SUPPLEMENT DATED SEPTEMBER 25, 1997
TO PROSPECTUS
DATED MAY 1, 1997
for
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
issued by
FARM BUREAU LIFE INSURANCE COMPANY
At page 17, in the section titled "The Policy," the language
describing the "Exchange Privilege" is replaced with the following:
The Company will permit the owner of a flexible premium fixed-benefit life
insurance policy issued by the Company or Western Farm Bureau Life
Insurance Company (a company held by the same holding company as the
Company) ("fixed-benefit policy"), within 12 months of the policy
date shown in such policy, to exchange his fixed-benefit policy for a
Policy on the life of the Insured. After the first 12 months of
the policy date shown in the fixed-benefit policy (forms #734-112
and #834-112 only), the Company will permit the owner of such
policy to exchange his fixed-benefit policy for a Policy when the
owner applies for an increase of $25,000 or more in Specified Amount.
The Policy Date will be the date the application for the Policy
is signed. If an exchange occurs in the first 12 months, the
Policy will have a Specified Amount equal to the specified amount
of the fixed-benefit policy and will require no evidence of
insurability to exercise the exchange privilege. The Insured will
be placed in the premium class applicable to the initial specified
amount under the fixed-benefit policy, unless there has been an
underwritten increase in specified amount, in which event the
Insured will be placed, with respect to the entire Specified
Amount under the Policy, in the premium class applicable to such
increase in specified amount.
If an exchange occurs after the first 12 months, the Policy will
have a Specified Amount equal to the specified amount of the
fixed-benefit policy plus the increase to purchase a Policy, and
the increase will require underwriting to exercise the exchange
privilege. The Insured will be placed in the premium class
applicable to the initial specified amount under the fixed-benefit
policy, unless there has been an underwritten increase in
specified amount, in which event the Insured will be placed, with
respect to the entire amount exchanged, in the premium class
applicable to such increase in specified amount. With regard to
the increase in Specified Amount, the Insured will be placed in
the premium class applicable to the increase.
The net cash value of the fixed-benefit policy will initially be
allocated to the Money Market Subaccount. When the Company
receives, at its Home Office, a notice signed by the Policyowner
that the Policy has been received and accepted, the policy's cash
value in the Money Market Subaccount automatically will be
allocated, without charge, among the Subaccounts and the Declared
Interest Option pursuant to the allocation instructions set forth
in the application for the Policy.
The Company will waive the sales charge and premium taxes (see
"CHARGES AND DEDUCTIONS-Premium Expense Charge-Sales Charge and
- -Premium Taxes") on the net cash value of the fixed-benefit policy
applied to the Policy pursuant to an exchange. In addition, the
Company will assess the First Year Monthly Administrative Charge
(see "CHARGES AND DEDUCTIONS-Monthly Deduction-First Year Monthly
Administrative Charge") only to the extent that 12 monthly per
$1,000 charges under the fixed-benefit policy have not been
assessed. An increase in Specified Amount related to a fixed
- -benefit policy exchanged after the first 12 months will be
assessed the First Year Monthly Administrative Charge. Otherwise,
charges and deductions will be made in the manner and amounts
described elsewhere in the Prospectus.
With regard to an exchange after the first 12 months of the fixed
- -benefit policy, the incontestable and suicide provisions of the
Policy will apply only to the increased amount of coverage,
except for any period remaining on the fixed-benefit policy.
An exchanging owner will not be permitted to carry over an
outstanding loan under his fixed-benefit policy. Any outstanding
loan and loan interest must be repaid prior to the date of
exchange. If not repaid prior to the date of exchange, the amount
of the outstanding loan and interest thereon will be reflected in
the net cash value of the fixed-benefit policy. To the extent a
fixed-benefit policy with an outstanding loan is exchanged for an
unencumbered Policy, the exchanging owner could recognize income
at the time of the exchange up to the amount of such loan
(including any due and unpaid interest on such loan). (See
"FEDERAL TAX MATTERS-Tax Treatment of Policy Benefits.")
Riders issued on the original fixed-benefit policy which are not
offered in the Policy will not be available on the new Policy.
Riders which are available may be exchanged to the new Policy.
Registered representatives will receive commissions on the
increase in face amount only.
The Policy differs from a fixed-benefit policy in many
Significant respects. Most importantly, the Cash Value under
this Policy may consist, entirely or in part, of Subaccount value
which fluctuates in response to the net investment return of the
Variable Account. In contrast, the cash values under a fixed-
benefit policy always reflect interest credited by the Company.
While a minimum rate of interest is guaranteed, the Company in the
past has credited interest at higher rates. Accordingly, cash
values under a fixed-benefit policy reflect changing current
interest rates and do not vary with the investment performance of
a Variable Account.
Other significant differences between the Policy and a fixed-
benefit policy include: (1) additional charges applicable under
the Policy not found in a fixed-benefit policy; (2) different
surrender charges; (3) different death benefits; and (4)
differences in federal and state laws and regulations applicable
to each of the types of policies.
Owners of a fixed-benefit policy should carefully consider whether
it will be advantageous to replace a fixed-benefit policy with a
Policy. It may not be advantageous to exchange a fixed-benefit
policy for a Policy (or to surrender in full or in part a fixed-
benefit policy and use the surrender or partial surrender proceeds
to purchase a Policy.)
The Company believes that an exchange of a fixed-benefit policy
for a Policy generally should be treated as a nontaxable exchange
within the meaning of Section 1035 of the Internal Revenue Code of
1986, as amended. A Policy purchased in exchange will generally
be treated as a newly issued contract as of the effective date of
the Policy. This could have various tax consequences. (See
"FEDERAL TAX MATTERS-Tax Treatment of Policy Benefits.")
If you surrender your fixed-benefit policy in whole or in part and
after receipt of the proceeds you use the surrender proceeds or
partial surrender proceeds to purchase a Policy, it will not be
treated as a non-taxable exchange. The surrender proceeds will
generally be includible in income.
Owners of a fixed-benefit policy should consult their tax advisers
before exchanging a fixed-benefit policy for this Policy, or
before surrendering in whole or in part their fixed-benefit policy
and using the proceeds to purchase a Policy.
