As Filed with the Securities and Exchange Commission on November 25, 1997
Registration No.333-_____________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUST
REGISTERED ON FORM N-8B-2
LIFE OF VIRGINIA SEPARATE ACCOUNT II
(Exact name of trust)
THE LIFE INSURANCE COMPANY OF VIRGINIA
(Name of depositor)
6610 West Broad Street
Richmond, Virginia 23230
(Complete address of depositor's principal executive offices)
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Name and complete address of agent for service: Copy to:
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J. Neil McMurdie, Esq. Stephen E. Roth, Esq.
The Life Insurance Company of Virginia Sutherland, Asbill & Brennan, L.L.P.
6610 West Broad Street 1275 Pennsylvania Avenue, N.W.
Richmond, Virginia 23230 Washington, DC 20004-2404
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Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement
Securities Being Offered: Flexible Premium Variable Life Insurance Policies
The Registrant hereby amends this Registration Statement on such dates as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT II
THE LIFE INSURANCE COMPANY OF VIRGINIA
Cross Reference to Items Required by form N-8B-2
N-8B-2 ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
1 Cover Page
2 Cover Page
3 Not applicable
4 Sale of the Policies
5 Separate Account II
6 Separate Account II
7 Not applicable
8 Separate Account II
9 Litigation
10 Summary and Diagram of the Policy; Premiums;
Allocation Options; Death Benefits; Other Policy
Benefits and Provisions; Surrender Benefits; Loan
Benefits; Separate Account II; Voting of Fund
Shares
11 Separate Account II; Allocation Options
12 Separate Account II; Allocation Options
13 Charges and Deductions
14 Premiums
15 Premiums; Allocation Options
16 Allocation Options
17 Premiums; Surrender Benefits; Loan Benefits;
Requesting Payments and Telephone Transactions
18 Separate Account II; Allocation Options; Other
Policy Benefits and Provisions
19 Reports to Policy Owners
20 Separate Account II
21 Loan Benefits
22 Not applicable
23 Life of Virginia
24 Not applicable
25 Life of Virginia
26 Charges and Deductions
27 Life of Virginia
28 Life of Virginia
29 Life of Virginia
30 Not applicable
31 Not applicable
32 Not applicable
33 Not applicable
34 Not applicable
35 Life of Virginia
36 Not applicable
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N-8B-2 ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
37 Not applicable
38 Sale of the Policies
39 Sale of the Policies
40 Not Applicable
41 Sale of the Policies
42 Not applicable
43 Not applicable
44 How Your Policy Account Values Vary
45 Not applicable
46 How Your Policy Account Values Vary
47 Allocation Options
48 Life of Virginia; Separate Account II; Allocation
Options
49 Not applicable
50 Separate Account II; Allocation Options
51 Premiums; Allocation Options; Charges and
Deductions; Surrender Benefits
52 Separate Account II; Allocation Options; Other
Policy Benefits and Provisions
53 Tax Considerations
54 Not applicable
55 Hypothetical Illustrations
56 Not applicable
57 Not applicable
58 Not applicable
59 Financial Statements
<PAGE>
PART I
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PROSPECTUS DATED _____________
Flexible Premium Variable Life Insurance Policy
Form 1250 CR 10/7
LIFE OF VIRGINIA SEPARATE ACCOUNT II
The Life Insurance Company of Virginia
6610 West Broad Street
Richmond, Virginia 23230
Telephone (800) 352-9910
This prospectus describes a flexible premium variable life insurance
policy offered by The Life Insurance Company of Virginia. The Policy is designed
to provide life insurance protection on the Insured named in the Policy and at
the same time provide flexibility to vary the amount and timing of premiums and
to change the amount of death benefit payable under the Policy. This flexibility
allows you to provide for changing insurance needs under a single insurance
policy.
You may allocate Net Premiums and Account Value to one or more
Investment Subdivisions of the Life of Virginia Separate Account II, within
certain limits. Each Investment Subdivision invests solely in a corresponding
portfolio of the available Funds. Currently, there are nine Funds available
under the Policy: the Janus Aspen Series, the Variable Insurance Products Fund,
the Variable Insurance Products Fund II, the Variable Insurance Products Fund
III, the GE Investments Funds, Inc., the Oppenheimer Variable Account Funds, the
Federated Insurance Series, The Alger American Fund, and the PBHG Insurance
Series Fund, Inc.
You can elect one of two Death Benefit Options under the Policy. Under
Option A, the Life Insurance Proceeds will equal the greater of (1) the
Specified Amount plus the Policy's Account Value, or (2) the Account Value
multiplied by the applicable corridor percentage. Under Option B, the Life
Insurance Proceeds will equal the greater of (1) the Specified Amount, or (2)
the Account Value multiplied by the applicable corridor percentage. Under both
options, the Specified Amount and Account Value are determined on the date of
the Insured's death. We guarantee that the Life Insurance Proceeds will never be
less than the Specified Amount so long as the Policy is in force.
The Policy provides for a Surrender Value. Because this value is based
on the performance of the Funds, to the extent of allocations to Separate
Account II, there is no guaranteed Surrender Value or guaranteed minimum
Surrender Value. On any given day, the Surrender Value could be more or less
than the premiums paid. If the Surrender Value is insufficient to cover the
charges due under the Policy, the Policy will lapse without value. However, the
Policy will not lapse during the Continuation Period, regardless of the
sufficiency of the Surrender Value, so long as the Net Total Premium is at least
equal to the Continuation Amount.
The Policy also provides for Policy loans and permits partial
surrenders within limits. In addition, you can elect dollar-cost averaging or
portfolio rebalancing programs.
<PAGE>
THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED
FOR FUTURE REFERENCE. PROSPECTUSES FOR THE FUNDS MUST
ACCOMPANY THIS PROSPECTUS AND SHOULD BE READ IN
CONJUNCTION WITH THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INTERESTS IN THE POLICIES AND FUNDS ARE NOT DEPOSITS WITH,
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK
OR BANK AFFILIATE, AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
<PAGE>
TABLE OF CONTENTS
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SUMMARY AND DIAGRAM OF 5 HYPOTHETICAL ILLUSTRATIONS 28
THE POLICY REQUESTING PAYMENTS AND 33
Fund Charges 8 TELEPHONE TRANSACTIONS
DEFINITIONS 10 Requesting Payments 33
PREMIUMS 12 Telephone Transactions 33
Applying for a Policy 12 OTHER POLICY BENEFITS AND 33
Free Look Right to Cancel 12 PROVISIONS
Premiums 12 Exchange Privilege 33
Periodic Premium Plan 12 Optional Payment Plans 33
Premium to Prevent Lapse 13 Other Policy Provisions 34
Minimum Premium Payment 13 Owner 35
Death Benefit Guarantee 13 Beneficiary 35
Crediting Premium to the Policy 13 Reinstatement 35
ALLOCATION OPTIONS 14 Trustee 35
Net Premium Allocations 14 Other Changes 35
Investment Subdivisions 14 Reports 35
Transfers 18 Change of Owner 35
Dollar-Cost Averaging 19 Supplemental Benefits 36
Portfolio Rebalancing 19 Using the Policy as Collateral 36
Powers of Attorney 19 Reinsurance 36
CHARGES AND DEDUCTIONS 20 LIFE OF VIRGINIA 36
Premium Charge 20 The Life Insurance Company of Virginia 36
Mortality and Expense Risk 20 State Regulation 36
Charge Executive Officers and Directors 36
Monthly Deduction 20 Separate Account II 38
Surrender Charge 20 Changes to Separate Account II 38
Cost of Insurance 21 Voting of Fund Shares 38
Other Charges 21 TAX CONSIDERATIONS 39
Reduction of Charges for Group Sales 21 Tax Status of the Policy 39
HOW YOUR ACCOUNT VALUE VARIES 22 Tax Treatment of Policy Proceeds 40
Account Value 22 Tax Treatment of Policy Loans 41
Surrender Value 22 and Other Distributions
Investment Subdivision Values 22 Taxation of Life of Virginia 42
DEATH BENEFITS 23 Income Tax Withholding 42
Amount of Death Benefit Payable 23 Other Considerations 42
Death Benefit Options 23 LEGAL DEVELOPMENTS - 42
Changing the Death Benefit Option 24 REGARDING EMPLOYMENT
Accelerated Benefit Rider 24 RELATED BENEFIT PLANS
Effect of Partial Surrenders on 25 ADDITIONAL INFORMATION 42
Life Insurance Proceeds Sale of Policies 42
Change in Existing Coverage 25 Other Information 43
Changing the Beneficiary 26 Litigation 43
LOAN BENEFITS 26 Legal Matters 43
Interest 26 Experts 43
Repayment of Policy Debt 26 Change in Auditors 43
Effect of Policy Loan 26 Financial Statements 44
SURRENDER BENEFITS 27
Full Surrender 27
Partial Surrender 27
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<PAGE>
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not be lawfully made. No person is authorized to make any
representations in connection with this offering other than those
representations contained in this prospectus and the Fund prospectuses and
Statements of Additional Information.
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SUMMARY AND DIAGRAM OF THE POLICY
The following summary of prospectus information and diagram of the important
features of the Policy should be read in conjunction with the more detailed
information appearing elsewhere in this prospectus. Unless otherwise indicated,
the description of the Policy in this prospectus assumes that the Policy is in
force and there is no Policy Debt. Definitions of certain terms used in this
prospectus may be found by referring to the DEFINITIONS section immediately
following the diagram.
Purpose of the Policy. The Policy is designed to provide insurance
benefits with a long-term investment element. The Policy should be considered in
conjunction with your other insurance. It may not be advantageous to replace
existing insurance with the Policy.
Comparison with Universal Life Insurance. The Policy is similar in many
ways to universal life insurance. As with universal life insurance: the Owner
pays premiums for insurance coverage on the Insured; the Policy provides for the
accumulation of Surrender Value that is payable if the Policy is surrendered
during the Insured's lifetime; and the Surrender Value may be substantially
lower than the premiums paid. However, the Policy differs from universal life
insurance in that the Surrender Value may decrease if the investment performance
of the Investment Subdivisions to which Account Value is allocated is
sufficiently adverse. If the Surrender Value becomes insufficient to cover
charges when due and the Continuation Period is not in effect, the Policy will
lapse without value after a grace period. See "Premium to Prevent Lapse."
Tax Considerations. We intend for the Policy to satisfy the definition
of a life insurance contract under section 7702 of the Internal Revenue Code of
1986, as amended (the "Code"). Under certain circumstances, a Policy could be
treated as a "modified endowment contract." We will monitor Policies and will
attempt to notify you on a timely basis if your Policy is in jeopardy of
becoming a modified endowment contract. For further discussion of the tax status
of a Policy and the tax consequences of being treated as a life insurance
contract or a modified endowment contract, see the "TAX CONSIDERATIONS" section
below.
Free Look Right to Cancel. For a limited time after the Policy is
issued, you have the right to cancel your Policy and receive the sum of all
charges deducted from premiums paid plus Net Premiums adjusted by investment
gains and losses or, if required by state law, a full refund of all premiums
paid. See "Free Look Right to Cancel" and "Net Premium Allocations."
Other Policies. We offer other variable life insurance policies which
also invest in the same portfolios of the Funds. These Policies may have
different charges that could affect the value of the Investment Subdivisions and
may offer different benefits more suitable to your needs. To obtain more
information about these policies, contact your agent, or call (800) 352-9910.
Inquiries. If you have any questions, you may write or call our Home
Office at 6610 West Broad Street, Richmond, Virginia 23230, (800) 352-9910.
<PAGE>
DIAGRAM OF POLICY
PREMIUMS
o You select a premium payment plan. You are not required to pay premiums
according to the plan, but may vary the frequency and amount, within
limits, and can skip planned premiums. See "Periodic Premium Plan."
o Premium amounts depend on the Insured's Age, sex (where applicable), risk
class, Specified Amount selected, and any supplemental benefit riders. See
"Premiums."
o Unscheduled premium payments may be made, within limits. See "Premiums."
o Under certain circumstances, extra premiums may be required to prevent
lapse. See "Premium to Prevent Lapse."
DEDUCTION FROM PREMIUMS
o Currently, a 8% premium charge (10% maximum) is deducted from each premium
before allocation to an Investment Subdivision resulting in a Net Premium.
A premium charge will not be assessed against the policy loan portion of a
premium received from the rollover of a life insurance policy. See "Premium
Charge."
ALLOCATION OF NET PREMIUMS
o You direct the allocation of Net Premiums among up to seven of the
Investment Subdivisions of Separate Account II. For states that require the
refund of premiums during the free look period, we will allocate Net
Premiums to the Money Market Investment Subdivision for 15 days, then to
your designated Investment Subdivisions. See "Net Premium Allocations" for
rules and limits.
o The Investment Subdivisions invest in corresponding portfolios of the
following Funds:
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Janus Aspen Series GE Investments Funds, Inc. (Continued)
Growth Portfolio Total Return Fund
Aggressive Growth Portfolio International Equity Fund
International Growth Portfolio Real Estate Securities Fund
Worldwide Growth Portfolio Global Income Fund
Balanced Portfolio Value Equity Fund
Flexible Income Portfolio Income Fund
Capital Appreciation Portfolio Oppenheimer Variable Account Funds
Variable Insurance Products Fund Oppenheimer Bond Fund
Equity-Income Portfolio Oppenheimer Capital Appreciation Fund
Overseas Portfolio Oppenheimer Growth Fund
Growth Portfolio Oppenheimer High Income Fund
Variable Insurance Products Fund II Oppenheimer Multiple Strategies Fund
Asset Manager Portfolio Federated Insurance Series
Contrafund Portfolio Federated American Leaders Fund II
Variable Insurance Products Fund III Federated Utility Fund II
Growth & Income Portfolio Federated High Income Bond Fund II
Growth Opportunities Portfolio The Alger American Fund
GE Investments Funds, Inc. Alger American Growth Portfolio
S&P 500 Index Fund Alger American Small Capitalization Portfolio
Money Market Fund PBHG Insurance Series Fund, Inc.
PBHG Growth II Portfolio
PBHG Large Cap Growth Portfolio
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See "Investment Subdivisions Options."
<PAGE>
DEDUCTIONS FROM ASSETS
o Management fees and other expenses are deducted from the assets of each
Fund. See "Fund Charges."
o A daily mortality and expense risk charge at a current effective annual
rate of 0.70% (maximum effective annual rate of 0.90%) is deducted from
assets in the Investment Subdivisions. See "Mortality and Expense Risk
Charge."
o A monthly deduction is made each month from the Account Value for (1) the
cost of insurance, (2) a current monthly policy charge of $15 in the first
Policy Year ($15 per month maximum in the first Policy Year) and $6 per
month thereafter ($12 per month maximum after the first Policy Year), and
(3) supplemental benefit charges. The monthly deduction will also include
the increase charge for the first month following an increase in the
Specified Amount. See "Monthly Deduction."
ACCOUNT VALUE
o Account Value is the total amount under the Policy in each Investment
Subdivision and the General Account. See "Account Value" and "Investment
Subdivision Account Value."
o Account Value serves as the starting point for calculating certain values
under a Policy, such as the Surrender Value and the Life Insurance
Proceeds. Account Value varies from day to day to reflect investment
experience of the Investment Subdivisions, charges deducted and other
Policy transactions (such as Policy loans, transfers and partial
surrenders.) See "HOW YOUR ACCOUNT VALUE VARIES."
o Account Value can be transferred among the Investment Subdivisions. A $10
transfer processing fee applies to each transfer made after the first
transfer in a Policy Month. See "Transfers" for rules and limits. Policy
loans reduce the amount available for allocations and transfers.
o There is no minimum guaranteed Account Value. During the Continuation
Period, the Policy will lapse if the Surrender Value is insufficient to
cover the monthly deduction and the Net Total Premium is less than the
Continuation Amount. After the Continuation Period, the Policy will lapse
if the Surrender Value is insufficient to cover the monthly deduction. See
"Premium to Prevent Lapse."
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CASH BENEFITS DEATH BENEFITS
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o Policy loans are available for amounts up to o The minimum Specified Amount available is
90% of Account Value less any Surrender $100,000.
Charges, less any Policy Debt. See "LOAN o A death benefit is available under one of two
BENEFITS" for discussion of interest on Policy options: Option A (greater of Specified
loans and additional rules and limits. See Amount plus Account Value, or a specified
also "TAX CONSIDERATIONS." percentage of Account Value); or Option B
o Partial surrenders are available under the (greater of Specified Amount, or a specified
Policy. The minimum partial surrender amount percentage of Account Value). See "DEATH
is $500, and a fee equal to the lesser of $25 BENEFITS."
or 2% of the amount of the partial surrender o A death benefit is payable as a lump sum or
will apply to each Partial Surrender. See under a variety of payment options.
"Partial Surrender" for rules and limits. o The Specified Amount and the Death Benefit
o The Policy can be surrendered at any time for Option may be changed. See "Change in
its Surrender Value (Account Value minus Existing Coverage" and "Changing the Death
Policy Debt and minus any applicable surrender Benefit Option" for rules and limits.
charge). A surrender charge will apply during o During the Continuation Period, the death
the first 15 Policy Years. See "Full benefit guarantee keeps the Policy in force
Surrender" and "Surrender Charge." regardless of the sufficiency of Surrender
o A variety of payment options are available. Value so long as Net Total Premium is at
See "Requesting Payments." least equal to the Continuation Amount. See
"Death Benefit Guarantee."
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<PAGE>
Fund Charges. The fees and expenses for each of the Funds (as a
percentage of net assets) for the most recent fiscal year are set forth in the
following table. For more information on these fees and expenses, see the
prospectuses for the Funds which accompany this prospectus.
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Management
Fees
(after fee Other Expenses
waiver as (after reimbursement- Total Annual
Fund applicable) as applicable) Expenses
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Janus Aspen Series:
Growth Portfolio 0.65% 0.04% 0.69%
Aggressive Growth Portfolio 0.72% 0.04% 0.76%
International Growth Portfolio 0.05% 1.21% 1.26%
Worldwide Growth Portfolio 0.66% 0.14% 0.80%
Balanced Portfolio 0.79% 0.15% 0.94%
Flexible Income Portfolio 0.65% 0.19% 0.84%
Capital Appreciation Portfolio * 0.75% 0.30% 1.05%
Variable Insurance Products Fund:
Equity-Income Portfolio 0.51% 0.07% 0.58%
Overseas Portfolio 0.76% 0.17% 0.93%
Growth Portfolio 0.61% 0.08% 0.69%
Variable Insurance Products Fund II:
Asset Manager Portfolio 0.64% 0.10% 0.74%
Contrafund Portfolio 0.61% 0.13% 0.74%
Variable Insurance Products Fund III:
Growth and Income Portfolio 0.50% 0.20% 0.70%
Growth Opportunities Portfolio 0.61% 0.16% 0.77%
GE Investments Funds, Inc.:
S&P 500 Index Fund 0.35% 0.13% 0.48%
Money Market Fund 0.10% 0.05% 0.15%
Total Return Fund 0.50% 0.10% 0.60%
International Equity Fund 1.00% 0.50% 1.50%
Real Estate Securities Fund 0.85% 0.22% 1.07%
Global Income Fund * 0.60% 0.30% 0.90%
Value Equity Fund * 0.65% 0.26% 0.91%
Income Fund* 0.50% 0.13% 0.63%
Oppenheimer Variable Account Funds:
Oppenheimer Bond Fund 0.74% 0.04% 0.78%
Oppenheimer Capital Appreciation Fund 0.72% 0.03% 0.75%
Oppenheimer Growth Fund 0.75% 0.04% 0.79%
Oppenheimer High Income Fund 0.75% 0.06% 0.81%
Oppenheimer Multiple Strategies Fund 0.73% 0.04% 0.77%
Federated Insurance Series:
Federated American Leaders Fund II 0.53% 0.32% 0.85%
Federated Utility Fund II 0.24% 0.61% 0.85%
Federated High Income Bond Fund II 0.01% 0.79% 0.80%
The Alger American Fund:
Alger American Growth Portfolio 0.75% 0.04% 0.79%
Alger American Small Capitalization Portfolio 0.85% 0.03% 0.88%
PBHG Insurance Series Fund, Inc.:
Growth II Portfolio * 0.85% 0.30% 1.15%
Large Cap Growth Portfolio * 0.72% 0.38% 1.10%
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*The Global Income Fund, Value Equity Fund and Income Fund of the GE Investments
Funds, Inc., the Capital Appreciation Portfolio of the Janus Aspen Series, and
the Growth II Portfolio and Large Cap Growth Portfolio of the PBHG Insurance
Series Fund, Inc. had not yet commenced operations as of December 31, 1996.
Therefore, the fees and expenses for these portfolios are estimates.
<PAGE>
The purpose of this table is to assist the Owner in understanding the various
costs and expenses that an Owner will bear, directly and indirectly. Except as
noted below, the Table reflects charges and expenses of Account II as well as
the underlying Funds for the most recent fiscal year. For more information on
the charges described in this table, see Charges and Deductions and the
Prospectuses for the underlying Funds which accompany this Prospectus. In
addition to the expenses listed above, premium taxes varying from 0 to 3.5% may
be applicable.
The expense information regarding the Funds was provided by those Funds. The
Janus Aspen Series, Variable Insurance Products Fund, Variable Insurance
Products Fund II, Variable Insurance Products Fund III, Oppenheimer Variable
Account Funds, Federated Insurance Series, The Alger American Fund, and PBHG
Insurance Series Fund, Inc. and their investment advisers are not affiliated
with Life of Virginia. While Life of Virginia has no reason to doubt the
accuracy of these figures provided by these non-affiliated Funds, Life of
Virginia has not independently verified such information. The annual expenses
listed for the Funds are net of certain reimbursements by the Funds' investment
advisers, as described below. Life of Virginia cannot guarantee that the
reimbursements will continue.
Absent certain reimbursements that are reflected in the table, the total
annual expenses of the portfolios of the Janus Aspen Series during 1996 would
have been .83% for Growth Portfolio, .83% for Aggressive Growth Portfolio, 0.91%
for Worldwide Growth Portfolio, 2.21% for International Growth Portfolio, and
1.07% for Balanced Portfolio. The Other Expenses listed for the Capital
Appreciation Portfolio of Janus Aspen Series are estimates provided by the Fund
because the portfolio had not yet commenced operations as of December 31, 1996.
The total expenses absent fee waivers are estimated to be 1.30%.
Absent certain reimbursements and reductions that are reflected in the table,
the total annual expenses of the portfolios of the Variable Insurance Products
Fund during 1996 would have been 0.56% for VIP Equity-Income Portfolio, 0.67%
for VIP Growth Portfolio and O.92% for VIP Overseas Portfolio.
Absent certain reimbursements and reductions that are reflected in the table,
the total annual expenses of the portfolios of the Variable Insurance Products
Fund II during 1996 would have been 0.73 for VIP Asset Manager Portfolio and
0.71% for VIP Contrafund Portfolio.
Absent certain reimbursements and reductions that are reflected in the table,
the total annual expenses of the portfolios of the Variable Insurance Products
Fund III during 1996 would have been 0.77% for VIP Growth Opportunities
Portfolio.
GE Investment Management Incorporated currently serves as investment adviser
to GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.).
Prior to May 1, 1997, Aon Advisors, Inc. served as investment adviser to this
Fund and had agreed to reimburse the Fund for certain expenses of each of the
Fund's portfolios. Absent certain fee waivers or reimbursements, the total
annual expenses of the portfolios of GE Investments Funds, Inc. during 1996
would have been 0.48% for S&P 500 Index Fund, 0.55% for Money Market Fund, 0.60%
for Total Return Fund, 1.56% for International Equity Fund, and 1.07% for Real
Estate Securities Fund,. The Other Expenses for the Global Income Fund, the
Value Equity Fund and the Income Fund are estimates by the Fund since these
portfolios were recently organized and have no operating history, and actual
expenses may be greater or less than those shown.
Absent certain fee waivers or reimbursements, the total annual expenses of the
portfolios of the Federated Insurance Series during 1996 would have been 1.36%
for Federated Utility Fund II, 1.39% for Federated High Income Bond Fund II, and
1.07% for Federated American Leaders Fund II.
The Other Expenses listed for the Growth II Portfolio and Large Cap Growth
Portfolio of PBHG Insurance Series Fund, Inc. are estimates provided by the Fund
because the portfolios were recently organized and have a brief operating
history. Actual expenses may be greater or less than those shown.
<PAGE>
DEFINITIONS
Account Value - Account Value is the total amount under the Policy in each
Investment Subdivision and the General Account.
Age - The age on the Insured's birthday nearest the Policy Date or a Policy
Anniversary.
Attained Age - The Insured's Age on the Policy Date plus the number of full
years since the Policy Date.
Beneficiary - The person or entity designated by you to receive the death
benefit payable at the death of the Insured.
Continuation Amount - A cumulative amount set forth on the Policy data pages for
each month of the Continuation Period representing the minimum Net Total Premium
required to keep the Policy in force during the Continuation Period.
Continuation Period - The number of Policy years during which the Policy will
not lapse if the Net Total Premium is at least equal to the Continuation Amount
for the number of Policy Months that the Policy has been in force. The
Continuation Period varies by issue Age as follows: 25 years for Ages 0 - 45; 20
years for Ages 46 - 55; 15 years for Ages 56 - 70; and 10 years for Ages 71 and
older.
Eligible Proceeds - Total Proceeds subject to a maximum of $250,000 from of all
our policies or certificates covering the Insured.
Fund - Any open-end management investment company, or unit investment trust, in
which Separate Account II invests.
General Account - Assets of Life of Virginia other than those allocated to
Separate Account II or any of our other separate accounts.
Home Office - Life of Virginia's offices at 6610 West Broad Street, Richmond,
Virginia 23230, 1-804-281-6000.
Insured - The person upon whose life the Policy is issued.
Investment Subdivision - A subdivision of Separate Account II, the assets of
which are invested exclusively in a corresponding Fund.
Life Insurance Proceeds - The amount payable upon the death of the Insured. The
Life Insurance Proceeds will be reduced by outstanding Policy Debt and past due
charges, if any, to determine the death benefit payable under the Policy.
Life of Virginia - The Life Insurance Company of Virginia. "We," "us," or "our"
refers to Life of Virginia.
Monthly Anniversary Day - The same day in each month as the Policy Date.
Net Premium - The portion of each premium paid allocated to one or more
Investment Subdivision, and used in determining the Account Value.
Net Premium Factor - The factor used in determining the Net Premium which
represents a deduction from each premium paid.
Net Total Premium - On any date, Net Total Premium equals the total of all
premiums paid to that date less (a) divided by (b), where:
(a) is any outstanding Policy Debt, plus the sum of any partial
surrenders to date; and
(b) is the Net Premium Factor.
Optional Payment Plan - A plan under which Life Insurance Proceeds or Surrender
Value proceeds can be used to provide a series of periodic payments to you or a
Beneficiary.
Owner - The Owner of the Policy. "You" or "your" refers to the Owner.
Contingent Owners may also be named.
Planned Periodic Premium - A level premium amount scheduled for payment at fixed
intervals over a specified period of time.
Policy - The Policy with any attached application(s), and any riders and
endorsements.
Policy Date - The date as of which the Policy is issued and as of which it
becomes effective. Policy Years and Anniversaries are measured from the Policy
Date.
Policy Debt - The amount of outstanding loans plus accrued interest.
Policy Month - A one-month period beginning on a Monthly Anniversary Day and
ending on the day immediately preceding the next Monthly Anniversary Day.
Separate Account II - The segregated asset account of Life of Virginia to which
Net Premiums are allocated.
Specified Amount - An amount used in determining the insurance coverage on an
insured life.
Surrender Value - The amount payable to you upon surrender of the Policy.
Total Proceeds - Life Insurance Proceeds plus any additional term insurance on a
terminally ill Insured added to the Policy by rider, not including the
Children's Insurance Rider. Total proceeds will not include any proceeds payable
under the Accidental Death Benefit Rider or any proceeds payable under the
Policy or any additional term insurance rider on the Insured that would expire
within 24 months of the date we receive proof of terminal illness. No adjustment
to the Total Proceeds will be made for any Policy Debt, but adjustments will be
made for any misstatement of age or sex of a terminally ill Insured.
Unit Value - Unit of measure used to calculate the Account Value for each
Investment Subdivision.
Valuation Day - For each Investment Subdivision, each day on which the New York
Stock Exchange is open for business except for days that the Investment
Subdivision's corresponding Fund does not value its shares.
Valuation Period - The period that starts at the close of regular trading on the
New York Stock Exchange on any Valuation Day and ends at the close of regular
trading on the next succeeding Valuation Day.
<PAGE>
PREMIUMS
Applying for a Policy. To purchase a Policy, you must complete an
application and submit it to us at our Home Office at 6610 West Broad Street,
Richmond, VA 23230. You also must pay an initial premium of a sufficient amount.
See "Premiums," below. Your initial premium can be submitted with your
application or at a later date. Coverage becomes effective as of the Policy
Date.
Generally, we will issue a Policy covering an Insured up to Age 85 if
evidence of insurability satisfies our underwriting rules. Required evidence of
insurability may include, among other things, a medical examination of the
Insured. We may, in our sole discretion, issue a Policy covering an Insured over
Age 85. We reserve the right not to accept an application for any lawful reason.
Free Look Right to Cancel. During your "free-look" period, you may
cancel your Policy and receive a refund of all charges deducted from premiums
paid, plus the Net Premiums allocated to Separate Account II adjusted for
investment gains and losses. Some states require the refund of all premiums
paid. Generally, the free look period expires 10 days after you receive your
Policy. Some states may require a longer period. If you decide to cancel the
Policy, you must return it by mail or other delivery to us or to our authorized
agent. Immediately after mailing or delivery, the Policy will be deemed void
from the beginning.
Premiums. The premium amounts sufficient to fund a Policy depend on a
number of factors, such as the Age, sex (where appropriate) and risk class of
the proposed Insured, the desired Specified Amount, any supplemental benefits,
and investment performance of the Investment Subdivisions. After the initial
premium is paid, unscheduled premium payments may be paid in any amount and at
any time. We reserve the right, however, to limit the number and amount of any
unscheduled premium payment. Additionally, total premiums paid may not exceed
guideline premium limitations for life insurance set forth in the Code. We
reserve the right to reject any premium, or portion thereof, that would result
in the Policy being disqualified as life insurance under the Code and will
refund any rejected premium along with any interest accrued thereon. In
addition, we will monitor Policies and will attempt to notify you on a timely
basis if your Policy is in jeopardy of becoming a modified endowment contract
under the Code. See "TAX CONSIDERATIONS."
Periodic Premium Plan. When you apply for a Policy, you select a
periodic premium payment plan. You may choose to send premiums directly to us
either annually, semi-annually, or quarterly. You can also arrange for annual,
semi-annual, quarterly or monthly premium payments to be paid via automatic
deduction from your bank account or a similar account acceptable to us. You are
not required to pay premiums in accordance with this premium plan; rather, you
can pay more or less than planned or skip a planned premium payment entirely.
You can change the amount of planned premiums and payment arrangements, or
switch between frequencies, whenever you want by providing satisfactory written
or telephone instructions to our Home Office, which will be effective upon our
receipt of the instructions. Depending on the Account Value at the time of an
increase in the Specified Amount and the amount of the increase requested, a
change in your periodic premium payments may be advisable. See "Change in
Existing Coverage."
<PAGE>
Premium to Prevent Lapse. Failure to make a planned premium payment
will not automatically cause a Policy to lapse. Generally, a Policy will lapse
if the Surrender Value is not sufficient to cover the monthly deduction when
due. However, a Policy will not lapse during the Continuation Period, regardless
of the sufficiency of the Surrender Value, so long as the Net Total Premium is
at least equal to the Continuation Amount. See "Monthly Deduction." If
additional premium is necessary to prevent a Policy from lapsing, we will mail
to you notice of the amount required to be paid to keep the Policy in force, and
you will have a 61-day grace period from the date we mail the notice to make the
required premium payment.
Your Policy will remain in effect during the grace period. If the
Insured should die during the grace period before the required premium is paid,
the death benefit will still be payable to the Beneficiary, although the amount
of the Life Insurance Proceeds will be reduced by the amount of premium that
would have been required to keep the Policy in force. See "DEATH BENEFITS --
Amount of Death Benefit Payable." If the required premium has not been paid
before the grace period ends, your Policy will lapse. It will have no value and
no benefits will be payable. But see "Death Benefit Guarantee" and
"Reinstatement" for a mention of your reinstatement rights.
A grace period also may begin if Policy Debt on any Monthly Anniversary
Day exceeds the Account Value less any applicable surrender charges. See "Effect
of Policy Loan" for details.
Minimum Premium Payment. Generally, the minimum amount of premium we
will accept in connection with a periodic premium payment plan is $20 ($15 for
payments made via automatic deduction from your bank or similar account).
Notwithstanding payment of this minimum amount, a Policy may lapse. See "Premium
to Prevent Lapse." For purposes of the minimum premium payment requirements, any
payment is deemed a planned periodic premium if it is received within 30 days
(before or after) of the scheduled date for a planned periodic premium payment
and the percentage difference between the planned amount and the actual payment
amount is not more than 10%. All other premium payments will be deemed
unscheduled premium payments.
Death Benefit Guarantee. On any Monthly Anniversary Day during the
Continuation Period, so long as the Net Total Premium is at least equal to the
Continuation Amount for your Policy, the Policy will remain in force, regardless
of the sufficiency of Surrender Value to cover the monthly deduction. At the end
of the Continuation Period, you may, however, have to make an additional premium
payment to keep the Policy in force. See "Premium to Prevent Lapse."
An increase in Specified Amount will increase the Continuation Amounts.
Any termination and subsequent reinstatement of the Policy will reduce the
Continuation Amounts. Notwithstanding termination and reinstatement, the
Continuation Period will be as though the Policy had been in effect continuously
from its original Policy Date. See "Reinstatement."
Crediting Premium to the Policy. Your initial premium payment will be
credited to the Policy on the Policy Date. Any subsequent premium payment (see
"Net Premium Allocations," below) will be credited to the Policy on the
Valuation Day it is received at our Home Office.
<PAGE>
ALLOCATION OPTIONS
Net Premium Allocations. When you apply for a Policy, you specify the
percentage of Net Premium to be allocated to each Investment Subdivision. You
may not allocate your Net Premiums and Account Value to more than seven
Investment Subdivisions at any given time. You can change the allocation
percentages at any time by sending satisfactory written instructions to our Home
Office. The change will apply to all premiums received with or after we receive
your instructions. Net Premium allocations must be in percentages totaling 100%,
and each allocation percentage must be a whole number of at least 1%.
In general, during the free look period Net Premiums will be allocated
to the Investment Subdivisions based on the Net Premium allocation percentages
specified in the application. However, for states requiring the refund of
premiums during the free look period, all Net Premiums will be allocated to the
Investment Subdivision investing in the Money Market Fund of GE Investments
Funds. Fifteen days following this allocation, the Account Value is transferred
to the Investment Subdivisions based on the Net Premium allocation percentages
selected by you. See "How Your Policy Account Values Vary."
Investment Subdivisions. Separate Account II currently invests in nine
series-type mutual funds. Each of the Funds currently available under the Policy
is registered with the Securities and Exchange Commission ("SEC") as a
diversified open-end management investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"). There are currently thirty-four
Investment Subdivisions available under the Policy. Each Investment Subdivision
invests exclusively in a designated investment portfolio of one of the Funds.
The assets of each portfolio are separate from other portfolios of that Fund and
each portfolio has separate investment objectives and policies. As a result,
each portfolio operates as a separate investment portfolio and the investment
performance of one portfolio has no effect on the investment of any other
portfolio. The Funds may, in the future, activate additional portfolios.
Before choosing the Investment Subdivisions to allocate your Net
Premium and Account Value, carefully read the individual prospectuses for the
Funds, along with this prospectus. The investment objectives of each of the
portfolios are summarized below. There is no assurance that these objectives
will be met.
Janus Aspen Series. The Janus Aspen Series has seven portfolios that
are currently available under the Policy: Growth Portfolio, Aggressive Growth
Portfolio, Worldwide Growth Portfolio, International Growth Portfolio, Balanced
Portfolio, Flexible Income PortfolioJanus Aspen Series. The Janus Aspen Series
has seven portfolios that are currently available under the Policy: Growth
Portfolio, Aggressive Growth Portfolio, Worldwide Growth Portfolio,
International Growth Portfolio, Balanced Portfolio, Flexible Income Portfolio
and Capital Appreciation Portfolio.
Growth Portfolio has the investment objective of long-term capital
growth in a manner consistent with the preservation of capital. The Growth
Portfolio is a diversified portfolio that pursues its objectives by investing in
common stocks of companies of any size. Generally, this Portfolio emphasizes
larger, more established issuers.
Aggressive Growth Portfolio has the investment objective of long-term
growth of capital. The Aggressive Growth Portfolio is a non-diversified
portfolio that will seek to achieve its objective by normally investing at least
50% of its equity assets in securities issued by medium-sized companies.
Worldwide Growth Portfolio has the investment objective of long-term
growth of capital in a manner consistent with the preservation of capital. The
Worldwide Growth Portfolio will seek to achieve its objective by investing in a
diversified portfolio of common stocks of foreign and domestic issuers of all
sizes. The Portfolio normally invests in issuers from at least five different
countries including the United States.
<PAGE>
International Growth Portfolio has the investment objective of
long-term growth of capital. The International Growth Portfolio will seek to
achieve its objective primarily through investments in common stocks of issuers
located outside the United States. The Portfolio normally invests at least 65%
of its total assets in securities of issuers from at least five different
countries, excluding the United States.
Balanced Portfolio has the investment objective of long-term growth of
capital, consistent with the preservation of capital and balanced by current
income. The Portfolio normally invests 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets in
securities selected primarily for their income potential.
Flexible Income Portfolio has the investment objective of seeking to
obtain maximum total return, consistent with preservation of capital. Total
return is expected to result from a combination of income and capital
appreciation. The Portfolio pursues its objectives primarily by investing in any
type of income-producing securities. This Portfolio may have substantial
holdings of lower-rated debt securities or "junk" bonds. The risks of investing
in junk bonds are described in the prospectus for the Janus Aspen Series, which
should be read carefully before investing.
Capital Appreciation Portfolio is a nondiversified portfolio that has
the investment objective of seeking long-term growth of capital. It pursues its
objective by investing primarily in common stocks of issuers of any size.
Janus Capital Corporation serves as investment adviser to the
portfolios of Janus Aspen Series.
Variable Insurance Products Fund. Variable Insurance Products Fund has
three portfolios that are currently available under the Policy:
Variable Insurance Products Fund. Variable Insurance Products Fund has
three portfolios that are currently available under the Policy: VIP
Equity-Income Portfolio, VIP Growth Portfolio, and VIP Overseas Portfolio.
VIP Equity-Income Portfolio seeks reasonable income by investing
primarily in income-producing equity securities. In choosing these securities,
the portfolio will also consider the potential for capital appreciation. The
portfolio's goal is to achieve a yield which exceeds the composite yield on the
securities comprising the Standard & Poor's Composite Index of 500 Stocks.
VIP Growth Portfolio seeks to achieve capital appreciation. The
portfolio normally purchases common stocks, although its investments are not
restricted to any one type of security. Capital appreciation may also be found
in other types of securities, including bonds and preferred stocks.
VIP Overseas Portfolio seeks long-term growth of capital primarily
through investments in foreign securities. The portfolio provides a means for
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.
Fidelity Management & Research Company serves as investment adviser to
the Variable Insurance Products Fund.
Variable Insurance Products Fund II. Variable Insurance Products Fund
II has two portfolios that are currently available under the Policy: VIP Asset
Manager Portfolio and VIP Contrafund Portfolio.
VIP Asset Manager Portfolio seeks high total return with reduced risk
over the long-term by allocating its assets among domestic and foreign stocks,
bonds and short-term fixed income instruments.
<PAGE>
VIP Contrafund Portfolio seeks capital appreciation by investing mainly
in equity securities of companies believed to be undervalued or out-of favor.
Fidelity Management & Research Company serves as investment adviser to
the Variable Insurance Products Fund II.
Variable Insurance Products Fund III. Variable Insurance Products Fund
III has two portfolios that are currently available under the policy: VIP Growth
& Income Portfolio and VIP Growth Opportunities Portfolio.
VIP Growth & Income Portfolio seeks high total return through a
combination of current income and capital appreciation by investing mainly in
equity securities.
VIP Growth Opportunities Portfolio seeks capital growth by investing
primarily in common stock and securities convertible to common stock.
Fidelity Management & Research Company serves as investment adviser to
the Variable Insurance Products Fund III.
GE Investments Funds, Inc. GE Investments Funds, Inc. ("GE Investments
Funds") has eight portfolios that are currently available under the Policy: S&P
500 Index Fund, Money Market Fund, Total Return Fund, International Equity Fund,
Real Estate Securities Fund, Global Income Fund, Value Equity Fund and Income
Fund are available to Owners through Separate Account II.
S&P 500 Index Fund1 has the investment objective of providing capital
appreciation and accumulation of income that corresponds to the investment
return of the Standard & Poor's 500 Composite Stock Price Index, through
investment in common stocks traded on the New York Stock Exchange, the American
Stock Exchange and, to a limited extent, in the over-the-counter markets.
Money Market Fund has the investment objective of providing the highest
level of current income as is consistent with high liquidity and safety of
principal by investing in high quality money market securities.
Total Return Fund has the investment objective of providing the highest
total return, composed of current income and capital appreciation, as is
consistent with prudent investment risk by investing in common stocks, bonds and
money market instruments, the proportion of each being continuously determined
by the investment adviser.
International Equity Fund has the investment objective of providing
long-term capital appreciation. The portfolio seeks to achieve its objective by
investing primarily in equity and equity-related securities of companies that
are organized outside of the U.S. or whose securities are principally traded
outside of the U.S.
Real Estate Securities Fund has the investment objective of providing
maximum total return through current income and capital appreciation. The
portfolio seeks to achieve its objective by investing primarily in securities of
U.S. issuers that are principally engaged in or related to the real estate
industry including those that own significant real estate assets. The portfolio
will not invest directly in real estate.
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(1) "Standard & Poor's," "S&P," and "S&P 500" are trademarks of
McGraw-Hill Companies, Inc. and have been licensed for use by GE Investment
Management Incorporated. The S&P 500 Index Fund is not sponsored, endorsed, sold
or promoted by Standard & Poor's, and Standard & Poor's makes no representation
or warranty, express or implied, regarding the advisability of investing in this
Fund or the Policy.
<PAGE>
Global Income Fund has the investment objectives of high total return,
emphasizing current income and, to a lesser extent, capital appreciation. The
portfolio seeks to achieve these objectives by investing primarily in foreign
and domestic income-bearing debt securities and other foreign and domestic
income-bearing instruments.
Value Equity Fund has the investment objective of providing long-term
capital appreciation. The portfolio seeks to achieve this objective by investing
primarily in common stock and other equity securities that are undervalued by
the market and offer above-average capital appreciation potential.
Income Fund has the investment objective of providing maximum income
consistent with prudent investment management and preservation of capital by
investing primarily in income-bearing debt securities and other income bearing
instruments.
GE Investment Management, Inc. serves as investment adviser to GE
Investments Funds.
Oppenheimer Variable Account Funds. Oppenheimer Variable Account Funds
has five portfolios that are currently available under the Policy: Oppenheimer
High Income Fund, Oppenheimer Bond Fund, Oppenheimer Capital Appreciation Fund,
Oppenheimer Growth Fund, and Oppenheimer Multiple Strategies Fund.
Oppenheimer High Income Fund seeks a high level of current income from
investment in high yield fixed income securities, including unrated securities
or high risk securities in the lower rating categories. These securities may be
considered to be speculative. This fund may have substantial holdings of
lower-rated debt securities or "junk" bonds. The risks of investing in junk
bonds are described in the prospectus for the Oppenheimer Variable Account
Funds, which should be read carefully before investing.
Oppenheimer Bond Fund primarily seeks a high level of current income
from investment in high yield fixed income securities rated "Baa" or better by
Moody's or "BBB" or better by Standard & Poor's. Secondarily, it seeks capital
growth when consistent with its primary objective.
Oppenheimer Capital Appreciation Fund seeks to achieve capital
appreciation by investing in `growth-type' companies.
Oppenheimer Growth Fund seeks to achieve capital appreciation by
investing in securities of well-known established companies.
Oppenheimer Multiple Strategies Fund seeks a total investment return
(which includes current income and capital appreciation in the value of its
shares) from investments in common stocks and other equity securities, bonds and
other debt securities, and "money market" securities.
Oppenheimer Funds, Inc. serves as investment adviser to Oppenheimer
Variable Account Funds.
Federated Insurance Series. The Federated Insurance Series has three
portfolios that are currently available under the Policy: Federated Utility Fund
II, Federated High Income Bond Fund II and Federated American Leaders Fund II.
<PAGE>
Federated Utility Fund II has the investment objective of high current
income and moderate capital appreciation. The Federated Utility Fund II will
seek to achieve its objective by investing primarily in equity and debt
securities of utility companies.
Federated High Income Bond Fund II has the investment objective of high
current income. The Federated High Income Bond Fund II will seek to achieve its
investment objective by investing primarily in a diversified portfolio of
professionally managed fixed-income securities. The fixed-income securities in
which the Fund intends to invest are lower-rated corporate debt obligations,
commonly referred to as "junk" bonds. The risks of these securities are
described in the prospectus for the Federated Insurance Series, which should be
read carefully before investing.
Federated American Leaders Fund II has the primary investment objective
of long-term growth of capital, and a secondary objective of providing income.
The Federated American Leaders Fund II will seek to achieve its objective by
investing, under normal circumstances, at least 65% of its total assets in
common stock of "blue chip" companies.
Federated Advisers serves as investment adviser to the Federated
Insurance Series.
The Alger American Fund. The Alger American Fund has two portfolios
that are currently available under the Policy: Alger American Small
Capitalization Portfolio and Alger American Growth Portfolio.
Alger American Small Capitalization Portfolio seeks long-term capital
appreciation. Except during temporary defensive periods, the portfolio invests
at least 65% of its total assets in equity securities of companies that, at the
time of purchase of the securities, have total market capitalization within the
range of companies included in the Russell 2000 Growth Index or the S&P Small
Cap 600 Index, updated quarterly. Both indexes are broad indexes of small
capitalization stocks. The portfolio may invest up to 35% of its total assets in
equity securities of companies that, at the time of purchase, have total market
capitalization outside this combined range and in excess of that amount (up to
100% of its assets) during temporary defensive periods.
Alger American Growth Portfolio has the investment objective of
long-term capital appreciation. Except during temporary defensive periods, this
portfolio invests at least 65% of its total assets in equity securities of
companies that, at the time of purchase, have a total market capitalization of
$1 billion or greater.
Fred Alger Management, Inc. serves as the investment manager to The
Alger American Fund.
PBHG Insurance Series Fund, Inc. PBHG Insurance Series Fund, Inc.
("PBHG Insurance Series Fund") has two portfolios that are currently available
under the Policy: Growth II Portfolio and Large Cap Growth Portfolio.
Growth II Portfolio seeks long-term capital appreciation by investing
in equity securities of small and medium sized companies (market capitalization
of up to $4 billion) which have an outlook for strong earnings growth and
significant capital appreciation.
Large Cap Growth Portfolio seeks long-term capital appreciation by
investing primarily in equity securities of larger capitalization companies
(market capitalization of greater than $1 billion) which have an outlook for
strong growth in earnings and potential for capital appreciation.
Pilgrim Baxter & Associates serves as investment adviser to the PBHG
Insurance Series Fund.
<PAGE>
Transfers. You may transfer Account Value among the Investment
Subdivisions at any time after the end of the free look period. Transfer
requests may be made in writing or in any other form acceptable to us. A
transfer will take effect as of the end of the Valuation Period during which we
receive your request at our Home Office.
We may defer transfers under the same conditions that we may delay
paying proceeds. See "Requesting Payments." Currently, there is no limit on the
number of transfers among the Investment Subdivisions, but we reserve the right
to limit the number of transfers to twelve each calendar year. However, there is
a $10 transfer charge for each transfer after the first transfer in any calendar
month. The transfer charge is taken from the amount transferred. For purposes of
assessing this fee, each transfer request is considered one transfer, regardless
of the number of Investment Subdivisions affected by the transfer. We reserve
the right to modify, restrict, suspend or eliminate the transfer privileges,
including telephone transfer privileges, at any time, for any reason.
Dollar-Cost Averaging. The dollar-cost averaging program permits you to
systematically transfer on a monthly or quarterly basis a set dollar amount from
the Investment Subdivision investing in the Money Market Fund of GE Investments
Funds to any combination of other Investment Subdivisions. The dollar-cost
averaging method of investment is designed to reduce the risk of making
purchases only when the price of units is high, but you should carefully
consider your financial ability to continue the program over a long enough
period of time to purchase units when their value is low as well as when it is
high. Dollar-cost averaging does not assure a profit or protect against a loss.
You may participate in the dollar-cost averaging program by selecting
the program on the application, completing a dollar-cost averaging agreement, or
calling our Home Office. To use the dollar-cost averaging program, you must
transfer at least $100 from the Money Market Investment Subdivision with each
transfer. Any amount allocated or transferred must also conform to the minimum
percentage requirements for Net Premium allocations. See "Net Premium
Allocations." Once elected, dollar-cost averaging remains in effect from the
date we receive your request until the value of the Investment Subdivision from
which transfers are being made is depleted, or until you cancel the program by
written request or by telephone if we have your telephone authorization on file.
There is no additional charge for dollar-cost averaging. A transfer under this
program will not count toward the free transfer permitted each calendar month
nor any limit on the maximum number of transfers we may impose for a calendar
year. We reserve the right to discontinue offering or to modify the dollar-cost
averaging program at any time and for any reason.
Portfolio Rebalancing. Once your money has been allocated among the
Investment Subdivisions, the performance of each Investment Subdivision may
cause your allocation to shift. You may instruct us to automatically rebalance
(on a quarterly, semi-annual or annual basis) your Account Value to return to
the percentages specified in your allocation instructions. You may elect to
participate in the portfolio rebalancing program at any time by completing the
portfolio rebalancing agreement. Your percentage allocations must be in whole
percentages and be at least 1% per allocation. Subsequent changes to your
percentage allocations may be made at any time by written or telephone
instructions to the Home Office. Once elected, portfolio rebalancing remains in
effect from the date we receive your written request until you instruct us to
discontinue portfolio rebalancing. There is no additional charge for using
portfolio rebalancing, and a portfolio rebalancing transfer is not considered a
transfer for purposes of assessing a transfer charge nor for calculating any
limit on the maximum number of transfers we may impose for a calendar year. We
reserve the right to discontinue offering the portfolio rebalancing program at
any time and for any reason. Portfolio rebalancing does not guarantee a profit
or protect against loss.
<PAGE>
Powers of Attorney. As a general rule and as a convenience to you, we
allow the use of powers of attorney whereby you give a third party the right to
effect transfers on your behalf. However, when the same third party possesses
powers of attorney executed by many Owners, the result can be simultaneous
transfers involving large amounts of Account Value. Such transfers can disrupt
the orderly management of the Funds underlying the Policy, can result in higher
costs to Owners, and are generally not compatible with the long-range goals of
Owners. We believe that such simultaneous transfers effected by such third
parties are not in the best interests of all shareholders of the Funds
underlying the Policies, and this position is shared by the managements of those
Funds.
Therefore, to the extent necessary to reduce the adverse effects of
simultaneous transfers made by third parties holding multiple powers of
attorney, we may not honor such powers of attorney and have instituted or will
institute procedures to assure that the transfer requests that we receive have,
in fact, been made by the Owners in whose names they are submitted. These
procedures will not, however, prevent Owners from making their own transfer
requests.
CHARGES AND DEDUCTIONS
The following charges are deducted. Certain of the charges depend on a
number of variables, and are illustrated in the hypothetical illustrations
below. The charges are for the services and benefits provided, costs and
expenses incurred, and risks assumed by us under or in connection with the
Policies. The services and benefits provided include: the cash and death
benefits provided by the Policy; investment options, including Net Premium
allocations, dollar-cost averaging and portfolio rebalancing programs;
administration of various elective options under the Policy; and the
distribution of various reports to Owners. The costs and expenses incurred
include: those associated with underwriting applications, increases in Specified
Amount, and riders; various overhead and other expenses associated with
providing the services and benefits provided by the Policy; sales and marketing
expenses; and other costs of doing business, such as federal, state and local
premium and other taxes and fees. The risks assumed include the risks that
insureds may live for a shorter period of time than estimated, resulting in the
payment of greater death benefits than expected, and that the costs of providing
the services and benefits under the Policies will exceed the charges deducted.
Premium Charge. We currently deduct an 8% charge (10% maximum) from each
premium before allocating the resulting Net Premium to the Investment
Subdivisions. A premium charge will not be assessed against the policy loan
portion of a premium received from the rollover of a life insurance policy.
Mortality and Expense Risk Charge. We currently deduct a daily charge
from assets in the Investment Subdivisions attributable to the Policies at an
effective annual rate of 0.70% of net assets. This charge is guaranteed not to
exceed an effective annual rate of 0.90% of net assets. This charge is factored
into the net investment factor. See "How Your Account Values Vary."
Monthly Deduction. We make a monthly deduction on the Policy Date and
each Monthly Anniversary Day from Account Value. The monthly deduction for each
Policy consists of (1) the cost of insurance charge discussed below, (2) a
current monthly policy charge of $15 in the first Policy Year ($15 per month
maximum in the first Policy Year) and $6 per month thereafter ($12 per month
maximum after the first Policy Year), and (3) any charges for additional
benefits added by riders to the Policy (see "Supplemental Benefits"). If an
increase in Specified Amount becomes effective, there will be a one-time charge
(per increase) of $1.50 per $1,000 of increase included in the monthly deduction
(it can not exceed $300 per increase). See "Change in Existing Coverage."
Surrender Charge. If the Policy is fully surrendered during the
surrender charge period, we will deduct a surrender charge. The surrender charge
will depend on the Insured's Age at issue, sex (where appropriate), and risk
<PAGE>
class. The surrender charge is calculated based on an amount per $1,000 of the
lowest Specified Amount in effect prior to the surrender. The surrender charge
remains level for the first five Policy Years and then decreases each Policy
month to zero over the next 10 Policy Years or at Age 95, whichever is earlier.
The surrender charge will be deducted before the Surrender Value is paid.
Decreases in the Specified Amount to less than the lowest Specified
Amount that had previously been in effect (other than as a result of partial
surrenders or changes in Death Benefit Options), will also incur a surrender
charge. The amount of surrender charge will be the charge for a full surrender
multiplied by the ratio of (a) to (b), where:
(a) is the lowest Specified Amount that was in effect prior to the
current decrease, minus the Specified Amount after the current
decrease; and
(b) is the lowest Specified Amount that was in effect prior to the
current decrease. (See Partial Surrenders under SURRENDER BENEFITS.)
A surrender charge is not imposed in connection with a partial
surrenders. (See "Partial Surrenders" under "SURRENDER BENEFITS".)
Cost of Insurance. The cost of insurance is a significant charge under
your Policy because it is the primary charge for the death benefit provided by
your Policy. The cost of insurance charge depends on a number of variables that
cause the charge to vary from Policy to Policy and from Monthly Anniversary Day
to Monthly Anniversary Day. It is calculated separately for the Specified Amount
at issue and for any increase in the Specified Amount. The cost of insurance is
calculated on each Monthly Anniversary Day and is based on the net amount at
risk. The net amount at risk is calculated by dividing the Life Insurance
Proceeds by 1.0032737, and then subtracting the Account Value. To determine the
cost of insurance for a particular Policy Month, we divide the net amount at
risk by 1000 and multiply that result by the applicable cost of insurance rate.
If Option B is in effect, and the Specified Amount has increased, the Account
Value is first considered part of the initial Specified Amount. If the Account
Value is more than the initial Specified Amount, it will be considered part of
the increased Specified Amounts resulting from increases in the order of the
increases.
The monthly cost of insurance rate is based on the Insured's sex (where
appropriate), Age at issue, policy duration and risk class. The risk class (and,
therefore, the cost of insurance rates) will be determined separately for the
initial Specified Amount and for any increase in the Specified Amount requiring
evidence of insurability. The maximum cost of insurance rates allowable under
the Policies are based on the Commissioners' 1980 Standard Ordinary Mortality
Table. The rates we currently charge are, at most ages, lower than the maximum
permitted under the Policies and are determined by us according to our
expectation of future experience with respect to mortality, expenses,
persistency, and taxes. The rates may be changed from time to time at our sole
discretion, but will never be more than the rates shown in the Table of
Guaranteed Maximum Insurance Rates contained in the Policies. A change in rates
will apply to all persons of the same Age, sex (where appropriate), and risk
class and whose Policies have been in effect for the same length of time.
The monthly cost of insurance rate generally increases as the Insured's
Age increases. Therefore, the older the Insured, the higher the investment
experience necessary to achieve the same impact on Life Insurance Proceeds and
Account Value. See "Hypothetical Illustrations" for examples showing the effects
of the cost of insurance charge.
Other Charges. If you request a projection of illustrative future life
insurance under the Policy and Policy values, we reserve the right to charge a
maximum fee of $25 for the cost of preparing the projection. See also
<PAGE>
"Transfers," for a discussion of the transfer charge, and "Partial Surrenders,"
for a discussion of the partial surrender processing fee.
Reduction of Charges for Group Sales. Charges and/or deductions may be
reduced for sales of the Policies to a trustee, employer or similar entity
representing a group or to members of the group where such sales result in
savings of sales or administrative expenses. The entitlement to such a reduction
in charges or deductions will be determined by us based on the following
factors:
1. The size of the group. Generally, the sales expenses for each
individual owner for a larger group are less than for a
smaller group because more Policies can be implemented with
fewer sales contacts and less administrative cost.
2. The total amount of premium payments to be received from a
group. Per Policy sales and other expenses are generally
proportionately less on larger premium payments than on
smaller ones.
3. The purpose for which the policies are purchased. Certain
types of plans are more likely to be stable than others. Such
stability reduces the number of sales contacts and
administrative and other services required, reduces sales
administration and results in fewer Policy terminations. As a
result, our sales and other expenses are reduced.
4. The nature of the group for which the Policies are being
purchased. Certain types of employee and professional groups
are more likely to continue Policy participation for longer
periods than are other groups with more mobile membership. If
fewer Policies are terminated in a given group, our sales and
other expenses are reduced.
5. There may be other circumstances of which we are not
presently aware, which could result in reduced sales
expenses.
If, after consideration of the foregoing factors, we determine that a
group purchase would result in reduced sales expenses, such a group may be
entitled to a reduction in charges and/or deductions. Reductions in these
charges and/or deductions will not be unfairly discriminatory against any
person, including the affected owners and all other owners of Policies funded by
Separate Account II.
HOW YOUR ACCOUNT VALUE VARIES
Account Value. The Account Value serves as a starting point for
calculating certain values under a Policy. It is the sum of the Account Value in
each Investment Subdivision and the Account Value held in the General Account to
secure Policy Debt. See "Loan Benefits." The Account Value is determined first
on the Policy Date and thereafter on each Valuation Day. The Account Value will
vary to reflect the performance of the Investment Subdivisions to which amounts
have been allocated and Policy Debt, charges, transfers, partial surrenders,
Policy loan interest, and Policy loan repayments. It may be more or less than
premiums paid.
Surrender Value. The Surrender Value on a Valuation Day is the Account
Value reduced by both any surrender charge that would be deducted if the Policy
were surrendered that day and any Policy Debt.
Investment Subdivision Values. On any Valuation Day, the value of an
Investment Subdivision is equal to the number of Investment Subdivision units
credited to the Policy multiplied by the Unit Value for that day. When
<PAGE>
allocations are made to an Investment Subdivision, either by Net Premium
allocation, transfer of Account Value, transfer of loan interest from the
General Account, or repayment of a Policy loan, your Policy is credited with
units in that Investment Subdivision. The number of units is determined by
dividing the amount allocated, transferred or repaid to the Investment
Subdivision by the Investment Subdivision's Unit Value for the Valuation Day
when the allocation, transfer or repayment is effected. The number of units
credited to a Policy will decrease whenever the allocated portion of the monthly
deduction is taken from the Investment Subdivision, a Policy loan is taken from
the Investment Subdivision, an amount is transferred from the Investment
Subdivision, a partial surrender is taken from the Investment Subdivision, or
the Policy is surrendered.
Unit Values. An Investment Subdivision's Unit Value varies to reflect
the investment experience of the underlying Fund, and may increase or decrease
from one Valuation Day to the next. The unit value for each Investment
Subdivision was arbitrarily set at $10 when the Investment Subdivision was
established. For each Valuation Period after the date of establishment, the Unit
Value is determined by multiplying the value of a unit for an Investment
Subdivision for the prior Valuation Period by the net investment factor for the
Investment Subdivision for the current Valuation Period.
Net Investment Factor. The net investment factor is an index used to
measure the investment performance of an Investment Subdivision from one
Valuation Period to the next. The net investment factor reflects the change in
the net asset value of each share of the Fund held in the Investment Subdivision
from one Valuation Period to the next, adjusted for the daily deduction of the
mortality and expense risk charge from assets in the Investment Subdivision. If
any "ex-dividend" date occurs during the Valuation Period, the per share amount
of any dividend or capital gain distribution is taken into account. Also, if any
taxes need to be reserved, a per share charge or credit for any taxes reserved
for, which is determined by us to have resulted from the operations of the
Investment Subdivision, is taken into account.
DEATH BENEFITS
As long as the Policy remains in force, we will pay the death benefit
upon receipt at our Home Office of satisfactory proof of the Insured's death.
See "Requesting Payments." The death benefit will be paid to the Beneficiary.
Amount of Death Benefit Payable. The amount of death benefit payable
equals the Life Insurance Proceeds determined under the Death Benefit Option in
effect on the date of the Insured's death, plus any supplemental death benefits
provided by rider, minus any Policy Debt on that date and, if the date of death
occurred during a grace period, minus the premium that would have been required
to keep the Policy in force. Under certain circumstances, the amount of the
death benefit payable may be further adjusted. See "OTHER POLICY PROVISIONS --
Incontestability" and "Misstatement of Age or Sex."
Death Benefit Options. Under Option A, the Life Insurance Proceeds
equals the greater of (1) the Specified Amount plus the Account Value, or (2)
the applicable corridor percentage of the Account Value as determined using the
table of percentages shown below. Under Option B, the Life Insurance Proceeds
equals the greater of (1) the Specified Amount, or (2) the applicable corridor
percentage of the Account Value as determined using the table of percentages
shown below. Under both options, the Specified Amount and Account Value are
determined on the date of the Insured's death. The percentage is 250% to Age 40
and declines thereafter as the Insured's Attained Age increases. If the table of
percentages currently in effect becomes inconsistent with any federal income tax
laws and/or regulations, we reserve the right to change the table.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Table of Percentages of Account Value
- -----------------------------------------------------------------------------------------------------------------
Corridor Corridor Corridor
Attained Age Percentage Attained Age Percentage Attained Age Percentage
------------ ---------- ------------ ---------- ------------ ----------
<S> <C>
0-40 250% 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%
53 164% 67 118%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Under Option A, the Life Insurance Proceeds will vary directly with the
investment performance of the Account Value. Under Option B, the Life Insurance
Proceeds ordinarily will not change until the applicable percentage amount of
the Account Value exceeds the Specified Amount or you change the Specified
Amount. To see how and when investment performance may begin to affect the Life
Insurance Proceeds, please see the hypothetical illustrations below.
Changing the Death Benefit Option. You select the Death Benefit Option
when you apply for the Policy. You may change the Death Benefit Option on your
Policy subject to the following rules. Each change must be submitted by written
request received by our Home Office. The effective date of the change will be
the Monthly Anniversary Day after we receive the request for the change. We will
send you revised Policy schedule pages reflecting the new Death Benefit Option
and the effective date of the change. If you request a change from Option A to
Option B, the Specified Amount will be increased by the Account Value on the
effective date of the increase. If you request a change from Option B to Option
A, the Specified Amount after the change will be decreased by the Account Value
on the effective date of the change. A change in Death Benefit Option will
affect the cost of insurance charges.
Accelerated Benefit Rider. Provided the Accelerated Benefit Rider to
the Policy is approved in your state, you may elect an accelerated benefit if
the Insured is terminally ill. For purposes of determining if an accelerated
benefit is available, terminal illness is defined as a medical condition
resulting from bodily injury, or disease, or both: (1) which has been diagnosed
by a licensed physician; (2) which diagnosis is supported by clinical,
radiological, laboratory or other evidence which is satisfactory to us; and (3)
which a licensed physician certifies is expected to result in death within 12
months from the date of such certification. Any request for payment of an
accelerated benefit must be in a form satisfactory to us, and any payment of an
accelerated benefit requires satisfactory proof of a terminal illness and is
subject to our administrative procedures as well as the conditions set forth in
the Accelerated Benefit Rider.
The accelerated benefit available under the Accelerated Benefit Rider
equals the Eligible Proceeds: (1) discounted for the life expectancy of the
Insured at the rate of interest charged for Policy loans; (2) less the amount of
the single premium required to keep the Policy in force for the life expectancy
of the Insured; and (3) less any Policy Debt on the date we pay the accelerated
<PAGE>
benefit, multiplied by the ratio of the Eligible Proceeds to the Total Proceeds.
The accelerated benefit will be paid in one lump sum.
If the Eligible Proceeds are equal to the Life Insurance Proceeds
otherwise payable on the death of the Insured, then payment of the accelerated
benefit will result in termination of all insurance coverage on the life of the
Insured and any insurance coverage under the Policy and riders on any other
named insured will be treated as if the Insured had died. If the Eligible
Proceeds are less than the Life Insurance Proceeds otherwise payable on the
death of the Insured, then the Policy will continue with the Specified Amount,
Account Value, Policy Debt and any additional term rider coverage on such
Insured reduced by the ratio of Eligible Proceeds to Total Proceeds. We will
waive any surrender charge for the resulting decrease in Specified Amount as
well as the minimum Specified Amount requirement under the Policy. Other rider
benefits will continue without reduction.
Effect of Partial Surrenders on Life Insurance Proceeds. A partial
surrender will reduce both the Account Value and the Life Insurance Proceeds by
the amount of the partial surrender. We will not permit partial surrenders
during the first Policy Year if Death Benefit Option B is in effect.
Change in Existing Coverage. After a Policy has been in effect for one
year, you may increase or decrease the Specified Amount. To make a change, you
must send a written request and the Policy to our Home Office. Any change in the
Specified Amount may affect the cost of insurance rate and the net amount at
risk, both of which will affect your cost of insurance. See "Monthly Deduction"
and Cost of Insurance." In addition, any change in the Specified Amount affects
the maximum premium limitation. If decreases in the Specified Amount cause the
premiums to exceed new lower limitations required by federal tax law, the excess
will be withdrawn from Account Value and refunded so that the Policy will
continue to meet these requirements. The Account Value so withdrawn and refunded
will be withdrawn from each Investment Subdivision in the same proportion that
the Account Value in that Investment Subdivision bears to the total Account
Value in all Investment Subdivisions under the Policy at the time of the
withdrawal (i.e. on a pro-rata basis).
Any decrease in the Specified Amount will become effective on the
Monthly Anniversary Day after the date the request is received. The decrease
will first apply to coverage provided by the most recent increase, then to the
next most recent increases successively, then to the coverage under the original
application. During the Continuation Period, we will not allow a decrease unless
the Account Value less any Policy Debt is greater than the surrender charge. The
Specified Amount following a decrease can never be less than the minimum
Specified Amount for the Policy when it was issued. A decrease may cause a
surrender charge to be assessed and may require a payment to you of excess
Account Value.
To apply for an increase, you must complete a supplemental application
and submit evidence of insurability satisfactory to us. Any approved increase
will become effective on the date shown in the supplemental policy data page. An
increase will not become effective, however, if the Policy's Surrender Value is
insufficient to cover the monthly deduction for the Policy Month following the
increase.
If there is an increase in Specified Amount, there will be a one-time
charge (per increase) of $1.50 per $1,000 of increase to cover underwriting and
administrative costs associated with the increase. This charge will be included
in the monthly deduction for the month the decrease becomes effective. This
charge will never exceed $300 per increase.
A change in the existing insurance coverage may have federal tax
consequences. See "TAX CONSIDERATIONS."
<PAGE>
Changing the Beneficiary. If the right is reserved, the Beneficiary may
also be changed during the Insured's life. To make a change, send a written
request to our Home Office. The request and the change must be in a form
satisfactory to us and must actually be received by us. The change will take
effect as of the date you signed the request.
LOAN BENEFITS
You may borrow up to 90% of the difference between (1) your Account
Value at the end of the Valuation Period during which the loan request is
received, and (2) any surrender charges on the date of the loan. See "Requesting
Payments." Requests for Policy loans may be made in writing or by telephone. See
"REQUESTING PAYMENTS AND TELEPHONE TRANSACTIONS." Outstanding Policy Debt,
including accrued interest, reduces the amount available for new loans.
When a loan is made, an amount equal to the loan proceeds is
transferred from the Account Value in Separate Account II to our General Account
and is held as "collateral" for the loan. If you do not direct an allocation for
this transfer when requesting the loan we will make it on a pro-rata basis. When
a loan is repaid, an amount equal to the repayment is transferred from our
General Account to Separate Account II and allocated as you direct when
submitting the repayment. If you provide no direction, the amount will be
allocated in accordance with your standing instructions for Net Premium
allocations.
A portion of Policy loans taken or existing on or after the Preferred
Loan Availability Date (as shown on the Policy data pages) will be designated as
Preferred Policy Debt. In Policy Years 11 through 20, Preferred Policy Debt will
be that portion of Policy Debt which equals the difference between the Account
Value and the sum of all premium payments made. After the 20th Policy Year,
Preferred Policy Debt will be that portion of Policy Debt which equals 130% of
the difference between the Account Value and the sum of all premium payments
made. We redetermine the amount of Preferred Policy Debt each Policy Month. We
currently intend to credit interest at an annual rate of 6% to that portion of
Account Value transferred to the General Account which is equal to Preferred
Policy Debt. We reserve the right to change, at our sole discretion, the rate of
interest credited to the amount of Account Value transferred to the General
Account and guarantee that Preferred Policy Debt will earn at least a minimum
annual interest rate of 4%. An annual rate of 4% is and will be credited to that
portion of Account Value transferred to the General Account which exceeds
Preferred Policy Debt.
Interest. We will charge interest daily on any outstanding Policy loan
at an effective annual rate of 6%. Interest is due and payable at the end of
each Policy Year while a Policy loan is outstanding. If, on any Policy
Anniversary, interest accrued since the last Policy Anniversary has not been
paid, the amount of the interest is added to the loan and becomes part of the
outstanding Policy Debt. Interest transferred out of Separate Account II will be
transferred from each Investment Subdivision on a pro-rata basis.
Repayment of Policy Debt. You may repay all or part of your Policy Debt
at any time while the Insured is living and the Policy is in force. Any payments
by you other than planned periodic premiums will be treated first as the
repayment of any outstanding Policy Debt. The portion of the payment in excess
of any outstanding Policy Debt will be treated as an unscheduled premium
payment. We will first apply any repayment to reduce the portion of Policy Debt
that is not Preferred Policy Debt. Loan repayments must be sent to our Home
Office and will be credited as of the date received. A Policy loan repayment is
not treated as a premium payment and is not subject to the current 8% premium
charge.
<PAGE>
Effect of Policy Loan. A Policy loan, whether or not repaid, will
affect Policy values over time because the investment results of the Investment
Subdivisions will apply only to the non-loaned portion of the Account Value. The
longer the loan is outstanding, the greater the effect is likely to be.
Depending on the investment results of the Investment Subdivisions while the
Policy loan is outstanding, the effect could be favorable or unfavorable. Policy
loans, particularly if not repaid, could make it more likely than otherwise for
a Policy to terminate. See "Tax Considerations," below, for a discussion of
adverse tax consequences if a Policy lapses with Policy loans outstanding. If
the death benefit becomes payable while there is an outstanding Policy loan,
Policy Debt will be deducted from the Life Insurance Proceeds. If Policy Debt
exceeds the Account Value less any applicable surrender charge on any Monthly
Anniversary Day and the Continuation Period is not in effect, the Policy will
lapse without payment of a required loan payment. During the Continuation
Period, if Policy Debt on any Monthly Anniversary Day exceeds the Account Value
less any applicable surrender charge, and the Net Total Premium is less than the
Continuation Amount, your Policy will lapse without payment of a required loan
payment. In either event, we will mail to you notice of the amount required to
be paid to keep the Policy in force, and you will have a 61-day grace period
from the date we mail the notice to make the required loan payment.
SURRENDER BENEFITS
Full Surrender. You may surrender your Policy at any time for its
Surrender Value. See "Requesting Payments." A surrender charge may apply. See
"Schedule of Surrender Charge." Your Policy will terminate and cease to be in
force if it is surrendered for a lump sum. It cannot later be reinstated.
Partial Surrender. You may make partial surrenders under your Policy.
See "Requesting Payments." Requests for partial surrenders may be made in
writing or by telephone. See "REQUESTING PAYMENTS AND TELEPHONE TRANSACTIONS."
The minimum partial surrender amount is $500. A partial surrender processing fee
equal to the lesser of $25 or 2% of the amount surrendered will be assessed for
a partial surrender. The amount of a partial surrender will equal the amount
requested for surrender plus the partial surrender processing fee. When you
request a partial surrender, you can direct how the partial surrender will be
deducted from your Account Value. If you provide no directions, the partial
surrender will be deducted from your Account Value in the Investment
Subdivisions on a pro-rata basis.
<PAGE>
HYPOTHETICAL ILLUSTRATIONS
The following illustrations show how certain values under a sample
Policy change with assumed investment performance over an extended period of
time. In particular, they illustrate how Account Values, Surrender Values and
Life Insurance Proceeds payable under a Policy covering an Insured of a given
Age on the Policy Date, would vary over time. The illustrations assume planned
premiums were paid annually and the return on the assets in the Investment
Subdivisions were a uniform gross annual rate of 0%, 6% or 12%, before deduction
of any fees and charges. The values reflect the deduction of all Policy and Fund
fees and charges. The tables also show planned premiums accumulated at 5%
interest. The values under a Policy would be different from those shown if the
returns averaged 0%, 6% or 12% but fluctuated over and under those averages
throughout the years shown. The hypothetical investment rates of return are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return for a particular Policy may
be more or less than the hypothetical investment rates of return used in the
illustrations.
The illustrations assume an average annual expense ratio of .82% of the
average daily net assets of the Funds available under the Policies, based on the
estimated expense ratios of each of the Funds for the first year of operations.
For information on Fund expenses, see the prospectus for the Funds accompanying
this prospectus. The current illustrations also reflect the 0.70% mortality and
expense risk charge to the Separate Account II. After deduction of estimated
Fund expenses and the current mortality and expense risk charge, the
illustrated gross annual investment rates of return of 0%, 6% and 12% would
correspond to approximate net annual rates of return for the Investment
Divisions of -1.52%, 4.48%, and 10.48% respectively. The guaranteed
illustrations reflect the maximum 0.90% mortality and expense risk charge to the
Separate Account II. After deduction of estimated Fund expenses and the
guaranteed mortality and expense risk charge, the illustrated gross annual
investment rates of return of 0%, 6% and 12% would correspond to approximate net
annual rates of return for the Investment Divisions of -1.72%, 4.28%, and 10.28%
respectively.
The illustrations also reflect the monthly deduction for the
hypothetical Insured. Our current charges and the higher guaranteed charges we
have the contractual right to charge are reflected in separate illustrations on
each of the following pages. All the illustrations reflect the fact that no
charges for Federal or state income taxes are currently made against Separate
Account II and assume no Policy Debt or charges for supplemental benefits.
The illustrations are based on our sex distinct rates for non-tobacco
users. Upon request, we will furnish a comparable illustration based upon the
proposed Insured's individual circumstances. Such illustrations may assume
different hypothetical rates of return than those illustrated.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age 45 Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option A Premium (Payable Annually)(1) $13,100
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ----------------------- ------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 13,755 6,460 10,588 260,588 7,135 1,263 261,263 7,811 11,938 261,938
2 28,198 16,835 20,963 270,963 18,848 22,975 272,975 20,943 25,070 275,070
3 43,363 26,960 31,087 281,087 30,988 35,115 285,115 35,349 39,476 289,476
4 59,286 36,834 40,961 290,961 43,568 47,696 297,696 51,154 55,281 305,281
5 76,005 46,451 50,578 300,578 56,598 60,725 310,725 68,492 72,619 322,619
6 93,560 56,226 59,939 309,939 70,505 74,218 324,218 87,929 91,642 341,642
7 111,993 65,729 69,029 319,029 84,875 88,175 338,175 109,204 112,504 362,504
8 131,348 74,949 77,837 327,837 99,712 102,600 352,600 132,490 135,377 385,377
9 151,670 83,876 86,351 336,351 115,021 117,496 367,496 157,977 160,452 410,452
10 173,009 92,494 94,556 344,556 130,798 132,861 382,861 185,867 187,930 437,930
15 296,813 130,499 130,499 380,499 216,781 216,781 466,781 370,249 370,249 620,249
20 454,822 156,116 156,116 406,116 311,859 311,859 561,859 658,044 658,044 908,044
25 656,486 166,867 166,867 416,867 414,499 414,499 664,499 1,110,877 1,110,877 1,360,877
30 913,866 155,306 155,306 405,306 516,620 516,620 766,620 1,822,072 1,822,072 2,072,072
35 1,242,356 108,174 108,174 358,174 600,770 600,770 850,770 2,935,865 2,935,865 3,185,865
</TABLE>
* In the absence of an additional premium, the Policy would lapse.
(1) The values illustrated assume a $13,100 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the maximum cost of insurance rates
allowable under the Policy. Accordingly, if the assumed hypothetical gross
annual investment return were earned, the values and benefits of an actual
Policy with the listed specifications could never be less than those shown,
and in some cases may be greater than those shown.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.72%, 4.28% AND 10.28%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age 45 Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option A Premium (Payable Annually) (1) $ 13,100
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ----------------------- ------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 13,755 6,851 10,979 260,979 7,545 11,673 261,673 8,240 12,367 262,367
2 28,198 17,711 21,838 271,838 19,790 23,918 273,918 21,954 26,082 276,082
3 43,363 28,243 32,471 282,471 32,520 36,648 286,648 37,040 41,167 291,167
4 59,286 38,746 42,874 392,874 45,750 49,877 299,877 53,634 57,762 307,762
5 76,005 48,917 53,044 303,044 59,046 63,623 313,623 71,899 76,016 326,016
6 93,560 59,280 62,993 312,993 74,202 77,915 327,915 92,399 96,112 346,112
7 111,993 69,416 72,716 322,716 89,471 92,771 342,771 114,935 118,235 368,235
8 131,348 79,312 82,199 332,199 105,310 108,197 358,197 139,691 142,579 392,579
9 151,670 88,969 91,444 341,444 121,742 124,217 374,217 166,899 169,374 419,374
10 173,009 98,370 100,433 350,433 138,774 140,836 390,836 196,792 198,855 448,855
15 296,813 143,948 143,948 393,948 236,440 236,440 486,440 400,341 400,341 650,341
20 454,822 182,648 182,648 432,648 353,709 353,709 603,709 730,078 730,078 980,078
25 656,486 213,756 213,756 463,756 494,325 494,325 744,325 1,266,753 1,266,753 1,516,753
30 913,866 234,834 234,834 484,834 660,510 660,510 910,510 2,140,109 2,140,109 2,390,109
35 1,242,356 242,798 242,798 492,798 854,246 854,246 1,104,246 3,563,223 3,563,223 3,813,223
</TABLE>
(1) The values illustrated assume a $13,100 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the cost of insurance charges
currently deducted by Life of Virginia. Although Life of Virginia
anticipates deducting these charges for the forseeable future, THESE
CHARGES ARE NOT GUARANTEED AND COULD BE RAISED AT THE DISCRETION OF LIFE OF
VIRGINIA. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.52%, 4.48% AND 10.48%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RAT OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age 45 Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option B Premium (Payable Annually) (1) $ 5,000
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ----------------------- ------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 5,250 0 3,436 250,000 0 3,675 250,000 0 3,913 250,000
2 10,763 2,668 6,796 250,000 3,362 7,489 250,000 4,085 8,212 250,000
3 16,551 5,913 10,040 250,000 7,283 11,410 250,000 8,770 12,898 250,000
4 22,628 9,041 13,169 250,000 11,313 15,441 250,000 3,881 18,009 250,000
5 29,010 12,048 16,175 250,000 15,451 19,579 250,000 9,457 23,585 250,000
6 35,710 15,346 19,059 250,000 20,115 23,828 250,000 25,963 29,675 250,000
7 42,746 18,507 21,807 250,000 24,880 28,180 250,000 33,025 36,325 250,000
8 50,133 21,521 24,409 250,000 29,742 32,629 250,000 40,698 43,585 250,000
9 57,889 24,380 26,855 250,000 34,696 37,171 250,000 49,043 51,518 250,000
10 66,034 27,067 29,130 250,000 39,734 41,797 250,000 58,126 60,188 250,000
15 113,287 37,564 37,564 250,000 66,056 66,056 250,000 117,896 117,896 250,000
20 173,596 39,408 39,408 250,000 91,621 91,621 250,000 213,190 213,190 260,092
25 250,567 29,987 29,987 250,000 116,991 116,991 250,000 368,912 368,912 427,938
30 348,804 ********************************* 140,255 140,255 250,000 617,386 617,386 660,603
35 474,182 ********************************* 157,532 157,532 250,000 1,018,787 1,018,787 1,069,726
</TABLE>
* In the absence of an additional premium, the Policy would lapse.
(1) The values illustrated assume a $ 5,000 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the maximum cost of insurance rates
allowable under the Policy. Accordingly, if the assumed hypothetical gross
annual investment return were earned, the values and benefits of an actual
Policy with the listed specifications could never be less than those shown,
and in some cases may be greater than those shown.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.72%, 4.28% AND 10.28%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age 45 Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option B Premium (Payable Annually) (1) $5,000
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ----------------------- ------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 5,250 0 3,652 250,000 0 3,899 250,000 20 4,148 250,000
2 10,763 3,180 7,308 250,000 3,909 8,037 250,000 4,669 8,796 250,000
3 16,551 6,733 10,860 250,000 8,184 12,312 250,000 9,758 13,885 250,000
4 22,628 10,179 14,307 250,000 12,600 16,728 250,000 15,332 19,460 250,000
5 29,010 13,516 17,644 250,000 17,160 21,288 250,000 21,442 25,569 250,000
6 35,710 17,168 20,881 250,000 22,296 26,008 250,000 28,570 32,282 250,000
7 42,746 20,715 24,015 250,000 27,594 30,894 250,000 36,363 39,663 250,000
8 50,133 24,147 27,035 250,000 33,052 35,940 250,000 44,887 47,775 250,000
9 57,889 27,464 29,939 250,000 38,680 41,155 250,000 54,226 56,701 250,000
10 66,034 30,652 32,714 250,000 44,473 46,536 250,000 64,460 66,523 250,000
15 113,287 46,680 46,680 250,000 78,306 78,306 250,000 135,069 135,069 250,000
20 173,596 58,711 58,711 250,000 117,894 117,894 250,000 250,176 250,176 305,214
25 250,567 66,682 66,682 250,000 166,542 166,542 250,000 438,686 438,686 508,876
30 348,804 68,756 68,756 250,000 228,496 228,496 250,000 746,464 746,464 798,716
35 474,182 62,087 62,087 250,000 308,446 308,446 323,869 1,251,768 1,251,768 1,314,357
</TABLE>
(1) The values illustrated assume a $ 5,000 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the cost of insurance charges
currently deducted by Life of Virginia. Although Life of Virginia
anticipates deducting these charges for the foreseeable future, THESE
CHARGES ARE NOT GUARANTEED AND COULD BE RAISED AT THE DISCRETION OF LIFE OF
VIRGINIA. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.52%, 4.48% AND 10.48%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age 55 Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option B Premium (Payable Annually) (1) $ 8,300
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ----------------------- -------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 5,250 0 3,652 250,000 0 3,899 250,000 20 4,148 250,000
2 10,763 3,180 7,308 250,000 3,909 8,037 250,000 4,669 8,796 250,000
3 16,551 6,733 10,860 250,000 8,184 12,312 250,000 9,758 13,885 250,000
4 22,628 10,179 14,307 250,000 12,600 16,728 250,000 15,332 19,460 250,000
5 29,010 13,516 17,644 250,000 17,160 21,288 250,000 21,442 25,569 250,000
6 35,710 17,168 20,881 250,000 22,296 26,008 250,000 28,570 32,282 250,000
7 42,746 20,715 24,015 250,000 27,594 30,894 250,000 36,363 39,663 250,000
8 50,133 24,147 27,035 250,000 33,052 35,940 250,000 44,887 47,775 250,000
9 57,889 27,464 29,939 250,000 38,680 41,155 250,000 54,226 56,701 250,000
10 66,034 30,652 32,714 250,000 44,473 46,536 250,000 64,460 66,523 250,000
15 113,287 46,680 46,680 250,000 78,306 78,306 250,000 135,069 135,069 250,000
20 173,596 58,711 58,711 250,000 117,894 117,894 250,000 250,176 250,176 305,214
25 250,567 66,682 66,682 250,000 166,542 166,542 250,000 438,686 438,686 508,876
30 348,804 68,756 68,756 250,000 228,496 228,496 250,000 746,464 746,464 798,716
35 474,182 62,087 62,087 250,000 308,446 308,446 323,869 1,251,768 1,251,768 1,314,357
</TABLE>
(1) The values illustrated assume a $ 5,000 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the cost of insurance charges
currently deducted by Life of Virginia. Although Life of Virginia
anticipates deducting these charges for the foreseeable future, THESE
CHARGES ARE NOT GUARANTEED AND COULD BE RAISED AT THE DISCRETION OF LIFE OF
VIRGINIA. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.52%, 4.48% AND 10.48%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option B Premium (Payable Annually) (1) $ 8,300
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ------------------------ ------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 8,715 0 5,275 250,000 0 5,657 250,000 0 6,040 250,000
2 17,866 3,527 10,342 250,000 4,626 11,441 250,000 5,773 12,588 250,000
3 27,474 8,350 15,165 250,000 10,503 17,318 250,000 12,846 19,661 250,000
4 37,563 12,922 19,737 250,000 16,474 23,289 250,000 20,499 27,314 250,000
5 48,156 17,227 24,042 250,000 22,526 29,341 250,000 28,787 35,602 250,000
6 59,279 21,930 28,063 250,000 29,334 35,466 250,000 38,457 44,589 250,000
7 70,958 26,332 31,782 250,000 36,205 41,655 250,000 48,903 54,353 250,000
8 83,220 30,401 35,171 250,000 43,118 47,888 250,000 60,206 64,976 250,000
9 96,097 34,108 38,196 250,000 50,058 54,146 250,000 72,467 76,555 250,000
10 109,616 37,413 40,820 250,000 56,999 60,407 250,000 85,801 89,208 250,000
15 188,057 46,805 46,805 250,000 91,473 91,473 250,000 175,461 175,461 250,000
20 288,170 34,442 34,442 250,000 120,540 120,540 250,000 326,677 326,677 349,544
25 415,942 ******************************** 143,861 143,861 250,000 572,685 572,685 601,319
30 579,015 ******************************** 156,371 156,371 250,000 956,749 956,749 1,004,586
35 787,141 ******************************** 129,635 129,635 250,000 1,538,803 1,538,803 1,615,744
</TABLE>
* In the absence of an additional premium, the Policy would lapse.
(1) The values illustrated assume a $ 8,300 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the maximum cost of insurance rates
allowable under the Policy. Accordingly, if the assumed hypothetical gross
annual investment return were earned, the values and benefits of an actual
Policy with the listed specifications could never be less than those shown,
and in some cases may be greater than those shown.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.72%, 4.28% AND 10.28%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age 55 Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option B Premium (Payable Annually) (1) $ 8,300
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ----------------------- ------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 8,715 0 5,815 250,000 0 6,219 250,000 0 6,624 250,000
2 17,866 4,719 11,534 250,000 5,897 12,712 250,000 7,127 13,942 250,000
3 27,474 10,227 17,042 250,000 12,562 19,377 250,000 15,098 21,913 250,000
4 37,563 15,521 22,336 250,000 19,404 26,219 250,000 23,794 30,609 250,000
5 48,156 20,595 27,410 250,000 26,427 33,242 250,000 33,296 40,111 250,000
6 59,279 26,326 32,458 250,000 34,521 40,653 250,000 44,580 50,712 250,000
7 70,958 32,056 37,506 250,000 43,048 48,498 250,000 57,112 62,562 250,000
8 83,220 37,800 42,570 250,000 52,045 56,815 250,000 71,047 75,817 250,000
9 96,097 43,586 47,673 250,000 61,563 65,651 250,000 86,567 90,655 250,000
10 109,616 49,441 52,849 250,000 71,654 75,061 250,000 103,866 107,274 250,000
15 188,057 74,679 74,679 250,000 127,121 127,121 250,000 221,514 221,514 256,957
20 288,170 89,793 89,793 250,000 191,904 191,904 250,000 412,093 412,093 440,939
25 415,942 97,322 97,322 250,000 278,410 278,410 292,331 724,804 724,804 761,044
30 579,015 92,373 92,373 250,000 385,750 385,750 405,038 1,231,120 1,231,120 1,292,676
35 787,141 63,516 63,516 250,000 514,911 514,911 540,657 2,043,163 2,043,163 2,145,321
</TABLE>
(1) The values illustrated assume a $ 8,300 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the cost of insurance charges
currently deducted by Life of Virginia. Although Life of Virginia
anticipates deducting these charges for the foreseeable future, THESE
CHARGES ARE NOT GUARANTEED AND COULD BE RAISED AT THE DISCRETION OF LIFE OF
VIRGINIA. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.52%, 4.48% AND 10.48%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age 65 Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option B Premium (Payable Annually) (1) $ 14,300
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ------------------------ ------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 15,015 0 7,413 250,000 0 8,021 250,000 0 8,632 250,000
2 30,781 3,262 14,352 250,000 4,959 16,049 250,000 16,738 17,828 250,000
3 47,335 9,677 20,767 250,000 12,950 24,040 250,000 16,529 27,619 250,000
4 64,717 15,552 26,642 250,000 20,900 31,990 250,000 27,004 38,094 250,000
5 82,967 20,858 31,948 250,000 28,796 39,886 250,000 38,261 49,351 250,000
6 102,131 26,644 36,627 250,000 37,709 47,692 250,000 51,510 61,493 250,000
7 122,252 31,603 40,476 250,000 46,365 55,238 250,000 65,654 74,527 250,000
8 143,380 35,878 43,640 250,000 54,933 62,696 250,000 81,059 88,822 250,000
9 165,564 39,210 45,865 250,000 63,220 69,875 250,000 97,824 104,479 250,000
10 188,857 41,465 47,010 250,000 71,164 76,709 250,000 116,248 121,793 250,000
15 324,002 31,460 31,460 250,000 104,698 104,698 250,000 254,094 254,094 266,799
20 496,485 ********************************* 114,162 114,162 250,000 487,459 487,459 511,832
25 716,622 ********************************* 51,442 51,442 250,000 843,077 843,077 885,231
30 997,579 ********************************************************** 1,409,390 1,409,390 1,423,484
35 1,356,159 ********************************************************** 2,329,125 2,329,125 2,352,416
</TABLE>
* In the absence of an additional premium, the Policy would lapse.
(1) The values illustrated assume a $14,300 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the maximum cost of insurance rates
allowable under the Policy. Accordingly, if the assumed hypothetical gross
annual investment return were earned, the values and benefits of an actual
Policy with the listed specifications could never be less than those shown,
and in some cases may be greater than those shown.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.72%, 4.28% AND 10.28%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age 65 Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option B Premium (Payable Annually) (1) $ 14,300
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ----------------------- ------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 15,015 0 9,752 250,000 0 10,441 250,000 42 11,132 250,000
2 30,781 8,183 19,273 250,000 10,190 21,280 250,000 12,285 23,375 250,000
3 47,335 17,367 28,457 250,000 21,343 32,433 250,000 25,665 36,755 250,000
4 64,717 26,213 37,303 250,000 32,837 43,927 250,000 40,337 51,427 250,000
5 82,967 34,723 45,813 250,000 44,704 55,794 250,000 56,485 67,575 250,000
6 102,131 44,418 54,401 250,000 58,494 68,477 250,000 75,820 85,803 250,000
7 122,252 54,173 63,046 250,000 73,133 82,005 250,000 97,474 106,347 250,000
8 143,380 64,128 71,890 250,000 88,798 96,561 250,000 121,839 129,602 250,000
9 165,564 74,267 80,922 250,000 105,528 112,183 250,000 149,206 155,861 250,000
10 188,857 84,647 90,192 250,000 123,417 128,962 250,000 179,929 185,474 250,000
15 324,002 127,941 127,941 250,000 225,177 225,177 250,000 390,898 390,898 410,443
20 496,485 156,165 156,165 250,000 351,154 351,154 368,711 724,064 724,064 760,267
25 716,622 179,916 179,916 250,000 503,260 503,260 528,423 1,258,519 1,258,519 1,321,445
30 997,579 204,316 204,316 250,000 692,567 692,567 699,493 2,132,639 2,132,639 2,153,965
35 1,356,159 236,598 236,598 250,000 932,636 932,636 941,962 3,582,227 3,582,227 3,618,049
</TABLE>
* In the absence of an additional premium, the Policy would lapse.
(1) The values illustrated assume a $14,300 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the cost of insurance charges
currently deducted by Life of Virginia. Although Life of Virginia
anticipates deducting these charges for the foreseeable future, THESE
CHARGES ARE NOT GUARANTEED AND COULD BE RAISED AT THE DISCRETION OF LIFE OF
VIRGINIA. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.52%, 4.48% AND 10.48%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age 75 Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option B Premium (Payable Annually) (1) $ 25,800
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ----------------------- ------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 27,090 0 8,641 250,000 0 9,607 250,000 0 10,581 250,000
2 55,534 4,425 16,168 250,000 6,975 18,717 250,000 9,668 21,411 250,000
3 85,401 10,759 22,502 250,000 15,534 27,277 250,000 20,820 32,563 250,000
4 116,761 15,852 27,595 250,000 23,532 35,274 250,000 32,457 44,200 250,000
5 149,689 19,589 31,332 250,000 30,911 42,654 250,000 44,757 56,499 250,000
6 184,264 22,927 33,495 250,000 38,714 49,282 250,000 59,085 69,653 250,000
7 220,567 24,368 33,761 250,000 45,561 54,953 250,000 74,514 83,906 250,000
8 258,685 23,438 31,656 250,000 51,146 59,363 250,000 91,379 99,596 250,000
9 298,710 19,484 26,529 250,000 55,049 62,094 250,000 110,193 117,238 250,000
10 340,735 11,687 17,557 250,000 56,768 62,638 250,000 131,805 137,675 250,000
15 584,563 **************************************************** 330,042 330,042 346,544
20 895,757 **************************************************** 671,916 671,916 678,635
25 1,292,927 **************************************************** 1,223,578 1,223,578 1,235,814
</TABLE>
* In the absence of an additional premium, the Policy would lapse.
(1) The values illustrated assume a $25,800 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the maximum cost of insurance rates
allowable under the Policy. Accordingly, if the assumed hypothetical gross
annual investment return were earned, the values and benefits of an actual
Policy with the listed specifications could never be less than those shown,
and in some cases may be greater than those shown.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.72%, 4.28% AND 10.28%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age 75 Initial Specified Amount $250,000
Preferred Nonsmoker Underwriting Risk Initial Premium and Planned
Death Benefit Option B Premium (Payable Annually) (1) $ 25,800
<TABLE>
<CAPTION>
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Premiums Gross Annual Investment Gross Annual Investment Gross Annual Investment
End of Accumulated Return with Guaranteed Return with Guaranteed Return with Guaranteed
Policy At 5% Interest Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3) Cost of Insurance Rates (2)(3)
----------------------- ----------------------- ------------------------
Per Year Surrender Account Death Surrender Account Death Surrender Account Death
Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C>
1 27,090 5,371 17,113 250,000 6,608 18,350 250,000 7,849 19,591 250,000
2 55,534 22,174 33,917 250,000 25,784 37,526 250,000 29,555 41,297 250,000
3 85,401 38,622 50,364 250,000 45,821 57,563 250,000 53,656 65,399 250,000
4 116,761 54,785 66,528 250,000 66,891 78,634 250,000 80,628 92,370 250,000
5 149,689 70,729 82,471 250,000 89,190 100,933 250,000 111,041 122,784 250,000
6 184,264 88,262 98,829 250,000 114,621 125,189 250,000 147,184 157,752 250,000
7 220,567 106,254 115,646 250,000 142,201 151,594 250,000 188,566 197,959 250,000
8 258,685 124,737 132,955 250,000 172,114 180,331 250,000 235,908 244,125 256,331
9 298,710 143,736 150,781 250,000 204,525 211,570 250,000 288,308 295,353 310,120
10 340,735 163,271 169,141 250,000 239,488 245,358 257,626 346,015 351,885 369,479
15 584,563 261,768 261,768 274,856 434,619 434,619 456,350 729,798 729,798 766,288
20 895,757 351,449 351,449 354,964 667,944 667,944 674,624 1,344,670 1,344,670 1,358,116
25 1,292,927 436,726 436,726 441,093 962,517 962,517 972,143 2,363,625 2,363,625 2,387,261
</TABLE>
* In the absence of an additional premium, the Policy would lapse.
(1) The values illustrated assume a $25,800 premium is paid at the beginning of
each Policy year. Values would be different if premiums are paid with a
different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient account
value.
(3) The values and benefits are shown using the cost of insurance charges
currently deducted by Life of Virginia. Although Life of Virginia
anticipates deducting these charges for the foreseeable future, THESE
CHARGES ARE NOT GUARANTEED AND COULD BE RAISED AT THE DISCRETION OF LIFE OF
VIRGINIA. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND
ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING PREVAILING INTEREST RATES, RATES OF
INFLATION, AND THE ALLOCATIONS MADE BY AN OWNER AMONG THE INVESTMENT OPTIONS.
THE GROSS HYPOTHETICAL INVESTMENT RATES OF RETURN OF 0%, 6% AND 12% SHOWN ABOVE
CORRESPOND TO NET ANNUAL RATES OF -1.52%, 4.48% AND 10.48%. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATE OF RETURN AVERAGES 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE BY LIFE OF VIRGINIA OR THE FUNDS THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
REQUESTING PAYMENTS AND TELEPHONE TRANSACTIONS
Requesting Payments. Written requests for payment (except for telephone
requests) must be sent to our Home Office or given to our authorized agent for
forwarding to our Home Office. We will ordinarily pay any Life Insurance
Proceeds, loan proceeds or surrender or partial surrender proceeds in a lump sum
within seven days after receipt at our Home Office of all the documents required
for such a payment. Other than the Life Insurance Proceeds, which are determined
as of the date of the Insured's death, the amount will be determined as of the
date our Home Office receives all required documents. Life Insurance Proceeds
may be paid in a lump sum or under an optional payment plan. See "Optional
Payment Plans." Any Life Insurance Proceeds that are paid in one lump sum will
include interest from the date of death to the date of payment. Interest will be
paid at a rate set by us, or by law if greater. The minimum interest rate which
will be paid is 2.5%. Interest will not be paid beyond one year or any longer
time set by law. Life Insurance Proceeds will be reduced by any outstanding
Policy Debt and any due and unpaid charges and increased by any benefits added
by rider.
We may delay making a payment or processing a transfer request if: (1)
the disposal or valuation of Separate Account II's assets is not reasonably
practicable because the New York Stock Exchange is closed for other than a
regular holiday or weekend, trading is restricted by the SEC, or the SEC
declares that an emergency exists; or (2) the SEC by order permits postponement
of payment to protect our Policy Owners. We also may defer making payments
attributable to a check that has not cleared the bank on which it is drawn.
Telephone Transactions. You may make certain requests under the Policy
by telephone provided we have your written authorization on file at the Home
Office. These include requests for transfers, partial surrenders, Policy loans,
changes in premium allocation designations, dollar-cost averaging changes and
changes in the portfolio rebalancing program. Our Home Office will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine. Such procedures may include, among others, requiring some form of
personal identification prior to acting upon instructions received by telephone,
providing written confirmation of such transactions, and/or tape recording of
telephone instructions. Your request for telephone transactions authorizes us to
record telephone calls. If reasonable procedures are not employed, we may be
liable for any losses due to unauthorized or fraudulent instructions. However,
if reasonable procedures are employed, we will not be liable for any losses due
to unauthorized or fraudulent instructions.
OTHER POLICY BENEFITS AND PROVISIONS
Exchange Privilege. During the first 24 Policy Months, you may convert
the Policy to a permanent fixed benefit policy. If you object to a material
change in the investment policy of Separate Account II or the Investment
Subdivisions, you may also convert the Policy to a permanent fixed benefit
policy within 60 days after the change. In either case, you may elect either the
same death benefit or the same net amount at risk as the existing Policy at the
time of conversion. Premiums will be based on the same Age at issue and risk
classification of the Insured as the existing Policy. The conversion will be
subject to an equitable adjustment in payments and Account Value to reflect
variances, if any, in the payments and Account Value under the existing Policy
and the new policy. See your Policy for further information.
Optional Payment Plans. The Policy currently offers the following five
optional payment plans as alternatives to the payment of a death benefit or
Surrender Value in a lump sum:
<PAGE>
Plan 1 - Income for a Fixed Period. Periodic payments will be made
for a fixed period not longer than 30 years. Payments can be annual,
semi-annual, quarterly or monthly.
Plan 2 - Life Income. Equal monthly payments will be made for a
guaranteed minimum period. If the payee lives longer than the minimum period,
payments will continue for his or her life. The minimum period can be 10, 15 or
20 years.
Plan 3 - Income of a Definite Amount. Equal periodic payments of a
definite amount will be paid. Payments can be annual, semi-annual, quarterly or
monthly.
Plan 4 - Interest Income. Periodic payments of interest earned from the
proceeds will be paid. Payments can be annual, semi-annual, quarterly or monthly
and will begin at the end of the first period chosen.
Plan 5 - Joint Life and Survivor Income. Equal monthly payments will be
made to two payees for a guaranteed minimum of 10 years. Each payee must be at
least 35 years old when payments begin.
An optional payment plan can be selected in the application or by
notifying us in writing at our Home Office. Any amount left with us for payment
under an optional payment plan will be transferred to our general account.
Payments under an optional payment plan will not vary with the investment
performance of Separate Account II because they are all forms of fixed-benefit
annuities. See "Tax Treatment of Policy Proceeds." Certain conditions and
restrictions apply to payments received under an optional payment plan. For
further information, review your Policy or contact an authorized Life of
Virginia agent.
Other Policy Provisions. The Policy contains provisions addressing the
following matters:
Dividends. The Policy is non-participating. No dividends will be paid
on the Policy.
Incontestability. The Policy limits our right to contest the Policy as
issued or as increased, except for material misstatements contained in the
application or a supplemental application, after it has been in force during the
Insured's lifetime for a minimum period, generally for two years from the Policy
Date or effective date of the increase. This provision does not apply to riders
that provide disability benefits.
Suicide Exclusion. If the Insured commits suicide while sane or insane,
within two years of the Policy Date, Life Insurance Proceeds payable under the
Policy will be limited to all premiums paid, less outstanding Policy Debt and
less amounts paid upon partial surrender of the Policy.
If the Insured commits suicide while sane or insane, more than two
years after the Policy Date but within two years after the effective date of an
increase in the Specified Amount, the proceeds payable with respect to the
increase will be limited to the cost of insurance applied to the increase.
Misstatement of Age or Sex. Life Insurance Proceeds will be adjusted
if the Insured's Age or sex has been misstated in the application.
Written Notice. Any written notice should be sent to us at our Home
Office at 6610 West Broad Street, Richmond, Virginia 23230. The notice should
include the Policy number and the Insured's full name. Any notice sent by us to
you will be sent to the address shown in the application unless an appropriate
address change form has been filed with us.
<PAGE>
Owner. You have rights in the Policy during the Insured's lifetime.
If you die before the Insured and there is no contingent Owner, ownership passes
to your estate.
Beneficiary. You designate the Primary Beneficiaries and Contingent
Beneficiaries when you apply for the Policy. If changed, the Primary Beneficiary
and Contingent Beneficiary is as shown in the latest change filed with us. One
or more Primary Beneficiaries or Contingent Beneficiaries may be named in the
application. In such a case, the proceeds will be paid in equal shares to the
survivors in the appropriate Beneficiary class, unless you request otherwise.
Unless an optional payment plan is chosen, the proceeds payable at the
Insured's death will be paid in a lump sum to the Primary Beneficiary(ies). If
the Primary Beneficiary(ies) dies before the Insured, the proceeds will be paid
to the Contingent Beneficiary(ies). If no Beneficiary(ies) survives the Insured,
the proceeds will be paid to you or your estate.
Reinstatement. If the Policy has not been surrendered, the Policy may
be reinstated within three years after lapse, subject to compliance with certain
conditions, including the payment of a necessary premium and submission of
satisfactory evidence of insurability. See your Policy for further information.
Trustee. If a trustee is named as the Owner or Beneficiary of the
Policy and subsequently exercises ownership rights or claims benefits
thereunder, we will have no obligation to verify that a trust is in effect or
that the trustee is acting within the scope of his/her authority. Payment of
policy benefits to the trustee will release us from all obligations under the
Policy to the extent of the payment. When we make a payment to the trustee, we
will have no obligation to ensure that such payment is applied according to the
terms of the trust agreement.
Other Changes. At any time we may make such changes in the Policy as
are necessary to assure compliance at all times with the definition of life
insurance prescribed by the Code; to make the Policy, our operations, or the
operation of Separate Account II conform with any law or regulation issued by
any government agency to which they are subject; or to reflect a change in the
operation of Separate Account II, if allowed by the Policy. Only the President
or a Vice-President of Life of Virginia has the right to change the Policy. No
agent has the authority to change the Policy or waive any of its terms. All
endorsements, amendments, or riders must be signed by such officer to be valid.
Reports. We maintain records and accounts of all transactions involving
the Policy, Separate Account II and Policy Debt. Within 30 days after each
Policy Anniversary, you will be sent a report showing information about your
Policy for the period covered by the report. The report will show the amount of
Life Insurance Proceeds, the Account Value in each Investment Subdivision, the
Surrender Value and Policy Debt. The report will also show premiums paid and
charges made during the Policy Year. You will also be sent an annual and a
semi-annual report for each Fund underlying an Investment Subdivision to which
you have allocated Account Value, as required by the 1940 Act. In addition, when
you pay premiums (other than by pre-authorized checking account deduction), or
if you take out a Policy loan, make transfers or make partial surrenders, you
will receive a written confirmation of these transactions.
Change of Owner. You may change the Owner of the Policy by sending a
written request on a form satisfactory to us to our Home Office while the
Insured is alive and the Policy is in force. The change will take effect the
date you sign the written request, but the change will not affect any action we
have taken before we receive the written request. A change of Owner does not
change the Beneficiary designation.
<PAGE>
Supplemental Benefits. Supplemental benefits are available and may be
added to your Policy by rider. Monthly charges for these benefits will be
deducted from your Account Value as part of the monthly deduction. See "Monthly
Deduction." Examples of these supplemental benefits include term insurance on a
spouse or children, additional death benefits if the insured dies in an
accident, and waiver of either the monthly deduction or a stipulated amount if
the Insured becomes disabled as defined in the rider. Additional rules and
limits apply to these supplemental benefits. Please ask your authorized Life of
Virginia agent for further information or contact our Home Office.
Using the Policy as Collateral. The Policy can be assigned as
collateral security. We must be notified in writing if you assign the Policy.
Any payments made before the assignment and recorded at our Home Office will not
be affected. We are not responsible for the validity of an assignment. Your
rights and the rights of the Beneficiary may be affected by an assignment.
Reinsurance. We intend to reinsure a portion of the risks assumed
under the Policies.
LIFE OF VIRGINIA
The Life Insurance Company of Virginia. We are a stock life insurance
company operating under a charter granted by the Commonwealth of Virginia on
March 21, 1871. We are principally engaged in the offering of life insurance and
annuity policies and rank among the 25 largest stock life insurance companies in
the United States in terms of business in force. We are admitted to do business
in 49 states and the District of Columbia. Our principal offices are at 6610
West Broad Street, Richmond, Virginia 23230.
Eighty percent of our capital stock is owned by General Electric
Capital Assurance Corporation ("GE Capital Assurance"). The remaining 20% is
owned by GE Financial Assurance Holdings, Inc. GE Capital Assurance and GE
Financial Assurance Holdings, Inc. are indirectly wholly-owned subsidiaries of
General Electric Capital Corporation ("GE Capital"). GE Capital, a New York
corporation, is a diversified financial services company whose subsidiaries
consist of specialty insurance, equipment management, and commercial and
consumer financing businesses. GE Capital's ultimate parent, General Electric
Company, founded more than one hundred years ago by Thomas Edison, is the
world's largest manufacturer of jet engines, engineering plastics, medical
diagnostic equipment and large electric power generation equipment.
State Regulation. We are subject to regulation by the State Corporation
Commission of the Commonwealth of Virginia. An annual statement is filed with
the Virginia Commissioner of Insurance on or before March 1 of each year
covering our operations and reporting on our financial condition as of December
31 of the preceding year. Periodically, the Commissioner of Insurance examines
our liabilities and reserves and those of Separate Account II and certifies
their adequacy, and a full examination of our operations is conducted by the
State Corporation Commission, Bureau of Insurance of the Commonwealth of
Virginia at least every five years.
We are also subject to the insurance laws and regulation of other
states within which it is licensed to operate.
Executive Officers and Directors. We are managed by a board of
directors. The following table sets forth the name, address and principal
occupations during the past five years of each of our executive officers and
directors.
<PAGE>
Name and Position(s)
With Life of Virginia* Principal Occupations Last Five Years
- --------------------------------------------------------------------------------
Ronald V. Dolan* Director, Chairman of the Board, Life of
Virginia since 1997; President and Chief
Executive Officer of First Colony Life
Insurance Company 1992-1997; President,
First Colony Corporation since 1985.
Paul E. Rutledge III* Director, President and Chief Executive
Officer since 1997; President and Chief
Operating Officer, Life of Virginia, 5/91 to
4/97; Executive Vice President and Chief
Operating Officer, United Investors Life
Insurance Company, Birmingham, Alabama, 9/87
to 4/91.
Selwyn L. Flournoy, Jr.* Director, Life of Virginia since 5/89;
Senior Vice President, Life of Virginia,
since 1980. Chief Financial Officer since
1980.
Linda L. Lanam* Director, Life of Virginia, since 2/93;
Senior Vice President since 1997; Vice
President and Senior Counsel, Life of
Virginia, since 1989; Corporate Secretary
for Life of Virginia and for a number of
Life of Virginia affiliates, since 1992.
Robert D. Chinn* Director, Life of Virginia since 1997;
Senior Vice President - Agency, Life of
Virginia, since 1/92; Vice President, Life
of Virginia, since 1985.
Elliott Rosenthal Senior Vice President - Investment Products
since 1997; Vice President and Senior
Investment Actuary, 1/95 - 4/97; Investment
Actuary, 1/82 - 2/95.
Victor C. Moses Director, Life of Virginia, since April 1,
1996. Director of GNA since April 1994.
Senior Vice President, Business Development,
and Chief Actuary of GNA since Mary 1993.
Senior Vice President and Chief Financial
Officer of GNA, 1991-1993. Vice President
and Chief Actuary of GNA, 1983-1991. Senior
Vice President, Controller and Treasurer GNA
Investors Trust, 1992-1993.
Geoffrey S. Stiff Director, Life of Virginia, since April 1,
1996. Director of GNA since April 1994.
Senior Vice President, Chief Financial
Officer and Treasurer of GNA since May 1993.
Vice President, Chief Financial Officer and
Director of Employers Reinsurance
Corporation 1987-1993. Senior Vice
President, Controller and Treasurer of GNA
Investors Trust since 1993.
- ----------------------------------------------------------------
* Messrs. Dolan, Rutledge, Flournoy, Chinn and Ms. Lanam are members of our
Executive Committee.
The principal business address of each person listed, unless otherwise
indicated, is The Life Insurance Company of Virginia, 6610 W. Broad Street,
Richmond, Virginia 23230.
The principal business address for Mr. Dolan and Mr. Stiff is First Colony
Life Insurance Company, 700 Main Street, Post Office 1280, Lynchburg, VA
24505-1280.
The principal business address for Mr. Moses is GNA Corporation, Two Union
Square, 601 Union Street, Seattle, WA 98101.
The composition of our Board of Directors changed following our sale on April
1, 1996.
<PAGE>
Separate Account II. Separate Account II was established by us as a
separate investment account on August 21, 1986. Separate Account II currently
has thirty-four Investment Subdivisions available under the Policy, but that
number may change in the future. Each Investment Subdivision invests exclusively
in shares representing an interest in a separate corresponding portfolio of one
of the nine Funds described above. Net Premiums are allocated in accordance with
your instructions among up to seven of the thirty-four Investment Subdivisions
available under the Policy.
The assets of Separate Account II belong to us. Nonetheless, the assets
in Separate Account II attributable to the Policies are not chargeable with
liabilities arising out of any other business which we may conduct. The assets
of Separate Account II shall, however, be available to cover the liabilities of
our General Account to the extent that the assets of Separate Account II exceed
its liabilities arising under the Policies supported by it. Income and both
realized and unrealized gains or losses from the assets of Separate Account II
are credited to or charged against Separate Account II without regard to the
income, gains or losses arising out of any other business we may conduct.
Separate Account II is registered with the SEC as a unit investment
trust under the 1940 Act and meets the definition of a separate account under
the federal securities laws. Registration with the SEC does not involve
supervision of the management or investment practices or policies of Separate
Account II by the SEC.
Changes to Separate Account II. Separate Account II may include other
Investment Subdivisions that are not available under the Policy and are not
otherwise discussed in this prospectus. We may substitute another investment
subdivision or insurance company separate account under the Policy if, in our
judgment, investment in a Investment Subdivision should no longer be possible or
becomes inappropriate to the purposes of the Policies, or if investment in
another investment subdivision or insurance company separate account is in the
best interest of Owners. No substitution may take place without notice to Owners
and prior approval of the SEC and insurance regulatory authorities, to the
extent required by the 1940 Act and applicable law.
We may also, where permitted by law: (1) create new separate accounts;
(2) combine separate accounts, including Separate Account II; (3) add new
Investment Subdivisions or remove Investment Subdivisions from Separate Account
II; (4) make the Investment Subdivisions available under other policies we
issue; (5) deregister Separate Account II under the 1940 Act; and (6) operate
Separate Account II under the direction of committee or in another form.
Voting of Fund Shares. We are the legal owner of shares held by the
Investment Subdivisions and as such have the right to vote on all matters
submitted to shareholders of the Funds. However, as required by law, we will
vote shares held in the Investment Subdivisions at regular and special meetings
of shareholders of the Funds in accordance with instructions received from
Owners with Account Value in the Investment Subdivisions. To obtain voting
instructions from Owners, before a meeting of shareholders of the Funds, we will
send Owners voting instruction material, a voting instruction form and any other
related material. Shares held by an Investment Subdivision for which no timely
instructions are received will be voted by us in the same proportion as those
shares for which voting instructions are received. Should the applicable federal
securities laws, regulations or interpretations thereof change so as to permit
us to vote shares of the Funds in our own right, we may elect to do so. We may,
if required by state insurance officials, disregard your voting instructions if
such instructions would require shares to be voted so as to cause a change in
sub-classification or investment objectives of one or more of the Funds, or to
approve or disapprove an investment advisory agreement. In addition, we may
under certain circumstances disregard voting instructions that would require
changes in the investment policy or investment adviser of one or more of the
Funds, provided that we reasonably disapprove of such changes in accordance with
applicable federal regulations. If we ever disregard voting instructions, Owners
will be advised of that action and of the reasons for such action in the next
report to Owners.
<PAGE>
TAX CONSIDERATIONS
The following discussion is general and is not intended as tax advice.
Tax Status of the Policy. The Code, in section 7702, establishes a
statutory definition of life insurance for tax purposes. We believe that the
Policy meets the statutory definition of life insurance, which places
limitations on the amount of premiums that may be paid. If the Specified Amount
of a Policy is increased or decreased, the applicable premium limitation may
change. In the case of a decrease in the Specified Amount, a partial surrender,
a change from Option A to Option B, or any other such change that reduces
benefits under the Policy during the first 15 years after a Policy is issued and
that results in a cash distribution to you in order for the Policy to continue
complying with section 7702 definitional limitations on premiums and cash
values, certain amounts prescribed in section 7702 which are so distributed will
be includable in your ordinary income (to the extent of any gain in the Policy).
Such income inclusion will also occur, in certain circumstances, with respect to
cash distributions made in anticipation of reductions in benefits under the
Policy.
The Code (section 817(h)) and regulations promulgated thereunder by the
Secretary of the Treasury (the "Treasury") prescribe diversification standards
for the investments of Separate Account II which must be met in order for the
Policy to be treated as a life insurance contract for federal tax purposes.
Separate Account II, through the Funds, intends to comply with the
diversification requirements prescribed by the Treasury. Although we do not
control the Funds, we have entered into agreements regarding participation in
the Funds which require the Funds to be operated in compliance with the
requirements prescribed by the Treasury. Thus, we believe that Separate Account
II will be treated as adequately diversified for federal tax purposes.
In certain circumstances, variable contract owners may be considered
the owners, for federal tax purposes, of the assets of the separate account used
to support such contracts. In those circumstances, income and gains from the
separate account assets would be includable in the variable contract owners'
gross income annually as earned. The Internal Revenue Service (the "Service")
has stated in published rulings that a variable contract owner will be
considered the owner of separate account assets if the owner possesses incidents
of ownership in those assets, such as the ability to exercise investment control
over the assets. The Treasury has announced, in connection with the issuance of
regulations concerning diversification requirements, that those regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset [i.e. separate] account may cause the
investor, rather than the insurance company, to be treated as the owner of the
assets of the account." This announcement also stated that guidance would be
issued by the way of regulation or published rulings on the "extent to which
policyholders may direct their investments to particular sub-accounts [of a
separate account] 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 present in situations addressed by the Service in
rulings in which it was determined that contract owners were not owners of
separate account assets. For example, you have the choice of more Funds to which
to allocate premiums and cash values and may be able to reallocate more
frequently than in such rulings. These differences could result in you being
considered, under the standard of those rulings, the owner of the assets of
Separate Account II. To ascertain the tax treatment of our policyowners, we have
requested, with regard to a policy similar to this Policy, a ruling from the
Service that we, and not our policyowners, are the owner of the assets of the
separate account there involved for federal income tax purposes. The Service
informed us that it will not rule on the request until issuance of the promised
<PAGE>
guidance referred to in the preceding paragraph. Because we do not know what
standards will be set forth in the regulations or revenue rulings which the
Treasury has stated it expects to issue, we have reserved the right to modify
our practices to attempt to prevent you from being considered the owner of the
assets of Separate Account II.
Frequently, if the Service or the Treasury sets forth a new position
which is adverse to taxpayers, the position is applied on a prospective basis
only. Thus, if the Service or the Treasury were to issue regulations or a ruling
which treated you as the owner of the assets of Separate Account II, that
treatment might only apply on a prospective basis. However, if the ruling or
regulations were not considered to set forth a new position, you might be
retroactively determined to be the owner of a portion of the assets of Separate
Account II for tax purposes.
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal tax purposes.
Tax Treatment of Policy Proceeds. The Policies should receive the same
Federal income tax treatment as fixed benefit life insurance. As a result, the
Life Insurance Proceeds payable under either benefit option are excludable from
the gross income of the Beneficiary under section 101 of the Code, and you will
not be deemed to be in constructive receipt of the Surrender Value under a
Policy until actual surrender. If proceeds payable upon death of the Insured are
paid under optional payment Plan 4 (interest income), the interest payments will
be includable in the Beneficiary's income. If proceeds payable on death are
applied under optional payment plan 3 and the Beneficiary is at an advanced age
at such time, such as age 80 or older, it is possible that payments would be
treated in a manner similar to that under Plan 4. If the proceeds payable upon
death of the Insured are paid under one of the other optional payment plans, the
payments will be prorated between amounts attributable to the death benefit
which will be excludable from the Beneficiary's income and amounts attributable
to interest which will be includable in the Beneficiary's income. In the event
of certain cash distributions under the Policy resulting from any change which
reduces future benefits under the Policy, the distribution will be taxed . The
Policies should receive the same Federal income tax treatment as fixed benefit
life insurance. As a result, the Life Insurance Proceeds payable under either
benefit option are excludable from the gross income of the Beneficiary under
section 101 of the Code, and you will not be deemed to be in constructive
receipt of the Surrender Value under a Policy until actual surrender. If
proceeds payable upon death of the Insured are paid under optional payment Plan
4 (interest income), the interest payments will be includable in the
Beneficiary's income. If proceeds payable on death are applied under optional
payment plan 3 and the Beneficiary is at an advanced age at such time, such as
age 80 or older, it is possible that payments would be treated in a manner
similar to that under Plan 4. If the proceeds payable upon death of the Insured
are paid under one of the other optional payment plans, the payments will be
prorated between amounts attributable to the death benefit which will be
excludable from the Beneficiary's income and amounts attributable to interest
which will be includable in the Beneficiary's income. In the event of certain
cash distributions under the Policy resulting from any change which reduces
future benefits under the Policy, the distribution will be taxed in whole or in
part as ordinary income (to the extent of gain in the Policy). See discussion
above, "Tax Status of the Policy."
For an Insured who survived beyond the end of the Commissioners' 1980
Standard Ordinary Mortality Table, there may be a question about taxation of
death benefit proceeds and constructive receipt. Because we continue to charge
for the insurance risk beyond age 100, we believe that the proceeds will
continue to be protected from taxation. Therefore, we have no current plans to
withhold or report taxes in this situation.
Except as noted below, a loan received under a Policy will be treated
as your indebtedness, so that no part of any loan under a Policy will constitute
income to you so long as the Policy remains in force, and a partial surrender
under a Policy will not constitute income except to the extent it exceeds the
total premiums paid for the Policy (reduced by any amounts previously withdrawn
which were not treated as income). However, with respect to the portion of any
loan that is attributable to cash value in excess of the total premium payments
under the Policy, it is possible that the Service could treat you as being in
receipt of certain amounts of income.
Generally, interest paid on loans under a Policy will not be tax
deductible, except in the case of certain loans under a Policy covering a "key
person." A tax adviser should be consulted before taking any policy loan.
The right to exchange the Policy for a permanent fixed benefit policy
(see "Exchange Privilege" ), the right to change Owners (see "Change of Owner"),
the provision for surrenders, the right to change from one death benefit option
to another, and other changes reducing future death benefits may have tax
consequences depending on the circumstances of such exchange, change or
surrender. Upon complete surrender, if the amount received plus the Policy Debt
exceeds the total premiums paid (less any amounts treated as previously
withdrawn by you), the excess generally will be treated as ordinary income.
<PAGE>
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Owner or Beneficiary.
Tax Treatment of Policy Loans and Other Distributions. The Technical
Miscellaneous Revenue Act of 1988 (TAMRA) includes the following provisions,
which affect the taxation of distributions (other than proceeds paid at the
death of the insured) from life insurance contracts:
1. If premiums are paid more rapidly than the rate defined by a
"7-Pay Test," the Policy will be classified as a "modified
endowment contract." This test applies a cumulative limit on the
amount of payments that can be made into a Policy in order to
avoid modified endowment contract treatment.
2. Any Policy received in exchange for a policy classified as a
modified endowment contract will be treated as a modified
endowment contract regardless of whether it meets the 7-Pay
Test.
3. Loans (including unpaid interest thereon) from a Policy
classified as a modified endowment contract will be considered
distributions.
4. Distributions (including partial surrenders, loans and loan
interest, assignments and pledges) from a Policy classified as a
modified endowment contract will be taxed first as distributions
of income from the Policy (to the extent that the cash value of
the Policy, before reduction by any surrender charge or loan,
exceeds the total premiums paid less any previous untaxed
withdrawals), and then as a non-taxable recovery of premium.
5. A penalty tax of 10% will be imposed on distributions includable
in income (including complete and partial surrenders, loans and
loan interest, assignments and pledges) from a Policy classified
as a modified endowment contract, unless such distributions are
made (1) after you attain age 59 1/2, (2) because you have
become disabled, or (3) as substantially equal annuity payments
over your life or life expectancy (or over the joint lives or
life expectancies of you and your beneficiary).
In order to avoid classification as a modified endowment contract, a
Policy must not have been issued in exchange for a modified endowment contract,
and premiums paid under the Policy must not be paid more rapidly than the 7-Pay
Test allows. We will provide you guidance as to the amount of premium payments
that may be paid if you wish to avoid treatment of the Policy as a modified
endowment contract.
Additionally, all life insurance contracts which are treated as
modified endowment contracts and which are issued by us or any of our affiliates
with the same person designated as the owner within the same calendar year will
be aggregated and treated as one contract for purposes of determining any tax on
distributions.
The provisions of TAMRA are complex and are open to considerable
variation in interpretation. You should consult your tax advisor before making
any decisions regarding increases or decreases in or additions to coverage or
distributions from your Policy.
Taxation of Life of Virginia. Because of our current status under the
Code, we do not expect to incur any Federal income tax liability that would be
chargeable to Separate Account II. Based upon this expectation, no charge is
<PAGE>
being made currently to Separate Account II for Federal income taxes. If,
however, we determine that such taxes may be incurred, we may assess a charge
for those taxes from Separate Account II.
We may also incur state and local taxes (in addition to premium taxes
for which a deduction from premiums is currently made) in several states. At
present, these taxes are not significant. If there is a material change in state
or local tax laws, charges for such taxes attributable to Separate Account II
may be made.
Income Tax Withholding. Generally, unless you provide us with a written
election to the contrary before a distribution is made, we are required to
withhold income taxes from any portion of the money received by you upon
surrender of the Policy (and if the Policy is a modified endowment contract,
upon a partial surrender or a Policy loan). If you request that no taxes be
withheld, or if we do not withhold a sufficient amount of taxes, you will be
responsible for the payment of any taxes and early distribution penalties that
may be due on the amounts received. You may also be required to pay penalties
under the estimated tax rules, if your withholding and estimated tax payments
are insufficient to satisfy your total tax liability. You may, therefore, want
to consult a tax advisor.
The foregoing discussion is general and is not intended as tax advice.
Other Considerations. Any person concerned about these tax implications
should consult a competent tax advisor. This discussion is based on our
understanding of the present Federal income tax laws as they are currently
interpreted by the Service. No representation is made as to the likelihood of
continuation of these current laws and interpretations. It should be further
understood that the foregoing discussion is not exhaustive and that special
rules not described in this prospectus may be applicable in certain situations.
Moreover, no attempt has been made to consider any applicable state or other tax
laws.
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
In 1983, the Supreme Court held in Arizona Governing Committee v.
Norris, that optional annuity benefits provided under an employee's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women on the basis of sex. The Policy contains guaranteed
cost of insurance rates and guaranteed purchase rates for certain settlement
options that distinguish between men and women. Accordingly, employers and
employee organizations should consider, in consultation with legal counsel, the
impact of Norris, and Title VII generally, on any employment-related insurance
or benefit program for which a Policy may be purchased.
ADDITIONAL INFORMATION
Sale of Policies. The Policies will be sold by our licensed life
insurance agents who are also registered representatives of Forth Financial
Securities Corporation, the principal underwriter of the Policies, or of
broker-dealers who have entered into written sales agreements with the principal
underwriter. Forth Financial Securities Corporation, a Virginia Corporation,
located at 6610 W. Broad Street, Richmond, Virginia 23230, is registered with
the SEC under the Securities Exchange Act of 1934 as a broker-dealer and a
member of the National Association of Securities Dealers, Inc. Forth Financial
Securities Corporation also serves as principal underwriter for other variable
life insurance and variable annuity policies issued by us. However, no amounts
have been retained by Forth Financial Securities Corporation for acting as
principal underwriter of these other policies.
Our writing agents will receive commissions based on a commission
schedule and rules. First-year commissions depend on the Insured's Age, risk
class, and the size of the policy. In the first Policy Year, the agent will
receive a commission of up to .95% of the maximum commissionable premium plus
up to ____% of premiums paid in excess of the maximum commissionable premium. In
<PAGE>
renewal years, the agent receives up to ____% of the premiums paid. A trail
commission equal to an annual rate of ____% of Account Value may be paid on
Policies.
Other Information. A registration statement under the Securities Act of
1933 has been filed with the SEC relating to the offering described in this
prospectus. This prospectus does not include all the information set forth in
the registration statement. The omitted information may be obtained at the SEC's
principal office in Washington, D.C. by paying the SEC's prescribed fees.
Litigation. No legal or administrative proceeding is pending that
would have a material effect upon Separate Account II.
Legal Matters. The legal matters in connection with the Policy
described in this prospectus have been passed on by J. Neil McMurdie, Associate
Counsel and Assistant Vice President of Life of Virginia. Sutherland, Asbill &
Brennan LLP of Washington, D.C. has provided advice on matters relating to the
federal securities laws.
Experts.
KPMG Peat Marwick LLP. The consolidated balance sheet of The Life
Insurance Company of Virginia and subsidiary as of December 31, 1996, and the
related consolidated statements of income, shareholders' equity and cash flows
for the nine months ended December 31, 1996 and the preacquisition three months
period ended March 31, 1996, and the Statement of Assets and Liabilities of Life
of Virginia Separate Account II as of December 31, 1996 and the related
statements of operations and changes in net assets for the year or period then
ended have been included herein and in the registration statement in reliance
upon the reports of KPMG Peat Marwick LLP, independent certified KPMG Peat
Marwick LLP. The consolidated financial statements of Life of Virginia and
subsidiaries as of December 31, 1996, and for the nine month period ended
December 31, 1996, and the reacquisition three month period ended March 31,
1996, and the financial statements of Separate Account II as of December 31,
1996, and for the year or periods then ended have been included herein and in
the registration statement in reliance upon the reports of KPMG Peat Marwick
LLP, independent auditors, appearing elsewhere herein, and upon the authority of
said firm as experts in account and auditing.
Ernst & Young LLP. The consolidated financial statements of The Life
Insurance Company of Virginia and subsidiaries at December 31, 1995 and for each
of the two years in the period ended December 31, 1995 and the statements of
operations and statements of changes in net assets of Life of Virginia Separate
Account II for each of the two years or periods ended December 31, 1995,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, to the extent indicated in their
reports thereon also appearing elsewhere herein, and are included in reliance
upon such reports given upon the authority of such firm as experts Ernst &
Young LLP. The consolidated financial statements of Life of Virginia and
subsidiaries as of December 31, 1995, and for each of the two years in the
period ended December 31, 1995, and the statements of operations and statements
of changes in net assets of Separate Account II for the two years or periods
ended December 31, 1995, appearing in this Prospectus and registration statement
have been audited by Ernst & Young LLP, independent auditors, to the extent
indicated in their reports thereon also appearing elsewhere herein, and are
included in reliance upon such reports given upon the authority of said firm as
experts in account and auditing.
Actuarial Matters. Actuarial matters included in this prospectus have
been examined by Bruce E. Booker, an actuary of Life of Virginia, whose opinion
is filed as an exhibit to the registration statement.
Change in Auditors. Subsequent to the acquisition of us by GNA
Corporation on April 1, 1996, we selected KPMG Peat Marwick LLP to be our
auditor. Accordingly, our principal auditor has changed for the year ending
December 31, 1996, from Ernst & Young LLP, to KPMG Peat Marwick LLP. The former
auditors were dismissed and KPMG Peat Marwick LLP was retained because KPMG Peat
Marwick LLP is the auditor for GE Capital, the indirect parent of GNA
Corporation. This change of auditors was approved by the members of our Board of
Directors.
Neither KPMG Peat Marwick LLP's nor Ernst & Young LLP's reports on the
financial statements contains any adverse opinions or a disclaimer of opinion,
or was qualified or modified as a uncertainty or audit scope. Furthermore, there
<PAGE>
were no disagreements with either on any matter of accounting principle or
practice, financial statement disclosure or auditing scope or procedure which
would have caused them to make reference to the subject matter of the
disagreement in connection with their reports.
Financial Statements. The consolidated financial statements of Life of
Virginia and subsidiaries included herein should be distinguished from the
financial statements of Separate Account II and should be considered only as
bearing on our ability to meet our obligations under the Policies. Such
consolidated financial statements of Life of Virginia and subsidiaries should
not be considered as bearing on the investment performance of the assets held in
Separate Account II.
[Financial Statements to be included by Pre-Effective Amendment]
<PAGE>
Part II
OTHER INFORMATION
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
The Life Insurance Company of Virginia's By-laws provide, in Article V,
Section 5, for indemnification of directors, officers and employees of the
Company.
Insofar as indemnification for liability arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provision, or otherwise
under circumstances where the burden of proof set forth in Section 11(b) of the
Act has not been sustained, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A)
Life of Virginia hereby represents that the fees and charges deducted
under the Policy, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by Life of
Virginia.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of ___ pages.
The undertaking to file reports.
The Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The Signatures.
Written consents of the following persons:
(a) J. Neil McMurdie (10)
(b) Messrs. Sutherland, Asbill & Brennan LLP (10)
(c) Bruce E. Booker, F.S.A. (10)
(d) KPMG Peat Marwick LLP (10)
(e) Ernst & Young LLP (10)
The following exhibits, corresponding to those required by paragraph A
of the instructions as to exhibits in Form N-8B-2:
(1)(a) Resolution of the Board of Directors of Life of Virginia
authorizing the establishment of Separate Account II. (1)
(1)(b) Resolution of the Board of Directors of Life of Virginia
authorizing the addition of Investment Subdivisions to
Separate Account II. (1)
(1)(c) Resolution of the Board of Directors of Life of Virginia
authorizing the establishment of Investment Subdivisions of
Separate Account II which invest in shares of the Fidelity
Variable Insurance Products Fund II Asset Manager Portfolio
and Neuberger and Berman Advisers Management Trust Balanced
Portfolio. (1)
(1)(d) Resolution of the Board of Directors of Life of Virginia
authorizing the establishment of Investment Subdivisions of
Separate Account II which invest in shares of Janus Aspen
Series, Growth Portfolio, Aggressive Growth Portfolio and
Worldwide Growth Portfolio. (3)
(1)(e) Resolution of the Board of Directors of Life of Virginia
authorizing the establishment of Investment Subdivisions of
Separate Account II which invest in shares of the Utility Fund
of the Investment Management Series. (4)
(1)(f) Resolution of the Board of Directors of Life of Virginia
authorizing the establishment of two additional Investment
Subdivisions of Separate Account II which invest in shares of
the Corporate Bond Fund of the Insurance Management Series and
the Contrafund Portfolio of the Variable Insurance Products
Fund II. (4)
(1)(g) Resolution of the Board of Directors of Life of Virginia
authorizing the establishment of four additional Investment
Subdivisions of Separate Account II which invest in shares of
the Alger American Growth Portfolio and the Alger American
Small Capitalization Portfolio of The Alger American Fund, and
the Balanced Portfolio and Flexible Income Portfolio of the
Janus Aspen Series. (6)
(1)(h) Resolution of the Board of Directors of Life of Virginia
authorizing the establishment of two additional Investment
Subdivisions of Separate Account 4 investing in shares of the
Federated American Leaders Fund II of the Federated Insurance
Series, and the International Growth Portfolio of the Janus
Aspen Series. (7)
<PAGE>
(1)(i) Resolution of the Board of Directors of Life of Virginia
authorizing additional Investment Subdivisions investing in
shares of Growth and Income Portfolio and Growth Opportunities
Portfolio of Variable Insurance Products Fund III; Growth II
Portfolio and Large Cap Growth Portfolio of the PBHG Insurance
Series Fund, Inc.; and Global Income Fund and Value Equity
Fund of GE Investments Funds, Inc. (8)
(1)(j) Resolution of the Board of Directors of Life of Virginia
authorizing additional Investment Subdivisions investing in
shares of Capital Appreciation Portfolio of Janus Aspen
Series. (8)
1A(2) Not Applicable
1A(3)(a) Underwriting Agreement (1)
1A(3)(b)(i) Underwriting Agreement dated April 2, 1996, between The Life
Insurance Company of Virginia and Fourth Financial Securities
Corporation. (7)
1A(3)(b)(ii) Selling Agreement (1)
1A(4) Not Applicable
1A(5) Policy Form, Commonwealth Four
1A(5)(a) Endorsement to policy (9)
(a) Accelerated Benefit Rider
(b) Disability Benefit Rider
(c) Disability Benefit Rider
(d) Insurance Rider for Additional Insured Person
(e) Children's Insurance Rider
(f) Accidental Death Benefit Rider
(g) Guarantee Account Rider
(h) Unisex Rider
(i) Unit Value Endorsement
1A(6)(a) Articles of Incorporation of The Life Insurance Company of
Virginia (1)
1A(6)(b) By-Laws of The Life Insurance Company of Virginia (1)
1A(7) Not Applicable
1A(8)(a) Stock Sale Agreement (1)
1A(8)(a)(i) Amendment to Stock Sale Agreement between The Life Insurance
Company of Virginia and Life of Virginia Series Fund, Inc. (1)
1A(8)(b) Amendment to Participation Agreement among Variable Insurance
Products Fund II, Fidelity Distributors Corporation, and The
Life Insurance Company of Virginia. (7)
1A(8)(b)(i) Amendment to Participation Agreement among Variable Insurance
Products Fund, Fidelity Distributors Corporation, and The Life
Insurance Company of Virginia. (7)
1A(8)(b)(ii) Participation Agreement among Variable Insurance Products
Fund, Fidelity Distributors Corporation, and The Life
Insurance Company of Virginia. (1)
1A(8)(c) Agreement between Oppenheimer Variable Account Funds,
Oppenheimer Management Corporation, and The Life Insurance
Company of Virginia. (1)
1A(8)(d) Amendment to the Participation Agreement between Oppenheimer
Variable Account Funds, Oppenheimer Management Corporation,
and The Life Insurance Company of Virginia. (1)
1A(8)(e) Participation Agreement among Variable Insurance Products Fund
II, Fidelity Distributors Corporation and The Life Insurance
Company of Virginia. (1)
<PAGE>
1A(8)(f) Sales Agreement between Advisers Management Trust and The Life
Insurance Company of Virginia. (1)
1A(8)(g) Amendment to Sales Agreement between Advisers Management Trust
and The Life Insurance Company of Virginia. (1)
1A(8)(h) Fund Participation Agreement between Janus Aspen Series and
The Life Insurance Company of Virginia. (3)
1A(8)(i) Fund Participation Agreement between Insurance Management
Series, Federated Securities Corporation, and The Life
Insurance Company of Virginia. (4)
1A(8)(j) Fund Participation Agreement between The Alger American Fund,
Fred Alger and Company, Inc., and The Life Insurance Company
of Virginia. (6)
1A(8)(k) Fund Participation Agreement between Variable Insurance
Products Fund III and The Life Insurance Company of Virginia.
(8)
1A(8)(l) Fund Participation Agreement between PBHG Insurance Series
Fund, Inc., and The Life Insurance Company of Virginia. (8)
1A(9) Administrative Agreement (1)
1A(10) Application for Commonwealth Four Policy (1)
2 See Exhibit 1(A)5
3(a) Opinion and Consent of Counsel (10)
3(b) Consent of Messrs. Sutherland, Asbill & Brennan LLP (10)
3(c) Consent of KPMG Peat Marwick LLP (10)
3(d) Consent of Ernst & Young LLP (10)
4 Not Applicable
5 Not Applicable
6 Opinion and Consent of Bruce E. Booker, Actuary (10)
7 Memorandum describing Life of Virginia's Issuance, Transfer,
Redemption and Exchange Procedures for the Policies. (10)
8 Undertaking to Guarantee performance of obligations of
principal underwriter. (1)
9 Power of Attorney (2)
Power of Attorney dated April 2, 1996. (7)
Power of Attorney dated April 16, 1997. (8)
- --------------------
1. Filed April 24, 1992 with Post-Effective Amendment Number 7 to Forms S-6
for Life of Virginia Separate Account II, Registration Number 33-9651.
2. Filed April 30, 1993 with Post-Effective Amendment Number 8 to Form S-6
for Life of Virginia Separate Account II, Registration Number 33-9651.
<PAGE>
3. Filed April 29, 1994 with Post-Effective Amendment Number 9 to Form S-6
for Life of Virginia Separate Account II, Registration Number 33-9651.
4. Filed January 3, 1995 with Post-Effective Amendment Number 10 to Form S-6
for Life of Virginia Separate Account II, Registration Number 33-9651.
5. Filed April 28, 1995 with Post-Effective Amendment Number 11 to Form S-6
for Life of Virginia Separate Account II, Registration Number 33-9651.
6. Filed September 28, 1995 with Post-Effective Amendment Number 12 to Form
S-6 for Life of Virginia Separate Account II, Registration Number
33-9651.
7. Filed May 1, 1996 with Post-Effective Amendment Number 13 to Form S-6 for
Life of Virginia Separate Account II, Registration Number 33-9651.
8. Filed May 1, 1997 with Post-Effective Amendment Number 14 to Form S-6 for
Life of Virginia Separate Account II, Registration Number 33-9651
9. Filed November 17, 1997 with Pre-Effective Amendment No. 1 to Form S-6
for Life of Virginia Separate Account II, Registration Number 333-32071.
10. To be Filed by Pre-Effective Amendment
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Life of Virginia Separate Account II has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal to be hereunto affixed and attested, all in the
County of Henrico in the Commonwealth of Virginia, on the 24th day of November,
1997.
Life of Virginia Separate Account II
(Seal) The Life Insurance Company of Virginia
(Depositor)
Attest: /s/ Laura Deusebio
--------------------
By: /s/ Selwyn L. Flournoy, Jr.
-----------------------------
Selwyn L. Flournoy, Jr.
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, The Life
Insurance Company of Virginia certifies that it has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal to be hereunto affixed and attested, all in the
County of Henrico in the Commonwealth of Virginia on the 24th day of November,
1997.
(Seal) The Life Insurance Company of Virginia
Attest: /s/ Laura Deusebio
---------------------
By: /s/ Selwyn L. Flournoy, Jr.
-------------------------------
Selwyn L. Flournoy, Jr.
Senior Vice President
Given under my hand this 24th day of November, 1997 in the City/County
of Henrico, Commonwealth of Virginia.
/s/ Laura Deusebio
------------------------------
Notary Public
My Commission Expires January 31, 2000
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date(s) indicated.
Signature Title Date
- --------- ----- ----
/s/RONALD V. DOLAN Director, Chairman of the Board November 24, 1997
- ------------------
Ronald V. Dolan
/s/PAUL E. RUTLEDGE Director, President, and November 24, 1997
- ------------------- Chief Operating Officer
Paul E. Rutledge III
/s/ SELWYN L. FLOURNOY, JR. Director, Senior Vice President November 24, 1997
- --------------------------- Chief Financial Officer
Selwyn L. Flournoy, Jr.
/s/LINDA L. LANAM Director, Senior Vice President November 24, 1997
- -----------------
Linda L. Lanam
/s/ROBERT D. CHINN Director, Senior Vice President November 24, 1997
- ------------------
Robert D. Chinn
/s/VICTOR C. MOSES Director November 24, 1997
- ------------------
Victor C. Moses
/s/GEOFFREY S. STIFF Director November 24, 1997
- --------------------
Geoffrey S. Stiff
By /s/ Selwyn L. Flournoy, Jr., pursuant to Power of Attorney executed on April
16, 1997.
<PAGE>
Exhibit List
1A(5) Policy Form, Commonwealth Four
Exhibit 1A(5)
Policy Form, Commonwealth Four
P1250 CR 10/97
<PAGE>
FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICY
LIFE OF
VIRGINIA LOGO
To the owner:
Please read your Policy carefully. This Policy is a legal contract between
you and the Company. You, the Owner, have benefits and rights described in
this Policy. The Insured is named in the Policy. The Beneficiary is as named
in the attached application, unless later changed. We will pay the Life
Insurance Proceeds on this Policy when we receive due proof that the Insured
died while this Policy was in effect. This is a Flexible Premium Variable
Life Insurance Policy. You may increase or decrease the Specified Amount. We
will allocate Net Premiums to the Separate Account named on the policy data
pages.
THIS POLICY'S ACCOUNT VALUE IN THE SEPARATE ACCOUNT IS BASED ON THE
INVESTMENT EXPERIENCE OF THAT ACCOUNT, AND MAY INCREASE OR DECREASE DAILY.
IT IS NOT GUARANTEED AS TO DOLLAR AMOUNT. THE AMOUNT OF THE DEATH BENEFIT OR
THE DURATION OF THE DEATH BENEFIT MAY VARY. THE MAXIMUM LOAN AMOUNT IS
NINETY PERCENT OF THE DIFFERENCE BETWEEN THE ACCOUNT VALUE AND ANY SURRENDER
CHARGE ON THE DATE OF THE LOAN.
Refund Privilege. You may return this Policy to our Home Office or to our
agency within 10 days after its delivery for a refund. The amount of the
refund will equal the sum of all charges deducted from premiums paid, plus
the Net Premiums allocated to the Separate Account adjusted by investment
gains and losses.
For The Life Insurance Company of Virginia
/s/PAUL E. RUTLEDGE III
PRESIDENT
o Flexible Premium Variable Life Insurance Policy
o Life Insurance Proceeds payable at the Insured's death
o Adjustable death benefit
o Flexible premiums payable for the Insured's life
o Some benefits reflect investment results
o No dividends
THE LIFE INSURANCE
COMPANY OF VIRGINIA
6610 West Broad Street, Richmond, Virginia 23230
A Stock Company
<PAGE>
TABLE OF CONTENTS
Policy Data Pages ........................................ 3
Definitions .............................................. 4
Introduction
The Policy and Its Parts ............................... 5
When This Policy Will Terminate ........................ 5
The Owner and the Beneficiary
The Owner .............................................. 6
The Beneficiary ......................................... 6
Changing the Owner or Beneficiary ...................... 6
Using the Policy as Collateral for a Loan ............ 6
Trustee ................................................. 6
Premium Payments
Premiums After the First Premium......................... 6
When and Where to Pay Premiums........................... 7
Allocation of Net Premiums ............................. 7
Continuation Amount and Continuation
Period ............................................... 7
Grace Period ........................................... 7
How This Policy Can Be Reinstated ...................... 8
Life Insurance Proceeds
How We Determine Proceeds .............................. 9
Corridor Percentage Chart .............................. 9
Compliance as Life Insurance ........................... 10
Change in Existing Coverage ............................ 10
Change in Death Benefit Options ......................... 10
The Separate Account
Insulation of Assets ................................... 11
Investment Subdivisions ................................ 11
Changes to the Separate Account and
Investment Subdivisions .............................. 11
Valuation of Separate Account Assets ................... 11
Policy Exchange ........................................ 12
Unit Value ............................................. 12
Transfers .............................................. 12
Account Value Benefits
How We Determine Account Value ......................... 13
How We Determine Net Premium ........................... 13
Monthly Deduction ...................................... 13
Cost of Insurance ...................................... 14
Insufficient Account Value ............................. 14
Continuation of Coverage ............................... 14
Surrender .............................................. 14
Receiving the Surrender Value .......................... 15
Postponement of Payments ............................... 15
Loan Benefits
Making a Policy Loan ................................... 15
Policy Loan Interest ................................... 16
Preferred Policy Debt .................................. 16
Repaying Policy Debt ................................... 16
Minimum Loan Payment ................................... 16
General Information
Annual Statement ....................................... 17
Calculation of Values .................................. 17
Exchange Provision ..................................... 17
Limits on Contesting This Policy ....................... 17
Misstatement of Age or Sex ............................. 18
Nonparticipating ....................................... 18
Suicide ................................................ 18
Written Notice ......................................... 18
Optional Payment Plans
Plan 1 ................................................. 19
Plan 2 ................................................. 19
Plan 3 ................................................. 19
Plan 4 ................................................. 19
Plan 5 ................................................. 19
Plan 1 Table ........................................... 20
Plan 2 Table ........................................... 20
Plan 5 Table ........................................... 20
Settlement Age Chart ................................... 20
A copy of the application and any riders and endorsements follow page 20.
<PAGE>
POLICY DATA
SCHEDULE OF BENEFITS SCHEDULE OF PREMIUMS
AMOUNT PAYABLE
LIFE INSURANCE NONSMOKER
PLANNED PERIODIC PREMIUM $ 516.24 ANNUALLY
MINIMUM NET PREMIUM FACTOR: 0.90 (THE MINIMUM NET PREMIUM FACTOR REFLECTS
THE MAXIMUM DEDUCTION OF 10% OF EACH PREMIUM RECEIVED)
MAXIMUM MONTHLY POLICY CHARGE: $ 15.00 IN THE FIRST POLICY YEAR,
$ 12.00 THEREAFTER
INCREASE CHARGE PER $1,000: $1.50 PER $1000, MAXIMUM $300 PER INCREASE
TRANSFER CHARGE: $10.00
POLICY LOAN INTEREST RATE: 6.00 % PER ANNUM PAYABLE IN ARREARS
PREFERRED LOAN AVAILABILITY DATE: OCTOBER 1, 2007
MINIMUM SPECIFIED AMOUNT $100,000
NOTE: IT IS POSSIBLE THAT COVERAGE WILL EXPIRE IF SUFFICIENT PREMIUMS ARE NOT
PAID. SEE THE GRACE PERIOD PROVISION.
OWNER THE INSURED
INSURED JOHN DOE MALE 35 AGE NEAREST BIRTHDAY
POLICY NUMBER N00000000 NONSMOKER STANDARD RATING CLASS
POLICY DATE OCTOBER 1, 1997
MONTHLY ANNIVERSARY DAY 1
PLAN FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
$100,000 INSURED'S SPECIFIED AMOUNT - DEATH BENEFIT OPTION B
<PAGE>
POLICY NUMBER [00000000]
SEPARATE ACCOUNT II
INVESTMENT SUBDIVISIONS ARE INVESTED IN
THE ALGER AMERICAN FUND
AAF SMALL CAPITALIZATION ALGER AMERICAN SMALL CAPITALIZATION
PORTFOLIO
AAF GROWTH ALGER AMERICAN GROWTH PORTFOLIO
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
FID EQUITY - INCOME EQUITY - INCOME PORTFOLIO
FID GROWTH GROWTH PORTFOLIO
FID OVERSEAS OVERSEAS PORTFOLIO
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
FID ASSET MANAGER ASSET MANAGER PORTFOLIO
FID CONTRAFUND CONTRAFUND PORTFOLIO
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
FID GROWTH AND INCOME GROWTH & INCOME PORTFOLIO
FID GROWTH OPPORTUNITIES GROWTH OPPORTUNITIES PORTFOLIO
FEDERATED INSURANCE SERIES
FED UTILITY II FEDERATED UTILITY FUND II
FED HIGH INCOME BOND II FEDERATED HIGH INCOME BOND FUND II
FED AMERICAN LEADERS II FEDERATED AMERICAN LEADERS FUND II
JANUS ASPEN SERIES
JAN BALANCED BALANCED PORTFOLIO
JAN FLEXIBLE INCOME FLEXIBLE INCOME PORTFOLIO
JAN GROWTH GROWTH PORTFOLIO
JAN AGGRESSIVE GROWTH AGGRESSIVE GROWTH PORTFOLIO
JAN WORLDWIDE GROWTH WORLDWIDE GROWTH PORTFOLIO
JAN INTERNATIONAL GROWTH INTERNATIONAL GROWTH PORTFOLIO
JAN CAPITAL APPRECIATION CAPITAL APPRECIATION PORTFOLIO
GE INVESTMENTS FUNDS INC.
GEI MONEY MARKET MONEY MARKET FUND
GEI INCOME INCOME FUND
GEI S&P 500 INDEX * S&P 500 INDEX FUND
GEI TOTAL RETURN TOTAL RETURN FUND
GEI INTERNATIONAL EQUITY INTERNATIONAL EQUITY FUND
GEI REAL ESTATE SECURITIES REAL ESTATE SECURITIES FUND
GEI GLOBAL INCOME GLOBAL INCOME FUND
GEI VALUE EQUITY VALUE EQUITY FUND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
OPP HIGH INCOME OPPENHEIMER HIGH INCOME FUND
OPP BOND OPPENHEIMER BOND FUND
OPP CAP APPRECIATION OPPENHEIMER CAPITAL APPRECIATION FUND
OPP GROWTH OPPENHEIMER GROWTH FUND
OPP MULTI STRATEGIES OPPENHEIMER MULTIPLE STRATEGIES FUND
PBHG INSURANCE SERIES FUND, INC.
PIL GROWTH II GROWTH II PORTFOLIO
PIL LARGE CAP GROWTH LARGE CAP GROWTH PORTFOLIO
<PAGE>
YOU MAY ALLOCATE YOUR NET PREMIUMS AND ACCOUNT VALUE TO AS MANY AS SEVEN.
THE PORTION OF EACH NET PREMIUM ALLOCATED MUST BE AT LEAST 1%.
CONSULT YOUR PROSPECTUS FOR INVESTMENT DETAILS.
* "STANDARD & POOR'S," "S&P," "S&P 500," "STANDARD & POOR'S 500," AND "500" ARE
TRADEMARKS OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY
GE INVESTMENT MANAGEMENT INCORPORATED. THE S&P 500 INDEX FUND IS NOT SPONSORED,
ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND STANDARD & POOR'S MAKES NO
REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE FUND.
<PAGE>
POLICY NUMBER: N00000000
TABLE OF MAXIMUM PREMIUMS
POLICY MAXIMUM POLICY MAXIMUM
YEAR PREMIUM YEAR PREMIUM
1 15,142.55 36 48,326.40
2 15,142.55 37 49,668.80
3 15,142.55 38 51,011.20
4 15,142.55 39 52,353.60
5 15,142.55 40 53,696.00
6 15,142.55 41 55,038.40
7 15,142.55 42 56,380.80
8 15,142.55 43 57,723.20
9 15,142.55 44 59,065.60
10 15,142.55 45 60,408.00
11 15,142.55 46 61,750.40
12 16,108.80 47 63,092.80
13 17,451.20 48 64,435.20
14 18,793.60 49 65,777.60
15 20,136.00 50 67,120.00
16 21,478.40 51 68,462.40
17 22,820.80 52 69,804.80
18 24,163.20 53 71,147.20
19 25,505.60 54 72,489.60
20 26,848.00 55 73,832.00
21 28,190.40 56 75,174.40
22 29,532.80 57 76,516.80
23 30,875.20 58 77,859.20
24 32,217.60 59 79,201.60
25 33,560.00 60 80,544.00
26 34,902.40 61 81,886.40
27 36,244.80 62 83,228.80
28 37,587.20 63 84,571.20
29 38,929.60 64 85,913.60
30 40,272.00 65 & LATER 87,256.00
31 41,614.40
32 42,956.80
33 44,299.20
34 45,641.60
35 46,984.00
ACCORDING TO OUR UNDERSTANDING OF CURRENT FEDERAL TAX LAW, YOU MAY NOT PAY MORE
THAN THESE AMOUNTS AND MAINTAIN THE TAX STATUS OF THIS POLICY AS LIFE INSURANCE.
THIS TABLE IS SUBJECT TO CHANGE.
<PAGE>
POLICY NUMBER: N00000000
TABLE OF CONTINUATION AMOUNTS
POLICY CONTINUATION POLICY CONTINUATION POLICY CONTINUATION
MONTH AMOUNT MONTH AMOUNT MONTH AMOUNT
1 43.02 41 1,763.82 81 3,484.62
2 86.04 42 1,806.84 82 3,527.64
3 129.06 43 1,849.86 83 3,570.66
4 172.08 44 1,892.88 84 3,613.68
5 215.10 45 1,935.90 85 3,656.70
6 258.12 46 1,978.92 86 3,699.72
7 301.14 47 2,021.94 87 3,742.74
8 344.16 48 2,064.96 88 3,785.76
9 387.18 49 2,107.98 89 3,828.78
10 430.20 50 2,151.00 90 3,871.80
11 473.22 51 2,194.02 91 3,914.82
12 516.24 52 2,237.04 92 3,957.84
13 559.26 53 2,280.06 93 4,000.86
14 602.28 54 2,323.08 94 4,043.88
15 645.30 55 2,366.10 95 4,086.90
16 688.32 56 2,409.12 96 4,129.92
17 731.34 57 2,452.14 97 4,172.94
18 774.36 58 2,495.16 98 4,215.96
19 817.38 59 2,538.18 99 4,258.98
20 860.40 60 2,581.20 100 4,302.00
21 903.42 61 2,624.22 101 4,345.02
22 946.44 62 2,667.24 102 4,388.04
23 989.46 63 2,710.26 103 4,431.06
24 1,032.48 64 2,753.28 104 4,474.08
25 1,075.50 65 2,796.30 105 4,517.10
26 1,118.52 66 2,839.32 106 4,560.12
27 1,161.54 67 2,882.34 107 4,603.14
28 1,204.56 68 2,925.36 108 4,646.16
29 1,247.58 69 2,968.38 109 4,689.18
30 1,290.60 70 3,011.40 110 4,732.20
31 1,333.62 71 3,054.42 111 4,775.22
32 1,376.64 72 3,097.44 112 4,818.24
33 1,419.66 73 3,140.46 113 4,861.26
34 1,462.68 74 3,183.48 114 4,904.28
35 1,505.70 75 3,226.50 115 4,947.30
36 1,548.72 76 3,269.52 116 4,990.32
37 1,591.74 77 3,312.54 117 5,033.34
38 1,634.76 78 3,355.56 118 5,076.36
39 1,677.78 79 3,398.58 119 5,119.38
40 1,720.80 80 3,441.60 120 5,162.40
CONTINUED
<PAGE>
POLICY NUMBER: N00000000
TABLE OF CONTINUATION AMOUNTS
POLICY CONTINUATION POLICY CONTINUATION POLICY CONTINUATION
MONTH AMOUNT MONTH AMOUNT MONTH AMOUNT
121 5,205.42 161 6,926.22 201 8,647.02
122 5,248.44 162 6,969.24 202 8,690.04
123 5,291.46 163 7,012.26 203 8,733.06
124 5,334.48 164 7,055.28 204 8,776.08
125 5,377.50 165 7,098.30 205 8,819.10
126 5,420.52 166 7,141.32 206 8,862.12
127 5,463.54 167 7,184.34 207 8,905.14
128 5,506.56 168 7,227.36 208 8,948.16
129 5,549.58 169 7,270.38 209 8,991.18
130 5,592.60 170 7,313.40 210 9,034.20
131 5,635.62 171 7,356.42 211 9,077.22
132 5,678.64 172 7,399.44 212 9,120.24
133 5,721.66 173 7,442.46 213 9,163.26
134 5,764.68 174 7,485.48 214 9,206.28
135 5,807.70 175 7,528.50 215 9,249.30
136 5,850.72 176 7,571.52 216 9,292.32
137 5,893.74 177 7,614.54 217 9,335.34
138 5,936.76 178 7,657.56 218 9,378.36
139 5,979.78 179 7,700.58 219 9,421.38
140 6,022.80 180 7,743.60 220 9,464.40
141 6,065.82 181 7,786.62 221 9,507.42
142 6,108.84 182 7,829.64 222 9,550.44
143 6,151.86 183 7,872.66 223 9,593.46
144 6,194.88 184 7,915.68 224 9,636.48
145 6,237.90 185 7,958.70 225 9,679.50
146 6,280.92 186 8,001.72 226 9,722.52
147 6,323.94 187 8,044.74 227 9,765.54
148 6,366.96 188 8,087.76 228 9,808.56
149 6,409.98 189 8,130.78 229 9,851.58
150 6,453.00 190 8,173.80 230 9,894.60
151 6,496.02 191 8,216.82 231 9,937.62
152 6,539.04 192 8,259.84 232 9,980.64
153 6,582.06 193 8,302.86 233 10,023.66
154 6,625.08 194 8,345.88 234 10,066.68
155 6,668.10 195 8,388.90 235 10,109.70
156 6,711.12 196 8,431.92 236 10,152.72
157 6,754.14 197 8,474.94 237 10,195.74
158 6,797.16 198 8,517.96 238 10,238.76
159 6,840.18 199 8,560.98 239 10,281.78
160 6,883.20 200 8,604.00 240 10,324.80
CONTINUED
<PAGE>
POLICY NUMBER: N00000000
TABLE OF CONTINUATION AMOUNTS
POLICY CONTINUATION POLICY CONTINUATION
MONTH AMOUNT MONTH AMOUNT
241 10,367.82 281 12,088.62
242 10,410.84 282 12,131.64
243 10,453.86 283 12,174.66
244 10,496.88 284 12,217.68
245 10,539.90 285 12,260.70
246 10,582.92 286 12,303.72
247 10,625.94 287 12,346.74
248 10,668.96 288 12,389.76
249 10,711.55 289 12,432.78
250 10,755.00 290 12,475.80
251 10,798.02 291 12,518.82
252 10,841.04 292 12,561.84
253 10,884.06 293 12,604.86
254 10,927.08 294 12,647.88
255 10,970.10 295 12,690.90
256 11,013.12 296 12,733.92
257 11,056.14 297 12,776.94
258 11,099.16 298 12,819.96
259 11,142.18 299 12,862.98
260 11,185.20 300 12,906.00
261 11,228.22
262 11,271.24
263 11,314.26
264 11,357.28
265 11,400.30
266 11,443.32
267 11,486.34
268 11,529.36
269 11,572.38
270 11,615.40
271 11,658.42
272 11,701.44
273 11,744.46
274 11,787.48
275 11,830.50
276 11,873.52
277 11,916.54
278 11,959.56
279 12,002.58
280 12,045.60
CONTINUATION AMOUNTS ARE DESCRIBED IN THE CONTINUATION AMOUNT AND CONTINUATION
PERIOD PROVISION
<PAGE>
POLICY NUMBER: N00000000
TABLE OF SURRENDER CHARGES
POLICY SURRENDER POLICY SURRENDER POLICY SURRENDER
MONTH CHARGE MONTH CHARGE MONTH CHARGE
1 1,009.00 37 1,009.00 73 900.00
2 1,009.00 38 1,009.00 74 891.00
3 1,009.00 39 1,009.00 75 883.00
4 1,009.00 40 1,009.00 76 874.00
5 1,009.00 41 1,009.00 77 866.00
6 1,009.00 42 1,009.00 78 858.00
7 1,009.00 43 1,009.00 79 849.00
8 1,009.00 44 1,009.00 80 841.00
9 1,009.00 45 1,009.00 81 832.00
10 1,009.00 46 1,009.00 82 824.00
11 1,009.00 47 1,009.00 83 816.00
12 1,009.00 48 1,009.00 84 807.00
13 1,009.00 49 1,009.00 85 799.00
14 1,009.00 50 1,009.00 86 790.00
15 1,009.00 51 1,009.00 87 782.00
16 1,009.00 52 1,009.00 88 774.00
17 1,009.00 53 1,009.00 89 765.00
18 1,009.00 57 1,009.00 93 732.00
22 1,009.00 58 1,009.00 94 723.00
23 1,009.00 59 1,009.00 95 715.00
24 1,009.00 60 1,009.00 96 706.00
25 1,009.00 61 1,001.00 97 698.00
26 1,009.00 62 992.00 98 689.00
27 1,009.00 63 984.00 99 681.00
28 1,009.00 64 975.00 100 673.00
29 1,009.00 65 967.00 101 664.00
30 1,009.00 66 959.00 102 656.00
31 1,009.00 67 950.00 103 647.00
32 1,009.00 68 942.00 104 639.00
33 1,009.00 69 933.00 105 631.00
34 1,009.00 70 925.00 106 622.00
35 1,009.00 71 917.00 107 614.00
36 1,009.00 72 908.00 108 605.00
CONTINUED
<PAGE>
POLICY NUMBER: N00000000
TABLE OF SURRENDER CHARGES
POLICY SURRENDER POLICY SURRENDER
MONTH CHARGE MONTH CHARGE
109 597.00 145 294.00
110 589.00 146 286.00
111 580.00 147 277.00
112 572.00 148 269.00
113 563.00 149 261.00
114 555.00 150 252.00
115 547.00 151 244.00
116 538.00 152 235.00
117 530.00 153 227.00
118 521.00 154 219.00
119 513.00 155 210.00
120 505.00 156 202.00
121 496.00 157 193.00
122 488.00 158 185.00
123 479.00 159 177.00
124 471.00 160 168.00
125 462.00 161 160.00
126 454.00 162 151.00
127 446.00 163 143.00
128 437.00 164 135.00
129 429.00 165 126.00
130 420.00 166 118.00
131 412.00 167 109.00
132 404.00 168 101.00
133 395.00 169 92.00
134 387.00 170 84.00
135 378.00 171 76.00
136 370.00 172 67.00
137 362.00 173 59.00
138 353.00 174 50.00
139 345.00 175 42.00
140 336.00 176 34.00
141 328.00 177 25.00
142 320.00 178 17.00
143 311.00 179 8.00
144 303.00 180 0.00
<PAGE>
POLICY NUMBER: N00000000
TABLE OF GUARANTEED MAXIMUM INSURANCE RATES
PER $1,000 OF NET AMOUNT AT RISK
AGE LIFE
MONTHLY
RATE
35 0.14096
36 0.14764
37 0.15682
38 0.16684
39 0.17854
40 0.19107
41 0.20610
42 0.22115
43 0.23870
44 0.25625
45 0.27716
46 0.29974
47 0.32401
48 0.34996
49 0.37926
50 0.41025
51 0.44713
52 0.48988
53 0.53770
54 0.59311
55 0.65444
56 0.72254
57 0.79492
58 0.87327
59 0.96181
60 1.06060
61 1.17052
62 1.29584
63 1.43920
64 1.60154
65 1.78128
66 1.97512
67 2.18573
68 2.41240
69 2.66044
CONTINUED
<PAGE>
POLICY NUMBER: N00000000
TABLE OF GUARANTEED MAXIMUM INSURANCE RATES
PER $1,000 OF NET AMOUNT AT RISK
AGE LIFE
MONTHLY
RATE
70 2.94130
71 3.31274
72 3.63092
73 4.54125
75 5.06274
76 5.62182
77 6.21386
78 6.83323
79 7.49615
80 8.22966
81 9.05444
82 9.99708
83 11.07331
84 12.26711
85 13.55590
86 14.91786
87 16.34412
88 17.80841
89 19.33266
90 20.94167
91 22.66794
92 24.57677
93 26.76406
94 29.63735
95 33.93111
96 41.27938
97 56.03985
98 83.33333
99 & OLDER 83.33333
<PAGE>
DEFINITIONS
Account Value - The total amount under the Policy in each Investment Subdivision
and our General Account.
Age - The Insured's Age on his or her birthday nearest the Policy Date or a
policy anniversary.
Attained Age - The Insured's Age on the Policy Date plus the number of full
years since the Policy Date.
Beneficiary - The person or entity designated by the Owner to receive the Life
Insurance Proceeds payable at the death of the Insured.
Continuation Amount - A cumulative amount set forth on the policy data pages for
each month of the Continuation Period.
Continuation Period - The period during which the Policy will not lapse if the
Net Total Premium is at least equal to the Continuation Amount for the number of
Policy Months that the Policy has been inforce.
The Company - The Life Insurance Company of Virginia. "We", "us" or "our"
refers to the Company.
Fund - Any open-end management investment company or investment portfolio
thereof, or unit investment trust or series thereof, in which an Investment
Subdivision invests.
General Account - Assets of the Company other than those allocated to the
Separate Account or any other Separate Account of the Company.
Home Office - The Company's offices at 6610 West Broad Street, Richmond,
Virginia 23230.
Insured - The person upon whose life this Policy is issued.
Investment Subdivision - Subdivision of the Separate Account, the assets of
which are invested exclusively in a corresponding Fund.
Life Insurance Proceeds - The amount payable upon the death of the Insured.
Monthly Anniversary Day - The same day in each month as the Policy Date. This
day is shown on the policy data pages.
Net Premium - The portion of each premium paid which is used in determining the
Account Value. It is equal to the premium paid times the Net Premium Factor.
Net Premium Factor - The factor used in determining the Net Premium which
reflects a deduction from each premium paid.
Net Total Premium - On any date, Net Total Premium means the total of all
premiums paid to that date less (a) divided by (b), where:
(a) is any outstanding Policy Debt, plus the sum of any partial
surrenders to date; and
(b) is the Net Premium Factor.
Optional Payment Plan - A plan whereby any part of Life Insurance Proceeds or
Surrender Value proceeds can be left with us to provide a series of periodic
payments to an Owner or Beneficiary.
Owner - The Owner of the Policy as named in this Policy. "You" or "your" refers
to the Owner. Contingent owners may also be named.
Planned Periodic Premium - A level premium amount scheduled for payment at fixed
intervals over a specified period of time.
Policy - This Policy with any attached application(s), and any riders and
endorsements.
Policy Date - Date as of which the Company issues the Policy and as of which the
Policy becomes effective. Policy years and anniversaries are measured from the
Policy Date. The Policy Date is shown on the policy data pages.
Policy Debt - The amount of outstanding loans plus accrued interest. Policy Debt
is deducted from proceeds payable at the Insured's death or on surrender.
Policy Month - A one-month period beginning on a Monthly Anniversary Day and
ending on the day immediately preceding the next Monthly Anniversary Day.
<PAGE>
Separate Account - The segregated asset account of the Company shown on the
policy data pages.
Specified Amount - An amount used in determining the insurance coverage on an
insured life. The original Specified Amount is shown on the policy data pages.
Surrender Value - The amount payable to the Owner upon surrender of the Policy.
Unit Value - Unit of measure used to calculate the Account Value for each
Investment Subdivision.
Valuation Day - For each Investment Subdivision, each day on which the New York
Stock Exchange is open for business except for days that the Investment
Subdivision's corresponding Fund does not value its shares.
Valuation Period - Period that starts at the close of regular trading on the New
York Stock Exchange on any Valuation Day and ends at the close of regular
trading on the next succeeding Valuation Day.
INTRODUCTION
This is a flexible premium variable life insurance policy. The first premium
payment is due on the Policy Date. Subsequent premiums may be paid at any time
while this Policy is in effect, subject to conditions specified in the Premium
Payments section. In return for these premiums and the insurance application, we
provide certain benefits.
The Policy provides Life Insurance Proceeds. Proceeds can be paid in a lump sum
or under an Optional Payment Plan.
During the Insured's life, the Policy has an Account Value. The Account Value
reflects the investment experience of the Separate Account. (See THE SEPARATE
ACCOUNT section.) This Account Value is the basis for certain benefits you can
use before the Insured's death.
We will provide a projection of illustrative future life insurance and Account
Value proceeds. To receive the illustration, send a written request to our Home
Office and pay any service fee in effect at that time, but not more than $25 per
illustration.
The illustration will assume:
o amounts of insurance;
o coverage options;
o future premium payments you specify; and
o other assumptions specified by you or by us.
The Policy and Its Parts
The Policy is a legal contract. It is the entire contract between you and us. An
agent cannot change this contract. Any change to it must be in writing and
approved by us. Only our President or one of our Vice-Presidents can give our
approval.
We will not use any statement in the original application to deny a claim unless
a copy of that application was attached to this Policy when issued or delivered.
We will not use any statement in a supplemental application to deny a claim
unless a copy of that application was sent to you when the change in coverage
went into effect. We will not use any statement in a reinstatement application
to deny a claim unless a copy of the reinstatement application was sent to you
when the Policy was reinstated.
READ YOUR POLICY CAREFULLY.
When This Policy Will Terminate
All coverage under this Policy will terminate when:
o you request that coverage terminate and you return this Policy;
o the Insured dies; or
o the grace period ends without sufficient premium being paid.
This Policy will also terminate as stated in the Suicide provision.
<PAGE>
THE OWNER AND THE BENEFICIARY
The Owner
You have rights in the Policy during the Insured's life. The Policy names you or
someone else as the Insured. If you are not the Insured, you should name a
contingent owner who will become the Owner if you die before the Insured. If you
die before the Insured and there is no contingent owner, ownership passes to
your estate.
The Beneficiary
You may name primary and contingent Beneficiaries. Your original Beneficiary
choice is shown in the attached application. Unless an Optional Payment Plan is
chosen, the proceeds payable at the Insured's death will be paid in a lump sum
to the primary Beneficiary. If the primary Beneficiary dies before the Insured,
the proceeds will be paid to the contingent Beneficiary. If no Beneficiary
survives the Insured, the proceeds will be paid to you or your estate.
You may name more than one primary or contingent Beneficiary. If you do, the
proceeds will be paid in equal shares to the survivors in the appropriate
Beneficiary class, unless you have requested otherwise.
Changing the Owner or Beneficiary
During the Insured's life, you may change the Owner. You may also change the
Beneficiary during the Insured's life if you reserved this right.
How to Change the Owner or Beneficiary. To make a change, send a written request
to our Home Office. The request must be received by us in a form satisfactory to
us. The change will take effect as of the date you sign the request. The change
will be subject to any payment we make before we record the change.
Using the Policy as Collateral for a Loan
This Policy may be assigned as collateral security. We must be notified in
writing if you assign the Policy. Any payment we make before we record the
assignment at our Home Office will not be affected. We are not responsible for
the validity of an assignment. Your rights and the rights of a Beneficiary may
be affected by an assignment.
Trustee
If a trustee is named as the Owner or Beneficiary of this Policy and
subsequently exercises ownership rights or claims benefits hereunder, we will
have no obligation to verify that a trust is in effect or that the trustee is
acting within the scope of his/her authority. Payment of policy benefits to the
trustee will release us from all obligations under the Policy to the extent of
the payment. When we make a payment to the trustee, we will have no obligation
to ensure that such payment is applied according to the terms of the trust
agreement.
PREMIUM PAYMENTS
This Policy's first premium is due on the Policy Date.
Premiums After the First Premium
Any premium payments after the first premium may be made under a periodic plan
or at any time while this Policy is in effect.
Periodic Premium Plan. You may request that we send reminders of your Planned
Periodic Premium. You may choose to send premiums directly to us either
annually, semi-annually, or quarterly. We can also arrange for pre-authorized
payments from your bank account or similar facility either annually,
semi-annually, quarterly or monthly. Planned Periodic Premiums will be subject
to our rules on minimum amount.
You can change the frequency or amount of your Planned Periodic Premium. We
reserve the right to limit the amount of any increase in Planned Periodic
Premiums.
Unscheduled Payments. You can make an unscheduled premium payment at any time
while this Policy is in effect. Unscheduled payments are applied first to repay
any Policy Debt, unless you direct us otherwise. We reserve the right to limit
the number and amount of any unscheduled premium payments.
<PAGE>
Maximum Premiums. We will limit the total of all premiums paid to date for this
Policy to the amounts shown in the table of maximum premiums in the policy data
pages. Any portion of a premium paid that causes the total of all premiums paid
to date to exceed the maximum premium will be returned to you along with any
earnings thereon. We reserve the right to change the table of maximum premiums
when necessary as a result of changes in coverage or to maintain compliance with
the Internal Revenue Code. If we do, we will send you a new table of maximum
premiums reflecting the adjusted amounts.
When and Where to Pay Premiums
Each premium is payable in advance. Send each premium to our Home Office. Make
the check or money order payable to The Life Insurance Company of Virginia.
Allocation of Net Premiums
You may allocate the Net Premium to one or more Investment Subdivisions of the
Separate Account, but not to more than the maximum number of allocations shown
in the policy data pages. The minimum percentage of each Net Premium which may
be allocated to any particular Investment Subdivision is shown on the policy
data pages. Net Premiums will initially be allocated in accordance with the
allocations requested by you. You may change the allocation of Net Premiums at
any time, without charge, simply by sending written notice to us at our Home
Office. The changed allocation will apply to premiums received after we record
the change.
Continuation Amount and Continuation Period
On any Monthly Anniversary Day during the Continuation Period, if the Surrender
Value of this Policy is not sufficient to cover the monthly deduction, this
Policy will remain in effect if the Net Total Premium is at least equal to the
Continuation Amount.
At the end of the Continuation Period, you may have to pay an additional premium
to keep the Policy inforce. (See Insufficient Account Value provision.)
An increase in Specified Amount will increase the Continuation Amounts while a
decrease in Specified Amount will reduce the Continuation Amounts. Any
termination and subsequent reinstatement of the Policy will reduce the
Continuation Amounts. We will send you a supplemental policy data page
reflecting the adjusted amounts. The Continuation Period will be as though the
Policy had been in effect continuously from its original Policy Date.
Grace Period
On any Monthly Anniversary Day during the Continuation Period, if (1) the
Surrender Value is not sufficient to cover the monthly deduction, and (2) the
Net Total Premium is less than the Continuation Amount, you must pay a premium
sufficient to keep the Policy in effect or coverage will terminate. The amount
of the sufficient premium will equal the lesser of (a) and (b), where:
(a) equals the monthly deduction due minus the Surrender Value, and
that result divided by the Net Premium Factor; and
(b) equals the Continuation Amount minus the Net Total Premium.
All amounts in (a) and (b) above are as of the Monthly Anniversary Day at the
beginning of the grace period. The monthly deduction is described in the ACCOUNT
VALUE BENEFITS section.
On any Monthly Anniversary Day after the Continuation Period, if the Surrender
Value is not sufficient to cover the monthly deduction, you must pay a premium
sufficient to keep the Policy in effect or coverage will terminate. In this
case, the amount of the sufficient premium will equal the monthly deduction due
minus the Surrender Value, and that result divided by the Net Premium Factor. As
used in this paragraph, the monthly deduction due and the Surrender Value are
both as of the Monthly Anniversary Day at the beginning of the grace period.
<PAGE>
In either case, we will mail you written notice of the sufficient premium. This
notice will be sent to your last known address. You have a 61-day grace period
from the date we mail the notice to pay the sufficient premium.
Coverage continues during the 61-day grace period. If the Insured dies during
the grace period, proceeds will be reduced by the amount of the sufficient
premium (as described in this provision) that would have been required to keep
the Policy in effect.
If the sufficient premium is not paid by the end of the grace period, this
Policy will terminate without value.
How This Policy Can Be Reinstated
You may reinstate this Policy within three years of the end of the grace period
if:
(1) you submit an application for reinstatement;
(2) you provide required evidence of insurability satisfactory to us
that the Insured is insurable;
(3) the Policy has not been surrendered for cash; and
(4) you pay the premium as described in this section.
The Policy will be reinstated effective on the date we approve the
reinstatement. The surrender charge and the Continuation Period will be as
though the Policy had been in effect continuously from its original Policy Date.
On the date of reinstatement, the Account Value will be allocated to the
Investment Subdivisions of the Separate Account. Unless you tell us otherwise,
these allocations will be made in the same manner that Net Premiums are
allocated.
If this Policy terminates and is reinstated before the end of the Continuation
Period, you will have to pay an amount equal to (1) minus (2) minus (3) plus
(4), where:
(1) is the Continuation Amount as of the date of reinstatement; is
the sum of the monthly deductions that would have been made
during the period between termination and reinstatement,
divided by the Net Premium Factor; is the Net Total Premium on
the date of termination; and is an amount sufficient to keep
the Policy in effect for two Policy Months after the date of
reinstatement.
On the date of reinstatement, the Account Value will equal (a)
plus (b) minus (c), where:
(a) is the Account Value on the first day of the grace period;
(b) is the premium paid to reinstate multiplied by the Net Premium
Factor; and
(c) is the monthly deduction for the month following the date of
reinstatement.
If this Policy terminates before the end of the Continuation Period, and is
reinstated after the end of the Continuation Period, you will have to pay a
premium which, after multiplying by the Net Premium Factor, equals (1) plus (2)
minus (3), where:
(1) is the surrender charge on the date of termination; and
(2) is an amount equal to the monthly deductions for two months after
the date of reinstatement; and
(3) is the Account Value on the date of termination.
On the date of reinstatement, the Account Value will equal (a) plus (b) plus
(c), where:
(a) is the surrender charge in effect on the date of reinstatement;
(b) is an amount equal to the monthly deductions for the two months
after the date of reinstatement, minus the monthly deduction for
the month following the date of reinstatement; and
(c) is any premium paid in excess of the required reinstatement
premium, multiplied by the Net Premium Factor.
If this Policy terminates after the end of the Continuation Period and is
reinstated, you will have to pay a premium sufficient to keep the Policy in
effect for at least two months.
On the date of reinstatement, the Account Value will equal (a) plus (b) minus
(c), where:
(a) is the surrender charge in effect on the date of reinstatement;
(b) is the premium paid to reinstate multiplied by the Net Premium
Factor; and
(c) is the monthly deduction for the month following the date of
reinstatement.
<PAGE>
LIFE INSURANCE PROCEEDS
Life Insurance Proceeds are payable at the death of the Insured. We will pay
the Life Insurance Proceeds on this Policy when we receive: this Policy; due
proof that the Insured died while this Policy was in effect; and proof of the
interest of the claimant.
Proceeds can be paid in a lump sum or under an Optional Payment Plan.
How We Determine Proceeds
In the application for original coverage, the Owner elected one of two death
benefit options.
Under Option A, Life Insurance Proceeds are based on the greater of (1) and (2),
where: (1) is the Specified Amount plus the Account Value; and (2) is the
Account Value multiplied by the corridor percentage.
Under Option B, Life Insurance Proceeds are based on the greater of (1) and (2),
where: (1) is the Specified Amount; and (2) is the Account Value multiplied by
the corridor percentage.
For both Option A and Option B, references to Specified Amount and Account Value
in items (1) and (2), are amounts in effect on the date of death.
In no event will Life Insurance Proceeds be less than the amount required to
keep the Policy qualified as life insurance.
The corridor percentage will depend on the Attained Age of the Insured on the
date of death. (See the corridor percentage chart in this section.)
Actual Amount of Proceeds. The actual amount of proceeds will depend on: the
Life Insurance Proceeds as determined in this section; the use of the Account
Value; any partial surrenders; any Policy Debt; any additional insurance
provided by rider; any increase or decrease in existing coverage; the Insured's
suicide during the first two policy years; and a misstatement of the Insured's
Age or sex.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Table of Percentages of Account Value
- --------------------------------------------------------------------------------------------------------------
Corridor Corridor Corridor
Attained Age Percentage Attained Age Percentage Attained Age Percentage
<S> <C>
0-40 250% 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%
53 164% 67 118%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Compliance as Life Insurance
We reserve the right to amend this Policy as necessary to maintain compliance
with the Internal Revenue Code. We will send any such amendments to you. You
have the right to refuse such amendments and accept full responsibility for any
consequences as a result of such refusal.
Change in Existing Coverage
After the Policy has been in effect for one year, you can increase or decrease
the Specified Amount. To make a change, send a written request along with the
Policy to our Home Office.
Decrease in Specified Amount. Any decrease will become effective on the Monthly
Anniversary Day after the date we receive the request. The decrease will first
apply to coverage provided by the most recent increase, then to the next most
recent increases successively, then to the coverage provided under the original
application.
During the Continuation Period, we will not allow a decrease unless the Account
Value less any Policy Debt is greater than the surrender charge. A decrease may
not cause the Specified Amount to be less than the minimum Specified Amount
shown on the policy data pages. A decrease may cause a surrender charge to be
assessed and may require a payment to you to keep the Policy qualified as life
insurance.If this event occurs, we will send you revised policy data pages. (See
Surrender Charge on Decrease in Specified Amount in the Surrender provision.)
Increase in Specified Amount. You must apply for an increase in Specified Amount
on a supplemental application. You will have to submit evidence satisfactory to
us that the Insured is insurable.
Any approved increase will become effective on the date shown in the
supplemental policy data pages, provided that there is sufficient Account Value
to cover the first monthly deduction following the increase. (See Monthly
Deduction provision.)
Change in Death Benefit Options
If you elected death benefit Option A, you can request a change to death benefit
Option B. The Specified Amount after the change will equal the sum of (1) plus
(2), where:
(1) is the Specified Amount on the date your request becomes effective;
and
(2) is the Account Value on the date your request becomes effective.
If you elected death benefit Option B, you can request a change to death benefit
Option A. This will decrease the Specified Amount by the amount of Account
Value.
Any change in death benefit options will become effective on the first Monthly
Anniversary Day after the date we receive the request in our Home Office.
<PAGE>
THE SEPARATE ACCOUNT
The Separate Account supports the operation of this Policy and certain other
variable life insurance policies we may offer. We will not allocate assets to
the Separate Account to support the operation of any contracts or policies that
are not variable life insurance.
We own the assets in the Separate Account. These assets are held separately from
our other assets and are not part of our General Account.
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. The
Separate Account is also subject to laws of the Commonwealth of Virginia which
regulate the operations of insurance companies incorporated in Virginia. The
investment policy of the Separate Account will not be changed without the
approval of the Insurance Commissioner of the Commonwealth of Virginia. The
approval process is on file with the Insurance Commissioner of the state in
which this Policy was delivered.
Insulation of Assets
The portion of the assets of the Separate Account which equals the reserves and
other policy liabilities of the policies which are supported by the Separate
Account will not be charged with liabilities arising from any other business we
conduct. We have the right to transfer to our General Account any assets of the
Separate Account which are in excess of such reserves and other policy
liabilities.
Investment Subdivisions
The Separate Account is divided into Investment Subdivisions. The income, gains
and losses, realized or unrealized, from the assets allocated to an Investment
Subdivision are credited to or charged against such Investment Subdivision
without regard to other income, gains or losses of the Company.
The Investment Subdivisions available under this Policy are shown in the policy
data pages. Each Investment Subdivision in the Separate Account invests
exclusively in shares of a designated portfolio of a series type of mutual fund
(a "Fund"). Any amounts of income, dividends and gains distributed from the
shares of a Fund are reinvested in additional shares of that Fund.
Changes to the Separate Account and Investment Subdivisions
Where permitted by applicable law, the Company may:
1. create new separate accounts;
2. combine separate accounts, including the Separate Account;
3. transfer assets of the Separate Account, which we determine to be
associated with the class of policies to which this Policy belongs,
to another separate account;
4. add new Investment Subdivisions to or remove existing Investment
Subdivisions from the Separate Account or combine Investment
Subdivisions;
5. make Investment Subdivisions (including new Investment
Subdivisions) available to such classes of policies as we may
determine;
6. add new Funds or remove existing Funds;
7. substitute new Funds for any existing Fund whose shares are no
longer available for investment;
8. substitute new Funds for any existing Fund which we determine is no
longer appropriate in light of the purposes of the Separate
Account;
9. deregister the Separate Account under the Investment Company Act of
1940; and
10. operate the Separate Account under the direction of a committee or
in any other form permitted by law.
In the event of any substitution or change, we may, by appropriate endorsement,
make such changes in this and other policies as may be necessary or appropriate
to reflect the substitution or change.
Valuation of Separate Account Assets
We will value the assets of the Separate Account each Valuation Day at their
fair market value in accordance with accepted accounting practices and
applicable laws and regulations.
<PAGE>
Policy Exchange
If you object to a material change in the investment policy of the Separate
Account or any Investment Subdivision, you have the right to exchange this
Policy for a fixed benefit policy. No evidence of insurability will be required.
We will notify you of the options available, and the procedures to follow if you
decide to make an exchange. You must make an exchange within sixty days after
the change in investment policy becomes effective. There will always be one
policy available for exchange.
Unit Value
Each Investment Subdivision has a Unit Value. When Net Premiums or other amounts
are transferred into an Investment Subdivision, a number of units are purchased
based on that Investment Subdivision's Unit Value as of the end of the Valuation
Period during which the transfer is made. Likewise, when amounts are transferred
out of an Investment Subdivision, units are redeemed in a similar manner.
The Unit Value of each Investment Subdivision was arbitrarily set when the
Investment Subdivision began operations. The Unit Value for each subsequent
Valuation Period is the net investment factor for that period, multiplied by the
Unit Value for the immediately preceding period. The Unit Value for a Valuation
Period applies to each day in the period.
Each Investment Subdivision has its own net investment factor. In the following
definition, "assets" refers to the assets in each Investment Subdivision. "Any
amount charged against the Separate Account" refers to those amounts that are
allocated to each Investment Subdivision.
The net investment factor for a Valuation Period is (a) divided by (b), minus
(c), where: (a) is the result of:
1. the value of the assets at the end of the preceding
Valuation Period; plus
2. the investment income and capital gains, realized or
unrealized, credited to those assets at the end of the
Valuation Period for which the net investment factor is
being determined; minus
3. the capital losses, realized or unrealized, charged against
those assets during the Valuation Period; minus
4. any amount charged against the Separate Account for taxes,
or any amount we set aside during the Valuation Period as a
provision for taxes attributable to the operation or
maintenance of the Separate Account; and
(b) is the value of the assets in the Investment
Subdivision at the end of the preceding Valuation
Period; and
(c) is a charge no greater than .0024769% for each day in
the Valuation Period. This corresponds to .90% per
year.
Transfers
You may transfer Account Value among the Investment Subdivisions of the Separate
Account. The transfer will be effective as of the end of the Valuation Period
during which we receive your request at our Home Office. You must request a
transfer in writing or in any other form acceptable to us. We reserve the right
to limit the number of transfers to twelve each calendar year. The first
transfer in each calendar month will be made without a transfer charge. A
transfer charge will be imposed for each subsequent transfer in a calendar
month. This transfer charge is shown on the policy data pages. When we make
transfers, the Account Value on the date of the transfer will not be affected by
the transfer except to the extent of the transfer charge. The transfer charge
will be taken from the amount transferred.
<PAGE>
ACCOUNT VALUE BENEFITS
How We Determine Account Value
At the end of the Valuation Period during which the first premium is received,
the Account Value in each Investment Subdivision is equal to (a) minus (b),
where:
(a) is the portion of the Net Premium which has been paid and
allocated to that Investment Subdivision; and
(b) is the portion of any due and unpaid monthly deductions
allocated to the Account Value in that Investment
Subdivision.
At the end of each Valuation Period after such date, the Account Value allocated
to each Investment Subdivision of the Separate Account is (1) plus (2) plus (3)
minus (4) minus (5) minus (6), where:
(1) is the Account Value allocated to the Investment Subdivision at the
end of the preceding Valuation Period, multiplied by the Investment
Subdivision's net investment factor for the current Valuation
Period;
(2) is Net Premiums received during the current Valuation Period and
which are allocated to the Investment Subdivision;
(3) is any other amount transferred into the Investment Subdivision
during the current Valuation Period;
(4) is any partial surrender made from the Investment Subdivision
during the current Valuation Period;
(5) is any Account Value transferred out of the Investment Subdivision
during the current Valuation Period;
(6) any monthly deduction allocated to the Investment Subdivision
during the current Valuation Period.
How We Determine Net Premium
To calculate the Net Premium, multiply the premium paid times the Net Premium
Factor.
The minimum Net Premium Factor is shown on the policy data pages. We may use a
Net Premium Factor greater than the minimum Net Premium Factor at our sole
discretion.
Monthly Deduction
The monthly deduction is a charge made on the Policy Date and each Policy Month
thereafter against the Account Value. It is determined by adding the cost of
insurance, the cost of additional benefits provided by rider, and the monthly
policy charge. The monthly deduction for the month when an increase in the
Specified Amount becomes effective will include the increase charge per $1000
for each $1000 of increase.
The actual monthly policy charge will never be greater than the maximum monthly
policy charge shown on the policy data pages. The increase charge per $1,000 is
also shown on the policy data pages.
The monthly deduction for a Policy Month will be allocated among the Investment
Subdivisions of the Separate Account in the same proportion that the Policy's
Account Value in each Investment Subdivision bears to the total Account Value in
all Investment Subdivisions at the beginning of the Policy Month.
<PAGE>
Cost of Insurance
The cost of insurance is calculated on each Monthly Anniversary Day and is based
on the net amount at risk. The net amount at risk is calculated by dividing the
Life Insurance Proceeds by 1.0032737, and then subtracting the Account Value. To
determine the cost of insurance for a particular Policy Month, we divide the net
amount at risk by 1000 and multiply that result by the applicable cost of
insurance rate. If Option B is in effect, and the Specified Amount has
increased, the Account Value is first considered part of the initial Specified
Amount. If the Account Value is more than the initial Specified Amount, it will
be considered part of the increased Specified Amounts resulting from increases
in the order of the increases.
Cost of Insurance Rate. The monthly rate is based on the Insured's sex, issue
age, policy duration and risk class. The risk class (and therefore the rates)
will be determined separately for the initial Specified Amount and for any
increase in the Specified Amount that requires evidence of insurability. The
rates are determined by us according to our expectations of future experience
for mortality, lapse, taxes, interest, and expenses. We can change the rates
from time to time, but they will never be more than the maximum rates shown in
the table of guaranteed maximum insurance rates. A change in rates will apply to
all persons of the same age, sex and risk class and whose policies have been in
effect for the same length of time.
Insufficient Account Value
On a Monthly Anniversary Day, if the Account Value less the surrender charge and
less any Policy Debt is not enough to cover the monthly deduction for that
Monthly Anniversary Day, the Grace Period provision will apply.
Continuation of Coverage
This Policy and any riders will remain in effect:
o as long as the Account Value less the surrender charge and less
any Policy Debt covers the monthly deduction; or
o as provided for in the Continuation Amount and Continuation
Period provision under PREMIUM PAYMENTS.
A rider attached to this Policy will not continue beyond its termination date
under any circumstances.
Surrender
You can make a full or partial surrender of this Policy by sending a written
request and the Policy to our Home Office. Unless an Optional Payment Plan is
chosen, any proceeds payable will be paid to you in a lump sum. A surrender must
take place during the Insured's life.
Amount Payable on Surrender. The Surrender Value of this Policy is the Account
Value on the date we receive your request for surrender in our Home Office less
any Policy Debt and less any surrender charge that applies.
Surrender Charge. We will charge a surrender charge during the surrender charge
period in the case of a full surrender of this Policy, and for decreases in
Specified Amount as described below. The amount of surrender charge is shown in
the policy data pages. The surrender charge period is the period of Policy
Months for which a surrender charge is shown in the policy data pages.
Surrender Charge on Decrease in Specified Amount. If the Specified Amount is
decreased to less than the smallest Specified Amount that had previously been in
effect, we may charge a surrender charge. The amount of surrender charge will be
the charge for a full surrender, multiplied by the ratio of (a) to (b), where:
(a) is the smallest Specified Amount that was in effect prior to the
current decrease, minus the Specified Amount after the current
decrease; and
(b) is the smallest Specified Amount that was in effect prior to the
current decrease.
Surrender charges in effect prior to the decrease will be adjusted to reflect
any assessments made.
<PAGE>
Partial Surrender. You can make a partial surrender of this Policy. A partial
surrender cannot be less than $500. A partial surrender cannot exceed the
lesser of:
o the Surrender Value, less $500; or
o the available loan amount.
We generally will reduce both the Account Value and the Life Insurance Proceeds
by the amount of any partial surrender. A partial surrender will not be
permitted during the first policy year if death benefit Option B is in effect.
You may tell us how to allocate the partial surrender among the Investment
Subdivisions of the Separate Account. If you do not, the partial surrender will
be allocated among each Investment Subdivision in the same proportion that the
Policy's Account Value in each Investment Subdivision bears to the total Account
Value in all Investment Subdivisions on the date we receive the request in our
Home Office.
We will deduct a charge from the amount of each partial surrender. This charge
will equal the lesser of (i) $25, or (ii) 2% of the amount of the partial
surrender.
Receiving the Surrender Value
The Surrender Value is payable in one lump sum unless you choose to receive
periodic payments under an Optional Payment Plan.
Postponement of Payments
We will usually pay any amounts payable as a result of surrender, partial
surrender, or policy loan within seven days after we receive written request in
our Home Office, in a form satisfactory to us. We will usually pay any Life
Insurance Proceeds within seven days after we receive due proof of death.
Payment of any amount payable on surrender, partial surrender, policy loan or
Life Insurance Proceeds may be postponed whenever:
o the New York Stock Exchange is closed other than customary week-end
and holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission;
or
o the Securities and Exchange Commission by order permits postponement
for the protection of policyowners; or
o an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to
determine the value of the net assets of the Separate Account.
We have the right to defer payment which is derived from any amount recently
paid to us by check or draft, until we are satisfied the check or draft has been
paid by the bank on which it is drawn.
LOAN BENEFITS
This Policy has loan benefits that are described below.
Making A Policy Loan
You may obtain a policy loan from us. This Policy is the only security required.
The maximum loan amount is 90% of the difference between (a) the Account Value
and (b) any surrender charge on the date of the loan. The available loan amount
is the maximum loan amount less any outstanding Policy Debt.
When a policy loan is made, an amount of Account Value sufficient to secure the
loan is transferred out of the Separate Account and into our General Account.
You may tell us how to allocate that Account Value among the Investment
Subdivisions of the Separate Account. If you do not, that Account Value will be
allocated among each Investment Subdivision in the same proportion that the
Policy's Account Value in each Investment Subdivision bears to the total Account
Value in all Investment Subdivisions on the date we make the loan.
Any loan transaction will permanently affect the values of the Policy.
<PAGE>
Policy Loan Interest
The interest rate paid on policy loans is shown on the policy data pages.
Interest accrues daily, and is due and payable on each policy anniversary. If
interest is not paid when due, an amount equal to the amount owed will be
transferred out of the Separate Account to become part of the Policy Debt and
interest will be charged on that amount. Interest transferred out of the
Separate Account will be transferred from each Investment Subdivision in the
same proportion that the Account Value in that Investment Subdivision bears to
the total Account Value in all Investment Subdivisions at the time of interest
transfer.
Preferred Policy Debt
Account Value in the General Account will earn interest daily at a minimum
annual rate of 4%. On each policy anniversary day, the interest earned since the
preceding policy anniversary day will be transferred into the Separate Account.
Unless you tell us otherwise, this interest will be allocated to the Investment
Subdivisions in the same manner as Net Premiums.
A portion of policy loans taken and/or existing after the preferred loan
availability date (shown on the policy data pages) will be designated as
preferred policy debt. The amount of preferred policy debt is redetermined each
policy month. Borrowed Account Value that corresponds to preferred policy debt
will earn interest at no less than the minimum annual rate of 4%. At our sole
discretion, we may use an interest rate higher than the guaranteed interest
rate. Preferred policy debt will be at least as large as:
(a) the Account Value less any surrender charge that applies, minus
(b) the total premiums paid.
Repaying Policy Debt
You can repay Policy Debt in part or in full any time during the Insured's life
while this Policy is in effect. Loan payments will first be applied to reduce
the portion of Policy Debt that does not correspond to preferred policy debt.
When a loan repayment is made, Account Value in the General Account related to
that payment will be transferred into the Separate Account. You may tell us how
to allocate this Account Value among each Investment Subdivision of the Separate
Account. If you do not, we will allocate that amount among the Investment
Subdivisions in the same proportion that Net Premiums are being allocated.
If you do not repay Policy Debt, it will be deducted from any proceeds or
benefit payable at the Insured's death or on surrender. Any Policy Debt which
exists at the end of the 61-day grace period will be deducted from the Account
Value and considered repaid as of the date of termination.
Minimum Loan Payment
During the Continuation Period, if Policy Debt on any Monthly Anniversary Day
exceeds the Account Value less any surrender charge that applies, and the Net
Total Premium is less than the Continuation Amount, your Policy will enter a
61-day grace period. You will have the 61-day grace period to pay a minimum loan
payment equal to the lesser of (a) and (b), where:
(a) equals the amount by which Policy Debt exceeds the Account Value
less any surrender charge; and
(b) equals the Net Premium Factor times the difference between the
Continuation Amount and the Net Total Premium.
All amounts in (a) and (b) above are as of the Monthly Anniversary Day when
excess Policy Debt first occurs.
After the Continuation Period, if Policy Debt on any Monthly Anniversary Day
exceeds the Account Value less any surrender charge that applies, your Policy
will enter a 61-day grace period. In this case, you will have the 61-day grace
period to pay a minimum loan payment equal to the amount by which Policy Debt
exceeds the Account Value less any surrender charge. As used in this paragraph,
Policy Debt, Account Value and surrender charge are all as of the Monthly
Anniversary Day when excess Policy Debt first occurs.
We will send written notice of the minimum loan payment to you and any assignee
of record at our Home Office at least 30 days prior to the date of termination.
If you do not pay the minimum loan payment by the end of the grace period, your
Policy will terminate without value.
<PAGE>
GENERAL INFORMATION
Annual Statement
On each policy anniversary, we will send you an annual statement. The statement
will show the Specified Amount, the Account Value, the Surrender Value and
Policy Debt as of the policy anniversary. The statement will also show premiums
paid and charges made during the policy year.
Calculation of Values
Our calculations of guaranteed maximum cost of insurance rates are based on the
Commissioners' 1980 Standard Ordinary Smoker or Nonsmoker Mortality Table for
issue ages 15 and above. For issue ages 0-14, they are based on the
Commissioner's 1980 Standard Ordinary Mortality Tables without distinction for
smoker or nonsmoker status, until attained age 15; then for attained ages 15 and
over, they are based on the Commissioner's 1980 Standard Ordinary Nonsmoker
Mortality Table.
If this Policy or an increased Specified Amount is in a special rating class,
the guaranteed maximum insurance rates are increased in the manner described in
the table of guaranteed maximum insurance rates.
If the net investment factor is always equivalent to an effective annual
interest rate of 4%, the values in this Policy will always at least equal the
account values required of an equivalent general account policy by the law where
this Policy was delivered. A detailed statement of how we calculate the values
in this Policy has been filed with the insurance department where this Policy
was delivered.
Exchange Provision
During the first 24 policy months, you have the right to exchange this Policy
for a permanent fixed benefit policy. We will not require evidence of
insurability. If you decide to make an exchange, we will notify you of the
policies available for exchange and the procedures to follow.
You may elect to have the amount of the new policy be either (a) or (b) where:
(a) is the Life Insurance Proceeds on the date of exchange, and
(b) is the Life Insurance Proceeds minus the Account Value on the date
of exchange.
The new policy will have the same policy date, sex, issue age and rating class
as this Policy. The new policy will include such riders and endorsements as were
included in this Policy, if such riders and endorsements are available with the
new policy.
The exchange is subject to an equitable adjustment in payments and Account
Values to reflect variances, if any, in the payments and Account Values under
the existing Policy and the new policy.
Limits on Contesting This Policy
In deciding to issue this Policy, we relied on statements in the application for
the Policy. If we increase the Specified Amount or reinstate the Policy after it
lapses, we rely on statements in a supplemental application or a reinstatement
application. The statements in all such applications are considered
representations and not warranties.
We can contest this Policy, an increase in Specified Amount and/or a
reinstatement of this Policy, if:
o any material misrepresentation of fact was made in the application,
a supplemental application or a reinstatement application; and
o a copy of that application was attached to the Policy when issued or
delivered, or was made a part of the Policy when a change in coverage
or Policy reinstatement went into effect.
With respect to the original Specified Amount, we will not contest this Policy
after it has been in effect during the lifetime of the Insured for two years
from its policy date. We will not contest an increase in Specified Amount after
that increase has been in effect during the lifetime of the Insured for two
years from the effective date of the increase. We will not contest a
reinstatement of this Policy after the reinstated Policy has been in effect
during the lifetime of the Insured for two years from the date of reinstatement.
This provision does not apply to riders that provide disability benefits.
<PAGE>
Misstatement of Age or Sex
If the Insured's Age or sex was misstated in an application, Life Insurance
Proceeds will be adjusted. The Life Insurance Proceeds after adjustment will be
the sum of (a) and (b), where:
(a) is the Account Value at the time of the Insured's death; and
(b) is the unadjusted Life Insurance Proceeds, reduced by the Account
Value at the time of the Insured's death, and multiplied by the
ratio of (1) the most recent monthly deduction based on the Age
and sex shown in the application, to (2) the most recent monthly
deduction based on the true Age or sex.
All amounts are those in effect, with respect to the Insured, in the Policy
Month of the Insured's death.
In no event will Life Insurance Proceeds be less than the amount required to
keep the Policy qualified as life insurance.
Nonparticipating
This is not a participating policy. No dividends are payable.
Suicide
If the Insured commits suicide, while sane or insane, within two years of the
Policy Date, all coverage under the Policy will end, and we will pay a limited
amount of proceeds. The limited amount of proceeds will equal all premiums paid
on the Policy, less Policy Debt and partial surrenders.
If the Insured commits suicide, while sane or insane, more than two years after
the policy date and within two years after an increase in the Specified Amount
became effective, the Specified Amount will be reduced to the amount in effect
prior to the increase. The amount payable with respect to the increase will
equal the monthly deductions that were made for that increase.
Any limited amount payable will be treated as Life Insurance Proceeds and paid
to the Beneficiary under the same conditions as the original Specified Amount.
Written Notice
Any written notice to us should be sent to our Home Office at 6610 West Broad
Street, Richmond, Virginia 23230. Please include the policy number and the
Insured's full name.
Any notice we send to you will be sent to your address shown in the application.
Notify us of any change of address.
<PAGE>
OPTIONAL PAYMENT PLANS
Life insurance or surrender value proceeds will be paid in one lump sum, unless
requested otherwise. Any part of the proceeds can be left with us and paid under
a payment plan. During the Insured's life, you can choose a plan. A Beneficiary
can choose a plan if you have not chosen one at the Insured's death.
There are several important payment plan rules:
o The payee under a plan cannot be a corporation, association or
fiduciary.
o If you change a Beneficiary, your plan selection will no longer be in
effect unless you request that it continue
o Any choice or change of a plan must be sent in writing to our Home
Office.
o The amount of each payment under a plan must be at least $50.
o Payments will begin either on the date of death or on lapse, except
for payments under Plan 4 which begin at the end of the first
interest period.
o Payments are backed by assets in our General Account.
Plan 1. Income for A Fixed Period. We will make equal periodic payments for a
fixed period, not longer than 30 years. Payments can be annual, semi-annual,
quarterly or monthly. Payments will be made according to the table in this
section. Guaranteed amounts payable under this plan will earn interest at 3%
compounded yearly. We may increase the interest and the amount of any payment.
If the payee dies, the amount of the remaining guaranteed payments will be
discounted to the date of the payee's death at a yearly rate of 3%. Discounted
means we will deduct the amount of interest each remaining payment would have
included had it not been paid out early. The discounted amount will be paid in
one sum to the payee's estate unless otherwise provided.
Plan 2. Life Income. `We will make equal monthly payments for a guaranteed
minimum period. If the payee lives longer than the minimum period, payments will
continue for his or her life. The minimum period can be 10, 15 or 20 years.
Payments will be according to the table in this section. Guaranteed amounts
payable under this plan will earn interest at 3% compounded yearly. We may
increase the interest rate and the amount of any payment. If the payee dies
before the end of the guaranteed period, the amount of remaining payments for
the minimum period will be discounted at the same interest rate used to
calculate the monthly income. The discounted amounts will be paid in one sum to
the payee's estate unless otherwise provided.
Plan 3. Income of A Definite Amount. We will make equal periodic payments of a
definite amount. Payments can be annual, semi-annual, quarterly or monthly. The
amount paid each year must be at least $120 for each $1,000 of proceeds.
Payments will continue until the proceeds are exhausted. The last payment will
equal the amount of any unpaid proceeds. Unpaid proceeds will earn interest at
3% compounded yearly. We may increase the interest rate. If we do, the payment
period will be extended. If the payee dies, the amount of the remaining proceeds
with earned interest will be paid in one sum to his or her estate unless
otherwise provided.
Plan 4. Interest Income. We will make periodic payments of interest earned from
the proceeds left with us. Payments can be annual, semi-annual, quarterly or
monthly, and will begin at the end of the first period chosen. Proceeds left
under this plan will earn interest at 3% compounded yearly. We may increase the
interest rate and the amount of any payment. If the payee dies, the amount of
remaining proceeds and any earned but unpaid interest will be paid in one sum to
his or her estate unless otherwise provided.
Plan 5. Joint Life and Survivor Income. We will make equal monthly payments to
two payees for a guaranteed minimum of 10 years. Each payee must be at least 35
years old when payments begin. The guaranteed amount payable under this plan
will earn interest at 3% compounded yearly. We may increase the interest rate
and the amount of any payment. Payments will continue as long as either payee is
living. If both payees die before the end of the minimum period, the amount of
the remaining payments for the 10 year period will be discounted at the same
interest rate used to calculate the monthly income. The discounted amount will
be paid in one sum to the survivor's estate unless otherwise provided.
<PAGE>
<TABLE>
<CAPTION>
Plan 1 Table: Monthly payment rates for each $1,000 of proceeds under Plan 1.
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Years 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Payable
- ----------------------------------------------------------------------------------------------------------------------------------
Monthly
Payment $84.47 $42.68 $28.99 $22.06 $17.91 $15.14 $13.16 $11.68 $10.53 $9.61 $8.86 $8.24 $7.71 $7.26 $6.87
- ----------------------------------------------------------------------------------------------------------------------------------
Years 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Payable
- ----------------------------------------------------------------------------------------------------------------------------------
Monthly
Payment $6.53 $6.23 $5.96 $5.73 $5.51 $5.32 $5.15 $4.99 $4.84 $4.71 $4.59 $4.47 $4.37 $4.27 $4.18
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Annual, semi-annual or quarterly payments are determined by multiplying the
monthly payment by 11.838, 5.963 or 2.992, respectively.
Plan 2 Table: Monthly payment rates for each $1,000 of proceeds under Plan 2.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Settlement| Male Payee | Female Payee | Settlement| Male Payee | Female Payee
Age |---------------------------|---------------------------| Age |--------------------------|--------------------------
|10 Years 15 Years 20 Years |10 Years 15 Years 20 Years | |10 Years 15 Years 20 Years|10 Years 15 Years 20 Years
|Certain Certain Certain | Certain Certain Certain | |Certain Certain Certain |Certain Certain Certain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
20 2.90 2.89 2.89 2.80 2.80 2.80 65 5.44 5.17 4.83 4.85 4.72 4.54
25 2.99 2.98 2.98 2.88 2.87 2.87 66 5.58 5.28 4.89 4.97 4.83 4.62
30 3.10 3.10 3.09 2.96 2.96 2.96 67 5.74 5.38 4.96 5.10 4.93 4.69
35 3.24 3.24 3.23 3.08 3.07 3.07 68 5.89 5.49 5.02 5.24 5.04 4.77
40 3.43 3.41 3.39 3.22 3.21 3.20 69 6.05 5.60 5.08 5.39 5.16 4.84
45 3.66 3.64 3.60 3.40 3.39 3.37 70 6.22 5.70 5.13 5.55 5.28 4.92
50 3.95 3.91 3.85 3.63 3.61 3.59 71 6.39 5.81 5.18 5.71 5.39 4.99
51 4.02 3.97 3.91 3.68 3.66 3.63 72 6.57 5.91 5.23 5.88 5.51 5.05
52 4.09 4.04 3.96 3.74 3.72 3.68 73 6.75 6.01 5.27 6.06 5.63 5.12
53 4.16 4.11 4.02 3.80 3.77 3.74 74 6.93 6.10 5.31 6.25 5.75 5.17
54 4.24 4.18 4.08 3.86 3.83 3.79 75 7.12 6.19 5.35 6.44 5.87 5.22
55 4.32 4.25 4.15 3.93 3.90 3.85 76 7.30 6.28 5.38 6.64 5.98 5.27
56 4.41 4.33 4.21 4.00 3.96 3.91 77 7.49 6.35 5.40 6.85 6.09 5.31
57 4.50 4.41 4.28 4.07 4.03 3.97 78 7.67 6.43 5.42 7.06 6.19 5.35
58 4.60 4.49 4.34 4.15 4.10 4.03 79 7.85 6.49 5.44 7.27 6.28 5.38
59 4.70 4.58 4.41 4.23 4.18 4.10 80 8.02 6.55 4.46 7.48 6.37 5.41
60 4.81 4.67 4.48 4.32 4.26 4.17 81 8.18 6.61 5.47 7.68 6.45 5.43
61 4.92 4.77 4.55 4.42 4.35 4.24 82 8.34 6.65 5.48 7.88 6.52 5.45
62 5.04 4.86 4.62 4.52 4.53 4.39 84 8.63 6.73 5.50 8.26 6.63 5.48
64 5.30 5.06 4.76 4.73 4.62 4.46 85& 8.76 6.76 5.50 8.43 6.68 5.49
over
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Values for ages not shown will be furnished upon request.
Plan 5 Table: Monthly payment rates for each $1000 of proceeds under Plan 5.
Monthly payment rates for each $1,000 of proceeds under Plan 5.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Male Settlement | Female Settlement Age
|-----------------------------------------------------------------------------------------
Age | 35 | 40 | 45 | 50 | 55 | 60 | 65 | 70 | 75 | 80 |85 & over
- ----------------------------------------------------------------------------------------------------------
<S> <C>
35 $2.95 $3.00 $3.06 $3.11 $3.15 $3.18 $3.20 $3.22 $3.23 $3.24 $3.24
40 2.98 3.06 3.13 3.20 3.26 3.31 3.35 3.38 3.40 3.41 3.42
45 3.01 3.10 3.20 3.30 3.39 3.46 3.53 3.58 3.61 3.64 3.65
50 3.03 3.14 3.25 3.38 3.51 3.63 3.73 3.38 3.87 3.91 3.93
55 3.04 3.16 3.30 3.45 3.62 3.79 3.94 4.08 4.18 4.25 4.29
60 3.05 3.18 3.33 3.51 3.72 3.94 4.16 4.37 4.55 4.67 4.75
65 3.06 3.19 3.36 3.56 3.79 4.07 4.37 4.68 4.96 5.18 5.32
70 3.07 3.20 3.37 3.59 3.85 4.17 4.55 4.97 5.39 5.75 6.00
75 3.07 3.21 3.38 3.61 3.89 4.24 4.68 5.20 5.78 6.32 6.73
80 3.07 3.21 3.39 3.62 3.91 4.28 4.76 5.37 6.08 6.81 7.40
85 & over 3.07 3.22 3.39 3.62 3.92 4.31 4.81 5.47 6.28 7.15 7.91
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Figures for intermediate ages, for two males or two females will be furnished
upon request.
Settlement Age: The settlement age is the payee's age nearest birthday on the
date payments begin, minus an age adjustment from the table below. The age
adjustment cannot exceed the age of the payment.
- -----------------------------------------------------------------------
YEAR Payments Begin AGE
ADJUSTMENT
AFTER PRIOR TO
- -----------------------------------------------------------------------
----- 2001 0
2000 2026 3
2025 2051 7
2050 ---- 10
- -----------------------------------------------------------------------
