We will deduct any Debt outstanding
against this policy.
b. We will deduct any monthly deductions
to and including the Policy Month of
death not already made.
c. We will add any premiums received by
Us after the Monthly Calculation Day
just prior to the date of death and
on or before the date of death.
INTEREST ON DEATH We will pay interest on any death
PROCEEDS proceeds from the date of the insured's
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.
THE BENEFICIARY Unless another payment option is elected
as described in Part 8, 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 for this policy
or as later changed. Payments will be
made successively in the following order:
a. Primary beneficiaries.
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<PAGE>
b. Contingent beneficiaries, if any,
provided 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.
Unless otherwise stated, the relationship
of a beneficiary is the relationship to
the insured.
HOW TO CHANGE THE You may change the beneficiary under this
BENEFICIARY policy by Written Request. When We
receive it, the change will relate back
and take effect as of the date it was
signed. However, the change will be
subject to any payments made or actions
taken by Us before We received the
Written Request.
PART 8: PAYMENT OPTIONS
WHO MAY ELECT The death benefit of this policy will be
PAYMENT OPTIONS paid in one sum unless otherwise
provided. As an alternative to payment in
one sum as provided under Option 1, any
surrender or death benefit that becomes
payable under an account may be applied
under one or more of the alternative
income payment options as described in
this part or such other payment options
as may then be currently available for
the policy. Our consent is required for
the election of an income payment option
by a fiduciary or any entity other than a
natural person.
Our consent is also required for
elections by any assigns or an owner
other than the insured if the owner has
been changed. You may designate or change
one or more beneficiaries who will be the
payee or payees under the option elected.
You may only do this during the lifetime
of the insured. For death proceeds, if no
election is in effect when the death
benefit becomes payable, the beneficiary
may elect a payment option.
Unless We agree otherwise, all payments
under any option chosen will be made to
the designated payee or to his executor
or administrator. We may require proof of
age of any payee or payees on whose life
payments depend as well as proof of the
continued survival of any such payee(s).
HOW TO ELECT A The election of an income payment
PAYMENT OPTION option must be by Written Request.
Payments may be made on an annual,
semiannual, 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.
V609 20
<PAGE>
PAYMENT OPTIONS This section provides a brief description
of the various payment options that are
available. In Part 9 You will find tables
illustrating the guaranteed installment
amount provided by several of the options
described in this section. The amount
shown for Options 4, 5 and 7 are the
minimum monthly payments for each $1,000
applied. The actual payments will be
based on the monthly payment rates We are
using when the first payment is due. They
will not be less than shown in the
tables.
Option 1 - Payment in one sum
Option 2 - Left to earn interest
We pay interest during the
payee's lifetime on the amount
left with Us under this option
as a principal sum. We
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:
(A) Ten years
(B) Twenty years
V609 21
<PAGE>
(C) Until the installments
paid refund the amount
applied under this option.
If the payee is not living
when the final payment
falls due, that payment
will be limited to the
amount which needs to be
added to the payments
already made to equal the
amount applied under this
option.
If, for the age of the payee,
a period certain is chosen
that is shorter than another
period certain paying the same
installment amount, We will
deem the longer period certain
as having been elected. The
life annuity provided under
this option is calculated
using an interest rate of
3-3/8%, except that any life
annuity providing a period
certain of twenty years or
more is calculated using an
interest rate of 3-1/4%.
Option 5 - Life Annuity
Equal installments are paid
only during the lifetime of
the payee. The first payment
will be on the date of
settlement. Any life annuity
as may be provided under this
option is calculated using an
interest rate of 3-1/2%.
Option 6 - Payments of specified amount
Equal installments of a
specified amount, out of the
principal sum and interest on
that sum, are paid until the
principal sum remaining is
less than the amount of the
installment. When that
happens, the principal sum
remaining with accrued
interest will be paid as a
final payment. The first
payment will be on the date of
settlement. The payments will
include interest on the
principal sum remaining at a
rate guaranteed to at least
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.
V609 22
<PAGE>
(C) The death of the other
named annuitant.
The other annuitant must be
named at the time this option
is elected and cannot later be
changed. That annuitant must
have an adjusted age as
defined in Part 9 of at least
40. The joint survivorship
annuity provided under this
option is calculated by using
an interest rate of 3-3/8%.
We may offer other payment options or
alternative versions of the options
listed in the above section.
ADDITIONAL INTEREST In addition to:
a. the interest of 3% per year
guaranteed on the principal sum
remaining with Us under Options 2 or
6; and
b. the interest of 3% per year included
in the installments payable under
Option 3.
We will pay or credit at the end of each
year such additional interest as We may
declare.
PART 9: TABLES OF PAYMENT OPTION AMOUNTS
The installment amounts shown in the
tables that follow are shown for each
$1,000 applied. Amounts for payment
frequencies, periods or ages not shown
will be furnished upon request. Under
Options 4 and 5, the installment amount
for younger ages than shown will be the
same as for the first age shown and for
older ages than shown it will be the same
amount as for the last age shown.
The term "age" as used in the tables
refers to the adjusted age. Under Options
4 and 5, the adjusted age is defined as
follows:
a. For Surrender Values, the age of the
payee on the payee's birthday nearest
to the Policy Anniversary nearest the
date of surrender.
b. For death proceeds, the age of the
payee on the payee's birthday nearest
the effective date of the Payment
Option elected.
Under Option 7, the adjusted age is the
age on the birthday nearest to the Policy
Anniversary nearest the date of
surrender.
V609 23
<PAGE>
OPTION 3 - PAYMENTS FOR A SPECIFIED PERIOD
<TABLE>
- -----------------------------------------------------------------------------
<CAPTION>
Number of Years 5 6 7 8 9 10 11 12
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Installments $211.99 179.22 155.80 138.31 124.69 113.82 104.93 97.54
Mo. Installments $17.91 15.14 13.16 11.68 10.53 9.61 8.86 8.24
- -----------------------------------------------------------------------------
</TABLE>
OPTION 3 - PAYMENTS FOR A SPECIFIED PERIOD (Continued)
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
Number of Years 13 14 15 16 17 18 19 20 25 30
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Installments 91.29 85.95 81.33 77.29 73.74 70.59 67.78 65.26 55.76 49.53
Mo. Installments 7.71 7.26 6.87 6.53 6.23 5.96 5.73 5.51 4.71
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
*OPTION 4 - LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Installment Installment
Age Refund 10 Years Certain 20 Years Certain Age Refund 10 Years Certain 20 Years Certain
of ------------------------------------------------------ of -----------------------------------------------------
Payee Male Female Male Female Male Female Payee Male Female Male Female Male Female
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 $3.08 $3.03 $3.08 $2.99 $3.00 $2.94 50 $4.36 $4.12 $4.50 $4.10 $4.28 $3.99
15 3.14 3.09 3.15 3.04 3.07 3.00 55 4.76 4.47 4.95 4.47 4.61 4.31
20 3.22 3.16 3.24 3.11 3.15 3.07 60 5.28 4.93 5.54 4.96 4.97 4.67
25 3.33 3.24 3.34 3.20 3.25 3.15 65 5.97 5.54 6.30 5.63 5.29 5.06
30 3.45 3.35 3.47 3.30 3.38 3.25 70 6.91 6.39 7.24 6.50 5.43 5.31
35 3.61 3.48 3.64 3.43 3.55 3.38 75 8.21 7.57 8.26 7.56 5.44 5.40
40 3.80 3.64 3.86 3.60 3.74 3.54 80 10.04 9.26 9.12 8.60 5.46 5.46
45 4.05 3.85 4.14 3.82 3.99 3.74 85 12.61 11.68 9.60 9.31 5.46 5.46
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
*OPTION 5 - LIFE ANNUITY
--------------------------------------------------------
<CAPTION>
Age Age
of of
Payee Male Female Payee Male Female
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 3.17 3.12 50 4.62 4.28
15 3.24 3.18 55 5.12 4.68
20 3.32 3.25 60 5.79 5.24
25 3.42 3.34 65 6.75 6.04
30 3.56 3.44 70 8.15 7.22
35 3.73 3.58 75 10.26 9.03
40 3.95 3.75 80 13.54 11.88
45 4.24 3.98 85 18.72 16.54
--------------------------------------------------------
</TABLE>
<TABLE>
*OPTION 7 - JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Age Age of Insured Age Age of Insured Age Age of Insured Age Age of Insured
of of of of
Other Other Other Other
Annuitant Male Annuitant Male Annuitant Female Annuitant Female
--------------------- ------------------- --------------------- ---------------------
F 55 60 65 F 55 60 65 M 55 60 65 M 55 60 65
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 3.62 3.64 3.65 60 4.43 4.64 4.82 40 3.72 3.77 3.80 60 4.34 4.64 4.93
45 3.80 3.83 3.86 65 4.61 4.93 5.23 45 3.89 3.97 4.03 65 4.44 4.82 5.23
50 4.00 4.07 4.12 70 4.75 5.18 5.63 50 4.06 4.19 4.31 70 4.50 4.95 5.48
55 4.22 4.34 4.44 75 4.86 5.36 5.96 55 4.22 4.43 4.61 75 4.54 5.03 5.65
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Minimum monthly income for each $1,000 applied.
V609 24
<PAGE>
CORPORATE FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
THE DEATH BENEFIT AND OTHER VALUES PROVIDED UNDER THIS POLICY ARE BASED ON THE
RATES OF INTEREST CREDITED ON ANY AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST
ACCOUNT AND THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS WITHIN OUR SEPARATE
ACCOUNT TO WHICH YOUR PREMIUMS ARE ALLOCATED. THUS, THE DEATH BENEFIT AND OTHER
VALUES MAY INCREASE OR DECREASE IN AMOUNT OR DURATION. SEE PART 7 FOR A
DESCRIPTION OF HOW THE DEATH BENEFIT IS DETERMINED.
NOT ELIGIBLE FOR ANNUAL DIVIDENDS
V609
EXHIBIT 1.A.(5)(b)
PHOENIX EXECUTIVE BENEFIT
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY,
VARIABLE POLICY EXCHANGE OPTION RIDER AND
FLEXIBLE TERM INSURANCE RIDER
<PAGE>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
<PAGE>
[logo] PHOENIX EXECUTIVE OFFICES: STATUTORY HOME OFFICE:
ONE AMERICAN ROW 10 KREY BOULEVARD
HARTFORD, CT 06102 EAST GREENBUSH, NY 12144
- --------------------------------------------------------------------------------
INSURED: John Doe 35 - Male :ISSUE AGE AND SEX
POLICY NUMBER: 2 000 000 November 1, 2000 :POLICY DATE
FACE AMOUNT: $100,000.00
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 at the following
address:
Phoenix VUL COLI Unit
c/o Andesa TPA, Inc.
1605 N. Cedar Crest Boulevard, Suite 502
Allentown, PA 18104-2351
Telephone (610) 439-5256
RIGHT TO CANCEL. You have the right to cancel this policy within a limited time
after the policy is delivered to You. The policy may be cancelled by returning
the policy to Us at the above address 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 the
above address.
Signed for Phoenix Home Life Mutual Insurance Company at its Home Office in
Hartford, Connecticut.
Sincerely yours,
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
/s/John H. Beers /s/Robert W. Fiondella
Secretary Chief Executive Officer
Registrar
CORPORATE FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
THE DEATH BENEFIT AND OTHER VALUES PROVIDED UNDER THIS POLICY ARE BASED ON THE
RATES OF INTEREST CREDITED ON ANY AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST
ACCOUNT AND THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS WITHIN OUR SEPARATE
ACCOUNT TO WHICH YOUR PREMIUMS ARE ALLOCATED. THUS, THE DEATH BENEFIT AND OTHER
VALUES MAY INCREASE OR DECREASE IN AMOUNT OR DURATION. SEE PART 7 FOR A
DESCRIPTION OF HOW THE DEATH BENEFIT IS DETERMINED.
NOT ELIGIBLE FOR ANNUAL DIVIDENDS
V607
<PAGE>
SCHEDULE PAGE
BASIC INFORMATION
INSURED: [John Doe] [35 - MALE] : ISSUE AGE AND SEX
POLICY NUMBER: [2 000 000] [November 1, 2000] : POLICY DATE
FACE AMOUNT: [$100,000.00]
OWNER AS STATED IN THE APPLICATION UNLESS LATER CHANGED.
DEATH BENEFIT OPTION: Death Benefit Option [1] or as later changed as provided
herein.
BENEFICIARY AS STATED IN THE APPLICATION UNLESS LATER CHANGED.
INTERNAL REVENUE CODE LIFE INSURANCE QUALIFICATION TEST: Guideline Premium/Cash
Value Corridor Test
PREMIUMS
--------
ISSUE PREMIUM: [$15,000.00]
SUBSEQUENT PLANNED ANNUAL PREMIUM: [$15,000.00]
SUBACCOUNT ALLOCATION SCHEDULE ON THE POLICY DATE
-------------------------------------------------
SUBACCOUNT PREMIUMS DEDUCTIONS*
---------- -------- -----------
Money Market [100%] Proportionate
* See Part 1 for definition of Proportionate. Subaccounts marked "NONE"
will be charged with a portion of the monthly deduction only if the
Subaccounts marked "PROPORTIONATE" are not sufficient to make the full
monthly deduction.
V607 PAGE 1 OF 5
<PAGE>
SCHEDULE PAGE (CONTINUED)
INSURED: [JOHN DOE] POLICY NUMBER: [2 000 000]
SUBACCOUNT FEES
---------------
MAXIMUM DAILY TAX FEE: [0] or such greater amount as may be assessed
as a result of a change in tax laws.
POLICY EXPENSE CHARGES
----------------------
MAXIMUM MONTHLY MORTALITY AND
EXPENSE RISK FEE: 0.00075 (Based on Annual Rate of 0.90%)
PREMIUM TAX CHARGE: x.xx% of premiums (based on actual state tax)
FEDERAL TAX CHARGE: [1.50%] of premiums
MAXIMUM SALES LOAD: 5.00% of premiums (Policy Years 1 to 7)
2.00% of premiums (Policy Years 8+)
MAXIMUM TRANSFER CHARGE: $ 0 - First two transfers per Policy Year.
$10 - Subsequent transfers per Policy Year.
MAXIMUM PARTIAL SURRENDER FEE: Lesser of $25.00 or 2% of partial surrender
amount paid.
MAXIMUM MONTHLY POLICY
ADMINISTRATION CHARGE: $10
OTHER RATES
-----------
GUARANTEED INTEREST ACCOUNT:
----------------------------
UNLOANED PORTION: Minimum Rate 3.00%
LOANED PORTION: [2.00%]
MAXIMUM LOAN INTEREST RATE: [2.75%] for the first 10 Policy Years or
until age 65, whichever is sooner;
[2.50%] thereafter, until the end of the 15th
Policy Year or until age 65,
whichever is sooner;
[2.25%] thereafter
V607 PAGE 2 OF 5
<PAGE>
SCHEDULE PAGE (CONTINUED)
INSURED: [JOHN DOE] POLICY NUMBER: [2 000 000]
TABLE OF CORRIDOR FACTORS
This policy complies with section 7702 of the Internal Revenue Code under the
[Guideline Premium/Cash Value Corridor Test], which requires the death benefit
is greater than or equal to the product of the Cash Value and the Applicable
Percentages from the following table.
<TABLE>
<CAPTION>
Attained Age of Insured Applicable Percentage Attained Age of Insured Applicable Percentage
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
30-40 250% 70 115%
41 243% 71 113%
42 236% 72 111%
43 229% 73 109%
44 222% 74 107%
45 215% 75 105%
46 209% 76 105%
47 203% 77 105%
48 197% 78 105%
49 191% 79 105%
50 185% 80 105%
51 178% 81 105%
52 171% 82 105%
53 164% 83 105%
54 157% 84 105%
55 150% 85 105%
56 146% 86 105%
57 142% 87 105%
58 138% 88 105%
59 134% 89 105%
60 130% 90 105%
61 128% 91 104%
62 126% 92 103%
63 124% 93 102%
64 122% 94 101%
65 120% 95 101%
66 119% 96 101%
67 118% 97 101%
68 117% 98 101%
69 116% 99 101%
100 100%
</TABLE>
V607 PAGE 3 OF 5
<PAGE>
SCHEDULE PAGE (CONTINUED)
INSURED: [JOHN DOE] POLICY NUMBER: [2 000 000]
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
PER $1,000 OF NET AMOUNT AT RISK
<TABLE>
<CAPTION>
Monthly Monthly Monthly
Attained Age Rate Attained Age Rate Attained Age Rate
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
35 .1758 57 1.0408 79 7.5875
36 .1867 58 1.1325 80 8.2367
37 .2000 59 1.2308 81 8.9567
38 .2150 60 1.3400 82 9.7708
39 .2325 61 1.4617 83 10.6883
40 .2517 62 1.5992 84 11.6875
41 .2742 63 1.7550 85 12.7458
42 .2967 64 1.9283 86 13.8408
43 .3225 65 2.1183 87 14.9625
44 .3492 66 2.3208 88 16.1058
45 .3792 67 2.5367 89 17.2742
46 .4100 68 2.7658 90 18.4808
47 .4433 69 3.0142 91 19.7483
48 .4783 70 3.2925 92 21.1208
49 .5175 71 3.6083 93 22.6758
50 .5592 72 3.9708 94 24.6583
51 .6083 73 4.3867 95 27.4967
52 .6633 74 4.8492 96 32.0458
53 .7258 75 5.3492 97 40.0167
54 .7967 76 5.8775 98 54.8317
55 .8725 77 6.4267 99 83.3333
56 .9550 78 6.9917
</TABLE>
BASIS OF COMPUTATION:
MORTALITY: Commissioner's 1980 Male Standard Ordinary Mortality Table,
Aggregate as to Tobacco, Age Nearest Birthday.
V607 PAGE 4 OF 5
<PAGE>
SCHEDULE PAGE (CONTINUED)
INSURED: [JOHN DOE] POLICY NUMBER: [2 000 000]
TABLE OF FACE AMOUNTS OF INSURANCE
----------------------------------
<TABLE>
<CAPTION>
ISSUE DATE FACE AMOUNT RISK CLASSIFICATION
- ---------- ----------- -------------------
<S> <C> <C>
[November 1, 1999] [$178,000.00] [Male Advantage]
</TABLE>
RIDERS AND RIDER BENEFITS
-------------------------
<TABLE>
<CAPTION>
PAYABLE MONTHLY
RIDER DESCRIPTION RIDER DATE AMOUNT PREMIUM TO CHARGE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VR35 - Exchange of Insured May 1, 2000 $0 $0.00 $0
VR37 - Policy Term Rider May 1, 2000 $100,000 $0.00 $3.88
</TABLE>
V607 PAGE 5 OF 5
<PAGE>
TABLE OF CONTENTS
PART PAGE
- ------------------------------------------------------------
Schedule Pages
Table of Contents
1. Definitions...............................................1
2. About the Policy..........................................2
Effective Date of Insurance............................2
Entire Contract........................................2
Non-Participating......................................2
Contestability.........................................2
Suicide................................................3
Misstatement of Age or Sex.............................3
Assignments............................................3
Annual Reports.........................................4
Transaction Rules......................................4
3. Rights of Owner...........................................4
Who Is the Owner.......................................4
What Are the Rights of the Owner.......................4
How to Change the Owner................................5
4. Premiums..................................................5
Premium Payments.......................................5
Premium Deductions.....................................5
Net Premium Allocation
to Subaccounts.......................................6
Premium Flexibility....................................6
Total Premium Limit....................................6
Grace Period and Lapse.................................7
Policy Value...........................................7
Monthly Deduction......................................8
5. The Accounts..............................................9
Guaranteed Interest Account............................9
Separate Account......................................10
Additional Subaccounts................................11
Substitution of Subaccounts...........................11
Voting Rights.........................................11
Share of Separate Account
Subaccount Values...................................11
Unit Value............................................11
Net Investment Factor.................................12
6. Lifetime Benefits........................................12
Transfers.............................................12
Loans.................................................13
Loan Interest.........................................14
Cash Surrender Value..................................14
Full Surrender........................................14
Partial Surrender.....................................15
Additional Insurance Option...........................15
7. Death Benefits...........................................17
Death Benefit Option 1................................17
Death Benefit Option 2................................17
Death Benefit Option 3................................17
Minimum Death Benefit.................................17
Death Benefit Following
Insured's Age 100...................................17
How to Change the Death
Benefit Options.....................................18
Request for an Increase in
Face Amounts........................................18
Right to Cancel Face
Amount Increases....................................18
Request for a Decrease in
Face Amount.........................................19
Death Proceeds........................................19
Interest on Death Proceeds............................19
The Beneficiary.......................................19
How to Change the Beneficiary.........................20
8. Payment Options..........................................20
Who May Elect Payment Options.........................20
How to Elect a Payment Option.........................20
Payment Options.......................................21
(1) Payment in one sum...............................21
(2) Left to earn interest ...........................21
(3) Payments for a specified period..................21
(4) Life annuity with specified
period certain...................................21
(5) Life annuity.....................................22
(6) Payments of a specified amount...................22
(7) Joint survivorship annuity
with a 10-year period certain....................22
Additional Interest..................................23
9. Tables of Payment Option Amounts......................23-24
V607
<PAGE>
PART 1: DEFINITIONS
ATTAINED AGE Age of the insured on the birthday
nearest the most recent Policy
Anniversary.
DEBT Unpaid loans against this policy plus
accrued interest.
GENDER The terms "he," "his" and "him" are
applicable without regard to sex. Where
proper, "she," "hers" or "her" may be
substituted.
IN FORCE The policy has not terminated.
IN WRITING (WRITTEN In a written form satisfactory to Us and
REQUEST) filed at Our Phoenix VUL COLI Unit, at
the address shown on the cover page of
this policy.
MONTHLY CALCULATION The first Monthly Calculation Day of a
DAY policy is the same day as its Policy Date
as shown on the Schedule Page. Subsequent
Monthly Calculation Days are the same day
for each month thereafter or, if such 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
Our VUL unless it is received after the
close of the New York Stock Exchange in
which case it will be the next Valuation
Date.
POLICY ANNIVERSARY The anniversary of the Policy Date.
POLICY DATE The Policy Date as shown on the Schedule
Page. It is the date from which Policy
Years and Policy Anniversaries are
measured.
POLICY MONTH The period from one Monthly Calculation
Day up to, but not including, the next
Monthly Calculation Day.
POLICY VALUE The Policy Value as defined in Part 4.
POLICY YEAR The first Policy Year is the one-year
period from the Policy Date to, but not
including, the first Policy Anniversary.
Each succeeding Policy Year is the
one-year period from the period from the
Policy Anniversary to, but not including,
the next Policy Anniversary.
PROPORTIONATE Amounts are allocated to Subaccounts on a
proportionate basis such that the ratios
of this policy's Subaccount values to
each other are the same before and after
the allocation.
SEPARATE ACCOUNT PLAC Variable Universal Life Account.
SUBACCOUNTS The Guaranteed Interest Account
(exclusive of the loaned portion of such
account) and the accounts within Our
Separate Account to which non-loaned
assets under the policy are allocated as
described in Part 5.
V607 1
<PAGE>
UNIT A standard of measurement, as described
in Part 4, used to determine the share of
this policy in the value of each
Subaccount of the Separate Account.
VALUATION DATE Every day the New York Stock Exchange is
open for trading.
VALUATION PERIOD The period in days from the end of one
Valuation Date through the next Valuation
Date.
VUL Our VUL COLI Unit at P.O. Box 22012,
Albany, NY, 12201-2012.
WE (OUR, US) Phoenix Home Life Mutual Insurance
Company (Phoenix).
YOU (YOUR) The owner of this policy.
PART 2: ABOUT THE POLICY
EFFECTIVE DATE OF This policy will begin In Force on the
INSURANCE Policy Date, provided the issue premium
is paid while the insured is alive.
ENTIRE CONTRACT This policy and the written application
of the policyholder, a copy of which is
attached to and made a part of the
policy, are the entire contract between
You and Us. Any change in the provisions
of the contract, to be in effect, must be
signed by one of Our executive officers
and countersigned by Our registrar or one
of Our executive officers. This policy is
issued by Us at Our Home Office in
Hartford, Connecticut. Any benefits
payable under this policy are payable at
Our VUL.
NON-PARTICIPATING This is a non-participating policy which
does not pay any dividends. Your policy
will not share in Our profits or surplus
earnings.
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 the
application, must be attached to this
policy when issued or made a part of this
policy when a change is made.
We cannot contest the validity of the
original face amount of this policy after
it has been In Force during the insured's
lifetime for two years from its Policy
Date. If We contest the policy, it will
be based on the application for this
policy.
We cannot contest the validity of any
increase in face amount after the policy
has been In Force during the insured's
lifetime for two years from the issue
date of the increase. Any such contest
will be based on the supplemental
application for the increase.
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If We contest the validity of all or a
portion of the face amount provided under
this policy, the amount We pay with
respect to such portion of the face
amount will be limited to the higher of a
return of any paid premium required by Us
for the contested Face Amount, or the sum
of any monthly deductions made under this
policy for the contested face amount.
SUICIDE If within two years from the Policy Date
the insured dies by suicide, while sane
or insane, and while this policy is In
Force, the amount of death benefit will
be limited to the Policy Value adjusted
as follows:
a. We will add any monthly deductions
made under this policy;
b. We will subtract any Debt owed Us
under this policy.
If within two years from the issue date
of an increase in face amount the insured
dies by suicide, while sane or insane,
and while the policy is In Force, the
death benefit for that increase will be
limited to a pro rata portion of the
Policy Value corresponding to such
increase adjusted as follows:
a. We will add the sum of the monthly
deductions corresponding to such
increase;
b. We will subtract any Debt owed Us
under this policy.
MISSTATEMENT OF If the age or sex of the insured has been
AGE OR SEX misstated, any benefits payable under
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 cost of
insurance rates, but subsequent cost
of insurance rates will be adjusted
to such rates that would apply had
this policy been issued based on the
correct 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 herein, any
or all of the rights in this policy may
be assigned. We will not be considered to
have notice of any assignment until We
receive the original or copy of the
assignment In Writing. We are not
responsible for the validity of any
assignment.
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ANNUAL REPORTS Each year We will send You a report for
this policy showing:
a. the then current Policy Value, cash
surrender value, death benefit and
face amount;
b. the premiums paid, and deductions and
partial surrenders made since the
last report;
c. any outstanding Debt;
d. an accounting of the change in Policy
Value since the last report; and
e. such additional information as
required by applicable law or
regulation.
TRANSACTION RULES Requests for transactions involving
Subaccounts will usually be processed
within 7 days after We receive the
Written Request. However, We may, at Our
discretion, postpone the payment of any
death benefit in excess of the initial
face amount, any policy loans, partial
withdrawals, surrenders or transfers:
a. For up to six months from the date of
request, for any transactions
dependent upon the value of the
Guaranteed Interest Account; or
b. Otherwise, for any period during
which the New York Stock Exchange is
closed for trading (except for normal
holiday closing) or when the
Securities and Exchange Commission
has determined that a state of
emergency exists which may make
processing such transactions
impractical.
PART 3: RIGHTS OF OWNER
WHO IS THE OWNER The Owner has all the rights under this
policy and is named in the application
unless later changed and endorsed on this
policy.
WHAT ARE THE RIGHTS You control this policy during the
OF THE OWNER 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. These rights
include the right to:
a. Receive any amounts payable under
this policy during the insured's
lifetime.
b. Change the owner or the interest of
any owner.
c. Change the planned premium amount and
frequency. See Part 4.
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d. Change the Subaccount allocation
schedule for premium payments and
monthly deductions. See Part 4.
e. Transfer amounts between and among
Subaccounts. See Part 6.
f. Obtain policy loans. See Part 6.
g. Obtain a partial surrender. See Part
6.
h. Surrender this policy for its cash
surrender value. See Part 6.
i. Select a payment option for any cash
surrender value that becomes payable.
See Part 6.
j. Request changes in the insurance
amount. See Part 7.
k. Change the beneficiary of the death
benefit. See Part 7.
l. Assign, release or surrender any
interest in the policy.
m. Change the death benefit option. See
Part 7.
You may exercise these rights only 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 other
beneficiaries and owners under this
policy.
HOW TO CHANGE You may change the owner by Written
THE OWNER Request.
PART 4: PREMIUMS
PREMIUM PAYMENTS The issue premium as shown on the
Schedule Page is due on the Policy Date.
The insured must be alive when the issue
premium is paid. Premiums other than the
Issue Premium may be paid at any time
while this policy is In Force subject to
the limits described below. All premiums
are payable at Our VUL, except that the
issue premium may be paid to an
authorized agent of Ours for forwarding
to Us. No benefit associated with any
premium shall be provided until it is
actually received by Us at Our VUL.
PREMIUM DEDUCTIONS A premium tax may be required based on
the laws of the state of issue. The
premium tax rate, if any, as of the
Policy Date, is shown on the Schedule
Page. This rate may change for subsequent
premium payments in accordance with
applicable state law.
A federal tax charge as stated on the
Schedule Page will also be deducted from
any premiums received by Us at Our VUL.
In addition, a sales load expressed as a
percent of premium will be deducted from
any premiums received by Us at Our VUL.
The maximum sales load is shown on the
Schedule Page. If the issue premium is
received by Us
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at Our VUL after the Policy Date, then it
will also be reduced by the amount
necessary to cover any past unpaid
monthly deductions described below. In
addition, payments received by Us during
a grace period will also be reduced by
the amount needed to cover any monthly
deductions during the grace period.
If you fully surrender your policy within
the first three policy years, We will
refund to You a portion of the sales load
as part of the cash surrender value.
NET PREMIUM ALLOCATION The premiums, net of any premium and
TO SUBACCOUNTS federal tax charges, will be applied on
the Payment Date to the various
Subaccounts based on the premium
allocation schedule elected in the
application for this policy or as later
changed by You. You may change the
allocation schedule for premium payments
by Written Request. Allocations to each
Subaccount must be expressed in whole
percentages unless We agree otherwise.
The number of units credited to each
Subaccount of the Separate Account will
be determined by dividing the net premium
applied to that Subaccount by the unit
value of that Subaccount on the Payment
Date. The number of units credited to
each Subaccount is carried to four
decimal places.
PREMIUM FLEXIBILITY Subject to the total premium limit
described in the next section and except
for the issue premium, You may change the
amount and frequency of premium payments
while this policy is In Force during the
lifetime of the insured as follows:
a. You may increase or decrease the
planned premium amount or payment
frequency at any time by Written
Request. We reserve the right to
limit increases to such maximums as
We may establish from time to time.
b. Additional premium payments may be
made at any time up to the Policy
Anniversary nearest the Insured's
100th birthday. However, We reserve
the right to require satisfactory
evidence of insurability before
accepting any additional premium
payment which results in any increase
in the net amount at risk.
c. Each premium payment made must at
least equal $100 or, if during a
grace period, the amount needed to
prevent lapse of this policy. We
reserve the right to reduce this
limit.
TOTAL PREMIUM LIMIT We will refund any portion of any premium
payment which is determined to be in
excess of the premium limit established
by law to qualify your Policy as a
contract for life insurance.
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The total premium limit is applied to the
sum of all premiums received by Us for
this policy to date, reduced by the sum
of all partial surrender amounts paid by
Us to date. If the total premium limit is
exceeded, We will pay You the excess,
with interest at an annual rate of not
less than 3%, not later than 60 days
after the end of the Policy Year in which
the limit was exceeded. The Policy Value
will be adjusted to reflect such refund.
The amount to be taken from the
Subaccount will be allocated in the same
manner as provided for monthly deductions
unless You request another allocation in
writing.
The total premium limit may be exceeded
if additional premium is needed to
prevent lapse under the grace period and
lapse provision. The total premium limit
may change due to:
a. a partial surrender or a decrease in
face amount;
b. addition, cancellation or change of a
rider; or
c. a change in federal tax laws or
regulations.
We reserve the right to not accept any
premium payment which would increase the
Death Benefit by more than it would
increase the Policy Value.
If the total premium limit changes, We
will send You a Revised Schedule Page
reflecting the change. However, We
reserve the right to require that this
policy be returned to Us so that We may
endorse the change.
GRACE PERIOD AND LAPSE If, on any Monthly Calculation Day, the
required monthly deduction exceeds the
Policy Value during the first three
Policy Years, or the cash surrender value
after the third Policy Year, a grace
period of 61 days will be allowed for the
payment of an amount equal to three times
the required monthly deduction. This
policy will continue In Force during any
such grace period. We will mail a written
notice to You and any assigns at the post
office addresses last known to Us as to
the amount of premium required. If such
premium is not paid to Us by the end of
the grace period this policy will lapse
without value, but not before 30 days
have elapsed since We mailed Our written
notice to You. The "date of lapse" will
be the Monthly Calculation Day on which
the deduction was to be made, and any
insurance and rider benefits provided
under this policy will terminate as of
that date.
POLICY VALUE The Policy Value is the sum of this
policy's share in the value of each
Subaccount of the Separate Account and
the value of this policy's Guaranteed
Interest Account. See Part 5 for an
explanation as to how this policy's share
in the value of each Subaccount of the
Separate Account is determined and for a
description of the Guaranteed Interest
Account.
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MONTHLY DEDUCTION A deduction is made each Policy Month
from the Policy Value (excluding the
value of the loaned portion of the
Guaranteed Interest Account) to pay:
a. the cost of insurance provided under
this policy;
b. any flat extra mortality charges;
c. the cost of any rider benefits
provided;
d. an administrative charge. The
administrative charge may vary but in
no event will it exceed the maximum
administrative charge amount shown on
the Schedule Page. We will send You a
written notice of any change at least
30 days in advance of such change;
and
e. a mortality and expense risk charge.
The mortality and expense risk charge
may vary but in no event will it
exceed the maximum mortality and
expense risk charge amount shown on
the Schedule Page. In general, the
mortality and expense risk charge is
based on Our current rate for
policies in this same class of
business, and on the level of
commission determined by You and your
agent.
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 for
this policy that monthly deductions not
be taken from certain specified
Subaccounts. Such a request may later be
changed by notifying Us In Writing, but
only with respect to future monthly
deductions. Monthly deductions will be
taken from this policy's share of the
remaining Subaccounts exclusive of the
loaned portion of the Guaranteed Interest
Account, on a proportionate basis. In the
event this policy's share in the value of
such Subaccounts is not sufficient to
permit the withdrawal of the full monthly
deduction, the remainder will be taken on
a proportionate basis from this policy's
share of each of the other Subaccounts
exclusive of the loaned portion of the
Guaranteed Interest Account. The number
of units deducted from each Subaccount of
the Separate Account will be determined
by dividing the portion of the monthly
deduction allocated to each such
Subaccount by the unit value of that
Subaccount on the Monthly Calculation
Day.
V607 8
<PAGE>
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 1,000
and then multiplied by the result of:
a. the death benefit on the Monthly
Calculation Day; minus
b. the Policy Value on the Monthly
Calculation Day.
The cost of insurance rate for the
current Policy Month is based on the
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 on the
Schedule Page 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 5: THE ACCOUNTS
Assets under this policy may be allocated
either to the Guaranteed Interest Account
or to any of the Subaccounts of the
Separate Account. Any allocation You make
must be at least 1%; You may not choose a
fractional percent. The sum of the Fund
allocation factors must equal 100%.
GUARANTEED INTEREST The Guaranteed Interest Account is not
ACCOUNT part of the Separate Account. It is part
of Our General Account. We reserve the
right to limit cumulative premiums,
including transfers, to the unloaned
portion of the Guaranteed Interest
Account during any one-week period to no
more than $250,000. We will credit
interest daily on the amounts allocated
under this policy to the Guaranteed
Interest Account. The loaned portion of
the Guaranteed Interest Account will be
credited interest at an effective annual
fixed rate as shown on the Schedule Page.
We will credit interest on the unloaned
portion of the Guaranteed Interest
Account at such rates We shall determine
but in no event will the effective annual
rate of interest on such portion be less
than the minimum interest rate shown on
the Schedule Page.
On the last working day of each calendar
week, We will set the interest rate that
will apply to any net premium or
transferred amounts made to the unloaned
portion of the Guaranteed Interest
Account during the following calendar
week. That rate will remain in effect for
such premiums, for an initial guarantee
period of one full year. Upon expiry of
the initial one-year guarantee period,
and each subsequent one-year guarantee
period thereafter, the rate applicable
for any premiums in the unloaned portion
of the Guaranteed Interest Account whose
guarantee period has just ended shall be
the same
V607 9
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rate that applies to new premiums to such
Subaccount at the time the guarantee
period expires. Such rate shall likewise
remain in effect for such premiums for a
subsequent guarantee period of one full
year.
All transfers, partial surrenders and
deductions from the unloaned portion of
the Guaranteed Interest Account will be
assessed on a Last-In, First-Out basis
based on the date the deposit was
initially made to the unloaned portion of
such Subaccount. At the end of each
Policy Year and at the time of any Debt
repayment, interest credited to the
loaned portion of the Guaranteed Interest
Account will be transferred to the
unloaned portion of the Guaranteed
Interest Account. We reserve the right to
add other Guaranteed Interest Accounts,
subject where required, to approval by
the insurance supervisory official of the
state where this policy is delivered.
SEPARATE ACCOUNT The Separate Account has been established
by Us as a Separate Account pursuant to
New York law and is registered as a unit
investment trust under the Investment
Company Act of 1940 (1940 Act). Income
and realized and unrealized gains and
losses from assets in the Separate
Account are credited to or charged
against it without regard to Our other
income, gains or losses. We own the
Separate Account assets and they are kept
separate from the Assets of Our General
Account. Separate Account assets will be
valued on each Valuation Date. The
portion of the Separate Account equal to
reserves and liabilities for policies
supported by the Separate Account will
not be charged with any liabilities
arising out of Our other business. We
reserve the right to use assets of the
Separate Account in excess of these
reserves and liabilities for any
purposes.
The Separate Account has several
Subaccounts available under this policy.
We use the assets of the Separate Account
to buy shares of the Fund identified
according to Your allocation
instructions. The Fund is registered
under the 1940 Act as an open-end,
diversified management investment
company. The Fund has separate Portfolios
that correspond to the Subaccounts of the
Separate Account. Assets of each such
Subaccount are invested in shares of the
corresponding Fund Portfolio.
A Portfolio of the Fund might make a
material change in its investment policy.
If that occurs, You will be notified of
the change. In addition, no change will
be made in the investment policy of any
of the Subaccounts of the Separate
Account without approval of the
appropriate insurance supervisory
official of Our domiciliary state of New
York. The approval process is on file
with the insurance supervisory official
of the state where the policy is
delivered.
V607 10
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ADDITIONAL SUBACCOUNTS We have the right to add Subaccounts of
the Separate Account subject to approval
by the Securities and Exchange Commission
and, where required, other regulatory
authority.
SUBSTITUTION OF If the shares of the Funds of this
SUBACCOUNTS contract should no longer be available
for investment by the Separate Account or
if in Our judgment further investment in
such Funds becomes inappropriate for use
with this policy, We reserve the right to
substitute Units of another Subaccount
for Units already purchased or to be
purchased in the future by premium
payments under this policy. Any such
change will be subject to approval by the
Securities Exchange Commission and, where
required, by the insurance supervisory
official of the state where this policy
is issued.
VOTING RIGHTS Although We are the legal owner of the
Fund shares, We will vote the shares at
regular and special meetings of the
shareholders of the Fund in accordance
with instructions received from You and
the other owners of the policies. Any
shares held by Us will be voted in the
same proportion as voted by You and the
other owners of the policies. However, We
reserve the right to vote the shares of
the Fund without direction from You if
there is a change in the law which would
permit this to be done.
SHARE OF SEPARATE The share of this policy in the value of
ACCOUNT SUBACCOUNT each Subaccount of the Separate Account
VALUES on a Valuation Date is the unit value of
that Subaccount on that date multiplied
by the number of this policy's units in
that Subaccount after all transactions
for the Valuation Period ending on that
day have been processed. For any day
which does not fall on a Valuation Date,
the share of this policy in the value of
each Subaccount of the Separate Account
is determined using the number of units
on that day after all transactions for
that day have been processed and the unit
values on the next Valuation Date.
UNIT VALUE The unit value of each Subaccount of the
Separate Account was set by Us on the
first Valuation Date of each such
Subaccount. The unit value of a
Subaccount of the Separate Account on any
other Valuation Date is determined by
multiplying the unit value of that
Subaccount on the just prior Valuation
Date by the Net Investment Factor for
that Subaccount for the then current
Valuation Period. The unit value of each
Subaccount of the Separate Account on a
day other than a Valuation Date is the
unit value on the next Valuation Date.
Unit values are carried to 6 decimal
places. The unit value of each Subaccount
of the Separate Account on a Valuation
Date is determined at the end of that
day.
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NET INVESTMENT FACTOR The Net Investment Factor for each
Subaccount of the Separate Account is
determined by the investment performance
of the assets held by the Subaccount
during the Valuation Period. Each
valuation will follow applicable law and
accepted procedures. The net Investment
Factor is equal to item (d) below
subtracted from the result of dividing
the sum of items (a) and (b) by item (c)
as defined below.
a. The value of the assets in the
Subaccount on the current Valuation
Date, including accrued net
investment income and realized and
unrealized capital gains and losses,
but excluding the net value of any
transactions during the current
Valuation Period.
b. The amount of any dividend (or, if
applicable, any capital gain
distribution) received by the
Subaccount if the "ex-dividend" date
for shares of the Fund occurs during
the current Valuation Period.
c. The value of the assets in the
Subaccount as of the just prior
Valuation Date, including accrued net
investment income and realized and
unrealized capital gains and losses,
and including the net value of all
transactions during the Valuation
Period ending on that date.
d. The daily charges, if any, for taxes
and reserves for taxes on investment
income, and realized and unrealized
capital gains as shown on the
Schedule Page, multiplied by the
number of days in the current
Valuation Period.
PART 6: LIFETIME BENEFITS
TRANSFERS You may transfer all or a portion of the
Policy Value among one or more of the
Subaccounts of the Separate Account and
the unloaned portion of the Guaranteed
Interest Account. We reserve the right to
limit the number of transfers You may
make, however, You can make up to six
transfers per contract year from
Subaccounts of the Separate Account and
only one transfer per contract year from
the unloaned portion of the Guaranteed
Interest Account unless the Systematic
Transfer Program is elected. Under that
program, funds may be transferred
automatically among the Subaccounts on a
monthly, quarterly, semiannual or annual
basis. Unless We agree otherwise, the
minimum initial and subsequent transfer
amounts are $25 monthly, $75 quarterly,
$150 semiannually or $300 annually.
Except as otherwise provided under the
Systematic Transfer Program, the amount
that may be transferred from the
Guaranteed Interest Account at any one
time cannot exceed the higher of $1,000
or 25% of the value of the Guaranteed
Interest Account.
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Transfers may be made by Written Request.
The maximum transfer charge is shown on
the Schedule Page. There is no transfer
charge for the Systematic Transfer
Program. Any such charge will be deducted
from the Subaccounts from which the
amounts are to be transferred in the same
proportion as the amounts to be
transferred bear to the total amount
transferred. The value of each Subaccount
will be determined on the Valuation Date
that coincides with the date of transfer.
LOANS While this policy is In Force, a loan may
be obtained against this policy in any
amount up to the available loan value. To
obtain a loan, this policy must be
properly assigned to Us as security. We
need no other collateral. We reserve the
right not to allow loans of less than
$500 unless the loans are to pay premiums
on another policy issued by Us.
The loan value is 90% of the Policy
Value. The "available loan value" is the
loan value on the current day less any
outstanding Debt.
The amount of the loan will be added to
the loaned portion of the Guaranteed
Interest Account and subtracted from this
policy's share of the Subaccounts based
on the allocation You request at the time
of the loan. The total reduction will
equal the amount added to the loaned
portion of the Guaranteed Interest
Account. Unless We agree otherwise,
allocations to each Subaccount must be
expressed in whole percentages. If no
allocation request is made, the amount
subtracted from the share of each
Subaccount will be determined in the same
manner as provided for monthly
deductions.
Debt may be repaid at any time during the
lifetime of the insured while this policy
is In Force. Such repayment, in excess of
any outstanding accrued loan interest,
will be applied to reduce the loaned
portion of the Guaranteed Interest
Account and will be transferred to the
unloaned portion of the Guaranteed
Interest Account to the extent that
loaned amounts taken from such account
have not previously been repaid.
Otherwise, such balance will be
transferred among the Subaccounts You
request upon repayment and, if no
allocation request is made, We will use
Your most recent premium allocation
schedule on file with Us. Any Debt
repayment received by Us during a grace
period as described in Part 4 will be
reduced to cover any overdue monthly
deductions and only the balance applied
to reduce the Debt. Such balance will
also be applied as described to reduce
the loaned portion of the Guaranteed
Interest Account.
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While there is any outstanding Debt
against this policy, any payments
received by Us for this policy will be
applied directly to reduce the Debt
unless specified as a premium payment.
Until the Debt is fully repaid,
additional Debt repayments may be made at
any time during the lifetime of the
insured while this policy is In Force.
Failure to repay a policy loan or to pay
loan interest will not terminate this
policy except as otherwise provided under
the Grace Period and Lapse in Part 4 when
the policy does not have sufficient
remaining value to pay the monthly
deductions, in which event, that grace
period provision will apply.
LOAN INTEREST Loans will bear interest at an effective
annual rate equal to the loan interest
rate shown on the Schedule Page and will
be compounded daily. Interest will accrue
on a daily basis from the date of the
loan and is included as part of the Debt
under this policy. Loan interest will be
due on each Policy Anniversary. If not
paid when due, the outstanding accrued
interest on that date will be charged as
a loan against this policy. Interest less
than the maximum guaranteed may be
charged.
CASH SURRENDER VALUE If you fully surrender your policy in the
first policy year, We will reimburse 100%
of the sales load collected for that
policy year. If You fully surrender your
policy in the second policy year, We will
reimburse 66% of the sales load collected
in the first policy year. If You fully
surrender your policy in the third policy
year, We will reimburse 33% of the sales
load collected in the first policy year.
A loan will have a permanent effect on
any death benefit and Cash Surrender
Value of this policy. The Cash Surrender
Value is the policy value as defined in
Part 4 less any outstanding policy debt;
plus the refund of sales load if
applicable. There is no surrender charge.
If You fully surrender your policy within
the first three policy years, We will
refund a portion of the sales load, as
part of the cash surrender value.
FULL SURRENDER You may fully surrender this policy for
its cash surrender value by Written
Request and returning this policy to Us
along with a written release and
surrender of all claims under this policy
signed by You and any assigns. You may do
this at any time during the lifetime of
the insured while this policy is In
Force. The written surrender must be in a
form satisfactory to Us and must include
such tax withholding information as We
may reasonably require. The surrender
will be effective on the "date of
surrender" which is the later of the
dates on which We receive the returned
policy and the written surrender. Upon
full surrender, all insurance and any
rider benefits provided under this policy
will terminate. You may direct that We
apply the surrender proceeds under any of
the Payment Options described in Part 8.
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PARTIAL SURRENDER You may obtain a partial surrender of
this policy by requesting that a part of
this policy's cash surrender value be
paid to You. You may do this at any time
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 this
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 8.
A partial surrender will be denied if the
resultant cash surrender value would be
less than or equal to zero. We reserve
the right not to allow partial surrenders
if the resulting death benefit would be
less than $50,000 or if the amount of the
partial surrender is less than $500. We
further reserve the right to require that
the entire balance of a Subaccount be
surrendered and withdrawn if the share of
this policy in the value of that
Subaccount would, immediately after a
partial surrender, be less than $500.
Upon a partial surrender, the Policy
Value will be reduced by the sum of the
following:
a. The partial surrender amount paid.
This amount comes from a reduction in
this policy's share in the value of
each Subaccount based on the
allocation You request at the time of
the partial surrender. If no
allocation request is made, the
assessment to each Subaccount will be
made in the same manner as provided
for monthly deductions.
b. We reserve the right to charge a
partial surrender fee. This fee, if
any, will be the lessor of $25 or 2%
of the partial surrender amount paid.
The assessment to each Subaccount
will be made in the same manner as
provided for the partial surrender
amount paid.
The cash surrender value will be reduced
by the partial surrender amount paid plus
the partial surrender fee. The face
amount of this policy will be reduced by
the same amount as the Policy Value is
reduced as described above. We will send
You a Revised Schedule Page reflecting
this change.
ADDITIONAL INSURANCE While this policy is In Force and subject
OPTION to the terms of this provision, including
Our receipt of evidence satisfactory to
Us of the insured's then insurability,
You have the option to purchase
additional insurance on the same insured
under the same plan of insurance as this
policy. The new policy will be based on
the same guaranteed rates and charges as
are in effect for this plan on the Policy
Date of this policy as adjusted for the
insured's new attained age and change, if
any, in risk classification. The new
policy will only include
V607 15
<PAGE>
such rider benefits as We may agree based
on Our rules and practices in effect on
the Policy Date of the new policy. The
amount of insurance under the new policy,
when added to all other insurance with
Our company on the life of the insured,
cannot exceed Our total insurance amount
limitations in effect on the Policy Date
of the new policy.
To elect this option, You must file a
written application In Writing. It must
be signed by You and the insured. We must
also receive:
a. Evidence that You have a satisfactory
insurable interest in the life of the
insured.
b. Evidence, satisfactory to Us, that
the insured is then insurable under
Our established practice in the
selection of risks for this plan of
insurance, including the new amount
applied for and rider benefits
requested. Selection of risks
includes health and non-health
factors.
c. Payment, while the insured is alive,
of the full issue premium for the new
policy. The payment must equal or
exceed Our minimum issue premium
requirements in effect for this plan
on the Policy Date of the new policy.
Any exclusions applicable to the new
policy will be determined in accordance
with Our rules and practices in effect on
the Policy Date of the new policy. The
new policy will not be subject to any
assignments or liens against this policy.
The owner and the beneficiary under the
new policy shall be as requested in the
application for the new policy. Any
subsequent changes will be governed by
the printed provisions of the new policy.
The new policy will begin in effect as of
the later of:
a. Our approval of the application for
the new policy;
b. payment of the full issue premium due
on the new policy.
The Policy Date of the new policy will be
as shown on the Schedule Pages of the new
policy based on Our rules and practices
then in effect. The time periods for the
suicide and contestability provisions in
the new policy will be measured from the
Policy Date of the new policy.
V607 16
<PAGE>
PART 7: DEATH BENEFITS
While the policy is In Force, You have
the right to elect one of the death
benefit options as described below. The
death benefit option shall be as elected
in the original application unless later
changed as provided below. If no option
is elected, Death Benefit Option 1 shall
apply.
DEATH BENEFIT OPTION 1 Under this option, during all Policy
Years until the Policy Anniversary which
follows the insured's 100th birthday, the
death benefit is equal to the greater of
(a) or (b) as defined below:
a. the policy's face amount on the date
of death;
b. the minimum death benefit on the date
of death as defined below.
DEATH BENEFIT OPTION 2 Under this option, during all Policy
Years until the Policy Anniversary which
follows the insured's 100th birthday, the
death benefit is equal to the greater of
(a) or (b) as defined below:
a. the policy's face amount on the date
of death plus the Policy Value;
b. the minimum death benefit on the date
of death as defined below.
DEATH BENEFIT OPTION 3 Under this option, during all Policy
Years until the Policy Anniversary which
follows the insured's 100th birthday, the
death benefit is equal to the greater of
(a) or (b) as defined below:
a. the policy's face amount on the date
of death plus the greater of:
i. all premium payments made to the
date of death less any partial
surrenders made to the date of
death; or
ii. zero.
b. the minimum death benefit on the date
of death as defined below.
MINIMUM DEATH BENEFIT The minimum death benefit is the Policy
Value on the date of death of the
insured, multiplied by the applicable
percentage from the Table of Corridor
Factors shown on the Schedule Page.
DEATH BENEFIT FOLLOWING After the Policy Anniversary which
INSURED'S AGE 100 follows the insured's 100th birthday, the
death benefit will equal the Policy
Value.
V607 17
<PAGE>
HOW TO CHANGE THE You may not make a change from or to
DEATH BENEFIT OPTION Option 3. While this policy is In Force,
You may make a Written Request to change
the Death Benefit Option from Option 1 to
Option 2, or from Option 2 to Option 1.
No evidence of insurability is required.
If the request is to change from Option 1
to Option 2, the face amount will be
decreased by the Policy Value and if the
request is to change from Option 2 to
Option 1, the face amount will be
increased by the Policy Value. Any such
change will be in effect on the Monthly
Calculation Day coincident with or next
following the day We approve the request.
REQUEST FOR AN INCREASE Anytime that this policy is In Force, You
IN FACE AMOUNT may make a Written Request to increase
its face amount. Unless We agree
otherwise, the minimum of such face
amount increase is $25,000, and the
increase will be effective on the first
Policy Anniversary on or following the
date that We approve the request. Such
date will be shown as the issue date for
such increase on the Revised Schedule
Pages We send You reflecting the change.
We reserve the right to limit increases
in face amount. All requests to increase
the face amount must be applied for on a
supplemental application and will be
subject to evidence of the insured's
insurability satisfactory to Us. The
insured must be alive on the issue date,
and You must also pay to Us in advance
such issue premium for the increase as We
may require according to Our published
rules then in effect. If no issue premium
is required, the increase will not take
effect unless the cash surrender value on
the issue date at least equals the
monthly deduction for the total combined
face amount. The Issue Expense Charge for
Face Amount increases is as stated on the
Schedule Page.
We will send You Revised Schedule Pages
reflecting the change. We reserve the
right to further require that the policy
be returned to Us so that We may
incorporate the change.
RIGHT TO CANCEL FACE You have the right to cancel any increase
AMOUNT INCREASES in the face amount provided by Us under
this policy by Written Request and
returning the policy to Us within a
limited time as stated below.
To cancel, You must return the policy,
including the Revised Schedule Pages,
before the latest of:
1. 10 days after the new Revised
Schedule Page showing such
increase in the face amount is
delivered to You; or
v607 18
<PAGE>
2. 10 days after a Notice of Right
to Cancel is delivered to You; or
3. 45 days after Part 1 of the
supplementary application for
such increased face amount is
signed.
Upon any such cancellation, We will
refund the higher of any paid premium
required by Us for the increase or the
sum of any monthly deductions and any
other fees and charges made under this
policy for the increase in face amount.
REQUEST FOR A DECREASE You may request a decrease in face amount
IN FACE AMOUNT at any time after the first Policy Year.
Unless We agree otherwise, the decrease
requested must at least equal $10,000 and
the face amount remaining after the
decrease must at least equal $25,000. All
requests to decrease the face amount must
be in writing and will be effective on
the first Monthly Calculation Day
following the date We approve the
request. We reserve the right to require
that this policy first be returned to Us
before the decrease is made. We will send
You a Revised Schedule Page reflecting
the change.
DEATH PROCEEDS Upon receipt In Writing of due proof that
the insured died while this policy is In
Force, We will pay the death proceeds of
this policy. The death proceeds equal the
death benefit on the date of death, with
the following adjustments:
a. We will deduct any Debt outstanding
against this policy.
b. We will deduct any monthly deductions
to and including the Policy Month of
death not already made.
c. We will add any premiums received by
Us after the Monthly Calculation Day
just prior to the date of death and
on or before the date of death.
INTEREST ON DEATH We will pay interest on any death
PROCEEDS proceeds from the date of the insured's
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.
THE BENEFICIARY Unless another payment option is elected
as described in Part 8, 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 for this policy
or as later changed. Payments will be
made successively in the following order:
a. Primary beneficiaries.
V607 19
<PAGE>
b. Contingent beneficiaries, if any,
provided 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.
Unless otherwise stated, the relationship
of a beneficiary is the relationship to
the insured.
HOW TO CHANGE THE You may change the beneficiary under this
BENEFICIARY policy by Written Request. When We
receive it, the change will relate back
and take effect as of the date it was
signed. However, the change will be
subject to any payments made or actions
taken by Us before We received the
Written Request.
PART 8: PAYMENT OPTIONS
WHO MAY ELECT The death benefit of this policy will be
PAYMENT OPTIONS paid in one sum unless otherwise
provided. As an alternative to payment in
one sum as provided under Option 1, any
surrender or death benefit that becomes
payable under an account may be applied
under one or more of the alternative
income payment options as described in
this part or such other payment options
as may then be currently available for
the policy.
Our consent is required for the election
of an income payment option by a
fiduciary or any entity other than a
natural person. Our consent is also
required for elections by any assigns or
an owner other than the insured if the
owner has been changed. You may designate
or change one or more beneficiaries who
will be the payee or payees under the
option elected. You may only do this
during the lifetime of the insured. For
death proceeds, if no election is in
effect when the death benefit becomes
payable, the beneficiary may elect a
payment option.
Unless We agree otherwise, all payments
under any option chosen will be made to
the designated payee or to his executor
or administrator. We may require proof of
age of any payee or payees on whose life
payments depend as well as proof of the
continued survival of any such payee(s).
HOW TO ELECT A The election of an income payment option
PAYMENT OPTION must be by Written Request. Payments may
be made on an annual, semiannual,
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.
V607 20
<PAGE>
PAYMENT OPTIONS This section provides a brief description
of the various payment options that are
available. In Part 9 You will find tables
illustrating the guaranteed installment
amount provided by several of the options
described in this section. The amount
shown for Options 4, 5 and 7 are the
minimum monthly payments for each $1,000
applied. The actual payments will be
based on the monthly payment rates We are
using when the first payment is due. They
will not be less than shown in the
tables.
Option 1 - Payment in one sum
Option 2 - Left to earn interest
We pay interest during the
payee's lifetime on the amount
left with Us under this option
as a principal sum. We
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:
(A) Ten years
(B) Twenty years
V607 21
<PAGE>
(C) Until the installments
paid refund the amount
applied under this option.
If the payee is not living
when the final payment
falls due, that payment
will be limited to the
amount which needs to be
added to the payments
already made to equal the
amount applied under this
option.
If, for the age of the payee,
a period certain is chosen
that is shorter than another
period certain paying the same
installment amount, We will
deem the longer period certain
as having been elected. The
life annuity provided under
this option is calculated
using an interest rate of
3-3/8%, except that any life
annuity providing a period
certain of twenty years or
more is calculated using an
interest rate of 3-1/4%.
Option 5 - Life Annuity
Equal installments are paid
only during the lifetime of
the payee. The first payment
will be on the date of
settlement. Any life annuity
as may be provided under this
option is calculated using an
interest rate of 3-1/2%.
Option 6 - Payments of specified amount
Equal installments of a
specified amount, out of the
principal sum and interest on
that sum, are paid until the
principal sum remaining is
less than the amount of the
installment. When that
happens, the principal sum
remaining with accrued
interest will be paid as a
final payment. The first
payment will be on the date of
settlement. The payments will
include interest on the
principal sum remaining at a
rate guaranteed to at least
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.
V607 22
<PAGE>
(C) The death of the other
named annuitant.
The other annuitant must be
named at the time this option
is elected and cannot later be
changed. That annuitant must
have an adjusted age as
defined in Part 9 of at least
40. The joint survivorship
annuity provided under this
option is calculated by using
an interest rate of 3-3/8%.
We may offer other payment options or
alternative versions of the options
listed in the above section.
ADDITIONAL INTEREST In addition to:
a. the interest of 3% per year
guaranteed on the principal sum
remaining with Us under Options 2 or
6; and
b. the interest of 3% per year included
in the installments payable under
Option 3.
We will pay or credit at the end of each
year such additional interest as We may
declare.
PART 9: TABLES OF PAYMENT OPTION AMOUNTS
The installment amounts shown in the
tables that follow are shown for each
$1,000 applied. Amounts for payment
frequencies, periods or ages not shown
will be furnished upon request. Under
Options 4 and 5, the installment amount
for younger ages than shown will be the
same as for the first age shown and for
older ages than shown it will be the same
amount as for the last age shown.
The term "age" as used in the tables
refers to the adjusted age. Under Options
4 and 5, the adjusted age is defined as
follows:
a. For Surrender Values, the age of the
payee on the payee's birthday nearest
to the Policy Anniversary nearest the
date of surrender.
b. For death proceeds, the age of the
payee on the payee's birthday nearest
the effective date of the Payment
Option elected.
Under Option 7, the adjusted age is the
age on the birthday nearest to the Policy
Anniversary nearest the date of
surrender.
V607 23
<PAGE>
OPTION 3 - PAYMENTS FOR A SPECIFIED PERIOD
<TABLE>
- -----------------------------------------------------------------------------
<CAPTION>
Number of Years 5 6 7 8 9 10 11 12
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Installments $211.99 179.22 155.80 138.31 124.69 113.82 104.93 97.54
Mo. Installments $17.91 15.14 13.16 11.68 10.53 9.61 8.86 8.24
- -----------------------------------------------------------------------------
</TABLE>
OPTION 3 - PAYMENTS FOR A SPECIFIED PERIOD (Continued)
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
Number of Years 13 14 15 16 17 18 19 20 25 30
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Installments 91.29 85.95 81.33 77.29 73.74 70.59 67.78 65.26 55.76 49.53
Mo. Installments 7.71 7.26 6.87 6.53 6.23 5.96 5.73 5.51 4.71
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
*OPTION 4 - LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Installment Installment
Age Refund 10 Years Certain 20 Years Certain Age Refund 10 Years Certain 20 Years Certain
of ------------------------------------------------------ of ------------------------------------------------------
Payee Male Female Male Female Male Female Payee Male Female Male Female Male Female
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 $3.08 $3.03 $3.08 $2.99 $3.00 $2.94 50 $4.36 $4.12 $4.50 $4.10 $4.28 $3.99
15 3.14 3.09 3.15 3.04 3.07 3.00 55 4.76 4.47 4.95 4.47 4.61 4.31
20 3.22 3.16 3.24 3.11 3.15 3.07 60 5.28 4.93 5.54 4.96 4.97 4.67
25 3.33 3.24 3.34 3.20 3.25 3.15 65 5.97 5.54 6.30 5.63 5.29 5.06
30 3.45 3.35 3.47 3.30 3.38 3.25 70 6.91 6.39 7.24 6.50 5.43 5.31
35 3.61 3.48 3.64 3.43 3.55 3.38 75 8.21 7.57 8.26 7.56 5.44 5.40
40 3.80 3.64 3.86 3.60 3.74 3.54 80 10.04 9.26 9.12 8.60 5.46 5.46
45 4.05 3.85 4.14 3.82 3.99 3.74 85 12.61 11.68 9.60 9.31 5.46 5.46
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
*OPTION 5 - LIFE ANNUITY
--------------------------------------------------------
<CAPTION>
Age Age
of of
Payee Male Female Payee Male Female
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 3.17 3.12 50 4.62 4.28
15 3.24 3.18 55 5.12 4.68
20 3.32 3.25 60 5.79 5.24
25 3.42 3.34 65 6.75 6.04
30 3.56 3.44 70 8.15 7.22
35 3.73 3.58 75 10.26 9.03
40 3.95 3.75 80 13.54 11.88
45 4.24 3.98 85 18.72 16.54
--------------------------------------------------------
</TABLE>
<TABLE>
*OPTION 7 - JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Age Age of Insured Age Age of Insured Age Age of Insured Age Age of Insured
of of of of
Other Other Other Other
Annuitant Male Annuitant Male Annuitant Female Annuitant Female
--------------------- ------------------- --------------------- ---------------------
F 55 60 65 F 55 60 65 M 55 60 65 M 55 60 65
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 3.62 3.64 3.65 60 4.43 4.64 4.82 40 3.72 3.77 3.80 60 4.34 4.64 4.93
45 3.80 3.83 3.86 65 4.61 4.93 5.23 45 3.89 3.97 4.03 65 4.44 4.82 5.23
50 4.00 4.07 4.12 70 4.75 5.18 5.63 50 4.06 4.19 4.31 70 4.50 4.95 5.48
55 4.22 4.34 4.44 75 4.86 5.36 5.96 55 4.22 4.43 4.61 75 4.54 5.03 5.65
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Minimum monthly income for each $1,000 applied.
V607 24
<PAGE>
CORPORATE FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
THE DEATH BENEFIT AND OTHER VALUES PROVIDED UNDER THIS POLICY ARE BASED ON THE
RATES OF INTEREST CREDITED ON ANY AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST
ACCOUNT AND THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS WITHIN OUR SEPARATE
ACCOUNT TO WHICH YOUR PREMIUMS ARE ALLOCATED. THUS, THE DEATH BENEFIT AND OTHER
VALUES MAY INCREASE OR DECREASE IN AMOUNT OR DURATION. SEE PART 7 FOR A
DESCRIPTION OF HOW THE DEATH BENEFIT IS DETERMINED.
NOT ELIGIBLE FOR ANNUAL DIVIDENDS
V607
<PAGE>
VARIABLE POLICY EXCHANGE OPTION RIDER
<PAGE>
VARIABLE POLICY EXCHANGE OPTION RIDER
THIS RIDER IS A PART OF THE POLICY TO
WHICH IT IS ATTACHED IF IT IS LISTED ON
THE SCHEDULE PAGES OF THE POLICY OR IN AN
ENDORSEMENT AFTER THAT PAGE. EXCEPT AS
STATED IN THIS RIDER, IT IS SUBJECT TO
ALL OF THE PROVISIONS CONTAINED IN THE
POLICY.
THE EXCHANGE OPTION While this rider is in effect and subject
to its terms, You have the option to
exchange Your policy (the "exchange
policy") for a new policy on the life of
a substitute Insured.
HOW TO EXERCISE THE To exercise this option, You must file an
OPTION exchange application In Writing. It must
be signed by You. We must also receive:
a. Evidence that You have a satisfactory
insurable interest in the life of the
substitute Insured.
b. Evidence that the substitute Insured
is insurable under Our established
practice in the selection of risks
for the amount and plan applied for.
Selection of risks includes health
and non-health factors.
c. The release of any lien against or
assignment against Your policy. You
may instead submit written approval
by the lienholder or assigns of the
exchange of the policies with such
other documents as We may require.
d. Payment of any amounts due to Us for
the exchange as described in the
Exchange Adjustments.
Unless otherwise provided in the exchange
application, the owner and beneficiary of
the new policies will be the same as
under the original policy. Any subsequent
changes will be governed by the printed
provisions of the new policy.
The Date of Exchange will be the same day
of the month as the exchange policy's
anniversary which occurs on or after the
later of:
a. Our approval of the exchange
application; o
b. Payment of any Exchange Adjustments
that are required of You.
The exchange policy will be in force only
to and including the day prior to the
Date of Exchange. It will thereafter be
deemed terminated and canceled.
The new policy will begin in effect on
the Date of Exchange.
THE NEW POLICY The date of issue of the new policy will
be the later of:
VR35 1
<PAGE>
a. The same date as the date of issue of
the exchange policy;
b. The first anniversary of the exchange
policy which follows the substitute
Insured's date of birth.
The age at issue shown in the new policy
will be the substitute Insured's age on
his or her birthday nearest the date of
issue of the new policy.
The new policy on the life of the
substitute Insured will be written on any
plan of variable life insurance issued by
Us at the time of the exchange. The new
policy will be written using a policy
form in use by Us on the date of issue
and will be subject to Our published
issue rules (e.g., age and amount limits)
for the plan chosen which were in effect
on the date of issue. The premium
classification and any exclusions
applicable to the new policy will be
determined in accordance with Our rules
and practices in effect on the date of
issue.
The face amount of the new policy will be
chosen by the owner. At Our sole
discretion, We may reduce the chosen face
amount to an amount not less than the
face amount of the original policy.
We will not permit the face amount of the
new policy to exceed an amount which,
when added to the amount at risk on the
life of the substitute Insured under all
other life insurance in force with Us on
the Date of Exchange, exceeds Our maximum
cumulative limits for the substitute
Insured.
The policy value for the original policy
will be transferred to the new policy.
Any such policy value that cannot so be
applied will be used to reduce any loan
against the policy, and the residual
amount will be returned to You in cash.
To the extent that 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.
The time periods for the suicide and
contestability provision in the new
policy will be measured from the Date of
Exchange.
Additional rider benefits may be included
in the new policy provided We consent.
The new policy will conform to all of the
requirements of the jurisdiction in which
it is issued regardless of any terms of
this rider providing to the contrary.
EXCHANGE ADJUSTMENTS The exchange is subject to the following
adjustments:
VR35 2
<PAGE>
1. If the policy value of the
original policy is insufficient
to produce a positive cash
surrender value for the new
policy, the owner must pay an
Exchange Adjustment in an amount
that, when applied as premium,
will make the cash surrender
value of the new policy greater
than zero.
2. In some cases, the amount of
policy value which may be applied
to the new policy may result in a
death benefit which exceeds the
limit for the new policy. In that
event, We will apply such excess
policy value to reduce any loan
against the policy, and the
residual amount will be returned
to You in cash.
3. The exchange will also be subject
to Our receipt of repayment of
the amount of any policy debt
under the exchange policy in
excess of the loan value of the
new policy on the Date of
Exchange.
RIDER CHARGES There are no monthly charges for this
rider.
TERMINATION OF THIS RIDER This rider will terminate on the earliest
of:
a. Termination of the exchange policy by
surrender, lapse or death of the
subsitute Insured; or
b. Exercise of the exchange option under
this rider.
Phoenix Hone Life Mutual Insurance Company
/s/John H. Beers
Secretary
VR35 3
<PAGE>
FLEXIBLE TERM INSURANCE RIDER
<PAGE>
FLEXIBLE TERM INSURANCE RIDER
THIS RIDER IS A PART OF THE POLICY TO
WHICH IT IS ATTACHED IF IT IS LISTED
UNDER THE RIDER SCHEDULE ON THE SCHEDULE
PAGES OF THE POLICY. EXCEPT AS STATED IN
THIS RIDER, IT IS SUBJECT TO ALL OF THE
PROVISIONS OF THE POLICY. THIS RIDER HAS
NO CONTRACT VALUE ASSOCIATED WITH IT.
POLICY NUMBER [2 000 000]
INSURED [John Doe]
INITIAL RIDER DEATH BENEFIT [$100,000]
INITIAL TARGET STATED AMOUNT [$278,000]
INSURANCE INCREASE [0]
INSURANCE INCREASE
EXPIRY DATE [NA]
RIDER DATE OF ISSUE [October 1, 1999]
DEFINITIONS Rider Anniversary--The Anniversary of the
Rider Date of Issue.
Target Stated Amount--The Target Stated
Amount is equal to the Initial Target
Stated Amount plus any Insurance
Increases, less any Insurance Decreases.
The Initial Target Stated Amount and
Insurance Increases are chosen by the
owner at the time of application.
Policy Insurance Amount--The insurance
amount provided by the underlying base
insurance policy. The Policy Insurance
Amount is the policy's minimum death
benefit as described in Part 7 of the
policy.
Rider Insurance Amount--The Target Stated
Amount less the Policy Insurance Amount.
RIDER DEATH BENEFIT Upon receipt In Writing of due proof that
the Insured died while this rider is in
effect, We will pay the Rider Death
Benefit to the beneficiary of the policy.
The Rider Death Benefit is equal to the
greater of (a) or (b) where:
a. equals the Target Stated Amount minus
the Policy Insurance Amount; and
b. equals zero.
SUICIDE EXCLUSION If within two years from the Rider Date
of Issue (or two years from any
reinstatement, if applicable) and
provided this rider is then in effect,
the Insured dies by suicide, whether sane
or insane, the amount We pay under this
rider will be limited to the cost of
insurance charges paid for this rider.
VR37 1
<PAGE>
CONTESTABILITY We cannot contest the validity of this
rider after it has been in effect during
the Insured's lifetime for two years from
the Rider Date of Issue (or two years
from any reinstatement, if applicable).
INSURANCE INCREASES Subject to the limitations stated below,
AND DECREASES if the Insurance Increase as shown above
is not 0, the Target Stated Amount will
increase or decrease as shown in the
schedule attached to this rider. The
scheduled Insurance Increase or Decrease
will occur on each Rider Anniversary that
this rider is in effect.
INSURANCE INCREASE The Insurance Increases will be subject
LIMITATIONS to the following limitations:
[bullet] Insurance Increases will not
occur after the Increase Expiry
Date;
[bullet] The total of all Insurance
Increases cannot exceed the
policy's initial face
amount plus the Initial Rider
Insurance Amount or, if less,
$5,000,000.
[bullet] Insurance Increases will no
longer be provided following the
first of any of the following to
occur:
1. a partial surrender of cash
surrender value;
2. a requested policy face
amount decrease;
3. a requested decrease in the
Target Stated Amount.
PARTIAL SURRENDERS OF CASH While this rider is in effect, the
SURRENDER VALUE AND FACE provisions entitled "Partial Surrender"
AMOUNT DECREASES in Part 6 of the policy and "Request for
a Decrease in Face Amount" in Part 7 of
the policy shall be amended to provide
that requests for a partial surrender of
cash surrender value or requested face
amount decreases under the policy will
first reduce the Target Stated Amount.
The Policy Value and the Target Stated
Amount will each be reduced for a partial
surrender of cash surrender value by the
amount of the partial surrender plus the
partial surrender fee. This fee is
described on the policy's Schedule Pages.
To the extent such partial surrenders of
cash surrender value or requested face
amount decreases reduce the Total Rider
Insurance Amount to zero, any additional
partial surrender of cash surrender value
or requested face amount decrease will
reduce the policy face amount and Policy
Value in accordance with the regular
non-amended terms of such provisions.
After such partial surrender of cash
surrender value, no Insurance Increases
will thereafter be provided.
VR37 2
<PAGE>
CHANGE IN TARGET You may, by Written Request, increase or
STATED AMOUNT decrease Your Target Stated Amount. If
you request a decrease in the Target
Stated Amount, no Insurance Increases
will thereafter be provided.
MONTHLY CHARGE The Monthly Charge for this rider is
equal to the monthly cost of insurance
rate for the Insured multiplied by the
Rider Death Benefit. The Monthly Charge
for each month of the first year that
this rider is in effect is shown on the
policy's Schedule Pages. The Monthly
Charge for the rider is deducted from the
Policy Value as part of the monthly
deduction for the policy.
The monthly cost of insurance rate is
based on the Insured's age nearest
birthday on the Rider Date of Issue, risk
class, sex and duration from such Rider
Date of Issue. The rate used in computing
the cost of insurance is obtained from
the Table of Guaranteed Maximum Cost of
Insurance Rates as shown on the Policy
Schedule Page, or such lower rate as We
may declare. Any new schedule of rates
will be determined by Us based on factors
which will be uniform by class without
regard to changes in the health of the
Insured after the Rider Date of Issue,
and based on Our future mortality,
expense, lapse and investment
expectations.
TERMINATION OF THIS RIDER This rider and all insurance under it
will terminate on the earliest of the
following dates:
1. the Insured's Age 100;
2. the date of surrender or lapse of
the policy;
3. the date of payment of the Rider
Death Benefit;
4. the first Monthly Calculation Day
following Our receipt of a
Written Request to cancel this
rider.
Phoenix Home Life Mutual Insurance Company
/s/John H. Beers
Secretary
VR37 3
EXHIBIT 1.A.(10)
FORMS OF APPLICATION
<PAGE>
SPECIMEN APPLICATION
MASTER APPLICATION
OL2826
<PAGE>
<TABLE>
<CAPTION>
[logo]PHOENIX 100 Bright Meadow Boulevard MASTER APPLICATION
PO Box 1900 FOR COMPANY USE ONLY
Enfield CT 06083-1900 Case Number:___________________
Master App. No.:_______________
<S> <C>
Company is defined as: [ ] Phoenix Home Life Mutual Insurance Company
[ ] PHL Variable Insurance Company
[ ] Phoenix Life and Annuity Company
====================================================================================================================================
SECTION I - BUSINESS ENTITY
- ------------------------------------------------------------------------------------------------------------------------------------
Business Entity Name Tax ID
- ------------------------------------------------------------------------------------------------------------------------------------
Address (Includes Street, City, State and ZIP Code)
====================================================================================================================================
SECTION II - OWNERSHIP (Choose one and complete one of the following)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. Business Entity is Owner of all policies covered by this Master Application
[ ] B. Other Owner as indicated on Insured's Application
====================================================================================================================================
SECTION III - ADDITIONAL PREMIUM NOTICE (In addition to Business Entity)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. Proposed Insureds or other Owner as specified on Insured's Application
[ ] B. Other (Name and Address)_____________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
====================================================================================================================================
SECTION IV - BENEFICIARY (Choose one of the following)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. Business Entity [ ] Check if subject to Split Dollar Agreement
[ ] B. Beneficiary Specified on Insured's Application
====================================================================================================================================
SECTION V - COVERAGE APPLIED FOR (Choose one and complete one of the following)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. As designated on Insured's Application
[ ] B. Specified as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Plan of Insurance Basic Policy Amount Rider
$ [ ] Flexible Term Insurance Rider-Initial Face Amount_______
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Test (GPT if none specified): [ ] Cash Value Accumulation Test [ ] Guideline Premium Test
- ------------------------------------------------------------------------------------------------------------------------------------
Death Benefit Option (Option 1 if none checked):
[ ] Option 1 - Level [ ] Option 2 - Increasing [ ] Option 3 - Specified Face + Accumulated Premiums Net of Distributions
====================================================================================================================================
SECTION VI - POLICY INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
With this policy, do you plan to replace (in whole or in part, now or in the future) and existing insurance or annuity in force?
[ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
Payment Mode (Choose one) [ ] Annual [ ] Semi-annual [ ] Quarterly [ ] Monthly
====================================================================================================================================
FOR VARIABLE LIFE ONLY (Complete only if Business Entity owned only)
- ------------------------------------------------------------------------------------------------------------------------------------
DO YOU UNDERSTAND THAT IF YOU HAVE PURCHASED A VARIABLE LIFE POLICY, THE DEATH BENEFIT MAY BE VARIABLE OR FIXED UNDER CERTAIN
CONDITIONS AND THAT THE DEATH BENEFIT AND CASH VALUES UNDER ANY VARIABLE POLICY MY INCREASE OR DECREASE IN AMOUNT OR DURATION BASED
ON THE INVESTMENT EXPERIENCE OF THE UNDERLYING SUB-ACCOUNTS? [ ] YES [ ] NO
If you are purchasing a Variable Life Policy, do you believe it is suitable to meet your financial objectives? [ ] Yes [ ] No
IF I HAVE PURCHASED A VARIABLE LIFE POLICY, I CONFIRM THAT I HAVE RECEIVED THE PROSPECTUS FOR THAT POLICY AND ITS UNDERLYING FUNDS.
====================================================================================================================================
ADDITIONAL COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
OL2826 8-99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 may be 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.
STATEMENT OF BUSINESS ENTITY
The undersigned on behalf of the Business Entity affirms as follows:
I have reviewed the information contained on the life insurance applications of the insured(s) and certify that the information
contained therein is true and complete to the best of my knowledge.
I have reviewed this application, and I hereby verify that all information given here is true and complete to the best of my
knowledge and belief, and has been and fully and correctly recorded.
I (We) agree that this Master Application, the insured's Life Insurance Application shall form a part of any policy issued, and
further agree that no insurance shall take affect unless and until the policy has been delivered to and accepted by me (us) and the
initial premium has been paid during the lifetime, and prior to any change in the health, of the Proposed Insured(s).
I certify that the tax identification numbers provided are correct.
In case of discrepancy between this master application and the insured's application, the insured's application shall be
controlling.
- ------------------------------------------------------------------------------------------------------------------------------------
Business Entity Representation (Owner/Corporate Officer/Partner/Trustee) State Signed In Witness Date
X
- ------------------------------------------------------------------------------------------------------------------------------------
The Producer hereby certifies that he/she has truly and accurately recorded on the application the information supplied by the
Owner(s); and that he/she is qualified and authorized to discuss the contract herein applied for.
WILL THE PROPOSED INSURED REPLACE (IN WHOLE OR IN PART) ANY EXISTING INSURANCE OR ANNUITY IN FORCE WITH THE POLICY APPLIED FOR?
[ ] YES [ ] NO
WILL THE PROPOSED INSURED 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
- ------------------------------------------------------------------------------------------------------------------------------------
Lic. Agt./Reg.'s Signature Date Lic. Agt./Reg.'s Rep. ID No.
X
- ------------------------------------------------------------------------------------------------------------------------------------
Broker/Dealer Name and Address Broker/Dealer No.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SPECIMEN APPLICATION
LIFE INSURANCE APPLICATION
OL2824
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
[logo]PHOENIX 100 Bright Meadow Boulevard LIFE INSURANCE APPLICATION
PO Box 1900 FOR COMPANY USE ONLY
Enfield CT 06083-1900 List Bill Number:______________
Master App. No.:_______________
Company is defined as: [ ] Phoenix Home Life Mutual Insurance Company
[ ] PHL Variable Insurance Company
[ ] Phoenix Life and Annuity Company
PLEASE NOTE: If application is taken in state where selected insurer has not been admitted to do business, it is void and will be
rejected.
====================================================================================================================================
SECTION I - PROPOSED INSURED - questions below pertain to the Proposed Insured unless otherwise indicated.
- ------------------------------------------------------------------------------------------------------------------------------------
Print Name as it is to appear on policy (First, Middle, Last) Sex Birthdate Birthplace (State or Country)
[ ]Male [ ] Female (Month, Day, Year)
- ------------------------------------------------------------------------------------------------------------------------------------
Current Occupation Length of Employment United States Citizen Social Security Number
[ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
Home Address (Include Street, Apt. Number, City, State, and ZIP Code)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] YES [ ] NO 1. Are you ACTIVELY-AT-WORK*?
*ACTIVELY-AT-WORK is defined as: Performing all normal duties of the position on a full-time basis for not less
than 30 hours per week and not absent from work due to accident, illness or other condition for more than four
consecutive days within the last 90 days prior to first becoming eligible to participate in the life insurance
program being applied for. Phoenix reserves the right to request recertification of the above information for
deaths occurring within two years of the application date or any increase thereafter and to contest any claim
during that period.
- ------------------------------------------------------------------------------------------------------------------------------------
Have you smoked cigarettes in the past 12 months? With this policy, do you plan to replace (in whole or in
part, now or in the future) any existing insurance or
[ ] Yes [ ] No annuity in force? [ ] Yes [ ] No
====================================================================================================================================
SECTION II - OWNERSHIP
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. Business Entity named in Master Application is owner
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] B. Proposed Insured
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] C. Other Owner Relationship to Proposed Insured
- ------------------------------------------------------------------------------------------------------------------------------------
Name Tax ID Number
- ------------------------------------------------------------------------------------------------------------------------------------
Address
====================================================================================================================================
SECTION III - BENEFICIARY DESIGNATION(S)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. Business entity named in Master Application is beneficiary
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] B. Other beneficiary (Complete details below) [ ] Check if subject to split dollar agreement
- ------------------------------------------------------------------------------------------------------------------------------------
Primary Beneficiary Relationship to Proposed Insured Date of Birth Tax ID Number
- ------------------------------------------------------------------------------------------------------------------------------------
Contingent Beneficiary Relationship to Proposed Insured Date of Birth Tax ID Number
====================================================================================================================================
SECTION IV - COVERAGE APPLIED FOR
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. As specified in Master Application
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] B. Specified as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Plan of Insurance Basic Policy Amount Rider
$ [ ] Flexible Term Insurance Rider-Initial Face Amount_______
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Test (GPT if none specified): [ ] Cash Value Accumulation Test [ ] Guideline Premium Test
- ------------------------------------------------------------------------------------------------------------------------------------
Death Benefit Option (Option 1 if none checked):
[ ] Option 1 - Level [ ] Option 2 - Increasing [ ] Option 3 - Specified Face + Accumulated Premiums Net of Distributions
====================================================================================================================================
FOR VARIABLE LIFE ONLY
- ------------------------------------------------------------------------------------------------------------------------------------
DO YOU UNDERSTAND THAT IF YOU HAVE PURCHASED A VARIABLE LIFE POLICY, THE DEATH BENEFIT MAY BE VARIABLE OR FIXED UNDER CERTAIN
CONDITIONS AND THAT THE DEATH BENEFIT AND CASH VALUES UNDER ANY VARIABLE POLICY MY INCREASE OR DECREASE IN AMOUNT OR DURATION BASED
ON THE INVESTMENT EXPERIENCE OF THE UNDERLYING SUB-ACCOUNTS? [ ] YES [ ] NO
If you are purchasing a Variable Life Policy, do you believe it is suitable to meet your financial objectives? [ ] Yes [ ] No
IF I HAVE PURCHASED A VARIABLE LIFE POLICY, I CONFIRM THAT I HAVE RECEIVED THE PROSPECTUS FOR THAT POLICY AND ITS UNDERLYING FUNDS.
====================================================================================================================================
ADDITIONAL COMMENTS
====================================================================================================================================
OL2824 8-99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 may be 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.
AUTHORIZATION TO OBTAIN INFORMATION
I hereby authorize any licensed physician, medical practitioner, hospital, clinic or other medical or medically-related facility,
insurance company, the Medical Information Bureau (MIB) or other organization, institution or person, having any records or
knowledge of me or my health, to give to Phoenix Home Life Mutual Insurance Company and its subsidiaries or reinsurers, any such
information. If insurance on any minor child is applied for, this authorization extends to records and knowledge of that child
and that child's health. To facilitate rapid submission of such information, I authorize all said sources, except MIB, to give
such records or knowledge to any agency employed by the company to collect and transmit such information.
The information requested by Phoenix Home Life Mutual Insurance Company and its subsidiaries or reinsurers, may include information
regarding diagnosis and treatment of physical or mental conditions, including consultations occurring after the date this
authorization is signed. Medical information will be used only for the purpose of risk evaluation, determining eligibility for
benefits under any policies issued, and for insurance statistical studies. If a medical record contains information relating to
alcohol or drug abuse or mental health care, adequate information is to be released to serve these purposes.
I acknowledge that I have received a copy of the Notice of Information Practices, including information about Investigative
Consumer Reports and the Medical Information Bureau and the Underwriting Process.
This authorization shall continue to be valid for thirty months from the date it is signed unless otherwise required by law. A
photocopy of this signed authorization shall be as valid as the original. It may be revoked in writing to the company at any time
until the insurance coverage has been placed in force. I understand I may or an individual authorized to act on my behalf may
receive a copy of this authorization on request.
I also authorize the preparation of an investigative consumer report. [ ] I do [ ] I do not (check one only) require that I be
interviewed in connection with any investigative consumer report that may be prepared.
I have reviewed this application, and I hereby verify that all information given here is true and complete to the best of my
knowledge and belief, and has been fully and correctly recorded.
I understand that as long as I am employed by the employer identified in the Master Application, the Company is authorized to
increase the Face Amount of the policy from time to time in accordance with my employer's instructions. Each increase shall be
subject to the underwriting limitations and requirements which the Company has in effect on the date the increase is requested
including, but not limited to, my being Actively-At-Work at the time of each change.
I certify that (a) the Social Security or Tax Identification Number shown above is correct, and (b) that I am not subject to
back-up withholding.
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Insured Signature Witness State Signed In Date
X
- ------------------------------------------------------------------------------------------------------------------------------------
Owner (If other than the Proposed Insured or Business
entity specified on Master Application) Witness State Signed In Date
X
- ------------------------------------------------------------------------------------------------------------------------------------
The Producer hereby certifies he/she has truly and accurately recorded on the application the information supplied by the Proposed
Insured; and that he/she is qualified and authorized to discuss the contract herein applied for.
WILL THE PROPOSED INSURED REPLACE (IN WHOLE OR IN PART) ANY EXISTING INSURANCE OR ANNUITY IN FORCE WITH THE POLICY APPLIED FOR?
[ ] YES [ ] NO
WILL THE PROPOSED INSURED 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
- ------------------------------------------------------------------------------------------------------------------------------------
Lic. Agt./Reg.'s Signature Date Lic. Agt./Reg.'s Rep. ID No.
X
- ------------------------------------------------------------------------------------------------------------------------------------
Broker/Dealer Name and Address Broker/Dealer No.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SPECIMEN APPLICATION
SIMPLIFIED LIFE INSURANCE APPLICATION
OL2827
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
[logo]PHOENIX 100 Bright Meadow Boulevard SIMPLIFIED LIFE INSURANCE APPLICATION
PO Box 1900 FOR COMPANY USE ONLY
Enfield CT 06083-1900 List Bill Number:______________
Master App. No.:_______________
Company is defined as: [ ] Phoenix Home Life Mutual Insurance Company
[ ] PHL Variable Insurance Company
[ ] Phoenix Life and Annuity Company
PLEASE NOTE: If application is taken in state where selected insurer has not been admitted to do business, it is void and will be
rejected.
====================================================================================================================================
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
- ------------------------------------------------------------------------------------------------------------------------------------
Driver's License No. (Include State) Marital Status
[ ] Single [ ] Married [ ] Widowed [ ] Divorced [ ] Separated
- ------------------------------------------------------------------------------------------------------------------------------------
Home Address (Include Street, Apt. Number, City, State, ZIP Code, and Country) Home Telephone Number
( )
- ------------------------------------------------------------------------------------------------------------------------------------
Give Prior Address if at address less than 2 years (Include Street, Apt. Number, City, State, ZIP Code, and Country)
- ------------------------------------------------------------------------------------------------------------------------------------
Current Occupation and Duties Business Entity Length of Employment
- ------------------------------------------------------------------------------------------------------------------------------------
Business Entity Address (Include Street, Apt. Number, City, State, ZIP Code, and Country) Bus. Phone No. (Include Ext.)
( ) X
- ------------------------------------------------------------------------------------------------------------------------------------
Email Address
====================================================================================================================================
SECTION II - OWNERSHIP
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. Business Entity named in Master Application is owner
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] B. Proposed Insured
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] C. Other Owner Relationship to Proposed Insured
- ------------------------------------------------------------------------------------------------------------------------------------
Name Tax ID Number
- ------------------------------------------------------------------------------------------------------------------------------------
Address
- ------------------------------------------------------------------------------------------------------------------------------------
Send premium and lapse notices to: (in addition to owner)
[ ] Proposed Insured: [ ] Home Address [ ] Business Entity Address
[ ] Secondary Address_______________________________________________________________________________________________________________
====================================================================================================================================
SECTION III - BENEFICIARY DESIGNATION(S)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. Business Entity named in Master Application is beneficiary
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] B. Other beneficiary (Complete details below) [ ] Check if subject to split dollar agreement
- ------------------------------------------------------------------------------------------------------------------------------------
Primary Beneficiary Relationship to Proposed Insured Date of Birth Tax ID Number
- ------------------------------------------------------------------------------------------------------------------------------------
Contingent Beneficiary Relationship to Proposed Insured Date of Birth Tax ID Number
====================================================================================================================================
SECTION IV - COVERAGE APPLIED FOR
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. As specified in Master Application
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] B. Specified as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Plan of Insurance Basic Policy Amount Rider
$ [ ] Flexible Term Insurance Rider-Initial Face Amount_______
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Test (GPT if none specified): [ ] Cash Value Accumulation Test [ ] Guideline Premium Test
- ------------------------------------------------------------------------------------------------------------------------------------
Death Benefit Option (Option 1 if none checked):
[ ] Option 1 - Level [ ] Option 2 - Increasing [ ] Option 3 - Specified Face + Accumulated Premiums Net of Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
First Year Anticipated BILLED Premium (Excluding 1035 Exchange, Lump Sum Funds, etc. Subsequent Planned Annual Premium
- ------------------------------------------------------------------------------------------------------------------------------------
OL2827 Page 1 8-99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
====================================================================================================================================
FOR VARIABLE LIFE ONLY
- ------------------------------------------------------------------------------------------------------------------------------------
DO YOU UNDERSTAND THAT IF YOU HAVE PURCHASED A VARIABLE LIFE POLICY, THE DEATH BENEFIT MAY BE VARIABLE OR FIXED UNDER CERTAIN
CONDITIONS AND THAT 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? [ ] YES [ ] NO
If you are purchasing a Variable Life Policy, do you believe it is suitable to meet your financial objectives? [ ] Yes [ ] No
IF I HAVE PURCHASED A VARIABLE LIFE POLICY, I CONFIRM THAT I HAVE RECEIVED THE PROSPECTUS FOR THAT POLICY AND ITS UNDERLYING FUNDS.
====================================================================================================================================
SECTION V - MODE OF PREMIUM PAYMENT
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Annual [ ] Quarterly [ ] Semi-Annual
[ ] Monthly (Variable Life Insurance only) [ ] PCS (Phoenix Check-O-Matic Service)
Minimum Monthly Check for Each Service - $25.00 for TRADITIONAL $25.00 for VARIABLE
Multiple Billing Option - Give # or Details ________________________________________________________________________________________
[ ] List Bill [ ] EICS [ ] Salary Allotment [ ] Pension [ ] Money Purchase Pension [ ] Other _____________________________
IF ELECTING PCS, COMPLETE THE FOLLOWING:
Existing Policy Number or PCS File Number___________________________________________________________________________________________
AUTHORIZATION AGREEMENT FOR PREAUTHORIZED PAYMENTS
I (we) hereby authorize the Company (Note: Company is defined as indicated on page 1 of application) to initiate debit entries to
my (our) checking account and the depository named below.
INFORMATION FOR NEW ACCOUNT
Attach a void check to furnish encoding details.
If the depositor's name is not imprinted on the check, fill it in here exactly as it appears in the bank records.
Attach Void Check Here
Signature of depositor (if different from owner)____________________________________________________________________________________
====================================================================================================================================
SECTION VI - MEDICAL HISTORY OF PROPOSED INSURED - (DOES NOT NEED TO BE COMPLETED IF EXAM HAS BEEN ORDERED)
- ------------------------------------------------------------------------------------------------------------------------------------
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:
- ------------------------------------------------------------------------------------------------------------------------------------
To the best of your knowledge have you:
YES NO
[ ] [ ] 1. In the last five years been examined or treated by a physician or medical practitioner or been examined or treated at
a hospital or other medical facility?
[ ] [ ] 2. In the last 10 years had or been treated for high blood pressure, chest pain, heart disease, stroke, lung disorder,
cancer, diabetes, kidney disease or mental or nervous disorder?
[ ] [ ] 3. In the last 10 years received counseling or treatment for alcohol or other drug use?
[ ] [ ] 4. Ever been diagnosed by a medical professional for Acquired Immune Deficiency Syndrome?
- ------------------------------------------------------------------------------------------------------------------------------------
OL2827 Page 2 8-99
</TABLE>
<PAGE>
<TABLE>
====================================================================================================================================
SECTION VII - ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
To the best of your knowledge have you:
<S> <C>
YES NO
[ ] [ ] 1. Have you used tobacco or nicotine products in any form in the last 15 years? If "Yes", PLEASE CIRCLE the product(s)
used: cigarettes, cigars, pipes, snuff, smokeless or chewing tobacco, nicotine patch or gum.
Check one: [ ] Use currently [ ] Date quit_____________________________________
[ ] [ ] 2. Have you ever applied for life, accident, or health insurance and been postponed, or been offered a policy differing
in plan, amount or premium rate from that applied for? (If "Yes", give date, company and reason).
[ ] [ ] 3. 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, form OL1064).
[ ] [ ] 4. Have you flown during the past three years as a pilot, student pilot or crew member? (If "Yes", complete Aviation
Questionnaire, form FN7).
[ ] [ ] 5. 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?
[ ] [ ] 6. 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?
[ ] [ ] 7. 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?
- ------------------------------------------------------------------------------------------------------------------------------------
Give full details for all "Yes" answers above.
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Proposed Insured Question Number Details
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
SECTION VIII - EXISTING LIFE INSURANCE
- ------------------------------------------------------------------------------------------------------------------------------------
Describe all coverage in force. Include individual and group. If none, write none.
- ------------------------------------------------------------------------------------------------------------------------------------
Company Year Issued Plan Amount Personal/Business
$
- ------------------------------------------------------------------------------------------------------------------------------------
$
- ------------------------------------------------------------------------------------------------------------------------------------
$
- ------------------------------------------------------------------------------------------------------------------------------------
Total Life Insurance in force (if none, indicate) $__________ Total Accidental Death Benefit in force (if none, indicate)$__________
====================================================================================================================================
INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
Earned Income Independent Income Net Worth
- ------------------------------------------------------------------------------------------------------------------------------------
ILLUSTRATIONS OF BENEFITS, INCLUDING DEATH BENEFITS, POLICY VALUES AND CASH SURRENDER VALUES ARE AVAILABLE ON REQUEST.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR HOME OFFICE OR ADMINISTRATIVE OFFICE USE ONLY
- ------------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
OL2827 Page 3 8-99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
====================================================================================================================================
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 may be guilty of insurance fraud as determined by a court of competent
jurisdiction.
====================================================================================================================================
AUTHORIZATION TO OBTAIN INFORMATION
I hereby authorize any licensed physician, medical practitioner, hospital, clinic or other medical or medically-related facility,
insurance company, the Medical Information Bureau (MIB) or other organization, institution or person, having any records or
knowledge of me or my health, to give to Phoenix Home Life Mutual Insurance Company and its subsidiaries or reinsurers, any such
information. If insurance on any minor child is applied for, this authorization extends to records and knowledge of that child and
that child's health. To facilitate rapid submission of such information, I authorize all said sources, except MIB, to give such
records or knowledge of any agency employed by the company to collect and transmit such information.
The information requested by Phoenix Home Life Mutual Insurance Company and its subsidiaries or reinsurers, may include information
regarding diagnosis and treatment of physical or mental conditions, including consultations occurring after the date this
authorization is signed. Medical information will be used only for the purpose of risk evaluation, determining eligibility for
benefits under any policies issued, and for insurance statistical studies. If a medical record contains information relating to
alcohol or drug abuse or mental health care, adequate information is to be released to serve these purposes.
I acknowledge that I have received a copy of the Notice of Information Practices, including information about Investigative
Consumer Reports and the Medical Information Bureau and the Underwriting Process.
I also authorize the preparation of an investigative consumer report. [ ] I do [ ] I do not (check one only) require that I be
interviewed in connection with any investigative consumer report that may be prepared.
This authorization shall continue to be valid for thirty months from the date it is signed unless otherwise required by law. A
photocopy of this signed authorization shall be as valid as the original. I understand I may or an individual authorized to act on
my behalf may receive a copy of this authorization on request.
I have reviewed this application, and I hereby verify that all information given here and 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.
I understand that as long as I am employed by the employer identified in the Master Application, the Company is authorized to
increase the Face Amount of the policy from time to time in accordance with my employer's instructions. Each increase shall be
subject to the underwriting limitations and requirements which the Company has in effect on the date the increase is requested
including, but not limited to, my being Actively-At-Work at the time of each change.
I certify that (a) the Social Security or Tax Identification Number shown above is correct, and (b) that I am not subject to
back-up withholding.
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Proposed Insured Signature State Signed In Witness Date
X
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Owner (if other than Proposed Insured) State Signed In Witness Date
X
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The Producer hereby certifies he/she has truly and accurately recorded on the application the information supplied by the Proposed
Insured; and that he/she is qualified and authorized to discuss the contract herein applied for.
WILL THE PROPOSED INSURED REPLACE (IN WHOLE OR IN PART) ANY EXISTING INSURANCE OR ANNUITY IN FORCE WITH THE POLICY APPLIED FOR?
[ ] YES [ ] NO
WILL THE PROPOSED INSURED 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
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Lic. Agt./Reg. Rep.'s Signature Date Lic. Agt./Reg. Rep.'s ID No.
X
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Broker/Dealer Name and Address Broker/Dealer No.
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OL2827 Page 4 8-99
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