<PAGE> 1
Registration No. 33-13774
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-6
POST-EFFECTIVE
AMENDMENT NO. 18
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
SEPARATE ACCOUNT FOUR
OF
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Exact name of trust)
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Name of depositor)
______________________
500 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
(Address of depositor's principal executive offices)
STEPHEN C. NESBITT
Secretary and General Counsel Notice to:
The Manufacturers Life Insurance J. Sumner Jones, Esq.
Company of America Jones & Blouch
500 N. Woodward Avenue 2100 Pennsylvania Ave., N.W.
Bloomfield Hills, Michican 48304 Washington, D.C. 20037
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on May 1, 1995 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
X on July 10, 1995 pursuant to paragraph (a)(1) of Rule 485
---
___ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
Registrant has registered, pursuant to Rule 24f-2 under the Investment Company
Act of 1940, an indefinite number of individual variable annuity contracts for
sale under the Securities Act of 1933 and filed a Rule 24f-2 notice on February
28, 1995 for its its fiscal year ended December 31, 1994.
<PAGE> 2
SEPARATE ACCOUNT FOUR
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
REGISTRATION STATEMENT ON FORM S-6
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
Form
N-8B-2
Item No. Caption in Prospectus
------- ------------------------------------------------------
<S> <C>
1 ----- Cover Page; General Information About Manufacturers Life of America, Separate Account Four and The Series Fund
(What Is Manufacturers Life of America's Separate Account Four?)
2 ----- Cover Page; General Information About Manufacturers Life of America, Separate Account Four And The Series Fund
(Who Are Manufacturers Life Of America And Manufacturers Life?)
3 ----- *
4 ----- Other Matters (Who Sells The Policies And What Are The Sales Commissions?)
5 ----- General Information About Manufacturers Life Of America, Separate Account Four And The Series Fund (What Is
Manufacturers Life of America's Separate Account Four?)
6 ----- General Information About Manufacturers Life of America, Separate Account Four And The Series Fund (What Is
Manufacturers Life of America's Separate Account Four?)
7 ----- *
8 ----- *
9 ----- Other Matters (Is There Any Litigation Pending?)
10 ----- Detailed Information About The Policies
11 ----- General Information About Manufacturers Life Of America, Separate Account Four And The Series Fund (What Is
Manulife Series Fund, Inc.?)
12 ----- General Information About Manufacturers Life Of America, Separate Account Four And The Series Fund (What Is
Manulife Series Fund, Inc.?)
13 ----- Detailed Information About The Policies (Charges)
14 ----- Detailed Information About the Policies (Premium Provisions -- What Are the Requirements and Procedures for
Issuance of a Policy?); Other Matters (What Responsibilities Has Manufacturers Life Assumed?)
15 ----- Detailed Information About The Policies (Premium Provisions -- What Are the Requirements and Procedures for
Issuance of a Policy?)
16 ----- **
17 ----- Detailed Information About The Policies (Policy Values -- How May a Policyowner Obtain the Net Cash Surrender
Value?; Other Provisions -- When Are Proceeds Paid?)
____________
* Omitted since answer is negative or item is not applicable.
** Omitted.
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Form
N-8B-2
Item No. Caption in Prospectus
------- ------------------------------------------------------
<S> <C>
18 ----- General Information About Manufacturers Life Of America, Separate Account Four And The Series Fund
19 ----- Detailed Information About The Policies (Other Provisions -- What Reports Will Be Sent To Policyowners?); Other
Matters (What Responsibilities Has Manufacturers Life Assumed?)
20 ----- *
21 ----- Detailed Information About The Policies
22 ----- *
23 ----- **
24 ----- Detailed Information About the Policies (Other Provisions -- What Are The Other General Policy Provisions?)
25 ----- General Information About Manufacturers Life Of America, Separate Account Four And The Series Fund (Who Are
Manufacturers Life Of America And Manufacturers Life?)
26 ----- *
27 ----- **
28 ----- Other Matters (Who Are The Directors And Officers Of Manufacturers Life Of America?)
29 ----- General Information About Manufacturers Life Of America, Separate Account Four And The Series Fund (Who Are
Manufacturers Life Of America And Manufacturers Life?)
30 ----- *
31 ----- *
32 ----- *
33 ----- *
34 ----- *
35 ----- **
36 ----- *
37 ----- *
38 ----- Other Matters (Who Sells The Policies And What Are The Sales Commissions?; What Responsibilities Has
Manufacturers Life Assumed?)
39 ----- Other Matters (Who Sells The Policies And What Are The Sales Commissions?)
40 ----- *
41 ----- **
42 ----- *
43 ----- *
44 ----- Detailed Information About The Policies (Policy Values -- What Is the Policy Value and How Is It Determined?)
45 ----- *
46 ----- Detailed Information About The Policies (Policy Values -- How May a Policyowner Obtain the Net Cash Surrender
Value?; Other Provisions -- When Are Proceeds Paid?)
47 ----- General Information About Manufacturers Life Of America, Separate Account Four And The Series Fund (What Is
Manulife Series Fund, Inc.?)
------------
* Omitted since answer is negative or item is not applicable.
** Omitted.
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Form
N-8B-2
Item No. Caption in Prospectus
------- ------------------------------------------------------
<S> <C>
48 ----- *
49 ----- *
50 ----- General Information About Manufacturers Life Of America, Separate Account Four And The Series Fund (What Is
Manufacturers Life Of America's Separate Account Four?)
51 ----- Detailed Information About The Policies
52 ----- Detailed Information About The Policies (Other Provisions -- Under What Circumstances May Fund Shares Be
Substituted?)
53 ----- **
54 ----- *
55 ----- *
56 ----- *
57 ----- *
58 ----- *
59 ----- Financial Statements
------------
* Omitted since answer is negative or item is not applicable.
** Omitted.
</TABLE>
<PAGE> 5
PART I
PROSPECTUS
<PAGE> 6
PROSPECTUS FOR
FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE
ISSUED BY
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
AND FOR
MANULIFE SERIES FUND, INC.
<PAGE> 7
PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
SEPARATE ACCOUNT FOUR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
This prospectus describes the flexible premium variable life insurance policy
(the "Policy") issued by The Manufacturers Life Insurance Company of America
("Manufacturers Life of America" or the "Company"), a stock life insurance
company that is an indirect wholly-owned subsidiary of The Manufacturers Life
Insurance Company ("Manufacturers Life"). The Policies are designed to provide
lifetime insurance protection together with flexibility as to the timing and
amount of premium payments, the investments underlying the Policy Value and the
amount of insurance coverage. This flexibility allows the policyowner to pay
premiums and adjust insurance coverage in light of his or her current financial
circumstances and insurance needs. The Policies provide for: (1) a Net Cash
Surrender Value that can be obtained by surrendering the Policy; (2) policy
loans; and (3) an insurance benefit payable at the life insured's death. As
long as a Policy remains in force, the death benefit will not be less than the
current face amount of the Policy.
A Policy's Policy Value may be accumulated on a fixed basis or vary with the
investment performance of the sub-accounts of Manufacturers Life of America's
Separate Account Four (the "Separate Account") to which the policyowner
allocates net premiums. The assets of each sub-account will be used to purchase
shares of a particular portfolio ("Fund") of Manulife Series Fund, Inc. (the
"Series Fund"). The accompanying prospectus for the Series Fund and the Series
Fund's statement of additional information describe the investment objectives
of the Funds in which net premiums may be invested: the Emerging Growth Equity
Fund, the Balanced Assets Fund, the Capital Growth Bond Fund, the Money-Market
Fund, the Common Stock Fund, the Real Estate Securities Fund, the International
Fund, and the Pacific Rim Emerging Markets Fund. Other sub-accounts and Funds
may be added in the future.
Prospective purchasers should note that it may not be advisable to purchase a
Policy as a replacement for existing insurance.
BECAUSE OF THE SUBSTANTIAL NATURE OF THE SURRENDER CHARGES, THE POLICY IS NOT
SUITABLE FOR SHORT-TERM INVESTMENT PURPOSES. A POLICYOWNER CONTEMPLATING
SURRENDER OF A POLICY SHOULD PAY SPECIAL ATTENTION TO THE REFUND RIGHTS
DESCRIBED IN THIS PROSPECTUS, WHICH ARE AVAILABLE ONLY DURING THE FIRST TWO
YEARS FOLLOWING ISSUANCE OF THE POLICY OR FOLLOWING AN INCREASE IN FACE AMOUNT.
ALSO, POLICYOWNERS SHOULD NOTE THAT THEIR POLICY COULD BE A MODIFIED ENDOWMENT
CONTRACT UNDER FEDERAL TAX LAW AND ANY POLICY LOAN OR SURRENDER MAY RESULT IN
ADVERSE TAX CONSEQUENCES AND A PENALTY.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT IS
VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR MANULIFE SERIES FUND,
INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Manufacturers Life Insurance
Company of America
500 North Woodward Avenue,
Bloomfield Hills, Michigan 48304
Service Office:
200 Bloor Street East
Toronto, Ontario, Canada M4W 1E5
TELEPHONE: 1 (800) 827-4546
1 (800) VARILIN(E)
THE DATE OF THIS PROSPECTUS IS JULY 10, 1995.
<PAGE> 8
PROSPECTUS CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS........................................................... 1
INTRODUCTION TO POLICIES.............................................. 1
GENERAL INFORMATION ABOUT MANUFACTURERS
LIFE OF AMERICA, SEPARATE ACCOUNT FOUR AND
THE SERIES FUND.................................................. 7
Who Are Manufacturers Life of America And
Manufacturers Life?.............................................. 7
What Is Manufacturers Life of America's Separate
Account Four?..................................................... 7
What Is Manulife Series Fund, Inc.?................................... 7
What Are The Investment Objectives And Risks Of
The Funds?........................................................ 8
Which Sub-account(s) Should Be Selected?.............................. 9
DETAILED INFORMATION ABOUT THE POLICIES............................... 10
PREMIUM PROVISIONS.................................................... 10
What Are The Requirements And Procedures For
Issuance Of A Policy?............................................. 10
What Limitations Apply To Premium
Amounts?.............................................................. 11
Is There A Death Benefit Guarantee?................................... 11
When Does A Policy Go Into Default?................................... 12
How Can A Terminated Policy Be Reinstated?............................ 12
How May Net Premiums Be Invested?..................................... 12
Is There A Short-Term Cancellation Right, Or
"Free Look"?...................................................... 13
What Are The Conversion Privileges Of The Policy?..................... 13
INSURANCE BENEFIT..................................................... 13
What Is The Insurance Benefit?........................................ 13
What Death Benefit Options Are Available?............................. 14
Can The Death Benefit Option Be Changed?.............................. 14
Can The Face Amount Of A Policy Be Changed?........................... 15
POLICY VALUES......................................................... 15
What Is The Policy Value And How Is It Determined?.................... 15
Transfers Of Policy Value............................................. 16
What Are The Provisions Governing Policy
Loans?................................................................ 17
How May A Policyowner Obtain The Net Cash
Surrender Value?.................................................. 19
CHARGES............................................................... 20
What Deductions Are Made From Premiums?............................... 20
What Are The Surrender Charges?....................................... 20
What Are The Monthly Deductions?...................................... 22
Are There Special Provisions For Group Or
Sponsored Arrangements?............................................... 23
Are There Special Provisions For Exchanges?........................... 23
What Are The Risk Charges Assessed Against
Separate Account Assets?.............................................. 24
Are There Other Relevant Charges?..................................... 24
THE GENERAL ACCOUNT................................................... 24
What Is The General Account?.......................................... 24
OTHER PROVISIONS...................................................... 25
What Supplementary Benefits Are Available?............................ 25
Under What Circumstances May Fund Shares Be
Substituted?...................................................... 25
What Are The Other General Policy Provisions?......................... 25
When Are Proceeds Paid?............................................... 26
What Reports Will Be Sent To Policyowners?............................ 26
OTHER MATTERS......................................................... 26
What Is The Federal Tax Treatment Of The Policies?.................... 26
Tax Status Of The Policy.............................................. 26
What Is The Tax Treatment Of Policy Benefits?......................... 27
What Are The Company's Tax Considerations?............................ 28
Who Sells The Policies And What Are The Sales
Commissions?...................................................... 28
What Responsibilities Has Manufacturers Life
Assumed?.......................................................... 29
What Are The Voting Rights?........................................... 29
Who Are The Directors And Officers Of
Manufacturers Life of America?.................................... 30
What State Regulations Apply?......................................... 31
Is There Any Litigation Pending?...................................... 31
Where Can Further Information Be Found?............................... 31
Legal Considerations.................................................. 31
Legal Matters......................................................... 31
Experts............................................................... 31
Financial Statements.................................................. 32
Appendix.............................................................. 57
What Are Some Illustrations Of Policy Values, Cash
Surrender Values And Death Benefits?.............................. 57
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUS OF THE SERIES FUND OR THE STATEMENT OF
ADDITIONAL INFORMATION OF THE SERIES FUND.
You are urged to examine this prospectus carefully. The INTRODUCTION TO
POLICIES will briefly describe the Flexible Premium Variable Life Insurance
Policy. More detailed information will be found further in the prospectus.
<PAGE> 9
DEFINITIONS
Business Day -- any day that the net asset value of the underlying shares of a
sub-account of the Separate Account is determined.
Cash Surrender Value -- the Policy Value less the deferred sales charge, the
deferred underwriting charge and any outstanding monthly deductions due.
Guaranteed Interest Account -- that part of the Policy Value which reflects the
value the policyowner has in the general account of Manufacturers Life of
America.
Investment Account -- that part of the Policy Value which reflects the value
the policyowner has in one of the sub-accounts of the Separate Account.
Loan Account -- that part of the Policy Value which reflects policy loans and
interest credited to the Policy Value in connection with such loans.
Modified Policy Debt -- as of any date the Policy Debt plus the amount of
interest to be charged to the next policy anniversary, all discounted from the
next policy anniversary to such date at an annual rate of 4%.
Net Cash Surrender Value -- the Cash Surrender Value less the value in the Loan
Account.
Net Policy Value -- the Policy Value less the value in the Loan Account.
Policy Debt -- as of any date the aggregate amount of policy loans, including
borrowed interest, less any loan repayments.
Policy Value -- the sum of the values in the Loan Account, the Guaranteed
Interest Account and the Investment Accounts.
Service Office -- the office we designate to service the Policies, which is
shown on the cover page of this prospectus.
Target Premium -- a premium amount used to measure the maximum deferred sales
charge under a Policy. The Target Premium for the initial face amount is set
forth in the Policy. The policyowner will be advised of the Target Premium for
any increase in face amount.
Withdrawal Tier Amount -- as of any date the product of the Net Cash Surrender
Value at the previous policy anniversary multiplied by 10%.
INTRODUCTION TO POLICIES
The following summary is intended to provide a general description of the most
important features of the Policy. It is not comprehensive and is qualified in
its entirety by the more detailed information contained in this prospectus.
Unless otherwise indicated or required by the context, the discussion
throughout this prospectus assumes that the Policy has not gone into default,
there is no outstanding Policy Debt and the death benefit is not determined by
the corridor percentage test.
GENERAL. The Policy provides a death benefit in the event of the death of the
life insured. There are two death benefit options. The policyowner may change
death benefit options and may increase or decrease the face amount of the
Policy.
Premium payments may be made at any time and in any amount, subject to certain
limitations.
After certain deductions, premiums will be allocated, according to the
policyowner's instructions, to one or more of the general account and the
sub-accounts of Manufacturers Life of America's Separate Account Four. Assets
of the sub-accounts of Separate Account Four are invested in shares of a
particular Fund of Manulife Series Fund, Inc. Allocation instructions may be
changed at any time and transfers among the accounts may be made.
The Funds currently offered by the Series Fund are the: Emerging Growth Equity
Fund, Balanced Assets Fund, Capital Growth Bond Fund, Money-Market Fund, Common
Stock Fund, Real Estate Securities Fund, International Fund, and Pacific Rim
Emerging Markets Fund.
The Policy has a Policy Value reflecting premiums paid, certain charges for
expenses and cost of insurance, and the investment performance of the accounts
to which the policyowner has allocated premiums. The policyowner may obtain a
portion of the Policy Value by taking a policy loan or a partial withdrawal, or
by full surrender of the Policy.
DEATH BENEFIT.
DEATH BENEFIT OPTIONS. The policyowner elects to have the Policy's death
benefit determined under one of two options:
- a death benefit equal to the face amount of the Policy, and
- a death benefit equal to the face amount of the Policy plus the Policy
Value.
1
<PAGE> 1
EXHIBIT 6
<PAGE> 2
May 3, 1995
The Manufacturers Life Insurance
Company of America
500 N. Woodward Avenue
Suite 250
Bloomfield Hills Michigan 48304
U.S.A.
Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 19 to Registration Statement No. 33-13774 on Form S-6
("Registration Statement") which covers premiums expected to be received under
Flexible Premium Variable Life Insurance Policies ("Policies") to be offered by
The Manufacturers Life Insurance Company of America ("Company"). The
prospectus included in the Registration Statement describes Policies which will
be offered by the Company in each State where they have been approved by
appropriate State insurance authorities. The Policy form was prepared under my
direction, and I am familiar with the amended Registration Statement and
Exhibits thereto. In my opinion:
(l) The table of corridor percentages shown under the caption
"What Death Benefit Options Are Available?" is consistent with
the Policy's provisions.
(2) The illustrations of death benefits based on Policy Value
multiplied by corridor percentage shown under the caption
"What Death Benefit Options Are Available?", based on the
assumptions stated in the illustrations, are consistent with
the provisions of the Policy.
(3) The illustration of Modified Policy Debt shown in the second
paragraph under the caption "What Are The Provisions Governing
Policy Loans?", based on the assumptions stated in the
illustration, is consistent with the Policy's provisions.
(4) The illustration of an application of the loan tier amount
shown under the sub-caption "Interest Credited to the Loan
Account" of the caption "What Are The Provisions Governing
Policy Loans?", based on the assumptions stated in the
illustration, is consistent with the provisions of the Policy.
(5) The Loan Account illustration shown as a sub-caption under the
caption "What Are The Provisions Governing Policy
Loans", based on the assumption stated in the illustration, is
consistent with the Policy's provisions.
<PAGE> 3
- 2 -
(6) The schedule of deferred underwriting charges shown under the
sub-caption "Deferred Underwriting Charge" of the caption
"What Are The Surrender Charges?" is consistent with the
Policy's provisions.
(7) The table under the sub-caption "Deferred Underwriting
Charge" of the caption "What Are The Surrender Charges?"
showing, on an annual basis, the surrender charge applied to
the Policy five years or more after issuance of the Policy or
a face amount increase, is consistent with the provisions of
the Policy.
(8) The table under sub-section "Deferred Sales Charge" of the
caption "What Are The Surrender Charges?" showing for life
insureds over age 69 at issue or face amount increase the
applicable percent of premium reduction against which the
deferred sales charge is applied is consistent with the
Policy's sales charge structure.
(9) The illustration of the operation of the maximum sales charge
under the sub-caption "Refund of Excess Sales Charge" of the
caption "What Are The Surrender Charges?", based on the
assumptions stated in the illustration, is consistent with the
Policy's sales charge structure.
(10) The illustrations of Accumulated Premiums, Policy Values, Cash
Surrender Values, and Death Benefits for the Policy shown in
the Appendix under the caption "What Are Some Illustration Of
Policy Values, Cash Surrender Values and Death Benefits?",
based on the assumptions stated in the illustrations, are
consistent with the provisions of the Policy. The rate
structure of the Policy has not been designed so as to make
the relationship between premiums and benefits, as shown in
these illustrations, appear to be correspondingly more
favorable to a prospective purchaser of the Policy for male
ages 25 and 35, than to prospective purchasers of the Policy
for females or males at other ages.
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,
John R. Ostler
John R. Ostler
Vice President, Treasurer and Chief Actuary
<PAGE> 1
EXHIBIT 9
<PAGE> 2
May 1995
MEMORANDUM REGARDING ISSUANCE, FACE AMOUNT INCREASE,
REDEMPTION AND TRANSFER PROCEDURES FOR THE POLICIES
---------------------------------------------------
This document sets forth information called for by paragraph
(b)(12)(iii) of Rule 6e-3(T) under the Investment Company Act of 1940 ("1940
Act") with respect to procedures relating to issuance, face amount increase,
redemption and transfer transactions under Flexible Premium Variable Life
Insurance Policies ("Policies") participating in Separate Account Four of The
Manufacturers Life Insurance Company of America ("Manufacturers Life of
America" or "Company"). Such paragraph provides exemptions from Sections
22(c), 22(d), 22(e) and 27(c)(1) of the 1940 Act, and Rule 22c-1 thereunder, to
the extent necessary to comply with other provisions of Rule 6e-3(T) or with
state insurance laws and regulations and established administrative procedures
of the Company, provided the procedures are reasonable, fair and not
discriminatory to policyholders and are disclosed in the Company's
registration statement under the 1940 Act.
1. GENERAL
Units of a particular sub-account of Separate Account Four are credited
to a Policy when net premiums are allocated to that sub-account or amounts are
transferred to that sub-account. Units of a sub-account are cancelled whenever
amounts are deducted, transferred or withdrawn from the sub-account. 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
<PAGE> 3
on the Business Day on which the transaction occurs or, in the case of errors,
should have occurred, except as set forth under 2(a) below with respect to
deductions when no units exist. The number of units credited with respect to a
premium payment will be based on the applicable unit values for the Business
Day on which the premium is received at the Manufacturers Life of America
Service Office, except for any premiums received before the policy date as to
which the applicable unit values will be the values determined on such date.
Units are valued at the end of each Business Day, which is any day that the
net asset value of the Fund shares held by the applicable sub-account is
determined. A Business Day is deemed to end at the time of such determination.
When an order involving the crediting or cancelling of units is received at the
Manufacturers Life of America Service 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 on 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 on the next Business
Day.
2. ISSUANCE AND RELATED TRANSACTIONS
---------------------------------
(a) Applications and Policy Issuance.
--------------------------------
To purchase a Policy, an applicant must submit a completed application.
Manufacturers Life of America will issue a Policy only if it has a face amount
of at least $25,000, except for
<PAGE> 4
Policies issued under group or sponsored arrangements in which case the minimum
face amount is $10,000. A Policy will generally be issued to persons between
the ages 0 and 80. In certain circumstances the Company may in its sole
discretion issue a Policy to persons above age 80. Upon receipt of a completed
application, the Company will follow certain insurance underwriting (e.g.
evaluation of risks) procedures designed to determine whether the applicant is
insurable. This process may involve such verification procedures as medical
examinations and blood testing and may require that further information be
provided by the proposed insured before a determination can be made. A Policy
will not be issued until the underwriting procedure has been completed. A life
insured meeting standard underwriting rules will have a risk class of either
"standard" or "nonsmoker". Persons failing to meet standard underwriting
requirements may be eligible for a Policy with an additional rating assigned to
it. Acceptance of an application is subject to the Company's insurance
underwriting rules.
Each Policy is issued with a policy date from which policy years, policy
months and policy anniversaries are all determined. Each Policy has an
effective date which is the date the Company becomes obligated under the Policy
and when the first monthly deductions are taken. If an application is
accompanied by a check for all or a portion of the initial premium and the
application is accepted, the policy date will be the date the application and
check were received at the Manufacturers Life of America Service Office and the
effective date will be the date Manufacturers Life
<PAGE> 5
of America's underwriters approve issuance of the Policy. A policy may be
approved for issuance conditional upon receipt of additional information. (If
an application is accompanied by a check for all or a portion of the initial
premium, the life insured may be covered under the terms of a conditional
insurance agreement until the effective date.) If an application accepted by
the Company is not accompanied by a check for the initial premium, the Policy
will be issued with a policy date which is seven days after issuance of the
Policy and with an effective date which is the date the Service Office receives
at least the initial planned premium. In certain situations a different policy
date may be used1. The initial planned premium must be received within 60 days
after the policy date. If the premium is not paid or if the application is
rejected, the Policy will be cancelled and any partial premiums paid will be
returned to the applicant.
Under certain circumstances a Policy may be issued with a backdated policy
date. A Policy will not be backdated more than six months before the date of
the application for the Policy. Monthly deductions will be made for the period
the policy date is backdated.
___________________
1 The "different date" refers to those instances in which Manufacturers
Life of America agrees to back date a Policy.
<PAGE> 6
All premiums received prior to the effective date of a policy will be
credited with interest from the date of receipt at the rate of return then
being earned on amounts allocated to the Money-Market Fund. On the effective
date, the premiums paid plus interest credited, net of deductions for federal,
state and local taxes, will be allocated among the Investment Accounts or the
Guaranteed Interest Account in accordance with the policyowner's instructions.
All premiums received on or after the effective date, will be allocated
among Investment Accounts or the Guaranteed Interest Account using unit values
as of the date the premiums were received at the Manufacturers Life of America
Service Office. Monthly deductions are due on the policy date and at the
beginning of each policy month thereafter. However, if due prior to the
effective date, they will be taken using unit values as of the effective date
instead of the dates they were due. If in the unlikely scenario where a
deduction is to be made as of a date when no units exist, the deduction will be
taken as of the date following when units first exist.
(b) Payment of Premiums.
--------------------
After the payment of the initial premium, premiums may be paid at any time
and in any amount during the lifetime of the life insured subject to the
limitations on premium amount and the minimum premium requirement described
hereinafter. Premiums after the first must be paid to the Manufacturers Life
of America Service
<PAGE> 7
Office. Manufacturers Life of America will not accept any premium payment
which is less than $50, unless the premium is payable pursuant to a
pre-authorized payment plan. In that case the Company will accept a payment
for as little as $10. Manufacturers Life of America may change these minimums
on 90 days' written notice. The Policies also limit the sum of the premiums
that may be paid at any time so as to preserve the qualification of the
Policies as life insurance for federal tax purposes. These limitations are set
forth in each Policy. Manufacturers Life of America reserves the right to
refuse or refund any premium payments that may cause the Policy to fail to
qualify as life insurance under applicable tax law.
(c) Deductions from Premiums.
-------------------------
Manufacturers Life of America deducts a sales charge of 3% of each premium
payment. (A deferred sales charge is deducted from the Policy Value upon
certain transactions.) Manufacturers Life of America also deducts a premium
tax charge of 2% of each premium payment. State and local premium taxes differ
from state to state. The 2% rate, which cannot be changed, is expected to be
sufficient, on average, to pay premium taxes where required.
(d) Reinstatement.
--------------
A policyowner can reinstate a Policy which has terminated after going into
default (described hereinafter) at any time within the five year period
following the date of termination subject to the following conditions:
<PAGE> 8
(a) The Policy must not have been surrendered for its Net Cash
Surrender Value;
(b) Evidence of the life insured's insurability satisfactory to
Manufacturers Life of America is furnished to it;
(c) A premium equal to the payment required during the grace period
following default to keep the Policy in force is paid to
Manufacturers Life of America; and
(d) An amount equal to any amounts paid by Manufacturers Life of
America in connection with the termination of the Policy is
repaid to Manufacturers Life of America.
If the reinstatement is approved, the date of reinstatement will be the later
of the date of the policyowner's written request or the date the required
payment is received at the Manufacturers Life of America Service Office. At
reinstatement, the Policy Value, surrender charges, and loan account will be
reinstated to what they were at the date of default. After reinstatement,
surrender charges will remain in force for the remainder of the fifteen year
period, as measured from the date of default. Cost of insurance charges after
reinstatement will reflect the actual age of the life insured.
3. FACE AMOUNT INCREASES
---------------------
Subject to certain limitations, a policyowner may, upon written request,
increase the face amount of the Policy. Currently, an increase in face amount
must be at least $10,000, except in the case of group or sponsored arrangements
where the minimum change is $5,000. Manufacturers Life of America reserves the
right to
<PAGE> 9
increase or decrease the minimum face amount change on 90 days' written notice
to the policyowner.
Increases in face amount are subject to satisfactory evidence of
insurability. Increases may be made only once per policy year and only after
the first policy year. An increase will become effective at the beginning of
the policy month following the date Manufacturers Life of America approves the
requested increase. The Company reserves the right to refuse a requested
increase if the life insured's age at the effective date of the increase would
be greater than the maximum issue age for new Policies at that time.
An increase in face amount will usually result in the Policy's being
subject to new surrender charges. The new surrender charges will be computed
as if a new Policy were being purchased for the increase in face amount. For
purposes of determining the new deferred sales charge, a portion of the Policy
Value at the time of the increase, and a portion of the premium paid on or
subsequent to the increase, will be deemed to be premiums attributable to the
increase. Any increase in face amount to a level less than the highest face
amount previously in effect will have no effect on the surrender charges to
which the Policy is subject, since surrender charges, if applicable, will have
been assessed in connection with the prior decrease in face amount. The
insurance coverage eliminated by the decrease of the oldest face amount will be
deemed to be restored first. As with the purchase of a Policy, a policy-owner
will have free look and
<PAGE> 10
refund rights with respect to any increase resulting in new surrender charges.
No additional premium is required for a face amount increase. However, a
premium payment may be necessary to avoid the Policy's going into default,
since new surrender charges resulting from an increase would automatically
reduce the Net Cash Surrender Value of the Policy. However, a new minimum
premium will be determined for purposes of the death benefit guarantee
described hereinafter.
4. REDEMPTIONS AND RELATED TRANSACTIONS
------------------------------------
(a) Surrenders and Partial Withdrawals.
-----------------------------------
A Policy may be surrendered for its Net Cash Surrender Value at any time
while the life insured is living. The Net Cash Surrender Value is equal to the
Policy Value less any surrender charges and outstanding monthly deductions due
(the "Cash Surrender Value") minus the value of the Loan Account. The Net Cash
Surrender Value will be determined as of the end of the Business Day on which
Manufacturers Life of America received the Policy and a written request for
surrender at its Service Office. After a Policy is surrendered, the insurance
coverage and all other benefits under the Policy will terminate.
After a Policy has been in force for two policy years, the policyowner may
make a partial withdrawal of the Net Cash Surrender Value. The minimum amount
that may be withdrawn is $500. The policyowner should specify the portion of
the
<PAGE> 11
withdrawal to be taken from each Investment Account and the Guaranteed Interest
Account. In the absence of instructions the withdrawal will be allocated among
such accounts in the same proportion that the Policy Value in each account
bears to the Net Policy Value. No more than one partial withdrawal may be made
in any one policy month.
If the Option 1 death benefit is in effect under a Policy from which a
partial withdrawal is made, the face amount of the Policy will be reduced. If
the death benefit is equal to the face amount at the time of withdrawal, the
face amount will be reduced by the amount of the withdrawal plus the portion of
the surrender charges assessed. If the death benefit is based upon the Policy
Value times the applicable percentage as set forth in the Policy, the face
amount will be reduced only to the extent that the amount of the withdrawal
plus the portion of the surrender charge assessed exceeds the difference
between the death benefit and the face amount. Reductions in face amount
resulting from partial withdrawals will not incur any surrender charges above
the surrender charges applicable to the withdrawal. When the face amount of a
Policy is based on one or more increases subsequent to issuance of the Policy,
a reduction resulting from a partial withdrawal will be applied in the same
manner as a requested decrease in face amount, i.e., against the face amount
provided by the most recent increase, then against the next most recent
increase successively and finally against the initial face amount.
<PAGE> 12
(b) Decreases in Face Amount.
-------------------------
Subject to certain limitations, a policyowner may, upon written request,
decrease the face amount of the Policy. Currently, a decrease in face amount
must be at least $10,000, except in the case of group or sponsored arrangements
where the minimum change is $5,000. Manufacturers Life of America reserves the
right to increase or decrease the minimum face amount change on 90 days'
written notice to the policyowner. The Company reserves the right to limit a
decrease in face amount so as to prevent the Policy from failing to qualify as
life insurance for tax purposes.
A decrease in the face amount may be requested after the Policy has been
in force for two years, except during the two year period following any
increase in face amount. In addition, during the two year period following an
increase in the face amount the policyowner may elect at any time to cancel the
increase. A decrease in face amount will only be effective on a policy
anniversary. Written request for a decrease must be received by Manufacturers
Life of America at least 30 days prior to a policy anniversary in order to
become effective on that date. A decrease will not be allowed if it would
cause the face amount to go below the minimum face amount of $25,000, or
$10,000 in the case of group or sponsored arrangements.
A decrease in face amount during the fifteen year period following
issuance of the Policy or any increase in face amount will usually result in
surrender charges being deducted from the Policy Value. For purposes of
determining surrender and cost of
<PAGE> 13
insurance charges, a decrease will reduce face amount in the following order:
(a) the face amount provided by the most recent increase, then (b) the face
amounts provided by the next recent increases successively, and finally (c)
the initial face amount.
(c) Default.
--------
The Policy provides for a minimum premium requirement. It is subject to
change if the face amount of the Policy or the death benefit option is changed
or if there is any change in the supplementary benefits added to the Policy or
in the rate classification of the life insured. If the minimum premium
requirement is met, Manufacturers Life of America will guarantee that the
Policy will not go into default even if a combination of policy loans, adverse
investment experience or other factors should cause the Policy's Net Cash
Surrender Value to be insufficient to meet the monthly deduction due at the
beginning of a policy month ("death benefit guarantee"). If the death benefit
guarantee is in effect, Manufacturers Life of America will not allow the Net
Policy Value to go below zero, although it will continue to assess a monthly
deduction at the beginning of each policy each month until the Net Policy Value
should fall to zero. The death benefit guarantee will expire on the policy
anniversary on which the life insured is 70 years old, or two years after the
policy date if later.
<PAGE> 14
If the minimum premium requirement should not be met at the beginning of
any policy month during the first two policy years, the Policy will go into
default. Manufacturers Life of America will notify the policyowner of the
default and allow a 61 day grace period in which the policyowner may make a
premium payment sufficient to bring the Policy out of default. The required
premium will be equal to the minimum premium due at the date of default plus
the minimum premium due for the next two policy months. If the required
payment is not received by the end of the grace period, the Policy will
terminate and the Net Cash Surrender Value as of the date of default less the
monthly deduction then due will be paid to the policyowner together with any
refund of excess sales loading to which the policyowner is entitled.
If the death benefit guarantee is no longer in effect, a Policy will go
into default after the second policy anniversary if at the beginning of any
policy month the Policy's Net Cash Surrender Value would go below zero after
deducting the monthly deduction then due. As with a default during the first
two policy years, Manufacturers Life of America will notify the policyowner of
the default and will allow a 61 day grace period in which the policyowner may
make a premium payment sufficient to bring the Policy out of default. The
required payment will be equal to the amount necessary to bring the Net Cash
Surrender Value to zero, if it was less than zero at the date of default, plus
the monthly deductions due at the date of default and payable at the beginning
of each of the two policy months thereafter. If the required payment is not
received by the end of the grace period, the Policy
<PAGE> 15
will terminate and the Net Cash Surrender Value as of the date of default less
the monthly deduction then due will be paid to the policyowner together with
any refund of excess sales loading to which the policyowner is entitled.
A payment made to bring a Policy out of default will be treated as a
regular premium payment except that any monthly deductions then due will be
taken immediately after the allocation of the payment among Investment Accounts
or the Guaranteed Interest Account. Units cancelled in connection with the
assessment of such monthly deductions will be based on the unit values as of
the date the payment was made.
(d) Surrender Charges
-----------------
Manufacturers Life of America will assess surrender charges upon
surrender or lapse of a Policy, a partial withdrawal of Policy Value above the
Withdrawal Tier Amount or a requested decrease in face amount. The charges
will be assessed if any of the above transactions occurs within fifteen years
after issuance of the Policy or any increase in face amount unless the charges
have been previously deducted. There are two surrender charges -- a deferred
underwriting charge and a deferred sales charge.
DEFERRED UNDERWRITING CHARGE. The deferred underwriting charge is a
dollar amount for each $1,000 of face amount of insurance in accordance with
the following schedule:
<PAGE> 16
Age: 0-20 21-40 41-50 51-60 61 & above
Charge Per $1,000: $2.00 $3.00 $4.00 $5.00 $6.00
The charge per $1,000 will be determined on the basis of the age of the life
insured at issue or upon increase of the face amount, as applicable. The
deferred underwriting charge applicable to each level of insurance coverage
cannot exceed $1,000. The amount of the charge remains level for five years.
Following the fifth year after issuance of the Policy or a face amount
increase, the charge applicable to the initial face amount or increase will
decrease each month by .83%, or 10% per year. After the monthly deduction is
taken for the last policy month preceding the end of the fifteenth year after
issuance or face amount increase, the charge will have decreased to zero. The
applicable percentage of the surrender charges to which the Policy would
otherwise be subject is illustrated on an annual basis by the following table:
Transaction Occurs After
Monthly Deduction Taken for
Last Month Preceding
Percent of Surrender
End of Year Charges
---------------------------- --------------------
5 & below 100%
6 90%
7 80%
8 70%
9 60%
10 50%
11 40%
12 30%
13 20%
14 10%
15 & above 0%
DEFERRED SALES CHARGES. The maximum deferred sales charge is equal to
47% of the premiums paid under the Policy up to two Target
<PAGE> 17
Premiums described below. For life insureds over age 69 at issue or face amount
increase, the applicable percent of premiums will be reduced in accordance with
the following table:
Applicable Applicable
Age Percent of Premiums Age Percent of Premiums
--- ------------------- --- -------------------
70 45% 76 34%
71 43% 77 33%
72 41% 78 32%
73 39% 79 31%
74 37% 80 30%
75 35%
Like the deferred underwriting charge, the percentage deferred sales charge
applicable to the initial face amount or face amount increase will remain level
for five years and following such five year period will decrease .83% per
month, or 10% per year, from the charge that would otherwise apply.
The deferred sales charge may not exceed 47% of two Target Premiums.
The Target Premium will be computed for each increase in face amount above the
highest face amount of coverage previously in effect, and the policyowner will
be advised of such Target Premium. Target Premiums are determined on the basis
of a target premium rate and the face amount of insurance provided at issue or
by the increase. The applicable rate varies with the issue age and sex (unless
unisex rates are required by law) of the life insured and, in the case of
certain Policies issued in group or sponsored arrangements providing for
reduction in cost of insurance charges, the amount of insurance coverage.
<PAGE> 18
In order to determine the deferred sales charge applicable to a face
amount increase, Manufacturers Life of America will treat a portion of the
Policy Value on the date of increase as a premium attributable to the increase.
In addition, a portion of each premium paid subsequent to the increase will be
attributed to the increase. In each case, the portion attributable to the
increase will be the ratio of the guideline annual premium (described below)
for the increase to the sum of the guideline annual premiums for the initial
face amount and all increases including the requested increase.
REFUND OF EXCESS SALES CHARGES. If a Policy is surrendered for its Net
Cash Surrender Value at any time during the first two years following issuance
or following an increase in face amount or if the face amount is decreased
during the second year following issuance or increase in face amount,
Manufacturers Life of America will refund that part of the total sales charges
deducted (the sum of the deferred sales charge and the sales charge deducted
from premiums) with respect to "premiums" paid for the initial face amount or
such increase (including premiums allocated to the increase as described in the
preceding paragraph), whichever is applicable, which is in excess of (i) the
sum of 30% of the "premiums" paid in excess of one guideline annual premium up
to two guideline annual premiums and (ii) 9% of the "premiums" paid in excess
of two guideline annual premiums. A policyowner in electing to cancel an
increase in face amount during the first two years following the increase will
have the deferred sales charge for the increase reduced by the refund of any
excess sales load attributable to the increase. The guideline annual
<PAGE> 19
premium, which is set forth in the Policy, is the level annual premium that
would be payable for the life of the Policy for a specific amount of coverage
if premiums were fixed as to both timing and amount and based on the 1980
Commissioners Smoker/Nonsmoker Standard Ordinary Mortality Tables, net
investment earnings at an effective annual rate of 5% and fees and charges as
set forth in the Policy. In determining the maximum sales charge allowable,
"premiums" will be attributed to the initial face amount and each increase in
the same manner as used in determining the deferred sales charge applicable to
the face amount and each increase, and the guideline annual premium will be
determined separately for the initial face amount and each increase.
Since a deferred sales charge is deducted in the event a Policy
terminates for failure to make the required payment following the Policy's
going into default, the refund right will apply if such termination occurs
during the two year period following issuance of the Policy or any increase in
face amount. If the Policy terminates during the two years after a face amount
increase, the refund will relate only to the sales charges assessed against
premiums attributable to the increase.
CHARGES ON PARTIAL WITHDRAWALS. Both the deferred sales charge and the
deferred underwriting charges are applicable in the event of a partial
withdrawal of the Net Cash Surrender Value above the Withdrawal Tier Amount. A
portion of the surrender charges applicable to the initial face amount and to
each increase in face amount will be deducted as a result of the withdrawal.
The portion
<PAGE> 20
to be deducted will be the same as the ratio of the amount of the withdrawal
above the Withdrawal Tier Amount to the Net Cash Surrender Value prior to the
withdrawal. The charges will be deducted from the Policy Value, and the amount
so deducted will be allocated among the Investment Accounts and the Guaranteed
Interest Account in the same proportion that the withdrawal is allocated among
such accounts. If the amount in the account is not sufficient to pay the
portion of the surrender charges allocated to that account, then the portion of
the withdrawal allocated to that account will be reduced so that the withdrawal
plus the portion of the surrender charges allocated to that account equal the
value of that account. Units equal to the amount of the partial withdrawal
taken, and surrender charges deducted, from each Investment Account will be
cancelled based on the value of such units determined at the end of the
Business Day on which Manufacturers Life of America received a written request
for withdrawal at its Service Office. Whenever a portion of the surrender
charges are deducted as a result of a partial withdrawal, the Policy's
remaining surrender charges will be reduced by the amount of the charges taken.
The surrender charges not assessed as a result of the l0% free withdrawal
provision remain in effect under the policy and may be assessed upon surrender
or lapse, other partial withdrawals or a requested decrease in face amount.
CHARGES ON DECREASES IN FACE AMOUNT. As with partial withdrawals, a
portion of a Policy's surrender charges will be deducted upon a decrease in or
cancellation of face amount requested by the policyowner. Since surrender
charges are
<PAGE> 21
determined separately for the initial face amount and each face amount increase
and since a decrease in face amount will have a different impact on each level
of insurance coverage, the portion of the surrender charges to be deducted with
respect to each level of insurance coverage will be determined separately.
Such portion will be the same as the ratio of the amount of the reduction in
such coverage to the amount of such coverage prior to the reduction. Decreases
are applied to the most recent increase first and thereafter to the next most
recent increases successively. The charges will be deducted from the Policy
Value, and the amount so deducted will be allocated among the Investment
Accounts and the Guaranteed Interest Account in the same proportion that the
Policy Value in each bears to the Net Policy Value. Whenever a portion of the
surrender charges is deducted as a result of a decrease in face amount, the
Policy's remaining surrender charges will be reduced by the amount of the
charges taken.
(e) Payment of Proceeds.
--------------------
If the Policy is in force at the time of the life insured's death,
Manufacturers Life of America will pay an insurance benefit based on the death
benefit option selected by the policyowner upon receipt of due proof of death.
The amount payable will be the death benefit under the selected option, plus
any amounts payable under any supplementary benefits added to the Policy, less
the value of the Loan Account at the date of death. The insurance benefit will
be paid in one sum unless another form of settlement option is agreed to by the
beneficiary and the Company. If the
<PAGE> 22
insurance benefit is paid in one sum, Manufacturers Life of America will pay
interest from the date of death to the date of payment.
If the life insured should die after the Company's receipt of a request
for surrender, no insurance benefit will be payable, and Manufacturers Life of
America will pay only the Net Cash Surrender Value. If the life insured should
die during the grace period following a Policy's going into default, the Policy
Value used in the calculation of the death benefit will be the Policy Value as
of the date of default and the insurance benefit payable will be reduced by any
outstanding monthly deductions due at the time of death. If the life insured,
whether sane or insane, dies by suicide within one year from the policy date,
Manufacturers Life of America will pay only the premiums paid less any partial
withdrawals of the Net Cash Surrender Value and any amount in the Loan Account.
If the life insured should die by suicide within one year after a face amount
increase, the death benefit for the increase will be limited to the monthly
deductions for the increase.
As long as the Policy is in force, Manufacturers Life of America will
ordinarily pay any policy loans, partial withdrawals, Net Cash Surrender Value
or any insurance benefit within seven days after receipt at the Manufacturers
Life of America Service Office of all the documents required for such a
payment. The Company may delay the payment of any policy loans, partial
withdrawals, Net Cash Surrender Value or the portion of any insurance benefit
that depends on Investment Account values for up to six months if such
<PAGE> 23
payments are based on values which do not depend on the investment performance
of the sub-accounts; otherwise for any period during which the New York Stock
Exchange is closed for trading (except for normal holiday closings) or when the
Securities and Exchange Commission has determined that a state of emergency
exists which may make such payment impracticable.
5. TRANSFERS OF POLICY VALUES AND RELATED PROCEDURES
-------------------------------------------------
(a) Transfers.
----------
Under the Policies a policyowner may change the extent to which his or
her Policy Value is based upon any specific sub-account of the Separate Account
or the Company's general account. Such changes are made by transferring
amounts from one or more Investment Accounts or the Guaranteed Interest Account
to other Investment Accounts or the Guaranteed Interest Account. A policyowner
is permitted to make one transfer each policy month. For this purpose all
transfer requests received by the Manufacturers Life of America Service Office
on the same Business Day are treated as a single transfer. Transfers are free
of charge. The minimum amount that may be transferred from an account is the
lesser of $500 or the entire account value.
The maximum amount that may be transferred from the Guaranteed Interest
Account in any one policy year is the greater of $500 or 15% of the Guaranteed
Interest Account value at the previous policy anniversary. Any transfer which
involves a transfer out of the
<PAGE> 24
Guaranteed Interest Account may not involve a transfer to the Investment
Account for the Money-Market Fund. Transfer request formats must be
satisfactory to Manufacturers Life of America and in writing or by telephone,
if a currently valid telephone transfer request form is on file. Manufacturers
Life of America may be permitted to delay the effective date of any transfer in
certain circumstances.
The policyowner may effectively convert his or her Policy to a fixed
benefit policy by transferring the Policy Value in all of the Investment
Accounts to the Guaranteed Interest Account and by changing his or her
allocation of net premiums entirely to the Guaranteed Interest Account. As
long as the entire Policy Value is allocated to the Guaranteed Account, the
Policy Value, other values based thereon and the death benefit will be
determinable and guaranteed. The Investment Account values to be transferred
to the Guaranteed Account will be determined as of the Business Day on which
Manufacturers Life of America receives the request for conversion. There will
be no change in the issue age, risk class of the life insured or face amount as
a result of the conversion. A transfer of any or all of the Policy Value to
the Guaranteed Interest Account can be made at any time, even if a prior
transfer has been made during the Policy Month.
(b) Dollar Cost Averaging.
----------------------
Manufacturers Life of America will offer policyowners a Dollar Cost
Averaging program. Under this program the policyowner will designate a dollar
amount of available assets which will be
<PAGE> 25
transferred at predetermined intervals from one Investment Account into any
other Investment Account(s) or the Guaranteed Interest Account. Each transfer
under the Dollar Cost Averaging program must be of a minimum amount as set by
Manufacturers Life of America. Once set, this minimum may be changed at any
time at the discretion of Manufacturers Life of America. Currently, no charge
will be made for this program if the Policy Value exceeds $15,000 on the date
of transfer. Otherwise, there will be a charge of $5.00 for each transfer under
this program which fee will be deducted from the value of the sub-account out
of which the transfer occurs. Manufacturers Life of America reserves the right
to discontinue this program as of 90 days after written notice is sent to the
policyowner.
(c) Asset Allocation Balancer Transfers.
------------------------------------
Manufacturers Life of America will also offer policyowners the ability to
have amounts automatically transferred among stipulated accounts to maintain an
allocated percentage in each stipulated account.
Under the Asset Allocation Balancer program the policyowner will designate
an allocation of Policy Value among Investment Accounts. On the Policy
Anniversary, and at six month intervals thereafter, Manufacturers Life of
America will move amounts among the Investment Accounts as necessary to
maintain the policyowner's chosen allocation. The charge for this program is
currently $15.00 per Asset Allocation Balancer Transfer. Manufacturers Life of
America reserves the right to discontinue this program as of 90 days after
written notice is sent to the policyowner.
<PAGE> 26
(d) Policy Loans.
-------------
On or after the first policy anniversary, while the Policy is in force,
the policyowner may borrow against the Policy Value of his or her Policy. The
amount of the loan must be at least $500 and cannot exceed the amount which
would cause the Modified Policy Debt to equal the loan value of the Policy on
the date of the loan. The loan value is the Policy's Cash Surrender Value less
the monthly deductions due to the next policy anniversary. The monthly
deductions due for this purpose will be projected assuming no further premiums
are paid, current cost of insurance rates and a 4% net interest rate. The
Modified Policy Debt as of any date is the Policy Debt (the aggregate amount of
policy loans, including borrowed interest, less any loan repayments) plus the
amount of interest to be charged to the next policy anniversary, all discounted
from the next policy anniversary to such date at an annual rate of 4 percent.
When a loan is made, Manufacturers Life of America will deduct from the
Investment Accounts or the
Guaranteed Interest Account, and transfer to the Loan Account, an amount which
will result in the Loan Account value being equal to the Modified Policy Debt.
The policyowner may designate how the amount to be transferred to the Loan
Account is allocated among the accounts from which the transfer is to be made.
In the absence of instructions, the amount to be transferred will be allocated
to each account in the same proportion that the value in each Investment
Account and the Guaranteed Interest Account bears to the Net Policy Value. A
transfer from an Investment Account will result in the cancellation of units of
the underlying sub-account
<PAGE> 27
equal in value to the amount transferred from the Investment Account. However,
since the Loan Account is part of the Policy Value, transfers made in
connection with a loan will not change the Policy Value.
When a loan is first taken out, and at specified events thereafter, the
value of the Loan Account is adjusted. Whenever the Loan Account is adjusted
the difference between (i) the Loan Account before any adjustment and (ii) the
Modified Policy Debt at the time of adjustment, is transferred between the Loan
Account and the Investment Accounts or the Guaranteed Interest Account. The
amount transferred to or from the Loan Account will be such that the value of
the Loan Account is equal to the Modified Policy Debt after the adjustment.
The specified events which cause an adjustment to the Loan Account are
(i) a policy anniversary, (ii) a partial or full loan repayment, (iii) a new
loan being taken out, or (iv) when an amount is needed to meet a monthly
deduction. A loan repayment may be implicit in that policy debt is effectively
repaid upon termination, that is upon death of the life insured, surrender or
lapse of the policy. In each of these instances, the Loan Account will be
adjusted with any excess of the Loan Account over the Modified Policy Debt
after the repayment being included in the termination proceeds.
Except as noted below, amounts transferred from the Loan Account will be
allocated to the Investment Accounts and the
<PAGE> 28
Guaranteed Interest Account in the same proportion that the value in the
corresponding "loan sub-account" exists for each Investment Account and for the
Guaranteed Interest Account. Amounts transferred to the Loan Account are
allocated to the appropriate loan sub-account to reflect the account from which
the transfer was made.
Policy Debt may be repaid in whole or in part at any time prior to the
death of the life insured provided the Policy is in force. When a payment is
made, the amount is credited to the Loan Account and a transfer is made to the
Guaranteed Interest Account or the Investment Accounts so that the Loan Account
at that time equals the Modified Policy Debt. Loan repayments will first be
allocated to the Guaranteed Interest Account until the associated loan
sub-account is reduced to zero. Any other amounts transferred from the Loan
Account will be allocated to the Guaranteed Interest Account and each
Investment Account in the same proportion that the value in the corresponding
loan sub-account bears to the value of the Loan Account. Amounts paid to the
Company not specifically designated in writing as loan repayments will be
treated as premiums.
6. COST OF INSURANCE
-----------------
As noted above, if the death benefit guarantee is no longer in effect, a
Policy will go into default after the second policy anniversary if at the
beginning of any policy month the Policy's Net Cash Surrender Value would go
below zero after deducting the monthly deduction then due. The Net Cash
Surrender Value reflects
<PAGE> 29
a number of factors including premiums paid, investment performance of selected
sub-accounts, policy loans and cost of insurance charges. The monthly charge
for the cost of insurance rate times the net amount at risk at the beginning of
each policy month. The charge for the cost of insurance will reflect any extra
charges for additional ratings indicated in the Policy. The cost of insurance
rate is based on the life insured's age, sex (unless unisex rates are required
by law) and risk class, the duration of the insurance coverage, and, in the
case of certain Policies issued in group or sponsored arrangements providing
for reduction in the cost of insurance charges, the face amount of the
Policy_*/. The rate is determined separately for the initial face amount and
for each increase in face amount. Cost of insurance rates will generally
increase with the life insured's age.
The cost of insurance rates used by Manufacturers Life of America
reflect its expectations as to future mortality experience. The rates may be
changed from time to time on a basis which does not unfairly discriminate
within the class of life insureds. In no event will the cost of insurance rate
exceed the guaranteed rates set forth in the Policy except to the extent that
an extra charge
_*/ If the life insured's stated age or sex or both in the Policy are
incorrect, Manufacturers Life of America will change the face amount of
insurance so that the death benefit will be that which the most recent monthly
charge for the cost of insurance would have bought for the correct age and sex.
<PAGE> 30
is imposed because of an additional rating applicable to the life insured. The
guaranteed rates are based on the 1980 Commissioners Smoker/Nonsmoker Standard
Ordinary Mortality Tables.
The net amount at risk to which the cost of insurance rate is applied is
the difference between the death benefit, divided by 1.0032737 (a factor which
reduces the net amount at risk for the cost of insurance charge purposes by
taking into account assumed monthly earnings at an annual rate of 4%), and the
Policy Value. Because different cost of insurance rates may apply to different
levels of insurance coverage, the net amount at risk will be calculated
separately for each level of insurance coverage. When the Option 1 death
benefit is in effect, for purposes of determining the net amount at risk
applicable to each level of insurance coverage, the Policy Value is attributed
first to the initial face amount and then, if the Policy Value is greater than
the initial face amount, to each increase in face amount in the order made.
Because the calculation of the net amount at risk is different under the
death benefit options when more than one level of insurance coverage is in
effect, a change in the death benefit option may result in a different net
amount at risk for each level of insurance coverage than would have occurred
had the death benefit option not been changed. Since the cost of insurance is
calculated separately for each level of insurance coverage, any change in the
net amount at risk for a level of insurance coverage resulting from a change in
the death benefit option may affect the amount of the charge for the cost of
insurance. Partial
<PAGE> 31
withdrawals and decreases in face amount will also affect the manner in which
the net amount at risk for each level of insurance coverage is calculated.
In group or sponsored arrangements where Manufacturers Life of America
issues Policies with a face amount of less than $25,000 but not less than
$10,000, Policies issued with a face amount of less than $25,000 may be subject
to an additional premium deduction equal to $1.00 per $1,000 of face amount.
This amount is added to the cost of insurance and deducted monthly. The amount
so added will not cause the cost of insurance deducted to exceed the guaranteed
rates set forth in the Policy.
7. ADJUSTMENTS TO CERTAIN CHARGES
------------------------------
(a) SPECIAL 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 sales charge, monthly deductions and surrender charges may be
reduced for policies issued in connection with group or sponsored arrangements.
(The monthly deductions consist of a monthly charge for the cost of insurance,
a monthly charge for any supplementary
<PAGE> 32
benefits added to the Policy, a monthly administration charge of $6.00 and, if
applicable, $1.00 per $1,000 of face amount for policies less than $25,000)
Manufacturers Life of America will reduce the above charges 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 contracts 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.
Manufacturers Life of America 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 or persons purchasing under a sponsored arrangement
may apply for simplified underwriting. If simplified underwriting is granted,
the cost of insurance charge may increase as a result of higher anticipated
mortality experience. However,
<PAGE> 33
such higher cost of insurance charges will not cause the cost of insurance
charge to exceed the guaranteed rates set forth in the Policy.
(b) Exchanges.
---------
Manufacturers Life of America will permit owners of certain fixed
benefit life insurance policies issued either by the Company or Manufacturers
Life to exchange their policies for the Policies. A portion of the cash values
transferred from such policies will be credited to the Policies without
deduction of the 3 percent sales charge. Moreover, surrender charges under the
policies being exchanged or the Policies issued in exchange therefor may be
reduced or eliminated. Policy loans made under policies being exchanged may be
carried over to the new Policies without repayment at the time of exchange.
8. INCOMPLETE ALLOCATION REQUEST
-----------------------------
If an incomplete change in premium allocation request is received future
premium payments will be allocated in accordance with the previous valid
allocation. A letter requesting a corrected allocation request will be sent to
the policyowner.
9. UNPAID CHECKS
-------------
When an unpaid item is received, a premium reversal will be made
effective the date of the original premium payment and the General Account of
the Company will absorb the gain or loss of this backdated transaction. The
policyowner will be notified in writing of the unpaid item.
<PAGE> 1
EXHIBIT 10
<PAGE> 2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 20, 1995 accompanying the financial statements
of The Manufacturers Life Insurance Company of America and to the use of our
report dated February 6, 1995 accompanying the financial statements of Separate
Account Four of The Manufacturers Life Insurance Company of America, in the
Registration Statement on Form S-6 and related prospectus of Separate Account
Four of The Manufacturers Life Insurance Company of America.
Ernst & Young LLP
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 2, 1995
<PAGE> 1
EXHIBIT 11
<PAGE> 2
Jones & Blouch
2100 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20037
(202) 223-3500
May 4, 1995
The Board of Directors
The Manufacturers Life Insurance
Company of America
500 N. Woodward Avenue
Bloomfield Hills, MI 48304
Dear Sirs:
We hereby consent to the reference to this firm under the caption "Legal
Matters" in the prospectus contained in post-effective amendment No. 18 to the
registration statement on Form S-6 of Separate Account Four of The
Manufacturers Life Insurance company of America, File No. 33-13774, to be
filed with the Securities and Exchange Commission pursuant to the Securities
Act of 1933.
Very truly yours,
Jones & Blouch
Jones & Blouch
