<PAGE> 1
Registration No. 33-13774
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
POST-EFFECTIVE
AMENDMENT NO. 20
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 W. Randolph Thompson, Esq., Of Counsel
Insurance Company of America Jones & Blouch L.L.P., Suite 405W
500 N. Woodward Avenue 1025 Thomas Jefferson St., N.W.
Bloomfield Hills, Michigan 48304 Washington, D.C. 20007
(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
_x_ on May 1, 1996 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on May 1, 1996 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
26, 1996 for its fiscal year ended December 31, 1995.
<PAGE> 2
SEPARATE ACCOUNT FOUR
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
Registration Statement on Form S-6
Cross-Reference Sheet
Form
N-8B-2
Item No. Caption in Prospectus
1 ----- Cover Page; General Information About Manufacturers Life of
America, Separate Account Four, Manulife Series Fund and NASL Series
Trust (What Is Manufacturers Life of America's Separate Account Four?)
2 ----- Cover Page; General Information About Manufacturers Life of
America, Separate Account Four, Manulife Series Fund and NASL Series
Trust (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, Manulife Series Fund and NASL Series Trust (What Is
Manufacturers Life of America's Separate Account Four?)
6 ----- General Information About Manufacturers Life of America, Separate
Account Four, Manulife Series Fund and NASL Series Trust (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, Manulife Series Fund and NASL Series Trust (What Is
Manulife Series Fund, Inc.?)
12 ----- General Information About Manufacturers Life Of America, Separate
Account Four, Manulife Series Fund and NASL Series Trust (What Are
Manulife Series Fund and NASL Series Trust?)
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?)
18 ----- General Information About Manufacturers Life Of America, Separate
Account Four, Manulife Series Fund, and NASL Series Trust
* Omitted since answer is negative or item is not applicable.
** Omitted.
<PAGE> 3
Form
N-8B-2
Item No. Caption in Prospectus
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, Manulife Series Fund and NASL Series Trust (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, Manulife Series Fund and NASL Series Trust (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, Manulife Series Fund and NASL Series Trust (What Are
Manulife Series Fund and NASL Series Trust?)
48 ----- *
49 ----- *
* Omitted since answer is negative or item is not applicable.
** Omitted.
<PAGE> 4
Form
N-8B-2
Item No. Caption in Prospectus
50 ----- General Information About Manufacturers Life Of America, Separate
Account Four, Manulife Series Fund and NASL Series Trust (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.
<PAGE> 5
PART I
PROSPECTUS
<PAGE> 6
Prospectus for
Flexible Premium Variable
Life Insurance
Issued by
The Manufacturers Life Insurance
Company of America
<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.
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 investment portfolio ( a "Portfolio") of Manulife Series Fund, Inc.
("Manulife Series Fund") or NASL Series Trust. The accompanying prospectuses for
Manulife Series Fund and NASL Series Trust, and the corresponding statements of
additional information, describe the investment objectives of the Portfolios in
which net premiums may be invested. The Portfolios available for allocation of
net premiums are the following Portfolios of Manulife Series Fund: 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, the Pacific Rim Emerging Markets Fund, and the Equity Index
Fund (collectively the "Manulife Funds") and the following Portfolios of NASL
Series Trust: the Value Equity Trust, the U.S. Government Securities Trust, the
Growth and Income Trust, the Equity Trust, the Conservative Asset Allocation
Trust, the Moderate Asset Allocation Trust and the Aggressive Asset Allocation
Trust (collectively the "NASL Trusts"). Other sub-accounts and Portfolios 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,
(i)
<PAGE> 8
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. AND NASL SERIES TRUST.
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 May 1, 1996.
(ii)
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Prospectus Contents
Page
Definitions
Introduction To Policies
General Information About Manufacturers Life of America, Separate Account Four,
Manulife Series Fund and NASL Series Trust
Who Are Manufacturers Life of America And Manufacturers Life?
What Is Manufacturers Life of America's Separate Account Four?
What Are Manulife Series Fund And NASL Series Trust?
What Are The Investment Objectives Of The Portfolios?
Detailed Information About The Policies
PREMIUM PROVISIONS
What Are The Requirements And Procedures For Issuance Of A Policy?
What Limitations Apply To Premium Amounts?
Is There A Death Benefit Guarantee?
When Does A Policy Go Into Default?
How Can A Terminated Policy Be Reinstated?
How May Net Premiums Be Invested?
Is There A Short-Term Cancellation Right, Or "Free Look"?
What Are The Conversion Privileges Of The Policy?
INSURANCE BENEFIT
What Is The Insurance Benefit?
What Death Benefit Options Are Available?
Can The Death Benefit Option Be Changed?
Can The Face Amount Of A Policy Be Changed?
POLICY VALUES
What Is The Policy Value And How Is It Determined?
Transfers Of Policy Value
What Are The Provisions Governing Policy Loans?
How May A Policyowner Obtain The Net Cash Surrender Value?
CHARGES
What Deductions Are Made From Premiums?
What Are The Surrender Charges?
What Are The Monthly Deductions?
Are There Special Provisions For Group Or Sponsored Arrangements?
Are There Special Provisions For Exchanges?
What Are The Risk Charges Assessed Against Separate Account Assets?
Are There Other Relevant Charges?
THE GENERAL ACCOUNT
What Is The General Account?
OTHER PROVISIONS
What Supplementary Benefits Are Available?
Under What Circumstances May Fund Shares Be Substituted?
What Are The Other General Policy Provisions?
When Are Proceeds Paid?
What Reports Will Be Sent To Policyowners?
Other Matters
What Is The Federal Tax Treatment Of The Policies?
Tax Status Of The Policy
(iii)
<PAGE> 10
Page
What Is The Tax Treatment Of Policy Benefits?
What Are The Company's Tax Considerations?
Who Sells The Policies And What Are The Sales Commissions?
What Responsibilities Has Manufacturers Life Assumed?
What Are The Voting Rights?
Who Are The Directors And Officers Of Manufacturers Life of America?
What State Regulations Apply?
Is There Any Litigation Pending?
Where Can Further Information Be Found?
Legal Considerations
Legal Matters
Experts
Financial Statements
Appendix
What Are Some Illustrations Of Policy Values, Cash Surrender Values And Death
Benefits?
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 MANULIFE SERIES FUND OR NASL SERIES TRUST, OR
THE STATEMENT OF ADDITIONAL INFORMATION OF MANULIFE SERIES FUND OR NASL SERIES
TRUST.
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.
(iv)
<PAGE> 11
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%.
1
<PAGE> 12
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
Portfolio of Manulife Series Fund or NASL Series Trust. Allocation instructions
may be changed at any time and transfers among the accounts may be made.
The Manulife Funds currently offered are the: Emerging Growth Equity Fund,
Common Stock Fund, Real Estate Securities Fund, Balanced Assets Fund, Capital
Growth Bond Fund, Money-Market Fund, International Fund, Pacific Rim Emerging
Markets Fund, and the Equity Index Fund. The NASL Trusts currently offered are
the: Value Equity Trust, U.S. Government Securities Trust, Growth and Income
Trust, Equity Trust, Conservative Asset Allocation Trust, Moderate Asset
Allocation Trust and Aggressive Asset Allocation Trust.
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.
Under either option, the death benefit may be increased to a multiple of the
Policy Value to satisfy the corridor percentage test under the definition of
life insurance in the Internal Revenue Code. (See Detailed Information About The
2
<PAGE> 13
Policies: Insurance Benefit "What Is The Insurance Benefit?" and "What Death
Benefit Options Are Available?")
The Policyowner May Change The Death Benefit Option. A change in the death
benefit option may be requested after the Policy has been in force for two
years. A change in death benefit option will be effective on a policy
anniversary. (See Detailed Information About The Policies; Insurance Benefit
"Can The Death Benefit Option Be Changed?")
The Policyowner May Increase The Face Amount. After the Policy has been in force
for one year, an increase in the face amount of the Policy may be requested once
per policy year. An increase in the face amount is subject to satisfactory
evidence of insurability and will usually result in the Policy's being subject
to new surrender charges. (See Detailed Information About The Policies;
Insurance Benefit "Can The Face Amount Of A Policy Be Changed?")
The Policyowner May Decrease The Face Amount. A decrease in the face amount may
be requested after the Policy has been in force for one year, except during the
one-year period following any increase in face amount. In addition, during the
two-year period following an increase in face amount, the policyowner may elect
at any time to cancel the increase and have the deferred sales charge for the
increase reduced by the refund of any excess sales load attributable to the
increase. A decrease in face amount will be effective only on a policy
anniversary and may result in certain surrender charges being deducted from the
Policy Value. (See Detailed Information About The Policies; Insurance Benefit
"Can The Face Amount Of A Policy Be Changed?")
Premium Payments Are Flexible.
The policyowner may pay premiums at any time and in any amount, subject to
certain limitations. (See Detailed Information About The Policies; Premium
Provisions "What Are The Requirements And Procedures For Issuance Of A Policy?"
and "What Limitations Apply To Premium Amounts?")
In the first two policy years the policyowner must pay a minimum premium to keep
the Policy in force. (See Detailed Information About The Policies; Premium
Provisions "What Limitations Apply To Premium Amounts?" and "Is There A Death
Benefit Guarantee?")
After the second policy year there is no minimum premium required; however, by
complying with the minimum premium schedule for the Policy, the policyowner can
ensure the Policy will not go into default prior to the life insured's reaching
age 70. (See Detailed Information About The Policies; Premium Provisions "Is
There A Death Benefit Guarantee?")
Certain maximum premium limitations apply to the Policy, ensuring the Policy
qualifies as life insurance under rules defined in the Internal Revenue Code.
(See Detailed Information About The Policies; Premium Provisions "What
Limitations Apply To Premium Amounts?")
3
<PAGE> 14
Summary of Charges And Deductions.
Charges under the Policy are assessed as:
(1) deductions from premiums
- 3% sales charge
- 2% state premium tax
(2) surrender charges upon surrender, partial withdrawal, decrease in face
amount or lapse
- deferred underwriting charge of $2-$6 for each $1,000 of face amount
- deferred sales charge of up to 47% of two Target Premiums
(3) monthly deductions
- administration charge of $6
- cost of insurance charge (including $1 per $1,000 of face amount for
policies less than $25,000)
- supplementary benefits charge
(4) Certain transfers
- a Dollar Cost Averaging transfer charge of $5 when Policy Value does
not exceed $15,000
- an Asset Allocation Balancer transfer charge of $15
(5) Separate Account charges
- mortality and expense risk charge of .65% per annum assessed daily
against the value of the Separate Account assets
(6) Other Charges
For the Manulife Funds:
- investment management fee of .50% per annum assessed against the
assets of the Emerging Growth Equity Fund, Common Stock Fund, Real
Estate Securities Fund, Balanced Assets Fund, Capital Growth Bond
Fund and Money-Market Fund
- investment management fee of (i) .85% per annum assessed against the
first $100 million of assets and (ii) .70% per annum assessed against
the assets over $100 million of each of the International Fund and
the Pacific Rim Emerging Markets Fund
- investment management fee of .25% per annum assessed against the
assets of the Equity Index Fund
- expenses of up to .50% and .65% per annum assessed against the assets
of the International Fund and the Pacific Rim Emerging Markets Fund,
respectively
- expenses of up to .15% per annum assessed against the assets of the
Equity Index Fund
For the NASL Trusts:
- investment management fee of .80% assessed against the assets of the
4
<PAGE> 15
Value Equity Trust
- investment management fee of .65% assessed against the assets of the
U.S. Government Securities Trust
- investment management fee of .75% assessed against the assets of the
Growth and Income Trust
- investment management fee of .75% assessed against the assets of the
Equity Trust
- investment management fee of .75% assessed against the assets of the
Conservative Asset Allocation Trust
- investment management fee of .75% assessed against the assets of the
Moderate Asset Allocation Trust
- investment management fee of .75% assessed against the assets of the
Aggressive Asset Allocation Trust
- expenses of up to .50% assessed against the assets of the NASL
Trusts.
For a complete discussion of charges and deductions see the heading Charges And
Deductions in this Introduction and the references therein.
Investment Options.
After deductions for sales charges of 3% and state premium taxes of 2%, net
premiums will be allocated, according to the policyowner's instructions, to any
combination of the general account or one or more of the sub-accounts of
Manufacturers Life of America's Separate Account Four.
Each of the sub-accounts of Separate Account Four invests its assets in the
shares of one of the following:
For the Manulife Funds:
- - Emerging Growth Equity Fund
- - Balanced Assets Fund
- - Capital Growth Bond Fund
- - Money-Market Fund
- - Common Stock Fund
- - Real Estate Securities Fund
- - International Fund
- - Pacific Rim Emerging Markets Fund
- - Equity Index Fund
For the NASL Trusts:
- - Value Equity Trust
- - U.S. Government Securities Trust
- - Growth and Income Trust
- - Equity Trust
- - Conservative Asset Allocation Trust
- - Moderate Asset Allocation Trust
- - Aggressive Asset Allocation Trust
The policyowner may change the allocation of net premiums among the general
account and the sub-accounts at any time. (See General Information About
5
<PAGE> 16
Manufacturers Life of America, Separate Account Four, Manulife Series Fund And
NASL Series Trust and Detailed Information About The Policies; Premium
Provisions "How May Net Premiums Be Invested?" and Policy Values "What Is The
Policy Value And How Is It Determined?")
The Policy Value.
The Policy has a Policy Value which reflects the following: premium payments
made; deduction of charges described under "Charges And Deductions" below;
investment performance of the sub-accounts to which amounts have been allocated;
and interest credited by the Company to amounts allocated to the general
account.
The Policy Value is the sum of the values in the Investment Accounts, the
Guaranteed Interest Account and the Loan Account.
Investment Account. An Investment Account is established under the Policy for
each sub-account 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 sub-account.
The value of each Investment Account under the Policy varies each Business Day
and reflects the investment performance of the Portfolio shares held in the
corresponding sub-account.
(See Detailed Information About The Policies; Policy Values "What Is The Policy
Value And How Is It Determined?")
Guaranteed Interest Account. The Guaranteed Interest 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.
Manufacturers Life of America credits interest on amounts in the Guaranteed
Interest Account at an effective annual rate guaranteed to be at least 4%. (See
Detailed Information About The Policies; The General Account "What Is The
General Account?")
Loan Account. When a policy loan is made, Manufacturers Life of America will
establish a Loan Account under the Policy and will transfer an amount from the
Investment Accounts and the Guaranteed Interest Account to the Loan Account.
The Company will credit interest to amounts in the Loan Account at an effective
annual rate of at least 4%. The actual rate credited will be the rate charged on
policy loans less an interest rate differential, which is currently 1.25%.
Under certain conditions the Company will credit interest to a portion of the
amounts in the Loan Account at an effective annual rate equal to the rate
charged on policy loans less 0.50%. (See Detailed Information About The
Policies; Policy Values "What Are The Provisions Governing Policy Loans?")
Transfers Are Permitted. A policyowner may change the extent to which the Policy
Value is based upon any specific sub-account of Separate Account Four or the
Company's general account by requesting a transfer of a portion or all amounts
6
<PAGE> 17
in one account to another account.
One transfer per policy month may be made. All transfer requests received at the
same time are treated as a single transfer request. The minimum dollar amount of
all transfers pursuant to a single transfer request except for Asset Allocation
Balancer transfers is $500. In addition transfers may be effected through the
Dollar Cost Averaging or Asset Allocation Balancer transfer programs.
Certain restrictions may apply to transfer requests. (See Detailed Information
About The Policies; Policy Values "What Is The Policy Value And How Is It
Determined?" (Transfer of Policy Value))
Using The Policy Value.
Borrowing Against The Policy Value. After the first policy
anniversary, the policyowner may borrow against the Policy
Value. The minimum loan amount is $500.
Loan interest will be charged either on a fixed basis or on a variable basis.
Interest on a fixed basis will be at an effective annual rate of 8%. Interest on
a variable basis will be at an effective annual rate equal to the greater of 6%
or the Moody's Corporate Bond Yield Average Monthly Average Corporates. (See
Detailed Information About The Policies; Policy Values "What Are The Provisions
Governing Policy Loans?")
A Policyowner May Make A Partial Withdrawal Of The Policy Value. After a Policy
has been in force for two years the policyowner may make a partial withdrawal of
the Policy Value. The minimum withdrawal amount is $500. The policyowner may
specify that the withdrawal is to be made from a specific Investment Account or
the Guaranteed Interest Account.
A partial withdrawal may result in a reduction in the face amount of the Policy.
A partial withdrawal may also result in the assessment of a portion of the
surrender charges to which the Policy is subject. (See Detailed Information
About The Policies; Policy Values "How May A Policyowner Obtain The Net Cash
Surrender Value?" and Charges "What Are The Surrender Charges?")
The Policy May Be Surrendered For Its Net Cash Surrender Value. 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 surrender charges
and outstanding monthly deductions due minus the value of the Loan Account.
Surrender of a Policy within 15 years after policy issue or following an
increase in the face amount will usually result in assessment of surrender
charges. (See Detailed Information About The Policies; Policy Values "How May A
Policyowner Obtain The Net Cash Surrender Value?" and Charges "What Are The
Surrender Charges?")
7
<PAGE> 18
Charges And Deductions.
Charges Made From Premium Payments. Two deductions are made when premiums are
paid:
- - a sales charge of 3% of premium, and
- - a charge of 2% for state premium taxes.
The 3% sales charge and the deferred sales charge described below compensate the
Company for some of the expenses of selling and distributing the Policies. (See
Detailed Information About The Policies; Charges "What Deductions Are Made From
Premiums?") A portion of the sales charge and the deferred sales charge may be
subject to refund under certain circumstances. (See Detailed Information About
The Policies; Charges "What Are The Surrender Charges?"; Refund Of Excess Sales
Charges)
Charges On Surrender. Manufacturers Life of America will usually deduct a
deferred underwriting charge and a deferred sales charge if, during the 15 years
following Policy issue or an increase in the face amount:
- - the Policy is surrendered for its Net Cash Surrender Value,
- - a partial withdrawal is made in excess of the Withdrawal Tier Amount,
- - a decrease in face amount is requested, or
- - the Policy lapses.
The deferred underwriting charge ranges from $2.00 to $6.00 for each $1,000 of
face amount depending on the age of the life insured. The charge is guaranteed
not to exceed $1,000 for each level of coverage.
The maximum deferred sales charge is 47% of premiums paid up to two Target
Premiums.
The full amount of charges will be in effect for up to five years following
issue of the Policy. Beginning no later than the sixth year these charges grade
downward each month over a 10-year period. In the event of a face amount
increase, the charges applicable to the increase, which will be at the same
rates that would apply if a Policy were issued to the life insured at his or her
then attained age, will be in effect for up to five years following such
increase and thereafter grade downward over a 10-year period. (See Detailed
Information About The Policies; Charges "What Are The Surrender Charges?")
Sales Charge Refund. If the Policy is surrendered at any time during the first
two years following issuance or following an increase in face amount or if the
increase is cancelled during the two-year period following the increase or face
amount decreased during the second year after issuance or after increase in face
amount, Manufacturers Life of America will refund the difference, if any,
between total sales charges deducted and the maximum sales charge allowable with
respect to the Policy or the increase, as applicable. (See Detailed Information
About The
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Policies; Charges "What Are The Surrender Charges?") If the Policy is
surrendered after such two- year period, no refund will be available and the
full amount of the surrender charge will apply.
Monthly Charges. At the beginning of each month Manufacturers Life of America
deducts from the Policy Value:
- - an administration charge of $6,
- - a charge for the cost of insurance (plus, if applicable, $1 per $1,000 of
face amount for policies with a face amount of less than $25,000), and
- - a charge for any supplementary benefits added to the Policy.
The cost of insurance charge varies based on the net amount at risk under the
Policy and the applicable cost of insurance rate. Cost of insurance rates vary
according to age, amount of coverage, duration of coverage, and sex and risk
class of the life insured. The maximum cost of insurance rate that can be
charged is guaranteed not to exceed the 1980 Commissioners Standard Ordinary
Smoker/ Nonsmoker Mortality Tables. Currently, the cost of insurance rates
assessed under the Policies are less than the maximum rates that can be charged.
The cost of insurance charge will reflect any extra charges for additional
ratings as indicated in the Policy. (See Detailed Information About The
Policies; Charges "What Are The Monthly Deductions?")
Charges For Certain Transfers. Charges will be imposed on certain transfer of
Policy Values, including a $15 charge for each Asset Allocation Balancer
transfer and a $5 charge for each Dollar Cost Averaging transfer when Policy
Value does not exceed $15,000. See Policy Values "Transfers of Policy Value."
Charges Assessed Against Assets Of The Separate Account. Manufacturers Life of
America makes a daily charge to the Separate Account at an annual rate of .65%
of the value of the Separate Account assets for the mortality and expense risks
it assumes under the Policies. (See Detailed Information About The Policies;
Charges "What Are The Risk Charges Assessed Against Separate Account Assets?")
Other Charges. Manufacturers Life of America reserves the right to charge or
establish a provision for any federal, state or local taxes that may be
attributable to the Separate Account or the operations of the Company with
respect to the Policies. No such charge is currently made.
Certain expenses are, or will be, assessed against the assets of Portfolios, as
follows:
For Manulife Series Fund:
(1) an investment management fee of (1) .50% per annum assessed against the
assets of the Emerging Growth Equity Fund, Common Stock Fund, Real
Estate Securities Fund, Balanced Assets Fund, Capital Growth Bond Fund
and Money-Market Fund;
(2) an investment management fee of .85% per annum assessed against the
first $100 million of assets and .70% per annum assessed against the
assets over $100 million of each of the International Fund and the
Pacific Rim
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<PAGE> 20
Emerging Markets Fund,
(3) an investment management fee of .25% per annum assessed against the
assets of the Equity Index Fund, and
(4) expenses of up to .50% and .65% per annum assessed against the assets
of the International Fund and the Pacific Rim Emerging Markets Fund,
respectively, and up to .15% per annum against the assets of the Equity
Index Fund. (See Detailed Information About The Policies; Charges "Are
There Other Relevant Charges?")
For NASL Series Trust:
(1) investment management fee of .80% assessed against the assets of the
Value Equity Trust
(2) investment management fee of .65% assessed against the assets of the
U.S. Government Securities Trust
(3) investment management fee of .75% assessed against the assets of the
Growth and Income Trust
(4) investment management fee of .75% assessed against the assets of the
Equity Trust
(5) investment management fee of .75% assessed against the assets of the
Conservative Asset Allocation Trust
(6) investment management fee of .75% assessed against the assets of the
Moderate Asset Allocation Trust
(7) investment management fee of .75% assessed against the assets of the
Conservative Asset Allocation Trust
(8) expenses of up to .50% assessed against the assets of each of the NASL
Trusts.
Supplementary Benefits.
A policyowner may choose to include certain supplementary benefits to the
Policy. These supplementary benefits include an accidental death benefit, life
insurance for additional insured persons, an option to purchase additional
insurance, a disability benefit to waive the cost of monthly deductions, a
change of life insured option and an option to ensure a guaranteed Policy Value.
The cost of any supplementary benefits will be deducted from the Policy Value
monthly. (See Detailed Information About The Policies; Other Provisions "What
Supplementary Benefits Are Available?")
Default.
The Policy will go into default (a) during the first two policy years, if the
policyowner does not pay the required minimum premiums, or (b) 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 charges
then due. The Company will notify the policyowner in the event the Policy goes
into default, and will allow a grace period in which the policyowner may make a
premium payment sufficient to bring the Policy out of default. If the required
premium is not paid during the grace period the Policy will terminate. (See
Detailed Information About The Policies; Premium Provisions "When Does A Policy
Go Into Default?")
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<PAGE> 21
Death Benefit Guarantee.
As long as the premiums paid by the policyowner at least equal the minimum
premiums for the Policy, the Company guarantees that the Policy will not go into
default prior to the life insured's age 70, regardless of the investment
performance of the Funds underlying the Policy Value. (See Detailed Information
About The Policies; Premium Provisions "Is There A Death Benefit Guarantee?")
Reinstatement.
A terminated policy may be reinstated by the policyowner within the five-year
period following the date of termination, providing certain conditions are met.
(See Detailed Information About The Policies; Premium Provisions "How Can A
Terminated Policy Be Reinstated?")
Free Look.
A Policy may be returned for a full refund within the later of:
- - 10 days after it is received
- - 45 days after the application for the Policy is signed
- - 10 days after Manufacturers Life of America mails or delivers a notice of
this right of withdrawal.
If a policyowner requests an increase in face amount which results in new
surrender charges, these rights to cancel the increase will also apply. (See
Detailed Information About The Policies; Premium Provisions "Is There A
Short-Term Cancellation Right, Or `Free Look'?")
Conversion.
At any time, the policyowner may convert the Policy to a fixed benefit Policy
with a Policy Value, other values based on the Policy Value and a death benefit
which is determinable and guaranteed. The conversion is effected by transferring
the Policy Value in all of the Investment Accounts to the Guaranteed Interest
Account. (See Detailed Information About The Policies; Premium Provisions "What
Are The Conversion Privileges Of The Policy?")
Federal Tax Matters.
Manufacturers Life of America believes that a Policy issued on a standard risk
class basis should meet the definition of a life insurance contract as set forth
in Section 7702 of the Internal Revenue Code of 1986. With respect to a Policy
issued on a substandard basis, there is less guidance available to determine if
such a Policy would satisfy the Section 7702 definition of a life insurance
contract, particularly if the policyowner pays the full amount of premiums
permitted under such a Policy. Assuming that a Policy qualifies as a life
insurance contract for federal income tax payments, a policyowner should not be
deemed to be in constructive receipt of Policy Value under a Policy until there
is a distribution from the Policy. Moreover, death benefits payable under a
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<PAGE> 22
Policy should be completely excludable from the gross income of the beneficiary.
As a result, the beneficiary generally should not be taxed on these proceeds.
See Other Matters "What Is The Federal Tax Treatment Of The Policies?" (Tax
Status Of The Policy).
Under certain circumstances, a Policy may be treated as a "Modified Endowment
Contract." If the Policy is a Modified Endowment Contract, then all pre-death
distributions, including Policy loans, will be treated first as a distribution
of taxable income and then as a return of investment in the Policy. In addition,
prior to age 59 1/2 any such distributions generally will be subject to a 10%
penalty tax. See Other Matters "What Is The Tax Treatment Of Policy Benefits?"
(Tax Treatment Of Policy Benefits).
If the Policy is not a Modified Endowment Contract, distributions generally will
be treated first as a return of investment in the Policy and then a disbursement
of taxable income. Moreover, loans will not be treated as distributions. A
policyowner considering the use of systematic policy loans as one element of a
comprehensive retirement income plan should consult his or her personal tax
adviser regarding the potential tax consequences if such loans were to so reduce
Policy Value that the Policy would lapse, absent additional payments. The
premium payment necessary to avert lapse would increase with the age of the
insured. Finally, neither distributions nor loans under a Policy that is not a
Modified Endowment Contract are subject to the 10% penalty tax. See Other
Matters "What Is The Tax Treatment Of Policy Benefits?" (Distributions From
Policies Not Classified As Modified Endowment Contracts).
The United States Congress has in the past considered, and in the future may
consider legislation that, if enacted, could change the tax treatment of life
insurance policies. In addition, the Treasury Department may amend existing
regulations, or adopt new interpretations of existing laws, state tax laws or,
if the policyowner is not a United States resident, foreign tax laws, which may
affect the tax consequences to him or her, the lives insured or the beneficiary.
These laws may change from time to time without notice and, as a result, the tax
consequences may be altered. There is no way of predicting whether, when or in
what form any such change would be adopted. Any such change could have a
retroactive effect regardless of the date of enactment. The Company suggests
that a tax adviser be consulted.
Estate and Generation-Skipping Taxes
The proceeds of this life insurance policy may be taxable under Estate and
Generation-Skipping Tax provisions of the Internal Revenue Code. The policyowner
should consult his or her tax adviser regarding these taxes.
General Information About Manufacturers Life of America, Separate Account Four,
Manulife Series Fund And NASL Series Trust
Who Are Manufacturers Life of America And Manufacturers Life?
Manufacturers Life of America, a wholly-owned subsidiary of Manulife
Reinsurance Corporation (U.S.A.), is a stock life insurance company organized
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<PAGE> 23
under the laws of Pennsylvania on April 11, 1977 and redomesticated under the
laws of Michigan on December 9, 1992. It is a licensed life insurance company in
the District of Columbia and all states of the United States except New York.
Manulife Reinsurance Corporation (U.S.A.) is a life insurance company organized
in 1983 under the laws of Michigan and is a wholly-owned subsidiary of
Manufacturers Life, a mutual life insurance company based in Toronto, Canada.
Manufacturers Life and its subsidiaries, together, constitute one of the largest
life insurance companies in North America as measured by assets. Manufacturers
Life and Manufacturers Life of America have received the following ratings from
independent rating agencies: Standard and Poor's Insurance Rating Service - AA+,
A.M. Best Company - A++, Duff & Phelps Credit Rating Co. - AAA, and Moody's
Investors Service, Inc. - Aa3.
What Is Manufacturers Life of America's Separate Account Four?
Manufacturers Life of America established its Separate Account Four on March 17,
1987 as a separate account under Pennsylvania law. Since December 9, 1992, it
has been operated under Michigan law. The Separate Account holds assets that are
segregated from all of Manufacturers Life of America's other assets. The
Separate Account is currently used only to support variable life insurance
policies.
Manufacturers Life of America is the legal owner of the assets in the Separate
Account. The income, gains and losses of the Separate Account, whether or not
realized, are, in accordance with applicable contracts, credited to or charged
against the Account without regard to the other income, gains or losses of
Manufacturers Life of America. Manufacturers Life of America will at all times
maintain assets in the Separate Account with a total market value at least equal
to the reserves and other liabilities relating to variable benefits under all
policies participating in the Separate Account. These assets may not be charged
with liabilities which arise from any other business Manufacturers Life of
America conducts. However, all obligations under the variable life insurance
policies are general corporate obligations of Manufacturers Life of America.
The Separate Account is registered with the Securities and Exchange Commission
("S.E.C.") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust. A unit investment trust is a type of investment company which
invests its assets in specified securities, such as the shares of one or more
investment companies, rather than in a portfolio of unspecified securities.
Registration under the 1940 Act does not involve any supervision by the S.E.C.
of the management or investment policies or practices of the Separate Account.
For state law purposes the Separate Account is treated as a part or division of
Manufacturers Life of America.
What Are Manulife Series Fund And NASL Series Trust?
Each sub-account of the Separate Account will purchase shares only of a
particular Manulife Fund or NASL Trust. Manulife Series Fund and NASL Series
Trust are registered under the 1940 Act as open-end management investment
companies. The Separate Account will purchase and redeem shares of the Manulife
Funds and the NASL Trusts at net asset value. Shares will be redeemed to the
extent necessary for Manufacturers Life of America to provide benefits under the
Policies, to transfer assets from one sub-account to another or to the general
account as requested by policyowners, and for other purposes not inconsistent
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<PAGE> 24
with the Policies. Any dividend or capital gain distribution received from a
Portfolio with respect to the Policies will be reinvested immediately at net
asset value in shares of that Portfolio and retained as assets of the
corresponding sub-account.
Manulife Series Fund and NASL Series Trust shares are issued to fund benefits
under both variable annuity contracts and variable life insurance policies
issued by the Company and, with respect to Manufacturers Life of America only,
shares of the Manulife Series Fund are issued to its general account for certain
limited purposes including initial portfolio seed money. For a description of
the procedures for handling potential conflicts of interest arising from the
funding of such benefits see the accompanying Manulife Series Fund prospectus
and the accompanying NASL Series Trust prospectus.
The Series Fund receives investment management services from Manufacturers
Adviser Corporation. Manufacturers Adviser Corporation is a registered
investment adviser under the Investment Advisers Act of 1940. NASL Series Trust
receives investment advisory services from NASL Financial Services, Inc. NASL
Financial Services, Inc. is a registered investment adviser under the Investment
Advisers Act of 1940. NASL Series Trust also employs subadvisers. Fidelity
Management Trust Company provides investment subadvisory services to the Equity,
Conservative Asset Allocation, Moderate Asset Allocation and Aggressive Asset
Allocation Trusts. Goldman Sachs Asset Management provides investment
subadvisory services to the Value Equity Trust. Wellington Management Company
provides investment subadvisory services to the Growth and Income Trust and
Salomon Brothers Asset Management Inc provides investment subadvisory services
to the U.S. Government Securities Trust.
What Are The Investment Objectives Of The Portfolios?
The investment objectives of the Portfolios currently available to policyowners
through corresponding sub-accounts are set forth below. There is, of course, no
assurance that these objectives will be met.
Manulife Funds
Emerging Growth Equity Fund. The investment objective of the Emerging Growth
Equity Fund is to achieve growth of capital by investing primarily in equity
securities of companies believed to offer growth potential over both the
intermediate and the long term. Current income is not a significant
consideration. In selecting investments, emphasis will be placed on securities
of progressive companies with aggressive and competent managements. A
substantial portion of the Fund's assets may be invested in emerging growth
companies, which at the time of the Fund's investment may be paying no dividends
to their shareholders.
Balanced Assets Fund. The investment objective of the Balanced Assets Fund is to
achieve intermediate and long-term growth through capital appreciation and
income by investing in both debt and equity securities. The Fund will maintain
at all times a balance between debt securities or preferred stocks, on the one
hand, and common stocks, on the other. At least 25% of the Fund's assets will be
invested in each of the two basic categories.
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<PAGE> 25
Capital Growth Bond Fund. The investment objective of the Capital Growth Bond
Fund is to achieve growth of capital by investing in medium-grade or better debt
securities with income as a secondary consideration. The Capital Growth Bond
Fund differs from most "bond" funds in that its primary objective is capital
appreciation, not income. The Fund will be carefully positioned in relation to
the term of debt obligations and the anticipated movement of interest rates.
Money-Market Fund. The investment objective of the Money-Market Fund is to
provide maximum current income consistent with capital preservation and
liquidity by investing in a portfolio of high-quality money market instruments.
Common Stock Fund. The investment objective of the Common Stock Fund is to
achieve intermediate and long-term growth through capital appreciation and
current income by investing in common stocks and other equity securities of well
established companies with promising prospects for providing an above-average
rate of return. In selecting investments, emphasis will be placed on companies
with good financial resources, strong balance sheet, satisfactory rate of return
on capital, good industry position, superior management skills, and earnings
that tend to grow consistently. The Fund's investments are not limited to any
particular type or size of company, but high-quality growth stocks are
emphasized.
Real Estate Securities Fund. The investment objective of the Real Estate
Securities Fund is to achieve a combination of long-term capital appreciation
and satisfactory current income by investing in real estate related equity and
debt securities. In pursuit of its objective, the Real Estate Securities Fund
will invest principally in real estate investment trust equity and debt
securities and other securities issued by companies which invest in real estate
or interests therein. The Fund may also purchase the common stocks, preferred
stocks, convertible securities and bonds of companies operating in industry
groups relating to the real estate industry. This would include companies
engaged in the development of real estate, building and construction, and other
market segments related to real estate. The Fund will not invest directly in
real property nor will it purchase mortgage notes directly. Under normal
circumstances, at least 65% of the value of the Fund's total assets will be
invested in real estate related equity and debt securities.
International Fund. The investment objective of the International Fund is to
achieve long-term growth of capital by investing in a diversified portfolio that
is comprised primarily of common stocks and equity-related securities of
companies domiciled in countries other than the United States and Canada. It
invests primarily in the securities markets of Western European countries,
Australia, the Far East, Mexico and South America. The Fund will, under normal
conditions, invest at least 65% of its net assets in common stocks and
equity-related securities of established larger-capitalization companies that
have attractive long-term prospects for growth of capital.
Pacific Rim Emerging Markets Fund. The investment objective of the Pacific Rim
Emerging Markets Fund is to achieve long-term growth of capital by investing in
a diversified portfolio that is comprised primarily of common stocks and
equity-related securities of companies domiciled in the countries of the Pacific
Rim region. The Fund will, under normal conditions, invest at least 65% of its
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<PAGE> 26
net assets in common stocks and equity-related securities of established
larger-capitalization companies that have attractive long-term prospects for
growth of capital.
Equity Index Fund. The investment objective of the Equity Index Fund is to
achieve investment results which approximate the total return of publicly-traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index.
A full description of the Manulife Series Fund, its investment objectives,
policies and restrictions, its expenses, the risks associated therewith, and
other aspects of its operation, is contained in the accompanying Manulife Series
Fund prospectus, which should be read together with this prospectus.
NASL Trusts
Equity Trust. The investment objective of the Equity Trust is to seek growth of
capital by investing primarily in common stocks of United States issuers and
securities convertible into or carrying the right to buy common stocks.
Value Equity Trust. The investment objective of the Value Equity Trust is to
seek long-term growth of capital by investing primarily in common stocks and
securities convertible into or carrying the right to buy common stocks.
Growth and Income Trust. The investment objective of the Growth and Income Trust
is to seek long-term growth of capital and income, consistent with prudent
investment risk, by investing primarily in a diversified portfolio of common
stocks of U.S. issuers which the subadviser believes are of high quality.
U.S. Government Securities Trust. The investment objective of the U.S.
Government Securities Trust is to seek a high level of current income consistent
with preservation of capital and maintenance of liquidity by investing in debt
obligations and mortgage-backed securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and derivative securities such as
collateralized mortgage obligations backed by such securities.
Automatic Asset Allocation Trusts. The investment objective of the Automatic
Asset Allocation Trusts is to seek the highest potential return consistent with
a specified level of risk tolerance -- conservative, moderate or aggressive --
by investing primarily in debt, equity, and money market securities.
- - The Aggressive Asset Allocation Trust seeks the highest total return
consistent with an aggressive level of risk tolerance. The Trust attempts
to limit the decline in portfolio value in very adverse market conditions
to 15% over any twelve month period.
- - The Moderate Asset Allocation Trust seeks the highest total return
consistent with a moderate level of risk tolerance. The Trust attempts to
limit the decline in portfolio value in very adverse market conditions to
10% over any twelve month period.
- - The Conservative Asset Allocation Trust seeks the highest total return
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<PAGE> 27
consistent with a conservative level of risk tolerance. The Trust
attempts to limit the decline in portfolio value in very adverse market
conditions to 5% over any twelve month period.
A full description of the NASL Series Trust, its investment objectives, policies
and restrictions, the risks associated therewith, its expenses, and other
aspects of its operation is contained in the accompanying NASL Series Trust
prospectus, which should be read together with this prospectus.
Detailed Information About The Policies
Premium Provisions
What Are The Requirements And Procedures For Issuance Of A Policy?
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 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 ages 0 and 80. In certain circumstances
the Company may at its sole discretion issue a Policy to persons above age 80.
Before issuing a Policy, Manufacturers Life of America will require evidence of
insurability satisfactory to it. 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 also 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 of America's underwriters approve issuance of the
Policy. 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 used. 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.
All premiums received prior to the effective date of a Policy will be credited
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<PAGE> 28
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 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 on the effective date instead of the dates they were due.
What Limitations Apply To Premium Amounts?
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
below. Premiums after the first must be paid to the Manufacturers Life of
America Service Office. Unlike traditional insurance, premiums are not payable
at specified intervals and in specified amounts. A Policy will be issued with a
planned premium, which is based on the amount of premium the policyowner wishes
to pay. The planned premium during the first two policy years must be such that
the minimum premium requirement will be met. Manufacturers Life of America will
send notices to the policyowner setting forth the planned premium at the payment
interval selected by the policyowner, unless payment is being made pursuant to a
pre-authorized payment plan. However, the policyowner is under no obligation to
make the indicated payment.
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 of 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.
Minimum Premium Requirement. The Policy provides for a minimum premium
requirement. The minimum premium requirement is met if at the beginning of each
policy month the sum of all premiums paid less any partial withdrawals and any
Policy Debt is at least equal to the sum of the minimum monthly premiums since
the policy date. The minimum premium as an annualized amount is set forth in the
Policy. It is subject to change if the face amount of the Policy or the death
benefit option is changed (see Insurance Benefit "Can The Death Benefit Option
Be Changed?" and "Can The Face Amount Of A Policy Be Changed?") or if there is
any change in the supplementary benefits added to the Policy or in the rate
classification of the life insured.
Is There A Death Benefit Guarantee?
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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. If the 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 month until the Net Policy Value should fall to zero. The
guarantee provides assurance to the policyowner that the Policy will remain in
force regardless of the investment performance of the sub-accounts selected by
the policyowner, provided the policyowner has satisfied the minimum premium
requirement.
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. While
the guarantee is in effect, Manufacturers Life of America will determine at the
beginning of each policy month whether the minimum premium requirement has been
met. If it has not been met, the Company will notify the policyowner of that
fact and allow a 61-day grace period in which the policyowner may make a premium
payment sufficient to keep the death benefit guarantee in effect. The required
payment will be equal to the minimum premium due at the date the minimum premium
requirement was not met 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 death benefit guarantee will terminate. Once it is terminated, it cannot be
reinstated.
When Does A Policy Go Into Default?
Default Prior To Second Policy Anniversary. 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.
See Charges "What Are The Surrender Charges?"
Default After Second Policy Anniversary. 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
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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. See Charges
"What Are The Surrender Charges?" 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.
How Can A Terminated Policy Be Reinstated?
A policyowner can reinstate a Policy which has terminated after going into
default at any time within the five-year period following the date of
termination subject to the following conditions:
(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.
How May Net Premiums Be Invested?
Net premiums (gross premiums less the premium tax deduction and sales charge)
may be allocated to either the Guaranteed Interest Account for accumulation at a
rate of interest equal to at least 4% or to one or more of the Investment
Accounts for investment in the Portfolio shares held by the corresponding
sub-account of the Separate Account. Allocations among the Investment Accounts
and the Guaranteed Interest Account are made as a percentage of the net premium.
The percentage allocation to any account may be any whole number between zero
and 100, provided the total percentage allocations equal 100. A policyowner may
change the way in which net premiums are allocated at any time without charge.
The change will take effect on the date a written or telephonic request for
change satisfactory to the Company is received at the Manufacturers Life of
America Service Office.
Is There A Short-Term Cancellation Right, Or "Free Look"?
A Policy may be returned for a full refund within 10 days after it is received,
within 45 days after the application for the Policy is signed, or within 10 days
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<PAGE> 31
after Manufacturers Life of America mails or delivers a notice of right of
withdrawal, whichever is latest. The Policy can be mailed or delivered to the
Manufacturers Life of America agent who sold it or to the Manufacturers Life of
America Service Office. Immediately on such delivery or mailing, the Policy
shall be deemed void from the beginning. Within seven days after receipt of the
returned Policy at its Service Office, Manufacturers Life of America will refund
any premium paid. Manufacturers Life of America reserves the right to delay the
refund of any premium paid by check until the check has cleared.
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 cancelled, the Policy Value and the surrender charges
will be recalculated to the amounts they would have been had the increase not
taken place. A policyowner may request a refund of all or any portion of
premiums paid during the free look period, and the Policy Value and the
surrender charges will be recalculated to the amounts they would have been had
the premiums not been paid.
What Are The Conversion Privileges Of The Policy?
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 Interest 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
Interest 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.
Insurance Benefit
What Is The Insurance Benefit?
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 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.
What Death Benefit Options Are Available?
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<PAGE> 32
The Policies permit the policyowner to select one of two death benefit options
Option 1 and Option 2. Under Option 1 the death benefit is the face amount of
the Policy at the date of death or, if greater, the Policy Value at the date of
death multiplied by the applicable percentage in the table set forth below.
Under Option 2 the death benefit is the face amount of the Policy plus the
Policy Value at the date of death or, if greater, the Policy Value at the date
of death multiplied by the applicable percentage in the following table:
<TABLE>
<CAPTION>
Attained Corridor
Age Percentage
<S> <C>
40 & below 250%
41 243
42 236
43 229
44 222
45 215
46 209
47 203
48 197
49 191
50 185
51 178
52 171
53 164
54 157
55 150
56 146
57 142
58 138
59 134
60 130
61 128
62 126
63 124
64 122
65 120
66 119
</TABLE>
22
<PAGE> 33
<TABLE>
<CAPTION>
Attained Corridor
Age Percentage
<S> <C>
67 118
68 117
69 116
70 115
71 113
72 111
73 109
74 107
75-90 105
91 104
92 103
93 102
94 101
95 & above 100
</TABLE>
Regardless of which death benefit option is in effect, the relationship of
Policy Value to death benefit will change whenever the "corridor percentages"
are used to determine the amount of the death benefit, in other words, whenever
multiplying the Policy Value by the applicable percentage set forth in the above
table results in a greater death benefit than would otherwise apply under the
selected option. For example, assume the life insured under a Policy with a face
amount of $100,000 has an attained age of 40. If Option 1 is in effect, the
corridor percentage will produce a greater death benefit whenever the Policy
Value exceeds $40,000 (250% X $40,000 = $100,000). If the Policy Value is less
than $40,000, an incremental change in Policy Value, up or down, will have no
effect on the death benefit. If the Policy Value is greater than $40,000, an
incremental change in Policy Value will result in a change in the death benefit
by a factor of 2.5. Thus, if the Policy Value were to increase to $40,010, the
death benefit would be increased to $100,025 (250% X $40,010 = $100,025).
If Option 2 were in effect in the above example, the corridor percentage would
produce a greater death benefit whenever the Policy Value exceeded $66,667. At
that point the death benefit produced by multiplying the Policy Value by 250%
would result in a greater amount than adding the Policy Value to the face amount
of the Policy. If the Policy Value is less than $66,667, an incremental change
in Policy Value will have a dollar-for-dollar effect on the death benefit. If
the Policy Value is greater than $66,667, an incremental change in Policy Value
will result in a change in the death benefit by a factor of 2.5 in the same
manner as would be the case under Option 1 when the corridor percentage
determined the death benefit.
Can The Death Benefit Option Be Changed?
The death benefit option is selected initially by the policyowner in the
23
<PAGE> 34
application. After the Policy has been in force for two years the death benefit
option may be changed effective with a policy anniversary. Written request for a
change 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. The Company
reserves the right to limit a request for change if the change would cause the
Policy to fail to qualify as life insurance for tax purposes.
A change in death benefit option will result in a change in the Policy's face
amount in order to avoid any change in the amount of the death benefit. If the
change in death benefit is from Option 1 to Option 2, the new face amount will
be equal to the face amount prior to the change minus the Policy Value on the
effective date of the change. If the change in death benefit is from Option 2 to
Option 1, the new face amount will be equal to the face amount prior to the
change plus the Policy Value on the effective date of the change. The increase
in face amount resulting from a change to Option 1 will not affect the amount of
surrender charges to which a Policy may be subject. A change to Option 2 will be
subject to satisfactory evidence of insurability and will not be allowed if it
would cause the face amount of the Policy to go below the minimum face amount of
$25,000.
Policyowners who wish to have level insurance coverage should generally select
Option 1. Under Option 1, increases in Policy Value usually will reduce the net
amount of risk under a Policy which will reduce cost of insurance charges. This
means that favorable investment performance should result in a faster increase
in Policy Value than would occur under an identical Policy with Option 2 in
effect. However, the larger Policy Value which may result under Option 1 will
not affect the amount of the death benefit unless the corridor percentages are
used to determine the death benefit.
Policyowners who want to have the Policy Value reflected in the death benefit so
that any increases in Policy Value will increase the death benefit should
generally select Option 2. Under Option 2 the net amount at risk will remain
level unless the corridor percentages are used to determine death benefit, in
which case increases in Policy Value will increase the net amount at risk.
Can The Face Amount Of A Policy Be Changed?
Subject to certain limitations, a policyowner may, upon written request,
increase or decrease the face amount of the Policy. A change in face amount will
usually affect the minimum premium requirement, the monthly deduction and
surrender charges (see "Charges"). Currently, a change 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 also reserves the right to limit a change in
face amount so as to prevent the Policy from failing to qualify as life
insurance for tax purposes.
Increases. 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
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<PAGE> 35
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 premiums paid on or subsequent to the
increase, will be deemed to be premiums attributable to the increase. See
Charges "What Are The Surrender Charges?" 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. As with the purchase of a Policy, a policyowner will have free look
and 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. Moreover, a new minimum premium will be
determined for purposes of the death benefit guarantee. The insurance coverage
eliminated by the decrease of the oldest face amount will be deemed to be
restored first.
Decreases. A decrease in the face amount may be requested after the Policy has
been in force for one year, except during the one-year period following any
increase in face amount. In addition, during the two-year period following an
increase in face amount, the policyowner may elect at any time to cancel the
increase and have the deferred sales charge for the increase reduced by the
refund of any excess sales load attributable to the increase. A decrease in face
amount will be effective only 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 15-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. See Charges "What Are The Surrender
Charges?" For purposes of determining surrender and cost of 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 most recent increases successively, and finally (c) the initial face
amount.
Policy Values
What Is The Policy Value And How Is It Determined?
A Policy has a Policy Value, a portion of which is available to the policyowner
by making a policy loan or partial withdrawal or upon surrender of the Policy.
25
<PAGE> 36
See "What Are The Provisions Governing Policy Loans?" and "How May A Policyowner
Obtain The Net Cash Surrender Value?" below. The Policy Value may also affect
the amount of the death benefit (see Insurance Benefit "What Death Benefit
Options Are Available?"). The Policy Value at any time is equal to the sum of
the Values in the Investment Accounts, the Guaranteed Interest Account and the
Loan Account. The following discussion relates only to the Investment Accounts.
Policy loans are discussed under "What Are The Provisions Governing Policy
Loans?" and the Guaranteed Interest Account is discussed under "The General
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 Portfolios.
An Investment Account is established under each Policy for each sub-account 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 sub-account. The value of the Investment Account
established for a particular sub-account is equal to the number of units of that
sub-account credited to the Policy times the value of such units.
Units of a particular sub-account 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 on 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 for the Business Day on which the premium is received
at the Manufacturers Life of America Service Office or other office or entity so
designated by Manufacturers Life of America, 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 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.
The value of a unit of each sub-account was initially fixed at $10.00. For each
subsequent Business Day the unit value is determined by taking the value of the
adjusted net assets of the particular sub-account at the end of the Business Day
divided by the total number of units. The value of a unit may increase, decrease
or remain the same, depending on the investment performance of a sub-account
from one Business Day to the next. The unit value for a sub-account for any
Business Day is equal to (a) minus (b), divided by (c), where:
(a) is the net asset value of the sub-account at the end of such Business Day;
(b) is a charge not exceeding 0.000017866 for each calendar day since the
26
<PAGE> 37
preceding Business Day, multiplied by the net assets of the sub-account
as of the end of such Business Day, corresponding to a charge not
exceeding 0.65% per year for mortality and expense risks; and
(c) is the total number of units of the sub-account.
Manufacturers Life of America reserves the right to adjust the above formula for
any taxes determined by it to be attributable to the operations of the
sub-account.
Transfers Of Policy Value.
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 Company's general account to other
Investment Accounts or the Company's general account. A policyowner is permitted
to make one transfer each policy month. For this purpose all transfer requests
received by Manufacturers Life of America on the same Business Day are treated
as a single transfer request. Transfers are free of charge.
The minimum dollar amount of all transfers pursuant to a single transfer
request, except for Asset Allocation Balancer transfers, is $500. 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 Guaranteed Interest Account may not involve a transfer to the
Investment Account for the Money- Market Fund.
Transfer requests must be in a format satisfactory to Manufacturers Life of
America and in writing, or by telephone if a currently valid telephone transfer
authorization form is on file. Although failure to follow reasonable procedures
may result in Manufacturers Life of America's liability for any losses resulting
from unauthorized or fraudulent telephone transfers, Manufacturers Life of
America will not be liable for following instructions communicated by telephone
that it reasonably believes to be genuine. Manufacturers Life of America will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. Such procedures shall consist of confirming a valid
telephone authorization form is on file, tape recording all telephone
transactions and providing written confirmation thereof.
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 Interest 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
Interest 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
27
<PAGE> 38
be made at any time, even if a prior transfer has been made during the policy
month.
Dollar Cost Averaging. Manufacturers Life of America will offer policyowners a
Dollar Cost Averaging program. Under this program amounts will be automatically
transferred at predetermined intervals from one Investment Account to any other
Investment Account(s) or the Guaranteed Interest Account.
Under the Dollar Cost Averaging program the policyowner will designate an amount
to be transferred each month 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 for each transfer under this
program. The charge will be deducted from the value of the Investment Account
out of which the transfer occurs. If insufficient funds exist to effect a Dollar
Cost Averaging transfer, including the charge, if applicable, the transfer will
not be effected and the policyowner will be so notified. Manufacturers Life of
America reserves the right to cease to offer this program on 90 days' written
notice to the policyowner.
Asset Allocation Balancer Transfers. Manufacturers Life of America will also
offer policyowners the ability to have amounts automatically transferred among
stipulated Investment Accounts to maintain an allocated percentage in each
stipulated Investment Account.
Under the Asset Allocation Balancer program the policyowner will designate an
allocation of Policy Value among Investment Accounts. At six month intervals,
beginning six months after the policy date, Manufacturers Life of America will
move amounts among the Investment Accounts as necessary to maintain the
policyowner's chosen allocation. A change to the policyowner's premium
allocation instructions will automatically result in a change in Asset
Allocation Balancer instructions so that the two are identical unless the
policyowner instructs Manufacturers Life of America otherwise or a dollar cost
averaging request is in effect. Currently, the charge for this program is $15
per transfer or series of transfers occurring on the same transfer date. This
charge will be deducted from all accounts affected by the Asset Allocation
Balancer transfer in the same proportion that the value in each account bears to
the Policy Value immediately after the transfer. Manufacturers Life of America
reserves the right to cease to offer this program on 90 days' written notice to
the policyowner.
What Are The Provisions Governing 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
one-year waiting period for borrowing against the Policy Value is waived in the
case of policies which are exchanged for Manufacturers Life of America Policies
and a policy loan will be permitted in an amount equal to the lesser of (a) the
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<PAGE> 39
amount rolled over into the Manufacturers Life of America Policy and (b) the
loan value of the Policy. The Policy serves as the only security for the loan.
The amount of any 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 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%. An amount equal to
the Modified Policy Debt is transferred to the Loan Account to ensure that a
sufficient amount will be available to pay interest on the Policy Debt at the
next policy anniversary.
For example, assume a Policy with a loan value of $5,000, no outstanding policy
loans and a loan interest rate of 8%. The maximum amount that can be borrowed is
an amount that will cause the Modified Policy Debt to equal $5,000. If the loan
is made on a policy anniversary, the maximum loan will be $4,815. This amount at
8% interest will equal $5,200 one year later; $5,200 discounted to the date of
the loan at 4% (the Modified Policy Debt) equals $5,000. Because the minimum
rate of interest credited to the Loan Account is 4%, $5,000 must be transferred
to the Loan Account to ensure that $5,200 will be available at the next policy
anniversary to cover the interest accrued on the Policy Debt.
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 as 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 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.
A policy loan may result in a Policy's failing to satisfy the minimum premium
requirement, since the Policy Debt is subtracted from the sum of the premiums
Paid in determining whether the minimum premium requirement is met. See Premium
Provisions "What Limitations Apply To Premium Amounts?; Minimum Premium
Requirement." As a result, the Policy may go into default if the minimum premium
requirement is not met during the first two policy years, or the death benefit
guarantee may terminate if the minimum premium requirement is not met either
before or after the second policy anniversary. See Premium Provisions "Is There
A Death Benefit Guarantee?" and "When Does A Policy Go Into Default?" Moreover,
if the death benefit guarantee is not in force, a policy loan may cause a Policy
to be more susceptible to going into default, since a policy loan will be
reflected in the Net Cash Surrender Value. See Premium Provisions "When Does A
Policy Go Into Default?" A policy loan will also have an effect on future Policy
Values, since that portion of the Policy Value in the Loan Account will increase
in value at the crediting interest rate rather than varying with the performance
29
<PAGE> 40
of the underlying Funds selected by the policyowner or increasing in value at
the rate of interest credited for amounts allocated to the Guaranteed Interest
Account. Finally, a policy loan will affect the amount payable on the death of
the life insured, since the death benefit is reduced by the value of the Loan
Account at the date of death in arriving at the insurance benefit. Interest
Charged On Policy Loans. Interest on the Policy Debt will accrue daily and be
payable annually on the policy anniversary. The rate of interest charged will be
either on a fixed basis or a variable basis as selected by the policyowner in
the application. The policyowner may change the interest basis on any policy
anniversary provided a written request for change is received by the Company at
least 60 days before the anniversary on which such change is to be effective.
If the policyowner elects to have interest charged on a fixed basis, interest
will be at an effective annual rate of 8%. If the policyowner elects to have
interest charged on a variable basis, the rate will be determined by
Manufacturers Life of America at the beginning of each policy year, and the rate
so determined will be effective until the next policy anniversary at which time
it will be recalculated. Except as described below, the variable rate will not
exceed the greater of 6% per year or the Moody's Corporate Bond Yield Average
Monthly Average Corporates for the calendar month ending two months before the
beginning of the month in which the policy anniversary falls. On each policy
anniversary, the annual rate of interest may be adjusted up or down, but no
adjustment will be made unless the Moody's Average for the month ending two
months before the date of determination is at least one-half of one percent
greater or less than the rate in effect for the year then ending. If the
interest due on a policy anniversary is not paid by the policyowner, the
interest will be borrowed against the policy.
Interest Credited To The Loan Account. Manufacturers Life of America will credit
interest to any amount in the Loan Account at an effective annual rate of at
least 4%. The actual rate credited is:
- - the rate of interest charged on the policy loan less .50% on amounts up
to the Policy's "loan tier amount"; and
- - the rate of interest charged on the policy loan less an interest rate
differential (currently 1.25%) on amounts in excess of the "loan tier
amount."
Manufacturers Life of America may change the interest rate differential on 90
days' written notice to the policyowner. The loan tier amount at any time is
equal to 25% of (a) minus (b) where (a) is the Policy's Cash Surrender Value at
the previous policy anniversary and (b) is the sum of the minimum monthly
premiums since issuance of the Policy to that date (see Premium Provisions "What
Limitations Apply To Premium Amounts?"). The loan tier amount cannot be a
negative number.
To illustrate the application of the loan tier amount, assume a Policy with a
Cash Surrender Value at the previous policy anniversary of $10,000, the sum of
the minimum monthly premiums since issuance to the previous policy anniversary
of $6,000 and a Loan Account value of $8,000. The loan tier amount is $1,000
[25%
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<PAGE> 41
X ($10,000 - $6,000)]. If loan interest is being charged at the fixed rate of
8%, $1,000 of the Loan Account value will accrue interest at 7.5% and the
remaining $7,000 will accrue interest at 6.75%.
Loan Account Adjustments. 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 in the Loan Repayments section, amounts transferred from
the Loan Account will be allocated to the Investment Accounts and the Guaranteed
Interest Account in the same proportion as the value in the corresponding "loan
sub-account" bears to the value of the Loan Account. A "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.
Loan Account Illustration. The operation of the Loan Account may be illustrated
by consideration of the Policy previously described with a loan value of $5,000,
a loan interest rate of 8%, and a maximum loan amount on a policy anniversary of
$4,815. For purposes of the illustration, assume that the loan tier amount is
zero. If a loan in the maximum amount of $4,815 is made, an amount equal to the
Modified Policy Debt, $5,000, is transferred to the Loan Account. At the next
policy anniversary the value of the Loan Account will have increased to
$5,337.50 ($5,000 X 1.0675) reflecting interest credited at an effective annual
rate of 6.75%. At that time the loan will have accrued interest charges of $385
($4,815 X .08) bringing the Policy Debt to $5,200.
If the accrued interest charges are paid on the policy anniversary, the Policy
Debt will continue to be $4,815, and the Modified Policy Debt, reflecting
interest for the next policy year and discounting the Policy Debt and such
interest at 4%, will be $5,000. An amount will be transferred from the Loan
Account to the Guaranteed Interest Account or the Investment Accounts so that
the Loan Account value will equal the Modified Policy Debt.
Since the Loan Account value was $5,337.50, a transfer of $337.50 will be
required ($5,337.50 - $5,000).
If, however, the accrued interest charges of $385 are borrowed, an amount will
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<PAGE> 42
be transferred from the Investment Accounts and the Guaranteed Interest Account
so that the Loan Account value will equal the Modified Policy Debt recomputed at
the policy anniversary. The new Modified Policy Debt is the Policy Debt, $5,200,
plus loan interest to be charged to the next policy anniversary, $416 ($5,200 X
.08), discounted at 4%, which results in a figure of $5,400. Since the value of
the Loan Account was $5,337.50, a transfer of $62.50 will be required. This
amount is equivalent to the 1.25% interest rate differential on the $5,000
transferred to the Loan Account on the previous policy anniversary.
Loan Repayments. 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
repayment 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 as 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.
How May A Policyowner Obtain The Net Cash Surrender Value?
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 at the end of the Business Day on which
Manufacturers Life of America receives 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. Surrender of a
Policy within 15 years of issuance or an increase in face amount will usually
result in the assessment by Manufacturers Life of America of surrender charges.
(See Charges "What Are The Surrender Charges?")
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
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 as 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.
Like surrender of a Policy, a partial withdrawal made within 15 years following
issuance of the Policy or a face amount increase will result in the assessment
of a portion of the surrender charges to which the Policy is subject if the
withdrawal is in excess of the Withdrawal Tier Amount. The Withdrawal Tier
Amount is equal to 10% of the Net Cash Surrender Value determined as of the
previous policy anniversary. In determining what, if any, portion of a partial
Net Cash Surrender Value withdrawal is in excess of the Withdrawal Tier Amount,
all
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<PAGE> 43
previous partial Net Cash Surrender Value withdrawals that have occurred in the
current policy year are included. The portion of the surrender charges assessed
will be based on the ratio of the amount of the withdrawal which exceeds the
Withdrawal Tier Amount to the Net Cash Surrender Value of the Policy immediately
prior to the withdrawal. The surrender charges will be deducted from each
Investment Account and the Guaranteed Interest Account in the same proportion as
the amount of the withdrawal taken from such account bears to the total amount
of the withdrawal (see Charges "What Are The Surrender Charges?"). 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
receives a written request for withdrawal at its Service Office.
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 set forth under Insurance Benefit "What Death
Benefit Options Are Available?" above, the face amount will be reduced only to
the extent that the amount of the withdrawal plus the portion of the surrender
charges 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 increases successively and finally against the
initial face amount.
Charges
Charges under the Policies are assessed as (i) deductions from premiums when
made, (ii) surrender charges upon surrender, partial withdrawals, decreases in
face amount or termination following default, (iii) monthly deductions from the
Policy Value, and (iv) risk charges assessed against Separate Account assets.
These charges are described below.
What Deductions Are Made From Premiums?
Manufacturers Life of America deducts a sales charge of 3% of each premium
payment. A deferred sales charge in the maximum amount of 47% of premiums paid
up to two Target Premiums is deducted from the Policy Value upon certain
transactions. See "What Are The Surrender Charges?" below. These charges
compensate the Company for some of the expenses of selling and distributing the
Policies, including agents' commissions, advertising, agent training and the
printing of prospectuses and sales literature.
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<PAGE> 44
The sales charges deducted in any policy year are not specifically related to
sales expenses incurred in that year. Instead, the Company expects that the
major portion of the sales expenses attributable to a Policy will be incurred
during the first policy year, although the sales charge deducted from premiums
and any deferred sales charge may be spread out over the period the Policy is in
force. Manufacturers Life of America anticipates that the aggregate amounts
received under the Policies for sales loading will be insufficient to cover
aggregate sales expenses. To the extent that sales expenses exceed sales
charges, Manufacturers Life of America will pay the excess from its other assets
or surplus, including amounts derived from the mortality and expense risks
charge described below. A portion of the sales charge and the deferred sales
charge may be subject to refund if the 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 increase is cancelled during the
two-year period following the increase. See "What Are The Surrender Charges?"
(Refund Of Excess Sales Charges).
Manufacturers Life of America 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.
What Are The Surrender Charges?
Manufacturers Life of America will assess surrender charges upon surrender or
lapse of a Policy, a partial withdrawal of Policy Value in excess of the
Withdrawal Tier Amount or a requested decrease in face amount. The charges will
be assessed if any of the above transactions occurs within 15 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:
<TABLE>
<S> <C> <C> <C> <C> <C>
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
</TABLE>
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
34
<PAGE> 45
illustrated on an annual basis by the following table:
<TABLE>
<CAPTION>
Transaction Occurs
After Monthly Deduction
Taken for Last Month Percent of
Preceding End of Year Surrender Charges
<S> <C>
5 & below 100%
6 90%
7 80%
8 70%
9 60%
10 50%
11 40%
12 30%
13 20%
14 10%
15 & above 0%
</TABLE>
The surrender charges begin to grade downward before the beginning of the sixth
year for issue ages above 69. For issue ages 70, 71, 72, 73, and issue ages 74
to 80, the surrender charges begin to grade downward at the beginning of the
fifth, fourth, third, second, and first years, respectively.
The deferred underwriting charge is designed to cover the administrative
expenses associated with underwriting and policy issue, including the costs of
processing applications, conducting medical examinations, determining the life
insured's risk class and establishing policy records. Manufacturers Life of
America does not expect to recover from the deferred underwriting charge any
amount in excess of its expenses associated with underwriting and policy issue.
Deferred Sales Charge. The maximum deferred sales charge is equal to 47% of the
premiums paid under the Policy up to two Target Premiums described below. For
life insureds over age 69 at issue or face amount increase, the applicable
percentage of premiums will be reduced in accordance with the following table:
<TABLE>
<CAPTION>
Applicable
Age Percentage of Premiums
<S> <C>
70 45%
71 43%
72 41%
73 39%
74 37%
75 35%
76 34%
77 33%
78 32%
79 31%
80 30%
</TABLE>
Like the deferred underwriting charge, the percentage deferred sales charge
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<PAGE> 46
applicable to the initial face amount or face amount increase will remain level
for five years (or less for issue ages above 69) and following such period will
decrease .83% per month, or 10% per year, from the charge that would otherwise
apply. See chart under "Deferred Underwriting Charge" above.
As noted above, the deferred sales charge may not exceed 47% of two Target
Premiums. The Target Premium for the initial face amount is set forth in the
Policy. A 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 (see "Are There Special Provisions For
Group Or Sponsored Arrangements?"), the amount of insurance coverage. 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 the face amount decreased during the
second year after issuance or after 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 up to one guideline annual premium plus 10% of the
"premiums" paid in excess of one guideline annual premium up to two guideline
annual premiums and (ii) up to 9% of the "premiums" paid in excess of two
guideline annual premiums. Since Target Premiums are always less than guideline
annual premiums, with the deferred sales charge structure described above, there
will be no refund with respect to "premiums" paid in excess of two guideline
annual premiums and these excess "premiums" will not reduce the refund
applicable to "premiums" paid up to two guideline annual premiums.
A policyowner may also elect to cancel an increase in face amount during the
first two years following the increase and have the deferred sales charge for
the increase reduced by the refund of any excess sales load attributable to the
increase. The guideline annual 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 Standard Ordinary Smoker/Nonsmoker 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
36
<PAGE> 47
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.
The operation of the maximum sales charge allowable is illustrated by the
following example. Assume that the policyowner has paid $3,000 in premiums under
a Policy with a guideline annual premium of $2,000 and a Target Premium of
$1,500 and decides to surrender his or her Policy during the second policy year.
In the absence of the refund right, the deferred sales charge would be $1,410
(47% of $3,000).
However, under the formula described above, the maximum sales charge allowable
is the sum of $600 (30% of $2,000) and $100 (10% of $1,000), or $700. Since a
sales load of $90 (3% of $3,000) was deducted from the premiums when received,
and therefore only $610 ($700 - $90) of the deferred sales charge may be
retained by the Company, a refund of $800 ($1,410 - $610) will be payable to the
policyowner. 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. As noted above, both the deferred sales charge
and the deferred underwriting charge are applicable in the event of a partial
withdrawal of the Net Cash Surrender Value in excess of 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 to be deducted will be the same as the ratio of the
amount of the withdrawal 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. 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 10% 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
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. As noted under
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<PAGE> 48
Insurance Benefit "Can The Face Amount Of A Policy Be Changed?" 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 as 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.
What Are The Monthly Deductions?
On the policy date and at the beginning of each policy month, a deduction is due
from the Policy Value to cover certain charges in connection with the Policy.
Monthly deductions due prior to the effective date will be taken on the
effective date instead of the dates they were due. The charges consist of (i) a
monthly administration charge, (ii) a monthly charge for the cost of insurance,
and (iii) a monthly charge for any supplementary benefits added to the Policy
(see Other Provisions "What Supplementary Benefits Are Available?"). The monthly
deduction will be allocated among the Investment Accounts and the Guaranteed
Interest Account in the same proportion as the Policy Value in each bears to the
Net Policy Value.
The monthly administration charge is $6.00. The charge is designed to cover
certain administrative expenses associated with the Policy, including
maintaining policy records, collecting premiums and processing death claims,
surrender and withdrawal requests and various changes permitted under a Policy.
Manufacturers Life of America does not expect to recover from the monthly
administration charge any amount in excess of its accumulated administrative
expenses relating to the Policies and the Separate Account. Even though
administrative expenses may increase, the Company guarantees that it will not
increase the amount of the monthly administration charge.
The monthly charge for the cost of insurance is determined by multiplying the
applicable 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), 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 cost of insurance charges (see "Are There Special Provisions For
Group Or Sponsored Arrangements?"), the face amount of the Policy. See Other
Matters Legal Considerations. 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
lives insured. 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 is
imposed because of an additional rating applicable to the life insured or if
simplified underwriting is granted in a group or sponsored arrangement (see "Are
38
<PAGE> 49
There Special Provisions For Group Or Sponsored Arrangements?"). The guaranteed
rates are based on the 1980 Commissioners Standard Ordinary Smoker/Nonsmoker
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 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 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 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.
Are There 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. As noted
previously, the minimum face amount and minimum change in face amount are
reduced to $10,000 and $5,000, respectively, for Policies issued pursuant to
such arrangements. 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. In California all participants of group
arrangements will be individually underwritten. 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, surrender charges, and other charges
described above may be reduced for Policies issued in connection with group or
sponsored arrangements. Such arrangements may include sales without withdrawal
39
<PAGE> 50
charges and deductions to employees, officers, directors, agents, immediate
family members of the foregoing, and employees of agents of Manufacturers Life
and its subsidiaries. In addition, pursuant to an exemptive order granted by the
SEC on April 10, 1996, Manufacturers Life of America may issue Policies in group
or sponsored arrangements which Policies have a surrender charge structure which
increases over the life of the Policy. Manufacturers Life of America will issue
these Policies 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.
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. In addition, groups or persons purchasing under a
sponsored arrangement may request increases and decreases in face amount at any
time after issue and decreases in face amount at any time after an increase in
face amount. Increases in face amount requested by groups or persons purchasing
under a sponsored arrangement are not subject to a minimum amount. Decreases in
face amount may involve imposition of a surrender charge.
Are There Special Provisions For 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 described in this prospectus. A portion
of the cash values transferred from such policies will be credited to the
Policies without deduction of the 3% 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. Policyowners considering an exchange should consult their tax advisers
as to the tax consequences of an exchange.
Manufacturers Life of America has obtained an order from the Securities and
Exchange Commission dated November 28, 1990 pursuant to which holders of
Manufacturers Life of America's scheduled premium variable life ("Director
2000") insurance policies may elect to exchange those policies for the Policies
40
<PAGE> 51
described in this prospectus (the "Exchange Offer").
The terms and conditions under which Director 2000 policyowners may exchange
their policies for the Policies differ from the terms and conditions set forth
in this prospectus and are available only to Director 2000 policyowners who
accept the Exchange Offer.
Those Director 2000 policyowners who accept the Exchange Offer will be able to
exchange their existing policies for Policies of like face amount without any
new evidence of insurability. No direct or deferred sales charge will be imposed
on the cash values rolled over into the Policy. No deferred sales charges or
underwriting charges will be imposed on surrenders of Policies acquired through
this Exchange Offer except in connection with premium payments attributable to
an increase in face amount. Increases in the face amount of a Policy issued
pursuant to the Exchange Offer will be permitted one month after issuance. In
addition, a Policy may be issued with a face amount less than $25,000 if issued
pursuant to the Exchange Offer.
What Are The Risk Charges Assessed Against Separate Account Assets?
Manufacturers Life of America makes a daily charge to the Separate Account for
the mortality and expense risks it assumes under the Policies. This charge is
made each Business Day at an annual rate of .65% of the value of the Separate
Account's assets. 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. Manufacturers Life of America will realize a gain
from this charge to the extent it is not needed to provide benefits and pay
expenses under the Policies.
Are There Other Relevant Charges?
Currently, Manufacturers Life of America makes no charge against the Separate
Account for federal, state or local taxes that may be attributable to the
Separate Account or to the operations of the Company with respect to the
Policies. However, if Manufacturers Life of America incurs any such taxes, it
may make a charge or establish a provision for those taxes.
Charges will be imposed on certain transfers of Policy Values, including a $15
charge for each Asset Allocation Balancer transfer and a $5 charge for each
Dollar Cost Averaging transfer when Policy Value does not exceed $15,000. See
Policy Values "Transfers Of Policy Value."
The Separate Account purchases shares of the Portfolios at net asset value. The
net asset value of those shares reflects:
For the Manulife Funds:
(i) an investment management fee equivalent to an annual rate of .50% of
the value of the average daily net assets of the Emerging Growth
Equity Fund, Common Stock Fund, Real Estate Securities Fund, Balanced
Assets Fund, Capital Growth Bond Fund and Money-Market Fund;
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<PAGE> 52
(ii) an investment management fee equivalent to an annual rate of (a) .85%
of the value of the first $100 million of average daily net assets
and (b) .70% of the value of the average daily net assets over $100
million of each of the International Fund and the Pacific Rim
Emerging Markets Fund;
(iii) an investment management fee equivalent to an annual rate of .25% of the
average of daily net assets of the Equity Index Fund,
(iv) expenses of up to .50% and .65% per annum assessed against the assets of
the International Fund and the Pacific Rim Emerging Markets Fund,
respectively; and
(v) expenses of up to .15% per annum assessed against the assets of the
Equity Index Fund; and
(vi) other expenses already deducted from the assets of the Manulife Funds.
For the NASL Trusts:
(i) investment management fee equivalent to an annual rate of .80% of the
value of the average daily net assets of the Value Equity Trust;
(ii) investment management fee equivalent to an annual rate of .65% of the
value of the average daily net assets of the U.S. Government Securities
Trust;
(iii) investment management fee equivalent to an annual rate of .75% of the
value of the average daily net assets of the Growth and Income Trust;
(iv) investment management fee equivalent to an annual rate of .75% of the
value of the average daily net assets of the Equity Trust;
(v) investment management fee equivalent to an annual rate of .75% of the
average daily net assets of the Conservative Asset Allocation Trust;
(vi) investment management fee equivalent to an annual rate of .75% of the
average daily net assets of the Moderate Asset Allocation Trust;
(vii) investment management fee equivalent to an annual rate of .75% of the
average daily net assets of the Conservative Asset Allocation Trust;
(viii) expenses of up to .50% per annum assessed against the assets of each of
the NASL Trusts; and
(ix) other expenses already deducted from the assets of the NASL Trusts.
Detailed information concerning such fees and expenses is set forth under the
caption "Management Of The Funds" in the Prospectus for the Manulife Series Fund
that accompanies this Prospectus and under the caption "Management of The Trust"
in the Prospectus for the NASL Series Trust that accompanies this Prospectus.
The General Account
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<PAGE> 53
By virtue of exclusionary provisions, interests in the general account of
Manufacturers Life of America 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 general
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 general account.
Disclosures regarding the general 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 a prospectus.
What Is The General Account?
The general account of Manufacturers Life of America consists of all assets
owned by the Company other than those in the Separate Account and other separate
accounts of the Company. Subject to applicable law, Manufacturers Life of
America has sole discretion over the investment of the assets of the general
account.
A policyowner may elect to allocate net premiums to the Guaranteed Interest
Account or to transfer all or a portion of the Policy Value to the Guaranteed
Interest Account from the Investment Accounts. Manufacturers Life of America
will hold the reserves required for any portion of the Policy Value allocated to
the Guaranteed Interest Account in its general account. However, an allocation
of Policy Value to the Guaranteed Interest Account does not entitle the
policyowner to share in the investment experience of the general account.
Instead, Manufacturers Life of America guarantees that the Policy Value in the
Guaranteed Interest Account will accrue interest daily at an effective annual
rate of at least 4%, without regard to the actual investment experience of the
general account. Consequently, if a policyowner pays the planned premiums,
allocates all net premiums only to the general account and makes no transfers,
partial withdrawals, or policy loans, the minimum amount and duration of his or
her death benefit will be determinable and guaranteed. Transfers from the
Guaranteed Interest Account to the Investment Accounts are subject to
restrictions (see Policy Values "What Is The Policy Value And How Is It
Determined?").
The Policy Value in the Guaranteed Interest Account is equal to the portion of
the net premiums allocated to it, plus any amounts transferred to it and
interest credited to it minus any charges deducted from it or partial
withdrawals or amounts transferred from it. Manufacturers Life of America
guarantees that the interest credited to the Policy Value in the Guaranteed
Interest Account will not be less than an effective annual rate of 4%. The
Company may, at its sole discretion, credit a higher rate of interest, although
it is not obligated to do so. The policyowner assumes the risk that interest
credited may not exceed the guaranteed minimum rate of 4% per year.
Other Provisions
What Supplementary Benefits Are Available?
Subject to certain requirements, one or more supplementary benefits may be added
to a Policy, including those providing term insurance for various persons,
guaranteeing insurability, providing accidental death coverage, waiving monthly
43
<PAGE> 54
deductions upon disability, guaranteeing the Policy Value and, in the case of
corporate-owned Policies, permitting a change of the life insured. The guarantee
of Policy Value is a supplementary benefit which guarantees that at the life
insured's age 65 the Policy Value will at least equal the value that would have
accumulated if all net premiums had been allocated to the Guaranteed Interest
Account with interest credited at an effective annual rate of 5.5% and maximum
charges for cost of insurance and supplementary benefits, where appropriate.
This supplementary benefit must be made a part of the Policy at issue, and the
minimum premium requirement of the Policy must be satisfied at all times for the
guarantee to remain in effect. The cost of the benefit for each $1,000 of face
amount ranges from 1 cent to 4 cents per month, depending on the current age of
the life insured. More detailed information concerning this and other
supplementary benefits may be obtained from an authorized agent of the Company.
The cost of any supplementary benefits will be deducted as part of the monthly
deduction. See Charges "What Are The Monthly Deductions?"
Under What Circumstances May Fund Shares Be Substituted?
Although Manufacturers Life of America believes it to be highly unlikely, it is
possible that in the judgment of its management, one or more of the Funds may
become unsuitable for investment by the Separate Account because of a change in
investment policy or a change in the applicable laws or regulations, because the
shares are no longer available for investment, or for some other reason. In that
event, Manufacturers Life of America may seek to substitute the shares of
another Fund or of an entirely different mutual fund. Before this can be done,
the approval of the S.E.C. and one or more state insurance departments may be
required.
Manufacturers Life of America also reserves the right to combine other separate
accounts with the Separate Account, to establish additional sub-accounts within
the Separate Account, to operate the Separate Account as a management investment
company or other form permitted by law, and to de-register the Separate Account
under the 1940 Act. Any such change would be made only if permissible under
applicable federal and state law.
The investment objective of the Separate Account will not be changed materially
without the approval of the Insurance Commissioner of the Commonwealth of
Pennsylvania. Policyowners will be advised of any such change at the time it is
made.
What Are The Other General Policy Provisions?
Beneficiary. One or more beneficiaries of the Policy may be appointed by the
policyowner by naming them in the application. Beneficiaries may be appointed in
three classes primary, secondary and final. There after the beneficiary may be
changed by the policyowner during the life insured's lifetime by giving written
notice to Manufacturers Life of America in a form satisfactory to it unless an
irrevocable designation has been elected. If the life insured dies and there is
no surviving beneficiary, the policyowner, or the policyowner's estate if the
policyowner is the life insured, will be the beneficiary. If a beneficiary dies
before the seventh day after the death of the life insured, the Company will pay
the insurance benefit as if the beneficiary had died before the life insured.
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<PAGE> 55
Incontestability. Manufacturers Life of America will not contest the validity of
a Policy after it has been in force during the life insured's lifetime for two
years from the policy date. It will not contest the validity of an increase in
face amount or the addition of a supplementary benefit after such increase or
addition has been in force during the life insured's lifetime for two years. If
a Policy has been reinstated and been in force for less than two years from the
reinstatement date, the Company can contest any misrepresentation of a fact
material to the reinstatement.
Misstatement Of Age Or Sex. 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.
Suicide Exclusion. 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 deduction for the increase.
Assignment. Manufacturers Life of America will not be bound by an assignment
until it receives a copy of it at its Service Office. Manufacturers Life of
America assumes no responsibility for the validity or effects of any assignment.
When Are Proceeds Paid?
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 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.
What Reports Will Be Sent To Policyowners?
Within 30 days after each policy anniversary, Manufacturers Life of America will
send the policyowner a statement showing, among other things, the amount of the
death benefit, the Policy Value and its allocation among the Investment
Accounts, the Guaranteed Interest Account and the Loan Account, the value of the
units in each Investment Account to which the Policy Value is allocated, any
Loan Account balance and any interest charged since the last report, the
premiums paid and policy transactions made during the period since the last
statement and any other information required by law.
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<PAGE> 56
Each policyowner will also be sent an annual and a semi-annual report for the
Series Fund which will include a list of the securities held in each Fund as
required by the 1940 Act.
Other Matters
What Is The Federal Tax Treatment Of Policies?
The following summary provides a general description of the federal income tax
considerations associated with the Policy and does not purport to be complete or
to cover all situations. This discussion is not intended as tax advice. Counsel
or other competent tax advisers should be consulted for more complete
information. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service (the "Service"). No representation is made as to the
likelihood of continuation of the present federal income tax laws nor of the
current interpretations by the Service. WE DO NOT MAKE ANY GUARANTEE REGARDING
THE TAX STATUS OF ANY POLICY OR ANY TRANSACTION REGARDING THE POLICIES.
The Policies may be used in various arrangements, including non-qualified
deferred compensation or salary continuance plans, split dollar insurance plans,
executive bonus plans, retiree medical benefit plans and others. The tax
consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if the use of such
Policies in any such arrangement, the value of which depends in part on tax
consequences, is contemplated, a qualified tax adviser should be consulted for
advice on the tax attributes of the particular arrangement.
Tax Status Of The Policy
Section 7702 of the Internal Revenue Code of 1986, as amended (the "Code") sets
forth a definition of a life insurance contract for federal tax purposes. The
Secretary of Treasury (the "Treasury") is authorized to prescribe regulations
implementing Section 7702. However, while proposed regulations and other interim
guidance have been issued, final regulations have not been adopted and guidance
as to how Section 7702 is to be applied is limited. If a Policy were determined
not to be a life insurance contract for purposes of Section 7702, such Policy
would not provide the tax advantages normally provided by a life insurance
policy.
With respect to a Policy issued on the basis of a standard rate class, the
Company believes (largely in reliance on IRS Notice 88-128 and the proposed
mortality charge regulations under Section 7702, issued on July 5, 1991) that
such a Policy should meet the Section 7702 definition of a life insurance
contract.
With respect to a Policy that is issued on a substandard basis (i.e., a premium
class involving higher-than-standard mortality risk), there is less guidance, in
particular as to how mortality and other expense requirements of Section 7702
are to be applied in determining whether such a Policy meets the Section 7702
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<PAGE> 57
definition of a life insurance contract. Thus, it is not clear whether or not
such a Policy would satisfy Section 7702, particularly if the policyowner pays
the full amount of premiums permitted under the Policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
the Company may take whatever steps are appropriate and reasonable to attempt to
cause such a Policy to comply with Section 7702. For these reasons, the Company
reserves the right to restrict Policy transactions as necessary to attempt to
qualify it as a life insurance contract under Section 7702.
Section 817(h) of the Code requires that the investments of the Separate Account
be "adequately diversified" in accordance with Treasury regulations in order for
the Policy to qualify as a life insurance contract under Section 7702 of the
Code (discussed above). The Separate Account, through the Series Fund, intends
to comply with the diversification requirements prescribed in Treas. Reg.
Sec.1.817-5, which affect how the Series Fund's assets are to be invested. The
Company believes that the Separate Account will thus meet the diversification
requirement, and the Company will monitor continued compliance with the
requirement.
In certain circumstances, owners of variable life insurance Policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their Policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policyowner's gross income. The IRS has stated in published rulings that a
variable policyowner will be considered the owner of separate account assets if
the policyowner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury Department
has also announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor (i.e., the policyowner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyowners may direct their
investments to particular subaccounts without being treated as owners of the
underlying assets."
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyowners were not owners of separate account assets. For example, the
owner has additional flexibility in allocating premium payments and Policy
Values. These differences could result in an owner being treated as the owner of
a pro rata portion of the assets of the Separate Account. In addition, the
Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The Company therefore reserves the right to modify the Policy as
necessary to attempt to prevent an owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
The following discussion assumes that the Policy will qualify as a life
insurance
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<PAGE> 58
contract for federal income tax purposes.
What Is The Tax Treatment Of Policy Benefits?
In General. The Company believes that the proceeds and cash value increases of a
Policy should be treated in a manner consistent with a fixed-benefit life
insurance policy for federal income tax purposes. Thus, the death benefit under
the Policy should be excludable from the gross income of the beneficiary under
Section 101(a)(1) of the Code.
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's death benefit option, a Policy loan, a partial withdrawal, a surrender,
a change in ownership, a change of insured, the addition of an accelerated death
benefit rider, or an assignment of the Policy may have federal income tax
consequences. In addition, federal, state and local transfer, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each policyowner or beneficiary.
Generally, the policyowner will not be deemed to be in constructive receipt of
the Policy Value, including increments thereof, until there is a distribution.
The tax consequences of distributions from, and loans taken from or secured by,
a Policy depend on whether the Policy is classified as a "Modified Endowment
Contract." Upon a complete surrender or lapse of a Policy or when benefits are
paid at a Policy's maturity date, if the amount received plus the amount of
indebtedness exceeds the total investment in the Policy, the excess will
generally be treated as ordinary income subject to tax, regardless of whether
the Policy is or is not a Modified Endowment Contract.
Modified Endowment Contracts. Section 7702A establishes a class of life
insurance contracts designated as "Modified Endowment Contracts," which applies
to Policies entered into or materially changed after June 20, 1988.
Because of the Policy's flexibility, classification as a Modified Endowment
Contract will depend on the individual circumstances of each Policy. In general,
a Policy will be a Modified Endowment Contract if the accumulated premiums paid
at any time during the first seven policy years exceed the sum of the net level
premiums which would have been paid on or before such time if the Policy
provided for paid-up future benefits after the payment of seven level annual
premiums. The determination of whether a Policy will be a Modified Endowment
Contract after a material change generally depends upon the relationship of the
death benefit and Policy Value at the time of such change and the additional
premiums paid in the seven years following the material change. If a premium is
credited or transaction conducted which would cause the Policy to become a
Modified Endowment Contract, the Company will notify the policyowner that unless
a refund of the excess premium is requested by the policyowner within 45 days of
the policy anniversary next occurring, thereafter the Policy will become a
Modified Endowment Contract.
Further, if a transaction occurs which reduces the face amount of the Policy,
the Policy will be retested, retroactive to the date of purchase, to determine
compliance with the seven-pay test based on the lower face amount. Failure to
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<PAGE> 59
comply would result in classification as a Modified Endowment Contract
regardless of any efforts by the Company to provide a payment schedule that will
not violate the seven-pay test.
The rules relating to whether a Policy will be treated as a Modified Endowment
Contract are extremely complex and cannot be adequately described in the limited
confines of this summary. Therefore, a current or prospective policyowner should
consult with a competent adviser to determine whether a transaction will cause
the Policy to be treated as a Modified Endowment Contract.
Distributions From Policies Classified As Modified Endowment Contracts. Policies
classified as Modified Endowment Contracts will be subject to the following tax
rules: First, all partial withdrawals from such a Policy are treated as ordinary
income subject to tax up to the amount equal to the excess (if any) of the
Policy Value immediately before the distribution over the investment in the
Policy (described below) at such time. Second, loans taken from or secured by
such a Policy are treated as partial withdrawals from the Policy and taxed
accordingly. Past-due loan interest that is added to the loan amount is treated
as a loan. Third, a 10% additional income tax is imposed on the portion of any
distribution (including distributions upon surrender) from, or loan taken from
or secured by, such a Policy that is included in income except where the
distribution or loan is made on or after the policyowner attains age 59 1/2, is
attributable to the policyowner's becoming disabled, or is part of a series of
substantially equal periodic payments for the life (or life expectancy) of the
policyowner or the joint lives (or joint life expectancies) of the policyowner
and the policyowner's beneficiary.
Distributions From Policies Not Classified As Modified Endowment Contracts. A
distribution from a Policy that is not a Modified Endowment Contract is
generally treated as a tax-free recovery by the policyowner of the investment in
the Policy (described below) to the extent of such investment in the Policy, and
as a distribution of taxable income only to the extent the distribution exceeds
the investment in the Policy. An exception to this general rule occurs in the
case of a decrease in the Policy's death benefit or any other change that
reduces benefits under the Policy in the first 15 years after the Policy is
issued and that results in a cash distribution to the policyowner in order for
the Policy to continue complying with the Section 7702 definitional limits. Such
a cash distribution will be taxed in whole or in part as ordinary income (to the
extent of any gain in the Policy) under rules prescribed in Section 7702.
Loans from, or secured by, a Policy that is not a Modified Endowment Contract
are not treated as distributions. Instead, such loans are treated as
indebtedness of the policyowner. Select Loans may, however, be treated as a
distribution.
Finally, neither distributions (including distributions upon surrender) nor
loans from, or secured by, a Policy that is not a Modified Endowment Contract
are subject to the 10% additional tax.
Policy Loan Interest. Generally, personal interest paid on any loan under a
Policy which is owned by an individual is not deductible. In addition, interest
on any loan under a Policy owned by a taxpayer and covering the life of any
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individual who is an officer or employee of or is financially interested in the
business carried on by that taxpayer will not be tax deductible to the extent
the aggregate amount of such loans with respect to contracts covering such
individual exceeds $50,000. The deduction of interest on Policy loans may also
be subject to other restrictions under Section 264 of the Code.
Investment In The Policy. Investment in the Policy means (i) the aggregate
amount of any premiums or other consideration paid for a Policy, minus (ii) the
aggregate amount received under the Policy which has been excluded from gross
income of the policyowner (except that the amount of any loan from, or secured
by, a Policy that is a Modified Endowment Contract, to the extent such amount
has been excluded from gross income, will be disregarded), plus (iii) the amount
of any loan from, or secured by, a Policy that is a Modified Endowment Contract
to the extent that such amount has been included in the gross income of the
policyowner.
Multiple Policies. All Modified Endowment Contracts that are issued by the
Company (or its affiliates) to the same policyowner during any calendar year are
treated as one Modified Endowment Contract for purposes of determining the
amount includible in the gross income under Section 72(e) of the Code.
What Are The Company's Tax Considerations?
As a result of the Omnibus Budget Reconciliation Act of 1990, insurance
companies are generally required to capitalize and amortize certain policy
acquisition expenses over a 10-year period rather than currently deducting such
expenses. This treatment applies to the deferred acquisition expenses of a
Policy and results in a significantly higher corporate income tax liability for
the Company.
At the present time, the Company makes no charge to the Separate Account for any
federal, state or local taxes that the Company incurs that may be attributable
to such Account or to the Policies. The Company, however, reserves the right in
the future to make a charge for any such tax or other economic burden resulting
from the application of the tax laws that it determines to be properly
attributable to the Separate Account or to the Policies.
Who Sells The Policies And What Are The Sales Commissions?
ManEquity, Inc., an indirect wholly-owned subsidiary of Manufacturers Life, will
act as the principal underwriter of, and continuously offer, the Policies
pursuant to a Distribution Agreement with Manufacturers Life of America.
ManEquity, Inc. is registered as a broker-dealer under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities Dealers.
The Policies will be sold by registered representatives of either ManEquity,
Inc. or other broker-dealers having distribution agreements with ManEquity, Inc.
who are also authorized by state insurance departments to do so. A registered
representative will receive first-year commissions not to exceed 50% of premiums
paid up to the "target commissionable premium," commissions of 3% of premiums in
excess thereof and, on and after the third anniversary, 0.15% of the Policy
Value per annum. In addition, representatives may be eligible for bonuses of up
to 90% of first-year commissions. Representatives who meet certain productivity
standards with regard to the sale of the Policies and certain other policies
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issued by Manufacturers Life of America or Manufacturers Life will be eligible
for additional compensation.
What Responsibilities Has Manufacturers Life Assumed?
Manufacturers Life has entered into an agreement with ManEquity, Inc. pursuant
to which Manufacturers Life, on behalf of ManEquity, Inc., will pay the sales
commissions in respect of the Policies and certain other policies issued by
Manufacturers Life of America, prepare and maintain all books and records
required to be prepared and maintained by ManEquity, Inc. with respect to the
Policies and such other policies, and send all confirmations required to be sent
by ManEquity, Inc. with respect to the Policies and such other policies.
ManEquity, Inc. will promptly reimburse Manufacturers Life for all sales
commissions paid by Manufacturers Life and will pay Manufacturers Life for its
other services under the agreement in such amounts and at such times as agreed
to by the parties.
Manufacturers Life has also entered into a Service Agreement with Manufacturers
Life of America pursuant to which Manufacturers Life will provide to
Manufacturers Life of America in Toronto, Ontario, Canada all issue,
administrative, general services and recordkeeping functions on behalf of
Manufacturers Life of America with respect to all of its insurance policies
including the Policies.
Finally, Manufacturers Life has entered into a Stoploss Reinsurance Agreement
with Manufacturers Life of America under which Manufacturers Life reinsures all
aggregate claims in excess of 110% of the expected claims for all Flexible
Premium Variable Life Insurance Policies. Under the agreement Manufacturers Life
will automatically reinsure the risk for any one life up to a maximum of
$7,500,000, except in the case of aviation risks where the maximum will be
$5,000,000. However, Manufacturers Life may also consider reinsuring any
non-aviation risk in excess of $7,500,000 and any aviation risk in excess of
$5,000,000.
What Are The Voting Rights?
As stated above, all of the assets held in the sub-accounts of the Separate
Account will be invested in shares of a particular Portfolio of Manulife Series
Fund or NASL Series Trust. Manufacturers Life of America is the legal owner of
those shares and as such has the right to vote upon certain matters that are
required by the 1940 Act to be approved or ratified by the shareholders of a
mutual fund and to vote upon any other matters that may be voted upon at a
shareholders' meeting. However, Manufacturers Life of America will vote shares
held in the sub-accounts in accordance with instructions received from
policyowners having an interest in such sub-accounts. Shares held in each
sub-account for which no timely instructions from policyowners are received,
including shares not attributable to Policies, will be voted by Manufacturers
Life of America in the same proportion as those shares in that sub-account for
which instructions are received. Should the applicable federal securities laws
or regulations change so as to permit Manufacturers Life of America to vote
shares held in the Separate Account in its own right, it may elect to do so.
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The number of shares in each sub-account for which instructions may be given by
a policyowner is determined by dividing the portion of the Policy Value derived
from participation in that sub-account, if any, by the value of one share of the
corresponding Manulife Fund or NASL Trust. The number will be determined as of a
date chosen by Manufacturers Life of America, but not more than 90 days before
the shareholders' meeting. Fractional votes are counted. Voting instructions
will be solicited in writing at least 14 days prior to the meeting.
Manufacturers Life of America may, if required by state insurance officials,
disregard voting instructions if such instructions would require shares to be
voted so as to cause a change in the sub-classification or investment policies
of one or more of the Portfolios, or to approve or disapprove an investment
management contract. In addition, Manufacturers Life of America itself may
disregard voting instructions that would require changes in the investment
policies or investment adviser, provided that Manufacturers Life of America
reasonably disapproves such changes in accordance with applicable federal
regulations. If Manufacturers Life of America does disregard voting
instructions, it will advise policyowners of that action and its reasons for
such action in the next communication to policyowners.
Who Are The Directors And Officers Of Manufacturers Life of America?
The directors and executive officers of Manufacturers Life of America, together
with their principal occupations during the past five years, are as follows:
<TABLE>
<CAPTION>
Position With
Manufacturers Life
Name of America Principal Occupation
<S> <C> <C>
William Atherton Director Vice President U.S. Annuities
(57) -- 1996-present, The
Manufacturers Life Insurance
Company; President -- 1957-1996,
North American Life Assurance
Company
Sandra M. Cotter Director Attorney 1989-present, Dykema
(34) Gossett
James D. Gallagher Director, Secretary, Vice President, Legal Services
(42) and General Counsel --January 1996-present, The
Manufacturers Life Insurance
Company; Vice President,
Secretary and General Counsel--
1994-present, North American
Security Life; Vice President
and Associate General Counsel--
1991-1994, The Prudential
Insurance Company of America
</TABLE>
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<PAGE> 63
<TABLE>
<CAPTION>
Position With
Manufacturers Life
Name of America Principal Occupation
<S> <C> <C>
Bruce Gordon Director Vice President, U.S. Operations
(53) - Pensions -- 1990-present, The
Manufacturers Life Insurance
Company
Donald A. Guloien Director and President Senior Vice President, Business
(39) Development 1994-present, The
Manufacturers Life Insurance
Company; Vice President, U.S.
Individual Business -- 1990-1994,
The Manufacturers Life Insurance
Company
Theodore Kilkuskie, Jr. Director Vice President, U.S. Individual
(41) Insurance -- June 1995-present,
The Manufacturers Life Insurance
Company; Executive Vice President,
Mutual Funds -- January 1995-May 1995,
State Street Research; Vice President,
Mutual Funds -- 1987-1994, Metropolitan
Life Insurance Company
Joseph J. Pietroski Director Senior Vice President, General
(58) Counsel and Corporate Secretary --
1988-present, The Manufacturers
Life Insurance Company
John D. Richardson Chairman and Director Senior Vice President and General
(58) Manager, U.S. Operations
1995-present, The Manufacturers
Life Insurance Company; Senior
Vice President and General
Manager, Canadian Operations
1992-1994, The Manufacturers Life
Insurance Company; Senior Vice
President, Financial Services
1992, The Manufacturers Life
Insurance Company; Executive Vice
Chairman and CFO -- 1989-1991,
Canada Trust
John R. Ostler Vice President, Chief Financial Vice President -- 1992-
(43) Actuary and Treasurer present, The Manufacturers Life
Insurance Company; Vice President,
Insurance Products -- 1990-1992,
The Manufacturers Life Insurance
Company
</TABLE>
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<PAGE> 64
<TABLE>
<CAPTION>
Position With
Manufacturers Life
Name of America Principal Occupation
<S> <C> <C>
Douglas H. Myers Vice President, Assistant Vice President and
(42) Finance and Compliance Controller, U.S. Operations --
Controller 1988-present, The Manufacturers
Life Insurance Company
Hugh McHaffie Vice President Vice President & Product Actuary --
(37) June 1990-present, North American
Security Life
</TABLE>
What State Regulations Apply?
Manufacturers Life of America is subject to regulation and supervision by the
Michigan Department of Insurance, which periodically examines its financial
condition and operations. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business. The
Policies have been filed with insurance officials, and meet all standards set by
law, in each jurisdiction where they are sold.
Manufacturers Life of America is required to submit annual statements of its
operations, including financial statements, to the insurance departments of the
various jurisdictions in which it does business for the purposes of determining
solvency and compliance with local insurance laws and regulations.
Is There Any Litigation Pending?
No litigation is pending that would have a material effect upon the Separate
Account or the Series Fund.
Where Can Further Information Be Found?
A registration statement under the Securities Act of 1933 has been filed with
the S.E.C. relating to the offering described in this prospectus. This
prospectus does not include all the information set forth in the registration
statement. The omitted information may be obtained from the S.E.C.'s principal
office in Washington, D.C. upon payment of the prescribed fee.
For further information you may also contact Manufacturers Life of America's
Service Office, the address and telephone number of which are on the first page
of this prospectus.
Legal Considerations
54
<PAGE> 65
On July 6, 1983, the Supreme Court of The United States held in Arizona
Governing Committee v. Norris that certain annuity benefits provided by
employers' retirement and fringe benefit programs may not, under Title VII of
the Civil Rights Act of 1964, vary between men and women. Unless requested by
the applicant, the Policy which will be issued by Manufacturers Life of America
will be based on actuarial tables which distinguish between men and women and
thus provide different benefits to men and women of the same age. Accordingly,
employers and employee organizations should consider, in consultation with legal
counsel, the effect of Norris or any other applicable law on any
employment-related insurance benefit program before purchasing a Policy. If
requested by the applicant, Manufacturers Life of America may offer the Policy
with provisions based on actuarial tables that do not differentiate on the basis
of sex to such prospective purchasers in states where the unisex version of the
Policy has been approved.
The State of Montana currently prohibits the use of actuarial tables that
distinguish between men and women in determining premiums and policy benefits
for policies issued on the life of any of its residents. Consequently, a Policy
will be issued pursuant to the offer contained in this prospectus to a Montana
resident having premiums and benefits which are based on actuarial tables that
do not differentiate on the basis of sex.
Legal Matters
The legal validity of the policies has been passed on by Stephen C. Nesbitt,
Esq., formerly Secretary and General Counsel of Manufacturers Life of America.
Jones & Blouch L.L.P., Washington D.C., has passed on certain matters relating
to the federal securities laws.
Experts
The financial statements of The Manufacturers Life Insurance Company of America
and of The Manufacturers Life Insurance Company of America Separate Account Four
appearing in this prospectus for the periods ending December 31 have been
audited by Ernst & Young LLP, independent auditors to the extent indicated in
their reports thereon also appearing elsewhere herein. Such financial statements
have been included herein in reliance upon such reports given upon the authority
of such firm as experts in auditing and accounting.
55
<PAGE> 66
FINANCIAL STATEMENTS
The financial statements of Manufacturers Life of America included herein should
be distinguished from the financial statements of the Account and should be
considered only as bearing upon the ability of Manufacturers Life of America to
meet its obligations under the Policies.
56
<PAGE> 67
Report of Independent Auditors
To the Board of Directors
The Manufacturers Life Insurance
Company of America
We have audited the statement of assets and liabilities of Separate Account
Four of The Manufacturers Life Insurance Company of America (comprising,
respectively, the Emerging Growth Equity Sub-Account, Common Stock Sub-Account,
Real Estate Securities Sub-Account, Balanced Assets Sub-Account, Capital Growth
Bond Sub-Account, Money Markets Sub-Account, International Sub-Account, and
Pacific Rim Emerging Markets Sub-Account) as of December 31, 1995 and the
related statement of operations for the year then ended, and the statements of
changes in net assets for each of the periods presented herein. These financial
statements are the responsibility of The Manufacturers Life Insurance Company of
America's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Separate Account Four of The
Manufacturers Life Insurance Company of America at December 31, 1995, and the
results of its operations for the year then ended and changes in its net assets
for each of the periods presented herein, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
February 2, 1996
57
<PAGE> 68
Separate Account Four of
The Manufacturers Life Insurance Company of America
Statement of Assets and Liabilities
December 31, 1995
<TABLE>
<CAPTION>
EMERGING COMMON REAL ESTATE
GROWTH EQUITY STOCK SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in Manulife Series Fund, Inc.--
at market value:
Emerging Growth Equity Fund,
2,259,310 shares (cost $43,821,087) $52,209,337
Common Stock Fund,
1,174,532 shares (cost $17,032,473) $20,283,176
Real Estate Securities Fund,
919,394 shares (cost $13,056,459) $13,885,851
Balanced Assets Fund,
2,284,961 shares (cost $34,437,481)
Capital Growth Bond Fund,
1,128,394 shares (cost $12,717,152)
Money Market Fund,
550,064 shares (cost $5,796,572)
International Fund,
169,513 shares (cost $1,698,017)
Pacific Rim Emerging Markets Fund,
134,397 shares (cost $1,277,433)
----------------------------------------------
52,209,337 20,283,176 13,885,851
Receivable (payable) for policy-related
transactions 54,898 3,134 (4,101)
==============================================
Net assets $52,264,235 $20,286,310 $13,881,750
==============================================
Units outstanding 1,007,406 742,544 520,501
==============================================
Net asset value per unit $ 51.88 $ 27.32 $ 26.67
==============================================
</TABLE>
See accompanying notes.
58
<PAGE> 69
<TABLE>
<CAPTION>
BALANCED CAPITAL
ASSETS GROWTH BOND MONEY MARKET INTERNATIONAL
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investment in Manulife Series Fund, Inc.--
at market value:
Emerging Growth Equity Fund,
2,259,310 shares (cost $43,821,087)
Common Stock Fund,
1,174,532 shares (cost $17,032,473)
Real Estate Securities Fund,
919,394 shares (cost $13,056,459)
Balanced Assets Fund,
2,284,961 shares (cost $34,437,481) $39,194,191
Capital Growth Bond Fund,
1,128,394 shares (cost $12,717,152) $12,746,903
Money Market Fund,
550,064 shares (cost $5,796,572) $5,962,404
International Fund,
169,513 shares (cost $1,698,017) $1,808,441
Pacific Rim Emerging Markets Fund,
134,397 shares (cost $1,277,433)
---------------------------------------------------------------
39,194,191 12,746,903 5,962,404 1,808,441
Receivable (payable) for policy-related
transactions 33,342 13,129 2,788 2,976
===============================================================
Net assets $39,227,533 $12,760,032 $5,965,192 $1,811,417
===============================================================
Units outstanding 1,700,370 649,696 404,694 168,347
===============================================================
Net asset value per unit $ 23.07 $ 19.64 $ 14.74 $ 10.76
===============================================================
</TABLE>
<TABLE>
<CAPTION>
PACIFIC RIM
EMERGING MARKETS
SUB-ACCOUNT TOTAL
-----------------------------------
<S> <C> <C>
ASSETS
Investment in Manulife Series Fund, Inc.--
at market value:
Emerging Growth Equity Fund,
2,259,310 shares (cost $43,821,087) $ 52,209,337
Common Stock Fund,
1,174,532 shares (cost $17,032,473) 20,283,176
Real Estate Securities Fund,
919,394 shares (cost $13,056,459) 13,885,851
Balanced Assets Fund,
2,284,961 shares (cost $34,437,481) 39,194,191
Capital Growth Bond Fund,
1,128,394 shares (cost $12,717,152) 12,746,903
Money Market Fund,
550,064 shares (cost $5,796,572) 5,962,404
International Fund,
169,513 shares (cost $1,698,017) 1,808,441
Pacific Rim Emerging Markets Fund,
134,397 shares (cost $1,277,433) $1,391,751 1,391,751
-----------------------------------
1,391,751 147,482,054
Receivable (payable) for policy-related
transactions (30) 106,136
===================================
Net assets $ 1,391,721 $147,588,190
===================================
Units outstanding 133,434
============
Net asset value per unit $ 10.43
============
</TABLE>
59
<PAGE> 70
Separate Account Four of
The Manufacturers Life Insurance Company of America
Statement of Operations
Year ended December 31, 1995
<TABLE>
<CAPTION>
EMERGING REAL ESTATE
GROWTH EQUITY COMMON STOCK SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-----------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividend income $1,225,634 $ - $ 226,773
Expenses:
Mortality and expense risks charge 270,835 105,143 78,656
--------------------------------------------
Net investment income (loss) 954,799 (105,143) 148,117
--------------------------------------------
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from security
transactions:
Proceeds from sales 2,832,896 1,361,365 1,615,880
Cost of securities sold 2,206,988 1,152,296 1,447,729
--------------------------------------------
Net realized gain (loss) 625,908 209,069 168,151
--------------------------------------------
Unrealized appreciation (depreciation)
of investments:
Beginning of year 111,061 (784,068) (567,347)
End of year 8,388,250 3,250,703 829,392
--------------------------------------------
Net unrealized appreciation
during the year 8,277,189 4,034,771 1,396,739
--------------------------------------------
Net realized and unrealized gain
on investments 8,903,097 4,243,840 1,564,890
--------------------------------------------
Net increase in net assets derived
from operations $9,857,896 $4,138,697 $1,713,007
============================================
</TABLE>
See accompanying notes.
60
<PAGE> 71
<TABLE>
<CAPTION>
BALANCED CAPITAL PACIFIC RIM
ASSETS GROWTH BOND MONEY MARKET INTERNATIONAL EMERGING MARKETS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 46,122 $ 886,880 $ 268 $ 42,811 $ 16,639 $ 2,445,127
Expenses:
Mortality and expense risks charge 212,093 68,677 36,426 7,535 5,651 785,016
----------------------------------------------------------------------------------------
Net investment income (loss) (165,971) 818,203 (36,158) 35,276 10,988 1,660,111
----------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from security
transactions:
Proceeds from sales 3,475,264 933,993 3,529,055 71,517 56,135 13,876,105
Cost of securities sold 3,283,870 952,316 3,419,405 69,179 56,923 12,588,706
----------------------------------------------------------------------------------------
Net realized gain (loss) 191,394 (18,323) 109,650 2,338 (788) 1,287,399
----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation)
of investments:
Beginning of year (2,255,674) (1,013,152) (31,424) (924) (5,485) (4,547,013)
End of year 4,756,710 29,751 165,832 110,424 114,318 17,645,380
----------------------------------------------------------------------------------------
Net unrealized appreciation
during the year 7,012,384 1,042,903 197,256 111,348 119,803 22,192,393
----------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 7,203,778 1,024,580 306,906 113,686 119,015 23,479,792
----------------------------------------------------------------------------------------
Net increase in net assets derived
from operations $ 7,037,807 $ 1,842,783 $ 270,748 $148,962 $130,003 $25,139,903
========================================================================================
</TABLE>
61
<PAGE> 72
Separate Account Four of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
EMERGING GROWTH COMMON STOCK REAL ESTATE SECURITIES
EQUITY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 954,799 $ (53,653) $ (105,143) $ 554,517 $ 148,117 $ 177,093
Net realized gain (loss) 625,908 259,712 209,069 92,981 168,151 108,207
Unrealized appreciation
(depreciation) of investments
during the period 8,277,189 (1,227,841) 4,034,771 (1,183,509) 1,396,739 (691,776)
--------------------------------------------------------------------------------------------
Increase (decrease) in net
assets derived from operations 9,857,896 (1,021,782) 4,138,697 (536,011) 1,713,007 (406,476)
--------------------------------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 15,756,405 14,531,343 5,345,309 5,946,303 4,283,407 4,968,671
Transfer of terminations (4,775,355) (2,706,223) (2,397,088) (1,073,532) (1,478,397) (931,394)
Transfer of policy loans (383,960) (308,656) (139,168) (97,701) (43,920) (85,424)
Net interfund transfers 808,068 322,712 601,941 (252,248) (1,220,289) 267,605
--------------------------------------------------------------------------------------------
11,405,158 11,839,176 3,410,994 4,522,822 1,540,801 4,219,458
--------------------------------------------------------------------------------------------
Net increase in net assets 21,263,054 10,817,394 7,549,691 3,986,811 3,253,808 3,812,982
NET ASSETS
Beginning of year 31,001,181 20,183,787 12,736,619 8,749,808 10,627,942 6,814,960
--------------------------------------------------------------------------------------------
End of year $ 52,264,235 $ 31,001,181 $ 20,286,310 $ 12,736,619 $ 13,881,750 $ 10,627,942
============================================================================================
</TABLE>
See accompanying notes.
62
<PAGE> 73
<TABLE>
<CAPTION>
BALANCED ASSETS CAPITAL GROWTH MONEY MARKET
SUB-ACCOUNT BOND SUB-ACCOUNT SUB-ACCOUNT
---------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (165,971) $ 1,257,677 $ 818,203 $ 492,509 $ (36,158) $ 120,825
Net realized gain (loss) 191,394 72,510 (18,323) (29,791) 109,650 11,641
Unrealized appreciation
(depreciation) of investments
during the period 7,012,384 (2,560,365) 1,042,903 (822,528) 197,256 (19,907)
---------------------------------------------------------------------------------------
Increase (decrease) in net
assets derived from operations 7,037,807 (1,230,178) 1,842,783 (359,810) 270,748 112,559
---------------------------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 10,932,103 11,014,712 3,119,374 3,088,112 2,577,889 2,895,838
Transfer of terminations (3,544,462) (3,111,863) (1,316,692) (628,592) (782,380) (1,071,814)
Transfer of policy loans (305,026) (287,843) (67,747) (55,847) (36,007) (42,089)
Net interfund transfers (1,831,364) (396,171) 730,548 (86,125) (642,476) (234,848)
---------------------------------------------------------------------------------------
5,251,251 7,218,835 2,465,483 2,317,548 1,117,026 1,547,087
---------------------------------------------------------------------------------------
Net increase in net assets 12,289,058 5,988,657 4,308,266 1,957,738 1,387,774 1,659,646
NET ASSETS
Beginning of year 26,938,475 20,949,818 8,451,766 6,494,028 4,577,418 2,917,772
---------------------------------------------------------------------------------------
End of year $ 39,227,533 $ 26,938,475 $ 12,760,032 $ 8,451,766 $ 5,965,192 $ 4,577,418
=======================================================================================
</TABLE>
63
<PAGE> 74
Separate Account Four of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets (continued)
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
INTERNATIONAL PACIFIC RIM EMERGING
SUB-ACCOUNT MARKETS SUB-ACCOUNT TOTAL
-------------------------------------------------------------------------------------------
YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC 31//95 DEC. 31/94 DEC. 31/95 DEC. 31/94
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 35,276 $ 533 $ 10,988 $ 572 $ 1,660,111 $ 2,550,073
Net realized gain (loss) 2,338 (215) (788) (31) 1,287,399 515,014
Unrealized appreciation
(depreciation) of investments
during the period 111,348 (924) 119,803 (5,485) 22,192,393 (6,512,335)
-------------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from operations 148,962 (606) 130,003 (4,944) 25,139,903 (3,447,248)
-------------------------------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 468,861 36,857 339,577 37,942 42,822,925 42,519,778
Transfer of terminations (114,292) (2,007) (84,460) (1,460) (14,493,126) (9,526,885)
Transfer of policy loans (8,567) - (7,956) - (992,351) (877,560)
Net interfund transfers 1,045,046 237,163 839,514 143,505 330,988 1,593
-------------------------------------------------------------------------------------------
1,391,048 272,013 1,086,675 179,987 27,668,436 32,116,926
-------------------------------------------------------------------------------------------
Net increase in net assets 1,540,010 271,407 1,216,678 175,043 52,808,339 28,669,678
NET ASSETS
Beginning of year 271,407 - 175,043 - 94,779,851 66,110,173
-------------------------------------------------------------------------------------------
End of year $ 1,811,417 $ 271,407 $ 1,391,721 $ 175,043 $ 147,588,190 $ 94,779,851
===========================================================================================
</TABLE>
*Reflects the period from commencement of operations October 4, 1994 through
December 31, 1994.
See accompanying notes.
64
<PAGE> 75
Separate Account Four of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
December 31, 1995
1. ORGANIZATION
Separate Account Four of The Manufacturers Life Insurance Company of America
(the "Separate Account") is a unit investment trust registered under the
Investment Company Act of 1940, as amended. The Separate Account is currently
comprised of eight investment sub-accounts, one for each series of shares of
Manulife Series Fund, Inc., available for allocation of net premiums under
variable universal life insurance policies (the "Policies") issued by The
Manufacturers Life Insurance Company of America ("Manufacturers Life of
America").
The Separate Account was established by Manufacturers Life of America, a
wholly-owned subsidiary of Manulife Reinsurance Corporation (U.S.A.) ("MRC"), as
a separate investment account on March 17, 1987. MRC is a life insurance holding
company organized in 1983 under Michigan law and a wholly-owned subsidiary of
The Manufacturers Life Insurance Company ("Manulife Financial"), a mutual life
insurance company based in Toronto, Canada.
The assets of the Separate Account are the property of Manufacturers Life of
America. The portion of the Separate Account's assets applicable to the Policies
will not be charged with liabilities arising out of any other business
Manufacturers Life of America may conduct.
The net assets may not be less than the amount required under state insurance
law to provide for death (without regard to the minimum death benefit guarantee)
and other Policy benefits.
Additional assets are held in Manufacturers Life of America's general account to
cover the contingency that the guaranteed minimum death benefit might exceed the
death benefit which would have been payable in the absence of such guarantee.
65
<PAGE> 76
Separate Account Four of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Separate Account in preparation of its financial statements.
a. Valuation of Investments - Investments are made among the eight Funds of
Manulife Series Fund, Inc. and are valued at the reported net asset values
of these Funds. Transactions are recorded on the trade date. Net investment
income and net realized and unrealized gain (loss) on investments in
Manulife Series Fund, Inc. are reinvested.
b. Realized gains and losses on the sale of investments are computed on the
first-in, first-out basis.
c. Dividend income is recorded on the ex-dividend date.
d. Federal Income Taxes - Manufacturers Life of America, the Separate
Account's sponsor, is taxed as a "life insurance company" under the
Internal Revenue Code. Under these provisions of the Code, the operations
of the Separate Account form part of the sponsor's total operations and are
not taxed separately.
The current year's operations of the Separate Account are not expected to
affect the sponsor's tax liabilities and, accordingly, no charges were made
against the Separate Account for federal, state and local taxes. However,
in the future, should the sponsor incur significant tax liabilities related
to Separate Account operations, it intends to make a charge or establish a
provision within the Separate Account for such taxes.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial state in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
66
<PAGE> 77
Separate Account Four of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. MORTALITY AND EXPENSE RISKS CHARGE
Manufacturers Life of America deducts from the assets of the Separate Account a
daily charge equivalent to an annual rate of 0.65% of the average net value of
the Separate Account's assets for mortality and expense risks.
4. PREMIUM DEDUCTIONS
Manufacturers Life of America deducts a sales charge of 3% and a charge of 2% to
cover state premium taxes from the gross single premium and any additional
premiums before placing the remaining net premiums in the sub-accounts.
5. PURCHASES AND SALES OF MANULIFE SERIES FUND, INC. SHARES
Purchases and sales of the shares of common stock of Manulife Series Fund, Inc.
for the year ended December 31, 1995 were $43,364,307 and $13,876,105,
respectively, and for the year ended December 31, 1994 were $41,461,367 and
$7,038,820, respectively.
6. RELATED PARTY TRANSACTIONS
ManEquity, Inc., a registered broker-dealer and indirect wholly-owned subsidiary
of Manulife Financial, acts as the principal underwriter of the Policies
pursuant to a Distribution Agreement with Manufacturers Life of America.
Registered representatives of either ManEquity, Inc. or other broker-dealers
having distribution agreements with ManEquity, Inc. who are also authorized as
variable life insurance agents under applicable state insurance laws, sell the
Policies. Registered representatives are compensated on a commission basis.
Manufacturers Life of America has a formal service agreement with its affiliate,
Manulife Financial, which can be terminated by either party upon two months'
notice. Under this Agreement, Manufacturers Life of America pays for legal,
actuarial, investment and certain other administrative services.
67
<PAGE> 78
Report of Independent Auditors
The Board of Directors
The Manufacturers Life Insurance
Company of America
We have audited the accompanying balance sheets of The Manufacturers Life
Insurance Company of America as of December 31, 1995 and 1994, and the related
statements of operations, changes in capital and surplus, and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Manufacturers Life
Insurance Company of America at December 31, 1995 and 1994, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles and with reporting practices prescribed or permitted by the Insurance
Department of the State of Michigan.
Philadelphia, Pennsylvania ERNST & YOUNG LLP
February 2, 1996
68
<PAGE> 79
The Manufacturers Life Insurance Company of America
Balance Sheets
<TABLE>
DECEMBER 31
1995 1994
-----------------------------
<S> <C> <C>
ASSETS
Bonds, at amortized cost (market $66,046,733--
1995 and $51,082,395--1994) $ 62,757,202 $ 52,149,080
Stocks 22,584,259 25,629,580
Short-term investments -- 10,914,561
Policy loans 6,955,292 4,494,390
------------ ------------
Total investments 92,296,753 93,187,611
Cash 9,674,362 5,069,197
Life insurance premiums deferred and uncollected 504,818 13,646
Accrued investment income 1,059,536 796,333
Separate account assets 480,404,450 302,736,198
Funds receivable on reinsurance assumed -- 880,284
Receivable for undelivered securities 146,328 69,003
Taxes recoverable 3,308,316 --
Investment in subsidiary 1,080,184 --
Other assets 267,015 333,651
------------ ------------
Total assets $588,741,762 $403,085,923
============ ============
LIABILITIES, CAPITAL AND SURPLUS
Aggregate policy reserves $26,683,090 $29,761,174
Other contract deposits 1,238,943 3,938,425
Interest maintenance and asset valuation reserves 4,742,400 111,566
Policy and contract claims 582,853 94,346
Provision for policyholder dividends payable 2,346,258 1,385,409
Amounts due to affiliates 9,049,217 7,377,108
Payable for undelivered securities 80,821 3,512,459
Accrued liabilities 7,315,315 4,773,565
Separate account liabilities 480,404,450 302,736,198
------------ ------------
Total liabilities 532,443,347 353,690,250
Capital and surplus:
Common shares, par value $1.00; authorized,
5,000,000 shares; issued and outstanding
4,501,857 shares (4,501,855 shares in 1994) 4,501,857 4,501,855
Preferred shares, par value $100; authorized
5,000,000 shares; issued and outstanding
105,000 shares 10,500,000 10,500,000
Surplus note 8,500,000 --
Capital paid in excess of par value 63,500,180 49,849,998
Deficit (30,703,622) (15,456,180)
------------ ------------
Total capital and surplus 56,298,415 49,395,673
------------ ------------
Total liabilities, capital and surplus $588,741,762 $403,085,923
============ ============
</TABLE>
See accompanying notes.
69
<PAGE> 80
The Manufacturers Life Insurance Company of America
Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
-----------------------------------------------
<S> <C> <C> <C>
Revenues:
Life and annuity premiums, principally
reinsurance assumed $5,956,997 $25,385,628 $12,745,981
Other life and annuity considerations 153,859,957 168,075,003 113,332,974
Investment income, net of investment
expenses 5,840,560 3,588,629 3,323,962
Amortization of interest maintenance reserve 23,975 19,527 32,866
Commission and expense allowance
on reinsurance ceded 147,109 187,694 --
Foreign exchange (loss) gain (284,127) 114,728 (197,971)
Other revenue 211,191 54,763 33,935
------------ ------------ ------------
Total revenues 165,755,662 197,425,972 129,271,747
Benefits paid or provided:
(Decrease) increase in aggregate policy reserves (3,078,084) 16,741,569 5,168,484
(Decrease) increase in liability for deposit funds (2,699,482) 654,214 2,820,520
Transfers to separate accounts, net 99,807,392 136,896,150 98,601,141
Death benefits 3,981,377 640,875 582,534
Disability benefits 123,786 -- --
Maturity benefits 207,719 580,615 79,253
Surrender benefits 22,028,224 3,701,591 2,319,926
------------ ------------ ------------
120,370,932 159,215,014 109,571,858
Insurance expenses:
Management fee 22,864,000 21,222,310 12,378,288
Commissions 21,411,198 23,416,110 14,742,130
General expenses 15,475,621 8,260,467 5,108,104
Commissions and expense allowances
on reinsurance assumed 1,014,163 810,252 329,634
------------ ------------ ------------
60,764,982 53,709,139 32,558,156
------------ ------------ ------------
Loss before policyholders' dividends
and federal income tax (15,380,252) (15,498,181) (12,858,267)
Dividends to policyholders 2,367,002 1,149,719 837,454
------------ ------------ ------------
Loss before federal income tax (17,747,254) (16,647,900) (13,695,721)
Federal income tax benefit (4,115,770) -- (324,643)
------------ ------------ ------------
Net loss from operations after policyholders'
dividends and federal income tax (13,631,484) (16,647,900) (13,371,078)
Net realized capital gains (net of capital
gains tax of $807,453 in 1995; $0 in 1994,
and $236,415 in 1993, and $1,567,770 in
1995, $(554,000) in 1994, and $347,292 in
1993 transferred (from) to the interest
maintenance reserve) (73,343) (3,012,485) 93,618
------------ ------------ ------------
Net loss from operations $(13,704,827) $(19,660,385) $(13,277,460)
============ ============ ============
</TABLE>
See accompanying notes.
70
<PAGE> 81
The Manufacturers Life Insurance Company of America
Statements of Changes in Capital and Surplus
<TABLE>
<CAPTION>
CAPITAL
PAID IN
EXCESS OF SURPLUS
CAPITAL PAR VALUE (DEFICIT) TOTAL
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1992 $35,001,853 $4,000,000 $16,542,195 $55,544,048
Net loss from operations (13,277,460) (13,277,460)
Issuance of preferred shares 1 5,849,999 5,850,000
Increase in asset valuation reserve (13,076) (13,076)
Increase in nonadmitted assets (133,575) (133,575)
Change in net unrealized capital
losses (1,592,242) (1,592,242)
Change in liability for reinsurance
in unauthorized companies (29,905) (29,905)
Company's share of increase in
separate account assets, net 4,308,148 4,308,148
----------- ----------- ------------ -----------
Balance, December 31, 1993 35,001,854 9,849,999 5,804,085 50,655,938
Net loss from operations (19,660,385) (19,660,385)
Issuance of common stocks 1 19,999,999 20,000,000
Capital restructuring of preference
shares (20,000,000) 20,000,000 --
Increase in asset valuation reserve (55,286) (55,286)
Increase in nonadmitted assets (1,021,357) (1,021,357)
Change in net unrealized capital
losses (425,082) (425,082)
Change in liability for reinsurance
in unauthorized companies (98,155) (98,155)
----------- ----------- ------------ -----------
Balance, December 31, 1994 15,001,855 49,849,998 (15,456,180) 49,395,673
Net loss from operations (13,704,827) (13,704,827)
Issuance of common shares 2 12,569,998 12,570,000
Issuance of surplus note 8,500,000 8,500,000
Contribution of Manufacturers
Adviser Corporation 1,080,184 1,080,184
Increase in asset valuation reserve (3,285,208) (3,285,208)
Increase in nonadmitted assets (1,053,124) (1,053,124)
Change in net unrealized capital
losses 2,921,742 2,921,742
Change in liability for reinsurance
in unauthorized companies (126,025) (126,025)
----------- ----------- ------------ -----------
Balance, December 31, 1995 $23,501,857 $63,500,180 $(30,703,622) $56,298,415
=========== =========== ============ ===========
</TABLE>
See accompanying notes.
71
<PAGE> 82
The Manufacturers Life Insurance Company of America
Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
-------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Premiums collected, net $159,337,079 $193,478,637 $126,075,035
Policy benefits paid, net (25,827,767) (4,982,444) (2,829,812)
Commissions and other expenses paid (62,302,890) (48,141,400) (35,203,997)
Net investment income 5,570,951 3,343,515 3,197,892
Other income and expenses (3,607,415) (1,946,063) (1,592,957)
Transfers to separate accounts, net (98,031,353) (136,950,482) (98,220,292)
Net cash (used in) provided by ------------ ------------ ------------
operating activities (24,861,395) 4,801,763 (8,574,131)
INVESTING ACTIVITIES
Sale, maturity, or repayment of investments 74,009,501 73,187,733 28,248,633
Purchase of investments (77,607,686) (91,063,874) (73,688,735)
------------ ------------ ------------
Net cash used in investing activities (3,598,185) (17,876,141) (45,440,102)
FINANCING ACTIVITIES
Issuance of shares 12,570,000 20,000,000 5,850,000
Contribution of Manufacturers Adviser
Corporation 1,080,184 -- --
Issuance of surplus notes 8,500,000 -- --
Surplus withdrawn from separate account -- -- 48,701,076
------------ ------------ ------------
Net cash provided by financing activities 22,150,184 20,000,000 54,551,076
------------ ------------ ------------
Net (decrease) increase in cash and
short-term investments (6,309,396) 6,925,622 536,843
Cash and short-term investments
at beginning of year 15,983,758 9,058,136 8,521,293
------------ ----------- ------------
Cash and short-term investments
at end of year $ 9,674,362 $15,983,758 $ 9,058,136
============ =========== ============
</TABLE>
See accompanying notes.
72
<PAGE> 83
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
December 31, 1995
1. ORGANIZATION
ORGANIZATION
The Manufacturers Life Insurance Company of America (Manufacturers Life of
America or the Company) is a wholly-owned subsidiary of Manulife Reinsurance
Corporation (U.S.A.) (the Parent), (formerly Manufacturers Life Insurance
Company of Michigan), which is in turn a wholly-owned subsidiary of The
Manufacturers Life Insurance Company (Manulife Financial), a Canadian-based
mutual life insurance company (Notes 4 and 5).
The Company issues and sells variable universal life and variable annuity
products in the United States. The Company also has a branch operation in Taiwan
to develop and market traditional insurance for the Taiwanese market. At
December 31, 1995 the Company had assets of $11,234,000 and liabilities of
$5,696,000 in the Taiwan branch.
During 1995, the Company's parent contributed $12,570,000 of capital in return
for 2 shares of the Company's common stock par value $1 with the remaining
$12,569,998 being recorded as contributed surplus. During 1995, the Company's
parent transferred 100% of the outstanding stock of Manufacturers Adviser
Corporation to the Company which was recorded at book values as contributed
surplus. During 1995, the Company's parent also contributed $8,500,000 in return
for a 10-year surplus note bearing interest at 6.625%.
Subsequent to the year end, the Parent contributed $15,000,000 capital in return
for 1 share of the Company's common stock par value $1 with the remaining
$14,999,999 being recorded as contributed surplus.
During 1994, the Company's parent contributed $20,000,000 of capital in return
for 1 share of the Company's common stock par value $1 with the remaining
$19,999,999 being recorded as contributed surplus. During 1994, the Company
restructured its capital by exchanging 230,000 shares of preferred stock with a
par value of $23,000,000 for 3,000,000 shares of common stock par value
$3,000,000 with the remaining $20,000,000 being recorded as contributed surplus.
The Parent contributed $5,850,000 in capital in return for 1 share of common
stock during 1993.
73
<PAGE> 84
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements of Manufacturers Life of America have been
prepared in accordance with accounting practices prescribed or permitted by the
Insurance Department of Michigan, which are considered generally accepted
accounting principles for mutual life insurance companies and their wholly-owned
direct and indirect subsidiaries. Such practices differ in certain respects from
generally accepted accounting principles followed by stock life insurance
companies in determining financial position and results of operations. In
general, the differences are: (1) commissions and other costs of acquiring and
writing policies are charged to expense in the year incurred rather than being
amortized over the related policy term; (2) certain non-admitted assets are
excluded from the balance sheet; (3) deferred income taxes are not provided for
timing differences in recording certain items for financial statement and tax
purposes; (4) certain transactions are reflected directly to surplus rather than
reflected in net income from operations (for example, certain transactions
related to the separate accounts); and (5) debt securities are carried at
amortized cost.
In April 1993, the Financial Accounting Standards Board issued Interpretation
No. 40, "Applicability of Generally Accepted Accounting Principles to Mutual
Life Insurance and Other Enterprises." The Interpretation as amended is
effective for 1996 annual financial statements and thereafter, and will no
longer allow statutory financial statements to be described as being prepared in
conformity with generally accepted accounting principles (GAAP). Upon the
effective date of the Interpretation, in order for financial statements to be
described as being prepared in accordance with GAAP, life insurance companies
will be required to adopt all applicable standards promulgated by the FASB in
any general purpose financial statements such companies may issue. While GAAP
standards have recently been developed for mutual life insurance companies, the
Company has not yet completed the complex and extensive historical calculations
and thus is unable to quantify the effects of the Interpretation on its
financial statements.
The preparation of financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Such estimates and assumptions
could change in the future as more information becomes known, which could impact
the amounts reported and disclosed herein.
All amounts presented are expressed in U.S. Dollars. Certain amounts from prior
periods have been reclassified to conform with current-period presentation.
74
<PAGE> 85
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCKS
Stocks are carried at market value.
BONDS
Bonds not backed by other loans are carried at amortized cost as computed using
the interest method. Loan backed bonds and other structured securities are
valued at amortized cost using the interest method including anticipated
prepayments. Prepayment assumptions are updated periodically and are accounted
for using the prospective method. Gains and losses on sales of bonds are
calculated on the specific identification method and recognized into income
based on NAIC prescribed formulas. Short-term investments include investments
with maturities of less than one year at the date of acquisition. Market values
disclosed are based on NAIC quoted values.
POLICY LOANS
Policy loans are reported at unpaid principal balances which approximate fair
value.
ASSET VALUATION RESERVE AND INTEREST MAINTENANCE RESERVE
The Asset Valuation Reserve and Interest Maintenance Reserve were determined by
NAIC prescribed formulas and are reported as liabilities rather than as
valuation allowances or appropriations of surplus.
POLICY AND CONTRACT CLAIMS
Policy and contract claims are determined on an individual case basis for
reported losses. Estimates of incurred but not reported losses are developed on
the basis of past experience.
75
<PAGE> 86
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SEPARATE ACCOUNTS
Separate account assets and liabilities reported in the accompanying financial
statements represent funds that are separately administered, principally for
variable annuity and variable life contracts. For the majority of these
contracts the contractholder, rather than the Company, bears the investment
risk. Separate account assets are recorded at market value. Operations of the
separate accounts are not included in the accompanying financial statements.
REVENUE RECOGNITION
Both premium and investment income are recorded when due.
INVESTMENT IN SUBSIDIARIES
The investment in Manufacturers Adviser Corporation ("MAC") is carried at net
equity of MAC as computed under generally accepted accounting principles.
Undistributed income and loss is treated as a component of unrealized gains and
losses and applies directly to capital and surplus.
REINSURANCE
Reinsurance premiums and claims are accounted for on a basis consistent with
that used in accounting for the original policies issued and the terms of the
reinsurance contracts. Premiums and claims are reported net of reinsured
amounts.
POLICY RESERVES
Certain policy reserves are calculated based on statutorily required interest
and mortality assumptions.
76
<PAGE> 87
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. INVESTMENTS AND INVESTMENT INCOME
The amortized cost and market value of investments in fixed maturities (bonds)
as of December 31, 1995 is summarized as follows:
<TABLE>
<CAPTION>
QUOTED OR
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
NAME OF PERSON COST GAINS LOSSES VALUE
- -------------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
United States Government $15,145,033 $681,032 $ (57,916) $15,768,149
Foreign governments 6,071,376 157,635 -- 6,229,011
Corporate 31,046,219 2,508,780 -- 33,554,999
Mortgage-backed securities:
U.S. Government agencies 9,522,771 -- -- 9,522,771
Corporate 971,803 -- -- 971,803
----------- ---------- ---------- -----------
$62,757,202 $3,347,447 $ (57,916) $66,046,733
=========== ========== ========== ===========
</TABLE>
Proceeds from sales of investments in debt securities during 1995 were
$67,506,660. Gross gains of $2,630,790 and gross losses of $218,778 were
realized on those sales.
The amortized cost and market value of investments in fixed maturities (bonds)
as of December 31, 1994 is summarized as follows:
<TABLE>
<CAPTION>
QUOTED OR
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
NAME OF PERSON COST GAINS LOSSES VALUE
- -------------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
United States Government $31,784,581 $ 243,971 $(441,592) $31,586,960
Foreign governments 7,388,458 -- (294,385) 7,094,073
Corporate 9,986,244 2,457 (577,136) 9,411,565
Mortgage-backed securities:
U.S. Government agencies 2,480,571 -- -- 2,480,571
Corporate 509,226 -- -- 509,226
----------- --------- ----------- -----------
$52,149,080 $ 246,428 $(1,313,113) $51,082,395
=========== ========= =========== ===========
</TABLE>
Proceeds from sales of investments in debt securities during 1994 were
$43,175,845. Gross gains of $167,738 and gross losses of $1,006,702 were
realized on those sales.
77
<PAGE> 88
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. INVESTMENTS AND INVESTMENT INCOME (CONTINUED)
The amortized cost and market value of fixed maturities at December 31, 1995 by
contractual maturities, are shown below. Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
YEARS TO MATURITY AMORTIZED COST MARKET VALUE
- ------------------------------ -------------- ------------
<S> <C> <C>
One year or less $564,857 $564,857
Greater than 1; up to 5 years 4,079,679 4,181,361
Greater than 5; up to 10 years 14,786,283 15,858,075
Due after 10 years 32,831,809 34,947,866
Mortgage-backed securities 10,494,574 10,494,574
----------- -----------
$62,757,202 $66,046,733
=========== ===========
</TABLE>
At December 31, 1995, $6,617,749 of bonds at amortized cost were on deposit
with government insurance departments to satisfy regulatory regulations.
Major categories of net investment income for each year were as follows:
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Gross investment income:
Dividends; Manulife Series Fund,
Inc. (Note 9) $645,908 $1,244,794 $1,440,392
Bond income 4,430,236 1,712,294 1,422,064
Policy loans 360,406 236,972 166,514
Short-term investments 754,346 501,477 384,178
---------- ---------- ----------
6,190,896 3,695,537 3,413,148
Investment expenses (350,336) (106,908) (89,186)
---------- ---------- ----------
Net investment income $5,840,560 $3,588,629 $3,323,962
========== ========== ==========
</TABLE>
78
<PAGE> 89
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
4. RELATED PARTY TRANSACTIONS
Manufacturers Life of America has a formal service agreement with Manulife
Financial which can be terminated by either party upon two months' notice. Under
the Agreement, Manufacturers Life of America will pay direct operating expenses
incurred each year by Manulife Financial on behalf of Manufacturers Life of
America. Services provided under the Agreement include legal, actuarial,
investment, data processing and certain other administrative services. Costs
incurred under this Agreement were $23,211,484 in 1995, $21,326,446 in 1994, and
$12,467,474 in 1993. In addition, there were $5,052,062 agents' bonuses in 1995,
$7,795,184 in 1994, and $5,363,558 in 1993 which were allocated to the Company
and are included in commissions.
In addition, the Company has several reinsurance agreements with Manulife
Financial which may be terminated upon the specified notice by either party.
These agreements are summarized as follows:
(a) The Company assumes two blocks of insurance from Manulife Financial under
coinsurance treaties. The Company's risk is limited to $100,000 of initial
face amount per claim plus a pro-rata share of any increase in face amount.
(b) The Company cedes the risk in excess of $25,000 per life to Manulife
Financial under the terms of an automatic reinsurance agreement.
(c) The Company cedes a substantial portion of its risk on its Flexible Premium
Variable Life policies to Manulife Financial under the terms of a stop loss
reinsurance agreement.
(d) Under the terms of an automatic coinsurance agreement, the Company cedes
its risk on structured settlements to Manulife Financial.
79
<PAGE> 90
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
4. RELATED PARTY TRANSACTIONS (CONTINUED)
Selected amounts relating to the above treaties reflected in the financial
statements are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Life and annuity premiums
assumed $5,956,997 $25,385,628 $12,745,981
Other life and annuity
considerations ceded (598,330) (437,650) (201,685)
Commissions and expense
allowances
on reinsurance assumed (1,014,163) (810,252) (329,634)
Policy reserves assumed 48,714,791 47,672,591 23,070,952
Policy reserves ceded 3,833,247 3,786,647 3,782,156
</TABLE>
During 1993, the Company assumed the first $50,000 of initial face amount on
two blocks of business. This resulted in transfers of $10,837,000 to establish
the initial reserves. In 1994 the treaties were amended to assume the first
$100,000 of initial face amount for the same blocks of business. This resulted
in a transfer of $21,477,000 to establish the additional reserve. Commissions
equal to 17% are charged for all renewed premiums related to these contracts.
During 1994, the Company terminated another treaty resulting in a premium to
Manulife Financial to transfer the reserve of $799,874.
Manulife Financial provides a claims paying guarantee to all U.S. policyholders.
5. FEDERAL INCOME TAX
The Company joins the Parent, The Manufacturers Life Insurance Co. (U.S.A.) and
Manufacturers Reinsurance Limited in filing a U.S. consolidated income tax
return as a life insurance group under provisions of the Internal Revenue Code.
In accordance with an income tax-sharing agreement dated December 29, 1983, the
Company's income tax provision (or benefit) is computed as if the Company filed
a separate income tax return. The Company receives no surtax exemption. Tax
benefits from operating losses are provided at the U.S. statutory rate plus any
tax credits attributable to the Company, provided the consolidated group
utilizes such benefits currently. Taxes recoverable in the financial statements
represent tax-related amounts receivable from affiliates.
80
<PAGE> 91
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
5. FEDERAL INCOME TAX
The Company, Parent and The Manufacturers Life Insurance Co. (U.S.A.) have
available consolidated net operating losses of approximately $51,400,000 which
will expire in the year 2009 and capital loss carryforwards of approximately
$102,800,000 which will expire in 1999. The losses of the Company, Parent and
the Manufacturers Life Insurance Co. (U.S.A.) may be used to offset the
ordinary and capital gain income of Manufacturers Reinsurance Limited.
6. STATUTORY RESTRICTIONS ON DIVIDENDS
The Company is subject to statutory limitations on the payment of dividends to
its Parent. The Company cannot pay dividends during 1995 without the prior
approval of insurance regulatory authorities.
7. REINSURANCE
The Company cedes reinsurance as a party to several reinsurance treaties with
major unrelated insurance companies. The Company remains obligated for amounts
ceded in the event reinsurers do not meet their obligations.
Summary financial information related to these reinsurance activities is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Life insurance premiums ceded $275,145 $218,767 $130,913
</TABLE>
81
<PAGE> 92
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
8. RESERVES
Aggregate policy reserves for life policies including variable life, are based
on statutory mortality tables and interest assumptions using either the net
level or commissioners' reserve valuation method. The composition of the
aggregate policy reserves at December 31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
MORTALITY INTEREST
AGGREGATE RESERVES TABLE RATES
------------------ ----- --------
1995 1994
---- ----
<S> <C> <C> <C>
$25,561,456 $28,553,885 1980 CSO 4%
(173,768) (189,080) Reinsurance ceded
1,295,402 1,396,369 Miscellaneous
- ----------- -----------
$26,683,090 $29,761,174
=========== ===========
</TABLE>
At December 31, 1995 the Company's annuity reserves and deposit fund liabilities
are comprised as follows:
<TABLE>
<CAPTION>
AMOUNT PERCENT
------ -------
(in 000's)
<S> <C> <C>
Subject to discretionary withdrawal:
With market value adjustment $222,994 97.8%
At book value less current surrender charge 1,239 .5%
Not subject to discretionary withdrawal 3,863 1.7%
-------- -----
Total gross annuity actuarial reserves and
deposit fund liabilities $228,096 100%
======== =====
</TABLE>
9. INVESTMENT IN SEPARATE ACCOUNTS
During 1984, the Company initiated plans to market variable life insurance
products through Separate Account One of The Manufacturers Life Insurance
Company of America ("Separate Account One") using Manulife Series Fund, Inc. as
its investment vehicle. Initial capitalization was $15,000,000. Through 1988,
the Company provided an additional capitalization of $6,000,000.
82
<PAGE> 93
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
9. INVESTMENT IN SEPARATE ACCOUNTS (CONTINUED)
In December 1993, the Company transferred all of its shares, related to seed
money, in Manulife Series Fund, Inc. out of Separate Account One to the General
Account. At December 31, 1995, the $22,584,259 common stock represents the
Company's seed money investment in Manulife Series Fund, Inc.
During 1995, 1994, and 1993, the following dividends were received from Manulife
Series Fund, Inc.:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Separate Account One $24,041 $38,732 $1,610,693
Separate Account Two 3,520,461 4,574,620 7,377,861
Separate Account Three 1,693,796 1,490,374 666,141
Separate Account Four 2,445,127 3,072,376 4,966,559
General Account 645,908 1,244,794 1,440,392
</TABLE>
Dividends have been reinvested by the Company in Manulife Series Fund, Inc.
During 1993, the Company withdrew $8,000,000 of its seed money and accumulated
earnings from Separate Account One and the Manulife Series Fund, Inc. and
utilized these funds to pay down its intercompany debt.
During 1994, the Company withdrew $13,011,137 of its seed money and accumulated
earnings from the Manulife Series Fund, Inc. and utilized these funds to pay
down its intercompany debt.
During 1995, the Company withdrew $6,500,000 of its seed money and accumulated
earnings from the Manulife Series Fund, Inc. and utilized these funds to pay
down its intercompany debt.
83
<PAGE> 94
APPENDIX
What Are Some Illustrations Of Policy Values, Cash Surrender Values And Death
Benefits?
The following tables have been prepared to help show how values under the Policy
change with investment performance. The tables include both Policy Values and
Cash Surrender Values as well as Death Benefits. The Policy Value is the sum of
the values in the Investment Accounts, as the tables assume no values in the
Guaranteed Interest Account or Loan Account. The Cash Surrender Value is the
Policy Value less the deferred sales charge and deferred underwriting charge.
The tables illustrate how Policy Values and Cash Surrender Values, which reflect
the deduction of all applicable charges including the premium tax charge and the
sales charge, and death benefits of the Policy on an insured of a given age
would vary over time if the return on the assets of the Portfolios was a
uniform, gross, after-tax, annual rate of 0%, 6% or 12%. The Policy Values,
death benefits and Cash Surrender Values would be different from those shown if
the returns averaged 0%, 6% or 12%, but fluctuated over and under those averages
throughout the years.
The amounts shown for the Policy Value, death benefit and Cash Surrender Value
as of each policy year reflect the fact that the net investment return on the
assets held in the sub-accounts is lower than the gross, after-tax return. This
is because the daily charge to the Separate Account for assuming mortality and
expense risks (0.65% on an annual basis) and the expenses and fees borne by the
Manulife Series Fund and NASL Series Trust are deducted from the gross return.
The illustrations reflect an average of those Portfolios' expenses, which is
approximately .76% on an annual basis. The gross annual rates of return of 0%,
6% and 12% correspond to approximate net annual rates of return of -1.39%,
4.53%, and 10.44%.
The tables assume that no premiums have been allocated to the Guaranteed
Interest Account, that planned premiums are paid on the policy anniversary and
that no transfers, partial withdrawals, policy loans, changes in death benefit
options or changes in face amount have been made. The tables reflect the fact
that no charges for federal, state or local taxes are currently made against the
Separate Account. If such a charge is made in the future, it will take a higher
gross rate of return to produce after-tax returns of 0%, 6% and 12% than it does
now.
There are two tables shown for each combination of age and death benefit option
for male nonsmokers, one based on current cost of insurance charges assessed by
the Company and the other based on the maximum cost of insurance charges based
on the 1980 Commissioners Standard Ordinary Smoker/ Nonsmoker Mortality Tables.
Current cost of insurance charges are not guaranteed and may be changed. Upon
request, Manufacturers Life of America will furnish a comparable illustration
based on the proposed life insured's age, sex and risk class, any additional
ratings and the death benefit option, face amount and planned premium requested.
Illustrations for smokers would show less favorable results than the
illustrations shown below.
From time to time, in advertisements or sales literature for the Policies that
quote performance data of one or more of the Portfolios, the Company may include
84
<PAGE> 95
cash 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 Portfolio for which performance data is shown in the
advertisement replacing the hypothetical rates of return shown in the following
tables.
The Policies were first sold to the public on December 7, 1987. However, total
return data may be advertised for as long a period of time as the underlying
Portfolio has been in existence. The results for any period prior to the
Policies being offered would be calculated as if the Policies had been offered
during that period of time, with all charges assumed to be the same as for the
first full year the Policies were offered.
85
<PAGE> 96
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Nonsmoker Issue Age 25
$100,000 Face Amount Death Benefit Option 1
$575 Annual Planned Premium
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 383 $ 0 $100,000
2 1,238 756 0 100,000
3 1,903 1,115 348 100,000
4 2,602 1,463 695 100,000
5 3,336 1,799 1,032 100,000
6 4,107 2,122 1,432 100,000
7 4,916 2,434 1,820 100,000
8 5,765 2,736 2,199 100,000
9 6,657 3,028 2,568 100,000
10 7,594 3,307 2,924 100,000
15 13,028 4,500 4,500 100,000
20 19,964 5,287 5,287 100,000
25 28,815 5,487 5,487 100,000
30 40,112 4,887 4,887 100,000
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
86
<PAGE> 97
<TABLE>
<CAPTION>
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 411 $ 0 $100,000
2 1,238 834 67 100,000
3 1,903 1,269 502 100,000
4 2,602 1,716 949 100,000
5 3,336 2,177 1,410 100,000
6 4,107 2,651 1,961 100,000
7 4,916 3,139 2,525 100,000
8 5,765 3,644 3,107 100,000
9 6,657 4,166 3,706 100,000
10 7,594 4,703 4,320 100,000
15 13,028 7,626 7,626 100,000
20 19,964 10,938 10,938 100,000
25 28,815 14,545 14,545 100,000
30 40,112 18,329 18,329 100,000
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no partial
withdrawal of the Cash Surrender Value has been made and (d) no premiums
have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until the
policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
87
<PAGE> 98
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 438 $ 0 $100,000
2 1,238 916 149 100,000
3 1,903 1,436 668 100,000
4 2,602 2,003 1,235 100,000
5 3,336 2,622 1,855 100,000
6 4,107 3,298 2,608 100,000
7 4,916 4,038 3,424 100,000
8 5,765 4,849 4,312 100,000
9 6,657 5,741 5,281 100,000
10 7,594 6,718 6,334 100,000
15 13,028 13,216 13,216 100,000
20 19,964 23,610 23,610 100,000
25 28,815 40,382 40,382 100,000
30 40,112 67,923 67,923 106,639
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no partial
withdrawal of the Cash Surrender Value has been made and (d) no premiums
have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until the
policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
88
<PAGE> 99
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Nonsmoker Issue Age 25
$100,000 Face Amount Death Benefit Option 1
$575 Annual Planned Premium
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 382 $ 0 $100,000
2 1,238 698 0 100,000
3 1,903 1,010 243 100,000
4 2,602 1,320 553 100,000
5 3,336 1,626 859 100,000
6 4,107 1,927 1,237 100,000
7 4,916 2,222 1,608 100,000
8 5,765 2,508 1,971 100,000
9 6,657 2,787 2,326 100,000
10 7,594 3,055 2,672 100,000
15 13,028 4,208 4,208 100,000
20 19,964 4,929 4,929 100,000
25 28,815 5,038 5,038 100,000
30 40,112 4,208 4,208 100,000
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no partial
withdrawal of the Cash Surrender Value has been made and (d) no premiums
have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until the
policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
89
<PAGE> 100
<TABLE>
<CAPTION>
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 410 0 $100,000
2 1,238 774 7 100,000
3 1,903 1,157 390 100,000
4 2,602 1,559 792 100,000
5 3,336 1,979 1,211 100,000
6 4,107 2,417 1,727 100,000
7 4,916 2,873 2,259 100,000
8 5,765 3,346 2,809 100,000
9 6,657 3,835 3,375 100,000
10 7,594 4,340 3,957 100,000
15 13,028 7,085 7,085 100,000
20 19,964 10,121 10,121 100,000
25 28,815 13,320 13,320 100,000
30 40,112 16,398 16,398 100,000
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
90
<PAGE> 101
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 437 $ 0 $100,000
2 1,238 854 87 100,000
3 1,903 1,316 549 100,000
4 2,602 1,829 1,062 100,000
5 3,336 2,394 1,627 100,000
6 4,107 3,019 2,328 100,000
7 4,916 3,705 3,092 100,000
8 5,765 4,460 3,923 100,000
9 6,657 5,288 4,828 100,000
10 7,594 6,197 5,813 100,000
15 13,028 12,219 12,219 100,000
20 19,964 21,708 21,708 100,000
25 28,815 36,803 36,803 100,000
30 40,112 61,196 61,196 100,000
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no partial
withdrawal of the Cash Surrender Value has been made and (d) no premiums
have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until the
policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
91
<PAGE> 102
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Nonsmoker Issue Age 25
$100,000 Face Amount Death Benefit Option 2
$575 Annual Planned Premium
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 383 $ 0 $100,383
2 1,238 754 0 100,754
3 1,903 1,113 345 101,113
4 2,602 1,459 691 101,459
5 3,336 1,793 1,026 101,793
6 4,107 2,114 1,423 102,114
7 4,916 2,422 1,808 102,422
8 5,765 2,720 2,183 102,720
9 6,657 3,008 2,548 103,008
10 7,594 3,283 2,899 103,283
15 13,028 4,439 4,439 104,439
20 19,964 5,165 5,165 105,165
25 28,815 5,269 5,269 105,269
30 40,112 4,538 4,538 104,538
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no partial
withdrawal of the Cash Surrender Value has been made and (d) no premiums
have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until the
policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
92
<PAGE> 103
<TABLE>
<CAPTION>
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 410 $ 0 $100,410
2 1,238 833 66 100,833
3 1,903 1,266 499 101,266
4 2,602 1,711 944 101,711
5 3,336 2,170 1,402 102,170
6 4,107 2,640 1,949 102,640
7 4,916 3,123 2,509 103,123
8 5,765 3,622 3,085 103,622
9 6,657 4,137 3,677 104,137
10 7,594 4,666 4,282 104,666
15 13,028 7,513 7,513 107,513
20 19,964 10,659 10,659 110,659
25 28,815 13,926 13,926 113,926
30 40,112 17,046 17,046 117,046
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
93
<PAGE> 104
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 438 $ 0 $100,438
2 1,238 914 147 100,914
3 1,903 1,432 665 101,432
4 2,602 1,997 1,230 101,997
5 3,336 2,613 1,845 102,613
6 4,107 3,284 2,593 103,284
7 4,916 4,016 3,402 104,016
8 5,765 4,819 4,282 104,819
9 6,657 5,699 5,239 105,699
10 7,594 6,661 6,277 106,661
15 13,028 13,006 13,006 113,006
20 19,964 22,964 22,964 122,964
25 28,815 38,566 38,566 138,566
30 40,112 63,101 63,101 163,101
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
94
<PAGE> 105
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Nonsmoker Issue Age 25
$100,000 Face Amount Death Benefit Option 2
$575 Annual Planned Premium
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 382 $ 0 $100,382
2 1,238 696 0 100,696
3 1,903 1,007 240 101,007
4 2,602 1,315 548 101,315
5 3,336 1,619 851 101,619
6 4,107 1,917 1,227 101,917
7 4,916 2,208 1,594 102,208
8 5,765 2,491 1,954 102,491
9 6,657 2,765 2,305 102,765
10 7,594 3,029 2,645 103,029
15 13,028 4,148 4,148 104,148
20 19,964 4,810 4,810 104,810
25 28,815 4,829 4,829 104,829
30 40,112 3,873 3,873 103,873
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
95
<PAGE> 106
<TABLE>
<CAPTION>
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 409 $ 0 $100,409
2 1,238 772 5 100,772
3 1,903 1,153 386 101,153
4 2,602 1,553 785 101,553
5 3,336 1,969 1,202 101,969
6 4,107 2,404 1,713 102,404
7 4,916 2,854 2,241 102,854
8 5,765 3,321 2,784 103,321
9 6,657 3,803 3,343 103,803
10 7,594 4,300 3,916 104,300
15 13,028 6,972 6,972 106,972
20 19,964 9,850 9,850 109,850
25 28,815 12,726 12,726 112,726
30 40,112 15,167 15,167 115,167
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
96
<PAGE> 107
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 604 $ 437 $ 0 $100,437
2 1,238 852 85 100,852
3 1,903 1,312 545 101,312
4 2,602 1,821 1,054 101,821
5 3,336 2,383 1,616 102,383
6 4,107 3,001 2,311 103,001
7 4,916 3,680 3,067 103,680
8 5,765 4,426 3,889 104,426
9 6,657 5,242 4,782 105,242
10 7,594 6,136 5,752 106,136
15 13,028 12,009 12,009 112,009
20 19,964 21,083 21,083 121,083
25 28,815 35,072 35,072 135,072
30 40,112 56,570 56,570 156,570
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
97
<PAGE> 108
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Nonsmoker Issue Age 45
$100,000 Face Amount Death Benefit Option 1
$1,325 Annual Planned Premium
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 896 $ 0 $100,000
2 2,852 1,762 202 100,000
3 4,386 2,591 1,031 100,000
4 5,996 3,383 1,823 100,000
5 7,688 4,129 2,569 100,000
6 9,463 4,831 3,427 100,000
7 11,328 5,484 4,236 100,000
8 13,285 6,094 5,002 100,000
9 15,341 6,654 5,718 100,000
10 17,499 7,167 6,387 100,000
15 30,021 8,940 8,940 100,000
20 46,003 8,949 8,949 100,000
25 66,400 4,673 4,673 100,000
30 92,433 0(4) 0(4) 0(4)
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no partial
withdrawal of the Cash Surrender Value has been made and (d) no premiums
have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until the
policy anniversary on which the life insured is 70 years old.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
98
<PAGE> 109
<TABLE>
<CAPTION>
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 960 $ 0 $100,000
2 2,852 1,945 385 100,000
3 4,386 2,949 1,389 100,000
4 5,996 3,973 2,413 100,000
5 7,688 5,009 3,449 100,000
6 9,463 6,059 4,655 100,000
7 11,328 7,118 5,870 100,000
8 13,285 8,193 7,101 100,000
9 15,341 9,278 8,342 100,000
10 17,499 10,375 9,595 100,000
15 30,021 16,006 16,006 100,000
20 46,003 21,576 21,576 100,000
25 66,400 24,917 24,917 100,000
30 92,433 23,425 23,425 100,000
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
99
<PAGE> 110
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 1,023 $ 1 $100,000
2 2,852 2,135 576 100,000
3 4,386 3,338 1,778 100,000
4 5,996 4,641 3,081 100,000
5 7,688 6,045 4,485 100,000
6 9,463 7,564 6,161 100,000
7 11,328 9,206 7,958 100,000
8 13,285 10,991 9,899 100,000
9 15,341 12,928 11,992 100,000
10 17,499 15,037 14,257 100,000
15 30,021 28,900 28,900 100,000
20 46,003 51,109 51,109 100,000
25 66,400 87,882 87,882 101,944
30 92,433 149,734 149,734 160,216
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
100
<PAGE> 111
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 45
$100,000 Face Amount Death Benefit Option 1
$1,325 Annual Planned Premium
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 894 $ 0 $100,000
2 2,852 1,700 140 100,000
3 4,386 2,468 908 100,000
4 5,996 3,197 1,637 100,000
5 7,688 3,884 2,324 100,000
6 9,463 4,529 3,125 100,000
7 11,328 5,125 3,877 100,000
8 13,285 5,668 4,576 100,000
9 15,341 6,152 5,216 100,000
10 17,499 6,571 5,791 100,000
15 30,021 7,494 7,494 100,000
20 46,003 5,626 5,626 100,000
25 66,400 0(4) 0(4) 100,000(4)
30 92,433 0(5) 0(5) 0(5)
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no partial
withdrawal of the Cash Surrender Value has been made and (d) no premiums
have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until the
policy anniversary on which the life insured is 70 years old.
(4) Provided the Minimum Premium Requirement has been met, the death benefit
guarantee will have kept the Policy in force until this point, i.e. the
policy anniversary on which the life insured is 70 years old, at which
time the death benefit guarantee will expire and in the absence of
additional premium payments the Policy will lapse.
(5) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
101
<PAGE> 112
<TABLE>
<CAPTION>
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 958 $ 0 $100,000
2 2,852 1,880 320 100,000
3 4,386 2,817 1,257 100,000
4 5,996 3,768 2,208 100,000
5 7,688 4,730 3,170 100,000
6 9,463 5,703 4,300 100,000
7 11,328 6,682 5,434 100,000
8 13,285 7,660 6,568 100,000
9 15,341 8,633 7,697 100,000
10 17,499 9,593 8,813 100,000
15 30,021 14,005 14,005 100,000
20 46,003 16,861 16,861 100,000
25 66,400 15,718 15,718 100,000
30 92,433 5,223 5,223 100,000
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
102
<PAGE> 113
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 1,021 $ 0 $100,000
2 2,852 2,068 508 100,000
3 4,386 3,197 1,637 100,000
4 5,996 4,415 2,855 100,000
5 7,688 5,729 4,169 100,000
6 9,463 7,147 5,743 100,000
7 11,328 8,676 7,428 100,000
8 13,285 10,322 9,230 100,000
9 15,341 12,094 11,158 100,000
10 17,499 14,000 13,220 100,000
15 30,021 26,006 26,006 100,000
20 46,003 43,956 43,956 100,000
25 66,400 72,610 72,610 100,000
30 92,433 122,681 122,681 131,269
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
103
<PAGE> 114
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Nonsmoker Issue Age 45
$100,000 Face Amount Death Benefit Option 2
$1,325 Annual Planned Premium
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 893 $ 0 $100,893
2 2,852 1,754 194 101,754
3 4,386 2,574 1,014 102,574
4 5,996 3,353 1,793 103,353
5 7,688 4,082 2,522 104,082
6 9,463 4,762 3,358 104,762
7 11,328 5,389 4,141 105,389
8 13,285 5,967 4,875 105,967
9 15,341 6,489 5,554 106,489
10 17,499 6,959 6,179 106,959
15 30,021 8,413 8,413 108,413
20 46,003 7,908 7,908 107,908
25 66,400 2,930 2,930 102,930
30 92,433 0(4) 0(4) 0(4)
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
104
<PAGE> 115
<TABLE>
<CAPTION>
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 957 $ 0 $100,957
2 2,852 1,935 375 101,935
3 4,386 2,929 1,369 102,929
4 5,996 3,937 2,377 103,937
5 7,688 4,950 3,390 104,950
6 9,463 5,970 4,566 105,970
7 11,328 6,990 5,742 106,990
8 13,285 8,015 6,923 108,015
9 15,341 9,037 8,101 109,037
10 17,499 10,058 9,278 110,058
15 30,021 15,010 15,010 115,010
20 46,003 19,068 19,068 119,068
25 66,400 18,976 18,976 118,976
30 92,433 11,128 11,128 111,128
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
105
<PAGE> 116
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 1,020 $ 0 $101,020
2 2,852 2,125 565 102,125
3 4,386 3,315 1,755 103,315
4 5,996 4,598 3,038 104,598
5 7,688 5,973 4,413 105,973
6 9,463 7,451 6,047 107,451
7 11,328 9,035 7,787 109,035
8 13,285 10,743 9,651 110,743
9 15,341 12,579 11,643 112,579
10 17,499 14,557 13,777 114,557
15 30,021 27,020 27,020 127,020
20 46,003 45,083 45,083 145,083
25 66,400 68,872 68,872 168,872
30 92,433 99,048 99,048 199,048
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no
partial withdrawal of the Cash Surrender Value has been made and (d) no
premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until
the policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
106
<PAGE> 117
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Nonsmoker Issue Age 45
$100,000 Face Amount Death Benefit Option 2
$1,325 Annual Planned Premium
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
0% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 891 $ 0 $100,891
2 2,852 1,690 130 101,690
3 4,386 2,448 888 102,448
4 5,996 3,163 1,603 103,163
5 7,688 3,832 2,272 103,832
6 9,463 4,454 3,050 104,454
7 11,328 5,023 3,775 105,023
8 13,285 5,532 4,440 105,532
9 15,341 5,977 5,041 105,977
10 17,499 6,350 5,570 106,350
15 30,021 6,929 6,929 106,929
20 46,003 4,552 4,552 104,552
25 66,400 0(4) 0(4) 100,000(4)
30 92,433 0(5) 0(5) 0(5)
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no partial
withdrawal of the Cash Surrender Value has been made and (d) no premiums
have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until the
policy anniversary on which the life insured is 70 years old.
(4) Provided the Minimum Premium Requirement has been met, the death benefit
guarantee will have kept the Policy in force until this point, i.e. the
policy anniversary on which the life insured is 70 years old, at which
time the death benefit guarantee will expire and in the absence of
additional premium payments the Policy will lapse.
(5) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
107
<PAGE> 118
<TABLE>
<CAPTION>
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 954 $ 0 $100,954
2 2,852 1,869 309 101,869
3 4,386 2,794 1,234 102,794
4 5,996 3,728 2,168 103,728
5 7,688 4,666 3,106 104,666
6 9,463 5,607 4,203 105,607
7 11,328 6,543 5,295 106,543
8 13,285 7,469 6,377 107,469
9 15,341 8,376 7,440 108,376
10 17,499 9,255 8,475 109,255
15 30,021 12,923 12,923 112,923
20 46,003 14,119 14,119 114,119
25 66,400 9,844 9,844 109,844
30 92,433 0(4) 0(4) 0(4)
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no partial
withdrawal of the Cash Surrender Value has been made and (d) no premiums
have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until the
policy anniversary on which the life insured is 70 years old.
(4) In the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
108
<PAGE> 119
<TABLE>
<CAPTION>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit
<S> <C> <C> <C> <C>
1 $ 1,391 $ 1,018 $ 0 $101,018
2 2,852 2,056 496 102,056
3 4,386 3,171 1,611 103,171
4 5,996 4,367 2,807 104,367
5 7,688 5,648 4,088 105,648
6 9,463 7,022 5,618 107,022
7 11,328 8,490 7,242 108,490
8 13,285 10,055 8,963 110,055
9 15,341 11,721 10,785 111,721
10 17,499 13,487 12,707 113,487
15 30,021 23,948 23,948 123,948
20 46,003 37,155 37,155 137,155
25 66,400 52,054 52,054 152,054
30 92,433 65,522 65,522 165,522
</TABLE>
(1) All values shown are as of the end of the policy year indicated and
assume that (a) premiums paid after the initial premium are received on
the policy anniversary, (b) no policy loan has been made, (c) no partial
withdrawal of the Cash Surrender Value has been made and (d) no premiums
have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the Minimum Premium Requirement has been and continues to be
met, the death benefit guarantee will keep the Policy in force until the
policy anniversary on which the life insured is 70 years old.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES TRUST. THE POLICY
VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
109
<PAGE> 120
PART II. OTHER INFORMATION
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The Prospectus, consisting of _____ pages;
The signatures;
Written consents of the following persons:
Jones & Blouch L.L.P.
Ernst & Young LLP
John R. Ostler
The following exhibits, filed as part of this Post-Effective Amendment No. 9 are
incorporated herein by reference to the designated filings:
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:
A(1) Resolutions of Board of Directors of The Manufacturers
Life Insurance Company of America establishing Separate
Account Four, previously filed as Exhibit A(1) to
Registrant's registration statement on Form S-6, April
24, 1987.
A(3)(a)(i) Distribution Agreement between The Manufacturers Life
Insurance Company of America and ManEquity, Inc.,
previously filed as Exhibit (A)(3)(a) to Pre-Effective
Amendment No. 1, August 13, 1987.
A(3)(a)(ii) Amendment to Distribution Agreement, previously filed as
Exhibit A(3)(a)(ii) to Post-Effective Amendment No. 9,
February 28, 1992.
A(3)(b)(i) Specimen agreement between ManEquity, Inc. and
registered representatives, previously filed as Exhibit
<PAGE> 121
A(3)(b)(i) to Post-Effective Amendment No.9, February
28, 1992.
A(3)(b)(ii) Specimen agreement between ManEquity, Inc. and dealers,
previously filed as Exhibit A(3)(b)(ii) to
Post-Effective Amendment No. 11, February 26, 1993.
A(3)(c) Schedule of Sales Commissions, previously filed as
Exhibit A(3)(c) to Post-Effective Amendment No. 9,
February 28, 1992.
A(5)(a) Form of Flexible Premium Variable Life Insurance
Policy, as amended, previously filed as Exhibit A(5) to
Pre-Effective Amendment No. 2, November 19, 1987.
A(5)(b) Endorsement to Flexible Premium Variable Life Insurance
Policy, previously filed as Exhibit A(5)(b) to
Post-Effective Amendment No. 9, February 28, 1992.
A(5)(c) Endorsement to Flexible Premium Variable Life Insurance
Policy re redomestication, previously filed as Exhibit
A(5)(c) to Post-Effective Amendment No. 11, February 26,
1993.
A(6)(a) Restated Articles of Redomestication of The
Manufacturers Life Insurance Company of America.**
A(6)(b) By-Laws of The Manufacturers Life Insurance Company of
America.**
A(8)(a) Service Agreement between The Manufacturers Life
Insurance Company of America and The Manufacturers Life
Insurance Company, previously filed as Exhibit 1.A(8)(a)
to Post-Effective Amendment No. 7 to the registration
statement on Form N-4 of Separate Account One of The
Manufacturers Life Insurance Company of America (File
No. 2-88607), March 2, 1989.
A(8)(a)(i) Amendment to Service Agreement, previously filed as
Exhibit A(8)(a)(i) to Post-Effective Amendment No. 11,
February 26, 1993.
A(8)(a)(ii) Amendments to Service Agreement: May 31, 1993 and June
30, 1993. Previously filed as Exhibit A(8)(a)(ii) to
Post-Effective Amendment No. 13, March 1, 1994.
** Filed Electronically
2
<PAGE> 122
A(8)(b) Stoploss Reinsurance Agreement between The
Manufacturers Life Insurance Company of
America and The Manufacturers Life Insurance
Company, previously filed as Exhibit A(8)(b)
to Pre-Effective Amendment No. 1, August 13,
1987.
A(8)(c) Automatic Coinsurance Agreement between The
Manufacturers Life Insurance Company of America and The
Manufacturers Life Insurance Company, previously filed
as Exhibit (7) to Pre-Effective Amendment No. 1 to the
registration statement on Form N-4 of Separate Account
Two of The Manufacturers Life Insurance Company of
America (File No. 33-14499), September 4, 1987.
A(8)(d) Service Agreement between The Manufacturers Life
Insurance Company and ManEquity, Inc. dated January 2,
1991 as amended March 1, 1994, previously filed as
Exhibit A(8)(d) to Post-Effective Amendment No. 14,
April 26, 1994.
A(10)(a) Form of Application for Flexible Premium Variable Life
Insurance Policy.**
A(10)(b) Form of Streamlined Application for Flexible Premium
Variable Life Insurance Policy, previously filed as
Exhibit A(10)(b) to Post-Effective Amendment No. 5,
March 2, 1990.
A(10)(c) Form of Short Form Application for Flexible Premium
Variable Life Insurance Policy, previously filed as
Exhibit A(10)(c) to Post-Effective Amendment No. 5,
March 2, 1990.
A(10)(d) Form of Application Supplement for Flexible Premium
Variable Life Insurance Policy, previously filed as
Exhibit A(10)(d) to Post-Effective Amendment No. 7,
March 1, 1991.
2. See Exhibit A(5).
3. Opinion and consent of Stephen C. Nesbitt, Esq., General Counsel of The
Manufacturers Life Insurance Company of America, previously filed as
Exhibit 3 to Pre-Effective Amendment No. 1, August 13, 1987.
4. No financial statements are omitted from the prospectus pursuant to
instruction 1(b) or (c) of Part I.
5. Not applicable.
** Filed Electronically
3
<PAGE> 123
6. Opinion and consent of John R. Ostler, Vice-President, Chief Actuary
and Treasurer of The Manufacturers Life Insurance Company of America.**
7. Form of notice of short term cancellation right and request for refund,
previously filed as Exhibit 7 to pre-Effective Amendment No. 1, August
13, 1987.
8(a). Form of notice of right of surrender and refund, previously filed as
Exhibit 8 to Pre-Effective Amendment No. 1, August 13, 1987.
8(b). Form of notice of right of surrender and refund (face amount increase),
previously filed as Exhibit 8(b) to Post-Effective Amendment No. 9,
February 28, 1992.
9. Memorandum Regarding Issuance, Face Amount Increase, Redemption and
Transfer Procedures for the Policies.**
10. Consent of Ernst & Young LLP.
11. Consent of Jones & Blouch L.L.P.
12. Financial Data Schedules.
** Filed Electronically
4
<PAGE> 124
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the
registrant, SEPARATE ACCOUNT FOUR OF THE MANUFACTURERS LIFE INSURANCE COMPANY OF
AMERICA, and its depositor, THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA,
certify that the registrant meets all of the requirements for effectiveness of
this amended registration statement pursuant to Rule 485(b) under the Securities
Act of 1933 and have duly caused this amendment to the registration statement to
be signed on their behalf by the undersigned thereunto duly authorized, and the
seal of the depositor to be hereunto affixed and attested, all in the City of
Toronto, Province of Ontario, Canada, on the 19th day of April, 1996.
[SEAL] SEPARATE ACCOUNT FOUR OF THE
MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
(Registrant)
By: THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Depositor)
By: Donald A. Guloien
-----------------------------
DONALD A. GULOIEN
President
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
By: Donald A. Guloien
-----------------------------
DONALD A. GULOIEN
President
Attest
Sheri L. Kocen
----------------
(60)SA4-485(b)
5
<PAGE> 125
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Donald A. Guloien President and Director April 19, 1996
DONALD A. GULOIEN (Principal Executive Officer)
SANDRA M. COTTER Director
LEONARD V. DAY, Jr. Director
Stephen C. Nesbitt Director April 19, 1996
STEPHEN C. NESBITT
Joseph J. Pietroski Director April 19, 1996
JOSEPH J. PIETROSKI
John D. Richardson Director and Chairman April 19, 1996
JOHN D. RICHARDSON
Diane M. Schwartz Director April 19, 1996
DIANE M. SCHWARTZ
Douglas H. Myers Vice President, Finance April 19, 1996
DOUGLAS H. MYERS (Principal Financial and
Accounting Officer)
</TABLE>
6
<PAGE> 126
EXHIBITS
7
<PAGE> 127
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
A(1) Resolutions of Board Previously filed as
of Directors of The Exhibit A(1) to Regis-
Manufacturers Life trant's registration
Insurance Company of statement on Form S-6,
America establishing April 24, 1987.
Separate Account Four
A(3)(a)(i) Distribution Agreement Previously filed as
between The Manufacturers Exhibit (A)(3)(a) to
Life Insurance Company of Pre-Effective Amendment
America and ManEquity, Inc. No. 1, August 13, 1987.
A(3)(a)(ii) Amendment to Distribution Previously filed as
Agreement. Exhibit A(3)(a)(ii) to
Post-Effective Amendment No.9,
February 28, 1992.
A(3)(b)(i) Specimen agreement Previously filed as
between ManEquity, Inc. Exhibit A(3)(b)(i) to
and registered repre- Post-Effective Amendment
sentatives. No. 9, February 28, 1992.
A(3)(b)(ii) Specimen agreement Previously filed as
between ManEquity, Inc. Exhibit A(3)(b)(ii) to
and dealers. Post-Effective Amendment
No. 11, February 26, 1993.
A(3)(c) Schedule of Sales Previously filed as
Commissions. Exhibit A(3)(c) to
Post-Effective Amendment
No. 9, February 28, 1992.
A(5)(a) Form of Flexible Premium Previously filed as
Variable Life Insurance Exhibit A(5) to Pre-
Policy, as amended Effective Amendment
No. 2, November 19, 1987.
A(5)(b) Endorsement to Flexible Previously filed as
Premium Variable Life Exhibit A(5)(b) to Post-
Insurance Policy. Effective Amendment
No. 9, February 28, 1992.
</TABLE>
8
<PAGE> 128
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
A(5)(c) Endorsement to Flexible Previously filed as
Premium Variable Life Exhibit A(5)(c) to Post-
Insurance Policy re Effective Amendment No. 11,
redomestication. February 26, 1993.
A(6)(a) Restated Articles of
Redomestication of The
Manufacturers Life
Insurance Company of
America. **
A(6)(b) By-Laws of The Manu-
facturers Life Insurance
Company of America. **
A(8)(a) Service Agreement between Previously filed as
The Manufacturers Life Exhibit 1.A(8)(a) to
Insurance Company of Post-Effective Amend-
America and The Manu- ment No. 7 to the
facturers Life Insurance registration statement
Company. on Form N-4 of Separate
Account One of The
Manufacturers Life Insurance
Company of America (File No.
2-88607), March 2, 1989.
A(8)(a)(i) Amendment to Service Previously filed as
Agreement Exhibit A(8)(a)(i) to
Post-Effective Amendment
No. 11, February 26, 1993.
A(8)(a)(ii) Amendments to Service Previously filed as
Agreement: May 31, 1993 Exhibit A(8)(a)(ii) to
and June 30, 1993 Post-Effective Amendment
No. 13, March 1, 1994.
A(8)(b) Stoploss Reinsurance Previously filed as
Agreement between The Exhibit A(8)(b) to
Manufacturers Life Pre-Effective Amend-
Insurance Company of ment No. 1, August 13, 1987
America and The Manu-
facturers Life Insurance
Company.
</TABLE>
** Filed Electronically
9
<PAGE> 129
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
A(8)(c) Automatic Coinsurance Previously filed as
Agreement between The Exhibit (7) to Pre-
Manufacturers Life Effective Amendment
Insurance Company of No. 1 to the regis-
America and The Manu- tration statement on
facturers Life Insurance Form N-4 of Separate
Company. Account Two of The Manu-
facturers Life Insurance
Company of America (File No.
33-14499), September 4, 1987.
A(8)(d) Service Agreement between Previously filed as
between The Manufacturers Exhibit A(8)(d) to Post-
Life Insurance Company and Effective Amendment
ManEquity, Inc. dated No. 14, April 26, 1994.
January 2, 1991 as amended
March 1, 1994.
A(10)(a) Form of Application for Previously filed as
Flexible Premium Variable Exhibit A(10) to Pre-
Life Insurance Policy. Effective Amendment No.
1, August 13, 1987.
A(10)(b) Form of Streamlined
Application for Flexible
Premium Variable Life
Insurance Policy.**
</TABLE>
** Filed Electronically
10
<PAGE> 130
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
A(10)(c) Form of Short Form Previously filed as
Application for Flexible Exhibit A(10)(c) to
Premium Variable Life Post-Effective Amend-
Insurance Policy. ment No. 5, March 2, 1990.
A(10)(d) Form of Application Previously filed as
Supplement for Flexible Exhibit A(10)(d) to
Premium Variable Life Post-Effective Amend-
Insurance Policy. ment No. 7, March 1, 1991.
2. See Exhibit A(5).
3. Opinion and consent of Previously filed as
Stephen C. Nesbitt, Esq., Exhibit 3 to Pre-
General Counsel of The Effective Amendment
Manufacturers Life Insurance No. 1, August 13, 1987.
Company of America.
4. No financial statements
are omitted from the
prospectus pursuant to instruction
1(b) or (c) of Part I.
5. Not applicable.
6. Opinion and consent of
John R. Ostler, Vice-
President, Chief Actuary
and Treasurer of The Manu-
facturers Life Insurance
Company of America.**
7. Form of notice of short- Previously filed as
term cancellation right Exhibit 7 to Post-
and request for refund. Effective Amendment
No. 9, February 28, 1992.
8(a). Form of notice of right Previously filed as
of surrender and refund. Exhibit 8 to Pre-
Effective Amendment No.
1, August 13, 1987.
</TABLE>
** Filed Electronically
11
<PAGE> 131
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
8(b). Form of notice of right Previously filed as
of surrender and refund Exhibit 8(b) to Post-
(face amount increase). Effective Amendment
No. 9, February 28, 1992.
9. Memorandum Regarding
Issuance, Face Amount
Increase, Redemption
and Transfer Procedures
for the Policies**
10. Consent of Ernst &
Young LLP.
11. Consent of Jones &
Blouch L.L.P.
12. Financial Data Schedules.
</TABLE>
** Filed Electronically.
12
<PAGE> 1
EXHIBIT 99-1.A(6)(a)
13
<PAGE> 2
MICHIGAN DEPARTMENT OF COMMERCE
INSURANCE BUREAU
RESTATED ARTICLES OF REDOMESTICATION
(Domestic)
The name of the corporation is THE MANUFACTURERS LIFE INSURANCE COMPANY
OF AMERICA.
The undersigned company and persons of full age, and pursuant to action
by the Company's Board of Directors and stockholders, as appropriate, and
subject to the approvals of the Commissioners of Insurance of the Commonwealth
of Pennsylvania and the State of Michigan, do make, acknowledge, and verify
these Restated Articles of Redomestication for the purpose of redomesticating
The Manufacturers Life Insurance Company of America from the Commonwealth of
Pennsylvania to the State of Michigan, pursuant to Michigan Insurance Code
Sections 500.412 through 500.415, and for the purpose of restating the Articles
of Agreement of The Manufacturers Life Insurance Company of America.
The following Restated Articles of Redomestication of The Manufacturers
Life Insurance Company of America was adopted by the stockholders of the company
on the Fifteenth day of September, 1992, in the manner prescribed by law to be
filed for approval with the above-identified Commissioners and to be effective
immediately upon filing:
Each article in the Articles of Agreement of The Manufacturers Life
Insurance Company of America, as amended, is deleted in its entirety and the
following is substituted in lieu thereof and supersedes the original Articles of
Agreement and all amendments thereto:
ARTICLE I
The name of the corporation and by which it is known in law is The
Manufacturers Life Insurance Company of America (the "Company") and its
principal office for the transaction of business shall be in the City of
Bloomfield Hills, State of Michigan.
ARTICLE II
The date of incorporation of the Company in the Commonwealth of
Pennsylvania was April 11, 1977 and the date of incorporation of the
redomesticated Company in the State of Michigan shall also be April 11, 1977.
14
<PAGE> 3
ARTICLE III
The Company is organized for the following purposes, as authorized by
Chapter 6, Act No. 218 of the Public Acts of 1956, as amended, namely:
1. To insure the lives of persons, and every insurance appertaining
thereto; to grant and dispose of annuities, including variable life insurance
contracts and variable annuity contracts and to insure against personal injury,
disablement, or death resulting from traveling or general accidents, and against
disablement resulting from sickness, and every insurance appertaining thereto,
when written as a part of a policy of life insurance.
2. To insure against personal injury, disablement, or death resulting
from traveling or general accidents, and against disablement resulting from
sickness, and every insurance appertaining thereto.
3. To have the power to establish either or both general or separate
accounts in connection with the business authorized hereunder; to have the power
to establish or acquire any subsidiary authorized by law; and to have the power
to act in its own right in any similar capacity authorized by law.
4. To have the right to buy, hold, sell, and convey personal property
and such real estate or interest therein, as may be necessary or convenient for
the proper conduct of the affairs of the corporation, and as permitted by law.
5. To have all the powers conferred by law on a life insurance company
organized for the purpose above set forth; and in connection therewith to have
all powers conferred by law on all corporations organized and doing business
under and by authority of Chapter 52 of the Michigan Insurance Code.
ARTICLE IV
The term of existence of the Company shall be perpetual.
ARTICLE V
The annual meeting of the stockholders of the Company shall be held on
the First day of May of each year. If for any reason the annual meeting is not
held on that date, the Board of Directors shall properly call and notice a
special general meeting for the transaction of business of the annual meeting.
The annual meeting of the stockholders of the Company shall be held at a place
determined by the Company's Board of Directors unless otherwise required by law.
ARTICLE VI
AUTHORIZED SHARES OF STOCK
The amount of capital stock of the Company is Five Hundred Five Million
Dollars ($505,000,000.00) divided into two classes: common stock and preferred
15
<PAGE> 4
stock; Five Million (5,000,000) shares of the stock, of the par value of One
Dollar ($1.00) each, amounting in the aggregate at par to Five Million Dollars
($5,000,000) to be common stock and Five Million (5,000,000) shares of the
stock, of the par value of One Hundred Dollars ($100.00) each, amounting in the
aggregate at par to Five Hundred Million Dollars ($500,000,000) to be preferred
stock. The preferred stock shall be non-voting, except as required by law, and
shall be redeemable by the Company at any time determined by its Board of
Directors. Preferred stock will take preference over common stock upon
liquidation of the company. The holders of shares of common stock shall be
entitled to one vote for each share of common stock held in the stockholders
name on the books of the company on each matter submitted to a vote of the
stockholders.
ARTICLE VII
DIVIDENDS
Dividends and distributions on shares of a particular stock may be
declared and paid with such frequency, in such form and in such amount as the
Board of Directors may from time to time determine, provided, however, that
dividends on the preferred stock will be noncumulative and will be at the rate
of 10% on all issued preferred stock.
Dividends and distributions may be paid in cash, property or shares,
including authorized but unissued shares, or treasury shares, or a combination
of any of the foregoing, as determined by the Board of Directors or pursuant to
any programs the Board of Directors may have in effect at the time.
ARTICLE VIII
BOARD OF DIRECTORS
The business of the Company shall be conducted by the Board of
Directors. The number of Directors shall be not less than five nor more than
twenty. At least one Director of the Company shall be a resident of the State of
Michigan.
Directors shall be elected annually at the annual meeting of
stockholders, except that, if the stockholders at a special meeting called for
the purpose or without a meeting by unanimous consent, shall increase the number
of directors, additional directors to fill the vacancies so created shall be
elected at such meeting or by such consent.
The majority of the members of the Board of Directors shall constitute
a quorum for the transaction of business at any meeting of the Board of
Directors. If a quorum shall not be in attendance, the meeting of the Board of
Directors shall be adjourned from time to time until a quorum shall be present.
A member of the Board of Directors may be removed, for cause, at any
time by the affirmative vote of a majority of the Board of Directors.
16
<PAGE> 5
If any vacancy on the Board of Directors shall occur by death,
resignation, removal, or otherwise, the remaining directors shall continue to
act, and such vacancy may be filled by a majority of the remaining directors,
though less than a quorum. The person elected to fill the vacancy shall hold
office for the remainder of the unexpired term or until a successor is duly
elected and qualified.
At its annual meeting, the Board of Directors shall elect a President,
a Secretary, and a Treasurer; and may appoint one or more Vice-Presidents and
such other officers with authority to act for such Board of Directors as they
may see fit or as may be provided for by the Bylaws of the Company. Any person
may serve in two or more offices, but a single person may not hold the positions
of President and Vice-President or Secretary and Assistant Secretary at one and
the same time.
ARTICLE IX
No director of the Company shall be personally liable to the Company
stockholders or policyholders for monetary damages for breach of the director's
fiduciary duty, provided that the foregoing shall not eliminate or limit the
liability of a director for any of the following:
i. a breach of the director's duty of loyalty to the corporation
or its stockholders or policyholders;
ii. acts or omissions not in good faith or that involve intentional
misconduct or knowing violations of law;
iii. a violation of Section 5036, 5276 or 5280 of the Michigan
Insurance Code, being MCL 500.5036, 500.5276 and 500.5280;
iv. a transaction from which the director derived an improper
personal benefit; or
v. an act or omission occurring on or before the date of filing of
these Restated Articles of Redomestication.
If the Michigan Insurance Code is hereafter amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the corporation, in addition to the limitation and
personal liability contained herein, shall be eliminated or limited to the
fullest extent permitted by the Michigan Insurance Code as so amended. No
amendment or appeal of this Article IX shall apply to or have any effect on the
liability or alleged liability of any director of the corporation for or with
respect to any acts or omissions of such director occurring prior to the
effective date of such amendment or appeal.
17
<PAGE> 6
IN WITNESS WHEREOF, , President, and ,
Secretary of The Manufacturers Life Insurance Company of America, by affixing
their signatures below on this day of , 1992 do hereby certify that the Restated
Articles of Redomestication herein were duly adopted by the unanimous written
consent of the stockholders.
- ----------------------------- -------------------------------
, President , Secretary
Province of Ontario )
County of )
On this day of , 1992, before me a notary
public in and for said county, personally appeared and
, known to me to be the persons named in and who executed
the foregoing instrument, and severally acknowledged that they executed the same
freely and for the intents and purposes therein mentioned.
Notary Public, in and for the Province of Ontario, County of My Commission does
not expire.
18
<PAGE> 1
EXHIBIT 99-1.A(6)(b)
19
<PAGE> 2
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
BY-LAWS
ARTICLE I - Name
This corporation shall be known as The Manufacturers Life Insurance
Company of America (formerly National Liberty Life Insurance Company of
America).
ARTICLE II - Purposes
This Company shall, through its officers, Board of Directors and
persons duly authorized to act for and on behalf of the Company, cause to be
issued contracts or policies of insurance in the form and for the purposes as
provided for under the statutes of the State of Michigan relating thereto, and
the rules and regulations of the Michigan Insurance Bureau and as provided by
the laws, rules and regulations of any other states in which the Company may
qualify to do business.
ARTICLE III - Company Business and Principal Office
The business of the Company may be conducted anywhere in the State of
Michigan, and in such other states of the United States or elsewhere wherein the
Company may qualify for the purpose of the conduct of the business, as
authorized by its Restated Articles of Redomestication and amendments thereto.
The home office of the Company shall be in Bloomfield Hills, Michigan. The
Company may establish branch or district offices, or agencies, elsewhere in the
State of Michigan, as well as in such other states in which it may qualify to do
the business of insurance.
ARTICLE IV - Seal
The Company has adopted a seal, a copy of which is impressed herewith,
that shall hereafter be used by the Company wherever a seal may be required.
ARTICLE V - Stockholders' Meetings
Section 1. Place of Meeting. All Annual and Special meetings of the
Stockholders shall be held in the city set forth in the Company's Restated
Articles of Redomestication as the location of its principal office or such
other place as determined by the Board of Directors unless otherwise required by
law.
20
<PAGE> 3
Section 2. Annual Meeting. The annual meeting of the stockholders of
the Company shall be held on the First day of May of each year or at such other
time as may be ordered by the Board of Directors.
Section 3. Special Meeting. Special meetings of the stockholders may be
convened at the request of the majority of the members of the Board of
Directors, by the President, or at the written request of stockholders
representing forty percent (40%) of the outstanding stock of this Company, duly
submitted to the Secretary at least forty-five days before the date of such
meeting. The call for a special meeting shall designate the time and place of
the said meeting, and as set forth in Section 5. The notice must also set forth
the particular purpose or purposes for which the said meeting is being called.
Section 4. Quorum. A quorum for the purpose of transacting the business
of any meeting shall consist of a majority of the outstanding stock represented
either in person or by proxy. A proxy must be filed with the Secretary at least
five days prior to any meeting, as provided for in Section 7.
Section 5. Notice of Meeting. Except as may otherwise be provided by
the Michigan Insurance Code, notice of the annual or any special meetings of the
stockholders shall be given to the stockholders either by publication, when
required under the Code, or by personal notice mailed, postage prepaid, to the
last known address as it appears on the books and records of the Company, at
least twenty one days prior to the date of such meeting. Any meeting occurring
on a holiday, not attended by a quorum, or at the request of the majority of
those present at any meeting, may be continued or adjourned from day to day or
to any other day certain without the necessity of any further notice being given
to stockholders.
Section 6. Business of the Meeting. The annual meeting of the
stockholders of the Company shall be an open meeting for all business of any
nature, kind or character relating to the affairs of the Company. At this
meeting, elections shall be held for members of the Board of Directors whose
term expires at the annual meeting, or to fill any existing vacancy. Any
business of the meeting may be continued from day to day or to a day certain.
Section 7. Voting. Each stockholder shall be entitled to one vote for
each share of stock. Each stockholder may vote by proxy. The proxy shall be in
writing and must be filed with the Secretary of the Company at least five days
prior to the date of the meeting. In all elections for directors, each
stockholder having a right to vote may cast the whole number of his votes for
one candidate or distribute them among the candidates as he may prefer.
Section 8. Action Without a Meeting. Except as otherwise provided in
the Restated Articles of Redomestication, or by law, any action required or
permitted to be taken at any annual or special meeting of the stockholders may
be taken without a meeting, prior notice or a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of all the
outstanding shares entitled to vote thereon.
ARTICLE VI - Directors
21
<PAGE> 4
Section 1. Number and Term. There shall be not less than five nor more
than twenty members of the Board of Directors. The exact number of directors
within said limits shall be determined by the Board of Directors. Each director
shall be elected for a period of one year or until his successor has been duly
elected and qualified as required herein. A director need not be a stockholder.
Section 2. Meetings. An annual meeting of the newly elected Board of
Directors shall be held as soon after the annual meeting of shareholders as
convenient, but in no event later than thirty days after the annual meeting of
the shareholders.
Special meetings of the Board of Directors may be called at any time by
the President or Chairman and shall be called by the President upon the written
request of one-third (1/3) of the directors. Notice of the time and place of
each special meeting shall be given to each director no later than the day
before the meeting.
Section 3. Quorums. A majority of the members of the Board of Directors
shall constitute a quorum for the transaction of business at any meeting. If a
quorum shall not be in attendance, a meeting may be adjourned from time to time
until a quorum shall be present.
Section 4. Action Without a Meeting. Except as otherwise provided in
the Restated Articles of Redomestication or by law, any action required or
permitted to be taken at any regular or special meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting, prior
notice or a vote, if a consent in writing setting forth the action so taken
shall be signed by all the members of the Board of Directors or the committee.
Section 5. Vacancies. Any vacancy in the Board of Directors which shall
occur by death, resignation, removal or for any other cause may be filled by a
vote of the majority of the remaining members of the Board at the next regular
or special meeting. The person elected shall hold office for the unexpired term
or until a successor is duly elected and qualified.
Section 6. Election of Officers. At its annual meeting, the Board of
Directors shall elect from among its members a Chairman. It shall also elect a
President, Secretary and Treasurer, and if the majority of the Board deems it
necessary, may elect Vice Presidents, Assistant Secretaries, Assistant
Treasurers, and such other officers as it may designate. Any person may be
elected to two or more offices, but may not hold the position of both President
and Vice President at one and the same time.
Section 7. Removal. The Board of Directors by a majority vote may, for
cause, at any time remove any officer or director of the Company from office and
upon such removal the rights of such persons to the emolument and compensation
for services in such office shall forthwith cease and terminate.
Section 8. Security. The Board of Directors may from time to time
designate the nature, kind and amount, if any, of security that may be required
of any officer for the faithful performance of his duty.
22
<PAGE> 5
Section 9. Powers of Board of Directors. The Board of Directors shall
generally be in charge of the business and affairs of the Company. The business
and affairs of the Company in its details shall be conducted and managed by its
elected officers. The Board of Directors may by resolution duly adopted,
designate or appoint any one to act for and on behalf of the Company, and may
delegate specific authority to any elected officer or to any person to do or
perform any act or deed for and on behalf of this Company. The Board of
Directors may enter into any contract or agreement on any matters relating to
the business and affairs of this Company, and it shall be binding upon the
Company though extending beyond the terms of office of any or all the members of
the Board of Directors. It shall receive reports from its officers and
employees, and shall be authorized to issue directives to them. It shall set the
policy and the manner of the conduct of the business of the Company. It shall
set the salary and compensation, if any, to be paid its elected officers.
Subject to the provisions of the Michigan Insurance Code, the investment of the
funds of this Company shall be in accordance with the policies prescribed by the
Board of Directors, and the elected officers shall act only subject to and
within the limits authorized by the Board of Directors. The Board of Directors
shall generally have all the duties, powers, rights and privileges granted them
by the laws of the State of Michigan as they presently exist or are amended or
changed from time to time.
ARTICLE VII - Committees
Section 1. Executive Committee. There shall be elected at each annual
meeting of the Board of Directors an Executive Committee. The Executive
Committee shall have all the powers of the Board of Directors in the interim
between Board Meetings.
The Executive Committee shall consist of three or more members, of
which the President shall be a member. Any vacancy shall be filled by the Board
of Directors.
Regular minutes of the proceedings of the Executive Committee shall be
kept, which shall be presented to the meeting of the Board next succeeding such
meeting.
Section 2. Other Committees. The Board of Directors may elect such
other committees as it deems appropriate and desirable at such times, for such
durations, for such purposes, under such conditions, and with such authority of
the Board as the Board of Directors shall designate.
ARTICLE VIII - Officers and Their Duties
Section 1. The general management of the business and affairs of this
Company shall be conducted and managed by its elected officers in accordance
with the duties assigned to each of the said officers by these by-laws or by
directives from the Board of Directors, and they shall have the duty to
generally supervise the details and procedure or daily operation of the said
business and see to the proper performance of same by employees, agents or
persons hired or engaged by them on behalf of the Company.
23
<PAGE> 6
Section 2. Chairman. The Chairman shall preside at all meetings of the
Board of Directors and stockholders. The Chairman shall not be an officer of the
Company. He shall have such other powers and perform such other duties as may
from time to time be assigned to him by the Board of Directors.
Vice Chairman. The Vice Chairman, if one is elected, shall preside at
all meetings of the Board of Directors and stockholders in the absence of the
Chairman. He shall not be an officer of the Company. He shall have such other
powers and perform such other duties as may from time to time be assigned to him
by the Board of Directors.
President. The President, unless otherwise provided by the Board, shall
be the chief executive officer of the Company, and shall have entire supervision
of the affairs of the Company subject to the regulations of the Board of
Directors. He shall preside at all meetings of the Board of Directors and
stockholders in the absence of the Chairman and Vice Chairman. He shall perform
all acts properly pertaining to the executive officer of the Company, or that he
may be directed to perform by the Board of Directors from time to time. He shall
from time to time bring before the Board of Directors such information affecting
the business and property of the Company as may be required or advisable.
Vice President. Each Vice President shall have such powers and perform
such duties as may from time to time be assigned to him or them by the Board of
Directors. Unless otherwise ordered by the Board of Directors, the Vice
Presidents in the order of their seniority shall, in the absence or the
inability of the President, perform the duties of that office until the return
of the President or the disability shall have been removed or a new President
shall have been elected.
Secretary. The Secretary shall have such particular powers as pertains
to his office, and such authority as may be granted to him by the Board of
Directors. He shall have a custody of the corporate seal, attend all the regular
and special meetings of the stockholders, Board of Directors, and committees,
keep accurate minutes of the proceedings at each of such meetings and report the
same at a succeeding meeting of the committee, Board of Directors, or of the
stockholders. He shall attend to the giving of all notices required by law or by
these by-laws to be given to stockholders, directors or committees unless and
except as the President or the Board of Directors may from time to time
designate some other officer to perform such functions. The Secretary may
delegate any of his ministerial duties to any Assistant Secretary.
Assistant Secretaries. The Assistant Secretaries shall have such powers
and perform such duties as may be assigned to them by the Board of Directors or
by the Secretary of the Company.
Treasurer. The Treasurer shall be the custodian of all the funds and
securities of the Company. He shall have such powers and authorities as may be
granted to him by the Board of Directors. He shall have the right to delegate
any of his ministerial duties to the Assistant Treasurer and shall also have the
right to enter into custodian agreements with banks or trust companies or other
corporations authorized by law to act as custodians.
24
<PAGE> 7
Assistant Treasurer. Assistant Treasurers shall have such power and
duties as may be granted to him or them by the Board of Directors or as may be
assigned to him or them by the Treasurer.
The Treasurer and Assistant Treasurer may be required to file a bond in
the sum of at least Five Thousand Dollars ($5,000.00) with corporate surety. The
amount of the bond may from time to time be increased or decreased by the Board
of Directors.
Other Officers. The Board of Directors shall have the power from time
to time at any of its regular meetings or special meetings called for that
purpose, to create such additional officers, to elect persons to such offices
and assign their duties and powers.
Section 3. Delegation of Authority. In the event of death, resignation,
absence, disability or removal of any officer, the Board of Directors may
delegate the power and duties of such office to any other officer, or appoint
any other person to said position for the balance of the term.
Section 4. Bonds. Every officer and employee of the Company may be
required by the Board of Directors to furnish a bond for the faithful
performance of their duties and trust at the expense of the Company. Said bond
shall be in an amount prescribed by the Board of Directors and with such surety
and in such form and amount as required by the Board of Directors.
ARTICLE IX - Certificates of Stock
The certificates for shares of capital stock of the Company shall be in
such form, not inconsistent with the Restated Articles of Redomestication, as
shall be approved by the Board of Directors. Certificates of stock shall be
issued under the seal of the Company and shall be signed by the President or a
Vice President and the Secretary, and countersigned by the Treasurer. Shares of
stock of the Company shall be transferable only on the books of the Company by
the registered holder thereof in person or by attorney duly authorized, and upon
the surrender and cancellation of the certificate thereof duly endorsed.
The Board of Directors may direct the proper officers to issue new
certificates of stock in lieu of others which may have been lost or destroyed,
after the expiration of thirty days from receipt of request therefor, provided
the person requesting the new certificate shall make an affidavit of the facts
concerning loss or destruction and shall give the Company a bond of indemnity in
such form, amount, and with such surety, as is acceptable to the Board of
Directors.
ARTICLE X - Fiscal Year
The fiscal year of the Company shall begin on the first day of January
and terminate on the thirty-first day of December in each year.
25
<PAGE> 8
ARTICLE XI - Bank Accounts
The Board of Directors shall have the authority on behalf of the
company and in its name to open or close an account or accounts in any reputable
banks or trust companies wherein there shall be deposited the funds of the
Company. Withdrawals from the said bank deposit shall be made by cheque or draft
signed only by such person or persons as may be specifically authorized so to do
by the Board of Directors. The Board of Directors may authorize a facsimile
signature on all cheques or drafts drawn for any amount.
ARTICLE XIa
1. All deeds, powers of attorney, contracts, documents, and instruments
in writing requiring to be executed by the Company under Seal shall be signed on
behalf of the Company by such Officer or Officers, or person or persons as may
be designated from time to time by Resolution of the Board of Directors.
2. All instruments and documents necessary to sell, assign, transfer,
purchase or accept shares, stocks, bonds, debentures and other like securities
out of or into the name of the Company shall be signed on behalf of the Company
by such Officer or Officers, or person or persons as may be designated from time
to time by Resolution of the Board of Directors.
ARTICLE XII - Reinsurance
The Board of Directors shall have the right to reinsure all or any of
the Company's liabilities under all or any of its policy contracts, subject to
the laws of the State of Michigan.
ARTICLE XIII - Notices
Wherever any notice is required by these by-laws, such notice may be
waived in writing by all of the persons entitled to such notice, anything to the
contrary herein notwithstanding.
26
<PAGE> 9
ARTICLE XIV - Amendments
These by-laws may be altered, amended, or repealed, except as otherwise
provided by law, by the affirmative vote of a majority of the Board of
Directors, if notice of the proposed alteration, amendment or repeal be
contained in the notice of the meeting of the Board of Directors at which such
action is proposed.
The undersigned, the Secretary of the Company, states that these
By-laws were adopted as and for the by-laws of the Company on the day of
, 1992.
Dated: _________________ ____________________________________
Secretary
27
<PAGE> 1
EXHIBIT 99.1-A(10)(b)
28
<PAGE> 2
APPLICATION FOR LIFE INSURANCE TO
The Manufacturers Life Insurance Company of America
(herein after referred to as The Company)
Manulife Financial
Application No.
PLEASE PRINT AND USE BLACK INK. ANY CHANGES MUST BE
INITIALLED BY THE PROPOSED INSURED AND/OR OWNER. Policy No.
Proposed Life Insured
1a. Name (first, middle, last) 1b. Date of Birth (mmm/dd/yy)
1c. Place of Birth 1d. Soc. Sec. No./Tax I.D. No. 1e. Sex
1f. Occupation 1g. Specific Duties 1h. How Long?
1i. Home Address City State Zip 1j. How Long?
1k. Employer Name and Address City State Zip 1l. How Long?
Owner if other than Proposed Life Insured
2a. Name (first, middle, last) 2b. Date of Birth (mmm/dd/yy) 2c. Occupation
2d. Relationship to Proposed Life Insured 2e. Address City State Zip
2f. Employer Name and Address City State Zip
2g. If home address or employer has changed in last 2 years, give details:
Successor Owner - Recommended for Juvenile Insurance - Not recommended for
buy-sell or corporate-owned
3a. Name 3b. Relationship to Owner 3c. Soc. Sec. No./Tax I.D. No.
Beneficiary(ies) subject to change by Owner
4a. Primary 4b. Relationship to Proposed Life Insured
4c. Secondary 4d. Relationship to Proposed Life Insured
Send Premium Notices To:
5a. Insured Owner Business Residence Other (give details below):
5b. Name Address City State Zip
Life Insurance in Force:
6a. Total insurance in force on the Proposed Life Insured's life $
6b. Total insurance currently pending with all companies, including this
application $. Of this total, what amount of insurance do you intend to
accept? $
6c. List policies in force
Year of Accidental GI Option
Company Issue Group? Face Amount Death Amount Business Personal
7. Have you ever been declined for insurance, or been offered
insurance with restricted benefits or at other than standard rates? Y/N
8. Is this insurance to replace, or will it cause a change in, or
involve a loan under, any insurance or annuity policy on any
Proposed Life Insured's life or in any insurance or annuity policy
owned by the Owner? If "Yes", to either 7 or 8, give details below: Y/N
Page 1
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc. and ManEquity Inc.
Form NB0777UA (0296)
29
<PAGE> 3
Application No. PLEASE PRINT
Policy Applied For
9a. Plan:
9b. Face Amount (policy only, excluding Supplementary Benefits): $
9c. If an additional or optional policy is being applied for in a separate
application, state plan and amount.
9d. Loan Interest Rate (Check loan rate applicable to the policy being applied
for) 5.75% 8% Variable
9e. If a supplementary benefit applied for cannot be approved, should the
policy be issued without it? Yes No Not Applicable
9f. Is a policy guarantee being applied for? Yes No Not Applicable
If "Yes", indicate type of policy guarantee: No Lapse Guarantee
Death Benefit Guarantee
Supplementary Benefits
Single-Life Plans Survivorship Plans
10. Total Disability Waiver of Monthly 11. Policy Split Option
Deductions Four Year Term (EPR)
Guaranteed Policy Value Total Disability Waiver of
Supplementary Insurance Option $ Monthly Deductions
Additional Life (number of lives Other (state which)
maximum 6) (complete application
NB0573UA for each additional life)
Other (state which)
Premiums
11a. Frequency: Annual Semi Quarterly Monthly Single
11b. If monthly, ManuMatic Transfer
11c. Planned Premium $
11d. Additional "once only" premium $
11e. Amount paid with application $
Death Benefit
12. Option 1: Face Amount Option 2: Face Amount Plus Policy Value
Special Requests
13.
Home Office Corrections or Amendments (NOT APPLICABLE IN WEST VIRGINIA) 14.
Page 2
30
<PAGE> 4
Application No. PLEASE PRINT
Smoking Questions
15a. Have you used tobacco in any form during the past 2 years (including
cigars, cigarillos, a pipe, chewing tobacco or cigarettes? Y/N
15b. Do you use any medication or product containing nicotine? Y/N
If "Yes", give details:
15c. Have you smoked any cigarettes during the past 12 months?
If "Yes", how many? Y/N
15d. Were you previously a cigarette smoker but have now stopped? Y/N
If "Yes", when did you stop? Give month and year:
Avocation Questions
16a. Do you have any part-time or seasonal occupation? Y/N
16b. Do you expect to change your occupation? Y/N
16c. Do you expect to change your country of residence? Y/N
If "Yes", give details:
17a. Have you flown as a student pilot, licensed pilot or crew member
in any aircraft (including ultralight planes) in the past 2 years? Y/N
17b. Are any such flights planned in the future? Y/N
17c. Have you engaged in any form of motor vehicle or power boat racing,
sky diving, skin or scuba diving, parachuting, hang-gliding,
mountain climbing or ballooning in the last 2 years? Y/N
18a. What is your Drivers License Number? State Y/N
18b. Have you been convicted of 3 or more moving violations within the
past 3 years? Y/N
18c. Have you been convicted of driving while intoxicated or while
otherwise impaired? If "Yes", give details? Y/N
Financial Questions
Complete when amount of insurance is $250,000.00 and more, or when applying for
business insurance for any amount, or insurance on the life of a juvenile for
any amount.
19. What is the purpose of this insurance? (e.g. estate conservation,
buy-sell, keyman)
20. How was the need for this amount determined? (Please submit copies of
financial statement(s), estate analysis, contractual agreements, etc.)
21a. Gross annual earned income (salary, commissions, bonuses, etc.)$
21b. Gross annual unearned income (dividends, interest, net real estate
income, etc.)$
21c. Total Assets $ 21d. Total Liabilities? $ 21e. Personal Net Worth? $
Juvenile Insurance:
22a. Are all brothers and sisters equally insured? Yes No
If "No", give details:
22b. Are parent(s) / guardian covered by life insurance? Yes No
If "Yes", how much is in force? If "No", why not?
Business Insurance: Provide the following information on your company
<TABLE>
<CAPTION>
Current Year Previous Year
<S> <C> <C>
23a. Assets $ $
23b. Liabilities $ $
23c. Gross Sales $ $
23d. Net Income after taxes $ $
23e. Fair Market Value of the business $ $
</TABLE>
23f. What percentage of the business is owned by the proposed Life Insured? %
23g. Are other partners/owners/executives being insured? Give details:
24. In the past 5 years, has the Proposed Life Insured or the business had any
major financial problems (bankruptcy, etc.)? Y/N If "Yes", give details:
31
<PAGE> 5
Application No. PLEASE PRINT
Medical Questions: -Please provide details to "Yes" answers in the space below
25. Have 2 or more of your immediate family members (parents, brothers and
sisters) prior to age 65, died of or been diagnosed as having coronary
artery disease, stroke or kidney disease? Yes No
<TABLE>
<CAPTION>
26. LIVING DECEASED
Family History Age Give Details of Present Health Age Cause of Death
<S> <C> <C>
Father
Mother
Brothers and
Sisters
</TABLE>
27a. Your Height 27b. Your Weight 27c. Any weight loss in the last year? Y/N
28a. Name and address of personal or attending doctor:
28b. Date last consulted? 28c. Reason and any medication/treatment given:
28d. List any medications you are taking currently:
29. So far as you know, within the last 10 years have you had or been told by
a doctor that you had:
a.) Chest pain, shortness of breath, heart murmur, high blood pressure,
stroke, irregular heart beat, or any other disease or disorder of the
heart or arteries? Y/N
b.) Diabetes or disease of any glands? Y/N
c.) Mental or emotional disorder, nervous breakdown, convulsions,
epilepsy, paralysis or any other disorder of the brain or nervous
system? Y/N
d.) Arthritis, gout, or any bone, joint, muscle or skin disorder? Y/N
e.) Asthma, bronchitis, pneumonia, emphysema or any lung disorder? Y/N
f.) Cirrhosis, hepatitis, ulcer, colitis, diverticulitis, ileitis, or
other disease of the liver, gall bladder, pancreas, stomach or
intestines? Y/N
g.) Prostate or testicular disease, disease of the uterus, ovaries or
breast? Y/N
h.) Anemia, leukemia, clotting disorders, platelet disorders, infections,
or sources of blood loss? Y/N
i.) Disorder of the urinary tract or kidneys - sugar, albumin or blood in
the urine? Y/N
j.) Cancer or tumors? Y/N
k.) An operation or admission to a hospital or any other health care
facility for observation, treatment of any illness or diagnostic
tests (including treadmill stress test for insurance)? Y/N
l.) Any other health impairment or medically treated condition? Y/N
m.) Treatment or advice from a physician, or licensed practitioner,
regarding alcohol or drug use? Y/N
30. Within the last 10 years have you been diagnosed by a doctor as
having Acquired Immune Deficiency Syndrome (Aids)? Y/N
PLEASE PROVIDE DETAILS TO ANY "YES" ANSWERS (If more space is required, use the
Medical Questions Continuation Sheet)
<TABLE>
<CAPTION>
Question Name, Address, Phone No. of Duration Reason and any
Number Date Attending Doctor and Hospital of Condition treatment given
<S> <C> <C> <C> <C>
</TABLE>
Page 4
32
<PAGE> 6
Application No.
Request for Taxpayer Identification Number and Certification
(To Be Completed by Owner/Taxpayer)
In order to comply with IRS regulations regarding Social Security Number
Tax Identification Numbers and Backup Tax - -
Withholding, individuals and sole proprietors
MUST give their Social Security Number. Other
entities MUST give their Employer Identification Number.
If you have no number or you have applied for a number Employer ID Number
and are waiting for one to be issued, write "APPLIED FOR" -
in the boxes. You then have 60 days to supply your TIN
number to us. After 60 days, The Company must begin
Backup Tax Withholding.
CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), AND
(2) I am not subject to Backup Tax Withholding either because I have not been
notified by the Internal Revenue Service (IRS) that I am subject to Backup Tax
Withholding as a result of a failure to report all interest or dividends, or the
IRS has notified me that I am no longer subject to Backup Tax Withholding (does
not apply to real estate transactions, mortgage interest paid, the acquisition
or abandonment of secured property, contributions to an individual retirement
arrangement (IRA), and payments other than interest and dividends).
Certification Instructions - You MUST cross out item (2) above if you have been
notified by the IRS that you are currently subject to Backup Tax Withholding
because of underreporting interest or dividends on your tax return.
Page 5
33
<PAGE> 7
Application No.
Signatures
The Proposed Life Insured (or Parent or Guardian) has read the statements and
answers to the medical evidence portion and they are complete and true to the
best of his/her knowledge and belief. The Proposed Life Insured hereby agrees
that they shall form part of the application for life insurance for which such
medical evidence was required by The Company.
The Proposed Life Insured (or Parent or Guardian) acknowledges receipt of The
Notice of Disclosure of Information.
The Proposed Life Insured and Owner (or Parent or Guardian) agree that: 1.) The
statements and answers in this application are complete and true to the best of
their knowledge and belief. 2.) UNLESS THE TERMS AND CONDITIONS OF THE TEMPORARY
LIFE INSURANCE AGREEMENT ARE SATISFIED SO THAT INSURANCE IS PROVIDED UNDER THAT
AGREEMENT, INSURANCE UNDER ANY POLICY ISSUED ON THE APPLICATION WILL BECOME
EFFECTIVE ONLY WHEN THE FIRST PREMIUM HAS BEEN PAID IN FULL AND THE POLICY HAS
BEEN DELIVERED; PROVIDED THAT AT THE TIME OF DELIVERY THERE HAS BEEN NO
DETERIORATION IN THE INSURABILITY OF ANY PERSON PROPOSED FOR LIFE INSURANCE AS
STATED IN THE APPLICATION, SINCE THE DATE OF THE APPLICATION. They are aware The
Company has underwriting rules to determine insurability. 3.) (NOT APPLICABLE IN
WEST VIRGINIA) Acceptance of the policy will, where permitted by law, constitute
agreement to its terms and ratification of any changes specified by The Company
in the policy, except that any change of amount, classification, plan, benefits
or age at issue will be made only with the Owner's written consent.
THE PROPOSED LIFE INSURED AND OWNER (OR PARENT OR GUARDIAN) UNDERSTAND THAT
UNDER THE POLICY APPLIED FOR, THE AMOUNT OF THE INSURANCE BENEFITS, THE DURATION
OF THE INSURANCE COVERAGE, AND THE POLICY VALUE MAY INCREASE OR DECREASE
DEPENDING ON THE INVESTMENT EXPERIENCE OF THE CHOSEN INVESTMENT ACCOUNT AND ARE
NOT GUARANTEED AS TO DOLLAR AMOUNT.
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines and confinement in
prison.
Signed at (City/State) this day of 19
(X) Witness (X) Signature of Proposed Life Insured
(X) Witness (X) Signature of Owner, if other than Proposed Life Insured
(X) Witness (X) Signature of any Proposed Juvenile Life Insured over age 10
(X) Signature of Registered Representative if other than Witness
(X) Consent of Parent or Guardian, if other than Owner
Father Mother Guardian
All other Registered Representatives sharing commissions for this policy must
also sign here.
(X) Signature of Registered Representative (X) Place and Date
(X) Signature of Registered Representative (X) Place and Date
(X) Countersignature of Licensed Resident Agent (where required by law)
Page 6
34
<PAGE> 8
Authorization To Obtain Information
The Manufacturers Life Insurance Company
The Manufacturers Life Insurance Company (U.S.A.)
The Manufacturers Life Insurance Company of America
(hereinafter referred to as The Company)
Application No.
I hereby give permission to any physician, medical care provider, hospital,
clinic, laboratory, insurance company or MIB Inc. (The Medical Information
Bureau) or any other similar person or organization to give The Company and to
its reinsurers, information about me or any of my minor children who are to be
insured. The information collected by The Company may relate to the symptoms,
examination, diagnosis, treatment or prognosis of any physical or mental
condition. Although information related to drug or alcohol abuse is protected
from disclosure by Federal Regulation 42 CFR Part 2, I give permission to The
Company to collect this information for those purposes which are described
below. I understand that I can revoke this permission to collect information
related to drug or alcohol abuse at any time, but any revocation will not affect
such information that has already been collected and relied on by The Company.
Information collected under this Authorization will be used by The Company to
evaluate my application for insurance, to evaluate a claim for benefits, or for
reinsurance or other insurance purposes. I understand that I have a right to
receive a copy of this form. I agree that a photocopy of this form will be as
valid as the original. This Authorization will be valid for two years from the
date shown below. I acknowledge receipt of the Notice of Disclosure of
Information.
Date (mmm/dd/yy) (X) Signature of Proposed Life Insured
Name(s) of minor child(ren) proposed for insurance (X) Witness
(X) Signature of Parent or Guardian (if minor children proposed for insurance)
[Bar Code]
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc., and ManEquity, Inc.
Form NB1116US (0194)
35
<PAGE> 9
Notice of Disclosure of Information
The Manufacturers Life Insurance Company; The Manufacturers Life Insurance
Company (U.S.A.); The Manufacturers Life Insurance Company of America;
(hereinafter referred to as The Company) Detach and give to Proposed Life
Insured Application No. This brief description of our
underwriting process is designed to help you understand how an application for
life insurance is handled, the types and sources of information we may collect
about you, the circumstances under which we may disclose that information to
others and your right to learn the nature and substance of that information upon
written request. The purpose of the underwriting process is to make sure that
you qualify for life insurance under the rules of The Company and, assuming you
do, establish the proper premium charge for that insurance. The underwriting
process assures that the cost of insurance is distributed equitably among all
policyowners, and that each individual pays his or her fair share. The
information necessary to evaluate your application is dependent upon your age,
the amount of insurance you are applying for, your medical history, your
occupation, your avocations and other personal information. Your answers on the
application are the principal source of information, however additional sources
of information may be required.
Information given in your application may be made available to other insurance
companies to which you make application for life or health insurance coverage or
to which a claim is being submitted. Information you provide will be treated as
confidential. The Company may, however, make a brief report thereon to the
Medical Information Bureau (M.I.B.), a non-profit membership organization of
life insurance companies which operates an information exchange on behalf of its
members. Upon request by another member insurance company to which you have
applied for life or health insurance coverage or to which a claim is submitted,
M.I.B. will supply such company with the information it may have in its files.
Upon receipt of a request from you, the Bureau will arrange disclosure of any
information it may have in your file. (Medical information will be disclosed
only to your attending physician). If you question the accuracy of information
in the Bureau's file, you may contact the Bureau and seek a correction in
accordance with the procedures set forth in the Federal Fair Credit Reporting
Act. The address of the Bureau's Information Office is Post Office Box 105,
Essex Station, Boston, Massachusetts 02112; telephone number (617) 426-3660. The
Company may also release information in its file to other life insurance
companies to whom you may apply for life or health insurance, or to whom a claim
for benefits may be submitted. As part of our normal procedure, an investigative
consumer report may be prepared concerning character, general reputation,
personal characteristics and mode of living, except as may be related directly
or indirectly to your sexual orientation. This information will be obtained
through a personal interview and/or interviews with friends, neighbors and
associates. A complete and accurate disclosure of the nature and scope of the
investigative consumer report, if one is prepared, will be provided to you upon
written request to the Senior Underwriting Consultant, The Manufacturers Life
Insurance Company, 200 Bloor Street East, Toronto, Canada M4W 1E5. Manulife
Financial and the block design are registered service marks of The Manufacturers
Life Insurance Company and are used by it and its subsidiaries: The
Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life Insurance
Company of America, Manulife Series Fund, Inc., and ManEquity, Inc.
Form NB1116US (0194)
36
<PAGE> 10
Notice Regarding Temporary Life Insurance Agreement and Receipt
The Manufacturers Life Insurance Company
The Manufacturers Life Insurance Company (U.S.A.)
The Manufacturers Life Insurance Company of America
(hereinafter referred to as The Company)
DO NOT DETACH
Application No. Policy No. Name of Proposed Life Insured
HEALTH QUESTIONS.
Has the Proposed Life Insured under this application:
(a) within the last 12 months been treated or had treatment recommended
by a member of the medical profession for any heart problem, stroke,
cancer or pneumonia? Y/N
(b) within the last 60 days had or been advised to have any additional
medical diagnostic test, treatment or surgery not yet performed? Y/N
(c) within the last 2 years, been declined for life or disability income
insurance? Y/N
I have read and understand the terms and conditions of the Temporary Life
Insurance Agreement. The Proposed Life Insured agrees that to the best of
his/her knowledge and belief the answers to the above Health Questions are true.
Signed at (City/State) this day of 19
(X) Witness (X) Signature of Proposed Life Insured
(X) Witness (X) Signature of Owner (if other than Proposed Life Insured)
(X) Witness (X) Signature of Parent or Guardian (if minor child is Proposed
Life Insured
[bar code]
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc., and ManEquity, Inc.
Form NB1074US (0196)
37
<PAGE> 11
Temporary Life Insurance Agreement and Receipt
The Manufacturers Life Insurance Company
The Manufacturers Life Insurance Company (U.S.A.)
The Manufacturers Life Insurance Company of America
(hereinafter referred to as The Company)
The Company acknowledges receipt of $ as a premium for life insurance applied
for on the life of for Application number Date (X)
Signature of Agent or Registered Representative
ALL PREMIUM CHECKS MUST BE MADE PAYABLE TO THE COMPANY AS INDICATED IN THE CHECK
BOX ABOVE; 200 BLOOR STREET EAST, TORONTO, CANADA M4W 1E5. DO NOT MAKE CHECKS
PAYABLE TO THE AGENT OR LEAVE THE PAYEE BLANK.
The Company will pay a death benefit to the beneficiary named in the Application
if any Proposed Life Insured or the survivor under a Survivorship Plan dies
while this Agreement is in effect, subject to the terms and conditions set out
below.
1. LIMITED AMOUNT OF INSURANCE. The amount of coverage under this Agreement will
be the lesser of: (a) the amount of insurance applied for including any
supplementary benefits and accidental death benefit if the Proposed Life
Insured's death is caused by an accident; and (b) $1,000,000 ($5,000,000 for
Survivorship plans or $200,000 for juvenile insurance). This maximum amount of
coverage applies to the total amount under this Agreement and any other
Temporary Life Insurance Agreement with The Company covering the Proposed Life
Insured. If there are two or more persons proposed for insurance, this maximum
amount applies to the total coverage. (See Over)
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc., and ManEquity, Inc.
Form NB1074US (0196)
38
<PAGE> 12
2. ACCIDENTAL DEATH BENEFIT LIMITATION. If the benefits applied for include an
accidental death benefit, no such benefit will be paid in respect of a death
caused by: (a) voluntarily taking or absorbing of any drug, medicine, sedative
or poison (except in connection with any Proposed Life Insured's employment)
unless prescribed by a licensed doctor other than the Proposed Life Insured; (b)
suicide whether sane or insane except as provided in Missouri; or (c) travel in
any aircraft other than as a passenger. Exclusion (a) does not apply to
applications taken in Connecticut or other states which disallow this exclusion.
3. TEMPORARY LIFE INSURANCE AGREEMENT. If any of questions (a) (b) or (c) in
the Notice Regarding Temporary Life Insurance Agreement and Receipt is answered
"yes" or left blank, no money will be accepted and no coverage will be provided
under this Agreement.
4. DATE INSURANCE BEGINS. Insurance under this Agreement will begin on the date
of this Agreement if The Company's Application for Life Insurance has been
completed and a payment has been received by The Company for at least
one-twelfth of the annual premium for the basic plan and any riders or
supplementary benefits requested in the Application. If payment is made by check
or draft, no insurance will be provided by this Agreement unless the check or
draft is honored when first presented for payment.
5. DATE INSURANCE ENDS - 90 DAY MAXIMUM. Insurance under this Agreement will end
on the earliest of: (a) the 90th day after the date of this Agreement; (b) the
day before the date insurance takes effect under the policy applied for; (c) the
date The Company offers insurance other than as applied for; or (d) the date The
Company mails notice to the applicant that the Application is declined and
refunds the premium paid. (a) does not apply to applications taken in
Connecticut.
6. SUICIDE. Except as otherwise provided in Missouri, if any person proposed
for insurance, whether sane or insane, commits suicide, The Company will only be
liable for a refund of the premium paid.
7. MISREPRESENTATION. If there is any material misrepresentation in the answers
to the Health Questions in the Notice Regarding Temporary Life Insurance
Agreement and Receipt, the Application or in any Medical Evidence Exam form
submitted to The Company related to any Proposed Life Insured, The Company will
only be liable for a refund of the premium paid.
8. OTHER CONDITIONS. No one is authorized to: (a) accept any premium for any
Proposed Life Insured under 15 days of age or over age 70 (nearest birthday) as
at the date of this Agreement; or (b) change or waive any provision of this
Agreement.
THE ABOVE EXCLUSIONS APPLY EXCEPT AS OTHERWISE PROVIDED BY APPLICABLE STATE LAW.
Form NB1074US (0196)
39
<PAGE> 13
Application No. PLEASE PRINT
To be answered by the Registered Representative (Required for ALL applications)
1. If the Owner is a Corporation, Partnership, Trust or other legal entity,
the NASD requires such entity to provide The Company with documentation
detailing the name(s) of all individuals authorized to transact business on
behalf of the entity. This requirement will be satisfied by submitting a copy
of the Corporation Resolution, Partnership Agreement, or Certification by
Trustee form. List the name(s) of individual(s) authorized to transact
business on behalf of the entity:
2. Temporary Life Insurance Agreement Issued? Yes No
3. To the best of your knowledge, is this insurance intended to replace, or will
it cause a change in, or involve a loan under, any insurance or annuity
policy on the life of any Proposed Life Insured or in any insurance or
annuity policy owned by the Owner? Yes No If "Yes", give details and complete
any replacement forms that are required. Advise whether any policy being
replaced was itself a replacement policy within the past 5 years.
4. Is this a 1035 exchange? Yes No If "Yes", how many policies will be
exchanged?
List policies:
Type of Contract
Company Name Policy No. (Annuity, Life, Term, Annuitant/Insured Owner
Endowment)
5. Additional information to be used in assessing suitability. (Please give
explanation if annual premium is more than 3% of annual income, if spouse's
income is to be included in determining suitability, if answers to income and
net worth have not been provided, etc.):
6. If you are sharing the commissions for this policy with another agent(s) or
entity(ies), please complete the following:
Name of Agent/Entity Agent Code Share Remarks
Total 100%
I certify that I have truly and accurately recorded on the application all the
information supplied by the Proposed Life Insured (or Parent or Guardian).
I certify that a current prospectus (and any supplement) for the policy applied
for has been given to the Proposed Life Insured, and to the Owner if other than
the Proposed Life Insured, and that no sales materials other than those approved
by the appropriate regulating authorities have been used.
(X) Signature of Registered Representative (X) Place and Date
All other Registered Representatives sharing commissions for this policy must
also sign here.
(X) Signature of Registered Representative (X) Place and Date
(X) Signature of Registered Representative (X) Place and Date
Office of Supervisory Jurisdiction
Has this application been approved by the Office of Supervisory Jurisdiction?
Yes No If answer is "No", explain:
19
Name of Broker/Dealer Registered Principal Signature Date (Month/Day/Year)
Page 9
40
<PAGE> 14
Application Supplement for
Investment Allocation and Investor Suitability
The Manufacturers Life Insurance Company of America
(hereinafter referred to as The Company)
Required with all Applications for Flexible Premium Variable Life Insurance.
Please print and use black ink. Any changes must be initialled by the Owner.
A signature is required on the reverse side.
This Application Supplement is deemed to be part of Application No.
Investment Allocation of Net Premiums Choose one or more of the accounts listed
below by indicating percentages of net premium. There are no minimum
percentages, but allocation percentages must be whole numbers. Total must be
100%.
<TABLE>
<CAPTION>
VARIABLE ACCOUNTS
AGGRESSIVE GROWTH FUNDS:
<S> <C>
Manulife Pacific Rim Emerging Markets Fund %
Manulife International Fund %
Manulife Emerging Growth Equity Fund %
SPECIALTY FUND:
Manulife Real Estate Securities Fund %
EQUITY FUNDS:
NASL Equity Trust %
Manulife Common Stock Fund %
NASL Value Equity Trust %
Manulife Equity Index Fund %
NASL Growth and Income Trust %
BALANCED ASSETS FUNDS:
Manulife Balanced Assets Fund %
NASL Aggressive Asset Allocation Trust %
NASL Moderate Asset Allocation Trust %
NASL Conservative Asset Allocation Trust %
BOND FUNDS:
Manulife Capital Growth Bond Fund %
NASL U.S. Government Securities Trust %
MONEY MARKET FUND:
Manulife Money-Market Fund %
GUARANTEED ACCOUNT
Guaranteed Interest Account %
</TABLE>
Note: NASL refers to North American Security Life (see over)
[bar code]
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, Manulife Series Fund, Inc., and ManEquity, Inc.
Form NB0031UA (0296)
41
<PAGE> 15
Investor Suitability
These questions apply to the OWNER of the policy. All questions must be
answered.
1. Have you received a current prospectus for the policy applied for? Y/N
Date of prospectus Date of supplement
2. DO YOU UNDERSTAND THAT UNDER THE POLICY APPLIED FOR:
(a) The amount of the insurance benefits, or the duration of the
insurance coverage, or both, may be variable or fixed? Y/N
(b) The amount of the insurance benefits, the duration of the
insurance coverage, and your policy value, may increase or
decrease depending on the investment experience of the chosen
investment accounts and are not guaranteed as to dollar amount? Y/N
3. With that in mind, is the policy in accord with your insurance
objectives and your anticipated financial needs? Y/N
4. PURPOSE OF INSURANCE
PERSONAL: Estate creation Estate conservation
BUSINESS: Buy-sell Deferred compensation Keyman Pension trust Other:
5. ANNUAL INCOME OF OWNER
<TABLE>
<S> <C> <C> <C> <C>
$250,000 plus $ 35,000 to $49,999 $15,000 to $19,999
$100,000 to $249,999 $ 25,000 to $34,999 $10,000 to $14,999
$ 50,000 to $ 99,999 $ 20,000 to $24,999 Under $10,000
</TABLE>
6. NET WORTH OF OWNER
<TABLE>
<S> <C>
$1,000,000 plus $100,000 to $249,999
$ 500,000 to $999,999 Under $100,000
$ 250,000 to $499,000
</TABLE>
If answers are not given to the above questions on income and net worth, The
Company will assume that the Owner has carefully considered the investment
objectives of the chosen Investment Accounts and has decided that those
objectives are suitable for his/her situation(s).
I decline to provide answers to questions related to income and net worth.
Signatures
signed at (City/State) this day of 19
(X) Witness (Registered Representative) (X) Signature of Owner
(X) Name of Registered Representative (PRINT NAME)
42
<PAGE> 1
EXHIBIT 99-6
43
<PAGE> 2
April 19, 1996
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. 20 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,
isconsistent with the Policy's provisions.
(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.
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<PAGE> 3
(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
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<PAGE> 1
EXHIBIT 99-9
46
<PAGE> 2
May 1996
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
policy-holders 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, trans-ferred 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 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
47
<PAGE> 3
of at least $25,000, except for 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 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
used*. 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.
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.
*The "different date" refers to those instances in which Manufacturers Life of
America agrees to back date a Policy.
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<PAGE> 4
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 or other office or entity so designated by Manufacturers Life of
America. 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 Office or such other office or entity so designated by
Manufacturers Life of America. 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:
(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;
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<PAGE> 5
(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 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 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
50
<PAGE> 6
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 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.
(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
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<PAGE> 7
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 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.
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.
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<PAGE> 8
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 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:
<TABLE>
<S> <C> <C> <C> <C> <C>
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
</TABLE>
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:
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<PAGE> 9
<TABLE>
<CAPTION>
Transaction Occurs After Last Month Preceding
Monthly Deduction Taken for Percent of Surrender
End of Year Charges
<S> <C>
5 & below 100%
6 90%
7 80%
8 70%
9 60%
10 50%
11 40%
12 30%
13 20%
14 10%
15 & above 0%
</TABLE>
Deferred Sales Charges. The maximum deferred sales charge is equal to
47% of the premiums paid under the Policy up to two Target 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:
<TABLE>
<CAPTION>
Applicable Applicable
Age Percent of Premiums Age Percent of Premiums
<S> <C> <C> <C>
70 45% 76 34%
71 43% 77 33%
72 41% 78 32%
73 39% 79 31%
74 37% 80 30%
75 35%
</TABLE>
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.
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
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<PAGE> 10
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 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 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
55
<PAGE> 11
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 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 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
56
<PAGE> 12
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 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 request. Transfers are free
of charge. The minimum dollar amount that may be transferred pursuant to a
single transfer request, except for Asset Allocation Balancer transfers, is
$500.
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 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
57
<PAGE> 13
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 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. At six month
intervals beginning six months after the policy date, Manufacturers Life of
America will move amounts among the Investment Accounts as necessary to maintain
the policyowner's chosen allocation. A change to the policyowner's premium
allocation instructions will automatically result in a change in his or her
Asset Allocation Balancer instructions so that the two are identical unless the
policyowner instructs Manufacturers Life of America otherwise or a dollar cost
averaging request is in effect. 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.
(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
58
<PAGE> 14
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 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 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
59
<PAGE> 15
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 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 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.
- -----------
*/ 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.
60
<PAGE> 16
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 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 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
61
<PAGE> 17
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, 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.
62
<PAGE> 1
EXHIBIT 99-10
63
<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 2, 1996 accompanying the financial statements of
The Manufacturers Life Insurance Company of America and to the use of our report
dated February 2, 1996 accompanying the financial statements of Separate Account
Four of The Manufacturers Life Insurance Company of America, in post-effective
amendment No. 20 to the Registration Statement No. 33-13774 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
April 22, 1996
64
<PAGE> 1
EXHIBIT 99-11
65
<PAGE> 2
Jones & Blouch L.L.P.
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007
(202) 965-8110
April 22, 1996
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. 20
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 L.L.P.
Jones & Blouch L.L.P.
66
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> CAPITAL GROWTH BOND FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 12,717,152
<INVESTMENTS-AT-VALUE> 12,746,903
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,760,032
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<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,664,701
<SHARES-COMMON-STOCK> 649,696
<SHARES-COMMON-PRIOR> 514,098
<ACCUMULATED-NII-CURRENT> 2,025,183
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 40,397
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 12,760,032
<DIVIDEND-INCOME> 886,880
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<OTHER-INCOME> 0
<EXPENSES-NET> (68,677)
<NET-INVESTMENT-INCOME> 818,203
<REALIZED-GAINS-CURRENT> (18,323)
<APPREC-INCREASE-CURRENT> 1,042,903
<NET-CHANGE-FROM-OPS> 1,842,783
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 135,596
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,308,266
<ACCUMULATED-NII-PRIOR> 1,206,980
<ACCUMULATED-GAINS-PRIOR> 58,720
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 0
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<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
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<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
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<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> MONEY MARKET FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 5,796,572
<INVESTMENTS-AT-VALUE> 5,962,404
<RECEIVABLES> 2,788
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,965,192
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,419,113
<SHARES-COMMON-STOCK> 404,694
<SHARES-COMMON-PRIOR> 326,027
<ACCUMULATED-NII-CURRENT> 264,370
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 115,877
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 165,832
<NET-ASSETS> 5,965,192
<DIVIDEND-INCOME> 268
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (36,426)
<NET-INVESTMENT-INCOME> (36,158)
<REALIZED-GAINS-CURRENT> 109,650
<APPREC-INCREASE-CURRENT> 197,256
<NET-CHANGE-FROM-OPS> 270,748
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 78,667
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,387,774
<ACCUMULATED-NII-PRIOR> 300,528
<ACCUMULATED-GAINS-PRIOR> 6,227
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 07
<NAME> INTERNATIONAL FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 1,696,017
<INVESTMENTS-AT-VALUE> 1,808,441
<RECEIVABLES> 2,976
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,811,417
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,663,061
<SHARES-COMMON-STOCK> 168,347
<SHARES-COMMON-PRIOR> 27,894
<ACCUMULATED-NII-CURRENT> 35,809
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,123
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 110,424
<NET-ASSETS> 1,811,417
<DIVIDEND-INCOME> 42,811
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (7,535)
<NET-INVESTMENT-INCOME> 35,276
<REALIZED-GAINS-CURRENT> 2,338
<APPREC-INCREASE-CURRENT> 111,348
<NET-CHANGE-FROM-OPS> 148,962
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 140,453
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,540,010
<ACCUMULATED-NII-PRIOR> 533
<ACCUMULATED-GAINS-PRIOR> (215)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
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<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 08
<NAME> PACIFIC RIM EMERGING MARKETS FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 1,277,433
<INVESTMENTS-AT-VALUE> 1,391,751
<RECEIVABLES> (30)
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,391,721
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,266,662
<SHARES-COMMON-STOCK> 133,434
<SHARES-COMMON-PRIOR> 18,582
<ACCUMULATED-NII-CURRENT> 11,560
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (819)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 114,318
<NET-ASSETS> 1,391,721
<DIVIDEND-INCOME> 16,639
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (5,651)
<NET-INVESTMENT-INCOME> 10,988
<REALIZED-GAINS-CURRENT> (788)
<APPREC-INCREASE-CURRENT> 119,803
<NET-CHANGE-FROM-OPS> 130,003
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 114,852
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,218,678
<ACCUMULATED-NII-PRIOR> 572
<ACCUMULATED-GAINS-PRIOR> (31)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
