As filed with the Securities and Exchange Commission on May 1, 1998
Registration No. 33-76336
Registration No. 811-5343
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
Registration Statement Under the Securities Act of 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 6 [X]
For Registration Under the Investment Company Act of 1940
Amendment No. 21 [X]
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Life of Virginia Separate Account 4
(Exact name of registrant)
The Life Insurance Company of Virginia
(Name of depositor)
6610 W. Broad Street
Richmond, Virginia 23230
(Address of depositor's principal executive office)
Depositor's telephone number: (804) 281-6000
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<S> <C>
Name and address of Agent for Service: Copy to:
Linda L. Lanam Stephen E. Roth, Esquire
Senior Vice President, General Counsel & Secretary Sutherland, Asbill & Brennan LLP
The Life Insurance Company of Virginia 1275 Pennsylvania Avenue, N.W.
6610 W. Broad Street Washington, D.C. 20004-2415
Richmond, Virginia 23230
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It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on pursuant to paragraph (a) of Rule 485
Title of Securities Being Offered:
Interests in a Separate Account Under Flexible Premium Variable Deferred
Annuity Policies
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<PAGE>
Cross Reference Sheet
Pursuant to Rule 481
Showing Location in Part A (Prospectus) and Part B (Statement of Additional
Information) of Registration Statement of Information Required by Form N-4
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<S><C>
PART A
Item of Form N-4 Prospectus Caption
1. Cover Page ..................... Cover Page
2. Definitions .................... Definitions
3. Synopsis ....................... Summary, Fee Table
4. Condensed Financial
Information .................. Financial Information; Total Return and Yield
5. General
(a) Depositor ................ The Life Insurance Company of Virginia
(b) Registrant ............... Account 4
(c) Portfolio Company ........ The Funds
(d) Fund Prospectus .......... The Funds
(e) Voting Rights ............ Voting Rights and Reports
(f) Administrators ........... N/A
6. Deductions and Expenses
(a) General .................. Charges and Deductions; Summary
(b) Sales Load % ............. Sales Charges; Summary
(c) Special Purchase Plan .... N/A
(d) Commissions .............. Distribution of the Policies
(e) Expenses - Registrant .... Charges Against Account 4; Summary
(f) Fund Expenses ............ The Funds; Other Charges
(g) Organizational Expenses .. N/A
7. Contracts
(a) Persons with Rights ...... Summary; The Policy; Distributions Under the Policy; Income
Payments; Voting Rights and Reports
(b) (i) Allocation of
Purchase Payments ... Allocation of Premium Payments
(ii) Transfers ........... Transfers
(iii) Exchanges ........... N/A
(c) Changes .................. Additions, Deletions or Substitutions of Investments; Changes by the
Owner
(d) Inquiries ................ Cover page; Summary; (SAI) Written Notice
8. Annuity Period ................. Income Payments; Transfers; (SAI) Transfer of Annuity Units
9. Death Benefit .................. Death Provisions;
Death Benefit; Payment
of Benefits
10. Purchases and Contract Value
(a) Purchases ................ Purchasing the Policies; Accumulation of Account alue; Value of
Accumulation Units
(b) Valuation ................ Value of Accumulation Units
(c) Daily Calculation ........ Value of Accumulation Units
(d) Underwriter .............. Distribution of the Policies
11. Redemptions
(a) - By Owners .............. Surrenders; Partial Surrenders
- By Annuitant ........... Optional Payment Plans
(b) Texas ORP ................ Restrictions on Distributions From Certain Policies
(c) Check Delay .............. Payment Under the Policies
(d) Lapse .................... N/A
(e) Free Look ................ Examination of Policy (Refund Privilege)
12. Taxes .......................... Federal Tax Matters
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<TABLE>
<S><C>
13. Legal Proceedings .............. Legal Proceedings
14. Table of Contents for the
Statement of Additional
Information ................... Statement of Additional Information Table of Contents
PART B
Item of Form N-4 Part B Caption
15. Cover Page ...................... Cover Page
16. Table of Contents ............... Table of Contents
17. General Information and
History ........................ The Life Insurance Company of Virginia
18. Services
(a) Fees and Expenses of
Registrant ................ N/A
(b) Management Contracts .... N/A
(c) Custodian ................. Safekeeping of the Assets of Account 4
Independent Public
Accountant ................ Experts
(d) Assets of Registrant ...... N/A
(e) Affiliated Persons ........ N/A
(f) Principal Underwriter ..... Transfer of Annuity Units; Distribution of the Policies
19. Purchase of Securities
Being Offered .................. (Prospectus) Distribution of the Policies
Offering Sales Load ............ N/A
20. Underwriters .................... (Prospectus) Distribution of the Policies
21. Calculation of Performance
Data ............................ Calculation of Total Return and Yield; (Prospectus) Yield and Total
Return
22. Annuity Payments ................ (Prospectus) Income Payments
23. Financial Statements ............ Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements
and Exhibits ................... Financial Statements and Exhibits
(a) Financial Statements ....... (a) Financial Statements
(b) Exhibits ................... (b) Exhibits
25. Directors and Officers
of the Depositor ................ Directors and Officers of Life of Virginia
26. Persons Controlled By or
Under Common Control with the
Depositor or Registrant ......... Persons Controlled By or In Common Control with the Depositor or
Registrant
27. Number of Contractowners ..... Number of Policyowners
28. Indemnification ................. Indemnification
29. Principal Underwriters .......... Principal Underwriters
30. Location of Accounts
and Records ..................... Location of Accounts and Records
31. Management Services .......... Management Services
32. Undertakings .................... Undertakings
Signature Page .................. Signatures
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
PROSPECTUS FOR THE
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY
FORM P1142N 6/94
Offered by
THE LIFE INSURANCE COMPANY OF VIRGINIA
6610 West Broad Street, Richmond, Virginia 23230
(804) 281-6000
This Prospectus describes the above-named individual flexible premium
variable deferred annuity policy ("Policy") issued by The Life Insurance
Company of Virginia ("Life of Virginia"). The Policy is designed to help
individuals in long-term financial planning and provides for the accumulation
of capital on a tax-deferred basis for retirement or other long-term purposes.
The Policy may be used in connection with retirement plans, some of which may
qualify for favorable federal income tax treatment under the Internal Revenue
Code.
The Premium Payments are placed in Life of Virginia Separate Account 4
("Account 4"). Premium payments from other flexible premium variable deferred
annuity policies issued by Life of Virginia are also placed in Account 4. The
Policyowner allocates net premiums among one or more of the 37 Investment
Subdivisions of Account 4. Each Investment Subdivision of Account 4 will invest
solely in a designated investment portfolio that is part of a series-type
investment company. Currently, there are ten such Funds available under this
Policy: the Janus Aspen Series, the Variable Insurance Products Fund, the
Variable Insurance Products Fund II, the Variable Insurance Products Fund III,
the GE Investments Funds, Inc., the Oppenheimer Variable Account Funds, the
Federated Insurance Series, the Alger American Fund, the PBHG Insurance Series
Fund, Inc. and Goldman Sachs Variable Insurance Trust (collectively referred to
as the "Funds"). The Funds, their investment managers and their currently
available portfolios are listed on the following page.
This Prospectus must be read along with the current prospectuses for the Funds.
This Prospectus sets forth the basic information that a prospective
investor should know before investing. A Statement of Additional Information
containing more detailed information about the Policy and Account 4 is
available free by writing Life of Virginia at the address above or by calling
(800) 352-9910. The Statement of Additional Information, which has the same
date as this Prospectus, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. The Table of Contents of
the Statement of Additional Information is included at the end of this
Prospectus.
Please Read This Prospectus Carefully And Retain It For Future Reference
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SHARES IN THE FUNDS AND INTERESTS IN THE POLICIES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, A BANK, AND THE SHARES AND
INTERESTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
The Date of This Prospectus Is May 1, 1998.
1
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Janus Aspen Series:
Growth Portfolio, Aggressive Growth Portfolio, International Growth Portfolio,
Worldwide Growth Portfolio, Balanced Portfolio, Flexible Income Portfolio,
Capital Appreciation Portfolio
Variable Insurance Products Fund:
VIP Equity-Income Portfolio, VIP Overseas Portfolio, VIP Growth Portfolio
Variable Insurance Products Fund II:
VIP II Asset Manager Portfolio, VIP II Contrafund Portfolio
Variable Insurance Products Fund III:
VIP III Growth & Income Portfolio, VIP III Growth Opportunities Portfolio
GE Investments Funds, Inc.:
S&P 500 Index Fund, Money Market Fund, Total Return Fund, International Equity
Fund, Real Estate Securities Fund, Global Income Fund, Value Equity Fund,
Income Fund, U.S. Equity Fund*
Oppenheimer Variable Account Funds:
Oppenheimer Bond Fund, Oppenheimer Aggressive Growth Fund, Oppenheimer Growth
Fund, Oppenheimer High Income Fund, Oppenheimer Multiple Strategies Fund
Federated Insurance Series:
Federated American Leaders Fund II, Federated Utility Fund II, Federated High
Income Bond Fund II
The Alger American Fund:
Alger American Growth Portfolio, Alger American Small Capitalization Portfolio
PBHG Insurance Series Fund, Inc.:
PBHG Growth II Portfolio, PBHG Large Cap Growth Portfolio
Goldman Sachs Variable Insurance Trust Fund:*
Goldman Sachs Growth and Income Fund, Goldman Sachs Mid Cap Equity Fund
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* The U.S. Equity Fund for GE Investments Funds, Goldman Sachs Growth and
Income Fund, and Goldman Sachs Mid Cap Equity Fund for Goldman Sachs
Variable Insurance Trust Fund are not available at this time in connection
with Policies issued to California Policyowners.
2
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TABLE OF CONTENTS
Page
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Definitions 4
Fee Table 5
Summary 12
Financial Information 14
The Life Insurance Company of Virginia
and Life of Virginia Separate Account 4 16
The Life Insurance Company of Virginia 16
IMSA Disclosure 16
Account 4 16
Additions, Deletions, or Substitutions of
Investments 16
The Funds 17
Janus Aspen Series 17
Variable Insurance Products Fund 18
Variable Insurance Products Fund II 18
Variable Insurance Products Fund III 18
GE Investments Funds, Inc. 18
Oppenheimer Variable Account Funds 19
Federated Insurance Series 20
The Alger American Fund 20
PBHG Insurance Series Fund, Inc. 20
Goldman Sachs Variable Insurance Trust 21
Resolving Material Conflicts 21
Total Return and Yield 21
The Policy 23
Purchasing the Policies 23
Allocation of Premium Payments 23
Accumulation of Account Value 24
Value of Accumulation Units 24
Transfers 24
Telephone Transfers 25
Dollar-Cost Averaging 25
Portfolio Rebalancing 25
Powers of Attorney 26
Examination of Policy (Refund
Privilege) 26
Distributions Under the Policy 26
Surrender (Withdrawal) 26
Systematic Withdrawals 27
Death Provisions 28
Restrictions on Distributions from
Certain Policies 29
Charges and Deductions 30
Charges Against Account 4 30
Page
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Policy Maintenance Charge 30
Annual Death Benefit Charge 30
Sales Charges 31
Transfer Charges 32
Governmental Charges 32
Other Charges 32
Reduction of Charges for Group Sales 32
Income Payments 33
Monthly Income Benefit 33
Determination of Monthly Income
Benefits 33
Optional Payment Plans 34
Federal Tax Matters 35
Introduction 35
Non-Qualified Policies 36
Qualified Policies 38
IRA Policies 38
Roth IRAs 39
Simplified Employee Pension Plans 41
SIMPLE IRAs 41
Section 403(B) Annuities 41
Deferred Compensation Plans of State
and Local Government and
Tax-Exempt Organizations 42
Other Qualified Retirement Plans 42
Legal and Tax Advice for Qualified
Plans 42
Direct Rollover and Mandatory
Withholding Requirements 42
Federal Income Tax Withholding 43
General Provisions 43
The Owner 43
The Annuitant 43
The Beneficiary 43
Changes by the Owner 43
Evidence of Death, Age, Sex or Survival 44
Payment Under The Policies 44
Distribution of the Policies 44
Voting Rights and Reports 44
Year 2000 Compliance 45
Legal Proceedings 45
Statement of Additional Information Table
of Contents 46
3
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DEFINITIONS
Account Value -- The value of the Policy equal to the Account Value
allocated to the Investment Subdivisions of Account 4.
Account 4 -- Life of Virginia Separate Account 4, a separate investment
account established by Life of Virginia to receive and invest premiums paid
under the Policies, and other variable annuity policies issued by Life of
Virginia.
Accumulation Unit -- An accounting unit of measure used in calculating the
Account Value prior to the Maturity Date.
Additional Premium Payment -- Any Premium Payment made after the initial
Premium Payment.
Annuitant -- The Annuitant is the person named in the Policy upon whose
age and, where appropriate, sex Monthly Income Benefits are determined. The
Annuitant must be the Owner of the Policy unless the Policy is owned by a trust
established for the benefit of the Annuitant. If a Joint Annuitant is named in
the Policy, unless stated otherwise, references to "Annuitant" mean both the
Annuitant and the Joint Annuitant.
Annuity Unit -- An accounting unit of measure used in the calculation of
the amount of the second and each subsequent Variable Income Payment.
Business Day -- Any day that the New York Stock Exchange is open for
business and any other day in which there is a material change in the value of
the assets in Account 4.
Code -- The Internal Revenue Code of 1986, as amended.
Death Benefit -- The optional benefit provided under a Policy upon the
death of an Annuitant prior to the Maturity Date.
Designated Beneficiary(ies) -- The person(s) designated in the Policy who
is alive (or in existence for non-natural designations) on the date of an
Annuitant's death and who will be treated as the sole owner of the Policy
following such a death.
Due Proof of Death -- Proof of death that is satisfactory to Life of
Virginia. Such proof may consist of the following if acceptable to Life of
Virginia:
(a) A certified copy of the death certificate; or
(b) A certified copy of the decree of a court of competent jurisdiction as
to the finding of death.
Final Annuitant -- If a Joint Annuitant was named and either the Annuitant
or the Joint Annuitant dies, the survivor becomes the Final Annuitant.
Fixed Income Payments -- Payments made pursuant to an optional payment
plan the value of which are guaranteed by Life of Virginia.
Funds -- The mutual funds designated as eligible investments for Account
4.
General Account -- The assets of Life of Virginia that are not segregated
in any of the separate investment accounts of Life of Virginia.
Home Office -- The principal offices of The Life Insurance Company of
Virginia at 6610 West Broad Street, Richmond, Virginia 23230.
Income Payment -- One of a series of payments made under either a Monthly
Income Benefit or one of the optional payment plans.
Investment Subdivision -- A subdivision of Account 4, each of which
invests exclusively in shares of a designated portfolio of one of the Funds.
All investment subdivisions may not be available in all states.
Joint Annuitant -- The person, if named in the Policy, whose age and sex
is used with those of the Annuitant to determine the amount of the Monthly
Income Benefits.
Joint Owner -- Joint Owners own the Policy equally. If one Joint Owner
dies, the surviving Joint Owner becomes the sole owner of the Policy.
IRA Policy -- An individual retirement annuity policy that receives
favorable federal income tax treatment under Section 408 of the Code.
4
<PAGE>
Maturity Date -- The date stated in the Policy on which Income Payments
are scheduled to commence, if an Annuitant is living on that date.
Monthly Income Benefit -- The monthly amounts payable to the Annuitant
beginning on the Maturity Date.
Net Investment Factor -- An index applied to measure the investment
performance of an Investment Subdivision from one Valuation Period to the next.
Non-Qualified Policy -- Policies not sold or used in connection with
retirement plans receiving favorable federal income tax treatment under the
Code.
Owner -- The Owner is entitled to the ownership rights stated in the
Policy. The original Owner is named in the Policy.
Policy -- The variable annuity policy issued by Life of Virginia and
described in this Prospectus. The term "Policy" or "Policies" includes the
Policy described in this Prospectus, the policy application, any supplemental
applications, any endorsements and riders.
Policy Date -- Generally, the date on which the application was signed and
the initial premium was paid.
Premium Payment(s) -- An amount paid to Life of Virginia by the Owner or
on the Owner's behalf as consideration for the benefits provided by the Policy.
Qualified Policies -- Policies used in connection with retirement plans
which receive favorable federal income tax treatment under the Code.
Surrender Value (or "Withdrawal Value") -- The Account Value less any
applicable surrender charge.
Valuation Period -- The period between the close of business on a Business
Day and the close of business on the next succeeding Business Day.
Variable Income Payments -- Payments made pursuant to a payment plan and
which fluctuate based on the investment performance of Investment Subdivisions
selected by the Owner.
Withdrawal Value (or "Surrender Value") -- The Account Value less any
applicable surrender charge.
FEE TABLE
<TABLE>
<S> <C>
Owner Transaction Expenses:
Sales Charge on Premium Payments ............................................... none
Maximum Contingent Deferred Sales Charge (as a percentage of premium payments) . 6.00%
Other surrender fees ........................................................... none
Transfer charge
First transfer each month .................................................... none
Subsequent transfers ......................................................... $ 10.00
Annual Expenses
(as a percentage of account value)
Mortality and expense risk charge .............................................. 1.25%
Administrative Expense Charge .................................................. .15%
Total Annual Expenses .......................................................... 1.40%
=======
Other Annual Expenses
Annual Policy Maintenance Charge ............................................... $ 25.00
Maximum Annual Death Benefit Charge (as a percentage of average benefit amount) .35%*
</TABLE>
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* If elective death benefit applies.
5
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FUND CHARGES
The fees and expenses for each of the Funds (as a percentage of net
assets) for the year ended December 31, 1997 are set forth in the following
table. For more information on these fees and expenses, see the prospectuses
for the Funds which accompany this prospectus.
<TABLE>
<CAPTION>
Management
Fees (after fee Other Expenses
waiver as (after reimbursement- Total Annual
Fund applicable) as applicable) Expenses
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Janus Aspen Series:
Growth Portfolio .................................. 0.65% 0.05% 0.70%
Aggressive Growth Portfolio ....................... 0.73% 0.03% 0.76%
International Growth Portfolio .................... 0.67% 0.29% 0.96%
Worldwide Growth Portfolio ........................ 0.66% 0.08% 0.74%
Balanced Portfolio ................................ 0.76% 0.07% 0.83%
Flexible Income Portfolio ......................... 0.65% 0.10% 0.75%
Capital Appreciation Portfolio .................... 0.23% 1.03% 1.26%
Variable Insurance Products Fund:*
Equity-Income Portfolio ........................... 0.50% 0.08% 0.58%
Overseas Portfolio ................................ 0.75% 0.17% 0.92%
Growth Portfolio .................................. 0.60% 0.09% 0.69%
Variable Insurance Products Fund II:*
Asset Manager Portfolio ........................... 0.55% 0.10% 0.65%
Contrafund Portfolio .............................. 0.60% 0.11% 0.71%
Variable Insurance Products Fund III:*
Growth and Income Portfolio ....................... 0.49% 0.21% 0.70%
Growth Opportunities Portfolio .................... 0.60% 0.14% 0.74%
GE Investments Funds, Inc.:
S&P 500 Index Fund ................................ 0.34% 0.12% 0.46%
Money Market Fund ................................. 0.20% 0.15% 0.32%
Total Return Fund ................................. 0.50% 0.15% 0.65%
International Equity Fund ......................... 0.98% 0.36% 1.34%
Real Estate Securities Fund ....................... 0.83% 0.12% 0.95%
Global Income Fund ................................ 0.40% 0.17% 0.57%
Value Equity Fund ................................. 0.37% 0.09% 0.46%
Income Fund ....................................... 0.42% 0.17% 0.59%
U.S. Equity Fund .................................. 0.55% 0.25% 0.80%
Oppenheimer Variable Account Funds:
Oppenheimer Bond Fund ............................. 0.73% 0.05% 0.78%
Oppenheimer Aggressive Growth Fund ................ 0.71% 0.02% 0.73%
Oppenheimer Growth Fund ........................... 0.73% 0.02% 0.75%
Oppenheimer High Income Fund ...................... 0.75% 0.07% 0.82%
Oppenheimer Multiple Strategies Fund .............. 0.72% 0.03% 0.75%
Federated Insurance Series:
Federated American Leaders Fund II ................ 0.66% 0.19% 0.85%
Federated Utility Fund II ......................... 0.48% 0.37% 0.85%
Federated High Income Bond Fund II ................ 0.51% 0.29% 0.80%
The Alger American Fund:
Alger American Growth Portfolio ................... 0.75% 0.04% 0.79%
Alger American Small Capitalization Portfolio ..... 0.85% 0.04% 0.89%
PBHG Insurance Series Fund, Inc.:
PBHG Growth II Portfolio .......................... 0.0% 1.20% 1.20%
PBHG Large Cap Growth Portfolio ................... 0.0% 1.10% 1.10%
Goldman Sachs Variable Insurance Trust Fund:
Goldman Sachs Growth and Income Fund .............. 0.75% 0.15% 0.90%
Goldman Sachs Mid Cap Equity Fund ................. 0.80% 0.15% 0.95%
</TABLE>
* The fees and expenses reported for Variable Insurance Products Fund,
Variable Insurance Products Fund II and Variable Insurance Products Fund III
are prior to any fee waiver and/or reimbursement as applicable.
6
<PAGE>
The purpose of these tables is to assist the Owner in understanding the
various costs and expenses that an Owner will bear, directly and indirectly.
Except as noted below, the Tables reflect charges and expenses of Account 4 as
well as the underlying Funds as of December 31, 1997. For more information on
the charges described in these Tables see Charges and Deductions and the
Prospectuses for the underlying Funds which accompany this Prospectus. In
addition to the expenses listed above, premium taxes varying from 0 to 3.5% may
be applicable.
The expense information regarding the Funds was provided by those Funds.
The Variable Insurance Products Fund, Variable Insurance Products Fund II,
Variable Insurance Products Fund III, Oppenheimer Variable Account Funds, Janus
Aspen Series, Federated Insurance Series, The Alger American Fund, PBHG
Insurance Series Fund, Inc., Goldman Sachs Variable Insurance Trust and their
investment advisers are not affiliated with Life of Virginia. While Life of
Virginia has no reason to doubt the accuracy of these figures provided by these
non-affiliated Funds, Life of Virginia has not independently verified such
information. The annual expenses listed for all the Funds except for Variable
Insurance Products Fund, Variable Insurance Products Fund II and Variable
Insurance Products Fund III are net of certain reimbursements by the Funds'
investment advisers. Life of Virginia cannot guarantee that the reimbursements
will continue.
Absent reimbursements, the total annual expenses of the portfolios of the
Janus Aspen Series during 1997 would have been .78% for Growth Portfolio, .78%
for Aggressive Growth Portfolio, 1.08% for International Growth Portfolio, .81%
for Worldwide Growth Portfolio, .83% for Balanced Portfolio and 2.19% for
Capital Appreciation Portfolio.
With reimbursements, the total annual expenses of the portfolios of the
Variable Insurance Products Fund during 1997 would have been .57% for VIP
Equity-Income Portfolio, .90% for VIP Overseas Portfolio and .67% for VIP
Growth Portfolio.
With reimbursements, the total annual expenses of the portfolios of the
Variable Insurance Products Fund II during 1997 would have been .64% for VIP II
Asset Manager Portfolio and .68% for VIP II Contrafund Portfolio.
With reimbursements, the total annual expenses of the portfolios of the
Variable Insurance Products Fund III during 1997 would have been .73% for VIP
III Growth Opportunities Portfolio.
GE Investment Management Incorporated currently serves as investment
adviser to GE Investments Funds, Inc. (formerly Life of Virginia Series Fund,
Inc.). Prior to May 1, 1997, Aon Advisors, Inc. served as investment adviser to
this Fund and had agreed to reimburse the Fund for certain expenses of each of
the Fund's portfolios. Absent certain fee waivers or reimbursements, the total
annual expenses of the portfolios of GE Investments Funds, Inc. during 1997
would have been .46% for S&P 500 Index Fund, .48% for Money Market Fund, .65%
for Total Return Fund, 1.43% for International Equity, .96% for Real Estate
Fund, .57% for Global Income Fund, .46% for Value Equity Fund, .76% for Income
Fund and .86% for U.S. Equity Fund.
Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of the Federated Insurance Series during 1997 would have been
.94% for Federated American Leaders Fund II, 1.12% for Federated Utility Fund
II, and .89% for Federated High Income Bond Fund II.
Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of PBHG Insurance Series Funds, Inc. during 1997 would have been
4.38% for Growth II Portfolio and 5.21% for Large Cap Growth Portfolio.
Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of Goldman Sachs Variable Insurance Trust would have been 1.51%
for Growth and Income Fund and 1.33% for Mid Cap Equity Fund.
Other Policies
We offer other variable annuity policies which also invest in the same
portfolios of the Funds. These Policies may have different charges that could
affect the value of the Investment Subdivisions and may offer different
benefits more suitable to your needs. To obtain more information about these
policies, contact your agent, or call (800) 352-9910.
7
<PAGE>
EXAMPLES: A Policyowner would pay the following expense on a $1,000
investment, assuming a 5% annual return on assets and the charges and expenses
reflected in the Fee Table above (including the elective death benefit rider):
1. If you surrender* your Policy at the end of the applicable period:
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
- ------------------------- ---------- ----------- ----------- -----------
<S> <C>
Janus Aspen Series
Balanced ................................. 77.45 117.33 168.83 266.60
Flexible Income .......................... 76.65 114.91 164.76 258.49
Growth ................................... 76.14 113.39 162.22 253.39
Aggressive Growth ........................ 76.75 115.21 165.28 259.51
Worldwide Growth ......................... 76.54 114.59 164.26 257.48
Capital Appreciation ..................... 81.78 130.28 190.35 308.97
International Growth ..................... 78.76 121.26 175.38 279.62
VIPF
Equity-Income ............................ 74.92 109.73 156.09 241.04
Overseas ................................. 78.36 120.05 173.37 275.63
Growth ................................... 76.04 113.08 161.72 252.37
VIPF II
Asset Manager ............................ 75.64 111.86 159.68 248.27
Contrafund ............................... 76.24 113.69 162.73 254.42
VIPF III
Growth and Income ........................ 76.14 113.39 162.22 253.39
Growth Opportunities ..................... 76.54 114.59 164.26 257.48
GE Investments Funds, Inc.
Income Fund .............................. 75.03 110.03 156.60 242.08
S&P 500 Index ............................ 73.72 106.06 149.92 228.53
Total Return ............................. 75.64 111.86 159.68 248.27
International Equity ..................... 82.58 132.66 194.31 316.64
Real Estate Securities ................... 78.66 120.96 174.88 278.62
Global Income ............................ 74.82 109.42 155.57 240.00
Value Equity ............................. 73.72 106.06 149.92 228.53
Money Market ............................. 72.30 101.76 142.67 213.73
U.S. Equity .............................. 81.78 130.28 190.35 308.97
Oppenheimer Variable Account Funds
Multiple Strategies ...................... 76.65 114.91 164.76 158.49
Aggressive Growth ........................ 76.44 114.29 163.75 256.46
Growth ................................... 76.65 114.91 164.76 258.49
High Income .............................. 77.35 117.03 168.32 265.59
Bond ..................................... 76.95 115.81 166.29 261.54
Federated Insurance Series
High Income Bond II ...................... 77.15 116.42 167.31 263.57
Utility II ............................... 77.65 117.93 169.84 268.61
American Leaders II ...................... 77.65 117.93 169.84 268.61
The Alger American Fund
Growth ................................... 77.05 116.11 166.79 262.55
Small Capitalization ..................... 78.05 119.15 171.86 272.63
PBHG Insurance Series Fund, Inc.
Growth II ................................ 81.17 128.48 187.38 303.18
Large Cap Growth ......................... 80.17 125.48 182.40 293.43
Goldman Sachs Variable Insurance Trust Fund
Growth and Income ........................ 78.15 119.45 172.37 273.63
Mid Cap Equity ........................... 78.66 120.96 174.88 278.62
</TABLE>
* surrender includes annuitization over a period of less than 5 years.
8
<PAGE>
2. If you annuitize at the end of the applicable period, or do not surrender*:
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
- ------------------------- ---------- --------- ----------- -----------
<S> <C>
Janus Aspen Series
Balanced ................................. 23.61 72.74 124.53 266.60
Flexible Income .......................... 22.81 70.33 120.49 258.49
Growth ................................... 22.31 68.82 117.96 253.39
Aggressive Growth ........................ 22.91 70.63 121.00 259.51
Worldwide Growth ......................... 22.71 70.02 119.99 257.48
Capital Appreciation ..................... 27.91 85.62 145.94 308.97
International Growth ..................... 24.91 76.65 131.05 279.62
VIPF
Equity-Income ............................ 21.10 65.18 111.86 241.04
Overseas ................................. 24.51 75.45 129.05 275.63
Growth ................................... 22.21 68.51 117.46 252.37
VIPF II
Asset Manager ............................ 21.81 67.30 115.43 248.27
Contrafund ............................... 22.41 69.12 118.47 254.42
VIPF III
Growth and Income ........................ 22.31 68.82 117.96 253.39
Growth Opportunities ..................... 22.71 70.02 119.99 257.48
GE Investments Funds, Inc.
Income Fund .............................. 21.20 65.48 112.37 242.08
S&P 500 Index ............................ 19.90 61.53 105.73 228.53
Total Return ............................. 21.81 67.30 115.43 248.27
International Equity ..................... 28.71 87.99 149.87 316.64
Real Estate Securities ................... 24.81 76.35 130.55 278.62
Global Income ............................ 21.00 64.87 111.35 240.00
Value Equity ............................. 19.90 61.53 105.73 228.53
Money Market ............................. 18.49 57.25 98.52 213.73
U.S. Equity .............................. 27.91 85.62 145.94 308.97
Oppenheimer Variable Account Funds
Multiple Strategies ...................... 22.81 70.33 120.49 258.49
Aggressive Growth ........................ 22.61 69.72 119.48 256.46
Growth ................................... 22.81 70.33 120.49 258.49
High Income .............................. 23.51 72.44 124.03 265.59
Bond ..................................... 23.11 71.23 122.01 261.54
Federated Insurance Series
High Income Bond II ...................... 23.31 71.84 123.02 263.57
Utility II ............................... 23.81 73.34 125.54 268.61
American Leaders II ...................... 23.81 73.34 125.54 268.61
The Alger American Fund
Growth ................................... 23.21 71.53 122.51 262.55
Small Capitalization ..................... 24.21 74.55 127.55 272.63
PBHG Insurance Series Fund, Inc.
Growth II ................................ 27.31 83.83 142.98 303.18
Large Cap Growth ......................... 26.31 80.85 138.03 293.43
Goldman Sachs Variable Insurance Trust Fund
Growth and Income ........................ 24.31 74.85 128.05 273.63
Mid Cap Equity ........................... 24.81 76.35 130.55 278.62
</TABLE>
* surrender includes annuitization over a period of less than 5 years.
9
<PAGE>
EXAMPLES: A Policyowner would pay the following expense on a $1,000
investment, assuming a 5% annual return on assets and the charges and expenses
reflected in the Fee Table above (including the elective death benefit rider):
1. If you surrender* your Policy at the end of the applicable period:
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
- ------------------------------------------- ---------- ----------- ----------- -----------
<S> <C>
Janus Aspen Series
Balanced ................................. 81.03 128.47 188.09 308.73
Flexible Income .......................... 80.23 126.05 184.07 300.80
Growth ................................... 79.72 124.55 181.55 295.81
Aggressive Growth ........................ 80.33 126.36 184.57 301.79
Worldwide Growth ......................... 80.13 125.75 183.57 299.80
Capital Appreciation ..................... 85.35 141.35 209.41 350.19
International Growth ..................... 82.34 132.38 194.59 321.47
VIPF
Equity-Income ............................ 78.52 120.91 175.47 283.72
Overseas ................................. 81.94 131.18 192.59 317.57
Growth ................................... 79.62 124.25 181.04 294.81
VIPF II
Asset Manager ............................ 79.22 123.03 179.02 290.79
Contrafund ............................... 79.82 124.85 182.06 296.81
VIPF III
Growth and Income ........................ 79.72 124.55 181.55 295.81
Growth Opportunities ..................... 80.13 125.75 183.57 299.80
GE Investments Funds, Inc.
Income Fund .............................. 78.62 121.21 175.99 284.73
S&P 500 Index ............................ 77.31 117.26 169.36 271.47
Total Return ............................. 79.22 123.03 179.02 290.79
International Equity ..................... 86.15 143.72 213.32 357.69
Real Estate Securities ................... 82.24 132.08 194.09 320.50
Global Income ............................ 78.42 120.61 174.97 282.70
Value Equity ............................. 77.31 117.26 169.36 271.47
Money Market ............................. 75.84 112.53 160.89 251.15
U.S. Equity .............................. 85.35 141.35 209.41 350.19
Oppenheimer Variable Account Funds
Multiple Strategies ...................... 80.23 126.05 184.07 300.80
Aggressive Growth ........................ 80.03 125.45 183.07 298.81
Growth ................................... 80.23 126.05 184.07 300.80
High Income .............................. 80.93 128.17 187.59 307.74
Bond ..................................... 80.53 126.96 185.58 303.78
Federated Insurance Series
High Income Bond II ...................... 80.73 127.56 186.58 305.76
Utility II ............................... 81.23 129.07 189.09 310.70
American Leaders II ...................... 81.23 129.07 189.09 310.70
The Alger American Fund
Growth ................................... 80.63 127.26 186.08 304.77
Small Capitalization ..................... 81.64 130.28 191.09 314.63
PBHG Insurance Series Fund, Inc.
Growth II ................................ 84.75 139.56 206.46 344.52
Large Cap Growth ......................... 83.75 136.57 201.53 334.99
Goldman Sachs Variable Insurance Trust Fund
Growth and Income ........................ 81.74 130.58 191.59 315.61
Mid Cap Equity ........................... 82.24 132.08 194.09 320.50
</TABLE>
* surrender includes annuitization over a period of less than 5 years.
10
<PAGE>
2. If you annuitize at the end of the applicable period, or do not surrender*:
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
- ------------------------- ---------- --------- ----------- -----------
<S> <C>
Janus Aspen Series
Balanced ................................. 27.17 83.82 143.69 308.73
Flexible Income .......................... 26.37 81.42 139.69 300.80
Growth ................................... 25.87 79.92 137.18 295.81
Aggressive Growth ........................ 26.47 81.72 140.19 301.79
Worldwide Growth ......................... 26.27 81.12 139.19 299.80
Capital Appreciation ..................... 31.46 96.63 164.89 350.19
International Growth ..................... 28.47 87.71 150.15 321.47
VIPF
Equity-Income ............................ 24.67 76.30 131.14 283.72
Overseas ................................. 28.07 86.52 148.16 317.57
Growth ................................... 25.77 79.62 136.68 294.81
VIPF II
Asset Manager ............................ 25.37 78.41 134.67 290.79
Contrafund ............................... 25.97 80.22 137.69 296.81
VIPF III
Growth and Income ........................ 25.87 79.92 137.18 295.81
Growth Opportunities ..................... 26.27 81.12 139.19 299.80
GE Investments Funds, Inc.
Income Fund .............................. 24.77 76.60 131.65 284.73
S&P 500 Index ............................ 23.47 72.67 125.06 271.47
Total Return ............................. 25.37 78.41 134.67 290.79
International Equity ..................... 32.26 98.99 168.78 357.69
Real Estate Securities ................... 28.37 87.41 149.65 320.50
Global Income ............................ 24.57 76.00 130.64 282.70
Value Equity ............................. 23.47 72.67 125.06 271.47
Money Market ............................. 22.01 67.97 116.64 251.15
U.S. Equity .............................. 31.46 96.63 164.89 350.19
Oppenheimer Variable Account Funds
Multiple Strategies ...................... 26.37 81.42 139.69 300.80
Aggressive Growth ........................ 26.17 80.82 138.69 298.81
Growth ................................... 26.37 81.42 139.69 300.80
High Income .............................. 27.07 83.52 143.19 307.74
Bond ..................................... 26.67 82.32 141.19 303.78
Federated Insurance Series
High Income Bond II ...................... 26.87 82.92 142.19 305.76
Utility II ............................... 27.37 84.42 144.68 310.70
American Leaders II ...................... 27.37 84.42 144.68 310.70
The Alger American Fund
Growth ................................... 26.77 82.62 141.69 304.77
Small Capitalization ..................... 27.77 85.62 146.67 314.63
PBHG Insurance Series Fund, Inc.
Growth II ................................ 30.87 94.85 161.96 344.52
Large Cap Growth ......................... 29.87 91.88 157.05 334.99
Goldman Sachs Variable Insurance Trust Fund
Growth and Income ........................ 27.87 85.92 147.17 315.61
Mid Cap Equity ........................... 28.37 87.41 149.65 320.50
</TABLE>
* surrender includes annuitization over a period of less than 5 years.
11
<PAGE>
SUMMARY
The following Summary Of Prospectus Information Should Be Read In Conjunction
With the Detailed Information Appearing Elsewhere In This Prospectus.
The Policy
The Policy allows the Owner to accumulate funds on a tax-deferred basis
based on the investment experience of the assets underlying the Policy. After
the Maturity Date, this Policy also permits Variable Income Payments to be made
based upon either the investment performance of the selected Investment
Subdivisions of Account 4 or Fixed Income Payments based upon the guarantees of
Life of Virginia. The Policy may be purchased on a non-tax qualified basis
(i.e., a Non-Qualified Policy) or it can be purchased with the proceeds from
certain retirement or savings plans qualifying for favorable federal income tax
treatment (i.e., a Qualified Policy).
The Owner can allocate premiums among up to ten Investment Subdivisions.
Before the Maturity Date, the Account Value depends on the investment
experience of the selected Investment Subdivisions; therefore, before Income
Payments begin, the Owner bears the entire investment risk under this Policy.
The payee will bear the investment risk after Income Payments begin with
respect to Variable Income Payments.
In addition, under Policies sold through certain distribution systems,
Owners can allocate premiums or transfer amounts from the Investment
Subdivisions to a Guarantee Account. Contributions and/or transfers to the
Guarantee Account become part of the General Account of Life of Virginia.
Premium Payments
Except for certain group sales, an initial Premium Payment of at least
$5,000 ($2,000 for an IRA Policy) is required. Additional Premium Payments of
at least $500 for Non-Qualified Policies or $100 for Qualified Policies or $50
for IRA Policies generally may be made any time before Income Payments begin.
(See Purchasing the Policies.)
Except as stated below, Premium Payments are allocated among the
Investment Subdivisions (or, if applicable, a guarantee account) in accordance
with the Owner's written instructions. Premium payments may be allocated among
up to ten Investment Subdivisions at any one time (however, at any point in
time, Account Value may not be invested in more than ten Investment
Subdivisions). The minimum allocation permitted is 1% of each Premium Payment
but not less than $100. The Owner may, by written request, change the
allocation of subsequent Premium Payments. In states that require a return of
Premium Payments as a refund privilege, initial Premium Payments will be placed
in the Investment Subdivision that invests in the Money Market Fund of the GE
Investments Funds, Inc. (See Allocation of Premium Payments.)
Transfers
Before Income Payments begin the Owner may transfer amounts among the
Investment Subdivisions that are available at the time the transfer is
requested. Currently, there is no limit on the number of transfers that may be
made; however, Life of Virginia reserves the right to impose such a limit in
the future. The first transfer in each calendar month will be made without a
transfer charge. Thereafter, each time amounts are transferred, a transfer
charge of $10 will be imposed. (See Transfers.) Life of Virginia may not honor
transfers made by third parties holding multiple powers of attorney. (See
Powers of Attorney.)
After Variable Income Payments begin, the payee may transfer Annuity Units
among the available Investment Subdivisions once each calendar year. No
transfer charge will be imposed on such transfers.
Full and Partial Surrenders (Withdrawals)
Full or partial surrenders may be made any time before Income Payments
begin provided that the surrender is for at least $500 and that the surrender
will not reduce the Account Value to below $5,000 ($2,000 for an IRA Policy).
(See Surrender.) Amounts surrendered will generally be subject to a surrender
charge (also known as a contingent deferred sales charge). (See Sales Charges.)
12
<PAGE>
Charges and Deductions
To cover the costs of administering the Policies, Life of Virginia deducts
a daily charge at an effective annual rate of .15% of the average daily net
assets in Account 4 attributable to the policies, and an annual policy
maintenance charge of $25 from the Account Value attributable to each Policy.
The annual charge is made at the earlier of 1) next policy anniversary, or 2)
surrender.
Life of Virginia does not deduct any sales charge from Premium Payments;
however, it may deduct a surrender charge (also referred to as a contingent
deferred sales charge). (See Sales Charges -- Surrender Charge.) A surrender
charge is deducted from full surrenders and certain partial surrenders that
occur within seven years of any Premium Payments. If there is a full surrender
of the Policy during the first two years following a Premium Payment, a maximum
surrender charge equal to 6% of the amount surrendered will be imposed.
Thereafter, the charge decreases so that no surrender charge, or portion
thereof, is ever attributable to a Premium Payment made more than seven years
prior to the date of a full surrender.
Similarly, a surrender charge may be imposed on certain partial surrenders
where the Account Value surrendered is attributable to a Premium Payment made
within the last seven years. The charge is calculated by multiplying (1) the
surrender charge percentage, described above and (2) the lesser of (a) the
amount surrendered attributable to the Premium Payment and (b) the actual
Premium Payment, less the total of all surrender amounts previously deemed to
reduce that Premium Payment. The first partial surrender in a policy year is
not subject to the charge if the amount of that surrender is 10% of the Account
Value, or less.
A daily charge at an effective annual rate of 1.25% of the average daily
net assets in Account 4 attributable to the Policies is imposed against those
assets to compensate Life of Virginia for mortality and expense risks assumed
by it. (See Charges Against Account 4.)
Life of Virginia may deduct a charge for any governmental charges
incurred. Any applicable governmental charge may be deducted from either the
premium paid or from proceeds (including benefits for surrender, maturity and
death). (See Governmental Charges.)
In the event that the Owner elects to purchase a Guaranteed Minimum Death
Benefit Rider (See Elective Guaranteed Minimum Death Benefit Rider.), a charge
will be made each year for expenses related to the Death Benefit under the
Rider not exceeding .35% of the average Guaranteed Minimum Death Benefit during
the prior year. (See Annual Death Benefit Charge.)
Income Payments
Beginning on the Maturity Date, the Annuitant may receive Monthly Income
Benefits based upon either the investment performance of the selected
Investment Subdivisions or the guarantees of Life of Virginia. The amount of
the Monthly Income Benefits will depend on: (1) the Surrender Value on the
Maturity Date; (2) the amount of any applicable state and/or local governmental
charge; (3) the Annuitant's sex, where appropriate, and age on the Maturity
Date; and (4) the optional payment plan chosen.
With respect to Monthly Income Benefits and any Income Payments derived
from Death Benefit or Surrender Value proceeds, the Owner may select from a
number of optional payment plans including Income Payments for the life of an
Annuitant (or a different or additional person, depending upon the benefit
payable) with a guaranteed number of Income Payments. (See Optional Payment
Plans.)
Death Provisions
Subject to a number of distribution rules, certain benefits and other
policy options are available to certain persons on the death of an Annuitant
prior to the Maturity Date while the Policy is in force. (See Distributions
Under the Policy -- Death Provisions.) Owners may also elect to purchase a
Guaranteed Minimum Death Benefit Rider. (See Elective Guaranteed Minimum Death
Benefit Rider.)
Refund Privilege
The Owner has 10 days after the Policy is received to examine the Policy
and return it for a refund. Unless state law requires that Premium Payments be
returned as the refund, the amount of the refund will equal the Account Value.
If state law requires that Premium Payments be returned, the amount of the
refund will equal the greater of (1) the Account Value (without reduction by
any surrender charges) plus any amount deducted from the Premium Payments prior
to allocation to Account 4 and (2) the Premium Payments made. In certain states
the Owner may have more than 10 days to return the policy for a refund. (See
Examination of Policy (Refund Privilege.)
13
<PAGE>
Questions
Any questions about the Policy or the Funds in which the subdivisions
invest will be answered by Life of Virginia's Home Office. All inquiries can be
addressed to Life of Virginia, Variable Products Department, 6610 W. Broad
Street, Richmond, VA 23230; if by phone, call (800) 352-9910.
FINANCIAL INFORMATION
Financial statements for Account 4 and consolidated financial statements
for Life of Virginia (as well as the auditors' reports thereon) are in the
Statement of Additional Information.
Condensed Financial Information
The Accumulation Unit Values and the number of accumulation units
outstanding for each Investment Subdivision for the periods shown are as
follows:
<TABLE>
<CAPTION>
Accumulation Accumulation No. of Accumulation Accumulation No. of
Unit Values Unit Values Units Unit Values Unit Values Units
as of as of as of as of as of As of
1/02/98 12/31/97 12/31/97 1/01/96 12/31/96 12/31/96
FUNDS -------------- -------------- ------------ -------------- -------------- ------------
<S> <C>
Janus Aspen Series
Growth 18.98 18.95 7,270,898 13.41 15.66 4,882,922
Aggressive Growth 19.86 20.04 3,442,667 16.95 18.04 2,662,051
Worldwide Growth 22.98 22.85 10,111,685 14.91 11.67 682,605
International Growth++ 13.65 13.63 3,001,600 -- 18.97 5,146,187
Balanced@@ 14.66 14.65 2,804,435 10.62 12.17 992,496
Flexible Income@@ 12.49 12.45 869,089 10.48 11.29 325,169
Capital Appreciation++ 12.51 12.54 163,550 -- -- --
Variable Insurance Products Fund
Equity-Income 36.54 36.47 10,074,173 25.62 28.87 7,041,867
Growth 38.59 38.45 3,614,598 27.93 31.58 3,026,574
Overseas 20.76 20.65 1,762,588 16.82 18.78 1,557,443
Variable Insurance Products Fund II
Asset Manager 24.06 24.03 2,678,933 17.87 20.20 2,248,519
Contrafund@@ 20.29 20.32 8,595,677 13.88 16.60 5,493,999
Variable Insurance Products Fund III
Growth and Income ++ 12.38 12.36 976,086 -- -- --
Growth Opportunities ++ 12.35 12.28 1,049,540 -- -- --
GE Investments Funds, Inc.
Money Market 14.43 14.42 4,980,487 13.35 13.88 3,893,379
Government Securities -- -- -- 16.60 16.59 276,196
S&P 500 Index 38.82 38.68 3,025,140 24.52 30.11 1,262,502
Total Return 28.37 28.26 928,145 22.27 24.29 659,251
International Equity@@ 12.57 12.50 614,410 10.61 11.51 332,403
Real Estate Securities@@ 18.28 18.34 1,478,247 11.59 15.57 428,969
Global Income++ 10.24 10.24 79,290 -- -- --
Value Equity++ 13.11 13.13 730,616 -- -- --
Income Fund 10.05 10.01 903,249
Oppenheimer Variable Account Funds
High Income 30.60 30.57 2,934,974 24.31 27.63 1,715,755
Bond 20.54 20.42 994,017 18.35 18.96 707,097
Capital Appreciation 35.33 35.64 3,176,448 27.31 32.37 2,121,294
Growth 36.75 36.72 2,462,359 23.81 29.40 1,091,602
Multiple Strategies 25.90 25.80 1,200,126 19.60 22.32 748,002
Federated Insurance Series
Federated Utility II@@ 16.68 16.75 1,325,701 12.20 13.41 1,130,433
Federated High Income Bond II@@ 15.01 15.00 1,886,887 11.86 13.37 809,989
Federated American Leaders II 14.45 14.42 2,056,691 -- 11.05 265,832
The Alger American Fund
AA Growth@@ 13.13 13.34 4,380,186 9.63 10.76 2,962,177
AA Small Capitalization@@ 10.47 10.58 5,645,458 9.38 9.63 3,568,152
PBHG Insurance Series Fund, Inc.
Growth II++ 10.52 10.65 576,010 -- -- --
Large Cap Growth++ 11.61 11.71 346,833 -- -- --
</TABLE>
@@ Accumulation Unit Values as of 1/31/95 are not shown for the Investment
Subdivisions investing in these portfolios as they were not available to
Account 4 Owners at that time.
++ Unit Values are not shown for the Investment Subdivisions investing in
these portfolios, as they were not available to Account 4 Owners during the
periods shown.
Financial statements for Account 4 and consolidated financial statements for
Life of Virginia (as well as the auditors' reports thereon) are in the
Statement of Additional Information.
14
<PAGE>
Condensed Financial Information
The Accumulation Unit Values and the number of accumulation units
outstanding for each Investment Subdivision for the periods shown are as
follows:
<TABLE>
<CAPTION>
Accumulation No. of Accumulation Accumulation No. of
Accumulation Unit Values Units Unit Values Unit Values Units
Unit Values as of As of as of as of As of
as of 1/03/95 12/31/95 12/31/95 7/21/94 12/31/94 12/31/94
FUNDS --------------- -------------- ----------- -------------- -------------- ---------
<S> <C>
Janus Aspen Series
Growth 10.48 13.41 1,875,640 10.30 10.44 159,068
Aggressive Growth 13.53 16.95 1,251,004 11.51 13.48 169,799
Worldwide Growth 11.91 14.91 1,227,070 11.63 11.87 117,700
International Growth++ -- -- --
Balanced@@ -- 10.62 73,538 -- -- --
Flexible Income@@ -- 10.48 36,272 -- -- --
Capital Appreciation++ -- -- -- -- -- --
Variable Insurance Products Fund
Equity-Income 19.56 25.62 3,119,975 18.71 19.23 276,392
Growth 21.27 27.93 1,525,015 19.45 20.92 141,845
Overseas 15.82 16.82 829,371 16.18 15.55 197,672
Variable Insurance Products Fund II
Asset Manager 15.70 17.87 1,469,667 15.80 15.50 450,885
Contrafund@@ -- 13.88 2,007,948 -- -- --
Variable Insurance Products Fund III
Growth and Income ++ -- -- -- -- -- --
Growth Opportunities ++ -- -- -- -- -- --
GE Investments Funds, Inc.
Money Market 13.01 13.35 1,508,360 12.61 12.79 75,600
Government Securities 14.61 16.60 153,756 14.47 14.38 889
S&P 500 Index 18.58 24.52 400,009 17.96 18.27 10,408
Total Return 17.94 22.27 252,584 17.15 17.65 12,498
International Equity@@ -- 10.61 47,044 -- -- --
Real Estate Securities@@ -- 11.59 34,477 -- -- --
Global Income++ -- -- -- -- -- --
Value Equity++ -- -- -- -- -- --
Oppenheimer Variable Account Funds
High Income 20.83 24.31 561,144 20.99 20.49 77,818
Bond 16.17 18.35 275,480 16.08 15.90 11,655
Capital Appreciation 21.25 27.31 582,579 19.39 20.90 68,052
Growth 17.97 23.81 423,764 16.88 17.67 12,276
Multiple Strategies 17.66 19.60 256,681 16.27 16.38 26,302
Federated Insurance Series
Federated Utility II@@ -- 12.20 463,476 -- -- --
Federated High Income Bond II@@ -- 11.86 123,152 -- -- --
Federated American Leaders II -- -- -- -- -- --
The Alger American Fund
AA Growth@@ -- 9.63 312,011 -- -- --
AA Small Capitalization@@ -- 9.38 401,258 -- -- --
PBHG Insurance Series Fund, Inc.
Growth II++ -- -- -- -- -- --
Large Cap Growth++ -- -- -- -- -- --
</TABLE>
++ Unit Values are not shown for the Investment Subdivisions investing in
these portfolios, as they were not available to Account 4 Owners during the
periods shown.
@@ Accumulation Unit Values as of 1/31/95 are not shown for the Investment
Subdivisions investing in these portfolios as they were not available to
Account 4 Owners at that time.
15
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA
AND LIFE OF VIRGINIA SEPARATE ACCOUNT 4
The Life Insurance Company of Virginia
The Life Insurance Company of Virginia is a stock life insurance company
operating under a charter granted by the Commonwealth of Virginia on March 21,
1871. Eighty percent of the capital stock of Life of Virginia is owned by
General Electric Capital Assurance Corporation. The remaining 20% is owned by
GE Financial Assurance Holdings, Inc.. General Electric Capital Assurance
Corporation and GE Financial Assurance Holdings, Inc. are indirectly,
wholly-owned subsidiaries of General Electric Capital Corporation ("GE
Capital"). GE Capital, a New York corporation, is a diversified financial
services company. GE Capital subsidiaries consist of commercial and industrial
specialized, mid-market and indirect consumer financing businesses. GE
Capital's indirect parent, General Electric Company, founded more than one
hundred years ago by Thomas Edison, is the world's largest manufacturer of jet
engines, engineering plastics, medical diagnostic equipment and large-sized
electric power generation equipment.
Life of Virginia is principally engaged in the offering of life insurance
policies and ranks among the twenty-five (25) largest stock life insurance
companies in the United States in terms of business in force. Life of Virginia
is admitted to do business in forty-nine (49) states and the District of
Columbia. The principal offices of Life of Virginia are at 6610 W. Broad
Street, Richmond, Virginia 23230.
IMSA Disclosure
Life of Virginia is a member of the Insurance Marketplace Standards
Association (IMSA). Life of Virginia may use the IMSA membership logo and
language in its advertisements, as outlined in IMSA's Marketing and Graphics
Guidelines. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuities.
Account 4
Life of Virginia Separate Account 4 was established by Life of Virginia as
a separate investment account on August 19, 1987. Account 4 currently has 74
investment subdivisions, 37 of which are available under this Policy. Premiums
are allocated in accordance with the instructions of the Owner among up to 10
of the 37 investment subdivisions available under this Policy. Each of these
investment subdivision invests exclusively in an investment portfolio of one of
the ten Funds described below.
The assets of Account 4 are the property of Life of Virginia. Income and
both realized and unrealized gains or losses from the assets of Account 4 are
credited to or charged against the Account without regard to the income, gains,
or losses arising out of any other business Life of Virginia may conduct.
Although the assets in Account 4 attributable to the Policies are not
chargeable with liabilities arising out of any other business which Life of
Virginia may conduct, all obligations arising under the policies, including the
promise to make Income Payments, are general corporate obligations of Life of
Virginia. Furthermore, the assets of Account 4 are available to cover the
liabilities of Life of Virginia's General Account to the extent that the assets
of Account 4 exceed its liabilities arising under the Policies supported by it.
Account 4 is registered with the Securities and Exchange Commission (the
"Commission") as a unit investment trust under the Investment Company Act of
1940 (the "1940 Act") and meets the definition of a Separate Account under the
Federal Securities Laws. Registration with the Commission, however, does not
involve supervision of the management or investment practices or policies of
Account 4 by the Commission.
Additions, Deletions, or Substitutions of Investments
Life of Virginia reserves the right, subject to compliance with applicable
law, to make additions to, deletions from, or substitutions for the shares of
the Fund portfolios that are held by Account 4 or that Account 4 may purchase.
Life of Virginia also reserves the right to establish additional
Investment Subdivisions of Account 4, each of which would invest in a separate
portfolio of a Fund, or in shares of another investment company, with a
specified investment objective. One or more Investment Subdivisions may also be
eliminated if, in the sole discretion of Life of Virginia, marketing, tax, or
investment conditions warrant.
If deemed by Life of Virginia to be in the best interests of persons
having voting rights under the Policies, and, if permitted by law, Life of
Virginia may deregister Account 4 under the 1940 Act in the event such
registration is no longer
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required; manage Account 4 under the direction of a committee; or combine
Account 4 with other Life of Virginia separate accounts. To the extent
permitted by applicable law, Life of Virginia may also transfer the assets of
Account 4 associated with the Policies to another separate account. In
addition, Life of Virginia may, when permitted by law, restrict or eliminate
any voting rights of Owners or other persons who have voting rights as to
Account 4.
THE FUNDS
Separate Account 4 currently invests in ten mutual funds. Each of the
Funds currently available under the Policy is a registered open-end,
diversified investment company of the series-type.
Each Investment Subdivision invests exclusively in a designated investment
portfolio of one of the Funds. The assets of each such portfolio are separate
from other portfolios of that Fund and each portfolio has separate investment
objectives and policies. As a result, each portfolio operates as a separate
investment portfolio and the investment performance of one portfolio has no
effect on the investment performance of any other portfolio. Some of the Funds
may, in the future, create additional portfolios.
Each of the Funds sells its shares to Separate Account 4 in accordance
with the terms of a participation agreement between the Fund and Life of
Virginia. The termination provisions of those agreements vary. A summary of
these termination provisions may be found in the Statement of Additional
Information. Should an agreement between Life of Virginia and a Fund terminate,
the Account will not be able to purchase additional shares of that Fund. In
that event, Policyowners will no longer be able to allocate Account Values or
Premium Payments to Investment Subdivisions investing in portfolios of that
Fund.
Additionally, in certain circumstances, it is possible that a Fund or a
portfolio of a Fund may refuse to sell its shares to Separate Account 4 despite
the fact that the participation agreement between the Fund and Life of Virginia
has not been terminated. Should a Fund or a portfolio of a Fund decide not to
sell its shares to Life of Virginia, Life of Virginia will be unable to honor
Policyowner requests to allocate their account values or premium payments to
Investment Subdivisions investing in shares of that Fund or portfolio.
Certain Investment Subdivisions invest in portfolios that have similar
investment objectives and/or policies; therefore, before choosing Investment
Subdivisions, carefully read the individual prospectuses for the Funds, along
with this prospectus.
Janus Aspen Series
The Janus Aspen Series has seven portfolios that are available under this
Policy: Growth Portfolio, Aggressive Growth Portfolio, Worldwide Growth
Portfolio, International Growth Portfolio, Balanced Portfolio, Flexible Income
Portfolio, and Capital Appreciation Portfolio.
Growth Portfolio has the investment objective of long-term capital growth
in a manner consistent with the preservation of capital. The Growth Portfolio
is a diversified portfolio that pursues its objective by investing in common
stocks of companies of any size. Generally, this portfolio emphasizes larger,
more established issuers.
Aggressive Growth Portfolio has the investment objective of long-term
growth of capital. The Aggressive Growth Portfolio is a non-diversified
portfolio that will seek to achieve its objective by normally investing at
least 50% of its equity assets in securities issued by medium-sized companies.
Worldwide Growth Portfolio has the investment objective of long-term
growth of capital in a manner consistent with the preservation of capital. The
Worldwide Growth Portfolio will seek to achieve its objective by investing in a
diversified portfolio of common stocks of foreign and domestic issuers of all
sizes. The portfolio normally invests in issuers from at least five different
countries including the United States.
International Growth Portfolio has the investment objective of long-term
growth of capital. The International Growth Portfolio will seek to achieve its
objective primarily through investments in common stocks of issuers located
outside the United States. The portfolio normally invests at least 65% of its
total assets in securities of issuers from at least five different countries,
excluding the United States.
Balanced Portfolio has the investment objective of seeking long-term
growth of capital, consistent with the preservation of capital and balanced by
current income. The portfolio normally invests 40-60% of its assets in
securities selected primarily for their growth potential and 40-60% of its
assets in securities selected primarily for their income potential.
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Flexible Income Portfolio has the investment objective of seeking to
obtain maximum total return, consistent with preservation of capital. Total
return is expected to result from a combination of income and capital
appreciation. The portfolio pursues its objective primarily by investing in any
type of income-producing securities. This portfolio may have substantial
holdings of lower-rated debt securities or "junk" bonds. The risks of investing
in junk bonds are described in the prospectus for Janus Aspen Series, which
should be read carefully before investing.
Capital Appreciation Portfolio has the investment objective of seeking
long-term growth of capital by investing primarily in common stocks of
companies of any size.
Janus Capital Corporation serves as investment adviser to Janus Aspen
Series.
Variable Insurance Products Fund
Variable Insurance Products Fund has three portfolios that are available
under this Policy: VIP Equity-Income Portfolio, VIP Overseas Portfolio and VIP
Growth Portfolio.
VIP Equity-Income Portfolio seeks reasonable income by investing primarily
in income-producing equity securities. In choosing these securities, the
Portfolio will also 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 Overseas Portfolio seeks long-term growth of capital primarily through
investments in foreign securities. The portfolio provides a means for investors
to diversify their own portfolios by participating in companies and economies
outside of the United States.
VIP Growth Portfolio seeks to achieve capital appreciation. The portfolio
normally purchases common stocks, although its investments are not restricted
to any one type of security. Capital appreciation may also be found in other
types of securities, including bonds and preferred stocks.
Fidelity Management & Research Company serves as investment adviser to
Variable Insurance Products Fund.
Variable Insurance Products Fund II
Variable Insurance Products Fund II has two portfolios that are available
under this Policy: VIP II Asset Manager Portfolio and VIP II Contrafund
Portfolio.
VIP II Asset Manager Portfolio seeks high total return with reduced risk
over the long-term by allocating its assets among domestic and foreign stocks,
bonds and short-term money market instruments.
VIP II Contrafund Portfolio seeks capital appreciation by investing mainly
in equity securities of companies believed to be undervalued or out-of-favor.
Fidelity Management & Research Company serves as investment adviser to
Variable Insurance Products Fund II.
Variable Insurance Products Fund III
Variable Insurance Products Fund III has two portfolios that are available
under this Policy: VIP III Growth & Income Portfolio and VIP III Growth
Opportunities Portfolio.
VIP III Growth & Income Portfolio seeks high total return through a
combination of current income and capital appreciation by investing mainly in
equity securities.
VIP III Growth Opportunities Portfolio seeks capital growth by investing
primarily in common stock and securities convertible to common stock.
Fidelity Management & Research Company serves as investment adviser to
Variable Insurance Products Fund III.
GE Investments Funds, Inc.
GE Investments Funds, Inc. (GE Investments Funds) has nine portfolios that
are available under this Policy: S&P 500 Index Fund, Money Market Fund, Total
Return Fund, International Equity Fund, Real Estate Securities Fund, Global
Income Fund, Value Equity Fund, Income Fund and U.S. Equity Fund. The U.S.
Equity Fund is not available at this time in connection with policies issued to
California policyowners.
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S&P 500 Index Fund1 has the investment objective of providing capital
appreciation and accumulation of income that corresponds to the investment
return of the Standard & Poor's 500 Composite Stock Price Index, through
investment in common stocks traded on the New York Stock Exchange and the
American Stock Exchange, to a limited extent, in the over-the-counter markets.
Money Market Fund has the investment objective of providing the highest
level of current income as is consistent with high liquidity and safety of
principal by investing in high quality money market securities.
Total Return Fund has the investment objective of providing the highest
total return, composed of current income and capital appreciation, as is
consistent with prudent investment risk by investing in common stocks, bonds
and money market instruments, the proportion of each being continuously
determined by the investment adviser.
International Equity Fund has the investment objective of providing
long-term capital appreciation. The portfolio seeks to achieve its objective by
investing primarily in equity and equity-related securities of companies that
are organized outside of the U.S. or whose securities are principally traded
outside of the U.S.
Real Estate Securities Fund has the investment objective of providing
maximum total return through current income and capital appreciation. The
portfolio seeks to achieve its objective by investing primarily in securities
of U.S. issuers that are principally engaged in or related to the real estate
industry including those that own significant real estate assets. The portfolio
will not invest directly in real estate.
Global Income Fund has the investment objective of high total return,
emphasizing current income and, to a lesser extent, capital appreciation. The
portfolio seeks to achieve these objectives by investing primarily in
income-bearing debt securities and other income-bearing instruments of U.S. and
foreign issuers.
Value Equity Fund has the investment objective of providing long-term
capital appreciation. The portfolio seeks to achieve this objective by
investing primarily in common stock and other equity securities that are
undervalued by the market and offer above-average capital appreciation
potential.
Income Fund has the investment objective or providing maximum income
consistent with prudent investment management and preservation of capital by
investing primarily in income-bearing debt securities and other income bearing
instruments.
U.S. Equity Fund has the investment objective of proving long-term growth
of capital by investing primarily in equity securities of U.S. companies.
GE Investment Management Incorporated serves as investment adviser to GE
Investments Funds.
Oppenheimer Variable Account Funds
Oppenheimer Variable Account Funds has five portfolios that are available
under this Policy: Oppenheimer High Income Fund, Oppenheimer Bond Fund,
Oppenheimer Aggressive Growth Fund, Oppenheimer Growth Fund, and Oppenheimer
Multiple Strategies Fund.
Oppenheimer High Income Fund seeks a high level of current income from
investment in high yield fixed income securities, including unrated securities
or high risk securities in the lower rating categories. These securities may be
considered to be speculative. This Fund may have substantial holdings of
lower-rated debt securities or "junk" bonds. The risks of investing in junk
bonds are described in the prospectus for the Oppenheimer Variable Account
Funds, which should be read carefully before investing.
Oppenheimer Bond Fund primarily seeks a high level of current income.
Secondarily, this Fund seeks capital growth when consistent with its primary
objective. Bond Fund will, under normal market conditions, invest at least 65%
of its total assets in investment grade debt securities.
Oppenheimer Aggressive Growth Fund seeks to achieve capital appreciation
by investing in "growth-type" companies. Prior to May 1, 1998 this fund was
known as Capital Appreciation Fund.
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1"Standard & Poor's," "S&P," and "S&P 500" are trademarks of Mc-Graw Hill
Companies, Inc, and have been licensed for use by GE Investment Management
Incorporated. The S&P 500 Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's, and Standard & Poor's makes no representation or
warranty, express or implied, regarding the advisability of investing in this
Fund or the Policy.
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Oppenheimer Growth Fund seeks to achieve capital appreciation by investing
in securities of well-known established companies.
Oppenheimer Multiple Strategies Fund seeks a total investment return
(which includes current income and capital appreciation in the value of its
shares) from investments in common stocks and other equity securities, bonds
and other debt securities, and "money market" securities.
OppenheimerFunds, Inc. serves as investment adviser to Oppenheimer
Variable Accounts Funds.
Federated Insurance Series
The Federated Insurance Series has three portfolios that are available
under this Policy: Federated Utility Fund II, Federated High Income Bond Fund
II and Federated American Leaders Fund II.
Federated Utility Fund II has the investment objective of high current
income and moderate capital appreciation. The Federated Utility Fund II will
seek to achieve its objective by investing primarily in equity and debt
securities of utility companies.
Federated High Income Bond Fund II has the investment objective of high
current income. The Federated High Income Bond Fund II will seek to achieve its
objective by investing primarily in a diversified portfolio of professionally
managed fixed-income securities. The fixed-income securities in which the Fund
intends to invest are lower-rated corporate debt obligations, commonly referred
to as "junk bonds". The risks of these securities are described in the
prospectus for the Federated Insurance Series, which should be read carefully
before investing.
Federated American Leaders Fund II has the primary investment objective of
long-term growth of capital, and a secondary objective of providing income. The
Federated American Leaders Fund II will seek to achieve its objective by
investing, under normal circumstances, at least 65% of its total assets in
common stock of "blue chip" companies.
Federated Advisers serves as investment adviser to Federated Insurance
Series.
The Alger American Fund
The Alger American Fund has two portfolios that are available under this
Policy: Alger American Growth Portfolio and Alger American Small Capitalization
Portfolio.
Alger American Growth Portfolio has the investment objective of long-term
capital appreciation. Except during temporary defensive periods, this portfolio
invests at least 65% of its total assets in equity securities of companies
that, at the time of purchase, have a total market capitalization of $1 billion
or greater.
Alger American Small Capitalization Portfolio seeks long-term capital
appreciation. Except during temporary defensive periods, the portfolio invests
at least 65% of its total assets in equity securities of companies that, at the
time of purchase of the securities, have total market capitalization within the
range of companies included in the Russell 2000 Growth Index or the S&P Small
Cap 600 Index, updated quarterly. Both indexes are broad indexes of small
capitalization stocks. The portfolio may invest up to 35% of its total assets
in equity securities of companies that, at the time of purchase, have total
market capitalization outside this combined range and in excess of that amount
(up to 100% of its assets) during temporary defensive periods.
Fred Alger Management, Inc. serves as the investment manager to The Alger
American Fund.
PBHG Insurance Series Fund, Inc.
PBHG Insurance Series Fund, Inc. (PBHG Insurance Series Fund) has two
portfolios that are available under this Policy: Growth II Portfolio and Large
Cap Growth Portfolio.
PBHG Growth II Portfolio seeks capital appreciation by investing at least
65% of its total assets in the equity securities of small and medium sized
growth companies (market capitalization of up to $4 billion) that, in the
adviser's opinion, have an outlook for strong earnings growth and the potential
for significant capital appreciation.
PBHG Large Cap Growth Portfolio seeks long-term growth of capital by
investing primarily in the equity securities of large capitalization companies
(market capitalization of greater than $1 billion) that, in the adviser's
opinion, have an outlook for strong growth in earnings and potential for
capital appreciation.
Pilgrim Baxter & Associates, Ltd. serves as the investment adviser to PBHG
Insurance Series Fund, Inc.
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Goldman Sachs Variable Insurance Trust
Goldman Sachs Variable Insurance Trust has two portfolios that are
available under this Policy: Goldman Sachs Mid Cap Equity Fund and Goldman
Sachs Growth & Income Fund. The Goldman Sachs Mid Cap Equity Fund and Goldman
Sachs Growth & Income Fund are not available at this time in connection with
policies issued to California policyowners.
Goldman Sachs Mid Cap Equity Fund seeks long-term capital appreciation,
primarily through equity securities of companies with public stock market
capitalization between $500 million and $10 billion at the time of investment.
Goldman Sachs Growth and Income Fund seeks long-term capital growth and
growth of income, primarily through equity securities that, in the management
team's view, offer favorable capital appreciation and/or dividend-paying
ability.
Goldman Sachs Asset Management serves as investment adviser to Goldman
Sachs Variable Insurance Trust.
THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES
AND POLICIES OF ANY OF THE FUNDS WILL BE ACHIEVED.
Life of Virginia currently is compensated by an affiliate(s) of each of
the Funds based upon an annual percentage of the average assets held in the
Fund by Life of Virginia. These percentage amounts, which vary by Fund, are
intended to reflect administrative and other services provided by Life of
Virginia to the Fund and/or affiliate(s).
More detailed information concerning the investment objectives and
policies of the Funds and their investment advisory services and charges can be
found in the current prospectuses for the Funds which accompany or precede this
Prospectus and the Funds' current statements of additional information. A
current prospectus for each Fund can be obtained by writing or calling Life of
Virginia at its Home Office. The prospectus for each Fund should be read
carefully before any decision is made concerning the allocation of Premium
Payments or transfers among the Investment Subdivisions.
Resolving Material Conflicts
The Funds are used as investment vehicles for both variable life insurance
and variable annuity policies issued by Life of Virginia. In addition, all of
the Funds are also available to registered separate accounts of insurance
companies other than Life of Virginia offering variable annuity and variable
life policies. As a result, there is a possibility that an irreconcilable
material conflict may arise between the interests of Owners owning Policies
whose account values are allocated to Account 4 and of Owners owning policies
whose Account Values are allocated to one or more other separate accounts
investing in any one of the Funds.
In addition, Janus Aspen Series, GE Investments Funds, The Alger American
Fund and Goldman Sachs Variable Insurance Trust may sell shares to certain
retirement plans. As a result, there is a possibility that a material conflict
may arise between the interests of Owners generally or certain classes of
Owners, and such retirement plans or participants in such retirement plans.
In the event of a material conflict, Life of Virginia will take any
necessary steps, including removing Account 4 assets from the Fund, to resolve
the matter. See the individual Fund Prospectus for additional details.
TOTAL RETURN AND YIELDS
From time to time, Life of Virginia may advertise total return and/or
yield for the Investment Subdivisions. These figures are based on historical
earnings and do not indicate or project future performance. Each Investment
Subdivision may, from time to time, advertise performance relative to certain
performance rankings and indices compiled by independent organizations. More
detailed information as to the calculation of performance information appears
in the Statement of Additional Information.
Total returns and yields for the Investment Subdivision are based on the
investment performance of the corresponding investment portfolios of the Funds.
Each portfolio's performance in part reflects its expenses. See the
Prospectuses for the Funds.
Total return for an Investment Subdivision refers to quotations made
assuming that an investment under a Policy has been held in that Investment
Subdivision for various periods of time. When an Investment Subdivision has
been in operation for one, five, and ten years, respectively, the total return
for these periods will be provided.
An average annual total return quotation represents the average annual
compounded rate of return that would equate a hypothetical initial investment
of $1,000 (as of the first day of the period for which the total return
quotation is provided)
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to the redemption value of that investment (as of the last day of the period).
Such quotations show the average annual percentage change in the value of a
hypothetical investment during the periods specified. The standardized version
of average annual total return reflects all historical investment results, less
all charges and deductions applied against the Investment Subdivision
(including any surrender charge that would apply if an Owner terminated the
Policy at the end of each period indicated, but excluding charges for the
Guaranteed Minimum Death Benefit Rider, and any deductions for premium taxes).
In addition to the standardized version described above, total return
performance quotations computed on non-standard bases may be used in
advertisements. For example, average annual total return information may be
presented, computed on the same basis as described above, except deductions
will not include sales or administrative charges. Average annual total returns
that exclude sales or administrative expenses, or both, will be greater than
standardized average annual total returns for comparable periods. In addition,
Life of Virginia may present historic performance data for the Investment
Subdivisions since their inception reduced by some or all of the fees and
charges under the Policy. Such adjusted historic performance includes data that
precedes the inception dates of the Investment Subdivisions. This data is
designed to show the performance that would have resulted if the Policy had
been in existence during that time. From time to time Life of Virginia may
disclose average annual and/or cumulative total return in other non-standard
formats.
The yield of a "money market" Investment Subdivision refers to the income
generated by an investment in that Investment Subdivision over a specified
seven-day period, which is then annualized. Yield is calculated by assuming
that the income generated for that seven-day period is generated each seven-day
period over a 52-week period. The effective yield is calculated similarly but
the income earned by an investment in that money market Subdivision is assumed
to be reinvested each period. The effective yield will be slightly higher than
the yield because of the compounding effect of this assumed reinvestment.
The yield of an Investment Subdivision (other than a "money market"
Subdivision) refers to the income generated by an investment in that Investment
Subdivision over a specified 30-day (or one-month) period. The income generated
over the period is assumed to be generated and reinvested each month for six
months. The resulting semi-annual yield is then doubled.
Non-standard performance data will only be disclosed if the standard
performance data for the required periods is also disclosed. For additional
information regarding the calculation of performance data, please refer to the
Statement of Additional Information.
In advertising and sales literature, the performance of each Investment
Subdivision may be compared to the performance of other variable annuity
issuers in general or to the performance of particular types of variable
annuities investing in mutual funds, or investment portfolios of mutual funds
with investment objectives similar to each of the Investment Subdivisions.
Lipper Analytical Services, Inc. ("Lipper") and the Variable Annuity Research
Data Service ("VARDS") are independent services which monitor and rank the
performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis.
Lipper's rankings include variable life insurance issuers as well as
variable annuity issuers. VARDS rankings compare only variable annuity issuers.
The performance analyses prepared by Lipper and VARDS each rank such issuers on
the basis of total return, assuming reinvestment of distributions, but do not
take sales charges, redemption fees, or certain expense deductions at the
separate account level into consideration. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking provides data as to which funds provide the
highest total return within various categories of funds defined by the degree
of risk inherent in their investment objectives.
Advertising and sales literature may also compare the performance of each
Investment Subdivision to various widely recognized indices. One such index is
the Standard & Poor's 500 Composite Stock Price Index, a measure of stock
market performance. This unmanaged index does not consider tax consequences or
the expense of operating or managing an investment portfolio, and may not
consider reinvestment of income dividends.
Life of Virginia may also report other information including the effect of
tax-deferred compounding on an Investment Subdivision's investment returns, or
returns in general, which may be illustrated by tables, graphs, or charts. All
income and capital gains derived from the Investment Subdivisions' investments
in the Funds are reinvested on a tax-deferred basis.
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THE POLICY
The Policy is an individual flexible premium variable deferred annuity
policy. The rights and benefits of the Policy are described below and in the
Policies. There may be differences in your Policy because of requirements of
the state where your Policy is issued. Any such differences will be included in
your Policy.
Purchasing the Policies
Individuals wishing to purchase a Policy must complete an application and
submit it to an authorized registered agent or to Life of Virginia at its Home
Office (6610 W. Broad Street, Richmond, Virginia 23230). The minimum initial
Premium Payment required under the Policy is $5,000 ($2,000 for an IRA Policy).
However, in certain cases where policies are being offered to members of a
group of individuals, Life of Virginia may agree to waive the $5,000 ($2,000
for an IRA Policy) initial premium requirement. Acceptance of an application or
a premium payment is subject to Life of Virginia's rules, and Life of Virginia
reserves the right to reject any application or initial Premium Payment for any
lawful reason and in a manner that does not unfairly discriminate against
similarly situated purchasers.
If the application can be accepted in the form received, the initial
Premium Payment will be credited to the Policy within two Valuation Periods
after the later of receipt of the application or receipt of the initial Premium
Payment by Life of Virginia at its Home Office. If the initial Premium Payment
cannot be credited within five Business Days after receipt by Life of Virginia
because the application is incomplete, Life of Virginia will contact the
applicant, explain the reason for the delay, and refund the initial Premium
Payment immediately, unless the applicant specifically consents to Life of
Virginia retaining the initial Premium Payment until the application is made
complete. If Life of Virginia retains the initial Premium Payment, it will be
credited within two Valuation Periods after the necessary requirements are
fulfilled.
The Owner may make Additional Premium Payments before the earliest of (1)
the date which is ten years preceding the Maturity Date, (2) the date the
Annuitant attains age 86 and (3) the date Income Payments begin. Subject to
applicable state requirements, Additional Premium Payments must be for $200 or
more if the Policy is a Non-Qualified Policy, $50 or more if the policy is an
IRA Policy, and $100 or more if the Policy is a Qualified Policy other than an
IRA Policy. Additional Premium Payments made under Qualified Policies are
limited to proceeds from certain qualified plans. Additional Premium Payments
are credited as of the next close of business (on a Business Day) following
receipt of the payment at the Home Office.
"Policy Years" for the initial Premium Payment are measured from the
Policy Date. With regard to the determination of charges attributable to
Additional Premium Payments, however, "years" are measured from the receipt of
the Additional Premium Payment by Life of Virginia at its Home Office. (See
Sales Charges.)
Allocation of Premium Payments
The Owner, by written instructions, allocates Premium Payments among the
Investment Subdivisions. The Owner may allocate Premium Payments totally to one
Investment Subdivision of Account 4, or partially to any one of the available
Investment Subdivisions; however, at any one point in time, the Account Value
may not be invested in more than ten Investment Subdivisions. Allocations of
less than 1% of any Premium Payment, or less than $100, to any one Investment
Subdivision are not permitted.
In those states which require that Premium Payments be returned during the
right to examine Policy period (see Examination of Policy (Refund Privilege)),
during an initial period commencing on the date the initial Premium Payment is
credited to the Policy, Premium Payments will be placed in the Investment
Subdivision that invests exclusively in the Money Market Fund of GE Investments
Funds. The Premium Payments will remain in that subdivision until the earlier
of 15 calendar days from the date the initial Premium Payment is credited to
the Policy or, if the Policy is not accepted by the Owner, when all amounts due
are refunded. At the end of the 15-day period, the Account Value at that time,
and all subsequent Premium Payments, will be allocated among the Investment
Subdivisions in accordance with the Owner's instructions.
The Owner may change the allocation of subsequent Premium Payments at any
time, without charge, by sending acceptable written notice to Life of Virginia
at its Home Office or by calling Life of Virginia's Telephone Transfer Line at
800-772-3844. The allocation will apply to any Premium Payments received after
Life of Virginia records the change. The Account Value will vary with the
investment performance of the Investment Subdivisions the Owner selects, and
the Owner bears the entire investment risk for the Account Value in any
particular Investment Subdivision. The allocation of Premium Payments will
affect not only the Account Value prior to the Maturity Date, but it may also
affect the Death Benefit payable upon an
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Annuitant's death. The Owner should periodically review his allocation of
Account Value in light of market conditions and overall financial planning
requirements.
Accumulation of Account Value
The Policy provides for an accumulation of Account Value prior to the
Maturity Date. The Account Value equals the sum of the values of the amounts
allocated under the Policy to each Investment Subdivision. Account Value will
be determined on a daily basis and will reflect a number of factors, including
Premium Payments, partial surrenders, transfers, charges assessed in connection
with the Policy, and the investment performance of the shares purchased by the
Investment Subdivisions to which the Account Value is allocated. There is no
guaranteed minimum Account Value.
On the date the initial Premium Payment is received and accepted by Life
of Virginia, the Account Value equals the initial Premium Payment. Thereafter,
prior to the Maturity Date, the Account Value in each Investment Subdivision is
determined by multiplying the number of Accumulation Units in that Investment
Subdivision credited to the Policy by the current value of an Accumulation Unit
for that Investment Subdivision. The number of Accumulation Units is increased
by any Additional Premium Payments and any transfers into that Investment
Subdivision and decreased by the policy maintenance charge, the Annual Death
Benefit Charge (if applicable), any transfers out of that Investment
Subdivision, and any full or partial surrenders.
Value of Accumulation Units
The Accumulation Units of each Investment Subdivision are valued
separately. The value of Accumulation Units will change each Valuation Period
according to the investment performance of the shares purchased by each
Investment Subdivision and the deduction of certain charges from Account 4.
For each Investment Subdivision, the value of an Accumulation Unit for the
first Valuation Period was $10. The value of an Accumulation Unit in an
Investment Subdivision for each subsequent Valuation Period equals the value of
the Accumulation Unit as of the immediately preceding Valuation Period,
multiplied by the Net Investment Factor for that Investment Subdivision for the
Valuation Period for which the Accumulation Unit Value is being calculated. The
Net Investment Factor is a number representing the change in the value of
Investment Subdivision assets on successive Business Days due to investment
income, realized or unrealized capital gains or losses, deductions for taxes,
if any, and deductions for the mortality and expense risk charge and
administrative expense charge.
The value of an Accumulation Unit for a Valuation Period is the same for
each day in the period.
Transfers
Before Income Payments begin, the Owner may transfer amounts among and
between the Investment Subdivisions that are available at the time of the
request by sending a written request to the Home Office. Telephone transfers
are subject to Life of Virginia's administrative requirements. All transfers
will be effective as of the end of the Valuation Period during which the
written or telephone request is received at the Home Office.
Currently, there is no limit to the number of transfers that may be made;
however, Life of Virginia reserves the right to limit, upon written notice, the
number of transfers to twelve each calendar year or, if it is necessary in
order that the Policy will continue to receive annuity treatment by the
Internal Revenue Service, a lower number.
The first transfer in each calendar month will be made without charge.
Thereafter, each time a transfer is made, a transfer charge of $10 will be
deducted from the amount transferred. The transfer charge is Life of Virginia's
estimate of the average actual cost of present and future typical transfers.
Once a Policy is issued, the amount of the transfer charge is guaranteed for
the life of the Policy.
If the amount of Account Value remaining in an Investment Subdivision
after the transfer is less than $100, Life of Virginia will transfer the amount
remaining in addition to the amount requested. Life of Virginia will not allow
a transfer into any Investment Subdivision unless the Account Value of that
Investment Subdivision after the transfer is at least $100.
After Income Payments begin, if Variable Income Payments are being made,
Annuity Units may be transferred among the Investment Subdivisions at the
payee's request once each calendar year. No transfer charge will be imposed on
such transfers. The transfer will be effective as of the end of the Valuation
Period during which Life of Virginia receives written request at its Home
Office. The Income Payment amount on the date of the transfer will not be
affected by the transfer, although subsequent Variable Income Payments will
reflect the investment experience of the selected Investment Subdivisions.
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If the number of Annuity Units remaining in an Investment Subdivision
after a transfer is less than one, then this unit will also be transferred. In
addition, transfers are only permitted into an Investment Subdivision if, after
the transfer, the number of Annuity Units of that Investment Subdivision is at
least one.
Where permitted by state law, Life of Virginia reserves the right to
refuse to execute any transfer, whether requested before or after income
payments begin, if any of the Investment Subdivisions that would be affected by
the transfer are unable to purchase or redeem shares of the mutual funds in
which they invest.
Telephone Transfers
Life of Virginia permits telephone transfers and may be liable for losses
resulting from unauthorized or fraudulent telephone transfers if it fails to
employ reasonable procedures to confirm that the telephone instructions that it
receives are genuine. Therefore, Life of Virginia will employ means to prevent
unauthorized or fraudulent telephone requests, such as sending written
confirmation, recording telephone requests, and/or requesting other identifying
information. In addition, Life of Virginia may require written authorization
before allowing Owners to make telephone transfers.
To request a telephone transfer, Owners should call Life of Virginia's
Telephone Transfer Line at 800-772-3844. Life of Virginia will record all
telephone transfer requests. Transfer requests received prior to the close of
the New York Stock Exchange will be executed that business day at that day's
prices. Requests received after that time will be executed on the next business
day at that day's prices.
Dollar-Cost Averaging
Owners may elect to have Life of Virginia automatically transfer specified
amounts from one of certain designated Investment Subdivisions of Account 4 to
any other available Investment Subdivision(s) on a monthly or quarterly basis.
This privilege is intended to permit Owners to utilize "Dollar-Cost Averaging,"
a long-term investment method that provides for regular level investments over
a period of time. Life of Virginia makes no representations or guarantees that
Dollar-Cost Averaging will result in a profit or protect against loss.
Owners must complete the Dollar-Cost Averaging Section of the application
or a Dollar-Cost Averaging Agreement or call Life of Virginia's Telephone
Transfer Line at 800-772-3844 in order to participate in the Dollar-Cost
Averaging program. Currently, the Investment Subdivision available to allocate
money for the purpose of Dollar-Cost Averaging is the Money Market Fund of GE
Investments Funds. Money may be allocated to this subdivision as initial
premium, additional premium or in the form of a transfer from other Investment
Subdivisions within Account 4. Any amount allocated must conform to the minimum
amount and percentage requirements, (see Purchasing the Policies, and
Allocation of Premium Payments.) The minimum transfer amount permitted by the
Dollar-Cost Averaging program is $100. A Dollar-Cost Averaging transfer will
not count toward the one free transfer available each month or any limit on the
number of transfers available each year, except to the extent necessary for the
Policy to continue to be treated as an annuity under applicable law.
Dollar-Cost Averaging will continue until the entire Account Value in the
subdivision designated for Dollar-Cost Averaging is depleted. Prior to that
time, the Owner may discontinue Dollar-Cost Averaging by sending Life of
Virginia a written cancellation notice. Owners may initiate or make changes to
their Dollar-Cost Averaging program by calling Life of Virginia's Telephone
Transfer Line at 800-772-3844. Also, Life of Virginia reserves the right to
discontinue Dollar-Cost Averaging upon 30 days written notice to the Owner.
Portfolio Rebalancing
Owners may elect to have Life of Virginia automatically transfer amounts
on a quarterly, semi-annual or annual basis to maintain a specified percentage
of Account Value in each of two or more Investment Subdivisions designated by
the Owner. This privilege is intended to permit owners to use "Portfolio
Rebalancing," a strategy that maintains over time the Owner's desired
allocation percentage in the designated Investment Subdivisions. The percentage
of Account Value in each of the Investment Subdivisions may shift from the
Premium Payment allocation percentage due to the performance of the Investment
Subdivisions. Life of Virginia makes no representations or guarantees that
Portfolio Rebalancing will result in a profit or protect against loss.
Owners must complete the Portfolio Rebalancing agreement to participate in
the Portfolio Rebalancing program. Owners may designate the Investment
Subdivisions and specify the rebalancing percentages in the agreement. The
specified percentages must be in whole percentages and must be at least 1%. The
date that a rebalancing transfer is effected is measured from the
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Policy Date, or other date selected at the sole discretion of Life of Virginia,
based on the rebalancing frequency chosen by an Owner. Account Value must be
allocated to each of the designated Investment Subdivisions for rebalancing to
become effective.
Portfolio Rebalancing is offered free of charge and will continue as long
as there is Account Value in each of the designated Investment Subdivisions.
Prior to that time, Owners may discontinue rebalancing by sending Life of
Virginia a written cancellation notice. Owners may make changes to their
Portfolio Rebalancing program by calling Life of Virginia's Telephone Transfer
Line at 800-772-3844. Portfolio Rebalancing transfers are not included for the
purpose of determining any transfer charge. Owners should consider the possible
effects of electing other automatic programs such as Dollar-Cost Averaging and
Systematic Withdrawals concurrent with Portfolio Rebalancing. Life of Virginia
reserves the right to exclude investment subdivisions from Portfolio
Rebalancing. Life of Virginia also reserves the right to discontinue Portfolio
Rebalancing upon 30 days written notice to the Owner.
Powers of Attorney
As a general rule and as a convenience to Owners, Life of Virginia allows
the use of powers of attorney whereby Owners give third parties the right to
effect account value transfers on behalf of the Owners. However, when the same
third party possesses powers of attorney executed by many Owners, the result
can be simultaneous transfers involving large amounts of Account Value. Such
transfers can disrupt the orderly management of the Funds, can result in higher
costs to Owners, and are generally not compatible with the long-range goals of
purchasers of the Policies. Life of Virginia believes that such simultaneous
transfers effected by such third parties are not in the best interests of all
shareholders of the Funds and this position is shared by the managements of
those Funds.
Therefore, to the extent necessary to reduce the adverse effects of
simultaneous transfers made by third parties holding multiple powers of
attorney, Life of Virginia may not honor such powers of attorney and has
instituted or will institute procedures to assure that the transfer requests
that it receives have, in fact, been made by the Owners in whose names they are
submitted. However, these procedures will not prevent Owners from making their
own Account Value transfer requests.
Examination of Policy (Refund Privilege)
The Owner may examine the Policy and return it for refund within 10 days
after it is received. Unless state law requires that Premium Payments be
returned as the refund, the amount of the refund will equal the Account Value
with any adjustments required by applicable law or regulation on the date Life
of Virginia receives the Policy. If state law requires that Premium Payments be
returned, the amount of the refund will equal the greater of (1) the Account
Value (without reduction by any surrender charges) plus any amount deducted
from the Premium Payments prior to allocation to Account 4 or (2) the Premium
Payments made. In certain states the Owner may have more than 10 days to return
the policy for a refund. An Owner wanting a refund should return the Policy to
Life of Virginia at its Home Office.
DISTRIBUTIONS UNDER THE POLICY
Surrender (Withdrawal)
The Owner may make a full or partial surrender of the Policy at any time
before Income Payments begin by sending a written request to Life of Virginia
at its Home Office. In the Policy, a "surrender" is referred to as a
"withdrawal."
Life of Virginia will not permit a partial surrender that is less than
$500 or that reduces the Account Value of the Policy to less than $5,000
($2,000 for an IRA Policy). In the event that a partial surrender request would
reduce the Account Value to less than $5,000 ($2,000 for an IRA Policy), Life
of Virginia will surrender only that amount of Account Value that would reduce
the remaining Account Value to $5,000 ($2,000 for an IRA Policy) and deduct any
Surrender Charge from the amount surrendered.
The amount payable on full surrender of the Policy is the Surrender Value
at the end of the Valuation Period during which the request is received. The
Surrender Value equals the Account Value on the date Life of Virginia receives
a request for surrender less any applicable surrender charge. (See Surrender
Charge.) Any premium tax paid by Life of Virginia which has not been previously
deducted may also be deducted from the Surrender Value, as will any applicable
Annual Death Benefit Charge and the Policy Maintenance Charge. (See Annual
Death Benefit Charge and Policy Maintenance Charge.) The Surrender Value may be
paid in a lump sum or under one of the optional payment plans specified in the
Policy. (See Optional Payment Plans.) Proceeds will generally be paid within
seven days of receipt of a request for a surrender. Postponement of payments
may occur in certain circumstances. (See Payment Under the Policies.)
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Upon partial surrender, the Owner may indicate, in writing, from which
Investment Subdivisions the Account Value is to be transferred. If no such
written instruction is received with the partial surrender request, the Account
Value transferred out will be transferred from the Investment Subdivisions in
the same proportion that the Account Value in each Investment Subdivision bears
to the total Account Value on the date Life of Virginia receives the written
request. A portion of the Policy's surrender charge may be assessed at the time
a partial surrender is made. Any applicable surrender charge will be deducted
from the amount surrendered. (See Surrender Charge.)
Full and partial surrenders may have federal tax consequences. (See
Federal Tax Matters)
Systematic Withdrawals
The Owner may elect in writing to make a series of partial surrenders in
equal installments, adding up, in a 12 month period beginning with the date of
the first payment, to an amount not to exceed 10% of the Account Value as of
the effective date of the partial surrender ("Systematic Withdrawals"). A
surrender charge will not be imposed on Systematic Withdrawals. A surrender
charge will however be applied to any additional surrender(s) made during the
time Systematic Withdrawal payments are being made on amounts that when
combined with the Systematic Withdrawal amounts, are in excess of 10% for that
year, unless all surrender charges have expired. (See Surrender Charge).
Systematic Withdrawal payments count as partial surrenders with reduced
charges. (See Reduced Charges on Certain Surrenders.)
Systematic Withdrawals will be made from any Investment Subdivisions to
which Account Value is allocated. Withdrawals will be made from each of the
designated Investment Subdivisions in the same proportion that the Account
Value in each Investment Subdivision bears to the total Account Value in all
Investment Subdivisions from which the withdrawals are to be made. At any time
while Systematic Withdrawals are being made, each of the designated Investment
Subdivisions from which withdrawals are being made must count as one of the ten
Investment Subdivisions to which the Account Value of the policy may be
allocated at any one time (see Allocation of Premium Payments).
After a series of Systematic Withdrawals has begun, the frequency and/or
amount of payments may be changed upon request by the Owner, subject to the
following rules:
1) only one such change may be requested in a calendar quarter;
2) if the maximum amount was not elected at the time the current series of
Systematic Withdrawals was initiated, the remaining payments may be
increased;
3) the total amount to be withdrawn during that 12-month period, including
amounts already paid, remains limited to 10% of the Account Value at the
time the current series of Systematic Withdrawals was initiated; and
4) if the current series of Systematic Withdrawals is discontinued, any
remaining payments in the current 12-month period will be paid in a lump
sum on request.
Systematic Withdrawals may be discontinued at any time by the Owner(s) by
notifying Life of Virginia in writing or by calling the Life of Virginia
Telephone Transfer Line at 800-772-3844. Life of Virginia reserves the right to
discontinue Systematic Withdrawals upon 30 days written notice to Owners.
Otherwise, payments will continue until the earlier of (i) the date on which a
Systematic Withdrawal reduces the Account Value for the entire Policy below
$5,000 ($2,000 for an IRA Policy) , or (ii) the date on which the total Account
Value in all Investment Subdivisions designated for Systematic Withdrawals is
insufficient to provide further payments on the mode in effect.
If any Systematic Withdrawal would be or becomes less than $50, Life of
Virginia reserves the right to reduce the frequency of payments to an interval
that would result in each payment being at least $50. Life of Virginia also
reserves the right to prohibit simultaneous Systematic Withdrawals and
Dollar-Cost Averaging, (see Dollar-Cost Averaging). Additional rules regarding
Systematic Withdrawals, available payment modes, and instructions for electing
this option are available upon request.
The amount of each Systematic Withdrawal should be considered as a
distribution and taxed in the same manner as a partial surrender of the Policy.
However, there is some uncertainty regarding the tax treatment of Systematic
Withdrawals, and it is possible that additional amounts may be includible in
income. In addition, a 10% penalty tax may, subject to certain exceptions, be
imposed on any amounts includible in income due to Systematic Withdrawals. It
is uncertain whether Systematic Withdrawals would qualify for an exception to
this penalty tax for a series of substantially equal periodic payments made
over the life (or life expectancy) of the recipient or the joint lives (or
joint life expectancies) of the recipient and his or her beneficiary. For more
information, see the "Federal Tax Matters" discussion of Taxation of Systematic
Withdrawals on page 41.
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Death Provisions
Before Income Payments begin, if an Annuitant dies while the Policy is in
force, the Designated Beneficiary will be treated as the sole owner of the
Policy following such death, subject to the distribution rules set forth below.
A Death Benefit may be payable to the Designated Beneficiary upon receipt by
Life of Virginia of Due Proof of Death. The Designated Beneficiary is
determined by identifying the first person named in the following list who is
alive or in existence on the date of death of an Annuitant:
(1) Final Annuitant
(2) Primary Beneficiary(ies)
(3) Contingent Beneficiary(ies)
(4) and if no one else is alive, the estate of the sole Annuitant (if no
Joint Annuitant was named) or of the Final Annuitant
If there is more than one Designated Beneficiary, each Designated
Beneficiary will be treated separately according to each Designated
Beneficiary's portion of the Policy for purposes of the Policy's death
provisions.
Death Benefit at Death of Annuitant. If any Annuitant dies before Income
Payments begin and while the Policy is in force, the Designated Beneficiary may
elect a Death Benefit. Life of Virginia must receive notice of the election
within 60 days after Life of Virginia receives Due Proof of Death, and in no
case later than one year after the date of such death for a Death Benefit to be
payable. If a Death Benefit is paid, the Policy will terminate, and Life of
Virginia will have no further obligation under the Policy. The Death Benefit
will be paid in one lump sum unless the Designated Beneficiary elects otherwise
pursuant to the Distribution Rules.
During the first seven Policy Years, the Death Benefit will be the greater
of: (1) the total of premiums paid, reduced by the total of any partial
surrenders, plus their surrender charges, and (2) the Account Value on the date
Life of Virginia receives Due Proof of Death or, if later, the date of the
request. During subsequent seven year periods, the Death Benefit will be the
greater of: (1) the Death Benefit on the last day of the previous seven year
period, plus any premiums paid since then, reduced by any partial surrenders
since then, plus their applicable surrender charges, and (2) the Account Value
on the date Due Proof of Death is received or, if later, the date of the
request.
If the request for payment of the Death Benefit occurs more than 60 days
from the date of receipt of Due Proof of Death, or more than one year after the
date of the Annuitant's death, the Surrender Value will be payable instead of
the Death Benefit.
If the Designated Beneficiary is eligible and elects to continue the
Policy, the Account Value will be set equal to the Death Benefit on the date
Life of Virginia received Due Proof of Death of the Annuitant. Any increase in
Account Value will be allocated to the Investment Subdivision using the premium
allocation in effect at that time.
If the Designated Beneficiary is not eligible to continue the Policy, the
Account Value on the date we receive Due Proof of Death will be set equal to
the Death Benefit on that date as described above and the distribution rules
will govern payment of proceeds. Surrender charges will apply if the Policy is
surrendered more than 60 days after the death of Annuitant, without regard to
whether or not the Account Value was increased.
Elective Guaranteed Minimum Death Benefit Rider. If an Annuitant dies
before Income Payments begin while the Guaranteed Minimum Death Benefit Rider
is in effect, the Designated Beneficiary may elect the Death Benefit described
below. Life of Virginia must receive the request for payment of the Death
Benefit within 60 days after it receives Due Proof of Death, and in no case
later than one year after the date of death. Otherwise the Surrender Value will
be payable instead of the Death Benefit. If the Death Benefit is paid, the
Policy will terminate, and Life of Virginia will have no further obligation
under the Policy. THE GUARANTEED MINIMUM DEATH BENEFIT RIDER MAY NOT BE
AVAILABLE IN ALL STATES OR MARKETS.
The Death Benefit under the Guaranteed Minimum Death Benefit Rider will be
the greater of: (1) the Death Benefit described above under "Death Benefit at
Death of Annuitant," and (2) the greater of (A) the Guaranteed Minimum Death
Benefit, and (B) the Account Value of the Policy on the date Life of Virginia
receives proof of the Annuitant's death, or, if later, the date of the request.
The Guaranteed Minimum Death Benefit is, on the Policy Date, equal to the
premium paid. At the end of each Valuation Period after such date, the
Guaranteed Minimum Death Benefit is the lesser of: (1) the total of all
premiums received, multiplied by two, less the amount of any partial surrenders
made prior to or during that Valuation Period; or (2) the Guaranteed Minimum
Death Benefit at the end of the preceding Valuation Period, increased as
specified
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below, plus any additional premium payments during the current Valuation Period
and less any partial surrenders plus their applicable surrender charges during
the current Valuation Period.
The amount of the increase for the Valuation Period will be calculated by
applying a factor to the Guaranteed Minimum Death Benefit at the end of the
preceding Valuation Period. Until the anniversary on which the Annuitant
attains age 80, the factor is determined for each Valuation Period at an
effective annual rate of 6%, except that with respect to amounts invested in
certain Investment Subdivisions shown in the Policy, the increase factor will
be calculated as the lesser of: (1) the Net Investment Factor of the Investment
Subdivision for the Valuation Period, minus one, and (2) a factor for the
Valuation Period equivalent to an effective annual rate of 6%. Currently, these
subdivisions include only the "money market" Investment Subdivisions. With
respect to amounts invested in the Guarantee Account, Item (1) above is
replaced with a factor for the Valuation Period equivalent to the credited
rate(s) applicable to such amounts.
After the anniversary on which the Annuitant attains age 80, the increase
factor will be zero.
If the Guaranteed Minimum Death Benefit Rider has been elected, it is
effective on the Policy Date and will remain in effect while the Policy is in
force and before Income Payments begin, or until the Policy Anniversary
following the date of receipt of the Owner's request to terminate the rider.
There will be a charge made each year for expenses related to the Death Benefit
available under the terms of the Guaranteed Minimum Death Benefit Rider. (See
Annual Death Benefit Charge.) Amounts payable under the Guaranteed Minimum
Death Benefit Rider are subject to the distribution rules described below.
Distribution Rules. If the Annuitant dies while the Policy is in force and
before Income Payments begin and the Designated Beneficiary is the surviving
spouse of the deceased Annuitant, the Policy will continue in force with the
surviving spouse as the new Annuitant. On the surviving spouse's death, the
entire interest in the Policy will be paid within 5 years of such spouse's
death to the Designated Beneficiary named by the surviving spouse (and if no
Designated Beneficiary is named, such payment will be made to the surviving
spouse's estate).
If the Annuitant dies before Income Payments begin and the Designated
Beneficiary is not the surviving spouse of the deceased Annuitant, then, unless
the optional Death Benefit is elected as described above, upon receipt of Due
Proof of Death, Life of Virginia will pay the Surrender Value in one lump sum
payment to, or for the benefit of, the Designated Beneficiary. Instead of
receiving a lump sum distribution, the Designated Beneficiary may elect: (1) to
continue the Policy in force during the five year period following the date of
the Annuitant's death and receive the Surrender Value at any time during that
period by making a full or partial surrender of the Policy. No premium payments
will be accepted during this period. If at the end of that five year period the
entire Surrender Value has not been paid, the policy will terminate and any
remaining Account Value will be paid to, or for the benefit of the Designated
Beneficiary, or (2) in writing within 60 days after the date of death, apply
the Surrender Value under optional payment plans 1 or 2 (see Income Payments),
with the first payment to the Designated Beneficiary being made no later than
one year after the date of an Annuitant's death. Such payments must be made
over the life of the Designated Beneficiary, or over a period not exceeding the
life expectancy of the Designated Beneficiary.
If the Designated Beneficiary dies before all required payments have been
made, Life of Virginia will make any remaining payments to any person named in
writing by the Designated Beneficiary; otherwise, Life of Virginia will pay the
Designated Beneficiary's estate.
These death benefit provisions are designed to comply with the Code
requirement that if the Owner dies before the Maturity Date, the entire value
of the Policy must generally be distributed within five years of the date of
the Owner's death. In the case of Joint Owners, this requirement applies if
either of the Joint Owners dies before the Maturity Date.
If any Annuitant or Designated Beneficiary dies while this Policy is in
force and on or after Income Payments have begun, payments made under the
Policy will be made at least as rapidly as under the method of distribution in
effect at the time of such death, notwithstanding any other provision of the
Policy.
Restrictions on Distributions from Certain Policies
Section 830.105 of the Texas Government Code permits participants in the
Texas Optional Retirement Program (ORP) to withdraw their interest in a
variable annuity contract issued under the ORP only upon (1) termination of
employment in the Texas public institutions of higher education, (2)
retirement, (3) death, or (4) the participant's attainment of age 70 1/2.
Accordingly, before any amounts may be distributed from the contract, proof
must be furnished to Life of Virginia that one of these four events has
occurred.
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Similar restrictions apply to variable annuity contracts used as funding
vehicles for Code Section 403(b) retirement plans. Section 403(b) of the Code
provides for tax-deferred retirement savings plans for employees of certain
non-profit and educational organizations. In accordance with the requirements
of Section 403(b), any Policy used for a 403(b) plan will prohibit
distributions of (i) elective contributions made in years beginning after
December 31, 1988, (ii) earnings on those distributions and (iii) earnings on
amounts attributable to elective contributions held as of the end of the last
year beginning before January 1, 1989. However, distributions of such amounts
will be allowed upon death of the employee, attainment of age 59 1/2,
separation from service, disability, or financial hardship, except that income
attributable to elective contributions may not be distributed in the case of
hardship.
CHARGES AND DEDUCTIONS
Charges Against Account 4
Mortality and Expense Risk Charge. A charge will be deducted from each
Investment Subdivision to compensate Life of Virginia for certain mortality and
expense risks assumed in connection with the Policies. The charge will be
deducted daily and equals .003446% for each day in a Valuation Period. The
effective annual rate of this charge, which is compounded daily, is 1.25% of
the average daily net assets of Account 4. Life of Virginia guarantees that
this charge of 1.25% will never increase.
The mortality risk assumed by Life of Virginia arises from its contractual
obligation to make Income Payments to each payee regardless of how long all
payees or any individual payee may live. Although Variable Income Payments will
vary in accordance with the investment performance of the shares purchased by
each Investment Subdivision, they will not be affected by the mortality
experience of persons receiving such payments or of the general population.
This assures each payee that neither the longevity of fellow payees nor an
improvement in life expectancy generally will have an adverse effect on the
Variable Income Payments received under the Policy. Mortality risk also arises
from the possibility that the Death Benefit will be greater than the Account
Value.
The expense risk assumed is that expenses incurred in issuing and
administering the Policies will be greater than estimated and, therefore, will
exceed the expense charge limits set by the Policies. If proceeds from the
mortality and expense charge are not needed to cover mortality and expense
risks, Life of Virginia may use proceeds to finance distribution of the
Policies.
Administrative Expense Charge. A charge will be deducted from each
Investment Subdivision to compensate Life of Virginia for certain
administrative expenses incurred in connection with the Policies. The charge
will be deducted daily and equals .000411% for each day in a Valuation Period.
The effective annual rate of this charge, which is compounded daily, is .15% of
the average daily net assets of Account 4.
Policy Maintenance Charge
A charge of $25 will be deducted annually from the Account Value of each
Policy to compensate Life of Virginia for certain administrative expenses
incurred in connection with the Policies. The charge will be deducted at each
anniversary and at surrender. Life of Virginia will waive this charge if the
Account Value exceeds $75,000 at the time the charge is due. The policy
maintenance charge will compensate Life of Virginia for issuance, processing,
start-up and on-going administration expenses. These expenses include the cost
of processing applications, establishing Policy records, premium collection,
recordkeeping, processing Death Benefit claims, full or partial surrenders,
transfers, and reporting and overhead costs. Once a Policy is issued, the
amount of the Policy Maintenance Charge is guaranteed for the life of the
Policy.
The annual Policy Maintenance Charge will be allocated among the
Investment Subdivisions in the same proportion that the Policy's Account Value
in each Investment Subdivision bears to the total Account Value in all
Investment Subdivisions at the time the charge is made. Other allocations
methods may be available upon request.
Annual Death Benefit Charge
There will be a charge made each year for expenses related to the Death
Benefit available under the terms of the Guaranteed Minimum Death Benefit
rider. Life of Virginia deducts this charge through the cancellation of
accumulation units at each anniversary and at surrender to compensate it for
the increased risks associated with providing the enhanced Death Benefit. The
charge at full surrender will be a pro-rata portion of the annual charge. Life
of Virginia guarantees that this charge will never exceed an annual rate of
.35% of the prior year's average Guaranteed Minimum Death Benefit.
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Sales Charges
Life of Virginia incurs certain sales and other distribution expenses when
the Policies are issued. The majority of these expenses consist of commissions
paid for sales of these Policies; however, other distribution expenses are
incurred in connection with the printing of prospectuses, conducting seminars
and other marketing, sales, and promotional activities. To recover a portion of
these expenses, a surrender charge (also referred to as a contingent deferred
sales charge) is imposed on full and certain partial surrenders.
Set forth below is a general discussion of the amount and nature of the
charge, followed by a more technical explanation of how the charge is
calculated.
Surrender Charge (Withdrawal Charge). Surrender charges (also referred to
as a contingent deferred sales charge) will be imposed on full and partial
surrenders that occur within seven years of any Premium Payments. Surrender
charges are made to cover certain expenses relating to the sale of the Policy,
including commissions to registered representatives and other promotional
expenses. (In the Policy, the "surrender charge" is referred to as the
"withdrawal charge.") Surrender charges also apply to proceeds received upon
maturity if the Maturity Date occurs within seven years of receipt of a Premium
Payment.
Surrender charges are deducted from the amount surrendered. All or part of
the amount surrendered may be subject to charge. Any amount subject to charge
is considered a surrender of Premium Payments. Surrender charges are determined
using the assumption that Premium Payments are surrendered on a first-in
first-out basis, up to the amount surrendered. For each such Premium Payment,
the charge is a percentage of the Premium Payment (or portion thereof)
surrendered. The charge is calculated separately for each Premium Payment at
the time it is surrendered, as specified in the table below.
Number of Full Years
Between the Date of Surrender Charge as a
Receipt of Premium Percentage of Premium
Payment and Date of Surrender Payment Surrendered
- ------------------------------- ----------------------
less than 1 6%
1 6%
2 5%
3 5%
4 5%
5 4%
6 2%
7 or more 0%
After all Premium Payments have been surrendered, any remaining Account
Value may be surrendered. Surrender charges do not apply after all Premium
Payments have been surrendered.
Reduced Charges on Certain Surrenders. No surrender charge applies to the
first surrender of the policy year, if the amount surrendered is not more than
10% of the Account Value at the end of the Valuation Period during which the
surrender request is received. If the first surrender of the policy year is a
full surrender, or a partial surrender of more than 10% of the Account Value,
no surrender charge will apply to a portion of the amount surrendered equal to
10% of the Account Value. Any remaining portion of the amount surrendered may
be subject to surrender charges, as described above. The amount subject to
charge will not exceed the amount surrendered.
Waived Surrender Charges for Certain Payment Plans. Surrender charges
otherwise applicable will be waived if and to the extent that proceeds are not
distributed in a lump sum and are applied to optional payment plans 1, 2 (for a
period of five or more years) or 5. (See Optional Payment Plans).
Waiver of Surrender Charges in the Event of Hospital or Nursing Facility
Confinement. Surrender charges arising from a full surrender or one or more
partial surrenders occurring before income payments begin will be waived if:
An Annuitant is, or has been confined to a state licensed or legally
operated hospital or inpatient nursing facility for at least 30 consecutive
days; and
Such confinement begins at least one year after the policy date; and
An Annuitant was age 80 or younger on the policy date; and
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The request for the full or partial surrender, together with proof of
such confinement is received in the Home Office of Life of Virginia while
the Annuitant is confined or within 90 days after discharge from the
facility.
For purposes of this provision, Annuitant means either the Annuitant,
Joint Annuitant or Final Annuitant, whichever is applicable.
The waiver of surrender charges in the event of hospital or nursing
facility confinement may not be available in all states or all markets.
Transfer Charges
The Owner may transfer amounts among the Investment Subdivisions.
Currently, there is no limit on the number of transfers that may be made;
however, Life of Virginia reserves the right to impose such a limit in the
future before Income Payments begin. Also, where permitted by state law, Life
of Virginia reserves the right to refuse to execute any transfer if any of the
Investment Subdivisions that would be affected by the transfer are unable to
purchase or redeem shares of the mutual funds in which they invest.
The first transfer in each calendar month will be made without charge.
Thereafter, each time amounts are transferred during that calendar month, a
transfer charge of $10 will be deducted from the amount transferred to
compensate Life of Virginia for the costs in making the transfer. No transfer
charge is imposed on transfers occurring after Income Payments begin.
Governmental Charges
Premium Taxes. Life of Virginia may deduct a charge for any premium taxes
incurred. The premium tax rates incurred by Life of Virginia currently range
from 0 to 3.5%. Any applicable premium tax charge may be deducted from either
the premium paid or from proceeds (including benefits for surrender, maturity
and death).
Other Taxes. Under present laws, Life of Virginia will incur state and
local taxes (other than premium or similar taxes) in several states. At
present, Life of Virginia is not making a charge for these taxes but it
reserves the right to charge for such taxes.
Because of its current status under the Code, Life of Virginia does not
expect to incur any federal income tax liability that would be chargeable to
Account 4. Based upon this expectation, no charge is being made currently to
Account 4 for federal income taxes. If, however, Life of Virginia determines
that such taxes may be incurred, it may assess a charge for those taxes from
Account 4.
Other Charges
Because Account 4 purchases shares of the Funds, the net assets of each
Investment Subdivision will reflect the investment advisory fee and other
expenses incurred by the investment portfolio of the Fund in which the
Investment Subdivision invests. For more information concerning these charges,
read the individual Fund prospectuses.
Reduction of Charges for Group Sales
The surrender charge may be reduced for sales of the Policies to a
trustee, employer or similar entity representing a group or to members of the
group where such sales result in savings of expenses incurred by Life of
Virginia in connection with the sale of the Policies. The entitlement to such a
reduction in such charge will be determined by Life of Virginia based on the
following factors:
(1) The size of the group. Generally, the sales expenses for each
individual Owner for a larger group are less than for a smaller group because
more Policies can be implemented with fewer sales contacts and less
administrative cost.
(2) The total amount of Premium Payments to be received from a group. Per
Policy sales and other expenses are generally proportionately less on larger
purchase payments than on smaller ones.
(3) The purpose for which the Policies are purchased. Certain types of
plans are more likely to be stable than others. Such stability reduces the
number of sales contacts and administrative and other services required,
reduces sales administration and results in fewer Policy terminations. As a
result, sales and other expenses can be reduced.
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(4) The nature of the group for which the Policies are being purchased.
Certain types of employee and professional groups are more likely to continue
Policy participation for longer periods than are other groups with more
mobile membership. If fewer Policies are terminated in a given group, Life of
Virginia's sales and other expenses are reduced.
(5) There may be other circumstances of which Life of Virginia is not
presently aware which could result in reduced sales expenses.
Reductions in this charge will not be unfairly discriminatory against any
person including the affected owners and all other owners of Policies.
Additional information about charge reductions is available from Life of
Virginia at its Home Office.
INCOME PAYMENTS
Monthly Income Benefit
Life of Virginia will pay a Monthly Income Benefit to the Annuitant(s) for
a guaranteed minimum period beginning on the Maturity Date. The Monthly Income
Benefit will be paid in the form of Variable Income Payments similar to those
described in Optional Payment Plan 1, Life Income with 10 Years Certain
(automatic payment plan), using the sex and settlement age of the Annuitant(s),
unless another election is made by the Owner.
Under the Life Income with 10 Years Certain plan, income payments will
continue for the lifetimes of the Annuitant and any Joint Annuitant. If the
Annuitant and any Joint Annuitant die before the end of ten years, the
remaining payments for the ten year period will be discounted at the same rate
used to calculate the monthly income. If the remaining payments are Variable
Income Payments, the amount of each payment to be discounted will be assumed
equal to the value of the payment amount on the date Life of Virginia receives
Due Proof of Death. This discounted amount will be paid in one sum. The Policy
does not specify a maximum maturity age or latest maturity date unless state
law requires it.
Unless a different date is chosen on the application for the Policy, the
Maturity Date is the Policy anniversary that the Annuitant reaches age 90. The
Owner may change the Maturity Date to any date at least 10 years after the date
of the most recent premium payment by sending Life of Virginia written notice
before the Maturity Date then in effect. The Policy does not specify a maximum
maturity age or latest maturity date unless state law requires it.
Prior to the Maturity Date, you, the Owner, may elect, by written notice
to the Home Office, to change the payment plan. If you do choose a different
plan, the amount of the income payment will reflect the plan chosen. You may
elect to receive the Surrender Value in a lump sum instead of receiving income
payments. If the Surrender Value is paid, there will be no further obligation
under this policy.
Certain states prohibit the use of actuarial tables that distinguish
between men and women in determining benefits for annuity polices issued on the
lives of residents. Therefore, Policies offered by this Prospectus on the lives
of residents of those states have annuity income payments which are based on
actuarial tables that do not differentiate on the basis of sex.
Determination of Monthly Income Benefits
The initial Monthly Income Benefit under the automatic payment plan will
be calculated by multiplying (a) times (b) divided by (c) where: (a) is the
monthly payment per $1,000, shown under the optional payment plans for Life
Income with 10 Years Certain (Joint Life and Survivor Income for Joint
Annuitants), using the sex(es) and settlement age(s) of the Annuitant(s), on
the Maturity Date; (b) is the Surrender Value on the Maturity Date less any
premium taxes paid by Life of Virginia that were not recouped previously by a
premium tax charge; and (c) is $1,000. (See Optional Payment Plans for
information about subsequent variable income payments.)
Income Payments will be made monthly unless the Owner elects quarterly,
semi-annual or annual payments by written request to Life of Virginia.
If at the time Income Payments begin, the Owner has not provided Life of
Virginia with a written election not to have federal income taxes withheld,
Life of Virginia must by law withhold such taxes from the taxable portion of
such Income Payments and remit that amount to the federal government. Also, in
some other circumstances, Life of Virginia may withhold taxes. (See Direct
Rollover and Mandatory Withholding Requirements and Federal Income Tax
Withholding.) In addition, any proceeds applied under an optional payment plan
are subject to the imposition of a premium tax charge in those states which
impose such a tax upon annuitization, or deduction of the deferred premium tax
in those states which impose such a tax on Life of Virginia for premiums
received. (See Premium Taxes.)
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Optional Payment Plans
Proceeds payable on the Maturity Date will be paid as described in the
Monthly Income Benefit Section. Death and surrender proceeds will be paid in
one sum. Subject to the rules stated below, and to the Death Benefit and
distribution rules stated above, however, any part of death or surrender
proceeds can be left with Life of Virginia and paid under a payment plan. (For
the tax treatment of surrender proceeds and death benefits, see Taxation of
Partial and Full Surrenders and Taxation of Death Benefit Proceeds.) Any
proceeds left with Life of Virginia will be applied to calculate the amount of
the income. During the Annuitant's life, a payment plan may be chosen. If a
Beneficiary is changed, then the payment plan selection is no longer in effect
unless a request to continue it is made. The Designated Beneficiary can choose
a plan at the death of the Annuitant if one has not been chosen.
Optional payment plans can provide either Fixed Income Payments or
Variable Income Payments as selected by the Owner or the payee. There are
currently five optional payment plans available. Optional payment plans 1
through 5 can be used to provide Fixed Income Payments while only optional
payment plans 1 and 5 are available to provide Variable Income Payments. A plan
and the form of the Income Payments may be designated in the application or by
notifying Life of Virginia in writing at its Home Office. If the payee is not a
natural person, consent of Life of Virginia is required prior to selecting a
plan.
The effect of choosing a Fixed Income Payment is that the minimum amount
of each Income Payment will be calculated on the date the first Income Payment
is made and will not change. If Fixed Income Payments are chosen, the proceeds
will be transferred to the General Account of Life of Virginia on the date the
Income Payments begin. Fixed Income Payments will be fixed in amount and
duration on that date, based on current rates for the optional payment plan
chosen and, if applicable, the age and sex of the payee. The current rates for
optional payment plans are based on interest, mortality and expense assumptions
made by Life of Virginia. The current rates may change from time to time but
will never be less than the guaranteed minimum rate described and shown in the
Policy form. For further information, the Owner should contact Life of Virginia
at its Home Office.
If the Owner, (or the Designated Beneficiary) elects to receive Variable
Income Payments under the applicable optional payment (Plan 1 or Plan 5), the
proceeds may be allocated among up to ten Investment Subdivisions. The first
Variable Income Payment is determined by the rate for the optional payment plan
chosen and the amount of proceeds applied to the plan. The dollar amount of
subsequent Income Payments will reflect the investment experience of the
selected Investment Subdivisions and is determined by means of Annuity Units.
The number of Annuity Units for an Investment Subdivision will be
determined when Income Payments begin and will remain fixed unless transferred.
(See Transfers.) The number of Annuity Units for an Investment Subdivision is
(a) divided by (b) where: (a) is the portion of the first Income Payment
allocated to an Investment Subdivision; and (b) is the Annuity Unit Value for
that Investment Subdivision seven days before the first Income Payment is due.
For subsequent payments, the Income Payment amount for an Investment
Subdivision is the number of Annuity Units for that Investment Subdivision
times the Annuity Unit Value for that Investment Subdivision seven days before
the payment is due.
For each Investment Subdivision, the Annuity Unit Value for the first
Valuation Period was $10. The Annuity Unit Value for each subsequent Valuation
Period is (a) times (b) times (c) where: (a) is the Net Investment Factor for
that period (see Statement of Additional Information -- Net Investment
Factor.); (b) is the Annuity Unit Value for the immediately preceding Valuation
Period; and (c) is the investment result adjustment factor.
The investment result adjustment factor recognizes an assumed interest
rate of 3% per year used in determining the amounts of the Income Payments.
This means that if the net investment experience of the Investment Subdivision
to which the Annuity Units apply for a given month exceeds the monthly
equivalent of 3% per year, the monthly payment will be greater than the
previous payment. If the net investment experience for such Subdivision is less
than the monthly equivalent of 3% per year, the monthly payment will be less
than the previous monthly payment.
Payments under Plans 1, 2, 3 or 5 will begin on the date Life of Virginia
receives proof of death, on surrender, or on the policy's Maturity Date.
Payments under Plan 4 will begin at the end of the first interest period after
the date Proceeds are otherwise payable. Plan 4 is not available under
Qualified Policies.
Under all of the optional payment plans, if any payment made more
frequently than annually would be or becomes less than $100, Life of Virginia
reserves the right to reduce the frequency of payments to an interval that
would result in each payment being at least $100. If the annual payment payable
is less than $20, Life of Virginia will pay the Surrender Value in a lump sum.
Upon making such a payment, Life of Virginia will have no future obligation
under the Policy.
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The fixed income options are shown below. Variable income options, if
applicable, have the same initial payment as the corresponding fixed option.
Plan 1 -- Life Income with Period Certain. Equal monthly payments will be
made for a guaranteed minimum period. If the payee lives longer than the
minimum period, payments will continue for his or her life. The minimum
period can be 10, 15 or 20 years. Guaranteed amounts payable under this
plan will earn interest at 3% compounded yearly. Life of Virginia may
increase the interest rate and the amount of any payment. If the payee dies
before the end of the guaranteed period, the amount of remaining payments
for the minimum period will be discounted at the same rate used in
calculating Income Payments. "Discounted" means Life of Virginia will
deduct the amount of interest each remaining payment would have earned had
it not been paid out early. The discounted amounts will be paid in one sum
to the payee's estate unless otherwise provided.
Plan 2 -- Income for a Fixed Period. Equal periodic payments will be made
for a fixed period not longer than 30 years. Payments can be annual,
semi-annual, quarterly, or monthly. Guaranteed amounts payable under this
plan will earn interest at 3% compounded yearly. Life of Virginia may
increase the interest and the amount of any payment. If the payee dies, the
amount of the remaining guaranteed payments will be discounted to the date
of the payee's death at the same rate used in calculating Income Payments.
The discounted amount will be paid in one sum to the payee's estate unless
otherwise provided.
Plan 3 -- Income of a Definite Amount. Equal periodic payments of a
definite amount will be paid. Payments can be annual, semi-annual,
quarterly, or monthly. The amount paid each year must be at least $120 for
each $1,000 of proceeds. Payments will continue until the Proceeds are
exhausted. The last payment will equal the amount of any unpaid proceeds.
If Fixed Income Payments are made under this plan, unpaid Proceeds will
earn interest at 3% compounded yearly. Life of Virginia may increase the
interest rate; if the interest rate is increased, the payment period will
be extended. If the payee dies, the amount of the remaining proceeds with
earned interest will be paid in one sum to his or her estate unless
otherwise provided.
Plan 4 -- Interest Income. Periodic payments of interest earned from the
proceeds left with Life of Virginia will be paid. Payments can be annual,
semi-annual, quarterly, or monthly, and will begin at the end of the first
period chosen. Proceeds will earn interest at 3% compounded yearly. Life of
Virginia may increase the interest rate and the amount of any payment. If
the payee dies, the amount of remaining proceeds and any earned but unpaid
interest will be paid in one sum to his or her estate unless otherwise
provided. This plan is not available under Qualified Policies.
Plan 5 -- Joint Life and Survivor Income. Equal monthly payments will be
made to two payees for a guaranteed minimum of 10 years. Each payee must be
at least 35 years old when payments begin. Payments will continue as long
as either payee is living. If Fixed Income Payments are made under this
Plan, the guaranteed amount payable under this plan will earn interest at
3% compounded yearly. Life of Virginia may increase the interest rate and
the amount of any payment. If both payees die before the end of the minimum
period, the amount of the remaining payments for the 10-year period will be
discounted at the same rate used in calculating Income Payments. The
discounted amount will be paid in one sum to the survivor's estate unless
otherwise provided.
FEDERAL TAX MATTERS
Introduction
The following discussion is general in nature and is not intended as tax
advice. The federal income tax consequences associated with the purchase of a
Policy are complex, and the application of the pertinent tax rules to a
particular person may vary according to facts peculiar to that person.
This discussion is based on the law, regulations, and interpretations
existing on the date of this prospectus. These authorities, however, are
subject to change by Congress, the Treasury Department, and judicial decisions.
This discussion does not address state or other local tax consequences
associated with the purchase of a Policy. In addition, LIFE OF VIRGINIA MAKES
NO GUARANTEE REGARDING ANY TAX TREATMENT -- FEDERAL, STATE, OR LOCAL -- OF ANY
POLICY OR OF ANY TRANSACTION INVOLVING A POLICY.
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Non-Qualified Policies
Premium Payments. A purchaser of a Policy that does not qualify for the
special tax treatment discussed below in connection with Policies used as
individual retirement annuities or used with other qualified retirement plans
may not deduct or exclude from gross income the amount of the premiums paid. In
this discussion, such a Policy is called a "Non-Qualified Policy".
Tax Deferral During Accumulation Period. In general, until distributions
are made or deemed to be made from a Non-Qualified Policy (as discussed below),
an Owner who is a natural person is not taxed on increases in the Account Value
resulting from the investment experience of Account 4. However, this rule
applies only if (1) the investments of Account 4 are "adequately diversified"
in accordance with Treasury Department regulations, and (2) Life of Virginia,
rather than the Owner, is considered the owner of the assets of Account 4 for
federal tax purposes.
(1) Diversification Requirements. Treasury Department regulations
prescribe the manner in which the investments of a separate account such as
Account 4 are to be "adequately diversified." Any failure of Account 4 to
comply with the requirements of these regulations would cause each Owner to
be taxable currently on the increase in the Account Value.
Account 4, through the Funds, intends to comply with the diversification
requirements prescribed by the Treasury Department regulations. Although Life
of Virginia does not control the investments of the Funds (other than the GE
Investments Funds), it has entered into agreements regarding participation in
the Funds which require the Funds to be operated in compliance with the
requirements prescribed by the Treasury Department.
(2) Ownership Treatment. In certain circumstances, variable contract
owners may be considered the owners, for federal tax purposes, of the assets
of the separate account used to support their contracts. In those
circumstances, income and gains from the separate account assets would be
includible in the variable contract owners' gross income annually as earned.
The Internal Revenue Service (the "Service") has stated in published rulings
that a variable contract owner will be considered the owner of separate
account assets if the owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The
Treasury Department has announced, in connection with the issuance of
regulations concerning investment diversification, that those regulations "do
not provide guidance concerning the circumstances in which investor control
of the investments of a segregated asset [i.e. separate] account may cause
the investor, rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also stated that guidance
would be issued by way of regulations or rulings on the "extent to which
policyholders may direct their investments to particular sub-accounts [of a
separate account] 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 the Policy are similar to, but different in
certain respects from, those addressed by the Service in rulings in which it
was determined that contract owners were not owners of separate account
assets. For example, the Owner of this Policy has the choice of more Funds to
which to allocate premiums and Account Values, and may be able to reallocate
more frequently, than in such rulings. These differences could result in an
Owner being considered, under the standard of those rulings, the owner of the
assets of Account 4. To ascertain the tax treatment of its Owners, Life of
Virginia requested, with regard to a policy similar to this Policy, a ruling
from the Service that it, and not its Owners, is the owner of the assets of
the separate account there involved for federal income tax purposes. The
Service informed Life of Virginia that it will not rule on the request until
issuance of the promised guidance referred to in the preceding paragraph.
Because Life of Virginia does not know what standards will be set forth in
regulations or revenue rulings which the Treasury Department has stated it
expects to be issued, Life of Virginia has reserved the right to modify its
practices to attempt to prevent the Owner from being considered the owner of
the assets of Account 4.
Frequently, if the Service or the Treasury Department sets forth a new
position which is adverse to taxpayers, the position is applied on a prospective
basis only. Thus, if the Service or the Treasury Department were to issue
regulations or a ruling which treated an Owner as the owner of the assets of
Account 4, that treatment might apply only on a prospective basis. However, if
the ruling or regulations were not considered to set forth a new position, an
Owner might retroactively be determined to be the owner of the assets of Account
4.
An Owner who is not a natural person -- that is, an entity such as a
corporation or a trust -- generally is taxable currently on the annual increase
in the Account Value of a Non-Qualified Policy, unless an exception to this
general rule applies. Exceptions exist for, among other things, an Owner which
is not a natural person but which holds the Policy as an agent for a natural
person. The following discussion applies to Policies owned by natural persons.
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In addition, if the Policy's Maturity Date occurs at a time when the
Annuitant is at an advanced age, such as over age 85, it is possible that the
Owner will be taxable currently on the annual increase in the Account Value.
Taxation of Partial and Full Surrenders. A distribution is made from a
Non-Qualified Policy upon a partial or full surrender. Any amount so
distributed upon a partial surrender is includible in income to the extent that
the Account Value immediately before the partial surrender exceeds the
"investment in the contract" at that time. The amount distributed upon a full
surrender is includible in income to the extent that the Policy's Surrender
Value exceeds the investment in the contract at the time of surrender. For
these purposes, the investment in the contract at any time equals the total of
the Premium Payments made for a Policy to that time, less any amounts
previously received from the Policy which were not included in income.
If an Owner transfers a Policy without adequate consideration to a person
other than the Owner's spouse (or to a former spouse incident to divorce), the
Owner will be taxed on the difference between his or her Account Value and the
investment in the contract at the time of transfer. In such case, the
transferee's investment in the contract will be increased to reflect the
increase in the transferor's income.
In addition, the Policy provides a Death Benefit that in certain
circumstances may exceed the greater of the Premium Payments and the Account
Value. As described elsewhere in this Prospectus, Life of Virginia imposes
certain charges with respect to the Death Benefit. It is possible that some
portion of those charges could be treated for federal tax purposes as a partial
surrender of the Policy.
All non-qualified annuity contracts which are issued after October 21,
1988 by Life of Virginia or any of its affiliates with the same person
designated as the Owner within the same calendar year will be aggregated and
treated as one contract for purposes of determining any tax on distributions.
The foregoing rules will apply to amounts distributed in connection with
the Waiver of Surrender Charges in the Event of Hospital or Nursing Facility
Confinement.
Taxation of Annuity Payments. Amounts may be distributed from a
Non-Qualified Policy as payments under one of the five optional payment plans.
In the case of optional payment plans other than Plan 4 (Interest Income),
typically a portion of each payment is includible in income when it is
distributed. Normally, the portion of a payment includible in income equals the
excess of the payment over the exclusion amount. The exclusion amount, in the
case of Variable Income Payments under Plans 1 and 5, is generally the amount
determined by dividing the "investment in the contract" allocated to that Plan
for the Policy when the payments begin to be made (as defined above), adjusted
for any period-certain or refund feature, by the number of payments expected to
be made (determined by Treasury Department regulations). Also, in the case of
Fixed Income Payments under Plans 1, 2, 3, and 5, the exclusion amount is
generally the amount determined by multiplying the payment by the ratio of such
investment in the contract allocated to that Plan, adjusted for any
period-certain or refund feature, to the Policy's "expected return" (determined
under Treasury Department regulations). However, payments which are received
after the investment in the contract has been fully recovered -- i.e., after
the sum of the excludable portions of the payments equal the investment in the
contract -- will be fully includible in income. On the other hand, should the
payments cease because of the death of the Annuitant before the investment in
the contract has been fully recovered, the Annuitant (or, in certain cases, the
Designated Beneficiary) is allowed a deduction for the unrecovered amount.
If certain amounts such as the Policy's Death Benefit become payable in a
lump sum from a Policy, it is possible that such amounts might be viewed as
constructively received and thus subject to tax, even though not actually
received. A lump sum will not be constructively received if it is applied under
an optional payment plan within 60 days after the date on which it becomes
payable. (Any optional payment plan selected must comply with applicable
minimum distribution requirements imposed by the Code.)
In the case of Plan 4, the proceeds left with Life of Virginia are
considered distributed for tax purposes at the time Plan 4 takes effect, and
are taxed in the same manner as a full surrender of the Policy, as described
above. The periodic interest payments are includible in the recipient's income
when they are paid or made available. In addition, if amounts are applied under
Plan 3 when the payee is at an advanced age, such as age 80 or older, it is
possible that such amounts would be treated in a manner similar to that under
Plan 4.
Taxation of Systematic Withdrawals. In the case of Systematic Withdrawals,
the amount of each withdrawal should be considered as a distribution and taxed
in the same manner as a partial surrender of the Policy, as described above.
However, there is some uncertainty regarding the tax treatment of Systematic
Withdrawals, and it is possible that additional amounts may be includible in
income.
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Taxation of Death Benefit Proceeds. Amounts may be distributed before the
maturity date from a Non-Qualified Policy because of the death of the
Annuitant. Such Death Benefit Proceeds are includible in the income of the
recipient as follows: (1) if distributed in a lump sum, they are taxed in the
same manner as a full surrender of the Policy, as described above (substituting
the Death Benefit Proceeds for the Surrender Value), or (2) if distributed
under an optional payment plan, they are taxed in the same manner as annuity
payments, as described above.
Penalty Tax on Premature Distributions. Subject to certain exceptions, a
penalty tax is also imposed on the foregoing distributions from a Non-Qualified
Policy, equal to 10 percent of the amount of the distribution that is
includible in income. The exceptions provide, however, that this penalty tax
does not apply to distributions made (1) on or after the recipient attains age
59 1/2, (2) because the recipient has become disabled (as defined in the tax
law), (3) on or after the death of the Owner, or if such Owner is not a natural
person, on or after the death of the primary annuitant under the Policy (as
defined in the tax law), or (4) as part of a series of substantially equal
periodic payments over the life (or life expectancy) of the recipient or the
joint lives (or life expectancies) of the recipient and his or her designated
beneficiary. In the case of Systematic Withdrawals, it is uncertain whether
such distributions will qualify for exception (4) above. If Systematic
Withdrawals did qualify for this exception, any modification of the Systematic
Withdrawals could result in certain adverse tax consequences. In addition, a
transfer between Investment Subdivisions may result in payments not qualifying
for exception (4) above.
Assignments. An assignment or pledge of (or an agreement to assign or
pledge) a Non-Qualified Policy is taxed in the same manner as a partial
surrender, as described above, to the extent of the value of the Policy so
assigned or pledged. The investment in the contract is increased by the amount
includible as income with respect to such assignment or pledge, though it is
not affected by any other amount in connection with the assignment or pledge
(including its release).
Loss of Interest Deduction Where Policies are Held by or for the Benefit
of Certain Non-Natural Persons. In the case of Policies issued after June 8,
1997 to a non-natural taxpayer (such as a corporation or a trust), or held for
the benefit of such an entity, otherwise deductible interest may no longer be
deductible by the entity, regardless of whether the interest relates to debt
used to purchase or carry the Policy. However, this interest deduction
disallowance does not affect Policies where the income on such Policies is
treated under Section 72(u) of the Code as ordinary income that is received or
accrued by the Owner during the taxable year. Entities that are considering
purchasing the Policy, or entities that will be beneficiaries with respect to a
Policy, should consult a tax advisor.
Qualified Policies
The following Sections describe tax considerations of Policies used as
Individual Retirement Annuities or other qualified retirement plans ("Qualified
Policies"). Life of Virginia does not currently offer all of the types of
Qualified Policies described, and may not offer them in the future. Prospective
purchasers of Qualified Policies should therefore contact Life of Virginia's
Home Office to ascertain the availability of Qualified Policies at any given
time.
IRA Policies
Premium Payments. Except for certain group sales, an initial Premium
Payment of at least $5,000 ($2,000 for an IRA Policy) is required. A Policy
that meets certain requirements set forth in the tax law may be used as an
individual retirement annuity (i.e., an "IRA Policy"). Both the amount of the
Premium Payments that may be paid, and the tax deduction that the Owner may
claim for such Premium Payments, are limited under an IRA Policy.
In general, the Premium Payments that may be made for any IRA Policy for
any year are limited to the lesser of $2,000 or 100 percent of the individual's
earned income for the year. Also, with respect to an individual who has less
income than his or her spouse, Premium Payments may be made by that individual
to an IRA Policy to the extent of the lesser of (1) $2,000, or (2) the sum of
(i) the compensation includible in such individual's gross income for the
taxable year and (ii) the compensation includible in the gross income of the
individual's spouse for the taxable year reduced by the amount allowed as a
deduction for IRA contributions to such spouse. An excise tax is imposed on IRA
contributions that exceed the law's limits.
The deductible amount of the Premium Payments made for an IRA Policy for
any taxable year is limited to the amount of the Premium Payments that may be
paid for the Policy for that year. Furthermore, a single person who is an
active participant in a qualified retirement plan (that is, a qualified
pension, profit-sharing, or annuity plan, a simplified employee pension plan, a
"SIMPLE" retirement account, or a "Section 403(b)" annuity plan, as discussed
below) and who has adjusted gross income in excess of $40,000 may not deduct
Premium Payments, and such a person with adjusted gross income between $30,000
and $40,000 may deduct only a portion of such payments. Also, married persons
who file a joint return, one of whom is an active participant in a qualified
retirement plan, and who have adjusted gross income in excess of $60,000 may
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not deduct Premium Payments, and those with adjusted gross income between
$50,000 and $60,000 may deduct only a portion of such payments. Additional
rules may apply.
In applying these and other rules applicable to an IRA Policy, all
individual retirement accounts and annuities owned by an individual are treated
as one contract, and all amounts distributed during any taxable year are
treated as one distribution.
Tax Deferral During Accumulation Period. Until distributions are made from
an IRA Policy, increases in the Account Value of the Policy are not taxed.
IRA Policies generally may not provide life insurance coverage, but they
may provide a death benefit that equals the greater of the premiums paid and
the contract value. The Policy provides a Death Benefit that in certain
circumstances may exceed the greater of the Premium Payments and the Account
Value. It is possible that the Policy's Death Benefit provisions could be
viewed as violating the prohibition on investment in life insurance contracts
with the result that the policy would not be viewed as satisfying the
requirements of an IRA Policy.
Taxation of Distributions and Rollovers. If all Premium Payments made to
an IRA Policy were deductible, all amounts distributed from the Policy are
included in the recipient's income when distributed. However, if nondeductible
Premium Payments were made to an IRA Policy (within the limits allowed by the
tax law), a portion of each distribution from the Policy typically is included
in income when it is distributed. In such a case, any amount distributed as an
annuity payment or in a lump sum upon death or a full surrender is taxed as
described above in connection with such a distribution from a Non-Qualified
Policy, treating as the investment in the contract the sum of the nondeductible
Premium Payments at the end of the taxable year in which the distribution
commences or is made (less any amounts previously distributed that were
excluded from income). Also in such a case, any amount distributed upon a
partial surrender is partially includible in income. The includible amount is
the excess of the distribution over the exclusion amount which in turn equals
the distribution multiplied by the ratio of the investment in the contract to
the Account Value.
In any event, subject to the direct rollover and mandatory withholding
requirements (discussed below) amounts may be "rolled over" from a qualified
retirement plan to an IRA Policy (or from one individual retirement annuity or
individual retirement account to an IRA Policy) without incurring tax if
certain conditions are met. Only certain types of distributions from qualified
retirement plans or individual retirement annuities may be rolled over.
Penalty Taxes. Subject to certain exceptions, a penalty tax is also
imposed on distributions from an IRA Policy equal to 10 percent of the amount
of the distribution includible in income. (Amounts rolled over from an IRA
Policy generally are excludable from income.) The exceptions provide, however,
that this penalty tax does not apply to distributions made (1) on or after age
59 1/2, (2) on or after death or because of disability (as defined in the tax
law), or (3) as part of a series of substantially equal periodic payments over
the life (or life expectancy) of the recipient or the joint lives (or joint
life expectancies) of the recipient and his or her designated beneficiary. In
addition to the foregoing, failure to comply with a minimum distribution
requirement will result in the imposition of a penalty tax of 50 percent of the
amount by which a minimum required distribution exceeds the actual distribution
from an IRA Policy. Under this requirement, distributions of minimum amounts
from an IRA Policy as specified in the tax law must commence by April 1 of the
calendar year following the calendar year in which the Annuitant attains age
70 1/2, or when he or she retires, whichever is later. Further, after 1988,
such distributions generally must begin by April 1 of the calendar year in
which the employee attains age 70 1/2 regardless of whether he or she has
retired.
Roth IRAs
Recently enacted Section 408A of the Code permits eligible individuals to
contribute to a type of IRA Policy known as a "Roth IRA." Roth IRAs differ from
other IRA Policies in several respects. Among the differences is that, although
Premium Payments to a Roth IRA are not tax deductible, "qualified
distributions" from a Roth IRA will be excludable from income. Additionally,
the eligibility and mandatory distribution requirements for Roth IRAs differ
from non-Roth IRA Policies.
Premium Payments. The maximum amount of contributions allowable for any
taxable year to all Roth IRAs maintained for an individual (the "contribution
limit") generally is the lesser of $2,000 and 100% of compensation for the
taxable year. The contribution limit is reduced by the amount of any deductible
and non-deductible contributions to a non-Roth IRA Policy. For individuals who
file a joint return and receive less compensation for the taxable year than
their spouse, special rules apply.
For taxpayers with adjusted gross incomes in excess of certain limits, no
contribution (or only a reduced contribution) to a Roth IRA is allowed. For
married individuals filing a joint return, the contribution limit is phased out
for adjusted gross
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incomes between $150,000 and $160,000. (Special rules apply to married
individuals filing separate returns.) For single individuals, the contribution
limit is phased out for adjusted gross incomes between $95,000 and $110,000.
Rollovers. A rollover may be made to a Roth IRA only if it is a "qualified
rollover contribution." A "qualified rollover contribution" is a rollover
contribution to a Roth IRA from another Roth IRA or from a non-Roth IRA Policy,
but only if such rollover contribution meets the rollover requirements for IRA
Policies under Section 408(d)(3) of the Code. In addition, a transfer may be
made to a Roth IRA directly from another Roth IRA or from a non-Roth IRA
Policy. Persons with adjusted gross incomes in excess of $100,000 or who are
married and file a separate return are not eligible to make a qualified
rollover contribution or a transfer in a taxable year from a non-Roth IRA
Policy to a Roth IRA.
In the case of a qualified rollover contribution or a transfer from a
non-Roth IRA Policy to a Roth IRA, any portion of the amount rolled over which
would be includible in gross income were it not part of a qualified rollover
contribution or a nontaxable transfer will be includible in gross income.
However, the 10 percent penalty tax on premature distributions generally will
not apply. If such a rollover occurs before January 1, 1999, any portion of the
amount rolled over which is required to be included in gross income must be
included ratably over the 4-taxable year period beginning with the taxable year
in which the rollover is made.
Conversions. All or part of amounts in a non-Roth IRA Policy may be
converted into a Roth IRA. Such a conversion can be made without taking an
actual distribution from the IRA Policy. For example, an individual may make a
conversion by notifying the IRA Policy issuer or trustee, whichever is
applicable. The conversion of an IRA Policy to a Roth IRA is a special type of
qualified rollover contribution. Hence, the IRA Policy participant must be
eligible to make a qualified rollover contribution in order to convert an IRA
Policy to a Roth IRA. A conversion typically will result in the inclusion of
some or all of the IRA Policy value in gross income, as described above.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLLOVER, TRANSFER,
OR CONVERT ALL OR PART OF A NON-ROTH IRA POLICY TO A ROTH IRA. WHETHER AN OWNER
SHOULD DO SO WILL DEPEND ON THE IRA POLICY OWNER'S PARTICULAR FACTS AND
CIRCUMSTANCES, INCLUDING, BUT NOT LIMITED TO, SUCH FACTORS AS WHETHER THE OWNER
IS QUALIFIED TO MAKE SUCH A ROLLOVER, TRANSFER, OR CONVERSION, HIS OR HER
FINANCIAL SITUATION, AGE, CURRENT AND FUTURE INCOME NEEDS, YEARS TO RETIREMENT,
CURRENT AND FUTURE TAX RATES, AND ABILITY AND DESIRE TO PAY CURRENT INCOME
TAXES WITH RESPECT TO AMOUNTS ROLLED OVER, TRANSFERRED, OR CONVERTED, AND
WHETHER SUCH TAXES MIGHT NEED TO BE PAID WITH WITHDRAWALS FROM THE OWNER'S ROTH
IRA (SEE DISCUSSION BELOW OF "NONQUALIFIED DISTRIBUTIONS" AND "PENDING
LEGISLATION"). PERSONS CONSIDERING A ROLLOVER, TRANSFER, OR CONVERSION SHOULD
CONSULT A QUALIFIED TAX ADVISOR.
Qualified Distributions. Any "qualified distribution" from a Roth IRA is
excludible from gross income. A "qualified distribution" is a payment or
distribution which satisfies two requirements. First, the payment or
distribution must be (a) made after the Owner attains age 59 1/2, (b) made
after the Owner's death, (c) attributable to the Owner being disabled, or (d) a
qualified first-time homebuyer distribution within the meaning of Section
72(t)(2)(F) of the Code. Second, the payment or distribution must be made in a
taxable year that is at least five years after (a) the first taxable year for
which a contribution was made to any Roth IRA established for the Owner, or (b)
in the case of a payment or distribution properly allocable to a qualified
rollover contribution from a non-Roth IRA Policy (or income allocable thereto),
the taxable year in which the rollover contribution was made.
Nonqualified Distributions. A distribution from a Roth IRA which is not a
qualified distribution is generally taxed in the same manner as a distribution
from a non-Roth IRA Policy. However, such a distribution will be treated as
made first from contributions to the Roth IRA to the extent that such
distribution, when added to all previous distributions from the Roth IRA, does
not exceed the aggregate amount of contributions to the Roth IRA. Generally,
all Roth IRAs are aggregated to determine the tax treatment of distributions.
Mandatory Distributions. Distributions of minimum amounts from a Roth IRA
need not commence at age 70 1/2. However, if the Owner dies before the entire
interest in a Roth IRA is distributed, any remaining interest in the Policy
must be distributed by December 31 of the calendar year containing the fifth
anniversary of the Owner's death, subject to certain exceptions.
As described in "Federal Tax Matters," there is some uncertainty regarding
the proper characterization of the Policy's death benefit for purposes of the
tax rules governing IRA Policies (which include Roth IRAs). Additionally, the
foregoing
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discusses the federal income tax consequences surrounding Roth IRAs and does
not address any state income tax consequences that may apply. Persons intending
to use the Policy in connection with a Roth IRA should seek competent advice
regarding these issues.
Pending Legislation. Pending legislation may modify these rules
retroactively to January 1, 1998.
Simplified Employee Pension Plans
An employer may use a Policy to establish for an employee an individual
retirement annuity plan known as a "simplified employee pension plan" (or
"SEP"), if certain requirements set forth in the tax law are satisfied. Premium
Payments may be made into a Policy used in a SEP generally in accordance with
the rules applicable to individual retirement annuities, though with expanded
contribution limits. Such payments are deductible by the employer and are not
includible in the income of the employee. The taxation of distributed amounts
generally follows the rules applicable to individual retirement annuities. As
discussed above (see IRA Policies), there is some uncertainty regarding the
proper characterization of the Policy's Death Benefit provisions for purposes
of certain tax rules governing IRAs (which would include SEP IRAs). Employers
intending to use the Policy in connection with a SEP should seek competent tax
advice.
SIMPLE IRAs
Section 408(p) of the Code permits certain small employers to establish
"SIMPLE retirement accounts," including SIMPLE IRAs, for their employees. Under
SIMPLE IRAs, certain deductible contributions are made by both employees and
employers. SIMPLE IRAs are subject to various requirements, including limits on
the amounts that may be contributed, the persons who may be eligible, and the
time when distributions may commence. As discussed above (see IRA Policies),
there is some uncertainty regarding the proper characterization of the Policy's
Death Benefit provisions for purposes of certain tax rules governing IRAs
(which would include SIMPLE IRAs). Employers intending to use the Policy in
connection with a SIMPLE retirement account should seek competent tax advice.
Section 403(b) Annuities
Premium Payments. Premiums paid for a Policy on behalf of an employee by a
public educational institution or certain other tax-exempt employers are not
included in the employee's income if the Policy meets certain requirements set
forth in the tax law. There are a number of limitations on contributions to a
"Section 403(b) Policy". For example, Premium Payments made as elective
deferrals through a salary reduction agreement with an employee generally are
limited to $9,500 per year (or, if greater, $7,000 per year as adjusted by the
Service for cost of living increases). (Note that contributions to certain
other qualified retirement plans, such as Section 401(k) plans or to SEP plans,
by the Owner may reduce these limits on elective deferrals.) Other limitations
may be more restrictive.
In applying these and other rules applicable to a Section 403(b) Policy,
that Policy and all similar contracts purchased by the same employer for the
same employee are treated as one contract.
Tax Deferral During Accumulation Period. Until distributions are made from
a Section 403(b) Policy, increases in the Account Value are not taxed.
Purchasers should consider that the Policy provides a Death Benefit that
in certain circumstances may exceed the greater of the Premium Payments and the
Account Value. It is possible that such Death Benefit could be characterized as
an incidental death benefit. If the Death Benefit were so characterized, this
could result in currently taxable income to purchasers. In addition, there are
limitations on the amount of incidental death benefits that may be provided
under a Section 403(b) Policy. Even if the Death Benefit under the Policy were
characterized as an incidental death benefit, it is unlikely to violate those
limits unless the purchaser also purchases a life insurance policy as part of
his or her Section 403(b) Policy.
Taxation of Distributions and Rollovers. If no portion of the premiums
paid into a Section 403(b) Policy were includible in the employee's income, all
amounts distributed from the Policy are included in the recipient's income when
distributed. However, if Premium Payments were made to a Section 403(b) Policy
which were includible in the employee's income, a portion of each distribution
from the Policy typically is included in income when it is distributed. In such
a case, any amount distributed as an annuity payment or in a lump sum upon
death or a full surrender is taxed as described above in connection with such a
distribution from a Non-Qualified Policy, treating as the investment in the
contract the sum of the Premium Payments made into the Policy which were not
excluded from income as of the time the distribution commences or is made (less
any amounts previously distributed that were excluded from income). Also in
such a case, any amount distributed upon a partial surrender is partially
includible in income. The includible amount is the excess of the distribution
over the exclusion amount, which in turn equals the distribution multiplied by
the ratio of the investment in the contract to the Account Value.
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In any event, subject to the direct rollover and mandatory withholding
requirements (discussed below), amounts may be rolled over from a Section
403(b) Policy (or similarly qualifying contract) to another Section 403(b)
Policy (or similarly qualifying contract) or to an individual retirement
account or individual retirement annuity without incurring tax if certain
conditions are met. Only certain types of distributions may be rolled over.
Beginning in 1989, a Section 403(b) Policy is required to prohibit
distributions of amounts attributable to elective deferrals and earnings
thereon (made under a salary reduction agreement) prior to age 59 1/2,
separation from service, death or disability. Distributions of elective
deferrals (but not any income earned thereon) may nonetheless be permitted in
the case of hardship.
Penalty Taxes. Subject to certain exceptions, a penalty tax is also
imposed on distributions from a Section 403(b) Policy equal to 10 percent of
the amount of the distribution includible in income. (Amounts rolled over from
a Section 403(b) Policy generally are excludable from income, although various
withholding requirements may nonetheless apply to such amounts, as discussed
below). The exceptions provide, however, that this penalty tax does not apply
to distributions made (1) on or after age 59 1/2, (2) on or after death or
because of disability (as defined in the tax law), (3) as part of a series of
substantially equal periodic payments beginning after the employee separates
from service and made over the life (or life expectancy) of the employee or the
joint lives (or joint life expectancies) of the employee and his or her
designated beneficiary, or (4) after separation from service after attainment
of age 55.
In addition to the foregoing, failure to comply with a minimum
distribution requirement will result in the imposition of a penalty tax of 50
percent of the amount by which a minimum required distribution exceeds the
actual distribution from a Section 403(b) Policy. Under this requirement,
distributions of minimum amounts specified by the tax law must generally
commence by April 1 of the calendar year following the calendar year in which
the employee attains age 70 1/2, or when he or she retires, whichever is later.
Deferred Compensation Plans of State and Local Governments and Tax-Exempt
Organizations
Section 457 of the Code permits employees of state and local governments
and tax-exempt organizations to defer a portion of their compensation without
paying current taxes. The employees must be participants in an eligible
deferred compensation plan. Generally, a Policy purchased by a state or local
government or a tax-exempt organization will not be treated as an annuity
contract for federal income tax purposes. Those who intend to use the Policies
in connection with such plans should seek competent tax advice.
Other Qualified Retirement Plans
Premium Payments. Premium Payments made by an employer for a Policy used
in connection with a pension, profit-sharing, or annuity plan qualified under
Section 401 or 403(a) of the Code are deductible by the employer within certain
limits. Such payments are also excludable from the income of the employee
within certain limits.
Tax Deferral and Taxation of Distributions. The deferral of taxation on
Account Value increases and the tax treatment of distributed amounts (including
the penalty tax) described above in the case of IRA Policies and Section 403(b)
Policies generally applies with respect to amounts held under or distributed
from Policies used in connection with other qualified retirement plans. For
Policies and amounts distributed therefrom to be eligible for such treatment,
certain requirements specified in the tax law must be satisfied.
The Policy provides a Death Benefit that in certain circumstances may
exceed the greater of the Premium Payments and the Account Value. It is
possible that such Death Benefit could be characterized as an incidental death
benefit. There are limitations on the amount of incidental death benefits that
may be provided under pension and profit sharing plans. In addition, the cost
of providing such benefits may be currently includible in income.
Legal and Tax Advice for Qualified Plans
The requirements of the tax law applicable to all qualified retirement
plans, and the tax treatment of amounts held and distributed under such plans,
are quite complex. Accordingly, a prospective purchaser of a Policy to be used
in connection with any such plan should seek competent legal and tax advice
regarding the suitability of the Policy for the situation involved, the
applicable requirements, and the treatment of the rights and benefits under a
Policy so used.
Direct Rollover and Mandatory Withholding Requirements
If a Policy is used in connection with a pension, profit-sharing, or
annuity plan qualified under Sections 401(a) or 403(a) of the Code, or is a
Section 403(b) Policy, any "eligible rollover distribution" from the Policy
will be subject to direct rollover
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and mandatory withholding requirements. An eligible rollover distribution
generally is any taxable distribution from a qualified pension plan under
Section 401(a) of the Code, qualified annuity plan under Section 403(a) of the
Code, or Section 403(b) annuity or custodial account, excluding certain amounts
(such as minimum distributions required under Section 401(a)(9) of the Code and
distributions which are part of a "series of substantially equal periodic
payments" made for the life or a specified period of 10 years or more). Under
these requirements, withholding at a rate of 20 percent will be imposed on any
eligible rollover distribution received from the Policy. Unlike withholding on
certain other amounts distributed from the Policy, discussed below, the
recipient cannot elect out of withholding with respect to an eligible rollover
distribution. However, this 20 percent withholding will not apply if, instead
of receiving the eligible rollover distribution, the plan participant elects to
have it directly transferred to certain qualified retirement plans. Prior to
receiving an eligible rollover distribution, the plan participant will receive
notice (from the plan administrator or Life of Virginia) explaining generally
the direct rollover and mandatory withholding requirements and how to avoid the
20 percent withholding by electing a direct transfer.
Federal Income Tax Withholding
Amounts distributed from a Policy, to the extent includible in income
under the federal tax laws, are subject to federal income tax withholding. Life
of Virginia will withhold and remit a portion of such amounts to the U.S.
Government unless properly notified by the Owner or other payee, at or before
the time of the distribution, that he or she chooses not to have any amounts
withheld. In some instances, however, Life of Virginia may be required to
withhold amounts. (See the discussion above regarding withholding requirements
applicable to distributions from various qualified retirement plans including
Section 403(b) Policies.)
GENERAL PROVISIONS
The Owner
The Owner or Joint Owners are designated in the application. (Joint Owners
own the Policy equally with the right of survivorship.) The Owner or Joint
Owners may exercise all of the rights and privileges under the Policy, subject
to the rights of any beneficiary named irrevocably, and any assignee under an
assignment filed with Life of Virginia. Disposition of the Policy is subject to
the Policy's death provisions (see Death Provisions). All Owners who are
natural persons must be Annuitants. If any Annuitant dies while this policy is
in force and before income payments begin, the Designated Beneficiary will
become the sole owner of the Policy following such a death, subject to the
distribution rules in the Policy's death provisions. The Designated Beneficiary
will be the first person named as follows who is alive or in existence on the
date of the death of an Annuitant: Final Annuitant, primary Beneficiary(ies),
contingent Beneficiary(ies), and if no one else is alive, the estate of the
sole Annuitant (if no Joint Annuitant was named) or of the Final Annuitant.
The Designated Beneficiary, for purposes of the required distribution
rules of Section 72(s) of the Code, will receive the required distribution if
the Owner dies prior to the Maturity Date. The required distribution is more
fully described in Death Provisions.
The Annuitant
The Annuitant is the person designated to receive the Monthly Income
Benefit beginning on the Maturity Date. He/she is named in the application. The
Annuitant's age and sex are used to determine the amount of the guaranteed
monthly income payment.
The Beneficiary
One or more primary and contingent Beneficiary(ies) may be designated by
the Owner in the application. If changed, the primary Beneficiary or contingent
Beneficiary is as shown in the latest change filed with Life of Virginia.
Changes By the Owner
If any Owner is a trust, such trust can be changed at any time until the
death of an Annuitant, if this right was reserved. The new Owner must also be a
trust for the benefit of the same Annuitant and the same Joint Annuitant, if
any. Also, until the death of an Annuitant, the Owner can change the
Beneficiary, if this right was reserved. Except as just described, neither the
Owner nor the Beneficiary can be changed. In addition, no changes in the
Annuitant or Joint Annuitant are permitted.
To make a change, a written request must be sent to Life of Virginia at
its Home Office. The request and the change must be in a form satisfactory to
Life of Virginia and must actually be received by the Company. The change will
take effect
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as of the date the request is signed by the Owner. The change will be subject
to any payment made before the change is recorded by Life of Virginia.
Evidence of Death, Age, Sex or Survival
Life of Virginia will require proof of death before it acts on Policy
provisions relating to the death of the Owner or other person(s). Life of
Virginia may also require proof of the age, sex or survival of any person or
persons before acting on any applicable Policy provision.
Payment under the Policies
Life of Virginia will usually pay any amounts payable as a result of a
full or partial surrender within seven days after it receives a written request
at its Home Office in a form satisfactory to it. Life of Virginia will usually
pay any Death Benefit within seven days after it receives Due Proof of Death.
Amounts payable as a result of a full or partial surrender, death of the
Annuitant or the Maturity Date may be postponed whenever: (i) the New York
Stock Exchange is closed other than customary weekend and holiday closings, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; or (ii) the Commission by order permits postponement for the
protection of Owners; or (iii) an emergency exists, as determined by the
Commission, as the result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to determine the value of the
net assets of Account 4.
Payments under a Policy which are derived from any amount paid to Life of
Virginia by check or draft may be postponed until such time as Life of Virginia
is satisfied that the check or draft has cleared the bank upon which it is
drawn.
If, at the time the Owner makes a full or partial surrender request, he or
she has not provided Life of Virginia with a written election not to have
federal income taxes withheld, Life of Virginia must by law withhold such taxes
and remit that amount to the federal government. Moreover, the Code provides
that a 10% penalty will be imposed on certain early surrenders. (See Federal
Tax Matters.)
Any Death Benefit proceeds that are paid in one lump sum will include
interest from the date of receipt of Due Proof of Death to the date of payment.
Interest will be paid at a rate set by Life of Virginia, or by law if greater.
The minimum interest rate which will be paid is 2.5%. Interest will not be paid
beyond one year or any longer time set by applicable law.
DISTRIBUTION OF THE POLICIES
The Policies will be sold by individuals who, in addition to being
licensed to sell variable annuity policies for Life of Virginia, are also
registered representatives of Capital Brokerage Corporation (doing business in
Indiana and Texas as GE Capital Brokerage Corporation) the principal
underwriter of the Policies, or of broker-dealers who have entered into written
sales agreements with the principal underwriter. Capital Brokerage Corporation,
an affiliate of Life of Virginia, is a Washington corporation located at 6630
West Broad Street, Richmond, Virginia 23230. Capital Brokerage Corporation is
registered with the Commission under the Securities Exchange Act of 1934 as a
broker-dealer and is a member of the National Association of Securities
Dealers, Inc. Capital Brokerage Corporation also serves as principal
underwriter for variable life insurance policies issued by Life of Virginia. No
amounts have been retained, however, by Capital Brokerage Corporation for
acting as principal underwriter of the Life of Virginia Policies.
Writing agents of Life of Virginia will receive commissions based on a
commission schedule and rules. Commissions depend on the premiums paid. The
agent will receive a commission of 3% of the initial premium paid and any
Additional Premium Payments.
Agents may also be eligible to receive certain bonuses and allowances, as
well as retirement plan credits, based on commissions earned. Field management
of Life of Virginia receives compensation which may be based in part on the
level of agent commissions in their management units. Broker-dealers and their
registered agents will receive first-year and subsequent year commissions
equivalent to the total commissions and benefits received by the field
management and writing agents of Life of Virginia.
VOTING RIGHTS AND REPORTS
To the extent required by law, Life of Virginia will vote the Funds'
shares held in Account 4 at regular and special shareholder meetings of the
Funds, in accordance with instructions received from persons having voting
interests in Account
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4. If, however, the 1940 Act or any regulation thereunder should be amended or
if the present interpretation thereof should change, and as a result, Life of
Virginia determines that it is permitted to vote Fund shares in its own right,
it may elect to do so.
Before Income Payments begin, the Owner exercises the voting rights under
the Policy. After Income Payments begin, the person receiving the Income
Payments has the voting interests. Before Income Payments begin, the number of
votes which each Owner has the right to instruct will be determined for a
portfolio by dividing a Policy's Account Value in the subdivision investing in
that portfolio by the net asset value per share of the portfolio. Fractional
shares will be counted. After Income Payments begin, the number of votes after
the first Income Payment is received will be determined by dividing the reserve
for such Policy allocated to the Investment Subdivision by the net asset value
per share of the corresponding portfolio. After Income Payments begin, the
reserves attributable to a Policy decrease as the reserves allocated to the
Investment Subdivision decrease. Fractional shares will be counted.
The number of votes which the Owner has the right to instruct will be
determined as of the date coincident with the date established by a particular
Fund for determining shareholders eligible to vote at the meeting of that Fund.
Voting instructions will be solicited by written communications prior to such
meeting in accordance with procedures established by that Fund.
The Funds serve as investment vehicles for variable life insurance
policies sold by Life of Virginia as well as for other variable life insurance
and variable annuity policies sold by insurers other than Life of Virginia and
funded through other separate investment accounts. Persons owning all such
other policies as well as the persons receiving income payments under all such
other policies will enjoy similar voting rights. Life of Virginia will vote
Fund shares held in Account 4 as to which no timely instructions are received,
and Fund shares held in Account 4 that it owns as a consequence of accrued
charges under the Policies and other variable annuity policies supported by
Account 4, in proportion to the voting instructions which are received with
respect to all policies funded through Account 4. Each person having a voting
interest will receive proxy materials, reports and other materials relating to
the appropriate portfolio.
YEAR 2000 COMPLIANCE
Like other financial services providers, Life of Virginia utilizes
computer systems that may be affected by Year 2000 date data processing issues
and it also relies on services providers, including banks, custodians,
administrators, and investment managers that also may be affected. Life of
Virginia is engaged in a process to evaluate and develop plans to have its
computer systems and critical applications ready to process Year 2000 date
data. It is also confirming that its service providers are also so engaged. The
resources that are being devoted to this effort are substantial. Remedial
actions include inventorying the company's computer systems, applications and
interfaces, assessing the impact of the Year 2000 date data on them, developing
a range of solutions specific to particular situations and implementing
appropriate solutions. Some systems, applications and interfaces will be
replaced or upgraded to new software or new releases of existing software which
are Year 2000 ready. Others will be modified as necessary to become ready. It
is difficult to predict with precision whether the amount of resources
ultimately devoted, or the outcome of these efforts, will have any negative
impact on Life of Virginia and Account 4. However, as of the date of this
prospectus, it is not anticipated that Owners will experience negative effects
on their investment, or on the services provided in connection therewith, as a
result of Year 2000 readiness implementation. Life of Virginia's target dates
for completion of these activities depend upon the particular situation. The
Company's goal is to be substantially Year 2000 ready for critical applications
by mid-1999, but there can be no assurance that Life of Virginia will be
successful in meeting its goal, or that interaction with other service
providers will not impair Life of Virginia's services at that time.
LEGAL PROCEEDINGS
Life of Virginia and its subsidiaries, like other life insurance
companies, are involved in lawsuits, including class action lawsuits. In some
class action and other lawsuits involving insurers, substantial damages have
been sought and/or material settlement payments have been made. Although the
outcome of any litigation cannot be predicted with certainty, Life of Virginia
believes that at the present time there are no pending or threatened lawsuits
that are reasonably likely to have a material adverse impact on Account 4 or
Life of Virginia.
45
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
-----
The Life Insurance Company of Virginia ................................ 3
The Policies .......................................................... 3
Transfer of Annuity Units ............................................ 3
Net Investment Factor ................................................ 3
Termination of Participation Agreements ............................... 4
Calculation of Performance Date ....................................... 4
Money Market Investment Subdivisions ................................. 4
Other Investment Subdivisions ........................................ 5
Federal Tax Matters ................................................... 8
Taxation of Life of Virginia ......................................... 8
IRS Required Distributions ........................................... 9
General Provisions .................................................... 9
Using the Policies as Collateral ..................................... 9
Non-Participating .................................................... 9
Misstatement of Age or Sex ........................................... 10
Incontestability ..................................................... 10
Statement of Values .................................................. 10
Written Notice ....................................................... 10
Distribution of the Policies .......................................... 10
Legal Developments Regarding Employment-Related Benefit Plans ......... 10
Additions, Deletions, or Substitutions of Investments ................. 10
State Regulation of Life of Virginia .................................. 11
Legal Matters ......................................................... 11
Experts ............................................................... 11
Change in Auditors .................................................... 11
Financial Statements .................................................. 12
A Statement of Additional Information containing more detailed information
about the Policy and Account 4 is available free by writing Life of Virginia at
the address above or by calling (800) 352-9910.
46
<PAGE>
SUPPLEMENT TO PROSPECTUS
FOR LIFE OF VIRGINIA SEPARATE ACCOUNT 4
General Information
Contributions and/or transfers to a Guarantee Account, as described below,
become part of the General Account of Life of Virginia. Because of exemptive
and exclusionary provisions, interests in the General Account have not been
registered under the Securities Act of 1933 (the "1933 Act"), and the General
Account is not registered as an investment company under the Investment Company
Act of 1940 (the "1940 Act"). Accordingly, neither the General Account nor any
interests therein are subject to the provisions of the 1933 Act or the 1940
Act, and the information in this supplement has not been reviewed by the staff
of the Securities and Exchange Commission. Disclosure regarding a Guarantee
Account and the General Account, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
The Guarantee Account
The Owner may allocate premium payments to the Guarantee Account(s) or
transfer amounts between the Guarantee Account(s) and the Investment
Subdivisions of Account 4. Upon maturity or surrender of the Policy, any amount
in a Guarantee Account is added to the Account Value in Account 4, and, after
deduction of any applicable surrender charge, is paid in a lump sum, or applied
under an optional payment plan (See Income payments).
Each time a Policyowner allocates purchase payments or transfer funds to
the Guarantee Account, Life of Virginia establishes an interest rate guarantee
period. Each interest rate guarantee period is guaranteed an interest rate for
a specified period of time (the available interest rate guarantee periods are
shown in your policy form). At the end of the interest rate guarantee period, a
new interest rate will be come effective, and a interest rate guarantee period
will commence for any remaining portion of that particular allocation. Interest
rates are determined by Life of Virginia in its sole discretion. The
determination made will be influenced by, but not necessarily correspond to,
interest rates available on fixed income investments which the Company may
acquire with the amounts it receives as premium payments or transfers of
Account Value under the Policies. A Policyowner will have no direct or indirect
interest in these investments. Life of Virginia will also consider other
factors in determining the interest rates, for the interest rate guarantee
period, including, but not limited to, regulatory and tax requirements, sales
commissions, and administrative expenses borne by the Company, general economic
trends, and competitive factors. Amounts allocated to the Guarantee Account
will not share in the investment performance of the General Account of Life of
Virginia, or any portion thereof. THE COMPANY'S MANAGEMENT WILL MAKE THE FINAL
DETERMINATION OF THE INTEREST RATES IT DECLARES FOR AN INTEREST RATE GUARANTEE
PERIOD. LIFE OF VIRGINIA CANNOT PREDICT OR GUARANTEE THE LEVEL OF INTEREST
RATES IN FUTURE INTEREST RATE GUARANTEE PERIODS. HOWEVER, THE INTEREST RATES
FOR ANY INTEREST RATE GUARANTEE PERIOD WILL BE AT LEAST THE GUARANTEED INTEREST
RATE SHOWN IN YOUR POLICY FORM.
Life of Virginia reserves the right to credit bonus interest on premium
allocated to a Guarantee Account participating in a Dollar-Cost Averaging
program. (This may not be available to all classes of policies.)
Charges
The Mortality and Expense Risk and Administrative Expense charges are not
deducted from the Guarantee Account(s). Such charges are borne solely by the
Separate Account. The Annual Policy Maintenance Charge and the Annual Death
Benefit Charge, if applicable, will be deducted from the Guarantee Account(s)
if there is no account value in the Separate Account. If there is insufficient
account value in the Separate Account at the time the charges are deducted, the
excess of these charges over the amount deducted from the Separate Account will
be deducted from the Guarantee Account(s). (See Policy Maintenance Charge).
Surrender charges apply to account values allocated to a Guarantee Account
in the same manner in which these charges apply to account values allocated to
the Separate Account.
Transfers
The Owner may transfer amounts between a Guarantee Account and the
available Investment Subdivisions of Account 4. Transfers will be effective on
the date the Owner's transfer request is received by Life of Virginia. With
respect to transfers between a Guarantee Account and the available Investment
Subdivisions, the following restrictions may be imposed:
<PAGE>
Transfers from any particular allocation to a Guarantee Account to an
Investment Subdivision may be made only during the 30 day period
beginning with the end of the preceding interest rate guarantee period
applicable to that particular allocation. Life of Virginia may limit the
amount which may be transferred to the Investment Subdivisions. For any
particular allocation to a Guarantee Account, the limited amount will not
be less than (a) any accrued interest on that allocation, plus (b) 25% of
the original amount of that allocation.
No transfers from an Investment Subdivision to a Guarantee Account may be
made during the six month period following the transfer of any amount
from a Guarantee Account to any Investment Subdivision.
In all other respects, the rules and charges applicable to transfers
between the available Investment Subdivisions of Account 4 will apply to
transfers involving a Guarantee Account.
Dollar-Cost Averaging
As an alternative to the Dollar-Cost Averaging program described in the
prospectus (See "Dollar-Cost Averaging"), Owners may elect to have Life of
Virginia automatically transfer specified amounts from a Guarantee Account to
any available Investment Subdivision on a monthly or quarterly basis. To make
the election, Owners must complete the Dollar-Cost Averaging section of the
application or a Dollar-Cost Averaging Agreement. Money may be allocated to a
Guarantee Account as an initial or additional premium or in the form of a
transfer of Account Value from one or more Investment Subdivisions. Such
allocations must comply with all applicable minimum amount and percentage
requirements (See "Purchasing the Policies" and "Allocation of Premium
Payments") as well as the rules applicable to transfers to the Guarantee
Account(s). Apart from automatic transfers under a Dollar-Cost Averaging
program, all rules regarding transfers from the Guarantee Account(s) will
apply.
Owners may designate the amount allocated to a Guarantee Account that is
subject to the Dollar-Cost Averaging program. Life of Virginia reserves the
right to limit the minimum amount of each automatic transfer to 10% per month
of the amount so designated. Each automatic transfer, as described above, will
be made on a first-in first-out basis until the entire value of the designated
amount in a Guarantee Account is depleted. Prior to that time, an Owner may
discontinue such automatic transfers by sending Life of Virginia written
notice.
Life of Virginia reserves the right to transfer any remaining portion of
an allocation used for Dollar-Cost Averaging to a Guarantee Account with a new
one year interest rate guarantee period upon termination of the Dollar-Cost
Averaging program for that allocation. Life of Virginia also reserves the right
to discontinue or modify this alternative Dollar-Cost Averaging program at any
time for any reason on 30 days written notice to the Owner.
Surrenders
Surrenders may be made from the Guarantee Account(s) in addition to the
Account 4. (See "Distributions Under the Policy.") If a partial surrender is
requested, the Owner may specify the Guarantee Account(s) from which the
deduction should be made. If no Guarantee Account is specified, the amount of
the partial surrender will be deducted first from the Investment Subdivisions
of the Separate Account on a pro-rata basis, in proportion to the Account Value
in the Separate Account. Any amount remaining will be deducted from the
Guarantee Account(s). Deductions from the Guarantee Account(s) will be taken
from the amounts (including interest credited to such amounts) which have been
in the Guarantee Account(s) for the longest period of time.
Deferral of Payment
Life of Virginia may defer payment of any amount from the Guarantee
Account(s) for up to six months. Payment will not be deferred if applicable law
requires earlier payment, or if the amount payable is to be used to pay
premiums on policies in force with Life of Virginia.
THE GUARANTEE ACCOUNT MAY NOT BE AVAILABLE IN ALL STATES OR MARKETS
The Life Insurance Company of Virginia
6610 West Broad Street
Richmond, Virginia 23230
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA
SEPARATE ACCOUNT 4
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY
FORM P1142N 6/94
OFFERED BY
THE LIFE INSURANCE COMPANY OF VIRGINIA
(A VIRGINIA STOCK CORPORATION)
6610 W. BROAD STREET
RICHMOND, VIRGINIA 23230
This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the above-named Flexible Premium Variable Deferred
Annuity Policy ("Policy") offered by The Life Insurance Company of Virginia. You
may obtain a copy of the Prospectus dated May 1, 1998, by calling (800)
352-9910, or writing to The Life Insurance Company of Virginia, 6610 W. Broad
Street, Richmond, Virginia 23230. Terms used in the current Prospectus for the
Policy are incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS
NOT A PROSPECTUS AND SHOULD BE READ ONLY
IN CONJUNCTION WITH THE PROSPECTUS FOR THE POLICY.
Dated May 1, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
The Life Insurance Company of Virginia........................................ 3
The Policies.................................................................. 3
Transfer of Annuity Units................................................... 3
Net Investment Factor....................................................... 3
Termination of Participation Agreements....................................... 4
Calculation of Performance Date............................................... 4
Money Market Investment Subdivisions........................................ 4
Other Investment Subdivisions............................................... 5
Federal Tax Matters............................................................8
Taxation of Life of Virginia.................................................8
IRS Required Distributions.................................................. 9
General Provisions............................................................ 9
Using the Policies as Collateral............................................ 9
Non-Participating........................................................... 9
Misstatement of Age or Sex..................................................10
Incontestability............................................................10
Statement of Values.........................................................10
Written Notice..............................................................10
Distribution of the Policies..................................................10
Legal Developments Regarding Employment-Related Benefit Plans.................10
Additions, Deletions, or Substitutions of Investments.........................10
State Regulation of Life of Virginia..........................................11
Legal Matters.................................................................11
Experts.......................................................................11
Change in Auditors............................................................11
Financial Statements..........................................................11
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA
The Life Insurance Company of Virginia ("Life of Virginia") has operated as a
stock life insurance company since March 21, 1871 under a charter granted by the
Commonwealth of Virginia and has done business continuously since that time as
"The Life Insurance Company of Virginia."
Eighty percent of the capital stock of Life of Virginia is owned by General
Electric Capital Assurance Company. The remaining 20% is owned by GE Financial
Assurance Holdings, Inc. General Electric Capital Assurance Company and GE
Financial Assurance Holdings, Inc. are indirectly, wholly-owned subsidiaries of
GE Capital. GE Capital is a diversified financial services company. GE Capital's
subsidiaries consist of commercial and industrial specialized, mid-market and
indirect consumer financing businesses. GE Capital's indirect parent, General
Electric Company, founded more than one hundred years ago by Thomas Edison, is
the world's largest manufacturer of jet engines, engineering plastics, medical
diagnostic equipment and large-sized electric power generation equipment.
GNA Corporation indirectly owns the stock of Capital Brokerage Corporation (a
broker/dealer registered with the Commission, which acts as principal
underwriter for the Policies).
THE POLICIES
TRANSFER OF ANNUITY UNITS
Upon the Owner's request, Annuity Units may be transferred once per calendar
year from the Investment Subdivision in which they are currently held. However,
where permitted by state law, Life of Virginia reserves the right to refuse to
execute any transfer if any of the Investment Subdivisions that would be
affected by the transfer are unable to purchase or redeem shares of the mutual
funds in which the Investment Subdivisions invest. The amount of the increase in
the number of Annuity Units for the Investment Subdivision to which the transfer
is made is (a) times (b) divided by (c) where: (a) is the number of Annuity
Units for the Investment Subdivision in which the Annuity Units are currently
held; (b) is the Annuity Unit Value for the Investment Subdivision in which the
Annuity Units are currently held; and (c) is the Annuity Unit Value for the
Investment Subdivision to which the transfer is made.
If the number of Annuity Units remaining in an Investment Subdivision after
the transfer is less than 1, Life of Virginia will transfer the amount remaining
in addition to the amount requested. Life of Virginia will not transfer into any
Investment Subdivision unless the number of Annuity Units of that Investment
Subdivision after the transfer is at least 1. The amount of the Income Payment
as of the date of the transfer will not be affected by the transfer.
NET INVESTMENT FACTOR
The Net Investment Factor measures investment performance of the Investment
Subdivisions of Account 4 during a Valuation Period. Each Investment Subdivision
has its own Net Investment Factor for a Valuation Period. The Net Investment
Factor of an Investment Subdivision available under the policies for a Valuation
Period is (a) divided by (b) minus (c) where:
(a) is (1) the value of the net assets of that Investment Subdivision at the
end of the preceding Valuation Period, plus (2) the investment income and
capital gains, realized or unrealized, credited to the net assets of that
Investment Subdivision during the Valuation Period for which the Net
Investment Factor is being determined, minus (3) the capital losses,
realized or unrealized, charged against those assets during the Valuation
Period, minus (4) any amount charged against that Investment Subdivision
for taxes, or any amount set aside during the Valuation Period by Life of
Virginia as a provision for taxes attributable to the operation or
maintenance of that Subdivision; and
(b) is the value of the net assets of that Investment Subdivision at the end
of the preceding Valuation Period; and
(c) is a charge no greater than .003857% for each day in the Valuation Period.
This corresponds to 1.25% and 0.15% per year of the net assets of that
Investment Subdivision for mortality and expense risks, and for
administrative expenses, respectively.
The value of the assets in Account 4 will be taken at their fair market value
in accordance with generally accepted accounting practices and applicable laws
and regulations.
<PAGE>
TERMINATION OF PARTICIPATION AGREEMENTS
The participation agreements pursuant to which the Funds sell their shares to
Account 4 contain varying provisions regarding termination. The following
summarizes those provisions:
Variable Insurance Products Fund, Variable Insurance Products Fund II, and
Variable Insurance Products Fund III ("the Fund"). These agreements provide for
termination (1) on one year's advance notice by either party, (2) at Life of
Virginia's option if shares of the Fund are not reasonably available to meet
requirements of the policies, (3) at the option of either party if certain
enforcement proceedings are instituted against the other, (4) upon vote of the
policyowners to substitute shares of another mutual fund, (5) at Life of
Virginia's option if shares of the Fund are not registered, issued, or sold in
accordance with applicable laws, if the Fund ceases to qualify as a regulated
investment company under the Code, (6) at the option of the Fund or its
principal underwriter if it determines that Life of Virginia has suffered
material adverse changes in its business or financial condition or is the
subject of material adverse publicity, (7) at the option of Life of Virginia if
the Fund has suffered material adverse changes in its business or financial
condition or is the subject of material adverse publicity, or (8) at the option
of the Fund or its principal underwriter if Life of Virginia decides to make
another mutual fund available as a funding vehicle for its policies.
Oppenheimer Variable Account Funds. This agreement may be terminated by the
parties on six months' advance written notice.
Janus Aspen Series. This agreement may be terminated by the parties on six
months' advance written notice.
Federated Insurance Series. This agreement may be terminated by any of the
parties on 180 days written notice to the other parties.
The Alger American Fund. This agreement may be terminated at the option of any
party upon six months' written notice to the other parties, unless a shorter
time is agreed to by the parties.
PBHG Insurance Series Fund, Inc. This agreement may be terminated at the option
of any party upon six months' written notice to the other parties, unless a
shorter time is agreed to by the parties.
Goldman Sachs Variable Insurance Trust. This agreement may be terminated at the
option of any party upon six months' written notice to the other parties, unless
a shorter time is agreed to by the parties.
GE Investments Funds, Inc. has entered into a Stock Sale Agreement between
Life of Virginia and the Fund. This agreement may be terminated by either party
on 360 days' written notice to the other.
CALCULATION OF PERFORMANCE DATA
From time to time, Life of Virginia may disclose total return, yield, and other
performance data for the Investment Subdivisions pertaining to the Policies.
Such performance data will be computed, or accompanied by performance data
computed, in accordance with the standards defined by the Securities and
Exchange Commission.
The calculations of yield, total return, and other performance data do not
reflect the effect of any premium tax that may be applicable to a particular
Policy. Premium taxes currently range from 0% to 3.5% of premium based on the
rules of the state in which the Policy is sold.
"MONEY MARKET" INVESTMENT SUBDIVISIONS
From time to time, advertisements and sales literature may quote the yield of
one or more of the "money market" Investment Subdivisions for a seven-day
period, in a manner which does not take into consideration any realized or
unrealized gains or losses on shares of the corresponding money market
investment portfolio or on its portfolio securities. This current annualized
yield is computed by determining the net change (exclusive of unrealized gains
and losses on the sale of securities and unrealized appreciation and
depreciation and income other than investment income) at the end of the
seven-day period in the value of a hypothetical account under a Policy having a
balance of one unit in that "money market" Investment Subdivision at the
beginning of the period, dividing such net change in account value by the value
of the account at the beginning of the period to determine the base period
return, and annualizing the result on a 365-day basis. The net change in account
value reflects: 1) net income from the investment portfolio attributable to the
hypothetical account; and 2) charges and deductions imposed under the Policy
which are attributable to the hypothetical account. The charges and deductions
include the per unit charges for the policy maintenance charge, administrative
expense charge, annual death benefit charge, and the mortality and expense risk
charge. For purposes of calculating current yields for
<PAGE>
a Policy, an average per unit policy maintenance charge is used. For the class
of policies issued with a Guaranteed Minimum Death Benefit rider, an average per
unit death benefit charge is also included. Current Yield will be calculated
according to the following formula:
Current Yield = ((NCP - ES)/UV) X (365/7)
where:
NCP = the net change in the value of the investment portfolio (exclusive
of realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment
income) for the seven-day period attributable to a hypothetical
account having a balance of one Investment Subdivision unit.
ES = per unit expenses of the hypothetical account for the seven-day
period.
UV = the unit value on the first day of the seven-day period.
The current yield for the "money market" Investment Subdivisions of Account 4
available under the policy, based on the seven-day period ending December 31,
1997 was:
GE Investments Funds, Inc. 3.93%
The effective yield of a "money market" Investment Subdivision determined on a
compounded basis for the same seven-day period may also be quoted. The effective
yield is calculated by compounding the base period return according to the
following formula:
365/7
Effective Yield = (1 + ((NCP - ES)/UV)) - 1
where:
NCP = the net change in the value of the investment portfolio (exclusive
of realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment
income) for the seven-day period attributable to a hypothetical
account having a balance of one Investment Subdivision unit.
ES = per unit expenses of the hypothetical account for the seven-day
period.
UV = the unit value for the first day of the seven-day period.
The effective yield for the "money market" Investment Subdivision of Account 4
available under the policy, based on the seven-day period ending December 31,
1997 was:
GE Investments Funds, Inc. 4.01%
The yield on amounts held in a "money market" Investment Subdivision normally
will fluctuate on a daily basis. Therefore, the disclosed yield for any given
past period is not an indication or representation of future yields or rates of
return. A "money market" Investment Subdivision's actual yield is affected by
changes in interest rates on money market securities, average portfolio maturity
of the Investment Subdivision's corresponding money market investment portfolio,
the types and quality of portfolio securities held by that investment portfolio,
and that investment portfolio's operating expenses. Because of the charges and
deductions imposed under the Policy, the yield for a "money market" Investment
Subdivision will be lower than the yield for its corresponding "money market"
investment portfolio.
Yield calculations do not take into account the Surrender Charge under the
Policy, a maximum of 6% of each Premium Payment made during the seven years
prior to a full or partial surrender, or charges for the Guaranteed Minimum
Death Benefit rider.
<PAGE>
OTHER INVESTMENT SUBDIVISIONS
Total Return. Sales literature or advertisements may quote total return,
including average annual total return for one or more of the Investment
Subdivisions for various periods of time, including 1 year, 5 years, and 10
years, or from inception if any of those periods are not available.
Average annual total return for a period represents the average annual
compounded rate of return that would equate an initial investment of $1,000
under a Policy to the redemption value of that investment as of the last day of
the period. The ending date for each period for which total return quotations
are provided will be for the most recent practicable, considering the type and
media of the communication, and will be stated in the communication.
Average annual total return will be calculated using Investment Subdivision unit
values and deductions for the policy maintenance charge, annual death benefit
charge and the surrender charge as described below:
1. Life of Virginia calculates unit value for each Valuation Period
based on the performance of the Investment Subdivision's underlying
investment portfolio (after deductions for Fund expenses, the
administrative expense charge, and the mortality and expense risk
charge).
2. The policy maintenance charge is $25 per year, deducted at the
beginning of each Policy Year after the first. For purposes of
calculating average annual total return, an average policy
maintenance charge (currently 0.1% of account value attributable to
the hypothetical investment) is used.
3. The surrender charge will be determined by assuming a surrender of
the Policy at the end of the period. Average annual total return for
periods of seven years or less will therefore reflect the deduction
of a surrender charge.
4. Total return does not consider charges for the Guaranteed Minimum
Death Benefit rider.
5. Total return will then be calculated according to the following
formula:
1/N
TR = (ERV/P) - 1
where:
TR = the average annual total return for the period.
ERV = the ending redeemable value (reflecting deductions as described above)
of the hypothetical investment at the end of the period.
P = a hypothetical single investment of $1,000.
N = the duration of the period (in years).
<PAGE>
Total Return for the currently available Investment Subdivisions is as follows:
<TABLE>
<CAPTION>
FROM THE DATE
FOR THE FOR THE FOR THE 5-YEAR OF SUBACCOUNT DATE OF
SUBDIVISION 1-YEAR PERIOD 3-YEAR PERIOD PERIOD ENDED INCEPTION SUBACCOUNT
ENDED 12/31/97 ENDED 12/31/97 12/31/97 TO 12/31/97 INCEPTION
<S> <C>
JANUS ASPEN SERIES
Balanced 14.27% 17.97% N/A 16.52% 10/02/95
Flexible Income 4.14% 11.72% N/A 8.07% 10/02/95
Growth 14.91% 20.71% N/A 15.17% 09/13/93
Aggressive Growth 4.99% 12.71% N/A 16.72% 09/13/93
Worldwide Growth 14.33% 23.17% N/A 20.43% 09/13/93
Capital Appreciation N/A N/A N/A 19.29%++ 05/01/97
International Growth 10.73% 22.29% N/A 17.61% -
VIPF
Equity-Income 20.19% 22.54% 17.83% 14.19% 05/02/88
Overseas 3.95% 8.40% 11.76% 7.67% 05/02/88
Growth 15.63% 21.25% 15.69% 14.82% 05/02/88
VIPF II
Asset Manager 12.85% 14.36% 10.60% 11.09% 10/01/89
Contrafund 16.28% N/A N/A 25.57% 01/04/95
VIPF III
Growth and Income N/A N/A N/A 17.51%++ 05/01/97
Growth Opportunities N/A N/A N/A 17.64%++ 05/01/97
GE INVESTMENTS FUNDS, INC.
Income Fund N/A N/A N/A -5.40%++ 05/02/88
S&P 500 Index 22.44% 27.25% 18.10% 14.89% 05/02/88
Total Return 10.21% 15.65% 11.92% 11.22% 05/02/88
International Equity 2.67% N/A N/A 6.93% 05/01/95
Real Estate Securities 11.72% N/A N/A 24.02% 05/01/95
Global Income 4.00% N/A N/A -3.19% 05/01/97
Value Equity N/A N/A N/A 25.19%++ 05/01/97
U.S. Equity Fund N/A N/A N/A N/A 05/01/98
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Multiple Strategies 9.47% 14.98% 10.96% 10.32% 05/02/88
Capital Appreciation 4.06% 18.18% 13.60% 13.92% 05/02/88
Growth 18.79% 26.44% 16.29% 14.31% 05/02/88
High Income 4.57% 12.87% 11.41% 12.45% 05/02/88
Bond 1.81% 7.15% 5.82% 7.79% 05/02/88
FEDERATED INSURANCE SERIES
High Income Bond II 6.13% 13.11% N/A 13.11% 01/04/95
Utility II 18.74% 17.61% N/A 17.50% 01/04/95
American Leaders II 24.36% 26.12% N/A 21.78% 01/04/95
THE ALGER AMERICAN FUND
Growth 17.87% 21.81% 16.97% 13.52% 10/02/95
Small Capitalization 3.80% 15.74% 10.29% 2.39% 10/02/95
PBHG INSURANCE SERIES FUND, INC.
Growth II N/A N/A N/A 0.64%++ 05/01/97
Large Cap Growth N/A N/A N/A 10.98%++ 05/01/97
Goldman Sachs Variable Insurance Trust
Growth & Income Fund N/A N/A N/A N/A 05/01/98
Mid Cap Equity Fund N/A N/A N/A N/A 05/01/98
</TABLE>
++ Returns for periods of less than one year are not annualized.
<PAGE>
The Funds have provided the price information for the Portfolios, including the
Portfolio price information used to calculate the total returns of the
Investment Subdivisions for periods prior to the inception of the Investment
Subdivisions. Variable Insurance Products Fund, Variable Insurance Products Fund
II, Variable Insurance Products Fund III, Oppenheimer Variable Account Funds,
Janus Aspen Series, Federated Insurance Series, The Alger American Fund, the
Advisers Management Trust, PBHG Insurance Series Fund and Goldman Sachs Variable
Insurance Trust are not affiliated with Life of Virginia. While Life of Virginia
has no reason to doubt the accuracy of the figures provided by these
nonaffiliated Funds, Life of Virginia has not independently verified such
information.
Other Performance Data
Life of Virginia may disclose cumulative total return in conjunction with the
standard format described above. The cumulative total return will be calculated
using the following formula:
CTR = (ERV/P) - 1
where:
CTR = the cumulative total return for the period.
ERV = the ending redeemable value (reflecting
deductions as described above) of the
hypothetical investment at the end of the
period.
P = a hypothetical single investment of $1,000.
Sales literature may also quote cumulative and/or average annual total return
that does not reflect the surrender charge. This is calculated in exactly the
same way as average annual total return, except that the ending redeemable value
of the hypothetical investment is replaced with an ending value for the period
that does not take into account any charges on withdrawn amounts.
Other non-standard quotations of Investment Subdivision performance may also be
used in sales literature. Such quotations will be accompanied by a description
of how they were calculated.
FEDERAL TAX MATTERS
TAXATION OF LIFE OF VIRGINIA
Life of Virginia does not expect to incur any federal income tax liability
attributable to investment income or capital gains retained as part of the
reserves under the Policies. (See Federal Tax Matters section of the
prospectus.) Based upon these expectations, no charge is being made currently to
Account 4 for federal income taxes which may be attributable to the Account.
Life of Virginia will periodically review the question of a charge to Account 4
for federal income taxes related to the Account. Such a charge may be made in
future years if Life of Virginia believes that it may incur federal income
taxes. This might become necessary if the tax treatment of Life of Virginia is
ultimately determined to be other than what Life of Virginia currently believes
it to be, if there are changes made in the federal income tax treatment of
annuities at the corporate level, or if there is a change in Life of Virginia's
tax status. In the event that Life of Virginia should incur federal income taxes
attributable to investment income or capital gains retained as part of the
reserves under the Policies, the Account Value would be correspondingly adjusted
by any provision or charge for such taxes.
Life of Virginia may also incur state and local taxes (in addition to premium
taxes) in several states. At present, these taxes, with the exception of premium
taxes, are not significant. If there is a material change in applicable state or
local tax laws causing an increase in taxes other than premium taxes (for which
Life of Virginia currently imposes a charge), charges for such taxes
attributable to Account 4 may be made.
IRS REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for federal income tax purposes,
section 72(s) of the Code requires any Non-Qualified Policy to provide that (a)
if any Owner dies on or after the Maturity Date but prior to the time the entire
interest in the Policy has been distributed, the remaining portion of such
interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that Owner's death; and (b) if any
Owner dies prior to the Maturity Date, the entire interest in the Policy will be
distributed (1) within five years after the date of that Owner's death, or (2)
as Income Payments which will begin within one year of that Owner's death and
which will be made over the life of the Owner's "designated beneficiary" or over
a period not extending beyond the life expectancy of that beneficiary. The
"designated beneficiary" generally is the person who will be treated as the sole
<PAGE>
owner of the Policy following the death of the Owner, Joint Owner or Annuitant.
However, if the "designated beneficiary" is the surviving spouse of the
decedent, these distribution rules will not apply until the surviving spouse's
death (and this spousal exception will not again be available). If any Owner is
not an individual, the death of the Annuitant will be treated as the death of an
Owner for purposes of these rules.
The Non-Qualified Policies contain provisions which are intended to comply with
the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. These provisions apply on
the death of any Annuitant, which should satisfy the requirements of section
72(s) under these Policies since, in all circumstances any individual Owners are
Annuitants. Life of Virginia intends to review such provisions and modify them
if necessary to assure that they comply with the requirements of Code section
72(s) when clarified by regulation or otherwise.
Other rules may apply to Qualified Policies.
GENERAL PROVISIONS
USING THE POLICIES AS COLLATERAL
A Non-Qualified Policy can be assigned as collateral security. Life of Virginia
must be notified in writing if a Policy is assigned. Any payment made before the
assignment is recorded at Life of Virginia's Home Office will not be affected.
Life of Virginia is not responsible for the validity of an assignment. An
Owner's rights and the rights of a Beneficiary may be affected by an assignment.
A Qualified Policy may not be sold, assigned, transferred, discounted, pledged
or otherwise transferred except under such conditions as may be allowed under
applicable law.
NON-PARTICIPATING
The Policy is non-participating. No dividends are payable.
MISSTATEMENT OF AGE OR SEX
If an Annuitant's age or sex was misstated in the application, any policy
benefits or proceeds, or availability thereof, will be determined using the
correct age and sex.
INCONTESTABILITY
Life of Virginia will not contest the Policy.
STATEMENT OF VALUES
At least once each year, Life of Virginia will send the Owner a statement of
values within 30 days after each report date. The statement will show Account
Value, Premium Payments and charges made during the report period.
WRITTEN NOTICE
Any written notice should be sent to Life of Virginia at its Home Office at 6610
West Broad Street, Richmond, Virginia 23230. The policy number and the
Annuitant's full name must be included.
Life of Virginia will send all notices to the Owner at the address shown in the
application unless the Owner requests that notices be sent to a new address.
DISTRIBUTION OF THE POLICIES
Capital Brokerage Corporation, the principal underwriter of the Policies, is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is member of the National
Association of Securities Dealers, Inc.
The Policies are offered to the public through brokers licensed under the
federal securities laws and state insurance laws that have entered into
agreements with Capital Brokerage Corporation. The offering is continuous and
Capital Brokerage Corporation does not anticipate discontinuing the offering of
the Policies. However, Life of Virginia does reserve the right to discontinue
the offering of the Policies.
<PAGE>
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
On July 6, 1983, the Supreme Court held in Arizona Governing Committee for Tax
Deferred Annuity v. Norris, 463 U.S. 1073 (1983), that optional annuity benefits
provided under an employee's deferred compensation plan could not, under Title
VII of the Civil Rights Act of 1964, vary between men and women on the basis of
sex. The Policy contains guaranteed annuity purchase rates for certain optional
payment plans that distinguish between men and women. Accordingly, employers and
employee organizations should consider, in consultation with legal counsel, the
impact of Norris, and Title VII generally, on any employment-related insurance
or benefit program for which a Policy may be purchased.
ADDITIONS, DELETIONS, OR SUBSTITUTIONS OF INVESTMENTS
Life of Virginia reserves the right, subject to compliance with applicable law,
to make additions to, deletions from, or substitutions for the shares of the
Fund portfolios that are held by Account 4 or that Account 4 may purchase. If
the shares of a portfolio are no longer available for investment or if in its
judgment further investment in any portfolio should become inappropriate in view
of the purposes of Account 4, Life of Virginia reserves the right to eliminate
the shares of any of the portfolios of the Funds and to substitute shares of
another portfolio or of another open-end, registered investment company. Life of
Virginia will not substitute any shares attributable to an Owner's Account Value
in Account 4 without notice and prior approval of the Commission, to the extent
required by the 1940 Act or other applicable law. Nothing contained herein shall
prevent Account 4 from purchasing other securities for other series or classes
of policies or from permitting a conversion between portfolios or classes of
policies on the basis of requests made by Owners.
Life of Virginia also reserves the right to establish additional Investment
Subdivisions of Account 4, each of which would invest in a separate portfolio of
a Fund, or in shares of another investment company, with a specified investment
objective. New Investment Subdivisions may be established when, in the sole
discretion of Life of Virginia, marketing, tax or investment conditions warrant,
and any new Investment Subdivisions may be made available to existing Owners on
a basis to be determined by Life of Virginia. One or more Investment
Subdivisions may also be eliminated if, in the sole discretion of Life of
Virginia, marketing, tax, or investment conditions warrant.
In the event of any such substitution or change, Life of Virginia may, by
appropriate endorsement, make such changes in these and other policies as may be
necessary or appropriate to reflect such substitution or change. If deemed by
Life of Virginia to be in the best interests of persons having voting rights
under the Policies, and, if permitted by law, Life of Virginia may deregister
Account 4 under the 1940 Act in the event such registration is no longer
required; manage Account 4 under the direction of a committee; or combine
Account 4 with other Life of Virginia separate accounts. To the extent permitted
by applicable law, Life of Virginia may also transfer the assets of Account 4
associated with the Policies to another separate account. In addition, Life of
Virginia may, when permitted by law, restrict or eliminate any voting rights of
Owners or other persons who have voting rights as to Account 4.
STATE REGULATION OF LIFE OF VIRGINIA
Life of Virginia, a stock life insurance company organized under the laws of
Virginia, is subject to regulation by the State Corporation Commission of the
Commonwealth of Virginia. An annual statement is filed with the Virginia
Commissioner of Insurance on or before March 1 of each year covering the
operations and reporting on the financial condition of Life of Virginia as of
December 31 of the preceding year. Periodically, the Commissioner of Insurance
examines the liabilities and reserves of Life of Virginia and Account 4 and
certifies their adequacy, and a full examination of Life of Virginia's
operations is conducted by the State Corporation Commission, Bureau of Insurance
of the Commonwealth of Virginia at least once every five years.
In addition, Life of Virginia is subject to the insurance laws and regulations
of other states within which it is licensed to operate. Generally, the Insurance
Department of any other state applies the laws of the state of domicile in
determining permissible investments. Presently, Life of Virginia is licensed to
do business in the District of Columbia and all states, except New York.
LEGAL MATTERS
Sutherland, Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters relating to federal securities laws applicable to the
issue and sale of the Policies described in this Prospectus. J. Neil McMurdie,
Associate Counsel and Assistant Vice President of Life of Virginia, has provided
advice on certain legal matters pertaining to the Policy, including the validity
of the Policy and Life of Virginia's right to issue the Policies under Virginia
insurance law.
<PAGE>
EXPERTS
KPMG Peat Marwick LLP.
The consolidated balance sheets of The Life Insurance Company of Virginia
and subsidiary as of December 31, 1997 and 1996, and the related consolidated
statements of income, stockholders' equity and cash flows for the year ended
December 31, 1997, the nine month period ended December 31, 1996 and the
preacquisition three month period ended March 31, 1996, and the statement of
assets and liabilities of Life of Virginia Separate Account 4 as of December 31,
1997 and the related statements of operations and changes in net assets for each
of the two years or lesser periods then ended have been included herein and in
the registration statement in reliance upon the reports of KPMG Peat Marwick
LLP, independent certified public accountants, appearing elsewhere herein and
upon the authority of such firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP with respect to the consolidated
financial statements of The Life Insurance Company of Virginia and subsidiary
contains an explanatory paragraph that states effective April 1, 1996, General
Electric Capital Corporation acquired all of the outstanding stock of the Life
Insurance Company of Virginia in a business combination accounted for as a
purchase. As a result of the acquisition, the consolidated financial information
for the periods after the acquisition is presented on a different cost basis
than that for the periods before the acquisition and, therefore, is not
comparable.
Ernst & Young LLP.
The consolidated statements of income, stockholder's equity and cash flows
of The Life Insurance Company of Virginia and subsidiaries for the year ended
December 31, 1995 and the statements of operations and changes in net assets of
Life of Virginia Separate Account 4 for the year or period ended December
31, 1995, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, to the extent indicated in
their reports thereon also appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
CHANGE IN AUDITORS
Subsequent to the acquisition of us by GNA Corporation on April 1, 1996, we
selected KPMG Peat Marwick LLP to be our auditor. Accordingly, our principal
auditor has changed for the year ending December 31, 1996, from Ernst & Young
LLP, to KPMG Peat Marwick LLP. The former auditors were dismissed and KPMG Peat
Marwick LLP was retained because KPMG Peat Marwick LLP is the auditor for GE
Capital, the indirect parent of GNA Corporation. This change was approved by the
members of our Board of Directors.
Neither KPMG Peat Marwick LLP's nor Ernst & Young LLP's reports on the
financial statements contain any adverse opinion or a disclaimer of opinion, or
was qualified or modified as to uncertainty or audit scope. Furthermore, there
were no disagreements with either on any matter of accounting principle or
practice, financial statement disclosure or auditing scope or procedure which
would have caused them to make reference to the subject matter of the
disagreement in connection with their reports.
FINANCIAL STATEMENTS
This Statement of Additional Information contains financial statements for Life
of Virginia Separate Account 4 as of December 31, 1997, and for each of the
three years in the period then ended.
The consolidated financial statements of The Life Insurance Company of Virginia
and subsidiaries included herein should be distinguished from the financial
statements of Account 4 and should be considered only as bearing on the ability
of Life of Virginia to meet its obligations under the Policy.
Such consolidated financial statements of The Life Insurance Company of Virginia
and subsidiaries should not be considered as bearing on the investment
performance of the assets held in Account 4.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Assets and Liabilities
Year ended December 31, 1997
(With Independent Auditors' Report Thereon)
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Table of Contents
Year ended December 31, 1997
=============================================================================
Page
Independent Auditors' Report................................................1
Financial Statements:
Statements of Assets and Liabilities..................................3
Statements of Operations..............................................9
Statements of Changes in Net Assets..................................20
Notes to Financial Statements..............................................31
=============================================================================
<PAGE>
1
Report of Independent Auditors
Contractholders
Life of Virginia Separate Account 4
and Board of Directors
The Life Insurance Company of Virginia
We have audited the accompanying statements of assets and liabilities of Life of
Virginia Separate Account 4 (the Account) (comprising the GE Investments Funds,
Inc.--S&P 500 Index, Money Market, Total Return, International Equity, Real
Estate Securities, Global Income, Value Equity and Income Funds; the Oppenheimer
Variable Account Funds--Bond, Capital Appreciation, Growth, High Income and
Multiple Strategies Funds; the Variable Insurance Products Fund--Equity-Income,
Growth and Overseas Portfolios; the Variable Insurance Products Fund II--Asset
Manager and Contrafund Portfolios; the Variable Insurance Products III--Growth &
Income and Growth Opportunities Portfolios; the Federated Investors Insurance
Series--American Leaders, High Income Bond and Utility Funds II; the Alger
American--Small Cap and Growth Portfolios; the PBHG Insurance Series Fund--PBHG
Large Cap Growth and PBHG Growth II Portfolios; and the Janus Aspen
Series--Aggressive Growth, Growth, Worldwide Growth, Balanced, Flexible Income,
International Growth and Capital Appreciation Portfolios) as of December 31,
1997 and the related statements of operations and changes in net assets for the
aforementioned funds and the GE Investments Funds Inc. --Government Securities
Fund; Oppenheimer Variable Account Funds--Money Fund; Variable Insurance
Products Funds--Money Market and High Income Portfolios; and Neuberger & Berman
Advisers Management Trust--Balanced, Bond and Growth Portfolios of Life of
Virginia Separate Account 4 for each of the two years or lesser periods then
ended. These financial statements are the responsibility of the Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The accompanying statements of operations and
changes in net assets of Life of Virginia Separate Account 4 for the year or
period ended December 31, 1995, were audited by other auditors, whose report
thereon dated February 8, 1996 expressed an unqualified opinion on those
statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1997, by correspondence with
the underlying mutual funds or their transfer agent. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
<PAGE>
In our opinion, the 1997 and 1996 financial statements referred to above present
fairly, in all material respects, the financial position of each of the
respective portfolios constituting Life of Virginia Separate Account 4 as of
December 31, 1997 and the results of their operations and changes in their net
assets for each of the two years or lesser periods then ended in conformity with
generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG PEAT MARWICK LLP
Richmond, Virginia
February 13, 1998
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Policyholders
Life of Virginia Separate Account 4
and
Board of Directors
The Life Insurance Company of Virginia
We have audited the accompanying statements of operations and changes in net
assets for the year ended December 31, 1995 for the Life of Virginia Series
Fund, Inc. Common Stock Index, Government Securities, Money Market and Total
Return portfolios, the Oppenheimer Variable Account Funds portfolios, the
Variable Insurance Products Fund portfolios, the Variable, Insurance Products
Fund II Asset Manager portfolio, the Advisers Management Trust portfolios, the
Janus Aspen Aggressive Growth, Growth, and Worldwide Growth portfolios, and for
the period from May 23, 1995 (date of inception) to December 31, 1995 for the
Life of Virginia Series Fund, Inc. International Equity portfolio, for the
period from May 2, 1995 (date of inception) to December 31, 1995 for the Life of
Virginia Series Fund, Inc. Real Estate Securities portfolio, for the period from
January 5, 1995 (date of inception) to December 31, 1995 for the Variable
Insurance Products Fund II Contrafund portfolio, for the period from February 3,
1995 (date of inception) to December 31, 1995 for the Insurance Management
Series Corporate Bond portfolio, for the period from January 27, 1995 (date of
inception) to December 31, 1995 for the Insurance Management Series Utility
portfolio, for the period from October 11, 1995 (date of inception) to December
31, 1995 for the Janus Aspen Balanced portfolio, for the period from October 13,
1995 (date of inception) to December 31, 1995 for the Janus Aspen Flexible
Income portfolio, for the period from October 3, 1995 (date of inception) to
December 31, 1995 for the Alger American Small Cap portfolio and for the period
from October 4, 1995 (date of inception) to December 31, 1995 for the Alger
American Growth portfolio. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that out audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and changes in net assets for
the periods described in the first paragraph of each of the respective
portfolios constituting Life of Virginia Separate Account 4, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Richmond, Virginia
February 8, 1996
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Policyholders
Life of Virginia Separate Account III
and
Board of Directors
The Life Insurance Company of Virginia
We have audited the accompanying statements of operations and changes in net
assets for the year ended December 31, 1995 for the Life of Virginia Series
Fund, Inc. Common Stock Index, Government Securities, Money Market and Total
Return portfolios, the Oppenheimer Variable Account Funds portfolios, the
Variable Insurance Products Fund portfolios, the Variable Insurance Products
Fund II Asset Manager portfolio, the Advisers Management Trust portfolios, and
for the period from June 30, 1995 (date of inception) to December 31, 1995
for the Life of Virginia Series Fund, Inc. International Equity portfolio,
for the period from December 6, 1995 (date of inception) to December 31, 1995
for the Life of Virginia Series Fund, Inc. Real Estate Securities portfolio,
for the period from January 16, 1995 (date of inception) to December 31, 1995
for the Variable Insurance Products Fund II Contrafund portfolio for the period
from February 7, 1995 (date of inception) to December 31, 1995 for the
Insurance Management Series portfolios, for the year ended December 31, 1995
and for the period from May 11, 1994 (date of inception) to December 31, 1994
for the Janus Aspen Aggressive Growth, Growth, and Worldwide Growth portfolios,
for the period from October 27, 1995 (date of inception) to December 31, 1995
for the Janus Aspen Balanced portfolio, for the period from November 1, 1995
(date of inception) to December 31, 1995 for the Janus Aspen Flexible Income
portfolio, for the period from October 6, 1995 (date of inception) to December
31, 1995 for the Alger American Small Cap portfolio and for the period from
November 2, 1995 (date of inception) to December 31, 1995 for the Alger
American Growth portfolio. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and changes in net assets for
the periods described in the first paragraph of each of the respective
portfolios constituting Life of Virginia Separate Account III, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Richmond, Virginia
February 8, 1996
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Assets and Liabilities
December 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GE Investment Funds, Inc.
(formerly Life Of Virginia Series Fund, Inc.)
------------------------------------------------
S&P 500 Money Total
Index Market Return
Fund Fund Fund
<S> <C>
- ----------------------------------------------------------------------------------------------------------------
Investment GE Investments Funds, Inc.,
at fair value (note 2):
S&P 500 Index Fund (7,976,419 shares; cost - $145,723,059) $ 153,386,538 - -
Money Market Fund (118,336,576 shares; cost - $117,791,205) - 118,336,576 -
Total Return Fund (3,370,192 shares; cost - $48,733,062) - - 44,520,238
International Equity Fund (2,151,087 shares; cost - $24,524,231) - - -
Real Estate Securities Fund (3,452,544 shares; cost - $48,950,718) - - -
Global Income Fund (611,834 shares; cost - $6,150,915) - - -
Value Equity Fund (1,199,676 shares; cost - $14,841,949) - - -
Income Fund (1,845,624 shares; cost - $22,362,706) - - -
Receivable from affiliate 131,054 - 34,825
Receivable for units sold 52,884 5,964,313 -
- ----------------------------------------------------------------------------------------------------------------
$ 153,570,476 124,300,889 44,555,063
- ----------------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 144,152 606,185 27,866
Payable for units withdrawn - - 80
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 144,152 606,185 27,946
- ----------------------------------------------------------------------------------------------------------------
Net Assets $ 153,426,324 123,694,704 44,527,117
- ----------------------------------------------------------------------------------------------------------------
Analysis of net assets:
Attributable to:
Variable deferred annuity contractholders $ 153,426,324 123,694,704 44,527,117
The Life Insurance Company
of Virginia - - -
- ----------------------------------------------------------------------------------------------------------------
Net assets $ 153,426,324 123,694,704 44,527,117
- ----------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 918,847 3,512,260 631,828
- ----------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I $ 39.63 14.77 28.96
- ----------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 3,025,140 4,980,487 928,145
- ----------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II $ 38.68 14.42 28.26
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)(continued)
---------------------------------------------------------------------
International Real Estate Global Value
Equity Securities Income Equity Income
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S><C>
Investment GE Investments Funds, Inc.,
at fair value (note 2):
S&P 500 Index Fund (7,976,419 shares; cost - $145,723,059) - - - - -
Money Market Fund (118,336,576 shares; cost - $117,791,205) - - - - -
Total Return Fund (3,370,192 shares; cost - $48,733,062) - - - - -
International Equity Fund (2,151,087 shares; cost - $24,524,231) 22,973,610 - - - -
Real Estate Securities Fund (3,452,544 shares; cost - $48,950,718) - 52,754,866 - - -
Global Income Fund (611,834 shares; cost - $6,150,915) - - 6,026,567 - -
Value Equity Fund (1,199,676 shares; cost - $14,841,949) - - - 15,727,748 -
Income Fund (1,845,624 shares; cost - $22,362,706) - - - - 22,350,507
Receivable from affiliate 12,571 26,750 - 14,492 -
Receivable for units sold - 27 89,788 166,328 -
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets 22,986,181 52,781,643 6,116,355 15,908,568 2,350,507
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 7,311 22,389 1,057 8,560 306,136
Payable for units withdrawn 102,337 75,457 - - 33,511
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 109,648 97,846 1,057 8,560 339,647
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets 22,876,533 52,683,797 6,115,298 15,900,008 22,010,860
- ----------------------------------------------------------------------------------------------------------------------------------
Analysis of net assets:
Attributable to:
Variable deferred annuity contractholders 9,954,696 33,635,732 944,793 11,923,320 22,010,860
The Life Insurance Company
of Virginia 12,921,837 19,048,065 5,170,505 3,976,688 -
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets 22,876,533 52,683,797 6,115,298 15,900,008 22,010,860
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 1,212,802 1,385,306 516,898 479,621 1,295,638
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I 12.53 18.46 10.26 13.15 10.01
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 614,410 1,478,247 79,290 730,616 903,249
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II 12.50 18.34 10.24 13.13 10.01
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statements of Assets and Liabilities, Continued
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-----------------------------------------------------------------
Capital High Multiple
Bond Appreciation Growth Income Strategies
Assets Fund Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment in Oppenheimer Variable Account Funds,
at fair value (note 2):
Bond Fund (3,338,044 shares; cost-$38,648,132) $39,756,108 - - - -
Capital Appreciation Fund (5,085,365 shares; cost-$177,299,340) - 208,296,549 - - -
Growth Fund (4,282,333 shares; cost-$115,624,020) - - 138,918,887 - -
High Income Fund (12,856,952 shares; cost-$143,356,020) - - - 148,112,092 -
Multiple Strategies Fund (4,239,791 shares; cost-$61,776,406) - - - - 72,118,841
Receivable from affiliate 3,463 56,595 - 89,573 13,227
Receivable for units sold 84,091 81,846 211,756 188,070 6,302
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $39,843,662 208,434,990 139,130,643 148,389,735 72,138,370
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 43,140 587,754 114,827 104,109 114,775
Payable for units withdrawn 54,839 - - - 42
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 97,979 587,754 114,827 104,109 114,817
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity
contractholders $39,745,683 207,847,236 139,015,816 148,285,626 72,023,553
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 929,630 2,591,419 1,291,813 1,869,843 1,553,549
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I $ 20.92 36.52 37.62 31.32 26.43
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 994,017 3,176,448 2,462,359 2,934,974 1,200,126
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II $ 20.42 35.64 36.72 30.57 25.80
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statements of Assets and Liabilities, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
-----------------------------------------
Equity-
Income Growth Overseas
Portfolio Portfolio Portfolio
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------
Investment in Variable Insurance Products
Fund, at fair value (note 2):
Equity-Income Portfolio (25,284,474 shares; cost - $481,451,916) $ 613,907,020 - -
Growth Portfolio (8,496,260 shares; cost - $238,768,154) - 315,211,237 -
Overseas Portfolio (5,812,347 shares; cost - $99,900,187) - - 111,597,056
Receivable from affiliate 204,695 116,417 14,558
Receivable for units sold 118,450 58,665 -
- -----------------------------------------------------------------------------------------------------------------------
Total assets $ 614,230,165 315,386,319 111,611,614
- -----------------------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note3) $ 437,839 312,937 172,653
Payable for units withdrawn 209,554 59,775 3,134,340
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities 647,393 372,712 3,306,993
- -----------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders $ 613,582,772 315,013,607 108,304,621
- -----------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 6,589,338 4,467,825 3,398,260
- -----------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I $ 37.36 39.40 21.16
- -----------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 10,074,173 3,614,598 1,762,588
- -----------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II $ 36.47 38.45 20.65
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statements of Assets and Liabilities, Continued
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Products Fund II Products Fund III
--------------------------------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Investment in Variable Insurance Products Fund II, at fair value (note 2):
Asset Manager Portfolio (26,932,347 shares; cost - $393,528,382) $ 485,051,564 - - -
Contrafund Portfolio (12,134,794 shares; cost - $193,722,470) - 241,967,789 - -
Investment in Variable Insurance Products Fund III, at fair value (note 2):
Growth & Income Portfolio (1,247,313 shares; cost - $15,170,737) - - 15,628,837 -
Growth Opportunities Portfolio (883,879 shares; cost - $15,976,584) - - - 17,032,342
Receivable from affiliate 5,351 176,780 25,307 3,157
Receivable for units sold 43,195 255,163 64,010 64,775
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $ 485,100,110 242,399,732 15,718,154 17,100,274
- ---------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 1,187,116 176,209 9,932 12,499
Payable for units withdrawn 38,182 86,127 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,225,298 262,336 9,932 12,499
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders $ 483,874,812 242,137,396 15,708,222 17,087,775
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 17,101,510 3,296,201 294,329 341,417
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I $ 24.53 20.47 12.38 12.30
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 2,678,933 8,595,677 976,086 1,049,540
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II $ 24.03 20.32 12.36 12.28
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statements of Assets and Liabilities, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Federated Investors
Insurance Series
-----------------------------------------
American High
Leaders Income Bond Utility
Assets Fund II Fund II Fund II
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------
Investments in Federated Investors Insurance Series, at fair value (note 2):
American Leaders Fund II (1,767,003 shares; cost - $31,138,913) $ 34,686,268 - -
High Income Bond Fund II (3,216,287 shares; cost - $33,511,201) - 35,218,348 -
Utility Fund II (2,126,742 shares - cost - $24,061,328) - - 30,391,148
Investment in Alger American, at fair value (note 2):
Small Cap Portfolio (1,690,554 shares; cost - $70,050,792) - - -
Growth Portfolio (1,691,682 shares; cost - $61,989,581) - - -
PBHG Insurance Series Fund at fair value (note 2):
PBHG Large Cap Growth Portfolio (401,761 shares; cost - $4,598,913) - - -
PBHG Growth II Portfolio (629,476 shares; cost - $6,856,693) - - -
Receivable from affiliate 9,118 6,282 20,101
Receivable for units sold 223,715 12,611 12,121
- -------------------------------------------------------------------------------------------------------------------------
Total assets $ 34,919,101 35,237,241 30,423,370
- -------------------------------------------------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 25,357 26,612 22,088
Payable for units withdrawn 18 15,282 3,388
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 25,375 41,894 25,476
- -------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders $ 34,893,726 35,195,347 30,397,894
- -------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 361,619 456,124 485,332
- -------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I $ 14.48 15.11 16.88
- -------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 2,056,691 1,886,887 1,325,701
- -------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II $ 14.42 15.00 16.75
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Statements of Assets and Liabilities, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Alger American
---------------------------
Small
Cap Growth
Assets Portfolio Portfolio
<S> <C>
- ------------------------------------------------------------------------------------------------------------
Investments in Federated Investors Insurance Series, at fair value (note 2):
American Leaders Fund II (1,767,003 shares; cost - $31,138,913) - -
High Income Bond Fund II (3,216,287 shares; cost - $33,511,201) - -
Utility Fund II (2,126,742 shares - cost - $24,061,328) - -
Investment in Alger American, at fair value (note 2):
Small Cap Portfolio (1,690,554 shares; cost - $70,050,792) 73,961,717 -
Growth Portfolio (1,691,682 shares; cost - $61,989,581) - 72,336,337
PBHG Insurance Series Fund at fair value (note 2):
PBHG Large Cap Growth Portfolio (401,761 shares; cost - $4,598,913) - -
PBHG Growth II Portfolio (629,476 shares; cost - $6,856,693) - -
Receivable from affiliate 23,461 28,703
Receivable for units sold - 7,598
- -----------------------------------------------------------------------------------------------------------
Total assets 73,985,178 72,372,638
- -----------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 56,893 156,426
Payable for units withdrawn 100,595 62,399
- -----------------------------------------------------------------------------------------------------------
Total liabilities 157,488 218,825
- -----------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders 73,827,690 72,153,813
- -----------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 1,325,070 1,022,514
- -----------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I 10.64 13.42
- -----------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 5,645,458 4,380,186
- -----------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II 10.58 13.34
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Statements of Assets and Liabilities, Continued
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PBHG Insurance Series Fund
--------------------------
PBHG Large PBHG
Cap Growth Growth II
Assets Portfolio Portfolio
<S> <C>
- -------------------------------------------------------------------------------------------------------
Investments in Federated Investors Insurance Series, at fair value (note 2):
American Leaders Fund II (1,767,003 shares; cost - $31,138,913) - -
High Income Bond Fund II (3,216,287 shares; cost - $33,511,201) - -
Utility Fund II (2,126,742 shares - cost - $24,061,328) - -
Investment in Alger American, at fair value (note 2):
Small Cap Portfolio (1,690,554 shares; cost - $70,050,792) - -
Growth Portfolio (1,691,682 shares; cost - $61,989,581) - -
PBHG Insurance Series Fund at fair value (note 2):
PBHG Large Cap Growth Portfolio (401,761 shares; cost - $4,598,913) 4,748,811 -
PBHG Growth II Portfolio (629,476 shares; cost - $6,856,693) - 6,766,864
Receivable from affiliate 19,040 423
Receivable for units sold 24,969 241,497
- -------------------------------------------------------------------------------------------------------
Total assets 4,792,820 7,008,784
- -------------------------------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 21,750 5,127
Payable for units withdrawn 52,803 51,717
- -------------------------------------------------------------------------------------------------------
Total liabilities 74,553 56,844
- -------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders 4,718,267 6,951,940
- -------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 55,997 76,611
- -------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I 11.73 10.67
- -------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 346,833 576,010
- -------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II 11.71 10.65
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statements of Assets and Liabilities, Continued
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Janus Aspen Series
-----------------------------------------------------------
Aggressive Worldwide
Growth Growth Growth Balanced
Assets Portfolio Portfolio Portfolio Portfolio
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Investment in Janus Aspen Series,
at fair value (note 2):
Aggressive Growth Portfolio
(5,150,041 shares; cost - $90,470,714) 105,833,338 - - -
Growth Portfolio (12,128,299
shares; cost - $177,459,821) - 224,130,972 - -
Worldwide Growth Portfolio
(14,763,565 shares; cost - $285,300,634) - - 345,319,777 -
Balanced Portfolio (4,444,303
shares; cost - $72,670,094) - - - 77,641,966
Flexible Income Portfolio
(1,218,449 shares; cost - $14,017,277) - - - -
International Growth Portfolio
(3,130,281 shares; cost - $56,025,325) - - - -
Capital Appreciation Portfolio
(214,897 shares; cost - $2,699,822) - - - -
Receivable from affiliate 48,595 24,477 118,902 52,126
Receivable for units sold 10,900 166,892 194,595 5,036
- -------------------------------------------------------------------------------------------------------------------------------
Total assets 105,892,833 224,322,341 345,633,274 77,699,128
- -------------------------------------------------------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 77,711 253,424 249,062 52,851
Payable for units withdrawn - - 258,130 8,042
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities 77,711 253,424 507,192 60,893
- -------------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders $105,815,122 224,068,917 345,126,082 77,638,235
- -------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 1,817,576 4,505,765 4,938,272 2,481,552
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I 20.26 19.15 23.10 14.73
- -------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 3,442,667 7,270,898 10,111,685 2,804,435
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II 20.04 18.95 22.85 14.65
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
Statements of Assets and Liabilities, Continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------------------------------------
Flexible International Capital
Income Growth Appreciation
Assets Portfolio Portfolio Portfolio
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
Investment in Janus Aspen Series, at fair value (note 2):
Aggressive Growth Portfolio
(5,150,041 shares; cost - $90,470,714) - - -
Growth Portfolio (12,128,299
shares; cost - $177,459,821) - - -
Worldwide Growth Portfolio
(14,763,565 shares; cost - $285,300,634) - - -
Balanced Portfolio (4,444,303
shares; cost - $72,670,094) - - -
Flexible Income Portfolio
(1,218,449 shares; cost - $14,017,277) 14,353,326 - -
International Growth Portfolio
(3,130,281 shares; cost - $56,025,325) - 57,847,585 -
Capital Appreciation Portfolio
(214,897 shares; cost - $2,699,822) - - 2,712,004
Receivable from affiliate 4,412 34,124 812
Receivable for units sold 42,930 - 1,500
- ------------------------------------------------------------------------------------------------------------------
Total assets 14,400,668 57,881,709 2,714,316
- ------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 10,126 40,026 39,487
Payable for units withdrawn 53,791 3,175,957 5,254
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 63,917 3,215,983 44,741
- ------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders 14,336,751 54,665,726 2,669,575
- ------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 280,878 1,004,669 49,257
- ------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I 12.52 13.69 12.56
- ------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 869,089 3,001,600 163,550
- ------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II 12.45 13.63 12.54
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.)
- -------------------------------------------------------------------------------------------------
<S> <C>
S&P 500 Government
Index Securities
Fund Fund
-------------------------------- -------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
Investment income:
Income - Dividends 4,001,897 23,435,279 411,769 - 1,309,648 565,524
Expenses - Mortality and expense
risk charges (note 3) 1,356,740 492,403 139,329 147,796 143,919 83,929
- ----------------------------------------------------------------------------------------------------------
Net investment income (expense) 2,645,157 22,942,876 272,440 (147,796) 1,165,729 481,595
- ----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) (899,446) 1,510,464 345,068 (242,895) (68,248) (20,275)
Unrealized appreciation
(depreciation) on investments 21,611,136 (16,204,375) 2,539,788 987,049 (995,503) 567,616
- ----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 20,711,690 (14,693,911) 2,884,856 744,154 (1,063,751) 547,341
- ----------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 23,356,847 8,248,965 3,157,296 596,358 101,978 1,028,936
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (formerly Life
of Virginia Series Fund, Inc.)
-----------------------------------------------------------------
<S> <C>
Money Market Total Return
Fund Fund
--------------------------------- ----------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- --------------------------------------------------------------------------------------------------------
Investment income:
Income - Dividends 5,626,589 5,204,323 1,098,198 6,098,862 9,319,880 1,576,466
Expenses - Mortality and expense
risk charges (note 3) 1,421,044 980,270 144,841 496,469 357,589 187,419
- --------------------------------------------------------------------------------------------------------
Net investment income (expense) 4,205,545 4,224,053 953,357 5,602,393 8,962,291 1,389,047
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) (4,421,730) 1,686,452 312,501 (454,827) 614,446 308,073
Unrealized appreciation
(depreciation) on investments 4,383,879 (2,984,484) (757,472) 657,828 (6,827,262) 1,987,241
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (37,851) (1,298,032) (444,971) 203,001 (6,212,816) 2,295,314
- --------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 4,167,694 2,926,021 508,386 5,805,394 2,749,475 3,684,361
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (formerly Life
of Virginia Series Fund, Inc.)
(continued)
<S> <C>
-------------------------------------------------------------------------------
International Real Estate
Equity Securities
Fund Fund
--------------------------------- ----------------------------------------
Period from Period from
May 23, May 2,
Year ended Year ended 1996 to Year ended Year ended 1995 to
December 31 December 31 December 31, December 31, December 31, December 31
1997 1996 1995 1997 1996 1995
- ------------------------------------------------------- ----------------------- -----------------------------------------
Investment income:
Income - Dividends 2,686,699 1,056,063 31,010 5,456,896 1,627,291 670,339
Expenses - Mortality and expense risk
charges (note 3) 113,987 56,953 4,298 292,230 49,030 2,663
- ------------------------------------------------------- ----------------------- -----------------------------------------
Net investment income 2,572,712 999,110 26,712 5,164,666 1,578,261 667,676
- ------------------------------------------------------- ----------------------- -----------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) 665,649 86,537 646 2,710,582 299,159 24,928
Unrealized appreciation (depreciation)
on investments (1,565,382) (11,119) 25,880 (1,305,117) 4,059,521 1,049,744
- ------------------------------------------------------- ------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (899,733) 75,418 26,526 1,405,465 4,358,680 1,074,672
- ------------------------------------------------------- ------------------------------------------------------------------
Increase in net assets from operations 1,672,979 1,074,528 53,238 6,570,131 5,936,941 1,742,348
- ------------------------------------------------------- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)
(continued)
-------------------------------------------
Global Value
Income Equity Income
Fund Fund Fund
---------- ---------- ----------
Period from Period from Period from
May 1, May 1, December 12,
1997 to 1997 to 1997 to
December 31 December 31 December 31,
1997 1997 1997
- ------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 300,672 142,788 58,034
Expenses - Mortality and expense risk
charges (note 3) 2,982 38,307 14,197
- ------------------------------------------------------------------------------------
Net investment income 297,690 104,481 43,837
- -----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) 2,417 357,048 (6,710)
Unrealized appreciation (depreciation)
on investments (124,348) 885,799 (12,199)
- -----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (121,931) 1,242,847 (18,909)
- -----------------------------------------------------------------------------------
Increase in net assets from operations 175,759 1,347,328 24,928
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-----------------------------------
Money
Fund
----------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ 110,711 175,537 303,556
Expenses - Mortality and expense
risk charges (note 3) 25,908 40,663 64,415
- ---------------------------------------------------------------------
Net investment income (expense) 84,803 134,874 239,141
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain - - -
Unrealized appreciation
(depreciation) on investments - - -
- --------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments - - -
- --------------------------------------------------------------------
Increase in net assets
from operations $ 84,803 134,874 239,141
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds (continued)
---------------------------------------------
Bond
Fund
-----------------------------------
Year ended December 31,
1997 1996 1995
- ---------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 2,260,511 1,774,226 1,222,079
Expenses - Mortality and expense
risk charges (note 3) 437,693 336,825 220,766
- ---------------------------------------------------------------------
Net investment income (expense) 1,822,818 1,437,401 1,001,313
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain 187,695 106,242 53,120
Unrealized appreciation
(depreciation) on investments 663,371 (442,815) 1,654,610
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 851,066 (336,573) 1,707,730
- ---------------------------------------------------------------------
Increase in net assets
from operations 2,673,884 1,100,828 2,709,043
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds (continued)
-----------------------------------------------
Capital
Appreciation
Fund
------------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 8,221,818 6,069,096 331,803
Expenses - Mortality and expense
risk charges (note 3) 2,381,196 1,506,102 868,053
- ---------------------------------------------------------------------
Net investment income (expense) 5,840,622 4,562,994 (536,250)
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain 6,868,228 6,301,279 1,666,666
Unrealized appreciation
(depreciation) on
investments) 5,927,622 7,478,382 18,977,772
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 12,795,850 13,779,661 20,644,438
- ----------------------------------------------------------------------
Increase in net assets
from operations 18,636,472 18,342,655 20,108,188
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds (continued)
---------------------------------------------
Growth
Fund
---------------------------------
Year ended December 31,
1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 4,911,400 3,110,376 393,011
Expenses - Mortality and expense
risk charges (note 3) 1,372,378 599,846 265,718
- ----------------------------------------------------------------------------
Net investment income (expense) 3,539,022 2,510,530 127,293
- ----------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain 5,826,603 1,959,742 739,151
Unrealized appreciation
(depreciation) on
investments) 11,621,155 5,568,726 5,287,316
- ----------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 17,447,758 7,528,468 6,026,467
- ----------------------------------------------------------------------------
Increase in net assets
from operations 20,986,780 10,038,998 6,153,760
- ----------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
----------------------------------------------------------------------
High Multiple
Income Strategies
Fund Fund
-------------------------------- -------------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $9,138,791 6,387,294 3,582,283 4,485,399 3,343,955 2,521,297
Expenses - Mortality and expense
risk charges (note 3) 1,397,317 825,956 471,932 794,598 571,993 410,701
- ------------------------------------------------------------------------------------------------------
Net investment income 7,741,474 5,561,338 3,110,351 3,690,801 2,771,962 2,110,596
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 1,298,149 763,575 (105,319) 1,435,981 701,256 353,442
Unrealized appreciation
(depreciation) on
investments) 2,089,422 2,079,281 2,497,291 4,025,778 2,786,345 3,750,075
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 3,387,571 2,842,856 2,391,972 5,461,759 3,487,601 4,103,517
- -----------------------------------------------------------------------------------------------------
Increase in net assets
from operations $11,129,045 8,404,194 5,502,323 9,152,560 6,259,563 6,214,113
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
--------------------------------------------------------------------------------------------------
High Equity-
Money Market Income Income
Portfolio Portfolio Portfolio
-------------------------------- -----------------------------------------------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $843,023 1,655,033 3,320,468 1,930,318 2,780,632 1,144,671 42,510,440 12,605,854 10,037,638
Expenses - Mortality and expense
risk charges (note 3) 212,121 382,911 699,880 277,254 332,922 297,241 6,650,343 4,253,036 2,138,272
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 630,902 1,272,122 2,620,588 1,653,064 2,447,710 847,430 35,860,097 8,352,818 7,899,366
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) - - - 4,673,705 479,085 425,760 15,417,526 9,394,625 4,284,587
Unrealized appreciation
(depreciation) on
investments - - - (2,814,608) 308,688 2,702,738 65,899,106 23,601,942 37,953,951
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments - - - 1,859,097 787,773 3,128,498 81,316,632 32,996,567 42,238,538
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from
operations $630,902 1,272,122 2,620,588 3,512,161 3,235,483 3,975,928 117,176,729 41,349,385 50,137,904
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Fund
----------------------------------------
Growth
Portfolio (continued)
---------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 9,229,913 13,903,188 567,790
Expenses - Mortality and expense
risk charges (note 3) 3,552,903 2,834,086 1,696,933
- ----------------------------------------------------------------------
Net investment income (expense) 5,677,010 11,069,102 (1,129,143)
- ----------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 14,576,544 9,229,819 7,510,176
Unrealized appreciation
(depreciation) on
investments) 34,536,532 6,990,625 29,804,134
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 49,113,076 16,220,444 37,314,310
- ---------------------------------------------------------------------
Increase in net assets from
operations 54,790,086 27,289,546 36,185,167
- ---------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund Variable Insurance Products Fund II
-------------------------------- ---------------------------------------------------
Asset
Overseas Manager Contrafund
Portfolio Portfolio Portfolio
------------------------------- ------------------------------- ---------------------
Year ended Year ended
Year ended December 31, Year ended December 31, December 31, December 31,
1997 1996 1995 1997 1996 1995 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $9,303,257 2,309,161 644,375 52,909,448 27,801,550 9,085,957 4,672,962 634,656
Expenses - Mortality and expense
risk charges (note 3) 1,401,167 1,245,263 999,548 5,474,604 4,059,911 4,926,810 2,588,608 1,322,883
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 7,902,090 1,063,898 (355,173) 47,434,844 23,741,639 4,159,147 2,084,354 (688,227)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain 6,802,686 2,693,770 734,798 9,093,636 7,507,674 1,958,733 9,468,307 2,738,082
Unrealized appreciation
(depreciation) on investments (3,387,543) 7,585,836 6,428,977 24,430,304 23,008,153 55,306,129 26,750,686 17,275,767
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on
investments 3,415,143 10,279,606 7,163,775 33,523,940 30,515,827 57,264,862 36,218,993 20,013,849
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 11,317,233 11,343,504 6,808,602 80,958,784 54,257,466 61,424,009 38,303,347 19,325,622
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Products
Fund II (continued) Fund III
----------------------------- --------------------------
Growth & Growth
Contrafund Income Opportunities
Portfolio Portfolio Portfolio
------------- --------- ----------
Period from Period from Period from
January 5, May 1, May 1,
1995 to 1997 to 1997 to
December 3 December 31, December 31,
1995 1997 1997
- ------------------------------------------------------- -------------------------
<S> <C>
Investment income:
Income - Dividends 784,088 - -
Expenses - Mortality and expense risk
charges (note 3) 323,922 53,296 69,440
- ----------------------------------------------------- -------------------------
Net investment income (expense) 460,166 (53,296) (69,440)
- ----------------------------------------------------- -------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 905,255 103,153 67,071
Unrealized appreciation (depreciation)
on investments 4,218,866 458,100 1,055,758
- ----------------------------------------------------- -----------------------
Net realized and unrealized gain on
investments 5,124,121 561,253 1,122,829
- ----------------------------------------------------- -----------------------
Increase in net assets from operations 5,584,287 507,957 1,053,389
- ------------------------------------------------------- ----------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust
---------------------------------------------------------------------
Balanced Bond
Portfolio Portfolio
-------------------------------- ------------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $1,992,971 5,226,886 748,770 550,544 1,231,424 958,338
Expenses - Mortality and expense
risk charges (note 3) 337,918 381,777 385,789 99,586 151,484 210,707
- ----------------------------------------------- ----------------------------------------------------
Net investment income 1,655,053 4,845,109 362,981 450,958 1,079,940 747,631
- ----------------------------------------------- ----------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 5,097,861 419,822 895,552 12,018 (136,701) 45,793
Unrealized appreciation
(depreciation) on
investments) (2,501,835) (3,501,201) 5,264,633 (23,525) (646,673) 816,276
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 2,596,026 (3,081,379) 6,160,185 (11,507) (783,374) 862,069
- ------------------------------------------------------------------------------------------------------
Increase in net assets from
operations $ 4,251,079 1,763,730 6,523,166 439,451 296,566 1,609,700
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Neuberger & Berman Advisers
Management Trust (continued)
-----------------------------------
Growth
Portfolio
-----------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 903,849 1,152,528 246,676
Expenses - Mortality and expense
risk charges (note 3) 132,989 146,484 127,144
- --------------------------------------------------------------------
Net investment income 770,860 1,006,044 119,532
- --------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 2,304,768 315,046 242,067
Unrealized appreciation
(depreciation) on
investments) (880,241) (363,320) 1,957,190
- --------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 1,424,527 (48,274) 2,199,257
- --------------------------------------------------------------------
Increase in net assets from
operations 2,195,387 957,770 2,318,789
- ---------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Federated Investors Insurance
Series
--------------------------------------------------------------------------------------
American High Income
Leaders Bond Utility
Fund II Fund II Fund II
--------------------- ------------------------------- --------------------------------
Year ended Period from Year ended Year ended Period from Year ended Year ended Period from
December 31, May 6, 1996 to December 31, December 31, February 3, December 31, December 31, January 27,
1997 December 31, 1997 1996 1995 to 1997 1996 1995 to
1996 December 31, December 31,
1995 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $228,362 15,977 1,129,533 579,337 45,272 1,046,132 766,616 223,744
Expenses - Mortality
and expense risk
charges (note 3) 228,448 12,003 302,211 87,381 6,392 326,253 243,314 61,497
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income
(expense) (86) 3,974 827,322 491,956 38,880 719,879 523,302 162,247
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on
investments:
Net realized gain
(loss) 544,140 29,680 630,351 31,769 3,368 731,431 336,527 90,613
Unrealized appreciation
(depreciation) on
investments 3,385,309 162,046 1,256,745 424,014 26,388 4,302,272 1,113,241 914,307
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) loss
on investments 3,929,449 191,726 1,887,096 455,783 29,756 5,033,703 1,449,768 1,004,920
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets from operations $3,929,363 195,700 2,714,418 947,739 68,636 5,753,582 1,973,070 1,167,167
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Alger American
----------------------------------------------------------------
Small
Cap Growth
Portfolio Portfolio
-------------------------------- -------------------------------
Period from Period from
October 3, October 4,
Year ended Year ended 1995 to Year ended Year ended 1995 to
December 31, December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 2,044,748 105,411 - 528,437 668,828 -
Expenses - Mortality and expense
risk charges (note 3) 799,242 414,206 9,745 811,338 358,846 6,776
- ----------------------------------------------------------------------------------------------------------
Net investment income (expense) 1,245,506 (308,795) (9,745) (282,901) 309,982 (6,776)
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 411,624 (122,299) (20,417) 3,954,588 315,644 (2,380)
Unrealized appreciation
(depreciation) on
investments) 4,016,910 (80,937) (25,048) 8,095,163 2,224,353 27,240
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
loss) on investments 4,428,534 (203,236) (45,465) 12,049,751 2,539,997 24,860
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 5,674,040 (512,031) (55,210) 11,766,850 2,849,979 18,084
- ------------------------------------------------------------------------------------------------------------
</TABLE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
PBHG Insurance
Series Fund
---------------------
PBHG
Large Cap PBHG
Growth Growth II
Portfolio Portfolio
---------- ----------
Period from Period from
May 1, May 1,
1997 to 1997 to
December 31, December 31,
1997 1997
- -------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ - -
Expenses - Mortality and expense
risk charges (note 3) 17,112 30,512
- ---------------------------------------------------------------------
Net investment income (expense) (17,112) (30,512)
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 13,525 7,643
Unrealized appreciation
(depreciation) on investments 149,898 (89,829)
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 163,423 (82,186)
- ---------------------------------------------------------------------
Increase (decrease) in net assets
from operations $ 146,311 (112,698)
- ---------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
--------------------------------------------------------------------------
Aggressive
Growth Growth
Portfolio Portfolio
------------------------------------ ------------------------------------
Year ended Year ended
December 31, December 31,
1997 1996 1995 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ - 755,467 701,550 5,821,316 3,316,849 1,774,926
Expenses - Mortality and expense risk charges
(note 3) 1,187,720 880,271 464,496 2,533,302 1,496,337 686,203
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) (1,187,720) (124,804) 237,054 3,288,014 1,820,512 1,088,723
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 6,675,700 3,422,984 1,735,504 9,346,395 4,286,543 1,220,855
Unrealized appreciation (depreciation) on
investments 5,540,954 109,555 7,840,280 23,212,981 11,457,707 11,886,046
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 12,216,654 3,532,539 9,575,784 32,559,376 15,744,250 13,106,901
- ------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 11,028,934 3,407,735 9,812,838 35,847,390 17,564,762 14,195,624
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
--------------------------------------
Worldwide
Growth
Portfolio
------------------------------------
Year ended
December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 4,490,822 2,094,632 225,282
Expenses - Mortality and expense risk charges
(note 3) 3,656,021 1,418,611 477,320
- ----------------------------------------------------------------------------------------
Net investment income (expense) 834,801 676,021 (252,038)
- ----------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 11,585,008 5,069,677 439,501
Unrealized appreciation (depreciation) on
investments 32,530,512 18,944,795 9,549,318
- ----------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 44,115,520 24,014,472 9,988,819
- ----------------------------------------------------------------------------------------
Increase in net assets from operations 44,950,321 24,690,493 9,736,781
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
--------------------------------------------------------------------------
Flexible
Balanced Income
Portfolio Portfolio
-------------------------------------- ------------------------------------
Period from Period from
October 11, October 13,
Year ended Year ended 1995 to Year ended 1995 to
December 31,December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ 1,376,630 283,521 12,299 699,223 288,802 20,133
Expenses - Mortality and expense risk charges
(note 3) 445,275 113,425 2,009 120,354 40,424 980
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 931,355 170,096 10,290 578,869 248,378 19,153
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 1,239,519 122,576 9,364 86,470 4,524 29
Unrealized appreciation (depreciation) on
investments 4,013,343 920,620 37,909 269,390 68,898 (2,240)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments 5,252,862 1,043,196 47,273 355,860 73,422 (2,211)
- ------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 6,184,217 1,213,292 57,563 934,729 321,800 16,942
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
-----------------------------------------
International Capital
Growth Appreciation
Portfolio Portfolio
----------------------- --------------
Period from Period from
May 3, 1996 May 2, 1997
Year ended to
December 31, December 31, December 31,
1997 1996 1997
- -------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 348,585 54,433 8,437
Expenses - Mortality and expense risk charges
(note 3) 516,236 45,378 9,981
- --------------------------------------------------------------------------------------------
Net investment income (expense) (167,651) 9,055 (1,544)
- --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 3,329,942 187,391 31,894
Unrealized appreciation (depreciation) on
investments 1,235,644 586,615 12,182
- --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments 4,565,586 774,006 44,076
- --------------------------------------------------------------------------------------------
Increase in net assets from operations 4,397,935 783,061 42,532
- --------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)
----------------------------------------------------
S&P 500
Index
Fund
---------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 2,645,157 22,942,876 272,440
Net realized gain (loss) (899,446) 1,510,464 345,068
Unrealized appreciation (depreciation)
on investments 21,611,136 (16,204,375) 2,539,788
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 23,356,847 8,248,965 3,157,296
- -----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 40,575,050 18,225,715 7,357,078
Transfers (to) from the general account of
Life of Virginia:
Death benefits (1,735,027) (77,864) (143,652)
Surrenders (3,415,596) (1,079,082) (306,506)
Administrative expense (note 3) (102,362) (45,091) (22,813)
Transfer gain (loss) and transfer fees (4,503) 7,463 (8,822)
Transfers (to) from the Guarantee
Account (note 1) 14,747,561 3,139,208 695,771
Interfund transfers 24,135,903 5,665,381 5,341,899
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 74,201,026 25,835,730 12,912,955
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 97,557,873 34,084,695 16,070,251
Net assets at beginning of year 55,868,451 21,783,756 5,713,505
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 153,426,324 55,868,451 21,783,756
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.)
--------------------------------------------------------------------------
Government
Securities
Fund
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) (147,796) 1,165,729 481,595
Net realized gain (loss) (242,895) (68,248) (20,275)
Unrealized appreciation (depreciation)
on investments 987,049 (995,503) 567,616
- -------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 596,358 101,978 1,028,936
- -------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 1,053,538 3,734,757 1,619,783
Transfers (to) from the general account of
Life of Virginia:
Death benefits (64,230) (76,802) (44,216)
Surrenders (666,510) (492,750) (500,706)
Administrative expense (note 3) (18,501) (21,731) (17,040)
Transfer gain (loss) and transfer fees (36,688) 8,420 (9,439)
Transfers (to) from the Guarantee
Account (note 1) 827,432 135,548 60,927
Interfund transfers (14,821,369) (65,339) 2,038,922
- -------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions (13,726,328) 3,222,103 3,148,231
- -------------------------------------------------------------------------------------------------------------
Increase in net assets (13,129,970) 3,324,081 4,177,167
Net assets at beginning of year 13,129,970 9,805,889 5,628,722
- -------------------------------------------------------------------------------------------------------------
Net assets at end of year - 13,129,970 9,805,889
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.) (continued)
----------------------------------------------------------
Money Market
Fund
-------------------------------------------------
Year ended December 31,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 4,205,545 4,224,053 953,357
Net realized gain (loss) (4,421,730) 1,686,452 312,501
Unrealized appreciation (depreciation)
on investments 4,383,879 (2,984,484) (757,472)
- ------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 4,167,694 2,926,021 508,386
- ------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 107,140,555 153,728,177 52,511,585
Transfers (to) from the general account of
Life of Virginia:
Death benefits (1,753,311) (781,386) (4,954)
Surrenders (18,383,973) (8,255,412) (2,099,100)
Administrative expense (note 3) (134,339) (78,769) (17,072)
Transfer gain (loss) and transfer fees (130,614) 28,173 52,426
Transfers (to) from the Guarantee
Account (note 1) 10,195,112 4,298,099 4,957,966
Interfund transfers (67,593,593) (93,981,321) (30,878,764)
- ------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 29,339,837 54,957,561 24,522,087
- ------------------------------------------------------------------------------------------------------------
Increase in net assets 33,507,531 57,883,582 25,030,473
Net assets at beginning of year 90,187,173 32,303,591 7,273,118
- ------------------------------------------------------------------------------------------------------------
Net assets at end of year 123,694,704 90,187,173 32,303,591
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) (continued)
- --------------------------------------------------------------------------------------------------------------
Total Return
Fund
- --------------------------------------------------------------------------------------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 5,602,393 8,962,291 1,389,047
Net realized gain (loss) (454,827) 614,446 308,073
Unrealized appreciation (depreciation)
on investments 657,828 (6,827,262) 1,987,241
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 5,805,394 2,749,475 3,684,361
- ----------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 5,641,626 8,515,814 4,777,568
Transfers (to) from the general account of
Life of Virginia:
Death benefits (271,179) (153,153) (184,615)
Surrenders (2,558,265) (946,894) (685,070)
Administrative expense (note 3) (60,731) (51,588) (40,610)
Transfer gain (loss) and transfer fees (15,082) (69,616) 5,627
Transfers (to) from the Guarantee
Account (note 1) 2,622,768 919,901 401,449
Interfund transfers (231,875) 75,151 2,419,115
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 5,127,262 8,289,615 6,693,464
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets 10,932,656 11,039,090 10,377,825
Net assets at beginning of year 33,594,461 22,555,371 12,177,546
- ----------------------------------------------------------------------------------------------------------------
Net assets at end of year 44,527,117 33,594,461 22,555,371
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.)
(continued)
---------------------------------------------
International
Equity
Fund
--------------------------------------------
Period from
May 23,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income $ 2,572,712 999,110 26,712
Net realized gain (loss) 665,649 86,537 646
Unrealized appreciation (depreciation) on investments (1,565,382) (11,119) 25,880
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 1,672,979 1,074,528 53,238
- -------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 1,854,537 2,563,735 332,761
Transfers (to) from the general account of Life of Virginia:
Death benefits (2,360) (3,522) (2,053)
Surrenders (349,063) (103,501) (1,796)
Administrative expense (note 3) (10,458) (6,060) (661)
Transfer gain and transfer fees 49,348 (92,027) 1,565
Capital contribution - 10,925,561 -
Transfers from the Guarantee Account (note 1) 1,095,648 557,466 101,612
Interfund transfers 664,758 1,263,184 1,237,114
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 3,302,410 15,104,836 1,668,542
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets 4,975,389 16,179,364 1,721,780
Net assets at beginning of period 17,901,144 1,721,780 -
- -------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 22,876,533 17,901,144 1,721,780
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia
Series Fund, Inc.) (continued)
-------------------------------------------------------
Real Estate
Securities
Fund
-------------------------------------------------------
Period from
May 2,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income 5,164,666 1,578,261 667,676
Net realized gain (loss) 2,710,582 299,159 24,928
Unrealized appreciation (depreciation) on investments (1,305,117) 4,059,521 1,049,744
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 6,570,131 5,936,941 1,742,348
- -----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 10,679,221 2,949,990 301,414
Transfers (to) from the general account of Life of Virginia:
Death benefits (18,462) - (1,392)
Surrenders (654,786) (41,760) (1,136)
Administrative expense (note 3) (19,846) (3,136) (286)
Transfer gain and transfer fees 122,915 (107,856) 1,212
Capital contribution - - 10,000,000
Transfers from the Guarantee Account (note 1) 4,443,497 539,647 70,614
Interfund transfers 5,849,780 4,063,439 261,308
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 20,402,319 7,400,324 10,631,734
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 26,972,450 13,337,265 12,374,082
Net assets at beginning of period 25,711,347 12,374,082 -
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 52,683,797 25,711,347 12,374,082
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.) (continued)
----------------------------------------------------------------
Global Value
Income Equity Income
Fund Fund Fund
------------------ ----------------- -----------------
Period from Period from Period from
May 1, May 1, December 12,
1997 to 1997 to 1997 to
December 31, December 31, December 31,
1997 1997 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income 297,690 104,481 43,837
Net realized gain (loss) 2,417 357,048 (6,710)
Unrealized appreciation (depreciation) on investments (124,348) 885,799 (12,199)
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 175,759 1,347,328 24,928
- --------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 198,123 3,244,942 19,521
Transfers (to) from the general account of Life of Virginia:
Death benefits - (1,960) -
Surrenders (5,701) (75,503) (59,137)
Administrative expense (note 3) (209) (1,938) (2,414)
Transfer gain and transfer fees (472) 15,109 (467)
Capital contribution 5,000,000 3,000,000 -
Transfers from the Guarantee Account (note 1) 234,749 2,034,025 52,096
Interfund transfers 513,049 6,338,005 21,976,333
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 5,939,539 14,552,680 21,985,932
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 6,115,298 15,900,008 22,010,860
Net assets at beginning of period - - -
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 6,115,298 15,900,008 22,010,860
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
--------------------------------------------------------
Money
Fund
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 84,803 134,874 239,141
Net realized gain - - -
Unrealized appreciation (depreciation) on investments - - -
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 84,803 134,874 239,141
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 440 1,000 1,236,189
Transfers (to) from the general account of Life of Virginia:
Death benefits - (25,650) -
Surrenders $ (84,605) (248,877) (534,163)
Administrative expense (note 3) - (7,741) (12,911)
Transfer gain (loss) and transfer fees (4,611) (6,711) (10,807)
Transfers (to) from the Guarantee Account (note 1) (9,897) (72,686) (522,980)
Interfund transfers (2,736,806) (1,858,335) (3,724,005)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (2,835,479) (2,219,000) (3,568,677)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (2,750,676) (2,084,126) (3,329,536)
Net assets at beginning of year 2,750,676 4,834,802 8,164,338
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ - 2,750,676 4,834,802
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
--------------------------------------------------------
Bond
Fund
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 1,822,818 1,437,401 1,001,313
Net realized gain 187,695 106,242 53,120
Unrealized appreciation (depreciation) on investments 663,371 (442,815) 1,654,610
- --------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 2,673,884 1,100,828 2,709,043
- --------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 3,472,666 6,447,661 3,897,393
Transfers (to) from the general account of Life of Virginia:
Death benefits (234,610) (255,232) (103,070)
Surrenders (2,350,488) (1,174,644) (1,044,752)
Administrative expense (note 3) (53,814) (47,633) (43,224)
Transfer gain (loss) and transfer fees (12,509) 15,212 (70,035)
Transfers (to) from the Guarantee Account (note 1) 3,535,189 1,424,034 277,812
Interfund transfers 1,076,424 1,248,636 1,434,738
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 5,432,858 7,658,034 4,348,862
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 8,106,742 8,758,862 7,057,905
Net assets at beginning of year 31,638,941 22,880,079 15,822,174
- --------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 39,745,683 31,638,941 22,880,079
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
--------------------------------------------------------
Capital
Appreciation
Fund
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 5,840,622 4,562,994 (536,250)
Net realized gain 6,868,228 6,301,279 1,666,666
Unrealized appreciation (depreciation) on investments 5,927,622 7,478,382 18,977,772
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 18,636,472 18,342,655 20,108,188
- -------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 25,418,900 35,523,585 13,056,769
Transfers (to) from the general account of Life of Virginia:
Death benefits (450,528) (577,949) (315,870)
Surrenders (7,755,383) (5,679,609) (3,725,572)
Administrative expense (note 3) (291,649) (237,053) (179,980)
Transfer gain (loss) and transfer fees (53,714) (234,268) (110,449)
Transfers (to) from the Guarantee Account (note 1) 13,461,161 5,093,547 910,511
Interfund transfers 37,796 16,982,928 899,125
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 30,366,583 50,871,181 10,534,534
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 49,003,055 69,213,836 30,642,722
Net assets at beginning of year 158,844,181 89,630,345 58,987,623
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 207,847,236 158,844,181 89,630,345
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
------------------------------------------------------
Growth
Fund
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 3,539,022 2,510,530 127,293
Net realized gain 5,826,603 1,959,742 739,151
Unrealized appreciation (depreciation) on investments 11,621,155 5,568,726 5,287,316
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 20,986,780 10,038,998 6,153,760
- ----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 31,719,458 15,322,231 8,623,363
Transfers (to) from the general account of Life of Virginia:
Death benefits (350,617) (246,052) (11,683)
Surrenders (5,238,134) (1,802,707) (531,276)
Administrative expense (note 3) (138,883) (79,593) (49,718)
Transfer gain (loss) and transfer fees (28,403) (9,390) (2,381)
Transfers (to) from the Guarantee Account (note 1) 12,928,357 2,323,647 807,793
Interfund transfers 11,277,889 8,265,699 5,644,624
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 50,169,667 23,773,835 14,480,722
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 71,156,447 33,812,833 20,634,482
Net assets at beginning of year 67,859,369 34,046,536 13,412,054
- ----------------------------------------------------------------------------------------------------------------------
Net assets at end of year 139,015,816 67,859,369 34,046,536
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
--------------------------------------------------------
High
Income
Fund
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income $ 7,741,474 5,561,338 3,110,351
Net realized gain (loss) 1,298,149 763,575 (105,319)
Unrealized appreciation (depreciation) on investments 2,089,422 2,079,281 2,497,291
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 11,129,045 8,404,194 5,502,323
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 21,931,355 22,356,655 11,530,804
Transfers (to) from the general account of Life of Virginia:
Death benefits (689,590) (693,092) (69,961)
Surrenders (5,920,831) (2,655,530) (1,461,891)
Administrative expense (note 3) (139,006) (100,320) (73,580)
Transfer gain (loss) and transfer fees (112,330) (25,953) 144,255
Transfers (to) from the Guarantee Account (note 1) 12,750,648 3,777,050 1,497,477
Interfund transfers 23,573,698 9,730,803 2,860,809
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 51,393,944 32,389,613 14,427,913
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets 62,522,989 40,793,807 19,930,236
Net assets at beginning of year 85,762,637 44,968,830 25,038,594
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 148,285,626 85,762,637 44,968,830
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
-------------------------------------------------------
Multiple
Strategies
Fund
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income 3,690,801 2,771,962 2,110,596
Net realized gain (loss) 1,435,981 701,256 353,442
Unrealized appreciation (depreciation) on investments 4,025,778 2,786,345 3,750,075
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 9,152,560 6,259,563 6,214,113
- -------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 9,089,218 8,520,761 4,566,130
Transfers (to) from the general account of Life of Virginia:
Death benefits (332,263) (389,751) (183,215)
Surrenders (4,493,985) (2,097,537) (1,641,635)
Administrative expense (note 3) (119,442) (104,392) (93,990)
Transfer gain (loss) and transfer fees (8,995) (27,395) (65,699)
Transfers (to) from the Guarantee Account (note 1) 4,101,390 1,507,791 282,847
Interfund transfers 516,158 198,943 787,704
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 8,752,081 7,608,420 3,652,142
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets 17,904,641 13,867,983 9,866,255
Net assets at beginning of year 54,118,912 40,250,929 30,384,674
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 72,023,553 54,118,912 40,250,929
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
--------------------------------------------------------
Money Market
Portfolio
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 630,902 1,272,122 2,620,588
Net realized gain - - -
Unrealized appreciation (depreciation) on investments - - -
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 630,902 1,272,122 2,620,588
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums (28,472) 117,921 36,176,530
Transfers (to) from the general account of Life of Virginia:
Death benefits (193,170) (458,667) 103,982
Surrenders (1,206,916) (2,213,343) (4,660,173)
Administrative expense (note 3) (39,130) (65,257) (121,073)
Transfer gain (loss) and transfer fees 86,971 (204,381) 49,754
Transfers (to) from the Guarantee Account (note 1) (27,901) (661,457) (141,309)
Interfund transfers (21,205,932) (23,959,305) (47,938,008)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (22,614,550) (27,444,489) (16,530,297)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (21,983,648) (26,172,367) (13,909,709)
Net assets at beginning of year 21,983,648 48,156,015 62,065,724
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ - 21,983,648 48,156,015
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund (continued)
--------------------------------------------------------
High
Income
Portfolio
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 1,653,064 2,447,710 847,430
Net realized gain 4,673,705 479,085 425,760
Unrealized appreciation (depreciation) on investments (2,814,608) 308,688 2,702,738
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 3,512,161 3,235,483 3,975,928
- -------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 8,207 (248,987) 7,262,170
Transfers (to) from the general account of Life of Virginia:
Death benefits (66,792) (33,131) (117,911)
Surrenders (2,281,288) (1,859,776) (953,927)
Administrative expense (note 3) (46,012) (54,571) (51,018)
Transfer gain (loss) and transfer fees (18,007) (14,545) (10,918)
Transfers (to) from the Guarantee Account (note 1) (23,044) (109,624) 860,461
Interfund transfers (25,886,326) (7,008,575) 4,509,566
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (28,313,262) (9,329,209) 11,498,423
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (24,801,101) (6,093,726) 15,474,351
Net assets at beginning of year 24,801,101 30,894,827 15,420,476
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of year - 24,801,101 30,894,827
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund (continued)
--------------------------------------------------------
Equity-
Income
Portfolio
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 35,860,097 8,352,818 7,899,366
Net realized gain 15,417,526 9,394,625 4,284,587
Unrealized appreciation (depreciation) on investments 65,899,106 23,601,942 37,953,951
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 117,176,729 41,349,385 50,137,904
- -------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 78,673,490 91,217,558 63,044,040
Transfers (to) from the general account of Life of Virginia:
Death benefits (3,144,602) (2,317,929) (623,306)
Surrenders (22,544,378) (12,923,609) (7,390,359)
Administrative expense (note 3) (744,663) (565,181) (384,060)
Transfer gain (loss) and transfer fees (156,609) (81,577) (128,097)
Transfers (to) from the Guarantee Account (note 1) 34,236,802 14,669,920 8,592,478
Interfund transfers 4,787,401 12,688,430 43,164,815
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 91,107,441 102,687,612 106,275,511
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 208,284,170 144,036,997 156,413,415
Net assets at beginning of year 405,298,602 261,261,605 104,848,190
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 613,582,772 405,298,602 261,261,605
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund (continued)
-----------------------------------------------------
Growth
Portfolio
-----------------------------------------------------
Year ended December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 5,677,010 11,069,102 (1,129,143)
Net realized gain 14,576,544 9,229,819 7,510,176
Unrealized appreciation (depreciation) on investments 34,536,532 6,990,625 29,804,134
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 54,790,086 27,289,546 36,185,167
- ----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 19,742,111 40,351,417 35,842,400
Transfers (to) from the general account of Life of Virginia:
Death benefits (1,127,415) (1,395,457) (338,418)
Surrenders (15,488,583) (8,362,725) (5,531,711)
Administrative expense (note 3) (502,085) (441,506) (345,393)
Transfer gain (loss) and transfer fees (84,076) (243,398) 13,309
Transfers (to) from the Guarantee Account (note 1) 9,277,787 7,334,280 3,842,828
Interfund transfers (3,139,585) (3,259,632) 18,922,427
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 8,678,154 33,982,979 52,405,442
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 63,468,240 61,272,525 88,590,609
Net assets at beginning of year 251,545,367 190,272,842 101,682,233
- ----------------------------------------------------------------------------------------------------------------------
Net assets at end of year 315,013,607 251,545,367 190,272,842
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund (continued)
-------------------------------------------------------
Overseas
Portfolio
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 7,902,090 1,063,898 (355,173)
Net realized gain 6,802,686 2,693,770 734,798
Unrealized appreciation (depreciation) on investments (3,387,543) 7,585,836 6,428,977
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 11,317,233 11,343,504 6,808,602
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 5,009,263 11,020,984 10,634,049
Transfers (to) from the general account of Life of Virginia:
Death benefits (527,674) (528,522) (556,976)
Surrenders (5,102,924) (3,972,175) (3,063,268)
Administrative expense (note 3) (220,173) (214,759) (208,318)
Transfer gain (loss) and transfer fees (38,435) (85,300) (53,050)
Transfers (to) from Guarantee Account (note 1) 3,378,950 3,116,987 590,771
Interfund transfers (12,846,872) (4,620,473) (7,084,976)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (10,347,865) 4,716,742 258,232
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 969,368 16,060,246 7,066,834
Net assets at beginning of period 107,335,253 91,275,007 84,208,173
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 108,304,621 107,335,253 91,275,007
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund II
---------------------------------------------------------
Asset
Manager
Portfolio
--------------------------------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 47,434,844 23,741,639 4,159,147
Net realized gain 9,093,636 7,507,674 1,958,733
Unrealized appreciation (depreciation) on investments 24,430,304 23,008,153 55,306,129
- --------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 80,958,784 54,257,466 61,424,009
- --------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 12,956,133 15,580,792 21,217,331
Transfers (to) from the general account of Life of Virginia:
Death benefits (2,389,147) (3,090,108) (2,849,779)
Surrenders (26,860,066) (23,863,347) (23,760,769)
Administrative expense (note 3) (1,170,300) (1,159,170) (1,245,010)
Transfer gain (loss) and transfer fees (5,281,252) (2,150,299) (305,606)
Transfers (to) from Guarantee Account (note 1) 4,580,560 2,112,849 (7,015,144)
Interfund transfers (14,758,069) (31,512,425) (58,702,053)
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (32,922,141) (44,081,708) (72,661,030)
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 48,036,643 10,175,758 (11,237,021)
Net assets at beginning of period 435,838,169 425,662,411 436,899,432
- --------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 483,874,812 435,838,169 425,662,411
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund II (continued)
------------------------------------------------------
Contrafund
Portfolio
------------------------------------------------------
Period from
January 5,
Year ended Year ended 1995
December 31, December 31, December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 2,084,354 (688,227) 460,166
Net realized gain 9,468,307 2,738,082 905,255
Unrealized appreciation (depreciation) on investments 26,750,686 17,275,767 4,218,866
- -----------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 38,303,347 19,325,622 5,584,287
- -----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 39,049,020 41,520,289 26,666,752
Transfers (to) from the general account of Life of Virginia:
Death benefits (778,781) (569,391) (17,699)
Surrenders (7,578,528) (3,409,236) (676,614)
Administrative expense (note 3) (239,385) (139,550) (42,327)
Transfer gain (loss) and transfer fees (1,813) (6,491) (28,134)
Transfers (to) from Guarantee Account (note 1) 20,874,655 8,894,897 4,851,438
Interfund transfers 9,642,188 15,486,630 25,426,220
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 60,967,356 61,777,148 56,179,636
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 99,270,703 81,102,770 61,763,923
Net assets at beginning of period 142,866,693 61,763,923 -
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of period 242,137,396 142,866,693 61,763,923
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Variable Insurance Products
Fund III
------------------------------------
Growth & Growth
Income Opportunities
Portfolio Portfolio
------------------------------------
Period from Period from
May 1, May 1,
1997 to 1997 to
December 31, December 31,
1997 1997
- ----------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) (53,296) (69,440)
Net realized gain 103,153 67,071
Unrealized appreciation (depreciation) on investments 458,100 1,055,758
- ----------------------------------------------------------------------------------------------------
Increase in net assets from operations 507,957 1,053,389
- ----------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 5,782,503 6,759,512
Transfers (to) from the general account of Life of Virginia
Death benefits (2,062) (11,218)
Surrenders (116,741) (178,411)
Administrative expense (note 3) (3,046) (4,370)
Transfer gain (loss) and transfer fees 358,955 734
Transfers (to) from Guarantee Account (note 1) 2,665,501 2,684,605
Interfund transfers 6,515,155 6,783,534
- ----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 15,200,265 16,034,386
- ----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 15,708,222 17,087,775
Net assets at beginning of period - -
- ----------------------------------------------------------------------------------------------------
Net assets at end of period 15,708,222 17,087,775
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust
---------------------------------------------------------
Balanced
Portfolio
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income $ 1,655,053 4,845,109 362,981
Net realized gain (loss) 5,097,861 419,822 895,552
Unrealized appreciation (depreciation) on investments (2,501,835) (3,501,201) 5,264,633
- ------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 4,251,079 1,763,730 6,523,166
- ------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums (6,001) - 2,535,815
Transfers (to) from the general account of Life of Virginia:
Death benefits (126,435) (191,199) (153,937)
Surrenders (2,675,228) (2,074,244) (1,503,514)
Administrative expense (note 3) (71,576) (82,124) (88,114)
Transfer gain (loss) and transfer fees (78,959) (12,205) 7,049
Capital contribution (629,209) - -
Transfers (to) from the Guarantee Account (note 1) (185,078) (37,694) (134,229)
Interfund transfers (31,241,057) (3,810,712) (2,179,193)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (35,013,543) (6,208,178) (1,516,123)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (30,762,464) (4,444,448) 5,007,043
Net assets at beginning of year 30,762,464 35,206,912 30,199,869
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ - 30,762,464 35,206,912
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust (continued)
--------------------------------------------------------
Bond
Portfolio
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income 450,958 1,079,940 747,631
Net realized gain (loss) 12,018 (136,701) 45,793
Unrealized appreciation (depreciation) on investments (23,525) (646,673) 816,276
- -----------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 439,451 296,566 1,609,700
- -----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 1,800 - 4,761,820
Transfers (to) from the general account of Life of Virginia:
Death benefits (196,037) (225,838) (7,505)
Surrenders (508,821) (366,908) (522,591)
Administrative expense (note 3) (15,911) (24,278) (37,167)
Transfer gain (loss) and transfer fees (11,476) (9,665) (23,158)
Capital contribution - - -
Transfers (to) from the Guarantee Account (note 1) (86,454) (92,797) 798,511
Interfund transfers (9,344,589) (5,700,964) (9,447,152)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (10,161,488) (6,420,450) (4,477,242)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (9,722,037) (6,123,884) (2,867,542)
Net assets at beginning of year 9,722,037 15,845,921 18,713,463
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of year - 9,722,037 15,845,921
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust (continued)
-------------------------------------------------------
Growth
Portfolio
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income 770,860 1,006,044 119,532
Net realized gain (loss) 2,304,768 315,046 242,067
Unrealized appreciation (depreciation) on investments (880,241) (363,320) 1,957,190
- ------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 2,195,387 957,770 2,318,789
- ------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 6,456 4,370 2,833,430
Transfers (to) from the general account of Life of Virginia:
Death benefits (58,098) (56,431) (78,819)
Surrenders (247,815) (415,296) (251,354)
Administrative expense (note 3) (22,353) (25,172) (23,723)
Transfer gain (loss) and transfer fees (2,057) (10,420) (697)
Capital contribution - - -
Transfers (to) from the Guarantee Account (note 1) - (14,970) 36,976
Interfund transfers (12,373,616) (3,652,818) 1,961,133
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (12,697,483) (4,170,737) 4,476,946
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (10,502,096) (3,212,967) 6,795,735
Net assets at beginning of year 10,502,096 13,715,063 6,919,328
- ------------------------------------------------------------------------------------------------------------------------
Net assets at end of year - 10,502,096 13,715,063
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Federated Investors Insurance
Series
---------------------------------------
American
Leaders
Fund II
---------------------------------------
Period from
Year ended May 6, 1996 to
December 31, December 31,
1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ (86) 3,974
Net realized gain 544,140 29,680
Unrealized appreciation (depreciation)
on investments 3,385,309 162,046
- ---------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 3,929,363 195,700
- ---------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 13,540,849 2,249,062
Transfers (to) from the general account
of Life of Virginia:
Death benefits (91,917) -
Surrenders (423,567) (28,376)
Administrative expense (note 3) (11,789) (522)
Transfer gain (loss) and transfer fees 791 4,221
Transfers from the Guarantee Account (note 1) 4,966,466 146,563
Interfund transfers 9,208,512 1,208,370
- ---------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 27,189,345 3,579,318
- ---------------------------------------------------------------------------------------------------------
Increase in net assets 31,118,708 3,775,018
Net assets at beginning of period 3,775,018 -
- ---------------------------------------------------------------------------------------------------------
Net assets at end of period $ 34,893,726 3,775,018
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Federated Investors Insurance
Series (continued)
----------------------------------------------------------
High Income
Bond
Fund II
----------------------------------------------------------
Period from
February 3,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 827,322 491,956 38,880
Net realized gain 630,351 31,769 3,368
Unrealized appreciation (depreciation)
on investments 1,256,745 424,014 26,388
- ---------------------------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 2,714,418 947,739 68,636
- ---------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 9,254,617 4,468,263 1,448,946
Transfers (to) from the general account
of Life of Virginia:
Death benefits (120,443) (42,084) -
Surrenders (861,128) (428,701) (12,805)
Administrative expense (note 3) (18,435) (5,233) (601)
Transfer gain (loss) and transfer fees (2,424) (43) 5,535
Transfers from the Guarantee Account (note 1) 4,882,888 670,397 200,240
Interfund transfers 5,675,771 6,113,878 235,916
- ---------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 18,810,846 10,776,477 1,877,231
- ---------------------------------------------------------------------------------------------------------------------------
Increase in net assets 21,525,264 11,724,216 1,945,867
Net assets at beginning of period 13,670,083 1,945,867 -
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 35,195,347 13,670,083 1,945,867
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Federated Investors Insurance
Series (continued)
------------------------------------------------------
Utility
Fund II
------------------------------------------------------
Period from
January 27,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 719,879 523,302 162,247
Net realized gain 731,431 336,527 90,613
Unrealized appreciation (depreciation)
on investments 4,302,272 1,113,241 914,307
- -----------------------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 5,753,582 1,973,070 1,167,167
- -----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 3,510,754 7,032,730 4,723,697
Transfers (to) from the general account
of Life of Virginia:
Death benefits (63,646) (172,666) -
Surrenders (1,420,075) (708,499) (150,715)
Administrative expense (note 3) (32,050) (25,376) (7,470)
Transfer gain (loss) and transfer fees (1,043) 11,752 (650)
Transfers from the Guarantee Account (note 1) 1,540,929 1,313,211 982,260
Interfund transfers (1,399,267) 830,436 5,539,763
- -----------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 2,135,602 8,281,588 11,086,885
- -----------------------------------------------------------------------------------------------------------------------
Increase in net assets 7,889,184 10,254,658 12,254,052
Net assets at beginning of period 22,508,710 12,254,052 -
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of period 30,397,894 22,508,710 12,254,052
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Alger American
--------------------------------------------------------------
Small
Cap
Portfolio
--------------------------------------------------------------
Period from
October 3,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
-----------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 1,245,506 (308,795) (9,745)
Net realized gain (loss) 411,624 (122,299) (20,417)
Unrealized appreciation (depreciation)
on investments 4,016,910 (80,937) (25,048)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 5,674,040 (512,031) (55,210)
- --------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 12,048,925 25,934,981 3,369,922
Transfers (to) from the general account
of Life of Virginia:
Death benefits (296,448) (167,439) -
Surrenders (1,974,869) (837,016) (18,166)
Administrative expense (note 3) (69,752) (32,819) (1,420)
Transfer gain (loss) and transfer fees 20,656 (18,410) 7,625
Transfers from the Guarantee Account (note 1) 9,339,897 5,067,731 298,188
Interfund transfers 1,782,889 10,297,239 3,969,177
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 20,851,298 40,244,267 7,625,326
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 26,525,338 39,732,236 7,570,116
Net assets at beginning of period 47,302,352 7,570,116 -
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 73,827,690 47,302,352 7,570,116
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Alger American
----------------------------------------------------
Growth
Portfolio
----------------------------------------------------
Period from
October 4,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
-----------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) (282,901) 309,982 (6,776)
Net realized gain (loss) 3,954,588 315,644 (2,380)
Unrealized appreciation (depreciation)
on investments 8,095,163 2,224,353 27,240
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 11,766,850 2,849,979 18,084
- ----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 13,470,987 21,518,317 2,632,716
Transfers (to) from the general account
of Life of Virginia:
Death benefits (317,671) (22,815) -
Surrenders (2,065,182) (539,265) (4,789)
Administrative expense (note 3) (68,206) (26,996) (895)
Transfer gain (loss) and transfer fees (390,379) (32,858) 1,883
Transfers from the Guarantee Account (note 1) 6,594,835 3,628,084 (47,006)
Interfund transfers (1,557,814) 11,823,073 2,922,881
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 15,666,570 36,347,540 5,504,790
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets 27,433,420 39,197,519 5,522,874
Net assets at beginning of period 44,720,393 5,522,874 -
- ----------------------------------------------------------------------------------------------------------------------
Net assets at end of period 72,153,813 44,720,393 5,522,874
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
PBHG Insurance Series Fund
------------------------------------
PBHG PBHG
Large Cap Growth II
Portfolio Portfolio
------------------------------------
Period from Period from
May 1, May 1,
1997 to 1997 to
December 31, December 31,
1997 1997
------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) (17,112) (30,512)
Net realized gain (loss) 13,525 7,643
Unrealized appreciation (depreciation)
on investments 149,898 (89,829)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 146,311 (112,698)
- --------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 1,239,113 3,502,382
Transfers (to) from the general account
of Life of Virginia:
Death benefits (715) -
Surrenders (12,383) (53,142)
Administrative expense (note 3) (684) (1,455)
Transfer gain (loss) and transfer fees 865 787
Transfers from the Guarantee Account (note 1) 610,146 1,108,447
Interfund transfers 2,735,614 2,507,619
- --------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 4,571,956 7,064,638
- --------------------------------------------------------------------------------------------------
Increase in net assets 4,718,267 6,951,940
Net assets at beginning of period - -
- --------------------------------------------------------------------------------------------------
Net assets at end of period 4,718,267 6,951,940
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
-------------------------------------------------------
Aggressive
Growth
Portfolio
----------------------------------------------------
Year ended
December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ (1,187,720) (124,804) 237,054
Net realized gain 6,675,700 3,422,984 1,735,504
Unrealized appreciation (depreciation) on investments 5,540,954 109,555 7,840,280
- ----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 11,028,934 3,407,735 9,812,838
- ----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 11,681,150 17,880,226 16,756,982
Transfers (to) from the general account of Life of Virginia:
Death benefits (427,386) (394,284) (86,506)
Surrenders (2,997,601) (2,851,517) (1,216,524)
Administrative expense (note 3) (120,078) (112,813) (73,928)
Transfer gain (loss) and transfer fees (19,458) (40,003) 38,529
Transfers (to) from the Guarantee Account (note 1) 4,987,441 3,328,781 2,434,875
Interfund transfers (2,281,417) 8,025,078 7,553,096
- ----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 10,822,651 25,835,468 25,406,524
- ----------------------------------------------------------------------------------------------------------------------------
Increase in net assets 21,851,585 29,243,203 35,219,362
Net assets at beginning of year 83,963,537 54,720,334 19,500,972
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 105,815,122 83,963,537 54,720,334
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
----------------------------------------------------------------
Growth
Portfolio
----------------------------------------------------------------
Year ended
December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 3,288,014 1,820,512 1,088,723
Net realized gain 9,346,395 4,286,543 1,220,855
Unrealized appreciation (depreciation) on investments 23,212,981 11,457,707 11,886,046
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 35,847,390 17,564,762 14,195,624
- ----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 30,338,859 35,456,497 20,907,687
Transfers (to) from the general account of Life of Virginia:
Death benefits (1,849,634) (483,092) (292,563)
Surrenders (9,041,380) (3,747,509) (1,304,563)
Administrative expense (note 3) (280,500) (199,595) (125,440)
Transfer gain (loss) and transfer fees (152,642) (208,664) (42,445)
Transfers (to) from the Guarantee Account (note 1) 16,216,500 7,027,293 2,397,459
Interfund transfers 1,293,752 11,381,396 14,146,981
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 36,524,955 49,226,326 35,687,116
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 72,372,345 66,791,088 49,882,740
Net assets at beginning of year 151,696,572 84,905,484 35,022,744
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 224,068,917 151,696,572 84,905,484
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
-----------------------------------------------------------------
Worldwide
Growth
Portfolio
---------------------------------------------------------------
Year ended
December 31,
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 834,801 676,021 (252,038)
Net realized gain 11,585,008 5,069,677 439,501
Unrealized appreciation (depreciation) on investments 32,530,512 18,944,795 9,549,318
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 44,950,321 24,690,493 9,736,781
- ---------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 77,908,754 45,862,046 14,202,159
Transfers (to) from the general account of Life of Virginia:
Death benefits (916,155) (407,146) (146,748)
Surrenders (9,754,795) (2,394,900) (1,173,774)
Administrative expense (note 3) (346,218) (172,873) (87,512)
Transfer gain (loss) and transfer fees (116,774) (183,599) (23,608)
Transfers (to) from the Guarantee Account (note 1) 30,845,279 8,313,366 1,874,804
Interfund transfers 25,144,972 42,049,450 7,110,222
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 122,765,063 93,066,344 21,755,543
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 167,715,384 117,756,837 31,492,324
Net assets at beginning of year 177,410,698 59,653,861 28,161,537
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 345,126,082 177,410,698 59,653,861
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
-----------------------------------------------------------------
Balanced
Portfolio
--------------------------------------------------------------
Period from
October 11,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 931,355 170,096 10,290
Net realized gain 1,239,519 122,576 9,364
Unrealized appreciation (depreciation) on investments 4,013,343 920,620 37,909
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 6,184,217 1,213,292 57,563
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 15,654,806 8,643,527 619,039
Transfers (to) from the general account of
Life of Virginia:
Death benefits (98,529) (37,496) -
Surrenders (1,560,191) (271,087) (61,992)
Administrative expense (note 3) (34,113) (7,301) (379)
Transfer gain (loss) and transfer fees (11,920) 5,413 (240)
Transfer (to) from the Guarantee Account (note 1) 6,551,408 1,091,622 210,233
Interfund transfers 34,492,843 3,850,513 1,147,007
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 54,994,304 13,275,191 1,913,668
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets 61,178,521 14,488,483 1,971,231
Net assets at beginning of period 16,459,714 1,971,231 -
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 77,638,235 16,459,714 1,971,231
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
--------------------------------------------------------------
Flexible
Income
Portfolio
--------------------------------------------------------------
Period from
October 13,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 578,869 248,378 19,153
Net realized gain 86,470 4,524 29
Unrealized appreciation (depreciation) on investments 269,390 68,898 (2,240)
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 934,729 321,800 16,942
- ---------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 3,465,715 2,591,080 312,671
Transfers (to) from the general account of Life of Virginia:
Death benefits (55,866) - -
Surrenders (425,891) (29,518) (451)
Administrative expense (note 3) (8,897) (2,717) (111)
Transfer gain (loss) and transfer fees 1,786 (413) 179
Transfer (to) from the Guarantee Account (note 1) 3,010,637 345,536 41,646
Interfund transfers 2,406,219 992,086 419,589
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 8,393,703 3,896,054 773,523
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 9,328,432 4,217,854 790,465
Net assets at beginning of period 5,008,319 790,465 -
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 14,336,751 5,008,319 790,465
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
-------------------------------------------------------------
International Capital
Growth Appreciation
Portfolio Portfolio
--------------------------------------- -------------------
Period from Period from
May 3, 1996 May 2, 1997
Year ended to to
December 31, December 31, December 31,
1997 1996 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) (167,651) 9,055 (1,544)
Net realized gain 3,329,942 187,391 31,894
Unrealized appreciation (depreciation) on investments 1,235,644 586,615 12,182
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 4,397,935 783,061 42,532
- -----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 19,031,016 4,654,797 720,613
Transfers (to) from the general account of Life of Virginia:
Death benefits (197,552) - -
Surrenders (1,293,141) (51,116) (37,177)
Administrative expense (note 3) (39,068) (3,441) (826)
Transfer gain (loss) and transfer fees 24,476 3,766 (33,752)
Transfer (to) from the Guarantee Account (note 1) 8,279,728 935,954 446,414
Interfund transfers 10,950,154 7,189,157 1,531,771
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 36,755,613 12,729,117 2,627,043
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 41,153,548 13,512,178 2,669,575
Net assets at beginning of period 13,512,178 - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 54,665,726 13,512,178 2,669,575
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
December 31, 1997
================================================================================
(1) Description of Entity
Life of Virginia Separate Account 4 (the Account) is a separate
investment account established in 1987 by The Life Insurance Company of
Virginia (Life of Virginia) under the laws of the Commonwealth of
Virginia. The Account operates as a unit investment trust under the
Investment Company Act of 1940. The Account is used to fund certain
benefits for flexible premium variable deferred annuity life insurance
policies issued by Life of Virginia. The Life Insurance Company of
Virginia is a stock life insurance company operating under a charter
granted by the Commonwealth of Virginia on March 21, 1871. Eighty
percent of the capital stock of Life of Virginia is owned by General
Electric Capital Assurance Corporation. The remaining 20% is owned by
GE Financial Assurance Holdings, Inc. General Electric Capital
Assurance Corporation and GE Financial Assurance Holdings, Inc. are
indirectly, wholly-owned subsidiaries of General Electric Capital ("GE
Capital"). GE Capital, a diversified financial services company, is a
wholly-owned subsidiary of General Electric Company (GE), a New York
corporation. Prior to April 1, 1996, Life of Virginia was an indirect
wholly-owned subsidiary of Aon Corporation (Aon).
In May 1997, seven new investment subdivisions were added to the
Account, for both Type I and II policies. The Growth & Income Portfolio
and Growth Opportunities Portfolio each invest solely in a designated
portfolio of the Variable Insurance Products Fund III. The Global
Income Fund and the Value Equity Fund each invest solely in a
designated portfolio of the GE Investments Funds, Inc. The Capital
Appreciation Portfolio invests solely in a designated portfolio of the
Janus Aspen Series. The Growth II Portfolio and the Large Cap Growth
Portfolio each invest solely in a designated portfolio of the PBHG
Insurance Series Fund. All designated portfolios described above are
series type mutual funds.
During 1997, the Life of Virginia Series Fund, Inc. changed its name to
the GE Investments Funds, Inc. As a result the Life of Virginia Series
Funds, Inc.--Common Stock Index, Government Securities, Money Market,
Total Return, International Equity and Real Estate Securities
Portfolios were renamed the GE Investments Funds, Inc.--S&P 500 Index,
Government Securities, Money Market, Total Return, International Equity
and Real Estate Securities Funds, respectively. On December 12, 1997,
the Account added the GE Investments Funds, Inc.--Income Fund as a new
investment subdivision and made the following substitutions of shares
held by the investment subdivisions:
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
================================================================
(1) Continued
<TABLE>
<S> <C>
Before the Substitution After the Substitution
Shares of Money Market Portfolio - Shares of Money Market Fund -
Variable Insurance Products Fund GE Investments Funds, Inc.
Shares of Money Fund - Shares of Money Market Fund -
Oppenheimer Variable Account Funds GE Investments Funds, Inc.
Shares of Bond Portfolio - Shares of Income Fund Neuberger & Berman -
Advisers Management Trust GE Investments Funds, Inc.
Shares of High Income Portfolio - Shares of High Income Fund -
Variable Insurance Products Fund Oppenheimer Variable Account Funds
Shares of Growth Portfolio - Shares of Growth Portfolio -
Neuberger & Berman Advisers Management Trust Variable Insurance Products Fund
Shares of Balanced Portfolio - Shares of Balanced Portfolio -
Neuberger & Berman Advisers Management Trust Janus Aspen Series
</TABLE>
The foregoing substitutions were carried out pursuant to an order of
the Securities and Exchange Commission (Commission) issued on December
11, 1997, with the approval of any necessary department of insurance.
The effect of such a share substitution was to replace certain
portfolios of Variable Insurance Products Fund, Oppenheimer Variable
Account Funds, GE Investments Funds, Inc., and Neuberger & Berman
Advisers Management Trust with those of GE Investments Funds, Inc.,
Oppenheimer Variable Account Funds, Variable Insurance Products Fund,
and Janus Aspen Series as investment options.
<PAGE>
(1) Continued
In May 1996, two new investment subdivisions were added to the Account,
for both Type I and II policies. One of these subdivisions, the
International Growth Portfolio, invests solely in a designated
portfolio of the Janus Aspen Series, a series type mutual fund. The
other new subdivision, the American Leaders Fund II, invests solely in
a designated portfolio of the Federated Investors Insurance Series, a
series type mutual fund.
During 1995, nine new investment subdivisions were added to the
Account, for both Type I and Type II policies. The Utility Fund II and
High Income Bond Fund II each invest solely in a designated portfolio
of the Federated Investors Insurance Series, a series type mutual fund.
The Contrafund Portfolio invests solely in a designated portfolio of
the Variable Insurance Products Fund II, a series type mutual fund. The
International Equity Portfolio and the Real Estate Securities Portfolio
each invest solely in a designated portfolio of GE Investments Funds,
Inc., a series type mutual fund. The Balanced Portfolio and Flexible
Income Portfolio each invest solely in a designated portfolio of the
Janus Aspen Series, a series type mutual fund. The Growth Portfolio and
Small Cap Portfolio each invest solely in a designated portfolio of the
Alger American Fund, a series type mutual fund.
In November 1995, six subdivisions were closed to new money for both
Type I and Type II policies. For each policy type, three of these
subdivisions, the Balanced Portfolio, Bond Portfolio, and Growth
Portfolio each invest solely in a designated portfolio of the Advisers
Management Trust, a series type mutual fund. The fourth and fifth
closed subdivisions, the Money Market Portfolio and High Income
Portfolio, each invest solely in a designated portfolio of the Variable
Insurance Products Fund, a series type mutual fund. The sixth closed
subdivision, the Money Fund, invests solely in a designated portfolio
of the Oppenheimer Variable Account Funds, a series type mutual fund.
Policyowners may transfer cash values between the Account's portfolios
and the Guarantee Account that is part of the general account of Life
of Virginia. Amounts transferred to the Guarantee Account earn interest
at the interest rate in effect at the time of such transfer and remain
in effect for one year, after which a new rate may be declared.
<PAGE>
(2) Summary of Significant Accounting Policies
Unit Classes
There are two unit classes included in the Account. Type I units are
sold under policy form P1140 and P1141. Type II units are sold under
policy forms P1142, P1142N and P1143. Type II unit sales began in the
third quarter of 1994.
Investments
Investments are stated at fair value which is based on the underlying
net asset value per share of the respective portfolios or funds.
Purchases and sales of investments are recorded on the trade date and
income distributions are recorded on the ex-dividend date. Realized
gains and losses on investments are determined on the average cost
basis. The units and unit values are disclosed as of the last business
day in the applicable year or period.
<PAGE>
(2) Continued
The aggregate cost of investments acquired and the aggregate proceeds
of investments sold, for the year or period ended December 31, 1997
were:
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- ----------------------------------------------------------------------------
GE Investments Funds, Inc.:
S&P 500 Index $ 132,222,938 31,818,054
Government Securities 10,499,388 23,055,080
Money Market 887,060,254 868,724,486
Total Return 30,724,166 10,679,067
International Equity 18,393,561 11,389,194
Real Estate Securities 43,204,050 16,152,111
Global Income 6,336,231 187,733
Value Equity 17,622,017 3,137,116
Income 25,679,422 3,310,006
Oppenheimer Variable Account Funds:
Money 314,112 3,030,625
Bond 16,807,159 9,544,382
Capital Appreciation 93,466,672 56,992,604
Growth 85,183,495 31,490,581
High Income 95,915,615 36,944,770
Multiple Strategies 23,819,771 11,316,157
Variable Insurance Products Fund:
Money Market 1,556,148 23,557,498
High Income 3,620,650 30,349,068
Equity - Income 220,439,185 93,043,056
Growth 83,553,084 68,794,613
Overseas 72,741,759 71,928,713
Variable Insurance Products Fund II:
Asset Manager 85,456,484 70,466,360
Contrafund 118,473,800 55,310,933
Variable Insurance Products Fund III:
Growth & Income 18,484,934 3,417,350
Growth Opportunities 17,590,719 1,681,206
- ----------------------------------------------------------------------------
<PAGE>
(2) Continued
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -----------------------------------------------------------------------------
Neuberger & Berman Advisers
Management Trust:
Balanced $ 2,635,418 36,069,865
Bond 1,856,865 11,649,317
Growth 977,918 12,925,079
Federated Investors Insurance Series:
American Leaders II 32,823,606 5,793,581
High Income Bond II 38,421,195 18,759,547
Utility 10,012,564 7,198,898
II
Alger American:
Small Cap 46,888,772 24,542,187
Growth 46,869,978 31,444,158
PBHG Insurance Series Fund:
PBHG Large Cap Growth 6,296,317 1,710,929
PBHG Growth II 7,969,729 1,120,679
Janus Aspen Series:
Aggressive Growth 99,975,217 90,226,548
Growth 86,207,354 46,144,088
Worldwide Growth 183,578,974 59,756,806
Balanced 67,917,334 11,980,846
Flexible Income 12,301,658 3,313,161
International Growth 94,751,055 54,755,744
Capital Appreciation 5,675,613 3,007,685
- -----------------------------------------------------------------------------
Capital Transactions
The increase (decrease) in outstanding units for Type I and Type II
from capital transactions for the years or periods ended December 31,
1997, 1996 and 1995 are as follows:
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
(2) Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-----------------------------------------------------------------------------
S&P 500 Government Money Total International Real Estate
Index Securities Market Return Equity Securities
Type I Units Fund Fund Fund Fund Fund Fund
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 297,274 384,930 484,719 666,497 - -
Net premiums 37,545 7,450 265,952 38,485 5,889 3,842
Transfers (to) from the
general account of Life of Virginia:
Death benefits (3,332) (2,593) (365) (8,225) (201) (130)
Surrenders (11,616) (27,386) (138,205) (30,218) (166) (82)
Administrative expenses (991) (994) (1,241) (1,911) (64) (27)
Transfers (to)/from the Guarantee Account 17,804 (78) 347,444 6,958 8,347 6,278
Interfund transfers 142,337 67,621 (64,330) 73,915 101,757 13,762
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 181,747 44,020 409,255 79,004 115,562 23,643
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 479,021 428,950 893,974 745,501 115,562 23,643
Net premiums 34,082 36,100 706,581 33,745 22,527 14,587
Transfers (to) from the
general account of Life of Virginia:
Death benefits (1,231) (163) (16,043) (6,096) - -
Surrenders (22,370) (25,884) (412,885) (31,853) (5,008) (1,361)
Administrative expenses (1,347) (1,204) (4,925) (2,175) (446) (192)
Transfers (to)/from the Guarantee Account 37,400 4,534 358,505 1,905 22,249 21,124
Interfund transfers 54,702 62,264 1,023,952 (32,962) 52,528 147,118
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 101,236 75,647 1,655,185 (37,436) 91,850 181,276
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 580,257 504,597 2,549,159 708,065 207,412 204,919
Net premiums 43,467 2,027 273,183 24,404 (153,291) 215,116
Transfers (to) from the
general account of Life of Virginia:
Death benefits (2,505) (3,654) (88,771) (5,480) - -
Surrenders (34,875) (27,521) (773,658) (56,645) 494,961 (112,838)
Administrative expenses (1,886) (938) (6,382) (1,805) 20,280 (5,712)
Transfers (to)/from the Guarantee Account 41,669 9,540 304,035 5,882 (736,706) 208,742
Interfund transfers 292,720 (484,051) 1,254,694 (42,593) 1,380,146 875,079
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 338,590 (504,597) 963,101 (76,237) 1,005,390 1,180,387
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 918,847 - 3,512,260 631,828 1,212,802 1,385,306
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. Oppenheimer Variable Account Funds
----------------------------------- -------------------------------------------
Global Capital
Income Value Equity Income Money Bond Appreciation Growth
Type I Units Fund Fund Fund Fund Fund Fund Fund
<S> <C>
- ---------------------------------------------------------------------------------- -------------------------------------------
Units outstanding at December 31, 1994 - - - 549,261 967,029 2,708,957 734,287
Net premiums - - - 36,722 (11,303) 222,696 (521,582)
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - - - 263 (31,865) 48,092
Surrenders - - - (38,250) 5,282 (311,147) 564,254
Administrative expenses - - - (910) 309 (13,475) 27,690
Transfers (to)/from the Guarantee Account - - - (33,828) (4,115) 27,379 (11,025)
Interfund transfers - - - (230,533) (4,765) 45,448 144,969
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - - - (266,799) (14,329) (60,964) 252,398
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 - - - 282,462 952,700 2,647,993 986,685
Net premiums - - - - (4,744) (181,755) 267,359
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - - (1,782) 2,016 44,441 (29,174)
Surrenders - - - (16,283) 7,728 332,700 (364,042)
Administrative expenses - - - (531) 407 14,718 (16,121)
Transfers (to)/from the Guarantee Account - - - (4,896) (7,110) (185,173) 105,286
Interfund transfers - - - (96,465) (9,728) 53,131 240,629
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - - - (119,957) (11,431) 78,062 203,937
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 - - - 162,505 941,269 2,726,055 1,190,622
Net premiums 15,669 30,034 595 - 12,729 48,378 50,650
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - - - (4,708) (2,476) (1,990)
Surrenders (2,874) (1,979) (5,500) (5,366) (114,775) (146,760) (99,247)
Administrative expenses (489) (345) (199) (298) (2,868) (6,721) (2,955)
Transfers (to)/from the Guarantee Account 131,841 33,741 - - 30,993 33,837 40,477
Interfund transfers 372,751 418,170 1,300,742 (156,841) 66,990 (60,894) 114,256
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 516,898 479,621 1,295,638 (162,505) (11,639) (134,636) 101,191
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 516,898 479,621 1,295,638 - 929,630 2,591,419 1,291,813
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION> Oppenheimer Variable
Account Funds Variable Insurance Products Fund
----------------------- ----------------------------------------------------------
High Multiple Money High Equity-
Income Strategies Market Income Income Growth Overseas
Type I Units Fund Fund Portfolio Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------- ---------------------------------------------------------------------------------
<S> <C>
Units outstanding at December 31, 1994 1,125,497 1,797,950 4,123,571 804,420 5,088,608 4,641,036 5,128,595
Net premiums 44,999 65,632 730,434 85,480 485,381 247,726 200,203
Transfers (to) from the
general account of Life of Virginia:
Death benefits (296) (9,569) 8,759 (5,083) (26,937) (11,327) (22,477)
Surrenders (12,636) (95,101) (323,643) (42,301) (295,625) (179,497) (183,059)
Administrative expenses (1,249) (5,559) (8,471) (2,631) (16,777) (12,038) (12,905)
Transfers (to)/from the Guarantee Account 10,579 (3,036) 36,658 35,020 214,956 67,303 (35,433)
Interfund transfers 96,818 12,445 (2,144,243) 83,390 1,492,501 433,983 (566,178)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 138,215 (35,188) (1,700,506) 153,875 1,853,499 546,150 (619,849)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Units outstanding at December 31, 1995 1,263,712 1,762,762 2,423,065 958,295 6,942,107 5,187,186 4,508,746
Net premiums 15,693 26,028 8,114 (11,013) 209,607 133,676 102,472
Transfers (to) from the
general account of Life of Virginia:
Death benefits (411) (15,299) (26,867) - (39,084) (25,152) (17,537)
Surrenders (23,047) (88,160) (136,342) (64,247) (314,228) (232,300) (188,428)
Administrative expenses (1,163) (4,615) (4,247) (2,193) (16,695) (13,593) (11,116)
Transfers (to)/from the Guarantee Account 13,792 26,304 (46,251) (1,584) 129,570 60,757 48,453
Interfund transfers 89,651 (66,358) (1,024,299) (147,328) (63,823) (278,909) (373,467)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 94,515 (122,100) (1,229,892) (226,365) (94,653) (355,521) (439,623)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Units outstanding at December 31, 1996 1,358,227 1,640,662 1,193,173 731,930 6,847,454 4,831,665 4,069,123
Net premiums 44,846 26,455 (2,769) - 132,909 46,481 33,637
Transfers (to) from the
general account of Life of Virginia:
Death benefits (6,846) (7,589) (3,458) (2,224) (25,251) (14,556) (15,035)
Surrenders (87,976) (127,118) (72,594) (65,456) (376,813) (325,620) (189,716)
Administrative expenses (3,299) (4,137) (2,380) (1,503) (17,119) (12,146) (9,227)
Transfers (to)/from the Guarantee Account 54,141 17,555 (1,822) (257) 81,689 26,348 10,283
Interfund transfers 510,750 7,721 (1,110,150) (662,490) (53,531) (84,347) (500,805)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 511,616 (87,113) (1,193,173) (731,930) (258,116) (363,840) (670,863)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Units outstanding at December 31, 1997 1,869,843 1,553,549 - - 6,589,338 4,467,825 3,398,260
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Products
Fund II Fund III Advisers Management Trust
---------------------------- --------------------------- -------------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities Balanced Bond Growth
Type I Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Units outstanding at December 31, 1994 27,382,848 - - - 2,303,795 1,644,509 619,834
Net premiums 387,499 582,483 - - 19,872 (319,688) (14,507)
Transfers (to) from the
general account of Life of Virginia:
Death benefits (158,949) (1,220) - - (260) 29,267 4,454
Surrenders (1,411,202) (39,641) - - (16,268) 86,040 50,773
Administrative expenses (74,816) (3,373) - - (1,256) 8,665 2,990
Transfers (to)/from the Guarantee Account (514,204) 257,604 - - 22,814 19,812 13,112
Interfund transfers (3,617,814) 1,639,032 - - (302,761) (529,362) 79,845
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (5,389,486) 2,434,885 - - (277,859) (705,266) 136,667
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 21,993,362 2,434,885 - - 2,025,936 939,243 756,501
Net premiums 164,394 191,853 - - - 692 -
Transfers (to) from the
general account of Life of Virginia:
Death benefits (142,857) (14,740) - - (13,542) (625) (7,106)
Surrenders (1,189,857) (156,723) - - (19,441) (46,729) (82,100)
Administrative expenses (60,017) (7,215) - - (1,491) (2,782) (3,304)
Transfers (to)/from the Guarantee Account (9,338) 168,994 - - (6,661) (1,863) (1,563)
Interfund transfers (1,775,712) 480,447 - - (300,225) (348,334) (131,122)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (3,013,387) 662,616 - - (341,360) (399,641) (225,195)
- --------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 18,979,975 3,097,501 - - 1,684,576 539,602 531,306
Net premiums 152,156 110,477 41,831 30,072 (343) 141 348
Transfers (to) from the
general account of Life of Virginia:
Death benefits (89,850) (9,932) - - (4,573) (13,722) (3,133)
Surrenders (1,096,143) (211,184) (813) (5,989) (131,590) (27,704) (10,160)
Administrative expenses (52,182) (7,854) (183) (318) (3,702) (1,043) (1,125)
Transfers (to)/from the Guarantee Account 25,895 101,581 19,562 24,545 (9,256) (144) -
Interfund transfers (818,341) 215,612 233,932 293,107 (1,535,112) (497,130) (517,236)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (1,878,465) 198,700 294,329 341,417 (1,684,576) (539,602) (531,306)
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 17,101,510 3,296,201 294,329 341,417 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Federated Investors Insurance PBHG Insurance
Series Alger American Series Fund
--------------------------------- --------------------- --------------------
American High
Leaders Income Large Cap
Portfolio Bonds Utility Small Cap Growth Growth Growth II
Type I Units Fund II Fund II Fund II Portfolio Portfolio Portfolio Portfolio
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 - - - - - - -
Net premiums - 6,661 74,380 67,353 46,215 - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - - - - - -
Surrenders - (60) (682) (606) (423) - -
Administrative expenses - (15) (144) (147) (90) - -
Transfers (to)/from the Guarantee Account - 1,534 126,922 8,574 4,799 - -
Interfund transfers - 32,694 339,152 330,617 210,724 - -
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - 40,814 539,628 405,791 261,225 - -
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 - 40,814 539,628 405,791 261,225 - -
Net premiums 6,132 11,997 34,892 260,309 140,387 - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (1,489) (13,689) (10,458) - - -
Surrenders (234) (8,472) (35,752) (35,446) (31,027) - -
Administrative expenses (47) (273) (1,868) (2,659) (2,129) - -
Transfers (to)/from the Guarantee Account 1,547 23,451 31,866 150,713 122,150 - -
Interfund transfers 68,264 145,478 (9,854) 571,403 700,068 - -
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 75,662 170,692 5,595 933,862 929,449 - -
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 75,662 211,506 545,223 1,339,653 1,190,674 - -
Net premiums 35,396 49,848 7,670 694,521 66,490 1,019 17,111
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (469) (853) (42,319) (2,907) - -
Surrenders (1,961) (14,353) (38,555)(1,148,701) (80,029) (92) (49)
Administrative expenses (502) (718) (1,375) (36,907) (3,546) (32) (101)
Transfers (to)/from the Guarantee Account 24,074 50,940 9,699 749,029 2,066 2,432 1,623
Interfund transfers 228,950 159,370 (36,477) (230,206) (150,234) 52,670 58,027
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 285,957 244,618 (59,891) (14,583) (168,160) 55,997 76,611
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 361,619 456,124 485,332 1,325,070 1,022,514 55,997 76,611
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Janus Aspen Series
----------------------------------------------------------------------------------
Aggressive Flexible International Capital
Growth Growth Worldwide Balanced Income Growth Appreciation
Type I Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 1,272,142 3,183,404 2,247,224 - - - -
Net premiums 41,540 495,631 154,654 47,108 369 - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (8,424) (9,493) (2,123) - - -
Surrenders (37,096) (129,651) (38,101) (16,212) (8) - -
Administrative expenses (196) (9,290) (4,194) (1,376) (11) - -
Transfers (to)/from the Guarantee Account 90,712 109,046 25,268 9,645 2,769 - -
Interfund transfers 598,635 792,010 381,858 74,930 35,960 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 693,595 1,249,322 509,992 111,972 39,079 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 1,965,737 4,432,726 2,757,216 111,972 39,079 - -
Net premiums 1,581 1,661,740 880,684 49,343 4,021 34,924 -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (181,059) (51,566) (2,953) - - -
Surrenders (429) (2,320,448) (739,842) (15,986) (1,075) (1,689) -
Administrative expenses (22) (113,310) (48,025) (1,541) (194) (301) -
Transfers (to)/from the Guarantee Account 1,256 1,066,999 455,640 26,519 11,223 37,626 -
Interfund transfers 7,695 217,761 916,700 191,453 64,966 403,878 -
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 10,081 331,683 1,413,591 246,835 78,941 474,438 -
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 1,975,818 4,764,409 4,170,807 358,807 118,020 474,438 -
Net premiums 55,368 109,351 257,478 32,492 8,506 99,898 2,452
Transfers (to) from the
general account of Life of Virginia:
Death benefits (1,972) (66,404) (7,323) - - - -
Surrenders (87,614) (321,901) (229,991) (34,024) (17,779) (40,170) (1,327)
Administrative expenses (4,772) (11,195) (12,079) (1,430) (403) (2,200) (58)
Transfers (to)/from the Guarantee Account 29,407 64,006 148,276 55,427 78,205 64,693 344
Interfund transfers (148,659) (32,501) 611,104 2,070,280 94,329 408,010 47,846
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (158,242) (258,644) 767,465 2,122,745 162,858 530,231 49,257
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 1,817,576 4,505,765 4,938,272 2,481,552 280,878 1,004,669 49,257
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
- ------------------------------------------------------------------------------
(2) Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-----------------------------------------------------------------------------
S&P 500 Government Money Total International Real Estate
Index Securities Market Return Equity Securities
Type II Units Fund Fund Fund Fund Fund Fund
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 10,408 889 75,600 12,498 - -
Net premiums 287,747 94,804 3,703,628 189,643 26,411 23,750
Transfers (to) from the
general account of Life of Virginia:
Death benefits (3,020) - - (523) - -
Surrenders (1,937) (2,139) (17,008) (2,245) (10) (23)
Administrative expenses (18) (6) (18) (12) (1) -
Transfers (to)/from the Guarantee Account 12,961 3,954 18,590 12,174 1,577 324
Interfund transfers 93,868 56,254 (2,272,432) 41,049 19,067 10,426
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 389,601 152,867 1,432,760 240,086 47,044 34,477
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 400,009 153,756 1,508,360 252,584 47,044 34,477
Net premiums 647,438 194,563 10,719,294 345,169 204,787 214,051
Transfers (to) from the
general account of Life of Virginia:
Death benefits (1,638) (4,586) (41,657) (930) (313) -
Surrenders (17,183) (4,362) (189,358) (11,361) (4,056) (1,826)
Administrative expenses (290) (130) (792) (196) (80) (43)
Transfers (to)/from the Guarantee Account 78,749 3,809 (49,295) 38,959 26,698 19,914
Interfund transfers 155,417 (66,854) (8,053,173) 35,026 58,323 162,396
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 862,493 122,440 2,385,019 406,667 285,359 394,492
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 1,262,502 276,196 3,893,379 659,251 332,403 428,969
Net premiums 1,106,640 58,332 7,321,970 188,455 143,803 604,427
Transfers (to) from the
general account of Life of Virginia:
Death benefits (46,669) - (31,824) (4,811) (188) (1,092)
Surrenders (61,683) (10,472) (497,702) (40,510) (16,180) (24,343)
Loans - - - - - -
Administrative expenses (1,001) (115) (2,877) (508) (358) (445)
Transfers (to)/from the Guarantee Account 376,140 37,807 406,500 93,000 69,865 236,279
Interfund transfers 389,211 (361,748) (6,108,959) 33,268 85,065 234,452
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 1,762,638 (276,196) 1,087,108 268,894 282,007 1,049,278
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 3,025,140 - 4,980,487 928,145 614,410 1,478,247
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
---------------------------------------
Global
Income Value Equity Income
Type II Units Fund Fund Fund
<S> <C>
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 - - -
Net premiums - - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - -
Surrenders - - -
Administrative expenses - - -
Transfers (to)/from the Guarantee Account - - -
Interfund transfers - - -
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - - -
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 - - -
Net premiums - - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - -
Surrenders - - -
Administrative expenses - - -
Transfers (to)/from the Guarantee Account - - -
Interfund transfers - - -
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - - -
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 - - -
Net premiums 19,022 242,987 1,357
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (153) -
Surrenders (487) (5,196) (415)
Loans - - -
Administrative expenses (8) (28) (42)
Transfers (to)/from the Guarantee Account 19,733 146,978 5,210
Interfund transfers 41,030 346,028 897,139
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 79,290 730,616 903,249
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 79,290 730,616 903,249
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-------------------------------------------------------------------------
Capital High Multiple
Money Bond Appreciation Growth Income Strategies
Type II Units Fund Fund Fund Fund Fund Fund
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 50,143 11,655 68,052 12,276 77,818 26,302
Net premiums 54,745 214,451 355,504 325,547 366,507 185,233
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (219) (166) (229) - (1,207)
Surrenders (652) (5,734) (5,891) (3,339) (1,757) (2,408)
Administrative expenses (31) (49) (30) (68) (24) (36)
Transfers (to)/from the Guarantee Account (4,360) 13,097 21,250 28,166 20,898 17,850
Interfund transfers (41,682) 42,279 143,860 61,411 97,702 30,947
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 8,020 263,825 514,527 411,488 483,326 230,379
- ---------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 58,163 275,480 582,579 423,764 561,144 256,681
Net premiums 70 307,614 1,152,800 440,344 922,316 383,300
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (3,625) (23,778) (2,446) (14,183) (3,190)
Surrenders (1,020) (13,875) (34,224) (9,335) (24,799) (11,252)
Administrative expenses (6) (160) (668) (213) (520) (329)
Transfers (to)/from the Guarantee Account (156) 32,015 169,506 50,413 94,808 45,770
Interfund transfers (33,183) 109,648 275,079 189,075 176,989 77,022
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (34,295) 431,617 1,538,715 667,838 1,154,611 491,321
- ---------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 23,868 707,097 2,121,294 1,091,602 1,715,755 748,002
Net premiums 30 167,289 713,649 880,279 703,696 349,189
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (8,306) (10,958) (8,211) (16,328) (5,971)
Surrenders (202) (30,599) (79,872) (48,836) (109,043) (55,647)
Loans - - - - - -
Administrative expenses (5) (513) (1,748) (951) (1,245) (701)
Transfers (to)/from the Guarantee Account - 156,266 369,347 337,722 379,179 151,804
Interfund transfers (23,691) 2,783 64,736 210,754 262,960 13,450
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (23,868) 286,920 1,055,154 1,370,757 1,219,219 452,124
- ---------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 - 994,017 3,176,448 2,462,359 2,934,974 1,200,126
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Variable Insurance Product Funds
-------------------------------------------------------------
Money High Equity-
Market Income Income Growth Overseas
Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C>
- --------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 450,740 56,076 276,392 141,845 197,672
Net premiums 1,923,388 288,601 2,285,441 1,079,779 464,979
Transfers (to) from the
general account of Life of Virginia:
Death benefits (1,352) (1,092) (898) (663) (12,509)
Surrenders (10,590) (7,686) (33,936) (16,831) (10,082)
Administrative expenses (211) (53) (378) (170) (235)
Transfers (to)/from the Guarantee Account (48,336) 9,984 165,649 72,558 71,820
Interfund transfers (1,333,295) 149,732 427,705 248,497 117,726
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 529,604 439,486 2,843,583 1,383,170 631,699
- --------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 980,344 495,562 3,119,975 1,525,015 829,371
Net premiums 138 - 3,158,538 1,222,269 521,600
Transfers (to) from the
general account of Life of Virginia:
Death benefits (5,285) (1,518) (43,181) (21,919) (11,961)
Surrenders (18,734) (18,658) (134,965) (50,499) (31,329)
Administrative expenses (323) (228) (2,658) (1,349) (733)
Transfers (to)/from the Guarantee Account (31) (3,382) 402,673 186,018 127,385
Interfund transfers (659,500) (168,501) 541,485 167,039 123,110
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (683,735) (192,287) 3,921,892 1,501,559 728,072
- --------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 296,609 303,275 7,041,867 3,026,574 1,557,443
Net premiums 931 306 2,260,371 504,224 230,215
Transfers (to) from the
general account of Life of Virginia:
Death benefits (9,387) (206) (70,511) (17,520) (11,283)
Surrenders (6,379) (17,828) (310,722) (121,652) (59,094)
Loans - - - - -
Administrative expenses (179) (172) (5,614) (2,437) (1,374)
Transfers (to)/from the Guarantee Account - (595) 959,930 232,691 169,290
Interfund transfers (281,595) (284,780) 198,852 (7,282) (122,609)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (296,609) (303,275) 3,032,306 588,024 205,145
- --------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 - - 10,074,173 3,614,598 1,762,588
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Products Fund II Products Fund III Advisers Management Trust
-------------------- ------------------------- --------------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities Balanced Bond Growth
Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 450,885 - - - 22,065 83,962 13,906
Net premiums 902,148 1,499,030 - - 199,692 240,461 167,067
Transfers (to) from the
general account of Life of Virginia:
Death benefits (13,552) (200) - - - - (1,865)
Surrenders (26,495) (14,316) - - (2,564) (2,394) (1,381)
Administrative expenses (510) (43) - - (46) (47) (47)
Transfers (to)/from the Guarantee Account 88,564 128,048 - - 6,725 11,012 19,747
Interfund transfers 68,627 395,429 - - (34,434) 65,282 12,482
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 1,018,782 2,007,948 - - 169,373 314,314 196,003
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 1,469,667 2,007,948 - - 191,438 398,276 209,909
Net premiums 640,444 2,595,994 - - - (252) -
Transfers (to) from the
general account of Life of Virginia:
Death benefits (19,704) (23,500) - - (1,089) (8,981) (1,419)
Surrenders (67,829) (72,281) - - (2,814) (3,959) (6,733)
Administrative expenses (1,135) (2,159) - - (103) (315) (174)
Transfers (to)/from the Guarantee Account 117,636 428,333 - - - 120 -
Interfund transfers 109,440 559,664 - - (44,480) (127,260) (46,447)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 778,852 3,486,051 - - (48,486) (140,647) (54,773)
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 2,248,519 5,493,999 - - 142,952 257,629 155,136
Net premiums 317,380 2,003,590 452,458 553,737 25 - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits (14,483) (32,105) (176) (968) (2,194) (1,620) -
Surrenders (101,528) (196,054) (9,166) (9,539) (10,921) (12,250) (3,242)
Loans - - - - - - -
Administrative expenses (1,272) (4,990) (79) (66) (108) (204) (81)
Transfers (to)/from the Guarantee Account 132,093 1,027,864 208,287 207,607 (601) (6,721) -
Interfund transfers 98,224 303,373 324,762 298,769 (129,153) (236,834) (151,813)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 430,414 3,101,678 976,086 1,049,540 (142,952) (257,629) (155,136)
- -----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 2,678,933 8,595,677 976,086 1,049,540 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Federated Investors Insurance
Series
-----------------------------------
American High
Leaders Income
Portfolio Bonds Utility
Type II Units Fund II Fund II Fund II
<S> <C>
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 - - -
Net premiums - 112,682 377,786
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - -
Surrenders - (398) (2,336)
Administrative expenses - - (32)
Transfers (to)/from the Guarantee Account - 4,581 19,944
Interfund transfers - 6,287 68,114
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - 123,152 463,476
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 - 123,152 463,476
Net premiums 208,871 343,618 543,077
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (1,859) (3,067)
Surrenders (2,478) (25,640) (28,920)
Administrative expenses (2) (143) (566)
Transfers (to)/from the Guarantee Account 12,459 29,882 81,126
Interfund transfers 46,982 340,979 75,307
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 265,832 686,837 666,957
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 265,832 809,989 1,130,433
Net premiums 998,765 599,938 229,931
Transfers (to) from the
general account of Life of Virginia:
Death benefits (7,020) (7,987) (3,557)
Surrenders (30,390) (46,149) (62,619)
Loans - - -
Administrative expenses (399) (579) (981)
Transfers (to)/from the Guarantee Account 355,249 292,000 95,492
Interfund transfers 474,654 239,675 (62,998)
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 1,790,859 1,076,898 195,268
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 2,056,691 1,886,887 1,325,701
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
<TABLE>
<CAPTION>
PBHG Insurance
Alger American Series Fund Janus Aspen Series
------------------------------------------- ----------------------
Large Cap Aggressive
Small Cap Growth Growth Growth II Growth Growth
Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 - - - - 169,799 159,068
Net premiums 291,288 228,664 - - 781,202 1,408,112
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - - - - (2,390)
Surrenders (1,324) (74) - - (487) (24,299)
Administrative expenses (2) (3) - - (77) (303)
Transfers (to)/from the Guarantee Account 23,122 (9,752) - - 84,482 173,800
Interfund transfers 88,174 93,176 216,085 161,652
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 401,258 312,011 - - 1,081,205 1,716,572
- --------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 401,258 312,011 - - 1,251,004 1,875,640
Net premiums 2,385,857 1,979,744 - - 1,109,539 1,939,884
Transfers (to) from the
general account of Life of Virginia:
Death benefits (6,505) (2,249) - - (5,075) (28,847)
Surrenders (49,583) (21,913) - - (20,314) (111,109)
Administrative expenses (658) (517) - - (141) (2,321)
Transfers (to)/from the Guarantee Account 364,980 234,626 - - 99,771 288,072
Interfund transfers 472,803 460,475 - - 227,267 921,603
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 3,166,894 2,650,166 - - 1,411,047 3,007,282
- --------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 3,568,152 2,962,177 - - 2,662,051 4,882,922
Net premiums 1,139,813 1,030,593 108,061 306,146 608,750 1,633,216
Transfers (to) from the
general account of Life of Virginia:
Death benefits (25,827) (23,277) (63) - (22,328) (36,365)
Surrenders (95,915) (104,485) (998) (4,853) (80,725) (180,611)
Loans - - - - - -
Administrative expenses (3,710) (2,759) (28) (35) (1,935) (4,325)
Transfers (to)/from the Guarantee Account 865,037 527,894 51,297 100,624 253,985 867,094
Interfund transfers 197,908 (9,957) 188,564 174,128 22,869 108,967
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 2,077,306 1,418,009 346,833 576,010 780,616 2,387,976
- --------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 5,645,458 4,380,186 346,833 576,010 3,442,667 7,270,898
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Janus Aspen Series
------------------------------------------------------------------
Flexible International Capital
Worldwide Balanced Income Growth Appreciation
Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 117,700 - - - -
Net premiums 873,533 55,928 30,062 - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits (786) (74) - - -
Surrenders (10,106) (831) (36) - -
Administrative expenses (144) (10) - - -
Transfers (to)/from the Guarantee Account 88,410 6,328 1,290 - -
Interfund transfers 158,463 12,197 4,956 -
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 1,109,370 73,538 36,272 - -
- ---------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 1,227,070 73,538 36,272 - -
Net premiums 2,853,570 547,525 240,317 388,753 -
Transfers (to) from the
general account of Life of Virginia:
Death benefits (26,212) (1,525) - - -
Surrenders (94,535) (10,808) (1,714) (2,959) -
Administrative expenses (2,275) (267) (63) (11) -
Transfers (to)/from the Guarantee Account 475,568 75,940 21,420 47,466 -
Interfund transfers 713,001 308,093 28,937 249,356 -
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 3,919,117 918,958 288,897 682,605 -
- ---------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 5,146,187 992,496 325,169 682,605 -
Net premiums 3,372,062 1,117,148 284,347 1,872,823 55,458
Transfers (to) from the
general account of Life of Virginia:
Death benefits (35,456) (7,246) (4,723) (15,267) -
Surrenders (228,974) (78,945) (17,933) (60,571) (1,630)
Loans - - - - -
Administrative expenses (4,300) (1,005) (342) (863) (7)
Transfers (to)/from the Guarantee Account 1,289,775 423,506 175,029 576,462 35,560
Interfund transfers 572,391 358,481 107,542 446,411 74,169
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 4,965,498 1,811,939 543,920 2,818,995 163,550
- ---------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 10,111,685 2,804,435 869,089 3,501,600 163,550
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
Federal Income Taxes
The Account is not taxed separately because the operations of the
Account are part of the total operations of Life of Virginia. Life of
Virginia is taxed as a life insurance company under the Internal
Revenue Code (the Code). Life of Virginia is included in the General
Electric Capital Assurance Company consolidated federal income tax
return. The Account will not be taxed as a regulated investment company
under subchapter M of the Code. Under existing federal income tax law,
no taxes are payable on the investment income or on the capital gains
of the Account.
Use of Estimates
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and
assumptions that affect amounts and disclosures reported therein.
Actual results could differ from those estimates.
(3) Related Party Transactions
Net premiums transferred from Life of Virginia to the Account represent
gross premiums recorded by Life of Virginia on its flexible premium
variable deferred annuity products, less deductions retained as
compensation for premium taxes. For policies issued on or after May 1,
1993, the deduction for premium taxes will be deferred until surrender.
For Type I policies, during the first ten years following a premium
payment, a charge of .20% of the premium payment is deducted monthly
from the policy Account values to reimburse Life of Virginia for
certain distribution expenses. In addition, a charge is imposed on full
and certain partial surrenders that occur within six years of any
premium payment (seven years for certain Type II policies) to cover
certain expenses relating to the sale of a policy. Subject to certain
limitations, the charge equals 6% (or less) of the premium surrendered,
depending on the time between premium payment and surrender.
Life of Virginia will deduct a charge of $30 per year and $25 plus .15%
per year from the policy account values for certain administrative
expenses incurred for policy Type I and Type II, respectively. For Type
II policies, the $25 charge may be waived if the account value is
greater than $75,000. In addition, Life of Virginia charges the Account
1.15% and 1.25% on policy Type I and Type II, respectively, for the
mortality and expense risk
<PAGE>
(3) Continued
that Life of Virginia assumes. Administrative expenses as well as
mortality and risk charges are deducted daily and reflect the effective
annual rates.
GE Investments Funds, Inc. (the Fund) is an open-end diversified
management investment company.
Capital Brokerage Corporation, an affiliate of Life of Virginia, is a
Washington Corporation registered with the Commission under the
Securities Exchange Act of 1934 as a broker-dealer and is a member of
the National Association of Securities Dealers, Inc. Capital Brokerage
Corporation also serves as principal underwriter for variable life
insurance policies issued by Life of Virginia.
GE Investment Management Incorporated (Investment Advisor), a
wholly-owned subsidiary of GE, currently serves as investment advisor
to GE Investments Funds, Inc. As compensation for its services, the
Investment Advisor is paid an investment advisory fee by the Fund based
on the average daily net assets at an effective annual rate of .35% for
the S&P 500 Index Fund, .10% for the Government Securities Fund, .50%
for the Money Market and Total Return Funds, 1.00% for the
International Equity Fund and .85% for the Real Estate Securities Fund.
Prior to May 1, 1997, Aon Advisors, Inc. served as investment advisor
to the Fund and was subject to the same compensation arrangement as GE
Investment Management Incorporated.
Certain officers and directors of Life of Virginia are also officers
and directors of Capital Brokerage Corporation.
===============================================================================
<PAGE>
THE LIFE INSURANCE COMPANY OF
VIRGINIA AND SUBSIDIARY
Consolidated Financial Statements
December 31, 1997, 1996, and 1995
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
The Board of Directors
The Life Insurance Company of Virginia:
We have audited the accompanying consolidated balance sheets of The Life
Insurance Company of Virginia (an indirect wholly-owned subsidiary of General
Electric Capital Corporation) and subsidiary as of December 31, 1997 and 1996,
and the related consolidated statements of income, stockholders' equity, and
cash flows for the year ended December 31, 1997 and the nine months ended
December 31, 1996. We have also audited the preacquisition statements of income,
stockholders' equity and cash flows for the three months ended March 31, 1996.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. The accompanying consolidated
financial statements of The Life Insurance Company of Virginia for the year
ended December 31, 1995, were audited by other auditors whose report, dated
February 8, 1996 on those consolidated financial statements included an
explanatory paragraph that described the change in the Company's method of
accounting for certain investments.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Life Insurance
Company of Virginia and subsidiary as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for the year ended December 31,
1997, the nine month period ended December 31, 1996 and the preacquisition three
month period ended March 31, 1996, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial statements, effective April
1, 1996, General Electric Capital Corporation acquired all of the outstanding
stock of The Life Insurance Company of Virginia in a business combination
accounted for as a purchase. As a result of the acquisition, the consolidated
financial information for the periods after the acquisition is presented on a
different cost basis than that for the periods before the acquisition and,
therefore, is not comparable.
KPMG Peat Marwick LLP
Richmond, Virginia
January 6, 1998
<PAGE>
REPORT OF INDEPENDENT AUDITIORS
Board of Directors
The Life Insurance Company of Virginia
We have audited the accompanying consolidated statements of income,
stockholder's equity, and cash flows of The Life Insurance Company of Virginia
and subsidiaries for the year ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of The Life Insurance Company of Virginia and subsidiaries for the year ended
December 31, 1995, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Richmond, Virginia
February 8, 1996
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1997 and 1996
(in millions)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Assets 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments:
Fixed maturities:
Available for sale - at fair value (amortized cost:
December 31, 1997 - $5,468.1; 1996 - $5,102.2) $ 5,622.6 5,142.7
Equity securities - at fair value
Common stocks (cost: December 31, 1997 - $43.1; 1996 - $31.6) 54.1 34.7
Preferred stocks (cost: December 31, 1997 - $87.6; 1996 - $123.5) 97.6 130.8
Mortgage loans on real estate (net of reserve for losses:
December 31, 1997 - $17.2; 1996 - $20.8) 496.2 585.4
Real estate (net) 11.8 19.4
Policy loans 188.4 179.5
Short-term investments - 42.4
- ------------------------------------------------------------------------------------------------------------------
Total investments 6,470.7 6,134.9
- ------------------------------------------------------------------------------------------------------------------
Cash 0.2 6.4
Receivables:
Premiums and other 6.6 7.9
Reinsurance recoverable 8.7 13.1
Accrued investment income 123.1 116.6
- ------------------------------------------------------------------------------------------------------------------
Total receivables 138.4 137.6
Deferred policy acquisition costs 165.0 70.3
Goodwill (net of accumulated amortization: December 31, 1997 - $11.3;
1996 - $5.0) 117.1 125.4
Present value of future profits (net) 332.6 419.2
Property and equipment at cost (net) 3.2 1.7
Deferred income taxes 57.4 72.9
Other assets 15.4 12.3
Assets held in separate accounts 4,066.4 2,762.7
- ------------------------------------------------------------------------------------------------------------------
Total assets $ 11,366.4 9,743.4
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(continued)
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Balance Sheets, Continued
December 31, 1997 and 1996
(in millions, except share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Policy liabilities:
Future policy benefits $ 520.6 518.3
Policy and contract claims 83.0 69.1
Unearned and advance premiums 0.1 0.1
Other policyholder funds 5,369.2 5,094.4
- ------------------------------------------------------------------------------------------------------------------
Total policy liabilities 5,972.9 5,681.9
General liabilities:
Payable to affiliate, net 9.4 8.8
Commissions and general expenses 51.1 46.8
Current income taxes 45.8 45.4
Other liabilities 71.5 192.2
Liabilities related to separate accounts 4,066.4 2,762.7
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 10,217.1 8,737.8
- ------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Liabilities
- ------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock - $1,000 par value:
Authorized, issued and outstanding: 4,000 shares 4.0 4.0
Additional paid-in capital 925.9 928.1
Net unrealized investment gains 74.3 19.4
Retained earnings 145.1 54.1
- ------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,149.3 1,005.6
- ------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 11,366.4 9,743.4
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Statements of Income
For the year ended December 31, 1997, the periods from April 1, 1996 to December
31, 1996 and from January 1, 1996 to March 31, 1996, and the year ended December
31, 1995 (in millions)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Preacquisition
--------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
1997 1996 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Revenue
Premiums and policy fees $ 273.2 154.7 92.4 179.3
Separate account fees 44.4 23.1 5.9 17.7
Net investment income (note 2) 472.5 334.4 112.0 402.1
Realized investment gains (losses) (note 2) 13.3 6.0 9.0 (76.5)
Other income 2.5 0.6 1.0 2.8
- ----------------------------------------------------------------------------------------------------------------------
Total revenue earned 805.9 518.8 220.3 525.4
- ----------------------------------------------------------------------------------------------------------------------
Benefits and Expenses
Benefits to policyholders 509.8 326.4 166.0 372.9
Commissions and general expenses 82.5 53.2 28.8 43.7
Amortization of intangibles 59.6 50.1 0.6 3.2
Amortization of deferred policy acquisition
costs 10.8 3.2 6.0 39.3
- ----------------------------------------------------------------------------------------------------------------------
Total benefits and expenses 662.7 432.9 201.4 459.1
Income Before Income Tax 143.2 85.9 18.9 66.3
Provision for income tax (note 3)
Current expense (benefit) 64.8 39.7 (3.8) 37.9
Deferred expense (benefit) (12.6) (7.9) 10.8 (10.8)
- ----------------------------------------------------------------------------------------------------------------------
52.2 31.8 7.0 27.1
- ----------------------------------------------------------------------------------------------------------------------
Net income $ 91.0 54.1 11.9 39.2
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For the year ended December 31, 1997, the periods from April 1, 1996 to December
31, 1996 and from January 1, 1996 to March 31, 1996, and the year ended December
31, 1995 (in millions)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Preacquisition
---------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
1997 1996 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Common stock
$1,000 par value common stock, authorized,
issued and outstanding 4,000 in 1997,
1996 and 1995)
- ------------------------------------------------------------------------------------------------------------------
Balance at beginning and end of period $ 4.0 4.0 4.0 4.0
- ------------------------------------------------------------------------------------------------------------------
Additional Paid-in Capital
Balance at beginning of period 928.1 818.4 749.1 704.1
Adjustment to reflect purchase method (note 1) (2.2) 109.7 - -
Capital contribution from parent (notes 4, 7) - - 69.3 45.0
- ------------------------------------------------------------------------------------------------------------------
Balance at end of period 925.9 928.1 818.4 749.1
- ------------------------------------------------------------------------------------------------------------------
Net Unrealized Investment Gains (Losses)
Balance at beginning of period 19.4 11.9 103.1 (97.5)
Adjustment to reflect purchase method
(note 1) - (11.9) - -
Net unrealized investment gains (losses) 54.9 19.4 (91.2) 200.6
- ------------------------------------------------------------------------------------------------------------------
Balance at end of period 74.3 19.4 11.9 103.1
- ------------------------------------------------------------------------------------------------------------------
Net Foreign Exchange Gains (Losses)
Balance at beginning of period - - - (3.0)
Net foreign exchange gains (losses) - - - 3.0
- ------------------------------------------------------------------------------------------------------------------
Balance at end of period - - - -
- ------------------------------------------------------------------------------------------------------------------
Retained Earnings (Deficit)
Balance at beginning of period 54.1 (22.4) (34.3) 159.8
Adjustment to reflect purchase method
(note 1) - 22.4 - -
Net income 91.0 54.1 11.9 39.2
Dividends to stockholder - - - (40.0)
Stock dividend to affiliate (note 7) - - - (193.3)
- ------------------------------------------------------------------------------------------------------------------
Balance at end of period 145.1 54.1 (22.4) (34.3)
- ------------------------------------------------------------------------------------------------------------------
Stockholders' equity at end of period $ 1,149.3 1,005.6 811.9 821.9
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the year ended December 31, 1997, the periods from April 1, 1996 to December
31, 1996 and from January 1, 1996 to March 31, 1996, and the year ended December
31, 1995 (in millions)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Preacquisition
----------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
1997 1996 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Cash flows from operating activities:
Net income $ 91.0 54.1 11.9 39.2
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Change in policy liabilities 239.0 53.5 (32.8) 114.2
Change in accrued investment income (6.5) (37.6) 4.1 (2.1)
Deferred policy acquisition costs (112.3) (74.9) (22.2) (76.1)
Amortization of deferred policy acquisition costs 10.8 3.2 6.0 39.3
Amortization of intangibles 59.6 50.1 0.6 3.2
Other amortization and depreciation 8.0 7.3 1.4 (1.2)
Premiums and operating receivables, commissions and general
expenses, income taxes and other (128.5) 77.8 22.9 (65.7)
Realized investment (gains) losses (13.3) (6.0) (9.0) 76.5
- ------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) operating activities 147.8 127.5 (17.1) 127.3
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Sale (purchase) of short-term investments - net 42.4 49.4 (10.1) (18.8)
Sale or maturity of investments
Fixed maturities - held to maturity:
Maturities - - - 3.9
Calls and prepayments - - - 60.9
Fixed maturities - available for sale
Maturities - 201.5 46.1 35.0
Calls and prepayments - 353.5 101.0 58.6
Sales 739.1 452.0 115.8 1,700.3
All other investments 145.1 177.3 44.9 124.6
Purchase of investments:
Fixed maturities - available for sale (1,104.1) (1,279.5) (144.1) (1,950.7)
All other investments (30.8) (39.5) (65.5) (183.5)
Purchase of property and equipment (2.4) - (0.2) (0.8)
- ------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities (210.7) (85.3) 87.9 (170.5)
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Capital contribution - - 2.8 -
Cash dividends to stockholder - - (40.0) (6.0)
Change in cash overdrafts 4.7 (12.7) 28.8 -
Interest sensitive life, annuity and investment contract deposits 1,894.2 1,275.4 301.9 1,059.5
Interest sensitive life, annuity and investment contract withdrawals (1,842.2) (1,305.6) (358.8) (1,031.7)
- ------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) financing activities 56.7 (42.9) (65.3) 21.8
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash (6.2) (0.7) 5.5 (21.4)
Cash at beginning of period 6.4 7.1 1.6 23.0
- ------------------------------------------------------------------------------------------------------------------------------
Cash at end of period $ 0.2 6.4 7.1 1.6
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA & SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
===============================================================================
(1) Summary of Significant Accounting Principles and Practices
Basis of Presentation
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles (GAAP) and
include the accounts of The Life Insurance Company of Virginia ("Life
of Virginia" or "Company") and its subsidiary, Assigned Settlements
Inc. All material intercompany accounts and transactions have been
eliminated.
Prior to April 1, 1996, Combined Insurance Company of America ("CICA")
owned 100% or 4,000 shares of Life of Virginia. CICA is a wholly-owned
subsidiary of AON Corporation (AON). On April 1, 1996, CICA sold 100%
of the issued and outstanding shares of Life of Virginia to General
Electric Capital Corporation ("GE Capital"). Immediately thereafter,
80% was contributed to General Electric Capital Assurance Company (the
"Parent"). On December 31, 1996, the remaining 20% was contributed to
General Electric Financial Assurance Holdings, Inc. ("GEFAH").
Life of Virginia primarily sells variable annuities and universal life
insurance to customers throughout most of the United States. Life of
Virginia distributes variable annuities primarily through stockbrokers
and universal life insurance primarily through career agents and
independent brokers. Life of Virginia is also engaged in the sale of
traditional individual and group life products and guaranteed
investment contracts. Approximately 23%, 34% and 43% of premium and
annuity consideration collected, in 1997, 1996, and 1995, respectively,
came from customers residing in the South Atlantic region of the United
States.
Although the Company markets its products through numerous
distributors, approximately 22%, 21% and 14% of the Company's sales in
1997, 1996 and 1995, respectively, have been through two specific
national stockbrokers. Loss of all or a substantial portion of the
business provided by these stockbrokers could have a material adverse
effect on the business and operations of the Company. The Company does
not believe, however, that the loss of such business would have a
long-term adverse effect because of the Company's competitive position
in the marketplace and the availability of business from other
distributors.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA & SUBSIDIARY
Notes to Consolidated Financial Statements
===============================================================================
(1) Continued
Estimates
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and
assumptions that could affect amounts and disclosures reported therein.
Actual results could differ from those estimates. As further discussed
in the accompanying notes to the consolidated financial statements,
significant estimates and assumptions affect deferred acquisition
costs, PVFP, future life policy benefits, provisions for real
estate-related losses and related reserves, other-than-temporary
declines in values for fixed maturities, the valuation allowance for
deferred income taxes and the calculation of fair value disclosures for
certain financial instruments.
Certain 1996 and 1995 amounts have been reclassified to conform to 1997
presentation.
Purchase Accounting Method
Upon acquisition of Life of Virginia by GE Capital, Life of Virginia
restated its financial statements in accordance with the purchase
method of accounting. The net purchase price for Life of Virginia and
its subsidiary of $929.9 million was allocated according to the fair
values of the acquired assets and liabilities, including the estimated
present value of future profits. These allocated values were dependent
upon policies in force and market conditions at the time of closing.
In addition to revaluing all material tangible assets and liabilities
to their respective estimated fair values as of the closing date of the
sale, Life of Virginia also recorded in its consolidated financial
statements the excess of cost over fair value of net assets acquired
(goodwill) as well as the present value of future profits to be derived
from the purchased business. These amounts were determined in
accordance with the purchase method of accounting. This new basis of
accounting resulted in an increase in stockholders' equity of $118
million (net of purchase accounting adjustments of $2.2 million in
1997), reflecting the application of the purchase method of accounting.
The Company's consolidated financial statements subsequent to April 1,
1996 reflect this new basis of accounting.
<PAGE>
(1) Continued
All amounts for periods ended before April 1, 1996 are labeled
"Preacquisition" and are based on the preacquisition historical costs
in accordance with generally accepted accounting principles. The
periods ending after such date are based on fair values at April 1,
1996 (which becomes the new cost basis) and subsequent costs in
accordance with the purchase method of accounting.
Present Value of Future Profits
As of April 1, 1996, Life of Virginia established an intangible asset
which represents the present value of future profits ("PVFP"). PVFP
reflects the estimated fair value of the Company's life insurance
business in-force and represents the portion of the cost to acquire the
Company that is allocated to the value of the right to receive future
cash flows from insurance contracts existing at the date of
acquisition. Such value is the present value of the actuarially
determined projected cash flows for the acquired policies discounted at
an appropriate rate.
PVFP is amortized over the estimated contract life of the business
acquired in relation to the present value of estimated gross profits.
The estimated gross profit streams are periodically reevaluated and the
unamortized balance of PVFP adjusted to the amount that would have
existed had the actual experience and revised estimates been known and
applied since inception. The amortization period is the remaining life
of the policies, which range from 10 to 30 years from the date of
original policy issue. Based on current assumptions, net amortization
of the PVFP asset, expressed as a percentage, is projected to be 12.4%,
11.6%, 10.8%, 9.5% and 8.1% for the years ended December 31, 1998
through 2002, respectively. Actual amortization incurred during these
years may vary as assumptions are modified to incorporate actual
results.
Prior to April 1, 1996, Life of Virginia's PVFP was calculated in a
similar manner as the PVFP discussed above and related to policies
in-force on April 30, 1986, the date the Company was acquired by Aon.
Under purchase accounting this PVFP was removed.
<PAGE>
(1) Continued
The projected ending balance of PVFP will be further adjusted to
reflect the impact of unrealized gains or losses on fixed maturities
classified as available for sale in the investment portfolios. Such
adjustments are not recorded in the Company's net income but rather as
a credit or charge to stockholders' equity, net of applicable income
tax. The components of PVFP are as follows:
<TABLE>
<CAPTION>
Preacquisition
------------------------------
Nine months Three months
Year ended ended ended Year ended,
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
PVFP - beginning of period $ 419.2 - 32.6 48.6
Adjustment related to the purchase
method of accounting - 484.0 - -
Interest accreted at 6.75% for 1997
and 6.25% for 1996 28.4 22.4 0.5 2.1
Gross amortization, excluding interest (81.6) (67.5) (1.1) (5.3)
Dividend of Globe Life Insurance
Company (note 7) - - - (12.8)
Effect of net unrealized
investment (gains) losses (33.4) (19.7) - -
- ---------------------------------------------------------------------------------------------------------------
PVFP - end of period $ 332.6 419.2 32.0 32.6
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Goodwill
Under the purchase method of accounting, Goodwill is the excess of the
purchase price over the fair value of assets and liabilities acquired
and PVFP. The Company has elected to amortize goodwill on the straight
line basis over a 20 year period.
The Company reviews goodwill to determine if events or changes in
circumstances may have affected the recoverability of the outstanding
goodwill as of each reporting period. In the event that the Company
determined that goodwill was not recoverable it would amortize such
amounts as additional goodwill expense in the accompanying consolidated
financial statements. As of December 31, 1997, the Company believes
that no such adjustment is necessary.
<PAGE>
(1) Continued
Deferred Tax Assets and Liabilities
Pursuant to the acquisition on April 1, 1996, GE Capital, and Aon
Corporation, the Company's previous ultimate parent, agreed to file an
election to treat the acquisition of Life of Virginia as an asset
acquisition under the provisions of Internal Revenue Code Section
338(h)(10). As a result of that election, the tax basis of the
Company's assets as of the date of acquisition were revalued based upon
fair market values. The principal effect of the election was to
establish a tax basis of intangibles for the value of the business
acquired that is amortizable for tax purposes over 10-15 years.
Deferred income taxes have been provided for the effects of temporary
differences between financial reporting and tax bases of assets and
liabilities and have been measured using the enacted marginal tax rates
and laws that are currently in effect.
Recognition of Premium Revenue and Related Expenses
For universal life-type and investment products, generally there is no
requirement for the payment of a premium other than to maintain account
values at a level sufficient to pay mortality and expense charges.
Consequently, premiums for universal life-type policies and investment
products are not reported as revenue, but as deposits. Policy fee
revenue for universal life-type policies and investment products
consists of charges for the cost of insurance, policy administration,
and surrenders assessed during the period. Expenses include interest
credited to policy account balances and benefit claims incurred in
excess of policy account balances.
In general, for accident and health products, premiums collected are
reported as earned proportionately over the period covered by the
policies. For all other life products, premiums are recognized as
revenue when due. Benefits and related expenses associated with the
premium revenues are charged to expense proportionately over the lives
of the policies through a provision for future policy benefit
liabilities and through deferral and amortization of deferred policy
acquisition costs.
<PAGE>
(1) Continued
Reinsurance
Reinsurance premiums, commissions, and expense reimbursements on
reinsured business are accounted for on a basis consistent with those
used in accounting for the original policies issued and the terms of
the reinsurance contracts. Premiums and benefits ceded to other
companies have been reported as a reduction of premium revenue and
benefits. Expense reimbursements received in connection with
reinsurance ceded have been accounted for as a reduction of the related
policy acquisition costs or, to the extent such reimbursements exceed
the related acquisition costs, as other revenue. All reinsurance
receivables and prepaid reinsurance premium amounts are reported as
assets.
Investments
Fixed maturities are classified as available for sale and carried at
fair value. The amortized cost of fixed maturities is adjusted for
amortization of premiums and accretion of discounts to maturity that
are included in net investment income. Included in fixed maturities are
investments in mortgage-backed securities. Investment income on
mortgage-backed securities is initially based upon yield, cash flow and
prepayment assumptions at the date of purchase. Subsequent revisions in
those assumptions are recorded using the retrospective method, whereby
the amortized cost of the securities is adjusted to the amount that
would have existed had the revised assumptions been in place at the
date of purchase. The adjustments to amortized cost are recorded as a
charge or credit to investment income.
Short-term investments are carried at amortized cost which approximates
fair value. Equity securities are valued at fair value. Mortgage loans
are carried at their unpaid principal balance, net of allowances for
estimated uncollectible amounts. Real estate is carried generally at
cost less accumulated depreciation. Policy loans are carried at unpaid
principal balance. Other long-term investments are carried generally at
cost.
Changes in the market values of investments available-for-sale, net of
the effect on deferred policy acquisition costs, present value of
future profits and deferred federal income taxes are reflected as
unrealized investment gains or losses in a separate component of
stockholders' interest and accordingly, have no effect on net income.
<PAGE>
(1) Continued
Investments that have declines in fair value below cost, that are
judged to be other than temporary, are written down to estimated fair
value and reported as realized investment losses. Additionally,
reserves for mortgage loans and certain other long-term investments are
established based on an evaluation of the respective investment
portfolio, past credit loss experience, and current economic
conditions. Writedowns and the change in reserves are included in
realized investment gains and losses in the consolidated statements of
income. In general, the Company ceases to accrue investment income when
interest or dividend payments are in arrears.
Impaired loans are loans for which it is probable that the Company will
be unable to collect all amounts due according to terms of the original
contractual terms of the loan agreement. This definition includes,
among other things, leases, or larger groups of small-homogenous loans,
and therefore applies principally to the Company's commercial loans.
Life of Virginia measures impaired loans at the present value of the
loans discounted cash flow using the effective interest rate of the
original loan as the discount rate.
Deferred Policy Acquisition Costs
Costs of acquiring new business, principally commissions, underwriting
and sales expenses that vary with and are primarily related to the
production of new business, are deferred. For non-universal life-type
products, amortization of deferred policy acquisition costs is related
to and based on the present value of expected premium revenues on the
policies. Periodically amortization is adjusted to reflect current
withdrawal experience. Expected premium revenues are estimated by using
the same assumptions used in estimating future policy benefits.
Deferred policy acquisition costs related to universal life-type
policies and investment products are amortized in relation to the
present value of expected gross profits on the policies. Such
amortization is adjusted periodically to reflect differences in actual
and assumed gross profits.
<PAGE>
(1) Continued
To the extent that unrealized gains or losses on available for sale
securities would result in an adjustment to deferred policy acquisition
costs amortization, had those gains or losses actually been realized,
the related deferred policy acquisition cost adjustments are recorded
along with the unrealized gains or losses included in stockholders'
equity with no effect on net income.
The components of deferred policy acquisition costs are as follows:
<TABLE>
<CAPTION>
Preacquisition
-------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Deferred policy acquisition costs - $ 70.3 - 363.9 388.1
beginning of period
Commissions and expenses deferred 112.3 74.9 22.2 76.1
Amortization (10.8) (3.2) (6.0) (39.3)
Dividend of Globe Life Insurance
Company (note 7) - - - (22.8)
Effect of net unrealized investment
(gains) losses (6.8) (1.4) 17.9 (38.2)
- ------------------------------------------------------------------------------------------------------------
Deferred policy acquisition costs - end of period $ 165.0 70.3 398.0 363.9
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Property and Equipment
Property and equipment are generally depreciated using the
straight-line method over their estimated useful lives. As a result of
purchase accounting, fully depreciated property and equipment were
removed.
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate fair values
for financial instruments. The carrying amounts in the consolidated
statements of financial position for cash and short-term investments
approximate their fair values. Fair values for fixed
<PAGE>
(1) Continued
maturity securities and equity securities are based on quoted market
prices or, if they are not actively traded, on estimated values
obtained from independent pricing services or in the case of private
placements, are estimated by discounted expected future cash flows
using a current market rate applicable to the yield credit quality,
call features and maturity of the investments, as applicable. The fair
values for mortgage loans and policy loans are estimated using
discounted cash flow analyses, using interest rates currently being
offered for similar loans to borrowers with similar credit ratings.
Fair values of derivatives are based on quoted prices for
exchange-traded instruments or the cost to terminate or offset with
other contracts.
Fair values for liabilities for investment-type contracts are estimated
using discounted cash flow calculations based on interest rates
currently being offered for similar contracts with maturities
consistent with those remaining for the contracts being valued.
Separate Account Business
The assets and liabilities of the separate accounts represent
designated funds of group pension, variable life and annuity
policyholders and are not guaranteed or supported by other general
investments of the Company. The Company earns mortality and expense
risk fees from the separate accounts and assesses withdrawal charges in
the event of early withdrawals. The assets are carried at fair value
and are offset by liabilities that represent such policyholders' equity
in those assets. The net investment income generated from these assets
is not included in the consolidated statements of income.
The Company has periodically transferred capital to the separate
accounts to provide for the initial purchase of investments in the new
portfolios. As of December 31, 1997, approximately $44.6 million of the
Company's common stock investment related to its capital investments in
the separate accounts.
Future Policy Benefit Liabilities and Unearned Premiums and Policy and
Contract Claims
Future policy benefit liabilities on non-universal life-type and
accident and health products have been provided on the net level
premium method. The liabilities are calculated based on assumptions as
to investment yield, mortality, morbidity and
<PAGE>
(1) Continued
withdrawal rates that were determined at the date of issue or
acquisition of Life of Virginia by the Parent, and provide for possible
adverse deviations. Interest assumptions are graded and range from 7.4%
to 6.5%.
Withdrawal assumptions are based principally on experience and vary by
plan, year of issue, and duration.
Policyholder liabilities on universal life-type and investment products
are generally based on policy account values. Interest crediting rates
for these products range from 8.6% to 4.5%.
Unearned premiums generally are calculated using the pro rata method
based on gross premiums. However, in the case of credit life and credit
accident and health, the unearned premiums are calculated such that the
premiums are earned over the period of risk in a reasonable
relationship to anticipated claims.
Policy and contract claim liabilities represent estimates for reported
claims, as well as provisions for losses incurred, but not yet
reported. These claim liabilities are based on historical experience
and are estimates of the ultimate amount to be paid when the claims are
settled. Changes in the estimated liability are reflected in income as
the estimates are revised.
Foreign Currency Translation
Foreign revenues and expenses are translated at average exchange rates.
Foreign assets and liabilities are translated at year-end exchange
rates. Unrealized foreign exchange gains or losses on translation are
generally reported in stockholders' equity. No tax effect was taken
into consideration for unrealized losses.
(2) Invested Assets and Related Income
Under purchase accounting, the fair value of Life of Virginia's fixed
maturity investments as of April 1, 1996, became Life of Virginia's new
cost basis in such investments. The difference between the new cost
basis and original par is then amortized against investment income over
the remaining effective lives of the fixed maturity investments.
<PAGE>
(2) Continued
The Company's investments in debt and equity securities are considered
available for sale and are carried at estimated fair value, with the
aggregate unrealized appreciation or depreciation being recorded as a
separate component of stockholders' equity. The carrying value and
amortized cost of investments at December 31, 1997 and 1996 were as
follows:
<TABLE>
<CAPTION>
December 31, 1997
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(millions) Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Available for sale:
U.S. government and agencies $ 44.3 1.3 - 45.6
States and political subdivisions 1.8 0.3 - 2.1
Foreign governments 200.1 6.5 (0.3) 206.3
Corporate securities 3,362.1 120.6 (8.1) 3,474.6
Mortgage-backed securities 1,859.8 39.6 (5.4) 1,894.0
- ----------------------------------------------------------------------------------------------------------------
Total fixed maturities 5,468.1 168.3 (13.8) 5,622.6
Total equity securities 130.7 21.5 (0.5) 151.7
- ----------------------------------------------------------------------------------------------------------------
Total available for sale $ 5,598.8 189.8 (14.3) 5,774.3
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
--------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(millions) Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Available for sale:
U.S. government and agencies $ 65.5 2.1 - 67.6
States and political subdivisions 2.1 - - 2.1
Foreign governments 178.2 5.6 - 183.8
Corporate securities 3,092.1 29.0 (19.6) 3,101.5
Mortgage-backed securities 1,764.3 29.7 (6.3) 1,787.7
- -----------------------------------------------------------------------------------------------------------------
Total fixed maturities 5,102.2 66.4 (25.9) 5,142.7
Total equity securities 155.1 11.2 (0.8) 165.5
- -----------------------------------------------------------------------------------------------------------------
Total available for sale $ 5,257.3 77.6 (26.7) 5,308.2
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
The scheduled maturity distribution of the fixed maturity portfolio at
December 31 follows. Expected maturities may differ from scheduled
contractual maturities because issuers of securities may have the right
to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
1997
---------------------------
Amortized Fair
(millions) Cost Value
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Due in one year or less $ 105.8 106.7
Due after one year through five years 1,196.8 1,224.3
Due after five years through ten years 1,654.9 1,705.3
Due after ten years 650.8 692.3
- -----------------------------------------------------------------------------------------------------------
Subtotals 3,608.3 3,728.6
Mortgage-backed securities 1,859.8 1,894.0
- -----------------------------------------------------------------------------------------------------------
Totals $ 5,468.1 5,622.6
- -----------------------------------------------------------------------------------------------------------
</TABLE>
As required by law, the Company has investments on deposit with
governmental authorities and banks for the protection of policyholders
of $4.7 million and $4.5 million at December 31, 1997 and 1996,
respectively.
At December 31, 1997, approximately 24.8% and 15.9% of the Company's
investment portfolio is comprised of securities issued by the
manufacturing and financial industries, respectively, the vast majority
of which are rated investment grade, and which are senior secured
bonds. No other industry group comprises more than 10% of the Company's
investment portfolio. This portfolio is widely diversified among
various geographic regions in the United States, and is not dependent
on the economic stability of one particular region.
At December 31, 1997, the Company did not hold any fixed maturity
securities, other than securities issued or guaranteed by the U.S.
government, which exceeded 10% of shareholders interest.
<PAGE>
(2) Continued
The credit quality of the fixed maturity portfolio at December 31,
follows. The categories are based on the higher of the ratings
published by Standard & Poors or Moody's.
<TABLE>
<CAPTION>
1997 1996
------------------------- -------------------------
Fair Fair
value Percent value Percent
- ------------------------------------------------------------------------------------------------------
<S> <C>
Agencies and treasuries $ 308 5.5% $ 317 6.2%
AAA/Aaa 1,465 26.0 1,437 27.9
AA/Aa 320 5.7 247 4.8
A/A 1,101 19.6 988 19.2
BBB/Baa 1,862 33.1 1,864 36.3
BB/Ba 307 5.5 207 4.0
B/B 77 1.4 13 0.3
Not rated 182 3.2 69 1.3
- -----------------------------------------------------------------------------------------------------
Totals $ 5,622 100.0% $ 5,142. 100.0%
- -----------------------------------------------------------------------------------------------------
</TABLE>
Bonds with earnings ranging from AAA/Aaa to BBB-/Baa3 are generally
regarded as investment grade securities. Some agencies and treasuries
(that is, those securities issued by the United States government or an
agency thereof) are not rated, but all are considered to be investment
grade securities. Finally, some securities, such as private placements,
have not been assigned a rating by any rating service and are therefore
categorized as "not rated." This has neither positive nor negative
implications regarding the value of the security.
<PAGE>
(2) Continued
The Company had $6.4 million and $12.6 million of non-income producing
investments on December 31, 1997 and December 31, 1996, respectively.
"Impaired" loans are defined under generally accepted accounting
principles as loans for which it is probable that the lender will be
unable to collect all amounts due according to the original contractual
terms of the loan agreement. That definition excludes, among other
things, leases or large groups of smaller-balance homogenous loans, and
therefore applies principally to the Company's commercial loans.
Under these principles, the Company has two types of "impaired" loans
as of December 31, 1997 and 1996: loans requiring allowances for losses
and loans expected to be fully recoverable because the carrying amount
has been reduced previously through charge-offs or deferral at income
recognition ($23.0 million and $-, respectively). There was no
allowance for losses on these loans as of December 31, 1997 and 1996.
Average investment in impaired loans during 1997 was $23.0 million and
interest income earned on these loans while they were considered
impaired was $2.0 million. There were no impaired loans nor related
interest income earned on such loans in 1996.
The Company's mortgage and real estate portfolio is distributed by
geographic location and type. However, the Company has concentration
exposures in certain regions and in certain types as shown in the
following two tables.
Geographic distribution as of December 31, 1997:
<TABLE>
<CAPTION>
Mortgage Real estate
- -----------------------------------------------------------------------------------------------------------
<S> <C>
South Atlantic 47.0% 60.3%
East North Central 14.8 2.3
Mountain 14.1 -
West South Central 12.0 37.4
Pacific 6.6 -
Middle Atlantic 3.9 -
East South Central 1.6 -
- ------------------------------------------------------------------------------------------------------------
Total 100.0% 100.0%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
Type distribution as of December 31, 1997:
<TABLE>
<CAPTION>
Mortgage Real estate
- --------------------------------------------------------------------------------------------------------
<S> <C>
Office building 19.8% 51.1%
Retail 23.7 21.3
Industrial 21.2 -
Apartments 21.8 25.3
Other 13.5 2.3
- --------------------------------------------------------------------------------------------------------
Total 100.0% 100.0%
- --------------------------------------------------------------------------------------------------------
</TABLE>
Net unrealized gains and losses on investment securities classified as
available-for-sale are reduced by deferred income taxes and adjustments
to the present value of future profits and deferred policy acquisition
costs that would have resulted had such gains and losses been realized.
Net unrealized gains and losses on available-for-sale investment
securities reflected as a separate component of stockholders' equity
are summarized as follows:
<TABLE>
<CAPTION>
Preacquisition
-------------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Net unrealized gains on available-for-sale investment securities before
adjustments:
Fixed maturities $ 154.5 40.5 2.8 143.8
Equity securities 21.0 10.4 5.8 23.2
- --------------------------------------------------------------------------------------------------------------------
Subtotal 175.5 50.9 8.6 167.0
Adjustments to the present value
of future profits and deferred policy
acquisition costs (61.2) (21.1) 9.9 (8.0)
Deferred income taxes (40.0) (10.4) (6.6) (55.9)
- --------------------------------------------------------------------------------------------------------------------
Net unrealized gains on
available-for-sale investment
securities 74.3 19.4 11.9 103.1
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
The source of investment income of the Company is as follows:
<TABLE>
<CAPTION>
Preacquisition
----------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Fixed maturities $ 398.5 274.4 93.1 332.8
Equity securities 7.3 8.7 4.2 10.8
Mortgage loans on real estate 48.3 41.3 13.5 49.8
Short-term investments 1.0 2.5 0.5 3.5
Other investments 22.3 12.9 3.0 13.2
- --------------------------------------------------------------------------------------------------------------
Gross investment income 477.4 339.8 114.3 410.1
Investment expenses (4.9) (5.4) (2.3) (8.0)
- --------------------------------------------------------------------------------------------------------------
Net investment income $ 472.5 334.4 112.0 402.1
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Gross realized investment gains and losses resulting from the sales of
investment securities were as follows:
<TABLE>
<CAPTION>
Preacquisition
---------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C>
Fixed maturities available for sale:
Gross gains $ 8.3 0.6 0.5 12.9
Gross losses - (0.7) (1.4) (90.2)
Fixed maturities held to maturity:
Gross gains - - - 1.1
Gross losses - - - (13.8)
Equity securities 3.4 6.0 10.3 5.6
Mortgage loans on real estate (0.8) - (0.4) 2.3
Other 2.4 0.1 - 5.6
- ---------------------------------------------------------------------------------------------------
Total before tax 13.3 6.0 9.0 (76.5)
Less applicable tax (4.7) (2.3) (1.9) 26.8
- ----------------------------------------------------------------------------------------------------
Total $ 8.6 3.7 7.1 (49.7)
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
The changes in net unrealized gains (losses) on fixed maturities and
equity security investments are as follows:
<TABLE>
<CAPTION>
Preacquisition
-----------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Fixed maturities:
Available for sale $ 114.0 40.5 (141.0) 298.7
Held to maturity - - - 233.7
Equity securities 10.6 10.4 (17.4) 26.1
- --------------------------------------------------------------------------------------------------------------
Net unrealized investment gains (losses) $ 124.6 50.9 (158.4) 558.5
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(3) Income Tax
Beginning April 1, 1996, Life of Virginia and its subsidiary have been
included in the life insurance company consolidated federal income tax
return of GE Capital Assurance and are also subject to a separate
tax-sharing agreement, as approved by state insurance regulators, the
provisions of which are substantially the same as the tax-sharing
agreement with GE Capital. Prior to April 1, 1996, Life of Virginia was
included in the consolidated federal income tax return of Aon and its
principal domestic subsidiaries and in accordance with intercompany
policy, provided taxes on income based on a separate company basis.
Amounts payable or recoverable related to periods before April 1, 1996,
are subject to an indemnification agreement with Aon. As such the
Company is not at risk for any income taxes nor entitled to recoveries
related to those periods.
<PAGE>
(3) Continued
Income taxes are recorded in the statements of income and directly in
stockholders' equity accounts. Income taxes for the years ending
December 31 was allocated as follows:
<TABLE>
<CAPTION>
Preacquisition
-----------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Statement of income:
Operating income (excluding
realized investment gains
and losses) $ 47.5 29.5 5.1 53.9
Realized investment gains/losses 4.7 2.3 1.9 (26.8)
- --------------------------------------------------------------------------------------------------------
Income tax expense included
in the statement of income 52.2 31.8 7.0 27.1
Stockholders' equity:
Unrealized gains/(losses) on
securities available for sale 29.6 10.4 (49.3) 86.0
- --------------------------------------------------------------------------------------------------------
Total $ 81.8 42.2 (42.3) 113.1
- --------------------------------------------------------------------------------------------------------
</TABLE>
The actual federal income tax expense differed from the expected tax
expense computed by applying the U.S. federal statutory rate to income
before income tax expense. A reconciliation of the income tax
provisions based on the statutory corporate tax rate to the provisions
reflected in the consolidated financial statements is as follows:
<TABLE>
<CAPTION>
Preacquisition
------------------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, December 31, December 31,
1997 1996 1996 1995
--------------------- --------------------- -------------------- ---------------------
<S> <C>
Statutory tax rate ..................... $ 50.1 35.0% $ 30.1 35.0% $ 6.6 35.0% $ 23.2 35.0%
Tax-exempt investment income
deductions ............................ ( 0.9) (0.7) ( 1.0) (1.2) -- (0.1) ( 0.1) (0.1)
Adjustment of prior year taxes ......... -- -- -- -- -- -- 3.5 5.3
Other-net .............................. 3.0 2.2 2.7 3.2 0.4 2.1 0.5 0.7
------- ---- ------- ---- ------ ---- ------- ----
Effective tax rate ..................... $ 52.2 36.5% $ 31.8 37.0% $ 7.0 37.0% $ 27.1 40.9%
======= ==== ======= ==== ====== ==== ======= ====
</TABLE>
Significant compnents of Life of Virginia's deffered tax liabilities and
assets are as follows (in millions):
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
-------------- -------------
<S> <C>
Deferred tax liabilities:
Present value of future profits ......... $ 79.1 89.9
Unrealized investment gains ............. 40.0 10.4
Other ................................... 2.7 6.5
------ -----
Total deferred tax liabilities ........... 121.8 106.7
------ -----
Deferred tax assets:
Insurance reserve amounts ............... 142.9 120.4
Policy acquisition costs ................ 11.8 34.3
Guaranty fund amounts ................... 9.4 10.8
Other ................................... 15.1 14.1
------ -----
Total deferred tax assets ................ 179.2 179.6
------ -----
Net deferred tax assets .................. $ 57.4 72.9
====== =====
</TABLE>
Deferred taxes are allocated to individual subsidiaries by applying the
asset and liability method of accounting for deferred income taxes.
Intercompany balances are settled annually.
<PAGE>
(3) Continued
A valuation allowance is provided when it is more likely than not that
some portion of the deferred tax assets will not be realized.
Management believes the deferred tax assets will be fully realized in
the future based on the expectation of the reversal of existing
temporary differences, anticipated future earnings, and consideration
of all other available evidence. Accordingly, no valuation allowance is
established.
The amount of income taxes paid (refunded) for the year ended December
31, 1997, the nine months ended December 31, 1996, three months ended
March 31, 1996, and the year ended December 31, 1995 was $64.4 million,
$38.6 million, $(2.4) million and $44.9 million, respectively.
(4) Reinsurance and Claim Reserves
Life of Virginia is involved in both the cession and assumption of
reinsurance with other companies. Life of Virginia's reinsurance
consists primarily of long-duration contracts that are entered into
with financial institutions and related party reinsurance. Although
these reinsurance agreements contractually obligate the reinsurers to
reimburse the Company, they do not discharge the Company from its
primary liabilities and the Company remains liable to the extent that
the reinsuring companies are unable to meet their obligations.
A summary of reinsurance activity is as follows:
<TABLE>
<CAPTION>
Preacquisition
---------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
1997 1996 1996 1995
--------------- --------------- --------------- ---------------
Earned Earned Earned Earned
--------------- --------------- --------------- ---------------
<S> <C>
Direct $ 337.3 210.5 77.2 261.5
Assumed 20.7 6.6 35.0 4.3
Ceded 84.8 62.4 19.8 86.5
- -------------------------------------------------------------------------------------------------------
Net premiums 273.2 154.7 92.4 179.3
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(4) Continued
Due to the nature of the Company's reinsurance contracts, premiums
earned approximate premiums written.
A significant portion of Life of Virginia's ceded premiums relates to
group life and health premiums. Life of Virginia is the primary carrier
for the State of Virginia employees group life and health plan. By
statute, Life of Virginia must reinsure these risks with other Virginia
domiciled companies who wish to participate.
Incurred losses and loss adjustment expenses are net of reinsurance of
$72.7 million, $60.5 million, $17.2 million and $63.1 million for the
year ended December 31, 1997, the nine months ended December 31, 1996,
three months ended March 31, 1996 and the year ended December 31, 1995,
respectively.
In December 1994, Life of Virginia ceded to CICA $406.6 million of its
guaranteed investment contract liabilities. In conjunction with the
liability cession, Life of Virginia transferred to CICA available for
sale fixed maturities with a fair value of $278.1 million and a cost of
$287.2 million and preferred stock with a fair value of $110.5 million
and a cost of $119.7 million.
In January 1995, Life of Virginia ceded to CICA $600 million of its
single premium deferred annuity liabilities. In conjunction with the
liability cession, Life of Virginia transferred to CICA available for
sale fixed maturities with a fair value of $436.1 million and book
value of $501.4 million and held to maturity fixed maturities with a
fair value of $81.4 million and a book value of $95.1 million. In
addition, $5.5 million of accrued income related to the assets above
was transferred to CICA. This transaction resulted in a deferred
reinsurance gain of $77.0 million, $24 million of which was recognized
in 1995. Additionally, Life of Virginia recognized a $79.0 million
realized investment loss.
<PAGE>
(4) Continued
In connection with the sale of the Company, the following transactions
occurred effective January 1, 1996: single premium deferred annuity
liabilities reinsured with CICA in 1995 were recaptured, guaranteed
investment contract liabilities reinsured with CICA in 1994 were
recaptured, other lines of CICA insurance business inforce were
assumed, and other related liabilities of CICA were assumed. In
conjunction with the recapture and assumption, CICA transferred to Life
of Virginia assets with a fair value totaling $842.6 million. For the
three months ended March 31, 1996, premiums of $33.9 million, benefits
of $46.7 million, commission expense of $10.2 million and a capital
contribution of $69.3 million as a result of various reinsurance
transactions. The $53 million deferred reinsurance gain remaining at
December 31, 1995 from the January 1995 single premium deferred annuity
cession to CICA was recognized as a capital contribution. The tables
below summarize the assets and liabilities transferred from CICA to the
Company.
<TABLE>
<CAPTION>
Millions Fair Value
- -----------------------------------------------------------------------------
<S> <C>
Assets transferred:
Fixed maturity $ 727.4
Preferred stock 88.2
Policy loans 14.2
Accrued investment income 10.0
Cash 2.8
- -----------------------------------------------------------------------------
Total 842.6
- -----------------------------------------------------------------------------
Liabilities recaptured and assumed:
Single premium deferred annuity 410.5
Guaranteed investment contracts 212.6
Universal life contracts 156.6
Individual traditional contracts 33.2
Other lines of business inforce 19.9
Other liabilities 16.5
- -----------------------------------------------------------------------------
Total $ 849.3
- -----------------------------------------------------------------------------
</TABLE>
<PAGE>
(5) Employee Benefits
Savings Plan
Beginning April 1, 1996, Life of Virginia's salaried and commissioned
employees participated in a General Electric contributory savings plan.
Provisions made for the savings plan were $.9 million and $.6 million
for the year ended December 31, 1997 and the nine months ended December
31, 1996.
Prior to the acquisition on April 1, 1996, Life of Virginia
participated in Aon's contributory savings plan for the benefit of
salaried and commissioned employees. Provisions made for the savings
plan were $.3 million and $.8 million for the three months ended March
31, 1996, and the year ended December 31, 1995, respectively. This plan
terminated upon the acquisition of Life of Virginia by GE Capital.
Employee Stock Ownership Plan
Prior to the acquisition on April 1, 1996, Life of Virginia
participated in Aon's leveraged ESOP for the benefit of salaried and
certain commissioned employees. Contributions to the ESOP for the three
months ended March 31, 1996 and the year ended December 31, 1995
charged to Life of Virginia's operations amounted to $.1 million and
$.5 million, respectively. This plan terminated upon the acquisition of
Life of Virginia by GE Capital.
Pension Plan
Beginning April 1, 1996, Life of Virginia's salaried and commissioned
employees participated in a General Electric contributory defined
benefit pension plan. Generally, benefits are based on the greater of a
formula recognizing career earnings or a formula recognizing length of
service and final average earnings. Benefit provisions are subject to
collective bargaining. General Electric's funding policy is to
contribute amounts sufficient to meet minimum funding requirements as
set forth in employee benefit and tax laws plus such additional amounts
as determined appropriate. The components of net periodic pension cost
and benefit obligations of the General Electric defined benefit plan
are not separately available for Life of Virginia. In connection with
Life of Virginia's participation in the General Electric contributory
defined benefit pension plan a $.6 million and $.4 million expense were
incurred for the year ended December 31, 1997 and the nine months ended
December 31, 1996.
<PAGE>
(5) Continued
Prior to the acquisition on April 1, 1996, Life of Virginia
participated in Aon's non-contributory defined benefit pension plan
providing retirement benefits for salaried employees and certain
commissioned employees based on years of service and salary. Aon's
funding policy was to contribute amounts to the plan sufficient to meet
the minimum funding requirements set forth in the Employee Retirement
Income Security Act of 1974, plus such additional amounts as Aon
determined to be appropriate from time to time. The components of net
periodic pension cost and benefit obligations of the Aon defined
benefit plan were not separately available for Life of Virginia. In
connection with Life of Virginia's participation in the Aon defined
benefit plan, the Company had net pension credits of $1.2 million and
$3.8 million in the three months ended March 31, 1996 and the year
ended December 31, 1995. This plan terminated upon the acquisition of
Life of Virginia by GE Capital.
Postretirement Benefits Other Than Pensions
Beginning April 1, 1996, Life of Virginia's salaried and commissioned
employees participated in a General Electric retiree health and life
insurance benefit plan. The plans principally provides health and life
insurance benefits to employees who retire under the General Electric
pension plan with 10 or more years of service. Retirees share in the
cost of their health care benefits. The funding policy for retiree
health benefits is generally to pay covered expenses as they are
incurred. Expenses incurred by Life of Virginia for the year ended
December 31, 1997 and the nine months ended December 31, 1996 for the
retiree health and life insurance benefit plan were $1.9 million and
$1.3 million, respectively.
Prior to the acquisition on April 1, 1996, Aon sponsored two defined
benefit postretirement health and welfare plans in which Life of
Virginia participated that cover both salaried and nonsalaried
employees. One plan provided medical benefits, prior to and subsequent
to Medicare eligibility, and the other provided life insurance
benefits. The postretirement health care plan was contributory, with
retiree contributions adjusted annually; the life insurance plan was
noncontributory. Both plans were funded on a pay-as-you-go basis. These
plans terminated upon the acquisition of Life of Virginia by GE
Capital.
<PAGE>
(6) Lease Commitments
Life of Virginia has noncancelable operating leases for certain office
space, equipment and automobiles. Future minimum rental payments
required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year at December 31, 1997
are as follows:
<TABLE>
<CAPTION>
(millions) Minimum lease payments
- ------------------------------------------------------------------------
<S> <C>
1998 $ 1.1
1999 0.8
2000 0.5
2001 0.3
2002 -
Later years -
- ------------------------------------------------------------------------
Total minimum payments required $ 2.7
- ------------------------------------------------------------------------
</TABLE>
Rental expense for all operating leases for the year ended December 31,
1997, for the nine months ended December 31, 1996, the three months
ended March 31, 1996 and the year ended December 31, 1995 amounted to
$1.3 million, $2.5 million, $.8 million and $3.6 million, respectively.
(7) Related Party Transactions
Life of Virginia pays investment advisory fees and other fees to
affiliates. Amounts incurred for these items aggregated $7.6 million,
$3.2 million, $3.5 million and $5.8 million for the year ended December
31, 1997, the nine months ended December 31, 1996, the three months
ended March 31, 1996 and the year ended December 31, 1995,
respectively. Life of Virginia charges affiliates for certain services
and for the use of facilities and equipment which aggregated $4.6
million, $2.0 million, $1.0 million, and $10.0 million for the year
ended December 31, 1997, the nine months ended December 31, 1996, the
three months ended March 31, 1996, and the year ended December 31,
1995, respectively.
<PAGE>
(7) Continued
At December 31, 1997 and 1996, Life of Virginia held investments in
securities of certain affiliates amounting to $2.6 million. Amounts
included in net investment income related to these holdings totaled
$0.1 million, $0.1 million, $0.2 million and $1.0 million for the year
ended December 31, 1997, for the nine months ended December 31, 1996,
the three months ended March 31, 1996 and the year ended December 31,
1995, respectively.
In January 1995, Life of Virginia dividend 100% of its Globe Life
Insurance Company ("Globe") common stock to CICA, a subsidiary of Aon.
At December 31, 1994, Globe had assets of $954.9 million, liabilities
of $765.7 million and stockholders' equity of $189.2 million. The fair
value of this dividend was $193.3 million.
In 1995, Life of Virginia received from CICA, in the form of a capital
contribution, fixed maturities with a fair value of $45.0 million.
In January 1995, Life of Virginia transferred limited partnership
investments with a fair value of $8.0 million and book value of $7.5
million, common stocks with a fair value of $5.6 million and book value
of $3.4 million, and cash of $6.4 million to pay a $20.0 million
dividend declared but not paid in 1994. A $2.7 million realized
investment gain was recorded on this transfer.
(8) Litigation
Life of Virginia is subject to numerous claims and lawsuits that arise
in the ordinary course of business. In some of these cases the remedies
that may be sought or damages claimed are substantial, including cases
that seek punitive or extraordinary damages. Accruals for these
lawsuits have been provided to the extent that losses are deemed
probable and are estimable. Although the ultimate outcome of these
suits cannot be ascertained and liabilities in indeterminate amounts
may be imposed on Life of Virginia, on the basis of present
information, availability of insurance coverage, and advice received
from counsel, it is the opinion of management that the disposition or
ultimate determination of such claims and lawsuits will not have a
material adverse effect on the consolidated financial position or
results of operations of Life of Virginia.
<PAGE>
(9) Financial Instruments
Interest Rate Risk Management
Life of Virginia used interest rate swap agreements to manage asset and
liability durations relating to its capital accumulation annuity
business. As of December 31, 1995, these swap agreements had the net
effect of lengthening liability durations. Variable rates received on
interest rate swap agreements correlate with crediting rates paid on
outstanding liabilities. The net effect of swap payments is settled
periodically and reported in income. There was no settlement of
underlying notional amounts.
Life of Virginia performed frequent analyses to measure the degree of
correlation associated with its derivative program. Life of Virginia
assessed the adequacy of the correlation analyses results in
determining whether the derivatives qualify for hedge accounting.
Realized gains and losses on derivatives that qualify as hedges were
deferred and reported as an adjustment of the cost basis of the hedged
item. Deferred gains and losses were amortized into income over the
life of the hedged item. The fair value of swap agreements hedging
liabilities were not recognized in the consolidated statements of
financial position.
These interest rate swaps gave rise to credit risks due to possible
non-performance by counterparties. The credit risk was generally
limited to the fair value of those contracts that were favorable to
Life of Virginia. Life of Virginia limited its credit risk by
restricting investments in derivative contracts to a diverse group of
highly rated major financial institutions. Life of Virginia closely
monitored the credit worthiness of, and exposure to, its counterparties
and considered its credit risk to be minimal.
Life of Virginia had no interest rate swaps outstanding at December 31,
1997 and 1996.
During the three months ended March 31, 1996 and the year ended
December 31, 1995 Life of Virginia amortized $.6 million and $1.4
million, respectively, of net deferred losses relating to interest rate
swaps into income.
As of December 31, 1995, the principal swaps have maturities ranging
from September 1999 to October 2000 and variable rates based on five
year treasury rates. These swaps were terminated prior to March 31,
1996 resulting in a $1.1 million gain which was deferred.
<PAGE>
(9) Continued
Other Financial Instruments
Life of Virginia has certain investment commitments to provide
fixed-rate loans. The investment commitments, which would be
collateralized by related properties of the underlying investments,
involve varying elements of credit and market risk. Investment
commitments outstanding at December 31, 1997 and December 31, 1996,
totaled $16.7 million and $1.7 million, respectively.
Fair Value of Financial Instruments
Accounting standards require the disclosure of fair values for certain
financial instruments. The fair value disclosures are not intended to
encompass the majority of policy liabilities, various other
non-financial instruments, or other intangible items related to Life of
Virginia's business. Accordingly, care should be exercised in deriving
conclusions about Life of Virginia's business or financial condition
based on the fair value disclosures.
The Company has no derivative financial instruments as defined by SFAS
No. 119 at December 31, 1997, other than mortgage loan commitments of
$67.7 million.
<PAGE>
(9) Continued
The carrying amount and fair value of certain of Life of Virginia's
financial instruments are as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
------------------------------------------------
Carrying Fair Carrying Fair
(millions) Amount Value Amount Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Fixed maturities and
equity securities
(note 2) $ 5,774.3 5,774.3 5,308.2 5,308.2
Mortgage loans on
real estate 496.2 532.2 585.4 622.6
Policy loans 188.4 188.4 179.5 179.5
Cash, short-term
investments and
receivables 138.6 138.6 186.4 186.4
Assets held in separate accounts 4,066.4 4,066.4 2,762.7 2,762.7
- ------------------------------------------------------------------------------------------------------------
Liabilities:
Investment type
insurance contracts 3,113.8 3,100.7 3,055.0 3,027.6
Commissions and
general expenses 51.1 51.1 46.8 46.8
Liabilities related to separate accounts 4,066.4 4,066.4 2,762.7 2,762.7
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Note 1 regarding the method used to estimate fair values.
<PAGE>
1
(10) Stockholders' Equity
Generally, the capital and surplus of Life of Virginia available for
transfer to the Parent are limited to the amounts that the statutory
capital and surplus exceed minimum statutory capital requirements;
however, payments of the amounts as dividends may be subject to
approval by regulatory authorities. The maximum amount of dividends
which can be paid by the Company without prior approval at December 31,
1997, is $51.8 million.
Statutory net income (loss) and stockholders' equity is summarized
below:
<TABLE>
<CAPTION>
Preacquisition
------------------------------
Nine months Three months
Year ended ended ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Statutory net income $ 73.9 69.7 (8.3) 53.9
Statutory stockholders' equity 522.5 419.1 360.5 364.2
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The National Association of Insurance Commissioners has developed
certain Risk Based Capital (RBC) requirements to help regulators
identify life insurers that may be inadequately capitalized. If
prescribed levels of RBC are not maintained, certain actions may be
required on the part of the Company or its regulators. At December 31,
1997 the Company's Total Adjusted Capital and Authorized Control Level
- RBC were above the calculated minimum regulatory thresholds.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
(1)(a) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of Separate Account 4. (11)
(1)(b) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of additional investment subdivisions of Separate
Account 4, investing in shares of the Asset Manager Portfolio of the
Fidelity Variable Insurance Products Fund II and the Balanced
Portfolio of the Advisers Management Trust. (1)
(1)(c) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of additional investment subdivisions of Separate
Account 4, investing in shares of the Growth Portfolio, the Aggressive
Growth Portfolio, and the Worldwide Growth Portfolio of the Janus
Aspen Series. (11)
(1)(d) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of twenty-two (22) additional subdivisions of Separate
Account 4, investing in shares of Money Market Portfolio, High Income
Portfolio, Equity-Income Portfolio, Growth Portfolio and Overseas
Portfolio of the Fidelity Variable Insurance Products Fund; Asset
Manager Portfolio of the Fidelity Variable Insurance Products Fund II;
Money Market Portfolio, Government Securities Portfolio, Common Stock
Index Portfolio, Total Return Portfolio of the Life of Virginia Series
Fund, Inc.; Limited Maturity Bond Portfolio, Growth Portfolio and
Balanced Portfolio of the Neuberger & Berman Advisers Management
Trust; Growth Portfolio, Aggressive Growth Portfolio, and Worldwide
Growth Portfolio of the Janus Aspen Series; Money Fund, High Income
Fund, Bond Fund, Capital Appreciation Fund, Growth Fund, Multiple
Strategies Fund of the Oppenheimer Variable Account Funds. (11)
(1)(e) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of one additional Investment Subdivision of Separate
Account 4 which invests in shares of the Utility Fund of the Insurance
Management Series. (11)
(1)(f) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of two additional investment subdivisions of Separate
Account 4, investing in shares of the Corporate Bond Fund of the
Insurance Management Series, and the Contrafund Portfolio of the
Variable Insurance Products Fund II.
(11)
(1)(g) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of two additional investment subdivisions of Separate
Account 4, investing in shares of the International Equity Portfolio
and the Real Estate Securities Portfolio of Life of Virginia Series
Fund. (11)
(1)(h) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of four additional investment subdivisions of Separate
Account 4, investing in shares of the American Growth Portfolio and
the American Small Capitalization Portfolio of The Alger American
Fund, and the Balanced Portfolio and Flexible Income Portfolio of the
Janus Aspen Series. (8)
(1)(i) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of two additional investment subdivision of Separate
Account 4, investing in shares of the Federated American Leaders
64
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Fund II of the Federated Insurance Series, and the International
Growth Portfolio of the Janus Aspen Series. (9)
(1)(j) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of twelve additional investment subdivisions of Separate
Account 4, investing in shares of the Growth and Income Portfolio and
Growth opportunities Portfolio of Variable Insurance Products Fund
III; Growth II Portfolio and Large Cap Growth Portfolio of the PBHG
Insurance Series Fund, Inc.; Global Income Fund and Value Equity Fund
of GE Investments Funds, Inc. (10)
(1)(k) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of two additional investment subdivisions of Separate
Account 4, investing in shares of the Capital Appreciation Portfolio
of the Janus Aspen Series. (10)
(2) Not Applicable.
(3)(a) Underwriting Agreement dated December 13, 1997 between The Life
Insurance Company of Virginia and Capital Brokerage Corporation. (11)
(b) Dealer Sales Agreement dated December 12, 1997. (11)
(4)(a) Form of Policy.
(i) Home Office version (12)
(ii) Field version (12)
(b) Endorsements to Policy.
(i) IRA Endorsement (12)
(ii) Pension Endorsement (12)
(iii) Section 403(b) Endorsement (12)
(iv) Guaranteed Minimum Death Benefit Rider (12)
(5)(a) Form of Application. (12)
(6)(a) Certificate of Incorporation of The Life Insurance Company of
Virginia. (11)
(b) By-Laws of The Life Insurance Company of Virginia. (11)
(7) Not Applicable.
(8)(a) Stock Sale Agreement between The Life Insurance Company of Virginia
and The Life of Virginia Series Fund, Inc. (11)
(b) Participation Agreement among Variable Insurance Products Fund,
Fidelity Distributors Corporation, and The Life Insurance Company of
Virginia. (11)
(b) (i) Amendment to Participation Agreement Referencing Policy Form
Numbers. (11)
(b) (ii) Amendment to Participation Agreement among Variable Insurance
Products Fund II, Fidelity Distributors Corporation, and The
Life Insurance Company of Virginia. (9)
(b) (iii) Amendment to Participation Agreement among Variable Insurance
Products Fund, Fidelity Distributors Corporation, and The Life
Insurance Company of Virginia. (9)
(c) Agreement between Oppenheimer Variable Account Funds, Oppenheimer
Management Corporation, and The Life Insurance Company of Virginia.
(11)
(c) (i) Amendment to Agreement between Oppenheimer Variable Account
Funds, Oppenheimer Management Corporation, and The Life
Insurance Company of Virginia. (11)
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(d) Participation Agreement among Variable Insurance Products Fund II,
Fidelity Distributors Corporation and The Life Insurance Company of
Virginia. (11)
(e) Participation Agreement between Janus Capital Corporation and The
Life Insurance Company of Virginia. (11)
(g) Participation Agreement between Insurance Management Series,
Federated Securities Corp., and The Life Insurance Company of
Virginia. (11)
(h) Participation Agreement between The Alger American Fund, Fred Alger
and Company, Inc., and The Life Insurance Company of Virginia. (8)
(i) Participation Agreement between Variable Insurance Products III and
The Life Insurance Company of Virginia. (10)
(j) Participation Agreement between PBHG Insurance Series Fund, Inc. and
The Life Insurance Company of Virginia. (10)
(9) Opinion and Consent of Counsel. (12)
(10)(a) Consent of Counsel. (12)
(b) Consent of Independent Auditors. (12)
(11) Not Applicable.
(12) Not Applicable.
(13) Not Applicable.
(14) Power of Attorney dated April 16, 1996. (12)
--------------------------------------------
66
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(8) Incorporated herein by reference to post-effective amendment number 3 to
the Registrant's registration statement on Form N-4, File No. 33-76336,
filed with the Securities and Exchange Commission on September 28, 1995.
(9) Incorporated herein by reference to post-effective amendment number 4 to
the Registrant's registered statement on Form N-4, File No. 33-76334, filed
with the Securities and Exchange Commission on May 1, 1997.
(10) Incorporated herein by reference to post-effective amendment number 5 to
the Registrant's registered statement on Form N-4, File No. 33-76336, filed
with the Securities and Exchange Commission on May 1, 1997.
(11) Incorporated herein by reference to post effective amendment number 12 to
the Registrant's statement on Form N-4, File No. 33-76334, filed with the
Securities and Exchange Commission on May 1, 1998.
(12) Incorporated herein.
67
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF LIFE OF VIRGINIA
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Name Address Positions and Offices with Depositor
Ronald V. Dolan* First Colony Life Director and Chairman of the Board
700 Main Street
Lynchburg, VA 24505
Selwyn L. Flournoy, Jr.* Life of Virginia Director and Senior Vice President
6610 W. Broad Street
Richmond, VA 23230
Linda L. Lanam* Life of Virginia Director and Senior Vice President
6610 W. Broad Street
Richmond, VA 23230
Robert D. Chinn* Life of Virginia Director and Senior Vice President - Agency
6610 W. Broad Street
Richmond, VA 23230
Elliot Rosenthal Life of Virginia Senior Vice President - Investment Products
6610 W. Broad Street
Richmond, VA 23230
Victor C. Moses GE Financial Assurance Director
601 Union St.reet, Ste. 5600
Seattle, WA 98101
Geoffrey S. Stiff First Colony Life Director
700 Main Street
Lynchburg, VA 23219
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Depositor, The Life Insurance Company of Virginia, is an indirectly,
wholly-owned subsidiary of GNA Corporation. GNA Corporation is a wholly-owned
subsidiary of General Electric Capital Corporation. The Registrant, Life of
Virginia Separate Account 4, is a segregated asset account of Life of Virginia.
Previously, Life of Virginia was an indirectly, wholly-owned subsidiary of Aon
Corporation, an affiliate of Aon Advisors, Inc.
ITEM 27. NUMBER OF POLICYOWNERS
For the period ended April 1, 1997 there were 2,899 Policyowners.
ITEM 28. INDEMNIFICATION
Section 13.1-698 and 13.1-702 of the Code of Virginia, in brief, allow a
corporation to indemnify any person made party to a proceeding because such
person is or was a director, officer, employee, or agent of the corporation,
against liability incurred in the proceeding if: (1) he conducted himself in
good faith; and (2) he believed that (a) in the case of conduct in his official
capacity with the corporation, his conduct was in its best interests; and (b) in
all other cases, his conduct was at least not opposed to the corporation's best
interests and (3) in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. The termination of a proceeding by
judgment, order, settlement or conviction is not, of itself, determinative that
the director, officer, employee, or agent of the corporation did not meet the
standard of conduct described. A corporation may not indemnify a director,
officer, employee, or agent of the corporation in connection with a proceeding
by or in the right of the corporation, in which such person was adjudged liable
to the corporation, or in connection with any other proceeding charging improper
personal benefit to such person, whether or not
68
<PAGE>
involving action in his official capacity, in which such person was adjudged
liable on the basis that personal benefit was improperly received by him.
Indemnification permitted under these sections of the Code of Virginia in
connection with a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
Section 5 of the By-Laws of Life of Virginia further provides that:
(a) The Corporation shall indemnify each director, officer and employee of this
Company who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative, or investigative (other than an
action by or in the right of the Corporation) by reason of the fact that he
is or was a director, officer or employee of the Corporation, or is or was
serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgements [sic],
fines and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of
the Corporation, and with respect to any criminal action, had no cause to
believe his conduct unlawful. The termination of any action, suit or
proceeding by judgement [sic], order, settlement, conviction, or upon a
plea of nolo contendere, shall not of itself create a presumption that the
person did not act in good faith, or in a manner opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, believed his conduct unlawful.
(b) The Corporation shall indemnify each director, officer or employee of the
Corporation who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of
the Corporation to procure a judgement [sic] in its favor by reason of the
fact that he is or was a director, officer or employee of the Corporation,
or is or was serving at the request of the Corporation as a director,
officer or employee of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged
to be liable for negligence or misconduct in the performance of his duty to
the Corporation unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
(c) Any indemnification under subsections (a) and (b) (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer or
employee is proper in the circumstances because he has met the applicable
standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors of the
Corporation by a majority vote of a quorum consisting of the directors who
were not parties to such action, suit or proceeding, or (2) if such a
quorum is not obtainable, or even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(3) by the stockholders of the Corporation.
(d) Expenses (including attorneys' fees) incurred in defending an action, suit
or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in subsection (c) upon receipt of an undertaking by or on behalf
of the director, officer or employee to repay such amount to the
Corporation unless it shall ultimately be determined that he is entitled to
be indemnified by the Corporation as authorized in this Article.
(e) The Corporation shall have the power to make any other or further indemnity
to any person referred to in this section except an indemnity against gross
negligence or willful misconduct.
69
<PAGE>
(f) Every reference herein to director, officer or employee shall include every
director, officer or employee, or former director, officer or employee of
the Corporation and its subsidiaries and shall enure to the benefit of the
heirs, executors and administrators of such person.
(g) The foregoing rights and indemnification shall not be exclusive of any
other rights and indemnification to which the directors, officers and
employees of the Corporation may be entitled according to law.
* * *
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
depositor pursuant to the foregoing provisions, or otherwise, the depositor has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the depositor of expenses incurred
or paid by a director, officer or controlling person of the depositor in
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the depositor will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Capital Brokerage Corporation is the principal underwriter of the Policies
as defined in the Investment Company Act of 1940, and is also the principal
underwriter for flexible premium variable life insurance policies issued
through Life of Virginia Separate Accounts I, II, III and V.
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices
Business Address* with Underwriter
<S> <C>
Name Address Positions and Offices with Depositor
Scott A. Curtis GE Financial Assurance President and Chief Executive Officer
6610 W. Broad St.
Richmond, VA 23230
Stephen P. Joyce GE Financial Assurance Senior Vice President
777 Long Ridge Rd., Bldg. "B"
Stamford, CT 06927
Charles A. Kaminski GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Victor C. Moses GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Geoffrey S. Stiff First Colony Life Senior Vice President
700 Main St.
Lynchburg, VA 23219
Mary Catherine Yeagley GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Jeffrey I. Hugunin GE Financial Assurance Treasurer
6604 W. Broad St.
Richmond, VA 23230
John W. Attey GE Financial Assurance Vice President, Counsel & Assistant
7125 W. Jefferson Ave., Ste. 200 Secretary
Lakewood, CO 80235
Thomas W. Casey GE Financial Assurance Vice President & Chief Financial Officer
6604 W. Broad St.
Richmond, VA 23230
</TABLE>
70
<PAGE>
<TABLE>
<S> <C>
Stephen N. DeVos GE Financial Assurance Vice President & Controller
6604 W. Broad St.
Richmond, VA 23230
Scott A. Reeks GE Financial Assurance Vice President & Assistant Treasurer
6610 W. Broad St.
Richmond, VA 23230
Edward J. Wiles, Jr. GE Financial Assurance Vice President, Counsel & Secretary
777 Long Ridge Rd., Bldg. "B"
Stamford, CT 06927
</TABLE>
* The principal business address of all listed above is 6630 West Broad Street,
Richmond, Virginia 23261.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules under it are maintained by Life of
Virginia at its executive offices.
ITEM 31. MANAGEMENT SERVICES
All management contracts are discussed in Part A or Part B of this Registration
Statement.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes that it will file a post-effective amendment to this
Registration Statement as frequently as necessary to ensure that the
audited financial statements in the Registration Statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that
an applicant can check to request a Statement of Additional Information, or
(2) a post card or similar written communication affixed to or included in
the Prospectus that the applicant can remove to send for a Statement of
Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to Life of Virginia at the address or
phone number listed in the Prospectus.
STATEMENT PURSUANT TO RULE 6c-7
Life of Virginia offers and will offer Policies to participants in the Texas
Optional Retirement Program. In connection therewith, Life of Virginia and
Account 4 rely on 17 C.F.R. Section 270.6c-7 and represent that the provisions
of paragraphs (a)-(d) of the Rule have been or will be complied with.
SECTION 403(b) REPRESENTATIONS
Life of Virginia represents that in connection with its offering of Policies as
funding vehicles for retirement plans meeting the requirements of Section 403(b)
of the Internal Revenue Code of 1986, it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88)
regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of
1940, and that paragraphs numbered (1) through (4) of that letter will be
complied with.
SECTION 26(e)(2)(A) REPRESENTATION
Life of Virginia hereby represents that the fees and charges deducted under the
Policy, in the aggregate, are reasonable in relation to the services rendered,
the expenses to be incurred, and the risks assumed by Life of Virginia.
71
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SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant, Life of Virginia Separate Account 4, certifies that it
meets the requirements of Securities Act Rule 485(b) for effectiveness of this
registration statement, and has caused this registration statement to be signed
on its behalf by the undersigned thereunto duly authorized, and its seal to be
hereunto affixed and attested, in the County of Henrico in the Commonwealth of
Virginia, on the 29th day of April, 1998.
Life of Virginia Separate Account 4
(Registrant)
By: /s/ Selwyn L. Flournoy, Jr.
__________________________________________________
Selwyn L. Flournoy, Jr.
Senior Vice President
The Life Insurance Company of Virginia
The Life Insurance Company of Virginia
(Depositor)
By: /s/ Selwyn L. Flournoy, Jr.
__________________________________________________
Selwyn L. Flournoy, Jr.
Senior Vice President
Given under my hand this 29th day of April, 1998 in the City/County of
Henrico, Commonwealth of Virginia.
/s/ Laura Deusebio
______________________________
Notary Public
01/2000
______________________________
My Commission Expires
72
<PAGE>
As required by the Securities Act of 1933, this registration statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
RONALD V. DOLAN Director, Chairman of the Board
_______________________
Ronald V. Dolan
/s/ Selwyn L. Flournoy, Jr. Director, Senior Vice President
_______________________
Selwyn L. Flournoy, Jr.
LINDA L. LANAM Director, Senior Vice President
_______________________
Linda L. Lanam
ROBERT D. CHINN Director, Senior Vice President
_______________________
Robert D. Chinn
VICTOR C. MOSES Director
_______________________
Victor C. Moses
GEOFFREY S. STIFF Director
_______________________
Geoffrey S. Stiff
By /s/ Selwyn L. Flournoy, Jr., pursuant to Power of Attorney executed on
April 16, 1997.
73
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Exhibit List
(4)(a) Form of Policy.
(i) Home Office version
(ii) Field version
(b) Endorsements to Policy.
(i) IRA Endorsement
(ii) Pension Endorsement
(iii) Section 403(b) Endorsement
(iv) Guaranteed Minimum Death Benefit Rider
(5)(a) Form of Application.
(9) Opinion and Consent of Counsel.
(10)(a) Consent of Counsel.
(b) Consent of Independent Auditors.
74
Exhibit 4(a) Form of Policy
(i) Home Office
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY POLICY
LIFE OF VIRGINIA
To the policyowner:
Please read your policy carefully. This policy is legal contract between you and
the Company. You, the owner, have benefits and rights described in this policy.
The annuitant is named in the policy. We will make income payments beginning on
the Maturity Date, if the annuitant is still living on that date.
THIS POLICY'S INCOME PAYMENTS DEPEND ON THE ACCOUNT VALUE. THE ACCOUNT VALUE IN
THE SEPARATE ACCOUNT IS BASED ON THE INVESTMENT EXPERIENCE OF THAT ACCOUNT, AND
MAY INCREASE OR DECREASE DAILY. IT IS NOT GUARANTEED AS TO DOLLAR AMOUNT.
RIGHT TO CANCEL. You may return this policy to our home office within 10 days
after its delivery for a refund. The amount of the refund will equal the account
value with any adjustments required by applicable law or regulation.
For the Life Insurance Company of Virginia
Daniel T. Cox Paul E. Rutledge III
CHAIRMAN PRESIDENT
- -----------------------------------------------------------
*Flexible Premium Variable Deferred
*Income payments beginning at maturity
*No dividends
*Some benefits reflect investment results
- -----------------------------------------------------------
THE LIFE INSURANCE
COMPANY OF VIRGINIA
6610 West Broad Street, Richmond 23230
2
<PAGE>
3
<PAGE>
POLICY DATA
SCHEDULE OF BENEFITS SCHEDULE OF PREMIUMS
AMOUNT PAYABLE FOR
ANNUITY $25,000.00 SINGLE PAYMENT
INITIAL PREMIUM DUE: $25,000.00
ADDITIONAL PREMIUM PAYMENTS MAY BE MADE. SEE PREMIUM PAYMENTS SECTION.
CHARGES:
PREMIUM TAX RATE: 0.00%
ANNUAL POLICY MAINTENANCE CHARGE: $25.00
MORTALITY AND EXPENSE RISK CHARGE: 1.25% ANNUALLY ( .003446% DAILY)
ADMINISTRATIVE EXPENSE CHARGE: 0.15% ANNUALLY ( .000411% DAILY)
TRANSFER CHARGE $10.00
OWNER THE ANNUITANT
ANNUITANT JOHN DOE 35 AGE LAST BIRTHDAY
POLICY NUMBER 000000000
POLICY DATE May 1, 1994 May 1, 2029 MATURITY DATE
<PAGE>
PAGE 3 PLAN FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
POLICY NUMBER 000000000
SEPARATE ACCOUNT 4
INVESTMENT SUBDIVISIONS ARE INVESTED IN
<TABLE>
<CAPTION>
<S><C>
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
FID MONEY MARKET - B MONEY MARKET PORTFOLIO
FID HIGH INCOME - B HIGH INCOME PORTFOLIO
FID EQUITY-INCOME - B EQUITY - INCOME PORTFOLIO
FID GROWTH - B GROWTH PORTFOLIO
FID OVERSEAS - B OVERSEAS PORTFOLIO
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
FID ASSET MANAGER - B ASSET MANAGER PORTFOLIO
JANUS ASPEN SERIES
JAN GROWTH - B GR0WTH PORTFOLIO
JAN AGGRESSIVE GROWTH - B AGGRESSIVE GROWTH PORTFOLIO
JAN WORLDWIDE GROWTH - B WORLDWIDE GROWTH PORTFOLIO
LIFE OF VIRGINIA SERIES FUND, INC.
LOV MONEY MARKET - B MONEY MARKET PORTFOLIO
LOV GOVERNMENT SECURITIES - B GOVERNMENT SECURITIES PORTFOLIO
LOV COMMON STOCK INDEX - B COMMON STOCK INDEX PORTFOLIO
LOV TOTAL RETURN - B TOTAL RETURN PORTFOLIO
NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST
N&B LIM MAT BOND - B LIMITED MATURITY BOND PORTFOLIO
N&B GROWN - B GROWTH PORTFOLIO
N&B BALANCED - B BALANCED PORTFOLIO
OPPENHEIMER VARIABLE ACCOUNT FUNDS
OPP MONEY - B OPPENHEIMER MONEY FUND
OPP HIGH INCOME - B OPPENHEIMER HIGH INCOME FUND
OFF BOND - B OPPENHEIMER BOND FUND
5
<PAGE>
OFF CAP APPRECIATION - B OPPENHEIMER CAPITAL APPRECIATION FUND
OFF GROWTH - B OPPENHEIMER GROWTH FUND
OFF MULTI STRATEGIES - B OPPENHEIMER MULTIPLE STRATEGY FUND
</TABLE>
YOU MAY ALLOCATE YOUR ACCOUNT VALUE TO AS MANY AS SEVEN INVESTMENT
SUBDIVISIONS.
CONSULT YOUR PROSPECTUS FOR INVESTMENT DETAILS.
POLICY NUMBER: 000000000
TABLE OF SURRENDER CHARGES
YEARS SURRENDER CHARGE PERCENTAGE
----- ---------------------------
1 6%
2 6%
3 6%
4 6%
5 4%
6 2%
YEARS 7 AND LATER 0
6
<PAGE>
TABLE OF CONTENTS
Policy Data............................................ 3
Introduction........................................... 6
Owner, Annuitant and Beneficiary Provisions............ 7
Death Provisions....................................... 8
Premium Payments....................................... 9
Monthly Income Benefit................................. 10
Account Value Benefits................................. 11
Separate Account....................................... 13
General Information.................................... 16
Optional Payment Plans................................. 17
Copies of any application, riders and endorsements follow page 19.
WORD INDEX
Account Value........................................... 11
Allocation of Premiums.................................. 9
Annual Statement........................................ 16
Beneficiary............................................. 7
Beneficiary Change...................................... 7
Death Benefit........................................... 9
Investment Subdivisions................................. 13
Misstatement of Age or Sex.............................. 16
Notices................................................. 16
Optional Payment Plans................................17-19
Owner................................................... 7
Ownership change........................................ 7
Premiums................................................ 9
Separate Account........................................ 13
Surrender............................................... 11
Surrender Value......................................... 11
Transfers............................................... 14
Unit Value.............................................. 14
INTRODUCTION
This is a flexible premium variable deferred annuity policy. The initial premium
payment is due on the policy date. Additional premiums may be paid at any time
before the earlier of (1) the maturity date and (2) the policy anniversary on
which the Annuitant attains age 86. In return for these premiums and any
application, we provide certain benefits.
As used in this policy, you or yours refers to the Owner or Owners. We, us or
ours refers to The Life Insurance Company of Virginia. The Owner and the
Annuitant are shown on page 3.
Person, as used in this policy is a human being, a trust, a corporation or any
other legally recognized entity.
<PAGE>
The policy provides a monthly income beginning on the maturity date. The amount
of monthly income will depend on:
o the maturity value;
o the amount of any applicable premium tax;
o the Annuitant's sex and settlement age on the maturity date; and
o the payment plan chosen.
Depending upon the conditions described in the Death Provisions section, this
policy provides for either the payment of a death benefit or the continuation of
the policy at the death of the Owner, Joint Owner or Annuitant prior to the
maturity date.
The Policy and Its Parts
This policy is a legal contract. It is the entire contract between you and us.
An agent cannot change this contract. Any change to it must be in writing and
approved by us. Only our President or one of our Vice Presidents can give our
approval. READ YOUR POLICY CAREFULLY.
Policy means this policy with any attached application and any riders and
endorsements. All statements in any application are considered representations
and not warranties.
We reserve the right to amend this contract as needed to maintain its status as
an annuity under the Internal Revenue Code. If the contract is amended, we will
send you a copy of the amendment, together with the applicable regulation,
ruling or other requirement imposed by the Internal Revenue Service which
requires such amendment.
Age
Age on the policy date or on a policy anniversary prior to the date payments
begin means the person's age on his or her last birthday.
Dates Used in the Policy
The policy goes into effect on the policy date shown on page 3. Policy years and
anniversaries for the initial premium are measured from this date. Years for
determining charges related to additional premiums are measured from the date of
receipt of each additional premium.
The maturity date is the date we start to pay a monthly income if the Annuitant
is still living. This date is shown on page 3 unless changed after issue.
OWNER, ANNUITANT AND BENEFICIARY PROVISIONS
The Owner
The Owner or Joint Owners are shown in the policy. Joint Owners own the policy
equally with the right of survivorship. Right of survivorship means that if a
Joint Owner dies, his or her interest in the policy will pass to the surviving
Joint Owner. Disposition of the policy upon death of an Owner is subject to the
Death Provisions.
An Owner or Joint Owner has rights while this policy is in force, subject to the
rights of any beneficiary named irrevocably, and any assignee under an
assignment filed with us.
The Annuitant
The Annuitant is the person upon whose age and sex guaranteed monthly income
benefits are determined. The policy names you or someone else as the Annuitant.
The Contingent Annuitant, if any, is shown in the application if attached to
this policy. If an application is not attached and you wish to name a Contingent
Annuitant, you may do so by sending a written request to our home office. At the
death of the Annuitant prior to the maturity date, the Contingent Annuitant, if
any, may become the Annuitant in certain circumstances, (see Death Provisions).
If no Contingent Annuitant is alive, the Owner (if a natural person, otherwise,
the Joint Owner, if a natural person) will be the Contingent Annuitant.
The Beneficiary
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The Primary Beneficiary and any Contingent Beneficiaries are shown in the
application if attached to this policy. If an application is not attached and
you wish to name a Primary or Contingent Beneficiary(ies), you may do so by
sending a written request to our home office.
Changing the Owner, Contingent Annuitant or Beneficiary
During the Annuitant's life, you can change the Owner, the Contingent Annuitant
and any Beneficiary if you reserved this right. A person named irrevocably may
be changed only with that person's written consent. To make a change, send a
written request to our home office. The request and the change must be in a form
satisfactory to us. The change will take effect as of the date you sign the
request. The change will be subject to any payment we make before we record the
change. Except as described above, the Annuitant cannot be changed.
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DEATH PROVISIONS
Designated Beneficiary
If the Owner, Joint Owner or the Annuitant dies while this policy is in force
and before income payments begin, the Designated Beneficiary will be treated as
the sole owner of the policy following such a death, subject to the distribution
rules set forth below. The Designated Beneficiary will be the person first
listed below who is alive or in existence on the date of the death of the Owner,
Joint Owner or the Annuitant:
(1) Owner
(2) Joint Owner
(3) Primary Beneficiary
(4) Contingent Beneficiary
(5) Owner's Estate
If Joint Owners both survive, they will become the Designated Beneficiary
together.
Distribution Rules
The following distribution rules will apply if the Owner, Joint Owner or the
Annuitant dies before income payments begin:
If the Designated Beneficiary is someone other than the surviving spouse of the
deceased Owner, Joint Owner or Annuitant, no further premium payments will be
accepted and we will pay the Surrender Value to, or for the benefit of, the
Designated Beneficiary. That payment will be made in one lump sum upon receipt
of due proof of death. Instead of receiving that distribution, the Designated
Beneficiary may elect:
(a) to receive the Surrender Value at any time during the five year period
following the date of death of the Owner, Joint Owner or Annuitant by
partially or totally surrendering the contract during that period; or
(b) to apply the entire Surrender Value under Optional Payment Plan 1 or 2
with the first payment to the Designated Beneficiary being made no
later than one year after the date of death of the Owner, Joint Owner
or Annuitant, and with payments being made over the life of the
Designated Beneficiary or over a period not exceeding the Designated
Beneficiary's life expectancy.
If the entire Surrender Value has not been paid to the Designated Beneficiary by
the end of the five year period following the date of death of the Owner, Joint
Owner or Annuitant and payments have not begun in accordance with (b) above, the
policy will terminate at the end of that five-year period, and we will pay any
remaining Surrender Value to, or for the benefit of, the Designated Beneficiary.
If the Designated Beneficiary dies before the required payments have been made,
the Designated Beneficiary will not be treated as an Owner of the policy for
purposes of these Death Provisions, and any remaining payments we make will be
made to the person named by the Designated Beneficiary in writing or, if no
person is so named, the estate of the Designated Beneficiary.
If the Designated Beneficiary is the surviving spouse of the deceased Owner,
Joint Owner or Annuitant, the surviving spouse may continue the policy as the
Owner. In addition, that person will also become the Annuitant if the deceased
was the Annuitant, there is no surviving Contingent Annuitant and the policy has
not been surrendered for the death benefit which is available at the Annuitant's
death under the conditions set forth on the following page. On the surviving
spouse's death, the entire interest in the contract will be paid within 5 years
of such spouse's death to the Beneficiary named by the surviving spouse (and if
no Beneficiary is named, such payment will be made to the surviving spouse's
estate).
If there is more than one Designated Beneficiary, each Designated Beneficiary
will be treated separately according to that Designated Beneficiary's portion of
the policy for purposes of this Death Provisions section.
These special Distribution Rules will not apply at the death of the Annuitant if
all of the following conditions exist:
o the Annuitant was not also an Owner of the policy;
o all owners of the policy are natural persons; and
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o a Contingent Annuitant survives.
Optional Death Benefit at Death of Annuitant
If the death of the Annuitant occurs before income payments begin, and he or she
was age 80 or younger on the policy date, the Designated Beneficiary may
surrender the policy for the Death Benefit within 90 days of the date of such
death. If this optional death benefit is paid, the policy will terminate, and we
will have no further obligation under the policy.
During the first six policy years, the Death Benefit will be the greater of:
o The total of premiums paid reduced by any applicable premium tax and
any partial surrenders plus their surrender charges; or
o The Account Value of the policy on the date we receive proof of the
Annuitant's death.
During any subsequent six year period, the Death Benefit will be the greater of:
o The Death Benefit on the last day of the previous six year period, plus
any premium paid since then, reduced by any applicable premium tax and
any partial surrenders plus their surrender charges since then; or
o The Account Value of the policy on the date we receive proof of the
Annuitant's death.
If the surrender occurs more than 90 days after the Annuitant's death, and/or if
the deceased Annuitant was age 81 or older on the policy date, the Surrender
Value will be payable instead of the Death Benefit. If the policy is not
surrendered, it will remain in force subject to the preceding provisions.
Payment of Benefits
Instead of receiving payment in a lump sum, the Designated Beneficiary may elect
to receive proceeds under Optional Payment Plans 1 or 2 with the first payment
to the Designated Beneficiary being made no later than one year after the date
of death of the Owner, Joint Owner or Annuitant. Payments will be made over the
life of the Designated Beneficiary or over a period not exceeding the Designated
Beneficiary's life expectancy.
Payment of Benefits After Income Payments Have Begun
If the Owner, Joint Owner, or the Annuitant dies while this policy is in force
and after income payments have begun, or if a Designated Beneficiary receiving
income payments dies after the date income payments have begun, payments made
under the policy will be made at least as rapidly as under the method of
distribution in effect at the time of such death, notwithstanding any other
provision of this policy.
PREMIUM PAYMENTS
The initial premium is due on the policy date.
Additional Premium Payments
You may make additional premium payments at any time before the earlier of (1)
the date which is ten years preceding the maturity date and (2) the policy
anniversary on which the Annuitant attains age 86. Each additional premium
payment must be at least $1,000.
When and Where to Pay Premiums
Each premium is payable in advance. Pay each premium to our home office. Make
any checks or money orders payable to Life of Virginia.
Allocation of Premiums
You may allocate premiums to one or more Investment Subdivisions of the Separate
Account, up to the maximum number shown in the policy data page. The portion of
each premium allocated to any particular Investment Subdivision must be at least
10%. Premiums will initially be allocated in accordance with the
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allocations requested by you.
You may change the allocation of later premiums at any time, without charge, by
sending a written notice to us at our home office. The allocation will apply to
premiums received after we record the change.
MONTHLY INCOME BENEFIT
We will pay you a monthly income for a guaranteed minimum period beginning on
the maturity date if the Annuitant is still living. The monthly income will be a
variable income payment similar to that described in the provision titled
"Variable Income Options" under the Optional Payment Plans section. Payments
will be made under a Life Income with 10 Years Certain plan, unless you choose
otherwise.
Under the Life Income 10 Years Certain plan, if the Annuitant lives longer than
10 years, payments will continue for his or her life. If the Annuitant dies
before the end of ten years, the remaining payments for the ten year period will
be discounted at the same rate used to calculate the monthly income. The
discounted amount will be paid in one sum to you.
At any time, while the Annuitant is living, and before the maturity date, you
may choose to change the payment plan by written request. If you do choose a
different plan, the monthly income will reflect the plan chosen. Payment plans
which base payment on the life or lives of one or more individuals will base
such payment on the life of the Annuitant or the Annuitant and an additional
individual. You may elect to receive the maturity value in a lump sum instead of
receiving a monthly income. If we pay the maturity value, we will have no
further obligation under the policy.
The maturity value is equal to the Surrender Value on the day immediately
preceding the maturity date.
The initial income payment under the automatic payment plan, payable monthly, is
calculated by multiplying (a) times (b), divided by (c) where:
(a) is the monthly payment rate per $1000, shown under the Optional Payment
Plans for Life Income 10 years Certain, using the sex and settlement
age of the Annuitant, instead of the payee, on the maturity date;
(b) is the maturity value; and
(c) is $1,000.
Annuity payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by written request. However, if any payment made more
frequently than annually would be or becomes less than $100, we reserve the
right to reduce the frequency of payments to an interval that would result in
each payment being at least $100. If the annual payment payable at maturity is
less than $20, we will pay the maturity value and the policy will terminate
effective as of maturity date.
Maturity Date
The maturity date is shown on page 3, unless changed after issue. You may change
the maturity date to any date at least ten years after the date of the last
premium payment. To make a change, send us written notice before the maturity
date then in effect.
If you change the maturity date, maturity date will then mean the maturity date
you selected. You may pay premiums until the date which is ten years preceding
the newly selected maturity date unless that right has been terminated by the
provisions of this policy.
ACCOUNT VALUE BENEFITS
The Account Value of the policy is equal to the account value allocated to the
Investment Subdivisions of the Separate Account.
On the date the initial premium is received and accepted, the Account Value
equals the initial premium. At the end of each valuation period after such date,
the Account Value allocated to each Investment Subdivision of the Separate
Account is (a) plus (b) plus (c) minus (d) minus (e) minus (f), where:
(a) is the Account Value allocated to the Investment Subdivision at the end
of the preceding valuation period, multiplied by the Investment Subdivision's
Net Investment Factor for the current period;
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(b) is premium payments received during the current valuation period;
(c) is any other amounts transferred into the Investment Subdivision during
the current valuation period;
(d) is Account Value transferred out of the Investment Subdivision during the
current valuation period;
(e) is any partial surrender made from the Investment Subdivision during the
current valuation period;
(f) any premium tax deductions.
In addition, after the policy date whenever a valuation period includes the
policy anniversary day, the Account Value at the end of such period is reduced
by the Annual Policy Maintenance Charge allocated to the Account Value in the
Investment Subdivision for that policy anniversary day. This charge will be
allocated among the Investment Subdivisions of the Separate Account in the same
proportion that the policy's Account Value in each Investment Subdivision bears
to the total Account Value in all Investment Subdivisions at the beginning of
the policy year.
Annual Policy Maintenance Charge
There will be a charge made each year for maintenance of the policy. This charge
is made once for each policy year against the Account Value allocated to the
Separate Account. The charge for a policy year will be made at the earlier of
the next policy anniversary or the date the policy is surrendered. The amount of
this charge is shown on page 3. We will waive this charge if the Account Value
exceeds $75,000 at the time the charge is due.
Surrender
You can fully or partially surrender this policy by sending a written request to
our home office. We must receive the request before income payments begin. You
may be required to pay a surrender charge and any applicable premium tax (see
Premium Tax). These charges will be deducted from the amount surrendered.
Full Surrender. You must send us your policy with your request for surrender.
The amount payable is the Surrender Value. The Surrender Value of this policy
is the Account Value on the date we receive your written request for surrender
in our home office, less any surrender charge. See Deferred Premium Tax.
Partial Surrender. You may make a partial surrender from the Account Value of
this policy at any time. We will not permit the amount of a partial surrender to
be less than $500 or to reduce the Account Value to less than $5000. The amount
payable will be the amount of the partial surrender less any surrender charge.
See Deferred Premium Tax.
You may tell us how to deduct the partial surrender from the Investment
Subdivisions of the Separate Account. If you do not, the partial surrender will
be deducted from each Investment Subdivision in the same proportion that the
policy's Account Value in that Investment Subdivision bears to the total Account
Value in all Investment Subdivisions on the date we receive the request in our
home office. See Deferred Premium Tax.
Deferred Premium Tax. If we paid a tax on a premium and we did not previously
deduct the tax, then we may deduct it at the time of surrender. See Premium
Tax.
Surrender Charge
All or part of the amount surrendered may be subject to a surrender charge. The
amount subject to a charge is the lesser of (a) or (b), where:
(a) is the amount surrendered;
(b) is the total premiums, less the total of all surrender amounts
previously allocated to premium payments.
The surrender charge will be the applicable percentage(s) of the amount subject
to a charge. For purposes of determining the applicable percentage(s), surrender
amounts that are subject to a charge will be allocated to remaining premium
payments in the order that the premium payments were received. Remaining premium
payments are the premium payments, less the amount of any surrenders previously
allocated to them. The applicable percentage for each premium payment is found
on the policy data pages in the Table of Surrender Charges next to the number
representing the number of full and partially completed years since the premium
<PAGE>
payment.
Reduced Charges on Certain Surrenders. Surrender charges will be reduced for the
first surrender in each policy year. If the first surrender of the policy year
is a partial surrender of 10% of the Account Value, or less, the amount
surrendered will not be subject to a charge.
If the first surrender of the policy year is a full surrender, or a partial
surrender of more than 10% of the Account Value, the amount of the surrender
that is subject to a charge will be reduced by 10% of the Account Value.
There will be no surrender charge if you choose one of the following Optional
Payment Plans:
o Plan 1;
o Plan 2 for a period of 5 or more years;
o Plan 5.
Waiver of Surrender Charges in the Event of Hospital or Nursing Facility
Confinement
We will waive the surrender charges otherwise applicable to a full surrender or
one or more partial surrenders occurring before income payments begin if:
o The Annuitant is, or has been confined to a state licensed or legally
operated hospital or inpatient nursing facility for at least 30
consecutive days; and
o Such confinement begins at least one year after the policy date; and
o The Annuitant was age 80 or younger on the policy date; and
o The request for the full or partial surrender, together with proof of
such confinement, is received in the Home Office while the Annuitant is
confined or within 90 days after discharge from the facility.
Postponement of Payments
We will usually pay any amounts payable as a result of full or partial
surrenders within seven days after we receive written request in our home
office, in a form satisfactory to us. We will usually pay any proceeds payable
as a result of death within seven days after we receive due proof of death.
Payment of any amount payable on surrender, partial surrender or death may be
postponed whenever:
o the New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission; or
o the Securities and Exchange Commission by order permits postponement
for the protection of policyowners; or
o an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which disposal of securities is not
reasonably practical or it is not reasonably practical to determine the
value of net assets of the Separate Account.
We have the right to defer payment which is derived from any amount recently
paid to us by check or draft, until we are satisfied the check or draft has been
paid by the bank on which it is drawn.
SEPARATE ACCOUNT
The Separate Account named in the policy data pages will be used to support the
operation of this policy and certain other variable annuity policies we may
offer. We will not allocate assets to the Separate Account to support the
operation of any contracts or policies that are not variable annuities.
We own assets in the Separate Account. However, these assets are not part of our
general account. Income, gains and losses, whether or not realized, from assets
allocated to the Separate Account will be credited to or charged against the
account without regard to our other income, gains or losses.
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. The
Separate Account is also subject to laws of the Commonwealth of Virginia which
regulates the operations of insurance companies incorporated in Virginia.
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The investment policy of the Separate Account will not be changed without the
approval of the Insurance Commissioner of the Commonwealth of Virginia. The
approval process is on file with the Insurance Commissioner in the state in
which this policy was delivered.
The Separate Account is divided into Investment Subdivisions. The Investment
Subdivisions are named in the policy data pages. We reserve the right to remove
any Investment Subdivision of the Separate Account, or to add new Investment
Subdivisions. Each Investment Subdivision of the Separate Account will invest in
shares of a mutual fund, or of a portfolio of a series type of mutual fund named
in the data pages. You determine the percentage of premiums which will be
allocated to each Investment Subdivision.
The Owner will share only the income, gains and losses of the Investment
Subdivisions to which his or her premium payments have been allocated.
The portion of the assets of the Separate Account which equals the reserves and
other policy liabilities of the policies which are supported by the Separate
Account will not be charged with liabilities arising from any other business we
conduct. We have the right to transfer to our general account any assets of the
Separate Account which are in excess of such reserves and other policy
liabilities.
We also have the right, subject to compliance with applicable law, to make
additions to, deletions from, or substitutions for the shares of a mutual fund
portfolio that are held by the Separate Account or that the Separate Account may
purchase. We reserve the right to eliminate the shares of any portfolio named in
the data pages, and to substitute shares of another portfolio, if the shares of
the portfolio are no longer available for investments, or if in our judgment
further investment in the portfolio should become inappropriate in view of the
purposes of the Separate Account. In the event of any substitution or change, we
may, by appropriate endorsement, make such changes in this and other policies as
may be necessary or appropriate to reflect the substitution or change.
We also reserve the right to transfer assets of the Separate Account, which we
determine to be associated with the class of policies to which this policy
belongs, to another separate account. If this type of transfer is made, the term
Separate Account, as used in this policy, shall then mean the Separate Account
to which the assets were transferred.
When permitted by law, we also reserve the right to:
(a) deregister the Separate Account under the Investment Company Act of 1940;
(b) manage the Separate Account under the direction of a committee;
(c) restrict or eliminate any voting rights of Owners, or other persons who
have voting rights as to the Separate Account; and
(d) combine the Separate Account with other accounts.
We will value the assets of the Separate Account each business day.
We will value the assets in the Separate Account at their fair market value in
accordance with accepted accounting practices and applicable laws and
regulations.
Unit Value
Each Investment Subdivision has a Unit Value. When premiums or other amounts are
transferred into an Investment Subdivision, a number of Units are purchased
based on the subdivision's Unit Value for the valuation period during which the
transfer is made. When amounts are transferred out of an Investment Subdivision,
Units are redeemed in a similar manner. The Unit Value for a valuation period
applies to each day in the period. Before income payments begin, Unit Values are
referred to as Accumulation Unit Values. Once income payments have begun, they
are referred to as Annuity Unit Values.
For each Investment Subdivision, the Accumulation Unit Value for the first
valuation period was $10. The Accumulation Unit Value for each subsequent period
is the Net Investment Factor for that period, multiplied by the Accumulation
Unit Value for the immediately preceding period.
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For each Investment Subdivision, the Annuity Unit Value for the first valuation
period was $10. The Annuity Unit Value for each subsequent period is (a) times
(b) times (c), where:
(a) is the Net Investment Factor for that period;
(b) is the Annuity Unit Value for the preceding period; and
(c) is the investment result adjustment factor for that period.
The investment result adjustment factor recognizes an assumed interest rate of
3% per year used in determining the income payment amounts and is equal to
0.99991902 daily.
Each valuation period includes a business day and any non-business day or
consecutive non-business days immediately preceding it. Assets are valued at the
close of the business day. A business day is any day the New York Stock Exchange
is open for trading, or any day in which there is a material change in the value
of the assets in the Separate Account.
Each Investment Subdivision has its own Net Investment Factor. In the following
definition, "assets" refers to the assets in each Investment Subdivision. "Any
amount charged against the Separate Account" refers to those amounts that are
allocated to each Investment Subdivision.
The Net Investment Factor for a valuation period is (a) divided by (b), minus
(c), where:
(a) is (1) the value of the assets at the end of the preceding valuation
period, plus (2) the investment income and capital gains, realized or
unrealized, credited to those assets at the end of the valuation period
for which the Net Investment Factor is being determined, minus (3) the
capital losses, realized or unrealized, charged against those assets
during the valuation period, minus (4) any amount charged against the
Separate Account for taxes, or any amount we set aside during the
valuation period as a provision for taxes attributable to the operation
or maintenance of the Separate Account; and
(b) is the value of the assets at the end of the preceding valuation
period; and
(c) is a factor representing the charge for mortality and expense risks we
assume and for administrative expenses. The annual rate for these
charges is shown on page 3.
Transfers Before Income Payments Begin
You may transfer amounts among the Investment Subdivisions of the Separate
Account by sending a written request to us at our home office. The first
transfer in each calendar month will be made without a transfer charge. A
transfer charge will be imposed for each subsequent transfer in a calendar
month. The amount of the transfer charge is shown on page 3. When we make
transfers, the Account Value on the date of the transfer will not be affected by
the transfer except to the extent of the transfer charge. The transfer charge
will be taken from the amount transferred.
We reserve the right to limit, upon written notice, the number of transfers to
twelve each calendar year or, if it is necessary for the policy to continue to
be treated as an annuity policy by the IRS, a lower number. Also, we reserve the
right to refuse to execute any transfer if any of the Investment Subdivisions
which would be affected by the transfer is unable to purchase or redeem shares
of the mutual fund in which the Investment Subdivision invests. The transfer
will be effective as of the end of the valuation period during which we receive
your request at our home office. If the amount of your Account Value remaining
in an Investment Subdivision after the transfer is less than $100, we will
transfer the amount remaining in addition to the amount requested. We will not
allow a transfer into any Investment Subdivision unless the Account Value of
that Investment Subdivision after the transfer is at least $100.
Transfers After Variable Income Payments Begin
If income payments are made under one of the Variable Income Options you may
transfer Annuity Units among the Investment Subdivisions of the Separate Account
by sending a written request to us at our home office. You may make one transfer
in each calendar year. We reserve the right to limit the number of transfers if
it is necessary for the policy to continue to be treated as an annuity policy by
the IRS. Also, we reserve the right to refuse to execute any transfer if any of
the Investment Subdivisions that would be affected by the transfer is unable to
purchase or redeem shares of the mutual fund in which the Investment Subdivision
invests. If the number of annuity units remaining in an Investment Subdivision
after the transfer is less than 1, we will
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transfer the amount remaining in addition to the amount requested. We will not
allow a transfer into any Investment Subdivision unless the number of annuity
units of that Investment Subdivision after the transfer is at least 1. No
transfer charge is imposed for transfers of annuity units. The amount of the
income payment as of the date of the transfer will not be affected by the
transfer.
GENERAL INFORMATION
Annual Statement
Within 30 days after each policy anniversary, we will send you an annual
statement. The statement will show the Account Value and Surrender Value as of
the policy anniversary. The statement will also show premiums paid and charges
made during the policy year.
Calculation of Values
If the Net Investment Factor is always equivalent to an effective annual
interest rate of 4%, the account values in this policy will always at least
equal the account values required of an equivalent general account policy by the
law where this policy was delivered.
A detailed statement of how we calculate the values in this policy has been
filed with the insurance department where this policy was delivered.
Evidence of Death, Age, Sex or Survival
We will require proof of death before we act on policy provisions relating to
death of any person or persons. We may also require proof of the age, sex or
survival of any person or persons before we act on any policy provision
dependent upon age, sex or survival.
Incontestability
We will not contest this policy.
Misstatement of Age or Sex
If the Annuitant's age or sex is misstated on the policy data page, any policy
benefits or proceeds, or the availability thereof, will be determined using the
correct age and sex.
Premium Tax
Premium tax rules vary by state and change from time to time. Some states assess
a tax against us upon receipt of premium and some states upon annuitization of
proceeds.
Tax assessed upon receipt of premium: The premium tax rate shown on page 3 is
the rate that was in effect in your state at policy issue. To calculate any
applicable premium tax in effect on the date we receive the premium payment,
multiply the premium payment by the premium tax rate. This is the amount of any
state and/or local premium tax charged to us for this policy. We reserve the
right to deduct any such tax either from your premium payment(s) when received,
or from proceeds later when paid. (Proceeds includes benefits from surrender,
maturity and death.)
Tax assessed upon annuitization of proceeds: Since some states assess a premium
tax on proceeds used to purchase income payments, we reserve the right to deduct
from such proceeds any premium tax paid by us. Because state premium tax rules
change from time to time, the tax rate, if any, applicable to proceeds used to
purchase income payments is not shown in your policy. You may request
notification of the amount of this tax before income payments begin.
Nonparticipating
This policy is nonparticipating. No dividends are payable.
Written Notice
Any written notice to us should be sent to our home office at 6610 West Broad
Street, Richmond, Virginia, 23230. Please include the policy number and the
Annuitant's full name.
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Any notice we send you will be sent to the last known address on file with our
company. You should request an address change form if you move.
OPTIONAL PAYMENT PLANS
Death benefit and Surrender Value proceeds will be paid in one lump sum, and
maturity proceeds will be paid as described in the Monthly Income Benefit
section. Subject to the rules stated below, however, any part of the death or
surrender proceeds can be left with us and paid under a payment plan. If you
choose to leave the proceeds with us and receive payments under a payment plan,
the proceeds less any applicable premium tax will be applied to calculate your
income. During the Annuitant's life you (or the Designated Beneficiary at your
death) can choose a plan. If a plan has not been chosen at the death of the
Annuitant, the Designated Beneficiary can choose a plan if the death benefit is
to be paid.
There are several important payment plan rules:
o Our consent must be obtained prior to selecting an optional payment
plan if the payee is not a natural person.
o Payment made under an Optional Payment Plan at the death of the Owner,
Joint Owner or Annuitant must conform with the rules in the Death
Provisions, including the Payment of Benefits section.
o If you change a beneficiary, your plan selection will no longer be in
effect unless you request that it continue.
o Any choice or change of a plan must be sent in writing to our home
office.
o The amount of each payment under a plan must be at least $100.
o Payments under a Fixed Income option will begin on the date we receive
proof of the Annuitant's death, on surrender, or on the policy's
maturity date.
o Payments under a Variable Income option will begin within seven days
after the date payments would begin under the corresponding fixed
option.
o Payments under Plan 4 will begin at the end of the first interest
period after the date proceeds are otherwise payable.
Fixed Income Options
Optional Payment Plans 1 through 5 are available as Fixed Income Options. Any
amount left with us under a Fixed Income option will be transferred to our
general account. Payments made will equal or exceed those required by the state
where this policy is delivered.
Variable Income Options
Optional Payment Plans 1 and 5 are available as Variable Income Options. This
means that income payments, after the first, will reflect the investment
experience of the Investment Subdivisions of the Separate Account.
Proceeds may be allocated to one or more Investment Subdivisions of the Separate
Account. The first income payment is determined by the Plan chosen and the
amount of proceeds applied to the Plan. The dollar amount of subsequent income
payments is determined by means of Annuity Units.
The number of Annuity Units for an Investment Subdivision will be determined at
the time income payments begin and will remain fixed unless transferred (as
shown below). The number of Annuity Units for an Investment Subdivision is (a)
divided by (b), where:
(a) is the portion of the first income payment allocated to that Investment
Subdivision; and
(b) is the Annuity Unit Value for that Investment Subdivision seven days
before the income payment is due.
After the first income payment, each subsequent income payment is a dollar
amount equal to the sum of the income payment amounts for each Investment
Subdivision. The income payment amount for an Investment Subdivision is the
number of Annuity Units for that Investment Subdivision times the Annuity Unit
Value for that Investment Subdivision seven days before the payment is due.
15
<PAGE>
Annuity Units may be transferred upon request. The number of Annuity Units for
the new Investment Subdivision is (a) times (b), divided by (c), where:
(a) is the number of Annuity Units for the current Investment Subdivision;
(b) is the Annuity Unit Value for the current Investment Subdivision; and
(c) is the Annuity Unit Value for the new Investment Subdivision.
Payment Plans
The fixed income options are shown below. Variable income options, if
applicable, have the same initial payment as the corresponding fixed option. The
monthly payment rate per $1000, as shown in the Plan 1 and Plan 5 Tables, is
based on the 1983 Table `a', using 3% interest.
Plan 1. Life lncome with Period Certain. We will make equal monthly payments for
a guaranteed minimum period. If the payee lives longer than the minimum period,
payments will continue for his or her life. The minimum period can be 10, 15 or
20 years. Payments will be according to the table below. Guaranteed amounts
payable under this plan will earn interest at 3% compounded yearly. We may
increase the interest rate and the amount of any payment. If the payee dies
before the end of the guaranteed period, the amount of remaining payments for
the minimum period will be discounted at the same rate used in calculating
income payments. Discounted means we will deduct the amount of interest each
remaining payment would have earned had it not been paid out early. The
discounted amounts will be paid in one sum to the payee's estate unless
otherwise provided.
Plan 1 Table
Monthly payment rates for each $1,000 of proceeds under Plan 1.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Settlement Male Payee Female Payee
Age
--------------------------------------------------------------
10 Years 15 Years 20 Years 10 Years 15 Years 20 Years
Certain Certain Certain Certain Certain Certain
- --------------------------------------------------------------------------
<S><C>
20 $2.90 $2.89 $2.89 $2.80 $2.80 $2.80
25 2.99 2.98 2.98 2.88 2.87 2.87
30 3.10 3.10 3.09 2.96 2.96 2.96
35 3.24 3.24 3.23 3.08 3.07 3.07
40 3.43 3.41 3.39 3.22 3.21 3.20
45 3.66 3.64 3.60 3.40 3.39 3.37
50 3.95 3.91 3.85 3.63 3.61 3.59
51 4.02 3.97 3.91 3.68 3.66 3.63
52 4.09 4.04 3.96 3.74 3.72 3.68
53 4.16 4.11 4.02 3.80 3.77 3.74
54 4.24 4.18 4.08 3.86 3.83 3.79
55 4.32 4.25 4.15 3.93 3.90 3.85
56 4.41 4.33 4.21 4.00 3.96 3.91
57 4.50 4.41 4.28 4.07 4.03 3.97
58 4.60 4.49 4.34 4.15 4.10 4.03
59 4.70 4.58 4.41 4.23 4.18 4.10
60 4.81 4.67 4.48 4.32 4.26 4.17
61 4.92 4.77 4.55 4.42 4.35 4.24
62 5.04 4.86 4.62 4.52 4.43 4.31
63 5.17 4.96 4.69 4.62 4.53 4.39
64 5.30 5.06 4.76 4.73 4.62 4.46
- --------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------
Settlement Male Payee Female Payee
Age
--------------------------------------------------------------------------
10 Years 15 Years 20 Years 10 Years 15 Years 20 Years
Certain Certain Certain Certain Certain Certain
- --------------------------------------------------------------------------------------
<S><C>
65 $5.44 $5.17 $4.83 $4.85 $4.72 $4.54
66 5.58 5.28 4.89 4.97 4.83 4.62
67 5.74 5.38 4.96 5.10 4.93 4.69
68 5.89 5.49 5.02 5.24 5.04 4.77
69 6.05 5.60 5.08 5.39 5.16 4.84
70 6.22 5.70 5.13 5.55 5.28 4.92
71 6.39 5.81 5.18 5.71 5.39 4.99
72 6.57 5.91 5.23 5.88 5.51 5.05
73 6.75 6.01 5.27 6.06 5.63 5.12
74 6.93 6.10 5.31 6.25 5.75 5.17
75 7.12 6.19 5.35 6.44 5.87 5.22
76 7.30 6.28 5.38 6.64 5.98 5.27
77 7.49 6.35 5.40 6.85 6.09 5.31
78 7.67 6.43 5.42 7.06 6.19 5.35
79 7.85 6.49 5.44 7.27 6.28 5.38
80 8.02 6.55 5.46 7.48 6.37 5.41
81 8.18 6.61 5.47 7.68 6.45 5.43
82 8.34 6.65 5.48 7.88 6.52 5.45
83 8.49 6.69 5.49 8.08 6.58 5.47
84 8.63 6.73 5.50 8.26 6.63 5.48
85 8.76 6.76 5.50 8.43 6.68 5.49
- --------------------------------------------------------------------------------------
</TABLE>
Values for ages not shown will be furnished upon request.
Plan 2. Income for a Fixed Period. We will make equal periodic payments for a
fixed period, not longer than 30 years. Payments can be annual, semi-annual,
quarterly or monthly. Payments will be made according to the table below.
Guaranteed amounts payable under this plan will earn interest at 3% compounded
yearly. We may increase the interest and the amount of any payment. If the payee
dies, the amount of the remaining guaranteed payments will be
16
<PAGE>
discounted to the date of the payee's death at the same rate used in calculating
income payments. The discounted amount will be paid in one sum to the payee's
estate unless otherwise provided.
Plan 2 Table
Monthly payment rates for each $1,000 of proceeds under Plan 2.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Years 1 2 3 4 5 6 7 8 9
Payable
- -------------------------------------------------------------------------------------------------------------------
<S><C>
Monthly $84.47 $42.86 $28.99 $22.06 $17.91 $15.14 $13.16 $11.68 $10.53
Payment
- -------------------------------------------------------------------------------------------------------------------
Years 16 17 18 19 20 21 22 23 24
Payable
- -------------------------------------------------------------------------------------------------------------------
Monthly $6.53 $6.23 $5.96 $5.73 $5.51 $5.32 $5.15 $4.99 $4.84
Payment
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------
Years 10 11 12 13 14 15
Payable
- ----------------------------------------------------------------------------------
<S><C>
Monthly $9.61 $8.86 $8.24 $7.71 $7.26 $6.87
Payment
- ----------------------------------------------------------------------------------
Years 25 26 27 28 29 30
Payable
- ----------------------------------------------------------------------------------
Monthly $4.71 $4.59 $4.47 $4.37 $4.27 $4.18
Payment
- ----------------------------------------------------------------------------------
</TABLE>
Annual, semi-annual or quarterly payments are determined by multiplying the
monthly payment by 11.838, 5.963 or 2.992, respectively.
Plan 3. Income of a Definite Amount. We will make equal periodic payments of a
definite amount. Payments can be annual, semi-annual, quarterly or monthly. The
amount paid each year must be at least $120 for each $1,000 of proceeds.
Payments will continue until the proceeds are exhausted. The last payment will
equal the amount of any unpaid proceeds. Unpaid proceeds will earn interest at
3% compounded yearly. We may increase the interest rate. If we do, the payment
period will be extended. If the payee dies, the amount of the remaining proceeds
with earned interest will be paid in one sum to his or her estate unless
otherwise provided.
Plan 4. Interest Income. We will make periodic payments of interest earned from
the proceeds left with us. Payments can be annual, semi-annual, quarterly or
monthly, and will begin at the end of the first period chosen. Proceeds left
under this plan will earn interest at 3% compounded yearly. We may increase the
interest rate and the amount of any payment. If the payee dies, the amount of
remaining proceeds and any earned but unpaid interest will be paid in one sum to
his or her estate unless otherwise provided.
Plan 5. Joint Life and Survivor Income. We will make equal monthly payments to
two payees for a guaranteed minimum of 10 years. Each payee must be at least 35
years old when payments begin. The guaranteed amount payable under this plan
will earn interest at 3% compounded yearly. We may increase the interest rate
and the amount of any payment. Payments will continue as long as either payee is
living. If both payees die before the end of the minimum period, the amount of
the remaining payments for the 10 year period will be discounted at the same
rate used in calculating the monthly income. The discounted amount will be paid
in one sum to the survivor's estate unless otherwise provided.
Plan 5 Table
Monthly payment rates for each $1,000 of proceeds under Plan 5.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Male Settlement
-------------------------------------------------------
Age 35 40 45 50
- -----------------------------------------------------------------------
<S><C>
35 $2.85 $3.00 $3.06 $3.11
40 2.98 3.06 3.13 3.20
45 3.01 3.10 3.20 3.30
50 3.03 3.14 3.25 3.38
55 3.04 3.16 3.30 3.45
60 3.05 3.18 3.33 3.51
65 3.06 3.19 3.36 3.56
70 3.07 3.20 3.37 3.59
75 3.07 3.21 3.38 3.61
80 3.07 3.21 3.39 3.62
85 & Over 3.07 3.22 3.39 3.62
- -----------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Male Settlement Female Settlement Age
----------------------------------------------------------------------------------------------------
Age 55 60 65 70 75 80 85 & Over
- --------------------------------------------------------------------------------------------------------------------
35 $3.15 $3.18 $3.20 $3.22 $3.23 $3.24 $3.24
40 3.26 3.31 3.35 3.38 3.40 3.41 3.42
45 3.39 3.46 3.53 3.58 3.61 3.64 3.65
50 3.51 3.63 3.73 3.81 3.87 3.91 3.93
55 3.62 3.79 3.94 4.08 4.18 4.25 4.29
60 3.72 3.94 4.16 4.37 4.55 4.67 4.75
65 3.79 4.07 4.37 4.68 4.96 5.18 5.32
70 3.85 4.17 4.55 4.97 5.39 5.75 6.00
75 3.89 4.24 4.68 5.20 5.78 6.32 6.73
80 3.91 4.28 4.76 5.37 6.08 6.81 7.40
85 & Over 3.92 4.31 4.81 5.47 6.28 7.15 7.91
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Figures for intermediate ages, for two males or two females will be furnished
upon request.
17
<PAGE>
Settlement Age: The settlement age is the payee's age nearest birthday on the
date payments begin, minus an age adjustment from the table below. The age
adjustment cannot exceed the age of the payee.
- ------------------------------------------------------------------------
Year Payments Begin Age
After Prior To Adjustment
- ------------------------------------------------------------------------
---- 2001 0
2000 2026 3
2025 2051 7
2050 ---- 10
- ------------------------------------------------------------------------
LIFE OF THE LIFE INSURANCE COMPANY OF VIRGINIA
VIRGINIA VARIABLE ANNUITY APPLICATION
1 Proposed
Annuitant __________________________ Social Security No._________________
Name(if no middle name,use
NMN)
________________________ Date of Birth _______________
Street address
_______________________ Age________
City State Zip
( ) Sex __Male __Female
--------------------------
Telephone
1a
Contingent
Annuitant
__________________________ Social Security No._________________
Name(if no middle name,use
NMN)
________________________ Date of Birth _______________
Street address
_______________________ Age________
City State Zip
( ) Sex __Male __Female
--------------------------
Telephone
2 Owner
Taxpayer ID or
__________________________ Social Security No._________________
Name(if no middle name,use
NMN) If applicable:
________________________ Date of Birth _______________
Street address
_______________________ Age________
City State Zip
( ) Sex __Male __Female
--------------------------
Telephone
2a Joint
Owner
Taxpayer ID or
__________________________ Social Security No._________________
Name(if no middle name,use
NMN) If applicable:
________________________ Date of Birth _______________
Street address
_______________________ Age________
City State Zip
( ) Sex __Male __Female
--------------------------
Telephone
3 Beneficiary
Primary[ ]
__________________________ Relationship[ ]
Name(if no middle name,use to owner
NMN)
Annuitant [ ]
________________________
Street address
Contingent [ ]
__________________________ Relationship[ ]
Name(if no middle name,use to owner
NMN)
Annuitant [ ]
________________________
Street address
CHANGES IN DESIGNATIONS
The following designations may be changed by the Owner at any time, unless they
are irrevocable. Check the appropriate boxes below ONLY if a designation is to
become irrevocable:
[ ]Primary [ ]Contingent [ ]Contingent
Beneficiary Beneficiary Annuitant
4 TYPE OF [ ]Nonqualified [ ]Qualified:
PLAN
[ ]Individual [ ]IRA(circle One):
[ ]Joint Regular payment;
tax year_________
Rollover
Direct Transfer
[ ]Simplified
Employee Pension
[ ]TSA/403(b)
[ ]Other
Owner:
[ ]Does [ ]Does Not
wish to have Federal
Income Tax withheld from
surrenders or annuity
payments.
5 Payment
With
Application $25,000
(initial minimum: $5,000)
6 Allocation Investment Subdivisions
of Purchase
Payments %
------
Enter a %
------
percentage %
------
of at %
------
least 10% %
------
for each %
------
fund %
------
selected % Guarantee Account(where available)
Percentages
must total 100%
13371 10/90
7 Dollar-Cost TRANSFER DOLLAR AMOUNTS FROM THE Money Market
Averaging Subdivision to the following investment subdivisions according
to the frequency indicated:
20
<PAGE>
FREQUENCY AMOUNTS TRANSFER TO INVESTMENT
(must be $100 or more) SUBDIVISIONS
[ ]MONTHLY (on the
5th of each
month.) $
$
$
[ ]QUARTERLY(on the $
last business $
each calendar $
quarter.)
I understand that the account value in my elected Money Market Subdivision must
be kept at or above the account value level which will permit the dollar-cost
averaging transfers requested; otherwise, these transfers will end. This request
is in lieu of the requirement for individual written transfer requests. I may
also change or terminate these transfers by written notice to the address below,
or by telephone if a Personal Identification Number (PIN) has been issued (See
Section 8). Initials of owner:
8 Telephone [ ]Telephone Transfer Agreement Form for assigning Personal
Identification Transfer Number for telephone transfers is being submitted with
this application. (optional)
[ ]Please send Telephone Transfer Agreement Form.
9 Replacement Will the proposed contract replace any existing annuity or
insurance contract?
[ ]No [ ]Yes (If yes, list company name, plan and year of
issue.)
10 Additional
Remarks
11 Signatures
Important All statements made in this application are true to the best
Information. of our knowledge and belief, and the answers to these
Please Read questions, together with this agreement, are the basis for
Carefully. issuing the policy. I/We agree to all terms and conditions as
shown on the front and back. I/We further agree that this
application shall be a part of the annuity contract, and
verify our understanding that ALL PAYMENTS AND VALUES PROVIDED
BY THE CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF
THE SEPARATE ACCOUNT, ARE VARIABLE AND NOT GUARANTEED AS TO
DOLLAR AMOUNT. THE OWNER ACKNOWLEDGES RECEIPT OF PROSPECTUSES
AND ALL APPLICABLE AMENDMENTS DATED WITHIN 13 MONTHS OF THIS
APPLICATION FOR THE SEPARATE ACCOUNT AND ALL MUTUAL FUNDS
APPLICABLE TO THE POLICY. I/We agree that no one, except the
President, the Secretary, or a Vice President of the Company
can make or change any annuity.
Proposed
Dated at______________________on________,19__ Annuitant__________________
City, State Month,day
Witness to Contingent
all signatures Annuitant
Licensed Resident Agent/Broker (Signature required if
designates as irrevocable)
Owner
Business name or stamp (Signature required of
other than Proposed
Annuitant) Joint Owner
21
<PAGE>
AGENTS STATEMENT - Do you have knowledge or reason to believe that replacement
of insurance is involved?
[ ]Yes [ ]No If "Yes",explain and submit a completed replacement form
where required.
Licensed Resident Agent/Broker
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Agency/Brokerage and Code (Print) Agent/Broker and Code (Print) Agent/Broker code(Print)
- --------------------------------------------------------------------------------------------------------------
Agent's/Broker Social Security/Tax Agent's/Broker's address Telephone Number
ID no.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The Life Insurance Company of Virginia
6610 W. Broad Street
Richmond, Virginia 23230
22
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY POLICY
* Income payments beginning at maturity
* No dividends
* Some benefits reflect investment results
THE LIFE INSURANCE
COMPANY OF VIRGINIA
23
<PAGE>
Exhibit 4(a) Form of Policy
(ii) Field Version
24
<PAGE>
TABLE OF CONTENTS
Contract Specifications................................................... 3
Introduction...............................................................6
Owner, Annuitant and Beneficiary Provisions................................7
Death Provisions...........................................................8
Premium Payments...........................................................9
Monthly Income Benefit....................................................10
Account Value Benefits....................................................11
Separate Account..........................................................13
General Information.......................................................16
Optional Payment Plans....................................................17
Copies of any endorsements or riders follow page 19.
WORD INDEX
Account Value . . . . . . . . . . 11 Optional Payment Plans. . . . . .17-19
Allocation of Premiums . . . . . . 9 Owner . . . . . . . . . . . . . . . 7
Annual Statement . . . . . . . . . 16 Ownership Change . . . . . . . . . 7
Beneficiary . . . . . . . . . . . 7 Premiums. . . . . . . . . . . . . . 9
Beneficiary Change . . . . . . . . 7 Separate Account. . . . . . . . . . 13
Death Benefit . . . . . . . . . . 9 Withdrawal. . . . . . . . . . . . . 11
Investment Subdivisions . . . . . 13 Withdrawal Value. . . . . . . . . . 11
Misstatement of Age or Sex . . . . 16 Transfers . . . . . . . . . . . . . 15
Notices . . . . . . . . . . . . . 16 Unit Value. . . . . . . . . . . . . 14
INTRODUCTION
This is a flexible premium variable deferred annuity. The initial premium
payment is due on the contract date. Additional premiums may be paid at any time
before the earlier of (1) the Income Date and (2) the contract anniversary on
which the Annuitant attains age 86. In return for these premiums and the
application, we provide certain benefits.
The contract provides a monthly income beginning on the Income Date. The amount
of monthly income will depend on:
* the Withdrawal Value on the Income Date;
* the Annuitant's sex and settlement age on the Income Date; and
* the payment plan chosen.
Depending upon the conditions described in the Death Provisions section, this
contract provides for either the payment of a death benefit or the continuation
of the contract at the death of an Annuitant prior to the Income Date.
Person, as used in this contract is a human being, a trust, a corporation or any
other legally recognized entity.
25
<PAGE>
As used in this contract, you or yours refers to the Owner or Owners, unless the
Owner is a Trust and the Trust allows the Annuitant and any Joint Annuitant to
exercise ownership rights under this contract. If such is the case, then you or
yours means the Annuitant and any Joint Annuitant. The Owner and the Annuitant
are shown in the application.
We, us or ours refers to The Life Insurance Company of Virginia.
The Contract and Its Parts
This annuity is a legal contract. It is the entire contract between you and us.
An agent cannot change this contract. Any change to it must be in writing and
approved by us. Only our President or one of our Vice Presidents can give our
approval. READ YOUR CONTRACT CAREFULLY.
Contract means this contract with the attached application and any endorsements.
All statements in the application are considered representations and not
warranties. The term "policy" means the same as, and is interchangeable with,
the term "contract."
We reserve the right to amend this contract as needed to maintain its status as
an annuity under the Internal Revenue Code. If the contract is amended, we will
send you a copy of the amendment, together with the applicable regulation,
ruling or other requirement imposed by the Internal Revenue Service which
requires such amendment.
Age
Age on the contract date or on a contract anniversary prior to the date payments
begin means the person's age on his or her last birthday.
Dates Used in the Contract
The contract date is the date you signed the application and paid the initial
premium. The contract goes into effect on the contract date. Contract years and
anniversaries for the initial premium are measured from this date. Years for
determining charges related to additional premiums are measured from the date of
receipt of each additional premium.
The contract reaches its maturity on the Income Date. The Income Date is the
date we start to pay a monthly income to the Annuitant if still living.
OWNER, ANNUITANT AND BENEFICIARY PROVISIONS
The Owner
An Owner or Joint Owner has rights while this contract is in force, subject to
the rights of any beneficiary named irrevocably, and any assignee under an
assignment filed with us.
Joint Owners own the contract equally with the right of survivorship. Right of
survivorship means that if a Joint Owner dies, his or her interest in the
contract will pass to the surviving Joint Owner. If the surviving Joint Owner is
not the decedent's spouse, distribution of contract proceeds is required by
federal tax law. See Death Provisions section for distribution rules.
The Annuitant and any Joint Annuitant are the Owner(s) of the contract unless a
Trust for the benefit of the Annuitant and any Joint Annuitant is named as
Owner. If the Owner is a Trust and the Trust allows any person(s) other than the
Trustee to exercise ownership rights under this contract, then such other
person(s) must be named as the Annuitant and any Joint Annuitant.
The Annuitant
The Annuitant is the person designated to receive the monthly income benefit
beginning on the Income Date. He/she is named in the application. The
Annuitant's age and sex are used to determine the amount of the guaranteed
monthly income payment.
26
<PAGE>
Joint Annuitant
If a Joint Annuitant is named in the contract, then the Annuitant and Joint
Annuitant are the persons designated to equally receive the monthly income
benefit beginning on the Income Date.
Both the Annuitant's and Joint Annuitant's age and sex are used to determine the
amount of the guaranteed monthly income payment. The Income Date, and the date
we will no longer allow additional premium payments, are determined using the
age of the older of the Annuitant and Joint Annuitant.
If a Joint Annuitant is named, unless stated otherwise, references in this
contract to "Annuitant" mean both the Annuitant and Joint Annuitant.
At the first death of either the Annuitant or Joint Annuitant, the survivor
becomes the Final Annuitant.
The Beneficiary
You can name Primary and Contingent Beneficiaries. Your original beneficiary
choice is shown on page 3.
You may name more than one Primary or Contingent Beneficiary. If you do, any
death benefit proceeds payable will be paid in equal shares to the survivors in
the appropriate beneficiary class, unless you have requested otherwise.
Changing the Owner and Beneficiary
If any Owner is a Trust, you can, until the death of the Annuitant, change such
Trust-Owner, if you reserved this right. The new Owner must also be a Trust for
the benefit of the same Annuitant and the same Joint Annuitant, if any. Also,
until the death of an Annuitant, you can change the Beneficiary if you reserved
this right. A person named irrevocably may be changed only with that person's
written consent. Except as just described, neither the Owner nor the Beneficiary
can be changed. In addition, neither the Annuitant nor the Joint Annuitant can
be changed.
To make a change, send a written request to our home office. The request and the
change must be in a form satisfactory to us. The change will take effect as of
the date you sign the request. The change will be subject to any payment we make
before we record the change.
27
<PAGE>
DEATH PROVISIONS
Designated Beneficiary
If any Annuitant dies while this contract is in force and before income payments
begin, the Designated Beneficiary will be treated as the sole owner of the
contract following such death, subject to the distribution rules set forth in
this section. The Designated Beneficiary will be the person first listed below
who is alive or in existence on the date of such death:
(1) Final Annuitant
(2) Primary Beneficiary(ies)
(3) Contingent Beneficiary(ies)
(4) Estate of the sole Annuitant (if no Joint Annuitant was named) or of
the Final Annuitant.
If a Designated Beneficiary dies within seven days of the death of the
Annuitant, the Designated Beneficiary's death will be treated as if it had
occurred prior to the Annuitant's death.
If there is more than one Designated Beneficiary, each person's share will be
treated separately for purposes of this section.
Distribution Rules
If we receive due proof of death of an Annuitant while this contract is in
effect, one of the options available to the Designated Beneficiary is to cancel
the contract in exchange for payment of the Death Benefit. (See the Optional
Death Benefit provision for details.) If this option is not chosen while
available, then one of the following distribution rules will apply.
Rule 1. If an Annuitant dies before income payments begin and the Designated
Beneficiary is the surviving spouse of the deceased Annuitant, the contract will
continue in force with the surviving spouse as the new Annuitant. On the
surviving spouse's death, the entire interest in the contract will be paid to
the Designated Beneficiary within 5 years of such spouse's death.
Rule 2. If an Annuitant dies before income payments begin and the Designated
Beneficiary is not the surviving spouse of the deceased Annuitant, we will pay
the Withdrawal Value in one lump sum to, or for the benefit of, the Designated
Beneficiary. Instead of receiving this payment, the Designated Beneficiary may
elect to:
(a) continue the contract in force during the five year period following the
date of the Annuitant's death and receive the Withdrawal Value at any time
during that period by making a full or partial withdrawal(s). No premium
payments will be accepted during this period. If at the end of that five year
period the entire Withdrawal Value has not been paid, we will terminate the
contract and pay any remaining Account Value to, or for the benefit of, the
Designated Beneficiary; or
(b) in writing within 60 days after the date of death, apply the Account Value
under Optional Payment Plans 1 or 2, with the first payment to the
Designated Beneficiary being made no later than one year after the date of
an Annuitant's death. Payments must be made over the life of, or over a
period not exceeding the life expectancy of, the Designated Beneficiary.
If the Designated Beneficiary dies before all payments have been completed, any
remaining payments we make will be made to the person named in writing by the
Designated Beneficiary. If no such person is named, payments will be made to the
Designated Beneficiary's estate.
Rule 3. If any Annuitant or Designated Beneficiary dies on or after the date
income payments begin and while this contract in force, any remaining payments
due will be made at least as rapidly as under the method of distribution in
effect at the time of such death.
28
<PAGE>
Optional Death Benefit at Death of Annuitant
If any Annuitant dies before income payments begin and while this contract is in
effect, the Designated Beneficiary may request payment of the Death Benefit . We
must receive the request for payment within 60 days after we receive due proof
of an Annuitant's death, and in no case later than one year after the date of
death. Upon receipt of such a request, the Death Benefit will be paid in one
lump sum immediately unless the Designated Beneficiary elects to apply the
entire Death Benefit in accordance with Rule 2(b) in the Distribution Rules
provision of this contract. If we do not receive the request within these time
limits, the Withdrawal Value will be payable instead of the Death Benefit, and
the entire interest in the contract must be distributed in accordance with rules
set forth in the Distribution Rules provision of this contract.
During the first seven policy years, the Death Benefit will be the greater of:
* The total of premiums paid reduced by any partial withdrawals plus their
withdrawal charges; or
* The Account Value on the date we receive proof of the Annuitant's death or,
if later, the date of your request.
During any subsequent seven year period, the Death Benefit will be the greater
of:
* The Death Benefit on the last day of the previous seven year period, plus any
premiums paid since then, reduced by any partial withdrawals plus their
withdrawal charges since then; or
* The Account Value on the date we receive proof of the Annuitant's death or,
if later, the date of your request.
If the Death Benefit is paid, the contract and all further obligations under it
will terminate.
PREMIUM PAYMENTS
The initial premium is due on the contract date.
Additional Premium Payments
You may make additional premium payments at any time before the earlier of (1)
the date which is ten years preceding the Income Date and (2) the contract
anniversary on which the Annuitant attains age 86. Each additional premium
payment must be at least $1,000.
When and Where to Pay Premiums
Each premium is payable in advance. Make any checks or money orders payable to
Life of Virginia.
Allocation of Premiums
You may allocate premiums to one or more Investment Subdivisions of the Separate
Account, up to the maximum number shown on page 4. The portion of each premium
allocated to any particular Investment Subdivision must be at least 10%.
Premiums will initially be allocated in accordance with the allocations
requested in the application.
You may change the allocation of later premiums at any time, without charge, by
sending a written notice to us at our home office. The allocation will apply to
premiums received after we record the change.
MONTHLY INCOME BENEFIT
We will pay a monthly income to the Annuitant for a guaranteed minimum period
beginning on the Income Date. The monthly income will be a variable income
payment similar to that described in the provision titled "Variable Income
Options" under the Optional Payment Plans section. Payments will be made under a
Life Income with 10 Years Certain plan, unless you choose otherwise.
Under the Life Income 10 Years Certain plan, income payments will continue for
the lifetimes of the Annuitant or any Joint Annuitant. If the Annuitant and any
Joint Annuitant die before the end of ten years, the remaining
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<PAGE>
payments for the guaranteed ten year period will be discounted at the same rate
used to calculate the income payment. The discounted amount will be paid in one
sum.
Prior to the Income Date, you may choose to change the payment plan by written
request. If you do choose a different plan, the amount of the income payment
will reflect the plan chosen. You may elect to receive the Withdrawal Value in a
lump sum instead of receiving income payments. If we pay the Withdrawal Value,
we will have no further obligation under the contract.
Income Date
Unless a different date is chosen on the application, the Income Date is the
contract anniversary that the Annuitant reaches age 90. The Income Date is the
date we start to pay a monthly income to the Annuitant if still living. You may
change the Income Date to any date at least ten years after the date of the last
premium payment. To make a change, send us written notice before the Income Date
then in effect.
If you change the Income Date, the Income Date will then mean the Income Date
you selected. You may pay premiums until the date which is ten years preceding
the newly selected Income Date unless that right has been terminated by the
provisions of this policy. The term "maturity date" means the same as, and is
interchangeable with, the term "income date."
How We Determine Monthly Income
The initial income payment under the automatic payment plan, payable monthly, is
calculated by multiplying (a) times (b) divided by (c) where:
(a) is the monthly payment rate per $1000, shown under Optional Payment Plan 1
(Plan 5 for Joint Annuitants) using the sex(es) and settlement age(s) of the
Annuitant(s) on the Income Date;
(b) is the Withdrawal Value on the Income Date; and
(c) is $1,000.
Annuity payments will be made monthly unless quarterly, semi-annually or annual
payments are chosen by written request. However, if any payment made more
frequently than annually would be or becomes less than $100, we reserve the
right to reduce the frequency of payments to an interval that would result in
each payment being at least $100. If the annual payment payable at maturity is
less than $20.00, we will pay the Withdrawal Value and the contract will
terminate effective as of the Income Date.
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<PAGE>
ACCOUNT VALUE BENEFITS
The Account Value of the contract is equal to the account value allocated to the
Investment Subdivisions of the Separate Account.
On the date the initial premium is received and accepted, the Account Value
equals the initial premium. At the end of each valuation period after such date,
the Account Value allocated to each Investment Subdivision of the Separate
Account is (a) plus (b) plus (c) minus (d) minus (e), where:
(a) is the Account Value allocated to the Investment Subdivision at the end
of the preceding valuation period, multiplied by the Investment Subdivision's
Net Investment Factor for the current period;
(b) is premium payments received during the current valuation period;
(c) is any other amounts transferred into the Investment Subdivision during
the current valuation period;
(d) is Account Value transferred out of the Investment Subdivision during the
current valuation period;
(e) is any partial withdrawal made from the Investment Subdivision during the
current valuation period.
In addition, whenever a valuation period includes the contract anniversary day,
the Account Value at the end of such period is reduced by the annual contract
maintenance charge allocated to the Account Value in the Investment Subdivision
for that contract anniversary day.
Annual Contract Maintenance Charge
There will be a charge made each year for maintenance of the contract. This
charge is made once for each contract year against the Account Value allocated
to the Separate Account. The charge for a contract year will be made at the
earlier of the next contract anniversary or the date of a full withdrawal. The
amount of this charge is $25.00. We will waive this charge if the Account Value
exceeds $75,000 at the time the charge is due.
The annual contract maintenance charge will be allocated among the Investment
Subdivisions of the Separate Account in the same proportion that the contract's
Account Value in each Investment Subdivision bears to the total Account Value in
all Investment Subdivisions at the beginning of the contract month. Other
allocation methods may be available on request.
Withdrawals
You can make a full or partial withdrawal from this contract by sending a
written request to our home office. We must receive the request before income
payments begin. You may be required to pay a withdrawal charge. The charge will
be deducted from the amount withdrawn. When used in connection with this
contract, the term "surrender" means the same as the term "withdrawal."
Full Withdrawal. You must send us your contract with your request for full
withdrawal. The amount payable is the Withdrawal Value. The Withdrawal Value of
this contract is the Account Value on the date we receive your written request
for withdrawal in our home office, less any withdrawal charge.
Partial Withdrawal. You may make a partial withdrawal from the Account Value of
this contract at any time. We will not permit the amount of a partial withdrawal
to be less than $500 or to reduce the Account Value to less than $5000. The
amount payable will be the amount of the partial withdrawal less any withdrawal
charge.
You may tell us how to deduct the partial withdrawal from the Investment
Subdivisions of the Separate Account. If you do not, the partial withdrawal will
be deducted from each Investment Subdivision in the same proportion that the
contract's Account Value in that Investment Subdivision bears to the total
Account Value in all Investment Subdivisions on the date we receive the request
in our home office.
Withdrawal Charge
All or part of the amount withdrawn may be subject to a withdrawal charge. The
amount subject to a charge is the lesser of (a) or (b), where:
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(a) is the amount withdrawn;
(b) is the total premiums, less the total of all surrender amounts previously
allocated to premium payments.
The withdrawal charge will be the applicable percentage(s) of the amount subject
to a charge. For purposes of determining the applicable percentage(s),
withdrawal amounts that are subject to a charge will be allocated to remaining
premium payments in the order that the premium payments were received. Remaining
premium payments are the premium payments, less the amount of any withdrawals
previously allocated to them. The applicable percentage for each premium payment
is found below in the Table of Withdrawal Charges next to the number
representing the number of full and partially completed years since the premium
payment.
Table of Withdrawal Charges
Year Withdrawal Charge Percentage
1 6
2 6
3 5
4 5
5 5
6 4
7 2
Year 8 and later 0
Reduced Charges on Certain Withdrawals. Withdrawal charges will be reduced for
the first withdrawal in each contract year. If the first withdrawal of the
contract year is a partial withdrawal of 10% of the Account Value, or less, the
amount withdrawn will not be subject to a charge.
If the first withdrawal of the contract year is a full withdrawal, or a partial
withdrawal of more than 10% of the Account Value, the amount of the withdrawal
that is subject to a charge will be reduced by 10% of the Account Value.
There will be no withdrawal charge if you choose one of the following Optional
Payment Plans:
* Plan 1;
* Plan 2 for a period of 5 or more years;
* Plan 5.
Waiver of Withdrawal Charges in the Event of Hospital or Nursing Facility
Confinement
We will waive the withdrawal charges otherwise applicable to a full withdrawal
or one or more partial withdrawals occurring before income payments begin if:
* An Annuitant is, or has been confined to a state licensed or legally
operated hospital or inpatient nursing facility for at least 30 consecutive
days; and
* Such confinement begins at least one year after the contract date; and
* An Annuitant was age 80 or younger on the contract date; and
* The request for the full or partial withdrawal, together with proof of such
confinement, is received in the Home Office while an Annuitant is confined
or within 90 days after discharge from the facility.
For purposes of this provision, Annuitant means either the Annuitant, Joint
Annuitant or Final Annuitant, whichever is applicable.
Postponement of Payments
We will usually pay any amounts payable as a result of full or partial
withdrawals within seven days after we receive written request in our home
office, in a form satisfactory to us. We will usually pay any proceeds payable
as a result of death within seven days after we receive due proof of death.
Payment of any amount payable on full withdrawal, partial withdrawal or death
may be postponed whenever:
* the New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission; or
* the Securities and Exchange Commission by order permits postponement for
the protection of contractowners; or
* an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which disposal of securities is not reasonably
practical or it is not reasonably practical to determine the value of net assets
of the Separate Account.
<PAGE>
We have the right to defer payment which is derived from any amount recently
paid to us by check or draft, until we are satisfied the check or draft has been
paid by the bank on which it is drawn.
SEPARATE ACCOUNT
Separate Account 4 will be used to support the operation of this contract and
certain other variable annuity policies we may offer. We will not allocate
assets to the Separate Account to support the operation of any contracts or
policies that are not variable annuities.
We own assets in the Separate Account. However, these assets are not part of our
general account. Income, gains and losses, whether or not realized, from assets
allocated to the Separate Account will be credited to or charged against the
account without regard to our other income, gains or losses.
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. The
Separate Account is also subject to laws of the Commonwealth of Virginia which
regulates the operations of insurance companies incorporated in Virginia. The
investment policy of the Separate Account will not be changed without the
approval of the Insurance Commissioner of the Commonwealth of Virginia. The
approval process is on file with the Insurance Commissioner in the state in
which this contract was delivered.
The Separate Account is divided into Investment Subdivisions. The Investment
Subdivisions are listed on page 4. We reserve the right to remove any Investment
Subdivision of the Separate Account, or to add new Investment Subdivisions. Each
Investment Subdivision of the Separate Account will invest in shares of a mutual
fund, or of a portfolio of a series type of mutual fund listed on page 4. You
determine the percentage of premiums which will be allocated to each Investment
Subdivision.
The Owner will share only the income, gains and losses of the Investment
Subdivisions to which his/her premium payments have been allocated.
The portion of the assets of the Separate Account which equals the reserves and
other contract liabilities of the policies which are supported by the Separate
Account will not be charged with liabilities arising from any other business we
conduct. We have the right to transfer to our general account any assets of the
Separate Account which are in excess of such reserves and other contract
liabilities.
We also have the right, subject to compliance with applicable law, to make
additions to, deletions from, or substitutions for the shares of a mutual fund
portfolio that are held by the Separate Account or that the Separate Account may
purchase. We reserve the right to eliminate the shares of any portfolio, and to
substitute shares of another portfolio, if the shares of the portfolio are no
longer available for investments, or if in our judgment further investment in
the portfolio should become inappropriate in view of the purposes of the
Separate Account. In the event of any substitution or change, we may, by
appropriate endorsement, make such changes in this and other policies as may be
necessary or appropriate to reflect the substitution or change.
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We also reserve the right to transfer assets of the Separate Account, which we
determine to be associated with the class of policies to which this contract
belongs, to another separate account. If this type of transfer is made, the term
Separate Account, as used in this contract, shall then mean the Separate Account
to which the assets were transferred.
When permitted by law, we also reserve the right to:
(a) deregister the Separate Account under the Investment Company Act of 1940;
(b) manage the Separate Account under the direction of a committee;
(c) restrict or eliminate any voting rights of Owners, or other persons who
have voting rights as to the Separate Account; and
(d) combine the Separate Account with other accounts.
We will value the assets of the Separate Account each business day.
We will value the assets in the Separate Account at their fair market value in
accordance with accepted accounting practices and applicable laws and
regulations.
Unit Value
Each Investment Subdivision has a Unit Value. When premiums or other amounts are
transferred into an Investment Subdivision, a number of Units are purchased
based on the subdivision's Unit Value for the valuation period during which the
transfer is made. When amounts are transferred out of an Investment Subdivision,
Units are redeemed in a similar manner. The Unit Value for a valuation period
applies to each day in the period. Before income payments begin, Unit Values are
referred to as Accumulation Unit Values. Once income payments have begun, they
are referred to as Annuity Unit Values.
For each Investment Subdivision, the Accumulation Unit Value for the first
valuation period was $10. The Accumulation Unit Value for each subsequent period
is the Net Investment Factor for that period, multiplied by the Accumulation
Unit Value for the immediately preceding period.
For each Investment Subdivision, the Annuity Unit Value for the first valuation
period was $10. The Annuity Unit Value for each subsequent period is (a) times
(b) times (c), where:
(a) is the Net Investment Factor for that period;
(b) is the Annuity Unit Value for the preceding period; and
(c) is the investment result adjustment factor for that period.
The investment result adjustment factor recognizes an assumed interest rate of
3% per year used in determining the income payment amounts and is equal to
0.99991902 daily.
Each valuation period includes a business day and any non-business day or
consecutive non-business days immediately preceding it. Assets are valued at the
close of the business day. A business day is any day the New York Stock Exchange
is open for trading, or any day in which there is a material change in the value
of the assets in the Separate Account.
Each Investment Subdivision has its own Net Investment Factor. In the following
definition, "assets" refers to the assets in each Investment Subdivision. "Any
amount charged against the Separate Account" refers to those amounts that are
allocated to each Investment Subdivision.
The Net Investment Factor for a valuation period is (a) divided by (b), minus
(c), where:
(a) is (1) the value of the assets at the end of the preceding valuation
period, plus (2) the investment income and capital gains, realized or
unrealized, credited to those assets at the end of the valuation period for
which the Net Investment Factor is being determined, minus (3) the capital
losses, realized or unrealized, charged against those assets during the
valuation period, minus (4) any amount charged against the Separate Account
for taxes, or any amount we set aside during the valuation period as a
provision for taxes attributable to the operation or maintenance of the
Separate Account; and
(b) is the value of the assets at the end of the preceding valuation period;
and
(c) is a factor representing a charge for mortality and expense risks we
assume and a charge for administrative expenses. The annual rate for these
charges is 1.25% and 0.15%, respectively.
Transfers Before Income Payments Begin
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You may transfer amounts among the Investment Subdivisions of the Separate
Account by sending a written request to us at our home office. The first
transfer in each calendar month will be made without a transfer charge. A
transfer charge will be imposed for each subsequent transfer in a calendar
month. The amount of the transfer charge is $10.00. When we make transfers, the
Account Value on the date of the transfer will not be affected by the transfer
except to the extent of the transfer charge. The transfer charge will be taken
from the amount transferred.
We reserve the right to limit, upon written notice, the number of transfers to
twelve each calendar year or, if it is necessary for the contract to continue to
be treated as an annuity contract by the IRS, a lower number. Also, we reserve
the right to refuse to execute any transfer if any of the Investment
Subdivisions which would be affected by the transfer is unable to purchase or
redeem shares of the mutual fund in which the Investment Subdivision invests.
The transfer will be effective as of the end of the valuation period during
which we receive your request at our home office. If the amount of your Account
Value remaining in an Investment Subdivision after the transfer is less than
$100, we will transfer the amount remaining in addition to the amount requested.
We will not allow a transfer into any Investment Subdivision unless the Account
Value of that Investment Subdivision after the transfer is at least $100.
Transfers After Variable Income Payments Begin
If income payments are made under one of the Variable Income Options you may
transfer Annuity Units among the Investment Subdivisions of the Separate Account
by sending a written request to us at our home office. You may make one transfer
in each calendar year. We reserve the right to limit the number of transfers if
it is necessary for the contract to continue to be treated as an annuity
contract by the IRS. Also, we reserve the right to refuse to execute any
transfer if any of the Investment Subdivisions that would be affected by the
transfer is unable to purchase or redeem shares of the mutual fund in which the
Investment Subdivision invests. If the number of annuity units remaining in an
Investment Subdivision after the transfer is less than 1, we will transfer the
amount remaining in addition to the amount requested. We will not allow a
transfer into any Investment Subdivision unless the number of annuity units of
that Investment Subdivision after the transfer is at least 1. No transfer charge
is imposed for transfers of annuity units. The amount of the income payment as
of the date of the transfer will not be affected by the transfer.
GENERAL INFORMATION
Annual Statement
Within 30 days after each contract anniversary, we will send you an annual
statement. The statement will show the Account Value and Withdrawal Value as of
the contract anniversary. The statement will also show premiums paid and charges
made during the contract year.
Calculation of Values
If the Net Investment Factor is always equivalent to an effective annual
interest rate of 4%, the account values in this contract will always at least
equal the account values required of an equivalent general account contract by
the law where this contract was delivered.
A detailed statement of how we calculate the values in this contract has been
filed with the insurance department where this contract was delivered.
Evidence of Death, Age, Sex or Survival
We will require proof of death before we act on contract provisions relating to
death of any person or persons. We may also require proof of the age, sex or
survival of any person or persons before we act on any contract provision
dependent upon age, sex or survival.
Governmental Charges
We reserve the right to reduce the values in this contract by the amount of any
charges imposed on us by federal, state or local governments if such charges are
directly related to your contract or its premium
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payments.
Incontestability
We will not contest this contract.
Misstatement of Age or Sex
If an Annuitant's age or sex was misstated in the application, any contract
benefits or proceeds, or the availability thereof, will be determined using the
correct age and sex.
Nonparticipating
This contract is nonparticipating. No dividends are payable.
Written Notice
Any written notice to us should be sent to our home office at 6610 West Broad
Street, Richmond, Virginia, 23230. Please include the contract number and the
Annuitant's full name.
Any notice we send you will be sent to your address shown in the application
unless you request that notices be sent to a new address. You should request an
address change form if you move.
OPTIONAL PAYMENT PLANS
Proceeds payable on the Income Date will be paid as described in the Monthly
Income Benefit section. Death and withdrawal proceeds will be paid in one sum.
Subject to the rules stated below, however, any part of death or withdrawal
proceeds can be left with us and paid under a payment plan. Any proceeds you
choose to leave with us will be applied to calculate your income. During the
Annuitant's life you can choose a plan. The Designated Beneficiary can choose a
plan at the death of the Annuitant if one has not been chosen.
There are several important payment plan rules:
* Our consent must be obtained prior to selecting an optional payment plan if
the payee is not a natural person.
* Payment made under an Optional Payment Plan at the death of the Owner,
Joint Owner or Annuitant must conform with the rules in the Death Provisions,
including the Payment of Benefits section.
* If you change a beneficiary, your plan selection will no longer be in
effect unless you request that it continue.
* Any choice or change of a plan must be sent in writing to our home office.
* The amount of each payment under a plan must be at least $100.
* Payments under a Fixed Income option will begin on the date we receive
proof of the Annuitant's death, on full withdrawal, or on the contract's Income
Date.
* Payments under a Variable Income option will begin within seven days after
the date payments would begin under the corresponding fixed option.
* Payments under Plan 4 will begin at the end of the first interest period
after the date proceeds are otherwise payable.
Fixed Income Options
Optional Payment Plans 1 through 5 are available as Fixed Income Options. Any
amount left with us under a Fixed Income option will be transferred to our
general account. Payments made will equal or exceed those required by the state
where this contract is delivered.
Variable Income Options
Optional Payment Plans 1 and 5 are available as Variable Income Options. This
means that income payments, after the first, will reflect the investment
experience of the Investment Subdivisions of the Separate Account.
Proceeds may be allocated to one or more Investment Subdivisions of the Separate
Account. The first income payment is determined by the Plan chosen and the
amount of proceeds applied to the Plan. The dollar amount of subsequent income
payments is determined by means of Annuity Units.
The number of Annuity Units for an Investment Subdivision will be determined at
the time income payments begin and will remain fixed unless transferred (as
shown below). The number of Annuity Units for an
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Investment Subdivision is (a) divided by (b), where:
(a) is the portion of the first income payment allocated to that Investment
Subdivision; and
(b) is the Annuity Unit Value for that Investment Subdivision seven days
before the income payment is due.
After the first income payment, each subsequent income payment is a dollar
amount equal to the sum of the income payment amounts for each Investment
Subdivision. The income payment amount for an Investment Subdivision is the
number of Annuity Units for that Investment Subdivision times the Annuity Unit
Value for that Investment Subdivision seven days before the payment is due.
Annuity Units may be transferred upon request. The number of Annuity Units for
the new Investment Subdivision is (a) times (b), divided by (c), where:
(a) is the number of Annuity Units for the current Investment Subdivision;
(b) is the Annuity Unit Value for the current Investment Subdivision; and (c)
is the Annuity Unit Value for the new Investment Subdivision.
Payment Plans
The fixed income options are shown below. Variable income options, if
applicable, have the same initial payment as the corresponding fixed option. The
monthly payment rate per $1000, as shown in the Plan 1 and Plan 5 Tables, is
based on the 1983 Table `a', using 3% interest.
Plan 1. Life Income with Period Certain. We will make equal monthly payments for
a guaranteed minimum period. If the payee lives longer than the minimum period,
payments will continue for his or her life. The minimum period can be 10, 15 or
20 years. Payments will be according to the table below. Guaranteed amounts
payable under this plan will earn interest at 3% compounded yearly. We may
increase the interest rate and the amount of any payment. If the payee dies
before the end of the guaranteed period, the amount of remaining payments for
the minimum period will be discounted at the same rate used in calculating
income payments. Discounted means we will deduct the amount of interest each
remaining payment would have earned had it not been paid out early. The
discounted amounts will be paid in one sum to the payee's estate unless
otherwise provided.
<TABLE>
<CAPTION>
Plan 1 Table
Monthly payment rates for each $1,000 of proceeds under Plan 1.
- --------------------------------------------------------------------------
Settlement Male Payee Female Payee
Age
--------------------------------------------------------------------------
10 Years 15 Years 20 Years 10 Years 15 Years 20 Years
Certain Certain Certain Certain Certain Certain
- --------------------------------------------------------------------------------------
<S> <C>
20 $2.90 $2.89 $2.89 $2.80 $2.80 $2.80
25 2.99 2.98 2,98 2.88 2.87 2.87
30 3.10 3.10 3.09 2.96 2.96 2.96
35 3.24 3.24 3.23 3.08 3.07 3.07
40 3.43 3.41 3.39 3.22 3.21 3.20
45 3.66 3.64 3.60 3.40 3.39 3.37
50 3.95 3.91 3.85 3.63 3.61 3.59
51 4.02 3.97 3.91 3.68 3.66 3.63
52 4.09 4.04 3.96 3.74 3.72 3.68
53 4.16 4.11 4.02 3.80 3.77 3.74
54 4.24 4.18 4.08 3.86 3.83 3.79
55 4.32 4.25 4.15 3.93 3.90 3.85
56 4.41 4.33 4.21 4.00 3.96 3.91
57 4.50 4.41 4.28 4.07 4.03 3.97
58 4.60 4.49 4.34 4.15 4.10 4.03
59 4.70 4.58 4.41 4.23 4.18 4.10
60 4.81 4.67 4.48 4.32 4.26 4.17
61 4.92 4.77 4.55 4.42 4.35 4.24
62 5.04 4.86 4.62 4.52 4.43 4.31
63 5.17 4.96 4.69 4.62 4.53 4.39
64 5.30 5.06 4.76 4.73 4.62 4.46
- --------------------------------------------------------------------------------------
Plan 1 Table
Monthly payment rates for each $1,000 of proceeds under Plan 1.
- ---------------------------------------------------------------------------------------
Settlement Male Payee Female Payee
Age
---------------------------------------------------------------------------
10 Years 15 Years 20 Years 10 Years 15 Years 20 Years
Certain Certain Certain Certain Certain Certain
--------------------------------------------------------------------------------------
65 $5.44 $5.17 $4.83 $4.85 $4.72 $4.54
66 5.58 5.28 4.89 4.97 4.83 4.62
67 5.74 5.38 4.96 5.10 4.93 4.69
68 5.89 5.49 5.02 5.24 5.04 4.77
69 6.05 5.60 5.08 5.39 5.16 4.84
70 6.22 5.70 5.13 5.55 5.28 4.92
71 6.39 5.81 5.18 5.71 5.39 4.99
72 6.57 5.91 5.23 5.88 5.51 5.05
73 6.75 6.01 5.27 6.06 5.63 5.12
74 6.93 6.10 5.31 6.25 5.75 5.17
75 7.12 6.19 5.35 6.44 5.87 5.22
76 7.30 6.28 5.38 6.64 5.98 5.27
77 7.49 6.35 5.40 6.85 6.09 5.31
78 7.67 6.43 5.42 7.06 6.19 5.35
79 7.85 6.49 5.44 7.27 6.28 5.38
80 8.02 6.55 5.46 7.48 6.37 5.41
81 8.18 6.61 5.47 7.68 6.45 5.43
82 8.34 6.65 5.48 7.88 6.52 5.45
83 8.49 6.69 5.49 8.08 6.58 5.47
84 8.63 6.73 5.50 8.26 6.63 5.48
85&Over 8.76 6.76 5.50 8.43 6.68 5.49
- -------------------------------------------------------------------------------------------
</TABLE>
Values for ages not shown will be furnished upon request.
Plan 2. Income for a Fixed Period. We will make equal periodic payments for a
fixed period, not longer than 30 years. Payments can be annual, semi-annual,
quarterly or monthly. Payments will be made according to the table below.
Guaranteed amounts payable under this plan will earn interest at 3% compounded
yearly. We may increase the interest and the amount of any payment. If the payee
dies, the amount of the remaining guaranteed payments will be discounted to the
date of the payee's death at the same rate used in calculating income payments.
The discounted amount will be paid in one sum to the payee's estate unless
otherwise provided.
<TABLE>
<CAPTION>
Plan 2 Table
Monthly payment rates for each $1,000 of proceeds under Plan 2.
<S> <C>
- --------------------------------------------------------------------------------
Years 1 2 3 4 5 6
Payable
- --------------------------------------------------------------------------------
Monthly $84.47 $42.86 $28.99 $22.06 $17.91 $15.14
Payment
- --------------------------------------------------------------------------------
Years 16 17 18 19 20 21
Payable
- --------------------------------------------------------------------------------
Monthly $6.53 $6.23 $5.96 $5.73 $5.51 $5.32
Payment
- --------------------------------------------------------------------------------
Plan 2 Table
Monthly payment rates for each $1,000 of proceeds under Plan 2.
- --------------------------------------------------------------------------------------------------------------------
Years 7 8 9 10 11 12 13 14 15
Payable
- --------------------------------------------------------------------------------------------------------------------
Monthly $13.16 $11.68 $10.53 $9.61 $8.86 $8.24 $7.71 $7.26 $6.87
Payment
- --------------------------------------------------------------------------------------------------------------------
Years 22 23 24 25 26 27 28 29 30
Payable
- --------------------------------------------------------------------------------------------------------------------
Monthly $5.15 $4.99 $4.84 $4.71 $4.59 $4.47 $4.37 $4.27 $4.18
Payment
- --------------------------------------------------------------------------------------------------------------------
Annual, semi-annual or quarterly payments are determined by multiplying the
monthly payment by 11.838, 5.963 or 2.992, respectively.
</TABLE>
Plan 3. Income of a Definite Amount. We will make equal periodic payments of a
definite amount. Payments can be annual, semi-annual, quarterly or monthly. The
amount paid each year must be at least $120 for each $1,000 of proceeds.
Payments will continue until the proceeds are exhausted. The last payment will
equal the amount of any unpaid proceeds. Unpaid proceeds will earn interest at
3% compounded yearly. We may increase the interest rate. If we do, the payment
period will be extended. If the payee dies, the amount of the remaining proceeds
with earned interest will be paid in one sum to his or her estate unless
otherwise provided.
Plan 4. Interest Income. We will make periodic payments of interest earned from
the proceeds left with us. Payments can be annual, semi-annual, quarterly or
monthly, and will begin at the end of the first period chosen. Proceeds left
under this plan will earn interest at 3% compounded yearly. We may increase the
interest rate and the amount of any payment. If the payee dies, the amount of
remaining proceeds and any earned but unpaid interest will be paid in one sum to
his or her estate unless otherwise provided.
Plan 5. Joint Life and Survivor Income. We will make equal monthly payments to
two payees for a guaranteed minimum of 10 years. Each payee must be at least 35
years old when payments begin. The guaranteed amount payable under this plan
will earn interest at 3% compounded yearly. We may increase the
37
<PAGE>
interest rate and the amount of any payment. Payments will continue as long as
either payee is living. If both payees die before the end of the minimum period,
the amount of the remaining payments for the 10 year period will be discounted
at the same rate used in calculating the monthly income. The discounted amount
will be paid in one sum to the survivor's estate unless otherwise provided.
<TABLE>
<CAPTION>
Plan 5 Table
Monthly payment rates for each $1,000 of proceeds under Plan 5.
- -------------------------------------------------------------------------------------------------------------
Male Settlement Female Settlement Age
---------------------------------------------------------------------------------------------
Age 35 40 45 50 55 60 65
- -------------------------------------------------------------------------------------------------------------
<S> <C>
35 $2.95 $3.00 $3.06 $3.11 $3.15 $3.18 $3.20
40 2.98 3.06 3.13 3.20 3.26 3.31 3.35
45 3.01 3.10 3.20 3.30 3.39 3.46 3.53
50 3.03 3.14 3.25 3.38 3.51 3.63 3.73
55 3.04 3.16 3.30 3.45 3.62 3.79 3.94
60 3.05 3.18 3.33 3.51 3.72 3.94 4.16
65 3.06 3.19 3.36 3.56 3.79 4.07 4.37
70 3.07 3.20 3.37 3.59 3.85 4.17 4.55
75 3.07 3.21 3.38 3.61 3.89 4.24 4.68
80 3.07 3.21 3.39 3.62 3.91 4.28 4.76
85 & Over 3.07 3.22 3.39 3.62 3.92 4.31 4.81
- -------------------------------------------------------------------------------------------------------------
Plan 5 Table
Monthly payment rates for each $1,000 of proceeds under Plan 5.
- ------------------------------------------------------------------
Male Settlement Female Settlement Age
- ------------------------------------------------------------------
Age 70 75 80 85 & Over
- ------------------------------------------------------------------
35 $3.22 $3.23 $3.24 $3.24
40 3.38 3.40 3.41 3.42
45 3.58 3.61 3.64 3.65
50 3.81 3.87 3.91 3.93
55 4.08 4.18 4.25 4.29
60 4.37 4.55 4.67 4.75
65 4.68 4.96 5.18 5.32
70 4.97 5.39 5.75 6.00
75 5.20 5.78 6.32 6.73
80 5.37 6.08 6.81 7.40
85 & Over 5.47 6.28 7.15 7.91
- -------------------------------------------------------------------
</TABLE>
Figures for intermediate ages, for two males or two females will be furnished
upon request.
Settlement Age: The settlement age is the payee's age nearest birthday on the
date payments begin, minus an age adjustment from the table below. The age
adjustment cannot exceed the age of the payee.
- ---------------------------------------------------------------
Year Payments Begin Age
After Prior To Adjustment
- ---------------------------------------------------------------
---- 2001 0
2000 2026 3
2025 2051 7
2050 ---- 10
- ---------------------------------------------------------------
38
<PAGE>
EXHIBIT (4)(b)(ii)
IRA ENDORSEMENT
39
<PAGE>
ENDORSEMENT
In order to qualify this contract as an Individual Retirement Annuity under
Section 408 of the Internal Revenue Code of 1986, as amended, (hereafter
referred to as The Code), the following provisions and restrictions are hereby
made applicable, notwithstanding any provisions to the contrary contained in the
policy. In the case of a conflict between the policy and the
endorsement, the endorsement overrides the policy.
ARTICLE 1 - Non-Transferability and Non-Forfeitability
The owner may not change the ownership of the policy and the policy may not be
sold, assigned or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose to anyone. The owner's
rights shall at all times be non-forfeitable.
ARTICLE 2 - Premium Limitation
Except in the case of a rollover contribution, as that term is described in
Section 402(a)(5), 402(a)(6), 402(a)(7); 403(a)(4), 403(b)(8), or 408(d)(3) of
The Code, or a direct transfer from one Individual Retirement Annuity issued by
the Company to another Individual Retirement Annuity issued by the Company, no
premiums will be accepted unless they are in cash, and the total of such
premiums shall not exceed $2000 for any taxable year. If the premium consists
entirely of an employer contribution under a simplified employee pension, as
such is defined in Section 408(k) of The Code, the maximum amount of premium
stated in paragraph 1 of this article shall be increased by the amount of this
limitation in effect under section 415(c)(1)(A) of The Code.
The minimum premium required for each additional premium payment under this IRA
is $50. The sentence stating that "Each additional premium payment must be at
least $1,000" found in the Premium Payments section of the policy is deleted.
ARTICLE 3 - Refund of Premiums
Any refund of premiums (other than those attributable to excess contributions)
will be applied towards the payment of future premiums or the purchase of
additional benefits before the close of the calendar year following the year of
the refund.
ARTICLE 4 - Distributions Before Death Of The Owner
Federal tax law requires that minimum distributions from individual retirement
arrangements, including Individual Retirement Annuities, begin not later than
April 1 of the calendar year following the year in which the owner attains age
70 1/2. In order to comply with this requirement, the Surrender Value of this
annuity may be distributed as a lump sum or may be distributed in equal or
substantially equal amounts over (a) the life of the owner, or the lives of the
owner and a designated beneficiary, or (b) a period certain not extending beyond
the life expectancy of the owner, or the joint life expectancy of the owner and
a designated beneficiary.
If distributions are to be made to the owner in the manner described in (a) or
(b) of this Article, the amount to be distributed each year, beginning with the
first calendar year for which distributions are required and then for each
succeeding calendar year, shall not be less than the quotient obtained by the
dividing the Surrender Value as of the beginning of each year by the lesser of
(1) the applicable life expectancy or (2) if the owner's spouse is not the
designated beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
For purposes of this calculation only, "Surrender Value at the beginning of each
year" will include amounts not in this Individual Retirement Annuity at the
beginning of the year because they have been withdrawn for the purpose of making
a rollover contribution to another individual retirement plan. Distributions
after the death of the owner shall be distributed using the applicable life
expectancy as the relevant divisor without regard to Section 1.401(a)(9)-2 of
the Proposed Income Tax Regulations.
40
<PAGE>
Life expectancy and joint and last survivor expectancy are computed by use of
the expected return multiples in Tables V of Section 1.72-9 of the Income Tax
Regulations. Unless otherwise elected by the owner by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the owner and shall apply to all subsequent
years. The life expectancy of a non-spouse beneficiary may not be recalculated,
instead life expectancy will be calculated using the attained age of such
beneficiary during the calendar year in which distributions are required to
begin pursuant to this section, and payments for subsequent years shall be
calculated based on such life expectancy reduced by one for each calendar year
which has elapsed since the calendar year life expectancy was first calculated.
Distributions under this annity shall be made in accordance with the
requirements of Section 401(a)(9) of the Code and the retulations thereunder.
ARTICLE 5 - Distributions Upon Death Of The Owner
If the owner dies after distribution of his or her interest has commenced, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the owner's
death.
If the owner dies before distribution of his or her interest commences, the
owner's entire interest will be distributed in accordance with one of the
following four provisions: (a) The owner's entire interest will be paid within
five years after the owner's death. (b) If the owner's interest is payable to a
designated beneficiary and the owner has not elected (a) above, then the entire
interest will be distributed in substantially equal installments over the life
or life expectancy of the designated beneficiary commencing no later than one
year after the date of the owner's death. The designated beneficiary may elect
at any time to receive greater payments to the extent of payments guaranteed to
be made. (c) If the designated beneficiary is the owner's surviving spouse, the
spouse may elect within the five year period commencing with the owner's date of
death to receive equal or substantially equal payments over the life or life
expectancy of the surviving spouse commencing at any date prior to the date on
which the deceased owner would have attained age 70 1/2. The surviving spouse
may increase the frequency or amount of these payments at any time to the extent
of any payments guaranteed to be made. (d) If the designated beneficiary is the
owner's surviving spouse, the spouse may treat the contract as his or her own
individual retirement annuity. This election will be deemed to have been made if
such surviving spouse makes a regular IRA contribution to the contract, makes a
rollover to or from such contract, or fails to elect any of the above three
provisions.
For purposes of this Article 5, payments will be calculated by use of he
expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax
Regulations. Unless otherwise elected by the surviving spouse by the time
distributions are required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the surviving spouse and
shall apply to all subsequent years. In the case of any other designated
beneficiary, life expectancy will be calculated at the time payment first
commences and payments for any 12-consecutive month period will be based on such
life expectancy minus the number of whole years passed since distribution first
commenced.
Any amount paid to a child of the owner will be treated as if it had been paid
to the surviving spouse if the remainder of the interest becomes payable to the
surviving spouse when the child
reaches the age of majority.
ARTICLE 6 - Applicant
41
<PAGE>
The applicant for the policy is the owner/annuitant of the policy. This policy
is established for the exclusive benefit of the owner(s) or his or her
beneficiaries.
ARTICLE 7 - Annual Reports
The Company will furnish annual calendar year reports concerning the status of
the annuity.
ARTICLE 8 - Amendments
The Company shall have the right, solely at its discretion, to amend any and all
provisions of the policy in order to maintain qualification of the policy as an
Individual Retirement Annuity under Section 408 of The Code. Such endorsement
will be effective with respect to the annuitant and this policy upon receipt by
the owner. The owner has the right to refuse to accept any amendment; however,
the Company shall not be held liable for any such tax consequences incurred by
the owner as a result of his or her refusal to accept such amendment.
For THE LIFE INSURANCE COMPANY OF VIRGINIA
Paul E. Rutledge, III
President
42
<PAGE>
EXHIBIT (4)(b)(iii)
PENSION ENDORSEMENT
ENDORSEMENT
In order to use this contract under the Internal Revenue Code of 1986, as
amended, (hereafter referred to as The Code), the following provisions and
restrictions are hereby made applicable, notwithstanding any provisions to the
contrary contained in the policy.
Non-Transferability
The owner may not change the ownership of the policy and the policy may not be
sold, assigned or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose to anyone other than The
Life Insurance Company of Virginia unless the owner is the trustee of an
employee trust qualified under The Code. The purpose of this provision is to
qualify the annuity under Section 401(g) of The Code, and it shall be so
construed.
Monthly Income Benefit
43
<PAGE>
We will make monthly payments to the annuitant for a guaranteed period. If the
annuitant dies before the end of the guaranteed minimum period, the remaining
payments will be discounted at the same rate used to calculate the monthly
income. The discounted amount will be paid in one sum to the annuitant's estate
unless otherwise provided.
Optional Payment Plans
We will make payments that do not depend on the sex of the annuitant. New
monthly payment rates for the Life Income plan or the Joint Life and Survivor
Income plan are contained in this endorsement.
Settlement Age: The settlement age is the payee's age nearest birthday on the
date payments begin, minus an age adjustment from the table below. The age
adjustment cannot exceed the age of the payee.
- ----------------------------------------------------------------------------
Year Payments Begin Age
After Prior To Adjustment
- ----------------------------------------------------------------------------
- ---- 2001 0
2000 2026 3
2025 2051 7
2050 ---- 10
- ----------------------------------------------------------------------------
LIFE INCOME PLAN TABLE
Monthly Payment Rates for each $1000 of proceeds
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Age 10 15 20 Age 10 15 20
Years Years Years Years Years Years
Certain Certain Certain Certain Certain Certain
- -------------------------------------------------------------------------------------------
<S><C>
20 $2.82 $2.82 $2.82 55 $4.00 $3.96 $3.90
25 2.90 2.89 2.89 56 4.07 4.03 3.96
30 2.99 2.99 2.98 57 4.15 4.10 4.03
35 3.11 3.10 3.10 58 4.23 4.18 4.09
40 3.26 3.25 3.24 59 4.32 4.25 4.16
45 3.45 3.43 3.42 60 4.41 4.34 4.23
50 3.59 3.67 3.64 61 4.51 4.42 4.30
51 3.74 3.72 3.68 62 4.61 4.51 4.37
52 3.80 3.78 3.74 63 4.72 4.61 4.44
53 3.87 3.84 3.79 64 4.83 4.70 4.52
54 3.93 3.90 3.85 65 4.95 4.80 4.59
- -------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------
Age 10 15 20 Age 10 15 20
Years Years Years Years Years Years
Certain Certain Certain Certain Certain Certain
- ----------------------------------------------------------------------------------------------
66 $5.08 $4.91 $4.67 77 $6.96 $6.14 $5.33
67 5.22 5.02 4.74 78 7.16 6.23 5.36
68 5.36 5.13 4.82 79 7.36 6.32 5.39
69 5.51 5.24 4.89 80 7.57 6.40 5.42
70 5.66 5.35 4.96 81 7.77 6.47 5.44
71 5.83 5.47 5.02 82 7.96 6.54 5.46
72 6.00 5.58 5.09 83 8.14 6.60 5.47
73 6.18 5.70 5.15 84 8.32 6.65 5.48
74 6.37 5.81 5.20 85&over 8.48 6.69 5.49
75 6.56 5.93 5.25
76 6.76 6.03 5.29
- ----------------------------------------------------------------------------------------------
</TABLE>
*Age means Settlement Age
<TABLE>
<CAPTION>
JOINT LIFE AND SURVIVOR INCOME PLAN TABLE
Monthly Payment Rates for each $1000 of proceeds
- --------------------------------------------------------------------------------------------------------------------
Settlement Settlement
Age Age
--------------------------------------------------------------------------------------------------
35 40 45 50 55 60 65
- --------------------------------------------------------------------------------------------------------------------
<S><C>
35 $2.92 $2.97 $3.00 $3.03 $3.06 $3.07 $3.08
40 2.97 3.03 3.08 3.13 3.17 3.20 3.22
45 3.00 3.08 3.16 3.23 3.29 3.34 3.38
50 3.03 3.13 3.23 3.33 3.43 3.51 3.57
55 3.06 3.17 3.29 3.43 3.56 3.68 3.79
60 3.07 3.20 3.34 3.51 3.68 3.86 4.03
65 3.08 3.22 3.38 3.57 3.79 4.03 4.27
70 3.09 3.23 3.41 3.62 3.87 4.16 4.49
75 3.10 3.24 3.42 3.65 3.93 4.27 4.68
80 3.10 3.25 3.44 3.67 3.96 4.34 4.81
85&over 3.11 3.25 3.44 3.68 3.99 4.38 4.89
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------
Settlement
Age
---------------------------------------------------------
70 75 80 85&over
- ---------------------------------------------------------------------------
<S><C>
35 $3.09 $3.10 $3.10 $3.11
40 3.23 3.24 3.25 3.25
45 3.41 3.42 3.44 3.44
50 3.62 3.65 3.67 3.68
55 3.87 3.93 3.96 3.99
60 4.16 4.27 4.34 4.38
65 4.49 4.68 4.81 4.89
70 4.83 5.14 5.38 5.54
75 5.14 5.61 6.02 6.30
80 5.38 6.02 6.63 7.10
85&over 5.54 6.30 7.10 7.76
- ---------------------------------------------------------------------------
</TABLE>
44
<PAGE>
For the Life Insurance Company of Virginia
Paul E. Rutledge III
President
45
<PAGE>
EXHIBIT (4)(iv)
Section 403b Endorsement
46
<PAGE>
ENDORSEMENT
Cash Value Withdrawal Restrictions Effective January 1, 1989
You may not withdraw cash value resulting from:
* premiums paid after December 31, 1988, as elective deferrals through a salary
reduction agreement;
* earnings on those premiums;
* earnings on the amount of cash value as of December 31, 1988, attributable to
premiums paid as elective deferrals.
These restrictions are required by Section 403(b)(11), which was added to the
Internal Revenue Code by the Tax Reform Act of 1986. They override any policy
provisions to the contrary.
Exceptions to Restrictions on Cash Value Withdrawals
The restrictions listed above do not apply to withdrawals due to your:
* death;
* attainment of age 59 1/2;
* ending employment with the employer sponsoring the 403(b) plan;
* disability, as defined in Section 403(b)(11); or
* financial hardship, as defined in Section 403(b)(11). In the case of financial
hardship, only cash value from premiums paid through elective deferrals, and
not cash value from income on those premiums, may be withdrawn.
For The Life Insurance Company of Virginia,
Paul E. Rutledge, III
President
47
<PAGE>
EXHIBIT (4)(b)(iv)
Guaranteed Minimum Death Benefit Rider
THE LIFE INSURANCE COMPANY OF VIRGINIA
GUARANTEED MINIMUM DEATH BENEFIT RIDER
This rider provides for an Optional Death Benefit in addition to the Optional
Death Benefit provided for in the policy. The Death Benefit will be the greater
of:
* The Death Benefit provided for Under the Death Provisions
section in the policy; or
* The Death Benefit provided for in this rider.
Optional Death Benefit at Death of Annuitant
If any Annuitant dies while this rider is in effect and before income payments
begin, the Designated Beneficiary may surrender the policy for the Death Benefit
within 90 days of the date of such death. If this Death Benefit is paid, the
policy will terminate, and we will have no further obligation under this policy.
48
<PAGE>
The Death Benefit will be the greater of:
* The Guaranteed Minimum Death Benefit; or
* The Account Value of the policy on the date we receive proof
of the Annuitant's death or, if later, the date of your
request.
Guaranteed Minimum Death Benefit. On the policy date, the Guaranteed Minimum
Death Benefit is equal to the premium paid. At the end of each valuation period
after such date, the Guaranteed Minimum Death Benefit is the lesser of:
* The total of all premiums received, multiplied by two, less
the amount of any partial surrenders, plus their surrender
charges, made prior to or during that valuation period; or
* The Guaranteed Minimum Death Benefit at the end of the
preceding valuation period, increased as specified below, plus
any additional premium payments during the current valuation
period and less the amount of any partial surrenders, plus
their surrender charges, made during the current valuation
period.
the amount of increase for the valuation period will be calculated by applying a
factor to the Guaranteed Minimum Death Benefit at the end of the preceding
valuation period. Until the anniversary on which the Annuitant attains age 80,
the factor is determined for each valuation period at an annual rate of 6%,
except that with respect to amounts invested in certain investment Subdivisions
shown in the policy data pages, the increase factor will be calculated as the
lesser of;
* The Net Investment Factor of the Investment Subdivision of the
valuation period, minus one; or
* A factor for the valuation period equivalent to an annual rate
of 6%.
With respect to amounts invested in the Guarantee Account, if it applies, the
increase factor for each such amount will be calculated as the lesser of:
* A factor for the valuation period equivalent to the annual
rate that applies to such amount; or
* A factor for the valuation period equivalent to an annual rate
of 6%.
After the anniversary on which the Annuitant attains age 80, the factor will be
zero.
If the surrender occurs more than 90 days after the Annuitant's death, the
Surrender Value will be payable instead of the Death Benefit. Amounts payable
under this rider are subject to the Distribution Rules and Payment of Benefits
provisions in the policy.
The following paragraph is added to the Account Value Benefits section of the
policy:
If the Guarantee Account applies and if the Account Value in the Separate
Account is insufficient to cover the Annual Death Benefit Charge, then the
deduction will be made first from the Account Value in the Separate Account. The
excess of the charges over the Account Value in the Separate Account will then
be deducted from the Account Value in the Guarantee Account. Deductions from the
Guarantee Account will be taken from the amounts which have been in the
Guarantee Account for the longest period of time.
The following provision is added to the Account Value Benefits section of the
policy:
Annual Death Benefit Charge
There will be a charge made each year for expenses related to the Death Benefit
that is available under the terms of the rider. This charge is made at the
beginning of each policy year after the first, and at surrender, against the
Account Value allocated to the Separate Account. The amount of this charge is
shown on page 3 and is applied to the average Guaranteed Minimum Death Benefit
during the previous year. The charge at surrender will be a pro-rata portion of
the annual charge.
When this Rider is Effective
This rider is effective on the policy date and will remain in effect while this
policy is in force and before income payments begin, or until the policy
anniversary following the date of receipt of your request to terminate the
rider.
For The Life Insurance Company of Virginia,
49
<PAGE>
Paul E. Rutledge, III
President
FORM P5103 4/94
50
<PAGE>
EXHIBIT (5) (A)
Form of Policy
1
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY POLICY
LIFE OF
VIRGINIA
To the policyowner:
Please read your policy carefully. This policy is legal contract between you and
the Company. You, the owner, have benefits and rights described in this policy.
The annuitant is named in the policy. We will make income payments beginning on
the Maturity Date, if the annuitant is still living on that date.
THIS POLICY'S INCOME PAYMENTS DEPEND ON THE ACCOUNT VALUE. THE ACCOUNT VALUE IN
THE SEPARATE ACCOUNT IS BASED ON THE INVESTMENT EXPERIENCE OF THAT ACCOUNT, AND
MAY INCREASE OR DECREASE DAILY. IT IS NOT GUARANTEED AS TO DOLLAR AMOUNT.
RIGHT TO CANCEL. You may return this policy to our home office within 10 days
after its delivery for a refund. The amount of the refund will equal the account
value with any adjustments required by applicable law or regulation.
For the Life Insurance Company of Virginia
Daniel T. Cox Paul E. Rutledge III
CHAIRMAN PRESIDENT
- -----------------------------------------------------------
*Flexible Premium Variable Deferred
*Income payments beginning at maturity
*No dividends *Some benefits reflect investment results
- -----------------------------------------------------------
THE LIFE INSURANCE
COMPANY OF VIRGINIA
6610 West Broad Street, Richmond 23230
2
<PAGE>
POLICY DATA
SCHEDULE OF BENEFITS SCHEDULE OF PREMIUMS
AMOUNT PAYABLE FOR
ANNUITY $25,000.00 SINGLE PAYMENT
INITIAL PREMIUM DUE: $25,000.00
ADDITIONAL PREMIUM PAYMENTS MAY BE MADE. SEE PREMIUM PAYMENTS SECTION.
CHARGES:
PREMIUM TAX RATE: 0.00%
ANNUAL POLICY MAINTENANCE CHARGE: $25.00
MORTALITY AND EXPENSE RISK CHARGE: 1.25% ANNUALLY ( .003446% DAILY)
ADMINISTRATIVE EXPENSE CHARGE: 0.15% ANNUALLY ( .000411% DAILY)
TRANSFER CHARGE $10.00
OWNER THE ANNUITANT
ANNUITANT JOHN DOE 35 AGE LAST BIRTHDAY
POLICY NUMBER 000000000
POLICY DATE May 1, 1994 May 1, 2029 MATURITY DATE
PAGE 3 PLAN FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
POLICY NUMBER 000000000
<TABLE>
<CAPTION>
<S><C>
SEPARATE ACCOUNT 4
INVESTMENT SUBDIVISIONS ARE INVESTED IN
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
FID MONEY MARKET - B MONEY MARKET PORTFOLIO
FID HIGH INCOME - B HIGH INCOME PORTFOLIO
FID EQUITY-INCOME - B EQUITY - INCOME PORTFOLIO
FID GROWTH - B GROWTH PORTFOLIO
FID OVERSEAS - B OVERSEAS PORTFOLIO
3
<PAGE>
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
FID ASSET MANAGER - B ASSET MANAGER PORTFOLIO
JANUS ASPEN SERIES
JAN GROWTH - B GR0WTH PORTFOLIO
JAN AGGRESSIVE GROWTH - B AGGRESSIVE GROWTH PORTFOLIO
JAN WORLDWIDE GROWTH - B WORLDWIDE GROWTH PORTFOLIO
LIFE OF VIRGINIA SERIES FUND, INC.
LOV MONEY MARKET - B MONEY MARKET PORTFOLIO
LOV GOVERNMENT SECURITIES - B GOVERNMENT SECURITIES PORTFOLIO
LOV COMMON STOCK INDEX - B COMMON STOCK INDEX PORTFOLIO
LOV TOTAL RETURN - B TOTAL RETURN PORTFOLIO
NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST
N&B LIM MAT BOND - B LIMITED MATURITY BOND PORTFOLIO
N&B GROWN - B GROWTH PORTFOLIO
N&B BALANCED - B BALANCED PORTFOLIO
OPPENHEIMER VARIABLE ACCOUNT FUNDS
OPP MONEY - B OPPENHEIMER MONEY FUND
OPP HIGH INCOME - B OPPENHEIMER HIGH INCOME FUND
OFF BOND - B OPPENHEIMER BOND FUND
OFF CAP APPRECIATION - B OPPENHEIMER CAPITAL APPRECIATION FUND
OFF GROWTH - B OPPENHEIMER GROWTH FUND
OFF MULTI STRATEGIES - B OPPENHEIMER MULTIPLE STRATEGY FUND
</TABLE>
YOU MAY ALLOCATE YOUR ACCOUNT VALUE TO AS MANY AS SEVEN INVESTMENT SUBDIVISIONS.
CONSULT YOUR PROSPECTUS FOR INVESTMENT DETAILS.
POLICY NUMBER: 000000000
TABLE OF SURRENDER CHARGES
YEARS SURRENDER CHARGE PERCENTAGE
1 6%
2 6%
3 6%
4 6%
5 4%
6 2%
YEARS 7 AND LATER 0
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TABLE OF CONTENTS
Policy Data......................................................... 3
Introduction........................................................ 6
Owner, Annuitant and Beneficiary Provisions......................... 7
Death Provisions.................................................... 8
Premium Payments.................................................... 9
Monthly Income Benefit.............................................. 10
Account Value Benefits.............................................. 11
Separate Account.................................................... 13
General Information................................................. 16
Optional Payment Plans.............................................. 17
Copies of any application, riders and endorsements follow page 19.
WORD INDEX
Account Value....................................................... 11
Allocation of Premiums.............................................. 9
Annual Statement.................................................... 16
Beneficiary......................................................... 7
Beneficiary Change.................................................. 7
Death Benefit....................................................... 9
Investment Subdivisions............................................. 13
Misstatement of Age or Sex.......................................... 16
Notices............................................................. 16
Optional Payment Plans........................................... 17-19
Owner............................................................... 7
Ownership change.................................................... 7
Premiums............................................................ 9
Separate Account.................................................... 13
Surrender........................................................... 11
Surrender Value..................................................... 11
Transfers........................................................... 14
Unit Value.......................................................... 14
INTRODUCTION
This is a flexible premium variable deferred annuity policy. The initial premium
payment is due on the policy date. Additional premiums may be paid at any time
before the earlier of (1) the maturity date and (2) the policy anniversary on
which the Annuitant attains age 86. In return for these premiums and any
application, we provide certain benefits.
As used in this policy, you or yours refers to the Owner or Owners. We, us or
ours refers to The Life Insurance Company of Virginia. The Owner and the
Annuitant are shown on page 3.
Person, as used in this policy is a human being, a trust, a corporation or any
other legally recognized entity.
The policy provides a monthly income beginning on the maturity date. The amount
of monthly income will depend on:
o the maturity value;
o the amount of any applicable premium tax;
o the Annuitant's sex and settlement age on the maturity date; and
o the payment plan chosen.
Depending upon the conditions described in the Death Provisions section, this
policy provides for either the payment of a death benefit or the continuation of
the policy at the death of the Owner, Joint Owner or Annuitant prior to the
maturity date.
The Policy and Its Parts
This policy is a legal contract. It is the entire contract between you and us.
An agent cannot change this contract. Any change to it must be in writing and
approved by us. Only our President or one of our Vice Presidents can give our
approval. READ YOUR POLICY CAREFULLY.
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Policy means this policy with any attached application and any riders and
endorsements. All statements in any application are considered representations
and not warranties.
We reserve the right to amend this contract as needed to maintain its status as
an annuity under the Internal Revenue Code. If the contract is amended, we will
send you a copy of the amendment, together with the applicable regulation,
ruling or other requirement imposed by the Internal Revenue Service which
requires such amendment.
Age
Age on the policy date or on a policy anniversary prior to the date payments
begin means the person's age on his or her last birthday.
Dates Used in the Policy
The policy goes into effect on the policy date shown on page 3. Policy years and
anniversaries for the initial premium are measured from this date. Years for
determining charges related to additional premiums are measured from the date of
receipt of each additional premium.
The maturity date is the date we start to pay a monthly income if the Annuitant
is still living. This date is shown on page 3 unless changed after issue.
OWNER, ANNUITANT AND BENEFICIARY PROVISIONS
The Owner
The Owner or Joint Owners are shown in the policy. Joint Owners own the policy
equally with the right of survivorship. Right of survivorship means that if a
Joint Owner dies, his or her interest in the policy will pass to the surviving
Joint Owner. Disposition of the policy upon death of an Owner is subject to the
Death Provisions .
An Owner or Joint Owner has rights while this policy is in force, subject to the
rights of any beneficiary named irrevocably, and any assignee under an
assignment filed with us.
The Annuitant
The Annuitant is the person upon whose age and sex guaranteed monthly income
benefits are determined. The policy names you or someone else as the Annuitant.
The Contingent Annuitant, if any, is shown in the application if attached to
this policy. If an application is not attached and you wish to name a Contingent
Annuitant, you may do so by sending a written request to our home office. At the
death of the Annuitant prior to the maturity date, the Contingent Annuitant, if
any, may become the Annuitant in certain circumstances, (see Death Provisions).
If no Contingent Annuitant is alive, the Owner (if a natural person, otherwise,
the Joint Owner, if a natural person) will be the Contingent Annuitant.
The Beneficiary
The Primary Beneficiary and any Contingent Beneficiaries are shown in the
application if attached to this policy. If an application is not attached and
you wish to name a Primary or Contingent Beneficiary(ies), you may do so by
sending a written request to our home office.
Changing the Owner, Contingent Annuitant or Beneficiary
During the Annuitant's life, you can change the Owner, the Contingent Annuitant
and any Beneficiary if you reserved this right. A person named irrevocably may
be changed only with that person's written consent. To make a change, send a
written request to our home office. The request and the change must be in a form
satisfactory to us. The change will take effect as of the date you sign the
request. The change will be subject to any payment we make before we record the
change. Except as described above, the Annuitant cannot be changed.
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DEATH PROVISIONS
Designated Beneficiary
If the Owner, Joint Owner or the Annuitant dies while this policy is in force
and before income payments begin, the Designated Beneficiary will be treated as
the sole owner of the policy following such a death, subject to the distribution
rules set forth below. The Designated Beneficiary will be the person first
listed below who is alive or in existence on the date of the death of the Owner,
Joint Owner or the Annuitant:
(1) Owner
(2) Joint Owner
(3) Primary Beneficiary
(4) Contingent Beneficiary
(5) Owner's Estate
If Joint Owners both survive, they will become the Designated Beneficiary
together.
Distribution Rules
The following distribution rules will apply if the Owner, Joint Owner or the
Annuitant dies before income payments begin:
If the Designated Beneficiary is someone other than the surviving spouse of the
deceased Owner, Joint Owner or Annuitant, no further premium payments will be
accepted and we will pay the Surrender Value to, or for the benefit of, the
Designated Beneficiary. That payment will be made in one lump sum upon receipt
of due proof of death. Instead of receiving that distribution, the Designated
Beneficiary may elect:
(a) to receive the Surrender Value at any time during the five year period
following the date of death of the Owner, Joint Owner or Annuitant by
partially or totally surrendering the contract during that period; or
(b) to apply the entire Surrender Value under Optional Payment Plan 1 or 2
with the first payment to the Designated Beneficiary being made no
later than one year after the date of death of the Owner, Joint Owner
or Annuitant, and with payments being made over the life of the
Designated Beneficiary or over a period not exceeding the Designated
Beneficiary's life expectancy.
If the entire Surrender Value has not been paid to the Designated Beneficiary by
the end of the five year period following the date of death of the Owner, Joint
Owner or Annuitant and payments have not begun in accordance with (b) above, the
policy will terminate at the end of that five-year period, and we will pay any
remaining Surrender Value to, or for the benefit of, the Designated Beneficiary.
If the Designated Beneficiary dies before the required payments have been made,
the Designated Beneficiary will not be treated as an Owner of the policy for
purposes of these Death Provisions, and any remaining payments we make will be
made to the person named by the Designated Beneficiary in writing or, if no
person is so named, the estate of the Designated Beneficiary.
If the Designated Beneficiary is the surviving spouse of the deceased Owner,
Joint Owner or Annuitant, the surviving spouse may continue the policy as the
Owner. In addition, that person will also become the Annuitant if the deceased
was the Annuitant, there is no surviving Contingent Annuitant and the policy has
not been surrendered for the death benefit which is available at the Annuitant's
death under the conditions set forth on the following page. On the surviving
spouse's death, the entire interest in the contract will be paid within 5 years
of such spouse's death to the Beneficiary named by the surviving spouse (and if
no Beneficiary is named, such payment will be made to the surviving spouse's
estate).
If there is more than one Designated Beneficiary, each Designated Beneficiary
will be treated separately according to that Designated Beneficiary's portion of
the policy for purposes of this Death Provisions section.
These special Distribution Rules will not apply at the death of the Annuitant if
all of the following conditions exist:
o the Annuitant was not also an Owner of the policy;
o all owners of the policy are natural persons; and
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o a Contingent Annuitant survives.
Optional Death Benefit at Death of Annuitant
If the death of the Annuitant occurs before income payments begin, and he or she
was age 80 or younger on the policy date, the Designated Beneficiary may
surrender the policy for the Death Benefit within 90 days of the date of such
death. If this optional death benefit is paid, the policy will terminate, and we
will have no further obligation under the policy.
During the first six policy years, the Death Benefit will be the greater of:
o The total of premiums paid reduced by any applicable premium tax and
any partial surrenders plus their surrender charges; or
o The Account Value of the policy on the date we receive proof of the
Annuitant's death.
During any subsequent six year period, the Death Benefit will be the greater of:
o The Death Benefit on the last day of the previous six year period, plus
any premium paid since then, reduced by any applicable premium tax and
any partial surrenders plus their surrender charges since then; or
o The Account Value of the policy on the date we receive proof of the
Annuitant's death.
If the surrender occurs more than 90 days after the Annuitant's death, and/or if
the deceased Annuitant was age 81 or older on the policy date, the Surrender
Value will be payable instead of the Death Benefit. If the policy is not
surrendered, it will remain in force subject to the preceding provisions.
Payment of Benefits
Instead of receiving payment in a lump sum, the Designated Beneficiary may elect
to receive proceeds under Optional Payment Plans 1 or 2 with the first payment
to the Designated Beneficiary being made no later than one year after the date
of death of the Owner, Joint Owner or Annuitant. Payments will be made over the
life of the Designated Beneficiary or over a period not exceeding the Designated
Beneficiary's life expectancy.
Payment of Benefits After Income Payments Have Begun
If the Owner, Joint Owner, or the Annuitant dies while this policy is in force
and after income payments have begun, or if a Designated Beneficiary receiving
income payments dies after the date income payments have begun, payments made
under the policy will be made at least as rapidly as under the method of
distribution in effect at the time of such death, notwithstanding any other
provision of this policy.
PREMIUM PAYMENTS
The initial premium is due on the policy date.
Additional Premium Payments
You may make additional premium payments at any time before the earlier of (1)
the date which is ten years preceding the maturity date and (2) the policy
anniversary on which the Annuitant attains age 86. Each additional premium
payment must be at least $1,000.
When and Where to Pay Premiums
Each premium is payable in advance. Pay each premium to our home office. Make
any checks or money orders payable to Life of Virginia.
Allocation of Premiums
You may allocate premiums to one or more Investment Subdivisions of the Separate
Account, up to the maximum number shown in the policy data page. The portion of
each premium allocated to any particular Investment Subdivision must be at least
10%. Premiums will initially be allocated in accordance with the
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allocations requested by you.
You may change the allocation of later premiums at any time, without charge, by
sending a written notice to us at our home office. The allocation will apply to
premiums received after we record the change.
MONTHLY INCOME BENEFIT
We will pay you a monthly income for a guaranteed minimum period beginning on
the maturity date if the Annuitant is still living. The monthly income will be a
variable income payment similar to that described in the provision titled
"Variable Income Options" under the Optional Payment Plans section. Payments
will be made under a Life Income with 10 Years Certain plan, unless you choose
otherwise.
Under the Life Income 10 Years Certain plan, if the Annuitant lives longer than
10 years, payments will continue for his or her life. If the Annuitant dies
before the end of ten years, the remaining payments for the ten year period will
be discounted at the same rate used to calculate the monthly income. The
discounted amount will be paid in one sum to you.
At any time, while the Annuitant is living, and before the maturity date, you
may choose to change the payment plan by written request. If you do choose a
different plan, the monthly income will reflect the plan chosen. Payment plans
which base payment on the life or lives of one or more individuals will base
such payment on the life of the Annuitant or the Annuitant and an additional
individual. You may elect to receive the maturity value in a lump sum instead of
receiving a monthly income. If we pay the maturity value, we will have no
further obligation under the policy.
The maturity value is equal to the Surrender Value on the day immediately
preceding the maturity date.
The initial income payment under the automatic payment plan, payable monthly, is
calculated by multiplying (a) times (b), divided by (c) where:
(a) is the monthly payment rate per $1000, shown under the Optional Payment
Plans for Life Income 10 years Certain, using the sex and settlement
age of the Annuitant, instead of the payee, on the maturity date;
(b) is the maturity value; and
(c) is $1,000.
Annuity payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by written request. However, if any payment made more
frequently than annually would be or becomes less than $100, we reserve the
right to reduce the frequency of payments to an interval that would result in
each payment being at least $100. If the annual payment payable at maturity is
less than $20, we will pay the maturity value and the policy will terminate
effective as of maturity date.
Maturity Date
The maturity date is shown on page 3, unless changed after issue. You may change
the maturity date to any date at least ten years after the date of the last
premium payment. To make a change, send us written notice before the maturity
date then in effect.
If you change the maturity date, maturity date will then mean the maturity date
you selected. You may pay premiums until the date which is ten years preceding
the newly selected maturity date unless that right has been terminated by the
provisions of this policy.
ACCOUNT VALUE BENEFITS
The Account Value of the policy is equal to the account value allocated to the
Investment Subdivisions of the Separate Account.
On the date the initial premium is received and accepted, the Account Value
equals the initial premium. At the end of each valuation period after such date,
the Account Value allocated to each Investment Subdivision of the Separate
Account is (a) plus (b) plus (c) minus (d) minus (e) minus (f), where:
(a) is the Account Value allocated to the Investment Subdivision at the end
of the preceding valuation period, multiplied by the Investment Subdivision's
Net Investment Factor for the current period;
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(b) is premium payments received during the current valuation period;
(c) is any other amounts transferred into the Investment Subdivision during
the current valuation period;
(d) is Account Value transferred out of the Investment Subdivision during the
current valuation period;
(e) is any partial surrender made from the Investment Subdivision during the
current valuation period;
(f) any premium tax deductions.
In addition, after the policy date whenever a valuation period includes the
policy anniversary day, the Account Value at the end of such period is reduced
by the Annual Policy Maintenance Charge allocated to the Account Value in the
Investment Subdivision for that policy anniversary day. This charge will be
allocated among the Investment Subdivisions of the Separate Account in the same
proportion that the policy's Account Value in each Investment Subdivision bears
to the total Account Value in all Investment Subdivisions at the beginning of
the policy year.
Annual Policy Maintenance Charge
There will be a charge made each year for maintenance of the policy. This charge
is made once for each policy year against the Account Value allocated to the
Separate Account. The charge for a policy year will be made at the earlier of
the next policy anniversary or the date the policy is surrendered. The amount of
this charge is shown on page 3. We will waive this charge if the Account Value
exceeds $75,000 at the time the charge is due.
Surrender
You can fully or partially surrender this policy by sending a written request to
our home office. We must receive the request before income payments begin. You
may be required to pay a surrender charge and any applicable premium tax (see
Premium Tax). These charges will be deducted from the amount surrendered.
Full Surrender. You must send us your policy with your request for surrender.
The amount payable is the Surrender Value. The Surrender Value of this policy
is the Account Value on the date we receive your written request for surrender
in our home office, less any surrender charge. See Deferred Premium Tax.
Partial Surrender. You may make a partial surrender from the Account Value of
this policy at any time. We will not permit the amount of a partial surrender to
be less than $500 or to reduce the Account Value to less than $5000. The amount
payable will be the amount of the partial surrender less any surrender charge.
See Deferred Premium Tax.
You may tell us how to deduct the partial surrender from the Investment
Subdivisions of the Separate Account. If you do not, the partial surrender will
be deducted from each Investment Subdivision in the same proportion that the
policy's Account Value in that Investment Subdivision bears to the total Account
Value in all Investment Subdivisions on the date we receive the request in our
home office. See Deferred Premium Tax.
Deferred Premium Tax. If we paid a tax on a premium and we did not previously
deduct the tax, then we may deduct it at the time of surrender. See Premium
Tax.
Surrender Charge
All or part of the amount surrendered may be subject to a surrender charge. The
amount subject to a charge is the lesser of (a) or (b), where:
(a) is the amount surrendered;
(b) is the total premiums, less the total of all surrender amounts
previously allocated to premium payments.
The surrender charge will be the applicable percentage(s) of the amount subject
to a charge. For purposes of determining the applicable percentage(s), surrender
amounts that are subject to a charge will be allocated to remaining premium
payments in the order that the premium payments were received. Remaining premium
payments are the premium payments, less the amount of any surrenders previously
allocated to them. The applicable percentage for each premium payment is found
on the policy data pages in the Table of Surrender Charges next to the number
representing the number of full and partially completed years since the premium
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payment.
Reduced Charges on Certain Surrenders. Surrender charges will be reduced for the
first surrender in each policy year. If the first surrender of the policy year
is a partial surrender of 10% of the Account Value, or less, the amount
surrendered will not be subject to a charge.
If the first surrender of the policy year is a full surrender, or a partial
surrender of more than 10% of the Account Value, the amount of the surrender
that is subject to a charge will be reduced by 10% of the Account Value.
There will be no surrender charge if you choose one of the following Optional
Payment Plans:
o Plan 1;
o Plan 2 for a period of 5 or more years;
o Plan 5.
Waiver of Surrender Charges in the Event of Hospital or Nursing Facility
Confinement
We will waive the surrender charges otherwise applicable to a full surrender or
one or more partial surrenders occurring before income payments begin if:
o The Annuitant is, or has been confined to a state licensed or legally
operated hospital or inpatient nursing facility for at least 30
consecutive days; and
o Such confinement begins at least one year after the policy date; and
o The Annuitant was age 80 or younger on the policy date; and
o The request for the full or partial surrender, together with proof of
such confinement, is received in the Home Office while the Annuitant is
confined or within 90 days after discharge from the facility.
Postponement of Payments
We will usually pay any amounts payable as a result of full or partial
surrenders within seven days after we receive written request in our home
office, in a form satisfactory to us. We will usually pay any proceeds payable
as a result of death within seven days after we receive due proof of death.
Payment of any amount payable on surrender, partial surrender or death may be
postponed whenever:
o the New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission; or
o the Securities and Exchange Commission by order permits postponement
for the protection of policyowners; or
o an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which disposal of securities is not
reasonably practical or it is not reasonably practical to determine the
value of net assets of the Separate Account.
We have the right to defer payment which is derived from any amount recently
paid to us by check or draft, until we are satisfied the check or draft has been
paid by the bank on which it is drawn.
SEPARATE ACCOUNT
The Separate Account named in the policy data pages will be used to support the
operation of this policy and certain other variable annuity policies we may
offer. We will not allocate assets to the Separate Account to support the
operation of any contracts or policies that are not variable annuities.
We own assets in the Separate Account. However, these assets are not part of our
general account. Income, gains and losses, whether or not realized, from assets
allocated to the Separate Account will be credited to or charged against the
account without regard to our other income, gains or losses.
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. The
Separate Account is also subject to laws of the Commonwealth of Virginia which
regulates the operations of insurance companies incorporated in Virginia.
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The investment policy of the Separate Account will not be changed without the
approval of the Insurance Commissioner of the Commonwealth of Virginia. The
approval process is on file with the Insurance Commissioner in the state in
which this policy was delivered.
The Separate Account is divided into Investment Subdivisions. The Investment
Subdivisions are named in the policy data pages. We reserve the right to remove
any Investment Subdivision of the Separate Account, or to add new Investment
Subdivisions. Each Investment Subdivision of the Separate Account will invest in
shares of a mutual fund, or of a portfolio of a series type of mutual fund named
in the data pages. You determine the percentage of premiums which will be
allocated to each Investment Subdivision.
The Owner will share only the income, gains and losses of the Investment
Subdivisions to which his or her premium payments have been allocated.
The portion of the assets of the Separate Account which equals the reserves and
other policy liabilities of the policies which are supported by the Separate
Account will not be charged with liabilities arising from any other business we
conduct. We have the right to transfer to our general account any assets of the
Separate Account which are in excess of such reserves and other policy
liabilities.
We also have the right, subject to compliance with applicable law, to make
additions to, deletions from, or substitutions for the shares of a mutual fund
portfolio that are held by the Separate Account or that the Separate Account may
purchase. We reserve the right to eliminate the shares of any portfolio named in
the data pages, and to substitute shares of another portfolio, if the shares of
the portfolio are no longer available for investments, or if in our judgment
further investment in the portfolio should become inappropriate in view of the
purposes of the Separate Account. In the event of any substitution or change, we
may, by appropriate endorsement, make such changes in this and other policies as
may be necessary or appropriate to reflect the substitution or change.
We also reserve the right to transfer assets of the Separate Account, which we
determine to be associated with the class of policies to which this policy
belongs, to another separate account. If this type of transfer is made, the term
Separate Account, as used in this policy, shall then mean the Separate Account
to which the assets were transferred.
When permitted by law, we also reserve the right to:
(a) deregister the Separate Account under the Investment Company Act of 1940;
(b) manage the Separate Account under the direction of a committee;
(c) restrict or eliminate any voting rights of Owners, or other persons who
have voting rights as to the Separate Account; and
(d) combine the Separate Account with other accounts.
We will value the assets of the Separate Account each business day.
We will value the assets in the Separate Account at their fair market value in
accordance with accepted accounting practices and applicable laws and
regulations.
Unit Value
Each Investment Subdivision has a Unit Value. When premiums or other amounts are
transferred into an Investment Subdivision, a number of Units are purchased
based on the subdivision's Unit Value for the valuation period during which the
transfer is made. When amounts are transferred out of an Investment Subdivision,
Units are redeemed in a similar manner. The Unit Value for a valuation period
applies to each day in the period. Before income payments begin, Unit Values are
referred to as Accumulation Unit Values. Once income payments have begun, they
are referred to as Annuity Unit Values.
For each Investment Subdivision, the Accumulation Unit Value for the first
valuation period was $10. The Accumulation Unit Value for each subsequent period
is the Net Investment Factor for that period, multiplied by the Accumulation
Unit Value for the immediately preceding period.
For each Investment Subdivision, the Annuity Unit Value for the first valuation
period was $10. The Annuity
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Unit Value for each subsequent period is (a) times (b) times (c), where:
(a) is the Net Investment Factor for that period;
(b) is the Annuity Unit Value for the preceding period; and
(c) is the investment result adjustment factor for that period.
The investment result adjustment factor recognizes an assumed interest rate of
3% per year used in determining the income payment amounts and is equal to
0.99991902 daily.
Each valuation period includes a business day and any non-business day or
consecutive non-business days immediately preceding it. Assets are valued at the
close of the business day. A business day is any day the New York Stock Exchange
is open for trading, or any day in which there is a material change in the value
of the assets in the Separate Account.
Each Investment Subdivision has its own Net Investment Factor. In the following
definition, "assets" refers to the assets in each Investment Subdivision. "Any
amount charged against the Separate Account" refers to those amounts that are
allocated to each Investment Subdivision.
The Net Investment Factor for a valuation period is (a) divided by (b), minus
(c), where:
(a) is (1) the value of the assets at the end of the preceding valuation
period, plus (2) the investment income and capital gains, realized or
unrealized, credited to those assets at the end of the valuation period
for which the Net Investment Factor is being determined, minus (3) the
capital losses, realized or unrealized, charged against those assets
during the valuation period, minus (4) any amount charged against the
Separate Account for taxes, or any amount we set aside during the
valuation period as a provision for taxes attributable to the operation
or maintenance of the Separate Account; and
(b) is the value of the assets at the end of the preceding valuation
period; and
(c) is a factor representing the charge for mortality and expense risks we
assume and for administrative expenses. The annual rate for these
charges is shown on page 3.
Transfers Before Income Payments Begin
You may transfer amounts among the Investment Subdivisions of the Separate
Account by sending a written request to us at our home office. The first
transfer in each calendar month will be made without a transfer charge. A
transfer charge will be imposed for each subsequent transfer in a calendar
month. The amount of the transfer charge is shown on page 3. When we make
transfers, the Account Value on the date of the transfer will not be affected by
the transfer except to the extent of the transfer charge. The transfer charge
will be taken from the amount transferred.
We reserve the right to limit, upon written notice, the number of transfers to
twelve each calendar year or, if it is necessary for the policy to continue to
be treated as an annuity policy by the IRS, a lower number. Also, we reserve the
right to refuse to execute any transfer if any of the Investment Subdivisions
which would be affected by the transfer is unable to purchase or redeem shares
of the mutual fund in which the Investment Subdivision invests. The transfer
will be effective as of the end of the valuation period during which we receive
your request at our home office. If the amount of your Account Value remaining
in an Investment Subdivision after the transfer is less than $100, we will
transfer the amount remaining in addition to the amount requested. We will not
allow a transfer into any Investment Subdivision unless the Account Value of
that Investment Subdivision after the transfer is at least $100.
Transfers After Variable Income Payments Begin
If income payments are made under one of the Variable Income Options you may
transfer Annuity Units among the Investment Subdivisions of the Separate Account
by sending a written request to us at our home office. You may make one transfer
in each calendar year. We reserve the right to limit the number of transfers if
it is necessary for the policy to continue to be treated as an annuity policy by
the IRS. Also, we reserve the right to refuse to execute any transfer if any of
the Investment Subdivisions that would be affected by the transfer is unable to
purchase or redeem shares of the mutual fund in which the Investment Subdivision
invests. If the number of annuity units remaining in an Investment Subdivision
after the transfer is less than 1, we will
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transfer the amount remaining in addition to the amount requested. We will not
allow a transfer into any Investment Subdivision unless the number of annuity
units of that Investment Subdivision after the transfer is at least 1. No
transfer charge is imposed for transfers of annuity units. The amount of the
income payment as of the date of the transfer will not be affected by the
transfer.
GENERAL INFORMATION
Annual Statement
Within 30 days after each policy anniversary, we will send you an annual
statement. The statement will show the Account Value and Surrender Value as of
the policy anniversary. The statement will also show premiums paid and charges
made during the policy year.
Calculation of Values
If the Net Investment Factor is always equivalent to an effective annual
interest rate of 4%, the account values in this policy will always at least
equal the account values required of an equivalent general account policy by the
law where this policy was delivered.
A detailed statement of how we calculate the values in this policy has been
filed with the insurance department where this policy was delivered.
Evidence of Death, Age, Sex or Survival
We will require proof of death before we act on policy provisions relating to
death of any person or persons. We may also require proof of the age, sex or
survival of any person or persons before we act on any policy provision
dependent upon age, sex or survival.
Incontestability
We will not contest this policy.
Misstatement of Age or Sex
If the Annuitant's age or sex is misstated on the policy data page, any policy
benefits or proceeds, or the availability thereof, will be determined using the
correct age and sex.
Premium Tax
Premium tax rules vary by state and change from time to time. Some states assess
a tax against us upon receipt of premium and some states upon annuitization of
proceeds.
Tax assessed upon receipt of premium: The premium tax rate shown on page 3 is
the rate that was in effect in your state at policy issue. To calculate any
applicable premium tax in effect on the date we receive the premium payment,
multiply the premium payment by the premium tax rate. This is the amount of any
state and/or local premium tax charged to us for this policy. We reserve the
right to deduct any such tax either from your premium payment(s) when received,
or from proceeds later when paid. (Proceeds includes benefits from surrender,
maturity and death.)
Tax assessed upon annuitization of proceeds: Since some states assess a premium
tax on proceeds used to purchase income payments, we reserve the right to deduct
from such proceeds any premium tax paid by us. Because state premium tax rules
change from time to time, the tax rate, if any, applicable to proceeds used to
purchase income payments is not shown in your policy. You may request
notification of the amount of this tax before income payments begin.
Nonparticipating
This policy is nonparticipating. No dividends are payable.
Written Notice
Any written notice to us should be sent to our home office at 6610 West Broad
Street, Richmond, Virginia, 23230. Please include the policy number and the
Annuitant's full name.
14
<PAGE>
Any notice we send you will be sent to the last known address on file with our
company. You should request an address change form if you move.
OPTIONAL PAYMENT PLANS
Death benefit and Surrender Value proceeds will be paid in one lump sum, and
maturity proceeds will be paid as described in the Monthly Income Benefit
section. Subject to the rules stated below, however, any part of the death or
surrender proceeds can be left with us and paid under a payment plan. If you
choose to leave the proceeds with us and receive payments under a payment plan,
the proceeds less any applicable premium tax will be applied to calculate your
income. During the Annuitant's life you (or the Designated Beneficiary at your
death) can choose a plan. If a plan has not been chosen at the death of the
Annuitant, the Designated Beneficiary can choose a plan if the death benefit is
to be paid.
There are several important payment plan rules:
o Our consent must be obtained prior to selecting an optional payment
plan if the payee is not a natural person.
o Payment made under an Optional Payment Plan at the death of the Owner,
Joint Owner or Annuitant must conform with the rules in the Death
Provisions, including the Payment of Benefits section.
o If you change a beneficiary, your plan selection will no longer be in
effect unless you request that it continue.
o Any choice or change of a plan must be sent in writing to our home
office.
o The amount of each payment under a plan must be at least $100.
o Payments under a Fixed Income option will begin on the date we receive
proof of the Annuitant's death, on surrender, or on the policy's
maturity date.
o Payments under a Variable Income option will begin within seven days
after the date payments would begin under the corresponding fixed
option.
o Payments under Plan 4 will begin at the end of the first interest
period after the date proceeds are otherwise payable.
Fixed Income Options
Optional Payment Plans 1 through 5 are available as Fixed Income Options. Any
amount left with us under a Fixed Income option will be transferred to our
general account. Payments made will equal or exceed those required by the state
where this policy is delivered.
Variable Income Options
Optional Payment Plans 1 and 5 are available as Variable Income Options. This
means that income payments, after the first, will reflect the investment
experience of the Investment Subdivisions of the Separate Account.
Proceeds may be allocated to one or more Investment Subdivisions of the Separate
Account. The first income payment is determined by the Plan chosen and the
amount of proceeds applied to the Plan. The dollar amount of subsequent income
payments is determined by means of Annuity Units.
The number of Annuity Units for an Investment Subdivision will be determined at
the time income payments begin and will remain fixed unless transferred (as
shown below). The number of Annuity Units for an Investment Subdivision is (a)
divided by (b), where:
(a) is the portion of the first income payment allocated to that Investment
Subdivision; and
(b) is the Annuity Unit Value for that Investment Subdivision seven days
before the income payment is due.
After the first income payment, each subsequent income payment is a dollar
amount equal to the sum of the income payment amounts for each Investment
Subdivision. The income payment amount for an Investment Subdivision is the
number of Annuity Units for that Investment Subdivision times the Annuity Unit
Value for that Investment Subdivision seven days before the payment is due.
15
<PAGE>
Annuity Units may be transferred upon request. The number of Annuity Units for
the new Investment Subdivision is (a) times (b), divided by (c), where:
(a) is the number of Annuity Units for the current Investment Subdivision;
(b) is the Annuity Unit Value for the current Investment Subdivision; and
(c) is the Annuity Unit Value for the new Investment Subdivision.
Payment Plans
The fixed income options are shown below. Variable income options, if
applicable, have the same initial payment as the corresponding fixed option. The
monthly payment rate per $1000, as shown in the Plan 1 and Plan 5 Tables, is
based on the 1983 Table `a', using 3% interest.
Plan 1. Life lncome with Period Certain. We will make equal monthly payments for
a guaranteed minimum period. If the payee lives longer than the minimum period,
payments will continue for his or her life. The minimum period can be 10, 15 or
20 years. Payments will be according to the table below. Guaranteed amounts
payable under this plan will earn interest at 3% compounded yearly. We may
increase the interest rate and the amount of any payment. If the payee dies
before the end of the guaranteed period, the amount of remaining payments for
the minimum period will be discounted at the same rate used in calculating
income payments. Discounted means we will deduct the amount of interest each
remaining payment would have earned had it not been paid out early. The
discounted amounts will be paid in one sum to the payee's estate unless
otherwise provided.
Plan 1 Table
Monthly payment rates for each $1,000 of proceeds under Plan 1.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Settlement Male Payee Female Payee
Age
-----------------------------------------------------------------------------
10 Years 15 Years 20 Years 10 Years 15 Years 20 Years
Certain Certain Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------
<S> <C>
20 $2.90 $2.89 $2.89 $2.80 $2.80 $2.80
25 2.99 2.98 2.98 2.88 2.87 2.87
30 3.10 3.10 3.09 2.96 2.96 2.96
35 3.24 3.24 3.23 3.08 3.07 3.07
40 3.43 3.41 3.39 3.22 3.21 3.20
45 3.66 3.64 3.60 3.40 3.39 3.37
50 3.95 3.91 3.85 3.63 3.61 3.59
51 4.02 3.97 3.91 3.68 3.66 3.63
52 4.09 4.04 3.96 3.74 3.72 3.68
53 4.16 4.11 4.02 3.80 3.77 3.74
54 4.24 4.18 4.08 3.86 3.83 3.79
55 4.32 4.25 4.15 3.93 3.90 3.85
56 4.41 4.33 4.21 4.00 3.96 3.91
57 4.50 4.41 4.28 4.07 4.03 3.97
58 4.60 4.49 4.34 4.15 4.10 4.03
59 4.70 4.58 4.41 4.23 4.18 4.10
60 4.81 4.67 4.48 4.32 4.26 4.17
61 4.92 4.77 4.55 4.42 4.35 4.24
62 5.04 4.86 4.62 4.52 4.43 4.31
63 5.17 4.96 4.69 4.62 4.53 4.39
64 5.30 5.06 4.76 4.73 4.62 4.46
- -----------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------
Settlement Male Payee Female Payee
Age
------------------------------------------------------------------------------
10 Years 15 Years 20 Years 10 Years 15 Years 20 Years
Certain Certain Certain Certain Certain Certain
- ------------------------------------------------------------------------------------------
<S> <C>
65 $5.44 $5.17 $4.83 $4.85 $4.72 $4.54
66 5.58 5.28 4.89 4.97 4.83 4.62
67 5.74 5.38 4.96 5.10 4.93 4.69
68 5.89 5.49 5.02 5.24 5.04 4.77
69 6.05 5.60 5.08 5.39 5.16 4.84
70 6.22 5.70 5.13 5.55 5.28 4.92
71 6.39 5.81 5.18 5.71 5.39 4.99
72 6.57 5.91 5.23 5.88 5.51 5.05
73 6.75 6.01 5.27 6.06 5.63 5.12
74 6.93 6.10 5.31 6.25 5.75 5.17
75 7.12 6.19 5.35 6.44 5.87 5.22
76 7.30 6.28 5.38 6.64 5.98 5.27
77 7.49 6.35 5.40 6.85 6.09 5.31
78 7.67 6.43 5.42 7.06 6.19 5.35
79 7.85 6.49 5.44 7.27 6.28 5.38
80 8.02 6.55 5.46 7.48 6.37 5.41
81 8.18 6.61 5.47 7.68 6.45 5.43
82 8.34 6.65 5.48 7.88 6.52 5.45
83 8.49 6.69 5.49 8.08 6.58 5.47
84 8.63 6.73 5.50 8.26 6.63 5.48
85 8.76 6.76 5.50 8.43 6.68 5.49
- ------------------------------------------------------------------------------------------
</TABLE>
Values for ages not shown will be furnished upon request.
Plan 2. Income for a Fixed Period. We will make equal periodic payments for a
fixed period, not longer than 30 years. Payments can be annual, semi-annual,
quarterly or monthly. Payments will be made according to the table below.
Guaranteed amounts payable under this plan will earn interest at 3% compounded
yearly. We may increase the interest and the amount of any payment. If the payee
dies, the amount of the remaining guaranteed payments will be
16
<PAGE>
discounted to the date of the payee's death at the same rate used in calculating
income payments. The discounted amount will be paid in one sum to the payee's
estate unless otherwise provided.
<TABLE>
<CAPTION>
Plan 2 Table
Monthly payment rates for each $1,000 of proceeds under Plan 2.
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Years 1 2 3 4 5 6 7 8 9
Payable
- --------------------------------------------------------------------------------------------------------------------
Monthly $84.47 $42.86 $28.99 $22.06 $17.91 $15.14 $13.16 $11.68 $10.53
Payment
- --------------------------------------------------------------------------------------------------------------------
Years 16 17 18 19 20 21 22 23 24
Payable
- --------------------------------------------------------------------------------------------------------------------
Monthly $6.53 $6.23 $5.96 $5.73 $5.51 $5.32 $5.15 $4.99 $4.84
Payment
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------
<S> <C>
Years 10 11 12 13 14 15
Payable
- ------------------------------------------------------------------------------
Monthly $9.61 $8.86 $8.24 $7.71 $7.26 $6.87
Payment
- ------------------------------------------------------------------------------
Years 25 26 27 28 29 30
Payable
- ------------------------------------------------------------------------------
Monthly $4.71 $4.59 $4.47 $4.37 $4.27 $4.18
Payment
- ------------------------------------------------------------------------------
</TABLE>
Annual, semi-annual or quarterly payments are determined by multiplying the
monthly payment by 11.838, 5.963 or 2.992, respectively.
Plan 3. Income of a Definite Amount. We will make equal periodic payments of a
definite amount. Payments can be annual, semi-annual, quarterly or monthly. The
amount paid each year must be at least $120 for each $1,000 of proceeds.
Payments will continue until the proceeds are exhausted. The last payment will
equal the amount of any unpaid proceeds. Unpaid proceeds will earn interest at
3% compounded yearly. We may increase the interest rate. If we do, the payment
period will be extended. If the payee dies, the amount of the remaining proceeds
with earned interest will be paid in one sum to his or her estate unless
otherwise provided.
Plan 4. Interest Income. We will make periodic payments of interest earned from
the proceeds left with us. Payments can be annual, semi-annual, quarterly or
monthly, and will begin at the end of the first period chosen. Proceeds left
under this plan will earn interest at 3% compounded yearly. We may increase the
interest rate and the amount of any payment. If the payee dies, the amount of
remaining proceeds and any earned but unpaid interest will be paid in one sum to
his or her estate unless otherwise provided.
Plan 5. Joint Life and Survivor Income. We will make equal monthly payments to
two payees for a guaranteed minimum of 10 years. Each payee must be at least 35
years old when payments begin. The guaranteed amount payable under this plan
will earn interest at 3% compounded yearly. We may increase the interest rate
and the amount of any payment. Payments will continue as long as either payee is
living. If both payees die before the end of the minimum period, the amount of
the remaining payments for the 10 year period will be discounted at the same
rate used in calculating the monthly income. The discounted amount will be paid
in one sum to the survivor's estate unless otherwise provided.
Plan 5 Table
Monthly payment rates for each $1,000 of proceeds under Plan 5.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Male Settlement Female Settlement Age
-------------------------------------------------------------------------------------------------------------
Age 35 40 45 50 55 60 65 70
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
35 $2.85 $3.00 $3.06 $3.11 $3.15 $3.18 $3.20 $3.22
40 2.98 3.06 3.13 3.20 3.26 3.31 3.35 3.38
45 3.01 3.10 3.20 3.30 3.39 3.46 3.53 3.58
50 3.03 3.14 3.25 3.38 3.51 3.63 3.73 3.81
55 3.04 3.16 3.30 3.45 3.62 3.79 3.94 4.08
60 3.05 3.18 3.33 3.51 3.72 3.94 4.16 4.37
65 3.06 3.19 3.36 3.56 3.79 4.07 4.37 4.68
70 3.07 3.20 3.37 3.59 3.85 4.17 4.55 4.97
75 3.07 3.21 3.38 3.61 3.89 4.24 4.68 5.20
80 3.07 3.21 3.39 3.62 3.91 4.28 4.76 5.37
85 & Over 3.07 3.22 3.39 3.62 3.92 4.31 4.81 5.47
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------
Male Settlement Female Settlement Age
-------------------------------------------------
Age 75 80 85 & Over
- -----------------------------------------------------------------
<S> <C>
35 $3.23 $3.24 $3.24
40 3.40 3.41 3.42
45 3.61 3.64 3.65
50 3.87 3.91 3.93
55 4.18 4.25 4.29
60 4.55 4.67 4.75
65 4.96 5.18 5.32
70 5.39 5.75 6.00
75 5.78 6.32 6.73
80 6.08 6.81 7.40
85 & Over 6.28 7.15 7.91
- -----------------------------------------------------------------
</TABLE>
Figures for intermediate ages, for two males or two females will be furnished
upon request.
17
<PAGE>
Settlement Age: The settlement age is the payee's age nearest birthday on the
date payments begin, minus an age adjustment from the table below. The age
adjustment cannot exceed the age of the payee.
- ---------------------------------------------------------------------
Year Payments Begin Age
After Prior To Adjustment
- ---------------------------------------------------------------------
---- 2001 0
2000 2026 3
2025 2051 7
2050 ---- 10
- ---------------------------------------------------------------------
18
<PAGE>
LIFE OF THE LIFE INSURANCE COMPANY OF VIRGINIA
VIRGINIA VARIABLE ANNUITY APPLICATION
1 Proposed
Annuitant __________________________ Social Security No._________________
Name(if no middle name,use
NMN)
________________________ Date of Birth _______________
Street address
_______________________ Age________
City State Zip
( ) Sex __Male __Female
--------------------------
Telephone
1a
Contingent
Annuitant
__________________________ Social Security No._________________
Name(if no middle name,use
NMN)
________________________ Date of Birth _______________
Street address
_______________________ Age________
City State Zip
( ) Sex __Male __Female
--------------------------
Telephone
2 Owner
Taxpayer ID or
__________________________ Social Security No._________________
Name(if no middle name,use
NMN) If applicable:
________________________ Date of Birth _______________
Street address
_______________________ Age________
City State Zip
( ) Sex __Male __Female
--------------------------
Telephone
2a Joint
Owner
Taxpayer ID or
__________________________ Social Security No._________________
Name(if no middle name,use
NMN) If applicable:
________________________ Date of Birth _______________
Street address
_______________________ Age________
City State Zip
( ) Sex __Male __Female
--------------------------
Telephone
3 Beneficiary
Primary[ ]
__________________________ Relationship[ ]
Name(if no middle name,use to owner
NMN)
Annuitant [ ]
________________________
Street address
Contingent [ ]
__________________________ Relationship[ ]
Name(if no middle name,use to owner
NMN)
Annuitant [ ]
________________________
Street address
CHANGES IN DESIGNATIONS
The following designations may be changed by the Owner at any time, unless they
are irrevocable. Check the appropriate boxes below ONLY if a designation is to
become irrevocable:
[ ]Primary [ ]Contingent [ ]Contingent
Beneficiary Beneficiary Annuitant
4 TYPE OF [ ]Nonqualified [ ]Qualified:
PLAN
[ ]Individual [ ]IRA(circle One):
[ ]Joint Regular payment;
tax year_________
Rollover
Direct Transfer
[ ]Simplified
Employee Pension
[ ]TSA/403(b)
[ ]Other
Owner:
[ ]Does [ ]Does Not
wish to have Federal
Income Tax withheld from
surrenders or annuity
payments.
5 Payment
With
Application $25,000
(initial minimum: $5,000)
6 Allocation Investment Subdivisions
of Purchase
Payments %
------
Enter a %
------
percentage %
------
of at %
------
least 10% %
------
for each %
------
fund %
------
selected % Guarantee Account(where available)
Percentages
must total 100%
20
<PAGE>
13371 10/90
7 Dollar-Cost TRANSFER DOLLAR AMOUNTS FROM THE Money Market
Averaging Subdivision to the following investment subdivisions according
to the frequency indicated:
FREQUENCY AMOUNTS TRANSFER TO INVESTMENT
(must be $100 or more) SUBDIVISIONS
[ ]MONTHLY (on the
5th of each
month.) $
$
$
[ ]QUARTERLY (on $
the last business $
each calendar $
quarter.)
I understand that the account value in my elected Money Market Subdivision must
be kept at or above the account value level which will permit the dollar-cost
averaging transfers requested; otherwise, these transfers will end. This request
is in lieu of the requirement for individual written transfer requests. I may
also change or terminate these transfers by written notice to the address below,
or by telephone if a Personal Identification Number (PIN) has been issued (See
Section 8). Initials of owner:
8 Telephone [ ] Telephone Transfer Agreement Form for assigning Personal
Identification Transfer Number for telephone transfers is being submitted with
this application. (optional)
[ ]Please send Telephone Transfer Agreement Form.
9 Replacement Will the proposed contract replace any existing
annuity or insurance contract?
[ ]No [ ]Yes (If yes, list company name, plan and year of
issue.)
10 Additional
Remarks
11 Signatures
Important All statements made in this application are true to the
Information. best of our knowledge and belief, and the answers to these
Please Read questions, together with this agreement, are the basis for
Carefully. issuing the policy. I/We agree to all terms and conditions
as shown on the front and back. I/We further agree that
this application shall be a part of the annuity contract,
and verify our understanding that ALL PAYMENTS AND VALUES
PROVIDED BY THE CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND NOT
GUARANTEED AS TO DOLLAR AMOUNT. THE OWNER ACKNOWLEDGES
RECEIPT OF PROSPECTUSES AND ALL APPLICABLE AMENDMENTS
DATED WITHIN 13 MONTHS OF THIS APPLICATION FOR THE
SEPARATE ACCOUNT AND ALL MUTUAL FUNDS APPLICABLE TO THE
POLICY. I/We agree that no one, except the President, the
Secretary, or a Vice President of the Company can make or
change any annuity.
<TABLE>
<S> <C>
Proposed
Dated at----------------------on----------- ,19 Annuitant
City, State Month,day ----------------------------
Witness to Contingent
all signatures Annuitant
- ------------------------------ -------------------------------------------------
Licensed Resident Agent/Broker (Signature required if designates as irrevocable)
- ------------------------------ Owner-------------------------------------
Business name or stamp (Signature required of other than Proposed
Annuitant)
Joint Owner-------------------------------
</TABLE>
21
<PAGE>
AGENTS STATEMENT - Do you have knowledge or reason to believe that replacement
of insurance is involved?
[ ]Yes [ ]No If "Yes",explain and submit a completed replacement form
where required.
<TABLE>
<S> <C>
Licensed Resident Agent/Broker
- ------------------------------------------------------------------------------------------------------------------------------------
Agency/Brokerage and Code (Print) Agent/Broker and Code (Print) Agent/Broker code(Print)
- ------------------------------------------------------------------------------------------------------------------------------------
Agent's/Broker Social Security/Tax Agent's/Broker's address Telephone Number
ID no.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Life Insurance Company of Virginia
6610 W. Broad Street
Richmond, Virginia 23230
22
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY POLICY
* Income payments beginning at maturity
* No dividends
* Some benefits reflect investment results
THE LIFE INSURANCE
COMPANY OF VIRGINIA
23
EXHIBIT (4)(b)(i)
IRA ENDORSEMENT
ENDORSEMENT
In order to qualify this contract as an Individual Retirement Annuity under
Section 408 of the Internal Revenue Code of 1986, as amended, (hereafter
referred to as The Code), the following provisions and restrictions are hereby
made applicable, notwithstanding any provisions to the contrary contained in the
policy. In the case of a conflict between the policy and the endorsement, the
endorsement overrides the policy.
ARTICLE 1 - Non-Transferability and Non-Forfeitability
The owner may not change the ownership of the policy and the policy may not be
sold,
<PAGE>
assigned or pledged as collateral for a loan or as security for the performance
of an obligation or for any other purpose to anyone. The owner's rights shall at
all times be non-forfeitable.
ARTICLE 2 - Premium Limitation
Except in the case of a rollover contribution, as that term is described in
Section 402(a)(5), 402(a)(6), 402(a)(7); 403(a)(4), 403(b)(8), or 408(d)(3) of
The Code, or a direct transfer from one Individual Retirement Annuity issued by
the Company to another Individual Retirement Annuity issued by the Company, no
premiums will be accepted unless they are in cash, and the total of such
premiums shall not exceed $2000 for any taxable year. If the premium consists
entirely of an employer contribution under a simplified employee pension, as
such is defined in Section 408(k) of The Code, the maximum amount of premium
stated in paragraph 1 of this article shall be increased by the amount of this
limitation in effect under section 415(c)(1)(A) of The Code.
The minimum premium required for each additional premium payment under this IRA
is $50. The sentence stating that "Each additional premium payment must be at
least $1,000" found in the Premium Payments section of the policy is deleted.
ARTICLE 3 - Refund of Premiums
Any refund of premiums (other than those attributable to excess contributions)
will be applied towards the payment of future premiums or the purchase of
additional benefits before the close of the calendar year following the year of
the refund.
ARTICLE 4 - Distributions Before Death Of The Owner
Federal tax law requires that minimum distributions from individual retirement
arrangements, including Individual Retirement Annuities, begin not later than
April 1 of the calendar year following the year in which the owner attains age
70 1/2. In order to comply with this requirement, the Surrender Value of this
annuity may be distributed as a lump sum or may be distributed in equal or
substantially equal amounts over (a) the life of the owner, or the lives of the
owner and a designated beneficiary, or (b) a period certain not extending beyond
the life expectancy of the owner, or the joint life expectancy of the owner and
a designated beneficiary.
If distributions are to be made to the owner in the manner described in (a) or
(b) of this Article, the amount to be distributed each year, beginning with the
first calendar year for which distributions are required and then for each
succeeding calendar year, shall not be less than the quotient obtained by the
dividing the Surrender Value as of the beginning of each year by the lesser of
(1) the applicable life expectancy or (2) if the owner's spouse is not the
designated beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
For purposes of this calculation only, "Surrender Value at the beginning of each
year" will include amounts not in this Individual Retirement Annuity at the
beginning of the year because they have been withdrawn for the purpose of making
a rollover contribution to another individual retirement plan. Distributions
after the death of the owner shall be distributed using the applicable life
expectancy as the relevant divisor without regard to Section 1.401(a)(9)-2 of
the Proposed Income Tax Regulations.
Life expectancy and joint and last survivor expectancy are computed by use of
the expected return multiples in Tables V of Section 1.72-9 of the Income Tax
Regulations. Unless otherwise elected by the owner by the time distributions are
required to begin, life expectancies shall be subsequent years. The life
expectancy of a non-spouse beneficiary may not be recalculated, instead life
expectancy will be calculated using the attained age of such beneficiary during
the calendar year in which distributions are required to begin pursuant to this
section, and payments for subsequent years shall be calculated based on such
life expectancy reduced by one for each calendar year which has elapsed since
the calendar year life expectancy was first calculated. Distributions under this
annuity shall be made in accordance with the requirements of Section 401(a)(9)
of the Code and the regulations thereunder.
<PAGE>
ARTICLE 5 - Distributions Upon Death Of The Owner
If the owner dies after distribution of his or her interest has commenced, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the owner's
death.
If the owner dies before distribution of his or her interest commences, the
owner's entire interest will be distributed in accordance with one of the
following four provisions: (a) The owner's entire interest will be paid within
five years after the owner's death. (b) If the owner's interest is payable to a
designated beneficiary and the owner has not elected (a) above, then the entire
interest will be distributed in substantially equal installments over the life
or life expectancy of the designated beneficiary commencing no later than one
year after the date of the owner's death. The designated beneficiary may elect
at any time to receive greater payments to the extent of payments guaranteed to
be made. (c) If the designated beneficiary is the owner's surviving spouse, the
spouse may elect within the five year period commencing with the owner's date of
death to receive equal or substantially equal payments over the life or life
expectancy of the surviving spouse commencing at any date prior to the date on
which the deceased owner would have attained age 70 1/2. The surviving spouse
may increase the frequency or amount of these payments at any time to the extent
of any payments guaranteed to be made. (d) If the designated beneficiary is the
owner's surviving spouse, the spouse may treat the contract as his or her own
individual retirement annuity. This election will be deemed to have been made if
such surviving spouse makes a regular IRA contribution to the contract, makes a
rollover to or from such contract, or fails to elect any of the above three
provisions.
For purposes of this Article 5, payments will be calculated by use of he
expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax
Regulations. Unless otherwise elected by the surviving spouse by the time
distributions are required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the surviving spouse and
shall apply to all subsequent years. In the case of any other designated
beneficiary, life expectancy will be calculated at the time payment first
commences and payments for any 12-consecutive month period will be based on such
life expectancy minus the number of whole years passed since distribution first
commenced.
Any amount paid to a child of the owner will be treated as if it had been paid
to the surviving spouse if the remainder of the interest becomes payable to the
surviving spouse when the child reaches the age of majority.
ARTICLE 6 - Applicant
The applicant for the policy is the owner/annuitant of the policy. This policy
is established for the exclusive benefit of the owner(s) or his or her
beneficiaries.
ARTICLE 7 - Annual Reports
The Company will furnish annual calendar year reports concerning the status of
the annuity.
ARTICLE 8 - Amendments
The Company shall have the right, solely at its discretion, to amend any and all
provisions of the policy in order to maintain qualification of the policy as an
Individual Retirement Annuity under Section 408 of The Code. Such endorsement
will be effective with respect to the annuitant and this policy upon receipt by
the owner. The owner has the right to refuse to accept any amendment; however,
the Company shall not be held liable for any such tax consequences incurred by
the owner as a result of his or her refusal to accept such amendment.
For THE LIFE INSURANCE COMPANY OF VIRGINIA
Paul E. Rutledge, III
President
<PAGE>
EXHIBIT (4)(b)(ii)
PENSION ENDORSEMENT
ENDORSEMENT
In order to use this contract under the Internal Revenue Code of 1986, as
amended, (hereafter referred to as The Code), the following provisions and
restrictions are hereby made applicable, notwithstanding any provisions to the
contrary contained in the policy.
Non-Transferability
The owner may not change the ownership of the policy and the policy may not be
sold, assigned or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose to anyone other than The
Life Insurance Company of Virginia unless the owner is the trustee of an
employee trust qualified under The Code. The purpose of this provision is to
qualify the annuity under Section 401(g) of The Code, and it shall be so
construed.
Monthly Income Benefit
We will make monthly payments to the annuitant for a guaranteed period. If the
annuitant dies before the end of the guaranteed minimum period, the remaining
payments will be discounted at the same rate used to calculate the monthly
income. The discounted amount will be paid in one sum to the annuitant's estate
unless otherwise provided.
<PAGE>
Optional Payment Plans
We will make payments that do not depend on the sex of the annuitant. New
monthly payment rates for the Life Income plan or the Joint Life and Survivor
Income plan are contained in this endorsement.
Settlement Age: The settlement age is the payee's age nearest birthday on the
date payments begin, minus an age adjustment from the table below. The age
adjustment cannot exceed the age of the payee.
- ------------------------------------------------------
Year Payments Begin Age
After Prior To Adjustment
- ------------------------------------------------------
- ---- 2001 0
2000 2026 3
2025 2051 7
2050 ---- 10
- ------------------------------------------------------
LIFE INCOME PLAN TABLE
Monthly Payment Rates for each $1000 of proceeds
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Age 10 15 20 Age 10 15 20 Age 10 15 20 Age 10 15 20
Years Years Years Years Years Years Years Years Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
20 $2.82 $2.82 $2.82 55 $4.00 $3.96 $3.90 66 $5.08 $4.91 $4.67 77 $6.96 $6.14 $5.33
25 2.90 2.89 2.89 56 4.07 4.03 3.96 67 5.22 5.02 4.74 78 7.16 6.23 5.36
30 2.99 2.99 2.98 57 4.15 4.10 4.03 68 5.36 5.13 4.82 79 7.36 6.32 5.39
35 3.11 3.10 3.10 58 4.23 4.18 4.09 69 5.51 5.24 4.89 80 7.57 6.40 5.42
40 3.26 3.25 3.24 59 4.32 4.25 4.16 70 5.66 5.35 4.96 81 7.77 6.47 5.44
45 3.45 3.43 3.42 60 4.41 4.34 4.23 71 5.83 5.47 5.02 82 7.96 6.54 5.46
50 3.59 3.67 3.64 61 4.51 4.42 4.30 72 6.00 5.58 5.09 83 8.14 6.60 5.47
51 3.74 3.72 3.68 62 4.61 4.51 4.37 73 6.18 5.70 5.15 84 8.32 6.65 5.48
52 3.80 3.78 3.74 63 4.72 4.61 4.44 74 6.37 5.81 5.20 85&over 8.48 6.69 5.49
53 3.87 3.84 3.79 64 4.83 4.70 4.52 75 6.56 5.93 5.25
54 3.93 3.90 3.85 65 4.95 4.80 4.59 76 6.76 6.03 5.29
- -----------------------------------------------------------------------------------------------------------------------------
*Age means Settlement Age
</TABLE>
JOINT LIFE AND SURVIVOR INCOME PLAN TABLE
Monthly Payment Rates for each $1000 of proceeds
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Settlement Settlement
Age Age
- ----------------------------------------------------------------------------------------------------------------
35 40 45 50 55 60 65 70 75 80 85&over
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
35 $2.92 $2.97 $3.00 $3.03 $3.06 $3.07 $3.08 $3.09 $3.10 $3.10 $3.11
40 2.97 3.03 3.08 3.13 3.17 3.20 3.22 3.23 3.24 3.25 3.25
45 3.00 3.08 3.16 3.23 3.29 3.34 3.38 3.41 3.42 3.44 3.44
50 3.03 3.13 3.23 3.33 3.43 3.51 3.57 3.62 3.65 3.67 3.68
55 3.06 3.17 3.29 3.43 3.56 3.68 3.79 3.87 3.93 3.96 3.99
60 3.07 3.20 3.34 3.51 3.68 3.86 4.03 4.16 4.27 4.34 4.38
65 3.08 3.22 3.38 3.57 3.79 4.03 4.27 4.49 4.68 4.81 4.89
70 3.09 3.23 3.41 3.62 3.87 4.16 4.49 4.83 5.14 5.38 5.54
75 3.10 3.24 3.42 3.65 3.93 4.27 4.68 5.14 5.61 6.02 6.30
80 3.10 3.25 3.44 3.67 3.96 4.34 4.81 5.38 6.02 6.63 7.10
85&over 3.11 3.25 3.44 3.68 3.99 4.38 4.89 5.54 6.30 7.10 7.76
- ----------------------------------------------------------------------------------------------------------------
For the Life Insurance Company of Virginia
</TABLE>
Paul E. Rutledge III
President
<PAGE>
EXHIBIT (4)(b)(iii)
Section 403b Endorsement
ENDORSEMENT
Cash Value Withdrawal Restrictions Effective January 1, 1989
You may not withdraw cash value resulting from:
* premiums paid after December 31, 1988, as elective deferrals through a salary
reduction agreement;
* earnings on those premiums;
* earnings on the amount of cash value as of December 31, 1988, attributable to
premiums paid as elective deferrals.
These restrictions are required by Section 403(b)(11), which was added to the
Internal Revenue Code by the Tax Reform Act of 1986. They override any policy
provisions to the contrary.
Exceptions to Restrictions on Cash Value Withdrawals
The restrictions listed above do not apply to withdrawals due to your:
* death;
* attainment of age 59 1/2;
* ending employment with the employer sponsoring the 403(b) plan;
* disability, as defined in Section 403(b)(11); or
* financial hardship, as defined in Section 403(b)(11). In the case of financial
hardship, only cash value from premiums paid through elective deferrals, and
not cash value from income on those premiums, may be withdrawn.
For The Life Insurance Company of Virginia,
Paul E. Rutledge, III
President
<PAGE>
EXHIBIT (4)(b)(iv)
Guaranteed Minimum Death Benefit Rider
THE LIFE INSURANCE COMPANY OF VIRGINIA
GUARANTEED MINIMUM DEATH BENEFIT RIDER
This rider provides for an Optional Death Benefit in addition to the Optional
Death Benefit provided for in the policy. The Death Benefit will be the greater
of:
* The Death Benefit provided for Under the Death Provisions
section in the policy; or
* The Death Benefit provided for in this rider.
Optional Death Benefit at Death of Annuitant
If any Annuitant dies while this rider is in effect and before income payments
begin, the Designated Beneficiary may surrender the policy for the Death Benefit
within 90 days of the date of such death. If this Death Benefit is paid, the
policy will terminate, and we will have no further obligation under this policy.
The Death Benefit will be the greater of:
* The Guaranteed Minimum Death Benefit; or
* The Account Value of the policy on the date we receive proof
of the Annuitant's death or, if later, the date of your
request.
Guaranteed Minimum Death Benefit. On the policy date, the Guaranteed Minimum
Death Benefit is equal to the premium paid. At the end of each valuation period
after such date, the Guaranteed Minimum Death Benefit is the lesser of:
* The total of all premiums received, multiplied by two, less
the amount of any partial surrenders, plus their surrender
charges, made prior to or during that valuation period; or
* The Guaranteed Minimum Death Benefit at the end of the
preceding valuation period, increased as specified below, plus
any additional premium payments during the current valuation
period and less the amount of any partial surrenders, plus
their surrender charges, made during the current valuation
period.
The amount of increase for the valuation period will be calculated by applying a
factor to the Guaranteed Minimum Death Benefit at the end of the preceding
valuation period. Until the anniversary on which the Annuitant attains age 80,
the factor is determined for each valuation period at an annual rate of 6%,
except that with respect to amounts invested in certain investment Subdivisions
shown in the policy data pages, the increase factor will be calculated as the
lesser of;
* The Net Investment Factor of the Investment Subdivision of the
valuation period, minus one; or
* A factor for the valuation period equivalent to an annual rate
of 6%.
With respect to amounts invested in the Guarantee Account, if it applies, the
increase factor for each such amount will be calculated as the lesser of:
<PAGE>
* A factor for the valuation period equivalent to the annual
rate that applies to such amount; or
* A factor for the valuation period equivalent to an annual rate
of 6%.
After the anniversary on which the Annuitant attains age 80, the factor will be
zero.
If the surrender occurs more than 90 days after the Annuitant's death, the
Surrender Value will be payable instead of the Death Benefit. Amounts payable
under this rider are subject to the Distribution Rules and Payment of Benefits
provisions in the policy.
The following paragraph is added to the Account Value Benefits section of the
policy:
If the Guarantee Account applies and if the Account Value in the Separate
Account is insufficient to cover the Annual Death Benefit Charge, then the
deduction will be made first from the Account Value in the Separate Account. The
excess of the charges over the Account Value in the Separate Account will then
be deducted from the Account Value in the Guarantee Account. Deductions from the
Guarantee Account will be taken from the amounts which have been in the
Guarantee Account for the longest period of time.
The following provision is added to the Account Value Benefits section of the
policy:
Annual Death Benefit Charge
There will be a charge made each year for expenses related to the Death Benefit
that is available under the terms of the rider. This charge is made at the
beginning of each policy year after the first, and at surrender, against the
Account Value allocated to the Separate Account. The amount of this charge is
shown on page 3 and is applied to the average Guaranteed Minimum Death Benefit
during the previous year. The charge at surrender will be a pro-rata portion of
the annual charge.
When this Rider is Effective
This rider is effective on the policy date and will remain in effect while this
policy is in force and before income payments begin, or until the policy
anniversary following the date of receipt of your request to terminate the
rider.
For The Life Insurance Company of Virginia,
Paul E. Rutledge, III
President
April 23, 1998
The Life Insurance Company of Virginia
6610 West Broad Street
Richmond, VA 23230
Gentlemen:
With reference to Post-Effective Amendment No. 6 to Form N-4 (File Number
33-76336) filed by The Life Insurance Company of Virginia and Life of Virginia
Separate Account 4 with the Securities and Exchange Commission covering flexible
premium variable deferred annuity policies, I have examined such documents and
such law as I considered necessary and appropriate, and on the basis of such
examination, it is my opinion that:
1. The Life Insurance Company of Virginia is duly organized and validly
existing under the laws of the Commonwealth of Virginia and has been duly
authorized to issue individual flexible premium variable deferred annuity
policies by the Bureau of Insurance of the State Corporation Commission of
the Commonwealth of Virginia.
2. Life of Virginia Separate Account 4 is a duly authorized and existing
separate account established pursuant to the provisions of Section
38.2-3113 of the Code of Virginia.
3. The flexible premium variable deferred annuity policies, when issued as
contemplated by said Form N-4 Registration Statement, will constitute
legal, validly issued and binding obligations of The Life Insurance Company
of Virginia.
I hereby consent to the use of this letter, or copy thereof, as an exhibit to
Post Effective Amendment No. 6 to the Registration Statement on Form N-4 (File
Number 33-76336) and the reference to me under the caption "Legal Matters" in
the Statement of Additional Information contained in said Post-Effective
Amendment.
Sincerely,
/s/ J. Neil McMurdie
- --------------------
J. Neil McMurdie
Associate Counsel and
Assistant Vice President
Law Department
STEPHEN E. ROTH
DIRECT LINE: (202) 383-0158
Internet: [email protected]
April 27, 1998
The Life Insurance Company of Virginia
6610 West Broad Street
Richmond, VA 23230
Re Life of Virginia Separate Account 4
Gentlemen:
We hereby consent to the reference to our name under the
caption "Legal Matters" in the Statement of Additional Information filed as part
of the Post-Effective Amendment No. 6 to the Registration Statement on Form N-4
filed by Life of Virginia Separate Account 4 for certain variable annuity
policies (File No. 33-76336). In giving this consent, we do not admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN LLP
By: _____________________________
Stephen E. Roth
Consent of Independent Auditors
The Board of Directors
The Life Insurance Company of Virginia:
We consent to the use of our reports for The Life Insurance Company of Virginia
included herein and Life of Virginia Separate Account 4 included in the
Statement of Additional Information incorporated herein by reference
(post-effective amendment no. 6 to Form N-4 of registration no. 33-76336) and to
the references to our firm under the caption "Experts" in the prospectus.
Our report with respect to The Life Insurance Company of Virginia dated January
6, 1998, contains an explanatory paragraph that states effective April 1, 1996,
General Electric Capital Corporation acquired all of the outstanding stock of
The Life Insurance Company of Virginia in a business combination accounted for
as a purchase. As a result of the acquisition, the consolidated financial
information for the periods after the acquisition is presented on a different
cost basis than that for the periods before the acquisition and, therefore, is
not comparable.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG PEAT MARWICK LLP
Richmond, Virginia
April 29, 1998
<PAGE>
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Experts" and "Change
in Auditors" and to the use of our reports dated February 8, 1996, with respect
to the consolidated financial statements and the related financial statement
schedules of The Life Insurance Company of Virginia and subsidiaries and Life of
Virginia Separate Account 4, in the Post-Effective Amendment No. 6 to the
Registration Statement (Form N-4 No. 33-76336) and related Prospectus of Life of
Virginia Separate Account 4 for the registration of an indefinite amount of
securities.
ERNST & YOUNG LLP
Richmond, Virginia
April 27, 1998
