As filed with the Securities and Exchange Commission on
September 26, 1997
Registration No. _____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. ____ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT ACT OF 1940 [X]
Amendment No. ____ [ ]
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2
Ameritas Variable Life Insurance Company
Depositor
5900 "O" Street
Lincoln, Nebraska 68510
-------------------------
NORMAN M. KRIVOSHA
Secretary and General Counsel
Ameritas Variable Life Insurance Company
5900 "O" Street
Lincoln, Nebraska 68510
Approximate Date of Proposed Public Offering: As soon as practicable after
effective date.
Calculation of Registration Fee under the Securities Act of 1933
The Registrant is registering an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
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OVERTURE
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
PART A
FORM N-4 ITEM HEADING IN PROSPECTUS
<S> <C> <C>
Item 1. Cover Page..............................Cover Page
Item 2. Definitions.............................Definitions
Item 3. Synopsis or Highlights..................Fee Table; Fund Expense Summary; Example
Item 4. Condensed Financial Information........Condensed Financial Information; Performance Data
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies
a) Depositor............................Ameritas Variable Life Insurance Company
b) Registrant...........................The Separate Account
c) Portfolio Company....................The Funds
d) Prospectus...........................The Funds
e) Voting...............................Voting Rights
f) Administrator........................N/A
Item 6. Deductions and Expenses
a) Deductions...........................Fee Table; Charges and Deductions
b) Sales load...........................Fee Table; Withdrawal Charge
c) Special purchase plans...............Administrative Charges
d) Commissions..........................Distribution of the Policies
e) Portfolio company deductions and
expenses.............................The Funds; Fee Table: Fund Expense Summary
f) Registrant's expenses................N/A
Item 7. General Description of Variable
Annuity Contracts
a) Rights ..............................Policy Features; Annuity Period; General Provisions;
Voting Rights
b) Provisions and limitations...........Policy Features; Allocation of Premium; Transfers Among the
Portfolios and the Fixed Account
c) Changes in contracts or
operations..........................Addition, Deletion, or Substitution of Investments;
Policy Features; Voting Rights
d) Contractowners inquiries.............Owner Inquiries
Item 8. Annuity Period
a) Level of benefits....................Allocation of Premium; Annuity Income Options
b) Annuity commencement date............Annuity Date
c) Annuity payments.....................Annuity Income Options
d) Assumed investment return............N/A
e) Minimums.............................Annuity Income Options
f) Rights to change options or
transfer investment base.............Annuity Income Options
Item 9. Death Benefit
a) Death benefit calculation............Death of Annuitant; Death of Owner;
Annuity Income Options
b) Forms of benefits....................Death of Annuitant; Death of Owner
Item 10. Purchases and Contract Values
a) Procedures for purchases.............Cover Page; Policy Purchase and Premium
Payment; Allocation of Premium
b) Accumulation unit value..............Accumulation Value; Value of Accumulation Units
c) Calculation of accumulation unit
value...............................Accumulation Value
d) Principal underwriter................Distribution of the Policies
<PAGE>
Item 11. Redemptions
a) Redemption procedures................Withdrawals and Surrenders
b) Texas Optional Retirement
Program.............................N/A
c) Delay................................Withdrawals and Surrenders;
Deferment of Payment
d) Lapse................................N/A
e) Revocation rights....................Free Look Privilege
Item 12. Taxes
a) Tax consequences.....................Federal Tax Matters
b) Qualified plans......................Federal Tax Matters
c) Impact of taxes......................Tax Charges
Item 13. Legal Proceedings ......................Legal Proceedings
Item 14. Table of Contents for Statement of
Additional Information..................Statement of Additional Information
PART B
FORM N-4 ITEM HEADING IN STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover page..............................Cover page
Item 16. Table of Contents.......................Table of Contents
Item 17. General Information and History
a) Name change/Suspended sales..........N/A
b) Attribution of Assets................N/A
c) Control of Depositor.................General Information and History
Item 18. Services
a) Fees, expenses and costs.............N/A
b) Management-related services..........AVLIC
c) Custodian and independent public
accountant..........................Safekeeping of Account Assets; Experts
d) Other custodianship..................N/A
e) Administrative servicing agent.......N/A
f) Depositor as principal
underwriter..........................N/A
Item 19. Purchase of Securities Being Offered
a) Manner of Offering...................N/A
b) Sales load...........................N/A
Item 20. Underwriters
a) Depositor or affiliate as principal
underwriter..........................Distribution of the Policy
b) Continuous offering..................Distribution of the Policy
c) Underwriting commissions.............Distribution of the Policy
d) Payments of underwriter..............N/A
Item 21. Calculation of Performance Data.........Calculation of Performance Data
Item 22. Annuity Payments........................N/A
Item 23. Financial Statements
a) Registrant...........................Financial Statements
b) Depositor............................Financial Statements
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AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
PROFILE
OF THE OVERTURE ACCLAIM!
VARIABLE ANNUITY CONTRACT (Date) ____________
This profile summarizes important points you should consider before
purchasing this Policy. The Policy is more fully described in the prospectus
which accompanies this Profile. Please read the prospectus carefully.
1. THE ANNUITY CONTRACT The variable annuity policy offered by Ameritas Variable
--------------------
Life Insurance Company (AVLIC) is a policy between you, the owner, and AVLIC, an
insurance company. The Policy provides a means for investing on a tax-deferred
basis in 26 investment subaccounts and a Fixed Account of AVLIC. The Policy is
intended for retirement savings or other long-term investment purposes and
provides for a death benefit and guaranteed income options.
This Policy offers 26 subaccounts which are listed below. These
subaccounts are designed to offer a better return than the Fixed Account,
however, this is NOT guaranteed. You can also lose your money.
The Fixed Account offers an interest rate guaranteed by the insurance
company, AVLIC. This interest rate is set each month and guaranteed for a year.
While your money is in the Fixed Account, your principal and all interest earned
is guaranteed by AVLIC.
You can put money into any or all of the subaccounts and the Fixed
Account. You can transfer between accounts up to 15 times a year without charge.
After 15 transfers, the charge is $10 for each additional transfer. There are
restrictions on the Fixed Account.
The Policy, like all deferred annuity policies, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The income phase occurs when you begin receiving regular payments
from your Policy.
The money you can accumulate in your account during the accumulation
phase will determine the income payments during the income phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE) If you want to receive regular income
-------------------------------------
from your annuity, you can choose one of five options: (1) monthly payments of
interest only; (2) monthly payments for a fixed amount until depleted; (3)
monthly payments for a certain period up to 20 years (as you select); (4)
monthly payments for your life (assuming you are the annuitant) that may include
a guaranteed period; and (5) monthly payments for your life and for the life of
another person (usually your spouse). Once you begin receiving regular payments,
you cannot change your payment plan.
3. PURCHASE You can buy this Policy with $25,000 or more under most
--------
circumstances. Your registered representative can help you fill out the proper
forms. You can add $1,000 or more any time during the accumulation phase.
4. INVESTMENT OPTIONS Besides the Fixed Account, you can put your money in any
-------------------
or all of these subaccounts described in the fund prospectuses. Depending upon
market conditions, you can make or lose money in any of these subaccounts.
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<CAPTION>
Managed by Managed by Managed by Managed by
Fidelity Management Fred Alger Massachusetts Morgan Stanley
& Research Company Management, Inc. Financial Services Co. Asset Management Inc.
------------------ ---------------- ---------------------- ---------------------
<S> <C> <C> <C>
Money Market(1) Alger American: Emerging Growth Emerging Markets Equity
Equity-Income(1) Growth Utilities Global Equity
Growth(1) Income and Growth World Governments International Magnum
High Income(1) Small Capitalization Research Asian Equity
Overseas(1) Balanced Growth With Income U.S. Real Estate
Asset Manager(2) MidCap Growth
Investment Grade Bond(2) Leveraged AllCap
Asset Manager: Growth(2)
Index 500(2)
Contrafund(2)
(1) Variable Insurance Products Fund ("VIPF")
(2) Variable Insurance Products Funds II ("VIPF II")
</TABLE>
<PAGE>
5. EXPENSES The Policy has insurance features and investment features, and
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there are costs related to each.
AVLIC currently deducts a $36 policy fee each year from your Policy
(guaranteed to be no more than $40 per year). AVLIC currently waives this charge
if the accumulation value of your Policy is at least $50,000. AVLIC also deducts
insurance charges of 1.40% of the average daily value of your Policy. Investment
charges range from .28% to 1.75% of the average daily value of the subaccounts
depending upon the subaccount.
If required by state law, AVLIC will assess a state premium tax
charge at the time of premium receipt or when you make a complete withdrawal or
begin receiving regular income payments. State premium tax ranges from 0% to
3.5%, depending upon the state.
The following chart is to help you understand the charges in the
Policy. The column "Total Annual Charges" shows the total of the $36 policy
maintenance charge (which we represent as .06% below, based on an assumed
average contract size of $60,000), the 1.40% insurance charges and the
investment charge for each subaccount. The next two columns show you examples of
the charges, in dollars, you would pay on a $1,000 investment in a Policy that
earns 5% annually if you withdraw your money: (1) at the end of year 1, and (2)
at the end of year 10. For year 1, the Total Annual Charges are assessed. For
year 10, the example shows the aggregate of all the annual charges assessed for
the first 10 years. There is no withdrawal charge.
Policy Expenses
---------------
The premium tax is assumed to be 0% in both examples.
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Examples:
Total Annual Total Annual Total Total Annual
Insurance Portfolio Annual Expenses at End of:
Subaccount Managed by Charges Charges Charges 1 Year 10 Years
- --------------------- ------------ ------------- ------- ------ --------
<S> <C> <C> <C> <C> <C>
Fidelity Management & Research Company
Money Market(1) 1.46% 0.30% 1.76% $18 $204
Equity-Income(1) 1.46% 0.56% 2.02% $20 $231
Growth(1) 1.46% 0.67% 2.13% $21 $243
High Income(1) 1.46% 0.71% 2.17% $22 $247
Overseas(1) 1.46% 0.92% 2.38% $24 $268
Asset Manager(2) 1.46% 0.73% 2.19% $22 $249
Investment Grade Bond(2) 1.46% 0.58% 2.04% $20 $233
Asset Manager: Growth(2) 1.46% 0.85% 2.31% $23 $261
Index 500(2) 1.46% 0.28% 1.74% $17 $202
Contrafund(2) 1.46% 0.71% 2.17% $22 $247
Fred Alger Management Inc.
Alger American:
Growth 1.46% 0.79% 2.25% $23 $255
Income and Growth 1.46% 0.81% 2.27% $23 $257
Small Capitalization 1.46% 0.88% 2.34% $23 $264
Balanced 1.46% 1.14% 2.60% $26 $290
MidCap Growth 1.46% 0.84% 2.30% $23 $260
Leveraged AllCap 1.46% 1.09% 2.55% $26 $285
Massachusetts Financial Services Company
Emerging Growth 1.46% 1.00% 2.46% $25 $276
Utilities 1.46% 1.00% 2.46% $25 $276
World Governments 1.46% 1.00% 2.46% $25 $276
Research 1.46% 1.00% 2.46% $25 $276
Growth With Income 1.46% 1.00% 2.46% $25 $276
Morgan Stanley Asset Management Inc.
Emerging Markets Equity 1.46% 1.75% 3.21% $32 $348
Global Equity 1.46% 1.15% 2.61% $26 $291
International Magnum 1.46% 1.15% 2.61% $26 $291
Asian Equity 1.46% 1.20% 2.66% $27 $296
U.S. Real Estate 1.46% 1.10% 2.56% $26 $286
For the newly formed subaccounts the charges have been estimated. The charges
reflect any expense reimbursement or fee waiver. For more detailed information,
see the Fee Table in the Prospectus.
(1) VIPF
(2) VIPF II
</TABLE>
(ii)
<PAGE>
6. TAXES Your earnings are not taxed until you take them out. If you take money
-----
out, earnings come out first and are taxed as income. If you are younger than 59
1/2 when you take money out, you may be charged a 10% federal tax penalty on the
earnings. Payments during the income phase are considered partly a return of
your original investment so that part of each payment is not taxable as income.
7. WITHDRAWALS You can take money out anytime during the accumulation phase.
-----------
There is no withdrawal charge. Of course, you may have to pay income tax and a
tax penalty on any money you take out.
8. PERFORMANCE The value of the Policy will vary up or down depending upon the
-----------
investment performance of the subaccounts you choose. The following chart shows
hypothetical historical total returns for each subaccount for the periods shown.
These numbers reflect the insurance charges, the policy maintenance charge, the
investment charges and all other expenses of the subaccount. Past performance is
not a guarantee of future results.
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<CAPTION>
HYPOTHETICAL HISTORICAL PERFORMANCE
Subaccount Managed By: 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity Management & Research Company
Money Market(1) 3.83% 4.27% 2.71% 1.69% 2.31% 4.54% 6.46% 7.53% 5.77% 4.79%
Equity-Income(1) 12.56% 33.10% 5.45% 16.52% 15.12% 29.47% -16.63% 15.59% 20.85% -2.68%
Growth(1) 12.98% 33.36% -1.53% 17.58% 7.67% 43.36% -13.10% 29.52% 13.82% 2.05%
High Income(1) 12.32% 18.88% -3.12% 18.60% 21.32% 33.07% -3.73% -5.63% 9.95% -0.72%
Overseas(1) 11.52% 8.03% 0.19% 35.31% -12.10% 6.36% -3.17% 23.89% 6.45% -
Asset Manager(2) 12.89% 15.21% -7.52% 19.41% 10.00% 20.67% 5.04% - - -
Investment Grade Bond(2) 1.63% 15.57% -5.22% 9.25% 5.03% 14.60% 4.58% 8.57% - -
Asset Manager: Growth(2) 19.00% - - - - - - - - -
Index 500(2) 20.98% 35.07% -0.61% 7.95% - - - - - -
Contrafund(2) 19.49% - - - - - - - - -
Fred Alger Management, Inc.
Alger American:
Growth 11.64% 34.34% -0.10% 20.63% 10.66% 38.27% 2.53% - - -
Income and Growth 17.89% 33.13% -9.68% 8.68% 6.99% 21.66% -1.26% 5.77% - -
Small Capitalization 2.60% 42.17% -5.83% 11.57% 1.97% 55.21% 7.06% 62.06% - -
Balanced 8.51% 26.71% -5.73% 6.16% 7.80% 3.07% 4.86% - - -
MidCap Growth 10.21% 42.30% -3.07% - - - - - - -
Leveraged AllCap 10.37% - - - - - - - - -
Massachusetts Financial Services Company
Emerging Growth 15.24% - - - - - - - - -
Utilities 16.74% - - - - - - - - -
World Governments 2.45% 12.65% - - - - - - - -
Research 20.45% - - - - - - - - -
Growth With Income 22.49% - - - - - - - - -
Morgan Stanley Asset Management Inc.
Emerging Markets - - - - - - - - - -
Global Equity - - - - - - - - - -
International Magnum - - - - - - - - - -
Asian Equity - - - - - - - - - -
U.S. Real Estate - - - - - - - - - -
(1) VIPF
(2) VIPF II
</TABLE>
(iii)
<PAGE>
9. DEATH BENEFIT If you die before reaching the income phase, the person you
--------------
have chosen as your beneficiary will receive a death benefit. This death benefit
will be the greater of: (1) the money you have put in, less any money you have
taken out, or (2) the current value of your Policy. If available, the death
benefit may be the value of your Policy at the most recent 7th-
year-anniversary, plus any money you have added since that anniversary, minus
any money you have taken out since that anniversary.
10. OTHER INFORMATION
-----------------
FREE LOOK. You may cancel the policy within 10 days after receiving it (or
whatever period is required in your state). You will receive whatever your
Policy is worth on the day we receive your returned policy. This may be more or
less than your original payment. If law requires us to return your original
payment, we will put your money in the Money Market subaccount during the
free-look period and return your original payment.
NO PROBATE. Usually, when you die, the person you choose as your beneficiary
will receive the death benefit without going through probate.
WHO SHOULD PURCHASE THE POLICY?
This Policy is designed for people seeking long-term tax-deferred accumulation
of assets, generally for retirement or other long-term purposes. The
tax-deferred feature is most attractive to people in high federal and state tax
brackets. You would not buy this Policy if you are looking for a short-term
investment or if you cannot take the risk of getting back less money than you
put in.
ADDITIONAL OPTIONAL FEATURES.
This Policy has additional features that might interest you. These include:
o You can arrange to have money automatically sent to you each month while
your Policy is still in the accumulation phase. Of course, you must pay
taxes on money you receive. We call this feature SYSTEMATIC WITHDRAWAL
OPTION.
o You can arrange to have a regular amount of money automatically invested in
subaccounts each month, theoretically giving you a lower average cost per
unit over time than a single one time purchase. We call this feature DOLLAR
COST AVERAGING.
o You can arrange to have AVLIC automatically readjust the money between
subaccounts periodically to keep the blend you select. We call this feature
PORTFOLIO REBALANCING.
o You can arrange to have AVLIC periodically reallocate the earnings (not the
principal amount) among the subaccounts. We call this feature EARNINGS
SWEEP.
These features are not available in all states and may not be suitable for your
particular situation.
11. INQUIRIES
---------
If you need more information, please contact us at:
Ameritas Variable Life Insurance Company
5900 O Street
Lincoln NE 68510
800-745-1112
- --------------------------------------------------------------------------------
(iv)
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
PROSPECTUS
OVERTURE ACCLAIM! 5900 "O" Street, P.O. Box 82550
FLEXIBLE PREMIUM VARIABLE ANNUITY Lincoln, NE 68501
- --------------------------------------------------------------------------------
This Prospectus describes a no sales load/no surrender charge flexible premium
variable annuity policy contract ("Policy") offered by Ameritas Variable Life
Insurance Company ("AVLIC"). The Policy provides a vehicle for individuals to
invest on a tax-deferred basis for retirement savings or other long-term
purposes.
You may purchase a Policy for $25,000 or more. Minimum additional subsequent
premiums may be $1,000 or more; smaller amounts may be accepted by automatic
bank draft or at the discretion of AVLIC.
You may direct that premiums accumulate on a variable basis in one or more of
the 26 Subaccounts of the Ameritas Variable Life Insurance Company Separate
Account VA-2 ("Separate Account") or on a fixed basis in the Fixed Account, or
on a combination variable and fixed basis. The Separate Account uses its assets
to purchase shares in one or more of the following Portfolios of mutual funds:
<TABLE>
<CAPTION>
Variable Insurance Products Fund ("VIPF")* Variable Insurance Products Funds II ("VIPF II")*
<S> <C>
Money Market Asset Manager
Equity-Income Investment Grade Bond
Growth Asset Manager: Growth
High Income Index 500
Overseas Contrafund
* VIPF and VIPF II are collectively referred to as "Fidelity Funds"
The Alger American Fund MFS Variable Insurance Morgan Stanley Universal Funds, Inc.
("Alger American Fund") Trust ("MFS Trust") ("Morgan Stanley Fund")
Alger American Growth Emerging Growth Emerging Markets Equity
Alger American Income and Growth Utilities Global Equity
Alger American Small Capitalization World Governments International Magnum
Alger American Balanced Research Asian Equity
Alger American MidCap Growth Growth With Income U.S. Real Estate
Alger American Leveraged AllCap
</TABLE>
This prospectus contains information you should know before investing; it must
be accompanied by current prospectuses for Fidelity Funds, Alger American Fund,
MFS Trust, and Morgan Stanley Fund. Read the prospectuses carefully and retain
them for future reference. A Statement of Additional Information, which has the
same date as this prospectus, has been filed with the Securities and Exchange
Commission; it is incorporated herein by reference and is available free by
writing AVLIC at the address above or by calling a Client Service Representative
at 1-800-745-1112. The table of contents of the Statement of Additional
Information appears at the end of this prospectus.
These securities are not deposits with, or obligations of, or guaranteed or
endorsed by, any financial institution; and the securities are not insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other agency. These securities involve investment risk, including the possible
loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES REGULATORY AUTHORITY, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES REGULATORY AUTHORITY PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Please Read This Prospectus Carefully And Retain It For Future Reference.
The Date of This Prospectus is_____________.
ACCLAIM! 1
<PAGE>
TABLE OF CONTENTS
Page
DEFINITIONS............................................................ 3
FEE TABLE.............................................................. 5
CONDENSED FINANCIAL INFORMATION........................................ 7
PERFORMANCE DATA....................................................... 7
AVLIC, THE SEPARATE ACCOUNT AND THE FUNDS.............................. 8
Ameritas Variable Life Insurance Company........................... 8
The Separate Account............................................... 8
The Funds.......................................................... 9
THE FIXED ACCOUNT...................................................... 10
POLICY FEATURES........................................................ 10
Control of the Policy.............................................. 11
Policy Purchase and Premium Payment................................ 11
Allocation of Premium.............................................. 11
Accumulation Value................................................. 12
Transfers Among the Portfolios and the Fixed Account............... 12
Systematic Programs................................................ 12
Withdrawals and Surrenders......................................... 13
Free Look Privilege................................................ 13
CHARGES AND DEDUCTIONS................................................. 14
Administrative Charges............................................. 14
Mortality and Expense Risk Charge.................................. 14
Tax Charges........................................................ 15
Fund Investment Advisory Fees and Expenses......................... 15
ANNUITY PERIOD......................................................... 15
Annuity Date....................................................... 15
Annuity Income Options............................................. 16
FEDERAL TAX MATTERS.................................................... 17
Taxation of Annuities in General................................... 17
Nonqualified Policies.............................................. 17
Qualified Policies................................................. 18
GENERAL PROVISIONS..................................................... 18
Annuitant's Beneficiary............................................ 18
Death of Annuitant................................................. 18
Guaranteed Minimum Death Benefit (GMDB) Rider...................... 19
Death of Owner..................................................... 19
Addition, Deletion or Substitution of Investments.................. 20
Deferment of Payment............................................... 20
Contestability..................................................... 20
Misstatement of Age or Sex......................................... 20
Reports and Records................................................ 20
DISTRIBUTION OF THE POLICIES........................................... 21
SAFEKEEPING OF THE ACCOUNT'S ASSETS.................................... 21
THIRD PARTY SERVICES................................................... 21
VOTING RIGHTS.......................................................... 21
LEGAL PROCEEDINGS...................................................... 22
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION............... 22
The Policy, certain provisions, and certain Portfolios are not available in all
states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
MAY MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON.
2 ACCLAIM!
<PAGE>
DEFINITIONS
ACCUMULATION UNIT. A unit used to measure the value of the Policy prior to the
Annuity Date. Analogous, though not identical, to a share owned in a mutual fund
account.
ACCUMULATION UNIT PRICE. The value of each Accumulation Unit is calculated each
Valuation Period. Analogous, though not identical, to the share price (net asset
value) of a mutual fund.
ACCUMULATION VALUE. The value of all amounts accumulated under the Policy prior
to the Annuity Date. On the Issue Date, the Accumulation Value is equal to the
initial premium, less any premium tax, plus any interest credited based on the
Money Market Portfolio value as of the Policy Date.
ANNUITANT. The person upon whose life expectancy the Policy is written. The
Annuitant may also be the Owner of the Policy.
ANNUITANT'S BENEFICIARY. The person to whom any benefits are paid upon the
Annuitant's death.
ANNUITY DATE. The date on which Annuity Payments begin.
ANNUITY INCOME OPTION. A method of receiving Annuity Payments.
ANNUITY PAYMENT. One of a series of payments paid to the Annuitant under an
Annuity Income Option.
AVLIC. ("We, Us, Our") Ameritas Variable Life Insurance Company, a Nebraska
stock life insurance company.
DEATH BENEFIT. The greater of the Accumulation Value or the premium payments
made, less withdrawals, or the Guaranteed Minimum Death Benefit, if applicable.
EFFECTIVE DATE. The Valuation Date on which premiums are applied to purchase a
Policy.
FIXED ACCOUNT. A part of AVLIC's general account to which all or a portion of
premiums may be allocated for accumulation at fixed rates of interest.
FUNDS. Fidelity Funds, Alger American Funds, MFS Trust, and Morgan Stanley Fund
are the Funds available for investment as of the date of this prospectus. The
Funds have one or more Portfolios; each Portfolio corresponds to one of the
Subaccounts of the Separate Account.
ISSUE DATE. The date all financial, contractual and administrative requirements
have been met to issue the Policy. The free look period begins on this date.
NET PREMIUM. The Premium Payment less the premium tax (if imposed by the state
in which the Policy is delivered).
NONQUALIFIED POLICIES. Policies that do not qualify for special federal income
tax treatment.
OWNER. ("You") The person or entity in whose name the Policy is issued (or as
subsequently changed) who has the privileges stated in the Policy, including the
right to make allocations or change beneficiaries. If a Policy has been
absolutely assigned, the assignee is the Owner. A collateral assignee is not the
Owner.
OWNER'S DESIGNATED BENEFICIARY. The person designated by the Owner to whom
Policy ownership passes upon the Owner's death.
POLICY. The no sales load/no surrender charge variable annuity contract offered
by AVLIC and described in this prospectus.
ACCLAIM! 3
<PAGE>
POLICY DATE. This date is determined on the Issue Date. It is the date two days
after AVLIC received the application and initial premium. The date is used to
determine Policy anniversary dates and Policy Years.
POLICY YEAR. The period from one Policy anniversary date until the next Policy
anniversary date.
PORTFOLIO. One of the separate investment Portfolios of the Funds in which the
Separate Account invests. Each Portfolio is a Subaccount of the Separate
Account. In this Separate Account, VIPF offers the following portfolios: Money
Market, Equity-Income, Growth, High Income and Overseas Portfolios. VIPF II
offers the following portfolios: Asset Manager, Investment Grade Bond, Asset
Manager: Growth, Index 500, and Contrafund Portfolios. The Alger American Fund
offers the following portfolios: Alger American Growth, Alger American Income
and Growth, Alger American Small Capitalization, Alger American Balanced, Alger
American MidCap Growth, and Alger American Leveraged AllCap Portfolios. The MFS
Trust offers the following portfolios or series in connection with this Policy:
MFS Emerging Growth, MFS Utilities, MFS World Governments, MFS Research and MFS
Growth With Income. The Morgan Stanley Fund offers the following portfolios in
connection with the Policy: Emerging Markets Equity, Global Equity,
International Magnum, Asian Equity and U.S. Real Estate Portfolios. In this
prospectus, Portfolio will also be used to refer to the Subaccount that invests
in the corresponding Portfolio.
PREMIUM PAYMENT. An amount paid to purchase a Policy or to increase the
investment in the Policy.
QUALIFIED POLICIES. Policies owned inside certain qualified plans as defined
under the Internal Revenue Code of 1986, as amended, such as IRA's and Pension
Trusts.
SATISFACTORY PROOF OF DEATH. All of the following must be submitted: (1) A
certified copy of the death certificate; (2) A Claimant Statement; (3) The
Policy; and (4) Any other information that AVLIC may require to establish the
validity of the claim.
SEPARATE ACCOUNT. Ameritas Variable Life Insurance Company Separate Account
VA-2, an account established by AVLIC to receive and invest premiums paid under
the Policy. Assets in the Separate Account are segregated from the general
assets of AVLIC.
SUBACCOUNT. A subdivision of the Separate Account which invests in shares of a
specified Portfolio of the Funds.
VALUATION DATE. Each day that the New York Stock Exchange (NYSE) is open for
trading.
VALUATION PERIOD. The period between two successive Valuation Dates, commencing
at the close of trading on the NYSE on one Valuation Date and ending at the
close of trading on the next Valuation Date.
4 ACCLAIM!
<PAGE>
FEE TABLE
The following illustrates the expenses you will bear as Owner, excluding
possible state premium taxes. For a complete discussion of expenses, see
"Charges and Deductions" and the Funds' prospectuses.
OWNER TRANSACTION EXPENSES
Sales Load Imposed....................................................None
Surrender Charge......................................................None
Withdrawal Charge.....................................................None
Transfer Fee (after 15 free transfers per Policy year)................$10
ANNUAL POLICY FEE (maximum of $40, currently $36, may be reduced or
eliminated)...........................................................$36
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE)
Mortality and Expense Risk Fees (M&E)............................. 1.25%
Daily Administrative Fee (as a percentage of average
account value).................................................... 0.15%
FUND EXPENSE SUMMARY
Fee information relating to the underlying Funds was provided to AVLIC by the
underlying Funds. AVLIC has not independently verified such information. The
amount of expenses borne by each portfolio for the fiscal year ended December
31, 1996, was as follows:
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT ADVISORY AND OTHER EXPENSES TOTAL
MANAGEMENT
Figures presented may reflect Figures presented may reflect Figures presented
expense reimbursement expense reimbursement may reflect expense
reimbursement
<S> <C> <C> <C>
FIDELITY
Money Market .21% .09% .30%
Equity-Income .51% .05% .56%(1)
Growth .61% .06% .67%(1)
High Income .59% .12% .71%
Overseas .76% .16% .92%(1)
Asset Manager .64% .09% .73%(1)
Investment Grade Bond .45% .13% .58%
Asset Manager: Growth .65% .20% .85%(1)
Index 500 .13% .15% .28%(2)
Contrafund .61% .10% .71%(1)
ALGER AMERICAN (3)
Growth .75% .04% .79%
Income and Growth .625% .185% .81%
Small Capitalization .85% .03% .88%
Balanced .75% .39% 1.14%
MidCap Growth .80% .04% .84%
Leveraged AllCap .85% .24% 1.09%
</TABLE>
ACCLAIM! 5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MFS
Emerging Growth .75% .25%(4) 1.00%(5)
Utilities .75% .25%(4) 1.00%(5)
World Governments .75% .25%(4) 1.00%(5)
Research .75% .25%(4) 1.00%(5)
Growth With Income .75% .25%(4) 1.00%(5)
MORGAN STANLEY
Emerging Markets Equity(6) 1.25% .50% 1.75%
Global Equity(7) .80% .35% 1.15%
International Magnum(7) .80% .35% 1.15%
Asian Equity(7) .80% .40% 1.20%
U.S. Real Estate(7) .80% .30% 1.10%
</TABLE>
(1) A portion of the brokerage commissions that certain funds pay was used
to reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. Without these reductions, the total operating
expenses presented in the table would have been .58% for Equity-Income
Portfolio, .69% for Growth Portfolio, .93% for Overseas Portfolio, .74%
for Asset Manager Portfolio, .74% for Contrafund Portfolio, and .87%
for Asset Manger: Growth Portfolio.
(2) Fidelity agreed to reimburse a portion of Index 500 Portfolio's
expenses during the period. Without this reimbursement, the fund's
management fee, other expenses and total expenses would have been .28%,
.15% and .43% respectively, on an annualized basis.
(3) Fred Alger Management, Inc. ("Alger Management") has agreed to
reimburse the portfolios to the extent that the aggregate annual
expenses (excluding interest, taxes, fees for brokerage services and
extraordinary expenses) exceed respectively: Alger American Income and
Growth, and Alger American Balanced, 1.25%; Alger American Small
Capitalization, Alger American MidCap Growth, Alger American Leveraged
All Cap, and the Alger American Growth, 1.50%. As long as the expense
limitations continue for a portfolio, if a reimbursement occurs, it
has the effect of lowering the portfolio's expense ratio and increasing
its total return. Included in "Other Expenses" of Leveraged AllCap is
.03% of interest expense.
(4) MFS has agreed to bear expenses for each series, subject to
reimbursement by each series, such that each series "Other Expenses"
shall not exceed .25% of the average daily net assets of the series
during the current fiscal year. Absent this expense arrangement, "Other
Expenses" and "Total" expenses would be .41% and 1.16%, respectively,
for the Emerging Growth Series; 2.00% and 2.75%, respectively, for the
Utilities Series; 1.28% and 2.03%, respectively, for the World
Governments Series; .73% and 1.48%, respectively, for the Research
Series; and 1.32% and 2.07%, respectively, for the Growth With Income
Series.
(5) Each series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series
with its custodian and dividend disbursing agent, and may enter into
other such arrangements and directed brokerage arrangements (which
would also have the effect of reducing the series' expenses). Any such
fee reductions are not reflected under "Other Expenses."
(6) The fund's expenses were voluntarily reduced by the fund's investment
adviser. Absent reimbursement, the management fee, other expenses, and
total expenses would have been 1.25%, 4.92%, and 6.17%, respectively.
(7) This is an estimate of expenses for the fiscal year ending December 31,
1997. MSAM has agreed to a reduction in management fees and to
reimburse each portfolio if necessary, if such fees would cause the
total annual operating expenses to exceed the percentage indicated.
Expense reimbursement agreements are expected to continue in future years but
may be terminated at any time. As long as the expense limitations continue for a
portfolio, if a reimbursement occurs, it has the effect of lowering the
portfolio's expense ratio and increasing its total return.
- --------------------------
6 ACCLAIM!
<PAGE>
EXAMPLE: The following example illustrates expenses you would incur at the end
of a one and three year period on a hypothetical $1,000 allocation to each
Portfolio assuming a 5% annual return. The example reflects expenses of the
Separate Account and the Portfolio, but does not reflect premium taxes which may
apply. The information presented applies whether or not the Policy is (1)
surrendered; (2) annuitized; or (3) not surrendered or annuitized.
1 year 3 years
Money Market $18 $55
Equity Income $20 $63
Growth $21 $66
High Income $22 $67
Overseas $24 $73
Asset Manager $22 $68
Investment Grade Bond $20 $63
Asset Manager: Growth $23 $71
Index 500 $17 $54
Contrafund $22 $67
Alger American Growth $23 $70
Alger American Income and Growth $23 $70
Alger American Small-Cap $23 $72
Alger American Balanced $26 $80
Alger American MidCap $23 $71
Alger American Leveraged AllCap $26 $79
MFS Emerging Growth $25 $76
MFS Utilities $25 $76
MFS World Governments $25 $76
MFS Research $25 $76
MFS Growth With Income $25 $76
Morgan Stanley Emerging Markets Equity $32 $98
Morgan Stanley Global Equity $26 $80
Morgan Stanley International Magnum $26 $80
Morgan Stanley Asian Equity $27 $82
Morgan Stanley U.S. Real Estate $26 $79
The examples assume an average $60,000 annuity investment. These examples should
not be considered a representation of past or future expenses, performance or
return. Actual expenses and/or returns may be greater or less than those shown.
CONDENSED FINANCIAL INFORMATION
The financial statements for AVLIC and the Account (as well as auditors' report
thereon) are in the Statement of Additional Information. The Separate Account
also funds variable annuity contracts not offered by this prospectus.
PERFORMANCE DATA
Separate Account VA-2 may advertise certain information regarding the
performance of the Subaccounts. Performance data may be advertised as average
annual total return and/or cumulative total return. The Money Market Subaccount
may advertise yield and/or effective yield. The yield figures are based on
historical earnings and are not intended to indicate future performance. Other
Subaccounts may advertise current yield. Details on how performance measures are
calculated for the Subaccounts are found in the Statement of Additional
Information. Performance advertising will reflect the mortality and expense risk
charge, the daily administrative fee and the annual policy fee.
ACCLAIM! 7
<PAGE>
AVLIC, THE SEPARATE ACCOUNT AND THE FUNDS
AMERITAS VARIABLE LIFE INSURANCE COMPANY
Ameritas Variable Life Insurance Company ("AVLIC") is a stock life insurance
company organized in the State of Nebraska. AVLIC was incorporated on June 22,
1983 and commenced business December 29, 1983. AVLIC is currently licensed to
sell life insurance in 46 states and the District of Columbia.
AVLIC is a wholly-owned subsidiary of AMAL Corporation, a Nebraska stock
company. AMAL Corporation is a joint venture of Ameritas Life Insurance Corp.
(Ameritas Life), which owns a majority interest in AMAL Corporation; and AmerUs
Life Insurance Company ("AmerUs Life"), an Iowa stock life insurance company,
which owns a minority interest in AMAL Corporation. The Home Offices of both
AVLIC and Ameritas Life are at 5900 "O" Street, P.O. Box 82550, Lincoln,
Nebraska 68501. Owner Inquiries can be sent to this address, or may be made by
calling 1-800-745-1112. All inquiries should include the Policy number and the
Owner's name.
On April 1, 1996 Ameritas Life consummated an agreement with AmerUs Life whereby
AVLIC became a wholly-owned subsidiary of a newly formed holding company, AMAL
Corporation. Under terms of the agreement the AMAL Corporation is 66% owned by
Ameritas Life and 34% owned by AmerUs Life. AmerUs Life has options to purchase
an additional interest in AMAL Corporation if certain conditions are met.
Ameritas Life and its subsidiaries had total assets at December 31, 1996 of over
$2.9 billion. AmerUs Life had total assets as of December 31, 1996 of over $4.3
billion.
AVLIC has a rating of A (Excellent) from A.M. Best Company, a firm that analyzes
insurance carriers, and a rating of AA ("Excellent") from Standard & Poor's for
claims-paying ability. Ameritas Life enjoys a long standing A+ (Superior) rating
from A.M. Best.
Ameritas Life, AmerUs Life and AMAL Corporation guarantee the obligations of
AVLIC. This guarantee will continue until AVLIC is recognized by a National
Rating Agency as having a financial rating equal to or greater than Ameritas
Life, or until AVLIC is acquired by another insurance company who has a
financial rating by a National Rating Agency equal to or greater than Ameritas
Life and who agrees to assume the guarantee; provided that if AmerUs Life sells
its interest in AMAL Corporation to another insurance company who has a
financial rating by a National Rating Agency equal to or greater than that of
AmerUs Life, and the purchaser assumes the guarantee, AmerUs Life will be
relieved of its obligations under the Guarantee.
AVLIC may publish in advertisements and reports to the Owners, the ratings and
other information assigned it by one or more independent rating services. The
purpose of the ratings is to reflect the financial strength and/or claims-paying
ability of AVLIC. The ratings do not relate to the performance of the separate
account. Further, AVLIC may publish charts and other information concerning
asset allocation, dollar cost averaging, portfolio rebalancing, earnings sweep,
diversification, tax deference, long term market trends, index performance and
other investment methods and programs.
THE SEPARATE ACCOUNT
Ameritas Variable Life Insurance Company Separate Account VA-2 ("Separate
Account") was established under Nebraska law on May 28, 1987 to receive and
invest premiums paid under the Policy. Assets of the Separate Account are held
separately from all other assets of AVLIC and are not chargeable with
liabilities from any other business AVLIC may conduct. Income, gains, or losses
of the Separate Account are credited without regard to other income, gains, or
losses of AVLIC.
The Separate Account purchases and redeems shares from the Funds at net asset
value. Shares are redeemed for AVLIC to pay withdrawals and surrenders, collect
charges, and transfer assets from one Portfolio to another, or to the Fixed
Account, as requested by the Owner. Any dividend or capital gain distribution
received from a Portfolio is immediately invested at net asset value in shares
of that Portfolio and held as assets of the corresponding Subaccount.
8 ACCLAIM!
<PAGE>
All obligations arising under the Policies are liabilities of AVLIC. AVLIC will
always keep assets in the Separate Account with a total market value at least
equal to the reserve and other contract liabilities of the Separate Account. To
the extent that assets in the Separate Account exceed AVLIC's liabilities in the
Separate Account, AVLIC may withdraw excess assets to cover general account
obligations.
The Separate Account is a unit investment trust registered with the Securities
and Exchange Commission ("SEC") under the Investment Company Act of 1940 ("1940
Act"). Such registration does not involve any SEC supervision of the management
or investment practices or policies of the Separate Account.
THE FUNDS
Each Fund is registered with the SEC under the 1940 Act as an open-ended
diversified management investment company or a series thereof. There are
currently 26 Subaccounts within the Account, each investing only in a
corresponding Portfolio of the Funds.
The assets of each Portfolio of the Funds are held separate from the assets of
the other Portfolios. Thus, each Portfolio operates as a separate investment,
and the income or losses of one Portfolio generally do not affect the investment
performance of any other Portfolio.
There is no assurance that any Portfolio will achieve its investment objectives.
More detailed information, including a description of investment risks,
investment advisory services, total expenses and charges is in the prospectuses
of the Funds, which must accompany or precede this Prospectus. These
prospectuses should be read in conjunction with this Prospectus and retained.
All underlying Fund information, including Fund prospectuses, has been provided
to AVLIC by the Funds.
AVLIC has not independently verified this information.
You should periodically reconsider your allocation among the Portfolios in light
of current market conditions and the investment risks attendant to investing in
the Portfolios.
The Account will purchase and redeem shares from the Funds at net asset value.
Shares will be redeemed to the extent necessary for AVLIC to collect charges,
pay the Accumulation Values, partial withdrawals, and make policy loans or to
transfer assets among Investment Options as requested by Policyowners. Any
dividend or capital gain distribution received from a portfolio of the Funds
will be reinvested immediately at net asset value in shares of that portfolio
and retained as assets of the corresponding Subaccount.
The Funds may be made available for variable annuity or variable life insurance
contracts of various insurance companies. Though unlikely, there is a
possibility that a material conflict could arise between the interests of the
Separate Account and one or more of the separate accounts of another
participating insurance company. In the event of a material conflict, the
affected insurance companies agree to take any necessary steps, including
removing separate accounts from the Funds, to resolve the matter. See the
prospectuses of the Funds for more information.
The eligible Portfolios of the Funds, along with their investment advisers; are
listed in the following table:
<TABLE>
<CAPTION>
FUND INVESTMENT ADVISERS ELIGIBLE PORTFOLIOS
- --------------------- ---------------------------------- -------------------
<S> <C> <C>
Fidelity Funds Fidelity Management and Money Market 1
Research Company Equity-Income1
Growth1
High Income1
Overseas1
Asset Manager2
Investment Grade Bond2
Asset Manager: Growth2
Index 5002
Contrafund2
1VIPF
2VIPF II
</TABLE>
ACCLAIM! 9
<PAGE>
<TABLE>
<CAPTION>
FUND INVESTMENT ADVISERS ELIGIBLE PORTFOLIOS
- --------------------- ---------------------------------- -------------------
<S> <C> <C>
Alger American Fund Fred Alger Management, Inc. Alger American Growth
Alger American Income and Growth
Alger American Small Capitalization
Alger American Balanced
Alger American MidCap Growth
Alger American Leveraged AllCap
MFS Trust Massachusetts Financial Services Emerging Growth
Company Utilities
World Governments
Research
Growth With Income
Morgan Stanley Fund Morgan Stanley Asset Emerging Markets Equity
Management Inc. Global Equity
International Magnum
Asian Equity
U.S. Real Estate
</TABLE>
THE FIXED ACCOUNT
You may allocate all or a portion of your Premium Payments and make transfers to
the Fixed Account. Amounts in the Fixed Account earn a fixed rate of interest
guaranteed by AVLIC never to be less than 3.5%.
Amounts allocated to the Fixed Account receive an interest rate declared
effective for the month of issue. The declared interest rate is guaranteed for
the remainder of the Policy Year. During subsequent Policy Years, all amounts in
the Fixed Account will earn the interest rate that was declared in the month of
the last Policy anniversary. Declared interest rates may be lower or higher than
the previous period.
Amounts allocated to the Fixed Account or transferred from the Separate Account
to the Fixed Account are placed in the General Account of AVLIC, which supports
insurance and annuity obligations. The General Account includes all of AVLIC's
assets, except those assets segregated in the separate accounts. AVLIC has the
sole discretion to invest the assets of the General Account, subject to
applicable law. AVLIC bears an investment risk for all amounts allocated or
transferred to the Fixed Account and interest credited thereto, less any
deduction for charges and expenses, whereas the owner bears the investment risk
that the declared interest rate described above may fall to a lower rate after
the expiration of a declared rate period.
Because of exemptive and exclusionary provisions, interests in the General
Account have not been registered under the Securities Act of 1933 nor is the
General Account registered as an investment company under the Investment Company
Act of 1940. Accordingly neither the General Account nor any interest therein is
generally subject to the provisions of the 1933 or 1940 Act. We understand that
the SEC has not reviewed the disclosures in this Prospectus relating to the
Fixed Account portion of the Contract; however, disclosures regarding the Fixed
Account portion of the Contract may be subject to generally applicable
provisions of the Federal Securities Laws regarding the accuracy and
completeness of statements made.
POLICY FEATURES
The Policy is a variable annuity contract issued by AVLIC. The rights and
benefits of the Policy are described below and in the Policy. The Policy
controls the rights and benefits you have. AVLIC reserves the right to make any
modification to conform the Policy to, or to give you the benefit of, any
changes in the law.
10 ACCLAIM!
<PAGE>
CONTROL OF THE POLICY
The Owner is the person or entity named as such in the application or in
subsequent written changes shown in AVLIC's records. While living, the Owner has
the sole right to receive all benefits and exercise all rights granted by the
Policy or AVLIC. The Owner may name both primary and contingent beneficiaries.
Subject to the rights of any irrevocable beneficiary and any assignee of record,
all rights, options, and privileges belong to the Owner, if living; otherwise to
any successor-owner or Owners, if living; otherwise to the estate of the last
Owner to die.
POLICY PURCHASE AND PREMIUM PAYMENT
Individuals wishing to purchase a Policy should send a complete application and
an initial premium to AVLIC's Home Office (5900 "O" Street, P.O. Box 82550,
Lincoln, NE 68501). Your initial premium must be equal to or greater than the
minimum $25,000 requirement. The named Annuitant must be 85 years of age or
less. Acceptance is subject to AVLIC's underwriting rules and complete
application. AVLIC reserves the right to reject any application.
If the application and initial Premium Payment can be accepted in the form
received, the initial premium will be applied to purchase the Policy within two
business days from the date the premium was received. The date the initial
premium is applied to purchase the Policy is the Effective Date.
If an incomplete application is received, we will request the necessary
information to complete the application. If after five business days from
receipt of the initial premium, the application remains incomplete, we will
return the initial premium unless we obtain your permission to retain the
premium pending completion of the application. Once the application is complete
and we have received the initial premium, the premium will be applied within two
business days.
Additional Premium Payments may be made at any time prior to the Annuity Date,
as long as the Annuitant is living. Additional payments must be made for at
least $1,000, however, smaller amounts may be accepted if made by automatic bank
draft or at AVLIC's discretion. Any additional premium is credited to the
Accumulation Value as of the date of receipt or the next Valuation Date if
received on a day when the NYSE is not open for trading.
Total premiums may not exceed $1,000,000 for either a single Policy or for
multiple AVLIC annuity Policies having the same Annuitant without prior approval
from AVLIC.
ALLOCATION OF PREMIUM
You may allocate premium to one or more of the Portfolios and to the Fixed
Account. Allocations must be whole number percentages and must total 100%.
On the Issue Date, the policy's Accumulation Value will be based on the Money
Market Portfolio value as if the Policy had been issued and the initial Net
Premium invested within two Valuation Dates of receipt by AVLIC of the
application and initial premium ("the two day date").
The Accumulation Value is allocated on the Issue Date of the Policy to one or
more Subaccounts of the Account or to the Fixed Account. The Accumulation Value
will be used to purchase accumulation units of the Subaccounts of the Account or
the Fixed Account at the price next computed on the Issue Date.
If state or other applicable law or regulation requires return of at least your
premium payments should you return the Annuity pursuant to the Refund Privilege,
your Accumulation Value will be allocated to the Money Market Subaccount.
Thirteen days after the Issue Date, the accumulation value of the Policy will be
allocated among the Subaccounts, or to the Fixed Account, as selected by the
owner in the application.
The Accumulation Value will vary with the performance of the portfolios you
select. Results for the portfolios are not guaranteed. The Owner bears the
entire investment risk for the portion of the Accumulation Value allocated to
the Portfolios. This will affect the Policy's Accumulation Value which on the
Annuity Date affects the level of annuity payments payable. You should
periodically review your allocation in light of market conditions and your
financial objectives.
ACCLAIM! 11
<PAGE>
ACCUMULATION VALUE
On the Effective Date, the Accumulation Value of the Policy is equal to the
initial premium received, less any applicable premium taxes, plus any interest
credited based on the Money Market Portfolio value as of the Policy Date.
Thereafter, the Accumulation Value is determined on each Valuation Date by
multiplying the number of Accumulation Units of each Subaccount by the current
Accumulation Unit Price for that Subaccount and by adding each together with the
amount in the Fixed Account. The number of Accumulation Units credited to the
Policy is decreased by any annual policy fee, any withdrawals, and, upon
annuitization, any applicable premium taxes.
When a portion of the Accumulation Value is allocated to a Portfolio, a certain
number of Accumulation Units are credited to your Policy. The number of
Accumulation Units is determined by dividing the dollar amount allocated to the
Portfolio by the Accumulation Unit Price for that Portfolio as of the end of the
Valuation Period in which the allocation is made.
The Accumulation Units of each Portfolio are valued separately. The Accumulation
Unit Price may vary each Valuation Period according to the net investment
performance of the Portfolio, the daily charges under the Policy, and, any
applicable tax charges.
Therefore, the Accumulation Value of your Policy will vary from Valuation Period
to Valuation Period, reflecting the investment experience of the selected
Portfolios of the Funds, the interest earned in the Fixed Account, additional
Premium Payments, withdrawals and the deduction of any charges.
TRANSFERS AMONG PORTFOLIOS AND THE FIXED ACCOUNT
You may make transfers among the Portfolios and/or the Fixed Account 15 times
each Policy Year without charge. A transfer charge of $10 may be imposed for
each additional transfer. This charge will be deducted pro rata from each
Subaccount (and, if applicable, the Fixed Account) in which the Policyowner is
invested. Each transfer must be at least $250, or the balance of the Portfolio,
if less. You may make unlimited transfers from the Portfolios to the Fixed
Account. During the 30 day period following the Policy anniversary date, you may
also transfer from the Fixed Account to the various Portfolios amounts up to the
greater of: 25% of the Accumulation Value of the Fixed Account; the amount of
any transfer from the Fixed Account during the prior thirteen months; or $1,000.
This provision is not available while dollar cost averaging from the Fixed
Account. The minimum amount that may remain in a Portfolio or the Fixed Account
after a transfer is $100.
You may initiate transactions by telephone. AVLIC will employ reasonable
procedures to confirm that telephone instructions are genuine. AVLIC procedures
for transactions initiated by telephone include, but are not limited to,
requiring the Owner to provide the policy number at the time of giving transfer
instructions; tape recording of all telephone transfer instructions; and the
provision, by AVLIC, of written confirmation of the telephone transactions.
AVLIC will effect transfers and determine all values in connection with
transfers at the end of the Valuation Period during which the transfer request
is received at the Home Office.
Transfers may be subject to additional limitations by the Funds. Specifically,
fund managers may have the right to refuse sales, or suspend or terminate the
offering of portfolio shares, if they determine that such action is necessary in
the best interests of the portfolio's shareholders. If a fund manager refuses a
transfer for any reason, the transfer will not be allowed. AVLIC will not be
able to process the transfer if the fund manager refuses.
SYSTEMATIC PROGRAMS
AVLIC may offer systematic programs as discussed below. Transfers of
Accumulation Value made within programs will be counted in determining whether
the transfer fee applies. Lower minimum amounts may be allowed to transfer as
part of a systematic program. There is no separate charge for participation in
these programs at this time. All other normal transfer restrictions, as
described above, may apply.
12 ACCLAIM!
<PAGE>
PORTFOLIO REBALANCING. Portfolio rebalancing is a method to maintain your
original allocation proportions among Portfolios. Under this program, the Owner
can instruct AVLIC to reallocate Accumulation Value among the Portfolios, on a
systematic basis, in accordance with allocation instructions specified by the
Owner. The Fixed Account can not be used in this program.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, the Owner can
instruct AVLIC to automatically transfer, on a systematic basis, a predetermined
amount or percentage specified by the Owner from the Fixed Account or the Money
Market Subaccount to any other Subaccount(s). Dollar cost averaging is permitted
from the Fixed Account, if no more than 1/36th of the value of the Fixed Account
at the time dollar cost averaging is established is transferred each month.
EARNINGS SWEEP. Permits systematic redistribution of earnings among Portfolios.
The Fixed Account may be used in this program.
The Owner can request participation in the available systematic programs when
purchasing the Policy or at a later date. The Owner can change the allocation
percentage or discontinue any program by sending written notice or calling the
Home Office. Other scheduled programs may be made available. AVLIC reserves the
right to modify, suspend or terminate such programs at any time. Use of
Systematic Programs may not be advantageous, and does not guarantee success.
WITHDRAWALS AND SURRENDERS
Any time prior to the Annuity Date and while the Annuitant is still living, you
may make withdrawals or surrender the Policy to receive part or all of the
Accumulation Value. No withdrawal or surrender may be made after the Annuity
Date except as permitted under a particular Annuity Income Option.
The amount available for withdrawal is the Accumulation Value at the end of the
Valuation Period during which the written request for withdrawal is received,
less any applicable premium taxes and in the case of a surrender, also less the
annual policy fee that would be due on the last Valuation Date of the Policy
Year.
In the absence of specific direction from the Owner, amounts will be withdrawn
from the Subaccounts and the Fixed Account on a pro rata basis. The minimum
withdrawal amount is $250. Any withdrawal request that would reduce the
Accumulation Value to less than $1,000 will be considered a request for policy
surrender.
Since the Owner assumes the investment risk with respect to amounts allocated to
the Separate Account, the total amount paid upon withdrawal under the Policy
(taking into account any prior withdrawals) may be more or less than the total
Premium Payments made. The surrender value may be paid in a lump sum to the
Owner, or, if elected, all or any part may be paid out under an Annuity Income
Option. (See "Annuity Income Options".)
Your proceeds will be paid within seven days of receipt of written request for
withdrawal or surrender, subject to postponement in certain circumstances. (See
"Deferment of Payment".) Payments under the Policy of any amounts derived from a
premium paid by check may be delayed until the check has cleared the payor's
bank.
If, at the time the Owner makes a withdrawal request, he or she has not provided
AVLIC with a written election not to have federal income taxes withheld, AVLIC
must by law withhold such taxes from the taxable portion of the withdrawal and
remit that amount to the federal government. Moreover, the Internal Revenue Code
provides that a 10% penalty tax may be imposed on certain early withdrawals.
(See "Federal Tax Matters.")
SYSTEMATIC WITHDRAWALS. A systematic withdrawal option is available. Automatic
withdrawals may be taken on a monthly, quarterly, semi-annual or annual mode.
FREE LOOK PRIVILEGE
A free look period is given to examine a Policy and return it for a refund. The
Owner may cancel the Policy within 10 days after receipt of the Policy, unless
state law requires a longer period of time. In states that permit it to do so,
AVLIC will refund the Accumulation Value calculated on the date AVLIC receives
the policy and refund request. The amount may be more or less than the premium
payments made. In other states, the refund is equal to the greater of the
premiums paid or
ACCLAIM! 13
<PAGE>
the premiums adjusted by investment gains or losses. All Individual Retirement
Annuity or custodial IRA annuity refunds will be a return of premium payment. To
cancel the Policy, the Owner should return it to AVLIC at the Home Office. A
refund, if the premium was paid by check, may be delayed until the check has
cleared the Owner's bank.
CHARGES AND DEDUCTIONS
There is no sales load, no withdrawal charge, and no surrender charge.
Charges will be deducted periodically from the Accumulation Value of the Policy
to compensate AVLIC for, among other things: (1) issuing and administering the
Policy; and (2) assuming certain risks in connection with the Policy. The nature
and amount of these charges are described more fully below.
No deductions are made from the Premium Payments before they are allocated to
the Account or Fixed Account, unless taxes are imposed by state law upon the
receipt of a Premium Payment. In that case AVLIC will deduct the premium tax due
when the premiums are received.
ADMINISTRATIVE CHARGES
ANNUAL POLICY FEE. An annual policy fee of up to $40.00 (currently $36.00) is
deducted from the Accumulation Value on the last Valuation Date of each Policy
Year or upon a surrender. This charge reimburses AVLIC for part of the
administrative costs of maintaining the Policy on AVLIC's system and the cost of
reporting to Owners.
From time to time AVLIC may reduce the amount of the annual policy fee. AVLIC
may do so when annuities are sold to individuals or a group of individuals in a
manner that reduces the administrative costs of policy maintenance. AVLIC would
consider such factors as: (a) the size and type of group; (b) the number of
Annuities purchased by an Owner; (c) the amount of premium payments; and/or (d)
other transactions where maintenance and/or administrative expenses are likely
to be reduced.
Any elimination of the annual policy fee will not discriminate unfairly between
Annuity purchasers. AVLIC will not make any changes to this charge where
prohibited by law.
ADMINISTRATIVE FEE. AVLIC imposes a charge to reimburse it for administrative
expenses in connection with issuing, servicing, and maintaining the Policies.
These expenses include the cost of processing the application and premium
payments, establishing policy records, processing and servicing owner
transactions and policy changes, recordkeeping, preparing and mailing reports,
processing death benefit claims and overhead. The charge is assessed daily and
is equal to an annual rate of .15% of the average daily net assets of the
Account. This charge is guaranteed not to be increased. No administrative fee is
imposed on the Fixed Account.
AVLIC does not expect to make a profit on the charges for the annual policy and
daily administrative fees.
TRANSFER CHARGE. Transfer charges may be levied. (See "Transfers Among
Portfolios and the Fixed Account.")
MORTALITY AND EXPENSE RISK CHARGE
AVLIC imposes a charge as compensation for bearing certain mortality and expense
(M&E) risks under the Policies. The charge is assessed daily and is equal to an
annual rate of 1.25% of the value of the average daily net assets of the
Account. AVLIC guarantees that this charge will never exceed 1.25%. If this
charge is insufficient to cover assumed risks, the loss will fall on AVLIC.
Conversely, if the charge proves more than sufficient, any excess will be added
to AVLIC's surplus.
No M&E charge is imposed on the Fixed Account.
The mortality risk borne by AVLIC, assuming the selection of one of the forms of
life annuities, is to make monthly Annuity Payments (determined in accordance
with the annuity tables and other provisions contained in the Policies)
regardless of how long all annuitants may live. This undertaking assures that
neither an Annuitant's own longevity, nor an improvement
14 ACCLAIM!
<PAGE>
in life expectancy greater than expected, will have any adverse affect on the
monthly annuity payments the Annuitant will receive. It therefore relieves the
Annuitant from the risk of outliving the funds accumulated for retirement.
In addition, AVLIC bears a mortality risk under the Policies, regardless of the
Annuity Income Option selected, in that it guarantees the purchase rates for the
Annuity Income Options available under the Policy and it guarantees that the
death benefit payable upon death of the Annuitant prior to the Annuity Date will
be the greater of the Accumulation Value or the Premium Payments made.
The expense risk undertaken by AVLIC, with respect to the Account, is that the
deductions for administrative costs under the Policies may be insufficient to
cover the actual future costs incurred by AVLIC for providing administration
services.
If the annual policy fee and daily administrative fee are insufficient to cover
the administration expenses, the deficiency will be met from AVLIC's General
Account funds, including the amount derived from the charge levied for mortality
and expense risks.
TAX CHARGES
The Owner will pay premium taxes that currently range from 0% to 3.5% of the
premium paid, where such taxes are imposed by the state law of the Owner's
residence. States impose premium taxes either upon receipt, by the company, of a
premium payment, or upon annuitization or withdrawals. AVLIC will charge and
deduct premium taxes as required by state law and in accordance with any
applicable company election. Applicable premium tax rates are subject to change.
The Owner will be notified of any applicable premium taxes. You are responsible
for informing AVLIC in writing of changes of residence.
Under present laws, AVLIC will incur state or local taxes (in addition to the
premium taxes described above) in several states. At present, these taxes are
not significant; thus, AVLIC does not currently make a charge for these other
taxes. If they increase, however, AVLIC may charge for such taxes. Such charges
would be deducted from the Accumulation Value.
AVLIC does not expect to incur any federal income tax liability attributable to
investment income or capital gains retained as part of the reserves under the
Policies. Based upon these expectations, no charge is being made currently to
the Account for corporate federal income taxes which may be attributable to the
Account. AVLIC will periodically review the question of a charge to the Account
for corporate federal income taxes related to the Account. Such a charge may be
made in future years for any federal income taxes incurred by AVLIC. This might
become necessary if the tax treatment of AVLIC is ultimately determined to be
other than what we currently believe it to be, if there are changes made in the
federal income tax treatment of annuities at the corporate level, or if there is
a change in AVLIC's tax status. In the event that AVLIC should incur federal
income taxes attributable to investment income or capital gains retained as part
of the reserves under the Policy, the Accumulation Unit Price would be
correspondingly adjusted. See "Federal Tax Matters".
FUND INVESTMENT ADVISORY FEES AND EXPENSES
The value of the assets in the Separate Account will reflect investment advisory
fees and other expenses incurred by the Funds. Fund expenses are found in the
Funds' prospectuses, and Statements of Additional Information.
AVLIC may receive administrative fees from the investment advisers of certain
funds.
ANNUITY PERIOD
ANNUITY DATE
The Annuity Date is the date that Annuity Payments are scheduled to begin,
unless the Policy has been surrendered or the Annuitant is deceased and an
amount has been paid as proceeds prior to that date. The Annuity Date will be
the later of the fifth Policy anniversary date or the Policy anniversary which
is nearest the Annuitant's 85th birthday.
ACCLAIM! 15
<PAGE>
However, the Owner may specify an Annuity Date at the time of purchase which may
be extended up to the Policy anniversary nearest the Annuitant's 95th birthday,
and may be extended further with prior Home Office approval.
An Annuity Date may only be changed by written request during the Annuitant's
lifetime. Written request to change the Annuity Date must be received at the
AVLIC Home Office at least 30 days before the currently scheduled Annuity Date.
The Annuity Date and Annuity Income Options available for Qualified contracts
may also be controlled by endorsements, the plan, or applicable law.
ANNUITY INCOME OPTIONS
If the Annuitant is living on the Annuity Date and the Policy is in force,
Annuity Payments will be made to the Annuitant according to the terms of the
Policy and the Annuity Income Option selected.
The amounts of any Annuity Payments payable will be based on the Accumulation
Value as of the Annuity Date less any premium taxes, if applicable. Thereafter,
the monthly Annuity Payment will not change, except in the event the Interest
Payment Option is elected, in which case the payment will vary based on the rate
of interest determined by AVLIC. All or part of the Accumulation Value may be
placed under one or more Annuity Income Options. If annuity payments are to be
paid under more than one option, AVLIC must be told what part of the
Accumulation Value is to be paid under each option.
The Annuity Income Options are shown below. Election of an Annuity Income Option
must be made by written request to AVLIC at least thirty (30) days in advance of
the Annuity Date. If no election is made, payments will be made as a Life
Annuity as shown below. Subject to AVLIC's approval, the Owner (or after the
Annuitant's death, the Annuitant's Beneficiary) may select any other Annuity
Income Option AVLIC then offers. Annuity Income Options are not available to:
(1) an assignee; or (2) any other than a natural person except with AVLIC's
consent.
If an Annuity Income Option selected does not generate monthly payments of at
least $100, AVLIC reserves the right to pay the Accumulation Value as a lump sum
payment or to change the frequency. If an Annuity Income Option is chosen which
depends on the continuation of life of the Annuitant, proof of birth date may be
required before Annuity Payments begin. For Annuity Income Options involving
life income, the actual age of the Annuitant or joint Annuitant will affect the
amount of each payment. Since payments to older Annuitants are expected to be
fewer in number, the amount of each Annuity Payment may be greater. For Annuity
Income Options that do not involve life income, the length of the payment period
may affect the amount of each payment: the shorter the period, the greater the
amount of each Annuity Payment.
The following Annuity Income Options are currently available:
INTEREST PAYMENT. AVLIC will hold any amount applied under this option and pay
or credit interest on the unpaid balance each month at a rate determined by
AVLIC.
DESIGNATED AMOUNT ANNUITY. Monthly annuity payments will be for a fixed amount.
Payments continue until the amount AVLIC holds runs out.
DESIGNATED PERIOD ANNUITY. Monthly annuity payments are paid for a period
certain, as the Owner elects, up to 20 years.
LIFE ANNUITY. Monthly annuity payments are paid for the life of an Annuitant,
ceasing with the last Annuity Payment due prior to his or her death. Variations
provide for guaranteed payments for a period of time.
JOINT AND LAST SURVIVOR ANNUITY. Monthly annuity payments are paid based on the
lives of the two annuitants and thereafter on the life of the survivor, ceasing
with the last Annuity Payment due prior to the survivor's death.
The rate of interest payable under the Interest Payment, Designated Amount
Annuity or Designated Period Annuity Options will be guaranteed to be no less
than 3% compounded yearly. Payments under the Life Annuity and Joint and Last
Survivor Annuity Options will be based on the 1983 Table "a" Individual Annuity
Table, projected for seventeen years, at 3 1/2% interest. AVLIC may, at time of
election of an Annuity Income Option, offer more favorable rates in lieu of the
guaranteed
16 ACCLAIM!
<PAGE>
rates specified in the Annuity Tables. These rates may be based on Annuity
Tables which distinguish between males and females.
Under current administrative practice, AVLIC allows the beneficiary to transfer
amounts applied under the Interest Payment, Designated Amount Annuity, and
Designated Period Annuity Options to either the Life Annuity or Joint and Last
Survivor Annuity Option after the Annuity Date. However, there is no guarantee
that AVLIC will continue this practice which can be changed at any time at
AVLIC's discretion.
FEDERAL TAX MATTERS
INTRODUCTION
The following discussion is general in nature and is not intended as tax advice.
It is not intended to address the tax consequences resulting from all of the
situations in which a person may be entitled to or may receive a distribution
under a contract. You should consult a competent tax adviser before purchasing a
policy. This discussion is based upon AVLIC's understanding of the present
federal income tax laws as they are currently interpreted by the Internal
Revenue Service. No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws, other than premium
taxes. (See "Tax Charges".)
TAXATION OF ANNUITIES IN GENERAL
NONQUALIFIED POLICIES. Section 72 of the Internal Revenue Code (the Code)
governs taxation of annuities. In general, the Owner is not taxed on increases
in the value of a Policy until some form of distribution is made under the
Policy. The exception to this rule is the treatment afforded to Owners that are
not natural persons. Generally, an Owner that is not a natural person must
include in income any increase in excess of the Owner's cash value over the
Owner's "investment in the policy" during the taxable year, even if no
distribution occurs. There are, however, exceptions to this rule which you may
wish to discuss with your tax counsel. The following discussion applies to
Policies owned by natural persons.
The taxable portion of a distribution (in the form of an annuity or lump sum
payment) is taxed as ordinary income, subject to any income averaging rules
applicable to taxpayers generally. For this purpose, the assignment, pledge, or
agreement to assign or pledge any portion of the Accumulation Value generally
will be treated as a distribution. A transfer of ownership of the Policy without
full and adequate consideration will also be treated as a distribution under the
Internal Revenue Code, unless the transfer falls within an exception for
transfers between spouses. Generally, in the case of a withdrawal under a
Nonqualified Policy, amounts received are first treated as taxable income to the
extent that the Accumulation Value immediately before the withdrawal exceeds the
"investment in the policy" at that time. Any additional amount is not taxable.
Although the tax consequences may vary depending on the Annuity Income Option
elected under the Policy, in general, only the portion of the Annuity Payment
that represents the amount by which the Accumulation Value exceeds the
"investment in the policy" will be taxed. For fixed annuity payments, in
general, there is no tax on the amount of each payment which represents the same
ratio that the "investment in the policy" bears to the total expected value of
the Annuity Payment for the term of the payment; however, the remainder of each
Annuity Payment is taxable. Any distribution received subsequent to the
investment in the Policy being recovered will be fully taxable.
In the case of a distribution from a Nonqualified Policy, there may be imposed a
federal penalty tax equal to 10% of the amount treated as taxable income. In
general, however, there is no penalty tax on distributions: (1) made on or after
the date on which the Owner is actual age 59 1/2, (2) made as a result of death
or disability of the Owner, or (3) received in substantially equal payments as a
life annuity subject to Internal Revenue Service requirements, including special
"recapture" rules.
ACCLAIM! 17
<PAGE>
QUALIFIED POLICIES. The rules governing the tax treatment of distributions under
qualified plans vary according to the type of plan and the terms and conditions
of the plan itself. Generally, in the case of a distribution to a participant or
beneficiary under a Policy purchased in connection with these plans, only the
portion of the payment in excess of the "investment in the policy" allocated to
that payment is subject to tax. The "investment in the policy" equals the
portion of plan contributions invested in the Policy that was not excluded from
the participant's gross income, and may be zero. In general, for allowed
withdrawals, a ratable portion of the amount received is taxable, based on the
ratio of the investment in the Policy to the total Policy value. The amount
excluded from a taxpayer's income will be limited to an aggregate cap equal to
the investment in the Policy. The taxable portion of annuity payments is
generally determined under the same rules applicable to Nonqualified Policies.
However, special favorable tax treatment may be available for certain
distributions (including lump sum distributions). Adverse tax consequences may
result from distributions prior to age 59 1/2 (subject to certain exceptions),
distributions that do not conform to specified commencement and minimum
distribution rules, aggregate distributions in excess of a specified annual
amount, and in other certain circumstances.
Distributions from qualified plans are subject to specific tax withholding
rules. Eligible rollover distributions from a qualified plan are subject to
income tax withholding at a rate of 20% unless the Policyowner elects to have
the distribution paid directly by AVLIC to an eligible retirement plan in a
direct rollover. If the distribution is not an eligible rollover distribution,
it is generally subject to the same withholding rules as distributions from
Nonqualified Policies.
GENERAL PROVISIONS
ANNUITANT'S BENEFICIARY
The Annuitant's Beneficiary(ies) receives the death benefit proceeds upon death
of the Annuitant. The Owner may name both primary and contingent Annuitant's
Beneficiaries. The Annuitant's Beneficiary(ies) is named in the application or
as subsequently changed and recorded in AVLIC's records.
Multiple beneficiaries may be named; however, unless otherwise indicated,
payments are made equally to those primary beneficiaries who are alive upon the
death of the Annuitant. Contingent beneficiaries are only eligible if no primary
beneficiary is alive at the time proceeds are payable. If none survive, the
final beneficiary will be the Owner or the Owner's estate.
The Owner may change the Annuitant's Beneficiary by written request on a Change
of Beneficiary form at any time during the Annuitant's lifetime. AVLIC, at its
option, may require that the Policy be returned to the Home Office for
endorsement of any change, or that other forms be completed. The change will
take effect as of the date the change is recorded at the Home Office. AVLIC will
not be liable for any payment made or action taken before the change is
recorded. No limit is placed on the number of changes that may be made.
DEATH OF ANNUITANT
If the Annuitant dies prior to the Annuity Date, an amount will be paid as
proceeds to the Annuitant's Beneficiary. The Death Benefit is payable upon
receipt of Satisfactory Proof of Death of the Annuitant as well as proof that
the Annuitant died prior to the Annuity Date. AVLIC guarantees the Death Benefit
will equal the greater of the Accumulation Value or total premiums paid less
withdrawals, on the date Satisfactory Proof of Death is received by AVLIC at its
Home Office. The Death Benefit is payable as a lump sum or under one of the
Annuity Income Options.
The Owner may elect an Annuity Income Option for the Annuitant's Beneficiary, or
if no such election was made by the Owner and a cash benefit has not been paid,
the Annuitant's Beneficiary may make this election after the Annuitant's Death.
Since Satisfactory Proof of Death includes a "Claimant's Statement", which
specifies how the beneficiary wishes to receive the benefit (unless the Owner
previously selected an option), the amount of the Death Benefit will continue to
reflect the investment performance of the Separate Account until that
information is supplied to AVLIC. Upon receipt of this proof,
18 ACCLAIM!
<PAGE>
the Death Benefit will be paid to the Annuitant's Beneficiary within seven days,
or as soon thereafter as AVLIC has sufficient information about the Annuitant's
Beneficiary to make the payment. In order to take advantage of the favorable tax
treatment accorded to receiving the Death Benefit as an annuity, the Annuitant's
Beneficiary must elect to receive the benefits under an Annuity Option within 60
days "after the day on which such lump sum became payable," as defined in the
Internal Revenue Code.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB) RIDER
This rider provides for payment of the GMDB in lieu of the death benefit payable
prior to annuity date if the GMDB is greater than such death benefit. The GMDB
depends on the annuitant's issue age, and when the company receives satisfactory
proof of death. The GMDB is calculated based upon the 7 year period in which
satisfactory proof of death is received. Each 7 year period begins with a 7 year
policy anniversary, i.e. the 7th, 14th, 21st, etc. policy anniversary. The GMDB
applies only for annuitants who are issue ages 0-70.
If satisfactory proof of the annuitant's death is received prior to the 7th
policy anniversary, or after the policy anniversary nearest the annuitant's 85th
birthday, the GMDB is zero, and the death benefit payable will equal the greater
of the accumulation value, or total premiums paid less partial withdrawals, on
the date satisfactory proof of death is received.
If satisfactory proof of the annuitant's death is received on or after the 7th
policy anniversary and before the policy anniversary nearest the annuitant's
75th birthday, the GMDB is calculated based upon the greater of (i) and (ii),
where (i) is the accumulation value as of the most recent 7 year policy
anniversary and (ii) is the GMDB immediately preceding the most recent 7 year
policy anniversary. The GMDB is increased by premiums paid since the most recent
7 year policy anniversary, decreased by any partial withdrawals since the most
recent 7 year policy anniversary, and decreased by an additional adjustment for
each partial withdrawal made since the most recent 7 year policy anniversary.
However, if satisfactory proof of the annuitant's death is received on or after
the policy anniversary nearest the annuitant's 75th birthday and before the
policy anniversary nearest the annuitant's 85th birthday, the most recent 7 year
policy anniversary on or prior to the policy anniversary nearest the annuitant's
75th birthday will be used in determining the GMDB.
For annuitants Issue Age 68 to 70, the accumulation value as of the 7th policy
anniversary will be used in calculating the GMDB prior to the policy anniversary
nearest the annuitant's 85th birthday. For annuitants Issue Age 69 and 70, the
references to "75th birthday" in the preceding paragraph should be replaced by
"76th birthday" (when issue age is 69) and "77th birthday" (when issue age is
70).
There is no additional charge for this rider, and this rider may not be
available in all states.
DEATH OF OWNER
If the Owner dies on or after the Annuity Date, annuity benefits continue to be
paid to the Annuitant under the Annuity Income Option in effect on the Owner's
date of death.
If the Owner dies before the Annuity Date and before the entire interest in the
Policy is distributed, the Accumulation Value of the Policy must be distributed
to the Owner's Designated Beneficiary so that the Policy qualifies as an annuity
under the Internal Revenue Code. The entire interest must be distributed within
five years of the Owner's death. However, a distribution period exceeding five
years will be allowed if the Owner's Designated Beneficiary purchases an
immediate annuity under which payments will begin within one year of the Owner's
death and will be paid out over the lifetime of the Owner's Designated
Beneficiary or over a period not extending beyond his or her life expectancy.
If the Owner's interest is payable to (or for the benefit of) the surviving
spouse of the Owner, the Policy may be continued with the surviving spouse
treated as the Owner for purposes of applying the rules described above.
Finally, in situations where the Owner is not an individual, these distribution
rules are applicable upon the death or change of the Annuitant.
ACCLAIM! 19
<PAGE>
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
AVLIC reserves the right, subject to applicable law, and if necessary, after
notice to and prior approval from the SEC and or state insurance authorities, to
make additional Portfolios available to you. We may also eliminate, combine or
substitute Subaccounts if, in our judgment, marketing needs, tax considerations,
or investment conditions warrant. This may happen due to a change in law or a
change in a Portfolio's investment objectives or restrictions, or for some other
reason. AVLIC may operate the Separate Account as a management company under the
1940 Act, it may be deregistered under that Act if registration is no longer
required, or it may be combined with other AVLIC separate accounts. AVLIC may
also transfer the assets of the Separate Account to another Separate Account.
If any of these substitutions or changes are made, AVLIC may by appropriate
endorsement change the policy to reflect the substitution or change. In
addition, AVLIC may, when permitted by law, restrict or eliminate any voting
rights of Owners or other persons who have voting rights as to the Account.
You will be notified of any material change in the investment Policy of any
Portfolio in which you have an interest.
DEFERMENT OF PAYMENT
Payment of any withdrawal, surrender or lump sum death benefit due from the
Separate Account will occur within seven days from the date the amount becomes
payable, except that AVLIC may be permitted to defer such payment if:
a) the New York Stock Exchange is closed other than customary weekends or
holidays or trading on the New York Stock Exchange is otherwise restricted;
or
b) the SEC permits the delay for the protection of Owners; or
c) an emergency exists as determined by the SEC.
In addition, surrenders or withdrawals from the Fixed Account may be deferred by
AVLIC for up to 6 months from the date of written request.
CONTESTABILITY
AVLIC cannot contest the validity of this Policy after the Policy Date, subject
to the "Misstatement of Age or Sex" provision.
MISSTATEMENT OF AGE OR SEX
AVLIC may require proof of age and sex before making annuity payments. If the
age or sex of the Annuitant has been misstated, we will adjust the benefits and
amounts payable under this Policy.
If AVLIC made any overpayments, interest at the rate of 6% per year compounded
yearly will be added and charged against future payments. If we made
underpayments, the balance due plus interest at the rate of 6% per year
compounded yearly will be paid in a lump sum.
REPORTS AND RECORDS
AVLIC will maintain all records relating to the Account and will mail the Owner,
at the last known address of record, within 30 days after each Policy
anniversary, an annual report which shows the current Accumulation Value as
allocated among the Subaccounts or the Fixed Account, and charges made during
the Policy Year. Quarterly reports are also currently provided but except for
the annual report, AVLIC reserves the right to charge a report fee. The Owner
will also be sent confirmations of transactions, such as purchase payments,
transfers and withdrawals under the Policy. A periodic report for
20 ACCLAIM!
<PAGE>
the Fund and a list of the securities held in each Portfolio of the Fund and any
other information required by the 1940 Act will also be provided.
DISTRIBUTION OF THE POLICIES
Ameritas Investment Corp. ("AIC"), located at 5900 O Street, 4th Floor, Lincoln,
Nebraska 68510, will act as the principal underwriter of the Policies pursuant
to an underwriting Agreement it has with AVLIC. AIC is a wholly-owned subsidiary
of AMAL Corporation, and an affiliate of AVLIC. AIC is a broker/dealer
registered under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. The Policies are sold by
individuals who are registered representatives of AIC or other broker-dealers.
Commissions paid by AVLIC to broker-dealers may vary, but are not expected to
exceed 1% of premiums paid. Broker-dealers may also receive an asset based
administrative compensation of up to 1% (annualized). From time to time,
additional sales incentives may be provided to broker-dealers.
SAFEKEEPING OF THE ACCOUNT'S ASSETS
AVLIC holds the assets of the Account. The assets are held separate and apart
from General Account assets. AVLIC maintains records of all purchases and
redemptions of the Funds' shares by each of the Subaccounts.
THIRD PARTY SERVICES
AVLIC is aware that certain third parties are offering investment advisory,
asset allocation, money management and timing services in connection with the
contracts. AVLIC does not engage any such third parties to offer such services
of any type. In certain cases, AVLIC has agreed to honor transfer instructions
from such services where it has received powers of attorney, in a form
acceptable to it, from the contract owners participating in the service. Firms
or persons offering such services do so independently from any agency
relationship they may have with AVLIC for the sale of contracts. AVLIC takes no
responsibility for the investment allocations and transfers transacted on a
contract owner's behalf by such third parties or any investment allocation
recommendations made by such parties. Contract owners should be aware that fees
paid for such services are separate and in addition to fees paid under the
contracts.
VOTING RIGHTS
To the extent required by law, AVLIC will vote the Portfolio shares held in the
Account at shareholder meetings in accordance with instructions received from
persons having voting interests in the corresponding Subaccount. The 1940 Act
currently requires shareholder voting on matters such as the election of the
Board of Trustees of the Funds, the approval of the investment advisory
contract, changes in the fundamental investment Policies of the Funds, and
approval of the independent accountants. If, however, the 1940 Act or any
regulation thereunder should be amended, or if the present interpretation
thereof should change, and, as a result, AVLIC determines that it is allowed to
vote the Portfolio shares in its own right, AVLIC may elect to do so.
Prior to the Annuity Date, the Owner holds a voting interest in each Subaccount
to which the Accumulation Value is allocated. The number of votes available to
an Owner will be calculated separately for each Subaccount of the Account. The
number of votes available to an Owner will be determined by dividing the
Accumulation Value attributable to a Subaccount by the net value per share of
the applicable Portfolio. In determining the number of votes, fractional shares
will be recognized.
ACCLAIM! 21
<PAGE>
The number of votes of the Portfolio which are available will be determined as
of the date coincident with the date established by that Portfolio for
determining shareholders eligible to vote at the meeting of the Funds. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established by the Funds.
Shares of Funds as to which no timely instructions are received, or shares held
by AVLIC as to which Owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
Policies participating in that Subaccount.
Each person having a voting interest in a Subaccount will receive proxy
material, reports and other materials relating to the appropriate Portfolio.
On and after the Annuity Date, there are no voting rights because amounts are no
longer held in the Account.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Account is a party or to which the
assets of the Account are subject. AVLIC and AIC are not involved in any
litigation that is of material importance in relation to their total assets or
that relates to the Account.
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available that contains more details
concerning the subjects discussed in this Prospectus. This can be obtained by
writing to the address on the front page or by calling 1-800-745-1112.
The following is a Table of Contents for that Statement:
Page
GENERAL INFORMATION AND HISTORY............................. 2
THE POLICY.................................................. 2
GENERAL MATTERS............................................. 6
FEDERAL TAX MATTERS......................................... 7
DISTRIBUTION OF THE POLICY.................................. 7
SAFEKEEPING OF ACCOUNT ASSETS............................... 8
STATE REGULATION............................................ 8
LEGAL MATTERS............................................... 8
EXPERTS..................................................... 8
OTHER INFORMATION........................................... 8
FINANCIAL STATEMENTS........................................ 8
22 ACCLAIM!
<PAGE>
Part B Registration No.____________
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2
STATEMENT OF ADDITIONAL INFORMATION
FOR
MULTI-PREMIUM VARIABLE ANNUITY POLICY
Offered by
Ameritas Variable Life Insurance Company
(formerly Bankers Life Assurance Company of Nebraska)
(A Nebraska Stock Company)
5900 "O" Street
Lincoln, Nebraska 68510
---------------------
This Statement of Additional Information expands upon subjects discussed
in the current Prospectus for the Multi- Premium Variable Annuity Policy
("Policy") offered by Ameritas Variable Life Insurance Company ("AVLIC"). You
may obtain a copy of the Prospectus dated _____________, by writing Ameritas
Variable Life Insurance Company, 5900 "O" Street, Lincoln, Nebraska 68510, or
calling, 1-800-745-1112. Terms used in the current Prospectus for the Policy are
incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD
BE READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE POLICY.
Dated: ______________.
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY .......................................... 2
- -------------------------------
THE POLICY ............................................................... 2
- ----------
Accumulation Value.............................................. 2
------------------
Value of Accumulation Units .................................... 2
---------------------------
Calculation of Performance Data ................................ 2
-------------------------------
GENERAL MATTERS........................................................... 6
- ---------------
The Policy ..................................................... 6
----------
Non-Participating .............................................. 6
-----------------
Assignment ..................................................... 6
----------
Annuity Data ................................................... 6
------------
Ownership ...................................................... 6
---------
Joint Annuitant ................................................ 6
---------------
IRS Required Distributions ..................................... 6
--------------------------
FEDERAL TAX MATTERS ...................................................... 7
- -------------------
Taxation of AVLIC .............................................. 7
-----------------
Tax Status of the Policies ..................................... 7
--------------------------
Qualified Policies ............................................. 7
------------------
DISTRIBUTION OF THE POLICY ............................................... 7
- --------------------------
SAFEKEEPING OF ACCOUNT ASSETS ............................................ 8
- -----------------------------
AVLIC .................................................................... 8
- -----
STATE REGULATION ......................................................... 8
- ----------------
LEGAL MATTERS ........................................................... 8
- -------------
EXPERTS .................................................................. 8
- -------
OTHER INFORMATION ........................................................ 8
- -----------------
FINANCIAL STATEMENTS ..................................................... 8
- --------------------
- 1 -
<PAGE>
GENERAL INFORMATION AND HISTORY:
- -------------------------------
In order to supplement the description in the Prospectus, the following
provides additional information concerning the company and its history.
As of April 1, 1996, AVLIC is a wholly-owned subsidiary of AMAL
Corporation, a Nebraska stock company. AMAL Corporation is a joint
venture of Ameritas Life Insurance Corp. (Ameritas Life), which owns
a majority interest in AMAL Corporation; and AmerUs Life Insurance
Company (AmerUs Life), an Iowa stock life insurance company, which
owns a minority interest in AMAL Corporation.
AVLIC may publish in advertisements and reports to policyowners, the
ratings and other information assigned it by one or more independent
rating services. The purpose of the ratings are to reflect the
financial strength and/or claims-paying ability of AVLIC.
THE POLICY
- ----------
In order to supplement the description in the Prospectus, the following
provides additional information about the Policy which may be of interest to the
owners.
Accumulation Value
- ------------------
The Accumulation Value of a Policy on each valuation date is equal to:
(1) the aggregate of the values attributable to the Policy in each
Subaccount on the valuation date, determined for each Subaccount by
multiplying the Subaccount's accumulation unit value by the number
of the Subaccount accumulation units allocated to the Policy and/or
the net allocation plus interest in the Fixed Account; plus;
(2) the amount deposited in the Fixed Account, plus interest; less
(3) any partial withdrawal, and its charge, made on the valuation date;
less
(4) any annual policy fee deducted on that valuation date. In computing
the accumulation value, the number of Subaccount accumulation units
allocated to the Policy is determined after any transfer among the
Subaccounts.
Value of Accumulation Units
- ---------------------------
The value of each Subaccount's accumulation units reflects the investment
performance of that Subaccount. The accumulation unit value of each Subaccount
shall be calculated by:
(1) multiplying the per share net asset value of the corresponding Fund
portfolio on the valuation date by the number of shares held by the
Subaccount, before the purchase or redemption of any shares on that
date; minus
(2) a daily charge of .003415% (equivalent to an annual rate of 1.25% of
the average daily net assets) for mortality and expense risks; minus
(3) a daily charge of .0004098% (equivalent to an annual rate of .15% of
the average daily net assets) as daily administrative fee; minus
(4) any applicable charge for federal and state income taxes, if any;
and
(5) dividing the result by the total number of accumulation units held
in the Subaccount on the valuation date, before the purchase or
redemption of any units on that date.
Calculation of Performance Data
- -------------------------------
As disclosed in the prospectus, premium payments will be allocated to the
Separate Account VA-2 which has twenty-six Subaccounts, with the assets of each
invested in corresponding portfolios of the Variable Insurance Products Fund or
the Variable Insurance Products Fund II (collectively the "Fidelity Funds"), the
Alger American Fund , the MFS Variable Insurance Trust, the Morgan Stanley
Universal Funds ("The Funds"), or to the Fixed Account. From time to time AVLIC
will advertise the performance data of the portfolios of the Funds.
Fidelity Management & Research Company (Fidelity) is the manager of the
Fidelity Funds. It maintains a large staff of experienced investment personnel
and a full complement of related support facilities. Alger American Funds are
managed by Fred Alger Management, Inc. It stresses proprietary research by its
large research team that follows approximately 1400 companies. MFS Variable
Insurance Trust is advised by Massachusetts Financial Services Company. MFS is
America's oldest mutual fund organization. Morgan Stanley Universal Funds, Inc.
are managed by Morgan Stanley Asset Management Inc.
-2-
<PAGE>
Performance information for any subaccount may be compared, in reports and
advertising to: (1) the Standard & Poor's 500 Stock Index ("S & P 500"). Dow
Jones Industrial Average ("DJIA"), Donahue Money Market Institutional Averages;
(2) other variable annuity separate accounts or other investment products
tracked by Lipper Analytical Services or the Variable Annuity Research and Data
Service, widely used independent research firms which rank mutual funds and
other investment companies by overall performance, investment objectives, and
assets; and (3) the Consumer Price Index (measure for inflation) to assess the
real rate of return from an investment in a contract. Unmanaged indices may
assume the reinvestment of dividends but generally do not reflect deductions for
annuity charges and investment management costs.
Total returns, yields and other performance information may be quoted
numerically or in a table, graph, or similar illustration. Reports and
advertising may also contain other information including (i) the ranking of any
subaccount derived from rankings of variable annuity separate accounts or other
investment products tracked by Lipper Analytical Series or by rating services,
companies, publications or other persons who rank separate accounts or other
investment products on overall performance or other criteria, and (ii) the
effect of tax deferred compounding on a subaccount's investment returns, or
returns in general, which may be illustrated by graphs, charts, or otherwise,
and which may include a comparison, at various points in time, of the return
from an investment in a contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis.
The tables below are established to demonstrate performance results for
each underlying portfolio with charges deducted at the Separate Account level as
if the policy had been in force from the commencement of the portfolio. The
performance information is based on the historical investment experience of the
underlying portfolios and does not indicate or represent future performance.
Total Return
- ------------
Total returns quoted in advertising reflect all aspects of a subaccount's
return, including the automatic reinvestment by the separate account of all
distributions and any change in the subaccount's value over the period. Average
annual returns are calculated by determining the growth or decline in value of a
hypothetical historical investment in the subaccount over a stated period, and
then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over ten
years would produce an average annual return of 7.18% which is the steady rate
that would equal 100% grown on a compounded basis in ten years. While average
annual returns are a convenient means of comparing investment alternatives,
investors should realize that the subaccount's performance is not constant over
time, but changes from year to year, and that average annual returns represent
averaged figures as opposed to the actual year-to-year performance of a
subaccount.
Table 1: The subaccounts will quote average annual returns for the period
-------
since the underlying portfolios commenced operation after deducting charges at
the Separate Account level. Table 1 shows the average annual total return on a
hypothetical investment in the subaccounts for the last year, five years, and
ten years if applicable, and/or from the date that the portfolios began
operations for the period ending December 31, 1996. The average annual total
returns to be shown in Table 1 were computed by finding the average annual
compounded rates of return over the periods shown that would equate the initial
amount invested to the withdrawal value, in accordance with the following
formula: P(1 + T)n = ERV where P is a hypothetical investment payment of $1,000,
T is the average annual total return, n is the number of years, and ERV is the
withdrawal value at the end of the periods shown. The returns reflect the
mortality and expense risk charge (1.25% on an annual basis), daily
administrative fee at an annual rate of .15% and the annual policy fee. Because
there is no surrender charge, the average annual total return would be the same
for the relevant time periods if the contract is continued.
AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING ON 12/31/96
10 Years or
Portfolios One Year Five Year Life of Fund
- --------------------- -------- --------- ------------
Fidelity VIP
- ------------
Equity-Income 9.08% 13.90% 10.04%*
Growth 9.50% 10.88% 11.64%*
High Income 8.83% 10.66% 6.98%*
Overseas 7.97% 4.28% 2.88%*
Fidelity VIP II
- ---------------
Asset Manager 9.40% 6.62% 7.20%
Inv. Grade Bond -1.85% 1.46% 3.17%
Asset Manager: Growth 14.76% N/A 16.40%
Index 500 17.50% N/A 12.55%
Contrafund 15.92% N/A 25.00%
* 10 Year Figure
Inception of Funds: High-Income, 9/19/85; Equity-Income, 10/9/86; Growth,
10/9/86; Overseas, 1/28/87; Asset Manager, 9/6/89; Investment Grade Bond,
12/5/88; Index 500, 8/27/92; Contrafund, 1/3/95; Asset Manager: Growth, 1/3/95.
- 3-
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING ON 12/31/96
10 Years or
Portfolios One Year Five Year Life of Fund
- --------------------- -------- --------- ------------
<S> <C> <C> <C>
Alger American Fund
- ---------------------
Growth 8.16% 12.46% 14.93%
Income and Growth 14.40% 7.65% 6.83%
Small Capitalization -0.88% 6.35% 16.63%
Balanced 5.03% 5.08% 3.66%
MidCap Growth 6.73% N/A 19.58%
Leveraged AllCap 6.87% N/A 35.94%
MFS Variable Ins. Trust
- -----------------------
Emerging Growth 11.78% N/A 19.24%
Utilities 13.25% N/A 20.86%
World Governments -1.03% N/A 2.19%
Research 17.02% N/A 10.49%
Growth With Income 19.12% N/A 15.08%
Morgan Stanley Universal Funds, Inc.
- ------------------------------------
Emerging Markets Equity N/A N/A N/A
Global Equity N/A N/A N/A
International Magnum N/A N/A N/A
Asian Equity N/A N/A N/A
U.S. Real Estate N/A N/A N/A
</TABLE>
Inception of Funds: Alger American Income and Growth Portfolio, 11/15/88; Alger
American Balanced, 9/5/89; Alger American Small Capitalization, 9/21/88; Alger
American Growth, 1/9/89; Alger American MidCap, 5/3/93; Alger American
Leveraged AllCap, 1 /25 /95; MFS Emerging Growth, 7/24/95; MFS Utilities, 1
/3/95; MFS World Governments, 6/14/94; MFS Research, 7/26/95; MFS Growth With
Income, 10/9/95; Morgan Stanley Emerging Markets Equity, 10/1/96; Morgan Stanley
Global Equity, 1/2/97; Morgan Stanley International Magnum, 1/2/97; Morgan
Stanley Asian Equity, not seeded as of 2/28/97; Morgan Stanley U.S. Real Estate,
not seeded as of 2/28/97.
In addition to average annual returns, the subaccounts may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Table 2 shows the cumulative total return on
a hypothetical investment in the subaccounts for the last year, 5 years, 10
years if applicable, and/or from the date the portfolios began operations for
the period ending December 31, 1996. The returns reflect the mortality and
expense risk charge (1.25% on an annual basis), daily administration fee at an
annual rate of .15%, and the annual policy fee. Because there is no surrender
charge, the cumulative total return would be the same for the relevant time
periods if the contract is continued.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN FOR PERIOD ENDING ON 12/31/96
10 Years or
Portfolios One Year Five Year Life of Fund
- --------------------- -------- --------- ------------
<S> <C> <C> <C>
Fidelity VIP
- ------------
Equity-Income 9.08% 91.68% 160.27%*
Growth 9.50% 67.57% 200.87%*
High Income 8.83% 65.91% 96.33%*
Overseas 7.97% 23.31% 32.86%*
Fidelity VIP II
- ---------------
Asset Manager 9.40% 37.77% 67.54%
Inv. Grade Bond -1.85% 7.53% 29.08%
Asset Manager: Growth 14.76% N/A 35.94%
Index 500 17.50% N/A 68.39%
Contrafund 15.92% N/A 57.02%
</TABLE>
* 10 Year Figure
-4-
<PAGE>
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN FOR PERIOD ENDING ON 12/31/96
10 Years or
Portfolios One Year Five Year Life of Fund
- --------------------- -------- --------- ------------
<S> <C> <C> <C>
Alger American Fund
- -------------------
Growth 8.16% 79.84% 208.41%
Income and Growth 14.40% 44.58% 72.41%
Small Capitalization -0.88% 36.07% 264.05%
Balanced 5.03% 28.13% 30.56%
MidCap Growth 6.73% N/A 94.40%
Leveraged AllCap 6.87% N/A 82.62%
MFS Variable Ins. Trust
- -----------------------
Emerging Growth 11.78% N/A 29.26%
Utilities 13.25% N/A 46.69%
World Governments -1.03% N/A 5.76%
Research 17.02% N/A 15.62%
Growth With Income 19.12% N/A 19.15%
Morgan Stanley Universal Funds, Inc.
- ------------------------------------
Emerging Markets Equity N/A N/A N/A
Global Equity N/A N/A N/A
International Magnum N/A N/A N/A
Asian Equity N/A N/A N/A
U.S. Real Estate N/A N/A N/A
</TABLE>
Yields
- ------
Some subaccounts may also advertise yields. Yields quoted in advertising
reflect the change in value of a hypothetical investment in the subaccount over
a stated period of time, not taking into account capital gains or losses. Yields
are annualized and stated as a percentage. Yields do not reflect the impact of
any contingent deferred sales load.
Current yield for Money Market subaccount reflects the income generated by a
subaccount over a 7 day period. Current yield is calculated by determining the
net change, exclusive of capital changes, in the value of a hypothetical account
having one Accumulation Unit at the beginning of the period adjusting for the
maintenance charge, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and
multiplying the base period return by (365/7). The resulting yield figure is
carried to the nearest hundredth of a percent. Effective yield for the Money
Market subaccount is calculated in a similar manner to current yield except that
investment income is assumed to be reinvested throughout the year at the 7 day
rate. Effective yield is obtained by taking the base period returns as computed
above, and then compounding the base period return by adding 1, raising the sum
to a power equal to (365/7) and subtracting one from the result, according to
the formula:
Effective Yield = [(Base Period Return + 1) 365/7] - 1.
Since the reinvestment of income is assumed in the calculation of effective
yield, it will generally be higher than current yield.
The net average yield for the 7-day period ended December 31, 1996 for the
Money Market Fund was 3.74% and the effective yield for the 7-day period ended
December 31, 1996 for the Money Market Fund was 3.80%.
Current yield for subaccounts other than the Money Market subaccount reflects
the income generated by a subaccount over a 30-day period. Current yield is
calculated by dividing the net investment income per accumulation unit earned
during the period by the maximum offering price per unit on the last day of the
period, according to the formula:
YIELD =2[( FUNC{a-b}OVER cd; +1) SUP 6 -1]
Where a = net investment income earned during the period by the portfolio
company attributable to shares owned by the subaccount, b = expenses accrued for
the period (net of reimbursements), c = the average daily number of accumulation
units outstanding during the period, and d = the maximum offering price per
accumulation unit on the last day of the period. The yield reflects the
mortality and expense risk charge and the annual policy fee.
-5-
<PAGE>
GENERAL MATTERS
- ---------------
The Policy
- ----------
The Policy, the application, any supplemental applications, and any
amendments or endorsements make up the entire contract. All statements made in
the application, in the absence of fraud, are considered representations and not
warranties. Only statements in the application that is attached to the Policy
and any supplemental applications made a part of the Policy when a change went
into effect can be used to contest a claim or the validity of the Policy. Only
the President, Vice President, Secretary or Assistant Secretary can modify the
Policy. Any changes must be made in writing, and approved by AVLIC. No agent has
the authority to alter or modify any of the terms, conditions or agreements of
the Policy or to waive any of its provisions.
Non-Participating
- -----------------
The Policies are non-participating. No dividends are payable and the Policies
will not share in the profits or surplus earnings of AVLIC.
Assignment
- ----------
Any policy, if permitted by the plan or by law relevant to the plan
applicable to a qualified policy, may be assigned by the owner prior to the
annuity date and during the annuitant's lifetime. AVLIC is not responsible for
the validity of any assignment. No assignment will be recognized until AVLIC
receives written notice thereof. The interest of any beneficiary which the
assignor has the right to change shall be subordinate to the interest of an
assignee. Any amount paid to the assignee shall be paid in one sum, not
withstanding any settlement agreement in effect at the time the assignment was
executed. AVLIC shall not be liable as to any payment or other settlement made
by AVLIC before receipt of written notice.
Annuity Data
- ------------
AVLIC will not be liable for obligations which depend on receiving
information from a payee until such information is received in a form
satisfactory to AVLIC.
Ownership
- ---------
The owner of the Policy on the policy date is the annuitant, unless otherwise
specified in the application. During the annuitant's lifetime, all rights and
privileges under this Policy may be exercised solely by the owner. Ownership
passes to the owner's designated beneficiary upon the death of the owner(s). If
the owner has not named an owner's designated beneficiary, or if no such
beneficiary is living, the ownership passes to the owner's estate. From time to
time AVLIC may require proof that the owner is still living.
In order to change the owner of the Policy or assign Policy rights, an
assignment of the Policy must be made in writing and filed with AVLIC at its
Home Office. The change will take effect as of the date the change is recorded
at the Home Office, and AVLIC will not be liable for any payment made or action
taken before the change is recorded. The payment of proceeds is subject to the
rights of any assignee of record. A change in the owner will be valid only upon
absolute and complete assignment of the Policy. A collateral assignment is not a
change of ownership.
Joint Annuitant
- ---------------
The owner may, by written request at least 30 days prior to the annuity date,
name a joint annuitant. Such joint annuitant must meet AVLIC's underwriting
requirements. An annuitant may not be replaced. The annuity date shall be
determined based on the date of birth of the annuitant.
IRS Required Distributions
- --------------------------
If the owner dies before the entire interest in the Policy is distributed,
the value of the Policy must be distributed to the owner's designated
beneficiary as described in this section so that the Policy qualifies as an
annuity under the Code.
If the death occurs on or after the annuity date, the remaining portion of
such interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of death.
If the death occurs before the annuity date, the entire interest in the
Policy will be distributed within five years after date of death or be used to
purchase an immediate annuity under which payments will begin within one year of
the owner's death and will be made for the life of the owner's designated
beneficiary or for a period not extending beyond the life expectancy of that
beneficiary.
The owner's designated beneficiary is the person to whom ownership of the
Policy passes by reason of death and must be a natural person. AVLIC reserves
the right to require proof of death.
If any portion of the owner's interest is payable to (or for the benefit of)
the surviving spouse of the owner, the Policy may be continued with the
surviving spouse as the new owner.
-6-
<PAGE>
FEDERAL TAX MATTERS
- -------------------
Taxation of AVLIC
- -----------------
AVLIC is taxed as a life insurance company under Part I of Subchapter L of
the Code. Since the Account is not an entity separate from AVLIC and its
operations form a part of AVLIC, it will not be taxed separately as a "regulated
investment company" under Subchapter M of the Code. Investment income and
realized net capital gains on the assets of the Account are reinvested and are
taken into account in determining the Policy values. As a result, such
investment income and realized net capital gains are automatically retained as
part of the reserves under the Policy. Under existing federal income tax law,
AVLIC believes that Account investment income and realized net capital gains
should not be taxed to the extent that such income and gains are retained as
part of the reserves under the Policy.
Tax Status of the Policies
- --------------------------
Section 817(h) of the Code provides in substance that Section 72 of the Code
will not apply and AVLIC will not be treated as the owner of the assets of the
Account unless the investments made by the Account are "adequately diversified"
in accordance with regulations prescribed by the Secretary of Treasury (the
"Treasury"). If the segregated account is not "adequately diversified" any
increase in the value of a variable annuity contract will be taxed to the owner
currently. The Account, through the fund, intends to comply with the
diversification requirements prescribed by Treasury regulations which affect how
the Fund's assets may be invested. Although AVLIC does not control the Fund, it
has entered into an agreement regarding participation in the Fund, which
requires the Fund to be operated in compliance with the requirements prescribed
by the Treasury.
Qualified Policies
- ------------------
The Policies are designed for use with several types of qualified plans. The
following are brief descriptions of qualified plans with which the policies may
be used:
a. H.R. 10 Plans - Section 401 of the Code permits self-employed
individuals to establish qualified plans for themselves and their
employees. Such plans commonly are referred to as "H.R. 10" or "Keogh"
plans. Taxation of plan participants depends on the specified plan.
The Code governs such plans with respect to maximum contributions,
distribution dates, non-forfeitability of interests, and tax rates
applicable to distributions. In order to establish such a plan, a plan
document, usually in prototype form preapproved by the Internal Revenue
Service, is adopted and implemented by the employer. When issued in
connection with H.R. 10 plans, a Policy may be subject to special
requirements to conform to the requirements under such plans.
Purchasers of a Policy for such purposes will be provided with
supplemental information required by the Internal Revenue Service or
other appropriate agency.
b. Individual Retirement Annuities - Section 408 of the Code permits
certain individuals to contribute to an individual retirement program
known as an "Individual Retirement Annuity" or an "IRA." IRA's are
subject to limitations on eligibility, maximum contributions, and time
of distribution. Distributions from certain other types of qualified
plans may be "rolled over" on a tax-deferred basis into an IRA. Sales
of a Policy for use with an IRA may be subject to special requirements
of the Internal Revenue Service. Purchasers of a Policy for such
purposes will be provided with supplemental information required by the
Internal Revenue Service or other appropriate agency.
c. Corporation Pension and Profit Sharing Plans -- Sections 401(a) and
403(a) of the Code permit corporate employers to establish various
types of retirement plans for employees. Such retirement plans may
permit the purchase of Policies in order to provide benefits under the
plans.
d. Plans of Public School Systems and Certain Tax Exempt Organizations -
Section 403(b) of the Code permits public school systems and certain
tax-exempt organizations to establish plans that provide retirement
benefits for employees through the purchase of annuity contracts. Such
plans may permit the purchase of the Policies in order to provide
benefits under the plans. Section 403(b)(11) of the Code became
effective January 1, 1989. 403(b)(11) provided that the policyholder
may not elect to withdraw funds from a plan under Section 403(b) before
age 59-1/2 and pay the taxes. The money may only be withdrawn as
provided by the Code. On November 28, 1988, the Division of Investment
Management issued a No Action Letter which stated that the Division
would not recommend enforcement action against registrants who followed
Section 403(b)(11) and did not allow such a withdrawal so long as the
No Action Letter is complied with. The Registrant is acting in
reliance on the November 28, 1988, No Action Letter and has complied,
is complying and/or will comply with its provisions. The policyholder
should fully review the prospectus and consult with his or her tax
consultant before purchasing this annuity as a part of a Section 403(b)
plan.
DISTRIBUTION OF THE POLICY
- --------------------------
Ameritas Investment Corp., the principal underwriter of the Policies, is
registered with the Securities and Exchange Commission under the Securities and
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Ameritas Investment Corp. is
wholly-owned by AMAL Corporation, which also owns AVLIC.
-7-
<PAGE>
The Policies are offered to the public through brokers, licensed under the
federal securities laws and state insurance laws, and properly licensed banking
institutes that have entered into agreements with Ameritas Investment Corp. The
offering of the Policies is continuous and Ameritas Investment Corp. does not
anticipate discontinuing the offering of this policy. However, Ameritas
Investment Corp. does reserve the right to discontinue the offering of the
policies.
Compensation for the Policies and for all other variable annuity policies
issued by AVLIC totaled $10,067,075 for 1996; $6,896,847 for 1995; and
$7,647,138 for 1994.
SAFEKEEPING OF ACCOUNT ASSETS
- -----------------------------
Title to assets of the Account is held by AVLIC. The assets are kept
physically segregated and held separate and apart from AVLIC's general account
assets. Accumulation values deposited or transferred to the Fixed Account are
held in the General Account of AVLIC. Records are maintained of all purchases
and redemptions of eligible portfolio shares held by each of the Subaccounts.
AVLIC
- -----
All the stock of AVLIC is owned by AMAL Corporation located in the state of
Nebraska. AVLIC has entered into a Management and Administrative Service
Agreement with Ameritas Life and AmerUs Life, to provide certain services at
estimated cost to AVLIC to assist with the administration of the Policies and
the Account.
STATE REGULATION
- ----------------
AVLIC is a stock life insurance company organized under the laws of Nebraska,
and is subject to regulation by the Nebraska State Department of Insurance. An
annual statement is filed with the Nebraska Commissioner of Insurance on or
before March 1 of each year covering the operations and reporting on the
financial condition of AVLIC as of December 31 of the preceding calendar year.
Periodically, the Nebraska Commissioner of Insurance examines the financial
condition of AVLIC, including the liabilities and reserves of the Account and
certifies their adequacy.
In addition, AVLIC is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain policy
rights and provisions depends on state approval and/or filing and review
process. Where required by state law or regulation, the Policy will be modified
accordingly.
LEGAL MATTERS
- -------------
All matters of Nebraska law pertaining to the validity of the Policy and
AVLIC's right to issue such Policies under Nebraska law have been passed upon by
Norman M. Krivosha, Secretary and General Counsel of AVLIC.
EXPERTS
- -------
The financial statements of AVLIC as of December 31, 1996 and 1995, and for
each of the three years in the period ended December 31, 1996, and the financial
statements of the Account as of December 31, 1996 and for each of the three
years in the period then ended, included in this Statement of Additional
Information have been audited by Deloitte & Touche LLP, 1040 NBC Center,
Lincoln, Nebraska 68508, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
OTHER INFORMATION
- -----------------
A registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy discussed in this Statement of Additional Information. Not all of the
information set forth in the Registration Statement, amendments and exhibits
thereto has been included in this Statement of Additional Information or in the
Prospectus. Statements contained in this Statement of Additional Information and
the Prospectus concerning the content of the policies and other legal
instruments are intended to be summaries. For a complete statement of the terms
of these documents, reference should be made to the instruments filed with the
Securities and Exchange Commission.
FINANCIAL STATEMENTS
- --------------------
The financial statements of AVLIC, which are included in this Statement of
Additional Information, should be considered only as bearing on the ability of
AVLIC to meet its obligations under the Policies. They should not be considered
as bearing on the investment performance of the assets held in the Accounts.
-8-
<PAGE>
DELOITTE &
TOUCHE LLP
- ----------- ----------------------------------------------------------
Logo 1040 NBC Center Telephone: (402) 474-1776
Lincoln, Nebraska 68508-1469 Facsimile: (402) 474-0365
Independent Auditors' Report
Board of Directors
Ameritas Variable Life
Insurance Company
Lincoln, Nebraska
We have audited the accompanying statement of net assets of Ameritas
Variable Life Insurance Company Separate Account VA-2 as of December 31, 1996,
and the related statements of operations and changes in net assets for each of
the three years in the period then ended. 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. Our procedures included
confirmation of securities owned as of December 31, 1996. 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, such financial statements present fairly, in all material
respects, the financial position of Ameritas Variable Life Insurance Company
Separate Account VA-2 as of December 31, 1996, and the results of its operations
and changes in its net assets for each of the three years in the period then
ended, in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
February 1, 1997
- ---------------
Deloitte Touche
Tohmatsu
International
- ---------------
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<S> <C>
ASSETS
INVESTMENTS AT NET ASSET VALUE:
Variable Insurance Products Fund:
Money Market Portfolio - 71,503,732.540 shares at
$1.00 per share (cost $71,503,733) $ 71,503,733
Equity-Income Portfolio - 6,375,543.739 shares at
$21.03 per share (cost $99,972,066) 134,077,685
Growth Portfolio - 3,570,738.040 shares at
$31.14 per share (cost $77,205,775) 111,192,783
High Income Portfolio - 4,203,994.114 shares at
$12.52 per share (cost $44,644,167) 52,634,006
Overseas Portfolio - 2,865,386.075 shares at
$18.84 per share (cost $43,328,965) 53,983,874
Variable Insurance Products Fund II:
Asset Manager Portfolio - 7,283,488.356 shares at
$16.93 per share (cost $98,260,500) 123,309,458
Investment Grade Bond Portfolio - 2,172,541.324 shares at
$12.24 per share (cost $25,097,268) 26,591,906
Contrafund Portfolio - 1,820,292.255 shares at
$16.56 per share (cost $26,532,239) 30,144,040
Asset Manager: Growth Portfolio - 235,282.226 shares at
$13.10 per share (cost $2,949,992) 3,082,197
Index 500 Portfolio - 203,711.023 shares at
$89.13 per share (cost $16,715,585) 18,156,763
Alger American Fund:
Small Capitalization Portfolio - 1,383,186.051 shares at
$40.91 per share (cost $44,552,949) 56,586,141
Growth Portfolio - 1,228,263.919 shares at
$34.33 per share (cost $34,074,114) 42,166,300
Income and Growth Portfolio - 1,394,185.376 shares at
$8.42 per share (cost $14,194,473) 11,739,041
Balanced Portfolio - 569,554.981 shares at
$9.24 per share (cost $6,042,018) 5,262,688
Midcap Growth Portfolio - 1,370,386.612 shares at
$21.35 per share (cost $25,292,322) 29,257,754
Leveraged Allcap Portfolio - 322,162.842 shares at
$19.36 per share (cost $6,003,860) 6,237,073
Dreyfus Stock Index Fund:
Stock Index Fund Portfolio - 460,407.134 shares at
$20.28 per share (cost $6,449,564) 9,337,057
MFS Variable Insurance Trust:
Emerging Growth Series Portfolio - 1,479,016.961 shares at
$13.24 per share (cost $19,212,194) 19,582,184
World Governments Series Portfolio - 119,563.323 shares at
$10.58 per share (cost $1,231,712) 1,264,980
Utilities Series Portfolio - 394,662.255 shares at
$13.66 per share (cost $5,210,876) 5,391,086
----------------------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS $ 811,500,749
======================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
1996 1995 1994
------------------ ------------------ --------------------
<S> <C> <C>
INVESTMENT INCOME
Dividend distributions received $ 13,564,184 $ 10,791,789 $ 6,905,119
EXPENSES
Charges to policyowners for assuming
mortality and expense risk 8,898,318 6,093,514 4,473,521
------------------ ------------------ --------------------
INVESTMENT INCOME - NET 4,665,866 4,698,275 2,431,598
------------------ ------------------ --------------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS - NET
Capital gain distributions received 25,240,462 2,906,457 9,513,298
Unrealized increase/(decrease) 40,926,181 83,391,448 (18,327,838)
------------------ ------------------ --------------------
NET GAIN/(LOSS) ON INVESTMENTS 66,166,643 86,297,905 (8,814,540)
------------------ ------------------ --------------------
NET INCREASE/(DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS 70,832,509 90,996,180 (6,382,942)
NET INCREASE IN NET ASSETS RESULTING
FROM PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS 151,795,930 93,106,859 123,008,669
------------------ ------------------ --------------------
TOTAL INCREASE IN NET ASSETS 222,628,439 184,103,039 116,625,727
NET ASSETS
Beginning of period 588,872,310 404,769,271 288,143,544
------------------ ------------------ --------------------
End of period $ 811,500,749 $ 588,872,310 $ 404,769,271
================== ================== ====================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2
NOTES TO FINANCIAL STATEMENTS
A. ORGANIZATION AND ACCOUNTING POLICIES:
-------------------------------------
Ameritas Variable Life Insurance Company Separate Account VA-2 (the
Account) was established on May 28, 1987, under Nebraska law by Ameritas
Variable Life Insurance Company (AVLIC), a wholly-owned subsidiary of AMAL
Corporation, a holding company 66% owned by Ameritas Life Insurance Corp
(ALIC) and 34% owned by AmerUs Life Insurance Company (AmerUs). The assets
of the Account are segregated from AVLIC's other assets and are used only
to support variable annuity products issued by AVLIC.
The Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. At December 31, 1996, there are twenty
subaccounts within the Account. Five of the subaccounts invest only in a
corresponding Portfolio of the Variable Insurance Products Fund, and five
invest only in a corresponding Portfolio of Variable Insurance Products
Fund II. Both funds are diversified open-end management investment
companies and are managed by Fidelity Management and Research Company. Six
of the subaccounts invest only in a corresponding Portfolio of Alger
American Fund which is a diversified open-end management investment company
managed by Fred Alger Management, Inc. One subaccount invests only in a
corresponding Portfolio of Dreyfus Stock Index Fund which is a
non-diversified open-end management investment company managed by Dreyfus
Service Corporation. Three of the subaccounts invest only in a
corresponding Portfolio of MFS Variable Insurance Trust which is a
diversified open-end management investment company managed by Massachusetts
Financial Services Company. All five funds are registered under the
Investment Company Act of 1940, as amended. Each Portfolio pays the manager
a monthly fee for managing its investments and business affairs. The assets
of the Account are carried at the net asset value of the underlying
Portfolios of the funds, and the value of the policyowners' units
corresponds to the Account's investment in the underlying subaccounts. The
availability of investment portfolio and subaccount options may vary
between products. Share transactions and security transactions are
accounted for on a trade date basis.
AVLIC currently does not expect to incur any federal income tax liability
attributable to the Account with respect to the sale of the variable
annuity policies. If, however, AVLIC determines that it may incur such
taxes attributable to the Account, it may assess a charge for such taxes
against the account.
B. POLICYHOLDER CHARGES:
---------------------
AVLIC charges the Account for mortality and expense risks assumed. A daily
charge is made on the average daily value of the net assets representing
equity of policyowners held in each subaccount per each product's current
policy provisions. Additional charges are made at intervals and in amounts
per each product's current policy provisions. These charges are prorated
against the balance in each investment option of the policyholder,
including the Fixed Account option which is not reflected in this separate
account. The withdrawal of these charges are included as other operating
transfers.
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2
NOTES TO FINANCIAL STATEMENTS
C: INFORMATION BY FUND:
Variable Insurance Products Fund
-------------------------------------------------------------------------------
Money Equity- High
Market Income Growth Income Overseas
-------------- ---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance 01-01-96 $ 57,326,277 $ 117,719,005 $ 86,780,936 $ 35,882,984 $ 45,684,513
Distibuted earnings 3,799,567 4,953,256 7,626,017 3,198,460 1,280,345
Mortality risk charge (915,893) (1,517,611) (1,328,474) (502,495) (667,514)
Unrealized increase/(decrease) --- 10,895,466 5,069,624 2,214,664 5,099,697
Net premium transferred 11,293,782 2,027,569 13,044,680 11,840,393 2,586,833
-------------- ---------------- -------------- -------------- --------------
Balance 12-31-96 $ 71,503,733 $ 134,077,685 $ 111,192,783 $ 52,634,006 $ 53,983,874
============== ================ ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Fund II
-------------------------------------------------------------------------------
Asset Investment Asset Mgr.:
Manager Grade Bond Contrafund Growth Index 500
-------------- ---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance 01-01-96 $ 115,119,774 $ 23,086,779 $ 2,491,998 $ 223,546 $ 663,229
Distributed earnings 7,548,811 1,152,156 36,378 118,882 39,805
Mortality risk charge (1,484,230) (312,284) (190,299) (14,233) (84,732)
Unrealized increase/(decrease) 8,603,434 (301,584) 3,604,329 135,704 1,418,021
Net premium transferred (6,478,331) 2,966,839 24,201,634 2,618,298 16,120,440
-------------- ---------------- -------------- -------------- --------------
Balance 12-31-96 $ 123,309,458 $ 26,591,906 $ 30,144,040 $ 3,082,197 $ 18,156,763
============== ================ ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Alger American Fund
-------------------------------------------------------------------------------------------------
Small Income and Midcap Leveraged
Capitalization Growth Growth Balanced Growth Allcap
-------------- ---------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Balance 01-01-96 $ 44,227,409 $ 24,289,630 $ 6,676,424 $ 2,526,276 $ 14,927,096 $ 1,030,461
Distributed earnings 228,276 922,125 4,990,761 1,483,047 441,180 21,457
Mortality risk charge (658,360) (432,284) (114,917) (52,447) (290,924) (44,009)
Unrealized increase/(decrease) 1,332,624 3,162,174 (3,244,881) (1,099,570) 1,684,242 216,090
Net premium transferred 11,456,192 14,224,655 3,431,654 2,405,382 12,496,160 5,013,074
-------------- ---------------- -------------- -------------- ------------- ----------------
Balance 12-31-96 $ 56,586,141 $ 42,166,300 $ 11,739,041 $ 5,262,688 $ 29,257,754 $ 6,237,073
============== ================ ============== ============== ============= ================
</TABLE>
<TABLE>
<CAPTION>
MFS Variable Insurance Trust Dreyfus
------------------------------------------------ --------------
Emerging World Stock
Growth Governments Utilities Index Fund TOTAL
-------------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Balance 01-01-96 $ 945,719 $ 176,476 $ 541,258 $ 8,552,520 $ 588,872,310
Distributed earnings 162,364 --- 441,088 360,671 38,804,646
Mortality risk charge (123,685) (10,173) (32,684) (121,070) (8,898,318)
Unrealized increase/(decrease) 378,565 44,953 194,795 1,517,834 40,926,181
Net premium transferred 18,219,221 1,053,724 4,246,629 (972,898) 151,795,930
-------------- ---------------- -------------- -------------- ----------------
Balance 12-31-96 $ 19,582,184 $ 1,264,980 $ 5,391,086 $ 9,337,057 $ 811,500,749
============== ================ ============== ============== ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2
NOTES TO FINANCIAL STATEMENTS
C: INFORMATION BY FUND:
Variable Insurance Products Fund
---------------------------------------------------------------------------------
Money Equity- High
Market Income Growth Income Overseas
---------------- ---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance 01-01-95 $ 64,578,099 $ 47,394,555 $ 59,264,436 $ 19,815,317 $ 32,138,329
Distributed earnings 3,385,236 4,417,946 390,703 1,473,552 241,854
Mortality risk charge (738,735) (943,916) (957,307) (415,996) (465,500)
Unrealized increase/(decrease) --- 17,850,823 20,702,655 4,685,960 3,572,714
Net premium transferred (9,898,323) 48,999,597 7,380,449 10,324,151 10,197,116
---------------- ---------------- -------------- -------------- --------------
Balance 12-31-95 $ 57,326,277 $ 117,719,005 $ 86,780,936 $ 35,882,984 $ 45,684,513
================ ================ ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Fund II
---------------------------------------------------------------------------------
Asset Investment Contrafund Asset Mgr.: Index 500
Manager Grade Bond (1) Growth (2) (3)
---------------- ---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance 01-01-95 $ 121,107,120 $ 14,907,528 $ --- $ --- $ ---
Distributed earnings 2,486,418 741,402 30,567 9,363 ---
Mortality risk charge (1,449,245) (253,150) (3,944) (266) (1,143)
Unrealized increase/(decrease) 15,665,746 2,423,519 7,472 (3,498) 23,156
Net premium transferred (22,690,265) 5,267,480 2,457,903 217,947 641,216
---------------- ---------------- -------------- -------------- --------------
Balance 12-31-95 $ 115,119,774 $ 23,086,779 $ 2,491,998 $ 223,546 $ 663,229
================ ================ ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Alger American Fund
-----------------------------------------------------------------------------------------------
Small Income and Midcap Leveraged
Capitalization Growth Growth Balanced Growth Allcap (4)
---------------- ---------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Balance 01-01-95 $ 19,196,546 $ 15,553,231 $ 2,348,430 $ 1,030,537 $ 3,540,066 $ ---
Distributed earnings --- 156,976 30,164 24,117 692 ---
Mortality risk charge (390,434) (218,376) (51,556) (20,525) (96,907) (1,843)
Unrealized increase/(decrease) 8,996,789 4,297,843 848,211 340,663 2,128,071 17,122
Net premium transferred 16,424,508 4,499,956 3,501,175 1,151,484 9,355,174 1,015,182
---------------- ---------------- -------------- -------------- -------------- ------------
Balance 12-31-95 $ 44,227,409 $ 24,289,630 $ 6,676,424 $ 2,526,276 $ 14,927,096 $ 1,030,461
================ ================ ============== ============== ============== ============
</TABLE>
<TABLE>
<CAPTION>
MFS Variable Insurance Trust Dreyfus
------------------------------------------------- --------------
Emerging World (6) Utilities Stock
Growth (5) Governments (7) Index Fund TOTAL
---------------- ---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance 01-01-95 $ --- $ --- $ --- $ 3,895,077 $ 404,769,271
Distributed earnings 25,522 16,669 33,188 233,877 13,698,246
Mortality risk charge (1,676) (481) (592) (81,922) (6,093,514)
Unrealized increase/(decrease) (8,574) (11,684) (14,585) 1,869,045 83,391,448
Net premium transferred 930,447 171,972 523,247 2,636,443 93,106,859
---------------- ---------------- -------------- -------------- --------------
Balance 12-31-95 $ 945,719 $ 176,476 $ 541,258 $ 8,552,520 $ 588,872,310
================ ================ ============== ============== ==============
(1) Commenced business 08/25/95. (5) Commenced business 08/25/95.
(2) Commenced business 09/15/95. (6) Commenced business 08/24/95.
(3) Commenced business 09/21/95. (7) Commenced business 09/18/95.
(4) Commenced business 08/30/95.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2
NOTES TO FINANCIAL STATEMENTS
C. INFORMATION BY FUND:
Variable Insurance Products Fund
-----------------------------------------------------------------------------
Money Equity High
Market Income Growth Income Overseas
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance 01-01-94 $ 31,379,124 $ 32,522,382 $ 47,340,345 $ 14,780,768 $ 26,209,548
Distributed earnings 2,394,455 2,724,507 3,209,519 1,502,298 154,645
Mortality risk charge (689,406) (506,822) (627,238) (226,605) (394,955)
Unrealized increase/(decrease) --- (101,881) (1,669,742) (1,667,003) (325,590)
Net premium transferred 31,493,926 12,756,369 11,011,552 5,425,859 6,494,681
-------------- -------------- -------------- -------------- --------------
Balance 12-31-94 $ 64,578,099 $ 47,394,555 $ 59,264,436 $ 19,815,317 $ 32,138,329
============== ============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Alger American Fund
-----------------------------------------------------------------------------
Small Income Midcap
Capitalization Growth and Growth Balanced Growth
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance 01-01-94 $ 16,350,688 $ 4,033,279 $ 1,486,488 $ 398,861 $ 1,241,078
Distributed earnings 920,888 349,387 79,765 15,142 3,756
Mortality risk charge (191,599) (77,513) (21,926) (8,792) (17,859)
Unrealized increase/(decrease) (1,419,617) 57,051 (188,024) (31,583) 73,432
Net premium transferred 3,536,186 11,191,027 992,127 656,909 2,239,659
-------------- -------------- -------------- -------------- --------------
Balance 12-31-94 $ 19,196,546 $ 15,553,231 $ 2,348,430 $ 1,030,537 $ 3,540,066
============== ============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance
Products Fund II Dreyfus
------------------------------ --------------
Asset Investment Stock
Manager Grade Bond Index Fund TOTAL
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Balance 01-01-94 $ 93,247,898 $ 16,150,701 $ 3,002,384 $ 288,143,544
Distributed earnings 4,919,949 43,054 101,052 16,418,417
Mortality risk charge (1,466,830) (201,910) (42,066) (4,473,521)
Unrealized increase/(decrease) (12,320,921) (662,594) (71,366) (18,327,838)
Net premium transferred 36,727,024 (421,723) 905,073 123,008,669
-------------- -------------- -------------- --------------
Balance 12-31-94 $ 121,107,120 $ 14,907,528 $ 3,895,077 $ 404,769,271
============== ============== ============== ==============
</TABLE>
<PAGE>
DELOITTE &
TOUCHE LLP
- ----------- ----------------------------------------------------------
Logo 1040 NBC Center Telephone: (402) 474-1776
Lincoln, Nebraska 68508-1469 Facsimile: (402) 474-0365
Independent Auditors' Report
Board of Directors
Ameritas Variable Life Insurance Company
Lincoln, Nebraska
We have audited the accompanying balance sheets of Ameritas Variable Life
Insurance Company as of December 31, 1996 and 1995, and the related statements
of operations, changes in stockholder's equity and cash flows for each of the
three years in the period ended December 31, 1996. 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, such financial statements present fairly, in all material
respects, the financial position of Ameritas Variable Life Insurance Company
as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996,
in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
February 1, 1997
- ---------------
Deloitte Touche
Tohmatsu
International
- ---------------
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
----------------------------------------
BALANCE SHEETS
--------------
(in thousands, except per share data)
-------------------------------------
December 31,
-------------------------------------------------
1996 1995
---------------------- --------------------
<S> <C> <C>
ASSETS
- ------
Investments:
Fixed maturity securities, available for sale (amortized cost
$62,048 - 1996 and $38,753 - 1995) $ 62,621 $ 40,343
Loans on insurance policies 4,309 2,639
---------------------- --------------------
Total investments 66,930 42,982
Cash and cash equivalents 10,684 5,660
Accrued investment income 1,096 790
Reinsurance recoverable-affiliates 9 57
Prepaid reinsurance premium-affiliates 2,156 1,506
Deferred policy acquisition costs 79,272 57,664
Other 483 106
Separate Accounts 947,580 682,482
---------------------- --------------------
$ 1,108,210 $ 791,247
====================== ====================
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------
LIABILITIES:
Policy and contract reserves $ 749 $ 609
Accumulated contract values 77,560 44,568
Unearned policy charges 1,243 964
Unearned reinsurance ceded allowance 3,139 2,279
Federal income taxes--
Current 875 685
Deferred 9,921 11,398
Other 8,134 4,266
Separate Accounts 947,580 682,482
---------------------- --------------------
Total Liabilities 1,049,201 747,251
---------------------- --------------------
STOCKHOLDER'S EQUITY:
Common stock, par value $100 per share;
authorized 50,000 shares, issued and
outstanding 40,000 shares 4,000 4,000
Additional paid-in capital 40,370 29,700
Retained earnings 14,510 9,860
Net unrealized investment gain 129 436
---------------------- --------------------
Total Stockholder's Equity 59,009 43,996
---------------------- --------------------
$ 1,108,210 $ 791,247
====================== ====================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
----------------------------------------
STATEMENTS OF OPERATIONS
------------------------
(in thousands)
--------------
Years Ended December 31,
-----------------------------------------------------------------
1996 1995 1994
------------------- ------------------- --------------------
<S> <C> <C> <C>
INCOME:
Insurance revenues:
Contract charges $ 26,345 $ 18,350 $ 13,528
Premium-reinsurance ceded (5,895) (4,289) (2,009)
Reinsurance ceded allowance 2,235 1,859 502
Investment revenues:
Investment income, net 3,603 3,492 3,046
Realized gains, net 19 28 19
Other 567 261 337
------------------- ------------------- --------------------
26,874 19,701 15,423
------------------- ------------------- --------------------
BENEFITS AND EXPENSES:
Policy Benefits:
Death benefits 716 268 417
Interest credited 2,736 1,995 1,524
Increase in policy and contract reserves 140 183 195
Other 52 32 46
Sales and operating expenses 10,041 6,815 5,940
Amortization of deferred policy acquisition costs 5,531 3,057 2,521
------------------- ------------------- --------------------
19,216 12,350 10,643
------------------- ------------------- --------------------
Income before federal income taxes 7,658 7,351 4,780
------------------- ------------------- --------------------
Income taxes - current 3,819 1,685 (608)
Income taxes - deferred (811) 902 2,278
------------------- ------------------- --------------------
Total income taxes 3,008 2,587 1,670
------------------- ------------------- --------------------
NET INCOME $ 4,650 $ 4,764 $ 3,110
=================== =================== ====================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
----------------------------------------
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
---------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
----------------------------------------------------
(in thousands, except shares)
-----------------------------
Net
Common Stock Additional Unrealized
------------------------------- Paid-in Retained Investment
Shares Amount Capital Earnings Gain(Loss) Total
--------------- ------------- -------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1994 40,000 $ 4,000 $ 23,700 $ 1,986 $ - $ 29,686
Capital contribution from
Ameritas Life Insurance Corp. - - 6,000 - - 6,000
Net unrealized investment loss, net - - - - (173) (173)
Net income - - - 3,110 - 3,110
--------------- ------------ -------------- ----------- ---------- ------------
BALANCE, December 31, 1994 40,000 4,000 29,700 5,096 (173) 38,623
Net unrealized investment gain, net - - - - 609 609
Net income - - - 4,764 - 4,764
--------------- ------------- -------------- ------------ --------- ------------
BALANCE, December 31, 1995 40,000 4,000 29,700 9,860 436 43,996
Return of capital - - (15,000) - - (15,000)
Capital contribution from
AMAL Corporation - - 25,670 - - 25,670
Net unrealized investment loss, net - - - - (307) (307)
Net income - - - 4,650 - 4,650
--------------- ------------- ------------- ------------ --------- ----------
BALANCE, December 31, 1996 40,000 $ 4,000 $ 40,370 $ 14,510 $ 129 $ 59,009
=============== ============= ============= ============ ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
----------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
(in thousands)
December 31,
----------------------------------------------------
1996 1995 1994
---------------- ----------------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net Income $ 4,650 $ 4,764 $ 3,110
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred policy acquisition costs 5,531 3,057 2,521
Policy acquisition costs deferred (26,596) (16,020) (17,481)
Interest credited to contract values 2,736 1,995 1,524
Amortization of discounts or premiums (83) (70) (49)
Net realized gains on investment transactions (19) (28) (19)
Deferred income taxes (811) 902 2,278
Change in assets and liabilities:
Accrued investment income (306) (15) (98)
Reinsurance recoverable-affiliates 48 412 (469)
Prepaid reinsurance premium (650) (487) (451)
Other assets (377) (18) (16)
Policy and contract reserves 140 183 195
Unearned policy charges 279 234 247
Federal income tax payable-current (310) 698 (81)
Unearned reinsurance ceded allowance 860 610 595
Other liabilities 3,868 1,939 (1,823)
------------- ------------------ --------------
Net cash used in operating activities (11,040) (1,844) (10,017)
------------- ------------------ --------------
INVESTING ACTIVITIES
- --------------------
Purchase of fixed maturity securities available for sale (31,514) (7,760) (15,673)
Proceeds from maturities or repayment of fixed maturity securities
available for sale 5,307 3,738 5,108
Proceeds from sales of fixed maturity securities available for sale 3,014 - -
Net change in loans on insurance policies (1,670) (1,042) (576)
------------- ------------------ --------------
Net cash used in investing activities (24,863) (5,064) (11,141)
------------- ------------------ --------------
FINANCING ACTIVITIES
- --------------------
Return of capital (15,000) - 6,000
Capital contribution 25,670 - -
Net change in accumulated contract values 30,257 4,448 2,873
------------- ------------------ --------------
Net cash from financing activities 40,927 4,448 8,873
------------- ------------------ --------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,024 (2,460) (12,285)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,660 8,120 20,405
============= ================== ==============
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,684 $ 5,660 $ 8,120
============= ================== ==============
Supplemental cash flow information:
- ----------------------------------
Net cash paid (received) on income taxes $ 4,129 $ 987 $ (527)
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(in thousands)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------------------------------------
Ameritas Variable Life Insurance Company (the Company), a stock life insurance
company domiciled in the State of Nebraska, was a wholly-owned subsidiary of
Ameritas Life Insurance Corp. (ALIC), a mutual life insurance company, until
April of 1996 when it became a wholly-owned subsidiary of AMAL Corporation, a
holding company 66% owned by ALIC and 34% owned by AmerUs Life Insurance
Company (AmerUs). The Company began issuing variable life insurance and
variable annuity policies in 1987 and fixed premium annuities in 1996. The
variable life, variable annuity and fixed premium annuity policies are not
participating with respect to dividends.
USE OF ESTIMATES
The preparation of financial statements 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.
The principal accounting and reporting practices followed are:
INVESTMENTS
The Company classifies its securities into categories based upon the Company's
intent relative to the eventual disposition of the securities. The first
category, held-to-maturity securities, is composed of debt securities which a
company has the positive intent and ability to hold-to-maturity. These
securities are carried at amortized cost. The second category,
available-for-sale securities, may be sold to address the liquidity and other
needs of a company. Debt and equity securities classified as available-for-sale
are carried at fair value on the balance sheet with unrealized gains and losses
excluded from income and reported as a separate component of stockholder's
equity, net of related deferred acquisition costs and income tax effects. The
third category, trading securities, is for debt and equity securities acquired
for the purpose of selling them in the near term. The Company has classified all
of its securities as available-for-sale. Realized investment gains and losses on
sales of securities are determined on the specific identification method.
The Company records write-offs or allowances for its investments based upon an
evaluation of specific problem investments. The Company reviews, on a continual
basis, all invested assets to identify investments where the Company has credit
concerns. Investments with credit concerns include those the Company has
identified as experiencing a deterioration in financial condition. The Company
has no write-offs or allowances recorded as of December 31, 1996, 1995 and 1994.
CASH EQUIVALENTS
The Company considers all highly liquid debt securities purchased with a
remaining maturity of less than three months to be cash equivalents.
SEPARATE ACCOUNTS
The Company operates separate accounts on which the earnings or losses accrue
exclusively to contractholders. The assets (mutual fund investments) and
liabilities of each account are clearly identifiable and distinguishable from
other assets and liabilities of the Company. Assets are reported at fair value.
PREMIUM REVENUE AND BENEFITS TO POLICYHOLDERS
RECOGNITION OF UNIVERSAL LIFE-TYPE CONTRACTS REVENUE AND BENEFITS TO
POLICYHOLDERS
Universal life-type policies are insurance contracts with terms that are not
fixed and guaranteed. The terms that may be changed could include one or more of
the amounts assessed the policyholder, premiums paid by the policyholder or
interest accrued to policyholder balances. Amounts received as payments for such
contracts are reflected as deposits and are not reported as premium revenues.
Revenues for universal life-type policies consist of charges assessed against
policy account values for deferred policy loading, mortality risk expense, the
cost of insurance and policy administration. Policy benefits and claims that are
charged to expense include interest credited to contracts under the fixed
account investment option and benefit claims incurred in the period in excess of
related policy account balances.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(in thousands)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------------------------------------
(Continued):
- -------------
RECOGNITION OF INVESTMENT CONTRACT REVENUE AND BENEFITS TO POLICYHOLDERS
Contracts that do not subject the Company to risks arising from policyholder
mortality or morbidity are referred to as investment contracts. Certain deferred
annuities are considered investment contracts. Amounts received as payments for
such contracts are reflected as deposits and are not reported as premium
revenues.
Revenues for investment products consist of investment income and policy
administration charges. Contract benefits that are charged to expense include
benefit claims incurred in the period in excess of related contract balances,
and interest credited to contract balances.
POLICY ACQUISITION COSTS
Those costs of acquiring new business, which vary with and are primarily
related to the production of new business, have been deferred to the extent that
such costs are deemed recoverable from future premiums. Such costs include
commissions, certain costs of policy issuance and underwriting, and certain
variable distribution expenses.
Costs deferred related to universal life-type policies and investment-type
contracts are amortized over the lives of the policies, in relation to the
present value of estimated gross profits from mortality, investment and expense
margins. The estimated gross profits are reviewed annually based on actual
experience and changes in assumptions.
An analysis of the costs carried in the balance sheets as deferred acquisition
costs is as follows:
<TABLE>
<CAPTION>
December 31
-----------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Beginning balance $57,664 $45,940 $30,659
Acquisition costs deferred 26,596 16,020 17,481
Amortization of deferred policy acquisition costs (5,531) (3,057) (2,521)
Adjustment for unrealized investment (gain) loss 543 (1,239) 321
- -------------------------------------------------------------------------------------------------------------------------
Ending balance $79,272 $57,664 $45,940
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
To the extent that unrealized gains or losses on available-for-sale securities
would result in an adjustment of deferred policy acquisition costs had those
gains or losses actually been realized, the related unamortized deferred policy
acquisition costs are recorded as an adjustment of the unrealized gains or
losses included in stockholder's equity.
FUTURE POLICY AND CONTRACT BENEFITS
Liabilities for future policy and contract benefits left with the Company on
variable universal life and annuity-type contracts are based on the policy
account balance, and are shown as accumulated contract values. In addition the
Company carries as future policy benefits a liability for additional coverages
offered under policy riders.
INCOME TAXES
The provision for income taxes includes amounts currently payable and
deferred income taxes resulting from the cumulative differences in assets and
liabilities determined on a tax return and financial statement basis at the
current enacted tax rates.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
-----------------------------------------------------
(in thousands)
2. INVESTMENTS
- ---------------
Investment income summarized by type of investment was as follows:
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturity securities available for sale $3,308 $2,819 $2,411
Cash equivalents 618 597 609
Loans on insurance policies 214 128 82
- ---------------------------------------------------------------------------------------------------------------------------------
Gross investment income 4,140 3,544 3,102
Investment expenses 537 52 56
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $3,603 $3,492 $3,046
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Net pretax realized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net gains on disposals of fixed maturity securities available for sale $19 $28 $19
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of fixed maturity securities available for sale and gross
gains and losses realized on those sales were as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1996
--------------------------------------------
Proceeds Gains Losses
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$3,014 $30 $ -
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There were no disposals of fixed maturity securities available for sale during
1995 or 1994 other than calls or maturities.
The amortized cost and fair value of investments in fixed maturity securities
available for sale by type of investment were as follows:
<TABLE>
<CAPTION>
December 31, 1996
--------------------------------------------------------
Amortized Gross Unrealized Fair
----------------------------
Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Corporate $33,690 $437 $114 $34,013
Mortgage-backed 13,407 209 22 13,594
U.S. Treasury securities and obligations of
U.S. government agencies 14,951 158 95 15,014
- ---------------------------------------------------------------------------------------------------------------------------------
Total fixed maturity securities available for sale $62,048 $804 $231 $62,621
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The December 31, 1996 balance of stockholder's equity was decreased by $307
(comprised of a decrease in the carrying value of the securities of $1,017
reduced by $545 of related adjustments to deferred acquisition costs and $165 in
deferred income taxes) to reflect the net unrealized gain on securities
classified as available-for-sale.
<TABLE>
<CAPTION>
December 31, 1995
--------------------------------------------------------
Amortized Gross Unrealized Fair
----------------------------
Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Corporate $20,667 $930 $ - $21,597
Mortgage-backed 3,628 114 - 3,742
U.S. Treasury securities and obligations of
U.S. government agencies 14,458 550 4 15,004
- ---------------------------------------------------------------------------------------------------------------------------------
Total fixed maturity securities available for sale $38,753 $1,594 $4 $40,343
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
-----------------------------------------------------
(in thousands)
2. INVESTMENTS (continued)
- ---------------------------
The December 31, 1995 balance of stockholder's equity was increased by $609
(comprised of an increase in the carrying value of the securities of $2,177,
reduced by $1,240 of related adjustments to deferred acquisition costs and $328
in deferred income taxes) to reflect the net unrealized gain on securities
classified as available-for-sale.
The amortized cost and fair value of fixed maturity securities available for
sale by contractual maturity at December 31, 1996 are shown below. Expected
maturities may differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $7,582 $7,652
Due after one year through five years 17,266 17,568
Due after five years through ten years 22,264 22,303
Due after ten years 1,529 1,504
Mortgage-backed securities 13,407 13,594
- --------------------------------------------------------------------------------------------------------------------------
Total $62,048 $62,621
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. INCOME TAXES
- ----------------
The items that give rise to deferred tax assets and liabilities relate to the
following:
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net unrealized investment gains $277 $606
Deferred policy acquisition costs 23,727 17,276
Prepaid expenses 172 118
Other 0 500
- -------------------------------------------------------------------------------------------------------------
Gross deferred tax liability 24,176 18,500
- -------------------------------------------------------------------------------------------------------------
Future policy and contract benefits 12,620 5,939
Deferred future revenues 1,534 1,039
Other 101 124
- -------------------------------------------------------------------------------------------------------------
Gross deferred tax asset 14,255 7,102
- -------------------------------------------------------------------------------------------------------------
Net deferred tax liability $9,921 $11,398
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The difference between the U.S. federal income tax rate and the consolidated
tax provision rate is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 35.0%
Other 4.3 0.2 (0.1)
- ---------------------------------------------------------------------------------------------------------------------
Provision for income taxes 39.3% 35.2% 34.9%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
-----------------------------------------------------
(in thousands)
4. RELATED PARTY TRANSACTIONS
- ------------------------------
Affiliates provide technical, financial and legal support to the Company under
administrative service agreements. The cost of these services to the Company for
years ended December 31, 1996, 1995 and 1994 was $8,907, $4,858 and $4,029
respectively. The Company also leased office space and furniture and equipment
from affiliates during 1995 and 1994. The cost of these leases to the Company
for the years ended December 31, 1995, and 1994 was $37 and $40, respectively.
Under the terms of investment advisory agreements, the Company paid $73, $44 and
$43 for the years ended December 31, 1996, 1995 and 1994 to Ameritas Investment
Advisors Inc., an indirect wholly-owned subsidiary of Ameritas Life Insurance
Corp.
The Company entered into reinsurance agreements (yearly renewable term) with
affiliates. Under this agreement, these affiliates assume life insurance risk in
excess of the Company's $100 retention limit. The Company paid $3,301, $2,280
and $1,333 of net reinsurance premiums to affiliates for the years ended
December 31, 1996, 1995 and 1994, respectively. The Company has received
reinsurance recoveries from affiliates of $659, $1,472 and $519 for the years
ended December 31, 1996, 1995 and 1994, respectively.
The Company has entered into guarantee agreements with ALIC, AmerUs and AMAL
Corporation whereby, they guarantee the full, complete and absolute performance
of all duties and obligations of the Company.
The Company's variable life and variable annuity products are distributed
through Ameritas Investment Corp., a wholly-owned subsidiary of AMAL
Corporation. The Company received $54, $192 and $272 for the years ended
December 31, 1996, 1995 and 1994 respectively, from this affiliate to partially
defray the costs of materials and prospectuses. Policies placed by this
affiliate generated commission expense of $20,373, $14,028 and $15,223 for the
years ended December 31, 1996, 1995 and 1994, respectively.
Transactions with related parties are not necessarily indicative of revenues and
expenses which would have occurred had the parties not been related.
5. EMPLOYEE AND AGENT BENEFIT PLANS
- ------------------------------------
The Company is included in the noncontributory defined-benefit pension plan that
covers substantially all full-time employees of ALIC and its subsidiaries.
Pension costs include current service costs, which are accrued and funded on a
current basis, and past service costs, which are amortized over the average
remaining service life of all employees on the adoption date. The assets and
liabilities of this plan are not segregated. The Company had no full time
employees during 1996 or 1995. Total Company contributions for the year ended
December 31, 1994 was $47.
The Company's employees also participate in a defined contribution thrift plan
that covers substantially all full-time employees of Ameritas Life Insurance
Corp. and its subsidiaries. Company matching contributions under the plan range
from 1% to 3% of the participant's compensation. The Company had no full time
employees during 1996 or 1995. Total Company contributions for the year ended
December 31, 1994 was $20.
The Company is also included in the postretirement benefit plans provided to
retired employees of Ameritas Life Insurance Corp. and its subsidiaries. These
benefits are a specified percentage of premium until age 65 and a flat dollar
amount thereafter. Employees become eligible for these benefits upon the
attainment of age 55, 15 years of service and participation in the plan for the
immediately preceding 5 years. Benefit costs include the expected cost of
postretirement benefits for newly eligible employees, interest cost, and gains
and losses arising from differences between actuarial assumptions and actual
experience. The assets and liabilities of this plan are not segregated. The
Company had no full time employees during 1996 or 1995. Total Company
contribution for the year ended December 31, 1994 was $7.
Expenses for the defined benefit pension plan and postretirement group medical
plan are allocated to the Company based on percentage of payroll.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
-----------------------------------------------------
(in thousands)
6. STOCKHOLDER'S EQUITY
- ------------------------
Net income(loss), as determined in accordance with statutory accounting
practices, was $855, $(19), and $(3,900) for 1996, 1995 and 1994, respectively.
The Company's statutory surplus was $44,100, $13,800, and $12,600 at December
31, 1996, 1995 and 1994, respectively. Effective January 1, 1996 the Company
changed reserving methods used for most existing products resulting in an
increase in statutory surplus of approximately $20,601.
Under statutes of the Insurance Department of the State of Nebraska, the Company
is limited in the amount of dividends it can pay to its stockholder. On February
28, 1996 the Board of Directors declared a return of paid-in-capital of $15,000
payable by way of a note due on or before August 15, 1996. The note was retired
on August 15, 1996. This action was approved by the State of Nebraska Insurance
Department and any additional distributions of capital or surplus will require
approval of the Insurance Department.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
- ---------------------------------------
The following disclosures are made regarding fair value information about
certain financial instruments for which it is practicable to estimate that
value. In cases where quoted market prices are not available, fair values are
based on estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. In that regard, the derived
fair value estimates, in many cases, may not be realized in immediate settlement
of the instrument. All nonfinancial instruments are excluded from disclosure
requirements. Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31 of each year. Although management is
not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date; therefore, current estimates of
fair value may differ significantly from the amounts presented herein.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for each class of financial instrument for which it
is practicable to estimate a value:
Fixed maturity securities available for sale
For publicly traded securities, fair value is determined using an
independent pricing source. For securities without a readily ascertainable
fair value, fair value has been determined using an interest rate spread
matrix based upon quality, weighted average maturity and Treasury yields.
Loans on insurance policies
Fair values for policy loans are estimated using discounted cash flow
analyses at interest rates currently offered for similar loans with similar
remaining terms. Policy loans with similar characteristics are aggregated
for purposes of the calculations.
Cash and cash equivalents, accrued investment income and reinsurance
recoverable
The carrying amounts reported in the balance sheet equals fair value due to
the nature of these instruments.
Accumulated contract values
Funds on deposit which do not have fixed maturities are carried at the
amount payable on demand at the reporting date.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
-----------------------------------------------------
(in thousands)
7. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued):
- ----------------------------------------------------
<TABLE>
<CAPTION>
Estimated fair values as of December 31, are as follows:
December 31
--------------------------------------------------------
1996 1995
--------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturity securities available for sale $62,621 $62,621 $40,343 $40,343
Loans on insurance policies 4,309 3,843 2,639 2,346
Cash and cash equivalents 10,684 10,684 5,660 5,660
Accrued investment income 1,096 1,096 790 790
Reinsurance recoverable - affiliates 9 9 57 57
Financial Liabilities:
Accumulated contract values excluding amounts held under
insurance contracts $70,640 $70,640 $39,283 $39,283
</TABLE>
8. SEPARATE ACCOUNTS
- ---------------------
The Company is currently marketing variable life and variable annuity products
which have separate accounts as an investment option. Separate Account V
(Account V) was formed to receive and invest premium receipts from variable life
insurance policies issued by the Company. Separate Account VA-2 (Account VA-2)
was formed to receive and invest premium receipts from variable annuity policies
issued by the Company. Both Separate Accounts are registered under the
Investment Company Act of 1940, as amended, as unit investment trusts. Account V
and VA-2's assets and liabilities are segregated from the other assets and
liabilities of the Company.
<TABLE>
<CAPTION>
Amounts in the Separate Accounts are:
December 31
- ---------------------------------------------------------------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Separate Account V $136,079 $93,610
Separate Account VA-2 811,501 588,872
- ---------------------------------------------------------------------------------------------------------------------------------
$947,580 $682,482
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The assets of Account V are invested in shares of the Variable Insurance
Products Fund, the Variable Insurance Products Fund II, Alger American Fund,
Dreyfus Stock Index Fund and MFS Variable Insurance Trust. Each fund is
registered with the SEC under the Investment Company Act of 1940, as amended, as
an open-end diversified management investment company.
The Variable Insurance Products Fund and the Variable Insurance Products Fund II
are managed by Fidelity Management and Research Company. The Variable Insurance
Products Fund has five portfolios: the Money Market Portfolio, the High Income
Portfolio, the Equity Income Portfolio, the Growth Portfolio and the Overseas
Portfolio. The Variable Insurance Fund II has five portfolios: the Investment
Grade Bond Portfolio, Asset Manager Portfolio, Contrafund Portfolio (effective
August 25, 1995), Asset Manager Growth Portfolio( effective September 15, 1995)
and the Index 500 Portfolio (effective September 21, 1995). The Alger American
Fund is managed by Fred Alger Management, Inc. and has six portfolios: Income
and Growth Portfolio, Small Capitalization Portfolio, Growth Portfolio, MidCap
Growth Portfolio (effective June 17, 1993), Balanced Portfolio (effective June
28, 1993) and the Leveraged Allcap Portfolio (effective August 30, 1995). The
Dreyfus Stock Index Fund is managed by Wells Fargo Nikko Investment Advisors and
has the Stock Index Fund Portfolio. The MFS Variable Insurance Trust is managed
by Massachusetts Financial Services Company. The MFS Variable Insurance Trust
has three portfolios: the Emerging Growth Portfolio (effective August 25, 1995),
World Governments Portfolio (effective August 24, 1995) and the Utilities
Portfolio (effective September 18, 1995)
Separate Account VA-2 allows investment in the Variable Insurance Products Fund,
Variable Insurance Products Fund II, Alger American Fund, Dreyfus Stock Index
Fund and the MFS Variable Insurance Trust with the same portfolios as described
above.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a) Financial Statements:
The financial statements of Ameritas Variable Life Insurance Company
Separate Account VA-2 and Ameritas Variable Life Insurance Company are
filed in Part B.
Ameritas Variable Life Insurance Company Separate Account VA-2:
- Report of Deloitte & Touche LLP, independent auditors.
- Statement of Net Assets as of December 31, 1996.
- Statements of Operations and Changes in Net Assets for each of the three
years in the period ended December 31, 1996.
- Notes to Financial Statements for the three years in the period ended
December 31, 1996.
Ameritas Variable Life Insurance Company:
- Report of Deloitte & Touche LLP, independent auditors.
- Balance Sheets as of December 31, 1996 and 1995.
- Statements of Operations for each of the three years in the period ended
December 31, 1996.
- Statements of Changes in Stockholder's Equity for each of the three
years in the period ended December 31, 1996.
- Statements of Cash Flows for each of the three years in the period ended
December 31, 1996.
- Notes to Financial Statements for the three years in the period ended
December 31, 1996.
All schedules of the Company for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions, are inapplicable or have been disclosed
in the Notes to the Financial Statements and therefore have been omitted.
There are no financial statements included in Part A.
- 1 -
<PAGE>
b) Exhibits
Exhibit Number Description of Exhibit
-------------- ----------------------
(1) Resolution of Board of Directors of Ameritas Variable
Life Insurance Company establishing Ameritas Variable
Life Insurance Company Separate Account VA-2.
(2) Not applicable.
(3)(a) Principal Underwriting Agreement.
(3)(b) Form of Selling Agreement.*
(4) Form of Variable Annuity Contract.
(5) Form of Application for Variable Annuity Contract. (To
Be Filed By Pre-Effective Amendment).
(6)(a) Articles of Incorporation of Ameritas Variable Life
Insurance Company.**
(6)(b) Bylaws of Ameritas Variable Life Insurance Company.**
(7) Not applicable.
(8)(a) Participation Agreement (MFS).*
(8)(b) Participation Agreement (Fidelity).**
(8)(c) Participation Agreement (Alger American)**
(8)(d) Participation Agreement (Morgan Stanley)*
(9) Opinion and consent of Norman M. Krivosha.
(10)(a) Independent Auditors' Consent
(11) No financial statements are omitted from Item 23.
(12) Not applicable
(13) Not applicable
* Incorporated by reference to initial registration statement for
Ameritas Variable Life Insurance Company, Separate Account V File
No. 333-15585, filed on November 5, 1996.
** Incorporated by reference to pre-effective amendment to registration
statement for Ameritas Variable Life Insurance Company, Separate
Account V File No. 333-15585, filed on January 17, 1997.
- 2 -
<PAGE>
Item 25. Directors and Officers of the Depositor.
Name and Principal Position and Offices
Business Address with Depositor
---------------- --------------
Lawrence J. Arth* Director, Chairman of the Board, President
and Chief Executive Officer
Kenneth C. Louis* Director and Executive Vice President
Gary McPhail** Director and Executive Vice President
Robert W. Bush* Director and Senior Vice President Variable
Operations and Administration
Thomas C. Godlasky** Director
Michael E. Sproule** Director
Wayne E. Brewster* Senior Vice President - Variable Sales
Ashok Chawla** Vice President - Fixed Annuity Investments
Brian J. Clark** Vice President-Fixed Annuity Product
Development
Joseph K. Haggerty** Assistant General Counsel
James R. Haire* Vice President and Actuary
Jon C. Headrick* Treasurer
Sandra K. Holmes** Vice President-Fixed Annuity Customer Service
Kenneth R. Jones* Vice President - Corporate Compliance and
Assistant Secretary
Norman M. Krivosha* Secretary and General Counsel
Candace Linville** Assistant Secretary
JoAnn M. Martin* Controller
Kevin Wagoner** Assistant Treasurer
* Principal business address: Ameritas Variable Life Insurance Company, 5900
"O" Street, Lincoln, Nebraska 68510.
** Principal business address: AmerUs Life Insurance Company, 611 Fifth Avenue,
Des Moines, Iowa 50309
- 3 -
<PAGE>
Item 26
The depositor, Ameritas Variable Life Insurance Company, is directly wholly
owned by AMAL Corporation. The Registrant is a segregated asset account of
Ameritas Variable Life Insurance Company.
The following chart indicates the persons controlled by or under common control
with Ameritas Variable Life Insurance Company:
Omitted chart shows Ameritas organization. ALIC with its separate accounts is at
the uppermost tier; second tier companies are: Ameritas Investment Advisors,
Inc., Ameritas Managed Dental Plan, Inc., First Ameritas Life Insurance Corp. of
New York, Pathmark Assurance Company, Veritas Corp., AMAL Corporation, third
tier companies are Ameritas Investment Corp. and Ameritas Variable Life
Insurance Company with its separate accounts which are owned by AMAL
Corporation.
All entities are Nebraska entities, except First Ameritas Life Insurance Corp.
of New York, which is a New York entity, and Ameritas Managed Dental Plan, Inc.,
which is a California entity.
All entities are wholly-owned by the person immediately controlling it, except
AMAL Corporation, a holding company, which is jointly owned by Ameritas Life
Insurance Corp., which owns a majority interest in AMAL Corporation, and AmerUs
Life Insurance Company, which owns a minority interest in AMAL Corporation.
AMAL Corporation is a holding company. Veritas is a marketing agency. Pathmark
Assurance Company is an insurance company.
Item 27. Number of Contractowners
As of December 31, 1996, there were 0 contractowners.
Item 28. Indemnification
Ameritas Variable Life Insurance Company's By-laws provide as follows:
"The Corporation shall indemnify any person who was, or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that he or she is or was a director, officer or employee of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses including attorney's fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such action, suit or proceeding to the full extent authorized
by the laws of Nebraska."
Section 21-2004 of the Nebraska Business Corporation Act, in general, allows
a corporation to indemnify any director, officer, employee or agent of the
corporation for amounts paid in settlement actually and reasonably incurred by
him or her in connection with an action, suit or proceeding, if he or she acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
In a case of a derivative action, no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable for negligence or misconduct in the performance of his or her duty
to the corporation, unless a court in which the action was brought shall
determine that such person is fairly and reasonably entitled to indemnify for
such expenses which the Court shall deem proper.
-4-
<PAGE>
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 29. Principal Underwriters
a) Ameritas Investment Corp., which will serve as the principal underwriter
for the variable annuity contracts issued through Ameritas Variable Life
Insurance Company Separate Account VA-2, also serves as the principal
underwriter for variable life insurance contracts issued through Ameritas
Variable Life Insurance Company Separate Account V, and serves as the
principal underwriter for variable life insurance contracts issued
through Ameritas Life Insurance Corp. Separate Account LLVL and variable
annuity contracts issued through Ameritas Life Insurance Corp Separate
Account LLVA.
b) The following table sets forth certain information regarding the officers
and directors of the principal underwriter, Ameritas Investment Corp.
Name and Principal Positions and Offices
Business Address with Underwriter
---------------- ----------------
Lawrence J. Arth* Director and Chairman of the Board
Kenneth C. Louis* Director, Senior Vice President
Gary McPhail** Director, Senior Vice President
William R. Giovanni* Director, President and Chief Executive
Officer
Thomas C. Godlasky** Director
Michael E. Sproule** Director
Billie B. Beavers*** Senior Vice President
Thomas C. Bittner* Vice President-Marketing and Administration
Alan R. Eveland* Vice President-Public Finance
James R. Fox*** Senior Vice President
Jon C. Headrick* Treasurer
Michael P. Heaton*** Senior Vice President
Kenneth R. Jones* Vice President-Corporate Compliance and
Assistant Secretary
Norman M. Krivosha* Secretary and General Counsel
Bruce D. Lefler*** Vice President
Robert W. Morrow* Vice President
Michael VanHorne*** Senior Vice President
Janell D. Winsor* Vice President-Retail Sales Manager
* Principal business address: Ameritas Investment Corp., 5900 "O" Street,
Lincoln, Nebraska 68510.
** Principal business address: AmerUs Life Insurance Company, 611 Fifth
Avenue, Des Moines, Iowa 50309
*** Principal business address: Ameritas Investment Corp., 440 Regency
Parkway Drive, Suite 222, Omaha, Nebraska 68114
-5-
<PAGE>
c)
<TABLE>
<CAPTION>
Net Underwriting Compensation
Name of Principal Discounts and on Brokerage
Underwriter (1) Commissions (2) Redemption (3) Commissions (4) Compensation (5)
----------------------- ------------------ --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Ameritas Investment $9,573,745 $ 0 $31,204 $462,126
Corp. ("AIC")
</TABLE>
(2)+(4)+(5) = Gross variable annuity compensation received by AIC.
(2) = Sales compensation received and paid out by AIC as underwriter, AIC
retains 0.
(4) = Sales compensation received by AIC for retail sales.
(5) = Sales compensation received by AIC and retained as underwriting fee.
Item 30. Location of Account and Records
The Books, records and other documents required to be maintained by Section
31(a) of the 1940 Act and Rules 31a-1 to 31a-3 thereunder are maintained at
Ameritas Variable Life Insurance Company, 5900 "O" Street, Lincoln, Nebraska
68510.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
a) Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as necessary to ensure that the
audited financial statements in the registration statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
b) Registrant undertakes to include either (1) as part of any application to
purchase a contract offered by the prospectus, a space that an applicant
can check to request a Statement of Additional Information, or (2) a post
card or similar written communication affixed to or included in the
prospectus that the applicant can remove and send for a Statement of
Additional Information.
c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this
form promptly upon written or oral request.
d) The Registrant is relying upon the Division of Investment Management
(Division) no-action letter of November 28, 1988 concerning annuities
sold in 403(b) plans and represents that the requirements of the
no-action letter have been, are and/or will be complied with.
e) Ameritas Variable Life Insurance Company represents that the fees and
charges deducted under the contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by the insurance company.
-6-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ameritas Variable Life Insurance Company Separate Account VA-2, certifies that
it has duly caused this Registration Statement to be signed on is behalf by the
undersigned thereunto duly authorized in the City of Lincoln, County of
Lancaster, State of Nebraska on this 22nd day of September, 1997.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2, Registrant
AMERITAS VARIABLE LIFE INSURANCE COMPANY, Depositor
Attest: /s/ Norman M. Krivosha By: /s/ Lawrence J. Arth
-------------------------- ---------------------------
Secretary Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the Directors and Officers of Ameritas Variable
Life Insurance Company of Nebraska on the dates indicated.
SIGNATURE TITLE DATE
/s/ Lawrence J. Arth Director, Chairman of the Board September 22, 1997
- ---------------------- President and Chief Executive Officer
Lawrence J. Arth
/s/ Kenneth C. Louis Director, Executive Vice President September 22, 1997
- ----------------------
Kenneth C. Louis
/s/ Gary R. McPhail Director, Executive Vice President September 22, 1997
- ----------------------
Gary R. McPhail
/s/ Robert W. Bush Director, Senior Vice President September 22, 1997
- ---------------------- Variable Operations and Administration
Robert W. Bush
/s/ Thomas C. Godlasky Director September 22, 1997
- -----------------------
Thomas C. Godlasky
<PAGE>
SIGNATURE TITLE DATE
/s/ Jon C. Headrick Treasurer September 22, 1997
- -----------------------
Jon C. Headrick
/s/ Norman M. Krivosha Secretary and General Counsel September 22, 1997
- -----------------------
Norman M. Krivosha
/s/ JoAnn M. Martin Controller September 22, 1997
- -----------------------
JoAnn M. Martin
/s/ Michael E. Sproule Director September 22, 1997
- ------------------------
Michael E. Sproule
<PAGE>
As filed with the Securities and Exchange Commission on _________________
Registration No. ________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
EXHIBITS
TO
FORM N-4
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2
<PAGE>
Exhibit Index
-------------
Exhibit
- -------
99.B1 Resolution of Board of Directors of Ameritas Variable Life
Insurance Company establishing Ameritas Variable Life
Insurance Company Separate Account VA-2
99.B3(a) Principal Underwriting Agreement
99.B4 Form of Variable Annuity Contract
99.B9 Opinion and Consent of Norman M. Krivosha
99.B10(a) Independent Auditors' Consent
RESOLUTIONS
BE IT RESOLVED, That the Board of Directors of Bankers Life Assurance Company of
Nebraska ("Company"), pursuant to the provisions of Section 44-402.01 of the
Nebraska Insurance Code, hereby establishes a separate account designated
"Bankers Life Assurance Company of Nebraska Separate Account VA-2" (hereinafter
"Separate Account") for the following use and purposes, and subject to such
conditions as hereinafter set forth:
FURTHER RESOLVED, That Separate Account is established for the purpose of
providing for the issuance by the Company of variable annuities, or other
insurance contracts, and shall constitute a separate account into which are
allocated amounts paid to or held by the Company under such annuities;
FURTHER RESOLVED, That the income, gains and losses, whether or not realized,
from assets allocated to Separate Account shall, in accordance with the
annuities, be credited to or charged against such account without regard to
other income, gains, or losses of the Company; and
FURTHER RESOLVED, That Separate Account shall be divided into Investment
Subdivisions, each Investment Subdivision in Separate Account shall invest in
the shares of a designated mutual fund portfolio and net premiums under the
annuities shall be allocated to the eligible portfolios set forth in the
annuities in accordance with instructions received from owners of the annuities;
and
FURTHER RESOLVED, That the Board of Directors expressly reserves the right to
add or remove any Investment Subdivision of Separate Account as it may hereafter
deem necessary or appropriate; and
FURTHER RESOLVED, That the President and Chief Executive Officer, any Vice
President, the Treasurer, the Secretary, or any Assistant Vice President, and
each of them, with full power to act without the others, be, and they hereby
are, severally authorized to invest such amount or amounts of the Company's cash
in Separate Account or in any Investment Subdivision thereof as may be deemed
necessary or appropriate to facilitate the commencement of Separate Account's
operations and/or to meet any minimum capital requirements under the Investment
Company Act of 1940; and
FURTHER RESOLVED, That the President and Chief Executive Officer, any Vice
President, the Treasurer, the Secretary, or any Assistant Vice President,, and
each of them, with full power to act without the others, be, and they hereby
are, severally authorized to transfer cash from time to time between the
Company's general account and Separate Account as deemed necessary or
appropriate and consistent with the terms of the annuities; and
<PAGE>
FURTHER RESOLVED, That the Board of Directors of the Company reserves the right
to change the designation of Separate Account hereafter to such other
designation as it may deem necessary or appropriate; and
FURTHER RESOLVED, That the President and Chief Executive Officer, any Vice
President, the Treasurer, the Secretary, or any Assistant Vice President, and
each of them, with full power to act without the others, with such assistance
from the Company's independent certified public accountants, legal counsel and
independent consultants or others as they may require, be and they hereby are,
severally authorized and directed to take all action necessary to: (a) Register
Separate Account as a unit investment trust under the Investment Company Act of
1940, as amended; (b) Register the annuities in such amounts, which may be an
indefinite amount, as the said officers of the Company shall from time to time
deem appropriate under the Securities Act of 1933; and (c) Take all other
actions which are necessary in connection with the offering of said annuities
for sale and the operation of Separate Account in order to comply with the
Investment Company Act of 1940, the Securities Exchange Act of 1934, the
Securities Act of 1933, and other federal laws, including the filing of any
amendments to registration statements, any undertakings, and any applications
for exemptions from the Investment Company Act of 1940 or other applicable
federal laws as the said officers of the Company shall deem necessary or
appropriate; and
FURTHER RESOLVED, That the President and Chief Executive Officer, any Vice
President, the Treasurer, the Secretary, or any Assistant Vice President, and
each of them, with full power to act without the others, hereby are severally
authorized and empowered to prepare, execute and cause to be filed with the
Securities and Exchange Commission on behalf of Separate Account and by the
Company as sponsor and depositor a Form of Notification of Registration
Statement under the Securities Act of 1933 registering the annuities and any and
all amendments to the foregoing on behalf of Separate Account and the Company
and on behalf of and as attorneys-in-fact for the principal executive officer
and/or the principal financial officer and/or the principal accounting officer
and/or any other officer of the Company; and
FURTHER RESOLVED, That Julian H. Hopkins, Vice President, and Cathy G. O'Kelly,
Esquire, are duly appointed as agents for service under any such registration
statement, duly authorized to receive communications and notices from the
Securities and Exchange Commission with respect thereto; and
FURTHER RESOLVED, That the President and Chief Executive Officer, any Vice
President, the Treasurer, the Secretary, or any Assistant Vice President, and
each of them, with full power to act without the others, hereby is severally
authorized on behalf of Separate Account and on behalf of the Company to take
any and all action that each of them may deem necessary or advisable in order to
offer and sell the annuities, including any registrations, filings and
qualifications both of the Company, its officers, agents and employees, and of
the
<PAGE>
policies, under the insurance and securities laws of any of the states of the
United States of America or other jurisdictions, and in connection therewith to
prepare, execute, deliver and file all such applications, reports, covenants,
resolutions applications for exemptions, consents to service or process and
other papers and instruments as may be required under such laws, and to take any
and all further action which the said officers or legal counsel of the Company
may deem necessary or desirable (including entering into whatever agreements and
contracts may be necessary) in order to maintain such registrations or
qualifications for as long as the said officer or legal counsel deem it to be in
the best interests of Separate Account and the Company; and
FURTHER RESOLVED, That the President and Chief Executive Officer, any Vice
President, the Treasurer, the Secretary, or any Assistant Vice President, and
each of them, with full power to act without the others, be, and they hereby
are, severally authorized in the names and on behalf of Separate Account and the
Company to execute and file irrevocable written consents on the part of Separate
Account and of the Company to be used in such states wherein such consents to
service of process may be requisite under the insurance or securities laws
therein in connection with said registration or qualification of the annuities
and to appoint the appropriate state official, or such other person as may be
allowed by said insurance or securities laws, agent of Separate Account and of
the Company for the purpose of receiving and accepting process; and
FURTHER RESOLVED, That the President and Chief Executive Officer, any Vice
President, the Treasurer, the Secretary, or any Assistant Vice President, and
each of them, with full power to act without the others, be, and hereby is,
severally authorized to establish procedures under which the Company will
institute procedures for providing voting rights for owners of the annuities
with respect to securities owned by Separate Account; and
FURTHER RESOLVED, That the President and Chief Executive Officer, any Vice
President, the Treasurer, the Secretary, or any Assistant Vice President, and
each of them, with full power to act without the others, is hereby severally
authorized to execute such agreement or agreements as deemed necessary and
appropriate (i) with BLN Investment Corp ("BLNIC") or other qualified entity
under which BLNIC or such other entity will be appointed principal underwriter
and distributor for the annuities and (ii) with one or more qualified banks or
other qualified entities to provide administrative and/or custodial services in
connection with the establishment and maintenance of Separate Account and the
design, issuance, and administration of the annuities.
FURTHER RESOLVED, That because Separate Account will invest solely in the
securities issued by a specific mutual fund corporation registered under the
Investment Company Act of 1940, the President and Chief Executive officer, any
Vice President, the Treasurer, the Secretary, or any Assistant Vice President,
and each of them, with
<PAGE>
full power to act without the others, are hereby severally authorized to execute
whatever agreements as may be necessary or appropriate to enable such
investments to be made.
FURTHER RESOLVED, That the President and Chief Executive Officer, any Vice
President, the Treasurer, the Secretary, or any Assistant Vice President, and
each of them, with full power to act without the others are hereby severally
authorized to execute and deliver such agreements and other documents and do
such acts and things as each of them may deem necessary or desirable to carry
out the foregoing resolutions and the intent and purposes thereof.
C E R T I F I C A T I 0 N
I, W. D. Marting, duly authorized Secretary of Bankers Life Assurance
Company of Nebraska do hereby certify that the above is a true and correct copy
of a resolution adopted by the Board of Directors on May 28, 1987 and that such
resolution remains in full force and effect on this 28th day of May, 1987.
CORPORATE SEAL /s/ W. D. Marting
------------------------------------------
W. D. Marting, - Secretary
PRINCIPAL UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT made this 30th day of April, 1997, by and
between Ameritas Investment Corp., (hereinafter the "Underwriter") and Ameritas
Variable Life Insurance Company hereinafter the "Insurance Company"), on its own
behalf and on behalf of Ameritas Variable Life Insurance Company Separate
Account VA-2 (hereinafter the "Account"), separate account of the Insurance
Company, as follows:
WHEREAS, the Account was established under authority of resolution of
the Insurance Company's Board of Directors on May 28, 1987, in order to set
aside and invest assets attributable to certain variable annuity contracts
(hereinafter "Contracts") issued by the Insurance Company;
WHEREAS, the Insurance Company has registered or will register the
Account as a unit investment trust under the Investment Company Act of 1940 (the
"Investment Company Act") and has registered or will register the Contracts
under the Securities Act of 1933 (the "1933 Act").
WHEREAS, the Insurance Company has filed or will file the Contract for
approval by the state insurance departments in those jurisdictions where it is
authorized to transact business.
WHEREAS, the Underwriter is registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and is a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Insurance Company and the Account desire to have Contracts
sold and distributed through the Underwriter and the Underwriter is willing to
sell and distribute such Contracts under the terms stated herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Insurance Company grants to the Underwriter the right to
be, and the Underwriter agrees to serve as distributor and
principal underwriter of the Contracts during the term of this
Agreement. The Underwriter agrees to use its best efforts to
solicit applications for the Contracts at its own expense, and
otherwise to perform all duties and functions which are
necessary and proper for the distribution of the Policies.
2. All premiums for Contracts shall be remitted promptly in full
together with such application, forms, and any other documents
required by the Insurance Company. Checks or money orders in
payment of premiums shall be drawn to the order of "Ameritas
Variable Life Insurance Company".
3. The Underwriter agrees to offer the Contracts for sale in
accordance with the prospectuses in effect. The Underwriter is
not authorized to give any information or to make any
representations concerning the Contracts other than those
contained in the current prospectuses filed with the SEC or in
such sales literature as may be developed and authorized by
the Insurance Company in conjunction with the Underwriter.
4. The Underwriter shall be responsible for any filings of
advertisements or sales literature required to be made with
the NASD.
5. The Underwriter agrees to join Insurance Company, upon
Insurance Company's request and after independent review of
such matters, in any joint applications required to be filed
with the SEC under the "1934 Act," the "1933 Act" and the
Investment Company Act.
6. The Insurance Company shall be responsible for any filings of
advertising and sales literature required to be made with
state insurance regulators.
<PAGE>
7. On behalf of the Account, the Insurance Company shall furnish
the Underwriter with copies of all prospectuses, financial
statements and other documents which the Underwriter
reasonably requests for use in connection with the
distribution of the Contracts.
8. Insurance Company represents to Underwriter that the
prospectus included in Insurance Company's Registration
Statement, post-effective amendments thereto and any
supplements thereto, as filed or to be filed with the SEC, as
of their effective dates, contain or will contain, all
statements and information which are required to be stated
therein by the 1933 Act and in all respects conform or will
conform to the requirements thereof. Neither any prospectus,
nor any supplement thereof, includes or will include, any
untrue statement of a material fact, or omits or will omit to
state any material fact required to be stated therein or
necessary to make the statement therein not misleading,
provided, however, that the foregoing representations shall
not apply to information contained in or omitted from any
prospectus or supplement in reliance upon, and in conformity
with, written information furnished to Insurance Company by
Underwriter specifically for use in the preparation thereof.
The foregoing representation also shall not apply to
information contained in or omitted from any prospectus or
supplement of any underlying mutual fund.
9. The Underwriter represents that it is duly registered as a
broker-dealer under the 1934 Act and is a member in good
standing of the NASD and, to the extent necessary to offer the
Contracts, shall be duly registered or otherwise qualified
under the securities laws and insurance laws of any state or
other jurisdiction. The Underwriter shall be responsible
itself, or through contracts with others, including Insurance
Company, for carrying out its sales and underwriting
obligations hereunder in continued compliance with the NASD
Rules of Fair Practice and federal and state securities laws
and regulations. Without limiting the generality of the
foregoing, the Underwriter agrees that it shall be fully
responsible for:
(a) ensuring that no person shall offer or sell the
Contracts on its behalf until such person is duly
registered as a representative of the Underwriter,
duly licensed and appointed by the Insurance Company,
and appropriately licensed, registered or otherwise
qualified to offer and sell such Contracts under the
federal securities laws and any applicable securities
laws and insurance laws of each state or other
jurisdiction in which such Contracts may be lawfully
sold, in which the Insurance Company is licensed to
sell the Contracts and in which such persons shall
offer or sell the Contracts; and
(b) training, supervising, and controlling all such
persons for purposes of complying on a continuous
basis with the NASD Rules of Fair Practice and with
federal and state securities law requirements
applicable in connection with the offer and sale of
the Contracts. Underwriter is responsible for all
costs associated with this undertaking. In connection
with this undertaking, the Underwriter shall:
(1) conduct such training (including the
preparation and utilization of training
materials) as in the opinion of the
Underwriter is necessary to accomplish the
purposes of this Agreement;
(2) establish and implement reasonable written
procedures for supervision of sales
practices of agents, representatives or
brokers selling the Contracts; and
(3) take reasonable steps to ensure that its
associated persons shall not make
recommendations to an applicant to purchase
a Contract and shall not sell a Contract in
the absence of reasonable grounds to believe
that the purchase of the Contract is
suitable for such applicant.
2
<PAGE>
10. The Underwriter is hereby authorized to enter into sales
agreements with other independent broker-dealers for the sale
of the Contracts. All such sales agreements entered into by
the Underwriter shall provide that each independent broker-
dealer will assume full responsibility for continued
compliance by itself and its associated persons with the NASD
Rules of Fair Practice and applicable federal and state
securities laws. All associated persons of such independent
broker-dealers soliciting applications for the Contracts shall
be duly and appropriately licensed or appointed for the sale
of the Contracts under the Federal and state securities laws
and the insurance laws of the applicable states or
jurisdictions in which such Contracts may be lawfully sold.
11. The Insurance Company shall apply for the proper insurance
licenses in the appropriate states or jurisdictions for the
designated persons associated with the Underwriter or with
other independent broker-dealers which have entered into
agreements with the Underwriter for the sale of the Contracts,
provided that the Insurance Company reserves the right to
refuse to appoint any proposed registered representative as an
agent or broker, and to terminate an agent or broker once
appointed. The cost of licensing for a designated person will
be paid by the party designating such person for licensing.
The Insurance Company will pay the cost of appointing all
designated persons.
12. The Insurance Company and the Underwriter shall cause to be
maintained and preserved for the periods prescribed such
accounts, books, and other documents as are required of them
by the Investment Company Act of 1940, the 1934 Act, and any
other applicable laws and regulations. The books, accounts
and records of the Insurance Company, the Account, and the
Underwriter as to all transactions hereunder shall be
maintained so as to disclose clearly and accurately the nature
and details of the transactions. The Insurance Company shall
maintain such books and records of the Underwriter pertaining
to the sale of the Contracts and required by the 1934 Act as
may be mutually agreed upon from time to time by the Insurance
Company and the Underwriter; provided that such books and
records shall be the property of the Underwriter, and shall at
all times be subject to such reasonable periodic, special or
other examination by the SEC and all other regulatory bodies
having jurisdiction. The Insurance Company shall be
responsible for sending all required confirmations on
customer transactions in compliance with applicable
regulations, as modified by any exemption or other relief
obtained by the Insurance Company. The Underwriter shall
cause the Insurance Company to be furnished with such reports
as the Insurance Company may reasonably request for the
purpose of meeting its reporting and recordkeeping
requirements under the insurance laws of the State of Nebraska
and any other applicable states or jurisdictions.
13. The Insurance Company shall have the responsibility for paying
(i) all commissions or other fees to associated persons of the
Underwriter which are due for the sale of the Contracts and
(ii) any compensation to other independent broker-dealers and
their associated persons due under the terms of any sales
agreements between the Underwriter, Insurance Company, and
such broker-dealers. Notwithstanding the preceding sentence,
no associated person or broker-dealer shall have an interest
in any deductions or other fees payable to the Underwriter
pursuant to the terms of this Agreement.
14. If Insurance Company is required to refund premiums or return
accumulation values and waive surrender charges on any Policy
for any reason; then no commission will be payable on such
payments, and previously paid commissions, to the extent they
are refunded by the Insurance Company, must be refunded by the
Underwriter.
15. Fees payable to the Underwriter in connection with
underwriting the policies shall be payable in accordance with
Schedule A, which may be revised from time to time by written
agreement of the parties.
Fees payable to the Underwriter in connection with the sale of
the policies by its registered representatives shall be
payable in accordance with Schedule B, which may be revised
from time to time by written agreement of the parties.
3
<PAGE>
In addition, the Insurance Company shall reimburse the
Underwriter for all reasonable and necessary costs and
expenses incurred by the Underwriter in furnishing the
services, materials, and supplies required by the terms of
this Agreement. The Underwriter agrees to obtain the prior
written approval by Insurance Company of any agreements it may
pursue with third party providers of such services, materials
and supplies.
16. Insurance Company shall indemnify Underwriter for any losses
to which Underwriter may become subject, insofar as such
losses result from negligent, fraudulent or unauthorized acts
or omissions by Insurance Company or its employees.
17. That beginning January 1, 1997, and on the first day of each
and every month thereafter, during the entire year of 1997,
unless sooner terminated by mutual agreement of the parties,
Insurance Company agrees to pay to Underwriter the sum of
$10,000.00 in addition to any other sums required to be paid
under the Principal Underwriting Agreement heretofore
executed; which said payment shall be as additional
compensation to Underwriter for performing duties under the
Principal Underwriting Agreement.
18. Underwriter agrees to indemnify the Insurance Company for any
losses to which Insurance Company may be subject if the losses
arise out of or result from negligent, improper, fraudulent or
unauthorized acts or omissions by Underwriter, its employees,
sales personnel, agents or principals, including but not
limited to improper solicitations of applications for
Policies, unauthorized use of sales materials or
advertisements, or any oral or written misrepresentations or
unlawful sales practices.
19. (a) Except as provided by paragraph 19(b) through (e),
this Agreement may be terminated by either party
hereto upon 180 days' written notice to the other
party.
(b) This Agreement may be terminated immediately upon
written notice of one party to the other party hereto
in the event of bankruptcy or insolvency of the party
to which notice is given.
(c) This Agreement may be terminated immediately, at the
option of Insurance Company, in the event that formal
administrative proceedings are instituted against the
Underwriter by the NASD, SEC, any state Insurance
Commissioner or any other regulatory body regarding
Underwriter's duties under this Agreement or related
to the sale of Policies, and that Insurance Company
determines in its sole judgment exercised in good
faith, that any such administrative proceedings will
have a material adverse effect upon the ability of
the Underwriter to perform its obligations under this
Agreement.
(d) This Agreement may be terminated immediately, at the
option of Underwriter, in the event that any of the
underlying funds are not registered, issued or sold
in accordance with applicable state and/or federal
law or such law precludes the use of such shares as
the underlying investment media of the Policies
issued or to be issued by Insurance Company.
(e) This Agreement may be terminated immediately, at the
option of Underwriter, if the underlying fund(s)
ceases to qualify as a Regulated Investment Company
under Subchapter M of the Internal Revenue Code of
1954, as amended.
(f) This Agreement may be terminated, at the option of
Insurance Company, if (a) Insurance Company shall
determine in its sole judgment exercised in good
faith that Underwriter has suffered a material
adverse change in its business or financial
condition or is subject to material adverse publicity
and such material adverse change or material adverse
publicity will have a material adverse impact upon
the business and operations of Insurance Company, (b)
Insurance Company shall notify Underwriter in
writing of such determination and its intent to
terminate this Agreement and (c) after considering
the actions taken by Underwriter and any other
changes in circumstances
4
<PAGE>
since the giving of such notice, such determination
of Insurance Company shall continue to apply on the
sixtieth (60th) day following the giving of such
notice, which sixtieth day shall be the effective day
of termination.
(g) This Agreement may be terminated at any time upon the
mutual written consent of the parties thereto.
(h) The Underwriter shall not assign or delegate its
responsibilities under this Agreement without the
written consent of the Insurance Company.
(i) Upon termination of this Agreement, all
authorizations, right and obligations shall cease
except the obligations to settle accounts hereunder,
including payments of premiums or contributions
subsequently received for Contracts in effect at the
time of termination or issued pursuant to
applications received by the Insurance Company prior
to termination.
20. This Agreement is subject to and its terms are to be
interpreted and construed in accordance with the provisions of
the Investment Company Act and the 1934 Act, and the rules,
regulations, and rulings thereunder and is subject to the
provisions of the NASD Rules of Fair Practice. Without
limiting the generality of the foregoing, the term "assigned"
shall not include any transaction exempted from section
15(b)(2) of the Investment Company Act.
The Underwriter shall submit to all regulatory and
administrative entities having jurisdiction over the
operations of the Accounts, present or future; and will
provide any information, reports or other material which any
such entity by reason of this Agreement may request or require
pursuant to applicable laws or regulations.
21. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
22. This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Nebraska.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed, and seals to be affixed, as of the day and year first above written.
AMERITAS INVESTMENT CORP.
Attest:
/s/ Ann D. Diers /s/ William R. Giovanni
___________________________ By: _________________________________________
William R. Giovanni,
President & Chief Executive Officer
AMERITAS VARIABLE LIFE INSURANCE COMPANY
Attest:
/s/ LuAnn Damewood /s/ Kenneth C. Louis
___________________________ By: __________________________________________
Kenneth C. Louis,
Executive Vice President
5
<PAGE>
SCHEDULE A
----------
Fee Schedule on Variable Products
Overture Life (Form 4001) 0.850% 1st Year
0.000% Renewal
Overture Applause! (Form 4010) 4.000% Target
0.300% Excess
0.000% Renewal
0.000% Penn Mutual Agents
Overture APPLAUSE! II (Form 4016) 4.000% Target
0.300% Excess
0.000% Renewal
Overture ENCORE! (Form 4018) 2.000% Target
0.200% Excess
0.000% Renewal
Variable Annuities (Forms 4780, 4782, 4784, 0.100% All Years
4786)
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY PRODUCTS
SCHEDULE B
COMMISSION AND EXPENSE REIMBURSEMENT SCHEDULE
OVERTURE LIFE (Registration No. 33-1576)
Broker/Dealer, for its efforts in soliciting sales of the Policy described as
Policy Form #4001 (Variable Life), shall receive commission as stated below.
Only those premium payments received by AVLIC in the first 12 months of any
Policy are commissionable. The Commission Schedule is as follows:
ALL SALES 5.0%
OVERTURE ANNUITY (Registration No. 33-14774) (CLOSED TO NEW ISSUES)
Broker/Dealer, for its efforts in soliciting sales of the Policy described as
Policy Form #4780 (Variable Annuity), shall receive commission as stated below.
Only those premium payments received by AVLIC in the first 12 months of any
Policy are commissionable.
ATTAINED AGE PERCENT OF PREMIUM PAID
------------ -----------------------
0-70 5.0%
71+ 4.2%
For Policy Form #4780, a service fee of .2% of the total Policy accumulation
value will be paid after the end of each policy year to reimburse the
broker/dealer for administrative costs incurred in servicing the Policy.
OVERTURE ANNUITY II (Registration No. 33-33844) (CLOSED TO NEW ISSUES)
Broker/Dealer, for its efforts in soliciting sales of the Policy described as
Policy Form #4782 (Variable Annuity II), shall receive commission as stated
below:
ATTAINED AGE FIRST YEAR RENEWAL
------------ ---------- -------
0-70 5.0% 5.0%
71+ 4.2% 4.2%
For Policy Form #4782, a service fee of .2% of the total Policy accumulation
value will be paid after the end of each policy year to reimburse the
broker/dealer for administrative costs incurred in servicing the Policy. There
may be a 100% chargeback of commission on policies where the annuitant dies
from non-accidental causes during the first policy year.
OVERTURE ANNUITY III (NON TAX QUALIFIED) (Registration No. 33-58642)
Broker/Dealer, for its efforts in soliciting sales of the Policy described as
Policy Form #4784 (Variable Annuity III), shall receive commission as stated
below:
ATTAINED AGE FIRST YEAR RENEWAL
------------ ---------- -------
0-65 5.25% 5.25%
66-70 5.00% 5.00%
71-80 4.25% 4.25%
81-85 2.45% 2.45%
For Policy Form #4784, an annual service fee of .25% of the total Policy
accumulation value will be paid at the end of each policy quarter after the
first policy year, to reimburse the broker/dealer for administrative costs
incurred in servicing the Policy. There may be a 100% chargeback of commission
on policies where the annuitant dies from non-accidental causes during the first
policy year.
OVERTURE ANNUITY III (TAX QUALIFIED) (Registration No. 33-58642)
Broker/Dealer, for its efforts in soliciting sales of the Policy described as
Policy Form #4784 (Variable Annuity III), shall receive commission as stated
below:
ATTAINED AGE POLICY YEAR BELOW $2000 $2000 & ABOVE
------------ ----------- ----------- -------------
0-65 1 4.25% 5.25%
0-65 2-on 4.25% 5.25%
ATTAINED AGE POLICY YEAR BELOW $2000 $2000 & ABOVE
------------ ----------- ----------- -------------
66-70 1 4.00% 5.00%
66-70 2-on 4.00% 5.00%
ATTAINED AGE POLICY YEAR BELOW $2000 $2000 & ABOVE
------------ ----------- ----------- -------------
71-80 1 3.25% 4.25%
71-80 2-on 3.25% 4.25%
ATTAINED AGE POLICY YEAR BELOW $2000 $2000 & ABOVE
------------ ----------- ----------- -------------
81-85 1 1.45% 2.45%
81-85 2-on 1.45% 2.45%
AG 1571-AVLIC Rev. 12-96
INSURED FIELD(1)
POLICY NUMBER FIELD(3)
POLICY TYPE VARIABLE ANNUITY
Flexible Premium Deferred Variable Annuity Policy.
Annuity Payments Are Fixed and Begin On the Annuity Date.
Death Benefit Payable On The Annuitant's Death Prior
To The Annuity Date. Non-participating.
THIS POLICY'S ACCUMULATION VALUE IN THE SEPARATE ACCOUNT IS BASED ON THE
INVESTMENT EXPERIENCE OF THAT ACCOUNT, AND MAY INCREASE OR DECREASE DAILY.
IT IS NOT GUARANTEED AS TO DOLLAR AMOUNT.
Ameritas Variable Life Insurance Company agrees to pay the income, as
described in this policy, to the Annuitant if the Annuitant is living on
the Annuity Date and if this policy is then in force. A death benefit is
payable upon death of the Annuitant prior to the Annuity Date.
/s/ Lawrence J. Arth /s/ Norman M. Krivosha
President Secretary
"NOTICE OF TEN-DAY RIGHT TO EXAMINE POLICY"
You are urged to read this policy carefully. If, after examination, you are
dissatisfied with it for any reason, you may return it to the selling agent
or to Ameritas Variable Life Insurance Company at One Ameritas Way, P.O.
Box 82550, Lincoln, Nebraska 68501-2550, within ten days from the date of
delivery of the policy to you. If allowed by state law, the amount of the
refund will equal the premiums paid less withdrawals, adjusted by
investment gains and losses. Otherwise, the amount of the refund will be
equal to the gross premiums paid less withdrawals.
Please read and carefully check the copy of the application attached to
this policy. This application is a part of your policy and this policy was
issued on the basis that the answers to all questions and the information
shown on this application are true and complete. If any information shown
on it is not true and complete, to the best of your knowledge, please
notify Ameritas Variable Life Insurance Company of Lincoln, Nebraska,
within ten days from the date of delivery of the policy to you.
Ameritas Variable Life Insurance Company Logo
Form 4790
<PAGE>
POLICY SCHEDULE
Annuitant: John D Specimen Policy Number: 2109004162
Issue Age - Sex: 35 Male Policy Date: January 1, 1998
Initial Premium: $25,000.00 Annuity Date: January 1, 2048
Owner: John D Specimen Day of Allocation: 13th calendar day
after issue date
Form 4790-1
<PAGE>
LIST OF SUBACCOUNTS AND PORTFOLIOS
Each subaccount of the Ameritas Variable Life Insurance Company (AVLIC) Separate
Account VA-2 invests in a specific portfolio of the following funds:
Fidelity Variable Insurance Products Fund
Fidelity Variable Insurance Products Fund II
(collectively referred to as "Fidelity")
Alger American Fund ("Alger")
MFS Variable Insurance Trust ("MFS")
Morgan Stanley Universal Funds, Inc. ("Morgan Stanley")
<TABLE>
<CAPTION>
INITIAL
CORRESPONDING ALLOCATION OF
FUND PORTFOLIO SUBACCOUNT NET PREMIUMS
<S> <C> <C> <C>
Fidelity Money Market Money Market Subaccount 0%
Equity-Income Equity-Income Subaccount 0%
Growth Growth Subaccount 50%
High Income High Income Subaccount 0%
Overseas Overseas Subaccount 0%
Asset Manager Asset Manager Subaccount 0%
Investment Grade Bond Investment Grade Bond Subaccount 0%
Asset Manager: Growth Asset Manager: Growth Subaccount 0%
Index 500 Index 500 Subaccount 0%
Contrafund Contrafund Subaccount 0%
Alger Growth Growth Subaccount 0%
Income and Growth Income and Growth Subaccount 0%
Small Capitalization Small Capitalization Subaccount 0%
Balanced Balanced Subaccount 50%
MidCap Growth MidCap Growth Subaccount 0%
Leveraged AllCap Leveraged AllCap Subaccount 0%
MFS Emerging Growth Emerging Growth Subaccount 0%
Utilities Utilities Subaccount 0%
World Governments World Governments Subaccount 0%
Research Research Subaccount 0%
Growth With Income Growth With Income Subaccount 0%
Morgan Stanley Emerging Markets Equity Emerging Markets Equity Subaccount 0%
Global Equity Global Equity Subaccount 0%
International Magnum International Magnum Subaccount 0%
Asian Equity Asian Equity Subaccount 0%
U.S. Real Estate U.S. Real Estate Subaccount 0%
Net premiums may also be allocated to the AVLIC Fixed Account.
INITIAL
ALLOCATION OF
NET PREMIUMS
AVLIC Fixed Account 0%
</TABLE>
Form 4790 1.1
<PAGE>
SCHEDULE OF CHARGES
Annual Policy Fee The maximum guaranteed Annual Policy Fee is $40.
In the first policy year, the current Annual
Policy Fee is $36.
The Annual Policy Fee is deducted on the last valuation date of the
policy year or at the time of a full withdrawal.
We may waive the Annual Policy Fee if your accumulation value on the
last valuation date of the policy year exceeds an amount which we
declare annually.
Daily Administrative Fee .0004098%* of accumulation value
Daily Mortality and
Expense Risk Charge .0034153%**
* Equivalent to an annual rate of .15% of the average daily net assets of
the account.
** Equivalent to an annual rate of 1.25% of the average daily net assets
of the account.
Form 4790 1.2
<PAGE>
TABLE OF CONTENTS
POLICY SCHEDULE PAGES
INTRODUCTION.......................................................... 4
SECTION 1. DEFINITIONS............................................. 4
SECTION 2. GENERAL PROVISIONS.......................................6
2.1 The Policy and Its Parts.................................6
2.2 Non-Participating........................................6
2.3 Contestability...........................................6
2.4 Misstatement of Age or Sex...............................6
2.5 When This Policy Terminates..............................6
2.6 Annual Report............................................6
2.7 Postponement of Payments.................................7
SECTION 3. PREMIUM PAYMENTS.........................................7
3.1 Initial Premium..........................................7
3.2 Subsequent Unscheduled Premiums..........................7
3.3 Where to Pay Premiums....................................7
3.4 Allocation of Premiums...................................7
SECTION 4. THE OWNER
AND THE BENEFICIARY......................................8
4.1 The Owner................................................8
4.2 The Annuitant's Beneficiary..............................8
4.3 Assigning the Policy.....................................8
SECTION 5. SEPARATE ACCOUNT.........................................8
5.1 The Separate Account.....................................8
5.2 The Subaccounts..........................................9
5.3 Valuation of Assets......................................9
5.4 Transfers Among Subaccounts
and the Fixed Account....................................9
5.5 The Funds...............................................10
5.6 Portfolio Changes.......................................10
4790
2
<PAGE>
SECTION 6. THE FIXED ACC0UNT.......................................10
6.1 The Fixed Account.......................................10
6.2 Transfers Among the Fixed Account
and the Subaccounts.....................................10
SECTION 7. VALUES..................................................11
7.1 How Accumulation Value
of the Policy is Determined.............................11
7.2 Accumulation Value of the Subaccounts...................11
7.3 Net Asset Value.........................................11
7.4 Subaccount Unit Value...................................11
7.5 Accumulation Value of the Fixed Account.................12
7.6 Interest Credits........................................12
7.7 Charges Under the Policy................................12
SECTION 8. WITHDRAWALS.............................................13
8.1 Partial Withdrawals.....................................13
8.2 Full Withdrawal.........................................14
SECTION 9. BENEFITS OF THIS
ANNUITY POLICY..........................................14
9.1 Annuity Benefits........................................14
9.2 Death Benefits..........................................15
SECTION 10. DEATH OF THE OWNER......................................15
10.1 If You Die Prior to the Annuity Date....................15
10.2 Special Spouse Rules....................................16
10.3 If You Die On or After the Annuity Date.................16
SECTION 11. ANNUITY INCOME OPTIONS..................................16
11.1 Payment Option Rules....................................16
11.2 Description of Options..................................17
11.3 Basis of Payment........................................17
SECTION 12. NOTES ON OUR
COMPUTATIONS............................................17
4790 3
<PAGE>
INTRODUCTION
This is a flexible premium variable annuity policy. The accumulation value
varies according to the value of the Subaccounts plus the amounts held in the
Fixed Account. It will pay a monthly annuity payment for the life of the
Annuitant or for the period selected. Annuity payments do not vary according to
the value of the Subaccounts. Annuity payments start on the annuity date.
If the Annuitant dies before the annuity date, a death benefit will be paid to
the Annuitant's Beneficiary. If the Annuitant dies after the annuity date, any
unpaid payments certain will be paid to the Annuitant's Beneficiary. If the
Owner and Annuitant are different and the Owner should die prior to the annuity
date, certain provisions are required. See Section 10. The Owner and Annuitant
are named in the policy schedule pages.
SECTION 1. DEFINITIONS
Whenever used in this policy:
"Accumulation value" means the value of all amounts accumulated under the policy
prior to the annuity date.
"Annuitant" means the person upon whose life expectancy this policy is written.
The Annuitant may also be the Owner of this policy.
"Annuitant's Beneficiary" means the person to whom any benefits are due upon
the Annuitant's death.
"Annuity date" means the date on which annuity payments begin. It is shown
in the policy schedule pages.
"Annuity income option" means one of several ways in which annuity payments may
be made. The dollar amount of each annuity payment will not change over time,
unless the interest payment option is selected.
"Annuity payment" means one of a series of payments made under an annuity income
option.
"Cash surrender value" means the accumulation value minus the annual policy fee.
"Death Benefit" is the amount payable to the Annuitant's Beneficiary should the
Annuitant die prior to the annuity date. It will be equal to the accumulation
value as of the date satisfactory proof of death is received, or the total
premiums paid less any previous partial withdrawals, whichever is greater.
However, this amount may be limited in accordance with the "Contestability"
provision. See Section 2.3.
4790 4
<PAGE>
"Fixed Account" is the account which consists of general account assets of
Ameritas Variable Life Insurance Company which support annuity and insurance
obligations.
"Funds" means the fund or funds available as funding vehicles on the policy
date, or as later changed by us and disclosed by the Prospectus. The Funds and
their respective portfolios which are available on the policy date are shown in
the policy schedule pages. The Funds have several portfolios. There is a
portfolio that corresponds to each of the Subaccounts of the Separate Account.
"Home Office" means our administrative office at One Ameritas Way, P.O. Box
82550, Lincoln, Nebraska 68501-2550.
"Issue Date" means the date that all financial, contractual, and administrative
requirements have been completed and processed. The issue date will be shown on
the confirmation notice sent to you.
"Owner's Designated Beneficiary": If you (the Owner) and the Annuitant are not
the same individual, this is the person you may designate to take policy
ownership upon your death.
"Net Premium" means the premium payment less the premium tax, if imposed by the
state in which this policy is delivered.
"NYSE" means the New York Stock Exchange.
"Policy date" means the date set forth in the policy that is used to determine
policy anniversary dates and policy years. The policy date is also used to
figure the start of the contestability period.
"Satisfactory proof of death" means all of the following submitted to the Home
Office: (1) a certified copy of the death certificate; (2) a Claimant Statement;
(3) the policy; and (4) any other information that we may require to establish
the validity of the policy.
"SEC" means the Securities and Exchange Commission.
"Separate Account" means the Separate Account identified in the policy schedule
pages. The Separate Account consists of assets set aside by us, the investment
performance of which is kept separate from that of our general assets.
"Subaccount" means that portion of the Separate Account which invests in shares
of mutual funds or any other investment portfolios which we determine to be
suitable for this policy's purposes.
"Valuation date" means each day on which the NYSE is open for trading.
"Valuation period" means the period between two successive valuation dates,
commencing at the close of trading on the NYSE on one valuation date and ending
at the close of trading on the NYSE on the next succeeding valuation date.
"We", "us", and "our" means Ameritas Variable Life Insurance Company.
"You" and "your" means the Owner of this policy.
4790 5
<PAGE>
SECTION 2. GENERAL PROVISIONS
2.1 THE POLICY AND ITS PARTS
This policy is a legal contract between you and us. It is issued in return for
the application and payment in advance of the premiums shown in the schedule
pages. The policy, application, any supplemental applications, endorsements,
riders and amendments are the entire contract. No change in this policy will be
valid unless it is in writing, attached to this policy, and approved by one of
our officers. We reserve the right to make any modification to conform the
policy to, or to give the Owner the benefit of, any federal or state statute or
any rule or regulation thereunder. No agent may change this policy or waive any
of its provisions.
2.2 NON-PARTICIPATING
This policy is non-participating. In other words, no dividends will be paid
under this policy.
2.3 CONTESTABILITY
Unless there has been a misstatement of the age or sex of the Annuitant, we
cannot contest the validity of this policy after the policy date.
2.4 MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant has been misstated, we will adjust the
benefits and amounts payable under this policy.
(1) If we made any overpayments, we will add interest at the rate of 6% per
year compounded yearly and charge them against payments to be made in the
future.
(2) If we made any underpayments, the balance plus interest at the rate of 6%
per year compounded yearly will be paid in a lump sum.
2.5 WHEN THIS POLICY TERMINATES
This policy will terminate on the earliest of these conditions: (a) you withdraw
the full cash surrender value; (b) you die and any cash surrender value due has
been paid; (c) the Annuitant dies and any death benefit due has been paid; or
(d) annuity income option payments being made cease.
2.6 ANNUAL REPORT
Within 30 days after each policy anniversary, we will mail you an annual report
that shows the progress of the policy. It will show the accumulation value as of
the policy anniversary. The report will also show any premiums paid and charges
made during the policy year. You may ask for a report like this at any time. We
have a right to charge a fee for each report other than the report we send out
once a year.
4790 6
<PAGE>
2.7 POSTPONEMENT OF PAYMENTS
We will usually pay any amounts payable from the Separate Account as a result of
a full or a partial withdrawal within seven (7) days after we receive your
written request in our Home Office in a form satisfactory to us. We can postpone
such payments or any transfers of amounts between Subaccounts or into the Fixed
Account if:
(1) NYSE is closed other than customary weekend and holiday closings or
trading on the NYSE is restricted as determined by the SEC; or
(2) the SEC by order permits the postponement for the protection of owners;
or
(3) an emergency exists as determined by the SEC, as a result of which
disposal of securities is not reasonably practicable, or it is not
reasonably practicable to determine the value of the net assets of the
Separate Account.
We may defer the payment of a full or a partial withdrawal from the Fixed
Account for up to six months from the date we receive your written request.
SECTION 3. PREMIUM PAYMENTS
3.1 INITIAL PREMIUM
The initial premium for the policy is shown in the schedule pages.
3.2 SUBSEQUENT UNSCHEDULED PREMIUMS
All premiums after the initial premium may be paid at any time. Except for the
initial premium payments, no premiums must be paid to keep this policy in force.
However, we reserve the right to limit the number of premium payments in any
calendar year. You can decide the amount of each premium, however we reserve the
right not to accept any payment of less than $1,000. We will also not accept
total premiums of more than $1 million under all annuity contracts issued by us
having the same Annuitant, without our prior approval.
3.3 WHERE TO PAY PREMIUMS
Each premium after the initial premium is payable at our Home Office. Upon
request, a receipt signed by our Secretary or an Assistant Secretary will be
given for any premium payment.
3.4 ALLOCATION OF PREMIUMS
On the issue date, we will allocate premiums to the Money Market Subaccount. The
accumulation value is allocated to the Subaccounts or to the Fixed Account in
accordance with the allocations you have selected as of the Day of Allocation
shown in the policy schedule pages.
4790 7
<PAGE>
Any subsequent premiums will be allocated in accordance with your instructions.
You may change the allocation of later premiums without charge. The allocation
will apply to future premiums after we receive the change. The Separate Account,
Subaccounts and Fixed Account are described in Sections 5 and 6.
SECTION 4. THE OWNER AND
THE BENEFICIARY
4.1 THE OWNER
While the Annuitant is living, you have all the benefits, rights and privileges
under this policy. These include naming the Owner's Designated Beneficiary,
changing the Annuitant's Beneficiary, assigning this policy, enjoying all the
policy benefits, and exercising all policy options.
If you are not the Annuitant, you should name your designated beneficiary who
will become the Owner if you die before the Annuitant. If you die before the
Annuitant and there is no Owner's Designated Beneficiary, ownership will pass to
your estate.
4.2 THE ANNUITANT'S BENEFICIARY
The Annuitant's Beneficiaries will receive the death benefit, if any, upon the
Annuitant's death. You can name primary and contingent beneficiaries. Your
original beneficiary choice is shown in the attached application. You may change
the beneficiary during the Annuitant's lifetime. We do not limit the number of
changes that may be made. To make the change, we must receive a completed Change
of Beneficiary form and any other forms required by the Home Office. The change
will take effect as of the date we record it at the Home Office, even if the
Annuitant dies before we do so. We will not be liable for any payment made or
action taken before the change is recorded in our Home Office.
4.3 ASSIGNING THE POLICY
You may assign this policy. For an assignment to bind us, we must receive a
signed copy in the Home Office. We are not responsible for the validity of any
assignment.
SECTION 5. SEPARATE ACCOUNT
5.1 THE SEPARATE ACCOUNT
The Ameritas Variable Life Insurance Company Separate Account VA-2 ("Separate
Account") is a unit investment trust registered with the SEC under the
Investment Company Act of 1940. It is also subject to the laws of Nebraska. We
own the assets of the Separate Account and keep them separate from the assets of
our general account.
4790 8
<PAGE>
The assets of the Separate Account will be available to cover the liabilities of
our general account only to the extent that the assets of the Separate Account
exceed the liabilities of the Separate Account arising under the variable
annuity policies supported by the Separate Account.
If we deem it to be in the best interests of owners, and subject to any
approvals that may be required under applicable law: (1) The Separate Account
may be operated as a management company under the Investment Company Act of
1940, or (2) it may be deregistered under that Act if registration is no longer
required, or (3) it may be combined with other separate accounts. To the extent
permitted by law, we may also transfer the assets of the Separate Account
associated with the policies to another Separate Account.
5.2 THE SUBACCOUNTS
The Separate Account has several Subaccounts. We list them in the schedule
pages. You determine, using percentages, how the premium will be allocated among
the Subaccounts. You may choose to allocate nothing to a particular Subaccount.
You may not choose a fractional percent. The allocations to the Subaccounts
along with allocations to the Fixed Account must total 100%. The assets of each
Subaccount will be used to buy shares in a corresponding portfolio of the
funding vehicles designated in the policy schedule pages. (See Section 5.5, "The
Funds"). Income and realized and unrealized gains or losses from the assets of
each Subaccount of the Separate Account are credited to or charged against that
Subaccount without regard to income, gains or losses in the other Subaccounts of
the Separate Account, in our general account or in any other separate accounts.
We reserve the right to establish additional Subaccounts, each of which would
invest in shares of the Funds or in shares of another funding vehicle. We may
establish new Subaccounts or eliminate one or more Subaccounts if marketing
needs, tax considerations or investment conditions warrant. Any new Subaccounts
may be made available to existing owners on a basis to be determined by us.
5.3 VALUATION OF ASSETS
We will determine the value of the assets of each Subaccount at the close of
trading on the NYSE on each valuation date.
5.4 TRANSFERS AMONG SUBACCOUNTS AND THE FIXED ACCOUNT
You may transfer amounts among Subaccounts and into the Fixed Account as often
as you wish in a policy year. The transfer will take effect at the end of the
valuation period during which the transfer request is received at our Home
Office.
The first 15 transfers per policy year between the Subaccounts and/or the Fixed
Account will be allowed free of charge. Thereafter, a $10 charge may be deducted
from the amount transferred.
Each transfer must be for a minimum of $250 or the balance in the Subaccount, if
less. The minimum amount which can remain in a Subaccount as a result of a
transfer is $100. Any amount below this minimum will be included in the amount
transferred.
Transfers may be subject to additional restrictions by the Funds.
4790 9
<PAGE>
5.5 THE FUNDS
The word Fund or Funds, where we use it in this policy without qualification,
means the funding vehicles designated in the policy schedule pages. The Funds
bear their own expenses. The Funds may have several portfolios; there is a
portfolio that corresponds to each of the Subaccounts of the Separate Account.
We list these portfolios in the schedule pages.
5.6 PORTFOLIO CHANGES
A portfolio of a Fund might, in our judgment, become unsuitable for investment
by a Subaccount. This might happen because of a change in investment policy,
because of a change in laws or regulations, because the shares are no longer
available for investment, or for some other reason. If that occurs, we have the
right to substitute another portfolio of the Fund, or to invest in another fund.
We would first notify the SEC and, where required, seek approval from the
insurance department of the state where this policy is delivered. You will be
notified of any material change in the investment policy of any portfolio in
which you have an interest.
SECTION 6. THE FIXED ACCOUNT
6.1 THE FIXED ACCOUNT
Net premiums allocated to and transfers to the Fixed Account under the policy
become part of the general account assets of Ameritas Variable Life Insurance
Company which support annuity and insurance obligations. The Fixed Account
includes all of Ameritas Variable Life Insurance Company's assets, except those
assets segregated in separate accounts. Ameritas Variable Life Insurance Company
maintains the sole discretion to invest the assets of the Fixed Account, subject
to applicable law.
You determine, using percentages, how the net premium will be allocated to the
Fixed Account. You may choose to allocate nothing to the Fixed Account. You may
not choose a fractional percent. The allocations to the Fixed Account along with
allocations to the Subaccounts must total 100%.
6.2 TRANSFERS AMONG THE FIXED ACCOUNT AND THE SUBACCOUNTS
You may transfer into the Fixed Account from the Subaccounts at any time during
the policy year.
You may make one transfer out of the Fixed Account to any of the other
Subaccounts only during the 30 day period following each policy anniversary.
The allowable transfer amount out of the Fixed Account is limited to the greater
of:
1. 25% of the Fixed Account balance; or
2. any Fixed Account transfer which occurred during the prior 13 months; or
3. $1,000.
Transfers into or from the Fixed Account will be subject to the same minimums
and charges that are applied to transfers among the Subaccounts.
4790 10
<PAGE>
SECTION 7. VALUES
7.1 HOW ACCUMULATION VALUE OF THE POLICY IS DETERMINED
The accumulation value of the policy on the issue date is equal to the initial
premium received, reduced by applicable premium taxes.
The accumulation value of this policy on a valuation date is equal to the total
of the values in each Subaccount and the Fixed Account, plus any net premium
received on that valuation date but not yet allocated.
7.2 ACCUMULATION VALUE OF THE SUBACCOUNTS
To compute the accumulation value held in the Subaccounts on any valuation date,
we multiply each Subaccount's unit value (defined in Section 7.4 below) by the
number of Subaccount units allocated to the policy.
The number of Subaccount units will increase when:
a. Net premiums are credited to that Subaccount; or
b. Transfers from other Subaccounts or the Fixed Account are credited
to that Subaccount.
The number of Subaccount units will decrease when:
a. A partial withdrawal is taken from that Subaccount; or
b. A transfer, and its charge, is made from that Subaccount to other
Subaccounts or the Fixed Account; or
c. We deduct the annual policy fee.
Each transaction above will increase or decrease the number of Subaccount units
allocated to the policy by an amount equal to the dollar value of the
transaction divided by the unit value as of the valuation date of the change.
7.3 NET ASSET VALUE
The net asset value of the shares of each portfolio of the Fund is determined
once daily as of the close of business of the New York Stock Exchange on days
when the Exchange is open for business. The net asset value is determined by
adding the values of all securities and other assets of the portfolio,
subtracting liabilities and expenses and dividing by the number of outstanding
shares of the portfolio. Expenses, including the investment advisory fee payable
to the Investment Advisor, are accrued daily.
7.4 SUBACCOUNT UNIT VALUE
For each Subaccount, the value of an accumulation unit (unit value) was set when
the Subaccount was established. The unit value of each Subaccount reflects the
investment performance of that Subaccount. The unit value may increase or
decrease from one valuation date to the next.
4790 11
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The unit value of each Subaccount on any valuation date shall be calculated as
follows:
a. The per share net asset value of the corresponding Fund portfolio
on the valuation date times the number of shares held by the
Subaccount, before the purchase or redemption of any shares on that
date; minus
b. The daily administrative fee; minus
c. The daily mortality and expense risk charge; divided by
d. The total number of units held in the Subaccount on the valuation
date before the purchase or redemption of any units on that date.
When transactions are made, the actual dollar amounts are converted to
accumulation units. The number of accumulation units for a transaction is found
by dividing the dollar amount of the transaction by the unit value as of the
valuation date.
7.5 ACCUMULATION VALUE OF THE FIXED ACCOUNT
The accumulation value of the Fixed Account on a valuation date is equal to:
a. The preceding month's ending value; plus
b. The net premiums credited to the Fixed Account; plus
c. Any transfers from the Subaccounts credited to the Fixed Account;
minus
d. Any partial withdrawals taken from the Fixed Account; minus
e. Any transfers and their charges made from the Fixed Account; plus
f. Interest credits; minus
g. Any annual policy fee due.
7.6 INTEREST CREDITS
We guarantee that the accumulation value in the Fixed Account will be credited
with an effective annual interest rate of at least 3.5%. We may, at our
discretion, credit a higher current rate of interest.
7.7 CHARGES UNDER THE POLICY
The following charges are deducted under the policy:
(1) Annual Policy Fee - an annual charge, equal to the amount listed in the
schedule pages, is deducted from the accumulation value on the last
valuation date of each policy year or upon a full withdrawal, if between
policy anniversaries. The charge will be deducted from the Subaccounts
and the Fixed Accounts in the same proportion as the balances held in the
4790 12
<PAGE>
Subaccounts and the Fixed Accounts. We may waive the Annual Policy Fee if
your accumulation value on the last valuation date of the policy year
exceeds an amount which we declare annually.
(2) Daily Administrative Fee - a charge equal to the percentage listed in the
schedule pages. This charge is deducted from the Subaccounts only and not
from the Fixed Account.
(3) Taxes - where imposed by state law upon the receipt of a premium payment,
a charge will be made on the date of the payment. If imposed upon
withdrawal or annuitization, a charge equal to the amount due will be
deducted prior to withdrawal or annuitization. We reserve the right to
charge for state or local taxes or for federal income tax, if any taxes
become attributable to the Separate Account. If any tax should become
applicable to this policy, you will be advised of the amount of such tax
and its effect upon any payments made.
(4) Daily Mortality and Expense Risk Charge - a charge listed in the schedule
pages. This charge is deducted from the Subaccounts only and not from the
Fixed Account.
SECTION 8. WITHDRAWALS
You may request partial withdrawals or a full withdrawal at any time before the
annuity date. Any amount withdrawn will be paid to you in a lump sum unless you
elect to be paid under an annuity income option.
8.1 PARTIAL WITHDRAWALS
Partial withdrawals can be categorized as either "elective" or "systematic".
Elective partial withdrawals must be elected by you. Systematic partial
withdrawals can be made automatically after the initial allocation date. You may
elect systematic withdrawals in accordance with our rules. Payouts under a
systematic withdrawal may be on monthly, quarterly, semi-annual or annual mode.
All partial withdrawals, elective and systematic, are subject to the following
rules:
a. The minimum partial withdrawal amount is $250.
b. The cash surrender value remaining after a partial withdrawal must
be at least $1,000.
c. Request for withdrawal must be made in writing, on a form approved
by us.
d. A partial withdrawal is considered irrevocable.
4790 13
<PAGE>
8.2 FULL WITHDRAWAL
If you elect a full withdrawal, the amount payable is the accumulation value
reduced by the annual policy fee. The accumulation value is determined as of the
date we receive your written request for full withdrawal. There is no withdrawal
charge on a full withdrawal.
SECTION 9. BENEFITS OF THIS
ANNUITY POLICY
This section describes the annuity benefits and how they work. It also describes
what happens if the Annuitant dies.
9.1 ANNUITY BENEFITS
This policy will pay a monthly annuity payment to the Annuitant for the life of
the Annuitant. The payments start on the annuity date. The amount of the monthly
annuity payment is based on the cash surrender value as of the annuity date and
the annuity income option elected by you.
When Annuity Payments Start
1. Annuity payments start on the annuity date. The normal annuity date is
the later of:
a. the policy anniversary nearest the Annuitant's 85th birthday; or
b. the fifth policy anniversary.
2. You may change the annuity date, either advance or defer it, subject to
the following:
a. Your request must be in writing and received by us at least 30 days
in advance.
b. The annuity date may only be changed during the lifetime of the
Annuitant and prior to the annuity date.
c. You may not defer the annuity date to a date beyond the policy
anniversary nearest the Annuitant's 95th birthday.
How Annuity Payments are Made
1. Frequency - Annuity payments are made monthly starting on the annuity
date.
2. Minimum Amount - The minimum amount of annuity payment we will make is
$20. If the annuity payment amount is less than $20, we have the right to
pay the cash surrender value in a lump sum or to change the frequency.
3. Proof - We may require proof of the Annuitant's age before making the
first annuity payment. From time to time, we may require proof that the
Annuitant is living.
4790 14
<PAGE>
4. Options - Subject to the above, you decide how the annuity payments
should be paid. You have a choice of certain payment options. These are
called annuity income options and are described in Section 11. If you do
not choose an option, we will make the annuity payments according to
Annuity Income Option c, Life Annuity.
9.2 DEATH BENEFITS
Death of the Annuitant Prior to the Annuity Date
If the Annuitant dies prior to the annuity date, we will pay the death benefit
to the Annuitant's Beneficiary.
1. Amount - The death benefit is calculated as of the date we receive at the
Home Office satisfactory proof of death. The amount of the death benefit
will equal the greater of:
a. The accumulation value; or
b. Total premiums paid less any previous partial withdrawals.
2. Payment - The death benefit will be paid as a lump sum cash benefit
unless you elect an annuity income option for the beneficiary. If you do
not elect an annuity income option and a cash benefit has not already
been made, the Annuitant's Beneficiary may make this election after the
Annuitant's death.
Death of the Annuitant On or After the Annuity Date
If the Annuitant dies on or after the annuity date, the remaining portion of any
unpaid annuity benefits due will be paid to the Annuitant's Beneficiary based on
the annuity income option in effect at the time of death.
SECTION 10. DEATH OF THE OWNER
REQUIRED DISTRIBUTIONS UNDER IRC 72(s)
Unless otherwise specified, this Section assumes that the Annuitant and Owner
are not the same person.
10.1 IF YOU DIE PRIOR TO THE ANNUITY DATE
If you die prior to the annuity date, ownership of this policy will pass to the
Owner's Designated Beneficiary. If you have not named an Owner's Designated
Beneficiary, ownership will pass to your estate.
Section 72(s) of the Internal Revenue Code has special rules regarding the
distribution of the cash surrender value of this policy if you, the Owner, die
4790 15
<PAGE>
before the annuity date. We will calculate the cash surrender value as of the
date we receive at the Home Office a written request for distribution from the
Owner's Designated Beneficiary. For purposes of this Section only, this amount
will be called the distribution amount.
Under Section 72(s), the entire distribution amount must be distributed for tax
purposes within five years of your death. However, Section 72(s) will allow
distribution over a period longer than five years but only if all of the
following conditions are met:
1. You have named an Owner's Designated Beneficiary.
2. The Owner's Designated Beneficiary is an individual person or persons.
3. The Owner's Designated Beneficiary takes the distribution amount as an
annuity payable to himself or herself or for his or her benefit.
4. The first payment of the annuity is to be paid to the Owner's Designated
Beneficiary within one year of your death or such later date as
prescribed by federal regulations.
5. The entire distribution amount must be paid out over the lifetime of the
Owner's Designated Beneficiary or over a period not extending beyond his
or her life expectancy. Also for purposes of Section 72(s) of the
Internal Revenue Code, if the Owner of the policy is not an individual,
death of the Annuitant shall be treated as death of the Owner.
10.1 SPECIAL SPOUSE RULES
If your spouse is named as the Owner's Designated Beneficiary, or in those cases
where you are both the Owner and the Annuitant and your spouse is named the
Annuitant's Beneficiary, the special distribution rules of Section 72(s)
described above will apply by treating your spouse as the original Owner of the
policy. Your spouse may elect to continue the policy in force until the earlier
of their death or the annuity date.
10.3 IF YOU DIE ON OR AFTER THE ANNUITY DATE
If you die on or after the annuity date, annuity benefits continue to be paid to
the Annuitant under the annuity income option in effect on your date of death.
SECTION 11. ANNUITY INCOME OPTIONS
11.1 PAYMENT OPTION RULES
All or part of the cash surrender value may be placed under one or more annuity
income options. If annuity payments are to be paid under more than one option,
we must be told what part of the cash surrender value is to be paid under each
option. The annuity income option must be made by written request and received
by us at least 30 days in advance of the annuity date. If no election is made,
4790 16
<PAGE>
payments will be made as an annuity under Option c, Life Annuity. Subject to our
approval, you may select any other annuity income option we then offer. Annuity
income options are not available to: (1) an assignee; or (2) any other than a
natural person except with our consent.
11.2 DESCRIPTION OF OPTIONS
Annuity income options aii., b., c. and d. are offered as fixed annuity options.
This means that the amount of each annuity payment will be set on the annuity
date and will not change.
ANNUITY INCOME OPTIONS:
ai. Interest Payment - We will hold any amount applied under this option.
Interest on the unpaid balance will be paid or credited each month at a
rate determined by us.
aii. Designated Amount Annuity - Monthly annuity payments will be for an
agreed fixed amount. Payments continue until the amount we hold runs out.
b. Designated Period Annuity - Monthly annuity payments are paid for a
period certain as elected up to 20 years.
c. Life Annuity - Monthly annuity payments are paid for the life of an
Annuitant, ceasing with the last annuity payment due prior to his or her
death. Variations provide for payments to be guaranteed to continue
beyond the lifetime of that person for a fixed period of time. One
variation assures that at least the original amount is returned in
benefits (cash refund). However, under all options, payments will
continue as long as the named person is alive.
d. Joint and Last Survivor Annuity - Monthly annuity payments are paid based
on the lives of two annuitants. Benefits cease with the last annuity
payment due prior to the survivor's death.
11.3 BASIS OF PAYMENT
The rate of interest payable under option ai, aii, and b will be guaranteed at
3% compounded yearly. Payments under option c and d will be based on a 3.5%
interest rate combined with the 1983 Table "a" Individual Annuity Table,
projected 17 years.
We may, at the time of election of an annuity income option, offer more
favorable rates in lieu of the guaranteed rates specified in the Annuity Tables.
SECTION 12. NOTES ON OUR COMPUTATIONS
We have filed a detailed statement of method we use to compute policy values and
benefits with the state where this policy was delivered. The accumulation
values, cash surrender values and the death benefit of this policy are not less
than those required by the laws of that state. Cash surrender values and
reserves are calculated in accordance with the Standard Non-Forfeiture and
Valuation Laws of the state in which this policy is delivered.
4790 17
<PAGE>
<TABLE>
<CAPTION>
TABLES OF SETTLEMENT OPTIONS
TABLE B (OPTION B) TABLE D (OPTION D)
Monthly Installments for Monthly Installments for each $1,000 of Net Proceeds
each $1,000 of Net Proceeds
MALE & MALE & MALE & MALE & MALE &
YEARS MONTHLY YEARS MONTHLY AGE FEMALE AGE FEMALE AGE FEMALE AGE FEMALE AGE FEMALE
- --------------------------- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 84.47 11 5.86 40 3.16 50 3.50 60 4.05 70 5.07 80 7.08
2 42.86 12 8.24 41 3.19 51 3.54 61 4.13 71 5.21 81 7.37
3 28.99 13 7.71 42 3.22 52 3.59 62 4.21 72 5.36 82 7.69
4 22.06 14 7.26 43 3.25 53 3.63 63 4.29 73 5.53 83 8.03
5 17.91 15 6.87 44 3.28 54 3.68 64 4.38 74 5.70 84 8.40
---------------------------- ------------------------------------------------------------------
6 15.14 16 6.53 45 3.31 55 3.74 65 4.48 75 5.89 85 8.79
7 13.16 17 6.23 46 3.34 56 3.79 66 4.58 76 6.10
8 11.68 18 5.96 47 3.38 57 3.85 67 4.69 77 6.32
9 10.53 19 5.73 48 3.42 58 3.92 68 4.81 78 6.55
10 9.61 20 5.51 49 3.46 59 3.98 69 4.93 79 6.81
- ----------------------------- ----------------------------------------------------
</TABLE>
Income for payments other than monthly will be furnished by the Home Office
upon request.
Table D values for combinations of ages not shown and values for 2 males or
2 females will be furnished by the Home Office upon request.
<TABLE>
<CAPTION>
TABLE C (OPTION C) Monthly Installments for each $1,000 of Net proceeds
FEMALE MALE
- --------------------------------------------- -----------------------------------------------
LIFE MONTHS CERTAIN CASH LIFE MONTHS CERTAIN CASH
AGE ONLY 60 120 180 240 REF. AGE ONLY 60 120 180 240 REF.
- --------------------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 3.54 3.54 3.53 3.52 3.50 3.46 40 3.33 3.33 3.33 3.32 3.31 3.29
41 3.58 3.58 3.57 3.56 3.54 3.50 41 3.36 3.36 3.36 3.36 3.35 3.32
42 3.63 3.63 3.62 3.60 3.57 3.54 42 3.40 3.40 3.40 3.39 3.38 3.36
43 3.68 3.67 3.66 3.64 3.62 3.58 43 3.44 3.44 3.43 3.43 3.41 3.39
44 3.73 3.72 3.71 3.69 3.66 3.62 44 3.48 3.48 3.47 3.46 3.45 3.42
- ---------------------------------------------- ---------------------------------------------
45 3.78 3.77 3.76 3.74 3.70 3.66 45 3.52 3.52 3.51 3.50 3.49 3.46
46 3.83 3.83 3.81 3.79 3.75 3.70 46 3.56 3.56 3.55 3.54 3.53 3.50
47 3.89 3.89 3.87 3.84 3.80 3.75 47 3.61 3.60 3.60 3.59 3.57 3.54
48 3.95 3.94 3.93 3.89 3.85 3.80 48 3.65 3.65 3.65 3.63 3.61 3.58
49 4.01 4.01 3.99 3.95 3.90 3.85 49 3.70 3.70 3.69 3.68 3.66 3.62
- ---------------------------------------------- ---------------------------------------------
50 4.08 4.07 4.05 4.01 3.95 3.90 50 3.76 3.75 3.75 3.73 3.70 3.67
51 4.15 4.14 4.11 4.07 4.00 3.96 51 3.81 3.81 3.80 3.78 3.75 3.72
52 4.22 4.21 4.18 4.13 4.06 4.02 52 3.87 3.87 3.86 3.83 3.80 3.76
53 4.30 4.29 4.26 4.20 4.12 4.08 53 3.93 3.93 3.91 3.89 3.85 3.82
54 4.38 4.37 4.33 4.27 4.18 4.14 54 4.00 3.99 3.98 3.95 3.91 3.87
- ---------------------------------------------- ---------------------------------------------
55 4.47 4.45 4.41 4.34 4.24 4.21 55 4.06 4.06 4.04 4.01 3.96 3.93
56 4.56 4.54 4.50 4.42 4.30 4.28 56 4.14 4.13 4.11 4.08 4.02 3.99
57 4.65 4.64 4.59 4.50 4.36 4.35 57 4.21 4.21 4.19 4.14 4.08 4.05
58 4.75 4.74 4.68 4.58 4.43 4.42 58 4.29 4.29 4.26 4.22 4.14 4.12
59 4.86 4.84 4.78 4.66 4.49 3.40 59 4.38 4.37 4.34 4.29 4.21 4.18
- ---------------------------------------------- ---------------------------------------------
60 4.98 4.96 4.88 4.75 4.56 4.59 60 4.47 4.46 4.43 4.37 4.28 4.26
61 5.10 5.08 4.99 4.84 4.62 4.67 61 4.57 4.56 4.52 4.45 4.34 4.33
62 5.23 5.20 5.11 4.93 4.69 4.77 62 4.67 4.66 4.62 4.54 4.41 4.41
63 5.38 5.34 5.23 5.03 4.76 4.86 63 4.78 4.77 4.72 4.63 4.48 4.50
64 5.53 5.49 5.35 5.13 4.82 4.96 64 4.90 4.88 4.82 4.72 4.55 4.58
- ---------------------------------------------- ---------------------------------------------
65 5.69 5.64 5.49 5.23 4.88 5.07 65 5.02 5.00 4.94 4.82 4.63 4.68
66 5.86 5.80 5.63 5.33 4.95 5.18 66 5.16 5.13 5.06 4.92 4.70 4.78
67 6.04 5.98 5.77 5.43 5.01 5.29 67 5.30 5.27 5.18 5.02 4.77 4.88
68 6.24 6.16 5.92 5.53 5.06 5.41 68 5.45 5.42 5.32 5.13 4.85 4.99
69 6.45 6.36 6.07 5.64 5.12 5.54 69 5.61 5.58 5.46 5.23 4.92 5.10
- ---------------------------------------------- ---------------------------------------------
70 6.67 6.56 6.23 5.74 5.17 5.67 70 5.79 5.75 5.60 5.35 4.98 5.22
71 6.91 6.78 6.40 5.84 5.21 5.81 71 5.98 5.93 5.76 5.46 5.05 5.35
72 7.16 7.01 6.57 5.93 5.26 5.96 72 6.19 6.13 5.92 5.57 5.11 5.49
73 7.43 7.25 6.74 6.03 5.30 6.11 73 6.41 6.34 6.10 5.69 5.17 5.63
74 7.72 7.51 6.91 6.12 5.33 6.27 74 6.66 6.56 6.27 5.80 5.22 5.78
- ---------------------------------------------- ---------------------------------------------
75 8.03 7.77 7.09 6.20 5.36 6.44 75 6.92 6.81 6.46 5.91 5.27 5.94
76 8.36 8.06 7.26 6.28 5.39 6.62 76 7.20 7.06 6.65 6.02 5.31 6.11
77 8.71 8.35 7.44 6.36 5.42 6.81 77 7.50 7.34 6.85 6.12 5.35 6.29
78 9.09 8.67 7.62 6.43 5.44 7.00 78 7.83 7.63 7.04 6.22 5.38 6.48
79 9.50 8.99 7.79 6.50 5.45 7.21 79 8.18 7.94 7.25 6.31 5.41 6.67
- ---------------------------------------------- ---------------------------------------------
80 9.93 9.33 7.96 6.56 5.47 7.43 80 8.56 8.27 7.45 6.39 5.43 6.88
81 10.40 9.68 8.12 6.61 5.48 7.65 81 8.98 8.62 7.65 6.47 5.45 7.11
82 10.89 10.05 8.28 6.66 5.49 7.89 82 9.43 8.99 7.85 6.54 5.47 7.34
83 11.42 10.42 8.43 6.70 5.50 8.15 83 9.92 9.37 8.04 6.60 5.48 7.58
84 11.98 10.80 8.58 6.74 5.50 8.41 84 10.45 9.78 8.22 6.65 5.49 7.84
85 12.58 11.19 8.71 6.77 5.51 8.69 85 11.02 10.20 8.39 8.70 5.50 8.12
- ---------------------------------------------- ---------------------------------------------
</TABLE>
Income for payments other than monthly will be furnished by the Home Office
upon request.
Table C values for ages below 40 and above 85, and values for 300 and 360
months certain will be furnished by the Home Office upon request.
4790 18
<PAGE>
Form 4790 Flexible Premium Deferred Variable Annuity Policy
Ameritas Variable Life Insurance Company
5900 O Street, Lincoln, Nebraska 68510
September 22, 1997
Ameritas Variable Life Insurance Company
5900 "O" Street
P.O. Box 81889
Lincoln, Nebraska 68501
Gentlemen:
With reference to the Registration Statement on Form N-4, filed by Ameritas
Variable Life Insurance Company and Ameritas Variable Life Insurance Company
Separate Account VA-2 with the Securities & Exchange Commission covering
flexible premium annuity policies, I have examined such documents and such laws
as I considered necessary and appropriate, and on the basis of such examination,
it is my opinion that:
1. Ameritas Variable Life Insurance Company is duly organized and validly
existing under the laws of the State of Nebraska and has been duly
authorized by the Insurance Department of the State of Nebraska to
issue variable annuity policies.
2. Ameritas Variable Life Insurance Company Separate Account VA-2 is a
duly authorized and existing separate account established pursuant to
the provisions of Section 44-310.06 (subsequently repealed) and/or
44-402.01 of the Statutes of the State of Nebraska.
3. The flexible premium variable annuity policies, when issued as
contemplated by said Form N-4 Registration Statement, will constitute
legal, validly issued and binding obligations of Ameritas Variable Life
Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to said N-4
Registration Statement and to the use of my name under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement.
Sincerely,
/s/ Norman Krivosha
Norman Krivosha
Secretary and General Counsel
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Ameritas Variable Life
Insurance Company Separate Account VA-2 on Form N-4 of our reports dated
February 1, 1997 on the financial statements of Ameritas Variable Life Insurance
Company and Ameritas Variable Life Insurance Company Separate Account VA-2,
appearing in the Statement of Additional Information, which is a part of this
Registration Statement, and to the reference to us under the heading "Experts"
in such Statement of Additional Information.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Lincoln, Nebraska
September 24, 1997
