<PAGE>
Registration No. 33-11465
As Filed with the Securities and Exchange Commission on March 1,1994
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 7
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
UNITED INVESTORS LIFE VARIABLE ACCOUNT
(Exact Name of Trust)
UNITED INVESTORS LIFE INSURANCE COMPANY
(Name of Depositor)
2001 Third Avenue South
Birmingham, Alabama 35233
(Address of Principal Executive Office)
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James L. Sedgwick, Esquire
United Investors Life Insurance Company
2001 Third Avenue South
Birmingham, Alabama 35233
(Name and Address of Agent for Service of Process)
Copy to:
Frederick R. Bellamy, Esquire
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
--------------------------------
DECLARATION PURSUANT TO RULE 24f-2
Flexible Premium Variable Life Insurance Policy -- An indefinite amount of
securities has been registered pursuant to Rule 24f-2 under the Investment
Company Act of 1940. The Rule 24f-2 Notice for the year ended December 31,
1993 was filed on January 26, 1994.
--------------------
The Registrant proposes that this Post-Effective Amendment No. 7 to the
Registration Statement shall become effective pursuant to Rule 486(a) of
the Securities Act of 1933 on April 29, 1994.
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
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Item No. Of
Form N-8B-2 Caption In Prospectus
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1. Cover Page
2. Cover Page
3. Not Applicable
4. Distribution of Policies
5. United Investors Life Insurance Company; United
Investors Life Variable Account
6. United Investors Life Variable Account
7. Not Applicable
8. Not Applicable
9. Legal Proceedings
10. Summary; United Investors Life Variable Account;
TMK/United Funds, Inc.; Charges and Deductions;
Policy Rights and Benefits; Voting Rights;
General Provisions
11. Summary; TMK/United Funds, Inc.
12. Summary; TMK/United Funds, Inc.
13. Summary; Charges and Deductions; TMK/United Funds,
Inc.
14. Summary; Premiums
15. Summary; Premiums
16. Premiums; TMK/United Funds, Inc.
17. Summary; Charges and Deductions; Policy Rights and
Benefits; TMK/United Funds, Inc.
18. TMK/United Funds, Inc.; Premiums
19. General Provisions, Voting Rights
20. Not Applicable
21. Policy Rights and Benefits; General Provisions
22. Not Applicable
23. Additional Information
24. General Provisions
25. United Investors Life Insurance Company
26. Not Applicable
27. United Investors Life Insurance Company
28. Executive Officers and Directors
29. United Investors Life Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Distribution of the Policies
36. Not Applicable
37. Not Applicable
38. Summary; Distribution of the Policies
39. Summary; Distribution of the Policies
40. Not Applicable
41. United Investors Life Insurance Company;
Distribution of the Policies
42. Not Applicable
43. Not Applicable
44. Premiums
45. Not Applicable
</TABLE>
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<TABLE>
<CAPTION>
Item No. Of
Form N-8B-2 Caption In Prospectus
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<S> <C>
46. Policy Rights and Benefits
47. TMK/United Funds, Inc.
48. Not Applicable
49. Not Applicable
50. United Investors Life Variable Account
51. Cover Page; Summary; Charges and Deductions;
Policy Rights and Benefits; Premiums
52. TMK/United Funds, Inc.
53. Federal Tax Matters
54. Not Applicable
55. Not Applicable
56. Not Applicable
57. Not Applicable
58. Not Applicable
59. Financial Statements
</TABLE>
<PAGE>
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U N I T E D I N V E S T O R S
A D V A N T A G E I SM
FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICY
PROSPECTUS
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This Prospectus describes the Flexible Premium Variable
Life Insurance Policy ("Policy") issued by United
Investors Life Insurance Company ("United Investors").
While the Policy can be purchased with a single premium,
it provides some flexibility to pay additional premiums
if the Policyowner so desires. The Policy provides for
life insurance coverage on the named Insured up to age
95, for the accumulation of Policy Value, for loan
privileges while the Insured is living, and for other
features that usually are associated with conventional
life insurance policies. Generally, all policy loans,
surrenders, and maturity benefits are treated first as
distributions of taxable income and then as a return of
the basis or investment in the Policy. In addition, prior
to age 59 1/2, such distributions generally are subject
to a 10% penalty tax. However, unlike conventional
insurance, the Death Benefit may and the Policy Value
will vary based on the performance of the investments
made in one or more of the Investment Divisions of United
Investors Life Variable Account (the "Variable Account").
The amount of the Death Benefit will never be less than
the Minimum Death Benefit specified in the Policy while
the Policy is still in force. Additional premium payments
may be required to keep the Policy in force. No minimum
amount of Policy Value is guaranteed, so the Policyowner
bears the entire investment risk under this Policy.
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 a flexible premium variable life
insurance policy.
This Prospectus Must be Accompanied or Preceded by a
Current Prospectus For TMK/United Funds, Inc.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR
FUTURE REFERENCE.
- --------------------------------------------------------------------------------
The Date of This Prospectus is April 29, 1994.
Issued By
United Investors Life Insurance Company
(a Missouri Stock Company)
2001 Third Avenue South
Birmingham, Alabama 35233
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U-1003 (4-94)
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TABLE OF CONTENTS
<TABLE>
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<C> <S> <C>
Definitions Definitions............................... i
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Summary Summary................................... 1
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United Investors Life United Investors Life Insurance Company... 3
Insurance Company and United Investors Life Variable Account.... 3
United Investors Life Variable TMK/United Funds, Inc. ................... 4
Account
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Policy Rights and Benefits Death Benefit............................. 5
Changes in the Minimum Death Benefit...... 6
Policy Value.............................. 6
Policy Loans.............................. 8
Surrenders................................ 9
Transfers................................. 9
Dollar Cost Averaging..................... 9
Free Look Period.......................... 10
Right to Exchange for Fixed Life
Insurance................................. 10
Voting Rights............................. 10
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Premium Payment and Issuance of a Policy...................... 11
Allocation Premiums.................................. 11
Allocation of Premiums.................... 11
Termination, Grace Period, and
Reinstatement............................. 12
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Charges and Deductions Mortality and Expense Risk Charge......... 13
Annual Deduction.......................... 13
Additional Premium Charge................. 14
Federal Taxes............................. 14
Surrender Charge.......................... 14
Fund Expenses............................. 14
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Payment Options Payment Options........................... 14
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General Provisions General Provisions........................ 15
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Distribution of the Policies Distribution of the Policies.............. 17
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Federal Tax Matters Federal Tax Matters....................... 17
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Additional Information Additional Information.................... 21
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Financial Statements Financial Statements...................... 23
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Appendix A Appendix A................................ A-1
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Appendix B Appendix B................................ B-1
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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.
THE PRIMARY PURPOSE OF THIS POLICY IS TO PROVIDE INSURANCE PROTECTION. NO CLAIM
IS MADE THAT THE POLICY IS IN ANY WAY SIMILAR OR COMPARABLE TO AN INVESTMENT IN
A MUTUAL FUND.
<PAGE>
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DEFINITIONS
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Accumulation Unit....... means an accounting unit used to calculate the Policy
Value.
Attained Age............ means the age of the Insured on his/her birthday
nearest a Policy Anniversary date (or the Policy
Date).
Beneficiary............. means the person or persons to whom this Policy's
Death Benefit is paid when the Insured dies.
Death Benefit........... means the amount payable under your Policy when the
Insured dies.
Fund.................... means the mutual fund available for investment by the
Variable Account on the Policy Date or as later
changed by us. The Fund available as of the date of
this prospectus is TMK/United Funds, Inc.
Grace Period Premium.... means that portion of the payment described in the
grace period provision of the Policy which represents
accrued and unpaid annual deductions.
In Force................ means the Insured's life remains insured under the
terms of the Policy.
Insured................. means the person whose life is insured by the Policy.
Issue Age............... means the age of the Insured on his/her birthday
nearest the Policy Date.
Loan Balance............ means all existing loans on a Policy plus any added
or accrued loan interest.
Maturity Date........... means the date on which the Proceeds are payable if
the Insured is living.
Minimum Death Benefit... means the least amount of Death Benefit payable while
the Policy remains in force. It is determined by the
Insured's age, sex and the amount of initial and
subsequent premiums paid.
Net Investment Factor... means the index applied to measure the investment
performance of an Investment Division from one
Valuation Period to the next.
Net premium............. means the premium paid less any deduction for sales
expenses and premium taxes.
Payee................... means the Beneficiary, or any other person, estate or
legal entity to whom benefits are to be paid.
Policy Anniversary...... means the same day and month as the Policy Date each
year that the Policy remains in force.
Policy Date............. means the date the Policy becomes effective, and the
date from which Policy Anniversaries and Policy Years
are determined.
Policyowner or Owner.... means the person named as the owner in the
application, unless he or she has assigned ownership
to someone else.
Policy Value............ means the Variable Account Value plus any Loan
Balance.
Policy Year............. means a year that starts on the Policy Date or on a
Policy Anniversary.
Proceeds................ means the amount payable under a Policy (a) upon the
death of the Insured, (b) on the Maturity Date, or
(c) upon the surrender of the Policy.
i
<PAGE>
Surrender Value......... means the Policy Proceeds if the Policy is
surrendered in full prior to the Maturity Date. It is
the Policy Value, less any Loan Balance and any
applicable surrender charges.
Terminate............... means that the Policy is no longer in force. All
insurance coverage under a Policy is stopped.
Valuation Date.......... means a normal business day, Monday through Friday.
However, we will not value the Policy's Death
Benefits or Policy Value on any customary U.S.
business holiday that the New York Stock Exchange is
not open for trading. Those holidays currently are
New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
Valuation Period........ means the interval of time commencing at the close of
business of the New York Stock Exchange on each
Valuation Date and ending at the close of business of
the New York Stock Exchange on the next Valuation
Date.
Variable Account Value.. means the sum of all values of the Investment
Divisions of the Variable Account under the Policy.
We...................... means United Investors Life Insurance Company. "Us"
and "our" also refer to United Investors.
Written Request......... means a request in writing signed by the Policyowner.
You..................... means the Owner of this Policy. "Your" and "yours"
also refer to the Owner.
ii
<PAGE>
SUMMARY
The following summary of Prospectus information should be read in conjunction
with the detailed information appearing elsewhere in this Prospectus. Unless
otherwise indicated the description of the Policy contained in this Prospectus
assumes that the Policy is in force and that there is no outstanding Loan
Balance.
THE POLICY. The Flexible Premium Variable Life Insurance Policy described in
this Prospectus is a life insurance contract that provides for life insurance
coverage on the named Insured up to age 95, cash values, surrender rights,
policy loan privileges, and other features associated with conventional life
insurance. The Policy is a "variable" policy because, unlike the fixed benefits
of a conventional life insurance policy, the Death Benefit may, and the Policy
Value will, increase or decrease depending upon the investment experience of
the Investment Divisions of the Variable Account to which the Policyowner
allocates the premium. However, so long as the Policy is in force, the Death
Benefit will be at least equal to the Minimum Death Benefit specified in the
Policy.
The Policy is issued in consideration of the application and payment of the
initial premium. The minimum initial premium is $5,000. The Policy can be
purchased for a single premium. However, additional premiums may be paid at the
Policyowner's option after the first Policy Year (within certain limits), and
additional premiums may be required in order to keep the Policy in force. No
Policy will be issued to an individual over age 75. The Policyowner determines
the allocation of the premium and Policy Value among the Investment Divisions
of the Variable Account.
THE VARIABLE ACCOUNT. The Variable Account currently has nine Investment
Divisions. The Investment Divisions invest solely in shares of a corresponding
portfolio of TMK/United Funds, Inc. (the "Fund"), which currently has the
following nine separate investment portfolios: the Money Market Portfolio, the
Bond Portfolio, the High Income Portfolio, the Growth Portfolio, the Income
Portfolio, the International Portfolio, the Small Cap Portfolio, the Balanced
Portfolio and the Limited-Term Bond Portfolio (collectively, the "Portfolios").
Each of these Portfolios have a different investment objective. (See TMK/United
Funds, Inc.) The Policyowner may redistribute the Policy Value from one
Investment Division to one or more other Investment Divisions up to twelve
times per Policy Year at no cost. (See Transfers.)
DEATH BENEFIT. So long as the Policy remains in force, the Death Benefit
payable will be the greater of the Minimum Death Benefit or the Policy Value
multiplied by the Death Benefit Factor. The Death Benefit proceeds will be
reduced by any outstanding Loan Balance. (See Death Benefit.)
Death Benefits under the Policy may be paid in a lump sum or under one of the
payment options set forth in the Policy. (See Payment Options.)
POLICY VALUE. On the Policy Date the Policy Value equals the amount of the
initial premium plus any accrued interest from the date of receipt of the
premium to the Policy Date. Thereafter, the Policy Value will increase or
decrease from day to day depending on the investment experience of the selected
Investment Divisions. There is no guaranteed minimum Policy Value. You may
surrender the Policy at any time for its Surrender Value, which is equal to the
Policy Value reduced by any Loan Balance and any applicable surrender charges.
The Policy Value is equal to the Variable Account Value plus any Loan
Balance. The Variable Account Value is equal to the sum of the values of the
Investment Divisions under the Policy. The Policy's Variable Account Value will
reflect the investment performance of the selected Investment Divisions, any
Policy loan activity, the charges imposed in connection with the Policy, and
indirectly the expenses of the Fund. (See Policy Value.) Accordingly, although
the Policy offers the possibility that the Variable Account Value and Policy
Value will increase, there is no assurance that they will increase and they may
decrease.
CHARGES AND DEDUCTIONS. United Investors does not impose any charge or
deduction against the initial premium prior to its allocation to the Variable
Account. Therefore the entire amount of the initial premium is invested in the
Variable Account for your benefit. However, there is a sales charge of a
1
<PAGE>
maximum of 8.5% of the initial premium, which is deducted from the Policy Value
in ten equal annual installments, one on each of the first ten Policy
Anniversaries, of 0.85% of the initial premium. This charge does not apply
after the first ten Policy Years.
A sales charge in the form of a surrender charge of 8% of the initial premium
is assessed for surrenders that occur in the first Policy Year. Thereafter the
charge decreases by 1% per year, so there is no charge on surrenders that occur
after the eighth Policy Year. (See Surrender Charge.) The combined total of
this surrender charge and the 0.85% sales charge deducted from Policy Value on
each of the first ten Policy Anniversaries will never exceed 8.5% of the
initial premium.
For any additional premiums after the initial premium, excluding Grace Period
Premiums, a sales load of 6% of such premium, and a premium tax charge of 2.5%
of such premium, will be deducted prior to its allocation to the Variable
Account.
On each of the first ten Policy Anniversaries, there are annual deductions of
.10% of the initial premium for underwriting and issue expenses and .25% of the
initial premium for state and local premium taxes incurred in connection with
the Policy. These charges do not apply after the first ten Policy Years.
A daily charge, at an effective annual rate of .60% of the daily value of the
Investment Divisions, will be deducted from the Investment Divisions for United
Investors assumption of certain mortality and expense risks incurred in
connection with the Policy. (See Mortality and Expense Risk Charge.)
A mortality charge is deducted on each Policy Anniversary to cover the cost
of insurance. This charge is based on the Policy's net amount at risk (which is
equal to the difference between the Death Benefit and the Policy Value as of
the end of the prior Policy Year) and on the attained age, sex and risk class
of the Insured. Annual cost of insurance rates will be determined by United
Investors based upon its expectations as to future mortality experience. The
current cost of insurance rates are not guaranteed but will not exceed the
maximum cost of insurance rates specified in the Policy.
An additional deduction of $50 is made on each Policy Anniversary to
compensate United Investors for the cost of administering the Policy.
The value of the net assets of the Investment Divisions also will reflect the
investment management fee and other expenses incurred by the Fund because the
Variable Account purchases shares of the Fund.
POLICY LOANS. After the first Policy Year, the Policyowner may borrow up to
the loan value of the Policy from United Investors. It should be noted,
however, that 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 Policy Value, less any applicable surrender charges, interest to the next
Policy Anniversary and any existing Loan Balance. The minimum loan amount is
$200. Loan interest at 6% per year is accrued daily and is payable at the end
of the Policy Year. If loan interest is not paid when due, it is added to the
loan and is charged interest. Any outstanding Loan Balance will be deducted
from Proceeds payable on the Maturity Date, at the Insured's death, or upon
surrender. All or part of a loan may be repaid at any time while the Insured is
alive and the Policy is in force.
A portion of the Policy Value sufficient to secure the loan will be
transferred from the Variable Account to United Investors' general account.
This amount is credited with interest at an effective annual rate of 4%
(currently, 6% is credited on loaned amounts that do not exceed the Policy
Value less total premiums paid) and does not share in the investment experience
of the Variable Account. Therefore, a loan will have a permanent impact on the
Policy Value even if it is repaid. (See Policy Loans.)
"FREE LOOK" PERIOD. You may cancel a Policy by returning it within 10 days
after you receive the Policy. When we receive the Policy we will cancel it and
refund the premium that was paid, or the amount required by your state if
greater.
During the Free Look period, your initial premium will be allocated to the
Money Market Investment Division. After the expiration of this period, the
Policy Value will be allocated to the Investment Divisions you have chosen, as
indicated in your application. (See Free Look Period.)
2
<PAGE>
TAX CONSEQUENCES OF THE POLICY. With respect to a Policy entered into before
October 21, 1988, or entered into after October 20, 1988, that is issued on the
basis of either a standard or preferred rate class, United Investors believes
that such a Policy should meet the definition of a life insurance contract for
Federal income tax purposes. As for a Policy entered into after October 20,
1988, that is issued on a substandard basis, it is not clear whether or not
such a Policy would qualify as a life insurance contract for Federal tax
purposes. Assuming that a Policy qualifies as a life insurance contract for
Federal income tax purposes, United Investors believes that the Death Benefits
paid under the Policy generally should be fully excludable from the gross
income of the beneficiary for Federal income tax purposes. Similarly, the Owner
should not be deemed in constructive receipt of cash values under a Policy
until there is a distribution from the Policy. A change of Policyowners may
have tax consequences depending on the particular circumstances. Generally, all
policy loans, surrenders, and maturity benefits are treated first as
distributions of taxable income and then as a return of the basis or investment
in the Policy. In addition, prior to age 59 1/2 such distributions generally
are subject to a 10% penalty tax. (Different rules may apply to Policies
entered into before June 21, 1988.) (See Federal Tax Matters.)
ILLUSTRATIONS. Sample projections of hypothetical Death Benefits and Policy
Values are included starting at page A-1 of this Prospectus. These projections
of hypothetical values may be helpful in under-standing the long-term effects
of different levels of investment performance, the charges and deductions, and
generally in comparing this Policy to other life insurance policies. These
projections also show the value of the initial premium accumulated with
interest and indicate that if the Policy is surrendered in the early Policy
Years, the Policy Value payable may be low compared to the premium accumulated
at interest. This reflects the cost of insurance protection and other charges
prior to surrender, and demonstrates that the Policy should not be purchased as
a short-term investment.
CORRESPONDENCE. All correspondence regarding the Policy should be addressed
or directed to the sales agent who sold the Policy or to United Investors at
the following address:
United Investors Life Insurance Company
Variable Products Division
P. O. Box 156 Birmingham, Alabama 35201-0156
Phone: (205) 325-4300
All inquiries should include the Policy number and the Insured's name and
Owner's name, if different.
UNITED INVESTORS LIFE INSURANCE COMPANY AND
UNITED INVESTORS LIFE VARIABLE ACCOUNT
UNITED INVESTORS LIFE INSURANCE COMPANY
United Investors Life Insurance Company is a stock life insurance company
that was incorporated in the State of Missouri on August 17, 1981, as the
successor to a company of the same name established in Missouri on September
27, 1961. United Investors is a wholly-owned subsidiary of United Investors
Management Company (formerly TMK/United, Inc.), which in turn is indirectly
owned by Torchmark Corporation. United Investors is principally engaged in
offering life insurance and annuity contracts and is admitted to do business in
the District of Columbia and all states except New York.
UNITED INVESTORS LIFE VARIABLE ACCOUNT
United Investors Life Variable Account (the "Variable Account") is currently
divided into nine Investment Divisions. Each Investment Division invests
exclusively in shares of a single portfolio of the Fund. Income and both
realized and unrealized gains or losses from the assets of each Investment
Division are credited to or charged against that Investment Division without
regard to income, gains or losses from any other Investment Division of the
Variable Account or arising out of any other business United Investors may
conduct.
3
<PAGE>
Although the assets in the Variable Account are the property of United
Investors, the assets in the Variable Account attributable to the Policies are
not chargeable with liabilities arising out of any other business which United
Investors may conduct. The Variable Account was established by United Investors
as a segregated asset account on January 5, 1987. The Variable Account will
receive and invest the premiums allocated to it under the Policies.
The Variable Account has been registered as a unit investment trust under the
Investment Company Act of 1940. Registration with the Securities and Exchange
Commission does not involve supervision of the management or investment
practices or policies of the Variable Account or United Investors by the
Commission and meets the definition of a separate account under the Federal
securities law.
TMK/UNITED FUNDS, INC.
The Variable Account invests in shares of TMK/United Funds, Inc. (the
"Fund"), a mutual fund of the series type with nine separate investment
portfolios. The Fund currently has a Money Market Portfolio, a Bond Portfolio,
a High Income Portfolio, a Growth Portfolio, an Income Portfolio, an
International Portfolio, a Small Cap Portfolio, a Balanced Portfolio, and a
Limited-Term Bond Portfolio. The assets of each Portfolio of the Fund are held
separate from the assets of the other Portfolios. Thus, each Portfolio operates
as a separate investment Portfolio, and the income or losses of one Portfolio
have no effect on the investment performance of any other Portfolio.
The investment objectives and policies of each Portfolio are summarized
below. There is no assurance that any of the Portfolios will achieve their
stated objectives. More detailed information, including a description of risks,
is in the Fund's prospectus, which accompanies this Prospectus and which should
be read carefully in conjunction with this Prospectus and retained.
The Fund is designed to provide investment vehicles for variable annuity or
variable life insurance contracts of various insurance companies. For more
information about the risks associated with the use of the same funding vehicle
for both variable annuity and variable life insurance contracts of various
insurance companies, see the Fund's prospectus.
The Fund currently offers the following nine Portfolios:
The Money Market Portfolio seeks to maximize current income consistent with
stability of principal. It may invest in money market securities such as bank
obligations and instruments secured by bank obligations, commercial paper and
corporate debt obligations and obligations of the U.S. and Canadian Governments
or their respective agencies and instrumentalities. Investments in a money
market fund are neither insured nor guaranteed by the U.S. Government and there
is no assurance that the portfolio will be able to maintain a stable per share
net asset value.
The Bond Portfolio seeks to provide current income with an emphasis on
preservation of capital. It will invest primarily in debt securities of varying
yields, quality and maturities.
The High Income Portfolio primarily seeks high current income. As a secondary
goal it will seek capital growth when consistent with the primary goal. It will
invest primarily in high-yield, high risk fixed- income securities, but may
have up to 20% of its assets in common stocks. High-yield fixed-income
securities may have an increased risk of default and greater market price
volatility than higher rated securities due to various circumstances. See "Risk
Factors of High Yield Investing" in the TMK/United Funds, Inc. prospectus for a
further description of the risk factors.
The Growth Portfolio primarily seeks capital growth. As a secondary goal it
will seek current income. It will invest primarily in common stocks or
securities convertible into common stocks.
The Income Portfolio seeks to maintain current income, subject to market
conditions. It will invest primarily in common stocks or securities convertible
into common stocks.
4
<PAGE>
The International Portfolio primarily seeks long-term appreciation of capital
with a secondary goal of realization of income by investing primarily in
securities issued by companies or governments of any nation.
The Small Cap Portfolio seeks capital growth through a diversified holding of
securities, primarily in the common stocks of, or securities convertible into
the common stocks of, relatively new or unseasoned companies, companies which
are in their early stages of development or smaller companies positioned in new
and emerging industries where the opportunity for rapid growth is above
average.
The Balanced Portfolio primarily seeks current income with a secondary goal
of long-term appreciation of capital by investing in a variety of securities,
including debt securities, common stocks and preferred stocks.
The Limited-Term Bond Portfolio seeks a high level of current income
consistent with preservation of capital by investing primarily in debt
securities of investment grade, including debt securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities. The Portfolio will
seek to maintain a dollar weighted average maturity of its portfolio of two to
five years.
FUND MANAGEMENT AND FEES
Waddell & Reed Investment Management Company (the "Manager") is the manager
of the Fund and provides investment advisory services to the Fund. Waddell &
Reed, Inc. previously served as Manager to the Fund and a number of other
mutual funds. On January 8, 1992, subject to the authority of the Fund's Board
of Directors, Waddell & Reed, Inc. assigned its investment management duties
(and assigned its professional staff for investment management services) to the
Manager. Waddell & Reed, Inc. will continue to act as the Fund's distributor.
Waddell & Reed, Inc. has provided to the Fund certain undertakings and
guarantees in connection with the assignment. The Manager is a wholly-owned
subsidiary of Waddell & Reed, Inc. which is a direct subsidiary of Waddell &
Reed Financial Services, Inc. and an indirect subsidiary of United Investors
Management Company and Torchmark Corporation. The Manager provides investment
advice to and supervises investments of a number of mutual funds. The Manager
maintains a large staff of experienced investment personnel and a full
complement of related support facilities. Each Portfolio pays the Manager a fee
for managing its investments at the following annual rates: Money Market
Portfolio--.51 of 1% of net assets; Bond Portfolio--.54 of 1% of net assets;
High Income Portfolio--.66 of 1% of net assets; Growth Portfolio--.71 of 1% of
net assets; Income Portfolio--.71 of 1% of net assets; International
Portfolio--.81 of 1% of net assets; Small Cap Portfolio--.86 of 1% of net
assets; Balanced Portfolio--.61 of 1% of net assets; and Limited-Term Bond
Portfolio--.56 of 1% of net assets. These fees are the result of the
combination of two elements: (i) a specific fee computed on each Portfolio's
net asset value at the close of business each day at the following annual
rates: Money Market Portfolio--None; Bond Portfolio--.03 of 1% of net assets;
High Income Portfolio--.15 of 1% of net assets; Growth Portfolio--.20 of 1% of
net assets; Income Portfolio--.20 of 1% of net assets; International
Portfolio--.30 of 1% of net assets; Small Cap Portfolio--.35 of 1% of net
assets; Balanced Portfolio--.10 of 1% of net assets; and Limited-Term Bond
Portfolio--.05 of 1% of net assets; and (ii) a base fee computed each day on
the combined net asset values of all of the Portfolios and allocated among the
Portfolios based on their relative net asset size at the annual rate of .51 of
1%.
POLICY RIGHTS AND BENEFITS
DEATH BENEFIT
The Policy pays a Death Benefit to the named Beneficiary if the Insured dies
while the Policy is in force. The Death Benefit will never be less than the
Minimum Death Benefit of the Policy as long as the Policy remains in force (the
proceeds will, of course, be reduced by any outstanding Policy loans). You will
be able to select from a range of initial Minimum Death Benefits. The Minimum
Death Benefit, at your option, can be the amount determined by treating the
premium paid as equal to 100% of Guideline Single
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Premiums (as defined for federal tax purposes); or the Minimum Death Benefit
can be an amount not in excess of 133% of that amount. (See Termination, Grace
Period, and Reinstatement.) The Death Benefit is the greater of the Minimum
Death Benefit or the Policy Value on the date of death multiplied by the Death
Benefit Factor for the Insured's age shown in the Table in Appendix B. The
Policy Value will begin to vary on the Policy Date to reflect the investment
performance of the amounts allocated to the Investment Divisions of the
Variable Account. There is no guarantee that the Policy Value will increase (it
may decrease) nor is there any guarantee that the Death Benefit will increase
above the Minimum Death Benefit.
The Minimum Death Benefit is shown in the Policy. Payment of additional
premiums may require an increase in the Minimum Death Benefit to continue the
Policy as a contract of life insurance for tax purposes. A new Policy Data page
will be sent to a Policyowner whenever the Minimum Death Benefit changes due to
the payment of additional premiums.
United Investors will compute the amount of the Death Benefit as of the end
of the Valuation Period during which the Insured dies, and will pay the Death
Benefit Proceeds upon proof of the Insured's death. The Proceeds may be paid in
a lump sum or under one of the payment options set forth in the Policy. (See
Payment Options.) The Death Benefit Proceeds are the Death Benefit reduced by
any outstanding Loan Balance.
Sample Death Benefits. The following table shows sample initial Minimum Death
Benefits for initial premiums of $10,000 and $25,000 at female age 35 and male
age 55.
INITIAL MINIMUM DEATH BENEFIT
<TABLE>
<CAPTION>
Initial Premium: $10,000 $25,000
Least Greatest Least Greatest
Age Amount Amount Amount Amount
--- ------ -------- ------ --------
<S> <C> <C> <C> <C>
35 female.......................... $62,365 $82,945 $164,860 $219,264
55 male............................ $24,039 $31,972 $ 62,499 $ 83,124
</TABLE>
A higher Death Benefit provides more insurance and, of course, costs more.
Thus, a higher Death Benefit will result in a higher mortality charge. (See
Cost of Insurance.)
CHANGES IN THE MINIMUM DEATH BENEFIT
Once each Policy Year, beginning in the second Policy Year, a Policyowner may
request an increase or a decrease in the Minimum Death Benefit. The Minimum
Death Benefit may not be decreased if it would cause a Policy to fail to
qualify as a contract of life insurance for federal tax purposes.
At the request of the Policyowner, or to keep premiums from exceeding the
limit qualifying the Policy as a life insurance contract for federal tax
purposes, we will allow a Policyowner to increase the Minimum Death Benefit,
provided:
(1) the increased amount plus any other existing insurance does not, in our
opinion, exceed an appropriate maximum amount on the Insured's life;
(2) satisfactory evidence of insurability for the Insured's risk class is
furnished to us; and
(3) the request is accompanied by a minimum additional premium of $5,000.
We will notify the Policyowner as to the acceptable amount of any increase in
the Minimum Death Benefit and refund any excess premium. The accepted premium
must equal or exceed a minimum additional premium.
POLICY VALUE
On the Maturity Date, the Proceeds payable under a Policy are equal to the
Policy Value less any Loan Balance. The Policy may be surrendered at any time
for the Surrender Value, which is equal to the
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<PAGE>
Policy Value less any Loan Balance and less any applicable surrender charge.
(See Surrender Charge.) The Policy Value equals the Variable Account Value plus
the value of any amount transferred to the general account to cover the Loan
Balance. The Policy Value will begin to vary immediately to reflect the
investment performance of the Investment Divisions to which the Policy Value is
allocated, any loan activity, and the charges assessed in connection with the
Policy. There is no guaranteed minimum Policy Value.
Determination of the Variable Account Value
The Policy's Variable Account Value is equal to the sum of the values of the
Investment Divisions of the Variable Account (so the Variable Account Value
equals the Policy Value less any Loan Balance). The value of each Investment
Division is calculated first on the Policy Date and thereafter on each
Valuation Date (a normal business day). On the Policy Date, the value of the
Investment Divisions is equal to the amount of the initial premium plus any
accrued interest from the date of the receipt of the initial premium to the
Policy Date. On any Valuation Date thereafter, the value of each Investment
Division equals what it was on the previous Valuation Date, multiplied by the
appropriate Net Investment Factor for the current Valuation Period, increased
and/or decreased by the amounts specified below. The value of an Investment
Division is increased by:
(1) the amount of any net premium payments allocated to the Investment
Division during the current Valuation Period;
(2) the amount of any transfers from other Investment Divisions to the
Investment Division during the current Valuation Period; and
(3) the amount of any loan repayments allocated to the Investment Division
during the current Valuation Period.
The value of an Investment Division is decreased by:
(1) the amount of any transfers to other Investment Divisions from the
Investment Division during the current Valuation Period;
(2) the portion of any annual deduction allocated to the Investment
Division; and
(3) the amount of any loan or loan interest transferred from the Investment
Division during the current Valuation Period.
Determining Investment Results
The Policy Value will change due to the investment results of the Investment
Divisions. An index is used to measure these investment results. The index is
called a unit value. Each Investment Division has its own unit value.
For each Investment Division, the unit value was initially set at $1.00.
Thereafter, the unit value for a given Valuation Period is equal to the unit
value for the prior Valuation Period multiplied by the Net Investment Factor
for the given Valuation Period.
The Net Investment Factor is an index applied to measure the investment
performance of an Investment Division from one Valuation Period to the next.
The Net Investment Factor may be greater or less than one, so the value of an
Investment Division may increase or decrease.
The Net Investment Factor of an Investment Division for any Valuation Period
is determined by dividing (1 ) by (2) and subtracting (3) from the result,
where:
1) is the result of:
a) the net asset value per share or value per unit of the investment held
in the Investment Division determined at the end of the current
Valuation Period; plus
7
<PAGE>
b) the per share amount of any dividend or capital gain distributions
made by the investment held in the Investment Division, if the "ex-
dividend" date occurs during the current Valuation Period; plus or
minus
c) a charge or credit for any taxes reserved for the current Valuation
Period which we determine to have resulted from the investment
operations of the Investment Division;
2) is the result of:
a) the net asset value per share or value per unit of the investment held
in the Investment Division, determined at the end of the previous
Valuation Period; plus or minus
b) the charge or credit for any taxes reserved for the previous Valuation
Period; and
3) is a deduction for certain mortality and expense risks that we assume.
At the end of any Valuation Period, the value of an Investment Division is
equal to the number of units multiplied by the unit value.
POLICY LOANS
A loan taken from, or secured by, a Policy, may have Federal income tax
consequences. (See Federal Tax Matters.)
After the first Policy Year you may borrow from United Investors against this
Policy up to the loan value. The loan value is 90% of the Policy Value, less
surrender charges and interest to the next Policy Anniversary, and you may
borrow in one or more loans any amount up to the difference between the loan
value and any existing Loan Balance. The effective annual interest rate charged
on all loans will be 6%. Interest to pay for the loan until the next Policy
Anniversary will be included in determining the maximum loan value. The Loan
Balance equals the total of all Policy loans and accrued interest on Policy
loans. The loan value of the Policy is the sole security for the loan. The
minimum loan amount is $200, and you may request up to four loans per Policy
Year without a charge. If more than four loans are requested, there will be a
$25 transaction charge for each additional loan.
We will transfer an amount equal to the Policy loan from the Investment
Divisions to the general account as security for the Loan Balance. We will
allocate the amount transferred in the proportion that the value of each
Investment Division bears to the Variable Account Value. The amounts
transferred to the general account equal to the Loan Balance will be credited
with interest earnings at an effective annual rate of 4.0%. Currently, an
additional 2.0% (or a total of 6.0%) is credited on loaned amounts that do not
exceed the Policy Value less the total premiums paid, excluding Grace Period
Premiums. This additional amount may change in the future. The Variable Account
Value is reduced by the amount transferred to the general account to secure the
Loan Balance, including loan interest charges that become part of the loan
because they are not paid when due.
Loan interest is charged daily on any amounts loaned and is due on each
Policy Anniversary (or when the loan is paid back). If loan interest is not
paid when due, it will be added to the principal of the loan and interest shall
be charged thereon. Interest will be taken from the Investment Divisions in the
proportion that the value of each Investment Division bears to the Variable
Account Value.
If the Loan Balance exceeds the Policy Value, less surrender charges, the
Policy will terminate without value unless additional premium payments
sufficient to keep the Policy in force are made by the end of the grace period.
(See Termination, Grace Period, and Reinstatement.)
A Policy loan will permanently affect the Policy Value, even if the loan is
repaid. The effect could be favorable or unfavorable depending on whether the
investment return of the Investment Divisions selected by you is less than or
greater than the net interest rate credited to the amount transferred to the
general account securing the loan (currently 0% or -2%). In comparison to a
Policy under which no loan was made, the Policy Value will be lower if the net
interest rate credited to the amount in the general account
8
<PAGE>
securing a loan is less than the investment return of the Investment Divisions
and greater if the general account net interest rate is higher than the
investment return of the Investment Divisions.
Repayment of the Loan Balance
You may repay all or part of the loan at any time while the Insured is alive
and the Policy is in force. Repayments must be in amounts of at least $200 or
the outstanding Loan Balance if less.
Upon repayment of the Loan Balance, the portion of the repayment allocated to
an Investment Division will be transferred from the general account and
increase the value in the Investment Division. The repayment will be allocated
among the Investment Divisions in the proportion that the value in each
Investment Division bears to the Variable Account Value. The repayment of the
Loan Balance will be allocated when the repayment is received.
Postponement of a Loan
A loan will usually be made within seven days after we receive your Written
Request. However, loans may be deferred under certain circumstances. (See Delay
or Suspension of Payments.)
SURRENDERS
You may surrender the Policy for its Surrender Value by sending a Written
Request to United Investors at its home office. Only full surrenders are
allowed; partial surrenders are not permitted. Surrenders will ordinarily be
paid within seven days of receipt of the Written Request. (See Delay or
Suspension of Payments.)
If a Policy is surrendered, United Investors will pay the Surrender Value,
which is the Policy Value less (1 ) any Loan Balance; and (2) the surrender
charge, if any (The surrender charge, described below, is only applicable if a
surrender occurs in the first eight Policy Years.). Coverage under the Policy
will terminate as of the date of receipt of a Written Request for surrender.
Surrenders may be taxable transactions. (See Federal Tax Matters.)
TRANSFERS
You may transfer all or part of the value of an Investment Division to one or
more of the other Investment Divisions. The total amount transferred each time
must be at least $1,000 or, if less, the entire value of the Investment
Division from which the transfer is being made. Transfers may be made by a
Written Request or by calling United Investors if a written authorization for
telephone transfers is on file. United Investors has the authority to honor any
telephone transfer request believed to be authentic. We are not responsible for
determining the authenticity of such calls.
Only twelve transfers may be made during each Policy Year. Each such transfer
will be made, without the imposition of any fee or charge, as of the end of the
Valuation Period during which United Investors receives a valid, complete
transfer request. United Investors may suspend or modify this transfer
privilege at any time.
Transferring the value of one Investment Division into two or more Investment
Divisions counts as one transfer request. However, transferring the values of
two Investment Divisions into one Investment Division counts as two transfer
requests.
DOLLAR COST AVERAGING
Prior to the Maturity Date you may authorize automatic transfers of a fixed
dollar amount from the Money Market Investment Division to up to four of the
other Investment Divisions. Automatic transfers will be made on a monthly basis
on the day of the month selected in your application. If the day of the month
selected does not fall on a Valuation Date, transfers will be made on the next
following Valuation Date. Transfers will be made at the unit values determined
on the date of each transfer.
9
<PAGE>
The minimum automatic transfer amount from the Money Market Investment
Division is $100. If the transfer is to be made to more than one Investment
Division, a minimum of $25 must be transferred to each Investment Division
selected.
Participation in the automatic transfer program does not guarantee a greater
profit nor does it protect against loss in declining markets. Automatic
transfers will not be counted as a transfer for purposes of the twelve transfer
limit specified in Transfers above.
FREE LOOK PERIOD
If for any reason you are not satisfied with the Policy, you may return it to
us within 10 days after you receive the Policy. If you cancel the Policy within
this 10 day "Free Look" period, we will refund the premium that was paid (or
the amount required by your state, if greater) and the Policy will be void from
the Policy Date. To cancel the Policy, you must mail or deliver it to either
United Investors' Home Office or the registered agent who sold it within 10
days after you received it.
RIGHT TO EXCHANGE FOR FIXED LIFE INSURANCE
Once during the first two policy years, you have the right to exchange this
policy for a single premium life insurance policy that provides for benefits
that do not vary with the investment return of the Investment Divisions. We
will not require evidence of insurability. We will require that:
(1) this policy is in force;
(2) you file a Written Request; and
(3) you repay any existing Loan Balance.
The new Policy will have the same initial Death Benefit, Policy Date and
issue age as the original Policy. The premium for the new Policy will be based
on our rates in effect on its Policy Date for the same class of risk as under
the original Policy. Upon request, we will inform you of the single premium for
the new Policy, and any extra sum required or allowance to be made for a
premium or cash value adjustment that takes appropriate account of the premium
and values under both the original Policy and the new Policy. If required, a
detailed statement of the method of computing such an adjustment has been filed
with the insurance regulator of the states where the Policies are delivered.
VOTING RIGHTS
To the extent required by law, United Investors will vote the Fund's shares
held in the Variable Account at regular and special shareholder meetings of the
Fund in accordance with instructions received from persons having voting
interest in the corresponding Investment Divisions of the Variable 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 United Investors
determines that it is allowed to vote the Fund's shares in its own right,
United Investors may elect to do so.
The number of votes which a Policyowner has the right to instruct will be
calculated separately for each Investment Division. The number of votes which
each Policyowner has the right to instruct will be determined by applying the
Policyowner's percentage interest in the Investment Division to the total
number of votes attributable to the Investment Division. Fractional votes will
be counted. The number of votes of a Portfolio which the Policyowner has the
right to instruct will be determined as of a date established by United
Investors, but not more than 90 days before the meeting of the Fund. Voting
instructions will be solicited by written communication prior to such meeting.
Each person having a voting interest in an Investment Division will receive
proxy material, reports and other materials relating to the appropriate
Portfolio.
United Investors will vote Fund shares attributable to the Policies as to
which no timely instructions are received and any Fund shares held by United
Investors as to which Policyowners have no beneficial interest, in proportion
to the voting instructions which are received with respect to all Policies
participating
10
<PAGE>
in that Portfolio. Voting instructions to abstain on any item to be voted upon
will be applied on a pro rata basis to reduce the votes eligible to be cast.
Disregard of Voting Instructions
United Investors 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 sub-classification or
investment objective or policies of the Fund or one or more of its Portfolios
or to approve or disapprove an investment advisory contract for a Portfolio.
In addition, United Investors itself may disregard voting instructions in
favor of changes initiated by a Policyowner in the investment policy or the
investment advisor of a Portfolio of the Fund if United Investors reasonably
disapproves of such changes. A change would be disapproved only if the
proposed change is contrary to state law or prohibited by state regulatory
authorities or United Investors determined that the change would have an
adverse effect on its general account in that the proposed investment policy
for a Portfolio may result in overly speculative or unsound investments. In
the event United Investors does disregard voting instructions, a summary of
that action and the reasons for such action will be included in the next
annual report to Policyowners.
PREMIUM PAYMENT AND ALLOCATION
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and
send it with the initial premium to United Investors' Home Office. United
Investors' Underwriting Department will review the application, and any
medical information or other data which it requires, to determine if the
individual is insurable under its underwriting rules. No Policy will be issued
to individuals over the age of 75. Coverage will only become effective on the
Policy Date. Should an individual die before the Policy Date, United
Investors' sole liability will be to return the premium paid plus any interest
earned on it.
PREMIUMS
The minimum Initial Premium that can be paid is $5,000. The amount of the
Minimum Death Benefit depends on the amount of the premium and on the
Insured's attained age and sex.
Although the Policy can operate as a single premium policy, after the first
Policy Year there is some flexibility to pay additional premiums at the
Policyowner's discretion. One additional premium per Policy Year may be paid
(not counting Grace Period Premiums). If the premium does not cause the
Minimum Death Benefit to increase, the minimum payment is $500. If the premium
does cause the Minimum Death Benefit to increase (so that the policy will
continue to qualify as a life insurance contract under the Internal Revenue
Code), then the minimum payment is $5,000 and is subject to the "Changes in
the Minimum Death Benefit" conditions. In addition, one or more additional
premiums may be required to prevent the Policy from terminating without value
if the Loan Balance exceeds the Policy Value, less surrender charges (or if
the Surrender Value is insufficient to cover the annual deduction). If either
of these conditions exist, then during the grace period you may pay an
additional premium sufficient to keep the Policy in force. If you do not, the
Policy will terminate without value. (See Termination, Grace Period, and
Reinstatement.)
ALLOCATION OF PREMIUMS
The Policyowner determines in the application how the initial premium will
be allocated among the Investment Divisions of the Variable Account. You may
allocate any whole percentage of the premium, from 0% to 100%.
Between the date that the initial premium was received and the Policy Date,
the initial premium is held in our general account and is credited with
interest as if it had been invested in the Money Market Investment Division.
Beginning on the Policy Date and ending on the seventeenth day after the
Policy Date or the first Valuation Date thereafter, the initial premium, plus
any accrued interest, will be allocated to the Money Market Investment
Division. Upon the expiration of this period, the Policy Value will be
transferred to the Investment Divisions of the Variable Account in accordance
with the allocation
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<PAGE>
instructions you specify in the application. The seventeen day period is
intended to cover the 10-day Free Look Period (See Free Look Period), plus 7
days for processing and policy delivery.
Additional premiums not requiring our approval will be allocated in
accordance with your instructions on the date of receipt. If approval is
required, the additional premium will be held in the general account and is
credited with interest as if it had been invested in the Money Market
Investment Division until the date of approval, at which time it will be
applied in accordance with your instructions. If no instructions are given,
then it will be invested in the proportions that the value of each Investment
Division bears to the Variable Account Value.
The Policy Value will vary with the investment performance of the Investment
Divisions you select and you bear the entire investment risk for the amounts
allocated to the Variable Account. This will affect not only the Policy Value,
but it may also affect the Death Benefit. You should periodically review your
allocations of Policy Value in light of all relevant factors, including market
conditions and your overall financial planning requirements.
TERMINATION, GRACE PERIOD, AND REINSTATEMENT
A Policy will terminate on the earliest of (a) the date the Policy is
surrendered, (b) the end of the grace period, (c) the date of the death of the
Insured, or (d) the Maturity Date.
If the Loan Balance on a Policy exceeds the Policy Value less surrender
charges, or if the Surrender Value is insufficient to cover the annual
deduction, a grace period of 61 days from the date notice is mailed shall be
allowed for the Policyowner to pay an additional premium sufficient to keep the
Policy in force. The additional premium required will not exceed the amount by
which the Loan Balance exceeds the Policy Value less surrender charges, plus
any accrued and unpaid annual deduction as of the date of the notice. The
payment will be sufficient to keep the Policy in force until the next Policy
Anniversary regardless of investment performance. If such additional premium is
not paid prior to the expiration of the grace period, the Policy will terminate
without value. If the Insured dies during the grace period, any Loan Balance or
overdue annual deduction will be deducted from the Death Benefit to determine
the Proceeds payable.
If the grace period has ended, the Policy may be reinstated if the
Policyowner:
1) submits a Written Request at any time within 3 years after the end of
the grace period and prior to the Maturity Date;
2) provides us with satisfactory evidence of insurability;
3) pays an additional premium sufficient to cover all previous annual
deductions that were due and unpaid; and
4) repays or reinstates any Loan Balance on the Policy which existed at the
end of the grace period.
If we approve the reinstatement, then (1) the effective date of reinstatement
will be the date of your Written Request or the date the required additional
premium is paid, if later; (2) the Death Benefit will be the same as it was
when the grace period ended; and (3) we will resume making charges and
deductions as of the date of reinstatement.
CHARGES AND DEDUCTIONS
United Investors does not impose any charge or deduction against the initial
premium prior to its allocation to the Variable Account, although for any
additional premiums, excluding Grace Period Premiums, a sales load of 6.0% of
such premium, and a premium tax charge of 2.5% of such premium, will be
deducted prior to its allocation to the Variable Account. Thereafter,
deductions are made from the values in the Investment Divisions to pay for
various expenses and risks that we incur. The charge for sales expenses may be
reduced or waived on Policies sold to employees of United Investors or its
affiliates, or to customers of United Investors who are transferring existing
policy values into a Policy.
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<PAGE>
MORTALITY AND EXPENSE RISK CHARGE
United Investors deducts a daily charge from the Investment Divisions at an
effective annual rate of .60% of the average daily net assets of each
Investment Division to compensate us for assuming certain mortality and expense
risks under the Policy. United Investors may realize a profit from this charge.
The level of this charge is guaranteed for the life of the Policy and may not
be increased. The mortality risk is the risk that the cost of insurance charges
specified in the Policy will be insufficient to meet actual claims. United
Investors also assumes the risk that other expense charges may be insufficient
to cover the actual expenses incurred in connection with the Policy.
ANNUAL DEDUCTION
On each Policy Anniversary, a deduction will be made from the values of the
Investment Divisions to compensate United Investors for certain costs and
expenses.
Deductions on Each of the First Ten Policy Anniversaries
On each of the first ten Policy Anniversaries, there is an annual deduction
of 1.20% of the initial premium. This charge is composed of a .85% charge for
sales expenses, a .10% charge for underwriting and issue expenses, and a .25%
charge for premium taxes. Each of these charges is discussed below.
(1) Sales Expenses--The .85% charge compensates United Investors for
certain sales and other distribution expenses incurred at the time the
Policies are issued, including agent sales commissions, the cost of
printing prospectuses and sales literature, advertising, and other
marketing and sales promotional activities. This charge for sales
expenses may be reduced or waived on Policies sold to employees of
United Investors or its affiliates or customers of United Investors who
are transferring existing policy values into a Policy.
(2) Underwriting and Issue Expenses--The .10% charge compensates United
Investors for initial underwriting costs and for certain expenses
incurred in issuing the Policy, including the cost of processing
applications, conducting medical examinations, determining
insurability, and establishing records.
(3) State and Local Premium Taxes--The .25% charge compensates United
Investors for the average premium tax expense incurred when issuing the
Policy.
Cost of Insurance
A mortality charge will be deducted on each Policy Anniversary to compensate
United Investors for the cost of insurance for the preceding Policy Year. This
charge is designed to compensate United Investors for the anticipated cost of
paying Death Benefits to the Beneficiaries of Insureds who die while the Policy
is in force. On the Policy Date, the Death Benefit is substantially higher than
the initial premium payment. As the Insured grows older, and if investment
results have been sufficiently favorable, the difference between the Policy
Value and the Death Benefit will become smaller. But prior to the Maturity Date
of the Policy the Death Benefit will always be higher than the Policy Value. To
enable United Investors to pay this additional amount, the mortality charge
must be assessed.
The mortality charge is based on the Policy's net amount at risk (which is
the difference between the Death Benefit and the Policy Value as of the end of
the Policy Year) and on the attained age, sex and risk class of the Insured.
Annual cost of insurance rates will be determined by United Investors based
upon its expectation as to future mortality experience. The rates are
guaranteed not to exceed the maximum cost of insurance rates specified in the
Policy, which are contained in the 1980 Commissioners' Standard Ordinary
Mortality Table, or a multiple thereof for substandard classes, Age Nearest
Birthday.
Administrative Expenses
United Investors deducts a charge of $50 on each Policy Anniversary to
compensate it for expenses incurred in administering the Policy. These expenses
include costs of maintaining records, processing
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<PAGE>
Death Benefit claims, surrenders, transfers, Policy loans and Policy changes,
providing reports to Policy-owners, and overhead costs. There is not
necessarily a relationship between the amount of the charge imposed on a
particular Policy and the amount of administrative expenses that may be
attributable to that Policy. This charge is "cost-based" and United Investors
does not expect a profit from this charge.
ADDITIONAL PREMIUM CHARGE
As noted above, there is no deduction from the initial premium. For
additional premiums, however, there are deductions of 6% of each such premium
for sales expenses, and 2.5% of each premium for premium taxes. The charge for
sales expenses may be reduced or waived on Policies sold to employees of United
Investors or its affiliates, or to customers of United Investors who are
transferring existing policy values into a Policy.
FEDERAL TAXES
Currently no charge is made to the Variable Account for federal income taxes
that may be attributable to the Variable Account. United Investors may,
however, make such a charge in the future. Charges for other taxes, if any,
attributable to the Variable Account may also be made. (See Federal Tax
Matters.)
SURRENDER CHARGE
If you surrender the Policy during the first eight Policy Years, then a
surrender charge is made against the amount of the initial premium as specified
in the following Table of surrender charges:
<TABLE>
<CAPTION>
POLICY YEAR: 1ST 2ND 3RD 4TH 5TH 6TH 7TH 8TH 9 OR MORE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Surrender Charge %.................... 8% 7% 6% 5% 4% 3% 2% 1% none
</TABLE>
There is no surrender charge after the first eight Policy Years. Because the
surrender charge is based on the amount of the initial premium, the dollar
amount of the charge will decrease each Policy Year by a fixed amount
regardless of the investment experience of the Variable Account.
The surrender charge will be deducted from the proceeds payable upon
surrender to partially compensate United Investors for sales expenses incurred
in connection with the Policy. These expenses include agent sales commissions,
the cost of printing prospectuses and sales literature, advertising, and other
marketing and sales promotional activities.
United Investors may reduce or waive the surrender charge on Policies that
have been sold to employees of United Investors or its affiliates, or to
customers of United Investors who are transferring existing policy values into
a Policy.
The amounts derived by United Investors from the surrender charge, along with
the deduction on the first ten Policy Anniversaries for sales expenses, and the
sales load deducted from additional premiums may not be sufficient to cover
distribution expenses. United Investors expects to recover any deficiency from
United Investors' general assets (which include amounts derived from the
mortality and expense risk charge and mortality gains). United Investors
believes that this distribution financing arrangement will benefit the Variable
Account and Policyowners.
FUND EXPENSES
The value of the assets of the Variable Account will reflect the investment
management fee (See Fund Management and Fees.) and other expenses incurred by
the Fund.
PAYMENT OPTIONS
Death Benefit Proceeds will be paid in one sum unless the Policyowner has
elected to apply all or part of this sum under a payment option. No option can
be elected if the payments under the option would be less than $25 each or less
that $120 in a year. Amounts payable under the payment options do not vary with
the investment performance of the Variable Account.
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<PAGE>
ELECTION OF PAYMENT OPTION
The Policyowner has the sole right to elect or change a payment option during
the lifetime of the Insured, either in the application or by Written Request.
If there is no option in effect when the Insured dies, the Beneficiary may
elect an option. The Payee may name a contingent payee to receive any final
payment in case the Payee dies; otherwise, the value of any remaining
guaranteed payments will be paid to the Payee's estate. We may require the
exchange of this Policy for a contract covering the option selected. As far as
permitted by law, the Proceeds under this Policy will not be subject to any
claims of the Beneficiary's creditors.
AVAILABLE OPTIONS
The options currently available are:
Option 1: Fixed Amount--This option provides an income payable monthly of a
fixed amount, until the Proceeds are fully paid. Under this
option at least 7% of the Proceeds must be paid each year.
Option 2: Fixed Period--This option provides an income payable monthly for
a fixed period, not exceeding 30 years.
Option 3: Life Income--This option provides an income payable during the
lifetime of the Payee. The payments are guaranteed for a fixed
period of 10, 15 or 20 years. Under this option, no payment will
become due after the death of the Payee, except payments for any
remaining fixed period.
Option 4: Proceeds Left at Interest--This option provides for the payment
of interest on any amount of Proceeds left with us, for any
period agreed upon. The interest may be paid at selected
intervals or allowed to accumulate.
Once a payment option is in effect, there will no longer be Policy Value in
the Variable Account. Any amount left with United Investors for payment under a
payment option will be transferred to the general account. The interest rate on
all amounts held under all options will be at least 2.5%, compounded annually.
United Investors may make other payment options available in the future and
other payment options can be arranged with our written consent.
Except as to Option 3, if the Payee selected the option, that Payee with our
consent may modify the terms of the option or select another option at any
time.
PAYMENT OPTION TABLES
The Payment Option Tables in the Policy show the guaranteed minimum amount of
the monthly payments. Under Option 3 the amount of each payment will depend on
the sex and age of the Payee at the time the first payment is due.
United Investors may, at the time of election of a Payment Option, offer more
favorable rates in lieu of the guaranteed rates specified in the Payment Option
Tables.
GENERAL PROVISIONS
THE CONTRACT
The entire contract is made up of the Policy and the written application. All
statements made in the application, in the absence of fraud, are considered
representations and not warranties. Only the statements made in the written
application can be used by us to defend a claim or avoid the Policy.
We reserve the right to make any modification to conform the Policy to, or
give you the benefit of, any Federal or State statute or any rule or regulation
of the United States Treasury Department or any state.
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<PAGE>
Changes to the Policy are not valid unless we made them in writing. They must
be signed by one of our Executive Officers. No agent has authority to change
the Policy or to waive any of its provisions.
INCONTESTABILITY
The Policy will be incontestable after it has been in force during the
lifetime of the Insured for two years from the Policy Date. A new two year
contestability period shall apply to each increase in insurance requiring
evidence of good health beginning on the effective date of each increase and
will apply only to statements made in the application for the increase. If the
Policy is reinstated, a new two year contestability period (apart from any
remaining contestability period) shall apply from the date of the application
for reinstatement and will apply only to statements made in the application for
reinstatement.
SUICIDE
If the Insured commits suicide, while sane or insane, within two years from
the Policy Date, our liability will be limited to the total premiums paid less
any Loan Balance. If the Insured dies by suicide, while sane or insane, within
two years from the effective date of any increase in insurance requiring
evidence of good health, the Proceeds under this Policy shall be reduced by the
excess, if any, of the net amount at risk (Death Benefit less Policy Value) on
the date of death over the corresponding amount in effect just prior to the
date of increase, and increased by the total annual cost of insurance charges
deducted for this excess.
MISSTATEMENT OF AGE OR SEX
If the Insured's age or sex is misstated, we will adjust each benefit and any
amount to be paid to reflect the correct age and sex.
ANNUAL REPORT
At least once each Policy Year we will send you a report on your Policy. It
will show the current Death Benefit, the current Policy Value, the current
Surrender Value, any payments since the last report, all charges since the last
report, and any Loan Balance. We will also include in the report any other
information required by state law or regulation. Further, we will send you the
reports required by the Investment Company Act of 1940. You may request
additional reports during the year but we may charge a fee for any additional
reports.
NON-PARTICIPATION
The Policy is non-participating. This means that no dividends will be paid on
your Policy. It will not share in our profits or surplus earnings.
DELAY OR SUSPENSION OF PAYMENTS
We will normally pay the Surrender Value or the proceeds of any loan within 7
days after we receive your Written Request in our Home Office. However, payment
of any amount may be delayed or suspended whenever:
a) 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 Securities and Exchange Commission;
b) the Securities and Exchange Commission by order permits postponement for
the protection of Policyowners; or
c) an emergency exists, as determined by the Commission, as a result of
which disposal of the securities held in the Investment Divisions is not
reasonably practicable or it is not reasonably practicable to determine
the value of the Variable Account's net assets.
Payments under the Policy of any amounts derived from premiums paid by check
may be delayed until such time as the check has cleared your bank.
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OWNERSHIP
The original Owner of a Policy is as stated in the application. Unless you
provide otherwise, you may receive all benefits and exercise all rights of the
Policy while the Insured is living. If there is more than one Owner at a given
time, all must exercise the rights of ownership by joint action.
BENEFICIARY
The Beneficiary is named in the application. More than one Beneficiary may be
named. The rights of any Beneficiary who dies before the Insured will pass to
the surviving Beneficiary or Beneficiaries unless you provide otherwise. If no
Beneficiary is living at the Insured's death, we will pay the Death Benefit
Proceeds to the Policyowner, if living; otherwise it will be paid to the
Policyowner's estate.
CHANGE OF OWNERSHIP OR BENEFICIARY
Unless you provide otherwise in writing to us, you may change the Owner or
the Beneficiary during the lifetime of the Insured. Any changes must be made by
Written Request filed with us. The change takes effect on the date the request
was signed, but it will not apply to payments made by us before we accept your
request in writing. We may require you to submit the Policy to us before making
a change.
ASSIGNMENT
You may assign the Policy, but we will not be responsible for the validity of
any assignment and no assignment will bind us until it is filed in writing at
our Home Office. When it is filed, your rights and the rights of any
beneficiary will be subject to it.
DISTRIBUTION OF THE POLICIES
The Policies will be sold by individuals who, in addition to being licensed
as life insurance agents for United Investors, are also registered
representatives of Waddell & Reed, Inc., the principal underwriter of the
Policies, or of broker-dealers who have entered into written sales agreements
with Waddell & Reed, Inc. Waddell & Reed, Inc. is registered with the
Securities and Exchange Commission under the Securities Exchange Act of 1934 as
a broker-dealer and as a member of the National Association of Securities
Dealers. Waddell & Reed, Inc. is an affiliate of United Investors.
A commission of up to 5% of premium plus bonus compensation may be paid to
broker-dealers or agents in connection with sales of the Policies.
FEDERAL TAX MATTERS
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE
INTRODUCTION
The following summary provides a general description of the Federal income
tax considerations relating to the Policy. This summary is based upon United
Investors' understanding of the present Federal income tax laws as they are
currently interpreted by the Internal Revenue Service ("IRS"). Because of the
complexity of such laws and the fact that tax results will vary according to
the factual status of the specific policy involved, tax advice may be needed by
a person contemplating the purchase of a Policy or the exercise of elections
under the Policy. It should therefore be understood that these comments
concerning Federal income tax consequences are not an exhaustive discussion of
all tax questions that might arise under the Policy. Further, these comments do
not take into account any federal estate tax and gift, state, or local tax
considerations which may be involved in the purchase of a Policy or the
exercise of elections under the Policy. For complete information on such
Federal and state tax considerations, a qualified tax advisor should be
consulted. United Investors does not make any guarantee regarding the tax
status of any policy and the following summary is not intended as tax advice.
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TAX STATUS OF THE POLICY
Section 7702 of the Code sets forth a definition of a life insurance contract
for Federal tax purposes. In addition, for Policies entered into after October
20, 1988, the Technical and Miscellaneous Revenue Act of 1988 ("TAMRA")
established certain new requirements with respect to the mortality (i.e., cost
of insurance) and other expense charges that are to be used in determining
compliance with section 7702. Recently the Secretary of the Treasury issued
proposed regulations that would specify what will be considered reasonable
mortality charges for Policies subject to TAMRA. However, these proposed
regulations do not address other expense charges. 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 entered into before October 21, 1988, although there
are no regulations specifically interpreting the manner in which the tests
under section 7702 are to be applied to such a Policy, United Investors
believes that such a Policy should meet the definition of a life insurance
contract for Federal tax purposes. However, an exchange of a Policy or payment
of an additional premium for a Policy entered into before October 21, 1988, or
possibly other changes, may cause such a Policy (or in the case of an exchange,
the new policy received in such exchange) to be treated as entered into after
October 20, 1988, and, in such circumstances, the Policy (or the new policy in
the case of an exchange) would be subject to the mortality and other expense
charge requirements prescribed by TAMRA. Accordingly, the Owner of a Policy
entered into before October 21, 1988, should contact a competent tax adviser
before exchanging, or making any other change, to such Policy to determine
whether the exchange or change would cause the Policy (or the new policy in the
case of an exchange) to be treated as entered into after October 20, 1988.
With respect to a Policy entered into after October 20, 1988, that is issued
on the basis of a standard rate class or a rate class involving a lower
mortality risk (i.e., a preferred basis), while there is some uncertainty due
to the lack of guidance on other expense charges, United Investors nonetheless
believes that such a Policy should meet the section 7702 definition of a life
insurance contract. However, with respect to a Policy entered into after
October 20, 1988, that is issued on a substandard basis (i.e., a rate class
involving higher than standard mortality risk), it remains unclear whether or
not 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, United Investors will
take all steps possible in order 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,
United Investors reserves the right to modify the Policy as necessary 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 Variable Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for Federal tax purposes. The Variable Account, through the
Fund, intends to comply with the diversification requirements prescribed by the
Treasury in Treas. Reg. Section 1.817-5, which affect how the Fund's assets may
be invested. Although the Fund's investment adviser and United Investors are
both indirectly owned by Torchmark Corporation, United Investors does not
control the Fund or its investments. United Investors, however, believes that
the Fund will be operated in compliance with the requirements prescribed by the
Treasury.
The Treasury announced that the diversification regulations do not provide
guidance concerning the tax consequences of the extent to which policyowners
may direct their investments to subaccounts of a separate account. It is not
clear whether additional guidance in this regard will be provided or whether it
will be applied on a prospective basis only. It is possible that if additional
guidance on this issue is promulgated, the policy may need to be modified to
comply with such guidance. For these reasons, United Investors reserves the
right to modify the policy as necessary to attempt to prevent the Owner
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from being considered the owner of the assets of the Variable Account or
otherwise to qualify the Policy for favorable tax treatment.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
TAX TREATMENT OF POLICY BENEFITS
1. In general. United Investors 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.
The exchange of the Policy, a change of the Policy's Minimum Death Benefit, a
Policy loan, an additional premium payment, a Policy lapse with an outstanding
loan, a change of Owners, or a surrender may have tax consequences depending on
the circumstances. 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 adviser should be consulted for further information.
Generally, the Owner will not be deemed to be in constructive receipt of the
cash value, including increments thereof, under the Policy until there is a
distribution. The tax consequences of distributions from, and loans taken from,
or secured by, a Policy depend on whether the Policy is classified as a
"modified endowment contract" under section 7702A.
2. Modified endowment contracts. Because of the premium level contemplated
under the Policies, all Policies entered into after June 20, 1988, will be
treated as modified endowment contracts. Moreover, a Policy entered into before
June 21, 1988, that is "materially changed" after June 20, 1988, may in certain
circumstances be treated as a modified endowment contract. With respect to a
Policy entered into before June 21, 1988, a change in such Policy's Minimum
Death Benefit, the payment of an additional premium, or the exchange of such a
Policy, among other things, may cause a material change to such Policy, which
could result in the treatment of the Policy (or the new Policy in the case of
an exchange) as a modified endowment contract. The material change rules for
determining when a Policy entered into before June 21, 1988, will be treated as
a modified endowment contract are extremely complex and, therefore, an Owner
should contact a competent tax adviser before paying any additional premium or
effecting any other change in, including an exchange of, a Policy entered into
before June 21, 1988. In addition, a life insurance contract received in
exchange for a Policy classified as a modified endowment contract will 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, loans taken from, or secured by,
such a Policy (including unpaid loan interest that is added to the principal of
a loan) are treated as distributions from such a Policy and taxed accordingly.
Third, a 10 percent additional tax is imposed on the portion of any
distribution from, or loan taken from or secured by, such a Policy that is
included in income except where the distribution or loan is made on or after
the Owner attains age 59 1/2, is attributable to the Owner's becoming disabled,
or 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
Contracts. Distributions from a Policy entered into before June 21, 1988, and
which is not materially changed (see discussion above) after June 20, 1988, or,
if materially changed, is not classified as a modified endowment contract after
such material change, are generally treated as first recovering the investment
in the Policy (described
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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 or any other change that
reduces benefits under the Policy in the first 15 years after the Policy is
issued and that results in a cash distribution to the 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.
Loans from, or secured by, a Policy that is not a modified endowment contract
may be treated as indebtedness of the Owner, not as a distribution.
Finally, neither distributions (including distributions upon surrender or
lapse) nor loans from, or secured by, a Policy that is not a modified endowment
contract are subject to the 10% additional income tax.
5. Policy loan interest. Generally, interest paid on any loan under an
insurance policy which is owned by an individual is not deductible. In
addition, interest on any loan under a Policy owned by a taxpayer and covering
the life of any individual who is an officer of or is financially interested in
the business carried on by that taxpayer will not be tax deductible to the
extent the aggregate amount of such loans with respect to contracts covering
such individual exceeds $50,000. No amount of Policy loan interest is, however,
deductible if the Policy were deemed for Federal tax purposes to be a single
premium life insurance contract. The Owner should consult a competent tax
adviser as to whether the Policy would be so deemed.
6. Investment in the Policy. Investment in the Policy means (i) the aggregate
amount of any premiums or other consideration paid for a Policy, minus (ii) the
aggregate amount received under the Policy which is excluded from the gross
income of the Owner (except that the amount of any loan from, or secured by, a
Policy that is a modified endowment contract, to the extent such amount is
excluded from gross income, will be disregarded), plus (iii) the amount of any
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.
7. Multiple Policies. All modified endowment contracts that are issued by
United Investors (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.
TAXATION OF UNITED INVESTORS
United Investors incurs state and local premium taxes. The amount of the
charge for such taxes is discussed above under "Charges and Deductions--Annual
Deduction." At the present time, the Company makes no charge to the Variable
Account for any Federal, state or local taxes (other than state premium taxes)
that it incurs which may be attributable to such 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 Variable Account or
to the Policies.
EMPLOYMENT-RELATED BENEFIT PLANS
On July 6, 1983, the Supreme Court held in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women on the basis of sex. The Policies described in this
Prospectus contain guaranteed purchase rates for certain payment options that
generally distinguish between men and women. Accordingly, employers and
employee organizations should consider, in consultation with their legal
counsel, the impact of Norris, and Title VII generally, on any employment-
related insurance or benefit program for which a Policy may be purchased.
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ADDITIONAL INFORMATION
SAFEKEEPING OF THE ACCOUNT'S ASSETS
United Investors holds the assets of the Variable Account. The assets are
kept physically segregated and held separate and apart from the general
account. United Investors maintains records of all purchases and redemptions of
Fund shares by each of the Investment Divisions.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
United Investors reserves the right, subject to compliance with applicable
law, to make additions to, deletions from, or substitutions for the shares of
the Fund that are held by the Variable Account (or any Investment Division) or
that the Variable Account (or any Investment Division) may purchase. United
Investors reserves the right to eliminate the shares of any of the Portfolios
of the Fund and to substitute shares of another Portfolio of the Fund or any
other investment vehicle or of another open-end, registered investment company
if laws or regulations are changed, if the shares of the Fund or a Portfolio
are no longer available for investment, or if in our judgment further
investment in any Portfolio should become inappropriate in view of the purposes
of the Investment Division. United Investors will not substitute any shares
attributable to a Policyowner's interest in an Investment Division of the
Variable Account without notice and prior approval of the Securities and
Exchange Commission and the insurance regulator of the state where the Policy
was delivered, where required. Nothing contained herein shall prevent the
Variable Account from purchasing other securities for other series or classes
of policies, or from permitting a conversion between series or classes of
policies on the basis of requests made by Policyowners.
United Investors also reserves the right to establish additional Investment
Divisions of the Variable Account, each of which would invest in a new
Portfolio of the Fund, or in shares of another investment company or suitable
investment, with a specified investment objective. New Investment Divisions may
be established when, in the sole discretion of United Investors, marketing
needs or investment conditions warrant, and any new Investment Divisions will
be made available to existing Policyowners on a basis to be determined by
United Investors. United Investors may also eliminate one or more Investment
Divisions if, in its sole discretion, marketing, tax, or investment conditions
warrant.
In the event of any such substitution or change, United Investors may, by
appropriate endorsement, make such changes in this and other policies as may be
necessary or appropriate to reflect such substitution or change. If deemed by
United Investors to be in the best interests of persons having voting rights
under the Policies, the Variable Account may be operated as a management
company under the Investment Company Act of 1940, it may be deregistered under
that Act in the event such registration is no longer required, or it may be
combined with other United Investors separate accounts.
STATE REGULATION
United Investors is subject to regulation by the Missouri Department of
Insurance. An annual statement is filed with the Missouri Department of
Insurance on or before March 1st of each year covering the operations and
reporting on the financial condition of United Investors as of December 31 of
the preceding year. Periodically, the Missouri Department of Insurance or other
authorities examine the liabilities and reserves of United Investors and the
Variable Account and certifies their adequacy, and a full examination of United
Investors' operations is conducted periodically by the National Association of
Insurance Commissioners.
In addition, United Investors 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 Department of any other state applies the
laws of the state of domicile in determining permissible investments.
A Policy is governed by the law of the state in which it is delivered. The
values and benefits of each policy are at least equal to those required by such
state.
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SENIOR OFFICERS AND DIRECTORS OF UNITED INVESTORS LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION
WITH UNITED INVESTORS* LAST FIVE YEARS
<S> <C>
W. Thomas Aycock Vice President and Chief Actuary of United Investors
Vice President and since November, 1992. Senior Vice President and
Chief Actuary Actuary of Associated Doctors Health & Life Insurance
Co., December, 1990--November, 1992. Senior Consulting
Actuary of Ernst & Young, August, 1989--December,
1990. Associate Actuary of Provident Life & Accident
Insurance Co., March, 1984--August, 1989.
William C. Barclift, III Executive Vice President, Secretary and General Counsel
Director of Liberty National Life Insurance Company since
January, 1985.
Joanne Elizabeth Boyd Associate Counsel of Torchmark Corporation 1989 to
Director present. Vice President and Acting General Counsel,
Ramsey HealthCare, New Orleans, LA, 1985--1988.
Charles T. Clayton, Jr. Vice President--Agency Division since January, 1987.
Vice President Vice President--Brokerage and General Agency
Operations of Liberty National Life Insurance Company,
July, 1986--January, 1987.
William R. Dean Executive Vice President of Liberty National Life
Director Insurance Company since March, 1985. Senior Vice
President of Liberty National, January, 1985--March,
1985.
William T. Graves Executive Vice President of Torchmark Corporation since
Director April, 1982.
Gene Paul Grimland
Vice President Vice President of United Investors since March, 1987.
Michael J. Klyce
Vice President & Trea- Vice President of Torchmark Corporation since January,
surer 1984.
James L. Mayton, Jr.
Vice President & Con- Vice President & Controller of Liberty National Life
troller Insurance Company since January, 1985.
Carol A. McCoy Assistant Secretary of Torchmark Corporation since
Director April, 1987. Associate Counsel of Torchmark
Corporation since January, 1985.
R. K. Richey Chairman of Torchmark Corporation since August, 1986
Chairman of the Board and Chief Executive Officer since December, 1984.
and Chief Executive Of- Chairman of United Investors Management Company since
ficer October, 1986. (President, Torchmark, April, 1982--
August, 1986. President of United Investors Management
Company, July, 1985--August, 1986.)
James L. Sedgwick President of United Investors since September, 1991.
President General Counsel and Secretary of United Investors,
January, 1985--September, 1991.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION
WITH UNITED INVESTORS* LAST FIVE YEARS
<S> <C>
Ross W. Stagner Vice President of United Investors since January, 1992.
Vice President Assistant Vice President of United Investors, March,
1988--January 1992.
William L. Surber Vice President of United Investors since April, 1992.
Vice President Assistant Vice President of United Investors, January,
1982--April, 1992.
Keith A. Tucker Vice Chairman of Torchmark Corporation since May, 1991.
Director Director of Torchmark Corporation, October, 1989--May,
1991.
</TABLE>
*The principal business address of each person listed, is United Investors
Life Insurance Company, P. O. Box 10207, Birmingham, Alabama 35202-0207.
LEGAL MATTERS
Legal advice regarding certain matters relating to federal securities laws
applicable to the issuance of the flexible premium variable life insurance
policy described in this Prospectus has been provided by Sutherland, Asbill &
Brennan of Washington, D. C. All matters of Missouri law pertaining to the
Policy, including the validity of the Policy and United Investors' right to
issue the Policy under Missouri Insurance Law and any other applicable state
insurance or securities laws, have been passed upon by James L. Sedgwick, Esq.,
President of United Investors.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party or to
which the assets of the Variable Account are subject. United Investors is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Variable Account.
EXPERTS
The balance sheet of United Investors Life Insurance Company as of December
31, 1993 and 1992, and the related statements of operations, shareholder's
equity, and cash flows for each of the years in the three-year period ended
December 31, 1993 and the balance sheet of United Investors Life Variable
Account as of December 31, 1993 and the related statements of operations and
changes in net assets for the years ended December 31, 1993, 1992 and 1991 have
been included herein in reliance upon the report of KPMG Peat Marwick,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
Actuarial matters included in this Prospectus have been examined by W. Thomas
Aycock, Vice President and Chief Actuary of United Investors, as stated in the
opinion filed as an exhibit to the Registration Statement.
FINANCIAL STATEMENTS
The financial statements of United Investors which are included in this
prospectus should be considered only as bearing on the ability of United
Investors to meet its obligations under the Policies. They should not be
considered as bearing on the investment performance of the assets held in the
Variable Account.
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APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS AND POLICY VALUES
The following tables illustrate how the Policy Values and Death Benefits of a
Policy may change with the investment experience of the Fund. The tables show
how the Policy Values and Death Benefits of a Policy issued to an Insured of a
given age who pays the given premium at issue would vary over time if the
investment return on the assets held in each Portfolio of the Fund were a
uniform, gross, after-tax annual rate of 0%, 4%, 8% or 12%. The table on page
A-2 illustrates a Policy issued to a female age 35 for $10,000 initial premium,
standard risk class with the minimum initial Death Benefit. The tables on pages
A-3 and A-4 illustrate a Policy issued to a male age 55 for $50,000 initial
premium, preferred risk class with the minimum initial Death Benefit. The
Policy Values and Death Benefits would be different from those shown if the
gross annual investment rates of return averaged 0%, 4%, 8% and 12% over a
period of years, but fluctuated above and below those averages for individual
Policy Years.
The second column of the tables shows the value of the premium paid
accumulated at 5% interest. The following columns show the Death Benefits and
the Policy Values for uniform hypothetical rates of return shown in these
tables. The table on page A-3 is based on the current cost of insurance and
administrative charges. This reflects the basis on which United Investors
currently sells its Policies. The maximum cost of insurance rates allowable
under the Policy are contained in the 1980 Commissioners' Standard Ordinary
Mortality Tables. The Death Benefits and Policy Values shown in the tables on
pages A-2 and A-4 are based on the assumption that the maximum allowable cost
of insurance rates as described above ("guaranteed cost") and maximum allowable
expense deductions are made throughout the life of the Policy.
The values shown assume that a Policyowner maintains Policy Values in equal
proportion among the Money Market, Bond, High Income, Growth, Income,
International, Small Cap, Balanced, and Limited-Term Bond portfolios of the
Fund, and they take into account an average of the daily investment management
fee currently paid by those nine portfolios (which is equivalent to the annual
rate of .65% of the aggregate average daily net assets of those portfolios), an
average of the actual annual expenses incurred by those nine portfolios (which
is an annual rate of .12%), the daily charge by United Investors to each
Investment Division for assuming mortality and expense risks (which is
equivalent to an annual rate of .60%), the annual deduction on each of the
first ten Policy Anniversaries for state and local premium taxes, underwriting
and issue expenses, and sales expenses (which is equivalent to an annual rate
of 1.20% of the initial premium), the annual deduction for cost of insurance
and the $50 annual deduction for administrative expenses.
Taking into account the mortality and expense risk charge of .60% and the
charge for investment management fees from the Fund, the illustrated gross
annual investment rates of return of 0%, 4%, 8% and 12%, correspond to
approximate net annual rates of -1.37%, 2.63%, 6.63%, and 10.63% respectively.
The hypothetical values shown in the tables do not reflect charges for any
federal income tax burden attributable to the Variable Account, since United
Investors is not currently making such charges. However, such charges may be
made in the future and, in that event, the gross annual investment rate of
return would have to exceed 0%, 4%, 8% or 12% by an amount sufficient to cover
the tax charges in order to produce the Death Benefits and Policy Values
illustrated. (See Federal Tax Matters.)
The tables illustrate the values that would result based upon the
hypothetical investment rates of return if only a single premium is paid as
indicated, and if no Policy loans have been made.
Illustrated values would be different if the proposed Insured were another
age.
Upon request, United Investors will provide a comparable illustration based
upon the Proposed Insured's age and the initial Death Benefit requested.
A-1
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
FEMALE ISSUE AGE 35 STANDARD RISK CLASS
$10,000 INITIAL PREMIUM PAYMENT
MAXIMUM COST OF INSURANCE AND ADMINISTRATIVE CHARGES(1)
<TABLE>
<CAPTION>
ASSUMING HYPOTHETICAL GROSS
END OF PYMTS ANNUAL RATE OF RETURN OF:
POLICY PLUS --------------------------------
YEAR INT.@ 5% 0% 4% 8% 12%
- ------ -------- -- -- -- ---
DEATH BENEFITS(2)
<S> <C> <C> <C> <C> <C>
1..................................... $10,500 $62,365 $62,365 $62,365 $ 62,365
2..................................... 11,025 62,365 62,365 62,365 62,365
3..................................... 11,576 62,365 62,365 62,365 62,365
4..................................... 12,155 62,365 62,365 62,365 62,365
5..................................... 12,763 62,365 62,365 62,365 62,365
10.................................... 16,289 62,365 62,365 62,365 62,365
20.................................... 26,533 62,365 62,365 62,365 94,075
30.................................... 43,219 (3) 62,365 62,365 193,362
A 65.................................. 43,219 (3) 62,365 62,365 193,362
<CAPTION>
POLICY VALUES(2)
<S> <C> <C> <C> <C> <C>
1..................................... $ 9,863 $10,263 $10,663 $ 11,063
2..................................... 9,475 10,270 11,098 11,957
3..................................... 9,085 10,272 11,556 12,942
4..................................... 8,694 10,266 12,039 14,026
5..................................... 8,299 10,253 12,546 15,220
10.................................... 6,231 10,010 15,483 23,271
20.................................... 2,373 9,501 25,732 59,920
30.................................... (3) 6,229 44,525 158,493
A 65.................................. (3) 6,229 44,525 158,493
<CAPTION>
SURRENDER VALUES(2)
<S> <C> <C> <C> <C> <C>
1..................................... $ 9,063 $ 9,463 $ 9,863 $ 10,263
2..................................... 8,775 9,570 10,398 11,257
3..................................... 8,485 9,672 10,956 12,342
4..................................... 8,194 9,766 11,539 13,526
5..................................... 7,899 9,853 12,146 14,820
10.................................... 6,231 10,010 15,483 23,271
20.................................... 2,373 9,501 25,732 59,920
30.................................... (3) 6,229 44,525 158,493
A 65.................................. (3) 6,229 44,525 158,493
</TABLE>
(1) Current and maximum charges are the same for female standard risks.
(2) Assumes no Policy loans have been made.
(3) In the absence of an additional premium payment, the Policy would lapse.
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this Prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown and will depend on a number of
factors, including the investment allocations made by a Policyowner and
different rates of return of the Fund Portfolios. The Death Benefit and
Surrender Value for a Policy would be different from those shown if actual
rates of return averaged 0%, 4%, 8%, and 12% over a period of years, but also
fluctuated above or below those averages for individual Policy Years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
A-2
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE ISSUE AGE 55 PREFERRED RISK CLASS
$50,000 INITIAL PREMIUM PAYMENT
CURRENT COST OF INSURANCE AND ADMINISTRATIVE CHARGES
<TABLE>
<CAPTION>
ASSUMING HYPOTHETICAL GROSS
END OF PYMTS ANNUAL RATE OF RETURN OF:
POLICY PLUS -----------------------------------
YEAR INT.@ 5% 0% 4% 8% 12%
- ------ -------- -- -- -- ---
DEATH BENEFITS(1)
<S> <C> <C> <C> <C> <C>
1.................................. $ 52,500 $126,599 $126,599 $126,599 $126,599
2.................................. 55,125 126,599 126,599 126,599 126,599
3.................................. 57,881 126,599 126,599 126,599 126,599
4.................................. 60,775 126,599 126,599 126,599 126,599
5.................................. 63,814 126,599 126,599 126,599 126,599
10................................. 81,445 126,599 126,599 126,599 147,379
20................................. 132,665 126,599 126,599 152,398 340,984
30................................. 216,097 (2) 126,599 275,675 892,910
A 65............................... 81,445 126,599 126,599 126,599 147,379
<CAPTION>
POLICY VALUES(1)
<S> <C> <C> <C> <C> <C>
1.................................. $ 49,315 $ 51,315 $ 53,315 $ 55,315
2.................................. 47,520 51,512 55,666 59,981
3.................................. 45,691 51,670 58,143 65,130
4.................................. 43,826 51,786 60,758 70,825
5.................................. 41,919 51,855 63,521 77,132
10................................. 31,446 51,240 79,975 120,802
20................................. 4,634 46,323 142,428 318,677
30................................. (2) 570 262,548 850,390
A 65............................... 31,446 51,240 79,975 120,802
<CAPTION>
SURRENDER VALUES(1)
<S> <C> <C> <C> <C> <C>
1.................................. $ 45,315 $ 47,315 $ 49,315 $ 51,315
2.................................. 44,020 48,012 52,166 56,481
3.................................. 42,691 48,670 55,143 62,130
4.................................. 41,326 49,286 58,258 68,325
5.................................. 39,919 49,855 61,521 75,132
10................................. 31,446 51,240 79,975 120,802
20................................. 4,634 46,323 142,428 318,677
30................................. (2) 570 262,548 850,390
A 65............................... 31,446 51,240 79,975 120,802
</TABLE>
(1) Assumes no Policy loans have been made.
(2) In the absence of an additional premium payment, the Policy would lapse.
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this Prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown and will depend on a number of
factors, including the investment allocations made by a Policyowner and
different rates of return of the Fund Portfolios. The Death Benefit and
Surrender Value for a Policy would be different from those shown if actual
rates of return averaged 0%, 4%, 8%, and 12% over a period of years, but also
fluctuated above or below those averages for individual Policy Years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
A-3
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE ISSUE AGE 55 PREFERRED RISK CLASS
$50,000 INITIAL PREMIUM PAYMENT
MAXIMUM COST OF INSURANCE AND ADMINISTRATIVE CHARGES
<TABLE>
<CAPTION>
ASSUMING HYPOTHETICAL GROSS
END OF PYMTS ANNUAL RATE OF RETURN OF:
POLICY PLUS -----------------------------------
YEAR INT.@ 5% 0% 4% 8% 12%
- ------ -------- -- -- -- ---
DEATH BENEFITS(1)
<S> <C> <C> <C> <C> <C>
1.................................. $ 52,500 $126,599 $126,599 $126,599 $126,599
2.................................. 55,125 126,599 126,599 126,599 126,599
3.................................. 57,881 126,599 126,599 126,599 126,599
4.................................. 60,775 126,599 126,599 126,599 126,599
5.................................. 63,814 126,599 126,599 126,599 126,599
10................................. 81,445 126,599 126,599 126,599 141,787
20................................. 132,665 (2) 126,599 133,769 320,905
30................................. 216,097 (2) (2) 237,451 824,888
A 65............................... 81,445 126,599 126,599 126,599 141,787
<CAPTION>
POLICY VALUES(1)
<S> <C> <C> <C> <C> <C>
1.................................. $ 49,315 $ 51,315 $ 53,315 $ 55,315
2.................................. 47,200 51,189 55,339 59,650
3.................................. 45,015 50,981 57,444 64,423
4.................................. 42,752 50,685 59,638 69,693
5.................................. 40,402 50,292 61,929 75,527
10................................. 26,754 46,335 75,059 116,219
20................................. (2) 22,473 125,018 299,911
30................................. (2) (2) 226,144 785,608
A 65............................... 26,754 46,335 75,059 116,219
<CAPTION>
SURRENDER VALUES(1)
<S> <C> <C> <C> <C> <C>
1.................................. $ 45,315 $ 47,315 $ 49,315 $ 51,315
2.................................. 43,700 47,689 51,839 56,150
3.................................. 42,015 47,981 54,444 61,423
4.................................. 40,252 48,185 57,138 67,193
5.................................. 38,402 48,292 59,929 73,527
10................................. 26,754 46,335 75,059 116,219
20................................. (2) 22,473 125,018 299,911
30................................. (2) (2) 226,144 785,608
A 65............................... 26,754 46,335 75,059 116,219
</TABLE>
(1) Assumes no Policy loans have been made.
(2) In the absence of an additional premium payment, the Policy would lapse.
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this Prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown and will depend on a number of
factors, including the investment allocations made by a Policyowner and
different rates of return of the Fund Portfolios. The Death Benefit and
Surrender Value for a Policy would be different from those shown if actual
rates of return averaged 0%, 4%, 8%, and 12% over a period of years, but also
fluctuated above or below those averages for individual Policy Years. No
representations can be made that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
A-4
<PAGE>
APPENDIX B
DEATH BENEFIT FACTORS
As noted in the Prospectus, after the Policy Date the Death Benefit is equal to
the greater of the Minimum Death Benefit or the Policy Value times the
applicable Death Benefit Factor. The Death Benefit Factors are listed below.
<TABLE>
<CAPTION>
Attained Attained
Age Factor Age Factor
-------- ------ -------- ------
<S> <C> <C> <C>
0-40 2.50 68 1.17
41 2.43 69 1.16
42 2.36 70 1.15
43 2.29 71 1.13
44 2.22 72 1.11
45 2.15 73 1.09
46 2.09 74 1.07
47 2.03 75 1.05
48 1.97 76 1.05
49 1.91 77 1.05
50 1.85 78 1.05
51 1.78 79 1.05
52 1.71 80 1.05
53 1.64 81 1.05
54 1.57 82 1.05
55 1.50 83 1.05
56 1.46 84 1.05
57 1.42 85 1.05
58 1.38 86 1.05
59 1.34 87 1.05
60 1.30 88 1.05
61 1.28 89 1.05
62 1.26 90 1.05
63 1.24 91 1.04
64 1.22 92 1.03
65 1.20 93 1.02
66 1.19 94 1.01
67 1.18 95 1.00
</TABLE>
B-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PART II
-------
UNDERTAKING TO FILE REPORTS
---------------------------
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
--------------------
In-so-far 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 will be governed by the final adjudication of
such issue.
REPRESENTATIONS PURSUANT TO RULE 6e-3(T)
----------------------------------------
This filing is made pursuant to Rule 6c-3 and 6e-3(T) under the
Investment Company Act of 1940.
Registrant elects to be governed by Rule 6e-3(T) (b) (13) (i) (B) under
the Investment Company Act of 1940 with respect to the Policies described in the
Prospectus.
<PAGE>
Registrant makes the following representations:
(1) Section 6e-3(T) (b) (13) (iii) (F) has been relied
upon.
(2) The level of the mortality and expense risk charge is
within the range of industry practice for comparable
flexible variable life insurance policies.
(3) The proceeds from explicit sales loads are expected
to cover the anticipated costs of distributing the
Policies.
The methodology used to support the representation made in paragraph (2)
above is based on an analysis of other policies registered under the Securities
Act of 1933, including the level of other expense charges, uncertainties in
terms of expense and mortality factors, and policy guarantees. Registrant
undertakes to keep and make available to the Commission on request the documents
used to support the representation in paragraph (2) above.
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT
------------------------------------------------------------------
This Post-Effective Amendment No. 7 to the Registration Statement
comprises the following Papers and Documents:
The Facing Sheet.
The Prospectus consisting of ______ pages.
The Undertaking to File Reports.
The Undertaking Pursuant to Rule 484.
Representations Pursuant to Rule 6e-3(T).
The Signatures.
Written consents of the following persons:
(a) James L. Sedgwick, Esq.\4\
(b) Messrs. Sutherland, Asbill & Brennan.\4\
(c) W. Thomas Aycock (included in Exhibit 6).\4\
(d) KPMG Peat Marwick.\4\
The following Exhibits:
1. The following Exhibits correspond to those required by paragraph
A of the instructions as to Exhibits in Form N-8B-2:
(1) Resolution of the Board of Directors of United Investors
establishing the Variable Account.\1\
(2) Not Applicable.
(3) (a) Principal Underwriting Agreement.\3\
(b) Not applicable.
(c) Commission Schedule.
(4) Not Applicable.
(5) Policy Form.\1\
(a) Policy Endorsement, VL94.
(6) (a) Certificate of Incorporation of United Investors.\1\
(b) By-Laws of United Investors.\1\
- -------------------
\1\ Previously filed as an Exhibit to Registration Statement No. 33-11465.
\2\ Previously filed as an Exhibit to Pre-Effective Amendment No. 1 to
Registration Statement No. 33-11465.
\3\ Previously filed as an Exhibit to Post-Effective Amendment No. 5 to
Registration Statement No. 33-11465.
\4\ To be filed by amendment.
<PAGE>
(7) Not Applicable.
(8) Participation Agreement for TMK/United Funds, Inc.\3\
(9) Not Applicable.
(10) Application Form.\2\
(11) Memorandum describing United Investors' issuance, transfer,
and redemption procedures for the Policy.\2\
2. See Exhibit 1(5).
3. Opinion of James L. Sedgwick, Esq.\2\
4. Financial Statements will be filed by amendment.
5. Not Applicable.
6. Opinion and Consent of W. Thomas Aycock, Vice President and Chief
Actuary of United Investors.\4\
7. Consent of Sutherland, Asbill & Brennan.\4\
8. Consent of KPMG Peat Marwick.\4\
9. Consent of James L. Sedgwick, Esq., President of United
Investors.\4\
- -------------------
\1\ Previously filed as an Exhibit to Registration Statement No. 33-11465.
\2\ Previously filed as an Exhibit to Pre-Effective Amendment No. 1 to
Registration Statement No. 33-11465.
\3\ Previously filed as an Exhibit to Post-Effective Amendment No. 5 to
Registration Statement No. 33-11465.
\4\ To be filed by amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, United
Investors Life Insurance Company certifies that it meets all of the requirements
for effectiveness of this Post-Effective Amendment No. 7 pursuant to Rule 486(a)
under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 7 to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in Birmingham, Alabama, on the 1st day of March, 1994.
(Seal) United Investors Life Insurance Company
Attest: By:
------------------------ -----------------------------------
Joanne E. Boyd James L. Sedgwick
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 7 to the Registration Statement has been signed below by
the following Directors and Officers of United Investors Life Insurance Company
in the capacities and on the Dates indicated.
Signature Title Date
- --------- ----- ----
Director, Chairman of
- ------------------------- of the Board and Chief --------------------
Ronald K. Richey Executive Office
Director and President
- ------------------------- --------------------
James L. Sedgwick
Director and Assistant
- ------------------------- Secretary --------------------
William C. Barclift, III
Director and Secretary
- ------------------------- --------------------
Joanne E. Boyd
Director
- ------------------------- --------------------
William R. Dean
Director
- ------------------------- --------------------
William T. Graves
Vice President and
- ------------------------- Treasurer --------------------
Michael J. Klyce
<PAGE>
Signature Title Date
- --------- ----- ----
Vice President and
- ------------------------- Controller --------------------
James L. Mayton, Jr.
Director and Assistant
- ------------------------- Secretary --------------------
Carol A. McCoy
Director and Vice
- ------------------------- Chairman --------------------
Keith A. Tucker
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, United Investors Life Variable Account, certifies that it meets all
of the requirements for effectiveness of this Post-Effective Amendment No. 7
pursuant to Rule 486(a) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment No. 7 to the Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in Birmingham, Alabama on the 1st day of
March, 1994
United Investors Life Variable Account
(Registrant)
United Investors Life Insurance Company
(Depositor)
Attest: By:
-------------------------- -------------------------------
Joanne E. Boyd James L. Sedgwick
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -------------------------------
<S> <C>
3(c) Commission Schedule
5(a) Policy Endorsement, VL94
</TABLE>
<PAGE>
EXHIBIT A
TO
PRINCIPAL UNDERWRITING AGREEMENT
Commissions payable to Waddell & Reed, Inc. are set forth below and
subject to all the conditions and limitations contained in the Principal
Underwriting Agreement dated May 1, 1990.
7% of all premiums accepted by United Investors Life
on flexible premium variable life insurance policies sold
by Waddell & Reed representatives.
- ---------------------------------January 1, 1994--------------------------------
<PAGE>
ENDORSEMENT - TRANSFERS
- --------------------------------------------------------------------------------
This Endorsement is a part of the Policy to which it is attached.
The following sentence is deleted from the TRANSFERS MADE AMONG YOUR
INVESTMENT DIVISIONS section of the INVESTMENT DIVISIONS PROVISION
of the policy.
You may have value in no more than four investment divisions at any time.
This limit is hereby removed from the policy.
UNITED INVESTORS LIFE INSURANCE COMPANY
President
VL94
