<PAGE>
As filed with the Securities and Exchange Commission on
26 February 1999.
Registration No. 33-84104
811-4901
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 5
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
(Name of Depositor)
700 Market Street
St. Louis, MO 63101
(Complete Address of Depositor's Principal Executive Offices)
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, D.C. 20004-2404
<PAGE>
<PAGE>
It is proposed that this filing will become effective (check appropriate
space)
[ ] immediately upon filing pursuant to paragraph (b), of
Rule 485
[ ] on May 1, 1998, pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of
Rule 485
[ X ] on 1 May 1999, 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
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933. The notice required by such Rule for the
Registrant's most recent fiscal year will be filed prior to 1 April
1999.
<PAGE>
<PAGE>
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, Variable Insurance Products
Fund, Variable Insurance Products Fund
II, Van Eck Investment Trust; Charges
and Deductions; Policy Benefits; Policy
Rights; Voting Rights; General Matters
11. Summary; General American Capital
Company, Variable Insurance Products
Fund, Variable Insurance Products Fund
II, Van Eck Investment Trust
12. Summary; General American Capital
Company, Variable Insurance Products
Fund, Variable Insurance Products Fund
II, Van Eck Investment Trust
13. Summary; Charges and Deductions; General
American Capital Company, Variable
Insurance Products Fund, Variable
Insurance Products Fund II, Van Eck
Investment Trust
14. Summary; Payment and Allocation of
Premium
15. Payment and Allocation of Premium
16. Payment and Allocation of Premium;
General American Capital Company,
Variable Insurance Products Fund,
Variable Insurance Products Fund II,
Van Eck Investment Trust
17. Summary; Charges and Deductions; Policy
Rights; General American Capital
Company, Variable Insurance Products
Fund, Variable Insurance Products Fund
II, Van Eck Investment Trust
18. General American Capital Company,
Variable Insurance Products Fund,
Variable Insurance Products Fund II,
Van Eck Investment Trust; Payment and
Allocation of Premium
-i-
<PAGE>
<PAGE>
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
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. Not Applicable
41. The Company and the Separate Account;
Distribution of the Policies
42. Not Applicable
43. Not Applicable
44. Payment and Allocation of Premium
45. Not Applicable
46. Policy Rights
47. General American Capital Company,
Variable Insurance Products Fund,
Variable Insurance Products Fund II,
Van Eck Investment Trust
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
Premium
52. General American Capital Company,
Variable Insurance Products Fund,
Variable Insurance Products Fund II,
Van Eck Investment Trust
53. Federal Tax Matters
54. Not Applicable
55. Not Applicable
56. Not Required
57. Not Required
58. Not Required
59. Not Required
-ii-
<PAGE>
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 MARKET STREET
St. Louis, Missouri 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 and to provide maximum
flexibility to vary premium payments and change the level of death
benefits payable under the Policy. This flexibility allows you to
provide for changing insurance needs under a single insurance policy.
You also have the opportunity to allocate Net Premiums among several
investment portfolios with different investment objectives.
The Policy provides:
(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 before the Insured's Attained Age
100, the death benefit will be at least the current Face Amount of the
Policy. A Policy will remain in force as long as its Cash Surrender
Value is sufficient to pay the monthly charges.
After the end of the "Right to Examine Policy" period, you may allocate
the Net Premiums to one or more of the Divisions of General American
Separate Account Eleven ("the Separate Account") or, in some contracts,
to General American's General Account.
You will find a list of the Funds in the Separate Account, the fund
managers, and the investment objectives in the Summary on page 2. Note
that investment results in the Separate Account are not guaranteed --
you may either make money or lose money. Depending on investment
results, the policy could lapse or the death benefit could change.
The Prospectus of each Fund contains a full description of the Fund,
including the investment policies, restrictions, risks, and charges.
You should receive a Prospectus for each Fund along with this Prospectus
for the Policy.
In most policies you may also invest all or part of your cash value in
the General Account, which guarantees at least 4% interest.
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.
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 keep it for future reference.
The date of this prospectus is May 1, 1999. 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>
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
SUMMARY 1
DEFINITIONS 11
THE COMPANY AND THE SEPARATE ACCOUNT 16
The Company
The Separate Account
General American Capital Company
Russell Insurance Funds
American Century Variable Portfolios
J.P. Morgan Series Trust II
Variable Insurance Products Fund
Variable Insurance Products Fund II
Van Eck Worldwide Insurance Trust
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS 20
POLICY BENEFITS 21
Death Benefit
Cash Value
POLICY RIGHTS 25
Loans
Surrender and Partial Withdrawals
Transfers
Portfolio Rebalancing
Dollar Cost Averaging
Right to Examine Policy
Conversion Privilege
PAYMENT AND ALLOCATION OF PREMIUMS 31
Issuance of a Policy
Premiums
Allocation of Net Premiums and Cash Value
Policy Lapse and Reinstatement
CHARGES AND DEDUCTIONS 33
Premium Tax Charges
Monthly Deduction
Contingent Deferred Sales Charge
Separate Account Charges
DIVIDENDS 40
THE GENERAL ACCOUNT 41
General Description
The Policy
General Account Benefits
General Account Cash Value
Transfers, Surrenders, Partial Withdrawals, and Policy Loans
GENERAL MATTERS 43
Postponement of Payments from the Separate Account
The Contract
Control of Policy
Beneficiary
Change of Owner or Beneficiary
Policy Changes
Conformity with Statutes
Claims of Creditors
Incontestability
Assignment
Suicide
<PAGE>
<PAGE>
Misstatement of Age or Sex and Corrections
Additional Insurance Benefits
Records and Reports
DISTRIBUTION OF THE POLICIES 46
FEDERAL TAX MATTERS 46
Introduction
Tax Status of the Policy
UNISEX REQUIREMENTS UNDER MONTANA LAW 49
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS 49
VOTING RIGHTS 50
STATE REGULATION OF THE COMPANY 50
MANAGEMENT OF THE COMPANY 51
LEGAL MATTERS 54
LEGAL PROCEEDINGS 54
EXPERTS 54
ADDITIONAL INFORMATION 54
FINANCIAL STATEMENTS 54
APPENDIX A 55
Illustrations of Death Benefits and Cash Values
APPENDIX B 66
Target Premium Factors per Thousand of Face Amount
</TABLE>
<PAGE>
<PAGE>
SUMMARY
THROUGHOUT THIS SUMMARY, THE TERMS "YOU" AND "YOUR" REFER TO THE OWNER
OF THE POLICY. THE OWNER MAY OR MAY NOT BE THE PERSON INSURED UNDER THE
POLICY. THE TERMS "WE," "US," AND "OUR" REFER TO GENERAL AMERICAN LIFE
INSURANCE COMPANY.
THE INFORMATION IN THIS SECTION IS JUST A SUMMARY, WRITTEN IN "LAYMEN'S
TERMS" TO HELP YOU UNDERSTAND THE POLICY. HOWEVER, BOTH YOUR POLICY AND
THIS PROSPECTUS ARE LEGAL DOCUMENTS. IF YOU HAVE QUESTIONS ABOUT THEM,
YOU SHOULD CONTACT YOUR AGENT OR OTHER COMPETENT PROFESSIONAL ADVISERS.
IN PREPARING THIS SUMMARY, WE ASSUME THAT THE POLICY IS IN FORCE, AND
THAT YOU HAVE NOT BORROWED ANY OF THE CASH VALUE.
THE POLICY. You are purchasing a life insurance policy. Like many life
insurance policies, it has both a death benefit and a cash value. The
death benefit is the amount of money that we will pay to the beneficiary
if the person insured under the policy dies while the policy is in
force. The cash value is the amount of money accumulated in your policy
as an investment at any time. The cash value consists of the premiums
you have paid, reduced by the expenses deducted for operation of the
policy, and either increased or decreased by investment results.
You have certain rights, including the right to borrow or withdraw money
from the policy's cash value and the right to select the funds in which
you will invest your premiums.
You have the right to review the policy and decide whether you want to
keep it. If you decide not to keep the policy, you may return it to us
or to your agent during the "Right to Examine Policy Period." This
period is sometimes referred to as the "Free Look Period." It normally
ends on the later of:
1. twenty days after you receive the policy or
2. forty-five days after you signed the application.
In some states the period may be longer. Your agent can tell you if
this is the case.
During the "Right to Examine Policy Period" we will hold any premiums
you have paid in the money market fund. If you return the policy before
the end of the free look period, we will cancel the policy and return
any premiums you have paid. (For policies issued in Kansas, the rules
are different. Your agent can provide you with the details.) (See
Policy Rights - Right to Examine Policy.)
When the "Right to Examine Policy Period" ends, we will deduct any
charges due and transfer the rest of the money (your "net premium")
into the investment funds that you have selected. We will continue to
transfer future net premiums into the investments that you select as
soon as we receive the premiums.
The policy is a "flexible premium" policy. This means that you may,
within limits described below, make premium payments at any time and in
any amount you choose. You do not have to make premium payments
according to a fixed schedule, although you may choose to do so.
There are limits on the amount that you may pay into the policy without
creating tax consequences. If you make a premium payment that exceeds
the limit, we will notify you and offer to refund the excess paid.
We will deduct certain expenses from your cash value. These expenses
are described below. In addition, your cash value may increase or
decrease, depending on the investment experience of the funds you
select. Because it is possible for your cash value to decrease, you may
have to pay additional premiums in order to keep the policy in force.
As long as there is enough money in your cash value to pay the monthly
charges, your death benefit will always be at least the face amount of
your policy, minus any amount that you have borrowed from the policy.
The face amount of your policy means the amount of insurance that you
have purchased. It is shown on the specifications page of your policy.
We will notify you if your cash value is not enough to pay the monthly
charges. If that happens, you will have 62 days to make a premium
payment big enough to bring your cash value up to the amount required to
pay the charges. If you make the premium payment, the policy will stay
in force. If you don't, the policy will lapse, or terminate with no
value. (See Payment and Allocation of Premiums - Policy Lapse and
Reinstatement.)
INVESTING YOUR CASH VALUE. You may tell us to invest your cash value in
either the general account or the separate account, or you may split
your cash value between them.
THE GENERAL ACCOUNT. The general account is an interest-bearing
account. Money in the general account is guaranteed to earn at least 4%
interest, and it may earn more. General American determines the current
interest rate from time to time, and we will
1
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<PAGE>
notify you in advance of any changes. We have the right to limit the
amount of money that you may put into the general account.
THE SEPARATE ACCOUNT. The separate account consists of divisions, which
represent different types of investments. Each division may either make
money or lose money. Therefore if you invest in a division of the
separate account, you may either make money or lose money, depending on
the investment experience of that division. There is no guaranteed rate
of return in the separate account.
There are currently twenty-four divisions, or investment options,
available in the separate account. These divisions represent investment
funds run by various investment companies. The investment companies
hire advisers to operate or advise on the day-to-day operation of the
funds.
The following list shows the investment companies whose funds are
available under the policy, along with the managers or advisers and the
divisions that they oversee:
<TABLE>
- -------------------------------------------------------------------------------------------------------
<CAPTION>
INVESTMENT COMPANY INVESTMENT MANAGER/ADVISER
- -------------------------------------------------------------------------------------------------------
<S> <C>
General American Capital Company Conning Asset Management Company
- -------------------------------------------------------------------------------------------------------
Russell Insurance Funds Frank Russell Investment Management Company
- -------------------------------------------------------------------------------------------------------
American Century Variable Portfolios American Century Investment Management, Inc.
- -------------------------------------------------------------------------------------------------------
J.P. Morgan Series Trust II J.P. Morgan Investment Management, Inc.
- -------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund Fidelity Management & Research Company
- -------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II Fidelity Management & Research Company
- -------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust Van Eck Associates Corporation
- -------------------------------------------------------------------------------------------------------
</TABLE>
These investment funds have different investment goals and strategies,
which we have summarized in the following table. You should review the
prospectus of each fund, or seek professional guidance in determining
which fund(s) best meet your objectives.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT FUND INVESTMENT
MANAGER NAME TYPE OBJECTIVE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conning S&P 500 Index Fund Growth & Income To achieve a rate of return that parallels
Asset Management the return of the stock market as a whole,
Company as represented by the Standard and Poor's
500 Stock Index.
- -----------------------------------------------------------------------------------------------------------------------------------
Conning Money Market Fund Money Market To obtain the highest level of current income
Asset Management consistent with the preservation of capital
Company and maintenance of liquidity.
- -----------------------------------------------------------------------------------------------------------------------------------
Conning Bond Index Fund Corporate Bonds To provide a rate of return that reflects the
Asset Management performance of the bond market as a whole,
Company as measured by the Lehman Brothers
Government/Corporate Bond Index.
- -----------------------------------------------------------------------------------------------------------------------------------
Conning Asset Allocation Fund Balanced To obtain a high rate of long-term return,
Asset Management composed of capital growth and income.
Company
- -----------------------------------------------------------------------------------------------------------------------------------
Conning Managed Equity Fund Growth To obtain long-term capital growth through
Asset Management investment in common stocks.
Company
- -----------------------------------------------------------------------------------------------------------------------------------
2
<PAGE>
<PAGE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT FUND INVESTMENT
MANAGER NAME TYPE OBJECTIVE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conning International Growth: To obtain investment results that parallel
Asset Management Index Fund International the price and yield performance of
Company Stock publicly-traded common stocks in the Morgan
Stanley Capital International, Europe,
Australia, and Far East Index ("EAFE Index").
- -----------------------------------------------------------------------------------------------------------------------------------
Conning Mid-Cap Equity Fund Growth To obtain long-term capital appreciation
Asset Management through investment primarily in common stocks
Company of U.S.-based, publicly traded companies with
medium market capitalization, defined as
within the range of the S&P Mid-Cap 400 at
the time of the Fund's investment.
- -----------------------------------------------------------------------------------------------------------------------------------
Conning Small-Cap Equity Fund Aggressive Growth To provide a high rate of return through
Asset Management investment in the common stock of small
Company companies, making up, at one time, the
smallest 20% of U.S.-based companies on the
New York Stock Exchange.
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Management & Growth Portfolio Growth To seek capital appreciation, normally
Research Company through purchases of common stocks, although
its investments are not restricted to any one
type of security.
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Management & Equity-Income Portfolio Growth & Income To seek reasonable income by investing
Research Company primarily in income-producing equity
securities.
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Management & Overseas Portfolio Growth: To seek long term growth of capital primarily
Research Company International though investment in foreign securities.
Stock
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Management & Asset Manager Portfolio Balanced To seek a high total return with reduced risk
Research Company over the long-term by allocating its assets
among domestic and foreign stocks, bonds, and
short-term fixed income instruments.
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Management & High Income Portfolio High Yield Bond To seek a high level of current income by
Research Company investing primarily in high yielding,
lower-rated, fixed income securities, while
also considering growth of capital.
- -----------------------------------------------------------------------------------------------------------------------------------
Van Eck Associates Worldwide Hard Aggressive Growth: To seek long-term capital appreciation by
Corporation Assets Fund Specialty investing in equity and debt securities of
companies engaged in the exploration,
development, production, and distribution of
gold and other natural resources such as
strategic and other metals, minerals, forest
products, oil, natural gas, and coal.
- -----------------------------------------------------------------------------------------------------------------------------------
3
<PAGE>
<PAGE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT FUND INVESTMENT
MANAGER NAME TYPE OBJECTIVE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Van Eck Associates Worldwide Emerging Aggressive Growth: To obtain long-term capital appreciation by
Corporation Markets Fund International Stock investing in equity securities in emerging
markets around the world. The Fund
emphasizes primarily investment in countries
that, compared to the world's major
economies, exhibit relatively low gross
national product per capita, as well as the
potential for rapid economic growth.
- -----------------------------------------------------------------------------------------------------------------------------------
Frank Russell Multi-Style Equity Fund Growth & Income To obtain income and capital growth by
Investment Management investing principally in equity securities.
Company
- -----------------------------------------------------------------------------------------------------------------------------------
Frank Russell Aggressive Equity Fund Aggressive Growth To provide capital appreciation by assuming a
Investment Management higher level of volatility than is ordinarily
Company expected from the Multi-Style Equity Fund, by
investing in equity securities.
- -----------------------------------------------------------------------------------------------------------------------------------
Frank Russell Non-U.S. Fund Growth: To achieve favorable total return and
Investment Management International Stocks additional diversification for United States
Company and Bonds investors by investing primarily in equity
and debt securities of non-United States
companies and non-United States governments.
- -----------------------------------------------------------------------------------------------------------------------------------
Frank Russell Core Bond Fund Growth & Income To maximize total return through capital
Investment Management appreciation and income by assuming a level
Company of volatility consistent with the broad
fixed-income market, by investing in
fixed-income securities.
- -----------------------------------------------------------------------------------------------------------------------------------
J.P. Morgan Investment Bond Portfolio Growth & Income To provide a high total return consistent
Management, Inc. with moderate risk of capital and maintenance
of liquidity.
- -----------------------------------------------------------------------------------------------------------------------------------
J.P. Morgan Investment Small Company Portfolio Aggressive Growth To provide high total return from a portfolio
Management, Inc. of equity securities of small companies. The
Fund invests at least 65% of the value of its
total assets in the common stock of small
U.S. companies primarily with market
capitalizations less than $1 billion.
- -----------------------------------------------------------------------------------------------------------------------------------
American Century Income & Growth Fund Growth & Income To attain long-term growth of capital as well
Investment as current income. The fund pursues a total
Management, Inc. return and dividend yield that exceeds those
of the S&P 500 by investing in stocks of
companies with strong dividend growth
potential.
- -----------------------------------------------------------------------------------------------------------------------------------
4
<PAGE>
<PAGE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT FUND INVESTMENT
MANAGER NAME TYPE OBJECTIVE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
American Century International Fund Aggressive Growth: To obtain capital growth over time by
Investment International Stock investing in common stocks of foreign
Management, Inc. companies considered to have
better-than-average prospects for
appreciation. Because this fund invests in
foreign securities, a higher degree of
short-term price volatility, or risk, is
expected due to factors such as currency
fluctuation and political instability.
- -----------------------------------------------------------------------------------------------------------------------------------
American Century Value Fund Growth To attain long-term capital growth, with
Investment income as a secondary objective. The Fund
Management, Inc. invests primarily in equity securities of
well-established companies that are believed
by management to be undervalued at the time
of purchase.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
You may change the investments that you want to use for your future
premiums by notifying our Home Office.
You may transfer your cash value among the various investment funds, and
you may withdraw money, but there are certain rules. You may only
transfer funds once in a policy month. (A policy month is measured
beginning on the same day of the month that the policy was issued, and
ending one day before the same day in the next month.) The amount
transferred from any investment fund must be at least $500, or the
entire balance in the fund if less than $500.
We have the right to change or eliminate transfers in the future, although
we don't currently intend to do so.
CHARGES AND DEDUCTIONS. There are certain costs that we charge you for
issuing your policy and keeping it in force. This section describes
those charges -- what they are and what they cover.
TAX CHARGE. The Federal government and many states and territories
impose taxes or charges on insurance premiums. We deduct 3.35% from
your premium payment to cover that cost -- 2.10% for the state tax
charge, and 1.25% for the federal tax charge.
If we are required by law to pay taxes based on the separate account, we
may charge an appropriate share to policies that invest in the separate
account. (See Federal Tax Matters.)
SELECTION AND ISSUE EXPENSE CHARGE. There is a charge to cover the
costs of underwriting issuing your policy. This charge is based on the
size of your policy. During the first policy year, the charge is $0.16
(sixteen cents) for each $1,000 of face amount of your policy.
Beginning in the second policy year, and continuing for the life of the
policy, the charge drops to $0.01 (one cent) for each $1,000 of face
amount.
SURRENDER CHARGE. If you surrender your policy or let it lapse during
the first fifteen (or fewer, in some cases) policy years, we will keep
part of the cash value to help us recover the costs of selling and
issuing the policy. This charge is called a Contingent Deferred Sales
Charge (CDSC) or, more simply, a surrender charge.
This charge generally applies to surrenders that occur during the first
fifteen policy years, but the charge ends sooner for policies issued at
some older ages and in some risk classes.
The surrender charge is based on a "grading percentage," which is
determined by the age, sex, and risk class of the person insured under
the policy. This "grading percentage" is multiplied by:
* 40% of the target premium or the premiums actually paid for the
base policy (the policy itself, without any riders), plus
* the "excess premium surrender charge factor" multiplied by
premiums paid in excess of the target premium.
You can find the information you need to determine the surrender charge
for your policy on the policy
5
<PAGE>
<PAGE>
specifications page. There is a section in this prospectus, beginning
on page 36, that explains the charge in greater detail. This section
includes charts that show the how long the surrender charge applies, the
"grading percentage" and the "excess premium surrender charge factor."
If you withdraw money from your policy or if you surrender a portion of
your policy, we will charge a pro-rated portion of the surrender charge.
Of course, if you don't surrender all or part of your policy, or let it
lapse, or withdraw cash from it, then you will not pay a surrender
charge.
If you increase the face amount of your policy, the increase will have
its own surrender charge for the first 10 policy years following the
increase.
(See Policy Rights - Surrender, Partial Withdrawals, and Pro-Rata
Surrender; Policy Benefits - Death Benefit; and Charges and Deductions
- - Contingent Deferred Sales Charge.)
Under certain conditions, applied in a uniform and nondiscriminatory
manner, we may reduce the surrender charge. (See Adjustment of Charges.)
ADMINISTRATIVE FEE. We charge a monthly fee to cover your policy's
administrative cost. This charge is $13 each month for the first policy
year. Beginning with the second policy year, the charge is $6 each
month for the life of the policy. We will deduct the charge from your
cash value each month.
COST OF INSURANCE. Because this is a life insurance policy, it has a
death benefit. We charge an insurance cost each month to cover the risk
that you will die and we will have to pay the death benefit.
The amount of this charge varies with the age, sex, risk class of the
person insured under the policy, and the amount of the death benefit at
risk -- if the risk of death or the amount of the death benefit is
greater, then the cost of insurance is also greater. We deduct the cost
of insurance from your cash value each month.
We make another charge to cover mortality and expense risks under the
Policy. We calculate this charge based on a percentage of the net
assets in each division of the separate account. Rather than deducting
the charge from the cash value, we apply the charge by adjusting the net
rate of return in the separate account. We guarantee that the charge
will not exceed an annual rate of 0.90% of the net separate account
assets. (See Charges and Deductions - Separate Account Charges.)
We pay the operating expenses of the separate account. The investment
funds pay for their own operating expenses and investment fees. For a
description of these charges, see Charges and Deductions - Separate
Account Charges.
6
<PAGE>
<PAGE>
The following chart shows the operating expenses of the funds as
reported for the fiscal year ending December 31, 1998:
<TABLE>
- ---------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES <F1>
As a Percentage of Average Net Assets
- ---------------------------------------------------------------------------------------------------
<CAPTION>
INVESTMENT
FUND ADVISORY / OTHER EXPENSES TOTAL
MANAGEMENT
FEE
- ---------------------------------------------------------------------------------------------------
GENERAL AMERICAN CAPITAL COMPANY
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
S&P 500 Index Fund .25% .05% .30%
Money Market Fund .125% .08% .205%
Bond Index Fund .25% .05% .30%
Managed Equity Fund .40% <F2> .10% .50%
Asset Allocation Fund .50% .10% .60%
International Index Fund .50% <F3> .30% .80%
Mid-Cap Equity Fund .55% <F4> .10% .65%
Small-Cap Equity Fund .25% .05% .30%
<CAPTION>
- ---------------------------------------------------------------------------------------------------
RUSSELL INSURANCE FUNDS
(Amounts shown are after fee waivers and expense reimbursements described below.)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Multi-Style Equity Fund .09% <F5> .83% .92% <F5>
Aggressive Equity Fund .00% <F6> 1.25% 1.25% <F6>
Non-U.S. Fund .00% <F7> 1.30% 1.30% <F7>
Core Bond Fund .00% <F8> .80% .80% <F8>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
AMERICAN CENTURY VARIABLE PORTFOLIOS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income & Growth Fund .70% .00% .70%
International Fund 1.50% .00% 1.50%
Value Fund 1.00% .00% 1.00%
<CAPTION>
- ---------------------------------------------------------------------------------------------------
J.P. MORGAN SERIES TRUST II
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bond Portfolio .30% .45% .75%
Small Company Portfolio .60% .55% 1.15%
<CAPTION>
- ---------------------------------------------------------------------------------------------------
VARIABLE INSURANCE PRODUCTS FUND
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity-Income Portfolio .50% .08% .58%
Growth Portfolio .60% .09% .69%
Overseas Portfolio .75% .17% .92%
High Income Portfolio .59% .12% .71%
<CAPTION>
- ---------------------------------------------------------------------------------------------------
VARIABLE INSURANCE PRODUCTS FUND II
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Manager .55% .10% .65%
<CAPTION>
- ---------------------------------------------------------------------------------------------------
VAN ECK WORLDWIDE INSURANCE TRUST
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Worldwide Hard Assets Fund 1.00% .00% 1.00%
Worldwide Emerging Markets Fund 1.50% .00% 1.50%
- ---------------------------------------------------------------------------------------------------
<FN>
<F1> The Fund expenses shown above are collected from the underlying
Fund, and are not direct charges against the Separate Account assets or
reductions from the Policy's Cash Value. These underlying Fund Expenses
are taken into consideration in computing each Fund's net asset value,
which is used to calculate the unit values in the Separate Account. The
management fees and other expenses are more fully described in the
prospectus of each individual Fund. The information relating to the
Fund expenses was provided by the Fund and was not independently
verified by General American. Except as otherwise specifically noted,
the management fees and other expenses are not currently subject to fee
waivers or expense reimbursements.
<F2> The fees charged by the Managed Equity Fund are stated as a series
of annual percentages of the average daily value of the net assets of
the Fund. The percentages decrease with respect to assets of the Fund
above certain amounts, as follows: First $10 million, 0.40%; Next $20
million, 0.30%; Balance over $30 million, 0.25%.
<PAGE>
<F3> The fees charged by the International Index Fund are stated as a
series of annual percentages of the average daily value of the net
assets of the Funds. The percentages decrease with respect to assets of
the Fund above certain amounts, as follows: First $10 million, 0.50%;
Next $20 million, 0.40%; Balance over $20 million, 0.30%.
<F4> The fees charged by the Mid-Cap Equity Fund are stated as a series
of annual percentages of the average daily value of the net assets of
the Funds. The percentages decrease with respect to assets of the Fund
above certain amounts, as follows: First $10 million, 0.55%; Next $10
million, 0.45%; Balance over $20 million, 0.40%.
<F5> The Manager has voluntarily agreed to waive a portion of its 0.78%
management fee, up to the full amount of that fee, equal to the amount
by which the Fund's total operating expenses exceed 0.92% of the Fund's
average daily net assets on an annual basis, and to reimburse the Fund
for all remaining expenses after fee waivers which exceed 0.92% of
average daily net assets on an annual basis. The management fee waivers
and reimbursements are intended to be in effect for 1999, but may be
revised or eliminated at any time thereafter without notice to
shareholders. Absent the waiver, the management fee would have been
0.78%, and total Fund expenses would have been 1.61% of average daily
net assets.
<F6> The Manager has voluntarily agreed to waive a portion of its 0.95%
management fee, up to the full amount of that fee, equal to the amount
by which the Fund's total operating expenses exceed 1.25% of the Fund's
average daily net assets on an annual basis, and to reimburse the Fund
for all remaining expenses after fee waivers which exceed 1.25% of
average daily net assets on an annual basis. The management fee waivers
and reimbursements are intended to be in effect for 1999, but may be
revised or eliminated at any time thereafter without notice to
shareholders. Absent the waiver, the management fee would have been
0.95%, other expenses would have been 1.27%, and total Fund expenses
would have been 2.22% of average daily net assets.
7
<PAGE>
<PAGE>
<F7> The Manager has voluntarily agreed to waive a portion of its 0.95%
management fee, up to the full amount of that fee, equal to the amount
by which the Fund's total operating expenses exceed 1.30% of the Fund's
average daily net assets on an annual basis, and to reimburse the Fund
for all remaining expenses after fee waivers which exceed 1.30% of
average daily net assets on an annual basis. The management fee waivers
and reimbursements are intended to be in effect for 1999, but may be
revised or eliminated at any time thereafter without notice to
shareholders. Absent the waiver, the management fee would have been
0.95%, other expenses would have been 2.70%, and total Fund expenses
would have been 3.65% of average daily net assets.
<F8> The Manager has voluntarily agreed to waive a portion of its 0.60%
management fee, up to the full amount of that fee, equal to the amount
by which the Fund's total operating expenses exceed 0.80% of the Fund's
average daily net assets on an annual basis, and to reimburse the Fund
for all remaining expenses after fee waivers which exceed 0.80% of
average daily net assets on an annual basis. The management fee waivers
and reimbursements are intended to be in effect for 1999, but may be
revised or eliminated at any time thereafter without notice to
shareholders. Absent the waiver, the management fee would have been
0.60%, other expenses would have been 1.70%, and total Fund expenses
would have been 2.30% of average daily net assets.
</TABLE>
8
<PAGE>
<PAGE>
PREMIUMS. Within limits, you decide how much money you want to put into
the policy. There is a minimum premium that you have to pay to put the
policy in force. That amount is 1/12 of the "minimum initial annual
premium amount" shown on the specifications page of your policy. After
the policy is in force, you may pay any amount you want as long as the
cash value is always enough to cover the surrender charge and the
current month's expenses.
If you have converted a General American term insurance policy to this
policy, and if the term policy includes conversion credits, you may
apply those credits to reduce your first-year minimum premium.
You can set up a schedule of payments, and we will send you reminders,
but you are not required to make the payments as long as the cash value
covers the surrender charge and the current month's expenses. (See
Payment and Allocation of Premiums.)
DEATH BENEFIT. If the person insured under the policy dies while the
policy is in force, we will pay a death benefit to the beneficiary. You
can select one of three death benefits at the time the policy is issued:
* Option A: The death benefit is the greater of the face amount of
the policy or an "applicable percentage" of the cash value.
* Option B: The death benefit is the greater of the face amount of
the policy plus the cash value, or an "applicable percentage" of
the cash value.
* Option C: The death benefit is the greater of the face amount of
the policy, or the cash value multiplied by an attained age
factor.
As long as the policy remains in force and the person insured is less
than 100 years old, the minimum death benefit under any death benefit
option will be at least the current face amount.
We will increase the death benefit by any dividends earned prior to the
death of the person insured, and by the cost of insurance from the date
of death to the end of the month, and will reduce it by any outstanding
loans and interest. We will pay the death benefit according to the
settlement options available at the time of death. (See Policy Benefits
- - Death Benefit.)
The minimum face amount at issue is generally $50,000 under our current
rules. Subject to certain restrictions, you may change the face amount
and the death benefit option. In certain cases we may require evidence
that the person insured under the policy is still insurable. (See
Change in Death Benefit Option, and Change In Face Amount.)
You may include additional insurance benefits with your policy. These
are described under General Matters - Additional Insurance Benefits. If
you elect any additional benefits, we will deduct the charges for those
benefits from your Cash Value.
CASH VALUE. Your Policy has a cash value that is the total amount
credited to you in the separate account, the loan account, and the
general account. The cash value increases by the amount of net premium
payments, and decreases by partial withdrawals and expense charges for
the policy. It may either increase or decrease based on the investment
experience of the separate account divisions that you have selected.
(See Policy Benefits - Cash Value.)
There is no minimum guaranteed cash value.
POLICY LOANS. You may borrow against the cash value of your policy.
The loan value is the maximum amount that you may borrow. The loan
value is:
the cash value on the date we receive the loan request;
minus interest on the new loan to the next policy anniversary;
minus any loans and interest already outstanding;
minus any surrender charges;
minus monthly deductions to the next policy anniversary.
When you borrow against the policy, we will take the money from the
general account and the divisions of the separate account in proportion
to your balances in each account.
Loan interest is due at each policy anniversary If you don't pay the
loan interest, we will add it to the amount of the loan.
You may repay all or part of the loan at any time. When you make a loan
payment, we will put the money back into the general account or the
divisions of the separate account in the same percentages used them to
make the loan.
When we pay out the proceeds of your policy, either as a death benefit
or as a policy surrender, we will deduct any outstanding loans and
interest from the amount we pay. (See Policy Rights - Loans.)
Loans taken from or secured by a policy may have Federal income tax
consequences. (See Federal Tax Matters.)
9
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<PAGE>
SURRENDER, PARTIAL WITHDRAWALS, AND PRO-RATA SURRENDER. You may
surrender the policy at any time while it is in force. We will pay you
the cash surrender value, plus dividends (if any) earned prior to the
surrender.
After the first year you may request a partial withdrawal of your cash
surrender value. Normally, withdrawing a portion of your cash surrender
value will reduce your death benefit by the amount of the withdrawal.
However, if you have included the Anniversary Partial Withdrawal Rider
on your policy, you may withdraw a portion of your cash surrender value
without reducing the death benefit. Under this rider, there are limits
on how much you can withdraw, and the withdrawal must be at the policy
anniversary. You can find more information about the rider under
General Matters - Additional Insurance Benefits.
You may also request a pro-rata surrender of the policy, which allows
you to surrender part of the policy and keep the rest in force. You can
find more information under Policy Rights - Surrender, Partial
Withdrawals, and Pro-Rata Surrender.
A surrender, partial withdrawal, or Pro-Rata Surrender may have Federal
income tax consequences. We suggest that you discuss your situation
with a competent tax adviser before taking one of these steps. (See
Federal Tax Matters.)
ILLUSTRATIONS OF DEATH BENEFITS AND CASH SURRENDER VALUES. The death
benefit and cash surrender value of your policy will depend on how well
your investments perform. In Appendix A we have illustrated some sample
policies. Depending on the rate of return, the values may increase or
decrease. In order to help you to understand the cost of the policy, we
also show how your premium would grow if you simply invested it at 5%
interest, compounded annually.
If you surrender your policy in the first few years, the cash surrender
value that you receive may be low compared to what you would have
accumulated by investing the premiums at interest. In this case, the
insurance protection that you received while the policy was in force
will have been expensive.
We will provide you with an illustration showing projected future cash
values if you request it in writing. We may charge a fee of up to $25
for preparing the illustration.
TAX CONSEQUENCES OF THE POLICY. If your policy was issued in a standard
premium class, then we believe that it qualifies as a life insurance
contract for Federal income tax purposes. Similarly, if your policy was
issued on a guaranteed issue or simplified issue basis, we believe that
it will qualify as a life insurance contract. However, if the policy
was issued on a substandard basis, it is not clear whether it will
qualify as a life insurance contract for tax purposes. The IRS has
provided very limited guidance in this area.
Assuming that the policy does qualify as a life insurance contract for
Federal income tax purposes, then we believe that the cash value should
be subject to the same tax treatment as the cash value of a conventional
fixed-benefit contract. This means that growth in the cash value will
not be taxed until you receive a distribution.
There are some actions that may trigger a tax. If you transfer
ownership to someone else, or if you surrender the policy or withdraw
cash from it, you may have to pay a tax. Similarly, if you let the
policy lapse while there is an outstanding loan, or if you exchange the
policy for another policy, you may owe a tax. (See Federal Tax
Matters.)
If you pay too much in premium, your policy may become a "modified
endowment contract." If that happens, then some pre-death distributions
of cash will be taxable income. If there is more cash value in the
policy that what you actually paid in premiums, you will taxed on the
excess in the year in which you receive a distribution. You may
withdraw the amount that you paid into the policy without being taxed,
but only after you have received the excess as taxable income. In
addition, any taxable distribution that you receive before age 59-1/2
will generally be subject to an additional 10% tax.
On the other hand, if the policy is not a modified endowment contract,
then distributions are normally treated first as a return of your "cost
basis," or investment in the contract. In this case, you may withdraw
up to the amount of the premiums you paid with no tax consequences.
After that, any additional distributions are treated as taxable income.
In addition, loans from the policy are not treated as distributions, so
they are not considered taxable income. Finally, if your policy is not a
modified endowment contract, neither distributions or loans are subject
to the 10% additional tax (See Federal Tax Matters.)
Please note that General American is neither a law firm nor a tax
adviser, so we cannot give you legal or
10
<PAGE>
<PAGE>
tax advice. If you have specific legal or tax questions, we suggest
that you consult a qualified professional in these fields.
DIVIDENDS. We do not expect to pay dividends on this Policy. (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.
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 in
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, in 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 General American
Capital Company, Russell Insurance Funds, 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.
INITIAL PREMIUM -- The minimum initial premium required to be paid for
the Policy to become effective.
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.
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,
11
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<PAGE>
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 tax charges (consisting of a
state premium tax charge and a charge to cover Federal income tax costs
attributable to premiums).
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.
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.
TARGET PREMIUM -- The amount of premiums paid that is used to determine
the amount of the Contingent Deferred Sales Charge.
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 on 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.
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. 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 deduction, 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.
12
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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 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 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 Value 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.)
CHARGES AND DEDUCTIONS. A premium tax charge will be deducted from each
premium payment prior to allocation. The premium tax charge consists of
a charge to cover state premium taxes and a charge to cover the
Company's Federal income tax costs attributable to the amount of
premiums received. The charge to cover state premium taxes is 2.10%,
and the charge to cover the Company's Federal income tax costs
attributable to the amount of premiums received is 1.25%. The amount of
these charges is subject to increase under certain circumstances. (See
Charges and Deductions--Premium Tax Charges.)
A Contingent Deferred Sales Charge to compensate for sales expenses may
be assessed against the Cash Value under a Policy upon a surrender, a
partial withdrawal, a lapse, or a decrease in Face Amount.
For a period of up to 15 years after the Issue Date or the effective
date of a Face Amount increase, the Company will impose a Contingent
Deferred Sales Charge ("CDSC") upon surrender, lapse, or a requested
decrease in Face Amount. The Company will also impose the CDSC upon a
partial withdrawal that results in a decrease in Face Amount. The
amount of the CDSC will depend upon a number of factors, including the
type of event (surrender, lapse, or decrease in Face Amount), the amount
of premium payments made under the Policy prior to the event, and the
number of Policy Years having elapsed since the Policy was issued or the
Face Amount was increased, as applicable.
A separate CDSC applies to the initial Face Amount and to each increase
in Face Amount and is deducted whenever (and to the extent that) a
surrender, lapse, or Face Amount decrease affects the applicable
increment of Face Amount. The length of time over which a CDSC will
apply to any increment of Face Amount will depend upon the Attained Age
of the Insured on the Issue Date or the effective date of the increase,
as applicable, and the Insured's sex and risk class.
The CDSC will equal the CDSC grading percentage multiplied by the sum of
(1) and (2) where:
(1) is 40% of the lesser of the premium payments made or the Target
Premium for the Policy, excluding any riders, and
(2) is the Excess Premium Surrender Charge Factor multiplied by premium
payments made in excess of the Target Premium for the Policy, excluding
any riders.
With regard to a Face Amount increase:
(1) is 40% of the lesser of the premium payments attributable to the
increase or the Target Premium for the increase, and
(2) is the Excess Premium Surrender Charge Factor multiplied by premium
payments attributable to the increase in excess of the Target Premium
for the increase.
The CDSC grading percentages and the Excess Premium Surrender Charge
Factors are described elsewhere in this Prospectus. The Excess Premium
Surrender Charge Factors vary with the Attained Age, sex, and risk class
of the Insured. In addition, the CDSC is limited to amounts less than
the foregoing during the first two Policy Years or the
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first two Policy Years following an increase in Face Amount, as
applicable. (See Policy Rights--Surrender and Partial Withdrawals,
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 the
monthly deduction consisting of:
(1) a monthly administrative charge of $13.00 ($156.00 per year) during
the first twelve Policy Months, and $6.00 per month ($72.00 per year)
thereafter, to compensate the Company for the continuing administrative
costs of the Policy;
(2) a Selection and Issue Expense Charge of $.16 per Policy Month for
each $1,000 of Face Amount in the first Policy Year and $.01 per Policy
Month for each $1000 of Face Amount in subsequent Policy Years (see
Charges and Deductions--Monthly Deduction);
(3) a monthly charge for the cost of insurance (see Charges and
Deductions--Monthly Deduction); and
(4) a charge for the cost of any additional benefits provided by rider.
A daily charge of .002455% (an effective annual rate of .90%) 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 and Partial
Withdrawals, 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 "Initial Annual 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 would 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 "Initial Annual Premium" for the Policy. (See Payment and
Allocation of Premiums.)
A Policy will lapse only when the Cash Surrender Value is insufficient
to pay the 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 the 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 (see
Dividends) and by the amount of the cost of
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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 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 and Additional Coverage from Riders.)
Additional insurance benefits offered under the Policy include a waiver
of specified premium rider, a waiver of monthly deduction rider, a
children's life insurance rider, an additional insured family term
rider, a guaranteed option to increase the Face Amount rider, an
accidental death benefit rider, a guaranteed survivor purchase option
rider, a supplemental coverage term rider, and an increasing benefit
rider. (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 Cash Value of the policy equal to the total of the
Policy's Cash Value 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 90% of the Cash Value of
the Policy on the date the loan request is received, less interest to
the next Policy Anniversary, less any outstanding Indebtedness, less any
surrender charges, and less monthly deductions to the next Policy
Anniversary. Loan interest is payable on each Policy Anniversary, and
all outstanding Indebtedness will be deducted from proceeds payable at
the Insured's death, 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 from the Division(s) of the Separate Account, a portion of the
Policy's Cash Value in the Division(s) 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 AND PARTIAL WITHDRAWALS. 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 unpaid dividends determined prior
to the surrender. After the first year, an Owner may also request a
partial withdrawal of the Cash Surrender Value. 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. A surrender
or a partial withdrawal 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), within 45
days after the application is signed, or within 10 days after the
Company mails a notice of this cancellation right, whichever is latest.
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-19 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.
15
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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 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.)
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.)
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 a dividend. The Company is not obligated to pay dividends on
the Policies. (See Dividends.)
This Prospectus describes only those aspects of the Policies that relate
to the Separate Account, except where General Account matters are
specifically mentioned. For a brief summary of the aspects of the
Policies 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 Missouri stock life insurance
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
Holding Company, a mutual holding company organized under Missouri Law.
General American Mutual Holding Company ("GAMHC") has announced that it
is developing a plan under which it would convert from a mutual company
to a publicly-held stock company. Conversion to a stock company, or
"demutualization", would be subject to policyholder and regulatory
approval, as well as the satisfaction of certain other conditions.
Demutualization would not affect General American's contractual
obligations. If, and when, GAMHC adopts a conversion plan, information
about the plan will be made available to policyholders in accordance
with applicable law and regulations.
General American is principally engaged in writing individual and group
life insurance policies and annuity contracts. As of December 31, 1998,
it had consolidated assets of approximately $29 billion. It is admitted
to do business in 49 states, the District of Columbia, Puerto Rico, and
in 10 Canadian provinces. The principal offices of General American are
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.
16<PAGE>
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 twenty-four Divisions.
Divisions invest in corresponding Funds from one of seven open-end,
diversified management investment companies: (1) General American
Capital Company, (2) Russell Insurance Funds, (3) American Century
Variable Portfolios, (4) J.P. Morgan Series Trust II, (5) Variable
Insurance Products Fund, (6) Variable Insurance Products Fund II, and
(7) 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
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. 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 500 Composite Stock Price Index ("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.
MONEY MARKET FUND: The investment objective of this Fund is to provide
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.
BOND INDEX FUND: The investment objective of this Fund is to provide a
rate of return that reflects the performance of the publicly-traded bond
market as a whole. The Fund uses the Lehman Brothers
Government/Corporate Bond Index as its standard for performance
comparison.
Effective October 1, 1992, a change in the objectives and investment
policies took place relative to what was previously offered as the
Intermediate Bond Fund. That change was approved by the shareholders of
the Fund at the General American Capital Company annual shareholder
meeting on July 22, 1992. All historical financial information
contained within this Prospectus and in the accompanying financial
statements relating to the Intermediate Bond
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Fund report on its operations under its objectives. The successor to
the Intermediate Bond Fund is the Bond Index Fund.
Because the investment objectives of the Bond Index Fund differ from
those of the Intermediate Bond Fund, the historical financial data of
the Intermediate Bond Fund should not be viewed as historical financial
data of the Bond Index Fund.
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 may be invested in common stocks, in bonds, in
money market instruments, or in a combination thereof consistent with
guidelines established from time to time by Capital Company's Board of
Directors.
INTERNATIONAL INDEX FUND: The investment objective of this Fund is to
obtain investment results that parallel the price and yield performance
of publicly-traded common stocks included 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.
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.
18
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AMERICAN CENTURY VARIABLE PORTFOLIOS
American Century Variable Portfolios, Inc., a part of American Century
Investments, was organized as a Maryland corporation on June 4, 1987.
It is a diversified, open-end management investment company. Its
business and affairs are managed by its officers under the Direction of
its Board of Directors. American Century Investment Management, Inc.
serves as the investment manager of the fund.
The investment objective and policies of the Funds are summarized below:
INCOME & GROWTH FUND: The investment objective of this Fund is to
attain long-term growth of capital as well as current income. The Fund
pursues a total return and dividend yield that exceed those of the S&P
500 by investing in stocks of companies with strong dividend growth
potential. Dividends are paid monthly.
INTERNATIONAL FUND: This Fund seeks capital growth over time by
investing in common stocks of foreign companies considered to have
better-than-average prospects for appreciation. Because the Fund
invests in foreign securities, a higher degree of short-term price
volatility, or risk, is expected due to factors such as currency
fluctuation and political instability.
VALUE FUND: This Fund is a core equity fund that seeks long-term
capital growth. Income is a secondary objective. To pursue its
objectives, the fund invests primarily in equity securities of
well-established companies that are believed by management to be
undervalued at the time of purchase. Please note that this is an equity
investment and, by nature, may fluctuate in value.
J.P. MORGAN SERIES TRUST II
J.P. Morgan Series Trust II is an open-end diversified management
investment company organized as a Delaware Business Trust. The Trust's
investment adviser is J.P. Morgan Investment Management, Inc., a
registered investment adviser and a wholly owned subsidiary of J.P.
Morgan & Co., Incorporated, a bank holding company organized under the
laws of Delaware.
The investment objective and policies of the Funds are summarized below:
BOND PORTFOLIO: This Fund seeks to provide a high total return
consistent with moderate risk of capital and maintenance of liquidity.
The Fund is designed for investors who seek a total return over time
that is higher than that generally available from a portfolio of
short-term obligations while acknowledging the greater price fluctuation
of longer-term instruments.
SMALL COMPANY PORTFOLIO: The investment objective of this Fund is to
provide high total return from a portfolio of equity securities of small
companies. The Fund invests at least 65% of the value of its total
assets in the common stock of small U.S. Companies primarily with market
capitalizations less than $1 billion. The Fund is designed for
investors who are willing to assume the somewhat higher risk of
investing in small companies in order to seek a higher return over time
than might be expected from a portfolio of stocks of large companies.
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
Fund's Manager.
The investment objective and policies of each Fund are summarized below:
HIGH INCOME PORTFOLIO: The investment objective of this Fund is to seek
a high level of current income 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.
EQUITY-INCOME PORTFOLIO: The investment objective of this Fund is to
seek reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, FMR also will 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 500 Composite Stock Price Index.
GROWTH PORTFOLIO: The investment objective of this Fund is to seek
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 found in
19
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other types of securities, including bonds and preferred stocks.
OVERSEAS PORTFOLIO: The investment objective of this Fund is to seek
long-term growth of capital primarily through investments in foreign
securities. The Overseas Portfolio provides a means for investors to
diversify their own portfolios by participating in companies and
economies outside of the United States.
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 Fund are summarized below:
ASSET MANAGER PORTFOLIO: 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 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 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 Global
Corporation of New York, New York.
The investment objectives and policies of the Funds 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.
WORLDWIDE EMERGING MARKETS FUND: The investment objective of this Fund
is to obtain long-term capital appreciation by investing in equity
securities in emerging markets around the world. The Fund emphasizes
primarily investment in countries that, compared to the world's major
economies, exhibit relatively low gross national product per capita, as
well as the potential for rapid economic growth.
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 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 each Fund 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 each Fund's
prospectus, 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
currently available under the Policy, 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
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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 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 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 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 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.)
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<TABLE>
APPLICABLE PERCENTAGE OF CASH VALUE TABLE<F*>
- ----------------------------------------------------------------
<CAPTION>
INSURED AGE PERCENTAGE OF CASH VALUE
- ----------------------------------------------------------------
<S> <C>
0 to 40 250%
- ----------------------------------------------------------------
45 215%
- ----------------------------------------------------------------
50 185%
- ----------------------------------------------------------------
55 150%
- ----------------------------------------------------------------
60 130%
- ----------------------------------------------------------------
65 120%
- ----------------------------------------------------------------
70 115%
- ----------------------------------------------------------------
75-90 105%
- ----------------------------------------------------------------
94 and older 101%
- ----------------------------------------------------------------
<FN>
<F*>For ages that are not shown on the 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>
DEATH BENEFIT OPTION C SAMPLE ATTAINED AGE FACTOR TABLE<F*>
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
INSURED MALE MALE FEMALE LIVES FACTOR FEMALE LIVES FACTOR
ATTAINED LIVES FACTOR LIVES FACTOR NONSMOKER SMOKER
AGE NONSMOKER SMOKER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
20 7.04625 5.70592 8.03974 7.06035
- ------------------------------------------------------------------------------------------------------------
25 6.05114 4.92067 6.81914 5.98942
- ------------------------------------------------------------------------------------------------------------
30 5.14023 4.19324 5.77002 5.07111
- ------------------------------------------------------------------------------------------------------------
35 4.34146 3.55672 4.87119 4.29400
- ------------------------------------------------------------------------------------------------------------
40 3.66645 3.02488 4.11828 3.64676
- ------------------------------------------------------------------------------------------------------------
45 3.10793 2.59310 3.49830 3.12711
- ------------------------------------------------------------------------------------------------------------
50 2.64629 2.24502 2.98426 2.70185
- ------------------------------------------------------------------------------------------------------------
55 2.26818 1.96426 2.55836 2.34994
- ------------------------------------------------------------------------------------------------------------
60 1.96389 1.74181 2.20532 2.05662
- ------------------------------------------------------------------------------------------------------------
65 1.72123 1.56496 1.91023 1.80744
- ------------------------------------------------------------------------------------------------------------
70 1.53188 1.42835 1.67283 1.60606
- ------------------------------------------------------------------------------------------------------------
75 1.38673 1.32212 1.48109 1.44005
- ------------------------------------------------------------------------------------------------------------
80 1.28057 1.24518 1.33746 1.31577
- ------------------------------------------------------------------------------------------------------------
85 1.20158 1.18661 1.23110 1.22199
- ------------------------------------------------------------------------------------------------------------
90 1.14546 1.14189 1.15634 1.15435
- ------------------------------------------------------------------------------------------------------------
95 1.08918 1.08918 1.09058 1.09058
- ------------------------------------------------------------------------------------------------------------<PAGE>
<FN>
<F*>In the first year, the factor may be slightly higher and may vary by
risk class.
</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).
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
nor Death Benefit Option B for the entire lifetime of
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the Policy. Similarly, a Policy issued under either Death Benefit
Option A or Death Benefit Option 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 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 AND ADDITIONAL COVERAGE FROM RIDERS. Subject to
certain limitations set forth below, an Owner may increase or decrease
the Face Amount of a Policy once each Policy Year, but 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, including conversion of the Policy into a
modified endowment contract. (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 $5,000. Although an
increase need not be accompanied by an additional premium (unless it is
required to meet the next monthly deduction), 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 Face Amount will 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.
An Owner also may increase insurance coverage without increasing the
Policy's Face Amount by purchasing a lower cost Supplemental Coverage
Term Rider ("SCTR") at the time the Policy is issued. A SCTR increases
the death benefit under a Policy by the face amount of the rider. In
addition, a SCTR may be canceled separately from the Policy (i.e., it
can be canceled without causing the Policy to be canceled or to lapse),
and no additional Contingent Deferred Sales Charge is assessed in
connection with a SCTR. (See Additional Insurance
Benefits--Supplemental Coverage Term Rider.) Owners should consult
their sales representative when deciding whether to purchase a SCTR at
the time the Policy is issued.
An Owner may increase a Policy's Face Amount (and the coverage under a
SCTR, if one was purchased) on a systematic basis by purchasing an
Increasing Benefit Rider ("IBR") at the time the Policy is issued. An
IBR provides generally for automatic annual increases in Face Amount
(and in any SCTR) until the Insured attains age 65. (See Additional
Insurance Benefits--Increasing Benefit Rider.)
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 the 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.
Solely for the purpose of maintaining compliance with the maximum
premium limitations under the Internal Revenue Code of 1986, as amended
("the Code"), insurance coverage provided by a SCTR will be treated as
part of the Face Amount of a Policy. Decreases in Face Amount will be
applied in the following order:
(1) to any Face Amount increases resulting from a change from Death
Benefit Option B to Death Benefit Option A; then to
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<PAGE>
(2) any requested increases in Face Amount, starting with the most
recent increase, followed by the next most recent increase successively;
then to
(3) any automatic increases to the initial Face Amount resulting from
the IBR; then to
(4) the initial 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 whether and in what amount a surrender charge will be
deducted. If the decrease in Face Amount is made against a Policy that
was subject to a surrender charge and which has been in force for less
than fifteen Policy Years, then a surrender charge will be assessed
against all Divisions and the General Account proportionately. (See
Charges and Deductions--Contingent Deferred Sales Charge.)
Owners may reduce or cancel coverage under a SCTR separately from the
Face Amount of a Policy. Likewise, the Face Amount of a Policy may be
decreased without reducing the coverage of any SCTR. In the event,
however, that an Owner who has a SCTR requests a reduction in coverage
without specifying whether the SCTR coverage or the Face Amount should
be reduced, the SCTR coverage will be reduced first followed by the Face
Amount (in the order shown above for Face Amount reductions) as follows:
(1) any automatic increases to the SCTR resulting from an IBR; then to
(2) any SCTR coverage.
Because no CDSC is assessed in connection with a reduction of coverage
under a SCTR, such a reduction may be less expensive than a decrease in
Face Amount if that increment of Face Amount would be subject to a CDSC.
On the other hand, continuing coverage on such an increment of Face
Amount may have a cost of insurance that is higher than the same amount
of coverage under the SCTR. Owners should consult their sales
representative before deciding whether to reduce Face Amount or SCTR
coverage under a Policy.
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 Payments 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 4.0%. Provisions for settlement of the
death benefit 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 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, and
Partial Withdrawals.) The Policy's Cash Value in the Separate Account
equals the sum of the Policy's Cash Value 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. Depending
upon the length of time between the Issue Date and the Investment Start
Date, this amount may be more than the amount of one monthly deduction.
(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 on the next
page) for the current Valuation Period; plus
24
<PAGE>
<PAGE>
(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 or
to another Division during the current Valuation Period (including any
transfer charges); minus
(7) Any amount transferred from the Division to the Loan Account during
that Valuation Period; minus
(8) Any partial withdrawals 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 decrease in face amount; 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 .002455% of the average net assets for each day
in the Valuation Period. This is equivalent to an effective annual rate
of 0.90% 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.)
The Loan Value is 90% of the Cash Value of the Policy on the date the
loan request is received, less interest to the next Policy Anniversary,
less anticipated monthly deductions to the next loan interest due date,
less any outstanding Indebtedness, and less any surrender charges. If
required by state law, the Policy's Loan Value may be a greater
percentage of the Cash Value as described in the Policy.
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--Postponement of Payments from the Separate
Account.)
When a Policy Loan is made, Cash Value equal to the amount of the loan
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
25
<PAGE>
<PAGE>
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
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"). In Policy Years one through ten, Cash
Value in the Loan Account will accrue interest daily at an earnings rate
which is the greater of (a) an annual rate of 4.0% ("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, we accrue interest at a discretionary earnings rate which is
.85% 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 .85% Loan Spread mentioned above is
currently in effect and is not guaranteed.
Beginning in the eleventh Policy Year, we guarantee that the Loan Spread
will not exceed .50% ("the guaranteed loan spread"). Beginning in the
eleventh Policy Year and thereafter, the Loan Spread will be the lesser
of (a) the guaranteed loan spread or (b) a current loan spread
determined by us ("the discretionary loan spread"). The Company may
change the discretionary loan spread at any time in its sole discretion.
Currently the discretionary loan spread beginning in the eleventh
Policy Year is .25%, but this discretionary loan spread is not
guaranteed.
Interest earned 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 earned will also be allocated, as appropriate:
(1) when a new Policy Loan is made; (2) when a Policy 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 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 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 Policy Year. The borrowing rate determined
by General American for a Policy Year may not exceed a Maximum Limit
which is the greater of:
(1) 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
(2) Five Percent (5.0%).
The Published Monthly Average means:
(1) Moody's Corporate Bond Yield Average-Monthly Average Corporates, 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.
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If the Maximum Limit for a Policy Year, as determined in this manner, is
at least .50% higher than the borrowing rate determined by General
American for the previous Policy Year, General American may increase the
borrowing rate up to the Maximum Limit. If the Maximum Limit for a
Policy Year is at least .50% lower than the borrowing rate determined by
General American for the previous Policy Year, General American will
reduce the borrowing rate to no 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 borrowing
rate by at least .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 of the Policy may be higher.
In addition, if the Indebtedness (See Definitions -- Indebtedness)
exceeds the Cash Value minus the surrender charges on any Monthly
Anniversary, the Policy will lapse, subject to a grace period. (See
Policy Lapse and Reinstatement -- Lapse.) A sufficient payment must be
made within the later of the grace period of 62 days from the Monthly
Anniversary immediately before the date the 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 or surrender.
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 AND PARTIAL WITHDRAWALS
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 or partial withdrawal 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 outstanding
Indebtedness, and less any surrender charges (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
otherwise deductible will be included in the amount paid. The 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
27
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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 in that Division, net of any applicable
surrender charges. The total partial withdrawals and transfers from the
General Account over the Policy Year may not exceed a maximum amount
equal to the greater of (a) 25% of the Cash Surrender Value in the
General Account at the beginning of the Policy Year or (b) the previous
Policy Year's maximum amount.
The Owner may allocate the amount withdrawn plus any applicable
surrender charges, 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.)
Generally, any surrender charges imposed in connection with a partial
withdrawal will be allocated among the Divisions of the Separate Account
and the General Account in the same proportion as the partial withdrawal
is allocated. An Owner may request, however, that a surrender charge
applicable to an amount withdrawn from a Division be paid from an
Owner's Cash Value in another Division. No amount may be withdrawn 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.
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 charges 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 charges 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.
If the Face Amount of a Policy has been increased or if a SCTR has been
purchased, then a partial withdrawal which reduces the Face Amount will
usually affect the way in which the cost of insurance charge is
calculated, as different increments of Face Amount and coverage under a
SCTR will often have different cost of insurance rates (See Monthly
Deduction--Cost of Insurance.) Partial withdrawals will be applied, in
the following order, to reduce:
(1) the initial Face Amount (subject to the Policy's minimum Face
Amount); then to
(2) any automatic increases to the initial Face Amount resulting from
an IBR; then to
(3) any requested increases in Face Amount starting with the oldest and
proceeding to the next oldest, successively; then to
(4) any Face Amount increases resulting from a change from Death
Benefit Option B to Death Benefit Option A; then to
(5) any SCTR coverage; then to
(6) any automatic increases to the SCTR resulting from the IBR.
The Company may change the minimum amount required for a partial
withdrawal or the number of times partial withdrawals may be made.
CHARGES ON SURRENDER, PARTIAL WITHDRAWALS, AND DECREASES. If a Policy
is surrendered, the CDSC will apply. (See Charges and
Deductions--Contingent Deferred Sales Charge.) A decrease in Face
Amount may result in a charge. A decrease in Face Amount may decrease
some or all of the initial Face Amount as well as any increases in Face
Amount. As noted above, a partial withdrawal may cause a decrease in
Face Amount and thus may result in a charge. The amount of the charge
assessed because of a decrease in Face Amount is a portion of the
charge that would be deducted upon surrender or lapse. The portion is
based on the relationship between the decrease in
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Face Amount and the initial Face Amount. Charges are described in more
detail under Charges and Deductions--Contingent Deferred Sales Charge.
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 -- Transfers, Surrenders, Partial Withdrawals, and Policy Loans
and The General Account -- General Description.) Requests for transfers
from or among Divisions of the Separate Account may be 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.
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 or
exercise of the conversion privilege will not be counted for purposes of
the limitations on the amount or frequency of transfers allowed in each
Policy Month or Policy Year.
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.
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 your Cash Value in the
General Account and in the Divisions of the Separate Account to the
percentages that you 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 fund 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. The Owner 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.
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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 automatically 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
guarantees that DCA will result in a profit or protect against loss in a
declining market.
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 Right to Examine Policy).
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), within
45 days after the application was signed, or within 10 days of the
Company's mailing a notice of the cancellation right, whichever is
latest. If a Policy is canceled within this time period, a refund will
be paid. Except for Policies sold in Kansas, the refund will equal all
premiums paid under the Policy. (For Policies sold in Kansas, 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 check has cleared the Owner's
bank. (See General Matters--Postponement of Payments from the Separate
Account.)
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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 latest of 20 days from the date the Owner receives the
new Policy specifications page for the increase, 45 days after the
application for the increase is signed, or 10 days of mailing the notice
of the cancellation right.
CONVERSION PRIVILEGE
During the first 24 Policy Months following the issuance of the Policy,
the Owner may convert any Policy still in force to a guaranteed benefit
life insurance policy by instructing the Company to transfer the
Policy's Cash Value in the Separate Account to the General Account and
to allocate all subsequent Net Premiums to the General Account. A
similar conversion privilege is available during the first 24 Policy
Months following a requested increase in Face Amount. Upon exercise of
this privilege, the Cash Value in the Separate Account attributable to
the increase will be transferred to the General Account, and all
subsequent Net Premiums attributable to the increase will be allocated
to the General Account.
Transfers made pursuant to this conversion privilege will not affect the
death benefit, Face Amount, net amount at risk, rate class, or Issue Age
under a Policy. No charge will be imposed on any transfers resulting
from the exercise of this conversion privilege, and such transfers will
not count against the limitation on the amount and frequency of transfer
requests allowed in each Policy Month or Policy Year. (See Transfers.)
Any limitation on allocations to the General Account in effect at the
time of an Owner's exercise of such conversion privilege will not apply.
(See The General Account.)
Notwithstanding an exercise of the conversion privilege during the first
24 Policy Months following an increase in Face Amount, circumstances in
effect following the conversion could subject Cash Value in the General
Account to substantial investment risk. For example, if Cash Value in
the Separate Account is high relative to Cash Value in the General
Account, poor investment performance of the Divisions of the Separate
Account to which the Owner has allocated Net Premium payments could
result in a greater likelihood of lapse. If the Divisions of the
Separate Account perform poorly and Cash Value is not available in the
Separate Account to pay monthly deductions, Cash Value in the General
Account could be wholly depleted, and the Policy could lapse. Because
circumstances can alter the expected outcome of an exercise of the
conversion privilege following an increase in Face Amount, Owners should
consult their sales representative or other competent advisor before
deciding whether to exercise the conversion privilege following an
increase in Face Amount.
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 "Initial Annual Premium" for the Policy. The Initial Annual 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. 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 "Initial Annual Premium" for the Policy.
(See Charges and Deductions.)
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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.) Premium receipts will be
furnished upon request.
An Owner may make unscheduled premium payments at any time in any amount
or may 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. Under these
circumstances, 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 the Owner's annual
report. 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.
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 aggregate amount of premium that may be paid under 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 by 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.)
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 in writing to the Company. Any change in
allocation will take effect immediately upon receipt by the Company of
the written notification. No charge is imposed for changing the
allocations of future Net 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, Net Premiums will automatically be allocated to the
Division that invests in the Money Market Fund of the Capital Company.
(See Right to Examine Policy). 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
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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.)
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 that Cash
Surrender Value is insufficient to cover the monthly deduction 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 to keep the Policy in
force. The amount of the premium required to keep the Policy in force
will be the amount required to cover the outstanding monthly deductions
and premium tax charges. (See Charges and Deductions--Monthly
Deduction.) If the Company does not receive the required amount during
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.
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 tax
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.
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 Loans paid at the time of
reinstatement, and the amount of any surrender charges paid at the time
of lapse to the extent of the Face Amount reinstated. 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 is 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 charges in effect at the time of reinstatement will equal
the surrender charges in effect at the time of lapse. If only a portion
of the total Face Amount is reinstated, then only the applicable portion
of the surrender charges will be reinstated. If only a portion of the
total Face Amount is reinstated, the Cash Value immediately following
reinstatement will be increased by the applicable portion of the
surrender charges imposed 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
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additional benefits added by rider, administering the Policy, incurring
expenses in distributing the Policy, and assuming certain risks in
connection with the Policy.
PREMIUM TAX CHARGES
Prior to allocation of Net Premiums, premium payments will be reduced by
premium tax charges consisting of a charge for state premium taxes and a
charge for Federal income tax costs. The premium payment, less the
premium tax charge, equals the Net Premium.
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 2.10% of the premium is
made from each premium payment for these taxes. Some jurisdictions may
not impose premium taxes, while others may impose premium taxes that are
more or less than the 2.10% deducted under the Policy. Accordingly, the
2.10% deduction may be higher or lower than the actual premium tax
imposed by the applicable jurisdiction. The deduction represents the
average amount the Company considers necessary to pay the premium taxes
imposed by the states and any subdivisions thereof. If the average
premium tax increases in the future, the deduction for premium taxes
will increase accordingly.
FEDERAL INCOME TAX COSTS ATTRIBUTABLE TO PREMIUM PAYMENTS. A 1.25%
deduction is taken from each premium payment to cover the Company's
Federal income tax costs attributable to the amount of premium received.
The Company has concluded that this deduction is reasonable in relation
to the Company's increased Federal tax burden as a result of Section 848
of the Internal Revenue Code.
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) 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. 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 the
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, recordkeeping,
processing death benefit claims, cash surrenders, partial withdrawals,
Policy changes, 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 for each
Policy. This charge is $13 per month during the first twelve Policy
Months and $6.00 per month thereafter. 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.
SELECTION AND ISSUE EXPENSE CHARGE. An additional administrative charge
will be deducted from Cash Value as part of the monthly deduction. The
charge will compensate the Company for issuance, underwriting,
processing, and start-up expenses. These expenses include the cost of
processing applications, conducting medical examinations, and
determining insurability and the Insured's rate class. The charge will
also compensate the Company for on-going administrative costs. In the
first Policy Year, the charge is $.16 per month multiplied by the Face
Amount (and by the face amount of any SCTR) divided by 1,000, and in all
Policy Years thereafter, the charge is $.01 per month multiplied by the
Face Amount (and by the Face Amount of any SCTR) divided by 1,000. The
Company does not anticipate that it will make any profit on the
Selection and Issue Expense Charge. The Selection and Issue Expense
Charge is guaranteed not to increase while the Policy is in force.
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The Selection and Issue Expense Charge is similarly imposed with respect
to an increase in Face Amount. In the first Policy Year following a
requested increase or an increase which results from the exercise of the
Guaranteed Option to Increase the Face Amount Rider, the charge is $.16
per month multiplied by the Face Amount of the increase divided by
1,000, and in all Policy Years thereafter (and when the increase results
from an IBR), the charge is $.01 per month multiplied by the Face Amount
of the increase divided by 1,000. If there is a decrease in Face
Amount, the charge will no longer be taken to the extent of the
decrease. The Selection and Issue Expense Charge is not imposed in
connection with a change from Death Benefit Option B to Death Benefit
Option A unless such change occurs simultaneously with a separately
requested increase in Face Amount.
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(s) by the net amount at risk (see
Monthly Deduction -- Cost of Insurance) 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, 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 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, excluding any rider, that required proof of
insurability. The cost of insurance is determined in a similar manner
for coverage under a SCTR and any increase in coverage under such a
rider. The current cost of insurance rate for coverage under a SCTR is
generally less than that for the Face Amount under a Policy. The
guaranteed maximum cost of insurance rates for a SCTR, however, are the
same as for the Face Amount under the Policy.
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 smoker/nonsmoker 1980 CSO Mortality Tables
(1980 CSO Table SA, 1980 CSO Table NA, 1980 CSO Table SG and 1980 CSO
Table NG), 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. Policies issued with simplified underwriting or guaranteed
issue, if it should become available in the future, will in general
incur a higher cost of insurance than Policies issued under full
underwriting.
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 4.0%), less (b) the Cash Value at the beginning of the Policy
Month. If there is an increase in Face Amount or a SCTR is in effect, a
net amount at risk will be calculated separately for the initial Face
Amount, for each increase in Face Amount, and for the SCTR. If Death
Benefit Option A or Death Benefit Option C is in effect, for purposes of
determining the net amounts at risk for the initial
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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 or for coverage
under a SCTR 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 15 years after the Issue Date or the effective
date of a Face Amount increase, the Company will impose a CDSC upon
surrender, lapse, or a requested decrease in Face Amount. The Company
will also impose the CDSC upon a partial withdrawal that results in a
decrease in Face Amount. The amount of the CDSC will depend upon a
number of factors, including the type of event (surrender, partial
withdrawal, lapse, or decrease in Face Amount), the amount of any
premium payments made under the Policy prior to the event, and the
number of Policy Years elapsed since the Policy was issued or the Face
Amount was increased, as applicable.
A separate CDSC applies to the initial Face Amount and to each increase
in Face Amount and is deducted whenever (and to the extent that) a
surrender, lapse, or Face Amount decrease affects the applicable
increment of Face Amount. For example, after an increase in Face
Amount, the Company will assess the CDSC applicable to the increase on a
surrender, lapse, or decrease of that increase in Face Amount. The
length of time over which a CDSC will apply to any increment of Face
Amount will depend upon the Attained Age of the Insured on the Issue
Date or the effective date of the increase, as applicable, and the
Insured's sex and risk class. The table below shows the duration of the
CDSC:
<TABLE>
CONTINGENT DEFERRED SALES CHARGE PERIOD (DURATION IN YEARS)
<CAPTION>
INSURED'S MALE NONSMOKER MALE FEMALE NONSMOKER FEMALE
AGE SMOKER SMOKER
<S> <C> <C> <C> <C>
0-50 15 15 15 15
51 14 14 14 14
52 13 13 13 13
53 12 12 12 12
54 11 11 11 11
55-79 10 11 10 10
80 10 6 10 10
</TABLE>
CALCULATION OF CHARGE. The CDSC will equal the CDSC grading percentage
multiplied by the sum of (1) and (2) where:
(1) is 40% of the lesser of the premium payments made or the Target
Premium for the Policy, excluding any riders, and
(2) is the Excess Premium Surrender Charge Factor multiplied by premium
payments made in excess of the Target Premium for the Policy, excluding
any riders.
With regard to a Face Amount increase:
(1) is 40% of the lesser of the premium payments attributable to the
increase or the Target Premium for the increase, and
(2) is the Excess Premium Surrender Charge Factor multiplied by premium
payments attributable to the increase in excess of the Target Premium
for the increase.
The Excess Premium Surrender Charge Factors vary with the Attained Age,
sex, and risk class of the Insured. The Target Premium for the Policies
is somewhat less than the guideline annual premium as defined in Rule
6e-3 (T) (c) (8) (hereinafter, a "GAP").
36
<PAGE>
<PAGE>
<TABLE>
CONTINGENT DEFERRED SALES CHARGE GRADING PERCENTAGES
Male Nonsmoker
--------------
<CAPTION>
End of Policy
Year Ages Age Age Age Age Ages
0 - 50 51 52 53 54 55 - 80
<S> <C> <C> <C> <C> <C> <C>
1 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
2 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
3 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
4 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
5 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
6 90.00% 88.89% 87.50% 85.71% 83.33% 80.00%
7 80.00% 77.78% 75.00% 71.43% 66.67% 60.00%
8 70.00% 66.67% 62.50% 57.14% 50.00% 40.00%
9 60.00% 55.56% 50.00% 42.86% 33.33% 20.00%
10 50.00% 44.44% 37.50% 28.57% 16.67% 0.00%
11 40.00% 33.33% 25.00% 14.29% 0.00% 0.00%
12 30.00% 22.22% 12.50% 0.00% 0.00% 0.00%
13 20.00% 11.11% 0.00% 0.00% 0.00% 0.00%
14 10.00% 0.00% 0.00% 0.00% 0.00% 0.00%
15+ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE GRADING PERCENTAGES
Male Smoker
-----------
End of
Policy Ages Age Age Age Ages Ages Age
Year 0 - 50 51 52 53 54-59 60-79 80
<S> <C> <C> <C> <C> <C> <C> <C>
1 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
2 100.00% 100.00% 100.00% 100.00% 100.00% 90.00% 80.00%
3 100.00% 100.00% 100.00% 100.00% 100.00% 80.00% 60.00%
4 100.00% 100.00% 100.00% 100.00% 100.00% 70.00% 40.00%
5 100.00% 100.00% 100.00% 100.00% 100.00% 60.00% 20.00%
6 90.00% 88.89% 87.50% 85.71% 83.33% 50.00% 0.00%
7 80.00% 77.78% 75.00% 71.43% 66.67% 40.00% 0.00%
8 70.00% 66.67% 62.50% 57.14% 50.00% 30.00% 0.00%
9 60.00% 55.56% 50.00% 42.86% 33.33% 20.00% 0.00%
10 50.00% 44.44% 37.50% 28.57% 16.67% 10.00% 0.00%
11 40.00% 33.33% 25.00% 14.29% 0.00% 0.00% 0.00%
12 30.00% 22.22% 12.50% 0.00% 0.00% 0.00% 0.00%
13 20.00% 11.11% 0.00% 0.00% 0.00% 0.00% 0.00%
14 10.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
15+ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
37
<PAGE>
<PAGE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE GRADING PERCENTAGES
Female Nonsmoker
----------------
End of
Policy Ages Age Age Age Age Ages
Year 0 - 50 51 52 53 54 55 - 80
<S> <C> <C> <C> <C> <C> <C>
1 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
2 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
3 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
4 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
5 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
6 90.00% 88.89% 87.50% 85.71% 83.33% 80.00%
7 80.00% 77.78% 75.00% 71.43% 66.67% 60.00%
8 70.00% 66.67% 62.50% 57.14% 50.00% 40.00%
9 60.00% 55.56% 50.00% 42.86% 33.33% 20.00%
10 50.00% 44.44% 37.50% 28.57% 16.67% 0.00%
11 40.00% 33.33% 25.00% 14.29% 0.00% 0.00%
12 30.00% 22.22% 12.50% 0.00% 0.00% 0.00%
13 20.00% 11.11% 0.00% 0.00% 0.00% 0.00%
14 10.00% 0.00% 0.00% 0.00% 0.00% 0.00%
15+ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE GRADING PERCENTAGES
Female Smoker
-------------
End of
Policy Ages Age Age Age Age Ages
Year 0 - 50 51 52 53 54 55 - 80
<S> <C> <C> <C> <C> <C> <C>
1 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
2 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
3 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
4 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
5 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
6 90.00% 88.89% 87.50% 85.71% 83.33% 80.00%
7 80.00% 77.78% 75.00% 71.43% 66.67% 60.00%
8 70.00% 66.67% 62.50% 57.14% 50.00% 40.00%
9 60.00% 55.56% 50.00% 42.86% 33.33% 20.00%
10 50.00% 44.44% 37.50% 28.57% 16.67% 0.00%
11 40.00% 33.33% 25.00% 14.29% 0.00% 0.00%
12 30.00% 22.22% 12.50% 0.00% 0.00% 0.00%
13 20.00% 11.11% 0.00% 0.00% 0.00% 0.00%
14 10.00% 0.00% 0.00% 0.00% 0.00% 0.00%
15+ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
38
<PAGE>
<PAGE>
<TABLE>
EXCESS PREMIUM SURRENDER CHARGE FACTORS
<CAPTION>
MALE MALE FEMALE FEMALE
ISSUE AGE NONSMOKER SMOKER NONSMOKER SMOKER
<S> <C> <C> <C> <C>
44 or younger 7.60% 7.60% 7.60% 7.60%
45-49 7.60% 7.40% 7.60% 7.60%
50-54 7.60% 7.20% 7.60% 7.60%
55-59 7.50% 7.00% 7.50% 7.50%
60-64 7.00% 7.00% 7.00% 7.00%
65 5.75% 5.75% 5.75% 5.75%
66 5.44% 5.75% 5.75% 5.75%
67 5.13% 5.75% 5.75% 5.75%
68 4.82% 5.75% 5.75% 5.75%
69 4.51% 5.13% 5.75% 5.13%
70 4.20% 4.50% 4.50% 4.50%
71 3.81% 4.20% 4.50% 4.15%
72 3.42% 3.90% 4.50% 3.80%
73 3.03% 3.60% 4.00% 3.45%
74 2.45% 3.30% 3.50% 3.10%
75 2.25% 3.00% 3.00% 2.75%
76 1.80% 2.40% 2.60% 2.30%
77 1.35% 1.80% 2.20% 1.85%
78 0.90% 1.20% 1.80% 1.40%
79 0.45% 0.60% 1.40% 0.95%
80 0.00% 0.00% 1.00% 0.50%
</TABLE>
Notwithstanding the foregoing, the CDSC for the initial Face Amount
during the first two Policy Years will not exceed 30% of the first GAP
paid under the Policy, 10% of the second GAP paid, and 9% of premium
payments made in excess of two GAP's. Likewise, the CDSC for any
increase in Face Amount during the first two Policy Years following the
increase will not exceed 30% of the first GAP attributable to the
increase, 10% of the second GAP attributable to the increase, and 9% of
premium payments attributable to the increase in excess of two GAP's.
The CDSC 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.
The Target Premium depends upon the Insured's Attained Age (on the Issue
Date or on the effective date of a requested increase), sex (except
under any Policies sold in Montana, see Unisex Requirements Under
Montana Law), and smoking risk class. The Target Premium will be fixed
and determined on the Issue Date or the effective date of any requested
increase in Face Amount. The Target Premium for the initial Face Amount
or a requested increase in Face Amount is determined by multiplying (a)
the applicable factor per $1,000 of Face Amount from Appendix B (using
the Insured's Attained Age on the Issue Date or on the effective date of
an increase), by (b) the initial Face Amount or the Face Amount of the
increase, and dividing the result by 1,000.
Because additional premium payments are not required to fund a requested
increase in Face Amount, a special rule applies to determine the amount
of "premiums attributable to the increase." In general, "premiums
attributable to the increase" will equal the sum of a proportionate
share of the Cash Surrender Value on the effective date of the increase,
before any deductions are taken, plus a proportionate share of premium
payments actually made on or after the effective date of the increase.
This means that, in effect, in calculating the amount of the Contingent
Deferred Sales Charge a portion of the existing Cash Surrender Value
will be deemed to be a premium payment for the increase, and subsequent
premium payments will be prorated. The proportion of existing Cash
Surrender Value and subsequent premium payments attributable to the
increase will equal the ratio of the Target Premium for the requested
increase to the sum of the Target Premiums for the total Face Amount in
effect under
39
<PAGE>
<PAGE>
the Policy, including the Target Premium for the requested increase.
See Appendix B for a table of Target Premium Factors.
CHARGE ASSESSED UPON DECREASES. Assuming there has been no prior
requested increase in Face Amount, the amount of the Contingent Deferred
Sales Charge deducted upon a decrease in Face Amount 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 decrease by the Policy's Face Amount on the Issue Date
of the Policy and multiplying the result by the charge.
If there has been a prior increase in Face Amount, the amount of the
charge will depend on whether the initial Face Amount or subsequent
increases in Face Amount are being decreased, which, in turn, will
depend on whether the decrease arises from a partial withdrawal or a
requested decrease in Face Amount. (See Policy Benefits--Death
Benefit--Change in Face Amount and Additional Coverage from Riders, and
Policy Rights--Surrender and Partial Withdrawals.) The charge deducted
will equal the proportionate amount of the Contingent Deferred Sales
Charge for each portion of the Face Amount being decreased, based on the
relationship of the decrease to the applicable portions of the Face
Amount.
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 Contingent Deferred Sales Charge, Selection
and Issue Expense 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; from the amount of projected premium
payments; or from lower Target Premiums when the death benefit under a
Policy has been increased by the amount of the coverage provided by a
SCTR. 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 .002455% of the average
net assets of each Division of the Separate Account, which equals an
effective annual rate of .90% of those net assets. This deduction is
guaranteed not to increase while the Policy is in effect. 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, Russell, 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 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.)
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; no dividends have been credited in the past.
40
<PAGE>
<PAGE>
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
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 percentage. 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
41
<PAGE>
<PAGE>
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 4.0%, 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, 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, IN ITS SOLE DISCRETION,
credit a higher rate of interest, although it is not obligated to credit
interest in excess of 4.0% 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 4.0% 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
4.0% 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 4.0% 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, surrender charges, or transfers to the Separate Account.
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS, AND POLICY LOANS
After the first Policy Year and prior to the death of the Insured, 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 the Cash Surrender Value in
the General Account at the beginning of the Policy Year or (b) 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 above) 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.)
No transfer charge currently is imposed on transfers to and 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
42
<PAGE>
<PAGE>
at any time. Partial withdrawals will result in the imposition of the
applicable surrender charges.
Transfers, surrenders, and partial withdrawals payable from the General
Account and the payment of Policy Loans allocated to the General Account
may, subject to certain restrictions, 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.
GENERAL MATTERS
POSTPONEMENT OF PAYMENTS FROM THE SEPARATE ACCOUNT
The Company usually pays amounts payable on partial withdrawal,
surrender, or Policy Loans 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, death of Insured, as well as payments of
a Policy Loan and transfers, may be postponed whenever: (i) 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; (ii) the SEC, by order, permits postponement for
the protection of Owners; or (iii) 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 check has cleared the bank upon which it
is 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 the death of the Insured. 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 Policy permits the designation of various types of trust 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. For more details about the use of trusts and
specialized types of beneficiaries, refer to the Policy.
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
43
<PAGE>
<PAGE>
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 60 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 this 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 is determined 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 and an addition of a rider after the Issue Date are
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 any outstanding Indebtedness. Subject to certain
limitations, if the Insured dies by suicide, while sane or insane,
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 an 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 under any Policies sold in Montana, see Unisex
Requirements Under Montana Law) of the Insured has been misstated in the
application, the amount of the benefit will be equitably adjusted on the
basis of the correct facts.
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.
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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. Many, but not all, of these additional
insurance benefits require additional charges. 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 deduction 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.
ACCIDENTAL DEATH BENEFIT RIDER. Provides additional insurance if the
Insured's death results from accidental bodily injury, as defined in the
rider. Under the terms of the rider, the additional benefits provided
in the Policy will be paid upon receipt of proof by the Company that
death: resulted directly from accidental bodily injury and
independently of all other causes; occurred within 120 days from the
date of injury; and occurred on or after the Policy Anniversary nearest
the Insured's age 0 and before age 70.
CHILDREN'S LIFE INSURANCE RIDER. Provides for term life insurance on
the Insured's children, as defined in the rider. Under the terms of the
rider, the death benefit will be payable to the named Beneficiary upon
the death of any insured child. Upon receipt of proof of the Insured's
death before the rider terminates, insurance on the life of any insured
child will continue without further premium payments.
GUARANTEED OPTION TO INCREASE THE FACE AMOUNT RIDER. Provides that the
Owner can purchase additional insurance under an existing Policy at
certain future dates without evidence of insurability.
ADDITIONAL INSURED FAMILY TERM RIDER. Provides for term life insurance
on an Additional Insured. An Additional Insured must be an immediate
family member (spouse or child) of the Insured. A rider is issued for
each additional family member individually. Under the terms of the
rider, the death benefit will be payable to the named Beneficiary upon
the death of the Additional Insured.
INCREASING BENEFIT RIDER. Provides generally for annual increases in
Face Amount under the Policy and coverages under any SCTR until the
Insured attains age 65. Increases may be either a fixed percentage or
indexed to a cost of living.
SUPPLEMENTAL COVERAGE TERM RIDER. Provides additional insurance
coverage on a basis different from that under the Policy. Coverage
under a SCTR generally has a lower cost of insurance, but has no Cash
Value associated with it.
GUARANTEED SURVIVOR PURCHASE OPTION RIDER. Provides that the
Beneficiary upon death of the Insured may purchase an option policy on a
"designated life." The designated life is named in the rider section
of the application for this Policy and may not be changed. No evidence
of insurability is required for the option policy.
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, VIP, VIP II, and Van Eck, and a list of the
securities held in each Fund. Receipt of premium payments, transfers,
partial withdrawals, 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.
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DISTRIBUTION OF THE POLICIES
The Policies 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 Policies, 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.
Walnut Street receives no administrative fees, management fees, or other
fee income from sales of the Policies.
Writing agents will receive commissions based on a commission schedule
and rules. Currently, agent first-year commissions can equal up to 45%
of the Target Premium and either 2.0% or 2.5% of the excess first year
premium, depending on the sales contract. In renewal years, the agent
commissions equal 2.0%, 2.5% or 3.0% of premium paid. For all years
after the first, a commission of .34% of the average monthly non-loaned
Cash Value for each Policy Year is paid. In addition, bonuses based on
first-year commissions may be earned during years 2 through 10 if an
agent is covered by a contract under which the lower percent of premium
commissions 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
based in part on the level of agent commissions in their agencies.
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 the 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
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American does not control Capital Company, 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."
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.
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 change of Owner, an assignment, 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, until there is a
distribution. The tax consequences of distributions from, and Policy
Loans taken from or secured by, a Policy depend on 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
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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 that 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's 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 Accounts.
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
CONTRACTS. 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 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.
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.
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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 (a) the
aggregate amount of any premiums or other consideration paid for a
Policy, minus (b) 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 (c) 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 includable 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
The Company holds the assets of the Separate Account. The assets are
kept physically segregated and held separate and apart from the General
Account. The Company maintains records of all purchases and redemptions
of the 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 $5
million, covering all officers and employees of the Company who have
access to the assets of the Separate Account.
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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 Funds 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 the 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 it owns and which are not attributable to
Policies in the same proportion.
Each person having a voting interest in a Division will receive 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 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.
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<TABLE>
MANAGEMENT OF THE COMPANY
<CAPTION>
PRINCIPAL OCCUPATION (S)
NAME DURING PAST FIVE YEARS<F*>
---- --------------------------
<C> <S>
PRINCIPAL OFFICERS<F**>
- -----------------------
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.
Kevin C. Eichner Executive Vice President of General American, President and Chairman of GenMark,
Chairman of Walnut Street Securities, 10/97-Present. President and CEO, Collaborative
Strategies, 1983-Present.
David L. Herzog Chief Financial Officer, GenAmerica Corporation, 1/99-present. President, GenAmerica
Management Corporation, 10/98-present. Formerly Assistant to the President, General
American and GenAmerica, 1996-1999, Chief Financial Officer, Individual Line, General
American, 1995-1996, Manager, Investor Relations, Reinsurance Group of America and
GenCare Health Systems, 1993-1995.
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.
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, Herzog,
Hughes, and Liddy is General American Life Insurance Company, 700
Market Street, St. Louis, Missouri 63101. The principal business
address for Messrs. Barber, Ingrassia, Lacy, 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.
51
<PAGE>
<PAGE>
<CAPTION>
PRINCIPAL OCCUPATION (S)
NAME DURING PAST FIVE YEARS<F*>
---- --------------------------
<C> <S>
Directors
- ---------
August A. Busch III Chairman of the Board and President, Anheuser-Busch Companies,
Anheuser-Busch Companies, Inc. 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
P.O. Box 149 Executive 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
Edison Brothers Stores, Inc. stores).
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, Missouri 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). Prior to 1991, President and
11420 Lackland Road Chief Executive Officer
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
St. Louis, Missouri 63164 resorts).
Andrew C. Taylor Chief Executive Officer and President, Enterprise Rent-A-Car
Enterprise Rent-A-Car (car rental). Prior to May, 1991, President.
600 Corporate Park Drive
St. Louis, Missouri 63105
H. Edwin Trusheim Retired Chairman and Chief Executive Officer
General American Life Insurance Co.
P.O. Box 396
St. Louis, MO 63166
52
<PAGE>
<PAGE>
<C> <S>
Robert L. Virgil Principal, Edward Jones (investments). Prior to 1993, Dean,
Edward Jones the John M. Olin School of Business, Washington University
12555 Manchester (business education)
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). Prior to 1993, Vice
St. Louis, Missouri 63167 President, Public Policy.
Ted C. Wetterau President, Wetterau Associates, L.L.C. Retired Chairman and
Wetterau Associates, L.L.C. Chief Executive Officer, Wetterau Incorporated (retail and
7700 Bonhomme, Suite 750 wholesale grocery, manufacturing business).
St. Louis, Missouri 63105
<FN>
<F*> All positions listed are with General American unless otherwise
indicated.
</TABLE>
53
<PAGE>
<PAGE>
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 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 SEC, 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.
54
<PAGE>
<PAGE>
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 in Appendix A 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 Selection and Issue Expense Charge, the
monthly administrative charges and monthly charges for the cost of
insurance based on the maximum values allowed under the 1980
Commissioners Standard Ordinary Nonsmoker 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 at the stated interest rate, reflecting deduction of the
Selection and Issue Expense Charge, 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 Nonsmoker 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 .90% charge for mortality and
expense risk, the investment advisory fee (.69% of aggregate average
daily net assets is assumed but 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), and administrative expenses incurred.
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 -1.59%, 4.41%, and 10.41%, 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. There is no
arrangement for reimbursing the expenses of General American Capital
Company, Russell Insurance Funds, Variable Insurance Products Fund,
Variable Insurance Products Fund II, and Van Eck Worldwide Insurance
Trust.
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,
55
<PAGE>
<PAGE>
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.
56
<PAGE>
<PAGE>
<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: $1,971
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.59%)
======== CURRENT ======== ======== GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,971 2,069 695 1,226 100,000 695 1,226 100,000
2 47 1,971 4,242 1,963 2,676 100,000 1,951 2,664 100,000
3 48 1,971 6,521 3,210 4,073 100,000 3,187 4,050 100,000
4 49 1,971 8,919 4,418 5,430 100,000 4,384 5,397 100,000
5 50 1,971 11,435 5,577 6,739 100,000 5,532 6,694 100,000
6 51 1,971 14,076 6,818 7,999 100,000 6,764 7,944 100,000
7 52 1,971 16,849 8,044 9,213 100,000 7,968 9,137 100,000
8 53 1,971 19,761 9,264 10,392 100,000 9,147 10,275 100,000
9 54 1,971 22,818 10,482 11,538 100,000 10,292 11,349 100,000
10 55 1,971 26,029 11,706 12,662 100,000 11,395 12,350 100,000
11 56 1,971 29,399 13,101 13,908 100,000 12,474 13,281 100,000
12 57 1,971 32,939 14,486 15,128 100,000 13,501 14,143 100,000
13 58 1,971 36,655 15,853 16,310 100,000 14,462 14,919 100,000
14 59 1,971 40,557 17,195 17,438 100,000 15,377 15,620 100,000
15 60 1,971 44,655 18,523 18,523 100,000 16,227 16,227 100,000
16 61 1,971 48,957 19,552 19,552 100,000 16,734 16,734 100,000
17 62 1,971 53,474 20,532 20,532 100,000 17,131 17,131 100,000
18 63 1,971 58,217 21,458 21,458 100,000 17,410 17,410 100,000
19 64 1,971 63,197 22,325 22,325 100,000 17,554 17,554 100,000
20 65 1,971 68,426 23,141 23,141 100,000 17,541 17,541 100,000
25 70 1,971 98,766 26,165 26,165 100,000 14,566 14,566 100,000
30 75 1,971 137,488 24,725 24,725 100,000 3,568 3,568 100,000
</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.
57
<PAGE>
<PAGE>
<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: $1,971
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.41%)
======== CURRENT ======== ======== GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,971 2,069 788 1,319 100,000 788 1,319 100,000
2 47 1,971 4,242 2,235 2,948 100,000 2,224 2,936 100,000
3 48 1,971 6,521 3,757 4,619 100,000 3,733 4,595 100,000
4 49 1,971 8,919 5,336 6,348 100,000 5,299 6,311 100,000
5 50 1,971 11,435 6,964 8,126 100,000 6,914 8,076 100,000
6 51 1,971 14,076 8,777 9,958 100,000 8,714 9,894 100,000
7 52 1,971 16,849 10,677 11,847 100,000 10,589 11,758 100,000
8 53 1,971 19,761 12,680 13,807 100,000 12,545 13,673 100,000
9 54 1,971 22,818 14,788 15,845 100,000 14,574 15,631 100,000
10 55 1,971 26,029 17,019 17,974 100,000 16,673 17,628 100,000
11 56 1,971 29,399 19,545 20,352 100,000 18,862 19,669 100,000
12 57 1,971 32,939 22,198 22,840 100,000 21,117 21,759 100,000
13 58 1,971 36,655 24,973 25,430 100,000 23,427 23,884 100,000
14 59 1,971 40,557 27,874 28,116 100,000 25,818 26,061 100,000
15 60 1,971 44,655 30,914 30,914 100,000 28,278 28,278 100,000
16 61 1,971 48,957 33,819 33,819 100,000 30,533 30,533 100,000
17 62 1,971 53,474 36,845 36,845 100,000 32,827 32,827 100,000
18 63 1,971 58,217 39,998 39,998 100,000 35,159 35,159 100,000
19 64 1,971 63,197 43,283 43,283 100,000 37,523 37,523 100,000
20 65 1,971 68,426 46,718 46,718 100,000 39,916 39,916 100,000
25 70 1,971 98,766 66,676 66,676 100,000 52,368 52,368 100,000
30 75 1,971 137,488 92,127 92,127 121,383 65,935 65,935 100,000
</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.
58
<PAGE>
<PAGE>
<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: $1,971
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.41%)
======== CURRENT ======== ======== GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,971 2,069 882 1,413 100,000 882 1,413 100,000
2 47 1,971 4,242 2,520 3,233 100,000 2,508 3,220 100,000
3 48 1,971 6,521 4,350 5,213 100,000 4,325 5,187 100,000
4 49 1,971 8,919 6,371 4,383 100,000 6,331 7,343 100,000
5 50 1,971 11,435 8,593 9,755 100,000 8,537 9,699 100,000
6 51 1,971 14,076 11,171 12,352 100,000 11,098 42,279 100,000
7 52 1,971 16,849 14,030 15,200 100,000 13,928 15,097 100,000
8 53 1,971 19,761 17,211 18,339 100,000 17,056 18,183 100,000
9 54 1,971 22,818 20,747 21,804 100,000 20,504 21,561 100,000
10 55 1,971 26,029 24,685 25,641 100,000 24,301 25,256 100,000
11 56 1,971 29,399 29,250 30,057 100,000 28,504 29,311 100,000
12 57 1,971 32,939 34,316 34,958 100,000 33,129 33,771 100,000
13 58 1,971 36,655 39,930 40,387 100,000 38,217 38,673 100,000
14 59 1,971 40,557 46,155 46,398 100,000 43,844 44,087 100,000
15 60 1,971 44,655 53,067 53,067 100,000 50,066 50,066 100,000
16 61 1,971 48,957 60,469 60,469 100,000 56,686 56,686 100,000
17 62 1,971 53,474 68,700 68,700 100,000 64,033 64,033 100,000
18 63 1,971 58,217 77,863 77,863 100,000 72,211 72,211 100,000
19 64 1,971 63,197 88,043 88,043 109,173 81,340 81,340 100,861
20 65 1,971 68,426 99,295 99,295 121,140 91,446 91,446 111,564
25 70 1,971 98,766 176,602 176,602 204,858 158,897 158,897 184,320
30 75 1,971 137,488 303,913 303,913 325,187 367,246 367,246 285,953
</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.
59
<PAGE>
<PAGE>
<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: $5,886
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.59%)
======== CURRENT ======== ======== GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,207 5,468 3,491 4,300 104,300 3,491 4,300 104,300
2 47 5,207 11,209 7,564 8,769 108,769 7,552 8,757 108,757
3 48 5,207 17,237 11,531 13,132 113,132 11,508 13,108 113,108
4 49 5,207 23,566 15,405 17,401 117,401 15,370 17,366 117,366
5 50 5,207 30,212 19,550 21,568 121,568 19,504 21,521 121,521
6 51 5,207 37,191 23,817 25,632 125,632 23,759 25,575 125,575
7 52 5,207 44,518 27,983 29,297 129,297 27,903 29,516 129,516
8 53 5,886 52,924 32,708 34,120 134,120 32,582 33,994 133,994
9 54 5,886 61,750 37,337 38,548 138,548 37,130 38,340 138,340
10 55 5,886 71,018 41,885 42,893 142,893 41,539 42,547 142,547
11 56 5,886 80,749 46,603 47,410 147,410 45,809 46,616 146,616
12 57 5,886 90,967 51,214 51,856 151,856 49,907 50,549 150,549
13 58 5,886 101,695 55,753 56,210 156,210 53,869 54,326 154,326
14 59 5,886 112,960 60,212 60,455 160,455 57,716 57,959 157,959
15 60 5,886 124,788 64,602 64,602 164,602 61,428 61,428 161,428
16 61 5,886 137,208 68,634 68,634 168,634 64,724 64,724 164,724
17 62 5,886 150,249 72,561 72,561 172,561 67,838 67,838 167,838
18 63 5,886 163,941 76,376 76,376 176,376 70,760 70,760 170,760
19 64 5,886 178,318 80,071 80,071 180,071 73,470 73,470 173,470
20 65 5,886 193,415 83,657 83,657 183,657 75,948 75,948 175,948
25 70 5,886 281,001 99,851 99,851 119,851 84,366 84,366 184,366
30 75 5,886 392,786 109,202 109,202 209,202 83,884 83,884 183,884
</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.
60
<PAGE>
<PAGE>
<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: $5,886
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.41%)
======== CURRENT ======== ======== GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,207 5,468 3,771 4,580 104,580 3,771 4,580 104,580
2 47 5,207 11,209 8,404 9,608 109,608 8,391 9,596 109,596
3 48 5,207 17,237 13,221 14,821 114,821 13,196 14,796 114,796
4 49 5,207 23,566 18,244 20,240 120,240 18,206 20,202 120,202
5 50 5,207 30,212 23,844 25,861 125,861 23,792 25,809 125,809
6 51 5,207 37,191 29,878 31,693 131,693 29,811 31,626 131,626
7 52 5,207 44,518 36,132 37,746 137,746 36,038 37,652 137,652
8 53 5,886 52,924 43,314 44,726 144,726 43,167 44,579 144,579
9 54 5,886 61,750 50,780 51,990 151,990 50,540 51,750 151,750
10 55 5,886 71,018 58,553 59,562 159,562 58,157 59,165 159,165
11 56 5,886 80,749 66,949 67,756 167,756 66,027 66,834 166,834
12 57 5,886 90,967 75,684 76,326 176,326 74,125 74,767 174,767
13 58 5,886 101,695 84,807 85,264 185,264 82,497 82,953 182,953
14 59 5,886 112,960 94,325 94,568 194,568 91,172 91,415 191,415
15 60 5,886 124,788 104,266 104,266 204,266 100,141 100,141 200,141
16 61 5,886 137,208 114,357 114,357 214,357 109,129 109,129 209,129
17 62 5,886 150,249 124,868 124,868 224,868 118,380 118,380 218,380
18 63 5,886 163,941 135,810 135,810 235,810 127,894 127,894 227,894
19 64 5,886 178,318 147,195 147,195 247,195 137,656 137,656 237,656
20 65 5,886 193,415 159,051 159,051 259,051 147,655 147,655 247,655
25 70 5,886 281,001 226,615 226,615 326,615 200,902 200,902 300,902
30 75 5,886 392,786 305,357 305,357 405,357 257,562 257,562 357,562
</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.
61
<PAGE>
<PAGE>
<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: $5,886
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.41%)
======== CURRENT ======== ======== GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,207 5,468 4,052 4,861 104,861 4,052 4,861 104,861
2 47 5,207 11,209 9,277 10,482 110,482 9,265 10,469 110,469
3 48 5,207 17,237 15,050 16,650 116,650 15,023 16,624 116,624
4 49 5,207 23,566 21,439 23,435 123,435 21,397 23,393 123,393
5 50 5,207 30,212 28,872 30,889 130,889 28,813 30,830 130,830
6 51 5,207 37,191 37,265 39,081 139,081 37,188 39,003 139,003
7 52 5,207 44,518 46,474 48,088 148,088 46,363 47,977 147,977
8 53 5,886 52,924 57,320 58,732 158,732 57,147 58,559 158,559
9 54 5,886 61,750 69,248 70,458 170,458 68,969 70,179 170,179
10 55 5,886 71,018 82,385 83,393 183,393 81,925 82,934 182,934
11 56 5,886 80,749 97,227 98,034 198,034 96,135 96,942 196,942
12 57 5,886 90,967 113,596 114,238 214,238 111,690 112,332 212,332
13 58 5,886 101,695 131,684 132,141 232,141 128,768 129,225 229,225
14 59 5,886 112,960 151,663 151,905 251,905 147,546 147,789 247,789
15 60 5,886 124,788 173,741 173,741 273,741 168,173 168,173 268,173
16 61 5,886 137,208 197,853 197,853 297,853 190,554 190,554 290,554
17 62 5,886 150,249 224,490 224,490 324,490 215,128 215,128 315,128
18 63 5,886 163,941 253,916 253,916 353,916 242,112 242,112 342,112
19 64 5,886 178,318 286,420 286,420 386,420 271,730 271,730 371,730
20 65 5,886 193,415 322,341 322,341 422,341 304,234 304,234 404,234
25 70 5,886 281,001 569,363 569,363 669,363 520,998 520,998 620,998
30 75 5,886 392,786 974,743 974,743 1,074,743 866,134 866,134 966,134
</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.
62
<PAGE>
<PAGE>
<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: $1,282
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.59%)
======== CURRENT ======== ======== GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,971 2,069 695 1,226 100,000 695 1,226 100,000
2 47 1,971 4,242 1,963 2,676 100,000 1,951 2,664 100,000
3 48 1,971 6,521 3,210 4,073 100,000 3,187 4,050 100,000
4 49 1,971 8,919 4,418 5,430 100,000 4,384 5,397 100,000
5 50 1,971 11,435 5,577 6,739 100,000 5,532 6,694 100,000
6 51 1,971 14,076 6,818 7,999 100,000 6,764 7,944 100,000
7 52 1,971 16,849 8,044 9,213 100,000 7,968 9,137 100,000
8 53 1,971 19,761 9,264 10,392 100,000 9,147 10,275 100,000
9 54 1,971 22,818 10,482 11,538 100,000 10,292 11,349 100,000
10 55 1,971 26,029 11,706 12,662 100,000 11,395 12,350 100,000
11 56 1,971 29,399 13,101 13,908 100,000 12,474 13,281 100,000
12 57 1,971 32,939 14,486 15,128 100,000 13,501 14,143 100,000
13 58 1,971 36,655 15,853 16,310 100,000 14,462 14,919 100,000
14 59 1,971 40,557 17,195 17,438 100,000 15,377 15,620 100,000
15 60 1,971 44,655 18,523 18,523 100,000 16,227 16,227 100,000
16 61 1,971 48,957 19,552 19,552 100,000 16,734 16,734 100,000
17 62 1,971 53,474 20,532 20,532 100,000 17,131 17,131 100,000
18 63 1,971 58,217 21,458 21,458 100,000 17,410 17,410 100,000
19 64 1,971 63,197 22,325 22,325 100,000 17,554 17,554 100,000
20 65 1,971 68,426 23,141 23,141 100,000 17,541 17,541 100,000
25 70 1,971 98,766 26,165 26,165 100,000 14,566 14,566 100,000
30 75 1,971 137,488 17,667 17,667 100,000 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.
63
<PAGE>
<PAGE>
<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: $1,282
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.41%)
======== CURRENT ======== ======== GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,971 2,069 788 1,319 100,000 788 1,319 100,000
2 47 1,971 4,242 2,235 2,948 100,000 2,224 2,936 100,000
3 48 1,971 6,521 3,757 4,619 100,000 3,733 4,595 100,000
4 49 1,971 8,919 5,336 6,348 100,000 5,299 6,311 100,000
5 50 1,971 11,435 6,964 8,126 100,000 6,914 8,076 100,000
6 51 1,971 14,076 8,777 9,958 100,000 8,714 9,894 100,000
7 52 1,971 16,849 10,677 11,847 100,000 10,589 11,758 100,000
8 53 1,971 19,761 12,680 13,807 100,000 12,545 13,673 100,000
9 54 1,971 22,818 14,788 15,845 100,000 14,574 15,631 100,000
10 55 1,971 26,029 17,019 17,974 100,000 16,673 17,628 100,000
11 56 1,971 29,399 19,545 20,352 100,000 18,862 19,669 100,000
12 57 1,971 32,939 22,198 22,840 100,000 21,117 21,759 100,000
13 58 1,971 36,655 24,973 25,430 100,000 23,427 23,884 100,000
14 59 1,971 40,557 27,874 28,116 100,000 25,818 26,061 100,000
15 60 1,971 44,655 30,914 30,914 100,000 28,278 28,278 100,000
16 61 1,971 48,957 33,819 33,819 100,000 30,533 30,533 100,000
17 62 1,971 53,474 36,845 36,845 100,000 32,827 32,827 100,000
18 63 1,971 58,217 39,998 39,998 100,000 35,159 35,159 100,000
19 64 1,971 63,197 43,283 43,283 100,000 37,523 37,523 100,000
20 65 1,971 68,426 46,718 46,718 100,000 39,916 39,916 100,000
25 70 1,971 98,766 66,644 66,644 104,374 52,368 52,368 100,000
30 75 1,971 137,488 82,409 82,409 116,389 57,474 57,474 100,000
</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.
64
<PAGE>
<PAGE>
<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: $1,282
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.41%)
======== CURRENT ======== ======== GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,971 2,069 882 1,413 100,000 882 1,413 100,000
2 47 1,971 4,242 2,520 3,233 100,000 2,508 3,220 100,000
3 48 1,971 6,521 4,350 5,213 100,000 4,325 5,187 100,000
4 49 1,971 8,919 6,371 7,383 100,000 6,331 7,343 100,000
5 50 1,971 11,435 8,593 9,755 100,000 8,537 9,699 100,000
6 51 1,971 14,076 11,171 12,352 100,000 11,098 12,279 100,000
7 52 1,971 16,849 14,030 15,200 100,000 13,928 15,097 100,000
8 53 1,971 19,761 17,211 18,339 100,000 17,056 18,183 100,000
9 54 1,971 22,818 20,747 21,804 100,000 20,504 21,561 100,000
10 55 1,971 26,029 24,685 25,641 100,000 24,301 25,256 100,000
11 56 1,971 29,399 29,250 30,057 100,000 28,504 29,311 100,000
12 57 1,971 32,939 34,316 34,958 100,000 33,129 33,771 100,000
13 58 1,971 36,655 39,930 40,387 100,000 38,217 38,673 100,000
14 59 1,971 40,557 46,155 46,398 100,000 43,844 44,087 100,000
15 60 1,971 44,655 53,053 53,053 107,144 50,066 50,066 101,111
16 61 1,971 48,957 60,363 60,363 118,545 56,604 56,604 111,164
17 62 1,971 53,474 68,394 68,394 130,680 63,703 63,703 121,717
18 63 1,971 58,217 77,214 77,214 143,610 71,406 71,406 132,807
19 64 1,971 63,197 86,895 86,895 157,399 79,750 79,750 144,456
20 65 1,971 68,426 97,532 97,532 172,157 88,778 88,778 156,705
25 70 1,971 98,766 168,954 168,954 264,606 145,977 145,977 228,620
30 75 1,971 137,488 270,489 270,489 382,016 220,270 220,270 311,092
</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.
65
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
APPENDIX B
Target Premium Factors per Thousand of Face Amount
Male Smoker
Age Factor Age Factor
<S> <C> <C> <C>
20 4.55
21 4.72 51 23.47
22 4.90 52 25.05
23 5.09 53 26.70
24 5.29 54 28.36
25 5.51 55 30.00
26 5.55 56 32.08
27 5.59 57 33.84
28 5.63 58 35.36
29 5.67 59 36.72
30 5.71 60 38.00
31 6.14 61 38.61
32 6.50 62 39.63
33 6.82 63 41.05
34 7.12 64 42.84
35 7.40 65 45.00
36 7.86 66 47.97
37 8.35 67 51.45
38 8.87 68 55.44
39 9.41 69 59.96
40 10.00 70 65.00
41 10.66 71 69.47
42 11.45 72 73.83
43 12.37 73 77.96
44 13.42 74 81.72
45 14.60 75 85.00
46 15.92 76 89.33
47 17.33 77 94.09
48 18.82 78 99.45
49 20.38 79 105.67
50 22.00 80 113.00
66
<PAGE>
<PAGE>
<CAPTION>
APPENDIX B
Target Premium Factors per Thousand of Face Amount
Male Non-Smoker
Age Factor Age Factor
<S> <C> <C> <C>
0 2.25
1 2.31 41 9.77
2 2.38 42 10.63
3 2.45 43 11.55
4 2.53 44 12.54
5 2.62 45 12.75
6 2.71 46 13.40
7 2.81 47 14.05
8 2.92 48 14.70
9 3.03 49 15.35
10 3.15 50 16.00
11 3.28 51 16.80
12 3.41 52 17.60
13 3.54 53 18.40
14 3.68 54 19.20
15 3.82 55 20.00
16 3.96 56 21.80
17 4.10 57 23.60
18 4.25 58 25.40
19 4.40 59 27.20
20 4.55 60 29.00
21 4.72 61 30.60
22 4.90 62 32.20
23 5.09 63 33.80
24 5.29 64 35.40
25 5.51 65 37.00
26 5.55 66 40.80
27 5.69 67 44.60
28 5.63 68 48.40
29 5.67 69 52.20
30 5.71 70 56.00
31 6.14 71 60.00
32 6.50 72 64.00
33 6.82 73 68.00
34 7.12 74 72.00
35 7.40 75 76.00
36 7.54 76 82.22
37 7.78 77 88.44
38 8.12 78 94.67
39 8.53 79 100.89
40 9.00 80 107.11
67
<PAGE>
<PAGE>
<CAPTION>
APPENDIX B
Target Premium Factors per Thousand of Face Amount
Female Smoker
Age Factor Age Factor
<S> <C> <C> <C>
20 3.25
21 3.38 51 17.35
22 3.49 52 18.65
23 3.59 53 19.91
24 3.68 54 21.09
25 3.75 55 22.20
26 3.77 56 23.44
27 3.79 57 24.72
28 3.81 58 26.06
29 3.83 59 27.48
30 3.85 60 29.00
31 3.88 61 30.60
32 3.91 62 32.27
33 3.94 63 34.02
34 3.97 64 35.89
35 4.00 65 37.90
36 4.22 66 40.08
37 4.46 67 42.46
38 4.74 68 45.05
39 5.08 69 47.90
40 5.50 70 51.00
41 5.87 71 54.40
42 6.41 72 58.10
43 7.13 73 62.11
44 7.99 74 66.42
45 9.00 75 70.74
46 10.27 76 75.25
47 11.62 77 80.07
48 13.03 78 85.21
49 14.49 79 90.74
50 16.00 80 96.00
68
<PAGE>
<PAGE>
<CAPTION>
APPENDIX B
Target Premium Factors per Thousand of Face Amount
Female Non-Smoker
Age Factor Age Factor
<S> <C> <C> <C>
0 1.90
1 1.95 41 9.67
2 1.99 42 10.13
3 2.06 43 10.64
4 2.12 44 11.21
5 2.19 45 11.84
6 2.27 46 12.44
7 2.34 47 13.05
8 2.43 48 13.72
9 2.52 49 14.42
10 2.62 50 15.11
11 2.72 51 15.44
12 2.83 52 15.98
13 2.95 53 16.69
14 3.06 54 17.54
15 3.17 55 18.50
16 3.24 56 20.06
17 3.31 57 21.50
18 3.38 58 22.87
19 3.45 59 24.21
20 3.50 60 25.59
21 4.00 61 26.37
22 4.17 62 27.34
23 4.35 63 28.47
24 4.53 64 29.76
25 4.65 65 31.20
26 4.77 66 33.34
27 4.89 67 35.88
28 5.01 68 38.87
29 5.13 69 42.34
30 5.25 70 46.35
31 5.65 71 49.46
32 6.06 72 52.82
33 6.49 73 56.43
34 6.92 74 60.33
35 7.36 75 64.48
36 7.71 76 68.92
37 8.08 77 73.68
38 8.48 78 78.83
39 8.89 79 84.24
40 9.28 80 90.08
</TABLE>
69
<PAGE>
<PAGE>
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:
"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
II-1
<PAGE>
<PAGE>
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 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-2
<PAGE>
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and
Documents:
The facing sheet
The Prospectus, consisting of 72 pages
The undertaking to file reports required by Section 15 (d),
1934 Act
The undertaking pursuant to Rule 484
Reasonableness of Fees and Charges
The signatures
The following exhibits:
1. The following exhibits 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) Proposed form of Policy and Policy Riders<F1>
(6) (a) Amended Charter and Articles of Incorporation
of General American<F3>
(b) Amended By-Laws of General American<F3>
(7) Not applicable
(8) (a) Form of Agreement to Purchase Shares of General
American Capital Company<F1>
(b) Form of Participation Agreement with Variable
Insurance Products Fund<F2>
(c) Form of Participation Agreement with Van Eck
Investment Trust<F1>
(d) General American's Undertaking pursuant to Rule
27d-2 is included as part of the Principal
Underwriting Agreement (see Exhibit 1.(3)(a))<F1>
II-3
<PAGE>
<PAGE>
(e) Form of Notice of Right of Cancellation and
Refund<F2>
(f) Form of Participation Agreement with Variable
Insurance Products Fund II<F2>
(9) Not applicable
(10) (a) Proposed form of Application for Policy<F2>
(b) Proposed form of Application for Policy
(Simplified Issue)<F2>
(11) 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>
2. See Exhibit 1.(5)
3. Opinion of Robert J. Banstetter, General Counsel of General
American<F1>
4. Not applicable
5. Not applicable
[FN]
<F1> Incorporated herein by reference to the initial
Registration Statement (file no. 33-84104) filed on
15 September 1994
<F2> Incorporated herein by reference to Pre-Effective
Amendment No. 1 (file no. 33-84104) filed on
23 January 1995
II-4
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, General
American Life Insurance Company and General American Separate Account
Eleven 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
26th day of February 1999.
General American Separate
Account Eleven
(Seal)
General American Life
Insurance Company
Attest: /s/ Robert J. Banstetter /s/ Richard A. Liddy
------------------------ ----------------------------------
Robert J. Banstetter, Richard A. Liddy,
Secretary President
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
- --------------------------- 2/26/99
Richard A. Liddy Chairman, President and
Chief Executive Officer
(Principal Executive
Officer)
/s/ David L. Herzog
- --------------------------- 2/26/99
David L. Herzog Vice President
Principal
Financial Officer
- --------------------------- Director
August A. Busch, III<F*>
- --------------------------- Director
William E. Cornelius<F*>
- --------------------------- Director
John C. Danforth<F*>
II-5
<PAGE>
<PAGE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
- --------------------------- Director
Bernard A. Edison<F*>
/s/ Richard A. Liddy
- --------------------------- Director 2/26/99
Richard A. Liddy
- --------------------------- Director
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*>
By: /s/ Matthew P. McCauley
------------------------
Matthew P. McCauley 2/26/99
<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-6
