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FORTIS BENEFITS INSURANCE COMPANY
MAY 1, 1999
PROFILE
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU
SHOULD CONSIDER AND KNOW BEFORE PURCHASING THE MASTERS+ ANNUITY. THIS
ANNUITY IS MORE FULLY DESCRIBED IN THE PROSPECTUS WHICH ACCOMPANIES THIS
PROFILE. PLEASE READ THE PROSPECTUS CAREFULLY.
1. THE ANNUITY CONTRACT
Masters + Variable Annuity is a contract between you and Fortis Benefits
Insurance Company. It is designed to help you accumulate assets for your
retirement and other long term financial goals on a tax deferred basis.
Masters + offers you a diverse selection of money managers and investment
options. You may divide your money among the 18 investment portfolios of the
Fortis Series Fund and ten fixed account options of Fortis Benefits.
The investment portfolios offer professionally managed investment options
with goals ranging from capital preservation to aggressive growth. Your
choices are found on the next page. These portfolios are designed to provide
you with better potential return than the fixed accounts. Your investment,
however, is not guaranteed. The value of your Masters + contract can
fluctuate up or down based on your choices and you may experience a loss.
Masters + does provide you with a death benefit that protects your
beneficiaries from such loss.
The fixed accounts provide guaranteed interest rates set by Fortis Benefits
for periods from one to ten years. When you invest in these guarantee
periods, and leave the money in the contract until the end of the period,
your investment and the interest rates are guaranteed. If you make any
transfers or withdrawals of your investment before the end of the selected
period, your contract value may increase or decrease depending on interest
rate changes.
Like most annuities, this contract has two phases: the accumulation phase and
the income phase. During the accumulation phase, you invest money in your
contract. Your contract value is based on your investment choices. You may
withdraw money from your contract. However, as with most other tax-deferred
investments, you will pay taxes on earnings and untaxed contributions when
you withdraw them. You may also be subject to an IRS tax penalty if you make
withdrawals before age 59 1/2.
During the income phase, you can elect to receive regular payments from your
contract. Depending on your choice, these payments can be fixed in dollar
amount or can vary with investment performance. The amount of these income
payments also are determined by the amount you are able to accumulate during
the accumulation phase of your contract.
2. ANNUITY INCOME OPTIONS
(THE INCOME PHASE)
You may select one of four annuity income options:
(1) monthly payments during your lifetime;
(2) monthly payments during your lifetime, but with payments continuing to
your beneficiary for a period from 10 to 20 years (as you select) if
you die before the end of the selected period;
(3) monthly payments during your lifetime and the lifetime of another
person you select; and
(4) monthly payments during your lifetime and the lifetime of another
person, with the payments being reduced by 1/2 when one of you dies.
At the start of the income phase, you can choose to have the payments come
from the fixed account, the investment portfolios, or both. The dollar amount
of your payments coming from the fixed account will be fixed. The payments
from the investment portfolios you select will go up or down depending on
their performance. Once payments begin, you cannot change your annuity
option.
3. PURCHASING A MASTERS +
VARIABLE ANNUITY CONTRACT
You can buy this contract through your registered representative who can help
you complete the proper forms. The minimum initial investment is $5,000 for
non-qualified and $2,000 for qualified investments. You can make additional
contributions of at least $50 at any time during the accumulation period. The
minimum investment may be smaller for certain employer sponsored plans.
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4. INVESTMENT OPTIONS
You can invest your money in any of the following investment portfolios
which are described in the fund prospectus:
INTERNATIONAL STOCK
Lazard - International Stock
Fortis - Global Growth
Morgan Stanley - Global Asset
Allocation
DOMESTIC STOCK
SMALL CAP Fortis - Aggressive Growth
Berger - Small Cap Value
MID CAP Fortis - Growth Stock
Dreyfus - Mid Cap Stock
LARGE CAP Alliance - Large Cap Growth
T. Rowe Price - Blue Chip Stock
Dreyfus - S & P 500 Index
Fortis - Growth & Income
Fortis - Value
Fortis - Asset Allocation
INTERNATIONAL BONDS
Mercury - Global Bond
DOMESTIC BONDS
Fortis - High Yield
Fortis - Diversified Income
Fortis - U.S. Government Securities
CASH Fortis - Money Market
You may also choose to invest in the guaranteed fixed account. You can choose
among guarantee periods ranging from one to ten years, each with its own
interest rate. Once set, the rate will not change during the selected period.
These accounts (except for the one year period) have a feature known as a
market value adjustment (MVA). This means that if you transfer, withdraw or
begin an income phase from one of these accounts before the end of the
selected period, your contract value will be adjusted up or down depending on
current interest rates.
5. EXPENSES
We deduct insurance charges equal to 1.35% annually of the average daily
value of your contract in the investment portfolios. As with other
professionally managed investments, there are also investment charges
on money in the investment portfolios, estimated to range from 0.35% to
1.25%.
If you decide to cancel your contract or take money out in excess of the
annual free withdrawal amount, there may be a withdrawal charge of a
percentage of your investment. The annual free withdrawal amount is 10% of
payments made plus any earnings. The withdrawal charge percentage declines
with each year the payment is in the contract as follows:
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<CAPTION>
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YEAR 1 2 3 4 5 6 7 8+
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
WITHDRAWAL
CHARGE 7% 7% 6% 6% 5% 3% 1% 0%
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</TABLE>
In a limited number of states, you may also be assessed a state premium tax
charge of up to 4%, depending upon the state. In these states, this tax will
be deducted when you cancel the contract, begin the income phase, or if a
death benefit is paid. In many states, there is no tax at all.
The following chart is designed to help you understand the expenses in your
contract. The column labeled "Total Annual Expenses" includes the total of
1.35% insurance charges and the investment management expenses for each
portfolio. The right side of the chart shows you two examples of the
expenses, in dollars, you could pay under the contract. The examples
illustrate the average cost per $1,000 invested, earning 5% annually and
withdrawals: (1) at the end of one year, and (2) at the end of ten years. In
the first example, the total annual expenses are assessed along with the
withdrawal charges. In the second example, the total annual expenses for the
ten years are shown but there is no withdrawal charge assessed. The premium
tax is assumed to be 0% for both examples. Please see the prospectus for more
complete examples.
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<TABLE>
<CAPTION>
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PORTFOLIO TOTAL TOTAL
ANNUAL ANNUAL TOTAL EXAMPLES
INSURANCE INVESTMENT ANNUAL
EXPENSES EXPENSES EXPENSES 1 YEAR 10 YEARS
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<S> <C> <C> <C> <C> <C>
INTERNATIONAL STOCK
Lazard - International Stock 1.35% 0.94% 2.29% $86 $259
Fortis - Global Growth 1.35% 0.75% 2.10% $84 $240
Morgan Stanley - Global Asset Allocation 1.35% 1.01% 2.36% $87 $266
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DOMESTIC STOCK
SMALL CAP
Fortis - Aggressive Growth 1.35% 0.72% 2.07% $84 $237
Berger - Small Cap Value 1.35% 1.24% 2.59% $89 $289
MID CAP
Fortis - Growth Stock 1.35% 0.65% 2.00% $83 $229
Dreyfus - Mid Cap Stock 1.35% 1.25% 2.60% $89 $290
LARGE CAP
Alliance - Large Cap Growth 1.35% 1.25% 2.60% $89 $290
T. Rowe Price - Blue Chip Stock 1.35% 0.94% 2.29% $86 $259
Dreyfus - S&P 500 Index 1.35% 0.46% 1.81% $81 $209
Fortis - Growth & Income 1.35% 0.67% 2.02% $83 $231
Fortis - Value 1.35% 0.76% 2.11% $84 $241
Fortis - Asset Allocation 1.35% 0.51% 1.86% $82 $215
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INTERNATIONAL BONDS
Mercury - Global Bond 1.35% 0.88% 2.23% $85 $253
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DOMESTIC BONDS
Fortis - High Yield 1.35% 0.56% 1.91% $82 $220
Fortis - Diversified Income 1.35% 0.52% 1.87% $82 $216
Fortis - U.S. Government Securities 1.35% 0.51% 1.86% $82 $215
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CASH
Fortis - Money Market 1.35% 0.35% 1.70% $80 $198
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6. TAXES
Your earnings are not taxed until you withdraw them from the contract. If you
take money out during the accumulation phase, earnings come out first and are
taxable ordinary income. If you make a withdrawal prior to age 59 1/2, you
may be charged a 10% federal tax penalty on that amount. Payments during the
income phase are considered partly a return of your original investment and
partly earnings. You will only be taxed on the earnings portion. However, if
your contract is funded with pretax or tax deductible dollars (qualified plan
contributions), then the entire payment will be taxable.
7. ACCESS TO YOUR MONEY
You can make withdrawals at any time during the accumulation phase. The
minimum amount you can withdraw is $1,000. Any payment invested in the
contract for more than seven years can be withdrawn without a charge. You can
withdraw up to 10% of your total investment each year plus earnings at any
time with no charge. All other withdrawals will be charged according to the
table shown in Section 5 "Expenses". If you withdraw from the fixed account,
your contract value may be subject to a market value adjustment. You may also
have to pay income tax and a tax penalty on any money you withdraw.
SYSTEMATIC WITHDRAWALS: You can have money automatically sent to you each
month during the accumulation phase of your contract. Systematic withdrawals
are available for amounts of $100 or more. Of course, withdrawals may be
taxable and subject to an IRS tax penalty.
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8. PERFORMANCE
The value of your contract will go up or down depending on the investment
portfolios you choose. The following chart shows the total return for each
investment portfolio for the time periods shown. Insurance charges,
investment management charges and all other expenses of the investment
portfolio have been deducted from these numbers. These numbers do not
reflect any withdrawal charges which, if applied, would reduce the
performance. Past performance is not a guarantee of future results.
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<CAPTION>
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PORTFOLIO 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL STOCK
Lazard - International Stock 14.91% 10.49% 12.48% 12.83% - - - - - -
Fortis - Global Growth 9.87% 5.39% 17.50% 28.74% -4.28% 16.34% - - - -
Morgan Stanley - Global Asset Allocation 14.41% 11.99% 11.20% 15.90% - - - - - -
DOMESTIC STOCK - SMALL CAP
Fortis - Aggressive Growth 19.55% 0.06% 6.19% 28.15% - - - - - -
Berger - Small Cap Value* - - - - - - - - - -
DOMESTIC STOCK - MID CAP
Fortis - Growth Stock 17.42% 10.91% 14.85% 25.96% -4.12% 7.32% 1.55% 51.44% -4.40% 34.66%
Dreyfus - Mid Cap Stock* - - - - - - - - - -
DOMESTIC STOCK - LARGE CAP
Alliance - Large Cap Growth* - - - - - - - - - -
T. Rowe Price - Blue Chip Stock 26.39% 25.25% - - - - - - - -
Dreyfus - S&P500 Index 26.39% 30.55% - - - - - - - -
Fortis - Growth & Income 11.70% 25.98% 19.87% 27.98% - - - - - -
Fortis - Value 8.18% 23.56% - - - - - - - -
Fortis - Asset Allocation 18.36% 18.62% 10.99% 20.35% -1.65% 8.32% 5.50% 25.93% 0.64% 22.04%
INTERNATIONAL BONDS
Mercury - Global Bond 11.97% -1.04% 1.86% 17.43% - - - - - -
DOMESTIC BONDS
Fortis - High Yield -0.73% 8.29% 9.03% 11.26% - - - - - -
Fortis - Diversified Income 4.88% 8.96% 2.74% 15.72% -6.50% 11.25% 5.64% 13.11% 7.40% 10.80%
Fortis - U.S. Government Securities 7.41% 7.62% 0.82% 17.22% -7.71% 7.98% 4.70% 12.85% 6.45% -
CASH
Fortis - Money Market 3.90% 3.93% 3.75% 4.31% 2.52% 1.39% 1.97% 4.50% 6.42% 7.96%
</TABLE>
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*Inception date May 1, 1998; per the SEC, portfolio numbers must reflect an
entire year's performance.
Note: Masters Annuity was first offered for the sale on April 4, 1991.
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9. DEATH BENEFIT
If you die during the accumulation phase, your contract beneficiary will
receive a death benefit. This death benefit will be the greater of three
amounts:
1) the value of your contract;
2) at the time of death, the highest anniversary contract value up to your
75th birthday; plus (a) any money you put in since that anniversary less
(b) a proportionate reduction related to any money you took out since
that anniversary.
3) if you die before your 75th birthday, the value of all payments
accumulated at 5%, less an adjustment for any money you took out. The
maximum this amount can be is twice your adjusted payments. The
adjustments are equal to a proportionate reduction related to any money
you took out. If you die after age 75, the death benefit is slightly
different.
10. OTHER INFORMATION
FREE LOOK PERIOD: You may cancel your contract within 10 days of
receiving it (or whatever period is required by your state). We will
pay you the value of your contract without imposing a withdrawal
charge. This may be more or less than the amount you invested. If
required by law, we will return your original payment.
NO PROBATE: In most cases, your beneficiary will receive the death
benefit when you die without going through probate.
DOLLAR COST AVERAGING: You can invest gradually with a regular amount
of money into your chosen investment portfolios from any of the
portfolios, or from the one year guarantee period of the fixed
account. This can lower your average cost per unit over time as
compared to your cost on a single purchase.
AUTOMATIC REBALANCING: You can maintain your asset allocation mix by
asking us to readjust your money on a periodic basis. This can help you
keep your investment in line with your goals.
NURSING HOME WAIVER: You will be able to take your money out without a
withdrawal charge if you are in a nursing home and meet certain
conditions.
DISABILITY WAIVER: You will be able to take your money out without a
withdrawal charge if you are disabled and meet certain conditions.
11. INQUIRIES
If you need more information, please contact us at:
Fortis Benefits Insurance Company
P.O. Box 64272, St. Paul, MN 55164
800-800-2000, Ext. 30570
