<PAGE>
The Penn Mutual Life Insurance Company
Founded 1847
Insured William Penn $50,000 Specified Amount
Policy Number 0 000 000 October 1, 2000 Policy Date
The Penn Mutual Life Insurance Company agrees, subject to the provisions of this
policy, to pay the Death Benefit to the Beneficiary upon receipt of due proof of
the death of the Insured while this policy is in force. Penn Mutual also agrees
to provide all of the other benefits stated in this policy. This contract is
made in consideration of the payment of premiums as provided in this policy. The
provisions on this and the following pages are part of this policy.
Executed on the Date of Issue by The Penn Mutual Life Insurance Company.
/s/ Laura M. Ritzko /s/ Robert E. Chappell
----------------------- -----------------------------
Secretary Chairman and
Chief Executive Officer
THE DEATH BENEFIT AND DURATION OF COVERAGE MAY INCREASE OR DECREASE DEPENDING ON
THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THE DEATH BENEFIT WILL NEVER
BE LESS THAN THE SPECIFIED AMOUNT SHOWN ON PAGE 3. THE POLICY'S ACCUMULATION
VALUE IN THE SEPARATE ACCOUNT MAY INCREASE OR DECREASE DEPENDING ON THE
INVESTMENT EXPERIENCE OF THAT ACCOUNT. THE POLICY VALUE IS NOT GUARANTEED.
Free Look Period - This policy may be cancelled by returning it within 10 days
after it is received by the owner. It must be returned to Penn Mutual or to the
agent through whom it was purchased. This policy will then be considered void as
of its inception. The Policy Value, premium charge and the monthly deductions
will be refunded.
READ YOUR POLICY CAREFULLY. This policy is a legal contract between the Owner
and Penn Mutual.
Flexible Premium Adjustable
Variable Life Insurance Policy
o Death Benefit payable at death prior to
Maturity Date
o Adjustable Death Benefit
o Maturity Benefit payable on Maturity Date
o Variable Policy Value
o Flexible premiums payable until Maturity Date
o Participating
o Supplemental benefits, if any, listed on Page 3
The Penn Mutual Life Insurance Company, Philadelphia, Pennsylvania 19172
VU-01(S)
<PAGE>
Guide to Policy Sections -----------------------------------------------------
1. Policy Specifications 11. Surrender of Policy
2. Endorsements 12. Policy Changes
3. Life Insurance Qualification Test 13. Transfer to Fixed Account
4. Premiums 14. Owner and Beneficiary
5. Lapse and Reinstatement 15. General Provisions
6. The Separate Account 16. Income Payment Options
7. The Fixed Account 17. Income Payment Option Table
8. Policy Value
9. Death and Maturity Benefits Supplemental Agreements and a
10. Policy Loans copy of any applications follow
the Additional Policy
Specifications Section.
Alphabetical Index
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Section Section
Age.......................................... 1,15 Monthly Anniversary.......................... 15
Allocation of Net Premiums................... 4 Monthly Deduction............................ 8
Annual Report................................ 15 Mortality and Expense Risk Charge............ 8
Assignment................................... 14 Net Cash Surrender Value..................... 11
Beneficiary.................................. 1,14 No-Lapse Date................................ 1,4
Cash Surrender Value......................... 11 No-Lapse Premium............................. 1,4
Cash Value Accumulation Test ................ 3 Owner........................................ 14
Continuation of Insurance.................... 4 Partial Surrender............................ 11
Contract..................................... 15 Policy Date.................................. 1,15
Cost of Insurance............................ 8 Policy Loan Account.......................... 10
Cost of Insurance Rates...................... 8 Policy Loans................................. 10
Date of Issue................................ 1 Policy Value................................. 8
Death Benefit................................ 9 Premium Charge............................... 4
Deferment of Transactions.................... 15 Premiums..................................... 1,4
Dividends.................................... 15 Rate Class................................... 1
Free Look Period............................. Cover Reinstatement................................ 5
Grace Period................................. 4 Schedule of Benefits......................... 1
Guideline Premium Test....................... 3 Schedule of Premiums......................... 1
Income Payment Options....................... 16 Separate Account............................. 1,6
Income Payment Option Tables................. 17 Service Office............................... 1
Incontestability............................. 15 Specified Amount............................. 1
Indebtedness................................. 10 Subaccounts.................................. 6
Lapse........................................ 5 Suicide Exclusion............................ 9
Loan Interest................................ 10 Surrender.................................... 11
Loan Value................................... 10 Surrender Charge............................. 11
Maturity Date................................ 1
Maturity Benefit............................. 9
</TABLE>
<PAGE>
1. Policy Specifications
INSURED WILLIAM PENN $50,000 SPECIFIED AMOUNT
(INCLUDES POLICY VALUE)
POLICY NUMBER 0 000 000 OCTOBER 1, 2000 POLICY DATE
AGE 35 MALE STANDARD NONSMOKER RATE CLASS
LIFE INSURANCE QUALIFICATION TEST IS GUIDELINE PREMIUM TEST
MATURITY DATE IS OCTOBER 1, 2065
DATE OF ISSUE IS THE POLICY DATE
OWNER AND BENEFICIARY AS PROVIDED IN APPLICATION
SEPARATE ACCOUNT IS PENN MUTUAL VARIABLE LIFE ACCOUNT I
ELIGIBLE INVESTMENT FUNDS: FUNDS AS SPECIFIED IN THE ADDITIONAL POLICY
SPECIFICATIONS
INITIAL ALLOCATION: PENN SERIES MONEY MARKET FUND - 100%
ALLOCATION DATE IS NOVEMBER 1, 2000
Schedule of Benefits
Description Amount
SUPPLEMENTAL TERM INSURANCE AGREEMENT $50,000 SPECIFIED AMOUNT
Schedule of Premiums
THE INITIAL PREMIUM OF $1,363.28 WAS PAID ON THE POLICY DATE FOR 12 MONTHS.
SUBSEQUENT PREMIUMS ARE PAYABLE ANNUALLY AS FOLLOWS:
BEGINNING AS OF PREMIUM
OCTOBER 1,2001 $1,363.28
THE NO LAPSE PREMIUM IS $610.85
THE NO LAPSE DATE IS OCTOBER 1, 2003
NOTE: INSURANCE WILL TERMINATE IF THE PREMIUMS PAID AND THE INTEREST CREDITED
ARE INSUFFICIENT TO COVER THE MONTHLY DEDUCTIONS, EXCEPT AS PROVIDED IN SECTION
4.
SECTION 7702A OF THE INTERNAL REVENUE CODE OF 1986 ESTABLISHES A CLASS OF LIFE
INSURANCE CONTRACTS DESIGNATED AS "MODIFIED ENDOWMENT CONTRACTS." THE RULES
RELATING TO WHETHER A POLICY WILL BE TREATED AS A MODIFIED ENDOWMENT CONTRACT
ARE EXTREMELY COMPLEX. PLEASE CONSULT WITH A QUALIFIED TAX ADVISOR REGARDING
YOUR OWN PERSONAL SITUATION.
PAGE 3
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1. Policy Specifications
Schedule of Surrender Charges
Maximum Surrender Charge Premium $433.50
Table of Surrender Charge Factors Surrender Charge Table
Policy Year Surrender Factor (per $1,000 of Specified Amount)
1-7 1.00 Age Surrender Charge
8 .80
9 .60 0 - 9 1.00
10 .40 10 - 19 2.00
11 .20 20 - 29 3.00
12 AND LATER 0 30 - 39 4.00
40 - 49 5.00
50 - 59 6.00
60 - 85 7.00
Schedule of Policy Loads and Expense Charges
Maximum percent of premium load 7.5%
(applied to each premium applied to the policy)
Maximum per policy monthly expense charge $9.00
Maximum Mortality and Expense Risk Face Amount charge $.13
per $1,000 of Specified Amount (for the first
120 months following the policy date)
Maximum Mortality and Expense Risk Face Amount charge per $.18
$1,000 of Specified Amount for Supplemental Term
Insurance Agreement (for the first 120 months
following the policy date)
Maximum Mortality and Expense Risk Face Amount charge per As shown on Page 19A
$1,000 of Specified Amount (for the first 120 months
following an increase in Specified Amount)
Maximum Mortality and Expense Risk Face Amount charge per As shown on Page 19B
$1,000 of Specified Amount for Supplemental Term Insurance Agreement
(for the first 120 months following an increase in Specified Amount)
Maximum Mortality and Expense Asset Risk Charge for Account Value -
up to and including $50,000 0.60%
in excess of $50,000 0.30%
Schedule of Interest Rates
Fixed Account Guaranteed Interest Rate 3% Effective Annual Rate
Death Benefit Discount Factor 1.0024663
Loan Interest Rate 4% Effective Annual Rate
Policy Loan Account Rates 3% Policy Years 1 -10
3.75% Policy Years 11 and after
Page 3 (cont'd)
<PAGE>
2. Endorsements
To be made only by the Company
This page is intentionally
left blank.
Page 4
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3. Qualification as Life Insurance
Your policy must qualify as life insurance under one of the following tests as
defined in Section 7702 of the Internal Revenue Code of 1986. The life insurance
qualification test for this policy will be the Guideline Premium Test unless
otherwise elected in the application. The Life Insurance Qualification Test for
this Policy is shown on Page 3. The test may not be changed at anytime after the
policy is issued.
Guideline Premium Test - Under this test, the amount of premium that can be paid
in a policy year may not exceed the Maximum Premium Limit. The Maximum Premium
Limit for a policy year is the largest amount of premium which can be paid in
that policy year such that the sum of the premiums paid under the policy will
not at any time exceed the guideline premium limitation referred to in Section
7702 of the Internal Revenue Code of 1986, as amended, or as set forth in any
applicable successor thereto. The Maximum Premium Limit for the following policy
year will be shown on the Annual Report sent to the Owner.
In addition, a minimum margin must exist between the Death Benefit and the
Policy Value. The margin is defined in Section 7702 and is based on the attained
age of the Insured. The Basic Death Benefit of the policy will be adjusted
accordingly with factors shown in the Table of Death Benefit Factors to satisfy
the requirements of this portion of the test. See the Death Benefit Section for
further details.
Cash Value Accumulation Test - Under this test, the Policy Value cannot at any
time exceed the net single premium required to fund the future benefits under
the policy. The net single premium is defined in Section 7702 of the Internal
Revenue Code. The Basic Death Benefit of the policy will be adjusted accordingly
with factors shown in the Table of Death Benefit Factors to satisfy the
requirements of this test. See the Death Benefit Section for further details.
The Company reserves the right to restrict Policy transactions as necessary in
order to qualify the policy as a life insurance contract under Section 7702. If
it is subsequently determined that a policy does not satisfy Section 7702, the
Company may take whatever steps are appropriate and necessary to attempt to
cause such a policy to comply with Section 7702.
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4. Premiums
Payment of Premiums--Premiums are payable while this policy is in force until
the Maturity Date. The first premium is due on the Policy Date. Premiums after
the first may be paid in any amount and at any interval subject to the following
conditions:
(a) No premium payment may be less than $25.
(b) The Company reserves the right to limit total premiums paid in any policy
year to the planned payments for that policy year as shown on Page 3. The
schedule of premiums shown on Page 3 is based on the premium amount and the
interval of payment specified in the application.
(c) We reserve the right to require submission of evidence of insurability
satisfactory to the Company on subsequent premiums that would cause an
immediate increase in the difference between the Death Benefit and the
Policy Value.
(d) If the Guideline Premium Test is in effect, total premiums paid in any
policy year may not exceed the Maximum Premium Limit for that policy year.
Each premium after the first is payable at the Company's Home Office. A receipt
signed by the President or the Secretary will be given on request.
Premium Charge--Each premium payment will be reduced by a percent of premium
charge. The percent of premium charge will be set by the Company as described in
the Determination of Nonguaranteed Factors provision in the Policy Value
Section. In no event will the percent of premium charge assessed on each premium
paid be greater than that shown on Page 3.
Net Premium--Net premium is the amount of any premium payment reduced by the
percent of premium charge.
Page 5
<PAGE>
Page 6
4. Premiums (continued)
Allocation of Net Premiums--The initial net premium and any additional premium
paid before the policy is issued will be allocated based on the Initial
Allocation specified on Page 3. On the Allocation Date listed on Page 3, the
assets will be allocated to the subaccounts of the Separate Account or to the
Fixed Account as directed by the Owner in the application for this policy.
Subject to and in accordance with the provisions of this policy, subsequent net
premiums will be allocated as directed by the Owner to the subaccounts of the
Separate Account and the Fixed Account set forth in the Additional Policy
Specifications. The Owner may change the allocation of future premium payments
at any time. Allocations must be in whole number percentages.
Continuation of Insurance--The insurance provided under this policy, including
benefits provided by any supplemental agreements attached to this policy, will
continue, subject to the grace period provision, in accordance with the
provisions of this policy and any such supplemental agreements for as long as
the values in this policy are sufficient to keep it in force.
No-Lapse Premium--The No-Lapse Premium is the amount stated on Page 3. If, on a
Monthly Anniversary prior to the No-Lapse Date shown on Page 3, the sum of all
premiums paid on this policy, reduced by any partial surrenders, is greater than
or equal to the No-Lapse Premium multiplied by the number of months since the
Policy Date, this policy will not then lapse as a result of a Net Cash Surrender
Value insufficient to pay the Monthly Deduction for the following month. This
provision will not prevent the termination of this policy when indebtedness
exceeds the Cash Surrender Value in accordance with the indebtedness provision
of the Policy Loans Section of this policy.
A change in the Specified Amount, the addition or deletion of a supplemental
agreement to this policy, or a change in the rate class of the Insured prior to
the No-Lapse Date shown on Page 3 may result in a change in the No-Lapse Premium
and may change the No-Lapse Date.
Grace Period--If, on a Monthly Anniversary prior to the No-Lapse Date shown on
Page 3:
(a) the Net Cash Surrender Value is insufficient to cover the Monthly Deduction
for the following policy month and,
(b) the sum of all premiums paid on this policy, reduced by any partial
surrenders, is less than the No-Lapse Premium shown on Page 3 multiplied by
the number of elapsed months since the Policy Date;
then a grace period of 61 days will be allowed for the payment of a premium
sufficient to keep this policy in force. If, on a Monthly Anniversary on or
after the No-Lapse Date shown on Page 3, the Net Cash Surrender Value is
insufficient to cover the Monthly Deduction for the following month, a grace
period of 61 days will be allowed for the payment of a premium sufficient to pay
the Monthly Deduction.
Notice of the amount of premium required to be paid during the grace period to
keep this policy in force will be sent at the beginning of the grace period to
the last known address of the Owner and of any assignee on record. The grace
period will end 61 days after the notice is sent. This policy will remain in
force during the grace period.
<PAGE>
5. Lapse and Reinstatement
Lapse--If a premium sufficient to keep this policy in force is not paid during
the grace period, this policy will lapse at the end of the grace period. At
lapse this policy will terminate without value and cease to be in force. Any
deduction for the Cost of Insurance after termination will not be considered a
reinstatement of the policy nor a waiver by the Company of the termination.
Reinstatement--This policy may be reinstated within five years after lapse. A
reinstatement is subject to:
(a) the submission of evidence of insurability satisfactory to the Company;
(b) the payment or reinstatement of any indebtedness which existed at the end
of the grace period; and
<PAGE>
5. Lapse and Reinstatement(continued)
(c) the payment of a premium sufficient to cover (i) the Monthly Deductions for
the grace period, (ii) any unpaid No-Lapse Premiums to the date of
reinstatement, and (iii) the Monthly Deductions or, if applicable, the No-Lapse
Premiums for two policy months after reinstatement.
The effective date of a reinstatement will be the date of approval by the
Company of the application for reinstatement. Such application will be attached
to and made a part of the reinstated policy.
The policy value on the date of reinstatement is the sum of:
(a) the policy value at the beginning of the grace period of lapse;
(b) interest on (a) at the guaranteed interest rate until the date of
reinstatement;
(c) any dividend credited to the policy since the date of lapse;
(d) interest on (c) at the guaranteed interest rate until the date of
reinstatement; and
(e) the payment made upon reinstatement reduced by the percent of premium charge
less the sum of:
(a) the Monthly Deductions for the grace period;
(b) interest on (a) at the guaranteed interest rate until the date of
reinstatement; and
(c) the Monthly Deduction for the policy month following the date of
reinstatement.
The surrender charge set forth in the Surrender of Policy Section will be
applicable to any surrender of this policy following reinstatement.
Any indebtedness which is reinstated will be subject to loan interest as set
forth in the Policy Loans Section.
Following reinstatement, the provisions of No-Lapse Premium set forth in the
Premiums Section will again be applicable until the No-Lapse Date shown on Page
3 if sufficient premium is paid so that, as of the effective date of
reinstatement, the sum of all premiums paid, reduced by any partial surrenders,
is greater than the No-Lapse Premium multiplied by the number of elapsed months
since the Policy Date.
<PAGE>
6. The Separate Account
The Separate Account--The Separate Account named on Page 3 was established by
the Company for this and other variable life insurance policies. The Separate
Account is divided into subaccounts for the investment of assets in shares of
the funds specified in the Additional Policy Specifications. The Company owns
the assets of the Separate Account. The assets of each subaccount of the
Separate Account equal to the reserves and other contract liabilities with
respect to the subaccount are not chargeable with liabilities arising out of any
other business the Company may conduct.
Income and realized and unrealized gains and losses from the assets held in each
subaccount are credited to or charged against the subaccount without regard to
the income, gains or losses in other investment accounts of the Company. Shares
of a fund held in a subaccount are valued at current net asset value on each
business day.
Shares of a fund held in a subaccount will be redeemed at current net asset
value to make transfers, pay benefits and cover applicable charges and
deductions. Any dividend or capital gain distribution from a fund will be
reinvested in shares of that fund.
Substitution of Investment--If investment in a subaccount should no longer be
possible or, in the judgment of the Company, investment in a subaccount becomes
inappropriate to the purposes of the policy, or if in the judgment of the
Company, investment in another subaccount or insurance company separate account
is in the interest of owners of this class of policies, the Company may
substitute another subaccount or insurance company separate account.
Substitution may be made with respect to existing investments and the investment
of future net premiums.
Page 7
<PAGE>
Page 8
6. The Separate Account(continued)
Substitution will be subject to the approval of the Insurance Department of the
jurisdiction in which this policy is delivered and all other approvals required
under applicable law.
Transfers--Subject to and in accordance with the provisions of this policy, at
any time after the Allocation Date listed on Page 3, amounts may be transferred
among the subaccounts of the Separate Account and the Fixed Account, provided
that:
(a) the minimum amount which may be transferred is $250 or, if less, the full
amount held in the subaccount or the Fixed Account;
(b) for partial transfers, the amount remaining in a subaccount or the Fixed
Account must be at least $250; and
(c) the first 12 transfers per policy year will be allowed free of charge;
thereafter, a $10 transfer charge may be deducted from the amount
transferred.
7. The Fixed Account
The Fixed Account--Amounts allocated or transferred to the Fixed Account under
this policy become a part of the general account assets of the Company. Subject
to applicable law and regulation, investment of general account assets is at the
sole discretion of the Company.
Interest--Amounts held in the Fixed Account will be credited with interest at
rates determined by the Company as described in the Determination of
Nonguaranteed Factors provision in the Policy Value Section. Different rates
will normally apply to the Policy Loan Account. In no event will the rate of
interest credited be less than the effective annual guaranteed interest rate
listed on Page 3.
Amounts allocated or transferred to the Fixed Account will be credited with
interest at an effective annual rate declared by the Company. The declared rate
will apply from the date of allocation or transfer through the end of the twelve
month period which begins on the first day of the calendar month in which the
allocation or transfer is made. Thereafter, interest will be credited on such
amount for successive twelve month periods at the declared effective annual rate
then applicable to new allocations to the account made as of the beginning of
each such period.
Transfers--Subject to and in accordance with the provisions of this policy,
including the Transfers provision of the Separate Account Section:
(a) an amount held in the Fixed Account may be transferred to one or more
subaccounts only during the period which is not more than thirty days
immediately following the end of each policy year;
(b) the maximum amount that may be transferred out of the Fixed Account is
limited to the greater of $5,000 or 25% of the accumulated value of the
Fixed Account; and
(c) the amount that may be transferred excludes any amount held in the Policy
Loan Account.
8. Policy Value
Policy Value-- On the Policy Date the Policy Value is the initial premium paid
less the sum of (a) the percent of premium charge, and (b) the Monthly Deduction
for the first policy month. On each Monthly Anniversary while this policy is in
force, the Policy Value is the sum of (a) the current market value of each
subaccount; (b) the value of the Fixed Account, after deduction of the Monthly
Deduction for the next policy month; and (c) the value of the Policy Loan
Account.
On any date other than the Policy Date or a Monthly Anniversary, the Policy
Value will be the sum of (a) the current market value of each subaccount; (b)
the value of the Fixed Account; and (c) the value of the Policy Loan Account.
Monthly Deduction--The Monthly Deduction is the sum of:
(a) the Cost of Insurance for the policy month;
(b) the monthly expense charge(s);
(c) the Mortality and Expense Risk Face Amount charge;
(d) the Mortality and Expense Risk Asset charge; and
(e) the Cost of Insurance and any other applicable monthly charge for the
policy month for any benefits provided by a supplemental agreement made a
part of this policy.
<PAGE>
8. Policy Value (continued)
The Monthly Deductions will be deducted on the Policy Date and on each Monthly
Anniversary from the subaccounts and the Fixed Account on a pro-rata basis.
However, no monthly deductions will be deducted from the Policy Loan Account.
Net Amount at Risk. The Net Amount at Risk is equal to the Basic Death Benefit
at the beginning of the policy month, divided by the Death Benefit Discount
Factor, minus the Policy Value at the beginning of the policy month before the
Monthly Deduction.
If the Specified Amount does not include Policy Value, the Policy Value will be
allocated to the initial Specified Amount segment in order to determine the Net
Amount at Risk.
If there have been any increases in the Specified Amount, the Policy Value will
be allocated to the initial Specified Amount segment for determining the Net
Amount at Risk. If the Policy Value exceeds the initial Specified Amount, the
excess will be allocated to the increases in Specified Amount in the order of
the increases. Any increases in the Basic Death Benefit in order to maintain the
required minimum margin between the Basic Death Benefit and the Policy Value
will be allocated to the most recent increase in Specified Amount.
Cost of Insurance--The Cost of Insurance is determined on a monthly basis. It is
determined separately for the initial segment as well as for each additional
segment created as the result of an increase in the Specified Amount. The Cost
of Insurance for a policy month is calculated as the sum of (a) multiplied by
(b) for each segment where:
(a) is the applicable Cost of Insurance Rate divided by 1,000; and
(b) is the Net Amount at Risk for that segment.
Cost of Insurance Rate--The Base Cost of Insurance Rate is based on the attained
age, sex, rate class and policy duration of the Insured. The Cost of Insurance
Rate will be determined by the Company as described in the Determination of
Nonguaranteed Factors provision.
<PAGE>
However, the rates will not exceed those shown in the Additional Policy
Specifications. Such maximum rates are based on the 1980 Commissioners Standard
Ordinary Smoker and Nonsmoker Mortality Tables, Age Nearest Birthday.
Expense Charges--The actual expense charges will be determined by the Company as
described in the Determination of Nonguaranteed Factors provision. However,
these actual expense charges will not exceed the maximum expense charges stated
on Page 3.
Mortality and Expense Risk Face Amount Charge -- The actual Mortality and
Expense Risk Face Amount Charge will be determined by the Company as described
in the Determination of Nonguaranteed Factors provision. However, this actual
Mortality and Expense Risk Face Amount Charge will not exceed the maximum stated
on Page 3.
Mortality and Expense Risk Asset Charge -- The actual Mortality and Expense Risk
Asset Charge will be determined by the Company as described in the Determination
of Nonguaranteed Factors provision. However, these actual Mortality and Expense
Risk Asset Charge will not exceed the maximum stated on Page 3.
Determination of Nonguaranteed Factors---Cost of Insurance Rates, Percent of
Premium Charges, Expense Charges, Mortality and Expense Risk Face Amount,
Mortality and Expense Risk Asset Charge, and Interest Rates will be determined
by the Company based on expectations as to future mortality, investment, expense
and persistency experience. The Company will not adjust such rates or charges as
a means of recovering prior losses nor as a means of distributing prior profits.
Variable Accumulation Values--At any valuation time, the current market value of
a subaccount is determined by multiplying that subaccount's accumulation unit
value times the number of subaccount units held under this policy.
The number of accumulation units is determined by dividing the amount allocated
to the subaccount by the subaccount's accumulation unit value for the Valuation
Date when the allocation is made.
The number of subaccount accumulation units will increase when:
(a) net premiums are allocated to that subaccount;
(b) amounts are transferred to that subaccount; and
(c) policy loans are repaid and credited to that subaccount.
Page 9
<PAGE>
Page 10
8. Policy Value (continued)
The number of subaccount accumulation units will decrease when:
(a) a pro-rata portion of the monthly deduction is deducted from that
subaccount;
(b) a policy loan is taken from that subaccount;
(c) policy loan interest is not paid when due and is taken from that subaccount;
(d) an amount is transferred from that subaccount; and
(e) a partial surrender, including the partial surrender charge, is taken from
that subaccount.
Valuation Period--As used in this policy, Valuation Period is the interval from
one valuation time to the next valuation time. Valuation time is the time as of
which each underlying investment company determines the net asset value of its
shares.
Value of Each Accumulation Unit--For each subaccount of the Separate Account,
the value was arbitrarily set at $10 when the subaccount was established. The
value may increase or decrease from one valuation period to the next. For any
valuation period the value is:
The value of an Accumulation Unit for the prior valuation period multiplied by
the net investment factor for that subaccount for the current valuation period.
Net Investment Factor--As used in this policy, Net Investment Factor is an index
used to measure the investment performance of a subaccount from one valuation
period to the next. For any subaccount, the net investment factor for a
valuation period is found by dividing (a) by (b):
Where (a) is
The net asset value per share of the mutual fund held in the subaccount, as of
the end of the valuation period plus
The per-share amount of any dividend or capital gain distributions by the mutual
fund if the "ex-dividend" date occurs in the valuation period.
Where (b) is
<PAGE>
The net asset value per share of the mutual fund held in the subaccount as of
the end of the last prior valuation period.
Fixed Account Value--At any valuation time the value of the Fixed Account is
(a) the total of net premiums allocated to the Fixed Account; plus
(b) any transfers to the Fixed Account; plus
(c) any repaid policy loan credited to the Fixed Account; plus
(d) interest credited to the Fixed Account.
less:
(a) the portion of the Monthly Deduction deducted pro-rata from the Fixed
Account;
(b) the amount of any transfers from the Fixed Account;
(c) the amount of any partial surrender, including the partial surrender charge,
taken from the Fixed Account;
(d) the amount of any policy loan taken from the Fixed Account; and
(e) unpaid policy loan interest taken from the Fixed Account.
Fixed Account Value Reductions--Monthly deductions, transfers and partial
surrenders will reduce the portion of the Fixed Account Value which results from
the most recent allocation to the Fixed Account. A policy loan will be secured
by the portion of the Net Policy Value assigned to the Policy Loan Account.
Computation of Values--All policy values and benefits are equal to or greater
than those required by the law of the jurisdiction in which this policy is
delivered. A detailed statement of the method of computing reserves and Policy
Values has been filed with the insurance supervisory official of that
jurisdiction if required.
<PAGE>
9. Death and Maturity Benefits
Basic Death Benefit--The Basic Death Benefit prior to the Maturity Date will be
as follows:
(a) If the Specified Amount includes the Policy Value, as shown on Page 3, the
Basic Death Benefit will be equal to the greater of:
(1) the Specified Amount; or
(2) the Policy Value multiplied by an attained age factor shown in Table of
Death Benefit Factors.
(b) If the Specified Amount does not include the Policy Value, as shown on Page
3, the Basic Death Benefit will be equal to the greater of;
(1) the Specified Amount plus the Policy Value; or
(2) the Policy Value multiplied by an attained age factor shown in Table of
Death Benefit Factors.
Amount of Death Benefit--The Death Benefit payable at the death of the Insured
while this policy is in force will be equal to the sum of:
(a) the Basic Death Benefit on the date of death;
(b) any dividend payable at death; and
(c) any benefit provided by a supplemental agreement attached to the policy and
payable because of the death of the Insured.
less the sum of:
(a) any indebtedness on this policy at the time of the death of the Insured; and
(b) if the death of the Insured occurs during a grace period, the past due
Monthly Deductions.
Suicide Exclusion--If the Insured dies by suicide, while sane or insane, within
two years from the Date of Issue, the Death Benefit will be limited to the
premiums paid less any indebtedness and any partial surrenders.
If the Insured dies by suicide, while sane or insane, within two years from the
effective date of any increase in the Specified Amount, the Death Benefit with
respect to that increase in the Specified Amount will be limited to the Monthly
Deductions made for that increase.
If the Insured dies by suicide, while sane or insane, within two years from the
effective date of a reinstatement of this policy, the Death Benefit will be
limited to the premiums paid since the reinstatement less any policy loans and
partial surrenders made since reinstatement.
Payment of Death Benefit--The Death Benefit will be paid to the Beneficiary in
one sum or, if elected, under an income payment option. If part or all of the
Death Benefit is paid in one sum, the Company will pay interest on this sum from
the date of death to the date of payment. The interest rate will be determined
each year by the Company, but will not be less than a rate of 3% per year
compounded annually, or such higher rate as may be required by law.
Amount of Maturity Benefit--The Maturity Benefit payable if the Insured is
living on the Maturity Date and if this policy is then in force will be equal to
the Net Policy Value on that date.
Payment of Maturity Benefit--The Maturity Benefit will be paid to the Owner in
one sum or, if elected, under an Income Payment Option.
<PAGE>
10. Policy Loans
Policy Loans--The Owner may obtain a loan while this policy is in force during
the life of the Insured. The loan, plus any existing indebtedness, may not be
greater than the Loan Value of this policy on the date of the loan. The minimum
loan is $250.
Loan Value--The Loan Value of this policy on any date is equal to 90% of the
Cash Surrender Value.
Loan Interest--Loans will bear interest at the loan interest rate listed on Page
3. Loan interest is due and payable at the end of each policy year. If the
interest is not paid when due it will be added to the loan. It will then bear
interest at the rate of interest on loans.
Indebtedness--Indebtedness means outstanding loans on this policy plus any loan
interest due or accrued. Indebtedness may be repaid in full or in part at any
time while this policy is in force during the life of the Insured.
Page 11
<PAGE>
Page 12
10. Policy Loans (continued)
Excess Indebtedness--This policy is the only security for indebtedness on it.
If, at any time, the indebtedness is greater than the Cash Surrender Value, a
notice of pending termination will be mailed to the last known address of the
Owner and of any assignee on record. If the excess indebtedness is not paid to
the Company, this policy will terminate 61 days after the notice is mailed.
Policy Loan Account--When a loan is made, an amount equal to the amount of the
loan will be withdrawn from the assets held under this policy in subaccounts of
the Separate Account and in the Fixed Account and the amount will be placed in
the Policy Loan Account included within the Fixed Account. Subject to and in
accordance with the provisions of this policy withdrawals will be made from the
subaccounts and the Fixed Account on a pro-rata basis unless otherwise directed
by the Owner. The Policy Loan Account will be credited with interest. The rate
of interest will be determined each year by the Company but will not be less
than the Policy Loan Account Rate listed on Page 3. Any repayment of
indebtedness will be withdrawn from the Policy Loan Account and reallocated to
the subaccounts and the Fixed Account as directed by the Owner. Except for such
repayment of indebtedness, no transfers or partial surrenders may be made from
the Policy Loan Account.
11. Surrender of Policy
Surrender--The Owner may surrender this policy for its Net Cash Surrender Value
by filing a written request with the Company. The Net Cash Surrender Value may
be taken in one sum or it may be left with the Company under an income payment
option. This policy will terminate and cease to be in force if it is surrendered
for one sum.
Net Cash Surrender Value--The Net Cash Surrender Value is the Net Policy Value
decreased by any surrender charge.
Net Policy Value--The Net Policy Value is the Policy Value decreased by any
indebtedness on this policy.
Cash Surrender Value--The Cash Surrender Value is the Policy Value decreased by
any surrender charge.
Surrender Charge--The surrender charge for the initial Specified Amount is
determined by multiplying (a) times the sum of (b) plus (c), where:
(a) is the appropriate surrender factor from the Table of Surrender Factors
determined from the Policy Date;
(b) is 25% of the lesser of:
(i) the sum of all premiums paid on this policy; and
(ii) the maximum surrender charge premium as shown on Page 3; and
(c) is the Per $1,000 Surrender Charge from the Table of Per $1,000 Surrender
Charges for the insurance age of the Insured multiplied by the initial
Specified Amount divided by 1,000.
The surrender charge for each increase in the Specified Amount is based on the
amount of the increase and on the attained age of the Insured at the time of the
increase. The surrender charge is determined by multiplying (a) times (b),
where:
(a) is the appropriate surrender factor from the Table of Surrender Factors
determined from the effective date of the increase;
(b) is the Per $1,000 Surrender Charge from the Table of Per $1,000 Surrender
Charges for the attained age of the Insured as of the effective date of the
increase multiplied by the increase in the Specified Amount divided by
1,000.
Partial Surrender--The Owner may make a partial surrender of this policy for any
portion of the Net Cash Surrender Value which exceeds $1,000 by filing a written
request with the Company. However, no partial surrender may be made for less
than $250 and no more than four partial surrenders may be made under this policy
in any policy year. No partial surrender may be made in the first five policy
years which would reduce the Specified Amount to less than $50,000. A charge of
<PAGE>
11. Surrender of Policy (Continued)
2% of the amount surrendered, but not more than $25 will be made for each
partial surrender. The charge will be deducted from the available Net Cash
Surrender Value and will be considered part of the partial surrender.
Any partial surrender will reduce the Policy Value by the amount of the partial
surrender. If the Specified Amount includes the Policy Value, the Specified
Amount will be reduced by the amount of the partial surrender that exceeds the
difference between the Death Benefit and the Specified Amount. In those
instances, the Specified Amount will be reduced in the following order:
(a) The most recent increase in the Specified Amount, if any, will be decreased
first.
(b) The next most recent increases in the Specified Amount, if any, will then
be successively decreased.
(c) The initial Specified Amount will then be decreased.
Partial surrenders will be deducted from the subaccounts and the Fixed Account
as directed by the Owner, provided that the minimum amount remaining in a
subaccount or the Fixed Account as a result of the allocation is $250. If no
allocation is directed, the partial surrender will be deducted from the
subaccounts and the Fixed Account on a pro-rata basis.
The surrender charge will not be reduced as a result of a partial surrender.
12. Policy Changes
Right to Make Change--At any time while this policy is in force after the first
policy year, the Owner may request changes as set forth in this section. No
change will be permitted that would result in the Death Benefit under this
policy not being excludable from gross income due to not satisfying the
requirements of Section 7702 of the Internal Revenue Code of 1986, as amended,
or as set forth in any applicable successor provision thereto. In addition, each
change is subject to the conditions stated. This policy will be amended as the
result of any such change.
Increase in Specified Amount--An increase in Specified Amount must be applied
for on a written application and is subject to the Company's underwriting
guidelines in effect at the time of the increase. Evidence of insurability
satisfactory to the Company must be submitted.
Decrease in Specified Amount--Any decrease in the Specified Amount must be at
least $5,000. The Specified Amount may not be decreased to less than $50,000. No
decrease may be made in the first year following the effective date of an
increase in the Specified Amount.
Any decrease in the Specified Amount will become effective on the Monthly
Anniversary that coincides with or next follows the receipt by the Company of
the request. The decrease in the Specified Amount will be in the following
order:
(a) The most recent increase in the Specified Amount, if any, will be
decreased first.
(b) The next most recent increases in the Specified Amount, if any, will then
be successively decreased.
(c) The initial Specified Amount will then be decreased.
The surrender charge will not change as a result of a decrease in the Specified
Amount. No surrender charge will be deducted from the Policy Value upon a
decrease in the Specified Amount.
Change in Specified Amount Option--If the Specified Amount does not include the
Policy Value, a request may be made to change this policy so that the Specified
Amount includes the Policy Value. The Specified Amount after the change will be
equal to the Specified Amount before the change plus the Policy Value on the
date of the change. The effective date of the change will be the Monthly
Anniversary that coincides with or next follows the date of receipt by the
Company of the request to make the change.
If the Specified Amount includes the Policy Value, a request may be made to
change this policy so that the Specified Amount does not include the Policy
Value. The Specified Amount after the change will be equal to the Specified
Amount before the change less the Policy
Page 13
<PAGE>
Page 14
12. Policy Changes (Continued)
Value on the date of the change. Evidence of insurability satisfactory to the
Company may be required. Such evidence will be attached to and made a part of
the policy. The effective date of the change will be the Monthly Anniversary
that coincides with or next follows the date of receipt by the Company of the
request to make the change.
The Specified Amount after the change must be at least $50,000. No more than one
change in the Specified Amount Option may be made in any policy year.
13. Transfer to Fixed Account
At any time within the first 24 policy months while this policy is in force
during the life of the Insured, the Owner may transfer all amounts held in
subaccounts of the Separate Account to the Fixed Account without restriction,
minimum or charge. Following such transfer, no future premiums may be allocated
to subaccounts of the Separate Account and no transfers may be made to the
subaccounts.
14. Owner and Beneficiary
Owner--The Owner of this policy is as stated in the application unless changed
by a subsequent owner designation or assignment. While this policy is in force
before the death of the Insured, the Owner may exercise all of the rights in it
without the consent of any other person.
Beneficiary--The Beneficiary of this policy is as stated in the application
unless changed by a subsequent beneficiary designation on a form provided by the
Company. If no other provision is made, the interest of a Beneficiary who dies
before the death of the Insured will pass to the Owner.
Change of Owner or Beneficiary--The Owner may transfer ownership or change the
Beneficiary by filing a written designation at the Home Office on a form
provided by the Company. The designation will take effect as of the date it is
signed by the Owner, subject to any action taken by the Company prior to the
time that the designation is received at the Home Office. Unless otherwise
stated in a designation, the following rules will apply to terms of kinship:
(a) A legally adopted child of any person will be considered the child of the
adopting parent.
(b) The brothers and sisters of a person will include those who have only one
parent in common with the person, but will not include stepbrothers or
stepsisters.
(c) Any reference to children will not include stepchildren and any reference to
parents will not include stepparents.
Assignment--The Owner may assign this policy while it is in force during the
life of the Insured. The rights of the Owner and of any Beneficiary will be
subject to the rights of an assignee under the terms of an assignment. No
assignment will bind the Company until the original or a copy signed by the
Owner, on a form provided by the Company, has been filed at the Home Office. The
Company is not responsible for the effect or the validity of any assignment.
15. General Provisions
The Contract--This policy and the application for it constitute the entire
contract. A copy of the application is attached to this policy. Only the
President, a Vice President, the Secretary, the Chief Actuary, Actuary or an
Associate Actuary may, on behalf of the Company, modify this policy or waive any
of its conditions.
No agent is authorized to modify this contract or to make any promise as to the
future payment of dividends or interest.
At any time the Company may make such changes in this policy as are necessary
(i) to assure compliance at all times with the definition of life insurance
prescribed by
<PAGE>
15. General Provisions (continued)
federal income tax law, or (ii) to make the policy conform with any law or
regulation issued by any government agency to which it is subject. Any such
change may, however, be accepted or rejected by the Owner.
Incontestability--All statements made in the application for this policy are
representations and not warranties. No statement will void this policy or be
used to contest a claim under it unless the statement is contained in a written
application, a copy of which is attached to and made a part of this policy.
This policy will be incontestable after it has been in force during the life of
the Insured for two years from the Date of Issue. Any increase in the Specified
Amount will be incontestable with respect to statements made in the evidence of
insurability for that increase after the increase has been in force during the
life of the Insured for two years from its effective date.
This policy will be incontestable with respect to statements made in an
application for reinstatement after it has been in force during the life of the
Insured for two years from the effective date of the reinstatement.
Duration of Coverage--The duration of coverage under this policy will depend on
the amount, timing and frequency of premium payments; changes in the Specified
Amount or benefits; the interest rates credited or investment return; the cost
of insurance rates charged; and the amount and timing of any partial surrenders
or policy loans.
Participation--This policy will participate in divisible surplus while it is in
force except as stated in the Income Payment Options Section. The share of such
surplus, if any, to be apportioned to this policy as a dividend will be
determined each year by the Company. Any dividend will be allocated to
subaccounts of the Separate Account as directed by the Owner, unless the Owner
elects to have it paid in cash. No divisible surplus is expected to be
apportioned to this policy in the foreseeable future.
Policy Date--The Policy Date shown on Page 3 is the date from which policy
years, months and anniversaries are determined.
Monthly Anniversary--The Monthly Anniversary is the day in each calendar month
which is the same day of the month as the Policy Date.
<PAGE>
Age--The age shown on Page 3 is the insurance age of the Insured. This is the
age of the Insured on the birthday nearest the Policy Date. Attained age means
the insurance age of the Insured increased by the number of whole years and
months after the Policy Date.
Misstatement of Age or Sex--If the age or the sex of the Insured has been
misstated, the Death Benefit under this policy will be the amount which would
have been provided by the most recent Cost of Insurance charge at the correct
age and sex.
Policy Payments--All payments by the Company under this policy are payable at
the Home Office. The Company may require the return of this policy upon
surrender for the Net Cash Surrender Value or payment of the Death Benefit.
Deferment of Transactions--The Company may defer payment from the subaccounts of
a partial surrender or of the Net Cash Surrender Value, may defer making a loan,
may defer payment of any portion of the Death Benefit in excess of the Specified
Amount and may defer transfer from assets held in subaccounts of the Separate
Account under any of the following conditions:
(a) The New York Stock Exchange is closed (other than customary weekend and
holiday closings).
(b) Trading on the New York Stock Exchange is restricted.
(c) An emergency exists such that it is not reasonably practical to dispose of
securities held in the Separate Account or to determine the value of its
assets.
(d) The Securities and Exchange Commission by order so permits for the
protection of securityholders.
Conditions in (b) and (c) will be decided by, or in accordance with rules of,
the Securities and Exchange Commission.
The Company may defer payment from the Fixed Account of a partial surrender, of
the Net Cash Surrender Value, or of a policy loan for up to six months from the
date we receive a written request. However, a partial surrender or policy loan
to pay a premium due on a policy of the Company will not be deferred. If the
payment is deferred for 30 days or more, it will bear interest at a rate of 3%
per year compounded annually while it is deferred, or such higher rate as may be
required by law.
Page 15
<PAGE>
Page 16
15. General Provisions (continued)
Annual Report--Each year a report will be sent to the Owner which shows the
current policy values, premiums paid and deductions made since the last report,
any outstanding policy loans, and any other information required by the
Insurance Department of the jurisdiction in which this policy is delivered.
Deferral of Maturity--Upon the written request of the Owner, this policy will
continue in force beyond the Maturity Date. Thereafter, the Death Benefit will
be the Net Policy Value.
16. Income Payment Options
Election of Income Payment Option--An income payment option may be elected in
place of a one sum payment of any amount payable upon the death of the Insured
or upon surrender. The Owner may elect an income payment option or change a
previous election while this policy is in force during the life of the Insured.
If no election is in effect on the date that the Death Benefit becomes payable,
the person entitled to such benefit may elect an income payment option. The
option must be elected before any payment has been made and within one year
after the date on which the benefit becomes payable.
The amount applied under an income payment option must be at least $5,000. No
election may provide for income payments of less than $50 each.
Option 1--Interest Income--The Company will hold the amount applied at interest.
Interest will be paid monthly, quarterly, semiannually or annually.
Option 2--Income for a Fixed Period--The Company will pay the amount applied,
with interest, in equal monthly payments for a fixed period. The fixed period
may not be greater than 30 years.
Option 3--Income of a Fixed Amount--The Company will make payments of a fixed
amount until the total amount applied, with interest, has been paid. The
payments may be made monthly, quarterly, semiannually or annually. The final
payment may be less than the fixed amount. The total of the payments to be made
each year must be at least $75 for each $1,000 applied.
Option 4--Life Income--The Company will pay equal monthly payments during the
life of the option annuitant.
Option 5--Life Income with Guaranteed Period--The Company will pay equal monthly
payments for a stated guaranteed period and thereafter during the life of the
option annuitant. The guaranteed period may be 5 years, 10 years or 20 years. In
the event that the monthly income at any age is the same for different
guaranteed periods, the longest guaranteed period that could have been elected
for the same monthly income at that age will be deemed to have been elected.
Option 6--Life Income with Refund Period--The Company will pay equal monthly
payments during the life of the option annuitant. If necessary, the payments
will continue after the death of the option annuitant until the total of all
payments made, including a smaller final payment, if required, equals the total
amount applied.
Option 7--Joint and Survivor Life Income--The Company will pay equal monthly
payments during the joint life of two option annuitants and thereafter during
the life of the survivor.
Income Amount--Participation--The income under Options 1 and 2 will be based on
interest at a rate of 3% per year compounded annually. The unpaid balance of the
amount applied under Option 3 will be credited with interest at a rate of 3% per
year compounded annually. Options 1, 2 and 3 will participate in divisible
surplus by the payment or crediting of additional interest in such amount, if
any, as determined each year by the Company. Additional interest will increase
the income payments under Options 1 and 2. Additional interest will lengthen the
period during which payments are made under Option 3.
In no event will the monthly income under these life income options be less than
the income stated in the Income Payment Option Tables. The tables are based on
the Annuity 2000 Basic Table, without projections, 50% male/50% female. Options
4, 5, 6 and 7 will not participate in divisible surplus.
<PAGE>
16. Income Payment Options (Continued)
Income Period--The income period under an option will begin on the date of death
of the Insured or the date of surrender. Income payments under Options 1 and 3
will be made at the end of the payment interval. Income payments under Options
2, 4, 5, 6 and 7 will be made at the beginning of the payment interval.
Option Annuitant--Option annuitant means a natural person on whose life the
income payments under Options 4, 5, 6 and 7 are based.
The Company may require proof of the age, sex and of the continued life of an
option annuitant. If the age or the sex of an option annuitant has been
misstated, an appropriate adjustment will be made in the income payments.
Withdrawal Privilege--Unless the election states otherwise, the payee under an
income payment option may:
(a) before any income payment has been made, withdraw the amount applied under
the option; or
(b) withdraw the present value of the income payments to become due during any
fixed, guaranteed or refund period; or
(c) withdraw the balance held under Option 1 or 3 plus any accrued interest.
There will be no right to withdraw the present value of the income payments
falling due after the guaranteed or refund period under Option 5 and 6. There
will be no right to withdraw the present value of any income payments under
Options 4 and 7.
The Company may defer the payment of the amount withdrawn for up to six months
from the date of a withdrawal request.
Present Value--The present value of the income payments under Option 2 will be
based on interest at a rate of 3% per year compounded annually. The present
value of the remaining income payments during a guaranteed or refund period
under a life income option will be based on interest at a rate set by the
Company at the time income payments are to begin.
Death of Payee--Upon the death of the payee under an income payment option, the
Company will pay the following to the payee's executors or administrators unless
stated otherwise in an election consented to by the Company:
(a) the balance of the amount held under Option 1 or 3 plus any accrued
interest; or
(b) the present value of the income payments to become due during the fixed
period under Option 2; or
(c) if the option annuitant under Option 5 or 6 has died, the present value of
the income payments, if any, to become due during the guaranteed or refund
period; or
(d) if any option annuitant under Option 4, 5, 6 or 7 is living, any income
payments as they become due during the option annuitant's life plus, upon
the death of the option annuitant under Option 5 or 6, the present value of
the income payments, if any, to become due during the guaranteed or refund
period.
Assignment--Creditors--The amount applied under an income payment option and the
payments under the option may not be assigned and, to the extent permitted by
law, will not be available to anyone who has a claim against the payee.
17. Income Payment Option Table
Amount of income provided by each $1,000 applied under an income payment option
<TABLE>
<CAPTION>
Option 1--Interest Income Option 2--Income for Fixed Period of Years
------------------------------------------------------------------------------------------------------------------------------------
Monthly Monthly Monthly
Payment Interval Amount Years Income Years Income Years Income
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $84.47 11 $8.86 21 $5.32
Annually $30.00 2 42.86 12 8.24 22 5.15
3 28.99 13 7.71 23 4.99
Semiannually 14.89 4 22.06 14 7.26 24 4.84
5 17.91 15 6.87 25 4.71
Quarterly 7.42 6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
Monthly 2.47 8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 17
<PAGE>
Page 18
17. Income Payment Option Table(continued)
"Age" as used in the tables for Options 4, 5, 6 and 7 means an adjusted age
determined in the following manner from the actual age of the Annuitant on the
birthday nearest the date of the first payment:
Date of First Payment Adjusted Age
Before calendar year 2010 Actual Age
2010-2019 Actual age decreased by 1
2020-2029 Actual age decreased by 2
2030 and later Actual age decreased by 3
<TABLE>
<CAPTION>
Options 4, 5 and 6--Monthly Life Income
------------------------------------------------------------------------------------------------------------------------------------
Option 4 Option 5 Option 6 Option 4 Option 5 Option 6
Age of _________ __________________________________ _________ Age of ____________ ________________________________ __________
Option 20 Year 10 Year 5 Year with Option 20 Year 10 Year 5 Year with
Annui- Life Guaranteed Guaranteed Guaranteed Refund Annui- Life Guaranteed Guaranteed Guaranteed Refund
tant Income Period Period Period Period tant Income Period Period Period Period
Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15 and
under $2.91 $2.84 $2.90 $2.84 $2.91 $2.84 $2.91 $2.84 $2.89 $2.83 50 $4.08 $3.83 $3.95 $3.76 $4.05 $3.81 $4.07 $3.82 $3.93 $3.74
16 2.92 2.85 2.91 2.85 2.92 2.85 2.92 2.85 2.91 2.85 51 4.15 3.89 4.00 3.81 4.11 3.87 4.14 3.88 3.99 3.79
17 2.94 2.87 2.93 2.86 2.93 2.87 2.94 2.87 2.92 2.86 52 4.22 3.95 4.06 3.86 4.18 3.93 4.21 3.94 4.05 3.85
18 2.95 2.88 2.94 2.88 2.95 2.88 2.95 2.88 2.94 2.87 53 4.30 4.01 4.12 3.92 4.26 3.99 4.29 4.01 4.11 3.90
19 2.97 2.90 2.96 2.89 2.97 2.89 2.97 2.90 2.95 2.89 54 4.38 4.08 4.18 3.97 4.33 4.06 4.37 4.08 4.18 3.96
20 2.99 2.91 2.98 2.91 2.98 2.91 2.99 2.91 2.97 2.90 55 4.47 4.15 4.24 4.03 4.41 4.13 4.45 4.15 4.25 4.02
21 3.00 2.93 3.00 2.92 3.00 2.92 3.00 2.93 2.99 2.92 56 4.56 4.23 4.30 4.09 4.50 4.20 4.54 4.22 4.32 4.09
22 3.02 2.94 3.01 2.94 3.02 2.94 3.02 2.94 3.00 2.93 57 4.65 4.31 4.36 4.15 4.59 4.28 4.64 4.31 4.39 4.15
23 3.04 2.96 3.03 2.95 3.04 2.96 3.04 2.96 3.02 2.95 58 4.75 4.40 4.43 4.22 4.68 4.36 4.74 4.39 4.47 4.23
24 3.06 2.98 3.05 2.97 3.06 2.97 3.06 2.97 3.04 2.96 59 4.86 4.49 4.49 4.29 4.78 4.45 4.84 4.48 4.56 4.30
25 3.08 2.99 3.07 2.99 3.08 2.99 3.08 2.99 3.06 2.98 60 4.98 4.59 4.56 4.35 4.88 4.54 4.96 4.58 4.64 4.38
26 3.10 3.01 3.09 3.01 3.10 3.01 3.10 3.01 3.08 3.00 61 5.10 4.69 4.62 4.42 4.99 4.63 5.08 4.68 4.74 4.46
27 3.13 3.03 3.11 3.02 3.12 3.03 3.13 3.03 3.10 3.02 62 5.23 4.80 4.69 4.49 5.11 4.73 5.20 4.79 4.83 4.55
28 3.15 3.05 3.14 3.04 3.15 3.05 3.15 3.05 3.19 3.06 63 5.38 4.92 4.76 4.57 5.23 4.84 5.34 4.90 4.93 4.64
29 3.17 3.07 3.16 3.06 3.17 3.07 3.17 3.07 3.15 3.06 64 5.53 5.05 4.82 4.64 5.35 4.96 5.49 5.02 5.04 4.74
30 3.20 3.09 3.19 3.20 3.09 3.20 3.09 3.17 3.17 3.08 65 5.69 5.18 4.88 4.71 5.49 5.07 5.64 5.16 5.15 4.84
31 3.23 3.12 3.21 3.11 3.22 3.11 3.23 3.12 3.20 3.10 66 5.86 5.32 4.95 4.78 5.62 5.20 5.80 5.29 5.27 4.95
32 3.26 3.14 3.24 3.13 3.25 3.14 3.25 3.14 3.22 3.12 67 6.04 5.48 5.00 4.85 5.77 5.33 5.98 5.44 5.39 5.07
33 3.29 3.17 3.27 3.16 3.28 3.16 3.28 3.17 3.25 3.15 68 6.24 5.64 5.06 4.92 5.92 5.48 6.16 5.60 5.52 5.19
34 3.32 3.19 3.30 3.18 3.31 3.19 3.32 3.19 3.28 3.17 69 6.45 5.82 5.11 4.99 6.07 5.62 6.36 5.77 5.66 5.31
35 3.35 3.22 3.33 3.21 3.34 3.22 3.35 3.22 3.31 3.20 70 6.67 6.01 5.17 5.05 6.23 5.78 6.56 5.96 5.80 5.45
36 3.38 3.25 3.36 3.23 3.38 3.24 3.38 3.25 3.34 3.22 71 6.91 6.22 5.21 5.11 6.39 5.94 6.78 6.15 5.96 5.59
37 3.42 3.28 3.39 3.26 3.41 3.27 3.42 3.28 3.37 3.25 72 7.16 6.44 5.25 5.17 6.56 6.12 7.01 6.36 6.11 5.75
38 3.46 3.31 3.42 3.29 3.45 3.31 3.46 3.31 3.40 3.28 73 7.43 6.68 5.29 5.22 6.73 6.29 7.25 6.59 6.28 5.91
39 3.50 3.34 3.46 3.32 3.49 3.34 3.49 3.34 3.44 3.31 74 7.72 6.94 5.33 5.27 6.91 6.48 7.50 6.83 6.46 6.08
40 3.54 3.38 3.50 3.35 3.53 3.37 3.54 3.37 3.47 3.34 75 8.03 7.23 5.36 5.31 7.08 6.67 7.77 7.09 6.64 6.26
41 3.58 3.41 3.53 3.39 3.57 3.41 3.58 3.41 3.51 3.37 76 8.36 7.53 5.39 5.35 7.26 6.87 8.05 7.37 6.83 6.46
42 3.63 3.45 3.57 3.42 3.62 3.44 3.62 3.45 3.55 3.41 77 8.71 7.86 5.41 5.38 7.44 7.07 8.35 7.66 7.04 6.66
43 3.68 3.49 3.62 3.46 3.66 3.48 3.67 3.49 3.59 3.44 78 9.09 8.22 5.43 5.41 7.61 7.27 8.66 7.97 7.25 6.88
44 3.73 3.53 3.66 3.50 3.71 3.52 3.72 3.53 3.64 3.48 79 9.49 8.61 5.45 5.43 7.78 7.47 8.98 8.30 7.48 7.10
45 3.78 3.57 3.70 3.54 3.76 3.57 3.77 3.57 3.68 3.52 80 and 9.92 9.03 5.46 5.45 7.95 7.67 9.32 8.66 7.71 7.35
46 3.83 3.62 3.75 3.58 3.81 3.61 3.83 3.62 3.73 3.56 over
47 3.89 3.67 3.80 3.62 3.87 3.66 3.88 3.67 3.77 3.60
48 3.95 3.72 3.85 3.67 3.93 3.71 3.94 3.72 3.82 3.65
49 4.01 3.77 3.90 3.71 3.99 3.76 4.01 3.77 3.88 3.69
------------------------------------------------------------------------------------------------------------------------------------
Option 7--Joint and Survivor Monthly Life Income
------------------------------------------------------------------------------------------------------------------------------------
Age of Female Age of Male Option Annuitant
Option Annuitant 45 50 55 60 62 65 70 75 80
------------------------------------------------------------------------------------------------------------------------------------
45 $3.33 $3.40 $3.45 $3.49 $3.50 $3.58 $3.52 $3.55 $3.56
50 3.43 3.53 3.61 3.68 3.70 3.73 3.76 3.79 3.80
55 3.52 3.65 3.78 3.88 3.92 3.97 4.04 4.08 4.01
60 3.59 3.76 3.94 4.10 4.16 4.25 4.36 4.45 4.50
62 3.62 3.80 4.00 4.19 4.26 4.37 4.51 4.62 4.69
65 3.65 3.86 4.08 4.32 4.41 4.55 4.74 4.90 5.01
70 3.69 3.93 4.21 4.52 4.65 4.84 5.16 5.43 5.64
75 3.72 3.99 4.30 4.68 4.84 5.11 5.57 6.02 6.41
80 3.75 4.02 4.37 4.80 5.00 5.32 5.94 6.60 7.26
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Additional Policy Specifications
TABLE OF MONTHLY GUARANTEED PER $1,000 CHARGES
ISSUE CHARGE
AGE MALE NONSMOKER
35 0.18
36 0.13
37 0.13
38 0.14
39 0.15
40 0.15
41 0.15
42 0.16
43 0.16
44 0.17
45 0.18
46 0.19
47 0.19
48 0.20
49 0.21
50 0.22
51 0.23
52 0.24
53 0.25
54 0.26
55 0.28
56 0.29
57 0.29
58 0.29
59 0.29
60 0.29
61 0.29
62 0.29
63 0.29
64 0.29
65 0.29
66 0.29
67 0.29
68 0.29
69 0.29
70 0.29
71 0.29
72 0.29
73 0.29
74 0.29
75 0.29
POLICY NUMBER 0 000 000
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICY
WILLIAM PENN
AGE 35 MALE
PAGE 19A
<PAGE>
PAGE 19A (cont'd)
Additional Policy Specifications
TABLE OF MONTHLY GUARANTEED PER $1,000 CHARGES
ISSUE CHARGE
AGE MALE NONSMOKER
76 0.29
77 0.29
78 0.29
79 0.29
80 0.29
81 0.29
82 0.29
83 0.29
84 0.29
85 0.29
POLICY NUMBER 0 000 000
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICY
WILLIAM PENN
AGE 35 MALE
<PAGE>
Additional Policy Specifications
TABLE OF MONTHLY GUARANTEED PER $1,000 CHARGES
FOR SUPPLEMENTAL TERM INSURANCE AGREEMENT
ISSUE CHARGE
AGE MALE NONSMOKER
35 0.18
36 0.18
37 0.18
38 0.19
39 0.20
40 0.20
41 0.20
42 0.21
43 0.21
44 0.22
45 0.23
46 0.24
47 0.24
48 0.25
49 0.26
50 0.27
51 0.28
52 0.29
53 0.30
54 0.31
55 0.33
56 0.34
57 0.34
58 0.34
59 0.34
60 0.34
61 0.34
62 0.34
63 0.34
64 0.34
65 0.34
66 0.34
67 0.34
68 0.34
69 0.34
70 0.34
71 0.34
72 0.34
73 0.34
74 0.34
75 0.34
POLICY NUMBER 0 000 000
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICY
WILLIAM PENN
AGE 35 MALE PAGE 19B
<PAGE>
PAGE 19B (cont'd)
Additional Policy Specifications
TABLE OF MONTHLY GUARANTEED PER $1,000 CHARGES
ISSUE CHARGE
AGE MALE NONSMOKER
76 0.34
77 0.34
78 0.34
79 0.34
80 0.34
81 0.34
82 0.34
83 0.34
84 0.34
85 0.34
POLICY NUMBER 0 000 000
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICY
WILLIAM PENN
AGE 35 MALE
<PAGE>
Additional Policy Specifications
TABLE OF GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1,000
ATTAINED BASE TERM
AGE RATE RATE
35 0.1408 0.1408
36 0.1475 0.1475
37 0.1566 0.1566
38 0.1666 0.1666
39 0.1783 0.1783
40 0.1908 0.1908
41 0.2058 0.2058
42 0.2208 0.2208
43 0.2383 0.2383
44 0.2558 0.2558
45 0.2767 0.2767
46 0.2992 0.2992
47 0.3234 0.3234
48 0.3492 0.3492
49 0.3784 0.3784
50 0.4093 0.4093
51 0.4460 0.4460
52 0.4885 0.4885
53 0.5361 0.5361
54 0.5911 0.5911
55 0.6520 0.6520
56 0.7196 0.7196
57 0.7914 0.7914
58 0.8690 0.8690
59 0.9567 0.9567
60 1.0544 1.0544
61 1.1630 1.1630
62 1.2866 1.2866
63 1.4278 1.4278
64 1.5875 1.5875
65 1.7639 1.7639
66 1.9538 1.9538
67 2.1596 2.1596
68 2.3806 2.3806
69 2.6218 2.6218
70 2.8941 2.8941
71 3.2027 3.2027
72 3.5592 3.5592
73 3.9690 3.9690
74 4.4295 4.4295
75 4.9241 4.9241
76 5.4512 5.4512
POLICY NUMBER 0 000 000
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICY
WILLIAM PENN
AGE 35 MALE
PAGE 19C
<PAGE>
PAGE 19C (cont'd)
Additional Policy Specifications
TABLE OF GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1,000
ATTAINED BASE TERM
AGE RATE RATE
77 6.0058 6.0058
78 6.5822 6.5822
79 7.1947 7.1947
80 7.8672 7.8672
81 8.6169 8.6169
82 9.4654 9.4654
83 10.4233 10.4233
84 11.4726 11.4726
85 12.5898 12.5898
86 13.7532 13.7532
87 14.9527 14.9527
88 16.1646 16.1646
89 17.4052 17.4052
90 18.6921 18.6921
91 20.0473 20.0473
92 21.5156 21.5156
93 23.1600 23.1600
94 25.2598 25.2598
95 28.2741 28.2741
96 33.1067 33.1067
97 41.6847 41.6847
98 58.0125 58.0125
99 83.3333 83.3333
POLICY NUMBER 0 000 000
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICY
WILLIAM PENN
AGE 35 MALE
<PAGE>
Additional Policy Specifications
Table of Death Benefit Factors
Attained
Age Factor
0-40 2.50
41 2.43
42 2.36
43 2.29
44 2.22
45 2.15
46 2.09
47 2.03
48 1.97
49 1.91
50 1.85
51 1.78
52 1.71
53 1.64
54 1.57
55 1.50
56 1.46
57 1.42
58 1.38
59 1.34
60 1.30
61 1.28
62 1.26
63 1.24
64 1.22
65 1.20
66 1.19
67 1.18
68 1.17
69 1.16
70 1.15
71 1.13
72 1.11
73 1.09
74 1.07
75-90 1.05
91 1.04
92 1.03
93 1.02
94-99 1.01
PAGE 19D
<PAGE>
Page 19E
Additional Policy Specifications
Eligible Mutual Funds
---------------------
--------------------- ----------------------
Penn Series Funds, Inc.
Independence Capital Management Inc Turner Investment Partners, Inc.
Money Market Mid Cap Growth
Limited Maturity Bond
Quality Bond T. Rowe Price
Growth Equity High Yield Bond
Flexibly Managed
Vontobel USA Wells Capital Management Inc.
International Equity Index 500
Putnam Investment Management RS Investments
Large Cap Value Emerging Growth
Royce & Associates, Inc. Neuberger Berman
Small Cap Value Mid Cap Value
Fidelity Investments' Variable Neuberger Berman Advisors
Insurance Products Fund Management Trust
Fidelity Management Neuberger Berman
VIP Equity Income AMT Balanced
VIP Growth
Fidelity Investments' Variable Morgan Stanley Dean Witter
Insurance Products Fund II Universal Funds Inc.
Fidelity Management Morgan Stanley
VIP II Asset Manager Emerging Markets Equity (Int'l)
--------------------- ----------------------
Eligible Fixed Interest Option
------------------------------
Penn Mutual General Account
<PAGE>
To obtain any of the benefits under this policy, write to Penn Mutual at its
Home Office, its Service Office or to its nearest agent.
Please notify Penn Mutual promptly of any change in address.
Annual Election - Penn Mutual is a mutual life insurance company. It has no
stockholders. The Owner of this policy is a member of Penn Mutual while this
policy is in force during the life of the Insured and before surrender of this
policy. Members have the right to vote in person or by proxy at the annual
election of Trustees held at the Home Office, on the first Tuesday of March. If
more information is desired, it may be obtained from the Secretary.
Flexible Premium Adjustable
Variable Life Insurance Policy
o Death Benefit payable at death prior to
Maturity Date
o Adjustable Death Benefit
o Maturity Benefit payable on Maturity Date
o Variable Policy Value
o Flexible premiums payable until Maturity Date
o Participating
o Supplemental benefits, if any, listed on Page 3
The Penn Mutual Life Insurance Company, Philadelphia, Pennsylvania 19172
VU-01(S)
