Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
(Exact Name of Depositor)
711 High Street
Des Moines, Iowa 50309
(Address of Depositor's Principal Executive Offices)
Michael D. Roughton
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50309
(Name and address of agent for service)
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Telephone Number, Including Area Code: (515) 247-5111
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Please send copies of all communications to
W. Randolph Thompson
Jorden, Burt, Berenson & Johnson LLP
Suite 400 East
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007-0805
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Title and Amount of Securities: PrinFlex Life Insurance Policy. (Pursuant to
Rule 24f-2 under the Investment Company Act of 1940, the Registrant elects to
register an indefinite amount of securities being registered.)
Amount of Filing Fee: $500.00
Approximate date of proposed public offering: As soon as practicable after the
effective date of the Registration Statement.
Registrant elects to be governed by paragraph (b)(13)(i)(A) of Rule 6e-3(T)
under the Investment Company Act of 1940 with Respect to the Policies described
in the Prospectus.
--------------------------
The Registrant hereby amends its Registration Statement under the Securities Act
of 1933 on such date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
<PAGE>
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
VARIABLE LIFE SEPARATE ACCOUNT
Registration Statement on Form S-6
Cross Reference Sheet
Items of
Form N-8B-2 Captions in Prospectus
1.............. Cover Page
2.............. Cover Page
3.............. Not Applicable
4.............. Distribution of the Policy
5.............. Principal Mutual Life Insurance Company Variable Life
Separate Account
6(a)........... Not Applicable
6(b)........... Not Applicable
7.............. Not Required
8.............. Not Required
9.............. Legal Proceedings
10(a).......... Ownership, Beneficiaries, Assignment
10(b).......... Policy Values; Participating Policy
10(c), 10(d)... Summary (Transfers; Policy Loans; Total and Partial
Surrenders, Charges and Deductions; Maturity Proceeds;
Death Benefits and Proceeds, Termination and
Reinstatement; Policy "Free Look"); Policy "Free Look,"
Values Transfers; Policy Loans; Total and Partial
Surrenders); Death Benefits and Rights; Charges and
Deductions (Transaction Charge, Surrender Charge)
Policy Termination and Reinstatement
10(e).......... Summary (Termination and Reinstatement); Policy
Termination and Reinstatement; Registration Statement
10(f).......... Other Matters (Voting Rights)
10(g)(1),
10(g)(2),
10(h)(1),
10(h)(2)....... Principal Mutual Life Insurance Company Variable Life
Separate Account; General Provisions (Addition,
Deletion or Substitution of Investments; The
Contract)
10(g)(3),
10(g)(4),
10(h)(3),
10(h)(4)....... Not Applicable
10(i).......... Principal Mutual Life Insurance Company Variable Life
Separate Account, Values and Policy Features While the
Policy is in Force; Death Benefits and Rights;
General Provisions (Addition, Deletion or Substitution
of Investments; Optional Insurance Benefits; Policy
Proceeds); Federal Tax Matters
11............. Principal Mutual Life Insurance Company Variable Life
Separate Account (Separate Account Divisions); General
Provisions (Addition, Deletion or Substitution of
Investments)
12(a).......... Cover page
12(b).......... Not Applicable
12(c).......... Principal Mutual Life Insurance Company Variable Life
Separate Account (Separate Account Divisions)
12(d).......... Distribution of the Policy
12(e).......... Not Applicable
13(a).......... Summary (Charges and Deductions); Principal Mutual Life
Insurance Company Variable Life Separate Account;
Charges and Deductions; Distribution of the Policy
13(b), 13(c),
13(d), 13(e),
13(f), 13(g)... Not Applicable
14............. Distribution of the Policy
15............. Summary (Premiums); Purchasing a Policy
16............. Summary (The Policy); Principal Mutual Life Insurance
Company Variable Life Separate Account; Purchasing a
Policy (Allocation of Premiums);
Values and Policy Features While the Policy is in
Force; General Provisions (Addition, Deletion or
Substitution of Investments)
17(a), 17(b),
17(c).......... Captions referenced under Items 10(c), 10(d), 10(e),
and 10(i) above
18(a).......... Summary (Policy Value); Values and Policy Features
While the Policy is in Force
18(b).......... Not Applicable
18(c).......... Values and Policy Features While the Policy is in Force
18(d).......... Not Applicable
19............. Other Matters (Voting Rights; Statement of Values)
20(a), 20(b)... Principal Mutual Life Insurance Company Variable Life
Separate Account; General Provisions (Addition,
Deletion or Substitution of Investments); Other Matters
(Voting Rights)
20(c), 20(d),
20(e), 20(f)... Not Applicable
21(a), 21(b)... Summary (Policy Loans); Values and Policy Features
While the Policy is in Force (Policy Loans)
21(c).......... Not Applicable
22............. General Provisions (The Contract; Incontestability)
23............. Not Applicable
24............. Charges and Deductions (Special Provisions for Group or
Sponsored Arrangements)
25............. Description of Principal Mutual Life Insurance Company
26............. Not Applicable
27............. Description of Principal Mutual Life Insurance Company
28............. Officers and Directors of Principal Mutual Life
Insurance Company
29............. Description of Principal Mutual Life Insurance Company
30............. Not Applicable
31............. Not Applicable
32............. Not Applicable
33............. Not Applicable
34............. Not Applicable
35............. Description of Principal Mutual Life Insurance Company
36............. Not Applicable
37............. Not Applicable
38(a), 38(b),
38(c).......... Distribution of the Policy
39(a), 39(b)... Distribution of the Policy
40............. Not Applicable
41(a).......... Distribution of the Policy
41(b), 41(c)... Not Applicable
42............. Not Applicable
43............. Not Applicable
44(a), 44(b),
44(c).......... Summary (Policy Value; Transfers; Policy Loans; Total
and Partial Surrenders, Termination and Reinstatement;
Policy "Free-Look"); Principal Mutual Life Insurance
Company Variable Life Separate Account; Values
and Policy Features while the Policy is in Force
(Policy Values; Transfers; Policy Loans; Total and
Partial Surrender) Charges and Deductions
45............. Not Applicable
46(a).......... Captions referenced under items 44(a) above
46(b).......... Not Applicable
47............. Not Applicable
48............. Not Applicable
49............. Not Applicable
50............. Not Applicable
51(a) - (j).... Description of Principal Mutual Life Insurance Company;
Principal Mutual Life Insurance Company Variable Life
Separate Account; Purchasing a Policy; Policy
Termination and Reinstatement; General Provisions;
Distribution of the Policy
52(a).......... Principal Mutual Life Insurance Company Variable Life
Separate Account; General Provisions (Addition,
Deletion or Substitution of Investments)
52(b).......... Not Applicable
52(c).......... Captions referenced in 10(g) and 10(h) above
52(d).......... Not Applicable
53(a).......... Summary (Tax Consequences of the Policy); Federal Tax
Matters
53(b).......... Not Applicable
54............. Not Applicable
55............. Not Applicable
56............. Not Applicable
57............. Not Applicable
58............. Not Applicable
59............. Not Applicable
<PAGE>
Prospectus Dated ________________, 1996
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
PrinFlex(R) LIFE -- FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
"PrinFlex(R) Life," the flexible premium variable universal life insurance
policy (the "Policy" or the "Policies") offered by Principal Mutual Life
Insurance Company ("Company") and described in this Prospectus is designed to
provide lifetime insurance protection and maximum flexibility in connection with
premium payments and death benefits. A policyowner may, within limits, vary the
frequency and amount of premium payments and increase or decrease the face
amount of the life insurance benefit under the Policy. This flexibility allows a
policyowner to provide for changing life insurance needs within a single
insurance policy.
The Policy provides : (1) a death benefit upon the insured's death; (2)
policy loans; and (3) a net surrender value accessible by a partial or total
surrender of the Policy.
Policy values may be accumulated on a fixed basis or vary with the
investment performance of the division of the Principal Mutual Life Insurance
Company Variable Life Separate Account to which the policyowner allocates Policy
values. Each division invests in a corresponding open-end, management investment
company, or a separate investment portfolio thereof ("Mutual Fund"). The
accompanying prospectuses describe the investment objectives and the attendant
risks of the Mutual Funds currently offered as investment choices under the
Policy: Principal Aggressive Growth Fund, Inc., Principal Asset Allocation Fund,
Inc., Principal Balanced Fund, Inc., Principal Bond Fund, Inc., Principal
Capital Accumulation Fund, Inc., Principal Emerging Growth Fund, Inc., Principal
Government Securities Fund, Inc., Principal Growth Fund, Inc., Principal Money
Market Fund, Inc., and Principal World Fund, Inc. ("Principal Mutual Funds"),
Fidelity Variable Insurance Products Fund-Contrafund, Equity Income and High
Income Portfolios ("Fidelity ContraFund Portfolio," "Fidelity Equity-Income
Portfolio" and Fidelity High Income Portfolio," respectively).
Prospective purchasers of this Policy are advised that replacement of
existing insurance coverage may not be financially advantageous. It may also be
disadvantageous to purchase a Policy as a means to obtain additional insurance
protection if the purchaser already owns a flexible premium universal variable
life insurance policy.
Please read this prospectus carefully and retain it for future reference.
This Prospectus is valid only if accompanied or preceded by the current
prospectuses for the Fidelity Insurance Products Fund and Principal Mutual
Funds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS ...................... 4
SUMMARY ........................................ 5
The Policy.................................. 5
Premiums.................................... 6
Policy Value................................ 6
Transfers................................... 6
Policy Loans................................ 6
Total and Partial Surrenders.................7
Charges and Deductions ..................... 7
Maturity Proceeds........................... 7
Death Benefit and Proceeds.................. 8
Adjustment Options.......................... 8
Termination and Reinstatement............... 8
Policy "Free Look".......................... 9
Distribution of the Policy.................. 9
Tax Consequences of the Policy.............. 9
DESCRIPTION OF PRINCIPAL MUTUAL
LIFE INSURANCE COMPANY .........................10
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY VARIABLE LIFE SEPARATE
ACCOUNT........................................ 10
Separate Account Divisions..................11
PURCHASING A POLICY.............................12
Purchase Procedures.........................12
Payment of Premiums.........................13
Premium Limitations.........................13
Allocation of Premiums......................13
Policy "Free Look"..........................14
VALUES AND POLICY FEATURES WHILE
THE POLICY IS IN FORCE......................14
Policy Values...............................14
Transfers...................................15
Policy Loans................................16
Total and Partial Surrenders...............16
DEATH BENEFITS AND RIGHTS.......................17
Death Proceeds..............................17
Death Benefit...............................17
Applicable Percentage.......................17
Change in Death Benefit Option..............18
Adjustment Options..........................18
CHARGES AND DEDUCTIONS..........................19
Premium Expense Charge......................20
Monthly Policy Charge.......................20
Transaction Charge..........................21
Surrender Charge............................21
Other Charges...............................22
Special Provisions for Group or Sponsored
Arrangements................................22
THE FIXED ACCOUNT...............................22
POLICY TERMINATION AND REINSTATEMENT............23
Policy Termination..........................23
Reinstatement...............................24
OTHER MATTERS...................................24
Voting Rights...............................24
Statement of Value..........................25
Service Available by Telephone..............25
GENERAL PROVISIONS..............................25
Addition, Deletion, or Substitution of
Investments.................................25
Optional Insurance Benefits.................26
The Contract................................29
Incontestability............................29
Misstatements...............................29
Suicide.....................................29
Ownership...................................29
Beneficiaries...............................29
Benefit Instructions........................30
Postponement of Payments....................30
Assignment..................................30
Policy Proceeds.............................30
Participating Policy........................31
Right to Exchange Policy....................31
DISTRIBUTION OF THE POLICY......................31
OFFICERS AND DIRECTORS OF
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY.........................................32
STATE REGULATION OF PRINCIPAL
MUTUAL LIFE INSURANCE COMPANY...................33
FEDERAL TAX MATTERS.............................33
Tax Status of the Company and the Separate
Account.....................................34
Charges for Taxes...........................34
Diversification Standards...................34
Life Insurance Status of Policy.............34
Modified Endowment Contract Status..........34
Policy Surrenders and Partial Surrenders....35
Policy Loans and Interest Deductions........35
Corporate Alternative Minimum Tax...........36
Exchange or Assignments of Policies.........36
Withholding.................................36
Taxation of Accelerated Death Benefits......36
Other Tax Issues............................36
EMPLOYEE BENEFIT PLANS..........................36
LEGAL PROCEEDINGS...............................36
LEGAL OPINION...................................37
EXPERTS.........................................37
REGISTRATION STATEMENT..........................37
FINANCIAL STATEMENTS............................35
APPENDIX A - SAMPLE ILLUSTRATIONS OF
POLICY VALUES, SURRENDER VALUES AND
DEATH BENEFITS..................................38
APPENDIX B - TARGET PREMIUMS....................43
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
DOES NOT AUTHORIZE ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING
DESCRIBED IN THIS PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS, THE
PROSPECTUSES FOR THE UNDERLYING MUTUAL FUNDS OR THE STATEMENTS OF ADDITIONAL
INFORMATION OF THESE FUNDS.
GLOSSARY OF SPECIAL TERMS
Attained Age - The insured's age on the birthday preceding the last Policy
Anniversary.
Business Day - Any day that the New York Stock Exchange is open for
trading, and trading is not restricted.
Division - A part of the Separate Account to which Net Premiums may be
allocated which invests in shares of a single Mutual Fund. The value of an
investment in a Division is variable and is not guaranteed.
Effective Date - The date on which all requirements for issuance of a Policy
have been satisfied.
Face Amount - The minimum death benefit of a Policy so long as the Policy
remains in force.
Fixed Account - That part of Policy Value that reflects the value in the
general account of the Company.
General Account - The assets of the Company other than those allocated to
any of the Separate Accounts of the Company.
Guideline Annual Premium - The level annual payment necessary to provide the
future benefit under a Policy, through maturity, based on the 1980 Commissioners
Standard Ordinary Mortality Table, a 5% assumed interest rate, and the fees and
charges specified for a Policy.
Internal Revenue Code - The Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder. Reference to the Internal Revenue Code means
such Internal Revenue Code or the corresponding provisions of any subsequent
revenue code and any regulations thereunder.
Investment Account - That part of the Policy Value that reflects the value
in one of the Divisions of the Separate Account.
Loan Account - That part of the Policy Value that reflects the value
transferred from the Fixed Account or Separate Account as collateral for a
policy loan.
Maturity Date - The Policy Anniversary following the insured's 95th
birthday.
Monthly Date - The day of the month which is the same as the day of the
Policy Date. For example, if the Policy Date is June 10, 1997, the first Monthly
Date is July 10, 1997.
Monthly Policy Charge - The amount subtracted from the Policy Value on each
Monthly Date equal to the sum of the cost of insurance and additional benefits
provided by any rider plus the monthly administration charge and mortality and
expense risks charge in effect on the Monthly Date.
Mutual Fund - A registered, open-end, management investment company , or a
separate investment portfolio thereof, in which a Division of the Separate
Account invests.
Net Premium - The gross premium less the deductions for the Premium Expense
Charge. It is the amount of premium allocated to the Fixed Account or Investment
Accounts.
Net Surrender Value - The Surrender Value of the Policy reduced by any
unpaid loans and loan interest.
Notice - Any form of communication received in the Company's home office
providing the information needed by the Company, either in writing or another
manner approved in advance by the Company.
Policy Date - The Policy Date is the date from which Monthly Dates and
Policy Years and Anniversaries are determined.
Policy Value - (also known as the Accumulated Value) is the sum of the
values in the Loan Account, Fixed Account and Investment Accounts.
Policy Years and Anniversaries - The Policy Years and Anniversaries computed
from the Policy Date. Example: If the Policy Date is May 5, 1997, the first
Policy Year ends on May 4, 1998 and the first Policy Anniversary falls on May 5,
1998.
Premium Expense Charge - The charge deducted from premium payments to cover
a sales charge, state premium taxes and federal taxes.
Prorated Basis - The proportion that the value of a particular Investment
Account or Fixed Account for a Policy bears to the total value of all Investment
Accounts and the Fixed Account for that Policy.
Separate Account - Principal Mutual Life Insurance Company Variable Life
Separate Account, a registered Unit investment trust with Divisions and
segregated assets, to which Net Premiums may be allocated to the Policy.
Surrender Charge - A charge assessed upon total surrender of a Policy or
termination of a Policy when a Grace Period expires without sufficient premium
payment.
Surrender Value - The Policy Value reduced by the Surrender Charge.
Target Premium - A premium amount used to measure the maximum sales charge
that is included as part of the Premium Expense Charge and any applicable
contingent deferred sales charge under a Policy. Target Premiums are set forth
in Appendix B. The policyowner will be advised of the Target Premium for any
increase in face amount.
Unit - The accounting measure used to calculate Division values.
Valuation Period - The period between the time as of which the net asset
value of a Mutual Fund is determined on one business day and the time as of
which that value is determined on the next following business day.
Written Request - Actual delivery to the Company at its home office in Des
Moines, Iowa, of a written notice or request, signed and dated, on a form
supplied or approved by the Company.
SUMMARY
THE FOLLOWING SUMMARY IS INTENDED TO PROVIDE A GENERAL DESCRIPTION OF THE
MOST IMPORTANT POLICY FEATURES. IT IS NOT COMPREHENSIVE AND SHOULD BE READ IN
CONJUNCTION WITH THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS.
The Policy
The Policy is designed to provide a policyowner with lifetime insurance
protection and flexibility in connection with the amount and frequency of
premium payments and the amount of life insurance proceeds payable under the
Policy. A policyowner may, subject to certain limitations, vary the frequency
and amount of premium payments. The Policy is a life insurance contract with a
death benefit, Policy Value, and other features traditionally associated with
life insurance.
The Policyowner allocates Net Premium Payments to one or more of the Fixed
Account and the Divisions of Principal Mutual Life Insurance Company's Variable
Life Separate Account. Allocations to the Divisions of the Separate Account are
invested in shares of a particular Mutual Fund. Allocation instructions may be
changed at any time and transfers may be made subject to certain conditions.
The Mutual Funds in which the Divisions currently invest are as follows:
Mutual Fund in
Division which the Division Invests
--------------------------------------------------------
Aggressive Growth Division Principal Aggressive Growth Fund
Asset Allocation Division Principal Asset Allocation Fund
Balanced Division Principal Balanced Fund
Bond Division Principal Bond Fund
Capital Accumulation Division Principal Capital Accumulation Fund
Emerging Growth Division Principal Emerging Growth Fund
Government Securities Division Principal Government Securities Fund
Growth Division Principal Growth Fund
Money Market Division Principal Money Market Fund
World Division Principal World Fund
Fidelity Contrafund Division Fidelity Contrafund Portfolio
Fidelity Equity-Income Division Fidelity Equity-Income Portfolio
Fidelity High Income Division Fidelity High Income Portfolio
Premiums
The required initial premium payment is equal to the minimum monthly premium
shown on the Policy's current data pages. The minimum monthly premium is the
amount that, if paid, will keep the Policy in force for one month, taking into
account the current Monthly Policy Charge and Surrender Charge. Payment of a
minimum premium is required during the first twelve policy months (the "Minimum
Required Premium"). The Company allows payments in accordance with the planned
periodic premium schedule established by the policyowner in the application
(annual, semiannual, quarterly, or pre-authorized withdrawal payments of premium
on a monthly basis). However, if the minimum monthly premium is less than $30
($15 if the insured is ages 0-14), only a planned periodic premium schedule that
would result in a payment of $30 or more ($15 or more if the insured is ages
0-14) will be made available to the policyowner. The Company also allows
unscheduled premium payments of $30 or more. The planned periodic premium
schedule indicates the preference of the policyowner only, and other than
payment of the Minimum Required Premium, payment of premiums is not required.
(However, the death benefit guarantee premium must be paid to maintain the Death
Benefit Guarantee Rider.) See "Optional Insurance Benefits." Changes in
frequency, as well as increases or decreases in the amount of planned periodic
premiums, may be made. However, the total of all premiums, planned and
otherwise, cannot exceed the current maximum premium limitations set forth in
the Internal Revenue Code to qualify a Policy as a life insurance contract. At
any time there is an outstanding policy loan, if a payment cannot be identified
as a premium payment, it will be considered a loan repayment.
All Net Premium payments received during the first 20 days from the
Effective Date are allocated to the Money Market Division of the Separate
Account. On the 21st day from the Effective Date, the Policy Value held in the
Money Market Division is transferred to the Divisions and the Fixed Account in
accordance with the policyowner's direction for allocation of premium payments.
(If the 21st day from the Effective Date is not a Business Day, the transfer
will occur on the first Business Day thereafter). Net Premium payments received
after the Policy Value in the Money Market Division is transferred to the
Divisions and the Fixed Account are allocated among the Divisions and the Fixed
Account in accordance with the directions in the application for the Policy.
Policy Value
The Policy Value reflects the following: premium payments made; investment
performance of the Divisions to which amounts have been allocated; interest
credited by the Company to amounts allocated to the Fixed Account; partial
withdrawals; loans taken; repayment of loans; and deduction of charges described
above under "Charges And Deductions." The Policy Value is the sum of the values
in the Investment Accounts, the Fixed Account and the Loan Account.
Investment Account. An Investment Account is established under the Policy
for each Division of the Separate Account to which Net Premiums or transfer
amounts have been allocated. An Investment Account measures the interest of the
Policy in the corresponding Division. The value of each Investment Account under
the Policy varies each Business Day and reflects the investment performance of
the Mutual Fund shares held in the corresponding Division. See "Policy Value".
Fixed Account. The Fixed Account consists of that portion of the Policy
Value based on Net Premiums allocated to, and amounts transferred to, the
general account of the Company. The Company credits interest on amounts in the
Fixed Account at an effective annual rate guaranteed to be at least 3%. See
"Fixed Account."
Loan Account. When a policy loan is taken, the Company will establish a
Loan Account under the Policy and will transfer an amount equal to the amount of
the loan from the Investment Accounts and/or the Fixed Account to the Loan
Account. The Company will credit interest to amounts in the Loan Account at an
effective annual rate of at least 6% through Policy Year ten at which point
interest is credited at 7.75%. See "Policy Loans."
Transfers
Scheduled and unscheduled transfers of Policy Value among Divisions and the
Fixed Account may be made by a policyowner, subject to certain conditions and
charges. The Company has reserved the right to revoke or modify transfer
privileges and charges. See "Transfers."
Policy Loans
A policyowner may borrow against the Policy Value at any time the Policy has
Net Surrender Value. The minimum amount for a loan is $500. Interest is charged
on policy loans at an effective annual rate of eight percent during any period
the loan is outstanding. Loan interest is payable at the end of each Policy
Year. All policy loans and loan interest will be deducted from proceeds payable
at the insured's death, upon maturity, or upon total surrender. See "Policy
Loans."
Total and Partial Surrenders
A policyowner may elect to make a total surrender of the Policy and receive
its Net Surrender Value determined as of the date the Company receives the
policyowner's Written Request. A Surrender Charge is imposed upon total
surrender of a Policy at any time within the first ten years after the Policy
Date. In addition, any increase in face amount is subject to a Surrender Charge
upon total surrender of the Policy at any time within ten years after the
effective date of the adjustment. After the first Policy Year, the policyowner
may request a partial surrender of the Policy Value, but no more than two times
per Policy Year. The minimum amount for a partial surrender is $500 and
aggregate partial surrenders during a Policy Year cannot exceed 75% of the
Policy's Net Surrender Value at the time the first partial surrender is
requested. A transaction charge of the lesser of $25 or two percent of the
amount of the partial surrender is imposed on each partial surrender. The Policy
Value is reduced by the amount of any partial surrender plus the transaction
charge. The amount surrendered will be withdrawn from the Policy on a last-in
first-out basis. If the Option 1 death benefit is in effect at the time of a
partial surrender, then the Policy's face amount is also reduced by the amount
of the partial surrender plus the transaction charge.
Charges and Deductions
Charges under the Policy are assessed as:
(1)deductions from premiums
o sales load of 2.75% of premiums less than or equal to Target
Premium made during each of the first ten Policy Years and, with
respect to premiums less than or equal to Target Premiums
attributable to any face amount increase, made during each of the
first ten years following the increase
o 2.20% state and local taxes
o 1.25% federal taxes
(2)Surrender Charges upon termination or total surrender made during the
first ten Policy Years (and ten years after an increase in the
Policy face amount) equal to a percentage (described in the table
below) of the sum of the following:
o deferred administrative charge of $3 for each $1,000 of face amount,
and
o deferred sales charge of 47.75% of premiums paid up to a maximum
of two Target Premiums
Surrender Surrender Charge
Year Percentage
1-5 100.0%
6 83.3%
7 66.7%
8 50.0%
9 33.3%
10 16.7%
11+ 0.0%
(3)Monthly Policy Charges
o administration charge:
During the first Policy Year: $.40 for each $1,000 of face
amount, but no less than $6.00/month and no greater than
$16.67/month;
During each Policy Year thereafter: $6.00/month.
o cost of insurance charge
o mortality and expense risks charge of .90% per annum against the
value of the policyowner's Investment Accounts (After the fifth
Policy Year the mortality and expense risks charge will not exceed
.35% per annum if, on the applicable Monthly Date, the Policy Value
less the Loan Account is equal to or greater than 20% of the Policy
face amount)
o supplemental benefit(s) charge(s)
(4)Other Charges
o investment management fees and other operating expenses for the
underlying Mutual Funds.
o transfer fee of $25 per unscheduled transfer in excess of twelve
during a Policy Year.
For complete discussion of charges and deductions see "Charges and
Deductions".
Maturity Proceeds
If the Insured under a Policy is living on the Policy's Maturity Date, which
is the Policy Anniversary following the birthday on which the Insured reaches
age 95, the Company will pay the Policy's maturity proceeds to the policyowner.
A Policy's maturity proceeds are the Policy Value less any Policy loans and
unpaid loan interest on the Maturity Date. If maturity proceeds are paid under a
Policy, the Policy terminates with no further benefits payable. On the Policy's
Maturity Date, the Company will pay the excess of the Policy's face amount over
the maturity proceeds, provided certain conditions are met.
Death Benefit and Proceeds
The death proceeds under a Policy are payable to the beneficiary when the
Insured dies, subject to all provisions and conditions of the Policy. The death
proceeds, determined as of the date of the Insured's death, are: the death
benefit described below, plus proceeds from any benefit riders on the Insured's
life, less any Policy loans and loan interest, and less any overdue Monthly
Policy Charges if the Insured dies during a Grace Period. All or part of the
death proceeds may be paid in cash or applied under one or more of the benefit
options available under the Policy, subject to certain restrictions. The Company
pays interest on the death proceeds from the date of death until the date of
payment or until applied under a benefit option. Interest is at a rate the
Company determines, but not less than required by state law.
There are two options available for the death benefit under a Policy. If a
policyowner selects Option 1, the death benefit will be equal to the greater of
the face amount of the Policy or the Policy Value on the date of death
multiplied by an applicable percentage specified in the Internal Revenue Code.
If a policyowner selects Option 2, the death benefit will be the greater of the
face amount of the Policy plus the Policy Value on the date of death or the
Policy Value on the date of death multiplied by the applicable percentage.
A policyowner may make a Written Request to change the death benefit option
on or after the first Policy Anniversary. Any change must be approved by the
Company before it takes effect. Changes in death benefit option are limited to
two per Policy Year. If the request is to change from Option 1 to Option 2, the
face amount will be reduced by the amount of the Policy Value on the effective
date of the change. The Company reserves the right to disapprove a request to
change from Option 1 to Option 2 if the face amount in effect after the change
would be less than $50,000. Evidence of insurability satisfactory to the Company
under its underwriting guidelines then in effect may be required on a change
from Option 1 to Option 2. If the request is to change from Option 2 to Option
1, the face amount will be increased by the amount of the Policy Value on the
effective date of the change. No evidence of insurability is required for a
change from Option 2 to Option 1. The effective date of any change will be the
Monthly Date that coincides with or next follows the day the request for change
is approved by the Company.
Adjustment Options
Subject to certain conditions, the face amount of a Policy may be adjusted
upon the Written Request of the policyowner. Any Written Request to adjust the
face amount of a Policy must be approved by the Company. If a payment in an
amount greater than or equal to the adjustment conditional receipt premium
deposit is submitted with the adjustment application, then a conditional receipt
is given to the policyowner reflecting receipt of the payment and outlining any
interim insurance coverage provided by the conditional receipt. The adjustment
conditional receipt premium deposit is that amount calculated by the Company and
provided to the policyowner in connection with the policyowner's request for a
face amount increase. No request to adjust the face amount of a Policy will be
approved if a Policy is in a Grace Period or if Monthly Policy Charges are being
waived under a rider. In addition, a decrease in face amount may be requested
only after the first Policy Anniversary and may not reduce the face amount of a
Policy below $50,000. A requested face amount increase must be at least $25,000
and is subject to evidence of insurability satisfactory to the Company under its
underwriting guidelines then in effect. Any adjustment in face amount of a
Policy will be effective on the Monthly Date that coincides with or next follows
the date the Company approves the request. No processing charges are assessed in
connection with adjustments of a Policy, although an increase in face amount
will result in Premium Expense Charges and Surrender Charges applicable to the
increase. Increases in face amount made pursuant to a Cost of Living Rider,
Salary Increase Rider or Extra Protection Increase Rider are not subject to the
minimum increase amount or to evidence of insurability. See "Optional Insurance
Benefits."
Termination and Reinstatement
Failure to make a planned periodic premium or additional premium payments
may cause termination of a Policy. A notice of impending termination of a Policy
will be sent if:
1. The Net Surrender Value of a Policy on any Monthly Date is less than the
Monthly Policy Charge and, if the Policy has a Death Benefit Guarantee
Rider, the death benefit guarantee premium requirement has not been
satisfied; or
2. During the 12 months following the Policy Date, the sum of the premiums
paid is less than the Minimum Required Premium on a Monthly Date.
The Minimum Required Premium on a Monthly Date is equal to (1) times (2)
where:
1. Is the minimum monthly premium shown on the current data pages; and
2. Is one plus the number of complete months since the Policy Date.
The notice of impending termination will show the 61-day Grace Period during
which the Company will accept a payment required to keep the Policy in force. If
a Grace Period begins because the net surrender value is less than the current
Monthly Policy Charge, the minimum payment is three times the Monthly Policy
Charge. If a Grace Period begins because the sum of the premiums paid is less
than the Minimum Required Premium, the minimum payment is the past due Minimum
Required Premium, which is:
1. The Minimum Required Premium due on the next following Monthly Date;
LESS
2. The sum of the premiums paid since the Policy Date.
If the Grace Period ends before the Company receives the past due Minimum
Required Premium, the Company will pay to the policyowner any remaining value in
the Policy, which would be the excess of (1) over (2) where:
1. Is the net surrender value on the Monthly Date at the start of the
Grace Period; and
2. Is the two Monthly Policy Charges applicable during the Grace Period.
In the event the 61-day Grace Period expires without a payment by the
policyowner at least equal to the minimum payment, the Policy will terminate.
Once a Policy has terminated as a result of insufficient value or failure to
pay the Minimum Required Premium on a Monthly Date during the 12 months
following the Policy Date, the policyowner may make a Written Request to
reinstate the Policy at any time within three years after the date of
termination, so long as the Insured is alive and it is prior to the Policy's
Maturity Date. Satisfactory proof of insurability and payment of a reinstatement
premium of at least the greater of (1) an amount that, after deduction of
Premium Expense Charges, is sufficient to allow at least three Monthly Policy
Charges; or (2) the past due Minimum Required Premium are required for
reinstatement. Repayment or reinstatement of policy loans and loan interest
which remained unpaid on the date the Policy terminated is also required.
Policy "Free Look"
A policyowner has the limited right to return a Policy for cancellation and
receive a refund of all premiums paid. The Written Request for cancellation,
along with return of the Policy, must be made within 10 days (30 days if the
Policy is issued in the state of California to a policyowner age 60 or over)
after the Policy is received by the policyowner, within 10 days (30 days if the
Policy is issued in the state of California to a policyowner age 60 or over)
after written notice of this right is provided to the policyowner, or within 45
days after the policyowner completes the Policy application, whichever is later.
Distribution of the Policy
The Company may offer the Policy in states and jurisdictions where it is
licensed to sell this type of insurance product. The Policy will be sold by
agents and brokers who represent the Company and are registered representatives
of Princor Financial Services Corporation, the principal underwriter of the
Policies, or registered representatives of other broker-dealers which Princor
Financial Services Corporation selects and the Company approves.
Tax Consequences of the Policy
The Policies will be treated as life insurance contracts under provisions of
the Internal Revenue Code so long as certain definitional tests of Section 7702
of the Internal Revenue Code are met and so long as the investments of the
Separate Account meet the diversification requirements of Section 817(h) of the
Internal Revenue Code. The Company has designed the Policy to meet these
criteria. Thus, the death benefit under a Policy should be fully excludable from
the gross income of the beneficiary. In addition, the policyowner should not be
taxed on any part of the Policy Value, unless in the first 15 years of a Policy
a cash distribution is made as a result of a change in the benefits under (or in
other terms of) the Policy, such as a partial or total surrender of Policy Value
which causes a reduction in the face amount. Such a distribution will be taxable
to the extent of income in the Policy, as limited by the applicable recapture
ceiling as set out in Section 7702(f)(7)(C) or (D) of the Internal Revenue Code.
Also, partial surrender may result in taxable income to the policyowner to the
extent distributions (or deemed distributions) exceed total investments
(generally premiums paid) in the Policy to the date of surrender. If, however,
the Policy is considered a modified endowment contract under the terms of the
Technical and Miscellaneous Revenue Act of 1988, all distributions under the
Policy would be taxed on an "income first" basis. Most distributions received by
a policyowner directly or indirectly (including policy loans, total or partial
surrenders or the assignment or pledge of any portion of the Policy Value) would
be includable in gross income to the extent that the Policy Value of the Policy
exceeds the policyowner's investment in the contract. (See "Tax
Considerations.") Policyowners are advised to consult with their own tax
advisors regarding tax treatment of the Policies.
DESCRIPTION OF PRINCIPAL MUTUAL LIFE INSURANCE COMPANY (The "Company")
Principal Mutual Life Insurance Company is a mutual life insurance company
with its home office at The Principal Financial Group, Des Moines, Iowa 50392,
telephone number (515) 247-5111. It was originally incorporated under the laws
of the State of Iowa in 1879 as Bankers Life Association, changed its name to
Bankers Life Company in 1911 and changed its name to Principal Mutual Life
Insurance Company in 1986. It is a member of The Principal Financial Group, a
diversified family of insurance and financial services companies.
Principal Mutual Life Insurance Company is authorized to do business in the
50 states of the United States, the District of Columbia, the Commonwealth of
Puerto Rico, and the Canadian Provinces of Alberta, British Columbia, Manitoba,
Ontario and Quebec. The Company offers a full range of products and services for
businesses, groups and individuals including individual insurance, pension plans
and group/employee benefits. During the year ended December 31, 1995, the
Company ranked in the upper one percent of life insurers in assets and premium
income. The Company has consistently received excellent ratings from the major
rating firms based upon the Company's claims paying ability. As of December 31,
1995, the Company had $__._ billion in assets under management and served more
than _._ million individuals and their families.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
The Separate Account was established on November 2, 1987, pursuant to a
resolution of the Executive Committee of the Board of Directors of the Company.
Under Iowa insurance law the income, gains or losses of the Separate Account are
credited to or charged against the assets of the Separate Account without regard
to the other income, gains or losses of the Company. The assets of the Separate
Account, equal to the reserves and other liabilities arising under the Policies,
are not chargeable with liabilities arising out of any other business conducted
by the Company. In addition, all income, gains or losses, whether or not
realized, and expenses with respect to a Division shall be credited to or
charged against that Division without regard to income, gains or losses, or
expenses of any other Division. The assets of the Separate Account are held with
relation to the Policies described in this Prospectus and other policies issued
by the Company. All obligations arising under Policies, including the promise to
make benefit payments, are general corporate obligations of the Company. The
Separate Account is organized as a unit investment trust under the Investment
Company Act of 1940.
The Company is taxed as a life insurance company under the Tax Reform Act of
1984, as amended. The operations of the Separate Account are part of the total
operations of the Company, but are treated separately for accounting and
financial statement purposes and are considered separately in computing the
Company's tax liability.
The Separate Account is not affected by federal income taxes paid by the
Company. The Company reserves the right to charge the Separate Account with, and
create a reserve for, any tax liability which the Company determines may result
from maintenance of the Separate Account. To the best of the Company's knowledge
there is no current prospect of such liability.
Separate Account Divisions
A policyowner may direct the Company to allocate Net Premium Payments among
the Divisions which invest exclusively in shares of a corresponding Mutual Fund.
Some of these Mutual Funds also offer their shares to variable annuity separate
accounts of the Company ("Mixed Funding") and to variable annuity and variable
life separate accounts of unaffiliated insurance companies ("Shared Funding").
The potential risks associated with "Mixed and Shared Funding" are disclosed in
the Mutual Fund prospectuses. The Mutual Funds in which the Divisions invest,
and the investment adviser of each Mutual Fund, are provided in the following
table.
<TABLE>
<CAPTION>
Mutual Fund In
Which Division Invests Mutual Fund
Division and Investment Adviser Investment Objective
<S> <C> <C>
Aggressive Growth Division Principal Aggressive Growth Fund; Seeks long-term capital appreciation by
Morgan Stanley Asset Management, Inc. investing primarily in growth-oriented common
through a sub-advisory agreement. stocks of medium and large capitalization
U.S. corporations and, to a limited extent,
foreign corporations.
Asset Allocation Division Principal Asset Allocation Fund; Seeks a total investment return consistent with the
Morgan Stanley Asset Management, Inc. preservation of capital.
through a sub-advisory agreement.
Balanced Division Principal Balanced Fund; Seeks a total return consisting of current income and
Invista Capital Management, Inc. capital appreciation while assuming reasonable risks in
through a sub-advisory agreement. furtherance of the investment objective.
Bond Division Principal Bond Fund; Seeks to provide as high a level of income as is
Princor Management Corporation. consistent with preservation of capital and prudent
investment risk.
Capital Accumulation Division Principal Capital Accumulation Fund; Seeks to achieve primarily long-term capital appreciation
Princor Management Corporation. and secondarily growth of investment income through the
purchase primarily of common stocks, but the Fund may invest
in other securities.
Emerging Growth Division Principal Emerging Growth Fund; Seeks growth of capital through the purchase primarily of
Princor Management Corporation. common stocks, but the Fund may invest in other securities.
Government Securities Principal Government Securities Fund; Seeks a high level of income, liquidity and safety of
Division Princor Management Corporation. principal through the purchase of obligations issued or
guaranteed by the United States Government or its agencies,
with emphasis on Government National Mortgage Association
Certifications ("GNMA Certificates"). Fund shares are not
guaranteed by the United States Government.
Growth Division Principal Growth Fund; Seeks growth of capital through the purchase primarily
Invista Capital Management, Inc. of common stocks, but the Fund may invest in other securities.
Money Market Division Principal Money Market Fund; Seeks as high a level of income available from
Princor Management Corporation. short-term securities as is considered consistent
with preservation of principal and maintenance of liquidity
by investing all of its assets in a portfolio of money
market instruments.
World Division Principal World Fund; Seeks long-term growth of capital by investing in a
Invista Capital Management, Inc. portfolio of equity securities of companies domiciled in
any of the nations of the world.
Fidelity Contrafund Division Fidelity Contrafund Portfolio; Seeks long-term capital appreciation.
Fidelity Management and
Research Company.
Fidelity Equity-Income Fidelity Equity-Income Portfolio; Seeks reasonable income by investing primarily in
Division Fidelity Management and income-producing equity securities.
Research Company.
Fidelity High Income Division Fidelity High Income Portfolio; Seeks a high level of current income by investing primarily
Fidelity Management and in high yielding, lower quality, fixed income securities,
Research Company. while also considering growth of capital.
</TABLE>
Policyowners make their own decisions on the allocations to and between the
Divisions based upon their unique circumstances and perceptions of economic
conditions. Additional information concerning these Mutual Funds, including
their investment policies and restrictions, investment management fees and
expenses, is given in the prospectuses which accompany, and should be read in
conjunction with, this Prospectus.
Underlying Mutual Fund shares are purchased at net asset value, which
reflects the deduction of investment management fees and certain other expenses.
The management fees are charged by each underlying Mutual Fund's investment
adviser for managing the underlying Mutual Fund and selecting its portfolio of
securities. Other underlying Mutual Fund expenses can include such items as
interest expense on loans and contracts with transfer agents, custodians, and
other companies that provide services to the underlying Mutual Fund. The
management fees and other expenses for each underlying Mutual Fund for its most
recently completed fiscal year, expressed as a percentage of the underlying
Mutual Fund's average assets, are as follows:
Management Other Total
Mutual Fund Fees Expenses Expenses
Principal Aggressive Growth Fund 0.80 0.15 0.95
Principal Asset Allocation Fund 0.80 0.11 0.91
Principal Balanced Fund 0.60 0.09 0.69
Principal Bond Fund 0.50 0.09 0.59
Principal Capital Accumulation Fund 0.49 0.02 0.51
Principal Emerging Growth Fund 0.65 0.07 0.72
Principal Government Securities Fund 0.50 0.05 0.55
Principal Growth Fund 0.50 0.15 0.65
Principal Money Market Fund 0.50 0.10 0.60
Principal World Fund 0.75 0.15 0.90
Fidelity Contrafund Portfolio
Fidelity Equity-Income Portfolio 0.60
Fidelity High-Income Portfolio 0.71
PURCHASING A POLICY
Purchase Procedures
To apply for a Policy, a completed application, including any required
supplements, must be submitted to the Company through the agent or broker
selling the Policy. If interim coverage is desired, a payment of at least the
required minimum initial premium amount must be submitted with the completed
application. The required minimum initial premium amount for any Policy
(including a Policy issued on an application submitted without an accompanying
payment) is equal to the minimum monthly premium shown on the Policy's current
data pages. The minimum monthly premium is the amount that, if paid, will keep
the Policy in force for one month, taking into account the Policy's current
Monthly Policy Charge and Surrender Charge. The Company generally will not issue
policies to insure persons over age 85 for regularly underwritten Policies and
age 70 for guaranteed issue, expanded non-medical and batch underwriting
Policies. Applicants for insurance must furnish satisfactory evidence of
insurability. Acceptance is subject to the Company's insurance underwriting
guidelines and suitability rules. The Company reserves the right to reject any
application or related premium if in the view of the Company, the Company's
insurance underwriting guidelines and suitability rules and procedures are not
satisfied. The minimum face amount for a Policy at issue is $50,000 ($25,000 for
guaranteed issue, batch underwriting and expanded non-medical Policies). The
Company reserves the right to revise its rules from time to time to specify
either a higher or a lower minimum face amount.
If a payment in at least the required minimum initial premium amount is
submitted with the completed application, then a conditional receipt is given to
the applicant, reflecting receipt of the initial payment and outlining any
interim conditional insurance coverage provided by the conditional receipt.
If the Company determines to issue a Policy then a Policy Date will be
established. Policy Years and Anniversaries will be determined from the Policy
Date regardless of when the Policy is delivered. The Company does not date
Policies on the 29th, 30th, or 31st day of any month. Policies which otherwise
would be dated on these days except for this rule will be dated on the 28th of
the month. The Policy Date is shown on the Policy's current data pages.
Upon specific Written Request of the applicant in the application and
subject to the Company's approval, a Policy may be issued with a backdated
Policy Date. The Policy Date may not be more than three months prior to the date
of the application or such shorter maximum backdating period as required by
state law. Monthly Policy Charges will be assessed for the period the Policy is
backdated.
Each Policy also has an Effective Date. The Policy Date and the Effective
Date will be the same unless (i) a backdated Policy Date is requested, (ii) the
application was not accompanied by a payment in an amount equal to or greater
than the minimum monthly premium, or (iii) additional premiums or application
amendments are required. In such cases, the Effective Date will be the date on
which the required premiums have been received at the Company's home office and
any application amendments have been received, reviewed, and accepted in the
Company's home office.
No insurance under a Policy will take effect until actual physical delivery
to and acceptance of a Policy by the applicant. If the proposed insured dies
before actual physical delivery to and acceptance of a Policy by the applicant,
there will be no coverage under the Policy and coverage will be determined
solely under the terms of the conditional receipt, if any, given to the
applicant.
Payment Of Premiums
Premiums must be paid to the Company at its home office. There is no fixed
schedule of premium payments on a Policy, either as to the amount or timing of
the payments, although a minimum premium is required during the first twelve
Policy months (the "Minimum Required Premium"). A policyowner may determine,
within specified limits, the planned periodic premium schedule for the Policy.
These limits will be set forth by the Company and will include a minimum initial
premium payment. Planned periodic premium schedules may provide for annual,
semiannual, quarterly or monthly payments. A "pre-authorized withdrawal" allows
the Company to deduct premiums, on a monthly basis, from the policyowner's
checking or other financial institution account. The policyowner is not required
to pay planned periodic premiums. Failure to make any premium payment will not
necessarily result in termination of a Policy provided that (1) any Minimum
Required Premium is paid and the Policy's net surrender value equals or exceeds
the Monthly Policy Charge on the current Monthly Date or (2) the Death Benefit
Guarantee Rider is in effect. Likewise, payment of premiums in accordance with
the planned periodic premium schedule does not guarantee that the Policy will
stay in force if the Policy's net surrender value is not at least equal to the
current Monthly Policy Charge on the Monthly Date, unless such premiums meet the
death benefit guarantee premium requirement.
The Company will send premium reminder notices in accordance with planned
periodic premium schedules to policyowners who are on annual, semi-annual or
quarterly premium payment schedules. Premium payments may also be made by
unscheduled premium payment made to the Company at its home office or by payroll
deduction where allowed by law and approved by the Company.
Premium Limitations
In no event can the total of all premiums paid exceed the current maximum
premium limitations required by the Internal Revenue Code in order to qualify a
Policy as a life insurance contract. The premium limitations are imposed in
order to assure favorable federal income tax treatment of the Policy and its
death benefit. If at any time a premium is paid which would result in total
premiums exceeding the current maximum premium limitation, the Company will only
accept that portion of the premium which will make total premiums equal the
maximum. Any part of the premium in excess of that amount will be returned and
no further premiums will be accepted until allowed by the maximum premium
limitations specified in the Internal Revenue Code. No premium payment may be
less than $30, except the minimum monthly premium for Policies issued to insure
persons ages 0 to 14 may be no less than $15. Premium payments less than the
minimum amount will be returned to the policyowner.
It is possible a premium payment could increase a Policy's death benefit by
more than it increases the Policy Value because of the manner in which the
Policy's death benefit is calculated. In order to qualify a Policy as a life
insurance contract under provisions of the Internal Revenue Code, the death
benefit must be at least equal to an applicable percentage of the Policy Value.
This percentage is 250% for insureds age 40 and under and grades down to 100%
for insureds age 95. For example, a hypothetical Policy insuring the life of a
35-year old with a Policy Value of $20,000 must have a death benefit in at least
the amount of $50,000 ($20,000 x 250%, the applicable percentage). Suppose a
premium is paid that, after deduction of the Premium Expense Charge, increases
this hypothetical Policy Value by $1,000. The Internal Revenue Code test
requires that the death benefit for the hypothetical Policy be at least $52,500
($21,000 x 250%). Hence, if the death benefit before the premium were $50,000,
the $1,000 increase in Policy Value would produce a $2,500 increase in the death
benefit of this hypothetical Policy. In such a situation where a premium payment
increases a Policy's death benefit by more than it increases the Policy Value,
the Company reserves the right to refund the premium payment. Evidence of
insurability under the Company's current underwriting guidelines then in effect
may be required before acceptance of any such premium.
Allocation Of Premiums
The initial Net Premium Payment and any additional premiums received at the
home office of the Company during the first 20 days from the Effective Date are
allocated to the Money Market Division of the Separate Account at the end of the
Valuation Period during which such premiums are received. On the 21st day from
the Effective Date, Policy Value held in the Money Market Division is
automatically transferred to the Divisions of the Separate Account or to the
Fixed Account, or both, in accordance with the policyowner's direction for
allocation of premium payments. If the 21st day from the Effective Date is not a
Business Day, then the transfer will occur on the first Business Day after the
21st day from the Effective Date.
Premium payments received after expiration of the initial 20-day period
described above are allocated among the Divisions, the Fixed Account, or both in
accordance with the directions in the application for the Policy. For each
Division and the Fixed Account, the allocation percentage must be zero or a
whole number not less than ten. The sum of the percentages for all the Divisions
and the Fixed Account must equal 100. The policyowner may change the allocation
of future premium payments among the Divisions and the Fixed Account without
payment of any fee or penalty, at any time, by Written Request to the Company or
by telephone as described below. Allocation percentages must be approved by the
Company. Changes in allocation percentages will be effective at the end of the
Valuation Period in which the Company receives the policyowner's request.
Policy "Free Look"
The policyowner has a limited right to return the Policy for cancellation
and receive a refund in an amount equal to the premiums paid. The request to
cancel a Policy must be in writing. The Written Request and the Policy must be
personally delivered or mailed to the home office of the Company or to the agent
or broker who sold the Policy before the later of:
o 10 days (30 days for Policies issued in the state of California to
policyowners over the age of 60) after the Policy is received by the
policyowner;
o 10 days (30 days for Policies issued in the state of California to
policyowners over the age of 60) after a written notice is delivered to the
policyowner which tells about the cancellation right; or
o 45 days after the policyowner completes the application.
If a policyowner requests an increase in face amount which results in new
surrender charges, he or she will have the same rights as described above to
cancel the increase. If an increase is cancelled, the Policy Value and the
surrender charges will be recalculated to the amounts they would have been had
the increase not taken place.
The refunded amount will ordinarily be disbursed by the Company to the
policyowner within seven days after the request for cancellation is received in
the Company's home office. (See "Postponement of Payments." )
VALUES AND POLICY FEATURES WHILE THE POLICY IS IN FORCE
Policy Values
A Policy has a Policy Value, a portion of which is available to the
policyowner by taking a policy loan or upon total or partial surrender of the
Policy. See "Policy Loans" and "Total and Partial Surrenders" below. The Policy
Value may also affect the amount of the death benefit. See INSURANCE BENEFIT -
"Death Benefit Options." This Policy Value at any time is equal to the sum of
the Values in the Investment Accounts, the Fixed Account and the Loan Account.
The following discussion relates only to the Investment Accounts. Policy loans
are discussed under "Policy Loans" and the Fixed Account is discussed under "The
Fixed Account." The portion of the Policy Value based on the Investment Accounts
is not guaranteed and will vary each Business Day with the investment
performance of the underlying Mutual Funds.
An Investment Account is established under each Policy for each Division of
the Separate Account to which Net Premiums or transfer amounts have been
allocated. Each Investment Account under a Policy measures the interest of the
Policy in the corresponding Division. The value of the Investment Account
established for a particular Division is equal to the number of Units of that
Division credited to the Policy times the value of those Units.
Units of a particular Division are credited to a Policy when Net Premiums
are allocated to that Division or amounts are transferred to that Division.
Units of a Division are cancelled when amounts are deducted, transferred or
withdrawn from the Division. The number of Units credited or cancelled for a
specific transaction is based on the dollar amount of the transaction divided by
the value of the Unit at the end of the Business Day on which the transaction
occurs. The number of Units credited with respect to a premium payment will be
based on the applicable Unit values at the end of the Business Day on which the
premium is received at the Company's home office.
Units are valued at the end of each Business Day. A Business Day is deemed
to end at the time of the determination of the net asset value of the Mutual
Fund shares. When an order involving the crediting or cancelling of Units is
received at the Company's home office after the end of a Business Day or on a
day which is not a Business Day, the order will be processed on the basis of
Unit values determined at the end of the next Business Day. Similarly, any
determination of Policy Value, Investment Account value or death benefit to be
made on a day which is not a Business Day will be made at the end of the next
Business Day.
The value of a Unit of each Division was initially fixed at $10. For each
subsequent Business Day the Unit value is determined by multiplying the Unit
value for the preceding Business Day by the "net investment factor" for the
particular Division for such subsequent Business Day. The net investment factor
for a Division for any Business Day is equal to (a) divided by (b), where:
(a) is the net asset value of the underlying Mutual Fund shares held by
that Division at the end of such Business Day before any policy transactions are
made that day; and
(b) is the net asset value of the underlying Mutual Fund shares held by
that Division at the end of the immediately preceding Business Day after all
policy transactions have been made for that day.
The Company reserves the right to adjust the above formula for any taxes
determined by it to be attributable to the operations of the Division.
Transfers
The policyowner may transfer amounts among the Investment Accounts and the
Fixed Account on either an unscheduled or a scheduled basis. The effective date
of a transfer is the date the request is received at the home office of the
Company.
Transfers From an Investment Account
Unscheduled Transfers. Transfers of amounts from one Investment Account
to another or to the Fixed Account can be made by the policyowner. A
transfer from an Investment Account to the Fixed Account may not be made
if a transfer from the Fixed Account to an Investment Account has been
made within the six-month period prior to the date of the requested
transfer or if immediately after the transfer to the Fixed Account the
policyowner's Fixed Account Value exceeds $1 million. The amount to be
transferred may be stated as a dollar amount or as a percentage of the
value of the Investment Account from which the transfer is to be made.
The amount transferred from each Investment Account must equal or exceed
the lesser of $100 or 100% of the policyowner's interest in the
Investment Account. Transfers may be completed by sending a Written
Request to the Company at its home office, or by telephone as described
below. (See "Service Available by Telephone.")
All or part of the values in one or more Investment Accounts may be
transferred at one time. Transfers from an Investment Account will be
executed and values will be determined in connection with the transfers
at the next computed Unit value after the Company receives the transfer
request. There is currently no charge for the transfer but the Company
reserves the right to impose charges (not to exceed $25 per transfer) on
unscheduled transfers after the twelfth such transfer during a Policy
Year. For this purpose, all transfers between and among the Investment
Accounts and the Fixed Account will be treated as one transfer, if all
the transfer requests are made at the same time as part of one request.
The Company also reserves the right to reject transfer instructions
provided by a person providing them for multiple contracts.
Scheduled Transfers. The policyowner may elect to have automatic
transfers completed on a periodic basis from any Investment Account.
Scheduled transfers may be initiated from an Investment Account only if
the value of the Investment Account equals or exceeds $2,500 when
scheduled transfers begin. A policyowner may establish scheduled
transfers by sending a Written Request to the Company at its home office
or by telephone. (See "Service Available by Telephone.") Scheduled
transfers will be completed on a monthly, quarterly, semiannual or
annual basis beginning on the Monthly Date following the date the
Company receives the Written Request. Scheduled transfers of the dollar
amount specified by the policyowner (minimum of $100) will continue
until the Policy Value in the Investment Account from which such
transfers are made is exhausted or until the policyowner notifies the
Company to discontinue such transfers. The Company reserves the right to
limit the number of Investment Accounts from which transfers will be
made simultaneously, but in no event will such limitation be less than
two Investment Accounts.
Transfer From The Fixed Account
Transfers from of the Fixed Account have special limitations which are
described below. A policyowner may not make both an unscheduled transfer and
scheduled transfers from the Fixed Account during the same Policy Year.
Unscheduled Transfer. An unscheduled transfer in an amount not to exceed
25% of the policyowner's Fixed Account value as of the later of the
Policy Date or the last Anniversary, may be made each Policy Year during
the 30-day period following the Policy Date or Anniversary. A transfer
request must be made by the policyowner within such 30-day period. The
minimum transfer amount is $100 (or, if less, the entire amount of the
Fixed Account value).
Scheduled Transfers. The policyowner may elect to have automatic
transfers completed on a monthly basis from the Fixed Account to one or
more Investment Accounts. Scheduled transfers are available from the
Fixed Account only if the policyowner's Fixed Account value equals or
exceeds $2,500 at the time scheduled transfers begin. (The Company
reserves the right to change that amount but it will never exceed
$10,000.) A policyowner may establish scheduled transfers by sending a
Written Request to the Company at its home office or by telephone.
Scheduled transfers will be completed on a monthly basis on the Monthly
Date following the date the Company receives the Written Request.
Scheduled monthly transfers of an amount equal to 2% of the
policyowner's Fixed Account value as of the later of the Policy Date or
the last Anniversary will continue until the Fixed Account value is
exhausted or until the policyowner notifies the Company to discontinue
the scheduled transfers. If the policyowner discontinues the scheduled
transfers, transfers may not begin again until six months after the date
of the last scheduled transfer.
Policy Loans
So long as a Policy remains in effect and the Policy has Net Surrender
Value, a policyowner may borrow money from the Company using the Policy as the
only security for the loan. The maximum amount that may be borrowed is 90% of
the Net Surrender Value of the Policy as of the date a loan request is processed
at the Company's home office.
The minimum amount of any policy loan is $500. Proceeds of policy loans
ordinarily will be disbursed within seven days from the date of receipt of a
Written Request at the Company's home office. (See "Postponement of Payments." )
When a policy loan is taken, a portion of the Policy Value equal to the
amount of the loan is transferred from the Fixed Account and/or the Investment
Accounts to the Loan Account in the proportion requested by the policyowner. If
no request for allocation of the loaned amount is made by the policyowner, the
loan amount will be withdrawn in the same proportion as the allocation used for
the most recent Monthly Policy Charge. Any loan interest that is due and unpaid
will be transferred in the same manner. The Loan Account will be credited
interest from the date of transfer. During the first ten Policy Years, the Loan
Account will earn interest at an annual rate of six percent. After the tenth
Policy Anniversary, the Loan Account will earn interest at an annual rate of
7.75%. Loan repayments will be allocated among the Fixed Account and the
Investment Accounts in the proportion currently designated by a policyowner for
the allocation of premium payments. A Policy's Loan Account is part of the
Company's General Account.
The Company charges interest on policy loans. Interest accrues daily and is
due and payable at the end of the Policy Year. Any interest not paid when due is
added to the loan principal and bears interest at the same rate. Adding unpaid
interest to the loan principal will cause additional amounts to be withdrawn
from the Fixed Account and/or Investment Accounts in the same manner as
described above for loans. Amounts withdrawn for unpaid loan interest will be
transferred to the Loan Account.
Unpaid policy loans and loan interest reduce the Policy's net surrender
value and may cause it to be less than the Monthly Policy Charges on a Monthly
Date. If on any Monthly Date the net surrender value is not sufficient to pay
the Monthly Policy Charges, the 61-day Grace Period provision will apply. (See
"Policy Termination.")
So long as a Policy remains in force, policy loans and loan interest may be
repaid in whole or in part at any time during the Insured's life. The minimum
loan repayment amount is $30. If the policyowner does not designate a payment as
a premium payment or if the Company cannot identify it as a premium payment, the
Company will apply the payment received as a loan repayment if a loan is
outstanding. Loan Account values equal to the loan repayment will be transferred
to the Fixed Account and/or Investment Accounts in the proportion currently
designated by a policyowner for the allocation of premium payments. Any policy
loan, whether repaid or not, is likely to have a permanent effect on the Policy
Value. If the policy loan had not been made, the Policy Value would have
reflected the investment experience of the Investment Accounts and/or the
interest credited to the Fixed Account. Any policy loans and loan interest are
subtracted from life insurance proceeds payable at the insured's death, from
surrender value upon total surrender or termination of a Policy when a Grace
Period expires without sufficient premium payment, and from the Policy Value
payable at maturity.
Total and Partial Surrenders
A Policy has a Surrender Value and a Net Surrender Value. The Surrender
Value of a Policy is the Policy Value less the Surrender Charge. The Net
Surrender Value of a Policy is its Surrender Value less any loans and loan
interest. While the Policy is in effect, a policyowner may elect to surrender
the Policy and receive its Net Surrender Value as of the date the Company
receives the policyowner's Written Request at its home office. A Surrender
Charge is imposed upon total surrender of a Policy which occurs at any time
within the first ten years after the Policy Date. In addition, if total
surrender of a Policy occurs at any time within the first ten years after the
adjustment date of a face amount increase, a Surrender Charge attributable to
the face amount increase will be imposed. (See "Surrender Charge.")
After the first Policy Anniversary and so long as a Policy is in effect, a
policyowner may request a partial surrender of the Policy Value, but no more
than two times per Policy Year. The minimum amount of a partial surrender is
$500 and the maximum amount that may be surrendered in a Policy Year is 75% of
the net surrender value as of the date of the first partial surrender. A
transaction charge of the lesser of $25 or two percent of the amount surrendered
is imposed on each partial surrender, which is intended to cover the
administrative costs of processing the partial surrender. No Surrender Charge is
assessed upon a partial surrender. The Policy Value is reduced by the amount of
the partial surrender plus the amount of the transaction charge. If the Option 1
death benefit is in effect at the time of a partial surrender, then the Policy
face amount also is reduced by the amount of the partial surrender and the
transaction charge.
A policyowner may designate the amount of the partial surrender and
transaction charge to be withdrawn from the Fixed Account and/or each Investment
Account. If no designation is made, the amount of the partial surrender and the
transaction charge will be withdrawn in the same proportion as the allocation
instruction in effect for the Monthly Policy Charge. The amount surrendered will
be withdrawn from the Policy on a last in, first out basis.
Proceeds from partial or total surrender of a Policy will ordinarily be
disbursed within seven days from the date of receipt of a Written Request at the
Company's home office. (See "Postponement of Payments.")
DEATH BENEFITS AND RIGHTS
Death Proceeds
As long as a Policy remains in force, the Company will, upon proof of the
Insured's death, pay the death proceeds under the Policy to the named
beneficiary in accordance with the designated death benefit option. The death
proceeds, determined as of the date of the Insured's death, are: the death
benefit described below, plus the proceeds from any benefit rider on the
Insured's life, less any unpaid loans and loan interest on the Policy, and less
any overdue Monthly Policy Charges if the Insured died during a Grace Period.
All or part of the death proceeds may be paid in cash or applied under one or
more of the benefit options available under the Policy. The Company pays
interest on the death proceeds from the date of death until date of payment or
until applied under a benefit option. Interest on death proceeds is credited at
a rate the Company determines, but not less than required by state law.
Death Benefit
The Policy provides two death benefit options: Option 1 and Option 2. The
policyowner designates the death benefit option in the application. Both Option
1 and Option 2 provide insurance protection combined with the opportunity for
increasing Policy Value. Under Option 1, the amount of death benefit remains
level (until the Policy Value exceeds certain limits). Under Option 2, the total
death benefit increases as the Policy Value increases. Thus, Option 1 emphasizes
the growth of Policy Value while Option 2 emphasizes the total available death
benefit.
Option 1
The death benefit is the greater of the Policy's current face amount or
the Policy Value on the date of death multiplied by the applicable
percentage.
Option 2
The death benefit is the greater of the Policy's current face amount plus
its Policy Value on the date of death or the Policy Value on that date
multiplied by the applicable percentage.
Applicable Percentage
The Policy provides that the death benefit is at least equal to the amount
of insurance proceeds required by the Internal Revenue Code to qualify the
Policy as a life insurance contract. That death benefit amount is calculated by
multiplying the Policy Value by an applicable percentage set forth in the
Internal Revenue Code based on the Insured's age. The applicable percentages
are:
TABLE OF APPLICABLE PERCENTAGES*
(For ages not shown, the applicable percentages
decrease by a pro rata portion for each full year.)
Insured's Attained Age %
- ------------------------------------------------------- ---
40 and under 250
45 215
50 185
55 150
60 130
65 120
70 115
75 through 90 105
95 100
*The Company has reserved the right, where allowed by law, to change or delete
the applicable percentages as required by amendments to the Internal Revenue
Code.
Illustration of Option 1. Assume that the Insured's attained age at the time
of death is between 20 and 40, that there are no unpaid policy loans or loan
interest at the time of death, and that the face amount of the Policy is
$50,000.
Under Option 1, because the death benefit will be equal to or greater than
250% of the Policy Value under this illustrative Policy, any time the Policy
Value of the Policy exceeds $20,000, the death benefit will exceed the Policy's
$50,000 face amount. Each additional dollar added to Policy Value above $20,000
will increase the death benefit by $2.50. Similarly, any time Policy Value
exceeds $20,000, each dollar taken out of Policy Value will reduce the death
benefit by $2.50. If, for example, the Policy Value is reduced from $24,000 to
$20,000 because of charges or negative investment performance, the death benefit
will be reduced from $60,000 to $50,000. If, however, at any time in this
illustration 250% of the Policy Value is less than $50,000 and no partial
surrenders have been made, the death benefit will equal $50,000. A partial
surrender causes the face amount to decrease by the amount of the partial
surrender and the transaction charge.
Illustration of Option 2. Assume that the Insured's attained age at the time
of death is between 20 and 40, that there are no policy loans or loan interest
unpaid at the time of death, and that the face amount of the Policy is $50,000.
Under Option 2, a Policy with an Policy Value of $10,000 will have a death
benefit of $60,000 ($50,000 + $10,000); a Policy Value of $30,000 will yield a
death benefit of $80,000 ($50,000 + $30,000). The death benefit under this
illustrative Policy, however, must be at least equal to 250% of Policy Value
(Policy Value plus 150% of Policy Value). As a result, if the Policy Value of
the Policy exceeds $33,334, the death benefit will be greater than the face
amount plus Policy Value. Each additional dollar of Policy Value above $33,334
will increase the death benefit by $2.50. A contract on a 40-year old Insured
that has an Policy Value of $40,000 will provide a death benefit of $100,000
(250% x $40,000). Similarly, any time Policy Value exceeds $33,334, each dollar
taken out of Policy Value reduces the death benefit by $2.50. If, for example,
the Policy Value is reduced from $40,000 to $34,000 because of partial
surrenders, charges, or negative investment performance, the death benefit will
be reduced from $100,000 to $85,000. If, however, at any time in this
illustration 250% of the Policy Value were less than $50,000 plus Policy Value,
the death benefit would be $50,000 plus the Policy Value of the Policy.
The Company guarantees that, so long as the Policy remains in force, the
death benefit under either death benefit option will never be less than the
current face amount of the Policy. However, the death proceeds payable may be
less than the death benefit in the event of policy loans, unpaid loan interest
or overdue Monthly Policy Charges.
Change in Death Benefit Option
A policyowner may make a Written Request to change the death benefit option
on or after the first Policy Anniversary. Only two changes in death benefit
option are allowed per Policy Year. There are no charges or fees for changing
the death benefit option. Any Written Request for change in death benefit option
must be approved by the Company. The effective date of any change will be the
Monthly Date that coincides with or next follows the day the request for change
is approved by the Company. A change in death benefit option will affect future
cost of insurance charges.
If the death benefit option is changed from Option 1 to Option 2, the new
face amount will be the old face amount decreased by the Policy Value as
determined on the effective date of the change. This change will not be allowed
if it will result in a face amount less than the minimum face amount of $50,000.
Changing from Option 1 to Option 2 may require evidence of insurability
satisfactory to the Company that the Insured is insurable for the new death
benefit under its underwriting guidelines then in effect.
If the death benefit option is changed from Option 2 to Option 1, the new
face amount will be the old face amount increased by the Policy Value as
determined on the effective date of the change. Changing from Option 2 to Option
1 does not require evidence of insurability.
Adjustment Options
A policyowner may make a Written Request to increase the face amount of a
Policy at any time, so long as the Policy is not in a Grace Period or a
policyowner is not receiving benefits under a waiver rider. See "Optional
Insurance Benefits." A policyowner may make a Written Request to decrease the
face amount at any time on or after the first Policy Anniversary so long as the
Policy is not in a Grace Period and Monthly Policy Charges are not being waived
under a rider. Any Written Request for adjustment of face amount must be
approved by the Company and is subject to these additional conditions:
1. Any request for an increase in face amount must be applied for by a
supplemental application and an adjustment application, signed by
the policyowner and the insured, and shall be subject to evidence of
insurability satisfactory to the Company under its underwriting
guidelines then in effect. The minimum increase in face amount is
$25,000. The age of the Insured must be 85 or less at the time of
the request.
2. A request for a decrease in face amount must be applied for by a
supplemental application and an adjustment application, signed by
the Policyowner and the Insured, and may not reduce the face amount
of the Policy below $50,000.
3. Any increase in face amount will be in a risk classification the
Company determines.
4. Any adjustment approved by the Company will become effective on the
Monthly Date that coincides with or next follows the Company's
approval of the request.
If a payment in an amount greater than or equal to the adjustment
conditional receipt premium deposit is submitted with the adjustment
application, then a conditional receipt is given to the policyowner reflecting
receipt of the payment and outlining any interim insurance coverage provided by
the conditional receipt. The adjustment conditional receipt premium deposit is
that amount calculated by the Company and provided to the policyowner in
connection with the policyowner's request for a face amount increase. The
adjustment conditional receipt premium deposit will be considered a premium
payment for the Policy and will be allocated to the Divisions of the Separate
Account or to the Fixed Account, or both, in accordance with the policyowner's
existing directions for allocation of premium payments.
Any increase in face amount will carry its own free look period and exchange
right, which apply only to the increase in face amount, not the entire Policy.
The policyowner has a limited right to cancel the face amount increase. The
request to cancel a face amount increase must be in writing. The Written Request
and the Policy data pages reflecting the increase must be personally delivered
or mailed to the Company's home office or to the agent or broker who sold the
face amount increase before the later of:
* 10 days (30 days for Policies issued in the state of California to
policyowners over age 60) after Policy data pages reflecting the
increase are received by the policyowner;
* 10 days (30 days for Policies issued in the state of California to
policyowners over age 60) after a written notice is delivered to the
policyowner which tells about the cancellation of face amount increase
right; or
* 45 days after the policyowner completes the application for the
face amount increase.
If a face amount increase is cancelled pursuant to this right or if the
Company does not approve a requested face amount increase, the Company will
restore to the Policy Value an amount equal to all Monthly Policy Charges
attributable to the increase in face amount (including rider costs arising from
the increase). The amount restored will be allocated among the Divisions of the
Separate Account or the Fixed Account, or both, as if it were a Net Premium.
This restoration will be made within seven days after the Company receives the
request for cancellation on the appropriate form. In addition, the Surrender
Charge will be adjusted, if necessary, so that it will be as though no increase
in face amount had occurred.
Net Premiums paid after an increase in face amount will be allocated to the
Divisions of the Separate Account or the Fixed Account, or both, and will not be
refunded following cancellation of the increase. Policyowners who request an
increase in face amount should consider this in deciding whether to make any
premium payments during the free look period for the increase.
During the first 24 policy months following issuance of Policy data pages
reflecting an increased face amount, but not while the Policy is in a Grace
Period, the policyowner may exchange the increased face amount for any other
form of fixed benefit individual life insurance policy (other than term
insurance) currently made available by the Company for this purpose on the
Insured's life. On the date of exchange, a portion of the Policy Value
attributable to the increase will be transferred to the fixed benefit policy.
The portion of the Policy Value attributable to the increase in face amount is
determined by use of the ratio of guideline annual premiums for the increase to
guideline annual premiums for the Policy, determined at the adjustment date for
the face amount increase.
Premium payments made under the Policy after exercise of this exchange right
will be credited only to the Policy. A new Policy will be issued upon exercise
of the exchange right which will require payment of its own premiums. A portion
of any unpaid policy loan and loan interest may be required to be repaid prior
to the exchange or transferred to the new Policy. In all other respects, this
exchange right for face amount increases is the same as that available for the
purchase of the Policy (See "Right to Exchange Policy." )
CHARGES AND DEDUCTIONS
The Company will make certain charges and deductions to support the
operation of the Policy and the Separate Account. Some charges will be deducted
from premium payments as received, some charges will be deducted from the Policy
Value on a monthly basis, and other charges will be deducted from the Policy
Value upon total surrender or termination of a Policy. In addition, there are
fees for the administrative costs involved in processing certain transfers and
all partial surrenders of Policy Value.
Premium Expense Charge
Upon receipt of each premium payment, the Company deducts a Premium Expense
Charge. The Premium Expense Charge includes a charge of 2.20% for state and
local taxes, a charge of 1.25% for federal taxes. The charge also includes a
premium sales load charge of 2.75% for premium payments less than or equal to
the Target Premium made during each of the first ten Policy Years and, with
respect to premiums less than or equal to Target Premiums attributable to any
face amount increase, made during each of the first ten years following the
increase. Sales loads, including the sales load portion of the Surrender Charge
more fully described below, are intended to compensate the Company for
distribution expenses including registered representatives' commissions, the
printing of prospectuses and sales literature, and advertising. The sales loads
imposed in any Policy Year are not necessarily related to actual distribution
expenses incurred in that year. Instead, the Company expects to incur the
majority of distribution expenses in the early years of a Policy and to recover
any deficiency over the life of a Policy. To the extent distribution expenses
exceed sales loads (including the sales load portion of Surrender Charges, if
any) in any year, the Company will pay them from its other assets or surplus in
its general account, which includes amounts derived from mortality and expense
risks charges and from mortality gains.
The charges for state, local and federal taxes are expected to be
sufficient to pay these taxes. However, if the Company incurs higher charges for
state, local or federal taxes, or any other taxes are incurred, it may make an
additional charge.
Monthly Policy Charge
On each Monthly Date, the Company will deduct from the Policy Value an
amount to cover certain charges and expenses incurred in connection with the
Policy. The Monthly Policy Charge deduction is made only from the Policy Value
held in the Fixed Account and/or Investment Accounts. No deduction is made from
a Loan Account . The Monthly Policy Charge will be allocated among the
Investment Accounts and the Fixed Account in accordance with policyowner
instruction on the application for the Policy. The policyowner's choice of
allocation percentages may be: (1) the same as the allocation percentages for
premiums, (2) on a Prorated Basis or (3) any other method of allocation agreed
upon by the policyowner and the Company. For the Fixed Account or each
Investment Account, the allocation percentage must be zero or a whole number not
less than ten nor greater than 100. The allocation percentages chosen by the
policyowner must total 100. Requests for changes in allocation percentages are
effective on the next Monthly Date following approval by the Company. If
following the policyowner's instruction would not be possible on any Monthly
Date due to insufficient value in the Fixed Account and/or Investment Accounts,
Monthly Policy Charges will be deducted on a Prorated Basis. The deduction for
the Monthly Policy Charge consists of a charge for the cost of insurance and a
charge for any optional benefits added by rider, a monthly administration
charge, and a mortality and expense risks charge.
Cost of Insurance Charge
The monthly cost of insurance charge is calculated as (1) multiplied by the
result of (2) minus (3) where:
(1) is the cost of insurance rate as described below divided by 1,000;
(2) is the death benefit at the beginning of the policy month; and
(3) is the Policy Value at the beginning of the policy month calculated as
if the Monthly Policy Charges were zero.
The cost of insurance rate is based on the sex, issue age and Attained Age
and risk classification of the insured under the Policy. (For Policies issued in
states which require unisex pricing or in connection with employment related
insurance and benefit plans, the cost of insurance is not based on the sex of
the insured.) The rate will be determined by the Company based upon its
expectations as to future mortality experience, but the rate will never exceed
the rate shown in the Table of Monthly Guaranteed Cost of Insurance Rates set
forth in the Policy. These guaranteed maximum rates are based on the 1980 Smoker
and Nonsmoker Commissioners Standard Ordinary Mortality Tables. The table used
will be male or female according to the sex of the insured (where allowed by
law). Any change in current cost of insurance rates will apply to all
individuals of the same age, sex and risk classification of the Insured.
However, different maximum cost of insurance rates may apply to any face amount
increases under a Policy.
Administration Charge
The current monthly administration charge for a Policy during the first
Policy Year is an amount equal to $.40 for each $1,000 of Policy face amount,
but not less than $6.00 per month and not greater than $16.67 per month. After
the first Policy Year, the monthly administration charge for a Policy is
currently set at $6.00 per month. The monthly administration charge is
guaranteed not to exceed an amount equal to the greater of $.60 for each $1,000
of Policy face amount or $10.00 per month, but no more than $25.00 per month
during the first Policy Year and no more than $10.00 per month after the first
Policy Year. The Policy also provides for a contingent deferred administration
charge which is a part of the Surrender Charge imposed upon total surrender or
termination of a Policy when a Grace Period expires without sufficient premium
payment. (See "Surrender Charge.") The monthly administration charge and the
deferred administration charge reimburse the Company for the recurring
administrative expenses related to the Policy and the Separate Account. These
expenses are expenses other than sales expenses and include, for example, the
cost of processing applications, conducting medical examinations, determining
insurability, establishing policy records, premium reminders and collection,
recordkeeping, processing death benefit claims and policy changes, reporting,
and overhead costs. The Company does not expect to recover from the
administration charges any amount above its accumulated expenses associated with
the Policies and the Separate Account.
Mortality and Expense Risks Charge
The company deducts a monthly charge from the Policy Value for the mortality
and expense risks it assumes under the Policies. This charge is made on each
Monthly Date at an annual rate of .90% of the value of the Policyowner's
Investment Accounts (after the fifth Policy Year, .35% if the Policy Value less
the Loan Account value on the Monthly Date is equal to or greater than 20% of
the face amount of the Policy). The mortality risk assumed is that lives insured
may live for a shorter period of time than the Company estimated. The expense
risk assumed is that expenses incurred in issuing and administering the Policies
will be greater than the Company estimated. The Company will realize a gain from
this charge to the extent it is not needed to provide benefits and pay expenses
under the Policies.
Transaction Charge
A transaction charge of the lesser of $25 or 2% of the amount being
surrendered is imposed on each partial surrender of Policy Value.
A transaction charge of $25 may be imposed on each unscheduled transfer of
Policy Value among the Investment Accounts exceeding twelve per Policy Year. All
transfers with the same effective date count as one transfer.
Surrender Charge
During the first ten Policy Years, the Company will assess a Surrender
Charge upon total surrender of a Policy or termination of a Policy when a Grace
Period expires without sufficient premium payment. In addition, the Company will
assess a Surrender Charge upon surrender or termination of a Policy for
insufficient premium payment which occurs during the first ten Policy Years
after the adjustment date for a face amount increase. Thus, surrender of a
Policy or termination of a Policy for insufficient value within the first ten
Policy Years and within ten Policy Years after the adjustment date of a face
amount increase will result in assessment of a composite Surrender Charge
representing the charge imposed on the initial face amount and the charge
imposed on the face amount increase. Surrender Charges do not decrease when the
face amount of a Policy is decreased. No additional Surrender Charges apply when
the death benefit under a Policy is changed from Option 2 to Option 1.
The Surrender Charge is comprised of two parts: A contingent deferred sales
charge and a contingent deferred administration charge.
Contingent Deferred Sales Charge
The contingent deferred sales charge is equal to 47.75% of premiums paid up to a
maximum of two Target Premiums. The contingent deferred sales charge portion of
the Surrender Charge is assessed to recover sales expenses and is in addition to
the 2.75% premium sales load charge which is deducted when premium payments are
made.
Contingent Deferred Administration Charge
The contingent deferred administration charge is equal to $3 per $1,000 of
Policy face amount. The contingent deferred administration charge portion of the
Surrender Charge is intended to reimburse the Company for administrative
expenses associated with the Policy and the Separate Account and is in addition
to the monthly administration charge for a Policy.
Surrender Charge Percentage
The Surrender Charge during any Policy Year is equal to the sum of the
contingent deferred sales charge and the contingent deferred administration
charge multiplied by the applicable surrender percentage as shown below.
Policy Year of Surrender Surrender Charge Percentage
------------------------ ---------------------------
1-5 100.0%
6 83.3%
7 66.7%
8 50.0%
9 33.3%
10 16.7%
11+ 0.0%
If the face amount of a Policy is increased, Surrender Charges apply to the
net increase in face amount as though a new Policy had been issued for an amount
equal to the net increase. The net increase in face amount is equal to the
increase in face amount less earlier decreases in face amount not offset against
an earlier increase in face amount. The Surrender Charge applicable to face
amount increase will be determined by multiplying the increase in the face
amount, in thousands, by the contingent deferred administration charge ($3) and
adding the increase in premium attributable to the face amount increase (up to a
maximum of two Target Premiums) multiplied by the contingent deferred sales
charge (47.75%). The sum of these amounts is then multiplied by the Surrender
Charge percentage in the above table to determine the Surrender Charge.
Surrender Charges following a Policy's reinstatement commence at the rate in
effect at the time of the Policy's termination.
Sales Charge Limitations
If a Policy is surrendered or its face amount decreased at any time during
the first two years after issuance or after an increase in face amount, the
Company will forego taking that part of the deferred sales charge with respect
to "premiums" paid for the initial face amount or such increase, whichever is
applicable, which would cause the total sales load (Premium Expense Charge
deducted from premium payments plus contingent deferred sales charge) to exceed
the sum of (i) 30% of the premiums paid up to the lesser of one guideline annual
premium or the maximum amount of premiums subject to the deferred sales charge
plus (ii) 10% of the premiums paid in excess of one guideline annual premium, up
to the lesser of two guideline annual premiums or the maximum amount of premiums
subject to the deferred sales charge.
Other Charges
Shares of the Mutual Funds are purchased by the corresponding Divisions at
the shares' net asset values. The net asset value of Mutual Fund shares reflects
the investment management fees and corporate operating expenses already deducted
from the assets of the Mutual Funds. The current investment management fee and
total operating expenses for each of the Mutual Funds is provided under the
heading "Separate Account". These fees and expenses are fully described in the
prospectus for each of the Mutual Funds.
Special Provisions for Group or Sponsored Arrangements
Where permitted by state insurance laws, Policies may be purchased under
group or sponsored arrangements, as well as on an individual basis. A "group
arrangement" includes a program under which a trustee, employer or similar
entity purchases Policies covering a group of individuals on a group basis. A
"sponsored arrangement" includes a program under which an employer permits group
solicitation of its employees or an association permits group solicitation of
its members for the purchase of Policies on an individual basis.
The charges and deductions described above may be reduced for Policies
issued in connection with group or sponsored arrangements. Such arrangements may
include sales without premium sales load charges and/or Surrender Charges to
employees, officers, directors, agents, immediate family members of the
foregoing, and employees of agents of the Company and its subsidiaries. The
Company will reduce the above charges and deductions in accordance with its
rules in effect as of the date an application for a Policy is approved. To
qualify for such a reduction, a group or sponsored arrangement must satisfy
certain criteria as to, for example, size of the group, expected number of
participants and anticipated premium payments from the group. Generally, the
sales contacts and effort, administrative costs and mortality cost per Policy
vary based on such factors as the size of the group or sponsored arrangements,
the purposes for which Policies are purchased and certain characteristics of its
members. The amount of reduction and the criteria for qualification will reflect
the reduced sales effort and administrative costs resulting from, and the
different mortality experience expected as a result of, sales to qualifying
groups and sponsored arrangements.
The Company may modify from time to time, on a uniform basis, both the
amounts of reductions and the criteria for qualification. Reductions in these
charges will not be unfairly discriminatory against any person, including the
affected policyowners and all other policyowners funded by the Separate Account.
In addition, groups and persons purchasing under a sponsored arrangement may
apply for flexible underwriting. If flexible underwriting is granted, the cost
of insurance charge may increase as a result of higher anticipated mortality
experience. Flexible underwriting programs currently available include batch
underwriting, expanded non-medical underwriting and guaranteed issue
underwriting.
THE FIXED ACCOUNT
Policyowners may allocate Net Premiums and transfer amounts from the Separate
Account to the Fixed Account, in which case such amounts are held in the General
Account of the Company. Because of exemptive and exclusionary provisions,
interests in the Fixed Account have not been registered under the Securities Act
of 1933 and the General Account has not been registered as an investment company
under the Investment Company Act of 1940. Accordingly, neither the Fixed Account
nor any interests therein are subject to the provisions of these Acts and, as a
result, the staff of the Securities and Exchange Commission has not reviewed the
disclosures in this prospectus relating to the Fixed Account. Disclosures
regarding the Fixed Account may, however, be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses. This prospectus is
generally intended to serve as a disclosure document only for the aspects of the
Policy involving the Separate Account and contains only selected information
regarding the Fixed Account. More information regarding the Fixed Account may be
obtained from the Company's home office or from a sales representative.
The Company's obligations with respect to the Fixed Account are supported by the
Company's General Account. Subject to applicable law, the Company has sole
discretion over the investment of the assets in the General Account.
The Company guarantees that Net Premiums allocated to the Fixed Account will
accrue interest daily at an effective annual interest rate of not less than 3%
compounded annually. In its sole discretion, the Company may credit a higher
rate of interest.
Charges under the Policy are the same as when the Separate Account is being
used, except that the mortality and expense risks charge is not imposed on
amounts of Policy Value in the Fixed Account. The value of the Fixed Account on
any Business Day is the sum of the Net Premiums allocated to the Fixed Account,
plus any transfers from the Separate Account, plus interest credited to the
Fixed Account, less surrenders, Surrender Charges, Monthly Policy Charges or
transaction fees allocated to the Fixed Account or transfers to the Separate
Account.
POLICY TERMINATION AND REINSTATEMENT
Policy Termination
An initial minimum premium payment is required to commence coverage under a
Policy. A minimum premium is required during the first twelve policy months (the
"Minimum Required Premium"). A notice of impending termination of a Policy will
be sent if during the 12 months following the Policy Date, the sum of the
premiums paid is less than the Minimum Required Premium on a Monthly Date.
The Minimum Required Premium on a Monthly Date is equal to (1) times (2)
where:
1. Is the minimum monthly premium shown on the current data pages ; and
2. Is one plus the number of completed months since the Policy Date.
Further, a notice of impending termination of a Policy will be sent if the
net surrender value of the Policy is not at least equal to the Monthly Policy
Charges on the current Monthly Date, and the death benefit guarantee premium
requirement has not been satisfied. (See "Death Benefit Guarantee Rider".)
The Grace Period begins when a notice of impending termination is mailed to
a policyowner. The notice will be sent to the last post office address of the
policyowner known to the Company. It will show the minimum payment required to
keep the Policy in force. The notice will also show the 61-day period during
which the Company will accept the required payment.
If the Grace Period begins because the sum of the premiums paid is less than
the Minimum Required Premium, the minimum payment is the past due Minimum
Required Premium, which is:
1. The Minimum Required Premium due on the next following Monthly Date.
LESS
2. The sum of the premiums paid since the Policy Date.
If the Grace Period ends before receipt by the Company of the past due
Minimum Required Premium, the Company will pay to the policyowner any remaining
value in the Policy which would be the excess of (1) over (2) where:
1. Is the Net Cash Surrender Value on the Monthly Date at the start of the
Grace Period; and
2. Is the two Monthly Policy Charges applicable during the Grace Period.
The refunded amount will ordinarily be disbursed by the Company to the
policyowner within seven days after the request for cancellation is received in
the Company's home office. (See "Postponement of Payments.")
If the Grace Period begins because the Net Cash Surrender Value is less than
the current Monthly Policy Charge, the minimum payment is three times the
Monthly Policy Charge which was due and unpaid. This payment is intended to
reimburse the Company for the Monthly Policy Charges during the 61-day Grace
Period and provide sufficient Policy Value to pay the Monthly Policy Charge for
the first Monthly Date following the Grace Period. There is no guarantee the
amount requested at the beginning of the Grace Period will be sufficient to
actually meet the three Monthly Policy Charges as they are processed. Should the
Policy's Net Cash Surrender Value not at least equal the Monthly Policy Charges
on any Monthly Date, a new 61-day Grace Period will commence.
The Policy will continue in force through a Grace Period; but, if the
required payment is not received by the Company during the 61-day period, the
Policy will terminate as of the Monthly Date on or immediately preceding the
start of the Grace Period. If the Insured dies during a Grace Period, the policy
proceeds will be reduced by the amount of all Monthly Policy Charges due and
unpaid at the Insured's death, as well as by loans and unpaid loan interest.
A Policy will also terminate if the policyowner makes a total surrender of
the Policy, the death proceeds under the Policy are paid or the maturity
proceeds under the Policy are paid. When a Policy terminates for any reason, all
policy privileges and rights of the policyowner under the Policy end.
Reinstatement
A policyowner may, however, reinstate a Policy which terminated as a result
of insufficient value or failure to pay the Minimum Required Premium on a
Monthly Date during the 12 months following the Policy Date, subject to certain
conditions. A Policy may be reinstated only prior to the Maturity Date and while
the insured is alive. The application for reinstatement must be personally
delivered or mailed to the Company at its home office within three years of a
Policy's termination. (In some states, the Company is required by law to provide
a longer period of time within which a Policy may be reinstated.) Satisfactory
proof of insurability based upon the Company's underwriting guidelines then in
effect and payment of a reinstatement premium of at least the greater of (1) an
amount that, after deduction of Premium Expense Charges, is sufficient to allow
at least three Monthly Policy Charges or (2) the past due Minimum Required
Premium are required. Payment of Monthly Policy Charges for the period of
termination is not required. If a policy loan or loan interest was unpaid at the
time of termination, the Company will require repayment or reinstatement of the
loan and any loan interest before permitting reinstatement of the Policy. Loan
interest will not be charged for the period the Policy was terminated.
Reinstatement will be effective on the next Monthly Date following the Company's
approval of the reinstatement application. The Policy Date will remain the
original Policy Date and will not be changed at reinstatement, although
Surrender Charges for total surrender following reinstatement will resume at the
rate charged at the time of the Policy's termination, as adjusted for the
payment of past due premiums, if any. Upon reinstatement of a Policy, all the
rights and privileges of the owner are restored.
OTHER MATTERS
Voting Rights
The Company shall vote Mutual Fund shares held in the Separate Account at
regular and special meetings of shareholders of each Mutual Fund, but will
follow voting instructions received from persons having the voting interest in
such Mutual Fund shares.
The policyowner has the voting interest under a Policy. The policyowner
shall have one vote for each $100 of Policy Value in the Divisions, with
fractional votes allocated for amounts less than $100. The number of votes on
which the policyowner has the right to instruct will be determined as of the
date coincident with the date established by the Mutual Fund for determining
shareholders eligible to vote at the meeting of the Mutual Fund. Voting
instructions will be solicited by written communications prior to such meetings
in accordance with procedures established by the Mutual Fund. The Company will
vote other Mutual Fund shares held in the Separate Account, including those for
which no instructions are received in the same proportion as it votes shares for
which it has received instructions. All Mutual Fund shares held in the general
account of the Company will be voted in proportion to instructions that are
received with respect to participating contracts.
If the Company determines pursuant to applicable law that Mutual Fund shares
held in the Separate Account need not be voted pursuant to instructions received
from persons otherwise having the voting interest as provided above, then the
Company may vote Mutual Fund shares held in the Separate Account in its own
right.
The Company may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that shares be voted
so as to cause a change in subclassification or investment objective of the
Mutual Fund, or disapprove an investment advisory contract of the Mutual Fund.
In addition, the Company may disregard voting instructions in favor of changes
initiated by a policyowner in the investment policy or the investment adviser of
the Mutual Fund if the Company 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 the Company determines that the
change would be inconsistent with the investment objectives of the Mutual Fund
or would result in the purchase of securities for the Mutual Fund which vary
from the general quality and nature of investments and investment techniques
utilized by other separate accounts created by the Company or any affiliates of
the Company which have similar investment objectives. In the event that the
Company does disregard voting instructions, a summary of that action and the
reason for such actions will be included in the next semiannual report to
policyowners.
Statement of Values
The Company will mail an annual statement to the policyowner after the end
of each Policy Year until the Policy terminates. The statement will show:
1. the current death benefit;
2. the current Policy Value and surrender value;
3. all premiums paid since the last statement;
4. all charges since the last statement;
5. any Policy loans and loan interest;
6. any partial surrenders since the last statement;
7. the number of Units and Unit value;
8. the total value of each of the policyowner's Investment Accounts; and
9. any investment gain or loss since the last statement.
10. the designated beneficiary or beneficiaries;
11. all riders included with the Policy; and
12. a detailed summary of activity which occurred during the Policy Year.
Any policyowner may request at any time a current statement of account
values, transactions and activities by telephoning 1-800-852-4450.
The Company will also send to the policyowner the reports required by the
Investment Company Act of 1940.
Service Available by Telephone
Unless telephone transaction services are declined on the supplemental
application for a Policy, or at any subsequent time the policyowner notifies the
Company in writing to remove telephone transaction services, certain
transactions, including transfers permitted by the Policy, changes in the
allocation of future premium payments and changes in allocation of the Monthly
Policy Charge, may be made pursuant to telephone instructions. The telephone
transactions may be exercised by telephoning 1-800-852-4450. Telephone transfer
requests must be received by the close of the New York Stock Exchange on a day
when the Company is open for business to be effective that day. Requests made
after that time or on a day when the Company is not open for business will be
effective the next Business Day. Although neither the Separate Account nor the
Company is responsible for the authenticity of telephone transaction requests,
the right is reserved to refuse to accept telephone requests when in the opinion
of the Company it seems prudent to do so. The policyowner bears the risk of loss
caused by fraudulent telephone instructions the Company reasonably believes to
be genuine. The Company will employ reasonable procedures to assure telephone
instructions are genuine and if such procedures are not followed, the Company
may be liable for losses due to unauthorized or fraudulent transactions. Such
procedures include recording all telephone instructions, requesting personal
identification information such as the caller's name, daytime telephone number,
social security number and/or birthdate and sending a written confirmation of
the transaction to the policyowner's address of record. Policyowners may obtain
additional information and assistance by telephoning the toll free number. The
Company may modify or terminate telephone transfer procedures at any time.
Policyowners may obtain additional information and assistance by telephoning
the toll free number.
GENERAL PROVISIONS
Addition, Deletion or Substitution of Investments
The Company reserves the right, subject to compliance with applicable law,
to make additions to, deletions from, or substitutions for the shares held by
any Division or which any Division may purchase. If shares of any Mutual Fund
should no longer be available for investment or if, in the judgment of the
Company's management, further investment in shares of any mutual fund should
become inappropriate in view of the purposes of the Policy, the Company may
substitute shares of any other investment company for shares already purchased,
or to be purchased in the near future under the Policies. No substitution of
securities will take place without notice to policyowners and without prior
approval of the Securities and Exchange Commission, to the extent required by
the Investment Company Act of 1940.
The investment policy of the Separate Account will not be materially changed
unless a statement of the change is filed with and not disapproved by the
Insurance Commissioner of the State of Iowa and the Superintendent of Insurance
of the State of New York, if required. Whether a change in investment policy is
material will be determined in conjunction with the appropriate state insurance
commissioner(s). The policyowner will be notified of any material investment
policy change. The policyowner may then change allocation percentages and
transfer any value in an affected Division to another Division without charge.
In the alternative, the policyowner may exchange the Policy for a fixed-benefit,
flexible premium life insurance policy offered by the Company for this purpose.
The policyowner may exercise this exchange privilege until the later of 60 days
after (i) the effective date of such change, or (ii) the receipt of a notice of
the options available. The face amount of the new policy will be the death
benefit of the Policy on the date of exchange.
Each Mutual Fund is subject to certain investment restrictions which may not
be changed without the approval of the majority of the outstanding voting
securities. See the accompanying prospectuses for the Mutual Funds.
Optional Insurance Benefits
Subject to certain requirements and approved by state insurance
departments, one or more supplementary benefits may be added to a Policy,
including those providing term insurance options, providing accidental death
coverage, waiving Monthly Policy Charges or waiving of premium payments upon
disability, accelerating benefits in the event of terminal illness, providing
cost of living increases in benefits, providing a death benefit guarantee,
providing extended coverage beyond the Maturity Date, and, in the case of
business-owned Policies, permitting a change of the life insured, providing face
amount increases that reflect salary increases, providing extra protection
increases and providing enhanced policy values in the early years of a Policy.
More detailed information concerning supplementary benefits may be obtained from
an authorized agent of the Company. The cost, if any, of any optional insurance
benefits will be deducted as part of the Monthly Policy Charge.
The Contract
The Policy, the application attached to it, any supplemental application,
any adjustment applications, any amendments to the application and the current
data pages make up the entire contract between the Company and the policyowner.
Any statements made in the application or an adjustment application will be
considered representations and not warranties. No statement, unless made in an
application, will be used to void a Policy (or void an adjustment in case of an
adjustment application) or to defend against a claim. A Policy may be modified
by mutual agreement between the policyowner and the Company. Any alteration of
the Policy must be in writing and signed by one of the Company's corporate
officers. No one else, including the agent, may change the contract or waive any
provisions.
Incontestability
The Company will not contest the insurance coverage provided under a Policy,
except for any subsequent increase in face amount, after the Policy has been in
force during the lifetime of the insured for a period of two years from the
Policy Date. This provision does not apply to claims for total disability or to
accidental death benefits which may be provided by a rider to a Policy. Any face
amount increase made under the adjustment options has its own two-year
contestable period which begins on the effective date of the adjustment.
Misstatements
If the age or sex of the insured has been misstated in an application,
including a reinstatement application, the death benefit under the Policy will
be the Policy Value plus the amount which would be purchased by the most recent
mortality charge at the correct age and sex.
Suicide
A Policy does not cover the risk of suicide within two years from the Policy
Date or two years from the date of any increase in face amount with respect to
such increase, whether the insured is sane or insane. In the event of suicide
within two years of the Policy Date, the only liability of the Company will be a
refund of premiums paid, without interest, less any policy loans and loan
interest and any partial surrenders. In the event of suicide within two years of
an increase in face amount, the only liability of the Company in respect to that
increase in face amount will be a refund of the cost of insurance for that
increase.
Ownership
The owner of the Policy is as named in the application. The owner may
exercise every right and enjoy every privilege provided by the Policy, subject
to the rights of any irrevocable beneficiary. All privileges and rights of the
owner under a Policy end when the owner surrenders the Policy for cash, the
death proceeds of the Policy are paid, or the maturity proceeds of the Policy
are paid. Also, if the Grace Period ends without receipt by the Company at its
home office of the payment required to keep the Policy in force, the privileges
and rights of the owner terminate as of the Monthly Date on or immediately
preceding the start of the Grace Period. If the owner is not the insured and
dies before the Insured, the Insured becomes the owner unless the owner has
provided for a successor owner. The owner may be changed by filing a Written
Request with the Company. The Company's approval is needed and no change is
effective until the Company approves the Written Request for change of owner.
Once approved, the change is effective as of the date the owner signed the
Written Request. The Company reserves the right to require that the Policy be
sent to the Company so that the change may be recorded.
Beneficiaries
The original beneficiaries and contingent beneficiaries are designated by
the policyowner on the application. A primary and/or contingent beneficiary or
beneficiaries may be changed by Written Request to the Company. The Company's
approval is needed and no change is effective until the Company approves the
Written Request for change of beneficiary. Once approved, the change is
effective as of the date the owner signed the Written Request. If changed, the
primary beneficiary or contingent beneficiary is as shown in the latest written
change filed with the Company. One or more primary or contingent beneficiaries
may be named in the application or a later change request.
Benefit Instructions
While the insured is alive, the owner may file instructions for the payment
of death proceeds under one of the benefit options under the Policy. Such
instructions, or a change of instructions, must be made by Written Request to
the Company. If the owner changes the beneficiary, that change will revoke any
prior benefit instructions.
Postponement of Payments
Payment of any amount upon total or partial surrender, policy loan, or
proceeds payable at death or maturity and the right to transfer to or from an
Investment Account may be postponed or suspended whenever: (1) the New York
Stock Exchange is closed other than customary weekend and holiday closings, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission; (2) the Securities and Exchange Commission
by order permits postponement for the protection of policyowners; or (3) the
Securities and Exchange Commission requires that trading be restricted or
declares an emergency, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the net
asset value of the Mutual Funds.
Assignment
The Policy can be assigned as collateral for a loan. The Company must be
notified in writing if the Policy has been assigned. Each assignment will be
subject to any payments made or action taken by the Company prior to its
notification of such assignment. The Company is not responsible for the validity
of an assignment. An assignment as collateral does not change the owner but the
rights of beneficiaries, whenever named, become subordinate to those of the
assignee.
Policy Proceeds
Death proceeds under a Policy will ordinarily be paid within seven days
after the Company receives due proof of death. Payments may be postponed in
certain circumstances. (See "Postponement of Payments.") During the insured's
lifetime, the policyowner may arrange for the death proceeds to be paid in a
lump sum or under one or more of the settlement options described below. These
choices are also available if the Policy is surrendered or matures.
When death proceeds are payable in a lump sum, the beneficiary may select
one or more of the settlement options.
The following options are available:
Option A
Special Benefit Arrangement - A specially designed benefit option may be
arranged with the Company's approval.
Option B
Proceeds Left at Interest - The Company will hold the amount applied on
deposit. Interest payments will be made annually, semiannually, quarterly or
monthly, as elected.
Option C
Fixed Income - The Company will pay an income of a fixed amount or an income
for a fixed period not exceeding 30 years.
Option D
Life Income - The Company will pay an income during a person's lifetime.
A minimum guaranteed period may be used.
Option E
Joint and Survivor Life Income - The Company will pay an income during the
lifetime of two persons, and continuing until the death of the survivor. This
option includes a minimum guaranteed period of 10 years.
Option F
Joint and Two-Thirds Survivor Life Income - The Company will pay an income
during the time two persons both remain alive, and two-thirds of the original
amount during the remaining lifetime of the survivor.
Interest at a rate set by the Company, but never less than required by state
law, will be applied to determine the payment under Option B, and any such
interest in excess of the guaranteed minimum will be added to payments under
Option C.
Participating Policy
The Policies share in any divisible surplus of the Company. The Company will
determine each Policy's share of the surplus and will credit it as a dividend at
the end of each Policy Year. The Company does not expect to pay any dividends
under the Policy. Dividends, if any, will be paid in cash.
Right To Exchange Policy
During the first 24 policy months following issuance of a Policy, except
during a Grace Period, the policyowner may exchange the Policy for any other
form of fixed benefit individual life insurance policy (other than term
insurance) currently made available by the Company for this purpose on the
insured's life. At present, the Company makes several insurance policies
available for exercise of this exchange right. Such request must be postmarked
or delivered to the home office of the Company before the expiration of 24
months after the Policy Date. At the option of the policyowner, the new policy
will provide either the same death benefit or the same amount at risk as the
Policy did at the time of the exchange request. Premiums for the new policy will
be based on the same issue age, sex and risk classification of the insured under
the Policy. An equitable adjustment in the new policy's payments and cash or
Policy Values will be made to reflect variances, if any, in the payments and
Policy Values under the Policy and the new policy. Minimum benefits of the new
policy will be fixed and guaranteed and the new policy will not participate in
the experience of the Separate Account. Policy values will be determined as of
the date the Written Request for exchange is received at the Company's home
office. Evidence of insurability will not be required for the exchange. No
charge will be imposed on the exercise of this exchange privilege. Any policy
loan and loan interest must be repaid prior to the exchange or transferred to
the new policy. Any benefit riders included as a part of a Policy may be
exchanged, without evidence of insurability, for similar benefit riders on the
new policy if both these conditions are met:
1. The policyowner, in the Written Request for exchange, indicates that
the rider or riders should be a part of the new policy; and
2. The similar benefit rider or riders were available for the new policy on
the effective date of the benefit rider for the Policy based on the same
issue age, sex and risk classification of the insured under the Policy.
The exchange will be effective upon proper receipt by the Company of the
Written Request, any amount required as an adjustment and surrender of the
Policy.
The policyowner may also exchange the Policy for a fixed-benefit, flexible
premium policy in the event of a material change in investment policy of a
Division (see "Addition, Deletion or Substitution of Investments.")
In addition, the policyowner has the right to exchange a face amount
increase for a fixed-benefit, flexible premium policy at any time during the
first 24 months following issuance of Policy data pages reflecting a face amount
increase, but not while the policy is in a Grace Period (see "Adjustment
Options.")
DISTRIBUTION OF THE POLICY
The Policy will be sold by individuals who, in addition to being licensed
and appointed as life insurance agents or brokers for the Company, are also
registered representatives of the principal underwriter of the Policies, Princor
Financial Services Corporation, or of other broker-dealers which Princor
Financial Services Corporation selects and the Company approves. Princor
Financial Services Corporation is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 as a broker-dealer and is a
member of the National Association of Securities Dealers, Inc. For contracts
distributed by the principal underwriter commissions will range between 0% and
50% of premium received in the first year of a Policy (and between 0% and 50% of
premium received in the first year following an adjustment date), up to a Target
Premium determined by a rate per $1,000 of face amount which varies by the age
and sex of the insured. In addition, commissions will include 0% to 4% of
premium received in the first year of the Policy, above the Target Premium. For
years two and later of a Policy, commissions will range from 0% to 2% of
premiums received. A service fee of 0% to 2% is paid on all premiums received
after the first Policy Year. In addition, a persistency renewal commission may
be paid which ranges from 1.25% to 5.25% of premiums received in the first three
Policy Years, depending upon the agent's or broker's total life insurance sales
for the Company. Expense allowances may also be payable to agents and brokers
based upon premiums received. Commission amounts for contracts distributed by
broker-dealers other than the principal underwriter will vary.
The Company has entered into a distribution agreement with Princor Financial
Services Corporation. Princor Financial Services Corporation is also the
principal underwriter for various registered investment companies organized by
the Company. Princor Financial Services Corporation is a wholly-owned subsidiary
of Principal Holding Company. Principal Holding Company is a holding company and
a wholly-owned subsidiary of the Company.
OFFICERS AND DIRECTORS OF PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
Principal Mutual Life Insurance Company is managed by a Board of Directors
which is elected by its policyowners. The directors and executive officers of
the Company, their positions with the Company, including Board Committee
memberships, and their principal occupation during the last five years, are as
follows:
DIRECTORS:
EXECUTIVE OFFICERS (OTHER THAN DIRECTORS):
J. E. ASCHENBRENNER Senior Vice President
R. S. CRABTREE Executive Vice President
J. B. GRISWELL Executive Vice President
T. J. GAARD Senior Vice President
M. H. GERSIE Senior Vice President
T. J. GRAF Senior Vice President
R. E. KELLER Executive Vice President
G. R. NARBER Senior Vice President and General Counsel
C. E. ROHM Executive Vice President
<TABLE>
<CAPTION>
Principal Occupation
Name, Positions and Offices During Last 5 Years
<S> <C>
M. VERMEER ANDRINGA President and Chief Operating Officer, Vermeer Manufacturing Company.
Director
Member, Nominating Committee
R. M. DAVIS President and Chief Executive Officer, The Pymatuning Group, Inc.
Director
Member, Nominating Committee
D. J. DRURY Chairman and Chief Executive Officer, Principal Mutual Life Insurance Company since
Director January 1995. President and Chief Executive Officer from 1994 - 1995; President from
Chairman of the Board 1993-1994; Executive Vice President from 1992-1993; Executive Vice
President and Chair, Chief Actuary 1992; prior thereto, Senior Vice President and Chief Actuary.
Executive Committee
C. D. GELATT, JR. President, NMT Corporation.
Director
Member, Executive and
Human Resources Committees
G. D. HURD Retired. Chairman and Chief Executive Officer, Principal Mutual Life
Director Insurance Company 1989 - 1994.
Member, Executive and
Human Resources Committee
T. M. HUTCHISON Vice Chairman, Principal Mutual Life Insurance Company since August
Director 1994. Prior thereto, Executive Vice President.
C. S. JOHNSON President and Chief Executive Officer, Pioneer Hi-Bred International,
Director Inc. since September 1995. President and Chief Operating Officer March-September 1995;
Member, Audit Committee Executive Vice President 1993-1995. Prior thereto, Senior Vice President.
W. T. KERR President & Chief Operating Officer since 1994 Meredith Corporation.
Director Executive Vice President 1991-1994. Prior thereto President, New York Times.
Member, Nominating Committee
L. LIU President, Chairman and Chief Executive Officer, IES Industries, Inc.
Director
Member, Executive and Human
Resources Committees
V. H. LOEWENSTEIN Managing Partner, Egon Zehnder International
Director
Member, Audit Committee
J. R. PRICE, JR. Managing Director, Chemical Banking Corporation.
Director
Chair, Audit Committee
B. A. RICE Consultant for Rice & Associates since 1995. Consultant for
Director Organizational Effectiveness 1994-1995. Prior thereto, Vice President-Human Resources,
Member, Human Resources Committee Scott Paper Company.
J-P. C. ROSSO President and Chief Executive Officer, Case Corporation, since April
Director 1994. President Honeywell, Inc., 1991-1994; Prior thereto President, Honeywell Europe.
Member, Audit Committee
D. M. STEWART President, The College Board.
Director
Chair, Nominating Committee
E. E. TALLETT President and Chief Executive Officer, Transcell Technologies, Inc. since
Director 1992. Prior thereto, President - Pharmaceutical Division, Centocor, Inc., 1989-1992.
Member, Audit Committee
D. D. THORNTON Retired since 1993. Prior thereto President, Boeing Commercial Airplane Group.
Director
Chair, Human Resources Committee
F. W. WEITZ President, Chairman of the Board and Chief Executive Officer, Essex Meadows, Inc.
Member, Executive since 1995. Prior thereto, President, Chairman of the Board, and Chief Executive Officer,
and Nominating Committees The Weitz Corporation and its subsidiaries.
</TABLE>
STATE REGULATION OF PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
The Company is organized under the laws of the State of Iowa and is subject
to regulation by the Commissioner of Insurance of Iowa. An annual statement is
filed with the Iowa Division of Insurance on or before March 1 of each year
covering the operations and reporting on the financial condition of the Company
as of December 31 of the preceding year. Periodically, the Commissioner examines
the assets
and liabilities of the Company and the Separate Account and verifies their
adequacy. A full examination of the Company's operations is conducted by the
National Association of Insurance Commissioners at least every five years.
FEDERAL TAX MATTERS
The discussion contained herein is general in nature, is not an exhaustive
discussion of all tax questions that might arise under the policies, and is not
intended as tax advice. No attempt is made to consider any applicable state or
other tax laws and no representation is made as to the likelihood of
continuation of current federal income tax laws and treasury regulations or of
current interpretations of the Internal Revenue Service.
While the Company reserves the right to make changes in the Policy to assure
that it continues to qualify as life insurance for tax purposes, the Company
cannot make any guarantee regarding the future tax treatment of any Policy. For
complete information on the impact of changes with respect to the Policy and
federal and state considerations, a qualified tax advisor should be consulted.
The ultimate effect of federal income taxes on values under the Policy and on
the economic benefit to the policyowner or beneficiary depends upon the
Company's tax status, upon the terms of the Policy and upon the tax status of
the individual concerned.
Tax Status of the Company and the Separate Account
The Company is taxed as an insurance Company under Subchapter L of the Internal
Revenue Code of 1986 (the "Code"). The Separate Account is not a separate
taxable entity and its operations are taken into account by the Company in
determining its income tax liability. All investment income and realized net
capital gains on the assets of the separate account are reinvested and taken
into account in determining Policy Values and are automatically applied to
increase the book reserves associated with the policies. Under existing federal
income tax law, neither the investment income nor any net capital gains of the
Separate Account, are taxed to the Company to the extent those items are applied
to increase reserves associated with the policies.
Charges for Taxes
The Company imposes a federal tax charge equal to 1.25% of premiums received
under the Policy to compensate for the federal income tax liability it incurs
under Section 848 of the Code by reason of its receipt of premiums under the
Policy. The Company believes that this charge is reasonable in relation to the
increased tax burden it incurs as a result of Section 848. No other charge is
currently made on the Separate Account for federal income taxes of the Company
that may be attributable to the Separate Account. Periodically, the Company
reviews the appropriateness of charges to the Separate Account for the Company's
federal income taxes, and in the future, a charge may be made for federal income
taxes incurred by the Company that are attributable to the Separate Account. In
addition, depending on the method of calculating interest on Policy Values
allocated to the Fixed Account, a charge may also be imposed for the Policy's
share of the Company's federal income taxes attributable to the Fixed Account.
Under current laws, the Company may incur state or local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant.
If there is a material change in applicable state or local tax laws, the Company
reserves the right to charge the Separate Account for the portion of such taxes
, if any, attributable to the Separate Account.
Diversification Standards
In addition to other requirements imposed by the Code, a Policy will qualify as
life insurance under the Code only if the diversification requirements of Code
Section 817(h) are satisfied by each Separate Account in which any of the Policy
Values are held. To assure that each Policy continues to qualify as life
insurance for federal income tax purposes, the Company intends to comply with
Code Section 817(h) and the regulations thereunder.
Life Insurance Status of Policy
The Company believes that the Policy meets the statutory definition of life
insurance under Code Section 7702 and that the policyowner and beneficiary of
any Policy will receive the same federal income tax treatment as that accorded
to owners and beneficiaries of fixed benefit life insurance policies.
Specifically, the death benefit under the Policy will be excludable from the
gross income of the beneficiary subject to the terms and conditions of Section
101(a)(1) of the Code. (Death benefits under a "modified endowment contract" as
discussed below are treated in the same manner as death benefits under life
insurance contracts that are not so classified.)
In addition, unless the Policy is a "modified endowment contract," in which case
the receipt of any loan under the Policy may result in recognition of income to
the policyowner, the policyowner will not be deemed to be in constructive
receipt of the Policy Values, including increments thereon, under the Policy
until proceeds of the Policy are received upon a total or partial surrender of
the Policy.
Modified Endowment Contract Status
A Policy will be a modified endowment contract if it satisfies the definition of
life insurance set out in the Internal Revenue Code, but it either fails the
additional "7-pay test" set forth in Code Section 7702A or was received in
exchange for a modified endowment contract. A Policy will fail the 7-pay test if
the accumulated amount paid under the contract at any time during the first
seven contract years exceeds the total premiums that would have been payable
under a Policy providing for guaranteed benefits upon the payment of seven level
annual premiums. A Policy received in exchange for a modified endowment contract
will be taxed as a modified endowment contract even if it would otherwise
satisfy the 7-pay test.
While the 7-pay test is generally applied as of the time the Policy is issued,
certain changes in the contractual terms of a Policy will require a Policy to be
retested to determine whether the change has caused the Policy to become a
modified endowment contract. For example, a reduction in death benefits during
the first seven contract years will cause the Policy to be retested as if it had
originally been issued with the reduced death benefit.
In addition, if a "material change" occurs at any time while the Policy is in
force, a new 7-pay test period will start and the Policy will need to be
retested to determine whether it continues to meet the 7-pay test. The term"
material change" generally includes increases in death benefits, but does not
include an increase in death benefits which is attributable to the payment of
premiums necessary to fund the lowest level of death benefits payable during the
first seven contract years, or which is attributable to the crediting of
interest with respect to such premiums.
Because the Policy provides for flexible premium payments, the Company has
instituted procedures to monitor whether increases in death benefits or
additional premium payments cause either the start of a new seven-year test
period or the taxation of distributions and loans. All additional premium
payments will be considered in these determinations.
If a Policy fails the 7-pay test, all distributions (including loans) occurring
in the year of failure and thereafter will be subject to the rules for modified
endowment contracts. A recapture provision also applies to loans and
distributions that are received in anticipation of failing the 7-pay test. Under
the Code, any distribution or loan made within two years prior to the date that
a Policy fails the 7-pay test is considered to have been made in anticipation of
the failure.
Policy Surrenders and Partial Surrenders
Upon a total surrender of a Policy, the policyowner will recognize ordinary
income for federal tax purposes to the extent that the net surrender value
exceeds the investment in the contract (the total of all premiums paid but not
previously recovered plus any other consideration paid for the Policy). The tax
consequences of a partial surrender from a Policy will depend upon whether the
partial surrender results in a reduction of future benefits under the Policy and
whether the Policy is a modified endowment contract.
If the Policy is not a modified endowment contract, the general rule is that a
partial surrender from a Policy is taxable only to the extent that it exceeds
the total investment in the contract. An exception to this general rule applies,
however, if a reduction of future benefits occurs during the first 15 years
after a Policy is issued and there is a cash distribution associated with that
reduction. In such a case, the Code prescribes a formula under which the
policyowner may be taxed on all or a part of the amount distributed. After 15
years, cash distributions from a Policy that is not a modified endowment
contract will not be subject to federal income tax, except to the extent they
exceed the total investment in the contract. The Company suggests that a
policyowner consult with a tax advisor in advance of a proposed decrease in face
amount or a partial surrender. In addition, any amounts distributed under a
"modified endowment contract" (including proceeds of any loan) are taxable to
the extent of any accumulated income in the Policy. In general, the amount which
may be subject to tax is the excess of the Policy Value (both loaned and
unloaned) over the previously unrecovered premiums paid.
Under certain circumstances, a distribution under a modified endowment contract
(including a loan) may be taxable even though it exceeds the amount of
accumulated income in the Policy. This can occur because for purposes of
determining the amount of income received upon a distribution (or loan) from a
modified endowment contract, the Code requires the aggregation of all modified
endowment contracts issued to the same policyowner by an insurer and its
affiliates within the same calendar year. Therefore, loans and distributions
from any one such Policy are taxable to the extent of the income accumulated in
all the modified endowment contracts required to be so aggregated.
If any amount is taxable as a distribution of income under a modified endowment
contract (as a result of a total surrender, a partial surrender or a loan), it
may also be subject to a 10% penalty tax under Code Section 72(v). Limited
exceptions from the additional penalty tax are available for certain
distributions to individual policyowners. The penalty tax will not apply to
distributions: (i) that are made on or after the date the taxpayer attains age
59 1/2; or (ii) that are attributable to the taxpayer's becoming disabled; or
(iii) that are part of a series of substantial equal periodic payments (made not
less frequently than annually) made for the life or life expectancy of the
taxpayer.
Policy Loans and Interest Deductions
The Company also believes that under current law any loan received under the
Policy will be treated as a Policy debt of a policyowner and that, unless the
Policy is a modified endowment contract, no part of any loan under a Policy will
constitute income to the policyowner. If the Policy is a modified endowment
contract (see discussion above) loans will be fully taxable to the extent of the
income in the Policy (and in any other contracts with which it must be
aggregated) and could be subject to the additional 10 percent tax.
Code Section 264 imposes stringent limitations on the deduction of interest paid
or accrued on loans in connection with a Policy. In addition, under the
"personal" interest limitation provisions of Code Section 163, no deduction is
allowed for interest on any Policy loan if the proceeds are used for personal
purposes, even if the Policy and loan otherwise meet the requirements of Code
Section 264. The limitations on deductibility of personal interest may not apply
to disallow all or part of the interest expense as a deduction if the loan
proceeds are used for "trade or business" or "investment" purposes. The Company
suggests consultation with a tax advisor for further guidance.
Corporate Alternative Minimum Tax
Ownership of a Policy by a corporation may affect the policyowner's exposure to
the corporate alternative maximum tax. In determining whether it is subject to
alternative minimum tax a corporate policyowner must make two computations.
First, the corporation must take into account a portion of the current year's
increase in the built-in gain in its corporate-owned policies. Second, the
corporation must take into account a portion of the amount by which the death
benefits received under any Policy exceed the sum of (i) the premiums paid on
that Policy in the year of death, and (ii) the corporation's basis in the Policy
(as measured for alternative minimum tax purposes) as of the end of the
corporation's tax year immediately preceding the year of death.
Exchange or Assignments of Policies
A change of the policyowner or the insured or an exchange or assignment of a
Policy may have significant tax consequences depending on the circumstances. For
example, an assignment or exchange of a Policy may result in taxable income to
the transferring policyowner. Further, Code Section 101(a) provides, subject to
certain exceptions, that where a Policy has been transferred for value, only the
portion of the death benefit which is equal to the total consideration paid for
the Policy may be excluded from gross income. For complete information with
respect to Policy assignments and exchanges, a qualified tax advisor should be
consulted.
Withholding
Under Section 3405 of the Code, withholding is generally required with respect
to certain taxable distributions under insurance contracts. In the case of
periodic payments (payments made as an annuity or on a similar basis), the
withholding is at graduated rates (as though the payments were employee wages).
With respect to non-periodic distributions, the withholding is at a flat rate of
10%. A Policyholder can elect to have either non-periodic or periodic payments
made without withholding except where the policyowner's tax identification
number has not been furnished to the Company or the Internal Revenue Service has
notified the Company that the tax identification number furnished by the
policyowner is incorrect.
Taxation of Accelerated Death Benefits
The Company provides accelerated death benefits based upon a lien method.
It is unclear whether benefits paid under this rider are taxable. For
information regarding taxation of accelerated death benefits, a qualified tax
advisor should be consulted.
Other Tax Issues
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each policyowner or beneficiary.
EMPLOYEE BENEFIT PLANS
Employers and employee organizations should consider, in consultation with
counsel, the impact of Title VII of the Civil Rights Act of 1964 on the purchase
of a Policy in connection with an employment-related insurance or benefit plan.
The United States Supreme Court held, in the 1983 decision of Arizona Governing
Committee v. Norris, that, under Title VII, optional annuity benefits under a
deferred compensation plan could not vary on the basis of sex. Policies are
available for use in connection with such employment-related insurance and
benefit plans which do not vary in any respect between male and female insureds
of a particular age and underwriting classification.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or
to which the assets of any of the Divisions thereof are subject. The Company is
not involved in any litigation that is of material importance in relation to its
total assets or that relate to the Separate Account.
LEGAL OPINION
Legal matters applicable to the issue and sale of the Policies, including
the right of the Company to issue Policies under Iowa insurance law, have been
passed upon by Gregg R. Narber, Senior Vice President and General Counsel of the
Company.
EXPERTS
The financial statements of Principal Mutual Life Insurance Company Variable
Life Separate Account and Principal Mutual Life Insurance Company which are
included in this registration statement have been audited by Ernst & Young LLP,
independent auditors, for the periods indicated in their reports thereon which
appear elsewhere in the registration statement.
REGISTRATION STATEMENT
A registration statement has been filed with the Commission under the
Securities Act of 1933, as amended, with respect to the Policies offered hereby.
This Prospectus does not contain all the information set forth in the
registration statement and the amendments and exhibits to the registration
statement to all of which reference is made for further information concerning
the Separate Account, the Company and the Policy offered hereby. Statements
contained in this Prospectus as to the contents of the Policy and other legal
instruments are summaries. For a complete statement of the terms thereof,
reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of the Company will be added by amendment.
APPENDIX - A
SAMPLE ILLUSTRATIONS OF POLICY VALUES, SURRENDER VALUES AND DEATH BENEFITS
The following illustrations have been prepared to help show how Policy
Values and Surrender Values under the Policies change with investment
performance and differing death benefit options. The illustrations show how
death benefits and values would vary over time if the return on assets held by
the Mutual Funds were uniform, gross, after tax, annual rates of 0%, 6% and 12%.
The death benefits and values would be different from those shown if the return
averaged 0%, 6% and 12%, but fluctuated above and below those averages during
individual years. Both Death Benefit Option 1 and Death Benefit Option 2 are
illustrated.
The four illustrations set out show hypothetical Policies issued to
45-year-old male nonsmokers. Illustrations for females or for younger males
would be more favorable; illustrations for older males or for smokers would be
less favorable than those presented. The Policies are illustrated on the basis
of $4,000 Target Premium and a face amount at issue of $250,000. The first and
third illustrations show the selection of Death Benefit Option 1; the second and
fourth, Death Benefit Option 2.
The illustrations reflect all Policy charges (including deductions from
premiums for sales loads and state and federal taxes; monthly deductions from
Policy Value of administration charges, cost of insurance charges and mortality
and expense risk charges; and the CDAC and CDSL that may be deducted upon full
surrenders or lapse of a Policy) and the average fees and expenses of the Mutual
Funds. The first two illustrations reflect current administrative and cost of
insurance charges. The third and fourth illustrations reflect the guaranteed
maximum administration and cost of insurance charges. The average fees and
expenses of the Mutual Funds may decrease or increase in the future making
operating expenses actually incurred by the Mutual Funds differ from the .73%
average rate shown in the illustrations.
The four illustrations are based on the assumption that payments are made
in accordance with a $4,000 annual Target Premium schedule, that no values are
allocated to the Fixed Account, no changes in death benefit option or face
amount are made, no policy loans or partial surrenders occur, and that no riders
are in effect. Upon request, the Company will prepare a comparable illustration
reflecting the proposed insured's actual age, sex, risk classification and
desired policy features.
From time to time, in advertisements or sales literature for the Policies
that quote performance data for one or more of the Mutual Funds, the Company may
include Policy Values, Surrender Values and death benefit figures computed using
the same methodology as that used in the following illustrations, but with the
average annual total return of the Fund for which performance data is shown in
the advertisement replacing the hypothetical rates of return shown in the
following tables. This information may be shown in the form of graphs, charts,
tables and examples and may include data for periods prior to the offering of
the Policies for which a Mutual Funds has had performance (with Policy charges
assumed to be equal to current charges for any periods prior to offering the
Policies).
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
PrinFlex Life
Male Age 45 Non-Smoker
Assuming Current Charges
Planned Premium 4000 Initial Face Amount 250,000
Death Benefit Option 1
Death Benefit (2) Accumulated Value (2)
Assuming Hypothetical Assuming Hypothetical Surrender Value (2)
Accumu- Gross Annual Gross Annual Assuming Hypothetical Gross
End of lated Investment Return Investment Return of Annual Investment Return of
Year Premiums 0% 6% 12% 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,200 250,000 250,000 250,000 2,931 3,129 3,327 1,080 1,278 1,476
2 8,610 250,000 250,000 250,000 5,795 6,373 6,974 3,464 4,042 4,643
3 13,241 250,000 250,000 250,000 8,559 9,702 10,939 4,428 5,571 6,808
4 18,103 250,000 250,000 250,000 11,251 13,149 15,285 7,121 9,018 11,154
5 23,208 250,000 250,000 250,000 13,872 16,717 20,051 9,741 12,587 15,920
6 28,568 250,000 250,000 250,000 16,412 20,405 25,273 12,971 16,964 21,832
7 34,196 250,000 250,000 250,000 18,873 24,217 31,001 16,118 21,462 28,246
8 40,106 250,000 250,000 250,000 21,238 28,143 37,271 19,173 26,077 35,206
9 46,312 250,000 250,000 250,000 23,494 32,173 44,132 22,119 30,798 42,756
10 52,827 250,000 250,000 250,000 25,637 36,311 51,762 24,947 35,621 51,073
11 59,669 250,000 250,000 250,000 27,664 40,557 60,344 27,664 40,557 60,344
12 66,852 250,000 250,000 250,000 29,620 44,963 69,862 29,620 44,963 69,862
13 74,395 250,000 250,000 250,000 31,511 49,541 80,428 31,511 49,541 80,428
14 82,314 250,000 250,000 250,000 33,364 54,628 92,190 33,364 54,628 92,190
15 90,630 250,000 250,000 250,000 35,103 59,906 105,229 35,103 59,906 105,229
16 99,361 250,000 250,000 250,000 36,704 65,366 119,686 36,704 65,366 119,686
17 108,530 250,000 250,000 250,000 38,152 71,010 135,731 38,152 71,010 135,731
18 118,156 250,000 250,000 250,000 39,438 76,844 153,565 39,438 76,844 153,565
19 128,264 250,000 250,000 250,000 40,550 82,876 173,419 40,550 82,876 173,419
20 138,877 250,000 250,000 250,000 41,493 89,128 195,564 41,493 89,128 195,564
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
PrinFlex Life
Male Age 45 Non-Smoker
Assuming Guaranteed Charges
Planned Premium 4000 Initial Face Amount 250,000
Death Benefit Option 1
Death Benefit (2) Accumulated Value (2)
Assuming Hypothetical Assuming Hypothetical Surrender Value (2)
Accumu- Gross Annual Gross Annual Assuming Hypothetical Gross
End of lated Investment Return Investment Return of Annual Investment Return of
Year Premiums 0% 6% 12% 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,200 250,000 250,000 250,000 2,882 3,078 3,274 1,030 1,226 1,423
2 8,610 250,000 250,000 250,000 5,699 6,270 6,865 3,367 3,939 4,534
3 13,241 250,000 250,000 250,000 8,416 9,545 10,768 4,285 5,415 6,637
4 18,103 250,000 250,000 250,000 11,062 12,936 15,045 6,932 8,805 10,914
5 23,208 250,000 250,000 250,000 13,638 16,445 19,734 9,507 12,314 15,604
6 28,568 250,000 250,000 250,000 16,134 20,071 24,873 12,693 16,630 21,432
7 34,196 250,000 250,000 250,000 18,550 23,818 30,507 15,795 21,063 27,752
8 40,106 250,000 250,000 250,000 20,871 27,675 36,675 18,806 25,610 34,609
9 46,312 250,000 250,000 250,000 23,084 31,634 43,420 21,708 30,259 42,045
10 52,827 250,000 250,000 250,000 25,184 35,697 50,851 24,494 35,007 50,161
11 59,669 250,000 250,000 250,000 27,168 39,864 59,278 27,168 39,864 59,278
12 66,852 250,000 250,000 250,000 29,082 44,187 68,623 29,082 44,187 68,623
13 74,395 250,000 250,000 250,000 30,930 48,678 78,996 30,930 48,678 78,996
14 82,314 250,000 250,000 250,000 32,742 53,668 90,544 32,742 53,668 90,544
15 90,630 250,000 250,000 250,000 34,439 58,843 103,342 34,439 58,843 103,342
16 99,361 250,000 250,000 250,000 35,999 64,195 117,530 35,999 64,195 117,530
17 108,530 250,000 250,000 250,000 37,405 69,723 133,273 37,405 69,723 133,273
18 118,156 250,000 250,000 250,000 38,649 75,434 150,768 38,649 75,434 150,768
19 128,264 250,000 250,000 250,000 39,719 81,334 170,240 39,719 81,334 170,240
20 138,877 250,000 250,000 250,000 40,620 87,445 191,956 40,620 87,445 191,956
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
PrinFlex Life
Male Age 45 Non-Smoker
Assuming Current Charges
Planned Premium 4000 Initial Face Amount 250,000
Death Benefit Option 2
Death Benefit (2) Accumulated Value (2)
Assuming Hypothetical Assuming Hypothetical Surrender Value (2)
Accumu- Gross Annual Gross Annual Assuming Hypothetical Gross
End of lated Investment Return Investment Return of Annual Investment Return of
Year Premiums 0% 6% 12% 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,200 252,922 253,119 253,317 2,922 3,119 3,317 1,070 1,268 1,465
2 8,610 255,768 256,342 256,941 5,768 6,342 6,941 2,814 3,389 3,987
3 13,241 258,503 259,637 260,865 8,503 9,637 10,865 4,372 5,507 6,734
4 18,103 261,156 263,035 265,150 11,156 13,035 15,150 7,025 8,904 11,019
5 23,208 263,727 266,538 269,829 13,727 16,538 19,829 9,596 12,407 15,698
6 28,568 266,207 270,139 274,932 16,207 20,139 24,932 12,766 16,699 21,491
7 34,196 268,594 273,842 280,500 18,594 23,842 30,500 15,839 21,087 27,745
8 40,106 270,871 277,629 286,559 20,871 27,629 36,559 18,806 25,564 34,494
9 46,312 273,022 281,487 293,141 23,022 31,487 43,141 21,646 30,111 41,765
10 52,827 275,041 285,410 300,290 25,041 35,410 50,290 24,351 34,720 49,600
11 59,669 276,924 289,394 308,382 26,924 39,394 58,382 26,924 39,394 58,382
12 66,852 278,721 293,493 317,290 28,721 43,493 67,290 28,721 43,493 67,290
13 74,395 280,437 297,714 327,105 30,437 47,714 77,105 30,437 47,714 77,105
14 82,314 282,106 302,385 337,958 32,106 52,385 87,958 32,106 52,385 87,958
15 90,630 283,636 307,166 349,865 33,636 57,166 99,865 33,636 57,166 99,865
16 99,361 285,001 312,034 362,906 35,001 62,034 112,906 35,001 62,034 112,906
17 108,530 286,179 316,970 377,182 36,179 66,970 127,182 36,179 66,970 127,182
18 118,156 287,160 321,960 392,809 37,160 71,960 142,809 37,160 71,960 142,809
19 128,264 287,929 326,990 409,915 37,929 76,990 159,915 37,929 76,990 159,915
20 138,877 288,493 332,065 428,663 38,493 82,065 178,663 38,493 82,065 178,663
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
PrinFlex Life
Male Age 45 Non-Smoker
Assuming Guaranteed Charges
Planned Premium 4000 Initial Face Amount 250,000
Death Benefit Option 2
Death Benefit (2) Accumulated Value (2)
Assuming Hypothetical Assuming Hypothetical Surrender Value (2)
Accumu- Gross Annual Gross Annual Assuming Hypothetical Gross
End of lated Investment Return Investment Return of Annual Investment Return of
Year Premiums 0% 6% 12% 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,200 252,873 253,068 253,264 2,873 3,068 3,264 1,021 1,217 1,412
2 8,610 255,671 256,240 256,832 5,671 6,240 6,832 2,718 3,287 3,879
3 13,241 258,360 259,481 260,695 8,360 9,481 10,695 4,229 5,351 6,564
4 18,103 260,968 262,823 264,911 10,968 12,823 14,911 6,838 8,693 10,781
5 23,208 263,495 266,268 269,516 13,495 16,268 19,516 9,364 12,137 15,385
6 28,568 265,931 269,809 274,536 15,931 19,809 24,536 12,490 16,368 21,096
7 34,196 268,275 273,448 280,013 18,275 23,448 30,013 15,520 20,693 27,258
8 40,106 270,509 277,169 285,972 20,509 27,169 35,972 18,444 25,104 33,907
9 46,312 272,619 280,958 292,443 22,619 30,958 42,443 21,243 29,582 41,068
10 52,827 274,597 284,809 299,471 24,597 34,809 49,471 23,907 34,120 48,781
11 59,669 276,439 288,719 307,424 26,439 38,719 57,424 26,439 38,719 57,424
12 66,852 278,197 292,740 316,177 28,197 42,740 66,177 28,197 42,740 66,177
13 74,395 279,874 296,879 325,821 29,874 46,879 75,821 29,874 46,879 75,821
14 82,314 281,504 301,460 336,485 31,504 51,460 86,485 31,504 51,460 86,485
15 90,630 282,997 306,147 348,182 32,997 56,147 98,182 32,997 56,147 98,182
16 99,361 284,324 310,917 360,991 34,324 60,917 110,991 34,324 60,917 110,991
17 108,530 285,465 315,748 375,009 35,465 65,748 125,009 35,465 65,748 125,009
18 118,156 286,410 320,630 390,351 36,410 70,630 140,351 36,410 70,630 140,351
19 128,264 287,144 325,546 407,141 37,144 75,546 157,141 37,144 75,546 157,141
20 138,877 287,673 330,502 425,537 37,673 80,502 175,537 37,673 80,502 175,537
</TABLE>
<PAGE>
Appendix B
Target Premiums
Annual per $1,000 Face Amount
Nonsmoker and Smoker
Age* Male Female Unisex Age* Male Female Unisex
0 3.08 2.60 3.01 44 13.59 11.36 13.30
1 3.10 2.62 3.04 45 14.31 11.93 14.00
2 3.16 2.68 3.10 46 15.08 12.53 14.75
3 3.21 2.73 3.14 47 15.90 13.16 15.54
4 3.24 2.76 3.18 48 16.77 13.83 16.39
5 3.28 2.80 3.21 49 17.70 14.54 17.29
6 3.31 2.83 3.25 50 18.68 15.30 18.24
7 3.42 2.92 3.36 51 19.74 16.10 19.27
8 3.51 2.99 3.44 52 20.86 16.94 20.35
9 3.60 3.07 3.53 53 22.05 17.85 21.50
10 3.68 3.15 3.61 54 23.32 18.80 22.73
11 3.82 3.22 3.74 55 24.67 19.82 24.04
12 4.03 3.43 3.96 56 26.11 20.90 25.43
13 4.15 3.55 4.07 57 27.65 22.05 26.92
14 4.28 3.62 4.19 58 29.30 23.29 28.52
15 4.40 3.75 4.32 59 31.05 24.62 30.21
16 4.51 3.86 4.42 60 32.93 26.06 32.04
17 4.60 3.94 4.51 61 34.94 27.60 33.99
18 4.72 4.06 4.63 62 37.10 29.26 36.08
19 4.85 4.13 4.76 63 39.40 31.06 38.32
20 4.99 4.27 4.89 64 41.86 32.97 40.70
21 5.08 4.36 4.99 65 44.48 35.02 43.25
22 5.24 4.52 5.15 66 47.29 37.21 45.98
23 5.36 4.60 5.26 67 50.30 39.58 48.91
24 5.42 4.66 5.32 68 53.52 42.14 52.04
25 5.50 4.74 5.40 69 56.98 44.93 55.41
26 5.74 4.94 5.64 70 60.71 47.98 59.06
27 5.99 5.16 5.88 71 64.73 51.30 62.98
28 6.26 5.39 6.15 72 69.02 54.93 67.19
29 6.54 5.63 6.42 73 73.62 58.86 71.70
30 6.85 5.89 6.73 74 78.48 63.12 76.48
31 7.17 6.16 7.04 75 83.65 67.71 81.58
32 7.51 6.44 7.37 76 91.26 75.72 89.24
33 7.87 6.74 7.72 77 97.89 82.52 95.89
34 8.26 7.06 8.10 78 104.84 89.87 102.90
35 8.66 7.40 8.50 79 112.34 98.02 110.48
36 9.10 7.76 8.93 80 120.62 107.28 118.89
37 9.55 8.13 9.37 81 129.90 117.93 128.35
38 10.03 8.53 9.84 82 140.37 130.21 139.05
39 10.54 8.94 10.33 83 151.98 144.06 150.95
40 11.09 9.38 10.87 84 164.50 159.33 163.83
41 11.66 9.83 11.42 85 177.65 175.84 177.41
42 12.26 10.32 12.01
43 12.91 10.82 12.64
* Last Birthday.
<PAGE>
PART II. OTHER INFORMATION
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 adopted under the authority conferred in that
section.
UNDERTAKING PURSUANT TO RULE 484
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant, 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 had been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
REPRESENTATIONS PURSUANT TO RULE 6e-3(T)
This filing is made pursuant to Rules 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)(A) under the Investment Company Act of 1940, with respect to
the Policies described in the prospectus. 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 risks charge is within
the range of industry practice for comparable contracts.
(3) The Registrant has concluded that there is a reasonable
likelihood that the distribution financing arrangement for the
Variable Life Separate Account will benefit the separate account
and policyowners, and it will keep and make available to the
Commission on request a memorandum setting forth the basis for
this representation.
(4) The Variable Life Separate Account will invest only in
management investment companies which have undertaken to have a
board of directors, a majority of whom are not interested
persons of the Company, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
The methodology used to support the representation made in paragraph (2) above
is based upon an analysis of the mortality and expense risks charges contained
in other variable life insurance policies, including scheduled and flexible
premium products. 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 REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The prospectus, consisting of 43 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:
G.R. Narber, Esq.
The following exhibits:
1. Copies of all exhibits required by paragraph A of the
instructions as to exhibits in Form N-8B-2 are set forth below
under designations based on such instructions:
1.A(1) Resolution of Executive Committee of Board of Directors of
Principal Mutual Life Insurance Company establishing the Variable
Life Separate Account.
1.A(3)(a) Distribution Agreement between Princor Financial Services
Corporation and Principal Mutual Life Insurance Company.
1.A(3)(a)(i) Form of Selling Agreement.
1.A(3)(b) Registered Representative Agreement.
1.A(3)(c) Schedule of sales commissions.
1.A(5)(a) Form of PrinFlex Life Insurance Policy.
1.A(5)(a)(i) Cost of Living Increase Rider.
1.A(5)(a)(ii) Waiver of Monthly Policy Charge Rider.
1.A(5)(a)(iii) Waiver of Specified Premium Rider.
1.A(5)(a)(iv) Accidental Death Benefit Rider.
1.A(5)(a)(v) Children Term Insurance Rider.
1.A(5)(a)(vi) Spouse Term Insurance Rider.
1.A(5)(a)(vii) Change of Insured Rider.
1.A(5)(a)(viii)Death Benefit Guarantee Rider.
1.A(5)(a)(ix) Salary Increase Rider.
1.A(5)(a)(x) Extra Protection Increase Rider.
1.A(5)(a)(xi) Accounting Benefits Rider.
1.A(5)(a)(xii) Extended Coverage Rider.
1.A(5)(a)(xiii)Accelerated Benefits Rider
1.A(5)(b) Form of PrinFlex Life Insurance Policy - Unisex Version.
1.A(5)(b)(i) Accidental Death Benefit Rider.
1.A(5)(b)(ii) Children Term Insurance Rider.
1.A(5)(b)(iii) Spouse Term Insurance Rider.
1.A(5)(b)(iv) Change of Insured Rider.
1.A(5)(b)(v) Death Benefit Guarantee Rider.
1.A(6)(a) Articles of Incorporation, as Amended of Principal Mutual Life
Insurance Company.
1.A(6)(b) By-laws of Principal Mutual Life Insurance Company.
1.A(10) Form of Application for PrinFlex Life Insurance Policy.
1.A(10(a) Form of Supplemental Application for PrinFlex Life Insurance
Policy.
2. Opinion and consent of G.R. Narber, Senior Vice President and
General Counsel of Principal Mutual Life Insurance Company.
3. No financial statements will be omitted from the prospectus
pursuant to Instruction 1(b) or (c) or Part I.
4. Not applicable.
5. Not applicable.
6. Consent of Ernst & Young.**
7. Description of Issuance, Transfer and Redemption Procedures
Pursuant to Rule 6e-3(T)(b)(12)(iii).**
8. Powers of Attorney of Directors of Principal Mutual Life
Insurance Company.
9. Opinion and consent of Lisa Huebert, Assistant Actuary.
- ---------------------------
** To be filed by Amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this 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 the city of Des Moines, and the state of Iowa, on
the 3rd day of January, 1996.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
VARIABLE LIFE SEPARATE ACCOUNT
(Registrant)
By: PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By ______________________________________________
David J. Drury Chairman and Chief Executive
Officer
Attest:
- -----------------------------------
Joyce N. Hoffman
Vice President and
Corporate Secretary
<PAGE>
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
Signature Title Date
Director, Chairman and
D. J. Drury Chief Executive Officer 01/03/96
Second Vice President and
D. C. Cunningham Controller (Principal
Accounting Officer) 01/03/96
Executive Vice
C. E. Rohm President (Principal
Financial Officer) 01/03/96
(M. V. Andringa)* Director 01/03/96
M. V. Andringa
(R. M. Davis)* Director 01/03/96
R. M. Davis
(C. D. Gelatt, Jr.)* Director 01/03/96
C. D. Gelatt, Jr.
(G. D. Hurd)* Director 01/03/96
G. D. Hurd
(T. M. Hutchison)* Director 01/03/96
T. M. Hutchison
(C.S. Johnson)* Director 01/03/96
C.S. Johnson
(W. T. Kerr)* Director 01/03/96
W. T. Kerr
(L. Liu)* Director 01/03/96
L. Liu
(V. H. Loewenstein)* Director 01/03/96
V. H. Loewenstein
(J. R. Price, Jr.)* Director 01/03/96
J. R. Price, Jr.
(B. A. Rice)* Director 01/03/96
B. A. Rice
(J-P. C. Rosso)* Director 01/03/96
J-P. C. Rosso
(D. M. Stewart)* Director 01/03/96
D. M. Stewart
(E. E. Tallett)* Director 01/03/96
E. E. Tallett
(D. D. Thornton)* Director 01/03/96
D. D. Thornton
(F. W. Weitz)* Director 01/03/96
F. W. Weitz
*By
David J. Drury
Chairman and Chief Executive Officer
Pursuant to Powers of Attorney
Previously Filed or Included Herein
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT INDEX
Page Number in
Sequential Numbering
Exhibit No. Description Where Exhibit Can Be Found
<S> <C> <C>
1.A(1) Resolution of Executive Committee 56
of Board of Directors of Depositor
establishing Variable Life Separate
Account.
1.A(3)(a) Distribution Agreement Between 59
Depositor and Principal Underwriter.
1.A(3)(a)(i) Form of Selling Agreement. 61
1.A(3)(b) Registered Representative Agreement. 64
1.A(3)(c) Schedule of Sales Commissions. 68
1.A(5)(a) PrinFlex Life Policy. 70
1.A(5)(a)(i) Cost of Living Increase Rider. 95
1.A(5)(a)(ii) Waiver of Monthly Policy Charge Rider. 97
1.A(5)(a)(iii) Waiver of Specified Premium Rider. 100
1.A(5)(a)(iv) Accidental Death Benefit Rider. 103
1.A(5)(a)(v) Children Term Insurance Rider. 105
1.A(5)(a)(vi) Spouse Term Insurance Rider. 107
1.A(5)(a)(vii) Change of Insured Rider. 109
1.A(5)(a)(viii) Death Benefit Guarantee Rider. 111
1.A(5)(a)(ix) Salary Increase Rider. 112
1.A(5)(a)(x) Extra Protection Increase Rider. 115
1.A(5)(a)(xi) Accounting Benefits Rider. 117
1.A(5)(a)(xii) Extended Coverage Rider. 118
1.A(5)(a)(xiii) Accelerated Benefits Rider. 119
1.A(5)(b) PrinFlex Life Policy - Unisex Version. 121
1.A(5)(b)(i) Accidental Death Benefit Rider. 153
1.A(5)(b)(ii) Children Term Insurance Rider. 155
1.A(5)(b)(iii) Spouse Term Insurance Rider. 158
1.A(5)(b)(iv) Change of Insured Rider. 160
1.A(5)(b)(v) Death Benefit Guarantee Rider. 162
1.A(6)(a) Articles of Incorporation, as Amended, 163
of Depositor.
1.A(6)(b) By-laws of Depositor. 166
1.A(10) Form of Application for the PrinFlex 170
Life Policy.
1.A(10)(a) Form or Supplemental Application 175
For the PrinFlex Life Policy.
2 Opinion and consent of G.R. Narber, 178
Senior Vice President and General
Counsel.
8 Powers of Attorney of Directors of 180
Principal Mutual Life Insurance
Company.
9 Opinion and consent of Lisa Huebert, 187
Senior Actuary.
</TABLE>
Executive Committee Resolution #3120 (passed November 2, 1987)
RESOLVED that Board Resolution No. 12324 of August 19, 1985, is
replaced and superseded as follows:
WHEREAS, Principal Mutual Life Insurance Company intends to issue
individual variable life insurance policies for which a separate account must be
established;
WHEREAS, payments under these policies may be allocated by policy-
owners to one or more investment alternatives;
NOW, THEREFORE, BE IT RESOLVED, that there is hereby created and
established a separate account, to be known as the Variable Life Separate
Account, for the receipt of payments under variable life insurance policies to
be issued by the Company.
BE IT FURTHER RESOLVED, that there are hereby established, for the
purpose of providing alternate investment choices for variable life
policyowners, six separate divisions within the Variable Life Separate Account,
an Aggressive Growth Division, a Bond Division, a Common Stock Division, a High
Yield Division, a Managed Division and a Money Market Division. All income and
expenses and all gains or losses, whether or not realized, experienced with
respect to assets for policies participating in a division of the Variable Life
Separate Account shall be credited to or charged against those assets,
unaffected by income and expenses or gains or losses experienced with respect to
assets for any other division of the Variable Life Separate Account, or any
other separate account, or the general account of the Company.
BE IT FURTHER RESOLVED, that the appropriate officers of the Company,
as shall be designated by the President or Chairman of the Board, are hereby
authorized and directed to prepare, execute and file with the Securities and
Exchange Commission in accordance with the provisions of the Securities Act of
1933, as amended, a registration statement or statements, and such amendments
thereto as may be necessary or appropriate, relating to such variable life
insurance contracts.
BE IT FURTHER RESOLVED, that the officers so designated are hereby
authorized if necessary to prepare, execute and file with the Securities and
Exchange Commission in accordance with the provisions of the Investment Company
Act of 1940, as amended, a registration statement or statements, and such
amendments thereto as may be necessary or appropriate, relating to such unit
investment trust or trusts.
BE IT FURTHER RESOLVED, that the officers so designated are hereby
authorized to take such further action as in their judgment may be necessary or
desirable to effect the registration of such variable life insurance contracts
and of such unit investment trust or trusts.
<PAGE>
Board Resolution #12503 (passed February 22-23, 1988)
RESOLVED, that Board Resolution No. 12057, October 18-19, 1982, is
amended and superseded by the following resolution, and all references in other
resolutions to that resolution, or resolutions which it replaced, are amended to
refer to this superseding resolution:
BE IT RESOLVED, that either the Chief Executive Officer, or the
President, is authorized to designate officers who shall have the power and
authority, acting directly or through other officers and employees to whom they
may delegate the power and authority:
1. To prepare an issue or amend appropriate individual life policies,
annuity contracts, disability and double indemnity riders or
contracts, and settlement option contracts; to determine the
appropriate plans of insurance, contracts, riders, amendments and
benefits to be offered; to determine underwriting practices,
including exclusions, restrictions, amount limits and
classification of risks; to determine premiums, fees or charges,
non-forfeiture values, and policy loan rates; to administer
benefit payments; and to make recommendations with respect to
dividends to be paid in connection with such policies or
contracts.
2. To prepare and issue or amend appropriate individual health
policies or contracts; to determine the appropriate plans of
insurance, contracts, riders, amendments and benefits to be
offered; to determine underwriting practices, including
exclusions, restrictions, amount limits and classification of
risks; to determine the premiums, fees or charges and
non-forfeiture values; to administer benefit payments; and to make
recommendations with respect to dividends to be paid in connection
with such policies or contracts.
3. To prepare and issue or amend appropriate group policies,
contracts, riders, amendments and other forms, including, but not
limited to, life plans, disability benefit plans, health plans,
dental plans, annuity plans and all other forms and plans,
contracts or agreements pertaining to or utilized in connection
with pension, profit sharing and other deferred compensation
plans; to determine the plans and benefits to be offered which may
include coverage on dependents as well as the participants in the
plans; to determine the underwriting practices, including the
exclusions, restrictions, amount limits, and classification of
risks; to determine premiums, fees or charges and values; to
administer benefit payments; and to make recommendations with
respect to dividends to be paid in connection with such
policies or contracts.
4. To prepare, issue or amend appropriate individual or group
contracts, policies or annuities providing for a separate account
or accounts and to establish, maintain, amend and discontinue such
account or accounts as are deemed necessary or advisable.
5. To enter into reinsurance and coinsurance contracts and treaties;
to take such actions as are required to liberalize, restrict or
otherwise change benefits, values and underwriting practices with
respect to any class or classes of persons or policyholders; to
cause the general account or any account maintained by the Company
to be segmented for the purposes of crediting investment results
separately to any class or classes of policyholders; to enter into
contracts or agreements wherein the Company undertakes to provide
formed insurance companies or other subsidiaries, the stock of
which will be owned directly or indirectly by the Company.
6. To do those other things deemed necessary or desirable to carry
out the business of Principal Mutual Life Insurance Company within
the powers of the corporation.
BE IT FURTHER RESOLVED, that either the corporate secretary or the
general counsel is authorized to certify the powers of the corporation and the
powers and authority of the officers or employees.
<PAGE>
MEMORANDUM
January 3, 1996
TO Dave Drury, Officers, S-6, x7-5921
FROM John Aschenbrenner, Ind. Staff, G-12, x7-5927
RE New Divisions for Variable Life Separate Account
In accordance with Principal Mutual Life Insurance Company Board Resolution
No. 12503 passed February 22, 1988, I have created the following new divisions
for the Variable Life Separate Account to reflect the funding options that will
be utilized by the variable life insurance policy Principal Mutual will issue in
the near future:
1. Aggressive Growth Division;
2. Asset Allocation Division;
3. Government Securities Division;
4. Growth Division;
5. World Division;
6. Fidelity Contrafund Division;
7. Fidelity Equity Income Division; and
8. Fidelity High-Income Division.
In addition, I have directed that the name of the Common Stock Division be
changed to the Capital Accumulation Division and the name of the existing
Aggressive Growth Division be changed to the Emerging Growth Division.
- -----------------------------------------
John Aschenbrenner
JA/sal
cc Barry Griswell
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made this 2nd day of January, 1996,
between Principal Mutual Life Insurance Company ("Principal Mutual"), a mutual
life insurance company organized under the laws of the State of Iowa, and
Princor Financial Services Corporation ("Princor"), an affiliate of Principal
Mutual organized under the laws of the State of Iowa.
WITNESSETH
WHEREAS, Principal Mutual has established Variable Life Separate Account
("Separate Account") and registered such Separate Account as an investment
company under the Investment Company Act of 1940 to fund variable life insurance
policies issued by Principal Mutual Life Insurance Company;
WHEREAS, Princor is registered with the Securities and Exchange
Commission as a broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc.; and
WHEREAS, Principal Mutual desires to issue certain PrinFlex Life
policies ("Policies") with respect to the Separate Account which will be sold
and distributed by and through Princor, and Princor is willing to sell and
distribute such Policies under the terms and conditions stated herein;
NOW, THEREFORE, the parties agree as follows:
1. Principal Mutual hereby appoints Princor as the principal underwriter of
the Policies issued with respect to the Separate Account, and Princor agrees to
use its best efforts to sell and distribute the Policies through its registered
representatives or through other broker-dealers registered under the Securities
and Exchange Act of 1934 whose registered representatives are authorized by
applicable law to sell variable life insurance policies.
2. All payments and other monies payable upon the sale, distribution,
renewal or other transaction involving the Policies shall be the property of and
be paid or remitted directly to Principal Mutual, who shall retain all such
payments and monies for its own account except to the extent such payments and
monies are allocated to the Separate Account. Princor shall not be deemed to
have any interest in such payments.
3. For the administrative convenience of the parties, Principal Mutual
shall:
(a) pay to the registered representatives of Princor the
commissions earned on the sale, distribution, renewal
or other transaction involvipg the Policies as
determined in the attached Commission Schedule, and
provide Princor with accurate records of all such
commissions paid on its behalf;
(b) pay to broker-dealers with whom Princor has entered
into a Selling Agreement for the distribution of the
Policies any applicable dealer allowance or other
compensation as provided in such Selling Agreement,
and provide Princor with accurate records of all such
payments paid on its behalf.
4. Principal Mutual shall pay to Princor an amount equal to the expenses
incurred by Princor in the performance of this Agreement. Princor shall provide
a statement of expenses to Principal Mutual at least semi-annually in a form and
manner agreed to by the parties.
5. Princor shall be solely responsible for the supervision and control of
the conduct and activities of its registered representatives with regard to the
sale and distribution of the Policies.
6. Principal Mutual shall assume the responsibility, including the costs
thereof, for all administrative and legal functions pertaining to the Policies
not otherwise specifically assumed by Princor in this agreement, including but
not limited to the following: filing of any policies with a state securities
commission as required by applicable state securities (Blue Sky) laws; the
preparation, printing and filing of prospectuses; the development, filing, and
compliance with federal and state securities laws and regulations of the
Separate Account; contract development; SEC registration; filing and compliance
with state insurance laws and regulations; underwriting; policy issue and
policyowner service functions; developing sales and promotional material; and
training agents.
7. Principal Mutual will prepare and maintain all the books and records in
connection with the offer and sales of variable life insurance policies which
are required to be maintained and preserved in accordance with applicable
securities law; and all such books and records are to be maintained and held by
Principal Mutual on behalf of and as agent for the broker-dealer whose property
they are and shall remain; and all such books and records will be made available
for inspection by the Securities and Exchange Commission at all times.
8. Principal Mutual shall send to each contractowner or such other person
as appropriate a confirmation as required by law or regulation of any
transaction made with respect to the Policies which shall reflect the true facts
of the transaction and show that confirmation of the transaction is being sent
on behalf of the broker-dealer acting in the capacity of agent for the insurance
company.
9. Princor and Principal Mutual may enter into agreements with other
broker-dealers duly licensed under applicable federal and state laws and with
their affiliated general agencies, if any, for the sale and distribution of the
Policies. The commission payable to registered representatives on the sale of
Policies thereunder may not exceed the amount shown on the attached Commission
Schedule.
10. This agreement may be terminated by either party upon 60 days prior
written notice. Princor shall promptly notify the Securities and Exchange
Commission of any such termination.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed on the day and year written above.
PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY
By:_____________________________
PRINCOR FINANCIAL SERVICES
CORPORATION
By:______________________________
BROKER-DEALER
MARKETING AND COMPENSATION AGREEMENT
FOR
PRINFLEX LIFE INSURANCE
AGREEMENT made this ________________ day of _________________________, 19____,
by and between Princor Financial Services Corporation (hereinafter called
Distributor), _______________________________ (hereinafter called Broker) and
Principal Mutual Life Insurance Company (hereinafter called Issuer).
Marketing
In consideration of the mutual agreements herein contained, the Parties hereto
agree as follows:
1. The Distributor hereby appoints the Broker to sell PrinFlex Variable Life
Insurance Policies (hereinafter called Policies) issued by the Issuer.
This Agreement is a selling agreement between broker-dealers. It does not
designate any party as the broker, agent, or employee of any other party.
Words and phrases in this Agreement given special meaning in any Policies
shall have that same special meaning in this Agreement unless specifically
defined otherwise herein.
2. The Broker hereby agrees to direct its best efforts to find purchasers for
Policies issued by the Issuer. The Broker does not undertake hereby to
sell any specific number of policies issued by the Issuer.
3. The Distributor shall provide the Broker with a reasonable number of
current prospectuses and such other material as the Distributor determines
to be desirable for use in connection with the sale of Policies or the
solicitation of applications for participation thereunder.
4. The Broker warrants that it is a member in good standing of the National
Association of Securities Dealers, Inc. (NASD) and will promptly notify
Distributor of any change in Broker's status as a member of the NASD.
5. The Broker represents that it is currently a member of SIPC and, while
this agreement is in effect, will continue to be a member of SIPC. The
Broker agrees to notify the Distributor if the Broker's SIPC membership
status changes.
6. The Broker warrants that the Broker and any person associated with or
acting for the Broker in the solicitation of applications for Policies
shall be qualified pursuant to the requirements of the National
Association of Securities Dealers, Inc. and appropriate federal and state
agencies regulating securities, insurance, any other aspect of the
Policies or the sale of them. The Broker shall be responsible for seeing
to such qualifications, and will indemnify and hold the Distributor and
the Issuer harmless for any failure to have all persons engaged in
solicitation properly licensed, registered, and appointed for securities
and insurance sales.
7. The Broker shall be responsible for supervising and controlling the
conduct and activities of its Registered Representatives with regard to
the sale and distribution of Policies. The Broker agrees to indemnify and
hold the Distributor and the Issuer harmless for claims and actions of any
sort which arise from the conduct and activities of the persons involved
in the sale and distribution of the Policies.
8. The Broker shall act only in its own behalf in making agreements with
Registered Representatives or other persons in connection with the
solicitation or sales of Policies.
9. The Broker agrees to maintain all books and records relating to the sale
of Policies or interests therein required to be maintained by the Broker
pursuant to the Securities Exchange Act of 1934, in conformity with the
requirements of Rules 17a-3 and 17a-4 under such Act, and to the
applicable securities or insurance laws of any state.
10. The Broker shall transmit promptly and directly to the Distributor all
Premiums collected by or paid to the Broker. All Policies are to be
delivered promptly, and any undelivered Policies are to be returned within
the time allowed or on demand.
COMPENSATION
With respect to the Policies issued by the Issuer and distributed by the
Distributor upon applications for Policies obtained by the Broker while this
agreement is in force, it is agreed that, subject to all provisions of this
Agreement and only so long as the Agreement remains in force, the Broker shall
receive Compensation in the form of a dealer concession as provided by Schedule
A attached hereto.
1. Compensation shall only be paid with respect to Policies issued while this
Agreement is in force. Determination of the Policies applicable to this
Agreement shall be by the Issuer.
2. The Distributor may, at any time, upon written notice to the Broker,
change any and all of the rates of Compensation set out herein.
3. If the Issuer, for any reason, refunds any Premiums, or any part thereof,
on any Policy, any Compensation paid on the amount refunded shall be
repaid to the Issuer by the Broker promptly and on demand.
4. Any indebtedness of any kind due to the Distributor or Issuer from the
Broker may be offset against any amount due the Broker.
5. No assignment of the Compensation payable pursuant to this Agreement shall
be valid unless it is accepted in writing by the Issuer and Distributor.
6. The maximum amount of selling commission the Broker may pay its
Representatives shall be 50% of premium up to target premium and 4% of
premium in excess of target premium in the first year, and 2% of premium
in years 2 and later.
7. Broker agrees that if its Representatives are paid for a portion of their
expenses incurred in the sale of Policies out of the Broker's dealer
concession, such payment will be conditioned upon the statement of the
Representative that he or she has actual unreimbursed expenses incurred
in the sale of the Policies equal to or exceeding the payment. Under no
circumstances shall the amount Broker pays the Representative as
reimbursement for such expenses exceed in any year forty percent (40%) of
the Commission paid in that year pursuant to paragraph 6 of this Agreement
immediately previous to this paragraph 7.
GENERAL
1. The Broker shall have no authority to incur any liability or debt against
the Distributor or the Issuer; accept risks or contracts of any kind;
make, alter, authorize or discharge any contract; extend the time of
payment of any Contributions; waive payments, fail to transmit any
Contributions collected promptly to the Distributor; use any advertising
or sales material which has not first been submitted to and approved by
the Distributor and the Issuer; nor bind the Distributor or the Issuer in
any way.
2. Any modifications of this Agreement must be in writing and signed by an
authorized office of the Distributor and the Issuer.
3. This Agreement may be terminated by either the Distributor, the Broker or
the Issuer upon written notice to the last known address of the other
parties.
4. This Agreement supersedes and replaces any and all prior agreements of the
Distributor or the Issuer with the Broker on the subject of Contracts or
the sale of them.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
in triplicate on the date first above written.
______________________________ (Broker)
By _______________________________________
PRINCOR FINANCIAL SERVICES CORPORATION
By _______________________________________
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By _______________________________________
The Principal Financial Group Princor Financial Registered Representative's
Des Moines, IA 50392-0200 Services Corporation Agreement
- --------------------------------------------------------------------------------
This agreement by and between Princor Financial Services Corporation
(herein referred to as "Princor" and ___________________________________,
registered representative (herein referred to as "RR", of the City of
___________________________, State of ___________________, for the sale of
registered products is effective on the ______ day of __________________, 19____
and is subject to the following terms and conditions.
Definitions
- --------------------------------------------------------------------------------
a. Throughout this Agreement, the terms "we", "us" and "our" mean Princor. The
terms "you" and "your" mean the RR executing this agreement.
b. Commissions mean payments made pursuant to the commission schedules for
registered products which are in effect at the time of sale. Those
commission schedules are incorporated into this agreement by reference.
c. Application means application or order for the purchase of registered
products.
d. Registered products means investment company shares underwritten by us,
investment company shares and units sold through us, limited partnership
interest, variable life insurance policies, variable annuity contracts, and
such other security products that we are or become qualified to sell.
e. "Advertising", "sales literature" and "sales material" shall have the
meanings given by the applicable securities laws.
Relationship
- ---------------------------------------------------------------------------
a. To the extent permitted by applicable securities laws, your relationship
with us is that of an independent contractor. Nothing contained herein or
elsewhere shall be construed to create an employer/employee relationship.
b. Subject to any applicable regulatory and licensing requirements, you are
responsible for developing your own sales prospects and determining when
and where you will solicit business.
c. You are not required to spend a certain portion of your time as RR.
However, you will be expected to solicit new applications if appropriate
and to service accounts.
d. We reserve the right to reject any applications, orders or payments
remitted by you and to refund to investors payments made by them.
<PAGE>
Duties and Responsibilities
- ----------------------------------------------------------------------------
You are agreeing to:
a. Solicit sales of products on our behalf .
b. Provide service to our clients.
c. Adhere strictly to the rules of the National Association of Securities
Dealers, Inc. (NASD), the acts and regulations of the Securities and
Exchange Commission (SEC), and all statutes and regulations of the states
and of the United States.
d. Follow our Field Representative OSJ Procedures (MM 66) and all other rules,
policies and directives concerning sales practices and conduct established
by us. Said procedures are incorporated herein by reference.
e. Obtain NASD registration and state licenses appropriate for your activities
as RR.
f. Acquire licenses, bonds and professional liability insurance coverage as
required by us or by the law. Provide us with evidence of such and of any
changes thereto.
g. Limit solicitations of applications to the state(s) in which you are
licensed. Solicitations shall be made only after receiving written
authorization from us.
h. Upon notification from us, pay promptly all registration and state license
renewal fees and such other costs as may be directed by us.
i. Immediately upon receipt, forward all applications and all payments.
j. Upon our demand or termination of this agreement, return all monies,
prospectuses, application forms, manuals, and other materials or supplies
furnished to you by us, or by anyone on our behalf.
Limitations
- -----------------------------------------------------------------------
You may not:
a. Incur any liability or debt against us.
b. Make contracts, promise reinstatement of contracts, or attempt to bind us.
c. Allow more time for payment of any amount by a client, applicant,
shareholder or other third party.
d. Extend credit to any person or entity in connection with a securities
account.
e. Accept payments or deposits from any client, applicant, shareholder or
third party except as expressly authorized by us.
f. Initiate legal proceedings in our name.
g. Make any representations concerning applications or products except as
contained in the current prospectus and supplementary sales materials or
sales literature approved by us.
h. Solicit in any manner in any state for which we have not given you written,
pre-approval to sell.
i. Solicit or sell any security, exempt or otherwise, that we have not given
you written, pre-approval to sell.
j. Send applications, or otherwise place orders, directly to a sponsor or
issuer other than Princor.
k. Call yourself a "financial planner", imply that you provide financial
planning services or charge fees for financial planning services unless
you first register as an investment advisor. We must review applications
for registration. You must comply with applicable federal and state
regulations.
Commissions
- -------------------------------------------------------------------------------
a. We will pay you commissions on commissionable transactions which have been
approved and accepted by us.
b. The commission rate will be determined by the commission schedules in
effect at the time of the sale.
c. Commission schedules may be changed at any time by us.
d. We may reduce the amount we pay you by an amount you owe us or our
affiliate(s).
<PAGE>
Prior Contract
- --------------------------------------------------------------------------------
This agreement supersedes all other contracts or agreements between you and
Princor. Your right to receive commissions pursuant to prior contracts is not
affected by this agreement.
Assignment
- --------------------------------------------------------------------------------
a. This agreement is not assignable.
b. Other than as provided in Commissions (d) above, no commission payable
under this agreement may be transferred, assigned or made payable to other
than you without our prior written approval.
Disciplinary Action and Termination
- --------------------------------------------------------------------------------
a. This agreement may be terminated by either party at any time upon three
days written notice sent to the last known address of the other party.
b. We may censure or fine you, or terminate your contract without giving prior
notice if we determine that you have committed any fraudulent, dishonest or
illegal acts, violated any provision of this agreement, failed or refused
to comply with the rules, regulations and statutes of the federal or state
government, SEC, or NASD, or failed or refused to comply with our
supervisory procedures or other instructions.
c. If your NASD registration is terminated for any reason, this agreement will
terminate concurrently.
- ------------------------------------ -----------------------------------
Princor Financial Services Corp. Registered Representative Signature
COMMISSION SCHEDULE
PrinFlex Life Policies Issued by Principal Mutual Life Insurance Company
1. First Year and Renewal Commissions
First Year Renewals
percentage of Premium Percentage of ALL Premium
--------------------- ----------------------------
1st Policy Year Policy Years
2nd and later
------------------------------------------------------------------------
Premium received 50%
up to the target
premium 2%
Premium received 4
above the target
premium
2. Service Fees
A service fee of 2% will be paid on all premium received beyond the first
year.
3. Flex Variable Life Target Premiums (Annual per $1,000 face amount)
Age* Male Female Age* Male Female
0 3.08 2.60 44 13.59 11.36
1 3.10 2.62 45 14.31 11.93
2 3.16 2.68 46 15.08 12.53
3 3.21 2.73 47 15.90 13.16
4 3.24 2.76 48 16.77 13.83
5 3.28 2.80 49 17.70 14.54
6 3.31 2.83 50 18.68 15.30
7 3.42 2.92 51 19.74 16.10
8 3.51 2.99 52 20.86 16.94
9 3.60 3.07 53 22.05 17.85
10 3.68 3.15 54 23.32 18.80
11 3.82 3.22 55 24.67 19.82
12 4.03 3.43 56 26.11 20.90
13 4.15 3.55 57 27.65 22.05
14 4.28 3.62 58 29.30 23.29
15 4.40 3.75 59 31.05 24.62
16 4.51 3.86 60 32.93 26.06
17 4.60 3.94 61 34.94 27.60
18 4.72 4.06 62 37.10 29.26
19 4.85 4.13 63 39.40 31.06
20 4.99 4.27 64 41.86 32.97
21 5.08 4.36 65 44.48 35.02
22 5.24 4.52 66 47.29 37.21
23 5.36 4.60 67 50.30 39.58
24 5.42 4.66 68 53.52 42.14
25 5.50 4.74 69 56.98 44.93
26 5.74 4.94 70 60.71 47.98
27 5.99 5.16 71 64.73 51.30
28 6.26 5.39 72 69.02 54.93
29 6.54 5.63 73 73.62 58.86
30 6.85 5.89 74 78.48 63.12
31 7.17 6.16 75 83.65 67.71
32 7.51 6.44 76 91.26 75.72
33 7.87 6.74 77 97.89 82.52
34 8.26 7.06 78 104.84 89.87
35 8.66 7.40 79 112.34 98.02
36 9.10 7.76 80 120.62 107.28
37 9.55 8.13 81 129.90 117.93
38 10.03 8.53 82 140.37 130.21
39 10.54 8.94 83 151.98 144.06
40 11.09 9.38 84 164.50 159.33
41 11.66 9.83 85 177.65 175.84
42 12.26 10.32
43 12.91 10.82
* Last Birthday.
4. Commissions on Increases in Face Amount
When a face amount increase occurs on an existing PrinFlex Life Policy,
commissions in addition to those outlined above may be payable.
An increase will be defined as a face amount increase. We will compare the
increased face amount of the policy against the highest policy face amount
over the latest three year period to determine if there is a policy face
amount increase during the current year.
A 50% commission will be paid on premium received during the first 12
months following the date of a face amount increase that is greater than
the premium level on which a high (50%) first year commission rate was
previously paid. The maximum premium on which a high (50%) first year
commission rate is paid will be limited to the total planned periodic
premium amount of the policy after a face amount increase has occurred.
5. Persistency-Production Bonus
Both short-term and long-term persistency bonuses are payable on PrinFlex
premium received according to the provisions of the Bonus Plans section of
the Agent/Broker Commission Schedules then in effect. The amount of the
bonus payments will depend on the amount of total life insurance premium in
force, the persistency percentage, and the policy year.
Payments may range from 0% to 5.25% of the premium in the first three
policy years and from 0% to 2.0% in subsequent policy years.
6. Other
Renewal commissions payable after the termination of the Registered
Representative's agreement will be governed by the Representative's
insurance marketing contract in force at the time of the sale, as permitted
by law.
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY. Adjustable death
benefit. Benefits payable at death or earlier Maturity Date. Flexible premiums
payable until Maturity Date or prior death.
This policy is a legal contract between you, as owner, and us, Principal Mutual
Life Insurance Company. Your policy is issued based on the information in the
application and payment of premiums as shown on the current Data Pages.
We will pay the benefits of this policy in accordance with its provisions.
Your net premiums are added to your Policy Value. You may allocate them to one
or more of the Separate Account Divisions and to the Fixed Account.
The portion of your Policy Value that is in the Separate Account will vary from
day to day. The amount is not guaranteed. It may increase or decrease depending
on the investment experience of the underlying divisions that you have chosen.
There are no minimum guarantees as to such portion of your Policy Value.
The portion of your Policy Value that is in the Fixed Account will accumulate,
after deductions, at rates of interest we determine. Such rates will not be less
than 3% a year.
The amount and duration of the death benefit may be variable or fixed as
described in this policy.
10 DAY EXAMINATION OFFER. IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS
POLICY. IF YOU ARE NOT SATISFIED, YOU MAY RETURN YOUR POLICY TO EITHER YOUR
AGENT OR OUR HOME OFFICE BEFORE THE LATTER OF:
(1) 10 DAYS OF ITS RECEIPT, (2) 45 DAYS AFTER THE APPLICATION WAS SIGNED; OR (3)
10 DAYS FROM THE DELIVERY OF THE NOTICE OF THE RIGHT TO CANCEL. WE WILL REFUND
ANY PREMIUM PAID AND YOUR POLICY WILL BE CONSIDERED VOID FROM ITS INCEPTION.
PLEASE READ YOUR POLICY CAREFULLY SO YOU MAY BETTER USE ITS MANY BENEFITS.
PARTICIPATING.
The terms of this policy start on the Policy Date and will stay in force until
the Insured's Age 95 Policy Anniversary so long as you satisfy the requirements
as outlined in your policy.
- -------------------------------
Vice President,
and Corporate Secretary
- -------------------------------
President
[GRAPHIC OMITTED] Principal Mutual Life
Insurance Company
711 High Street
Des Moines, Iowa 50392-0001
- --------------------------------------------------------------------------------
INSURED John Doe POLICY DATE November 21, 2001
OWNER Jane Doe POLICY Flexible Premium Variable
Universal Life
POLICY NUMBER SAMPLE FACE AMOUNT $1,000,000
<PAGE>
INDEX
PAGE PAGE
Adjusting the Face Amount.........18 Loan Interest Charge...........14
Age and Sex.......................25 Loan Repayment.................14
Alterations...................... 25 Owner/Beneficiary Changes......25
Assignment........................25 Planned Periodic Premiums.......6
Benefit Payment Options...........19 Policy Expenses................15
Contract..........................25 Policy Value...................10
Cost of insurance Rates...........16 Premium Payment Limits..........6
Data Page..........................3 Reinstatement...................8
Death Benefit Option..............17 Right to Exchange Policy.......24
Death Benefit Option Changes .....18 Statement of Value.............27
Death Proceeds....................17 Suicide........................26
Definitions........................4 Surrender Value................14
Fixed Account......................9 Termination.....................8
Grace Period.......................7 Transfers......................11
Incontestability..................25 Variable Life Separate Account..9
Investment Accounts................9
A copy of the application and any additional benefits provided
by rider follow the last page of this policy.
<PAGE>
DATA PAGE PAGE 3
POLICY NUMBER Sample POLICY DATE November 21, 2001
INSURED John Doe ISSUE AGE-SEX 35-Male
SCHEDULE OF PROTECTION
FORM PROTECTION*1
NO. POLICY AND RIDERS FACE AMOUNT PERIOD DEATH BENEFIT
SF378 Flexible Premium $X,XXX,XXX To Age 95*2 Option X
Variable Universal
Life
SF380 Cost of Living To Age 55
PREMIUM INFORMATION
Your planned periodic premium of $XXX.XX is payable XXXXXXXX.
*1 If sufficient premiums are paid, this policy provides life insurance
protection on the Insured until the maturity date, which is the Policy
Anniversary following the birthday on which the Insured attains age 95, or
termination of the Extended Maturity Rider, whichever is later. YOU MAY HAVE
TO PAY OTHER THAN THE PLANNED PERIODIC PREMIUM SHOWN ABOVE TO KEEP THIS
POLICY AND COVERAGE IN FORCE TO THAT DATE, and to keep any additional benefit
riders in force.
*2 Any reference to age means the Policy Anniversary following the birthday on
which the Insured attains the age stated.
The smallest payment we will accept is $30.00.
Minimum monthly premium: $XXX.XX
Target Premium: $X,XXX.XX
This policy is adjustable. If it is adjusted, we will send you new Data Pages.
The Data Pages are to be attached to and made a part of this policy. The minimum
face amount is $XX,XXX. [Should print according to type of case: $50,000 for
individual; $25,000 for multi-life and guaranteed issue.] The minimum face
amount increase is $50,000.
3.0% Fixed Account Guaranteed Interest Crediting Rate
8% Loan Interest Rate
Interest on borrowed funds is credited at 6% through Policy Year ten at which
point it is credited at 7.75%.
SF378 (Continued on Page 3-1)
<PAGE>
DATA PAGE PAGE 3-1
POLICY NUMBER Sample POLICY DATE November 21, 2001
INSURED John Doe ISSUE AGE-SEX 35-Male
SEPARATE ACCOUNT: PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
VARIABLE LIFE SEPARATE ACCOUNT
PREMIUM DEDUCTION
ALLOCATIONS ALLOCATIONS
FIXED ACCOUNT XXX% XXX%
SEPARATE ACCOUNT DIVISIONS
Aggressive Growth XXX% XXX%
Asset Allocation XXX% XXX%
Balanced XXX% XXX%
Bond XXX% XXX%
Capital Accumulation XXX% XXX%
Emerging Growth XXX% XXX%
Fidelity Contrafund XXX% XXX%
SF 378 (Continued on Page 3-2)
<PAGE>
DATA PAGE PAGE 3-2
POLICY NUMBER Sample POLICY DATE November 21, 2001
INSURED John Doe ISSUE AGE-SEX 35-Male
PREMIUM DEDUCTION
ALLOCATIONS ALLOCATIONS
SEPARATE ACCOUNT DIVISIONS
Fidelity Equity-Income Fund XXX% XXX%
Fidelity High Income Fund XXX% XXX%
Government Securities XXX% XXX%
Growth XXX% XXX%
Money Market XXX% XXX%
World XXX% XXX%
SF 378 (Continued on Page 3-3)
<PAGE>
DATA PAGE PAGE 3-3
POLICY NUMBER Sample POLICY DATE November 21, 2001
INSURED John Doe ISSUE AGE-SEX 35-Male
SCHEDULE OF CHARGES
Maximum Monthly Administration Charge: $20.00
Maximum Monthly Mortality and Expense Risks Charge: .XXXXXXX
(.90% annual) of accumulated value.
Premium Expense Charge: 2.75% of each premium received for premium payments less
than or equal to the Target Premium made during the first ten Policy Years plus
a charge for state taxes of 2.2% of each premium received and a deferred
acquisition cost (DAC) tax of 1.25% of each premium received.
Transaction Charges: The first 12 division transfers per year are free.
Thereafter, there is a $25.00 transaction charge for each transfer. Each partial
surrender will also have a transaction charge. The transaction charge is the
lesser of $25.00 or 2% of the amount surrendered.
Minimum Transfer Amount: $100 or the balance of the investment account being
transferred from, if less.
Minimum Partial Surrender or Loan Amount: $500
Minimum Policy Loan Repayment: $30.00
TABLE OF SURRENDER CHARGES
(POLICY YEAR OF SURRENDER)
POLICY YEAR AMOUNT
1 $X,XXX.XX
2 X,XXX.XX
3 X,XXX.XX
4 X,XXX.XX
5 X,XXX.XX
6 X,XXX.XX
7 X,XXX.XX
8 X,XXX.XX
9 XXX.XX
10 XXX.XX
In the first year, surrender charges build up on a monthly basis over the first
twelve policy months.
SF 378 (Continued on Page 3-4)
<PAGE>
DATA PAGE PAGE 3-4
POLICY NUMBER Sample POLICY DATE November 21, 2001
INSURED John Doe ISSUE AGE-SEX 35-Male
DETAILED SCHEDULE OF PROTECTION AND RISK CLASSES
POLICY AND EFFECTIVE
RIDERS DATE AMOUNT RISK CLASS
Flexible Premium
Variable Universal Novemember 21, 2001 $1,000,000 Standard Nonsmoker
Life
TOTAL $1,000,000
Cost of Living The Effective Date is November 21, 2001. The
current cost of living base is $1,000,000.
The maximum cost of living increase is the
lesser of $100,000 or 30% of the cost of
living base. The minimum cost of living
increase is $1,000.
Basis of Values: Guaranteed maximum cost of insurance rates are based on 1980
CSO Mortality, age last birthday, with distinction for sex and smoking status.
The rates will reflect the Insured's premium class.
SF 378 (Continued on Page 3-5)
<PAGE>
DATA PAGE PAGE 3-5
INSURED John Doe ISSUE AGE-SEX 35-Male
POLICY NUMBER Sample POLICY DATE November 21, 2001
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
MONTHLY RATES PER $1,000.00
INSURED'S MONTHLY INSURED'S MONTHLY
ATTAINED AGE RATE ATTAINED AGE RATE
35 X.XXXXX 67 X.XXXXX
36 X.XXXXX 68 X.XXXXX
37 X.XXXXX 69 X.XXXXX
38 X.XXXXX 70 X.XXXXX
39 X.XXXXX 71 X.XXXXX
40 X.XXXXX 72 X.XXXXX
41 X.XXXXX 73 X.XXXXX
42 X.XXXXX 74 X.XXXXX
43 X.XXXXX 75 X.XXXXX
44 X.XXXXX 76 X.XXXXX
45 X.XXXXX 77 X.XXXXX
46 X.XXXXX 78 X.XXXXX
47 X.XXXXX 79 X.XXXXX
48 X.XXXXX 80 X.XXXXX
49 X.XXXXX 81 X.XXXXX
50 X.XXXXX 82 X.XXXXX
51 X.XXXXX 83 X.XXXXX
52 X.XXXXX 84 X.XXXXX
53 X.XXXXX 85 X.XXXXX
54 X.XXXXX 86 X.XXXXX
55 X.XXXXX 87 X.XXXXX
56 X.XXXXX 88 X.XXXXX
57 X.XXXXX 89 X.XXXXX
58 X.XXXXX 90 X.XXXXX
59 X.XXXXX 91 X.XXXXX
60 X.XXXXX 92 X.XXXXX
61 X.XXXXX 93 X.XXXXX
62 X.XXXXX 94 X.XXXXX
63 X.XXXXX 95 X.XXXXX
64 X.XXXXX 96 X.XXXXX
65 X.XXXXX 97 X.XXXXX
66 X.XXXXX 98 X.XXXXX
99 X.XXXXX
SF 378
<PAGE>
DEFINITIONS IN THIS POLICY
ACCUMULATED VALUE---(Also known as Policy Value) is the sum of the values in the
Loan Account, Fixed Account, and Investment Accounts.
ADJUSTMENT DATE--means the Monthly Date on or next following our approval of a
requested adjustment.
EXAMPLE:If the Policy Date is June 5, 1997, and if your requested adjustment
is approved on April 20, 1998, the Adjustment Date will be May 5, 1998.
ATTAINED AGE--means the Insured's age on the birthday on or preceding the last
Policy Anniversary.
BUSINESS DAY--is any day that the New York Stock Exchange is open for trading,
and trading is not restricted. The net asset value of the Mutual Fund shares in
which a Division of the Separate Account invests will be determined on each
Business Day.
DIVISION--part of the Separate Account to which Net Premiums may be allocated
which invests in shares of a Mutual Fund. The value of an investment in a
Division is variable and is not guaranteed.
FIXED ACCOUNT--is that part of the Policy Value that reflects the value you have
in our general account.
INSURED-- means the person named as the Insured on the current Data Pages of
this policy. The Insured may or may not be the owner.
INVESTMENT ACCOUNT--is that part of the Policy Value that reflects the value you
have in one of the Divisions of the Separate Account.
LOAN ACCOUNT--is that part of the Policy Value that reflects the value you have
transferred from the Fixed Account and/or Separate Account as collateral for a
policy loan.
MATURITY DATE--means the Policy Anniversary following the Insured's 95th
birthday.
MONTHLY DATE--means the day of the month which is the same as the day of the
Policy Date.
EXAMPLE: If the Policy Date is June 5, 1997, the first Monthly Date is
July 5, 1997.
MONTHLY POLICY CHARGE--is the amount subtracted from your Policy Value on each
Monthly Date equal to the sum of the cost of insurance and additional benefits
provided by any rider plus the monthly administration charge and mortality and
expense risks charge in effect on the Monthly Date.
MUTUAL FUND--means a registered open-end investment company in which the
Divisions of the Separate Account may invest under this policy. Mutual Funds
currently available are shown on the current Data Pages.
NET PREMIUM--is the gross premium less the deductions for the Premium Expense
Charge as shown on the current Data Pages. It is the amount of premium
allocated to the Fixed Account or Investment Accounts.
NOTICE--means any form of communication we receive in our home office providing
the information we need, either in writing or another manner that we approve in
advance.
POLICY DATE--the date shown on the current Data Pages.
POLICY VALUE--(also known as the Accumulated Value) is the sum of the values
in the Loan Account, Fixed Account, and Investment Accounts.
POLICY YEARS AND ANNIVERSARIES--means the Policy Years and Anniversaries
computed from the Policy Date.
EXAMPLE: If the Policy Date is June 5, 1997, the first Policy Year ends
on June 4, 1998. The first Policy Anniversary falls on June 5, 1998.
PREMIUM EXPENSE CHARGE---is the charge deducted from premium payments to cover a
sales charge, state premium taxes and the deferred acquisition cost(DAC) tax as
shown on the current Data Pages.
PRORATED BASIS--means in the proportion that the value of a particular
Investment Account or Fixed Account bears to the total value of all Investment
Accounts and Fixed Account.
SEPARATE ACCOUNT--means Principal Mutual Life Insurance Company Variable Life
Separate Account, a registered Unit investment trust with Divisions and
segregated assets, to which Net Premiums may be allocated under this policy and
others we issue.
TARGET PREMIUM--a premium amount used to measure the maximum sales charge that
is included as part of the Premium Expense Charge and any applicable contingent
deferred sales charge under a policy. Your Target Premium is set forth on your
Current Data Pages.
UNIT--the accounting measure used to calculate the Separate Account value.
VALUATION PERIOD--means the period between the time as of which the net asset
value of a Mutual Fund is determined on one Business Day and the time as of
which such value is determined on the next following Business Day.
WE, OUR, US--means Principal Mutual Life Insurance Company.
WRITTEN REQUEST--a form satisfactory to us, signed and dated by you, and filed
at our home office.
YOU, YOUR--means the owner of this policy.
<PAGE>
PURCHASING AND KEEPING THE CONTRACT IN FORCE
Premium Payments
Your first premium is due on the Policy Date. After that, premiums may be paid
at any time while this policy is in force. The amount of your premiums is
subject to the Premium Payment Limits provision. We will give a receipt to the
premium payor on request.
Your initial Net Premium will be allocated to the Money Market Division of the
Separate Account. The Net Premium is the premium paid less the Premium Expense
Charge. The Premium Expense Charge is shown on the current Data Pages. Net
Premiums will continue to be allocated to the Money Market Division until 20
days after the Policy Date. After the 20-day period has expired, your policy's
Accumulated Value will be transferred to the Divisions indicated by your initial
premium allocation percentage(s) request.
The premium allocation percentages are shown on the current Data Pages. Unless
you change them, these percentages apply to future allocations of premiums. For
each Division, the allocation percentages must be zero or a whole number not
less than ten nor greater than 100. The sum of the percentages for all Divisions
must equal 100.
PLANNED PERIODIC PREMIUMS You may preauthorize automatic monthly planned
periodic premium payments. If you do not elect to pay automatically, we will
send you reminder notices of the amount and frequency of your planned periodic
premiums as selected in your application. These notices serve only as a reminder
of your preference. Premiums are to be sent to the address we provide in the
reminder notices. You may change the amount and frequency of your planned
periodic premiums by providing Notice to us.
If you do not make a planned periodic premium payment or additional premium
payments, the Grace Period provision may apply.
PREMIUM PAYMENT LIMITS To keep this policy in force you must satisfy the
requirements described in the Grace Period provision.
The smallest premium payment we will accept is shown on the current Data Pages.
You may choose to make premium payments that are greater than the planned
periodic premium. However, we will refund any premiums that would disqualify
this policy as "life insurance" as defined in the Internal Revenue Code, as
amended.
If any payment increases the policy's death benefit by more than it increases
the Policy Value, we reserve the right to refund the premium payment. Evidence
of insurability which satisfies us may be required.
GRACE PERIOD The grace period begins when we mail a notice of impending policy
termination to you. This notice will be sent to your last post office address
known to us. It will show the minimum payment required to keep your policy in
force. It will also show the 61 day grace period during which we will accept
that payment.
A notice of impending policy termination will be sent if:
1. The net surrender value on any Monthly Date is less than the Monthly Policy
Charge; or
2. During the 12 months following the Policy Date, the sum of the premiums paid
is less than the minimum required premium on a Monthly Date.
The minimum required premium on a Monthly Date is equal to A times B where:
A Is the minimum monthly premium shown on the current Data Pages; and
B Is one plus the number of complete months since the Policy Date. If the grace
period begins because the net surrender value is less than the Monthly Policy
Charge, the minimum payment is three times that Monthly Policy Charge.
If the grace period begins because the sum of the premiums paid is less than the
minimum required premium, the minimum payment is the past due minimum required
premium. The past due minimum required premium is:
1. The minimum required premium due on the next following Monthly Date;
LESS
2. The sum of the premiums paid since the Policy Date.
If the grace period ends before we receive the past due minimum required
premium, we will pay you any remaining value in the policy which would be the
excess of A over B where:
A Is the net surrender value on the Monthly Date at the start of the grace
period, and
B Is the two Monthly Policy Charges applicable during the grace period. If the
Insured dies during a grace period, we will pay the death proceeds to the
beneficiary.
TERMINATION All policy privileges and rights of the owner under this policy end:
1. When you surrender your policy for cash;
2. When the death proceeds are paid;
3. When the policy maturity proceeds are paid; or
4. When the grace period ends as described above. In this case, the privileges
and rights of the owner terminate as of the Monthly Date on which the grace
period begins.
REINSTATEMENT If this policy ends as described in the Grace Period provision,
you may reinstate it provided:
1. Such reinstatement is prior to the Maturity Date;
2. The Insured is alive;
3. Not more than three years have elapsed since the policy terminated;
4. You supply evidence which satisfies us that the Insured is insurable under
our underwriting guidelines then in effect;
5. You either repay or reinstate any policy loans and unpaid loan interest on
this policy existing at termination; and
6. You make a payment of at least the greater of an amount sufficient to allow
three Monthly Policy Charges or the past due minimum required premium, if any.
The reinstatement will be effective on the Monthly Date on or next following the
date we approve it. Your surrender charges made upon reinstatement will be
calculated as if the policy had never ended. You will receive new Data Pages
upon reinstatement.
Premium Investment Options
ALLOCATIONS--You may allocate Net Premiums to the Fixed Account and/or any of
the Separate Account Divisions. Allocation percentages must be zero or a whole
number not less than ten nor greater than 100. The sum of the allocation
percentages must equal 100. You may change the allocation percentages by sending
us your Written Request. The change will take effect on the date we receive your
Written Request at our home office. Unless you change the initial premium
allocation specified in your application for this policy, it will continue to
apply to subsequent premium payments.
FIXED ACCOUNT Net Premiums allocated to the Fixed Account will earn interest at
a specified rate. In no event will the guaranteed interest rate be less than 3%
compounded annually.
INVESTMENT ACCOUNTS The Separate Account is comprised of Divisions shown on the
current Data Pages. Each Division invests in a Mutual Fund with a different
investment objective. You may allocate amounts to one or more of the Divisions.
An Investment Account will be established for you corresponding to each Division
of the Separate Account to which amounts are allocated or transferred under this
policy. We will maintain each of these Investment Accounts for you to keep track
of your values in each Division. Income, gains and losses, whether or not
realized, from each Division's assets are credited to or charged against that
Division without regard to income, gains or losses of other Divisions or our
other income, gains or losses.
VARIABLE LIFE SEPARATE ACCOUNT The Separate Account is registered with the
Securities and Exchange Commission as a Unit investment trust under the
Investment Company Act of 1940, as amended. Assets are put into the Separate
Account to support this policy and to support other variable life insurance
policies we may offer. We own the assets of the Separate Account. These assets
are not part of our general account. Income, gains and losses of the Separate
Account, whether or not realized, are credited to or charged against the
Separate Account assets, without regard to our other income, gains or losses.
The assets of the Separate Account will be available to cover the liabilities of
our general account only to the extent that the assets of the Separate Account
exceed the liabilities of the Separate Account arising under the variable life
insurance policies supported by the Separate Account.
We reserve the right to add other Divisions, eliminate or combine existing
Divisions, or transfer assets in one Division to another. If shares of a Mutual
Fund are no longer available for investment, or in our judgment investment in a
Mutual Fund becomes inappropriate considering the purpose of the Separate
Account, we may eliminate the shares of a Mutual Fund and substitute shares of
another. Substitution may be made with respect to both existing investments and
the investment of future Net Premium payments. However, no such changes will be
made without notifying you and getting any required approval from the
appropriate state and/or federal regulatory authorities.
We will notify you of any such change. You may then change your allocation
percentages and transfer any value in that Division to another Division without
charge. Or, you may exchange the policy for a fixed-benefit flexible premium
policy made available by us. You may exercise this right until the later of 60
days after the effective date of such change or the date you receive notice of
this right. The face amount of the new policy will be the death benefit of this
policy on the date of exchange.
BENEFITS WHILE POLICY IS IN FORCE
Your Policy Values
Your Policy Value at any time is equal to the sum of the values you have in the
Loan Account, the Fixed Account and the Investment Accounts.
LOAN ACCOUNT VALUE You can get a loan on this policy under certain conditions.
When you take out a loan, we transfer the amount of the loan from the Fixed
Account and/or one or more of the Investment Accounts, into the Loan Account.
For details of the Loan Account see the Policy Loan section.
FIXED ACCOUNT VALUE The amount you have in the Fixed Account at any time equals:
1) Net Premiums allocated to it,
PLUS
2) Amounts transferred to it,
PLUS
3) Interest credited to it,
LESS
4) Amounts deducted from it,
LESS
5) Amounts transferred from it,
LESS
6) Amounts withdrawn from it.
INVESTMENT ACCOUNT VALUE Your Investment Account value for each Division is
equal to the number of Units in that Investment Account multiplied by that
Division's Unit value. The number of Units in an Investment Account at any time
equals A minus B, where:
A is the number of Units credited to the Investment Account because of
1. Net Premiums allocated to it, and
2. Amounts transferred to it; and
B is the number of Units canceled from the Investment Account because of
1. Amounts deducted from it,
2. Amounts transferred from it, and
3. Amounts withdrawn from it.
The number of Units credited or canceled for a given transaction is equal to the
dollar amount of the transaction, divided by the Unit value on the Business Day
of the transaction.
UNIT VALUES We will determine the Unit values for each Division of the Separate
Account at the end of each Business Day. We will deem each Business Day to end
at the time we determine the net asset value of the underlying Mutual Fund
shares held by the Division of the Separate Account. When we need to determine a
Policy Value or an amount after the end of a Business Day, or on a day that is
not a Business Day, we will do so at the end of the next Business Day.
The Unit value for each Division was established at $10 for the first Business
Day that an amount was allocated, or transferred to the particular Division. For
any subsequent Business Day, the Unit value for that Division is obtained by
multiplying the Unit value for the immediately preceding Business Day by the net
investment factor for the particular Division on that subsequent Business Day.
NET INVESTMENT FACTOR The net investment factor for a Division on any Business
Day is equal to A divided by B where:
A Is the net asset value of the underlying Mutual Fund shares held by that
Division at the end of such Business Day before any policy transactions are made
on that day; and
B Is the net asset value of the underlying Mutual Fund shares held by that
Division at the end of the immediately preceding Business Day after all policy
transactions were made for that day.
We reserve the right to adjust the above formula for any taxes determined by us
to be attributable to the operations of the Division.
Transfers
TRANSFERS ALLOWED You may transfer amounts between the Fixed Account and the
Investment Accounts as provided below. To request a transfer, you must provide
us Notice. All transfers with the same effective dates count as one transfer. We
reserve the right to not accept transfer requests from someone requesting them
for multiple contracts. We also reserve the right to modify or revoke transfer
privileges and charges.
TRANSFERS FROM FIXED ACCOUNT You may transfer amounts from the Fixed Account to
an Investment Account by, making either a scheduled or unscheduled Fixed Account
transfer, subject to the following conditions:
Either unscheduled transfers or scheduled transfers (not both) may occur during
the same Policy Year.
UNSCHEDULED FIXED ACCOUNT TRANSFERS--You may make one unscheduled transfer from
the Fixed Account each Policy Year, as follows:
1. You must provide us Notice within 30 days following either the Policy Date or
any Policy Anniversary.
2. The transfer will occur within one Business Day of the date we receive your
Notice; and
3. You must specify the dollar amount or percentage to be transferred, and the
resulting amount must not exceed 25% of your Fixed Account value as of the later
of the Policy Date or the last Policy Anniversary. However, you may transfer up
to 100% of your Fixed Account value within 30 days after the first and following
Policy Anniversaries if your Fixed Account value is less than $1,000
SCHEDULED FIXED ACCOUNT TRANSFERS-(Dollar Cost Averaging)-You may make scheduled
transfers on a monthly basis from the Fixed Account as follows:
1. Transfers will begin on the Monthly Date following the date we receive your
Notice.
2. our Fixed Account value must equal or exceed the minimum transfer value shown
on the current Data Pages. We reserve the right to change this amount but it
will never exceed $10,000;
3. The monthly amount transferred must equal 2% of your Fixed Account value as
of the later of the Policy Date or the last Anniversary;
4. The transfers will continue until your Fixed Account value is exhausted or we
receive Notice to stop them; and
5. If you stop the scheduled transfers, you may not start them again until six
months after the date of the last scheduled transfer.
6. You must have a minimum of $2500 in your Fixed Account at the time the
transfer begins in order to initiate the transfers.
TRANSFERS FROM INVESTMENT ACCOUNTS You may transfer amounts from an Investment
Account to either the Fixed Account or another Investment Account by making
either a scheduled or unscheduled Investment Account transfer, subject to the
following conditions.
Transfers to the Fixed Account are allowed only if:
1. You have not transferred any amount from the Fixed Account for at least six
months; and
2. Your Fixed Account value immediately after the transfer does not exceed
$1,000,000, except with our prior approval.
UNSCHEDULED INVESTMENT ACCOUNT TRANSFERS--You may make unscheduled transfers
from an Investment Account, as follows:
1. The transfer will occur within one Business Day after the date we receive
your Notice;
2. You must specify the dollar amount or percentage to transfer from each
Investment Account, and the resulting amount must equal or exceed the lesser of
the value of your Investment Account or the minimum transaction amount shown on
the current Data Pages; and
3. We reserve the right to charge a transaction charge as shown on the current
Data Pages for each unscheduled transfer after the twelfth transfer in a Policy
Year.
SCHEDULED INVESTMENT ACCOUNT TRANSFERS-(Dollar Cost Averaging)-You may make
scheduled transfers from an Investment Account, as follows:
1. Scheduled transfers will begin on the Monthly Date following the date we
receive your Notice;
2. You must specify how often the transfers will occur (annually, semi-annually,
quarterly or monthly);
3. You must specify the dollar amount to transfer from each Investment Account,
and that amount must equal or exceed the lesser of the value of your Investment
Account or the minimum transaction amount shown on the current Data Pages;
4. The value of each Investment Account from which transfers are made must equal
or exceed the minimum transfer amount shown on the current Data Pages;
5. The transfers will continue until your interest in the Investment Account is
exhausted or we receive Notice to stop them; and
6. We reserve the right to limit the number of Investment Accounts from which
transfers will be made at the same time. In no event will the limit ever be less
than two.
7. You must have a minimum of $2500 in your Fixed Account at the time the
transfer begins in order to initiate the transfers.
Policy Loans
You may obtain a policy loan from us with this policy as sole security. You may
borrow up to (A) minus (B) where:
A. Is 90% of the net surrender value; and
B. Is any outstanding policy loan and unpaid loan interest at the time the loan
request is processed at the home office.
The minimum loan amount is shown on the current Data Pages.
YOUR LOAN ACCOUNT If you take a policy loan, a portion of your Policy Value
equal to the loan will be transferred from the Fixed Account and/or the
Investment Accounts to your Loan Account until the loan is repaid. The effective
date of the transfer is the date of the loan.
The loan will result in a reduction in the value of the Fixed Account to the
extent amounts are transferred from the Fixed Account to the Loan Account, or in
the cancellation of Units in the Investment Account or Accounts from which the
loan was withdrawn. For each Investment Account, the number of Units canceled
will be equal to the portion of the loan withdrawn divided by the Unit value for
the Valuation Period in which the loan is taken.
You may tell us the amount of the policy loan to be withdrawn from the Fixed
Account and/or each Investment Account. If you do not tell us, the loan amount
will be withdrawn in the same proportion as the allocation used for your Monthly
Policy Charge. Amounts held in your Loan Account will be part of the Company's
general account and will be credited with interest from the date of transfer.
The difference between the policy loan rate and the rate credited on the Loan
Account will not exceed 2%.
On each Policy Anniversary, if there has been a loan repayment, this credited
interest is transferred from the Loan Account to the Fixed Account and the
Investment Accounts. It is allocated among the Fixed Account and the Investment
Accounts in the same manner used to allocate premium payments.
All interest rates stated are effective annual rates. We apply these rates to
properly reflect the actual date we receive any repayments and any changes you
make in loan amounts during a policy month.
LOAN INTEREST CHARGE Interest charges accrue daily at the annual loan interest
rate shown on the current Data Pages. Interest is due and payable at the end of
each Policy Year. Any interest not paid when due is added to the loan principal
and bears interest at the same rate. The adding of unpaid interest charges to
the loan principal will cause additional amounts to be withdrawn from the
Divisions in the same manner as described above for loans.
REPAYMENT You may repay all or part of a policy loan as long as the policy is in
force and the minimum payment amount (as shown on the current Data Pages) is
met. Any policy loans and unpaid loan interest charges not repaid at the
Insured's death or at maturity are deducted from the death or maturity proceeds.
YOU SHOULD IDENTIFY THE PURPOSE OF EACH PAYMENT. IF WE CANNOT IDENTIFY ITS
PURPOSE, WE WILL CONSIDER IT TO BE A LOAN REPAYMENT IF A LOAN IS OUTSTANDING.
As the loan is repaid, the amount repaid is transferred from your Loan Account
to the Fixed Account and/or the Investment Accounts in the same manner used to
allocate premium payments. If you do not repay a policy loan or pay loan
interest and the net surrender value is less than the Monthly Policy Charge due
on a Monthly Date, the Grace Period provision will apply.
Surrender of the Policy
SURRENDER VALUE AND NET SURRENDER VALUE The surrender value of your policy
equals the Policy Value less the surrender charges (described below).
The net surrender value of your policy is the surrender value less any policy
loans and unpaid loan interest. As long as your policy is in force, you may
surrender it for its net surrender value by sending us a Written Request.
SURRENDER CHARGES The table of surrender charges is shown on the current Data
Pages. Surrender charges vary based on the face amount of the policy and the
premiums paid and will apply only during the first 10 Policy Years unless
changed due to a face amount increase. A face amount increase has its own
surrender charge period which begins on the Adjustment Date. If a face amount
increase is made, the surrender charges will be a composite of all charges which
apply for each year.
PARTIAL SURRENDERS Each Policy Year after the first Policy Year, you may make up
to two partial surrenders of the net surrender value, subject to the following:
1. Each partial surrender must be in an amount not less than the minimum amount
shown on the current Data Pages; and
2. In the aggregate the total amount surrendered in a Policy Year will not
exceed an amount equal to 75% of the net surrender value as of the date of the
first surrender.
You may tell us in what proportion to allocate the amount of the partial
surrender and transaction charge to be withdrawn from the Fixed Account and/or
each Separate Account Division. The transaction charge is shown on the current
Data Pages. If you do not tell us, the partial surrender and the transaction
charge will be withdrawn from the Fixed Account and the Separate Account
Divisions in the same proportion as the allocations used for your current
Monthly Policy Charge. Partial surrenders from the Fixed Account will be taken
from the most recent premium payments first (LIFO).
The amount of the partial surrender plus the transaction charge will result in
the cancellation of Units in the Separate Account Divisions from which the
partial surrender occurs. The number of Units cancelled will be equal to the
amount of the partial surrender plus the transaction charge divided by the Unit
value of the Division or Divisions for the Valuation Period in which the partial
surrender is effective.
Your Policy Value is reduced by the amount of the partial surrender plus the
amount of the transaction charge.
If the Option 1 death benefit is in effect, the face amount is reduced by the
amount of the partial surrender and the transaction charge.
POLICY EXPENSES
MONTHLY POLICY CHARGES On the Policy Date, and each Monthly Date thereafter, we
will deduct a Monthly Policy Charge.
The deduction for the Monthly Policy Charge is the sum of the following amounts:
1. The cost of insurance (described below) and the cost of additional benefits
provided by any rider in force for the policy month;
2. The current monthly administration charge but not greater than the maximum
shown on the current Data Pages; and
3. The mortality and expense risks charge imposed on the Investment Account
value as shown on the current Data Pages.
The Monthly Policy Charge will be withdrawn from the Investment Accounts and/or
Fixed Account according to the allocation percentages you have chosen. These
percentages are shown on the current Data Pages.
Your choice for the Monthly Policy Charge allocation may be:
1. The same as the allocation percentages you have chosen for your premiums; or
2. Determined on a Prorated Basis; or
3. Any other allocation which we mutually agree upon.
If the amount in an Investment Account and/or Fixed Account is insufficient to
allow the allocation you have chosen, your Monthly Policy Charge will be
allocated on a Prorated Basis.
For each Investment Account and/or Fixed Account, the allocation percentages
must be zero or a whole number not less than ten nor greater than 100. The sum
of the percentages for all the Investment Accounts and the Fixed Account must
equal 100. Changes in allocation percentages may be made by providing Notice to
us. Once approved by us, they are effective as of the next Monthly Date.
COST OF INSURANCE The cost of insurance on each Monthly Date is A multiplied by
the result of B minus C, where:
A Is the cost of insurance rate as described in the Cost of Insurance Rates
section divided by 1,000;
B Is the death benefit as described in the Your Death Proceeds section of this
policy at the beginning of the Policy Month, divided by the sum of 1 plus the
monthly guaranteed fixed account interest rate (1.0024663); and
C Is the Policy Value at the beginning of the policy month calculated as if the
Monthly Policy Charge was zero.
COST OF INSURANCE RATES The monthly cost of insurance rates are based on the
sex, issue age and Attained Age (at the time an adjustment is made), and risk
classification of the Insured. We determine these rates based on our
expectations as to our future mortality experience. Any change in these rates
applies to all individuals of the same class as the Insured. The cost of
insurance rates will never be greater than shown in the Table of Guaranteed
Maximum Cost of Insurance Rates on the current Data Pages. However, different
cost of insurance rates may apply to any face amount increase.
PREMIUM EXPENSE CHARGE We will deduct a Premium Expense Charge as shown on the
current Data Pages from each premium payment. The result will be the Net Premium
payment.
OTHER CHARGES We will charge a surrender charge as described in the Surrender Of
The Policy section if any of the following occurs during the surrender charge
period:
1. You request the net surrender value of your policy;
2. You take a partial surrender of the net surrender value of your policy;
3. You do not pay an amount due at the end of a grace period, and the policy
terminates.
YOUR DEATH PROCEEDS
We will pay the death proceeds to the beneficiary subject to the provisions of
the policy, when we receive proof that the Insured died before the Maturity
Date. These death proceeds, determined as of the date of the Insured's death,
are A minus B where:
A Is the death benefit described below plus any proceeds from any benefit rider
on the Insured's life; and
B Is any policy loans and unpaid loan interest and, if the Insured died during a
grace period, any overdue Monthly Policy Charges.
We will pay interest on death proceeds from the date of death until date of
payment or until applied under a benefit option. It will be at a rate we
determine, but not less than required by state law.
DEATH BENEFIT This policy provides two death benefit options. The option in
effect is shown on the current Data Pages.
Option 1.
Under Option 1, the death benefit equals the greater of:
1. The policy's face amount; or
2. The amount found by multiplying the Policy Value by the applicable percentage
shown below.
Option 2.
Under Option 2, the death benefit equals the greater of:
1. The policy's face amount plus its Policy Value; or
2. The amount found by multiplying the Policy Value by the applicable percentage
shown below.
TABLE OF APPLICABLE PERCENTAGES*
(For ages not shown, the applicable percentages shall decrease by a pro rata
portion for each full year.)
INSURED'S ATTAINED AGE %
40 and under 250
45 215
50 185
55 150
60 130
65 120
70 115
75 through 90 105
95 100
*These percentages will be updated as required by revisions to the Internal
Revenue Code.
CHANGES IN DEATH BENEFIT OPTION You may change the death benefit option on or
after the first Policy Anniversary. To request a change in the death benefit
option, you must send us a Written Request. A change approved on a Monthly Date
will be effective on that Monthly Date. A change approved on other than a
Monthly Date will be effective on the next following Monthly Date. Changes in
options are limited to two per Policy Year and are subject to the following
conditions:
1. If the change is from Option 1 to Option 2, we will reduce the face amount.
The reduction will be equal to the Accumulated Value on the effective date of
the change. The face amount after any reduction must be at least the minimum
face amount required by our then current underwriting guidelines. We may require
proof of insurability which satisfies us.
2. If the change is from Option 2 to Option 1, we will increase the face amount.
The increase will be equal to the Accumulated Value on the effective date of
change. No proof of insurability is required.
YOUR MATURITY PROCEEDS If the Insured is living on the policy's Maturity Date,
we will pay you the policy's Accumulated Value less any policy loans and unpaid
loan interest.
ADJUSTING THE FACE AMOUNT While your policy is in force (but not in a grace
period) you may request an increase or decrease in the face amount. Decreases
may not be made during the first Policy Year. Any adjustment is subject to our
approval.
APPROVAL OF AN ADJUSTMENT Any increase in face amount will be in a risk
classification we determine, and will be approved if:
1. The Attained Age of the Insured is 85 or less and the amount of the increase
is at least the minimum increase shown on the current Data Pages; and
2. You supply evidence which satisfies us that the Insured is insurable under
our underwriting guidelines then in effect.
No adjustment will be approved if:
1. The face amount after adjustment would be less than the minimum amount shown
on the current Data Pages; or
2. Your Monthly Policy Charges are being waived under any rider.
REQUESTING AN ADJUSTMENT You must send us a Written Request for an adjustment. A
request for a face amount increase must be signed by the Insured and owner. It
must show the face amount desired after adjustment. An adjustment is effective
on the Adjustment Date.
A face amount increase that is not a result of an increase rider is subject to
the Right to Examine and Right to Exchange provisions.
BENEFIT PAYMENT OPTIONS You may elect to use one of these benefit options in
your benefit instructions. If no benefit instructions are in effect at the
Insured's death, the beneficiary may apply unpaid death proceeds under a benefit
option. You may also apply the net surrender value of your policy at surrender
or at maturity under a benefit option.
If a benefit option is elected, this policy must be exchanged for a
supplementary contract effective when the policy proceeds first become payable.
Payments under the following options are not affected by the investment
experience of any Division of our Separate Account after the policy proceeds are
applied under an option.
Option A. SPECIAL BENEFIT ARRANGEMENT--A specially designed benefit option may
be arranged with our approval.
Option B. PROCEEDS LEFT AT INTEREST--We will hold the amount applied on deposit.
Interest payments will be made annually, semi-annually, quarterly or monthly, as
elected.
Option C. FIXED INCOME--We will pay an income of a fixed amount or an income for
a fixed period not exceeding 30 years. Refer to Option C Tables to determine the
number of fixed amount payments or the amount of each fixed period payment. On
request, we will furnish benefit information not shown in the Tables.
Option D. LIFE INCOME--We will pay an income during a person's lifetime. A
minimum guaranteed period may be used, as shown in the Option D Table. Payments
will be in an amount we determine, but not less than shown in the Table.
Option E. JOINT AND SURVIVOR LIFE INCOME--We will pay an income during the
lifetime of two persons, and continuing until the death of the survivor. This
option includes a minimum guaranteed period of 10 years. Payments will be in an
amount we determine, but not less than shown in the Option E Table. On request,
we will furnish minimum income information for age combinations not shown in the
Table.
Option F. JOINT AND TWO-THIRDS SURVIVOR LIFE INCOME--We will pay an income
during the lifetime of two persons, and two-thirds of the original amount
continuing until the death of the survivor. Payments during the time both people
are alive will be in an amount we determine (the "original amount"), but not
less than shown in the Option F Table. On request, we will furnish minimum
income information for age combinations not shown in the Table.
OPTION C TABLES
================================================================================
Minimum Number of Months for Which Monthly Income will be Paid. First Payment on
effective date of Supplementary Policy.
Amount No. of No. of No. of
Applied Income Pymts* Income Pymts* Income Pymts*
$ 10,000 $ 50 274 $ 100 114 $ 175 61
25,000 150 214 250 114 400 67
50,000 250 274 500 114 750 72
100,000 450 321 1,000 114 1,500 72
Minimum Monthly Income To Be Paid for Number Of Years. First Payment on
effective date of Supplementary Policy.
Number of Years
Amount ------------------------------------------------------------
Applied 5 10 15 20 25 30
$ 10,000 179.10 96.10 68.70 55.10 47.10 41.80
25,000 447.75 240.25 171.75 137.75 117.75 104.50
50,000 895.50 480.50 343.50 275.50 235.50 209.00
100,000 1,791.00 961.00 687.00 551.00 471.00 418.00
<PAGE>
OPTION D TABLE
================================================================================
Minimum Monthly Life Income for Each $1,000 Applied. First Payment on effective
date of Supplementary Policy.
Minimum Guaranteed Period
Age ------------------------------------
Last Birthday 5 10 15 20 Inst*
Male Payee None Yrs. Yrs. Yrs. Yrs. Rfd.
----------------- --------- -------- ------- -------- -------- -------
55 4.45 4.44 4.40 4.33 4.23 4.24
56 4.54 4.53 4.48 4.41 4.29 4.31
57 4.64 4.62 4.57 4.48 4.35 4.38
58 4.74 4.72 4.66 4.56 4.42 4.46
59 4.84 4.82 4.76 4.65 4.48 4.54
60 4.96 4.94 4.87 4.74 4.55 4.63
61 5.08 5.06 4.97 4.83 4.61 4.72
62 5.21 5.18 5.09 4.92 4.68 4.82
63 5.35 5.32 5.21 5.01 4.75 4.92
64 5.50 5.46 5.33 5.11 4.81 5.02
65 5.66 5.62 5.47 5.21 4.87 5.13
66 5.83 5.78 5.60 5.31 4.94 5.25
67 6.01 5.95 5.75 5.41 4.99 5.37
68 6.21 6.13 5.89 5.52 5.05 5.50
69 6.42 6.33 6.05 5.62 5.11 5.64
70 6.64 6.53 6.21 5.72 5.16 5.78
71 6.87 6.74 6.37 5.82 5.20 5.93
72 7.12 6.97 6.54 5.91 5.25 6.09
73 7.39 7.21 6.71 6.01 5.29 6.25
74 7.67 7.46 6.88 6.10 5.32 6.42
75 7.98 7.73 7.05 6.18 5.35 6.60
*Income payments continue until the total received equals the amount applied
under the option.
<PAGE>
OPTION D TABLE, CONTINUED
================================================================================
Minimum Monthly Life Income for Each $1,000 Applied. First Payment on effective
date of Supplementary Policy.
Minimum Guaranteed Period
Age --------------------------------------------------
Last Birthday None 5 10 15 20 Inst*
Female Payee Yrs. Yrs. Yrs. Yrs. Rfd.
- ------------------- -------- -------- -------- ------- -------- --------
55 4.05 4.05 4.03 4.00 3.95 3.94
56 4.12 4.12 4.10 4.06 4.01 4.00
57 4.20 4.19 4.17 4.13 4.07 4.06
58 4.28 4.27 4.25 4.20 4.13 4.13
59 4.36 4.35 4.33 4.28 4.20 4.20
60 4.45 4.44 4.41 4.35 4.26 4.27
61 4.55 4.54 4.50 4.43 4.33 4.35
62 4.65 4.64 4.60 4.52 4.40 4.43
63 4.76 4.74 4.70 4.61 4.47 4.52
64 4.87 4.86 4.80 4.70 4.54 4.61
65 5.00 4.98 4.91 4.80 4.61 4.70
66 5.13 5.11 5.03 4.89 4.69 4.81
67 5.27 5.24 5.16 5.00 4.76 4.91
68 5.42 5.39 5.29 5.10 4.83 5.02
69 5.58 5.55 5.43 5.21 4.90 5.14
70 5.76 5.71 5.57 5.32 4.97 5.27
71 5.94 5.89 5.73 5.43 5.03 5.40
72 6.15 6.09 5.89 5.55 5.09 5.54
73 6.37 6.30 6.06 5.66 5.15 5.69
74 6.60 6.52 6.24 5.77 5.20 5.85
75 6.86 6.75 6.42 5.88 5.25 6.02
*Income payments continue until the total received equals the amount applied
under the option.
<PAGE>
OPTION E TABLE
================================================================================
Minimum Monthly Joint and Survivor Life Income For Each $1,000 Applied. First
Payment on effective date of Supplementary Policy.
Age Last Birthday Age Last Birthday of Female Payee
of Male Payee 55 60 62 65 70
----------------------- ------- ------ ------ ----- -----
60 3.82 4.04 4.12 4.25 4.45
62 3.85 4.09 4.19 4.33 4.57
65 3.90 4.16 4.28 4.45 4.74
70 3.95 4.26 4.40 4.62 5.01
75 3.99 4.33 4.48 4.75 5.24
OPTION F TABLE
================================================================================
Minimum Monthly Joint and Two-Thirds Survivor Life Income for Each $1,000
Applied. First Payment on effective date of Supplementary Policy.
Age Last Birthday of Female Payee
Age Last Birthday ----------------------------------------------------
of Male Payee 55 60 62 65 70
---------------------- ---------- --------- ---------- ---------- --------
60 4.22 4.45 4.55 4.71 5.00
62 4.30 4.54 4.65 4.82 5.14
65 4.41 4.68 4.80 4.99 5.35
70 4.61 4.92 5.06 5.29 5.74
75 4.82 5.17 5.33 5.60 6.14
BENEFIT OPTION INTEREST Interest at a rate we set, but never less than 3% a
year, will be applied to determine the payments under Option B. Any such
interest in excess of 3% will be added to payments under Option C.
CONDITIONS When a benefit option is elected:
1. Any amount payable to an assignee will be paid in one lump sum.
2. The amount applied must be at least $3,500 and result in periodic payments of
at least $20.
3. Benefit options are restricted if the recipient of benefits is not a natural
person.
4. Under Options D, E and F, one of the persons on whose life payments are based
must be the owner, Insured or beneficiary. The size of payments depends on the
age and sex of the person or persons on whose life payments are based. This will
be determined as of the effective date of the supplementary contract. We reserve
the right to require evidence of age, sex and continuing survival.
RIGHT TO EXCHANGE POLICY
You may exchange this policy for a new life policy we make available for this
purpose on the life of the Insured based on our current underwriting guidelines.
The new policy may not be a term insurance policy or a variable policy. Evidence
of insurability will not be required.
The exchange must be made during the first 24 months from the Policy Date while
your policy is in force, but not while it is in a grace period. The exchange
will be effective on receipt of a Written Request on a form we specify. This
policy will then terminate. The new policy will have the same Policy Date as
this policy.
You may choose whether the new policy will have either the same death benefit or
the same amount at risk as this policy. The amount at risk is the difference
between the Accumulated Value and the death benefit of the policy. Premiums for
the new policy will be based on the same issue age, sex, and risk classification
as this policy.
An equitable adjustment in the new policy's premiums and values will be made to
reflect any variations between the premiums and values under this policy and the
new policy. No additional charge will be made for this exchange privilege. Any
policy loans and unpaid loan interest must be repaid or transferred to the new
policy.
Any benefit riders included on this policy may be exchanged, without evidence of
insurability, for similar benefit riders on the new policy if:
1. You request the similar benefit rider to be included on the new policy; and
2. The similar benefit rider was available for the new policy on the effective
date of the benefit rider for this policy based on the same issue age, sex, and
risk classification as the Insured.
OWNER, BENEFICIARY, ASSIGNMENT
OWNERSHIP The owner is as named in the application unless you change ownership
as provided below. As owner, you may exercise every right and enjoy every
privilege provided by your policy, subject to the rights of any irrevocable
beneficiary. These rights and privileges continue while your policy is in force,
and end at the Insured's death. If you are not the Insured and you die before
the Insured, the Insured becomes the owner unless you have provided for a
successor owner.
BENEFICIARY The beneficiary(ies) named in the application will receive the death
proceeds unless you change the beneficiary designation as provided below. Any
death proceeds payable to a beneficiary who dies before the Insured will be paid
equally to surviving beneficiaries named in the application, unless we have
approved another Written Request. If no beneficiary survives the Insured, the
death proceeds will be paid to the owner or to the owner' s estate.
CHANGE OF OWNER OR BENEFICIARY You may change the owner or beneficiary of this
policy by Written Request. Our approval is needed and no change is effective
until we approve it. Once approved, the change is effective as of the date you
signed the request. We have the right to require that you send us this policy so
we can record the change.
BENEFIT INSTRUCTIONS While the Insured is alive, you may file instructions for
the payment of the death proceeds under one of the benefit options previously
described. Such instructions, or change of instructions, must be by Written
Request approved by us. If you change the beneficiary, it will revoke any prior
benefit instructions.
ASSIGNMENT You may assign your policy as collateral for a loan. The assignment
must be in writing and filed in our home office. We assume no responsibility for
any assignment's validity. An assignment as collateral does not change the
owner. The rights of beneficiaries, whenever named, except irrevocable
beneficiaries, become subordinate to those of the assignee.
GENERAL INFORMATION
THE CONTRACT This policy, the attached application, any amendments to the
application, and the current Data Pages make up the entire contract. Any
statements made in the application or an adjustment application will be
considered representations and not warranties. No statement, unless made in an
application, will be used to void your policy (or void an adjustment in case of
an adjustment application) or to defend against a claim. Unless a separate
effective date is shown on the current Data Pages, the Policy Date is also the
effective date.
ALTERATIONS This policy may be altered by mutual agreement, but any alterations
must be in writing and signed by one of our corporate officers. No one else,
including the agent, may change the contract or waive any provisions.
INCONTESTABILITY With respect to statements made in the initial application for
this policy, we will not contest this policy after the Insured has been alive
for two years after the Issue Date. With respect to statements made in any
subsequent application for additional coverage, we will not contest the
additional coverage resulting from such application after the Insured has been
alive for two years after the application date. The time limits in this
Incontestability provision do not apply to fraudulent misrepresentations.
AGE AND SEX If the age or sex of the Insured has been misstated, the death
benefit will be that which would be purchased by the most recent mortality
charge at the correct age or sex.
DEFERMENT We will usually pay surrenders, partial surrenders, or policy loans
within 3 Business Days after we receive a Written Request. We will usually pay
any death benefit within 3 Business Days after we receive proof at our home
office of the Insured ' s death.
However, we may not be able to determine the value of the assets of our Separate
Account if:
1. The New York Stock Exchange is closed on 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;
2. The Securities and Exchange Commission by order permits postponement for the
protection of policyowners; or
3. The Securities and Exchange Commission requires that trading be restricted or
declares an emergency, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the net
asset value of the Mutual Funds.
If any of the above events occur, we reserve the right to defer:
1. Determination and payment of any surrender, partial surrenders, or death
proceeds;
2. Payment of any policy loans;
3. Determination of the Unit values of the Divisions;
4. Any requested transfer between the Divisions; and
5. Application of your death proceeds or surrender proceeds under Your Benefit
Options
PARTICIPATING Your policy is eligible to share in our divisible surplus. We will
determine its share and credit it as a dividend at the end of each Policy Year.
We do not expect any dividends will be paid under this policy. Dividends, if
any, will be paid in cash.
SUICIDE This policy' s death proceeds will not be paid if the Insured dies by
suicide, while sane or insane, within 2 years of the Policy Date. Instead, we
will return all premiums paid, less any partial surrenders and any policy loans
and unpaid loan interest. This amount will be paid to the beneficiary.
Any face amount increase made under the adjustment options will not be paid if
the Insured dies by suicide, while sane or insane, within 2 years of the
Adjustment Date. Instead, we will return the sum of the cost of insurance
charges for the increased amount of protection. This amount will be paid to the
beneficiary.
BASIS OF VALUES Guaranteed maximum cost of insurance rates are based on the
mortality table referred to on the current Data Pages.
A detailed statement of the method of calculating values and benefits has been
filed with the insurance department of the state in which this policy is
delivered. The guaranteed values are greater than or equal to those required by
any state law.
STATEMENT OF VALUE We will mail a statement to you once each Policy Year until
the policy terminates. The statement will show:
1. The current death benefit;
2. The current accumulated and surrender values;
3. All premiums paid since the last statement;
4. Any investment gain or loss since the last statement;
5. All charges since the last statement;
6. Any policy loans and unpaid loan interest;
7. Any partial surrenders since the last statement;
8. The number of Units and Unit value;
9. The total value of each of your Investment Accounts;
10. Your designated beneficiary(ies);
11. All riders included with your policy; and
12. Detailed summary of activity for the year.
COST OF LIVING INCREASE RIDER
We will periodically give you the opportunity to increase the face amount of
your policy based on increases in the Consumer Price Index for All Urban
Consumers, subject to the provisions of this Rider. No evidence that the Insured
is insurable is required.
LIMITATIONS AND CONDITIONS These limitations and conditions apply:
1. Increases are available only on every 3rd Policy Anniversary, as measured
from the Policy Date, and only when the amount of the increase is at least the
minimum cost of living increase shown on the current Data Pages.
2. The amount of increase will be:
a. The lesser of the calculated increase ( as determined below) or the maximum
cost of living increase shown on the current Data Pages;
LESS
b. The total of any face amount increases made during the prior year at a
standard or preferred risk class.
3. Increases are subject to your acceptance, the provisions of this Rider and
any other applicable policy provisions, including any exclusions or limitations.
THE CALCULATED INCREASE The calculated cost of living increase is based on the
all-item Consumer Price Index for All Urban Consumers (CPI) as published by the
United States Department of Labor. The increase amount is determined by
multiplying your policy's current cost of living base (shown on the current Data
Pages) by an increase factor. The increase factor will be:
1. CPI 6 months prior to the cost of living increase date
DIVIDED BY
2. CPI 42 months prior to the cost of living increase date
LESS
3. 1.00
If use of the Index would result in a face amount decrease, no change in the
face amount will be made.
SF 380
<PAGE>
We will substitute what we believe is an appropriate index for the Consumer
Price Index for All Urban Consumers if:
1. The Index is discontinued, delayed, or otherwise not available for this use;
or
2. The composition or base of, or method of calculating the Index changes so
that we consider it not appropriate for calculating the future cost of living
increases.
MONTHLY POLICY CHARGE There is no cost associated with this rider. However, when
it is exercised, the Monthly Policy Charge will be increased to cover the costs
and charges for any increase in protection made under this Rider. This increase
will be based on the risk class or classes shown on the current Data Pages.
Please refer to your policy for more information on monthly policy charges.
DISABILITY BENEFITS If your policy has a rider that provides any benefits due to
disability, we will increase such benefits when a cost of living increase
occurs. For more information, see the Rider providing these benefits.
PLANNED PERIODIC PREMIUM Your planned periodic premium will be increased
accordingly for any increase in protection made under this rider. Increases are
subject to your acceptance. We will notify you of this increase. You will be
sent new Data Pages reflecting the increase.
LIMIT ON COST OF LIVING BASE Your cost of living base may not be greater than
the face amounts on your policy that have a standard or preferred risk class.
TERMINATION This Rider terminates, with no further cost of living increases
available, on the first of:
1. The Policy Anniversary following the Insured's 55th birthday;
2. Any decrease in your Policy's face amount (except as a result of a partial
surrender or a change in your death benefit option);
3. Your failure to accept a cost of living increase; or
4. The termination of your Policy.
REINSTATEMENT If this Rider terminates under 2, 3, or 4 above it will be
reinstated:
1. Whenever an underwritten increase is made in your Policy's face amount,
provided that increase is issued at a standard or preferred risk class;
2. If your Policy is reinstated at a standard or preferred risk class; or
3. Automatically on the Policy Anniversary following the Insured's 21st
birthday, if terminated prior to that time.
SF 380
WAIVER OF MONTHLY POLICY CHARGE RIDER
This rider is part of your policy. It is issued in consideration of the
application and deduction from Accumulated Value of the monthly cost of waiver
rates for the benefits provided by this rider. All definitions, provisions and
exceptions of the policy apply to this rider unless changed by this rider. The
effective date is the Policy Date unless another date is shown on the current
Data Pages.
DEFINITIONS An Age Policy anniversary means the Policy Anniversary on or next
following the birthday designated.
EXAMPLE: If the Policy date is June 5, 2000, and the Insured is 65 years old on
June 4, 2001, the Age 65 Policy anniversary is June 5, 2001.
TOTAL DISABILITY For purposes of this rider, Total Disability is disability
which results from injury or sickness and prevents the Insured from working for
pay or profit:
1. In the Insured's regular occupation during the first 2 years of the
disability; and
2. Thereafter, in any occupation for which the Insured is reasonably fitted by
education, training, or experience.
Until the Insured's 25th birthday, "working for pay or profit" includes
attending school full time outside the home.
Total Disability also means (without regard to "working for pay or profit") the
total and irrecoverable loss of (a) sight of both eyes; (b) use of both hands or
both feet; or (c) use of one hand and one foot.
WAIVER PERIOD A waiver period becomes effective only after the Insured has
remained Totally Disabled for 6 continuous months. Once effective, the waiver
period begins:
1. On the Insured's Age 5 Policy Anniversary if the rider was issued and Total
Disability began before and continues to that date; or
2. For all others, on the Monthly Date which follows the date Total Disability
began.
In no event will a waiver period begin earlier than one year prior to our
receipt of written notice of the Insured's Total Disability.
The waiver period will continue as long as Total Disability continues
uninterrupted, except that the waiver period will:
1. End on the policy's Maturity Date (or death of the Insured, whichever is
earlier) if Total Disability:
a. Begins prior to the Insured's Age 60 Policy Anniversary; and
b. Continues to the Insured's Age 65 Policy Anniversary.
2. End on the Insured's Age 65 Policy Anniversary, if Total Disability:
a. Begins on or after the Insured's Age 60 Policy Anniversary; and
b. Begins before the Insured's Age 63 Policy Anniversary.
3. End after 2 years if Total Disability:
a. Begins on or after the Insured's Age 63 Policy Anniversary; and
b. Begins before the Insured's Age 65 Policy Anniversary.
If during a waiver period, a waived or credited Policy Charge would disqualify
your policy as "life insurance" as defined in the Internal Revenue Code, as
amended, we will not waive that Monthly Policy Charge. We will resume waiving
Monthly Policy Charges when they would not disqualify your policy as "life
insurance".
DISABILITY BENEFITS If the Insured becomes Totally Disabled while this rider is
in force, on each Monthly Date during a waiver period we will waive (or credit
to the Accumulated Value if already deducted) the Monthly Policy Charge for the
policy benefits.
If Death Benefit Option 1 is in effect when we begin to waive your Monthly
Policy Charges, we will then change it to Option 2. You may not change the death
benefit option or increase the face amount during a waiver period.
We will pay the Accumulated Value to you on the Maturity Date if the policy
matures while Monthly Policy Charges are being waived by this rider.
If Monthly Policy Charges for policy benefits are being waived under this rider,
your policy will remain in force whether or not your net surrender value is
sufficient to continue the Monthly Policy Charge.
You may continue to pay premiums as described in your policy.
COST OF WAIVER RIDER The cost for the Waiver of Monthly Policy Charge Rider is
deducted on each Monthly Date. The cost is 1 multiplied by the result of 2 minus
3 where:
1. Is the Cost of Waiver Rate as shown on the current Data Pages divided by 1
plus the monthly guaranteed rate (1.XXXXXX);
2. Is the death benefit at the beginning of the Policy Month; and
3. Is the Accumulated Value at the beginning of the month.
EXCEPTIONS In no case will the Monthly Policy Charge be waived or credited under
this rider if the Total Disability results from an intentional self-injury or
service in the military forces of any country at war, declared or undeclared.
PROOF OF DISABILITY We will require proof which satisfies us of the Insured's
Total Disability before any Monthly Policy Charge can be waived or credited.
Such proof may include examination at our expense by doctors we select.
We may require similar proof of the Insured's continued Total Disability from
time to time during the first 2 years of Total Disability and once a year
thereafter.
If such proof is not provided as we require, the waiver period will end and
Monthly Policy Charges will again be deducted from your Accumulated Value.
CLAIMS The benefits under this rider will not be granted unless we receive
Written Notice of the claim while the Insured is living and remains Totally
Disabled. Failure to comply however, will not invalidate a claim if it was not
reasonably possible to give written notice within such time and notice was given
as soon as reasonably possible.
Even if your policy terminates because of the expiration of a grace period,
benefits under this rider may be granted if:
1. The Total Disability for which claim is made began before the end of the
grace period;
2. We receive written notice of the claim within one year after the due date of
the first unpaid Monthly Policy Charge; and
3. All other conditions for this rider are met.
If Total Disability begins within the grace period, any unpaid Monthly Policy
Charge due prior to the start of the waiver period must be paid before the
benefits of this rider are available.
POLICY INCREASES Refer to your current policy Data Pages to see if your policy
contains a Cost of Living Increase rider or a Salary Increase rider.
If so, any increase arising from that rider will also be covered by this Waiver
of Monthly Policy Charge rider. The Monthly Policy Charge for this rider will be
increased based on the risk class or classes shown on the Data Pages. We will
not require evidence of insurability.
If an increase under the Cost of Living Increase rider becomes effective during
a waiver period, the Monthly Policy Charge for the increase will be waived as
long as the waiver period continues.
TERMINATION This rider ends on the first of:
1. The termination of your Policy;
2. The Insured's Age 65 Policy Anniversary, or at the end of a waiver period
which is in effect on the Insured's Age 65 Policy Anniversary; or
3. Our receipt of your Written Request to cancel it. The change will be
effective on the Monthly Date on or next following the date we receive the
request. We may require that you send your policy to our home office so that we
can record the cancellation.
SF 386
WAIVER OF SPECIFIED PREMIUM RIDER
This rider is part of your policy. It is issued in consideration of the
application and deduction from accumulated value of the monthly cost of waiver
rates for the benefits provided by this rider. All definitions, provisions and
exceptions of the policy apply to this rider unless changed by this rider. the
effective date is the Policy Date unless another date is shown on the current
Data Pages.
DEFINITIONS An Age Policy Anniversary means the Policy Anniversary on or next
following the birthday designated.
EXAMPLE: If the Policy Date is June 5, 2000, and the Insured is 65 years old on
June 4, 2001, the Age 65 Policy Anniversary is June 5, 2001.
TOTAL DISABILITY For purposes of this rider, Total Disability is disability
which results from injury or sickness and prevents the Insured from working for
pay or profit:
1. In the Insured's regular occupation during the first 2 years of the
disability; and
2. Thereafter, in any occupation for which the Insured is reasonably fitted by
education, training, or experience.
Until the Insured's 25th birthday, "working for pay or profit" includes
attending school full time outside the home.
Total Disability also means (without regard to "working for pay or profit") the
total and irrecoverable loss of (a) sight of both eyes; (b) use of both hands or
both feet; or (c) use of one hand and one foot.
WAIVER PERIOD A Waiver Period becomes effective only after the Insured has
remained Totally Disabled for 6 continuous months. Once effective, the Waiver
Period begins:
1. On the Insured's Age 5 Policy Anniversary if the rider was issued and Total
Disability began before and continues to that date; or
2. For all others, on the Monthly Date which follows the date Total Disability
began.
In no event will a Waiver Period begin earlier than one year prior to our
receipt of Written Notice of the Insured's Total Disability.
The Waiver Period will continue as long as Total Disability continues
uninterrupted, except that the Waiver Period will:
1. End on the policy's Maturity Date (or death of the Insured, whichever is
earlier) if Total Disability:
a. Begins prior to the Insured's Age 60 Policy Anniversary; and
b. Continues to the Insured's Age 65 Policy Anniversary.
2. End on the Insured's Age 65 Policy Anniversary, if Total Disability:
a. Begins on or after the Insured's Age 60 Policy Anniversary; and
b. Begins before the Insured's Age 63 Policy Anniversary.
3. End after 2 years if Total Disability:
a. Begins on or after the Insured's Age 63 Policy Anniversary; and
b. Begins before the Insured's Age 65 Policy Anniversary.
If during a Waiver Period, a paid specified premium would disqualify your policy
as "life insurance" as defined in the Internal Revenue Code, as amended, we will
not pay that portion of the specified premium which would cause the
disqualification. We will resume paying the entire specified premium when this
payment would not disqualify your policy as "life insurance".
DISABILITY BENEFITS If the Insured becomes Totally Disabled while this rider is
in force, beginning on the first Monthly Date following the commencement of a
Total Disability, we will pay the greater of the monthly specified premium as
shown on the current Data Pages or the Monthly Policy Charges while the Insured
remains Totally Disabled. We must receive proof of the Insured's Total
Disability which has continued for six continuous months and which began after
the Policy Date and began prior to the Insured's Attained Age 65.
If death benefit option 1 is in effect when we begin to waive your monthly
specified premium, we will the change it to option 2. You may not change the
death benefit option or increase the face amount during a waiver period.
We will pay the Accumulated Value of your policy to you on the maturity date if
the policy matures while the specified premium is being waived under this rider.
COST OF WAIVER RIDER The cost for the Waiver of Monthly Policy Charge Rider is
deducted on each Monthly Date. The cost is 1 multiplied by the result of 2 minus
3 where:
1. Is the Cost of Waiver Rate as shown on the current Data Pages divided by 1
plus the monthly guaranteed rate (1.XXXXXX);
2. Is the death benefit at the beginning of the Policy Month; and
3. Is the Accumulated Value at the beginning of the month.
The greater of the cost of Waiver of Specified Premium rider or cost of Waiver
of Monthly Policy Charge Rider is deducted on each Monthly Date. The cost for
the Waiver of Specified Premium rider is the sum of up to three parts--the cost
of the policy, the cost of the Spouse Term Insurance rider, if any, and the cost
for the Children Term Insurance rider, if any. The cost for each part is the
product of 1 and 2 where:
1. Is the Cost of Insurance for the policy or rider for the Policy Month; and
2. Is the Cost of Waiver rates for the policy or rider as shown on the current
Data Pages.
EXCEPTIONS In no case will the specified premiums be paid under this rider if
the Total Disability results from an intentional self-injury or service in the
military forces of any country at war, declared or undeclared.
We will not pay the specified premium for an Insured with a Total Disability
which commences prior to the Policy Date, or the effective date of this rider,
if later.
PROOF OF DISABILITY We will require proof which satisfies us of the Insured's
Total Disability before any specified premium shall be paid. Such proof may
include examination by doctors we select at our own expense.
We may require similar proof of the Insured's continued Total Disability from
time to time during the first 2 years of Total Disability and once a year
thereafter.
If such proof is not provided as we require, the waiver period will end and the
specified premium payments shall again become payable by the Owner.
CLAIMS The benefits of this rider will not be granted unless we receive Written
Notice of the claim while the Insured is living and remains Totally Disabled.
Failure to comply however, will not invalidate a claim if it was not reasonably
possible to give Written Notice within such time and notice was given as soon as
reasonably possible.
Even if your policy terminates because of the expiration of a grace period,
benefits of this rider may be granted if:
1. The Total Disability for which claim is made began before the end of the
grace period;
2. We receive Written Notice of the claim within one year after the due date of
the first unpaid specified premium; and
3. All other conditions for this rider are met.
If Total Disability begins within the grace period, any unpaid Monthly Policy
Charges due prior to the start of the Waiver Period must be paid before the
benefits of this rider are available.
POLICY INCREASES Refer to your current policy Data Pages to see if your policy
contains a Cost of Living Increase rider or a Salary Increase rider.
If so, any increase arising from that rider will also be covered by this Waiver
of Specified Premium rider. The Monthly Policy Charge for this rider will be
increased based on the risk class or classes shown on the Data Pages. We will
not require evidence of insurability.
If an increase under the Cost of Living Increase rider becomes effective during
a waiver period, the Monthly Policy Charge for the increase will be waived as
long as the waiver period continues.
TERMINATION This rider ends on the first of:
1. The termination of your policy;
2. The Insured's Age 65 Policy Anniversary; or
3. Our receipt of your Written Request to cancel it. The change will be
effective on the Monthly Date on or next following the date we receive the
request. We may require that you send your policy to our home office so that we
can record the cancellation.
SF381
ACCIDENTAL DEATH BENEFIT RIDER
This rider is part of your policy. It is issued in consideration of the
application and deduction from the Accumulated Value of the monthly cost of
accidental death benefits provided by this rider. All definitions, provisions
and exceptions of the policy apply to this rider unless changed by this rider.
The effective date is the Policy Date unless another date is shown on the data
page.
ACCIDENTAL DEATH BENEFIT This rider provides an accidental death benefit as
shown on the data page. We will pay the benefit to the beneficiary upon receipt
of proof satisfactory to us that:
1. The Insured died on or after the Policy anniversary following the Insured's
first birthday;
2. The Insured died as a result, directly and independently of all other causes,
of accidental bodily injury; and
3. The death is not a direct or indirect result of an Excluded Risk.
EXCLUDED RISKS We will not pay the accidental death benefit if death results
directly or indirectly from any of the following:
1. Suicide, while sane or insane;
2. War or an act of war, or service in the military forces of any country at
war, declared or undeclared;
3. Bodily or mental disease or infirmary, or medical or surgical treatment
thereof;
4. The commission or attempted commission by the Insured of an assault or
felony;
5. Operating, riding in or descending from any kind of aircraft in which the
Insured is a pilot or a member of the operating crew, or in which the Insured is
receiving or giving any kind of training or instruction; or
6. The voluntary taking of or the effects of voluntarily using any drug,
narcotic or hallucinogen unless prescribed for and administered to the Insured
by a licensed physician who is not a member of the Insured's family. This
includes any controlled substances listed in Schedules I, II, III or IV of the
Federal Controlled Substances Act, 231 U.S.C. Section 812, or successor
statutes, as they may be amended.
AUTOPSY We reserve the right to examine the Insured's body and, unless
prohibited by law, to make an autopsy.
INCREASES You may increase the accidental death benefit up to the current face
amount of your policy, provided:
1. The increase is for at least the minimum face amount increase shown on the
data page;
2. The increase does not result in a total benefit exceeding our underwriting
limits then in effect; and
3. You supply evidence of insurability which satisfies us under our underwriting
rules then in effect.
FACE AMOUNT Our underwriting rules do not permit accidental death benefit
amounts greater than DECREASES policy face amounts. If a face amount decrease
causes a conflict with that rule, we will reduce the accidental death benefit
amount and its cost, accordingly.
COST OF INSURANCE We deduct the cost of insurance for the benefits provided by
this rider on each Monthly Date. The cost is 1 multiplied by 2 where:
1. Is the cost of insurance rate, as described in the Cost of insurance Rates
section, divided by 1,000; and
2. is the accidental death benefit.
COST OF INSURANCE RATES The monthly cost of insurance rates for the accidental
death benefit are based on the attained age, sex, and risk class of the insured.
We determine these rates based on our expectations as to our future mortality
experience. Any change in these rates applies to all individuals of the same
class as the insured. The cost of insurance rates will never be greater than
those shown on the data page in the Table of Guaranteed Maximum Cost of
Insurance Rates for Accidental Death Benefits. However, different guaranteed
maximum cost of insurance rates may apply to any increase in the accidental
death benefit.
TERMINATION This rider ends on the first of:
1. Termination of your policy;
2. The policy anniversary following the insured's 70th birthday; or
3. Our receipt of your written request to cancel this rider. The change will be
effective on the monthly date on or next following the date we receive the
request. We may require that you send your policy to our home office to record
the cancellation.
SF 40
CHILDREN TERM INSURANCE RIDER
This rider is part of your policy. It is issued in consideration of the
application and deduction from the accumulated value of the monthly cost of
children term insurance benefits provided by tjis rider. for the benefits
provided by this rider. All definitions, provisions and exceptions of the policy
apply to this rider unless changed by this rider. The effective date is the
Policy Date unless another date is shown on the current Data Pages.
DEFINITION An insured child under this rider is:
1. Any child, stepchild or legally adopted child of the
insured named in the application for this rider who is
less than 18 years of age on the date of the application
for this rider.
2. Any child of the insured born after the date of the
application for this rider; and
3. Any child less than 18 years of age legally adopted by the
insured after the date of the application for this rider.
A child will not be an insured child and will not be covered before attaining
the age of 14 days or beyond this rider's protection period.
INSURANCE BENEFIT We will pay this rider's beneficiary its insurance amount upon
receipt of proof of an insured child's death. This rider's insurance amount is
equal to the number of units of this rider included in your policy, as shown on
the data page, times $1,000.
EXAMPLES:
3 UNITS children term x $1,000 =
$3,000 insurance amount for each child
4.5 UNITS children term x $1,000
$4,500 insurance amount for each child
PROTECTION PERIOD This rider's protection period ends on the first of:
1. Termination of this rider (see Termination section below)
or
2. As to any individual insured child, the Policy Anniversary
next following the insured child's 25th birthday.
COST OF INSURANCE We deduct the cost of insurance for the benefits provided by
this rider on each monthly date. The cost is 1 multiplied by 2 where:
1. Is the number of units; and
2. Is the rate per unit shown on the data page.
BENEFICIARY The beneficiary named in the application for this rider will receive
this rider's insurance amount, unless the beneficiary is changed as provided in
your policy.
OWNERSHIP The policy's owner is also the owner of this rider. Any changes in
ownership of your policy and all provisions which apply to ownership also apply
to this rider.
INCONTESTABILITY We will not claim this rider is void or deny payment of its
insurance amount after it has been in force for 2 years from its effective date.
SUICIDE This rider's insurance amount will not be paid if the insured dies by
suicide, while sane or insane, within 2 years of its effective date. Instead, we
will return tall costs of children term insurance deducted for this rider. This
amount will be paid to the beneficiary.
PAID-UP BENEFIT If the insured dies while your policy and this rider are in
force, this rider will become fully paid up. It will then continue in force
during its protection period, as shown on the current Data Pages, unless
surrendered. You may obtain the surrender value of this rider, when fully paid
up, at any time. Your request must be in writing. The surrender value will be
the net single premium for the insurance at the respective attained age of each
insured child based on the Commissioners 1980 Standard Ordinary Mortality Table,
assuming:
1. Interest at 4% a year;
2. Immediate payment of claims; and
3. Age determined on last birthday basis.
The net surrender value within 30 days after a Policy Anniversary will not be
less than the value on the Anniversary.
EXCHANGE Any insurance under this rider may be exchanged for a policy on the
life of the insured child on the earlier of:
1. The Policy Anniversary following the insured child's 25th
birthday;
2. The Policy Anniversary following the Insured's 65th
birthday; or
3. The death of the Insured.
No evidence of insurability is required provided:
1. We receive written application and payment of the first
premium for the policy no earlier than 90 days before
nor later than 31 days after the date exchange may be made
as provided above; and
2. The policy face amount is not less than $1,000 per unit of
this rider and is not more than $5,000 per unit of this
rider.
This policy may be any form of life policy, except term, available under our
underwriting guidelines then in effect. Its premium rate will be at our then
published standard risk class rate for the policy based on the insured child's
attained age. Its effective date will be the date of exchange. No insurance is
provided until the insurance under this rider terminates.
The new policy may include Waiver or Accidental Death riders with our consent
and upon payment of any additional cost we determine for the riders.
If an insured child dies within 31 days of the date on which exchange would have
been allowed, we will pay a death benefit of $1,000 per unit of this rider.
REINSTATEMENT This rider may be reinstated as part of your policy if, in
addition to all other policy conditions for reinstatement, you supply evidence
which satisfies us that each proposed insured child is insurable under our
underwriting guidelines then in effect.
Upon reinstatement, if any child proposed for insurance does not meet the above
conditions, this rider may still be reinstated as part of your policy but only
with an endorsement excluding such ineligible child from insurance coverage
under this rider.
TERMINATION This rider ends on the first of:
1. Termination of your policy;
2. The Policy Anniversary following the Insured's 65th
birthday; or
3. Our receipt of your written request to cancel it. The
change will be effective on the Monthly Date on or next
following the date we receive the request. We may require
you to send your policy to the home office to record the
cancellation.
SF 392
SPOUSE TERM INSURANCE RIDER
This rider is part of your policy. It is issued in consideration of the
application and deduction from the accumulated value of the monthly cost of
spouse term insurance benefits provided by this rider. All definitions,
provisions and exceptions of the policy apply to this rider unless changed by
this rider. The effective date is the Policy Date unless another date is shown
on the current Data Pages.
DEFINITION SPOUSE--means, for the purposes of this rider, the person named as
the spouse in the application for this rider.
INSURANCE BENEFIT Upon receipt of proof that the spouse died before the
termination of this rider, we will pay the beneficiary of this rider the face
amount shown on the current Data Pages.
COST OF INSURANCE The cost of insurance rates for spouse term insurance are
based on the attained age, sex, and risk class of the spouse and the Insured. We
determine these rates based on our expectations as to our future mortality
experience. Any change in these rates applies to all individuals of the same
class as the spouse and the Insured. the cost of insu5rance rates will never be
greater than those shown on the current Data Pages in the Table of Guaranteed
Maximum Cost of Spouse Term Insurance Rates.
PAID-UP BENEFIT If the insured dies while your policy and this rider are in
force, this rider will become fully paid up. It will then continue in force
during its protection period, as shown on the current Data Pages, unless
surrendered. You may obtain the surrender value of this rider, when fully paid
up, at any time. Your request must be in writing. The surrender value will be
the net single premium for the insurance at the respective attained age of each
insured child based on the Commissioners 1980 Standard Ordinary Mortality Table,
assuming:
1. Interest at 4% a year;
2. Immediate payment of claims; and
3. Age determined on last birthday basis.
The net surrender value within 30 days after a Policy Anniversary will not be
less than the value on the Anniversary.
EXCHANGE Any insurance under this rider may be exchanged for a policy on the
life of the insured spouse without evidence of insurability. This exchange must
occur on or before this rider's expiration date.
The policy may be any form of life policy, except term, available under our
underwriting guidelines then in effect, based on the attained age of the spouse.
the policy will be in the same risk class as shown for the spouse on this
policy's current Data Pages. Its effective date will be the date of exchange. No
insurance is provided until the insurance under this rider terminates.
BENEFICIARY The beneficiary named in the application for this rider will receive
this rider's insurance amount, unless the beneficiary is changed as provided in
your policy.
MISSTATEMENT OF AGE AND SEXIf the age and sex of either the Insured or spouse is
not correctly shown on the current Data Pages, we will adjust the amount
payable, under this rider to reflect the correct age and sex. The ages shown
should be the ages on the respective birthdays prior to the effective date.
INCONTESTABILITY We will not claim this rider is void or deny payment of its
insurance amount after it has been in force during the lifetime of the spouse
for 2 years from its effective date.
SUICIDE This rider's insurance amount will not be paid if the insured or spouse
dies by suicide, while sane or insane, within 2 years of its effective date.
Instead, the rider will immediately terminate, and we will return all costs of
spouse term insurance charges paid. This amount will be paid to the beneficiary.
REINSTATEMENT This rider may be reinstated as part of your policy in a risk
class we determine based on facts in the application for reinstatement, if in
addition to all other policy conditions for reinstatement you supply evidence
which satisfies us that the spouse is insurable under our underwriting
guidelines then in effect.
TERMINATION This rider ends on the first of:
1. Termination of your policy;
2. Its exchange as provided above;
3. The end of the protection period as shown on the current
Data Pages; or
4. Our receipt of your written request to cancel it. The
change will be effective on the Monthly Date on or next
following the date we receive the request. We may
require you to send your policy to the home office to
record the cancellation.
CHANGE OF INSURED RIDER
This rider is part of your policy. It is issued in consideration of the
application. There is no charge for this rider.
CHANGE OF INSURED You may name a new Insured for this policy provided:
PRIVILEGE
1. You are the original and current owner of this policy;
2. This policy is in force and is not within the grace period;
3. Benefits are not being granted under any rider due to the Insured's
disability;
4. You have an insurable interest in the life of the proposed new Insured;
5. The Age Last Birthday of the proposed new insured is 69 or under on the
Change of Insured Date; and
6. You supply evidence which satisfies us of the proposed new Insured's
insurability under our underwriting guidelines then in effect.
LIMITATIONS AND CONDITIONS The change to a new Insured is subject to these
limitations and conditions:
1. The face amount, surrender value and accumulated value will remain the
same.
2. The minimum monthly premium after the Change of Insured Date will be the
greater of:
a. The minimum monthly premium before the Change of Insured Date; or
b. The minimum monthly premium based on the age and risk class of the
new Insured.
3. Any benefit riders which are part of this policy end on the Change of
Insured Date. Riders may be added for the new Insured only with our
consent.
4. Any loans or unpaid loan interest secured by your policy will remain
indebtedness and are subject to the conditions of the Policy Loans
section of your policy.
5. Your policy will remain subject to any existing assignments.
6. The Change of Insured Date will be the Monthly Date next following our
approval of a requested Change of Insured application. The insurance on
the new insured will be effective on the Change of Insured Date.
EXAMPLE: If the Policy Date is June 5, 2000 and your requested Change of Insured
is approved on April 20, 2002, the Change of Insured Date will be May 5, 2002.
INCONTESTABILITY We will not claim your policy is void or deny payment of any
proceeds after it has been in force during the Insured's lifetime for two years
from the Change of Insured Date for the new Insured, except for any claim for
total disability or accidental death benefits your policy may provide.
Any face amount increase made after the Change of Insured Date has its own
incontestability period which begins on the adjustment date.
SUICIDE The death proceeds of the policy will not be paid if the new Insured
dies by suicide, while sane or insane, within two years of the date of exchange.
Instead, we will pay the net surrender value as of the date of death.
TERMINATION This rider ends on the first of:
1. The Policy Anniversary following the Insured's 70th birthday;
2. Termination of your policy;
3. The death of the Insured under your policy while it is in force; or
4. The application of your policy's net surrender value under a lapse or
surrender option, or the surrender of this rider.
DEATH BENEFIT GUARANTEE RIDER
This rider is part of your policy. The effective date is the Policy Date.
DEATH BENEFIT If you meet the death benefit guarantee premium requirement
GUARANTEE described below, the policy will not enter its grace period even
if your net surrender value is not sufficient to cover the
Monthly Policy Charge on a Monthly Date.
MATURITY On the policy Maturity Date, we will pay you the maturity
GUARANTEE proceeds if the following conditions are met:
1. This rider is in force;
2. The Insured is alive; and
3. You have met the death benefit guarantee premium
requirement described below.
DEATH BENEFIT The death benefit guarantee premium requirement on each
GUARANTEE PREMIUM Monthly Date is met if (1) is equal to or greater than (2)
REQUIREMENT where:
1. Is the sum of all premiums paid less any partial
surrenders and any policy loans and unpaid loan
interest; and
2. Is the sum of the monthly death benefit guarantee
premiums as shown on the current Data Pages applicable
to the number of months your policy has been in force,
less one month.
The death benefit guarantee premium is based on the issue age, death benefit
option, and risk class of the Insured and is shown on the current Data Pages.
For any month that your Monthly Policy Charge is being paid by our Waiver of
Monthly Policy Charge Rider, we will consider your monthly death benefit
guarantee premium to be zero.
CHANGES THAT Your death benefit guarantee premium may change if:
AFFECT THE DEATH
BENEFIT GUARANTEE 1. Your face amount is increased or decreased;
PREMIUM REQUIREMENT
2. There is a change in your death benefit option;
3. A rider is added or deleted.
If your death benefit guarantee premium changes we will send you new data pages
which reflect the change. Also, as a result of a change, an additional premium
may be required on the date of change in order to meet the new death benefit
guarantee
NOTICE If, on any Monthly Date, the death benefit guarantee premium requirement
is not met, we will send you a notice of the premium required to maintain the
guarantee.
If the premium is not received in our home office prior to the expiration of 61
days after the date we mail our notice, the death benefit guarantee will no
longer be in effect and this rider will terminate.
REINSTATEMENT If this rider terminates, it may not be reinstated. This rider
TERMINATION ends:
1. When your policy terminates;
2. On the expiration of 61 days after the date we mail
our notice to you that the death benefit guarantee
premium has not been met and your failure to remit the
required premium; or
3. On the later of your Age 65 Policy Anniversary or five
years after the effective date of this rider.
SALARY INCREASE RIDER
This rider is part of your policy. It is issued based on the information given
in the application and deduction from the accumulated value of the monthly cost
of the benefits provided by this rider. All definitions, provisions and
exceptions of the policy apply to this rider unless changed by this rider. The
effective date is the same as the Policy Date unless another date is shown on
the current Data Pages.
DEFINITIONS SALARY REVIEW DATE - means the month and day for the annual
increase under this rider as shown on the current Data Pages.
EMPLOYER - means the person or busines for whom the Insured is working, as shown
on the application for this rider. If that business is purchased, the new
business will be considered the employer.
MULTIPLIER - means the face amount of this policy on the effective date of this
rider plus the amount of any Other Employer Purchased Insurance reported to us
by the Employer as of the effective date of this rider, divided by the Insured's
salary as shown on the application for this rider. This Multiplier may be
increased provided you supply us with evidence which satisfies us that the
Insured is qualified for the increase under our underwriting guidelines then in
effect.
OTHER EMPLOYER PURCHASED INSURANCE - means the amount of group and individual
life insurance in force on the life of the Insured (other than the insurance
provided by the policy to which the rider is attached) for which premiums are
paid in whole or in part by the Employer. If this amount exceeds the limits
established by our underwriting guidelines in effect when the Multiplier is
being calculated, Other Employer Purchased Insurance shall mean the maximum
amount provided in those underwriting guidelines.
If this rider and the policy to which it is attached are integrated with the
Other Employer Purchased Insurance for the Insured's benefit plan, the amount of
the Other Employer Purchased Insurance as of the effective date of this rider
will be used in calculating the Multiplier and the amount of increase available
under each increase option.
SALARY - means the Insured's annual compensation as reported to us by the
Employer and as reportable on the Insured's W-2 Wage and Tax Statement.
THE INCREASE You have the right to purchase additional insurance on the
Insured's life, without OPTION evidence of insurability, subject to the
provisions of this rider, as long as your policy and this rider are in force
with no Monthly Policy Charge in default.
Each increase will be made based on the Insured's Attained Age on the current
Policy Anniversary. The increase will be in a premium class equivalent to that
shown on the current Data Pages.
If the insured's salary has not changed or has decreased as of the Salary Review
Date, additional insurance will not be offered under this rider on that date.
While the Insured is actively engaged in employment at the Employer's usual
place or places of business as noted on the application for this rider, and
while the Insured is performing normal daily job duties, increases are available
on every Salary Review Date from the first Salary Review Date to the Salary
Review Date next following the Insured's 65th birthday, subject to the
provisions of this rider.
AMOUNT OF Increases are subject to your acceptance, to the provisions of
INCREASE this rider and any other applicable policy provisions, including
any exclusions or limitations.
The amount of the increase will be:
1. The Insured's Salary as reported for the current Salary Review
Date
MULTIPLIED BY
2. The Multiplier shown on the current Data Pages
LESS
3. Any Other Employer Purchased Insurance which remains in force
on the current Salary Review Date
LESS
4. The current face amount of your policy on the current Salary
Review Date.
EXAMPLE: If the face amount of your policy is $150,000, the Multiplier is 3, the
Insured's Salary on the annual review date is $60,000, and Other Employer
Purchased Insurance is $15,000, the amount of increase is $15,000.
$60,000 X 3 = $180,000 - $15,000 - $150,000 = $15,000
LIMITS ON Any increase we offer you will not exceed the lesser of
MAXIMUM INCREASE 1 or 2 below.
1. (10% of A) minus B where:
A equals the face amount as of the Policy Date or the last Policy Anniversary,
whichever is later; and
B equals any face amount increase(s) since the last Policy Date or the last
Policy Anniversary, whichever is later.
2. The maximum increase amount shown on the current
Data Pages minus any face amount increase(s)
since the Policy Date or the last Policy
Anniversary, whichever is later.
LIFETIME MAXIMUM INCREASE - Notwithstanding anything to the contrary in this
rider, the face amount may at no time exceed the Lifetime Maximum Increase
amount shown on the current Data Pages.
EFFECTIVE DATE OF INCREASE Any increase offered under this rider, unless timely
rejected, will be effective on the Monthly Date immediately following the date
of our increase offer.
ACCEPTANCE AND REJECTION OF INCREASE Your premium will be increased for any
increase in protection made under this rider. We will offer any increase under
this rider Sby notifying you of the increased premium. You may accept the face
amount increase by paying the increased premium. We will then send you new Data
Pages reflecting the changes in your policy due to such increase.
You may reject an increase by notifying us in writing prior to the effective
date of the increase, or by not paying the increased premium.
MONTHLY POLICY CHARGES The Monthly Policy Charge will be increased to cover the
costs and charges for any increase in protection made under this rider. This
increase will be based on the risk class or classes shown on the current data
pages.
WAIVER BENEFITS If your policy has a rider that provides any benefits due to
disability, we will increase such benefits when an increase occurs under this
rider. The premium for the waiver rider will be increased accordingly. No
evidence of insurability will be required.
If your policy includes a Waiver of Specified Premium rider, you may increase
the specified premium amount under that rider whenever this rider's increase
option is exercised. However, any increases of the specified premium amount will
be no greater than:
1. The amount necessary to keep the same specified premium amount/tota
annual premium amount ratio that existed before the increase; or
2. The amount necessary to make the specified premium amount and the
total annual premium amount the same.
Any increases of the specified premium amount will increase the premium for the
Waiver of Specified Premium Rider. Increases require no evidence of
insurability.
MISSTATEMENT OF SALARY If the Insured's Salary is misstated, we may:
1. Reduce any benefits to reflect the correct Salary;
2. Exercise any other rights available to us which are
not excluded by the Incontestability provision of the
policy.
TERMINATION This rider terminates, with no further increases available, on the
first of:
1. The Policy Anniversary following the Insured's 65th
birthday;
2. Your rejection of an increase;
3. The termination of your policy;
4. Any decrease in insurance which causes the face amount
of the policy to be less than:
The Insured's Salary
MULTIPLIED BY
The Multiplier
LESS
Any Other Employer Purchased Insurance
5. The Insured's leaving the employment of the Employer;
6. Any failure to provide updated Salary information as
required by this rider; or
7. Our receipt of your Written Request to cancel the
rider. We may require you to send your policy to the
home office to record the cancellation.
REINSTATEMENT In addition to all other policy conditions for reinstatement, if
either of the following conditions exists, this rider may be reinstated as part
of your policy whenever an underwritten increase is made in your policy's face
amount, provided that increase is issued at an available premium class.
This rider will be reinstated in a premium class we determine based in
information provided in the application for reinstatement.
EXTRA PROTECTION INCREASE RIDER
This rider is part of your policy. It is issued based on the information given
in the application and deduction from the accumulated value of the monthly cost
of the benefits provided by this rider. All definitions, provisions and
exceptions of the policy apply to this rider unless changed by this rider. The
effective date is the same as the Policy Date unless another date is shown on
the current Data Pages.
FACE AMOUNT INCREASES On each Policy Anniversary, we will increase the face
amount of your policy, subject to the provisions of this rider, as long as your
rider is in force with no premium is in default. These increases are automatic.
No evidence of insurability is required.
The amount of the increase will be:
1. The face amount of your policy as of the Policy Date
PLUS
2. The premiums paid as of the Policy Date, up to the Extra Protection
Amount elected on your application, as shown on your current data
pages
LESS
3. The face amount of your policy on the current increase date, not
including the current increase from this rider.
The premium for each increase will be based on the Insured's Attained Age on the
Policy Anniversary on which the increase is effective. The increase will be in a
premium increase class equivalent to that shown on the current Data Pages.
Increases are subject to your acceptance, to the provisions of this rider and
any other applicable policy provisions, including any exclusions or limitations.
Increases are available only when the amount of the increase is at least the
minimum increase shown on the current data pages.
EFFECTIVE DATE Any increase accepted under this rider, unless timely rejected,
will be effective on the Policy Anniversary immediately following the date of
our increase offer.
ACCEPTANCE AND REJECTION OF INCREASES Your premium will be increased for any
increase in protection made under this rider. We will offer any increase under
this rider by notifying you of the increased premium. You may accept the face
amount increase by paying the increased premium. We will then send you new Data
Pages reflecting the changes in your policy due to such increase.
You may reject an increase by notifying us in writing prior to the effective
date of the increase, or by not paying the increased premium.
LIMITS ON INCREASE MAXIMUM INCREASE - Any increase we offer you will not
exceed the lesser of 1 or 2 below.
1. (10% of A) minus B where:
A equals the face amount as of the Policy Date or the last Policy Anniversary,
whichever is later; and
B equals any face amount increase(s) since the last Policy Date or the last
Policy Anniversary, whichever is later.
2. The maximum increase amount shown on the current Data Pages minus
any face amount increase(s) since the Policy Date or the last
Policy Anniversary, whichever is later.
LIFETIME MAXIMUM INCREASE - Notwithstanding anything to the contrary in this
rider, the face amount may at no time exceed the Lifetime Maximum Increase
amount shown on the current Data Pages.
WAIVER BENEFITS If your policy has a rider that provides any benefits due to
disability, we will increase such benefits when an increase occurs under this
rider. For more information, see the rider providing those benefits.
If your policy includes a Waiver of Specified Premium rider, you may increase
the speckfied premium amount under that rider whenever this rider's increase
option is exercised. However, any increases of the specified premium amount will
be no greater than:
1. The amount necessary to keep the same specified premium
amount/total annual premium amount ratio that existed before the
increase; or
2. The amount necessary to make the specified premium amount and the
total annual premium amount the same.
Any increases of the specified premium amount will increase the premium for the
Waiver of Specified Premium Rider. Increases require no evidence of
insurability.
TERMINATION This rider terminates, with no further increases available, on the
first of:
1. The Policy Anniversary following the Insured's 65th birthd
2. Your rejection of an increase;
3. The termination of your policy;
4. The application of your policy's net surrender value under a
lapse or surrender option.
5. Our receipt of your Written Request to cancel the rider; or
REINSTATEMENT In addition to all other policy conditions for reinstatement, if
either of the following conditions exists, this rider may be reinstated as part
of your policy:
1. Whenever an underwritten increase is made in your policy's face
amount, provided that increase is issued at an available premium
class; or
2. Automatically on the Policy Anniversary following the insured's
21st birthday, if terminated prior to that time.
This rider will be reinstated in a risk class we determine based in information
provided in the application for reinstatement.
ACCOUNTING BENEFIT RIDER
This rider is part of your policy. All definitions, provisions, and exceptions
of the policy apply to this rider unless changed by this rider. The effective
date is the Policy Date.
RIDER The SCHEDULE OF CHAGES and TABLE OF SURRENDER CHARGES provisions
PROVISIONS in yourcurrent Data Pages are amended as follows:
1. SCHEDULE OF CHARGES
The following paragraph is inserted as the last two sentences
in the paragraph labeled "Premium Expense Charge:"
Should you surrender this policy for its net surrender
value, we will refund you a percentage of the cumulative
premium expense charges by applying the following
percentages: If you surrender your policy in Year One -
100%; Year Two - 67%; Year Three - 33%; Year Four and later -
0%.
2. TABLE OF SURRENDER CHARGES
The following two sentences are added to the paragraph
following the TABLE OF SURRENDER CHARGES:
Should you surrender this policy for its net surrender value
the applicable surrender charges will be reduced by the
application of the following percentages: If you surrender
your policy in Year One - 100%; Year Two - 80%; Year Three -
60%; Year Four - 40%; Year Five - 20%; Year Six and after -
0%.
TERMINATION This rider ends on the first of:
1. Termination of
2. Our receipt of your Written Request to cancel it. To be
effective on a specific Monthly Date your Written Request
must be received by us within 31 daysafter that date.
We may require you to send your policy to the home
office to record the cancellation; or
3. Your Sixth Policy Anniversary.
EXTENDED COVERAGE RIDER
This rider is part of your policy. All definitions, provisions, and exceptions
of the policy apply to this rider unless changed by this rider. The effective
date is the Policy Date unless another date is shown on the current Data Pages.
ELIGIBILITY The provisions described below will be applicable only if the
Insured is living on"the Maturity Date as defined in your policy.
RIDER PROVISIONS This rider provides that:
1. We will continue your policy in force, and the Maturity Date will be the date
of the Insured's death.
2. We will pay the beneficiary death proceeds equal to 105% of the
Accumulated Value, less any loans and loan interest, as of the date of the
Insured's death.
3. The cost of insurance and monthly administrative charge will both be zero.
4. No additional payments will be allowed, and no adjustment options will be
available.
TERMINATION This rider ends on the first of:
1. Termination of your policy; or
2. Our receipt of your Written Request to cancel it. To be effective on a
specific Monthly Date your Written Request must be received by us within 31 days
after that date. We may require you to send your policy to the home office to
record the cancellation.
SF 387
ACCELERATED BENEFITS RIDER
This rider is part of your policy. All definitions, provisions, and exceptions
of the policy apply to this rider unless changed by this rider. The effective
date is the same as the policy date unless another date is shown on the data
page.
DEFINITIONS The eligible face amount means:
Under Option 1.
The face amount of your policy.
Under Option 2.
The sum of the face amount of your policy plus its accumulated value.
BENEFIT We will pay an accelerated benefit if the insured is terminally ill,
subject to the provisions of this rider. The maximum accelerated benefit you may
receive is the lesser of the amount shown in the data page or:
1. 75% of the eligible face amount;
MINUS
2. Any outstanding policy loans, unpaid loan interest and previously paid
accelerated benefit.
We will pay the accelerated benefit as a lump sum. Payments other than as a lump
sum may be made at your request, subject to our approval. The minimum amount if
any payment is $500. We may charge a one time administrative expense fee up to
the maximum which is shown on the data page.
INTEREST We will charge interest on the amount of the accelerated benefit. The
interest accrues daily at the same interest rate as the policy's loan interest
rate. On the policy anniversary, the accrued interest will be added to the
accelerated benefit and bear interest at the rate then in effect. Additional
interest will not accrue if the accelerated benefit plus accrued interest equals
the eligible face amount.
EFFECT ON YOUR POLICY The accelerated benefit will first be used to repay any
outstanding policy loans and unpaid loan interest. The accelerated benefit plus
accrued interest will be treated as a lien against the policy values. Your
access to the net surrender value of your policy through policy loans, partial
surrenders or full surrender is limited to any excess of the net surrender value
over the accelerated benefit and accrued interest on the accelerated benefit.
Death proceeds, as defined in the policy, will be reduced by the amount of the
accelerated benefit plus accrued interest. Any benefits payable under other
riders attached to your policy are not affected by any benefit paid under this
rider.
PROOF OF TERMINAL ILLNESS Before payment of any accelerated benefit, we will
require you provide us with proof satisfactory to us that the insured's life
expectancy is 12 months or less from the date of application for the accelerated
benefit. this proof will include the certification of a licensed physician, who
is not yourself or a member of your family. We reserve the right to obtain a
second medical opinion at our expense.
CLAIMS We must receive your written request for an accelerated benefit in a form
acceptable to us. Upon receipt of your request, we will provide a claim form
within 10 working days.
CONDITIONS The payment of any accelerated benefit is subject to the following
conditions:
1. The policy must be in force other than as extended term or paid-up term
insurance.
2. The policy must not be assigned except to us as a security for a loan.
3. The payment of an accelerated benefit must be approved by any irrevocable
beneficiary.
4. This rider provides for the accelerated payment of the death benefit of your
life insurance policy. This is not meant to cause you to involuntarily access
proceeds ultimately payable to the beneficiary. Therefore, you are not eligible
for this benefit:
a. If you are required by law to use this benefit to meet the claims of
creditors, whether in bankruptcy or otherwise; or
b. If you are required by a government agency to use this benefit in order to
apply for , obtain, or otherwise keep a government benefit or entitlement.
TERMINATION This rider ends on the first of:
1. The termination of the policy to which this rider is attached; or
2. Our receipt of your written request to cancel this rider. We have the right
to require that you send us this policy so we can record the cancellation.
REINSTATEMENT This rider may be reinstated as part of your policy if it is
terminated under 1 or 2 above.
SF 209
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY. Adjustable death
benefit. Benefits payable at death or earlier Maturity Date. Flexible premiums
payable until Maturity Date or prior death.
This policy is a legal contract between you, as owner, and us, Principal Mutual
Life Insurance Company. Your policy is issued based on the information in the
application and payment of premiums as shown on the current Data Pages.
We will pay the benefits of this policy in accordance with its provisions.
Your net premiums are added to your Policy Value. You may allocate them to one
or more of the Separate Account Divisions and to the Fixed Account.
The portion of your Policy Value that is in the Separate Account will vary from
day to day. The amount is not guaranteed. It may increase or decrease depending
on the investment experience of the underlying divisions that you have chosen.
There are no minimum guarantees as to such portion of your Policy Value.
The portion of your Policy Value that is in the Fixed Account will accumulate,
after deductions, at rates of interest we determine. Such rates will not be less
than 3% a year.
The amount and duration of the death benefit may be variable or fixed as
described in this policy.
10 DAY EXAMINATION OFFER. IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS
POLICY. IF YOU ARE NOT SATISFIED, YOU MAY RETURN YOUR POLICY TO EITHER YOUR
AGENT OR OUR HOME OFFICE BEFORE THE LATTER OF:
(1) 10 DAYS OF ITS RECEIPT, (2) 45 DAYS AFTER THE APPLICATION WAS SIGNED; OR (3)
10 DAYS FROM THE DELIVERY OF THE NOTICE OF THE RIGHT TO CANCEL. WE WILL REFUND
ANY PREMIUM PAID AND YOUR POLICY WILL BE CONSIDERED VOID FROM ITS INCEPTION.
PLEASE READ YOUR POLICY CAREFULLY SO YOU MAY BETTER USE ITS MANY BENEFITS.
PARTICIPATING.
The terms of this policy start on the Policy Date and will stay in force until
the Insured's Age 95 Policy Anniversary so long as you satisfy the requirements
as outlined in your policy.
- -------------------------------
Vice President,
and Corporate Secretary
- -------------------------------
President
[GRAPHIC OMITTED] Principal Mutual Life
Insurance Company
711 High Street
Des Moines, Iowa 50392-0001
- --------------------------------------------------------------------------------
INSURED John Doe POLICY DATE November 21, 2001
OWNER Jane Doe POLICY Flexible Premium Variable
Universal Life
POLICY NUMBER SAMPLE FACE AMOUNT $1,000,000
<PAGE>
INDEX
PAGE PAGE
Adjusting the Face Amount.........18 Loan Interest Charge...........14
Age and Sex.......................25 Loan Repayment.................14
Alterations...................... 25 Owner/Beneficiary Changes......25
Assignment........................25 Planned Periodic Premiums.......6
Benefit Payment Options...........19 Policy Expenses................15
Contract..........................25 Policy Value...................10
Cost of insurance Rates...........16 Premium Payment Limits..........6
Data Page..........................3 Reinstatement...................8
Death Benefit Option..............17 Right to Exchange Policy.......24
Death Benefit Option Changes .....18 Statement of Value.............27
Death Proceeds....................17 Suicide........................26
Definitions........................4 Surrender Value................14
Fixed Account......................9 Termination.....................8
Grace Period.......................7 Transfers......................11
Incontestability..................25 Variable Life Separate Account..9
Investment Accounts................9
A copy of the application and any additional benefits provided
by rider follow the last page of this policy.
<PAGE>
DATA PAGE PAGE 3
POLICY NUMBER Sample POLICY DATE November 21, 2001
INSURED John Doe ISSUE AGE-SEX 35-Male
SCHEDULE OF PROTECTION
FORM PROTECTION*1
NO. POLICY AND RIDERS FACE AMOUNT PERIOD DEATH BENEFIT
SF379 Flexible Premium $X,XXX,XXX To Age 95*2 Option X
Variable Universal
Life
SF380 Cost of Living To Age 55
PREMIUM INFORMATION
Your planned periodic premium of $XXX.XX is payable XXXXXXXX.
*1 If sufficient premiums are paid, this policy provides life insurance
protection on the Insured until the maturity date, which is the Policy
Anniversary following the birthday on which the Insured attains age 95, or
termination of the Extended Maturity Rider, whichever is later. YOU MAY HAVE
TO PAY OTHER THAN THE PLANNED PERIODIC PREMIUM SHOWN ABOVE TO KEEP THIS
POLICY AND COVERAGE IN FORCE TO THAT DATE, and to keep any additional benefit
riders in force.
*2 Any reference to age means the Policy Anniversary following the birthday on
which the Insured attains the age stated.
The smallest payment we will accept is $30.00.
Minimum monthly premium: $XXX.XX
Target Premium: $X,XXX.XX
This policy is adjustable. If it is adjusted, we will send you new Data Pages.
The Data Pages are to be attached to and made a part of this policy. The minimum
face amount is $XX,XXX. [Should print according to type of case: $50,000 for
individual; $25,000 for multi-life and guaranteed issue.] The minimum face
amount increase is $50,000.
3.0% Fixed Account Guaranteed Interest Crediting Rate
8% Loan Interest Rate
Interest on borrowed funds is credited at 6% through Policy Year ten at which
point it is credited at 7.75%.
SF379 (Continued on Page 3-1)
<PAGE>
DATA PAGE PAGE 3-1
POLICY NUMBER Sample POLICY DATE November 21, 2001
INSURED John Doe ISSUE AGE-SEX 35-Male
SEPARATE ACCOUNT: PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
VARIABLE LIFE SEPARATE ACCOUNT
PREMIUM DEDUCTION
ALLOCATIONS ALLOCATIONS
FIXED ACCOUNT XXX% XXX%
SEPARATE ACCOUNT DIVISIONS
Aggressive Growth XXX% XXX%
Asset Allocation XXX% XXX%
Balanced XXX% XXX%
Bond XXX% XXX%
Capital Accumulation XXX% XXX%
Emerging Growth XXX% XXX%
Fidelity Contrafund XXX% XXX%
SF 379 (Continued on Page 3-2)
<PAGE>
DATA PAGE PAGE 3-2
POLICY NUMBER Sample POLICY DATE November 21, 2001
INSURED John Doe ISSUE AGE-SEX 35-Male
PREMIUM DEDUCTION
ALLOCATIONS ALLOCATIONS
SEPARATE ACCOUNT DIVISIONS
Fidelity Equity-Income Fund XXX% XXX%
Fidelity High Income Fund XXX% XXX%
Government Securities XXX% XXX%
Growth XXX% XXX%
Money Market XXX% XXX%
World XXX% XXX%
SF 379 (Continued on Page 3-3)
<PAGE>
DATA PAGE PAGE 3-3
POLICY NUMBER Sample POLICY DATE November 21, 2001
INSURED John Doe ISSUE AGE-SEX 35-Male
SCHEDULE OF CHARGES
Maximum Monthly Administration Charge: $20.00
Maximum Monthly Mortality and Expense Risks Charge: .XXXXXXX
(.90% annual) of accumulated value.
Premium Expense Charge: 2.75% of each premium received for premium payments less
than or equal to the Target Premium made during the first ten Policy Years plus
a charge for state taxes of 2.2% of each premium received and a deferred
acquisition cost (DAC) tax of 1.25% of each premium received.
Transaction Charges: The first 12 division transfers per year are free.
Thereafter, there is a $25.00 transaction charge for each transfer. Each partial
surrender will also have a transaction charge. The transaction charge is the
lesser of $25.00 or 2% of the amount surrendered.
Minimum Transfer Amount: $100 or the balance of the investment account being
transferred from, if less.
Minimum Partial Surrender or Loan Amount: $500
Minimum Policy Loan Repayment: $30.00
TABLE OF SURRENDER CHARGES
(POLICY YEAR OF SURRENDER)
POLICY YEAR AMOUNT
1 $X,XXX.XX
2 X,XXX.XX
3 X,XXX.XX
4 X,XXX.XX
5 X,XXX.XX
6 X,XXX.XX
7 X,XXX.XX
8 X,XXX.XX
9 XXX.XX
10 XXX.XX
In the first year, surrender charges build up on a monthly basis over the first
twelve policy months.
SF 379 (Continued on Page 3-4)
<PAGE>
DATA PAGE PAGE 3-4
POLICY NUMBER Sample POLICY DATE November 21, 2001
INSURED John Doe ISSUE AGE-SEX 35-Male
DETAILED SCHEDULE OF PROTECTION AND RISK CLASSES
POLICY AND EFFECTIVE
RIDERS DATE AMOUNT RISK CLASS
Flexible Premium
Variable Universal Novemember 21, 2001 $1,000,000 Standard Nonsmoker
Life
TOTAL $1,000,000
Cost of Living The Effective Date is November 21, 2001. The
current cost of living base is $1,000,000.
The maximum cost of living increase is the
lesser of $100,000 or 30% of the cost of
living base. The minimum cost of living
increase is $1,000.
Basis of Values: Guaranteed maximum cost of insurance rates are based on 1980
CSO Mortality, age last birthday, with distinction for sex and smoking status.
The rates will reflect the Insured's premium class.
SF 379 (Continued on Page 3-5)
<PAGE>
DATA PAGE PAGE 3-5
INSURED John Doe ISSUE AGE-SEX 35-Male
POLICY NUMBER Sample POLICY DATE November 21, 2001
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
MONTHLY RATES PER $1,000.00
INSURED'S MONTHLY INSURED'S MONTHLY
ATTAINED AGE RATE ATTAINED AGE RATE
35 X.XXXXX 67 X.XXXXX
36 X.XXXXX 68 X.XXXXX
37 X.XXXXX 69 X.XXXXX
38 X.XXXXX 70 X.XXXXX
39 X.XXXXX 71 X.XXXXX
40 X.XXXXX 72 X.XXXXX
41 X.XXXXX 73 X.XXXXX
42 X.XXXXX 74 X.XXXXX
43 X.XXXXX 75 X.XXXXX
44 X.XXXXX 76 X.XXXXX
45 X.XXXXX 77 X.XXXXX
46 X.XXXXX 78 X.XXXXX
47 X.XXXXX 79 X.XXXXX
48 X.XXXXX 80 X.XXXXX
49 X.XXXXX 81 X.XXXXX
50 X.XXXXX 82 X.XXXXX
51 X.XXXXX 83 X.XXXXX
52 X.XXXXX 84 X.XXXXX
53 X.XXXXX 85 X.XXXXX
54 X.XXXXX 86 X.XXXXX
55 X.XXXXX 87 X.XXXXX
56 X.XXXXX 88 X.XXXXX
57 X.XXXXX 89 X.XXXXX
58 X.XXXXX 90 X.XXXXX
59 X.XXXXX 91 X.XXXXX
60 X.XXXXX 92 X.XXXXX
61 X.XXXXX 93 X.XXXXX
62 X.XXXXX 94 X.XXXXX
63 X.XXXXX 95 X.XXXXX
64 X.XXXXX 96 X.XXXXX
65 X.XXXXX 97 X.XXXXX
66 X.XXXXX 98 X.XXXXX
99 X.XXXXX
SF 379
<PAGE>
DEFINITIONS IN THIS POLICY
ACCUMULATED VALUE---(Also known as Policy Value) is the sum of the values in the
Loan Account, Fixed Account, and Investment Accounts.
ADJUSTMENT DATE--means the Monthly Date on or next following our approval of a
requested adjustment.
EXAMPLE: If the Policy Date is June 5, 1997, and if your requested
adjustment is approved on April 20, 1998, the Adjustment Date will be May
5, 1998.
ATTAINED AGE--means the Insured's age on the birthday on or preceding the last
Policy Anniversary.
BUSINESS DAY--is any day that the New York Stock Exchange is open for trading,
and trading is not restricted.
DIVISION--part of the Separate Account to which Net Premiums may be allocated
which invests in shares of a Mutual Fund. The value of an investment in a
Division is variable and is not guaranteed.
FIXED ACCOUNT--is that part of the Policy Value that reflects the value you have
in our general account.
INSURED-- means the person named as the Insured on the current Data Pages of
this policy. The Insured may or may not be the owner.
INVESTMENT ACCOUNT--is that part of the Policy Value that reflects the value you
have in one of the Divisions of the Separate Account.
LOAN ACCOUNT--is that part of the Policy Value that reflects the value you have
transferred from the Fixed Account and/or Separate Account as collateral for a
policy loan.
MATURITY DATE--means the Policy Anniversary following the Insured's 95th
birthday.
MONTHLY DATE--means the day of the month which is the same as the day of the
Policy Date.
EXAMPLE: If the Policy Date is June 5, 1997, the first Monthly Date is July
5, 1997.
MONTHLY POLICY CHARGE--is the amount subtracted from your Policy Value on each
Monthly Date equal to the sum of the cost of insurance and additional benefits
provided by any rider plus the monthly administration charge and mortality and
expense risks charge in effect on the Monthly Date.
MUTUAL FUND--means a registered open-end investment company in which the
Divisions of the Separate Account may invest under this policy. Mutual Funds
currently available are shown on the current Data Pages.
NET PREMIUM--is the gross premium less the deductions for the Premium Expense
Charge as shown on the current Data Pages. It is the amount of premium allocated
to the Fixed Account or Investment Accounts.
NOTICE--means any form of communication we receive in our home office providing
the information we need, either in writing or another manner that we approve in
advance.
POLICY DATE--the date shown on the current Data Pages.
POLICY VALUE--(also known as the Accumulated Value) is the sum of the values in
the Loan Account, Fixed Account, and Investment Accounts.
POLICY YEARS AND ANNIVERSARIES--means the Policy Years and Anniversaries
computed from the Policy Date.
EXAMPLE: If the Policy Date is June 5, 1997, the first Policy Year ends on
June 4, 1998. The first Policy Anniversary falls on June 5, 1998.
PREMIUM EXPENSE CHARGE---is the charge deducted from premium payments to cover a
sales charge, state premium taxes and the deferred acquisition cost (DAC) tax as
shown on the current Data Pages.
PRORATED BASIS--means in the proportion that the value of a particular
Investment Account or Fixed Account bears to the total value of all Investment
Accounts and Fixed Account.
SEPARATE ACCOUNT--means Principal Mutual Life Insurance Company Variable Life
Separate Account, a registered Unit investment trust with Divisions and
segregated assets, to which Net Premiums may be allocated under this policy and
others we issue.
TARGET PREMIUM---a premium amount used to measure the maximum sales charge that
is included as part of the Premium Expense Charge and any applicable contingent
deferred sales charge under a policy. Your Target Premium is set
forth on your current Data Pages.
UNIT--the accounting measure used to calculate the Separate Account value.
VALUATION PERIOD--means the period between the time as of which the net asset
value of a Mutual Fund is determined on one Business Day and the time as of
which such value is determined on the next following Business Day.
WE, OUR, US--means Principal Mutual Life Insurance Company.
WRITTEN REQUEST--a form satisfactory to us, signed and dated by you, and filed
at our home office.
YOU, YOUR--means the owner of this policy.
<PAGE>
PURCHASING AND KEEPING THE CONTRACT IN FORCE
Premium Payments
Your first premium is due on the Policy Date. After that, premiums may be paid
at any time while this policy is in force. The amount of your premiums is
subject to the Premium Payment Limits provision. We will give a receipt to the
premium payor on request.
Your initial Net Premium will be allocated to the Money Market Division of the
Separate Account. The Net Premium is the premium paid less the Premium Expense
Charge. The Premium Expense Charge is shown on the current Data Pages. Net
Premiums will continue to be allocated to the Money Market Division until 20
days after the Policy Date. After the 20-day period has expired, your policy's
Accumulated Value will be transferred to the Divisions indicated by your initial
premium allocation percentage(s) request.
The premium allocation percentages are shown on the current Data Pages. Unless
you change them, these percentages apply to future allocations of premiums. For
each Division, the allocation percentages must be zero or a whole number not
less than ten nor greater than 100. The sum of the percentages for all Divisions
must equal 100.
PLANNED PERIODIC PREMIUMS
You may preauthorize automatic monthly planned periodic premium payments. If you
do not elect to pay automatically, we will send you reminder notices of the
amount and frequency of your planned periodic premiums as selected in your
application. These notices serve only as a reminder of your preference. Premiums
are to be sent to the address we provide in the reminder notices. You may change
the amount and frequency of your planned periodic premiums by providing Notice
to us.
If you do not make a planned periodic premium payment or additional premium
payments, the Grace Period provision may apply.
PREMIUM PAYMENT LIMITS
To keep this policy in force you must satisfy the requirements described in the
Grace Period provision.
The smallest premium payment we will accept is shown on the current Data Pages.
You may choose to make premium payments that are greater than the planned
periodic premium. However, we will refund any premiums that would disqualify
this policy as "life insurance" as defined in the Internal Revenue Code, as
amended.
If any payment increases the policy's death benefit by more than it increases
the Policy Value, we reserve the right to refund the premium payment. Evidence
of insurability which satisfies us may be required.
<PAGE>
GRACE PERIOD
The grace period begins when we mail a notice of impending policy termination to
you. This notice will be sent to your last post office address known to us. It
will show the minimum payment required to keep your policy in force. It will
also show the 61 day grace period during which we will accept that payment.
A notice of impending policy termination will be sent if:
1. The net surrender value on any Monthly Date is less than the Monthly
Policy Charge; or
2. During the 12 months following the Policy Date, the sum of the premiums
paid is less than the minimum required premium on a Monthly Date.
The minimum required premium on a Monthly Date is equal to A times B where:
A Is the minimum monthly premium shown on the current Data Pages; and
B Is one plus the number of complete months since the Policy Date. If the
grace period begins because the net surrender value is less than the
Monthly Policy Charge, the minimum payment is three times that Monthly
Policy Charge.
If the grace period begins because the sum of the premiums paid is less than the
minimum required premium, the minimum payment is the past due minimum required
premium. The past due minimum required premium is:
1. The minimum required premium due on the next following Monthly Date;
LESS
2. The sum of the premiums paid since the Policy Date.
If the grace period ends before we receive the past due minimum required
premium, we will pay you any remaining value in the policy which would be the
excess of A over B where:
A Is the net surrender value on the Monthly Date at the start of the grace
period, and
B Is the two Monthly Policy Charges applicable during the grace period. If
the Insured dies during a grace period, we will pay the death proceeds to
the beneficiary.
<PAGE>
TERMINATION All policy privileges and rights of the owner under this policy end:
1. When you surrender your policy for cash;
2. When the death proceeds are paid;
3. When the policy maturity proceeds are paid; or
4. When the grace period ends as described above. In this case, the
privileges and rights of the owner terminate as of the Monthly Date on which the
grace period begins.
REINSTATEMENT
If this policy ends as described in the Grace Period provision, you may
reinstate it provided:
1. Such reinstatement is prior to the Maturity Date;
2. The Insured is alive;
3. Not more than three years have elapsed since the policy terminated;
4. You supply evidence which satisfies us that the Insured is insurable
under our underwriting guidelines then in effect;
5. You either repay or reinstate any policy loans and unpaid loan interest
on this policy existing at termination; and
6. You make a payment of at least the greater of an amount sufficient to
allow three Monthly Policy Charges or the past due minimum required premium, if
any.
The reinstatement will be effective on the Monthly Date on or next following the
date we approve it. Your surrender charges made upon reinstatement will be
calculated as if the policy had never ended. You will receive new Data Pages
upon reinstatement.
Premium Investment Options
ALLOCATIONS--You may allocate Net Premiums to the Fixed Account and/or any of
the Separate Account Divisions. Allocation percentages must be zero or a whole
number not less than ten nor greater than 100. The sum of the allocation
percentages must equal 100. You may change the allocation percentages by sending
us your Written Request. The change will take effect on the date we receive your
Written Request at our home office. Unless you change the initial premium
allocation specified in your application for this policy, it will continue to
apply to subsequent premium payments.
<PAGE>
FIXED ACCOUNT
Net Premiums allocated to the Fixed Account will earn interest at a specified
rate. In no event will the guaranteed interest rate be less than 3% compounded
annually.
INVESTMENT ACCOUNTS
The Separate Account is comprised of Divisions shown on the current Data Pages.
Each Division invests in a Mutual Fund with a different investment objective.
You may allocate amounts to one or more of the Divisions. An Investment Account
will be established for you corresponding to each Division of the Separate
Account to which amounts are allocated or transferred under this policy. We will
maintain each of these Investment Accounts for you to keep track of your values
in each Division. Income, gains and losses, whether or not realized, from each
Division's assets are credited to or charged against that Division without
regard to income, gains or losses of other Divisions or our other income, gains
or losses.
VARIABLE LIFE SEPARATE ACCOUNT
The Separate Account is registered with the Securities and Exchange Commission
as a Unit investment trust under the Investment Company Act of 1940, as amended.
Assets are put into the Separate Account to support this policy and to support
other variable life insurance policies we may offer. We own the assets of the
Separate Account. These assets are not part of our general account. Income,
gains and losses of the Separate Account, whether or not realized, are credited
to or charged against the Separate Account assets, without regard to our other
income, gains or losses. The assets of the Separate Account will be available to
cover the liabilities of our general account only to the extent that the assets
of the Separate Account exceed the liabilities of the Separate Account arising
under the variable life insurance policies supported by the Separate Account.
We reserve the right to add other Divisions, eliminate or combine existing
Divisions, or transfer assets in one Division to another. If shares of a Mutual
Fund are no longer available for investment, or in our judgment investment in a
Mutual Fund becomes inappropriate considering the purpose of the Separate
Account, we may eliminate the shares of a Mutual Fund and substitute shares of
another. Substitution may be made with respect to both existing investments and
the investment of future Net Premium payments. However, no such changes will be
made without notifying you and getting any required approval from the
appropriate state and/or federal regulatory authorities.
We will notify you of any such change. You may then change your allocation
percentages and transfer any value in that Division to another Division without
charge. Or, you may exchange the policy for a fixed-benefit flexible premium
policy made available by us. You may exercise this right until the later of 60
days after the effective date of such change or the date you receive notice of
this right. The face amount of the new policy will be the death benefit of this
policy on the date of exchange.
<PAGE>
BENEFITS WHILE POLICY IS IN FORCE
Your Policy Values
Your Policy Value at any time is equal to the sum of the values you have in the
Loan Account, the Fixed Account and the Investment Accounts.
LOAN ACCOUNT VALUE
You can get a loan on this policy under certain conditions. When you take out a
loan, we transfer the amount of the loan from the Fixed Account and/or one or
more of the Investment Accounts, into the Loan Account. For details of the Loan
Account see the Policy Loan section.
FIXED ACCOUNT VALUE
The amount you have in the Fixed Account at any time equals:
1) Net Premiums allocated to it, PLUS
2) Amounts transferred to it, PLUS
3) Interest credited to it, LESS
4) Amounts deducted from it, LESS
5) Amounts transferred from it, LESS
6) Amounts withdrawn from it.
INVESTMENT ACCOUNT VALUE
Your Investment Account value for each Division is equal to the number of Units
in that Investment Account multiplied by that Division's Unit value. The number
of Units in an Investment Account at any time equals A minus B, where:
A is the number of Units credited to the Investment Account because of
1. Net Premiums allocated to it, and
2. Amounts transferred to it; and
B is the number of Units canceled from the Investment Account because of
1. Amounts deducted from it,
2. Amounts transferred from it, and
3. Amounts withdrawn from it.
The number of Units credited or canceled for a given transaction is equal to the
dollar amount of the transaction, divided by the Unit value on the Business Day
of the transaction.
UNIT VALUES
We will determine the Unit values for each Division of the Separate Account at
the end of each Business Day. We will deem each Business Day to end at the time
we determine the net asset value of the underlying Mutual Fund shares held by
the Division of the Separate Account. When we need to determine a Policy Value
or an amount after the end of a Business Day, or on a day that is not a Business
Day, we will do so at the end of the next Business Day.
The Unit value for each Division was established at $10 for the first Business
Day that an amount was allocated, or transferred to the particular Division. For
any subsequent Business Day, the Unit value for that Division is obtained by
multiplying the Unit value for the immediately preceding Business Day by the net
investment factor for the particular Division on that subsequent Business Day.
NET INVESTMENT FACTOR
The net investment factor for a Division on any Business Day is equal to A
divided by B where:
A Is the net asset value of the underlying Mutual Fund shares held by that
Division at the end of such Business Day before any policy transactions are
made on that day; and
B Is the net asset value of the underlying Mutual Fund shares held by that
Division at the end of the immediately preceding Business Day after all
policy transactions were made for that day.
We reserve the right to adjust the above formula for any taxes determined by us
to be attributable to the operations of the Division.
Transfers
TRANSFERS ALLOWED
You may transfer amounts between the Fixed Account and the Investment Accounts
as provided below. To request a transfer, you must provide us Notice. All
transfers with the same effective dates count as one transfer. We reserve the
right to not accept transfer requests from someone requesting them for multiple
contracts. We also reserve the right to modify or revoke transfer privileges and
charges.
TRANSFERS FROM FIXED ACCOUNT
You may transfer amounts from the Fixed Account to an Investment Account by
making either a scheduled or unscheduled Fixed Account transfer, subject to the
following conditions:
Either unscheduled transfers or scheduled transfers (not both) may occur during
the same Policy Year.
UNSCHEDULED FIXED ACCOUNT TRANSFERS--You may make one unscheduled transfer from
the Fixed Account each Policy Year, as follows:
1. You must provide us Notice within 30 days following either the Policy
Date or any Policy Anniversary.
2. The transfer will occur within one Business Day of the date we receive
your Notice; and
3. You must specify the dollar amount or percentage to be transferred, and
the resulting amount must not exceed 25% of your Fixed Account value as of the
later of the Policy Date or the last Policy Anniversary. However, you may
transfer up to 100% of your Fixed Account value within 30 days after the first
and following Policy Anniversaries if your Fixed Account value is less than
$1,000.
SCHEDULED FIXED ACCOUNT TRANSFERS-(Dollar Cost Averaging)-You may make scheduled
transfers on a monthly basis from the Fixed Account as follows:
1. Transfers will begin on the Monthly Date following the date we receive
your Notice.
2. Your Fixed Account value must equal or exceed the minimum transfer value
shown on the current Data Pages. We reserve the right to change this amount but
it will never exceed $10,000;
3. The monthly amount transferred must equal 2% of your Fixed Account value
as of the later of the Policy Date or the last Anniversary;
4. The transfers will continue until your Fixed Account value is exhausted
or we receive Notice to stop them; and
5. If you stop the scheduled transfers, you may not start them again until
six months after the date of the last scheduled transfer.
6. You must have a minimum of $2500 in your Fixed Account at the time the
transfer begins in order to initiate the transfers.
TRANSFERS FROM INVESTMENT ACCOUNTS
You may transfer amounts from an Investment Account to either the Fixed Account
or another Investment Account by making either a scheduled or unscheduled
Investment Account transfer, subject to the following conditions.
Transfers to the Fixed Account are allowed only if:
1. You have not transferred any amount from the Fixed Account for at least
six months; and
2. Your Fixed Account value immediately after the transfer does not exceed
$1,000,000, except with our prior approval.
UNSCHEDULED INVESTMENT ACCOUNT TRANSFERS--You may make unscheduled transfers
from an Investment Account, as follows:
1. The transfer will occur within one Business Day after the date we
receive your Notice;
2. You must specify the dollar amount or percentage to transfer from each
Investment Account, and the resulting amount must equal or exceed the lesser of
the value of your Investment Account or the minimum transaction amount shown on
the current Data Pages; and
3. We reserve the right to charge a transaction charge as shown on the
current Data Pages for each unscheduled transfer after the twelfth transfer in a
Policy Year.
SCHEDULED INVESTMENT ACCOUNT TRANSFERS-(Dollar Cost Averaging)-You may make
scheduled transfers from an Investment Account, as follows:
1. Scheduled transfers will begin on the Monthly Date following the date we
receive your Notice;
2. You must specify how often the transfers will occur (annually,
semi-annually, quarterly or monthly);
3. You must specify the dollar amount to transfer from each Investment
Account, and that amount must equal or exceed the lesser of the value of your
Investment Account or the minimum transaction amount shown on the current Data
Pages;
4. The value of each Investment Account from which transfers are made must
equal or exceed the minimum transfer amount shown on the current Data Pages;
5. The transfers will continue until your interest in the Investment
Account is exhausted or we receive Notice to stop them; and
6. We reserve the right to limit the number of Investment Accounts from
which transfers will be made at the same time. In no event will the limit ever
be less than two.
7. You must have a minimum of $2500 in your Fixed Account at the time the
transfer begins in order to initiate the transfers.
Policy Loans
You may obtain a policy loan from us with this policy as sole security. You may
borrow up to (A) minus (B) where:
A. Is 90% of the net surrender value; and
B. Is any outstanding policy loan and unpaid loan interest at the time
the loan request is processed at the home office.
The minimum loan amount is shown on the current Data Pages.
YOUR LOAN ACCOUNT
If you take a policy loan, a portion of your Policy Value equal to the loan will
be transferred from the Fixed Account and/or the Investment Accounts to your
Loan Account until the loan is repaid. The effective date of the transfer is the
date of the loan.
<PAGE>
The loan will result in a reduction in the value of the Fixed Account to the
extent amounts are transferred from the Fixed Account to the Loan Account, or in
the cancellation of Units in the Investment Account or Accounts from which the
loan was withdrawn. For each Investment Account, the number of Units canceled
will be equal to the portion of the loan withdrawn divided by the Unit value for
the Valuation Period in which the loan is taken.
You may tell us the amount of the policy loan to be withdrawn from the Fixed
Account and/or each Investment Account. If you do not tell us, the loan amount
will be withdrawn in the same proportion as the allocation used for your Monthly
Policy Charge. Amounts held in your Loan Account will be part of the Company's
general account and will be credited with interest from the date of transfer.
The difference between the policy loan rate and the rate credited on the Loan
Account will not exceed 2%.
On each Policy Anniversary, if there has been"a loan repayment, this credited
interest is transferred from the Loan Account to the Fixed Account and the
Investment Accounts. It is allocated among the Fixed Account and the Investment
Accounts in the same manner used to allocate premium payments.
All interest rates stated are effective annual rates. We apply these rates to
properly reflect the actual date we receive any repayments and any changes you
make in loan amounts during a policy month.
LOAN INTEREST CHARGE
Interest charges accrue daily at the annual loan interest rate shown on the
current Data Pages. Interest is due and payable at the end of each Policy Year.
Any interest not paid when due is added to the loan principal and bears interest
at the same rate. The adding of unpaid interest charges to the loan principal
will cause additional amounts to be withdrawn from the Divisions in the same
manner as described above for loans.
REPAYMENT
You may repay all or part of a policy loan as long as the policy is in force and
the minimum payment amount (as shown on the current Data Pages) is met. Any
policy loans and unpaid loan interest charges not repaid at the Insured's death
or at maturity are deducted from the death or maturity proceeds.
YOU SHOULD IDENTIFY THE PURPOSE OF EACH PAYMENT. IF WE CANNOT IDENTIFY ITS
PURPOSE, WE WILL CONSIDER IT TO BE A LOAN REPAYMENT IF A LOAN IS OUTSTANDING.
As the loan is repaid, the amount repaid is transferred from your Loan Account
to the Fixed Account and/or the Investment Accounts in the same manner used to
allocate premium payments. If you do not repay a policy loan or pay loan
interest and the net surrender value is less than the Monthly Policy Charge due
on a Monthly Date, the Grace Period provision will apply.
Surrender of the Policy
SURRENDER VALUE AND
NET SURRENDER VALUE
The surrender value of your policy equals the Policy Value less the surrender
charges (described below).
<PAGE>
The net surrender value of your policy is the surrender value less any policy
loans and unpaid loan interest. As long as your policy is in force, you may
surrender it for its net surrender value by sending us a Written Request.
SURRENDER CHARGES
The table of surrender charges is shown on the current Data Pages. Surrender
charges vary based on the face amount of the policy and the premiums paid and
will apply only during the first 10 Policy Years unless changed due to a face
amount increase. A face amount increase has its own surrender charge period
which begins on the Adjustment Date. If a face amount increase is made, the
surrender charges will be a composite of all charges which apply for each year.
PARTIAL SURRENDERS
Each Policy Year after the first Policy Year, you may make up to two partial
surrenders of the net surrender value, subject to the following:
1. Each partial surrender must be in an amount not less than the minimum
amount shown on the current Data Pages; and
2. In the aggregate the total amount surrendered in a Policy Year will not
exceed an amount equal to 75% of the net surrender value as of the date of the
first surrender.
You may tell us in what proportion to allocate the amount of the partial
surrender and transaction charge to be withdrawn from the Fixed Account and/or
each Separate Account Division. The transaction charge is shown on the current
Data Pages. If you do not tell us, the partial surrender and the transaction
charge will be withdrawn from the Fixed Account and the Separate Account
Divisions in the same proportion as the allocations used for your current
Monthly Policy Charge. Partial surrenders from the Fixed Account will be taken
from the most recent premium payments first (LIFO).
The amount of the partial surrender plus the transaction charge will result in
the cancellation of Units in the Separate Account Divisions from which the
partial surrender occurs. The number of Units canceled will be equal to the
amount of the partial surrender plus the transaction charge divided by the Unit
value of the Division or Divisions for the Valuation Period in which the partial
surrender is effective.
Your Policy Value is reduced by the amount of the partial surrender plus the
amount of the transaction charge.
If the Option 1 death benefit is in effect, the face amount is reduced by the
amount of the partial surrender and the transaction charge.
POLICY EXPENSES
MONTHLY POLICY CHARGES
On the Policy Date, and each Monthly Date thereafter, we will deduct a Monthly
Policy Charge.
The deduction for the Monthly Policy Charge is the sum of the following amounts:
1. The cost of insurance (described below) and the cost of additional
benefits provided by any rider in force for the policy month;
<PAGE>
2. The current monthly administration charge but not greater than the
maximum shown on the current Data Pages; and
3. The mortality and expense risks charge imposed on the Investment Account
value as shown on the current Data Pages.
The Monthly Policy Charge will be withdrawn from the Investment Accounts and/or
Fixed Account according to the allocation percentages you have chosen. These
percentages are shown on the current Data Pages.
Your choice for the Monthly Policy Charge allocation may be:
1. The same as the allocation percentages you have chosen for your
premiums; or
2. Determined on a Prorated Basis; or
3. Any other allocation which we mutually agree upon.
If the amount in an Investment Account and/or Fixed Account is insufficient to
allow the allocation you have chosen, your Monthly Policy Charge will be
allocated on a Prorated Basis.
For each Investment Account and/or Fixed Account, the allocation percentages
must be zero or a whole number not less than ten nor greater than 100. The sum
of the percentages for all the Investment Accounts and the Fixed Account must
equal 100. Changes in allocation percentages may be made by providing Notice to
us. Once approved by us, they are effective as of the next Monthly Date.
COST OF INSURANCE
The cost of insurance on each Monthly Date is A multiplied by the result of B
minus C, where:
A Is the cost of insurance rate as described in the Cost of Insurance Rates
section divided by 1,000;
B Is the death benefit as described in the Your Death Proceeds section of
this policy at the beginning of the Policy Month, divided by the sum of 1
plus the monthly guaranteed fixed account interest rate (1.0024663); and
C Is the Policy Value at the beginning of the policy month calculated as if
the Monthly Policy Charge was zero.
COST OF INSURANCE RATES
The monthly cost of insurance rates are based on the issue age and Attained Age
(at the time an adjustment is made), and risk classification of the Insured. We
determine these rates based on our expectations as to our future mortality
experience. Any change in these rates applies to all individuals of the same
class as the Insured. The cost of insurance rates will never be greater than
shown in the Table of Guaranteed Maximum Cost of Insurance Rates on the current
Data Pages. However, different cost of insurance rates may apply to any face
amount increase.
<PAGE>
PREMIUM EXPENSE CHARGE
We will deduct a Premium Expense Charge as shown on the current Data Pages from
each premium payment. The result will be the Net Premium payment.
OTHER CHARGES
We will charge a surrender charge as described in the Surrender Of The Policy
section if any of the following occurs during the surrender charge period:
1. You request the net surrender value of your policy;
2. You take a partial surrender of the net surrender value of your policy;
3. You do not pay an amount due at the end of a grace period, and the
policy terminates.
YOUR DEATH PROCEEDS
We will pay the death proceeds to the beneficiary subject to the provisions of
the policy, when we receive proof that the Insured died before the Maturity
Date. These death proceeds, determined as of the date of the Insured's death,
are A minus B where:
A Is the death benefit described below plus any proceeds from any benefit
rider on the Insured's life; and
B Is any policy loans and unpaid loan interest and, if the Insured died
during a grace period, any overdue Monthly Policy Charges.
We will pay interest on death proceeds from the date of death until date of
payment or until applied under a benefit option. It will be at a rate we
determine, but not less than required by state law.
DEATH BENEFIT
This policy provides two death benefit options. The option in effect is shown on
the current Data Pages.
Option 1.
Under Option 1, the death benefit equals the greater of:
1. The policy's face amount; or
2. The amount found by multiplying the Policy Value by the applicable
percentage shown below.
Option 2.
Under Option 2, the death benefit equals the greater of:
1. The policy's face amount plus its Policy Value; or
2. The amount found by multiplying the Policy Value by the applicable
percentage shown below.
TABLE OF APPLICABLE PERCENTAGES*
(For ages not shown, the applicable percentages shall decrease by a pro rata
portion for each full year.)
INSURED'S ATTAINED AGE %
40 and under 250
45 215
50 185
55 150
60 130
65 120
70 115
75 through 90 105
95 100
*These percentages will be updated as required by revisions to the Internal
Revenue Code.
CHANGES IN DEATH BENEFIT OPTION
You may change the death benefit option on or after the first Policy
Anniversary. To request a change in the death benefit option, you must send us a
Written Request. A change approved on a Monthly Date will be effective on that
Monthly Date. A change approved on other than a Monthly Date will be effective
on the next following Monthly Date. Changes in options are limited to two per
Policy Year and are subject to the following conditions:
1. If the change is from Option 1 to Option 2, we will reduce the face
amount. The reduction will be equal to the Accumulated Value on the effective
date of the change. The face amount after any reduction must be at least the
minimum face amount required by our then current underwriting guidelines. We may
require proof of insurability which satisfies us.
2. If the change is from Option 2 to Option 1, we will increase the face
amount. The increase will be equal to the Accumulated Value on the effective
date of change. No proof of insurability is required.
YOUR MATURITY PROCEEDS
If the Insured is living on the policy's Maturity Date, we will pay you the
policy's Accumulated Value less any policy loans and unpaid loan interest.
ADJUSTING THE FACE AMOUNT
While your policy is in force (but not in a grace period) you may request an
increase or decrease in the face amount. Decreases may not be made during the
first Policy Year. Any adjustment is subject to our approval.
<PAGE>
APPROVAL OF AN ADJUSTMENT
Any increase in face amount will be in a risk classification we determine, and
will be approved if:
1. The Attained Age of the Insured is 85 or less and the amount of the
increase is at least the minimum increase shown on the current Data Pages; and
2. You supply evidence which satisfies us that the Insured is insurable
under our underwriting guidelines then in effect.
No adjustment will be approved if:
1. The face amount after adjustment would be less than the minimum amount
shown on the current Data Pages; or
2. Your Monthly Policy Charges are being waived under any rider.
REQUESTING AN ADJUSTMENT
You must send us a Written Request for an adjustment. A request for a face
amount increase must be signed by the Insured and owner. It must show the face
amount desired after adjustment. An adjustment is effective on the Adjustment
Date.
A face amount increase that is not a result of an increase rider is subject to
the Right to Examine and Right to Exchange provisions.
BENEFIT PAYMENT
OPTIONS
You may elect to use one of these benefit options in your benefit instructions.
If no benefit instructions are in effect at the Insured's death, the beneficiary
may apply unpaid death proceeds under a benefit option. You may also apply the
net surrender value of your policy at surrender or at maturity under a benefit
option.
If a benefit option is elected, this policy must be exchanged for a
supplementary contract effective when the policy proceeds first become payable.
Payments under the following options are not affected by the investment
experience of any Division of our Separate Account after the policy proceeds are
applied under an option.
Option A. SPECIAL BENEFIT ARRANGEMENT--A specially designed benefit option
may be arranged with our approval.
Option B. PROCEEDS LEFT AT INTEREST--We will hold the amount applied on
deposit. Interest payments will be made annually, semi-annually, quarterly
or monthly, as elected.
<PAGE>
Option C. FIXED INCOME--We will pay an income of a fixed amount or an
income for a fixed period not exceeding 30 years. Refer to Option C Tables
to determine the number of fixed amount payments or the amount of each
fixed period payment. On request, we will furnish benefit information not
shown in the Tables.
Option D. LIFE INCOME--We will pay an income during a person's lifetime. A
minimum guaranteed period may be used, as shown in the Option D Table.
Payments will be in an amount we determine, but not less than shown in the
Table.
Option E. JOINT AND SURVIVOR LIFE INCOME--We will pay an income during the
lifetime of two persons, and continuing until the death of the survivor.
This option includes a minimum guaranteed period of 10 years. Payments will
be in an amount we determine, but not less than shown in the Option E
Table. On request, we will furnish minimum income information for age
combinations not shown in the Table.
Option F. JOINT AND TWO-THIRDS SURVIVOR LIFE INCOME--We will pay an income
during the lifetime of two persons, and two-thirds of the original amount
continuing until the death of the survivor. Payments during the time both
people are alive will be in an amount we determine (the "original amount"),
but not less than shown in the Option F Table. On request, we will furnish
minimum income information for age combinations not shown in the Table.
<TABLE>
<CAPTION>
OPTION C TABLES
Minimum Number of Months for Which Monthly Income will be Paid. First
Payment on effective date of Supplementary Policy.
--------------- ------------ ----------- ------------ ---------- ------------ -----------
Amount No. of No. of No. of
Applied Income Pymts* Income Pymts* Income Pymts*
--------------- ------------ ----------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 10,000 $ 50 274 $ 100 114 $ 175 61
--------------- ------------ ----------- ------------ ---------- ------------ -----------
25,000 150 214 250 114 400 67
--------------- ------------ ----------- ------------ ---------- ------------ -----------
50,000 250 274 500 114 750 72
--------------- ------------ ----------- ------------ ---------- ------------ -----------
100,000 450 321 1,000 114 1,500 72
--------------- ------------ ----------- ------------ ---------- ------------ -----------
</TABLE>
Minimum Monthly Income To Be Paid for Number Of Years. First Payment on
effective date of Supplementary Policy.
<TABLE>
<CAPTION>
--------------- -------------------------------------------------------------------------
Amount Number of Years
----------- ------------ ----------- ----------- ----------- ------------
Applied 5 10 15 20 25 30
--------------- ----------- ------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 10,000 179.10 96.10 68.70 55.10 47.10 41.80
--------------- ----------- ------------ ----------- ----------- ----------- ------------
25,000 447.75 240.25 171.75 137.75 117.75 104.50
--------------- ----------- ------------ ----------- ----------- ----------- ------------
50,000 895.50 480.50 343.50 275.50 235.50 209.00
--------------- ----------- ------------ ----------- ----------- ----------- ------------
100,000 1,791.00 961.00 687.00 551.00 471.00 418.00
--------------- ----------- ------------ ----------- ----------- ----------- ------------
</TABLE>
<PAGE>
OPTION D TABLE
Minimum Monthly Life Income for Each $1,000 Applied. First Payment on
effective date of Supplementary Policy.
----------------- ------------------------------------
Age Minimum Guaranteed Period
------------------------------------
--------- -------- ------- -------- -------- ------
Last Birthday 5 10 15 20 Inst*
Male Payee None Yrs. Yrs. Yrs. Yrs. Rfd.
----------------- --------- -------- ------- -------- -------- -------
55 4.45 4.44 4.40 4.33 4.23 4.24
56 4.54 4.53 4.48 4.41 4.29 4.31
57 4.64 4.62 4.57 4.48 4.35 4.38
58 4.74 4.72 4.66 4.56 4.42 4.46
59 4.84 4.82 4.76 4.65 4.48 4.54
60 4.96 4.94 4.87 4.74 4.55 4.63
61 5.08 5.06 4.97 4.83 4.61 4.72
62 5.21 5.18 5.09 4.92 4.68 4.82
63 5.35 5.32 5.21 5.01 4.75 4.92
64 5.50 5.46 5.33 5.11 4.81 5.02
65 5.66 5.62 5.47 5.21 4.87 5.13
66 5.83 5.78 5.60 5.31 4.94 5.25
67 6.01 5.95 5.75 5.41 4.99 5.37
68 6.21 6.13 5.89 5.52 5.05 5.50
69 6.42 6.33 6.05 5.62 5.11 5.64
70 6.64 6.53 6.21 5.72 5.16 5.78
71 6.87 6.74 6.37 5.82 5.20 5.93
72 7.12 6.97 6.54 5.91 5.25 6.09
73 7.39 7.21 6.71 6.01 5.29 6.25
74 7.67 7.46 6.88 6.10 5.32 6.42
75 7.98 7.73 7.05 6.18 5.35 6.60
----------------- --------- -------- ------- -------- -------- -------
*Income payments continue until the total received equals the amount
applied under the option.
<PAGE>
OPTION D TABLE, CONTINUED
Minimum Monthly Life Income for Each $1,000 Applied. First Payment on
effective date of Supplementary Policy.
------------------- --------------------------------------------------
Age Minimum Guaranteed Period
--------------------------------------------------
-------- -------- -------- ------- -------- --------
Last Birthday None 5 10 15 20 Inst*
Female Payee Yrs. Yrs. Yrs. Yrs. Rfd.
------------------- -------- -------- -------- ------- -------- --------
55 4.05 4.05 4.03 4.00 3.95 3.94
56 4.12 4.12 4.10 4.06 4.01 4.00
57 4.20 4.19 4.17 4.13 4.07 4.06
58 4.28 4.27 4.25 4.20 4.13 4.13
59 4.36 4.35 4.33 4.28 4.20 4.20
60 4.45 4.44 4.41 4.35 4.26 4.27
61 4.55 4.54 4.50 4.43 4.33 4.35
62 4.65 4.64 4.60 4.52 4.40 4.43
63 4.76 4.74 4.70 4.61 4.47 4.52
64 4.87 4.86 4.80 4.70 4.54 4.61
65 5.00 4.98 4.91 4.80 4.61 4.70
66 5.13 5.11 5.03 4.89 4.69 4.81
67 5.27 5.24 5.16 5.00 4.76 4.91
68 5.42 5.39 5.29 5.10 4.83 5.02
69 5.58 5.55 5.43 5.21 4.90 5.14
70 5.76 5.71 5.57 5.32 4.97 5.27
71 5.94 5.89 5.73 5.43 5.03 5.40
72 6.15 6.09 5.89 5.55 5.09 5.54
73 6.37 6.30 6.06 5.66 5.15 5.69
74 6.60 6.52 6.24 5.77 5.20 5.85
75 6.86 6.75 6.42 5.88 5.25 6.02
------------------- -------- -------- -------- ------- -------- --------
*Income payments continue until the total received equals the amount
applied under the option.
<PAGE>
OPTION E TABLE
Minimum Monthly Joint and Survivor Life Income For Each $1,000 Applied.
First Payment on effective date of Supplementary Policy.
------------------------- ------------------------------------------
Age Last Birthday Age Last Birthday of Female Payee
------- -------- -------- ------- --------
of Male Payee 55 60 62 65 70
-------------------------
------- -------- -------- ------- --------
60 3.82 4.04 4.12 4.25 4.45
62 3.85 4.09 4.19 4.33 4.57
65 3.90 4.16 4.28 4.45 4.74
70 3.95 4.26 4.40 4.62 5.01
75 3.99 4.33 4.48 4.75 5.24
------------------------- ------- -------- -------- ------- --------
OPTION F TABLE
Minimum Monthly Joint and Two-Thirds Survivor Life Income for Each $1,000
Applied. First Payment on effective date of Supplementary Policy.
---------------------- ----------------------------------------------------
Age Last Birthday Age Last Birthday of Female Payee
----------------------------------------------------
---------- --------- ---------- ---------- ---------
of Male Payee 55 60 62 65 70
----------------------
---------- --------- ---------- ---------- ---------
60 4.22 4.45 4.55 4.71 5.00
62 4.30 4.54 4.65 4.82 5.14
65 4.41 4.68 4.80 4.99 5.35
70 4.61 4.92 5.06 5.29 5.74
75 4.82 5.17 5.33 5.60 6.14
---------------------- ---------- --------- ---------- ---------- ---------
BENEFIT OPTION INTEREST
Interest at a rate we set, but never less than 3% a year, will be applied
to determine the payments under Option B. Any such interest in excess of 3%
will be added to payments under Option C.
CONDITIONS
When a benefit option is elected:
1. Any amount payable to an assignee will be paid in one lump sum.
2. The amount applied must be at least $3,500 and result in periodic
payments of at least $20.
3. Benefit options are restricted if the recipient of benefits is not a
natural person.
<PAGE>
4. Under Options D, E and F, one of the persons on whose life payments are
based must be the owner, Insured or beneficiary. The size of payments depends on
the age of the person or persons on whose life payments are based. This will be
determined as of the effective date of the supplementary contract. We reserve
the right to require evidence of age and continuing survival.
RIGHT TO EXCHANGE POLICY
You may exchange this policy for a new life policy we make available for this
purpose on the life of the Insured based on our current underwriting guidelines.
The new policy may not be a term insurance policy or a variable policy. Evidence
of insurability will not be required.
The exchange must be made during the first 24 months from the Policy Date while
your policy is in force, but not while it is in a grace period. The exchange
will be effective on receipt of a Written Request on a form we specify. This
policy will then terminate. The new policy will have the same Policy Date as
this policy.
You may choose whether the new policy will have either the same death benefit or
the same amount at risk as this policy. The amount at risk is the difference
between the Accumulated Value and the death benefit of the policy. Premiums for
the new policy will be based on the same issue age and risk classification as
this policy.
An equitable adjustment in the new policy's premiums and values will be made to
reflect any variations between the premiums and values under this policy and the
new policy. No additional charge will be made for this exchange privilege. Any
policy loans and unpaid loan interest must be repaid or transferred to the new
policy.
Any benefit riders included on this policy may be exchanged, without evidence of
insurability, for similar benefit riders on the new policy if:
1. You request the similar benefit rider to be included on the new policy;
and
2. The similar benefit rider was available for the new policy on the
effective date of the benefit rider for vhis policy based on the same issue age
and risk classification as the Insured.
OWNER, BENEFICIARY, ASSIGNMENT
OWNERSHIP
The owner is as named in the application unless you change ownership as provided
below. As owner, you may exercise every right and enjoy every privilege provided
by your policy, subject to the rights of any irrevocable beneficiary. These
rights and privileges continue while your policy is in force, and end at the
Insured's death. If you are not the Insured and you die before the Insured, the
Insured becomes the owner unless you have provided for a successor owner.
<PAGE>
BENEFICIARY
The beneficiary(ies) named in the application will receive the death proceeds
unless you change the beneficiary designation as provided below. Any death
proceeds payable to a beneficiary who dies before the Insured will be paid
equally to surviving beneficiaries named in the application, unless we have
approved another Written Request. If no beneficiary survives the Insured, the
death proceeds will be paid to the owner or to the owner' s estate.
CHANGE OF OWNER OR BENEFICIARY
You may change the owner or beneficiary of this policy by Written Request. Our
approval is needed and no change is effective until we approve it. Once
approved, the change is effective as of the date you signed the request. We have
the right to require that you send us this policy so we can record the change.
BENEFIT INSTRUCTIONS
While the Insured is alive, you may file instructions for the payment of the
death proceeds under one of the benefit options previously described. Such
instructions, or change of instructions, must be by Written Request approved by
us. If you change the beneficiary, it will revoke any prior benefit
instructions.
ASSIGNMENT
You may assign your policy as collateral for a loan. The assignment must be in
writing and filed in our home office. We assume no responsibility for any
assignment's validity. An assignment as collateral does not change the owner.
The rights of beneficiaries, whenever named, except irrevocable beneficiaries,
become subordinate to those of the assignee.
GENERAL INFORMATION
THE CONTRACT
This policy, the attached application, any amendments to the application, and
the current Data Pages make up the entire contract. Any statements made in the
application or an adjustment application will be considered representations and
not warranties. No statement, unless made in an application, will be used to
void your policy (or void an adjustment in case of an adjustment application) or
to defend against a claim. Unless a separate effective date is shown on the
current Data Pages, the Policy Date is also the effective date.
ALTERATIONS
This policy may be altered by mutual agreement, but any alterations must be in
writing and signed by one of our corporate officers. No one else, including the
agent, may change the contract or waive any provisions.
INCONTESTABILITY
With respect to statements made in the initial application for this policy, we
will not contest this policy after the Insured has been alive for two years
after the Issue Date. With respect to statements made in any subsequent
application for additional coverage, we will not contest the additional coverage
resulting from such application after the Insured has been alive for two years
after the application date. The time limits in this Incontestability provision
do not apply to fraudulent misrepresentations.
AGE
If the age of the Insured has been misstated, the death benefit will be that
which would be purchased by the most recent mortality charge at the correct age.
<PAGE>
DEFERMENT
We will usually pay surrenders, partial surrenders, or policy loans within 3
Business Days after we receive a Written Request. We will usually pay any death
benefit within 3 Business Days after we receive proof at our home office of the
Insured ' s death.
However, we may not be able to determine the value of the assets of our Separate
Account if:
1. The New York Stock Exchange is closed on 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;
2. The Securities and Exchange Commission by order permits postponement for
the protection of policyowners; or
3. The Securities and Exchange Commission requires that trading be
restricted or declares an emergency, as a result of which disposal of securities
is not reasonably practicable or it is not reasonably practicable to determine
the net asset value of the Mutual Funds.
If any of the above events occur, we reserve the right to defer:
1. Determination and payment of any surrender, partial surrenders, or death
proceeds;
2. Payment of any policy loans;
3. Determination of the Unit values of the Divisions;
4. Any requested transfer between the Divisions; and
5. Application of your death proceeds or surrender proceeds under Your
Benefit Options.
PARTICIPATING
Your policy is eligible to share in our divisible surplus. We will determine its
share and credit it as a dividend at the end of each Policy Year. We do not
expect any dividends will be paid under this policy. Dividends, if any, will be
paid in cash.
SUICIDE
This policy' s death proceeds will not be paid if the Insured dies by suicide,
while sane or insane, within 2 years of the Policy Date. Instead, we will return
all premiums paid, less any partial surrenders and any policy loans and unpaid
loan interest. This amount will be paid to the beneficiary.
<PAGE>
Any face amount increase made under the adjustment options will not be paid if
the Insured dies by suicide, while sane or insane, within 2 years of the
Adjustment Date. Instead, we will return the sum of the cost of insurance
charges for the increased amount of protection. This amount will be paid to the
beneficiary.
BASIS OF VALUES
Guaranteed maximum cost of insurance rates are based on the mortality table
referred to on the current Data Pages.
A detailed statement of the method of calculating values and benefits has been
filed with the insurance department of the state in which this policy is
delivered. The guaranteed values are greater than or equal to those required by
any state law.
STATEMENT OF VALUE
We will mail a statement to you once each Policy Year until the policy
terminates. The statement will show:
1. The current death benefit;
2. The current accumulated and surrender values;
3. All premiums paid since the last statement;
4. Any investment gain or loss since the last statement;
5. All charges since the last statement;
6. Any policy loans and unpaid loan interest;
7. Any partial surrenders since the last statement;
8. The number of Units and Unit value;
9. The total value of each of your Investment Accounts;
10. Your designated beneficiary(ies);
11. All riders included with your policy; and
12. Detailed summary of activity for the year.
<PAGE>
ACCIDENTAL DEATH BENEFIT RIDER
This rider is part of your policy. It is issued in consideration of the
application and deduction from the Accumulated Value of the monthly cost of
accidental death benefits provided by this rider. All definitions, provisions
and exceptions of the policy apply to this rider unless changed by this rider.
The effective date is the Policy Date unless another date is shown on the data
page.
ACCIDENTAL DEATH BENEFIT
This rider provides an accidental death benefit as shown on the data page. We
will pay the benefit to the beneficiary upon receipt of proof satisfactory to us
that:
1. The Insured died on or after the Policy anniversary following the
Insured's first birthday;
2. The Insured died as a result, directly and independently of all other
causes, of accidental bodily injury; and
3. The death is not a direct or indirect result of an Excluded Risk.
EXCLUDED RISKS
We will not pay the accidental death benefit if death results directly or
indirectly from any of the following:
1. Suicide, while sane or insane;
2. War or an act of war, or service in the military forces of any country
at war, declared or undeclared;
3. Bodily or mental disease or infirmary, or medical or surgical treatment
thereof;
4. The commission or attempted commission by the Insured of an assault or
felony;
5. Operating, riding in or descending from any kind of aircraft in which
the Insured is a pilot or a member of the operating crew, or in which the
Insured is receiving or giving any kind of training or instruction; or
6. The voluntary taking of or the effects of voluntarily using any drug,
narcotic or hallucinogen unless prescribed for and administered to the Insured
by a licensed physician who is not a member of the Insured's family. This
includes any controlled substances listed in Schedules I, II, III or IV of the
Federal Controlled Substances Act, 231 U.S.C. Section 812, or successor
statutes, as they may be amended.
AUTOPSY
We reserve the right to examine the Insured's body and, unless prohibited by
law, to make an autopsy.
INCREASES
You may increase the accidental death benefit up to the current face amount of
your policy, provided:
1. The increase is for at least the minimum face amount increase shown on
the data page;
2. The increase does not result in a total benefit exceeding our
underwriting limits then in effect; and
3. You supply evidence of insurability which satisfies us under our
underwriting rules then in effect.
FACE AMOUNT DECREASES
Our underwriting rules do not permit accidental death benefit amounts greater
than policy face amounts. If a face amount decrease causes a conflict with that
rule, we will reduce the accidental death benefit amount and its cost,
accordingly.
COST OF INSURANCE
We deduct the cost of insurance for the benefits provided by this rider on each
Monthly Date. The cost is 1 multiplied by 2 where:
1. Is the cost of insurance rate, as described in the Cost of insurance
Rates section, divided by 1,000; and
2. is the accidental death benefit.
COST OF INSURANCE RATES
The monthly cost of insurance rates for the accidental death benefit are based
on the attained age and risk class of the insured. We determine these rates
based on our expectations as to our future mortality experience. Any change in
these rates applies to all individuals of the same class as the insured. The
cost of insurance rates will never be greater than those shown on the data page
in the Table of Guaranteed Maximum Cost of Insurance Rates for Accidental Death
Benefits. However, different guaranteed maximum cost of insurance rates may
apply to any increase in the accidental death benefit.
TERMINATION
This rider ends on the first of:
1. Termination of your policy;
2. The policy anniversary following the insured's 70th birthday; or
3. Our receipt of your written request to cancel this rider. The change
will be effective on the monthly date on or next following the date we receive
the request. We may require that you send your policy to our home office to
record the cancellation.
SF 45
CHILDREN TERM INSURANCE RIDER
This rider is part of your policy. It is issued in consideration of the
application and deduction from the accumulated value of the monthly cost of
children term insurance benefits provided by this rider. for the benefits
provided by this rider. All definitions, provisions and exceptions of the policy
apply to this rider unless changed by this rider. The effective date is the
Policy Date unless another date is shown on the current Data Pages.
DEFINITION
An insured child under this rider is:
1. Any child, stepchild or legally adopted child of the insured named in
the application for this rider who is less than 18 years of age on the date of
the application for this rider;
2. Any child of the insured born after the date of the application for this
rider; and
3. Any child less than 18 years of age legally adopted by the insured
after the date of the application for this rider. A child will not be an insured
child and will not be covered before attaining the age of 14 days or beyond this
rider's protection period.
INSURANCE BENEFIT
We will pay this rider's beneficiary its insurance amount upon
receipt of proof of an insured child's death. This rider's insurance amount is
equal to the number of units of this rider included in your policy, as shown on
the data page, times $1,000.
EXAMPLES:
3 UNITS children term x $1,000 =
$3,000 insurance amount for each child
4.5 UNITS children term x $1,000 =
$4,500 insurance amount for each child
PROTECTION PERIOD
This rider's protection period ends on the first of:
1. Termination of this rider (see Termination section below); or
2. As to any individual insured child, the Policy Anniversary next
following the insured child's 25th birthday.
COST OF INSURANCE
We deduct the cost of insurance for the benefits provided
by this rider on each monthly date. The cost is 1 multiplied by 2 where:
1. Is the number of units; and
2. Is the rate per unit shown on the data page.
BENEFICIARY
The beneficiary named in the application for this rider will receive this
rider's insurance amount, unless the beneficiary is changed as provided in your
policy.
OWNERSHIP
The policy's owner is also the owner of this rider. Any changes in ownership of
your policy and all provisions which apply to ownership also apply to this
rider.
INCONTESTABILITY
We will not claim this rider is void or deny payment of its insurance amount
after it has been in force for 2 years from its effective date.
SUICIDE
This rider's insurance amount will not be paid if the insured dies by suicide,
while sane or insane, within 2 years of its effective date. Instead, we will
return tall costs of children term insurance deducted for this rider. This
amount will be paid to the beneficiary.
PAID-UP BENEFIT
If the insured dies while your policy and this rider are in force, this rider
will become fully paid up. It will then continue in force during its protection
period, as shown on the current Data Pages, unless surrendered. You may obtain
the surrender value of this rider, when fully paid up, at any time. Your request
must be in writing. The surrender value will be the net single premium for the
insurance at the respective attained age of each insured child based on the
Commissioners 1980 Standard Ordinary Mortality Table B, assuming:
1. Interest at 4% a year;
2. Immediate payment of claims; and
3. Age determined on last birthday basis.
The net surrender value within 30 days after a Policy Anniversary will not be
less than the value on the Anniversary.
EXCHANGE
Any insurance under this rider may be exchanged for a policy on the life of the
insured child on the earlier of:
1. The Policy Anniversary following the insured child's 25th birthday;
2. The Policy Anniversary following the Insured's 65th birthday; or
3. The death of the Insured.
No evidence of insurability is required provided:
1. We receive written application and payment of the first premium for the
policy no earlier than 90 days before nor later than 31 days after the date
exchange may be made as provided above; and
2. The policy face amount is not less than $1,000 per unit of this rider
and is not more than $5,000 per unit of this rider.
This policy may be any form of life policy, except term, available under our
underwriting guidelines then in effect. Its premium rate will be at our then
published standard risk class rate for the policy based on the insured child's
attained age. Its effective date will be the date of exchange. No insurance is
provided until the insurance under this rider terminates.
The new policy may include Waiver or Accidental Death riders with our consent
and upon payment of any additional cost we determine for the riders.
If an insured child dies within 31 days of the date on which exchange would have
been allowed, we will pay a death benefit of $1,000 per unit of this rider.
REINSTATEMENT
This rider may be reinstated as part of your policy if, in addition to all other
policy conditions for reinstatement, you supply evidence which satisfies us that
each proposed insured child is insurable under our underwriting guidelines then
in effect.
Upon reinstatement, if any child proposed for insurance does not meet the above
conditions, this rider may still be reinstated as part of your policy but only
with an endorsement excluding such ineligible child from insurance coverage
under this rider.
TERMINATION
This rider ends on the first of:
1. Termination of your policy;
2. The Policy Anniversary following the Insured's 65th birthday; or
3. Our receipt of your written request to cancel it. The change will be
effective on the Monthly Date on or next following the date we receive the
request. We may require you to send your policy to the home office to record the
cancellation.
SF 392
SPOUSE TERM INSURANCE RIDER
This rider is part of your policy. It is issued in consideration of the
application and deduction from the accumulated value of the monthly cost of
spouse term insurance benefits provided by this rider. All definitions,
provisions and exceptions of the policy apply to this rider unless changed by
this rider. The effective date is the Policy Date unless another date is shown
on the current Data Pages.
DEFINITION
SPOUSE--means, for the purposes of this rider, the person named as the spouse in
the application for this rider.
INSURANCE BENEFIT
Upon receipt of proof that the spouse died before the termination of this rider,
we will pay the beneficiary of this rider the face amount shown on the current
Data Pages.
COST OF INSURANCE
The cost of insurance rates for spouse term insurance are based on the attained
age and risk class of the spouse and the Insured. We determine these rates based
on our expectations as to our future mortality experience. Any change in these
rates applies to all individuals of the same class as the spouse and the
Insured. the cost of insu5rance rates will never be greater than those shown on
the current Data Pages in the Table of Guaranteed Maximum Cost of Spouse Term
Insurance Rates.
PAID-UP BENEFIT
If the insured dies while your policy and this rider are in force, this rider
will become fully paid up. It will then continue in force during its protection
period, as shown on the current Data Pages, unless surrendered. You may obtain
the surrender value of this rider, when fully paid up, at any time. Your request
must be in writing. The surrender value will be the net single premium for the
insurance at the respective attained age of each insured child based on the
Commissioners 1980 Standard Ordinary Mortality Table, B, assuming:
1. Interest at 4% a year;
2. Immediate payment of claims; and
3. Age determined on last birthday basis.
The net surrender value within 30 days after a Policy Anniversary will not be
less than the value on the Anniversary. EXCHANGE Any insurance under this rider
may be exchanged for a policy on the life of the insured spouse without evidence
of insurability. This exchange must occur on or before this rider's expiration
date.
The policy may be any form of life policy, except term, available under our
underwriting guidelines then in effect, based on the attained age of the spouse.
the policy will be in the same risk class as shown for the spouse on this
policy's current Data Pages. Its effective date will be the date of exchange. No
insurance is provided until the insurance under this rider terminates.
The new policy may include Waiver or Accidental Death riders with our consent
and upon payment of any additional cost we determine for the riders.
BENEFICIARY
The beneficiary named in the application for this rider will receive this
rider's insurance amount, unless the beneficiary is changed as provided in your
policy.
OWNERSHIP
The policy's owner is also the owner of this rider. Any changes in ownership of
your policy and all provisions which apply to ownership also apply to this
rider.
MISSTATEMENT OF AGE
If the age of either the Insured or spouse is not correctly shown on the current
Data Pages, we will adjust the amount payable, under this rider to reflect the
correct age. The ages shown should be the ages on the respective birthdays prior
to the effective date.
INCONTESTABILITY
We will not claim this rider is void or deny payment of its insurance amount
after it has been in force during the lifetime of the spouse for 2 years from
its effective date.
SUICIDE
This rider's insurance amount will not be paid if the insured or spouse dies by
suicide, while sane or insane, within 2 years of its effective date. Instead,
the rider will immediately terminate, and we will return all costs of spouse
term insurance charges paid. This amount will be paid to the beneficiary.
REINSTATEMENT
This rider may be reinstated as part of your policy in a risk class we determine
based on facts in the application for reinstatement, if in addition to all other
policy conditions for reinstatement you supply evidence which satisfies us that
the spouse is insurable under our underwriting guidelines then in effect.
TERMINATION
This rider ends on the first of:
1. Termination of your policy;
2. Its exchange as provided above;
3. The end of the protection period as shown on the current Data Pages; or
4. Our receipt of your written request to cancel it. The change will be
effective on the Monthly Date on or next following the date we receive the
request. We may require you to send your policy to the home office to record the
cancellation.
SF 393
CHANGE OF INSURED RIDER
This rider is part of your policy. It is issued in consideration of the
application. There is no charge for this rider.
CHANGE OF INSURED
You may name a new Insured for this policy provided:
PRIVILEGE
1. You are the original and current owner of this policy;
2. This policy is in force and is not within the grace period;
3. Benefits are not being granted under any rider due to the Insured's
disability;
4. You have an insurable interest in the life of the proposed new Insured;
5. The Age Last Birthday of the proposed new insured is 69 or under on the
Change of Insured Date; and
6. You supply evidence which satisfies us of the proposed new Insured's
insurability under our underwriting guidelines then in effect.
LIMITATIONS AND CONDITIONS
The change to a new Insured is subject to these limitations and conditions:
1. The face amount, surrender value and accumulated value will remain the
same.
2. The minimum monthly premium after the Change of Insured Date will be the
greater of:
a. The minimum monthly premium before the Change of Insured Date; or
b. The minimum monthly premium based on the age and risk class of the
new Insured.
3. Any benefit riders which are part of this policy end on the Change of
Insured Date. Riders may be added for the new Insured only with our consent.
4. Any loans or unpaid loan interest secured by your policy will remain
indebtedness and are subject to the conditions of the Policy Loans section of
your policy.
5. Your policy will remain subject to any existing assignments.
6. The Change of Insured Date will be the Monthly Date next following our
approval of a requested Change of Insured application. The insurance on the new
insured will be effective on the Change of Insured Date.
EXAMPLE:
If the Policy Date is June 5, 2000 and your requested Change of Insured
is approved on April 20, 2002, the Change of Insured Date will be May 5, 2002.
INCONTESTABILITY
We will not claim your policy is void or deny payment of any proceeds after it
has been in force during the Insured's lifetime for two years from the Change of
Insured Date for the new Insured, except for any claim for total disability or
accidental death benefits your policy may provide.
Any face amount increase made after the Change of Insured Date has its own
incontestability period which begins on the adjustment date.
SUICIDE
The death proceeds of the policy will not be paid if the new Insured dies by
suicide, while sane or insane, within two years of the date of exchange.
Instead, we will pay the net surrender value as of the date of death.
TERMINATION
This rider ends on the first of:
1. The Policy Anniversary following the Insured's 70th birthday;
2. Termination of your policy;
3. The death of the Insured under your policy while it is in force; or
4. The application of your policy's net surrender value under a lapse or
surrender option, or the surrender of this rider.
SF 390
DEATH BENEFIT GUARANTEE RIDER
This rider is part of your policy. The effective date is the Policy Date.
DEATH BENEFIT If you meet the death benefit guarantee premium requirement
GUARANTEE described below, the policy will not enter its grace period even
if your net surrender value is not sufficient to cover the
Monthly Policy Charge on a Monthly Date.
MATURITY On the policy Maturity Date, we will pay you the maturity
GUARANTEE proceeds if the following conditions are met:
1. This rider is in force;
2. The Insured is alive; and
3. You have met the death benefit guarantee premium
requirement described below.
DEATH BENEFIT The death benefit guarantee premium requirement on each
GUARANTEE PREMIUM Monthly Date is met if (1) is equal to or greater than (2)
REQUIREMENT where:
1. Is the sum of all premiums paid less any partial
surrenders and any policy loans and unpaid loan
interest; and
2. Is the sum of the monthly death benefit guarantee
premiums as shown on the current Data Pages applicable
to the number of months your policy has been in force,
less one month.
The death benefit guarantee premium is based on the issue age, death benefit
option, and risk class of the Insured and is shown on the current Data Pages.
For any month that your Monthly Policy Charge is being paid by our Waiver of
Monthly Policy Charge Rider, we will consider your monthly death benefit
guarantee premium to be zero.
CHANGES THAT Your death benefit guarantee premium may change if:
AFFECT THE DEATH
BENEFIT GUARANTEE 1. Your face amount is increased or decreased;
PREMIUM REQUIREMENT
2. There is a change in your death benefit option;
3. A rider is added or deleted.
If your death benefit guarantee premium changes we will send you new data pages
which reflect the change. Also, as a result of a change, an additional premium
may be required on the date of change in order to meet the new death benefit
guarantee
NOTICE If, on any Monthly Date, the death benefit guarantee premium requirement
is not met, we will send you a notice of the premium required to maintain the
guarantee.
If the premium is not received in our home office prior to the expiration of 61
days after the date we mail our notice, the death benefit guarantee will no
longer be in effect and this rider will terminate.
REINSTATEMENT If this rider terminates, it may not be reinstated. This rider
TERMINATION ends:
1. When your policy terminates;
2. On the expiration of 61 days after the date we mail
our notice to you that the death benefit guarantee
premium has not been met and your failure to remit the
required premium; ot
3. On the later of your Age 65 Policy Anniversary or five
years after the effective date of this rider.
ARTICLES OF INCORPORATION
Principal Mutual Life Insurance Company
711 High Street DES MOINES, IOWA 50392
AMENDED AND SUBSTITUTED ARTICLES OF INCORPORATION
AS AMENDED
Effective July 1, 1991
ARTICLE I.
The name of the corporation shall be Principal Mutual Life Insurance Company, by
which name (or by the names Bankers Life Company and Princor Mutual Life
Insurance Company which it may use in its discretion and where permitted
continue to use or adopt) it shall do business and shall have and retain all its
property, rights and privileges.
ARTICLE II.
The corporation shall be located and have its principal place of business in the
city of Des Moines, Polk County, lowa. The principal office of the corporation
is the registered office, and the President is the registered agent of the
company.
ARTICLE III.
The purpose of this corporation are and it shall have full power to engage in,
pursue, maintain and transact a general life, health and accident insurance and
annuity business, and to insure other risks, perform other services and engage
in other businesses allowed by law. It may issue participating or
nonparticipating contracts. It shall further have the power to enter into
contracts with respect to proceeds of such insurance, to accept and reinsure
risks, to enter into coinsurance agreements, to issue and perform policies and
contracts of all types, including but not limited to individual and group, to
act as trustee or advisor in any capacity, and to offer all services, including
those of a financial accounting or data processing nature, to all persons,
partnerships, corporations and other business organizations, directly or
indirectly incidental to its business. It shall have all the rights, powers and
privileges granted or permitted by the Constitution and laws of the state of
Iowa governing the conduct of insurance companies and by Titles XIX and XX of
the Code of Iowa 1966 and all acts amendatory thereof or additional thereto.
The corporation shall be empowered: To sue and be sued, complain and defend, in
its corporate or assumed name, to have a corporate seal which may be altered at
pleasure, and to use the same by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced; to purchase, take,
receive, lease, or otherwise acquire, own, hold, improve, use and otherwise deal
in and with, real or tangible or intangible personal property, or any interest
therein, wherever situated; to sell, convey, mortgage, pledge, lease, exchange,
transfer and otherwise dispose of all or any part of its property and assets; to
lend money to, and otherwise assist its employees, agents, officers and
directors unless prohibited by law; to purchase, take, receive, subscribe for,
or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge, or otherwise dispose of, and otherwise use and deal in and with, shares,
options, warrants or other interests in, or obligations of, other domestic or
foreign corporations, associations, partnerships or individuals, or direct or
indirect obligations of the United States or of any other government, state,
territory, governmental district or municipality or of any instrumentality
thereof unless prohibited by law; to make contracts and guaranties and incur
liabilities; to lend and borrow money for its corporate purposes, invest and
reinvest its funds, and take and hold real and personal property as security for
the payment of funds so loaned or invested; to acquire or organize subsidiaries;
to conduct its business, carry on its operations, and have offices and exercise
the powers granted in any state, territory, district, or possession of the
United States, or in any foreign country; to make donations for the public
welfare, and for religious, charitable, scientific or educational purposes; to
pay pensions and establish pension plans, pension trusts, profit-sharing plans
and other incentive, insurance and welfare plans for any or all of its
directors, officers, agents and employees; to enter into general partnerships,
limited partnerships, whether the corporation be a limited or general partner,
joint ventures, syndicates, pools, associations and other arrangements for
carrying on any or all of the purposes for which the corporation is organized,
jointly or in common with others; to indemnify officers, directors, employees
and agents, as allowed by law, subject to such limitations as may be established
by the Board of Directors; and to have and exercise all powers necessary or
convenient to effect any or all of the purposes for which the corporation is
organized.
ARTICLE IV.
The corporation shall have perpetual existence and succession.
ARTICLE V.
The private property of the members, directors and other officers and managers
of this corporation shall in no case be liable for the corporate debts, but
shall be exempt therefrom.
ARTICLE Vl.
The corporate powers of the corporation shall be exercised by the Board of
Directors, and by such officers and agents as the Board may authorize, elect or
appoint. The Board of Directors shall consist of not less than nine (9) nor more
than twenty-one (21) directors, the number to be determined from time to time by
a majority of the entire Board of Directors. The directors shall be divided into
three classes, as nearly equal numerically as possible, determined by terms
expiring in successive years. Each director shall serve a term of approximately
three years except as otherwise provided or where it is necessary to fix a
shorter term in order to preserve classification. No decrease in the number of
directors shall shorten the term of any incumbent director. Each director shall
serve until a successor is elected and shall be eligible for re-election. The
Board of Directors shall have the power to fill any vacancy in their number. The
term of office of each director shall begin at the annual meeting at which such
director is elected by the members or at the time elected by the Board of
Directors. The term of office of each director shall not extend beyond the
annual meeting next following the date such director attains age 70, or such
younger age as may be established for all directors by the Board of Directors,
except that the terms of directors holding office prior to the annual meeting in
1984 may extend to the annual meeting next following the date such director
attains age 72 and except that for officer-directors, other than one who is or
has been Chief Executive Officer, the term as a director shall not extend beyond
the annual meeting next following the date such director retires as an active
officer of this corporation. Directors need not be members.
The Board of Directors shall have the power to adopt such By-Laws and rules and
regulations for the transaction of the business of the corporation not
inconsistent with these Amended and Substituted Articles or the laws of the
state of Iowa, and to amend or repeal such By-Laws, rules and regulations. The
By-Laws shall provide procedures for the nomination and election of directors.
The Board of Directors may fix reasonable compensation of the directors for
their services. The Board of Directors shall elect from their number at the
first board meeting after the annual meeting of the corporation a President, and
shall authorize, eleet or appoint at such first meeting or at any meeting
thereafter such other officers, agents or committees as in their judgment may be
necessary or advisable.
A director of this corporation shall not be personally liable to the corporation
or its members for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for a breach of the director's duty of loyalty to the
corporation or its members, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, or (iii)
for a transaction from which the director derives an improper personal benefit.
The liability of directors shall be deemed further limited or eliminated to the
fullest extent permitted by changes in the law governing this corporation and
approved by a majority of the entire Board of Directors. Any repeal or
modification of the provisions of this paragraph shall not adversely affect the
duty, liability, rights or protection of a director existing at the time of such
repeal or modification.
ARTICLE Vll.
The annual meeting of this corporation shall be held at the Home Office in Des
Moines, lowa, on the third Monday in May of each year for the election of a
director or directors and the transaction of any other business properly coming
before the annual meeting.
Special meetings of the corporation may be called by the directors at any time
and shall be so called upon the written request of five per cent (5%) of the
members, which request shall specify the matters proposed to be acted upon.
Notice of the time and place of each annual and each special meeting shall be
published at least one time in a newspaper of general circulation in the city
where the meeting is to be held not less than 30 nor more than 90 days prior to
the date of the meeting. No person shall be elected a director by the members at
any meeting except an annual meeting and then only if duly nominated in
accordance with the requirements of the By-Laws and named in the notice of the
annual meeting as a nominee for the class of director to be so elected. Each
notice of a meeting shall state the purpose of the meeting. These Amended and
Substituted Articles may be amended at any meeting only if the notice of the
meeting describes or sets out the proposed amendment.
At every annual or special meeting each member shall be entitled to one vote, to
be cast by ballot signed by such member and mailed or personally delivered by
such member to the Home Office. The Secretary of the corporation will, during
any 60 consecutive regular business days immediately preceding the date of the
annual or any special meeting, give or mail to each member making a request
therefor a ballot, and shall if the Board of Directors so direct mail a ballot
to each member. No ballot received in any manner after the adjournment of any
such meeting, or which in not signed by a member, shall be counted upon matters
acted upon at the meeting. There will be no cumulative voting by proxy,
ARTICLE VIII.
This corporation shall have no capital stock, but shall be purely mutual as a
legal reserve company.
ARTICLE IX.
Except as otherwise provided in this Article, each person who, and each entity
which, is regarded as present owner under the provisions of an original contract
of insurance or annuity issued by this corporation, or, absent determination by
such provisions, under the By-Laws or rules of the corporation, shall be a
member of this corporation and entitled to the privileges of such member as
defined herein, in the By-Laws or in the contract of insurance or annuity, but
so long only as the said original contract of insurance or annuity has not
matured or been surrendered and remains in force. The membership privileges of
those issued an original contract of insurance or annuity on or before April 8,
1980, but not the owner on that date, shall be preserved.
ARTICLE X.
These Articles of Incorporation may be amended at any annual meeting, or any
special meeting called for that purpose, upon notice given as required by
Article VII, upon a majority vote in favor of the amendment cast by the members
voting at such meeting by ballot or in person. The amendment shall be binding
upon all members of the corporation. Any amendment will not affect contracts of
the members nor terminate rights, powers, privileges, and franchises of the
corporation existing as of the time of amendment.
BY-LAWS
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
711 HIGH STREET DES MOINES, IOWA 50392
Adopted and Effective April 8, 1969
As Amended through August 15, 1994
ARTICLE I
MEETINGS OF THE COMPANY, ELECTION OF
DIRECTORS AT ANNUAL MEETING
SECTION 1. Meetings of the Company. The annual meeting of the Company shall be
held in accordance with the provisions of the Articles at the hour of 9:00
o'clock A.M.., Des Moines time. Any special meeting of the Company shall be held
at the time and place specified in the notice of such special meeting. The
Chairman of the Board or the acting Chairman of the Board shall preside at
meetings of the Company. The Secretary of the Corporation shall act as the
Secretary of the meeting. If either person is unable to act in the designated
capacity, the members present shall elect a member to serve as chairman pro tem
or secretary pro tem.
SECTION 2. Notices and Ballots. The Secretary of the Corporation shall cause
notice of each meeting to be published and shall mail or make ballots available
to members as required by the Articles and shall if so directed by the Board
mail a ballot to each member. No name of a candidate for election to the Board
shall be included in the ballot unless the candidate has been nominated as
provided in these By-Laws.
SECTION 3. Election of Directors and Voting on Propositions; Failure of
Election. At each annual meeting the ballots cast for candidates for election to
the Board, and at each annual meeting or special meeting the ballots cast
concerning any proposition, shall be referred to the Board for canvass at the
first meeting of the Board following such meeting of the Company. In the event a
candidate for election to the Board, who is included in a class for which the
number of candidates nominated for election is greater than the number to be
elected, dies or withdraws before election, then there shall be no election of
Directors in that class and the vacancy or vacancies created may be filled by
the Board, to serve until the next following annual meeting of the Company, when
a new election shall be held for the unexpired term of such vacancy or
vacancies.
The candidate or candidates receiving the highest number of votes in each class
shall be declared elected Director or Directors, and any proposition or any
other matter submitted shall be declared carried or lost in accordance with the
majority of votes cast for or against it. No person other than a candidate may
be elected a Director.
ARTICLE II
NOMINATION OF DIRECTORS AND
ELECTION BY BOARD
SECTION 1. Nomination by Board. The Board shall each year nominate candidates
for election as Directors to succeed those whose terms are expiring.
SECTION 2. Nomination by Members. Members of the Company may nominate candidates
for election as Directors to succeed those whose terms are expiring, upon
delivery to the Secretary of the Corporation a certificate or certificates of
nomination signed by members residing in at least five states and numbering in
each such state not less than 1/25 of 1% of the total membership of the entire
Company as of a date one hundred eighty days prior to the date of the annual
meeting and including the address and policy or contract number of each member
so signing.
SECTION 3. Qualification of Candidates. To qualify as a candidate, whether
nominated by the Board or by members, written certificate or certificates of
nomination shall be filed with the Secretary of the Corporation not more than
one hundred eighty days nor less than ninety days before the date of the annual
meeting of the Company and shall be accompanied by a written statement of the
nominee of his willingness to serve.
SECTION 4. Assignment to Class. Each nomination of a candidate shall be to a
class to which one or more Directors are to be elected at the next annual
meeting of the Company. If any nomination made by the members of the Company
fails to assign the candidate to any class, the Board shall make such
assignment.
SECTION 5. Filling Vacancies. Any vacancy upon the Board (except vacancies
resulting from failure of election as provided in Article I, Section 3), whether
resulting from death or resignation of a Director, increase in number of
Directors, or for any other reason, may be filled by the Board at any regular or
special meeting, and each such newly elected Director shall be assigned by the
Board to a class.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. Number of Directors. The Board shall consist of thirteen Directors or
such larger or smaller number, within the limits specified by the Articles, as a
majority of the entire Board may determine at any regular or special meeting of
the Board.
SECTION 2. Meetings. Regular meetings of the Board shall be held without notice
once in each calendar quarter on such date and at such hour and place as may be
fixed by the Board, except that the meeting in the second quarter shall be held
in the Home Office of the Company in Des Moines on the date of the annual
meeting. The date, hour and place of any regular meeting other than the meeting
in the second quarter may be changed by the Chairman of the Board, if any, or
the President, by written notice to all Directors at least thirty days before
the regular meeting date, provided that the date to which any meeting is changed
shall not be more than fifteen days earlier or later than the date fixed by the
Board. Special meetings of the Board may be called at any time upon five days'
written notice given by the Chairman of the Board, if any, the President or any
two Directors. In the alternative, upon oral or written notice received prior to
the time of the meeting by at least two-thirds of the Directors, the Chairman of
the Board, or acting Chairman of the Board, may call a special meeting of the
Board to be held through communications equipment which permits all participants
to communicate with each other, with such participation constituting attendance
at such meeting. Any Director may waive call or notice required to be given
either before or after the time stated therein. Any meeting may be continued to
the succeeding day if the Board does not complete the business coming before it
on the meeting date.
At all meetings of the Board, regular or special, a majority of its number shall
constitute a quorum for the transaction of business. If at any meeting less than
a quorum is present, the meeting may be adjourned from time to time to a
subsequent date, at which date the meeting may be held without notice if a
quorum is then present.
SECTION 3. Officers of the Board; Duties. The Board shall elect from its number
a Chairman of the Board to serve at the pleasure of the Board. The Chairman of
the Board shall, if present, preside at each meeting of the Board and shall have
such powers and shall perform such duties as may be assigned to him by these
By-Laws or by or pursuant to authorization of the Board or, if the Chairman of
the Board is not the chief executive officer of the Company, by the chief
executive officer.
The Board may at any meeting of the Board elect a Secretary of the Board and
such other officers, assistants and committees of the Board as the Board may
deem necessary to serve during the pleasure of the Board, each of whom shall
have and perform such duties as may be assigned to him by the Board or by the
Chairman of the Board. The Secretary of the Board shall keep a record of all
proceedings of the Board.
The Board shall by resolution establish a procedure to provide for an acting
Chairman of the Board in the event the current Chairman of the Board is unable
to serve or act in that capacity.
SECTION 4. Compensation of Directors. Directors who are not officers of the
Company shall be entitled to an annual retainer and an additional amount for
attendance at each regular or special meeting of the Board or meetings of
committees of the Company, plus expense of attending such meetings, if any, as
may be fixed by the Board.
ARTICLE IV
OFFICERS OF THE COMPANY
SECTION 1. President. The Board shall, at the first meeting of the Board
following the annual meeting of the Company, or at any meeting thereafter to
fill a vacancy in the office, elect from its number a President of the Company
to serve for one year or until his successor is elected.
SECTION 2. Chief Executive Officer. The Board shall empower either the Chairman
of the Board, if one is elected, or the President to serve as the chief
executive officer of the Company.
SECTION 3. Other Officers Elected by Board. At any meeting of the Board it may
elect such officers of the Company, in addition to a President, as the Board may
deem necessary, to serve at the pleasure of the Board.
SECTION 4. Other Officers. The Board may authorize the Company to elect or
appoint other officers, each of whom shall serve at the pleasure of the Company.
SECTION 5. Duties of Officers. The chief executive officer shall supervise the
carrying out of policies adopted or approved by the Board, shall exercise a
general supervision and superintendence over all the business and affairs of the
Company, and shall possess such other powers and perform such other duties as
may be incident to his function.
The President, if not the chief executive officer, shall have such powers and
perform such duties as may be assigned to him by these By-Laws or by or pursuant
to authorization of the Board or by the chief executive officer.
Other officers elected by the Board shall have such powers and perform such
duties as may be assigned to them by or pursuant to authorization of the Board
or by the chief executive officer.
Officers elected or appointed by the Company shall have such powers and perform
such duties as may be assigned to them by the Company.
SECTION 6. Compensation of Officers. The compensation of all officers elected by
the Board shall be fixed by the Board. The compensation of officers elected or
appointed by the Company shall be fixed as provided by resolution of the Board
of Directors.
ARTICLE V
COMMITTEES
SECTION 1. Executive Committee. An Executive Committee is hereby created
composed of five Directors and shall include the Chairman of the Board and the
chief executive officer if other than the Chairman of the Board. Members of the
Executive Committee shall be appointed by and serve at the pleasure of the
Board. If the Board has elected a Chairman of the Board he shall, if present,
preside at each meeting of the Executive Committee. In the absence or vacancy in
the office of the Chairman of the Board, the chief executive officer shall
preside. If the Chairman of the Board is also the chief executive officer, any
other member of the Executive Committee, as determined by the members of the
Executive Committee present, shall preside at a meeting of the Committee in the
absence of the Chairman of the Board. The Secretary of the Board shall act as
secretary of the Executive Committee and shall keep a record of all proceedings.
A majority of the members of the Executive Committee shall constitute a quorum.
SECTION 2. Powers of Executive Committee. The Executive Committee shall have and
may exercise the powers of the Board in the management and affairs of the
Company except when the Board is in session and except the power to make, alter
or repeal By-Laws or to nominate candidates for election to, fill vacancies in
or change the number of members of the Board. Actions of the Executive
Committee, except when the rights or acts of third parties would be adversely
affected, shall be subject to the approval of the Board, which approval shall be
implied unless contrary action is taken by the Board.
SECTION 3. Other Committees. Other committees composed of members or directors,
officers, agents, or employees of the Company or of any subsidiary or affiliate
of the Company may be appointed and their respective functions, terms and duties
prescribed from time to time by the Board of Directors, by the chief executive
officer subject to the approval of the Board, or by the chief executive officer.
ARTICLE VI
EXECUTION AND SIGNING OF INSTRUMENTS
AND CHECKS: FACSIMILE SIGNATURES
SECTION 1. Execution of Instruments. Instruments affecting or relating to real
estate or the investment of funds of the Company may be executed as authorized
by resolution of the Board or as may be authorized by such officers of the
Company as the Board designates.
SECTION 2. Disposition of Funds. The funds of the Company shall be paid out,
transferred or otherwise disposed of only in such manner and under such controls
as may be authorized by resolution of the Board or as may be authorized by such
officers of the Company as the Board designates.
SECTION 3. Survival of Validity of Instrument Bearing Facsimile signature. If
any officer whose facsimile signature has been placed upon any form of
instrument shall have ceased to be such officer before an instrument in such
form is issued, such instrument may be issued with the same effect as if he had
been such officer at the time of its issue.
ARTICLE VII
INDEMNITY
The Board shall have the power to indemnify, or authorize the officers of the
Company to indemnify, directly and through insurance coverage, each person now
or hereafter a Director, officer, employee or other representative of the
Company, and that person's heirs and legal representatives, against all damages,
awards, costs and expenses, including counsel fees, reasonably incurred or
imposed in connection with or resulting from any action, suit or proceeding, or
the settlement thereof prior to final adjudication, to which such person is or
may be made a party by reason of being or having been a Director, officer,
employee or other representative of the Company or by reason of service at the
request of the Company in any capacity with another entity or organization. Such
rights or indemnification shall be in addition to any rights to which any
Director, officer, employee or other representative of the Company, former,
present or future, may otherwise be entitled as a matter of law and subject to
such limitations permitted by law as may be established by the Board.
ARTICLE VIII
AMENDMENT OF BY-LAWS
These By-Laws may be amended, altered or repealed by the Board at any regular or
special meeting of the Board, provided written notice expressing in substance
the proposed change shall have been given to each Director at least five days
prior to the date of such regular or special meeting to each Director who does
not waive notice. Notice may be waived by any Director by filing a written
waiver of notice with the Secretary of Board before, on or after the meeting
date.
ARTICLE IX
MEANINGS OF WORDS AND TERMS
When used in these By-Laws, the following words and terms shall have the meaning
assigned to them in this Article.
Company - Principal Mutual Life Insurance Company (which also may be
known as Bankers Life Company and Princor Mutual Life
Insurance Company)
Board - Board of Directors of the Company
By-Laws - these By-Laws of the Board, as from time to time amended
Articles - Articles of Incorporation of the Company, as from time to
time amended
member - a member of the Company, as defined in the Articles
Director - a person duly elected to the Board of the Company
class - that group of Directors whose terms expire on the date of the
same annual meeting of the Company.
candidate- a person duly nominated for election to the Board pursuant to the
provisions of the Articles and By-Laws
711 High Street Principal Mutual Life and Disability
Des Moines, Iowa 50392-0001 Life Insurance Company Insurance Application
All references to "you" and "your" in this application means the
Proposed Insured.
________________________________________________________________________________
Personal Proposed Insured's Name (First, Middle Initial, Last) Date of Birth
Information
(Always ___________________________________________________________________
complete Address City County State Zip
this section)
___________________________________________________________________
Sex Social Security Number Birthplace Driver's License
__ M __ F (State or Country) Number
________________________________________________________________________________
Life Annual Earned Income Unearned Income Occupation Employer/
Only Address
________________________________________________________________________________
Life Face Amount Type Plan Unscheduled Premium,
Coverage (Term, Whole (or Premium, if AL) if applicable
Applied For Life, etc.)
_____________________________________________________________________________
If joint life (Survivorship, First-To-Die)
other lives to be covered
_____________________________________________________________________________
If Universal or Variable Life __ Option 1 (Death Benefit = Face Amount)
- Planned Premium __ Option 2 (Death Benefit = Face Amount
+ Accum. Value)
_______________________________________________________________________________
Life Rider 1 Amount, if applicable If Child Term, or
Benefits/ ____________________________________ Spouse Term, or
Riders Rider 2 Amount, if applicable Payor Benefits
Applied For ____________________________________ Then Submit Supplemental App.
Rider 3 Amount, if applicable _____________________________
____________________________________ If PAPA Rider:
Rider 4 Amount, if applicable Total Annual Premium $_______
____________________________________ (Dividends must be additions)
_______________________________________________________________________________
Beneficiary Primary Relationship to Social Security Number
of Life Proposed Insured
Insurance __________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Contingent Relationship to Social Security Number
Proposed Insured
_______________________________________________________________________________
Proceeds __ to be left at interest.
Beneficiary to have election and withdrawal rights.
Pay interest ______________ (frequency)
_______________________________________________________________________________
Life Owner Name Relationship to Proposed Insured Taxpayer ID Number
(if other __________________________________________________________________
than the Address City County State ZIP
Proposed __________________________________________________________________
Insured) If Proposed Insured is under age 15, Ownership is
__ Permanent __ Temporary __ Age 18 __ Age 21 __ Age 25
(at which time the Insured becomes Owner)
________________________________________________________________________________
Life __ AL - Improve Policy __ Purchase Additional Insurance
Dividend __ Paid in Cash
__ AL - Loan Enhancement __ Accumulate at Interest
__ *EPO - Return Cash Value
__ AL - Reduce/Unscheduled __ Reduce Premium
__ * EPO - Return of Premium
* Balance as Checked
_______________________________________________________________________________
Life __ Annual __ Semi-Annual
Method of __ Quarterly __ List Bill List existing reference number _______
Premium __ Preauthorized Withdrawal (monthly)
Payment List existing policy number(s)__________________________________
________________________________________________________________________________
Other Life Company Amount Amount ADB Waiver of Year of Purpose
Insurance In Force Pending Amount Premium Issue (Business or
Personal)? If
business, type
(Key Person,
Buy, Sell, etc.)
(list all __________________________________________________________________
life
insurance in __________________________________________________________________
force or
currently __________________________________________________________________
being applied
for) __________________________________________________________________
Will this insurance replace any exisitng coverage? __ No __ Yes
If "yes", enclose replacement forms.
If "yes", company name(s) ________________________________________
Policy number(s) _________________________________________________
Will all pending coverage be accepted? __ No __ Yes Explain
________________________________________________________________________________
Activities 1. Have you, are you, or do you plan to:
*a. be a member of any Armed Forces or Military Unit?
__ No __ Yes
*b. pilot any type of aircraft?
__ No __ Yes
*c. engage in scuba/skin diving, motor vehicle racing,
skydiving or any other hazardous sporting activity?
__ No __ Yes
*d. live or travel outside the United States?
__ No __ Yes
2. In the last 5 years have you:
a. been in a motor vehicle accident; been charged with
driving while intoxicated; had more than one moving
traffic violation?
__ No __ Yes
b. used cocaine, marijuana, amphetamines, barbiturates
or other controlled substances?
__ No __ Yes
c. been arrested for other than traffic violations?
__ No __ Yes
3. Have you ever had any life, health or disability insurance
rated, ridered or declined?
__ No __ Yes
If "yes", give details, or *complete special statement:
________________________________________________________________________________
Personal 4. a. Full Name and Address of personal physician/health
History care provider (if none, so indicate)
_________________________________________________________________
b. Date last seen Reason and results Doctor's Phone No.
_________________________________________________________________
(always c. Height Weight Weight loss in the last year? __No __ Yes
complete If "yes, number of pounds
this section) Reason for weight loss
_________________________________________________________________
5. a. Do you use tobacco or nicotine products?
__ Never __ Current __ Past - date last used ___________
b. If current or past use, type/amount per day?
__ Cigarettes _Pipe/Cigar __ Chew __ Patch/gum
6. a. Do you drink alcohol?
__ Never __ Current __ Past - date last used/
reason quit ______________
b. If current or past use, type/amount per week?
__ Beer/Wine __ Other ___________________________________
__________________________________________________________________
7. a. Have you ever been advised to limit or discontinue the
use of alcohol or drugs? __ No __ Yes
b. Have you sought or received treatment or counseling
because of alcohol or drug use? __ No __ Yes
c. Have you participated in a support group or program
because of alcohol or drug use? __ No __ Yes
If "yes" give details:
__________________________________________________________________
8. a. Has any parent or sibling died before age 60?
__ No __ Yes If yes, age(s) at death ___________________
b. Relationship(s) __________________________________________
cause(s) of death ________________________________________
________________________________________________________________________________
Medical 9. Within the last 10 years have you had, been treated for or
History diagnosed as having (check all that apply):
a. __ high blood pressure __ heart attack __ chest pain
(always __ any other disease or disorder of the heart or
complete circulatory system (specify) __________________________
this section ) __ None
b. __ athsma __ bronchitis __ emphysema
__ any other disease or disorder of the lungs or
respitory system (specify) ___________________________
__ None
c. __ seizure __ stroke __ headaches
__ any other disease or disorder of the brain or nervous
system (specify) ______________________________________
d. __ irritable bowel syndrome __ hepatitis __ colitis
__ ulcer __ cirrhosis __ gallbladder disorder
__ pancreas disorder
__ any other disease or disorder of the liver, stomach
or digestive tract (specify) __________________________
__ none
For each item checked (except "none" or "No"), list question
number and give details, including (1) diagnosis,
(2) dates of first and last treatment; (3) types and results
of treatment, and (4) doctor's full names and addresses:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
<PAGE>
________________________________________________________________________________
711 High Street Principal Mutual Insurance Application
Des Moines, Iowa 50392-0001 Life Insurance Company and Authorization
________________________________________________________________________________
As part of our routine underwriting procedure, you may receive a phone call from
the Home Office in Des Moines. The purpose of this call is to obtain personal
and financial information needed to evaluate your insurability. Your answers
will be kept strictly confidential. Do you prefer to be interviewed rather
than another family member? __ Yes __ No May we call you at work? __ Yes __ No
May we talk to your spouse? __ Yes __ No
________________________________________________________________________________
Home Phone (include area code) Business Phone (include area code)
( ) ( )
Spouse's Business Phone ( )l
________________________________________________________________________________
Special Instructions
________________________________________________________________________________
Statement In Application: I represent that all statements in this application
are true and complete and were correctly recorded before I signed my name below.
I understand and agree that the statements in the application, including
statements by the proposed insured in any medical questionnaire that becomes a
part of this application, shall be the basis of any insurance issued. I also
understand that misrepresentations could mean denial during the contestable
period of an otherwise valid claim.
When Insurance Effective: Except as may be provided by the Conditional Receipt,
I understand and agree that the Company shall incur no liability: (1) unless a
policy issued on this application has been physically delivered to and accepted
by the owner and the first premium paid; and (2) unless, at the time of such
delivery and payment, the person to be insured is actually in the state of
health and insurability represented in this application and in any medical
questionnaire or amendment that becomes a part of this application. If these
conditions are met, the policy will then be deemed effective on the Policy Date
stated in the policy.
Limitation of Authority: I understand and agree that no agent, broker or medical
examiner has any authority to determine insurability, or to make, change or
discharge any contract, or to waive any of the Company's rights. The Company's
right to truthful and complete answers to all questions on this application and
in any medical questionnaire that becomes a part of this application may not be
waived. No knowledge of any fact on the part of any agent, broker, medical
examiner or other person shall be considered knowledge of the Company unless
such fact is stated in the application.
__ This application is COD or __ I have paid $_____ for Life; _____ for
Disability Insurance. If money was paid, I have been given the Conditional
Receipt. In return I have read, understand, and agree to its terms.
Authorization: I authorize any doctor, hospital, clinic, health care provider,
insurance (or reinsuring) company, consumer reporting agency, my insurance
agent/broker, employer, family member, friend, neighbor, lawyer, accountant,
roommate or business associate having personal information (including physical,
mental, drug or alcohol use history) regarding me or any named dependent, to
provide the Company, its representatives or reinsurers, any such data.
I authorize the Company to conduct a Personal Telephone Interview in connection
with my application for insurance. I authorize the MIB, Inc. to furnish the
above data to its reinsurers, to MIB, Inc., or as required by law or as provided
in the Notice of Information Practices. Data released may include results of my
medical examinations or tests requested by the Company. I understand that the
data obtained by use of this Authorization will be used by the Company to
determine eligibility for insurance. I have received a copy of the "Notice of
Insurance Information Practices", which includes notice required by any Fair
Credit Reporting Act. It also describes MIB, Inc. I agree that this
authorization shall be valid for two years from the earlier of: (1) the date of
this application, or (2) the date of my policy. I may revoke this authorization
for information not then obtained. Such revocation must be in writing. It will
not be effective until received at the Company's Home Office. I agree a
photocopy of this authorization shall be as valid as the original. I have
received a copy of this authorization.
Taxpayer I.D. Certification: As owner of this contract, I certify under
penalties of perjury: 1. The taxpayer identification number shown on this
application is correct. 2. I am not subject to IRS backup withholding. Note:
Check this box __ if you are currently subject to backup withholding.
Proposed Insured Signatures
________________________________________________________________________________
Proposed Insured (if over age 9) Spouse (if Spouse Term is being applied for)
________________________________________________________________________________
Parent (if Proposed Insured is under age 15 Payor (if Payor Benefits
and Parent has not signed as Owner) are being applied for)
________________________________________________________________________________
Owner's Signature (If other than Proposed Insured)
Owner of Insurance Title, if corporation (an officer other than the Proposed
Insured must sign)
________________________________________________________________________________
Signed at City State Date Witness (Agent/Broker)
Agent/Broker's License Number
________________________________________________________________________________
Cosignature by resident licensed Date
Agent/Broker's, if applicable in your state Agent/Broker's License Number
________________________________________________________________________________
LOGO Principal Mutual Flexible Variable Universal
Life Insurance Company Life Insurance Supplemental
Application
1. Print full name of Proposed Insured Policy Number
_______________________________________ _______________
2. Complete the sections for: Required Sections Optional Sections
A. New Business 1, 3, 5 & 8 4 & 7
B. Adjustments to Existing Business 1, 3, 6 & 8 4, 5 & 7
C. Term Conversions 1, 3, 6 & 8 4 & 7
D. Adding/Changing Dollar Cost Averaging 1, 7 & 8 (N/A)
NOTE: Section 9 must be completed when sold by a Registered Representative of a
Broker/Dealer other than Princor Financial Services Corporation. A selling
agreement between the Broker/Dealer and Princor Financial Services Corporation
must be in place.
3. Investor Information. The following questions apply to the Policyowner. (The
Registered Representative is required to determine the suitability of this
sale.)
a) If your objective is other than death benefit protection, please indicate:
________________________________________
b) My risk tolerance is:|_| Conservative |_| Moderate |_| Aggressive
c) Occupation: _____________________________________________________
d) Estimated Annual Net Income:
(current tax year, in thousands)
|_| Under $25,000 |_| Under $50,000 |_| Under $100,000
|_| Under $250,000 |_| Over $250,000
e) Approximate Net Worth:
(current tax year, in thousands)
|_| Under $25,000 |_| Under $50,000 |_| Under $100,000
|_| Under $250,000 |_| Over $250,000
f) Income Tax Bracket |_| Under 20% |_| Under 30% |_| Over 30%
g) Are you employed by a National Association of Securities Dealers firm?
Yes No
|_| |_|
4. |_| Decline Telephone Transfer Authorization. I (We) do not want telephone
transaction services as described in the prospectus.
5. Allocation Percentages for:
Premiums Premiums include the initial payment and all planned periodic premiums.
The net premium is the premium paid less the Premium Expense Charge. Net
premiums received by the company will be allocated to the Money Market Division
for 20 days from the effective date. On the 21st day, the Accumulated Value and
net premiums will be reallocated to the Separate Account Divisions and/or Fixed
Account according to the allocation percentages you choose.
Monthly Policy Charge The Monthly Policy Charge includes the cost of insurance,
the cost of additional benefits provided by any rider, the current monthly
administration charge and the mortality and expense charge. This amount is
withdrawn from the Separate Account Divisions and/or Fixed Account according to
the allocation percentages you choose.
NOTE: IF THE MONTHLY POLICY CHARGE SECTION IS NOT COMPLETED, THE MONTHLY POLICY
CHARGE WILL BE ALLOCATED IN THE SAME MANNER AS PREMIUMS.
PREMIUMS MONTHLY POLICY CHARGE
(Minimum of 10% per selection. (Minimum of 10% per selection.
Whole numbers only.) Whole numbers only.)
Check |_| Allocated in the same
manner as premiums
One |_| Prorated based on balances
of the policyowner's
investment accounts
|_| As below
Aggressive Growth Division ____% Aggressive Growth Division ____%
Asset Allocation Division ____% Asset Allocation Division ____%
Balanced Division ____% Balanced Division ____%
Bond Division ____% Bond Division ____%
Capital Accumulation Division ____% Capital Accumulation Division ____%
Emerging Growth Division ____% Emerging Growth Division ____%
Fidelity Contrafund Division ____% Fidelity Contrafund Division ____%
Fidelity Equity-Income Division ____% Fidelity Equity-Income Division ____%
Fidelity High Income Division ____% Fidelity High Income Division ____%
Government Securities Division ____% Government Securities Division ____%
Growth Division ____% Growth Division ____%
Money Market Division ____% Money Market Division ____%
World Division ____% World Division ____%
_____________________________ ______________________________
Fixed Account ____% Fixed Account ____%
TOTAL 100 % TOTAL 100%
6. Adjustments and Term Conversion.
Any money submitted with an adjustment will be considered a premium payment for
the Policy and will be allocated to the Separate Account Divisions and/or Fixed
Account, in accordance with the policyowner's existing directions for allocation
of premium payments. Any adjustment approved by the Company will become
effective on the Monthly Date that coincides with or next follows the Company's
approval of the request.
NOTE: If you are requesting an adjustment and you would like to change your
allocation percentage(s) or exercise your optional feature at this time,
complete Section 5 for Allocation Percentages and Section 7 for Dollar Cost
Averaging.
7. Optional Feature:
|_| Dollar Cost Averaging - Allows for transfer of money between Separate
Account Divisions and/or Fixed Account on a scheduled basis. There must be a
minimum of $2,500 in a division/account to initiate transfers from it.
Frequency:|_| Monthly |_| Quarterly |_| Semiannually |_| Annually
Transfer Out (-) Transfer In (+)
Division/Account Amount Percent Division/Account Amount Percent
1.__________________ $_______ _____% 1.__________________ $_______ _____%
2.__________________ $_______ _____% 2.__________________ $_______ _____%
3.__________________ $_______ _____% 3.__________________ $_______ _____%
4.__________________ $_______ _____% 4.__________________ $_______ _____%
5.__________________ $_______ _____% 5.__________________ $_______ _____%
6.__________________ $_______ _____% 6.__________________ $_______ _____%
Note: Dollar Cost Averaging will begin on the first Monthly Date following
receipt of this form.
8. Signature.
I have read this application and have had the opportunity to read the
prospectus. I authorize the instructions in this application. I have been given
the opportunity to ask questions regarding this policy, and they have been
answered to my satisfaction. I understand the investment objectives of the
Separate Account Divisions and/or Fixed Account for which I am applying and
believe they are compatible with my investment objective(s). All of the
statements in this application are true and complete to the best of my knowledge
and are the basis of any life insurance issued.
_____________________________________ ______________________________________
Signature of Policyowner (if other Signature of Proposed Insured
than Proposed Insured). If a Corporation,
Trust, Entity, etc., authorized person
(indicate title) must sign.
To be completed by the Registered Representative:
Signed at __________________________________ Signature_________________________
City State Date
9. To Be Completed by Selling Firm
Dealer's Name Telephone
_________________________________ __________________
Reviewed by
Registered Principal: Date
_____________________________________________ __________________
January 4, 1996
Board of Directors
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50309
RE: Variable Life Separate Account
Gentlemen:
The establishment of the Variable Life Separate Account by the Board of
Directors of Principal Mutual Life Insurance Company as a separate account for
assets applicable to variable life insurance policies, pursuant to the then
existing provisions of the Code of Iowa applicable to the establishment of
separate accounts by Iowa domiciled life insurance companies, was supervised by
the office of General Counsel of the Company. I have supervised the preparation
of the Registration Statement on Form S-6 to be filed by Principal Mutual Life
Insurance Company with the Securities and Exchange Commission under the
Securities Act of 1933 with respect to the PrinFlex Life Insurance Policies.
It is my opinion that:
1. The Variable Life Separate Account is a separate account of the Company
duly created and validly existing pursuant to Iowa law, currently
consisting of thirteen distinct Divisions.
2. The PrinFlex Life Insurance Policies, when issued in accordance with
the Prospectuses contained or referred to in the Registration Statement
and upon compliance with applicable local law, will be legal and
binding obligations of the Company enforceable in accordance with their
terms.
3. All income and expenses and all gains and losses, whether or not
realized, of the Variable Life Separate Account, shall be credited to
or charged against those assets, without regard to income and expenses
or gains and losses of the Company.
4. These assets for the policies participating in a Division of the
Variable Life Separate Account, equal to the reserves and other
liabilities arising under the policies, shall not be charged with any
liabilities arising from any other business conducted by the Company.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.
<PAGE>
Board of Directors
Page 2
January 4, 1996
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the caption "Legal Opinion" in the
prospectus contained in the Registration Statement.
Very truly yours,
G.R. Narber
General Counsel
GRN/sal
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
M. Vermeer Andringa
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
R. M. Davis
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
D. J. Drury
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
C. D. Gelatt, Jr.
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
G. D. Hurd
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
T. M. Hutchison
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
C. S. Johnson
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
W. T. Kerr
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
L. Liu
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
V. H. Loewestein
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
J. R. Price, Jr.
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
B. A. Rice
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
J-P. C. Rosso
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
D. M. Stewart
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
E. E. Tallett
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
D. D. Thornton
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form S-6 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
F. W. Weitz
_____________________________________________
December 18, 1995
RE: PRINFLEX VARIABLE LIFE -- PRINCIPAL MUTUAL'S FLEXIBLE
PREMIUM VARIABLE LIFE INSURANCE POLICY
Dear Sir or Madam:
In my capacity as Assistant Actuary of Principal Mutual Life Insurance Company
("Principal Mutual"), I have provided actuarial advice concerning, and
participated in, the design of, Principal Mutual's Flexible Premium Variable
Life Insurance Policy (the "Policy"). I also provided actuarial advice
concerning the preparation of a registration statement on form S-6 for filing
with the Securities and Exchange Commission under the Securities Act of 1933 in
connection with the Policy. In my opinion:
a) the federal tax charge of 1.25% of premium for deferred acquisition
costs is reasonable in relation to Principal Mutual's increased tax
burden under Section 848 of the Internal Revenue Code of 1986 as
amended. In addition, it is my professional opinion that the 11%
rate of return, and the assumptions on which that rate is based, are
reasonable for use in calculating such charges.
b) the illustrations of death benefits, account values, surrender
values and accumulated premiums in the prospectus are based on the
assumptions stated in the illustrations, consistent with the
provisions of the Policy. Such assumptions, including the
assumed current charge levels are reasonable. The Policy has not
been designed so as to make the relationship between premium and
benefits, as shown in the illustrations, appear to be
correspondingly more favorable to a prospective purchaser
of the Policy at the ages, genders and underwriting classes shown,
than to prospective purchasers at other ages, genders and
underwriting classes. Nor were the particular illustrations shown
selected for the purpose of making this relationship appear more
favorable.
I hereby consent to the use of this opinion as an exhibit to the registration
statement and to the reference to my name under the heading "Experts" in the
prospectus.
Very truly yours,
Lisa Huebert
Assistant Actuary
Phone: 515-248-3792
Fax: 515-248-2499
