[LETTERHEAD OF AMERICAN INTERNATIONAL LIFE ASSURANCE]
Flexible Premium Variable Life Insurance Policy
We agree to pay the Life Insurance Proceeds of this Policy and to provide its
other benefits and rights in accordance with its provisions.
This is a flexible premium variable life insurance policy. You can, within
limits:
o increase or decrease the Face Amount;
o pay Premium at any time and in any amount;
o change the Death Benefit Option;
o change the allocation of Net Premiums among Your investment options;
and
o transfer amounts among Your investment options.
All of these rights and benefits are subject to the terms and conditions of this
Policy. All requests for Policy changes are subject to Our approval and may
require evidence of insurability.
The portion of Your Account Value that is in a Subaccount will vary up or down
depending on the unit value of such Subaccount, which in turn depends on the
investment performance of the corresponding portfolio of a designated investment
company. There are no minimum guarantees as to such portion of Your Account
Value.
The portion of Your Account Value that is in the Guaranteed Account will
accumulate, after deductions, at rates of interest We determine. Such rates will
not be less than an effective rate of 4% per year, compounded annually.
The amount of the Death Benefit may be level or variable as described in the
Death Benefit provision of THE BENEFITS WE PAY section on page 7 of this Policy.
Please Read This Policy With Care. This Policy is a legal contract between You
and Us. This is a non-participating policy. It does not participate in Our
profits or surplus. No dividends are payable.
Right To Examine And Cancel This Policy. You may examine this Policy and if for
any reason You are not satisfied with it You may cancel it by returning this
Policy with a Written Notice for cancellation to Our Administrative Office, or
to the agent who sold it, no later than the later of (a) 10 days after You
receive it; or (b) 45 days after the application was signed. If You do this, We
will refund the Premiums that were paid on this Policy.
/s/ Elizabeth M. Tuck /s/ Gill Wyclif
Secretary President
<PAGE>
INDEX
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Sections Page
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Policy Information ........................................................ 3
Definitions ............................................................... 4
Owner And Beneficiary Provisions .......................................... 6
The Benefits We Pay ....................................................... 7
Automatic Face Amount Increase Option ..................................... 7
Changing The Face Amount Or The Death Benefit Option ...................... 8
The Premiums You Pay ...................................................... 9
Your Account Value And How It Works ....................................... 10
Your Investment Options ................................................... 11
Your Account Value ........................................................ 12
The Cash Surrender Value Of This Policy ................................... 13
How A Loan Can Be Made .................................................... 15
The Separate Account ...................................................... 16
Our Annual Report To You .................................................. 16
How Benefits Are Paid ..................................................... 17
Other Important Information ............................................... 17
A copy of the application for this Policy and any additional benefit riders are
at the back of this Policy.
<TABLE>
<CAPTION>
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Important Terms and Provisions Page Page
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<S> <C>
Account Value ....................4, 10, 12 Misstatement Of Age Or Sex...............18
Age ......................................4 Money Market Subaccount .................3A
Allocation Date ..........................4 Monthly Anniversary ......................4
Allocations .............................11 Monthly Deduction .......................10
Annual Report ...........................16 Net Cash Surrender Value .............4, 13
Assignment ...............................6 Net Premium ..........................4, 10
Attained Age .............................4 No Lapse .................................9
Automatic Increase Option ................7 No Lapse Period .......................3, 9
Automatic Rebalancing Option.............19 Outstanding Loan .........................4
Basis Of Computation ....................18 Owner ..............................3, 4, 6
Beneficiary ...........................4, 6 Paid Up Insurance Benefit................19
Cash Surrender Value .................4, 13 Partial Withdrawal ......................14
Changes In Policy Cost Factors ..........17 Partial Withdrawal Limits................3A
Changing The Death Benefit Option ........8 Planned Periodic Premium ..............3, 4
Changing The Face Amount .................8 Policy Changes - Applicable Tax Law .....17
Contesting This Policy ..................17 Policy Date............................3, 5
Contract ................................17 Policy Loan .............................15
Cost Of Insurance .......................10 Policy Loan Limits ......................3A
Cost Of Insurance Rate ..................10 Premium ............................3, 4, 9
Death Benefit.............................7 Reinstatement ............................9
Dollar Cost Averaging....................20 Right To Exchange .......................19
Expense Charges ......................3, 10 Subaccount Value ........................12
Face Amount ...........................3, 4 Suicide .................................18
Grace Period ..........................4, 9 Surrender Charge ........................14
Guaranteed Account Value .............4, 13 Table Of Face Amounts ...................3D
Guaranteed Interest Rates ................3 Table Of Guaranteed Maximum Cost Of
How, When And What We May Defer .........18 Insurance Rates .......................3B
Initial Premium .......................3, 9 Table Of Maximum Surrender Charges ......3A
Insured ...............................3, 4 Table Of Minimum Death Benefit Factors ..3C
Issue Date ............................3, 4 Tax Qualification Option ..............3, 5
Lapse ....................................9 Transfer limits .........................3A
Life Insurance Proceeds ...............4, 7 Transfers ...............................11
Minimum Premium .......................3, 4 Written Notice ...........................5
</TABLE>
2
<PAGE>
DEFINITIONS
Account Value. The total amounts in the accounts credited to this Policy.
Administrative Office. American International Life Assurance Company of New
York, 80 Pine Street, New York, NY 10005.
Age. The Insured's age nearest birthday on the Policy Date.
Allocation Date. The first business day following the completion of the Right To
Examine and Cancel This Policy period.
Attained Age. The Insured's Age on the Policy Date plus the number of full
Policy Years since the Policy Date.
Beneficiary. The person(s) who is(are) entitled to the Life Insurance Proceeds
of this Policy.
Cash Surrender Value. The Account Value less any applicable surrender charge
that would be deducted upon surrender.
Face Amount. The amount of insurance You have specified and from which the Death
Benefit will be determined. The Initial Face Amount is shown in the POLICY
INFORMATION section.
Grace Period. The period of time following a Monthly Anniversary during which
this Policy will continue in force while the Net Cash Surrender Value is not
sufficient to cover the total monthly deduction then due.
Guaranteed Account. An account within Our general account which consists of all
of Our assets other than the assets of the Separate Account and any of Our other
separate accounts.
Insured. The person who has life insurance coverage under this Policy.
Issue Date. The date this Policy is issued. It may be a later date than the
Policy Date.
Life Insurance Proceeds. The amount of money payable to the Beneficiary if the
Insured dies while life insurance coverage under this Policy is in force.
Minimum Premium. The amount of Premium, shown in the POLICY INFORMATION section,
which is used, as described in the No Lapse provision, to test the continuation
of this Policy during the No Lapse Period.
Monthly Anniversary. The same day as the Policy Date for each succeeding month,
except that, for any month not having such a day, it is the last day of that
month.
Net Cash Surrender Value. The Cash Surrender Value less any Outstanding Loan.
Net Premium. A Premium less any expense charges deducted from the Premium.
Outstanding Loan. The total amount of Policy Loans including both principal and
accrued loan interest.
Owner, You, Your. The person who purchased this Policy as shown in the
application, unless later changed. The Owner may be someone other than the
Insured.
Planned Periodic Premium. The amount of Premium You have selected to pay at the
frequency shown in the POLICY INFORMATION section.
Policy. This Flexible Premium Variable Life Insurance contract between American
International Life Assurance Company of New York and You.
Policy Anniversary. An anniversary of the Policy Date.
4
<PAGE>
DEFINITIONS (Continued)
Policy Date. The date as of which We have received the Initial Premium and an
application in good order. If a Policy is issued, life insurance coverage is
effective as of the Policy Date.
Policy Loan Account. The portion of the Account Value held in the Guaranteed
Account as collateral for Policy Loans.
Policy Month. The month commencing with the Policy Date and ending on the day
before the first Monthly Anniversary, or any following month commencing with a
Monthly Anniversary and ending on the day before the next Monthly Anniversary.
Policy Year. The year commencing with the Policy Date and ending on the day
before the first Policy Anniversary, or any following year commencing with a
Policy Anniversary and ending on the day before the next Policy Anniversary.
Premium. The total consideration paid by You in exchange for Our obligations
under this Policy. The Initial Premium is due on or before delivery of this
Policy.
Separate Account. Variable Account B, a separate investment account of American
International Life Assurance Company of New York.
Subaccount. A division of the Separate Account established to invest in a
particular fund and available for investment under this Policy.
Tax Qualification Option. The option shown in the POLICY INFORMATION section
which determines the manner in which this Policy will qualify as a life
insurance contract as defined in Section 7702 of the Internal Revenue Code of
1986, as amended (`the Code'). It will be designated as either the Guideline
Premium/Cash Value Corridor Test, or the Cash Value Accumulation Test.
Valuation Date. Each day the New York Stock Exchange is open for trading.
Valuation Period. A period commencing with the close of trading on the New York
Stock Exchange on any particular Valuation Date and ending at the close of
trading on the New York Stock Exchange for the next succeeding Valuation Date.
We, Our, Us. American International Life Assurance Company of New York.
Written Notice. Information given in written form satisfactory to Us and signed
by You.
5
<PAGE>
OWNER AND BENEFICIARY PROVISIONS
Owner. The Owner of this Policy is the Insured unless otherwise stated in the
application, or later changed.
As the Owner, You are entitled to exercise all the rights of this Policy while
the Insured is living. To exercise a right, You do not need the consent of
anyone who has only a conditional or future ownership interest in this Policy.
Beneficiary. The Beneficiary is the person(s) who is(are) entitled to the Life
Insurance Proceeds of this Policy. The Beneficiary is as stated in the
application, unless later changed. One or more beneficiaries for the Life
Insurance Proceeds can be named in the application. If more than one beneficiary
is named, each can be classed as primary or contingent. If two or more persons
are named in a class, their shares in the benefit can be stated. The stated
shares in the Life Insurance Proceeds will be paid to any primary beneficiaries
who survive the Insured. If no primary beneficiaries survive, payment will be
made to any surviving contingent beneficiaries. Beneficiaries who survive in the
same class will share the Life Insurance Proceeds equally, unless You have made
another arrangement with Us.
If there is no designated Beneficiary living at the death of the Insured, We
will pay the Life Insurance Proceeds to the Owner, if living, otherwise to the
Owner's estate.
Changing The Owner Or Beneficiary. While the Insured is living, You may send Us
a Written Notice to change the Owner or Beneficiary. (You can get such a form
from Our agent or by writing to Us at Our Administrative Office.) The change
will take effect on the date You sign the notice, but it will not apply to any
payment We make or other action We take before We receive the notice.
Assignment. You may assign this Policy, if We agree. In any event, We will not
be bound by an assignment unless We have received it in writing at Our
Administrative Office. Your rights and those of any other person referred to in
this Policy will be subject to the assignment. We assume no responsibility for
the validity of an assignment.
6
<PAGE>
THE BENEFITS WE PAY
Life Insurance Proceeds. We will pay the Life Insurance Proceeds of this Policy
to the Beneficiary when We receive at Our Administrative Office (1) proof
satisfactory to Us that the Insured died while this Policy was in force; and (2)
all other requirements We deem necessary before such payment may be made. The
Life Insurance Proceeds includes the following amounts, which We will determine
as of the date of the Insured's death:
o the Death Benefit described below; plus
o any other benefits then due from riders to this Policy; minus
o any Outstanding Loan; minus
o any overdue monthly deductions from Your Account Value if the
Insured dies during a Grace Period.
We will add interest to the resulting amount for the period from the date of
death to the date of payment. We will compute the interest at a rate We
determine, but not less than the rate required by any applicable law. Payment of
the Life Insurance Proceeds may also be affected by other provisions of this
Policy. See the OTHER IMPORTANT PROVISIONS section, where We specify Our right
to contest this Policy, the suicide exclusion, and what happens if the Insured's
age or sex has been misstated on the application. Any additional exclusions or
limitations are listed in the POLICY INFORMATION section.
Death Benefit. You have chosen in the application one of the two Tax
Qualification Options available under the federal tax law; and one of the two
Death Benefit Options. These selections are shown in the POLICY INFORMATION
section. The Death Benefit Option may be changed by You, within limits; however
the Tax Qualification Option may not be changed. The Death Benefit amount will
be determined based on which options are in effect at the time of death.
Prior to the Insured reaching Attained Age 100, the Death Benefit will be
determined as follows:
Under Death Benefit Option I, the Level Death Benefit Option, the Death Benefit
is the greater of the Face Amount, or the Account Value on the date of death
multiplied by the Minimum Death Benefit Factor for the Attained Age of the
Insured at the time of death (see Table Of Minimum Death Benefit Factors in the
POLICY INFORMATION section). Under this Option, the amount of the Death Benefit
is level, unless it is determined by such Death Benefit Factor.
Under Death Benefit Option II, the Variable Death Benefit Option, the Death
Benefit is the greater of the Face Amount plus the Account Value on the date of
death, or the Account Value on the date of death multiplied by the Minimum Death
Benefit Factor for the Attained Age of the Insured at the time of death (see
Table Of Minimum Death Benefit Factors in the POLICY INFORMATION section). Under
this Option, the amount of the Death Benefit is variable.
Upon the Insured reaching Attained Age 100, all riders attached to this Policy
will end without value, no further premiums will be accepted and no further
expense or cost of insurance charges will be incurred. The Death Benefit from
Attained Age 100 forward will equal the Account Value. Policy Loans, Partial
Withdrawals and Transfers of funds can still be requested by You in accordance
with the provisions of this Policy for as long as the Policy remains in force.
AUTOMATIC FACE AMOUNT INCREASE OPTION
Automatic Increase Option. An automatic increase in the Face Amount of this
Policy will be effective on specified Policy Anniversaries, as shown in the
Table Of Face Amounts in the POLICY INFORMATION section, subject to the
following conditions:
o You elected this option in the application for this Policy; and
o this Policy is issued under Death Benefit Option I; and
o the Death Benefit Option has never been changed to Death Benefit
Option II; and
o You have not refused any previous scheduled automatic increase; and
o the Face Amount of this Policy has not been increased other than by
such scheduled automatic increase(s); and
o the Face Amount of this Policy has not been decreased as a result of
Your request for a decrease, or as a result of a partial withdrawal.
No additional automatic increase in Face Amount will take effect after the last
Policy Anniversary shown in the Table Of Face Amounts. If You want to stop the
scheduled automatic increases, We must be given Written Notice at least 30 days
before the effective date of the next increase. We will then cancel the next
increase and all subsequent scheduled automatic increases and send You a revised
Table Of Face Amounts.
7
<PAGE>
CHANGING THE FACE AMOUNT OR THE DEATH BENEFIT OPTION
At any time after the first Policy Year while this Policy is in force, and prior
to the Insured reaching Attained Age 100, You may change the Death Benefit
Option or the Face Amount by Written Notice to Us at Our Administrative Office.
The Tax Qualification Option may not be changed. Any requested change is subject
to Our approval and the following:
1. You may ask Us to increase the Face Amount if You provide evidence
satisfactory to Us of the insurability of the Insured. If the Face Amount
is increased, then the cost of insurance rate for the amount of the
increase will be based on the rate class of the Insured on the date of the
increase, and the Insured's sex and Attained Age. Any increase You ask for
must be at least $10,000. If You increase the Face Amount, an additional
ten year surrender charge will apply to that increase. We will also assess
an additional monthly expense charge related to the Face Amount increase
for 60 months beginning on the effective date of the increase. We will not
allow You to increase the Face Amount more than once during any Policy
Year, nor will We allow You to increase the Face Amount after the Insured
reaches Attained Age 85. Any requested increase in Face Amount will void
Your rights under this Policy relating to the No Lapse provision, and will
cancel any future Face Amount increases under the Automatic Increase
Option provision.
2. You may ask Us to decrease the Face Amount but not to less than the
Minimum Face Amount shown in the POLICY INFORMATION section. Any such
decrease in the Face Amount must be at least $5,000; however, during each
of the second through fifth Policy Years, the Face Amount may not be
decreased by more than 25% of the Initial Face Amount. If You decrease the
Face Amount before the end of the tenth Policy Year, or before the end of
the tenth Policy Year following an increase in the Face Amount, We will
deduct from Your Account Value a pro rata share of the applicable
surrender charge. Decreases will first be applied against the most recent
increase, if any, in the Face Amount. They will then be applied to any
prior increases in the Face Amount in the reverse order in which such
increases took place, and then to the Initial Face Amount. Any requested
decrease in Face Amount will cancel any future Face Amount increases under
the Automatic Increase Option provision.
3. You can change Your Death Benefit Option. We may require that You submit
evidence, satisfactory to Us, that the Insured is insurable. If You ask Us
to change from Death Benefit Option I to Death Benefit Option II, We will
decrease the Face Amount by the amount in Your Account Value on the date
the change takes effect. However, We will not allow such change if it
would decrease the Face Amount below the Minimum Face Amount shown in the
POLICY INFORMATION section. If You ask Us to change from Death Benefit
Option II to Death Benefit Option I, We will increase the Face Amount by
the amount in Your Account Value on the date the change takes effect. Such
decreases and increases in the Face Amount are made so that the Death
Benefit remains the same on the date the change takes effect. However, if
Your Account Value multiplied by the applicable Minimum Death Benefit
Factor exceeds the Face Amount on the date the Death Benefit Option change
takes effect, there may be an increase in the Death Benefit. Any requested
change to Death Benefit Option II will cancel any future Face Amount
increases under the Automatic Increase Option provision.
4. Any change must be by Written Notice to Us at Our Administrative Office.
We may also require You to return this Policy to Us to make a change. A
copy of any additional application and the new POLICY INFORMATION section,
that We will issue when the change is made, will become a part of this
Policy.
5. Any change will take effect at the beginning of the Policy Month that
coincides with or next follows the date We approve Your request.
6. We reserve the right to decline to make any change that We determine would
cause this Policy to fail to qualify as life insurance as defined in the
Code.
8
<PAGE>
THE PREMIUMS YOU PAY
The Initial Premium shown in the POLICY INFORMATION section is due on or before
delivery of this Policy. No insurance will take effect before the Initial
Premium is paid. Other Premiums may be paid at Our Administrative Office at any
time prior to the Insured reaching the Attained Age 100, while this Policy is in
force. If requested, We will give You a receipt signed by one of Our Officers.
We will send Premium notices to You for the Planned Periodic Premium which You
have selected and which is shown in the POLICY INFORMATION section. You may skip
Planned Periodic Premiums. However, this may adversely affect the duration of
life insurance coverage and Your Policy's values. Even if the Planned Periodic
Premium is paid as scheduled, it may not provide life insurance coverage
throughout the lifetime of the Insured.
Limits. Each Premium after the Initial Premium must be at least $25.00. We will
limit the amount of Premiums paid to Us so that this Policy will continue to
qualify as a life insurance contract as defined in the Code. In addition, We may
require You to submit evidence, satisfactory to Us, that the Insured is
insurable before We will accept any Premium payment which would increase the
Death Benefit to an extent greater than that Premium amount.
No Lapse. In general, this Policy will lapse on any Monthly Anniversary that the
Net Cash Surrender Value is not sufficient to cover the monthly deduction due.
However, this Policy will not lapse on any Monthly Anniversary during the No
Lapse Period shown in the POLICY INFORMATION section if the total Premium paid
to date, less any partial withdrawals, and less any Outstanding Loan, is at
least equal to the Minimum Premium shown in the POLICY INFORMATION section
multiplied by the number of months since the Policy Date. This No Lapse feature
will end and will not be reinstated if the Face Amount of this Policy has been
increased in any manner other than as a result of a scheduled automatic increase
as shown in the Table Of Face Amounts, or if any rider has been added after the
Issue Date. Additionally, in order to comply with the definition of life
insurance under the code, We may not be able to accept the Minimum Premium
following a requested decrease in the Face Amount. If We can no longer accept
the Minimum Premium following a requested decrease in the Face Amount, the No
Lapse feature will end. The No Lapse feature will not be reinstated if this
Policy has ended without value.
Grace Period. If this Policy lapses, We will, within 30 days, send a written
notice to You and any assignee on Our records, at the last known addresses,
stating that a Grace Period of 61 days has begun, starting with the date of our
mailing of such notice. The notice will request payment of an amount of Premium
which would increase the Net Cash Surrender Value sufficiently to cover total
monthly deductions for 3 months, if no interest or investment performance were
credited to or charged against the Account Value and no Policy changes were
made. If We do not receive the requested Premium amount before the end of the
Grace Period, this Policy will end without value and no Life Insurance Proceeds
will be payable.
If We do receive the requested Premium amount before the end of the Grace
Period, but the Net Cash Surrender Value is still insufficient to cover total
monthly deductions, We will send a written notice that a new 61 day Grace Period
has begun and request additional Premium.
If the Insured dies during a Grace Period, We will pay the Life Insurance
Proceeds described in THE BENEFITS WE PAY section.
Reinstatement Of Your Policy. If this Policy has ended without value, You may
reinstate it while the Insured is alive provided You do all of the following:
o Send a Written Notice for reinstatement of this Policy within 3
years from the end of the Grace Period.
o Provide evidence of insurability satisfactory to Us.
o Pay a Premium sufficient to cover (i) total monthly deductions for 3
months, calculated from the effective date of reinstatement; and
(ii) the premium expense charge. We will determine the required
Premium as if no interest or investment performance were credited to
or charged against Your Account Value.
o Repay or reinstate any Outstanding Loan which existed on the date
this Policy ended.
The effective date of the reinstatement of this Policy will be the beginning of
the Policy Month which coincides with or next follows the date We approve Your
request. We will start to make monthly deductions again as of this date.
We will deduct the premium expense charge from the required Premium. The monthly
expense charges, the Account Value, any Outstanding Loan, and the surrender
charges applicable at the time of reinstatement will be those that were in
effect on the date this Policy ended.
9
<PAGE>
YOUR ACCOUNT VALUE AND HOW IT WORKS
Premium. When We receive Your Premium, We subtract the expense charges shown in
the POLICY INFORMATION section. We put the balance (the Net Premium) into Your
Account Value as of the date We receive the Premium at Our Administrative
Office, and before any deductions from Your Account Value as of the Policy Date,
if it is later than the date of receipt. No Premium will be applied to Your
Account Value until the full Initial Premium, as shown on Your application, is
received at Our Administrative Office.
Monthly Deduction. On the Policy Date and each following Monthly Anniversary,
Anniversary until the Insured reaches Attained Age 100, We make a deduction from
Your Account Value to cover the monthly expense charge and to provide life
insurance coverage. Such deduction for any Policy Month is the sum of the
following amounts, determined as of the beginning of that month:
o the monthly expense charge; plus
o the monthly cost of insurance charge for the Insured ; and plus
o the monthly cost of any benefits provided by riders to this Policy.
The monthly expense charge is comprised of an acquisition charge and an
administrative charge. The acquisition charge, which is assessed for the first
five Policy Years, is to compensate Us for the expenses related to the
acquisition and underwriting of Your Policy. Your Policy will also be assessed
an additional acquisition charge for the first five years following each
non-automatic Face Amount increase. The administrative charge, which is assessed
for all Policy Years prior to the Insured reaching Attained Age 100, is to
compensate Us for the administrative expenses associated with the Policy and the
Separate Account.
The monthly cost of insurance charge is the sum of:
o the current monthly cost of insurance rate per $1,000, multiplied by
the net amount at risk at the beginning of the Policy Month divided
by $1,000; plus
o any extra charge per $1,000 of Face Amount shown in the POLICY
INFORMATION section, multiplied by the Face Amount at the beginning
of the Policy Month divided by $1,000.
If the Death Benefit is equal to the Face Amount, or the Face Amount plus the
Account Value, then the net amount at risk is equal to the Death Benefit divided
by 1.0032737, minus the amount in Your Account Value at that time. However, if
the Death Benefit is equal to the Account Value of this Policy multiplied by a
factor from the Table Of Minimum Death Benefit Factors, then the net amount at
risk is equal the Death Benefit minus the amount in Your Account Value at that
time. The cost of insurance rate per $1,000 is based on the sex, Attained Age,
rate class, and smoker or non-smoker status of the Insured.
If more than one risk class is in effect for Your Initial Face Amount and any
applied for increase in Face Amount, the net amount at risk will be allocated to
the Initial Face Amount first, with any balance over the Initial Face Amount
allocated successively to the applied for increases in Face Amount, in the same
order in which they were applied for.
We will determine cost of insurance rates at least every three years. Any change
in the cost of insurance rates We use will be as described in the Changes In
Policy Cost Factors provision. Such rates will never be more than those shown in
the Table Of Guaranteed Maximum Cost Of Insurance Rates in the POLICY
INFORMATION section.
Other Deductions. We may also make additional deductions from Your Account Value
at the time of certain requested transactions.
o We deduct a surrender charge if, before the end of the tenth Policy
Year, You give up this Policy for its Net Cash Surrender Value, You
decrease the Face Amount, or if this Policy terminates without value
at the end of a Grace Period. A surrender charge will also apply to
such transactions for ten years immediately following a Face Amount
increase, other than a scheduled automatic increase.
o We may deduct a surrender charge if You make a partial withdrawal
from this Policy.
o We may deduct an administrative charge for each partial withdrawal.
o We may deduct an administrative charge for certain transfers.
Treatment Of Deductions. It is Our standard procedure to make all monthly
deductions from Your unloaned value in the Guaranteed Account and from Your
values in the Subaccounts based on the proportion that Your unloaned value in
the Guaranteed Account and Your values in the Subaccounts bear to the total
unloaned value in Your Account Value. You may by Written Notice to Our
Administrative Office request that all monthly deductions be made only from Your
unloaned value in the Guaranteed Account, or from specified Subaccounts. Such
request will be subject to Our approval. If there is not sufficient value to
cover a monthly deduction in the location(s) You have specified, then the
standard procedure would apply.
10
<PAGE>
YOUR INVESTMENT OPTIONS
Allocations. This Policy provides investment options for the amount in Your
Account Value. Amounts put into Your Account Value are allocated to the
Subaccounts and to the unloaned portion of the Guaranteed Account at Your
direction. You specified Your Initial Premium allocation percentages in Your
application for this Policy, a copy of which is attached to this Policy. Unless
You change them, such allocation percentages will also apply to subsequent
Premiums. However, any Net Premium received prior to the Allocation Date will
initially be allocated to the money market Subaccount named in the POLICY
INFORMATION section. On the Allocation Date, any such amounts will then be
allocated in accordance with the directions contained in Your Policy
application.
Premium allocation percentages must be zero or a whole number from 5% to 100%.
The sum of the Premium allocation percentages must equal 100. You may change
such allocation percentages by request to Our Administrative Office, in a form
acceptable to Us. A change will take effect on the date We receive it at Our
Administrative Office except for changes received on or prior to the Allocation
Date which will take effect on the first business day following the Allocation
Date.
Transfers. At Your request to Our Administrative Office, in a form acceptable to
Us, We will transfer amounts from Your unloaned value in the Guaranteed Account
to one or more Subaccounts, or from Your value in any Subaccount to one or more
other Subaccounts or to the Guaranteed Account, subject to the limitations noted
below.
The minimum amount that We will transfer is the lesser of the minimum transfer
amount shown in the POLICY INFORMATION section, or the total amount You have in
that Subaccount, or the total unloaned value of the Guaranteed Account on that
date.
The maximum amount We will transfer from Your unloaned value in the Guaranteed
Account during any Policy Year is 25% of the value in that account on the most
recent Policy Anniversary reduced by all partial withdrawals and transfers You
made from that account during the current Policy Year.
You may make up to 12 transfers each Policy Year free of charge. For each
additional transfer, We reserve the right to make a transfer charge up to the
amount shown in the POLICY INFORMATION section. All transfers made on a single
day will be counted as just one transfer in determining whether a charge will
apply. Any transfer on the Allocation Date will not be counted as a transfer in
determining future charges. The transfer charge, if any, is deducted from the
total amount transferred prior to the balance being reallocated according to
Your request.
Transfers will take effect on the date We receive Your transfer request, subject
to the New York Stock Exchange being open for trading. We may, however, defer
transfers under the same conditions as described in the How, When And What We
May Defer provision.
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<PAGE>
YOUR ACCOUNT VALUE
The amount in Your Account Value at any time is equal to the sum of the amounts
You then have in the Subaccounts under this Policy, and in the Guaranteed
Account.
Value In The Subaccounts. The amount You have in a Subaccount under this Policy
at any time is equal to the number of units this Policy then has in that
Subaccount multiplied by the Subaccount's unit value at that time. A Policy
transaction occurs when units of a Subaccount are either purchased or redeemed.
Amounts allocated, transferred or added to a Subaccount are used to purchase
units of that Subaccount; units are redeemed when amounts are deducted, loaned,
transferred, withdrawn or surrendered.
The number of units this Policy has in a Subaccount at any time is equal to the
number of units purchased minus the number of units redeemed in that Subaccount
to that time. The number of units purchased or redeemed in a Policy transaction
is equal to the dollar amount of the Policy transaction divided by the
Subaccount's unit value on the date of the Policy transaction. Policy
transactions may be made on any day. The unit value that applies to a Policy
transaction made on a Valuation Date will be the unit value for that day. The
unit value that applies to a Policy transaction made on a day other than a
Valuation Date will be the unit value for the next Valuation Date.
We determine unit values for the Subaccounts at the end of each Valuation Date.
The unit value of a Subaccount on any Valuation Date is equal to the unit value
for that Subaccount on the immediately preceding Valuation Date multiplied by
the net investment factor for that Subaccount on that Valuation Date.
The net investment factor for a Subaccount on any Valuation Date is (a) divided
by (b), minus (c), where:
(a) is the net asset value of the shares in designated investment companies
that belong to the Subaccount at the close of business on such Valuation
Date before any Policy transactions are made on that day, plus the amount
of any dividend or capital gain distribution paid by the investment
companies on that day;
(b) is the value of the assets in that Subaccount at the close of business on
the immediately preceding Valuation Date after all transactions were made
for that day; and
(c) is a daily charge, for each day in the Valuation Period which includes
such Valuation Date, not exceeding .00248%, which is equivalent to a
charge of .90% annually, for mortality and expense risks.
The net asset value of an investment company's shares held in each Subaccount
will be the value reported to Us by that investment company.
12
<PAGE>
YOUR ACCOUNT VALUE (Continued)
Value In The Guaranteed Account. The amount You have in the Guaranteed Account
at any time is equal to the amounts allocated and transferred to it, plus the
interest credited to it, minus amounts deducted, transferred, withdrawn or
surrendered from it.
We will credit the Guaranteed Account with interest rates We determine. Any
change in the interest rate We credit to the unloaned amount in the Guaranteed
Account will be as described in the Changes In Policy Cost Factors provision.
The loaned amount in the Guaranteed Account will be credited with an interest
rate of not less than the Policy Loan interest rate minus 2% through the tenth
Policy Year. After the tenth Policy Anniversary, the loaned amount in the
Guaranteed Account will be credited with an interest rate of not less than the
Policy Loan interest rate minus .25%. The interest rate applied to either the
loaned or unloaned amount in the Guaranteed Account will not be less than 4% per
year, compounded annually.
At the end of each Policy Month We will credit interest on unloaned amounts in
the Guaranteed Account as follows:
o on amounts that remain in the Guaranteed Account for the entire
Policy Month, from the beginning to the end of the Policy Month;
o on amounts allocated to the Guaranteed Account during a Policy Month
that are Net Premium payments, or Outstanding Loan payments, from
the date We receive them to the end of the Policy Month;
o on amounts transferred to the Guaranteed Account during a Policy
Month, from the date of the transfer to the end of the Policy Month;
o on amounts deducted or withdrawn from the Guaranteed Account during
a Policy Month, from the beginning of the Policy Month, or the date
such amount is allocated or transferred to the Guaranteed Account,
if later, to the date of the deduction or partial withdrawal.
THE CASH SURRENDER VALUE OF THIS POLICY
Cash Surrender Value. The Cash Surrender Value on any date is equal to the
amount in Your Account Value on that date minus any surrender charge.
Net Cash Surrender Value. The Net Cash Surrender Value is equal to the Cash
Surrender Value minus any Outstanding Loan. You may give up this Policy for its
Net Cash Surrender Value at any time while the Insured is living. You may do
this by sending a Written Notice for it and this Policy to Our Administrative
Office. We will compute the Net Cash Surrender Value as of the date We receive
Your request for it and this Policy at Our Administrative Office. All life
insurance coverage under this Policy will end on such date.
13
<PAGE>
THE CASH SURRENDER VALUE OF THIS POLICY (Continued)
Surrender Charges. If You give up this Policy for its Net Cash Surrender Value
or if it ends without value at the end of a Grace Period before the end of the
tenth Policy Year, We will subtract a surrender charge from Your Account Value.
A table of maximum surrender charges is shown in the POLICY INFORMATION section.
An increase in the Face Amount will result in an additional ten year surrender
charge applicable to the amount of the increase. The additional surrender charge
period will begin on the effective date of the increase.
If You request a decrease in the Face Amount before the end of the tenth Policy
Year, or within ten years immediately following a Face Amount increase, We will
also deduct a pro rata share of any applicable surrender charge from Your
Account Value. Decreases in Face Amount will first be applied against the most
recent increase, if any, in the Face Amount. They will then be applied to any
prior increases in the Face Amount in the reverse order in which such increases
took place, and then to the Initial Face Amount.
The amount of any pro rata surrender charge is (a) divided by (b), and
multiplied by (c), where:
a) is the amount of the decrease in the Face Amount,
b) is the Face Amount immediately prior to the decrease, and
c) is the total surrender charge applicable to this Policy immediately
prior to the decrease.
If there is an increase or decrease in the surrender charge shown in the POLICY
INFORMATION section, We will send You a new table showing the revised surrender
charges. We have filed a detailed statement of the method of computing surrender
charges with the insurance supervisory official of the jurisdiction in which
this Policy is delivered.
Partial Withdrawal. At any time after the first Policy Year, and while the
Insured is living, You may ask for a partial withdrawal by Written Notice to Our
Administrative Office. Your request will be subject to Our approval based on Our
rules in effect when We receive Your request, and to the partial withdrawal
limits shown in the POLICY INFORMATION section. A partial withdrawal will result
in a decrease in the Cash Surrender Value, in Your Account Value, and in Your
Death Benefit. If Death Benefit Option I is in effect, the partial withdrawal
will also result in a decrease in the Face Amount. However, We will not allow
such partial withdrawal if it would decrease the Face Amount to less than the
Minimum Face Amount shown in the POLICY INFORMATION section. Any decrease in
Face Amount would be applied in reverse order to any increases in Face Amount,
and then to the Initial Face Amount.
The partial withdrawal amount deducted from the Account Value is equal to the
amount requested, plus any applicable administrative charge shown in the POLICY
INFORMATION section, and plus any applicable surrender charge. The surrender
charge for a partial withdrawal is equal to the amount of the partial
withdrawal, plus any administrative charge for the partial withdrawal, divided
by the Net Cash Surrender Value immediately prior to the partial withdrawal, and
then multiplied by the surrender charge which would apply to a full surrender at
that time.
You may tell Us how much of each partial withdrawal is to come from Your
unloaned value in the Guaranteed Account and from Your values in each of the
Subaccounts. The maximum amount that may be withdrawn from Your unloaned value
in the Guaranteed Account during any Policy Year is 25% of the value in that
account on the most recent Policy Anniversary reduced by all partial withdrawals
and transfers You made from that account during the current Policy Year. If You
do not specify, the partial withdrawal will be deducted from Your Account Value
based on the proportion that Your unloaned value in the Guaranteed Account and
Your values in each of the Subaccounts bear to the total unloaned value in Your
Account Value.
Such partial withdrawal and resulting decrease in the Death Benefit, in the Cash
Surrender Value and in Your Account Value will take effect on the date We
receive Your Written Notice for it at Our Administrative Office. We will
generally pay a partial withdrawal within seven days. We will send You the
applicable new page for the POLICY INFORMATION section if a partial withdrawal
results in a decrease in the Face Amount. It will become a part of this Policy.
We may require You to return this Policy to Our Administrative Office to make a
change.
14
<PAGE>
HOW A LOAN CAN BE MADE
Policy Loans. You may request a Policy Loan by Written Notice to Our
Administrative Office. During the first Policy Year, You can obtain a Policy
Loan if the resulting Outstanding Loan does not exceed 50% of the Cash Surrender
Value on the date of the loan request. After the first Policy Year, You can
obtain a loan on this Policy up to the amount of the Loan Value. The initial
loan and any additional loan must be for at least the minimum loan amount shown
in the POLICY INFORMATION section.
The Account Value of this Policy is the only security for a loan. Any amount on
loan is maintained within the Guaranteed Account. We refer to this as the loaned
portion of the Guaranteed Account. When a Policy Loan is requested, You may tell
Us how much of the requested loan is to be transferred from Your unloaned value
in the Guaranteed Account and from Your value in each Subaccount. If You do not
tell Us, We will allocate the loan based on the proportion that Your unloaned
value in the Guaranteed Account and Your values in each of the Subaccounts bear
to the total unloaned value in Your Account Value. If some or all of the loan is
allocated to a Subaccount, We will redeem units of that Subaccount sufficient in
value to cover such amount and transfer that amount to the loaned portion of the
Guaranteed Account. If some or all of the loan is allocated to the Guaranteed
Account, We will transfer that amount from the unloaned value in the Guaranteed
Account to the loaned portion of the Guaranteed Account. Such transfers will be
made as of the date We receive Your request. We do not make a charge for these
transfers and they are not counted toward any future transfer charges.
Loan Value. After the first Policy Year, the Loan Value is the Net Cash
Surrender Value on the date of the request, less interest on the amount of the
loan to the end of the Policy Year, and less the amount We calculate as the
value of the remaining monthly deductions to the end of the Policy Year. The
amount of the loan may not be more than the Loan Value. If You request an
increase to an existing loan, the amount requested will be added to the
Outstanding Loan.
Loan Interest. Interest on a loan accrues daily at an interest rate not greater
than the Policy Loan interest rate shown in POLICY INFORMATION section. Loan
interest is due on each Policy Anniversary. If the interest is not paid when
due, it will be added to the Policy Loan and will bear interest at the loan
interest rate. The unpaid interest will be allocated based on the proportion
that Your unloaned value in the Guaranteed Account and Your values in each of
the Subaccounts bear to the total unloaned value in Your Account Value.
Loan Repayment. You may repay all or part of an Outstanding Loan at any time
while the Insured is alive and this Policy is in force. However, since We
normally treat all payments as a payment of Premium, if You wish all or any
portion of a payment to be applied as an Outstanding Loan payment, You must
include a Written Notice to this effect. An Outstanding Loan payment will be
allocated on the basis of the Premium allocation percentages then in effect, and
will reduce the loaned portion of the Guaranteed Account.
Failure to repay an Outstanding Loan will not cause this Policy to lapse unless,
on a Monthly Anniversary, the Net Cash Surrender Value is less than the total
monthly deduction then due, and the No Lapse feature is not in effect. In that
case, this Policy will lapse and the Grace Period provision will apply.
A Policy Loan will have a permanent effect on Your Benefits under this Policy
even if it is repaid. Depending on the investment results of the Subaccounts and
the interest rates credited to the Guaranteed Account while a Policy Loan is
outstanding, such effect could be favorable or unfavorable. You should consult
with Your tax advisor before taking any loan on this Policy.
15
<PAGE>
THE SEPARATE ACCOUNT
The Separate Account is named in the DEFINITIONS section. We established the
Separate Account and each Subaccount pursuant to the New York Insurance Code and
the rules promulgated thereunder. We own the assets in the Separate Account and
in each Subaccount. The Separate Account and each Subaccount, however, are
separate from Our general account and from any other separate account and
subaccount We may maintain or establish at any time. Income, and realized and
unrealized gains and losses from assets allocated to each Subaccount of the
Separate Account are credited to or charged against such Subaccount without
regard to other income, gains or losses of any of Our other business. Assets
equal to the reserves and other liabilities of a Subaccount and of the Separate
Account will not be charged with liabilities from any other business We conduct.
In the event the assets of any Subaccount are in excess of its required reserves
and other liabilities, We may transfer such excess to another separate account
or to Our general account.
Subaccounts. Our Separate Account consists of Subaccounts. Each Subaccount
invests its assets in shares of a designated investment company or companies.
The Subaccounts that You chose for the allocation of Your Initial Premium are
shown on the application for this Policy, a copy of which is attached to this
Policy. We may from time to time make other Subaccounts available to You. We
will provide You with written notice of all material details including
investment objectives and all charges.
We have reserved certain rights regarding the Separate Account. We will exercise
these rights only in compliance with all applicable regulatory requirements. We
have the right to:
o Change, add or delete designated investment companies.
o Add or remove Subaccounts.
o Withdraw assets of the class of policies to which this Policy
belongs from a Subaccount and put them into another Subaccount.
o Combine any two or more Subaccounts.
o Register other separate accounts, or deregister the Separate Account
with the Securities and Exchange Commission.
o Run the Separate Account under the direction of a committee, and
discharge such committee at any time.
o Restrict or eliminate any voting rights of Policy Owners, or other
persons who have voting rights as to the Separate Account.
o Operate the Separate Account or one or more of the Subaccounts by
making direct investments, or in any other form. If We do so, We may
invest the assets of the Separate Account or one or more of the
Subaccounts in any investments that are legal, as determined by Our
own or outside counsel.
o We will not change an investment advisor or any investment of a
Subaccount or Our Separate Account unless approved by the
Superintendent of Insurance of the State of New York or deemed
approved in accordance with such law or regulation. If so required,
the process for getting such approval is on file with the insurance
supervisory official of the jurisdiction in which this Policy is
delivered.
If any of these changes result in a material change in the underlying
investments of a Subaccount, We will notify You of such change, as required by
law. If You have value in that Subaccount, You may send a Written Notice to
transfer it (without charge) from that Subaccount to another Subaccount or to
the Guaranteed Account, and You may then change Your Premium allocation
percentages.
OUR ANNUAL REPORT TO YOU
For each Policy Year We will send You a report for this Policy that shows the
current Death Benefit, the value You have in the Guaranteed Account and the
value You have in each Subaccount of Our Separate Account, the Cash Surrender
Value and any Outstanding Loan with the current loan interest rate. It will also
show the Premiums paid and any other information as may be required by the
insurance supervisory official of the jurisdiction in which this Policy is
delivered.
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<PAGE>
HOW BENEFITS ARE PAID
The Life Insurance Proceeds, or the payment amount of any partial withdrawal, or
the full surrender of Your Account Value will be paid immediately in one sum.
OTHER IMPORTANT INFORMATION
Your Contract With Us. This Policy is issued in consideration of the payment of
the Initial Premium shown in the POLICY INFORMATION section.
This Policy, and the attached copy of the initial application and all subsequent
applications to change this Policy, any Riders or Endorsements added to this
policy, and all additional POLICY INFORMATION sections added to this Policy,
make up the entire contract. The rights conferred by this Policy are in addition
to those provided by applicable Federal and State laws and regulations.
Only Our executive officers can modify this contract or waive any of Our rights
or requirements under it. The person making these changes must put them in
writing and sign them.
Policy Changes - Applicable Tax Law. For You and the Beneficiary to receive the
tax treatment accorded to life insurance under Federal law, this Policy must
qualify initially and continue to qualify as a life insurance contract under the
Code, or any successor law or regulation. Therefore, in Our best effort to
assure this qualification for You, We have reserved earlier in this Policy the
right to decline to accept Premium, in whole or in part, to decline to change
the Death Benefit Option, to decline to change the Face Amount or to decline to
make partial withdrawals that would cause this Policy to fail to qualify as life
insurance as defined in the Code. Further, We reserve the right to make changes
in this Policy or its riders (for example, in the Table Of Minimum Death Benefit
Factors) or to require additional Premium or to make distributions from this
Policy to the extent We deem it necessary to continue to qualify this Policy as
life insurance. Any such changes will apply uniformly to all policies that are
affected subject to the prior approval of the insurance supervisory official of
the jurisdiction in which the Policy is delivered. You will be given advance
written notice of such changes.
Changes In Policy Cost Factors. Changes in policy cost factors (interest rates
We credit, cost of insurance rates and expense charges) will be by class and
based upon changes in future expectations for such elements as: investment
earnings, mortality, persistency, expenses and taxes. Any change in policy cost
factors will be determined in accordance with procedures and standards on file,
if required, with the insurance supervisory official of the jurisdiction in
which this Policy is delivered.
When This Policy Is Incontestable. We have the right to contest the validity of
this Policy based on material misstatements made in the initial application for
this Policy. We also have the right to contest the validity of any policy change
or reinstatement based on material misstatements made in any application for
such change or reinstatement. However, We will not contest the validity of this
Policy after it has been in effect during the lifetime of the Insured for two
years from the Issue Date shown in the POLICY INFORMATION section. We will not
contest any policy change that requires evidence of insurability, or any
reinstatement of this Policy, after the change or reinstatement has been in
effect for two years during the Insured's lifetime.
No statement will be used to contest a claim unless such statement is contained
in an application.
All statements made in an application are representations and not warranties.
See any additional benefit riders for modifications of this provision that apply
to them.
17
<PAGE>
OTHER IMPORTANT INFORMATION (Continued)
What If Age Or Sex Has Been Misstated? If the Insured's age or sex has been
misstated on any application, the Death Benefit and any benefits provided by
riders to this Policy will be those which would be purchased by the most recent
monthly deduction for the cost of insurance, and the cost of any benefits
provided by riders, at the correct Age and sex.
How The Suicide Exclusion Affects Benefits. If the Insured commits suicide
within two years after the Issue Date shown in the POLICY INFORMATION section,
Our liability will be limited to the payment of a single sum. This sum will be
equal to the Premiums paid, minus any Outstanding Loan, and minus any partial
withdrawal, and minus the cost of any riders attached to this Policy. If the
Insured commits suicide within two years after the effective date of a change
that You asked for that increases the Face Amount (other than a scheduled
automatic increase), then Our liability as to the increase in Face Amount will
be limited to the payment of a single sum equal to the monthly cost of insurance
charges made for such increase plus the expense charge deducted for the
increase.
How We Measure Policy Periods And Anniversaries. We measure Policy Years, Policy
Months, and Policy Anniversaries from the Policy Date. Each Policy Month begins
on the same day as the Policy Date for each succeeding month, except that, for
any month not having such a day, it is the last day of that month.
How, When And What We May Defer. We may not be able to obtain the value of the
assets of the Subaccounts if: (1) the New York Stock Exchange is closed; or (2)
the Securities and Exchange Commission requires trading to be restricted or
declares an emergency. During such times, as to amounts allocated to the
Subaccounts, We may defer:
o determination and payment of a surrender or any partial withdrawals;
o determination and payment of any Death Benefit in excess of the Face
Amount;
o payment of loans;
o determination of the unit values of the Subaccounts; and
o any requested transfer or the transfer on the Allocation Date.
As to amounts allocated to the Guaranteed Account, We may defer payment of any
partial withdrawal, surrender, or Policy Loan for up to six months after We
receive a request for it. We will not defer a Policy Loan if it is to be used to
pay premiums on policies with Us. We will allow interest, at a rate of at least
4% a year, on any Net Cash Surrender Value payment derived from the Guaranteed
Account that We defer for 10 days or more.
The Basis We Use For Computation. We provide Cash Surrender Values that are at
least equal to those required by law in the jurisdiction in which this Policy is
delivered. If required to do so, We have filed with the insurance supervisory
official of that jurisdiction a detailed statement of Our method of computing
such values. We compute reserves under this Policy by the Commissioners' Reserve
Valuation Method.
We base minimum Cash Surrender Values and reserves on the Commissioners' 1980
Standard Ordinary Male or Female, Smoker or Non-Smoker, Mortality Tables, Age
Nearest Birthday. We also use these tables as the basis for determining maximum
cost of insurance rates, taking account of sex, Attained Age, rate class and
smoker or non-smoker status of the Insured. We use an effective annual interest
rate of 4%.
Policy Changes. You may add additional benefit riders or make other changes,
subject to Our rules at the time of change.
18
<PAGE>
OTHER IMPORTANT INFORMATION (Continued)
Right To Exchange. While this Policy is in force, and subject to the time limits
noted below, You may, by Written Notice to Us, request to exchange the original
life insurance coverage provided under this Policy for fixed benefit life
insurance coverage on the life of the Insured, without evidence of insurability.
This exchange may be made:
o within 24 months after the Issue Date; or
o within 24 months after an increase in the Face Amount of this
Policy, other than a scheduled automatic increase, and other than an
increase due to a Death Benefit Option change; or
o within 60 days of the effective date of a material change in the
investment policy of a Subaccount, or within 60 days of the
notification of such change, if later. In the event of such a
change, We will notify You and give You information on the options
available.
When an exchange is requested, We accomplish it by transferring all the amounts
You then have in the Subaccounts under this Policy to the Guaranteed Account.
There is no charge for this transfer. Once this Right To Exchange is exercised,
the entire amount of Your Account Value must be left in the Guaranteed Account
for the remaining life of this Policy. The Face Amount in effect at the time of
the exchange will remain unchanged. The Owner and Beneficiary will remain the
same as were recorded immediately before the exchange. The Policy Date, Issue
Date and Age of the Insured will remain unchanged.
Paid-Up Insurance Benefit. At any time while this Policy is in force and while
the Insured is living, You may request conversion of this Policy to guaranteed
paid-up life insurance payable on the death of the Insured. Upon such
conversion, no more premiums will be accepted and the fixed, guaranteed amount
of insurance will be the lesser of (a) and (b) where:
(a) is the amount of insurance that can be purchased by using the Net
Cash Surrender Value on the date of conversion, if any, as a net
single premium. The calculation will be based on the mortality table
and interest rates specified and guaranteed on the Policy
Information Page as well as the risk class of the Insured; and
(b) is the life insurance benefit under this Policy before conversion.
The balance of the Net Cash Surrender Value, in excess of the net single
premium, if any, will be refunded.
Automatic Rebalancing. Using Our Asset Rebalancing Plan Request Form, You may
elect to automatically reallocate Your Account Value on a monthly, quarterly,
semi-annual or annual basis based on the Asset Rebalancing allocation
instructions currently in effect. You may instruct Us to reallocate the Account
Value of any Subaccount or the Guaranteed Account so long as the total Account
Value is initially at least $2,000. You may elect to automatically reallocate
Your Account Value in accordance with the following:
1. Your Account Value will be reallocated on the first Monthly
Anniversary in accordance with the frequency elected (e.g., monthly,
quarterly, semi-annually or annually) and each period thereafter.
2. You may change Your allocation instructions once each Policy Year.
Your allocation instructions must be in writing and signed by the
Owner at least ten days prior to the date the change is to take
effect.
3. Automatic Asset Rebalancing transfers will be made based on the
allocation instructions in effect. There is no charge for these
transfers.
We will stop processing automatic Asset Rebalancing transfers if one of the
following conditions occur:
1. We receive Your written request at Our Administrative Office to
cancel future transfers;
2. We receive notification of death of the Insured; or
3. this Policy goes into the Grace Period or lapses.
19
<PAGE>
OTHER IMPORTANT INFORMATION (Continued)
Dollar Cost Averaging. Using Our Dollar Cost Averaging Plan Request Form, You
may elect to automatically transfer a portion of Your Account Value on a
monthly, quarterly, semi-annual or annual basis based on the allocation
instructions currently in effect. You may transfer funds from any Subaccount or
the Guaranteed Account so long as the Account Value in that Account is initially
at least $2,000. You may elect to transfer a specified dollar amount or a
specified percentage in accordance with the following:
1. If You elect Dollar Cost Averaging when You applied for Your Policy,
the automatic transfers will begin on the first Monthly Anniversary
and each period thereafter in accordance with the frequency elected
(e.g., monthly, quarterly, semi-annually or annually).
2. If You elect Dollar Cost Averaging after the initial application,
the automatic transfers will begin on the second Monthly Anniversary
following the receipt of the request at our Administrative Office
and each period thereafter in accordance with the frequency elected
(e.g., monthly, quarterly, semi-annually or annually).
3. Automatic transfers will be made based on the allocation
instructions in effect. There is no charge for these transfers.
4. If You elect the Specified Dollar Amount Of Transfer option, We will
automatically transfer this amount in accordance with the most
current Dollar Cost Averaging allocation instructions for a
specified period or until the Account Value in the transferring
Account is depleted.
5. If You elect the Specified Percentage option, We will automatically
transfer a specified percentage of the amount in the transferring
Account in accordance with the most current Dollar Cost Averaging
allocation instructions over a specified period or until the Account
Value in the transferring Account is depleted.
We will stop processing automatic Dollar Cost Averaging transfers if one of the
following conditions occur:
1. the balance in the transferring Account are depleted;
2. We receive Your written request at Our Administrative Office to
cancel future transfers;
3. We receive notification of death of the Insured(s); or
4. this Policy goes into the Grace Period or lapses.
20
<PAGE>
ailife(R)
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
80 PINE STREET
NEW YORK, NEW YORK 10005
<PAGE>
POLICY INFORMATION
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
80 PINE STREET
NEW YORK, NY 10005
TELEPHONE: (212) 770-7000
POLICY DATA
Policy Number - 1,234,567 April 1, 1999 - Policy Date
Insured - John Doe 35/Male - Age/Sex
Initial Face Amount - $100,000 Non-smoker - Rate Class
Other Benefits - See Page 3D Standard
Premium Frequency - Annual April 1, 1999 - Issue Date
SCHEDULE OF BENEFITS & PREMIUMS
Initial Premium - $2,361.00 $2,361.00 - Planned [Annual]
Death Benefit Option - [Option I/II] Premium
Tax Qualification Option - [Guideline Premium/ 5 Years - No Lapse Period
Cash Value Corridor
Test] 1st - Monthly Processing
Minimum Face - [$50,000] Date
Amount Allowed
MORTALITY TABLE & GUARANTEED INTEREST RATES
Mortality Table - 1980 Commissioners' Standard Ordinary
Mortality Table, Male or Female, Nonsmoker or
Smoker, Age Nearest Birthday
Guaranteed Account Interest Rate - 0.01075% Compounded Daily, Which Is
Equivalent To An Effective Annual Rate
of 4.0%
Policy Loan Interest Rate - 8% Per Year, Compounded Annually, Payable In
Arrears
MAXIMUM EXPENSE CHARGES
Premium Expense Charge - 8.0% of each premium
Monthly Expense Charge - $64.00 for Policy Years 1 through 5
$15.00 for Policy Years 6 and later
This Policy provides life insurance coverage for the lifetime of the Insured if
sufficient premiums are paid. The period for which the policy and coverage will
continue in force will depend on: 1) the timing, frequency and amount of
premium; 2) changes in the Face Amount and the Death Benefit Options; 3) changes
in the interest rates credited to our Guaranteed Account and in the investment
performance of the Subaccounts; 4) changes in the Monthly Deductions from the
Policy Account Value for this Policy and any benefits provided by Riders to this
Policy; and 5) Policy Loan and Partial Withdrawal activity.
THIS POLICY MAY FAIL TO MEET THE DEFINITION OF LIFE INSURANCE UNDER FEDERAL TAX
LAW AFTER THE INSURED'S ATTAINED AGE 100 AND MAY BE SUBJECT TO ADVERSE TAX
CONSEQUENCES. YOU SHOULD CONSULT A TAX ADVISOR REGARDING CONTINUING THIS POLICY
PAST AGE 100.
RIGHT TO CHANGE POLICY COST FACTORS,
ADDITIONAL AMOUNTS NOT GUARANTEED
Subject to minimum guaranteed interest rates, maximum expense charges and
guaranteed cost of insurance rates, we have the right to change: 1) the rate of
interest credited to the amount you have in our Guaranteed Account; 2) the
monthly cost of insurance rate; and 3) expense charges deducted under the
Policy, which may require more premium to be paid than was illustrated or may
result in policy values being less than those illustrated.
3
<PAGE>
POLICY INFORMATION (Continued)
TABLE OF MAXIMUM SURRENDER CHARGES
--------------------------------------------------------------------------------
POLICY YEAR SURRENDER CHARGE
--------------------------------------------------------------------------------
1 $1,764.00
2 $1,587.60
3 $1,411.20
4 $1,234.80
5 $1,058.40
6 $882.00
7 $705.60
8 $529.20
9 $352.80
10 $176.40
11 and Beyond $0.00
--------------------------------------------------------------------------------
PARTIAL WITHDRAWAL LIMITS
The amount of each partial withdrawal must be at least [$250.00].
Not more than [4] partial withdrawals may be made in any Policy Year.
We reserve the right to deduct an administrative charge of up to $25.00 for each
partial withdrawal. There may also be a surrender charge for any partial
withdrawal as described in the Partial Withdrawal provision.
POLICY LOAN LIMITS
The amount of each Policy Loan must be at least [$500.00].
TRANSFER LIMITS
The amount of each transfer must be at least [$250.00].
A $25.00 fee will be accessed for each transfer in excess of the 12 transfers
allowed free per Policy Year.
MONEY MARKET SUBACCOUNT
Any Net Premium received prior to the Allocation Date will be allocated to the
[Cash Management Subaccount] until the end of the Right To Examine and Cancel
This Policy period.
3A
<PAGE>
POLICY INFORMATION (Continued)
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
--------------------------------------------------------------------------------
ATTAINED MONTHLY RATE ATTAINED MONTHLY RATE
AGE PER $1,000 AGE PER $1,000
--------------------------------------------------------------------------------
35 0.14085 68 2.38065
36 0.14752 69 2.62186
37 0.15669 70 2.89419
38 0.16669 71 3.25305
39 0.17837 72 3.55929
40 0.19087 73 3.96902
41 0.20588 74 4.42953
42 0.22088 75 4.92413
43 0.23839 76 5.45122
44 0.25590 77 6.00585
45 0.27674 78 6.58221
46 0.29926 79 7.19473
47 0.32344 80 7.86724
48 0.34929 81 8.61695
49 0.37848 82 9.46542
50 0.40933 83 10.42336
51 0.44603 84 11.47263
52 0.48857 85 12.58987
53 0.53612 86 13.75325
54 0.59118 87 14.95279
55 0.65209 88 16.16464
56 0.71968 89 17.40526
57 0.79146 90 18.69215
58 0.86909 91 20.04733
59 0.95675 92 21.51567
60 1.05444 93 23.16008
61 1.16302 94 25.25984
62 1.28665 95 28.27411
63 1.42787 96 33.10677
64 1.58752 97 41.68475
65 1.76394 98 58.01259
66 1.95381 99 83.33333
67 2.15965
--------------------------------------------------------------------------------
3B
<PAGE>
POLICY INFORMATION (Continued)
TABLE OF MINIMUM DEATH BENEFIT FACTORS (guideline premium test)
--------------------------------------------------------------------------------
ATTAINED MINIMUM DEATH ATTAINED MINIMUM DEATH
AGE BENEFIT FACTOR AGE BENEFIT FACTOR
--------------------------------------------------------------------------------
15 2.50 55 1.50
16 2.50 56 1.46
17 2.50 57 1.42
18 2.50 58 1.38
19 2.50 59 1.34
20 2.50 60 1.30
21 2.50 61 1.28
22 2.50 62 1.26
23 2.50 63 1.24
24 2.50 64 1.22
25 2.50 65 1.20
26 2.50 66 1.19
27 2.50 67 1.18
28 2.50 68 1.17
29 2.50 69 1.16
30 2.50 70 1.15
31 2.50 71 1.13
32 2.50 72 1.11
33 2.50 73 1.09
34 2.50 74 1.07
35 2.50 75 1.05
36 2.50 76 1.05
37 2.50 77 1.05
38 2.50 78 1.05
39 2.50 79 1.05
40 2.50 80 1.05
41 2.43 81 1.05
42 2.36 82 1.05
43 2.29 83 1.05
44 2.22 84 1.05
45 2.15 85 1.05
46 2.09 86 1.05
47 2.03 87 1.05
48 1.97 88 1.05
49 1.91 89 1.05
50 1.85 90 1.05
51 1.78 91 1.04
52 1.71 92 1.03
53 1.64 93 1.02
54 1.57 94 -99 1.01
--------------------------------------------------------------------------------
3C
<PAGE>
POLICY INFORMATION (Continued)
TABLE OF MINIMUM DEATH BENEFIT FACTORS (cash value accumulation test)
<TABLE>
<CAPTION>
---------- -------------------------- ------------------------- --------- -------------------------- -------------------------
MALE FEMALE MALE FEMALE
---------- -------------------------- ------------------------- --------- -------------------------- -------------------------
AGE Nonsmoker Smoker Nonsmoker Smoker AGE Nonsmoker Smoker Nonsmoker Smoker
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 N/A 10.62 N/A 13.29 51 2.61 2.23 2.95 2.68
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
1 N/A 10.61 N/A 13.23 52 2.53 2.17 2.86 2.60
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
2 N/A 10.30 N/A 12.85 53 2.46 2.11 2.77 2.53
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
3 N/A 10.00 N/A 12.47 54 2.38 2.05 2.69 2.46
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
4 N/A 9.69 N/A 12.09 55 2.31 2.00 2.61 2.40
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
5 N/A 9.39 N/A 11.72 56 2.24 1.95 2.53 2.33
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
6 N/A 9.10 N/A 11.36 57 2.18 1.90 2.46 2.27
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
7 N/A 8.81 N/A 11.00 58 2.12 1.86 2.39 2.21
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
8 N/A 8.52 N/A 10.65 59 2.06 1.82 2.32 2.15
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
9 N/A 8.23 N/A 10.31 60 2.00 1.77 2.25 2.10
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
10 N/A 7.96 N/A 9.97 61 1.95 1.73 2.18 2.04
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
11 N/A 7.69 N/A 9.64 62 1.90 1.70 2.12 1.99
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
12 N/A 7.43 N/A 9.33 63 1.85 1.66 2.06 1.94
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
13 N/A 7.18 N/A 9.02 64 1.80 1.63 2.00 1.89
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
14 N/A 6.94 N/A 8.72 65 1.75 1.59 1.95 1.84
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
15 8.30 6.72 9.59 8.44 66 1.71 1.56 1.89 1.80
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
16 8.05 6.52 9.28 8.17 67 1.67 1.53 1.84 1.75
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
17 7.82 6.33 8.99 7.90 68 1.63 1.50 1.80 1.71
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
18 7.59 6.15 8.70 7.65 69 1.59 1.48 1.75 1.67
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
19 7.37 5.98 8.43 7.41 70 1.56 1.45 1.70 1.64
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
20 7.16 5.81 8.16 7.17 71 1.53 1.43 1.66 1.60
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
21 6.95 5.64 7.90 6.94 72 1.49 1.40 1.62 1.56
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
22 6.75 5.48 7.65 6.72 73 1.46 1.38 1.58 1.53
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
23 6.55 5.32 7.40 6.51 74 1.44 1.36 1.54 1.50
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
24 6.35 5.17 7.16 6.30 75 1.41 1.34 1.51 1.47
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
25 6.16 5.01 6.93 6.09 76 1.39 1.32 1.47 1.44
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
26 5.96 4.86 6.70 5.89 77 1.36 1.31 1.44 1.41
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
27 5.77 4.71 6.48 5.70 78 1.34 1.29 1.41 1.38
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
28 5.59 4.56 6.27 5.52 79 1.32 1.28 1.39 1.36
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
29 5.41 4.41 6.07 5.34 80 1.30 1.26 1.36 1.34
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
30 5.23 4.27 5.87 5.16 81 1.28 1.25 1.34 1.32
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
31 5.06 4.13 5.67 5.00 82 1.26 1.24 1.31 1.30
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
32 4.89 4.00 5.49 4.83 83 1.25 1.22 1.29 1.28
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
33 4.73 3.87 5.30 4.67 84 1.23 1.21 1.27 1.26
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
34 4.57 3.75 5.13 4.52 85 1.22 1.20 1.25 1.24
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
35 4.42 3.63 4.96 4.38 86 1.21 1.19 1.23 1.23
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
36 4.27 3.51 4.79 4.23 87 1.19 1.18 1.22 1.21
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
37 4.13 3.40 4.64 4.10 88 1.18 1.18 1.20 1.20
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
38 3.99 3.29 4.48 3.96 89 1.17 1.17 1.19 1.18
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
39 3.86 3.18 4.34 3.84 90 1.16 1.16 1.17 1.17
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
40 3.74 3.08 4.19 3.72 91 1.15 1.15 1.16 1.16
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
41 3.61 2.99 4.06 3.60 92 1.14 1.14 1.15 1.15
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
42 3.49 2.90 3.93 3.49 93 1.13 1.13 1.14 1.14
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
43 3.38 2.81 3.80 3.39 94 1.12 1.12 1.12 1.12
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
44 3.27 2.72 3.68 3.29 95 1.11 1.11 1.11 1.11
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
45 3.17 2.64 3.56 3.19 96 1.09 1.09 1.09 1.09
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
46 3.07 2.57 3.45 3.10 97 1.08 1.08 1.08 1.08
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
47 2.97 2.49 3.34 3.01 98 1.06 1.06 1.06 1.06
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
48 2.87 2.42 3.24 2.92 99 1.05 1.05 1.05 1.05
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
49 2.78 2.35 3.14 2.84
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
50 2.70 2.29 3.04 2.75
---------- --------------- ---------- -------------- ---------- --------- --------------- ---------- --------------- ---------
</TABLE>
3C
<PAGE>
POLICY INFORMATION (Continued)
SCHEDULE OF COVERAGES, BENEFITS AND RIDERS
------------------ ----------- ---------- -------------- ------------ ----------
TYPE OF AMOUNT OF EFFECTIVE PAYMENT EXPIRATION MONTHLY
COVERAGE INSURANCE DATE PERIOD (YRS) DATE COST
------------------ ----------- ---------- -------------- ------------ ----------
TABLE OF FACE AMOUNTS
---------------------- -------------------------- ----------------------
AUTOMATIC INCREASE
POLICY YEAR IN FACE AMOUNT TOTAL FACE AMOUNT
---------------------- -------------------------- ----------------------
[1] [$ 0] [$100,000]
[2] [$ 0] [$100,000]
[3] [$ 0] [$100,000]
[4] [$ 0] [$100,000]
[5] [$10,000] [$110,000]
[6] [$10,000] [$120,000]
[7] [$10,000] [$130,000]
[8] [$10,000] [$140,000]
[9] [$10,000] [$150,000]
[10 AND THEREAFTER] [$ 0] [$150,000]
---------------------- -------------------------- ----------------------
3D
