<PAGE> 1
Registration No.33-77256
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM S-6
POST-EFFECTIVE AMENDMENT NO. 3
TO THE REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF l933
___________________________
SEPARATE ACCOUNT THREE
OF
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Exact name of trust)
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Name of depositor)
___________________________
500 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
(Address of depositor's principal executive offices)
STEPHEN C. NESBITT
Secretary and General Counsel
The Manufacturers Life Insurance Notice to:
Company of America W. Randolph Thompson, Esq., Of Counsel
500 N. Woodward Avenue Jones & Blouch L.L.P., Suite
405W
Bloomfield Hills, Michigan 48304 1025 Thomas Jefferson Street,
N.W.
(Name and Address of Agent for Service) Washington, D.C. 20007-0805
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on May 1, 1996 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on May 1, 1996 pursuant to paragraph (a)(1) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
Election Pursuant to Rule 24f-2
_______________________________
Registrant has registered, pursuant to Rule 24f-2 under the Investment Company
Act of 1940, an indefinite number of its variable life contracts for sale under
the Securities Act of 1933 and filed a Rule 24f-2 Notice on February 26, 1996
for its fiscal year ended December 31, 1995.
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<PAGE> 2
SEPARATE ACCOUNT THREE
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
Registration Statement on Form S-6
Cross-Reference Sheet
Form
N-8B-2
Item No. Caption in Prospectus
_______ ______________________________________________________
1 ----- Cover Page; General Information About Manufacturers
Life of America, Separate Account Three, Manulife
Series Fund and NASL Series Trust (Manufacturers
Life of America's Separate Account Three)
2 ----- Cover Page; General Information About Manufacturers
Life of America, Separate Account Three, Manulife Series
Fund and NASL Series Trust (Manufacturers Life Of
America And Manufacturers Life)
3 ----- *<F1>
4 ----- Miscellaneous Matters (Distribution of the Policy)
5 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series Fund
and NASL Series Trust (Manufacturers Life of America's
Separate Account Three)
6 ----- General Information About Manufacturers Life of
America, Separate Account Three, Manulife
Series Fund and NASL Series Trust (Manufacturers
Life of America's Separate Account Three)
7 ----- *<F1>
8 ----- *<F1>
9 ----- Miscellaneous Matters (Pending Litigation)
10 ----- Detailed Information About The Policies
11 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series Fund
and NASL Series Trust (Manulife Series Fund and
NASL Series Trust)
12 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series Fund
and NASL Series Trust (Manulife Series Fund and
NASL Series Trust)
13 ----- Detailed Information About The Policies (Charges and
Deductions)
14 ----- Detailed Information About the Policies (Premium
Provisions -- Policy Issue and Initial Premium);
Miscellaneous Matters (Responsibilities Assumed By
Manufacturers Life)
15 ----- Detailed Information About The Policies (Premium
Provisions -- Policy Issue and Initial Premium)
16 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series Fund
and NASL Series Trust (Manulife Series Fund and
NASL Series Trust)
17 ----- Detailed Information About The Policies (Policy
Values -- Partial Withdrawals and Surrenders);
Other Provisions -- Payment of Proceeds)
18 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series Fund and
NASL Series Trust
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19 ----- Detailed Information About The Policies (Other
Provisions -- Reports To Policyowners); Miscellaneous
Matters (Responsibilities Assumed By Manufacturers Life)
20 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series Fund
and NASL Series Trust; Miscellaneous Matters
(Responsibilities Assumed By Manufacturers Life)
21 ----- Detailed Information About The Policies (Policy
Values -- Policy Loans)
22 ----- *<F1>
23 ----- **<F2>
24 ----- Detailed Information About the Policies (Other
General Policy Provisions)
25 ----- General Information About Manufacturers Life Of America,
Separate Account Three, Manulife Series Fund and NASL
Series Trust (Manufacturers Life Of America And
Manufacturers Life)
26 ----- *<F1>
27 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series Fund
and NASL Series Trust (Manufacturers Life Of America
And Manufacturers Life)
28 ----- Miscellaneous Matters (Directors And Officers Of
Manufacturers Life Of America)
29 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series Fund
and NASL Series Trust (Manufacturers Life Of America
And Manufacturers Life)
30 ----- *<F1>
31 ----- *<F1>
32 ----- *<F1>
33 ----- *<F1>
34 ----- *<F1>
35 ----- Miscellaneous Matters (State Regulations)
36 ----- *<F1>
37 ----- *<F1>
38 ----- Miscellaneous Matters (Distribution of the Policy;
Responsibilities Assumed By Manufacturers Life)
39 ----- Miscellaneous Matters (Distribution of the
Policy)
40 ----- *<F1>
41(a)---- Miscellaneous Matters (Distribution of the
Policy)
41(b)---- **<F2>
41(c)---- **<F2>
42 ----- *<F1>
43 ----- *<F1>
44 ----- Detailed Information About The Policies (Policy
Values -- Policy Value)
45 ----- *<F1>
46 ----- Detailed Information About The Policies (Policy
Values -- Partial Withdrawals and Surrenders; Other
Provisions -- Payment of Proceeds)
47 ----- General Information About Manufacturers Life Of America,
Separate Account Three, Manulife Series Fund and NASL Series
Trust (Manulife Series Fund and NASL Series Trust)
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<PAGE> 4
48 ----- *<F1>
49 ----- *<F1>
50 ----- *<F1>
51 ----- Detailed Information About The Policies
52 ----- Detailed Information About The Policies (Miscellaneous
Matters -- Fund Share Substitution)
53 ----- **<F2>
54 ----- *<F1>
55 ----- *<F1>
56 ----- *<F1>
57 ----- *<F1>
58 ----- *<F1>
59 ----- Financial Statements
*<F1> Omitted since answer is negative or item is not applicable.</F1>
**<F2>Omitted.</F2>
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<PAGE> 5
Prospectus for
Venture SVUL
A Flexible Premium
Survivorship Variable Life
Insurance Policy
Issued by
The Manufacturers Life Insurance
Company of America
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<PAGE> 6
Prospectus
The Manufacturers Life Insurance
Company of America
Separate Account Three
Venture SVUL
Flexible Premium Survivorship Variable Life Insurance Policy
This prospectus describes the Flexible Premium Survivorship Variable Life
Insurance Policy (the "Policy") issued by The Manufacturers Life Insurance
Company of America ("Manufacturers Life of America" or the "Company"), a stock
life insurance company that is an indirect wholly-owned subsidiary of The
Manufacturers Life Insurance Company ("Manufacturers Life"). The Policies are
designed to provide lifetime insurance protection together with flexibility as
to the timing and amount of premium payments, the investments underlying the
Policy Value and the amount of insurance coverage. This flexibility allows the
policyowner to pay premiums and adjust insurance coverage in light of his or
her current financial circumstances and insurance needs. In this prospectus
the term
"policyowner" means one or more policyowners.
The Policies provide for: (1) a Net Cash Surrender Value that can be received by
partial withdrawals or surrender of the Policy; (2) Policy loans; and (3) an
insurance benefit payable at the last surviving life insured's death.
Policy Value may be accumulated on a fixed basis or vary with the investment
performance of the sub-accounts of Manufacturers Life of America's Separate
Account Three (the "Separate Account") to which the policyowner allocates net
premiums. The assets of each sub-account will be used to purchase shares of a
particular investment portfolio (a "Portfolio") of Manulife Series Fund, Inc.
("Manulife Series Fund") or NASL Series Trust. The accompanying prospectuses
for Manulife Series Fund and NASL Series Trust, and the corresponding statements
of additional information, describe the investment objectives of the Portfolios
in which net premiums may be invested. The Portfolios available for allocation
of net premiums are the following Funds of Manulife Series Fund: the Emerging
Growth Equity Fund, the Common Stock Fund, the Real Estate Securities Fund, the
Balanced Assets Fund, the Capital Growth Bond Fund, the Money-Market Fund, the
International Fund, the Pacific Rim Emerging Markets Fund, and the Equity Index
Fund (collectively the "Manulife Funds") and the following Portfolios of NASL
Series Trust: the Value Equity Trust, the U.S. Government Securities Trust, the
Growth and Income Trust, the Equity Trust, the Conservative Asset Allocation
Trust, the Moderate Asset Allocation Trust and the Aggressive Asset Allocation
Trust (collectively the "NASL Trusts"). Other sub-accounts and Portfolios may
be added in the future.
Prospective purchasers should ask a Manulife Financial representative if
changing, or adding to, existing insurance coverage would be advantageous.
Prospective purchasers should note that it may not be advisable to purchase a
Policy as a replacement for existing insurance.
Because of the substantial nature of the surrender charges in the early years,
the Policy is not suitable for short-term investment purposes. A policyowner
contemplating surrender of a Policy should pay special attention to the sales
charge limitation provisions described in this prospectus, which apply only
during the first two years following the Policy Date or following an increase
in face amount.
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PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT IS
VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR MANULIFE SERIES FUND,
INC. AND NASL SERIES TRUST.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The Manufacturers Life Insurance
Company of America
500 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
Service Office:
200 Bloor Street East
Toronto, Ontario, Canada M4W 1E5
TELEPHONE: 1-800-827-4546
(1-800-VARILIN [E])
The date of this Prospectus is May 1, 1996.
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<PAGE> 8
Prospectus Contents
Page
____
Introduction to Policies
General Information About Manufacturers Life of
America, Separate Account Three, Manulife Series
Fund and NASL Series Trust
Manufacturers Life of America and
Manufacturers Life
Manufacturers Life of America's Separate
Account Three
Manulife Series Fund and NASL Series Trust
Investment Objectives of the
Portfolios
Selection of Sub-account(s)
Detailed Information About the Policies
PREMIUM PROVISIONS
Policy Issue and Initial Premium
Premium Allocation
Premium Limitations
Short-Term Cancellation Right and
"Free Look" Provisions
INSURANCE BENEFIT
The Insurance Benefit
No Lapse Guarantee
Death Benefit Guarantee
Death Benefit Options
Death Benefit Option Changes
Face Amount Changes
POLICY VALUES
Policy Value
Transfers of Policy Value
Policy Loans
Partial Withdrawals and Surrenders
CHARGES AND DEDUCTIONS
Deductions from Premiums
Surrender Charges
Deferred Sales Charge
Monthly Deductions
Other Charges
Special Provisions for Group or
Sponsored Arrangements
Special Provisions for Exchanges
THE GENERAL ACCOUNT
OTHER GENERAL POLICY PROVISIONS
Policy Default
Policy Reinstatement
Miscellaneous Policy Provisions
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<PAGE> 9
OTHER PROVISIONS
Supplementary Benefits
Payment of Proceeds
Reports to Policyowners
MISCELLANEOUS MATTERS
Fund Share Substitution
Federal Income Tax Considerations
Tax Status of the Policy
Tax Treatment of Policy Benefits
The Company's Taxes
Distribution of the Policy
Responsibilities Assumed by
Manufacturers Life
Voting Rights
Executive Officers and Directors
State Regulations
Pending Litigation
Additional Information
Legal Matters
Experts
Financial Statements
Appendices
A. Sample Illustrations of Policy
Values, Cash Surrender Values and
Death Benefits
B. Definitions
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN
ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO
MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
THE PROSPECTUS OF MANULIFE SERIES FUND OR NASL SERIES
TRUST, OR THE STATEMENT OF ADDITIONAL INFORMATION OF
MANULIFE SERIES FUND OR NASL SERIES TRUST.
You are urged to examine this prospectus carefully.
The INTRODUCTION TO POLICIES will briefly describe the
Flexible Premium Survivorship Variable
Life Insurance Policy. More detailed information will
be found within.
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<PAGE> 10
Introduction to Policies
The following summary is intended to provide a general description of the most
important features of the Policy. It is not comprehensive and is qualified in
its entirety by the more detailed information contained in this prospectus.
Unless otherwise indicated or required by the context, the discussion
throughout this prospectus assumes that the Policy has not gone into default,
there is no outstanding Policy Debt, and the death benefit is not determined by
the corridor percentage test.
General
The Policy provides a death benefit at the time of the death of the last
surviving life insured.
Premium payments may be made at any time and in any amount, subject to certain
limitations.
After certain deductions, premiums will be allocated, according to the
policyowner's instructions, to one or more of the general account and the
sub-accounts of Manufacturers Life of America's Separate Account Three. Assets
of the sub-accounts of Separate Account Three are invested in shares of a
particular Fund of the Series Fund. Allocation instructions may be changed at
any time and transfers among the accounts may be made, subject to certain
restrictions. If the Policy is owned by two or more persons, the Company will
require authorization from each policyowner before taking any action on the
Policy.
The Manulife Funds currently offered are the: Emerging Growth Equity Fund,
Common Stock Fund, Real Estate Securities Fund, Balanced Assets Fund, Capital
Growth Bond Fund, Money-Market Fund, International Fund, Pacific Rim Emerging
Markets Fund, and the Equity Index Fund. The NASL Trusts currently offered are
the: Value Equity Trust, U.S. Government Securities Trust, Growth and Income
Trust, Equity Trust, Conservative Asset Allocation Trust, Moderate Asset
Allocation Trust and Aggressive Asset Allocation Trust.
The Policy has a Policy Value reflecting premiums paid, the investment
performance of the accounts to which the policyowner has allocated premiums,
and certain charges for expenses and cost of insurance. The policyowner may
receive a portion of the Policy Value by taking a Policy loan or a partial
withdrawal, or by full surrender of the Policy.
Death Benefit
Death Benefit Options. The policyowner elects to have the Policy's death
benefit determined under one of two options:
- - a death benefit equal to the face amount of the Policy, or
- - a death benefit equal to the face amount of the Policy plus the Policy
Value.
Under either option, the death benefit may have to be increased to a multiple
of the Policy Value to satisfy the corridor percentage test under the
definition of life insurance in the Internal Revenue Code. See Detailed
Information About the Policies; Insurance Benefit- "The Insurance Benefit" and
"Death Benefit Options."
The Policyowner May Change the Death Benefit Option. A change in the death
benefit option may be requested after the Policy has been in force for two
years.
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<PAGE> 11
See Detailed Information About the Policies; Insurance Benefit- "Death
Benefit Option Changes."
The Policyowner May Increase the Face Amount. After the Policy has been in
force for two years, an increase in the face amount of the Policy may be
requested once per Policy Year. An increase in the face amount is subject to
satisfactory evidence of insurability and will usually result in the Policy's
being subject to new surrender charges. See Detailed Information About the
Policies; Insurance Benefit- "Face Amount Changes."
The Policyowner May Decrease the Face Amount. A decrease in the face amount
may be requested once per Policy Year after the Policy has been in force for
two years, except during the two-year period following any increase in face
amount. In addition, during the two-year period following an increase in face
amount, the policyowner may elect at any time to cancel the increase, which
will result in certain surrender charges being deducted from the Policy Value.
During the two-year period following an increase, the deferred sales charge for
the increase is subject to the Policy's sales charge limitation provisions. A
decrease in face amount may result in certain surrender charges being deducted
from the Policy Value. See Detailed Information About the Policies; Insurance
Benefit- "Face Amount Changes."
Death Benefit Guarantee
As long as the Death Benefit Guarantee Cumulative Premium Test or, where
applicable, the Fund Value Test is satisfied, the Company guarantees that the
Policy will not go into default (i) prior to when the youngest life insured
achieves or would have achieved Attained Age 100, if Death Benefit Option 1 is
maintained through the life of the Policy, (ii) prior to when the youngest life
insured attains or would have achieved Attained Age 85 if Death Benefit Option 2
is selected at any time regardless of the investment performance of the Funds
underlying the Policy Value. See Detailed Information About the Policies;
Premium Provisions- "Death Benefit Guarantee."
No Lapse Guarantee
As long as the No Lapse Guarantee Cumulative Premium Test is satisfied, the
Company guarantees that the Policy will not go into default during the No Lapse
Guarantee Period. For lives insured with an average Issue Age of up to and
including age 70, the No Lapse Guarantee Period is 10 years. For lives insured
with an average Issue Age of 71 and older, the No Lapse Guarantee Period
decreases by one year for each year the average age exceeds 70, until average
age 77. From average age 77 to 85 the No Lapse Guarantee Period is fixed at
three years. The No Lapse Guarantee is not available to lives insured whose
average Issue Age exceeds 85. See Detailed Information About the Policies;
Premium Provisions- "No Lapse Guarantee."
Dollar Cost Averaging.
Manufacturers Life of America will offer policyowners a Dollar Cost Averaging
program. Under the Dollar Cost Averaging program the policyowner will designate
an amount which will be transferred at predetermined intervals from one
Investment Account into any other Investment Account(s) or the Guaranteed
Interest Account.
Each transfer under the Dollar Cost Averaging program must be of a minimum
amount as set by Manufacturers Life of America. Once set, this minimum may be
changed at any time at the discretion of Manufacturers Life of America.
Currently, no charge will be made for this program if the Policy Value exceeds
$15,000 on the date of transfer. Otherwise, there will be a charge of $5 for
each transfer under this program. The charge will be deducted from the value
of the Investment
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<PAGE> 12
Account out of which the transfer occurs. If insufficient
funds exist to effect a Dollar Cost Averaging transfer, including the charge,
if applicable, the transfer will not be effected and the policyowner will be so
notified.
Manufacturers Life of America reserves the right to cease to offer this program
as of 90 days after written notice is sent to the policyowner.
Asset Allocation Balancer Transfers. Under the Asset Allocation Balancer
program the policyowner will designate an allocation of Policy Value among
Investment Accounts. At six-month intervals Manufacturers Life of America will
move amounts among the Investment Accounts as necessary to maintain the
policyowner's chosen allocation.
Currently, the charge for this program is $15 per transfer or series of
transfers occurring on the same transfer date. This charge will be deducted
from all accounts affected by the Asset Allocation Balancer transfer in the
same proportion as the value in each account bears to the Policy Value
immediately after the transfer.
Manufacturers Life of America reserves the right to cease to offer this program
as of 90 days after written notice is sent to the policyowner.
Premium Payments Are Flexible
The policyowner may pay premiums at any time and in any amount, subject to
certain limitations. See Detailed Information About the Policies; Premium
Provisions- "Policy Issue" and "Premium Limitations."
The policyowner must pay at least the Initial Premium to put the Policy in
force. See Detailed Information About the Policies; Premium Provisions-
"Policy Limitations," Insurance Benefit- "No Lapse Guarantee" and "Death
Benefit Guarantee."
After the Initial Premium is paid there is no minimum premium required.
However, minimum premiums are required to maintain the Death Benefit Guarantee
or the No Lapse Guarantee. See Detailed Information About the Policies;
Insurance Benefit- "Death Benefit Guarantee" and "No Lapse Guarantee." In
addition, certain premium payments may be required to keep the Policy from
lapsing. See Detailed Information About the Policies; Other General Policy
Provisions- "Policy Default."Certain maximum premium limitations apply to the
Policy, to ensure that the Policy qualifies as life insurance under rules
defined in the Internal Revenue Code. See Detailed Information About the
Policies; Premium Provisions- "Premium Limitations."
Summary of Charges and Deductions
Charges under the Policy are assessed as described below:
(1) Deductions from premiums
- 2.35% of all premiums paid, for state and local taxes, and 1.25%
of all premiums paid, for federal taxes, to the end of the tenth
Policy Year. Currently, the Company expects this deduction to
cease after the end of the tenth Policy Year.
- a sales charge of 5.5% of the premiums paid, in the current
Policy Year, up to a maximum of the Target Premium for the
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<PAGE> 13
current Policy Year. This deduction is taken to the end of the
tenth Policy Year. See Detailed Information About the Policies;
Charges and Deductions - "Deductions from Premiums."
(2) Surrender Charges
- upon surrender, partial withdrawal in excess of the Withdrawal
Tier Amount, decrease in face amount or lapse.
- deferred underwriting charge of $4 for each $1,000 of face
amount.
- deferred sales charge of a maximum of 100% of the lower of
first-year premium or the Target Premium (but in no event will the
sum of the deferred sales charge and the sales charge deducted from
premiums exceed the amount permitted by Section 27(a)(2) of the
Investment Company Act of 1940). See Detailed Information About
the Policies; Charges and Deductions - "Surrender Charges."
(3) Monthly Deductions
- administration charge of $.04 per $1,000 of face amount per
month until the later of the end of the fifteenth Policy Year,
or when the youngest life insured reaches Attained Age 55.
The administration charge is 0 thereafter. This charge has a
minimum of $30 per month and a maximum of $60 per month.
- cost of insurance charge.
- mortality and expense risks charge of .067%
deducted monthly through the later of the tenth Policy Year
and the youngest life insured's Attained Age 55. It is
currently expected to be .0125% thereafter.
- supplementary benefit(s) charge(s)
If the Policy is still in force when the youngest of the lives
insured reaches or would have reached Age 100 no further monthly
deductions will be taken from the Policy Value. See Detailed
Information About the Policies; Charges and Deductions -
"Monthly Deductions."
(4) Other Charges
For the Manulife Funds:
- investment management fee of .50% per annum assessed against
assets of the Series Fund invested in any or all of the Emerging
Growth Equity Fund, Common Stock Fund, Real Estate Securities
Fund, Balanced Assets Fund, Capital Growth Bond Fund, and/or
Money-Market Fund.
- investment management fee of (i) .85% per annum assessed against
the first $100 million of assets and (ii) .70% per annum
assessed against the assets over $100 million of each of the
International Fund and the Pacific Rim Emerging Markets Fund.
- investment management fee of .25% per annum assessed against
the assets of the Equity Index Fund.
- expenses of up to .50% and .65% per annum assessed
against the assets of the International Fund and the
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<PAGE> 14
Pacific Rim Emerging Markets Fund, respectively.
- expenses of up to .15% per annum assessed against the
assets of the Equity Index Fund.
For the NASL Trusts:
- - investment management fee of .80% assessed against the assets of the
Value Equity Trust
- - investment management fee of .65% assessed against the assets of the
U.S. Government Securities Trust
- - investment management fee of .75% assessed against the assets of the
Growth and Income Trust
- - investment management fee of .75% assessed against the assets of the
Equity Trust
- - investment management fee of .75% assessed against the assets of the
Conservative Asset Allocation Trust
- - investment management fee of .75% assessed against the assets of the
Moderate Asset Allocation Trust
- - investment management fee of .75% assessed against the assets of the
Aggressive Asset Allocation Trust
- - expenses of up to .50% assessed against the assets of the NASL
Trusts.
For all policies:
- transfer fee of $35 if the policyowner elects to exercise the
option to make a second transfer in any Policy Month (multiple
requests received at the same time are treated as a single
transfer).
- transfer fee of $5 for each transfer under the Dollar Cost
Averaging program when Policy Value does not exceed $15,000.
- transfer fee of $15 for each transfer under the Asset Allocation
Balancer program.
Manufacturers Life of America reserves the right to charge or establish a
provision for any federal, state, or local taxes that may be attributable to
the Separate Account or the operations of the Company with respect to the
Policies in addition to the deductions for state, local, and federal taxes
currently being made. See Detailed Information About the Policies; Charges and
Deductions - "Other Charges."
Investment Options
After deductions from premiums for federal, state and local taxes and the
premium charge, Net Premiums will be allocated, according to the policyowner's
instructions, to any combination of the general account or one or more of the
sub-accounts of Manufacturers Life of America's Separate Account Three.
Each sub-account of Separate Account Three invests its assets in the shares of
one of the following:
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<PAGE> 15
Manulife Funds:
- - Emerging Growth Equity Fund
- - Common Stock Fund
- - Real Estate Securities Fund
- - Balanced Assets Fund
- - Capital Growth Bond Fund
- - Money-Market Fund
- - International Fund
- - Pacific Rim Emerging Markets Fund
- - Equity Index Fund
NASL Trusts:
- - Value Equity Trust
- - U.S. Government Securities Trust
- - Growth and Income Trust
- - Equity Trust
- - Conservative Asset Allocation Trust
- - Moderate Asset Allocation Trust
- - Aggressive Asset Allocation Trust
The policyowner may change the allocation of Net Premiums among the general
account and the sub-accounts at any time. See General Information About
Manufacturers Life of America, Separate Account Three and The Series Fund and
Detailed Information About the Policies; Premium Provisions - "Premium
Allocation" and Policy Values - "Policy Value."
The Policy Value
The Policy has a Policy Value which reflects the following: premium payments
made; investment performance of the sub-accounts to which amounts have been
allocated; interest credited by the Company to amounts allocated to the general
account; partial withdrawals; and deduction of charges described under "Charges
and Deductions."
The Policy Value is the sum of the values in the Investment Accounts, the
Guaranteed Interest Account and the Loan Account.
Investment Account. An Investment Account is established under the Policy for
each sub-account of the Separate Account to which Net Premiums or transfer
amounts have been allocated. An Investment Account measures the interest of
the Policy in the corresponding sub-account.
The value of each Investment Account under the Policy varies each Business Day
and reflects the investment performance of the Portfolio shares held in the
corresponding sub-account. See Detailed Information About the Policies; Policy
Values-"Policy Value."
Guaranteed Interest Account. The Guaranteed Interest Account consists of that
portion of the Policy Value based on net premiums allocated to, and amounts
transferred to, the general account of the Company.
Manufacturers Life of America credits interest on amounts in the Guaranteed
Interest Account at an effective annual rate guaranteed to be at least 4%. See
Detailed Information About the Policies and The General Account.
- - 17 -
<PAGE> 16
Loan Account. When a Policy loan is made, Manufacturers Life of America will
establish a Loan Account under the Policy and will transfer an amount from the
Investment Accounts and the Guaranteed Interest Account to the Loan Account.
The Company will credit interest to amounts in the Loan Account at an effective
annual rate of at least 4%. The actual rate credited on loan amounts will be
the rate charged on loan amounts less an interest rate differential. See
Detailed Information About the Policies; Policy Values- "Policy Loans."
Transfers Are Permitted. A policyowner may make transfers among Investment
Accounts and the Guaranteed Interest Account, subject to certain restrictions.
One transfer per Policy Month may be made at no cost to the policyowner; a
second transfer in each Policy Month will be permitted at a cost of $35 per
transfer. All transfer requests received at the same time are treated as a
single transfer request. The minimum amount that may be transferred is the
lesser of $500 or the entire account value. The maximum that may be
transferred out of the Guaranteed Interest Account in any one Policy Year is
the greater of $500 or 15% of the value in the Guaranteed Interest Account as
of the previous Policy Anniversary.
Certain restrictions may apply to transfer requests. See Detailed Information
About the Policies; Policy Values- "Policy Value."
Using the Policy Value
Borrowing Against the Policy Value. The policyowner may borrow against the
Policy Value. In most states the minimum loan amount is $500.
Loan interest will be charged on a fixed basis at an effective annual rate of
5.75%. See Detailed Information About the Policies; Policy Values- "Policy
Loans."
A Policyowner May Make a Partial Withdrawal of the Policy Value. After a
Policy has been in force for two years the policyowner may make a partial
withdrawal of the Policy Value. In most states the minimum withdrawal amount
is $500. The policyowner may specify that the withdrawal is to be made from a
specific Investment Account or the Guaranteed Interest Account.
A partial withdrawal may result in a reduction in the face amount of the Policy
and may also result in the assessment of a portion of the surrender charges to
which the Policy is subject. See Detailed Information About the Policies;
Policy Values- "Partial Withdrawals and Surrenders" and Charges and Deductions-
"Surrender Charges."
The Policy May Be Surrendered for Its Net Cash Surrender Value. The Net Cash
Surrender Value is equal to the Policy Value less surrender charges,
outstanding monthly deductions due and the value of the Loan Account.
Surrender of a Policy during the Surrender Charge Period will usually result in
assessment of surrender charges. See Detailed Information About the
Policies; Policy Values - "Partial Withdrawals and Surrenders" and Charges and
Deductions - "Surrender Charges."
Supplementary Benefits
A policyowner may choose to add certain supplementary benefits to the Policy.
These supplementary benefits include an estate preservation rider and a policy
split option.
- - 18 -
<PAGE> 17
The cost of any supplementary benefits will be deducted from the Policy Value
monthly. See Detailed Information About the Policies; Other Provisions -
"Supplementary Benefits."
Default
Unless the Death Benefit Guarantee or No Lapse Guarantee is in effect, the
Policy will go into default if the Net Cash Surrender Value at the beginning of
any Policy Month would go below zero after deducting the monthly charges then
due. The Policy will not go into default if the Policy qualifies for the Death
Benefit Guarantee or No Lapse Guarantee. The Company will notify the
policyowner in the event the Policy goes into default, and will allow a grace
period in which the policyowner may make a premium payment sufficient to bring
the Policy out of default. If the required premium is not paid during the
grace period the Policy will terminate. See Detailed Information About the
Policies; Premium Provisions
- - "Policy Default."
Reinstatement
A terminated policy may be reinstated by the policyowner within either the
21-day or five-year period following the date of termination, providing certain
conditions are met. See Detailed Information About the Policies; Premium
Provisions - "Policy Reinstatement."
Free Look
A Policy may be returned for a refund of premium within the latest of:
- - 10 days after it is received
- - 45 days after the application for the Policy is signed
- - 10 days after Manufacturers Life of America mails or delivers a
notice of this right of withdrawal.
If a policyowner requests an increase in face amount which results in new
surrender charges, the "free look" provision will also apply to the increase.
See Detailed Information About the Policies; Premium Provisions - "Short-Term
Cancellation Right" and "Free Look" Provisions.
Federal Tax Matters
Manufacturers Life of America believes that a Policy issued on a standard risk
class basis should meet the definition of a life insurance contract as set
forth in Section 7702 of the Internal Revenue Code of 1986. With respect to a
Policy issued on a substandard basis, there is less guidance available to
determine if such a Policy would satisfy the Section 7702 definition of a life
insurance contract, particularly if the policyowner pays the full amount of
premiums permitted under such a Policy.
Assuming that a Policy qualifies as a life insurance contract for federal
income tax payments, a policyowner should not be deemed to be in constructive
receipt of Policy Value under a Policy until there is a distribution from the
Policy. Moreover, death benefits payable under a Policy should be completely
excludable from the gross income of the beneficiary. As a result, the
beneficiary generally should not be taxed on these proceeds. See
Miscellaneous Matters - "Federal Income Tax Considerations" (Tax Status of the
Policy).
- - 19 -
<PAGE> 18
Under certain circumstances, a Policy may be treated as a "Modified Endowment
Contract." If the Policy is a Modified Endowment Contract, then all pre-death
distributions, including Policy loans, will be treated first as a distribution
of taxable income and then as a return of investment in the Policy. In
addition, prior to age 59-1/2 any such distributions generally will be subject
to a 10% penalty tax. See Miscellaneous Matters - "Federal Income Tax
Considerations" (Tax Treatment of Policy Benefits).
If the Policy is not a Modified Endowment Contract, distributions generally
will be treated first as a return of investment in the Policy and then a
disbursement of taxable income. Moreover, loans will not be treated as
distributions. A policyowner considering the use of systematic Policy loans as
one element of a comprehensive retirement income plan should consult his or her
personal tax adviser regarding the potential tax consequences if such loans
were to so reduce Policy Value that the Policy would lapse, in absence of
additional payments. The premium payment necessary to avert lapse would
increase with the average age of the lives insured. Finally, neither
distributions nor loans under a Policy that is not a Modified Endowment
Contract are subject to the 10% penalty tax. See
Miscellaneous Matters - "Federal Income Tax Considerations" (Distributions from
Policies Not Classified as Modified Endowment Contracts).
The United States Congress has in the past considered, and in the future may
consider legislation that, if enacted, could change the tax treatment of life
insurance policies. In addition, the Treasury Department may amend existing
regulations, or adopt new interpretations of existing laws, state tax laws or,
if the policyowner is not a United States resident, foreign tax laws, may
affect the tax consequences to him or her, the lives insured or the
beneficiary. These laws may change from time to time without notice and, as a
result, the tax consequences may be altered. There is no way of predicting
whether, when or in what form any such change would be adopted. Any such
change could have a retroactive effect regardless of the date of enactment.
The Company suggests that a tax adviser be consulted.
Estate and Generation-Skipping Taxes
The proceeds of this life insurance policy may be taxable under Estate and
Generation-Skipping Tax provisions of the Internal Revenue Code. The
policyowner should consult his or her tax adviser regarding these taxes.
- - 20 -
<PAGE> 19
General Information About Manufacturers
Life of America, Separate Account Three,
Manulife Series Fund And NASL Series Trust
Manufacturers Life of America and Manufacturers Life
Manufacturers Life of America, a wholly-owned subsidiary of Manulife Reinsurance
Corporation (U.S.A.), is a stock life insurance company organized under the laws
of Pennsylvania on April 11, 1977 and redomesticated under the laws of Michigan
on December 9, 1992. It is a licensed life insurance company in the District of
Columbia and all states of the United States except New York. Manulife
Reinsurance Corporation (U.S.A.) is a life insurance company organized in 1983
under the laws of Michigan and is a wholly-owned subsidiary of Manufacturers
Life, a mutual life insurance company based in Toronto, Canada. Manufacturers
Life and its subsidiaries, together, constitute one of the largest life
insurance companies in North America as measured by assets. Manufacturers Life
and Manufacturers Life of America have received the following ratings from
independent rating agencies: Standard and Poor's Insurance Rating Service - AA+,
A.M. Best Company - A++, Duff and Phelps Credit Rating Co. - AAA, and Moody's
Investors Service, Inc. - Aa3. Manufacturers Life was the first company to
introduce survivorship life insurance -- a sophisticated insurance product which
revolutionized the estate planning market. With five survivorship products,
Manufacturers Life and its subsidiaries offer the broadest second-to-die
portfolio in the industry.
Manufacturers Life of America's
Separate Account Three
Manufacturers Life of America established its Separate Account Three on August
22, 1986 as a separate account under Pennsylvania law. Since December 9, 1992
the Separate Account has been operated under Michigan law. The Separate
Account holds assets that are segregated from all of Manufacturers Life of
America's other assets. The Separate Account is currently used only to support
variable life insurance policies.
Manufacturers Life of America is the legal owner of the assets in the Separate
Account. The income, gains and losses of the Separate Account, whether or not
realized, are, in accordance with applicable contracts, credited to or charged
against the Account without regard to the other income, gains or losses of
Manufacturers Life of America. Manufacturers Life of America will at all times
maintain assets in the Separate Account with a total market value at least
equal to the reserves and other liabilities relating to variable benefits under
all policies participating in the Separate Account. These assets may not be
charged with liabilities which arise from any other business Manufacturers Life
of America conducts. However, all obligations under the variable life
insurance policies are general corporate obligations of Manufacturers Life of
America.
The Separate Account is registered with the Securities and Exchange Commission
("S.E.C.") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust. A unit investment trust is a type of investment company
which invests its assets in specified securities, such as the shares of one or
more investment companies, rather than in a portfolio of unspecified
securities. Registration under the 1940 Act does not involve any supervision
by the S.E.C. of the management or investment policies or practices of the
Separate Account. For state law purposes the Separate Account is treated as a
part or division of Manufacturers Life of America.
Manulife Series Fund and NASL Series Trust
- - 21 -
<PAGE> 20
Each sub-account of the Separate Account will purchase shares only of a
particular Manulife Fund or NASL Trust. Manulife Series Fund and NASL Series
Trust are registered under the 1940 Act as open-end management investment
companies. The Separate Account will purchase and redeem shares of Manulife
Funds and NASL Trusts at net asset value. Shares will be redeemed to the
extent necessary for Manufacturers Life of America to provide benefits under
the Policies, to transfer assets from one sub-account to another or to the
general account as requested by policyowners, and for other purposes
consistent with the Policies. Any dividend or capital gain distribution
received from a Portfolio will be reinvested immediately at net asset value in
shares of that Portfolio and
retained as assets of the corresponding sub-account.
Manulife Series Fund and NASL Series Trust shares are issued to fund benefits
under both variable annuity contracts and variable life insurance policies
issued by the Company or life insurance companies affiliated with the Company
and, with respect to Manufacturers Life of America only, shares of the Manulife
Series Fund are also issued to its general account for certain limited purposes
including initial portfolio seed money. For a description of the procedures
for handling potential conflicts of interest arising from the funding of such
benefits see the accompanying Manulife Series Fund prospectus and the
accompanying NASL Series Trust prospectus.
Manulife Series Fund receives investment management services from Manufacturers
Adviser Corporation. Manufacturers Adviser Corporation is a registered
investment adviser under the Investment Advisers Act of 1940.
NASL Series Trust receives investment advisory services from NASL Financial
Services, Inc. NASL Financial Services, Inc. is a registered investment
adviser under the Investment Advisers Act of 1940. NASL Series Trust also
employs subadvisers. Fidelity Management Trust Company provides investment
subadvisory services to the Equity, Conservative Asset Allocation, Moderate
Asset Allocation and Aggressive Asset Allocation Trusts. Goldman Sachs Asset
Management provides investment subadvisory services to the Value Equity Trust.
Wellington Management Company provides investment subadvisory services to the
Growth and Income Trust and Salomon Brothers Asset Management Inc provides
investment subadvisory services to the U.S. Government Securities Trust.
Investment Objectives of the Portfolios
The investment objectives of the Portfolios available to policyowners through
allocation of Policy Values to corresponding sub-accounts are set forth below.
There is, of course, no assurance that these objectives will be met.
Manulife Funds
Emerging Growth Equity Fund. The investment objective of the Emerging Growth
Equity Fund is to achieve growth of capital by investing primarily in equity
securities of companies believed to offer growth potential over both the
intermediate and the long term. Current income is not a significant
consideration. In selecting investments, emphasis will be placed on securities
of progressive companies with aggressive and competent managements. A
substantial portion of the Fund's assets may be invested in emerging growth
companies, which at the time of the Fund's investment may be paying no
dividends to their shareholders.
Common Stock Fund. The investment objective of the Common Stock Fund is to
achieve intermediate and long-term growth through capital appreciation and
current income by investing in common stocks and other equity securities of
well
- - 22 -
<PAGE> 21
established companies with promising prospects for providing an
above-average rate of return. In selecting investments, emphasis will be
placed on companies with good financial resources, strong balance sheet,
satisfactory rate of return on capital, good industry position, superior
management skills, and earnings that tend to grow consistently. The Fund's
investments are not limited to any particular type or size of company, but
high-quality growth stocks are emphasized.
Real Estate Securities Fund. The investment objective of the Real Estate
Securities Fund is to achieve a combination of long-term capital appreciation
and satisfactory current income by investing in real estate-related equity and
debt securities. In pursuit of its objective, the Real Estate Securities Fund
will invest principally in real estate investment trust equity and debt
securities and other securities issued by companies which invest in real estate
or interests therein. The Fund may also purchase the common stocks, preferred
stocks, convertible securities and bonds of companies operating in
industry groups relating to the real estate industry. This would include
companies engaged in the development of real estate, building and construction,
and other market segments related to real estate. The Fund will not invest
directly in real property, nor will it purchase mortgage notes directly. Under
normal circumstances, at least 65% of the value of the Fund's total assets will
be invested in real estate-related equity and debt securities.
Balanced Assets Fund. The investment objective of the Balanced Assets Fund is
to achieve intermediate and long-term growth through capital appreciation and
income by investing in both debt and equity securities. The Fund will maintain
at all times a balance between debt securities or preferred stocks, on the one
hand, and common stocks, on the other. At least 25% of the Fund's assets will
be invested in each of the two basic categories.
Capital Growth Bond Fund. The investment objective of the Capital Growth Bond
Fund is to achieve growth of capital by investing in medium grade or better
debt securities with income as a secondary consideration. The Capital Growth
Bond Fund differs from most "bond" funds in that its primary objective is
capital appreciation, not income. The Fund will be carefully positioned in
relation to the term of debt obligations and the anticipated movement of
interest rates.
Money-Market Fund. The investment objective of the Money-Market Fund is to
provide maximum current income consistent with capital preservation and
liquidity by investing in a portfolio of high-quality money market instruments.
International Fund. The investment objective of the International Fund is to
achieve long-term growth of capital by investing in a diversified portfolio
that is comprised primarily of common stocks and equity-related securities of
companies domiciled in countries other than the United States and Canada. It
invests primarily in the securities markets of western European countries,
Australia, the Far East, Mexico and South America. The Fund will, under normal
conditions, invest at least 65% of its net assets in common stocks and
equity-related securities of established larger-capitalization companies that
have attractive long-term prospects for growth of capital.
Pacific Rim Emerging Markets Fund. The investment objective of the Pacific Rim
Emerging Markets Fund is to achieve long-term growth of capital by investing in
a diversified portfolio that is comprised primarily of common stocks and
equity-related securities of companies domiciled in the countries of the
Pacific Rim region. The Fund will, under normal conditions, invest at least
65% of its net assets in common stocks and equity-related securities of
established larger-capitalization companies that have attractive long-term
prospects for growth of capital.
- - 23 -
<PAGE> 22
Equity Index Fund. The investment objective of the Equity Index Fund is to
achieve investment results which approximate the total return of
publicly-traded common stocks in the aggregate, as represented by the Standard
& Poor's 500 Composite Stock Price Index.
A full description of the Manulife Series Fund, its investment objectives,
policies and restrictions, the risks associated therewith, its expenses, and
other aspects of its operation is contained in the accompanying Manulife Series
Fund prospectus, which should be read together with this prospectus.
NASL Trusts
Equity Trust. The investment objective of the Equity Trust is to seek growth
of capital by investing primarily in common stocks of United States issuers and
securities convertible into or carrying the right to buy common stocks.
Value Equity Trust. The investment objective of the Value Equity Trust is to
seek long-term growth of capital by investing primarily in common stocks and
securities convertible into or carrying the right to buy common stocks.
Growth and Income Trust. The investment objective of the Growth and Income
Trust is to seek long-term growth of capital and income, consistent with
prudent investment risk, by investing primarily in a diversified portfolio of
common stocks of U.S. issuers which the subadviser believes are of high
quality.
U.S. Government Securities Trust. The investment objective of the U.S.
Government Securities Trust is to seek a high level of current income
consistent with preservation of capital and maintenance of liquidity by
investing in debt obligations and mortgage-backed securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
derivative securities such as collateralized mortgage obligations backed by
such securities.
Automatic Asset Allocation Trusts. The investment objective of the Automatic
Asset Allocation Trusts is to seek the highest potential return consistent with
a specified level of risk tolerance -- conservative, moderate or aggressive --
by investing primarily in debt, equity, and money market securities.
- - The Aggressive Asset Allocation Trust seeks the highest total return
consistent with an aggressive level of risk tolerance. The Trust
attempts to limit the decline in portfolio value in very adverse
market conditions to 15% over any twelve month period.
- - The Moderate Asset Allocation Trust seeks the highest total return
consistent with a moderate level of risk tolerance. The Trust attempts
to limit the decline in portfolio value in very adverse market
conditions to 10% over any twelve month period.
- - The Conservative Asset Allocation Trust seeks the highest total
return consistent with a conservative level of risk tolerance.
The Trust attempts to limit the decline in portfolio value in very
adverse market conditions to 5% over any twelve month period.
A full description of the NASL Series Trust, its investment objectives,
policies and restrictions, the risks associated therewith, its expenses, and
other aspects of its operation is contained in the accompanying NASL Series
Trust prospectus, which should be read together with this prospectus.
- - 24 -
<PAGE> 23
Detailed Information About the Policies
Premium Provisions
Policy Issue and Initial Premium
To purchase a Policy, an applicant must submit a completed application.
Manufacturers Life of America will issue a Policy only if it has a face amount
of at least $250,000. A Policy will generally be issued to persons between
ages 0 and 90. In certain circumstances the Company may at its sole discretion
issue a Policy to persons above age 90. Before issuing a Policy, Manufacturers
Life of America will require evidence of insurability satisfactory to it. Each
life insured will have a risk class of preferred/non-smoker, preferred/smoker,
standard/non-smoker or standard/smoker as determined by underwriting rules.
Persons failing to meet standard underwriting requirements may be eligible to
purchase a Policy provided an additional rating is assigned. Acceptance of an
application is subject to the Company's insurance underwriting rules.
Each Policy is issued with an Effective Date and a Policy Date. The Effective
Date is the date we become obligated under this Policy and when we take the
first Monthly Deductions, other than for backdated policies (which are
described below). It is the later of the date the Company's underwriters
approve issuance of the Policy, or the date at least the Initial Premium is
received at the Manufacturers of America Service Office. The lives insured may
be covered under the terms of a conditional insurance agreement between the
Policy Date and the Effective Date.
Under certain circumstances a Policy may be issued with a backdated Policy
Date. A Policy will not be backdated more than six months (12 months where
required by state regulation) before the date of the application for the
Policy. Monthly deductions will be made for the period the Policy Date is
backdated.
All premiums received for backdated Policies prior to the Effective Date of a
Policy will be credited with interest from the date of receipt at the rate of
return then being earned on amounts allocated to the Money-Market Fund. As of
the effective date, the premiums paid plus interest credited, net of deductions
for federal, state and local taxes, and the premium charge, will be allocated
among the Investment Accounts and/or the Guaranteed Interest Account in
accordance with the policyowner's instructions.
All premiums received on or after the Effective Date of the Policy will be
allocated among the Investment Accounts or the Guaranteed Interest Account as
of the date the premiums were received at the Manufacturers Life of America
Service Office.
The Policy Date is the date used to calculate the insurance age. It is the
date from which Policy Months, Policy Years, and Policy Anniversaries are all
determined. If the application accepted by the Company is accompanied by a
check for at least the Initial Premium, the Policy Date is the date the
application and check were received at the Manufacturers Life of America
Service Office. If the application accepted by the Company is not accompanied
by a check for at least the Initial Premium, the Policy Date is calculated as
seven days after issuance of the Policy (which is also the "Issue Date").
Monthly deductions are made as of the Policy Date and at the beginning of each
Policy Month thereafter. However, if due prior to the Effective Date on a
backdated policy, they will be made as of the Effective Date instead of the
dates they were due, as described above.
- - 25 -
<PAGE> 24
The Initial Premium must be received within 60 days after the Policy Date;
however, the Initial Premium may be required within 30 days on Policies with
Additional Ratings. If the Initial Premium is not paid or if the application
is rejected, the Policy will be cancelled.
Premium Allocation
Net Premiums may be allocated to either the Guaranteed Interest Account for
accumulation at a rate of interest equal to at least 4% or to one or more of
the Investment Accounts for investment in the Portfolio shares held by the
corresponding sub-account of the Separate Account. Allocations among the
Investment Accounts and the Guaranteed Interest Account are made as a
percentage of the Net Premium. The percentage allocation to any account may be
any whole number between zero and 100, provided the total percentage
allocations equal 100. A policyowner may change the way in which Net Premiums
are allocated at any time without charge. The change will take effect as of
the date a written or telephone request for change, in a format which is
satisfactory to the Company, is received at the Manufacturers Life of America
Service Office.
Premium Limitations
After the payment of the Initial Premium, premiums may be paid at any time and
in any amount during the lifetime of any of the lives insured subject to
certain limitations. After the Initial Premium, all premiums must be paid to
the Manufacturers Life of America Service Office. Unlike traditional
insurance, premiums are not payable at specified intervals or in specified
amounts. A Policy will be issued with a Planned Premium which is based on the
amount of premium the policyowner wishes to pay. It is recommended that a
premium amount that will satisfy the requirements of the No Lapse Guarantee
Cumulative Premium Test or the Death Benefit Guarantee Cumulative Premium Test
(see Insurance Benefit - "No Lapse Guarantee" and "Death Benefit Guarantee") be
paid into the Policy as the Planned Premium. Manufacturers Life of America
will send notices to the policyowner setting forth the Planned Premium at the
payment interval selected by the policyowner, unless payment is being made
pursuant to a pre-authorized payment plan. However, the policyowner is under
no obligation to make the indicated payment. See Premium Provisions - "Policy
Default."
Manufacturers Life of America will not accept any premium payment which is less
than $50, unless the premium is payable pursuant to a pre-authorized payment
plan. In that case the Company will accept a payment of as little as $10.
Manufacturers Life of America may change these minimums as of 90 days after
written notice is sent to the policyowner. The Policies also limit the sum of
the premiums that may be paid at any time, in order to preserve the
qualification of the Policies as life insurance for federal tax purposes.
These limitations are set forth in each Policy. Manufacturers Life of America
reserves the right to refuse or refund any premium payments that may cause the
Policy to fail to qualify as life insurance under applicable tax law.
Short-Term Cancellation Right and
"Free Look" Provisions
A Policy may be returned for a refund of the premium within 10 days after it is
received, within 45 days after the application for the Policy is signed, or
within 10 days after Manufacturers Life of America mails or delivers a notice
of right of withdrawal, whichever is latest. The Policy can be mailed or
delivered to the Manufacturers Life of America agent who sold it or to the
Manufacturers Life of America Service Office. Immediately on such delivery or
mailing, the Policy shall be deemed void from the beginning. Within seven days
after receipt of the returned Policy at its Service Office, Manufacturers Life
of America will
- - 26 -
<PAGE> 25
refund any premium paid. Manufacturers Life of America
reserves the right to delay the refund of any premium paid by check until the
check has cleared.
If a policyowner requests an increase in face amount which results in new
surrender charges, he or she will have the same rights as described above to
cancel the increase. If the increase is cancelled, the Policy Value and the
surrender charges will be recalculated to the amounts they would have been had
the increase not taken place. A policyowner may request a refund of all or any
portion of premiums paid during the free look period, and the Policy Value and
the surrender charges will be recalculated to the amounts they would have been
had the premiums not been paid.
Insurance Benefit
The Insurance Benefit
If the Policy is in force at the time of the last surviving life insured's
death, Manufacturers Life of America will pay, upon receipt of due proof of
death, an insurance benefit based on the death benefit option selected by the
policyowner. The amount payable will be the death benefit under the selected
option, plus any amounts payable under any supplementary benefits added to the
Policy, less the value of the Loan Account at the date of death. The insurance
benefit will be paid in one sum unless another form of settlement option is
agreed to by the beneficiary and the Company. If the insurance benefit is paid
in one sum, Manufacturers Life of America will pay interest from the date of
death to the date of payment. If the last surviving life insured should die
after the Company's receipt of a request for surrender, no insurance benefit
will be payable, and Manufacturers Life of America will pay only the Net Cash
Surrender Value.
No Lapse Guarantee
In those states where it is permitted and if elected by the policyowner, as
long as the No Lapse Guarantee Cumulative Premium Test (see below) is satisfied
during the No Lapse Guarantee Period, as described below, Manufacturers Life of
America will guarantee that the Policy will not go into default (see Other
General Policy Provisions- "Policy Default"), even if a combination of Policy
loans, adverse investment experience or other factors should cause the Policy's
Net Cash Surrender Value to be insufficient to meet the monthly deductions due
at the beginning of a Policy Month.
The No Lapse Guarantee Period is the first 10 Policy Years for lives insured
with an average issue age up to and including 70. For lives insured with an
average issue age of 71 and older, the No Lapse Guarantee Period decreases by
one year for each year the average issue age exceeds 70, until the average
Issue Age reaches 77. For lives insured with an average Issue Age between 77
and 85, the No Lapse Guarantee Period is three years. The No Lapse Guarantee
is not offered to lives insured whose average Issue Age exceeds 85.
While the No Lapse Guarantee is in effect, Manufacturers Life of America will
determine at the beginning of each Policy Month whether the No Lapse Guarantee
Cumulative Premium Test, described below, has been met. If it has not been
satisfied, the Company will notify the policyowner of that fact and allow a
61-day grace period in which the policyowner may make a premium payment
sufficient to keep the No Lapse Guarantee in effect. This required payment, as
described in the notification to the policyowner, will be equal to the
outstanding premium requirement as of the date the No Lapse Guarantee was not
satisfied plus the Monthly No Lapse Guarantee Premium due for the next two
Policy
- - 27 -
<PAGE> 26
Months. If the required payment is not received by the end of the grace
period, or if a death benefit option change occurs, the No Lapse Guarantee will
terminate, and the Policy may go into default. A death benefit option change
will also terminate the No Lapse Guarantee if it is in effect at the time of
the change. The No Lapse Guarantee cannot be reinstated after it has been
terminated. See Other General Policy Provisions- "Policy Default," and
Insurance Benefit "Death Benefit Option Changes."
No Lapse Guarantee Cumulative Premium Test
The No Lapse Guarantee Cumulative Premium Test is satisfied if, as of the
beginning of the Policy Month, the sum of all premiums paid to date less any
partial withdrawals and less any Policy Debt is at least equal to the sum of
the Monthly No Lapse Guarantee Premiums due since the Policy Date, as follows:
The Policy will satisfy the No Lapse Guarantee Cumulative Premium Test if (a)
is greater than or equal to (b), where:
(a) is the sum of all premiums paid, less any partial withdrawals and
less any Policy Debt;
and
(b) is the sum of the Monthly No Lapse Guarantee Premiums due since the
Policy Date.
The Monthly No Lapse Guarantee Premium is one-twelfth of the No Lapse Guarantee
Premium.
The No Lapse Guarantee Premium is equal to the Target Premium and any
Additional Rating, if applicable. The No Lapse Guarantee Premium is set forth
in the Policy. It is subject to change if the face amount of the Policy is
changed (see Insurance Benefit- "Face Amount Changes"); or if there is any
change in the supplementary benefits added to the Policy or in the risk class
of any life insured.
Death Benefit Guarantee
Where permitted by state law and elected by the policyowner, if the Death
Benefit Guarantee Cumulative Premium Test (see below) is satisfied any time
before the Death Benefit Guarantee terminates, Manufacturers Life of America
will guarantee that the Policy will not go into default (See Other General
Policy Provisions - "Policy Default") even if a combination of Policy loans,
adverse investment experience or other factors should cause the Policy's Net
Cash Surrender Value to be insufficient to meet the monthly deductions due at
the beginning of a Policy Month.
If after the tenth Policy Year the Death Benefit Guarantee Cumulative Premium
Test is not satisfied but the Fund Value Test (see below) is satisfied,
Manufacturers Life of America will keep the Death Benefit Guarantee in effect.
This Death Benefit Guarantee will expire at the end of a Policy Year specified
in the Policy, currently (i) the year in which the youngest life insured
reaches or would have reached Attained Age 100 if death benefit Option 1 is
maintained throughout the life of the Policy and (ii) the year in which the
youngest life insured reaches or would have reached Attained Age 85 if death
benefit Option 2 is selected at any time. While the Death Benefit Guarantee is
in effect, Manufacturers Life of America will determine at the beginning of
each Policy Month whether the Death Benefit Guarantee Cumulative Premium Test
or the Fund
- - 28 -
<PAGE> 27
Value Test has been satisfied. If neither has been satisfied, the
Company will notify the policyowner of that fact and allow a 61-day grace
period in which the
policyowner may make a premium payment sufficient to keep the Death Benefit
Guarantee in effect. The required payment stated in the notice to the
policyowner will be equal to the outstanding premium required to meet the Death
Benefit Guarantee Cumulative Premium Test or the Fund Value Test at the date
neither test was satisfied, plus the Monthly Minimum Death Benefit Guarantee
Premium due for the next two Policy Months. If the required payment is not
received by the end of the grace period, the Death Benefit Guarantee will
terminate, and the Policy may go into default. Once the Death Benefit
Guarantee is terminated, it cannot be reinstated.
Death Benefit Guarantee Cumulative Premium Test
The Death Benefit Guarantee Cumulative Premium Test will be satisfied if
(a) is greater than or equal to (b), where:
(a) is the sum of all premiums paid, less any partial withdrawals and
less any Policy Debt;
and
(b) is the sum of the Monthly Death Benefit Guarantee Premiums due since
the Policy Date.
The Death Benefit Guarantee Premium is set forth in the Policy. It is subject
to change if the face amount of the Policy or the death benefit option is
changed (see Insurance Benefit- "Death Benefit Option Changes" and "Face Amount
Changes") or if there is any change in the supplementary benefits added to the
Policy or in the risk class of any life insured.
Fund Value Test. The Fund Value Test is applicable after the end of the tenth
year of the Policy. The Fund Value Test is satisfied, if at the beginning of
the Policy Month, the Net Policy Value is greater than or equal to the Gross
Single Premium.
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<PAGE> 28
Death Benefit Options
The Policy permits the policyowner to select one of two death benefit options -
Option 1 and Option 2. Under Option 1 the death benefit is the face amount of
the Policy or, if greater, the Policy Value multiplied by the applicable
percentage in the table set forth below. Under Option 2 the death benefit is
the face amount of the Policy plus the Policy Value or, if greater, the Policy
Value multiplied by the applicable percentage in the following table.
Age in the table below refers to the Age of the youngest life insured or the
Age such person would have reached.
Corridor
Age Percentage
___ __________
40 & below 250%
41 243
42 236
43 229
44 222
45 215
46 209
47 203
48 197
49 191
50 185
51 178
52 171
53 164
54 157
55 150
56 146
57 142
58 138
59 134
60 130
61 128
62 126
63 124
64 122
65 120
66 119
67 118
68 117
69 116
70 115
71 113
72 111
73 109
74 107
75-90 105
91 104
92 103
93 102
94 101
95 & above 100
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<PAGE> 29
Regardless of which death benefit option is in effect, the relationship of
Policy Value to death benefit will change whenever the "corridor percentages"
are used to determine the amount of the death benefit. This will occur
whenever multiplying the Policy Value by the applicable percentage set forth in
the above table results in a greater death benefit than would otherwise apply
under the selected option. For example, assume the youngest life insured under
a Policy with a face amount of $400,000 is currently Age 40. If Option 1 is in
effect, the corridor percentage will produce a greater death benefit whenever
the Policy Value exceeds $160,000 (250% x $160,000 =
$400,000). If the Policy Value is less than $160,000, an incremental change in
Policy Value will have no effect on the death benefit. If the Policy Value is
greater than $160,000, an incremental change in Policy Value will result in a
change in the death benefit by a factor of 2.5. Thus, if the Policy Value were
to increase to $160,010, the death benefit would be increased to $400,025 (250%
x $160,010 = $400,025).
If Option 2 were in effect in the above example, the corridor percentage would
produce a greater death benefit whenever the Policy Value exceeded $266,667
(250% x $266,667 = $666,667). At that point the death benefit produced by
multiplying the Policy Value by 250% would result in a greater amount than
adding the Policy Value to the face amount of the Policy. If the Policy Value
is less than $266,667, an incremental change in Policy Value will have a
dollar-for-dollar effect on the death benefit. If the Policy Value is greater
than $266,667, an incremental change in Policy Value will result in a change in
the death benefit by a factor of 2.5 in the same manner as would be the case
under Option 1 when the corridor percentage determined the death benefit.
Death Benefit Option Changes
The death benefit option is selected initially by the policyowner in the
application. After the Policy has been in force for two years the death
benefit option may be changed effective as of the next Policy Anniversary
following a request. Written requests for a change must be received by
Manufacturers Life of America at least 30 days prior to a Policy Anniversary in
order to become effective on that date. The Company reserves the right to
limit a request for change if the change would cause the Policy to fail to
qualify as life insurance for tax purposes.
A change in death benefit option will result in a change in the Policy's face
amount in order for the amount of the death benefit to remain exactly the same
immediately after the change.
If the change in death benefit is from Option 1 to Option 2, the new face
amount will be equal to the face amount prior to the change minus the Policy
Value on the Effective Date of the change. Thereafter, the death benefit will
vary with changes in the Policy Value. A change to Option 2 will not be
allowed if it would cause the face amount of the Policy to go below the minimum
face amount of $250,000.
If the change in death benefit is from Option 2 to Option 1, the new face
amount will be equal to the face amount prior to the change plus the Policy
Value on the Effective Date of the change. The increase in face amount
resulting from a change to Option 1 will not affect the amount of surrender
charges to which a Policy may be subject.
A policyowner may elect at issue the ability to switch from Option 2 to Option
1 within six months of a date certain. No evidence of insurability will be
required if the policyowner exercises his or her ability to switch within six
months of the chosen date. In the absence of such an election, a change from
Option 2 to Option 1 will be subject to satisfactory evidence of insurability.
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<PAGE> 30
If satisfactory evidence of insurability is not provided, the policyowner may
still switch from Option 2 to Option 1; however, the face amount of the Policy
will remain at its previous level, thus reducing the death benefit.
A death benefit option change will terminate the No Lapse Guarantee, if it is
in effect at the time of the death benefit option change. See Insurance
Benefit - "No Lapse Guarantee." A change from Option 1 to Option 2 will also
shorten the Death Benefit Guarantee Period to the year in which the lives
insured reach average Attained Age 85.
Policyowners who wish to have level insurance coverage should generally select
Option 1. Under Option 1 increases in Policy Value usually will reduce the net
amount of risk under a Policy which will reduce cost of insurance charges.
This means that favorable investment performance should result in a faster
increase in Policy Value than would occur under an identical Policy with Option
2 in effect. However, the larger Policy Value which may result under
Option 1 will not affect the amount of the death benefit unless the corridor
percentages are used to determine the death benefit.
Policyowners who want to have the Policy Value reflected in the death benefit
so that any increases in Policy Value will increase the death benefit should
generally select Option 2. Under Option 2 the net amount at risk will remain
level unless the corridor percentages are used to determine death benefit, in
which case increases in Policy Value will increase the net amount at risk.
Face Amount Changes
Subject to certain limitations, a policyowner may, upon written request,
increase or decrease the face amount of the Policy. A change in face amount
may affect the Death Benefit Guarantee Premium and the No Lapse Guarantee
Premium, the Guideline Single Premium, Guideline Level Premium, the monthly
deductions and surrender charges (see "Charges and Deductions"). Currently,
each face amount increase or decrease (other than a decrease resulting from a
partial withdrawal or an increase or decrease for a corporate-owned Policy),
must be at least $100,000. Manufacturers Life of America reserves the right to
modify this minimum requirement as of 90 days after written notice is sent to
the policyowner. The Company also reserves the right to limit a change in face
amount to the extent necessary to prevent the Policy from failing to qualify as
life insurance for tax purposes.
Increases. Increases in face amount are subject to satisfactory evidence of
insurability. Increases may be made only once per Policy Year and only after
the second Policy Anniversary, except for corporate-owned Policies, in which
case increases may be made in any Policy Year, with no minimum amount
requirement. An increase will become effective at the beginning of the next
Policy Month following the date Manufacturers Life of America approves the
requested increase. The Company reserves the right to refuse a requested
increase if the Attained Age of any of the lives insured still living at the
effective date of the increase would be greater than the maximum issue age for
new Policies at that time. In addition, subject to certain conditions as set
forth in the Policy, the policyowner may be entitled to increase the face
amount of the Policy by a certain amount without further evidence of
insurability if there is an increase in federal estate taxes within three years
of the Policy Date. The policyowner is entitled to this benefit if both
insureds are standard risks and under age 75 at time of issue. If the
policyowner is considered a substandard risk in accordance with Manufacturers
Life of America's normal underwriting practices, the benefit may not be
available.
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<PAGE> 31
An increase in face amount will usually result in the Policy's being subject to
new surrender charges. The new surrender charges will be computed as if a new
Policy were being purchased for the increase in face amount. For purposes of
determining the new deferred sales charge, a portion of the Policy Value at the
time of the increase, and a portion of the premiums paid on or subsequent to
the increase, will be deemed to be premiums attributable to the increase. See
Charges and Deductions- "Surrender Charges." Any increase in face amount,
following a prior decrease in face amount to a level less than the highest face
amount previously in effect will have no effect on the surrender charges to
which the Policy is subject. This is because surrender charges, if applicable,
will have been assessed in connection with the prior decrease in face amount.
The insurance coverage eliminated by the decrease of the oldest face amount
will be deemed to be restored first. As with the purchase of a Policy, a
policyowner will have free look and sales charge limitation rights with respect
to any increase resulting in new surrender charges.
An additional premium may be required for a face amount increase, and new Death
Benefit Guarantee Premiums, No Lapse Guarantee Premiums, Guideline Annual
Premium, and Target Premium will be determined.
Decreases. A decrease in the face amount may be requested only once per Policy
Year and only after the Policy has been in force for two years, except for
corporate-owned Policies, in which case decreases may be made in any Policy
Year, with no minimum amount requirement. In addition, during the two-year
period following an increase in face amount, the policyowner may
elect at any time to cancel the increase and have the deferred sales charge for
the increase reduced by applicable limitations on sales charges attributable to
the increase. A decrease in face amount will become effective at the beginning
of the next Policy Month following the receipt of a properly executed request.
A decrease will not be allowed if it would cause the face amount to go below
the minimum face amount of $250,000.
A decrease in face amount during the Surrender Charge Period will usually
result in surrender charges being deducted from the Policy Value. See Charges
and Deductions- "Surrender Charges." For purposes of determining surrender and
cost of insurance charges, a decrease will reduce face amount in the following
order: (a) the face amount provided by the most recent increase, then (b) the
face amounts provided by the next most recent increases successively, and
finally (c) the initial face amount.
Policy Values
Policy Value
A Policy has a Policy Value, a portion of which is available to the policyowner
by making a Policy loan or partial withdrawal or upon surrender of the Policy.
See "Policy Loans" and "Partial Withdrawals and Surrenders" below. The Policy
Value may also affect the amount of the death benefit. See Insurance Benefit -
"Death Benefit Options." The Policy Value at any time is equal to the sum of
the Values in the Investment Accounts, the Guaranteed Interest Account and the
Loan Account. The following discussion relates only to the Investment
Accounts. Policy loans are discussed under "Policy Loans" and the Guaranteed
Interest Account is discussed under "The General Account." The portion of the
Policy Value based on the Investment Accounts is not guaranteed and will vary
each Business Day with the investment performance of the underlying Portfolios.
An Investment Account is established under each Policy for each sub-account of
the Separate Account to which net premiums or transfer amounts have been
- - 33 -
<PAGE> 32
allocated. Each Investment Account under a Policy measures the interest of the
Policy in the corresponding sub-account. The value of the Investment Account
established for a particular sub-account is equal to the number of units of
that sub-account credited to the Policy times the value of such units.
Units of a particular sub-account are credited to a Policy when net premiums
are allocated to that sub-account or amounts are transferred to that
sub-account. Units of a sub-account are redeemed whenever amounts are
deducted, transferred or withdrawn from the sub-account. The number of units
credited or redeemed for a specific transaction is based on the dollar amount
of the transaction divided by the value of the unit as of the end of the
Business Day on which the transaction occurs. The number of units credited or
redeemed will be based on the applicable unit values as of the Business Day on
which the premium or transaction request is received at the Manufacturers Life
of America Service Office or other office or entity so designated by
Manufacturers Life of America.
Units are valued as of the end of each Business Day. When an order involving
the crediting or redemption of units is received after the end of a Business
Day or on a day which is not a Business Day, the order will be processed on the
basis of unit values determined as of the next Business Day. Similarly, any
determination of Policy Value, Investment Account value or death benefit to be
made on a day which is not a Business Day will be made as of the next Business
Day.
The value of a unit of each sub-account was initially fixed at $10. For each
subsequent Business Day the unit value is determined by multiplying the unit
value for the preceding Business Day by the "net investment factor" for the
particular sub-account for such subsequent Business Day. The net investment
factor for a sub-account for any Business Day is equal to (a) divided by (b),
where:
(a) is the net asset value of the underlying Portfolio shares held by
that sub-account as of the end of such Business Day before any Policy
transactions are made for that day;
(b) is the net asset value of the underlying Fund shares held by that
sub-account as of the end of the immediately preceding Business Day
after all Policy transactions have been made for that day.
Manufacturers Life of America reserves the right to adjust the above formula
for any taxes determined by it to be attributable to the operations of the
sub-account.
Transfers of Policy Value
A policyowner may transfer amounts from one or more Investment Accounts or the
Company's general account to other Investment Accounts and/or the Company's
general account. A policyowner is permitted to make one transfer each Policy
Month free of charge. One additional transfer in each Policy Month may be made
at a cost of $35. This charge will be allocated among the Investment Accounts
and the Guaranteed Interest Account in the same proportion as the amount
transferred from each bears to the total amount transferred. For this purpose
all transfer requests received by Manufacturers Life of America on the same
Business Day are treated as a single transfer request.
The minimum dollar amount of all transfers pursuant to a single transfer
request, except for Asset Allocation Balancer transfers, is $500. The maximum
amount that may be transferred from the Guaranteed Interest Account in any one
Policy Year
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<PAGE> 33
is the greater of $500 or 15% of the Guaranteed Interest Account
value as of the previous Policy Anniversary.
Any transfer which involves a transfer out of the Guaranteed Interest Account
may not involve a transfer to the Investment Account for the Money-Market Fund.
Transfer request formats must be satisfactory to Manufacturers Life of America
and in writing or by telephone, if a currently valid telephone transfer
authorization form is on file.
Although failure to follow reasonable procedures may result in Manufacturers
Life of America's liability for any losses arising from unauthorized or
fraudulent telephone transfers, Manufacturers Life of America will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. Manufacturers Life of America will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
Such procedures shall consist of confirming a valid telephone authorization
form is on file, tape recording all telephone transactions and providing
written confirmation thereof.
The policyowner may effectively convert his or her Policy to a fixed benefit
Policy by transferring the Policy Value in all of the Investment Accounts to
the Guaranteed Interest Account and by changing his or her allocation of net
premiums entirely to the Guaranteed Interest Account. As long as the entire
Policy Value is allocated to the Guaranteed Interest Account and remains in the
Guaranteed Interest Account, the Policy Value, other values based thereon and
the death benefit will be determinable and guaranteed. That is, future values
and minimum levels of benefits can be computed using guaranteed charges,
guaranteed interest rate and the guaranteed Mortality Table for a given death
benefit option, Face Amount of insurance and premium payment. Actual values
will never be less than the minimum guaranteed values provided the entire
Policy Value remains in the
Guaranteed Interest Account.
The Investment Account values to be transferred to the Guaranteed Interest
Account will be determined as of the Business Day on which Manufacturers Life
of America receives the request for conversion. There will be no change in the
Issue Age, risk class of the Lives Insured or face amount as a result of the
conversion. A transfer of any or all of the Policy Value to the Guaranteed
Interest Account can be made at any time, even if a prior transfer has been
made during the Policy Month. After the conversion has been
effected, the policyholder may again transfer all or part of the Policy Value
back into the Investment Accounts and/or allocate net premiums to the
Investment Accounts. The Policy will then cease to be considered a
fixed-benefit Policy. Transfers from the Guaranteed Interest Account will be
subject to the limitations stated above.
Limitations. To the extent that total surrenders, partial withdrawals and
transfers out of a sub-account exceed total net premium allocations and
transfers into that sub-account, portfolio securities of the underlying
Portfolio may have to be sold. Excessive sales of the investment portfolio
securities in such a situation could be detrimental to that Portfolio and to
policyowners with Policy Values allocated to sub-accounts investing in that
Portfolio. To protect the interests of all policyowners, the Policy's transfer
privilege is limited as described below.
So long as effecting net transfers out of a sub-account as of a particular
Business Day would not reduce the number of shares of the underlying Portfolio
outstanding at the close of the prior Business Day by more than 5%, all such
transfers will be effected. However, net transfers out of a sub-account
greater than 5% would be permitted only if, and to the extent that, in the
judgment of Manufacturers Adviser Corporation, they would not result in
detriment to the underlying Portfolio or to the interests of policyowners or
others with assets
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<PAGE> 34
allocated to that Portfolio. If and when transfers must be
limited to avoid such detriment, some requests will not be effected. In
determining which requests will be effected, transfers pursuant to the Dollar
Cost Averaging program will be effected first, followed by Asset Allocation
Balancer transfers, written requests next and telephone requests last. Within
each such group, requests will be processed in the order received, to the
extent possible. Policyowners whose transfer requests are not effected will be
so notified. Current S.E.C. rules preclude the Company from processing at a
later date those requests that were not effected. Accordingly, a new transfer
request would have to be submitted in order to effect a transfer that was not
effected because of the limitations described in this paragraph. Manufacturers
Life of America may be permitted to limit transfers in certain other
circumstances. See Other Provisions- "Payment of Proceeds."
Dollar Cost Averaging. Manufacturers Life of America will offer policyowners a
Dollar Cost Averaging program. Under the Dollar Cost Averaging program the
policyowner will designate an amount which will be transferred at predetermined
intervals from one Investment Account into any other Investment Account(s) or
the Guaranteed Interest Account. Each transfer under the Dollar Cost Averaging
program must be of a minimum amount as set by Manufacturers Life of America.
Once set, this minimum may be changed at any time at the discretion of
Manufacturers Life of America. Currently, no charge will be made for this
program if the Policy Value exceeds $15,000 on the date of transfer.
Otherwise, there will be a charge of $5 for each transfer under this program.
The charge will be deducted from the value of the Investment Account out of
which the transfer occurs. If insufficient funds exist to effect a Dollar Cost
Averaging transfer, including the charge, if applicable, the transfer will not
be effected and the policyowner will be so notified.
Manufacturers Life of America reserves the right to cease to offer this program
as of 90 days after written notice is sent to the policyowner.
Asset Allocation Balancer Transfers. Under the Asset Allocation Balancer
program the policyowner will designate an allocation of Policy Value among
Investment Accounts. At six-month intervals beginning six months after the
Policy Date, Manufacturers Life of America will move amounts among the
Investment Accounts as necessary to maintain the policyowner's chosen
allocation. A change to the policyowner premium allocation instructions will
automatically result in a change in Asset Allocation Balancer instructions so
that the two are identical unless the policyowner either instructs Manulife of
America otherwise or has elected the Dollar Cost Averaging program. Currently,
the charge for this program is $15 per transfer or series of transfers
occurring on the same transfer date. This charge will be deducted from all
accounts affected by the Asset Allocation Balancer transfer in the
same proportion as the value in each account bears to the Policy Value
immediately after the transfer.
Manufacturers Life of America reserves the right to cease to offer this program
as of 90 days after written notice is sent to the policyowner.
Policy Loans
While the Policy is in force and has a loan value the policyowner may borrow
against the Policy Value of his or her Policy. The Policy serves as the only
security for the loan. In most states the minimum amount of any loan is $500.
The maximum loan amount is the amount which would cause the Modified Policy
Debt, as described below, to equal the loan value of the Policy as of the date
of the loan. The loan value is the Policy's Cash Surrender Value less the
monthly
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<PAGE> 35
deductions due to the next Policy Anniversary. The Modified Policy
Debt as of any date is the Policy Debt (the aggregate amount of policy loans,
including borrowed interest, less any loan repayments) plus the amount of
interest to be charged to the next Policy Anniversary, all discounted from the
next Policy Anniversary to such date at an annual rate of 4%. When a loan has
been taken out, or when loan interest charges are borrowed, an amount equal to
the Modified Policy Debt is transferred to the Loan Account to ensure that a
sufficient amount will be available to pay interest on the Policy Debt at the
next Policy Anniversary.
For example, assume a Policy with a loan value of $5,000, no outstanding Policy
loans and a loan interest rate of 5.75%. The maximum amount that can be
borrowed is an amount that will cause the Modified Policy Debt to equal $5,000.
If the loan is made on a Policy Anniversary, the maximum loan will be $4,917.
This amount at 5.75% interest will equal $5,200 one year later; $5,200
discounted to the date of the loan at 4% (the Modified Policy Debt) equals
$5,000. Because the minimum rate of interest credited to the Loan Account is
4%, $5,000 must be transferred to the Loan Account to ensure that $5,200 will
be available as of the next Policy Anniversary to cover the interest accrued on
the Policy Debt. The current credited Interest Rate to the Loan Account is
4.5%.
When a loan is made, Manufacturers Life of America will deduct from the
Investment Accounts or the Guaranteed Interest Account, and transfer to the
Loan Account, an amount which will result in the Loan Account value's being
equal to the Modified Policy Debt. The policyowner may designate how the
amount to be transferred to the Loan Account is allocated among the accounts
from which the transfer is to be made. In the absence of instructions, the
amount to be transferred will be allocated to each account in the same
proportion as the value in each Investment Account and the Guaranteed Interest
Account bears to the Net Policy Value.
A Policy loan may result in a Policy's failing to satisfy the Death Benefit
Guarantee Cumulative Premium Test and/or the No Lapse Guarantee Cumulative
Premium Test, since the Policy Debt is subtracted from the sum of the premiums
paid in determining whether these tests are satisfied. As a result, the Death
Benefit Guarantee and/or No Lapse Guarantee may terminate. See Insurance
Benefit - "Death Benefit Guarantee," "No Lapse Guarantee," and Other General
Policy Provisions - "Policy Default." Moreover, if the Death Benefit Guarantee
or No Lapse Guarantee is not in force, a Policy loan may cause a Policy to be
more susceptible to going into default, since a Policy loan will be reflected
in the Net Cash Surrender Value. See Other General Policy Provisions - "Policy
Default." A Policy loan will also affect future Policy Values, since that
portion of the Policy Value in the Loan Account will increase in value at the
crediting interest rate rather than varying with the performance of the
underlying Funds selected by the policyowner or increasing in value at the rate
of interest credited for amounts allocated to the Guaranteed Interest Account.
Policy loans may have tax consequences. A policyowner considering the use of
systematic Policy loans as one element of a comprehensive retirement income
plan should consult his or her personal tax adviser regarding the potential tax
consequences if such loans were to so reduce Policy Value that the Policy would
lapse, absent additional payments. The
premium payment necessary to avert lapse would increase with the age of the
insured. See Miscellaneous Matters - "Federal Income Tax
Considerations" (Tax Treatment of Policy Benefits). Finally, a Policy loan
will affect the amount payable on the death of the last surviving life insured,
since the death benefit is reduced by the value of the Loan Account at the date
of death in arriving at the insurance benefit.
Interest Charged on Policy Loans. Interest on the Policy Debt will accrue
daily and be payable annually on the Policy Anniversary. The rate of interest
charged
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<PAGE> 36
will be fixed at an effective annual rate of 5.75%. If the interest
due on a Policy Anniversary is not paid by the policyowner, the interest will
be borrowed against the Policy.
Interest Credited to the Loan Account. Manufacturers Life of America will
credit interest to any amount in the Loan Account at an effective annual rate
of at least 4%. The actual rate credited is the rate of interest charged on
the Policy loan less an interest rate differential, currently 1.25%.
Loan Account Adjustments. When a loan is first taken out, and at specified
events thereafter, the value of the Loan Account is adjusted. Whenever the
Loan Account is adjusted, the difference between (i) the Loan Account before
any adjustment and (ii) the Modified Policy Debt at the time of adjustment, is
transferred between the Loan Account and the Investment Accounts or the
Guaranteed Interest Account. The amount transferred to or from the Loan
Account will be such that the value of the Loan Account is equal to the
Modified Policy Debt after the adjustment.
The specified events which cause an adjustment to the Loan Account are (i) a
Policy Anniversary, (ii) a partial or full loan repayment, (iii) a new loan
being taken out, or (iv) when an amount is needed to meet a monthly deduction.
A loan repayment may be implicit in that Policy Debt is effectively repaid upon
termination (i.e., upon death of the last surviving life insured, surrender or
lapse of the policy). In each of these instances, the Loan Account will be
adjusted so that any excess of the Loan Account over the Modified Policy Debt
after the repayment will be included in the termination proceeds.
Except as noted below in the Loan Repayments section, amounts transferred from
the Loan Account will be allocated to the Investment Accounts and the
Guaranteed Interest Account in the same proportion as the value in the
corresponding "loan sub-account" bears to the value of the Loan Account. A
"loan sub-account" exists for each Investment Account and for the Guaranteed
Interest Account. Amounts transferred to the Loan Account are allocated to the
appropriate loan sub-account to reflect the account from which the transfer was
made.
Loan Account Illustration. (Dollar amounts in this illustration have been
rounded to the nearest dollar).
The operation of the Loan Account may be illustrated by consideration of a
Policy with a loan value of $5,000, a loan interest rate of 5.75%, and a
maximum loan amount on a Policy Anniversary of $4,917. If a loan in the
maximum amount of $4,917 is made, an amount equal to the Modified Policy Debt,
$5,000, is transferred to the Loan Account. At the next Policy Anniversary the
value of the Loan Account will have increased to $5,225 ($5,000 x 1.045),
reflecting interest credited at an effective annual rate of 4.5%. At that time
the loan will have accrued interest charges of $283 ($4,917 x .0575) bringing
the Policy Debt to $5,200.
If the accrued interest charges are paid on the Policy Anniversary, the Policy
Debt will continue to be $4,917, and the Modified Policy Debt, reflecting
interest for the next Policy Year and discounting the Policy Debt and such
interest at 4%, will be $5,000. An amount will be transferred from the Loan
Account to the Guaranteed Interest Account or the Investment Accounts so that
the Loan Account value will equal the Modified Policy Debt. Since the Loan
Account value was $5,225, a transfer of $225 will be required ($5,225 -
$5,000).
If, however, the accrued interest charges of $283 are borrowed, an amount will
be transferred from the Investment Accounts and the Guaranteed Interest Account
so that the Loan Account value will equal the Modified Policy Debt recomputed
at
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<PAGE> 37
the Policy Anniversary. The new Modified Policy Debt is the Policy Debt,
$5,200, plus loan interest to be charged to the next Policy Anniversary, $299
($5,200 x .0575), discounted at 4%, which results in a figure of $5,288. Since
the value of the Loan Account was $5,225, a transfer of $63 will be required.
This amount is equivalent to the 1.25% interest rate differential on the $5,000
transferred to the Loan Account on the previous Policy Anniversary.
Loan Repayments. Policy Debt may be repaid in whole or in part at any time
prior to the death of the last surviving life insured provided the Policy is in
force. When a repayment is made, the amount is credited to the Loan Account
and a transfer is made to the Guaranteed Interest Account or the Investment
Accounts so that the Loan Account at that time equals the Modified Policy Debt.
Loan repayments will first be allocated to the Guaranteed Interest Account
until the associated loan sub-account is reduced to zero. Loan repayments will
then be allocated to each Investment Account in the same proportion as the
value in the corresponding loan sub-account bears to the value of the Loan
Account. Amounts paid to the Company not specifically designated in writing as
loan repayments will be treated as premiums.
Partial Withdrawals and Surrenders
After a Policy has been in force for two Policy Years, the policyowner may make
a partial withdrawal of the Net Cash Surrender Value. In most states the
minimum amount that may be withdrawn is $500. The policyowner should specify
the portion of the withdrawal to be taken from each Investment Account and the
Guaranteed Interest Account. In the absence of instructions the withdrawal
will be allocated among such accounts in the same proportion as the Policy
Value in each account bears to the Net Policy Value. No more than one partial
withdrawal may be made in any one Policy Month.
A partial withdrawal made during the Surrender Charge Period will usually
result in the assessment of a portion of the surrender charges to which the
Policy is subject (see Charges and Deductions - "Surrender Charges") if the
withdrawal is in excess of the Withdrawal Tier Amount. The Withdrawal Tier
Amount is equal to 10% of the Net Cash Surrender Value determined as of the
previous Policy Anniversary. The portion of a partial withdrawal that is
considered to be in excess of the Withdrawal Tier Amount includes all previous
partial withdrawals that have occurred in the current Policy Year. If the
Option 1 death benefit is in effect under a Policy from which a partial
withdrawal is made, the face amount of the Policy will be reduced by the amount
of the partial withdrawal and any surrender charges. If the death benefit is
equal to the face amount at the time of withdrawal, the face amount will be
reduced by the amount of the withdrawal plus the portion of the surrender
charges assessed. If the death benefit is based upon the Policy Value times
the corridor percentage set forth under Insurance Benefit - "Death Benefit
Options" above, the face amount will be reduced only to the extent that the
amount of the withdrawal plus the portion of the surrender charges assessed
exceeds the difference between the death benefit and the face amount.
Reductions in face amount resulting from partial withdrawals will not incur any
surrender charges above the surrender charges applicable to the withdrawal.
When the face amount of a Policy is based on one or more increases subsequent
to issuance of the Policy, a reduction resulting from a partial withdrawal will
be applied in the same manner as a requested decrease in face amount, i.e.
against the face amount provided by the most recent increase, then against the
next most recent increases successively and finally against the initial face
amount. If there has been a prior increase in face amount, then the face
amount will be decreased in the same order as if the policyowner had requested
the decrease. See Charges and Deductions - "Surrender Charges" (Charges on
Partial Withdrawals).
- - 39 -
<PAGE> 38
A Policy may be surrendered for its Net Cash Surrender Value at any time while
at least one of the lives insured is living. The Net Cash Surrender Value is
equal to the Policy Value less any surrender charges and outstanding monthly
deductions due (the "Cash Surrender Value") minus the value of the Policy
Debt. The Net Cash Surrender Value will be determined as of the end of the
Business Day on which Manufacturers Life of America receives the Policy and a
written request for surrender at its Service Office. After a Policy is
surrendered, the insurance coverage and all other benefits under the Policy
will terminate. Surrender of a Policy during the Surrender Charge Period will
usually result in the assessment by Manufacturers Life of America of surrender
charges. See Charges and Deductions - "Surrender Charges."
Charges and Deductions
Charges under the Policy are assessed as (i) deductions from premiums, (ii)
surrender charges upon surrender, partial withdrawals, decreases in face amount
or lapse, (iii) monthly deductions, and (iv) other charges. These charges are
described below.
Deductions from Premiums
Manufacturers Life of America deducts a charge of 2.35% of each premium payment
for state and local taxes. State and local taxes differ from state to state.
The 2.35% rate is expected to be sufficient, on average, to pay state and local
taxes where required.
Manufacturers Life of America also deducts a charge of 1.25% of each premium
payment for federal taxes related to premium payments, an amount which is also
expected to be sufficient to pay federal taxes.
Currently, it is the Company's intent to cease these deductions at the end of
the tenth Policy Year. However, Manufacturers Life of America may continue
these deductions beyond the tenth Policy Year. In addition, if any other taxes
are incurred, it may make a charge for those taxes in addition to the
deductions for federal, state or local taxes currently being made from premium
payments. Manufacturers Life of America also deducts a sales charge of 5.5% of
the premiums paid in each Policy Year, up to a maximum of the Target Premium in
the then current Policy Year. This deduction is guaranteed to cease at the end
of the tenth Policy Year, or 10 years after a face increase.
Surrender Charges
Manufacturers Life of America will assess surrender charges upon surrender, a
partial withdrawal of Policy Value in excess of the Withdrawal Tier Amount, a
requested decrease in face amount, or lapse. The charges will be assessed if
any of the above transactions occurs within the Surrender Charge Period unless
the charges have been previously deducted. There are two surrender charges - a
deferred underwriting charge and a deferred sales charge. The charges will
never exceed the allowable maximums under standard non-forfeiture law.
Deferred Underwriting Charge. The deferred underwriting charge is $4 for each
$1,000 of face amount of life insurance coverage initially purchased or added
by increase. The charge applies only to the first $1,000,000 of face amount
initially purchased or the first $1,000,000 of each subsequent increase in face
amount. Thus, the charge made in connection with any one underwriting will not
exceed $4,000.
The deferred underwriting charge is designed to cover the administrative
expenses associated with underwriting and Policy issue, including the costs of
processing
- - 40 -
<PAGE> 39
applications, conducting medical examinations, determining each life
insured's risk class and establishing Policy records. Manufacturers Life of
America does not expect to recover from the deferred underwriting charge any
amount in excess of its expenses associated with underwriting and Policy issue,
including the costs of processing applications, conducting medical
examinations, determining the risk classes of the lives insured and
establishing Policy records.
Deferred Sales Charge
The maximum deferred sales charge is equal to the premiums paid in the first
Policy Year up to a maximum of the Target Premium, multiplied by the
percentages shown in Table 1 below (but in no event will the sum of the
deferred sales charge and the sales charge deducted from premiums exceed
the amount permitted by Section 27(a)(2) of the Investment Company Act
of 1940).
This charge compensates the Company for some of the expenses of selling and
distributing the Policies, including agents' commissions, advertising, agent
training and the printing of prospectuses and sales literature. The deferred
sales charge deducted in any Policy Year is not specifically related to sales
expenses incurred in that year. Instead, the Company expects that the major
portion of the sales expenses attributable to a Policy will be incurred during
the first Policy Year, although the deferred sales charge might be deducted up
to fifteen years later. Manufacturers Life of America anticipates that the
aggregate amounts received under the Policies for sales charges will be
insufficient to cover aggregate sales expenses. To the extent that sales
expenses exceed sales charges, Manufacturers Life of America will pay the
excess from its other assets or surplus, including amounts derived from the
mortality and expense risks charge described below. Manufacturers Life of
America may forego deducting a portion of the deferred sales charge if the
Policy is surrendered for its Net Cash Surrender Value at any time during the
first two years following issuance or following an increase in face amount or
if the increase is cancelled during the two-year period following any increase.
See Surrender Charges - "Sales Charge Limitation" below.
The Target Premium for the initial face amount is specified in the Policy. A
Target Premium will be computed for each increase in face amount above the
highest face amount of coverage previously in effect, except for an increase in
face amount which results from a change in the death benefit option, and the
policyowner will be advised of each new Target Premium. Target Premiums depend
upon the face amount of insurance provided at issue or by an increase, except
those increases attributable to a death benefit option change, and the issue
age and sex (unless unisex rates are required by law) of each life insured.
Except for surrenders to which the sales charge limitation provisions described
below apply, the maximum deferred sales charge will be in effect for at least
the first six years of the Surrender Charge Period for lives insured with
either an Average Issue Age (or an Average Attained Age at time of face
increase) of 0-75. For Average Ages higher than 75, the portion of the
deferred sales charge that remains in effect will grade down at a rate that
also varies according to Table 1 as described below.
In order to determine the deferred sales charge applicable to a face amount
increase, Manufacturers Life of America will treat a portion of the Policy
Value on the date of increase as a premium attributable to the increase. In
addition, a portion of each premium paid on or subsequent to the increase will
be attributed to the increase. In each case, the portion attributable to the
increase will be the ratio of the "Guideline Annual Premium" for the increase
to the sum of the guideline annual premiums for the initial face amount and all
increases including the requested increase.
- - 41 -
<PAGE> 40
A "Guideline Annual Premium" is a hypothetical amount based on S.E.C. rules
that is used to measure the maximum amount of the deferred sales charge that
may be imposed upon surrender, partial withdrawal, a decrease in face amount or
lapse during the first two years after issuance or after an increase in face
amount.
<TABLE>
<CAPTION>
Table 1: The Deferred Underwriting Charge and the Surrender Charge
Grading Percentages During the Surrender Charge Period
(Applicable to the Initial Face Amount and Subsequent Increases)
Surrender Charge Average Age and Percentage of Charges** <F4>
Period* <F3> Average Age:
----------------- ---------------------------------------
0-75 76 77 78 79 80+
<S> <C> <C> <C> <C> <C> <C>
12 100% 100% 100% 100% 100% 100%
24 100% 100% 100% 100% 100% 90%
36 100% 100% 100% 100% 90% 80%
48 100% 100% 100% 90% 80% 70%
60 100% 100% 90% 80% 70% 60%
72 100% 90% 80% 70% 60% 50%
84 90% 80% 70% 60% 50% 40%
96 80% 70% 60% 50% 40% 30%
108 70% 60% 50% 40% 30% 20%
120 60% 50% 40% 30% 20% 10%
132 50% 40% 30% 20% 10% 0%
144 40% 30% 20% 10% 0%
156 30% 20% 10% 0%
168 20% 10% 0%
180 0% 0%
* <F3> Periods shown are after end of Policy Month. Policy Months not
shown may be calculated by linear extrapolation.</F3>
**<F4> Average Age refers to the average rated Issue Age of the lives insured
when the Policy is first issued, or their average Attained Age at
the time of a subsequent face amount increase.</F4>
</TABLE>
The following example illustrates how deferred underwriting and sales charges
are calculated using data from Table 1 above.
Assume a 42-year-old male and a 42-year-old female (standard risks), whose
Policy was issued at an average Issue Age 35 and who have paid $9,000 in
premiums in equal installments under a Policy with a Target Premium of $505 and
a face amount of $250,000, surrender their Policy during the last month of the
seventh Policy Year.
A deferred underwriting charge of $900 would be assessed. The maximum deferred
underwriting charge of $1,000 ($4 per $1,000 of face amount x 250) would be
multiplied by the 90% listed in Table 1 as applicable to surrenders during the
last month of the seventh Policy Year (90% x ($4 x 250) = $900).
A deferred sales charge of $454.50 would be assessed. The deferred sales
charge is equal to the lower of premiums paid in the first Policy Year (or
first year after a face increase), in our example $9,000/7 = $1,285.71, or the
Target Premium ($505). Therefore the deferred sales charge is $505. Because
the
- - 42 -
<PAGE> 41
surrender occurs during the last month of the seventh Policy Year, only 90%
(from Table 1) of the maximum sales charge remains applicable [.90 x $505 =
$454.50].
Sales Charge Limitation. The maximum sales charge that may be taken under the
Policy is 9% of 20 guideline annual premiums (GAPs) or, if the insureds' joint
life expectancy is less than 20 years, then the number of years of life
expectancy would replace 20 GAPs in determining the maximum sales charge.
However, if a Policy is surrendered or lapsed, or a face amount decrease is
requested at any time during the first two years after issuance or after an
increase in face amount, Manufacturers Life of America will forego taking that
part of the deferred sales charge with respect to "premiums" paid for the
initial face amount or such increase (including the portion of Policy Value
treated as premiums for the increase, as described above), whichever is
applicable, which exceeds the sum of (i) 30% of the premiums paid up to the
lesser of one guideline annual premium or the cumulative premiums paid to the
surrender date plus (ii) 10% of the premiums paid in excess of one guideline
annual premium, up to the lesser of two guideline annual premiums or the
cumulative premiums paid to the surrender date, plus (iii) 9% of the premiums
paid in excess of two guideline annual premiums.
The operation of the sales charge limitation that applies in the first two
years after issuance, or after an increase in face amount, is illustrated by
the following example. A 37-year-old male non-smoker and a 37-year-old female
non-smoker purchased a Policy with a face amount in excess of $250,000 when
their average Issue Age was 35. They have paid $2,000 in premiums in equal
installments under the Policy and it has a guideline annual premium (GAP) of
$1,614 and a Target Premium (TP) of $505. They surrender the Policy during
the second Policy Year. In the absence of the sales charge limitation, the
maximum deferred sales charge would be $505 as described in Charges and
Deductions - "Deferred Sales Charge."
However, under the formula described above, the maximum sales charge allowable
would be $523. This is calculated as the sum of:
(i) 30% of one GAP, or $484 [.30 x $1,614 = $484], because one GAP
($1,614) is less than premiums paid ($2,000);
plus
(ii) 10% of premiums paid in excess of one GAP, or $39 (.1 x $386 = $39)
because premiums paid in excess of one GAP ($2,000 - $1,614 = $386) are
less than the amount of a second GAP ($1,614);
plus
(iii) $0, because no premiums in excess of two GAPs were paid.
Thus, (i) $484 plus (ii) $39 plus (iii) $0 equals $523.
Thus after applying the sales charge limitation calculation, the maximum
allowable sales charge is $523. However, since Manufacturers Life of America
has already deducted from premiums the sum of $27.78 (5.5% of $505) this
amount is deducted from $523 to arrive at a maximum deferred sales charge
of $495.22. The maximum deferred sales charge allowable is $495.22 which is
equal to the smaller of the deferred sales charge ($505) and the maximum
sales charge limitation ($495.22).
Since a deferred sales charge is deducted when a Policy terminates for failure
to make the required payment following the Policy's going into default, the
sales charge limitation will apply if the termination occurs during the
two-year period following issuance or any increase in face amount. If the
Policy terminates during the two years after a face amount increase, the sales
charge limitation will relate only to the sales charges applicable to the
increase.
- - 43 -
<PAGE> 42
Charges on Partial Withdrawals. Whenever a portion of the surrender charges is
deducted as a result of a partial withdrawal of Policy Value in excess of the
Withdrawal Tier Amount, the Policy's remaining surrender charges will be
reduced by the amount of the charges taken. The surrender charges not assessed
as a result of the 10% free withdrawal provision remain in effect under the
Policy and may be assessed upon surrender or lapse, other partial withdrawals
in excess of the Withdrawal Tier Amount in each Policy Year, or a requested
decrease in face amount. The portion of the surrender charges assessed will be
based on the ratio of the amount of the withdrawal in excess of the Withdrawal
Tier Amount to the Net Cash Surrender Value of the Policy less the Withdrawal
Tier Amount immediately prior to the withdrawal. The surrender charges will be
deducted from each Investment Account and the Guaranteed Interest Account in
the same proportion as the amount of the withdrawal taken from such account
bears to the total amount of the withdrawal. If the amount in the account is
insufficient to pay the portion of the surrender charges allocated to that
account, then the portion of the withdrawal allocated to that account will be
reduced so that the withdrawal plus the portion of the surrender charges
allocated to that account equal the value of that account. Units equal to the
amount of the partial withdrawal taken, and surrender charges deducted, from
each Investment Account will be redeemed based on the value of such units
determined as of the end of the Business Day on which Manufacturers Life of
America receives a written request for withdrawal at its Service Office.
Charges on Decreases in Face Amount. As with partial withdrawals, a portion of
a Policy's surrender charges will be deducted upon a decrease, or a
cancellation of an increase (other than by means of a Free Look), in face
amount requested by the policyowner. Since surrender charges are determined
separately for the initial face amount and each face amount increase, and since
a decrease in face amount will have a different impact on each level of
insurance coverage, the portion of the surrender charges to be deducted with
respect to each level of insurance coverage will be determined separately.
Such portion will be the same as the ratio of the amount of the reduction in
such coverage to the amount of such coverage prior to the reduction. As noted
under "Insurance Benefit- Face Amount Changes," decreases are applied to the
most recent increase first and thereafter to the next most recent increases
successively. The charges will be deducted from the Policy Value, and the
amount so deducted will be allocated among the Investment Accounts and the
Guaranteed Interest Account in the same proportion as the Policy Value in each
bears to the Net Policy Value. Whenever a portion of the surrender charges are
deducted as a result of a decrease in face amount, the Policy's remaining
surrender charges will be reduced by the amount of the charges taken.
Charges Remaining After Face Amount Decreases or Partial Withdrawals. Each
time a portion of the deferred underwriting charge or a portion of the deferred
sales charge for a face amount decrease or for a partial withdrawal is
deducted, the remaining deferred underwriting charge and deferred sales charge
will be reduced as described below.
The remaining deferred underwriting and sales charge will be calculated using
Table 1 above. The actual remaining charges will be the result of (a)
multiplied by (b), where:
(a) is the grading percentage applicable as per Table 1, and
(b) is the remaining deferred sales charge prior to the last face amount
decrease or partial withdrawal less the deferred sales charge deducted
for that face amount decrease or partial withdrawal.
- - 44 -
<PAGE> 43
Monthly Deductions
Each month a deduction consisting of an administration charge, a charge for the
cost of insurance, a charge for mortality and expense risks, and charge(s) for
any supplementary benefit(s) (see Other Provisions - "Supplementary Benefits")
is deducted from Policy Value. The monthly deduction will be allocated among
the Investment Accounts and (other than the mortality and expense risks charge)
the Guaranteed Interest Account in the same proportion as the Policy Value in
each bears to the Net Policy Value. Monthly Deductions due prior to the
Effective Date will be taken as of the Effective Date instead of the dates they
were due. Monthly deductions are due until the youngest of the lives insured
attains or would have Attained Age 100.
Administration Charge. The monthly administration charge is $.04 per $1,000 of
face amount until the later of the youngest living life insured's Attained Age
55 or the end of the fifteenth Policy Year. Thereafter, the charge is 0. This
charge has a minimum of $30 per month and a maximum of $60 per month.
The charge is designed to cover certain administrative expenses associated with
the Policy, including maintaining Policy records, collecting premiums and
processing death claims, surrender and withdrawal requests and various changes
permitted under a Policy. Manufacturers Life of America does not expect to
recover from the monthly administration charge any amount in excess of its
accumulated administrative expenses relating to the Policies and the Separate
Account.
Cost of Insurance Charge. The monthly charge for the cost of insurance is
determined by multiplying the applicable cost of insurance rate times the net
amount at risk at the beginning of each Policy Month. The cost of insurance
rate is based on each life insured's Issue Age, the duration of the coverage,
sex (unless unisex rates are required by law or are requested), risk class,
and, in the case of certain Policies issued in group or sponsored arrangements
providing for reduction in cost of insurance charges (see "Special Provisions
for Group or Sponsored Arrangements"), the face amount of the Policy. The rate
is determined separately for the initial face amount and for each increase in
face amount. Cost of insurance rates will generally increase with the Attained
Age of the lives insured. Any Additional Ratings as indicated in the Policy
will be added to the cost of insurance rate.
The cost of insurance rates used by Manufacturers Life of America reflect its
expectations as to future mortality experience as based on current experience.
The rates may be changed from time to time on a basis which does not unfairly
discriminate within the class of life insured. In no event will the cost of
insurance rate exceed the guaranteed rate set forth in the Policy except to
the extent that an extra rate is imposed because of an Additional Rating
applicable to any life insured or if simplified underwriting is granted in a
group or sponsored arrangement (see "Special Provisions for Group or Sponsored
Arrangements"). The guaranteed rates are based on the 1980 Commissioners
Standard Ordinary Smoker/Nonsmoker Mortality Tables, except in the case of
Group or Sponsored Arrangements, where the guaranteed rates are based on the
1980 Commissioners Extended Term Mortality Table.
If requested by the applicant, Manufacturers Life of America may offer the
Policy with provisions based on actuarial tables that do not differentiate on
the basis of sex to such prospective purchase(s) in states where the unisex
version of the Policy has been approved.
Currently, the State of Montana prohibits the issuance of policies with
assumptions that distinguish between men and women in determining premiums and
Policy benefits for Policies issued on the life of any of its residents.
- - 45 -
<PAGE> 44
Consequently, Policies issued to Montana residents will have premiums and
benefits which do not differentiate on the basis of sex.
The net amount at risk to which the cost of insurance rate is applied is the
difference between the death benefit, divided by 1.0032737 (a factor which
reduces the net amount at risk for cost of insurance charge purposes by taking
into account assumed monthly earnings at an annual rate of 4%), and the Policy
Value. Because different cost of insurance rates may apply to different levels
of insurance coverage, the net amount at risk will be calculated separately for
each level of insurance coverage. When the Option 1 death benefit is in
effect, for purposes of determining the net amount at risk applicable to each
level of insurance coverage, the Policy Value is attributed first to the
initial face amount and then, if the Policy Value is greater than the initial
face amount, to each increase in face amount in the order made.
Because the calculation of the net amount at risk is different under the death
benefit options when more than one level of insurance coverage is in effect, a
change in the death benefit option may result in a different net amount at risk
for each level of insurance coverage than would have occurred had the death
benefit option not been changed. Since the cost of insurance is calculated
separately for each level of insurance coverage, any change in the net amount
at risk for a level of insurance coverage resulting from a change in the death
benefit option may affect the amount of the charge for the cost of insurance.
Partial withdrawals and decreases in face amount will also affect the manner in
which the net amount at risk for each level of insurance coverage is
calculated.
Mortality and Expense Risks Charge. Manufacturers Life of America deducts a
monthly charge from the Policy Value for the mortality and expense risks it
assumes under the Policies. This charge is made at the beginning of each
Policy Month at a rate of .067% through the later of the tenth Policy Year and
the youngest life insured's Attained Age 55. Currently, it is expected that
this charge will reduce to .0125 per month thereafter. This drop in the
Mortality and Expense Risks Charge is not guaranteed. It is assessed against
the value of the policyowner's Investment Accounts by redemption of units in
the same proportion as the value of each Investment Account bears to the total
value of the Investment Accounts. The mortality risk assumed is that the lives
insured may live for a shorter period of time than the Company estimated when
it set the maximum mortality rates in the Policy. The expense risk assumed is
that expenses incurred in issuing and administering the Policies will be
greater than the Company estimated when it set the guaranteed administration
charge in the Policy.
Manufacturers Life of America will realize a gain from this charge to the
extent it is not needed to provide benefits and pay expenses under the
Policies.
Other Charges
Currently, Manufacturers Life of America makes no charge against the Separate
Account for federal, state or local taxes that may be attributable to the
Separate Account or to the operations of the Company with respect to the
Policies. However, if Manufacturers Life of America incurs any such taxes, it
may make a charge therefor, in addition to the deductions for federal, state or
local taxes currently being made from premium payments.
Charges will be imposed on certain Transfers of Policy Values, including a $35
charge for a second Transfer in a Policy Month, a $15 charge for each Asset
Allocation Balancer Transfer and a $5 charge for each Dollar Cost Averaging
transfer when Policy Value does not exceed $15,000. See Policy Values -
"Transfers of Policy Value."
- - 46 -
<PAGE> 45
The Separate Account purchases shares of the Portfolios at net asset
value. The net asset value of those shares reflects:
(i) the deduction of investment management and expense fees, with
amounts as detailed in the caption "Management of the Funds" in the
Prospectus for Manulife Series Fund that accompanies this Prospectus,
(ii) the deduction of investment management and expense fees, with
amounts as detailed in the caption "Management of the Trust" in the
Prospectus for NASL Series Trust that accompanies this Prospectus,
(iii) other expenses already deducted from the assets of the Manulife
Series Funds, and
(iv) other expenses already deducted from the assets of the NASL Series
Trust.
Special Provisions for Group or Sponsored Arrangements
Where permitted by state insurance laws, Policies may be purchased under group
or sponsored arrangements, as well as on an individual basis. A "group
arrangement" includes a program under which a trustee, employer or similar
entity purchases Policies covering a group of individuals on a group basis. In
California all participants of group arrangements will be individually
underwritten. A "sponsored arrangement" includes a program under which an
employer permits group solicitation of its employees or an association permits
group solicitation of its members for the purchase of Policies on an individual
basis.
The charges and deductions described above may be reduced for Policies issued
in connection with group or sponsored arrangements. Such arrangements may
include reduction or elimination of withdrawal charges and deductions for
employees, officers, directors, agents, immediate family members of the
foregoing, and employees of agents of Manufacturers Life and its subsidiaries.
Manufacturers Life of America will reduce or eliminate the above charges and
deductions in accordance with its rules in effect as of the date an application
for a Policy is approved. To qualify for such a reduction, a group or
sponsored arrangement must satisfy certain criteria as to, for example, size of
the group, expected number of participants and anticipated premium payments
from the group. Generally, the sales contacts and effort, administrative costs
and mortality cost per Policy vary based on such factors as the size of the
group or sponsored arrangement, the purposes for which Policies are purchased
and certain characteristics of its members. The amount of reduction and the
criteria for qualification will reflect the reduced sales effort and
administrative costs resulting from, and the different mortality experience
expected as a result of, sales to qualifying groups and sponsored arrangements.
Manufacturers Life of America may modify from time to time, on a uniform basis,
both the amounts of reductions and the criteria for qualification. Reductions
in these charges will not be unfairly discriminatory against any person,
including the affected policyowners and all other policyowners funded by the
Separate Account.
In addition, groups and persons purchasing under a sponsored arrangement may
request increases in face amount within the first Policy Year, and decreases in
face amount within one year of an increase in face amount. See Charges and
Deductions - "Cost of Insurance Charge."
- - 47 -
<PAGE> 46
In addition, groups and persons purchasing under a sponsored arrangement may
apply for simplified underwriting. If simplified underwriting is granted, the
cost of insurance charge may increase as a result of higher anticipated
mortality experience.
Special Provisions for Exchanges
Manufacturers Life of America will permit owners of certain life insurance
policies issued either by the Company or Manufacturers Life to exchange their
policies for the Policies described in this prospectus. Owners of certain
policies may be entitled to convert their policies to the Policies described in
this prospectus. If they elect to convert, they may receive a credit upon
conversion in an amount up to their first-year premium. Charges under the
policies being exchanged or the Policies issued in exchange therefor may be
reduced or eliminated. Policy loans made under policies being exchanged may,
in some circumstances, be carried over to the new Policies without repayment at
the time of exchange. Policyowners considering an exchange should consult
their tax advisers as to the tax consequences of an exchange.
The General Account
By virtue of exclusionary provisions, interests in the general account of
Manufacturers Life of America have not been registered under the Securities Act
of 1933 and the general account has not been registered as an investment
company under the Investment Company Act of 1940. Accordingly, neither the
general account nor any interests therein are subject to the provisions of
these acts, and as a result the staff of the S.E.C. has not reviewed the
disclosures in this prospectus relating to the general account.
Disclosures regarding the general account may, however, be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in a prospectus.
The general account of Manufacturers Life of America consists of all assets
owned by the Company other than those in its separate accounts. Subject to
applicable law, Manufacturers Life of America has sole discretion over the
investment of the assets of the general account.
A policyowner may elect to allocate net premiums to the Guaranteed Interest
Account or to transfer all or a portion of the Policy Value to the Guaranteed
Interest Account from the Investment Accounts. Transfers from the Guaranteed
Interest Account to the Investment Accounts are subject to restrictions. See
Policy Values - "Transfers of Policy Value."
Manufacturers Life of America will hold the reserves required for any portion
of the Policy Value allocated to the Guaranteed Interest Account in its general
account.
However, an allocation of Policy Value to the Guaranteed Interest Account does
not entitle the policyowner to share in the investment experience of the
general account. Instead, Manufacturers Life of America guarantees that the
Policy Value in the Guaranteed Interest Account will accrue interest daily at
an effective annual rate of at least 4%, without regard to the actual
investment experience of the general account. The Company may, at its sole
discretion, credit a higher rate of interest, although it is not obligated to
do so. The policyowner assumes the risk that interest credited may not exceed
the guaranteed minimum rate of 4% per year.
Other General Policy Provisions
- - 48 -
<PAGE> 47
Policy Default
Unless the Death Benefit Guarantee or the No Lapse Guarantee is in effect, a
Policy will go into default if the Policy's Net Cash Surrender Value at the
beginning of any Policy Month would go below zero after deducting the monthly
deductions then due. Manufacturers Life of America will notify the policyowner
of the default and will allow a 61-day grace period in which the policyowner
may make a premium payment sufficient to bring the Policy out of
default. The required payment will be equal to the amount necessary to bring
the Net Cash Surrender Value to zero, if it was less than zero as of the date
of default, plus the monthly deductions due as of the date of default and as of
the beginning of each of the two Policy Months thereafter, based on the Policy
Value as of the date of default. If the required payment is not received by
the end of the grace period, the Policy will terminate and the Net Cash
Surrender Value (subject to any applicable limitation on surrender charges; see
Charges and Deductions - "Surrender Charges") as of the date of default less
the monthly deductions then due will be paid to the policyowner. If the last
surviving life insured should die during the grace period following a Policy's
going into default, the Policy Value used in the calculation of the death
benefit will be the Policy Value as of the date of default and the insurance
benefit payable will be reduced by any outstanding monthly deductions due as of
the time of death.
Policy Reinstatement
A policyowner can reinstate a Policy which has terminated after going into
default at any time within 21 days following the date of termination without
furnishing evidence of insurability, subject to the following conditions:
(a) All lives insured's risk classes are standard or preferred, and
(b) All lives insured's Attained Ages are less than 46.
A policyowner can reinstate a Policy which has terminated after going into
default at any time within the five-year period following the date of
termination subject to the following conditions:
(a) The Policy must not have been surrendered for its Net Cash Surrender
Value at the request of the policyowner;
(b) Evidence of all lives insured's insurability satisfactory to
Manufacturers Life of America is furnished to it;
(c) A premium equal to the payment required during the 61-day grace
period following default to keep the Policy in force is paid to
Manufacturers Life of America; and
(d) An amount equal to any amounts paid by Manufacturers Life of America
in connection with the termination of the Policy is repaid to
Manufacturers Life of America.
If the reinstatement is approved, the date of reinstatement will be the later
of the date of the policyowner's written request or the date the required
payment is received at the Manufacturers Life of America Service Office.
Miscellaneous Policy Provisions
- - 49 -
<PAGE> 48
Beneficiary. One or more beneficiaries of the Policy may be appointed by the
policyowner by naming them in the application. Beneficiaries may be appointed
in three classes - primary, secondary and final.
Thereafter the beneficiary may be changed by the policyowner during the last
surviving life insured's lifetime by giving written notice to Manufacturers
Life of America in a form satisfactory to it unless an irrevocable designation
has been elected. If the last surviving life insured dies and there is no
surviving beneficiary, the policyowner, or the policyowner's estate if one of
the policyowners is the last surviving life insured, will be the beneficiary.
If a beneficiary dies before the seventh day after the death of the last
surviving life insured, the Company will pay the insurance benefit as if the
beneficiary had died before the last surviving life insured.
Incontestability. Manufacturers Life of America will not contest the validity
of a Policy after it has been in force during the lifetime of the last
surviving life insured for two years from the Issue Date. It will not contest
the validity of an increase in face amount or the addition of a supplementary
benefit after such increase or addition has been in force during the lifetime
of the last surviving life insured for two years. If a Policy has been
reinstated and been in force for less than two years from the reinstatement
date, the Company can contest any misrepresentation of a fact material to the
reinstatement.
Misstatement of Age or Sex. If any life insured's stated Age or sex or both in
the Policy are incorrect, Manufacturers Life of America will change the face
amount of insurance so that the death benefit will be that which the most
recent monthly charge for the cost of insurance would have bought for the
correct Age and sex (unless unisex rates are required by law, or are
requested).
Suicide Exclusion. Except for the last to die, if any of the lives insured die
by suicide within two years after the Issue Date, whether each life insured is
sane or insane, the Company will re-issue this Policy. The new policy(ies) on
the survivor(s) will be any single life permanent policy that is available at
time of re-issue. The suicide provision for any new policy(ies) will be
effective as of the original Issue Date.
If the last surviving life insured, whether sane or insane, dies by suicide
within two years from the Policy Date, Manufacturers Life of America will pay
only the premiums paid less any partial withdrawals of the Net Cash Surrender
Value and any amount in the Loan Account. If the last surviving life insured
should die by suicide within two years after a face amount increase, the death
benefit for the increase will be limited to the monthly deductions for the
increase.
Assignment. Manufacturers Life of America will not be bound by an assignment
until it receives a copy of it at its Service Office. Manufacturers Life of
America assumes no responsibility for the validity or effects of any
assignment.
Other Provisions
Supplementary Benefits
Subject to certain requirements, one or more supplementary benefits may be
added to a Policy, including the Estate Preservation Rider, which rider
provides additional term insurance at no extra charge during the first four
policy years to protect against application of the "three year contemplation of
death rule," and an option to split the Policy into two individual life
policies upon divorce or certain federal tax law changes without evidence of
insurability ("Policy Split Option"). More detailed information concerning
supplementary benefits may
- - 50 -
<PAGE> 49
be obtained from an authorized agent of the Company.
The cost of any supplementary benefits will be deducted as part of the monthly
deduction. See Charges and Deductions - "Monthly Deductions."
Payment of Proceeds
As long as the Policy is in force, Manufacturers Life of America will
ordinarily pay any Policy loans, partial withdrawals, Net Cash Surrender Value
or any insurance benefit within seven days after receipt at the Manufacturers
Life of America Service Office of all the documents required for such a
payment.
The Company may delay the payment of any Policy loans, partial withdrawals, Net
Cash Surrender Value or the portion of any insurance benefit that depends on
the Guaranteed Interest Account value for up to six months; otherwise the
Company may delay payment for any period during which (i) the New York Stock
Exchange is closed for trading (except for normal holiday closings) or trading
on the Exchange is otherwise restricted; or (ii) an emergency exists as defined
by the S.E.C. or the S.E.C. requires that trading be restricted; or (iii) the
S.E.C. permits a delay for the protection of policyowners. Also, Transfers
may be denied under the circumstances stated in clauses (i), (ii) and (iii)
above and under the circumstances previously set forth. See Policy Values -
"Transfers of Policy Value."
Reports to Policyowners
Within 30 days after each Policy Anniversary, Manufacturers Life of America
will send the policyowner a statement showing, among other things, the amount
of the death benefit, the Policy Value and its allocation among the Investment
Accounts, the Guaranteed Interest Account and the Loan Account, the value of
the units in each Investment Account to which the Policy Value is allocated,
any Loan Account balance and any interest charged since the last statement, the
premiums paid and Policy transactions made during the period since the last
statement and any other information required by law.
Within seven days after any transaction involving purchase, sale, or transfer
of units of Investment Accounts, a confirmation statement will be sent.
Each policyowner will also be sent an annual and a semi-annual report for the
Series Fund which will include a list of the securities held in each Fund as
required by the 1940 Act.
Miscellaneous Matters
Fund Share Substitution
Although Manufacturers Life of America believes it to be highly unlikely, it is
possible that in the judgment of its management, one or more of the Funds may
become unsuitable for investment by the Separate Account because of a change in
investment policy or a change in the applicable laws or regulations, because
the shares are no longer available for investment, or for some other reason.
In that event, Manufacturers Life of America may seek to substitute the shares
of another Fund or of an entirely different mutual fund. Before this can be
done, the approval of the S.E.C. and one or more state insurance departments
may be required.
Manufacturers Life of America also reserves the right to create new Separate
Accounts, combine other separate accounts with the Separate Account (either
from Manulife Series Fund, Inc. or another investment company), to establish
additional sub-accounts within the Separate Account, to operate the Separate
- - 51 -
<PAGE> 50
Account as a management investment company or other form permitted by law, to
transfer assets from this Separate Account to another separate account and from
another separate account to this Separate Account, to de-register the Separate
Account under the 1940 Act, and to eliminate Sub-Accounts. Any such change
would be made only if permissible under applicable federal and state laws.
The investment objectives of the Separate Account will not be changed
materially without first filing the change with the Insurance Commissioner of
the State of Michigan. Policyowners will be advised of any such change at the
time it is made.
Federal Income Tax Considerations
The following summary provides a general description of the federal income tax
considerations associated with the Policy and does not purport to be complete
or to cover all situations. This discussion is not intended as tax advice.
Counsel or other competent tax advisers should be consulted for more complete
information. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service (the "Service"). No representation is made as to the
likelihood of continuation of the present federal income tax laws or of the
current interpretations by the Service. WE DO NOT MAKE ANY GUARANTEE REGARDING
THE TAX STATUS OF ANY POLICY OR ANY TRANSACTION REGARDING THE POLICIES.
The Policies may be used in various arrangements, including non-qualified
deferred compensation or salary continuance plans, executive bonus plans,
retiree medical benefit plans, charitable remainder trusts, and others,
including split dollar insurance plans, with respect to which Manufacturers
Life took the lead in establishing the method to be used to calculate the
economic benefit arising from the death benefit component of survivorship split
dollar arrangements with the "Greenberg to Greenberg" letter in 1983. The tax
consequences of all such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if the use of such
Policies under such arrangement, the value of which depends in part on its tax
consequences, is contemplated, a qualified tax adviser should be consulted for
advice on the tax attributes of the particular arrangement.
Tax Status of the Policy
Section 7702 of the Internal Revenue Code of 1986, as amended (the "Code"),
sets forth a definition of a life insurance contract for federal tax purposes.
The Secretary of Treasury (the "Treasury") is authorized to prescribe
regulations to implement Section 7702. However, while proposed regulations and
other interim guidance have been issued, final regulations have not been
adopted and guidance as to how Section 7702 is to be applied is limited. If a
Policy were determined not to be a life insurance contract for purposes of
Section 7702, such Policy would not provide the tax advantages normally
provided by a life insurance policy.
With respect to a Policy issued on the basis of a standard rate class, the
Company has a reasonable belief (largely in reliance on IRS Notice 88-128 and
the proposed mortality charge regulations under Section 7702, issued on July 5,
1991) that such a Policy should meet the Section 7702 definition of a life
insurance contract.
With respect to a Policy that is issued on a substandard basis (i.e., a premium
class involving higher-than-standard mortality risk), there is less guidance,
in
- - 52 -
<PAGE> 51
particular as to how mortality and other expense requirements of Section
7702 are to be applied in determining whether such a Policy meets the Section
7702 definition of a life insurance contract. Thus, it is not clear whether or
not such a Policy would satisfy Section 7702, particularly if the policyowner
pays the full amount of premiums permitted under the Policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
the Company may take whatever steps are appropriate and reasonable to attempt
to cause such a Policy to comply with Section 7702. For these reasons, the
Company reserves the right to restrict Policy transactions as necessary to
attempt to qualify it as a life insurance contract under Section 7702.
Section 817(h) of the Code requires that the investments of the Separate
Account be "adequately diversified" in accordance with Treasury regulations in
order for the Policy to qualify as a life insurance contract under Section 7702
of the Code (discussed above). The Separate Account, through the Series Fund,
intends to comply with the diversification requirements prescribed in Treas.
Reg. Sec. 1.817-5, which affect how the Series Fund's assets are to be
invested. The Company believes that the Separate Account will thus meet the
diversification requirement, and the Company will monitor continued compliance
with the requirement.
In certain circumstances, owners of variable life insurance Policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their Policies. In those circumstances,
income and gains from the separate account assets would be includible in the
variable policyowner's gross income. The IRS has stated in published rulings
that a variable policyowner will be considered the owner of separate account
assets if the policyowner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The
Treasury Department has also announced, in connection with the issuance of
regulations concerning diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
policyowner), rather than the insurance company, to be treated as the owner of
the assets in the account." This announcement also stated that guidance would
be issued by way of regulations or rulings on the "extent to which
policyowners may direct their investments to particular subaccounts without
being treated as owners of the underlying assets."
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyowners were not owners of separate account assets. For example, the
policyowner has additional flexibility in allocating premium payments and
Policy Values. These differences could result in a policyowner being treated
as the owner of a pro rata portion of the assets of the Separate Account. In
addition, the Company does not know what standards will be set forth, if any,
in the regulations or rulings which the Treasury Department has stated it
expects to issue. The Company therefore reserves the right to modify the
Policy as necessary to attempt to prevent a policyowner from being considered
the policyowner of a pro rata share of the assets of the Separate Account.
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal income tax purposes.
- - 53 -
<PAGE> 52
Tax Treatment of Policy Benefits
In General. The Company believes that the proceeds and cash value increases of
a Policy should be treated in a manner consistent with a fixed-benefit life
insurance policy for federal income tax purposes. Thus, the death benefit
under the Policy should be excludable from the gross income of the beneficiary
under Section 101(a)(1) of the Code.
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's death benefit option, a Policy loan, a partial withdrawal, a
surrender, a change in ownership, or an assignment of the Policy may have
federal income tax consequences. In addition, federal, state and local
transfer, and other tax consequences of ownership or receipt of Policy proceeds
depend on the circumstances of each policyowner or beneficiary. Generally, the
policyowner will not be deemed to be in constructive receipt of the Policy
Value, including increments thereof, until there is a distribution. The tax
consequences of distributions from, and loans taken from or secured by, a
Policy depend on whether the Policy is classified as a "Modified Endowment
Contract." Upon a complete surrender or lapse of a Policy or when benefits are
paid at a Policy's maturity date, if the amount received plus the amount of
indebtedness exceeds the total investment in the Policy, the excess will
generally be treated as ordinary income subject to tax, regardless of whether
the Policy is or is not a Modified Endowment Contract.
Modified Endowment Contracts. Section 7702A establishes a class of life
insurance contracts designated as "Modified Endowment Contracts," which applies
to Policies entered into or materially changed after June 20, 1988.
Because of the Policy's flexibility, classification as a Modified Endowment
Contract will depend on the individual circumstances of each Policy. In
general, a Policy will be a Modified Endowment Contract if the accumulated
premiums paid at any time during the first seven Policy Years exceed the sum of
the net level premiums which would have been paid on or before such time if the
Policy provided for paid-up future benefits after the payment of seven level
annual premiums (the "seven-pay test"). The determination of whether a Policy
will be a Modified Endowment Contract after a material change generally depends
upon the relationship of the death benefit and Policy Value at the time of such
change and the additional premiums paid in the seven years following the
material change. If a premium is credited or transaction conducted which would
cause the Policy to become a Modified Endowment Contract, the Company will
notify the policyowner that unless a refund of the excess premium is requested
by the policyowner within 45 days of the Policy Anniversary next occurring,
after the receipt of such premium the Policy will become a Modified Endowment
Contract.
Further, if a transaction occurs which reduces the face amount of the Policy,
the Policy will be retested, retroactive to the date of purchase, to determine
compliance with the seven-pay test based on the lower face amount. Failure to
comply would result in classification as a Modified Endowment Contract
regardless of any efforts by the Company to provide a payment schedule that
will not violate the seven-pay test.
The rules relating to whether a Policy will be treated as a Modified Endowment
Contract are extremely complex and cannot be adequately described in the
limited confines of this summary. Therefore, a current or prospective
policyowner should consult with a competent adviser to determine whether a
transaction will cause the Policy to be treated as a Modified Endowment
Contract.
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<PAGE> 53
Distributions from Policies Classified as Modified Endowment Contracts.
Policies classified as Modified Endowment Contracts will be subject to the
following tax rules: First, all partial withdrawals from such a Policy are
treated as ordinary income subject to tax up to the amount equal to the excess
(if any) of the Policy Value immediately before the distribution over the
investment in the Policy (described below) at such time. Second, loans taken
from or secured by such a Policy are treated as partial withdrawals from the
Policy and taxed accordingly. Past-due loan interest that is added to the loan
amount is treated as a loan. Third, a 10% additional income tax is imposed on
the portion of any distribution (including distributions upon surrender) from,
or loan taken from or secured by, such a Policy that is included in income
except where the distribution or loan is made on or after the policyowner
attains age 59-1/2, is attributable to the policyowner becoming disabled, or is
part of a series of substantially equal periodic payments for the life (or life
expectancy) of the policyowner or the joint lives (or joint life expectancies)
of the policyowner and the policyowner's beneficiary.
Distributions from Policies Not Classified as Modified Endowment Contracts. A
distribution from a Policy that is not a Modified Endowment Contract is
generally treated as a tax-free recovery by the policyowner of the investment
in the Policy (described below) to the extent of such investment in the Policy,
and as a distribution of taxable income only to the extent the distribution
exceeds the investment in the Policy. An exception to this general rule occurs
in the case of a decrease in the Policy's death benefit or any other change
that reduces benefits under the Policy in the first 15 years after the Policy
is issued and that results in a cash distribution to the policyowner in order
for the Policy to continue complying with the Section 7702 definitional limits.
Such a cash distribution will be taxed in whole or in part as ordinary income
(to the extent of any gain in the Policy) under rules prescribed in Section
7702.
Loans from, or secured by, a Policy that is not a Modified Endowment Contract
are not treated as distributions. Instead, such loans are treated as
indebtedness of the policyowner.
Finally, neither distributions (including distributions upon surrender) nor
loans from, or secured by, a Policy that is not a Modified Endowment Contract
are subject to the 10% additional tax.
Policy Loan Interest. Generally, personal interest paid on any loan under a
Policy which is owned by an individual is not deductible. In addition,
interest on any loan under a Policy owned by a taxpayer and covering the life
of any individual who is an officer or employee of or is financially interested
in the business carried on by that taxpayer will not be tax deductible to the
extent the aggregate amount of such loans with respect to contracts covering
such individual exceeds $50,000. The deduction of interest on Policy loans may
also be subject to other restrictions under Section 264 of the Code.
Investment in the Policy. Investment in the Policy means (i) the aggregate
amount of any premiums or other consideration paid for a Policy, minus (ii) the
aggregate amount received under the Policy which has been excluded from
gross income of the policyowner (except that the amount of any loan from, or
secured by, a Policy that is a Modified Endowment Contract, to the extent such
amount has been excluded from gross income, will be disregarded), plus (iii)
the amount of any loan from, or secured by, a Policy that is a Modified
Endowment Contract to the extent that such amount has been included in the
gross income of the policyowner.
- - 55 -
<PAGE> 54
Multiple Policies. All Modified Endowment Contracts that are issued by the
Company (or its affiliates) to the same policyowner during any calendar year
are treated as one Modified Endowment Contract for purposes of determining the
amount includible in the gross income under Section 72(e) of the Code.
Taxation of Policy Split Option. This option permits a Policy to be split into
two other individual Policies upon the occurrence of a divorce of the lives
insured or certain changes in federal estate tax law. A policy split could
have adverse tax consequences. For example, it is not clear whether a policy
split will be treated as a nontaxable exchange under Sections 1031 through 1043
of the Code. If a policy split is not treated as a nontaxable exchange, a
split could result in the recognition of taxable income in an amount up to any
gain in the Policy at the time of the split. Before exercising rights provided
by the policy split option, please consult with a competent tax adviser
regarding the possible consequences of a policy split.
The Company's Taxes
As a result of the Omnibus Budget Reconciliation Act of 1990, insurance
companies are generally required to capitalize and amortize certain Policy
acquisition expenses over a 10-year period rather than currently deducting such
expenses. This treatment applies to the deferred acquisition expenses of a
Policy and results in a significantly higher corporate income tax liability for
the Company. The Company makes a charge to premiums to compensate it for the
anticipated higher corporate income taxes.
At the present time, the Company makes no charge to the Separate Account for
any federal, state or local taxes that the Company incurs that may be
attributable to such Account or to the Policies. The Company, however,
reserves the right in the future to make a charge for any such tax or other
economic burden resulting from the application of the tax laws that it
determines to be properly attributable to the Separate Account or to the
Policies.
Distribution of the Policy
ManEquity, Inc., an indirect wholly-owned subsidiary of Manufacturers Life,
will act as the principal underwriter of, and continuously offer, the Policies
pursuant to a Distribution Agreement with Manufacturers Life of America.
ManEquity, Inc. is registered as a broker-dealer under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities Dealers,
Inc. The Policies will be sold by registered representatives of either
ManEquity, Inc. or other broker-dealers having distribution agreements with
ManEquity, Inc. who are also authorized by state insurance departments to do
so. In the first Policy Year after issue (or after a face amount increase), a
registered representative will receive first-year commissions not to exceed 55%
of premiums paid up to the Target Premium and 2% of premiums in excess thereof.
In years 2 through 5 inclusive (following issue or face amount increase), a
commission of 2% of premiums paid in that period will be paid. Beginning with
the first Policy year end's Anniversary, 0.15% of the previous unloaned Policy
Value will be paid. In addition, registered representatives will be eligible
for bonuses of up to 90% of first-year commissions. Registered representatives
who meet certain standards with regard to the sale of the Policies and certain
other policies issued by Manufacturers Life of America or Manufacturers Life
will be eligible for additional compensation.
- - 56 -
<PAGE> 55
Responsibilities Assumed by Manufacturers Life
Manufacturers Life has entered into an agreement with ManEquity, Inc. pursuant
to which Manufacturers Life, on behalf of ManEquity, Inc., will pay the sales
commissions in respect of the Policies and certain other policies issued by
Manufacturers Life of America, prepare and maintain all books and records
required to be prepared and maintained by ManEquity, Inc. with respect to the
Policies and such other policies, and send all confirmations required to be
sent by ManEquity, Inc. with respect to the Policies and such other policies.
ManEquity, Inc. will promptly reimburse Manufacturers Life for all sales
commissions paid by Manufacturers Life and will pay Manufacturers Life for its
other services under the agreement in such amounts and at such times as agreed
to by the parties.
Manufacturers Life has also entered into a Service Agreement with Manufacturers
Life of America pursuant to which Manufacturers Life will provide to
Manufacturers Life of America all issue, administrative, general services and
recordkeeping functions on behalf of Manufacturers Life of America with respect
to all of its insurance policies including the Policies.
Finally, Manufacturers Life has entered into a Stop Loss Reinsurance Agreement
with Manufacturers Life of America under which Manufacturers Life reinsures all
aggregate claims in excess of 110% of the expected claims for all flexible
premium variable life insurance policies issued by Manufacturers Life of
America. Under the agreement Manufacturers Life of America will automatically
reinsure the risk for any lives insured up to a maximum of $15,000,000
($10,000,000 if either insured is over age 70), except in the case of aviation
risks where the maximum will be $5,000,000. However, Manufacturers Life of
America may also consider reinsuring any non-aviation risks in excess of
$15,000,000 and any aviation risk in excess of $5,000,000.
Voting Rights
As stated above, all of the assets held in the sub-accounts of the Separate
Account will be invested in shares of a particular Portfolio of Manulife Series
Fund or NASL Series Trust. Manufacturers Life of America is the legal owner of
those shares and as such has the right to vote upon certain matters that are
required by the 1940 Act to be approved or ratified by the shareholders of a
mutual fund and to vote upon any other matters that may be voted upon at a
shareholders' meeting. However, Manufacturers Life of America will vote shares
held in the sub-accounts in accordance with instructions received from
policyowners having an interest in such sub-accounts.
Shares held in each sub-account for which no timely instructions from
policyowners are received, including shares not attributable to Policies, will
be voted by Manufacturers Life of America in the same proportion as those
shares in that sub-account for which instructions are received. Should the
applicable federal securities laws or regulations change so as to permit
Manufacturers Life of America to vote shares held in the Separate Account in
its own right, it may elect to do so.
The number of shares in each sub-account for which instructions may be given by
a policyowner is determined by dividing the portion of the Policy Value derived
from participation in that sub-account, if any, by the value of one share of
the corresponding Manulife Fund or NASL Trust. The number will be determined
as of a date chosen by Manufacturers Life of America, but not more than 90 days
before
- - 57 -
<PAGE> 56
the shareholders' meeting. Fractional votes are counted. Voting
instructions will be solicited in writing at least 14 days prior to the meeting
date.
Manufacturers Life of America may, if required by state insurance officials,
disregard voting instructions if such instructions would require shares to be
voted so as to cause a change in the sub-classification or investment policies
of one or more of the Portfolios, or to approve or disapprove an investment
management contract. In addition, Manufacturers Life of America itself may
disregard voting instructions that would require changes in the investment
policies or investment adviser, provided that Manufacturers Life of America
reasonably disapproves such changes in accordance with applicable federal
regulations. If Manufacturers Life of America does disregard voting
instructions, it will advise policyowners of that action and its reasons for
such action in the next communication to policyowners.
Executive Officers and Directors
The directors and executive officers of Manufacturers Life of America, together
with their principal occupations during the past five years, are as follows:
- - 58 -
<PAGE> 57
<TABLE>
<CAPTION>
Position With
Manufacturers Life
Name of America Principal Occupation
<S> <C> <C>
William Atherton Director Vice President U.S. Annuities
(57) -- 1996-present, The Manufacturers
Life Insurance Company;
President -- 1957-1996,
North American Life Assurance
Company
Sandra M. Cotter Director Attorney 1989-present, Dykema
(34) Gossett
James D. Gallagher Director, Secretary, Vice President, Legal Services
(42) and General Counsel --January 1996-present, The
Manufacturers Life Insurance
Company; Vice President,
Secretary and General Counsel--
1994-present, North American
Security Life; Vice President
and Associate General Counsel--
1991-1994, The Prudential
Insurance Company of America
Bruce Gordon Director Vice President, U.S. Operations
(53) - Pensions -- 1990-present, The
Manufacturers Life Insurance
Company
Donald A. Guloien Director and President Senior Vice President, Business
(39) Development 1994-present, The
Manufacturers Life Insurance
Company; Vice President, U.S.
Individual Business -- 1990-1994,
The Manufacturers Life Insurance
Company
Theodore Kilkuskie, Jr. Director Vice President, U.S. Individual
(41) Insurance -- June 1995-present,
The Manufacturers Life Insurance
Company; Executive Vice President,
Mutual Funds -- January 1995-May 1995,
State Street Research; Vice President,
Mutual Funds -- 1987-1994, Metropolitan
Life Insurance Company
Joseph J. Pietroski Director Senior Vice President, General
(58) Counsel and Corporate Secretary --
1988-present, The Manufacturers
Life Insurance Company
</TABLE>
- - 59 -
<PAGE> 58
<TABLE>
<CAPTION>
Position With
Manufacturers Life
Name of America Principal Occupation
<S> <C> <C>
John D. Richardson Chairman and Director Senior Vice President and General
(58) Manager, U.S. Operations
1995-present, The Manufacturers
Life Insurance Company; Senior
Vice President and General
Manager, Canadian Operations
1992-1994, The Manufacturers Life
Insurance Company; Senior Vice
President, Financial Services
1992, The Manufacturers Life
Insurance Company; Executive Vice
Chairman and CFO -- 1989-1991,
Canada Trust
John R. Ostler Vice President, Chief Financial Vice President -- 1992-
(43) Actuary and Treasurer present, The Manufacturers Life
Insurance Company; Vice President,
Insurance Products -- 1990-1992,
The Manufacturers Life Insurance
Company
Douglas H. Myers Vice President, Assistant Vice President and
(42) Finance and Compliance Controller, U.S. Operations --
Controller 1988-present, The Manufacturers
Life Insurance Company
Hugh McHaffie Vice President Vice President & Product Actuary --
(37) June 1990-present, North American
Security Life
</TABLE>
State Regulations
Manufacturers Life of America is subject to regulation and supervision by the
Michigan Department of Insurance, which periodically examines its financial
condition and operations. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business. The
Policies have been filed with insurance officials, and meet all standards set
by law, in each jurisdiction where they are sold.
Manufacturers Life of America is required to submit annual statements of its
operations, including financial statements, to the insurance departments of the
various jurisdictions in which it does business for the purposes of determining
solvency and compliance with local insurance laws and regulations.
- - 60 -
<PAGE> 59
Pending Litigation
No litigation is pending that would have a material effect upon the Separate
Account or the Series Fund.
Additional Information
A registration statement under the Securities Act of 1933 has been filed with
the S.E.C. relating to the offering described in this prospectus. This
prospectus does not include all the information set forth in the registration
statement. The omitted information may be obtained at the S.E.C.'s principal
office in Washington, D.C. upon payment of the prescribed fee.
For further information you may also contact Manufacturers Life of America's
Service Office, the address and telephone number of which are on the cover page
of this prospectus.
Legal Matters
The legal validity of the policies has been passed on by Stephen C. Nesbitt,
Esq., formerly Secretary and General Counsel of Manufacturers Life of America.
Jones & Blouch L.L.P., Washington, D.C., has passed on certain matters relating
to the federal securities laws.
Experts
The financial statements of The Manufacturers Life Insurance Company of America
and The Manufacturers Life Insurance Company of America Separate Account Three
appearing in this prospectus have been audited by Ernst & Young LLP, independent
auditors, to the extent indicated in their reports thereon also appearing
elsewhere herein. Such financial statements have been included herein in
reliance upon such reports given upon the authority of such firm as experts in
auditing and accounting.
- - 61 -
<PAGE> 60
Report of Independent Auditors
To the Board of Directors
The Manufacturers Life Insurance
Company of America
We have audited the statement of assets and liabilities of Separate
Account Three of The Manufacturers Life Insurance Company of America
(comprising, respectively, the Emerging Growth Equity Sub-Account,
Common Stock Sub-Account, Real Estate Securities Sub-Account, Balanced
Assets Sub-Account, Capital Growth Bond Sub-Account, Money Market
Sub-Account, International Sub-Account and Pacific Rim Emerging Markets
Sub-Account) as of December 31, 1995, and the related statement of
operations for the year then ended, and the statements of changes in net
assets for each of the periods presented herein. These financial
statements are the responsibility of The Manufacturers Life Insurance
Company of America's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Separate
Account Three of The Manufacturers Life Insurance Company of America at
December 31, 1995, the results of its operations for the year then ended
and the changes in its net assets for each of the periods presented
herein, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
February 2, 1996
- - 62 -
<PAGE> 61
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Assets and Liabilities
December 31, 1995
<TABLE>
<CAPTION>
REAL ESTATE
EMERGING GROWTH COMMON STOCK SECURITIES BALANCED ASSETS
EQUITY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Investment in Manulife Series Fund, Inc.--
at market value:
Emerging Growth Equity Fund,
1,503,318 shares (cost $29,944,573) $34,739,484
Common Stock Fund,
899,788 shares (cost $13,242,646) $15,538,587
Real Estate Securities Fund,
632,442 shares (cost $8,803,902) $9,551,936
Balanced Assets Fund,
1,347,671 shares (cost $20,423,372) $23,116,748
Capital Growth Bond Fund,
925,335 shares (cost $10,299,253)
Money Market Fund,
1,065,704 shares (cost $11,317,951)
International Fund,
232,902 shares (cost $2,384,926)
Pacific Rim Emerging Markets Fund,
154,166 shares (cost $1,507,605)
----------- ----------- ---------- -----------
34,739,484 15,538,587 9,551,936 23,116,748
Receivable for policy-related
transactions 107,039 124,161 5,514 16,900
----------- ----------- ---------- -----------
Net assets $34,846,523 $15,662,748 $9,557,450 $23,133,738
=========== =========== ========== ===========
Units outstanding 994,478 697,983 386,785 1,147,507
=========== =========== ========== ===========
Net asset value per unit $35.04 $22.44 $24.71 $20.16
=========== =========== ========== ===========
</TABLE>
See accompanying notes.
2
<PAGE> 62
<TABLE>
<CAPTION>
PACIFIC RIM
CAPITAL GROWTH MONEY MARKET INTERNATIONAL EMERGING MARKETS
BOND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
---------------- ------------ ------------- ---------------- -----
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in Manulife Series Fund, Inc.--
at market value:
Emerging Growth Equity Fund,
1,503,318 shares (cost $29,944,573) $34,739,484
Common Stock Fund,
899,788 shares (cost $13,242,646) 15,538,587
Real Estate Securities Fund,
632,442 shares (cost $8,803,902) 9,551,936
Balanced Assets Fund,
1,347,671 shares (cost $20,423,372) 23,116,748
Capital Growth Bond Fund,
925,335 shares (cost $10,299,253) $10,453,051 10,453,051
Money Market Fund,
1,065,704 shares (cost $11,317,951) $11,551,671 11,551,671
International Fund,
232,902 shares (cost $2,384,926) $2,484,703 2,484,703
Pacific Rim Emerging Markets Fund,
154,166 shares (cost $1,507,605) $1,596,461 1,596,461
----------- ----------- ---------- ---------- ------------
10,453,051 11,551,671 2,484,703 1,596,461 109,032,641
Receivable for policy-related
transactions 21,101 1,473,716 49,665 71,296 1,869,482
----------- ----------- ---------- ---------- ------------
Net assets $10,474,152 $13,025,387 $2,534,368 $1,667,757 $110,902,123
=========== =========== ========== ========== ============
Units outstanding 550,981 825,436 233,582 158,081
=========== =========== ========== ==========
Net asset value per unit $19.01 $15.78 $10.85 $10.55
=========== =========== ========== ==========
</TABLE>
3
<PAGE> 63
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Operations
Year ended December 31, 1995
<TABLE>
<CAPTION>
EMERGING GROWTH COMMON STOCK REAL ESTATE SECURITIES BALANCED ASSETS
EQUITY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------ ---------------------- ---------------
<S> <C> <C> <C> <C>
Investment income:
Dividend income $ 721,489 $ -- $ 142,066 $ 24,806
---------- ---------- ---------- ----------
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from
security transactions:
Proceeds from sales 1,274,886 798,694 812,232 739,327
Cost of securities sold 1,068,731 804,887 830,335 769,053
---------- ---------- ---------- ----------
Net realized gain (loss) 206,155 (6,193) (18,103) (29,726)
---------- ---------- ---------- ----------
Unrealized appreciation (depreciation)
of investments:
Beginning of year 78,088 (438,289) (280,544) (1,064,130)
End of year 4,794,911 2,295,941 748,034 2,693,376
---------- ---------- ---------- ----------
Net unrealized appreciation during the year 4,716,823 2,734,230 1,028,578 3,757,506
---------- ---------- ---------- ----------
Net realized and unrealized gain
on investments 4,922,978 2,728,037 1,010,475 3,727,780
---------- ---------- ---------- ----------
Net increase in net assets derived
from operations $5,644,467 $2,728,037 $1,152,541 $3,752,586
========== ========== ========== ==========
</TABLE>
See accompanying notes.
4
<PAGE> 64
<TABLE>
<CAPTION>
PACIFIC RIM
CAPITAL GROWTH MONEY MARKET INTERNATIONAL EMERGING MARKETS
BOND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
---------------- ------------ ------------- ---------------- -----
<S> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 726,517 $ 468 $ 59,169 $ 19,281 $ 1,693,796
---------- --------- -------- --------- -----------
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from
security transactions:
Proceeds from sales 798,441 8,849,535 344,439 335,955 13,953,509
Cost of securities sold 830,096 8,634,234 334,542 329,373 13,601,251
Net realized gain (loss) (31,655) 215,301 9,897 6,582 352,258
---------- --------- -------- --------- -----------
Unrealized appreciation (depreciation)
of investments:
Beginning of year (542,982) (75,010) (3,406) (8,633) (2,334,906)
End of year 153,798 233,720 99,777 88,856 11,108,413
---------- --------- -------- --------- -----------
Net unrealized appreciation during the year 696,780 308,730 103,183 97,489 13,443,319
---------- --------- -------- --------- -----------
Net realized and unrealized gain
on investments 665,125 524,031 113,080 104,071 13,795,577
---------- --------- -------- --------- -----------
Net increase in net assets derived
from operations $1,391,642 $ 524,499 $172,249 $ 123,352 $15,489,373
========== ========= ======== ========= ===========
</TABLE>
5
<PAGE> 65
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
EMERGING GROWTH COMMON STOCK REAL ESTATE SECURITIES
EQUITY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------------ ------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Investment income $ 721,489 $ 43,907 $ -- $ 267,928 $ 142,066 $ 75,896
Net realized gain (loss) 206,155 211,186 (6,193) (341) (18,103) 31,029
Unrealized appreciation
(depreciation) of invest-
ments during the year 4,716,823 (255,344) 2,734,230 (435,910) 1,028,578 (305,376)
----------- ----------- ----------- ---------- ---------- ----------
Increase (decrease) in net
assets derived from
operations 5,644,467 (251) 2,728,037 (168,323) 1,152,541 (198,451)
----------- ----------- ----------- ---------- ---------- ----------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 15,025,111 12,590,008 6,620,667 5,554,746 4,344,151 4,874,992
Transfer on death (202,957) -- -- -- -- --
Transfer of terminations (3,281,049) (1,565,370) (1,485,111) (649,516) (1,139,201) (663,869)
Transfer of policy loans (390,119) (86,018) (349,518) (36,417) (80,626) (6,117)
Net interfund transfers 3,663,152 823,390 2,202,823 421,280 42,920 318,546
----------- ----------- ----------- ---------- ---------- ----------
14,814,138 11,762,010 6,988,861 5,290,093 3,167,244 4,523,552
----------- ----------- ----------- ---------- ---------- ----------
Net increase in net assets 20,458,605 11,761,759 9,716,898 5,121,770 4,319,785 4,325,101
NET ASSETS
Beginning of year 14,387,918 2,626,159 5,945,850 824,080 5,237,665 912,564
----------- ----------- ----------- ---------- ---------- ----------
End of year $34,846,523 $14,387,918 $15,662,748 $5,945,850 $9,557,450 $5,237,665
=========== =========== =========== ========== ========== ==========
</TABLE>
See accompanying notes.
6
<PAGE> 66
<TABLE>
<CAPTION>
BALANCED ASSETS CAPITAL GROWTH MONEY MARKET
SUB-ACCOUNT BOND SUB-ACCOUNT SUB-ACCOUNT
-------------------------- ------------------------- -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Investment income $ 24,806 $ 603,014 $ 726,517 $ 311,297 $ 468 $ 186,610
Net realized gain (loss) (29,726) (1,270) (31,655) 8,755 215,301 12,880
Unrealized appreciation
(depreciation) of invest-
ments during the year 3,757,506 (954,131) 696,780 (497,582) 308,730 (50,726)
----------- ----------- ----------- ---------- ----------- ----------
Increase (decrease) in net
assets derived from
operations 3,752,586 (352,387) 1,391,642 (177,530) 524,499 148,764
----------- ----------- ----------- ---------- ----------- ----------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 7,806,794 9,721,164 3,332,849 3,709,555 17,598,898 9,185,855
Transfer on death -- -- -- -- -- --
Transfer of terminations (1,853,986) (1,044,780) (716,686) (306,914) (1,962,294) (1,053,809)
Transfer of policy loans (304,332) (153,402) (159,472) (57,452) (66,223) (110)
Net interfund transfers 1,681,177 150,911 1,564,644 (184,732) (10,196,735) (1,923,048)
----------- ----------- ----------- ---------- ----------- ----------
7,329,653 8,673,893 4,021,335 3,160,457 5,373,646 6,208,888
----------- ----------- ----------- ---------- ----------- ----------
Net increase in net assets 11,082,239 8,321,506 5,412,977 2,982,927 5,898,145 6,357,652
NET ASSETS
Beginning of year 12,051,499 3,729,993 5,061,175 2,078,248 7,127,242 769,590
----------- ----------- ----------- ---------- ----------- ----------
End of year $23,133,738 $12,051,499 $10,474,152 $5,061,175 $13,025,387 $7,127,242
=========== =========== =========== ========== =========== ==========
</TABLE>
7
<PAGE> 67
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets (continued)
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
PACIFIC RIM
INTERNATIONAL EMERGING MARKETS
SUB-ACCOUNT SUB-ACCOUNT TOTAL
---------------------------- --------------------------- --------------------------
YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
---------- ------------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Investment income $ 59,169 $ 851 $ 19,281 $ 871 $ 1,693,796 $1,490,374
Net realized gain (loss) 9,897 (2) 6,582 (57) 352,258 262,180
Unrealized appreciation
(depreciation) of
invest-ments during the
year 103,183 (3,406) 97,489 (8,633) 13,443,319 (2,511,108)
---------- -------- ---------- -------- ------------ -----------
Increase (decrease) in net
assets derived from
operations 172,249 (2,557) 123,352 (7,819) 15,489,373 (758,554)
---------- -------- ---------- -------- ------------ -----------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 1,353,292 73,368 812,122 41,337 56,893,884 45,751,025
Transfer on death -- -- -- -- (202,957) --
Transfer of terminations (180,239) (4,461) (131,282) (2,998) (10,749,848) (5,291,717)
Transfer of policy loans (2,743) (768) (3,509) (768) (1,356,542) (341,052)
Net interfund transfers 863,795 262,432 622,581 214,741 444,357 83,520
---------- -------- ---------- -------- ------------ -----------
2,034,105 330,571 1,299,912 252,312 45,028,894 40,201,776
---------- -------- ---------- -------- ------------ -----------
Net increase in net assets 2,206,354 328,014 1,423,264 244,493 60,518,267 39,443,222
NET ASSETS
Beginning of year 328,014 -- 244,493 -- 50,383,856 10,940,634
---------- -------- ---------- -------- ------------ -----------
End of year $2,534,368 $328,014 $1,667,757 $244,493 $110,902,123 $50,383,856
========== ======== ========== ======== ============ ===========
</TABLE>
*Reflects the period from commencement of operations October 4, 1994 through
December 31, 1994.
See accompanying notes.
8
<PAGE> 68
Separate Account Three of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
December 31, 1995
1. ORGANIZATION
Separate Account Three of The Manufacturers Life Insurance Company of America
(the "Separate Account") is a unit investment trust registered under the
Investment Company Act of 1940, as amended. The Separate Account is currently
comprised of eight investment sub-accounts, one for each series of shares of
Manulife Series Fund, Inc., available for allocation of net premiums under
single premium variable life insurance policies (the "Policies") issued by The
Manufacturers Life Insurance Company of America ("Manufacturers Life of
America").
The Separate Account was established by Manufacturers Life of America, a
wholly-owned subsidiary of Manulife Reinsurance Corporation (U.S.A.)
("MRC"), as a separate investment account on February 6, 1987. MRC is a life
insurance holding company organized in 1983 under Michigan law and a
wholly-owned subsidiary of The Manufacturers Life Insurance Company ("Manulife
Financial"), a mutual life insurance company based in Toronto, Canada.
The assets of the Separate Accounts are the property of Manufacturers Life of
America. The portion of the Separate Account's assets applicable to the Policies
will not be charged with liabilities arising out of any other business
Manufacturers Life of America may conduct.
The net assets may not be less than the amount required under state insurance
law to provide for death (without regard to the minimum death benefit guarantee)
and other Policy benefits.
Additional assets are held in Manufacturers Life of America's general account to
cover the contingency that the guaranteed minimum death benefit might exceed the
death benefit which would have been payable in the absence of such guarantee.
9
<PAGE> 69
Separate Account Three of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Separate Account in preparation of its financial statements.
a. Valuation of Investments - Investments are made among the eight Funds of
Manulife Series Fund, Inc. and are valued at the reported net asset values
of these Funds. Transactions are recorded on the trade date. Net investment
income and net realized and unrealized gain (loss) on investments in
Manulife Series Fund, Inc. are reinvested.
b. Realized gains and losses on the sale of investments are computed on the
first-in, first-out basis.
c. Dividend income is recorded on the ex-dividend date.
d. Federal Income Taxes - Manufacturers Life of America, the Separate
Account's sponsor, is taxed as a "life insurance company" under the
Internal Revenue Code. Under these provisions of the Code, the operations
of the Separate Account form part of the sponsor's total operations and are
not taxed separately.
The current year's operations of the Separate Account are not expected to
affect the sponsor's tax liabilities and, accordingly, no charges were made
against the Separate Account for federal, state and local taxes. However,
in the future, should the sponsor incur significant tax liabilities related
to Separate Account operations, it intends to make a charge or establish a
provision within the Separate Account for such taxes.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
10
<PAGE> 70
Separate Account Three of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. PREMIUM DEDUCTIONS
Manufacturers Life of America deducts certain charges for state, local, and
federal taxes from the gross premium before placing the remaining net premiums
in the sub-accounts.
4. PURCHASES AND SALES OF MANULIFE SERIES FUND, INC. SHARES
Purchases and sales of the shares of common stock of Manulife Series Fund, Inc.
for the year ended December 31, 1995 were $58,905,751 and $13,953,509,
respectively, and for the year ended December 31, 1994 were $47,012,777 and
$5,377,813, respectively.
5. RELATED PARTY TRANSACTIONS
ManEquity, Inc., a registered broker-dealer and indirect wholly-owned subsidiary
of Manulife Financial, acts as the principal underwriter of the Policies
pursuant to a Distribution Agreement with Manufacturers Life of America.
Registered representatives of either ManEquity, Inc. or other broker-dealers
having distribution agreements with ManEquity, Inc. who are also authorized as
variable life insurance agents under applicable state insurance laws, sell the
Policies. Registered representatives are compensated on a commission basis.
Manufacturers Life of America has a formal service agreement with its affiliate,
Manulife Financial, which can be terminated by either party upon two months'
notice. Under this Agreement, Manufacturers Life of America pays for legal,
actuarial, investment and certain other administrative services.
11
<PAGE> 71
Report of Independent Auditors
The Board of Directors
The Manufacturers Life Insurance
Company of America
We have audited the accompanying balance sheets of The Manufacturers Life
Insurance Company of America as of December 31, 1995 and 1994, and the related
statements of operations, changes in capital and surplus, and cash flows for
each of the three years in the period ended December 31, 1995. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Manufacturers Life
Insurance Company of America at December 31, 1995 and 1994, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles and with reporting practices prescribed or permitted by the Insurance
Department of the State of Michigan.
Philadelphia, Pennsylvania ERNST & YOUNG LLP
February 2, 1996
63
<PAGE> 72
The Manufacturers Life Insurance Company of America
Balance Sheets
<TABLE>
DECEMBER 31
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Bonds, at amortized cost (market $66,046,733--
1995 and $51,082,395--1994) $ 62,757,202 $ 52,149,080
Stocks 22,584,259 25,629,580
Short-term investments -- 10,914,561
Policy loans 6,955,292 4,494,390
------------ ------------
Total investments 92,296,753 93,187,611
Cash 9,674,362 5,069,197
Life insurance premiums deferred and uncollected 504,818 13,646
Accrued investment income 1,059,536 796,333
Separate account assets 480,404,450 302,736,198
Funds receivable on reinsurance assumed -- 880,284
Receivable for undelivered securities 146,328 69,003
Taxes recoverable 3,308,316 --
Investment in subsidiary 1,080,184 --
Other assets 267,015 333,651
------------ ------------
Total assets $588,741,762 $403,085,923
============ ============
LIABILITIES, CAPITAL AND SURPLUS
Aggregate policy reserves $ 26,683,090 $ 29,761,174
Other contract deposits 1,238,943 3,938,425
Interest maintenance and asset valuation reserves 4,742,400 111,566
Policy and contract claims 582,853 94,346
Provision for policyholder dividends payable 2,346,258 1,385,409
Amounts due to affiliates 9,049,217 7,377,108
Payable for undelivered securities 80,821 3,512,459
Accrued liabilities 7,315,315 4,773,565
Separate account liabilities 480,404,450 302,736,198
------------ ------------
Total liabilities 532,443,347 353,690,250
Capital and surplus:
Common shares, par value $1.00; authorized,
5,000,000 shares; issued and outstanding
4,501,857 shares (4,501,855 shares in 1994) 4,501,857 4,501,855
Preferred shares, par value $100; authorized
5,000,000 shares; issued and outstanding
105,000 shares 10,500,000 10,500,000
Surplus note 8,500,000 --
Capital paid in excess of par value 63,500,180 49,849,998
Deficit (30,703,622) (15,456,180)
------------ ------------
Total capital and surplus 56,298,415 49,395,673
------------ ------------
Total liabilities, capital and surplus $588,741,762 $403,085,923
============ ============
</TABLE>
See accompanying notes.
2
<PAGE> 73
The Manufacturers Life Insurance Company of America
Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Life and annuity premiums, principally
reinsurance assumed $ 5,956,997 $ 25,385,628 $ 12,745,981
Other life and annuity considerations 153,859,957 168,075,003 113,332,974
Investment income, net of investment
expenses 5,840,560 3,588,629 3,323,962
Amortization of interest maintenance reserve 23,975 19,527 32,866
Commission and expense allowance
on reinsurance ceded 147,109 187,694 --
Foreign exchange (loss) gain (284,127) 114,728 (197,971)
Other revenue 211,191 54,763 33,935
------------ ------------ ------------
Total revenues 165,755,662 197,425,972 129,271,747
Benefits paid or provided:
(Decrease) increase in aggregate policy reserves (3,078,084) 16,741,569 5,168,484
(Decrease) increase in liability for deposit funds (2,699,482) 654,214 2,820,520
Transfers to separate accounts, net 99,807,392 136,896,150 98,601,141
Death benefits 3,981,377 640,875 582,534
Disability benefits 123,786 -- --
Maturity benefits 207,719 580,615 79,253
Surrender benefits 22,028,224 3,701,591 2,319,926
------------ ------------ ------------
120,370,932 159,215,014 109,571,858
Insurance expenses:
Management fee 22,864,000 21,222,310 12,378,288
Commissions 21,411,198 23,416,110 14,742,130
General expenses 15,475,621 8,260,467 5,108,104
Commissions and expense allowances
on reinsurance assumed 1,014,163 810,252 329,634
------------ ------------ ------------
60,764,982 53,709,139 32,558,156
------------ ------------ ------------
Loss before policyholders' dividends
and federal income tax (15,380,252) (15,498,181) (12,858,267)
Dividends to policyholders 2,367,002 1,149,719 837,454
------------ ------------ ------------
Loss before federal income tax (17,747,254) (16,647,900) (13,695,721)
Federal income tax benefit (4,115,770) -- (324,643)
------------ ------------ ------------
Net loss from operations after policyholders'
dividends and federal income tax (13,631,484) (16,647,900) (13,371,078)
Net realized capital gains (net of capital
gains tax of $807,453 in 1995; $0 in 1994,
and $236,415 in 1993, and $1,567,770 in
1995, $(554,000) in 1994, and $347,292 in
1993 transferred (from) to the interest
maintenance reserve) (73,343) (3,012,485) 93,618
------------ ------------ ------------
Net loss from operations $(13,704,827) $(19,660,385) $(13,277,460)
============ ============ ============
</TABLE>
See accompanying notes.
3
<PAGE> 74
The Manufacturers Life Insurance Company of America
Statements of Changes in Capital and Surplus
<TABLE>
<CAPTION>
CAPITAL
PAID IN
EXCESS OF SURPLUS
CAPITAL PAR VALUE (DEFICIT) TOTAL
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1992 $35,001,853 $ 4,000,000 $ 16,542,195 $55,544,048
Net loss from operations (13,277,460) (13,277,460)
Issuance of preferred shares 1 5,849,999 5,850,000
Increase in asset valuation reserve (13,076) (13,076)
Increase in nonadmitted assets (133,575) (133,575)
Change in net unrealized capital
losses (1,592,242) (1,592,242)
Change in liability for reinsurance
in unauthorized companies (29,905) (29,905)
Company's share of increase in
separate account assets, net 4,308,148 4,308,148
----------- ----------- ------------ -----------
Balance, December 31, 1993 35,001,854 9,849,999 5,804,085 50,655,938
Net loss from operations (19,660,385) (19,660,385)
Issuance of common stocks 1 19,999,999 20,000,000
Capital restructuring of preference
shares (20,000,000) 20,000,000 --
Increase in asset valuation reserve (55,286) (55,286)
Increase in nonadmitted assets (1,021,357) (1,021,357)
Change in net unrealized capital
losses (425,082) (425,082)
Change in liability for reinsurance
in unauthorized companies (98,155) (98,155)
----------- ----------- ------------ -----------
Balance, December 31, 1994 15,001,855 49,849,998 (15,456,180) 49,395,673
Net loss from operations (13,704,827) (13,704,827)
Issuance of common shares 2 12,569,998 12,570,000
Issuance of surplus note 8,500,000 8,500,000
Contribution of Manufacturers
Adviser Corporation 1,080,184 1,080,184
Increase in asset valuation reserve (3,285,208) (3,285,208)
Increase in nonadmitted assets (1,053,124) (1,053,124)
Change in net unrealized capital
losses 2,921,742 2,921,742
Change in liability for reinsurance
in unauthorized companies (126,025) (126,025)
----------- ----------- ------------ -----------
Balance, December 31, 1995 $23,501,857 $63,500,180 $(30,703,622) $56,298,415
=========== =========== ============ ===========
</TABLE>
See accompanying notes.
4
<PAGE> 75
The Manufacturers Life Insurance Company of America
Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Premiums collected, net $159,337,079 $193,478,637 $126,075,035
Policy benefits paid, net (25,827,767) (4,982,444) (2,829,812)
Commissions and other expenses paid (62,302,890) (48,141,400) (35,203,997)
Net investment income 5,570,951 3,343,515 3,197,892
Other income and expenses (3,607,415) (1,946,063) (1,592,957)
Transfers to separate accounts, net (98,031,353) (136,950,482) (98,220,292)
------------ ------------ ------------
Net cash (used in) provided by
operating activities (24,861,395) 4,801,763 (8,574,131)
INVESTING ACTIVITIES
Sale, maturity, or repayment of investments 74,009,501 73,187,733 28,248,633
Purchase of investments (77,607,686) (91,063,874) (73,688,735)
------------ ------------ ------------
Net cash used in investing activities (3,598,185) (17,876,141) (45,440,102)
FINANCING ACTIVITIES
Issuance of shares 12,570,000 20,000,000 5,850,000
Contribution of Manufacturers Adviser
Corporation 1,080,184 -- --
Issuance of surplus notes 8,500,000 -- --
Surplus withdrawn from separate account -- -- 48,701,076
------------ ------------ ------------
Net cash provided by financing activities 22,150,184 20,000,000 54,551,076
------------ ------------ ------------
Net (decrease) increase in cash and
short-term investments (6,309,396) 6,925,622 536,843
Cash and short-term investments
at beginning of year 15,983,758 9,058,136 8,521,293
------------ ----------- ------------
Cash and short-term investments
at end of year $ 9,674,362 $15,983,758 $ 9,058,136
============ =========== ============
</TABLE>
See accompanying notes.
5
<PAGE> 76
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
December 31, 1995
1. ORGANIZATION
ORGANIZATION
The Manufacturers Life Insurance Company of America (Manufacturers Life of
America or the Company) is a wholly-owned subsidiary of Manulife Reinsurance
Corporation (U.S.A.) (the Parent), (formerly Manufacturers Life Insurance
Company of Michigan), which is in turn a wholly-owned subsidiary of The
Manufacturers Life Insurance Company (Manulife Financial), a Canadian-based
mutual life insurance company (Notes 4 and 5).
The Company issues and sells variable universal life and variable annuity
products in the United States. The Company also has a branch operation in Taiwan
to develop and market traditional insurance for the Taiwanese market. At
December 31, 1995 the Company had assets of $11,234,000 and liabilities of
$5,696,000 in the Taiwan branch.
During 1995, the Company's parent contributed $12,570,000 of capital in return
for 2 shares of the Company's common stock par value $1 with the remaining
$12,569,998 being recorded as contributed surplus. During 1995, the Company's
parent transferred 100% of the outstanding stock of Manufacturers Adviser
Corporation to the Company which was recorded at book values as contributed
surplus. During 1995, the Company's parent also contributed $8,500,000 in return
for a 10-year surplus note bearing interest at 6.625%.
Subsequent to the year end, the Parent contributed $15,000,000 capital in return
for 1 share of the Company's common stock par value $1 with the remaining
$14,999,999 being recorded as contributed surplus.
During 1994, the Company's parent contributed $20,000,000 of capital in return
for 1 share of the Company's common stock par value $1 with the remaining
$19,999,999 being recorded as contributed surplus. During 1994, the Company
restructured its capital by exchanging 230,000 shares of preferred stock with a
par value of $23,000,000 for 3,000,000 shares of common stock par value
$3,000,000 with the remaining $20,000,000 being recorded as contributed surplus.
The Parent contributed $5,850,000 in capital in return for 1 share of common
stock during 1993.
6
<PAGE> 77
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements of Manufacturers Life of America have been
prepared in accordance with accounting practices prescribed or permitted by the
Insurance Department of Michigan, which are considered generally accepted
accounting principles for mutual life insurance companies and their wholly-owned
direct and indirect subsidiaries. Such practices differ in certain respects from
generally accepted accounting principles followed by stock life insurance
companies in determining financial position and results of operations. In
general, the differences are: (1) commissions and other costs of acquiring and
writing policies are charged to expense in the year incurred rather than being
amortized over the related policy term; (2) certain non-admitted assets are
excluded from the balance sheet; (3) deferred income taxes are not provided for
timing differences in recording certain items for financial statement and tax
purposes; (4) certain transactions are reflected directly to surplus rather than
reflected in net income from operations (for example, certain transactions
related to the separate accounts); and (5) debt securities are carried at
amortized cost.
In April 1993, the Financial Accounting Standards Board issued Interpretation
No. 40, "Applicability of Generally Accepted Accounting Principles to Mutual
Life Insurance and Other Enterprises." The Interpretation as amended is
effective for 1996 annual financial statements and thereafter, and will no
longer allow statutory financial statements to be described as being prepared in
conformity with generally accepted accounting principles (GAAP). Upon the
effective date of the Interpretation, in order for financial statements to be
described as being prepared in accordance with GAAP, life insurance companies
will be required to adopt all applicable standards promulgated by the FASB in
any general purpose financial statements such companies may issue. While GAAP
standards have recently been developed for mutual life insurance companies, the
Company has not yet completed the complex and extensive historical calculations
and thus is unable to quantify the effects of the Interpretation on its
financial statements.
The preparation of financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Such estimates and assumptions
could change in the future as more information becomes known, which could impact
the amounts reported and disclosed herein.
All amounts presented are expressed in U.S. Dollars. Certain amounts from prior
periods have been reclassified to conform with current-period presentation.
7
<PAGE> 78
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCKS
Stocks are carried at market value.
BONDS
Bonds not backed by other loans are carried at amortized cost as computed using
the interest method. Loan backed bonds and other structured securities are
valued at amortized cost using the interest method including anticipated
prepayments. Prepayment assumptions are updated periodically and are accounted
for using the prospective method. Gains and losses on sales of bonds are
calculated on the specific identification method and recognized into income
based on NAIC prescribed formulas. Short-term investments include investments
with maturities of less than one year at the date of acquisition. Market values
disclosed are based on NAIC quoted values.
POLICY LOANS
Policy loans are reported at unpaid principal balances which approximate fair
value.
ASSET VALUATION RESERVE AND INTEREST MAINTENANCE RESERVE
The Asset Valuation Reserve and Interest Maintenance Reserve were determined by
NAIC prescribed formulas and are reported as liabilities rather than as
valuation allowances or appropriations of surplus.
POLICY AND CONTRACT CLAIMS
Policy and contract claims are determined on an individual case basis for
reported losses. Estimates of incurred but not reported losses are developed on
the basis of past experience.
8
<PAGE> 79
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SEPARATE ACCOUNTS
Separate account assets and liabilities reported in the accompanying financial
statements represent funds that are separately administered, principally for
variable annuity and variable life contracts. For the majority of these
contracts the contractholder, rather than the Company, bears the investment
risk. Separate account assets are recorded at market value. Operations of the
separate accounts are not included in the accompanying financial statements.
REVENUE RECOGNITION
Both premium and investment income are recorded when due.
INVESTMENT IN SUBSIDIARIES
The investment in Manufacturers Adviser Corporation ("MAC") is carried at net
equity of MAC as computed under generally accepted accounting principles.
Undistributed income and loss is treated as a component of unrealized gains and
losses and applies directly to capital and surplus.
REINSURANCE
Reinsurance premiums and claims are accounted for on a basis consistent with
that used in accounting for the original policies issued and the terms of the
reinsurance contracts. Premiums and claims are reported net of reinsured
amounts.
POLICY RESERVES
Certain policy reserves are calculated based on statutorily required interest
and mortality assumptions.
9
<PAGE> 80
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. INVESTMENTS AND INVESTMENT INCOME
The amortized cost and market value of investments in fixed maturities (bonds)
as of December 31, 1995 is summarized as follows:
<TABLE>
<CAPTION>
QUOTED OR
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
NAME OF PERSON COST GAINS LOSSES VALUE
- -------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
United States Government $15,145,033 $ 681,032 $ (57,916) $15,768,149
Foreign governments 6,071,376 157,635 -- 6,229,011
Corporate 31,046,219 2,508,780 -- 33,554,999
Mortgage-backed securities:
U.S. Government agencies 9,522,771 -- -- 9,522,771
Corporate 971,803 -- -- 971,803
----------- ---------- ---------- -----------
$62,757,202 $3,347,447 $ (57,916) $66,046,733
=========== ========== ========== ===========
</TABLE>
Proceeds from sales of investments in debt securities during 1995 were
$67,506,660. Gross gains of $2,630,790 and gross losses of $218,778 were
realized on those sales.
The amortized cost and market value of investments in fixed maturities (bonds)
as of December 31, 1994 is summarized as follows:
<TABLE>
<CAPTION>
QUOTED OR
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
NAME OF PERSON COST GAINS LOSSES VALUE
- -------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
United States Government $31,784,581 $ 243,971 $ (441,592) $31,586,960
Foreign governments 7,388,458 -- (294,385) 7,094,073
Corporate 9,986,244 2,457 (577,136) 9,411,565
Mortgage-backed securities:
U.S. Government agencies 2,480,571 -- -- 2,480,571
Corporate 509,226 -- -- 509,226
----------- --------- ----------- -----------
$52,149,080 $ 246,428 $(1,313,113) $51,082,395
=========== ========= =========== ===========
</TABLE>
Proceeds from sales of investments in debt securities during 1994 were
$43,175,845. Gross gains of $167,738 and gross losses of $1,006,702 were
realized on those sales.
10
<PAGE> 81
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. INVESTMENTS AND INVESTMENT INCOME (CONTINUED)
The amortized cost and market value of fixed maturities at December 31, 1995 by
contractual maturities, are shown below. Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
YEARS TO MATURITY AMORTIZED COST MARKET VALUE
----------------- -------------- ------------
<S> <C> <C>
One year or less $ 564,857 $ 564,857
Greater than 1; up to 5 years 4,079,679 4,181,361
Greater than 5; up to 10 years 14,786,283 15,858,075
Due after 10 years 32,831,809 34,947,866
Mortgage-backed securities 10,494,574 10,494,574
----------- -----------
$62,757,202 $66,046,733
=========== ===========
</TABLE>
At December 31, 1995, $6,617,749 of bonds at amortized cost were on deposit
with government insurance departments to satisfy regulatory regulations.
Major categories of net investment income for each year were as follows:
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Gross investment income:
Dividends; Manulife Series
Fund, Inc. (Note 9) $ 645,908 $1,244,794 $1,440,392
Bond income 4,430,236 1,712,294 1,422,064
Policy loans 360,406 236,972 166,514
Short-term investments 754,346 501,477 384,178
---------- ---------- ----------
6,190,896 3,695,537 3,413,148
Investment expenses (350,336) (106,908) (89,186)
---------- ---------- ----------
Net investment income $5,840,560 $3,588,629 $3,323,962
========== ========== ==========
</TABLE>
11
<PAGE> 82
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
4. RELATED PARTY TRANSACTIONS
Manufacturers Life of America has a formal service agreement with Manulife
Financial which can be terminated by either party upon two months' notice. Under
the Agreement, Manufacturers Life of America will pay direct operating expenses
incurred each year by Manulife Financial on behalf of Manufacturers Life of
America. Services provided under the Agreement include legal, actuarial,
investment, data processing and certain other administrative services. Costs
incurred under this Agreement were $23,211,484 in 1995, $21,326,446 in 1994, and
$12,467,474 in 1993. In addition, there were $5,052,062 agents' bonuses in 1995,
$7,795,184 in 1994, and $5,363,558 in 1993 which were allocated to the Company
and are included in commissions.
In addition, the Company has several reinsurance agreements with Manulife
Financial which may be terminated upon the specified notice by either party.
These agreements are summarized as follows:
(a) The Company assumes two blocks of insurance from Manulife Financial under
coinsurance treaties. The Company's risk is limited to $100,000 of initial
face amount per claim plus a pro-rata share of any increase in face amount.
(b) The Company cedes the risk in excess of $25,000 per life to Manulife
Financial under the terms of an automatic reinsurance agreement.
(c) The Company cedes a substantial portion of its risk on its Flexible Premium
Variable Life policies to Manulife Financial under the terms of a stop loss
reinsurance agreement.
(d) Under the terms of an automatic coinsurance agreement, the Company cedes
its risk on structured settlements to Manulife Financial.
12
<PAGE> 83
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
4. RELATED PARTY TRANSACTIONS (CONTINUED)
Selected amounts relating to the above treaties reflected in the financial
statements are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Life and annuity premiums
assumed $5,956,997 $25,385,628 $12,745,981
Other life and annuity
considerations ceded (598,330) (437,650) (201,685)
Commissions and expense
allowances
on reinsurance assumed (1,014,163) (810,252) (329,634)
Policy reserves assumed 48,714,791 47,672,591 23,070,952
Policy reserves ceded 3,833,247 3,786,647 3,782,156
</TABLE>
During 1993, the Company assumed the first $50,000 of initial face amount on
two blocks of business. This resulted in transfers of $10,837,000 to establish
the initial reserves. In 1994 the treaties were amended to assume the first
$100,000 of initial face amount for the same blocks of business. This resulted
in a transfer of $21,477,000 to establish the additional reserve. Commissions
equal to 17% are charged for all renewed premiums related to these contracts.
During 1994, the Company terminated another treaty resulting in a premium to
Manulife Financial to transfer the reserve of $799,874.
Manulife Financial provides a claims paying guarantee to all U.S. policyholders.
5. FEDERAL INCOME TAX
The Company joins the Parent, The Manufacturers Life Insurance Co. (U.S.A.) and
Manufacturers Reinsurance Limited in filing a U.S. consolidated income tax
return as a life insurance group under provisions of the Internal Revenue Code.
In accordance with an income tax-sharing agreement dated December 29, 1983, the
Company's income tax provision (or benefit) is computed as if the Company filed
a separate income tax return. The Company receives no surtax exemption. Tax
benefits from operating losses are provided at the U.S. statutory rate plus any
tax credits attributable to the Company, provided the consolidated group
utilizes such benefits currently. Taxes recoverable in the financial statements
represent tax-related amounts receivable from affiliates.
13
<PAGE> 84
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
5. FEDERAL INCOME TAX
The Company, Parent and The Manufacturers Life Insurance Co. (U.S.A.) have
available consolidated net operating losses of approximately $51,400,000 which
will expire in the year 2009 and capital loss carryforwards of approximately
$102,800,000 which will expire in 1999. The losses of the Company, Parent and
the Manufacturers Life Insurance Co. (U.S.A.) may be used to offset the
ordinary and capital gain income of Manufacturers Reinsurance Limited.
6. STATUTORY RESTRICTIONS ON DIVIDENDS
The Company is subject to statutory limitations on the payment of dividends to
its Parent. The Company cannot pay dividends during 1995 without the prior
approval of insurance regulatory authorities.
7. REINSURANCE
The Company cedes reinsurance as a party to several reinsurance treaties with
major unrelated insurance companies. The Company remains obligated for amounts
ceded in the event reinsurers do not meet their obligations.
Summary financial information related to these reinsurance activities is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Life insurance premiums ceded $275,145 $218,767 $130,913
</TABLE>
14
<PAGE> 85
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
8. RESERVES
Aggregate policy reserves for life policies including variable life, are based
on statutory mortality tables and interest assumptions using either the net
level or commissioners' reserve valuation method. The composition of the
aggregate policy reserves at December 31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
MORTALITY INTEREST
AGGREGATE RESERVES TABLE RATES
------------------ ----- --------
1995 1994
---- ----
<S> <C> <C> <C>
$25,561,456 $28,553,885 1980 CSO 4%
(173,768) (189,080) Reinsurance ceded
1,295,402 1,396,369 Miscellaneous
- ----------- -----------
$26,683,090 $29,761,174
=========== ===========
</TABLE>
At December 31, 1995 the Company's annuity reserves and deposit fund liabilities
are comprised as follows:
<TABLE>
<CAPTION>
AMOUNT PERCENT
------ -------
(in 000's)
<S> <C> <C>
Subject to discretionary withdrawal:
With market value adjustment $222,994 97.8%
At book value less current surrender charge 1,239 .5%
Not subject to discretionary withdrawal 3,863 1.7%
-------- -----
Total gross annuity actuarial reserves and
deposit fund liabilities $228,096 100%
======== =====
</TABLE>
9. INVESTMENT IN SEPARATE ACCOUNTS
During 1984, the Company initiated plans to market variable life insurance
products through Separate Account One of The Manufacturers Life Insurance
Company of America ("Separate Account One") using Manulife Series Fund, Inc. as
its investment vehicle. Initial capitalization was $15,000,000. Through 1988,
the Company provided an additional capitalization of $6,000,000.
15
<PAGE> 86
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
9. INVESTMENT IN SEPARATE ACCOUNTS (CONTINUED)
In December 1993, the Company transferred all of its shares, related to seed
money, in Manulife Series Fund, Inc. out of Separate Account One to the General
Account. At December 31, 1995, the $22,584,259 common stock represents the
Company's seed money investment in Manulife Series Fund, Inc.
During 1995, 1994, and 1993, the following dividends were received from Manulife
Series Fund, Inc.:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- -----------
<S> <C> <C> <C>
Separate Account One $ 24,041 $ 38,732 $1,610,693
Separate Account Two 3,520,461 4,574,620 7,377,861
Separate Account Three 1,693,796 1,490,374 666,141
Separate Account Four 2,445,127 3,072,376 4,966,559
General Account 645,908 1,244,794 1,440,392
</TABLE>
Dividends have been reinvested by the Company in Manulife Series Fund, Inc.
During 1993, the Company withdrew $8,000,000 of its seed money and accumulated
earnings from Separate Account One and the Manulife Series Fund, Inc. and
utilized these funds to pay down its intercompany debt.
During 1994, the Company withdrew $13,011,137 of its seed money and accumulated
earnings from the Manulife Series Fund, Inc. and utilized these funds to pay
down its intercompany debt.
During 1995, the Company withdrew $6,500,000 of its seed money and accumulated
earnings from the Manulife Series Fund, Inc. and utilized these funds to pay
down its intercompany debt.
16
<PAGE> 87
APPENDIX A
Sample Illustrations of Policy Values, Cash Surrender Values and Death Benefits
The following tables have been prepared to help show how values under the
Policy change with investment performance. The tables include both Policy
Values and Cash Surrender Values as well as Death Benefits. The Policy Value
is the sum of the values in the Investment Accounts, as the tables assume no
values in the Guaranteed Interest Account or Loan Account. The Cash Surrender
Value is the Policy Value less any applicable surrender charges. The tables
illustrate how Policy Values and Cash Surrender Values, which reflect all
applicable charges and deductions, and Death Benefits of the Policy on lives
insured of given ages would vary over time if the return on the assets of the
Portfolios was a uniform, gross, after-tax, annual rate of 0%, 6% or 12%. The
Policy Values, Death Benefits and Cash Surrender Values would be different from
those shown if the returns averaged 0%, 6% or 12%, but fluctuated over and
under those averages throughout the years. The charges reflected in the tables
include those for deductions from premiums, surrender charges, and monthly
deductions.
The amounts shown for the Policy Value, Death Benefit and Cash Surrender Value
as of each Policy Year reflect the fact that the net investment return on the
assets held in the sub-accounts is lower than the gross, after-tax return.
This is because expenses and fees borne by the Portfolios have been deducted
from the gross return. For the purposes of illustration, this deduction has
been set at 0.76% per annum, which represents an equal allocation of expenses
among the Portfolios. In the tables, gross annual rates of return of 0%, 6%
and 12% correspond to approximate net annual rates of return of -.75%, 5.21%,
and 11.16%.
The tables assume that no premiums have been allocated to the Guaranteed
Interest Account, that planned premiums are paid on the Policy Anniversary and
that no transfers, partial withdrawals, Policy loans, changes in death benefit
options or changes in face amount have been made. The tables reflect the fact
that no charges for federal, state or local taxes are currently made against
the Separate Account. If such a charge is made in the future, it would take a
higher gross rate of return to produce after-tax returns of 0%, 6% and 12% than
it does now.
There are two tables shown for each combination of age and death benefit option
for a Policy issued to a male non-smoker and female non-smoker, one based on
current cost of insurance charges assessed by the Company and the other based
on the maximum cost of insurance charges based on the 1980 Commissioners
Standard Ordinary Smoker/Nonsmoker Mortality Tables. Current cost of insurance
charges are not guaranteed and may be changed. Upon request, Manufacturers
Life of America will furnish a comparable illustration based on the proposed
lives insured's issue ages, sex (unless unisex rates are required by law, or
are requested) and risk classes, any additional ratings and the death benefit
option, face amount and planned premium requested. Illustrations for smokers
would show less favorable results than the illustrations shown below.
From time to time, in advertisements or sales literature for the Policies that
quote performance data of one or more of the Portfolios, the Company may
include cash surrender values and death benefit figures computed using the same
methodology as that used in the following illustrations, but with the average
annual total return of the Fund for which performance data is shown in
- - 64 -
<PAGE> 88
the advertisement replacing the hypothetical rates of return shown in
the following tables. This information may be shown in the form of
graphs, charts, tables and examples.
The Policies have been offered to the public only since September 1, 1994.
However, total return data may be advertised for as long a period of time as
the underlying Portfolio has been in existence. The results for any period
prior to the Policies' being offered would be calculated as if the Policies
had been offered during that period of time, with all charges assumed to be
those applicable to the Policies.
- 65 -
<PAGE> 89
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 55 (Standard) and
Female Non-Smoker Issue Age 50 (Standard)
$500,000 Face Amount Death Benefit Option 1
$7,500 Annual Planned Premium
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F9> (2)<F10> (4)<F12>
- ------- ------------ ------- ---------- --------
<S> <C> <C> <C> <C>
1 $ 7,875 $ 6,576(3) $ 2,419(3) $ 500,000(3)
<F11> <F11> <F11>
2 16,144 13,015 8,117 500,000
3 24,826 19,321 14,203 500,000
4 33,942 25,490 20,372 500,000
5 43,514 31,518 26,400 500,000
6 53,565 37,400 32,282 500,000
7 64,118 43,131 38,525 500,000
8 75,199 48,705 44,611 500,000
9 86,834 54,115 50,532 500,000
10 99,051 59,351 56,280 500,000
15 169,931 86,997 86,997 500,000
20 260,394 109,613 109,613 500,000
25 375,851 120,527 120,527 500,000
30 523,206 104,075 104,075 500,000
6% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F9> (2)<F10> (4)<F12>
- ------- ------------ ------- ---------- --------
1 $ 7,875 $ 6,981(3) $ 2,824(3) $ 500,000(3)
<F11> <F11> <F11>
2 16,144 14,230 9,332 500,000
3 24,826 21,761 16,642 500,000
4 33,942 29,580 24,462 500,000
5 43,514 37,694 32,576 500,000
6 53,565 46,110 40,992 500,000
7 64,118 54,833 50,227 500,000
8 75,199 63,871 59,776 500,000
9 86,834 73,228 69,645 500,000
10 99,051 82,909 79,838 500,000
15 169,931 142,969 142,969 500,000
20 260,394 217,356 217,356 500,000
25 375,851 307,175 307,175 500,000
30 523,206 417,937 417,937 500,000
</TABLE>
- - 66 -
<PAGE> 90
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F9> (2)<F10>
- ------- ------------ ------ ---------- --------
<S> <C> <C> <C> <C>
1 $ 7,875 $ 7,387(3) $ 3,230(3) $ 500,000(3)
<F11> <F11> <F11>
2 16,144 15,493 10,596 500,000
3 24,826 24,398 19,280 500,000
4 33,942 34,176 29,058 500,000
5 43,514 44,912 39,794 500,000
6 53,565 56,700 51,582 500,000
7 64,118 69,640 65,033 500,000
8 75,199 83,846 79,752 500,000
9 86,834 99,444 95,862 500,000
10 99,051 116,572 113,501 500,000
15 169,931 241,448 241,448 500,000
20 260,394 453,436 453,436 525,986
25 375,851 811,109 811,109 867,886
30 523,206 1,409,348 1,409,348 1,479,816
</TABLE>
(1)<F9> All values shown are as of the end of the Policy Year indicated,
have been rounded to the nearest dollar, and assume that
(a) premiums paid after the initial premium are received on
the Policy Anniversary, (b) no Policy loan has been made,
(c) no partial withdrawal of the Cash Surrender Value has been
made and (d) no premiums have been allocated to the Guaranteed
Interest Account.</F9>
(2)<F10> Assumes net interest of 5% compounded annually.</F10>
(3)<F11> Provided the No Lapse Guarantee Cumulative Premium Test has been
and continues to be met, the No Lapse Guarantee will keep the
Policy in force until the end of the first 10 Policy Years.
Provided the Death Benefit Guarantee Cumulative Premium Test or
the Fund Value Test has been and continues to be met, the
Guaranteed Death Benefit will keep the Policy in force until the
Policy Anniversary on which the lives insured are average Attained
Age 100 years old.</F11>
(4)<F12> Cash Surrender Value for first two years reflects sales charge
limitations imposed by the S.E.C.</F12>
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT
THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT
RETURNS FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE
POLICY VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- - 67 -
<PAGE> 91
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 55 (Standard) and
Female Non-Smoker Issue Age 50 (Standard)
$500,000 Face Amount Death Benefit Option 1
$7,500 Annual Planned Premium
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F13> (2)<F14> (4)<F16>
- ------- ------------ ------- ---------- --------
<S> <C> <C> <C> <C>
1 $ 7,875 $ 6,564(3) $ 2,407(3) $ 500,000(3)
<F15> <F15> <F15>
2 16,144 12,978 8,081 500,000
3 24,826 19,237 14,119 500,000
4 33,942 25,335 20,216 500,000
5 43,514 31,261 26,143 500,000
6 53,565 37,008 31,890 500,000
7 64,118 42,562 37,956 500,000
8 75,199 47,912 43,818 500,000
9 86,834 53,043 49,461 500,000
10 99,051 57,937 54,866 500,000
15 169,931 78,646 78,646 500,000
20 260,394 88,631 88,631 500,000
25 375,851 74,097 74,097 500,000
30 523,206 3,316 3,316 500,000
6% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F13> (2)<F14> (4)<F16>
- ------- ------------ ------- ---------- --------
1 $ 7,875 $ 6,968(3) $ 2,811(3) $500,000(3)
<F15> <F15> <F15>
2 16,144 14,190 9,292 500,000
3 24,826 21,667 16,549 500,000
4 33,942 29,401 24,282 500,000
5 43,514 37,391 32,273 500,000
6 53,565 45,637 40,519 500,000
7 64,118 54,135 49,529 500,000
8 75,199 62,881 58,787 500,000
9 86,834 71,871 68,289 500,000
10 99,051 81,096 78,025 500,000
15 169,931 131,123 131,123 500,000
20 260,394 185,273 185,273 500,000
25 375,851 235,891 235,891 500,000
30 523,206 270,932 270,932 500,000
</TABLE>
- - 68 -
<PAGE> 92
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F13> (2)<F14>
- ------- ------------ ------- ---------- --------
<S> <C> <C> <C> <C>
1 $ 7,875 $ 7,373(3) $ 3,216(3) $ 500,000(3)
<F15> <F15> <F15>
2 16,144 15,449 10,551 500,000
3 24,826 24,292 19,174 500,000
4 33,942 33,969 28,851 500,000
5 43,514 44,554 39,436 500,000
6 53,565 56,128 51,010 500,000
7 64,118 68,778 64,171 500,000
8 75,199 82,600 78,506 500,000
9 86,834 97,703 94,121 500,000
10 99,051 114,203 111,132 500,000
15 169,931 223,854 223,854 500,000
20 260,394 399,869 399,869 500,000
25 375,851 687,134 687,134 735,233
30 523,206 1,145,953 1,145,953 1,203,251
</TABLE>
(1)<F13> All values shown are as of the end of the Policy Year indicated,
have been rounded to the nearest dollar, and assume that
(a) premiums paid after the initial premium are received on
the Policy Anniversary, (b) no Policy loan has been made,
(c) no partial withdrawal of the Cash Surrender Value has been
made and (d) no premiums have been allocated to the Guaranteed
Interest Account.</F13>
(2)<F14> Assumes net interest of 5% compounded annually.</F14>
(3)<F15> Provided the No Lapse Guarantee Cumulative Premium Test has been
and continues to be met, the No Lapse Guarantee will keep the
Policy in force until the end of the first 10 Policy Years.
Provided the Death Benefit Guarantee Cumulative Premium Test or
the Fund Value Test has been and continues to be met, the
Guaranteed Death Benefit will keep the Policy in force until the
Policy Anniversary on which the lives insured are average Attained
Age 100 years old.</F15>
(4)<F16> Cash Surrender Value for first two years reflects sales charge
limitations imposed by the S.E.C.</F16>
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER
IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS
EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS FOR THE
FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED
THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS
CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR
ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - 69 -
<PAGE> 93
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 55 (Standard) and
Female Non-Smoker Issue Age 50 (Standard)
$500,000 Face Amount Death Benefit Option 2
$8,200 Annual Planned Premium
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F17> (2)<F18> (4)<F20>
- ------- ------------ ------- ---------- --------
<S> <C> <C> <C> <C>
1 $ 8,610 $ 7,240(3) $ 2,780(3) $507,240(3)
<F19> <F19> <F19>
2 17,651 14,332 9,214 514,332
3 27,143 21,278 16,160 521,278
4 37,110 28,074 22,956 528,074
5 47,576 34,715 29,597 534,715
6 58,564 41,194 36,076 541,194
7 70,103 47,504 42,897 547,504
8 82,218 53,636 49,541 553,636
9 94,939 59,580 55,997 559,580
10 108,296 65,325 62,254 565,325
15 185,791 95,265 95,265 595,265
20 284,698 118,270 118,270 618,270
25 410,930 125,573 125,573 625,573
30 572,038 97,554 97,554 597,554
</TABLE>
<TABLE>
<CAPTION>
6% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F17> (2)<F18> (4)<F20>
- ------- ------------ ------- ---------- --------
<S> <C> <C> <C> <C>
1 $ 8,610 $ 7,685(3) 3,225(3) 507,685(3)
<F19> <F19> <F19>
2 17,651 15,667 10,549 515,667
3 27,143 23,961 18,843 523,961
4 37,110 32,573 27,454 532,573
5 47,576 41,508 36,390 541,508
6 58,564 50,771 45,653 550,771
7 70,103 60,368 55,761 560,368
8 82,218 70,300 66,206 570,300
9 94,939 80,570 76,987 580,570
10 108,296 91,176 88,105 591,176
15 185,791 156,169 156,169 656,169
20 284,698 232,913 232,913 732,913
25 410,930 314,343 314,343 814,343
30 572,038 378,614 378,614 878,614
</TABLE>
- - 70 -
<PAGE> 94
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F17> (2)<F18>
- ------- ------------ ------- ---------- --------
<S> <C> <C> <C> <C>
1 $ 8,610 $ 8,130(3) $ 3,670(3) $ 508,130(3)
<F19> <F19> <F19>
2 17,651 17,056 11,938 517,056
3 27,143 26,861 21,742 526,861
4 37,110 37,627 32,509 537,627
5 47,576 49,445 44,327 549,445
6 58,564 62,414 57,296 562,414
7 70,103 76,641 72,035 576,641
8 82,218 92,244 88,150 592,244
9 94,939 109,351 105,769 609,351
10 108,296 128,100 125,029 628,100
15 185,791 263,211 263,211 763,211
20 284,698 483,547 483,547 983,547
25 410,930 835,665 835,665 1,335,665
30 572,038 1,383,422 1,383,422 1,883,422
</TABLE>
(1)<F17> All values shown are as of the end of the Policy Year indicated,
have been rounded to the nearest dollar, and assume that
(a) premiums paid after the initial premium are received on
the Policy Anniversary, (b) no Policy loan has been made,
(c) no partial withdrawal of the Cash Surrender Value has been
made and (d) no premiums have been allocated to the Guaranteed
Interest Account.</F17>
(2)<F18> Assumes net interest of 5% compounded annually.</F18>
(3)<F19> Provided the No Lapse Guarantee Cumulative Premium Test has been
and continues to be met, the No Lapse Guarantee will keep the
Policy in force until the end of the first 10 Policy Years.
Provided the Death Benefit Guarantee Cumulative Premium Test or
the Fund Value Test has been and continues to be met, the
Guaranteed Death Benefit will keep the Policy in force until the
Policy Anniversary on which the lives insured are average Attained
Age 85 years old.</F19>
(4)<F20> Cash Surrender Value for first two years reflects sales charge
limitations imposed by the S.E.C.</F20>
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER
IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS
EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS FOR THE
FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED
THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS
CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR
ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- - 71 -
<PAGE> 95
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 55 (Standard) and
Female Non-Smoker Issue Age 50 (Standard)
$500,000 Face Amount Death Benefit Option 2
$8,200 Annual Planned Premium
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F21> (2)<F22> (4)<F24>
- ------- ------------ ------- ---------- --------
<S> <C> <C> <C> <C>
1 $ 8,610 $ 7,227(3) $ 2,767(3) $507,227(3)
<F23> <F23> <F23>
2 17,651 14,292 9,173 514,292
3 27,143 21,187 16,069 521,187
4 37,110 27,906 22,787 527,906
5 47,576 34,436 29,318 534,436
6 58,564 40,767 35,649 540,767
7 70,103 46,883 42,277 546,883
8 82,218 52,768 48,674 552,768
9 94,939 58,403 54,820 558,403
10 108,296 63,764 60,693 563,764
15 185,791 85,952 85,952 585,952
20 284,698 94,656 94,656 594,656
25 410,930 74,130 74,130 574,130
30 572,038 0 (5) 0 (5) 0 (5)
<F25> <F25> <F25>
6% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F21> (2)<F22> (4)<F24>
- ------- ------------ ------- ---------- --------
1 $ 8,610 $ 7,671(3) $ 3,211(3) $507,671(3)
<F23> <F23> <F23>
2 17,651 15,623 10,505 515,623
3 27,143 23,858 18,740 523,858
4 37,110 32,377 27,259 532,377
5 47,576 41,177 36,059 541,177
6 58,564 50,254 45,136 550,254
7 70,103 59,601 54,995 559,601
8 82,218 69,208 65,113 569,208
9 94,939 79,062 75,480 579,062
10 108,296 89,145 86,075 589,145
15 185,791 142,697 142,697 642,697
20 284,698 195,170 195,170 695,170
25 410,930 227,013 227,013 727,013
30 572,038 199,434 199,434 699,434
</TABLE>
- - 72 -
<PAGE> 96
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
----------------------------
End of Cash
Policy Accumulated Policy Surrender Death
Year Premium Value Value Benefit
(1)<F21> (2)<F22>
- ------- ------------ ------- ---------- --------
<S> <C> <C> <C> <C>
1 $ 8,610 $ 8,115(3) $ 3,655(3) $ 508,115(3)
<F23> <F23> <F23>
2 17,651 17,007 11,889 517,007
3 27,143 26,745 21,627 526,745
4 37,110 37,401 32,283 537,401
5 47,576 49,053 43,935 549,053
6 58,564 61,786 56,668 561,786
7 70,103 75,689 71,083 575,689
8 82,218 90,858 86,764 590,858
9 94,939 107,397 103,814 607,397
10 108,296 125,412 122,341 625,412
15 185,791 242,810 242,810 742,810
20 284,698 417,466 417,466 917,466
25 410,930 662,549 662,549 1,162,549
30 572,038 982,340 982,340 1,482,340
</TABLE>
(1)<F21> All values shown are as of the end of the Policy Year indicated,
have been rounded to the nearest dollar, and assume that
(a) premiums paid after the initial premium are received on
the Policy Anniversary, (b) no Policy loan has been made,
(c) no partial withdrawal of the Cash Surrender Value has been
made and (d) no premiums have been allocated to the Guaranteed
Interest Account.</F21>
(2)<F22> Assumes net interest of 5% compounded annually.</F22>
(3)<F23> Provided the No Lapse Guarantee Cumulative Premium Test has been
and continues to be met, the No Lapse Guarantee will keep the
Policy in force until the end of the first 10 Policy Years.
Provided the Death Benefit Guarantee Cumulative Premium Test or
the Fund Value Test has been and continues to be met, the
Guaranteed Death Benefit will keep the Policy in force until the
Policy Anniversary on which the lives insured are average Attained
Age 85 years old.</F23>
(4)<F24> Cash Surrender Value for first two years reflects sales charge
limitations imposed by the S.E.C.</F24>
(5)<F25> In the absence of additional premium payments, the policy will
lapse.</F25>
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT
THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT
RETURNS FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE
POLICY VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE
RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW
THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- - 73 -
<PAGE> 97
APPENDIX B
Definitions
The following terms have the following meanings when used in this Prospectus:
Additional Rating - an addition to the cost of insurance rate for lives insured
who do not meet at least the underwriting requirements of the standard risk
class.
Age - at a specific date means, for each of the lives insured, the age on the
nearest birthday. If no specific date is mentioned, age means the age on the
birthday nearest to the Policy Anniversary.
Attained Age - Issue Age plus duration the policy has been in force since the
Policy Date.
Business Day - any day that the New York Stock Exchange is open for trading and
trading is not restricted. The net asset value of the underlying shares of a
sub-account of the Separate Account will be determined as of the end of each
Business Day. A Business Day is deemed to end at 4:00 p.m. Eastern Time.
Cash Surrender Value - the Policy Value less the deferred sales charge, the
deferred underwriting charge and any outstanding monthly deductions due.
Death Benefit Guarantee - Manufacturers Life of America guarantees that the
Policy will not go into default even if a combination of Policy loans, adverse
investment experience or other factors should cause the Policy's Net Cash
Surrender Value to be insufficient to meet the monthly deductions due at the
beginning of a Policy Month.
Death Benefit Guarantee Cumulative Premium Test - a test that, if satisfied to
youngest Attained Age 100 for death benefit Option 1 Policies, and youngest
Attained Age 85 for death benefit Option 2 Policies, will maintain the Death
Benefit Guarantee. To satisfy the Death Benefit Guarantee Cumulative Premium
Test, the sum of premiums paid, less withdrawals, and less Policy loans must
equal or exceed the sum of Death Benefit Guarantee Premiums since issue as at
the beginning of each Policy Month.
Death Benefit Guarantee Premium - a measure of premium used in determining
compliance with the Death Benefit Guarantee Cumulative Premium Test. The Death
Benefit Guarantee Premium as an annual amount is established by the Company
based on the individual life insured's Issue Age, sex (unless unisex rates are
required by law or are requested), risk class, death benefit option,
supplementary benefits and additional ratings.
Effective Date - the date that Manufacturers Life of America becomes obligated
under the Policy and when the first monthly deductions are taken. It is the
later of the date the underwriters approve issuance of the Policy, or the date
at least the Initial Premium is received at the Service Office.
Fund Value Test - a test which, if satisfied in applicable Policy Years, will
maintain the Death Benefit Guarantee. To satisfy the Fund Value Test the Gross
Single Premium at the beginning of any applicable Policy Month must not be
greater than the Net Policy Value.
- - 74 -
<PAGE> 98
Gross Single Premium - the amount of premium, based on each life insured's
Attained Age, the duration of the coverage, sex (unless unisex rates are
required by law or are requested), and risk class, needed to endow the Policy
at the age the Death Benefit Guarantee terminates, assuming 4% interest and
current charges.
Guaranteed Interest Account - that part of the Policy Value which reflects the
value the policyowner has in the general account of Manufacturers Life of
America.
Guideline Annual Premium (GAP) - an amount defined by S.E.C. regulation. It
is used to determine maximum sales charges that may be deducted under the
Policy.
Initial Premium - at least 1/12 of the Target Premium.
Investment Account - that part of the Policy Value which reflects the value the
policyowner has in one of the sub-accounts of the Separate Account.
Issue Age - the Age nearest birthday, at Policy Date, as shown in the Policy.
If there is an Additional Rate based on age, the Issue Age will be adjusted to
reflect the underwriting class.
Loan Account - that part of the Policy Value which reflects the value the
policyowner has transferred from the Guaranteed Interest Account or the
Investment Accounts as collateral for a Policy loan.
Modified Policy Debt - as of any date, the Policy Debt plus the amount of
interest to be charged to the next Policy Anniversary, all discounted from the
next Policy Anniversary to such date at an annual rate of 4%.
Monthly Death Benefit Guarantee Premium - 1/12 of the Death Benefit Guarantee
Premium.
Monthly No Lapse Guarantee Premium - 1/12 of the No Lapse Guarantee Premium.
Net Cash Surrender Value - the Cash Surrender Value less the Policy Debt.
Net Policy Value - the Policy Value less the value in the Loan Account.
Net Premium - amount of premium allocated to the Investment Accounts and/or the
Guaranteed Interest Account. It equals gross premiums less the deductions for
premium charge and state, local and federal taxes.
No Lapse Guarantee - Manufacturers Life of America guarantees that the Policy
will not go into default even if a combination of Policy loans, adverse
investment experience or other factors should cause the Policy's Net Cash
Surrender Value to be insufficient to meet the monthly deductions due at the
beginning of a Policy Month.
The No Lapse Guarantee requires a lower cumulative premium than the Death
Benefit Guarantee, and in return guarantees a shorter number of years that the
Policy will stay in force if the No Lapse Guarantee Cumulative Premium Test is
met.
No Lapse Guarantee Cumulative Premium Test - a test that, if satisfied in the
No Lapse Guarantee Period, will maintain the No Lapse Guarantee. To satisfy
- - 75 -
<PAGE> 99
the No Lapse Guarantee Cumulative Premium Test, the sum of premiums paid, less
withdrawals, and less Policy loans must equal or exceed the sum of No Lapse
Guarantee Premiums since issue as at the beginning of each Policy Month.
No Lapse Guarantee Period - is the first 10 Policy Years for lives insured with
an average Issue Age up to and including age 70. For lives insured with an
average Issue Age of 71 and older, the No Lapse Guarantee Period decreases by
one year for each year the average Issue Age exceeds 70, until age 77. After
age 77 the No Lapse Guarantee Period is fixed at three years.
The No Lapse Guarantee is available only to lives insured whose average Issue
Age is 85 or less.
No Lapse Guarantee Premium - is equal to Target Premium, and is a measure of
premium used in determining compliance with the No Lapse Guarantee Premium
Test.
Planned Premium - the premium the policyowner plans to pay periodically.
Subject to certain requirements of law, the Planned Premium may be changed at
any time.
Policy Date - the date from which Policy Years, Policy Months and Policy
Anniversaries are determined. Monthly deductions are due on the Policy Date.
Policy Debt - as of any date, the aggregate amount of Policy loans, including
borrowed interest, less any loan repayments.
Policy Value - the sum of the values in the Loan Account, the Guaranteed
Interest Account and the Investment Accounts.
Service Office - the office designated to service the Policies, which is shown
on the cover page of this prospectus.
Surrender Charge Period - the period (usually 15 years) following the Policy
Date or any increase in face amount during which surrender charges may be
assessed if the Policy is surrendered or lapsed, the face amount is decreased
or a partial withdrawal takes place. There are two surrender charges under the
Policy: a Deferred Underwriting Charge and a Deferred Sales Charge.
Target Premium (TP) - a premium amount used to determine the maximum sales
charge and deferred sales charge under a Policy and to determine the level of
compensation the agent shall receive. The Target Premium for the initial face
amount is set forth in the Policy.
This premium is based on each individual life insured's Issue Age, sex (unless
unisex rates are required by law or are requested), risk class, death benefit
option, supplementary benefits and additional ratings. The policyowner will be
advised of the Target Premium for any increase in face amount.
Withdrawal Tier Amount - as of any date is the net Cash Surrender Value at the
previous anniversary, multiplied by 10%.
- - 78 -
<PAGE> 100
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.
<PAGE> 101
Indemnification of Directors and Officers
Article XV of the By-Laws of The Manufacturers Life Insurance Company of
America provides for indemnification of directors and officers as follows:
"Article XV."
1. The Company may indemnify any person who is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal or administrative (other than by or in
the right of the Company), by reason of the fact that he;
(a) is or was a director, officer or employee of the Company, or
(b) is or was serving at the request of the Company as a director,
officer, employee, or trustee of another corporation, partnership,
joint venture, trust or other enterprise, against all expenses
(including solicitors' and attorneys' fees), judgments, fines and
amounts paid in settlement, actually and reasonably incurred by
him in connection with such action, suit or proceeding, if he acted
honestly and in good faith and with a view to the best interests of
the Company, and, in the case of any criminal or administrative
action or proceeding, he had reasonable grounds for believing that
his conduct was lawful. The termination of any action, suit
or proceeding by judgment, order, settlement or conviction shall not of
itself create a presumption that the person did not act honestly and in
good faith with a view to the best interest of the Company and, with
respect to any criminal action or proceeding, that he did not have
reasonable grounds for believing that his conduct was lawful.
2. The Company shall in any event indemnify a person referred to in
paragraph 1 hereof who has been substantially successful in the defence
of any such action, suit or proceeding against all expenses (including
solicitors' and attorneys' fees) reasonably incurred by him in connection
with the action, suit or proceeding.
3. The indemnification provided by this By-Law shall be continuing and
enure to the benefit of the heirs, executors, and administrators of any
person referred to in paragraph 1 hereof.
4. Expenses (including solicitors' and attorneys' fees) incurred in
defending a civil or criminal action, suit or proceeding may be paid by
the Company in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of any person
referred to in paragraph 1 hereof to repay the amount if it shall be
ultimately determined that he is not entitled to indemnified by the
Company as authorized by this By-Law.
5. The indemnification provided by this By-Law shall not be deemed
exclusive of any other rights to which those entitled to be indemnified
hereunder may be entitled as a matter of law or under any by-law,
- - 2 -
<PAGE> 102
agreement, vote of members, or otherwise.
Administrative Resolution Number 600.01 of The Manufacturers Life
Insurance Company provides for indemnification of certain directors and
officers of subsidiary companies as follows:
"Resolution 600.01"
1.1 [The Manufacturers Life Insurance Company (the "Company")] shall
indemnify any person who is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or administrative (other than by or in the right of the Company except
as provided in 1.2 of this Article) by reason of the fact that the person
(a) is or was a Director, officer or employee of the Company, or
(b) is or was serving at the specific request of the Company, as a
Director, officer, employee or trustee of another corporation,
partnership, joint venture, trust or other enterprise, or
(c) is or was engaged at the same time as an agent in the sale of the
Company's products while at the same time employed by the Company in the
United States in a branch management capacity, against all expenses
(including but not limited to solicitors' and attorneys' fees) judgments,
fines and amounts in settlement, actually and reasonably incurred by the
person in connection with such action, suit or proceeding, (other than
those specifically excluded below) if the person acted honestly, in good
faith, with a view to the best interests of the Company or the enterprise
the person is serving at the request of the Company, and within the scope
of his or her authority and normal activities, and, in the case of any
criminal or administrative action or proceeding, the person had reasonable
grounds for believing that his or her conduct was lawful.
The termination of any action, suit or proceeding by judgment, order,
settlement or conviction shall not of itself create a presumption that the
person did not act honestly and in good faith with a view to the best interests
of the Company and, with respect to any criminal action or proceeding, that the
person did not have reasonable grounds for believing that his or her conduct
was lawful.
1.2 The Company shall also, with the approval of the Board, indemnify a
person referred to in Section 1.1 of this Article in respect of any action
by any person by or on behalf of the Company to procure a judgment in its
favour to which the person is made a party by reason of being or having
been a Director, officer or employee of the Company, against all costs,
charges and expenses reasonably incurred by him or her in connection with
such action if he or she fulfills the conditions set out in Section 1.1 of
this Article.
1.3 The Company shall have no obligation to indemnify any person for:
(a) any act, error, or omission committed with actual dishonest,
fraudulent, criminal or malicious purpose or intent, or
- - 3 -
<PAGE> 103
(b) any act of gross negligence or willful neglect, or
(c) any liability of others assumed by any person otherwise entitled to
indemnification hereunder, or
(d) any claims by or against any enterprise which is owned, operated,
managed, or controlled by any person otherwise entitled to indemnification
hereunder or any claims by such person against an enterprise, or
(e) any claim arising out of, or based on, any pension plan sponsored by
any person otherwise entitled to indemnification hereunder as employer, or
(f) bodily injury, sickness, disease or death of any person, or injury to
or destruction of any tangible property including loss of use thereof, or
(g) any amount covered by any other indemnification provision or by any
valid and collectible insurance which the person entitled to indemnity
hereunder may have, or
(h) any liability in respect of which the person would otherwise be
entitled to indemnification if in the course of that person's actions,
he or she is found by the Board of Directors to have been in breach of
compliance with the Company's Code of Business Conduct or Conflict of
Interest guidelines, or
(i) any liability incurred by that person for any sales activities unless
the person qualifies under Section 1.1(c) of this Article.
1.4 In the event of any indemnity payment by the Company and as a condition
of it, the Company shall be subrogated to all the rights of recovery of the
person indemnified, and such person shall execute and deliver instruments and
papers and do whatever else is necessary to secure such rights.
1.5 As a condition of indemnification, the person to be indemnified shall not
demand or agree to arbitration of any claim, make any payment, admit any
liability, settle any claims, assume any obligation or incur any expense
without the written consent of the Company.
1.6 Any claim to indemnification shall not be assignable. In the event of
death or incompetency, the legal representative of a person eligible for
indemnification shall be entitled to indemnification for those acts and
omissions of the indemnified person incurred prior to his death or
incompetency.
1.7 The Company shall have the right as a condition of pending
indemnification to appoint counsel satisfactory to the person to be
indemnified to defend the person for any claim against him or her which may be
covered by this indemnity.
1.8 The indemnification shall be continuing and enure to the benefit of the
heirs, executors and administrators of any person referred to in Section 1.1
of this Article.
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<PAGE> 104
1.9 Expenses (including but not limited to solicitors' and attorneys' fees),
incurred in defending a civil, criminal, or administrative action, suit or
proceeding shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of any person referred to in Section 1.1 of this Article to repay the amount
if it shall be ultimately determined that the person is not eligible to be
indemnified by the Company.
1.10 The Indemnification provided hereunder shall not be deemed exclusive of
any other rights to which those eligible to be indemnified hereunder may be
entitled as a matter of law under any By-Law, Resolution, agreement, vote of
members or otherwise.
Liability Insurance
At a meeting of the Executive Committee of the Board of Directors of The
Manufacturers Life Insurance Company held October 21, 1993, the purchase of
Directors and Officers (D&O) liability insurance was approved. It became
effective December 1, 1993. It provides global coverage for all Directors and
Officers of The Manufacturers Life Insurance Company and its subsidiaries.
The coverage provided is comprised of two key components:
1. Insures Directors and Officers against loss arising from claims against
them for certain acts in cases where they are not indemnified by The
Manufacturers Life Insurance Company or a subsidiary.
2. Insures The Manufacturers Life Insurance Company against loss arising from
claims against Directors and Officers for certain wrongful acts, but only
where the corporation indemnifies the Directors or Officers as required or
permitted under applicable statutory or by-law provisions.
- - 5 -
<PAGE> 105
In general, the D&O coverage encompasses:
- - past, present and future Directors and Officers of The Manufacturers Life
Insurance Company and subsidiaries
- - defense costs and settlements (if legally obligated to be paid) resulting
from third party claims in connection with 'wrongful acts' committed by a
Director or Officer within the scope of their duties
- - claims made basis (i.e. policy responds to claims filed/reported during
the policy term, including claims arising from events transpiring before the
policy was in force as long as no Director/Officer was aware of the events
prior to coverage placement).
Representations Pursuant To Rule 6e-3(T)
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940, with respect to the policies described in the
prospectus.
Registrant makes the following representations:
(1) Section 6e-3(T)(b)(13)(iii)(F) has been relied upon.
(2) The level of the mortality and expense risks charge is within the
range of industry practice for comparable contracts.
(3) The Manufacturers Life Insurance Company of America ("Company") has
concluded that there is a reasonable likelihood that the distribution
financing arrangements for Separate Account Three will benefit the
Account and policyowners, and it will keep and make available to the
Commission on request a memorandum setting forth the basis for this
representation.
(4) Separate Account Three will invest only in management investment
companies which have undertaken to have a board of directors, a
majority of whom are not interested persons of the Company, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
The methodology used to support the representations made in paragraph (2)above
is based upon an analysis of the mortality and expense risks charges contained
in other variable life insurance policies, including flexible premium products.
Registrant undertakes to keep and make available to the Commission on request
the documents used to support the representation in paragraph (2) above.
- - 6 -
<PAGE> 106
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
Cross-Reference Sheet;
The Prospectus, consisting of _____ pages;
Undertaking required by Section 15(d) of the Securities Exchange
Act of 1934;
The Undertaking pursuant to Rule 484;
Representations pursuant to Rule 6e-3(T);
The signatures;
Written consents of the following persons:
Jones & Blouch L.L.P.
Ernst & Young LLP
Stephen C. Nesbitt (See Exhibit 3)
John R. Ostler
The following exhibits are filed as part of this Registration Statement:
1. Copies of all exhibits required by paragraph A of the instructions as to
exhibits in Form N-8B-2 are set forth below under designations based on such
instructions:
A(1) Resolutions of Board of Directors of The Manufacturers Life
Insurance Company of America establishing Separate Account
Three. Incorporated by reference to Exhibit A(1) to the
Registration Statement on Form S-6 filed by The Manufacturers
Life Insurance Company of America on April 4, 1994 (File
No. 33-77256).
A(3)(a)(i) Distribution Agreement between The Manufacturers Life Insurance
Company of America and ManEquity, Inc. Incorporated by
reference to Exhibit A(3)(a)(i) to the Registration Statement
on Form S-6 filed by The Manufacturers Life Insurance Company
of America on April 4, 1994 (File No. 33-77256).
- - 7 -
<PAGE> 107
A(3)(a)(ii) Amendment to Distribution Agreement (re Variable Life).
Incorporated by reference to Exhibit A(3)(a)(ii) to the
Registration Statement on Form S-6 filed by The Manufacturers
Life Insurance Company of America on April 4, 1994 (File
No. 33-77256).
A(3)(a)(iii) Amendment to Distribution Agreement (re redomestication).
Incorporated by reference to Exhibit A(3)(a)(iii) to the
Registration Statement on Form S-6 filed by The Manufacturers
Life Insurance Company of America on April 4, 1994 (File
No. 33-77256).
A(3)(b)(i) Specimen Agreement between ManEquity, Inc. and registered
representatives. Incorporated by reference to Exhibit
A(3)(b)(i) to the Registration Statement on Form S-6 filed by
The Manufacturers Life Insurance Company of America on
April 4, 1994 (File No. 33-77256).
A(3)(b)(ii) Specimen Agreement between ManEquity, Inc. and dealers.
Incorporated by reference to Exhibit A(3)(b)(ii) to the
Registration Statement on Form S-6 filed by The Manufacturers
Life Insurance Company of America on April 4, 1994 (File
No. 33-77256).
A(3)(c) Schedule of Sales Commissions. Incorporated by reference to
Exhibit A(3)(c) to the Registration Statement on Form S-6
filed by The Manufacturers Life Insurance Company of America
on April 4, 1994 (File No. 33-77256).
A(5)(a) Specimen Flexible Premium Variable Life Insurance Policy.
Incorporated by reference to Exhibit A(5)(a) to the Pre-
Effective Amendment No. 1 to the Registration Statement on Form
S-6 filed by The Manufacturers Life Insurance Company of
America on August 12, 1994 (File No. 33-77256).
A(6)(a) Articles of Incorporation of The Manufacturers Life Insurance
Company of America.**
A(6)(b) By-Laws of The Manufacturers Life Insurance Company of
America.**
** filed electronically
- - 8 -
<PAGE> 108
A(8)(a) Service Agreement between The Manufacturers Life Insurance
Company of America and The Manufacturers Life Insurance Company.
(Amended and Restated as of July 1, 1993). Incorporated by
reference to Exhibit A(8)(a) to the Registration Statement on
Form S-6 filed by The Manufacturers Life Insurance Company of
America on April 4, 1994 (File No. 33-77256).
A(8)(b) Specimen Stoploss Reinsurance Agreement between The
Manufacturers Life Insurance Company of America and The
Manufacturers Life Insurance Company. Incorporated by reference
to Exhibit A(8)(b) to the Registration Statement on Form S-6
filed by The Manufacturers Life Insurance Company of America
on April 4, 1994 (File No. 33-77256).
A(8)(c) Service Agreement between The Manufacturers Life Insurance
Company and ManEquity. Incorporated by reference to Exhibit
A(8)(c) to the Registration Statement on Form S-6 filed by The
Manufacturers Life Insurance Company of America on April 4, 1994
(File No. 33-77256).
A(10) Specimen Application for Flexible Premium Variable Life
Insurance Policy.**
2. See Exhibit 1.A(5)(a).
3. Opinion and consent of Stephen C. Nesbitt, Esq., General Counsel of The
Manufacturers Life Insurance Company of America. Incorporated by
reference to Exhibit 3 to the Registration Statement on Form S-6 filed
by The Manufacturers Life Insurance Company of America on April 4, 1994
(File No. 33-77256).
4. No financial statements are omitted from the prospectus pursuant to
instruction 1(b) or (c) of Part I.
5. Not applicable.
6. Opinion and consent of John R. Ostler, Vice-President, Treasurer and
Chief Actuary of The Manufacturers Life Insurance Company of America.
** filed electronically
- - 9 -
<PAGE> 109
7. Specimen notice of withdrawal right ("free look" notice). Incorporated by
reference to Exhibit 7 to Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-6 filed by The Manufacturers Life
Insurance Company of America on August 12, 1994 (File No. 33-77256).
8(a). Specimen notice of right of surrender while sales charge limitation
applies (initial purchase). Incorporated by reference to Exhibit 8(a)
to Pre-Effective Amendment No. 1 to the Registration Statement on
Form S-6 filed by The Manufacturers Life Insurance Company of America
on August 12, 1994 (File No. 33-77256).
8(b). Specimen notice of cancellation right (face amount increase).
Incorporated by reference to Exhibit 8(b) to Pre-Effective Amendment
No. 1 to the Registration Statement on Form S-6 filed by The
Manufacturers Life Insurance Company of America on August 12, 1994
(File No. 33-77256).
8(c). Specimen notice of right of surrender while sales charge limitation
applies (default). Incorporated by reference to Exhibit 8(c) to
Pre-Effective Amendment No. 1 to the Registration Statement on Form S-6
filed by The Manufacturers Life Insurance Company of America on
August 12, 1994 (File No. 33-77256).
9. Memorandum Regarding Issuance, Face Amount Increase, Redemption and
Transfer Procedures for the Policies.**
10. Consent of Ernst & Young LLP.
11. Consent of Jones & Blouch L.L.P.
12. Financial Data Schedules.
** Filed electronically
- - 10 -
<PAGE> 110
SIGNATURES
Pursuant to the requirments of the Securities Act of 1933 the
registrant, SEPARATE ACCOUNT THREE OF THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA, and its depositor, THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA, certify that the registrant meets all of the
requirements for effectiveness of this amended registration statement
pursuant to Rule 485(b) under the Securities Act of 1933 and have duly
caused this amendment to the registration statement to be signed on
their behalf by the undersigned thereunto duly authorized, and the seal
of the depositor to be hereunto affixed and attested, all in the City of
Toronto, Province of Ontario, Canada, on the 19th day of April, 1996.
[SEAL] SEPARATE ACCOUNT THREE OF THE
MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
______________________________
(Registrant)
By: THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Depositor)
By: /s/ Donald A. Guloien
DONALD A. GULOIEN
President
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
By: /s/ Donald A. Guloien
DONALD A. GULOIEN
President
Attest
Sheri L. Kocen
/s/ Sheri L. Kocen
- 11 -
<PAGE> 111
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, this amendment to
the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- ---------- ------ -----
Donald A. Guloien President and Director April 19, 1996
DONALD A. GULOIEN (Principal Executive Officer)
SANDRA M. COTTER Director
LEONARD V. DAY, Jr. Director
Stephen C. Nesbitt Director April 19, 1996
STEPHEN C. NESBITT
Joseph J. Pietroski Director April 19, 1996
JOSEPH J. PIETROSKI
John D. Richardson Director and Chairman April 19, 1996
JOHN D. RICHARDSON
Diane M. Schwartz Director April 19, 1996
DIANE M. SCHWARTZ
Douglas H. Myers Vice President, Finance April 19, 1996
DOUGLAS H. MYERS (Principal Financial and
Accounting Officer)
- - 12 -
<PAGE> 112
EXHIBITS
- - 15 -
<PAGE> 113
EXHIBITS
Sequentially
Numbered
Exhibit No. Description Page
- ----------- ------------ -------------
1.A(1) Resolutions of Board of Incorporated by reference
Directors of The Manu- to Exhibit A(1) to the
facturers Life Insurance Registration State-
Company of America ment on Form S-6 filed by
establishing Separate The Manufacturers Life
Account Three. Insurance Company of
America on April 4, 1994
(File No. 33-77256).
A(3)(a)(i) Distribution Agreement Incorporated by reference
between The Manufacturers to Exhibit A(3)(a)(i) to
Life Insurance Company of the Registration State-
America and ManEquity, Inc. ment on Form S-6 filed by
The Manufacturers Life
Insurance Company of
America on April 4, 1994
(File No. 33-77256).
A(3)(a)(ii) Amendment to Distribution Incorporated by reference
Agreement (re Variable Life). to Exhibit A(3)(a)(ii) to
the Registration State-
ment on Form S-6 filed by
The Manufacturers Life
Insurance Company of
America on April 4, 1994
(File No. 33-77256).
A(3)(a)(iii) Amendment to Distribution Incorporated by reference
Agreement (re redomesti- to Exhibit A(3)(a)(iii) to
cation). the Registration State-
ment on Form S-6 filed by
The Manufacturers Life
Insurance Company of
America on April 4, 1994
(File No. 33-77256).
A(3)(b)(i) Specimen agreement between Incorporated by reference
ManEquity, Inc. and to Exhibit A(3)(b)(i) to
registered representatives. the Registration State-
ment on Form S-6 filed by
The Manufacturers Life
Insurance Company of
America on April 4, 1994
(File No. 33-77256).
- - 16 -
<PAGE> 114
A(3)(b)(ii) Specimen agreement between Incorporated by reference
ManEquity, Inc. and dealers. to Exhibit A(3)(b)(ii) to
the Registration State-
ment on Form S-6 filed by
The Manufacturers Life
Insurance Company of
America on April 4, 1994
(File No. 33-77256).
A(3)(c) Schedule of Sales Incorporated by reference
Commissions. to Exhibit A(3)(c) to the
Registration Statement
on Form S-6 filed by
The Manufacturers Life
Insurance Company of
America on April 4, 1994
(File No. 33-77256).
A(5)(a) Specimen Flexible Premium Incorporated by reference
Variable Life Insurance to Exhibit A(5)(a) to Pre-
Policy. Effective Amendment No.1
to the Registration
Statement on Form S-6
filed by The Manufacturers
Life Insurance Company of
America on August 12, 1994
(File No. 33-77256).
A(6)(a) Articles of Incorporation of
The Manufacturers Life
Insurance Company of America.
**
A(6)(b) By-Laws of The Manufacturers
Life Insurance Company of
America.**
** Filed electronically
- - 17 -
<PAGE> 115
A(8)(a) Service Agreement between The Incorporated by reference
Manufacturers Life Insurance to Exhibit A(8)(a) to the
Company of America and The Registration Statement
Manufacturers Life Insurance on Form S-6 filed by
Company (Amended and Restated The Manufacturers Life
as of July 1, 1993). Insurance Company of
America on April 4, 1994
(File No. 33-77256).
A(8)(b) Specimen Stoploss Reinsurance Incorporated by reference
Agreement between The Manu- to Exhibit A(8)(b) to the
facturers Life Insurance Registration Statement
Company of America and The on Form S-6 filed by
Manufacturers Life Insurance The Manufacturers Life
Company. Insurance Company of
America on April 4, 1994
(File No. 33-77256).
A(8)(c) Service Agreement between Incorporated by reference
The Manufacturers Life to Exhibit A(8)(c) to the
Insurance Company and Registration Statement
ManEquity. on Form S-6 filed by
The Manufacturers Life
Insurance Company of
America on April 4, 1994
(File No. 33-77256).
A(10) Specimen Application for
Flexible Premium Variable
Life Insurance Policy.**
2. See Exhibit 1A(5)(a).
** Filed Electronically.
- - 18 -
<PAGE> 116
3. Opinion and consent of Incorporated by reference
Stephen C. Nesbitt, to Exhibit 3 to the
Esq., General Counsel of Registration Statement
The Manufacturers Life on Form S-6 filed by
Insurance Company of The Manufacturers Life
America. Insurance Company of
America on April 4, 1994
(File No. 33-77256).
4. No financial statements
are omitted from the
prospectus pursuant to
instruction 1(b) or (c)
of Part I.
5. Not applicable.
6. Opinion and consent of
John R. Ostler, Vice-
President, Treasurer and
Chief Actuary of The
Manufacturers Life
Insurance Company of
America.
7. Specimen notice of with- Incorporated by reference
drawal right ("free look" to Exhibit 7 to Pre-
notice). Effective Amendment No.1
to the Registration
Statement on Form S-6
filed by The Manufacturers
Life Insurance Company of
America on August 12, 1994
(File No. 33-77256).
8(a). Specimen notice of right Incorporated by reference
of surrender while sales to Exhibit 8(a) to Pre-
charge limitation applies Effective Amendment No.1
(initial purchase). to the Registration
Statement on Form S-6
filed by The Manufacturers
Life Insurance Company of
America on August 12, 1994
(File No. 33-77256).
- - 19 -
<PAGE> 117
8(b). Specimen notice of Incorporated by reference
cancellation right to Exhibit 8(b) to Pre-
(face amount increase). Effective Amendment No.1
to the Registration
Statement on Form S-6
filed by The Manufacturers
Life Insurance Company of
America on August 12, 1994
(File No. 33-77256).
8(c). Specimen notice of right Incorporated by reference
of surrender while sales Exhibit 8(c) to Pre-
charge limitation applies Effective Amendment No.1
(default). to the Registration
Statement on Form S-6
filed by The Manufacturers
Life Insurance Company of
America on August 12, 1994
(File No. 33-77256).
9. Memorandum Regarding
Issuance, Face Amount
Increase, Redemption
and Transfer Procedures
for the Policies.**
10. Consent of Ernst & Young LLP.
11. Consent of Jones & Blouch L.L.P.
12. Financial Data Schedules.
** Filed electronically
- - 20 -
<PAGE> 1
EXHIBIT 1.A(6)(a)
- - 21 -
<PAGE> 2
MICHIGAN DEPARTMENT OF COMMERCE
INSURANCE BUREAU
RESTATED ARTICLES OF REDOMESTICATION
(Domestic)
The name of the corporation is THE MANUFACTURERS LIFE INSURANCE COMPANY OF
AMERICA.
The undersigned company and persons of full age, and pursuant to action by
the Company's Board of Directors and stockholders, as appropriate, and subject
to the approvals of the Commissioners of Insurance of the Commonwealth of
Pennsylvania and the State of Michigan, do make, acknowledge, and verify these
Restated Articles of Redomestication for the purpose of redomesticating The
Manufacturers Life Insurance Company of America from the Commonwealth of
Pennsylvania to the State of Michigan, pursuant to Michigan Insurance Code
Sections 500.412 through 500.415, and for the purpose of restating the Articles
of Agreement of The Manufacturers Life Insurance Company of America.
The following Restated Articles of Redomestication of The Manufacturers
Life Insurance Company of America was adopted by the stockholders of the
company on the Fifteenth day of September, 1992, in the manner prescribed by
law to be filed for approval with the above-identified Commissioners and to be
effective immediately upon filing:
Each article in the Articles of Agreement of The Manufacturers Life
Insurance Company of America, as amended, is deleted in its entirety and the
following is substituted in lieu thereof and supersedes the original Articles
of Agreement and all amendments thereto:
ARTICLE I
The name of the corporation and by which it is known in law is The
Manufacturers Life Insurance Company of America (the "Company") and its
principal office for the transaction of business shall be in the City of
Bloomfield Hills, State of Michigan.
ARTICLE II
The date of incorporation of the Company in the Commonwealth of
Pennsylvania was April 11, 1977 and the date of incorporation of the
redomesticated Company in the State of Michigan shall also be April 11, 1977.
ARTICLE III
The Company is organized for the following purposes, as authorized by
Chapter 6, Act No. 218 of the Public Acts of 1956, as amended, namely:
1. To insure the lives of persons, and every insurance appertaining
thereto; to grant and dispose of annuities, including variable life insurance
contracts and variable annuity contracts and to insure against personal injury,
disablement, or death resulting from traveling or general accidents, and
against disablement resulting from sickness, and every insurance appertaining
thereto, when written as a part of a policy of life insurance.
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<PAGE> 3
2. To insure against personal injury, disablement, or death resulting from
traveling or general accidents, and against disablement resulting from
sickness, and every insurance appertaining thereto.
3. To have the power to establish either or both general or separate
accounts in connection with the business authorized hereunder; to have the
power to establish or acquire any subsidiary authorized by law; and to have the
power to act in its own right in any similar capacity authorized by law.
4. To have the right to buy, hold, sell, and convey personal property and
such real estate or interest therein, as may be necessary or convenient for the
proper conduct of the affairs of the corporation, and as permitted by law.
5. To have all the powers conferred by law on a life insurance company
organized for the purpose above set forth; and in connection therewith to have
all powers conferred by law on all corporations organized and doing business
under and by authority of Chapter 52 of the Michigan Insurance Code.
ARTICLE IV
The term of existence of the Company shall be perpetual.
ARTICLE V
The annual meeting of the stockholders of the Company shall be held on the
First day of May of each year. If for any reason the annual meeting is not
held on that date, the Board of Directors shall properly call and notice a
special general meeting for the transaction of business of the annual meeting.
The annual meeting of the stockholders of the Company shall be held at a place
determined by the Company's Board of Directors unless otherwise required by
law.
ARTICLE VI
AUTHORIZED SHARES OF STOCK
The amount of capital stock of the Company is Five Hundred Five Million
Dollars ($505,000,000.00) divided into two classes: common stock and preferred
stock; Five Million (5,000,000) shares of the stock, of the par value of One
Dollar ($1.00) each, amounting in the aggregate at par to Five Million Dollars
($5,000,000) to be common stock and Five Million (5,000,000) shares of the
stock, of the par value of One Hundred Dollars ($100.00) each, amounting in the
aggregate at par to Five Hundred Million Dollars ($500,000,000) to be preferred
stock. The preferred stock shall be non-voting, except as required by law, and
shall be redeemable by the Company at any time determined by its Board of
Directors. Preferred stock will take preference over common stock upon
liquidation of the company. The holders of shares of common stock shall be
entitled to one vote for each share of common stock held in the stockholders
name on the books of the company on each matter submitted to a vote of the
stockholders.
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ARTICLE VII
DIVIDENDS
Dividends and distributions on shares of a particular stock may be
declared and paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine, provided, however, that
dividends on the preferred stock will be noncumulative and will be at the rate
of 10% on all issued preferred stock.
Dividends and distributions may be paid in cash, property or shares,
including authorized but unissued shares, or treasury shares, or a combination
of any of the foregoing, as determined by the Board of Directors or pursuant to
any programs the Board of Directors may have in effect at the time.
ARTICLE VIII
BOARD OF DIRECTORS
The business of the Company shall be conducted by the Board of Directors.
The number of Directors shall be not less than five nor more than twenty. At
least one Director of the Company shall be a resident of the State of Michigan.
Directors shall be elected annually at the annual meeting of stockholders,
except that, if the stockholders at a special meeting called for the purpose or
without a meeting by unanimous consent, shall increase the number of directors,
additional directors to fill the vacancies so created shall be elected at such
meeting or by such consent.
The majority of the members of the Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of
Directors. If a quorum shall not be in attendance, the meeting of the Board of
Directors shall be adjourned from time to time until a quorum shall be present.
A member of the Board of Directors may be removed, for cause, at any time
by the affirmative vote of a majority of the Board of Directors.
If any vacancy on the Board of Directors shall occur by death,
resignation, removal, or otherwise, the remaining directors shall continue to
act, and such vacancy may be filled by a majority of the remaining directors,
though less than a quorum. The person elected to fill the vacancy shall hold
office for the remainder of the unexpired term or until a successor is duly
elected and qualified.
At its annual meeting, the Board of Directors shall elect a President, a
Secretary, and a Treasurer; and may appoint one or more Vice-Presidents and
such other officers with authority to act for such Board of Directors as they
may see fit or as may be provided for by the Bylaws of the Company. Any person
may serve in two or more offices, but a single person may not hold the
positions of President and Vice-President or Secretary and Assistant Secretary
at one and the same time.
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<PAGE> 5
ARTICLE IX
No director of the Company shall be personally liable to the Company
stockholders or policyholders for monetary damages for breach of the director's
fiduciary duty, provided that the foregoing shall not eliminate or limit the
liability of a director for any of the following:
i. a breach of the director's duty of loyalty to the corporation or its
stockholders or policyholders;
ii. acts or omissions not in good faith or that involve intentional
misconduct or knowing violations of law;
iii. a violation of Section 5036, 5276 or 5280 of the Michigan Insurance
Code, being MCL 500.5036, 500.5276 and 500.5280;
iv. a transaction from which the director derived an improper personal
benefit; or
v. an act or omission occurring on or before the date of filing of these
Restated Articles of Redomestication.
If the Michigan Insurance Code is hereafter amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the corporation, in addition to the limitation and
personal liability contained herein, shall be eliminated or limited to the
fullest extent permitted by the Michigan Insurance Code as so amended. No
amendment or appeal of this Article IX shall apply to or have any effect on the
liability or alleged liability of any director of the corporation for or with
respect to any acts or omissions of such director occurring prior to the
effective date of such amendment or appeal.
IN WITNESS WHEREOF, , President, and ,
Secretary of The Manufacturers Life Insurance Company of America, by affixing
their signatures below on this day of , 1992 do hereby certify
that the Restated Articles of Redomestication herein were duly adopted by the
unanimous written consent of the stockholders.
________________________ ________________________
, President , Secretary
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<PAGE> 6
Province of Ontario )
County of )
On this day of , 1992, before me a notary public in and for
said county, personally appeared and , known to
me to be the persons named in and who executed the foregoing instrument, and
severally acknowledged that they executed the same freely and for the intents
and purposes therein mentioned.
Notary Public, in and for the Province of Ontario, County of
My Commission does not expire.
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<PAGE> 1
EXHIBIT 1.A(6)(b)
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<PAGE> 2
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
BY-LAWS
ARTICLE I - Name
This corporation shall be known as The Manufacturers Life Insurance
Company of America (formerly National Liberty Life Insurance Company of
America).
ARTICLE II - Purposes
This Company shall, through its officers, Board of Directors and persons
duly authorized to act for and on behalf of the Company, cause to be issued
contracts or policies of insurance in the form and for the purposes as provided
for under the statutes of the State of Michigan relating thereto, and the rules
and regulations of the Michigan Insurance Bureau and as provided by the laws,
rules and regulations of any other states in which the Company may qualify to
do business.
ARTICLE III - Company Business and
Principal Office
The business of the Company may be conducted anywhere in the State of
Michigan, and in such other states of the United States or elsewhere wherein
the Company may qualify for the purpose of the conduct of the business, as
authorized by its Restated Articles of Redomestication and amendments thereto.
The home office of the Company shall be in Bloomfield Hills, Michigan. The
Company may establish branch or district offices, or agencies, elsewhere in the
State of Michigan, as well as in such other states in which it may qualify to
do the business of insurance.
ARTICLE IV - Seal
The Company has adopted a seal, a copy of which is impressed herewith,
that shall hereafter be used by the Company wherever a seal may be required.
ARTICLE V - Stockholders' Meetings
Section 1. Place of Meeting. All Annual and Special meetings of the
Stockholders shall be held in the city set forth in the Company's Restated
Articles of Redomestication as the location of its principal office or such
other place as determined by the Board of Directors unless otherwise required
by law.
Section 2. Annual Meeting. The annual meeting of the stockholders of the
Company shall be held on the First day of May of each year or at such other
time as may be ordered by the Board of Directors.
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<PAGE> 3
Section 3. Special Meeting. Special meetings of the stockholders may be
convened at the request of the majority of the members of the Board of
Directors, by the President, or at the written request of stockholders
representing forty percent (40%) of the outstanding stock of this Company, duly
submitted to the Secretary at least forty-five days before the date of such
meeting. The call for a special meeting shall designate the time and place of
the said meeting, and as set forth in Section 5. The notice must also set
forth the particular purpose or purposes for which the said meeting is being
called.
Section 4. Quorum. A quorum for the purpose of transacting the business
of any meeting shall consist of a majority of the outstanding stock represented
either in person or by proxy. A proxy must be filed with the Secretary at
least five days prior to any meeting, as provided for in Section 7.
Section 5. Notice of Meeting. Except as may otherwise be provided by the
Michigan Insurance Code, notice of the annual or any special meetings of the
stockholders shall be given to the stockholders either by publication, when
required under the Code, or by personal notice mailed, postage prepaid, to the
last known address as it appears on the books and records of the Company, at
least twenty one days prior to the date of such meeting. Any meeting occurring
on a holiday, not attended by a quorum, or at the request of the majority of
those present at any meeting, may be continued or adjourned from day to day or
to any other day certain without the necessity of any further notice being
given to stockholders.
Section 6. Business of the Meeting. The annual meeting of the
stockholders of the Company shall be an open meeting for all business of any
nature, kind or character relating to the affairs of the Company. At this
meeting, elections shall be held for members of the Board of Directors whose
term expires at the annual meeting, or to fill any existing vacancy. Any
business of the meeting may be continued from day to day or to a day certain.
Section 7. Voting. Each stockholder shall be entitled to one vote for
each share of stock. Each stockholder may vote by proxy. The proxy shall be
in writing and must be filed with the Secretary of the Company at least five
days prior to the date of the meeting. In all elections for directors, each
stockholder having a right to vote may cast the whole number of his votes for
one candidate or distribute them among the candidates as he may prefer.
Section 8. Action Without a Meeting. Except as otherwise provided in the
Restated Articles of Redomestication, or by law, any action required or
permitted to be taken at any annual or special meeting of the stockholders may
be taken without a meeting, prior notice or a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of all the
outstanding shares entitled to vote thereon.
ARTICLE VI - Directors
Section 1. Number and Term. There shall be not less than five nor more
than twenty members of the Board of Directors. The exact number of directors
within said limits shall be determined by the Board of Directors. Each director
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<PAGE> 4
shall be elected for a period of one year or until his successor has been duly
elected and qualified as required herein. A director need not be a
stockholder.
Section 2. Meetings. An annual meeting of the newly elected Board of
Directors shall be held as soon after the annual meeting of shareholders as
convenient, but in no event later than thirty days after the annual meeting of
the shareholders.
Special meetings of the Board of Directors may be called at any time by
the President or Chairman and shall be called by the President upon the written
request of one-third (1/3) of the directors. Notice of the time and place of
each special meeting shall be given to each director no later than the day
before the meeting.
Section 3. Quorums. A majority of the members of the Board of Directors
shall constitute a quorum for the transaction of business at any meeting. If a
quorum shall not be in attendance, a meeting may be adjourned from time to time
until a quorum shall be present.
Section 4. Action Without a Meeting. Except as otherwise provided in the
Restated Articles of Redomestication or by law, any action required or
permitted to be taken at any regular or special meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting, prior
notice or a vote, if a consent in writing setting forth the action so taken
shall be signed by all the members of the Board of Directors or the committee.
Section 5. Vacancies. Any vacancy in the Board of Directors which shall
occur by death, resignation, removal or for any other cause may be filled by a
vote of the majority of the remaining members of the Board at the next regular
or special meeting. The person elected shall hold office for the unexpired
term or until a successor is duly elected and qualified.
Section 6. Election of Officers. At its annual meeting, the Board of
Directors shall elect from among its members a Chairman. It shall also elect a
President, Secretary and Treasurer, and if the majority of the Board deems it
necessary, may elect Vice Presidents, Assistant Secretaries, Assistant
Treasurers, and such other officers as it may designate. Any person may be
elected to two or more offices, but may not hold the position of both President
and Vice President at one and the same time.
Section 7. Removal. The Board of Directors by a majority vote may, for
cause, at any time remove any officer or director of the Company from office
and upon such removal the rights of such persons to the emolument and
compensation for services in such office shall forthwith cease and terminate.
Section 8. Security. The Board of Directors may from time to time
designate the nature, kind and amount, if any, of security that may be required
of any officer for the faithful performance of his duty.
Section 9. Powers of Board of Directors. The Board of Directors shall
generally be in charge of the business and affairs of the Company. The
business and affairs of the Company in its details shall be conducted and
managed by its
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<PAGE> 5
elected officers. The Board of Directors may by resolution duly
adopted, designate or appoint any one to act for and on behalf of the Company,
and may delegate specific authority to any elected officer or to any person to
do or perform any act or deed for and on behalf of this Company. The Board of
Directors may enter into any contract or agreement on any matters relating to
the business and affairs of this Company, and it shall be binding upon the
Company though extending beyond the terms of office of any or all the members
of the Board of Directors. It shall receive reports from its officers and
employees, and shall be authorized to issue directives to them. It shall set
the policy and the manner of the conduct of the business of the Company. It
shall set the salary and compensation, if any, to be paid its elected officers.
Subject to the provisions of the Michigan Insurance Code, the investment of
the funds of this Company shall be in accordance with the policies prescribed
by the Board of Directors, and the elected officers shall act only subject to
and within the limits authorized by the Board of Directors. The Board of
Directors shall generally have all the duties, powers, rights and privileges
granted them by the laws of the State of Michigan as they presently exist or
are amended or changed from time to time.
ARTICLE VII - Committees
Section 1. Executive Committee. There shall be elected at each annual
meeting of the Board of Directors an Executive Committee. The Executive
Committee shall have all the powers of the Board of Directors in the interim
between Board Meetings.
The Executive Committee shall consist of three or more members, of which
the President shall be a member. Any vacancy shall be filled by the Board of
Directors.
Regular minutes of the proceedings of the Executive Committee shall be
kept, which shall be presented to the meeting of the Board next succeeding such
meeting.
Section 2. Other Committees. The Board of Directors may elect such other
committees as it deems appropriate and desirable at such times, for such
durations, for such purposes, under such conditions, and with such authority of
the Board as the Board of Directors shall designate.
ARTICLE VIII - Officers and Their Duties
Section 1. The general management of the business and affairs of this
Company shall be conducted and managed by its elected officers in accordance
with the duties assigned to each of the said officers by these by-laws or by
directives from the Board of Directors, and they shall have the duty to
generally supervise the details and procedure or daily operation of the said
business and see to the proper performance of same by employees, agents or
persons hired or engaged by them on behalf of the Company.
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<PAGE> 6
Section 2. Chairman. The Chairman shall preside at all meetings of the
Board of Directors and stockholders. The Chairman shall not be an officer of
the Company. He shall have such other powers and perform such other duties as
may from time to time be assigned to him by the Board of Directors.
Vice Chairman. The Vice Chairman, if one is elected, shall preside at all
meetings of the Board of Directors and stockholders in the absence of the
Chairman. He shall not be an officer of the Company. He shall have such other
powers and perform such other duties as may from time to time be assigned to
him by the Board of Directors.
President. The President, unless otherwise provided by the Board, shall
be the chief executive officer of the Company, and shall have entire
supervision of the affairs of the Company subject to the regulations of the
Board of Directors. He shall preside at all meetings of the Board of Directors
and stockholders in the absence of the Chairman and Vice Chairman. He shall
perform all acts properly pertaining to the executive officer of the Company,
or that he may be directed to perform by the Board of Directors from time to
time. He shall from time to time bring before the Board of Directors such
information affecting the business and property of the Company as may be
required or advisable.
Vice President. Each Vice President shall have such powers and perform
such duties as may from time to time be assigned to him or them by the Board of
Directors. Unless otherwise ordered by the Board of Directors, the Vice
Presidents in the order of their seniority shall, in the absence or the
inability of the President, perform the duties of that office until the return
of the President or the disability shall have been removed or a new President
shall have been elected.
Secretary. The Secretary shall have such particular powers as pertains to
his office, and such authority as may be granted to him by the Board of
Directors. He shall have a custody of the corporate seal, attend all the
regular and special meetings of the stockholders, Board of Directors, and
committees, keep accurate minutes of the proceedings at each of such meetings
and report the same at a succeeding meeting of the committee, Board of
Directors, or of the stockholders. He shall attend to the giving of all
notices required by law or by these by-laws to be given to stockholders,
directors or committees unless and except as the President or the Board of
Directors may from time to time designate some other officer to perform such
functions. The Secretary may delegate any of his ministerial duties to any
Assistant Secretary.
Assistant Secretaries. The Assistant Secretaries shall have such powers
and perform such duties as may be assigned to them by the Board of Directors or
by the Secretary of the Company.
Treasurer. The Treasurer shall be the custodian of all the funds and
securities of the Company. He shall have such powers and authorities as may be
granted to him by the Board of Directors. He shall have the right to delegate
any of his ministerial duties to the Assistant Treasurer and shall also have
the right to enter into custodian agreements with banks or trust companies or
other corporations authorized by law to act as custodians.
Assistant Treasurer. Assistant Treasurers shall have such power and
duties as may be granted to him or them by the Board of Directors or as may be
assigned to him or them by the Treasurer.
The Treasurer and Assistant Treasurer may be required to file a bond in
the sum of at least Five Thousand Dollars ($5,000.00) with corporate surety.
The amount of the bond may from time to time be increased or decreased by the
Board of Directors.
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<PAGE> 7
Other Officers. The Board of Directors shall have the power from time to
time at any of its regular meetings or special meetings called for that
purpose, to create such additional officers, to elect persons to such offices
and assign their duties and powers.
Section 3. Delegation of Authority. In the event of death, resignation,
absence, disability or removal of any officer, the Board of Directors may
delegate the power and duties of such office to any other officer, or appoint
any other person to said position for the balance of the term.
Section 4. Bonds. Every officer and employee of the Company may be
required by the Board of Directors to furnish a bond for the faithful
performance of their duties and trust at the expense of the Company. Said bond
shall be in an amount prescribed by the Board of Directors and with such surety
and in such form and amount as required by the Board of Directors.
ARTICLE IX - Certificates of Stock
The certificates for shares of capital stock of the Company shall be in
such form, not inconsistent with the Restated Articles of Redomestication, as
shall be approved by the Board of Directors. Certificates of stock shall be
issued under the seal of the Company and shall be signed by the President or a
Vice President and the Secretary, and countersigned by the Treasurer. Shares
of stock of the Company shall be transferable only on the books of the Company
by the registered holder thereof in person or by attorney duly authorized, and
upon the surrender and cancellation of the certificate thereof duly endorsed.
The Board of Directors may direct the proper officers to issue new
certificates of stock in lieu of others which may have been lost or destroyed,
after the expiration of thirty days from receipt of request therefor, provided
the person requesting the new certificate shall make an affidavit of the facts
concerning loss or destruction and shall give the Company a bond of indemnity
in such form, amount, and with such surety, as is acceptable to the Board of
Directors.
ARTICLE X - Fiscal Year
The fiscal year of the Company shall begin on the first day of January and
terminate on the thirty-first day of December in each year.
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<PAGE> 8
ARTICLE XI - Bank Accounts
The Board of Directors shall have the authority on behalf of the company
and in its name to open or close an account or accounts in any reputable banks
or trust companies wherein there shall be deposited the funds of the Company.
Withdrawals from the said bank deposit shall be made by cheque or draft signed
only by such person or persons as may be specifically authorized so to do by
the Board of Directors. The Board of Directors may authorize a facsimile
signature on all cheques or drafts drawn for any amount.
ARTICLE XIa
1. All deeds, powers of attorney, contracts, documents, and instruments in
writing requiring to be executed by the Company under Seal shall be signed on
behalf of the Company by such Officer or Officers, or person or persons as may
be designated from time to time by Resolution of the Board of Directors.
2. All instruments and documents necessary to sell, assign, transfer,
purchase or accept shares, stocks, bonds, debentures and other like securities
out of or into the name of the Company shall be signed on behalf of the Company
by such Officer or Officers, or person or persons as may be designated from
time to time by Resolution of the Board of Directors.
ARTICLE XII - Reinsurance
The Board of Directors shall have the right to reinsure all or any of the
Company's liabilities under all or any of its policy contracts, subject to the
laws of the State of Michigan.
ARTICLE XIII - Notices
Wherever any notice is required by these by-laws, such notice may be
waived in writing by all of the persons entitled to such notice, anything to
the contrary herein notwithstanding.
ARTICLE XIV - Amendments
These by-laws may be altered, amended, or repealed, except as otherwise
provided by law, by the affirmative vote of a majority of the Board of
Directors, if notice of the proposed alteration, amendment or repeal be
contained in the notice of the meeting of the Board of Directors at which such
action is proposed.
The undersigned, the Secretary of the Company, states that these By-laws
were adopted as and for the by-laws of the Company on the day of
, 1992.
Dated: ___________________ ____________________________________
Secretary
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<PAGE> 1
EXHIBIT 1.A(10)
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<PAGE> 2
APPLICATION FOR LIFE INSURANCE TO
The Manufacturers Life Insurance Company of America
(hereinafter referred to as The Company)
Manulife Financial
Application No.
PLEASE PRINT AND USE BLACK INK. ANY CHANGES MUST BE
INITIALLED BY THE PROPOSED INSURED AND/OR OWNER. Policy No.
Proposed Life Insured
1a. Name (first, middle, last) 1b. Date of Birth (mmm/dd/yy)
1c. Place of Birth 1d. Soc. Sec. No./Tax I.D. No. 1e. Sex
1f. Occupation 1g. Specific Duties 1h. How Long?
1i. Home Address City State Zip 1j. How Long?
1k. Employer Name and Address City State Zip 1l. How Long?
Owner if other than Proposed Life Insured
2a. Name (first, middle, last) 2b. Date of Birth (mmm/dd/yy) 2c. Occupation
2d. Relationship to Proposed Life Insured 2e. Address City State Zip
2f. Employer Name and Address City State Zip
2g. If home address or employer has changed in last 2 years, give details:
Successor Owner - Recommended for Juvenile Insurance - Not recommended for
buy-sell or corporate-owned
3a. Name 3b. Relationship to Owner 3c. Soc. Sec. No./Tax I.D. No.
Beneficiary(ies) subject to change by Owner
4a. Primary 4b. Relationship to Proposed Life Insured
4c. Secondary 4d. Relationship to Proposed Life Insured
Send Premium Notices To:
5a. Insured Owner Business Residence Other (give details below):
5b. Name Address City State Zip
Life Insurance in Force:
6a. Total insurance in force on the Proposed Life Insured's life $
6b. Total insurance currently pending with all companies, including this
application $. Of this total, what amount of insurance do you intend to
accept? $
6c. List policies in force
Year of Accidental GI Option
Company Issue Group? Face Amount Death Amount Business Personal
7. Have you ever been declined for insurance, or been offered
insurance with restricted benefits or at other than standard rates?
Y/N
8. Is this insurance to replace, or will it cause a change in, or
involve a loan under, any insurance or annuity policy on any
Proposed Life Insured's life or in any insurance or annuity policy
owned by the Owner? If "Yes", to either 7 or 8, give details below:
Y/N
Page 1
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc. and ManEquity Inc.
Form NB0777UA (0296)
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<PAGE> 3
Application No. PLEASE PRINT
Policy Applied For
9a. Plan:
9b. Face Amount (policy only, excluding Supplementary Benefits): $
9c. If an additional or optional policy is being applied for in a separate
application, state plan and amount.
9d. Loan Interest Rate (Check loan rate applicable to the policy being applied
for) 5.75% 8% Variable
9e. If a supplementary benefit applied for cannot be approved, should the
policy be issued without it? Yes No Not Applicable
9f. Is a policy guarantee being applied for? Yes No Not Applicable
If "Yes", indicate type of policy guarantee: No Lapse Guarantee
Death Benefit Guarantee
Supplementary Benefits
Single-Life Plans Survivorship Plans
10. Total Disability Waiver of Monthly 11. Policy Split Option
Deductions Four Year Term (EPR)
Guaranteed Policy Value Total Disability Waiver of
Supplementary Insurance Option $ Monthly Deductions
Additional Life (number of lives Other (state which)
maximum 6) (complete application
NB0573UA for each additional life)
Other (state which)
Premiums
11a. Frequency: Annual Semi Quarterly Monthly Single
11b. If monthly, ManuMatic Transfer
11c. Planned Premium $
11d. Additional "once only" premium $
11e. Amount paid with application $
Death Benefit
12. Option 1: Face Amount Option 2: Face Amount Plus Policy Value
Special Requests
13.
Home Office Corrections or Amendments (NOT APPLICABLE IN WEST VIRGINIA)
14.
Page 2
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<PAGE> 4
Application No. PLEASE PRINT
Smoking Questions
15a. Have you used tobacco in any form during the past 2 years (including
cigars, cigarillos, a pipe, chewing tobacco or cigarettes? Y/N
15b. Do you use any medication or product containing nicotine? Y/N
If "Yes", give details:
15c. Have you smoked any cigarettes during the past 12 months?
If "Yes", how many? Y/N
15d. Were you previously a cigarette smoker but have now stopped? Y/N
If "Yes", when did you stop? Give month and year:
Avocation Questions
16a. Do you have any part-time or seasonal occupation? Y/N
16b. Do you expect to change your occupation? Y/N
16c. Do you expect to change your country of residence? Y/N
If "Yes", give details:
17a. Have you flown as a student pilot, licensed pilot or crew member
in any aircraft (including ultralight planes) in the past 2 years? Y/N
17b. Are any such flights planned in the future? Y/N
17c. Have you engaged in any form of motor vehicle or power boat racing,
sky diving, skin or scuba diving, parachuting, hang-gliding,
mountain climbing or ballooning in the last 2 years? Y/N
18a. What is your Drivers License Number? State Y/N
18b. Have you been convicted of 3 or more moving violations within the
past 3 years? Y/N
18c. Have you been convicted of driving while intoxicated or while
otherwise impaired? If "Yes", give details? Y/N
Financial Questions
Complete when amount of insurance is $250,000.00 and more, or when applying for
business insurance for any amount, or insurance on the life of a juvenile for
any amount.
19. What is the purpose of this insurance? (e.g. estate conservation,
buy-sell, keyman)
20. How was the need for this amount determined? (Please submit copies of
financial statement(s), estate analysis, contractual agreements, etc.)
21a. Gross annual earned income (salary, commissions, bonuses, etc.)$
21b. Gross annual unearned income (dividends, interest, net real estate
income, etc.)$
21c. Total Assets $ 21d. Total Liabilities? $ 21e. Personal Net Worth? $
Juvenile Insurance:
22a. Are all brothers and sisters equally insured? Yes No
If "No", give details:
22b. Are parent(s) / guardian covered by life insurance? Yes No
If "Yes", how much is in force? If "No", why not?
Business Insurance: Provide the following information on your company
Current Year Previous Year
23a. Assets $ $
23b. Liabilities $ $
23c. Gross Sales $ $
23d. Net Income after taxes $ $
23e. Fair Market Value of the business $ $
23f. What percentage of the business is owned by the proposed Life Insured? %
23g. Are other partners/owners/executives being insured? Give details:
24. In the past 5 years, has the Proposed Life Insured or the business had any
major financial problems (bankruptcy, etc.)? Y/N If "Yes", give details:
Page 3
- - 38 -
<PAGE> 5
Application No. PLEASE PRINT
Medical Questions: -Please provide details to "Yes" answers in the space below
25. Have 2 or more of your immediate family members (parents, brothers and
sisters) prior to age 65, died of or been diagnosed as having coronary
artery disease, stroke or kidney disease? Yes No
26. LIVING DECEASED
Family History Age Give Details of Present Health Age Cause of Death
Father
Mother
Brothers and
Sisters
27a. Your Height 27b. Your Weight 27c. Any weight loss in the last year? Y/N
28a. Name and address of personal or attending doctor:
28b. Date last consulted? 28c. Reason and any medication/treatment given:
28d. List any medications you are taking currently:
29. So far as you know, within the last 10 years have you had or been told by
a doctor that you had:
a.) Chest pain, shortness of breath, heart murmur, high blood pressure,
stroke, irregular heart beat, or any other disease or disorder of the
heart or arteries? Y/N
b.) Diabetes or disease of any glands? Y/N
c.) Mental or emotional disorder, nervous breakdown, convulsions,
epilepsy, paralysis or any other disorder of the brain or nervous
system? Y/N
d.) Arthritis, gout, or any bone, joint, muscle or skin disorder? Y/N
e.) Asthma, bronchitis, pneumonia, emphysema or any lung disorder? Y/N
f.) Cirrhosis, hepatitis, ulcer, colitis, diverticulitis, ileitis, or
other disease of the liver, gall bladder, pancreas, stomach or
intestines? Y/N
g.) Prostate or testicular disease, disease of the uterus, ovaries or
breast? Y/N
h.) Anemia, leukemia, clotting disorders, platelet disorders, infections,
or sources of blood loss? Y/N
i.) Disorder of the urinary tract or kidneys - sugar, albumin or blood in
the urine? Y/N
j.) Cancer or tumors? Y/N
k.) An operation or admission to a hospital or any other health care
facility for observation, treatment of any illness or diagnostic
tests (including treadmill stress test for insurance)? Y/N
l.) Any other health impairment or medically treated condition? Y/N
m.) Treatment or advice from a physician, or licensed practitioner,
regarding alcohol or drug use? Y/N
30. Within the last 10 years have you been diagnosed by a doctor as
having Acquired Immune Deficiency Syndrome (Aids)? Y/N
PLEASE PROVIDE DETAILS TO ANY "YES" ANSWERS (If more space is required, use the
Medical Questions Continuation Sheet)
Question Name, Address, Phone No. of Duration Reason and any
Number Date Attending Doctor and Hospital of Condition treatment given
Page 4
- - 39 -
<PAGE> 6
Application No.
Request for Taxpayer Identification Number and Certification
(To Be Completed by Owner/Taxpayer)
In order to comply with IRS regulations regarding Social Security Number
Tax Identification Numbers and Backup Tax - -
Withholding, individuals and sole proprietors
MUST give their Social Security Number. Other
entities MUST give their Employer Identification Number.
If you have no number or you have applied for a number Employer ID Number
and are waiting for one to be issued, write "APPLIED FOR" -
in the boxes. You then have 60 days to supply your TIN
number to us. After 60 days, The Company must begin
Backup Tax Withholding.
CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), AND
(2) I am not subject to Backup Tax Withholding either because I have not been
notified by the Internal Revenue Service (IRS) that I am subject to Backup Tax
Withholding as a result of a failure to report all interest or dividends, or
the IRS has notified me that I am no longer subject to Backup Tax Withholding
(does not apply to real estate transactions, mortgage interest paid, the
acquisition or abandonment of secured property, contributions to an individual
retirement arrangement (IRA), and payments other than interest and dividends).
Certification Instructions - You MUST cross out item (2) above if you have been
notified by the IRS that you are currently subject to Backup Tax Withholding
because of underreporting interest or dividends on your tax return.
Page 5
- - 40 -
<PAGE> 7
Application No.
Signatures
The Proposed Life Insured (or Parent or Guardian) has read the statements and
answers to the medical evidence portion and they are complete and true to the
best of his/her knowledge and belief. The Proposed Life Insured hereby agrees
that they shall form part of the application for life insurance for which such
medical evidence was required by The Company.
The Proposed Life Insured (or Parent or Guardian) acknowledges receipt of The
Notice of Disclosure of Information.
The Proposed Life Insured and Owner (or Parent or Guardian) agree that: 1.)
The statements and answers in this application are complete and true to the
best of their knowledge and belief. 2.) UNLESS THE TERMS AND CONDITIONS OF THE
TEMPORARY LIFE INSURANCE AGREEMENT ARE SATISFIED SO THAT INSURANCE IS PROVIDED
UNDER THAT AGREEMENT, INSURANCE UNDER ANY POLICY ISSUED ON THE APPLICATION WILL
BECOME EFFECTIVE ONLY WHEN THE FIRST PREMIUM HAS BEEN PAID IN FULL AND THE
POLICY HAS BEEN DELIVERED; PROVIDED THAT AT THE TIME OF DELIVERY THERE HAS BEEN
NO DETERIORATION IN THE INSURABILITY OF ANY PERSON PROPOSED FOR LIFE INSURANCE
AS STATED IN THE APPLICATION, SINCE THE DATE OF THE APPLICATION. They are
aware The Company has underwriting rules to determine insurability. 3.) (NOT
APPLICABLE IN WEST VIRGINIA) Acceptance of the policy will, where permitted by
law, constitute agreement to its terms and ratification of any changes
specified by The Company in the policy, except that any change of amount,
classification, plan, benefits or age at issue will be made only with the
Owner's written consent.
THE PROPOSED LIFE INSURED AND OWNER (OR PARENT OR GUARDIAN) UNDERSTAND THAT
UNDER THE POLICY APPLIED FOR, THE AMOUNT OF THE INSURANCE BENEFITS, THE
DURATION OF THE INSURANCE COVERAGE, AND THE POLICY VALUE MAY INCREASE OR
DECREASE DEPENDING ON THE INVESTMENT EXPERIENCE OF THE CHOSEN INVESTMENT
ACCOUNT AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines and confinement in
prison.
Signed at (City/State) this day of 19
(X) Witness (X) Signature of Proposed Life Insured
(X) Witness (X) Signature of Owner, if other than Proposed Life Insured
(X) Witness (X) Signature of any Proposed Juvenile Life Insured over age 10
(X) Signature of Registered Representative if other than Witness
(X) Consent of Parent or Guardian, if other than Owner
Father Mother Guardian
All other Registered Representatives sharing commissions for this policy must
also sign here.
(X) Signature of Registered Representative (X) Place and Date
(X) Signature of Registered Representative (X) Place and Date
(X) Countersignature of Licensed Resident Agent (where required by law)
Page 6
- - 41 -
<PAGE> 8
Authorization To Obtain Information
The Manufacturers Life Insurance Company
The Manufacturers Life Insurance Company (U.S.A.)
The Manufacturers Life Insurance Company of America
(hereinafter referred to as The Company)
Application No.
I hereby give permission to any physician, medical care provider, hospital,
clinic, laboratory, insurance company or MIB Inc. (The Medical Information
Bureau) or any other similar person or organization to give The Company and to
its reinsurers, information about me or any of my minor children who are to be
insured. The information collected by The Company may relate to the symptoms,
examination, diagnosis, treatment or prognosis of any physical or mental
condition. Although information related to drug or alcohol abuse is protected
from disclosure by Federal Regulation 42 CFR Part 2, I give permission to The
Company to collect this information for those purposes which are described
below. I understand that I can revoke this permission to collect information
related to drug or alcohol abuse at any time, but any revocation will not
affect such information that has already been collected and relied on by The
Company. Information collected under this Authorization will be used by The
Company to evaluate my application for insurance, to evaluate a claim for
benefits, or for reinsurance or other insurance purposes. I understand that I
have a right to receive a copy of this form. I agree that a photocopy of this
form will be as valid as the original. This Authorization will be valid for
two years from the date shown below. I acknowledge receipt of the Notice of
Disclosure of Information.
Date (mmm/dd/yy) (X) Signature of Proposed Life Insured
Name(s) of minor child(ren) proposed for insurance (X) Witness
(X) Signature of Parent or Guardian (if minor children proposed for insurance)
[Bar Code]
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc., and ManEquity, Inc.
Form NB1116US (0194)
- - 42 -
<PAGE> 9
Notice of Disclosure of Information
The Manufacturers Life Insurance Company
The Manufacturers Life Insurance Company (U.S.A.)
The Manufacturers Life Insurance Company of America
(hereinafter referred to as The Company)
Detach and give to Proposed Life Insured
Application No.
This brief description of our underwriting process is designed to help you
understand how an application for life insurance is handled, the types and
sources of information we may collect about you, the circumstances under which
we may disclose that information to others and your right to learn the nature
and substance of that information upon written request. The purpose of the
underwriting process is to make sure that you qualify for life insurance under
the rules of The Company and, assuming you do, establish the proper premium
charge for that insurance. The underwriting process assures that the cost of
insurance is distributed equitably among all policyowners, and that each
individual pays his or her fair share. The information necessary to evaluate
your application is dependent upon your age, the amount of insurance you are
applying for, your medical history, your occupation, your avocations and other
personal information. Your answers on the application are the principal source
of information, however additional sources of information may be required.
Information given in your application may be made available to other insurance
companies to which you make application for life or health insurance coverage
or to which a claim is being submitted. Information you provide will be
treated as confidential. The Company may, however, make a brief report thereon
to the Medical Information Bureau (M.I.B.), a non-profit membership
organization of life insurance companies which operates an information exchange
on behalf of its members. Upon request by another member insurance company to
which you have applied for life or health insurance coverage or to which a
claim is submitted, M.I.B. will supply such company with the information it may
have in its files. Upon receipt of a request from you, the Bureau will arrange
disclosure of any information it may have in your file. (Medical information
will be disclosed only to your attending physician). If you question the
accuracy of information in the Bureau's file, you may contact the Bureau and
seek a correction in accordance with the procedures set forth in the Federal
Fair Credit Reporting Act. The address of the Bureau's Information Office is
Post Office Box 105, Essex Station, Boston, Massachusetts 02112; telephone
number (617) 426-3660. The Company may also release information in its file to
other life insurance companies to whom you may apply for life or health
insurance, or to whom a claim for benefits may be submitted. As part of our
normal procedure, an investigative consumer report may be prepared concerning
character, general reputation, personal characteristics and mode of living,
except as may be related directly or indirectly to your sexual orientation.
This information will be obtained through a personal interview and/or
interviews with friends, neighbors and associates. A complete and accurate
disclosure of the nature and scope of the investigative consumer report, if one
is prepared, will be provided to you upon written request to the Senior
Underwriting Consultant, The Manufacturers Life Insurance Company, 200 Bloor
Street East, Toronto, Canada M4W 1E5.
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc., and ManEquity, Inc.
Form NB1116US (0194)
- - 43 -
<PAGE> 10
Notice Regarding Temporary Life Insurance Agreement and Receipt
The Manufacturers Life Insurance Company
The Manufacturers Life Insurance Company (U.S.A.)
The Manufacturers Life Insurance Company of America
(hereinafter referred to as The Company)
DO NOT DETACH
Application No. Policy No. Name of Proposed Life Insured
HEALTH QUESTIONS.
Has the Proposed Life Insured under this application:
(a) within the last 12 months been treated or had treatment recommended
by a member of the medical profession for any heart problem, stroke,
cancer or pneumonia? Y/N
(b) within the last 60 days had or been advised to have any additional
medical diagnostic test, treatment or surgery not yet performed? Y/N
(c) within the last 2 years, been declined for life or disability income
insurance? Y/N
I have read and understand the terms and conditions of the Temporary Life
Insurance Agreement. The Proposed Life Insured agrees that to the best of
his/her knowledge and belief the answers to the above Health Questions are
true.
Signed at (City/State) this day of 19
(X) Witness (X) Signature of Proposed Life Insured
(X) Witness (X) Signature of Owner (if other than Proposed Life Insured)
(X) Witness (X) Signature of Parent or Guardian (if minor child is Proposed
Life Insured
[bar code]
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc., and ManEquity, Inc.
Form NB1074US (0196)
- - 44 -
<PAGE> 11
Temporary Life Insurance Agreement and Receipt
The Manufacturers Life Insurance Company
The Manufacturers Life Insurance Company (U.S.A.)
The Manufacturers Life Insurance Company of America
(hereinafter referred to as The Company)
The Company acknowledges receipt of $ as a premium for life insurance applied
for on the life of for Application number
Date (X) Signature of Agent or Registered Representative
ALL PREMIUM CHECKS MUST BE MADE PAYABLE TO THE COMPANY AS INDICATED IN THE
CHECK BOX ABOVE; 200 BLOOR STREET EAST, TORONTO, CANADA M4W 1E5. DO NOT MAKE
CHECKS PAYABLE TO THE AGENT OR LEAVE THE PAYEE BLANK.
The Company will pay a death benefit to the beneficiary named in the
Application if any Proposed Life Insured or the survivor under a Survivorship
Plan dies while this Agreement is in effect, subject to the terms and
conditions set out below.
1. LIMITED AMOUNT OF INSURANCE. The amount of coverage under this Agreement
will be the lesser of: (a) the amount of insurance applied for including any
supplementary benefits and accidental death benefit if the Proposed Life
Insured's death is caused by an accident; and (b) $1,000,000 ($5,000,000 for
Survivorship plans or $200,000 for juvenile insurance). This maximum amount of
coverage applies to the total amount under this Agreement and any other
Temporary Life Insurance Agreement with The Company covering the Proposed Life
Insured. If there are two or more persons proposed for insurance, this maximum
amount applies to the total coverage. (See Over)
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc., and ManEquity, Inc.
Form NB1074US (0196)
- - 45 -
<PAGE> 12
2. ACCIDENTAL DEATH BENEFIT LIMITATION. If the benefits applied for include
an accidental death benefit, no such benefit will be paid in respect of a death
caused by: (a) voluntarily taking or absorbing of any drug, medicine, sedative
or poison (except in connection with any Proposed Life Insured's employment)
unless prescribed by a licensed doctor other than the Proposed Life Insured;
(b) suicide whether sane or insane except as provided in Missouri; or (c)
travel in any aircraft other than as a passenger. Exclusion (a) does not apply
to applications taken in Connecticut or other states which disallow this
exclusion.
3. TEMPORARY LIFE INSURANCE AGREEMENT. If any of questions (a) (b) or (c) in
the Notice Regarding Temporary Life Insurance Agreement and Receipt is answered
"yes" or left blank, no money will be accepted and no coverage will be provided
under this Agreement.
4. DATE INSURANCE BEGINS. Insurance under this Agreement will begin on the
date of this Agreement if The Company's Application for Life Insurance has been
completed and a payment has been received by The Company for at least
one-twelfth of the annual premium for the basic plan and any riders or
supplementary benefits requested in the Application. If payment is made by
check or draft, no insurance will be provided by this Agreement unless the
check or draft is honored when first presented for payment.
5. DATE INSURANCE ENDS - 90 DAY MAXIMUM. Insurance under this Agreement will
end on the earliest of: (a) the 90th day after the date of this Agreement; (b)
the day before the date insurance takes effect under the policy applied for;
(c) the date The Company offers insurance other than as applied for; or (d) the
date The Company mails notice to the applicant that the Application is declined
and refunds the premium paid. (a) does not apply to applications taken in
Connecticut.
6. SUICIDE. Except as otherwise provided in Missouri, if any person proposed
for insurance, whether sane or insane, commits suicide, The Company will only
be liable for a refund of the premium paid.
7. MISREPRESENTATION. If there is any material misrepresentation in the
answers to the Health Questions in the Notice Regarding Temporary Life
Insurance Agreement and Receipt, the Application or in any Medical Evidence
Exam form submitted to The Company related to any Proposed Life Insured, The
Company will only be liable for a refund of the premium paid.
8. OTHER CONDITIONS. No one is authorized to: (a) accept any premium for any
Proposed Life Insured under 15 days of age or over age 70 (nearest birthday) as
at the date of this Agreement; or (b) change or waive any provision of this
Agreement.
THE ABOVE EXCLUSIONS APPLY EXCEPT AS OTHERWISE PROVIDED BY APPLICABLE STATE
LAW.
Form NB1074US (0196)
- - 46 -
<PAGE> 13
Application No. PLEASE PRINT
To be answered by the Registered Representative (Required for ALL applications)
1. If the Owner is a Corporation, Partnership, Trust or other legal entity,
the NASD requires such entity to provide The Company with documentation
detailing the name(s) of all individuals authorized to transact business
on behalf of the entity. This requirement will be satisfied by submitting
a copy of the Corporation Resolution, Partnership Agreement, or
Certification by Trustee form.
List the name(s) of individual(s) authorized to transact business on
behalf
of the entity:
2. Temporary Life Insurance Agreement Issued? Yes No
3. To the best of your knowledge, is this insurance intended to replace, or
will it cause a change in, or involve a loan under, any insurance or
annuity policy on the life of any Proposed Life Insured or in any
insurance
or annuity policy owned by the Owner? Yes No
If "Yes", give details and complete any replacement forms that are
required. Advise whether any policy being replaced was itself a
replacement policy within the past 5 years.
4. Is this a 1035 exchange? Yes No If "Yes", how many policies will be
exchanged?
List policies:
Type of Contract
Company Name Policy No. (Annuity, Life, Term, Annuitant/Insured Owner
Endowment)
5. Additional information to be used in assessing suitability. (Please give
explanation if annual premium is more than 3% of annual income, if
spouse's
income is to be included in determining suitability, if answers to income
and net worth have not been provided, etc.):
6. If you are sharing the commissions for this policy with another agent(s) or
entity(ies), please complete the following:
Name of Agent/Entity Agent Code Share Remarks
Total 100%
I certify that I have truly and accurately recorded on the application all the
information supplied by the Proposed Life Insured (or Parent or Guardian).
I certify that a current prospectus (and any supplement) for the policy applied
for has been given to the Proposed Life Insured, and to the Owner if other than
the Proposed Life Insured, and that no sales materials other than those
approved by the appropriate regulating authorities have been used.
(X) Signature of Registered Representative (X) Place and Date
All other Registered Representatives sharing commissions for this policy must
also sign here.
(X) Signature of Registered Representative (X) Place and Date
(X) Signature of Registered Representative (X) Place and Date
Office of Supervisory Jurisdiction
Has this application been approved by the Office of Supervisory Jurisdiction?
Yes No If answer is "No", explain:
19
Name of Broker/Dealer Registered Principal Signature Date (Month/Day/Year)
Page 9
- - 47 -
<PAGE> 14
Application Supplement for
Investment Allocation and Investor Suitability
The Manufacturers Life Insurance Company of America
(hereinafter referred to as The Company)
Required with all Applications for Flexible Premium Variable Life Insurance.
Please print and use black ink. Any changes must be initialled by the Owner.
A signature is required on the reverse side.
This Application Supplement is deemed to be part of Application No.
Investment Allocation of Net Premiums
Choose one or more of the accounts listed below by indicating percentages of
net premium. There are no minimum percentages, but allocation percentages must
be whole numbers. Total must be 100%.
VARIABLE ACCOUNTS
AGGRESSIVE GROWTH FUNDS:
Manulife Pacific Rim Emerging Markets Fund %
Manulife International Fund %
Manulife Emerging Growth Equity Fund %
SPECIALTY FUND:
Manulife Real Estate Securities Fund %
EQUITY FUNDS:
NASL Equity Trust %
Manulife Common Stock Fund %
NASL Value Equity Trust %
Manulife Equity Index Fund %
NASL Growth and Income Trust %
BALANCED ASSETS FUNDS:
Manulife Balanced Assets Fund %
NASL Aggressive Asset Allocation Trust %
NASL Moderate Asset Allocation Trust %
NASL Conservative Asset Allocation Trust %
BOND FUNDS:
Manulife Capital Growth Bond Fund %
NASL U.S. Government Securities Trust %
MONEY MARKET FUND:
Manulife Money-Market Fund %
GUARANTEED ACCOUNT
Guaranteed Interest Account %
Note: NASL refers to North American Security Life (see over)
[bar code]
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc., and ManEquity, Inc.
Form NB0031UA (0296)
- - 48 -
<PAGE> 15
Investor Suitability
These questions apply to the OWNER of the policy. All questions must be
answered.
1. Have you received a current prospectus for the policy applied for? Y/N
Date of prospectus Date of supplement
2. DO YOU UNDERSTAND THAT UNDER THE POLICY APPLIED FOR:
(a) The amount of the insurance benefits, or the duration of the
insurance coverage, or both, may be variable or fixed? Y/N
(b) The amount of the insurance benefits, the duration of the
insurance coverage, and your policy value, may increase or
decrease depending on the investment experience of the chosen
investment accounts and are not guaranteed as to dollar amount? Y/N
3. With that in mind, is the policy in accord with your insurance
objectives and your anticipated financial needs?
Y/N
4. PURPOSE OF INSURANCE
PERSONAL: Estate creation Estate conservation
BUSINESS: Buy-sell Deferred compensation Keyman Pension trust Other:
5. ANNUAL INCOME OF OWNER
$250,000 plus $ 35,000 to $ 49,999 $ 15,000 to $ 19,999
$100,000 to $249,999 $ 25,000 to $ 34,999 $ 10,000 to $ 14,999
$ 50,000 to $ 99,999 $ 20,000 to $ 24,999 Under $10,000
6. NET WORTH OF OWNER
$1,000,000 plus $100,000 to $249,999
$ 500,000 to $999,999 Under $100,000
$ 250,000 to $499,000
If answers are not given to the above questions on income and net worth, The
Company will assume that the Owner has carefully considered the investment
objectives of the chosen Investment Accounts and has decided that those
objectives are suitable for his/her situation(s).
I decline to provide answers to questions related to income and net worth.
Signatures
signed at (City/State) this day of 19
(X) Witness (Registered Representative) (X) Signature of Owner
(X) Name of Registered Representative (PRINT NAME)
- 49 -
<PAGE> 1
EXHIBIT 6
- 50 -
<PAGE> 2
April 19, 1996
The Manufacturers Life Insurance
Company of America
500 N. Woodward Avenue
Suite 250
Bloomfield Hills, Michigan 48304
U.S.A.
Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 3 to Registration Statement No. 33-77256 on Form S-6
("Registration Statement") which covers premiums expected to be received under
Flexible Premium Survivorship Variable Life Insurance Policies ("Policies") to
be offered by The Manufacturers Life Insurance Company of America ("Company").
The prospectus included in the Registration Statement describes Policies
which will be offered by the Company in each State where they have been
approved by appropriate State insurance authorities. The Policy form was
prepared under my direction, and I am familiar with the amended Registration
Statement and Exhibits thereto. In my opinion:
(1) The table of corridor percentages shown under the caption "Death Benefit
Options" is consistent with the Policy's provisions.
(2) The illustrations of death benefits based on Policy Value multiplied by
corridor percentage shown under the caption "Death Benefit Options",
based on the assumptions stated in the illustrations, are consistent with
the provisions of the Policy.
(3) The illustration of Modified Policy Debt shown in the second paragraph
under the caption "Policy Loans", based on the assumptions stated in the
illustration, is consistent with the Policy's provisions.
(4) The Loan Account Illustration shown as a sub-caption under the caption
"Policy Loans", based on the assumption stated in the illustration, is
consistent with the Policy's provisions.
(5) Table 1 under the caption "Surrender Charges" showing the Deferred
Underwriting Charge and the Surrender Charge grading percentages during
the surrender charge period, is consistent with the provisions of the
Policy.
(6) The illustration of the operation of the deferred sales charge shown
under the sub-caption "Deferred Sales Charges" of the caption "Surrender
- - 51 -
<PAGE> 3
Charges", based on the assumptions stated in the illustration, is
consistent with the Policy's sales charge structure.
(7) The illustration of the operation of the maximum sales charge shown
under the sub-caption "Sales Charge Limitation" of the caption "Surrender
Charges", based on the assumptions stated in the illustration, is
consistent with the Policy's sales charge structure.
(8) The illustrations of Policy Values, Cash Surrender Values, and
Death Benefits for the Policy shown in Appendix A under the caption
"Sample Illustrations Of Policy Values, Cash Surrender Values and
Death Benefits", based on the assumptions stated in the illustrations,
are consistent with the provisions of the Policy. The rate structure of
the Policy has not been designed so as to make the relationship between
premiums and benefits, as shown in these illustrations, appear to be
correspondingly more favorable to a prospective purchaser of the Policy
for male age 55 and female age 50, than to prospective purchasers of the
Policy for males/females at other ages.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
Prospectus.
Very truly yours,
John R. Ostler
/s/ John R. Ostler
Vice President, Treasurer and Chief Actuary
- - 52 -
<PAGE> 1
EXHIBIT 9
- 53 -
<PAGE> 2
SVUL (May 96)
Memorandum Regarding Issuance, Face Amount Increase,
Redemption and Transfer Procedures For The Policies
This document sets forth information called for by paragraph
(b)(12)(iii) of Rule 6e-3(T) under the Investment Company Act of 1940
("1940 Act") with respect to procedures relating to issuance, face
amount increase, redemption and transfer transactions under Flexible
Premium Survivorship Variable Life Insurance Policies ("Policies")
participating in Separate Account Three of The Manufacturers Life
Insurance Company of America ("Manufacturers Life of America" or
"Company"). Such paragraph provides exemptions from Sections 22(c),
22(d), 22(e) and 27(c)(1) of the 1940 Act, and Rule 22c-1 thereunder, to
the extent necessary to comply with other provisions of Rule 6e-3(T) or
with state insurance laws and regulations and established administrative
procedures of the Company, provided the procedures are reasonable, fair
and not discriminatory to policy-holders and are disclosed in the
Company's registration statement under the 1940 Act.
1. GENERAL
Units of a particular sub-account of Separate Account Three are
credited to a Policy when net premiums are allocated to that sub-account
or amounts are transferred to that sub-account. Units of a sub-account
are redeemed whenever amounts are deducted, transferred or withdrawn
from the sub-account. The number of units credited or redeemed for a
specific transaction is based on the dollar amount of the transaction
divided by the value of the unit as of the Business Day on which the
transaction occurs or, in the case of errors, should have occurred,
except as set forth under 2(a) below with respect to deductions when no
units exist. The number of units credited with respect to a premium
payment will be based on the applicable unit values as of the Business
Day on which the premium is received at the Manufacturers Life of
America Service Office or other office or entity so designated by
Manufacturers Life of America, except for any premiums received before
the policy date as to which the applicable unit values will be the
values determined as of such date.
Units are valued as of the end of each Business Day. A Business
Day is deemed to end at 4:00 Eastern Standard Time. When an order
involving the crediting or redeeming of units is received after the end
of a Business Day or as of a day which is not a Business Day, the order
will be processed on the basis of unit values determined as of the next
Business Day. Similarly, any determination of Policy Value, Investment
Account value or death benefit to be made as of a day which is not a
Business Day will be made as of the next Business Day.
2. ISSUANCE AND RELATED TRANSACTIONS
(a) Applications and Policy Issuance.
To purchase a Policy, an applicant must submit a completed
application. Manufacturers Life of America will issue a Policy only if
it has a face amount of at least $250,000. A Policy will generally be
issued to persons between the ages of 0 and 90. In certain
circumstances the Company may in its sole
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discretion issue a Policy to persons above age 90. Upon receipt of a
completed application, the Company will follow certain insurance
underwriting (e.g. evaluation of risks) procedures designed to determine
whether the applicants are insurable. This process may involve such
verification procedures as medical examinations and blood testing and
may require that further information be provided by the proposed
insureds before a determination can be made. A Policy will not be
issued until the underwriting procedure has been completed. Each life
insured will have a risk class of preferred/non-smoker,
preferred/smoker, standard/non-smoker, or standard/smoker. Persons
failing to meet standard underwriting requirements nonetheless may be
eligible to purchase a Policy provided an Additional Rating is assigned.
Acceptance of an application is subject to the Company's insurance
underwriting rules.
(b) Payment of Premiums.
After the payment of the Initial Premium, premiums may be paid at any time
and in any amount during the lifetime of any of the lives insured subject to
the limitations on premium amount described hereinafter. All premiums must be
paid to the Manufacturers Life of America Service Office or other office or
entity so designated by Manufacturers Life of America. Manufacturers Life of
America will not accept any premium payment which is less than $50, unless the
premium is payable pursuant to a pre-authorized payment plan. In that case the
Company will accept a payment for as little as $10. Manufacturers Life of
America may change these minimums as of 90 days after written notice is sent to
the policyowner.
Effective Date is the date the Company becomes obligated under the Policy
and when the first monthly deductions are taken, other than for backdated
Policies which are described below. It is the later of the date the Company's
underwriters approve issuance of the Policy, or the date at least the Initial
Premium is received at the Manufacturers Life of America Service Office.
The Lives Insured may be covered under the terms of a conditional
insurance agreement between the Policy Date and the Effective Date.
Under certain circumstances a Policy may be issued with a backdated policy
date. A Policy will not be backdated more than six months (twelve months where
required by state regulation) before the date of the application for the
Policy. Monthly deductions will be made for the period the Policy Date is
backdated.
All premiums received for backdated Policies prior to the Effective Date
of a Policy, will be credited with interest from the date of receipt at the
rate of return then being earned on amounts allocated to the Money-Market Fund.
As of the Effective Date, the premiums paid plus interest credited, net of
deductions for federal, state and local taxes and the premium charge, will be
allocated among Investment Accounts and/or the Guaranteed Interest Account in
accordance with the policyowner's instructions.
All premiums received on or after the Effective Date of the Policy will be
allocated among Investment Accounts or the Guaranteed Interest Account using
unit values as of the date the premiums were received at the Manufacturers Life
of
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America Service Office or other office or entity so designated by
Manufacturers Life of America.
Policy Date is the date used to calculate the insurance age. It is the
date from which Policy Months, Policy Years, and Policy Anniversaries are all
determined. If the application accepted by the Company is accompanied by a
check for at least the Initial Premium, the Policy Date is the date the
application and check were received at the Manufacturers Life of America
Service Office. If the application accepted by the Company is not accompanied
by a check for at least the Initial Premium, the Policy Date is calculated as 7
days after issuance of the Policy (which is also the "Issue Date").
Monthly deductions are made as of the Policy Date and at the beginning of
each Policy Month thereafter. However, if due prior to the Effective Date on a
backdated policy, they will be made as of the Effective Date instead of the
dates they were due, as described above.
The Initial Premium must be received within 60 days after the Policy Date;
however, the Initial Premium may be required within 30 days on Policies with
Additional Ratings. If the Initial Premium is not paid or if the application
is rejected, the Policy will be cancelled.
The Policies also limit the sum of the premiums that may be paid at any
time so as to preserve the qualification of the Policies as life insurance for
federal tax purposes. These limitations are set forth in each Policy.
Manufacturers Life of America reserves the right to refuse or refund any
premium payments that may cause the Policy to fail to qualify as life insurance
under applicable tax law.
(c) Deductions from Premiums.
Manufacturers Life of America deducts a charge to cover state and local
premium taxes of 2.35% of each premium payment. State and local premium taxes
differ from state to state. The 2.35% rate is expected to be sufficient, on
average, to pay premium taxes where required. Manufacturers Life of America
also deducts a charge of 1.25% of each premium payment for federal taxes, an
amount which is also expected to be sufficient to pay federal taxes. Currently
it is the Company's intent to stop these deductions at the end of the tenth
Policy Year, but is not contractually obligated to do so. Manufacturers Life
of America also deducts a premium charge of 5.5% of the premiums paid in each
Policy Year, up to a maximum of the Target Premium in the then current Policy
Year. This deduction is guaranteed to cease at the end of the tenth Policy
Year, or ten years after a face increase.
(d) Reinstatement.
A policyowner can reinstate a Policy which has terminated after going into
default at any time within 21 days following the date of termination without
furnishing evidence of insurability, subject to the following conditions:
(a) All lives insured's risk classes are standard or preferred; and
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(b) All lives insured's attained ages are less than 46.
A policyowner can reinstate a Policy which has terminated after going into
default (described hereinafter) at any time within the five year period
following the date of termination subject to the following conditions:
(a) The Policy must not have been surrendered for its Net Cash
Surrender
Value at the request of the policyowner;
(b) Evidence of all lives insured's insurability satisfactory to
Manufacturers Life of America is furnished to it;
(c) A premium equal to the payment required during the 61 day grace
period following default to keep the Policy in force is paid to
Manufacturers Life of America; and
(d) An amount equal to any amounts paid by Manufacturers Life of America
in connection with the termination of the Policy is repaid to
Manufacturers Life of America.
If the reinstatement is approved, the date of reinstatement will be the
later of the date of the policyowner's written request or the date the required
payment is received at the Manufacturers Life of America Service Office or
other office or entity so designated by Manufacturers Life of America. At
reinstatement, the Policy Value, surrender charges, and loan account will be
reinstated to what they were at the date of default. After reinstatement,
surrender charges will remain in force for the remainder of the Surrender
Period, as measured from the date of default. Cost of insurance charges after
reinstatement will reflect the actual age of the lives insured.
3. FACE AMOUNT INCREASES
Subject to certain limitations, a policyowner may, upon written request,
increase the face amount of the Policy. Currently, an increase in face amount
must be at least $100,000. Manufacturers Life of America reserves the right to
increase or decrease the minimum face amount change as of 90 days after written
notice is sent to the policyowner.
Increases in face amount are subject to satisfactory evidence of
insurability. Increases may be made only once per Policy Year and only after
the second Policy Year except for Corporate-owned cases, where increases may
begin in the first year, and there are no minimum increase amount requirements.
An increase will become effective at the beginning of the Policy Month next
following the date Manufacturers Life of America approves the requested
increase. The Company reserves the right to refuse a requested increase if the
attained age of any of the lives insured at the Effective Date of the increase
would be greater than the maximum issue age for new Policies at that time.
In addition, subject to certain conditions as set forth in the Policy, the
policyowner may be entitled to increase the face amount of the Policy by a
certain amount without further evidence of insurability if there is an increase
in federal estate taxes within three years of the Policy Date. The policyowner
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is entitled to this benefit if both insureds are standard risks and under age
75 at time of issue. If the policyowner is considered a substandard risk in
accordance with Manufacturers Life of America's normal underwriting practices,
the benefit may not be available.
An increase in face amount will usually result in the Policy's being
subject to new surrender charges. The new surrender charges will be computed
as if a new Policy were being purchased for the increase in face amount. For
purposes of determining the new deferred sales charge, a portion of the Policy
Value at the time of the increase, and a portion of the premium paid on or
subsequent to the increase, will be deemed to be premiums attributable to the
increase. Any increase in face amount following a prior decrease in face
amount to a level less than the highest face amount previously in effect will
have no effect on the surrender charges to which the Policy is subject. This
is because surrender charges, if applicable, will have been assessed in
connection with the prior decrease in face amount. The insurance coverage
eliminated by the decrease of the oldest face amount will be deemed to be
restored first. As with the purchase of a Policy, a policyowner will have free
look and sales charge limitation rights with respect to any increase resulting
in new surrender charges.
An additional premium may be required for a face amount increase. The
increases will ordinarily increase the monthly deduction, and a new Death
Benefit Guarantee Premium, No Lapse Guarantee Premium, Guideline Level Premium,
Guideline Single Premium, and Target Premium, will be determined.
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4. REDEMPTIONS AND RELATED TRANSACTIONS
(a) Surrenders and Partial Withdrawals.
A Policy may be surrendered for its Net Cash Surrender Value at any time
while the last surviving life insured is living. The Net Cash Surrender Value
is equal to the Policy Value less any surrender charges and outstanding monthly
deductions due (the "Cash Surrender Value") minus the value of the Loan
Account. The Net Cash Surrender Value will be determined as of the end of the
Business Day on which Manufacturers Life of America received the Policy and a
written request for surrender at its Service Office. After a Policy is
surrendered, the insurance coverage and all other benefits under the Policy
will terminate.
After a Policy has been in force for two policy years, the policyowner may
make a partial withdrawal of the Net Cash Surrender Value. In most states, the
minimum amount that may be withdrawn is $500. The policyowner should specify
the portion of the withdrawal to be taken from each Investment Account and the
Guaranteed Interest Account. In the absence of instructions the withdrawal
will be allocated among such accounts in the same proportion that the Policy
Value in each account bears to the Net Policy Value. No more than one partial
withdrawal may be made in any one policy month.
If the Option 1 death benefit is in effect under a Policy from which a
partial withdrawal is made, the face amount of the Policy will be reduced. If
the death benefit is equal to the face amount at the time of withdrawal, the
face amount will be reduced by the amount of the withdrawal plus the portion of
the surrender charges assessed. If the death benefit is based upon the Policy
Value times the Corridor percentage as set forth in the Policy, the face amount
will be reduced only to the extent that the amount of the withdrawal plus the
portion of the surrender charge assessed exceeds the difference between the
death benefit and the face amount. Reductions in face amount resulting from
partial withdrawals will not incur any surrender charges above the surrender
charges applicable to the withdrawal. When the face amount of a Policy is
based on one or more increases subsequent to issuance of the Policy, a
reduction resulting from a partial withdrawal will be applied in the same
manner as a requested decrease in face amount, i.e., against the face amount
provided by the most recent increase, then against the next most recent
increase successively and finally against the initial face amount.
(b) Decreases in Face Amount.
Subject to certain limitations, a policyowner may, upon written request,
decrease the face amount of the Policy. Currently, a decrease in face amount
must be at least $100,000 (except for Corporate-owned policies, which have no
minimum decrease amount requirement). Manufacturers Life of America reserves
the right to increase or decrease the minimum face amount change as of 90 days
after written notice is sent to the policyowner. The Company reserves the
right to limit a decrease in face amount so as to prevent the Policy from
failing to qualify as life insurance for tax purposes.
A decrease in the face amount may be requested after the Policy has been
in force for two years, except during the two year period following any
increase in
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face amount or for Corporate-owned policies. In addition, during
the two year period following an increase in the face amount the policyowner
may elect at any time to cancel the increase. A decrease in face amount will
be effective at the beginning of the month next following the receipt of a
written request. A decrease will not be allowed if it would cause the face
amount to go below the minimum face amount of $250,000.
A decrease in face amount during the Surrender Charge Period will usually
result in surrender charges being deducted from the Policy Value. For purposes
of determining surrender and cost of insurance charges, a decrease will reduce
face amount in the following order: (a) the face amount provided by the most
recent increase, then (b) the face amounts provided by the next recent
increases successively, and finally (c) the initial face amount.
(c) Default.
The Policy provides for a Death Benefit Guarantee Cumulative Premium Test
and a No Lapse Guarantee Cumulative Premium Test. These tests are subject to
change if the face amount of the Policy or the death benefit option is changed
or if there is any change in the supplementary benefits added to the Policy or
in the rate classification of any life insured. If the Death Benefit Guarantee
Cumulative Premium Test or the No Lapse Guarantee Cumulative Premium Test is
satisfied, Manufacturers Life of America will guarantee that the Policy will
not go into default even if a combination of policy loans, adverse investment
experience or other factors should cause the Policy's Net Cash Surrender Value
to be insufficient to meet the monthly deductions due at the beginning of a
Policy Month. The death benefit guarantee will expire at the end of a Policy
Year specified in the Policy, currently (i) the year in which the youngest life
insured reaches, or would have reached, attained age 100 if death benefit
option 1 is maintained throughout the life of the Policy and (ii) the year in
which the youngest life insured reaches, or would have reached, attained age 85
if death benefit option 2 is selected at any time. The no lapse guarantee will
expire at the end of ten years for lives insured with an average issue age up
to and including 70. For lives insured with an average issue age of 71 and
older, the no lapse guarantee period decreases by one year for each year the
average issue age exceeds 70, until the average issue age reaches 77. For
lives insured with an average issue age of between 77 and 85, the no lapse
guarantee period is three years. The no lapse guarantee is not offered to
lives insured whose average age exceeds 85.
A Policy will go into default if at the beginning of any Policy Month the
Policy's Net Cash Surrender Value would go below zero after deducting the
monthly deductions then due except that in any policy year, the Policy will not
go into default if the death benefit guarantee or no lapse guarantee is in
effect, and, after ten years, if the Fund Value Test is satisfied.
Manufacturers Life of America will notify the policyowner of the default and
allow a 61 day grace period in which the policyowner may make a premium payment
sufficient to bring the Policy out of default. The required premium will be
equal to the amount necessary to bring the Net Cash Surrender Value to zero, if
it was less than zero as of the date of default, plus the monthly deductions
due at the date of default, and payable for the next two Policy Months. If the
required payment is not received by the end of the grace period, the Policy
will terminate and the
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Net Cash Surrender Value as of the date of default less
the monthly deduction then due will be paid to the policyowner (subject to any
applicable limitation on surrender charges).
A payment made to bring a Policy out of default will be treated as a
regular premium payment except that any monthly deductions then due will be
taken immediately after the allocation of the payment among Investment Accounts
or the Guaranteed Interest Account. Units redeemed in connection with the
assessment of such monthly deductions will be based on the unit values as of
the date the payment was made.
(d) Surrender Charges
Manufacturers Life of America will usually assess surrender charges upon
surrender or lapse of a Policy, a partial withdrawal of Policy Value or a
requested decrease in face amount. The charges will be assessed if any of the
above transactions occurs within the Surrender Charge Period unless the charges
have been previously deducted. There are two surrender charges -- a deferred
underwriting charge and a deferred sales charge.
Deferred Underwriting Charge. The deferred underwriting charge is $4 for
each $1,000 of face amount of insurance, originally purchased or added by
increase.
The deferred underwriting charge applicable to each level of insurance
coverage cannot exceed $4,000.
Deferred Sales Charges. The maximum deferred sales charge is equal to the
premiums paid in the first year up to a maximum of the Target Premium,
multiplied by the percentages shown in the table below.
Target Premiums depend upon the face amount of insurance provided at issue
or by an increase and the issue age and sex (unless unisex rates are required
by law or are requested) of each life insured and, in the case of certain
Policies issued in group or sponsored arrangements providing for reduction in
cost of insurance charges, the amount of insurance coverage. The Target
Premium for the initial face amount is specified in the Policy. The Target
Premium will be computed for each increase in face amount above the highest
face amount of coverage previously in effect, except for an increase in face
amount which results from a change in the death benefit option, and the
policyowner will be advised of such Target Premium.
Except for surrenders to which the surrender charge limitation below
applies, the maximum deferred sales charge will grade down as shown in Table 1
below:
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Table 1: The Deferred Underwriting and Deferred Surrender
Charge Grading Percentages During the Surrender Charge Period
(Applicable to the Initial Face amount and Subsequent Increases)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Age**: 0-75 76 77 78 79 80+
Surrender Charge Period*
12 100% 100% 100% 100% 100% 100%
24 100% 100% 100% 100% 100% 90%
36 100% 100% 100% 100% 90% 80%
48 100% 100% 100% 90% 80% 70%
60 100% 100% 90% 80% 70% 60%
72 100% 90% 80% 70% 60% 50%
84 90% 80% 70% 60% 50% 40%
96 80% 70% 60% 50% 40% 30%
108 70% 60% 50% 40% 30% 20%
120 60% 50% 40% 30% 20% 10%
132 50% 40% 30% 20% 10% 0%
144 40% 30% 20% 10% 0%
156 30% 20% 10% 0%
168 20% 10% 0%
180 0% 0%
</TABLE>
* Periods shown are after end of Policy Month. Policy Months not shown may
be calculated by linear interpolation.
** Average age refers to Average Issue Age of the Lives Insured, or Average
Attained Age following a face increase.
In order to determine the deferred sales charge applicable to a face
amount increase, Manufacturers Life of America will treat a portion of the
Policy Value as of the date of increase as a premium attributable to the
increase. In addition, a portion of each premium paid subsequent to the
increase will be attributed to the increase. In each case, the portion
attributable to the increase will be the ratio of the "guideline annual
premium" for the increase to the sum of the guideline annual premiums for the
initial face amount and all increases including the requested increase.
A "guideline annual premium" (gap) is a hypothetical amount based on
S.E.C. rules that is used to measure the maximum amount of the deferred sales
charge that may be imposed upon surrender, partial withdrawal, or a decrease in
face amount during the first two years after issuance or after an increase in
face amount.
Surrender Charge Limitation. The maximum sales charge that may be taken
under the Policy is 9% of twenty gaps or, if the insureds' joint life
expectancy is less than twenty years, then the number of years of life
expectancy would replace twenty gaps in determining the maximum sales charge.
However, if a Policy is surrendered or lapsed, or a face amount decrease is
requested at any time during the first two years after issuance or after an
increase in face amount, Manufacturers Life of America will forego taking that
part of the deferred sales charge with respect to "premiums" paid for the
initial face amount or such increase (including the portion of Policy Value
treated as premiums for the increase, as described above), whichever is
applicable, which exceeds the sum of (i) 30% of the premiums paid up to the
lesser of one gap or the cumulative premiums paid to the surrender date plus
(ii) 10% of the premiums paid in excess of one gap up to the lesser of two gaps
or the cumulative premiums paid to the surrender date plus (iii) 9% of the
premiums paid in excess of two gaps.
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Since a deferred sales charge is deducted in the event a Policy terminates
for failure to make the required payment following the Policy's going into
default, the surrender charge limitation will apply if such termination occurs
during the two year period following issuance of the Policy or any increase in
face amount. If the Policy terminates during the two years after a face amount
increase, the limitation will relate only to the sales charges assessed against
premiums attributable to the increase.
Charges on Partial Withdrawals. Both the deferred sales charge and the
deferred underwriting charges are applicable in the event of a partial
withdrawal of the Net Cash Surrender Value. A portion of the surrender charges
applicable to the initial face amount and to each increase in face amount will
be deducted as a result of the withdrawal. The surrender charges not assessed
as a result of the 10% free withdrawal provision remain in effect under the
Policy and may be assessed upon surrender or lapse, other partial withdrawals,
or a requested decrease in face amount. The portion of the surrender charges
assessed will be based on the ratio of the amount of the withdrawal in excess
of the Withdrawal Tier Amount to the Net Cash Surrender Value of the Policy
less the Withdrawal Tier Amount immediately prior to the withdrawal. The
surrender charges will be deducted from the Policy Value, and the amount so
deducted will be allocated among each Investment Account and the Guaranteed
Interest Account in the same proportion as the withdrawal taken from such
account bears to the total amount of the withdrawal. If the amount in the
account is insufficient to pay the portion of the surrender charges allocated
to that account, then the portion of the withdrawal allocated to that account
will be reduced so that the withdrawal plus the portion of the surrender
charges allocated to that account equal the value of that account. Units equal
to the amount of the partial withdrawal taken, and surrender charges deducted,
from each Investment Account will be redeemed based on the value of such units
determined as of the end of the Business Day on which Manufacturers Life of
America received a written request for withdrawal at its Service Office.
Charges on Decreases in Face Amount. As with partial withdrawals, a
portion of a Policy's surrender charges will be deducted upon a decrease, or a
cancellation of an increase (other than by means of a a Free Look), in face
amount requested by the policyowner. Since surrender charges are determined
separately for the initial face amount and each face amount increase, and since
a decrease in face amount will have a different impact on each level of
insurance coverage, the portion of the surrender charges to be deducted with
respect to each level of insurance coverage will be determined separately.
Such portion will be the same as the ratio of the amount of the reduction in
such coverage to the amount of such coverage prior to the reduction. Decreases
are applied to the most recent increase first and thereafter to the next most
recent increases successively. The charges will be deducted from the Policy
Value, and the amount so deducted will be allocated among the Investment
Accounts and the Guaranteed Interest Account in the same proportion that the
Policy Value in each bears to the Net Policy Value. Whenever a portion of the
surrender charges is deducted as a result of a decrease in face amount, the
Policy's remaining surrender charges will be reduced by the amount of the
charges taken.
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(e) Payment of Proceeds.
As long as the Policy is in force, Manufacturers Life of America will
ordinarily pay any policy loans, partial withdrawals, Net Cash Surrender Value
or any insurance benefit within seven days after receipt at the Manufacturers
Life of America service office if all the documents required for such a
payment. For death claims, the amount payable will be the death benefit under
the selected option, plus any amounts payable under any supplementary benefits
added to the Policy, less the value of the Loan Account at the date of death.
The insurance benefit will be paid in one sum unless another form of settlement
option is agreed to by the beneficiary and the Company. If the insurance
benefit is paid in one sum, Manufacturers Life of America will pay interest
from the date of death to the date of payment.
If the last surviving life insured should die after the Company's receipt
of a request for surrender, no insurance benefit will be payable, and
Manufacturers Life of America will pay only the Net Cash Surrender Value. If
the last surviving life insured should die during the grace period following a
Policy's going into default, the Policy Value used in the calculation of the
death benefit will be the Policy Value as of the date of default and the
insurance benefit payable will be reduced by any outstanding monthly deductions
due at the time of death. Except for the last-to-die, if any of the lives
insured dies by suicide within two years after the issue date, whether the
insured person is sane or insane, Manufacturers Life of America will re-issue
the Policy. The new Policy on the survivor(s) will be any single life
permanent policy that is available at the time of re-issue. The suicide
provision for any new policy will be effective as of the original Issue Date.
If the last surviving life insured, whether sane or insane, dies by suicide
within two years from the policy date, Manufacturers Life of America will pay
only the premiums paid less any partial withdrawals of the Net Cash Surrender
Value and any amount in the Loan Account. If the last surviving life insured
should die by suicide within two years after a face amount increase, the death
benefit for the increase will be limited to the monthly deductions for the
increase.
As long as the Policy is in force, Manufacturers Life of America will
ordinarily pay any policy loans, partial withdrawals, Net Cash Surrender Value
or any insurance benefit within seven days after receipt at the Manufacturers
Life of America Service Office of all the documents required for such a
payment. The Company may delay the payment of any policy loans, partial
withdrawals, Net Cash Surrender Value or the portion of any insurance benefit
that depends on the Guaranteed Interest Account value for up to six months;
otherwise the Company may delay payment (i) for any period during which the New
York Stock Exchange is closed for trading (except for normal holiday closings)
or trading on the Exchange is otherwise restricted; (ii) an emergency exists as
defined by the Securities and Exchange Commission ("the S.E.C."), or the S.E.C.
requires that trading be restricted; or (iii) the S.E.C. permits a delay for
the protection of policyowners. Transfers also may be deferred under the
circumstances set forth in clauses (i), (ii) and (iii) above and in certain
other circumstances.
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5. TRANSFERS OF POLICY VALUES AND RELATED PROCEDURES
(a) Transfers.
Under the Policies a policyowner may change the extent to which his or her
Policy Value is based upon any specific sub-account of the Separate Account or
the Company's general account. Such changes are made by transferring amounts
from one or more Investment Accounts or the Guaranteed Interest Account to
other Investment Accounts or the Guaranteed Interest Account. A policyowner is
permitted to make one transfer each policy month free of charge. One
additional transfer may be made in each policy month at a cost of $35.00. For
this purpose all transfer requests received by the Manufacturers Life of
America Service Office as of the same Business Day are treated as a single
transfer request. The minimum dollar amount of all transfers pursuant to a
single transfer request, except for Asset Allocation Balancer transfers, is
$500.
The maximum amount that may be transferred from the Guaranteed Interest
Account in any one Policy Year is the greater of $500 or 15% of the Guaranteed
Interest Account value at the previous policy anniversary. Any transfer which
involves a transfer out of the Guaranteed Interest Account may not involve a
transfer to the Investment Account for the Money-Market Fund. Transfer
request formats must be satisfactory to Manufacturers Life of America and in
writing or by telephone, if a currently valid telephone transfer request form
is on file. Manufacturers Life of America may be permitted to delay the
effective date of any transfer in certain circumstances.
The policyowner may effectively convert his or her Policy to a fixed
benefit policy by transferring the Policy Value in all of the Investment
Accounts to the Guaranteed Interest Account and by changing his or her
allocation of net premiums entirely to the Guaranteed Interest Account. As
long as the entire Policy Value is allocated to the Guaranteed Account, the
Policy Value, other values based thereon and the death benefit will be
determinable and guaranteed. The Investment Account values to be transferred
to the Guaranteed Account will be determined as of the Business Day on which
Manufacturers Life of America receives the request for conversion. There will
be no change in the issue age, risk class of the life insured or face amount as
a result of the conversion. A transfer of any or all of the Policy Value to
the Guaranteed Interest Account can be made at any time, even if a prior
transfer has been made during the Policy Month.
To the extent that total surrenders, partial withdrawals and transfers out
of a sub-account exceed total net premium allocations and transfers into that
sub-account, portfolio securities of the underlying Fund may have to be sold.
Excessive sales of the Fund's portfolio securities in such a situation could be
detrimental to that Fund and to policyowners with Policy Values allocated to
sub-accounts investing in that Fund. To protect the interests of all
policyowners, the Policy's transfer privilege is limited as described below.
So long as effecting net transfers out of a sub-account as of a particular
Business Day would not reduce the number of shares of the underlying Fund
outstanding at the close of the prior Business Day by more than 5%, all such
- - 65 -
<PAGE> 14
requests will be effected. However, net transfers out of an Investment Account
greater than 5% would be permitted only if, and to the extent that, in the
judgment of Manufacturers Adviser Corporation, they would not result in
detriment to the underlying Fund or to the interests of policyowners or others
with assets allocated to that Fund. If and when transfers must be limited to
avoid such detriment, some requests will not be effected. In determining which
requests will be effected, transfers pursuant to the Dollar Cost Averaging
program will be effected first, followed by Asset Allocation Balancer
transfers, written requests next and telephone requests last. Within each such
group, requests will be processed in the order received, to the extent
possible. Policyowners whose transfer requests are not effected will be so
notified. Current S.E.C. rules appear to preclude Manufacturers Life of
America from delaying until a later date the processing of requests that cannot
be effected. Accordingly, a new transfer request would have to be submitted in
order to effect a transfer that was not effected because of the limitations
described in this paragraph.
(b) Dollar Cost Averaging.
Manufacturers Life of America will offer policyowners a Dollar Cost
Averaging program. Under this program amounts will be automatically
transferred at fixed times from one Investment Account to any other Investment
Account(s) or the Guaranteed Interest Account.
Under the Dollar Cost Averaging program the policyowner will designate a
dollar amount of available assets which will be transferred at predetermined
intervals from one Investment Account into any other Investment Account(s) or
the Guaranteed Interest Account. Each transfer under the Dollar Cost Averaging
program must be of a minimum amount as set by Manufacturers Life of
America. Once set, this minimum may be changed at any time at the discretion
of Manufacturers Life of America. Currently, no charge will be made for this
program if the Policy Value exceeds $15,000 on the date of transfer.
Otherwise, there will be a charge of $5.00 for each transfer under this program
which fee will be deducted from the value of the sub-account out of which the
transfer occurs. Manufacturers Life of America reserves the right to
discontinue this program, as of 90 days after written notice is sent to the
policyowner.
(c) Asset Allocation Balancer Transfers.
Manufacturers Life of America will also offer policyowners the ability to
have amounts automatically transferred among stipulated accounts to maintain an
allocated percentage in each stipulated account.
Under the Asset Allocation Balancer program the policyowner will designate
an allocation of Policy Value among Investment Accounts. At six month intervals
beginning six months after the Policy Date, Manufacturers Life of America will
move amounts among the Investment Accounts as necessary to maintain the
policyowner's chosen allocation. A change to the policyowner's premium
allocation instructions will automatically result in a change in Asset
Allocation Balancer instructions so that the two are identical unless the
policyowner has either instructed Manufacturers Life of America differently or
- - 66 -
<PAGE> 15
has elected the Dollar Cost Averaging program. The charge for this program is
currently $15.00 per Asset Allocation Balancer Transfer. Manufacturers Life of
America reserves the right to discontinue this program as of 90 days after
written notice is sent to the policyowner.
(d) Policy Loans.
While the Policy is in force, the policyowner may borrow against the
Policy Value of his or her Policy. In most States, the minimum amount of any
loan is $500. The maximum loan amount is the amount which would cause the
Modified Policy Debt, described below, to equal the loan value of the Policy as
of the date of the loan. The loan value is the Policy's Cash Surrender Value
less the monthly deductions due to the next Policy Anniversary. The monthly
deductions due for this purpose will be projected assuming no further premiums
are paid, current cost of insurance rates and a 4% net interest rate. The
Modified Policy Debt as of any date is the Policy Debt (the aggregate amount of
policy loans, including borrowed interest, less any loan repayments) plus the
amount of interest to be charged to the next Policy Anniversary, all discounted
from the next Policy Anniversary to such date at an annual rate of 4 percent.
When a loan is made, Manufacturers Life of America will deduct from the
Investment Accounts or the Guaranteed Interest Account, and transfer to the
Loan Account, an amount which will result in the Loan Account value being equal
to the Modified Policy Debt. The policyowner may designate how the amount to
be transferred to the Loan Account is allocated among the accounts from which
the transfer is to be made. In the absence of instructions, the amount to be
transferred will be allocated to each account in the same proportion that the
value in each Investment Account and the Guaranteed Interest Account bears to
the Net Policy Value. A transfer from an Investment Account will result in the
redemption of units of the underlying sub-account equal in value to the amount
transferred from the Investment Account. However, since the Loan Account is
part of the Policy Value, transfers made in connection with a loan will not
change the Policy Value.
When a loan is first taken out, and at specified events thereafter, the
value of the Loan Account is adjusted. Whenever the Loan Account is adjusted
the difference between (i) the Loan Account before any adjustment and (ii) the
Modified Policy Debt at the time of adjustment, is transferred between the Loan
Account and the Investment Accounts or the Guaranteed Interest Account. The
amount transferred to or from the Loan Account will be such that the value of
the Loan Account is equal to the Modified Policy Debt after the adjustment.
The specified events which cause an adjustment to the Loan Account are (i)
a Policy Anniversary, (ii) a partial or full loan repayment, (iii) a new loan
being taken out, or (iv) when an amount is needed to meet a monthly deduction.
A loan repayment may be implicit in that Policy Debt is effectively repaid upon
termination (i.e. upon death of the last surviving life insured, surrender or
lapse of the Policy). In each of these instances, the Loan Account will be
adjusted with any excess of the Loan Account over the Modified Policy Debt
after the repayment being included in the termination proceeds.
Except as noted below, amounts transferred from the Loan Account
will be allocated to the Investment Accounts and the Guaranteed Interest
Account in
- - 67 -
<PAGE> 16
the same proportion that the value in the corresponding "loan
sub-account" exists for each Investment Account and for the Guaranteed
Interest Account. Amounts transferred to the Loan Account are allocated
to the appropriate loan sub-account to reflect the account from which
the transfer was made.
Policy Debt may be repaid in whole or in part at any time prior to the
death of the last surviving life insured provided the Policy is in force. When
a payment is made, the amount is credited to the Loan Account and a transfer is
made to the Guaranteed Interest Account or the Investment Accounts so that the
Loan Account at that time equals the Modified Policy Debt. Loan repayments
will first be allocated to the Guaranteed Interest Account until the associated
loan sub-account is reduced to zero. Loan repayments will then be allocated to
each Investment Account in the same proportion that the value in the
corresponding loan sub-account bears to the value of the Loan Account. Amounts
paid to the Company not specifically designated in writing as loan repayments
will be treated as premiums.
6. COST OF INSURANCE
The monthly charge for the cost of insurance rate is determined by
multiplying the applicable cost of insurance rate times the net amount at risk
at the beginning of each policy month. The cost of insurance rate is based on
each life insured's issue age, sex (unless unisex rates are required by law or
are requested), risk class, the duration of the insurance coverage, and, in the
case of certain Policies issued in group or sponsored arrangements providing
for reduction in the cost of insurance charges, the face amount of the Policy
*/. The rate is determined separately for the initial face amount and for each
increase in face amount. Cost of insurance rates will generally increase with
the attained age of the lives insured. Any additional ratings as indicated in
the Policy will be added to the cost of insurance rate.
The cost of insurance rates used by Manufacturers Life of America reflect
its expectations as to future mortality experience. The rates may be changed
from time to time on a basis which does not unfairly discriminate within the
class of life insureds. In no event will the cost of insurance rate exceed the
guaranteed rates set forth in the Policy except to the extent that an extra
rate is imposed because of an additional rating applicable to any life insured,
or if simplified underwriting is granted on a group or sponsored arrangement
(see "Special Provision for Group or Sponsored Arrangements"). The guaranteed
rates are based on the 1980 Commissioners Smoker/Nonsmoker Standard Ordinary
Mortality Tables, except in the case of Group or Sponsored Arrangements, where
the guaranteed rates are based on the 1980 Commissioner's Extended Term
Mortality Table.
*/ If any life insured's stated age or sex or both in the Policy are
incorrect, Manufacturers Life of America will change the face amount of
insurance so that the death benefit will be that which the most recent monthly
charge for the cost of insurance would have bought for the correct age and sex.
- - 68 -
<PAGE> 17
The net amount at risk to which the cost of insurance rate is applied is
the difference between the death benefit, divided by 1.0032737 (a factor which
reduces the net amount at risk for the cost of insurance charge purposes by
taking into account assumed monthly earnings at an annual rate of 4%), and the
Policy Value.
Because different cost of insurance rates may apply to different levels of
insurance coverage, the net amount at risk will be calculated separately for
each level of insurance coverage. When the Option 1 death benefit is in
effect, for purposes of determining the net amount at risk applicable to each
level of insurance coverage, the Policy Value is attributed first to the
initial face amount and then, if the Policy Value is greater than the initial
face amount, to each increase in face amount in the order made.
Because the calculation of the net amount at risk is different under the
death benefit options when more than one level of insurance coverage is in
effect, a change in the death benefit option may result in a different net
amount at risk for each level of insurance coverage than would have occurred
had the death benefit option not been changed. Since the cost of insurance is
calculated separately for each level of insurance coverage, any change in the
net amount at risk for a level of insurance coverage resulting from a change in
the death benefit option may affect the amount of the charge for the cost of
insurance. Partial withdrawals and decreases in face amount will also affect
the manner in which the net amount at risk for each level of insurance coverage
is calculated.
7. ADJUSTMENTS TO CERTAIN CHARGES
(a) Special Arrangements. Where permitted by state insurance laws,
Policies may be purchased under group or sponsored arrangements, as well as on
an individual basis. A "group arrangement" includes a program under which a
trustee, employer or similar entity purchases Policies covering a group of
individuals on a group basis. A "sponsored arrangement" includes a program
under which an employer permits group solicitation of its employees or an
association permits group solicitation of its members for the purchase of
Policies on an individual basis.
The charges and deductions described above may be reduced for policies
issued in connection with group or sponsored arrangements. Such arrangements
may include no withdrawal charges and deductions for employees, officers, and
directors of Manufacturers Life and its subsidiaries. Manufacturers Life of
America will reduce the charges and deductions in accordance with its rules in
effect as of the date an application for a Policy is approved. To qualify for
such a reduction, a group or sponsored arrangement must satisfy certain
criteria as to, for example, size of the group, expected number of participants
and anticipated premium payments from the group. Generally, the sales
contracts and effort, administrative costs and mortality cost per Policy vary
based on such factors as the size of the group or sponsored arrangements, the
purposes for which Policies are purchased and certain characteristics of its
members. The amount of reduction and the criteria for qualification will
reflect the reduced sales effort and administrative costs resulting from, and
- - 69 -
<PAGE> 18
the different mortality experience expected as a result of, sales to qualifying
groups and sponsored arrangements.
Manufacturers Life of America may modify from time to time on a uniform
basis, both the amounts of reductions and the criteria for qualification.
Reductions in these charges will not be unfairly discriminatory against any
person, including the affected policyowners and all other policyowners funded
by the Separate Account.
In addition, groups or persons purchasing under a sponsored arrangement
may apply for simplified underwriting. If simplified underwriting is granted,
the cost of insurance charge may increase as a result of higher anticipated
mortality experience. In addition, groups and persons purchasing under a group
arrangement may request increases or decreases in face amount at any time after
issue, and decreases in face amount at any time after an increase in face
amount.
(b) Exchanges.
Manufacturers Life of America will permit owners of certain life insurance
policies issued either by the Company or Manufacturers Life to exchange their
policies for the Policies. Charges under the policies being exchanged or the
Policies issued in exchange therefor may, in some circumstances, be reduced or
eliminated. Policy loans made under policies being exchanged may, in some
circumstances, be carried over to the new Policies without repayment at the
time of exchange.
8. INCOMPLETE ALLOCATION REQUEST
If an incomplete change in premium allocation request is received, a
letter requesting a corrected allocation request will be sent to the
policyowner.
9. UNPAID CHECKS
When an unpaid item is received, a premium reversal will be made effective
the date of the original premium payment and the General Account of the Company
will absorb the gain or loss of this backdated transaction. The policyowner
will be notified in writing of the unpaid item.
- - 70 -
<PAGE> 1
EXHIBIT 10
- 72 -
<PAGE> 2
EXHIBIT 10
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and
to the use of our report dated February 2, 1996 accompanying the
financial statements of The Manufacturers Life Insurance Company of
America and to the use of our report dated February 2, 1996 accompanying
the financial statements of Separate Account Three of The Manufacturers
Life Insurance Company of America, in post-effective amendment No. 3 to
the Registration Statement No. 33-77256 on Form S-6 and related
prospectus of Separate Account Three of The Manufacturers Life Insurance
Company of America.
Ernst & Young LLP
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
April 22, 1996
- 70 -
<PAGE> 1
EXHIBIT 11
- 74 -
<PAGE> 2
EXHIBIT 11
Jones & Blouch L.L.P.
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007-0805
(202) 223-3500
April 22, 1996
The Board of Directors
The Manufacturers Life Insurance
Company of America
500 N. Woodward Avenue
Bloomfield Hills, MI 48304
Dear Sirs:
We hereby consent to the reference to this firm under the caption
"Legal Matters" in the prospectus contained in post-effective amendment
No. 3 to the registration statement on Form S-6 of Separate Account
Three of The Manufacturers Life Insurance company of America, File No.
33-77256, to be filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933.
Very truly yours,
Jones & Blouch L.L.P.
Jones & Blouch L.L.P.
- 72 -
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<TABLE> <S> <C>
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<NAME> REAL ESTATE FUND
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<S> <C>
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<TABLE> <S> <C>
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<SERIES>
<NUMBER> 07
<NAME> INTERNATIONAL FUND
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
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<TABLE> <S> <C>
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<SERIES>
<NUMBER> 08
<NAME> PACIFIC RIM EMERGING MARKETS FUND
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<S> <C>
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