<PAGE> 1
As filed with the Securities and Exchange Commission on April 24, 1998
Registration No. 33-48550
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 9
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
(Exact Name of Registrant)
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street
St. Louis, MO 63101
(Name and Address of principal executive office of depositor)
Matthew P. McCauley, Esquire
General American Life Insurance Company
700 Market Street
St. Louis, MO 63101
(Name and Address of Agent for Service of Process)
Copy to:
Stephen E. Roth, Esquire
Sutherland, Asbill & Brennan
1275 Pennsylvania Ave., N.W.
Washington, DC 20004-2404
<PAGE> 2
It is proposed that this filing will become effective (check appropriate
space)
[ ] immediately upon filing pursuant to paragraph (b), of Rule 485
[ x ] on (1 May 1998) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date), pursuant to paragraph (a)(1) of rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, an
indefinite number or amount of securities has been registered under the
Securities Act of 1933. The Registrant filed the 24f-2 Notice for the fiscal
year ended December 31, 1997 on March 13, 1998.
<PAGE> 3
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
Item No. of
Form N-8B-2 Caption in Prospectus
----------- ---------------------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Distribution of the Policies
5. The Company and the Separate Account
6. The Separate Account
7. Not Required
8. Not Required
9. Legal Proceedings
10. Summary; General American Capital
Company/Russell Insurance Funds;
Charges and Deductions; Policy
Benefits; Policy Rights; Voting
Rights; General Matters
11. Summary; General American Capital
Company/ Russell Insurance Funds
12. Summary; General American Capital
Company/ Russell Insurance Funds
13. Summary; Charges and Deductions; General
American Capital Company/ Russell
Insurance Funds
14. Summary; Payment and Allocation of
Premiums
15. Payment and Allocation of Premiums
16. Payment and Allocation of Premiums;
General American Capital Company/
Russell Insurance Funds
17. Summary; Charges and Deductions; Policy
Rights; General American Capital
Company/ Russell Insurance Funds
18. General American Capital Company/
Russell Insurance Funds; Payment and
Allocation of Premiums
19. General Matters; Voting Rights
20. Not Applicable
21. Policy Rights; General Matters
22. Not Applicable
23. Safekeeping of the Separate Account's
Assets
24. General Matters
25. The Company and the Separate Account
26. Not Applicable
i
<PAGE> 4
Item No. of
Form N-8B-2 Caption in Prospectus
----------- ---------------------
27. The Company and the Separate Account
28. Management of the Company
29. The Company and the Separate Account
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. The Company and the Separate Account
36. Not Required
37. Not Applicable
38. Summary; Distribution of the Policies
39. Summary; Distribution of the Policies
40. Distribution of the Policies
41. The Company and the Separate Account;
Distribution of the Policies
42. Not Applicable
43. Not Applicable
44. Payment and Allocation of Premiums
45. Not Applicable
46. Policy Rights
47. General American Capital Company/Russell
Insurance Funds
48. Not Applicable
49. Not Applicable
50. The Separate Account
51. Cover Page; Summary; Charges and
Deductions; Policy Rights; Policy
Benefits; Payment and Allocation of
Premiums
52. General American Capital Company/Russell
Insurance Funds
53. Federal Tax Matters
54. Not Applicable
55. Not Applicable
56. Not Required
57. Not Required
58. Not Required
59. Not Required
- ii -
<PAGE> 5
This Post-Effective Amendment No. 9 to the Registration Statement on Form S-6
includes two prospectuses describing variable life insurance policies which
are substantially identical, except that the policy described in the second
prospectus makes available to policy owners different investment divisions of
the registrant than does the policy described in the original prospectus.
- iii -
<PAGE> 6
FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICY
ISSUED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street St. Louis, MO 63101 (314) 231-1700
This Prospectus describes an individual flexible premium variable life
insurance Policy ("the Policy") offered by General American Life Insurance
Company ("General American" or "the Company"). The Policy is designed to
provide lifetime insurance protection to age 100 and at the same time provide
maximum flexibility to vary premium payments and change the level of death
benefits payable under the Policy. This flexibility allows an Owner to
provide for changing insurance needs under a single insurance policy. An
Owner also has the opportunity to allocate Net Premiums among several
investment portfolios with different investment objectives.
The Policy provides for: (1) a Cash Surrender Value that can be obtained by
surrendering the Policy; (2) Policy Loans; and (3) a death benefit payable at
the Insured's death. As long as a Policy remains in force, the death benefit
will not be less than the current Face Amount of the Policy. A Policy will
remain in force so long as its Cash Surrender Value is sufficient to pay
certain monthly charges imposed in connection with the Policy.
After the end of the "Right to Examine Policy" period, Net Premiums may be
allocated to one or more of the Divisions of General American Separate
Account Eleven ("the Separate Account") or in certain contracts to General
American's General Account. If Net Premiums are allocated to the Separate
Account, the amount of the Cash Value will vary to reflect the investment
performance of the investment Divisions selected by the Owner, the Policy may
lapse, and, depending on the death benefit option elected, the amount of the
death benefit above the minimum may also vary with that investment
performance. The Owner bears the entire investment risk for all amounts
allocated to the Separate Account; there is no minimum guaranteed Cash Value.
Divisions of the Separate Account invest in corresponding Funds from the
following open-end, diversified management investment companies: (1) General
American Capital Company, (2) Russell Insurance Funds, (3) Variable Insurance
Products Fund, (4) Variable Insurance Products Fund II, and (5) Van Eck
Worldwide Insurance Trust. Funds offered from General American Capital
Company include the S & P 500 Index Fund, the Money Market Fund, the Bond
Index Fund, the Managed Equity Fund, the Asset Allocation Fund, the
International Index Fund, the Mid-Cap Equity Fund, and the Small-Cap Equity
Fund. Funds offered from Russell Insurance Funds include the Multi-Style
Equity Fund, the Aggressive Equity Fund, the Non-U.S. Fund, and the Core
Bond Fund. Funds offered from Variable Insurance Products Fund include the
Equity-Income Portfolio, the Growth Portfolio, the High Income Portfolio, and
the Overseas Portfolio. The Fund offered from Variable Insurance Products
Fund II is the Asset Manager Portfolio. The Fund offered from Van Eck
Worldwide Insurance Trust is the Worldwide Hard Assets Fund. A full
description of the Funds, including the investment policies, restrictions,
risks, and charges is contained in the Prospectus of each Fund.
It may not be advantageous to purchase a Policy as a replacement for another
type of life insurance or as a means to obtain additional insurance
protection if the purchaser already owns another flexible premium variable
life insurance policy.
This Prospectus must be accompanied by current Prospectuses for General
American Capital Company, Russell Insurance Funds, Variable Insurance
Products Fund, Variable Insurance Products Fund II, and Van Eck Worldwide
Insurance Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please read this Prospectus carefully and retain it for future reference. The
date of this Prospectus is May 1, 19987. The Policies are not available in
all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
<PAGE> 7
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
Definitions 1
Summary 2
The Company and the Separate Account 5
The Company
The Separate Account
General American Capital Company
Russell Insurance Funds
Variable Insurance Products Fund
Variable Insurance Products Fund II
Van Eck Worldwide Insurance Trust
Addition, Deletion, or Substitution of Investments 9
Policy Benefits 9
Death Benefit
Cash Value
Policy Rights 13
Loans
Surrender, Partial Withdrawals and Pro Rate Surrender
Transfers
Portfolio Rebalancing
Dollar Cost Averaging
Right to Examine Policy
Payment of Benefits at Maturity
Payment and Allocation of Premiums 18
Issuance of a Policy
Premiums
Allocation of Net Premiums and Cash Value
Policy Lapse and Reinstatement
Charges and Deductions 20
Premium Expense Charges
Monthly Deduction
Contingent Deferred Sales Charge
Separate Account Charges
Dividends 23
The General Account 24
General Matters 26
Distribution of the Policies 28
Federal Tax Matters 29
Unisex Requirements Under Montana Law 32
Safekeeping of the Separate Account's Assets 32
Voting Rights 32
State Regulation of the Company 33
Management of the Company 34
Legal Matters 37
Legal Proceedings 37
Experts 37
Additional Information 37
Financial Statements 37
Appendix A - Illustration of Death Benefits and Cash Values 38
Appendix B - Target Premium Factors per Thousand of Face Amount 48
</TABLE>
<PAGE> 8
DEFINITIONS
ATTAINED AGE - The Issue Age of the Insured plus the number of completed
Policy Years.
BENEFICIARY - Tthe person(s) named in the application or by later designation
to receive Policy proceeds in the event of the Insured's death. A
Beneficiary may be changed as set forth in the Policy and this Prospectus.
CASH VALUE - The total amount that a Policy provides for investment at any
time. It is equal to the total of the amounts credited to the Owner in the
Separate Account, the Loan Account, and in certain contracts, the General
Account.
CASH SURRENDER VALUE - The Cash Value of a Policy on the date of surrender,
less any Indebtedness, and less any surrender charges.
DIVISION - A subaccount of the Separate Account. Each Division invests
exclusively in the shares of a corresponding Fund of either General American
Capital Company, Variable Insurance Products Fund, Variable Insurance
Products Fund II, or Van Eck Worldwide Insurance Trust.
EFFECTIVE DATE - The date as of which insurance coverage begins under a
policy.
FACE AMOUNT - The minimum death benefit under the Policy so long as the
Policy remains in force.
FUND - A separate investment Portfolio of either General American Capital
Company, Russell Insurance Funds, Variable Insurance Products Fund, Variable
Insurance Products Fund II, or Van Eck Worldwide Insurance Trust. Although
sometimes referred to elsewhere as "Portfolios," they are referred to herein
as "Funds," except where "Portfolio" is part of their name.
GENERAL ACCOUNT -The assets of the Company other than those allocated to the
Separate Account or any other separate account. The Loan Account is part of
the General Account.
HOME OFFICE - The service office of General American Life Insurance Company,
the mailing address of which is P.O. Box 14490, St. Louis, Missouri 63178.
INDEBTEDNESS - The sum of all unpaid Policy Loans and accrued interest on
loans.
INSURED - The person whose life is insured under the Policy.
INVESTMENT START DATE - The date the initial premium is applied to the
General Account and/or the Divisions of the Separate Account. This date is
the later of the Issue Date or the date the initial premium is received at
General American's Home Office.
ISSUE AGE - The Insured's age at his or her nearest birthday as of the date
the Policy is issued.
ISSUE DATE - The date from which Policy Anniversaries, Policy Years, and
Policy Months are measured.
LOAN ACCOUNT - The account of the Company to which amounts securing Policy
Loans are allocated. The Loan Account is part of General American's General
Account.
LOAN SUBACCOUNT - A Loan Subaccount exists for the General Account and for
each Division of the Separate Account. Any Cash Value transferred to the
Loan Account will be allocated to the appropriate Loan Subaccount to reflect
the origin of the Cash Value. At any point in time, the Loan Account will
equal the sum of all the Loan Subaccounts.
MATURITY DATE - The Policy Anniversary on which the Insured reaches Attained
Age 100.
MONTHLY ANNIVERSARY - The same date in each succeeding month as the Issue
Date except that whenever the Monthly Anniversary falls on a date other than
a Valuation Date, the Monthly Anniversary will be deemed the next Valuation
Date. If any Monthly Anniversary would be the 29th, 30th, or 31st day of a
month that does not have that number of days, then the Monthly Anniversary
will be the last day of that month.
NET PREMIUM - The premium less the premium expense charges (consisting of the
sales charge and the premium tax charge).
OWNER - The Owner of a Policy, as designated in the application or as
subsequently changed.
POLICY - The flexible premium variable life insurance Policy offered by the
Company and described in this Prospectus.
POLICY ANNIVERSARY - The same date each year as the Issue Date.
1
<PAGE> 9
POLICY MONTH - A month beginning on the Monthly Anniversary.
POLICY YEAR - A period beginning on a Policy Anniversary and ending on the
day immediately preceding the next Policy Anniversary.
PORTFOLIO - see Fund.
SEC - The United States Securities and Exchange Commission.
SEPARATE ACCOUNT - General American Separate Account Eleven, a separate
investment account established by the Company to receive and invest the Net
Premiums paid under the Policy, and certain other variable life policies, and
allocated by the Owner to provide variable benefits.
VALUATION DATE - Each day that the New York Stock Exchange is open for
trading and the Company is open for business. The Company is not open for
business the day after Thanksgiving.
VALUATION PERIOD - The period between two successive Valuation Dates,
commencing at 4:00 p.m. (Eastern Standard Time) on a Valuation Date and
ending 4:00 p.m. on the next succeeding Valuation Date.
SUMMARY
THE FOLLOWING SUMMARY OF PROSPECTUS INFORMATION SHOULD BE READ IN CONJUNCTION
WITH THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS
OTHERWISE INDICATED, THE DESCRIPTION OF THE POLICIES CONTAINED IN THIS
PROSPECTUS ASSUMES THAT A POLICY IS IN FORCE AND THAT THERE IS NO OUTSTANDING
INDEBTEDNESS.
THE POLICY. Under the flexible premium variable life insurance Policy
described in this Prospectus, the Owner may, subject to certain limitations,
make premium payments in any amount and at any frequency. The Policy is a
life insurance contract with death benefits, Cash Value, surrender rights,
Policy Loan privileges, and other features traditionally associated with life
insurance. It is a "flexible premium" Policy because, unlike traditional
insurance policies, there is no fixed schedule for premium payments.
Although the Owner may establish a schedule of premium payments ("planned
premium payments"), failure to make the planned premium payments will not
necessarily cause a Policy to lapse nor will making the planned premium
payments guarantee that a Policy will remain in force to maturity. Thus, an
Owner may, but is not required to, pay additional premiums. This flexibility
permits an Owner to provide for changing insurance needs within a single
insurance policy.
The Policy is a "variable" Policy because, unlike the fixed benefits under an
ordinary life insurance contract, to the extent that Net Premiums are
allocated to the Separate Account, the Cash Value and, under certain
circumstances, the death benefit under a Policy may increase or decrease
depending upon the investment performance of the Divisions of the Separate
Account to which the Owner has allocated Net Premium payments. However, so
long as a Policy's Cash Surrender Value continues to be sufficient to pay the
monthly deductions, an Owner is guaranteed a minimum death benefit equal to
the Face Amount of his or her Policy, less any outstanding Indebtedness.
A Policy will lapse (and terminate without value) when the Cash Surrender
Value is insufficient to pay the next monthly deduction and a grace period of
62 days expires without an adequate payment being made by the Owner. (See
Payment and Allocation of Premiums - Policy Lapse and Reinstatement..)
THE SEPARATE ACCOUNT. After the end of the "Right to Examine Policy" period,
the Owner may allocate the Net Premiums to the Separate Account and, if it is
available, to the General Account. Amounts allocated to the Separate Account
are further allocated to one or more Divisions. Assets of each Division are
invested at net asset value in shares of a corresponding Fund. (See The
Company and the Separate Account,) An Owner may change future allocations of
Net Premiums at any time.
The option offered in connection with the Policies to allocate Net Premiums
or to transfer Cash Value to the General Account may not be made available,
at the Company's discretion, under all Policies. Further, the option may be
limited with respect to some Policies. The Company may, from time to time,
adjust the extent to which future premiums may be allocated to the General
Account in regard to any or all outstanding Policies. Such adjustments may
not be uniform as to all Policies.
Until the end of the "Right to Examine Policy" period (See Policy Rights -
Right to Examine Policy), all Net Premiums automatically will be allocated to
the Division that invests in the Money Market Fund. (See Payment and
Allocation of Premiums - Allocation of Net Premiums and Cash Value.)
To the extent Net Premiums are allocated to the Divisions of the Separate
Account, the Cash Value
2
<PAGE> 10
will, and the death benefit may, vary with the investment performance of the
chosen Division. To the extent Net Premiums are allocated to the General
Account, the Cash Value will accrue interest at a guaranteed minimum rate.
(See The General Account..) Thus, depending upon the allocation of Net
Premiums, investment risk over the life of a Policy may be borne by the Owner,
by the Company, or by both.
Subject to certain restrictions, an Owner may transfer Cash Values among the
Divisions of the Separate Account or, it available, between the Separate
Account and the General Account. Currently, no charge is assessed for
transfers. The Company reserves the right to revoke or modify the transfer
privilege. (See Policy Rights - Transfers.)
CHARGES AND DEDUCTIONS. A premium expense charge will be deducted from each
premium payment prior to allocation. The premium expense charge consists of
a sales charge and a charge to cover premium taxes. The sales charge will
never exceed 5.0% and is currently 5.0% in Policy years one through ten and
2.25% in Policy years past Policy year ten. The charge to cover premium
taxes is 2.5%. (See Charges and Deductions - Premium Expense Charges.)
A Contingent Deferred Sales Charge to compensate for sales expenses will also
be assessed against the Cash Value under a Policy upon a surrender, a lapse,
a partial withdrawal, or pro rata surrender. The Contingent Deferred Sales
Charge will never exceed 4% of premiums paid. (See Policy Rights -
Surrender, Partial Withdrawals, and Pro Rata Surrender; Policy Benefits -
Death Benefit; and Charges and Deductions - Contingent Deferred Sales
Charge.) Reductions in the Contingent Deferred Sales Charge are available in
some situations. (See Reduction of Charges.)
On each Monthly Anniversary, the Cash Value will be reduced by a monthly
deduction. The monthly deduction includes an administrative charge of $4 per
month for each Policy Month. (See Charges and Deductions - Monthly
Deduction.) A monthly charge is also made for the cost of insurance, and the
cost of any additional benefits provided by rider. (See CHARGES AND
DEDUCTIONS - MONTHLY DEDUCTION.)
A daily charge based on an effective annual charge of .70% of the net assets
of each Division of the Separate Account will be imposed for the Company's
assumption of certain mortality and expense risks incurred in connection with
the Policies. (See Charges and Deductions - Separate Account Charges.)
The Company may make a charge for any taxes or economic burden resulting
from the application of the tax laws that it determines to be properly
attributable to the Separate Account or to the Policy. (See Federal Tax
Matters.)
The operating expenses of the Separate Account are paid by General American.
Investment Advisory fees and other operating expenses of the Funds are paid
by the Funds and are reflected in the value of the assets of the
corresponding Division of the Separate Account. For a description of these
charges, see Charges and Deductions--Separate Account Charges.
Currently, there are no transaction charges to cover the administrative costs
of processing partial withdrawals or transfers of Cash Value between
Divisions of the Separate Account. In contracts with the General Account
option, there are no transaction charges to cover the administrative costs of
processing transfers of Cash Value between the Separate and General Accounts.
However, the Company reserves the right to impose such charges in the future.
In addition, transfers and withdrawals are subject to restrictions relative
to amount and frequency. (See Payment and Allocation of Premiums -
Allocation of Net Premiums and Cash Value; Policy Rights - Surrender, Partial
Withdrawals, and Pro Rata Surrender; and The General Account.)
PREMIUMS. An Owner has considerable flexibility concerning the amount and
frequency of premium payments. A Policy will not become effective until the
Owner has paid an initial premium equal to one-twelfth (1/12) of the "Minimum
Premium" for the Policy. This amount will be different for each Policy.
Thereafter, an Owner may, subject to certain restrictions, make premium
payments in any amount and at any frequency. The Owner may also determine a
planned premium payment schedule. The schedule will provide for a premium
payment of a level amount at a fixed interval over a specified period of
time. An Owner need not, however, adhere to the planned premium payment
schedule. For policies issued as a result of a term conversion from certain
General American term policies, the Company requires the Owner to pay an
initial premium, which combined with conversion credits given, if any, will
equal one full "Minimum Premium" for the Policy. (See Payment and Allocation
of Premiums.)
3
<PAGE> 11
A Policy will lapse only when the Cash Surrender Value is insufficient to pay
the next monthly deduction (See Charges and Deductions - Monthly Deduction.)
and a grace period expires without a sufficient payment by the Owner. (See
Payment and Allocation of Premiums - Policy Lapse and Reinstatement.)
DEATH BENEFIT. A death benefit is payable to the named Beneficiary when the
Insured under a Policy dies. Three death benefit options are available.
Under Death Benefit Option A, the death benefit is the Face Amount of the
Policy or, if greater, the applicable percentage of Cash Value. Under Death
Benefit Option B, the death benefit is the Face Amount of the Policy plus the
Cash Value or, if greater, the applicable percentage of Cash Value. Under
Death Benefit Option C, the death benefit is the Face Amount of the Policy
or, if greater, the Cash Value multiplied by the Attained Age factor. So
long as the Policy remains in force, the minimum death benefit under any
death benefit option will be at least the current Face Amount. The death
benefit will be increased by any unpaid dividends determined prior to the
Insured's death. and by the amount of the cost of insurance for the portion
of the month from the date of death to the end of the month, and reduced by
any outstanding Indebtedness. The death benefit will be paid according to
the settlement options available at the time of death. (See Policy Benefits
- - Death Benefit.)
The minimum Face Amount at issue is $50,000 under the Company's current
rules. Subject to certain restrictions, the Owner may change the Face Amount
and the death benefit option. In certain cases evidence of insurability may
be required. (See Change in Death Benefit Option, and Change In Face
Amount.)
Additional insurance benefits offered under the Policy include a waiver of
specified premium rider, a waiver of monthly deduction rider, and an
increasing benefit option. (See General Matters - Additional Insurance
Benefits.) The cost of these additional insurance benefits will be deducted
from the Cash Value as part of the monthly deduction. (See Charges and
Deductions - Monthly Deduction.)
CASH VALUE. The Policies provide for a Cash Value equal to the total of the
amounts credited to the Owner in the Separate Account, the Loan Account
(securing Policy Loans) and in certain contracts, the General Account. A
Policy's Cash Value will reflect the amount and frequency of Net Premium
payments, the investment performance of any selected Divisions of the
Separate Account, any Policy Loans, any partial withdrawals, and the charges
imposed in connection with the Policy. (See Policy Benefits - Cash Value.)
There is no minimum guaranteed Cash Value.
POLICY LOANS. After the first Policy Anniversary, an Owner may borrow
against the Cash Value of a Policy. The maximum amount that may be borrowed
under a Policy ("the Loan Value") is the Cash Value of the Policy on the date
the loan request is received, less loan interest to the next Policy
Anniversary, less any outstanding Indebtedness, less any surrender charges to
the next Policy Anniversary, and less monthly deductions to the next loan
interest due date. Loan interest is payable on each Policy Anniversary and
all outstanding Indebtedness will be deducted from proceeds payable at the
Insured's death, upon maturity, upon the exercise of a settlement option, or
upon surrender.
A Policy loan will be allocated among the General Account (if available) and
the various Divisions of the Separate Account. When a loan is allocated to
the Divisions of the Separate Account, a portion of the Policy's Cash Value
in the Divisions of the Separate Account sufficient to secure the loan will
be transferred to the Loan Account as security for the loan. Therefore, a
loan may have impact on the Policy's Cash Value even if it is repaid. A
Policy Loan may be repaid in whole or in part at any time while the Policy is
in force. (See Policy Rights - Loans.) Loans taken from, or secured by, a
Policy may have Federal income tax consequences. (See Federal Tax Matters.)
SURRENDER, PARTIAL WITHDRAWALS, AND PRO RATA SURRENDER. At any time that a
Policy is in force, an Owner may elect to surrender the Policy and receive
its Cash Surrender Value plus the value of any dividends determined prior to
the surrender. After the first year, an Owner may also request a partial
withdrawal of the Cash Surrender Value of the Policy. When the death benefit
is not based on an applicable percentage of the Cash Value, a partial
withdrawal reduces the death benefit payable under the Policy by an amount
equal to the reduction in the Policy's Cash Value. An Owner may also request
a pro rata surrender of the Policy. (See Policy Rights - Surrender, Partial
Withdrawals, and Pro Rata Surrender.) A surrender, partial withdrawal, or pro
rata surrender may have Federal income tax consequences. (See Federal Tax
Matters.)
RIGHT TO EXAMINE POLICY. The Owner has a limited right to return a Policy
for cancellation within 20 days after receiving it (30 days if the Owner is a
resident of California and is age 60 or older), or
4
<PAGE> 12
within 45 days after the application is signed, whichever is later (or such
longer period, if any, as required by law). If a Policy is canceled within
this time period, a refund will be paid which will equal all premiums paid
under the Policy except in Kansas. The Owner also has a similar right to
cancel a requested increase in Face Amount. Upon cancellation of an increase,
the additional charges deducted in connection with the increase will be added
to the Cash Value. (See Policy Rights - Right to Examine Policy.)
ILLUSTRATIONS OF DEATH BENEFITS AND CASH SURRENDER VALUES. Illustrations on
pages A-2 to A-10 in Appendix A show how death benefits and Cash Surrender
Values may vary based on certain rate of return assumptions and how these
benefits compare with amounts which would accumulate if premiums were
invested to earn interest at 5% compounded annually. If a Policy is
surrendered in the early Policy Years the Cash Surrender Value payable will
be low as compared to premiums accumulated at interest, and consequently the
insurance protection provided prior to surrender will be costly. You may
make a written request for a projection of illustrated future Cash Values
and death benefits for a nominal fee not to exceed $25.00.
TAX CONSEQUENCES OF THE POLICY. If a Policy is issued on the basis of a
standard premium class or on a guaranteed or simplified issue basis, while
limited guidance exists, the Company believes that the Policy should qualify
as a life insurance contract for Federal income tax purposes. However, if a
Policy is issued on a substandard basis, it is unclear whether or not such a
Policy would qualify as a life insurance contract for Federal income tax
purposes. Assuming that the Policy qualifies as a life insurance contract
for Federal income tax purposes, the Company believes the Cash Value of the
Policy should be subject to the same Federal income tax treatment as the Cash
Value of a conventional fixed-benefit contract. If so, the Owner is not
considered to be in constructive receipt of the Cash Value under the Policy
until there is a distribution. A change of Owners, a surrender, a partial
withdrawal, a pro rata surrender, a lapse with outstanding Indebtedness, or
an exchange may have tax consequences, depending on the particular
circumstances. (See Federal Tax Matters.)
A Policy may be treated as a "modified endowment contract" depending upon the
amount of premiums paid in relation to the death benefit. If the Policy is a
modified endowment contract, then all pre-death distributions, including
Policy Loans and due but unpaid loan interest, will be treated first as a
distribution of taxable income and then as a return of basis or investment in
the contract. In addition, prior to age 59 1/2 taxable income from such
distributions generally will be subject to a 10% additional tax.
If the Policy is not a modified endowment contract, distributions generally
will be treated first as a return of basis or investment in the contract and
then as disbursing taxable income. Moreover, loans will not be treated as
distributions. Finally, neither distributions nor loans from a Policy that
is not a modified endowment contract are subject to the 10.0% additional tax.
(See Federal Tax Matters.)
DIVIDENDS. While a Policy is in force, it may share in the divisible surplus
of the Company. Each year the Company will determine the share of divisible
surplus accruing to a Policy and will distribute the surplus as dividend.
The Company is not obligated to pay dividends on the Policies. (See
Dividends.)
* * *
This Prospectus describes only those aspects of the Policy that relate to the
Separate Account, except where General Account matters are specifically
mentioned. For a brief summary of the aspects of the Policy relating to the
General Account, see The General Account.
THE COMPANY AND THE SEPARATE ACCOUNT
THE COMPANY
General American Life Insurance Company ("General American" or "the Company")
was originally incorporated as a stock company in 1933. In 1936, General
American initiated a program to convert to a mutual life insurance company.
In 1997, General American's policyholders approved a reorganization of the
Company into a mutual holding company structure under which General American
became a stock company wholly owned by GenAmerica Corporation, an
intermediate stock holding company. GenAmerica is wholly owned by General
American Mutual Life Insurance Company, a mutual holding company organized
under Missouri law. The mutual holding company structure retains mutuality
as General American's ultimate parent company is wholly owned by General
American's policyholders.
General American is principally engaged in writing individual and group life
insurance policies and annuity contracts. As of December 31, 1997, it had
consolidated assets of approximately $24 billion. It is admitted to do
business in 49 states, the District of
5
<PAGE> 13
Columbia, Puerto Rico, and in ten Canadian provinces. The principal offices of
General American are located at 700 Market Street, St. Louis, Missouri 63101.
The mailing address of General American's service center ("the Home Office") is
P.O. Box 14490, St. Louis, Missouri 63178.
THE SEPARATE ACCOUNT
General American Life Insurance Company Separate Account Eleven ("the
Separate Account") was established by General American as a separate
investment account on January 24, 1985 under Missouri law. The Separate
Account will receive and invest the Net Premiums paid under this Policy and
allocated to it. In addition, the Separate Account currently receives and
invests Net Premiums for other classes of flexible premium variable life
insurance policies and might do so for additional classes in the future.
The Separate Account has been registered with the SEC as a unit investment
trust under the Investment Company Act of 1940 ("the 1940 Act") and meets the
definition of a "separate account" under Federal securities laws.
Registration with the SEC does not involve supervision of the management or
investment practices or policies of the Separate Account or General American
by the SEC.
The Separate Account currently is divided into eighteen Divisions. Divisions
invest in corresponding Funds from one of five open-end, diversified
management investment companies: (1) General American Capital Company, (2)
Russell Insurance Funds, (3) Variable Insurance Products Fund, (4) Variable
Insurance Products Fund II, and (5) Van Eck Worldwide Insurance Trust.
Income and both realized and unrealized gains or losses from the assets of
each Division of the Separate Account are credited to or charged against that
Division without regard to income, gains, or losses from any other Division
of the Separate Account or arising out of any other business General American
may conduct.
Although the assets of the Separate Account are the property of General
American, the assets in the Separate Account equal to the reserves and other
liabilities of the Separate Account are not chargeable with liabilities
arising out of any other business which General American may conduct. The
assets of the Separate Account are available to cover the general liabilities
of General American only to the extent that the Separate Account's assets
exceed its liabilities arising under the Policies. From time to time, the
Company may transfer to its General Account any assets of the Separate
Account that exceed the reserves and the Policy liabilities of the Separate
Account (which will always be at least equal to the aggregate Policy value
allocated to the Separate Account under the Policies). Before making any
such transfers, General American will consider any possible adverse impact
the transfer may have on the Separate Account.
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company ("the Capital Company") is an open-end,
diversified management investment company which was incorporated in Maryland
on November 15, 1985, and commenced operations on October 1, 1987. Only the
Capital Company Funds described in this section of the Prospectus are
currently available as investment choices for this Policy even though
additional Funds may be described in the prospectus for the Capital Company.
Shares of Capital Company are currently offered to separate accounts
established by General American Life Insurance Company and affiliates. The
Capital Company's investment Advisor is Conning Asset Management Company
("the Advisor"), an indirect majority-owned subsidiary of General American
Holding Company which, in turn is wholly owned by General American. The
Advisor selects investments for the Funds.
The investment objectives and policies of each Fund are summarized below:
S&P 500 INDEX FUND: The investment objective of this Fund is to
provide investment results that parallel the price and yield
performance of publicly-traded common stocks in the aggregate. The
Fund uses the Standard & Poor's Composite Index of 500 Stocks ( "the
S&P Index") as its standard for performance comparison. The Fund
attempts to duplicate the performance of the S&P Index and includes
dividend income as a component of the Fund's total return. The Fund is
not managed by Standard & Poor's.
THE MONEY MARKET FUND: The investment objective of the Money Market
Fund is to obtain the highest level of current income which is
consistent with the preservation of capital and maintenance of
liquidity. The Fund invests primarily in high-quality, short-term
money market instruments. An investment in the Money Market Fund is
neither insured nor guaranteed by the U.S. Government.
BOND INDEX FUND: The investment objective of this Fund is to provide a
rate of return that reflects the performance of the publicly-traded
6
<PAGE> 14
bond market as a whole. The Fund uses the Lehman Brothers
Government/Corporate Bond Index as its standard for performance
comparison.
MANAGED EQUITY FUND: The investment objective of this Fund is long-term
growth of capital, obtained by investing primarily in common stocks.
Securing moderate current income is a secondary objective.
ASSET ALLOCATION FUND: The investment objective of this Fund is a high
rate of long-term total return composed of capital growth and income
payments. Preservation of capital is the secondary objective and chief
limit on investment risk. The Fund will invest only in those types of
securities that the other Capital Company Funds may invest in. The
Asset Allocation Fund invests in a combination of common stocks, bonds,
or money market instruments in accordance with guidelines established
from time to time by Capital Company's Board of Directors.
INTERNATIONAL INDEX FUND: The investment objective of this Fund is
obtain investment results that parallel the price and yield performance
of publicly-traded common stocks in the Morgan Stanley Capital
International ("MSCI") Europe, Australia and Far East Index ("EAFE").
MID-CAP EQUITY FUND: The investment objective of this Fund is capital
appreciation. It pursues this objective by investing primarily in
common stocks of United States-based, publicly traded companies with
medium market capitalizations falling within the capitalization range
of the S&P Mid-Cap 400 at the time of the Fund's investment.
SMALL-CAP EQUITY FUND: The investment objective of this Fund is to
provide a rate of return that corresponds to the performance of the
common stock of small companies, while incurring a level of risk that
is generally equal to the risks associated with small company common
stock. The Fund attempts to duplicate the performance of the smallest
20% of companies, based on capitalization size, that are based in the
United States and listed on the New York Stock Exchange ("NYSE").
RUSSELL INSURANCE FUNDS
Russell Insurance Funds ("RIF") is organized as a Massachusetts business
trust under a Master Trust Agreement dated July 11, 1996. RIF is authorized
to issue an unlimited number of shares evidencing beneficial interests in
different investment Funds, which interests may be offered in one or more
classes. RIF is a diversified open end management investment company,
commonly known as a "mutual fund." Frank Russell Company, which is a
consultant to RIF, has been primarily engaged since 1969 in providing asset
management consulting services to large corporate employee benefit funds.
Major components of its consulting services are: (i) quantitative and
qualitative research and evaluation aimed at identifying the most appropriate
investment management firms to invest large pools of assets in accord with
specific investment objectives and styles; and (ii) the development of
strategies for investing assets using "multi-style, multi-manager
diversification." This is a method for investing large pools of assets by
dividing the assets into segments to be invested using different investment
styles, and selecting money managers for each segment based upon their
expertise in that style of investment. General management of RIF is provided
by Frank Russell Investment Management Company, a wholly-owned subsidiary of
Frank Russell Company, which furnishes officers and staff required to manage
and administer RIF on a day-to-day basis.
The investment objectives and policies of each Fund are summarized below:
MULTI-STYLE EQUITY FUND: The investment objective of this Fund is to
provide income and capital growth by investing principally in equity
securities.
AGGRESSIVE EQUITY FUND: This Fund seeks to provide capital appreciation
by assuming a higher level of volatility than is ordinarily expected
from the Multi-Style Equity Fund while still investing in equity
securities.
AGGRESSIVE EQUITY FUND: This Fund seeks to provide capital appreciation
by assuming a higher level of volatility than is ordinarily expected
from the Multi-Style Equity Fund while still investing in equity
securities.
NON-U.S. FUND: This Fund's objective is to provide favorable total
return and additional diversification for U.S. investors by investing
primarily in equity and fixed-income securities of non-U.S. companies,
and securities issued by non-U.S. governments.
CORE BOND FUND: This Fund's objective is to maximize total return,
through capital appreciation and income, by assuming a level of
volatility consistent with the broad fixed-income
7
<PAGE> 15
market. The Fund invests in fixed-income securities.
VARIABLE INSURANCE PRODUCTS FUND
Variable Insurance Products Fund ("VIP") is an open-end, diversified
management investment company organized as a Massachusetts business trust on
November 13, 1981. Only the Funds described in this section of the
Prospectus are currently available as investment choices for this Policy even
though additional Funds may be described in the prospectus for VIP. VIP
shares are purchased by insurance companies to fund benefits under variable
insurance and annuity policies. Fidelity Management & Research Company
("FMR") of Boston, Massachusetts is the Funds' Manager.
The investment objectives and policies of each Fund are summarized below:
EQUITY-INCOME PORTFOLIO: The investment objective of this Fund is
income, obtained by investing primarily in income-producing equity
securities. In choosing these securities, FMR will also consider the
potential for capital appreciation. The Fund'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.
GROWTH PORTFOLIO: The investment objective of this Fund is capital
appreciation. The Fund normally purchases common stocks, although its
investments are not restricted to any one type of security. Capital
appreciation may also be obtained from other types of securities,
including bonds and preferred stocks.
OVERSEAS PORTFOLIO: The investment objective of this Fund is long-term
growth of capital. The Fund invests primarily in foreign securities.
The Overseas Portfolio provides a means for investors to diversify
their own portfolios by participation in companies and economies
outside of the United States.
HIGH INCOME PORTFOLIO: The investment objective of this Fund is a high
level of current income. The Fund seeks to fulfill the objective by
investing primarily in high-yielding, lower-rated, fixed-income
securities, while also considering growth of capital. Lower-rated
securities, commonly referred to as "junk bonds," involve greater risk
of default or price change than securities assigned a higher quality
rating.
VARIABLE INSURANCE PRODUCTS FUND II
Variable Insurance Products Fund II ("VIP II") is an open-end, diversified
management investment company organized as a Massachusetts business trust on
March 21, 1988. Only the Fund described in this section of the Prospectus is
currently available as an investment choice for this Policy even though
additional Funds may be described in the prospectus for VIP II. VIP II
shares are purchased by insurance companies to fund benefits under variable
insurance and annuity policies. FMR is the Fund's manager.
The investment objective and policies of the Funds are summarized below:
ASSET MANAGER: The investment objective of this Fund is to seek a 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.
VAN ECK WORLDWIDE INSURANCE TRUST
Van Eck Worldwide Insurance Trust ("Van Eck") is an open-end management
investment company organized as a Massachusetts business trust on January 7,
1987. Only the Fund described in this section of the Prospectus is
currently available as an investment choice for this Policy even though
additional Funds may be described in the prospectus for Van Eck. Shares of
Van Eck are offered only to separate accounts of various insurance companies
to support benefits of variable insurance and annuity policies. The assets
of Van Eck are managed by Van Eck Associates Corporation of New York, New
York.
The investment objectives and policies of the Fund are summarized below:
WORLDWIDE HARD ASSETS FUND: The investment objective of the Fund is to
seek long-term capital appreciation by investing in equity and debt
securities of companies engaged in the exploration, development,
production, and distribution of one or more of the following: (i)
precious metals, (ii) ferrous and non-ferrous metals, (iii) oil and
gas, (iv) forest products, (v) real estate, and (vi) other basic non-
agricultural commodities (together, "Hard Assets"). Current income is
not an objective.
THERE IS NO ASSURANCE THAT ANY OF THE FUNDS WILL ACHIEVE ITS STATED
OBJECTIVE. It is conceivable that in the future it may be disadvantageous
for Funds to
8
<PAGE> 16
offer shares to separate accounts of various insurance companies to
serve as the investment medium for their variable products or for both
variable life and annuity separate accounts to invest simultaneously in
Capital Company. The Board of Trustees of RIF, the Board of Trustees of FMR,
the Board of Trustees of Van Eck, the Board of Directors of Capital Company,
the respective Advisors of each Fund, and the Company and any other insurance
companies participating in RIF, VIP, VIP II, Van Eck, and Capital Company
are required to monitor events to identify any material irreconcilable
conflicts that may possibly arise, and to determine what action, if any,
should be taken in response to those events or conflicts. A more detailed
description of the Funds, their investment policies, restrictions, risks, and
charges is in the prospectuses for RIF, VIP, VIP II, Van Eck, and Capital
Company, which must accompany or precede this Prospectus and which should be
read carefully.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
The Company reserves the right, subject to compliance with applicable law, to
make additions to, deletions from, or substitutions for the shares that are
held by the Separate Account or that the Separate Account may purchase. The
Company reserves the right to eliminate the shares of any of the Funds and to
substitute shares of another Fund of Capital Company, RIF, VIP, VIP II, Van
Eck, or of another registered open-end investment company if the shares of a
Fund are no longer available for investment or if in its judgment further
investment in any Fund becomes inappropriate in view of the purposes of the
Separate Account. The Company will not substitute any shares attributable to
an Owner's interest in a Division of the Separate Account without notice to
the Owner and prior approval of the SEC, to the extent required by the 1940
Act or other applicable law. Nothing contained in this Prospectus shall
prevent the Separate Account from purchasing other securities for other
series or classes of policies, or from permitting a conversion between series
or classes of policies on the basis of requests made by Owners.
The Company also reserves the right to establish additional Divisions of the
Separate Account, each of which would invest in a new Fund of Capital
Company, RIF, VIP, VIP II, or Van Eck, or in shares of another investment
company, with a specified investment objective. New Divisions may be
established when, in the sole discretion of the Company, marketing needs or
investment conditions warrant. Any new Division will be made available to
existing Owners on a basis to be determined by the Company. To the extent
approved by the SEC, the Company may also eliminate or combine one or more
Divisions, substitute one Division for another Division, or transfer assets
between Divisions if, in its sole discretion, marketing, tax, or investment
conditions warrant.
In the event of a substitution or change, the Company may, if it considers it
necessary, make such changes in the Policy by appropriate endorsement and
offer conversion options required by law, if any. The Company will notify
all Owners of any such changes.
If deemed by the Company to be in the best interests of persons having voting
rights under the Policy, and to the extent any necessary SEC approvals or
Owner votes are obtained, the Separate Account may be: (a) operated as a
management company under the 1940 Act; (b) de-registered under that Act in
the event such registration is no longer required; or (c) combined with other
separate accounts of the Company. To the extent permitted by applicable law,
the Company may also transfer the assets of the Separate Account associated
with the Policy to another separate account.
POLICY BENEFITS
DEATH BENEFIT
As long as the Policy remains in force (See Payment and Allocation of
Premiums - Policy Lapse and Reinstatement), the Company will, upon receipt of
proof of the Insured's death at its Home Office, pay the death benefit in a
lump sum The amount of the death benefit payable will be determined at the
end of the Valuation Period during which the Insured's death occurred. The
death benefit will be paid to the surviving Beneficiary or Beneficiaries
specified in the application or as subsequently changed.
The Policy provides three death benefit options: "Death Benefit Option A,"
"Death Benefit Option B," and "Death Benefit Option C." The death benefit
under all options will never be less than the current Face Amount of the
Policy (LESS INDEBTEDNESS) as long as the Policy remains in force. (See
Payment and Allocation of Premiums - Policy Lapse and Reinstatement.) The
minimum Face Amount currently is $50,000.
DEATH BENEFIT OPTION A. Under Death Benefit Option A, the death benefit is
the current Face Amount of the Policy or, if greater, the applicable
percentage of Cash Value on the date of death. The applicable percentage is
250% for an Insured Attained Age 40 or below on the Policy Anniversary
9
<PAGE> 17
prior to the date of death. For Insureds with an a Attained Age over 40 on
that Policy Anniversary, the percentage is lower and declines with age as shown
in the Applicable Percentage of Cash Value Table shown below. Accordingly,
under Death Benefit Option A the death benefit will remain level at the Face
Amount unless the applicable percentage of Cash Value exceeds the current
Face Amount, in which case the amount of the death benefit will vary as the
Cash Value varies. (See Illustrations of Death Benefits and Cash Values,
Appendix A.)
DEATH BENEFIT OPTION B. Under Death Benefit Option B, the death benefit is
equal to the current Face Amount plus the Cash Value of the Policy on the
date of death or, if greater, the applicable percentage of the Cash Value on
the date of death. The applicable percentage is the same as under Death
Benefit Option A: 250% for an Insured Attained Age 40 or below on the Policy
Anniversary prior to the date of death, and for Insureds with an Attained Age
over 40 on that Policy Anniversary the percentage declines as shown in the
Applicable Percentage of Cash Value Table shown below. Accordingly, under
Death Benefit Option B the amount of the death benefit will always vary as
the Cash Value varies (but will never be less than the Face Amount). (See
Illustrations of Death Benefits and Cash Values, Appendix A.)
<TABLE>
<CAPTION>
APPLICABLE PERCENTAGE OF CASH VALUE TABLE<F*>
-------------------------------------------------------------------
Policy Account Multiple
Insured Person's Age Percentage
-------------------- -----------------------
<S> <C>
40 or under 250%
45 215%
50 185%
55 150%
60 130%
65 120%
70 115%
78 to 90 105%
95 or older 100%
<FN>
<F*>For ages that are not shown on this table, the
applicable percentage multiples will decrease by a
ratable portion for each full year.
</TABLE>
DEATH BENEFIT OPTION C. Under Death Benefit Option C, the death benefit is
equal to the current Face Amount of the Policy or, if greater, the Cash Value
on the date of death multiplied by the "Attained Age factor" (a list of
sample Attained Age factors is shown in the Sample Attained Age Factor Table
below). Accordingly, under Death Benefit Option C the death benefit will
remain level at the Face Amount unless the Cash Value multiplied by the
Attained Age factor exceeds the current Face Amount, in which case the amount
of the death benefit will vary as the Cash Value varies. (See Illustrations
of Death Benefits and Cash Values, Appendix A.)
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION C
SAMPLE ATTAINED AGE FACTOR TABLE
----------------------------------------------------------------
INSURED MALE LIVES FEMALE LIVES
ATTAINED AGE FACTOR FACTOR
------------ ---------- ------------
<S> <C> <C>
20 6.39373 7.62992
25 5.50505 6.48136
30 4.68733 5.49185
35 3.97255 4.64894
40 3.37168 3.94230
45 2.87784 3.36481
50 2.47279 2.88712
55 2.14116 2.49005
60 1.87392 2.15766
65 1.65835 1.87615
70 1.48797 1.64736
75 1.35451 1.46009
80 1.25595 1.31875
85 1.18113 1.21344
90 1.12767 1.13972
95 1.07472 1.07637
</TABLE>
CHANGES IN DEATH BENEFIT OPTION. After the first Policy Anniversary, if the
Policy was issued with either Death Benefit Option A or Death Benefit Option
B, the death benefit option may be changed. The option may be changed once
each Policy Year, and a request for change must be made to the Company in
writing. The effective date of such a change will be the Monthly Anniversary
on or following the date the Company receives the change request. A change
in death benefit option may have Federal income tax consequences. (See
Federal Tax Matters.)
A Death Benefit Option A Policy may change its death benefit option to Death
Benefit Option B. The Face Amount will be decreased to equal the death
benefit less the Cash Value on the effective date of change. A Death Benefit
Option B Policy may change its death benefit option to Death Benefit Option
A. The Face Amount will be increased to equal the death benefit on the
effective date of change. A Policy issued under Death Benefit Option C may
not change to either Death Benefit Option A or Death Benefit Option B for the
entire lifetime of the Contract. Similarly, a Policy issued under either
Death Benefit Option A or B may not change to Death Benefit Option C for the
lifetime of the Policy.
10
<PAGE> 18
Satisfactory evidence of insurability must be submitted to the Company in
connection with a request for a change from Death Benefit Option A to Death
Benefit Option B. A change may not be made if it would result in a Face
Amount of less than the minimum Face Amount.
A change in death benefit option will not in itself result in an immediate
change in the amount of a Policy's death benefit or Cash Value. In addition,
if, prior to or accompanying a change in the death benefit option, there has
been an increase in the Face Amount, the cost of insurance charge may be
different for the increased amount. (See Monthly Deduction - Cost of
Insurance,.)
CHANGE IN FACE AMOUNT. Subject to certain limitations set forth below, an
Owner may increase or decrease the Face Amount of a Policy once each Policy
Year and not before the first Policy Anniversary. A written request is
required for a change in the Face Amount. A change in Face Amount may affect
the cost of insurance rate and the net amount at risk, both of which affect
an Owner's cost of insurance charge. (See Monthly Deduction - Cost of
Insurance.) A change in the Face Amount of a Policy may have Federal income
tax consequences. (See Federal Tax Matters.)
For an increase in the Face Amount, the Company requires that satisfactory
evidence of insurability be submitted. An application for an increase must
be received by the Company. If approved, the increase will become effective
as of the Monthly Anniversary on or following receipt of the application by
the Company. In addition, the Insured must have an Attained Age of not
greater than 80 on the effective date of the increase. The increase may not
be less than $25,000. Although an application for an increase need not be
accompanied by an additional premium, the Cash Surrender Value in effect
immediately after the increase must be sufficient to cover the next monthly
deduction. To the extent the Cash Surrender Value is not sufficient, an
additional premium must be paid. (See Charges and Deductions - Monthly
Deduction.) An increase in the Face Amount may result in certain additional
charges. (See Charges and Deductions - Monthly Deduction.)
For the Owner's rights upon an increase in Face Amount, see Policy Rights -
Right to Examine Policy. Owners should consult their sales representative
before deciding whether to increase coverage by increasing the Face Amount of
a Policy.
Any decrease in the Face Amount will become effective on the Monthly
Anniversary on or following receipt of the written request by the Company.
The amount of the requested decrease must be at least $5,000 and the Face
Amount remaining in force after any requested decrease may not be less than
minimum Face Amount. If following a decrease in Face Amount, the Policy
would not comply with the maximum premium limitations required by Federal tax
law (see Payment and Allocation of Premiums), the decrease may be limited or
Cash Value may be returned to the Owner (at the Owner's election), to the
extent necessary to meet these requirements. Decreases will be applied to
prior increases in the Face Amount, if any, in the reverse order in which
such increases occurred, and then to the original Face Amount. This order of
reduction will be used to determine the amount of subsequent cost of
insurance charges (See Monthly Deduction - Cost of Insurance; and Charges and
Deductions - Contingent Deferred Sales Charge.)
PAYMENT OF THE DEATH BENEFIT. The death benefit under the Policy will
ordinarily be paid in a lump sum within seven days after the Company receives
all documentation required for such a payment. Payment may, however, be
postponed in certain circumstances. (See General Matters - Postponement of
Payment from the Separate Account.) The death benefit will be increased by
any unpaid dividends determined prior to the Insured's death, and by the
amount of the monthly cost of insurance for the portion of the month from the
date of death to the end of the month, and reduced by any outstanding
Indebtedness. (See General Matters - Additional Insurance Benefits,
Dividends, and Charges and Deductions.) The Company will pay interest on the
death benefit from the date of the Insured's death to the date of payment.
Interest will be at an annual rate determined by the Company, but will never
be less than the guaranteed rate of 4%. Provisions for settlement of
proceeds other than a lump sum payment may only be made upon written
agreement with the Company.
CASH VALUE
The Cash Value of the Policy is equal to the total of the amounts credited to
the Owner in the Separate Account, the Loan Account (securing Policy Loans),
and, in certain contracts, the General Account. The Policy's Cash Value in
the Separate Account will reflect the investment performance of the chosen
Divisions of the Separate Account as measured by each Division's Net
Investment Factor (defined below), the frequency and amount of Net Premiums
paid, transfers, partial withdrawals, loans and the
11
<PAGE> 19
charges assessed in connection with the Policy. An Owner may at any time
surrender the Policy and receive the Policy's Cash Surrender Value. (See
Policy Rights - Surrender, Partial Withdrawals, and Pro Rata Surrender.) The
Policy's Cash Value in the Separate Account equals the sum of the Policy's Cash
Values in each Division. There is no guaranteed minimum Cash Value.
DETERMINATION OF CASH VALUE. Cash Value is determined on each Valuation
Date. On the Investment Start Date, the Cash Value in a Division will equal
the portion of any Net Premium allocated to the Division, reduced by the
portion allocated to that Division of the monthly deduction(s) due from the
Issue Date through the Investment Start Date. (See Payment and Allocation of
Premiums.) Thereafter, on each Valuation Date, the Cash Value in a Division
of the Separate Account will equal:
(1) The Cash Value in the Division on the preceding Valuation Date,
multiplied by the Division's Net Investment Factor (defined below) for
the current Valuation Period; plus
(2) Any Net Premium payments received during the current Valuation
Period which are allocated to the Division; plus
(3) Any loan repayments allocated to the Division during the current
Valuation Period; plus
(4) Any amounts transferred to the Division from the General Account or
from another Division during the current Valuation Period; plus
(5) That portion of the interest credited on outstanding loans which is
allocated to the Division during the current Valuation Period; minus
(6) Any amounts transferred from the Division to the General Account,
Loan Account, or to another Division during the current Valuation Period
(including any transfer charges); minus
(7) Any partial withdrawals from the Division during the current
Valuation Period; minus
(8) Any withdrawal due to a pro rata surrender from the Division during
the current Valuation Period; minus
(9) Any withdrawal or surrender charges incurred during the current
Valuation Period attributed to the Division in connection with a partial
withdrawal or pro rata surrender; minus
(10) If a Monthly Anniversary occurs during the current Valuation
Period, the portion of the monthly deduction allocated to the Division
during the current Valuation Period to cover the Policy Month which
starts during that Valuation Period. (See Charges and Deductions .)
Net Investment Factor: The Net Investment Factor measures the investment
performance of a Division during a Valuation Period. The Net Investment
Factor for each Division for a Valuation period is calculated as follows:
(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 the assets in 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 each Division for taxes, including any
tax or other economic burden resulting from the application of the tax
laws determined by the Company to be properly attributable to the
Divisions of the Separate Account, or any amount set aside during the
Valuation Period as a reserve for taxes attributable to the operation or
maintenance of each Division; minus
(5) A charge equal to .0019111% of the average net assets for each day
in the Valuation Period. This is equivalent to an effective annual rate
of 0.70% per year for mortality and expense risks; divided by
(6) The value of the assets at the end of the preceding Valuation
Period.
POLICY RIGHTS
LOANS
Loan Privileges. After the first Policy Anniversary, the Owner may, by
written request to General American, borrow an amount up to the Loan Value of
the Policy, with the Policy serving as sole security for such loan. A loan
taken from, or secured by, a
12
<PAGE> 20
Policy may have Federal income tax consequences. (See Federal Tax Matters.)
The Loan Value is the Cash Value of the Policy on the date the loan request
is received, less interest to the next loan interest due date, less
anticipated monthly deductions to the next loan interest due date, less any
existing loan, and less any surrender charge. Policy Loan interest is
payable on each Policy Anniversary.
The minimum amount that may be borrowed is $500. The loan may be completely
or partially repaid at any time while the Insured is living. Any amount due
to an Owner under a Policy Loan ordinarily will be paid within seven days
after General American receives the loan request at its Home Office, although
payments may be postponed under certain circumstances. (See General
Matters-Matters-Postponement of Payments from the Separate Account.)
When a Policy Loan is made, Cash Value equal to the amount of the loan plus
interest due will be transferred to the Loan Account as security for the
loan. A Loan Subaccount exists within the Loan Account for the General
Account and each Division of the Separate Account. Amounts transferred to
the Loan Account to secure Indebtedness are allocated to the appropriate Loan
Subaccount to reflect its origin. Unless the Owner requests a different
allocation, amounts will be transferred from the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account, if any, bears to the Policy's
total Cash Value, less the Cash Value in the Loan Account, at the end of the
Valuation Period during which the request for a Policy Loan is received.
This will reduce the Policy's Cash Value in the General Account and Separate
Account. These transactions will not be considered transfers for purposes of
the limitations on transfers between Divisions or to or from the General
Account.
Cash Value in the Loan Account is expected to earn interest at a rate ("the
earnings rate") which is lower than the rate charged on the Policy Loan ("the
borrowing rate"). Cash Value in the Loan Account will accrue interest daily
at an earnings rate which is the greater of (a) an annual rate of 4% ("the
guaranteed earnings rate" or (b) a current rate determined by us ("the
discretionary earnings rate"). The Company may change the discretionary
earnings rate on Policy Loans at any time in its sole discretion. Currently
in Policy Years one through ten, we accrue interest at a discretionary
earnings rate which is .85% less than the borrowing rate we charge for Policy
Loan interest. Beginning in Policy Year eleven we accrue interest at a
discretionary earnings rate which is .50% less than the borrowing rate we
charge for Policy Loan interest. The difference between the rate of interest
earned and the borrowing rate is the "Loan Spread". The Loan Spreads
mentioned above are currently in effect and are not guaranteed.
Interest credited on the Cash Value held in the Loan Account will be
allocated on Policy Anniversaries to the General Account and the Divisions of
the Separate Account in the same proportion that the Cash Value in each Loan
Subaccount bears to the Cash Value in the Loan Account. The interest
credited will also be transferred: (1) when a new loan is made; (2) when a
loan is partially or fully repaid; and (3) when an amount is needed to meet a
monthly deduction.
Interest Charged. The borrowing rate we charge for Policy Loan interest will
be based on an index. The indexed borrowing rate will never be more than the
maximum loan rate permitted by law. More information on the borrowing rate
charged is provided below.
General American will inform the Owner of the current borrowing rate when a
Policy Loan is made. General American will also mail the Owner an advance
notice if there is to be a change in the borrowing rate applicable to any
outstanding Indebtedness.
Policy Loan interest is due and payable annually on each Policy Anniversary.
If the Owner does not pay the interest when it is due, the unpaid loan
interest will be added to the outstanding Indebtedness as of the due date and
will be charged interest at the same rate as the rest of the Indebtedness.
(See Effect of Policy Loans below.) The amount of Policy Loan interest which
is transferred to the Loan Account will be deducted from the Divisions of the
Separate Account and from the General Account in the same proportion that the
portion of the Cash Value in each Division and in the General Account,
respectively, bears to the total Cash Value of the Policy minus the Cash
Value in the Loan Account.
We determine the borrowing rate at the beginning of each Policy Year . The
same rate applies to any outstanding Indebtedness and to any new Policy Loans
made during the year. The borrowing rate determined by General American for
a Policy Year may not exceed a Maximum Limit which is the greater of:
(a) The Published Monthly Average (defined below) for the calendar
month ending two
13
<PAGE> 21
months before the beginning of the month in which the Policy Anniversary
falls (example: for a Policy with a June Policy Anniversary, the March
Published Average); or
(b) Five Percent (5%).
The Published Monthly Average means:
(1) Moody's Corporate Bond Yield Average - Monthly Average Corporate,
as published by Moody's Investors Service, Inc. or any successor to
that service; or
(2) If that average is no longer published, a substantially similar
average, established by regulation issued by the insurance supervisory
official of the state in which this Policy is issued.
If the Maximum Limit for a Policy Year, as determined in this manner, is at
lest 0.50% higher than the borrowing rate determined by General American for
the previous Policy Year, General American may increase the borrowing rate to
not more than the Maximum Limit. Therefore the borrowing rate we charge for
Policy Loan interest will only change if the Published Monthly Average
differs from the previous rate by at least 0.50%.
EFFECT OF POLICY LOANS. Whether or not a Policy Loan is repaid, it will
permanently affect the Cash Value of a Policy, and may permanently affect the
amount of the death benefit. The collateral for the loan (the amount held in
the Loan Account) does not participate in the performance of the Separate
Account while the loan is outstanding. If the Loan Account earnings rate is
less than the investment performance of the selected Division(s), the Cash
Value of the Policy will be lower as a result of the Policy Loan.
Conversely, if the Loan Account earnings rate is higher than the investment
performance of the Division(s), the Cash Value may be higher.
In addition, if the Indebtedness (See Definitions) exceeds the Cash Value
minus the surrender charge on any Monthly Anniversary, the Policy will lapse,
subject to a grace period. (See Payment and Allocation of Premiums - Policy
Lapse and Reinstatement.) A sufficient payment must be made within the later
of the grace period of 62 days from the Monthly Anniversary immediately
before the date Indebtedness exceeds the Cash Value less any surrender
charges, or 31 days after notice that a Policy will terminate unless a
sufficient payment has been mailed, or the Policy will lapse and terminate
without value. A lapsed Policy, however, may later be reinstated subject to
certain limitations. (See Payment and Allocation of Premiums - Policy Lapse
and Reinstatement.)
Any outstanding Indebtedness will be deducted from the proceeds payable upon
the death of the Insured, surrender, or the maturity of the Policy.
REPAYMENT OF INDEBTEDNESS. A Policy Loan may be repaid in whole or in part
at any time prior to the death of the Insured and as long as a Policy is in
force. When a loan repayment is made, an amount securing the Indebtedness in
the Loan Account equal to the loan repayment will be transferred to the
Divisions of the Separate Account and the General Account in the same
proportion that the Cash Value in each Loan Subaccount bears to Cash Value in
the Loan Account. Amounts paid while a Policy Loan is outstanding will be
treated as premiums unless the Owner requests in writing that they be treated
as repayment of Indebtedness.
SURRENDER, PARTIAL WITHDRAWALS AND PRO RATA SURRENDER
At any time during the lifetime of the Insured and while a Policy is in
force, the Owner may surrender the Policy by sending a written request to the
Company. After the first Policy Year, an Owner may make a partial withdrawal
by sending a written request to the Company. The amount available for
surrender is the Cash Surrender Value at the end of the Valuation Period
during which the surrender request is received at the Company's Home Office.
Amounts payable from the Separate Account upon surrender, partial withdrawal,
or a pro rata surrender will ordinarily be paid within seven days of receipt
of the written request. (See General Matters - Postponement of Payments from
the Separate Account.)
SURRENDERS. To effect a surrender, either the Policy itself must be returned
to the Company along with the request, or the request must be accompanied by
a completed affidavit of loss, which is available from the Company. Upon
surrender, the Company will pay the Cash Surrender Value plus any unpaid
dividends determined prior to surrender (See Dividends) to the Owner in a
single sum. The Cash Surrender Value equals the Cash Value on the date of
surrender, less any Indebtedness, and less any surrender charge. (See
Charges and Deductions - Contingent Deferred Sales Charge.) The Company will
determine the Cash Surrender Value as of the date that an Owner's written
request is received at the Company's Home Office. If the request is received
on a Monthly Anniversary, the monthly deduction
14
<PAGE> 22
otherwise deductible will be included in the amount paid. Coverage under a
Policy will terminate as of the date of surrender. The Insured must be living
at the time of a surrender. A surrender may have Federal income tax
consequences. (See Federal Tax Matters.)
PARTIAL WITHDRAWALS. After the first Policy Year, an Owner may make up to
one partial withdrawal each Policy Month from the Separate Account, and up to
four partial withdrawals and transfers in any Policy Year from the General
Account. A partial withdrawal may have Federal income tax consequences.
(See Federal Tax Matters.)
The minimum amount of a partial withdrawal request, net of any applicable
surrender charges, is the lesser of a) $500 from a Division of the Separate
Account, or b) the Policy's Cash Value in a Division. (See Charges and
Deductions - Contingent Deferred Sales Charge.) Partial withdrawals made
during a Policy Year may not exceed the following limits. The maximum amount
that may be withdrawn from a Division of the Separate Account is the Policy's
Cash Value net of any applicable surrender charges in that Division. The
total partial withdrawals and transfers from the General Account over the
Policy Year may not exceed a maximum amount equal to the greatest of the
following: (1) 25% of the Cash Surrender Value in the General Account at the
beginning of the Policy Year, (2) $5,000, (3) the previous Policy Year's
maximum amount.
The Owner may allocate the amount withdrawn plus any applicable surrender
charge, subject to the above conditions, among the Divisions of the Separate
Account and the General Account. If no allocation is specified, then the
partial withdrawal will be allocated among the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account bears to the total Cash Value
of the Policy, less the Cash Value in the Loan Account, on the date the
request for the partial withdrawal is received. If the limitations on
withdrawals from the General Account will not permit this proportionate
allocation, the Owner will be requested to provide an alternate allocation.
(See The General Account.)
No amount may be withdrawn that would result in there being insufficient Cash
Value to meet any surrender charge that would be payable immediately
following the withdrawal upon the surrender of the remaining Cash Value.
The death benefit will be affected by a partial withdrawal. If Death Benefit
Option A or Death Benefit Option C is in effect and the death benefit equals
the Face Amount, then a partial withdrawal will decrease the Face Amount by
an amount equal to the partial withdrawal plus the applicable surrender
charge resulting from that partial withdrawal. If the death benefit is based
on a percentage of the Cash Value, then a partial withdrawal will decrease
the Face Amount by an amount by which the partial withdrawal plus the
applicable surrender charge exceeds the difference between the death benefit
and the Face Amount. If Death Option B is in effect, the Face Amount will
not change.
The Face Amount remaining in force after a partial withdrawal may not be less
than the minimum Face Amount. Any request for a partial withdrawal that
would reduce the Face Amount below this amount will not be implemented.
Partial withdrawals may affect the way in which the cost of insurance charge
is calculated and the amount of pure insurance protection afforded under a
Policy. (See Monthly Deduction - Cost of Insurance.) Partial withdrawals
will be applied first to reduce the initial Face Amount and then to each
increase in Face Amount in order, starting with the first increase. The
Company may change the minimum amount required for a partial withdrawal or
the number of times partial withdrawals may be made.
PRO RATA SURRENDER. After the first Policy Year, an Owner can make a pro
rata surrender of the Policy. The pro rata surrender will reduce the Face
Amount and the Cash Value by a percentage chosen by the Owner. This
percentage must be any whole number. A pro rata surrender may have Federal
income tax consequences. (See Federal Tax Matters.) The percentage will be
applied to the Face Amount and the Cash Value on the Monthly Anniversary on
or following our receipt of the request.
The Owner may allocate the amount of decrease in Cash Value plus any
applicable surrender charge among the Divisions of the Separate Account and
the General Account. (See Charges and Deductions - Contingent Deferred Sales
Charge.) If no allocation is specified, then the decrease in Cash Value and
any applicable surrender charge will be allocated among the Divisions of the
Separate Account and the General Account in the same proportion that the
Policy's Cash Value in each Division and the General Account bears to the
total Cash Value of the Policy, less the Cash Value in the Loan Account, on
the date the request for pro rata surrender is received.
15
<PAGE> 23
A pro rata surrender can not be processed if it will reduce the Face Amount
below the minimum Face Amount of the Policy. No pro rata surrender will be
processed for more Cash Surrender Value than is available on the date of the
pro rata surrender. A cash payment will be made to the Owner for the amount
of Cash Value reduction less any applicable surrender charges.
Pro rata surrenders may affect the way in which the cost of insurance charge
is calculated and the amount of the pure insurance protection afforded under
the Policy. (See Monthly Deduction - Cost of Insurance.) Pro rata surrenders
will be applied to prior increases in the Face Amount, if any, in the reverse
order in which such increases occurred, and then to the original Face Amount.
CHARGES ON SURRENDER, PARTIAL WITHDRAWALS AND PRO RATA SURRENDER. If a
Policy is surrendered within the first ten Policy Years, the Deferred
Contingent Sales Charge will apply. (See Contingent Deferred Sales Charge.)
A partial withdrawal or pro rata surrender may also result in a charge. The
amount of the charge assessed is a portion of the Contingent Deferred Sales
Charge that would be deducted upon surrender or lapse. Charges are described
in more detail under Charges and Deductions - Contingent Deferred Sales
Charge.
While partial withdrawals and pro rata surrenders are each methods of
reducing a Policy's Cash Value, a pro rata surrender differs from a partial
withdrawal in that a partial withdrawal does not typically have a
proportionate effect on a Policy's death benefit by reducing the Policy's
Face Amount, while a pro rata surrender does. Assuming that a Policy's death
benefit is not a percentage of the Policy's Cash Value, a pro rata surrender
will reduce the Policy's death benefit in the same proportion that the
Policy's Cash Value is reduced, while a partial withdrawal will reduce the
death benefit by one dollar for each dollar of Cash Value withdrawn. Partial
Withdrawals and Pro Rata Surrenders will also result in there being different
cost of insurance charges subsequently deducted. (See Monthly Deduction -
Cost of Insurance; Surrender, Partial Withdrawals and Pro Rata Surrender -
Partial Withdrawals; and Surrenders, Partial Withdrawals, and Pro Rata
Surrenders-Pro Rata Surrender.)
TRANSFERS
Under General American's current practices, a Policy's Cash Value, except
amounts credited to the Loan Account, may be transferred among the Divisions
of the Separate Account and for certain contracts, between the General
Account and the Divisions. Transfers to and from the General Account are
subject to restrictions (See The General Account). Requests for transfers
from or among Divisions of the Separate Account must be made in writing.
Transfers from or among the Divisions of the Separate Account may be made
once each Policy Month and must be in amounts of at least $500 or, if
smaller, the Policy's Cash Value in a Division. General American ordinarily
will effectuate transfers and determine all values in connection with
transfers as of the end of the Valuation Period during which the transfer
request is received.
All requests received on the same Valuation Day will be considered a single
transfer request. Each transfer must meet the minimum requirement of $500 or
the entire Cash Value in a Division whichever is smaller. Where a single
transfer request calls for more than one transfer, and not all of the
transfers would meet the minimum requirements, General American will
effectuate those transfers that do meet the requirements. Transfers
resulting from Policy Loans will not be counted for purposes of the
limitations on the amount or frequency of transfers allowed in each Policy
Month or Policy Year.
Although General American currently intends to continue to permit transfers
for the foreseeable future, the Policy provides that General American may at
any time revoke, modify, or limit the transfer privilege, including the
minimum amount transferable, the maximum General Account allocation percent,
and the frequency of such transfers. General American may in the future
impose a charge of no more than $25 per transfer request.
PORTFOLIO REBALANCING
Over time, the funds in the General Account and the Divisions of the Separate
Account will accumulate at different rates as a result of different
investment returns. The Owner may direct that from time to time we
automatically restore the balance of the Cash Value in the General Account
and in the Divisions of the Separate Account to the percentages determined in
advance. There are two methods of rebalancing available - periodic and
variance.
PERIODIC REBALANCING. Under this option The Owner elects a frequency
(monthly, quarterly, semiannually or annually), measured from the Policy
Anniversary. On each date elected, we will rebalance the funds by generating
transfers to reallocate the funds according to the investment percentages
elected.
16
<PAGE> 24
VARIANCE REBALANCING. Under this option The Owner elects a specific
allocation percentage for the General Account and each Division of the
Separate Account. For each such account, the allocation percentage (if not
zero) must be a whole percentage and must not be less than five percent (5%).
The Owner also elects a maximum variance percentage (5%, 10%, 15%, or 20%
only), and can exclude specific funds from being rebalanced. On each Monthly
Anniversary we will review the current fund balances to determine whether any
fund balance is outside of the variance range (either above or below) as a
percentage of the specified allocation percentage for that fund. If any fund
is outside of the variance range, we will generate transfers to rebalance all
of the specified funds back to the predetermined percentages.
Transfers resulting from portfolio rebalancing will not be counted against
the total number of transfers allowed in a Policy Year before a charge is
applied.
The Owner may elect either form of portfolio rebalancing by specifying it on
the policy application, or may elect it later for an in-force Policy, or may
cancel it, by submitting a change form acceptable to General American under
its administrative rules.
Only one form of portfolio rebalancing may be elected at any one time, and
portfolio rebalancing may not be used in conjunction with dollar cost
averaging (see below).
General American reserves the right to suspend portfolio rebalancing at any
time on any class of Policies on a nondiscriminatory basis, or to charge an
administrative fee for election changes in excess of a specified number in a
Policy Year in accordance with its administrative rules.
DOLLAR COST AVERAGING
The Owner may direct the Company to transfer amounts on a monthly basis from
the Money Market Fund to any other Division of the Separate Account. This
service is intended to allow the Owner to utilize "dollar cost averaging"
("DCA"), a long-term investment technique which provides for regular, level
investments over time. The Company makes no guarantee that DCA will result
in a profit or protect against loss.
The following rules and restrictions apply to DCA transfers:
(1) The minimum DCA transfer amount is $100.
(2) A written election of the DCA service, on a form provided by the
Company, must be completed by the Owner and on file with the Company in
order to begin DCA transfers.
(3) In the written election of the DCA service, the Owner indicates
how DCA transfers are to be allocated among the Divisions of the
Separate Account. For any Division chosen to receive DCA transfers,
the minimum percentage that may be allocated to a Division is 5% of the
DCA transfer amount, and fractional percentages may not be used.
(4) DCA transfers can only be made from the Money Market Fund, and DCA
transfers will not be allowed to the General Account.
(5) The DCA transfers will not count against the Policy's normal
transfer restrictions. (See Policy Rights -- Transfers.)
(6) The DCA transfer percentages may differ from the allocation
percentages the Owner specifies for the allocation of Net Premiums.
(See Payment and Allocation of Premiums -- Allocation of Net Premiums
and Cash Values.)
(7) Once elected, DCA transfers from the Money Market Fund will be
processed monthly until either the value in the Money Market Fund is
completely depleted or the Owner instructs the Company in writing to
cancel the DCA service.
(8) Transfers as a result of a Policy Loan or repayment, or in
exercise of the conversion privilege, are not subject to the DCA rules
and restrictions. The DCA service terminates at the time the
conversion privilege is exercised, when any outstanding amount in any
Division of the Separate Account is immediately transferred to the
General Account. (See Policy Rights - Loans, and Policy Rights -
Conversion Privilege.)
(9) DCA transfers will not be made until the Right to Examine Policy
period has expired (See Policy Rights - Right to Examine Policy).
The Company reserves the right to assess a processing fee for the DCA
service. The Company reserves the right to discontinue offering DCA
upon 30 days' written notice to Owners. However, any such
discontinuation will not affect DCA services already commenced. The
Company reserves the
17
<PAGE> 25
right to impose a minimum total Cash Value, less outstanding Indebtedness, in
order to qualify for DCA service. Also, the Company reserves the right to
change the minimum necessary Cash Value and the minimum required DCA transfer
amount.
RIGHT TO EXAMINE POLICY
The Owner may cancel a Policy within 20 days after receiving it (30 days if
the Owner is a resident of California and is age 60 or older) or within 45
days after the application was signed, whichever is later. If a Policy is
canceled within this time period, a refund will be paid. Where required by
state law, the refund will equal all premiums paid under the Policy. Where
required by state law, General American will refund an amount equal to the
greater of premiums paid or (1) plus (2) where (1) is the difference between
the premiums paid, including any policy fees or other charges, and the
amounts allocated to the Separate Account under the Policy and (2) is the
value of the amounts allocated to the Separate Account under the Policy on
the date the returned Policy is received by General American or its agent.
To cancel the Policy, the Owner should mail or deliver the Policy to either
General American or the agent who sold it. A refund of premiums paid by
check may be delayed until the Owner's check has cleared the bank upon which
it was drawn. (See General Matters - Postponement of Payments from the
Separate Account.)
A request for an increase in Face Amount (see Policy Benefits - Death
Benefit) may also be canceled. The request for cancellation must be made
within the later of 20 days from the date the Owner received the new Policy
specifications page for the increase, or 45 days after the application for
the increase was signed.
PAYMENTS OF BENEFITS AT MATURITY
If the Insured is living and the Policy is in force, the Company will pay in
a lump sum the Cash Surrender Value of the Policy on the Maturity Date, plus
any unpaid dividends determined prior to maturity. Amounts payable on the
Maturity Date ordinarily will be paid in a lump sum within seven days of that
date, although payments may be postponed under certain circumstances. (See
General Matters - Postponements of Payments from the Separate Account.) A
Policy will mature if and when the Insured reaches Attained Age 100.
Settlement options other than a lump sum payment may only be made upon
written agreement with the Company.
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and
submit it to an authorized registered agent of General American or to General
American's Home Office. A Policy will generally be issued to Insureds of
Issue Ages 0 through 80 for regularly underwritten contracts and, should they
become available in the future, to Insureds of Issue Ages 0 through 64 for
simplified issue and guaranteed issue contracts. General American may, in
its sole discretion, issue Policies to individuals falling outside of those
Issue Ages. Acceptance of an application is subject to General American's
underwriting rules and General American reserves the right to reject an
application for any reason.
The Issue Date is determined by General American in accordance with its
standard underwriting procedures for variable life insurance policies. The
Issue Date is used to determine Policy Anniversaries, Policy Years, and
Policy Months. Insurance coverages under a Policy will not take effect until
the Policy has been delivered and the initial premium has been paid prior to
the Insured's death and prior to any change in health as shown in the
application.
PREMIUMS
The initial premium is due on the Issue Date, and may be paid to an
authorized registered agent of General American or to General American at its
Home Office. General American currently requires that the initial premium
for a Policy be at least equal to one-twelfth (1/12) of the Minimum Premium
for the Policy. The Minimum Premium is the amount specified for each Policy
based on the requested initial Face Amount and the charges under the Policy
which vary according to the Issue Age, sex, underwriting risk class, and
smoker status of the Insured. (See Charges and Deductions.) For policies
issued as a result of a term conversion from certain General American term
policies, the Company requires the Owner to pay an initial premium, which
combined with conversion credits given, if any, will equal one full "Minimum
Premium" for the Policy.
Following the initial premium, subject to the limitations described below,
premiums may be paid in any amount and at any interval. Premiums after the
first premium payment must be paid to General American at its Home Office.
An Owner may establish a schedule of planned premiums which will
18
<PAGE> 26
be billed by the Company at regular intervals. Failure to pay planned
premiums, however, will not itself cause the Policy to lapse. (See Policy
Lapse and Reinstatement.) Premium receipts will be furnished upon request.
An Owner may make unscheduled premium payments at any time in any amount, or
skip planned premium payments, subject to the minimum and maximum premium
limitations described below.
If a Policy is in the intended Owner's possession but the initial premium has
not been paid, the Policy is not in force. The intended Owner is deemed to
have the Policy for inspection only.
PREMIUM LIMITATIONS. Every premium payment must be at least $10. In no
event may the total of all premiums paid in any Policy Year exceed the
current maximum premium limitations for that Policy Year. Maximum premium
limits for the Policy Year will be shown in an Owner's annual report.
In general, for policies issued with Death Benefit Option A or Death Benefit
Option B, the maximum premium limit for a Policy Year is the largest amount
of premium that can be paid in that Policy Year such that the sum of the
premiums paid under the Policy will not at any time exceed the guideline
premium limitations needed to comply with the tax definition of life
insurance. For policies issued with Death Benefit Option C, the company
reserves the right to impose other restrictions upon the amount of premium
that may be paid into the Policy. If at any time a premium is paid which
would result in total premiums exceeding the current maximum premium
limitations, the Company will only accept that portion of the premium which
will make total premiums equal the maximum. Any part of the premium in
excess of that amount will be returned or applied as otherwise agreed, and no
further premiums will be accepted until allowed under the current maximum
premium limitations.
In addition to the foregoing tax definitional limits on premiums, for
purposes of determining whether distributions (including loans) are a return
of income first, the Company monitors the Policy to detect whether the "seven
pay limit" has been exceeded. If the seven pay limit is exceeded, the Policy
becomes a "Modified Endowment". The Company has adopted administrative steps
designed to notify an Owner when it is believed that a premium payment will
cause a Policy to become a modified endowment contract. The Owner will be
given a limited amount of time to request that the premium be reversed in
order to avoid the Policy's being classified as a modified endowment
contract. (See Federal Tax Matters.)
If the Company receives a premium payment which would cause the death benefit
to increase by an amount that exceeds the Net Premium portion of the payment,
then the Company reserves the right to (1) refuse that premium payment, or
(2) require additional evidence of insurability before it accepts the
premium.
ALLOCATION OF NET PREMIUMS AND CASH VALUE
ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Owner
indicates how Net Premiums are to be allocated among the Divisions of the
Separate Account, to the General Account (if available), or both. For each
Division chosen, the minimum percentage that may be allocated to a Division
is 5% of the Net Premium, and fractional percentages may not be used.
Certain other restrictions apply to allocations made to the General Account
(see General Account). For policies issued with an allowable percentage to
the General Account of more than 5%, the minimum percentage is 5%, and
fractional percentages may not be used.
The allocation for future Net Premiums may be changed without charge at any
time by providing notice to the Company. Any change in allocation will take
effect immediately upon receipt by the Company of written notice. No charge
is imposed for changing the allocations of future premiums. The initial
allocation will be shown on the application which is attached to the Policy.
The Company may at any time modify the maximum percentage of future Net
Premiums that may be allocated to the General Account.
During the period from the Issue Date to the end of the Right to Examine
Policy Period (See Policy Rights - Right to Examine Policy), Net Premiums
will automatically be allocated to the Division that invests in the Money
Market Fund of Capital Company. When this period expires, the Policy's Cash
Value in that Division will be transferred to the Divisions of the Separate
Account and to the General Account (if available) in accordance with the
allocation requested in the application for the Policy, or any allocation
instructions received subsequent to receipt of the application. Net Premiums
received after the Right to Examine Policy Period will be allocated according
to the allocation instructions most recently received by the Company unless
otherwise instructed for that particular premium receipt.
19
<PAGE> 27
The Policy's Cash Value may also be transferred between Divisions of the
Separate Account, and, if the General Account is available under the Policy,
between those Divisions and the General Account. (See Policy Rights -
Transfers.)
The value of amounts allocated to Divisions of the Separate Account will vary
with the investment performance of the chosen Divisions and the Owner bears
the entire investment risk. This will affect the Policy's Cash Value, and
may affect the death benefit as well. Owners should periodically review
their allocations of Net Premiums and the Policy's Cash Value in light of
market conditions and their overall financial planning requirements.
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike conventional whole life insurance policies, the failure to
make a premium payment following the initial premium will not itself cause a
Policy to lapse. Lapse will occur when the Cash Surrender Value is
insufficient to cover the monthly deduction, and a grace period expires
without a sufficient payment being made.
The grace period, which is 62 days, begins on the Monthly Anniversary on
which the Cash Surrender Value becomes insufficient to meet the next monthly
deduction. The Company will notify the Owner at the beginning of the grace
period by mail addressed to the last known address on file with the Company.
The notice to the Owner will indicate the amount of additional premium that
must be paid. The amount of the premium required to keep the Policy in force
will be the amount to cover the outstanding monthly deductions and premium
expense charges. (See Charges and Deductions - Monthly Deduction.) If the
Company does not receive the required amount within the grace period, the
Policy will lapse and terminate without Cash Value.
If the Insured dies during the grace period, any overdue monthly deductions
will be deducted from the death benefit otherwise payable.
REINSTATEMENT. The Owner may reinstate a lapsed Policy by written
application any time within five years after the date of lapse and before the
Maturity Date. Reinstatement is subject to the following conditions:
1. Evidence of the insurability of the Insured satisfactory to the
Company (including evidence of insurability of any person covered by a
rider to reinstate the rider).
2. Payment of a premium that, after the deduction of premium expense
charges, is large enough to cover: (a) the monthly deductions due at
the time of lapse, and (b) two times the monthly deduction due at the
time of reinstatement.
3. Payment or reinstatement of any Indebtedness. Any Indebtedness
reinstated will cause Cash Value of an equal amount also to be
reinstated. Any loan interest due and unpaid on the Policy Anniversary
prior to reinstatement must be repaid at the time of reinstatement.
Any loan paid at the time of reinstatement will cause an increase in
Cash Value equal to the amount to be reinstated.
The Policy cannot be reinstated if it has been surrendered.
The amount of Cash Value on the date of reinstatement will be equal to the
amount of any Policy Loan reinstated, increased by the Net Premiums paid at
reinstatement, any Policy Loan paid at the time of reinstatement, and the
amount of any surrender charge paid at the time of lapse. The Insured must
be alive on the date the Company approves the application for reinstatement.
If the Insured is not then alive, such approval is void and of no effect.
The effective date of reinstatement will be the date the Company approves the
application for reinstatement. There will be a full monthly deduction for
the Policy Month which includes that date. (See Charges and
Deductions-Monthly Deduction.)
The surrender charge in effect at the time of reinstatement will equal the
surrender charge in effect at the time of lapse.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate the
Company for providing the insurance benefits set forth in the Policy and any
additional benefits added by rider, administering the Policies, incurring
expenses in distributing the Policies, and assuming certain risks in
connection with the Policy.
PREMIUM EXPENSE CHARGES
Prior to allocation of Net Premiums, premium payments will be reduced by
premium expense charges consisting of a sales charge and a charge for
20
<PAGE> 28
premium taxes. The premium payment less the premium expense charge equals the
Net Premium.
SALES CHARGE. A sales charge not to exceed 5% of each premium payment will
be deducted from each premium payment to partially compensate the Company for
expenses incurred in distributing the Policy and any additional benefits
provided by riders. The Company currently intends to deduct a sales charge
of 5% in Policy Years one through ten and 2.25% in Policy Years past Policy
Year ten. The expenses covered by the sales charge include agent sales
commissions, the cost of printing Prospectuses and sales literature, and any
advertising costs. Where Policies are issued to Insureds with higher
mortality risks or to Insureds who have selected additional insurance
benefits, a portion of the amount deducted for sales charge is used to pay
distribution expenses and other costs associated with these additional
coverages. No increase in this sales charge will occur that would result in
an increase in the sales charge percentage deducted in any previous Policy
year.
A Contingent Deferred Sales Charge is also imposed under certain
circumstances for expenses incurred in distributing the Policies. That
charge is discussed below.
To the extent that sales expenses are not recovered from the sales charge and
the surrender charge, those expenses may be recovered from other sources,
including the mortality and expense risk charge described below.
PREMIUM TAXES. Various states and subdivisions impose a tax on premiums
received by insurance companies. Premium taxes vary from state to state. A
deduction of 2.5% of the premium is taken from each premium payment for these
taxes. The deduction represents an amount the Company considers necessary to
pay the premium taxes imposed by the states and any subdivisions thereof.
MONTHLY DEDUCTION
Charges will be deducted monthly from the Cash Value of each Policy ("the
monthly deduction") to compensate the Company for (a) certain administrative
costs; (b) the cost of insurance; and (c) the cost of optional benefits added
by rider. The monthly deduction will be taken on the Investment Start Date
and on each Monthly Anniversary. It will be allocated among the General
Account and each Division of the Separate Account in the same proportion that
a Policy's Cash Value in the General Account and the Policy's Cash Value in
each Division bear to the total Cash Value of the Policy, less the Cash Value
in the Loan Account, on the date the deduction is taken. Because portions of
the monthly deduction, such as the cost of insurance, can vary from month to
month, the monthly deduction itself can vary in amount from month to month.
MONTHLY ADMINISTRATIVE CHARGE. The Company has responsibility for the
administration of the Policies and the Separate Account. Administrative
expenses include premium billing and collection, record keeping, processing
death benefit claims, cash surrenders, partial withdrawals, Policy changes,
and reporting and overhead costs, processing applications, and establishing
Policy records. As reimbursement for administrative expenses related to the
maintenance of each Policy and the Separate Account, the Company assesses a
monthly administration charge from each Policy. This charge is $4 per month
for all Policy Months. These charges are guaranteed not to increase while
the Policy is in force. The Company does not anticipate that it will make
any profit on the monthly administrative charge.
The Company may administer the Policy itself, or the Company may purchase
administrative services from such sources (including affiliates) as may be
available. Such services will be acquired on a basis which, in the Company's
sole discretion, affords the best services at the lowest cost. The Company
reserves the right to select a company to provide services which the Company
deems, in its sole discretion, is the best able to perform such services in a
satisfactory manner even though the costs for such services may be higher
than would prevail elsewhere.
COST OF INSURANCE. The cost of insurance is deducted on each Monthly
Anniversary for the following Policy Month. Because the cost of insurance
depends upon a number of variables, the cost will vary for each Policy Month.
The cost of insurance is determined separately for the initial Face Amount
and for any subsequent increases in Face Amount. The Company will determine
the cost of insurance charge by multiplying the applicable cost of insurance
rate or rates by the net amount at risk (defined below) for each Policy
Month.
The cost of insurance rates are determined at the beginning of each Policy
Year for the initial Face Amount and each increase in Face Amount. The rates
will be based on the Attained Age, duration, rate class, and sex (except for
Policies sold in Montana, (See Unisex Requirements Under Montana Law) of the
Insured at issue or the date of an increase in Face Amount. The cost of
insurance rates
21
<PAGE> 29
generally increase as the Insured's Attained Age increases. The rate class of
an Insured also will affect the cost of insurance rate. For the initial Face
Amount, the Company will use the rate class on the Issue Date. For each
increase in Face Amount, other than one caused by a change in the death benefit
option, the Company will use the rate class applicable to that increase. If
the death benefit equals a percentage of Cash Value, an increase in Cash Value
will cause an automatic increase in the death benefit. The rate class for such
increase will be the same as that used for the most recent increase that
required proof of insurability.
The Company currently places Insureds into a preferred rate class, a standard
rate class, or into rate classes involving a higher mortality risk. The
degree of underwriting imposed may vary from full underwriting, to simplified
issue underwriting, and should it become available in the future, to
guaranteed issue underwriting.
Actual cost of insurance rates may change and the actual monthly cost of
insurance rates will be determined by the Company based on its expectations
as to future mortality experience. However, the actual cost of insurance
rates will not be greater than the guaranteed cost of insurance rates set
forth in the Policy. For fully underwritten and simplified issue Policies
which are not in a substandard risk class, the guaranteed cost of insurance
rates are equal to 100% of the rates set forth in the male/female 1980 CSO
Mortality Tables (1980 CSO Table A and 1980 CSO Table G), age nearest
birthday. Higher rates apply if the Insured is determined to be in a
substandard risk class.
In two otherwise identical Policies, an Insured in the preferred rate class
will have a lower cost of insurance than an Insured in a rate class involving
higher mortality risk. For rate classes other than the guaranteed issue rate
class, each rate class is also divided into two categories: smokers and
nonsmokers. Nonsmoker Insureds will generally incur a lower cost of
insurance than similarly situated Insureds who smoke. (Insureds under
Attained Age 20 are automatically assigned to the smoker rate class.)
Policies issued with simplified underwriting or guaranteed issue, if it would
become available in the future, will in general incur a higher cost of
insurance than Policies issued under full underwriting. Guaranteed issue
Policies will in general incur the highest cost of insurance rates.
The net amount at risk for a Policy Month is (a) the death benefit at the
beginning of the Policy Month divided by 1.0032737 (which reduces the net
amount at risk, solely for purposes of computing the cost of insurance, by
taking into account assumed monthly earnings at an annual rate of 4%), less
(b) the Cash Value at the beginning of the Policy Month. If there is an
increase in the Face Amount, a net amount at risk will be calculated
separately for the initial Face Amount and for each increase in Face Amount.
If Death Benefit Option A or Death Option C is in effect, for purposes of
determining the net amounts at risk for the initial Face Amount and for each
increase in Face Amount, Cash Value will first be considered a part of the
initial Face Amount. If the Cash Value is greater than the initial Face
Amount, the excess Cash Value will then be considered a part of each increase
in order, starting with the first increase. If Death Benefit Option B is in
effect, the net amount at risk will be determined separately for the initial
Face Amount and for each increase in Face Amount. In calculating the cost of
insurance charges, the cost of insurance rate for a Face Amount is applied to
the net amount at risk for that Face Amount.
ADDITIONAL INSURANCE BENEFITS. The monthly deduction will include charges
for any additional benefits provided by rider. (See General Matters -
Additional Insurance Benefits.)
CONTINGENT DEFERRED SALES CHARGE ("CDSC")
For a period of up to ten years after the Issue Date, the Company will impose
a CDSC upon surrender or lapse of the Policy, upon a partial withdrawal, or
upon a pro rata surrender. The amount of the charge assessed will depend
upon a number of factors, including the type of event (a full surrender,
lapse, or partial withdrawal), the amount of any premium payments made under
the Policy prior to the event,, and the number of Policy Years having elapsed
since the Policy was issued.
The Contingent Deferred Sales Charge compensates the Company for expenses
relating to the distribution of the Policy, including agents' commissions,
advertising, and the printing of the Prospectus and sales literature.
CALCULATION OF CHARGE. If a Policy is surrendered, the charge will be the
Contingent Deferred Sales Charge Percentage multiplied by 4.0% of premiums
paid since issue.
The Contingent Deferred Sales Charge Percentage is shown in the following
table.
22
<PAGE> 30
<TABLE>
CONTINGENT DEFERRED SALES CHARGE PERCENTAGE TABLE
<CAPTION>
IF SURRENDER OR LAPSE THE FOLLOWING PERCENTAGE
OCCURS IN THE LAST MONTH OF THE SURRENDER CHARGE
OF POLICY YEAR:<F*> PAYABLE WILL BE:<F**>
<S> <C>
1 through 5 100%
6 80%
7 60%
8 40%
9 20%
10 and later 0%
<FN>
<F*>In addition, the percentages reduce equally for each Policy
Month during the years shown. For example, during the seventh
year, the percentage reduces equally each month from 80% at the
end of the sixth Year to 60% at the end of the seventh Year.
<F**>For male issue ages 75 through 80 and female issue ages 77
through 80, the Contingent Deferred Sales Charge Percentage
grades to 0% in less than ten years.
</TABLE>
CHARGE ASSESSED UPON PARTIAL WITHDRAWALS OR PRO RATA SURRENDER. The amount
of the Contingent Deferred Sales Charge deducted upon a partial withdrawal or
pro rata surrender will equal a fraction of the charge that would be deducted
if the Policy were surrendered at that time. The fraction will be determined
by dividing the amount of the withdrawal of cash by the Cash Value before the
withdrawal and multiplying the result by the charge. Immediately after a
withdrawal, the Policy's remaining surrender charge will equal the amount of
the surrender charge immediately before the withdrawal less the amount
deducted in connection with the withdrawal.
REDUCTION OF CHARGES. The Policy is available for purchase by individuals,
corporations, and other institutions. For certain individuals and certain
corporate or other group or sponsored arrangements purchasing one or more
Policies, General American may waive or reduce the amount of the Sales
Charge, Contingent Deferred Sales Charge, monthly administrative charge, or
other charges where the expenses associated with the sale of the Policy or
Policies or the underwriting or other administrative costs associated with
the Policy or Policies are reduced.
Sales, underwriting, or other administrative expenses may be reduced for
reasons such as expected economies resulting from a corporate purchase or a
group or sponsored arrangement; from the amount of the initial premium
payment or payments; or from the amount of projected premium payments.
General American will determine in its discretion if, and in what amount, a
reduction is appropriate. The Company may modify its criteria for
qualification for reduction of charges as experience is gained, subject to
the limitation that such reductions will not be unfairly discriminatory
against the interests of any Owner.
SEPARATE ACCOUNT CHARGES
MORTALITY AND EXPENSE RISK CHARGE. General American will deduct a daily
charge from the Separate Account at the rate of .0019111% of the average net
assets of each Division of the Separate Account which equals an effective
annual rate of .70% of those net assets. This deduction is guaranteed not to
increase while the Policy is in force. General American may realize a profit
from this charge.
The mortality risk assumed by General American is that Insureds may die
sooner than anticipated and that therefore General American will pay an
aggregate amount of death benefits greater than anticipated. The expense
risk assumed is that expenses incurred in issuing and administering the
Policy will exceed the amounts realized from the administrative charges
assessed against the Policy.
FUND EXPENSES. The value of the net assets of the Separate Account will
reflect the investment advisory fee and other expenses incurred by the
underlying investment companies. See the prospectuses for the respective
Funds for a description of investment advisory fees and other expenses
incurred by the Capital Company, RIF, VIP, VIP II, and Van Eck.
No charges are currently made to the Separate Account for Federal, state, or
local taxes that the Company incurs which may be attributable to such
Separate Account or to the Policy. The Company may make such a charge for
any such taxes or economic burden resulting from the application of the tax
laws that it determines to be properly attributable to the Separate Account
or to the Policy. (See Federal Tax Matters.)
DIVIDENDS
The Policy is a participating Policy which is entitled to a share, if any, of
the divisible surplus of the Company as determined each year and apportioned
to it. This surplus will be distributed as a dividend payable annually on
the January Monthly Anniversary. If the Insured dies after the dividend
23
<PAGE> 31
has been determined, the Company will pay any unpaid dividend to the
Beneficiary.
Dividends under participating policies may be described as refunds of
premiums which adjust the cost of a Policy to the actual level of costs
emerging over time after the issue of the Policies. Both Federal and state
law recognize that dividends are generally considered to be a refund of a
portion of the premium paid and therefore are not treated as income for
Federal or state income tax purposes. However, depending on the dividend
payment option chosen (see below), dividends may have tax consequences to
Owners. Counsel or other competent tax advisors should be consulted for more
complete information.
Dividend illustrations published at the time of issue of a Policy reflect the
actual recent experience of the issuing insurance company with respect to
factors such as interest, mortality, and expenses. State law generally
prohibits a company from projecting or estimating future results. State law
also requires that dividends must be based on surplus, after setting aside
certain necessary amounts, and that such surplus must be apportioned
equitably among participating policies. In other words, in principle and by
statute, dividends must be based on actual experience and cannot be
guaranteed at issue of a Policy.
Each year the Company's actuary analyzes the current and recent past
experience and compares it to the assumptions used in determining the premium
rates at the time of issue. Some of the more important data studied includes
mortality and lapse rates, investment yield in the General Account, and
actual expenses incurred in administering the Policy. Such data is then
allocated to each dividend class, e.g., by year of issue, age and plan. The
actuary then determines what dividends can be equitably apportioned to each
Policy class and makes a recommendation to the Company's Board of Directors
("the Board). The Board, which has the ultimate authority to declare
dividends, will vote the amount of surplus to be apportioned to each Policy
class, thereby, authorizing the distribution of the annual dividend.
An Owner may choose one of the following dividend options. Dividends will be
credited under the chosen option until the Owner changes it. If the Owner
does not choose an option, the Company will credit the dividend under
Dividend Option B until such time as the Owner requests in writing a
different option.
DIVIDEND OPTION A: Cash. The amount of the dividend will be paid in cash.
DIVIDEND OPTION B: Increase Cash Value. The amount of the dividend will be
added to the Policy's Cash Value on the date of the dividend payment. The
Cash Value will be increased by the amount of the dividend. The dividend
will be allocated to the General Account (if available) and the Divisions of
the Separate Account according to the current allocation of the Net Premium.
THE GENERAL ACCOUNT
Because of exemptive and exclusionary provisions, interests in the General
Account have not been registered under the Securities Act of 1933 and the
General Account has not been registered as an investment company under the
1940 Act. Accordingly, neither the General Account nor any interests therein
are subject to the provisions of these Acts and, as a result, the staff of
the SEC has not reviewed the disclosure in this Prospectus relating to the
General Account. The disclosure regarding the General Account may, however,
be subject to certain generally applicable provisions of the Federal
securities laws relating to the accuracy and completeness of statements made
in prospectuses.
GENERAL DESCRIPTION
The General Account consists of all assets owned by General American other
than those in the Separate Account and other separate accounts. Subject to
applicable law, General American has sole discretion over the investment of
the assets of the General Account.
At issue, General American will determine the maximum percentage of the
non-borrowed Cash Value that may be allocated, either initially or by
transfer, to the General Account. The ability to allocate Net Premiums or to
transfer Cash Value to the General Account may not be made available, in the
Company's discretion, under certain Policies. Further, the option may be
limited with respect to some Policies. The Company may, from time to time,
adjust the extent to which premiums or Cash Value may be allocated to the
General Account (the "maximum allocation percentage"). Such adjustments may
not be uniform as to all Policies. General American may at any time modify
the General Account maximum allocation percent. Subject to this maximum, an
Owner may elect to allocate Net Premiums to the General Account, the Separate
Account, or both. Subject to this maximum, the Owner may also transfer Cash
Value from the
24
<PAGE> 32
Divisions of the Separate Account to the General Account, or from the General
Account to the Divisions of the Separate Account. The allocation of Net
Premiums or the transfer of Cash Value to the General Account does not entitle
an Owner to share in the investment experience of the General Account.
Instead, General American guarantees that Cash Value allocated to the General
Account will accrue interest at a rate of at least 4%, compounded annually,
independent of the actual investment experience of the General Account.
The Loan Account is part of the General Account.
THE POLICY
This Prospectus describes a flexible premium variable life insurance policy.
This Prospectus is generally intended to serve as a disclosure document only
for the aspects of the Policy relating to the Separate Account. For complete
details regarding the General Account, see the Policy itself.
GENERAL ACCOUNT BENEFITS
If the Owner allocates all Net Premiums only to the General Account and makes
no transfers, partial withdrawals, pro rata surrenders, or Policy Loans, the
entire investment risk will be borne by General American, and General
American guarantees that it will pay at least a minimum specified death
benefit. The Owner may select Death Benefit Option A, B or C under the
Policy and may change the Policy's Face Amount subject to satisfactory
evidence of insurability.
GENERAL ACCOUNT CASH VALUE
Net Premiums allocated to the General Account are credited to the Cash Value.
General American bears the full investment risk for these amounts and
guarantees that interest will be credited to each Owner's Cash Value in the
General Account at a rate of no less than 4% per year, compounded annually.
General American may, AT ITS SOLE DISCRETION, credit a higher rate of
interest, although it is not obligated to credit interest in excess of 4% per
year, and might not do so. ANY INTEREST CREDITED ON THE POLICY'S CASH VALUE
IN THE GENERAL ACCOUNT IN EXCESS OF THE GUARANTEED MINIMUM RATE OF 4% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF GENERAL AMERICAN. THE
POLICY OWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE
GUARANTEED MINIMUM RATE OF 4% PER YEAR. If excess interest is credited, a
different rate of interest may be applied to the Cash Value in the Loan
Account. The Cash Value in the General Account will be calculated on each
Monthly Anniversary of the Policy.
General American guarantees that, on each Valuation Date, the Cash Value in
the General Account will be the amount of the Net Premiums allocated or Cash
Value transferred to the General Account, plus interest at the rate of 4% per
year, plus any excess interest which General American credits and any amounts
transferred into the General Account, less the sum of all Policy charges
allocable to the General Account and any amounts deducted from the General
Account in connection with partial withdrawals, pro rata surrenders,
surrender charges or transfers to the Separate Account.
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS
After the first Policy Year and prior to the Maturity Date, a portion of Cash
Value may be withdrawn from the General Account or transferred from the
General Account to the Separate Account. A maximum total of four partial
withdrawals and transfers from the General Account is permitted in a Policy
Year. A partial withdrawal, net of any applicable surrender charges, and any
transfer must be at least $500 or, the Policy's entire Cash Value in the
General Account if less than $500. No amount may be withdrawn from the
General Account that would result in there being insufficient Cash Value to
meet any surrender charges that would be payable immediately following the
withdrawal upon the surrender of the remaining Cash Value of the Policy. The
total amount of transfers and withdrawals in a Policy Year may not exceed a
Maximum Amount equal to the greater of (a) 25% of a Policy's Cash Surrender
Value in the General Account at the beginning of the Policy Year, (b) $5,000,
or (c) the previous Policy Year's Maximum Amount (not to exceed the total
Cash Surrender Value of the Policy).
Transfers to the General Account are limited by the maximum allocation
percentage (described below) in effect for a Policy at the time a transfer
request is made.
Policy Loans may also be made from the Policy's Cash Value in the General
Account.
Loans and withdrawals from the General Account may have Federal income tax
consequences. (See Federal Tax Matters.)
25
<PAGE> 33
No transfer charge currently is imposed on transfers to or from the General
Account. However, such a charge may be imposed in the future. General
American may revoke or modify the privilege of transferring amounts to or
from the General Account at any time. Partial withdrawals and pro rata
surrenders will result in the imposition of the applicable surrender charge.
Transfers, surrenders, partial withdrawals and pro rata surrenders payable
from the General Account and the payment of Policy Loans allocated to the
General Account may, subject to certain limitations, be delayed for up to six
months. However, if payment is deferred for 30 days or more, General
American will pay interest at the rate of 2.5% per year for the period of the
deferment. Amounts from the General Account used to pay premiums on policies
with General American will not be delayed.
GENERAL MATTERS
POSTPONEMENT OF PAYMENTS FROM THE SEPARATE ACCOUNT
The Company usually pays amounts payable on partial withdrawal, pro rata
surrender, surrender, or Policy Loan allocated to the Separate Account
Divisions within seven days after written notice is received. Payment of any
amount payable from the Divisions of the Separate Account upon surrender,
partial withdrawals, pro rata surrender, death of Insured, or the Maturity
Date, as well as payments of a Policy Loan and transfers, may be postponed
whenever: (1) the New York Stock Exchange is closed other than customary
weekend and holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the SEC; (2) the SEC by order permits
postponement for the protection of Owners; or (3) an emergency exists, as
determined by the SEC, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Separate Account's net assets. The Company may defer payment of
the portion of any Policy Loan from the General Account for not more than six
months.
Payments under the Policy of any amounts derived from premiums paid by check
may be delayed until the Owner's check has cleared the bank upon which it
was drawn.
THE CONTRACT
The Policy, the attached application, any riders, endorsements, any
application for an increase in Face Amount, and any application for
reinstatement constitute the entire contract. All statements made by the
Insured in the application and any supplemental applications can be used to
contest a claim or the validity of the Policy. Any change to the Policy must
be in writing and approved by the President, a Vice President, or the
Secretary of the Company. No agent has the authority to alter or modify any
of the terms, conditions, or agreements of the Policy or to waive any of its
provisions.
CONTROL OF POLICY
The Insured is the Owner of the Policy unless another person or entity is
shown as the Owner in the application. Ownership may be changed, however, as
described below. The Owner is entitled to all rights provided by the Policy,
prior to its Maturity Date. After the Maturity Date, the Owner cannot change
the payee nor the mode of payment, unless otherwise provided in the Policy.
Any person whose rights of ownership depend upon some future event does not
possess any present rights of ownership. If there is more than one Owner at
a given time, all Owners must exercise the rights of ownership by joint
action. If the Owner dies, and the Owner is not the Insured, the Owner's
interest in the Policy becomes the property of his or her estate unless
otherwise provided. Unless otherwise provided, the Policy is jointly owned
by all Owners named in the Policy or by the survivors of those joint Owners.
Unless otherwise stated in the Policy, the final Owner is the estate of the
last joint Owner to die. The Company may rely on the written request of any
trustee of a trust which is the Owner of the Policy, and the Company is not
responsible for the proper administration of any such trust.
BENEFICIARY
The Beneficiary(ies) is (are) the person(s) specified in the application or
by later designation. Unless otherwise stated in the Policy, the Beneficiary
has no rights in a Policy before the death of the Insured. If there is more
than one Beneficiary at the death of the Insured, each Beneficiary will
receive equal payments unless otherwise provided by the Owner. If no
Beneficiary is living at the death of the Insured, the proceeds will be
payable to the Owner or, if the Owner is not living, to the Owner's estate.
The Company permits the designation of various types of trusts as
Beneficiary(ies), including trusts for minor beneficiaries, trusts under a
will, and trusts under a separate written agreement. An Owner is also
permitted to designate several types of beneficiaries, including business
beneficiaries.
26
<PAGE> 34
CHANGE OF OWNER OR BENEFICIARY
The Owner may change the ownership and/or Beneficiary designation by written
request in a form acceptable to the Company at any time during the Insured's
lifetime subject to any restrictions stated in the Policy and this
Prospectus. The Company may require that the Policy be returned for
endorsement of any change. If acceptable to us, the change will take effect
as of the date the request is signed, whether or not the Insured is living
when the request is received at the Company's Home Office. The Company is
not liable for any payment made or action taken before the Company received
the written request for change. If the Owner is also a Beneficiary of the
Policy at the time of the Insured's death, the Owner may, within sixty days
of the Insured's death, designate another person to receive the Policy
proceeds. Any change will be subject to any assignment of the Policy or any
other legal restrictions.
POLICY CHANGES
The Company reserves the right to limit the number of changes to a Policy to
one per Policy Year and to restrict changes in the first Policy Year.
Currently, only one change is permitted during any Policy Year and no change
may be made during the first Policy Year. For this purpose, changes include
increases or decreases in Face Amount and changes in the death benefit
option. No change will be permitted, if as a result, the Policy would fail
to satisfy the definition of life insurance in Section 7702 of the Internal
Revenue Code or any applicable successor provision.
CONFORMITY WITH STATUTES
If any provision in a Policy is in conflict with the laws of the state
governing the Policy, the provision will be deemed to be amended to conform
to such laws. In addition, the Company reserves the right to change the
Policy if it determines that a change is necessary to cause this Policy to
comply with, or give the Owner the benefit of any Federal or state statute,
rule, or regulation, including, but not limited to, requirements of the
Internal Revenue Code, or its regulations or published rulings.
CLAIMS OF CREDITORS
To the extent permitted by law, neither the Policy nor any payment under it
will be subject to the claims of creditors or to any legal process.
INCONTESTABILITY
The Policy is incontestable after it has been in force for two years from the
Issue Date during the lifetime of the Insured. An increase in Face Amount or
addition of a rider after the Issue Date is incontestable after such increase
or addition has been in force for two years from its effective date during
the lifetime of the Insured. Any reinstatement of a Policy is incontestable
only after it has been in force during the lifetime of the Insured for two
years after the effective date of the reinstatement.
ASSIGNMENT
The Company will be bound by an assignment of a Policy only if: (a) the
assignment is in writing; (b) the original assignment instrument or a
certified copy thereof is filed with the Company at its Home Office; and (c)
the Company returns an acknowledged copy of the assignment instrument to the
Owner. The Company is not responsible for determining the validity of any
assignment. Payment of Policy proceeds is subject to the rights of any
assignee of record. If a claim is based on an assignment, the Company may
require proof of the interest of the claimant. A valid assignment will take
precedence over the claim of any Beneficiary.
SUICIDE
Suicide within two years of the Issue Date is not covered by the Policy. If
the Insured dies by suicide, while sane or insane, within two years from the
Issue Date (or within the maximum period permitted by the laws of the state
in which the Policy was delivered, if less than two years), the amount
payable will be limited to premiums paid, less any partial withdrawals and
outstanding Indebtedness subject to certain limitations, if the Insured,
while sane or insane, dies by suicide within two years after the effective
date of an increase in Face Amount, the death benefit for that increase will
be limited to the amount of the monthly deductions for the increase.
If the Insured is a Missouri citizen when the Policy is issued, this
provision does not apply on the Issue Date of the Policy, or on the effective
date of any increase in Face Amount, unless the Insured intended suicide when
the Policy, or the increase in Face Amount, was applied for.
MISSTATEMENT OF AGE OR SEX AND CORRECTIONS
If the age or sex (except any Policies sold in Montana; see Unisex
Requirements Under Montana Law) of the Insured has been misstated in the
27
<PAGE> 35
application, the amount of the death benefit will be that which the most
recent cost of insurance charge would have purchased for the correct age and
sex.
Any payment or Policy changes made by the Company in good faith, relying on
its records or evidence supplied with respect to such payment, will fully
discharge the Company's duty. The Company reserves the right to correct any
errors in the Policy.
CHANGE IN RATE CLASS
Sixty days prior to the Policy Anniversary on which the Insured attains age
20, a letter will be sent to the Owner notifying the Owner of the opportunity
to apply for a change in the Insured's Rate Class from Smoker to Non-Smoker.
Upon receipt of the forms requested for a Non-Smoker risk classification and
proof satisfactory to the Company, the Rate Class will be Non-Smoker. If the
Owner does not apply for a Rate Class change, the Rate Class will remain
Smoker.
ADDITIONAL INSURANCE BENEFITS
Subject to certain requirements, one or more of the following additional
insurance benefits may be added to a Policy by rider. The descriptions below
are intended to be general; the terms of the Policy riders providing the
additional benefits may vary from state to state, and the Policy should be
consulted. The cost of any additional insurance benefits which require
additional charges will be deducted as part of the monthly deduction from the
Policy's Cash Value. (See Charges and Deductions - Monthly Deduction.)
Certain restrictions may apply and are described in the applicable rider. An
insurance agent authorized to sell the Policy can describe these extra
benefits further. Samples of the provisions are available from General
American upon written request.
WAIVER OF MONTHLY DEDUCTION RIDER. Provides for the waiver of the monthly
deductions while the Insured is totally disabled, subject to certain
limitations described in the rider. The Insured must have become disabled
after age 5 and before age 65.
WAIVER OF SPECIFIED PREMIUM RIDER. Provides for crediting the Policy's Cash
Value with a specified monthly premium while the Insured is totally disabled.
The monthly premium selected at issue is not guaranteed to keep the Policy in
force. The Insured must have become disabled after age 5 and before age 65.
INCREASING BENEFIT OPTION RIDER. Allows the Owner to increase the Face
Amount of the Policy without evidence of insurability. The increase is made
on each Policy Anniversary.
RECORDS AND REPORTS
The Company will maintain all records relating to the Separate Account and
will mail to the Owner once each Policy Year, at the last known address of
record, a report which shows the current Policy values, premiums paid,
deductions made since the last report, and any outstanding Policy Loans. The
Owner will also be sent a periodic report for the Capital Company, RIF, VIP,
VIP II, and Van Eck and a list of the securities held in each Fund. Receipt
of premium payments, transfers, partial withdrawals, pro rata surrenders,
Policy Loans, loan repayments, changes in death benefit options, increases or
decreases in Face Amount, surrenders and reinstatements will be confirmed
promptly following each transaction.
An Owner may request in writing a projection of illustrated future Cash
Surrender Values and death benefits. This projection will be furnished by
the Company for a nominal fee which will not exceed $25.
DISTRIBUTION OF THE POLICIES
The Policy will be sold by individuals who, in addition to being licensed as
life insurance agents for the Company, are also registered representatives of
Walnut Street Securities, Inc. ("Walnut Street"), the principal underwriter
of the Policy, or of broker-dealers who have entered into written sales
agreements with Walnut Street. Walnut Street was incorporated under the laws
of Missouri in 1984 and is a wholly-owned subsidiary of General American
Holding Company, which is, in turn, a wholly-owned subsidiary of the
Company. Walnut Street is registered with the SEC under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. No director or officer of Walnut
Street owns any units in the Separate Account.
Writing agents will receive commissions based on a commission schedule and
rules. Currently, agent first-year commissions equal 7.50% of target
premiums and 2.00% of excess premium paid in Policy Year 1. In renewal
years, the agent commissions equal 4.0% of premiums paid in years 2 through
10. A 2.50% of premium service fee is paid after Policy year 10. For Policy
years after Policy Year 1, a commission of .20% of the average monthly Cash
Value for each Policy Year is paid. Reductions may be possible under the
circumstances
28
<PAGE> 36
outlined in the section entitled Reduction of Charges. General Agents receive
compensation which may be in part based on the level of agent commissions in
their agencies.
As principal underwriter for the Policies, Walnut Street received
$1,792,2101,666,078 in commission income on total premium payments of
$5,063,96715,453,957 in 19976. Walnut Street receives no administrative
fees, management fees, or other fee income from sales of the Policies.
The general agent commission schedules and rules differ for different types
of agency contracts.
FEDERAL TAX MATTERS
INTRODUCTION
The following summary provides a general description of the Federal income
tax considerations associated with the Policy and does not purport to be
complete or to cover all situations. This discussion is not intended as tax
advice. Counsel or other competent tax Advisors should be consulted for more
complete information. This discussion is based upon General American's
understanding of the present Federal income tax laws as they are currently
interpreted by the Internal Revenue Service. No representation is made as to
the likelihood of continuation of the present Federal income tax laws or of
the current interpretations by the Internal Revenue Service.
TAX STATUS OF THE POLICY
Section 7702 of the Internal Revenue Code of 1986, as amended (the "Code")
includes a definition of a life insurance contract for Federal tax purposes.
The Secretary of the Treasury (the "Treasury") issued proposed regulations
which specify what will be considered reasonable mortality charges under
Section 7702. Guidance as to how Section 7702 is to be applied is, however,
limited. If a Policy were determined not to be a life insurance contract for
purposes of Section 7702, such Policy would not provide most of the tax
advantages normally provided by a life insurance policy.
With respect to a Policy issued on a basis of a standard premium class or on
a guaranteed or simplified issue basis, while there is some uncertainty due
to the limited guidance under Section 7702, the Company believes that such a
Policy should meet the Section 7702 definition of a life insurance contract.
However, with respect to a Policy issued on a substandard basis (i.e., a
premium class involving higher than standard mortality risk), it is not clear
whether such a Policy would satisfy Section 7702, particularly if the Owner
pays the full amount of premiums permitted under the Policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
the Company will take whatever steps are appropriate and necessary to attempt
to cause such a Policy to comply with Section 7702, including possibly
refunding any premiums paid that exceed the limitations allowable under
Section 7702 (together with interest or other earnings on any such premiums
refunded as required by law). For these reasons, the Company reserves the
right to modify the Policy as necessary to attempt to qualify it as a life
insurance contract under Section 7702.
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Separate Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for Federal tax purposes. The Separate Account, intends
to comply with the diversification requirements prescribed by the Treasury in
Regulation Section 1.817-1.817-5, which affect how assets may be invested.
Although General American does not control Capital Company, RIF, VIP, VIP II,
or Van Eck, it has entered into agreements, which require these investment
companies to be operated in compliance with the requirements prescribed by
the Treasury.
The IRS has stated in published rulings that a variable contract owner will
be considered the owner of separate account assets, for federal income tax
purposes, if the contract owner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the assets.
If that were to be determined to be the case, income and gains from the
separate account assets would be includible in the variable contract owner's
gross income. The Treasury Department has also announced, in connection with
the issuance of regulations concerning diversification, that those
regulations "do not provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may cause
the investor (i.e., the Owner), rather than the insurance company, to be
treated as the owner of the assets in the account." This announcement also
stated that guidance would be issued by way of regulations or rulings on the
"extent to which policyholders may direct their investments to particular
subaccounts without being treated as owners of the underlying assets."
29
<PAGE> 37
The ownership rights under the Policy are different in certain respects from
those described by the IRS in rulings in which it was determined that policy
owners were not owners of separate account assets. For example, the Owner
has additional flexibility in allocating Premium payments and Policy Values.
These differences could result in an Owner being treated as the owner of a
pro rata portion of the assets of the Separate Account. In addition, the
Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The Company therefore reserves the right to modify the Policy as
necessary to attempt to prevent an Owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
1. TAX TREATMENT OF POLICY BENEFITS. In general, the Company believes that
the proceeds and Cash Value increases of a Policy should be treated in a
manner consistent with a fixed-benefit life insurance policy for Federal
income tax purposes. Thus, the death benefit under the Policy should be
excludable from the gross income of the Beneficiary under Section 101(a)(1)
of the Code, unless a transfer for value (generally a sale of the policy) has
occurred.
Many changes or transactions involving a Policy may have tax consequences,
depending on the circumstances. Such changes include, but are not limited
to, the exchange of the Policy, a change of the Policy's Face Amount, a
Policy Loan, an additional premium payment, a Policy lapse with an
outstanding Policy Loan, a partial withdrawal, or a surrender of the Policy.
In addition, Federal estate and state and local estate, inheritance, and
other tax consequences of ownership or receipt of Policy proceeds depend upon
the circumstances of each Owner or Beneficiary. A competent tax Advisor
should be consulted for further information.
A Policy may also be used in various arrangements, including non-qualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans, retiree medical benefit plans and others. The
tax consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if you are
contemplating the use of a Policy in any arrangement the value of which
depends in part on its tax consequences, you should be sure to consult a
qualified tax advisor regarding the tax attributes of the particular
arrangement.
Generally, the Owner will not be deemed to be in constructive receipt of the
Policy's Cash Value, including increments thereof, under the Policy until
there is a distribution. The tax consequences of distributions from, and
Policy Loans taken from or secured by, a Policy depend upon whether the
Policy is classified as a "modified endowment contract". However, upon a
complete surrender or lapse of any Policy, or when benefits are paid at such
a Policy's maturity date, if the amount received plus the amount of
outstanding Indebtedness exceeds the total investment in the Policy, the
excess will generally be treated as ordinary income subject to tax.
2. MODIFIED ENDOWMENT CONTRACTS. A policy may be treated as a modified
endowment contract depending upon the amount of premiums paid in relation to
the death benefit provided under such Policy. The premium limitation rules
for determining whether a Policy is a modified endowment contract are
extremely complex. In general, however, a Policy will be a modified
endowment contract if the accumulated premiums paid at any time during the
first seven Policy Years exceed the sum of the net level premiums which would
have been paid on or before such time if the Policy provided for paid-up
future benefits after the payment of seven level annual premiums.
In addition, if a Policy is "materially changed" it may cause such Policy to
be treated as a modified endowment contract. The material change rules for
determining whether a Policy is a modified endowment contract are also
extremely complex. In general, however, the determination of whether a
Policy will be a modified endowment contract after a material change
generally depends upon the relationship among the death benefit at the time
of such change, the Cash Value at the time of the change and the additional
premiums paid in the seven Policy Years starting with the date on which the
material change occurs.
Moreover, a life insurance contract received in exchange for a life insurance
contract classified as a modified endowment contract will also be treated as
a modified endowment contract. A reduction in a Policy's benefits may also
cause such Policy to become a modified endowment contract.
Due to the Policy's flexibility, classification of a Policy as a modified
endowment contract will depend upon the circumstances of each Policy. The
Company has, however, adopted administrative steps designed to protect an
Owner against the possibility that the Policy might become a modified
endowment
30
<PAGE> 38
contract. The Company believes the safeguards are adequate for most
situations, but it cannot provide complete assurance that a Policy will
not be classified as a modified endowment contract. At the time a premium is
credited which would cause the Policy to become a modified endowment
contract, the Company will notify the Owner that unless a refund of the
excess premium is requested by the Owner, the Policy will become a modified
endowment contract. The Owner will have 30 days after receiving such
notification to request the refund. The excess premium paid will be returned
to the Owner upon receipt by the Company of the refund request. The amount
to be refunded will be deducted from the Policy Cash Value in the Divisions
of the Separate Account and in the General Account in the same proportion as
the premium payment was allocated to such Divisions.
Accordingly, a prospective Owner should contact a competent tax advisor
before purchasing a Policy to determine the circumstances under which the
Policy would be a modified endowment contract. In addition, an Owner should
contact a competent tax Advisor before paying any additional premiums or
making any other change to, including an exchange of, a Policy to determine
whether such premium or change would cause the Policy (or the new Policy in
the case of an exchange) to be treated as a modified endowment contract.
3. DISTRIBUTIONS FROM POLICIES CLASSIFIED AS MODIFIED ENDOWMENT CONTRACT.
Policies classified as modified endowment contracts will be subject to the
following tax rules: First, all distributions, including distributions upon
surrender and benefits paid at maturity, from such a Policy are treated as
ordinary income subject to tax up to the amount equal to the excess (if any)
of the Cash Value immediately before the distribution over the investment in
the Policy (described below) at such time. Second, Policy Loans taken from,
or secured by, such a Policy, as well as due but unpaid interest thereon, are
treated as distributions from such a Policy and taxed accordingly. Third, a
10 percent additional income tax is imposed on the portion of any
distribution from, or Policy Loan taken from or secured by, such a Policy
that (a) is included in income, except where the distribution or Policy Loan
is made on or after the Owner attains age 59 1/2, (b) is attributable to the
Owner's becoming disabled, or (c) is part of a series of substantially equal
periodic payments for the life (or life expectancy) of the Owner or the joint
lives (or joint life expectancies) of the Owner and the Owner's Beneficiary.
4. DISTRIBUTIONS FROM POLICIES NOT CLASSIFIED AS MODIFIED ENDOWMENT
CONTRACT. Distributions from Policies not classified as a modified
endowment contracts are generally treated as first recovering the investment
in the Policy (described below) and then, only after the return of all such
investment in the Policy, as distributing taxable income. An exception to
this general rule occurs in the case of a decrease in the Policy's death
benefit (possibly including a partial withdrawal) or any other change that
reduces benefits under the Policy in the first 15 years after the Policy is
issued and that results in cash distribution to the Owner in order for the
Policy to continue complying with the Section 7702 definitional limits. Such
a cash distribution will be taxed in whole or in part as ordinary income (to
the extent of any gain in the Policy) under rules prescribed in Section 7702.
Policy Loans from, or secured by, a Policy that is not a modified endowment
contract are not treated as distributions. Instead. such loans are treated
as indebtedness of the Owner.
Upon a complete surrender or lapse of a Policy that is not a modified
endowment contract, or when benefits are paid at such a Policy's maturity
date, if the amount received plus the amount of indebtedness exceeds the
total investment in the Policy, the excess will generally be treated as
ordinary income subject to tax.
Neither distributions (including distributions upon surrender or lapse) nor
Policy Loans from, or secured by, a Policy that is not a modified endowment
contract are subject to the 10 percent additional income tax.
If a Policy which is not a modified endowment contract subsequently becomes a
modified endowment contract, then any distribution made from the Policy
within two years prior to the date of such change in status may become
taxable.
5. POLICY LOAN INTEREST. Generally, interest paid on any loan under a life
insurance Policy owned by an individual is not deductible. In addition,
interest on any loan under a life insurance Policy owned by a business
taxpayer on the life of any individual who is an officer of or is financially
interested in the business carried on by that taxpayer is deductible only
under certain very limited circumstances. An Owner should consult a
competent tax Advisor before deducting any loan interest.
6. INTEREST EXPENSE ON UNRELATED INDEBTEDNESS. Under provisions added to
the Code in 1997 for policies issued after June 8, 1997, if a business
31
<PAGE> 39
taxpayer owns or is the beneficiary of a Policy on the life of any individual
who is not an officer, director, employee, or 20 percent owner of the
business, and the taxpayer also has debt unrelated to the Policy, a portion
of the taxpayer's unrelated interest expense deductions may be lost. No
business taxpayer should purchase, exchange, or increase the death benefit
under a Policy on the life of any individual who is not an officer, director,
employee, or 20 percent owner of the business without first consulting a
competent tax Advisor.
7. INVESTMENT IN THE POLICY. Investment in the Policy means (i) the
aggregate amount of any premiums or other consideration paid for a Policy,
minus (ii) the aggregate amount received under the Policy which is excluded
from gross income of the Owner (except that the amount of any Policy Loan
from, or secured by, a Policy that is a modified endowment contract, to the
extent such amount is excluded from gross income, will be disregarded), plus
(iii) the amount of any Policy Loan from, or secured by, a Policy that is a
modified endowment contract to the extent that such amount is included in the
gross income of the Owner.
8. MULTIPLE POLICIES. All modified endowment contracts that are issued by
the Company (or its affiliates) to the same Owner during any calendar year
are treated as one modified endowment contract for purposes of determining
the amount includible in gross income under Section 72(e) of the Code.
9. POSSIBLE CHARGE FOR TAXES. At the present time, the Company makes no
charge to the Separate Account for any Federal, state, or local taxes (as
opposed to Premium Tax Charges which are deducted from premium payments) that
it incurs which may be attributable to such Separate Account or to the
Policies. The Company, however, reserves the right in the future to make a
charge for any such tax or other economic burden resulting from the
application of the tax laws that it determines to be properly attributable to
the Separate Account or to the Policies.
10. POSSIBLE CHANGES IN TAXATION. As of the date of this Prospectus, the
President's budget for fiscal year 1999 contains a number of proposals that
would adversely affect the Federal income tax treatment of life insurance
contracts. Of particular importance to owners of variable life insurance
contracts such as the Policy are two proposals under which, if adopted: (1)
the inside buildup of variable life insurance contracts like the Policy would
be taxed whenever cash values were reallocated among the available investment
options, for example, if the Periodic and Variance Rebalancing options
available under the Policy were used, and (2) it would no longer be possible
to exchange a variable life insurance contract tax free under Code section
1035. Moreover, it is always possible that any changes in the tax treatment
of life insurance contracts could be effective prior to the date of any new
legislation.
UNISEX REQUIREMENTS UNDER MONTANA LAW
The State of Montana generally prohibits the use of actuarial tables that
distinguish between men and women in determining premiums and Policy benefits
for policies issued on the lives of their residents. Therefore, all Policies
offered by this Prospectus to insure residents of Montana will have premiums
and benefits which are based on actuarial tables that do not differentiate on
the basis of sex.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
General American holds the assets of the Separate Account in a custodial
account in its name at the Bank of New York. The Company maintains records
of all purchases and redemptions of applicable Fund shares by each of the
Divisions. Additional protection for the assets of the Separate Account is
afforded by a blanket fidelity bond issued by Lloyd's Underwriters in the
amount of five million dollars, covering all officers and employees of the
Company who have access to the assets of the Separate Account.
VOTING RIGHTS
Based on its understanding of current applicable legal requirements, the
Company will vote the shares of the Funds held in the Separate Account at
regular and special shareholder meetings of the mutual funds in accordance
with the instructions received from persons having voting interests in the
corresponding Divisions of the Separate Account. If, however, the 1940 Act
or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as a result the Company determines
that it is permitted to vote shares of the Fund in its own right, it may
elect to do so. No voting privileges apply to the Policies with respect to
Cash Value removed from the Separate Account as a result of a Policy Loan.
The number of votes which an Owner has the right to instruct will be
calculated separately for each Division. Voting rights reflect the dollar
value of the total number of units of each Division of the Separate
32
<PAGE> 40
Account credited to the Owner at the record date, rather than the number of
units alone. Fractional shares will be counted. The number of votes of the
Fund which the Owner has the right to instruct will be determined as of the
date coincident with the date established by that Fund for determining
shareholders eligible. Voting instructions will be solicited by written
communications prior to such meeting in accordance with procedures
established by the mutual funds.
The company will vote shares of a Fund for which no timely instructions are
received in proportion to the voting instructions which are received with
respect to that Fund. The Company will also vote any shares of the Funds
which are not attributable to Policies in the same proportion.
Each person having a voting interest in a Division will receive any proxy
material, reports, and other materials relating to the appropriate Fund.
DISREGARD OF VOTING INSTRUCTIONS. The Company may, when required by state
insurance regulatory authorities, disregard voting instructions if the
instructions require that the shares be voted so as to cause a change in the
subclassification or investment objective of the Fund or to approve or
disapprove an investment Advisory contract for a Fund. In addition, the
Company itself may disregard voting instructions in favor of changes
initiated by an Owner in the investment policy or the investment Advisor or
sub-Advisor of a Fund if the Company reasonably disapproves of such changes.
A proposed change would be disapproved only if the proposed change is
contrary to state law or prohibited by state regulatory authorities, or the
Company determined that the change would have an adverse effect on its
General Account in that the proposed investment policy for a Fund may result
in overly speculative or unsound investments. If the Company disregards
voting instructions, a summary of that action and the reasons for such action
will be included in the next annual report to Owners.
STATE REGULATION OF THE COMPANY
The Company, a stock mutual life insurance company organized under the laws
of Missouri, and the Separate Account are subject to regulation by the
Missouri Department of Insurance. An annual statement is filed with the
Director of Insurance on or before March 1st of each year covering the
operations and reporting on the financial condition of the Company as of
December 31 of the preceding year. Periodically, the Director of Insurance
examines the liabilities and reserves of the Company and the Separate Account
and certifies their adequacy, and a full examination of the Company's
operations is conducted by the National Association of Insurance
Commissioners at least once every three years.
In addition, the Company is subject to the insurance laws and regulations of
other states within which it is licensed or may become licensed to operate.
Generally, the insurance departments of other states apply the laws of the
state of domicile in determining permissible investments.
33
<PAGE> 41
<TABLE>
MANAGEMENT OF THE COMPANY
<CAPTION>
PRINCIPAL OCCUPATION(S)
NAME DURING PAST FIVE YEARS<F*>
---- --------------------------
PRINCIPAL OFFICERS<F**>
- -----------------------
<C> <S>
Richard A. Liddy Chairman, President and CEO, 1/95-present; Chairman of the Executive
Committee, 5/92-present. Formerly President and CEO, 5/92-1/95;
President and Chief Operating Officer, 5/88-5/92.
Robert J. Banstetter, Sr. Vice President, General Counsel and Secretary, 2/91-present. Formerly
Vice President and General Counsel, 1/83-2/91.
John W. Barber Vice President and Controller, 12/84-present.
O'Neil P. Boudreaux Vice President-Sales and Marketing, 10/96-present. Formerly Vice
President-Group Field Accounts, 4/87-10/96.
Kevin C. Eichner Executive Vice President of General American, Chairman of GenMark,
Chairman of Walnut Street Securities, 10/97-Present. President and CEO,
Collaborative Strategies, 1983-Present.
E. Thomas Hughes Corporate Actuary and Treasurer, 10/94-present. Formerly Executive Vice
President-Group Pensions, 3/90-10/94
Michael P. Ingrassia Vice President-Group Executive Accounts, 3/92-present. Formerly Vice
President-Group Operations, 5/84-2/92.
Barbara L. Snyder Vice President-Product Division, 4/95-present. Formerly Vice President
and Chief Actuary, American Bankers Insurance Company, Miami, FL.
Warren J. Winer Executive Vice President-Group Life and Health, 8/95-present. Formerly
Managing Director, William M. Mercer, Inc., 7/93-8/95; President and
Chief Operating Officer, W. F. Corroon, 1986-7/93.
Bernard H. Wolzenski Executive Vice President-Individual Insurance, 10/91-present. Formerly
Vice President-Life Product Management, 5/86-10/91.
A. Greig Woodring President and Chief Executive Officer, Reinsurance Group of America,
12/92-present. Executive Vice President-Reinsurance, 3/90-present.
<FN>
<F*> All positions listed are with General American unless otherwise
indicated.
<F**> The principal business address for Mr. Woodring is 660 Mason Ridge
Center Drive, Suite 300, St. Louis, Missouri 63141. The principal
business address for Mr. Eichner is 670 Mason Ridge Center Drive, Suite
100, St. Louis, Missouri 63141.
34
<PAGE> 42
<CAPTION>
PRINCIPAL OCCUPATION(S)
NAME DURING PAST FIVE YEARS<F*>
---- --------------------------
DIRECTORS
- ---------
<C> <S>
August A. Busch III Chairman of the Board and President, Anheuser-Busch Companies, Inc.
Anheuser-Busch Companies, Inc. (beer business).
One Busch Place
St. Louis, Missouri 63118
William E. Cornelius Retired Chairman and Chief Executive Officer, Union Electric
Union Electric Company Company (electric utility business).
P.O. Box 149
St. Louis, Missouri 63166
John C. Danforth Partner. Formerly, U. S. Senator, State of Missouri.
Bryan Cave
One Metropolitan Square, Suite 3600
St. Louis, Missouri 63102
Bernard A. Edison Past President, Edison Brothers Stores, Inc. (retail specialty stores).
Edison Brothers Stores, Inc.
P.O. Box 14020
St. Louis, Missouri 63178
Richard A. Liddy Chairman, President and CEO, General American
General American Life Insurance Co.
700 Market Street
St. Louis, MO 63101
William E. Maritz Chairman and Chief Executive Officer, Maritz, Inc.
Maritz, Inc. (motivation, travel, communications, training and marketing
1375 North Highway Drive research business).
Fenton, Missouri 63099
Craig D. Schnuck Chairman and Chief Executive Officer, Schnuck Markets, Inc.
Schnuck Markets, Inc. (retail supermarket chain).
11420 Lackland Road
P.O. Box 46928
St. Louis, Missouri 63146
William P. Stiritz Chairman, Chief Executive Officer and President, Ralston Purina
Ralston Purina Company Company (pet food, batteries, and bread business); Chairman,
Checkerboard Square Ralcorp Holdings, Inc. (ready-to-eat cereal, baby food, ski resorts).
St. Louis, Missouri 63164
Andrew C. Taylor Chief Executive Officer and President, Enterprise Rent-A-Car (car
Enterprise Rent-A-Car rental).
600 Corporate Park Drive
St. Louis, Missouri 63105
35
<PAGE> 43
<CAPTION>
PRINCIPAL OCCUPATION(S)
NAME DURING PAST FIVE YEARS<F*>
---- --------------------------
DIRECTORS (CONTINUED)
- ---------------------
<C> <S>
H. Edwin Trusheim Retired Chairman and Chief Executive Officer
General American Life Insurance Co.
P.O. Box 396
St. Louis, MO 63166
Robert L. Virgil Principal, Edward Jones (investments).
Edward Jones
12555 Manchester
St. Louis, Missouri 63131-3729
Virginia V. Weldon, M.D. Senior Vice President, Public Policy, Monsanto Company
Monsanto Company (chemicals diversified industry, pharmaceuticals, life science
800 North Lindbergh products, and food ingredients business).
St. Louis, Missouri 63167
Ted C. Wetterau President, Wetterau Associates, L.L.C. Retired Chairman and Chief
Wetterau Associates, L.L.C. Executive Officer, Wetterau Incorporated (retail and wholesale
7700 Bonhomme, Suite 750 grocery, manufacturing business).
St. Louis, Missouri 63105
<FN>
<F*>All positions listed are with General American unless otherwise indicated.
</TABLE>
36
<PAGE> 44
LEGAL MATTERS
All matters of Missouri law pertaining to the Policy, including the validity
of the Policy and General American's right to issue the Policy under Missouri
insurance law, have been passed upon by Robert J. Banstetter, Vice
President, General Counsel, and Secretary of General American.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. General American is
not involved in any litigation that is of material importance in relation to
its total assets or that relates to the Separate Account.
EXPERTS
The audited financial statements of General American and the Separate Account
have been included in this Prospectus in reliance on the reports of KPMG Peat
Marwick LLP independent certified public accountants, and on the authority of
said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the December 31, 19976 financial
statements of General American refers to the adoption of Statement of
Financial Accounting Standards No. 120, Accounting and Reporting by Mutual
Life Insurance Enterprises and by Insurance Enterprises for Certain
Long-Duration Participating Contracts.
Actuarial matters included in this Prospectus have been examined by Alan J.
Hobbs, FSA, MAAA, LLIF, Second Vice President & Financial Actuary of General
American, as stated in the opinion filed as an exhibit to the registration
statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and the amendments and exhibits to
the registration statement, to all of which reference is made for further
information concerning the Separate Account, General American and the Policy
offered hereby. Statements contained in this Prospectus as to the contents
of the Policy and other legal instruments are summaries. For a complete
statement of the terms thereof reference is made to such instruments as
filed.
FINANCIAL STATEMENTS
The financial statements of General American which are included in this
Prospectus should be distinguished from the financial statements of the
Separate Account, and should be considered only as bearing on the ability of
General American to meet its obligations under the Policy. They should not
be considered as bearing on the investment performance of the assets held in
the Separate Account. Financial information is not provided for four of the
seventeen Divisions of the Separate Account because those Divisions have only
recently been established, and therefore no operating history exists for
those Divisions.
37
<PAGE> 45
APPENDIX A- ILLUSTRATIONS OF
DEATH BENEFITS AND CASH VALUES
The following tables illustrate how the Cash Value, Cash Surrender Value, and
death benefit of a Policy change with the investment experience of a Division
of the Separate Account. The tables show how the Cash Value, Cash Surrender
Value, and death benefit of a Policy issued to an insured of a given age and
at a given premium would vary over time if the investment return on the
assets held in each Division of the Separate Account were a uniform, gross,
after-tax annual rate of 0%, 6%, or 12%. The tables on pages A-2 through
A-10 illustrate a Policy issued to a Male, age 45 in a preferred nonsmoker
rate class. If the insured falls into a smoker rate class, the Cash Values,
Cash Surrender Values, and death benefits would be lower than those shown in
the tables. In addition, the Cash Values, Cash Surrender Values, and death
benefits would be different from those shown if the gross annual investment
rates of return averaged 0%, 6%, and 12% over a period of years, but
fluctuated above and below those averages for individual Policy Years.
The Cash Value column under the "Guaranteed" heading shows the accumulated
value of the Net Premiums paid at the stated interest rate, reflecting
deduction of the monthly administrative charges and monthly charges for the
cost of insurance based on the maximum values allowed under the 1980
Commissioners Standard Ordinary Mortality Table. The Cash Surrender Value
column under the "Guaranteed" heading shows the projected Cash Surrender
Value of the Policy, which is calculated by taking the Cash Value under the
"Guaranteed" heading and deducting any appropriate Contingent Deferred Sales
Charge. The Cash value column under the "Current" heading shows the
accumulated value of the Net Premiums paid at the stated interest rate,
reflecting deduction of the monthly administrative charges and monthly
charges for the cost of insurance at their current level, which is less than
or equal to that allowed by the 1980 Commissioners Standard Ordinary
Mortality Table. The Cash Value column under the "Current" heading also
reflects payment of the projected dividends into the Cash Value. The Cash
Surrender Value column under the "Current" heading shows the projected Cash
Surrender Value of the Policy, which is calculated by taking the Cash Value
under the "Current" heading and deducting any appropriate Contingent Deferred
Sales Charge. The illustrations of death benefits reflect the above
assumptions. The death benefits also vary between tables depending upon
whether Death Benefit Options A or C (Level Type) or Death Benefit Option B
(Increasing Type) are illustrated.
The amounts shown for Cash Value, Cash Surrender Value, and death benefit
reflect the fact that the investment rate of return is lower than the gross
after-tax return on the assets held in a Division of the Separate Account.
The charges include a .70% charge for mortality and expense risk, and an
assumed .7270% charge for the investment Advisory fee and administrative
expenses combined. The actual investment Advisory fee applicable to each
Division is shown in the respective Prospectuses of General American Capital
Company, Russell Insurance Funds, Variable Insurance Products Fund, Variable
Insurance Products Fund II, and Van Eck Worldwide Insurance Trust. After
deduction for these amounts, the illustrated gross annual investment rates of
return of 0%, 6%, and 12% correspond to approximate net annual rates of
- -1.40%, 4.60%, and 10.60%, respectively. The Prospectuses for General
American Capital Company, Russell Insurance Funds, Variable Insurance
Products Fund, Variable Insurance Products Fund II, and Van Eck Worldwide
Insurance Trust should be consulted for details about the nature and extent
of their expenses.
The hypothetical values shown in the tables do not reflect any charges for
Federal income taxes against the Separate Account (as opposed to Premium Tax
Charges which are deducted from premium payments), since General American is
not currently making any such charges. However, such charges may be made in
the future and, in that event, the gross annual investment rate of return of
the Divisions of the Separate Account would have to exceed 0%, 6%, and 12% by
an amount sufficient to cover the tax charges in order to produce the death
benefit and Cash Value illustration. (See Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon the
investment rates of return if premiums are paid as indicated, if all Net
Premiums are allocated to the Separate Account, if no Policy Loans have been
made, and dividends are paid into the Cash Value as projected. The tables
are also based on the assumptions that the Owner has not requested an
increase or decrease in the Face Amount, that no partial withdrawals have
been made, that no transfer charges were incurred, and that no optional
riders have been requested.
Upon request, General American will provide a comparable illustration based
upon the proposed Insured's age, sex, and rate class, the Face Amount or
premium requested, the proposed frequency of premium payments, and any
available riders requested.
38
<PAGE> 46
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $2,162
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.40%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 2,162 2,270 1,709 1,796 100,000 1,709 1,796 100,000
2 47 2,162 4,653 3,350 3,523 100,000 3,052 3,225 100,000
3 48 2,162 7,155 4,914 5,173 100,000 4,344 4,604 100,000
4 49 2,162 9,783 6,425 6,771 100,000 5,586 5,931 100,000
5 50 2,162 12,542 7,896 8,329 100,000 6,772 7,205 100,000
6 51 2,162 15,439 9,444 9,859 100,000 8,008 8,423 100,000
7 52 2,162 18,481 10,988 11,351 100,000 9,216 9,580 100,000
8 53 2,162 21,674 12,540 12,817 100,000 10,394 10,670 100,000
9 54 2,162 25,028 14,092 14,247 100,000 11,533 11,689 100,000
10 55 2,162 28,549 15,643 15,643 100,000 12,629 12,629 100,000
11 56 2,162 32,246 17,103 17,103 100,000 13,487 13,487 100,000
12 57 2,162 36,128 18,533 18,533 100,000 14,258 14,258 100,000
13 58 2,162 40,204 19,916 19,916 100,000 14,941 14,941 100,000
14 59 2,162 44,484 21,264 21,264 100,000 15,531 15,531 100,000
15 60 2,162 48,978 22,577 22,577 100,000 16,023 16,023 100,000
16 61 2,162 53,697 23,830 23,830 100,000 16,408 16,408 100,000
17 62 2,162 58,652 25,025 25,025 100,000 16,674 16,674 100,000
18 63 2,162 63,854 26,154 26,154 100,000 16,805 16,805 100,000
19 64 2,162 69,317 27,212 27,212 100,000 16,784 16,784 100,000
20 65 2,162 75,052 28,200 28,200 100,000 16,592 16,592 100,000
25 70 2,162 108,330 31,890 31,890 100,000 12,416 12,416 100,000
30 75 2,162 150,801 32,684 32,684 100,000 0 0 0
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH
VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE
SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE
COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL
INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE
THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE
YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
39
<PAGE> 47
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $2,162
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.60%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 2,162 2,270 1,824 1,910 100,000 1,824 1,910 100,000
2 47 2,162 4,653 3,691 3,864 100,000 3,384 3,557 100,000
3 48 2,162 7,155 5,594 5,853 100,000 4,989 5,249 100,000
4 49 2,162 9,783 7,559 7,905 100,000 6,642 6,988 100,000
5 50 2,162 12,542 9,603 10,035 100,000 8,342 8,774 100,000
6 51 2,162 15,439 11,844 12,259 100,000 10,194 10,609 100,000
7 52 2,162 18,481 14,209 14,572 100,000 12,124 12,487 100,000
8 53 2,162 21,674 16,712 16,989 100,000 14,132 14,409 100,000
9 54 2,162 25,028 19,350 19,506 100,000 16,215 16,371 100,000
10 55 2,162 28,549 22,130 22,130 100,000 18,369 18,369 100,000
11 56 2,162 32,246 24,985 24,985 100,000 20,406 20,406 100,000
12 57 2,162 36,128 27,983 27,983 100,000 22,480 22,480 100,000
13 58 2,162 40,204 31,111 31,111 100,000 24,595 24,595 100,000
14 59 2,162 44,484 34,386 34,386 100,000 26,752 26,752 100,000
15 60 2,162 48,978 37,819 37,819 100,000 28,952 28,952 100,000
16 61 2,162 53,697 41,399 41,399 100,000 31,196 31,196 100,000
17 62 2,162 58,652 45,139 45,139 100,000 33,481 33,481 100,000
18 63 2,162 63,854 49,049 49,049 100,000 35,804 35,804 100,000
19 64 2,162 69,317 53,139 53,139 100,000 38,161 38,161 100,000
20 65 2,162 75,052 57,427 57,427 100,000 40,552 40,552 100,000
25 70 2,162 108,330 82,526 82,526 100,000 53,144 53,144 100,000
30 75 2,162 150,801 115,392 115,392 123,469 67,447 67,447 100,000
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH
VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE
SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE
COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL
INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE
THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE
YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
40
<PAGE> 48
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $2,162
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.60%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 2,162 2,270 1,938 2,025 100,000 1,938 2,025 100,000
2 47 2,162 4,653 4,045 4,218 100,000 3,730 3,903 100,000
3 48 2,162 7,155 6,330 6,590 100,000 5,691 5,950 100,000
4 49 2,162 9,783 8,838 9,184 100,000 7,840 8,186 100,000
5 50 2,162 12,542 11,607 12,039 100,000 10,196 10,629 100,000
6 51 2,162 15,439 14,781 15,196 100,000 12,886 13,301 100,000
7 52 2,162 18,481 18,313 18,677 100,000 15,861 16,224 100,000
8 53 2,162 21,674 22,253 22,530 100,000 19,148 19,424 100,000
9 54 2,162 25,028 26,632 26,787 100,000 22,774 22,930 100,000
10 55 2,162 28,549 31,496 31,496 100,000 26,775 26,775 100,000
11 56 2,162 32,246 36,855 36,855 100,000 31,000 31,000 100,000
12 57 2,162 36,128 42,832 42,832 100,000 35,654 35,654 100,000
13 58 2,162 40,204 49,468 49,468 100,000 40,794 40,794 100,000
14 59 2,162 44,484 56,852 56,852 100,000 46,485 46,485 100,000
15 60 2,162 48,978 65,075 65,075 100,000 52,804 52,804 100,000
16 61 2,162 53,697 74,231 74,231 100,000 59,838 59,838 100,000
17 62 2,162 58,652 84,422 84,422 108,060 67,688 67,688 100,000
18 63 2,162 63,854 95,703 95,703 120,586 76,476 76,476 100,000
19 64 2,162 69,317 108,187 108,187 134,152 86,301 86,301 107,014
20 65 2,162 75,052 122,007 122,007 148,848 97,123 97,123 118,490
25 70 2,162 108,330 216,521 216,521 251,165 169,615 169,615 196,754
30 75 2,162 150,801 373,725 373,725 399,886 286,992 286,992 307,081
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH
VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE
SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE
COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL
INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE
THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE
YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
41
<PAGE> 49
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $6,288
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.40%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 6,288 6,603 5,306 5,557 105,557 5,306 5,557 105,557
2 47 6,288 13,536 10,486 10,989 110,989 10,177 10,680 110,680
3 48 6,288 20,815 15,531 16,285 116,285 14,938 15,693 115,693
4 49 6,288 28,459 20,466 21,472 121,472 19,587 20,593 120,593
5 50 6,288 36,484 25,305 26,563 126,563 24,121 25,379 125,379
6 51 6,288 44,911 30,363 31,570 131,570 28,841 30,048 130,048
7 52 6,288 53,759 35,427 36,484 136,484 33,537 34,594 134,594
8 53 6,288 63,050 40,512 41,317 141,317 38,206 39,011 139,011
9 54 6,288 72,805 45,606 46,059 146,059 42,839 43,292 143,292
10 55 6,288 83,048 50,710 50,710 150,710 47,429 47,429 147,429
11 56 6,288 93,804 55,571 55,571 155,571 51,419 51,419 151,419
12 57 6,288 105,096 60,390 60,390 160,390 55,255 55,255 155,255
13 58 6,288 116,954 65,110 65,110 165,110 58,936 58,936 158,936
14 59 6,288 129,404 69,745 69,745 169,745 62,457 62,457 162,457
15 60 6,288 142,477 74,295 74,295 174,295 65,813 65,813 165,813
16 61 6,288 156,204 78,726 78,726 178,726 68,992 68,992 168,992
17 62 6,288 170,617 83,039 83,039 183,039 71,983 71,983 171,983
18 63 6,288 185,750 87,223 87,223 187,223 74,770 74,770 174,770
19 64 6,288 201,641 91,268 91,268 191,268 77,333 77,333 177,333
20 65 6,288 218,325 95,176 95,176 195,176 79,655 79,655 179,655
25 70 6,288 315,129 112,314 112,314 212,314 87,169 87,169 187,169
30 75 6,288 438,677 124,271 124,271 224,271 85,685 85,685 185,685
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH
VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE
SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE
COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL
INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE
THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE
YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
42
<PAGE> 50
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $6,288
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.60%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 6,288 6,603 5,649 5,900 105,900 5,649 5,900 105,900
2 47 6,288 13,536 11,520 12,023 112,023 11,201 11,704 111,704
3 48 6,288 20,815 17,612 18,366 118,366 16,980 17,735 117,735
4 49 6,288 28,459 23,958 24,964 124,964 22,994 24,000 124,000
5 50 6,288 36,484 30,584 31,842 131,842 29,248 30,505 130,505
6 51 6,288 44,911 37,816 39,023 139,023 36,052 37,259 137,259
7 52 6,288 53,759 45,454 46,511 146,511 43,207 44,263 144,263
8 53 6,288 63,050 53,525 54,330 154,330 50,718 51,523 151,523
9 54 6,288 72,805 62,033 62,485 162,485 58,587 59,040 159,040
10 55 6,288 83,048 70,991 70,991 170,991 66,817 66,817 166,817
11 56 6,288 93,804 80,224 80,224 180,224 74,858 74,858 174,858
12 57 6,288 105,096 89,945 89,945 189,945 83,169 83,169 183,169
13 58 6,288 116,954 100,099 100,099 200,099 91,758 91,758 191,758
14 59 6,288 129,404 110,719 110,719 210,719 100,631 100,631 200,631
15 60 6,288 142,477 121,828 121,828 221,828 109,791 109,791 209,791
16 61 6,288 156,204 133,413 133,413 233,413 119,241 119,241 219,241
17 62 6,288 170,617 145,498 145,498 245,498 128,977 128,977 228,977
18 63 6,288 185,750 158,096 158,096 258,096 138,994 138,994 238,994
19 64 6,288 201,641 171,220 171,220 271,220 149,282 149,282 249,282
20 65 6,288 218,325 184,896 184,896 284,896 159,832 159,832 259,832
25 70 6,288 315,129 262,146 262,146 362,146 216,318 216,318 316,318
30 75 6,288 438,677 355,596 355,596 455,596 277,380 277,380 377,380
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH
VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE
SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE
COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL
INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE
THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE
YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
43
<PAGE> 51
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $6,288
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.60%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 6,288 6,603 5,992 6,244 106,244 5,992 6,244 106,244
2 47 6,288 13,536 12,595 13,098 113,098 12,267 12,770 112,770
3 48 6,288 20,815 19,862 20,617 120,617 19,192 19,946 119,946
4 49 6,288 28,459 27,888 28,895 128,895 26,833 27,839 127,839
5 50 6,288 36,484 36,767 38,024 138,024 35,262 36,520 136,520
6 51 6,288 44,911 46,902 48,109 148,109 44,860 46,068 146,068
7 52 6,288 53,759 58,182 59,238 159,238 55,510 56,566 156,566
8 53 6,288 63,050 70,730 71,535 171,535 67,303 68,108 168,108
9 54 6,288 72,805 84,656 85,109 185,109 80,342 80,795 180,795
10 55 6,288 83,048 100,097 100,097 200,097 94,738 94,738 194,738
11 56 6,288 93,804 117,097 117,097 217,097 110,064 110,064 210,064
12 57 6,288 105,096 136,023 136,023 236,023 126,912 126,912 226,912
13 58 6,288 116,954 156,973 156,973 256,973 145,438 145,438 245,438
14 59 6,288 129,404 180,181 180,181 280,181 165,813 165,813 265,813
15 60 6,288 142,477 205,895 205,895 305,895 188,225 188,225 288,225
16 61 6,288 156,204 234,351 234,351 334,351 212,878 212,878 312,878
17 62 6,288 170,617 265,851 265,851 365,851 239,992 239,992 339,992
18 63 6,288 185,750 300,714 300,714 400,714 269,810 269,810 369,810
19 64 6,288 201,641 339,298 339,298 439,298 302,595 302,595 402,595
20 65 6,288 218,325 382,011 382,011 482,011 338,642 338,642 438,642
25 70 6,288 315,129 674,710 674,710 782,663 580,578 580,578 680,578
30 75 6,288 438,677 1,161,247 1,161,247 1,261,247 970,215 970,215 1,070,215
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH
VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE
SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE
COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL
INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE
THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE
YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
44
<PAGE> 52
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM: $5,551
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.40%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,551 5,829 4,669 4,892 100,000 4,669 4,892 100,000
2 47 5,551 11,949 9,234 9,678 100,000 8,955 9,399 100,000
3 48 5,551 18,376 13,689 14,355 100,000 13,166 13,832 100,000
4 49 5,551 25,123 18,061 18,950 100,000 17,304 18,192 100,000
5 50 5,551 32,209 22,364 23,474 100,000 21,370 22,480 100,000
6 51 5,551 39,648 26,874 27,940 100,000 25,632 26,698 100,000
7 52 5,551 47,459 31,408 32,341 100,000 29,912 30,845 100,000
8 53 5,551 55,661 35,977 36,688 100,000 34,211 34,922 100,000
9 54 5,551 64,273 40,575 40,974 100,000 38,529 38,929 100,000
10 55 5,551 73,316 45,198 45,198 100,479 42,866 42,866 100,000
11 56 5,551 82,810 49,604 49,604 107,243 46,713 46,713 100,993
12 57 5,551 92,780 53,977 53,977 113,544 50,436 50,436 106,095
13 58 5,551 103,248 58,268 58,268 119,313 54,037 54,037 110,650
14 59 5,551 114,239 62,486 62,486 124,601 57,518 57,518 114,696
15 60 5,551 125,780 66,633 66,633 129,445 60,880 60,880 118,270
16 61 5,551 137,898 70,688 70,688 133,838 64,121 64,121 121,404
17 62 5,551 150,622 74,655 74,655 137,818 67,240 67,240 124,129
18 63 5,551 163,982 78,530 78,530 141,414 70,234 70,234 126,474
19 64 5,551 178,010 82,308 82,308 144,655 73,098 73,098 128,469
20 65 5,551 192,739 85,994 85,994 147,583 75,832 75,832 130,142
25 70 5,551 278,198 102,991 102,991 158,313 87,605 87,605 134,662
30 75 0 355,059 92,678 92,678 129,383 73,201 73,201 102,192
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH
VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE
SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE
COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL
INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE
THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE
YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
45
<PAGE> 53
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM: $5,551
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.60%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,551 5,829 4,972 5,194 100,000 4,972 5,194 100,000
2 47 5,551 11,949 10,146 10,591 100,000 9,861 10,305 100,000
3 48 5,551 18,376 15,528 16,194 100,000 14,976 15,642 100,000
4 49 5,551 25,123 21,152 22,040 100,000 20,332 21,221 100,000
5 50 5,551 32,209 27,044 28,154 100,000 25,944 27,054 100,000
6 51 5,551 39,648 33,495 34,561 100,000 32,094 33,160 100,000
7 52 5,551 47,459 40,336 41,269 100,002 38,619 39,552 100,000
8 53 5,551 55,661 47,552 48,263 113,593 45,485 46,195 108,727
9 54 5,551 64,273 55,140 55,540 127,016 52,648 53,047 121,317
10 55 5,551 73,316 63,112 63,112 140,302 60,106 60,106 133,621
11 56 5,551 82,810 71,309 71,309 154,171 67,373 67,373 145,660
12 57 5,551 92,780 79,920 79,920 168,117 74,847 74,847 157,445
13 58 5,551 103,248 88,890 88,890 182,015 82,531 82,531 168,994
14 59 5,551 114,239 98,245 98,245 195,907 90,426 90,426 180,317
15 60 5,551 125,780 108,004 108,004 209,816 98,535 98,535 191,421
16 61 5,551 137,898 118,148 118,148 223,695 106,853 106,853 202,310
17 62 5,551 150,622 128,694 128,694 237,577 115,376 115,376 212,991
18 63 5,551 163,982 139,647 139,647 251,473 124,096 124,096 223,469
19 64 5,551 178,010 151,012 151,012 265,401 133,003 133,003 233,750
20 65 5,551 192,739 162,808 162,808 279,410 142,085 142,085 243,845
25 70 5,551 278,198 228,546 228,546 351,309 189,993 189,993 292,048
30 75 0 355,059 276,591 276,591 386,135 213,690 213,690 298,322
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH
VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE
SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE
COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL
INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE
THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE
YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
46
<PAGE> 54
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM: $5,551
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.60%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,551 5,829 5,275 5,497 100,000 5,275 5,497 100,000
2 47 5,551 11,949 11,096 11,540 100,000 10,803 11,247 100,000
3 48 5,551 18,376 17,517 18,183 100,000 16,936 17,603 100,000
4 49 5,551 25,123 24,631 25,519 100,000 23,747 24,635 100,000
5 50 5,551 32,209 32,528 33,638 100,000 31,314 32,424 100,000
6 51 5,551 39,648 41,565 42,631 106,392 39,993 41,059 102,468
7 52 5,551 47,459 51,596 52,528 127,286 49,582 50,515 122,407
8 53 5,551 55,661 62,716 63,427 149,284 60,132 60,842 143,201
9 54 5,551 64,273 75,019 75,419 172,479 71,712 72,111 164,915
10 55 5,551 73,316 88,614 88,614 196,996 84,396 84,396 187,620
11 56 5,551 82,810 103,528 103,528 223,828 97,781 97,781 211,402
12 57 5,551 92,780 120,064 120,064 252,562 112,352 112,352 236,339
13 58 5,551 103,248 138,285 138,285 283,159 128,211 128,211 262,531
14 59 5,551 114,239 158,381 158,381 315,824 145,463 145,463 290,064
15 60 5,551 125,780 180,549 180,549 350,747 164,222 164,222 319,030
16 61 5,551 137,898 204,939 204,939 388,020 184,604 184,604 349,521
17 62 5,551 150,622 231,775 231,775 427,870 206,730 206,730 381,637
18 63 5,551 163,982 261,281 261,281 470,506 230,723 230,723 415,480
19 64 5,551 178,010 293,700 293,700 516,171 256,709 256,709 451,161
20 65 5,551 192,739 329,324 329,324 565,183 284,823 284,823 488,811
25 70 5,551 278,198 566,934 566,934 871,462 463,142 463,142 711,919
30 75 0 355,059 906,923 906,923 1,266,110 688,985 688,985 961,858
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE TRUST. THE CASH
VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE
SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT
AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE
COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL
INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE
THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE
YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
47
<PAGE> 55
APPENDIX B
<TABLE>
TARGET PREMIUM FACTORS PER THOUSAND OF FACE AMOUNT
MALE POLICY
<CAPTION>
Age Factor Age Factor Age Factor
<S> <C> <C> <C> <C> <C>
0 14.29 30 35.06 60 92.89
1 14.18 31 36.25 61 95.86
2 14.58 32 37.48 62 98.94
3 15.01 33 38.75 63 102.14
4 15.46 34 40.08 64 105.44
5 15.94 35 41.45 65 108.86
6 16.44 36 42.87 66 112.39
7 16.96 37 44.34 67 116.07
8 17.52 38 45.85 68 119.93
9 18.11 39 47.41 69 124.02
10 18.73 40 49.02 70 128.38
11 19.38 41 50.68 71 133.05
12 20.05 42 52.38 72 138.03
13 20.74 43 54.13 73 143.31
14 21.44 44 55.92 74 148.87
15 22.14 45 57.77 75 154.68
16 22.84 46 59.67 76 160.76
17 23.55 47 61.62 77 167.16
18 24.25 48 63.62 78 173.98
19 24.97 49 65.70 79 181.36
20 25.71 50 67.83 80 189.45
21 26.46 51 70.04 81 198.36
22 27.25 52 72.31 82 208.15
23 28.08 53 74.64 83 218.81
24 28.94 54 77.04 84 230.23
25 29.84 55 79.50 85 242.34
26 30.79 56 82.02 86 255.11
27 31.79 57 84.61 87 268.60
28 32.83 58 87.28 88 282.97
29 33.93 59 90.03 89 298.61
90 316.23
</TABLE>
48
<PAGE> 56
APPENDIX B
<TABLE>
TARGET PREMIUM FACTORS PER THOUSAND OF FACE AMOUNT
FEMALE POLICY
<CAPTION>
Age Factor Age Factor Age Factor
<S> <C> <C> <C> <C> <C>
0 11.75 30 29.89 60 78.54
1 11.75 31 30.90 61 81.08
2 12.09 32 31.96 62 83.72
3 12.44 33 33.05 63 86.47
4 12.82 34 34.18 64 89.29
5 13.21 35 35.36 65 92.19
6 13.63 36 36.57 66 95.17
7 14.06 37 37.83 67 98.24
8 14.51 38 39.12 68 101.44
9 14.99 39 40.46 69 104.83
10 15.48 40 41.83 70 108.46
11 16.00 41 43.23 71 112.36
12 16.54 42 44.67 72 116.56
13 17.10 43 46.14 73 121.04
14 17.67 44 47.65 74 125.81
15 18.26 45 49.20 75 130.83
16 18.87 46 50.80 76 136.14
17 19.49 47 52.44 77 141.78
18 20.13 48 54.13 78 147.85
19 20.80 49 55.87 79 154.47
20 21.48 50 57.66 80 161.78
21 22.19 51 59.50 81 169.89
22 22.93 52 61.39 82 178.88
23 23.69 53 63.34 83 188.78
24 24.48 54 65.33 84 199.60
25 25.30 55 67.36 85 211.36
26 26.15 56 69.45 86 224.13
27 27.04 57 71.59 87 238.06
28 27.95 58 73.81 88 253.36
29 28.90 59 76.13 89 270.44
90 290.05
</TABLE>
49
<PAGE> 57
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street St. Louis, MO 63101 (314) 231-1700
This Prospectus describes an individual flexible premium variable life
insurance Policy ("the Policy") offered by General American Life Insurance
Company ("General American" or "the Company"). The Policy is designed to
provide lifetime insurance protection to age 100 and at the same time provide
maximum flexibility to vary premium payments and change the level of death
benefits payable under the Policy. This flexibility allows an Owner to
provide for changing insurance needs under a single insurance policy. An
Owner also has the opportunity to allocate Net Premiums among several
investment portfolios with different investment objectives.
The Policy provides for: (1) a Cash Surrender Value that can be obtained by
surrendering the Policy; (2) Policy Loans; and (3) a death benefit payable at
the Insured's death. As long as a Policy remains in force, the death benefit
will not be less than the current Face Amount of the Policy. A Policy will
remain in force so long as its Cash Surrender Value is sufficient to pay
certain monthly charges imposed in connection with the Policy.
After the end of the "Right to Examine Policy" period, Net Premiums may be
allocated to one or more of the Divisions of General American Separate
Account Eleven ("the Separate Account") or in certain contracts to General
American's General Account. If Net Premiums are allocated to the Separate
Account, the amount of the Cash Value will vary to reflect the investment
performance of the investment Divisions selected by the Owner, the Policy may
lapse, and, depending on the death benefit option elected, the amount of the
death benefit above the minimum may also vary with that investment
performance. The Owner bears the entire investment risk for all amounts
allocated to the Separate Account; there is no minimum guaranteed Cash Value.
Divisions of the Separate Account invest in corresponding Funds from the
following open-end, diversified management investment companies:
Russell Insurance General American
Funds, Inc. Capital Company
Multi-Style Equity Fund Money Market Fund
Aggressive Equity Fund
Non-U.S. Fund
Core Bond Fund
A full description of the Funds, including the investment policies,
restrictions, risks, and charges is contained in the prospectus of each Fund.
It may not be advantageous to purchase a Policy as a replacement for another
type of life insurance or as a means to obtain additional insurance
protection if the purchaser already owns another flexible premium variable
life insurance policy.
This Prospectus must be accompanied by current prospectuses for Russell
Insurance Funds, Inc. and General American Capital Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Please read this Prospectus carefully and retain it for future reference.
The date of this Prospectus is May 1, 1998.
The Policy is not available in all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
<PAGE> 58
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
DEFINITIONS 1
SUMMARY 2
THE COMPANY AND THE SEPARATE ACCOUNT 5
The Company 5
The Separate Account 5
Russell Insurance Funds, Inc. 6
General American Capital Company 6
POLICY BENEFITS 7
Death Benefit 7
Cash Value 9
POLICY RIGHTS 10
Loans 10
Surrender, Partial Withdrawals and Pro Rata Surrender 12
Transfers 14
Portfolio Rebalancing 14
Dollar Cost Averaging 15
Right to Examine Policy 15
Payment of Benefits at Maturity 16
PAYMENT AND ALLOCATION OF PREMIUMS 16
Issuance of a Policy 16
Premiums 16
Allocation of Net Premiums and Cash Value 17
Policy Lapse and Reinstatement 17
CHARGES AND DEDUCTIONS 18
Premium Expense Charges 18
Monthly Deduction 18
Contingent Deferred Sales Charge 20
Separate Account Charges 21
DIVIDENDS 21
THE GENERAL ACCOUNT 22
GENERAL MATTERS 23
DISTRIBUTION OF THE POLICIES 25
FEDERAL TAX MATTERS 26
UNISEX REQUIREMENTS UNDER MONTANA LAW 29
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS 29
VOTING RIGHTS 29
STATE REGULATION OF THE COMPANY 30
MANAGEMENT OF THE COMPANY 31
LEGAL MATTERS 34
LEGAL PROCEEDINGS 34
EXPERTS 34
ADDITIONAL INFORMATION 34
FINANCIAL STATEMENTS 34
APPENDIX A 35
APPENDIX B 45
</TABLE>
<PAGE> 59
DEFINITIONS
Attained Age - The Issue Age of the Insured plus the number of completed
Policy Years.
Beneficiary - the person(s) named in the application or by later designation
to receive Policy proceeds in the event of the Insured's death. A Beneficiary
may be changed as set forth in the Policy and this Prospectus.
Cash Value - The total amount that a Policy provides for investment at any
time. It is equal to the total of the amounts credited to the Owner in the
Separate Account, the Loan Account, and in certain contracts, the General
Account.
Cash Surrender Value - The Cash Value of a Policy on the date of surrender,
less any Indebtedness, and less any surrender charges.
Division - A subaccount of the Separate Account which invests exclusively in
the shares of a corresponding Fund of Russell Insurance Funds, Inc. ("Russell
Insurance Funds") or General American Capital Company.
Effective Date - The date as of which insurance coverage begins under a
policy.
Face Amount - The minimum death benefit under the Policy so long as the
Policy remains in force.
Fund - A separate investment portfolio of Russell Insurance Funds or General
American Capital Company.
General Account - The assets of the Company other than those allocated to the
Separate Account or any other separate account. The Loan Account is part of
the General Account.
Home Office - The service office of General American Life Insurance Company,
the mailing address of which is P.O. Box 14490, St. Louis, Missouri 63178.
Indebtedness - The sum of all unpaid Policy Loans and accrued interest on
loans.
Insured - The person whose life is insured under the Policy.
Investment Start Date -The date the initial premium is applied to the General
Account and/or the Divisions of the Separate Account. This date is the later
of the Issue Date or the date the initial premium is received at General
American's Home Office.
Issue Age - The Insured's age at his or her nearest birthday as of the date
the Policy is issued.
Issue Date - The date from which Policy Anniversaries, Policy Years, and
Policy Months are measured.
Loan Account - The account of the Company to which amounts securing Policy
Loans are allocated. The Loan Account is part of General American's General
Account.
Loan Subaccount - A Loan Subaccount exists for the General Account and for
each Division of the Separate Account. Any Cash Value transferred to the Loan
Account will be allocated to the appropriate Loan Subaccount to reflect the
origin of the Cash Value. At any point in time, the Loan Account will equal
the sum of all the Loan Subaccounts.
Maturity Date - The Policy Anniversary on which the Insured reaches Attained
Age 100.
Monthly Anniversary - The same date in each succeeding month as the Issue
Date except that whenever the Monthly Anniversary falls on a date other than
a Valuation Date, the Monthly Anniversary will be deemed the next Valuation
Date. If any Monthly Anniversary would be the 29th, 30th, or 31st day of a
month that does not have that number of days, then the Monthly Anniversary
will be the last day of that month.
Net Premium - The premium less the premium expense charges (consisting of the
sales charge and the premium tax charge).
Owner - The Owner of a Policy, as designated in the application or as
subsequently changed.
Policy - The flexible premium variable life insurance Policy offered by the
Company and described in this Prospectus.
Policy Anniversary - The same date each year as the Issue Date.
Policy Month - A month beginning on the Monthly Anniversary.
Policy Year - A period beginning on a Policy Anniversary and ending on the
day immediately preceding the next Policy Anniversary.
SEC - The United States Securities and Exchange Commission.
Separate Account - General American Separate Account Eleven, a separate
investment account established by the Company to receive and invest the Net
Premiums paid
<PAGE> 60
under the Policy, and certain other variable life policies, and allocated by
the Owner to provide variable benefits.
Valuation Date - Each day that the New York Stock Exchange is open for
trading and the Company is open for business. The Company is not open for
business the day after Thanksgiving.
Valuation Period - The period between two successive Valuation Dates,
commencing at 4:00 p.m. (Eastern Standard Time) on a Valuation Date and
ending 4:00 p.m. on the next succeeding Valuation Date.
SUMMARY
The following summary of Prospectus information should be read in conjunction
with the detailed information appearing elsewhere in this Prospectus. Unless
otherwise indicated, the description of the Policies contained in this
Prospectus assumes that a Policy is in force and that there is no outstanding
Indebtedness.
The Policy. Under the flexible premium variable life insurance Policy
described in this Prospectus, the Owner may, subject to certain limitations,
make premium payments in any amount and at any frequency. The Policy is a
life insurance contract with death benefits, Cash Value, surrender rights,
Policy Loan privileges, and other features traditionally associated with life
insurance. It is a "flexible premium" Policy because, unlike traditional
insurance policies, there is no fixed schedule for premium payments.
Although the Owner may establish a schedule of premium payments ("planned
premium payments"), failure to make the planned premium payments will not
necessarily cause a Policy to lapse nor will making the planned premium
payments guarantee that a Policy will remain in force to maturity. Thus, an
Owner may, but is not required to, pay additional premiums. This flexibility
permits an Owner to provide for changing insurance needs within a single
insurance policy.
The Policy is a "variable" Policy because, unlike the fixed benefits under an
ordinary life insurance contract, to the extent that Net Premiums are
allocated to the Separate Account, the Cash Value and, under certain
circumstances, the death benefit under a Policy may increase or decrease
depending upon the investment performance of the Divisions of the Separate
Account to which the Owner has allocated Net Premium payments. However, so
long as a Policy's Cash Surrender Value continues to be sufficient to pay the
monthly deductions, an Owner is guaranteed a minimum death benefit equal to
the Face Amount of his or her Policy, less any outstanding Indebtedness.
A Policy will lapse (and terminate without value) when the Cash Surrender
Value is insufficient to pay the next monthly deduction and a grace period of
62 days expires without an adequate payment being made by the Owner. (See
Payment and Allocation of Premiums - Policy Lapse and Reinstatement on page 17.)
The Separate Account. After the end of the "Right to Examine Policy" period,
the Owner may allocate the Net Premiums to the Separate Account and, if it is
available, to the General Account. Amounts allocated to the Separate Account
are further allocated to one or more Divisions. Assets of each Division are
invested at net asset value in shares of a corresponding Fund. (See The
Company and the Separate Account on page 5.) An Owner may change future
allocations of Net Premiums at any time.
The option offered in connection with the Policies to allocate Net Premiums
or to transfer Cash Value to the General Account may not be made available,
at the Company's discretion, under all Policies. Further, the option may be
limited with respect to some Policies. The Company may, from time to time,
adjust the extent to which future premiums may be allocated to the General
Account in regard to any or all outstanding Policies. Such adjustments may
not be uniform as to all Policies.
Until the end of the "Right to Examine Policy" period (See Policy Rights -
Right to Examine Policy on page 15.), all Net Premiums automatically will be
allocated to the Division that invests in the Money Market Fund. (See
Payment and Allocation of Premiums - Allocation of Net Premiums and Cash
Value on page 16.)
To the extent Net Premiums are allocated to the Divisions of the Separate
Account, the Cash Value will, and the death benefit may, vary with the
investment performance of the chosen Division. To the extent Net Premiums
are allocated to the General Account, the Cash Value will accrue interest at
a guaranteed minimum rate. (See The General Account on page 21.) Thus,
depending upon the allocation of Net Premiums, investment risk over the life
of a Policy may be borne by the Owner, by the Company, or by both.
Subject to certain restrictions, an Owner may transfer Cash Values among the
Divisions of the Separate Account or, if available, between the Separate
Account and the General Account. Currently, no charge is assessed for
transfers. The Company reserves the right to revoke or modify the transfer
privilege. (See Policy Rights - Transfers on page 13.)
Charges and Deductions. A premium expense charge will be deducted from each
premium payment prior to allocation. The premium expense charge consists of a
2
<PAGE> 61
sales charge and a charge to cover premium taxes. The sales charge will never
exceed 5.0% and is currently 5.0% in Policy years one through ten and 2.25% in
Policy years past Policy year ten. The charge to cover premium taxes is 2.5%.
(See Charges and Deductions - Premium Expense Charges on page 18.)
A Contingent Deferred Sales Charge to compensate for sales expenses will also
be assessed against the Cash Value under a Policy upon a surrender, a lapse,
a partial withdrawal, or pro rata surrender. The Contingent Deferred Sales
Charge will never exceed 4% of premiums paid. (See Policy Rights -
Surrender, Partial Withdrawals, and Pro Rata Surrender on page 12; Policy
Benefits - Death Benefit on page 7; and Charges and Deductions - Contingent
Deferred Sales Charge on page 19.) Reductions in the Contingent Deferred Sales
Charge are available in some situations. (See Reduction of Charges on page 20.)
On each Monthly Anniversary, the Cash Value will be reduced by a monthly
deduction. The monthly deduction includes an administrative charge of $4 per
month for each Policy Month. (See Charges and Deductions - Monthly Deduction
on page 18.) A monthly charge is also made for the cost of insurance, and the
cost of any additional benefits provided by rider. (See Charges and
Deductions - Monthly Deduction on page 18.)
A daily charge based on an effective annual charge of .70% of the net assets
of each Division of the Separate Account will be imposed for the Company's
assumption of certain mortality and expense risks incurred in connection with
the Policies. (See Charges and Deductions - Separate Account Charges on page
20.)
The Company may make a charge for any taxes or economic burden resulting
from the application of the tax laws that it determines to be properly
attributable to the Separate Account or to the Policy. (See Federal Tax
Matters on page 25.)
The operating expenses of the Separate Account are paid by General American.
Investment management and advisory fees and other operating expenses of the
Funds are paid by the Funds and are reflected in the value of the assets of
the corresponding Division of the Separate Account. For a description of
these charges, see Charges and Deductions-Separate Account Charges on page 20.
Currently, there are no transaction charges to cover the administrative costs
of processing partial withdrawals or transfers of Cash Value between
Divisions of the Separate Account. In contracts with the General Account
option, there are no transaction charges to cover the administrative costs of
processing transfers of Cash Value between the Separate and General Accounts.
However, the Company reserves the right to impose such charges in the future.
In addition, transfers and withdrawals are subject to restrictions relative
to amount and frequency. (See Payment and Allocation of Premiums - Allocation
of Net Premiums and Cash Value on page 16; Policy Rights - Surrender, Partial
Withdrawals, and Pro Rata Surrender on page 12; and The General Account on
page 21.)
Premiums. An Owner has considerable flexibility concerning the amount and
frequency of premium payments. A Policy will not become effective until the
Owner has paid an initial premium equal to one-twelfth (1/12) of the "Minimum
Premium" for the Policy. This amount will be different for each Policy.
Thereafter, an Owner may, subject to certain restrictions, make premium
payments in any amount and at any frequency. The Owner may also determine a
planned premium payment schedule. The schedule will provide for a premium
payment of a level amount at a fixed interval over a specified period of
time. An Owner need not, however, adhere to the planned premium payment
schedule. For policies issued as a result of a term conversion from certain
General American term policies, the Company requires the Owner to pay an
initial premium, which combined with conversion credits given, will equal one
full "Minimum Premium" for the Policy. (See Payment and Allocation of
Premiums on page 15.)
A Policy will lapse only when the Cash Surrender Value is insufficient to pay
the next monthly deduction (See Charges and Deductions - Monthly Deduction on
page 18.) and a grace period expires without a sufficient payment by the
Owner. (See Payment and Allocation of Premiums - Policy Lapse and
Reinstatement on page 17.)
Death Benefit. A death benefit is payable to the named Beneficiary when the
Insured under a Policy dies. Three death benefit options are available. Under
Death Benefit Option A, the death benefit is the Face Amount of the Policy
or, if greater, the applicable percentage of Cash Value. Under Death Benefit
Option B, the death benefit is the Face Amount of the Policy plus the Cash
Value or, if greater, the applicable percentage of Cash Value. Under Death
Benefit Option C, the death benefit is the Face Amount of the Policy or, if
greater, the Cash Value multiplied by the Attained Age factor. So long as the
Policy remains in force, the minimum death benefit under any death benefit
option will be at least the current Face Amount. The death benefit will be
increased by any unpaid dividends determined prior to the Insured's death and
by the amount of the cost of insurance for the portion of the month from the
date of death to the end of the month, and reduced by any outstanding
Indebtedness. The death benefit will be paid according to the settlement
options available at the time of death. (See Policy Benefits - Death Benefit
on page 7.)
3
<PAGE> 62
The minimum Face Amount at issue is $50,000 under the Company's current
rules. Subject to certain restrictions, the Owner may change the Face Amount
and the death benefit option. In certain cases evidence of insurability may
be required. (See Change in Death Benefit Option on page 8, and Change In
Face Amount on page 8.)
Additional insurance benefits offered under the Policy include a waiver of
specified premium rider, a waiver of monthly deduction rider, and an
increasing benefit option. (See General Matters - Additional Insurance
Benefits on page 33.) The cost of these additional insurance benefits will be
deducted from the Cash Value as part of the monthly deduction. (See Charges
and Deductions - Monthly Deduction on page 18.)
Cash Value. The Policy provides for a Cash Value equal to the total of the
amounts credited to the Owner in the Separate Account, the Loan Account
(securing Policy Loans) and in certain contracts, the General Account. A
Policy's Cash Value will reflect the amount and frequency of Net Premium
payments, the investment performance of any selected Divisions of the
Separate Account, any Policy Loans, any partial withdrawals, and the charges
imposed in connection with the Policy. (See Policy Benefits - Cash Value on
page 9.) There is no minimum guaranteed Cash Value.
Policy Loans. After the first Policy Anniversary, an Owner may borrow
against the Cash Value of a Policy. The maximum amount that may be borrowed
under a Policy ("the Loan Value") is the Cash Value of the Policy on the date
the loan request is received, less loan interest to the next Policy
Anniversary, less any outstanding Indebtedness, less any surrender charges to
the next Policy Anniversary, and less monthly deductions to the next loan
interest due date. Loan interest is payable on each Policy Anniversary and
all outstanding Indebtedness will be deducted from proceeds payable at the
Insured's death, upon maturity, upon the exercise of a settlement option, or
upon surrender.
A Policy loan will be allocated among the General Account (if available) and
the various Divisions of the Separate Account. When a loan is allocated to
the Divisions of the Separate Account, a portion of the Policy's Cash Value
in the Divisions of the Separate Account sufficient to secure the loan will
be transferred to the Loan Account as security for the loan. Therefore, a
loan may have impact on the Policy's Cash Value even if it is repaid. A
Policy Loan may be repaid in whole or in part at any time while the Policy is
in force. (See Policy Rights - Loans on page 10.) Loans taken from, or secured
by, a Policy may have Federal income tax consequences. (See Federal Tax
Matters on page 25.)
Surrender, Partial Withdrawals, and Pro Rata Surrender. At any time that a
Policy is in force, an Owner may elect to surrender the Policy and receive
its Cash Surrender Value plus the value of any dividends determined prior to
the surrender. After the first year, an Owner may also request a partial
withdrawal of the Cash Surrender Value of the Policy. When the death benefit
is not based on an applicable percentage of the Cash Value, a partial
withdrawal reduces the death benefit payable under the Policy by an amount
equal to the reduction in the Policy's Cash Value. An Owner may also request
a pro rata surrender of the Policy. (See Policy Rights - Surrender, Partial
Withdrawals, and Pro Rata Surrender. on page 12.) A surrender, partial
withdrawal, or pro rata surrender may have Federal income tax consequences.
(See Federal Tax Matters on page 25.)
Right to Examine Policy. The Owner has a limited right to return a Policy
for cancellation within 20 days after receiving it (30 days if the Owner is a
resident of California and is age 60 or older), or within 45 days after the
application is signed, whichever is later. If a Policy is canceled within
this time period, a refund will be paid which will equal all premiums paid
under the Policy except in Kansas. The Owner also has a similar right to
cancel a requested increase in Face Amount. Upon cancellation of an increase,
the additional charges deducted in connection with the increase will be added
to the Cash Value. (See Policy Rights - Right to Examine Policy on page 15.)
Illustrations of Death Benefits and Cash Surrender Values. Illustrations on
pages A-2 to A-10 in Appendix A show how death benefits and Cash Surrender
Values may vary based on certain rate of return assumptions and how these
benefits compare with amounts which would accumulate if premiums were
invested to earn interest at 5% compounded annually. If a Policy is
surrendered in the early Policy Years the Cash Surrender Value payable will
be low as compared to premiums accumulated at interest, and consequently the
insurance protection provided prior to surrender will be costly. You may make
a written request for a projection of illustrated future Cash Values and
death benefits for a nominal fee not to exceed $25.00.
Tax Consequences of the Policy. If a Policy is issued on the basis of a
standard premium class or on a guaranteed or simplified issue basis, while
limited guidance exists, the Company believes that the Policy should qualify
as a life insurance contract for Federal income tax purposes. However, if a
Policy is issued on a substandard basis, it is unclear whether or not such a
Policy would qualify as a life insurance contract for Federal income tax
purposes. Assuming that the Policy qualifies as a life insurance contract for
Federal income tax purposes, the Company believes the Cash Value of the
Policy should be subject
4
<PAGE> 63
to the same Federal income tax treatment as the Cash Value of a conventional
fixed-benefit contract. If so, the Owner is not considered to be in
constructive receipt of the Cash Value under the Policy until there is a
distribution. A change of Owners, a surrender, a partial withdrawal, a pro
rata surrender, a lapse with outstanding Indebtedness, or an exchange may
have tax consequences, such as making the Policy a modified endowment
contract, depending on the particular circumstances. (See Federal Tax Matters
on page 25.)
A Policy may be treated as a "modified endowment contract" depending upon the
amount of premiums paid in relation to the death benefit. If the Policy is a
modified endowment contract, then all pre-death distributions, including
Policy Loans and due but unpaid loan interest, will be treated first as a
distribution of taxable income and then as a return of basis or investment in
the contract. In addition, prior to age 59 1/2 taxable income from such
distributions generally will be subject to a 10% additional tax. A
prospective Owner should contact a competent tax advisor before purchasing a
Policy to determine the circumstances under which the Policy would be a
modified endowment contract, and before paying any additional premiums or
making any other change to, including an exchange of, a Policy to determine
whether such premium or change would cause the Policy (or the new Policy in
the case of an exchange) to be treated as a modified endowment contract.
If the Policy is not a modified endowment contract, distributions generally
will be treated first as a return of basis or investment in the contract and
then as disbursing taxable income. Moreover, loans will not be treated as
distributions. Finally, neither distributions nor loans from a Policy that is
not a modified endowment contract are subject to the 10.0% additional tax.
(See Federal Tax Matters on page 25.)
Dividends. While a Policy is in force, it may share in the divisible surplus
of the Company. Each year the Company will determine the share of divisible
surplus accruing to a Policy and will distribute the surplus as dividend. The
Company is not obligated to pay dividends on the Policies. (See Dividends on
page 21.)
This Prospectus describes only those aspects of the Policy that relate to the
Separate Account, except where General Account matters are specifically
mentioned. For a brief summary of the aspects of the Policy relating to the
General Account, see The General Account on page 21.
THE COMPANY AND THE SEPARATE ACCOUNT
The Company
General American Life Insurance Company ("General American" or "the Company")
was originally incorporated as a stock company in 1933. In 1936, General
American initiated a program to convert to a mutual life insurance company.
In 1997, General American's policyholders approved a reorganization of the
Company into a mutual holding company structure under which General American
became a stock company wholly owned by GenAmerica Corporation, an
intermediate stock holding company. GenAmerica is wholly owned by General
American Mutual Life Insurance Company, a mutual holding company organized
under Missouri law. The mutual holding company structure retains mutuality
as General American's ultimate parent company is wholly owned by General
American's policyholders.
General American is principally engaged in writing individual and group life
insurance policies and annuity contracts. As of December 31, 1997, it had
consolidated assets of approximately $24 billion. It is admitted to do
business in 49 states, the District of Columbia, Puerto Rico, and in ten
Canadian provinces. The principal offices of General American are located at
700 Market Street, St. Louis, Missouri 63101. The mailing address of General
American's service center ("the Home Office") is P.O. Box 14490, St. Louis,
Missouri 63178.
The Separate Account
General American Life Insurance Company Separate Account Eleven ("the
Separate Account") was established by General American as a separate
investment account on January 24, 1985 under Missouri law. The Separate
Account will receive and invest the Net Premiums paid under this Policy and
allocated to it. In addition, the Separate Account currently receives and
invests Net Premiums for other classes of flexible premium variable life
insurance policies and might do so for additional classes in the future.
The Separate Account has been registered with the SEC as a unit investment
trust under the Investment Company Act of 1940 ("the 1940 Act") and meets the
definition of a "separate account" under Federal securities laws.
Registration with the SEC does not involve supervision of the management or
investment practices or policies of the Separate Account or General American
by the SEC.
The Separate Account currently is divided into eighteen divisions. The
Divisions which are available under the Policy are four Divisions which
invest in corresponding Funds from Russell Insurance Funds and one Division
5
<PAGE> 64
which invests in a corresponding Fund from General American Capital Company.
Income and both realized and unrealized gains or losses from the assets of
each Division of the Separate Account are credited to or charged against that
Division without regard to income, gains, or losses from any other Division
of the Separate Account or arising out of any other business General American
may conduct.
Although the assets of the Separate Account are the property of General
American, the assets in the Separate Account equal to the reserves and other
liabilities of the Separate Account are not chargeable with liabilities
arising out of any other business which General American may conduct. The
assets of the Separate Account are available to cover the general liabilities
of General American only to the extent that the Separate Account's assets
exceed its liabilities arising under the Policies. From time to time, the
Company may transfer to its General Account any assets of the Separate
Account that exceed the reserves and the Policy liabilities of the Separate
Account (which will always be at least equal to the aggregate Policy value
allocated to the Separate Account under the Policies). Before making any such
transfers, General American will consider any possible adverse impact the
transfer may have on the Separate Account.
Russell Insurance Funds
Russell Insurance Funds ("RIF") is organized as a Massachusetts business
trust under a Master Trust Agreement dated July 11, 1996. RIF is authorized
to issue an unlimited number of shares evidencing beneficial interests in
different investment Funds, which interests may be offered in one or more
classes. RIF is a diversified open end management investment company,
commonly known as a "mutual fund." Frank Russell Company, which is a
consultant to RIF, has been primarily engaged since 1969 in providing asset
management consulting services to large corporate employee benefit funds.
Major components of its consulting services are: (i) quantitative and
qualitative research and evaluation aimed at identifying the most appropriate
investment management firms to invest large pools of assets in accord with
specific investment objectives and styles; and (ii) the development of
strategies for investing assets using "multi-style, multi-manager
diversification." This is a method for investing large pools of assets by
dividing the assets into segments to be invested using different investment
styles, and selecting money managers for each segment based upon their
expertise in that style of investment. General management of RIF is provided
by Frank Russell Investment Management Company, a wholly-owned subsidiary of
Frank Russell Company, which furnishes officers and staff required to manage
and administer RIF on a day-to-day basis.
The investment objectives and policies of each Fund are summarized below:
Multi-Style Equity Fund: The investment objective of this Fund is to provide
income and capital growth by investing principally in equity securities.
Aggressive Equity Fund: This Fund seeks to provide capital appreciation by
assuming a higher level of volatility than is ordinarily expected from the
Multi-Style Equity Fund while still investing in equity securities.
Non-U.S. Fund: This Fund's objective is to provide favorable total return and
additional diversification for U.S. investors by investing primarily in
equity and fixed-income securities of non-U.S. companies, and securities
issued by non-U.S. governments.
Core Bond Fund: This Fund's objective is to maximize total return, through
capital appreciation and income, by assuming a level of volatility consistent
with the broad fixed-income market. The Fund invests in fixed-income
securities.
General American Capital Company
General American Capital Company ( the "Capital Company") is an open-end,
diversified management investment company which was incorporated in Maryland
on November 15, 1985, and commenced operations on October 1, 1987. Only the
Capital Company Fund described in this section of the Prospectus is currently
available as an investment choice for this Policy even though additional
Funds may be described in the prospectus for Capital Company. Shares of
Capital Company are currently offered to separate accounts established by
General American Life Insurance Company and affiliates. The Capital Company's
Investment Advisor is Conning Asset Management Company ("the Advisor"), an
indirect subsidiary of General American Holding Company which, in turn is
wholly owned by General American. The Advisor selects investments for the
Fund.
The investment objectives and policies of the Fund are summarized below:
The Money Market Fund: The investment objective of the Money Market Fund is
to obtain the highest level of current income which is consistent with the
preservation of capital and maintenance of liquidity. The Fund invests
primarily in high-quality, short-term money market instruments. An
investment in the Money Market Fund is neither insured nor guaranteed by the
U. S. Government.
6
<PAGE> 65
There is no assurance that any of the Funds will achieve its stated
objective. A more detailed description of the Funds, their investment
policies, restrictions, risks, and charges is in the prospectuses for Russell
Insurance Funds and Capital Company, which must accompany or precede this
Prospectus and which should be read carefully.
Addition, Deletion, or Substitution of Investments
The Company reserves the right, subject to compliance with applicable law, to
make additions to, deletions from, or substitutions for the shares that are
held by the Separate Account or that the Separate Account may purchase. The
Company reserves the right to eliminate the shares of any of the Funds and to
substitute shares of another Fund of Russell Insurance Funds, Capital
Company, or of another registered open-end investment company if the shares
of a Fund are no longer available for investment or if in its judgment
further investment in any Fund becomes inappropriate in view of the purposes
of the Separate Account. The Company will not substitute any shares
attributable to an Owner's interest in a Division of the Separate Account
without notice to the Owner and prior approval of the SEC, to the extent
required by the 1940 Act or other applicable law. Nothing contained in this
Prospectus shall prevent the Separate Account from purchasing other
securities for other series or classes of policies, or from permitting a
conversion between series or classes of policies on the basis of requests
made by Owners.
The Company also reserves the right to establish additional Divisions of the
Separate Account, each of which would invest in a new Fund of Russell
Insurance Funds, Capital Company, or in shares of another investment company,
with a specified investment objective. New Divisions may be established when,
in the sole discretion of the Company, marketing needs or investment
conditions warrant. Any new Division will be made available to existing
Owners on a basis to be determined by the Company. To the extent approved by
the SEC, the Company may also eliminate or combine one or more Divisions,
substitute one Division for another Division, or transfer assets between
Divisions if, in its sole discretion, marketing, tax, or investment
conditions warrant.
In the event of a substitution or change, the Company may, if it considers it
necessary, make such changes in the Policy by appropriate endorsement and
offer conversion options required by law, if any. The Company will notify all
Owners of any such changes.
If deemed by the Company to be in the best interests of persons having voting
rights under the Policy, and to the extent any necessary SEC approvals or
Owner votes are obtained, the Separate Account may be: (a) operated as a
management company under the 1940 Act; (b) de-registered under that Act in
the event such registration is no longer required; or (c) combined with other
separate accounts of the Company. To the extent permitted by applicable law,
the Company may also transfer the assets of the Separate Account associated
with the Policy to another separate account.
POLICY BENEFITS
Death Benefit
As long as the Policy remains in force (See Payment and Allocation of
Premiums--Policy Lapse and Reinstatement on page 17), the Company will, upon
receipt of proof of the Insured's death at its Home Office, pay the death
benefit in a lump sum. The amount of the death benefit payable will be
determined at the end of the Valuation Period during which the Insured's
death occurred. The death benefit will be paid to the surviving Beneficiary
or Beneficiaries specified in the application or as subsequently changed.
The Policy provides three death benefit options: "Death Benefit Option A,"
"Death Benefit Option B," and "Death Benefit Option C." The death benefit
under all options will never be less than the current Face Amount of the
Policy (less Indebtedness) as long as the Policy remains in force. (See
Payment and Allocation of Premiums - Policy Lapse and Reinstatement on page
17.) The minimum Face Amount currently is $50,000.
Death Benefit Option A. Under Death Benefit Option A, the death benefit is
the current Face Amount of the Policy or, if greater, the applicable
percentage of Cash Value on the date of death. The applicable percentage is
250% for an Insured Attained Age 40 or below on the Policy Anniversary prior
to the date of death. For Insureds with an Attained Age over 40 on that
Policy Anniversary, the percentage is lower and declines with age as shown in
the Applicable Percentage of Cash Value Table shown below. Accordingly,
under Death Benefit Option A the death benefit will remain level at the Face
Amount unless the applicable percentage of Cash Value exceeds the current
Face Amount, in which case the amount of the death benefit will vary as the
Cash Value varies. (See Illustrations of Death Benefits and Cash Values,
Appendix A.)
Death Benefit Option B. Under Death Benefit Option B, the death benefit is
equal to the current Face Amount plus the Cash Value of the Policy on the
date of death or, if greater, the applicable percentage of the Cash Value on
the date of death. The applicable percentage is the same as under Death
Benefit Option A: 250% for an Insured Attained Age 40 or below on the Policy
Anniversary prior to the date of death, and for Insureds
7
<PAGE> 66
with an Attained Age over 40 on that Policy Anniversary the percentage
declines as shown in the Applicable Percentage of Cash Value Table below.
Accordingly, under Death Benefit Option B the amount of the death benefit
will always vary as the Cash Value varies (but will never be less than the
Face Amount). (See Illustrations of Death Benefits and Cash Values, Appendix A.)
<TABLE>
<CAPTION>
Applicable Percentage of Cash Value Table<F*>
------------------------------------------------------------------
Insured Policy Account
Person's Age Percentage Multiple
------------ -------------------
<S> <C>
40 or under 250%
45 215%
50 185%
55 150%
60 130%
65 120%
70 115%
78 to 90 105%
95 or over 100%
<FN>
<F*>For ages that are not shown on this table, the applicable percentage
multiples will decrease by a ratable portion for each full year.
</TABLE>
Death Benefit Option C. Under Death Benefit Option C, the death benefit is
equal to the current Face Amount of the Policy or, if greater, the Cash Value
on the date of death multiplied by the "Attained Age factor" (a list of
sample Attained Age factors is shown in the Sample Attained Age Factor Table
below). Accordingly, under Death Benefit Option C the death benefit will
remain level at the Face Amount unless the Cash Value multiplied by the
Attained Age factor exceeds the current Face Amount, in which case the amount
of the death benefit will vary as the Cash Value varies. (See Illustrations
of Death Benefits and Cash Values, Appendix A.)
<TABLE>
<CAPTION>
Death Benefit Option C
Sample Attained Age Factor Table
---------------------------------------------------------
Insured Male Female
Attained Lives Lives
Age Factor Factor
-------- ------ ------
<S> <C> <C>
20 6.39373 7.62992
25 5.50505 6.48136
30 4.68733 5.49185
35 3.97255 4.64894
40 3.37168 3.94230
45 2.87784 3.36481
50 2.47279 2.88712
55 2.14116 2.49005
60 1.87392 2.15766
65 1.65835 1.87615
70 1.48797 1.64736
75 1.35451 1.46009
80 1.25595 1.31875
85 1.18113 1.21344
90 1.12767 1.13972
95 1.07472 1.07637
</TABLE>
Change In Death Benefit Option. After the first Policy Anniversary, if the
Policy was issued with either Death Benefit Option A or Death Benefit Option
B, the death benefit option may be changed. The option may be changed once
each Policy Year, and a request for change must be made to the Company in
writing. The effective date of such a change will be the Monthly Anniversary
on or following the date the Company receives the change request. A change
in death benefit option may have Federal income tax consequences. (See
Federal Tax Matters on page 25.)
A Death Benefit Option A Policy may change its death benefit option to Death
Benefit Option B. The Face Amount will be decreased to equal the death
benefit less the Cash Value on the effective date of change. A Death Benefit
Option B Policy may change its death benefit option to Death Benefit Option
A. The Face Amount will be increased to equal the death benefit on the
effective date of change. A Policy issued under Death Benefit Option C may
not change to either Death Benefit Option A or Death Benefit Option B for the
entire lifetime of the Contract. Similarly, a Policy issued under either
Death Benefit Option A or B may not change to Death Benefit Option C for the
lifetime of the Policy.
Satisfactory evidence of insurability must be submitted to the Company in
connection with a request for a change from Death Benefit Option A to Death
Benefit Option B. A change may not be made if it would result in a Face
Amount of less than the minimum Face Amount.
A change in death benefit option will not in itself result in an immediate
change in the amount of a Policy's death
8
<PAGE> 67
benefit or Cash Value. In addition, if, prior to or accompanying a change in
the death benefit option, there has been an increase in the Face Amount, the
cost of insurance charge may be different for the increased amount. (See
Monthly Deduction - Cost of Insurance on page 18.)
Change in Face Amount. Subject to certain limitations set forth below, an
Owner may increase or decrease the Face Amount of a Policy once each Policy
Year and not before the first Policy Anniversary. A written request is
required for a change in the Face Amount. A change in Face Amount may affect
the cost of insurance rate and the net amount at risk, both of which affect
an Owner's cost of insurance charge. (See Monthly Deduction - Cost of
Insurance on page 18.) A change in the Face Amount of a Policy may have
Federal income tax consequences, including conversion of the Policy into a
modified endowment contract. (See Federal Tax Matters on page 25.)
For an increase in the Face Amount, the Company requires that satisfactory
evidence of insurability be submitted. An application for an increase must
be received by the Company. If approved, the increase will become effective
as of the Monthly Anniversary on or following receipt of the application by
the Company. In addition, the Insured must have an Attained Age of not
greater than 80 on the effective date of the increase. The increase may not
be less than $25,000. Although an application for an increase need not be
accompanied by an additional premium, the Cash Surrender Value in effect
immediately after the increase must be sufficient to cover the next monthly
deduction. To the extent the Cash Surrender Value is not sufficient, an
additional premium must be paid. (See Charges and Deductions - Monthly
Deduction on page 18.) An increase in the Face Amount may result in certain
additional charges. (See Charges and Deductions - Monthly Deduction on page
18.)
For the Owner's rights upon an increase in Face Amount, see Policy Rights -
Right to Examine Policy on page 15. Owners should consult their sales
representative before deciding whether to increase coverage by increasing the
Face Amount of a Policy.
Any decrease in the Face Amount will become effective on the Monthly
Anniversary on or following receipt of the written request by the Company.
The amount of the requested decrease must be at least $5,000 and the Face
Amount remaining in force after any requested decrease may not be less than
minimum Face Amount. If following a decrease in Face Amount, the Policy
would not comply with the maximum premium limitations required by Federal tax
law (See Payment and Allocation of Premiums on page 15), the decrease may be
limited or Cash Value may be returned to the Owner (at the Owner's election),
to the extent necessary to meet these requirements. Decreases will be
applied to prior increases in the Face Amount, if any, in the reverse order
in which such increases occurred, and then to the original Face Amount. This
order of reduction will be used to determine the amount of subsequent cost of
insurance charges (See Monthly Deduction - Cost of Insurance on page 18; and
Charges and Deductions - Contingent Deferred Sales Charge on page 19.)
Where one or more Policies are sold to a corporation or other entity or group
of individuals, special arrangements may be agreed upon to increase or
decrease the Face Amount, in accordance with criteria which the Company may
establish and modify from time to time in its discretion. Criteria that may
determine changes in Face Amount include, but shall not be limited to,
periodic adjustments to the Insured's level of compensation, the number of
Policies issued to a corporation or other entity, or the number of Policies
issued to any group of owners. Criteria established by the Company will not
unfairly discriminate against the interest of any Owner or Insured.
Payment of the Death Benefit. The death benefit under the Policy will
ordinarily be paid in a lump sum within seven days after the Company receives
all documentation required for such a payment. Payment may, however, be
postponed in certain circumstances. (See General Matters - Postponement of
Payment from the Separate Account on page 23.) The death benefit will be
increased by any unpaid dividends determined prior to the Insured's death,
and by the amount of the monthly cost of insurance for the portion of the
month from the date of death to the end of the month, and reduced by any
outstanding Indebtedness. (See General Matters - Additional Insurance
Benefits on page 25; Dividends on page 21; and Charges and Deductions on page
18.) The Company will pay interest on the death benefit from the date of the
Insured's death to the date of payment. Interest will be at an annual rate
determined by the Company, but will never be less than the guaranteed rate of
4%. Provisions for settlement of proceeds other than a lump sum payment may
only be made upon written agreement with the Company.
Cash Value
The Cash Value of the Policy is equal to the total of the amounts credited to
the Owner in the Separate Account, the Loan Account (securing Policy Loans),
and, in certain contracts, the General Account. The Policy's Cash Value in
the Separate Account will reflect the investment performance of the chosen
Divisions of the Separate Account as measured by each Division's Net
Investment Factor (defined on the next page), the frequency and amount of Net
Premiums paid, transfers, partial withdrawals, loans and the charges assessed
in
9
<PAGE> 68
connection with the Policy. An Owner may at any time surrender the Policy
and receive the Policy's Cash Surrender Value. (See Policy Rights -
Surrender, Partial Withdrawals, and Pro Rata Surrender on page 12.) The
Policy's Cash Value in the Separate Account equals the sum of the Policy's
Cash Values in each Division. There is no guaranteed minimum Cash Value.
Determination of Cash Value. Cash Value is determined on each Valuation
Date. On the Investment Start Date, the Cash Value in a Division will equal
the portion of any Net Premium allocated to the Division, reduced by the
portion allocated to that Division of the monthly deduction(s) due from the
Issue Date through the Investment Start Date. (See Payment and Allocation of
Premiums on page 15.) Thereafter, on each Valuation Date, the Cash Value in a
Division of the Separate Account will equal:
(1) The Cash Value in the Division on the preceding Valuation Date,
multiplied by the Division's Net Investment Factor (defined below) for the
current Valuation Period; plus
(2) Any Net Premium payments received during the current Valuation Period
which are allocated to the Division; plus
(3) Any loan repayments allocated to the Division during the current
Valuation Period; plus
(4) Any amounts transferred to the Division from the General Account or
from another Division during the current Valuation Period; plus
(5) That portion of the interest credited on outstanding loans which is
allocated to the Division during the current Valuation Period; minus
(6) Any amounts transferred from the Division to the General Account, Loan
Account, or to another Division during the current Valuation Period
(including any transfer charges); minus
(7) Any partial withdrawals from the Division during the current Valuation
Period; minus
(8) Any withdrawal due to a pro rata surrender from the Division during the
current Valuation Period; minus
(9) Any withdrawal or surrender charges incurred during the current
Valuation Period attributed to the Division in connection with a partial
withdrawal or pro rata surrender; minus
(10) If a Monthly Anniversary occurs during the current Valuation Period,
the portion of the monthly deduction allocated to the Division during the
current Valuation Period to cover the Policy Month which starts during that
Valuation Period. (See Charges and Deductions on page 18.)
Net Investment Factor: The Net Investment Factor measures the investment
performance of a Division during a Valuation Period. The Net Investment
Factor for each Division for a Valuation period is calculated as follows:
(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 the assets in 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 each Division for taxes, including any tax
or other economic burden resulting from the application of the tax laws
determined by the Company to be properly attributable to the Divisions of the
Separate Account, or any amount set aside during the Valuation Period as a
reserve for taxes attributable to the operation or maintenance of each
Division; minus
(5) A charge equal to .0019111% of the average net assets for each day in
the Valuation Period. This is equivalent to an effective annual rate of
0.70% per year for mortality and expense risks; divided by
(6) The value of the assets at the end of the preceding Valuation Period.
POLICY RIGHTS
Loans
Loan Privileges. After the first Policy Anniversary, the Owner may, by
written request to General American, borrow an amount up to the Loan Value of
the Policy, with the Policy serving as sole security for such loan. A loan
taken from, or secured by, a Policy may have Federal income tax consequences.
(See Federal Tax Matters on page 25.)
The Loan Value is the Cash Value of the Policy on the date the loan request
is received, less interest to the next loan interest due date, less
anticipated monthly deductions to the next loan interest due date, less any
existing loan, and less any surrender charge. Policy Loan interest is payable
on each Policy Anniversary.
10
<PAGE> 69
The minimum amount that may be borrowed is $500. The loan may be completely
or partially repaid at any time while the Insured is living. Any amount due
to an Owner under a Policy Loan ordinarily will be paid within seven days
after General American receives the loan request at its Home Office, although
payments may be postponed under certain circumstances. (See General Matters -
Postponement of Payments from the Separate Account on page 23.)
When a Policy Loan is made, Cash Value equal to the amount of the loan plus
interest due will be transferred to the Loan Account as security for the
loan. A Loan Subaccount exists within the Loan Account for the General
Account and each Division of the Separate Account. Amounts transferred to the
Loan Account to secure Indebtedness are allocated to the appropriate Loan
Subaccount to reflect its origin. Unless the Owner requests a different
allocation, amounts will be transferred from the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account, if any, bears to the Policy's
total Cash Value, less the Cash Value in the Loan Account, at the end of the
Valuation Period during which the request for a Policy Loan is received.
This will reduce the Policy's Cash Value in the General Account and Separate
Account. These transactions will not be considered transfers for purposes of
the limitations on transfers between Divisions or to or from the General
Account.
Cash Value in the Loan Account is expected to earn interest at a rate ("the
earnings rate") which is lower than the rate charged on the Policy Loan ("the
borrowing rate"). Cash Value in the Loan Account will accrue interest daily
at an earnings rate which is the greater of (a) an annual rate of 4% ("the
guaranteed earnings rate" or (b) a current rate determined by us ("the
discretionary earnings rate"). The Company may change the discretionary
earnings rate on Policy Loans at any time in its sole discretion. Currently
in Policy Years one through ten, we accrue interest at a discretionary
earnings rate which is .50% less than the borrowing rate we charge for Policy
Loan interest. Beginning in Policy Year eleven we accrue interest at a
discretionary earnings rate which is .25% less than the borrowing rate we
charge for Policy Loan interest. The difference between the rate of interest
earned and the borrowing rate is the "Loan Spread." The Loan Spreads
mentioned above are currently in effect and are not guaranteed.
Interest credited on the Cash Value held in the Loan Account will be
allocated on Policy Anniversaries to the General Account and the Divisions of
the Separate Account in the same proportion that the Cash Value in each Loan
Subaccount bears to the Cash Value in the Loan Account. The interest credited
will also be transferred: (1) when a new loan is made; (2) when a loan is
partially or fully repaid; and (3) when an amount is needed to meet a monthly
deduction.
Interest Charged. The borrowing rate we charge for Policy Loan interest will
be based on an index. The indexed borrowing rate will never be more than the
maximum loan rate permitted by law. More information on the borrowing rate
charged is provided below.
General American will inform the Owner of the current borrowing rate when a
Policy Loan is made. General American will also mail the Owner an advance
notice if there is to be a change in the borrowing rate applicable to any
outstanding Indebtedness.
Policy Loan interest is due and payable annually on each Policy Anniversary.
If the Owner does not pay the interest when it is due, the unpaid loan
interest will be added to the outstanding Indebtedness as of the due date and
will be charged interest at the same rate as the rest of the Indebtedness.
(See Effect of Policy Loans on page 11.) The amount of Policy Loan interest
which is transferred to the Loan Account will be deducted from the Divisions
of the Separate Account and from the General Account in the same proportion
that the portion of the Cash Value in each Division and in the General
Account, respectively, bears to the total Cash Value of the Policy minus the
Cash Value in the Loan Account.
We determine the borrowing rate at the beginning of each Policy Year. The
same rate applies to any outstanding Indebtedness and to any new Policy Loans
made during the year. The borrowing rate determined by General American for
a Policy Year may not exceed a Maximum Limit which is the greater of:
(a) The Published Monthly Average (defined below) for the calendar month
ending two months before the beginning of the month in which the Policy
Anniversary falls (example: for a Policy with a June Policy Anniversary, the
March Published Average); or
(b) Five Percent (5%).
The Published Monthly Average means:
(1) Moody's Corporate Bond Yield Average - Monthly Average Corporate, as
published by Moody's Investors Service, Inc. or any successor to that
service; or
(2) If that average is no longer published, a substantially similar
average, established by regulation issued by the insurance supervisory
official of the state in which this Policy is issued.
If the Maximum Limit for a Policy Year, as determined in this manner, is at
least 0.50% higher than the borrowing rate determined by General American for
the
11
<PAGE> 70
previous Policy Year, General American may increase the borrowing rate to
not more than the Maximum Limit. Therefore the borrowing rate we charge for
Policy Loan interest will only change if the Published Monthly Average
differs from the previous rate by at least 0.50%.
Effect of Policy Loans. Whether or not a Policy Loan is repaid, it will
permanently affect the Cash Value of a Policy, and may permanently affect the
amount of the death benefit. The collateral for the loan (the amount held in
the Loan Account) does not participate in the performance of the Separate
Account while the loan is outstanding. If the Loan Account earnings rate is
less than the investment performance of the selected Division(s), the Cash
Value of the Policy will be lower as a result of the Policy Loan.
Conversely, if the Loan Account earnings rate is higher than the investment
performance of the Division(s), the Cash Value may be higher.
In addition, if the Indebtedness (See Definitions on page 3) exceeds the Cash
Value minus the surrender charge on any Monthly Anniversary, the Policy will
lapse, subject to a grace period. (See Payment and Allocation of Premiums -
Policy Lapse and Reinstatement on page 17.) A sufficient payment must be made
within the later of the grace period of 62 days from the Monthly Anniversary
immediately before the date Indebtedness exceeds the Cash Value less any
surrender charges, or 31 days after notice that a Policy will terminate
unless a sufficient payment has been mailed, or the Policy will lapse and
terminate without value. A lapsed Policy, however, may later be reinstated
subject to certain limitations. (See Payment and Allocation of Premiums -
Policy Lapse and Reinstatement on page 17.)
Any outstanding Indebtedness will be deducted from the proceeds payable upon
the death of the Insured, surrender, or the maturity of the Policy.
Repayment of Indebtedness. A Policy Loan may be repaid in whole or in part
at any time prior to the death of the Insured and as long as a Policy is in
force. When a loan repayment is made, an amount securing the Indebtedness in
the Loan Account equal to the loan repayment will be transferred to the
Divisions of the Separate Account and the General Account in the same
proportion that the Cash Value in each Loan Subaccount bears to Cash Value in
the Loan Account. Amounts paid while a Policy Loan is outstanding will be
treated as premiums unless the Owner requests in writing that they be treated
as repayment of Indebtedness.
Surrender, Partial Withdrawals
and Pro Rata Surrender
At any time during the lifetime of the Insured and while a Policy is in
force, the Owner may surrender the Policy by sending a written request to the
Company. After the first Policy Year, an Owner may make a partial withdrawal
by sending a written request to the Company. The amount available for
surrender is the Cash Surrender Value at the end of the Valuation Period
during which the surrender request is received at the Company's Home Office.
Amounts payable from the Separate Account upon surrender, partial withdrawal,
or a pro rata surrender will ordinarily be paid within seven days of receipt
of the written request. (See General Matters - Postponement of Payments from
the Separate Account on page 23.)
Surrenders. To effect a surrender, either the Policy itself must be returned
to the Company along with the request, or the request must be accompanied by
a completed affidavit of loss, which is available from the Company. Upon
surrender, the Company will pay the Cash Surrender Value plus any unpaid
dividends determined prior to surrender (See Dividends) to the Owner in a
single sum. The Cash Surrender Value equals the Cash Value on the date of
surrender, less any Indebtedness, and less any surrender charge. (See
Charges and Deductions - Contingent Deferred Sales Charge on page 19.) The
Company will determine the Cash Surrender Value as of the date that an
Owner's written request is received at the Company's Home Office. If the
request is received on a Monthly Anniversary, the monthly deduction otherwise
deductible will be included in the amount paid. Coverage under a Policy will
terminate as of the date of surrender. The Insured must be living at the time
of a surrender. A surrender may have Federal income tax consequences. (See
Federal Tax Matters on page 25.)
Partial Withdrawals. After the first Policy Year, an Owner may make up to
one partial withdrawal each Policy Month from the Separate Account, and up to
four partial withdrawals and transfers in any Policy Year from the General
Account. A partial withdrawal may have Federal income tax consequences. (See
Federal Tax Matters on page 25.)
The minimum amount of a partial withdrawal request, net of any applicable
surrender charges, is the lesser of a) $500 from a Division of the Separate
Account, or b) the Policy's Cash Value in a Division. (See Charges and
Deductions - Contingent Deferred Sales Charge on page 19.) Partial withdrawals
made during a Policy Year may not exceed the following limits. The maximum
amount that may be withdrawn from a Division of the Separate Account is the
Policy's Cash Value net of any applicable surrender charges in that
Division. The total partial withdrawals and transfers from the General
Account over the Policy Year may not exceed a maximum amount equal to the
greatest of the following: (1) 25% of the Cash Surrender Value in the General
Account at the
12
<PAGE> 71
beginning of the Policy Year, (2) $5,000, (3) the previous Policy Year's
maximum amount.
The Owner may allocate the amount withdrawn plus any applicable surrender
charge, subject to the above conditions, among the Divisions of the Separate
Account and the General Account. If no allocation is specified, then the
partial withdrawal will be allocated among the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account bears to the total Cash Value
of the Policy, less the Cash Value in the Loan Account, on the date the
request for the partial withdrawal is received. If the limitations on
withdrawals from the General Account will not permit this proportionate
allocation, the Owner will be requested to provide an alternate allocation.
(See The General Account on page 21.)
No amount may be withdrawn that would result in there being insufficient Cash
Value to meet any surrender charge that would be payable immediately
following the withdrawal upon the surrender of the remaining Cash Value.
The death benefit will be affected by a partial withdrawal. If Death Benefit
Option A or Death Benefit Option C is in effect and the death benefit equals
the Face Amount, then a partial withdrawal will decrease the Face Amount by
an amount equal to the partial withdrawal plus the applicable surrender
charge resulting from that partial withdrawal. If the death benefit is based
on a percentage of the Cash Value, then a partial withdrawal will decrease
the Face Amount by an amount by which the partial withdrawal plus the
applicable surrender charge exceeds the difference between the death benefit
and the Face Amount. If Death Benefit Option B is in effect, the Face Amount
will not change.
The Face Amount remaining in force after a partial withdrawal may not be less
than the minimum Face Amount. Any request for a partial withdrawal that would
reduce the Face Amount below this amount will not be implemented.
Partial withdrawals may affect the way in which the cost of insurance charge
is calculated and the amount of pure insurance protection afforded under a
Policy. (See Monthly Deduction - Cost of Insurance on page 18.) Partial
withdrawals will be applied first to reduce the initial Face Amount and then
to each increase in Face Amount in order, starting with the first increase.
The Company may change the minimum amount required for a partial withdrawal
or the number of times partial withdrawals may be made.
Pro Rata Surrender. After the first Policy Year, an Owner can make a pro
rata surrender of the Policy. The pro rata surrender will reduce the Face
Amount and the Cash Value by a percentage chosen by the Owner. This
percentage must be any whole number. A pro rata surrender may have Federal
income tax consequences. (See Federal Tax Matters on page 25.) The percentage
will be applied to the Face Amount and the Cash Value on the Monthly
Anniversary on or following our receipt of the request.
The Owner may allocate the amount of decrease in Cash Value plus any
applicable surrender charge among the Divisions of the Separate Account and
the General Account. (See Charges and Deductions - Contingent Deferred Sales
Charge on page 19.) If no allocation is specified, then the decrease in Cash
Value and any applicable surrender charge will be allocated among the
Divisions of the Separate Account and the General Account in the same
proportion that the Policy's Cash Value in each Division and the General
Account bears to the total Cash Value of the Policy, less the Cash Value in
the Loan Account, on the date the request for pro rata surrender is received.
A pro rata surrender can not be processed if it will reduce the Face Amount
below the minimum Face Amount of the Policy. No pro rata surrender will be
processed for more Cash Surrender Value than is available on the date of the
pro rata surrender. A cash payment will be made to the Owner for the amount
of Cash Value reduction less any applicable surrender charges.
Pro rata surrenders may affect the way in which the cost of insurance charge
is calculated and the amount of the pure insurance protection afforded under
the Policy. (See Monthly Deduction - Cost of Insurance on page 18.) Pro rata
surrenders will be applied to prior increases in the Face Amount, if any, in
the reverse order in which such increases occurred, and then to the original
Face Amount.
Charges on Surrender, Partial Withdrawals and Pro Rata Surrender. If a
Policy is surrendered within the first ten Policy Years, the Deferred
Contingent Sales Charge will apply. (See Contingent Deferred Sales Charge on
page 19.)
A partial withdrawal or pro rata surrender may also result in a charge. The
amount of the charge assessed is a portion of the Contingent Deferred Sales
Charge that would be deducted upon surrender or lapse. Charges are described
in more detail under Charges and Deductions - Contingent Deferred Sales
Charge on page 19.
While partial withdrawals and pro rata surrenders are each methods of
reducing a Policy's Cash Value, a pro rata surrender differs from a partial
withdrawal in that a partial withdrawal does not typically have a
13
<PAGE> 72
proportionate effect on a Policy's death benefit by reducing the Policy's
Face Amount, while a pro rata surrender does. Assuming that a Policy's death
benefit is not a percentage of the Policy's Cash Value, a pro rata surrender
will reduce the Policy's death benefit in the same proportion that the
Policy's Cash Value is reduced, while a partial withdrawal will reduce the
death benefit by one dollar for each dollar of Cash Value withdrawn. Partial
Withdrawals and Pro Rata Surrenders will also result in there being different
cost of insurance charges subsequently deducted. (See Monthly Deduction -
Cost of Insurance on page 18; Surrender, Partial Withdrawals and Pro Rata
Surrender - Partial Withdrawals on page 12; and Surrenders, Partial
Withdrawals, and Pro Rata Surrenders - Pro Rata Surrender on page 13.)
Transfers
Under General American's current practices, a Policy's Cash Value, except
amounts credited to the Loan Account, may be transferred among the Divisions
of the Separate Account and for certain contracts, between the General
Account and the Divisions. Transfers to and from the General Account are
subject to restrictions. (See The General Account on page 21.) Requests for
transfers from or among Divisions of the Separate Account may be made in
writing or by telephone. Transfers from or among the Divisions of the
Separate Account may be made once each Policy Month and must be in amounts of
at least $500 or, if smaller, the Policy's Cash Value in a Division. General
American ordinarily will effectuate transfers and determine all values in
connection with transfers as of the end of the Valuation Period during which
the transfer request is received.
Requests may be made by telephone if the Owner has chosen to use General
American's telephone transfer program. To elect this program the Owner must
complete a form provided by General American. General American reserves the
right to cancel the telephone transfer program upon 30 days written notice.
All requests received on the same Valuation Day will be considered a single
transfer request. Each transfer must meet the minimum requirement of $500 or
the entire Cash Value in a Division whichever is smaller. Where a single
transfer request calls for more than one transfer, and not all of the
transfers would meet the minimum requirements, General American will
effectuate those transfers that do meet the requirements. Transfers resulting
from Policy Loans will not be counted for purposes of the limitations on the
amount or frequency of transfers allowed in each Policy Month or Policy Year.
Although General American currently intends to continue to permit transfers
for the foreseeable future, the Policy provides that General American may at
any time revoke, modify, or limit the transfer privilege, including the
minimum amount transferable, the maximum General Account allocation percent,
and the frequency of such transfers. General American may in the future
impose a charge of no more than $25 per transfer request.
Portfolio Rebalancing
Over time, the funds in the General Account and the Divisions of the Separate
Account will accumulate at different rates as a result of different
investment returns. The Owner may direct that from time to time we
automatically restore the balance of the Cash Value in the General Account
and in the Divisions of the Separate Account to the percentages determined in
advance. There are two methods of rebalancing available - periodic and
variance.
Periodic Rebalancing. Under this option The Owner elects a frequency
(monthly, quarterly, semiannually or annually), measured from the Policy
Anniversary. On each date elected, we will rebalance the funds by generating
transfers to reallocate the funds according to the investment percentages
elected.
Variance Rebalancing. Under this option The Owner elects a specific
allocation percentage for the General Account and each Division of the
Separate Account. For each such account, the allocation percentage (if not
zero) must be a whole percentage and must not be less than five percent (5%).
The Owner also elects a maximum variance percentage (5%, 10%, 15%, or 20%
only), and can exclude specific funds from being rebalanced. On each Monthly
Anniversary we will review the current fund balances to determine whether any
fund balance is outside of the variance range (either above or below) as a
percentage of the specified allocation percentage for that fund. If any fund
is outside of the variance range, we will generate transfers to rebalance all
of the specified funds back to the predetermined percentages.
Transfers resulting from portfolio rebalancing will not be counted against
the total number of transfers allowed in a Policy Year before a charge is
applied.
The Owner may elect either form of portfolio rebalancing by specifying it on
the policy application, or may elect it later for an in-force Policy, or may
cancel it, by submitting a change form acceptable to General American under
its administrative rules.
Only one form of portfolio rebalancing may be elected at any one time, and
portfolio rebalancing may not be used in conjunction with dollar cost
averaging (see below).
General American reserves the right to suspend portfolio rebalancing at any
time on any class of Policies on a
14
<PAGE> 73
nondiscriminatory basis, or to charge an administrative fee for election
changes in excess of a specified number in a Policy Year in accordance with
its administrative rules.
Dollar Cost Averaging
The Owner may direct the Company to transfer amounts on a monthly basis from
the Money Market Fund to any other Division of the Separate Account. This
service is intended to allow the Owner to utilize "dollar cost averaging"
("DCA"), a long-term investment technique which provides for regular, level
investments over time. The Company makes no guarantee that DCA will result in
a profit or protect against loss.
The following rules and restrictions apply to DCA transfers:
(1) The minimum DCA transfer amount is $100.
(2) A written election of the DCA service, on a form provided by the
Company, must be completed by the Owner and on file with the Company in order
to begin DCA transfers.
(3) In the written election of the DCA service, the Owner indicates how DCA
transfers are to be allocated among the Divisions of the Separate Account.
For any Division chosen to receive DCA transfers, the minimum percentage that
may be allocated to a Division is 5% of the DCA transfer amount, and
fractional percentages may not be used.
(4) DCA transfers can only be made from the Money Market Fund, and DCA
transfers will not be allowed to the General Account.
(5) The DCA transfers will not count against the Policy's normal transfer
restrictions. (See Policy Rights Transfers on page 13.)
(6) The DCA transfer percentages may differ from the allocation
percentages the Owner specifies for the allocation of Net Premiums. (See
Payment and Allocation of Premiums - Allocation of Net Premiums and Cash
Values on page 16.)
(7) Once elected, DCA transfers from the Money Market Fund will be
processed monthly until either the value in the Money Market Fund is
completely depleted or the Owner instructs the Company in writing to cancel
the DCA service.
(8) Transfers as a result of a Policy Loan or repayment, or in exercise of
the conversion privilege, are not subject to the DCA rules and restrictions.
The DCA service terminates at the time the conversion privilege is exercised,
when any outstanding amount in any Division of the Separate Account is
immediately transferred to the General Account. (See Policy Rights - Loans on
page 10.)
(9) DCA transfers will not be made until the Right to Examine Policy period
has expired (See Policy Rights - Right to Examine Policy on page 15).
No fee is currently charged for DCA, but the Company reserves the right to
assess a processing fee for the DCA service. The Company reserves the right
to discontinue offering DCA upon 30 days' written notice to Owners. However,
any such discontinuation will not affect DCA services already commenced. The
Company reserves the right to impose a minimum total Cash Value, less
outstanding Indebtedness, in order to qualify for DCA service. Also, the
Company reserves the right to change the minimum necessary Cash Value and the
minimum required DCA transfer amount.
Right to Examine Policy
The Owner may cancel a Policy within 20 days after receiving it (30 days if
the Owner is a resident of California and is age 60 or older) or within 45
days after the application was signed, whichever is later. If a Policy is
canceled within this time period, a refund will be paid. Where required by
state law, the refund will equal all premiums paid under the Policy. Where
required by state law, General American will refund an amount equal to the
greater of premiums paid or (1) plus (2) where (1) is the difference between
the premiums paid, including any policy fees or other charges, and the
amounts allocated to the Separate Account under the Policy and (2) is the
value of the amounts allocated to the Separate Account under the Policy on
the date the returned Policy is received by General American or its agent.
To cancel the Policy, the Owner should mail or deliver the Policy to either
General American or the agent who sold it. A refund of premiums paid by check
may be delayed until the Owner's check has cleared the bank upon which it
was drawn. (See General Matters - Postponement of Payments from the Separate
Account on page 23.)
A request for an increase in Face Amount (See Policy Benefits - Death Benefit
on page 7) may also be canceled. The request for cancellation must be made
within the later of 20 days from the date the Owner received the new Policy
specifications page for the increase, or 45 days after the application for
the increase was signed.
15
<PAGE> 74
Payment of Benefits at Maturity
If the Insured is living and the Policy is in force, the Company will pay in
a lump sum the Cash Surrender Value of the Policy on the Maturity Date, plus
any unpaid dividends determined prior to maturity. Amounts payable on the
Maturity Date ordinarily will be paid in a lump sum within seven days of that
date, although payments may be postponed under certain circumstances. (See
General Matters - Postponements of Payments from the Separate Account on page
23.) A Policy will mature if and when the Insured reaches Attained Age 100.
Settlement options other than a lump sum payment may only be made upon
written agreement with the Company.
PAYMENT AND ALLOCATION OF PREMIUMS
Issuance of a Policy
Individuals wishing to purchase a Policy must complete an application and
submit it to an authorized registered agent of General American or to General
American's Home Office. A Policy will generally be issued to Insureds of
Issue Ages 0 through 80 for regularly underwritten contracts and to Insureds
of Issue Ages 0 through 70 for simplified issue and to Insureds of Issue Ages
20 through 70 for guaranteed issue contracts. General American may, in its
sole discretion, issue Policies to individuals falling outside of those Issue
Ages. Acceptance of an application is subject to General American's
underwriting rules and General American reserves the right to reject an
application for any reason.
The Issue Date is determined by General American in accordance with its
standard underwriting procedures for variable life insurance policies. The
Issue Date is used to determine Policy Anniversaries, Policy Years, and
Policy Months. Insurance coverages under a Policy will not take effect until
the Policy has been delivered and the initial premium has been paid prior to
the Insured's death and prior to any change in health as shown in the
application.
Premiums
The initial premium is due on the Issue Date, and may be paid to an
authorized registered agent of General American or to General American at its
Home Office. General American currently requires that the initial premium for
a Policy be at least equal to one-twelfth (1/12) of the Minimum Premium for
the Policy. The Minimum Premium is the amount specified for each Policy based
on the requested initial Face Amount and the charges under the Policy which
vary according to the Issue Age, sex, underwriting risk class, and smoker
status of the Insured. (See Charges and Deductions on page 18.) For policies
issued as a result of a term conversion from certain General American term
policies, the Company requires the Owner to pay an initial premium, which
combined with conversion credits given, if any, will equal one full "Minimum
Premium" for the Policy.
Following the initial premium, subject to the limitations described below,
premiums may be paid in any amount and at any interval. Premiums after the
first premium payment must be paid to General American at its Home Office. An
Owner may establish a schedule of planned premiums which will be billed by
the Company at regular intervals. Failure to pay planned premiums, however,
will not itself cause the Policy to lapse. (See Policy Lapse and
Reinstatement on page 17.) Premium receipts will be furnished upon request.
An Owner may make unscheduled premium payments at any time in any amount, or
skip planned premium payments, subject to the minimum and maximum premium
limitations described below.
If a Policy is in the intended Owner's possession but the initial premium has
not been paid, the Policy is not in force. The intended Owner is deemed to
have the Policy for inspection only.
Premium Limitations. Every premium payment must be at least $10. In no event
may the total of all premiums paid in any Policy Year exceed the current
maximum premium limitations for that Policy Year. Maximum premium limits for
the Policy Year will be shown in an Owner's annual report.
In general, for policies issued with Death Benefit Option A or Death Benefit
Option B, the maximum premium limit for a Policy Year is the largest amount
of premium that can be paid in that Policy Year such that the sum of the
premiums paid under the Policy will not at any time exceed the guideline
premium limitations needed to comply with the tax definition of life
insurance. For policies issued with Death Benefit Option C, the company
reserves the right to impose other restrictions upon the amount of premium
that may be paid into the Policy. If at any time a premium is paid which
would result in total premiums exceeding the current maximum premium
limitations, the Company will only accept that portion of the premium which
will make total premiums equal the maximum. Any part of the premium in
excess of that amount will be returned or applied as otherwise agreed, and no
further premiums will be accepted until allowed under the current maximum
premium limitations.
In addition to the foregoing tax definitional limits on premiums, for
purposes of determining whether distributions (including loans) are a return
of income first, the Company monitors the Policy to detect whether
16
<PAGE> 75
the "seven pay limit" has been exceeded. If the seven pay limit is exceeded,
the Policy becomes a "Modified Endowment". The Company has adopted
administrative steps designed to notify an Owner when it is believed that a
premium payment will cause a Policy to become a modified endowment contract.
The Owner will be given a limited amount of time to request that the premium
be reversed in order to avoid the Policy's being classified as a modified
endowment contract. (See Federal Tax Matters on page 25.)
If the Company receives a premium payment which would cause the death benefit
to increase by an amount that exceeds the Net Premium portion of the payment,
then the Company reserves the right to (1) refuse that premium payment, or
(2) require additional evidence of insurability before it accepts the
premium.
Allocation of Net Premiums and Cash Value
Allocation of Net Premiums. In the application for a Policy, the Owner
indicates how Net Premiums are to be allocated among the Divisions of the
Separate Account, to the General Account (if available), or both. For each
Division chosen, the minimum percentage that may be allocated to a Division
is 5% of the Net Premium, and fractional percentages may not be used. Certain
other restrictions apply to allocations made to the General Account (See
General Account on page 21). For policies issued with an allowable percentage
to the General Account of more than 5%, the minimum percentage is 5%, and
fractional percentages may not be used.
The allocation for future Net Premiums may be changed without charge at any
time by providing notice to the Company. Any change in allocation will take
effect immediately upon receipt by the Company of written notice. No charge
is imposed for changing the allocations of future premiums. The initial
allocation will be shown on the application which is attached to the Policy.
The Company may at any time modify the maximum percentage of future Net
Premiums that may be allocated to the General Account.
During the period from the Issue Date to the end of the Right to Examine
Policy Period (See Policy Rights - Right to Examine Policy on page 15.), Net
Premiums will automatically be allocated to the Division that invests in the
Money Market Fund of Capital Company. When this period expires, the Policy's
Cash Value in that Division will be transferred to the Divisions of the
Separate Account and to the General Account (if available) in accordance with
the allocation requested in the application for the Policy, or any allocation
instructions received subsequent to receipt of the application. Net Premiums
received after the Right to Examine Policy Period will be allocated according
to the allocation instructions most recently received by the Company unless
otherwise instructed for that particular premium receipt.
The Policy's Cash Value may also be transferred between Divisions of the
Separate Account, and, if the General Account is available under the Policy,
between those Divisions and the General Account. (See Policy Rights -
Transfers on page 13.)
The value of amounts allocated to Divisions of the Separate Account will vary
with the investment performance of the chosen Divisions and the Owner bears
the entire investment risk. This will affect the Policy's Cash Value, and may
affect the death benefit as well. Owners should periodically review their
allocations of Net Premiums and the Policy's Cash Value in light of market
conditions and their overall financial planning requirements.
Policy Lapse and Reinstatement
Lapse. Unlike conventional whole life insurance policies, the failure to
make a premium payment following the initial premium will not itself cause a
Policy to lapse. Lapse will occur when the Cash Surrender Value is
insufficient to cover the monthly deduction, and a grace period expires
without a sufficient payment being made.
The grace period, which is 62 days, begins on the Monthly Anniversary on
which the Cash Surrender Value becomes insufficient to meet the next monthly
deduction. The Company will notify the Owner at the beginning of the grace
period by mail addressed to the last known address on file with the Company.
The notice to the Owner will indicate the amount of additional premium that
must be paid. The amount of the premium required to keep the Policy in force
will be the amount to cover the outstanding monthly deductions and premium
expense charges. (See Charges and Deductions - Monthly Deduction on page 18.)
If the Company does not receive the required amount within the grace period,
the Policy will lapse and terminate without Cash Value.
If the Insured dies during the grace period, any overdue monthly deductions
will be deducted from the death benefit otherwise payable.
Reinstatement. The Owner may reinstate a lapsed Policy by written
application any time within five years after the date of lapse and before the
Maturity Date. Reinstatement is subject to the following conditions:
(1) Evidence of the insurability of the Insured satisfactory to the Company
(including evidence of insurability of any person covered by a rider to
reinstate the rider).
17
<PAGE> 76
(2) Payment of a premium that, after the deduction of premium expense
charges, is large enough to cover: (a) the monthly deductions due at the time
of lapse, and (b) two times the monthly deduction due at the time of
reinstatement.
(3) Payment or reinstatement of any Indebtedness. Any Indebtedness
reinstated will cause Cash Value of an equal amount also to be reinstated.
Any loan interest due and unpaid on the Policy Anniversary prior to
reinstatement must be repaid at the time of reinstatement. Any loan paid at
the time of reinstatement will cause an increase in Cash Value equal to the
amount to be reinstated.
(4) The Policy cannot be reinstated if it has been surrendered.
(5) The amount of Cash Value on the date of reinstatement will be equal to
the amount of any Policy Loan reinstated, increased by the Net Premiums paid
at reinstatement, any Policy Loan paid at the time of reinstatement, and the
amount of any surrender charge paid at the time of lapse. The Insured must be
alive on the date the Company approves the application for reinstatement. If
the Insured is not then alive, such approval is void and of no effect.
(6) The effective date of reinstatement will be the date the Company
approves the application for reinstatement. There will be a full monthly
deduction for the Policy Month which includes that date. (See Charges and
Deductions-Monthly Deduction on page 18.)
(7) The surrender charge in effect at the time of reinstatement will equal
the surrender charge in effect at the time of lapse.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate the
Company for providing the insurance benefits set forth in the Policy and any
additional benefits added by rider, administering the Policies, incurring
expenses in distributing the Policies, and assuming certain risks in
connection with the Policy.
Premium Expense Charges
Prior to allocation of Net Premiums, premium payments will be reduced by
premium expense charges consisting of a sales charge and a charge for premium
taxes. The premium payment less the premium expense charge equals the Net
Premium.
Sales Charge. A sales charge not to exceed 5% of each premium payment will
be deducted from each premium payment to partially compensate the Company for
expenses incurred in distributing the Policy and any additional benefits
provided by riders. The Company currently intends to deduct a sales charge of
5% in Policy Years one through ten and 2.25% in Policy Years past Policy Year
ten. The expenses covered by the sales charge include agent sales
commissions, the cost of printing Prospectuses and sales literature, and any
advertising costs. Where Policies are issued to Insureds with higher
mortality risks or to Insureds who have selected additional insurance
benefits, a portion of the amount deducted for sales charge is used to pay
distribution expenses and other costs associated with these additional
coverages. No increase in this sales charge will occur that would result in
an increase in the sales charge percentage deducted in any previous Policy
year.
A Contingent Deferred Sales Charge is also imposed under certain
circumstances for expenses incurred in distributing the Policies. That charge
is discussed below.
To the extent that sales expenses are not recovered from the sales charge and
the surrender charge, those expenses may be recovered from other sources,
including the mortality and expense risk charge described below.
Premium Taxes. Various states and subdivisions impose a tax on premiums
received by insurance companies. Premium taxes vary from state to state and
range from 0.75% to 3.50%. A deduction of 2.5% of the premium is taken from
each premium payment for these taxes. The deduction represents an amount the
Company considers necessary to pay the premium taxes imposed by the states
and any subdivisions thereof.
Monthly Deduction
Charges will be deducted monthly from the Cash Value of each Policy ("the
monthly deduction") to compensate the Company for (a) certain administrative
costs; (b) the cost of insurance; and (c) the cost of optional benefits added
by rider. The monthly deduction will be taken on the Investment Start Date
and on each Monthly Anniversary. It will be allocated among the General
Account and each Division of the Separate Account in the same proportion that
a Policy's Cash Value in the General Account and the Policy's Cash Value in
each Division bear to the total Cash Value of the Policy, less the Cash Value
in the Loan Account, on the date the deduction is taken. Because portions of
the monthly deduction, such as the cost of insurance, can vary from month to
month, the monthly deduction itself can vary in amount from month to month.
Monthly Administrative Charge. The Company has responsibility for the
administration of the Policies and the Separate Account. Administrative
expenses include premium billing and collection, record keeping,
18
<PAGE> 77
processing death benefit claims, cash surrenders, partial withdrawals, Policy
changes, and reporting and overhead costs, processing applications, and
establishing Policy records. As reimbursement for administrative expenses
related to the maintenance of each Policy and the Separate Account, the
Company assesses a monthly administration charge from each Policy. This
charge is $4 per month for all Policy Months. These charges are guaranteed
not to increase while the Policy is in force. The Company does not anticipate
that it will make any profit on the monthly administrative charge.
The Company may administer the Policy itself, or the Company may purchase
administrative services from such sources (including affiliates) as may be
available. Such services will be acquired on a basis which, in the Company's
sole discretion, affords the best services at the lowest cost. The Company
reserves the right to select a company to provide services which the Company
deems, in its sole discretion, is the best able to perform such services in a
satisfactory manner even though the costs for such services may be higher
than would prevail elsewhere.
Cost of Insurance. The cost of insurance is deducted on each Monthly
Anniversary for the following Policy Month. Because the cost of insurance
depends upon a number of variables, the cost will vary for each Policy Month.
The cost of insurance is determined separately for the initial Face Amount
and for any subsequent increases in Face Amount. The Company will determine
the cost of insurance charge by multiplying the applicable cost of insurance
rate or rates by the net amount at risk (defined below) for each Policy
Month.
The cost of insurance rates are determined at the beginning of each Policy
Year for the initial Face Amount and each increase in Face Amount. The rates
will be based on the Attained Age, duration, rate class, and sex (except for
Policies sold in Montana, (See Unisex Requirements Under Montana Law on page
28.) of the Insured at issue or the date of an increase in Face Amount. The
cost of insurance rates generally increase as the Insured's Attained Age
increases. The rate class of an Insured also will affect the cost of
insurance rate. For the initial Face Amount, the Company will use the rate
class on the Issue Date. For each increase in Face Amount, other than one
caused by a change in the death benefit option, the Company will use the rate
class applicable to that increase. If the death benefit equals a percentage
of Cash Value, an increase in Cash Value will cause an automatic increase in
the death benefit. The rate class for such increase will be the same as that
used for the most recent increase that required proof of insurability.
The Company currently places Insureds into a preferred rate class, a standard
rate class, or into rate classes involving a higher mortality risk. The
degree of underwriting imposed may vary from full underwriting, to simplified
issue underwriting, and to guaranteed issue underwriting.
Actual cost of insurance rates may change, and the actual monthly cost of
insurance rates will be determined by the Company based on its expectations
as to future mortality experience. However, the actual cost of insurance
rates will not be greater than the guaranteed cost of insurance rates set
forth in the Policy.
The Company issues Policies on three underwriting bases: a full underwriting
basis, a simplified underwriting basis, and a guaranteed underwriting basis.
Policies receiving a full underwriting basis are issued in six rate classes:
preferred non-smoker, preferred smoker, standard non-smoker, standard smoker,
substandard non-smoker and substandard smoker. Policies underwritten on a
simplified issue basis are issued in standard smoker/non-smoker rate classes
and substandard smoker/non-smoker rate classes. Policies underwritten on a
guaranteed issue basis are only issued in guaranteed issue smoker and
guaranteed issue non-smoker rate classes. All other things being equal,
Policies issued on a guaranteed issue basis will have higher cost of
insurance rates than Policies issued on a simplified issue or fully
underwritten basis. Generally, Policies underwritten on a simplified issue
basis will have the same cost of insurance rates as those subject to full
underwriting (except to the extent that a Policy underwritten on a simplified
issue basis may have received a preferred rate class had it been fully
underwritten). Similarly, for Policies issued on the same underwriting
basis, all other things being equal, standard rate classes pay a higher cost
of insurance rate than preferred rate classes and substandard rate classes
pay a higher cost of insurance rate than standard rate classes.
For Policies fully underwritten or underwritten on a simplified issue basis
that receive a standard rate class, the guaranteed cost of insurance rates
are equal to 100% of the rates set forth in the male/female 1980 CSO
Mortality Tables (1980 CSO Table A and 1980 CSO Table G), age nearest
birthday. For Policies issued on a guaranteed issue basis, the guaranteed
cost of insurance rates are equal to 125% of the rates set forth in the
smoker/ non-smoker 1980 CSO Mortality Tables (1980 CSO Table SB and 1980 CSO
Table NB), age nearest birthday.
The net amount at risk for a Policy Month is (a) the death benefit at the
beginning of the Policy Month divided by 1.0032737 (which reduces the net
amount at risk, solely for purposes of computing the cost of insurance, by
taking into account assumed monthly earnings at an annual rate of 4%), less
(b) the Cash Value at the beginning of the Policy Month. If there is an
19
<PAGE> 78
increase in the Face Amount, a net amount at risk will be calculated
separately for the initial Face Amount and for each increase in Face Amount.
If Death Benefit Option A or Death Option C is in effect, for purposes of
determining the net amounts at risk for the initial Face Amount and for each
increase in Face Amount, Cash Value will first be considered a part of the
initial Face Amount. If the Cash Value is greater than the initial Face
Amount, the excess Cash Value will then be considered a part of each increase
in order, starting with the first increase. If Death Benefit Option B is in
effect, the net amount at risk will be determined separately for the initial
Face Amount and for each increase in Face Amount. In calculating the cost of
insurance charges, the cost of insurance rate for a Face Amount is applied to
the net amount at risk for that Face Amount.
Additional Insurance Benefits. The monthly deduction will include charges
for any additional benefits provided by rider. (See General Matters -
Additional Insurance Benefits on page 25.)
Contingent Deferred Sales Charge (CDSC)
For a period of up to ten years after the Issue Date, the Company will impose
a CDSC upon surrender or lapse of the Policy, upon a partial withdrawal, or
upon a pro rata surrender. The amount of the charge assessed will depend upon
a number of factors, including the type of event ( a full surrender, lapse,
or partial withdrawal), the amount of any premium payments made under the
Policy prior to the event, and the number of Policy Years having elapsed
since the Policy was issued.
The Contingent Deferred Sales Charge compensates the Company for expenses
relating to the distribution of the Policy, including agents' commissions,
advertising, and the printing of the Prospectus and sales literature.
Calculation of Charge. If a Policy is surrendered, the charge will be the
Contingent Deferred Sales Charge Percentage multiplied by 4.0% of premiums
paid since issue.
The Contingent Deferred Sales Charge Percentage is shown in the following
table:
<TABLE>
Contingent Deferred Sales Charge Percentage Table
<CAPTION>
If surrender or lapse The following percentage
occurs in the last month of the 4% surrender charge
of Policy Year:<F*> will be payable:<F**>
<S> <C>
1 through 5 100%
6 80%
7 60%
8 40%
9 20%
10 and later 0%
<FN>
<F*> In addition, the percentages reduce equally for each Policy Month
during the years shown. For example, during the seventh year, the percentage
reduces equally each month from 80% at the end of the sixth Year to 60% at
the end of the seventh Year.
<F**> For male issue ages 75 through 80 and female issue ages 77 through 80,
the Contingent Deferred Sales Charge Percentage grades to 0% in less than ten
years.
</TABLE>
Charge Assessed Upon Partial Withdrawals or Pro Rata Surrender. The amount
of the Contingent Deferred Sales Charge deducted upon a partial withdrawal or
pro rata surrender will equal a fraction of the charge that would be deducted
if the Policy were surrendered at that time. The fraction will be determined
by dividing the amount of the withdrawal of cash by the Cash Value before the
withdrawal and multiplying the result by the charge. Immediately after a
withdrawal, the Policy's remaining surrender charge will equal the amount of
the surrender charge immediately before the withdrawal less the amount
deducted in connection with the withdrawal.
Reduction of Charges. The Policy is available for purchase by individuals,
corporations, and other institutions. For certain individuals and certain
corporate or other group or sponsored arrangements purchasing one or more
Policies, General American may waive or reduce the amount of the Sales
Charge, Contingent Deferred Sales Charge, monthly administrative charge, or
other charges where the expenses associated with the sale of the Policy or
Policies or the underwriting or other administrative costs associated with
the Policy or Policies are reduced.
Sales, underwriting, or other administrative expenses may be reduced for
reasons such as expected economies resulting from a corporate purchase or a
group or sponsored arrangement; from the amount of the initial premium
payment or payments; or from the amount of projected premium payments.
General American will determine in its discretion if, and in what amount, a
reduction is appropriate. The Company may modify its criteria for
qualification for reduction of charges as experience is gained, subject to
the limitation that such
20
<PAGE> 79
reductions will not be unfairly discriminatory against the interests of any
Owner.
Separate Account Charges
Mortality and Expense Risk Charge. General American will deduct a daily
charge from the Separate Account at the rate of .0019111% of the average net
assets of each Division of the Separate Account which equals an effective
annual rate of .70% of those net assets. This deduction is guaranteed not to
increase while the Policy is in force. General American may realize a profit
from this charge.
The mortality risk assumed by General American is that Insureds may die
sooner than anticipated and that therefore General American will pay an
aggregate amount of death benefits greater than anticipated. The expense risk
assumed is that expenses incurred in issuing and administering the Policy
will exceed the amounts realized from the administrative charges assessed
against the Policy.
Fund Expenses. The value of the net assets of the Separate Account will
reflect the investment management and advisory fees and other expenses
incurred by the underlying investment companies. See the prospectuses for
the respective Funds for a description of investment management and advisory
fees and other expenses incurred by Russell Insurance Funds and the Capital
Company.
No charges are currently made to the Separate Account for Federal, state, or
local taxes that the Company incurs which may be attributable to such
Separate Account or to the Policy. The Company may make such a charge for any
such taxes or economic burden resulting from the application of the tax laws
that it determines to be properly attributable to the Separate Account or to
the Policy. (See Federal Tax Matters on page 25.)
DIVIDENDS
The Policy is a participating Policy which is entitled to a share, if any, of
the divisible surplus of the Company as determined each year and apportioned
to it. This surplus will be distributed as a dividend payable annually on the
January Monthly Anniversary. If the Insured dies after the dividend has been
determined, the Company will pay any unpaid dividend to the Beneficiary.
Because investment results are credited directly through changes in the
Policy's cash value, the Company expects little or no divisible surplus to be
credited to a Policy.
Dividends under participating policies may be described as refunds of
premiums which adjust the cost of a Policy to the actual level of costs
emerging over time after the issue of the Policies. Both Federal and state
law recognize that dividends are generally considered to be a refund of a
portion of the premium paid and therefore are not treated as income for
Federal or state income tax purposes. However, depending on the dividend
payment option chosen (see below), dividends may have tax consequences to
Owners. Counsel or other competent tax advisors should be consulted for more
complete information.
Dividend illustrations published at the time of issue of a Policy reflect the
actual recent experience of the issuing insurance company with respect to
factors such as interest, mortality, and expenses. State law generally
prohibits a company from projecting or estimating future results. State law
also requires that dividends must be based on surplus, after setting aside
certain necessary amounts, and that such surplus must be apportioned
equitably among participating policies. In other words, in principle and by
statute, dividends must be based on actual experience and cannot be
guaranteed at issue of a Policy.
Each year the Company's actuary analyzes the current and recent past
experience and compares it to the assumptions used in determining the premium
rates at the time of issue. Some of the more important data studied includes
mortality and lapse rates, investment yield in the General Account, and
actual expenses incurred in administering the Policy. Such data is then
allocated to each dividend class, e.g., by year of issue, age and plan. The
actuary then determines what dividends can be equitably apportioned to each
Policy class and makes a recommendation to the Company's Board of Directors
("the Board"). The Board, which has the ultimate authority to declare
dividends, will vote the amount of surplus to be apportioned to each Policy
class, thereby, authorizing the distribution of the annual dividend.
An Owner may choose one of the following dividend options. Dividends will be
credited under the chosen option until the Owner changes it. If the Owner
does not choose an option, the Company will credit the dividend under
Dividend Option B until such time as the Owner requests in writing a
different option.
Dividend Option A: Cash. The amount of the dividend will be paid in cash.
Dividend Option B: Increase Cash Value. The amount of the dividend will be
added to the Policy's Cash Value on the date of the dividend payment. The
Cash Value will be increased by the amount of the dividend. The dividend will
be allocated to the General Account (if available) and the Divisions of the
Separate Account according to the current allocation of the Net Premium.
21
<PAGE> 80
THE GENERAL ACCOUNT
Because of exemptive and exclusionary provisions, interests in the General
Account have not been registered under the Securities Act of 1933 and the
General Account has not been registered as an investment company under the
1940 Act. Accordingly, neither the General Account nor any interests therein
are subject to the provisions of these Acts and, as a result, the staff of
the SEC has not reviewed the disclosure in this Prospectus relating to the
General Account. The disclosure regarding the General Account may, however,
be subject to certain generally applicable provisions of the Federal
securities laws relating to the accuracy and completeness of statements made
in prospectuses.
General Description
The General Account consists of all assets owned by General American other
than those in the Separate Account and other separate accounts. Subject to
applicable law, General American has sole discretion over the investment of
the assets of the General Account.
At issue, General American will determine the maximum percentage of the
non-borrowed Cash Value that may be allocated, either initially or by transfer,
to the General Account. The ability to allocate Net Premiums or to transfer
Cash Value to the General Account may not be made available, in the Company's
discretion, under certain Policies. Further, the option may be limited with
respect to some Policies. The Company may, from time to time, adjust the
extent to which premiums or Cash Value may be allocated to the General
Account (the "maximum allocation percentage"). Such adjustments may not be
uniform as to all Policies. General American may at any time modify the
General Account maximum allocation percent. Subject to this maximum, an Owner
may elect to allocate Net Premiums to the General Account, the Separate
Account, or both. Subject to this maximum, the Owner may also transfer Cash
Value from the Divisions of the Separate Account to the General Account, or
from the General Account to the Divisions of the Separate Account. The
allocation of Net Premiums or the transfer of Cash Value to the General
Account does not entitle an Owner to share in the investment experience of
the General Account. Instead, General American guarantees that Cash Value
allocated to the General Account will accrue interest at a rate of at least
4%, compounded annually, independent of the actual investment experience of
the General Account.
The Loan Account is part of the General Account.
The Policy
This Prospectus describes a flexible premium variable life insurance policy.
This Prospectus is generally intended to serve as a disclosure document only
for the aspects of the Policy relating to the Separate Account. For complete
details regarding the General Account, see the Policy itself.
General Account Benefits
If the Owner allocates all Net Premiums only to the General Account and makes
no transfers, partial withdrawals, pro rata surrenders, or Policy Loans, the
entire investment risk will be borne by General American, and General
American guarantees that it will pay at least a minimum specified death
benefit. The Owner may select Death Benefit Option A, B or C under the Policy
and may change the Policy's Face Amount subject to satisfactory evidence of
insurability.
General Account Cash Value
Net Premiums allocated to the General Account are credited to the Cash Value.
General American bears the full investment risk for these amounts and
guarantees that interest will be credited to each Owner's Cash Value in the
General Account at a rate of no less than 4% per year, compounded annually.
General American may, AT ITS SOLE DISCRETION, credit a higher rate of
interest, although it is not obligated to credit interest in excess of 4% per
year, and might not do so. ANY INTEREST CREDITED ON THE POLICY'S CASH VALUE
IN THE GENERAL ACCOUNT IN EXCESS OF THE GUARANTEED MINIMUM RATE OF 4% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF GENERAL AMERICAN. THE
POLICY OWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE
GUARANTEED MINIMUM RATE OF 4% PER YEAR. If excess interest is credited, a
different rate of interest may be applied to the Cash Value in the Loan
Account. The Cash Value in the General Account will be calculated on each
Monthly Anniversary of the Policy.
General American guarantees that, on each Valuation Date, the Cash Value in
the General Account will be the amount of the Net Premiums allocated or Cash
Value transferred to the General Account, plus interest at the rate of 4% per
year, plus any excess interest which General American credits and any amounts
transferred into the General Account, less the sum of all Policy charges
allocable to the General Account and any amounts deducted from the General
Account in connection with partial withdrawals, pro rata surrenders,
surrender charges or transfers to the Separate Account.
Transfers, Surrenders, Partial Withdrawals and Policy Loans
After the first Policy Year and prior to the Maturity Date, a portion of Cash
Value may be withdrawn from the
22
<PAGE> 81
General Account or transferred from the General Account to the Separate
Account. A maximum total of four partial withdrawals and transfers from the
General Account is permitted in a Policy Year. A partial withdrawal, net of
any applicable surrender charges, and any transfer must be at least $500 or,
the Policy's entire Cash Value in the General Account if less than $500. No
amount may be withdrawn from the General Account that would result in there
being insufficient Cash Value to meet any surrender charges that would be
payable immediately following the withdrawal upon the surrender of the
remaining Cash Value of the Policy. The total amount of transfers and
withdrawals in a Policy Year may not exceed a Maximum Amount equal to the
greater of (a) 25% of a Policy's Cash Surrender Value in the General Account
at the beginning of the Policy Year, (b) $5,000, or (c) the previous Policy
Year's Maximum Amount (not to exceed the total Cash Surrender Value of the
Policy).
Transfers to the General Account are limited by the maximum allocation
percentage (described below) in effect for a Policy at the time a transfer
request is made.
Policy Loans may also be made from the Policy's Cash Value in the General
Account.
Loans and withdrawals from the General Account may have Federal income tax
consequences. (See Federal Tax Matters on page 25.)
No transfer charge currently is imposed on transfers to or from the General
Account. However, such a charge may be imposed in the future. General
American may revoke or modify the privilege of transferring amounts to or
from the General Account at any time. Partial withdrawals and pro rata
surrenders will result in the imposition of the applicable surrender charge.
Transfers, surrenders, partial withdrawals and pro rata surrenders payable
from the General Account and the payment of Policy Loans allocated to the
General Account may, subject to certain limitations, be delayed for up to six
months. However, if payment is deferred for 30 days or more, General American
will pay interest at the rate of 2.5% per year for the period of the
deferment. Amounts from the General Account used to pay premiums on policies
with General American will not be delayed.
GENERAL MATTERS
Postponement of Payments from the Separate Account
The Company usually pays amounts payable on partial withdrawal, pro rata
surrender, surrender, or Policy Loan allocated to the Separate Account
Divisions within seven days after written notice is received. Payment of any
amount payable from the Divisions of the Separate Account upon surrender,
partial withdrawals, pro rata surrender, death of Insured, or the Maturity
Date, as well as payments of a Policy Loan and transfers, may be postponed
whenever: (1) the New York Stock Exchange is closed other than customary
weekend and holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the SEC; (2) the SEC by order permits
postponement for the protection of Owners; or (3) an emergency exists, as
determined by the SEC, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Separate Account's net assets. The Company may defer payment of
the portion of any Policy Loan from the General Account for not more than six
months.
Payments under the Policy of any amounts derived from premiums paid by check
may be delayed until the Owner's check has cleared the bank upon which it
was drawn.
The Contract
The Policy, the attached application, any riders, endorsements, any
application for an increase in Face Amount, and any application for
reinstatement constitute the entire contract. All statements made by the
Insured in the application and any supplemental applications can be used to
contest a claim or the validity of the Policy. Any change to the Policy must
be in writing and approved by the President, a Vice President, or the
Secretary of the Company. No agent has the authority to alter or modify any
of the terms, conditions, or agreements of the Policy or to waive any of its
provisions.
Control of Policy
The Insured is the Owner of the Policy unless another person or entity is
shown as the Owner in the application. Ownership may be changed, however, as
described below. The Owner is entitled to all rights provided by the Policy,
prior to its Maturity Date. After the Maturity Date, the Owner cannot change
the payee nor the mode of payment, unless otherwise provided in the Policy.
Any person whose rights of ownership depend upon some future event does not
possess any present rights of ownership. If there is more than one Owner at a
given time, all Owners must exercise the rights of ownership by joint action.
If the Owner dies, and the Owner is not the Insured, the Owner's interest in
the Policy becomes the property of his or her estate unless otherwise
provided. Unless otherwise provided, the Policy is jointly owned by all
Owners named in the Policy or by the survivors of those joint Owners. Unless
otherwise stated in the Policy, the final Owner is the estate of the last
joint Owner to die. The Company may
23
<PAGE> 82
rely on the written request of any trustee of a trust which is the Owner of
the Policy, and the Company is not responsible for the proper administration
of any such trust.
Beneficiary
The Beneficiary(ies) is (are) the person(s) specified in the application or
by later designation. Unless otherwise stated in the Policy, the Beneficiary
has no rights in a Policy before the death of the Insured. If there is more
than one Beneficiary at the death of the Insured, each Beneficiary will
receive equal payments unless otherwise provided by the Owner. If no
Beneficiary is living at the death of the Insured, the proceeds will be
payable to the Owner or, if the Owner is not living, to the Owner's estate.
The Company permits the designation of various types of trusts as
Beneficiary(ies), including trusts for minor beneficiaries, trusts under a
will, and trusts under a separate written agreement. An Owner is also
permitted to designate several types of beneficiaries, including business
beneficiaries.
Change of Owner or Beneficiary
The Owner may change the ownership and/or Beneficiary designation by written
request in a form acceptable to the Company at any time during the Insured's
lifetime subject to any restrictions stated in the Policy and this
Prospectus. The Company may require that the Policy be returned for
endorsement of any change. If acceptable to us, the change will take effect
as of the date the request is signed, whether or not the Insured is living
when the request is received at the Company's Home Office. The Company is not
liable for any payment made or action taken before the Company received the
written request for change. If the Owner is also a Beneficiary of the Policy
at the time of the Insured's death, the Owner may, within sixty days of the
Insured's death, designate another person to receive the Policy proceeds. Any
change will be subject to any assignment of the Policy or any other legal
restrictions.
Policy Changes
The Company reserves the right to limit the number of changes to a Policy to
one per Policy Year and to restrict changes in the first Policy Year.
Currently, only one change is permitted during any Policy Year and no change
may be made during the first Policy Year. For this purpose, changes include
increases or decreases in Face Amount and changes in the death benefit
option. No change will be permitted that would result in a Policy not
satisfying the definition of life insurance under the Internal Revenue Code
of 1986 or any applicable successor provision thereto.
Conformity with Statutes
If any provision in a Policy is in conflict with the laws of the state
governing the Policy, the provision will be deemed to be amended to conform
to such laws. In addition, the Company reserves the right to change the
Policy if it determines that a change is necessary to cause this Policy to
comply with, or give the Owner the benefit of any Federal or state statute,
rule, or regulation, including, but not limited to, requirements of the
Internal Revenue Code, or its regulations or published rulings.
Claims of Creditors
To the extent permitted by law, neither the Policy nor any payment under it
will be subject to the claims of creditors or to any legal process.
Incontestability
The Policy is incontestable after it has been in force for two years from the
Issue Date during the lifetime of the Insured. An increase in Face Amount or
addition of a rider after the Issue Date is incontestable after such increase
or addition has been in force for two years from its effective date during
the lifetime of the Insured. Any reinstatement of a Policy is incontestable
only after it has been in force during the lifetime of the Insured for two
years after the effective date of the reinstatement.
Assignment
The Company will be bound by an assignment of a Policy only if: (a) the
assignment is in writing; (b) the original assignment instrument or a
certified copy thereof is filed with the Company at its Home Office; and (c)
the Company returns an acknowledged copy of the assignment instrument to the
Owner. The Company is not responsible for determining the validity of any
assignment. Payment of Policy proceeds is subject to the rights of any
assignee of record. If a claim is based on an assignment, the Company may
require proof of the interest of the claimant. A valid assignment will take
precedence over the claim of any Beneficiary.
Suicide
Suicide within two years of the Issue Date is not covered by the Policy. If
the Insured dies by suicide, while sane or insane, within two years from the
Issue Date (or within the maximum period permitted by the laws of the state
in which the Policy was delivered, if less than two years), the amount
payable will be limited to premiums paid, less any partial withdrawals and
outstanding Indebtedness subject to certain limitations, if the Insured,
while sane or insane, dies by suicide within two years after the effective
date of an increase in Face Amount,
24
<PAGE> 83
the death benefit for that increase will be limited to the amount of the
monthly deductions for the increase.
If the Insured is a Missouri citizen when the Policy is issued, this
provision does not apply on the Issue Date of the Policy, or on the effective
date of any increase in Face Amount, unless the Insured intended suicide when
the Policy, or the increase in Face Amount, was applied for.
Misstatement of Age or Sex and Corrections
If the age or sex (except any Policies sold in Montana; see Unisex
Requirements Under Montana Law) of the Insured has been misstated in the
application, the amount of the death benefit will be that which the most
recent cost of insurance charge would have purchased for the correct age and
sex.
Any payment or Policy changes made by the Company in good faith, relying on
its records or evidence supplied with respect to such payment, will fully
discharge the Company's duty. The Company reserves the right to correct any
errors in the Policy.
Change in Rate Class
Sixty days prior to the Policy Anniversary on which the Insured attains age
20, a letter will be sent to the Owner notifying the Owner of the opportunity
to apply for a change in the Insured's Rate Class from Smoker to Non-Smoker.
Upon receipt of the forms requested for a Non-Smoker risk classification and
proof satisfactory to the Company, the Rate Class will be Non-Smoker. If the
Owner does not apply for a Rate Class change, the Rate Class will remain
Smoker.
Additional Insurance Benefits
Subject to certain requirements, one or more of the following additional
insurance benefits may be added to a Policy by rider. The descriptions below
are intended to be general; the terms of the Policy riders providing the
additional benefits may vary from state to state, and the Policy should be
consulted. The cost of any additional insurance benefits which require
additional charges will be deducted as part of the monthly deduction from the
Policy's Cash Value. (See Charges and Deductions - Monthly Deduction on page
18.) Certain restrictions may apply and are described in the applicable rider.
An insurance agent authorized to sell the Policy can describe these extra
benefits further. Samples of the provisions are available from General
American upon written request.
Waiver of Monthly Deduction Rider. Provides for the waiver of the monthly
deductions while the Insured is totally disabled, subject to certain
limitations described in the rider. The Insured must have become disabled
after age 5 and before age 65.
Waiver of Specified Premium Rider. Provides for crediting the Policy's Cash
Value with a specified monthly premium while the Insured is totally disabled.
The monthly premium selected at issue is not guaranteed to keep the Policy in
force. The Insured must have become disabled after age 5 and before age 65.
Increasing Benefit Rider. Allows the Owner to increase the Face Amount of
the Policy without evidence of insurability. The increase is made on each
Policy Anniversary.
Records and Reports
The Company will maintain all records relating to the Separate Account and
will mail to the Owner once each Policy Year, at the last known address of
record, a report which shows the current Policy values, premiums paid,
deductions made since the last report, and any outstanding Policy Loans. The
Owner will also be sent a periodic report for Russell Insurance Funds and the
Capital Company and a list of the securities held in each Fund. Receipt of
premium payments, transfers, partial withdrawals, pro rata surrenders, Policy
Loans, loan repayments, changes in death benefit options, increases or
decreases in Face Amount, surrenders and reinstatements will be confirmed
promptly following each transaction.
An Owner may request in writing a projection of illustrated future Cash
Surrender Values and death benefits. This projection will be furnished by the
Company for a nominal fee which will not exceed $25.
DISTRIBUTION OF THE POLICY
The Policy will be sold by individuals who, in addition to being licensed as
life insurance agents for the Company, are also registered representatives of
Walnut Street Securities, Inc. ("Walnut Street"), the principal underwriter
of the Policy, or of broker-dealers who have entered into written sales
agreements with Walnut Street. Walnut Street was incorporated under the laws
of Missouri in 1984 and is a wholly-owned subsidiary of General American
Holding Company, which is, in turn, a wholly-owned subsidiary of the
Company. Walnut Street is registered with the SEC under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. No director or officer of Walnut
Street owns any units in the Separate Account.
Writing agents will receive commissions based on a commission schedule and
rules. The maximum agent first-year commissions equal 7.50% of target
premiums
25
<PAGE> 84
paid in Policy Year 1. In renewal years, the maximum agent commissions equal
4.0% of premiums paid in years 2 through 10. A maximum 2.50% of premium
service fee is paid after Policy year 10. For Policy years after Policy Year
1, a maximum commission of .20% of the average monthly Cash Value for each
Policy Year is paid. These are maximum commissions, and reductions may be
possible under the circumstances outlined in the section entitled Reduction
of Charges. General Agents receive compensation which may be in part based on
the level of agent commissions in their agencies. The general agent
commission schedules and rules differ for different types of agency
contracts. Walnut Street receives no administrative fees, management fees,
or other fees from sales of the Policy.
FEDERAL TAX MATTERS
Introduction
The following summary provides a general description of the Federal income
tax considerations associated with the Policy and does not purport to be
complete or to cover all situations. This discussion is not intended as tax
advice. Counsel or other competent tax advisors should be consulted for more
complete information. This discussion is based upon General American's
understanding of the present Federal income tax laws as they are currently
interpreted by the Internal Revenue Service. No representation is made as to
the likelihood of continuation of the present Federal income tax laws or of
the current interpretations by the Internal Revenue Service.
Tax Status of the Policy
Section 7702 of the Internal Revenue Code of 1986, as amended (the "Code")
includes a definition of a life insurance contract for Federal tax purposes.
The Secretary of the Treasury (the "Treasury") issued proposed regulations
which specify what will be considered reasonable mortality charges under
Section 7702. Guidance as to how Section 7702 is to be applied is, however,
limited. If a Policy were determined not to be a life insurance contract for
purposes of Section 7702, such Policy would not provide most of the tax
advantages normally provided by a life insurance policy.
With respect to a Policy issued on a basis of a standard premium class or on
a guaranteed or simplified issue basis, while there is some uncertainty due
to the limited guidance under Section 7702, the Company believes that such a
Policy should meet the Section 7702 definition of a life insurance contract.
However, with respect to a Policy issued on a substandard basis (i.e., a
premium class involving higher than standard mortality risk), it is not clear
whether such a Policy would satisfy Section 7702, particularly if the Owner
pays the full amount of premiums permitted under the Policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
the Company will take whatever steps are appropriate and necessary to attempt
to cause such a Policy to comply with Section 7702, including possibly
refunding any premiums paid that exceed the limitations allowable under
Section 7702 (together with interest or other earnings on any such premiums
refunded as required by law). For these reasons, the Company reserves the
right to modify the Policy as necessary to attempt to qualify it as a life
insurance contract under Section 7702.
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Separate Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for Federal tax purposes. The Separate Account intends to
comply with the diversification requirements prescribed by the Treasury in
Regulation Section 1.817-5, which affect how assets may be invested. Although
General American does not control Russell Insurance Funds or the Capital
Company it has entered into agreements, which require these investment
companies to be operated in compliance with the requirements prescribed by
the Treasury.
The IRS has stated in published rulings that a variable contract owner will
be considered the owner of separate account assets, for federal income tax
purposes, if the contract owner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the assets.
If that were to be determined to be the case, income and gains from the
separate account assets would be includible in the variable contract owner's
gross income. The Treasury Department has also announced, in connection with
the issuance of regulations concerning diversification, that those
regulations "do not provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may cause
the investor (i.e., the Owner), rather than the insurance company, to be
treated as the owner of the assets in the account." This announcement also
stated that guidance would be issued by way of regulations or rulings on the
"extent to which policyholders may direct their investments to particular
subaccounts without being treated as owners of the underlying assets."
The ownership rights under the Policy are different in certain respects from
those described by the IRS in rulings in which it was determined that policy
owners were not owners of separate account assets. For example, the Owner
has additional flexibility in allocating Premium payments and Policy Values.
These differences could result in an Owner being treated as the
26
<PAGE> 85
owner of a pro rata portion of the assets of the Separate Account. In
addition, the Company does not know what standards will be set forth, if any,
in the regulations or rulings which the Treasury Department has stated it
expects to issue. The Company therefore reserves the right to modify the
Policy as necessary to attempt to prevent an Owner from being considered the
owner of a pro rata share of the assets of the Separate Account.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
(1) Tax Treatment of Policy Benefits. In general, the Company believes
that the proceeds and Cash Value increases of a Policy should be treated in a
manner consistent with a fixed-benefit life insurance policy for Federal
income tax purposes. Thus, the death benefit under the Policy should be
excludable from the gross income of the Beneficiary under Section 101(a)(1)
of the Code, unless a transfer for value (generally a sale of the policy) has
occurred.
Many changes or transactions involving a Policy may have tax consequences,
depending on the circumstances. Such changes include, but are not limited to,
the exchange of the Policy, a change of the Policy's Face Amount, a Policy
Loan, an additional premium payment, a Policy lapse with an outstanding
Policy Loan, a partial withdrawal, or a surrender of the Policy. In addition,
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend upon the
circumstances of each Owner or Beneficiary. A competent tax advisor should be
consulted for further information.
A Policy may also be used in various arrangements, including non-qualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans, retiree medical benefit plans and others. The
tax consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if you are
contemplating the use of a Policy in any arrangement the value of which
depends in part on its tax consequences, you should be sure to consult a
qualified tax advisor regarding the tax attributes of the particular
arrangement.
Generally, the Owner will not be deemed to be in constructive receipt of the
Policy's Cash Value, including increments thereof, under the Policy until
there is a distribution. The tax consequences of distributions from, and
Policy Loans taken from or secured by, a Policy depend upon whether the
Policy is classified as a "modified endowment contract." However, upon a
complete surrender or lapse of any Policy, or when benefits are paid at such
a Policy's maturity date, if the amount received plus the amount of
outstanding Indebtedness exceeds the total investment in the Policy, the
excess will generally be treated as ordinary income subject to tax.
(2) Modified Endowment Contracts. A policy may be treated as a modified
endowment contract depending upon the amount of premiums paid in relation to
the death benefit provided under such Policy. The premium limitation rules
for determining whether a Policy is a modified endowment contract are
extremely complex. In general, however, a Policy will be a modified endowment
contract if the accumulated premiums paid at any time during the first seven
Policy Years exceed the sum of the net level premiums which would have been
paid on or before such time if the Policy provided for paid-up future
benefits after the payment of seven level annual premiums.
In addition, if a Policy is "materially changed" it may cause such Policy to
be treated as a modified endowment contract. The material change rules for
determining whether a Policy is a modified endowment contract are also
extremely complex. In general, however, the determination of whether a Policy
will be a modified endowment contract after a material change generally
depends upon the relationship among the death benefit at the time of such
change, the Cash Value at the time of the change and the additional premiums
paid in the seven Policy Years starting with the date on which the material
change occurs.
Moreover, a life insurance contract received in exchange for a life insurance
contract classified as a modified endowment contract will also be treated as
a modified endowment contract. A reduction in a Policy's benefits may also
cause such Policy to become a modified endowment contract.
Due to the Policy's flexibility, classification of a Policy as a modified
endowment contract will depend upon the circumstances of each Policy. The
Company has, however, adopted administrative steps designed to protect an
Owner against the possibility that the Policy might become a modified
endowment contract. The Company believes the safeguards are adequate for most
situations, but it cannot provide complete assurance that a Policy will not
be classified as a modified endowment contract. At the time a premium is
credited which would cause the Policy to become a modified endowment
contract, the Company will notify the Owner that unless a refund of the
excess premium is requested by the Owner, the Policy will become a modified
endowment contract. The Owner will have 30 days after receiving such
notification to request the refund. The excess premium paid will be returned
to the Owner upon receipt by the Company of the refund request. The amount to
be refunded will be deducted from the Policy Cash Value in the Divisions of
the Separate Account and in the General
27
<PAGE> 86
Account in the same proportion as the premium payment was allocated to such
Divisions.
Accordingly, a prospective Owner should contact a competent tax advisor
before purchasing a Policy to determine the circumstances under which the
Policy would be a modified endowment contract. In addition, an Owner should
contact a competent tax advisor before paying any additional premiums or
making any other change to, including an exchange of, a Policy to determine
whether such premium or change would cause the Policy (or the new Policy in
the case of an exchange) to be treated as a modified endowment contract.
(3) Distributions from Policies Classified as Modified Endowment Contract.
Policies classified as modified endowment contracts will be subject to the
following tax rules: First, all distributions, including distributions upon
surrender and benefits paid at maturity, from such a Policy are treated as
ordinary income subject to tax up to the amount equal to the excess (if any)
of the Cash Value immediately before the distribution over the investment in
the Policy (described below) at such time. Second, Policy Loans taken from,
or secured by, such a Policy, as well as due but unpaid interest thereon, are
treated as distributions from such a Policy and taxed accordingly. Third, a
10 percent additional income tax is imposed on the portion of any
distribution from, or Policy Loan taken from or secured by, such a Policy
that (a) is included in income, except where the distribution or Policy Loan
is made on or after the Owner attains age 591/2, (b) is attributable to the
Owner's becoming disabled, or (c) is part of a series of substantially equal
periodic payments for the life (or life expectancy) of the Owner or the joint
lives (or joint life expectancies) of the Owner and the Owner's Beneficiary.
(4) Distributions From Policies Not Classified as Modified Endowment
Contract. Distributions from Policies not classified as modified endowment
contracts are generally treated as first recovering the investment in the
Policy (described below) and then, only after the return of all such
investment in the Policy, as distributing taxable income. An exception to
this general rule occurs in the case of a decrease in the Policy's death
benefit (possibly including a partial withdrawal) or any other change that
reduces benefits under the Policy in the first 15 years after the Policy is
issued and that results in cash distribution to the Owner in order for the
Policy to continue complying with the Section 7702 definitional limits. Such
a cash distribution will be taxed in whole or in part as ordinary income (to
the extent of any gain in the Policy) under rules prescribed in Section 7702.
Policy Loans from, or secured by, a Policy that is not a modified endowment
contract are not treated as distributions. Instead. such loans are treated as
indebtedness of the Owner.
Upon a complete surrender or lapse of a Policy that is not a modified
endowment contract, or when benefits are paid at such a Policy's maturity
date, if the amount received plus the amount of indebtedness exceeds the
total investment in the Policy, the excess will generally be treated as
ordinary income subject to tax.
Neither distributions (including distributions upon surrender or lapse) nor
Policy Loans from, or secured by, a Policy that is not a modified endowment
contract are subject to the 10 percent additional income tax.
If a Policy which is not a modified endowment contract subsequently becomes a
modified endowment contract, then any distribution made from the Policy
within two years prior to the date of such change in status may become
taxable.
(5) Policy Loan Interest. Generally, interest paid on any loan under a
life insurance Policy owned by an individual is not deductible. In addition,
interest on any loan under a life insurance Policy owned by a business
taxpayer on the life of any individual who is an officer of or is financially
interested in the business carried on by that taxpayer is deductible only
under certain very limited circumstances. An Owner should consult a
competent tax advisor before deducting any loan interest.
(6) Interest Expense on Unrelated Indebtedness. Under provisions added to
the Code in 1997 for policies issued after June 8, 1997, if a business
taxpayer owns or is the beneficiary of a Policy on the life of any individual
who is not an officer, director, employee, or 20 percent owner of the
business, and the taxpayer also has debt unrelated to the Policy, a portion
of the taxpayer's unrelated interest expense deductions may be lost. No
business taxpayer should purchase, exchange, or increase the death benefit
under a Policy on the life of any individual who is not an officer, director,
employee, or 20 percent owner of the business without first consulting a
competent tax Advisor.
(7) Investment in the Policy. Investment in the Policy means (i) the
aggregate amount of any premiums or other consideration paid for a Policy,
minus (ii) the aggregate amount received under the Policy which is excluded
from gross income of the Owner (except that the amount of any Policy Loan
from, or secured by, a Policy that is a modified endowment contract, to the
extent such amount is excluded from gross income, will be disregarded), plus
(iii) the amount of any Policy Loan from, or secured by, a Policy that is a
modified endowment contract to the extent that such amount is included in the
gross income of the Owner.
28
<PAGE> 87
(8) Multiple Policies. All modified endowment contracts that are issued by
the Company (or its affiliates) to the same Owner during any calendar year
are treated as one modified endowment contract for purposes of determining
the amount includible in gross income under Section 72(e) of the Code.
(9) Possible Charge for Taxes. At the present time, the Company makes no
charge to the Separate Account for any Federal, state, or local taxes (as
opposed to Premium Tax Charges which are deducted from premium payments) that
it incurs which may be attributable to such Separate Account or to the
Policies. The Company, however, reserves the right in the future to make a
charge for any such tax or other economic burden resulting from the
application of the tax laws that it determines to be properly attributable to
the Separate Account or to the Policies.
(10) Possible Changes in Taxation. As of the date of this Prospectus, the
President's budget for fiscal year 1999 contains a number of proposals that
would adversely affect the Federal income tax treatment of life insurance
contracts. Of particular importance to owners of variable life insurance
contracts such as the Policy are two proposals under which, if adopted: (1)
the inside buildup of variable life insurance contracts like the Policy would
be taxed whenever cash values were reallocated among the available investment
options, for example, if the Periodic and Variance Rebalancing options
available under the Policy were used, and (2) it would no longer be possible
to exchange a variable life insurance contract tax free under Code section
1035. Moreover, it is always possible that any changes in the tax treatment
of life insurance contracts could be effective prior to the date of any new
legislation.
UNISEX REQUIREMENTS UNDER MONTANA LAW
The State of Montana generally prohibits the use of actuarial tables that
distinguish between men and women in determining premiums and Policy benefits
for policies issued on the lives of their residents. Therefore, all Policies
offered by this Prospectus to insure residents of Montana will have premiums
and benefits which are based on actuarial tables that do not differentiate on
the basis of sex.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
General American holds the assets of the Separate Account in a custodial
account in its name at the Bank of New York. The Company maintains records of
all purchases and redemptions of applicable Fund shares by each of the
Divisions. Additional protection for the assets of the Separate Account is
afforded by a blanket fidelity bond issued by Lloyd's Underwriters in the
amount of five million dollars, covering all officers and employees of the
Company who have access to the assets of the Separate Account.
VOTING RIGHTS
Based on its understanding of current applicable legal requirements, the
Company will vote the shares of the Funds held in the Separate Account at
regular and special shareholder meetings of the mutual funds in accordance
with the instructions received from persons having voting interests in the
corresponding Divisions of the Separate Account. If, however, the 1940 Act or
any regulation thereunder should be amended or if the present interpretation
thereof should change, and as a result the Company determines that it is
permitted to vote shares of the Fund in its own right, it may elect to do so.
No voting privileges apply to the Policies with respect to Cash Value removed
from the Separate Account as a result of a Policy Loan.
The number of votes which an Owner has the right to instruct will be
calculated separately for each Division. Voting rights reflect the dollar
value of the total number of units of each Division of the Separate Account
credited to the Owner at the record date, rather than the number of units
alone. Fractional shares will be counted. The number of votes of the Fund
which the Owner has the right to instruct will be determined as of the date
coincident with the date established by that Fund for determining
shareholders eligible. Voting instructions will be solicited by written
communications prior to such meeting in accordance with procedures
established by the mutual funds.
The company will vote shares of a Fund for which no timely instructions are
received in proportion to the voting instructions which are received with
respect to that Fund. The Company will also vote any shares of the Funds
which are not attributable to Policies in the same proportion.
Each person having a voting interest in a Division will receive any proxy
material, reports, and other materials relating to the appropriate Fund.
Disregard of Voting Instructions. The Company may, when required by state
insurance regulatory authorities, disregard voting instructions if the
instructions require that the shares be voted so as to cause a change in the
subclassification or investment objective of the Fund or to approve or
disapprove an investment advisory contract for a Fund. In addition, the
Company itself may disregard voting instructions in favor of changes
initiated by an Owner in the investment policy or the investment advisor or
sub-advisor of a Fund if the Company reasonably disapproves of such changes.
A proposed
29
<PAGE> 88
change would be disapproved only if the proposed change is contrary to state
law or prohibited by state regulatory authorities, or the Company determined
that the change would have an adverse effect on its General Account in that
the proposed investment policy for a Fund may result in overly speculative or
unsound investments. If the Company disregards voting instructions, a
summary of that action and the reasons for such action will be included in
the next annual report to Owners.
STATE REGULATION OF THE COMPANY
The Company, a stock life insurance company organized under the laws of
Missouri, and the Separate Account are subject to regulation by the Missouri
Department of Insurance. An annual statement is filed with the Director of
Insurance on or before March 1st of each year covering the operations and
reporting on the financial condition of the Company as of December 31 of the
preceding year. Periodically, the Director of Insurance examines the
liabilities and reserves of the Company and the Separate Account and
certifies their adequacy, and a full examination of the Company's operations
is conducted by the National Association of Insurance Commissioners at least
once every three years.
In addition, the Company is subject to the insurance laws and regulations of
other states within which it is licensed or may become licensed to operate.
Generally, the insurance departments of other states apply the laws of the
state of domicile in determining permissible investments.
30
<PAGE> 89
<TABLE>
MANAGEMENT OF THE COMPANY
<CAPTION>
Principal Occupation(s)
Name During Past Five Years<F*>
---- --------------------------
Principal Officers<F**>
- -----------------------
<C> <S>
Richard A. Liddy Chairman, President and CEO, 1/95-present; Chairman of the Executive Committee,
5/92-present. Formerly President and CEO, 5/92-1/95.
Robert J. Banstetter, Sr. Vice President, General Counsel and Secretary, 2/91-present.
John W. Barber Vice President and Controller, 12/84-present.
O'Neil P. Boudreaux Vice President-Sales and Marketing, 10/96-present. Formerly Vice President-Group
Field Accounts, 4/87-10/96.
Kevin C. Eichner Executive Vice President of General American, Chairman of GenMark, Chairman of
Walnut Street Securities, 10/97-Present. President and CEO, Collaborative
Strategies, 1983-Present.
E. Thomas Hughes Corporate Actuary and Treasurer, 10/94-present. Formerly Executive Vice President-
Group Pensions, 3/90-10/94
Michael P. Ingrassia Vice President-Group Executive Accounts, 3/92-present. Formerly Vice President-
Group Operations, 5/84-2/92.
Barbara L. Snyder Vice President-Product Division, 4/95-present. Formerly Vice President and Chief
Actuary, American Bankers Insurance Company, Miami, FL.
Warren J. Winer Executive Vice President-Group Life and Health, 8/95-present. Formerly Managing
Director, William M. Mercer, Inc., 7/93-8/95; President and Chief Operating
Officer, W. F. Corroon, 1986-7/93.
Bernard H. Wolzenski Executive Vice President-Individual Insurance, 10/91-present. Formerly Vice
President-Life Product Management, 5/86-10/91.
A. Greig Woodring President and Chief Executive Officer, Reinsurance Group of America, 12/92-present.
Executive Vice President-Reinsurance, 3/90-present.
<FN>
<F*> All positions listed are with General American unless otherwise
indicated.
<F**> The principal business address of Messrs. Banstetter, Hughes, and Liddy
is General American Life Insurance Company, 700 Market Street,
St. Louis, Missouri 63101. The principal business address for
Messrs. Barber, Boudreaux, Ingrassia, Winer and Wolzenski and
for Ms. Snyder is 13045 Tesson Ferry Road, St. Louis, Missouri
63128. The principal business address for Mr. Woodring is 660
Mason Ridge Center Drive, Suite 300, St. Louis, Missouri 63141.
The principal business address for Mr. Eichner is 670 Mason
Ridge Center Drive, Suite 100, St. Louis, Missouri 63141.
31
<PAGE> 90
<CAPTION>
Principal Occupation(s)
Name During Past Five Years<F*>
---- --------------------------
Directors
- ---------
<C> <S>
August A. Busch III Chairman of the Board and President, Anheuser-Busch Companies, Inc.,
Anheuser-Busch Companies, Inc. (beer business).
One Busch Place
St. Louis, Missouri 63118
William E. Cornelius Retired Chairman and Chief Executive Officer, Union Electric Company
Union Electric Company (electric utility business). Prior to 1993, Chairman and Chief Executive
P.O. Box 149 Officer.
St. Louis, Missouri 63166
John C. Danforth Partner. Formerly, U. S. Senator, State of Missouri.
Bryan Cave
One Metropolitan Square, Suite 3600
St. Louis, Missouri 63102
Bernard A. Edison Past President, Edison Brothers Stores, Inc. (retail specialty stores).
Edison Brothers Stores, Inc.
P.O. Box 14020
St. Louis, Missouri 63178
Richard A. Liddy Chairman, President and CEO, General American
General American Life Insurance Co.
700 Market Street
St. Louis, MO 63101
William E. Maritz Chairman and Chief Executive Officer, Maritz, Inc.
Maritz, Inc. (motivation, travel, communications, training and marketing
1375 North Highway Drive research business).
Fenton, Missouri 63099
Craig D. Schnuck Chairman and Chief Executive Officer, Schnuck Markets, Inc. (retail
Schnuck Markets, Inc. supermarket chain). Prior to 1991, President and Chief Executive Officer
11420 Lackland Road
P.O. Box 46928
St. Louis, Missouri 63146
William P. Stiritz Chairman, Chief Executive Officer and President, Ralston Purina Company
Ralston Purina Company (pet food, batteries, and bread business); Chairman, Ralcorp Holdings, Inc.
Checkerboard Square (ready-to-eat cereal, baby food, ski resorts).
St. Louis, Missouri 63164
Andrew C. Taylor Chief Executive Officer and President, Enterprise Rent-A-Car (car
Enterprise Rent-A-Car rental). Prior to May, 1991, President.
600 Corporate Park Drive
St. Louis, Missouri 63105
32
<PAGE> 91
Principal Occupation(s)
Name During Past Five Years<F*>
---- --------------------------
Directors (continued)
- ---------------------
H. Edwin Trusheim Retired Chairman and Chief Executive Officer
General American Life Insurance Co.
P.O. Box 396
St. Louis, MO 63166
Robert L. Virgil Principal, Edward Jones (investments). Prior to 1993, Dean, the John
Edward Jones M. Olin School of Business, Washington University (business education)
12555 Manchester
St. Louis, Missouri 63131-3729
Virginia V. Weldon, M.D. Senior Vice President, Public Policy, Monsanto Company (chemicals
Monsanto Company diversified industry, pharmaceuticals, life science products, and food
800 North Lindbergh ingredients business). Prior to 1993, Vice President, Public Policy.
St. Louis, Missouri 63167
Ted C. Wetterau President, Wetterau Associates, L.L.C. Retired Chairman and Chief
Wetterau Associates, L.L.C. Executive Officer, Wetterau Incorporated (retail and wholesale grocery,
7700 Bonhomme, Suite 750 manufacturing business).
St. Louis, Missouri 63105
<FN>
<F*> All positions listed are with General American unless otherwise
indicated.
</TABLE>
33
<PAGE> 92
LEGAL MATTERS
All matters of Missouri law pertaining to the Policy, including the validity
of the Policy and General American's right to issue the Policy under Missouri
insurance law, have been passed upon by Robert J. Banstetter, Vice President,
General Counsel, and Secretary of General American.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. General American is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Separate Account.
EXPERTS
The audited financial statements of General American and the Separate Account
have been included in this Prospectus in reliance on the reports of KPMG Peat
Marwick LLP, independent certified public accountants, and on the authority
of said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the December 31, 1997 financial
statements of General American refers to the adoption of Statement of
Financial Accounting Standards No. 120, Accounting and Reporting by Mutual
Life Insurance Enterprises and by Insurance Enterprises for Certain
Long-Duration Participating Contracts.
Actuarial matters included in this Prospectus have been examined by
Shashikant Bhave, FSA, MAAA, Executive Director and Associate Actuary, as
stated in the opinion filed as an exhibit to the registration statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and the amendments and exhibits to
the registration statement, to all of which reference is made for further
information concerning the Separate Account, General American and the Policy
offered hereby. Statements contained in this Prospectus as to the contents of
the Policy and other legal instruments are summaries. For a complete
statement of the terms thereof reference is made to such instruments as
filed.
FINANCIAL STATEMENTS
The financial statements of General American which are included in this
Prospectus should be distinguished from the financial statements of the
Separate Account, and should be considered only as bearing on the ability of
General American to meet its obligations under the Policy. They should not be
considered as bearing on the investment performance of the assets held in the
Separate Account. Financial information is not provided for four of the five
Divisions of the Separate Account because those Divisions have only recently
been established, and therefore no operating history exists for those
Divisions.
34
<PAGE> 93
APPENDIX A
Illustrations of Death Benefits and Cash Values
The following tables illustrate how the Cash Value, Cash Surrender Value, and
death benefit of a Policy change with the investment experience of a Division
of the Separate Account. The tables show how the Cash Value, Cash Surrender
Value, and death benefit of a Policy issued to an insured of a given age and
at a given premium would vary over time if the investment return on the
assets held in each Division of the Separate Account were a uniform, gross,
after-tax annual rate of 0%, 6%, or 12%. The tables on pages 35 through 43
illustrate a Policy issued to a Male, age 45 in a preferred nonsmoker rate
class. If the insured falls into a smoker rate class, the Cash Values, Cash
Surrender Values, and death benefits would be lower than those shown in the
tables. In addition, the Cash Values, Cash Surrender Values, and death
benefits would be different from those shown if the gross annual investment
rates of return averaged 0%, 6%, and 12% over a period of years, but
fluctuated above and below those averages for individual Policy Years.
The Cash Value column under the "Guaranteed" heading shows the accumulated
value of the Net Premiums paid at the stated interest rate, reflecting
deduction of the monthly administrative charges and monthly charges for the
cost of insurance based on the maximum values allowed under the 1980
Commissioners Standard Ordinary Mortality Table. The Cash Surrender Value
column under the "Guaranteed" heading shows the projected Cash Surrender
Value of the Policy, which is calculated by taking the Cash Value under the
"Guaranteed" heading and deducting any appropriate Contingent Deferred Sales
Charge. The Cash value column under the "Current" heading shows the
accumulated value of the Net Premiums paid at the stated interest rate,
reflecting deduction of the monthly administrative charges and monthly
charges for the cost of insurance at their current level, which is less than
or equal to that allowed by the 1980 Commissioners Standard Ordinary
Mortality Table. The Cash Surrender Value column under the "Current" heading
shows the projected Cash Surrender Value of the Policy, which is calculated
by taking the Cash Value under the "Current" heading and deducting any
appropriate Contingent Deferred Sales Charge. The illustrations of death
benefits reflect the above assumptions. The death benefits also vary between
tables depending upon whether Death Benefit Options A or C (Level Type) or
Death Benefit Option B (Increasing Type) are illustrated.
The amounts shown for Cash Value, Cash Surrender Value, and death benefit
reflect the fact that the investment rate of return is lower than the gross
after-tax return on the assets held in a Division of the Separate Account.
The charges include a .70% charge for mortality and expense risk, and an
assumed .72% charge for the investment management and advisory fees and
administrative expenses combined. The actual investment management and
advisory fees applicable to each Division are shown in the respective
prospectuses of Russell Insurance Funds and General American Capital Company.
After deduction for these amounts, the illustrated gross annual investment
rates of return of 0%, 6%, and 12% correspond to approximate net annual rates
of -1.42%, 4.58%, and 10.58%, respectively. The prospectuses for Russell
Insurance Funds and General American Capital Company should be consulted for
details about the nature and extent of their expenses.
The hypothetical values shown in the tables do not reflect any charges for
Federal income taxes against the Separate Account (as opposed to Premium Tax
Charges which are deducted from premium payments), since General American is
not currently making any such charges. However, such charges may be made in
the future and, in that event, the gross annual investment rate of return of
the Divisions of the Separate Account would have to exceed 0%, 6%, and 12% by
an amount sufficient to cover the tax charges in order to produce the death
benefit and Cash Value illustration. (See Federal Tax Matters on page 25.)
The tables illustrate the Policy values that would result based upon the
investment rates of return if premiums are paid as indicated, if all Net
Premiums are allocated to the Separate Account and if no Policy Loans have
been made. The tables are also based on the assumptions that the Owner has
not requested an increase or decrease in the Face Amount, that no partial
withdrawals have been made, that no transfer charges were incurred, and that
no optional riders have been requested.
Upon request, General American will provide a comparable illustration based
upon the proposed Insured's age, sex, and rate class, the Face Amount or
premium requested, the proposed frequency of premium payments, and any
available riders requested.
35
<PAGE> 94
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $2,141
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.42%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 2,141 2,248 1,782 1,782 100,000 1,692 1,777 100,000
2 47 2,141 4,609 3,497 3,497 100,000 3,017 3,188 100,000
3 48 2,141 7,087 5,134 5,134 100,000 4,292 4,548 100,000
4 49 2,141 9,690 6,719 6,719 100,000 5,515 5,858 100,000
5 50 2,141 12,423 8,264 8,264 100,000 6,685 7,114 100,000
6 51 2,141 15,292 9,782 9,782 100,000 7,903 8,314 100,000
7 52 2,141 18,305 11,262 11,262 100,000 9,093 9,453 100,000
8 53 2,141 21,468 12,717 12,717 100,000 10,252 10,526 100,000
9 54 2,141 24,790 14,135 14,135 100,000 11,373 11,527 100,000
10 55 2,141 28,278 15,519 15,519 100,000 12,450 12,450 100,000
11 56 2,141 31,940 16,955 16,955 100,000 13,290 13,290 100,000
12 57 2,141 35,785 18,337 18,337 100,000 14,044 14,044 100,000
13 58 2,141 39,822 19,669 19,669 100,000 14,709 14,709 100,000
14 59 2,141 44,062 20,961 20,961 100,000 15,281 15,281 100,000
15 60 2,141 48,513 22,214 22,214 100,000 15,755 15,755 100,000
16 61 2,141 53,187 23,403 23,403 100,000 16,122 16,122 100,000
17 62 2,141 58,094 24,530 24,530 100,000 16,368 16,368 100,000
18 63 2,141 63,247 25,587 25,587 100,000 16,480 16,480 100,000
19 64 2,141 68,658 26,569 26,569 100,000 16,439 16,439 100,000
20 65 2,141 74,339 27,478 27,478 100,000 16,226 16,226 100,000
25 70 2,141 107,300 30,714 30,714 100,000 11,923 11,923 100,000
30 75 2,141 149,368 30,950 30,950 100,000 0 0 0
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE,
CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL INSURANCE
FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK INVESTMENT TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
36
<PAGE> 95
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $2,141
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.58%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 2,141 2,248 1,896 1,896 100,000 1,805 1,890 100,000
2 47 2,141 4,609 3,835 3,835 100,000 3,345 3,516 100,000
3 48 2,141 7,087 5,809 5,809 100,000 4,930 5,187 100,000
4 49 2,141 9,690 7,845 7,845 100,000 6,561 6,903 100,000
5 50 2,141 12,423 9,958 9,958 100,000 8,237 8,665 100,000
6 51 2,141 15,292 12,165 12,165 100,000 10,063 10,474 100,000
7 52 2,141 18,305 14,459 14,459 100,000 11,967 12,326 100,000
8 53 2,141 21,468 16,857 16,857 100,000 13,946 14,220 100,000
9 54 2,141 24,790 19,355 19,355 100,000 15,998 16,152 100,000
10 55 2,141 28,278 21,958 21,958 100,000 18,120 18,120 100,000
11 56 2,141 31,940 24,763 24,763 100,000 20,123 20,123 100,000
12 57 2,141 35,785 27,673 27,673 100,000 22,162 22,162 100,000
13 58 2,141 39,822 30,698 30,698 100,000 24,239 24,239 100,000
14 59 2,141 44,062 33,854 33,854 100,000 26,356 26,356 100,000
15 60 2,141 48,513 37,151 37,151 100,000 28,514 28,514 100,000
16 61 2,141 53,187 40,575 40,575 100,000 30,712 30,712 100,000
17 62 2,141 58,094 44,139 44,139 100,000 32,947 32,947 100,000
18 63 2,141 63,247 47,848 47,848 100,000 35,216 35,216 100,000
19 64 2,141 68,658 51,713 51,713 100,000 37,515 37,515 100,000
20 65 2,141 74,339 55,747 55,747 100,000 39,843 39,843 100,000
25 70 2,141 107,300 79,037 79,037 100,000 52,006 52,006 100,000
30 75 2,141 149,368 109,257 109,257 116,905 65,527 65,527 100,000
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE,
CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL INSURANCE
FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK INVESTMENT TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
37
<PAGE> 96
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $2,141
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.58%)
========= CURRENT ========= ========= GUARANTEED =========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 2,141 2,248 2,010 2,010 100,000 1,918 2,004 100,000
2 47 2,141 4,609 4,187 4,187 100,000 3,687 3,858 100,000
3 48 2,141 7,087 6,540 6,540 100,000 5,623 5,880 100,000
4 49 2,141 9,690 9,114 9,114 100,000 7,745 8,087 100,000
5 50 2,141 12,423 11,947 11,947 100,000 10,070 10,498 100,000
6 51 2,141 15,292 15,079 15,079 100,000 12,724 13,135 100,000
7 52 2,141 18,305 18,533 18,533 100,000 15,660 16,019 100,000
8 53 2,141 21,468 22,357 22,357 100,000 18,902 19,176 100,000
9 54 2,141 24,790 26,581 26,581 100,000 22,479 22,633 100,000
10 55 2,141 28,278 31,254 31,254 100,000 26,423 26,423 100,000
11 56 2,141 31,940 36,521 36,521 100,000 30,587 30,587 100,000
12 57 2,141 35,785 42,341 42,341 100,000 35,173 35,173 100,000
13 58 2,141 39,822 48,782 48,782 100,000 40,236 40,236 100,000
14 59 2,141 44,062 55,924 55,924 100,000 45,841 45,841 100,000
15 60 2,141 48,513 63,853 63,853 100,000 52,063 52,063 100,000
16 61 2,141 53,187 72,651 72,651 100,000 58,986 58,986 100,000
17 62 2,141 58,094 82,421 82,421 105,499 66,712 66,712 100,000
18 63 2,141 63,247 93,208 93,208 117,442 75,358 75,358 100,000
19 64 2,141 68,658 105,108 105,108 130,334 85,042 85,042 105,451
20 65 2,141 74,339 118,238 118,238 144,251 95,721 95,721 116,780
25 70 2,141 107,300 207,133 207,133 240,275 167,272 167,272 194,036
30 75 2,141 149,368 352,671 352,671 377,358 283,155 283,155 302,976
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE,
CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL INSURANCE
FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK INVESTMENT TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
38
<PAGE> 97
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $5,551
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.42%)
======== CURRENT ======== ======== GUARANTEED ========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,551 5,829 4,899 4,899 104,899 4,663 4,885 104,885
2 47 5,551 11,949 9,681 9,681 109,681 8,902 9,346 109,346
3 48 5,551 18,375 14,338 14,338 114,338 13,039 13,705 113,705
4 49 5,551 25,122 18,895 18,895 118,895 17,074 17,962 117,962
5 50 5,551 32,206 23,364 23,364 123,364 21,003 22,113 122,113
6 51 5,551 39,645 27,759 27,759 127,759 25,091 26,157 126,157
7 52 5,551 47,456 32,069 32,069 132,069 29,154 30,087 130,087
8 53 5,551 55,657 36,307 36,307 136,307 33,186 33,896 133,896
9 54 5,551 64,269 40,463 40,463 140,463 37,179 37,579 137,579
10 55 5,551 73,311 44,537 44,537 144,537 41,126 41,126 141,126
11 56 5,551 82,805 48,749 48,749 148,749 44,534 44,534 144,534
12 57 5,551 92,774 52,856 52,856 152,856 47,797 47,797 147,797
13 58 5,551 103,241 56,857 56,857 156,857 50,912 50,912 150,912
14 59 5,551 114,232 60,768 60,768 160,768 53,876 53,876 153,876
15 60 5,551 125,772 64,588 64,588 164,588 56,682 56,682 156,682
16 61 5,551 137,889 68,285 68,285 168,285 59,320 59,320 159,320
17 62 5,551 150,612 71,859 71,859 171,859 61,777 61,777 161,777
18 63 5,551 163,971 75,300 75,300 175,300 64,037 64,037 164,037
19 64 5,551 177,998 78,598 78,598 178,598 66,081 66,081 166,081
20 65 5,551 192,727 81,756 81,756 181,756 67,892 67,892 167,892
25 70 5,551 278,180 95,120 95,120 195,120 72,952 72,952 172,952
30 75 5,551 387,242 103,313 103,313 203,313 69,176 69,176 169,176
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE,
CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL INSURANCE
FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK INVESTMENT TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
39
<PAGE> 98
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $5,551
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.58%)
========= CURRENT ========= ========= GUARANTEED =========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,551 5,829 5,202 5,202 105,202 4,965 5,187 105,187
2 47 5,551 11,949 10,594 10,594 110,594 9,802 10,246 110,246
3 48 5,551 18,375 16,173 16,173 116,173 14,830 15,497 115,497
4 49 5,551 25,122 21,973 21,973 121,973 20,058 20,946 120,946
5 50 5,551 32,206 28,016 28,016 128,016 25,489 26,599 126,599
6 51 5,551 39,645 34,324 34,324 134,324 31,396 32,462 132,462
7 52 5,551 47,456 40,899 40,899 140,899 37,602 38,534 138,534
8 53 5,551 55,657 47,764 47,764 147,764 44,109 44,819 144,819
9 54 5,551 64,269 54,921 54,921 154,921 50,918 51,317 151,317
10 55 5,551 73,311 62,384 62,384 162,384 58,028 58,028 158,028
11 56 5,551 82,805 70,398 70,398 170,398 64,956 64,956 164,956
12 57 5,551 92,774 78,733 78,733 178,733 72,102 72,102 172,102
13 58 5,551 103,241 87,402 87,402 187,402 79,473 79,473 179,473
14 59 5,551 114,232 96,435 96,435 196,435 87,071 87,071 187,071
15 60 5,551 125,772 105,846 105,846 205,846 94,899 94,899 194,899
16 61 5,551 137,889 115,619 115,619 215,619 102,955 102,955 202,955
17 62 5,551 150,612 125,768 125,768 225,768 111,234 111,234 211,234
18 63 5,551 163,971 136,300 136,300 236,300 119,727 119,727 219,727
19 64 5,551 177,998 147,220 147,220 247,220 128,421 128,421 228,421
20 65 5,551 192,727 158,545 158,545 258,545 137,305 137,305 237,305
25 70 5,551 278,180 221,527 221,527 321,527 184,237 184,237 284,237
30 75 5,551 387,242 295,538 295,538 395,538 233,333 233,333 333,333
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE,
CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL INSURANCE
FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK INVESTMENT TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
40
<PAGE> 99
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $5,551
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.58%)
========= CURRENT ========= ========= GUARANTEED =========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,551 5,829 5,505 5,505 105,505 5,268 5,490 105,490
2 47 5,551 11,949 11,543 11,543 111,543 10,738 11,182 111,182
3 48 5,551 18,375 18,159 18,159 118,159 16,771 17,437 117,437
4 49 5,551 25,122 25,438 25,438 125,438 23,423 24,311 124,311
5 50 5,551 32,206 33,464 33,464 133,464 30,754 31,865 131,865
6 51 5,551 39,645 42,329 42,329 142,329 39,101 40,167 140,167
7 52 5,551 47,456 52,109 52,109 152,109 48,355 49,288 149,288
8 53 5,551 55,657 62,914 62,914 162,914 58,597 59,307 159,307
9 54 5,551 64,269 74,840 74,840 174,840 69,911 70,311 170,311
10 55 5,551 73,311 88,005 88,005 188,005 82,392 82,392 182,392
11 56 5,551 82,805 102,788 102,788 202,788 95,660 95,660 195,660
12 57 5,551 92,774 119,088 119,088 219,088 110,231 110,231 210,231
13 58 5,551 103,241 137,067 137,067 237,067 126,241 126,241 226,241
14 59 5,551 114,232 156,915 156,915 256,915 143,834 143,834 243,834
15 60 5,551 125,772 178,831 178,831 278,831 163,170 163,170 263,170
16 61 5,551 137,889 202,997 202,997 302,997 184,420 184,420 284,420
17 62 5,551 150,612 229,651 229,651 329,651 207,773 207,773 307,773
18 63 5,551 163,971 259,044 259,044 359,044 233,432 233,432 333,432
19 64 5,551 177,998 291,456 291,456 391,456 261,618 261,618 361,618
20 65 5,551 192,727 327,207 327,207 427,207 292,579 292,579 392,579
25 70 5,551 278,180 569,395 569,395 669,395 499,780 499,780 599,780
30 75 5,551 387,242 964,855 964,855 1,064,855 831,958 831,958 931,958
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE,
CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL INSURANCE
FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK INVESTMENT TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
41
<PAGE> 100
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM: $5,551
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.42%)
========= CURRENT ========= ========= GUARANTEED =========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,551 5,829 4,905 4,905 100,000 4,669 4,891 100,000
2 47 5,551 11,949 9,706 9,706 100,000 8,956 9,400 100,000
3 48 5,551 18,375 14,397 14,397 100,000 13,167 13,833 100,000
4 49 5,551 25,122 19,005 19,005 100,000 17,305 18,194 100,000
5 50 5,551 32,206 23,544 23,544 100,000 21,372 22,482 100,000
6 51 5,551 39,645 28,024 28,024 100,000 25,636 26,702 100,000
7 52 5,551 47,456 32,439 32,439 100,000 29,918 30,850 100,000
8 53 5,551 55,657 36,801 36,801 100,000 34,218 34,929 100,000
9 54 5,551 64,269 41,102 41,102 100,000 38,538 38,937 100,000
10 55 5,551 73,311 45,339 45,339 100,793 42,877 42,877 100,000
11 56 5,551 82,805 49,714 49,714 107,481 46,726 46,726 101,022
12 57 5,551 92,774 53,991 53,991 113,572 50,451 50,451 106,128
13 58 5,551 103,241 58,173 58,173 119,117 54,055 54,055 110,687
14 59 5,551 114,232 62,269 62,269 124,169 57,539 57,539 114,737
15 60 5,551 125,772 66,283 66,283 128,766 60,904 60,904 118,316
16 61 5,551 137,889 70,195 70,195 132,903 64,148 64,148 121,454
17 62 5,551 150,612 74,007 74,007 136,622 67,269 67,269 124,183
18 63 5,551 163,971 77,718 77,718 139,952 70,266 70,266 126,533
19 64 5,551 177,998 81,323 81,323 142,923 73,134 73,134 128,531
20 65 5,551 192,727 84,827 84,827 145,579 75,871 75,871 130,208
25 70 5,551 278,180 100,806 100,806 154,954 87,660 87,660 134,746
30 75 0 355,036 89,186 89,186 124,507 73,269 73,269 102,288
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE,
CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL INSURANCE
FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK INVESTMENT TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
42
<PAGE> 101
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM: $5,551
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.58%)
========= CURRENT ========= ========= GUARANTEED =========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,551 5,829 5,209 5,209 100,000 4,972 5,194 100,000
2 47 5,551 11,949 10,621 10,621 100,000 9,861 10,305 100,000
3 48 5,551 18,375 16,240 16,240 100,000 14,977 15,643 100,000
4 49 5,551 25,122 22,104 22,104 100,000 20,334 21,222 100,000
5 50 5,551 32,206 28,238 28,238 100,000 25,947 27,057 100,000
6 51 5,551 39,645 34,665 34,665 100,000 32,099 33,164 100,000
7 52 5,551 47,456 41,394 41,394 100,306 38,626 39,559 100,000
8 53 5,551 55,657 48,410 48,410 113,939 45,494 46,205 108,750
9 54 5,551 64,269 55,710 55,710 127,406 52,660 53,060 121,345
10 55 5,551 73,311 63,307 63,307 140,737 60,122 60,122 133,657
11 56 5,551 82,805 71,444 71,444 154,462 67,393 67,393 145,704
12 57 5,551 92,774 79,892 79,892 168,058 74,871 74,871 157,497
13 58 5,551 103,241 88,663 88,663 181,551 82,561 82,561 169,055
14 59 5,551 114,232 97,781 97,781 194,982 90,462 90,462 180,388
15 60 5,551 125,772 107,261 107,261 208,373 98,577 98,577 191,503
16 61 5,551 137,889 117,082 117,082 221,678 106,902 106,902 202,403
17 62 5,551 150,612 127,259 127,259 234,927 115,433 115,433 213,097
18 63 5,551 163,971 137,792 137,792 248,132 124,162 124,162 223,587
19 64 5,551 177,998 148,684 148,684 261,309 133,078 133,078 233,881
20 65 5,551 192,727 159,951 159,951 274,506 142,170 142,170 243,991
25 70 5,551 278,180 222,082 222,082 341,374 190,140 190,140 292,273
30 75 0 355,036 264,396 264,396 369,110 213,916 213,916 298,638
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE,
CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL INSURANCE
FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK INVESTMENT TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
43
<PAGE> 102
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM: $5,551
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.582%)
========= CURRENT ========= ========= GUARANTEED =========
END PREM
OF ANNUAL ACCUM SURR CASH DEATH SURR CASH DEATH
YEAR AGE PAYMNT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,551 5,829 5,512 5,512 100,000 5,275 5,497 100,000
2 47 5,551 11,949 11,572 11,572 100,000 10,803 11,247 100,000
3 48 5,551 18,375 18,235 18,235 100,000 16,937 17,603 100,000
4 49 5,551 25,122 25,593 25,593 100,000 23,749 24,637 100,000
5 50 5,551 32,206 33,737 33,737 100,000 31,318 32,428 100,000
6 51 5,551 39,645 42,758 42,758 106,708 39,999 41,065 102,482
7 52 5,551 47,456 52,685 52,685 127,666 49,591 50,523 122,427
8 53 5,551 55,657 63,618 63,618 149,735 60,144 60,854 143,229
9 54 5,551 64,269 75,648 75,648 173,004 71,728 72,128 164,953
10 55 5,551 73,311 88,886 88,886 197,602 84,419 84,419 187,670
11 56 5,551 82,805 103,699 103,699 224,197 97,810 97,810 211,465
12 57 5,551 92,774 119,969 119,969 252,362 112,390 112,390 236,419
13 58 5,551 103,241 137,840 137,840 282,247 128,259 128,259 262,629
14 59 5,551 114,232 157,487 157,487 314,040 145,523 145,523 290,182
15 60 5,551 125,772 179,090 179,090 347,914 164,296 164,296 319,172
16 61 5,551 137,889 202,783 202,783 383,939 184,694 184,694 349,690
17 62 5,551 150,612 228,768 228,768 422,319 206,838 206,838 381,836
18 63 5,551 163,971 257,246 257,246 463,241 230,853 230,853 415,713
19 64 5,551 177,998 288,434 288,434 506,917 256,864 256,864 451,433
20 65 5,551 192,727 322,595 322,595 553,634 285,006 285,006 489,125
25 70 5,551 278,180 548,095 548,095 842,504 463,537 463,537 712,526
30 75 0 355,036 862,947 862,947 1,204,718 689,758 689,758 962,936
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY,
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, RUSSELL INSURANCE FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE,
CASH SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL COMPANY, RUSSELL INSURANCE
FUNDS, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II,
VAN ECK INVESTMENT TRUST, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
44
<PAGE> 103
<TABLE>
APPENDIX B
TARGET ANNUAL PREMIUM PER $1,000
BASE COVERAGE -- UNDERWRITTEN
NON-SMOKER RATES
- --------------------------------------------------------------------------------------------------------
<CAPTION>
- - - - - - - - - - Male Non-Smoker - - - - - - - - - - - - - - - - - Female Non-Smoker - - - - - - - -
Pre- Stan- Pre- Stan- Pre- Stan- Pre- Stan-
ferred dard ferred dard ferred dard ferred dard
Issue Non- Non- Issue Non- Non- Issue Non- Non- Issue Non- Non-
Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 -- -- 0 -- --
1 -- -- 41 48.84 48.86 1 -- -- 41 41.73 41.75
2 -- -- 42 50.44 50.45 2 -- -- 42 43.09 43.10
3 -- -- 43 52.09 52.11 3 -- -- 43 44.47 44.49
4 -- -- 44 53.77 53.79 4 -- -- 44 45.90 45.92
5 -- -- 45 55.51 55.53 5 -- -- 45 47.38 47.40
6 -- -- 46 57.27 57.31 6 -- -- 46 48.88 48.90
7 -- -- 47 59.10 59.14 7 -- -- 47 50.44 50.46
8 -- -- 48 60.98 61.00 8 -- -- 48 52.02 52.04
9 -- -- 49 62.90 62.92 9 -- -- 49 53.67 53.69
10 -- -- 50 64.87 64.90 10 -- -- 50 55.34 55.36
66.91
11 -- -- 51 66.89 11 -- -- 51 57.06 57.09
12 -- -- 52 68.95 68.99 12 -- -- 52 58.83 58.85
13 -- -- 53 71.07 71.11 13 -- -- 53 60.63 60.67
14 -- -- 54 73.23 73.27 14 -- -- 54 62.48 62.52
15 -- -- 55 75.44 75.49 15 -- -- 55 64.38 64.41
77.73
16 -- -- 56 77.68 16 -- -- 56 66.32 66.36
17 -- -- 57 79.98 80.04 17 -- -- 57 68.32 68.35
18 -- -- 58 82.31 82.38 18 -- -- 58 70.36 70.40
19 -- -- 59 84.71 84.78 19 -- -- 59 72.51 72.54
20 24.89 24.91 60 87.18 87.23 20 20.89 20.89 60 74.42 74.77
21 25.63 25.64 61 89.71 89.76 21 21.58 21.58 61 77.03 77.07
22 26.39 26.41 62 92.30 92.36 22 22.31 22.31 62 79.40 79.45
23 27.20 27.22 63 94.96 95.04 23 23.05 23.05 63 81.85 81.91
24 28.06 28.06 64 97.69 97.78 24 23.81 23.81 64 84.35 84.41
25 28.94 28.94 65 100.47 100.56 25 24.60 24.60 65 86.89 86.96
26 29.87 29.87 66 103.30 103.41 26 25.43 25.43 66 89.48 89.57
27 30.83 30.84 67 106.23 106.34 27 26.28 26.30 67 92.15 92.24
28 31.84 31.86 68 109.23 109.38 28 27.16 27.18 68 94.93 95.02
29 32.88 32.92 69 112.39 112.54 29 28.08 28.10 69 97.84 97.93
30 33.98 34.01 70 115.66 115.83 30 29.01 29.02 70 100.90 101.01
31 35.12 35.14 71 119.09 119.27 31 29.99 30.00 71 104.11 104.24
32 36.30 36.32 72 122.65 122.86 32 30.98 31.00 72 107.49 107.64
33 37.53 37.55 73 126.30 126.53 33 32.03 32.05 73 111.01 111.16
34 38.80 38.81 74 130.03 130.27 34 33.12 33.14 74 114.61 114.79
35 40.11 40.12 75 133.81 134.07 35 34.25 34.27 75 118.31 118.52
36 41.46 41.48 76 137.66 137.97 36 35.41 35.43 76 122.14 122.36
37 42.85 42.87 77 141.64 141.98 37 36.60 36.62 77 126.13 126.37
38 44.29 44.31 78 145.79 146.18 38 37.84 37.85 78 130.31 130.57
39 45.77 45.78 79 150.22 150.65 39 39.10 39.12 79 134.76 135.06
40 47.28 47.30 80 154.90 155.38 40 40.39 40.41 80 139.52 139.84
</TABLE>
45
<PAGE> 104
<TABLE>
APPENDIX B
TARGET ANNUAL PREMIUM PER $1,000
BASE COVERAGE -- UNDERWRITTEN
SMOKER RATES
- --------------------------------------------------------------------------------------------------------
<CAPTION>
- - - - - - - - - - Male Non-Smoker - - - - - - - - - - - - - - - - - Female Non-Smoker - - - - - - - -
Pre- Stan- Pre- Stan- Pre- Stan- Pre- Stan-
Issue ferred dard Issue ferred dard Issue ferred dard Issue ferred dard
Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 13.49 13.49 0 11.20 11.20
1 13.77 13.77 41 48.95 49.16 1 11.44 11.44 41 41.79 41.99
2 14.16 14.16 42 50.56 50.80 2 11.76 11.76 42 43.16 43.36
3 14.58 14.58 43 52.22 52.49 3 12.11 12.11 43 44.56 44.78
4 15.00 15.00 44 53.91 54.20 4 12.48 12.48 44 46.01 46.24
5 15.47 15.47 45 55.67 55.96 5 12.84 12.84 45 47.79 47.74
6 15.96 15.96 46 57.47 57.72 6 13.25 13.25 46 49.02 49.26
7 16.48 16.48 47 59.32 59.53 7 13.67 13.67 47 50.58 50.82
8 17.03 17.03 48 61.21 61.39 8 14.11 14.11 48 52.20 52.42
9 17.61 17.61 49 63.15 63.30 9 14.58 14.58 49 53.85 54.05
10 18.21 18.21 50 65.15 65.26 10 15.06 15.06 50 55.56 55.74
11 18.84 18.84 51 67.18 67.29 11 15.56 15.56 51 57.29 57.45
12 19.48 19.48 52 69.26 69.36 12 16.08 16.08 52 59.07 59.23
13 20.14 20.14 53 71.40 71.52 13 16.64 16.64 53 60.88 61.04
14 20.83 20.83 54 73.59 73.70 14 17.19 17.19 54 62.73 32.91
15 21.50 21.50 55 75.81 75.92 15 17.77 17.77 55 64.65 64.81
16 22.17 22.17 56 78.07 78.19 16 18.36 18.36 56 66.61 66.77
17 22.85 22.85 57 80.39 80.54 17 18.95 18.95 57 68.60 68.76
18 23.52 23.52 58 82.74 82.88 18 19.59 19.59 58 70.67 70.81
19 24.20 24.20 59 85.14 85.30 19 20.23 20.23 59 72.81 72.94
20 24.91 24.98 60 87.61 87.75 20 20.89 20.89 60 75.02 75.15
21 25.64 25.72 61 90.14 90.30 21 21.58 21.58 61 77.33 77.44
22 26.41 26.49 62 92.77 92.93 22 22.31 22.31 62 79.72 79.82
23 27.22 27.29 63 95.45 95.61 23 23.05 23.05 63 82.19 82.30
24 28.06 28.13 64 98.20 98.40 24 23.81 23.81 64 84.71 84.83
25 28.96 29.00 65 101.01 101.23 25 24.60 24.60 65 87.28 87.43
26 29.89 29.93 66 103.90 104.12 26 25.43 25.43 66 89.89 90.05
27 30.86 30.90 67 106.86 107.12 27 26.30 26.30 67 92.60 92.76
28 31.88 31.91 68 109.92 110.20 28 27.18 27.18 68 95.40 95.59
29 32.93 32.97 69 113.10 113.42 29 28.10 28.10 69 98.34 98.54
30 34.03 34.07 70 116.44 116.77 30 29.02 29.06 70 101.42 101.63
31 35.17 35.21 71 119.90 120.27 31 30.00 30.04 71 104.69 104.92
32 36.36 36.41 72 123.51 123.90 32 31.02 31.07 72 108.09 108.34
33 37.58 37.64 73 127.20 127.61 33 32.07 32.13 73 111.61 111.88
34 38.85 38.92 74 130.95 131.41 34 33.16 33.23 74 115.25 115.54
35 40.16 40.25 75 134.80 135.29 35 34.28 34.36 75 118.99 119.32
36 41.51 41.62 76 138.72 139.26 36 35.45 35.54 76 122.86 123.19
37 42.91 43.03 77 142.78 143.36 37 36.66 36.75 77 126.87 127.26
38 44.36 44.51 78 146.99 147.63 38 37.89 38.02 78 131.11 131.53
39 45.84 46.02 79 151.48 152.17 39 39.15 39.30 79 135.59 136.06
40 47.37 47.57 80 156.21 156.98 40 40.46 40.63 80 140.38 140.90
</TABLE>
46
<PAGE> 105
<TABLE>
APPENDIX B
TARGET ANNUAL PREMIUM PER $1,000
BASE COVERAGE -- GUARANTEED ISSUE
- --------------------------------------------------------------------------------------------------------
<CAPTION>
- - - - - - - - -Male Guaranteed Issue- - - - - - - - - - - - - - -Female Guaranteed Issue- - - - - - -
Issue Non- Issue Non- Issue Non- Issue Non-
Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker Age Smoker Smoker
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 -- -- 0 -- --
1 -- -- 41 44.70 53.45 1 -- -- 41 44.70 53.45
2 -- -- 42 46.24 55.22 2 -- -- 42 46.24 55.22
3 -- -- 43 47.82 57.01 3 -- -- 43 47.82 57.01
4 -- -- 44 49.45 58.83 4 -- -- 44 49.45 58.83
5 -- -- 45 51.12 60.69 5 -- -- 45 51.12 60.69
6 -- -- 46 52.83 62.61 6 -- -- 46 52.83 62.61
7 -- -- 47 54.60 64.57 7 -- -- 47 54.60 64.57
8 -- -- 48 56.40 66.56 8 -- -- 48 56.40 66.56
9 -- -- 49 58.24 68.63 9 -- -- 49 58.24 68.63
10 -- -- 50 60.15 70.78 10 -- -- 50 60.15 70.78
11 -- -- 51 62.09 72.97 11 -- -- 51 62.09 72.97
12 -- -- 52 64.10 75.19 12 -- -- 52 64.10 75.19
13 -- -- 53 66.20 77.47 13 -- -- 53 66.20 77.47
14 -- -- 54 68.35 79.77 14 -- -- 54 68.35 79.77
15 -- -- 55 70.62 82.10 15 -- -- 55 70.62 82.10
16 -- -- 56 72.94 84.51 16 -- -- 56 72.94 84.51
17 -- -- 57 75.29 86.96 17 -- -- 57 75.29 86.96
18 -- -- 58 77.72 89.47 18 -- -- 58 77.72 89.47
19 -- -- 59 80.25 92.06 19 -- -- 59 80.25 92.06
20 22.39 27.34 60 82.85 94.72 20 22.39 27.34 60 82.85 94.72
21 23.07 28.15 61 85.52 97.47 21 23.07 28.15 61 85.52 97.47
22 23.78 28.99 62 88.26 100.35 22 23.78 28.99 62 88.26 100.35
23 24.52 29.87 63 91.03 103.30 23 24.52 29.87 63 91.03 103.30
24 25.31 30.79 64 93.83 106.30 24 25.31 30.79 64 93.83 106.30
25 26.15 31.76 65 96.69 109.36 25 26.15 31.76 65 96.69 109.36
26 27.00 32.77 66 99.70 112.47 26 27.00 32.77 66 99.70 112.47
27 27.89 33.83 67 102.83 115.66 27 27.89 33.83 67 102.83 115.66
28 28.81 34.94 68 106.12 119.02 28 28.81 34.94 68 106.12 119.02
29 29.78 36.09 69 109.54 122.54 29 29.78 36.09 69 109.54 122.54
30 30.79 37.28 70 113.12 126.28 30 30.79 37.28 70 113.12 126.28
31 31.83 38.54 71 -- -- 31 31.83 38.54 71 -- --
32 32.91 39.83 72 -- -- 32 32.91 39.83 72 -- --
33 34.04 41.18 73 -- -- 33 34.04 41.18 73 -- --
34 35.24 42.57 74 -- -- 34 35.24 42.57 74 -- --
35 36.45 43.99 75 -- -- 35 36.45 43.99 75 -- --
36 37.72 45.46 76 -- -- 36 37.72 45.46 76 -- --
37 39.02 46.96 77 -- -- 37 39.02 46.96 77 -- --
38 40.39 48.53 78 -- -- 38 40.39 48.53 78 -- --
39 41.78 50.14 79 -- -- 39 41.78 50.14 79 -- --
40 43.21 51.79 80 -- -- 40 43.21 51.79 80 -- --
</TABLE>
47
<PAGE> 106
INDEPENDENT AUDITORS' REPORT
The Board of Directors
General American Life Insurance Company
and Policyholders of General American
Separate Account Eleven:
We have audited the statements of assets and liabilities, including the
schedule of investments, of the S & P 500 Index, Money Market, Bond Index,
Managed Equity, Asset Allocation, International Index, Mid-Cap Equity,
Small-Cap Equity, Equity-Income, Growth, Overseas, Asset Manager, High
Income, Worldwide Hard Assets, Multi-style Equity, Core Bond, Aggressive
Equity, and Non-US Fund Divisions of General American Separate Account
Eleven as of December 31, 1997, and the related statements of operations and
changes in net assets for each of the years in the three-year period then
ended. These financial statements are the responsibility of the management
of General American Separate Account Eleven. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Investments owned as of December 31, 1997 were verified by audit of the
statements of assets and liabilities of the underlying portfolios of General
American Capital Company and confirmation by correspondence with respect to
the Variable Insurance Products Fund and the Variable Insurance Products
Fund II sponsored by Fidelity Investments, the Van Eck World Wide Insurance
Trust sponsored by Van Eck Associates Corporation, and the Russell Insurance
Funds sponsored by Frank Russell Investment Company. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the S & P 500 Index,
Money Market, Bond Index, Managed Equity, Asset Allocation, International
Index, Mid-Cap Equity, Small-Cap Equity, Equity-Income, Growth, Overseas,
Asset Manager, High Income, Worldwide Hard Assets, Multi-Style Equity, Core
Bond, Aggressive Equity, and Non-US Fund Divisions of General American
Separate Account Eleven as of December 31, 1997, the results of their
operations and changes in their net assets for each of the years in the
three-year period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
St. Louis, Missouri
February 9, 1998
<PAGE> 107
LEGAL COUNSEL
Stephen E. Roth
Sutherland, Asbill & Brennan, Washington, D.C.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
If distributed to prospective investors, this report must be preceded or
accompanied by a current prospectus.
The prospectus is incomplete without reference to the financial data
contained in the annual report.
<PAGE> 108
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<CAPTION>
S & P 500 MONEY BOND MANAGED ASSET
INDEX MARKET INDEX EQUITY ALLOCATION
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American
Capital Company at market value
(see Schedule of Investments): $20,581,893 $8,600,564 $3,450,248 $4,241,762 $10,482,605
Receivable from General American Life
Insurance Company 0 715,691 0 0 0
----------- ---------- ---------- ---------- -----------
Total assets 20,581,893 9,316,255 3,450,248 4,241,762 10,482,605
----------- ---------- ---------- ---------- -----------
Liabilities:
Payable to General American Life
Insurance Company 3,570 0 1,704 6,447 6,300
----------- ---------- ---------- ---------- -----------
Total net assets $20,578,323 $9,316,255 $3,448,544 $4,235,315 $10,476,305
=========== ========== ========== ========== ===========
Total net assets represented by:
Individual Variable Universal Life cash
value invested in Separate Account $ 8,460,347 $ 782,727 $2,066,526 $2,634,705 $ 8,267,995
Individual Variable General Select Plus
cash value invested in Separate Account 5,747,133 6,532,380 655,815 740,703 1,259,015
Individual Variable Universal Life-100
cash value invested in Separate Account 6,370,843 1,911,272 726,203 859,907 949,295
Russell Variable Universal Life
cash value invested in Separate Account 0 89,876 0 0 0
----------- ---------- ---------- ---------- -----------
Total net assets $20,578,323 $9,316,255 $3,448,544 $4,235,315 $10,476,305
=========== ========== ========== ========== ===========
Total units held - VUL-95 236,305 46,703 97,454 92,710 282,838
Total units held - VGSP 248,494 535,853 50,400 37,481 72,507
Total units held - VUL-100 292,865 166,128 55,636 44,402 55,074
Total units held - Russell VUL 0 8,547 0 0 0
VUL-95 Net unit value $ 35.80 $ 16.76 $ 21.21 $ 28.42 $ 29.23
VGSP Net unit value $ 23.13 $ 12.19 $ 13.01 $ 19.76 $ 17.36
VUL-100 Net unit value $ 21.75 $ 11.50 $ 13.05 $ 19.37 $ 17.24
Russell VUL Net unit value $ 10.52
Cost of investments $17,072,779 $8,673,549 $3,434,435 $3,756,762 $ 8,720,069
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 109
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<CAPTION>
INTERNATIONAL MID-CAP SMALL-CAP EQUITY-
INDEX EQUITY EQUITY INCOME GROWTH
FUND DIVISION<F*> FUND DIVISION<F**> FUND DIVISION FUND DIVISION FUND DIVISION
----------------- ------------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American
Capital Company at market value
(see Schedule of Investments): $7,866,879 $6,232,329 $1,143,813 $ 0 $ 0
Investments in Variable Insurance
Products Fund at market value
(see Schedule of Investments): 0 0 0 17,001,106 22,237,647
Receivable from General American
Life Insurance Company 0 2,387 41 0 0
---------- ---------- ---------- ----------- -----------
Total assets 7,866,879 6,234,716 1,143,854 17,001,106 22,237,647
---------- ---------- ---------- ----------- -----------
Liabilities:
Payable to General American Life
Insurance Company 2,586 0 0 5,289 9,056
---------- ---------- ---------- ----------- -----------
Total net assets $7,864,293 $6,234,716 $1,143,854 $16,995,817 $22,228,591
========== ========== ========== =========== ===========
Total net assets represented by:
Individual Variable Universal Life cash
value invested in Separate Account $2,758,129 $3,609,898 $ 458,303 $ 6,510,189 $ 8,787,216
Individual Variable General Select Plus
cash value invested in Separate Account 953,767 1,616,472 391,596 5,047,948 6,674,197
Individual Variable Universal Life-100
cash value invested in Separate Account 966,544 1,008,346 293,955 5,437,680 6,767,178
General American Life Insurance
Company seed money 3,185,853 0 0 0 0
---------- ---------- ---------- ----------- -----------
Total net assets $7,864,293 $6,234,716 $1,143,854 $16,995,817 $22,228,591
========== ========== ========== =========== ===========
Total units held - VUL-95 175,226 174,121 35,177 292,344 407,913
Total units held - VGSP 70,058 77,919 30,027 226,141 328,018
Total units held - VUL-100 83,423 53,229 22,570 282,274 362,381
Total units held - Seed Money 200,000 0 0 0 0
VUL-95 Net unit value $ 15.74 $ 20.73 $ 13.03 $ 22.27 $ 21.54
VGSP Net unit value $ 13.61 $ 20.75 $ 13.04 $ 22.32 $ 20.35
VUL-100 Net unit value $ 11.59 $ 18.94 $ 13.02 $ 19.26 $ 18.67
Cost of investments $7,797,863 $5,262,750 $1,277,188 $13,670,582 $17,509,262
<FN>
<F*> This fund was formerly known as the International Equity Fund.
<F**>This fund was formerly known as the Special Equity Fund.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 110
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<CAPTION>
ASSET HIGH WORLDWIDE
OVERSEAS MANAGER INCOME HARD ASSETS
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION<F*>
------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Assets:
Investments in Variable Insurance
Products Fund at market value
(see Schedule of Investments): $8,174,972 $ 0 $2,175,014 $ 0
Investments in Variable Insurance
Products Fund II at market value
(see Schedule of Investments): 0 577,825 0 0
Investments in Van Eck Worldwide
Insurance Trust at market value
(see Schedule of Investments): 0 0 0 269,764
Receivable from General American
Life Insurance Company 0 0 0 41
---------- -------- ---------- --------
Total assets 8,174,972 577,825 2,175,014 269,805
---------- -------- ---------- --------
Liabilities:
Payable to General American Life
Insurance Company 3,488 368 2,095 0
---------- -------- ---------- --------
Total net assets $8,171,484 $577,457 $2,172,919 $269,805
========== ======== ========== ========
Total net assets represented by:
Individual Variable Universal Life
cash value invested in Separate Account $4,197,173 $ 30,870 $ 264,448 $117,116
Individual Variable General Select Plus
cash value invested in Separate Account 2,612,802 111,623 923,865 32,914
Individual Variable Universal Life-100
cash value invested in Separate Account 1,361,509 434,964 984,606 119,775
---------- -------- ---------- --------
Total net assets $8,171,484 $577,457 $2,172,919 $269,805
========== ======== ========== ========
Total units held - VUL-95 242,563 2,132 18,572 10,326
Total units held - VGSP 168,708 7,680 64,632 2,892
Total units held - VUL-100 100,943 30,075 69,238 10,573
VUL-95 Net unit value $ 17.30 $ 14.48 $ 14.24 $ 11.34
VGSP Net unit value $ 15.49 $ 14.53 $ 14.29 $ 11.38
VUL-100 Net unit value $ 13.49 $ 14.46 $ 14.22 $ 11.33
Cost of investments $7,472,992 $523,566 $1,954,241 $280,524
<FN>
<F*>This fund was formerly known as the Gold & Natural Resources Fund.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 111
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<CAPTION>
MULTI-STYLE AGGRESSIVE
EQUITY CORE BOND EQUITY NON-US
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Assets:
Investments in Russell Insurance Fund
at market value
(see Schedule of Investments): $2,538,339 $1,153,638 $1,344,291 $782,951
Receivable from General American
Life Insurance Company 941 769 1,134 892
---------- ---------- ---------- --------
Total assets 2,539,280 1,154,407 1,345,425 783,843
---------- ---------- ---------- --------
Liabilities:
Payable to General American Life
Insurance Company 0 0 0 0
---------- ---------- ---------- --------
Total net assets $2,539,280 $1,154,407 $1,345,425 $783,843
========== ========== ========== ========
Total net assets represented by:
Individual Variable General Select Plus
cash value invested in Separate Account $ 601,650 $ 235,820 $ 335,282 $293,990
Russell Variable Universal Life
cash value invested in Separate Account 1,937,630 918,587 1,010,143 489,853
---------- ---------- ---------- --------
Total net assets $2,539,280 $1,154,407 $1,345,425 $783,843
========== ========== ========== ========
Total units held - VGSP 46,930 21,414 25,100 28,578
Total units held - Russell VUL 151,491 84,125 75,156 49,083
VGSP Net unit value $ 12.82 $ 11.01 $ 13.36 $ 10.29
Russell VUL Net unit value $ 12.79 $ 10.92 $ 13.44 $ 9.98
Cost of investments $2,536,786 $1,126,156 $1,320,664 $840,268
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 112
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
---------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F*> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (59,320) (38,288) (31,973) (7,951) (8,690) (13,058)
Mortality and expense charges - VGSP (29,674) (16,887) (3,459) (12,872) (21,323) (8,747)
Mortality and expense charges - VUL-100 (36,234) (9,712) (233) (13,566) (10,113) (1,350)
Mortality and expense charges - Russell VUL 0 0 0 (1,626) 0 0
---------- ---------- ---------- --------- --------- ---------
Total expenses (125,228) (64,887) (35,665) (36,015) (40,126) (23,155)
---------- ---------- ---------- --------- --------- ---------
Net investment expense (125,228) (64,887) (35,665) (36,015) (40,126) (23,155)
---------- ---------- ---------- --------- --------- ---------
Net realized gain on investments:
Realized gain from distributions 913,559 435,253 128,459 121,801 363,544 231,929
Realized gain (loss) on sales 1,570,537 244,401 339,252 (48,325) 14,173 65,400
---------- ---------- ---------- --------- --------- ---------
Net realized gain on investments 2,484,096 679,654 467,711 73,476 377,717 297,329
---------- ---------- ---------- --------- --------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 1,982,215 851,246 (10,068) (256,852) (158,740) (31,189)
Unrealized gain (loss) on investments,
end of period 3,509,114 1,982,215 851,246 (72,985) (256,852) (158,740)
---------- ---------- ---------- --------- --------- ---------
Net unrealized gain (loss) on investments 1,526,899 1,130,969 861,314 183,867 (98,112) (127,551)
---------- ---------- ---------- --------- --------- ---------
Net gain on investments 4,010,995 1,810,623 1,329,025 257,343 279,605 169,778
---------- ---------- ---------- --------- --------- ---------
Net increase in net assets
resulting from operations $3,885,767 $1,745,736 $1,293,360 $ 221,328 $ 239,479 $ 146,623
========== ========== ========== ========= ========= =========
<FN>
<F*>See Note 2C.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 113
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
--------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
--------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F*> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (14,601) (11,376) (18,478) (20,327) (16,463) (16,717)
Mortality and expense charges - VGSP (3,943) (10,234) (153) (4,370) (1,751) (208)
Mortality and expense charges - VUL-100 (4,363) (1,802) (24) (4,815) (1,080) (40)
--------- --------- --------- -------- -------- ---------
Total expenses (22,907) (23,412) (18,655) (29,512) (19,294) (16,965)
--------- --------- --------- -------- -------- ---------
Net investment expense (22,907) (23,412) (18,655) (29,512) (19,294) (16,965)
--------- --------- --------- -------- -------- ---------
Net realized gain (loss) on investments:
Realized gain from distributions 165,804 496,106 70,070 251,405 292,621 193,544
Realized gain (loss) on sales (176,276) (15,797) (31,850) 95,532 11,431 (1,087)
--------- --------- --------- -------- -------- ---------
Net realized gain (loss) on investments (10,472) 480,309 38,220 346,937 304,052 192,457
--------- --------- --------- -------- -------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (234,659) 19,005 (313,506) 116,769 (26,912) (408,116)
Unrealized gain (loss) on investments,
end of period 15,812 (234,659) 19,005 485,000 116,769 (26,912)
--------- --------- --------- -------- -------- ---------
Net unrealized gain (loss) on investments 250,471 (253,664) 332,511 368,231 143,681 381,204
--------- --------- --------- -------- -------- ---------
Net gain on investments 239,999 226,645 370,731 715,168 447,733 573,661
--------- --------- --------- -------- -------- ---------
Net increase in net assets
resulting from operations $ 217,092 $ 203,233 $ 352,076 $685,656 $428,439 $ 556,696
========= ========= ========= ======== ======== =========
<FN>
<F*>See Note 2C.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 114
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F*>
---------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (67,466) (52,462) (46,892) (23,446) (19,773) (13,991)
Mortality and expense charges - VGSP (7,499) (5,214) (5,214) (5,564) (3,014) (2,260)
Mortality and expense charges - VUL-100 (5,279) (1,078) (10) (6,468) (2,475) (66)
Mortality and expense charges - Seed Money 0 0 0 (27,476) (25,684) (23,784)
---------- ---------- ---------- --------- -------- ---------
Total expenses (80,244) (58,754) (52,116) (62,954) (50,946) (40,101)
---------- ---------- ---------- --------- -------- ---------
Net investment expense (80,244) (58,754) (52,116) (62,954) (50,946) (40,101)
---------- ---------- ---------- --------- -------- ---------
Net realized gain on investments:
Realized gain from distributions 311,438 554,498 474,238 220,590 164,186 514,927
Realized gain on sales 195,821 36,291 131,272 136,741 43,830 41,508
---------- ---------- ---------- --------- -------- ---------
Net realized gain on investments: 507,259 590,789 605,510 357,331 208,016 556,435
---------- ---------- ---------- --------- -------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 657,734 197,823 (765,423) 268,331 40,286 198,307
Unrealized gain on investments,
end of period 1,762,536 657,734 197,823 69,016 268,331 40,286
---------- ---------- ---------- --------- -------- ---------
Net unrealized gain (loss) on investments 1,104,802 459,911 963,246 (199,315) 228,045 (158,021)
---------- ---------- ---------- --------- -------- ---------
Net gain on investments 1,612,061 1,050,700 1,568,756 158,016 436,061 398,414
---------- ---------- ---------- --------- -------- ---------
Net increase in net assets
resulting from operations $1,531,817 $ 991,946 $1,516,640 $ 95,062 $385,115 $ 358,313
========== ========== ========== ========= ======== =========
<FN>
<F*> This fund was formerly known as the International Equity Fund.
<F**>See Note 2C.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 115
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F*> FUND DIVISION
---------------------------------- ----------------
1997 1996 1995 1997<F***>
---------- ---------- -------- ---------
<S> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (26,828) (21,527) (16,741) (787)
Mortality and expense charges - VGSP (7,567) (4,349) (3,645) (869)
Mortality and expense charges - VUL-100 (6,142) (2,084) (72) (627)
Mortality and expense charges - Seed Money 0 (5,213) (11,191) 0
---------- ---------- -------- ---------
Total expenses (40,537) (33,173) (31,649) (2,283)
---------- ---------- -------- ---------
Net investment expense (40,537) (33,173) (31,649) (2,283)
---------- ---------- -------- ---------
Net realized gain on investments:
Realized gain from distributions 262,603 805,221 210,225 149,353
Realized gain on sales 188,905 417,832 121,217 1,064
---------- ---------- -------- ---------
Net realized gain on investments: 451,508 1,223,053 331,442 150,417
---------- ---------- -------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain on investments,
beginning of period 24,121 464,281 75,550 0
Unrealized gain (loss) on investments,
end of period 969,578 24,121 464,281 (133,375)
---------- ---------- -------- ---------
Net unrealized gain (loss) on investments 945,457 (440,160) 388,731 (133,375)
---------- ---------- -------- ---------
Net gain on investments 1,396,965 782,893 720,173 17,042
---------- ---------- -------- ---------
Net increase in net assets
resulting from operations $1,356,428 $ 749,720 $688,524 $ 14,759
========== ========== ======== =========
<FN>
<F*> This fund was formerly known as the Special Equity Fund.
<F**> See Note 2C.
<F***>The Small-Cap Equity Fund began operations on May 1, 1997.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 116
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 186,680 $ 9,260 $ 94,314 $ 94,061 $ 21,639 $ 21,771
Expenses:
Mortality and expense charges - VUL-95 (49,108) (38,120) (24,157) (65,287) (51,026) (34,577)
Mortality and expense charges - VGSP (27,082) (13,918) (6,731) (37,459) (19,582) (11,893)
Mortality and expense charges - VUL-100 (34,605) (10,210) (378) (42,613) (14,179) (439)
---------- ---------- ---------- ---------- ---------- ----------
Total expenses (110,795) (62,248) (31,266) (145,359) (84,787) (46,909)
---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss) 75,885 (52,988) 63,048 (51,298) (63,148) (25,138)
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments:
Realized gain from distributions 938,582 265,454 125,686 421,033 546,396 0
Realized gain on sales 310,747 130,118 67,467 381,175 254,460 176,048
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments: 1,249,329 395,572 193,153 802,208 800,856 176,048
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain on investments:
Unrealized gain on investments,
beginning of period 1,528,943 868,207 17,485 2,039,425 1,501,642 51,539
Unrealized gain on investments,
end of period 3,330,524 1,528,943 868,207 4,728,383 2,039,425 1,501,642
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain on investments 1,801,581 660,736 850,722 2,688,958 537,783 1,450,103
---------- ---------- ---------- ---------- ---------- ----------
Net gain on investments 3,050,910 1,056,308 918,189 3,491,166 1,338,639 1,626,151
---------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations $3,126,795 $1,003,320 $1,106,923 $3,439,868 $1,275,491 $1,601,013
========== ========== ========== ========== ========== ==========
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 117
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION
-------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995<F*>
-------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 98,942 $ 41,332 $ 8,707 $ 9,219 $ 2,632 $ 0
Expenses:
Mortality and expense charges - VUL-95 (32,823) (24,616) (17,340) (219) (126) (3)
Mortality and expense charges - VGSP (15,095) (8,371) (5,232) (597) (193) (20)
Mortality and expense charges - VUL-100 (9,246) (3,542) (152) (2,776) (1,031) (29)
-------- -------- -------- ------- ------- ------
Total expenses (57,164) (36,529) (22,724) (3,592) (1,350) (52)
-------- -------- -------- ------- ------- ------
Net investment income (loss) 41,778 4,803 (14,017) 5,627 1,282 (52)
-------- -------- -------- ------- ------- ------
Net realized gain on investments:
Realized gain from distributions 392,769 45,464 8,707 23,126 2,171 0
Realized gain on sales 73,551 42,658 19,162 10,620 1,016 13
-------- -------- -------- ------- ------- ------
Net realized gain on investments: 466,320 88,122 27,869 33,746 3,187 13
-------- -------- -------- ------- ------- ------
Net unrealized gain on investments:
Unrealized gain (loss) on investments,
beginning of period 639,437 210,998 (36,045) 19,793 1,779 0
Unrealized gain on investments,
end of period 710,980 639,437 210,998 54,259 19,793 1,779
-------- -------- -------- ------- ------- ------
Net unrealized gain on investments 62,543 428,439 247,043 34,466 18,014 1,779
-------- -------- -------- ------- ------- ------
Net gain on investments 528,863 516,561 266,205 68,212 21,201 1,792
-------- -------- -------- ------- ------- ------
Net increase in net assets
resulting from operations $570,641 $521,364 $260,895 $73,839 $22,483 $1,740
======== ======== ======== ======= ======= ======
<FN>
<F*>The Asset Manager Fund began operations on July 19, 1995.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 118
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F**>
---------------------------------- -----------------------------------
1997 1996 1995<F*> 1997 1996 1995<F*>
-------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 91,441 $28,732 $ 0 $ 3,388 $ 1,298 $ 32
Expenses:
Mortality and expense charges - VUL-95 (2,255) (1,639) (122) (754) (389) (3)
Mortality and expense charges - VGSP (4,993) (1,456) (55) (186) (214) 0
Mortality and expense charges - VUL-100 (6,583) (2,645) (76) (917) (410) (11)
-------- ------- ------ -------- ------- ----
Total expenses (13,831) (5,740) (253) (1,857) (1,013) (14)
-------- ------- ------ -------- ------- ----
Net investment income (loss) 77,610 22,992 (253) 1,531 285 18
-------- ------- ------ -------- ------- ----
Net realized gain (loss) on investments:
Realized gain from distributions 11,302 5,621 0 4,590 1,273 0
Realized gain (loss) on sales 17,736 (202) 1,132 (1,380) 1,682 (5)
-------- ------- ------ -------- ------- ----
Net realized gain (loss) on investments: 29,038 5,419 1,132 3,210 2,955 (5)
-------- ------- ------ -------- ------- ----
Net unrealized gain (loss) on investments:
Unrealized gain on investments,
beginning of period 57,062 2,337 0 3,346 370 0
Unrealized gain (loss) on investments,
end of period 220,773 57,062 2,337 (10,760) 3,346 370
-------- ------- ------ -------- ------- ----
Net unrealized gain (loss) on investments 163,711 54,725 2,337 (14,106) 2,976 370
-------- ------- ------ -------- ------- ----
Net gain (loss) on investments 192,749 60,144 3,469 (10,896) 5,931 365
-------- ------- ------ -------- ------- ----
Net increase (decrease) in net assets
resulting from operations $270,359 $83,136 $3,216 $ (9,365) $ 6,216 $383
======== ======= ====== ======== ======= ====
<FN>
<F*> The High Income Fund and Worldwide Hard Assets Fund began operations on May
24, and August 9, 1995, respectively.
<F**>This fund was formerly known as the Gold & Natural Resources Fund.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 119
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<CAPTION>
MULTI-STYLE AGGRESSIVE
EQUITY CORE BOND EQUITY NON-US
FUND DIVISION<F*> FUND DIVISION<F*> FUND DIVISION<F*> FUND DIVISION<F*>
----------------- ----------------- ----------------- -----------------
1997 1997 1997 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment income:
Dividend income $ 599 $ 2,483 $ 23 $ 0
Expenses:
Mortality and expense charges - VGSP (996) (408) (505) (496)
Mortality and expense charges - Russell VUL (1,582) (1,146) (682) (649)
------- ------- ------- --------
Total expenses (2,578) (1,554) (1,187) (1,145)
------- ------- ------- --------
Net investment income (loss) (1,979) 929 (1,164) (1,145)
------- ------- ------- --------
Net realized gain on investments:
Realized gain from distributions 0 0 0 0
Realized gain on sales 5,224 705 2,158 78
------- ------- ------- --------
Net realized gain on investments: 5,224 705 2,158 78
------- ------- ------- --------
Net unrealized gain (loss) on investments:
Unrealized gain on investments,
beginning of period 0 0 0 0
Unrealized gain (loss) on investments,
end of period 1,553 27,482 23,627 (57,317)
------- ------- ------- --------
Net unrealized gain (loss) on investments 1,553 27,482 23,627 (57,317)
------- ------- ------- --------
Net gain (loss) on investments 6,777 28,187 25,785 (57,239)
------- ------- ------- --------
Net increase (decrease) in net assets
resulting from operations $ 4,798 $29,116 $24,621 $(58,384)
======= ======= ======= ========
<FN>
<F*>The Multi-Style Equity Fund, Core Bond Fund, Aggressive Equity Fund, and
Non-US Fund began operations on January 2, 1997.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 120
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
------------------------------------ ----------------------------------
1997 1996 1995 1997 1996 1995
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (125,228) $ (64,887) $ (35,665) $ (36,015) $ (40,126) $ (23,155)
Net realized gain on investments 2,484,096 679,654 467,711 73,476 377,717 297,329
Net unrealized gain (loss) on investments 1,526,899 1,130,969 861,314 183,867 (98,112) (127,551)
----------- ----------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 3,885,767 1,745,736 1,293,360 221,328 239,479 146,623
Net deposits into (deductions from)
Separate Account 2,209,424 8,067,322 (145,477) 932,501 3,557,381 2,340,021
----------- ----------- ---------- ---------- ---------- ----------
Increase in net assets 6,095,191 9,813,058 1,147,883 1,153,829 3,796,860 2,486,644
Net assets, beginning of period 14,483,132 4,670,074 3,522,191 8,162,426 4,365,566 1,878,922
----------- ----------- ---------- ---------- ---------- ----------
Net assets, end of period $20,578,323 $14,483,132 $4,670,074 $9,316,255 $8,162,426 $4,365,566
=========== =========== ========== ========== ========== ==========
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 121
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
------------------------------------ ----------------------------------
1997 1996 1995 1997 1996 1995
----------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (22,907) $ (23,412) $ (18,655) $ (29,512) $ (19,294) $ (16,965)
Net realized gain (loss) on investments (10,472) 480,309 38,220 346,937 304,052 192,457
Net unrealized gain (loss) on investments 250,471 (253,664) 332,511 368,231 143,681 381,204
----------- ---------- ----------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 217,092 203,233 352,076 685,656 428,439 556,696
Net deposits into (deductions from)
Separate Account (3,532,130) 5,128,242 (1,271,114) 779,803 436,005 (487,360)
----------- ---------- ----------- ---------- ---------- ----------
Increase (decrease) in net assets (3,315,038) 5,331,475 (919,038) 1,465,459 864,444 69,336
Net assets, beginning of period 6,763,582 1,432,107 2,351,145 2,769,856 1,905,412 1,836,076
----------- ---------- ----------- ---------- ---------- ----------
Net assets, end of period $ 3,448,544 $6,763,582 $ 1,432,107 $4,235,315 $2,769,856 $1,905,412
=========== ========== =========== ========== ========== ==========
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 122
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F*>
----------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995
----------- ---------- ---------- ---------- ---------- ----------
<C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (80,244) $ (58,754) $ (52,116) $ (62,954) $ (50,946) $ (40,101)
Net realized gain on investments 507,259 590,789 605,510 357,331 208,016 556,435
Net unrealized gain (loss) on investments 1,104,802 459,911 963,246 (199,315) 228,045 (158,021)
----------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 1,531,817 991,946 1,516,640 95,062 385,115 358,313
Net deposits into (deductions from)
Separate Account 909,812 1,086,684 (709,124) 979,833 1,016,960 789,597
----------- ---------- ---------- ---------- ---------- ----------
Increase in net assets 2,441,629 2,078,630 807,516 1,074,895 1,402,075 1,147,910
Net assets, beginning of period 8,034,676 5,956,046 5,148,530 6,789,398 5,387,323 4,239,413
----------- ---------- ---------- ---------- ---------- ----------
Net assets, end of period $10,476,305 $8,034,676 $5,956,046 $7,864,293 $6,789,398 $5,387,323
=========== ========== ========== ========== ========== ==========
<FN>
<F*>This fund was formerly known as the International Equity Fund.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 123
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F*> FUND DIVISION
---------------------------------- ----------------
1997 1996 1995 1997<F**>
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Operations:
Net investment expense $ (40,537) $ (33,173) $ (31,649) $ (2,283)
Net realized gain on investments 451,508 1,223,053 331,442 150,417
Net unrealized gain (loss) on investments 945,457 (440,160) 388,731 (133,375)
---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 1,356,428 749,720 688,524 14,759
Net deposits into (deductions from)
Separate Account 793,111 (860,933) 229,832 1,129,095
---------- ---------- ---------- ----------
Increase (decrease) in net assets 2,149,539 (111,213) 918,356 1,143,854
Net assets, beginning of period 4,085,177 4,196,390 3,278,034 0
---------- ---------- ---------- ----------
Net assets, end of period $6,234,716 $4,085,177 $4,196,390 $1,143,854
========== ========== ========== ==========
<FN>
<F*> This fund was formerly known as the Special Equity Fund.
<F**>The Small-Cap Equity Fund began operations on May 1, 1997.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 124
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
------------------------------------- ------------------------------------
1997 1996 1995 1997 1996 1995
----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (expense) $ 75,885 $ (52,988) $ 63,048 $ (51,298) $ (63,148) $ (25,138)
Net realized gain on investments 1,249,329 395,572 193,153 802,208 800,856 176,048
Net unrealized gain on investments 1,801,581 660,736 850,722 2,688,958 537,783 1,450,103
----------- ----------- ---------- ----------- ----------- ----------
Net increase in net assets
resulting from operations 3,126,795 1,003,320 1,106,923 3,439,868 1,275,491 1,601,013
Net deposits into Separate Account 3,516,214 3,869,404 2,068,778 5,418,111 4,760,220 1,991,002
----------- ----------- ---------- ----------- ----------- ----------
Increase in net assets 6,643,009 4,872,724 3,175,701 8,857,979 6,035,711 3,592,015
Net assets, beginning of period 10,352,808 5,480,084 2,304,383 13,370,612 7,334,901 3,742,886
----------- ----------- ---------- ----------- ----------- ----------
Net assets, end of period $16,995,817 $10,352,808 $5,480,084 $22,228,591 $13,370,612 $7,334,901
=========== =========== ========== =========== =========== ==========
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 125
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION<F*>
----------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (expense) $ 41,778 $ 4,803 $ (14,017) $ 5,627 $ 1,282 $ (52)
Net realized gain on investments 466,320 88,122 27,869 33,746 3,187 13
Net unrealized gain on investments 62,543 428,439 247,043 34,466 18,014 1,779
---------- ---------- ---------- -------- -------- -------
Net increase in net assets
resulting from operations 570,641 521,364 260,895 73,839 22,483 1,740
Net deposits into Separate Account 2,154,913 1,491,289 1,053,659 227,154 202,863 49,378
---------- ---------- ---------- -------- -------- -------
Increase in net assets 2,725,554 2,012,653 1,314,554 300,993 225,346 51,118
Net assets, beginning of period 5,445,930 3,433,277 2,118,723 276,464 51,118 0
---------- ---------- ---------- -------- -------- -------
Net assets, end of period $8,171,484 $5,445,930 $3,433,277 $577,457 $276,464 $51,118
========== ========== ========== ======== ======== =======
<FN>
<F*>The Asset Manager Fund began operations on July 19, 1995.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 126
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F*>
---------------------------------- ---------------------------------
1997 1996 1995<F**> 1997 1996 1995<F**>
---------- ---------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (expense) $ 77,610 $ 22,992 $ (253) $ 1,531 $ 285 $ 18
Net realized gain (loss) on investments 29,038 5,419 1,132 3,210 2,955 (5)
Net unrealized gain (loss) on investments 163,711 54,725 2,337 (14,106) 2,976 370
---------- ---------- -------- -------- -------- ------
Net increase (decrease) in net assets
resulting from operations 270,359 83,136 3,216 (9,365) 6,216 383
Net deposits into Separate Account 711,529 904,946 199,733 92,851 170,306 9,414
---------- ---------- -------- -------- -------- ------
Increase in net assets 981,888 988,082 202,949 83,486 176,522 9,797
Net assets, beginning of period 1,191,031 202,949 0 186,319 9,797 0
---------- ---------- -------- -------- -------- ------
Net assets, end of period $2,172,919 $1,191,031 $202,949 $269,805 $186,319 $9,797
========== ========== ======== ======== ======== ======
<FN>
<F*> This fund was formerly known as the Gold & Natural Resources Fund.
<F**>The High Income Fund and the Worldwide Hard Assets Fund began operations on May 24, and August 9, 1995, respectively.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 127
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1997
<CAPTION>
MULTI-STYLE AGGRESSIVE
EQUITY CORE BOND EQUITY NON-US
FUND DIVISION<F*> FUND DIVISION<F*> FUND DIVISION<F*> FUND DIVISION<F*>
----------------- ----------------- ----------------- -----------------
1997 1997 1997 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Operations:
Net investment income (expense) $ (1,979) $ 929 $ (1,164) $ (1,145)
Net realized gain on investments 5,224 705 2,158 78
Net unrealized gain (loss) on investments 1,553 27,482 23,627 (57,317)
---------- ---------- ---------- --------
Net increase (decrease) in net assets
resulting from operations 4,798 29,116 24,621 (58,384)
Net deposits into Separate Account 2,534,482 1,125,291 1,320,804 842,227
---------- ---------- ---------- --------
Increase in net assets 2,539,280 1,154,407 1,345,425 783,843
Net assets, beginning of period 0 0 0 0
---------- ---------- ---------- --------
Net assets, end of period $2,539,280 $1,154,407 $1,345,425 $783,843
========== ========== ========== ========
<FN>
<F*>The Multi-Style Equity Fund, Core Bond Fund, Aggressive Equity Fund, and Non-US Fund began operations on January 2,
1997.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 128
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<CAPTION>
No. of Shares Market Value
------------- ------------
<S> <C> <C>
S & P 500 Index Fund
General American Capital Company<F*> 522,436 $20,581,893
Money Market Fund
General American Capital Company<F*> 471,869 8,600,564
Bond Index Fund
General American Capital Company<F*> 148,761 3,450,248
Managed Equity Fund
General American Capital Company<F*> 135,951 4,241,762
Asset Allocation Fund
General American Capital Company<F*> 329,020 10,482,605
International Index Fund<F**>
General American Capital Company<F*> 474,049 7,866,879
Mid-Cap Equity Fund<F***>
General American Capital Company<F*> 282,331 6,232,329
Small-Cap Equity Fund
General American Capital Company<F*> 23,695 1,143,813
Equity-Income Fund
Variable Insurance Products Fund 700,210 17,001,106
Growth Fund
Variable Insurance Products Fund 599,398 22,237,647
Overseas Fund
Variable Insurance Products Fund 425,780 8,174,972
Asset Manager Fund
Variable Insurance Products Fund II 32,084 577,825
High Income Fund
Variable Insurance Products Fund 160,163 2,175,014
Worldwide Hard Assets Fund<F****>
Van Eck Worldwide Insurance Trust 17,172 269,764
Multi-Style Equity Fund
Russell Insurance Funds 198,618 2,538,339
Core Bond Fund
Russell Insurance Funds 110,396 1,153,638
Aggressive Equity Fund
Russell Insurance Funds 99,947 1,344,291
Non-US Fund
Russell Insurance Funds 78,061 782,951
<FN>
<F*> These funds use consent dividending. See Note 2C.
<F**> This fund was formerly known as the International Equity Fund.
<F***> This fund was formerly known as the Special Equity Fund.
<F****>This fund was formerly known as the Gold & Natural Resources Fund.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 129
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Note 1 - Organization
General American Separate Account Eleven (the Separate Account) commenced
operations on September 15, 1987 and is registered under the Investment
Company Act of 1940 (1940 Act) as a unit investment trust. The Separate
Account offers four products: Variable Universal Life (VUL-95), Variable
General Select Plus (VGSP), Variable Universal Life (VUL-100), and Russell
Variable Universal Life (Russell VUL) that receive and invest net premiums
for flexible premium variable life insurance policies that are issued by
General American Life Insurance Company (General American). The Separate
Account is divided into eighteen Divisions. Each Division invests exclusively
in shares of a single Fund of either General American Capital Company,
Variable Insurance Products Fund, Variable Insurance Products Fund II, Van
Eck Worldwide Insurance Trust or Russell Insurance Funds which are open-end,
diversified management companies. The Funds of the General American Capital
Company, sponsored by General American, are the S & P 500 Index (formerly
Equity Index), Money Market, Bond Index, Managed Equity, Asset Allocation,
International Index (formerly International Equity), Mid-Cap Equity (formerly
Special Equity), and the Small-Cap Equity Fund Divisions. The Funds of the
Variable Insurance Products Fund, managed by Fidelity Management & Research
Company, are the Equity-Income, Growth, Overseas, and the High Income Fund
Divisions. The Funds of the Variable Insurance Products Fund II, managed by
Fidelity Management and Research Company is the Asset Manager Fund. The Fund
of the Van Eck Worldwide Insurance Trust, managed by Van Eck Associates
Corporation, is the Worldwide Hard Assets Fund, formerly known as the Gold
and Natural Resources Fund. The Funds of the Russell Variable Insurance
Product, managed by Frank Russell Investment Management Company are the
Multi-style Equity, Core Bond, Aggressive Equity, and Non-US Fund Divisions.
Policyholders have the option of directing their premium payments into one or
all of the Funds as well as into the general account of General American,
which is not generally subject to regulation under the Securities Act of 1933
or the 1940 Act.
Note 2 - Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Separate Account in the preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles.
A. Investments
The Separate Accounts' investments in the eighteen Funds are valued
daily based on the net asset values of the respective Fund shares held
as reported to General American by General American Capital Company,
Variable Insurance Products Fund, Variable Insurance Products Fund II,
Van Eck Worldwide Insurance Trust, and Russell Insurance Funds. The
specific identification method is used in determining the cost of
shares sold on withdrawals by the Separate Account. Share transactions
are recorded on the trade date, which is the same as the settlement
date.
B. Federal Income Taxes
Under current federal income tax law, capital gains from sales of
investments of the Separate Account are not taxable. Therefore, no
federal income tax expense has been provided.
C. Distribution of Income and Realized Capital Gains
General American Capital Company follows the federal income tax
practice known as consent dividending, whereby substantially all of its
net investment income and realized gains are deemed to be passed
through to the Separate Account. As a result, General American Capital
Company does not pay any dividends or capital gain distributions.
During December of each year, accumulated investment income and capital
gains of the underlying Capital Company Fund are allocated to the
Separate Account by increasing the cost basis and recognizing a capital
gain in the Separate Account. The Variable Insurance Products Fund,
Variable Insurance Products Fund II, Van Eck Worldwide Insurance Trust
and Russell Insurance Funds intend to pay out all of their net
investment income and net realized capital gains each year. Dividends
from the funds are distributed at least annually on a per share basis
and are recorded on the ex dividend date. Normally, net realized
capital gains, if any, are distributed each year for each fund. Such
income and capital gain distributions are automatically reinvested in
additional shares of the funds.
<PAGE> 130
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
D. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increase
and decrease in net assets from operations during the period. Actual
results could differ from those estimates.
Note 3 - Policy Charges
Charges are deducted from premiums and paid to General American for providing
the insurance benefits set forth in the contracts and any additional benefits
added by rider, administering the policies, reimbursement of expenses
incurred in distributing the policies, and assuming certain risks in
connection with the policies.
Prior to the allocation of net premiums among General American's general
account and the Fund Divisions of the Separate Account, premium payments are
reduced by premium expense charges, which consist of a sales charge and a
charge for premium taxes. The premium payment, less the premium expense
charge, equals the net premium.
Sales Charge: A sales charge equal to 6% is deducted from each VUL-95
-------------
premium paid. A sales charge of 5% in years one through ten and 2.25%
thereafter is deducted from each VGSP premium paid. A maximum sales
charge of 5% in years one through ten and a maximum 2.25% thereafter
based on initial deposit is deducted from each Russell VUL premium
paid. This charge is deducted to partially reimburse General American
for expenses incurred in distributing the policy and any additional
benefits provided by rider. No sales charge is deducted from VUL-100
premiums.
Premium Taxes: Various state and political subdivisions impose a tax
--------------
on premiums received by insurance companies. Premium taxes vary from
state to state. A deduction of 2% of each VUL-95 premium, 2.5% of each
VGSP premium, 2.10% of each VUL-100 premium, and 2.5% of each Russell
VUL premium is made from each premium payment for these taxes. In
addition, a 1.25% deduction is taken from VUL-100 premiums to cover the
company's Federal income tax costs attributable to the amount of
premium received.
Charges are deducted monthly from the cash value of each policy to compensate
General American for (a) certain administrative costs; (b) insurance
underwriting and acquisition expenses in connection with issuing a policy;
(c) the cost of insurance, and (d) the cost of optional benefits added by
rider.
Administrative Charge: General American has responsibility for the
----------------------
administration of the policies and the Separate Account. As
reimbursement for administrative expenses related to the maintenance of
each policy and the Separate Account, General American assesses a
monthly administrative charge against each policy. This charge is $10
per month for a standard policy and $12 per month for a pension policy
during the first 12 policy months and $4 (standard) and $6 (pension)
per month for all policy months beyond the 12th for VUL-95 contracts.
The charge is $4 per month for VGSP and Russell VUL contracts. The
charge is $13 per month during the first 12 policy months and $6 per
month thereafter for VUL-100 contracts.
Insurance Underwriting and Acquisition Expense Charge: An additional
------------------------------------------------------
administrative charge is deducted from the policy cash value for VUL-95
as part of the monthly deduction during the first 12 policy months and
for the first 12 policy months following an increase in the face
amount. The charge is $0.08 per month multiplied by the face amount
divided by 1,000. For VUL-100, the charge during the first 12 policy
months is $0.16 per month multiplied by the face amount divided by
1,000, and in all policy years thereafter, the charge is $0.01 per
month multiplied by the face amount divided by 1,000.
<PAGE> 131
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Cost of Insurance: The cost of insurance is deducted on each monthly
------------------
anniversary date for the following policy month. Because the cost of
insurance depends upon a number of variables, the cost varies for each
policy month. The cost of insurance is determined separately for the
initial face amount and for any subsequent increases in face amount.
General American determines the monthly cost of insurance charge by
multiplying the applicable cost of insurance rate or rates by the net
amount at risk for each policy month.
Optional Rider Benefits Charge: This monthly deduction includes
-------------------------------
charges for any additional benefits provided by rider.
Contingent Deferred Sales Charge: During the first ten policy years
---------------------------------
for VUL-95, VGSP, and Russell VUL, and the first fifteen years for VUL-
100, General American also assesses a charge upon surrender or lapse of
a Policy, a requested decrease in face amount, or a partial withdrawal
that causes the face amount to decrease. The amount of the charge
assessed depends on a number of factors, including whether the event is
a full surrender or lapse or only a decrease in face amount, the amount
of premiums received to date by General American, and the policy year
in which the surrender or other event takes place.
Mortality and Expense Charge: In addition to the above charges, a daily
- -----------------------------
charge is made at the separate account level for the mortality and expense
risks assumed by General American. General American deducts a daily charge
from the Separate Account at the rate of .002319% for VUL-95, .0019111% for
VGSP, .002455% for VUL-100, and .001366% for Russell VUL of the net assets of
each division of the Separate Account, which equals an annual rate of .85%,
..70%, .90%, and .50% for VUL-95, VGSP, VUL-100, and Russell VUL,
respectively. VUL-95, VGSP, VUL-100, and Russell VUL mortality and expense
charges for 1997 were $398,648, $160,175, $174,234, and $5,685,
respectively. The mortality risk assumed by General American is the risk that
those insured may die sooner than anticipated and therefore, that General
American will pay an aggregate amount of death benefits greater than
anticipated. The expense risk assumed is that expenses incurred in issuing
and administering the policy will exceed the amounts realized from the
administrative charges assessed against the policy.
NOTE 4 - INVESTMENT OBJECTIVES, MANAGER CHANGES AND NEW DIVISIONS
Effective January 1, 1997, the International Equity Fund became the
International Index Fund. The investment objective of the International Index
Fund is to obtain investment results that parallel the price and yield
performance of publicly-traded common stocks in the Morgan Stanley Capital
International Europe, Australia, and Far East Index ("EAFE Index"). The
portfolio manager of the International Index Fund is Conning Asset Management
Company and the management fee for the fund is .50% on the first $10 million
in assets, .40% on the balance over $10 million and less than $20 million and
..30% on any balance in excess of $20 million.
Effective January 1, 1997, the Special Equity Fund became the Mid-Cap Equity
Fund. The investment objective of the Mid-Cap Equity Fund is to seek
sustained growth of capital by investing primarily in common stocks of United
States-bases publicly traded companies with "medium market capitalization".
"Medium market capitalization companies" are those whose market
capitalization falls within the range of the S&P MidCap 400 at the time of
the Fund's investment. The portfolio manager of the Mid-Cap Equity Fund is
Conning Asset Management Company and the total management fee rate remained
unchanged from that of the Special Equity Fund.
On March 1, 1997, Conning Asset Management Company became the manager of the
Managed Equity Fund. The management fee is .40% on the first $10 million in
assets, .30% on the balance over $10 million and less than $30 million, and
..25% on the balance in excess of $30 million.
<PAGE> 132
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
On January 2, 1997, four new divisions and a new product -Russell VUL- were
added to Separate Account Eleven. The four divisions were the Multi-Style
Equity, Core Bond, Aggressive Equity and Non-US. The underlying funds in
these divisions are offered by Russell Insurance Funds and managed by Frank
Russell Company. The investment objectives of each of these new divisions are
as follows:
Multi-Style Equity Fund - To provide income and capital growth by investing
- -----------------------
principally in equity securities.
Core Bond Fund - To provide effective diversification against equities and a
- --------------
stable level of cash flow by investing in fixed income securities.
Aggressive Equity Fund - To maximize total return through capital
- ----------------------
appreciation and by assuming a higher level of volatility than is ordinarily
expected from the Multi-Style Equity Fund, while still investing in equity
securities.
Non-US Fund - To provide favorable total return and additional
- -----------
diversification for United States investors by investing primarily in equity
and fixed income securities of non-US companies and securities issued by
non-United States governments.
The underlying products currently offered by these divisions are Russell VUL
and VGSP.
On May 1, 1997, the Small Cap Equity division was added to Separate Account
Eleven. The underlying fund in this division is offered by General American
Capital Company and is managed by Conning Asset Management Company. The
investment objective of the fund is to provide a rate of return that
corresponds to the performance of the common stock of small companies, while
incurring a level of risk that is generally equal to the risks associated
with small company common stock. The Fund attempts to duplicate the
performance of the smallest 20% of companies based on capitalization size,
that are based in the United States and listed on the New York Stock
Exchange.
The underlying products currently offered by this division are VUL-95, VGSP,
and VUL-100.
<PAGE> 133
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 5 - PURCHASES AND SALES
During the year ended December 31, 1997, purchases including net realized
gain and income from distribution and proceeds from sales of General American
Capital Company shares were as follows:
<TABLE>
<CAPTION>
S & P 500 Money Bond Managed Asset International Mid-Cap Small-Cap
Index Market Index Equity Allocation Index Equity Equity
Fund Fund Fund Fund Fund Fund Fund Fund
---------- ----------- ---------- ---------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchases $8,442,192 $18,247,884 $1,749,901 $1,578,051 $2,343,633 $1,765,214 $2,156,245 $1,293,907
========== =========== ========== ========== ========== ========== ========== ==========
Sales $5,448,171 $17,983,425 $5,140,723 $ 590,072 $1,218,119 $ 628,010 $1,147,830 $ 17,782
========== =========== ========== ========== ========== ========== ========== ==========
</TABLE>
During the year ended December 31, 1997, purchases (including dividend
reinvestment) and proceeds from sales of Variable Insurance Products Fund
Shares were as follows:
<TABLE>
<CAPTION>
Equity-Income Growth Overseas High Income
Fund Fund Fund Fund
------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Purchases $5,671,668 $6,780,325 $3,016,982 $1,043,519
========== ========== ========== ==========
Sales $1,100,161 $ 960,461 $ 418,954 $ 240,128
========== ========== ========== ==========
</TABLE>
During the year ended December 31, 1997, purchases (including dividend
reinvestment) and proceeds from sales of Variable Insurance Products Fund II
shares were as follows:
<TABLE>
<CAPTION>
Asset Manager
Fund
-------------
<S> <C>
Purchases $367,321
========
Sales $111,483
========
</TABLE>
During the year ended December 31, 1997, purchases (including dividend
reinvestment) and proceeds from sales of Van Eck Worldwide Insurance Trust
shares were as follows:
<TABLE>
<CAPTION>
Worldwide Hard
Assets Fund
--------------
<S> <C>
Purchases $152,061
========
Sales $ 53,087
========
</TABLE>
During the year ended December 31, 1997, purchases (including dividend
reinvestment) and proceeds from sales of Russell Insurance Funds shares were as
follows:
<TABLE>
<CAPTION>
Multi-Style Core Bond Aggressive Non-US
Equity Fund Fund Equity Fund Fund
----------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Purchases $2,574,829 $1,160,983 $1,338,577 $863,517
========== ========== ========== ========
Sales $ 43,266 $ 35,533 $ 20,072 $ 23,327
========== ========== ========== ========
</TABLE>
<PAGE> 134
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
--------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
-------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 70,404 56,960 78,391 98,719 52,946 206,798
Withdrawals (29,686) (32,408) (101,054) (110,821) (79,319) (215,226)
Outstanding units, beginning of year 195,587 171,035 193,698 58,805 85,178 93,606
-------- ------- -------- -------- ---------- --------
Outstanding units, end of year 236,305 195,587 171,035 46,703 58,805 85,178
======== ======= ======== ======== ========== ========
Variable General Select Plus:
Deposits 146,632 376,931 30,100 942,448 1,489,642 344,162
Withdrawals (305,772) (16,019) (15,451) (900,950) (1,173,354) (215,211)
Outstanding units, beginning of year 407,634 46,722 32,073 494,355 178,067 49,116
-------- ------- -------- -------- ---------- --------
Outstanding units, end of year 248,494 407,634 46,722 535,853 494,355 178,067
======== ======= ======== ======== ========== ========
Variable Universal Life-100:<F*>
Deposits 212,106 151,173 14,240 738,912 729,350 214,797
Withdrawals (41,462) (42,505) (687) (707,676) (698,266) (110,989)
Outstanding units, beginning of period 122,221 13,553 0 134,892 103,808 0
-------- ------- -------- -------- ---------- --------
Outstanding units, end of period 292,865 122,221 13,553 166,128 134,892 103,808
======== ======= ======== ======== ========== ========
Russell Variable Universal Life:<F**> 435,785
Deposits (427,238)
Withdrawals 0
--------
Outstanding units, beginning of period
Outstanding units, end of period 8,547
========
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F**>The Russell Variable Universal Life product was introduced in 1997, and
the first deposit was received on May 6, 1997.
(continued)
</TABLE>
$" "
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years ended
December 31, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
--------------------------------- -------------------------------
1997 1996 1995 1997 1996 1995
-------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 45,996 20,690 28,341 20,213 22,639 37,042
Withdrawals (19,985) (19,502) (102,229) (19,170) (23,620) (68,803)
Outstanding units, beginning of year 71,443 70,255 144,143 91,667 92,648 124,409
-------- ------- -------- ------- ------- -------
Outstanding units, end of year 97,454 71,443 70,255 92,710 91,667 92,648
======== ======= ======== ======= ======= =======
Variable General Select Plus:
Deposits 26,599 422,790 5,765 22,411 20,875 5,835
Withdrawals (398,540) (6,268) (1,249) (10,526) (1,816) (595)
Outstanding units, beginning of year 422,341 5,819 1,303 25,596 6,537 1,297
-------- ------- -------- ------- ------- -------
Outstanding units, end of year 50,400 422,341 5,819 37,481 25,596 6,537
======== ======= ======== ======= ======= =======
Variable Universal Life-100:<F*>
Deposits 38,781 31,945 1,670 38,918 15,297 1,823
Withdrawals (8,471) (8,214) (75) (8,793) (2,675) (168)
Outstanding units, beginning of period 25,326 1,595 0 14,277 1,655 0
-------- ------- -------- ------- ------- -------
Outstanding units, end of period 55,636 25,326 1,595 44,402 14,277 1,655
======== ======= ======== ======= ======= =======
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 135
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F*>
------------------------------- -------------------------------
1997 1996 1995 1997 1996 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 58,255 67,461 80,183 56,157 60,637 74,018
Withdrawals (49,785) (33,247) (98,461) (45,488) (32,650) (28,390)
Outstanding units, beginning of year 274,368 240,154 258,432 164,557 136,570 90,942
------- ------- ------- ------- ------- -------
Outstanding units, end of year 282,838 274,368 240,154 175,226 164,557 136,570
======= ======= ======= ======= ======= =======
Variable General Select Plus:
Deposits 21,682 21,668 12,925 35,709 24,970 16,837
Withdrawals (10,372) (18,560) (31,947) (10,776) (12,229) (6,722)
Outstanding units, beginning of year 61,197 58,089 77,111 45,125 32,384 22,269
------- ------- ------- ------- ------- -------
Outstanding units, end of year 72,507 61,197 58,089 70,058 45,125 32,384
======= ======= ======= ======= ======= =======
Variable Universal Life-100:<F**>
Deposits 44,721 23,767 1,072 56,601 46,973 4,468
Withdrawals (11,617) (2,830) (39) (15,926) (7,916) (777)
Outstanding units, beginning of year 21,970 1,033 0 42,748 3,691 0
------- ------- ------- ------- ------- -------
Outstanding units, end of year 55,074 21,970 1,033 83,423 42,748 3,691
======= ======= ======= ======= ======= =======
General American Life Insurance Company
seed money:
Deposits 0 0 0 0 0 0
Withdrawals 0 0 0 0 0 0
Outstanding units, beginning of year 0 0 0 200,000 200,000 200,000
------- ------- ------- ------- ------- -------
Outstanding units, end of year 0 0 0 200,000 200,000 200,000
======= ======= ======= ======= ======= =======
<FN>
<F*> This fund was formerly known as the International Equity Fund.
<F**> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 136
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, 1996, and 1995, for the Mid-Cap Equity Fund
Division and the period ended December 31, 1997, for the Small-Cap Equity Fund
Division:
<TABLE>
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F*> FUND DIVISION
------------------------------- -------------------------------
1997 1996 1995 1997<F***>
------- -------- ------- ----------
<S> <C> <C> <C> <C>
Variable Universal Life - 95:
Deposits 50,013 67,217 94,909 35,503
Withdrawals (61,032) (50,100) (88,190) (326)
Outstanding units, beginning of period 185,140 168,023 161,304 0
------- ------- ------- ------
Outstanding units, end of period 174,121 185,140 168,023 35,177
======= ======= ======= ======
Variable General Select Plus:
Deposits 43,764 17,983 22,352 30,298
Withdrawals (14,054) (16,026) (12,685) (271)
Outstanding units, beginning of period 48,209 46,252 36,585 0
------- ------- ------- ------
Outstanding units, end of period 77,919 48,209 46,252 30,027
======= ======= ======= ======
Variable Universal Life - 100:<F**>
Deposits 36,664 35,395 4,498 23,110
Withdrawals (15,674) (6,929) (725) (540)
Outstanding units, beginning of period 32,239 3,773 0 0
------- ------- ------- ------
Outstanding units, end of period 53,229 32,239 3,773 22,570
======= ======= ======= ======
General American Life Insurance Company
seed money:
Deposits 0 0 0
Withdrawals 0 (100,000) 0
Outstanding units, beginning of year 0 100,000 100,000
------- ------- -------
Outstanding units, end of year 0 0 100,000
======= ======= =======
<FN>
<F*> This fund was formerly known as the Special Equity Fund.
<F**> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F***> The Small-Cap Equity Fund began operations on May 1, 1997.
(continued)
</TABLE>
<PAGE> 137
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
------------------------------- -------------------------------
1997 1996 1995 1997 1996 1995
------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 73,369 100,383 143,543 110,237 141,831 181,296
Withdrawals (68,932) (61,252) (48,670) (69,361) (101,041) (80,832)
Outstanding units, beginning of year 287,907 248,776 153,903 367,037 326,247 225,783
------- ------- ------- ------- -------- -------
Outstanding units, end of year 292,344 287,907 248,776 407,913 367,037 326,247
======= ======= ======= ======= ======== =======
Variable General Select Plus:
Deposits 107,293 95,653 78,040 151,169 136,928 90,761
Withdrawals (41,943) (24,220) (34,513) (56,898) (38,737) (60,661)
Outstanding units, beginning of year 160,791 89,358 45,831 233,747 135,556 105,456
------- ------- ------- ------- -------- -------
Outstanding units, end of year 226,141 160,791 89,358 328,018 233,747 135,556
======= ======= ======= ======= ======== =======
Variable Universal Life-100:<F*>
Deposits 161,018 167,806 20,481 227,448 213,702 25,375
Withdrawals (42,604) (22,709) (1,718) (64,065) (38,214) (1,865)
Outstanding units, beginning of period 163,860 18,763 0 198,998 23,510 0
------- ------- ------- ------- -------- -------
Outstanding units, end of period 282,274 163,860 18,763 362,381 198,998 23,510
======= ======= ======= ======= ======== =======
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 138
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, 1996, and 1995, for the Overseas Fund Division
and for the years ended December 31, 1997, and 1996, and the period ended
December 31, 1995, for the Asset Manager Division:.
<TABLE>
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION
------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995<F*>
------- ------- ------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 73,211 86,129 97,609 1,053 1,196 331
Withdrawals (33,419) (57,328) (42,775) (363) (80) (4)
Outstanding units, beginning of period 202,771 173,970 119,136 1,443 327 0
------- ------- ------- ------ ------ -----
Outstanding units, end of period 242,563 202,771 173,970 2,132 1,443 327
======= ======= ======= ====== ====== =====
Variable General Select Plus:
Deposits 78,015 59,185 46,058 4,792 4,133 1,534
Withdrawals (24,003) (18,099) (24,367) (1,323) (1,450) (6)
Outstanding units, beginning of period 114,696 73,610 51,919 4,211 1,528 0
------- ------- ------- ------ ------ -----
Outstanding units, end of period 168,708 114,696 73,610 7,680 4,211 1,528
======= ======= ======= ====== ====== =====
Variable Universal Life-100:<F**>
Deposits 61,939 59,253 9,829 19,775 17,799 3,044
Withdrawals (16,003) (12,929) (1,146) (6,893) (3,550) (100)
Outstanding units, beginning of period 55,007 8,683 0 17,193 2,944 0
------- ------- ------- ------ ------ -----
Outstanding units, end of period 100,943 55,007 8,683 30,075 17,193 2,944
======= ======= ======= ====== ====== =====
<FN>
<F*> The Asset Manager fund began operations on July 19, 1995.
<F**>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 139
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, and 1996, and the period ended December 31, 1995:
<TABLE>
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F**>
---------------------------------- ---------------------------------
1997 1996 1995<F*> 1997 1996 1995<F*>
------- ------ -------- ------ ----- --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 8,197 18,576 6,217 5,256 6,777 135
Withdrawals (10,956) (3,225) (237) (857) (976) (9)
Outstanding units, beginning of period 21,331 5,980 0 5,927 126 0
------- ------ ----- ------ ------ ---
Outstanding units, end of period 18,572 21,331 5,980 10,326 5,927 126
======= ====== ===== ====== ====== ===
Variable General Select Plus:
Deposits 36,763 32,705 6,436 1,994 4,222 0
Withdrawals (8,788) (2,369) (115) (3,232) (92) 0
Outstanding units, beginning of period 36,657 6,321 0 4,130 0 0
------- ------ ----- ------ ------ ---
Outstanding units, end of period 64,632 36,657 6,321 2,892 4,130 0
======= ====== ===== ====== ====== ===
Variable Universal Life-100:<F***>
Deposits 39,145 41,415 6,662 7,159 6,746 890
Withdrawals (9,470) (8,355) (159) (2,531) (1,660) (31)
Outstanding units, beginning of period 39,563 6,503 0 5,945 859 0
------- ------ ----- ------ ------ ---
Outstanding units, end of period 69,238 39,563 6,503 10,573 5,945 859
======= ====== ===== ====== ====== ===
<FN>
<F*> The High Income Fund and Worldwide Hard Assets Fund began operations on May
24, and August 9, 1995, respectively.
<F**> This fund was formerly known as the Gold & Natural Resources Fund.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 140
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the period
ended December 31, 1997:
<TABLE>
<CAPTION>
MULTI-STYLE AGGRESSIVE
EQUITY CORE BOND EQUITY NON-US
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- -------------- -------------
1997<F*> 1997<F*> 1997<F*> 1997<F*>
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Variable General Select Plus:<F**>
Deposits 47,597 21,805 25,379 28,863
Withdrawals (667) (391) (279) (285)
Outstanding units, beginning of period 0 0 0 0
------- ------ ------ ------
Outstanding units, end of period 46,930 21,414 25,100 28,578
======= ====== ====== ======
Russell Variable Universal Life:<F***>
Deposits 153,054 86,149 75,650 50,101
Withdrawals (1,563) (2,024) (494) (1,018)
Outstanding units, beginning of period 0 0 0 0
------- ------ ------ ------
Outstanding units, end of period 151,491 84,125 75,156 49,083
======= ====== ====== ======
<FN>
<F*> The Multi-Style Equity Fund, Core Bond Fund, Aggressive Equity Fund, and
Non-US Fund began operations on January 2, 1997.
<F**> The Variable General Select Plus product was introduced in 1997, and the
first deposit was received on June 26, 1997.
<F***>The Russell Variable Universal Life product was introduced in 1997, and
the first deposit was received on June 6, 1997.
</TABLE>
<PAGE> 141
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT
Deposits into the Separate Account are used to purchase shares in the
Capital Company, Variable Insurance Products Funds, Variable Insurance
Products Fund II, Van Eck Worldwide Insurance Trust, or Russell Insurance
Funds. Net deposits represent the amounts available for investment in such
shares after deduction of sales charges, premium taxes, administrative
costs, insurance, underwriting and acquisition expense, cost of insurance,
and cost of optional benefits by rider. Realized and unrealized capital
gains (losses) have been excluded from net deposits into the Separate
Account because they have been included in increase (decrease) in net assets
resulting from operations in the Statements or Changes in Net Assets.
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
----------------------------------- ------------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,099,723 $1,063,999 $ 919,322 $ 1,794,475 $ 575,302 $ 2,001,421
Transfers between fund divisions and
General American 931,860 139,650 472,868 (1,471,521) (728,445) (1,597,558)
Surrenders and withdrawals (144,131) (82,719) (1,380,995) (20,934) (107,442) (346,828)
---------- ---------- ----------- ----------- --------- -----------
Total gross deposits, transfers between
fund divisions and surrenders 1,887,452 1,120,930 11,195 302,020 (260,585) 57,035
---------- ---------- ----------- ----------- --------- -----------
Deductions:
Premium load charges 84,994 84,266 82,459 371,169 46,330 194,508
Cost of insurance and administrative expenses 481,051 430,221 435,147 135,973 105,165 329,711
---------- ---------- ----------- ----------- --------- -----------
Total deductions 566,045 514,487 517,606 507,142 151,495 524,219
---------- ---------- ----------- ----------- --------- -----------
Net deposits into (withdrawals from)
Separate Account $1,321,407 $ 606,443 $ (506,411) $ (205,122) $(412,080) $ (467,184)
========== ========== =========== =========== ========= ===========
(continued)
</TABLE>
<PAGE> 142
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
---------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995
--------- --------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 312,433 $ 321,458 $ 421,967 $ 359,432 $ 395,649 $ 465,063
Transfers between fund divisions and
General American 504,481 20,627 62,346 53,604 (120,443) (121,086)
Surrenders and withdrawals (161,856) (171,083) (1,586,477) (162,045) (83,215) (647,675)
--------- --------- ----------- --------- --------- ---------
Total gross deposits, transfers between
fund divisions and surrenders 655,058 171,002 (1,102,164) 250,991 191,991 (303,698)
--------- --------- ----------- --------- --------- ---------
Deductions:
Premium load charges 24,355 25,685 32,747 27,564 31,741 38,137
Cost of insurance and administrative expenses 111,704 119,034 206,477 191,337 187,326 234,100
--------- --------- ----------- --------- --------- ---------
Total deductions 136,059 144,719 239,224 218,901 219,067 272,237
--------- --------- ----------- --------- --------- ---------
Net deposits into (withdrawals from)
Separate Account $ 518,999 $ 26,283 $(1,341,388) $ 32,090 $ (27,076) $(575,935)
========= ========= =========== ========= ========= =========
(continued)
</TABLE>
<PAGE> 143
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F*>
------------------------------------ ---------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ----------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,571,785 $1,478,021 $ 1,361,239 $ 674,809 $ 657,882 $635,309
Transfers between fund divisions and
General American (542,327) (26,293) (10,959) (244,489) 132,812 302,360
Surrenders and withdrawals (261,445) (117,682) (1,175,619) (27,295) (102,036) (45,598)
---------- ---------- ----------- --------- --------- --------
Total gross deposits, transfers between
fund divisions and surrenders 768,013 1,334,046 174,661 403,025 688,658 892,071
---------- ---------- ----------- --------- --------- --------
Deductions:
Premium load charges 115,555 113,909 115,321 53,326 52,174 54,639
Cost of insurance and administrative
expenses 472,278 467,810 559,425 206,172 215,112 211,351
---------- ---------- ----------- --------- --------- --------
Total deductions 587,833 581,719 674,746 259,498 267,286 265,990
---------- ---------- ----------- --------- --------- --------
Net deposits into (withdrawals from)
Separate Account $ 180,180 $ 752,327 $ (500,085) $ 143,527 $ 421,372 $626,081
========== ========== =========== ========= ========= ========
<FN>
<F*> This fund was formerly known as the International Equity Fund.
(continued)
</TABLE>
<PAGE> 144
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- --------------------------
<TABLE>
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F*> FUND DIVISION
----------------------------------- ---------------------
1997 1996 1995 1997<F***>
--------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Total gross deposits $ 731,205 $ 927,388 $ 713,819 $ 81,175
Transfers between fund divisions and
General American (545,250) (325,567) (319,339) 386,732
Surrenders and withdrawals (30,828) (74,752) (35,191) 0
Seed withdrawals <F**> 0 (1,494,837) 0 0
--------- ----------- --------- --------
Total gross deposits, transfers between
fund divisions and surrenders 155,127 (967,768) 359,289 467,907
--------- ----------- --------- --------
Deductions:
Premium load charges 55,258 73,857 57,765 6,341
Cost of insurance and administrative expenses 226,846 224,222 228,560 4,229
--------- ----------- --------- --------
Total deductions 282,104 298,079 286,325 10,570
--------- ----------- --------- --------
Net deposits into (withdrawals from)
Separate Account $(126,977) $(1,265,847) $ 72,964 $457,337
========= =========== ========= ========
<FN>
<F*> This fund was formerly known as the Special Equity Fund.
<F**> Represents funds distributed to General American Life Insurance Company
in repayment of seed money used to start the Special Equity Fund in 1993.
<F***>The Small-Cap Equity Fund began operations on May 1, 1997.
(continued)
</TABLE>
<PAGE> 145
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,258,958 $1,399,658 $1,217,315 $1,700,056 $2,077,054 $1,771,614
Transfers between fund divisions and
General American (346,404) 10,733 565,593 124,428 (252,029) 348,401
Surrenders and withdrawals (243,196) (186,491) (37,075) (260,054) (286,745) (61,341)
---------- ---------- ---------- ---------- ---------- ----------
Total gross deposits, transfers between
fund divisions and surrenders 669,358 1,223,900 1,745,833 1,564,430 1,438,280 2,058,674
---------- ---------- ---------- ---------- ---------- ----------
Deductions:
Premium load charges 98,808 111,476 101,562 134,071 165,735 145,300
Cost of insurance and administrative expenses 470,011 473,165 406,596 606,328 610,838 588,684
---------- ---------- ---------- ---------- ---------- ----------
Total deductions 568,819 584,641 508,158 740,399 776,573 733,984
---------- ---------- ---------- ---------- ---------- ----------
Net deposits into Separate Account $ 100,539 $ 639,259 $1,237,675 $ 824,031 $ 661,707 $1,324,690
========== ========== ========== ========== ========== ==========
(continued)
</TABLE>
<PAGE> 146
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION
---------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995<F*>
---------- ---------- ---------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 927,173 $1,128,054 $ 978,388 $ 9,236 $ 3,210 $ 24
Transfers between fund divisions and
General American 262,454 (173,088) 156,839 3,098 10,046 3,317
Surrenders and withdrawals (121,639) (163,405) (33,911) 0 0 0
---------- ---------- ---------- ------- ------- ------
Total gross deposits, transfers between
fund divisions and surrenders 1,067,988 791,561 1,101,316 12,334 13,256 3,341
---------- ---------- ---------- ------- ------- ------
Deductions:
Premium load charges 71,458 89,820 79,076 706 248 3
Cost of insurance and administrative expenses 302,840 289,700 317,551 1,874 896 39
---------- ---------- ---------- ------- ------- ------
Total deductions 374,298 379,520 396,627 2,580 1,144 42
---------- ---------- ---------- ------- ------- ------
Net deposits into Separate Account $ 693,690 $ 412,041 $ 704,689 $ 9,754 $12,112 $3,299
========== ========== ========== ======= ======= ======
<FN>
<F*>The Asset Manager Fund began operations on July 19, 1995.
(continued)
</TABLE>
<PAGE> 147
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F**>
--------------------------------- --------------------------------
1997 1996 1995<F*> 1997 1996 1995<F*>
-------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 61,425 $ 47,325 $ 6,373 $29,642 $ 7,990 $1,007
Transfers between fund divisions and
General American (76,243) 146,648 59,489 31,281 63,119 387
-------- -------- ------- ------- ------- ------
Total gross deposits, transfers between
fund divisions and surrenders (14,818) 193,973 65,862 60,923 71,109 1,394
-------- -------- ------- ------- ------- ------
Deductions:
Premium load charges 4,910 3,747 499 2,223 595 81
Cost of insurance and administrative expenses 19,821 16,948 2,512 5,330 3,272 87
-------- -------- ------- ------- ------- ------
Total deductions 24,731 20,695 3,011 7,553 3,867 168
-------- -------- ------- ------- ------- ------
Net deposits into (withdrawals from)
Separate Account $(39,549) $173,278 $62,851 $53,370 $67,242 $1,226
======== ======== ======= ======= ======= ======
<FN>
<F*> The High Income Fund and Worldwide Hard Assets fund began operations on May
24, and August 9, 1995, respectively.
<F**>This fund was formerly known as the Gold & Natural Resources Fund.
(continued)
</TABLE>
<PAGE> 148
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
------------------------------------ --------------------------------------
1997 1996 1995 1997 1996 1995
----------- ---------- -------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 1,229,167 $ 475,955 $ 47,504 $11,949,827 $ 18,203,638 $ 3,333,097
Transfers between fund divisions
and General American 1,639,191 5,512,487 182,278 (6,333,824) (13,115,248) (1,350,435)
Surrenders and withdrawals (5,100,149) (28,210) (15,259) (4,042,319) (15,934) (10,440)
----------- ---------- -------- ----------- ------------ -----------
Total gross deposits, transfers between
fund divisions and surrenders (2,231,791) 5,960,232 214,523 1,573,684 5,072,456 1,972,222
----------- ---------- -------- ----------- ------------ -----------
Deductions:
Premium load charges 88,924 35,750 11,884 870,893 1,315,430 232,745
Cost of insurance and administrative expenses 158,092 63,207 21,050 158,166 126,052 88,973
----------- ---------- -------- ----------- ------------ -----------
Total deductions 247,016 98,957 32,934 1,029,059 1,441,482 321,718
----------- ---------- -------- ----------- ------------ -----------
Net deposits into (withdrawals from)
Separate Account $(2,478,807) $5,861,275 $181,589 $ 544,625 $ 3,630,974 $ 1,650,504
=========== ========== ======== =========== ============ ===========
(continued)
</TABLE>
<PAGE> 149
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
------------------------------------ --------------------------------
1997 1996 1995 1997 1996 1995
----------- ---------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 170,971 $ 68,383 $ 9,129 $225,421 $131,764 $ 9,302
Transfers between fund divisions
and General American 109,381 4,780,139 57,441 49,038 170,404 60,563
Surrenders and withdrawals (4,675,478) (5,060) (12,416) (28,866) 0 0
----------- ---------- -------- -------- -------- -------
Total gross deposits, transfers between
fund divisions and surrenders (4,395,126) 4,843,462 54,154 245,593 302,168 69,865
----------- ---------- -------- -------- -------- -------
Deductions:
Premium load charges 12,639 5,137 614 16,872 9,560 645
Cost of insurance and administrative expenses 24,838 16,027 1,862 24,211 11,739 1,602
----------- ---------- -------- -------- -------- -------
Total deductions 37,477 21,164 2,476 41,083 21,299 2,247
----------- ---------- -------- -------- -------- -------
Net deposits into (withdrawals from)
Separate Account $(4,432,603) $4,822,298 $ 51,678 $204,510 $280,869 $67,618
=========== ========== ======== ======== ======== =======
(continued)
</TABLE>
<PAGE> 150
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F*>
-------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
-------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $225,188 $170,662 (34,323) $273,454 $181,044 $ 76,251
Transfers between fund divisions
and General American 92,485 (27,308) (131,408) 190,371 32,353 76,707
Surrenders and withdrawals (48,400) (26,276) (10,179) (47,175) (10,048) (4,465)
-------- -------- --------- -------- -------- --------
Total gross deposits, transfers between
fund divisions and surrenders 269,273 117,078 (175,910) 416,650 203,349 148,493
-------- -------- --------- -------- -------- --------
Deductions:
Premium load charges 17,168 12,611 6,512 19,728 13,690 7,697
Cost of insurance and administrative expenses 67,268 52,342 39,594 37,091 23,940 16,684
-------- -------- --------- -------- -------- --------
Total deductions 84,436 64,953 46,106 56,819 37,630 24,381
-------- -------- --------- -------- -------- --------
Net deposits into (withdrawals from)
Separate Account $184,837 $ 52,125 $(222,016) $359,831 $165,719 $124,112
======== ======== ========= ======== ======== ========
<FN>
<F*>This fund was formerly known as the International Equity Fund.
(continued)
</TABLE>
<PAGE> 151
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F*> FUND DIVISION
-------------------------------- ----------------
1997 1996 1995 1997<F**>
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Total gross deposits $376,253 $191,049 $ 81,787 $ 59,270
Transfers between fund divisions
and General American 301,956 (58,467) 76,580 326,392
Surrenders and withdrawals (53,267) (52,717) (11,584) 0
-------- -------- -------- --------
Total gross deposits, transfers between
fund divisions and surrenders 624,942 79,865 146,783 385,662
-------- -------- -------- --------
Deductions:
Premium load charges 29,256 13,676 12,214 4,711
Cost of insurance and administrative expenses 40,346 26,565 21,651 3,518
-------- -------- -------- --------
Total deductions 69,602 40,241 33,865 8,229
-------- -------- -------- --------
Net deposits into Separate Account $555,340 $ 39,624 $112,918 $377,433
======== ======== ======== ========
<FN>
<F*> This fund was formerly known as the Special Equity Fund.
<F**>The Small-Cap Equity Fund began operations on May 1, 1997.
(continued)
</TABLE>
<PAGE> 152
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,043,306 $ 673,157 $285,714 $1,354,928 $ 899,999 $ 392,035
Transfers between fund divisions and
General American 658,129 638,476 446,973 957,813 888,367 225,243
Surrenders and withdrawals (148,279) (10,403) (62,763) (268,257) (48,837) (161,933)
---------- ---------- -------- ---------- ---------- ---------
Total gross deposits, transfers between
fund divisions and surrenders 1,553,156 1,301,230 669,924 2,044,484 1,739,529 455,345
---------- ---------- -------- ---------- ---------- ---------
Deductions:
Premium load charges 78,543 53,024 20,534 101,854 69,694 34,454
Cost of insurance and administrative expenses 163,469 112,967 58,881 206,497 136,072 82,849
---------- ---------- -------- ---------- ---------- ---------
Total deductions 242,012 165,991 79,415 308,351 205,766 117,303
---------- ---------- -------- ---------- ---------- ---------
Net deposits into Separate Account $1,311,144 $1,135,239 $590,509 $1,736,133 $1,533,763 $ 338,042
========== ========== ======== ========== ========== =========
(continued)
</TABLE>
<PAGE> 153
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION
-------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995<F*>
-------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $763,625 $385,284 $154,142 $53,004 $ 8,754 $ 255
Transfers between fund divisions
and General American 265,722 271,694 200,230 3,027 26,425 15,583
Surrenders and withdrawals (56,432) (45,712) (55,346) (2,184) (2,067) 0
-------- -------- -------- ------- ------- -------
Total gross deposits, transfers between
fund divisions and surrenders 972,915 611,266 299,026 53,847 33,112 15,838
-------- -------- -------- ------- ------- -------
Deductions:
Premium load charges 57,640 29,621 13,147 3,927 670 10
Cost of insurance and administrative expenses 71,616 46,151 31,516 3,625 1,631 56
-------- -------- -------- ------- ------- -------
Total deductions 129,256 75,772 44,663 7,552 2,301 66
-------- -------- -------- ------- ------- -------
Net deposits into Separate Account $843,659 $535,494 $254,363 $46,295 $30,811 $15,772
======== ======== ======== ======= ======= =======
<FN>
<F*> The Asset Manager Fund began operations on July 19, 1995.
(continued)
</TABLE>
<PAGE> 154
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F**>
--------------------------------- ------------------------------------
1997 1996 1995<F*> 1997 1996 1995<F*>
-------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $201,994 $ 91,307 $ 603 $ 22,621 $ 1,869 $0
Transfers between fund divisions and
General American 207,353 278,491 68,178 1,823 45,785 0
Surrenders and withdrawals (6,433) 0 0 (36,871) 0 0
-------- -------- ------- -------- ------- --
Total gross deposits, transfers between
fund divisions and surrenders 402,914 369,798 68,781 (12,427) 47,654 0
-------- -------- ------- -------- ------- --
Deductions:
Premium load charges 15,004 7,156 37 1,715 175 0
Cost of insurance and administrative expenses 25,526 12,823 1,198 890 1,041 0
-------- -------- ------- -------- ------- --
Total deductions 40,530 19,979 1,235 2,605 1,216 0
-------- -------- ------- -------- ------- --
Net deposits into (withdrawals from)
Separate Account $362,384 $349,819 $67,546 $(15,032) $46,438 $0
======== ======== ======= ======== ======= ==
<FN>
<F*> The High Income Fund and Worldwide Hard Assets Fund began operations on May
24, and August 9, 1995, respectively.
<F**>This fund was formerly known as the Gold & Natural Resources Fund.
(continued)
</TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
MULTI-STYLE AGGRESSIVE
EQUITY CORE BOND EQUITY NON-US
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- -------------
1997<F*> 1997<F*> 1997<F*> 1997<F*>
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total gross deposits $ 80,451 $ 17,978 $ 54,099 $ 42,059
Transfers between fund divisions and
General American 532,364 215,118 281,507 276,242
-------- -------- -------- --------
Total gross deposits and transfers
between fund divisions 612,815 233,096 335,606 318,301
-------- -------- -------- --------
Deductions:
Premium load charges 5,866 1,346 3,761 3,283
Cost of insurance and administrative expenses 8,425 2,474 3,632 3,028
-------- -------- -------- --------
Total deductions 14,291 3,820 7,393 6,311
-------- -------- -------- --------
Net deposits into Separate Account $598,524 $229,276 $328,213 $311,990
======== ======== ======== ========
<FN>
<F*>The Multi-Style Equity Fund, Core Bond Fund, Aggressive Equity Fund, and
Non-US Fund began operations on January 2, 1997.
(continued)
</TABLE>
<PAGE> 155
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
------------------------------------ ---------------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,995,433 $ 606,419 $ 16,519 $ 8,679,144 $ 7,989,872 $ 2,385,983
Transfers between fund divisions and
General American 2,177,143 1,285,071 172,340 (7,303,949) (6,898,282) (1,031,031)
Surrenders and withdrawals (68,513) (12,850) 0 (3,421) (242) 0
---------- ---------- -------- ----------- ----------- -----------
Total gross deposits, transfers between
fund divisions and surrenders 4,104,063 1,878,640 188,859 1,371,774 1,091,348 1,354,952
---------- ---------- -------- ----------- ----------- -----------
Deductions:
Premium load charges 66,092 20,294 458 286,729 250,193 73,630
Cost of insurance and administrative expenses 671,147 258,742 9,056 599,119 502,668 124,621
---------- ---------- -------- ----------- ----------- -----------
Total deductions 737,239 279,036 9,514 885,848 752,861 198,251
---------- ---------- -------- ----------- ----------- -----------
Net deposits into Separate Account $3,366,824 $1,599,604 $179,345 $ 485,926 $ 338,487 $ 1,156,701
========== ========== ======== =========== =========== ===========
<FN>
<F*>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 156
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
-------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
-------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $184,259 $ 58,468 $ 2,634 $228,756 $102,809 $ 1,658
Transfers between fund divisions and
General American 265,500 257,285 16,903 432,012 120,203 21,497
Surrenders and withdrawals (4,282) (2,419) 0 (13,613) (413) 0
-------- -------- ------- -------- -------- -------
Total gross deposits, transfers between
fund divisions and surrenders 445,477 313,334 19,537 647,155 222,599 23,155
-------- -------- ------- -------- -------- -------
Deductions:
Premium load charges 6,186 1,906 79 7,603 3,442 48
Cost of insurance and administrative expenses 57,817 31,767 862 96,349 36,945 2,150
-------- -------- ------- -------- -------- -------
Total deductions 64,003 33,673 941 103,952 40,387 2,198
-------- -------- ------- -------- -------- -------
Net deposits into Separate Account $381,474 $279,661 $18,596 $543,203 $182,212 $20,957
======== ======== ======= ======== ======== =======
<FN>
<F*>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 157
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F**>
-------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
-------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $297,431 $ 91,429 $ 926 $380,598 $202,195 $20,494
Transfers between fund divisions and
General American 423,970 233,391 12,569 259,917 315,663 27,674
Surrenders and withdrawals (7,250) (906) 0 (12,338) (2,005) 0
-------- -------- ------- -------- -------- -------
Total gross deposits, transfers between
fund divisions and surrenders 714,151 323,914 13,495 628,177 515,853 48,168
-------- -------- ------- -------- -------- -------
Deductions:
Premium load charges 10,273 3,162 30 12,990 6,724 656
Cost of insurance and administrative expenses 159,083 38,520 488 138,712 79,260 8,108
-------- -------- ------- -------- -------- -------
Total deductions 169,356 41,682 518 151,702 85,984 8,764
-------- -------- ------- -------- -------- -------
Net deposits into Separate Account $544,795 $282,232 $12,977 $476,475 $429,869 $39,404
======== ======== ======= ======== ======== =======
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F**>This fund was formerly known as the International Equity Fund.
(continued)
</TABLE>
<PAGE> 158
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-100:<F*>
- --------------------------------
<TABLE>
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F**> FUND DIVISION
-------------------------------- ----------------
1997 1996 1995 1997<F***>
-------- -------- ------- ----------
<S> <C> <C> <C> <C>
Total gross deposits $405,467 $232,270 $18,525 $ 48,912
Transfers between fund divisions and
General American 129,102 228,709 34,407 254,044
Surrenders and withdrawals (15,375) (5,591) 0 0
-------- -------- ------- --------
Total gross deposits, transfers between
fund divisions and surrenders 519,194 455,388 52,932 302,956
-------- -------- ------- --------
Deductions:
Premium load charges 13,537 7,772 598 1,579
Cost of insurance and administrative expenses 140,909 82,326 8,384 7,052
-------- -------- ------- --------
Total deductions 154,446 90,098 8,982 8,631
-------- -------- ------- --------
Net deposits into Separate Account $364,748 $365,290 $43,950 $294,325
======== ======== ======= ========
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F**> This fund was formerly known as the Special Equity Fund.
<F***>The Small-Cap Equity Fund began operations on May 1, 1997.
(continued)
</TABLE>
<PAGE> 159
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,996,233 $ 914,095 $ 44,385 $2,402,233 $1,361,304 $ 50,500
Transfers between fund divisions and
General American 792,184 1,521,792 219,488 1,492,743 1,759,062 304,735
Surrenders and withdrawals (44,826) (7,812) 0 (114,282) (38,619) 0
---------- ---------- -------- ---------- ---------- --------
Total gross deposits, transfers between
fund divisions and surrenders 2,743,591 2,428,075 263,873 3,780,694 3,081,747 355,235
---------- ---------- -------- ---------- ---------- --------
Deductions:
Premium load charges 66,340 29,267 1,400 80,190 44,819 1,424
Cost of insurance and administrative
expenses 572,720 303,902 21,879 842,557 472,178 25,541
---------- ---------- -------- ---------- ---------- --------
Total deductions 639,060 333,169 23,279 922,747 516,997 26,965
---------- ---------- -------- ---------- ---------- --------
Net deposits into Separate Account $2,104,531 $2,094,906 $240,594 $2,857,947 $2,564,750 $328,270
========== ========== ======== ========== ========== ========
<FN>
<F*>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 160
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION
-------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995<F**>
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $508,810 $373,593 $ 25,338 $147,295 $ 50,502 $ 964
Transfers between fund divisions and
General American 313,710 307,488 82,196 109,004 137,452 30,404
Surrenders and withdrawals (22,505) (13,206) 0 (5,778) (2,165) 0
-------- -------- -------- -------- -------- -------
Total gross deposits, transfers between
fund divisions and surrenders 800,015 667,875 107,534 250,521 185,789 31,368
-------- -------- -------- -------- -------- -------
Deductions:
Premium load charges 17,197 11,611 762 4,955 1,674 28
Cost of insurance and administrative expenses 165,254 112,510 12,165 74,461 24,175 1,033
-------- -------- -------- -------- -------- -------
Total deductions 182,451 124,121 12,927 79,416 25,849 1,061
-------- -------- -------- -------- -------- -------
Net deposits into Separate Account $617,564 $543,754 $ 94,607 $171,105 $159,940 $30,307
======== ======== ======== ======== ======== =======
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F**>The Asset Manager Fund began operations on July 19, 1995.
(continued)
</TABLE>
<PAGE> 161
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F***>
--------------------------------- --------------------------------
1997 1996 1995<F**> 1997 1996 1995<F**>
-------- -------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $300,761 $158,842 $ 5,221 $63,004 $22,003 $ 193
Transfers between fund divisions and
General American 224,109 297,097 65,982 18,216 53,910 8,300
Surrenders and withdrawals (20,348) (11,551) 0 (4,909) (5,154) 0
-------- -------- ------- ------- ------- ------
Total gross deposits, transfers between
fund divisions and surrenders 504,522 444,388 71,203 76,311 70,759 8,493
-------- -------- ------- ------- ------- ------
Deductions:
Premium load charges 10,110 4,982 174 2,147 712 8
Cost of insurance and administrative expenses 105,718 57,557 1,693 19,651 13,421 297
-------- -------- ------- ------- ------- ------
Total deductions 115,828 62,539 1,867 21,798 14,133 305
-------- -------- ------- ------- ------- ------
Net deposits into Separate Account $388,694 $381,849 $69,336 $54,513 $56,626 $8,188
======== ======== ======= ======= ======= ======
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F**> The High Income Fund and Gold & Natural Resources Fund began operations on
May 24, and August 9, 1995, respectively.
<F***>This fund was formerly known as the Gold & Natural Resources Fund.
(continued)
</TABLE>
<PAGE> 162
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Russell Variable Universal Life:<F*>
- ------------------------------------
<TABLE>
<CAPTION>
MONEY MULTI-STYLE CORE AGGRESSIVE
MARKET EQUITY BOND EQUITY NON-US
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------ ------------- ------------- -------------
1997<F**> 1997<F**> 1997<F**> 1997<F**> 1997<F**>
------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total gross deposits $ 4,627,386 $ 19,255 $ 3,472 $ 12,641 $ 8,990
Transfers between fund divisions and
General American (4,374,607) 1,937,967 914,278 987,308 532,277
Surrenders and withdrawals 0 (328) 0 (94) (137)
----------- ---------- -------- -------- --------
Total gross deposits, transfers between
fund divisions and surrenders 252,779 1,956,894 917,750 999,855 541,130
----------- ---------- -------- -------- --------
Deductions:
Premium load charges 72,762 1,369 0 822 548
Cost of insurance and administrative expenses 72,945 19,567 21,735 6,442 10,345
----------- ---------- -------- -------- --------
Total deductions 145,707 20,936 21,735 7,264 10,893
----------- ---------- -------- -------- --------
Net deposits into Separate Account $ 107,072 $1,935,958 $896,015 $992,591 $530,237
=========== ========== ======== ======== ========
<FN>
<F*> Russell Variable Universal Life product was introduced in 1997, and the
first deposit was received on June 6, 1997.
<F**>The Multi-Style Equity Fund, Core Bond Fund, Aggressive Equity Fund, and
Non-US Fund began operations on January 2, 1997.
</TABLE>
<PAGE> 163
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholder of General American Life Insurance Company:
We have audited the accompanying consolidated balance sheets of General American
Life Insurance Company and subsidiaries as of December 31, 1997 and 1996, and
the related consolidated statements of operations, stockholder equity, and cash
flows for each of the years in the three-year period ended December 31, 1997.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of General American
Life Insurance Company and subsidiaries as of December 31, 1997 and 1996, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1997, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1996 the
Company adopted Statement of Financial Accounting Standards No. 120, ACCOUNTING
AND REPORTING BY MUTUAL LIFE INSURANCE ENTERPRISES AND BY INSURANCE ENTERPRISES
FOR CERTAIN LONG-DURATION PARTICIPATING CONTRACTS.
St. Louis, Missouri
March 5, 1998
<PAGE> 164
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31
ASSETS 1997 1996
<S> <C> <C>
Fixed maturities:
Available-for-sale, at fair value $ 9,115,519 6,758,309
Mortgage loans, net 2,140,262 2,273,627
Real estate, net 140,145 203,767
Equity securities, at fair value 24,211 20,905
Policy loans 2,073,152 1,917,861
Short-term investments 190,374 55,594
Other invested assets 243,921 183,612
----------- ----------
Total investments 13,927,584 11,413,675
Cash and cash equivalents 358,879 142,724
Accrued investment income 168,592 148,419
Reinsurance recoverables and other contract deposits 4,117,958 3,264,644
Deferred policy acquisition costs 695,253 652,251
Other assets 488,582 442,139
Separate account assets 4,118,860 2,833,258
----------- ----------
Total assets $23,875,708 18,897,110
=========== ==========
LIABILITIES AND STOCKHOLDER EQUITY
Policy and contract liabilities:
Future policy benefits $ 4,933,787 4,238,033
Policyholder account balances:
Universal life 2,534,744 1,960,726
Annuities 4,161,946 4,321,241
Pension funds 4,732,400 2,778,834
Policy and contract claims 458,606 352,433
Dividends payable to policyholders 113,525 103,019
----------- ----------
Total policy and contract liabilities 16,935,008 13,754,286
Amounts payable to reinsurers 310,592 142,661
Long-term debt and notes payable 214,477 295,614
Other liabilities and accrued expenses 826,868 670,109
Deferred tax liability 89,046 43,277
Separate account liabilities 4,112,666 2,810,907
----------- ----------
Total liabilities 22,488,657 17,716,854
Minority interests 216,555 182,469
Stockholder equity:
Common stock, $1 par value, 5,000,000 shares
authorized, 3,000,000 shares issued and
outstanding in 1997 and 0 in 1996 3,000 -
Additional paid in capital 3,000 -
Retained earnings 1,055,233 963,230
Foreign currency translation adjustments,
net of taxes (19,481) (15,810)
Unrealized gain on investments, net of taxes 128,744 50,367
----------- ----------
Total stockholder equity 1,170,496 997,787
----------- ----------
Total liabilities and stockholder equity $23,875,708 18,897,110
=========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 165
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
REVENUES 1997 1996 1995
<S> <C> <C> <C>
Insurance premiums and other considerations $1,768,169 1,623,228 1,498,013
Net investment income 945,542 806,883 676,404
Ceded commissions 44,902 27,538 18,523
Other income 362,160 280,803 182,193
Net realized investment gains 28,538 24,531 280,756
--------- --------- ---------
Total revenues 3,149,311 2,762,983 2,655,889
BENEFITS AND EXPENSES
Policy benefits 1,528,333 1,379,803 1,150,188
Interest credited to policyholder account balances 345,937 262,532 192,522
--------- --------- ---------
Total policyholder benefits 1,874,270 1,642,335 1,342,710
Dividends to policyholders 182,146 171,904 264,658
Policy acquisition costs 168,045 143,094 138,811
Other insurance and operating expenses 739,814 642,636 522,986
--------- --------- ---------
Total benefits and expenses 2,964,275 2,599,969 2,269,165
--------- --------- ---------
Income before provision for income taxes
and minority interest 185,036 163,014 386,724
--------- --------- ---------
Income tax provision (benefit):
Current 65,778 45,902 115,769
Deferred (113) 13,992 29,411
--------- --------- ---------
Total provision for income taxes 65,665 59,894 145,180
--------- --------- ---------
Income before minority interest 119,371 103,120 241,544
Minority interest in earnings of consolidated subsidiaries (22,134) (19,888) (17,512)
--------- --------- ---------
Net income $ 97,237 83,232 224,032
========= ========= =========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 166
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Foreign
currency Unrealized
translation gain (loss) on Total
Common Additional Retained adjustments, investments, stockholder
stock paid in capital earnings net of taxes net of taxes equity
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ - - 646,727 (20,175) (65,409) 561,143
Net income 224,032 224,032
Foreign currency translation adjustments 5,908 5,908
Change in unrealized gain (loss) on
investments, net of tax 162,864 162,864
Other, net 3,136 3,136
--------------------------------------------------------------------------------
Balance at December 31, 1995 - - 873,895 (14,267) 97,455 957,083
Net income 83,232 83,232
Foreign currency translation adjustments (1,543) (1,543)
Change in unrealized gain (loss) on
investments, net on tax (47,088) (47,088)
Other, net 6,103 6,103
--------------------------------------------------------------------------------
Balance at December 31, 1996 - - 963,230 (15,810) 50,367 997,787
Net income 97,237 97,237
Foreign currency translation adjustments (3,671) (3,671)
Change in unrealized gain (loss) on
investments, net of tax 78,377 78,377
Issuance of common stock 3,000 3,000 (6,000) -
Dividend to parent (4,480) (4,480)
Other, net 5,246 5,246
--------------------------------------------------------------------------------
Balance at December 31, 1997 $3,000 3,000 1,055,233 (19,481) 128,744 1,170,496
================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 167
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
YEARS ENDED DECEMBER 31
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES 1997 1996 1995
Net income $ 97,237 83,232 224,032
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Change in:
Accrued investment income (20,568) (16,275) (22,202)
Reinsurance recoverables and other contract deposits (838,390) (159,713) 262,054
Deferred policy acquisition costs (113,040) (87,249) (23,141)
Other assets (61,796) (51,444) (67,650)
Future policy benefits 693,052 330,511 399,261
Policy and contract claims 105,503 14,652 74,173
Other liabilities and accrued expenses 319,787 65,184 184,756
Deferred income taxes (113) 13,992 29,411
Policyholder considerations (137,163) (144,748) (140,475)
Interest credited to policyholder account balances 345,937 262,532 192,522
Amortization and depreciation 32,744 28,375 19,196
Net realized investment (gains) (28,538) (24,531) (280,756)
Other, net 372 (14,554) 2,488
----------- ---------- ----------
Net cash provided by operating activities 395,024 299,964 853,669
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investments sold or redeemed:
Fixed maturities available-for-sale 2,070,743 1,822,169 1,482,122
Mortgage loans 594,151 182,650 206,520
Equity securities 31,602 13,427 468,143
Short-term and other invested assets 163,393 84,748 414,102
Cost of investments purchased:
Fixed maturities available-for-sale (4,463,100) (3,428,943) (3,010,016)
Fixed maturities held-to-maturity - - (3,068)
Equity securities (47,283) (39,553) (89,062)
Short-term and other invested assets (293,857) (97,426) (16,471)
Mortgage loan originations (438,959) (593,438) (431,043)
Maturity of fixed maturities held-to-maturity - - 6,365
Maturity of fixed maturities available-for-sale 281,736 225,087 75,518
Increase in policy loans, net (153,399) (210,624) (211,526)
Investments in subsidiaries (6,032) (4,807) (126,363)
----------- ---------- ----------
Net cash used in investing activities (2,261,005) (2,046,710) (1,234,779)
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net policyholder account and contract deposits 2,121,488 1,632,495 294,685
Issuance of debt 1,857 106,903 100,219
Repayment of debt (80,606) (19,497) (4,800)
Dividends (2,112) (1,832) (4,376)
Other, net 46,829 26,770 17,498
----------- ---------- ----------
Net cash provided by financing activities 2,087,456 1,744,839 403,226
----------- ---------- ----------
Effect of exchange rate changes (5,320) (266) 5,908
----------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 216,155 (2,173) 28,024
----------- ---------- ----------
Cash and cash equivalents at beginning of year 142,724 144,897 116,873
----------- ---------- ----------
Cash and cash equivalents at end of year $ 358,879 142,724 144,897
=========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 168
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REORGANIZATION
In September 1996, the Board of Directors of General American Life Insurance
Company (General American) adopted the Reorganization Plan (Plan) which
authorized the reorganization (Reorganization) of General American into a mutual
insurance holding company structure. The Missouri Department of Insurance held
a public hearing on the Reorganization on December 19, 1996 and approved the
Plan on January 24, 1997. The policyholders of General American approved the
Plan on January 28, 1997 and the Reorganization became effective on April 24,
1997 (effective date). General American was the first company to obtain
approval and to form a mutual insurance holding company under the Missouri
Mutual Holding Company Statute.
Pursuant to the Reorganization, General American (the Company) (i) formed
General American Mutual Holding Company (GAMHC) as a mutual insurance holding
company under the insurance laws of the State of Missouri, (ii) formed
GenAmerica Corporation (GenAmerica) as an intermediate stock holding company
under the general laws of the State of Missouri, and (iii) amended and restated
its Charter and Articles of Incorporation to authorize the issuance of capital
stock and the continuance of its existence as a stock life insurance company
under the same name. GAMHC may, among other things, elect all of the directors
of GenAmerica and approve matters submitted for shareholder approval. As of the
effective date of the Reorganization, the membership interests and the
contractual rights of the policyholders of the Company were separated - the
membership interests automatically became, by operation of law, membership
interests in GAMHC and the contractual rights remained with the Company. Each
person who becomes the owner of a designated policy or contract of insurance or
annuity issued by the Company after the effective date of the Reorganization
(subject to certain exceptions and conditions set forth in the Articles of
Incorporation of GAMHC) will become a member of GAMHC and have a membership
interest in GAMHC by operation of law so long as such policy or contract remains
in force. The membership interests in GAMHC follow, and are not severable, from
the insurance policy or annuity contract from which the membership interest in
GAMHC is derived.
The Company issued 3 million shares of its authorized shares of capital stock to
GAMHC in 1997. GAMHC then contributed all of these to GenAmerica in exchange
for 1 thousand shares of its common stock. As a result, GenAmerica directly
owns the Company, and GAMHC indirectly owns the Company, through GenAmerica. In
addition, the Company capitalized $3 million of its unassigned surplus to paid
in capital.
The consolidated financial statements include the assets, liabilities, and
results of operations of the Company and its wholly owned subsidiaries, General
American Holding Company, a non-insurance holding company; Cova Corporation, an
insurance holding company; Paragon Life Insurance Company; Security Equity Life
Insurance Company; General Life Insurance Company of America; General Life
Insurance Company, its 63.8 percent owned subsidiary, Reinsurance Group of
America, Incorporated (RGA), an insurance holding company, and its 62.7 percent
owned subsidiary, Conning Corporation.
The Company's principal lines of business, conducted through General American or
one of its subsidiaries, are: Individual Life Insurance, Annuities, Group Life
and Health Insurance, Asset Management, and Reinsurance. The Company
distributes its products and services primarily through a nationwide network of
general agencies, independent brokers, and group sales and claims offices. The
Company (including its subsidiaries) is licensed to do business in all fifty
states, twelve Canadian provinces, Puerto Rico, and the District of Columbia.
Through its subsidiaries, the Company has operations in Europe, Pacific Rim
countries, and Latin America.
INITIAL PUBLIC OFFERING
In December 1997, the Company's subsidiary, Conning Corporation (Conning)
successfully completed an Initial Public Offering (IPO) of 2.875 million shares
of its common stock. Conning received net proceeds of approximately $34.5
million from the offering. After the IPO, the Company owns 62.7 percent of the
total shares outstanding of Conning's common stock. The publicly held stock of
Conning is listed on the NASDAQ National Market System
SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements are prepared on the basis of
generally accepted accounting principles (GAAP) and include the accounts of the
Company and its majority owned subsidiaries. Less than majority-owned entities
in which the Company has at least a 20 percent interest are reported on the
equity basis. All significant intercompany accounts and transactions have been
eliminated in consolidation. The preparation of financial statements requires
the use of estimates by management which affect the amounts reflected in the
financial statements. Actual results could differ from those estimates.
Accounts that the Company deems to be sensitive to changes in estimates include
future policy benefits and policy and contract claims, deferred acquisition
costs, and investment and deferred tax valuation allowances.
In April 1993, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40, APPLICABILITY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
TO MUTUAL LIFE INSURANCE AND OTHER ENTERPRISES. This Interpretation requires
mutual life insurance enterprises which had traditionally issued statutory based
financial statements that had been reported to be in conformity with GAAP, to
apply all authoritative accounting pronouncements in preparing those statements,
effective for periods beginning after December 31, 1994. In January 1995, the
FASB issued Statement of Financial Accounting Standards No. 120 (SFAS 120),
ACCOUNTING AND REPORTING BY MUTUAL LIFE INSURANCE ENTERPRISES AND BY INSURANCE
ENTERPRISES FOR CERTAIN LONG DURATION PARTICIPATING CONTRACTS, and the American
Institute of Certified Public Accountants (AICPA) issued Statement of Position
95-1 (SOP 95-1), ACCOUNTING FOR CERTAIN INSURANCE ACTIVITIES OF MUTUAL LIFE
ENTERPRISES, which together define the GAAP model for mutual life insurance
enterprises. These pronouncements define the enterprises and method of
accounting for certain participating life insurance contracts of mutual and
stock life insurance companies that meet the criteria defined in SOP 95-1. SFAS
120 also deferred implementation of Interpretation No. 40 to be concurrent with
implementation of SFAS 120. SFAS 120 and SOP 95-1 are effective for financial
statements issued for fiscal years beginning after December 15, 1995. The
effect of initially applying this new accounting model has been reported
retroactively through restatement of all periods presented.
<PAGE> 169
The significant accounting policies of the Company are as follows:
RECOGNITION OF REVENUE
For traditional life policies, including participating businesses, premiums are
recognized when due, less allowances for estimated uncollectible balances. For
limited payment contracts, net premiums are recorded as revenue, and the
difference between the gross premium and the net premium is deferred and
recognized in income in a constant relationship to insurance in force over the
estimated policy life. For universal life and annuity products, contract charges
for mortality, surrender, and expense, other than front-end expense charges, are
reported as income when charged to policyholders' accounts.
Other income represents the fees generated from the Company's non-insurance
operations, primarily service and contract fees relating to asset management,
system development, and third-party administration. Amounts are recognized when
earned.
INVESTED ASSETS
FIXED MATURITY AND EQUITY SECURITIES: Investment securities are accounted for
in accordance with SFAS 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. SFAS 115 requires debt and equity securities to be
classified into categories of available-for-sale, trading securities, or held-
to-maturity depending on an entity's ability and positive intent to hold a
security to maturity. All of the Company's securities are classified as
available-for-sale. Fixed maturities available-for-sale are reported at fair
value and are so classified based on the possibility that such securities could
be sold prior to maturity if that action enables the Company to execute its
investment philosophy and appropriately match investment results to operating
and liquidity needs. Equity securities are carried at fair value.
Realized gains or losses on the sale of securities are determined on the basis
of specific identification. Unrealized gains and losses are recorded, net of
related income tax effects, in a separate component of stockholder equity.
MORTGAGE LOANS: Mortgage loans on real estate are stated at an unpaid principal
balance, net of unamortized discounts and valuation allowances for possible
impairment in value. The Company discontinues the accrual of interest on
mortgage loans which are more than 90 days delinquent. Interest received on
nonaccrual mortgage loans is generally reported as interest income.
POLICY LOANS, REAL ESTATE AND OTHER INVESTED ASSETS: Policy loans are carried at
an unpaid principal balance and are generally secured by the cash surrender
value. Investment real estate which the Company has the intent to hold for the
production of income is carried at depreciated cost, net of writedowns for other
than temporary declines in fair value and encumbrances. Properties held for
sale (primarily acquired through foreclosure) are carried at the lower of
depreciated cost (fair value at foreclosure plus capital additions less
accumulated depreciation and encumbrances) or fair value. Adjustments to
carrying value of properties held for sale are recorded in a valuation reserve
when the fair value is below depreciated cost. The accumulated depreciation and
encumbrances on real estate amounted to $47.0 million and $53.0 million at
December 31, 1997 and 1996, respectively. Direct valuation allowances amounted
to $6.7 million and $15.7 million at December 31, 1997 and 1996, respectively.
Other invested assets are principally recorded at fair value.
SHORT-TERM INVESTMENTS: Short-term investments, consisting primarily of money
market instruments and other debt issues purchased with an original maturity of
less than a year, are carried at amortized cost, which approximates fair value.
INVESTED ASSET IMPAIRMENT AND VALUATION ALLOWANCES: Invested assets are
considered impaired when the Company determines that collection of all amounts
due under the contractual terms is doubtful. The Company adjusts invested
assets to their estimated net realizable value at the point at which it
determines an impairment is other than temporary. In addition, the Company has
established valuation allowances for mortgage loans and other invested assets.
Valuation allowances for other than temporary impairments in value are netted
against the asset categories to which they apply. Additions to valuation
allowances are included in realized gains and losses.
The Company recognizes its proportionate share of the resultant gains or losses
on the issuance or repurchase of its subsidiaries' stock as a direct credit or
charge to retained earnings.
CASH AND CASH EQUIVALENTS: For purposes of reporting, cash and cash equivalents
represent cash, demand deposits and highly liquid short-term investments, which
include U.S. Treasury bills, commercial paper, and repurchase agreements with
original or remaining maturities of 90 days or less when purchased.
INVESTMENT INCOME
Bond premium and discounts are amortized into income using the scientific yield
method over the term of the security. Amortization of the premium or discount
on mortgage-backed securities is recognized using a scientific yield method
which considers the estimated timing and amount of prepayments of underlying
mortgage loans. Actual prepayment experience is periodically reviewed and
effective yields are adjusted when differences arise between the prepayments
originally anticipated and the actual prepayments received and currently
anticipated. When such differences occur, the net investment in the
mortgage-backed security is adjusted to the amount that would have existed had
the new effective yield been applied since the acquisition of the security with
a corresponding charge or credit to interest income (the "retrospective
method").
POLICY AND CONTRACT LIABILITIES
For traditional life insurance policies, future policy benefits are computed
using a net level premium method with actuarial assumptions as to mortality,
persistency, and interest established at policy issue. Assumptions established
at policy issue as to
<PAGE> 170
mortality and persistency are based on industry standards and the Company's
historical experience which, together with interest and expense assumptions,
provide a margin for adverse deviation. Interest rate assumptions generally
range from 2.5 percent to 11.0 percent.
For participating policies, future policy benefits are computed using a net
level premium method based on the guaranteed cash value basis for mortality and
interest. Mortality rates are similar to those used for statutory valuation
purposes. Interest rates generally range from 2.5 percent to 6.0 percent.
Dividend liabilities are established when earned.
When the liabilities for future policy benefits plus the present value of
expected future gross premiums are insufficient to provide for expected policy
benefits and expenses, unrecoverable deferred policy acquisition costs are
written off and thereafter a premium deficiency reserve is established through a
charge to earnings.
Policyholder account balances for universal life and annuity policies are equal
to the policyholder account value before deduction of any surrender charges.
The policyholder account value represents an accumulation of gross premium
payments plus credited interest less expense and mortality charges and
withdrawals. These expense charges are recognized in income as earned.
The range of weighted average interest crediting rates used by the Company and
its life insurance subsidiaries were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Universal life 6.00-7.10% 6.00-7.56% 6.00-7.87%
Annuities 5.70-6.20% 5.70-6.20% 5.69-6.29%
</TABLE>
Accident and health benefits for active lives are calculated using the net level
premium method and assumptions as to future morbidity, withdrawals, and interest
which provide a margin for adverse deviation. Benefit liabilities for disabled
lives are calculated using the present value of future benefits and experience
assumptions for claim termination, expense, and interest which also provide a
margin for adverse deviation.
POLICY AND CONTRACT CLAIMS
The Company establishes a liability for unpaid claims based on estimates of the
ultimate cost of claims incurred, which is comprised of aggregate case basis
estimates, average claim costs for reported claims, and estimates of unreported
losses based on past experience. Policy and contract claims include a provision
for both life and accident and health claims. Management believes the
liabilities for unpaid claims are adequate to cover the ultimate liability;
however, due to the underlying risks and the high degree of uncertainty
associated with the determination of the liability for unpaid claims, the
amounts which will ultimately be paid to settle these liabilities cannot be
determined precisely and may vary from the estimated amount included in the
consolidated balance sheets.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, which vary with and are primarily related
to the production of new business, have been deferred to the extent that such
costs are deemed recoverable from future profitability of the underlying
business. Such costs include commissions, premium taxes, as well as certain
other costs of policy issuance and underwriting.
For limited payment and other nonparticipating traditional life insurance
policies, the deferred policy acquisition costs are amortized with interest in
proportion to the ratio of the expected annual premium revenue to the expected
total premium revenue. Expected future premium revenue is estimated with the
same assumptions used for computing liabilities for future policy benefits for
these policies.
For participating life insurance, universal life, and annuity type contracts,
the deferred policy acquisition costs are amortized over a period of not more
than thirty years in relation to the present value of estimated gross profits
arising from interest margin, cost of insurance, policy administration, and
surrender charges.
The range of average rates of assumed interest used by the Company and its
insurance subsidiaries in estimated gross margins were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Participating life 8.17% 8.70% 7.81%
Universal life 6.25-7.79% 6.00-8.20% 6.00-7.56%
Annuities 7.00-7.84% 7.83% 8.04%
</TABLE>
The estimates of expected gross margins are evaluated regularly and are revised
if actual experience or other evidence indicates that revision is appropriate.
Upon revision, total amortization recorded to date is adjusted by a charge or
credit to current earnings. Under SFAS 115, deferred policy acquisition costs
are adjusted for the impact on estimated gross margins as if the net unrealized
gains and losses on securities had actually been realized.
REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured by ceding risks to other insurance enterprises or
reinsurers under various types of contracts including coinsurance and excess
coverage. The Company's retention level per individual life ranges between $50
thousand and $2.5 million depending on the entity writing the policy.
The Company assumes and retrocedes financial reinsurance contracts which
represent low mortality risk reinsurance treaties. These contracts are reported
as deposits and are included in reinsurance recoverable/payable in the
accompanying consolidated balance sheet. The amount of revenue reported on these
contracts represents fees and the cost of insurance under the terms of the
reinsurance agreement.
<PAGE> 171
Reinsurance activities are accounted for consistent with terms of the risk
transfer reinsurance contracts. Premiums ceded to other companies have been
reported as a reduction of premiums. Amounts applicable to reinsurance ceded
for future policy benefits and claim liabilities have been reported as assets
for these items and commissions and expense allowances received in connection
with reinsurance ceded have been accounted for in income as earned. Reinsurance
does not relieve the Company from its primary responsibility to meet claim
obligations. The Company evaluates the financial conditions of its reinsurers
annually.
FEDERAL INCOME TAXES
The Company and certain of its U.S. subsidiaries file a consolidated federal
income tax return. In order to consolidate, the Company must possess both 80
percent of the total voting power and 80 percent of the value of the stock of
the subsidiary. Further, even if it meets the 80 percent test, any acquired
life insurance company is not included in the consolidated return until the
acquired company has been a member of the group for five years. Prior to
satisfying the five-year requirement, the subsidiary files a separate federal
return. RGA Barbados, a subsidiary of RGA, also files a U.S. tax return. The
Company's Canadian, Argentine, Australian, Chilean, Mexican, Spanish, and United
Kingdom subsidiaries are taxed under applicable local statutes. The Company
uses the asset and liability method to record deferred income taxes.
Accordingly, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases, using enacted tax rates, expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled.
SEPARATE ACCOUNT BUSINESS
The assets and liabilities of the separate accounts represent segregated funds
administered and invested by the Company for purposes of funding variable life
insurance and annuity contracts for the exclusive benefit of the contract
holders. The Company charges the separate accounts for cost of insurance and
administrative expense associated with a contract and charges related to early
withdrawals by contract holders. The assets and liabilities of the separate
account are carried at fair value. The Company's participation in the separate
accounts (seed money) is carried at its fair value in the separate account, and
amounted to $6.2 million and $22.3 million at December 31, 1997 and 1996,
respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering
for sale at one time the Company's entire holdings of a particular financial
instrument. Although fair value estimates are calculated using assumptions that
management believes are appropriate, changes in assumptions could significantly
affect the estimates and such estimates should be used with care. The following
assumptions were used to estimate the fair value of each class of financial
instrument for which it was practicable to estimate fair value:
INVESTMENT SECURITIES: Fixed maturities are valued using quoted market prices,
if available. For securities not actively traded, fair values are estimated
using values obtained from independent pricing services or, in the case of
private placements, are estimated by discounting expected future cash flows
using a current market rate applicable to the yield, credit quality, and
maturity of investments. The fair values of equity securities are based on
quoted market prices.
MORTGAGE LOANS: The fair values of mortgage loans are estimated using discounted
cash flow analyses and interest rates currently being offered for similar loans
to borrowers with similar credit ratings. Loans with similar characteristics
are aggregated for purposes of the calculations.
POLICY LOANS: The fair value of policy loans approximates the carrying value.
The majority of these loans are indexed, with yield tied to a stated return.
POLICYHOLDER ACCOUNT BALANCES ON INVESTMENT TYPE CONTRACTS: Fair values for the
Company's liabilities under investment-type contracts are estimated using
discounted cash flow calculations based on interest rates currently being
offered for similar contracts with maturities consistent with those remaining
for the contracts being valued. For contracts with no defined maturity date, the
carrying value approximates fair value.
SEPARATE ACCOUNT ASSETS AND LIABILITIES: The separate account assets and
liabilities are carried at fair value as determined by the market value of the
underlying segregated investments.
SHORT-TERM INVESTMENTS AND CASH AND CASH EQUIVALENTS: The carrying amount is
considered a reasonable estimate of fair value.
LONG-TERM DEBT AND NOTES PAYABLE: The fair value of long-term debt and notes
payable is estimated using discounted cash flow calculations based on interest
rates currently being offered for similar instruments.
Refer to Note 4 for additional information on fair value of financial
instruments.
RECLASSIFICATION
The Company has reclassified the presentation of certain prior period
information to conform with the 1997 presentation.
<PAGE> 172
(2) SIGNIFICANT ACQUISITIONS AND DIVESTITURES
On June 1, 1995, the Company acquired Xerox Life Insurance Companies, now known
as Cova Corporation (Cova). At acquisition, Cova had total assets of
approximately $635.6 million. The purchase price of approximately $107.7
million was funded from the Company's operations.
Effective July 31, 1995, the Company entered into a merger arrangement with
Conning Corporation and Subsidiaries (Conning), an investment management firm,
whereby the Company acquired Conning and subsequently contributed Conning and
General American Investment Management Company, a wholly owned subsidiary, to
form Conning Asset Management Company (CAM). At acquisition, Conning had total
assets of approximately $16.0 million. The purchase price consisted of
approximately $12.0 million in cash (from the Company's operations) and 3.2
million shares of CAM convertible redeemable preferred stock, with fair value of
approximately $17.0 million.
These transactions were accounted for using the purchase method of accounting.
The results of operations of the acquired entities are included in the
consolidated financial statements subsequent to the respective acquisition
dates. The excess of cost over fair value of net assets acquired amounted to
approximately $56.6 million and $23.1 million for Cova and Conning,
respectively, and is being amortized over approximately 20 years.
On January 3, 1995, the Company sold its 72 percent ownership in GenCare Health
Systems, Inc. to United HealthCare Corporation. Proceeds received net of
expenses were $365.0 million and the net realized gain on sale was $170.2
million.
The Company distributed its ownership of its wholly owned subsidiary, Walnut
Street Securities, Inc. (WSS), at December 31, 1997 to GenAmerica. The net book
value of WSS, was $4.48 million at the time of distribution. The revenue and
expenses of WSS are included in the Company's consolidated statement of
operations for 1997.
<PAGE> 173
(3) INVESTMENTS
Fixed maturities and equity securities
The amortized cost and estimated fair value of fixed maturity and equity
securities at December 31, 1997 and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
1997
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury securities $ 48,074 1,125 (27) 49,172
Government agency
obligations 378,002 84,425 (1,281) 461,146
Corporate securities 5,491,210 319,682 (45,790) 5,765,102
Mortgage-backed securities 2,544,241 45,211 (17,832) 2,571,620
Asset-backed securities 265,725 3,380 (626) 268,479
---------- ---------- ---------- ---------
Total fixed maturities
available-for-sale $8,727,252 453,823 (65,556) 9,115,519
========== ========== ========== =========
Equity securities $ 23,558 653 - 24,211
========== ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
1996
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury securities $ 28,980 368 (151) 29,197
Government agency
obligations 343,945 41,324 (970) 384,299
Corporate securities 4,071,775 158,361 (39,623) 4,190,513
Mortgage-backed securities 1,949,717 18,927 (14,386) 1,954,258
Asset-backed securities 198,934 1,599 (491) 200,042
---------- ---------- ---------- ---------
Total fixed maturities
available-for-sale $6,593,351 220,579 (55,621) 6,758,309
========== ========== ========== =========
Equity securities $ 21,460 1,137 (1,692) 20,905
========== ========== ========== =========
</TABLE>
The Company manages its credit risk associated with fixed maturities by
diversifying its portfolio. At December 31, 1997 and 1996, the Company held no
corporate debt securities or foreign government debt securities of a single
issuer which had a carrying value in excess of 10 percent of stockholder equity.
The amortized cost and estimated fair value of fixed maturities at December 31,
1997, by contractual maturity, are shown below (in thousands). Expected
maturities may differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
<S> <C> <C>
Due in one year or less $ 67,409 67,921
Due after one year through five years 1,279,675 1,303,178
Due after five years through ten years 1,816,231 1,855,188
Due after ten years through twenty years 3,019,696 3,317,612
Mortgage-backed securities 2,544,241 2,571,620
------------- ---------
Total $ 8,727,252 9,115,519
============= =========
</TABLE>
<PAGE> 174
The sources of net investment income follow (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Fixed maturities $ 561,709 464,512 368,033
Mortgage loans 194,504 171,781 143,047
Real estate 34,164 39,062 37,108
Equity securities 1,317 755 622
Policy loans 148,316 133,511 127,920
Short-term investments 16,600 13,979 26,920
Other 13,943 9,705 (368)
-------- ------- -------
Investment revenue 970,553 833,305 703,282
Investment expenses (25,011) (26,422) (26,878)
-------- ------- -------
Net investment income $ 945,542 806,883 676,404
======== ======= =======
</TABLE>
Net realized gains (losses) from sales of investments consist of the following
(in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Fixed maturities:
Realized gains $ 23,969 27,928 30,139
Realized losses (16,796) (10,398) (9,000)
Equity securities:
Realized gains 1,835 6,146 306,142
Realized losses (1,457) (288) (5,259)
Other investments, net 20,987 1,143 (41,266)
------- ------- -------
Net realized investment gains $ 28,538 24,531 280,756
======= ======= =======
</TABLE>
Included in the net realized losses are permanent write-downs of approximately
$4.8 million during 1997.
A summary of the components of the net unrealized appreciation (depreciation) on
invested assets carried at fair value is as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Unrealized appreciation (depreciation):
Fixed maturities available-for-sale $ 388,267 164,957
Equity securities and short-term investments 658 605
Derivatives 888 -
Effect of unrealized appreciation (depreciation) on:
Deferred policy acquisition costs (142,187) (70,038)
Present value of future profits (2,901) 1,986
Deferred income taxes (91,779) (36,705)
Other 139 -
Minority interest, net of taxes (24,341) (10,438)
---------- ---------
Net unrealized appreciation $ 128,744 50,367
========== =========
</TABLE>
The Company and its insurance subsidiaries have securities on deposit with
various state insurance departments and regulatory authorities with an amortized
cost of approximately $ 293.5 million and $278.6 million at December 31, 1997
and 1996, respectively.
MORTGAGE LOANS
The Company originates mortgage loans on income-producing properties, such as
apartments, retail and office buildings, light warehouses, and light industrial
facilities. Loan to value ratios at the time of loan approval are 75 percent or
less. The Company minimizes risk through a thorough credit approval process and
through geographic and property type diversification.
The Company's mortgage loans were distributed as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
Carrying Percent of Carrying Percent of
Value Total Value Total
<S> <C> <C> <C> <C>
Arizona $ 156,453 7.2% $ 185,575 8.0%
California 358,443 16.5 378,376 16.4
Colorado 228,797 10.5 226,531 9.8
Florida 153,174 7.0 193,570 8.4
Georgia 131,861 6.1 141,442 6.1
Illinois 155,184 7.1 183,883 8.0
Maryland 104,567 4.8 99,944 4.3
Missouri 100,815 4.6 102,111 4.4
Texas 191,619 8.8 225,697 9.8
Virginia 84,140 3.9 92,663 4.0
Other 513,213 23.5 481,546 20.8
----------- --------- ----------- --------
Subtotal 2,178,266 100.0% 2,311,338 100.0%
Valuation reserve (38,004) (37,711)
----------- --------- ----------- --------
Total $ 2,140,262 $ 2,273,627
=========== ========= =========== ========
</TABLE>
<PAGE> 175
<TABLE>
<CAPTION>
1997 1996
Carrying Percent of Carrying Percent of
Value Total Value Total
<S> <C> <C> <C> <C>
Property Type
Apartment $ 101,038 4.6% $ 131,352 5.7%
Retail 903,438 41.5 966,298 41.8
Office building 622,185 28.6 641,204 27.7
Industrial 445,253 20.4 479,755 20.8
Other commercial 106,352 4.9 92,729 4.0
----------- --------- ----------- --------
Subtotal 2,178,266 100.0% 2,311,338 100.0%
Valuation reserve (38,004) (37,711)
----------- --------- ----------- --------
Total $ 2,140,262 $ 2,273,627
=========== ========= =========== ========
</TABLE>
An impaired loan is measured at the present value of expected future cash
flows or, alternatively, the observable market price or the fair value of the
collateral.
Mortgage loans which have been non-income producing for the preceding twelve
months were $8.7 million and $5.1 million at December 31, 1997 and 1996,
respectively. At December 31, 1997 and 1996, the recorded investment in
mortgage loans that were considered impaired under SFAS 114, ACCOUNTING BY
CREDITORS FOR IMPAIRMENT OF A LOAN, was $119.7 million and $86.5 million,
respectively, with related allowances for credit losses of $12.7 million and
$8.0 million, respectively. The average recorded investment in impaired
loans during 1997 and 1996 was $103.1 million and $107.9 million,
respectively. For the years ended December 31, 1997, 1996, and 1995, the
Company recognized $9.7 million, $6.6 million, and $11.9 million,
respectively, of interest income on those impaired loans, which included $9.9
million, $6.7 million, and $12.0 million, respectively, of interest income
recognized using the cash basis method of income recognition.
The Company has outstanding mortgage loan commitments as of December 31, 1997
totaling $284.6 million. During 1995, the Company entered into an agreement
whereby approximately $109.8 million of mortgage loans were sold by the
Company for securitization and resale by a financial institution as mortgage
pass-through certificates. In conjunction with this transaction, the Company
entered into futures positions to hedge against interest rate risk. The sale
of these mortgage loans resulted in a net loss of approximately $.4 million.
In addition, the close-out of the futures positions related to this
transaction resulted in a net loss of approximately $6.4 million.
DERIVATIVES The Company has a variety of reasons to use derivative
instruments, such as to attempt to protect the Company against possible
changes in the market value of its portfolio as a result of interest rate
changes and to manage the portfolio's effective yield, maturity, and
duration. The Company does not invest in derivatives for speculative
purposes. Upon disposition, a realized gain or loss is recognized
accordingly, except when exercising an option contract or taking delivery of
a security underlying a futures contract. In these instances, the
recognition of gain or loss is postponed until the disposal of the security
underlying the option or futures contract.
Summarized below are the specific types of derivative instruments used by the
Company.
INTEREST RATE SWAPS: The Company manages interest rate risk on certain
contracts, primarily through the utilization of interest rate swaps. Under
interest rate swaps, the Company agrees with counterparties to exchange, at
specified intervals, the payments between floating and fixed-rate interest
amounts calculated by reference to notional amounts. Net interest payments are
recognized within net investment income in the consolidated statements of
operations.
At December 31, 1997, the Company had thirty outstanding interest rate swap
agreements which expire at various dates through 2025. Under thirteen of the
agreements, the Company receives a fixed rate ranging from 5.975 percent to
7.51 percent on a notional amount of $68.6 million and pays a floating rate
based on London Interbank Offered Rate (LIBOR). Under the remaining
seventeen outstanding interest rate swap agreements, the Company receives a
floating rate based on LIBOR on a notional amount of $93 million and pays a
fixed rate ranging from 6.495 percent to 8.562 percent. The estimated fair
value of the agreements was a net loss of approximately $2.5 million which is
not recognized in the accompanying consolidated balance sheet.
At December 31, 1996, the Company had eight outstanding interest rate swap
agreements which expire at various dates through 2025. Under six of the
agreements, the Company receives a fixed rate ranging from 5.825 percent to
8.31 percent on a notional amount of $25.4 million and pays a floating rate
based on LIBOR. Under the remaining two outstanding interest rate swap
agreements, the Company receives a floating rate based on LIBOR on a notional
amount of $15 million and pays a fixed rate ranging from 6.52 percent to 6.90
percent. The estimated fair value of the agreements was a net gain of
approximately $0.3 million which is not recognized in the accompanying
consolidated balance sheet.
<PAGE> 176
CURRENCY SWAPS: Under foreign currency swaps, the Company agrees with
other parties to exchange at specified intervals, the difference between two
currencies on an exchange rate basis the interest amounts calculated by
reference to an agreed notional principal amount. The Company uses this
technique for foreign denominated assets to match dollar denominated
liabilities of various fixed income products. Net interest payments are
recognized within net investment income in the consolidated statements of
operations.
At December 31, 1997 and 1996, the Company had six and two outstanding
currency swap agreements, respectively, which expire at various dates through
2026. The notional amount was $34.3 million and $13.9 million, respectively.
The estimated fair value of the agreements was a net loss of $1.3 million
and $2.3 million, respectively, which is not recognized in the accompanying
consolidated balance sheet.
FUTURES: A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The
Company generally invests in futures on U.S. Treasury Bonds, U.S. Treasury
Notes, and the S&P 500 Index and typically closes the contract prior to the
delivery date. These contracts are generally used to manage the portfolio's
effective maturity and duration.
<PAGE> 177
Futures contracts outstanding as of years ending 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
($ in thousands)
NET (SOLD)
PURCHASE NOTIONAL FAIR UNREALIZED
POSITION AMOUNT VALUE GAIN(LOSS)
<S> <C> <C> <C> <C>
December 31, 1997 (510) $51,000 60,940 ($907)
December 31, 1996 50 12,500 14,653 404
</TABLE>
OPTIONS: Currently, the Company buys both exchange-traded and
over-the-counter options based on the S&P 500 Index to support equity indexed
annuity policies. An equity indexed annuity is a product under which
contractholders receive a minimum guaranteed value and also participate in
stock market appreciation. Options are marked to market value quarterly. The
change in value is reflected in investment income to assure proper matching
of the hedge to changes in the liability. The amounts involved are not
material.
The Company is exposed to credit related risk in the event of nonperformance
by counterparties to financial instruments but does not expect any
counterparties to fail to meet their obligations. Where appropriate, master
netting agreements are arranged and collateral is obtained in the form of
rights to securities to lower the Company's exposure to credit risk. It is
the Company's policy to deal only with highly rated companies. There are not
any significant concentrations with counterparties.
(4) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1997 and 1996. SFAS
107, DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS, defines fair
value of a financial instrument as the amount at which the instrument could
be exchanged in a current transaction between willing parties (in thousands):
<TABLE>
<CAPTION>
1997 1996
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
<S> <C> <C> <C> <C>
Assets:
Fixed maturities $ 9,115,519 9,115,519 6,758,309 6,758,309
Mortgage loans 2,140,262 2,333,895 2,273,627 2,354,072
Policy loans 2,073,152 2,073,152 1,917,861 1,917,861
Short-term investments 190,374 190,374 55,594 55,594
Other invested assets 243,921 243,921 183,612 183,628
Separate account assets 4,118,860 4,118,860 2,833,258 2,833,258
Liabilities:
Policyholder account
balances relating to
investment contracts $ 6,696,690 6,608,068 6,281,967 6,190,919
Long term debt and
notes payable 214,477 222,419 295,614 293,913
Separate account
liabilities 4,112,666 4,112,666 2,810,907 2,810,907
</TABLE>
(5) REINSURANCE
The Company is a major reinsurer to the life and health industry. The effect
of reinsurance on premiums and other considerations is as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Direct $ 1,120,169 1,097,340 1,069,248
Assumed 996,861 827,171 700,152
Ceded (348,861) (301,283) (271,387)
----------- --------- ---------
Net insurance premiums and other
considerations $ 1,768,169 1,623,228 1,498,013
=========== ========= =========
</TABLE>
Reinsurance assumed represents approximately $212.5 billion, $160.0 billion,
and $157.9 billion, of insurance in force at December 31, 1997, 1996, and
1995, respectively. The amount of ceded insurance in force, including
retrocession, was $50.4 billion, $53.2 billion, and $48.7 billion, for 1997,
1996, and 1995, respectively.
<PAGE> 178
(6) FEDERAL INCOME TAXES
Income tax expense (benefit) attributable to income from operations consists
of the following (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Current income tax expense $ 65,778 45,902 115,769
Deferred income tax expense
(benefit) (113) 13,992 29,411
---------- ------- -------
Provision for income taxes $ 65,665 59,894 145,180
========== ======= =======
</TABLE>
Income tax expense attributable to income from operations differed from the
amounts computed by applying the U.S. federal income tax rate of 35 percent
to pre-tax income as a result of the following (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Computed "expected" tax expense $ 64,763 57,055 135,353
Increase (decrease) in income tax
resulting from:
Surplus tax on mutual life
insurance companies 5,325 4,777 -
Foreign tax rate in excess
of U.S. tax rate 556 941 763
Tax preferred investment
income (6,583) (7,318) (5,784)
State tax net of federal benefit 830 971 292
GAAP/tax basis difference
on GenCare sale - - 15,710
Foreign tax credit (594) - -
Goodwill amortization 956 895 567
Difference in book vs. tax
basis in domestic
subsidiaries 2,166 2,230 1,547
Other, net (1,754) 343 (3,268)
---------- ------- -------
Provision for income taxes $ 65,665 59,894 145,180
========== ======= =======
</TABLE>
Total income taxes were allocated as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Provision for income taxes $ 65,665 59,894 145,180
Income tax from stockholder equity:
Unrealized holding gain
or loss on debt and
equity securities
recognized for financial
reporting purposes 55,923 (24,612) 99,871
Foreign currency translation (12,122) - -
Other (437) (1,023) -
---------- ------- -------
Total income tax $ 109,029 34,259 245,051
========== ======= =======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at December 31, 1997 and 1996
are presented below (in thousands):
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax assets:
Reserve for future policy benefits $ 149,496 138,848
Deferred acquisition costs capitalized
for tax 110,418 95,332
Difference in basis of post retirement
benefits 6,846 13,993
Net operating loss 40,915 22,789
Other, net 132,354 106,263
---------- -------
Gross deferred tax assets 442,029 377,225
Less valuation allowance 1,150 1,299
---------- -------
Total deferred tax asset after valuation
allowance $ 438,879 375,926
========== =======
</TABLE>
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax liabilities:
Unrealized gain on investments $ 78,420 63,204
Deferred acquisition costs capitalized
for financial reporting 282,714 246,858
Difference in the tax basis of
cash and invested assets 45,551 19,222
Other, net 121,240 89,919
---------- -------
Total deferred tax liabilities 527,925 419,203
---------- -------
Net deferred tax liability $ 89,046 43,277
========== =======
</TABLE>
<PAGE> 179
The Company has not recognized a deferred tax liability for the
undistributed earnings of its wholly owned foreign subsidiaries because the
Company currently does not expect those unremitted earnings to become taxable
to the Company in the foreseeable future. This is because the unremitted
earnings will not be repatriated in the foreseeable future, or because those
unremitted earnings that may be repatriated will not be taxable through the
application of tax planning strategies that management would utilize.
As of December 31, 1997, the Company has provided for a 100 percent valuation
allowance against the deferred tax asset related to the net operating losses
of RGA's Australian, Argentine, and UK subsidiaries and Genelco's Spanish and
Mexican subsidiaries. The Company has provided for a 50 percent valuation
allowance against the deferred tax asset related to International
Underwriting Services' net operating losses which were incurred in separate
return limitation years. Based on income projections for future years, a 50
percent valuation allowance is appropriate.
At December 31, 1997, the Company had capital loss carryforwards of $.8
million. During 1997, 1996, and 1995 the Company paid income taxes totaling
approximately $70.8 million, $20.7 million, and $121.7 million, respectively.
At December 31, 1997, the Company's subsidiaries had recognized deferred tax
assets associated with net operating loss carryforwards of approximately
$115.7 million. The net operating loss and capital losses are expected to be
utilized during the period allowed for carryforwards.
(7) DEFERRED POLICY ACQUISITION COSTS
A summary of the policy acquisition costs deferred and amortized is as
follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Balance at beginning of year $ 652,251 526,939 664,452
Transfer of present value of future
profits 19,279 - -
Policy acquisition costs deferred 267,008 206,790 163,218
Policy acquisition costs amortized (211,979) (182,038) (176,216)
Interest credited 40,843 38,944 37,405
Deferred policy acquisition costs relating
to change in unrealized (gain) loss on
investments available for sale (72,149) 61,616 (161,920)
---------- ------- --------
Balance at end of year $ 695,253 652,251 526,939
========== ======= ========
</TABLE>
(8) ASSOCIATE BENEFIT PLANS AND POSTRETIREMENT BENEFITS
The Company has a defined benefit plan covering substantially all associates.
The benefits are based on years of service and each associate's compensation
level. The Company's funding policy is to contribute annually the maximum
amount deductible for federal income tax purposes. Contributions provide for
benefits attributed to service to date and for those expected to be earned in
the future.
The Company also has several non-qualified, defined benefit, and defined
contribution plans for directors and management associates. The plans are
unfunded and are deductible for federal income tax purposes when the benefits
are paid.
Net periodic defined benefit plan costs consist of the following (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Service cost $ 5,915 5,421 4,074
Interest 8,597 8,047 7,160
Return on plan assets (29,043) (14,207) (27,984)
Amortization and deferral 18,637 4,646 19,841
Other - 192 -
---------- --------- ---------
Pension costs $ 4,106 4,099 3,091
========== ========= =========
</TABLE>
<PAGE> 180
The following table presents the plans' funded status and amount
recognized in the Company's consolidated balance sheets at December 31, 1997
and 1996 based on the actuarial valuations as of December 31, 1997 and 1996
(in thousands):
<TABLE>
<CAPTION>
1997 1996
Qualified Other Qualified Other
Plans Plans Plans Plans
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Accumulated benefit
obligation, including vested
benefits of $79,995 and
$19,057 for 1997 and
$74,223 and $18,560
for 1996 82,758 27,965 76,928 26,897
--------- ------ --------- ------
Projected benefit obligation for
service rendered to date 97,662 32,168 92,825 29,726
Plan assets at fair value primarily
listed stocks and bonds 133,477 128,545
Plan assets in excess (less than)
projected benefit obligations 35,815 (32,168) 35,720 (29,726)
Unrecognized net transition obligation
at December 31 4,021 2,701
Pension cost funded in advance $ 35,815 35,720
========= =======
Accrued pension liability (28,147) (27,025)
======== ========
</TABLE>
Assumptions used for the December 31, 1997 and 1996 projected benefit obligation
included a 7.25 percent current discount rate, a same age-based salary scale and
4.50 percent increase rate, respectively, for future compensation levels, and a
9.25 percent projected return on plan assets.
The Board of Directors has adopted an associate incentive plan applicable to
full-time salaried associates with at least one year of service. Contributions
to the plan are determined annually by the Board of Directors and are based upon
salaries of eligible associates. Full vesting occurs after five years of
continuous service. The Company's contribution to the plan was $10.4 million,
$8.8 million, and $9.2 million for 1997, 1996, and 1995, respectively
In addition to pension benefits, the Company provides certain health care and
life insurance benefits for retired employees. Substantially all employees may
become eligible for these benefits if they reach retirement age while working
for the Company. Alternatively, retirees may elect certain prepaid health care
benefit plans.
The Company uses the accrual method to account for the costs of its retiree
benefit plans and amortizes its transition obligation for retirees and fully
eligible or vested employees over 20 years. The unamortized transition
obligation was $16.8 million and $17.8 million at December 31, 1997 and 1996,
respectively. Net postretirement benefit costs for the years ended December 31,
1997, 1996, and 1995 were $5.1 million, $5.8 million, and $5.4 million,
respectively, and include the expected cost of such benefits for newly eligible
or vested employees, interest cost, gains and losses arising from difference
between actuarial assumptions and actual experience, and amortization of the
transition obligation. The liability for the Company as of December 31, 1997 and
$27.8 million and $25.6 million, respectively.
Assumptions used were as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Discount rate in determining benefit obligations 7.25% 7.25%
Healthcare cost trend
First year:
Indemnity plan 8.0% 9.0%
HMO plan 8.0% 8.0%
Dental plan 8.0% 9.0%
Ultimate 5.00% 5.25%
</TABLE>
The health care cost trend rate assumption has a significant effect on the
amount reported. To illustrate, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1997 by $4.7 million or
12.5 percent. The aggregate of the service cost and interest cost components of
net periodic postretirement benefit cost for 1997 would increase by $.6 million
or 15.5 percent.
<PAGE> 181
(9) DEBT
The Company's long-term debt and notes payable consists of the following
($ in millions):
<TABLE>
<CAPTION>
Face value
at December 31,
Description Rate Maturity 1997 1996
<S> <C> <C> <C> <C>
Long-term debt:
General American surplus note 7.625% January 2024 $107.0 $107.0
RGA senior note 7.250% April 2006 100.0 100.0
Notes payable
General American 5.555% March 1997 - 80.5
RGA Australia Hldgs. 5.460% April 1998 7.8 7.6
------ ------
Total long-term debt and notes payable $214.8 $295.1
====== ======
</TABLE>
The difference between the face value of debt and the carrying value per the
consolidated balance sheets is unamortized discount.
General American's surplus note pays interest on January 15 and July 15 of
each year. The note is not subject to redemption prior to maturity. Payment
of principal and interest on the note may be made only with the approval of
the Missouri Director of Insurance.
The RGA senior note pays interest semiannually on April 1 and October 1. The
ability of RGA to make debt principal and interest payments as well as make
dividend payments to shareholders is ultimately dependent on the earnings and
surplus of its subsidiaries and the investment earnings on the undeployed
debt proceeds. The transfer of funds from the insurance subsidiaries to
Reinsurance Group of America, Incorporated is subject to applicable insurance
laws and regulations.
The General American note payable was retired during December of 1997.
The RGA Australian note had drawdowns for the respective years of $2.0
million in January 1997, $5.6 million in January 1996, and $2.0 million in
July 1996. Principal repayments are due in April 1998 and are expected to be
renewed under the terms of the line of credit. This agreement contains
various restrictive covenants which primarily pertain to limitations on the
quality and types of investments, minimum requirements of net worth, and
minimum rating requirements.
Interest paid on debt during 1997, 1996, and 1995 amounted to $20.0 million,
$19.9 million, and $9.0 million, respectively.
As of December 31, 1997, the Company was in compliance with all covenants
under its debt agreements.
(10) REGULATORY MATTERS
The Company and its insurance subsidiaries are subject to financial statement
filing requirements in their respective state of domicile, as well as the
states in which they transact business. Such financial statements, generally
referred to as statutory financial statements, are prepared on a basis of
accounting which varies in some respects from GAAP. Statutory accounting
practices include: (1) charging of policy acquisition costs to income as
incurred; (2) establishment of a liability for future policy benefits
computed using required valuation standards; (3) nonprovision of deferred
federal income taxes resulting from temporary differences between financial
reporting and tax bases of assets and liabilities; (4) recognition of
statutory liabilities for asset impairments and yield stabilization on fixed
maturity dispositions prior to maturity with asset valuation reserves based
on a statutorily determined formulas; and (5) valuation of investments in
bonds at amortized cost.
Net income and policyholders' surplus of the Company for the years ended
December 31, 1997, 1996, and 1995, as determined in accordance with statutory
accounting practices, are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net income $ 39,737 18,464 236,962
Policyholders' surplus 844,110 636,260 589,783
</TABLE>
Under Risk-Based Capital (RBC) requirements, General American and its
insurance subsidiaries are required to measure its solvency against certain
parameters. As of December 31, 1997, the Company and its insurance
subsidiaries exceeded the established RBC minimums. In addition, the Company
and its insurance subsidiaries exceeded the minimum statutory capital and
surplus requirements of their respective states of domicile.
The Company and its insurance subsidiaries are subject to limitations on the
payment of dividends. Generally, dividends during any year may not be paid
without prior regulatory approval, in excess of the lessor of (and with
respect to life and health subsidiaries in Missouri, in excess of the greater
of): (a) 10 percent of the statutory surplus as of the preceding December 31
or (b) the statutory gain from operations for the preceding year.
<PAGE> 182
(11) LEASE COMMITMENTS
The Company has entered into operating leases for office space and other
assets, principally office furniture and equipment. Future minimum lease
obligations under noncancelable leases are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Year ended December 31:
<S> <C>
1998 $ 17,583
1999 15,510
2000 12,621
2001 8,680
2002 6,276
Thereafter 3,107
</TABLE>
Operating lease expense totaled $16.4 million, $17.0 million, and $11.6 million
in 1997, 1996, and 1995, respectively
(12) PARTICIPATING POLICIES AND DIVIDENDS TO POLICYHOLDERS
Over 27.5 percent and 31.2 percent of the Company's business in force relates
to participating policies as of December 31, 1997 and 1996, respectively.
These participating policies allow the policyholders to receive dividends
based on actual interest, mortality, and expense experience for the related
policies. These dividends are distributed to the policyholders through an
annual dividend, using current dividend scales which are approved by the
Board of Directors.
(13) CONTINGENT LIABILITIES
From time to time, the Company is subject to litigation related to its
insurance business and to employment related matters in the normal course of
business. Management does not believe that the Company is party to any such
pending litigation which would have a material adverse effect on its
financial position or future operations.
<PAGE> 183
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities and
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant
to authority conferred in that section.
RULE 484 UNDERTAKING
Section 351.355 of the Missouri General and Business Corporation Law, in
brief, allows a corporation to indemnify any person who is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, against expenses, including attorneys'
fees, judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation. When any person was or is a party or is
threatened to be made a party in an action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the Fact that he
is or was a director, officer, employee, or agent of the corporation,
indemnification may be paid unless such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation. In the event of such a determination indemnification is allowed
if a court determines that the person is fairly and reasonably entitled to
indemnity. A corporation has the power to give any further indemnity to any
person who is or was a director, officer, employee, or agent, provided for in
the articles of incorporation or as authorized by any by-law which has been
adopted by vote of the shareholders, provided that no such indemnity shall
indemnify any person's conduct which was finally adjudged to have been
knowingly fraudulent, deliberately dishonest, or willful misconduct.
In accordance with Missouri law, General American's Board of Directors, at
its meeting on 19 November 1987, and the policyholders of General American at
the annual meeting held on 26 January 1988, adopted the following
resolutions:
II-2
<PAGE> 184
"BE IT RESOLVED THAT
1. The company shall indemnify any person who is, or was a director,
officer, or employee of the company, or is or was serving at the
request of the company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against any and all expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by him or her in connection with any civil,
criminal, administrative, or investigative action, proceeding, or
claim (including an action by or in the right of the company), by
reason of the fact that he or she was serving in such capacity if he
or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the company;
provided that such person's conduct is not finally adjudged to have
been knowingly fraudulent, deliberately dishonest, or willful
misconduct.
2. The indemnification provided herein shall not be deemed exclusive
of any other rights to which a director, officer, or employee may be
entitled under any agreement, vote of policyholders or disinterested
directors, or otherwise, both as to action in his or her official
capacity and as to action in another capacity which holding such
office, and shall continue as to a person who has ceased to be a
director, officer, or employee and shall inure to the benefit of the
heirs, executors and administrators of such a person."
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
II-3
<PAGE> 185
the Act and will be governed by the final adjudication of such issue.
Reasonableness of Fees and Charges
General American, of which Registrant forms a part, hereby represents that
the fees and charges deducted under the terms of the Contract are, in the
aggregate, reasonable in relationship to the services rendered, the expenses
expected, and the risks assumed by General American.
II-4
<PAGE> 186
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
VGSP Prospectus, consisting of 49 pages; FRC-VUL Prospectus,
consisting of 47 pages.
The undertaking to file reports required by Section 15 (d), 1934 Act.
The undertaking pursuant to Rule 484.
Representations pursuant to Rule 6e-3(T).
The signatures.
1. The following exhibits (which correspond in number to the numbers under
paragraph A of the instructions for exhibits to Form N-8B-2):
(1) Resolution of the Board of Directors of General
American authorizing establishment of the
Separate Account <F1>
(2) Not applicable
(3) (a) Principal Underwriting Agreement <F1>
(b) Proposed form of Selling Agreement <F1>
(c) Commission Schedule <F1>
(4) Not applicable
(5) (a) Revised form of VGSP Policy <F2>
(b) Form of VGSP Pension Policy and Policy Riders <F1>
(c) Waiver of monthly Deduction Rider <F1>
(d) Form of FRC-VUL Policy <F4>
(e) Form of FRC-VUL Waiver of Monthly Deduction Rider <F4>
(f) Form of FRC-VUL Waiver of Specified Premium Rider <F4>
(g) Form of FRC-VUL Increasing Benefit Rider <F4>
(6) (a) Amended and Restated Charter and Articles of Incorporation
of General American <F6>
II-5
<PAGE> 187
(b) Amended and Restated By-Laws of General American <F6>
(7) Not applicable
(8) (a) Form of Agreement to Purchase Shares of
General American Capital Company <F2>
(b) Form of Participation Agreement with Variable
Insurance Products Fund <F2>
(c) Form of Participation Agreement with Russell
Insurance Funds, Inc. <F4>
(9) Not applicable
(10) (a) Form of Application for Standard VGSP Policy <F2>
(b) Form of Application for Standard FRC-VUL Policy <F4>
(c) Form of Application for FRC-VUL Policy--Guaranteed
Issue <F4>
(d) Form of Master Application for FRC-VUL Policy <F4>
2. Revised Memorandum describing General American's issuance,
transfer, and redemption procedures for the Policies and
General American's procedure for conversion to a fixed
benefit policy <F2>
3. The following exhibits are numbered to correspond to the numbers in the
instructions as to exhibits for Form S-6.
(1) See above
(2) See Exhibit 1(5)
(3) (a) Opinion of Robert J. Banstetter, General
Counsel of General American as to VGSP Policy <F1>
(b) Opinion of Matthew P. McCauley, Associate
General Counsel of General American as to FRC-VUL
Policy <F4>
(4) No financial statements are omitted from the
Prospectuses pursuant to prospectus instructions 1(b) or
(c).
II-6
<PAGE> 188
(5) Not applicable
4. The consent of KPMG Peat Marwick LLP, Independent Certified Public
Accountants.
[FN]
- ---------------------
<F1> Incorporated by reference to the initial Registration Statement
and File No. 33-48550.
<F2> Incorporated by reference to Pre-Effective Amendment
No. 1 to the Registration Statement, File No. 33-48550.
<F3> Incorporated by reference to Post-Effective Amendment No. 3 to
the Registration Statement, File No. 33-48550.
<F4> Incorporated by reference to Post-Effective Amendment No. 5 to
the Registration Statement, File No. 33-48550.
<F5> Incorporated by reference to Post-Effective Amendment No. 7 to
the Registration Statement, File No. 33-48550.
<F6> Filed herewith.
II-7
<PAGE> 189
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, General American
Life Insurance Company and General American Separate Account Eleven certify
that they meet all of the requirements for effectiveness of this amended
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and have duly caused this amended Registration Statement to be signed on
their behalf by the undersigned thereunto duly authorized, and the seal of
General American Life Insurance Company to be hereunto affixed and attested,
all in the City of St. Louis, State of Missouri, on the 29th day of April,
1998.
GENERAL AMERICAN SEPARATE ACCOUNT
ELEVEN (Registrant)
(Seal) BY: GENERAL AMERICAN LIFE
INSURANCE COMPANY (for Registrant
and as Depositor)
Attest: /S/ Robert J. Banstetter By: /S/ Richard A. Liddy
-------------------------- ------------------------
Robert J. Banstetter, Sr. Richard A. Liddy,
Secretary President, General American
Life Insurance Company
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/S/ Richard A. Liddy Chairman, President 4/29/98
- ------------------------------ (Principal Executive
Richard A. Liddy Officer)
/S/ John W. Barber Vice President 4/29/98
- ------------------------------ Controller
John W. Barber (Principal Accounting
Financial Officer)
- ------------------------------
August A. Busch, III<F*> Director
- ------------------------------
William E. Cornelius<F*> Director
II-8
<PAGE> 190
- ------------------------------
John C. Danforth<F*> Director
- ------------------------------
Bernard A. Edison<F*> Director
/S/ Richard A. Liddy
- ------------------------------
Richard A. Liddy Director 4/29/98
- ------------------------------
William E. Maritz<F*> Director
- ------------------------------
Craig D. Schnuck<F*> Director
- ------------------------------
William P. Stiritz<F*> Director
- ------------------------------
Andrew C. Taylor<F*> Director
- ------------------------------
H. Edwin Trusheim<F*> Director
- ------------------------------
Robert L. Virgil, Jr.<F*> Director
- ------------------------------
Virginia V. Weldon<F*> Director
- ------------------------------
Ted C. Wetterau<F*> Director
By /S/Matthew P. McCauley 4/29/98
---------------------------
Matthew P. McCauley
<FN>
<F*> Original powers of attorney authorizing Matthew P. McCauley to sign this
Registration Statement and Amendments thereto on behalf of the Board of
Directors of General American Life Insurance Company are on file with the
Securities and Exchange Commission.
</TABLE>
II-9
<PAGE> 191
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Source
Exhibit or Page
Number Description Number
- ------ ----------- ------
<S> <C> <C>
1. Consent of KPMG Peat Marwick LLP,
Independent Certified Public Accountants
2. Amended and Restated Charter and Articles of
Incorporation of General American Life Insurance
Company
3. Amended and Restated By-Laws of General American
Life Insurance Company
</TABLE>
Consent of Independent Certified Public Accountants
<PAGE> 1
Exhibit 1.
Consent of KPMG Peat Marwick LLP, Independent Certified Public Accountants
<PAGE> 2
The Board of Directors
General American Life Insurance Company:
Re: "Select Plus"
"Russell Insurance Funds"
We consent to the use of our reports included herein on General American Life
Insurance Company and on General American Separate Account Eleven and to the
reference of our firm under the heading "Experts" in the Registration Statement
and Prospectus for General American Separate Account Eleven. Our report on the
consolidated financial statements of General American Life Insurance Company
and subsidiaries refers to the adoption of Statement of Financial Accounting
Standards No. 120, Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts in 1996.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
St. Louis, Missouri
April 24, 1998
Amended and Restated Charter and Articles of Incorp.
<PAGE> 1
Exhibit 2.
Amended and Restated Charter and Articles of Incorporation of General
American Life Insurance Company
<PAGE> 2
AMENDED AND RESTATED CHARTER
and
ARTICLES OF INCORPORATION
of
GENERAL AMERICAN LIFE INSURANCE COMPANY
ARTICLE I
The name of the Company shall continue to be General American Life
Insurance Company.
ARTICLE II
The principal office of the Company shall continue to be located at 700
Market Street in the City of St. Louis, in the State of Missouri.
ARTICLE III
The Company is incorporated for the purpose of making insurance upon
the lives of individuals and every assurance pertaining thereto or connected
therewith, to grant, purchase and dispose of annuities and endowments of
every kind and description whatsoever, to provide an indemnity against death
and for weekly or other periodic indemnity for disability occasioned by
accident or sickness to the person of the assured and to have all the further
rights, powers and privileges granted or permitted life insurance companies
organized under the provisions of Chapter 376 R.S.Mo., and all Acts
amendatory thereof or additional thereto.
ARTICLE IV
The Company was originally organized as a domestic stock and mutual
life insurance company in 1933 and, in a process initiated in 1936, converted
to a mutual company with no capital stock. Pursuant to a Plan of
Reorganization (the "Plan") adopted by the Company as of 26 September 1996,
and in accordance with Senate Bill No. 759 as enacted by the 1996 Session of
the 88th General Assembly of the State of Missouri (Section 376.1300 et seq.
R.S.Mo.)(the "MHC Statute"), the Company converted to a stock form life
insurance company, without members, and each member of the Company
immediately prior to the consummation of the reorganization described in the
Plan became, automatically by operation of law, a member of General American
Mutual Holding Company in accordance with the provisions of the Articles of
Incorporation and By-laws of General American Mutual Holding Company and the
MHC Statute.
The aggregate number of shares of stock that the Company shall be
authorized to issue shall be five million (5,000,000) shares of common stock,
with par value of one dollar ($1.00) per share.
No holder of stock of the Company shall be entitled as a matter of
right to subscribe for or purchase any part of any new or additional issue of
stock, or securities convertible into stock, of any class whatsoever, whether
now or hereafter authorized, and all such additional shares of stock or other
securities convertible into stock may be issued and disposed of by the Board
of Directors to such person or persons and on such terms and for such
consideration (so far as may be permitted by law) as the Board of Directors,
in its absolute discretion, may deem advisable.
The Company shall be a continuation of the original corporation of the
same name whose first Certificate of Authority to transact a life insurance
business was granted by the Superintendent of the Insurance Department on the
5th day of September, 1933.
<PAGE> 3
ARTICLE V
The corporate powers of the Company shall be vested in a Board of
Directors and shall be exercised by the Board and by such officers, agents,
employees and committees, including an Advisory Committee, as the Board may,
in its discretion, from time to time appoint and empower. The Board shall
have the power from time to time to make, amend or repeal such By-laws, rules
and regulations for the transaction of the business of the Company as the
Board may deem expedient and as are not inconsistent with this Amended and
Restated Charter and Articles of Incorporation or the constitution or other
laws of the State of Missouri. The Company shall have perpetual succession
for a term of nine hundred ninety-nine (999) years.
ARTICLE VI
The Board of Directors shall consist of not less than nine (9) and not
more than fifteen (15) persons elected as hereinafter provided. At least one
Director shall be a citizen and resident of the state of Missouri, and a
majority of the Directors shall be policyholders of the Company. Meetings of
the Board of Directors shall be held at such time and place and upon such
notice as shall be prescribed by the By-laws of the Company. Vacancies in
the Board of Directors may be filled by the shareholders at any regular
meeting or at any special meeting called for that purpose, or by vote of a
majority of Directors present at any regular or special meeting. Vacancies
occasioned by death, resignation or disqualification when filled shall be
filled for the unexpired term for which such Director was elected. Any
Director elected by the Board to fill a vacancy shall have the same
qualifications required of the Director whose place he or she takes. A
majority of the members of the Board of Directors, or such greater number
thereof as may from time to time be provided for in the By-laws of the
Company, shall constitute a quorum for the transaction of business, but a
smaller number may meet and adjourn from time to time until a quorum is
present.
ARTICLE VII
The incumbent members of the Board of Directors shall continue to be
Directors of the Company until their respective terms have expired or until
their successors are duly elected and qualified. New Directors will be
elected by class so as to equalize as nearly as possible the number in each
class of Directors. There shall continue to be three classes of Directors,
each class serving for a three year term expiring one year after expiration
of the term of the immediately preceding class (effective at the annual
meeting of the Company for the year in which the term expires), so that the
term of one class will expire each year. Each Director shall serve during
the term for which he or she was elected or until a successor is duly elected
and qualified and nothing in this Amended and Restated Charter and Articles
of Incorporation shall be interpreted to prevent a Director whose term is
expiring from being eligible for re-election.
ARTICLE VIII
The annual meeting of the Company shall be held at the office of the
Company in the City of St. Louis, State of Missouri, on the fourth Thursday
in April in each year or at such other place as may be selected by the Board
of Directors and shall be held at such time as shall be selected by the Board
of Directors or as provided in the By-laws of the Company. Special meetings
of the Company shall be called at any time by the vote of a majority of the
entire number of the members of the Board of Directors, or upon the written
request of five percent of those shareholders of the Company eligible to vote
at such meeting, which request shall specify the matters proposed to be acted
upon. Notice of any annual or special meeting shall be given in the manner
provided in the By-laws.
Each outstanding share of stock shall be entitled to one vote upon each
matter submitted to a vote at any annual or special meeting of the Company.
On all propositions which shall be submitted for decision at any annual or
special meeting of the Company, such matter shall be decided by the vote of
the majority of the shares voting at such meeting.
<PAGE> 4
ARTICLE IX
The policyholders of the Company shall benefit in the earnings and
profits of the Company in such manner as shall be determined from time to
time by the Board of Directors under the laws of the State of Missouri, and
particularly Section 376.360 R.S.Mo. and all Acts amendatory thereof. Any
allocation of earnings and profits as made by the Board of Directors pursuant
to the provisions of this Article shall be binding and conclusive upon every
person who is entitled to share in its profits or earnings.
ARTICLE X
This Amended and Restated Charter and Articles of Incorporation may be
amended at any annual or special meeting of the Company by the majority vote
of the shareholders voting at such meeting; provided that if it is proposed
to amend the same at any special meeting a copy of the proposed amendment and
a copy of the notice of the meeting of the shareholders of the Company called
for that purpose shall be mailed at least ten (10) days before such meeting
to each shareholder as the shareholder's address appears upon the books of
the Company.
If it be proposed to amend Articles IV, V, IX and X of this Amended and
Restated Charter and Articles of Incorporation at any meeting, annual or
otherwise, then the notice and a copy of the proposed amendment, provided in
the preceding paragraph, shall be mailed at least thirty (30) days before
such meeting and a true and correct list of the shareholders of the Company,
together with the address of each as shown on the books and records of the
Company, shall be filed with the Director of the Department of Insurance of
the State of Missouri at least twenty (20) days before such meeting.
ARTICLE XI
Whenever in this Amended and Restated Charter and Articles of
Incorporation notice is required or permitted to be given by mail, the
affidavit of the person who mailed such notice, filed with the Secretary of
the Company, shall constitute conclusive evidence that such notice has been
given and mailed.
ARTICLE XII: INDEMNIFICATION
The Company shall indemnify each of its directors, officers, employees,
and agents to the full extent specified by Section 351.355 R.S.Mo., as
amended from time to time (the "Indemnification Statute"), and, in addition,
shall indemnify each of them against all expenses (including, without
limitation, attorneys' fees, judgments, fines, taxes, and amounts paid in
settlement) actually and reasonably incurred by him or her in connection with
any claim (including, without limitation, any threatened, pending, or
completed action, suit, or proceeding whether civil, criminal,
administrative, or investigative and whether or not by or in the right of any
corporation) by reason of the fact that he or she is or was serving the
Company or at the request of the Company in any of the capacities referred to
in the Indemnification Statute or arising out of his or her status in any
such capacity, provided that the Company shall not indemnify any person from
or on account of such person's conduct which was finally adjudged to have
been knowingly fraudulent, deliberately dishonest or willful misconduct.
The Company is authorized to give or supplement any of the aforesaid
indemnifications by By-law, agreement, or otherwise and support them by
insurance to the extent it deems appropriate. Amounts to be paid under this
Article XII shall be disbursed at such times and upon such procedures as the
Company shall determine. All such indemnification shall continue as to any
person who has ceased to serve in any of the aforesaid capacities and shall
inure to the benefit of the heirs, devisees, and personal representatives of
such person. Indemnification given under this Article XII shall survive
elimination or modification of this Article XII with respect to any such
expenses incurred in
<PAGE> 5
connection with claims arising out of acts or omissions occurring prior to such
elimination or modification and persons to whom such indemnification is given
shall be entitled to rely on such indemnification as a contract with the
Company.
Originally filed 2/21/97
Amended 9/10/97 (Article IV, paragraph 2)
MPMcC/vq/gachart
<PAGE> 1
Exhibit 3.
Amended and Restated By-Laws of General American Life Insurance Company
<PAGE> 2
AMENDED AND RESTATED BY-LAWS
of
GENERAL AMERICAN LIFE INSURANCE COMPANY
ARTICLE I
Shareholders
Section 1. Annual Meeting. The annual meeting of the Company shall be
--------------
held on the fourth Thursday in April in each year, if not a legal holiday,
and if a legal holiday, then on the next day not a legal holiday, when
members of the Board of Directors shall be elected to succeed those whose
terms are then expiring and such other business shall be transacted as may
properly be brought before the meeting.
Section 2. Special Meetings. Special meetings of the Company may be
----------------
called at any time by the vote of a majority of the entire number of the
members of the Board of Directors. Business transacted at all special
meetings of the Company shall be confined to the purpose or purposes stated
in the notice of the meeting.
Section 3. Place and Hour of Meeting. Every annual meeting of the
-------------------------
Company shall commence immediately after the annual meeting of the members of
General American Mutual Holding Company shall have been concluded. Every
special meeting of the Company shall be held at such time as may be selected
by the Board of Directors. Every meeting of the Company, whether an annual
or a special meeting, shall be continued during at least three hours, unless
the object for which it was called shall be accomplished sooner and shall be
held at the office of the Company in the City of St. Louis, in the State of
Missouri, or at such other place as may be selected by the Board of
Directors.
Section 4. Notice of Meetings; Record Date. Notice of each meeting of
-------------------------------
the Company shall be mailed to each shareholder of the Company not less than
ten nor more than fifty days previous to such meeting, and every such notice
shall state the day and hour and the place at which the meeting is to be held
and, in the case of any special meeting, shall indicate briefly the purpose
or purposes thereof. The Board of Directors of the Company shall have the
power to close the transfer books of the Company for a period not exceeding
seventy days preceding the date of any meeting of shareholders or the date of
payment of any dividend or the date for the allotment of rights or the date
when any change or conversion or exchange of shares goes into effect. In
lieu, however, of closing the stock transfer books, the Board of Directors
may fix in advance a date, not exceeding seventy days preceding the dates of
the aforenamed occurrences, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, any such meeting and any
adjournment thereof, or entitled to receive payment of any such dividend or
to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of shares. In such case, such
shareholders, and only such shareholders as are shareholders of the Company
of record on the date of closing the transfer books or on the record date so
fixed, are entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the Company after
such date of closing of the transfer books or such record date so fixed. If
the Board of Directors shall not close the transfer books or set a record
date for the determination of the shareholders entitled to notice of, and to
vote at, a meeting of shareholders, only the shareholders who are
shareholders of record at the close of business
<PAGE> 3
on the 20th day preceding the date of the meeting are entitled to notice of,
and to vote at, the meeting and any adjournment of the meeting.
Section 5. List of Voters. A complete list of all shareholders
--------------
entitled to vote at any annual and special meeting of the Company's
shareholders is to be compiled at least ten days before such meeting by the
officer or agent having charge of the transfer books for shares of stock of
the Company. Such list is to be compiled in alphabetical order with the
address and the number of shares held by each shareholder. The list must be
kept on file in the registered office of the Company for a period of at least
ten days prior to such meeting and must be open to inspection by any
shareholder for such period during usual business hours. Such list must also
be present and kept open at the time and place of such meeting and is subject
to the inspection of any shareholder during such meeting. The original share
ledger or transfer book, or a duplicate thereof kept in Missouri, is prima
facie evidence as to who are the shareholders of the Company entitled to
examine such list or share ledger or transfer book, or to vote at any meeting
of shareholders. Failure to comply with the requirements of this section
does not affect the validity of any action taken at such meeting.
Section 6. Quorum. A majority of the outstanding shares entitled to
------
notice of and to vote at a meeting, present in person or by proxy conforming
to Section 9 of this Article I, shall constitute a quorum for the transaction
of any business coming before any regular or special meeting of the Company
duly and properly called, except as provided by law, the Amended and Restated
Charter and Articles of Incorporation of the Company, or these By-Laws. If,
however, such quorum of shareholders shall not be present or represented at
any meeting of the Company, the shareholders entitled to vote thereat,
present in person or by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until
requisite number of shareholders shall be present. At any such adjourned
meeting at which the requisite number of shareholders shall be represented
any business may be transacted which might have been transacted at the
meeting as originally notified.
Section 7. Voting Rights. Each outstanding share of stock shall be
-------------
entitled to one vote upon each matter submitted to a vote at any annual or
special meeting of the Company.
Section 8. Inspectors of Election. At every meeting of the Company,
----------------------
the President shall appoint not less than two persons, who are not Directors,
inspectors to receive and canvass the votes given at the meeting, and certify
the result to him. At the next meeting of the Board of Directors held
thereafter, the President shall lay before the Board the returns so
certified, and thereupon such proceedings shall be had as the subject-matter
decided by the election or the vote may require. Each such inspector, before
he shall enter on the duties of his office, shall take and subscribe the
following oath before any officer authorized by law to administer oaths: "I
do solemnly swear that I will execute the duties of an inspector of the
election now to be held with strict impartiality and according to the best of
my ability."
Section 9. Voting by Proxy. Every person legally entitled to vote as
---------------
a shareholder at any election, or on any question relating to the management
or business of the Company may cast such vote by proxy; but said proxy shall
be a shareholder of the Company otherwise entitled to vote, and the authority
to cast such vote
<PAGE> 4
shall be in writing and shall state the name of the person authorized to cast
such vote and the date of the meeting at which such vote shall be cast. In
no event shall a proxy be valid for more than one annual or special meeting,
as the case may be.
Section 10. Voting of Shares by Certain Holders.
-----------------------------------
(a) Shares of stock in the name of another corporation, foreign
or domestic, are to be voted by such officer, agent, or proxy as the bylaws
of such corporation may prescribe, or in the absence of such provision, as
the Board of Directors of such corporation may determine.
(b) Shares of stock in the name of a deceased person are to be
voted by his executor or administrator in person or by proxy.
(c) Shares of stock in the name of a fiduciary, such as
guardian, curator, or trustee are to be voted by such fiduciary either in
person or by proxy provided the books of the Company show the stock to be in
the name of such fiduciary in such capacity.
(d) Shares of stock in the name of a receiver are to be voted
by such receiver, and shares held by, or in the control of, a receiver are to
be voted by such receiver without the transfer thereof into his name, if such
voting authority is contained in an appropriate order of the court by which
such receiver was appointed.
(e) Shares of stock which have been pledged are to be voted by
the pledgor until the shares of stock have been transferred into the name of
the pledgee, and thereafter, the pledgee is entitled to vote the shares so
transferred.
Section 11. Informal Action by Unanimous Consent of Shareholders. Any
----------------------------------------------------
action required by law to be taken at a meeting of the shareholders of the
Company, or any action which may be taken at a meeting of the shareholders,
may be taken without a meeting if all of the shareholders entitled to vote
with respect to the subject matter thereof sign written consents that set
forth the action so taken. Such consents have the same force and effect as a
unanimous vote of the shareholders at a meeting duly held, and may be stated
as such in any certificate or document filed with the Secretary of State of
the State of Missouri or any other state in the United States of America or
other Country. The Secretary of the Company shall file such consents with
the minutes of the meetings of the shareholders of the Company.
Section 12. Shareholder Proposals and Director Nominations. (a) All
----------------------------------------------
shareholder proposals and Director nominations that have not been proposed,
adopted, or ratified by the Company's Board of Directors must be submitted by
certified mail to, and received by, the Company's Secretary no later than
sixty (60) days prior to the date of meeting at which the proposal or
nomination is to be voted upon by the shareholders. All such proposals must
be accompanied by: (i) the proponent's name, address, and telephone number;
(ii) a brief narrative that describes in sufficient detail the purpose and
the anticipated costs and benefits of the proposal; and (iii) the financial
interests, if any, of the proponent in the proposal. All such Director
nominations must be accompanied by the nominee's biographical, background,
and related information as required by federal securities laws in the
solicitation of proxies for the election of directors, as if proxies were
being solicited for the election of the nominee under the federal securities
laws. In addition, all such shareholder proposals and Director nominations
must be accompanied by: (i) a list of shareholders that have signed written
consents
<PAGE> 5
in support of the proposal or Director nomination; (ii) an affidavit
attesting that the list of shareholders is accurate and that each person on
the list has submitted a signed written consent in favor of the proposal or
nomination; and (iii) copies of the written consents. The list must contain
at least five percent (5%) of the shares eligible to vote on the proposal or
nomination. The Secretary shall examine the list and written consents in
order to satisfy himself or herself of the validity and level of shareholder
support. If the Secretary determines that the proposal or nomination is
supported by less than five percent (5%) of the Company's shares eligible to
vote, then this requirement will not be met.
(b) All costs associated with complying with this Section 12 of
the Bylaws shall be borne by the proponent of the proposal or nomination.
Shareholder proposals and Director nominations that have not been proposed,
adopted, or ratified by the Company's Board of Directors, and that fail to
comply fully with each of the requirements set forth in this Section 12 of
the Bylaws shall be considered void and of no effect, and shall not be
presented to the shareholders for consideration or vote.
ARTICLE II
Board of Directors
Section 1. Number and Term of Office. The property and the business
-------------------------
of the Company shall be managed by its Board of Directors, at least nine and
not more than fifteen in number, at least one of whom shall be a citizen and
resident of the State of Missouri. Directors will be elected by class so as
to equalize as nearly as possible the number in each class of Directors.
There shall be three classes of Directors, each class serving for a three
year term expiring one year after expiration of the term of the immediately
preceding class (effective at the annual meeting of the Company for the year
in which the term expires), so that the term of one class will expire each
year. All Directors shall serve during the term for which they were elected
or until their successors are duly elected and qualified, except that if any
Director shall fail to attend at least two meetings (either regular or
special) of the Board of Directors during a calendar year, he may be deemed
to have resigned as a Director effective on December 31 of such year, and the
vacancy so created shall be filled by the Board of Directors in the manner
provided in Section 2 of Article II of these By-Laws. Nothing in these
By-Laws shall be interpreted to prevent a Director or Officer whose term is
expiring from being eligible for re-election or reappointment.
Section 2. Filling of Vacancies. Vacancies in the Board of Directors
--------------------
when not filled by shareholders may be filled by the Directors, as provided
for in Article VI of the Amended and Restated Charter and Articles of
Incorporation. Vacancies occasioned by death, resignation, or
disqualification, when filled, shall be filled for the unexpired term for
which such Director was elected. Any Director elected by the Board to fill
such a vacancy shall have the same qualifications required of the Director
whose seat he fills.
Section 3. Place of Meeting, etc. The Board of Directors may hold
---------------------
their meetings and have one or more offices, and keep the books of the
Company, except as otherwise required by law, at the office of the Company,
in the City of St. Louis, Missouri, or at such other place or places as they
may from time to time by resolution determine.
<PAGE> 6
Section 4. Regular Meetings. Regular meetings of the Board of
----------------
Directors shall be held on the Thursday following the fourth Tuesday of
January, on the fourth Thursday of February, April, July, October, and on the
third Thursday of December in each year and shall commence immediately after
the meeting of the Board of Directors of General American Mutual Holding
Company shall have been concluded, or at such time or times of day as the
Board may determine.
Section 5. Special Meetings. Special meetings of the Board of
----------------
Directors may be called by the President on three days' notice to each
Director specifying the time and place of such meeting, which notice may be
given, either personally or by mail or by facsimile addressed to the
Director; and shall be called by the Secretary in like manner and on like
notice on the written request of any five Directors. Every special meeting
shall be held either at the office of the Company in the City of St. Louis,
Missouri, or at some other place which shall have been previously designated
by resolution of the Board as one of the places at which special meetings of
the Board may be held. Except as herein otherwise provided, or unless
otherwise indicated in the notice thereof, any business may be transacted at
any special meeting, and any business may be transacted at any meeting at
which every Director shall be present, even though without any notice.
Section 6. Quorum. At all meetings of the Board of Directors, a
------
majority of the Directors then in office shall be necessary and sufficient to
constitute a quorum for the transaction of business, but if, at any meeting,
less than a quorum shall be present, a majority of those present may adjourn
the meeting from time to time, and the act of a majority of the Directors
present at any meeting at which there is a quorum shall be the act of the
Board of Directors, except as may be otherwise specifically provided by
statute or by the Amended and Restated Charter and Articles of Incorporation
of the Company or by these By-laws.
Section 7. Compensation of Directors. Members of the Board of
-------------------------
Directors, who are not salaried officers of the Company, shall receive such
annual compensation as shall be fixed from time to time by resolution of the
Board of Directors; and, in addition, the Directors who are not salaried
officers of the Company shall receive a sum in such amount as shall be fixed
from time to time by resolution of the Board of Directors, and the expenses
of attendance, if any, for attendance at each regular or special meeting of
the Board, whether or not an adjournment be had because of the absence of a
quorum.
Section 8. Action by Unanimous Consent of Directors. If all the
----------------------------------------
Directors severally or collectively consent in writing to any action taken or
to be taken by the Directors, such consents have the same force and effect as
a unanimous vote of the Directors at a meeting duly held, and may be stated
as such in any certificate or document filed with the Secretary of State of
the State of Missouri or any other state in the United States of America or
other Country. The Secretary of the Company shall file such consents with
the minutes of the meetings of the Board of Directors.
ARTICLE III
Executive Committee; Other Committees
Section 1. Executive Committee, Powers. The Chief Executive Officer
---------------------------
of the Company may, subject to the approval of the Board of Directors,
appoint an Executive Committee to consist of himself, the President of the
Company, whether or not he is the Chief Executive Officer, the elected
Chairman of the
<PAGE> 7
Executive Committee, if any, and five other Directors. The Committee shall
have and exercise any or all of the powers of the Board of Directors in the
management of the business and affairs of the Company, and the action of the
Chief Executive Officer and any three other members of said Committee shall
for all purposes be and be deemed to be the action of the Executive Committee
whether or not the other members thereof shall have had notice of such action
or of the meeting at which such action shall have been taken.
The Chief Executive Officer may, for the purpose of completing a
quorum, or to obtain the benefit of the advice and judgment of any Director
or Directors, invite any Director or Directors not a member or members of the
Executive Committee to attend any meeting of the Committee and each Director
so invited shall at such meeting have all the powers and authority of a
member of the Committee, including the right to vote.
Section 2. Term of Office. The members of the Executive Committee
--------------
shall hold office until the meeting of the Board of Directors next following
the annual meeting of the Company after their appointment, and until their
successors are appointed, but any member of the Executive Committee ceasing
to be a Director shall forthwith cease to be a member of the Executive
Committee, and all or any of the members of the Executive Committee may be
removed at any time by a majority vote of the Board of Directors.
Section 3. Organization. The Chairman of the Executive Committee, if
------------
any, shall preside at its meetings but in the absence of the Chairman of the
Executive Committee, the President shall preside. In all other matters the
Executive Committee shall fix its own rules of procedure and shall meet where
and as provided by such rules.
Section 4. Quorum. At all meetings of the Executive Committee four
------
Directors shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the affirmative vote of four of the regular or
acting members of the Committee in all cases shall be necessary for its
adoption of any resolution. Any resolution adopted by the affirmative vote
of a majority of the regular or acting members of the Executive Committee and
any action taken by such majority shall for all purposes be deemed to be the
act of said Committee, whether or not such vote be had or action taken at a
meeting duly called and held in conformity with these By-laws or with any
rules of procedure adopted by the Committee.
Section 5. Contracts. Any member of the Executive Committee, or of
---------
any other Committee of the Board of Directors, individually, may be a party
to, or may be interested in any contract or transaction of the Company;
provided that such contract or transaction shall be approved or ratified by
the affirmative vote of a majority of the members of such Committee not so
interested (if such majority shall be sufficient to constitute a quorum); and
no such Committee member shall be liable or responsible on account of such
contract or transaction, but the mere ownership of stock in another
corporation by any Director (whether or not a member of the Executive
Committee or of any other Committee of the Board of Directors), shall not
disqualify him to vote as a Director, or as a member of said Committee, in
respect of any transaction between the Company and such other corporation.
Section 6. Minutes. The minutes of all proceedings of the Executive
-------
Committee shall be entered in a book kept for that purpose.
<PAGE> 8
Section 7. Other Committees. The Chief Executive Officer of the
----------------
Company may appoint a Compensation Committee to consist of himself and not
less than two other officers of the Company which, to the extent provided by
resolution or resolutions passed by a majority of the Board of Directors,
shall have and exercise the powers of the Board of Directors in compensation
matters. Further, the Board of Directors may, by resolution or resolutions
passed by a majority of the whole Board, designate one or more committees,
each committee to consist of three or more of the Directors of the Company
which, to the extent provided in said resolution or resolutions, shall have
and may exercise the powers of the Board of Directors in the management of
the business and affairs of the Company and may have power to authorize the
seal of the Company to be affixed to all papers which may require it. Each
such committee shall have such name as may be determined from time to time by
resolution adopted by the Board of Directors.
Section 8. Compensation. Members of the Executive Committee, who are
------------
not salaried officers of the Company, shall receive such annual compensation
as shall be fixed from time to time by resolution of the Board of Directors;
and members of the Executive Committee, and of any other committee or
committees of the Board of Directors, including Directors invited by the
Chairman or President to sit thereon at any meeting, except salaried officers
of the Company, may be allowed such additional sum, and the expenses of
attendance, if any, as shall be fixed from time to time by resolution of the
Board of Directors for attendance at each meeting of any committee specified
in any such resolution, whether or not an adjournment be had because of the
absence of a quorum.
ARTICLE IV
Advisory Council
Section 1. Advisory Council. Subject to the approval of the Board of
----------------
Directors, the President may appoint annually an Advisory Council to consist
of not more than five members.
Section 2. Term. The members of the Advisory Council shall be
----
appointed for a term of not to exceed one year, the term expiring on the date
of each annual meeting, and all or any of the members of the Advisory Council
may be removed at any time by a majority vote of the Board of Directors.
Section 3. Organization. The Board of Directors shall each year
------------
select a Chairman of the Advisory Council; otherwise the Advisory Council
shall fix its own rules of procedure and shall meet where and as provided by
such rules.
Section 4. Duties. The duties and functions of the Advisory Council
------
shall be advisory only, the purpose of such Council being to secure the
advice of capable and competent people interested in the Company and its
affairs for the benefit of the Board of Directors and officers of the Company
in transacting the business of the Company.
Section 5. Quorum. At all meetings of the Advisory Council, a
------
majority of those then appointed shall constitute a quorum for the
transaction of business.
Section 6. Chairman. The Chairman of the Advisory Council shall be
--------
invited by the President to attend all meetings of the Board and he shall
receive the same compensation as then prevails as the compensation for
<PAGE> 9
Directors. On the date of his attendance at any such Directors' meeting, if
there be an Executive Committee meeting or meetings, then the Chairman of the
Advisory Council shall be invited to attend such Executive Committee meeting
or meetings and shall receive such attendance fees as are then provided for
the members of the Executive Committee.
ARTICLE V
Officers
Section 1. Officers. The officers of the Company shall be chosen by
--------
the Board of Directors and shall be a Chairman of the Board, unless the Board
of Directors desires the duties of the Chairman of the Board to devolve upon
the President, a Chairman of the Executive Committee, a President, one or
more Executive Vice-Presidents, as deemed necessary, one or more Vice-
Presidents, a Secretary, one or more Assistant Secretaries, an Actuary, a
Medical Director, General Counsel, Treasurer, and such other officers as the
Board of Directors may deem advisable, who shall have such authority and
perform such duties as from time to time may be prescribed by the Board of
Directors, or, in the event of their failure so to prescribe, then by the
President. The Chairman of the Board, the Chairman of the Executive
Committee and the President shall be chosen from among the Directors and
other officers may, but need not, be Directors. All such officers shall be
elected by the Board of Directors at the regular meeting of the Board held
after each annual meeting of the shareholders. One person may hold more than
one office except that no one person shall hold the offices of President and
Secretary and no one person shall hold the offices of Chairman of the Board
and Secretary.
Section 2. Chairman of the Board. The Chairman of the Board or the
---------------------
President, if it is the desire of the Board of Directors that the duties of
the Chairman of the Board devolve upon him, shall preside at all meetings of
the Board of Directors. The Chairman of the Board shall have such other
duties as may from time to time be provided by a resolution or resolutions of
the Board of Directors and he may be designated as the Chief Executive
Officer of the Company if the Board of Directors shall so determine.
Section 2A. Chairman of the Executive Committee. The Chairman of the
-----------------------------------
Executive Committee, if any, otherwise the President, shall preside at all
meetings of the Executive Committee. In the absence of the Chairman of the
Executive Committee, the President shall preside. The Chairman of the
Executive Committee shall have such other duties as may from time to time be
provided by resolution or resolutions of the Board of Directors.
Section 2B. Chief Executive Officer. Either the Chairman of the Board
-----------------------
of Directors or the President shall be designated the Chief Executive Officer
of the Company and such designation shall be made by the Board of Directors
by a resolution or resolutions adopted from time to time.
The Chief Executive Officer shall have general charge and control of
all of its business and affairs and shall preside at all meetings of the
Company. He shall be ex-officio a member of all committees of the Board of
Directors and he shall from time to time secure information concerning the
business and affairs of the Company and shall promptly lay such information
before the Board of Directors or any of its committees authorized for such
purpose.
The Chairman of the Board, when he is the Chief Executive Officer of
the Company, shall exercise all powers and duties otherwise specifically
delegated
<PAGE> 10
in these By-laws to the President of the Company, provided that in the
absence of the Chairman of the Board of Directors his duties and
responsibilities as Chief Executive Officer of the Company shall devolve upon
the President, as provided for in Article V, Section 3 of these By-laws,
notwithstanding the provisions of Article V, Section 4 of these By-laws, as
amended, and provided further that the President of the Company, regardless
of whether he is the Chief Executive Officer, the Chairman of the Board, if
he is the Chief Executive Officer, an Executive Vice-President or a Vice-
President may sign contracts with the Secretary in the name of the Company,
as authorized in Article V, Section 6 of these By-laws.
Section 3. President. The President may be designated as the Chief
---------
Executive Officer of the Company if the Board of Directors shall so
determine.
If he is not designated as Chief Executive Officer, the President shall
perform such duties as may from time to time be assigned to him by resolution
of the Board of Directors or of the Executive Committee or by the Chairman of
the Board. In the absence of the Chairman of the Board of Directors his
duties and responsibilities as Chief Executive Officer of the Company shall
devolve upon the President.
Section 4. Executive Vice-Presidents. Each Executive Vice-President
-------------------------
shall perform such duties as may from time to time be assigned to him by
resolution of the Board of Directors or of the Executive Committee or by the
Chief Executive Officer of the Company or by the President of the Company.
In the absence of the President, his duties should devolve upon the Executive
Vice-Presidents.
Section 5. Vice-Presidents. Each Vice-President shall perform such
---------------
duties as may from time to time be assigned to him by resolution of the Board
of Directors or of the Executive Committee or by the President.
Section 6. Secretary. The Secretary shall keep the minutes of all
---------
meetings of the Board of Directors and the minutes of all meetings of the
Company in books provided for that purpose; he shall attend to the giving or
serving of all notices of the Company; he may sign with the President, an
Executive Vice-President, or a Vice-President, in the name of the Company,
all contracts authorized by the Board of Directors or by any Committee of the
Company, having the requisite authority and, when so ordered by the Board of
Directors or such Committee, he shall affix the seal of the Company thereto;
he shall have charge of such books and papers as the Board of Directors or
the Executive Committee shall direct, all of which shall at all reasonable
times be open to the examination of any Director, upon application at the
office of the Company during business hours; and he shall in general perform
all the duties incident to the office of the Secretary, subject to the
control of the Board of Directors, the Executive Committee, the Chairman of
the Board, and the President.
Section 7. Compensation of Officers. The President and the other
------------------------
officers of the Company shall be entitled to receive such compensation for
their services as may from time to time be determined by the Board of
Directors.
Section 8. Removal of Officers. The President, subject to the
-------------------
approval of the Board of Directors, may at any time remove any of the
officers of the Company and the salary of any officer so removed by him shall
cease upon the approval of such removal being given by the Board. Except
where otherwise
<PAGE> 11
expressly provided in a contract duly authorized by the Board of Directors,
all officers and agents shall be subject to removal at any time by the
affirmative vote of a majority of the whole Board of Directors, and all
officers, agents, and employees other than officers appointed by the Board of
Directors shall hold office at the discretion of the Committee or of the
officers appointing them.
Section 9. Offices to Be Kept in Missouri. The Chairman of the Board,
------------------------------
when he is the Chief Executive Officer, the President, the Executive Vice-
Presidents, the Treasurer, and the Secretary of the Company shall have and
keep their offices in this State.
Section 10. Other Employees. Except as hereinbefore provided, the
---------------
President shall have full power to appoint, remove, and fix the compensation
of each and every person employed by the Company.
<PAGE> 12
ARTICLE VI
Indemnification of Officers and Directors
Against Liabilities and Expenses
Section 1. Indemnification with Respect to Third Party Actions. The
---------------------------------------------------
Company shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the Company) by reason of the fact that
he is or was a director, officer, employee, or agent of the Company, or is or
was serving at the request of the Company as a director, officer, employee,
partner, trustee or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, taxes, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
----
contendere or its equivalent, does not, of itself, create a presumption that
- ----------
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Company, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful. Any indemnification under this
Section 1 is to be made by the Company only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee, partner, trustee, or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in this Section 1.
Such determination is to be made (a) by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit, or proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or (c) by the shareholders.
Section 2. Indemnification with Respect to Actions by or in the Right
----------------------------------------------------------
of the Company. The Company shall indemnify any person who was or is a party
- --------------
or is threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the Company to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee,
or agent of the Company, or is or was serving at the request of the Company
as a director, officer, employee, partner, trustee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees), judgments, fines, taxes, and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company. No indemnification, however, shall be made in respect of any claim,
issue or matter as to which such person has been adjudged to be liable for
gross negligence or willful misconduct in the performance of his duty to the
Company unless and only to the extent that the court in which such action or
suit was brought determines upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
deems proper. Any indemnification under this Section 2 (unless ordered by a
court) is to be made by the Company only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee,
<PAGE> 13
partner, trustee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in this Section 2. Such
determination is to be made (a) by the Board of Directors by a majority vote
of a quorum consisting of Directors who were not parties to such action,
suit, or proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or (c) by the shareholders.
Section 3. Payment of Expenses in Advance of Disposition of Action.
-------------------------------------------------------
Expenses incurred in defending any actual or threatened civil or criminal
action, suit, or proceeding shall be paid by the Company in advance of the
final disposition of such action, suit, or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or
on behalf of the Director, officer, employee, partner, trustee, or agent to
repay such amount if it is ultimately determined that he is not entitled to
be indemnified by the Company as authorized in this Article.
Section 4. Indemnification Provided in This Article Non-Exclusive.
------------------------------------------------------
The indemnification provided by this Article is not exclusive of any other
rights to which one seeking indemnification may be entitled under any By-law,
agreement, vote of shareholders or disinterested Directors, or otherwise,
both as to action in his official capacity while holding such office, and as
to a person who has ceased to be a Director, officer, employee, partner,
trustee, or agent and the indemnification inures to the benefit of the heirs,
executors, and administrators of such a person.
Section 5. Definition of "Company". For the purposes of this Article,
-----------------------
references to the "Company" include all constituent corporations absorbed in
a consolidation or merger as well as the resulting or surviving corporation
so that any person who is or was a director, officer, employee, partner,
trustee, or agent of such a constituent corporation or is or was serving at
the request of such constituent corporation as a director, officer, employee,
partner, trustee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise stands in the same position under the
provisions of this Article with respect to the resulting or surviving
corporation in the same capacity.
ARTICLE VII
Miscellaneous Provisions
Section 1. Corporate Seal. The Board of Directors shall provide a
--------------
suitable seal, containing the name of the Company, the year of its
incorporation and the words CORPORATE SEAL, MISSOURI, which seal shall be in
charge of the Secretary. Such seal may from time to time, upon the order of
the Board of Directors, expressed by a resolution of said Board, be used by
causing a facsimile thereof to be impressed, affixed, or reproduced. If and
when so directed by the Board of Directors, a duplicate of the seal may be
kept and be used by any Assistant Secretary or other officer.
Section 2. Fiscal Year. The fiscal year of the Company shall begin on
-----------
the first day of January and terminate on the thirty-first day of December in
each year.
Section 3. Manner of Giving Notice. Whenever under the provisions of
-----------------------
these By-laws notice is required to be given to any Director or shareholder,
it shall not be construed to mean personal notice, but such notice may be
given in writing, by mail, by depositing the same in a postoffice or letter
box, in a
<PAGE> 14
post-paid sealed wrapper, addressed to such Director or shareholder at his
address as it appears on the records of the Company, and such notice shall be
deemed to be given at the time when the same shall be thus mailed. Any
shareholder of the Company, Director, officer or committee member may waive
any notice required to be given under these By-laws. Whenever in the
Company's Amended and Restated Charter and Articles of Incorporation or these
By-laws notice is required or permitted to be given by mail, the affidavit of
the person who mailed such notice, filed with the Secretary of the Company,
shall constitute conclusive evidence that such notice has been given and
mailed.
Section 4. Certificates for Shares. The Board of Directors is to
-----------------------
prescribe the form of the certificate of stock of the Company. The
certificate is to be signed by the President or Vice-President and by the
Secretary, Treasurer, or Assistant Secretary or Assistant Treasurer, is to be
sealed with the seal of the Company and is to be numbered consecutively. The
name of the owner of the certificate, the number of shares of stock
represented thereby, and the date of issue are to be recorded on the books of
the Company. Certificates of stock surrendered to the Company for transfer
are to be canceled, and new certificates of stock representing the
transferred shares issued. New stock certificates may be issued to replace
lost, destroyed or mutilated certificates upon such terms and with such
security to the Company as the Board of Directors may require.
Section 5. Transfer of Shares. Shares of stock of the Company may be
------------------
transferred on the books of the Company by the delivery of the certificates
representing such shares to the Company for cancellation, and with an
assignment in writing on the back of the certificate executed by the person
named in the certificates as the owner thereof, or by a written power of
attorney executed for such purpose by such person. The person registered on
the books of the Company as the owner of shares of stock of the Company is
deemed the owner thereof and is entitled to all rights of ownership with
respect to such shares.
Section 6. Transfer Books. Transfer books are to be maintained under
--------------
the direction of the Secretary, showing the ownership and transfer of all
certificates of stock issued by the Company.
Section 7. Construction. Whenever a word in the masculine gender is
------------
used in these By-laws it shall be understood to be in or include the feminine
gender where appropriate under the circumstances. These By-laws are to be
construed to be consistent with applicable law, and if such construction is
not possible then the invalidity of a By-law or a portion thereof shall not
affect the validity of the remainder of the By-laws, which shall remain in
full force and effect.
ARTICLE VIII
Amendments
These By-laws may be altered, amended or repealed, or new By-laws may
be adopted, by vote of a majority of all of the members of the Board of
Directors then in office, at any regular or special meeting of the Board;
provided, no By-law may be adopted or amended so as to be inconsistent with
the Amended and Restated Charter and Articles of Incorporation of the Company
or the Constitution or other laws of the State of Missouri.
Amendments:
<PAGE> 15
Article I, Section 12 added by amendment on 1/29/98
gabylaw
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - S&P 500 Index
<NUMBER> 1
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 17,073
<INVESTMENTS-AT-VALUE> 20,582
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,582
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 4
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 522
<SHARES-COMMON-PRIOR> 488
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 20,578
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (125)
<NET-INVESTMENT-INCOME> (125)
<REALIZED-GAINS-CURRENT> 2,484
<APPREC-INCREASE-CURRENT> 1,527
<NET-CHANGE-FROM-OPS> 3,886
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,095
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Money Market
<NUMBER> 2
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 8,674
<INVESTMENTS-AT-VALUE> 8,600
<RECEIVABLES> 716
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,316
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 472
<SHARES-COMMON-PRIOR> 476
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 9,316
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (36)
<NET-INVESTMENT-INCOME> (36)
<REALIZED-GAINS-CURRENT> 73
<APPREC-INCREASE-CURRENT> 184
<NET-CHANGE-FROM-OPS> 221
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,154
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Bond Index
<NUMBER> 3
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 3,434
<INVESTMENTS-AT-VALUE> 3,450
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,450
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2
<TOTAL-LIABILITIES> 2
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 149
<SHARES-COMMON-PRIOR> 319
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,448
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (23)
<NET-INVESTMENT-INCOME> (23)
<REALIZED-GAINS-CURRENT> (10)
<APPREC-INCREASE-CURRENT> 250
<NET-CHANGE-FROM-OPS> 217
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (3,315)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Managed Equity
<NUMBER> 4
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 3,757
<INVESTMENTS-AT-VALUE> 4,242
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,242
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7
<TOTAL-LIABILITIES> 7
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 136
<SHARES-COMMON-PRIOR> 110
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,235
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (29)
<NET-INVESTMENT-INCOME> (29)
<REALIZED-GAINS-CURRENT> 347
<APPREC-INCREASE-CURRENT> 368
<NET-CHANGE-FROM-OPS> 686
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,465
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Asset Allocation
<NUMBER> 5
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 8,720
<INVESTMENTS-AT-VALUE> 10,482
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,482
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6
<TOTAL-LIABILITIES> 6
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 329
<SHARES-COMMON-PRIOR> 300
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10,476
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (80)
<NET-INVESTMENT-INCOME> (80)
<REALIZED-GAINS-CURRENT> 507
<APPREC-INCREASE-CURRENT> 1,105
<NET-CHANGE-FROM-OPS> 1,532
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,442
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - International Equity
<NUMBER> 6
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 7,798
<INVESTMENTS-AT-VALUE> 7,867
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,867
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3
<TOTAL-LIABILITIES> 3
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 474
<SHARES-COMMON-PRIOR> 419
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,864
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (63)
<NET-INVESTMENT-INCOME> (63)
<REALIZED-GAINS-CURRENT> 357
<APPREC-INCREASE-CURRENT> (199)
<NET-CHANGE-FROM-OPS> 95
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,075
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Mid-Cap Equity
<NUMBER> 7
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 5,263
<INVESTMENTS-AT-VALUE> 6,233
<RECEIVABLES> 2
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,235
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 282
<SHARES-COMMON-PRIOR> 249
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 6,235
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (41)
<NET-INVESTMENT-INCOME> (41)
<REALIZED-GAINS-CURRENT> 452
<APPREC-INCREASE-CURRENT> 945
<NET-CHANGE-FROM-OPS> 1,356
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,150
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Small-Cap Equity
<NUMBER> 8
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,277
<INVESTMENTS-AT-VALUE> 1,144
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,144
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 24
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,144
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (2)
<NET-INVESTMENT-INCOME> (2)
<REALIZED-GAINS-CURRENT> 150
<APPREC-INCREASE-CURRENT> (133)
<NET-CHANGE-FROM-OPS> 15
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,144
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Equity Income
<NUMBER> 9
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 13,671
<INVESTMENTS-AT-VALUE> 17,001
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,001
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5
<TOTAL-LIABILITIES> 5
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 700
<SHARES-COMMON-PRIOR> 491
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 16,996
<DIVIDEND-INCOME> 187
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (111)
<NET-INVESTMENT-INCOME> 76
<REALIZED-GAINS-CURRENT> 1,249
<APPREC-INCREASE-CURRENT> 1,802
<NET-CHANGE-FROM-OPS> 3,127
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,643
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Growth
<NUMBER> 10
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 17,509
<INVESTMENTS-AT-VALUE> 22,238
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22,238
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9
<TOTAL-LIABILITIES> 9
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 599
<SHARES-COMMON-PRIOR> 429
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 22,229
<DIVIDEND-INCOME> 94
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (145)
<NET-INVESTMENT-INCOME> (51)
<REALIZED-GAINS-CURRENT> 802
<APPREC-INCREASE-CURRENT> 2,689
<NET-CHANGE-FROM-OPS> 3,440
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,858
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Overseas
<NUMBER> 11
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 7,473
<INVESTMENTS-AT-VALUE> 8,175
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,175
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 4
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 426
<SHARES-COMMON-PRIOR> 289
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8,171
<DIVIDEND-INCOME> 99
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (57)
<NET-INVESTMENT-INCOME> 42
<REALIZED-GAINS-CURRENT> 466
<APPREC-INCREASE-CURRENT> 63
<NET-CHANGE-FROM-OPS> 571
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,726
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Asset Manager
<NUMBER> 12
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 524
<INVESTMENTS-AT-VALUE> 578
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 578
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 32
<SHARES-COMMON-PRIOR> 16
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 578
<DIVIDEND-INCOME> 9
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (3)
<NET-INVESTMENT-INCOME> 6
<REALIZED-GAINS-CURRENT> 34
<APPREC-INCREASE-CURRENT> 34
<NET-CHANGE-FROM-OPS> 74
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 301
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - High Income
<NUMBER> 13
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,954
<INVESTMENTS-AT-VALUE> 2,175
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,175
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2
<TOTAL-LIABILITIES> 2
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 160
<SHARES-COMMON-PRIOR> 95
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,173
<DIVIDEND-INCOME> 91
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (14)
<NET-INVESTMENT-INCOME> 77
<REALIZED-GAINS-CURRENT> 29
<APPREC-INCREASE-CURRENT> 164
<NET-CHANGE-FROM-OPS> 270
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 982
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Worldwide Hard Assets
<NUMBER> 14
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 281
<INVESTMENTS-AT-VALUE> 270
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 270
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 17
<SHARES-COMMON-PRIOR> 11
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 270
<DIVIDEND-INCOME> 4
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (2)
<NET-INVESTMENT-INCOME> 2
<REALIZED-GAINS-CURRENT> 3
<APPREC-INCREASE-CURRENT> (14)
<NET-CHANGE-FROM-OPS> (9)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 83
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Multi-Style Equity
<NUMBER> 15
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 2,537
<INVESTMENTS-AT-VALUE> 2,538
<RECEIVABLES> 1
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,539
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 199
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,539
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (3)
<NET-INVESTMENT-INCOME> (2)
<REALIZED-GAINS-CURRENT> 5
<APPREC-INCREASE-CURRENT> 2
<NET-CHANGE-FROM-OPS> 5
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,539
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Core Bond
<NUMBER> 16
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,126
<INVESTMENTS-AT-VALUE> 1,154
<RECEIVABLES> 1
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,155
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 110
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,155
<DIVIDEND-INCOME> 3
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (2)
<NET-INVESTMENT-INCOME> 1
<REALIZED-GAINS-CURRENT> 1
<APPREC-INCREASE-CURRENT> 27
<NET-CHANGE-FROM-OPS> 29
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,154
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Aggressive Equity
<NUMBER> 17
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,321
<INVESTMENTS-AT-VALUE> 1,344
<RECEIVABLES> 1
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,345
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 100
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,345
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (1)
<NET-INVESTMENT-INCOME> (1)
<REALIZED-GAINS-CURRENT> 2
<APPREC-INCREASE-CURRENT> 24
<NET-CHANGE-FROM-OPS> 25
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,345
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Sep. Acct. 11 - Non-US
<NUMBER> 18
<MULTIPLIER> 1000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 840
<INVESTMENTS-AT-VALUE> 783
<RECEIVABLES> 1
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 784
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 78
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 784
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (1)
<NET-INVESTMENT-INCOME> (1)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (57)
<NET-CHANGE-FROM-OPS> (58)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 784
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
