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As filed with the Securities and Exchange Commission on February 19, 1999
Registration No.33-52310
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-6
POST-EFFECTIVE AMENDMENT NO. 13
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)
JAMES D. GALLAGHER
Secretary and General Counsel
The Manufacturers Life Insurance Company of America
500 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
- ----- immediately upon filing pursuant to paragraph (b) of Rule 485
- ----- on (DATE) pursuant to paragraph (b) of Rule 485
- ----- 60 days after filing pursuant to paragraph (a)(1) of Rule 485
X on May 1, 1999 pursuant to paragraph (a)(1) of Rule 485
- -----
- ----- this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
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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, and Manufacturers Investment Trust
(Manufacturers Life of America's Separate Account Three
2 Cover Page; General Information About Manufacturers Life of America,
Separate Account Three, and Manufacturers Investment Trust
(Manufacturers Life Of America And Manufacturers Life)
3 *
4 Miscellaneous Matters (Distribution of the Policy
5 General Information About Manufacturers Life Of America, Separate
Account Three, and Manufacturers Investment Trust (Manufacturers Life
of America's Separate Account Three)
6 General Information About Manufacturers Life of America, Separate
Account Three, and Manufacturers Investment Trust (Manufacturers Life
of America's Separate Account Three
7 *
8 *
9 Miscellaneous Matters (Pending Litigation)
10 Detailed Information About The Policies
11 General Information About Manufacturers Life Of America, Separate
Account Three, and Manufacturers Investment Trust (Manufacturers
Investment Trust)
12 General Information About Manufacturers Life Of America, Separate
Account Three, and Manufacturers Investment Trust (Manufacturers
Investment 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 **
17 Detailed Information About The Policies (Policy Values -- Partial
Withdrawals and Surrenders); Other Provisions -- Payment of Proceeds)
18 eneral Information About Manufacturers Life Of America, Separate
Account Three, and Manufacturers Investment Trust
19 Detailed Information About The Policies (Other Provisions -- Reports
To Policyowners); Miscellaneous Matters (Responsibilities Assumed By
Manufacturers Life)
20 *
21 Detailed Information About The Policies
22 *
23 **
24 Detailed Information About the Policies (Other General Policy
Provisions)
25 General Information About Manufacturers Life Of America, Separate
Account Three, and Manufacturers Investment Trust (Manufacturers Life
Of America And Manufacturers Life)
26 *
27 **
- -----------
*Omitted since answer is negative or item is not applicable.
**Omitted.
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Form
N-8B-2
Item No. Caption in Prospectus
28 Miscellaneous Matters (The Directors And Officers Of Manufacturers
Life Of America)
29 General Information About Manufacturers Life Of America, Separate
Account Three, and Manufacturers Investment Trust (Manufacturers Life
Of America And Manufacturers Life)
30 *
31 *
32 *
33 *
34 *
35 **
36 *
37 *
38 Miscellaneous Matters (Distribution of the Policy; Responsibilities
Assumed By Manufacturers Life)
39 Miscellaneous Matters (Distribution of the Policy)
40 *
41 **
42 *
43 *
44 Detailed Information About The Policies (Policy Values -- Policy
Value)
45 *
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, and Manufacturers Investment Trust (Manufacturers
Investment Trust)
48 *
49 *
50 General Information About Manufacturers Life Of America, Separate
Account Three, and Manufacturers Investment Trust (Manufacturers Life
Of America's Separate Account Three)
51 Detailed Information About The Policies
52 Detailed Information About The Policies (Miscellaneous Matters --
Portfolio Share Substitution)
53 **
54 *
55 *
56 *
57 *
58 *
59 Financial Statements
<PAGE> 4
PART I
PROSPECTUS
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PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
SEPARATE ACCOUNT THREE
VENTURE VUL - A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
This prospectus describes the flexible premium variable life insurance policy
(the "Policy") issued by The Manufacturers Life Insurance Company of America
("Manufacturers Life of America" or the "Company"). The Policies are designed to
provide lifetime insurance protection together with flexibility as to
o the timing and amount of premium payments,
o the investments underlying the Policy Value and
o the amount of insurance coverage.
This flexibility allows you, the policyowner, to pay premiums and adjust
insurance coverage in light of your current financial circumstances and
insurance needs.
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").
We use the assets of each sub-account to purchase shares of a particular
investment portfolio ("Portfolio") of Manufacturers Investment Trust. The
accompanying prospectus for Manufacturers Investment Trust and the corresponding
statement of additional information describe the investment objectives of the
Portfolios in which you may invest net premiums. The Portfolios available to you
are set forth commencing on the inside front cover. Other sub-accounts and
Portfolios may be added in the future.
You should ask a Manulife Financial representative if changing, or adding to,
existing insurance coverage would be advantageous. You should note that it may
not be advisable to purchase a Policy as a replacement for existing insurance.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT IS
VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR MANUFACTURERS INVESTMENT
TRUST.
The Securities and Exchange Commission maintains a Web site (http://www.sec.gov)
that contains material incorporated by reference and other information regarding
registrants that file electronically with the Commission.
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.
Service Office:
The Manufacturers Life Insurance 200 Bloor Street East
Company of America Toronto, Ontario, Canada M4W 1E5
500 N. Woodward Avenue TELEPHONE: 1-800-827-4546
Bloomfield Hills, Michigan 48304 (1-800-VARILIN[E])
THE DATE OF THIS PROSPECTUS IS 1999.
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ELIGIBLE PORTFOLIOS
The Portfolios of Manufacturers Investment Trust available under the Policies
are as follows:
AGGRESSIVE GROWTH PORTFOLIOS
PACIFIC RIM EMERGING MARKETS TRUST. The investment objective of the Pacific Rim
Emerging Markets Trust is to achieve long-term growth of capital. Manufacturers
Adviser Corporation ("MAC") manages the Pacific Rim Emerging Markets Trust and
seeks to achieve this investment objective by investing in a diversified
portfolio that is comprised primarily of common stocks and equity-related
securities of corporations domiciled in countries of the Pacific Rim region.
SCIENCE & TECHNOLOGY TRUST. The investment objective of the Science & Technology
Trust is long-term growth of capital. Current income is incidental to the
portfolio's objective. T. Rowe Price Associates, Inc. ("T. Rowe Price") manages
the Science & Technology Trust.
INTERNATIONAL SMALL CAP TRUST. The investment objective of the International
Small Cap Trust is to seek long-term capital appreciation. Founders Asset
Management, LLC ("Founders") manages the International Small Cap Trust and will
pursue this objective by investing primarily in securities issued by foreign
companies which have total market capitalizations or annual revenues of $1
billion or less. These securities may represent companies in both established
and emerging economies throughout the world.
EMERGING SMALL COMPANY TRUST (formerly Emerging Growth Trust). The investment
objective of the Emerging Small Company Trust is maximum capital appreciation.
Warburg, Pincus Asset Management, Inc. manages the Emerging Small Company Trust
and will pursue this objective by investing primarily in a portfolio of equity
securities of domestic companies. The Emerging Small Company Trust ordinarily
will invest at least 65% of its total assets in common stocks or warrants of
emerging growth companies that represent attractive opportunities for maximum
capital appreciation.
PILGRIM BAXTER GROWTH TRUST. The investment objective of the Pilgrim Baxter
Growth Trust is capital appreciation. Pilgrim Baxter & Associates, Ltd. ("PBHG")
manages the Pilgrim Baxter Growth Trust and seeks to achieve its objective by
investing in companies believed by PBHG to have an outlook for strong earnings
growth and the potential for significant capital appreciation.
SMALL/MID CAP TRUST. The investment objective of the Small/Mid Cap Trust is to
seek long term capital appreciation. Fred Alger Management, Inc. manages the
Small/Mid Cap Trust and will pursue this objective by investing at least 65% of
the portfolio's total assets (except during temporary defensive periods) in
small/mid cap equity securities.
INTERNATIONAL STOCK TRUST. The investment objective of the International Stock
Trust is to achieve long-term growth of capital. Rowe Price-Fleming
International, Inc. manages the International Stock Trust and seeks to obtain
this objective by investing primarily in common stocks of established, non-U.S.
companies.
GROWTH PORTFOLIOS
WORLDWIDE GROWTH TRUST. The investment objective of the Worldwide Growth Trust
is long-term growth of capital. Founders manages the Worldwide Growth Trust and
seeks to attain this objective by normally investing at least 65% of its total
assets in equity securities of growth companies in a variety of markets
throughout the world.
GLOBAL EQUITY TRUST. The investment objective of the Global Equity Trust is
long-term capital appreciation. Morgan Stanley Dean Witter Investment Management
Inc. manages the Global Equity Trust and intends to pursue this objective by
investing primarily in equity securities of issuers throughout the world,
including U.S. issuers.
SMALL COMPANY VALUE TRUST. The investment objective of the Small Company Value
Trust is long-term growth of capital. AXA Rosenberg Investment Management LLC
manages the Small Company
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Value Trust and intends to pursue this objective by investing in equity
securities of smaller companies which are traded principally in the markets of
the United States.
EQUITY TRUST. The principal investment objective of the Equity Trust is growth
of capital. Current income is a secondary consideration although growth of
income may accompany growth of capital. Fidelity Management Trust Company
manages the Equity Trust and seeks to attain the foregoing objective by
investing primarily in common stocks of United States issuers or securities
convertible into or which carry the right to buy common stocks.
GROWTH TRUST. The investment objective of the Growth Trust is to seek long-term
growth of capital. Founders manages the Growth Trust and will pursue this
objective by investing, under normal market conditions, at least 65% of its
total assets in common stocks of well-established, high-quality growth companies
that Founders believes have the potential to increase earnings faster than the
rest of the market.
QUANTITATIVE EQUITY TRUST (FORMERLY COMMON STOCK FUND). The investment objective
of the Quantitative Equity Trust 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 established companies with promising
prospects for providing an above-average rate of return. MAC manages the
Quantitative Equity Trust.
EQUITY INDEX TRUST. The investment objective of the Equity Index Trust 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. MAC manages the Equity Index Trust.
BLUE CHIP GROWTH TRUST. The primary investment objective of the Blue Chip Growth
Trust is to provide long-term growth of capital. Current income is a secondary
objective, and many of the stocks in the Portfolio are expected to pay
dividends. T. Rowe Price manages the Blue Chip Growth Trust.
REAL ESTATE SECURITIES TRUST. The investment objective of the Real Estate
Securities Trust is to achieve a combination of long-term capital appreciation
and satisfactory current income by investing in real estate related equity and
debt securities. MAC manages the Real Estate Securities Trust.
GROWTH & INCOME PORTFOLIOS
VALUE TRUST. The investment objective of the Value Trust is to realize an
above-average total return over a market cycle of three to five years,
consistent with reasonable risk. Miller Anderson & Sherrerd, LLP ("MAS") manages
the Value Trust and seeks to attain this objective by investing primarily in
common and preferred stocks, convertible securities, rights and warrants to
purchase common stocks, ADRs and other equity securities of companies with
equity capitalizations usually greater than $300 million.
INTERNATIONAL GROWTH AND INCOME TRUST. The investment objective of the
International Growth and Income Trust is to seek long-term growth of capital and
income. The portfolio is designed for investors with a long-term investment
horizon who want to take advantage of investment opportunities outside the
United States. J.P. Morgan Investment Management Inc. manages the International
Growth and Income Trust.
GROWTH AND INCOME TRUST. The investment objective of the Growth and Income Trust
is to provide long-term growth of capital and income consistent with prudent
investment risk. Wellington Management Company, LLP manages the Growth and
Income Trust and seeks to achieve the Trust's objective by investing primarily
in a diversified portfolio of common stocks of U.S. issuers which Wellington
Management Company believes are of high quality.
EQUITY-INCOME TRUST. The investment objective of the Equity-Income Trust (prior
to December 31, 1996, the "Value Equity Trust") is to provide substantial
dividend income and also long term capital appreciation. T. Rowe Price manages
the Equity-Income Trust and seeks to attain this objective by investing
primarily in dividend-paying common stocks, particularly of established
companies with
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favorable prospects for both increasing dividends and capital appreciation.
BALANCED PORTFOLIOS
BALANCED TRUST. The investment objective of the Balanced Trust is current income
and capital appreciation. Founders is the manager of the Balanced Trust and
seeks to attain this objective by investing in a balanced portfolio of common
stocks, U.S. and foreign government obligations and a variety of corporate
fixed-income securities.
AUTOMATIC ASSET ALLOCATION TRUSTS (AGGRESSIVE, MODERATE AND CONSERVATIVE). The
investment objective of each of the Automatic Asset Allocation Trusts is to
realize the highest potential total return consistent with a specified level of
risk tolerance -- conservative, moderate or aggressive. The amount of each
Portfolio's assets invested in each category of securities -- debt, equity, and
money market -- is dependent upon the judgment of Fidelity Management Trust
Company as to what percentages of each Portfolio's assets in each category will
contribute to the limitation of risk and the achievement of its investment
objective.
BOND PORTFOLIOS
HIGH YIELD TRUST. The investment objective of High Yield Trust is to realize an
above-average total return over a market cycle of three to five years,
consistent with reasonable risk. MAS manages the High Yield Trust and seeks to
attain this objective by investing primarily in high yield debt securities,
including corporate bonds and other fixed-income securities.
STRATEGIC BOND TRUST. The investment objective of the Strategic Bond Trust is to
seek a high level of total return consistent with preservation of capital. The
Strategic Bond Trust seeks to achieve its objective by giving its Subadviser,
Salomon Brothers Asset Management Inc ("SBAM") broad discretion to deploy the
Strategic Bond Trust's assets among certain segments of the fixed-income market
as SBAM believes will best contribute to the achievement of the portfolio's
objective.
GLOBAL GOVERNMENT BOND TRUST. The investment objective of the Global Government
Bond Trust is to seek a high level of total return by placing primary emphasis
on high current income and the preservation of capital. Oechsle International
Advisors, LLC manages the Global Government Bond Trust and intends to pursue
this objective by investing primarily in a selected global portfolio of
high-quality, fixed-income securities of foreign and U.S. governmental entities
and supranational issuers.
CAPITAL GROWTH BOND TRUST. The investment objective of the Capital Growth Bond
Trust is to achieve growth of capital by investing in medium-grade or better
debt securities, with income as a secondary consideration. MAC manages the
Capital Growth Bond Trust. The Capital Growth Bond Trust differs from most
"bond" funds in that its primary objective is capital appreciation, not income.
INVESTMENT QUALITY BOND TRUST. The investment objective of the Investment
Quality Bond Trust is to provide a high level of current income consistent with
the maintenance of principal and liquidity. Wellington Management Company, LLP
manages the Investment Quality Bond Trust and seeks to achieve the Trust's
objective by investing primarily in a diversified portfolio of investment grade
corporate bonds and U.S. Government bonds with intermediate to longer term
maturities.
U.S. GOVERNMENT SECURITIES TRUST. The investment objective of the U.S.
Government Securities Trust is to obtain a high level of current income
consistent with preservation of capital and maintenance of liquidity. SBAM
manages the U.S. Government Securities Trust and seeks to attain its objective
by investing a substantial portion of its assets 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.
MONEY MARKET PORTFOLIO
MONEY MARKET TRUST. The investment objective of the Money Market Trust is to
obtain maximum current income consistent with preservation of principal and
liquidity. MAC manages the Money Market
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Trust and seeks to achieve this objective by investing in high quality, U.S.
dollar denominated money market instruments.
LIFESTYLE PORTFOLIOS
LIFESTYLE AGGRESSIVE 1000 TRUST. The investment objective of the Lifestyle
Aggressive 1000 Trust is to provide long term growth of capital. Current income
is not a consideration. MAC seeks to achieve this objective by investing
approximately 100% of the Lifestyle Trust's assets in Underlying Portfolios
which invest primarily in equity securities.
LIFESTYLE GROWTH 820 TRUST. The investment objective of the Lifestyle Growth 820
Trust is to provide long term growth of capital with consideration also given to
current income. MAC seeks to achieve this objective by investing approximately
20% of the Lifestyle Trust's assets in Underlying Portfolios which invest
primarily in fixed income securities and approximately 80% of its assets in
Underlying Portfolios which invest primarily in equity securities.
LIFESTYLE BALANCED 640 TRUST. The investment objective of the Lifestyle Balanced
640 Trust is to provide a balance between high level of current income and
growth of capital with a greater emphasis given to capital growth. MAC seeks to
achieve this objective by investing approximately 40% of the Lifestyle Trust's
assets in Underlying Portfolios which invest primarily in fixed income
securities and approximately 60% of its assets in Underlying Portfolios which
invest primarily in equity securities.
LIFESTYLE MODERATE 460 TRUST. The investment objective of the Lifestyle Moderate
460 Trust is to provide a balance between a high level of current income and
growth of capital with a greater emphasis given to high income. MAC seeks to
achieve this objective by investing approximately 60% of the Lifestyle Trust's
assets in Underlying Portfolios which invest primarily in fixed income
securities and approximately 40% of its assets in Underlying Portfolios which
invest primarily in equity securities.
LIFESTYLE CONSERVATIVE 280 TRUST. The investment objective of the Lifestyle
Conservative 280 Trust is to provide a high level of current income with some
consideration also given to growth of capital. MAC seeks to achieve this
objective by investing approximately 80% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed income securities and
approximately 60% of its assets in Underlying Portfolios which invest primarily
in equity securities.
5
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PROSPECTUS CONTENTS
PAGE
----
INTRODUCTION TO POLICIES..............................................
GENERAL INFORMATION ABOUT MANUFACTURERS
LIFE OF AMERICA SEPARATE ACCOUNT THREE
AND MANUFACTURERS INVESTMENT TRUST..................................
Manufacturers Life of America And Manufacturers Life.............
Manufacturers Life of America's Separate Account Three...........
Manufacturers Investment Trust...................................
DETAILED INFORMATION ABOUT THE POLICIES...............................
PREMIUM PROVISIONS....................................................
Policy Issue And Initial Premium.................................
Premium Allocation...............................................
Premium Limitations..............................................
Short-Term Cancellation Right And "Free Look" Provisions.........
PROVISIONS FOR AVOIDING LAPSE.........................................
No Lapse Guarantee...............................................
Death Benefit Guarantee..........................................
INSURANCE BENEFIT.....................................................
The Insurance Benefit............................................
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................................................
Monthly Deductions...............................................
Administration Charge............................................
Cost Of Insurance Charge.........................................
Mortality And Expense Risks Charge...............................
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..................................
OTHER PROVISIONS......................................................
Supplementary Benefits...........................................
Payment Of Proceeds..............................................
Reports To Policyowners..........................................
MISCELLANEOUS MATTERS.................................................
Portfolio Share Substitution.....................................
Federal Income Tax Considerations................................
Tax Status Of The Policy.........................................
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Tax Treatment Of Policy Benefits.................................
The Company's Taxes..............................................
Distribution Of The Policy.......................................
Responsibilities Assumed By Manufacturers Life...................
Voting Rights....................................................
Directors And Officers Of Manufacturers Life of America..........
State Regulations................................................
Pending Litigation...............................................
Additional Information...........................................
Legal Matters....................................................
Experts..........................................................
Year 2000 Issues.................................................
Financial Statements..................................................
Appendices............................................................
A. Sample Illustrations Of Policy Values, Cash Surrender
Values And Death Benefits........................................
B. Definitions......................................................
C. Deferred Sales Charge Tables.....................................
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION WHERE THE
OFFERING WOULD NOT BE LAWFUL. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED
IN THIS PROSPECTUS OR IN THE PROSPECTUS OR STATEMENT OF ADDITIONAL INFORMATION
OF MANUFACTURERS INVESTMENT TRUST. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH INFORMATION THAT IS DIFFERENT.
You are urged to examine this prospectus carefully. The INTRODUCTION TO POLICIES
will briefly describe the Flexible Premium Variable Life Insurance Policy. More
detailed information will be found within.
7
<PAGE> 12
INTRODUCTION TO POLICIES
The following summary is intended to provide a general description of the most
important features of the Policy. It is not a complete description. You should
read all of this prospectus in order to fully understand the provisions of the
Policy.
GENERAL
The Policy provides a death benefit in the event of the death of the life
insured to the person you name as the beneficiary.
You may pay premiums at any time and in any amount, subject to certain
limitations.
[You may tell us how to invest your premiums.]
You may instruct us as to how your premiums, net of certain deductions, will be
allocated. You may choose among the general account and the sub-accounts of
Manufacturers Life of America's Separate Account Three. The premiums you
allocate to the sub-accounts of Separate Account Three are invested in shares of
a particular Portfolio of Manufacturers Investment Trust. You may change your
instructions as to how premiums should be allocated at any time. You may also
transfer amounts among the sub-accounts subject to certain restrictions (see
"Transfers of Policy Value").
The Portfolios currently available to you are set forth beginning on the inside
front cover of this prospectus. In the future we may make available other
sub-accounts and Portfolios.
The Policy has a Policy Value reflecting premiums you have paid, the investment
performance of the accounts to which you have allocated premiums, and certain
charges for expenses and cost of insurance. You may obtain a portion of the
Policy Value by taking a policy loan or a partial withdrawal, or by full
surrender of the Policy.
DEATH BENEFIT
[You have two death benefit options.]
DEATH BENEFIT OPTIONS. You choose one of two death benefit 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 satisfy the
so-called "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."
YOU MAY CHANGE THE DEATH BENEFIT OPTION. You may change the death benefit option
after the Policy has been in force for two years. See Detailed Information About
The Policies; Insurance Benefit -- "Death Benefit Option Changes."
[You may increase or decrease the Policy's face amount.]
YOU MAY INCREASE THE FACE AMOUNT. After the Policy has been in force for two
years, you may increase the face amount of the Policy once per policy year. You
may have to furnish satisfactory evidence of your insurability. Usually a Policy
will have new surrender charges after an increase. See DETAILED INFORMATION
ABOUT THE POLICIES; INSURANCE BENEFIT -- "Face Amount Changes."
YOU MAY DECREASE THE FACE AMOUNT. After the Policy has been in force for two
years, you may decrease the face amount once per policy year, except during the
two-year period following any increase in face amount. A decrease in face amount
may result
1
<PAGE> 13
in the deduction of surrender charges. At any time during the two-year period
following an increase, you may choose to cancel the increase. See DETAILED
INFORMATION ABOUT THE POLICIES; INSURANCE BENEFIT -- "Face Amount Changes."
PREMIUM PAYMENTS ARE FLEXIBLE
[You may pay premiums at any time.]
You 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."
You must pay at least the Initial Premium to put the Policy in force. See
DETAILED INFORMATION ABOUT THE POLICIES; PREMIUM PROVISIONS -- "Policy
Limitations" and "Death Benefit Guarantee."
After the Initial Premium is paid there is no minimum premium required. However,
by complying with certain tests reflecting the amount of premiums paid, you can
ensure that the Policy will not go into default for the first three policy
years. For Policies with a face amount of at least $250,000, the protection
against default extends beyond the three year period. See DETAILED INFORMATION
ABOUT THE POLICIES; PREMIUM PROVISIONS -- "Death Benefit Guarantee."
The Policy is subject to maximum premium limitations to ensure that it qualifies
as life insurance under rules defined in the Internal Revenue Code. See DETAILED
INFORMATION ABOUT THE POLICIES; PREMIUM PROVISIONS -- "Premium Limitations."
THE POLICY VALUE
[What is the Policy Value?]
The Policy has a Policy Value which reflects the following:
o the premium payments you have made;
o the investment performance of the sub-accounts to which you have allocated
net premiums;
o the interest we have credited to amounts allocated to our general account;
o any partial withdrawals you have made;
o and charges we have deducted under the Policy.
The Policy Value is the sum of the values in the Investment Accounts, the Fixed
Account and the Loan Account.
INVESTMENT ACCOUNT. We establish an Investment Account under the Policy for each
sub-account of the Separate Account to which you have allocated net premiums or
have transferred amounts. 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."
FIXED ACCOUNT. The Fixed 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.
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<PAGE> 14
We credit interest on amounts in the Fixed Account at an effective annual rate
guaranteed to be at least 4%. See DETAILED INFORMATION ABOUT THE POLICIES and
The General Account.
LOAN ACCOUNT. When you make a policy loan, we will establish a Loan Account
under the Policy. We will transfer an amount from the Investment Accounts and
the Fixed Account to the Loan Account.
We 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, currently 1.75%. For
Select Loan Amounts the interest rate differential is currently 0%. This is
subject to change in certain circumstances. See DETAILED INFORMATION ABOUT THE
POLICIES; Policy Values -- "Policy Loans."
[You may transfer amounts among the various investment options.]
TRANSFERS ARE PERMITTED. You may transfer amounts among the sub-accounts of
Separate Account Three and our general account, subject to certain restrictions.
We permit twelve transfers per policy year at no cost to you. Transfers in
excess of that will cost $25 per transfer. If you request more than one transfer
at the same time, we will treat your requests as a single request.
Certain restrictions may apply to transfer requests. See DETAILED INFORMATION
ABOUT THE POLICIES; Policy Values -- "Policy Value."
USING THE POLICY VALUE
[How you may use your Policy Value.]
BORROWING AGAINST THE POLICY VALUE. You may borrow against the Policy Value. 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."
YOU MAY MAKE A PARTIAL WITHDRAWAL OF THE POLICY VALUE. After a Policy has been
in force for two years, you may make a partial withdrawal of the Policy Value.
The minimum amount you may withdraw is $500. You may specify that the withdrawal
is to be made from a specific Investment Account or the Fixed Account.
A partial withdrawal may result in a reduction in the face amount of the Policy.
It 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."
CHARGES AND DEDUCTIONS
[What are the various charges under the Policy?]
1) DEDUCTIONS FROM PREMIUMS.
- we reserve the right to make a charge for state, local and federal taxes
in an amount not to exceed 3.60% (in Oregon no state
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premium tax is deducted).
2) SURRENDER CHARGES. We usually deduct a deferred underwriting charge and a
deferred sales charge if, during the Surrender Charge Period:
- you surrender the Policy for its Net Cash Surrender Value,
- you make a partial withdrawal in excess of the Withdrawal Tier Amount,
- you decrease the face amount of the Policy, or
- the Policy lapses.
The deferred underwriting charge is $6 for each $1,000 of face amount of life
insurance coverage initially or added by increase.
In effect, the charge applies only to the first $500,000 of face amount
initially purchased or the first $500,000 of each subsequent increase in face
amount. Thus, the charge made in connection with any one underwriting will not
exceed $3,000.
The full amount of the deferred underwriting charge will be in effect for five
years following Policy issue. Beginning in the sixth year these charges grade
downward over a maximum ten-year period. See DETAILED INFORMATION ABOUT THE
POLICIES; Charges And Deductions -- "Surrender Charges."
The maximum deferred sales charge is 50% of premiums paid up to a maximum number
of Target Premiums that varies (from -0.180 to 3.031) according to the issue age
of the life insured, the face amount at issue and the amount of any increase.
Subject to compliance with the sales charge limitation provisions described
below, the maximum deferred sales charge will be in effect for at least the
first two years of the Surrender Charge Period. After that, the portion of the
deferred sales charge that remains in effect will grade down at a rate that also
varies according to the issue age of the life insured, until at the end of the
Surrender Charge Period there is no deferred sales charge. See DETAILED
INFORMATION ABOUT THE POLICIES -- "Charges And Deductions" -- Surrender Charges.
Because of the sales charge limitation described below, the deferred sales
charge assessable under the Policy may increase at the beginning of the third
policy year.
If you increase the face amount, the surrender charges applicable to the
increase will be those rates that would apply if a Policy were issued to the
life insured at his or her then attained age and based on the amount of the
increase.
LIMITATION OF SALES CHARGES. If the Policy is surrendered at any time during the
first two years following issuance or following an increase in face amount or if
you cancel the increase during the two-year period following the increase, then
we may forego deducting the maximum deferred sales charge applicable to the
Policy or the increase. See DETAILED INFORMATION ABOUT THE POLICIES; Charges and
Deductions -- "Surrender Charges." If you surrender the Policy after that
two-year period, the full amount of the applicable sales charge will apply.
3) MONTHLY DEDUCTIONS. At the beginning of each policy month we deduct from the
Policy Value:
o an administration charge of $35 per month until the first policy
anniversary; thereafter $10 per month (the right is reserved to increase
the administration charge by an additional amount of up to $.01 per
$1,000 of face amount per
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<PAGE> 16
month),
o a charge for the cost of insurance,
o a charge for mortality and expense risks of .90% per annum through the
later of the tenth policy anniversary and your attained age 60 and,
thereafter,.45% per annum (This charge is assessed against the value of
your investment accounts.), and
o charge(s) for any supplementary benefit(s) added to the Policy.
At the Company's discretion, the policy owner may request that the sum of all
charges assessed monthly be deducted from the Fixed Account or one of the
sub-accounts of the Separate Account.
The cost of insurance charge varies based on the net amount at risk under the
Policy and the applicable cost of insurance rate. Cost of insurance rates vary
according to issue age, the duration of the coverage, sex (unless unisex rates
are required by law), any additional ratings indicated in the policy, and risk
class of the life insured. The maximum cost of insurance rate we charge will not
exceed the 1980 Commissioners Standard Ordinary Smoker/Nonsmoker Mortality
Tables. However, any additional ratings as indicated in the Policy will be added
to the cost of insurance rate. See DETAILED INFORMATION ABOUT THE POLICIES;
Charges and Deductions -- "Monthly Deductions."
If the Policy is still in force when the life insured attains age 100, we will
not take any further monthly deductions from the Policy Value.
4) OTHER CHARGES. Charges will be imposed on certain transfers of Policy Values,
including a $25 charge for each transfer in excess of twelve per policy year and
a $5 charge for each Dollar Cost Averaging transfer if Policy Value does not
exceed $15,000. See Policy Values -- "Transfers Of Policy Value."
INVESTMENT MANAGEMENT FEES AND EXPENSES
Manufacturers Investment Trust (excluding the Lifestyle Trusts) pays investment
management fees that range from .25% to 1.10% of the assets of the Portfolios.
Maximum expenses range from .15% to .75% of the assets of the Portfolios
(excluding the Lifestyle Trusts). Because each Lifestyle Trust invests in shares
of other Portfolios, each will bear its pro rata share of the fees and expenses
incurred by the other Portfolios. See DETAILED INFORMATION ABOUT THE POLICIES;
Charges and Deductions -- "Other Charges."
We reserve the right to charge or establish a provision for any federal, state
or local taxes that may be attributable to the Separate Account or our
operations with respect to the Policies. This charge or provision for taxes
would be in addition to the deductions for state, local and federal taxes
currently being made.
SUPPLEMENTARY BENEFITS
[Supplementary benefits are available.]
You may choose to add certain supplementary benefits to the Policy. These
supplementary benefits include
o an accidental death benefit,
o life insurance for additional insured persons,
o acceleration of benefits in the event of terminal illness,
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<PAGE> 17
o a disability benefit to waive the cost of monthly deductions, and
o an option to ensure a guaranteed Policy Value.
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 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. We will
send a notice to you if the Policy goes into default. It will allow a grace
period in which you may make a premium payment sufficient to bring the Policy
out of default. If you do not pay the required premium during the grace period,
the Policy will terminate. See DETAILED INFORMATION ABOUT THE POLICIES; Premium
Provisions -- "Policy Default."
[You may be able to guarantee that your Policy will not go into default.]
DEATH BENEFIT GUARANTEE
A death benefit guarantee is available under Policies issued and maintained with
a minimum face amount of $250,000. As long as the Cumulative Premium Test or,
where applicable, the Fund Value Test is satisfied, we guarantee that the Policy
will not go into default
o prior to the life insured's attaining age 100 if Death Benefit Option 1
is maintained throughout the life of the Policy and
o prior to the life insured's attaining age 85 if Death Benefit Option 2 is
selected at any time,
regardless of the investment performance of the Funds underlying the Policy
Value.
Under Policies with face amounts of less than $250,000 there is no Death Benefit
Guarantee after the third policy anniversary. The Death Benefit Guarantee is not
available under Policies issued in the state of New Jersey. See DETAILED
INFORMATION ABOUT THE POLICIES; Premium Provisions -- "Death Benefit Guarantee."
REINSTATEMENT
If your Policy is terminated, you may have it reinstated 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
You may return a Policy for a refund of premium within the later of:
o 10 days after it is received,
o 45 days after the application for the Policy is signed, or
o 10 days after we mail or deliver a notice of this right of withdrawal.
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<PAGE> 18
If you request 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."
[Policies issued on a standard rate basis should qualify as life insurance under
the Internal Revenue Code.]
FEDERAL TAX MATTERS
We believe 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. If your Policy qualifies as a life insurance contract for Federal income
tax purposes, you 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).
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. Select
Loans may, however, be treated as taxable distributions. If you are considering
the use of systematic policy loans as one element of a comprehensive retirement
income plan, you should consult your 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. 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, which 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. We suggest that you
consult a tax adviser.
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. You should
consult your tax adviser regarding these taxes.
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GENERAL INFORMATION ABOUT MANUFACTURERS LIFE OF AMERICA, SEPARATE ACCOUNT THREE,
AND MANUFACTURERS INVESTMENT TRUST
MANUFACTURERS LIFE OF AMERICA AND MANUFACTURERS LIFE
[We are an indirect subsidiary of Manulife.]
We are a stock life insurance company governed by the laws of Michigan. We are
licensed to do business as a life insurance company in the District of Columbia
and all states of the United States except New York. We are an indirect
wholly-owned subsidiary of The Manufacturers Life Insurance Company
("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 and rank among the 60 largest
life insurers in the world as measured by assets.
We and Manufacturers Life have received the following ratings from independent
rating agencies: Standard and Poor's Insurance Rating Service -- AA+ (for claims
paying ability), A.M. Best Company -- A++ (for financial strength), Duff &
Phelps Credit Rating Co. -- AAA (for claims paying ability), and Moody's
Investors Service, Inc. - Aa2 (for financial strength). Neither we nor
Manufacturers Life guarantees the investment performance of the Separate
Account.
MANUFACTURERS LIFE OF AMERICA'S SEPARATE ACCOUNT THREE
[The Policy Values you allocate to our Separate Account are invested in the
Trust portfolio(s) you select.]
We established Separate Account Three on August 22, 1986. The Separate Account
holds assets that are segregated from all of our other assets. The Separate
Account is currently used only to support variable life insurance policies.
We are 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 our other income, gains or losses.
We 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 we
conduct. However, our obligations under the policies are part of our general
corporate obligations.
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.
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<PAGE> 20
MANUFACTURERS INVESTMENT TRUST
[The Trust is a mutual fund in which the Separate Account invests that has 36
investment portfolios managed by 15 sub-advisers.]
We invest the assets of each sub-account of the Separate Account in shares of a
particular Portfolio of Manufacturers Investment Trust. The Trust is registered
under the 1940 Act as an open-end management investment company. It receives
investment advisory services from Manufacturers Securities Services, LLC.
Manufacturers Securities Services, LLC is a registered investment adviser under
the Investment Advisers Act of 1940. It too is an indirect wholly-owned
subsidiary of Manufacturers Life.
Manufacturers Investment Trust employs sub-advisers to perform the securities
selection process. The sub-adviser for each Portfolio is identified in the
description of the eligible Portfolios set forth commencing on the inside front
cover of this prospectus.
The Separate Account purchases and redeems shares of Manufacturers Investment
Trust at net asset value. 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.
The list of Portfolios in which you may invest under the Policy and the
investment objectives and certain policies of those Portfolios is set forth
commencing on the inside front cover of this prospectus. A full description of
Manufacturers Investment Trust, its investment objectives, policies and
restrictions, the risks associated therewith, its expenses, and other aspects of
its operation is contained in the accompanying Manufacturers Investment Trust
prospectus, which should be read together with this prospectus.
We use shares of Manufacturers Investment Trust to support benefits under both
variable annuity contracts and variable life insurance policies that we or life
insurance companies affiliated with us issue. We also purchase shares through
our general account for certain limited purposes including providing initial
portfolio seed money. For a description of the procedures for handling potential
conflicts of interest arising from the funding of benefits under both types of
policies, you should review the accompanying Manufacturers Investment Trust
prospectus.
DETAILED INFORMATION ABOUT THE POLICIES
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 (see "Death Benefit Options").
PREMIUM PROVISIONS
POLICY ISSUE AND INITIAL PREMIUM
[The minimum face amount is $50,000.]
To purchase a Policy, you must submit a completed application. We will issue a
Policy only if it has a face amount of at least $50,000 ($100,000 for preferred
risk policies). Generally, we issue a Policy only to persons between ages 0 and
90. In certain circumstances we may in our sole discretion issue a Policy to
persons above age 90. Before issuing a Policy, we will require evidence of
insurability satisfactory to us. A life insured will have a risk class of
preferred/non-smoker, preferred/smoker, standard/non-smoker or standard/smoker
as determined by our underwriting rules. We may issue Policies to persons who
fail to meet standard underwriting requirements by assigning an additional
rating. We will accept an application if it meets our insurance underwriting
rules. Each Policy has
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<PAGE> 21
a policy date from which policy years, policy months and policy anniversaries
are all determined. Each Policy also has an effective date which is the date we
become obligated under the Policy and when the first monthly deductions are
taken.
If an application is accompanied by a check for at least the Initial Premium and
we accept the application, the policy date will be the date we receive the
application and check at our Service Office. The effective date will be the date
our underwriters approve issuance of the Policy. If an application is
accompanied by a check for at least the Initial Premium, the life insured may be
covered under the terms of a conditional insurance agreement until the effective
date.
If an application that we accept is not accompanied by a check for at least the
Initial Premium, we will issue the Policy with a policy date which is seven days
after issuance of the Policy (the "issue date") and with an effective date which
is the date our Service Office receives at least the Initial Premium. In certain
situations a different policy date may be used. We must receive the Initial
Premium within 60 days after the policy date; however, we may require the
Initial Premium within 30 days on Policies issued with Additional Ratings. If
the Initial Premium is not paid or if the application is rejected, we will
cancel the Policy and return any premiums paid to the applicant.
Under certain circumstances we may issue a Policy with a backdated policy date.
A Policy will not be backdated more than six months (twelve months where allowed
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.
We will credit interest on all premiums received prior to the effective date of
a Policy from the date of receipt at the rate of return then being earned on
amounts allocated to the Money Market Trust. On the effective date, we will
allocate the premiums paid plus interest credited, net of deductions for
federal, state and local taxes, among the Investment Accounts or the Fixed
Account in accordance with the your instructions.
[Premiums paid after the first premium are allocated as of the date received.]
We will allocate all premiums received on or after the effective date of the
Policy among the Investment Accounts or the Fixed Account as of the date the
premiums were received at our Service Office. Monthly deductions are due on the
policy date and at the beginning of each policy month thereafter. However, if
due prior to the effective date, they will be taken on the effective date
instead of the dates they were due.
PREMIUM ALLOCATION
You may allocate your premium payments, net of deductions, to either the Fixed
Account or to one or more of the Investment Accounts. Amounts allocated to the
Fixed Account will accumulate at an annual rate of interest equal to at least
4%. Amounts allocated to the Investment Accounts will be invested in shares of
the Portfolios held by the corresponding sub-accounts of the Separate Account.
Your allocation must be made as a percentage of the Net Premium. The percentage
may be any whole number between zero and 100, provided the total percentage
equals 100. You may change the way in which your Net Premiums are allocated at
any time without charge. The change will take effect on the date a written or
telephonic request for change, in a format satisfactory to us, is received at
our Service Office.
PREMIUM LIMITATIONS
[We issue Policies with a Planned Premium you select.]
After you pay the Initial Premium, you may pay additional premiums at any time
and in any amount during the lifetime of the life insured subject to certain
limitations. After the Initial Premium, all premiums must be paid to our Service
Office. Unlike traditional insurance, premiums are not payable at specified
intervals or in specified amounts. Your
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Policy will be issued with a Planned Premium which is based on the amount of
premium you wish to pay. It is recommended that the Planned Premium be such that
the Cumulative Premium Test (see Insurance Benefits -- "Death Benefit
Guarantee") will be satisfied.
We will send notices to you setting forth the Planned Premium at the payment
interval you select, unless you are making payments pursuant to a pre-authorized
payment plan. However, you are under no obligation to make the indicated
payment.
We 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 we
will accept a payment of as little as $10. We may change these minimums on 90
days' written notice. 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. We reserve the right to refuse or refund any premium payments that may
cause a Policy to fail to qualify as life insurance under applicable tax law.
SHORT-TERM CANCELLATION RIGHT AND "FREE LOOK" PROVISIONS
You may return a Policy for a refund of the premium
o within 10 days after it is received,
o within 45 days after the application for the Policy is signed, or
o within 10 days after we mail or deliver a notice of right of withdrawal,
whichever is latest. The Policy can be mailed or delivered to our agent who sold
it or to our Service Office. Immediately on such delivery or mailing, the Policy
is deemed void from the beginning. Within seven days after receipt of the
returned Policy at our Service Office, we will refund any premium paid. We
reserve the right to delay the refund of any premium paid by check until the
check has cleared.
If you request an increase in face amount which results in new surrender
charges, you will have the same rights as described above to cancel the
increase. If canceled, the Policy Value and the surrender charges will be
recalculated to the amounts they would have been had the increase not taken
place. You 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.
PROVISIONS FOR AVOIDING LAPSE
NO LAPSE GUARANTEE
[Policies with a face amount of $250,000 may be issued with a no lapse
guarantee.]
In those states where it is permitted, you may elect the No Lapse Guarantee on
Policies issued with a face amount of at least $250,000 (calculated as described
below). (In Illinois this benefit is known as Minimum Premium Guarantee.) If
elected, as long as the No Lapse Guarantee Cumulative Premium Test (see below)
is satisfied during the first five policy years, we guarantee that the Policy
will not go into default (see OTHER GENERAL PROVISIONS -- "Policy Default"). Our
guarantee applies even if a combination of Policy loans, adverse investment
experience and other factors causes the Policy's Net Cash Surrender Value to be
insufficient to meet the monthly deductions due at the beginning of a policy
month. For purposes of determining the face amount at issue for the No Lapse
Guarantee, the face amount includes any amounts purchased under the
supplementary insurance option.
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<PAGE> 23
The No Lapse Guarantee terminates at the end of the fifth policy year.
The No Lapse Guarantee is not offered to life insureds with an issue age
exceeding 85.
While the No Lapse Guarantee is in effect, we will determine at the beginning of
each policy month whether the No Lapse Guarantee Cumulative Premium Test,
described below, has been satisfied. If it has not been satisfied, we will
notify you of that fact and allow a 61-day grace period in which you may make a
premium payment sufficient to keep the No Lapse Guarantee in effect. This
required payment, as described in the notification to you, will be equal to the
outstanding premium required to meet the No Lapse Guarantee Cumulative Premium
Test as of the date the No Lapse Guarantee was not satisfied plus the Monthly No
Lapse Guarantee Premium due for the next two policy months.
If the required payment is not received by the end of the grace period, the No
Lapse Guarantee will terminate. Thereafter, the Policy may go into default if
the Policy's Net Cash Surrender Value is insufficient to meet the monthly
deductions due at the beginning of a policy month. A death benefit option change
will also terminate the No Lapse Guarantee if it is in effect at the time of the
change as will a decrease in face amount below $250,000. 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.
The Monthly No Lapse Guarantee Premium is one-twelfth of the No Lapse Guarantee
Premium. The No Lapse Guarantee Premium is set forth in the Policy. It is
subject to change if you change the face amount of the Policy (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
[Policies with a face amount of $250,000 may be issued with a death benefit
guarantee.]
POLICIES WITH FACE AMOUNTS OF AT LEAST $250,000. If permitted by state law and
if you elect, we will guarantee that a Policy issued and maintained with a
minimum face amount of $250,000 will not go into default if the Cumulative
Premium Test (see below) is satisfied. (See OTHER GENERAL POLICY PROVISIONS --
"Policy Default".) Our guarantee applies even if a combination of policy loans,
adverse investment experience or other factors causes 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 anniversary the Cumulative Premium Test is not
satisfied but the Fund Value Test (see below) is satisfied, we will keep the
Death Benefit Guarantee in effect.
This Death Benefit Guarantee, which is not available in the state of New Jersey,
will expire at the end of a policy year specified in the Policy. Currently, the
specified policy year is
(i) the year in which the life insured reaches attained age 100
if Death Benefit Option 1 is maintained throughout the life
of the Policy and
(ii) the year in which the life insured reaches attained age 85
if
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<PAGE> 24
Death Benefit Option 2 is selected at any time.
While the guarantee is in effect, we will determine at the beginning of each
policy month whether the Cumulative Premium Test or the Fund Value Test has been
satisfied. If neither has been satisfied, we will notify you of that fact and
allow a 61-day grace period in which you may make a premium payment sufficient
to keep the Death Benefit Guarantee in effect. The required payment will be
equal to the outstanding premium required to meet the Cumulative Premium Test at
the date neither test was satisfied, plus the Monthly 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. Once the Death Benefit Guarantee is terminated, it cannot be
reinstated.
POLICIES WITH FACE AMOUNTS UNDER $250,000. If permitted by state law and you
elect, we will guarantee that a Policy with a face amount less than $250,000 at
issue or after face amount decrease will not go into default during the first
three policy years if the Cumulative Premium Test is satisfied. Our guarantee
applies even if a combination of policy loans, adverse investment experience or
other factors should causes the Policy's Net Cash Surrender Value to be
insufficient to meet the monthly deductions due at the beginning of a policy
month. After the third policy anniversary, the Death Benefit Guarantee
terminates.
CUMULATIVE PREMIUM TEST. The Cumulative Premium Test is satisfied if at the
beginning of each policy month the sum of all premiums paid to date less any
partial withdrawals and any Policy Debt is at least equal to the sum of the
Monthly Death Benefit Guarantee Premiums due since the policy date. The Death
Benefit Guarantee Premium will increase when the insured attains age 70. The
Death Benefit Guarantee Premiums for ages 0-69 and age 70 and above are set
forth in the Policy. They are subject to change if you change the face amount of
the Policy or the death benefit option (see -- "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 the life insured.
FUND VALUE TEST. The Fund Value Test is applicable after the tenth anniversary
of the Policy. The Fund Value Test is satisfied if at the beginning of each
policy month the Net Policy Value is greater than or equal to the Gross Single
Premium.
INSURANCE BENEFIT
THE INSURANCE BENEFIT
If the Policy is in force at the time of the life insured's death, we will pay
an insurance benefit based on the death benefit option that you select upon
receipt of due proof of death. 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 we and the
beneficiary agree upon another form of settlement. If the insurance benefit is
paid in one sum, we will pay interest from the date of death to the date of
payment. If the life insured should die after our receipt of a request for
surrender, no insurance benefit will be payable, and we will pay only the Net
Cash Surrender Value.
DEATH BENEFIT OPTIONS
You may select one of two death benefit options -- Option 1 and Option 2.
[What is Option 1?]
Under Option 1 the death benefit is
o the face amount of the Policy at the date of death or, if greater,
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<PAGE> 25
o the Policy Value at the date of death multiplied by the applicable
percentage in the table set forth below.
[What is Option 2?]
Under Option 2 the death benefit is
o the face amount of the Policy plus the Policy Value at the date of death
or, if greater,
o the Policy Value at the date of death multiplied by the applicable
percentage in the following table:
[Use of the corridor percentage may increase your death benefit.]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
CORRIDOR CORRIDOR CORRIDOR
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
40 & below 250% 54 157 68 117
41 243 55 150 69 116
42 236 56 146 70 115
43 229 57 142 71 113
44 222 58 138 72 111
45 215 59 134 73 109
46 209 60 130 74 107
47 203 61 128 75-90 105
48 197 62 126 91 104
49 191 63 124 92 103
50 185 64 122 93 102
51 178 65 120 94 101
52 171 66 119 95 & above 100
53 164 67 118
</TABLE>
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<PAGE> 26
Regardless of which death benefit option is in effect, the relationship of
Policy Value to death benefit will change whenever we use the "corridor
percentages" 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 life insured under a Policy with a face amount of
$100,000 has an attained age of 40. If Option 1 is in effect, the corridor
percentage will produce a greater death benefit whenever the Policy Value
exceeds $40,000 (250% X $40,000 = $100,000). If the Policy Value is less than
$40,000, an incremental change in Policy Value, up or down, will have no effect
on the death benefit. If the Policy Value is greater than $40,000, 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 $40,010, the
death benefit would be increased to $100,025 (250% X $40,010 = $100,025).
If Option 2 were in effect in the above example, the corridor percentage would
produce a greater death benefit whenever the Policy Value exceeded $66,667 (250%
X 66,667 = 166,667). 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
$66,667, an incremental change in Policy Value will have a dollar-for-dollar
effect on the death benefit. If the Policy Value is greater than $66,667, 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
Your initial selection of the death benefit option is made in the application.
After the Policy has been in force for two years, you may change the death
benefit option. The change will be effective as of any subsequent policy month
following a request. Your written request for a change must be received by us at
least 30 days prior to the beginning of a policy month in order to become
effective on that date. We reserve 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. The change in face amount is required in order to avoid any change in
the amount of the death benefit.
- --------------------------------------------------------------------------------
CHANGE TO OPTION 2 If the change in death benefit is FROM OPTION 1 TO
OPTION 2, the new face amount will be equal to the face
NEW FACE AMOUNT = amount prior to the change minus the Policy Value on
OLD FACE AMOUNT the effective date of the change. A change to Option 2
MINUS will not be allowed if it would cause the face amount
POLICY VALUE of the Policy to go below the minimum face amount of
$50,000 ($100,000 for preferred risk policies). A
change to Option 2 will shorten the death benefit
guarantee period to the year in which the life insured
reaches attained age 85.
------------------------------------------------------
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<PAGE> 27
- ------------------------------------------------------------------------------
CHANGE TO OPTION 1 If the change in death benefit is FROM OPTION 2 TO
OPTION 1, the new face amount will be equal to the face
NEW FACE AMOUNT = amount prior to the change plus the Policy Value on the
OLD FACE AMOUNT effective date of the change. The increase in face
PLUS amount resulting from a change to Option 1 will not
POLICY VALUE affect the amount of surrender charges to which a
Policy may be subject. The Company has the right to
require satisfactory evidence of insurability before
permitting a change from Option 2 to Option 1. The
Company does not currently require evidence of
insurability when making this change.
- ------------------------------------------------------------------------------
If you wish to have level insurance coverage, you 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.
If you want to have the Policy Value reflected in the death benefit so that any
increases in Policy Value will increase the death benefit, you 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
[You may increase or decrease the Policy's face amount.]
Subject to certain limitations, you may increase or decrease the face amount of
your Policy. A change in face amount may affect the Death Benefit Guarantee
Premium, the monthly deductions and surrender charges (see "Charges And
Deductions").
MINIMUM CHANGES. Currently, each increase or decrease in face amount (other than
a decrease resulting from a partial withdrawal) must be at least $50,000
($100,000 for increases in preferred risk policies and $10,000 for increases
under Policies purchased under group or sponsored arrangements). We reserve the
right to increase or decrease the minimum face amount change on 90 days' written
notice to you. We also reserve 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. After the Policy has been in force for two years, you may increase
the face amount of your Policy once per policy year. Increases are subject to
satisfactory evidence of insurability. An increase will become effective at the
beginning of the next policy month following the date we approve the requested
increase. We reserve the right to refuse your request for an increase if the
life insured's age at the effective date of the increase would be greater than
the maximum issue age for new Policies at that time.
[Face amount increases usually subject the Policy to new surrender charges.]
An increase in face amount will usually subject the Policy 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 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, since 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,
16
<PAGE> 28
you will have free look and sales charge limitation rights with respect to any
increase resulting in new surrender charges.
No additional premium is required for a face amount increase. However, you may
need to pay an additional premium to keep the Policy from going into default.
This is because new surrender charges resulting from an increase would
automatically reduce the Net Cash Surrender Value of the Policy. Moreover, a new
Death Benefit Guarantee Premium will be determined.
DECREASES. After the Policy has been in force for two years, you may decrease
the face amount of your Policy once per policy year. No decrease is allowed
during the two-year period following an increase in face amount. However, during
that two-year period, you may choose to cancel the increase in face amount 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 $50,000
($100,000 for preferred risk policies).
[Face amount decreases usually result in the assessment of a surrender charge.]
Usually, we will deduct surrender charges from the Policy Value whenever a
decrease in face amount is made during the Surrender Charge Period. 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
[The Policy Value is the sum of your values in the Investment Accounts, the
Fixed Account and the Loan Account.]
A Policy has a Policy Value. You may access a portion of the Policy Value by
making a policy loan or partial withdrawal or by surrendering 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 Fixed Account and the Loan Account. The
following discussion relates only to the Investment Accounts. Policy loans are
discussed under "Policy Loans" and the Fixed 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 Portfolio.
We establish an Investment Account under the Policy for each sub-account of the
Separate Account to which you allocate net premiums or transfer amounts. Each
Investment Account measures the interest of the Policy in the corresponding
sub-account. The value of the Investment Account 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.
[Sub-account units are used to measure Investment Account values.]
We credit sub-account units to a Policy whenever you allocate net premiums or
transfer amounts to that sub-account. Sub-account units are canceled whenever
amounts are deducted, transferred or withdrawn from the sub-account. The number
of units credited or canceled for a specific transaction is based on the dollar
amount of the transaction divided by the value of the unit at the end of the
Business Day on which the transaction occurs. The number of units credited with
respect to a premium payment is based on the applicable unit values at the end
of the Business Day on which the premium is received at our Service Office or
other office or entity so designated by us.
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<PAGE> 29
Units are valued at the end of each Business Day. A Business Day is deemed to
end at the time of the determination of the net asset value of the underlying
Portfolio shares. When an order involving the crediting or canceling 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 at the
end 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 at the end 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 that 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 at the end of such Business Day before any policy
transactions are made on that day;
(b) is the net asset value of the underlying Portfolio shares held by that
sub-account at the end of the immediately preceding Business Day after
all policy transactions have been made for that day.
We reserve the right to adjust the above formula for any taxes determined by us
to be attributable to the operations of the sub-account.
TRANSFERS OF POLICY VALUE
[You may transfer amounts among the various investment options. You may make 12
transfers per year free of charge.]
You may change the extent to which your Policy Value is based upon any specific
sub-account of the Separate Account or the Company's general account. You make
those changes by transferring amounts from one or more Investment Accounts or
the Company's general account to other Investment Accounts or the Company's
general account. You are permitted to make twelve transfers each policy year
free of charge. If you make additional transfers in a policy year, we will
charge you $25 per transfer. We will assess this charge against the Investment
Account or Fixed Account from which the amount is being transferred. For this
purpose all transfer requests we receive from you on the same Business Day will
be treated as a single transfer request.
The most that you may transfer from the Fixed Account in any one policy year is
the greater of $500 or 15% of the Fixed Account value at the previous policy
anniversary. Any transfer which involves a transfer out of the Fixed Account may
not involve a transfer to the Investment Account for the Money Market Trust.
Your request for transfer must be in a format satisfactory to us. It must be in
writing unless you have a currently valid telephone transfer authorization form
on file with us. Generally, we will not be liable for following telephone
instructions that we reasonably believe to be genuine. We will employ reasonable
procedures to confirm that telephone instructions are genuine. Those procedures
shall consist of confirming that a valid telephone authorization form is on
file, tape recording all telephone transactions and providing written
confirmation of the instructions. We may be liable for any losses resulting from
unauthorized or fraudulent telephone transfers if we fail to follow reasonable
procedures.
[You may effectively convert your Policy to a fixed benefit Policy.]
You may effectively convert your Policy to a fixed benefit policy by
transferring the Policy Value in all of the Investment Accounts to the Fixed
Account and by changing your allocation of net premiums entirely to the Fixed
Account. As long as the entire Policy Value is allocated to the Fixed Account,
the Policy Value, other values based thereon and the death benefit will be
determinable and guaranteed. The Investment Account values to
18
<PAGE> 30
be transferred to the Fixed Account will be determined as of the Business Day on
which we receive the request for conversion. No change in the issue age, risk
class of the life insured or face amount will result from a conversion. You may
transfer any or all of the Policy Value to the Fixed Account at any time, even
if a prior transfer has been made during the policy month.
DOLLAR COST AVERAGING. We offer a Dollar Cost Averaging program. Under this
program amounts will be automatically transferred at predetermined intervals
from one Investment Account to any other Investment Account(s) or the Fixed
Account.
[You may arrange for periodic transfers from one Investment Account to other
accounts.]
Under the Dollar Cost Averaging program you designate an amount to be
transferred at predetermined intervals from one Investment Account into any
other Investment Account(s) or the Fixed Account. Each transfer under the Dollar
Cost Averaging program must be of a minimum amount set by us. We may change this
minimum at any time in our discretion. 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. We will deduct the
charge from the value of the Investment Account out of which the transfer is
made. If there are insufficient funds to effect a Dollar Cost Averaging
transfer, including the charge, if applicable, we will not effect the transfer
and will notify you of that fact. We reserve the right to cease to offer this
program on 90 days' written notice.
ASSET ALLOCATION BALANCER TRANSFERS. We also offer policyowners the ability to
have amounts automatically transferred among stipulated Investment Accounts to
maintain an allocated percentage in each stipulated Investment Account.
[You may arrange for automatic transfers every six months to preserve your
investment allocations.]
Under the Asset Allocation Balancer program you designate an allocation of
Policy Value among Investment Accounts. At six month intervals, beginning six
months after the policy date, we will move amounts among the Investment Accounts
as necessary to maintain your chosen allocation. A change to your premium
allocation instructions will automatically result in a change in Asset
Allocation Balancer instructions so that the two are identical unless either you
instruct us differently or a Dollar Cost Averaging request is in effect.
Currently, we make no charge for this program; however, we reserves the right to
institute a charge on 90 days' written notice.
We reserve the right to cease to offer this program on 90 days' written notice.
POLICY LOANS
[You may borrow against your Policy Value.]
While the Policy is in force, you may borrow against your Policy Value. The
Policy serves as the only security for the loan. The minimum amount of any loan
is $500. The maximum loan amount is the amount which would cause the Modified
Policy Debt to equal the loan value of the Policy on 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 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%. We transfer an amount equal to the Modified Policy Debt
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
19
<PAGE> 31
$5,200 will be available at the next policy anniversary to cover the interest
accrued on the Policy Debt.
[You may designate how the loan is to be taken from your various accounts.]
When a loan is made, we will deduct from the Investment Accounts or the Fixed
Account, and transfer to the Loan Account, an amount which will result in the
Loan Account value being equal to the Modified Policy Debt. You 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,
we will allocate the amount to be transferred to each account in the same
proportion as the value in each Investment Account and the Fixed Account bears
to the Net Policy Value. A transfer from an Investment Account will result in
the cancellation 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.
A policy loan may result in a Policy's failing to satisfy the Cumulative Premium
Test, since the Policy Debt is subtracted from the sum of the premiums paid in
determining whether the Cumulative Premium Test is satisfied. As a result, the
death benefit guarantee may terminate. See Insurance Benefit -- "Death Benefit
Guarantee" and Other General Policy Provisions -- "Policy Default."
Moreover, if the death benefit 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
Portfolios selected by the policyowner or increasing in value at the rate of
interest credited for amounts allocated to the Fixed Account.
[The interest we credit to your Loan Account may equal the interest we charge on
your loan for amounts up to the Policy's Select Loan Amount.]
[Systematic loans may have adverse tax consequences, and a premium necessary to
avoid lapse will increase as the insured grows older.]
Policy loans may have tax consequences. If you are considering the use of
systematic policy loans as one element of a comprehensive retirement income
plan, you should consult your 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 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. We will fix the rate of
interest charged 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. We will credit interest to any amount in
the Loan Account at an effective annual rate of at least 4%. The actual rate
credited is:
o On amounts in excess of the Policy's Select Loan Amount, the rate of
interest charged on the policy loan less an interest rate differential,
currently 1.75%.
o On amounts up to the Policy's Select Loan Amount, the rate of interest
charged on policy loan less an interest rate differential, currently 0%.
The tax consequences associated with a loan interest credited differential of 0%
are unclear. A tax adviser should be consulted before effecting a loan to
evaluate the tax
20
<PAGE> 32
consequences that may arise in such a situation. If we determine, in our sole
discretion, that there is a substantial risk that a loan will be treated as a
taxable distribution under Federal tax law as a result of the differential
between the credited interest rate and the loan interest rate, the Company
retains the right to increase the the loan interest rate to an amount that would
result in the transaction being treated as a loan under Federal tax law. If this
amount is not prescribed by any IRS ruling or regulation or any court decision,
the amount of increase will be that which the Company considers to be most
likely to result in the transaction being treated as a loan under Federal tax
law.
Prior to the later of the tenth policy anniversary and the anniversary following
attained age 55, the amount available as a Select Loan is zero; after the later
of the tenth policy anniversary and the policy anniversary following attained
age 55, the amount available annually as a Select Loan is equal to 12% of the
Policy's Net Cash Surrender Value at the previous policy anniversary. The amount
available as a Select Loan applies to existing and new loans. If, at the time
your are considering a Select Loan, interest due currently on your outstanding
loans equals or exceeds the Select Loan Amount, the Select Loan feature can not
be used to withdraw additional cash from Policy Value. The total of all loans,
including the Select Loan Amount, cannot exceed the maximum loan amount as
described above.
To illustrate the amount available as a Select Loan, assume that a Policy has an
issue age of 47 and a Net Cash Surrender Value on the eleventh policy
anniversary of $10,000. The Select Loan Amount available during the twelfth
policy year is $1,200 (12% X $10,000). Assume that at the beginning of the
twelfth policy year, a loan of $1,500 is taken. $1,200 of that amount is
considered the Select Loan Amount, $300 an ordinary policy loan.
At the end of the twelfth policy year, assume that the Net Cash Surrender Value
is $9,000. The Select Loan Amount available during the thirteenth policy year is
$1,080 (12% X $9,000). If not already repaid, the $300 from the prior year's
loan that was not considered a Select Loan is immediately converted to a Select
Loan, leaving $780 of the Select Loan Amount available for the thirteenth policy
year (provided that the sum of all outstanding loans does not exceed the
Policy's maximum loan amount). The amount of any unpaid interest on the Select
Loan and the ordinary policy loan from the twelfth policy year also would be
borrowed as a Select Loan up to the maximum Select Loan Amount and thereby
reduce by that amount the $780 available for borrowing as a Select Loan during
the remainder of the thirteenth policy year.
LOAN ACCOUNT ADJUSTMENTS. Whenever a loan is first taken out, and at specified
events thereafter, we adjust the value of the Loan Account. We take the
difference between (i) the Loan Account before any adjustment and (ii) the
Modified Policy Debt at the time of adjustment and transfer that amount between
the Loan Account and the Investment Accounts or the Fixed Account. The amount
transferred to or from the Loan Account will be such that the value of the Loan
Account after the adjustment will be equal to the Modified Policy Debt.
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 or
(iv) 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 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 under "Loan Repayments," we will allocate amounts
transferred from the Loan Account to the Investment Accounts and the Fixed
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 Fixed
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<PAGE> 33
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 as follows: assume 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. For purposes of the illustration, assume that the Select Loan Amount is
zero. 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 $5,200
($5,000 X 1.04) reflecting interest credited at an effective annual rate of
4.0%. 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 Fixed Account or the Investment Accounts so that the Loan Account
value will equal the Modified Policy Debt. Since the Loan Account value was
$5,200, a transfer of $200 will be required ($5,200 -- $5,000).
If, however, the accrued interest charges of $283 are borrowed, an amount will
be transferred from the Investment Accounts and the Fixed Account so that the
Loan Account value will equal the Modified Policy Debt recomputed at 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 $5,200, a transfer of $88 will be required. This amount is
equivalent to the 1.75% interest rate differential on the $5,000 transferred to
the Loan Account on the previous policy anniversary.
[You may repay your Policy loan at any time prior to the death of the insured.]
LOAN REPAYMENTS. You may repay Policy Debt in whole or in part at any time prior
to the death of the life insured provided the Policy is in force. When a
repayment is made, we will credit the repayment amount to the Loan Account and
transfer an amount to the Fixed Account or the Investment Accounts so that the
Loan Account at that time will equal the Modified Policy Debt. We will allocate
loan repayments first to the Fixed Account until the associated loan sub-account
is reduced to zero. We will then allocate loan repayments 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 us not
specifically designated in writing as loan repayments will be treated as
premiums.
PARTIAL WITHDRAWALS AND SURRENDERS
[You may partially withdraw your Policy's Net Cash Surrender Value after the
Policy has been in force for two policy years.]
After a Policy has been in force for two policy years, you may make a partial
withdrawal of the Net Cash Surrender Value. The minimum amount that may be
withdrawn is $500. You should specify the portion of the withdrawal to be taken
from each Investment Account and the Fixed Account. In the absence of
instructions we will allocate the withdrawal 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.
If you make a partial withdrawal during the Surrender Charge Period, we will
usually assess a portion of the surrender charges to which the Policy is subject
(see Charges And Deductions -- "Surrender Charges") if the amount withdrawn is
in excess of the Withdrawal Tier Amount. The Withdrawal Tier Amount is 10% of
the Net Cash Surrender
22
<PAGE> 34
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. See CHARGES AND DEDUCTIONS -- SURRENDER CHARGES (CHARGES ON PARTIAL
WITHDRAWALS).
You may surrender your Policy for its Net Cash Surrender Value at any time while
the life insured is living. The Net Cash Surrender Value is 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 at the end of the Business Day on which we receive the
Policy and a written request for surrender at our 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 our assessment of surrender charges. See Charges And
Deductions -- "Surrender Charges."
CHARGES AND DEDUCTIONS
The charges we make 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
We currently make no deduction from premium payments for state and local taxes.
The maximum amount we may deduct for such taxes in the future is 2.35% (except
for Oregon where no premium tax is deducted). We currently make no deduction
from premium payments for federal taxes. The maximum amount we may deduct for
such taxes in the future is 1.25%.
SURRENDER CHARGES
We 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. We usually assess these charges 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 deferred underwriting charge is $6 per $1000 of face amount not to exceed
$3000.]
DEFERRED UNDERWRITING CHARGE. The deferred underwriting charge is $6 for each
$1,000 of face amount of life insurance coverage initially purchased or added by
increase. In effect, the charge applies only to the first $500,000 of face
amount initially purchased or the first $500,000 of each subsequent increase in
face amount. Thus, the charge made in connection with any one underwriting will
not exceed $3,000. The amount of the charge remains level for five years.
Following the fifth year after issuance of the Policy or a face amount increase,
the charge applicable to the initial face amount or increase will decrease each
month by varying rates depending upon the life insured's issue age until the
charge has decreased to zero. The applicable percentage of the deferred
underwriting charges to which the Policy is subject is illustrated by the
following table:
23
<PAGE> 35
<TABLE>
<CAPTION>
TABLE 1: DEFERRED UNDERWRITING CHARGES
Transaction Occurs after
Monthly Deduction Taken Percent of Deferred Underwriting Charges by Issue Age*
For Last Month Preceding ------------------------------------------------------
End of Month* Age
- ------------------------- ------------------------------------------------------
Month 0-50 51 52 53 54 55+
- ------------------------- ---- -- -- -- -- ---
<S> <C> <C> <C> <C> <C> <C>
12 100% 100% 100% 100% 100% 100%
24 100% 100% 100% 100% 100% 100%
36 100% 100% 100% 100% 100% 100%
48 100% 100% 100% 100% 100% 100%
60 100% 100% 100% 100% 100% 100%
72 90% 88.89% 87.50% 85.71% 83.33% 80.00%
84 80% 77.78% 75.00% 71.43% 66.67% 60.00%
96 70% 66.67% 62.50% 57.14% 50.00% 40.00%
108 60% 55.56% 50.00% 42.86% 33.33% 20.00%
120 50% 44.44% 37.50% 28.57% 16.67% 0%
132 40% 33.33% 25.00% 14.28% 0%
144 30% 22.22% 12.50% 0%
156 20% 11.11% 0%
168 10% 0%
180 0%
</TABLE>
* Months not shown may be calculated by interpolation.
We designed the deferred underwriting charge to cover the administrative
expenses associated with underwriting and policy issue, including the costs of
processing applications, conducting medical examinations, determining the life
insured's risk class and establishing policy records.
[The maximum deferred sales charge is 50% of premiums not to exceed a specified
number of Target Premiums.]
DEFERRED SALES CHARGE. The maximum deferred sales charge is 50% of premiums paid
up to a maximum number of Target Premiums that varies (from -0.180 to 3.031)
according to the issue age of the life insured, the face amount at issue and the
amount of any increase. This charge compensates us 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, we expect 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. We anticipate that the aggregate amounts we
receive under the Policies for sales charges will be insufficient to cover our
aggregate sales expenses. To the extent that our sales expenses exceed our sales
charges, we will pay the excess from our other assets or surplus, including
amounts derived from the mortality and expense risks charge described below. We
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 canceled during the two-year period following the increase. Where
that sales charge limitation is applicable, the deferred sales charge assessable
under the Policy will increase at the beginning of the third policy year. See
Surrender Charges (Sales Charge Limitation) below.
We specify the Target Premium for the initial face amount in the Policy. We will
compute a Target Premium for each increase in face amount above the highest face
amount of coverage previously in effect, and we will advise you of each new
Target Premium.
24
<PAGE> 36
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)
of the life insured. The maximum number of Target Premiums subject to the
deferred sales charge varies, based on the issue age of the life insured, the
face amount at issue and the amount of any increase, according to the following
tables:
TABLE 2: NUMBER OF TARGET PREMIUMS SUBJECT TO DEFERRED SALES CHARGE FOR POLICIES
ISSUED PRIOR TO JULY 10, 1995
(APPLICABLE TO THE INITIAL FACE AMOUNT AND INCREASES)
<TABLE>
<CAPTION>
$250,000 UNDER $250,000 UNDER $250,000 UNDER
AGE OR MORE $250,000 AGE OR MORE $250,000 AGE OR MORE $250,000
--- -------- -------- --- -------- -------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
*0 -0.031 -0.039 30 1.319 1.648 60 2.356 2.945
*1 -0.144 -0.180 31 1.366 1.707 61 2.375 2.968
*2 -0.081 -0.102 32 1.415 1.768 62 2.399 2.998
*3 -0.020 -0.025 33 1.459 1.823 63 2.425 3.031
4 0.037 0.046 34 1.503 1.878 64 2.380 2.975
5 0.096 0.120 35 1.542 1.927 65 2.269 2.836
6 0.166 0.207 36 1.590 1.987 66 2.124 2.655
7 0.221 0.276 37 1.633 2.041 67 2.006 2.507
8 0.281 0.351 38 1.672 2.090 68 1.888 2.360
9 0.340 0.425 39 1.718 2.147 69 1.787 2.233
10 0.391 0.488 40 1.756 2.195 70 1.691 2.113
11 0.453 0.566 41 1.790 2.237 71 1.592 1.990
12 0.514 0.642 42 1.832 2.290 72 1.494 1.867
13 0.560 0.700 43 1.869 2.336 73 1.396 1.745
14 0.614 0.767 44 1.904 2.380 74 1.317 1.646
15 0.560 0.700 45 1.937 2.421 75 1.241 1.551
16 0.606 0.757 46 1.969 2.461 76 1.162 1.452
17 0.658 0.822 47 2.000 2.500 77 1.084 1.355
18 0.718 0.897 48 2.032 2.540 78 1.010 1.262
19 0.767 0.958 49 2.062 2.577 79 0.946 1.182
20 0.817 1.021 50 2.093 2.616 80 0.887 1.108
21 0.870 1.087 51 2.123 2.653 81 0.831 1.038
22 0.924 1.155 52 2.154 2.692 82 0.779 0.973
23 0.973 1.216 53 2.182 2.727 83 0.733 0.916
24 1.026 1.282 54 2.211 2.763 84 0.688 0.860
25 1.075 1.343 55 2.234 2.792 85 0.646 0.807
26 1.125 1.406 56 2.259 2.823 86 0.606 0.757
27 1.177 1.471 57 2.284 2.855 87 0.567 0.708
28 1.228 1.535 58 2.307 2.883 88 0.530 0.662
29 1.274 1.592 59 2.333 2.916 89 0.493 0.616
90 0.484 0.605
</TABLE>
* A negative number of Target Premiums produces a negative deferred sales
charge. When combined with the deferred underwriting charge, a negative deferred
sales charge reduces the total surrender charge.
TABLE 3: NUMBER OF TARGET PREMIUMS SUBJECT TO DEFERRED SALES CHARGE FOR POLICIES
ISSUED ON OR AFTER JULY 10, 1995
(APPLICABLE TO THE INITIAL FACE AMOUNT AND INCREASES)
<TABLE>
<CAPTION>
$250,000 UNDER $250,000 UNDER $250,000 UNDER
AGE OR MORE $250,000 AGE OR MORE $250,000 AGE OR MORE $250,000
- --- -------- -------- --- -------- -------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
*0 -0.031 -0.039 30 1.319 1.648 60 2.356 2.945
*1 -0.144 -0.180 31 1.366 1.707 61 2.375 2.968
*2 -0.081 -0.102 32 1.415 1.768 62 2.399 2.998
*3 -0.020 -0.025 33 1.459 1.823 63 2.425 3.031
4 0.037 0.046 34 1.503 1.878 64 2.367 2.959
5 0.096 0.120 35 1.542 1.927 65 2.259 2.824
</TABLE>
25
<PAGE> 37
<TABLE>
<CAPTION>
$250,000 UNDER $250,000 UNDER $250,000 UNDER
AGE OR MORE $250,000 AGE OR MORE $250,000 AGE OR MORE $250,000
- --- -------- -------- --- -------- -------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 0.166 0.207 36 1.590 1.987 66 2.113 2.641
7 0.221 0.276 37 1.633 2.041 67 1.992 2.490
8 0.281 0.351 38 1.672 2.090 68 1.875 2.344
9 0.340 0.425 39 1.718 2.147 69 1.777 2.222
10 0.391 0.488 40 1.756 2.195 70 1.679 2.099
11 0.453 0.566 41 1.790 2.237 71 1.583 1.979
12 0.514 0.642 42 1.832 2.290 72 1.486 1.857
13 0.560 0.700 43 1.869 2.336 73 1.392 1.740
14 0.614 0.767 44 1.904 2.380 74 1.315 1.644
15 0.560 0.700 45 1.937 2.421 75 1.238 1.547
16 0.606 0.757 46 1.969 2.461 76 1.161 1.451
17 0.658 0.822 47 2.000 2.500 77 1.083 1.354
18 0.718 0.897 48 2.032 2.540 78 1.007 1.259
19 0.767 0.958 49 2.062 2.577 79 0.945 1.182
20 0.817 1.021 50 2.093 2.616 80 0.885 1.106
21 0.870 1.087 51 2.123 2.653 81 0.829 1.037
22 0.924 1.155 52 2.154 2.692 82 0.779 0.973
23 0.973 1.216 53 2.182 2.727 83 0.732 0.915
24 1.026 1.282 54 2.211 2.763 84 0.687 0.859
25 1.075 1.343 55 2.234 2.792 85 0.644 0.806
26 1.125 1.406 56 2.259 2.823 86 0.604 0.755
27 1.177 1.471 57 2.284 2.855 87 0.566 0.708
28 1.228 1.535 58 2.307 2.883 88 0.529 0.661
29 1.274 1.592 59 2.333 2.916 89 0.493 0.616
90 0.484 0.605
</TABLE>
* A negative number of Target Premiums produces a negative deferred sales
charge. When combined with the deferred underwriting charge, a negative
deferred sales charge reduces the total surrender charge.
[A ratio of guideline annual premiums will be used to allocate a portion of the
Policy Value and of subsequent premiums to a face amount increase for purposes
of determining the deferred sales charge applicable to the increase.]
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 two years of the Surrender Charge Period. After that, the portion of
the deferred sales charge that remains in effect will grade down at a rate that
also varies according to the issue age of the life insured until, at the end of
the Surrender Charge Period, there is no deferred sales charge. The tables we
use to reduce the applicable deferred sales charge during the Surrender Charge
Period are set forth in Appendix C to this Prospectus. The applicable table will
be set forth in each Policy, and we will inform you of the table to be used in
connection with sales charges on increases in face amount.
[The deferred sales charge grades down after the first two policy years, subject
to the sales charge limitation in effect during such period.]
In order to determine the deferred sales charge applicable to a face amount
increase, we 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.
A "guideline annual premium" is a hypothetical amount based on S.E.C. rules that
we use 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.
The following example illustrates how deferred underwriting and deferred sales
charges are calculated using data from Tables 1, 2 and 3 above and from the
tables in Appendix C.
Assume a 36-year-old male (standard risk), whose Policy was issued prior to July
10, 1995, at age 30, and who has paid $9,000 in premiums under a Policy with a
Target
26
<PAGE> 38
Premium of $1,500 and a face amount of $100,000, surrenders his Policy during
the last month of the sixth policy year.
A deferred underwriting charge of $540 will be assessed. The maximum deferred
underwriting charge of $600 ($6 per $1,000 of face amount X 100) will be
multiplied by the 90% listed in Table 1 as applicable to surrenders during the
last month of the sixth policy year [90% X ($6 X 100) = $540].
A deferred sales charge of $1,192.74 will also be assessed. According to Table
2, the maximum number of Target Premiums subject to the deferred sales charge
for a person who was 30 years old when his or her Policy with a face amount less
than $250,000 was issued would be 1.648. Thus $2,472 (1.648 X $1,500) will be
the maximum amount of premiums subject to the 50% sales charge, producing a
maximum sales charge of $1,236 (50% X $2,472 = $1,236). Because the surrender
occurs during the last month of the sixth policy year, only 96.50% (from the
table in Appendix C for issue age 30) of the maximum sales charge remains
applicable [96.50% X (.50 X 1.648 X $1,500) = $1,192.74].
[We forego taking the full deferred sales charge for a surrender, termination or
face amount decrease during the first two policy years.]
SALES CHARGE LIMITATION. If you surrender your Policy or decrease its face
amount at any time during the first two years after issuance or after an
increase in face amount, we 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 maximum amount of premiums
subject to the deferred sales charge
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 maximum amount of premiums subject to the
deferred sales charge,
plus
(iii) 9% of the premiums paid in excess of two guideline
annual premiums up to the maximum amount of premiums subject
to the deferred sales charge.
The operation of the sales charge limitation for Policies issued prior to July
10, 1995 is illustrated by the following example. A 67-year-old male non-smoker
purchased a Policy with a face amount in excess of $250,000 when he was age 65.
He has paid $30,000 in premiums under the Policy and it has a guideline annual
premium (GAP) of $15,997 and a Target Premium (TP) of $11,835. He surrenders his
policy during the second policy year. In the absence of the sales charge
limitation, the maximum deferred sales charge would be 50% of the lesser of
premiums paid ($30,000) or the maximum amount of premiums subject to the
deferred sales charge (TP X Maximum Number of TP's = $11,835 X 2.269 = $26,854),
which results in 50% of $26,854 (the "Maximum Chargeable Amount" or "MCA") or
$13,427 as the maximum deferred sales charge. However, under the formula
described above, the maximum sales charge allowable will be $5,885. This is
calculated as the sum of:
(i) 30% of one GAP, or $4,799 [.30 X $15,997 = $4,799], because one GAP
($15,997) is less than premiums paid ($30,000) and less
than
27
<PAGE> 39
the MCA ($26,854);
plus
(ii) 10% of the MCA in excess of one GAP, or $1,086 (.10 X $10,857 =
$1,086) because the MCA in excess of one GAP ($26,854 -
$15,997 = $10,857) is less than premiums paid in excess of
one GAP ($30,000 - $15,997 = $14,003) and less than the
amount of a second GAP ($15,997);
plus
(iii) $0, because no premiums in excess of two GAPs were paid and would not
have been chargeable in any event, as the MCA was less than
two GAPs.
Thus, (i) $4,799 plus (ii) $1,086 plus (iii) $0 equals $5,885, the maximum sales
charge allowable.
If the Policy in the foregoing example were issued on or after July 10, 1995,
the maximum sales charge allowable would be $5,873, because the maximum amount
of Target Premiums subject to the deferred sales charge would be 2.259 (from
Table 3) instead of 2.269 (from Table 2).
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.
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, we will reduce the Policy's remaining surrender charges
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, or a
requested decrease in face amount. The portion of the surrender charges assessed
will be based on the ratio of (i) to (ii), where
(i) is the amount of the withdrawal in excess of the Withdrawal Tier
Amount, and
(ii) is to the Net Cash Surrender Value of the Policy less the
Withdrawal Tier Amount immediately prior to the withdrawal.
We will deduct the surrender charges from each Investment Account and the Fixed
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 canceled based on the value of
such units determined at the end of the Business Day on which we receive a
written request for withdrawal at our Service Office.
28
<PAGE> 40
[A partial withdrawal will result in a reduction in the Policy's face amount if
the Option 1 death benefit is in effect.]
If the Option 1 death benefit is in effect under a Policy from which a partial
withdrawal is made, we will reduce the face amount of the Policy. 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 applicable 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.
[We deduct a portion of the surrender charges if you decrease the face amount or
cancel an increase.]
CHARGES ON DECREASES IN FACE AMOUNT. As with partial withdrawals, we will deduct
a portion of a Policy's surrender charges upon a decrease, or a cancellation of
an increase, in face amount which you request. 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, we will determine separately the portion of the surrender
charges to be deducted with respect to each level of insurance coverage. That
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," we apply decreases to
the most recent increase first and thereafter to the next most recent increases
successively. We will deduct the charges from the Policy Value, and we will
allocate the amount so deducted among the Investment Accounts and the Fixed
Account in the same proportion as 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.
CHARGES REMAINING AFTER FACE AMOUNT DECREASES OR PARTIAL WITHDRAWALS. Each time
a pro-rata deferred underwriting charge or a pro-rata 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
proportionately.
We will calculate the remaining deferred underwriting charge using Table 1
above. The actual remaining charge will be the result of (a) divided by (b),
multiplied by (c), where
(a) is the grading percentage applicable to the life
insured's issue age and Policy duration;
(b) is the grading percentage applicable to the life
insured's issued age at the time of the last face amount
decrease or partial withdrawal;
and
(c) is the remaining deferred sales charge prior to the last
face amount decrease or partial withdrawal less the deferred
underwriting charge deducted for that face amount decrease
or partial withdrawal.
29
<PAGE> 41
We will calculate the remaining deferred sales charge using Table 2 above and
Appendix C. The actual remaining charge will be the result of (a) divided by
(b), multiplied by (c), where:
(a) is the grading percentage applicable to the Policy duration;
(b) is the grading percentage at the time of the last face amount decrease
or partial withdrawal;
and
(c) 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.
Until the sum of premiums paid equals or exceeds the number of Target Premiums
subject to deferred sales charge multiplied by the Target Premium, subsequent
premium payments will increase the remaining deferred sales charge.
MONTHLY DEDUCTIONS
[We deduct monthly from the Policy Value: an administrative charge, a cost of
insurance charge, a mortality and expense risks charge and charges for
supplementary benefits.]
Each month we make a deduction from Policy Value 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"). We allocate the monthly deduction among the
Investment Accounts and (other than the mortality and expense risks charge) the
Fixed 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 on the effective date instead of the dates they were due. If the Policy is
still in force when the life insured attains age 100, no further monthly
deductions will be taken from the Policy Value.
ADMINISTRATION CHARGE
The monthly administration charge is $35 until the first anniversary and,
thereafter, $10 (the right is reserved to increase the administration charge by
an additional amount of up to $.01 per $1,000 of face amount 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 charges permitted
under a Policy.
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
o the life insured's issue age,
o the duration of the coverage,
o sex (unless unisex rates are required by law),
o risk class, and,
o 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.
See Miscellaneous Matters -- "Legal Considerations." We determine the rate
separately for the initial face amount and for each increase in face amount.
Cost of insurance rates will generally increase with the life insured's age. Any
additional ratings as indicated in
30
<PAGE> 42
the Policy will be added to the cost of insurance rate.
We use cost of insurance rates that reflect our expectations as to future
mortality experience as based on current experience. We may change the rates
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 rate set forth in the Policy except to the extent that an extra rate
is imposed because of an additional rating applicable to the 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.
If requested by the applicant, we may offer the Policy with provisions based on
actuarial tables that do not differentiate on the basis of sex to such
prospective purchasers in states where the unisex version of the Policy has been
approved.
The State of Montana currently 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.
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, we will calculate the net amount at risk 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
We make a monthly charge against your Policy Value for the mortality and expense
risks we assume under the Policies. We make this charge at the beginning of each
policy month at an annual rate of
o .90% through the later of the tenth anniversary of the Policy and your
attained age of 60
o and, thereafter, .45%.
We assess the charge against the value of your Investment Accounts by canceling
units in the same proportion as the value of each Investment Account bears to
the total value of your Investment Accounts. The mortality risk assumed is that
lives insured may live for a shorter period of time than we estimated. The
expense risk assumed is that expenses incurred in issuing and administering the
Policies will be greater than we estimated. We estimate that virtually all of
the mortality and expense risks charge currently relates to
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<PAGE> 43
expense risks. We 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, we make no charge against the Separate Account for federal, state or
local taxes that may be attributable to the Separate Account or to our
operations with respect to the Policies. However, if we incur any such taxes, we
may make a charge therefor.
We impose charges on certain transfers of Policy Values, including a $25 charge
for each transfer in excess of twelve in a policy year 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."
The Separate Account purchases shares of Portfolios at net asset value. The net
asset value of those shares reflects investment management fees and expenses. In
addition to the information contained in the table below, detailed information
concerning those fees and expenses is set forth under the caption "Management of
The Trust" in the Prospectus for the Manufacturers Investment Trust that
accompanies this Prospectus.
TABLE OF INVESTMENT MANAGEMENT FEES AND EXPENSES
ANNUAL EXPENSES OF EACH PORTFOLIO
(as a percentage of a Portfolio's average net assets)
<TABLE>
<CAPTION>
MANAGEMENT OTHER EXPENSES
PORTFOLIO TOTAL TRUST (AFTER EXPENSE
EXPENSES FEES REIMBURSEMENT)*** ANNUAL
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggressive Growth
Pacific Rim Emerging Markets........ 0.850% 0.570% 1.420%
Science & Technology................ 1.100% 0.160% 1.260%
International Small Cap............. 1.100% 0.210% 1.310%
Emerging Small Company.............. 1.050% 0.060% 1.110%
Pilgrim Baxter Growth............... 1.050% 0.130% 1.180%
Small/Mid Cap....................... 1.000% 0.050% 1.050%
International Stock................. 1.050% 0.330% 1.380%
Growth
Worldwide Growth.................... 1.000% 0.320% 1.320%
Global Equity....................... 0.900% 0.110% 1.010%
Small Company Value................. 1.050% 0.100%* 1.150%
Equity.............................. 0.750% 0.050% 0.800%
Growth.............................. 0.850% 0.100% 0.950%
Quantitative Equity................. 0.700% 0.070% 0.770%***
Blue Chip Growth.................... 0.925% 0.050% 0.975%
Equity Index........................ 0.250% 0.15%**** 0.40%****
Real Estate Securities.............. 0.700% 0.070% 0.770%***
Growth and Income
Value............................... 0.800% 0.160% 0.960%
International Growth and Income..... 0.950% 0.170% 1.120%
Growth and Income................... 0.750% 0.040% 0.790%
Equity-Income....................... 0.800% 0.050% 0.850%
Balanced
Balanced............................ 0.800% 0.080% 0.880%
Aggressive Asset Allocation......... 0.750% 0.150% 0.900
</TABLE>
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<PAGE> 44
<TABLE>
<S> <C> <C> <C>
Moderate Asset Allocation........... 0.750% 0.100% 0.850%
Conservative Asset Allocation....... 0.750% 0.140% 0.890%
Bond
High Yield.......................... 0.775% 0.110% 0.885%
Strategic Bond...................... 0.775% 0.100% 0.875%
Global Government Bond.............. 0.800% 0.130% 0.930%
Capital Growth Bond................. 0.650% 0.080% 0.730%***
Investment Quality Bond............. 0.650% 0.090% 0.740%
U.S. Government Securities.......... 0.650% 0.070% 0.720%
Money Market
Money Market........................ 0.500% 0.040% 0.540%
Lifestyle
Lifestyle Aggressive 1000#.......... 0% 1.116%** 1.116%
Lifestyle Growth 820#............... 0% 1.048%** 1.048%
Lifestyle Balanced 640#............. 0% 0.944%** 0.944%
Lifestyle Moderate 460#............. 0% 0.850%** 0.850%
Lifestyle Conservative 280#......... 0% 0.708%** 0.708%
</TABLE>
#Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will bear its pro rata share of the fees and
expenses incurred by the Underlying Portfolios and the investment return of each
Lifestyle Trust will be net of the Underlying Portfolio expenses. Each Lifestyle
Portfolio must also bear its own expenses. However, the Adviser is currently
paying these expenses as described in footnote ** below.
*Based on estimates of payments to be made during the current fiscal year.
** Reflects expenses of the other portfolios of the Trust in which the Lifestyle
Trust invests ("Underlying Portfolios"). MSS has voluntarily agreed to pay the
expenses of each Lifestyle Trust (excluding the expenses of the Underlying
Portfolios). This voluntary expense reimbursement may be terminated at any time.
If such expense reimbursement was not in effect, Total Trust Annual Expenses
would be .04% higher (based on expenses of the Lifestyle Trusts for the fiscal
year ended December 31, 1997) as noted in the chart below:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO EXPENSES FEES EXPENSES ANNUAL
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lifestyle Aggressive 1000........... 0% 1.156% 1.156%
Lifestyle Growth 820................ 0% 1.088% 1.088%
Lifestyle Balanced 640.............. 0% 0.984% 0.984%
Lifestyle Moderate 460.............. 0% 0.890% 0.890%
Lifestyle Conservative 280.......... 0% 0.748% 0.748%
</TABLE>
***During the one year period ended December 31, 1997, MSS voluntarily waived
fees payable to it and/or reimbursed expenses to the extent necessary to prevent
"Total Trust Annual Expenses" for the Quantitative Equity, Real Estate and
Capital Growth Bond Trusts from exceeding .50% of the Trust's average net
assets. This voluntary fee waiver was terminated effective January 1, 1998.
Expenses shown in the table for these three Trusts do not reflect the fee
waiver.
****Under the Advisory Agreement, MSS has agreed to reduce its advisory fee or
reimburse the Equity Index Trust if the total of all expenses (excluding
advisory fees, taxes, portfolio brokerage commissions, interest, litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business) exceed an annual rate of 0.15% of the
average annual net assets of the Equity Index Trust. The expense limitation will
continue in effect from year to year unless otherwise terminated at any year end
by MSS on 30 days' notice to the Trust. If this expense reimbursement had not
been in effect, Total Trust Annual Expenses would have been 0.57%, and Other
Expenses would have been 0.32%, of the average annual net assets of
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<PAGE> 45
the Equity Index Trust.
SPECIAL PROVISIONS FOR GROUP OR SPONSORED ARRANGEMENTS
[We may reduce any Policy charges when the Policy is issued in 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.
We may reduce the charges and deductions described above for Policies issued in
connection with group or sponsored arrangements. Such arrangements may include
sales without withdrawal charges and deductions to our employees, officers,
directors, agents, immediate family members of the foregoing, and employees of
our agents and of our subsidiaries. We will reduce the above charges and
deductions in accordance with our 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
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 the different mortality experience expected as a result of,
sales to qualifying groups and sponsored arrangements.
We 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
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 or persons purchasing under a
sponsored 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.
SPECIAL PROVISIONS FOR EXCHANGES
[We may eliminate or reduce charges in connection with certain exchanges.]
We will permit owners of certain life insurance policies issued either by us or
Manufacturers Life to exchange their policies for the Policies described in this
prospectus. Charges under the policies being exchanged or the Policies issued in
exchange therefor may be reduced or eliminated. 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. 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 our general account have not
been
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<PAGE> 46
registered under the Securities Act of 1933 and our general account has not been
registered as an investment company under the Investment Company Act of 1940.
Accordingly, neither our general account nor any interests therein are subject
to the provisions of these acts, and as a result the staff of the Securities and
Exchange Commission 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.
Our general account consists of all assets owned by us other than those in our
separate accounts. Subject to applicable law, we have sole discretion over the
investment of the assets of our general account.
[We will credit interest to the portion of your Policy Value allocated to the
Fixed Account at an annual rate of at least 4%.]
You may elect to allocate net premiums to the Fixed Account or to transfer all
or a portion of your Policy Value to the Fixed Account from the Investment
Accounts. Transfers from the Fixed Account to the Investment Accounts are
subject to restrictions. See Policy Values -- "Transfers Of Policy Value" and
"Policy Value." We will hold the reserves required for any portion of the Policy
Value allocated to the Fixed Account in our general account. However, your
allocation of Policy Value to the Fixed Account does not entitle you to share in
the investment experience of our general account. Instead, we guarantee that
your Policy Value in the Fixed Account will accrue interest daily at an
effective annual rate of at least 4%, without regard to the actual investment
experience of our general account. We may, at our sole discretion, credit a
higher rate of interest, although we are not obligated to do so. You assume the
risk that interest credited may not exceed the guaranteed minimum rate of 4% per
year.
OTHER GENERAL POLICY PROVISIONS
POLICY DEFAULT
[Unless the Death Benefit Guarantee is in effect, your Policy will go into
default if the Net Cash Surrender Value would go below zero after taking the
monthly deductions then due.]
Unless the Death Benefit Guarantee is in effect, your 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. We
will notify you of the default and will allow a 61-day grace period in which you
may make a premium payment sufficient to bring the Policy out of default. The
payment you must make will be equal to the amount necessary to bring the Net
Cash Surrender Value to zero, if it was less than zero at the date of default,
plus the monthly deductions due at the date of default and at the beginning of
each of the two policy months thereafter, based on the Policy Value at the date
of default. If we do not receive the required payment by the end of the grace
period, we will terminate the Policy and pay to you 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. If the 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.
POLICY REINSTATEMENT
You 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) The life insured's risk class is standard or preferred; and
(b) The life insured's attained age is less than 46.
You can reinstate a Policy which has terminated after going into default at any
time within
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<PAGE> 47
the five-year period following the date of termination subject to the following
conditions:
(a) You must not have surrendered the Policy for its Net
Cash Surrender Value;
(b) You furnish to us satisfactory evidence of the life
insured's insurability;
(c) You pay us a premium equal to the payment required
during the 61-day grace period following default to keep the
Policy in force; and
(d) You repay to us an amount equal to any amounts paid by
us in connection with the termination of the Policy.
If we approve the reinstatement, the date of reinstatement will be the later of
the date of your written request or the date we receive the required payment at
our Service Office.
MISCELLANEOUS POLICY PROVISIONS
BENEFICIARY. You may appoint one or more beneficiaries of the Policy by naming
them in the application. Beneficiaries may be appointed in three classes --
primary, secondary and final. Thereafter you may change the beneficiary during
the life insured's lifetime by giving written notice to us in a form
satisfactory to us unless an irrevocable designation has been elected. If the
life insured dies and there is no surviving beneficiary, you, or your estate if
you are the life insured, will be the beneficiary. If a beneficiary dies before
the seventh day after the death of the life insured, we will pay the insurance
benefit as if the beneficiary had died before the life insured.
INCONTESTABILITY. We will not contest the validity of a Policy after it has been
in force during the life insured's lifetime for two years from the issue date.
We 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 life insured's lifetime for two years. If a Policy has been
reinstated and been in force for less than two years from the reinstatement
date, we can contest any misrepresentation of a fact material to the
reinstatement.
MISSTATEMENT OF AGE OR SEX. If the life insured's stated age or sex or both in
the Policy are incorrect, we 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).
SUICIDE EXCLUSION. If the life insured, whether sane or insane, dies by suicide
within two years from the issue date, we 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 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 deduction for the increase.
ASSIGNMENT. We will not be bound by an assignment until we receive a copy of it
at our Service Office. We assume no responsibility for the validity or effects
of any assignment.
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<PAGE> 48
OTHER PROVISIONS
SUPPLEMENTARY BENEFITS
Subject to certain requirements, you may add one or more supplementary benefits
to a Policy, including those providing term insurance for additional insureds,
providing accidental death coverage, waiving monthly deductions upon disability,
guaranteeing the Policy Value, accelerating benefits in the event of terminal
illness, and, in the case of corporate-owned Policies, permitting a change of
the life insured. You may obtain more detailed information concerning
supplementary benefits from one of our authorized agents. We will deduct the
cost of any supplementary benefits as part of the monthly deduction. See Charges
And Deductions -- "Monthly Deductions."
PAYMENT OF PROCEEDS
As long as the Policy is in force, we will ordinarily pay any policy loans,
partial withdrawals, Net Cash Surrender Value or any insurance benefit within
seven days after receipt at our Service Office of all the documents required for
such a payment.
We 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
Fixed Account value for up to six months; otherwise we 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, we may deny transfers in the circumstances
stated in clauses (i), (ii) and (iii) above and in the circumstances previously
set forth. See Policy Values -- "Transfers Of Policy Value."
REPORTS TO POLICYOWNERS
Within 30 days after each policy anniversary, we will send you a statement
showing, among other things, the amount of the death benefit, the Policy Value
and its allocation among the Investment Accounts, the Fixed 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 10 days after any transaction involving purchase, sale, or transfer of
units of Investment Accounts, we will send a confirmation statement.
You will also be sent an annual and a semi-annual report for Manufacturers
Investment Trust which will include a list of the securities held in each
Portfolio as required by the 1940 Act.
MISCELLANEOUS MATTERS
PORTFOLIO SHARE SUBSTITUTION
[Under certain circumstances we may seek to substitute shares of a different
Portfolio or fund.]
Although we believe it to be highly unlikely, it is possible that in the
judgment of our management, one or more of the Portfolios 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, we may
seek to substitute the shares of another Portfolio 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.
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<PAGE> 49
We also reserve the right to combine other separate accounts with the Separate
Account, to establish additional sub-accounts within the Separate Account, to
operate the Separate 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, and
to de-register the Separate Account under the 1940 Act. We would make the change
only if permissible under applicable federal and state law.
We will not materially change the investment objectives of the Separate Account
without first filing the change with the Insurance Commissioner of the State of
Michigan. You will be advised of any 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. You
should consult counsel or other competent tax advisers for more complete
information. This discussion is based upon our understanding of the present
federal income tax laws as they are currently interpreted by the Internal
Revenue Service (the "Service"). We make no representation 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, split dollar insurance plans,
executive bonus plans, retiree medical benefit plans and others. The tax
consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if the use of such
Policies in any such arrangement, the value of which depends in part on its tax
consequences, is contemplated, you should consult a qualified tax adviser 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
implementing 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.
[Policies issued on a standard rate basis should qualify as life insurance under
the Internal Revenue Code.]
With respect to a Policy issued on the basis of a standard rate class, we
believe (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
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, we
may take
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<PAGE> 50
whatever steps are appropriate and reasonable to attempt to cause such a Policy
to comply with Section 7702. For these reasons, we reserve 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 Manufacturers Investment
Trust, intends to comply with the diversification requirements prescribed in
Treas. Reg. Sec. 1.817-5, which affect how Manufacturers Investment Trust's
assets are to be invested. We believe that the Separate Account will thus meet
the diversification requirement, and we 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 Policy has many more Portfolios to which policyowners may
allocate premium payments and Policy Values than were available in the policies
described in the rulings. These differences could result in an owner being
treated as the owner of a pro rata portion of the assets of the Separate
Account. In addition, we do 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. We therefore reserve the right to modify the Policy as
necessary to attempt to prevent an owner from being considered the owner 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.
TAX TREATMENT OF POLICY BENEFITS
IN GENERAL. We believe 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
39
<PAGE> 51
[Generally, you will not be deemed to be in constructive receipt of your Policy
Value until there is a distribution.]
death benefit option, a Policy loan, a partial withdrawal, a surrender, a change
in ownership, a change of insured, the addition of an accelerated death benefit
rider, 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 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
received which would cause the Policy to become a Modified Endowment Contract
(MEC) within 23 days of the next policy anniversary, we will not apply the
portion of the premium which would cause MEC status (excess premium) to the
Policy when received. The excess premium will be placed in a suspense account
until the next anniversary date, at which point the excess premium, along with
interest earned on the excess premium at a rate of 3.5% from the date the
premium was received, will be applied to the Policy. The policyowner will be
advised of this action and will be offered the opportunity to have the premium
credited as of the original date received or to have the premium returned. If
the policyowner does not respond, the premium and interest will be applied to
the Policy as of the first day of the next anniversary.
If a premium is received which would cause your Policy to become a MEC more than
23 days prior to the next policy anniversary, we will refund any excess premium
to you. The portion of the premium which is not excess will be applied as of the
date received. We will advise you of this action and will offer to return the
premium and have it credited to the account as of the original date received.
If, in connection with the application or issue of the Policy, you acknowledge
that your Policy is or will become a MEC, we will credit excess premiums that
would cause MEC status as of the date received.
Further, if a transaction occurs which reduces the face amount of your Policy
during the first seven years, we will retest the Policy, retroactive to the date
of purchase, to determine compliance with the seven-pay test based on the lower
face amount. As well, if a reduction of the face amount occurs within seven
years of a material change, we will retest the Policy for compliance retroactive
to the date of the material change. Failure to comply would result in
classification as a Modified Endowment Contract regardless of any efforts by us
to provide a payment schedule that will not violate the seven-pay test.
[Generally, a distribution from a Policy that is not a MEC is taxable to you
only to the extent the distribution exceeds your investment in the Policy.]
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
40
<PAGE> 52
summary. Therefore, you should consult with a competent adviser to determine
whether a transaction will cause the Policy to be treated as a Modified
Endowment Contract.
[Generally, a distribution from a Policy that is not MEC is taxable to you only
to the extent the distribution exceeds your investment in the Policy.]
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 loans 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's 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. Select Loans may, however, be treated as a
distribution.
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, except
for the transition rules described in the paragraph below, 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 the taxpayer will not be tax deductible unless the employee is a
key person within the meaning of Section 264 of the Code. A deduction will not
be permitted for interest on a loan under a policy held on the life of a key
person to the extent the aggregate of such loans with respect to contracts
covering the key person exceeds $50,000. The number of employees who can qualify
as key persons depends in part on the size of the employer but cannot exceed 20
individuals.
For policies issued after June 20, 1986 and prior to January 1, 1994 a
transition rule permits all or a portion of the interest paid on policy debt
incurred before January 1, 1996 to be deducted. For policies issued in 1994 or
1995 the transition rule applies to indebtedness incurred before January 1,
1997. To be deducted the interest must be paid or accrued prior to January 1,
1999, and must meet other rules contained in Section 264 of the Code and section
501 of the Health Insurance Portability and Accountability Act of 1996.
Furthermore, if a non-natural person owns a policy, or is the direct or indirect
beneficiary
41
<PAGE> 53
under a policy, Section 264(f) of the Code disallows a pro-rata portion of the
taxpayer's interest expense allocable to unborrowed policy cash values
attributable to insurance held on the lives of individuals who are not 20% (or
more) owners of the taxpayer-entity, officers, employees, or former employees of
the taxpayer.
The portion of the interest expense that is allocable to unborrowed policy cash
values is an amount that bears the same ratio to that interest expense as the
taxpayer's average unborrowed policy cash values under such life insurance
policies bears to the average adjusted bases for all assets of the taxpayer.
If the taxpayer is not the owner, but is the direct or indirect beneficiary
under the contract, then the amount of unborrowed cash value of the policy taken
into account in computing the portion of the taxpayer's interest expense
allocable to unborrowed policy cash values cannot exceed the benefit to which
the taxpayer is directly or indirectly entitled under the policy.
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.
MULTIPLE POLICIES. All Modified Endowment Contracts that are issued by us (or
our 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.
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. We reserve the right to make a charge to premiums to compensate us
for the anticipated higher corporate income taxes.
At the present time, we make no charge to the Separate Account for any federal,
state or local taxes that we incur that may be attributable to the Account or to
the Policies. We, 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 we determine to be properly attributable to the Separate Account or to
the Policies.
42
<PAGE> 54
DISTRIBUTION OF THE POLICY
ManEquity, Inc., one of our indirect wholly-owned subsidiaries, acts as the
principal underwriter of, and continuously offers, the Policies pursuant to a
Distribution Agreement with us. 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. 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. Compensation is comprised of first-year
commissions and bonus not to exceed 105% of premiums paid up to the Target
Premium, commissions not to exceed 2% of premiums in excess thereof and, after
the third anniversary, 0.15% of the Policy Value per annum. If certain standards
with regard to the sale of the Policies and certain other policies issued by us
or Manufacturers Life (USA) are met, additional compensation will be available.
RESPONSIBILITIES ASSUMED BY MANUFACTURERS LIFE
Manufacturers Life and Manufacturers USA have entered into an agreement with
ManEquity, Inc. pursuant to which Manufacturers Life or Manufacturers USA, on
behalf of ManEquity, Inc., will pay the sales commissions in respect of the
Policies and certain other policies issued by us, 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 or
Manufacturers USA for all sales commissions paid by them and will pay them for
their other services under the agreement in such amounts and at such times as
agreed to by the parties.
Manufacturers Life and Manufacturers USA have also entered into a Service
Agreement with us pursuant to which Manufacturers Life or Manufacturers USA will
provide to us all issue, administrative, general services and recordkeeping
functions on our behalf with respect to all of our insurance policies including
the Policies.
Finally, Manufacturers Life of America may, from time to time in its sole
discretion, enter into one or more reinsurance agreements with other life
insurance companies under which policies issued by it may be reinsured, such
that its total amount at risk under a policy would be limited for the life of an
insured.
VOTING RIGHTS
[We will vote shares of the Trust attributable to your Policy in accordance with
your instructions.]
As stated above, we will invest all of the assets held in the sub-accounts of
the Separate Account in shares of a particular Portfolio of Manufacturers
Investment Trust. We are the legal owner of those shares and as such have the
right to vote upon matters that are required by the 1940 Act to be approved or
ratified by the shareholders of a mutual and to vote upon any other matters that
may be voted upon at a shareholders' meeting. However, we will vote shares held
in the sub-accounts in accordance with instructions received from policyowners
having an interest in such sub-accounts.
We will vote shares held in each sub-account for which no timely instructions
from policyowners are received, including shares not attributable to Policies,
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 us to vote shares held in the Separate
Account in our own right, we 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
43
<PAGE> 55
Portfolio of Manufacturers Investment Trust. We will determine the number as of
a date chosen by us, but not more than 90 days before the shareholders' meeting.
Fractional votes are counted. Voting instructions will be solicited in writing
at least 14 days prior to the shareholders' meeting.
We 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, we
may disregard voting instructions that would require changes in the investment
policies or investment adviser, provided that we reasonably disapprove such
changes in accordance with applicable federal regulations. If we disregard
voting instructions, we will advise you of that action and our reasons for such
action in the next communication to policyowners.
DIRECTORS AND OFFICERS OF MANUFACTURERS LIFE OF AMERICA
Our Directors and Officers, together with their principal occupations during the
past few years, are as follows:
<TABLE>
<CAPTION>
POSITION WITH
MANUFACTURERS LIFE
NAME OF AMERICA PRINCIPAL OCCUPATION
---- ------------------ --------------------
<S> <C> <C>
Sandra M. Cotter Director Attorney 1989-present, Dykema Gossett.
(35)
James D. Gallagher Director, Secretary, and Vice President, Secretary and General Counsel --
(43) General Counsel January 1997-present, ManUSA; Vice President,
Legal Services U.S. Operations -- January
1996-present, The Manufacturers Life Insurance Company;
Vice President, Secretary and General Counsel --
1994-present, The Manufacturers Life Insurance Company
of North America; Vice President and Associate
General Counsel -1991-1994, The Prudential Insurance
Company of America.
Bruce Gordon Director Vice President, U.S. Operations -- Pension 1990-present,
(54) The Manufacturers Life Insurance Company.
Donald A. Guloien Director and President Executive Vice President, Business Development,
(41) 1999-present, The Manufacturers Life Insurance Company;
senior Vice President, Business Development, 1994-1998, The
Manufacturers Life Insurance Company; Vice President, U.S.
Individual Business -- 1990-1994,The Manufacturers Life
Insurance Company.
</TABLE>
44
<PAGE> 56
<TABLE>
<CAPTION>
<S> <C> <C>
Theodore Kilkuskie, Jr. Director Senior Vice President, Annuities - 1999-present, The
(42) Manufacturers Life Insurance Company; President, The
Manufacturers Life Insurance Company of North America - 1999 -
present; Vice President, U.S. Individual Insurance
-- January 1997- present, ManUSA; Vice President,
U.S. Individual 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 Counsel and Corporate
(59) Secretary -- 1988-present, The Manufacturers Life Insurance
Company.
John D. Richardson Chairman and Senior Executive Vice President, U.S. Individual Insurance
(60) Director - 1999- present, The Manufacturers Life Insurance Company;
Executive Vice President and General Manager, U.S.
Operations 1995-present, The Manufacturers Life Insurance
Company; Senior Vice President and General Manager,
Canadian Operations 1992-1994.
John R. Ostler Vice President and Financial Vice President -- 1992-present, The
(45) Treasurer Manufacturers Life Insurance Company.
Douglas H. Myers Vice President, Finance Assistant Vice President and Controller, U.S.. Operations
(43) and Compliance -- 1988-present, The Manufacturers Life Insurance Company.
Controller
Victor Apps Senior Vice President and Senior Vice President and General Manager, Greater China
(49) General Manager Division -- 1995-present, The Manufacturers Life Insurance
Company; Vice President and General Manger, Greater China
Division -- 1993-1995, The Manufacturers Life Insurance
Company.
Felix Chee Vice President, Executive Vice President -- 1997 to present, The
(51) Investments Manufacturers Life Insurance Company; Chief Investment
Officer -- 1997 to present, The Manufacturers Life
Insurance Company, Senior Vice President and Treasurer --
1993-1994.
Robert A. Cook Vice President, Senior Vice President, U.S. Individual Insurance -
(43) Marketing 1999-present, The Manufacturers Life Insurance Company;
Vice President, Product Management -- 1996-present, The
Manufacturers Life Insurance Company; Sales and Marketing
Director, U.S. Division 1994-1995, The Manufacturers Life
Insurance Company.
Hugh C. McHaffie Vice Vice President, U.S. Annuities and Product Development
(39) President --1996 to present, The Manufacturers Life Insurance
Company; Vice President U.S. Annuities and
Product Development -- 1994 to present, The
Manufacturers Life Insurance Company of North America;
Product Development Executive -- 1990 to 1994, The
Manufacturers Life Insurance Company of North America.
John G. Vrysen Vice President and Vice President and Chief Financial Officer, U.S. Operations
(42) Appointed Actuary -- 1996 to present, The Manufacturers Life Insurance
Company, Vice President and Chief Actuary -- 1986 to
present, The Manufacturers Life Insurance Company of North
America.
</TABLE>
45
<PAGE> 57
STATE REGULATIONS
We are subject to regulation and supervision by the Michigan Department of
Insurance, which periodically examines our financial condition and operations.
We are also subject to the insurance laws and regulations of all jurisdictions
in which we are 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.
We are required to submit annual statements of our operations, including
financial statements, to the insurance departments of the various jurisdictions
in which we do business for the purposes of determining solvency and compliance
with local insurance laws and regulations.
PENDING LITIGATION
No litigation is pending that would have a material effect upon the Separate
Account or Manufacturers Investment Trust.
ADDITIONAL INFORMATION
We have filed a registration statement under the Securities Act of 1933 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.
You may obtain the omitted information from 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
James D. Gallagher, Esq., our Secretary and General Counsel, has passed on the
legal validity of the Policies. Jones & Blouch L.L.P., Washington, D.C., has
passed on certain matters relating to the federal securities laws.
46
<PAGE> 58
EXPERTS
Our financial statements and those of our Separate Account III for the period
ended December 31, 1998 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. Those financial statements have been
included herein in reliance upon their reports given upon the authority of such
firm as experts in auditing and accounting.
YEAR 2000 ISSUES
Preparing computer systems to deal with the Year 2000 risk has become a major
issue for businesses throughout the world. Within the group of companies made up
of Manufacturers Life and its subsidiaries ("Manulife Financial"), a group-wide
program has been underway since 1996 to make all critical systems compliant by
the end of 1998 and other systems compliant by the end of 1999. Included in this
program are all systems applicable to and shared by the Company with Manulife
Financial. Based on a detailed assessment, Manulife Financial determined that a
portion of its software needs to be modified or replaced so that its computer
systems will function properly into the Year 2000 and beyond. Like most
companies, the Year 2000 issue represents a significant challenge for Manulife
Financial, and extensive resources have been dedicated to modifying existing
software and to converting to new software. However, there can be no assurances
that Manulife Financial's systems, nor those of other companies on which
Manulife Financial relies, will be fully converted on a timely basis and
therefore that all adverse effects on the Company due to the Year 2000 risk will
be avoided. Manulife Financial is presently consulting with vendors, customers,
subsidiaries, third-parties and other businesses with which it deals to ensure
that no material aspect of its, or the Company's operations will be hindered by
the Year 2000 risk.
The costs of the project and the date on which Manulife Financial plans to
complete the modifications are based on management's best estimates and are
subject to some uncertainty. Manulife Financial is using both internal and
external resources to reprogram, or replace, and test the software for Year 2000
modifications. The total cost of this program to Manulife Financial is estimated
to be $64 million, comprised of $55 million for specifically budgeted programs
and $9 million for general contingencies. Manulife Financial has incurred $15
million as at December 31, 1997 of which the Company will receive an allocation
due to its shared systems. The costs allocated are not expected to have a
material effect on the net operating income of the Company.
FINANCIAL STATEMENTS
The financial statements of Manufacturers Life of America included herein should
be distinguished from the financial statements of Separate Account Three and
should be considered only as bearing upon the ability of Manufacturers Life of
America to meet its obligations under the Policies.
[FINANCIAL STATEMENTS WILL BE INCLUDED BY AMENDMENT.]
47
<PAGE> 59
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
Fixed 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 an insured of a given age would vary over time
if the return on the assets of the Portfolio 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
for state, local and federal taxes, deferred underwriting and sales charges, and
monthly deductions for administration, cost of insurance and mortality and
expense risks.
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 the expenses and fees borne by the Portfolios are deducted from the
gross return. The illustrations reflect an average of the Trusts' expenses,
which is approximately 0.954% on an annual basis. The gross annual rates of
return of 0%, 6% and 12% correspond to approximate net annual rates of return of
- -0.949%, 4.994% and 10.937%.
The tables assume that no premiums have been allocated to the Fixed 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 male non-smokers, one based on current cost of insurance and monthly
administration charges and the other based on the maximum administration
charges, deductions from premiums and cost of insurance charges based on the
1980 Commissioners Standard Ordinary Smoker/Nonsmoker Mortality Tables. The
current waiver of deductions from premiums and current monthly administration
charges and 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 life insured's age, sex (unless unisex rates
are required by law) and risk class, 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
A-1
<PAGE> 60
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 Portfolios for which performance data is shown in 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 10, 1993.
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.
A-2
<PAGE> 61
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$5,960 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical
Gross Investment Return Gross Investment Return
--------------------------------------------- ---------------------------------------------
End of Accumulated Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3)(4) Benefit Value Value(3)(4) Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 6,258 $ 4,614 $ 0 $500,000 $ 4,925 $ 271 $500,000
2 12,829 9,407 4,636 500,000 10,324 5,553 500,000
3 19,728 14,068 7,546 500,000 15,897 9,375 500,000
4 26,973 18,596 12,127 500,000 21,649 15,180 500,000
5 34,579 22,981 16,561 500,000 27,577 21,157 500,000
6 42,566 27,251 21,131 500,000 33,713 27,592 500,000
7 50,953 31,368 25,548 500,000 40,026 34,206 500,000
8 59,758 35,336 29,823 500,000 46,528 41,008 500,000
9 69,004 39,149 34,146 500,000 53,219 48,215 500,000
10 78,712 42,811 38,748 500,000 60,108 56,045 500,000
15 135,039 58,611 58,611 500,000 97,596 97,596 500,000
20 206,927 69,484 69,484 500,000 140,362 140,362 500,000
25 298,676 74,497 74,497 500,000 189,390 189,390 500,000
30 415,774 70,948 70,948 500,000 249,721 249,721 500,000
</TABLE>
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
------------------------------------------
End of Cash
Policy Policy Surrender Death
Year(1) Value Value(3)(4) Benefit
<S> <C> <C> <C>
1 $ 5,237 $ 583 $ 500,000
2 11,278 6,508 500,000
3 17,877 11,355 500,000
4 25,085 18,616 500,000
</TABLE>
A-3
<PAGE> 62
5 32,955 26,535 500,000
6 41,580 35,460 500,000
7 50,998 45,177 500,000
8 61,293 55,773 500,000
9 72,550 67,546 500,000
10 84,870 80,808 500,000
15 166,561 166,561 500,000
20 297,108 297,108 500,000
25 507,829 507,829 680,491
30 859,860 859,860 1,049,029
- ---------------
(1) 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.
(2) Assumes net interest of 5% compounded annually.
(3) 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 5 Policy Years. Provided the Cumulative Premium
Test or the Fund Value Test has been and continues to be met, the Death
Benefit Guarantee will keep the Policy in force on all policies for the
first three years and until age 100 on Policies issued and maintained with
a minimum face amount of $250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at least $250,000 and
if Death benefit Option 2 is selected at any time.
(4) Cash Surrender Values for first two years reflect sales charge limitations
imposed by the S.E.C.
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
A-4
<PAGE> 63
RETURNS FOR THE FUNDS OF MANUFACTURERS INVESTMENT 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.
A-5
<PAGE> 64
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$5,960 ANNUAL PLANNED PREMIUM
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical
Gross Investment Return Gross Investment Return
----------------------- -----------------------
End of Accumulated Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3)(4) Benefit Value Value(3)(4) Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 6,258 $ 4,338 $ 0 $500,000 $ 4,635 $ 0 $500,000
2 12,829 8,863 4,092 500,000 9,733 4,963 500,000
3 19,728 13,259 6,737 500,000 14,993 8,471 500,000
4 26,973 17,526 11,057 500,000 20,418 13,949 500,000
5 34,579 21,657 15,237 500,000 26,007 19,586 500,000
6 42,566 25,650 19,530 500,000 31,762 25,642 500,000
7 50,953 29,495 23,675 500,000 37,679 31,859 500,000
8 59,758 33,196 27,676 500,000 43,768 38,248 500,000
9 69,004 36,743 31,740 500,000 50,024 45,020 500,000
10 78,712 40,139 36,077 500,000 56,456 52,394 500,000
15 135,039 54,654 54,654 500,000 91,207 91,207 500,000
20 206,927 63,667 63,667 500,000 130,114 130,114 500,000
25 298,676 64,609 64,609 500,000 172,001 172,001 500,000
30 415,774 53,954 53,954 500,000 220,462 220,462 500,000
</TABLE>
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
-----------------------
End of Cash
Policy Policy Surrender Death
Year(1) Value Value(3)(4) Benefit
<S> <C> <C> <C>
1 4,933 280 $ 500,000
2 10,640 5,873 500,000
3 16,871 10,355 500,000
4 23,674 17,215 500,000
</TABLE>
A-6
<PAGE> 65
5 31,099 24,695 500,000
6 39,206 33,111 500,000
7 48,054 42,270 500,000
8 57,722 52,251 500,000
9 68,283 63,345 500,000
10 79,835 75,857 500,000
15 156,172 156,172 500,000
20 277,565 277,565 500,000
25 473,143 473,143 634,012
30 799,351 799,351 975,209
- ---------------
(1) 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.
(2) Assumes net interest of 5% compounded annually.
(3) 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 5 Policy Years. Provided the Cumulative Premium
Test or the Fund Value Test has been and continues to be met, the Death
Benefit Guarantee will keep the Policy in force on all policies for the
first three years and until age 100 on Policies issued and maintained with
a minimum face amount of $250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at least $250,000 and
if Death benefit Option 2 is selected at any time.
(4) Cash Surrender Values for first two years reflect sales charge limitations
imposed by the S.E.C.
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
A-7
<PAGE> 66
RETURNS FOR THE FUNDS OF MANUFACTURERS INVESTMENT 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.
A-8
<PAGE> 67
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$7,450 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical
Gross Investment Return Gross Investment Return
------------------------------------------- ------------------------------------------
End of Accumulated Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3)(4) Benefit Value Value(3)(4) Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 7,823 $ 6,067 $ 930 $506,067 $ 6,466 $ 1,329 $506,466
2 16,036 12,279 7,142 512,279 13,459 8,321 513,459
3 24,660 18,323 11,801 518,323 20,679 14,157 520,679
4 33,716 24,197 17,728 524,197 28,131 21,662 528,131
5 43,224 29,892 23,472 529,892 35,812 29,392 535,812
6 53,208 35,435 29,315 535,435 43,755 37,635 543,755
7 63,691 40,788 34,967 540,788 51,928 46,108 551,928
8 74,698 45,953 40,432 545,953 60,341 54,821 560,341
9 86,255 50,922 45,919 550,922 68,991 63,987 568,991
10 98,391 55,699 51,637 555,699 77,887 73,824 577,887
15 168,798 76,419 76,419 577,419 125,987 125,987 625,987
20 258,658 90,947 90,947 590,947 179,636 179,636 679,636
25 373,345 98,160 98,160 598,160 238,189 238,189 738,189
30 519,718 95,367 95,367 595,367 303,091 303,091 803,091
</TABLE>
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
-------------------------------------------
End of Cash
Policy Policy Surrender Death
Year(1) Value Value(3)(4) Benefit
<S> <C> <C> <C>
1 $ 6,866 $ 1,729 $ 506,866
2 14,686 9,549 514,686
3 23,227 16,705 523,227
4 32,555 26,086 532,555
</TABLE>
A-9
<PAGE> 68
5 42,734 36,314 542,734
6 53,875 47,754 553,875
7 66,029 60,209 566,029
8 79,297 73,776 579,297
9 93,777 88,773 593,777
10 109,589 105,526 609,589
15 213,281 213,281 713,281
20 374,069 374,069 874,069
25 624,487 624,487 1,124,487
30 1,034,482 1,034,482 1,534,482
- ---------------
(1) 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.
(2) Assumes net interest of 5% compounded annually.
(3) 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 5 Policy Years. Provided the Cumulative Premium
Test or the Fund Value Test has been and continues to be met, the Death
Benefit Guarantee will keep the Policy in force on all policies for the
first three years and until age 100 on Policies issued and maintained with
a minimum face amount of $250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at least $250,000 and
if Death benefit Option 2 is selected at any time.
(4) Cash Surrender Values for first two years reflect sales charge limitations
imposed by the S.E.C.
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
A-10
<PAGE> 69
RETURNS FOR THE FUNDS OF MANUFACTURERS INVESTMENT 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.
A-11
<PAGE> 70
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$7,450 ANNUAL PLANNED PREMIUM
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical
Gross Investment Return Gross Investment Return
------------------------------------------ -----------------------------------------
End of Accumulated Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3)(4) Benefit Value Value(3)(4) Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 7,823 $ 5,740 $ 603 $505,740 $ 6,121 $ 984 $506,121
2 16,036 11,632 6,495 511,632 12,756 7,619 512,756
3 24,660 17,362 10,840 517,362 19,604 13,082 519,604
4 33,716 22,927 16,458 522,927 26,668 20,199 526,668
5 43,224 28,321 21,901 528,321 33,947 27,527 533,947
6 53,208 33,542 27,422 533,542 41,445 35,325 541,445
7 63,691 38,578 32,758 538,578 49,155 43,335 549,155
8 74,698 43,432 37,912 543,432 57,086 51,565 557,086
9 86,255 48,094 43,091 548,094 65,231 60,227 565,231
10 98,391 52,556 48,504 551,556 73,599 69,536 573,599
15 168,798 71,714 71,714 571,714 118,572 118,572 618,572
20 258,658 84,327 84,327 581,327 167,887 167,887 668,887
25 373,345 87,135 87,135 587,135 218,065 218,065 718,065
30 519,718 77,092 77,092 577,092 268,832 268,832 768,832
</TABLE>
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
-------------------------------------
End of Cash
Policy Policy Surrender Death
Year(1) Value Value(3)(4) Benefit
<S> <C> <C> <C>
1 $ 6,503 $ 1,365 $ 506,503
2 13,926 8,788 513,926
3 22,029 15,507 522,029
4 30,876 24,407 530,876
</TABLE>
A-12
<PAGE> 71
5 40,528 34,108 540,528
6 51,061 44,941 551,061
7 62,547 56,727 562,547
8 75,081 69,560 575,081
9 88,750 83,747 588,750
10 103,668 99,605 603,668
15 201,198 201,198 701,198
20 351,523 351,523 851,523
25 581,560 581,560 1,081,560
30 953,480 953,480 1,453,480
- ---------------
(1) 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.
(2) Assumes net interest of 5% compounded annually.
(3) 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 5 Policy Years. Provided the Cumulative Premium
Test or the Fund Value Test has been and continues to be met, the Death
Benefit Guarantee will keep the Policy in force on all policies for the
first three years and until age 100 on Policies issued and maintained with
a minimum face amount of $250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at least $250,000 and
if Death benefit Option 2 is selected at any time.
(4) Cash Surrender Values for first two years reflect sales charge limitations
imposed by the S.E.C.
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
A-13
<PAGE> 72
RETURNS FOR THE FUNDS OF MANUFACTURERS INVESTMENT 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.
A-14
<PAGE> 73
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$15,095 ANNUAL PLANNED PREMIUM*
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical
Gross Investment Return Gross Investment Return
------------------------------------------- --------------------------------------------
End of Accumulated Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3)(4) Benefit Value Value(3)(4) Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 15,850 $ 10,718 $ 3,337 $ 500,000 $ 11,478 $ 4,097 $ 500,000
2 32,492 21,323 12,806 500,000 23,518 15,000 500,000
3 49,966 31,482 15,567 500,000 35,803 19,888 500,000
4 68,314 41,474 25,888 500,000 48,630 33,045 500,000
5 87,580 51,319 36,080 500,000 62,045 46,807 500,000
6 107,809 60,996 47,255 500,000 76,057 62,317 500,000
7 129,049 70,346 60,040 500,000 90,539 80,233 500,000
8 151,351 79,304 72,433 500,000 105,454 98,583 500,000
9 174,768 87,920 84,484 500,000 120,880 117,445 500,000
10 199,356 96,183 96,183 500,000 136,853 136,853 500,000
15 342,015 136,983 137,983 500,000 233,079 233,079 500,000
20 527,441 163,908 163,908 500,000 356,307 356,307 500,000
25 764,098 130,219 130,219 500,000 515,275 515,275 541,039
30 1,066,138 2,731 2,731 500,000(5) 718,254 718,254 754,167
</TABLE>
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
--------------------------------------------
End of Cash
Policy Policy Surrender Death
Year(1) Value Value(3)(4) Benefit
<S> <C> <C> <C>
1 $ 12,241 $ 4,860 $ 500,000
2 25,808 17,290 500,000
3 40,493 24,579 500,000
4 56,712 41,127 500,000
</TABLE>
A-15
<PAGE> 74
5 74,653 59,414 500,000
6 94,484 80,744 500,000
7 116,264 105,958 500,000
8 140,160 133,289 500,000
9 166,476 163,040 500,000
10 195,507 195,507 500,000
15 405,181 405,181 500,000
20 765,780 765,780 819,384
25 1,347,742 1,347,742 1,415,129
30 2,269,248 2,269,248 2,382,710
- ---------------
* Note that the second tier Death Benefit Guarantee Premium level of $16,240
is paid from age 70.
(1) 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.
(2) Assumes net interest of 5% compounded annually.
(3) 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 5 Policy Years. Provided the Cumulative Premium
Test or the Fund Value Test has been and continues to be met, the Death
Benefit Guarantee will keep the Policy in force on all policies for the
first three years and until age 100 on Policies issued and maintained with
a minimum face amount of $250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at least $250,000 and
if Death benefit Option 2 is selected at any time.
(4) Cash Surrender Values for first two years reflect sales charge limitations
imposed by the S.E.C.
(5) In the absence of additional premium payments, the Policy will lapse,
A-16
<PAGE> 75
unless the Death Benefit Guarantee is in effect.
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 MANUFACTURERS INVESTMENT 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.
A-17
<PAGE> 76
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$15,095 ANNUAL PLANNED PREMIUM*
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical
Gross Investment Return Gross Investment Return
-------------------------------------------- --------------------------------------------
End of Accumulated Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3)(4) Benefit Value Value(3)(4) Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 15,850 $ 10,042 $ 2,661 $ 500,000 $ 10,765 $ 3,384 $ 500,000
2 32,492 19,891 11,373 500,000 21,968 13,450 500,000
3 49,966 29,243 13,328 500,000 33,316 17,401 500,000
4 68,314 38,087 22,502 500,000 44,804 29,219 500,000
5 87,580 46,390 31,152 500,000 56,406 41,168 500,000
6 107,809 54,120 40,380 500,000 68,102 54,362 500,000
7 129,049 61,242 50,936 500,000 79,868 69,562 500,000
8 151,351 67,701 60,830 500,000 91,663 84,792 500,000
9 174,768 73,429 69,993 500,000 103,441 100,005 500,000
10 199,356 78,355 78,355 500,000 115,153 115,153 500,000
15 342,015 90,953 90,953 500,000 175,935 175,935 500,000
20 527,441 74,206 74,206 500,000 240,546 240,546 500,000
25 764,098 0(5) 0(5) 500,000(5) 300,694 300,694 500,000
30 1,066,138 0(5) 0(5) 500,000(5) 362,731 362,731 500,000
</TABLE>
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
--------------------------------------------
End of Cash
Policy Policy Surrender Death
Year(1) Value Value(3)(4) Benefit
<S> <C> <C> <C>
1 $ 11,492 $ 4,111 $ 500,000
2 24,136 15,619 500,000
3 37,739 21,825 500,000
4 52,398 36,813 500,000
</TABLE>
A-18
<PAGE> 77
5 68,202 52,964 500,000
6 85,264 71,524 500,000
7 103,712 93,406 500,000
8 123,685 116,814 500,000
9 145,343 141,907 500,000
10 168,884 168,884 500,000
15 333,980 333,980 500,000
20 634,129 634,129 678,518
25 1,127,274 1,127,274 1,183,638
30 1,903,391 1,903,391 1,998,561
- ---------------
* Note that the second tier Death Benefit Guarantee Premium level of $16,240
is paid from age 70.
(1) 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.
(2) Assumes net interest of 5% compounded annually.
(3) 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 5 Policy Years. Provided the Cumulative Premium
Test or the Fund Value Test has been and continues to be met, the Death
Benefit Guarantee will keep the Policy in force on all policies for the
first three years and until age 100 on Policies issued and maintained with
a minimum face amount of $250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at least $250,000 and
if Death benefit Option 2 is selected at any time.
(4) Cash Surrender Values for first two years reflect sales charge limitations
imposed by the S.E.C.
(5) In the absence of additional premium payments, the Policy will lapse,
A-19
<PAGE> 78
unless the Death Benefit Guarantee is in effect.
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 MANUFACTURERS INVESTMENT 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.
A-20
<PAGE> 79
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$17,920 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical
Gross Investment Return Gross Investment Return
-------------------------------------------- --------------------------------------------
End of Accumulated Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3)(4) Benefit Value Value(3)(4) Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 18,816 $ 13,394 $ 5,018 $ 513,394 $ 14,315 $ 5,939 $ 514,315
2 38,573 26,532 15,593 526,532 29,199 18,261 529,199
3 59,317 39,066 23,152 539,066 44,313 28,399 544,313
4 81,099 51,294 35,709 551,294 59,960 44,375 559,960
5 103,970 63,237 47,999 563,237 76,181 60,942 576,181
6 127,985 74,872 61,132 574,872 92,966 79,226 592,966
7 153,200 86,015 75,709 586,015 110,145 99,839 610,145
8 179,676 96,580 89,709 596,580 127,634 120,764 627,634
9 207,476 106,619 103,183 606,619 145,490 142,055 645,490
10 236,666 116,124 116,124 616,124 163,709 163,709 663,709
15 406,022 160,845 160,845 660,845 268,285 268,285 768,285
20 622,169 174,194 174,194 674,194 367,040 367,040 867,040
25 898,033 101,614 101,614 601,614 392,033 392,033 892,033
30 1,250,113 0(5) 0(5) 500,000(5) 323,023 323,023 823,023
</TABLE>
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
--------------------------------------------
End of Cash
Policy Policy Surrender Death
Year(1) Value Value(3)(4) Benefit
<S> <C> <C> <C>
1 $ 15,238 $ 6,862 $ 515,238
2 31,980 21,041 531,980
3 50,001 34,087 550,001
4 69,733 54,148 569,733
</TABLE>
A-21
<PAGE> 80
5 91,363 76,125 591,363
6 115,050 101,309 615,050
7 140,795 130,489 640,795
8 168,703 161,832 668,703
9 199,032 195,597 699,032
10 232,006 232,006 732,006
15 458,720 458,720 958,720
20 795,725 795,725 1,295,725
25 1,244,482 1,244,482 1,736,159
30 1,836,159 1,836,159 2,344,482
- ---------------
(1) 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.
(2) Assumes net interest of 5% compounded annually.
(3) 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 5 Policy Years. Provided the Cumulative Premium
Test or the Fund Value Test has been and continues to be met, the Death
Benefit Guarantee will keep the Policy in force on all policies for the
first three years and until age 100 on Policies issued and maintained with
a minimum face amount of $250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at least $250,000 and
if Death benefit Option 2 is selected at any time.
(4) Cash Surrender Values for first two years reflect sales charge limitations
imposed by the S.E.C.
(5) Provided the Death Benefit Guarantee has been in effect, the Policy will
have been kept in force until the end of the policy year in which the life
insured reached attained age 85, at which time the Death Benefit Guarantee
will expire and in the absence of additional premium payments, the Policy
will lapse.
A-22
<PAGE> 81
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 MANUFACTURERS INVESTMENT 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.
A-23
<PAGE> 82
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$17,920 ANNUAL PLANNED PREMIUM
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
0% Hypothetical 6% Hypothetical
Gross Investment Return Gross Investment Return
-------------------------------------------- --------------------------------------------
End of Accumulated Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3)(4) Benefit Value Value(3)(4) Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 18,816 $ 12,621 $ 4,245 $ 512,621 $ 13,499 $ 5,123 $ 513,499
2 38,573 24,908 13,969 524,908 27,440 16,501 527,440
3 59,317 36,543 20,629 536,543 41,506 25,592 541,506
4 81,099 47,506 31,921 547,506 55,669 40,084 555,669
5 103,970 57,749 42,511 557,749 69,871 54,633 569,871
6 127,985 67,227 53,486 567,227 84,052 70,312 584,052
7 153,200 75,888 65,582 575,888 98,146 87,840 598,146
8 179,676 83,659 76,788 583,659 112,056 105,185 612,056
9 207,476 90,453 87,018 590,453 125,669 122,233 625,669
10 236,666 96,179 96,179 596,179 138,860 138,860 638,860
15 406,022 108,762 108,762 608,762 198,852 198,852 698,852
20 622,169 79,172 79,172 579,172 226,343 226,343 726,343
25 898,033 0(5) 0(5) 500,000(5) 180,769 180,769 680,769
30 1,250,113 0(5) 0(5) 0(5) 8,085 8,085 508,085
</TABLE>
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
---------------------------------------------
End of Cash
Policy Policy Surrender Death
Year(1) Value Value(3)(4) Benefit
<S> <C> <C> <C>
1 $ 14,380 $ 6,004 $ 514,380
2 30,080 19,142 530,080
3 46,889 30,975 546,889
4 64,882 49,297 564,882
</TABLE>
A-24
<PAGE> 83
5 84,112 68,873 584,112
6 104,639 90,898 604,639
7 126,524 116,218 626,524
8 149,808 142,937 649,808
9 174,519 171,084 674,519
10 200,684 200,684 700,684
15 363,211 363,211 863,211
20 576,018 576,018 1,076,018
25 833,780 833,780 1,333,780
30 1,124,290 1,124,290 1,624,290
- ---------------
(1) 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.
(2) Assumes net interest of 5% compounded annually.
(3) 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 5 Policy Years. Provided the Cumulative Premium
Test or the Fund Value Test has been and continues to be met, the Death
Benefit Guarantee will keep the Policy in force on all policies for the
first three years and until age 100 on Policies issued and maintained with
a minimum face amount of $250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at least $250,000 and
if Death benefit Option 2 is selected at any time.
(4) Cash Surrender Values for first two years reflect sales charge limitations
imposed by the S.E.C.
(5) Provided the Death Benefit Guarantee has been in effect, the Policy will
have been kept in force until the end of the policy year in which the life
insured reached attained age 85, at which time the Death Benefit Guarantee
will expire and in the absence of additional premium payments, the Policy
will lapse.
A-25
<PAGE> 84
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 MANUFACTURERS INVESTMENT 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.
A-26
<PAGE> 85
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 insureds who
do not meet at least the underwriting requirements of the standard risk class.
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 at the end of each
Business Day.
CASH SURRENDER VALUE -- the Policy Value less the deferred sales charge, the
deferred underwriting charge and any outstanding monthly deductions due.
CUMULATIVE PREMIUM TEST -- a test that, if satisfied in the first three policy
years and, where applicable, if satisfied in subsequent policy years, will
maintain the Death Benefit Guarantee. To satisfy the 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 -- Manufacturers Life of America's 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.
DEATH BENEFIT GUARANTEE PREMIUM -- a measure of premium used in determining
compliance with the Cumulative Premium Test. The Death Benefit Guarantee Premium
as an annual amount is established by the Company based on issue age, sex
(unless unisex rates are required by law), risk class, death benefit option,
supplementary benefits and additional ratings. The Death Benefit Guarantee
Premium, which is set forth in the Policy, will increase, when the policyowner
reaches attained age 70, to an amount as specified in the Policy.
EFFECTIVE DATE -- the date that Manufacturers Life of America becomes obligated
under the Policy and when the first monthly deductions are taken.
FIXED ACCOUNT -- that part of the Policy Value which reflects the value the
policyowner has in the general account of Manufacturers Life of America.
FUND VALUE TEST -- a test which, if satisfied in applicable policy years will
maintain the Death Benefit Guarantee feature. 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.
GROSS SINGLE PREMIUM -- the amount of premium needed to endow the Policy to the
expiration of the Death Benefit Guarantee assuming 4% interest and current
charges.
B-1
<PAGE> 86
GUIDELINE ANNUAL PREMIUM -- an amount defined by S.E.C. regulation. It is used
to determine maximum sales charges that may be deducted during the first two
years following issuance of a Policy.
INITIAL PREMIUM -- at least 1/12 of the Target Premium. The Initial Premium must
be received within 60 days after the policy date.
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 on the nearest birthday, at policy date, as shown in the
Policy.
LOAN ACCOUNT -- that part of the Policy Value which reflects the value the
policyowner has transferred from the Fixed Account or the Investment Accounts as
collateral for a policy loan.
B-2
<PAGE> 87
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 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 or Fixed
Account. It equals gross premiums less the deduction for 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 and 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. In Illinois this benefit is known as the Minimum
Premium Guarantee.
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 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 5 policy years for life insureds with
an issue age up to and including 85. It is not offered to life insureds whose
Issue Age exceeds 85.
NO LAPSE GUARANTEE PREMIUM -- is a measure of premium used in determining
compliance with the No Lapse Guarantee Cumulative Premium Test. The No Lapse
Guarantee premium for each policyowner is set forth in the Policy.
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. If
a check for at least the Initial Premium accompanies the application, the policy
date is the date the application and check are received at the Service office.
If an application accepted by the Company is not accompanied by a check for the
Initial Premium, the policy will be issued with a policy date which is 7 days
after issuance of the policy.
POLICY DEBT -- as of any date, the aggregate amount of policy loans, including
borrowed interest, less any loan repayments.
B-3
<PAGE> 88
POLICY VALUE -- the sum of the values in the Loan Account, the Fixed Account and
the Investment Accounts.
SELECT LOAN -- A loan on which the differential between the interest credited
and the interest charged is currently 0%; provided, however, if at some time in
the future it is determined that the current differential could cause the loan
to be treated as a taxable distribution under any applicable ruling, regulation
or court decision, Manufacturers Life of America has the right to increase the
differential on all subsequent Select Loans either (i) to an amount that may be
presented in such ruling, regulation or court decision that would result in the
transaction being treated as a loan under federal tax law or (ii) if no amount
is prescribed, to an amount that Manufacturers Life of America feels would be
more likely to result in the transaction being treated as a loan under Federal
tax law.
SELECT LOAN AMOUNT -- the amount of any Select Loan.
SERVICE OFFICE -- the office designated to service the Policies, which is shown
on the cover page of this prospectus.
B-4
<PAGE> 89
SURRENDER CHARGE PERIOD -- the period (usually 15 years) following issuance of
the Policy 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.
TARGET PREMIUM -- a premium amount used to measure the maximum deferred sales
charge under a Policy. The Target Premium for the initial face amount is set
forth in the Policy. The policyowner will be advised of the Target Premium for
any increase in face amount.
WITHDRAWAL TIER AMOUNT -- as of any date, the net Cash Surrender Value at the
previous anniversary multiplied by 10%.
B-5
<PAGE> 90
APPENDIX C
The maximum deferred sales charge is 50% of premiums received up to a specified
number of Target Premiums that varies (from -0.180 to 3.031) with the issue age
of the life insured, the face amount of the Policy and the amount of any
increase. Beginning after two policy years, that maximum deferred sales charge
decreases over time according to a pattern that varies with the issue age of the
life insured. In all cases, the deferred sales charge is eliminated entirely by
the last month of the 15th policy year. The same pattern applies to sales
charges occasioned by face amount increases, with time periods and issue age
computed using the date of the increase in face amount rather than the Policy
Date.
The following tables show the percentage of the maximum sales charge that would
be applicable in the last month of the years shown. The percentages for other
months would be derived by interpolation.
If the transaction occurs in the last month of
<TABLE>
<CAPTION>
ISSUE AGE
POLICY ---------------------------------------------------------------------------------------------------------------------------
YEAR* 0 1 2 3 4 5 6 7 8
- ------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9666 0.9500 0.9642 0.9444 0.9555 0.9811 0.9843 0.9866 0.9885
4 0.9666 0.9500 0.9285 0.9444 0.9555 0.9622 0.9687 0.9600 0.9655
5 0.9333 0.9000 0.8928 0.9166 0.9111 0.9433 0.9531 0.9466 0.9540
6 0.9333 0.9000 0.8928 0.9166 0.9111 0.9433 0.9531 0.9466 0.9540
7 0.9333 0.9000 0.8928 0.9166 0.9111 0.9433 0.9531 0.9466 0.9540
8 0.9333 0.9000 0.8928 0.9166 0.9111 0.9433 0.9531 0.9466 0.9540
9 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503
10 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803
11 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442
12 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082
13 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721
14 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<TABLE>
<CAPTION>
ISSUE AGE
POLICY -----------------------------------------------------------------------------------------------
YEAR* 9 10 11 12 13 14 15
- ------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9861 0.9873 0.9885 0.9895 0.9875 0.9940 0.9898
4 0.9696 0.9734 0.9765 0.9722 0.9751 0.9831 0.9796
5 0.9595 0.9646 0.9609 0.9652 0.9689 0.9719 0.9695
</TABLE>
C-1
<PAGE> 91
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
6 0.9595 0.9646 0.9609 0.9652 0.9689 0.9719 0.9695
7 0.9595 0.9646 0.9609 0.9652 0.9689 0.9719 0.9695
8 0.9595 0.9646 0.9609 0.9652 0.9689 0.9719 0.9695
9 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503
10 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803
11 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442
12 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082
13 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721
14 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<TABLE>
<CAPTION>
ISSUE AGE
POLICY ---------------------------------------------------------------------------------------------------------------------------
YEAR* 16 17 18 19 20 21 22 23 24
- ------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9912 0.9872 0.9884 0.9842 0.9903 0.9867 0.9878 0.9887 0.9896
4 0.9788 0.9795 0.9768 0.9789 0.9806 0.9778 0.9796 0.9804 0.9792
5 0.9718 0.9681 0.9653 0.9631 0.9661 0.9646 0.9674 0.9699 0.9688
6 0.9667 0.9667 0.9653 0.9631 0.9661 0.9646 0.9674 0.9699 0.9688
7 0.9333 0.9333 0.9333 0.9333 0.9333 0.9396 0.9396 0.9396 0.9396
8 0.9000 0.9000 0.9000 0.9000 0.9000 0.9060 0.9060 0.9060 0.9060
9 0.8333 0.8333 0.8333 0.8333 0.8333 0.8389 0.8389 0.8389 0.8389
10 0.6667 0.6667 0.6667 0.6667 0.6667 0.6711 0.6711 0.6711 0.6711
11 0.5333 0.5333 0.5333 0.5333 0.5333 0.5369 0.5369 0.5369 0.5369
12 0.4000 0.4000 0.4000 0.4000 0.4000 0.4027 0.4027 0.4027 0.4027
13 0.2667 0.2667 0.2667 0.2667 0.2667 0.2685 0.2685 0.2685 0.2685
14 0.1330 0.1330 0.1330 0.1330 0.1330 0.1342 0.1342 0.1342 0.1342
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<TABLE>
<CAPTION>
ISSUE AGE
POLICY -----------------------------------------------------------------------------------------------
YEAR* 25 26 27 28 29 30 31
- ------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9901 0.9885 0.9889 0.9897 0.9887 0.9889 0.9885
4 0.9803 0.9793 0.9779 0.9770 0.9757 0.9772 0.9771
5 0.9679 0.9678 0.9678 0.9659 0.9644 0.9650 0.9624
6 0.9679 0.9678 0.9678 0.9659 0.9644 0.9650 0.9624
7 0.9396 0.9432 0.9469 0.9507 0.9545 0.9583 0.9622
8 0.9060 0.9122 0.9184 0.9247 0.9310 0.9375 0.9441
9 0.8389 0.8446 0.8503 0.8562 0.8621 0.8681 0.8741
10 0.6711 0.6757 0.6803 0.6849 0.6897 0.6944 0.6993
11 0.5369 0.5405 0.5442 0.5479 0.5517 0.5556 0.5594
12 0.4027 0.4054 0.4082 0.4110 0.4138 0.4167 0.4196
13 0.2685 0.2703 0.2721 0.2740 0.2759 0.2778 0.2797
14 0.1342 0.1351 0.1361 0.1370 0.1379 0.1389 0.1399
</TABLE>
C-2
<PAGE> 92
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
*Months not shown may be calculated by interpolation.
C-3
<PAGE> 93
If the transaction occurs in the last month of
<TABLE>
<CAPTION>
ISSUE AGE
POLICY ---------------------------------------------------------------------------------------------------------------------------
YEAR* 32 33 34 35 36 37 38 39 40
- ------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9878 0.9886 0.9883 0.9888 0.9860 0.9859 0.9868 0.9858 0.9849
4 0.9741 0.9758 0.9751 0.9739 0.9733 0.9728 0.9725 0.9714 0.9706
5 0.9634 0.9630 0.9614 0.9602 0.9593 0.9577 0.9573 0.9572 0.9529
6 0.9634 0.9630 0.9614 0.9602 0.9593 0.9577 0.9573 0.9572 0.9529
7 0.9634 0.9630 0.9614 0.9602 0.9593 0.9577 0.9573 0.9572 0.9529
8 0.9507 0.9574 0.9614 0.9602 0.9593 0.9577 0.9573 0.9572 0.9529
9 0.8803 0.8865 0.8929 0.8993 0.8999 0.9006 0.9012 0.9019 0.9025
10 0.7042 0.7092 0.7143 0.7194 0.7199 0.7205 0.7210 0.7215 0.7220
11 0.5634 0.5674 0.5714 0.5755 0.5760 0.5764 0.5768 0.5772 0.5776
12 0.4225 0.4255 0.4286 0.4317 0.4320 0.4323 0.4326 0.4329 0.4332
13 0.2817 0.2837 0.2857 0.2878 0.2880 0.2882 0.2884 0.2886 0.2888
14 0.1408 0.1418 0.1429 0.1439 0.1440 0.1441 0.1442 0.1443 0.1444
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<TABLE>
<CAPTION>
ISSUE AGE
POLICY -----------------------------------------------------------------------------------------------
YEAR* 41 42 43 44 45 46 47
- ------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9850 0.9828 0.9839 0.9822 0.9833 0.9819 0.9808
4 0.9692 0.9680 0.9664 0.9651 0.9659 0.9639 0.9627
5 0.9526 0.9501 0.9496 0.9480 0.9473 0.9446 0.9425
6 0.9526 0.9501 0.9496 0.9480 0.9473 0.9446 0.9425
7 0.9526 0.9501 0.9496 0.9480 0.9473 0.9190 0.9176
8 0.9526 0.9501 0.9496 0.9480 0.9473 0.9117 0.9104
9 0.9032 0.9038 0.9045 0.9051 0.9058 0.9045 0.9032
10 0.7225 0.7231 0.7236 0.7241 0.7246 0.7236 0.7225
11 0.5780 0.5785 0.5789 0.5793 0.5797 0.5789 0.5780
12 0.4335 0.4338 0.4342 0.4345 0.4348 0.4342 0.4335
13 0.2890 0.2892 0.2894 0.2896 0.2899 0.2894 0.2890
14 0.1445 0.1446 0.1447 0.1448 0.1449 0.1447 0.1445
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<TABLE>
<CAPTION>
ISSUE AGE
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
POLICY
YEAR* 48 49 50 51 52 53 54 55 56
- ------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
C-4
<PAGE> 94
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9809 0.9796 0.9786 0.9795 0.9779 0.9770 0.9763 0.9761 0.9738
4 0.9619 0.9598 0.9577 0.9573 0.9563 0.9541 0.9523 0.9512 0.9477
5 0.9418 0.9385 0.9354 0.9351 0.9330 0.9300 0.9268 0.9250 0.9207
6 0.9365 0.9251 0.9137 0.9023 0.8910 0.8797 0.8684 0.8571 0.8689
7 0.9163 0.9150 0.9101 0.8567 0.8032 0.7498 0.6963 0.6429 0.6517
8 0.9091 0.9078 0.9029 0.8080 0.7132 0.6183 0.5235 0.4286 0.4345
9 0.9019 0.9006 0.8993 0.7623 0.6253 0.4883 0.3513 0.2143 0.2172
10 0.7215 0.7205 0.7194 0.5755 0.4316 0.2878 0.1439 0.0000 0.0000
11 0.5772 0.5764 0.5755 0.4316 0.2876 0.1439 0.0000 0.0000 0.0000
12 0.4329 0.4323 0.4317 0.2878 0.1439 0.0000 0.0000 0.0000 0.0000
13 0.2886 0.2882 0.2878 0.1439 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.1443 0.1441 0.1439 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<TABLE>
<CAPTION>
ISSUE AGE
POLICY -----------------------------------------------------------------------------------------------
YEAR* 57 58 59 60 61 62 63
- ------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9731 0.9720 0.9707 0.9711 0.9700 0.9690 0.9678
4 0.9460 0.9441 0.9417 0.9410 0.9389 0.9367 0.9341
5 0.9192 0.9160 0.9128 0.9109 0.9078 0.9044 0.9006
6 0.8811 0.8939 0.9071 0.9087 0.9039 0.8986 0.8937
7 0.6608 0.6704 0.6803 0.6907 0.7015 0.7128 0.7247
8 0.4406 0.4469 0.4536 0.4605 0.4677 0.4752 0.4831
9 0.2203 0.2235 0.2268 0.2302 0.2338 0.2376 0.2416
10 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
11 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
12 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
13 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
C-5
<PAGE> 95
<TABLE>
<CAPTION>
ISSUE AGE
POLICY -------------------------------------------------------------------------------------------------------------
YEAR* 64 65 66 67 68 69 70 71
- ------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9650 0.9638 0.9637 0.9612 0.9597 0.9573 0.9572 0.9559
4 0.9315 0.9277 0.9261 0.9224 0.9196 0.9158 0.9144 0.9129
5 0.8966 0.8916 0.8874 0.8836 0.8796 0.8745 0.8727 0.8700
6 0.8872 0.8823 0.8769 0.8719 0.8665 0.8612 0.8582 0.8554
7 0.7370 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500
8 0.4914 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000
9 0.2457 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500
10 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
11 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
12 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
13 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<TABLE>
<CAPTION>
ISSUE AGE
POLICY -------------------------------------------------------------------------------------------------------------
YEAR* 72 73 74 75 76 77 78 79
- ------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9555 0.9532 0.9518 0.9504 0.9491 0.9464 0.9436 0.9422
4 0.9113 0.9078 0.9050 0.9021 0.8982 0.8939 0.8885 0.8856
5 0.8676 0.8623 0.8581 0.8526 0.8472 0.8404 0.8347 0.8301
6 0.8520 0.8441 0.8387 0.8317 0.8239 0.8170 0.8099 0.8054
7 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500
8 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000
9 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500
10 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
11 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
12 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
13 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
*Months not shown may be calculated by interpolation.
If the transaction occurs in the last month of
C-6
<PAGE> 96
<TABLE>
<CAPTION>
ISSUE AGE
POLICY -------------------------------------------------------------------------------------------------------------
YEAR* 80 81 82 83 84 85 86 87
- ------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9405 0.9388 0.9375 0.9362 0.9360 0.9345 0.9320 0.9303
4 0.8824 0.8806 0.8777 0.8762 0.8747 0.8705 0.8663 0.8608
5 0.8267 0.8235 0.8204 0.8176 0.8145 0.8079 0.8009 0.7899
6 0.8016 0.7971 0.7940 0.7897 0.7842 0.7749 0.7627 0.7451
7 0.7500 0.7500 0.7500 0.7500 0.7500 0.7405 0.7232 0.6964
8 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000
9 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500
10 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
11 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
12 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
13 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<TABLE>
<CAPTION>
ISSUE AGE
POLICY -------------------------------------------------------------------------------------------------------------
YEAR* 88 89 90 91 92 93 94 95
- ------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 0.0000 0.0000 0.0000 0.0000 0.0000
2 1.0000 1.0000 1.0000 0.0000 0.0000 0.0000 0.0000 0.0000
3 0.9261 0.9191 0.9115 0.0000 0.0000 0.0000 0.0000 0.0000
4 0.8510 0.8357 0.8165 0.0000 0.0000 0.0000 0.0000 0.0000
5 0.7732 0.7483 0.7136 0.0000 0.0000 0.0000 0.0000 0.0000
6 0.7192 0.6822 0.6308 0.0000 0.0000 0.0000 0.0000 0.0000
7 0.6597 0.6068 0.5399 0.0000 0.0000 0.0000 0.0000 0.0000
8 0.5000 0.5000 0.4439 0.0000 0.0000 0.0000 0.0000 0.0000
9 0.2500 0.2500 0.2500 0.0000 0.0000 0.0000 0.0000 0.0000
10 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
11 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
12 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
13 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
*Months not shown may be calculated by interpolation.
C-7
<PAGE> 97
[MANULIFE FINANCIAL LOGO]
<PAGE> 98
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 99
PART II
OTHER INFORMATION
UNDERTAKINGS
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940.
The Manufacturers Life Insurance Company of America hereby represents that the
fees and charges deducted under the Policies issued pursuant to this
registration statement, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by the Company.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The Prospectus, consisting of ___ pages;
Representation pursuant to Section 26 of the Investment Company Act of
1940;
The signatures;
Written consents of the following persons:
Jones & Blouch L.L.P. [To be filed by amendment]
Ernst & Young LLP[To be filed by amendment]
Brian R. Koop [To be filed by amendment]
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
Initial Registration Statement on Form S-6 filed October 29,
1998 (file No. 333-66303).
A(3)(a)(i) Distribution Agreement between The Manufacturers Life
Insurance Company of America and ManEquity, Inc. dated
December 23, 1986. Incorporated by reference to Exhibit
A(3)(a)(i) to the Initial Registration Statement on Form S-6
filed October 29, 1998 (file No. 333-66303).
A(3)(a)(ii) Amendment to Distribution Agreement between The
Manufacturers Life Insurance Company of America and
ManEquity, Inc. dated May 30, 1992. Incorporated by
reference to Exhibit A(3)(a)(ii) to the Initial Registration
Statement on Form S-6 filed October 29, 1998 (file No.
333-66303).
A(3)(a)(iii) Amendment to Distribution Agreement between The
Manufacturers Life Insurance Company of America and
ManEquity, Inc. dated February 23, 1994. Incorporated by
reference to Exhibit A(3)(a)(iii) to the Initial
Registration Statement on Form S-6 filed October 29, 1998
(file No. 333-66303).
A(3)(b)(i) Specimen Agreement between ManEquity, Inc. and registered
representatives. Incorporated by reference to Exhibit
A(3)(b)(i) to Pre-effective Amendment No. 1 to the
Registration Statement on Form S-6 filed August 28, 1998
(file No. 333-51293).
A(3)(b)(ii) Specimen agreement between The Manufacturers Life Insurance
Company of America and registered representatives.
Incorporated by reference to Exhibit A(3)(b)(ii) to
Pre-effective Amendment No. 1 to the Registration Statement
on Form S-6 filed August 28, 1998 (file No. 333-51293).
A(3)(b)(iii) Specimen Agreement between ManEquity, Inc. and dealers.
Incorporated by reference to Exhibit A(3)(b)(iii) to
Pre-effective Amendment No. 1 to the Registration Statement
on Form S-6 filed August 28, 1998 (file No. 333-51293).
<PAGE> 100
A(3)(b)(iv) Specimen agreement between The Manufacturers Life Insurance
Company of America and dealers. Incorporated by reference to
Exhibit A(3)(b)(iv) to Pre-effective Amendment No. 1 to the
Registration Statement on Form S-6 filed August 28, 1998
(file No. 333-51293).
A(5)(a) Form of Flexible Premium Variable Life Insurance Policy.
Filed herein.
A(5)(a)(i) Endorsement No. 776-1ua to Flexible Premium Variable Life
Insurance Policy. Previously filed as Exhibit A(5)(a)(i) to
the Post-Effective Amendment No. 11 to the Registration
Statement on Form S-6 filed April 29, 1997 (file No.
33-52310).
A(5)(a)(ii) Endorsement No. 770-10ua to Flexible Premium Variable Life
Insurance Policy. Previously filed as Exhibit A(5)(a)(ii) to
the Post-Effective Amendment No. 11 to the Registration
Statement on Form S-6 filed April 29, 1997 (file No.
33-52310).
A(6)(a) Restated Articles of Redomestication of The Manufacturers
Life Insurance Company of America. Incorporated by reference
to Exhibit 3(a)(i) to Post-Effective Amendment No. 6 on Form
S-1 filed December 9, 1996 (file No. 33-57020).
A(6)(b) By-Laws of The Manufacturers Life Insurance Company of
America. Incorporated by reference to Exhibit 3(b)(i) to
Post-Effective Amendment No. 6 on Form S-1 filed December 9,
1996 (file No. 33-57020).
A(8)(a)(i) Service Agreement between The Manufacturers Life Insurance
Company and The Manufacturers Life Insurance Company of
America dated June 1, 1988. Incorporated by reference to
Exhibit A(8)(a)(i) to Pre-effective Amendment No. 1 to the
Registration Statement on Form S-6 filed August 28, 1998
(file No. 333-51293).
A(8)(a)(ii) Amendment to Service Agreement between The Manufacturers
Life Insurance Company and The Manufacturers Life Insurance
Company of America dated December 31, 1992. Incorporated by
reference to Exhibit A(8)(a)(ii) to Pre-effective Amendment
No. 1 to the Registration Statement on Form S-6 filed August
28, 1998 (file No. 333-51293).
A(8)(a)(iii) Amendment to Service Agreement between The Manufacturers
Life Insurance Company and The Manufacturers Life Insurance
Company of America dated May 31, 1993. Incorporated by
reference to Exhibit A(8)(a)(iii) to Pre-effective Amendment
No. 1 to the Registration Statement on Form S-6 filed August
28, 1998 (file No. 333-51293).
A(8)(a)(iv) Amendment to Service Agreement between The Manufacturers
Life Insurance Company and The Manufacturers Life Insurance
Company of America dated June 30, 1993. Incorporated by
reference to Exhibit A(8)(a)(iv) to Pre-effective Amendment
No. 1 to the Registration Statement on Form S-6 filed August
28, 1998 (file No. 333-51293).
A(8)(a)(v) Amendment to Service Agreement between The Manufacturers
Life Insurance Company and The Manufacturers Life Insurance
Company of America dated December 31, 1996. Incorporated by
reference to Exhibit A(8)(a)(v) to Pre-effective Amendment
No. 1 to the Registration Statement on Form S-6 filed August
28, 1998 (file No. 333-51293).
A(8)(a)(vi) Amendment to Service Agreement between The Manufacturers
Life Insurance Company and The Manufacturers Life Insurance
Company of America dated May 31, 1998. Incorporated by
reference to Exhibit A(8)(a)(vi) to Pre-effective Amendment
No. 1 to the Registration Statement on Form S-6 filed August
28, 1998 (file No. 333-51293).
A(8)(a)(vii) Amendment to Service Agreement between The Manufacturers
Life Insurance Company and The Manufacturers Life Insurance
Company of America dated December 31, 1998. Incorporated by
reference to Exhibit ___ to Post-Effective Amendment No. 11
to the Registration Statement on Form N-4 (file No.
33-57018).
A(8)(b) Form of Stoploss Reinsurance Agreement between The
Manufacturers Life Insurance Company of America and The
Manufacturers Life Insurance Company. Filed herein.
<PAGE> 101
A(8)(c)(i) Service Agreement between The Manufacturers Life Insurance
Company and ManEquity, Inc. dated January 2, 1991.
Incorporated by reference to Exhibit A(8)(c)(i) to
Pre-effective Amendment No. 1 to the Registration Statement
on Form S-6 filed August 28, 1998 (file No. 333-51293).
A(8)(c)(ii) Amendment to Service Agreement between The Manufacturers
Life Insurance Company and ManEquity, Inc. dated March 1,
1994. Incorporated by reference to Exhibit A(8)(c)(ii) to
Pre-effective Amendment No. 1 to the Registration Statement
on Form S-6 filed August 28, 1998 (file No. 333-51293).
A(10) Form of Application for Flexible Premium Variable Life
Insurance Policy. Previously filed as Exhibit (A)(10) to
Post-Effective Amendment No. 7 on Form S-6 filed April 26,
1996 (file No. 33-52310).
A(10)(a) Form of Application Supplement for Flexible Premium Variable
Life Insurance Policy. Previously filed as Exhibit A(10)(a)
to Post Effective Amendment No. 9 on Form S-6 filed December
23, 1996 (File No. 33-52310).
2. Not applicable.
3. Opinion and consent of James D. Gallagher, Esq., General
Counsel of The Manufacturers Life Insurance Company of
America. Previously filed as Exhibit 3 to the Post-Effective
Amendment No. 9 to the Registration Statement on Form S-6
filed December 23, 1996 (file No. 33-52310).
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 Brian R. Koop, actuary of The
Manufacturers Life Insurance Company of America. [TO BE
FILED BY AMENDMENT]
7. Form of notice of withdrawal right ("free look" notice).
Filed herein.
8(a). Form of notice of right of surrender while sales charge
limitation applies (initial purchase). Filed herein.
8(b). Form of notice of cancellation right (face amount increase).
Filed herein.
8(c). Form of notice of right of surrender while sales charge
limitation applies (default). Filed herein.
9. Memorandum Regarding Issuance, Face Amount Increase,
Redemption and Transfer Procedures for the Policies.
Previously filed as Exhibit 9 to Post Effective Amendment
No. 8 on Form S-6 filed December 1, 1996 (file no.
33-52310).
10. Consent of Ernst & Young LLP. [TO BE FILED BY AMENDMENT]
11. Consent of Jones & Blouch L.L.P. [TO BE FILED BY AMENDMENT]
12. Power of Attorney. Incorporated by reference of Exhibit 12
to Post Effective Amendment No. 10 to the Registration
Statement on Form S-6 filed by The Manufacturers Life
Insurance Company of America on February 28, 1997 (File No.
33-52310).
<PAGE> 102
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the registrant,
SEPARATE ACCOUNT THREE OF THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA,
and the depositor, THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA, 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 18th day of February, 1999.
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
[SEAL]
Attest
/s/ James D. Gallagher
- ----------------------
JAMES D. GALLAGHER
Secretary
<PAGE> 103
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, this amended
registration statement has been signed by the following persons in the
capacities indicated on this 18th day of February, 1999.
Signature Title
* Chairman and Director
- -------------------------
JOHN D. RICHARDSON
/s/ Donald A. Guloien President and Director
(Principal Executive Officer)
- --------------------------
DONALD A. GULOIEN
*
- --------------------------
SANDRA M. COTTER Director
/s/ James D. Gallagher Director
- --------------------------
JAMES D. GALLAGHER
* Director
- --------------------------
BRUCE GORDON
* Director
- --------------------------
JOSEPH J. PIETROSKI
* Director
- --------------------------
THEODORE KILKUSKIE, JR.
* Vice President, Finance
- -------------------------- (Principal Financial
DOUGLAS H. MYERS and Accounting Officer)
*/s/ James D. Gallagher
- --------------------------
JAMES D. GALLAGHER
Pursuant to Power of Attorney
<PAGE> 104
EXHIBIT INDEX
Exhibit No. Description
99.A(5)(a) Form of Flexible Premium Variable Life
Insurance Policy.
99.A(8)(b) Form of Stoploss Reinsurance Agreement
between The Manufacturers Life Insurance
Company of America and The Manufacturers Life
Insurance Company.
99.7 Form of notice of withdrawal right ("free
look" notice).
99.8(a) Form of notice of right of surrender while
sales charge limitation applies (initial
purchase).
99.8(b) Form of notice of cancellation right (face
amount increase).
99.8(c) Form of notice of right of surrender while sales charge
limitation applies (default).
<PAGE> 1
Exhibit 99.A(5)(9)
- --------------------------------------------------------------------------------
LIFE INSURED JOHN M DOE
POLICY NUMBER 1 234 567
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY VALUES ALLOCATED TO AN INVESTMENT ACCOUNT REFLECT THE
POLICY. INVESTMENT EXPERIENCE OF THE UNDERLYING SUB-ACCOUNT. INVESTMENT
ADJUSTABLE DEATH BENEFIT. OPTIONS DESCRIBED IN THE "POLICY VALUE COMPOSITION" AND THE
FLEXIBLE PREMIUMS PAYABLE DURING THE LIFE INSURED'S LIFETIME. "INVESTMENT OPTIONS" PROVISIONS. NON-PARTICIPATING (NOT ELIGIBLE
FOR DIVIDENDS).
</TABLE>
- --------------------------------------------------------------------------------
In this policy "you" and "your" refer to the owner of the policy. "We", "us" and
"our" refer to The Manufacturers Life Insurance Company of America.
If the life insured dies while the policy is in force, we will pay the Insurance
Benefit to the beneficiary, subject to the provisions of the policy. The life
insured and the beneficiary are named on page 3 and the application for this
policy, a copy of which is attached to this policy.
YOUR NET PREMIUMS ARE ADDED TO YOUR POLICY VALUE. YOU MAY ALLOCATE THEM TO ONE
OR MORE OF THE INVEST-MENT ACCOUNTS AND TO THE GUARANTEED INTEREST ACCOUNT.
THE PORTION OF YOUR POLICY VALUE THAT IS IN AN INVESTMENT ACCOUNT WILL VARY FROM
DAY TO DAY. THE AMOUNT IS NOT GUARANTEED; IT MAY INCREASE OR DECREASE, DEPENDING
ON THE INVESTMENT EXPERIENCE OF THE UNDERLYING SUB-ACCOUNTS FOR THE INVESTMENT
ACCOUNTS THAT YOU HAVE CHOSEN.
THE PORTION OF YOUR POLICY VALUE THAT IS IN THE GUARANTEED INTEREST ACCOUNT WILL
ACCUMULATE, AFTER DEDUCTIONS, AT RATES OF INTEREST WE DETERMINE. SUCH RATES WILL
NOT BE LESS THAN 4% A YEAR.
THE AMOUNT OF THE INSURANCE BENEFIT, OR THE DURATION OF THE INSURANCE COVERAGE,
OR BOTH, MAY BE VARIABLE OR FIXED AS DESCRIBED IN THE "PAYMENT OF PREMIUMS"
PROVISION AND THE "INSURANCE BENEFIT" PROVISION.
READ YOUR POLICY CAREFULLY. IT IS A CONTRACT BETWEEN YOU AND US.
RIGHT TO RETURN POLICY. WITHIN EITHER (1) TEN DAYS AFTER YOU RECEIVE YOUR
POLICY; OR (2) FORTY-FIVE DAYS AFTER YOU SIGN THE APPLICATION; OR (3) TEN DAYS
AFTER WE MAIL OR DELIVER A NOTICE OF RIGHT OF WITHDRAWAL, YOU CAN RETURN THE
POLICY FOR CANCELLATION BY DELIVERING OR MAILING IT TO US OR TO THE AGENT WHO
SOLD IT. IMMEDIATELY ON DELIVERY OR MAILING, THE POLICY WILL BE VOID FROM THE
BEGINNING. WE WILL REFUND IN FULL THE PREMIUM PAID.
- --------------------------------------------------------------------------------
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
A STOCK COMPANY
/s/ President /s/ Secretary [LOGO]
MANULIFE FINANCIAL
- --------------------------------------------------------------------------------
0644ua
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
Policy Information.........................................................3
Table Of Guaranteed Maximum Cost Of Insurance Rates........................4
Definitions................................................................5
Payment Of Premiums........................................................6
Termination................................................................8
Reinstatement..............................................................8
Insurance Benefit..........................................................8
Policy Value...............................................................9
Policy Value Composition..................................................10
Investment Options........................................................12
Policy Loan Conditions....................................................13
Changing The Death Benefit Option Or The Face Amount......................15
Surrender For Cash........................................................17
Right To Postpone Payment Of Benefits.....................................21
Right To Return Policy Or Cancel Increases................................21
Age And Sex...............................................................21
Suicide...................................................................22
Beneficiary...............................................................22
Ownership And Assignment..................................................22
Protection Against Creditors..............................................22
Currency And Place Of Payment.............................................23
Contract..................................................................23
Validity..................................................................23
Non-Participating.........................................................23
How Values Are Computed...................................................23
Annual Statement..........................................................23
Tax Considerations........................................................24
</TABLE>
A copy of the application, any supplementary benefits, and any endorsements
will follow page 24.
0644-021ua Page 2
<PAGE> 3
POLICY INFORMATION
LIFE INSURED JOHN M. DOE AGE AT POLICY DATE: 35
POLICY NUMBER 1,234,567 POLICY DATE: AUGUST 1, 1992
OWNER JOHN M. DOE ISSUE DATE: SEPTEMBER 1, 1992
BENEFICIARY AS DESIGNATED IN THE APPLICATION OR SUBSEQUENTLY CHANGED
PLAN FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE, NON-PARTICIPATING
FACE AMOUNT $50,000
DEATH BENEFIT OPTION 1
SEX MALE
PREMIUM MODE ANNUALLY
BEGINNING ON
MON DAY YEAR PLANNED PREMIUM
AUG 01 1992 $600
RATE CLASS STANDARD NON-SMOKER
ADDITIONAL $0.00 PER $1,000 OF FACE AMOUNT
RATE $0.00 PER $1,000 OF FACE AMOUNT FOR 0 YEARS
0% OF THE COST OF INSURANCE
THIS POLICY PROVIDES LIFE INSURANCE COVERAGE FOR THE LIFETIME OF THE LIFE
INSURED IF SUFFICIENT PREMIUMS ARE PAID. PREMIUM PAYMENTS IN ADDITION TO THE
PLANNED PREMIUM SHOWN MAY NEED TO BE MADE TO KEEP THIS POLICY AND COVERAGE IN
FORCE.
Page 3
<PAGE> 4
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
TABLE OF EXPENSE CHARGES
CHARGE FOR APPLICABLE TAXES (OTHER THAN TAXES DESCRIBED IN THE POLICY VALUE
COMPOSITION PROVISION):
TWO DEDUCTIONS ARE MADE FROM EACH PREMIUM PAYMENT:
2.35% FOR STATE AND LOCAL TAXES, AND
1.25% FOR FEDERAL TAXES
MONTHLY ADMINISTRATIVE CHARGE:
THE FOLLOWING AMOUNT IS DEDUCTED MONTHLY FROM THE POLICY VALUE:
(a) $0.01 PER $1,000 OF FACE AMOUNT, PLUS $35 DURING THE FIRST POLICY
YEAR, AND
(b) $0.01 PER $1,000 OF FACE AMOUNT, PLUS $10 DURING EACH SUBSEQUENT
YEAR
MORTALITY AND EXPENSE RISKS CHARGE:
THE FOLLOWING AMOUNT IS DEDUCTED MONTHLY FROM THE INVESTMENT ACCOUNT VALUE.
0.075% UNTIL THE LATER OF THE TENTH POLICY ANNIVERSARY AND THE LIFE
INSURED'S AGE 60
0.0375% AFTER THE LATER OF THE TENTH POLICY ANNIVERSARY AND THE LIFE
INSURED'S AGE 60
INVESTMENT MANAGEMENT FEE:
0.50% ANNUALLY ASSESSED AGAINST THE SERIES FUND. THIS IS THE
GUARANTEED MAXIMUM FEE AND THE CURRENT FEE UNDER THE POLICY.
Page 3.1
<PAGE> 5
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
TABLE OF EXPENSE CHARGES (CONTINUED)
DEFERRED UNDERWRITING CHARGE:
$6.00 FOR EACH $1,000 OF FACE AMOUNT, TO A MAXIMUM CHARGE OF $3,000 FOR
EACH LEVEL OF COVERAGE. (LEVEL OF COVERAGE REFERS TO THE INITIAL FACE
AMOUNT AND EACH SUBSEQUENT INCREASE IN FACE AMOUNT.)
THIS AMOUNT WILL BE DEDUCTED FROM THE POLICY VALUE UNDER CERTAIN
CONDITIONS. IT WILL REDUCE OVER TIME ACCORDING TO THE GRADING PERCENTAGES
SHOWN BELOW. SEE THE POLICY VALUE, CHANGING THE DEATH BENEFIT OPTION OR THE
FACE AMOUNT, AND SURRENDER FOR CASH PROVISIONS FOR DETAILS.
TABLE OF GRADING PERCENTAGES FOR THE DEFERRED UNDERWRITING CHARGE
-----------------------------------------------------------------
<TABLE>
<CAPTION>
Ages
Month* 0-50 51 52 53 54 55+
<S> <C> <C> <C> <C> <C> <C>
12 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
24 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
36 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
48 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
60 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
72 90.00% 88.89% 87.50% 85.71% 83.33% 80.00%
84 80.00% 77.78% 75.00% 71.43% 66.67% 60.00%
96 70.00% 66.67% 62.50% 57.14% 50.00% 40.00%
108 60.00% 55.56% 50.00% 42.86% 33.33% 20.00%
120 50.00% 44.44% 37.50% 28.57% 16.67% 0%
132 40.00% 33.33% 25.00% 14.28% 0%
144 30.00% 22.22% 12.50% 0%
156 20.00% 11.11% 0%
168 10.00% 0%
180 0%
</TABLE>
* FOR POLICY MONTHS NOT SHOWN, THE GRADING PERCENTAGE CAN BE FOUND BY
INTERPOLATION.
Page 3.2
<PAGE> 6
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
TABLE OF EXPENSE CHARGES (CONTINUED)
DEFERRED SALES CHARGE:
THE MAXIMUM AMOUNT IS 50% OF PREMIUMS PAID, UP TO A CERTAIN NUMBER OF
TARGET PREMIUMS, AS SHOWN BELOW. (THERE MAY BE A LIMITATION ON THE SALES
CHARGE DURING THIS PERIOD AS DESCRIBED UNDER THE DEFERRED SALES CHARGE
LIMITATION SECTION OF THE SURRENDER FOR CASH PROVISION).
THE DEFERRED SALES CHARGE WILL BE DEDUCTED FROM THE POLICY VALUE UNDER
CERTAIN CONDITIONS, EXCEPT AS DESCRIBED BELOW FOR AGES 0-3. THE AMOUNT
CHANGES OVER TIME ACCORDING TO THE GRADING PERCENTAGES SHOWN ON PAGE 3.4.
SEE THE FOLLOWING PROVISIONS FOR DETAILS: POLICY VALUE, CHANGING THE DEATH
BENEFIT OPTION OR THE FACE AMOUNT, AND SURRENDER FOR CASH.
<TABLE>
<CAPTION>
NUMBER OF TARGET PREMIUMS SUBJECT TO DEFERRED SALES CHARGE
----------------------------------------------------------
(APPLICABLE TO THE INITIAL FACE AMOUNT AND INCREASES)
$250,000 OR UNDER $250,000 OR UNDER $250,000 OR UNDER
AGE MORE $250,000 AGE MORE $250,000 AGE MORE $250,000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0* -0.031 -0.039 30 1.319 1.648 60 2.356 2.945
1* -0.144 -0.180 31 1.366 1.707 61 2.375 2.968
2* -0.081 -0.102 32 1.415 1.768 62 2.399 2.998
3* -0.020 -0.025 33 1.459 1.823 63 2.425 3.031
4 0.037 0.046 34 1.503 1.878 64 2.367 2.959
5 0.096 0.120 35 1.542 1.927 65 2.259 2.824
6 0.166 0.207 36 1.590 1.987 66 2.113 2.641
7 0.221 0.276 37 1.633 2.041 67 1.992 2.490
8 0.281 0.351 38 1.672 2.090 68 1.875 2.344
9 0.340 0.425 39 1.718 2.147 69 1.777 2.222
10 0.391 0.488 40 1.756 2.195 70 1.679 2.099
11 0.453 0.566 41 1.790 2.237 71 1.583 1.979
12 0.514 0.642 42 1.832 2.290 72 1.486 1.857
13 0.560 0.700 43 1.869 2.336 73 1.392 1.740
14 0.614 0.767 44 1.904 2.380 74 1.315 1.644
15 0.560 0.700 45 1.937 2.421 75 1.238 1.547
16 0.606 0.757 46 1.969 2.461 76 1.161 1.451
17 0.658 0.822 47 2.000 2.500 77 1.083 1.354
18 0.718 0.897 48 2.032 2.540 78 1.007 1.259
19 0.767 0.958 49 2.062 2.577 79 0.945 1.182
20 0.817 1.021 50 2.093 2.616 80 0.885 1.106
21 0.870 1.087 51 2.123 2.653 81 0.829 1.037
22 0.924 1.155 52 2.154 2.692 82 0.779 0.973
23 0.973 1.216 53 2.182 2.727 83 0.732 0.915
24 1.026 1.282 54 2.211 2.763 84 0.687 0.859
25 1.075 1.343 55 2.234 2.792 85 0.644 0.806
26 1.125 1.406 56 2.259 2.823 86 0.604 0.755
27 1.177 1.471 57 2.284 2.855 87 0.566 0.708
28 1.228 1.535 58 2.307 2.883 88 0.529 0.661
29 1.274 1.592 59 2.333 2.916 89 0.493 0.616
90 0.484 0.605
</TABLE>
* The negative Number Of Target Premiums produces a negative Deferred Sales
Charge. When combined with the Deferred Underwriting Charge, the negative
Deferred Sales Charge reduces the total surrender charge.
Page 3.3
<PAGE> 7
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
TABLE OF EXPENSE CHARGES (CONTINUED)
DEFERRED SALES CHARGE (CONTINUED):
THE DEFERRED SALES CHARGE WILL CHANGE ACCORDING TO THE FOLLOWING TABLE OF
GRADING PERCENTAGES.
<TABLE>
TABLE OF GRADING PERCENTAGES FOR THE DEFERRED SALES CHARGE
----------------------------------------------------------
<CAPTION>
END OF POLICY GRADING
YEAR* PERCENTAGE
------------- ----------
<S> <C>
1 100.00%
2 100.00%
3 98.88%
4 97.39%
5 96.02%
6 96.02%
7 96.02%
8 96.02%
9 89.93%
10 71.94%
11 57.55%
12 43.17%
13 28.78%
14 14.39%
15 0%
</TABLE>
* FOR POLICY MONTHS NOT SHOWN, THE GRADING PERCENTAGE CAN BE FOUND BY
INTERPOLATION.
Page 3.4
<PAGE> 8
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
TABLE OF VALUES
REFER TO YOUR POLICY PROVISIONS FOR DETAILS ON THE TERMS AND VALUES SHOWN
IN THIS TABLE.
GUIDELINE ANNUAL PREMIUM (GAP) $682.13
TARGET PREMIUM $369.50
GUIDELINE SINGLE PREMIUM $9,770.25
GUIDELINE LEVEL PREMIUM $787.85
MINIMUM ANNUAL PREMIUM (DEATH BENEFIT GUARANTEE)*
- - TO THE POLICY ANNIVERSARY NEAREST AGE 70 $596.00
- - AGE 70 AND AFTER $655.50
NO LAPSE GUARANTEE PREMIUM** $369.50
MINIMUM FACE AMOUNT $50,000
MINIMUM FACE AMOUNT INCREASE OR DECREASE $50,000
MINIMUM PAYMENT AMOUNT $50.00
- - IF PAYABLE BY PRE-AUTHORIZED PLAN $10.00
MINIMUM TRANSFER AMOUNT $500.00
TRANSFER FEE $35.00
MAXIMUM GUARANTEED INTEREST
ACCOUNT TRANSFER PERCENTAGE 15%
MINIMUM PARTIAL NET CASH SURRENDER
VALUE WITHDRAWAL $500.00
PARTIAL WITHDRAWAL PERCENTAGE 10%
MINIMUM LOAN AMOUNT $500.00
ANNUAL LOAN INTEREST RATE 5.75%
LOAN INTEREST CREDITED DIFFERENTIAL
- - REGULAR LOAN AMOUNTS 1.75%
- - SELECT LOAN AMOUNTS 0.00%
DEATH BENEFIT DISCOUNT FACTOR 1.0032737
FIRST YEAR GUARANTEED MONTHLY 0.140
COST OF INSURANCE RATE PER THOUSAND
* ELECTED: THE DEATH BENEFIT GUARANTEE AS DESCRIBED IN THE PAYMENT OF
PREMIUMS PROVISION IS APPLICABLE TO YOUR POLICY.
** ELECTED: SEE THE NO LAPSE GUARANTEE SUPPLEMENTARY BENEFIT ATTACHED TO YOUR
POLICY FOR DETAILS.
Page 3.5
<PAGE> 9
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
LIST OF INVESTMENT FUNDS
THE SEPARATE ACCOUNT IS AUTHORIZED TO INVEST IN SHARES OF MANULIFE SERIES FUND,
INC. OR ANOTHER INVESTMENT COMPANY. EACH SUB-ACCOUNT OF THE SEPARATE ACCOUNT
PURCHASES SHARES IN THE FUNDS LISTED BELOW. WE WILL INFORM YOU OF ANY CHANGES IN
THE AVAILABLE FUNDS.
YOU MAY ALLOCATE NET PREMIUMS TO ANY OF THE FUNDS. YOUR INITIAL INVESTMENT
ALLOCATION IS SHOWN IN THE APPLICATION FOR THE POLICY.
SEE THE FOLLOWING PROVISIONS FOR DETAILS: POLICY VALUE, POLICY VALUE
COMPOSITION, AND INVESTMENT OPTIONS.
MANUFACTURERS INVESTMENT TRUST PORTFOLIOS AND INVESTMENT OBJECTIVES
(1) THE PACIFIC RIM EMERGING MARKETS TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
(2) THE SCIENCE AND TECHNOLOGY TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL. CURRENT INCOME IS INCIDENTAL TO THE PORTFOLIO'S OBJECTIVE.
(3) THE INTERNATIONAL SMALL CAP TRUST SEEKS TO PROVIDE LONG-TERM CAPITAL
APPRECIATION.
(4) THE EMERGING SMALL COMPANY TRUST SEEKS TO PROVIDE MAXIMUM CAPITAL
APPRECIATION.
(5) THE PILGRIM BAXTER GROWTH TRUST SEEKS TO PROVIDE CAPITAL APPRECIATION.
(6) THE SMALL/MID CAP TRUST SEEKS TO PROVIDE LONG-TERM CAPITAL APPRECIATION.
(7) THE INTERNATIONAL STOCK TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
(8) THE WORLDWIDE GROWTH TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
(9) THE GLOBAL EQUITY TRUST SEEKS TO PROVIDE LONG-TERM CAPITAL APPRECIATION.
(10) THE SMALL COMPANY VALUE TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPTIAL.
(11) THE EQUITY TRUST SEEKS TO PROVIDE GROWTH OF CAPITAL. CURRENT INCOME IS A
SECONDARY CONSIDERATION ALTHOUGH GROWTH OF INCOME MAY ACCOMPANY GROWTH OF
CAPITAL.
(12) THE GROWTH TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
(13) THE QUANTITATIVE EQUITY TRUST SEEKS TO ACHIEVE INTERMEDIATE AND LONG-TERM
GROWTH THROUGH CAPITAL APPRECIATION AND CURRENT INCOME.
Page 3.6
<PAGE> 10
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
LIST OF INVESTMENT FUNDS
(14) THE EQUITY INDEX TRUST SEEKS 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.
(15) THE BLUE CHIP GROWTH TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
CURRENT INCOME IS A SECONDARY OBJECTIVE, AND MANY OF THE STOCKS IN THE
PORTFOLIO ARE EXPECTED TO PAY DIVIDENDS.
(16) THE REAL ESTATE SECURITIES TRUST SEEKS TO ACHIEVE A COMBINATION OF
LONG-TERM CAPITAL APPRECIATION AND SATISFACTORY CURRENT INCOME.
(17) THE VALUE TRUST SEEKS TO PROVIDE AN ABOVE-AVERAGE TOTAL RETURN OVER A
MARKET CYCLE OF THREE TO FIVE YEARS, CONSISTENT WITH REASONABLE RISK.
(18) THE INTERNATIONAL GROWTH AND INCOME TRUST SEEKS TO PROVIDE LONG-TERM GROWTH
OF CAPITAL AND INCOME.
(19) THE GROWTH AND INCOME TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL
AND INCOME CONSISTENT WITH PRUDENT INVESTMENT RISK.
(20) THE EQUITY-INCOME TRUST SEEKS TO PROVIDE SUBSTANTIAL DIVIDEND INCOME AND
ALSO LONG-TERM CAPITAL APPRECIATION.
(21) THE BALANCED TRUST SEEKS TO PROVIDE CURRENT INCOME AND CAPITAL
APPRECIATION.
(22) THE AUTOMATIC ASSET ALLOCATION TRUSTS (AGGRESSIVE, MODERATE AND
CONSERVATIVE) SEEK TO OBTAIN THE HIGHEST POTENTIAL TOTAL RETURN CONSISTENT
WITH A SPECIFIED LEVEL OF RISK TOLERANCE -- AGGRESSIVE, MODERATE AND
CONSERVATIVE.
(23) THE HIGH YIELD TRUST SEEKS TO REALIZE AN ABOVE-AVERAGE TOTAL RETURN OVER A
MARKET CYCLE OF THREE TO FIVE YEARS, CONSISTENT WITH REASONABLE RISK.
(24) THE STRATEGIC BOND TRUST SEEKS TO PROVIDE A HIGH LEVEL OF TOTAL RETURN
CONSISTENT WITH PRESERVATION OF CAPITAL.
(25) THE GLOBAL GOVERNMENT BOND TRUST SEEKS TO PROVIDE A HIGH LEVEL OF TOTAL
RETURN BY PLACING PRIMARY EMPHASIS ON HIGH CURRENT INCOME AND THE
PRESERVATION OF CAPITAL.
(26) THE CAPITAL GROWTH BOND TRUST SEEKS TO ACHIEVE GROWTH OF CAPITAL BY
INVESTING IN MEDIUM-GRADE OR BETTER DEBT SECURITIES, WITH INCOME AS A
SECONDARY CONSIDERATION.
(27) THE INVESTMENT QUALITY BOND TRUST SEEKS TO PROVIDE A HIGH LEVEL OF CURRENT
INCOME CONSISTENT WITH THE MAINTENANCE OF PRINCIPAL AND LIQUIDITY.
Page 3.6 (continued)
<PAGE> 11
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
LIST OF INVESTMENT FUNDS
(28) THE U.S. GOVERNMENT SECURITIES TRUST SEEKS TO OBTAIN A HIGH LEVEL OF
CURRENT INCOME CONSISTENT WITH PRESERVATION OF CAPITAL AND MAINTENANCE OF
LIQUIDITY.
(29) THE MONEY MARKET TRUST SEEKS TO OBTAIN MAXIMUM CURRENT INCOME CONSISTENT
WITH PRESERVATION OF PRINCIPAL AND LIQUIDITY.
(30) THE LIFESTYLE AGGRESSIVE 1000 TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL. CURRENT INCOME IS NOT A CONSIDERATION.
(31) THE LIFESTYLE GROWTH 820 TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL
WITH CONSIDERATION ALSO GIVEN TO CURRENT INCOME.
(32) THE LIFESTYLE BALANCED 640 TRUST SEEKS TO PROVIDE A BALANCE BETWEEN A HIGH
LEVEL OF CURRENT INCOME AND GROWTH OF CAPITAL WITH A GREATER EMPHASIS GIVEN
TO CAPITAL GROWTH.
(33) THE LIFESTYLE MODERATE 460 TRUST SEEKS TO PROVIDE A BALANCE BETWEEN A HIGH
LEVEL OF CURRENT INCOME AND GROWTH OF CAPITAL WITH A GREATER EMPHASIS GIVEN
TO HIGH INCOME.
(34) THE LIFESTYLE CONSERVATIVE 280 TRUST SEEKS TO PROVIDE A HIGH LEVEL OF
CURRENT INCOME WITH SOME CONSIDERATION ALSO GIVEN TO GROWTH OF CAPITAL.
Page 3.6 (continued)
<PAGE> 12
<TABLE>
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
GUARANTEED MAXIMUM MONTHLY RATES PER $1,000
OF NET AMOUNT AT RISK
MALE, STANDARD NON-SMOKER
<CAPTION>
LIFE LIFE LIFE
INSURED'S INSURED'S INSURED'S
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE RATE AGE RATE AGE RATE
$ $ $
<S> <C> <C> <C> <C> <C>
0 0.3483 35 0.1408 70 2.8858
1 0.0891 36 0.1475 71 3.1925
2 0.0825 37 0.1566 72 3.5466
3 0.0816 38 0.1666 73 3.9533
4 0.0791 39 0.1783 74 4.4100
5 0.0750 40 0.1908 75 4.9000
6 0.0716 41 0.2058 76 5.4216
7 0.0666 42 0.2208 77 5.9700
8 0.0633 43 0.2383 78 6.5391
9 0.0616 44 0.2558 79 7.1433
10 0.0608 45 0.2766 80 7.8058
11 0.0641 46 0.2991 81 8.5433
12 0.0708 47 0.3233 82 9.3766
13 0.0825 48 0.3491 83 10.3158
14 0.0958 49 0.3783 84 11.3425
15 0.1075 50 0.4091 85 12.4333
16 0.1191 51 0.4458 86 13.5666
17 0.1283 52 0.4883 87 14.7325
18 0.1333 53 0.5358 88 15.9075
19 0.1383 54 0.5908 89 17.1075
20 0.1400 55 0.6516 90 18.3491
21 0.1391 56 0.7191 91 19.6533
22 0.1366 57 0.7908 92 21.0625
23 0.1341 58 0.8683 93 22.6358
24 0.1308 59 0.9558 94 24.6375
25 0.1266 60 1.0533 95 27.4966
26 0.1233 61 1.1616 96 32.0458
27 0.1216 62 1.2850 97 40.0166
28 0.1200 63 1.4258 98 54.8316
29 0.1200 64 1.5850 99 83.3333
30 0.1200 65 1.7608
31 0.1225 66 1.9500
32 0.1250 67 2.1550
33 0.1291 68 2.3750
34 0.1341 69 2.6150
</TABLE>
The above rates will be adjusted for any Additional Rate shown in the
Policy Information section.
0644-04Cua Page 4
<PAGE> 13
DEFINITIONS
AGE at a specific date means age on the nearest birthday. If no specific date is
mentioned, age means the life insured's age on the Policy Anniversary nearest to
the birthday.
BUSINESS DAY is 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 will be determined on each Business Day.
CASH SURRENDER VALUE is the Policy Value less the deferred sales charge, the
deferred underwriting charge and any outstanding monthly deductions due.
EFFECTIVE DATE is the date we become obligated under this policy and when we
take the first monthly deductions. It is the later of the date our underwriters
approve issuance of this policy, or the date we receive at least the initial
premium at our Service Office.
GUARANTEED INTEREST ACCOUNT is that part of the Policy Value that reflects the
value you have in our general account.
GROSS SINGLE PREMIUM is the amount of premium necessary to endow the policy at
the age the Death Benefit Guarantee terminates, assuming an annual interest rate
of 4% and current charges.
GUIDELINE ANNUAL PREMIUM (GAP) is used to determine maximum sales charges that
may be deducted during the first two Policy Years following issuance of a
policy, or an increase in Face Amount.
INVESTMENT ACCOUNT is that part of the Policy Value that reflects the value you
have in one of the sub-accounts.
LOAN ACCOUNT is that part of the Policy Value that reflects the value you have
transferred from the Guaranteed Interest Account or the Investment Accounts as
collateral for a policy loan.
NET CASH SURRENDER VALUE is the Cash Surrender Value less the Policy Debt.
NET POLICY VALUE is the Policy Value less the value in the Loan Account.
NET PREMIUM is the gross premium less the deductions for state, local and
federal taxes. It is the amount of premium allocated to the Guaranteed Interest
Account or Investment Accounts.
POLICY DEBT is the aggregate amount of policy loans, including borrowed
interest, less any loan repayments.
POLICY VALUE is the sum of the values in the Loan Account, the Guaranteed
Interest Account and the Investment Accounts.
POLICY YEARS, POLICY MONTHS and POLICY ANNIVERSARIES are determined from the
Policy Date shown on Page 3.
SEPARATE ACCOUNT refers to Separate Account Three of The Manufacturers Life
Insurance Company of America.
SERVICE OFFICE is the office that we designate to service this policy.
SUB-ACCOUNT refers to one of the sub-accounts of the Separate Account.
SURRENDER CHARGE PERIOD is the period following issuance of the policy or
following any increase in Face Amount during which we will assess surrender
charges. Surrender charges will apply during this period if you surrender or
lapse the policy, decrease the Face Amount or make a partial withdrawal.
WRITTEN REQUEST must be in a form satisfactory to us, signed and dated by you,
and filed at our Service Office.
0644-053ua Page 5
<PAGE> 14
PAYMENT OF PREMIUMS
Premiums are payable during the life insured's lifetime. They are payable on or
before their due dates at our Service Office. On request, we will give you a
receipt signed by one of our officers. The Planned Premium you requested in the
application is shown in the Policy Information Section.
The initial premium is due on the Policy Date. The minimum amount required for
the initial premium is one-twelfth of the Minimum Annual Premium shown in the
Policy Information section.
You may pay subsequent premiums in any amount and at any frequency, subject to
the following:
(a) premium payments are due at the beginning of each Policy Month,
(b) no premium payment may be less than the Minimum Payment Amount shown in the
Policy Information section. We may change this amount 90 days after we send
you written notice of the change;
(c) we have the right to refuse or refund any premium payments that may cause
this policy to fail to qualify as life insurance under applicable tax law;
and
(d) the sum of the premiums paid into this policy at any time may not exceed
the guideline premium limitation as of such time. The guideline premium
limitation is, as of any date, the greater of:
(1) the Guideline Single Premium, or
(2) the sum of the Guideline Level Premiums to such date.
The Guideline Single Premium and the Guideline Level Premium are shown in the
Policy Information section.
MINIMUM PREMIUM. The minimum premium is the amount due at the beginning of each
Policy Month to meet the Cumulative Premium Test described below. If the Death
Benefit Guarantee is not in effect, premium payments in addition to the minimum
premiums may be required to keep this policy in force. The minimum premium as an
annualized amount is shown in the Policy Information section. The minimum
premium may change if:
(a) you change the Face Amount or Death Benefit Option;
(b) you add, change or terminate a Supplementary Benefit;
(c) your rate class changes; or
(d) we add or terminate a temporary additional rate. We will inform you of any
changes in the minimum premium.
CUMULATIVE PREMIUM TEST. We will apply a Cumulative Premium Test to your policy
at the beginning of each Policy Month. Your policy will satisfy the test if (a)
is greater than (b), where:
(a) is the sum of all premiums paid, less any partial withdrawals and any
policy debt; and
(b) is the sum of minimum monthly premiums due since the Policy Date.
Satisfaction of the Cumulative Premium Test during the first three Policy Years,
and subsequently, if your policy is issued and maintained with a face amount of
at least $250,000, will keep the Death Benefit Guarantee in effect. See the
Death Benefit Guarantee section of this provision for the age at which the
guarantee terminates.
(continued)
0644-063ua Page 6
<PAGE> 15
PAYMENT OF PREMIUMS (continued)
If in any Policy Month the policy does not satisfy the Cumulative Premium Test,
we will notify you of the amount required to keep the Death Benefit Guarantee in
force. This amount will be the minimum premium for that Policy Month plus the
minimum premium for the next two Policy Months.
If we do not receive the required amount within 61 days from the date it is due,
the Death Benefit Guarantee will be discontinued unless, if applicable, the Fund
Value Test is satisfied.
FUND VALUE TEST. The Fund Value Test is applicable if your policy is issued and
maintained with a face amount of at least $250,000. We will apply this test if
your policy does not satisfy the Cumulative Premium Test at any time after the
tenth Policy Anniversary.
We will apply the Fund Value Test to your policy at the beginning of each Policy
Month. Your policy will satisfy the Fund Value Test if the Net Policy Value is
equal to or greater than the Gross Single Premium necessary to endow the Policy
at the age the Death Benefit Guarantee terminates. See the Death Benefit
Guarantee section of this provision.
We will notify you if your policy does not satisfy the Fund Value Test. We will
also allow a 61-day grace period for you to pay the premium that is required to
keep the Death Benefit Guarantee in effect. The required payment will be equal
to the amount needed to satisfy the Cumulative Premium Test, plus the Minimum
Monthly Premium due for the next two Policy Months. If we do not receive the
required payment by the end of the 61-day grace period, the Death Benefit
Guarantee will terminate.
DEATH BENEFIT GUARANTEE. We guarantee that this Policy will not go into default
while the Death Benefit Guarantee is in effect. This will apply even if the
policy's Net Cash Surrender Value falls below the amount needed to pay the
Monthly Deductions due. The Death Benefit Guarantee will remain in effect until
the third Policy Anniversary, provided the policy satisfies the Cumulative
Premium Test. After the third Policy Anniversary, continuation of the Death
Benefit Guarantee will be subject to the following:
(a) the policy must be issued and maintained with a Face Amount of at least
$250,000;
(b) the policy must continue to satisfy the Cumulative Premium Test or, if
applicable, the Fund Value Test; and
(c) the guarantee will terminate at the life insured's age 100 if Death Benefit
Option 1 was always in effect under the policy. If Death Benefit Option 2
was in effect at any time, the guarantee will terminate at age 85.
While the Death Benefit Guarantee is in force, we will continue to make Monthly
Deductions from your Net Policy Value. We will not allow your Net Policy Value
to go below zero. If any amount is outstanding after the deductions, we will
deduct the outstanding amount from your next premium payment.
Once the Death Benefit Guarantee terminates, it cannot be reinstated.
DEFAULT. Unless the Death Benefit Guarantee is in effect, the policy will go
into default if, at the beginning of any Policy Month, the Net Cash Surrender
Value would go below zero after we take the Monthly Deductions that are due. The
policy will not go into default if it qualifies for the Death Benefit Guarantee.
GRACE PERIOD. We will allow 61 days from the date that the policy goes into
default, for you to pay the amount that is required to bring the policy out of
default. We will send you a notice specifying the required amount. The amount is
equal to (a) plus (b), where:
(continued)
0644-072ua Page 7
<PAGE> 16
PAYMENT OF PREMIUMS (continued)
(a) is the amount necessary to bring the Net Cash Surrender Value to zero, if
it is less than zero at the date of default; and
(b) is the monthly deductions due, plus the next two monthly deductions.
If the life insured dies during the grace period, we will pay the Insurance
Benefit. The amount of the benefit will be as defined in the Insurance Benefit
provision, with the following modifications:
(a) we will reduce the Insurance Benefit by any outstanding Monthly Deductions
due; and
(b) in calculating the Death Benefit, we will use the Policy Value as of the
default date.
TERMINATION
This policy terminates on the earliest of the following dates:
(a) at the end of the grace period for which you have not paid any amount that
is due;
(b) on the date you surrender the policy for its Net Cash Surrender Value; or
(c) on the date the life insured dies.
We will pay you the Net Cash Surrender Value as of the date of termination, less
the Monthly Deductions then due. The payment will be subject to the Deferred
Sales Charge Limitation provision.
REINSTATEMENT
You can reinstate this policy only if it terminated at the end of a grace period
in which you did not make a required payment. You can reinstate the policy
within five years of the termination date if you:
(a) make a Written Request for reinstatement;
(b) provide us with written evidence of the life insured's insurability that is
satisfactory to us;
(c) pay a premium equal to the amount that was required during the 61-day grace
period following default; and
(d) repay any amount we had paid in connection with the termination of the
policy.
If we approve your request, your policy reinstatement date will be the later of
the date of your request or the date we receive the required payment at our
Service Office.
INSURANCE BENEFIT
If the life insured dies while the policy is in force, we will pay the Insurance
Benefit on receiving due proof of death, subject to the Age And Sex, Suicide and
Validity provisions. If the life insured dies after we receive your request for
surrender, there will be no Insurance Benefit. We will pay the amount payable
under the Surrender For Cash provision instead.
INSURANCE BENEFIT. The Insurance Benefit payable is:
(a) the Death Benefit as described below,
plus (b) any amounts payable under any Supplementary Benefits that are a
part of the policy,
less (c) the value of the Loan Account at the date of death.
(continued)
0644-082ua Page 8
<PAGE> 17
INSURANCE BENEFIT (continued)
DEATH BENEFIT. The Death Benefit will depend on whether Death Benefit Option 1
or 2 is in effect on the date of death.
Under Option 1, the Death Benefit is the greater of (a) and (b), where:
(a) is the Face Amount of the policy at the date of the life insured's death,
and
(b) is the Policy Value at the date of death, multiplied by the applicable
percentage as shown in the table below.
Under Option 2, the Death Benefit is the greater of (a) and (b), where:
(a) is the Face Amount of the policy, plus the Policy Value at the date of the
life insured's death, and
(b) is the Policy Value at the date of death, multiplied by the applicable
percentage as shown in the table below.
<TABLE>
<CAPTION>
* Age Applicable Percentage
----- ---------------------
<S> <C>
40 and under 250%
45 215%
50 185%
55 150%
60 130%
65 120%
70 115%
75 105%
90 105%
95 and above 100%
</TABLE>
* For ages not shown, the Applicable Percentage can be found by
interpolation.
INTEREST. We will pay the Insurance Benefit in one lump sum with interest
calculated from the date of death to the date of payment. The rate will be at
least the minimum required by the law of the state in which this policy was
delivered. If the state does not specify the interest rate, we will use the rate
for Insurance Benefits left on deposit with us.
POLICY VALUE
NET PREMIUMS ADDED. On the Business Day we receive your premium payments at our
Service Office, we add your Net Premium to your Policy Value. We will do this
before we take any deductions due on that Business Day. On the Business Day
coincident with or next following the Effective Date, we will add Net Premiums
received before the Effective Date into your Policy Value.
MONTHLY DEDUCTIONS. A deduction is due from your Policy at the beginning of each
Policy Month. The deduction covers monthly administrative charges and the cost
to provide the insurance coverage. Monthly Deductions are due until the life
insured's age 100.
On the Effective Date, we will take the Monthly Deductions that are due prior to
the Effective Date. We will take the Monthly Deductions that are due on or after
the Effective Date on the date they are due.
The deduction for any Policy Month is the sum of the following amounts
determined at the beginning of that month:
(a) The Monthly Administrative Charge shown in the Table Of Expense Charges in
the Policy Information section,
(b) The Mortality and Expense Risks Charge shown in the Table Of Expense
Charges in the Policy Information section,
(c) The monthly Cost of Insurance for the life insured, and
(d) The monthly cost of any Supplementary Benefits that are a part of this
policy, as determined in accordance with such Supplementary Benefit.
(continued)
0644-092ua Page 9
<PAGE> 18
POLICY VALUE (continued)
COST OF INSURANCE. The Cost Of Insurance for a specific Policy Month is the rate
for the Cost Of Insurance for that month, as described below, multiplied by the
net amount at risk
The net amount at risk is equal to the result of (a) minus (b), where:
(a) is the Death Benefit on the first day of the month, divided by the Death
Benefit Discount Factor shown in the Policy Information section; and
(b) is the Policy Value on the first day of the month.
The rates for the Cost of Insurance, on the Policy Date, and subsequently for
each increase, are based on the life insured's age, sex, rate class, and the
duration that the coverage has been in force. We will determine Cost of
Insurance rates from time to time, on a basis that does not discriminate
unfairly within any class of lives insured.
The Cost of Insurance calculation will reflect any Additional Rate shown in the
Policy Information section. The Cost of Insurance rates will never exceed those
shown in the Table Of Guaranteed Maximum Cost Of Insurance Rates on page 4, plus
any Additional Rate.
OTHER DEDUCTIONS. We also make the following deductions from your Policy Value
as they occur.
We deduct a Deferred Underwriting Charge and a Deferred Sales Charge if any of
the following occurs during the Surrender Charge Period. If you,
(a) give up the policy for its Net Cash Surrender Value,
(b) make a partial withdrawal of the Net Cash Surrender Value,
(c) reduce the face amount of insurance, or
(d) do not pay an amount due at the end of a grace period, and the policy
terminates.
See the Surrender For Cash provision for details.
POLICY VALUE COMPOSITION
Your Policy Value at any time is equal to the sum of the values you have in the
Loan Account, the Guaranteed Interest Account and the Investment Accounts.
LOAN ACCOUNT VALUE. You can get a loan on this policy under certain conditions.
When you take out a loan, we transfer the amount of the loan from the Guaranteed
Interest Account and/or one or more of the Investment Accounts, into the Loan
Account. For details of the Loan Account see the Policy Loan Conditions
provision.
GUARANTEED INTEREST ACCOUNT VALUE. The amount you have in the Guaranteed
Interest Account at any time equals:
(a) Net Premiums allocated to it, plus
(b) amounts transferred to it, plus
(c) interest credited to it, less
(d) amounts deducted from it, less
(e) amounts transferred from it, less
(f) amounts withdrawn from it.
We will credit interest to amounts in the Guaranteed Interest Account, at an
annual rate of no less than 4%. We will set the actual rates from time to time.
For all transactions, we calculate interest from the date of the transaction.
(continued)
0644-102ua Page 10
<PAGE> 19
POLICY VALUE COMPOSITION (continued)
INVESTMENT ACCOUNTS VALUE. The amount you have in an Investment Account at any
time equals the number of units in that Investment Account, multiplied by the
unit value of the corresponding Sub-Account at that time.
The number of units in an Investment Account at any time equals (a) minus (b),
where:
(a) is the number of units credited to the Investment Account because of
(1) Net Premiums allocated to it,
(2) amounts transferred to it; and
(b) is the number of units canceled from the Investment Account because of
(1) amounts deducted from it,
(2) amounts transferred from it, and
(3) amounts withdrawn from it.
The number of units credited or canceled for a given transaction is equal to the
dollar amount of the transaction, divided by the unit value on the Business Day
of the transaction.
SEPARATE ACCOUNT AND SUB ACCOUNTS. The Separate Account is authorized to invest
in the shares of Manulife Series Fund, Inc., an open-end diversified management
investment company. Each Sub-Account of the Separate Account purchases shares of
a corresponding Fund of Manulife Series Fund, Inc. The Funds are listed in the
Policy Information section.
FUND SUBSTITUTION. A Fund might, in our judgment, become unsuitable for
investment by a Sub-Account. This might happen because of a change of investment
policy; or a change in the applicable laws or regulations; or because the shares
are no longer available for investment; or for some other reason. If a Fund
becomes unsuitable for investment, we have the right to substitute another Fund
or another management investment company. Before doing this, we would first
seek, where required, approval from the Securities and Exchange Commission and
the Insurance Commissioner of the state in which this policy is delivered.
To the extent permitted by applicable federal and state law, we also have the
right, without your approval, to:
(a) create new separate accounts;
(b) combine any two or more separate accounts including the Separate Account;
(c) make available additional Sub-Accounts investing in additional Funds of
Manulife Series Fund, Inc.;
(d) operate the Separate Account as a management investment company under the
Investment Company Act of 1940 or in any other form permitted by law;
(e) de-register the Separate Account under the Investment Company Act of 1940;
and
(f) transfer assets between the Separate Account and other separate accounts.
The investment objectives of the Separate Account will not be changed materially
without first filing the change with the Insurance Commissioner of our state of
domicile. We will inform you of any changes deemed to be material.
UNIT VALUES. We will determine the unit values for each Sub-Account at the end
of each Business Day. We will deem each Business Day to end at the time we
determine the net asset value of the underlying shares held by the Sub-Account.
When we need to determine a Policy Value or an amount after the end of a
Business Day, or on a day that is not a Business Day, we will do so on the next
Business Day.
(continued)
0644-111ua Page 11
<PAGE> 20
POLICY VALUE COMPOSITION (continued)
The unit value for each Sub-Account was established at $10 for the first
Business Day that an amount was allocated, or transferred to the particular
Sub-Account. For any subsequent Business Day, the unit value for that
Sub-Account is obtained by multiplying the unit value for the immediately
preceding Business Day by the net investment factor for the particular
Sub-Account on such subsequent Business Day.
NET INVESTMENT FACTOR. The net investment factor for a Sub-Account on any
Business Day is equal to (a) divided by (b), where:
(a) is the net asset value of the underlying Fund shares held by that
Sub-Account at the end of such Business Day before any policy transactions
are made on that day; and
(b) is the net asset value of the underlying Fund shares held by that
Sub-Account at the end of the immediately preceding Business Day after all
policy transactions were made for that day.
We reserve the right to adjust the above formula for any taxes determined by us
to be attributable to the operations of the Sub-Account.
ASSETS. The assets held in each Sub-Account are used to support the Policy
Values of Single and Flexible Premium Variable Life Insurance policies. The
Separate Account will be used to fund only variable life insurance benefits.
Income, gains and losses of the Separate Account are credited to, or charged
against, the applicable Sub-Accounts without regard to our other income, gains
and losses.
The assets of the Separate Account are our property. The part of the assets that
is equal to the Investment Account values in respect of all Single and Flexible
Premium Variable Life Insurance policies will not be charged with liabilities
from any other business we conduct. We can transfer any Separate Account assets
in excess of those Investment Account values to our general account.
INVESTMENT OPTIONS
ALLOCATIONS. You may allocate Net Premiums to the Guaranteed Interest Account or
any of the Investment Accounts. Unless you change the initial premium allocation
specified in your application for this policy, it will continue to apply to
subsequent premium payments.
Allocation percentages must be zero or a whole number not greater than 100. The
sum of the allocation percentages must equal 100. You may change the allocation
percentages by Written Request to our Service Office. The change will take
effect on the date we receive your request at our Service Office.
(continued)
0644-121ua Page 12
<PAGE> 21
INVESTMENT OPTIONS (continued)
We will take monthly deductions from the Guaranteed Interest Account and the
Investment Accounts in the same proportion that the Policy Value in each of
these accounts bears to the Net Policy Value.
TRANSFERS. By Written Request you may transfer portions of your Policy Value
among the Investment Accounts and the Guaranteed Interest Account. We will also
permit telephone transfers if a currently valid authorization form is on file
with us. All transfers are subject to the following restrictions:
(a) You are permitted to make two transfers each Policy Month. There is no
charge for the first transfer. The Transfer Fee shown in the Policy
Information section will apply if you make the second transfer. We will
consider all transfer requests received on the same Business Day as one
transfer.
(b) The Minimum Transfer Amount is shown in the Policy Information section. If
the Policy Value in the account from which an amount is being transferred
is less than the Minimum Transfer Amount, we will transfer the entire
amount in the account.
(c) The maximum amount that you can transfer out of the Guaranteed Interest
Account in any one Policy Year is limited to the greater of:
(1) the Maximum Guaranteed Interest Account Transfer Percentage shown in
the Policy Information section, multiplied by the value in the
Guaranteed Interest Account at the previous Policy Anniversary; and
(2) the Minimum Transfer Amount shown in the Policy Information section.
(d) Any transfer out of the Guaranteed Interest Account may not involve a
transfer to the Investment Account for the Money-Market Fund.
(e) If a transfer would result in more than a 5% reduction in the number of
shares outstanding at the close of the previous Business Day in the
underlying Fund of a Sub-Account, we can decline the transfer. If at a
later date you wish to make a previously declined transfer, we will require
a new transfer request.
POLICY LOAN CONDITIONS
POLICY DEBT. The policy debt as of any date equals (a) plus (b), minus (c),
where:
(a) is the total amount of loans borrowed as of such date,
(b) is the total amount of loan interest charges which have been borrowed as of
such date, and
(c) is the total amount of loan repayments as of such date.
MODIFIED POLICY DEBT. The modified policy debt as of any date equals the policy
debt as of such date, plus the loan interest to be charged to the next Policy
Anniversary. All are discounted from the next Policy Anniversary back to such
date at an annual rate of 4%.
AVAILABLE LOAN VALUE. While this policy is in force, you may obtain a loan from
us by Written Request. We may require a loan agreement from you as the policy is
the only security for the loan. On the date you take out a new loan, the amount
of the new loan cannot be greater than the amount which would cause the Modified
Policy Debt to equal the loan value as of that date. A loan must be for at least
the Minimum Loan Amount shown in the Policy Information Section.
(continued)
0644-132ua Page 13
<PAGE> 22
POLICY LOAN CONDITIONS (continued)
The loan value on any date is the Cash Surrender Value, less the monthly
deductions due to the next Policy Anniversary.
TYPES OF LOAN. Select and Regular loans are available under this policy.
Select Loans are available beginning on the later of the tenth Policy
Anniversary and the life insured's Age 55. The amount available annually on a
Select Loan basis is equal to 12% of the Net Cash Surrender Value at the
previous Policy Anniversary. This amount applies to existing and new loan
amounts.
Regular Loans are all loans taken out prior to the Select Loan period, and loans
taken out at any time in excess of the Select Loan amount.
LOAN ACCOUNT. When you take out a loan, or when loan interest charges are
borrowed, we transfer amounts from the Guaranteed Interest Account and/ or one
or more of the Investment Accounts into the Loan Account. The total amount
transferred is the difference between the Loan Account before the transfer and
the Modified Policy Debt as of the transfer date, so that the Loan Account value
after the transfer is the same as the Modified Policy Debt.
You may tell us how much of the transfer you wish to allocate to your value in
the Guaranteed Interest Account and each of the Investment Accounts. If you do
not tell us, we will allocate the transfer based on the proportion that your
value in the Guaranteed Interest Account and your value in the Investment
Accounts bear to the Net Policy Value.
When a transfer is allocated to an Investment Account, we will cancel units of
that Investment Account sufficient in value to cover the allocated amount. These
transfers do not count as a transfer for purposes of the Transfers section of
the Investment Options provision.
LOAN INTEREST CHARGED. Interest will accrue daily on the policy debt, and is
charged to the Loan Account annually in arrears at each Policy Anniversary. In
the event that you do not pay the loan interest charged, it will be borrowed
against the policy. The annual Loan Interest Charged rate is 5.75%.
LOAN INTEREST CREDITED. We will credit interest daily to amounts in the Loan
Account at an annual rate of no less than 4%. The actual interest will accrue at
a different rate on Regular and Select Loan amounts. The rate at which interest
is credited is calculated by subtracting the Loan Interest Credited Differential
shown in the Policy Information section from the Loan Interest Charged rate.
We may reduce the Loan Interest Credited Differential on Regular Loans 90 days
after we send you written notice of the change.
We will increase the Loan Interest Credited Differential on Select Loans if at
any time it is determined that the differential would cause a Select Loan to be
taxable under any applicable ruling, regulation or court decision. We will
increase the differential to either of the following amounts, and send you
written notice of the change:
(a) the amount that may be prescribed in the ruling, regulation or court
decision; or
(b) if no amount is prescribed, an amount that we consider to be more likely to
result in the transaction being treated as loan under federal tax law.
Any change in the Loan Interest Credited Differential on Regular or Select Loans
will apply to loans you take out after the change.
LOAN ACCOUNT ADJUSTMENTS. We will adjust the value of the Loan Account when you
take out a loan. We will also make an adjustment at other specified events
listed below. When we adjust the Loan Account, the difference between:
(a) the Loan Account before any adjustment; and
(b) the Modified Policy Debt at the time of adjustment,
(continued)
0644-142ua Page 14
<PAGE> 23
POLICY LOAN CONDITIONS (continued)
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:
(a) a Policy Anniversary,
(b) a partial or full loan repayment,
(c) a new loan being taken out, or
(d) when an amount is needed to meet a monthly deduction.
A loan repayment may be implicit in that the policy debt is effectively repaid
upon termination of the policy. The policy terminates upon the death of the life
insured, or upon the surrender or lapse of the policy. In each of these
instances, we will adjust the Loan Account with any excess of the Loan Account
over the Modified Policy Debt.
Except as noted below in the Loan Repayment section, amounts transferred from
the Loan Account will be allocated to the Guaranteed Interest Account and to the
Investment Accounts in the same proportion that 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 REPAYMENT. You may repay the policy debt in whole or in part at any time
prior to the death of the life insured, and while the policy is in force. When
you repay a loan, we credit the amount to the Loan Account, and make a transfer
to the Guaranteed Interest Account or the Investment Accounts, so that the Loan
Account at that time equals the Modified Policy Debt.
We will allocate loan repayments as follows:
(a) first to the Guaranteed Interest Account, until the associated Loan
Sub-Account is reduced to zero,
(b) then 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.
While a loan exists, we will treat the amounts you pay as premiums unless you
request in writing that they be treated as loan repayments.
CHANGING THE DEATH BENEFIT OPTION OR THE FACE AMOUNT
You may change your Death Benefit Option or your Face Amount of insurance by
Written Request. The applicable restrictions and conditions are noted below for
each type of change.
A change in Death Benefit Option or Face Amount of insurance will cause a change
in the Guideline Single Premium and Guideline Level Premium. We will inform you
of the new Guideline Single Premium and Guideline Level Premium amounts. We
reserve the right to limit any changes that would cause this policy to fail to
qualify as life insurance for tax purposes.
CHANGES IN DEATH BENEFIT OPTION. You may change your Death Benefit Option after
the second Policy Anniversary. Changes will take effect at the beginning of the
Policy Month following the date we receive your Written Request, provided we
receive at least 30 days prior notice.
(continued)
0644-152ua Page 15
<PAGE> 24
CHANGING THE DEATH BENEFIT OPTION OR THE FACE AMOUNT (continued)
CHANGE FROM DEATH BENEFIT OPTION 1 TO OPTION 2. The face amount of insurance
after the change from Option 1 to Option 2 will be (a) minus (b), where:
(a) is the Face Amount of insurance immediately before the change, and
(b) is the Policy Value on the effective date of the change.
We will not allow the change in Death Benefit Option if it would cause the Face
Amount to decrease below the minimum shown in the Policy Information section.
CHANGE FROM DEATH BENEFIT OPTION 2 TO OPTION 1. The Face Amount of insurance
after the change from Option 2 to Option 1 will be (a) plus (b), where:
(a) is the Face Amount of insurance immediately before the change, and
(b) is the Policy Value on the effective date of the change.
We require satisfactory evidence of insurability to change the death benefit
from Option 2 to Option 1. An increase in Face Amount resulting from a change in
death benefit will not have any Deferred Underwriting Charge or Deferred Sales
Charge associated with it.
DECREASE IN FACE AMOUNT. You may decrease the Face Amount of insurance once
during each Policy Year after the second Policy Anniversary. You may not
decrease a prior increase during the two Policy Years following such increase. A
decrease in Face Amount will take effect at the beginning of the Policy Month
following the date we receive your Written Request, provided we had at least 30
days prior notice. If we did not get sufficient notice, the decrease will be
effective on the next Policy Month.
The minimum Face Amount Decrease is shown in the Policy Information section. We
may change this amount 90 days after we send you written notice of the change.
We will not allow a decrease if it would cause the Face Amount to go below the
Minimum Face Amount shown in the Policy Information section.
A decrease in Face Amount will reduce the Face Amount in the following order:
(a) the Face Amount provided by the most recent increase will decrease first,
followed by
(b) the next most recent increase until all increases are reduced, then
(c) the initial Face Amount.
If you decrease the initial Face Amount or an increase in Face Amount during the
Surrender Charge Period, we will deduct a Deferred Underwriting Charge and a
Deferred Sales Charge from the Policy Value. See the Decreases in Face Amount
Section of the Surrender For Cash provision for details.
INCREASE IN FACE AMOUNT. You may increase the Face Amount of insurance once
during each Policy Year after the second Policy Anniversary. You will need to
provide us with satisfactory evidence of insurability.
An increase in Face Amount will take effect at the beginning of the Policy Month
following the date we approve your request. An increase may be canceled, but not
decreased, at any time during the two Policy Years following the increase. The
cancellation will be subject to the Deferred Sales Charge Limitation section of
the Surrender For Cash provision.
(continued)
0644-162ua Page 16
<PAGE> 25
CHANGING THE DEATH BENEFIT OPTION OR THE FACE AMOUNT (continued)
We reserve the right to refuse increases if the life insured's age at the
effective date of the increase is greater than the maximum issue age for new
policies at that time. The Minimum Face Amount Increase is shown in the Policy
Information section. We may change this amount 90 days after we send you written
notice of the change.
The amount of insurance will increase in the following order:
(a) we will restore the amount reduced by the most recent decrease first,
followed by
(b) the next most recent decrease until all decreases are restored, then
(c) we will add the new amount of insurance.
There will be no new Deferred Underwriting Charge or Deferred Sales Charge
associated with increases due to (a) or (b) above. However, there will be a new
GAP and Target Premium amount, as well as a new Deferred Underwriting Charge and
Deferred Sales Charge associated with the increase in Face Amount under (c). We
will inform you of the new amounts at the time of the increase in Face Amount.
You will not necessarily have to pay additional premium with an increase in Face
Amount. If the Death Benefit Guarantee is not in force, the new Deferred
Underwriting Charge and Deferred Sales Charge may require an additional premium
payment to prevent the policy from going into default.
For Deferred Sales Charge purposes, the premiums attributable to the increase in
Face Amount at any time will be equal to (a) plus (b), where:
(a) is the proportion of the Policy Value on the date of the increase
attributable to the increase; and
(b) is the proportion of the premiums received on or after the date of increase
attributable to the increase.
The proportion of Policy Value or premiums attributable to the increase will
equal the ratio of (a) to (b),where:
(a) is the GAP for the increase, and
(b) is the sum of the GAPs for the initial Face Amount and all increases,
including the requested increase.
After an increase in Face Amount the proportion of each premium attributable to
the initial Face Amount is equal to the ratio of (a) to (b), where:
(a) is the GAP for the initial Face Amount, and
(b) is the sum of the GAPs for the initial Face Amount and all increases in
effect at that time.
SURRENDER FOR CASH
CASH SURRENDER VALUE. The Cash Surrender Value on any date is equal to (a) minus
(b), where:
(a) is the Policy Value on that date, and
(b) is the sum of any Deferred Sales Charge, Deferred Underwriting Charge, and
any outstanding monthly deductions.
NET CASH SURRENDER VALUE. The Net Cash Surrender Value is equal to the Cash
Surrender Value, less the Policy Debt. You may surrender this policy for its Net
Cash Surrender Value at any time while the life insured is living. We will
determine the Net Cash Surrender Value at the end of the Business Day on which
we receive the policy and your Written Request for surrender at our Service
Office. After the date of surrender, no insurance will be in force.
(continued)
0644-173ua Page 17
<PAGE> 26
SURRENDER FOR CASH (continued)
DEFERRED UNDERWRITING CHARGE. If you surrender this policy for its Net Cash
Surrender Value or if it terminates at the end of a grace period during the
Surrender Charge Period, we will deduct a Deferred Underwriting Charge from the
Policy Value. A description of the Deferred Underwriting Charge is in the Policy
Information section.
DEFERRED SALES CHARGE. If you surrender this policy for its Net Cash Surrender
Value or if it terminates at the end of a grace period during the Surrender
Charge Period, we will deduct a Deferred Sales Charge from the Policy Value. A
description of the Deferred Sales Charge is in the Policy Information section.
DECREASES IN FACE AMOUNT. If you reduce the Face Amount of insurance during the
Surrender Charge Period, we will deduct a pro-rata Deferred Underwriting Charge
and a pro-rata Deferred Sales Charge from the Policy Value. We will allocate
this deduction to the Guaranteed Interest Account and the Investment Accounts in
the same manner as monthly deductions. See the Allocations section of the
Investment Options provision.
A decrease in Face Amount caused by a change from Death Benefit Option 1 to
Option 2 will not incur the pro-rata Deferred Underwriting Charge or the
Pro-rata Deferred Sales Charge described below.
CHARGES DEDUCTED FOR DECREASES. The amount of the charges deducted for a
decrease in Face Amount is equal to the sum of the pro-rata Deferred
Underwriting Charge and the pro-rata Deferred Sales Charge for the initial Face
Amount and any previous increase in Face Amount. This amount is the result of
(a) divided by (b), multiplied by (c), where:
(a) is the amount of the decrease in the initial Face Amount or previous
increase in Face Amount;
(b) is the amount of the corresponding initial Face Amount or previous increase
in Face Amount, prior to the decrease; and
(c) is the Deferred Underwriting Charge and Deferred Sales Charge for the
corresponding initial Face Amount or previous increase in Face Amount,
immediately prior to the decrease.
See the Charges Remaining After Face Amount Decreases Or Partial Withdrawals
section of this provision for a description of the charges remaining after
deduction of the pro-rata charges.
PARTIAL NET CASH SURRENDER VALUE WITHDRAWAL. You may request a partial Net Cash
Surrender Value withdrawal once each Policy Month after the first two Policy
Years. You may make this request provided there is a Net Cash Surrender Value
for the policy. The partial Net Cash Surrender Value withdrawal will be made as
of the end of the Business Day on which we receive your Written Request.
The minimum amount that you may withdraw is the Minimum Partial Net Cash
Surrender Value Withdrawal Amount shown in the Policy Information section. You
may specify the accounts from which we should make the partial Net Cash
Surrender Value withdrawal. If you do not specify, we will make the withdrawal
in the same proportion that the value in the Guaranteed Interest Account and the
Investment Accounts bears to the Net Policy Value.
If a partial Net Cash Surrender Value withdrawal is above the Withdrawal Tier
Amount and occurs during the Surrender Charge Period, we will deduct a pro-rata
Deferred Underwriting Charge and a pro-rata Deferred Sales Charge from the
Policy Value.
(continued)
0644-183ua Page 18
<PAGE> 27
SURRENDER FOR CASH (continued)
The Withdrawal Tier Amount at any date is determined as (a) multiplied by (b),
where:
(a) is the Partial Withdrawal Percentage shown in the Policy Information
section; and
(b) is the Net Cash Surrender Value at the previous Policy Anniversary.
The portion of a partial Net Cash Surrender Value withdrawal that is considered
above the Withdrawal Tier Amount includes all previous partial Net Cash
Surrender Value withdrawals that have occurred in the current Policy Year.
If Death Benefit Option 1 is in effect at the time of the withdrawal, then the
Face Amount will be reduced by,
(a) the amount of the withdrawal plus the pro-rata Deferred Underwriting Charge
and the pro-rata Deferred Sales Charge, if at the time of the withdrawal
the Death Benefit equals the Face Amount, otherwise
(b) the amount, if any, by which the withdrawal plus the pro-rata Deferred
Underwriting Charge and the pro-rata Deferred Sales Charge exceeds the
difference between the Death Benefit and the 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 you had requested the decrease. See the
Decrease in Face Amount section of the Changing The Death Benefit Option Or The
Face Amount provision.
CHARGES DEDUCTED FOR PARTIAL WITHDRAWALS. The amount of the charges deducted for
the partial withdrawal will equal the sum of the pro-rata Deferred Underwriting
Charge and the pro-rata Deferred Sales Charge for the initial Face Amount and
any previous increase in Face Amount. This amount is the result of (a) divided
by (b), multiplied by (c), where:
(a) is the amount of the partial Net Cash Surrender Value withdrawal in excess
of the Withdrawal Tier Amount;
(b) is the Net Cash Surrender Value prior to the withdrawal, in excess of the
Withdrawal Tier Amount; and
(c) is the Deferred Underwriting Charge and Deferred Sales Charge for the
corresponding initial face amount or previous increase in Face Amount,
immediately prior to the withdrawal.
We will allocate the charges among the Guaranteed Interest Account and the
Investment Accounts in the same proportion that the withdrawal from each account
bears to the total withdrawal.
If the withdrawal plus the pro-rata Deferred Underwriting Charge and the
pro-rata Deferred Sales Charge allocated to a particular account are greater
than the value of that account, we will reduce the portion of the withdrawal
allocated to that account. We will reduce the allocated portion so that the
withdrawal plus the pro-rata charges allocated to the account equal the value of
the account.
See the Charges Remaining After Face Amount Decreases Or Partial Withdrawals
section of this provision for a description of the charges remaining after
deduction of the pro-rata charges.
(continued)
0644-193ua Page 19
<PAGE> 28
SURRENDER FOR CASH (continued)
CHARGES REMAINING AFTER FACE AMOUNT DECREASES OR PARTIAL WITHDRAWALS. Each time
we deduct the pro-rata Deferred Underwriting Charge or the pro-rata Deferred
Sales Charge for a Face Amount decrease or for a partial withdrawal, we will
reduce the remaining Deferred Underwriting Charge and Deferred Sales Charge
proportionately.
The remaining Deferred Underwriting Charge will be calculated using the table on
Page 3.2 in the Policy Information Section. The actual remaining charge will be
the result of (a) divided by (b), multiplied by (c), where:
(a) is the grading percentage applicable to the life insured's issue age and
policy duration;
(b) is the grading percentage applicable to the life insured's issue age at the
time of the last decrease or partial withdrawal; and
(c) is the remaining Deferred Underwriting Charge prior to the last decrease or
partial withdrawal, less the Deferred Underwriting Charge deducted for that
decrease or partial withdrawal.
The remaining Deferred Sales Charge will be calculated using the tables on Page
3.3 and Page 3.4 in the Policy Information Section. The actual remaining charge
will be the result of (a) divided by (b), multiplied by (c), where:
(a) is the grading percentage applicable to the policy duration;
(b) is the grading percentage at the time of the last decrease or partial
withdrawal; and
(c) is the remaining Deferred Sales Charge prior to the last decrease or
partial withdrawal, less the Deferred Sales Charge deducted for that
decrease or partial withdrawal.
Until the sum of premiums paid equals or exceeds the Number Of Target Premiums
Subject To Deferred Sales Charge multiplied by the Target Premium, subsequent
premium payments will increase the remaining Deferred Sales Charge.
DEFERRED SALES CHARGE LIMITATION. If you surrender this policy for its Net Cash
Surrender Value in the first two years following issuance of the policy or the
date of an increase in Face Amount, we will forego deducting that part of the
Deferred Sales Charge that is in excess of the sum of (a), (b) and (c), where:
(a) is 30% of premiums paid, up to the lesser of the Number Of Target Premiums
Subject To Deferred Sales Charge, or one GAP, and
(b) is 10% of premiums paid in excess of one GAP, up to the lesser of the
Number Of Target Premiums Subject To Deferred Sales Charge, or two GAPs,
and
(c) is 9% of premiums paid in excess of two GAPs, up to the Number of Target
Premiums Subject To Deferred Sales Charge
The number of Target Premiums Subject To Deferred Sales Charge is shown in the
Table Of Expense Charges in the Policy Information Section.
(continued)
0644-203ua Page 20
<PAGE> 29
SURRENDER FOR CASH (continued)
If you cancel an increase in Face Amount during the first two years following
the date of the increase, we will not take any part of the Deferred Sales Charge
with respect to premiums attributable to that increase, which is in excess of
the amount permitted by the above formula. We will deduct the Deferred Sales
Charge and the Deferred Underwriting Charge upon cancellation, as described in
the Decreases in Face Amount section above.
In this section, premiums refer to the premiums attributable, for Deferred Sales
Charge purposes, to the initial Face Amount, or an increase in Face Amount, as
appropriate. GAP refers to the Guideline Annual Premium as shown in the Policy
Information section for the initial Face Amount, or an increase in Face Amount,
as appropriate.
RIGHT TO POSTPONE PAYMENT OF BENEFITS
We reserve the right to postpone the payment of Net Cash Surrender Values,
partial Net Cash Surrender Value withdrawals, policy loans and the portion of
Insurance Benefit that depend on Investment Account values, for any period
during which:
(a) the New York Stock Exchange (Exchange) is closed for trading (other than
customary week-end and holiday closings), or trading on the Exchange is
otherwise restricted;
(b) an emergency exists as defined by the Securities and Exchange Commission
(SEC), or the SEC requires that trading be restricted; or
(c) the SEC permits a delay for the protection of policyholders.
We also reserve the right to postpone payments for up to six months if such
payments are based on values that do not depend on the investment performance of
the Sub-Accounts.
In addition, we may deny transfers under the circumstances stated in (a), (b)
and (c) above, and in the Transfers section of the Investment Options provision.
RIGHT TO RETURN POLICY OR CANCEL INCREASES
Within either (1) ten days after you receive your policy; or (2) forty-five days
after you sign the application; or (3) ten days after we mail or deliver a
notice of right of withdrawal, you can return the policy for cancellation by
delivering or mailing it to us or to the agent who sold it. Immediately on
delivery or mailing, the policy will be void from the beginning. We will refund
in full the premium paid.
If you request an increase in Face Amount which results in a new Deferred
Underwriting Charge or Deferred Sales Charge, you have the same rights as
described above to cancel the increase. If canceled, the Policy Value, the
Deferred Underwriting Charge and the Deferred Sales Charge will be recalculated
to the amounts they would have been, had the increase not taken place. You may
request a refund for all or a portion of premiums paid during this period. Upon
payment of the refund, we will recalculate the Policy Value, the Deferred
Underwriting Charge and the Deferred Sales Charge to the amounts they would have
been, had the premiums not been paid.
AGE AND SEX
If the life insured's age or sex was misstated in the application, we will
change the Face Amount of insurance. The new Face Amount will be determined so
that the Death Benefit will be that which the most recent Cost of Insurance
deduction would have purchased for the correct age and sex.
0644-211ua Page 21
<PAGE> 30
SUICIDE
If the life insured dies by suicide, whether sane or insane, within two years
after the Issue Date, we will pay only the premiums paid, less any partial Net
Cash Surrender Value withdrawals, less the amount in the Loan Account. If the
life insured dies by suicide, whether sane or insane, within two years after the
date an increase in Face Amount takes effect, the Death Benefit for that
increase will be limited to the monthly deductions for the increase.
BENEFICIARY
The following four sections will apply unless there is a beneficiary appointment
in force that provides otherwise.
BENEFICIARY CLASSIFICATION. You can appoint beneficiaries for any Insurance
Benefit in three classes: primary, secondary and final. Beneficiaries in the
same class will share equally in any Insurance Benefit payable to them.
PAYMENT TO BENEFICIARIES. We will pay the Insurance Benefit:
(a) to any primary beneficiaries who are alive when the life insured dies; or
(b) if no primary beneficiary is then alive, to any secondary beneficiaries who
are then alive; or
(c) if no primary or secondary beneficiary is then alive, to any final
beneficiaries who are then alive.
CHANGE OF BENEFICIARY. During the life insured's lifetime you can change the
beneficiary by Written Request unless you make an irrevocable designation. We
are not responsible if the change does not achieve your purpose. DEATH OF
BENEFICIARY. If no beneficiary is alive when the life insured dies, the
Insurance Benefit will belong to you; or to your estate if you are the life
insured. If a beneficiary dies before the seventh day after the death of the
life insured, we will pay the Insurance Benefit as if the beneficiary had died
before the life insured.
OWNERSHIP AND ASSIGNMENT
While the life insured is living, you as owner can, without any beneficiary's
consent:
(a) receive any amount payable under your policy;
(b) exercise all rights and privileges granted by the policy; and
(c) assign the policy.
An assignment does not bind us until we receive it at our Service Office. We are
not responsible for its validity or its effects. It should be filed with us in
duplicate. We will return a copy.
TRUSTEE OWNER. Should the owner be a trustee, payment to the trustee(s) of any
amount to which the trustee(s) is (are) entitled under the policy, either by
death or otherwise, will fully discharge us from all liability under the policy
to the extent of the amount so paid.
SUCCESSOR OWNER. Upon the owner's death during the life insured's lifetime, a
named successor owner will, if then living, have all the owner's rights and
interest in the policy. During the life insured's lifetime, the owner, without
the consent of any beneficiary or any successor owner, can cancel or change the
designation of successor owner. This may be done from time to time by agreement
in writing with us.
PROTECTION AGAINST CREDITORS
If permitted by state law, all payments shall be exempt from the debts and
contracts of the owners and beneficiaries, and from seizure by court order.
0644-221ua Page 22
<PAGE> 31
CURRENCY AND PLACE OF PAYMENT
All payments to or by us will be in U.S. currency. We will make payments from
our Service Office. We may require proof that the person claiming any payment is
entitled to it.
CONTRACT
The policy, application, supplementary benefits, and any endorsements form your
whole contract. A copy of the application is attached to the policy and deemed a
part of it. We will not be bound by any statement that is not in the application
or the policy.
Only our President or one of our Vice-Presidents can agree to amend or modify
the policy or waive any of its provisions. Any change must be in writing.
Statements made by you or the life insured are representations, not warranties,
unless fraud is involved. We will not use any statement by you or the life
insured to deny a claim, unless it is written in the application.
VALIDITY
We cannot contest the validity of your policy after it has been in force during
the life insured's lifetime for two years from the Issue Date. We cannot contest
the validity of an increase in face amount or an addition of a Supplementary
Benefit after such increase or addition has been in force during the life
insured's lifetime for two years from the date of such increase or addition.
We can contest after that time limit if the policy has been reinstated and has
been in force during the life insured's lifetime for less than two years from
the reinstatement date. If this is the case, we can only contest the validity in
respect of any fact material to the reinstatement that was misrepresented.
NON-PARTICIPATING
Your policy is non-participating. It does not earn dividends.
HOW VALUES ARE COMPUTED
We provide Cash Surrender Values that are at least equal to those required by
law. A detailed statement of the method of computing the values of this policy
has been filed with the insurance department of the state in which this policy
is delivered. This statement is available on request from our Service Office.
We base minimum Cash Surrender Values and reserves on the Commissioners 1980
Standard Ordinary Smoker/Non-Smoker Mortality Table. We also use these tables as
the basis for determining maximum Cost of Insurance rates. Values are computed
at an interest rate of 4% per year.
ANNUAL STATEMENT
Within 30 days after each Policy Anniversary, we will send you a report showing:
(a) the Death Benefit;
(b) the Policy Value;
(c) the current allocation of money in the Guaranteed Interest Account, the
Loan Account and each of the Investment Accounts;
(d) the value of the units in each chosen Investment Account;
(e) any Loan Account balance and loan interest charged since the last report;
(f) the premiums paid and policy transactions for the year; and
(g) any further information required by law.
0644-231ua Page 23
<PAGE> 32
TAX CONSIDERATIONS
It is the intent that this policy be considered as life insurance for tax
purposes. The Death Benefit is designed to comply with Section 7702 of the
Internal Revenue Code of 1986, or any other equivalent section of the Code.
We do not give tax advice and this provision should not be construed to mean
that the Death Benefit and Policy Value will be exempt from the future actions
of any tax authority.
0644-241ua Page 24
<PAGE> 33
- --------------------------------------------------------------------------------
The Manufacturers Life Insurance Company of America
A stock company
Service Office: 200 Bloor Street East, Toronto, Canada, M4W 1E5
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY.
ADJUSTABLE DEATH BENEFIT.
FLEXIBLE PREMIUMS PAYABLE DURING THE LIFE INSURED'S LIFETIME.
POLICY VALUES ALLOCATED TO AN INVESTMENT ACCOUNT REFLECT THE INVESTMENT
EXPERIENCE OF THE UNDERLYING SUB-ACCOUNT. INVESTMENT OPTIONS DESCRIBED IN THE
"POLICY VALUE COMPOSITION" AND THE "INVESTMENT OPTIONS" PROVISIONS.
NON-PARTICIPATING (NOT ELIGIBLE FOR DIVIDENDS).
- --------------------------------------------------------------------------------
IMPORTANT NOTICE
To claim a benefit or request a change in your
policy, contact our nearest representative. Or
write to our Service Office at the address above.
Please tell us promptly of any change in your address.
WE STRONGLY URGE THAT, BEFORE YOU TAKE ANY ACTION
TO REPLACE THIS OR ANY OTHER POLICY, YOU ASK THE
ADVICE OF THE COMPANY THAT ISSUED THE POLICY.
- --------------------------------------------------------------------------------
0644ua
<PAGE> 1
Exhibit 99A(8)(b)
FORM OF STOPLOSS REINSURANCE AGREEMENT
BETWEEN
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
(The Ceding Company, hereinafter referred to as "ManAmerica")
AND
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF TORONTO, ONTARIO, CANADA
(The Reinsuring Company, hereinafter referred to as
"Manufacturers Life")
<PAGE> 2
I - SCOPE
This Agreement applies to stop-loss reinsurance of standard and
substandard insurance arising from Base Plan and attaching Benefit
Riders issued by ManAmerica, as described in Schedule A and later
referred to as Flexible Premium Variable Life (FPVL).
II - AUTOMATIC REINSURANCE
This coverage is automatically provided for all FPVL policies issued by
ManAmerica, up to the amounts shown in schedule B, and sold in any
calendar year starting at the effective date specified in section XV.
Amounts over those shown in Schedule B will be submitted facultatively
to Manufacturers Life.
III - LIABILITY
For reinsurance under this Agreement, the exposure to liability of
Manufacturers Life will commence simultaneously with the liability of
ManAmerica. Subject to the provisions of this section and section VII
and conditional to the payment of reinsurance premiums as provided for
in section VI of this Agreement, Manufacturers Life's exposure will
continue as long as ManAmerica is liable under the original policies
and shall cease when the liability of ManAmerica ceases.
IV - PLAN OF REINSURANCE
Manufacturers Life will reimburse 100% of the total death claims and
total monthly deductions waived on the policies reinsured in excess of
the Attachment Point, as set in Schedule C, on a calendar quarter basis
in arrears. Manufacturers Life shall not reimburse surrender benefits
paid by ManAmerica. The total death claims shall exclude any amounts
reimbursed under any other reinsurance agreement on the policies
reinsured hereunder.
V - PREMIUMS
The reinsurance premiums will be computed for each calendar quarter in
arrears as set out in Schedule D attached hereto.
VI - PAYMENTS/REPORTING
Within 15 days after the end of each calendar quarter, ManAmerica will
send to Manufacturers Life an itemized statement of account, in
substantial accord with Schedule E, together with any remittance for
the balance due to Manufacturers Life as stated therein. Manufacturers
Life will have 15 days after receipt of the statement of account to pay
any amounts owing to ManAmerica.
ManAmerica will supply Manufacturers Life with details as outlined in
Schedule E. All policy details will be housed with ManAmerica.
2
<PAGE> 3
VII - OVERSIGHTS
It is expressly understood and agreed that if non-payment of premiums
or failure to comply with any terms of this contract is shown to be
unintentional and the result of misunderstanding or oversights on the
part of either Manufacturers Life or ManAmerica, both Manufacturers
Life and ManAmerica shall be restored to the position they would have
occupied had no such error or oversights occurred.
VIII - CLAIMS
ManAmerica shall give Manufacturers Life a copy of the total death
benefit claims, the policy value of those policies as well as total
monthly deductions waived on the policies reinsured hereunder net of
any amount reimbursed under any other reinsurance agreement.
Manufacturers Life shall be liable to ManAmerica for the total claims
in excess of the Attachment Point as defined in Schedule C. Any
liability of Manufacturers Life shall be settled in one lump-sum.
IX - CURRENCY
Reinsurance under this Agreement will be effected on an original
currency basis whereby the risk and premium amounts will be expressed
in U.S. Dollars. Settlements for all amounts due to either party by
the other as a result of transactions under the provisions of this
Agreement shall be paid in U.S. Dollars.
X - INSOLVENCY
In the event of the insolvency of ManAmerica, all reinsurance under
this Agreement will be paid by Manufacturers Life directly to
ManAmerica, its liquidator, receiver or statutory successor, on the
basis of the liability of ManAmerica under the policies reinsured
without diminution because of the insolvency of ManAmerica, or because
the Company has failed to pay all or a portion of any claims.
XI - INSPECTION OF RECORDS
Manufacturers Life shall have the right, at any reasonable time, at the
office of ManAmerica to examine all books and documents relating to
reinsurance under this Agreement.
XII - ARBITRATION
All disputes and differences between the two contracting parties upon
which an amicable understanding cannot be reached are to be decided by
arbitration and the arbitrators, one is to be appointed by ManAmerica,
the second by Manufacturers Life and the third is to be selected by
these two representatives. Should the two arbitrators be unable to
agree on the choice of a third, the appointment shall be left to the
President of the American Council of Life insurance, or its successor.
3
<PAGE> 4
The arbitrators are not bound by any rules of law. They shall decide by
a majority of votes and from their written decision there can be no
appeal. The cost of arbitration, including the fees of the arbitrators,
shall be shared by each party unless the arbitrators shall decide
otherwise.
XIII - SEVERABILITY
In the event that any of the provisions herein contained shall be
invalid or unenforceable, such declaration or adjudication shall in no
manner affect or impair the validity or the enforcibility of the other
provisions and the remaining provisions shall remain in full force and
effect as though such invalid or unenforceable provisions or clauses
had not been herein included or made part of the Agreement.
XIV - DURATION OF AGREEMENT
This Agreement will be effective on and after the effective date stated
in section XV.
This Agreement may be amended only be mutual consent of ManAmerica and
Manufacturers Life.
ManAmerica and Manufacturers Life may terminate this Agreement by
giving ninety (90) days prior written notice of termination. The day
the notice is received in the mail at the other party's Home Office,
or, if the mail is not used, the day it is delivered to the other
party's Home Office or to an Officer of the other party, as the case
may be, shall be the first day of the ninety (90) day period.
During the ninety (90) day period, this Agreement shall continue to
operate in accordance with its terms.
Manufacturers Life and ManAmerica shall remain liable after
termination, in accordance with the terms and conditions of this
Agreement, with respect to all reinsurance which was effective prior to
termination of this Agreement.
4
<PAGE> 5
XV - EXECUTION
In witness of the above, this Agreement is signed in duplicate on the
dates and at the places indicated below.
The effective date of this Agreement is, the __ day of ______, 19___.
Date: ______________________ For: ___________________________
Place ______________________ By: ___________________________
Attest:_____________________ Title:___________________________
Date: ______________________ For: ___________________________
Place ______________________ By: ___________________________
Attest:_____________________ Title:___________________________
5
<PAGE> 6
SCHEDULE A
----------
POLICY SUBJECT TO REINSURANCE
- -----------------------------
Base Plan: Flexible Premium Variable Life
Riders: - Accidental Death Benefit
- Guaranteed Insurability Benefit
- Additional Life Benefit
- Supplementary Insurance Benefit
- Contingent Life Benefit
- Total Disability Waiver of Monthly
Deductions Benefit
6
<PAGE> 7
SCHEDULE B
----------
RETENTION LIMITS OF MANUFACTURERS LIFE
- --------------------------------------
Life $7,500,000
Aviation Risk $5,000,000
Accidental Death $1,000,000
Total Disability Waiver
of Monthly Deductions $5,000 per month
7
<PAGE> 8
SCHEDULE C
----------
ATTACHMENT POINT
- ----------------
The Attachment Point shall be 110% of the expected claims. Expected
claims, for a given period, are defined as 75% of the total insurance
charges for the base plan and riders, as described in Schedule A,
deducted during that period for the coverages reinsured hereunder.
8
<PAGE> 9
SCHEDULE D
----------
REINSURANCE PREMIUMS
- --------------------
Reinsurance premiums shall be paid at the end of each calendar quarter,
in arrears, and shall be computed as 5% of the expected claims as
defined in Schedule C.
9
<PAGE> 10
SCHEDULE E
----------
STOPLOSS REINSURANCE AGREEMENT BETWEEN MANAMERICA
AND MANUFACTURERS LIFE
Statement of account for the period
XX/XX/XX TO XX/XX/XX
A. Total insurance charges (base plans and riders)
deducted during the period: X,XXX.xx
B. Expected claims (75% of A): X,XXX.xx
C. Attachment point (110% of B): X,XXX.xx
D. Actual claims: X,XXX.xx
E. Reinsured claims (excess, if any, of D over C): X,XXX.xx
F. Reinsurance premium (5% of B): X,XXX.xx
Net amount due (owing) = E-F X,XXX.xx
10
<PAGE> 1
Exhibit 99.7
[Date]
FORM OF NOTICE OF WITHDRAWAL RIGHT
RE: [Contract Number]
--------------------------------------------------
[Name]
--------------------------------------------------
Premium Mode:
-----------------------------------
Modal Planned Premium:$
-------------------------
This notice is sent to you in accordance with the laws administered by the
United States Securities and Exchange Commission ("SEC"). Please read it
carefully and retain it with your important records.
You have recently purchased a flexible premium variable life insurance contract
from The Manufacturers Life Insurance Company of America under which benefits
may depend on the experience of the sub-accounts of Manufacturers Life of
America's Separate Account Three (the "Separate Account"). You have, pursuant to
requirements of the SEC and your contract, the right to examine and return your
contract for cancellation, and receive a full refund of all premiums paid, at
any time within 10 days from delivery of the contract or 45 days from the date
of execution of the application, whichever is later, but in any event you have
until 10 days from the date of delivery or mailing (as determined by its
postmark) of this notice to return the contract for cancellation.
In determining whether or not to exercise your right, you should consider, among
other things, the projected cost of your contract including your ability to make
additional payments, if required. You have already been furnished a prospectus
which describes the deductions from premiums before amounts are allocated to the
applicable Separate Account. These are:
For applicable state and local taxes, 2.35% of each premium payment.
For applicable federal taxes, 1.25% of each premium payment.
The prospectus also describes other charges which are taken from the Policy
Value, including the charges assessed upon surrenders and decreases in face
amount.
Should you decide to exercise this right of cancellation, complete the enclosed
form and return your contract in accordance with the enclosed instructions,
postmarked on or before the latest date permitted for cancellation as described
above.
<PAGE> 2
INSTRUCTIONS
Please Read Carefully
To the Contract Owner:
If, after reading the enclosed notice, you elect to return your contract for
cancellation you must:
1. Sign and date the bottom of this form.
2. Mail the form together with your contract (if received by you) to
The Manufacturers Life Insurance Company of America
P.O. Box 633
Niagara Square Station
Buffalo, New York, 14202-0633.
3. The postmark on the envelop must be on or before the latest
date permitted for cancellation as described in the attached
letter.
4. Please check the box at the bottom if you have not yet received your
contract when mailing this form.
To: The Manufacturers Life Insurance Company of America
Pursuant to the terms of the notice previously furnished me by The Manufacturers
Life Insurance Company of America, I hereby return the contract numbered below
for cancellation and request a full refund of the premium paid by me for the
contract. I hereby release The Manufacturers Life Insurance Company of America
from any and all claims arising out of or in connection with the sale or
issuance of this policy and I hereby acknowledge that The Manufacturers Life
Insurance Company of America's sole liability with respect to the policy is the
refund to me of the premiums paid for the policy.
---------------------------------
- ------------------------------- ---------------------------------
Date Signature of Contract Owner
---------------------------------
Contract number
[ ] The contract has not yet been received and should it be received will be
returned to The Manufacturers Life Insurance Company of America.
<PAGE> 1
Exhibit 99.8(a)
FORM OF NOTICE OF RIGHT OF SURRENDER
WHILE SALES CHARGE LIMITATION APPLIES
RE: [Policy Number]
----------------------------------------
[Name]
----------------------------------------
Premium Mode:
---------------------------
Modal Planned Premium:$
------------------
This notice is sent to you in accordance with the laws administered by the
United States Securities and Exchange Commission ("SEC"). Please read it
carefully and retain it with your important records.
You have purchased a flexible premium variable life insurance Policy from The
Manufacturers Life Insurance Company of America under which benefits may depend
on the experience of the sub-accounts of the applicable Manufacturers Life of
America's separate account. You have, pursuant to requirements of the SEC and
your Policy, the right to surrender your Policy at any time from the date of
issuance to the expiration of twenty-four (24) months from that date and to
receive, in cash, the Net Cash Surrender Value of the Policy at the time of
surrender as determined in accordance with the provisions of your Policy,
together with any amount to which you may be entitled under the Policy's sales
charge limitation provision.
The deferred sales charge will be limited to (i) the sum of 30% of premiums paid
up to the lesser of one guideline annual premium or the maximum amount of
premiums paid subject to the deferred sales charge plus (ii) 10% of premiums
paid in excess of one guideline annual premium up to the lesser of two guideline
annual premiums or the maximum amount of premiums paid subject to the deferred
sales charge plus (iii) 9% of the premiums paid in excess of two guideline
annual premiums up to the maximum amount of premiums paid subject to the
deferred sales charge. The same sales charge limitation apply to this Policy for
twenty four (24) months from following the date of an increase in face amount
which results in new surrender charges. The sales charge limitation relating to
an increase in face amount only applies to the deferred sales charges
attributable to the increase.
In determining whether or not to exercise your right to surrender while the
sales charge limitation applies, you should consider, among other things, the
projected cost of your Policy, including your ability to make additional
payment, if required. You have already been furnished a prospectus which
describes the deductions from premiums before amounts are allocated to the
applicable separate account for investment. These are:
For applicable state and local taxes, 2.35% of each premium payment.
For applicable federal taxes, 1.25% of each premium payment.
The prospectus also describes other charges which are taken from the Policy
Value, including the charge assessed upon surrenders and decreases in face
amount.
If you should have any questions regarding your right of surrender while the
sales charge limitation applies, please refer to your prospectus. Should you
decide to exercise this right, complete the enclosed form and return your Policy
in accordance with the enclosed instructions, postmarked on or before the latest
date permitted for cancellation as described above.
<PAGE> 2
INSTRUCTIONS
Please Read Carefully
To the Policyowner:
If, after reading the enclosed notice, you elect to return your Policy for
surrender while the sales charge limitation applies you must:
1. Sign and date the bottom of this form.
2. Mail the form together with your policy (if received by you) to
The Manufacturers Life Insurance Company of America
P.O. Box 633
Niagara Square Station
Buffalo, New York, 14202-0633.
3. The postmark on the envelop must be on or before the latest
date permitted for surrender while the sales charge limitation
applies, as described in the attached letter.
4. Please check the box at the bottom if you have not yet received your
policy when mailing this form.
To: The Manufacturers Life Insurance Company of America
Pursuant to the terms of the notice previously furnished me by The Manufacturers
Life Insurance Company of America I hereby return the Policy numbered below for
surrender and request the payment to me in cash of the Net Cash Surrender Value
next computed after my request for surrender is received plus any amount to
which I am entitled under the Policy's surrender charge limitation provisions.
---------------------------------------
- -------------------------------- ---------------------------------------
Date Signature of Policyowner
---------------------------------------
Policy number
[ ] The policy has not yet been received and should it be received will be
returned to The Manufacturers Life Insurance Company of America.
<PAGE> 1
Exhibit 99.8(b)
FORM OF NOTICE OF CANCELLATION RIGHT
(FACE AMOUNT INCREASE)
RE: [Policy Number]
-------------------------------------
[Name]
-------------------------------------
Premium Mode:
------------------------
Modal Planned Premium:$
---------------
This notice is sent to you in accordance with the laws administered by the
United States Securities and Exchange Commission ("SEC"). Please read it
carefully and retain it with your important records.
You have recently increased the face amount of the flexible premium variable
life insurance policy you purchased from The Manufacturers Life Insurance
Company of America under which benefits may depend on the experience of the
sub-accounts of the applicable Manufacturers Life of America's separate account.
You have, pursuant to requirements of the SEC and your Policy, the right to
cancel the increase at any time within 30 days from delivery of the Policy
Update Page or 45 days from the date of execution of the application for
increase, whichever is later, but in any event you have until 30 days from the
date of delivery or mailing (as determined by its postmark) of this notice to
return the Policy Update page for cancellation of the face amount increase. If
you choose to cancel the increase, the Policy Value and the surrender charges
will be recalculated to the amounts they would have been had the increase not
taken place.
In determining whether or not to exercise your right of surrender and refund,
you should consider, among other things, the projected cost of your Policy
including your ability to make additional payment, if required. You have already
been furnished a prospectus which describes the deductions from premiums before
amounts are allocated to the applicable separate account for investment. These
are:
For applicable state and local taxes, 2.35% of each premium payment.
For applicable federal taxes, 1.25% of each premium payment.
The prospectus also describes other charges which are taken from the Policy
Value, including the charge assessed upon surrenders and decreases in face
amount.
If you should have any questions regarding your right to cancel the face amount
increase, please refer to your prospectus. Should you decide to exercise this
right, complete the enclosed form and return the Policy Update Page in
accordance with the enclosed instructions, postmarked on or before the latest
date permitted for cancellation as described above.
<PAGE> 2
INSTRUCTIONS
Please Read Carefully
To the Policyowner:
If, after reading the enclosed notice, you elect to cancel the face amount
increase you must:
1. Sign and date the bottom of this form.
2. Mail the form together with your Policy Update Page
(if received by you) to
The Manufacturers Life Insurance Company of America
P.O. Box 633
Niagara Square Station
Buffalo, New York, 14202-0633.
3. The postmark on the envelop must be on or before the latest
date permitted for cancellation as described in the attached
letter.
4. Please check the box at the bottom if you have not yet received your
Policy Update Page when mailing this form.
To: The Manufacturers Life Insurance Company of America
Pursuant to the terms of the notice previously furnished me by The Manufacturers
Life Insurance Company of America I hereby return the Policy Update Page for the
Policy numbered below for cancellation of the face amount increase. I understand
that the Policy Value and surrender charges will be recalculated to the amounts
they would have been had the increase not taken place. I hereby release The
Manufacturers Life Insurance Company of America from any and all claims arising
out of or in connection with the sale or issuance of the face amount increase of
the Policy and I hereby acknowledge that The Manufacturers Life Insurance
Company of America has no liability with respect to the face amount increase of
the policy except the recalculation of Policy Value and surrender charges as
described above.
-----------------------------------
- ------------------------------ -----------------------------------
Date Signature of Policyowner
-----------------------------------
Policy number
[ ] The policy has not yet been received and should it be received will be
returned to The Manufacturers Life Insurance Company of America.
<PAGE> 1
Exhibit 99.8(c)
FORM OF NOTICE OF RIGHT OF SURRENDER
WHILE SALES CHARGE LIMITATION APPLIES
RE: [Policy Number]
--------------------------------------
[Name]
--------------------------------------
Premium Mode:
--------------------------
Modal Planned Premium:$
----------------
This notice is sent to you in accordance with the laws administered by the
United States Securities and Exchange Commission ("SEC"). Please read it
carefully and retain it with your important records.
Your Policy has gone into default. If you fail to make the required payment
within the grace period (61 days), the Policy will lapse and your Net Cash
Surrender Value as of the date of default less the monthly deduction then due
will be paid to you together with any amount to which you may be entitled under
the Policy's sales charge limitation provisions.
The deferred sales charge will be limited to (i) the sum of 30% of premiums paid
up to the lesser of one guideline annual premium or the maximum amount of
premiums paid subject to the deferred sales charge plus (ii) 10% of premiums
paid in excess of one guideline annual premium up to the lesser of two guideline
annual premiums or the maximum amount of premiums paid subject to the deferred
sales charge plus (iii) 9% of the premiums paid in excess of two guideline
annual premiums up to the maximum amount of premiums paid subject to the
deferred sales charge.
You also have, pursuant to requirements of the SEC and your Policy, the right to
surrender your Policy at any time from the date of issuance to the expiration of
twenty-four (24) months from that date and to receive, in cash, the Net Cash
Surrender Value of the Policy at the time of surrender, and any amount to which
you are entitled under the sales charge limitation provisions described above.
The same rights apply to this Policy for twenty-four months following the date
of an increase in face amount which results in new surrender charges. The sales
charge limitation relating to an increase in face amount only applies to the
deferred sales charges attributable to the increase.
In determining whether or not to exercise your right to surrender while the
sales charge limitation applies, you should consider, among other things, the
projected cost of your Policy including your ability to make additional
payments, if required. You have already been furnished a prospectus which
describes the deductions from premiums before amounts are allocated to the
applicable separate account for investment. These are:
For applicable state and local taxes, 2.35% of each premium payment.
For applicable federal taxes, 1.25% of each premium payment.
For sales charges, 5.5% of each premium payment in each Policy Year, up
to a maximum of the then current Target Premium for the first ten
Policy Years following the Policy Date or following an increase in face
amount.
The prospectus also describes other charges which are taken from the Policy
Value, including the charge assessed upon surrenders and decreases in face
amount.
If you should have any questions regarding your right of surrender while the
sales charge limitation applies, please refer to your prospectus. Should you
decide to exercise this right, complete the enclosed form and return your Policy
in accordance with the enclosed instructions, postmarked on or before the latest
date permitted for cancellation as described above.
<PAGE> 2
INSTRUCTIONS
Please Read Carefully
To the Policyowner:
If, after reading the enclosed notice, you elect to return your Policy for
surrender while the sales charge limitation applies you must:
1. Sign and date the bottom of this form.
2. Mail the form together with your Policy (if received by you) to
The Manufacturers Life Insurance Company of America
P.O. Box 633
Niagara Square Station
Buffalo, New York, 14202-0633.
3. The postmark on the envelop must be on or before the latest
date permitted for surrender while the sales charge limitation
applies, as described in the attached letter.
4. Please check the box at the bottom if you have not yet received your
Policy when mailing this form.
To: The Manufacturers Life Insurance Company of America
Pursuant to the terms of the notice previously me by The Manufacturers Life
Insurance Company of America I hereby returned the Policy numbered below for
surrender and request the to me in cash of the Net Cash Surrender Value next
computed after my request for surrender is received plus any amount to which I
am entitled under the Policy's sales charge limitation provisions.
----------------------------------
- -------------------------- ----------------------------------
Date Signature of Policyowner
----------------------------------
Policy number
[ ] The policy has not yet been received and should it be received will be
returned to The Manufacturers Life Insurance Company of America.
