Securities and Exchange Commission
450 5 Street, N.W.
Washington, DC 20549
RE: Variable Executive Universal Life 2
File Number 333-14081
Commissioners:
Enclosed for filing is a complete copy, including exhibits, of
Post-Effective Amendment Number 3 to the above referenced Form
S-6 Registration Statement.
This amendment is being filed pursuant to paragraph (a) (i) of Rule 485.
This amendment is being filed under 485 (a) because it includes a new
prospectus of a new version of a variable universal life policy that
reflects changes made to of changes made to the Contingent Deferred Sales
Charge, premium load, expense charges as well as other changes. The old
version of the Variable Executive Universal Life will be phased out during
2000 as state insurance department approve the new version.
Financial Statements and certain exhibits will be filed in an amendment
pursuant to 485 (b).
If you have any comments or questions about this filing, please contact
Fred Bellamy of Sutherland, Asbill and Brennan at 202-383-0126.
Sincerely,
Paul M. Phalen, CLU, FLMI
Assistant Vice-President
Variable Services
VEUL2CVR.TXT
<PAGE>
Registration No. 333-14081
POST-EFFECTIVE AMENDMENT NO. 3
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
--------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
MIDLAND NATIONAL LIFE SEPARATE ACCOUNT A
________________________________________
(Exact Name of Trust)
MIDLAND NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)
One Midland Plaza
Sioux Falls, SD 57193
(Address of Principal Executive Office)
_________________________
Jack L. Briggs, Vice President, Secretary and General Counsel
Midland National Life Insurance Company
One Midland Plaza
Sioux Falls, SD 57193
(Name and Address of Agent for Service of Process)
Copy to:
Frederick R. Bellamy
Sutherland Asbill & Brennan L L P
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
Variable Executive Universal Life 2 Life Insurance Policies
(Title of Securities being offered)
It is proposed that this filing will become effective (check appropriate line):
___ immediately upon filing pursuant to paragraph (b)
___ on May 01, 2000 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a) (i)
_X_ on _April 28, 2000_ pursuant to paragraph (a) (i) of Rule 485
If appropriate, check the following line:
___ the Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective Amendment.
----------------------------------------------------------------------
S6CVRVEL.TXT
<PAGE>
VARIABLE EXECUTIVE UNIVERSAL LIFE 2
Issued By:
Midland National Life Insurance Company
One Midland Plaza Sioux Falls, SD 57193 (605) 335-5700
Variable Executive Universal Life 2 is an individual
variable life insurance policy issued by Midland
National Life Insurance Company. Variable Executive
Universal Life 2 :
- - provides insurance coverage with flexibility in death
benefits and premiums;
- - pays a death benefit if the insured person dies while
the contract is still in force;
- - can provide substantial cash value build-up on a tax-
deferred basis. However, there is no guaranteed
cash value for amounts you allocate to the
Investment Divisions. You bear the risk of poor
investment performance for those amounts.
- - lets you borrow against your contract, withdraw part
of the net cash surrender value, or completely
surrender your contract. Loans and withdrawals
affect the cash value, and may affect the death
benefit.
After the first premium, you may decide how much
your premiums will be and how often you wish to pay
them, within limits. You may also increase or decrease
the amount of insurance protection, within limits.
Depending on the amount of premiums paid, this may
or may not be a Modified Endowment contract. If it is
a Modified Endowment contract, then loans and
withdrawals may have negative tax consequences.
You have a limited right to examine your contract and
return it to us for a refund.
You may allocate your cash value to our General
Account or up to ten investment divisions. Each
division invests in a specified mutual fund portfolio.
You can choose among the following twenty -three five
investment divisions:
(a) VIP Money Market Portfolio
(b) VIP High Income Portfolio
(c) VIP Equity-Income Portfolio
(d) VIP Growth Portfolio
(e) VIP Overseas Portfolio
(f) VIP II Asset Manager Portfolio
(g) VIP II Investment Grade Bond Portfolio
(h) VIP II Contrafund Portfolio
(i) VIP II Asset Manager: Growth Portfolio
(j) VIP II Index 500 Portfolio
(k) VIP III Growth & Income Portfolio
(l) VIP III Balanced Portfolio
(m) VIP III Growth Opportunities Portfolio
(n) American Century VP Capital Appreciation
Portfolio
(o) American Century VP Value Portfolio
(p) American Century VP Balanced Portfolio
(q) American Century VP International Portfolio
(r) American Century VP Income & Growth
(s) MFS VIT Emerging Growth
(t) MFS VIT Research
(u) MFS VIT Growth with Income
(v) MFS VIT New Discovery
(w) Lord Abbett Growth and Income
(a) VIP Money Market Portfolio
- - VIP High Income Portfolio
- - VIP Equity-Income Portfolio
- - VIP Growth Portfolio
- - VIP Overseas Portfolio
- - VIP II Asset Manager Portfolio
- - VIP II Investment Grade Bond Portfolio
- - VIP II Contrafund Portfolio
- - VIP II Asset Manager: Growth Portfolio
- - VIP II Index 500 Portfolio
- - VIP III Growth & Income Portfolio
- - VIP III Balanced Portfolio
- - VIP III Growth Opportunities Portfolio
- - American Century VP Capital Appreciation
Portfolio
- - American Century VP Value Portfolio
- - American Century VP Balanced Portfolio
- - American Century VP International Portfolio
- -American Century VP Income & Growth
- - MFS VIT Emerging Growth
- - MFS VIT Research
- - MFS VIT Growth with Income
- - MFS VIT New Discovery
- - Lord Abbett Growth and Income (hereinafter
referred to as Lord Abbett VC Growth and Income)
- - Lord Abbett Mid-Cap Value hereinafter referred to
as Lord Abbett VC Mid-Cap Value)
- - Lord Abbett International (hereinafter referred to as
Lord Abbett VC International)
Your cash value in the investment divisions will
increase or decrease based on investment performance.
You bear this risk. The U.S. Government does not
insure or guarantee any of these investments. Separate
prospectuses describe the investment objectives,
policies and risks of the portfolios.
The Securities and Exchange Commission has not
approved or disapproved of these securities or
determined if this prospectus is truthful or
complete. Any representation to the contrary is a
criminal offense.
Prospectus: May 1, 1999 2000 .
Table of Contents
PART 1: SUMMARY 4
FEATURES OF VARIABLE EXECUTIVE UNIVERSAL
LIFE 2 4
Death Benefit Options 4
Contract Changes 4
Flexible Premium Payments 4
Additional Benefits 4
INVESTMENT CHOICES 5
YOUR CASH VALUE 5
Transfers 6
Policy Loans 6
Withdrawing Money 6
Surrendering Your Contract 6
DEDUCTIONS AND CHARGES 6
Deductions From Your Premiums 6
Deductions From Your Cash Value 6
Surrender Charge s 7
Portfolio Expenses 7
ADDITIONAL INFORMATION ABOUT THE
CONTRACTS 8
Your Right To Examine This Contract 8
Your Contract Can Lapse 8
Tax Effects of Variable Executive Universal Life 2 9
Illustrations 9
PART 2: DETAILED INFORMATION ABOUT
VARIABLE EXECUTIVE UNIVERSAL LIFE 2 9
INSURANCE FEATURES 9
How the Contracts Differ From Whole Life Insurance 9
Application for Insurance 10
Death Benefit 10
Maturity Benefit 11
Changes In Variable Executive Universal Life 2 11
Changing The Face Amount of Insurance 11
Changing Your Death Benefit Option 12
When Contract Changes Go Into Effect 12
Flexible Premium Payments 12
Allocation of Premiums 13
Additional Benefits 14
Extended Maturity Option 14
Automatic Benefit Increase Provision 15
SEPARATE ACCOUNT INVESTMENT CHOICES 16
Our Separate Account And Its Investment Divisions 16
The Funds 16
Investment Policies Of The Portfolios 16
USING YOUR CASH VALUE 19
The Cash Value 19
Amounts In Our Separate Account 19
How We Determine The Accumulation Unit Value 19
Cash Value Transactions 20
Transfers Of Cash Value 20
Dollar Cost Averaging 21
Portfolio Re-Balancing 21
Contract Loans 22
Withdrawing Money From Your Cash Value 23
Surrendering Your Contract 23
THE GENERAL ACCOUNT 24
DEDUCTIONS AND CHARGES 24
Deductions From Your Premiums 24
Charges Against The Separate Account 25
Deductions From Your Cash Value 25
Transaction Charge s 26
How Cash Value Charges Are Allocated 26
Surrender Charge 27
Charges In The Funds 28
ADDITIONAL INFORMATION ABOUT THE
CONTRACTS 30
Your Right To Examine The Contract 30
Your Contract Can Lapse 30
You May Reinstate Your Contract 30
Contract Periods And Anniversaries 31
Maturity Date 31
We Own The Assets Of Our Separate Account 31
Changing the Separate Account 31
Limits On Our Right To Challenge The Contract 32
Your Payment Options 32
Your Beneficiary 33
Assigning Your Contract 34
When We Pay Proceeds From This Contract 34
TAX EFFECTS 34
Contract Proceeds 34
Possible Charge for Midland's Taxes 37
Other Tax Considerations 37
PART 3: ADDITIONAL INFORMATION 37
MIDLAND NATIONAL LIFE INSURANCE
COMPANY 37
YOUR VOTING RIGHTS AS AN OWNER 37
OUR REPORTS TO CONTRACT OWNERS 38
DIVIDENDS 38
MIDLAND'S SALES AND OTHER AGREEMENTS 38
REGULATION 39
YEAR 2000 39
DISCOUNT FOR MIDLAND EMPLOYEES 40
LEGAL MATTERS 40
FINANCIAL AND ACTUARIAL MATTERS 40
ADDITIONAL INFORMATION 40
MANAGEMENT OF MIDLAND 41
ILLUSTRATIONS 44
DEFINITIONS 49
PERFORMANCE 51
FINANCIAL STATEMENTS 52
This prospectus generally describes only the variable portion of the Contract,
except where the General Account is specifically mentioned.
Buying this contract might not be a good way of replacing your existing
insurance or adding more insurance if you
already own a flexible premium variable life insurance contract.
You should read this prospectus carefully and keep it for future reference. You
should also have and read the
current prospectuses for the funds.
PART 1: SUMMARY
In this prospectus "We", "Our", and "Us" mean
Midland National Life Insurance Company.
"You" and "Your" mean the owner of the contract.
We refer to the person who is covered by the contract
as the "Insured" or "Insured Person", because the
insured person and the owner may not be the same.
There is a list of definitions at the end of this
prospectus, explaining many words and phrases used
here and in the actual insurance policy.
The detailed information appearing later in this
prospectus further explains the following
summary. This summary must be read along with
that detailed information. Unless otherwise
indicated, the description of the contract in this
prospectus assumes that the contract is in force
and that there is no outstanding contract loan.
FEATURES OF VARIABLE EXECUTIVE
UNIVERSAL LIFE 2
Death Benefit Options
Variable Executive Universal Life 2 is life insurance
on the insured person. If the contract is in force we
will pay a death benefit when the insured person dies.
You can choose between two death benefit options:
- - Option 1: death benefit equals the face amount
("Specified Amount") of the insurance contract.
This is sometimes called a "level" death benefit.
- - Option 2: death benefit equals the face amount
plus the cash value. This is sometimes called a
"variable" death benefit.
The death benefit may be even greater in some
circumstances. See "Death Benefit" on page 10.
We deduct any outstanding loans and unpaid charges
before paying any benefits. The beneficiary can take
the death benefit in a lump sum or under a variety of
payment plans.
Whether your contract lapses or remains in force can
depend on the amount of your cash value (less any
outstanding loans and surrender charge s ). The cash
value, in turn, depends on the investment
performance of the investment divisions you select.
(The cash value also depends on the premiums you
pay and the charges we deduct.) However, during the
Minimum Premium Period, you can keep your policy
in force by paying a certain level of premiums.
The minimum face amount is $150,000
Contract Changes
You may change the death benefit option you have
chosen. You may also increase or decrease the face
amount of your contract, within limits.
Flexible Premium Payments
You may pay premiums whenever and in whatever
amount you want, within certain limits. We require
an initial minimum premium based on the contract's
face amount and the insured person's age and sex.
You choose a planned periodic premium. But
payment of the planned premiums does not ensure
that your contract will remain in force. Additional
premiums may be required to keep your policy from
lapsing. You need not pay premiums according to
the planned schedule. However, you can ensure that
your contract stays in force during the Minimum
Premium Period by paying premiums equal to the
accumulated minimum premium amounts. See
"Flexible Premium Payments" on page 12.
Additional Benefits
You may choose to include additional benefits in the
contract by rider. These benefits may include:
- - a disability waiver benefit (to waive the cost of
monthly deductions)
- - a monthly disability benefit
- - an accidental death benefit
- - life insurance for children
- - family life insurance coverage
- - life insurance for additional insured persons
- - an accelerated death benefit in the event of a
terminal illness.
We deduct any costs of additional benefits from your
cash value monthly. See "Additional Benefits" on
page 14.
INVESTMENT CHOICES
You may allocate your cash value to up to ten of the
following investment divisions:
1. Fidelity's Variable Insurance Products Fund
(VIP) Money Market Portfolio
2. Fidelity's Variable Insurance Products Fund
(VIP) High Income Portfolio
3. Fidelity's Variable Insurance Products Fund
(VIP) Equity-Income Portfolio
4. Fidelity's Variable Insurance Products Fund
(VIP) Growth Portfolio
5. Fidelity's Variable Insurance Products Fund
(VIP) Overseas Portfolio
6. Fidelity's Variable Insurance Products Fund II
(VIP II) Asset Manager Portfolio
7. Fidelity's Variable Insurance Products Fund II
(VIP II) Investment Grade Bond Portfolio
8. Fidelity's Variable Insurance Products Fund II
(VIP II) Contrafund Portfolio
9. Fidelity's Variable Insurance Products Fund II
(VIP II) Asset Manager: Growth Portfolio
10. Fidelity's Variable Insurance Products Fund II
(VIP II) Index 500 Portfolio
11. Fidelity's Variable Insurance Products Fund III
(VIP III) Growth & Income Portfolio
12. Fidelity's Variable Insurance Products Fund III
(VIP III) Balanced Portfolio
13. Fidelity's Variable Insurance Products Fund III
(VIP III) Growth Opportunities Portfolio
14. American Century VP Capital Appreciation
Portfolio
15. American Century VP Value Portfolio
16. American Century VP Balanced Portfolio
17. American Century VP International Portfolio
18. American Century VP Income & Growth
19. MFS VIT Emerging Growth
20. MFS VIT Research
21. MFS VIT Growth with Income
22. MFS VIT New Discovery
23. Lord Abbett VC Growth and Income
24. Lord Abbett VC Mid-Cap Value
25. Lord Abbett VC International
You bear the complete investment risk for all
amounts allocated to any of these investment
divisions. You may also allocate your cash value to
our General Account, where we guarantee the safety
of principal and a minimum interest rate.
For more information, see "The Funds" on page 16.
YOUR CASH VALUE
Your cash value begins with your first premium
payment. From your premium we deduct a sales
charge , a premium load tax and any per premium
expenses. The balance of the premium is your
beginning cash value.
Your cash value reflects:
- - the amount and frequency of premium payments,
- - deductions for the cost of insurance and expenses,
- - the investment performance of your chosen
investment divisions,
- - interest earned on amounts allocated to the General
Account,
- - loans, and
- - partial withdrawals.
There is no guaranteed cash value for amounts
allocated to the investment divisions.
See "The Cash Value" on page 19.
Transfers
You may transfer your cash value between the
General Account and the various investment
divisions. Transfers take effect when we receive your
request. We require a minimum amount for each
transfer, usually $200. Currently, we allow an
unlimited number of transfers. We reserve the right
to charge a $25 fee after the 12th transfer in a
contract year. There are other limitations on transfers
to and from the General Account. See "Transfers Of
Cash Value" on page 20.
Policy Loans
You may borrow up to 92% of your cash surrender
value (the cash value less the surrender charge).
Your contract will be the sole security for the loan.
Your contract states a minimum loan amount, usually
$200. Contract loan interest accrues daily at an
annually adjusted rate. See "Contract Loans" on page
22. Contract loan interest is not tax deductible on
contracts owned by an individual. There may be
federal tax consequences for taking a policy loan. See
"TAX EFFECTS" on page 34.
Withdrawing Money
You may make a partial withdrawal from your cash
value. The current minimum withdrawal amount is
$200. The maximum partial withdrawal you can
make is 50% of the net cash surrender value. The net
cash surrender value is the cash surrender
value (your cash value minus any surrender
charge )minus any outstanding loan and loan
interest due. Withdrawals are subject to other
requirements. If you make more than one
withdrawal in a contract year, then we
deduct a service charge (no more than $25). See
"Withdrawing Money From Your Cash Value" on
page 23. Withdrawals and surrenders may have
negative tax effects. See "TAX EFFECTS" on page
34.
Surrendering Your Contract
You can surrender your contract for cash and then we
will pay you the net cash surrender value. A
surrender charge may be deducted, and taxes and a
tax penalty may apply. See "Surrendering Your
Contract" on page 23.
DEDUCTIONS AND CHARGES
Deductions From Your Premiums
We deduct a 2.5% 5.00% premium load sales charge
from each premium payment. We currently intend to
eliminate this charge after the 15th contract year. (This
is not guaranteed.) This charge partially reimburses
us for the selling and distributing costs of this
contract and for premium taxes we pay. We also
charge a 2.5% premium tax on each premium
payment. We may decrease or increase this charge
depending on our expenses, and we may vary this
charge by state. If you elect to pay premiums by Civil
Service Allotment, we also deduct a 46 service
charge from each premium payment. See
"Deductions From Your Premiums" on page 24.
Deductions From Your Cash Value
Certain amounts are deducted from your cash value
each month.
These are:
- - an expense charge of $6.00 (currently, we plan to
make this deduction for only the first 15 contract
years),
- - a cost of insurance charge. The amount of this
charge is based on the insured person's attained
age, sex, risk class, and the amount of insurance
under your contract; and
- - charges for additional benefits.
In addition, we deduct fees when you make:
- - a partial withdrawal of net cash surrender value
more than once in a contract year or
- - more than twelve transfers a year between
investment divisions. (We currently waive this
charge).
See "Deductions From Your Cash Value" on page 25.
We also deduct a daily charge at an annual rate of
0.90% of the assets in every investment division. We
currently intend to reduce this charge to 0.50% 0.25%
after the 10th contract year. (This is not guaranteed.)
This charge is for certain mortality and expense risks.
Surrender Charges
We deduct a surrender charge only if you surrender
your contract for its net cash surrender value or let
your contract lapse during the first 12 10 contract
years. If you keep this contract in force for 12 longer
than 10 years, then you will not incur a surrender
charge.
The surrender charge has two parts: a deferred sales
charge and a deferred issue charge. The deferred
sales charge partially reimburses us for our costs in
selling and distributing this contract. The deferred
issue charge reimburses us for underwriting and our
other costs in issuing the contract.
The maximum deferred sales charge is:
- - 27.5% of any premium payment in the first 2
contract years up to one guideline annual premium
(this varies for each contract); and
- - 6.5% of all other premium payments.
After seven years, this charge begins to decline.
There is no surrender charge after 12 years. The
amount of the deferred sales charge depends on:
1) the amount of your premium payments,
2) when you pay your premiums and
3) when you surrender your contract or allow it to
lapse.
The deferred issue charge is on a fixed schedule per
thousand dollars of face amount. It starts at $3.00 per
$1,000 of face amount for the first 7 contract years
and decreases to $0.00 after the 12th contract year.
This summary of the deferred sales charge and the
deferred issue charge assumes no changes in face
amount. See "Surrender Charges" on page 25.
The surrender charge varies by the issue age, sex and
class of the insured at the time of issue. The per
$1,000 of face amount surrender charge is highest in
the first year of your policy and decreases to $0.00
after the end of 10 contract years. For example, a
male with an issue age of 35 and a class of preferred
nonsmoker will have a first year surrender charge of
$19.00 per $1,000, but a male issue age 65 and a class
of preferred nonsmoker will have a first year
surrender charge of $55.00 per $1,000. The
maximum first year surrender charge for all issue
ages, sexes, and classes is $52.50 per $1,000. The
$52.50 per $1,000 surrender charge occurs for males
issued at a smoker class with issue ages at 63 or
older.
The surrender charge at the time of surrender is
determined by multiplying the surrender charge listed
in your policy form, for the appropriate policy year,
times the appropriate face amount of insurance and
dividing by 1000. If you change your face amount of
insurance after your policy is issued, the face amount
used in the surrender charge calculation is the highest
face amount which exists during the time from the
issue to the time of surrender of your contract.
See"Surrender Charges" on page 27 for samples of
the per $1,000 charge for various issue ages, sexes
and classes.
Portfolio Expenses
Each investment division invests exclusively in a
corresponding mutual fund portfolio. Each portfolio
pays an investment advisory fee, and may also incur
other operating expenses. The total expenses for each
portfolio (as a percentage of assets) for the year
ending December 31, 1998 are shown in the table
below (except as otherwise noted).
Total
Expenses
(after expense
Portfolio reimbursement)
VIP Money Market .30%
VIP High Income .70%
VIP Equity-Income(1) .58%
VIP Growth(1) .68%
VIP Overseas(1) .91%
VIP II Asset Manager(1) .64%
VIP II Investment Grade Bond .57%
VIP II Contrafund(1) .70%
VIP II Asset Manager: Growth(1) .73%
VIP II Index 500(1) .35%
VIP III Growth & Income(1) .61%
VIP III Balanced(1) .59%
VIP III Growth Opportunities(1) .71%
American Century VP Capital Appreciation 1.00%
American Century VP Value 1.00%
American Century VP Balanced 1.00%
American Century VP International 1.47%
American Century VP Income & Growth .70%
MFS VIT Emerging Growth (2) (3) .85%
MFS VIT Research(2) (3) .86%
MFS VIT Growth with Income(2) (3) .88%
MFS VIT New Discovery(2) (3) 1.17%
Lord Abbett VC Growth and Income .51%
Lord Abbett VC Mid-Cap Value
(4) (3) 1.10%
Lord Abbett VC International (4)(3) 1.35%
(1) This portfolio used a portion of its paid brokerage commissions
to reduce its expenses. Certain portfolios used credits gained as a
result of uninvested cash balances to reduce custodian and
transfer agent expenses. Including these reductions, total
operating expenses would have been as follows:
VIP Equity-Income 0.57%
VIP Growth 0.66%
VIP Overseas 0.89%
VIP II Asset Manager 0.63%
VIP II Index 500 0.28%
VIP II Contrafund 0.66%
VIP II Asset Manager: Growth 0.72%
VIP III Balanced 0.58%
VIP III Growth Opportunities 0.70%
VIP III Growth & Income 0.60%
(2) MFS has agreed to bear expenses for this portfolio, such that
the portfolio's other expenses shall not exceed 0.25%. Without
this limitation, the other expenses and total expenses would be
- - 4.32% and 5.22% for the MFS VIT New Discovery.
(2) Each of the MFS 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. Each series may enter into other such
arrangements and directed brokerage arrangements, which would
also havae the effect of reducing the series' expenses. The
expenses shown above do not take into account these expense
reductions, and are therefore higher than the actual expenses of
the series.See "Charges In The Funds" on page 28.
(3) The expense figures shown for these portfolios are based on
estimated expenses for 1999 since the portfolios were not in
existence during 1998.
ADDITIONAL INFORMATION ABOUT THE
CONTRACTS
Your Right To Examine This Contract
You have a right to examine and cancel the contract.
Your cancellation request must be postmarked by the
latest of the following 3 dates:
- - 10 days after you receive your contract,
- - 10 days after we mail you a notice of this right, or
- - 45 days after you sign the contract application.
If you cancel your contract during this period, then
we will return your cash value plus all of the charges
we have deducted from premiums or from the
investment divisions or the cash value. Expenses of
the portfolios are not returned.
See "Your Right To Examine The Contract" on page
30.
Your Contract Can Lapse
Your contract remains in force if the net cash
surrender value can pay the monthly charges. In
addition, during the Minimum Premium Period, your
contract will remain in force as long as you meet the
applicable minimum premium requirements.
However, the contract can lapse after the Minimum
Premium Period no matter how much you pay in
premiums, if the net cash surrender value is
insufficient to pay the monthly charges (subject to the
grace period). See "Your Contract Can Lapse" on
page 30.
Tax Effects of Variable Executive Universal Life 2
We believe that a contract issued on the basis of a
standard rate class should quality as a life insurance
contract for federal income tax purposes. It is unclear
whether a contract issued on a substandard basis
would qualify as a life insurance contract, particularly
if you pay the full amount of premiums permitted
under the contract. If a contract does not satisfy
Section 7702 of the Internal Revenue code (defining
life insurance for tax purposes), we will take
appropriate and reasonable steps to try to get the
contract to comply with Section 7702.
If a contract qualifies as a life insurance contract for
federal income tax purposes, then the death benefit
payment is not subject to federal income tax. In
addition, under current federal tax law, you do not
have to pay income tax on any increases in your cash
value as long as they remain in your contract.
A contract may be treated as a "Modified Endowment
contract" depending upon the amount of premiums
paid in relation to the death benefit. If the contract is
a Modified Endowment contract, then all pre-death
distributions, including contract loans, will be treated
first as distributions of taxable income and then as a
return of your investment in the contract. In addition,
prior to age 59 1/2, such distributions generally will
be subject to a 10% penalty tax.
If the contract is not a Modified Endowment contract,
distributions generally will be treated first as a return
of your investment in the contract and then as a
distribution of taxable income. Moreover, loans will
not be treated as distributions. Finally, distributions
and loans from a contract that is not a Modified
Endowment contract are not subject to the 10%
penalty tax. See "TAX EFFECTS" on page 34.
Illustrations
This prospectus includes sample projections of
hypothetical death benefits and cash surrender values,
beginning on page 40. These are only hypothetical
figures and are not indications of either past or
anticipated future investment performance. These
hypothetical value projections may be helpful in
understanding the long-term effects of different levels
of investment performance, charges and deductions.
They may help in comparing this contract to other
life insurance contracts. They indicate that if the
contract is surrendered in the early contract years, the
net cash surrender value may be low compared to
never purchasing the policy and investing the money
used as premiums at 5% per year. This demonstrates
that this contract should not be purchased as a short-
term investment.
PART 2: DETAILED INFORMATION
ABOUT VARIABLE
EXECUTIVE UNIVERSAL LIFE 2
INSURANCE FEATURES
This prospectus describes our Variable Executive
Universal Life 2 contract. There may be contractual
variances because of requirements of the state where
your contract is issued.
How the Contracts Differ From Whole Life
Insurance
Variable Executive Universal Life 2 (VEUL 2 )
provides insurance coverage with flexibility in death
benefits and premium payments. It enables you to
respond to changes in your life and to take advantage
of favorable financial conditions. VEUL 2 differs
from traditional whole life insurance because you
may choose the amount and frequency of premium
payments, within limits.
In addition, VEUL 2 has two types death benefit
options. You may switch back and forth between
these options. Variable Executive Universal Life 2
also allows you to change the face amount without
purchasing a new insurance policy. However,
evidence of insurability may be required.
Application for Insurance
To apply for a contract you must submit a completed
application. We decide whether to issue a contract
based on the information in the application and our
standards for issuing insurance and classifying risks.
If we decide not to issue a contract, then we will
return the sum of premiums paid plus interest
credited. The maximum issue age is 80.
Death Benefit
We pay the death benefit to the beneficiary when the
insured person dies (outstanding indebtedness will be
deducted from the proceeds). As the owner, you may
choose between two death benefit options:
- - Option 1 provides a benefit that equals the face
amount of the contract. This "level" death benefit
is for owners who prefer insurance coverage that
does not vary in amount and has lower insurance
charges. Except as described below, the option 1
death benefit is level or fixed at the face amount.
- - Option 2 provides a benefit that equals the face
amount of the contract plus the cash value on the
day the insured person dies. This "variable" death
benefit is for owners who prefer to have
investment performance reflected in the amount of
their insurance coverage. Under Option 2, the
value of the death benefit fluctuates with your cash
value.
Under both options, Federal tax law may require a
greater benefit. This benefit is a percentage multiple
of your cash value. The percentage declines as the
insured person gets older (this is referred to as the
"corridor" percentage). This death benefit will be
your cash value on the day the insured person dies
multiplied by the percentage for his or her age. For
this purpose, age is the attained age (last birthday) at
the beginning of the contract year of the insured
person's death.
The percentages are shown below:
Table of Death Benefits
Based on Cash Value
The Death The Death
Benefit Will Benefit Will
Be At Least Be At Least
If The Equal To If The Equal To
Insured This Percent Insured This Percent
Person's of The Person's of The
Age Is Cash Value Age Is Cash Value
0-40 250% 60 130%
41 243% 61 128%
42 236% 62 126%
43 229% 63 124%
44 222% 64 122%
45 215% 65 120%
46 209% 66 119%
47 203% 67 118%
48 197% 68 117%
49 191% 69 116%
50 185% 70 115%
51 178% 71 113%
52 171% 72 111%
53 164% 73 109%
54 157% 74 107%
55 150% 75-90 105%
56 146% 91 104%
57 142% 92 103%
58 138% 93 102%
59 134% 94 101%
95-99 100%
These percentages are based on federal income tax
law which require a minimum death benefit, in
relation to cash value, for your contract to qualify as
life insurance.
For example, assume the insured person is 55 years
old and the face amount is $100,000 $150,000 . The
"corridor percentage" at that age is 150%. Under
Option 1, the death benefit will generally be
$100,000 $150,000 . However, when the cash value is
greater than $66.666.67 $100,000 , the corridor
percentage applies and the death benefit will be
greater than $100,000 $150,000 (since 150% of
$66.666.67 $100,000 equals $100,000 $150,000 ).
In this case, at age 55, we multiply the cash value by a
factor of 150%. So if the cash value were $70,000
$110,000 , then the death benefit would be $105,000
$165,000 .
Under Option 2, the death benefit is the face amount
plus the cash value. In this example, if a 55 year-old
had a face amount of $100,000 $150,000 and a cash
value of $200,000 $300,000 , then the death benefit
would be $300,000 $450,000 . This figure results
from either: (a) adding the face amount to the cash
value or (b) multiplying the cash value by the
corridor percentage. For all cash values higher than
this level, the corridor percentage would apply.
Therefore, for every $1.00 added to the cash value
above $200,000 $300,000 , the death benefit would
increase by $1.50 (at that age).
Under either option, the length of time your contract
remains in force depends on the net cash surrender
value of your contract and whether you meet the
Minimum Premium Period requirements. Your
coverage lasts as long as your net cash surrender
value can cover the monthly deductions from your
cash value. In addition, during the Minimum
Premium Period, your contract remains in force if the
sum of your premium payments (minus any loans or
withdrawals) is greater than the sum of the monthly
minimum premiums for all of the contract months
since the contract was issued.
The investment performances of the investment
divisions and the interest earned in the General
Account affect your cash value. Therefore, the
returns from these investment options can affect the
length of time your contract remains in force.
The minimum initial face amount is $150,000.
Maturity Benefit
If the insured person is still living on the maturity
date, we will pay the beneficiary the cash value
minus any outstanding loans. The contract will then
end. The maturity date is the contract anniversary
after the insured person's 100th birthday. In certain
circumstances, you may extend the maturity date. See
"Maturity Date" on page 31.
Changes In Variable Executive Universal Life 2
Variable Executive Universal Life 2 gives you the
flexibility to choose from a variety of strategies that
enable you to increase or decrease your insurance
protection.
A reduction in face amount lessens the emphasis on a
contract's insurance coverage by reducing both the
death benefit and the amount of pure insurance
provided. The amount of pure insurance is the
difference between the cash value and the death
benefit. This is the amount of risk we take. A
reduced amount at risk results in lower cost of
insurance deductions from your cash value.
A partial withdrawal reduces the cash value and may
reduce the death benefit, while providing you with a
cash payment, but generally does not reduce the
amount at risk. Choosing not to make premium
payments may have the effect of reducing the cash
value. Under death benefit option 1, reducing the
cash value increases the amount at risk (thereby
increasing the cost of insurance deductions) while
leaving the death benefit unchanged; under death
benefit option 2, it decreases the death benefit while
leaving the amount at risk unchanged.
Increases in the face amount have the exact opposite
effect of decreases.
Changing The Face Amount of Insurance
You may change the face amount of your contract by
sending a written request to our home executive
office. You can only change the face amount twice
each contract year. All changes are subject to our
approval and to the following conditions.
For increases:
- - Increases in the face amount must be at least
$25,000.
- - To increase the face amount, you must provide
satisfactory evidence of insurability. If the insured
person has become a more expensive risk, then we
charge higher cost of insurance fees for the
additional amounts of insurance (we may change
this procedure in the future).
- - Monthly cost of insurance deductions from your
cash value will increase. There will also be a
surrender charge increase. These begin on the date
the face amount increase takes effect.
- - The right to examine this contract does not apply
to face amount increases. (It only applies when
you first buy the contract.)
For decreases:
- - You cannot reduce the face amount below the
minimum we require to issue this contract at the
time of the reduction. Monthly cost of insurance
deductions from your cash value will decrease.
- - The federal tax law may limit a decrease in the
face amount. If that limit applies, then your new
death benefit will be your cash value multiplied by
the corridor percentage the federal tax law
specifies for the insured's age at the time of the
change.
- - If you request a face amount decrease after you
have already increased the face amount at
substandard (i.e., higher) risk charges, and the
original face amount was at standard risk charges,
then we will first decrease the face amount that is
at substandard higher risk charges. We may
change this procedure.
Changing Your Death Benefit Option
You may change your death benefit option by
sending a written request to our home executive
office. We require satisfactory evidence of
insurability to make this change.
If you change from option 1 to option 2, the face
amount decreases by your cash value on the date of
the change. This keeps the death benefit and amount
at risk the same as before the change. We may not
allow a change in death benefit option if it would
reduce the face amount below the minimum we
require to issue this contract at the time of the
reduction.
If you change from option 2 to option 1, then the face
amount increases by the amount of your cash value
on the date of the change. These increases and
decreases in face amount are made so that the amount
of the death benefit remains the same on the date of
the change. When the death benefit remains the same,
there is no change in the net amount at risk. This is
the amount on which the cost of insurance charges
are based.
When Contract Changes Go Into Effect
Any changes in the face amount or the death benefit
option will go into effect on the monthly anniversary
of after the date we approved your request. After
your request is approved, you will receive a written
notice showing each change. You should attach this
notice to your contract. We may also ask you to
return your contract to us at our home executive
office so that we can make a change. We will notify
you if we do not approve a change you request. For
example, we might not approve a change that would
disqualify your contract as life insurance for income
tax purposes.
Contract changes may have negative tax
consequences. See "TAX EFFECTS" on page 34.
Flexible Premium Payments
You may choose the amount and frequency of
premium payments, within the limits described
below.
Even though your premiums are flexible, your
contract information page will show a "planned"
periodic premium. You determine the planned
premium when you apply and can change them it at
any time. You will specify the frequency to be on a
quarterly, semi-annual or annual basis. Planned
periodic premiums may be monthly if paid by pre-
authorized check. Premiums may be bi-weekly if
paid by Civil Service Allotment. The planned
premiums may not be enough to keep your contract in
force.
The insurance goes into effect when we receive your
initial minimum premium payment (and approve your
application). We determine the initial minimum
premium based on:
1) the age, sex, and premium class of the insured
person,
2) the initial face amount of the contract, and
3) any additional benefits selected.
All premium payments should be payable to
"Midland". After your first premium payment, all
additional premiums should be sent directly to our
home executive office .
We will send you premium reminders based on your
planned premium schedule. You may make the
planned payment, skip the planned payment, or
change the frequency or the amount of the payment.
Generally, you may pay premiums at any time.
Amounts must be at least $50, unless made through a
$30 monthly automatic payment plan.
Payment of the planned premiums does not guarantee
that your contract will stay in force . Additional
premium payments may be necessary. The planned
premiums increase when the face amount of
insurance increases. This includes increases resulting
from the Automatic Benefit Increase provision. (See
"Automatic Benefit Increase Provision" on page 15
for details on how and when the increases are
applied.)
If you send us a premium payment that would cause
your contract to cease to qualify as life insurance
under Federal tax law, we will notify you and return
that portion of the premium that would cause the
disqualification.
Premium Provisions During The Minimum Premium
Period. During the Minimum Premium Period, you
can keep your contract in force by meeting a
minimum premium requirement. The Minimum
Premium Period lasts until the 5th contract
anniversary. A monthly minimum premium is shown
on your contract information page. (This is not the
same as the planned premiums.) The minimum
premium requirement will be satisfied if the sum of
premiums you have paid, less your loans or
withdrawals, is more than the sum of the monthly
minimum premiums required to that date. The
minimum premium increases when the face amount
increases.
During the Minimum Premium Period, your contract
will lapse if:
- - the net cash surrender value cannot cover the
monthly deductions from your cash value; and
- - the premiums you have paid, less your loans or
withdrawals, are less than the total monthly
minimum premiums required to that date.
This contract lapse can occur even if you pay all of
the planned premiums.
Premium Provisions After The Minimum Premium
Period. After the Minimum Premium Period, your
contract will lapse if the net cash surrender value
cannot cover the monthly deductions from your cash
value. Paying your planned premiums may not be
sufficient to maintain your contract because of
investment performance, charges and deductions,
contract changes or other factors. Therefore,
additional premiums may be necessary to keep your
contract in force.
Allocation of Premiums
Each net premium will be allocated to the investment
divisions or to our General Account on the day we
receive it (except that any premium received before
we issue the contract will not be allocated or invested
until we issue the contract). The net premium is the
premium minus a premium load sales charge, a
premium tax and any expense a service charge s
(deducted only if you are on a Civil Service
Allotment Premium Mode.) Each premium is put
into your cash value according to your instructions.
Your contract application may provide directions to
allocate net premiums to our General Account or the
investment divisions. You may not allocate your
cash value to more than 10 investment divisions at
any one point in time. Your allocation instructions
will apply to all of your premiums unless you write to
our home executive office with new instructions.
Allocation percentages may be any whole number
from 0 to 100. The sum of the allocation percentages
must equal 100. Of course, you may choose not to
allocate a premium to any particular investment
division. See "THE GENERAL ACCOUNT" on page
24. Any premium received before the record date
will be held and earn interest in the General Account
until the day after the record date. When this period
ends your instructions will dictate how we allocate it.
Additional Benefits
You may include additional benefits in your contract.
Certain benefits result in an additional monthly
deduction from your cash value. You may cancel
these benefits at any time. The following briefly
summarizes the additional benefits that are currently
available:
(1) Disability Waiver Benefit: With this benefit,
we waive monthly charges from the cash value if the
insured person becomes totally disabled on or after
his/her 15th birthday and the disability continues for
at least 6 months. If a disability starts before the
contract anniversary following the insured person's
60th birthday, then we will waive monthly deductions
for as long as the disability continues.
(2) Monthly Disability Benefit: With this benefit,
we pay a set amount into your cash value each month
(the amount is on your contract information page).
The benefit is payable when the insured person
becomes totally disabled on or after their 15th
birthday and the disability continues for at least 6
months. The disability must start before the contract
anniversary following the insured person's 60th
birthday. The benefit will continue until the insured
person reaches age 65. If the amount of benefit paid
into the cash value is more than the amount allowed
under the income tax code, the monthly benefit will
be paid to the insured person.
(3) Accidental Death Benefit: We will pay an
additional benefit if the insured person dies from a
physical injury that results from an accident, provided
the insured person dies before the contract
anniversary that is within a half year of his or her
70th birthday.
(4) Children's Insurance Rider: This benefit
provides term life insurance on the lives of the
insured person's children. This includes natural
children, stepchildren and legally adopted children,
between the ages of 15 days and 21 years. They are
covered until the insured person reaches age 65 or the
child reaches age 25.
(5) Family Insurance Rider: This benefit provides
term life insurance on the insured person's children
as does the Children's Insurance. It also provides
decreasing term life insurance on the insured's
spouse.
(6) Additional Insured Rider: You may provide
term insurance for another person, such as the insured
person's spouse, under your contract. A separate
charge will be deducted for each additional insured.
(7) Guaranteed Insurability Rider: This benefit
provides for additional amounts of insurance without
further evidence of insurability.
(8) Living Needs Rider: This benefit provides an
accelerated death benefit as payment of an
"Advanced Sum," in the event the insured person is
expected to die within 12 months.
You can choose the death benefit amount to
accelerate at the time of the claim. The maximum
advanced sum is 50% of the eligible death benefit
(which is the death benefit of the contract plus the
sum of any additional death benefits on the life of the
insured person provided by any eligible riders).
Currently, there is a maximum of $250,000 and a
minimum of $5,000.
There is no charge for this benefit prior to the time of
a payment. The amount of the advanced sum is
reduced by expected future interest and may be
reduced by a charge for administrative expenses.
On the day we pay the accelerated benefit, we will
reduce the following in proportion to the reduction in
the eligible death benefit:
a. the death benefit of the contract and of each
eligible rider
b. the face amount
c. any cash values
d. any outstanding loan
When we reduce the cash value, we allocate the
reduction based on the proportion that your unloaned
amounts in the General Account and your amounts in
the investment divisions bear to the total unloaned
portion of your cash value.
Pursuant to the Health Insurance Portability and
Accountability Act of 1996, we believe that for
federal income tax purposes an advanced sum
payment made under the living needs rider should
be fully excludable from the gross income of the
beneficiary, as long as the beneficiary is the
insured person under the contract. However, you
should consult a qualified tax advisor about the
consequences of adding this rider to a contract or
requesting an advanced sum payment under this
rider.
Extended Maturity Option
This option allows the maturity date to be extended
indefinitely, or as long as allowed by the IRS. If the
insured is alive on the maturity date and this contract
is still in force and not in the grace period, this option
may be elected. In order to elect this option, all of
the Cash Value must be transferred to either the
General Account or the Money Market Investment
Division and the death benefit option must be elected
as Option 1. Once your policy is extended beyond
the Maturity Date, there will be no further monthly
deductions and we will only allow transfers to the
General Account or the Money Market Investment
Division. Furthermore, we will not allow any of the
following to occur:
- - Increase in the Specified Amount of Insurance
- - Changes in the Death Benefit Options
- - Premium Payments
The Extended Maturity Option election may have tax
consequences. Consult your tax advisor before
taking this election.
Automatic Benefit Increase Provision
The Automatic Benefit Increase (ABI) provision is a
contract rider that allows for face amount increases to
keep pace with inflation. All standard issues of
regularly underwritten policies issued after May 1,
1998, include the ABI provision, except where the
issue age of the primary insured is older than 55. In
addition, the ABI provision is not included where the
billing mode is military government allotment, civil
service allotment or list bill.
The ABI can automatically increase your face amount
every two years, based on increases in the Consumer
Price Index. The increases will occur on the 2nd
contract anniversary and every two years thereafter,
unless you reject an increase. The increases continue
until the rider terminates. We send you a notice
about the increase amounts at least 30 days before the
increase date. You have the right to reject any
increase in face amount by sending us a notice before
it takes effect. If you reject an increase, then the ABI
provision terminates. (See your ABI rider for exact
details.)
We calculate each face amount increase under the
ABI provision as follows:
(a) The eligible face amount, multiplied by
(b) The Consumer Price Index 5 months before the
increase date, divided by
(c) The Consumer Price Index 29 months before the
increase date, minus.
(d) The eligible face amount from part (a).
The eligible face amount is the sum of the portions of
the face amount of insurance that are in the non-
smoker, ordinary or preferred premium class.
The maximum increase is the lesser of $50,000 or
20% of the eligible face amount. The ABI provision
automatically terminates once the total of the
increases is more than twice the initial face amount.
The Consumer Price Index is the U.S. Consumer
Price Index for all urban consumers as published by
the U.S. Department of Labor. (See your policy form
for more details on this index.)
The ABI provision does not require separate monthly
charges, but it does affect the amount of your
monthly cost of insurance charge by increasing your
face amount. (See "Deductions From Your Cash
Value" on page 25.)
ABI increases also increase the planned and
minimum premiums. (See Your ABI Rider and Your
Base Contract Policy Form for exact details.)
The Automatic Benefit Increase Provision may have
tax consequences. Consult your tax advisor for
questions.
SEPARATE ACCOUNT INVESTMENT
CHOICES
Our Separate Account And Its Investment
Divisions
The "Separate Account" is our Separate Account A,
established under the insurance laws of the State of
South Dakota. It is a unit investment trust registered
with the Securities and Exchange Commission (SEC)
under the Investment Company Act of 1940 but this
registration does not involve any SEC supervision
of its management or investment policies. The
Separate Account meets the definition of a "Separate
Account" under the federal securities laws. The
Separate Account has a number of investment
divisions, each of which invests in the shares of a
corresponding portfolio of the Funds. You may
allocate part or all of your net premiums to ten of the
twenty- three five investment divisions of our
Separate Account.
The Funds
Each of the 23 25 portfolios available under the
contract is a "series" of one of the following
investment companies:
1. Fidelity's Variable Insurance Products Fund,
2. Fidelity's Variable Insurance Products Fund II,
3. Fidelity's Variable Insurance Products Fund III,
4. American Century Variable Portfolios, Inc.,
5. MFS Variable Insurance Trusts, and
6. Lord Abbett's Series Fund, Inc.
The Funds' shares are bought and sold by our
Separate Account at net asset value. More detailed
information about the Funds and their investment
objectives, policies, risks, expenses and other aspects
of their operations, appear in their prospectuses,
which accompany this prospectus.
Midland may from time to time receive revenue from
the Funds and/or from their managers. The amounts
of the revenue, if any, may be based on the amount of
Midland's investments in the Funds.
Investment Policies Of The Portfolios
Each portfolio tries to achieve a specified investment
objective by following certain investment policies. A
portfolio's objectives and policies affect its returns
and risks. Each investment division's performance
depends on the experience of the corresponding
portfolio. The objectives of the portfolios are as
follows:
Portfolio
Objective
VIP Money Market
Seeks as high a level of
current income as is
consistent with preservation
of capital and liquidity by
investing in U.S. dollar-
denominated money market
securities.
VIP High
Income
Seeks a high level of current
income by investing
primarily in income-
producing debt securities
while also considering
growth of capital. Policy
owners should understand
that the fund's unit price
may be volatile due to the
nature of the high yield
bond marketplace.
VIP Equity-Income
Seeks reasonable income by
investing primarily in
income-producing equity
securities. In choosing these
securities, the Manager will
consider the potential for
capital appreciation. The
Portfolio's goal is to achieve
a yield which exceeds the
composite yield on the
securities comprising the
Standard & Poor's
Composite Index of 500
Stocks.
VIP Growth
Seeks capital appreciation
by investing in common
stocks. The adviser invests
the fund's assets in
companies the adviser
believes have above-average
growth potential.
VIP Overseas
Seeks long-term growth of
capital, primarily through
investments in foreign
securities.
VIP II Asset Manager
Seeks high total return with
reduced risk over the long
term by allocating its assets
among domestic and foreign
stocks, bonds and short-term
instruments.
VIP II Investment
Grade Bond
Seeks a high a level of
current income as is
consistent with the
preservation of capital by
investing in U.S. dollar-
denominated investment-
grade bonds.
VIP II Contrafund
Seeks to achieve capital
appreciation over the long
term by investing in
common stocks and
securities of companies
whose value the manager
believes is not fully
recognized by the public.
VIP II
Asset Manager: Growth
Seeks to maximize total
return by allocating its
assets among stocks, bonds,
short-term instruments, and
other investments.
VIP II Index 500
Seeks to provide investment
results that correspond to the
total return of common
stocks publicly traded in the
United States by duplicating
the composition and total
return of the Standard &
Poor's Composite Index of
500 Stocks.
VIP III Growth & Income
Seeks high total return,
combining current income
and capital appreciation.
Invests mainly in stocks that
pay current dividends and
show potential for capital
appreciation.
VIP III Balanced
Seeks both income and
growth of capital. When
FMR's outlook is neutral, it
will invest approximately
60% of the fund's assets in
equity securities and will
always invest at least 25%
of the fund's assets in fixed-
income senior securities.
VIP III Growth
Opportunities
Seeks capital growth by
investing primarily in
common stocks. Although
the fund invests primarily in
common stocks, it has the
ability to purchase other
securities, including bonds,
which may be lower-quality
debt securities.
American Century
VP Capital
Appreciation
Seeks capital growth by
investing primarily in
common stocks that
management considers to
have better-than-average
prospects for appreciation.
American Century
VP Value
Seeks long-term capital
growth with income as a
secondary objective. Invests
primarily in equity securities
of well-established
companies that management
believes to be under-valued.
American Century
VP Balanced
Seeks capital growth and
current income. Invests
approximately 60 percent of
its assets in common stocks
that management considers
to have better than average
potential for appreciation
and the rest in fixed income
securities.
American Century
VP International
Seeks capital growth by
investing primarily in
securities of foreign
companies that management
believes to have potential
for appreciation.
American Century
VP Income & Growth
Seeks dividend growth,
current income and capital
appreciation. The Portfolio
will seek to achieve its
investment objective by
investing in common stocks.
MFS VIT
Emerging Growth
Seeks to provide long-term
growth of capital. Dividend
and interest income from
portfolio securities, if any, is
incidental to the Series'
investment objective of
long-term growth capital.
MFS VIT Research
Seeks to provide long-term
growth of capital and future
income.
MFS VIT Growth
with Income
Seeks to provide reasonable
current income and long-
term growth of capital and
income.
MFS VIT New
Discovery
Seeks capital appreciation.
Lord Abbett VC
Growth and Income
Lord Abbett VC Mid-
Cap Value
Lord Abbett VC
International
Seeks long-term growth of
capital and income without
excessive fluctuation in
market value.
Seeks capital appreciation
through investments,
primarily in equity securities
which are believed to be
undervalued in the
marketplace.
Seeks long-term capital
appreciation, by investing
primarily in equity securities
of non-U.S. issuers.
Fidelity Management & Research Company manages
the VIP, VIP II and VIP III portfolios. American
Century Investment Management, Inc. manages the
American Century VP Portfolios. MFS(r) Services
Company manages the MFS Variable Insurance
Trusts. Lord Abbett & Co. manages the Lord Abbett
Series Fund, Inc.
The Fund portfolios available under these contracts
are not available for purchase directly by the general
public, and are not the same as the mutual funds with
very similar or nearly identical names that are sold
directly to the public. However, the investment
objectives and policies of the portfolios are very
similar to the investment objectives and policies of
other (publicly available) mutual fund portfolios that
have very similar or nearly identical names and that
are or may be managed by the same investment
advisor or manager. Nevertheless, the investment
performance and results of any of the Funds'
portfolios that are available under the contracts may
be lower, or higher, than the investment results of
such other (publicly available) portfolios. There can
be no assurance, and no representation is made, that
the investment results of any of the available
portfolios will be comparable to the investment
results of any other portfolio or mutual fund, even if
the other portfolio or mutual fund has the same
investment advisor or manager and the same
investment objectives and policies and a very similar
or nearly identical name.
USING YOUR CASH VALUE
The Cash Value
Your cash value is the sum of your amounts in the
various investment divisions and in the General
Account (including any amount in our General
Account securing a contract loan). Your cash value
reflects various charges. See "DEDUCTIONS AND
CHARGES" on page 24. Monthly deductions are
made on the first day of each contract month.
Transaction and surrender charges are made on the
effective date of the transaction. Charges against our
Separate Account are reflected daily.
We guarantee amounts allocated to the General
Account. There is no guaranteed minimum cash
value for amounts allocated to the investment
divisions of our Separate Account. You bear that
investment risk. An investment division's
performance will cause your cash value to go up or
down.
Amounts In Our Separate Account
Amounts allocated or transferred to the investment
divisions are used to purchase accumulation units.
Accumulation units of an investment division are
purchased when you allocate premiums, repay loans
or transfer amounts to that division. Accumulation
units are redeemed when you make withdrawals, or
when you transfer amounts from an investment
division (including transfers for loans), when we
make monthly deductions and charges, and to when
we pay the death benefit. The number of
accumulation units purchased or redeemed in an
investment division is calculated by dividing the
dollar amount of the transaction by the division's
accumulation unit value at the end of that day. The
value you have in an investment division is the
accumulation unit value times the number of
accumulation units credited to you. The number of
accumulation units credited to you will not vary
because of changes in accumulation unit values.
How We Determine The Accumulation Unit Value
We determine accumulation unit values for the
investment divisions at the end of each business day.
Accumulation unit values fluctuate with the
investment performance of the corresponding
portfolios of the Funds. They reflect investment
income, the portfolio's realized and unrealized capital
gains and losses, the Funds' expenses, and our
deductions and charges. The accumulation unit value
for each investment division is set at $10.00 on the
first day there are contract transactions in our
Separate Account associated with these contracts.
After that, the accumulation unit value for any
business day is equal to the accumulation unit value
for the previous business day multiplied by the net
investment factor for that division on that business
day.
We determine the net investment factor for each
investment division every business day as follows:
- - We take the value of the shares belonging to the
division in the corresponding Fund portfolio at the
close of business that day (before giving effect to
any contract transactions for that day, such as
premium payments or surrenders). We use the
share value reported to us by the Fund.
- - We add any dividends or capital gains distributions
paid by the portfolio on that day.
- - We divide this amount by the value of the amounts
in the investment division at the close of business
on the preceding business day (after giving effect
to any contract transactions on that day).
- - We subtract a daily asset charge for each calendar
day between business days (for example, a
Monday calculation may include charges for
Saturday and Sunday). The daily charge is
.0024547%, which is an effective annual rate of
0.90%. We currently intend to reduce this charge
to 0.50% 0.25% after the 10th contract year.
(This is not guaranteed.) (See "Mortality and
Expense Risks" on page 21.)
- - We may subtract any daily charge for taxes or
amounts set aside as tax reserves.
Cash Value Transactions
The transactions described below may have different
effects on your cash value, death benefit, face amount
or cost of insurance changes. You should consider
the net effects before making any cash value
transactions. Certain transactions have fees.
Remember that upon completion of these
transactions, you may not have your cash value
allocated to more than 10 investment divisions.
Transfers Of Cash Value
You may transfer amounts among the investment
divisions and between the General Account and any
investment divisions. To make a transfer of cash
value, write to our home executive office. Currently,
you may make an unlimited number of transfers of
cash value in each contract year. But we reserve the
right to assess a $25 charge after the 12th transfer in a
contract year. If we charge you for making a transfer,
then we will allocate the charge as described under
"Deductions and Charges - How Cash Value Charges
Are Allocated" on page 26. Although a single
transfer request may include multiple transfers, it will
be considered a single transfer for fee purposes.
Transfer requests received before 3:00 p.m. (Central
Standard Time) will take affect on the same day if
that day is a business day. Otherwise, the transfer
request will take affect on the business day following
the day we receive your request. The unit values are
determined on the day the transfer takes affect.
Transfers are effected at unit values determined at the
close of business on the day the transfer takes effect.
The minimum transfer amount is $200. The
minimum amount does not have to come from or be
transferred to just one investment division. The only
requirement is that the total amount transferred that
day equals the transfer minimum.
The total amount that can be transferred from the
General Account to the Separate Account, in any
contract year, cannot exceed the larger of:
1. 25% of the unloaned amount in the General
Account at the beginning of the contract year, or
2. $25,000 1,000; on a current basis we will allow
$25,000 (This is not guaranteed).
These limits do not apply to transfers made in a
Dollar Cost Averaging program that occurs over a
time period of 12 or more months.
Dollar Cost Averaging
The Dollar Cost Averaging (DCA) program enables
you to make monthly transfers of a predetermined
dollar amount from the DCA source account (any
investment division or the General Account) into one
or more of the investment divisions. By allocating
monthly, as opposed to allocating the total amount at
one time, you may reduce the impact of market
fluctuations. This plan of investing does not insure a
profit or protect against a loss in declining markets.
The minimum monthly amount to be transferred
using DCA is $200.
You can elect the DCA program at any time. You
must complete the proper request form, and there
must be a sufficient amount in the DCA source
account. The minimum amount required in the DCA
source account for DCA to begin is the sum of $2,400
and the minimum premium. You can get a sufficient
amount by paying a premium with the DCA request
form, allocating premiums, or transferring amounts to
the DCA source account. The DCA election will
specify:
a. The DCA source account from which DCA
transfers will be made,
b. That any money received with the form is to be
placed into the DCA source account,
c. The total monthly amount to be transferred to the
other investment divisions, and
d. How that monthly amount is to be allocated
among the investment divisions.
The DCA request form must be received with any
premium payments you intend to apply to DCA.
Once DCA is elected, additional premiums can be
deposited into the DCA source account by sending
them in with a DCA request form. All amounts in the
DCA source account will be available for transfer
under the DCA program.
Any premium payments received while the DCA
program is in effect will be allocated using the
allocation percentages from the DCA request form,
unless you specify otherwise. You may change the
DCA allocation percentages or DCA transfer amounts
twice during a contract year.
If it is requested when the contract is issued, then
DCA will start at the beginning of the 2nd contract
month. If it is requested after issue, then DCA will
start at the beginning of the 1st contract month which
occurs at least 30 days after the request is received.
DCA will last until the value in the DCA source
account falls below the allowable limit or until we
receive your written termination request. DCA
automatically terminates on the maturity date.
Transfers made through a DCA program which only
extends for fewer than 12 months will be included in
counting the number of transfer of Cash Value.
We reserve the right to end the DCA program by
sending you one month's notice.
Portfolio Rebalancing
The Portfolio Rebalancing Option allows
policyowners, who are not participating in a Dollar
Cost Averaging program, to have the Company
automatically reset the percentage of cash value
allocated to each investment division to a pre-set
level. For example, you may wish to specify that
30% of your cash value be allocated to the VIP
Growth Investment Division, 40% in the VIP High
Income Investment Division and 30% in the VIP II
Overseas Investment Division. Over time, the
variations in the investment division's investment
results will shift the percentage allocations of your
cash value. If you elect this option, then at each
contract anniversary, we will transfer amounts needed
to "re-balance" the cash value to the specified
percentages selected by you. Rebalancing is not
available to amounts in the General Account.
Rebalancing may result in transferring amounts from
an investment division earning a relatively high
return to one earning a relatively low return.
Even with a Portfolio Rebalancing Option, you can
only allocate your total cash value in up to at most 10
investment divisions. We reserve the right to end the
Portfolio Rebalancing Option by sending you one
month's notice. Contact us at our Executive Office to
elect the Portfolio Rebalancing Option.
Contract Loans
If your contract has a TSA Life 403(b) Endorsement,
contract loans are not available and this section is not
applicable to your contract. Whenever your contract
has a net cash surrender value, you may borrow up to
92% of the cash surrender value using only your
contract as security for the loan. If you request an
additional loan, then the outstanding loan and loan
interest will be added to the additional loan amount
and the original loan will be canceled. Thus, you will
only have one outstanding loan.
We pay you interest on this loaned amount, currently
at an annual rate of 6.0% 3.5%. After the 10th
contract year, we guarantee that the annual rate of
interest paid on the loaned portion of the cash value
will equal 8% (which is equal to the interest rate
charged on the contract loan) for the portion of the
loan that is from earnings (that is, the portion that
does not exceed the cash value minus total premiums
paid).
A loan taken from, or secured by, a contract may
have federal income tax consequences. See "TAX
EFFECTS" on page 34.
You may request a loan by contacting our home
executive office. You should tell us how much of the
loan you want taken from your unloaned amount in
the General Account or from the Separate Account
investment divisions. If you do not tell us how to
allocate your loan, the loan will be allocated
according to your deduction allocation percentages as
described under "How Cash Value Charges Are
Allocated" on page 26. If the loan cannot be
allocated this way, then we will allocate it in
proportion to the unloaned amounts of your cash
value in the General Account and each investment
division. We will redeem units from each investment
division equal in value to the amount of the loan
allocated to that investment division (and transfer
these amounts to the General Account).
Contract Loan Interest. Currently interest on a
contract loan accrues daily at an annual interest rate
of 8% 5.5%. We guarantee that this rate will not
exceed 8%.
After the 10th contract year, we guarantee that the
annual rate of interest charged on the contract loan
will equal 3.5% (which is equal to the interest rate
paid on the loaned portion of the cash value) for the
portion of the loan that is from earnings (the earnings
of the policy is equal to the cash value minus total
premiums paid).
Interest is due on each contract anniversary. If you
do not pay the interest when it is due, then it will be
added to your outstanding loan and allocated based
on the deduction allocation percentages for your cash
value. This means we make an additional loan to pay
the interest and will transfer amounts from the
General Account or the investment divisions to make
the loan. If we cannot allocate the interest based on
these percentages, then we will allocate it as
described above for allocating your loan.
Repaying The Loan. You may repay all or part of a
contract loan while your contract is in force. While
you have a contract loan, we assume that any money
you send us is meant to repay the loan. If you wish to
have any of these payments serve as premium
payments, then you must tell us in writing.
You may choose how you want us to allocate your
repayments. If you do not give us instructions, we
will allocate your repayments based on your premium
allocation percentages.
The Effects Of A Contract Loan On Your Cash Value.
A loan against your contract will have a permanent
effect on your cash value and benefits, even if the
loan is repaid. When you borrow on your contract,
we transfer your loan amount into our General
Account where it earns a declared rate of interest.
You cannot invest that loan amount in any Separate
Account investment divisions. You may earn more
or less on the loan amount, depending on the
performance of the investment divisions and whether
they are better or worse than the rates declared for the
unloaned portion of the General Account.
Your Contract May Lapse. Your loan may affect the
amount of time that your contract remains in force.
For example, your contract may lapse because the
loaned amount cannot be used to cover the monthly
deductions that are taken from your cash value. If
these deductions are more than the net cash surrender
value of your contract, then the contract's lapse
provisions may apply. Since the contract permits
loans up to 92% of the cash surrender value, loan
repayments or additional premium payments may be
required to keep the contract in force, especially if
you borrow the maximum.
Withdrawing Money From Your Cash Value
You may request a partial withdrawal of your net
cash surrender value by writing to our home
executive office. You will not incur a deferred sales
charge or deferred issue charge. Partial withdrawals
are subject to certain conditions. They must:
- - be at least $200,
- - total no more than 50% of the net cash surrender
value in any contract year,
- - allow the death benefit to remain above the
minimum for which we would issue the contract at
that time,
- - allow the contract to still qualify as life insurance
under applicable tax law.
You may specify how much of the withdrawal you
want taken from each investment division. If you do
not tell us, then we will make the withdrawal as
described in "Deductions and Charges - How Cash
Value Charges Are Allocated" on page 26.
Withdrawal Charges. When you make a partial
withdrawal more than once in a contract year, a
charge of $25 (or 2% of the amount withdrawn,
whichever is less), will be deducted from your cash
value. If you do not give us instructions for
deducting the charge, then it will be deducted as
described under "Deductions and Charges - How
Cash Value Charges Are Allocated" on page 26.
In general, we do not permit you to make a
withdrawal on monies for which your premium check
has not cleared your bank.
The Effects Of A Partial Withdrawal. A partial
withdrawal reduces the amount in your cash value,
the cash surrender value and generally the death
benefit on a dollar-for-dollar basis. If the death
benefit is based on the corridor percentage multiple,
then the death benefit reduction could be greater. If
you have death benefit option 1, then we will also
reduce the face amount of your contract so that there
will be no change in the net amount at risk. We will
send you a new contract information page to reflect
this change. Both the withdrawal and any reductions
will be effective as of the date we receive your
request at our home executive office.
A contract loan might be better than a partial
withdrawal if you need temporary cash.
Surrendering Your Contract
You may surrender your contract for its net cash
surrender value while the insured person is living.
You do this by sending both a written request and the
contract to our home executive office. The net cash
surrender value equals the cash surrender value minus
any loan outstanding (including loan interest).
During the first 12 10 contract years, the cash
surrender value is the cash value minus the surrender
charge. After 12 10 years, the cash surrender value
equals the cash value. We will compute the net cash
surrender value as of the date we receive your request
and contract at our home executive office. All of
your insurance coverage will end on that date.
THE GENERAL ACCOUNT
You may allocate all or some of your cash value to
the General Account. The General Account pays
interest at a declared rate. We guarantee the principal
after deductions. The General Account supports our
insurance and annuity obligations. Because of
applicable exemptive and exclusionary provisions,
interests in the General Account have not been
registered under the Securities Act of 1933, and
the General Account has not been registered as an
investment company under the Investment
Company Act of 1940. Accordingly, neither the
General Account nor any interests therein are
generally subject to regulation under the 1933 Act
or the 1940 Act. We have been advised that the
staff of the SEC has not made a review of the
disclosures which are included in this prospectus
for your information and which relate to the
General Account.
You may accumulate amounts in the General
Account by:
- - allocating net premium and loan payments,
- - transferring amounts from the investment
divisions,
- - securing any contract loans, or
- - earning interest on amounts you already have in
the General Account.
This amount is reduced by transfers, withdrawals and
allocated deductions.
We pay interest on all your amounts in the General
Account. The annual interest rates will never be less
than 3.5%. We may, at our sole discretion, credit
interest in excess of 3.5%. You assume the risk that
interest credited may not exceed 3.5%. We may pay
different rates on unloaned and loaned amounts in the
General Account. Interest compounds daily at an
effective annual rate that equals the annual rate we
declared.
You may request a transfer between the General
Account and one or more of the investment divisions,
within limits. See "Transfers of Cash Value".
DEDUCTIONS AND CHARGES
Deductions From Your Premiums
We deduct a sales charge premium load, a premium
tax charge , and in some cases a service charge from
each premium. The rest of each premium (called the
net premium) is placed in your cash value.
Sales Charge. We deduct a 2.5% 5.0% premium load
sales charge from each premium payment. We
currently intend to eliminate this charge after the 15th
contract year. (This is not guaranteed). This charge
partially reimburses us for premium taxes we incur,
and for the selling and distributing costs of this
contract. These include commissions and the costs of
preparing sales literature and printing prospectuses.
(We also deduct a deferred sales surrender charge if
you surrender your contract for its net cash surrender
value or let your contract lapse in the first 12 10
years. See "Surrender Charges" on page 27.)
Premium Tax Charge. Some states and other
jurisdictions (cities, counties, municipalities) tax
premium payments and some levy other charges. We
deduct 2.5% of each premium for those tax charges.
These tax rates currently range from 0.75% to 4%.
We expect to pay at least 2.5% of most premiums in
premium tax because of certain retaliatory provisions
in the premium tax regulations. If we pay less, then
we may reduce the charge for that premium.
This is a tax to Midland so you cannot deduct it on
your income tax return. Since the charge is a
percentage of your premium, the amount of the
charge will vary with the amount of the premium.
We may increase this charge if our premium tax
expenses increase. We reserve the right to vary this
charge by state. If we make such a change, then we
will notify you.
Service Charge. If you have chosen the Civil Service
Allotment Mode, then we deduct $.46 from each
premium payment. The $.46 covers the extra
expenses we incur in processing bi-weekly premium
payments.
Charges Against The Separate Account
Fees and charges allocated to the investment
divisions reduce the amount in your cash value.
Mortality and Expense Risks. We charge for
assuming mortality and expense risks. We guarantee
that monthly administrative and insurance deductions
from your cash value will never be greater than the
maximum amounts shown in your contract. The
mortality risk we assume is that insured people will
live for shorter periods than we estimated. When this
happens, we have to pay a greater amount of death
benefits than we expected. The expense risk we
assume is that the cost of issuing and administering
contracts will be greater than we expected. We
charge for mortality and expense risks at an effective
annual rate of 0.90% of the value of the assets in the
Separate Account attributable to Variable Executive
Universal Life 2 . We currently intend to reduce this
charge to 0.50% 0.25% after the 10th contract year
(this is not guaranteed). The investment divisions'
accumulation unit values reflect this charge. See
"Using Your Cash Value - How We Determine The
Accumulation Unit Value" on page 19. If the money
we collect from this charge is not needed, then we
profit. We expect to make money from this charge.
To the extent sales expenses are not covered by the
sales charge premium load and the deferred sales
surrender charge, our General Account funds, which
may include amounts derived from this mortality and
expense risk charge, will be used to cover sales
expenses.
Tax Reserve. We reserve the right to charge for taxes
or tax reserves, which may reduce the investment
performance of the investment divisions. Currently,
no such charge is made.
Deductions From Your Cash Value
At the beginning of each contract month (including
the contract date), the following three deductions are
taken from your cash value:
1. Expense Charge: This charge is $6.00 per
month (currently we plan to make this deduction
for the first 15 years only, but we reserve the
right to deduct it throughout the life of the
contract). This charge covers the continuing costs
of maintaining your contract, such as premium
billing and collections, claim processing, contract
transactions, record keeping, communications
with owners and other expense and overhead
items.
2. Charges for Additional Benefits: Monthly
deductions are made for the cost of any additional
benefits. We may change these charges, but your
contract contains tables showing the guaranteed
maximum rates for all of these insurance costs.
3. Cost of Insurance Charge: The cost of
insurance is our current monthly cost of
insurance rate times the amount at risk at the
beginning of the contract month. If the current
death benefit for the month is increased due to
the requirements of Federal tax law, then your
amount at risk for the month will also increase.
For this purpose, your cash value amount is
determined before deduction of the cost of
insurance charge, but after all of the other
deductions due on that date. The amount of the
cost of insurance charge will vary from month to
month with changes in the amount at risk.
The cost of insurance rate is based on the sex,
attained age, and rating class of the insured person at
the time of the charge. We place the insured person
that is a standard risk in the following rate classes:
preferred non-smoker, non-smoker, and smoker. The
insured person may also be placed in a rate class
involving a higher mortality risk, known as a
substandard class. We may change the cost of
insurance rates, but they will never be more than the
guaranteed maximum rates set forth in your contract.
The maximum charges are based on the charges
specified in the Commissioner's 1980 Standard
Ordinary Mortality Table. The table below shows the
current and guaranteed maximum monthly cost of
insurance rates per $1,000 of amount at risk for a
male, preferred, nonsmoker, standard risk at various
ages. (In Montana, there are no distinctions based on
sex.)
If Variable Executive Universal Life 2 is purchased
in connection with an employment-related insurance
or benefit plan, employers and employee
organizations should consider, in consultation with
counsel, the impact of Title VII of the Civil Rights
Act of 1964. In 1983, the United States Supreme
Court held that under Title VII, optional annuity
benefits under a deferred compensation plan could
not vary on the basis of sex.
Illustrative Table of Monthly Cost of Insurance Rates
(Rounded) per $1,000 of Amount at Risk
Male Guaranteed Current
Attained Maximum (Preferred Non-Smoker)
Age Rate Rate
5 $.07 $.05
15 .11 .10
25 .13 .07
35 .14 .08 .07
45 .29 .17 .14
55 .69 .36 .29
65 1.87 .74 .68
For a male preferred non-smoker, age 35, with a
$100,000 $150,000 face amount option 1 contract and
an initial premium of $1,000, the cost of insurance
for the first month will be $7.92 $10.43. This
example assumes the expense charge ($6.00 per
month) and current cost of insurance rate ( $0.8 $.07
per $1,000).
The non-smoker cost of insurance rates are lower
than the smoker cost of insurance rates. To qualify,
an insured must be a standard risk and must meet
additional requirements that relate to smoking habits.
The reduced cost of insurance rates depends on such
variables as the attained age and sex of the insured.
The preferred non-smoker cost of insurance rates are
lower than the non-smoker cost of insurance rates.
To qualify for the preferred non-smoker class, the
insured person must be age 20 or over and meet
certain underwriting requirements.
Changes in Monthly Charges. Any changes in the
cost of insurance, charges for additional benefits or
expense charges will be by class of insured and will
be based on changes in future expectations of
investment earnings, mortality, the length of time
contracts will remain in effect, expenses and taxes.
Automatic Benefit Increase Charges. There is no
separate charge for the Automatic Benefit Increase
(ABI) provision. However, as the automatic increases
are applied (see page 15 for exact details) the face
amount of insurance will increase. The face amount
increase will cause an increase in the amount at risk
and the monthly cost of insurance charge.
Transaction Charges
In addition to the deductions described above, we
charge fees for certain contract transactions:
- - Partial Withdrawal of Net Cash Surrender Value.
You may make one partial withdrawal during each
contract year without a charge. There is an
administrative charge of $25 or 2 percent of the
amount withdrawn, whichever is less, each time
You make a partial withdrawal if more than one
withdrawal is made during a contract year.
- - Transfers. Currently, we do not charge when You
make transfers of cash value among investment
divisions. We reserve the right to assess a $25
charge after the twelfth transfer in a contract year.
How Cash Value Charges Are Allocated
Generally, deductions from your cash value for
monthly or partial withdrawal charges are made from
the investment divisions and the unloaned portion of
the General Account. They are made in accordance
with your specified deduction allocation percentages
unless you instruct us otherwise. Your deduction
allocation percentages may be any whole numbers
(from 10 to 100) which add up to 100. You may
change your deduction allocation percentages by
writing to our home executive office.
Changes will be effective as of the date we receive
them.If we cannot make a deduction in accordance with
these percentages, we will make it based on the
proportion of (a) to (b) where (a) is your unloaned
amounts in the General Account and your amounts in
the investment divisions and (b) is the total unloaned
amount of your cash value.
Deductions for transfer charges are made equally
between the investment divisions from which the
transfer was made. For example, if the transfer is
made from two investment divisions, then the transfer
charge assessed to each of the investment divisions
will be $12.50.
Surrender Charges
We incur various sales and promotional expenses in
selling Variable Executive Universal Life 2 . These
include commissions, the cost of preparing sales
literature, promotional activities and other
distribution expenses. We also incur expenses for
underwriting, printing contract forms and
prospectuses, and entering information in our records.
The surrender charge is the difference between the
amount in your cash value and your contract's cash
surrender value for the first 12 10 contract years. It is
a contingent, deferred issue charge and sales load
designed to partially recover our expenses in
distributing and issuing contracts which are
terminated by surrender in their early years (the sales
charge premium load is also designed to partially
reimburse us for these expenses). It is a contingent
load because you pay it only if you surrender your
contract (or let it lapse) during the first 12 10 contract
years. It is a deferred load because we do not deduct
it from your premiums. The amount of the load
charge in a contract year is not necessarily related to
our actual sales expenses in that year. We anticipate
that the sales charge premium load and surrender
charge will not fully cover our sales expenses. If sales
expenses are not covered by the sales premium load
and surrender charges, we will cover them with other
funds. The net cash surrender value, the amount we
pay you if you surrender your contract for cash,
equals the cash surrender value minus any
outstanding loan and loan interest.
The surrender charge includes deferred sales charges
and deferred issue charges. The deferred sales charge
is the sum of two pieces:
- - 27.5% of any premium payment in the first 2
contract years up to one guideline annual
premium.
- - 6.5% of all other premium payments.
The sum of the above pieces is also limited by the
Guideline Annual Premium, times 6.5%, times the
lesser of 20 years or the expected future lifetime at
issue as determined by the 1980 CSO Mortality
Table. Your contract information page specifies the
guideline annual premium. It varies for each
contract.
During the first 7 contract years, the maximum
deferred sales charge may be imposed. Beginning in
the 8th year the maximum deferred sales charge will
be multiplied by a percentage:
Contract Year Percentage Multiple
8 83.33%
9 66.67%
10 50.00%
11 33.33%
12 16.67%
13 and up 0.00%
If there is an increase in face amount, there will also
be an increase in the Guideline Annual Premium. All
additions to the deferred sales charge, due to this
increase, will be 6.5% of premiums. The maximum
limit will also increase by the additional Guideline
Annual Premium, times 6.5%, times the lesser of 20
years or the expected future lifetime (determined at
the time of the increase using the 1980 CSO
Mortality Table). The total in the deferred sales
charge prior to the increase in face amount will not be
affected.
If there is a decrease in the face amount, there will
also be a decrease in Guideline Annual Premium.
Future additions to the Deferred Sales Charge will
follow the same rules as at issue with the new
Guideline Annual Premium. Prior totals in the
Deferred Sales Charge will not be affected.
You will not incur any Deferred Sales Charge,
regardless of the amount and timing of premiums, if
You keep this contract in force for thirteen years.
The following table shows the deferred issue charge
per $1,000 of the face amount. After the 12th
contract year, there is no deferred issue charge.
Table of Deferred Issue Charges
Per Thousand of Face Amount
Contract
Year Charge
1-7 $3.00
8 $2.50
9 $2.00
10 $1.50
11 $1.00
12 $0.50
The first year surrender charge varies by the issue
age, sex and class of the insured at the time the policy
is issued. The maximum charge for your policy per
$1,000 of face amount is the first year charge. The
first year charge, on a per $1,000 of face amount
basis, gradually decreases over the 10 year surrender
charge period and is $0.00 after the 10th contract year.
The following table provides some examples of the
first year surrender charge. The maximum first year
surrender charge for all issue ages, sexes, and classes
is $52.50 per $1,000. The $52.50 per $1,000
surrender charge occurs for males issued at a smoker
class with issue ages at 63 or older. Your contract
will specify the actual surrender charge rate, per
$1,000 of face amount, for all durations in the 10 year
surrender charge period. The table below is only
provided to give you an idea of the level of first year
surrender charges for a few sample issue ages, sexes
and classes.
Table of First Year Surrender Charges
Per $1,000 of Face Amount
Surrender Charge Per
Issue Age Sex Class $1,000 of Face Amount
15 Male Preferred Non-Smoker $13.00
15 Female Preferred Non-Smoker $13.50
35 Male Non-Smoker $19.00
35 Male Smoker $23.00
55 Female Non-Smoker $32.50
55 Female Smoker $37.00
65 Male Preferred Non-Smoker $50.00
65 Male Smoker $52.50
If there has been a change in face amount during the
life of the contract, then the surrender charge is
applied against the highest face amount in force
during the time from the issue date until the time of
surrender. Your contract will specify your actual
surrender charge rates per $1,000 of face amount.
Charges In The Funds
The Funds charge for managing investments and
providing services. Each portfolio's charges vary.
The VIP, the VIP II, and the VIP III Portfolios have
an annual management fee. That fee is the sum of an
individual fund fee rate and a group fee rate based on
the monthly average net assets of Fidelity
Management & Research Company's mutual funds.
In addition, each of these portfolios' total operating
expenses includes fees for management and
shareholder services and other expenses (custodial,
legal, accounting, and other miscellaneous fees). See
the VIP, VIP II and VIP III prospectuses for
additional information on how these charges are
determined and on the minimum and maximum
charges allowed. All expenses for the year ending
December 31, 1998, are shown in the table below.
The American Century Variable Portfolios have
annual management fees that are based on the
monthly average of the net assets in each of the
portfolios. See the American Century Variable
Portfolios prospectus for details. The expenses for
the year ending December 31, 1998, (except as
otherwise noted) are shown in the table below.
The MFS Portfolios have annual management fees
that are based on the monthly average of the net
assets in each of the portfolios. See the MFS
Portfolios prospectus for details. The expenses for the
year ending December 31, 1998, (except as otherwise
noted) are shown in the table below.
The Lord Abbett Portfolio has an annual management
fee that is based on the monthly average of the net
assets in the portfolio. See the Lord Abbett Portfolio
prospectus for details.
The expenses for all of the portfolios for the year
ending December 31, 1998, (except as otherwise
noted) are shown in the table below.
Management Other Total
Portfolio Fee Expenses
Expenses
VIP Money Market .20% .10% .30%
VIP High Income .58% .12% .70%
VIP Equity-Income(1).49% .09% .58%
VIP Growth(1) .59% .09% .68%
VIP Overseas(1) .74% .17% .91%
VIP II Asset Manager(1) .54% .10% .64%
VIP II Investment
Grade Bond .43% .14% .57%
VIP II Contrafund(1).59% .11% .70%
VIP II Asset
Manager: Growth(1).59% .14% .73%
VIP II Index 500(1) .24% .11% .35%
VIP III Growth &
Income(1) .49% .12% .61%
VIP III Balanced(1) .44% .15% .59%
VIP III Growth
Opportunities(1) .59% .12% .71%
American Century VP
Capital Appreciation 1.00% .00% 1.00%
American Century VP
Value 1.00% .00% 1.00%
American Century VP
Balanced 1.00% .00% 1.00%
American Century VP
International 1.47% .00% 1.47%
American Century VP
Income & Growth .70% .00% .70
MFS VIT Emerging
Growth(3) .75% .10% .85%
MFS VIT Research(3) .75% .11% .86%
MFS VIT Growth
With Income(3) .75% .13% .88%
MFS VIT New
Discovery(2) (3) .90% .27% 1.17%
Lord Abbett VC
Growth and Income .50% .01% .51%
Lord Abbett VC Mid-
Cap Value(4) (5) .75% .35% 1.10%
Lord Abbett VC
International(4) (5) 1.00% .35% 1.35%
(1) The portfolio used a portion of its paid brokerage commissions
to reduce its expenses. Certain portfolios used credits gained as a
result of uninvested cash balances to reduce custodian and
transfer agent expenses. Including these reductions, total
operating expenses would have been as follows:
VIP Equity-Income 0.57%
VIP Growth 0.66%
VIP Overseas 0.89%
VIP II Asset Manager 0.63%
VIP II Index 500 0.28%
VIP II Contrafund 0.66%
VIP II Asset Manager: Growth 0.72%
VIP III Balanced 0.58%
VIP III Growth Opportunities 0.70%
VIP III Growth & Income 0.60%
(2) MFS has agreed to bear expenses for this portfolio (subject to
reimbursement by these portfolios) such that the portfolio's other
expenses shall not exceed 0.25%. Without this limitation, the
other expenses and total expenses would be:
Other Total
Expenses Expenses
MFS VIT New Discovery 4.32% 5.22%
(3) Each of the MFS 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. Each series may enter into other such
arrangements and directed brokerage arrangements, which would
also have the effect of reducing the series' expenses. The
expenses shown above do not take into account these expense
reductions, and are therefore higher than the actual expenses of
the series.
(4) The expense figures shown for these portfolios are based on
estimated expenses for 1999 since the portfolios were not in
existence during 1998.
(5) Lord Abbett & Co. has entered into an expense reimbursement
agreement with Lord Abbett VC Mid-Cap Value and Lord Abbett
VC International under which Lord, Abbett & Co. will reimburse
each portfolio if and to the extent such portfolios' Other Expenses
(excluding management fees) exceed or would otherwise exceed
.35%.
ADDITIONAL INFORMATION ABOUT THE
CONTRACTS
Your Right To Examine The Contract
You have a right to examine the contract. If for any
reason you are not satisfied with it, then you may
cancel the contract. You cancel the contract by
sending it to our home executive office along with a
written cancellation request. Your cancellation
request must be postmarked by the latest of the
following three dates:
- - 10 days after you receive your contract,
- - 10 days after we mail you a written notice telling
you about your rights to cancel (Notice of
Withdrawal Right), or
- - 45 days after you sign Part 1 of the contract
application.
If you cancel your contract, then we will return all of
the charges deducted from your paid premiums and
cash value, plus the cash value.
Insurance coverage ends when you send your request.
Your Contract Can Lapse
Your Variable Executive Universal Life 2 insurance
coverage continues as long as the net cash surrender
value of your contract is enough to pay the monthly
deductions that are taken out of your cash value.
During the Minimum Premium Period, coverage
continues if your paid premiums exceed the schedule
of required minimum premiums. If neither of these
conditions is true at the beginning of any contract
month, we will send written notification to you and
any assignees on our records that a 61-day grace
period has begun. This will tell you the amount of
premium payment that is needed to satisfy the
minimum requirement for two months.
If we receive payment of this amount before the end
of the grace period, then we will use that amount to
pay the overdue deductions. We will put any
remaining balance in your cash value and allocate it
in the same manner as your previous premium
payments.
If we do not receive payment within 61 days, then
your contract will lapse without value. We will
withdraw any amount left in your cash value. We
will apply this amount to the deductions owed to us,
including any applicable surrender charge. We will
inform you and any assignee that your contract has
ended without value.
If the insured person dies during the grace period, we
will pay the insurance benefits to the beneficiary,
minus any loan, loan interest, and overdue
deductions.
You May Reinstate Your Contract
You may reinstate the contract within five years after
it lapses if you did not surrender the contract for its
net cash surrender value. To reinstate the contract,
you must:
- - complete an application for reinstatement,
- - provide evidence that the insured person is still
insurable,
- - pay enough premium to cover all overdue monthly
deductions, including the premium tax on those
deductions,
- - increase the cash value so that the cash value
minus any contract debt equals the surrender
charges,
- - cover the next two months' deductions, and
- - pay or restore any contract debt.
The contract date of the reinstated contract will be the
beginning of the contract month that coincides with
or follows the date that we approve your
reinstatement application. Previous loans will not be
reinstated.
Contract Periods And Anniversaries
We measure contract years, contract months, and
contract anniversaries from the contract date shown
on your contract information page. Each contract
month begins on the same day in each calendar
month. The calendar days of 29, 30, and 31 are not
used. Our right to challenge a contract and the
suicide exclusion are measured from the contract
date. See "Limits On Our Right To Challenge The
Contract" on page 32.
Maturity Date
The maturity date is the first contract anniversary
after the insured person's 100th birthday. The
contract ends on that date if the insured person is still
alive and the maturity benefit is paid.
If the insured person survives to the maturity date and
you would like to continue the contract, we will
extend the maturity date as long as this contract still
qualifies as life insurance according to the Internal
Revenue Service and your state.
In order to extend the maturity date, all of the
following conditions must be satisfied:
(a) The policy can not be in the grace period;
(b) All of the cash value must be transferred to either
the General Account or the Money Market
Investment Division;
(c) The death benefit option must be elected as
Option 1
(See the Extended Maturity Option section on page
15 for further details about this option).
If the maturity date is extended, the contract may not
qualify as life insurance and there may be tax
consequences. A tax advisor should be consulted
before you elect to extend the maturity date. In order
to continue the contract beyond the original maturity
date, we require that the death benefit not exceed the
cash value on the original maturity date.
We Own The Assets Of Our Separate Account
We own the assets of our Separate Account and use
them to support your contract and other variable life
contracts. We may permit charges owed to us to stay
in the Separate Account. Thus, we may also
participate proportionately in the Separate Account.
These accumulated amounts belong to us and we may
transfer them from the Separate Account to our
General Account. The assets in the Separate Account
generally are not chargeable with liabilities arising
out of any other business we conduct. Under certain
unlikely circumstances, one investment division of
the Separate Account may be liable for claims
relating to the operations of another division.
Changing the Separate Account
We have the right to modify how we operate our
Separate Account. We have the right to:
- - add investment divisions to, or remove investment
divisions from, our Separate Account;
- - combine two or more divisions within our Separate
Account;
- - withdraw assets relating to Variable Executive
Universal Life 2 from one investment division and
put them into another;
- - eliminate the shares of a portfolio and substitute
shares of another portfolio of the Funds or another
open-end investment company. This may happen
if the shares of the portfolio are no longer
available for investment or, if in our judgment,
further investment in the portfolio is inappropriate
in view of the purposes of Separate Account A;
- - register or end the registration of our Separate
Account under the Investment Company Act of
1940;
- - operate our Separate Account under the direction
of a committee or discharge such a committee at
any time (the committee may be composed
entirely of interested parties of Midland);
- - disregard instructions from contract owners
regarding a change in the investment objectives of
the portfolio or the approval or disapproval of an
investment advisory contract. (We would do so
only if required by state insurance regulatory
authorities or otherwise pursuant to insurance law
or regulation); and
- - operate our Separate Account or one or more of
the investment divisions in any other form the law
allows, including a form that allows us to make
direct investments. In choosing these investments,
we will rely on our own or outside counsel for
advice. In addition, we may disapprove of any
change in investment advisors or in investment
policies unless a law or regulation provides
differently.
Limits On Our Right To Challenge The Contract
We can challenge the validity of your insurance
contract (based on material misstatements in the
application) if it appears that the insured person is not
actually covered by the contract under our rules.
There are limits on how and when we can challenge
the contract:
- - We cannot challenge the contract after it has been
in effect, during the insured person's lifetime, for
two years from the date the contract was issued or
reinstated. (Some states may require us to measure
this in some other way.)
- - We cannot challenge any contract change that
requires evidence of insurability (such as an
increase in face amount) after the change has been
in effect for two years during the insured person's
lifetime.
- - We can challenge at any time (and require proof of
continuing disability) an additional benefit that
provides benefits to the insured person in the event
that the insured person becomes totally disabled.
If the insured person dies during the time that we may
challenge the validity of the contract, then we may
delay payment until we decide whether to challenge
the contract.
If the insured person's age or sex is misstated on any
application, then the death benefit and any additional
benefits will be changed. They will be those which
would be purchased by the most recent deduction for
the cost of insurance and the cost of any additional
benefits at the insured person's correct age and sex.
If the insured person commits suicide within two
years after the date on which the contract was issued
or reinstated, then the death benefit will be limited to
the total of all paid premiums minus the amount of
any outstanding contract loan and loan interest minus
any partial withdrawals of net cash surrender value.
If the insured person commits suicide within two
years after the effective date of your requested face
amount increase, then we will pay the face amount
which was in effect before the increase, plus the
monthly cost of insurance deductions for the increase
(Some states require us to measure this time by some
other date).
Your Payment Options
You may choose for contract benefits and other
payments (such as the net cash surrender value or
death benefit) to be paid immediately in one lump
sum or in another form of payment. Payments under
these options are not affected by the investment
performance of any investment division. Instead,
interest accrues pursuant to the option chosen. If you
do not arrange for a specific form of payment before
the insured person dies, then the beneficiary will have
this choice. However, if you do make an
arrangement with us for how the money will be paid,
then the beneficiary cannot change your choice.
Payment options will also be subject to our rules at
the time of selection. Our consent is required when
an optional payment is selected and the payee is
either an assignee or not a natural person (i.e., a
corporation). Currently, these alternate payment
options are only available if the proceeds applied are
more than $1,000 and periodic payments are at least
$20.
You have the following payment options:
1. Deposit Option: The money will stay on deposit
with us for a period that we agree upon. You will
receive interest on the money at a declared interest
rate.
2. Installment Options: There are two ways that
we pay installments:
a. Fixed Period: We will pay the amount applied
in equal installments plus applicable interest,
for a specified time, up to 30 years.
b. Fixed Amount: We will pay the sum in
installments in an amount that we agree upon.
We will continue to pay the installments until
we pay the original amount, together with any
interest you have earned.
3. Monthly Life Income Option: We will pay the
money as monthly income for life. You may
choose from 1 of 4 ways to receive the income.
We will guarantee payments for:
(1) at least 5 years (called "5 Years Certain");
(2) at least 10 years (called "10 Years
Certain");
(3) at least 20 years (called "20 Years
Certain"); or
(4) payment for life. With a life only payment
option, payments will only be made as
long as the payee is alive. Therefore, if
the payee dies after the first payment,
only one payment will be made.
4. Other: You may ask us to apply the money under
any option that we make available at the time the
benefit is paid.
We guarantee interest under the deposit and
installation options at 2.75% a year, but we may
allow a higher rate of interest.
The beneficiary, or any other person who is entitled
to receive payment, may name a successor to receive
any amount that we would otherwise pay to that
person's estate if that person died. The person who is
entitled to receive payment may change the successor
at any time.
We must approve any arrangements that involve
more than one of the payment options, or a payee
who is a fiduciary or not a natural person. Also, the
details of all arrangements will be subject to our rules
at the time the arrangements take effect. These
include:
- - rules on the minimum amount we will pay under
an option,
- - minimum amounts for installment payments,
- - withdrawal or commutation rights (your rights to
receive payments over time, for which we may
offer you a lump sum payment),
- - the naming of people who are entitled to receive
payment and their successors, and
- - the ways of proving age and survival.
You will choose a payment option (or any later
changes) and your choice will take effect in the same
way as it would if you were changing a beneficiary.
(See "Your Beneficiary" below). Any amounts that
we pay under the payment options will not be subject
to the claims of creditors or to legal process, to the
extent that the law provides.
Your Beneficiary
You name your beneficiary in your contract
application. The beneficiary is entitled to the
insurance benefits of the contract. You may change
the beneficiary during the insured person's lifetime
by writing to our home executive office. If no
beneficiary is living when the insured person dies,
then we will pay the death benefit, in equal shares, to
the insured person's surviving children. If there are
no surviving children, then we will pay the death
benefit to the insured person's estate.
Assigning Your Contract
You may assign your rights in this contract. You
must send a copy of the assignment to our home
executive office. We are not responsible for the
validity of the assignment or for any payment we
make or any action we take before we receive notice
of the assignment. An absolute assignment is a
change of ownership. There may be tax
consequences.
When We Pay Proceeds From This Contract
We will generally pay any death benefits, net cash
surrender value, or loan proceeds within seven days
after receiving the required form(s) at our home
executive office. Death benefits are determined as of
the date of the insured person's death and will not be
affected by subsequent changes in the accumulation
unit values of the investment divisions. We pay
interest from the date of death to the date of payment.
We may delay payment for one or more of the
following reasons:
(1) We contest the contract.
(2) We cannot determine the amount of the payment
because the New York Stock Exchange is closed,
the SEC has restricted trading in securities, or the
SEC has declared that an emergency exists.
(3) The SEC, by order, permits us to delay payment
to protect our contract owners.
We may also delay any payment until your premium
checks have cleared your bank. We may defer
payment of any loan amount, withdrawal, or
surrender from the General Account for up to six
months after we receive your request.
TAX EFFECTS
Contract Proceeds
The Internal Revenue Code of 1986 ("Code"),
Section 7702, defines life insurance for tax purposes.
The Code places limits on certain contract charges
used in determining the maximum amount of
premiums that may be paid under Section 7702.
There is limited guidance as to how to apply Section
7702.
Midland believes that a standard rate class contract
should meet the Section 7702 definition of a life
insurance contract (although there is some
uncertainty). For a contract issued on a substandard
basis (i.e., a rate class involving higher than standard
mortality risk), there may be more uncertainty
whether it meets the Section 7702 definition of a life
insurance contract. It is not clear whether such a
contract would satisfy Section 7702, particularly if
the contract owner pays the full amount of premiums
permitted under the contract.
If it is subsequently determined that only a lower
amount of premiums may be paid for a contract to
satisfy Section 7702, then Midland may take
appropriate and reasonable steps to cause the contract
to comply with Section 7702. These may include
refunding any premiums paid which exceed that
lower amount (together with interest or such other
earnings on any such premiums as is required by
law).
If a contract's face amount changes, then the
applicable premium limitation may also change.
During the first 15 contract years, there are certain
events that may create taxable ordinary income for
you if at the time of the event there has been a gain in
the contract. These events include:
- - A decrease in the face amount;
- - A partial withdrawal;
- - A change from death benefit option 2 to option 1;
or,
- - Any change that otherwise reduces benefits under
the contract and that results in a cash distribution
in order for the contract to continue to comply with
Section 7702 relating to premium and cash value
limitations.
Such income inclusion may result with respect to
cash distributions made in anticipation of reductions
in benefits under the contract.
Code Section 7702A affects the taxation of
distributions (other than death benefits) from certain
Variable Life insurance contracts as follows:
1. If premiums are paid more rapidly than the rate
defined by a 7-Pay Test, then the contract will be
treated as a "Modified Endowment contract."
2. Any contract received in exchange for a contract
classified as a Modified Endowment contract will
be treated as a Modified Endowment contract
regardless of whether the contract received in the
exchange meets the 7-Pay Test.
3. Loans (including unpaid loan interest), surrenders
and withdrawals from a Modified Endowment
contract will be considered distributions.
4. Distributions (including loans) from a Modified
Endowment contract will be taxed first as a
taxable distribution of gain from the contract (to
the extent that gain exists), and then as non-
taxable recovery of basis.
5. The Code imposes an extra "penalty" tax of 10%
on any distribution from a Modified Endowment
Contract includable in income, unless such
distributions are made (a) after you attain age 59
1/2, (b) on account of you becoming disabled, or
(c) as substantially equal annuity payments over
your life or life expectancy.
A contract that is not a Modified Endowment contract
may be classified as a Modified Endowment contract
if it is "materially changed" and fails to meet the 7-
Pay Test. Any distributions from such a contract will
be taxed as explained above.
Material changes include a requested increase in
death benefit or a change from option 1 to option 2.
Before making any contractual changes, a competent
tax advisor should be consulted.
Any life insurance contracts which are treated as
Modified Endowment contracts and are issued by
Midland or any of its affiliates:
- - with the same person designated as the owner;
- - on or after June 21, 1988; and
- - within any single calendar year
will be aggregated and treated as one contract for
purposes of determining any tax on distributions.
Even if a contract is not a Modified Endowment
contract, loans at very low or no net cost may be
treated as distributions for federal income tax
purposes.
For contracts not classified as Modified Endowment
contracts, distributions generally will be treated first
as a return of your investment in the contract, and
then taxed as ordinary income to the extent that they
exceed your investment in the contract (which
generally is the total premiums paid plus any contract
debt).
The Code (Section 817(h)) also authorizes the
Secretary of the Treasury to set standards, by
regulation or otherwise, for the investments of
Variable Life insurance Separate Accounts to be
"adequately diversified" in order for the contracts to
be treated as life insurance contracts for federal tax
purposes. We believe Separate Account A, through
its investments in the Funds, will be adequately
diversified, although we do not control the Funds.
Owners of Variable Life insurance contracts may be
considered, for Federal income tax purposes, the
owners of the assets of the Separate Account used to
support their contracts. In those circumstances,
income and gains from the Separate Account assets
are included in the Variable contract owner's gross
income. The IRS has stated in published rulings that
a Variable contract owner will be considered the
owner of Separate Account assets if the contract
owner possesses incidents of ownership in those
assets, such as the ability to exercise investment
control over the assets. The Treasury Department also
announced, in connection with the issuance of
regulations concerning diversification, that those
regulations "do not provide guidance concerning the
circumstances in which investor control of the
investments of a segregated asset account may cause
the investor (i.e., the policy owner), rather than the
insurance company, to be treated as the owner of the
assets in the account." This announcement also
stated that regulations or rulings would issue
guidance on the "extent to which policyholders may
direct their investments to particular sub-accounts
without being treated as owners of the underlying
assets." As of the date of this prospectus, no such
guidance has been issued.
The ownership rights under Variable Executive
Universal Life 2 are similar to, but different from
those described by the IRS in rulings in which it was
determined that contract owners were not owners of
Separate Account assets. For example, the owner has
additional flexibility in allocating premium payments
and contract values. These differences could result in
an owner being treated as the owner of a pro rata
portion of the assets of Separate Account A. Midland
does not know what standards will be set forth in the
regulations or rulings which the Treasury Department
has stated it expects to issue. Midland therefore
reserves the right to modify the contract as necessary
to attempt to prevent an owner from being considered
the owner of a pro rata share of the assets of Separate
Account A or to otherwise qualify Variable Executive
Universal Life 2 for favorable tax treatment.
Assuming a contract is a life insurance contract for
federal income tax purposes, the contract should
receive the same federal income tax treatment as
fixed benefit life insurance. As a result, the life
insurance proceeds payable under either benefit
option should be excludable from the gross income of
the beneficiary under Section 101 of the Code, and
you should not be deemed to be in constructive
receipt of the cash values under a contract until actual
distribution.
Surrenders, withdrawals, and contract changes may
have tax consequences. These include a change of
owners, an assignment of the contract, a change from
one death benefit option to another, and other
changes reducing future death benefits. Upon
complete surrender or when maturity benefits are
paid, if the amount received plus the contract debt is
more than the total premiums paid that are not treated
as previously withdrawn by you, then the excess
generally will be treated as ordinary income.
Policy loan interest is generally not tax deductible.
Federal, state and local estate, inheritance and other
tax consequences of ownership or receipt of contract
proceeds depend on the circumstances of each
contract owner or beneficiary.
A contract may be used in various arrangements,
including:
- - nonqualified deferred compensation or salary
continuance plans,
- - split dollar insurance plans,
- - executive bonus plans, or
- - retiree medical benefit plans,
- - and others.
The tax consequences of such plans may vary
depending on the particular facts and circumstances
of each individual arrangement. Therefore, if you are
contemplating the use of a contract in which the value
depends in part on its tax consequences, then you
should be sure to consult a qualified tax advisor
regarding the tax attributes of the particular
arrangement.
In recent years, Congress has adopted new rules
relating to corporate owned life insurance. Any
business contemplating the purchase of a new life
insurance contract or a change in an existing contract
should consult a tax advisor.
Although the likelihood of legislative changes is
uncertain, there is always the possibility that the tax
treatment of the policy could change by legislation or
other means. For instance, the President's 1999
Budget Proposal has recommended legislation that
would negatively modify the federal taxation of the
contracts described in this prospectus. It is possible
that any change could be retroactive (that is, effective
prior to the date of the change). A tax advisor could
be consulted with respect to actual and prospective
changes in taxation.
Possible Charge for Midland's Taxes
At the present time, Midland makes no charge to the
Separate Account for any federal, state, or local taxes
(other than premium taxes) that it incurs which may
be attributable to such account or to the contracts.
Midland reserves the right to make a charge for any
such tax or other economic burden resulting from the
application of the tax laws.
If such a charge is made, it would be set aside as a
provision for taxes which we would keep in the
effected division rather than in our General Account.
Other Tax Considerations
The foregoing discussion is general and is not
intended as tax advice. If you are concerned about
these tax implications, you should consult a
competent tax advisor. This discussion is based on
our understanding of the Internal Revenue Service's
current interpretation of the present federal income
tax laws. No representation is made as to the
likelihood of continuation of these current laws and
interpretations, and we do not make any guarantee as
to the tax status of the contract. It should be further
understood that the foregoing discussion is not
complete and that special rules not described in this
prospectus may be applicable in certain situations.
Moreover, no attempt has been made to consider any
applicable state or other tax laws.
PART 3: ADDITIONAL INFORMATION
MIDLAND NATIONAL LIFE INSURANCE
COMPANY
We are Midland National Life Insurance Company, a
stock life insurance company. Midland was
organized, in 1906, in South Dakota, as a mutual life
insurance company at that time named "The Dakota
Mutual Life Insurance Company". We were
reincorporated as a stock life insurance company in
1909. Our name "Midland" was adopted in 1925. We
were redomisticated to Iowa in 1999. We are
licensed to do business in 49 states, the District of
Columbia, and Puerto Rico. Our officers and
directors are listed beginning on page 36.
Midland is a subsidiary of Sammons Enterprises,
Inc., Dallas, Texas. Sammons has controlling or
substantial stock interests in a large number of other
companies engaged in the areas of insurance,
corporate services, and industrial distribution.
YOUR VOTING RIGHTS AS AN OWNER
We invest the assets of our Separate Account
divisions in shares of the Funds' portfolios. Midland
is the legal owner of the shares and has the right to
vote on certain matters. Among other things, we may
vote:
- - to elect the Funds' Board of Directors,
- - to ratify the selection of independent auditors for
the Funds, and
- - on any other matters described in the Funds'
current prospectuses or requiring a vote by
shareholders under the Investment Company Act
of 1940.
Even though we own the shares, we give you the
opportunity to tell us how to vote the number of
shares that are allocated to your contract. We will
vote at shareholder meetings according to your
instructions.
The Funds will determine how often shareholder
meetings are held. As we receive notice of these
meetings, we will ask for your voting instructions.
The Funds are not required to hold a meeting in any
given year.
If we do not receive instructions in time from all
contract owners, then we will vote those shares in the
same proportion as we vote shares for which we have
received instructions in that portfolio. We will also
vote any Fund shares that we alone are entitled to
vote in the same proportions that contract owners
vote. If the federal securities laws or regulations or
interpretations of them change so that we are
permitted to vote shares of the Fund in our own right
or to restrict contract owner voting, then we may do
so.
You may participate in voting only on matters
concerning the Fund portfolios in which your cash
value has been invested. We determine your voting
shares in each division by dividing the amount of
your cash value allocated to that division by the net
asset value of one share of the corresponding Fund
portfolio. This is determined as of the record date set
by the Funds' Board for the shareholders meeting.
We count fractional shares.
If you have a voting interest, we will send you proxy
material and a form for giving us voting instructions.
In certain cases, we may disregard instructions
relating to changes in the Funds' advisor or the
investment policies of its portfolios. We will advise
you if we do.
Other insurance companies own shares in the Funds
to support their Variable insurance products. We do
not foresee any disadvantage to this. Nevertheless,
the Funds' Board of Directors will monitor events to
identify conflicts that may arise and determine
appropriate action. If we disagree with any Fund
action, then we will see that appropriate action is
taken to protect our contract owners.
OUR REPORTS TO CONTRACT OWNERS
Shortly after the end of the third, sixth, ninth, and
twelfth contract months, we will send you reports that
show:
- - the current death benefit for your contract,
- - your cash value,
- - information about investment divisions,
- - the cash surrender value of your contract,
- - the amount of your outstanding contract loans,
- - the amount of any interest that you owe on the
loan, and
- - information about the current loan interest rate.
The annual report will show any transactions
involving your cash value that occurred during the
year. Transactions include your premium allocations,
our deductions, and your transfers or withdrawals.
We will send you semi-annual reports with financial
information on the Funds, including a list of the
investments held by each portfolio.
Our report also contains information that is required
by the insurance supervisory official in the
jurisdiction in which this insurance contract is
delivered.
Notices will be sent to you for transfers of amounts
between investment divisions and certain other
contract transactions.
DIVIDENDS
We do not pay any dividends on the contract
described in this prospectus.
MIDLAND'S SALES AND OTHER
AGREEMENTS
The contract will be sold by individuals who, in
addition to being licensed as life insurance agents for
Midland National Life, are registered representatives
of Walnut Street Securities (WSS) or broker-dealers
who have entered into written sales agreements with
WSS. WSS, the principal underwriter of the
contracts, is registered with the SEC as a broker-
dealer under the Securities Exchange Act of 1934 and
is a member of the National Association of Securities
Dealers, Inc. The address for Walnut Street
Securities is 670 Mason Ridge Center Drive, Suite
301, St. Louis, Missouri 63141.
During the first contract year, we will pay agents a
commission of up to 50% of premiums paid. For
subsequent years, the commission allowance may
equal an amount up to 2.5% of premiums paid. After
the 15th contract year, we pay no commission.
Certain persistency and production bonuses may be
paid.
We may sell our contracts through broker-dealers
registered with the Securities and Exchange
Commission under the Securities Exchange Act of
1934 that enter into selling agreements with us. The
commission for broker-dealers will be no more than
that described above.
REGULATION
We are regulated and supervised by the South Dakota
Iowa Insurance Department. We are subject to the
insurance laws and regulations in every jurisdiction
where we sell contracts. This contract has been filed
with and approved by insurance officials in those
states. The provisions of this contract may vary
somewhat from jurisdiction to jurisdiction.
We submit annual reports on our operations and
finances to insurance officials in all the jurisdictions
where we sell contracts. The officials are responsible
for reviewing our reports to be sure that we are
financially sound and are complying with the
applicable laws and regulations.
We are also subject to various federal securities laws
and regulations.
The Year 2000 issue (Y2K) relates to the ability of
computer systems to properly recognize a four-digit
year code. Many computer systems only allowed for
a two-digit year code and thus years such as 1998
were simply recognized as 98. Using a two-digit year
code for the years 2000 and beyond could result in
errors and miscalculations.
Midland National Life relies extensively on computer
systems in its daily operations. Several years ago, we
began implementing a Plan to modify all of our
computer systems to properly recognize the year
2000. Our Y2K Plan focused on assuring compliance
in the following areas: Information Technology
("IT") and non-information ("non-IT") hardware,
operating systems, software applications and custom
applications. We are in the process of the remediation
and testing of other systems, including telephone,
heating and cooling, mechanical and other equipment
having embedded, date sensitive technology for Year
2000 compliance, In addition, we are reviewing the
Year 2000 compliance status of our mission critical
customers, vendors and service providers.
We have upgraded our mainframe computer
hardware, systems software and applications software
to address Y2K issues and we expect to complete
compliance testing by June 30, 1999. Most of our
systems run on the IBM mainframe computer
platform, where future dated systems testing has been
performed through December 31, 2000. We are in the
process of updating and testing hardware and
software running on personal computer (PC)
platforms and expect to have any Y2K issues
resolved by June 30, 1999.
Y2K issues have been handled primarily by our
internal staff. We spent approximately $800,000 on
the Year 2000 project through the end of 1998 and
estimate additional expenditures of $250,000 for the
balance of the project. Due to our early start in
addressing Y2K issues, the number of other IT
projects delayed due to Y2K has been very limited.
We are currently in the process of developing a Y2K
Contingency Plan and will involve representatives
from our IT and non-IT business units in the planning
process. The Y2K Contingency Plan may include
potential Y2K issues generated within our own
Company and potential Y2K issues generated by
third parties that have a mission critical business
relationship with us.
While we cannot guarantee that our computer
systems nor those of the parties with which we
conduct business will properly function once the year
2000 is reached, Midland National Life is committed
to maintaining reliable computer systems which
properly recognize the year 2000.
DISCOUNT FOR MIDLAND EMPLOYEES
Midland employees may receive a discount of up to
25% of first year premiums. Midland will pay off the
discount as the employee pays the qualifying
premium. Additional premium payments contributed
solely by Midland National Life will be paid into the
employee's policy during the first year. All other
contract provisions will apply.
LEGAL MATTERS
The law firm of Sutherland Asbill & Brennan LLP,
Washington, DC, has provided advice regarding
certain matters relating to federal securities laws.
We are not involved in any material legal
proceedings.
FINANCIAL AND ACTUARIAL MATTERS
The financial statements of Midland National Life
Separate Account A and Midland National Life
Insurance Company, included in this prospectus and
the registration statement, have been audited by
PricewaterhouseCoopers LLP, independent auditors,
for the periods indicated in their report which appears
in this prospectus and in the registration statement.
The address for PricewaterhouseCoopers LLP is IBM
Park Building, Suite 1300, 650 Third Avenue South,
Minneapolis, Minnesota 55402-4333. The financial
statements have been included in reliance upon
reports given upon the authority of the firm as experts
in accounting and auditing.
Actuarial matters in this prospectus have been
examined by Russell A. Evenson, F.S.A., M.A.A.A.,
who is Senior Vice President and Corporate Actuary
of Midland. His opinion on actuarial matters is filed
as an exhibit to the Registration Statement we filed
with the Securities and Exchange Commission.
ADDITIONAL INFORMATION
We have filed a Registration Statement relating to the
Separate Account and the Variable Life insurance
contract described in this prospectus with the
Securities and Exchange Commission. The
Registration Statement, which is required by the
Securities Act of 1933, includes additional
information that is not required in this prospectus
under the rules and regulations of the SEC. If you
would like the additional information, then you may
obtain it from the SEC's main office in Washington,
DC. You will have to pay a fee for the material.
Management of Midland
Here is a list of our directors and officers.
Directors
Name and
Business Address
Principal Occupation
Principal Occupation During Past Five Years
Michael M. Masterson
Midland National Life
One Midland Plaza
Sioux Falls, SD 57193-0001
Chairman of the Board,
President and Chief
Executive Officer
Chairman of the Board (March 1999 to present), Chief
Executive Officer and President (March 1997 to
present) President and Chief Operating Officer (March
1996 to February 1997), Executive Vice President-
Marketing (March 1995 to February 1996), Midland
National Life Insurance Company; Vice President -
Individual Sales (prior thereto), Northwestern National
Life
John J. Craig, II
Midland National Life
One Midland Plaza
Sioux Falls, SD 57193-0001
Executive Vice President
Executive Vice President (January 1998 to present),
Midland National Life Insurance Company; Senior
Vice President and Chief Financial Officer (October
1993 to 1998), Midland National Life Insurance
Company; Treasurer (January 1996 to present), Briggs
ITD Corp.; Treasurer (March 1996 to present),
Sammons Financial Holdings, Inc.; Treasurer
(November 1993 to present), CH Holdings; Treasurer
(November 1993 to present), Consolidated Investment
Services, Inc.; Treasurer (November 1993 to present),
Richmond Holding Company, L.L.C.; Partner (prior
thereto), Ernst and Young
Russell A. Evenson
Midland National Life
One Midland Plaza
Sioux Falls, SD 57193-0001
Senior Vice President and
Corporate Actuary
Senior Vice President and Chief Actuary (March 1996
to present), Senior Vice President and Actuary (prior
thereto), Midland National Life Insurance Company;
Steven C. Palmitier
Midland National Life
One Midland Plaza
Sioux Falls, SD 57193-0001
Stephen P. Horvat, Jr.
Midland National Life
Insurance Company
Senior Vice President and
Chief Marketing Officer
Senior Vice President
Senior Vice President and Chief Marketing Officer
(March 1997 to present), Senior Vice President-Sales
(August 1996 to February 1997), Midland National Life
Insurance Company; Senior Vice President-Sales (prior
thereto), Penn Mutual Life Insurance
Senior Vice President (January 1997 to present),
Midland National Life Insurance Company;
Shareholder (June 1996 to December 1997), Sorling
Law Firm; Sernior Vice President, General Counsel &
Secretary (prior thereto), Franklin Life Insurance
Company
Robert W. Korba
Sammons Enterprises, Inc.
300 Crescent CT
Dallas, TX 75201
Board of Directors
Member, Vice President
President and Director (since 1988), Sammons
Enterprises, Inc., Vice President (August 1998 to
present), Midland National Life Insurance Company
Executive Officers (other than Directors)
Unless otherwise indicated, the addresses for
the following are One Midland
Plaza, Sioux Falls, SD 57193-0001
Name and
Business Address
Principal Occupation
Principal Occupation During Past Five Years
E John Fromelt
Midland National Life
Senior Vice President,
Chief Investment Officer
Senior Vice President, Chief Investment Officer (since
1990), Midland National Life Insurance Company;
President (since August 1995), Midland Advisors
Company; Chief Investment Officer (1996 to present),
North American Company for Life and Health
Thomas M. Meyer
Midland National Life
Stephen P. Horvat, Jr.
Midland National Life
Insurance Company
Senior Vice President and
Chief Financial Officer
Senior Vice President
Senior Vice President and Chief Financial Officer
(January 2000 to December 1999), Vice President and
Chief Financial Officer (January 1998 to December
1999) Second Vice President and Controller (1995 to
1998), Midland National Life Insurance Company
Senior Vice President (January 1997 to present),
Midland National Life Insurance Company;
Shareholder (June 1996 to December 1997), Sorling
Law Firm; Sernior Vice President, General Counsel &
Secretary (prior thereto), Franklin Life Insurance
Company
Gary J. Gaspar
North American
Company for Life &
Health Insurance
222 South Riverside Plaza
Chicago, IL 60606-5929
Senior Vice President &
Chief Information Officer
Senior Vice President & Chief Information Officer
(August 1998 to present), Midland National Life
Insurance Company; Senior Vice President Information
Systems Officer (1985 to present); North American
Company for Life & Health Insurance
Jack L. Briggs
Midland National Life
Vice President, Secretary,
and General Counsel
Vice President, Secretary and General Counsel (since
1978), Midland National Life Insurance Company
Gary W. Helder
Midland National Life
Vice President- Policy
Administration
Vice President-Policy Administration (since 1991),
Midland National Life Insurance Company
Robert W. Buchanan
Midland National Life
Vice President- Marketing
Services
Vice President-Marketing Services (March 1996 to
present), Second Vice President-Sales Development
(prior thereto), Midland National Life Insurance
Company
Thomas M. Meyer
Midland National Life
Vice President and Chief
Financial Officer
Vice President and Chief Financial Officer (January
1998 to present), Second Vice President and Controller
(1995 to 1998), Midland National Life Insurance
Company
Timothy A. Reuer
Julia B. Roper
North American
Company for Life &
Health Insurance
222 South Riverside Plaza
Chicago, IL 60606-5929
Vice President Product
Development
Vice President & Chief
Compliance Officer
Vice President - Product Development (January 2000
To Present); Actuary - Product Development (March
1996 to December 1999); Associate Acuary (March
1992 to February 1996) Midland National Life
Insurance Company
Vice President & Chief Compliance Officer (August
1998 to present), Midland National Life Insurance;
Vice President & Chief Compliance Officer (September
1997 to present), North American Company for Life &
Health Insurance; Assistant Vice President (prior
thereto), CNA Insurance Companies
Joseph B. Moran
Parkway Mortgage
1700 Galloping Hill Road
Kenilworth, NJ 07033
Vice President - Parkway
Mortgage Division
Vice President - Parkway Mortgage Division (January
1999 to present), Midland National Life Insurance
Company; President (prior thereto), Parkway Mortgage,
Inc.
James T. Fehon
Parkway Mortgage
1700 Galloping Hill Road
Kenilworth, NJ 07033
Vice President - Parkway
Mortgage Division
Vice President - Parkway Mortgage Division (January
1999 to present), Midland National Life Insurance
Company; Executive Vice President (prior thereto),
Parkway Mortgage, Inc.
Illustration
Following are a series of tables that illustrate how the
cash values, cash surrender values, and death benefits
of a contract change with the investment performance
of the Funds. The tables show how the cash values,
cash surrender values, and death benefits of a contract
issued to an insured of a given age and given
premium would vary over time if the return on the
assets held in each Portfolio of the Funds were a
constant gross, after tax annual rate of 0%, 6%, or
12%. The tables on pages 31 46 through 33 48
illustrate a contract issued to a male, age 25 35 , under
a standard rate preferred non-smoker underwriting
risk classification. The tables on pages 34 through 36
illustrate a contract issued to a male, age 40, under a
standard rate preferred non-smoker underwriting risk
classification. The cash values, cash surrender values,
and death benefits would be different from those
shown if the returns averaged 0%, 6%, and 12% over
a period of years, but fluctuated above and below
those averages for individual contract years.
The amount of the cash value exceeds the cash
surrender value during the first twelve ten contract
years due to the surrender charge. For contract years
thirteen eleven and after, the cash value and cash
surrender value are equal, since the surrender charge
has reduced to zero.
The second column shows the accumulation value of
the premiums paid at the stated interest rate. The third
and sixth columns illustrate the cash values and the
fourth and seventh columns illustrate the cash
surrender values of the contract over the designated
period. The cash values shown in the third column
and the cash values shown in the fourth column
assume the monthly charge for cost of insurance is
based upon the current cost of insurance rates. The
cash values shown in the sixth column and the cash
surrender values shown in the seventh column
assume the monthly charge for cost of insurance is
based upon the cost of insurance rates that we
guarantee. The maximum cost of insurance rates
allowable under the contract are based on the
Commissioner's 1980 Standard Ordinary Mortality
Table. The fifth and eighth columns illustrate the
death benefit of a contract over the designated period.
The illustrations of death benefits reflect the same
assumptions as the cash value and cash surrender
values. The death benefit values also vary between
tables, depending upon whether Option 1 or Option 2
death benefits are illustrated.
The amounts shown for the death benefit, cash
values, and cash surrender values reflect the fact that
the net investment return of the divisions of our
Separate Account is lower than the gross, after-tax
return on the assets in the Funds, as a result of
expenses paid by the Funds and charges levied
against the divisions of our Separate Account. The
illustrations also reflect the 2.5% 5.0% premium load
sales charge deduction from each premium, (for the
first fifteen years on a current basis) the 2.5%
premium tax deduction from each premium and the
$6.00 per month expense charge (for the first fifteen
years on a current basis) as well as current and
guaranteed cost of insurance charges.
The contract values shown assume daily investment
advisory fees and operating expenses equivalent to an
annual rate of .76% .80% of the aggregate average
daily net assets of the Portfolios of the Funds (the
average rate of the Portfolios for the period ending
December 31, 1998). The actual fees and expenses
associated with the contract may be more or less than
.76% .80% and will depend on how allocations are
made to each investment division. The MFS VIT
New Discovery, The Lord Abbett VC Mid-Cap Value
and The Lord Abbett VC International portfolios
contain an expense reimbursement arrangement
whereby the portfolio's expenses have a limit.
Without this arrangement, expenses would be higher
and the average of 0.80% would be higher. This
would result in lower values than what are shown in
the illustrations. Midland cannot predict whether
such arrangements will continue. See footnotes (2)
and (5) on pages 25 and 26 for further information on
the limits on other expenses. The contract values also
take into account a daily charge to each division of
Separate Account A for assuming mortality and
expense risks and administrative charges which is
equivalent to a charge at an annual rate of .90%
( .50% .25% after year 10 on a current basis) of the
average net assets of the divisions of Separate
Account A. After deductions of these amounts, the
illustrated gross investment rates of 0%, 6%, and
12% correspond to approximate net annual rates of -
1.60% -1.70%, 4.34% 4.30%, and 10.34% 10.30,
respectively ( 1.26% -1.05%, 4.74% 4.95%, 10.75%
10.95% after year 10 on a current basis).
The Approximate net annual rates do not include cost
of insurance charges, surrender charges, premium
loads, expense charges nor any charges for additional
benefits.
The hypothetical values shown in the tables do not
reflect any charges for federal income taxes against
Separate Account A since Midland is not currently
making such charges. However, if, in the future, such
charges are made, the gross annual investment rate of
return would have to exceed the stated investment
rates by a sufficient amount to cover the tax charges
in order to produce the cash values, cash surrender
values, and death benefits illustrated.
The tables illustrate the contract values that would
result based on hypothetical investment rates of
return if premiums are paid in full at the beginning of
each year and if no contract loans have been made.
The values would vary from those shown if the
assumed annual premium payments were paid in
installments during a year. The values would also
vary if the contract owner varied the amount or
frequency of premium payments. The tables also
assume that the contract owner has not requested an
increase or decrease in face amount, that no
withdrawals have been made and no withdrawal
charges imposed, that no contract loans have been
taken, and that no transfers have been made and no
transfer charges imposed.
MIDLAND NATIONAL LIFE INSURANCE COMPANY - VEUL 2
DEATH BENEFIT OPTION 1 ASSUMED HYPOTHETICAL GROSS
MALE PREFERRED NON-SMOKER ISSUE AGE 25 35 ANNUAL RATE OF RETURN: 0%
$200,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM(1): $1,500
$3,000 ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
PREMIUMS CASH
CASH
END ACCUMULATED VALUE
CASH VALUE CASH
OF AT 5% INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR PER YEAR FUND (2) VALUE(2) BENEFIT(2) FUND (2)VALUE(2)BENEFIT(2)
1 3,150 2,566 0 200,000 2,402 0 200,000
2 6,458 5,067 1,457 200,000 4,743 1,133 200,000
3 9,930 7,529 4,109 200,000 7,026 3,606 200,000
4 13,577 9,950 6,720 200,000 9,252 6,022 200,000
5 17,406 12,311 9,365 200,000 11,422 8,476 200,000
6 21,426 14,612 11,952 200,000 13,516 10,856 200,000
7 25,647 16,876 14,596 200,000 15,557 13,277 200,000
8 30,080 19,083 17,183 200,000 17,525 15,625 200,000
9 34,734 21,235 19,809 200,000 19,422 17,996 200,000
10 39,620 23,331 22,571 200,000 21,250 20,490 200,000
11 44,751 25,544 25,544 200,000 23,165 23,165 200,000
12 50,139 27,717 27,717 200,000 25,025 25,025 200,000
13 55,796 29,850 29,850 200,000 26,811 26,811 200,000
14 61,736 31,925 31,925 200,000 28,544 28,544 200,000
15 67,972 33,943 33,943 200,000 30,205 30,205 200,000
16 74,521 36,054 36,054 200,000 31,777 31,777 200,000
17 81,397 38,111 38,111 200,000 33,261 33,261 200,000
18 88,617 40,113 40,113 200,000 34,659 34,659 200,000
19 96,198 42,082 42,082 200,000 35,933 35,933 200,000
20 104,158 44,018 44,018 200,000 37,106 37,106 200,000
21 112,516 45,921 45,921 200,000 38,141 38,141 200,000
22 121,291 47,793 47,793 200,000 39,039 39,039 200,000
23 130,506 49,599 49,599 200,000 39,802 39,802 200,000
24 140,181 51,321 51,321 200,000 40,394 40,394 200,000
25 150,340 52,946 52,946 200,000 40,815 40,815 200,000
30 209,282 59,815 59,815 200,000 39,382 39,382 200,000
35 284,509 64,613 64,613 200,000 28,638 28,638 200,000
40 380,519 66,337 66,337 200,000 0 0 200,000
1. ASSUMES A $1,500 $3,000 PREMIUM IS PAID AT THE BEGINNING OF
EACH CONTRACT YEAR. VALUES WOULD BE DIFFERENT IF PREMIUMS ARE
PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT AMOUNTS.
2. ASSUMES THAT NO CONTRACT LOANS OR WITHDRAWALS HAVE BEEN
MADE. ZERO VALUES INDICATE LAPSE IN THE ABSENCE OF AN ADDITIONAL
PREMIUM PAYMENT.THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN
ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION
OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES
OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER
AND DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUND SERIES. THE
CONTRACT FUND, SURRENDER VALUE AND DEATH BENEFIT FOR A CONTRACT
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL INVESTMENT RATES
OF RETURN AVERAGED OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE
OR BELOW THOSE AVERAGES FOR THE INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATION CAN BE MADE BY MIDLAND, THE SEPARATE ACCOUNT, OR
THE FUND THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
MIDLAND NATIONAL LIFE INSURANCE COMPANY - VEUL 2
DEATH BENEFIT OPTION 1 ASSUMED HYPOTHETICAL GROSS
MALE PREFERRED NON-SMOKER ISSUE AGE 25 35 ANNUAL RATE OF RETURN: 6%
$200,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM(1): $1,500
$3,000
ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
PREMIUMS CASH
CASH
END ACCUMULATED VALUE
CASH VALUE CASH
OF AT 5% INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR PER FUND (2) VALUE(2) BENEFIT(2)FUND (2)VALUE(2)BENEFIT(2)
1 3,150 2,729 0 200,000 2,560 0 200,000
2 6,458 5,555 1,945 200,000 5,210 1,600 200,000
3 9,930 8,504 5,084 200,000 7,956 4,536 200,000
4 13,577 11,584 8,354 200,000 10,802 7,572 200,000
5 17,406 14,776 11,830 200,000 13,754 10,808 200,000
6 21,426 18,086 15,426 200,000 16,794 14,134 200,000
7 25,647 21,543 19,263 200,000 19,950 17,670 200,000
8 30,080 25,132 23,232 200,000 23,207 21,307 200,000
9 34,734 28,859 27,433 200,000 26,571 25,145 200,000
10 39,620 32,730 31,970 200,000 30,047 29,287 200,000
11 44,751 36,985 36,985 200,000 33,856 33,856 200,000
12 50,139 41,439 41,439 200,000 37,828 37,828 200,000
13 55,796 46,102 46,102 200,000 41,953 41,953 200,000
14 61,736 50,968 50,968 200,000 46,261 46,261 200,000
15 67,972 56,050 56,050 200,000 50,747 50,747 200,000
16 74,521 61,520 61,520 200,000 55,404 55,404 200,000
17 81,397 67,243 67,243 200,000 60,248 60,248 200,000
18 88,617 73,235 73,235 200,000 65,294 65,294 200,000
19 96,198 79,528 79,528 200,000 70,525 70,525 200,000
20 104,158 86,140 86,140 200,000 75,975 75,975 200,000
21 112,516 93,088 93,088 200,000 81,633 81,633 200,000
22 121,291 100,394 100,394 200,000 87,522 87,522 200,000
23 130,506 108,054 108,054 200,000 93,666 93,666 200,000
24 140,181 116,082 116,082 200,000 100,065 100,065 200,000
25 150,340 124,496 124,496 200,000 106,748 106,748 200,000
30 209,282 173,550 173,550 211,731 145,247 145,247 200,000
35 284,509 235,982 235,982 273,739 195,451 195,451 226,724
40 380,519 315,100 315,100 337,157 258,683 258,683 276,791
1. ASSUMES A $1,500 $3,000 PREMIUM IS PAID AT THE BEGINNING
OF EACH CONTRACT YEAR. VALUES WOULD BE DIFFERENT IF PREMIUMS
ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT AMOUNTS.
2. ASSUMES THAT NO CONTRACT LOANS OR WITHDRAWALS HAVE BEEN
MADE. ZERO VALUES INDICATE LAPSE IN THE ABSENCE OF AN ADDITIONAL
PREMIUM PAYMENT. THE HYPOTHETICAL INVESTMENT RATES OF RETURN
SHOWN ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RATES OF RETURN MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR THE FUND SERIES. THE CONTRACT FUND, SURRENDER
VALUE AND DEATH BENEFIT FOR A CONTRACT WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR THE INDIVIDUAL CONTRACT YEARS. NO REPRESENTATION
CAN BE MADE BY MIDLAND, THE SEPARATE ACCOUNT, OR THE FUND THAT
THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
MIDLAND NATIONAL LIFE INSURANCE COMPANY - VEUL 2
DEATH BENEFIT OPTION 1 ASSUMED HYPOTHETICAL GROSS
MALE PREFERRED NON-SMOKER ISSUE AGE 25 35 ANNUAL RATE OF RETURN: 12%
$200,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM(1): $1,500
$3,000 ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
PREMIUMS CASH
CASH
END ACCUMULATED VALUE
CASH VALUE CASH
OF AT 5% INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR PER YEAR FUND (2) VALUE(2) BENEFIT(2) FUND (2)VALUE(2)BENEFIT(2)
1 3,150 2,893 0 200,000 2,718 0 200,000
2 6,458 6,062 2,452 200,000 5,697 2,087 200,000
3 9,930 9,561 6,141 200,000 8,963 5,543 200,000
4 13,577 13,423 10,193 200,000 12,550 9,320 200,000
5 17,406 17,665 14,719 200,000 16,491 3,545 200,000
6 21,426 22,326 19,666 200,000 20,801 18,141 200,000
7 25,647 27,473 25,193 200,000 25,544 23,264 200,000
8 30,080 33,136 31,236 200,000 30,746 28,846 200,000
9 34,734 39,369 37,943 200,000 36,458 35,032 200,000
10 39,620 46,235 45,475 200,000 42,737 41,977 200,000
11 44,751 54,119 54,119 200,000 49,941 49,941 200,000
12 50,139 62,864 62,864 200,000 57,925 57,925 200,000
13 55,796 72,567 72,567 200,000 66,763 66,763 200,000
14 61,736 83,322 83,322 200,000 76,578 76,578 200,000
15 67,972 95,252 95,252 200,000 87,469 87,469 200,000
16 74,521 108,663 108,663 201,027 99,556 99,556 200,000
17 81,397 123,536 123,536 219,894 112,988 112,988 201,119
18 88,617 140,005 140,005 239,408 127,888 127,888 218,689
19 96,198 158,259 158,259 259,545 144,344 144,344 236,725
20 104,158 178,498 178,498 280,242 162,545 162,545 255,195
21 112,516 200,946 200,946 301,419 182,671 182,671 274,007
22 121,291 225,828 225,828 329,708 204,898 204,898 299,151
23 130,506 253,386 253,386 359,808 229,458 229,458 325,830
24 140,181 283,905 283,905 391,789 256,590 256,590 354,095
25 150,340 317,700 317,700 425,718 286,589 286,589 384,029
30 209,282 549,715 549,715 670,652 490,638 490,638 598,578
35 284,509 936,514 936,514 1,086,356 823,657 823,657 955,442
40 380,519 1,582,825 1,582,825 1,693,623 1,370,059 1,370,059 1,465,963
1. ASSUMES A $1,500 $3,000 PREMIUM IS PAID AT THE BEGINNING OF
EACH CONTRACT YEAR. VALUES WOULD BE DIFFERENT IF PREMIUMS ARE
PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT AMOUNTS.
2. ASSUMES THAT NO CONTRACT LOANS OR WITHDRAWALS HAVE BEEN MADE.
ZERO VALUES INDICATE LAPSE IN THE ABSENCE OF AN ADDITIONAL PREMIUM
PAYMENT.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT RATES OF
RETURN FOR THE FUND SERIES. THE CONTRACT FUND, SURRENDER VALUE
AND DEATH BENEFIT FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED OVER
A PERIOD OF YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES
FOR THE INDIVIDUAL CONTRACT YEARS. NO REPRESENTATION CAN BE MADE
BY MIDLAND, THE SEPARATE ACCOUNT, OR THE FUND THAT THIS ASSUMED
INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
Definitions
Accumulation Unit means the units credited to each investment
division in the Separate Account.
Age means the age of the Insured Person on his/her birthday
which immediately precedes the Contract Date.
Attained Age means the age of the Insured Person on his/her
birthday preceding a Contract Anniversary date.
Beneficiary means the person or persons to whom the contract's
death benefit is paid when the Insured Person dies.
Business Day means any day we are open and the New York Stock
Exchange is are open for trading. The holidays which we are
closed but the New York Stock Exchange is open are the day
after Thanksgiving, the day before Christmas Eve Day, and
New Year's Eve Day December 21, December 22 and December 29.
These days along with the days the New York Stock Exchange
is not open for trading will not be counted as Business Days.
Contract Fund means the total amount of monies in our
Separate Account A attributable to your in force contract.
It also includes monies in our General Account for your
contract.
Cash Surrender Value means the Contract Fund Cash Value
on the date of surrender, less any Surrender Charges.
Cash Value is the value of your contract fund. means the
total amount of monies in our Separate Account A
Attributable to your in force contract plus any monies
in our General Account for your Contact.
Contract Anniversary: The same month and day of the Contract
Date in each year following the Contract Date.
Contract Date means the date from which Contract
Anniversaries and Contract Years are determined.
Contract Month means a month that starts on a Monthly
Anniversary and ends on the following Monthly Anniversary.
Contract Year means a year that starts on the Contract
Date or on each anniversary thereafter.
Death Benefit means the amount payable under your contract
when the Insured Person dies.
Evidence of Insurability means evidence, satisfactory to us,
that the insured person is insurable and meets our
underwriting standards.
Funds mean the investment companies, more commonly called
mutual funds, available for investment by Separate
Account A on the Contract Date or as later changed by us.
Home Office Executive Office means where you write to us
to pay premiums or take other action, such as transfers
between investment divisions, changes in Specified Amount,
or other such action regarding your contract. The
address is:
Midland National Life Insurance Company
One Midland Plaza
Sioux Falls, SD 57193
In Force means the Insured Person's life remains insured
under the terms of the contract.
Investment Division means a division of Separate Account
A which invests exclusively in the shares of a specified
Portfolio of the Fund.
Minimum Premium Period: This is the period of time beginning
on the Contract Date and ending five years from
the Contract Date.
Modified Endowment Contract is a contract where premiums
are paid more rapidly than the rate defined by a 7-Pay Test.
Monthly Anniversary means the day of each month that has
the same numerical date as the Contract Date.
Net Cash Surrender Value means the Cash Surrender Value
less any outstanding contract loan.
Net Premium means the premium paid less any a deduction
for premium taxes, less any deduction for the sales
charge the premium load and less any per premium expenses.
Record Date means the date the contract is recorded on Our
books as an In Force contract.
Separate Account means Our Separate Account A which receives a
nd invests your net premiums under the contract.
Surrender Charges means a charge made only upon surrender of
the contract. It includes a charge for sales related
expenses and issue related expenses.
Performance
Performance information for the investment divisions may appear
in reports and advertising to current and prospective owners.
We base the performance information on the investment experience
of the investment division and the Funds. The information does
not indicate or represent future performance.
Total return quotations reflect changes in Funds' share prices,
the automatic reinvestment by the Separate Account of all
distributions and the deduction of the mortality and expense
risk charge. The quotations will not reflect deductions from
premiums (the sales charge, premium tax charge, and any per
premium expense charge), the monthly deduction from the cash
value (the expense charge, the cost of insurance charge, and
any charges for additional benefits), the surrender charge,
or other transaction charges. Therefore, these returns do
not show how actual investment performance will affect c
ontract benefits.
A cumulative total return reflects performance over a
stated period of time. An average annual total return
reflects the hypothetical annually compounded return that
would have produced the same cumulative total return if the
performance had been constant over the entire period.
Average annual total returns tend to smooth out variations in
an investment division's returns and are not the same as
actual year-by-year results.
Midland may advertise performance figures for the investment
divisions based on the performance of a portfolio
before the Separate Account commenced operations.
Midland may provide individual hypothetical illustrations of
cash value, cash surrender value, and death benefits
based on the Funds' historical investment returns. These
illustrations will reflect the deduction of expenses in
the Funds and the deduction of contract charges, including
the mortality and expense risk charge, the deductions from
premiums, the monthly deduction from the cash value and
the surrender charge. The illustrations do not indicate
what contract benefits will be in the future.
Financial Statements
The financial statements of Midland National Life Insurance
Company included in this prospectus should be
distinguished from the financial statements of the
Midland National Life Separate Account A and should be
considered only as bearing upon the ability of Midland
to meet its obligations under the Contracts. They should
not be considered as bearing upon the investment performance
of the assets held in the Separate Account.
VEULprosp1.txt
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securi-
ties Exchange Act of 1934, the undersigned registrant hereby undertakes
to file with the Securities and Exchange Commission such supplementary
and periodic information, documents, and reports as may be prescribed by
any rule or regulation of the Commission heretofore, or hereafter duly
adopted pursuant to authority conferred in that section.
RULE 484 UNDERTAKING
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling per-
sons of the registrant pursuant to the foregoing provisions, or other-
wise, the registrant has been advised that in the opinion of the Securi-
ties 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 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 indemnifi-
cation by it is against public policy as expressed in the Act and will
be governed by the final jurisdiction of such issue.
UNDRTAKE.txt
<PAGE>
REPRESENTATIONS PURSUANT TO SECTION 26 (e) OF THE INVESTMENT COMPANY ACT
Midland National Life Insurance Company hereby 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 Midland National Life Insurance
Company.
S6FORM.TXT
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
----------------------------------
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of 53 pages.
The undertaking to file reports.
Representations pursuant to Section 26(e) of the Investment
Company Act.
The signatures.
Written consents of the following persons:
(a) Jack L. Briggs 8
(b) Sutherland Asbill & Brennan L L P 8
(c) PricewaterhouseCoopers L L P 8
(d) Timothy A. Reuer 8
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of
the instructions as to the exhibits in Form N-8B-2:
(1) Resolution of the Board of Directors of Midland National Life
establishing the Separate Account A. 4
(2) Not applicable.
(3) (a) Principal Underwriting Agreement. 2
(b) Selling Agreement. 2
(c) Commission schedule. 8
(4) Not applicable.
(5) Form of Contract. 8
1 Filed previously in Post-Effective Amendment No. 4 on April 10, 1999
for Form S-6 File No. 33-16354.
2 Filed previously in Pre-Effective Amendment No. 1 for Form S-6 File
No. 333-14061 on January 31, 1997.
3 Filed previously in Pre-Effective Amendment No. 2 for Form S-6 File
No. 333-14061 on April 23, 1997.
4 Filed previously in Post Effective Amendment No. 1 for Form S-6 File
No. 333-14061 on April 28, 1998.
5 Filed previously in Post Effective Amendment No. 3 for Form S-6 File
No. 333-14061 on April 29, 1999.
6 Filed previously in Pre-Effective Amendment No. 1 for Form S-6 File
No. 333-80975.
7 Filed herein.
8 To be filed by amendment.
- --------------
<PAGE>
(6) (a) Articles of Incorporation of Midland National Life. 4
(b) By-Laws of Midland National Life. 4
(7) Not applicable.
(8) (a) Participation Agreements for Fidelity Distributors
Corporation/Variable Insurance Products Fund,
and Variable Products Fund II. 3
(b) Amendments to Participation Agreements for Fidelity
Distributors Corporation/Variable Insurance Products Fund,
and Variable Products Fund II. 3
(c) Participation Agreement for Fidelity Distributors
Corporation/Variable Insurance Products Fund III. 4
(d) Participation Agreement for American Century Investment
Services, Inc. 3
(e) Participation Agreement for Lord Abbett Series Funds, Inc. 5
(f) Amendments to Participation Agreement for Lord Abbett
Series Funds, Inc. 6
(g) Participation Agreement for Massachusetts Financial Variable
Insurance Trusts. 5
(9) Not applicable.
(10) Application Form. 7
(11) Memorandum describing Midland National Life's issuance, transfer
and redemption procedures for the Contract. 1
2. See Exhibit 1(5).
---
3. Opinion and Consent of Jack L. Briggs. 8
4. No financial statements are omitted from the Prospectus pursuant to
Instruction 1(b) or (c) or Part I.
5. Not applicable.
6. Opinion and Consent of Timothy A. Reuer. 8
7. Consent of Sutherland Asbill & Brennan L L P 8
8. Consent of PricewaterhouseCoopers L L P 8
1 Filed previously in Post-Effective Amendment No. 4 on April 30, 1990
for Form S-6 File No. 33-16354.
2 Filed previously in Pre-Effective Amendment No. 1 for Form S-6 File
No. 333-14061 on January 31, 1997.
3 Filed previously in Pre-Effective Amendment No. 2 for Form S-6 File
No. 333-14061 on April 23, 1997.
4 Filed previously in Post Effective Amendment No. 1 for Form S-6 File
No. 333-14061 on April 28, 1998.
5 Filed previously in Post Effective Amendment No. 3 for Form S-6 File
No. 333-14061 on April 29, 1999.
6 Filed previously in Pre-Effective Amendment No. 1 for Form S-6 File
No. 333-80975.
7 Filed herein.
8 To be filed by amendment.
- --------------
CONVL4VE2.txt
<PAGE>
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Midland National Life Separate Account A, has duly
caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto
affixed, all in Sioux Falls, South Dakota, on the 10th day of
February, 2000.
Midland National Life Separate Account A
(Seal) By: Midland National Life Insurance Company
By:_/s/ Michael M. Masterson__
President
Pursuant to the requirements of the Securities Act of 1933, Midland
National Life Insurance Company has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal to be hereunto affixed, all in Sioux
Falls, South Dakota on the 10th day of February, 2000.
(Seal) By: Midland National Life Insurance Company
By:__/s/ Michael M. Masterson ____
President
Signature Title Date
--------- ----- ----
/s/_ Michael M. Masterson Director, Chairman of the February 10, 2000
Michael M. Masterson Board, Chief Executive
Officer and President
_/s/ John J. Craig II Director, Executive Vice February 10, 2000
John J. Craig II President and Chief
Operating Officer
_/s/ Steven C. Palmitier Director, Senior Vice February 10, 2000
Steven C. Palmitier President and Chief
Marketing Officer
_/s/ Stephen P. Horvat, Jr. Director, Senior Vice February 10, 2000
Stephen P. Horvat, Jr. President - Legal
_/s/ Thomas M. Meyer Senior Vice President February 10, 2000
Thomas M. Meyer and Chief Financial
Officer
_____________________ Director and Vice President February 10, 2000
Robert W. Korba
VL4VE2SIG.TXT
<PAGE>
Registration No. 333-14081
POST EFFECTIVE AMENDMENT NO.3
________________________________________________________________________________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________
EXHIBITS
TO
FORM S-6
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FOR
MIDLAND NATIONAL LIFE SEPARATE ACCOUNT A
AND
MIDLAND NATIONAL LIFE INSURANCE COMPANY
____________________________________
________________________________________________________________________________
- --------------------------------------------------------------------------------
EXHVEL2.TXT
<PAGE>
EXHIBIT INDEX
Exhibit
_________
10. Application Form
INDVUL4.txt
<PAGE>
General Purpose Life Application
MIDLAND NATIONAL LIFE
PART1
1. PRIMARY PROPOSED INSURED
SINGLE
MARRIED
LAST NAME FIRST M.I.
BIRTH DATE
MO. DAY YEAR
STATE OF BIRTH
AGE
SEX
SOCIAL SECURITY NUMBER AND DRIVERS LICENSE NUMBER
STATE
HEIGHT (FT. IN.)
WEIGHT (LBS.)
SPOUSE PROPOSED for INSURANCE (or premium payer for juvenile policy)
BIRTH DATE
MO. DAY YEAR
STATE OF BIRTH
AGE
SEX
SOCIAL SECURITY NUMBER AND DRIVERS LICENSE NUMBER
STATE
HEIGHT (FT. IN.)
WEIGHT (LBS.)
DEPENDENT CHILDREN PROPOSED for INSURANCE
BIRTH DATE
MO. DAY YEAR
STATE OF BIRTH
AGE
SEX
SOCIAL SECURITY NUMBER AND DRIVERS LICENSE NUMBER
HEIGHT (FT. IN.)
WEIGHT (LBS.)
BIRTH DATE
MO. DAY YEAR
STATE OF BIRTH
AGE
SEX
SOCIAL SECURITY NUMBER AND DRIVERS LICENSE NUMBER
HEIGHT (FT. IN.)
WEIGHT (LBS.)
BIRTH DATE
MO. DAY YEAR
STATE OF BIRTH
AGE
SEX
SOCIAL SECURITY NUMBER AND DRIVERS LICENSE NUMBER
HEIGHT (FT. IN.)
WEIGHT (LBS.)
2. RESIDENCE ADDRESS (Street, City, State, Zip)
TELEPHONE NUMBER(S)
( )
3. How long at this address? If less than 2 years,
provide previous address in "Special Requests", Section #14.
CONTACT THE PROPOSED INSURED AT:
RESIDENCE
BUSINESS
A.M.
P.M.
Time
4. EMPLOYER (Company Name, Street, City, State, Zip)
5. OCCUPATION (Describe and give exact duties)
OCCUPATION OF SPOUSE (if applicable)
BUSINESS TELEPHONE NUMBER
Primary Insured ( )
Spouse ( )
ANNUAL INCOME
Primary Proposed Insured
Spouse
6. Has Primary Proposed Insured ever used tobacco in any
form?
No Yes IF YES, complete below...
Type of Tobacco: Cigarettes Other
Date Last Used Current or within 1 yer
Over 1 year but less than 3 years
Over 3 years
Has Spouse Proposed Insured ever used tobacco in any
form?
No Yes IF YES, complete below...
Type of Tobacco: Cigarettes Other
Date Last Used Current or within 1 yer
Over 1 year but less than 3 years
Over 3 years
7. AMOUNT
PLAN OF BASIC POLICY
Preferred Plus
Preferred
Preferred Smoker
Nonsmoker
Smoker
If Universal Life
Option I
Option II
Automatic Premium Loan Repayment
8. RIDERS
Waiver of Premium
Living Needs Rider
Accidental Death Benefit
Amount
Units
Children's Insurance Rider
Other Rider
Plan
Amount
Preferred
Preferred Plus
Preferred Smoker
Non-Smoker
Smoker
9a. PREMIUM FREQUENCY
Annual
Semi-Annual
Quarterly
Monthly
PREMIUM MODE
Auto Withdrawal, with COLR/ABI, age 0-55
Direct Billing, with COLR/ABI, age 0-55
List Billing/Franchise
Military Government Allotment
Civil Service Allotment
Amount of Mode Premium
Amount Paid with Application
(Receipt valid only if amount paid with application is entered here.)
9b. FOR AUTO WITHDRAWAL ONLY:
DRAW DATE
(1st-28th)
MONTH DAY
ACCOUNT TYPE
Checking (enclose voided check)
Savings (must complete 8c)
AUTHORIZED SIGNATURE(S) OF ACCOUNT HOLDER(S)
X
9c. ROUTING/TRANSIT NUMBER
ACCOUNT NUMBER
FINANCIAL INSTITUTION NAME AND ADDRESS
10a. WILL THE INSURANCE BEING APPLIED FOR REPLACE OR CHANGE ANY EXISTING LIFE
INSURANCE OR ANNUITY CONTRACT?
YES
NO
10b. IS THERE ANY INSURANCE IN FORCE OR APPLICATION PENDING ON THE LIFE/LIVES
OF ANY PROPOSED INSURED(S)?
YES
NO (If yes, please complete 10c.)
10c. Proposed Insured Name
Company
Amount
Status
Pending
Issued
Yr.
Pending
Issued
Yr.
ADB
Y
N
Y
N
Proposed Insured Name
Company
Amount
Status
Pending
Issued
Yr.
Pending
Issued
Yr.
ADB
Y
N
Y
N
11. OWNER IF OTHER THAN PROPOSED INSURED (Include relationship to proposed
insured)
NAME
ADDRESS
Soc. Sec. No. or Fed. Tax I.D. No.
12. PRIMARY BENEFICIARY - (Class 1) (Include relationship to proposed insured)
13. CONTINGENT BENEFICIARY - (Class 2) (Include relationship to proposed
insured)
Beneficiary designations do not apply to others covered under Family/Chidren's
Provision Riders.
14. SPECIAL REQUESTS OR DETAILS
PRINCIPAL REVIEW (For Variable Products)
Premium checks must be payable to Midland National Life
Insurance Company. Do not make checks payable to the Agent
or leave the Payee blank.
Detach and Deliver this section to the proposed insured.
RECEIPT
Cash
Franchise Authorization or Government Allotment
Received from the sum of $ representing Full Partial
payment of the first premium on account of application made this date to
MIDLAND NATIONAL LIFE INSURANCE COMPANY. If after investigation and the
completion of all required medical examinations and studies, the Company
shall be satisfied that on the date of the application or medical
examination, whichever is later, each person proposed for insurance
was insurable and entitled under the Company's rules and standards to
insurance on the plan and for the amount and at the rate of premium applied
for, the insurance protection applied for shall by reason of such payment
take effect from the date of application or such medical
examination or the date specifically requested in the application, whichever is
later, if the sum paid is equal to or greater than 1/12th of the annual premium
required for the policy applied for. Unless every condition specified in this
receipt is fulfilled exactly, no insurance shall be considered in effect unless
and until the application has been approved and accepted by the Company and the
policy delivered to and accepted by the Owner, and the full first premium has
been paid while each person proposed for insurance is alive and while the state
of health and other conditions affecting insurability are as stated in this
application or examination, if required. This receipt will be void if any
acknowledged authorization is cancelled before payment or if any check or draft
is not honored when presented. This receipt will be void if altered or
modified in any respect. No agent of the Company and no broker is
authorized to alter or waive any of such conditions. Failure of the Company
to issue a policy within 90 days from the date of this receipt shall
automatically be deemed a declination without further notice.
EVEN IF EVERY CONDITION SPECIFIED IN THIS RECEIPT IS FULFILLED EXACTLY, THE
COMPANY'S MAXIMUM LIABILITY PRIOR TO THE ACTUAL ISSUANCE AND DELIVERY OF THE
POLICY SHALL NOT EXCEED $250,000.
Date
Agent
Signature
Detach and Deliver this section to proposed insured.
MIDLAND NATIONAL LIFE INSURANCE COMPANY, Sioux Falls, South Dakota 57193-0001
Fair Credit Reporting Act Notification
As part of our underwriting procedure, an investigative consumer report may be
made which will provide applicable information concerning residence
verification, employment, occupation, general health, habits, reputation,
personal characteristics and mode of living, except as may be related directly
or indirectly to your sexual orientation. Such information for the
investigative consumer report may be obtained through personal interviews with
your friends, neighbors, and associates. Upon written request, a complete and
accurate disclosure of the nature and scope of the investigative consumer
report will be provided.
Medical Information Bureau Notification
Information regarding your insurability will be treated as confidential.
Midland National Life Insurance Company, or its reinsurers, may, however,
make a brief report thereon to the Medical Information Bureau, a non-profit
membership organization of life insurance companies, which operates an
information exchange on behalf of its members. If you apply to another
Bureau member company for life or health insurance coverage, or a claim for
benefits is submitted to such a company, the Bureau, upon request, will
supply such company with the information in its file. Upon receipt of a
request from you, the Bureau will arrange disclosure of any information it
may have in your file. If you question the accuracy of information in the
Bureau's file, you may contact the Bureau and seek a correction in accordance
with the procedures set forth in the federal
Fair Credit Reporting Act. The address of the Bureau's information office is
Post Office Box 105, Essex Station, Boston, Massachusetts 02112, telephone
number (617) 426-3660. Midland National Life Insurance Company, or its
reinsurers, may also release information in its file to other life insurance
companies to whom you may apply for life or health insurance, or to whom a
claim for benefits may be submitted.
Page 2 - Application to MIDLAND NATIONAL LIFE INSURANCE COMPANY
Details of questions answered "yes" in Section 15 through 18. Include question
number, full names and addresses of physicians and names of individuals to whom
history pertains.
Question 15 to be completed on both non-medical and examined applications.
Yes
No
15. Has any person proposed for insurance in Section 1 on reverse side
(a) Received treatment for drug or alcohol use or used marijuana; narcotic,
hallucinogenic or habit forming drugs not prescribed by a physician or is any
such person currently using marijuana or such drugs?
(b) Had any motor vehicle moving violations or accidents or been arrested for
driving under the influence of alcohol or drugs within the last five years?
(c) Been arrested for any reason other than moving traffic violations?
(d) Flown other than as a fare-paying passenger within the last tow years, or
contemplate such flying in the future? (If yes, complete Aviation
Questionnaire.)
(e) Any past, present or expected activity in racing, skin or sky diving, or
any other hazardous sport or hobby? (If yes, complete Hazardous Activities
Questionnaire.)
(f) Ever had an application for insurance or reinstatement of insurance
declined, postponed, rated up or modified? Why?
(g) Traveled or resided outside the U.S. or intends to travel or reside
outside the U.S.?
16. Has any person proposed for insurance in Section 1 on reverse side
ever had or been treated for
(a) Chest pain, heart murmur, high blood pressure, or any other disease of the
heart, blood, or blood vessels?
(b) Peptic ulcer, indigestion, or any other disease of the stomach,
intestines, gall bladder or liver?
(c) Emphysema, bronchitis, asthma, pleurisy, or any other disease of the chest
or lungs?
(d) Kidney stone, diabetes; albumin, pus, blood or sugar in urine; venereal
disease, or any other disease of the kidneys, bladder or reproductive organs?
(e) An immune deficiency disorder, AIDS, ARC (AIDS related complex) or been
told test results indicate exposure to the AIDS virus?
(f) Severe headaches, fainting spells, epilepsy, paralysis, nervousness,
mental disorder, or any other disease of the brain or nervous system?
(g) Any impairment of sight or hearing?
(h) Cancer, tumor or any other illness or injury not mentioned above?
17. Other than indicated above, has any person proposed for insurance in
Section 1 on reverse side
(a) Ever applied for or received a pension or disability benefit?
(b) Been hospitalized in the past 5 years?
(c) Consulted a physician during the past 5 years?
(d) Had a change of weight in the past year?
(e) Had an immediate family member with a history of cancer, diabetes, mental,
nervous, heart or circulatory disorder?
18. Is any person proposed for insurance in Section 1 on reverse side now
under observation or taking treatment or been advised to have any tests,
hospitalization or surgery which has not been completed?
19. Are medical records under any other name (maiden name, etc.)?
Yes
No
If yes, please indicate full name.
Name and Address of Primary Physicians (if not specified above, date last
consulted)
Telephone Number of Primary Physicians
( )
IT IS DECLARED that the statements and answers in this application or given to
the examiner in Part II, should examination be required, are complete and true
to the best knowledge and belief of the undersigned. IT IS AGREED: (1) that
any waiver or modification of this application will not be effective unless in
writing and signed by the President, a Vice President, the Secretary or an
Assistant Secretary; (2) that no insurance shall be in effect under this
application (except as may be provided in the receipt bearing the same date as
this application) unless and until the application has been approved and
accepted by the Company at its Home Office and the policy delivered to and
accepted by the Owner and the full first premium has been paid while each
person proposed for insurance is alive and while the state of health and other
conditions affecting insurability are as stated in this application and
examination, if required. (If a List Billing Authorization or Government
Allotment is indicated in Section 9a and has actually been signed and delivered
for the correct amount, this shall be considered the same as payment of the
full first premium); (3) that the acceptance of any policy issued on this
application shall constitute a ratification of any correction or amendment
made by the Company, except that when issued in Maryland, no change in amount,
classification, plan of insurance, or benefits shall be effective unless agreed
to in writing by the applicant.
I also acknowledge receipt of Fair Credit Reporting Act and Medical Information
Bureau Notifications.
TAX PAYER IDENTIFICATION NUMBER CERTIFICATION: Under penalties of perjury,
I certify that:
1. The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be assigned to me), and
2. I am not subject to backup withholding because(a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
that I am subject to backup withholding as a result of a failure to report
all interest and dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding. (Please check appropriate response.)
AUTHORIZATION: I hereby authorize any licensed physician, medical
practitioner,
hospital, clinic or other medical or medically related facility, insurance
company, the Medical Information Bureau or other organization, institution or
person, that has any records or knowledge of me or my child for whom insurance
application is made, or my health or my child's health, to give to Midland
National Life Insurance Company, or its reinsurers, any such information. A
reproduction of this authorization shall be as valid as the original.
Make all checks payable to Midland National Life Insurance Company.
PROPOSED INSURED if 15 YEARS OR OLDER (Signature)
X
SIGNED AT (City, State)
DATE
OWNER (Signature)
SPOUSE PROPOSED FOR INSURANCE (Signature)
To the best of my knowledge, this application is is not involved in
replacement of life insurance or annuities, as defined in applicable
Insurance Department Regulations, except as stated in Section 9a.
SOLICITING AGENT (Signature)
PRINT AGENT'S LAST NAME
CODE NO.
TELEPHONE NUMBER
( )
OTHER AGENT (Please Print)
% CREDIT
CODE NO.
GENERAL AGENT (Please Print)
CODE NO.
7300.txt
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