<PAGE>
AS FILED WITH THE SEC ON SEPTEMBER 30, 1998. REGISTRATION NO.______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
----------------------
PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT
(Exact Name of Trust)
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(Name of Depositor)
751 BROAD STREET
NEWARK, NEW JERSEY 07102-3777
(800) 437-4016
(Address and telephone number of principal executive offices)
----------------------
THOMAS C. CASTANO
ASSISTANT SECRETARY
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
751 BROAD STREET
NEWARK, NEW JERSEY 07102-3777
(Name and address of agent for service)
Copy to:
JEFFREY C. MARTIN
SHEA & GARDNER
1800 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, D.C. 20036
----------------------
Variable Universal Life Insurance Contracts--Pursuant to Rule 24f-2 under the
Investment Company Act of 1940, the Registrant elects to register an indefinite
amount of securities. The filing fee is $500. (Title and amount of securities
being registered; proposed maximum aggregate offering price; amount of filing
fee).
Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.
The Registrant hereby amends this Registration Statement on such date as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, action pursuant to said Section 8(a), may determine.
This filing is being made pursuant to Rules 6c-3 and 6e-3(T) under the
Investment Company Act of 1940.
Registrant elects to be governed by Rules 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940 with respect to the Contract described in this
Registration Statement.
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY FORM N-8B-2)
N-8B-2 ITEM NUMBER LOCATION
------------------ --------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Sale of the Contract and Sales Commissions
5. The Prudential Variable Appreciable
Account
6. The Prudential Variable Appreciable
Account
7. Not Applicable
8. Not Applicable
9. Litigation
10. Introduction and Summary; Short-Term
Cancellation Right, or "Free Look"; Type
of Death Benefit; Changing the Type of
Death Benefit; Premiums; Contract Date;
Allocation of Premiums; Transfers; Dollar
Cost Averaging, Auto-Rebalancing; Charges
and Expenses; How a Contract's Cash
Surrender Value Will Vary; How a Type A
(Fixed) Contract's Death Benefit Will
Vary; How a Type B (Variable) Contract's
Death Benefit Will Vary; Surrender of a
Contract; Withdrawals; Increases in Basic
Insurance Amount; Decreases in Basic
Insurance Amount; Lapse and Reinstatement;
When Proceeds are Paid; Riders; Other
General Contract Provisions; Voting
Rights; Substitution of Fund Shares
11. Introduction and Summary; The Prudential
Variable Appreciable Account
12. Cover Page; Introduction and Summary; The
Funds; Sale of the Contract and Sales
Commissions
13. Introduction and Summary; The Funds;
Charges and Expenses; Sale of the Contract
and Sales Commissions
14. Introduction and Summary; Requirements for
Issuance of a Contract
15. Introduction and Summary; Allocation of
Premiums; Transfers; Dollar Cost
Averaging, Auto-Rebalancing; The Fixed-
Rate Option
16. Introduction and Summary; Detailed
Information for Prospective Contract
Owners
17. When Proceeds are Paid
<PAGE>
N-8B-2 ITEM NUMBER LOCATION
------------------ --------
18. The Prudential Variable Appreciable
Account
19. Reports to Contract Owners
20. Not Applicable
21. Contract Loans
22. Not Applicable
23. Not Applicable
24. Other General Contract Provisions
25. The Prudential Variable Appreciable
Account
26. Introduction and Summary; The Funds;
Charges and Expenses
27. The Prudential Insurance Company of
America; The Funds
28. The Prudential Insurance Company of
America; Directors and Officers
29. The Prudential Insurance Company of
America
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. The Prudential Insurance Company of
America
36. Not Applicable
37. Not Applicable
38. Sale of the Contract and Sales Commissions
39. Sale of the Contract and Sales Commissions
40. Not Applicable
41. Sale of the Contract and Sales Commissions
42. Not Applicable
43. Not Applicable
<PAGE>
N-8B-2 ITEM NUMBER LOCATION
------------------ --------
44. Introduction and Summary; The Funds; How a
Contract's Cash Surrender Value Will Vary;
How a Type A (Fixed) Contract's Death
Benefit Will Vary; How a Type B (Variable)
Contract's Death Benefit Will Vary
45. Not Applicable
46. Introduction and Summary; The Prudential
Variable Appreciable Account; The Funds
47. The Prudential Variable Appreciable
Account; The Funds
48. Not Applicable
49. Not Applicable
50. Not Applicable
51. Not Applicable
52. Substitution of Fund Shares
53. Tax Treatment of Contract Benefits
54. Not Applicable
55. Not Applicable
56. Not Applicable
57. Not Applicable
58. Not Applicable
59. Financial Statements; Financial Statements
of the Prudential Variable Appreciable
Account; Consolidated Financial Statements
of The Prudential Insurance Company of
America and Subsidiaries
<PAGE>
Variable Universal Life
Insurance
PROSPECTUS
The Prudential
Variable Appreciable Account
November 9, 1998
[LOGO] PRUDENTIAL
<PAGE>
PROSPECTUS
NOVEMBER 9, 1998
THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT
VARIABLE UNIVERSAL LIFE
This prospectus describes a flexible premium variable universal life insurance
contract (the "Contract") offered by The Prudential Insurance Company of America
("Prudential"). The Contract provides life insurance coverage with flexible
premium payments and a variety of investment options. You must pay an initial
premium, after which you can pay premium amounts as desired, as long as
sufficient money is in the Contract Fund to cover all charges. Your Contract may
lapse without value if your Contract Fund has insufficient value. You may
select either of two death benefit types, a fixed death benefit or a variable
death benefit. The variable death benefit will vary with the performance of the
investment options you select. For each type, there are generally two death
benefit guarantees, each of which can be secured by a certain level of premium
payments.
You may choose to invest your Contract's premiums and their earnings in the
following ways:
. Invest in one or more of 15 available subaccounts of The Prudential Variable
Appreciable Account, each of which invests in a corresponding portfolio of the
Funds indicated below:
THE PRUDENTIAL SERIES FUND, INC. (THE "SERIES FUND")
Money Market High Yield Bond Equity
Diversified Bond Stock Index Prudential Jennison
Conservative Balanced Equity Income Global
Flexible Managed
AIM VARIABLE INSURANCE FUNDS, INC. AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
AIM V.I. Value Fund American Century VP Value Fund
JANUS ASPEN SERIES MFS(R) VARIABLE INSURANCE TRUST/SM/
Growth Portfolio Emerging Growth Series
T. ROWE PRICE INTERNATIONAL SERIES, INC.
International Stock Portfolio
. Invest in the fixed-rate option, which pays a guaranteed interest rate.
Prudential will credit interest daily on any portion of the premium payment
that you have allocated to the fixed-rate option at rates periodically
declared by Prudential, in its sole discretion. Any such interest rate will
never be less than an effective annual rate of 4%.
This prospectus describes the Contract generally and The Prudential Variable
Appreciable Account. The attached prospectuses for the Funds and their related
statements of additional information describe the investment objectives and the
risks of investing in the portfolios. Prudential may add additional investment
options in the future. Please read this prospectus and keep it for future
reference.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
751 Broad Street
Newark, New Jersey 07102-3777
Telephone: (800) 437-4016
<PAGE>
PROSPECTUS CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS.......................................................................... 1
INTRODUCTION AND SUMMARY...................................................................................................... 2
Brief Description of the Contract............................................................................................ 2
Charges...................................................................................................................... 2
Types of Death Benefit....................................................................................................... 4
Premium Payments............................................................................................................. 5
Refund....................................................................................................................... 5
GENERAL INFORMATION ABOUT THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, THE PRUDENTIAL
VARIABLE APPRECIABLE ACCOUNT, AND THE VARIABLE INVESTMENT OPTIONS
AVAILABLE UNDER THE CONTRACT................................................................................................. 6
The Prudential Insurance Company of America.................................................................................. 6
The Prudential Variable Appreciable Account.................................................................................. 6
The Funds.................................................................................................................... 7
The Fixed-Rate Option........................................................................................................ 9
Which Investment Option Should Be Selected?.................................................................................. 9
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS.......................................................................... 10
Requirements For Issuance of a Contract...................................................................................... 10
Short-term Cancellation Right or "Free Look".................................................................................. 10
Type of Death Benefit........................................................................................................ 10
Changing the Type of Death Benefit........................................................................................... 11
Premiums..................................................................................................................... 11
Death Benefit Guarantee...................................................................................................... 12
Contract Date................................................................................................................ 13
Allocation of Premiums....................................................................................................... 14
Transfers.................................................................................................................... 14
Dollar Cost Averaging........................................................................................................ 15
Auto-rebalancing............................................................................................................. 15
Charges and Expenses......................................................................................................... 15
How a Contract's Cash Surrender Value Will Vary.............................................................................. 18
How a Type A (Fixed) Contract's Death Benefit Will Vary...................................................................... 19
How a Type B (Variable) Contract's Death Benefit Will Vary................................................................... 20
Surrender of a Contract...................................................................................................... 21
Withdrawals.................................................................................................................. 21
Increases in Basic Insurance Amount.......................................................................................... 21
Decreases In Basic Insurance Amount.......................................................................................... 22
When Proceeds Are Paid....................................................................................................... 22
Living Needs Benefit......................................................................................................... 23
Illustrations of Cash Surrender Values, Death Benefits, and Accumulated Premiums............................................. 23
Contract Loans............................................................................................................... 25
Sale of the Contract and Sales Commissions................................................................................... 26
Tax Treatment of Contract Benefits........................................................................................... 26
Withholding.................................................................................................................. 27
Lapse and Reinstatement...................................................................................................... 28
Legal Considerations Relating to Sex-distinct Premiums and Benefits.......................................................... 28
Other General Contract Provisions............................................................................................ 29
Riders....................................................................................................................... 29
Participation in Divisible Surplus........................................................................................... 29
Voting Rights................................................................................................................ 30
Substitution of Fund Shares.................................................................................................. 30
Reports to Contract Owners................................................................................................... 30
State Regulation............................................................................................................. 31
Experts...................................................................................................................... 31
Litigation................................................................................................................... 31
Year 2000 Compliance......................................................................................................... 32
Additional Information....................................................................................................... 33
Financial Statements......................................................................................................... 33
</TABLE>
<PAGE>
<TABLE>
<S> <C>
DIRECTORS AND OFFICERS OF PRUDENTIAL.......................................................................................... 33
FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT ........................................................... A1
CONSOLIDATED FINANCIAL STATEMENTS OF THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA AND SUBSIDIARIES ......................................................................................... B1
</TABLE>
<PAGE>
DEFINITIONS OF SPECIAL TERMS
USED IN THIS PROSPECTUS
ACCUMULATED NET PAYMENTS--The actual premium payments you make, accumulated at
an effective annual rate of 4%, less any withdrawals you make, accumulated at an
effective annual rate of 4%.
ATTAINED AGE--The insured's age on the Contract date plus the number of years
since then.
BASIC INSURANCE AMOUNT--The amount of life insurance as shown in the Contract.
CASH SURRENDER VALUE--The amount payable to the
Contract owner upon surrender of the Contract. It is equal to the Contract Fund
minus any Contract debt and, during the first 10 Contract years, minus the
applicable surrender charge.
CONTRACT--The variable universal life insurance contract described in this
prospectus.
CONTRACT ANNIVERSARY--The same date as the Contract date in each later year.
CONTRACT DATE--The date the Contract is effective, as specified in the Contract.
CONTRACT DEBT--The principal amount of all outstanding loans plus any interest
we have charged that is not yet due and that we have not yet added to the loan.
CONTRACT FUND--The total amount credited to a specific Contract. On any date it
is equal to the sum of the amounts in all the subaccounts, the amount invested
under the fixed-rate option, and the principal amount of any Contract debt.
CONTRACT OWNER--Unless a different owner is named in the application, the owner
of the Contract is the insured.
CONTRACT YEAR--A year that starts on the Contract date or on a Contract
anniversary. For any portion of a Contract representing an increase (see page
21), "Contract year" is a year that starts on the effective date of the
increase.
DEATH BENEFIT--The amount we will pay upon the death of the insured before
reduction of any Contract debt and amounts needed to pay charges through the
date of death.
FACE AMOUNT--The same as the "basic insurance amount."
FIXED-RATE OPTION--An investment option under which interest is accrued daily
at a rate that Prudential declares periodically, but not less than an effective
annual rate of 4%.
FUNDS--Mutual funds with separate portfolios. One or more of the available Fund
portfolios may be chosen as an underlying investment for the Contract.
LIFETIME DEATH BENEFIT GUARANTEE PERIOD--The lifetime of the Contract, during
which time the Lifetime Death Benefit Guarantee is available if sufficient
premiums are paid. See DEATH BENEFIT GUARANTEE, page 12.
LIMITED DEATH BENEFIT GUARANTEE PERIOD--A period which is determined on a case-
by-case basis, during which time the Limited Death Benefit Guarantee is
available if sufficient premiums are paid. See DEATH BENEFIT GUARANTEE,
page 12.
MONTHLY DATE--The Contract date and the same date in each subsequent month.
SUBACCOUNT--An investment division of the Account, the assets of which are
invested in the shares of the corresponding portfolio of the Funds.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA--Us, we, Prudential. The company
offering the Contract.
THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT (THE "ACCOUNT")--A separate account
of Prudential registered as a unit investment trust under the Investment Company
Act of 1940.
VALUATION PERIOD--The period of time from one determination of the value of the
amount invested in a subaccount to the next. Such determinations are made when
the net asset values of the portfolios of the Funds are calculated, which is
generally at 4:15 p.m. Eastern time on each day during which the New York Stock
Exchange is open.
VARIABLE INVESTMENT OPTIONS--The subaccounts.
WE--The Prudential Insurance Company of America.
YOU--The owner of the Contract.
1
<PAGE>
INTRODUCTION AND SUMMARY
THIS SUMMARY PROVIDES A BRIEF OVERVIEW OF THE MORE SIGNIFICANT ASPECTS OF THE
CONTRACT. WE PROVIDE FURTHER DETAIL IN THE SUBSEQUENT SECTIONS OF THIS
PROSPECTUS AND IN THE CONTRACT. THE CONTRACT, INCLUDING THE APPLICATION
ATTACHED TO IT, CONSTITUTES THE ENTIRE AGREEMENT BETWEEN YOU AND PRUDENTIAL AND
YOU SHOULD RETAIN THESE DOCUMENTS.
As you read this prospectus you should keep in mind that this is a life
insurance contract. VARIABLE LIFE INSURANCE has significant investment aspects
and requires you to make investment decisions and therefore it is also a
"security." Securities that are offered to the public must be registered with
the Securities and Exchange Commission. The prospectus that is a part of the
registration statement must be given to all prospective purchasers. A
substantial part of the premium pays for life insurance that will pay a benefit
to the beneficiary, in the event of the insured's death. This death benefit
generally far exceeds your total premium payments. Therefore, you should not
buy this Contract unless the major reason for the purchase is to provide life
insurance protection.
BRIEF DESCRIPTION OF THE CONTRACT
The Contract is a form of variable universal life insurance. It is based on a
Contract Fund, the value of which changes every business day. The chart below
describes how the value of your Contract Fund changes.
You may invest premiums in one or more of the 15 available subaccounts or in the
fixed-rate option. Your Contract Fund value changes every day depending upon
the change in the value of the particular investment options that you have
selected.
Although the value of your Contract Fund will increase if there is favorable
investment performance in the subaccounts you select, there is a risk that
investment performance will be unfavorable and that the value of your Contract
Fund will decrease. The risk will be different, depending upon which investment
options you choose. See WHICH INVESTMENT OPTION SHOULD BE SELECTED?, page 9.
If you select the fixed-rate option, Prudential credits your account with a
declared rate or rates of interest but you assume the risk that the rate may
change, although it will never be lower than an effective annual rate of 4%.
CHARGES
The following chart outlines the components of your Contract Fund and the
adjustments which may be made including the maximum charges which may be
deducted from each premium payment and from the amounts held in the designated
investment options. These charges are largely designed to cover insurance costs
and risks as well as sales and administrative expenses. The maximum charges
shown in the chart, as well as the current lower charges, are fully described
under CHARGES AND EXPENSES, page 15.
2
<PAGE>
---------------------
| PREMIUM PAYMENT |
---------------------
|
---------------------------------------------
. less a charge of up to 7.5% of the
premiums.
. less a charge for sales expenses of up
to 4% of the premiums paid.
---------------------------------------------
|
--------------------------------------------------------------
INVESTED PREMIUM AMOUNT
To be invested in one or a combination of:
. 15 investment portfolios of the Funds
. The fixed-rate option
--------------------------------------------------------------
|
--------------------------------------------------------------
CONTRACT FUND
On the Contract Date, the Contract Fund is equal to the invested
premium amount minus any of the charges described below which
may be due on that date. Thereafter, the value of the Contract
Fund changes daily.
--------------------------------------------------------------
|
--------------------------------------------------------------
PRUDENTIAL ADJUSTS THE CONTRACT FUND FOR:
. Addition of any new invested premium amounts.
. Addition of any increase due to investment results of the chosen
variable investment options.
. Addition of guaranteed interest at an effective annual rate of 4%
(plus any excess interest if applicable) on the portion of the
Contract Fund allocated to the fixed-rate option.
. Addition of guaranteed interest at an effective annual rate of 4% on
the amount of any Contract loan. (Separately, interest charged on the
loan accrues at an effective annual rate of 4.5% or 5%. See CONTRACT
LOANS, page 25.)
. Subtraction of any decrease due to investment results of the chosen
variable investment options.
. Subtraction of any amount withdrawn.
. Subtraction of the charges listed below, as applicable.
--------------------------------------------------------------
|
--------------------------------------------------------------
DAILY CHARGES
. Management fees and expenses are deducted from the Fund assets.
. We deduct a daily mortality and expense risk charge, equivalent to an
annual rate of up to 0.9%, from the variable investment options
assets.
--------------------------------------------------------------
3
<PAGE>
-----------------------------------------------------------------------
MONTHLY CHARGES
. We reduce the Contract Fund by a monthly administrative charge of up
to $10 plus $0.07 per $1,000 of the basic insurance amount; after
the first Contract year, the $0.07 per $1,000 portion of the charge
is reduced to $0.01 per $1,000 of the basic insurance amount.
. We deduct a cost of insurance ("COI") charge.
. We reduce the Contract Fund by a Death Benefit Guarantee risk charge
of $0.01 per $1,000 of the basic insurance amount.
. If the Contract includes riders, we deduct rider charges from the
Contract Fund.
. If the rating class of an insured results in an extra charge, we
will deduct that charge from the Contract Fund.
-----------------------------------------------------------------------
-----------------------------------------------------------------------
POSSIBLE ADDITIONAL CHARGES
. During the first 10 Contract years, we will assess a contingent
deferred sales charge if the Contract lapses, is surrendered, or the
basic insurance amount is decreased (including as a result of a
withdrawal or a death benefit type change). For insureds age 76 or
less at issue, the maximum contingent deferred sales charge is 26%
of the lesser of the target level premium or the actual premiums
paid (see PREMIUMS, page 11) for the Contract. The charge is level
for six years and then declines monthly to zero at the end of the
10th Contract year. For insureds age 77 or over at issue, the
maximum charge will be a lesser percentage of the target level
premium for the Contract or the actual premiums paid.
. During the first 10 Contract years, we will assess a contingent
deferred administrative charge if the Contract lapses, is
surrendered or the basic insurance amount is decreased (including as
a result of a withdrawal or a death benefit type change). This
charge equals the lesser of: (a) $5 per $1,000 of basic insurance
amount; and (b) $500. It is level for six years and then declines
monthly until it reaches zero at the end of the 10th Contract year.
. We assess an administrative charge of up to $25 for any
withdrawals.
. We assess an administrative charge of up to $25 for any change in
basic insurance amount.
. We assess an administrative charge of up to $25 for each transfer
exceeding 12 in any Contract year.
-----------------------------------------------------------------------
TYPES OF DEATH BENEFIT
There are two types of death benefit available. You may choose a Contract with
a Type A (fixed) death benefit under which the cash surrender value varies daily
with investment experience, and the death benefit generally remains at the basic
insurance amount you initially chose. However, the Contract Fund may grow to a
point where the death benefit may increase and vary with investment experience.
If you choose a Contract with a Type B (variable) death benefit, the cash
surrender value and the death benefit both vary with
4
<PAGE>
investment experience. For either type of death benefit, as long as the Contract
is inforce, the death benefit will never be less than the basic insurance amount
shown in your Contract. See TYPE OF DEATH BENEFIT, page 10.
PREMIUM PAYMENTS
The Contract is a flexible premium contract there are no scheduled premiums.
Except for the minimum initial premium, and subject to a minimum of $25 per
subsequent payment, you choose the timing and amount of premium payments. The
Contract will remain inforce if the Contract Fund less any applicable surrender
charges is greater than zero and more than any Contract debt. However, if the
accumulated premiums you pay are high enough, and Contract debt does not equal
or exceed the Contract Fund less any applicable surrender charges, Prudential
guarantees that your Contract will not lapse even if investment experience is
very unfavorable and the Contract Fund drops below zero. Each Contract
generally provides two guarantees, one that lasts for the lifetime of the
Contract and another that lasts for a stated, generally lengthy period. The
guarantee for the life of the Contract requires higher premium payments. See
PREMIUMS, page 11, DEATH BENEFIT GUARANTEE, page 12 and LAPSE AND REINSTATEMENT,
page 28.
We offer and suggest regular billing of premiums even though you decide when to
make premium payments and, subject to a $25 minimum, in what amounts. You
should discuss your billing options with your Prudential representative when you
apply for the Contract. See PREMIUMS, page 11.
REFUND
For a limited time, you may return your Contract for a refund in accordance with
the terms of its "free look" provision. See SHORT-TERM CANCELLATION RIGHT OR
"FREE LOOK," page 10.
For the DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS, see page 1.
THE REPLACEMENT OF LIFE INSURANCE IS GENERALLY NOT IN THE INTEREST OF THE
CUSTOMER. WHEN A CUSTOMER REQUIRES ADDITIONAL COVERAGE, IN MOST CASES, THE
BENEFITS OF THE EXISTING CONTRACT CAN BE PROTECTED BY PURCHASING ADDITIONAL
INSURANCE OR A SUPPLEMENTAL CONTRACT. IF YOU ARE CONSIDERING REPLACING A
CONTRACT, YOU SHOULD COMPARE THE BENEFITS AND COSTS OF SUPPLEMENTING YOUR
EXISTING CONTRACT WITH THE BENEFITS AND COSTS OF PURCHASING THE CONTRACT
DESCRIBED IN THIS PROSPECTUS AND YOU SHOULD CONSULT WITH A QUALIFIED TAX
ADVISER.
THIS PROSPECTUS MAY ONLY BE OFFERED IN JURISDICTIONS IN WHICH THE OFFERING IS
LAWFUL. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
PROSPECTUSES AND THE STATEMENTS OF ADDITIONAL INFORMATION FOR THE FUNDS.
5
<PAGE>
GENERAL INFORMATION ABOUT THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA,
THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT,
AND THE VARIABLE INVESTMENT OPTIONS AVAILABLE
UNDER THE CONTRACT
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
The Prudential Insurance Company of America ("Prudential") is a mutual insurance
company, founded in 1875 under the laws of the State of New Jersey. Prudential
is currently considering reorganizing itself into a stock company. This form of
reorganization, known as demutualization, is a complex process that could take
two years to complete. No plan of demutualization has been adopted yet
by Prudential's Board of Directors. Any plan of reorganization adopted by the
Board of Directors would have to be approved by qualified policyholders and
appropriate state insurance regulators. Throughout the process, there will be a
continuing evaluation by the Board of Directors and management of Prudential as
to the desirability of demutualization. The Board of Directors, in its
discretion, may choose not to demutualize or to delay demutualization for a
time.
Prudential is licensed to sell life insurance and annuities in the District of
Columbia, Guam, U. S. Virgin Islands, and in all states. This Contract is only
offered in New York State.
Prudential's consolidated financial statements begin on page B1 and should be
considered only as bearing upon Prudential's ability to meet its obligations
under the Contracts.
THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT
The Prudential Variable Appreciable Account (the "Account") was established on
August 11, 1987 under New Jersey law as a separate investment account. The
Account meets the definition of a "separate account" under federal securities
laws. The Account holds assets that are segregated from all of Prudential's
other assets.
The obligations to Contract owners and beneficiaries arising under the Contract
are general corporate obligations of Prudential. Prudential is also the legal
owner of the assets in the Account. Prudential will maintain assets in the
Account with a total market value at least equal to the reserve and other
liabilities relating to the variable benefits attributable to the Account.
These assets may not be charged with liabilities which arise from any other
business Prudential conducts. In addition to these assets, the Account's assets
may include funds contributed by Prudential to commence operation of the Account
and may include accumulations of the charges Prudential makes against the
Account. From time to time these additional assets may be withdrawn by
Prudential.
The Account is a unit investment trust, which is a type of investment company.
It is registered with the Securities and Exchange Commission ("SEC") under the
Investment Company Act of 1940 ("1940 Act"). This does not involve any
supervision by the SEC of the management or investment Contracts or practices of
the Account. For state law purposes, the Account is treated as a part or
division of Prudential.
Currently, you may invest in one or a combination of 15 available subaccounts
within the Account, each of which invests in a single corresponding portfolio of
the Funds. Prudential may add additional subaccounts in the future. The
Account's financial statements begin on page A1.
6
<PAGE>
THE FUNDS
The following is a list of the Funds, the portfolios' investment objectives and
investment advisers:
THE PRUDENTIAL SERIES FUND, INC. (THE "SERIES FUND"):
. MONEY MARKET PORTFOLIO: The maximum current income that is consistent with
stability of capital and maintenance of liquidity through investment in high-
quality short-term debt obligations. There are no assurances that this
portfolio will maintain a stable net asset value.
. DIVERSIFIED BOND PORTFOLIO: A high level of income over the longer term while
providing reasonable safety of capital through investment primarily in readily
marketable intermediate and long-term fixed income securities that provide
attractive yields but do not involve substantial risk of loss of capital
through default.
. CONSERVATIVE BALANCED PORTFOLIO: Achievement of a favorable total investment
return consistent with a portfolio having a conservatively managed mix of
money market instruments, fixed income securities, and common stocks, in
proportions believed by the investment manager to be appropriate for an
investor desiring diversification of investment who prefers a relatively lower
risk of loss than that associated with the Flexible Managed Portfolio while
recognizing that this reduces the chances of greater appreciation.
. FLEXIBLE MANAGED PORTFOLIO: Achievement of a high total return consistent with
a portfolio having an aggressively managed mix of money market instruments,
fixed income securities, and common stocks, in proportions believed by the
investment manager to be appropriate for an investor desiring diversification
of investment who is willing to accept a relatively high level of loss in an
effort to achieve greater appreciation.
. HIGH YIELD BOND PORTFOLIO: Achievement of a high total return through
investment in high yield/high risk fixed income securities in the medium to
lower quality ranges.
. STOCK INDEX PORTFOLIO: Achievement of investment results that correspond to
the price and yield performance of publicly traded common stocks in the
aggregate by following a policy of attempting to duplicate the price and yield
performance of the Standard & Poor's 500 Composite Stock Price Index.
. EQUITY INCOME PORTFOLIO: Both current income and capital appreciation through
investment primarily in common stocks and convertible securities that provide
favorable prospects for investment income returns above those of the Standard
& Poor's 500 Composite Stock Price Index or the New York Stock Exchange
Composite Index.
. EQUITY PORTFOLIO: Capital appreciation through investment primarily in common
stocks of companies, including major established corporations as well as
smaller capitalization companies, that appear to offer attractive prospects of
price appreciation that are superior to broadly-based stock indices. Current
income, if any, is incidental.
. PRUDENTIAL JENNISON PORTFOLIO: Long-term growth of capital through investment
primarily in equity securities of established companies with above-average
growth prospects. Current income, if any, is incidental.
. GLOBAL PORTFOLIO: Long-term growth of capital through investment primarily in
common stock and common stock equivalents of foreign and domestic issuers.
Current income, if any, is incidental.
Prudential is the investment adviser for the assets of each of the portfolios of
the Series Fund. Prudential's principal business address is 751 Broad Street,
Newark, New Jersey 07102-3777. Prudential has a Service Agreement with its
wholly-owned subsidiary, The Prudential Investment Corporation ("PIC"). The
Service Agreement provides that, subject to Prudential's supervision, PIC will
furnish investment advisory services in connection with the management of the
Series Fund. In addition, Prudential has entered into a Subadvisory Agreement
with its wholly-owned subsidiary Jennison Associates LLC ("Jennison"), under
which Jennison furnishes investment advisory services in connection with the
management of the Prudential Jennison Portfolio.
7
<PAGE>
AIM VARIABLE INSURANCE FUNDS, INC.:
. AIM V.I. VALUE FUND. To achieve long-term growth of capital by investing
primarily in equity securities judged by A I M Advisors, Inc. to be
undervalued relative to the current or projected earnings of the companies
issuing the securities, or relative market values of assets owned by the
companies issuing the securities or relative to the equity market generally.
Income is a secondary objective and would be satisfied principally from the
income (interest and dividends) generated by the common stocks, convertible
bonds and convertible preferred stocks that make up the Fund's portfolio.
A I M Advisors, Inc. ("AIM") is the investment adviser for this fund. The
principal business address for AIM is 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.:
. AMERICAN CENTURY VP VALUE FUND. Seeks long-term capital growth with income as
a secondary objective. The fund seeks to achieve its objective by investing
primarily in equity securities of well-established companies with
intermediate-to-large market capitalizations that are believed by management
to be undervalued at the time of purchase.
American Century Investment Management, Inc. ("ACIM") is the investment adviser
for this fund. ACIM's principal business address is American Century Tower,
4500 Main Street, Kansas City, Missouri 64111. The Principal Underwriter of the
fund is American Century Services, Inc., located at 4500 Main Street, Kansas
City, Missouri 64111.
JANUS ASPEN SERIES:
. GROWTH PORTFOLIO. Seeks long-term growth of capital in a manner consistent
with the preservation of capital.
Janus Capital Corporation is the investment adviser and is responsible for the
day-to-day management of the portfolio and other business affairs of the
portfolio. Janus Capital Corporation's principal business address is 100
Fillmore Street, Denver, Colorado 80206-4928.
MFS(R) VARIABLE INSURANCE TRUST/SM/:
. EMERGING GROWTH SERIES. Seeks to provide long-term growth of capital. Dividend
and interest income from portfolio securities, if any, is incidental to the
Series' investment objective of long-term growth of capital.
Massachusetts Financial Services Company, a Delaware corporation, is the
investment adviser to this MFS Series. The principal business address for the
Massachusetts Financial Services Company is 500 Boylston Street, Boston,
Massachusetts 02116.
T. ROWE PRICE INTERNATIONAL SERIES, INC.:
. INTERNATIONAL STOCK PORTFOLIO. Long-term growth of capital through investments
primarily in common stocks of established, non-U.S. companies.
Rowe Price-Fleming International, Inc. is the investment manager for this fund.
The principal business address for Rowe Price-Fleming International, Inc. is 100
East Pratt Street, Baltimore, Maryland 21202.
Further information about Fund portfolios can be found in the attached
prospectuses and their statements of additional information for each Fund.
The investment advisers for the Funds charge a daily investment management fee
as compensation for their services. These fees are described in the table in
the DEDUCTIONS FROM PORTFOLIOS section on page 15, and are more fully described
in the prospectus for each Fund.
In the future it may become disadvantageous for both variable life insurance and
variable annuity contract separate accounts to invest in the same underlying
mutual funds. Although neither the companies which
8
<PAGE>
invest in the Funds nor the Funds currently foresee any such disadvantage, the
Board of Directors for each Fund intends to monitor events in order to identify
any material conflict between variable life insurance and variable annuity
Contract owners and to determine what action, if any, should be taken. Material
conflicts could result from such things as: (1) changes in state insurance law;
(2) changes in federal income tax law; (3) changes in the investment management
of any portfolio of the Funds; or (4) differences between voting instructions
given by variable life insurance and variable annuity contract owners.
Prudential may be compensated by an affiliate of each of the Funds (other than
the Prudential Series Fund) based upon an annual percentage of the average
assets held in the Fund by Prudential under the Contracts. These percentages
vary by Fund, and reflect administrative and other services provided by
Prudential.
A FULL DESCRIPTION OF THE FUNDS, THEIR INVESTMENT OBJECTIVES, MANAGEMENT,
POLICIES, RESTRICTIONS, EXPENSES, INVESTMENT RISKS, AND ALL OTHER ASPECTS OF
THEIR OPERATION IS CONTAINED IN THE ATTACHED PROSPECTUSES FOR EACH FUND AND IN
THE RELATED STATEMENTS OF ADDITIONAL INFORMATION, WHICH SHOULD BE READ IN
CONJUNCTION WITH THIS PROSPECTUS. THERE IS NO ASSURANCE THAT THE INVESTMENT
OBJECTIVES OF THE FUNDS WILL BE MET.
THE FIXED-RATE OPTION
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED-RATE
OPTION UNDER THE CONTRACT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS AN INVESTMENT COMPANY
UNDER THE INVESTMENT COMPANY ACT OF 1940. ACCORDINGLY, INTERESTS IN THE FIXED-
RATE OPTION ARE NOT SUBJECT TO THE PROVISIONS OF THESE ACTS, AND PRUDENTIAL HAS
BEEN ADVISED THAT THE STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURE IN THIS
PROSPECTUS RELATING TO THE FIXED-RATE OPTION. DISCLOSURE REGARDING THE FIXED-
RATE OPTION MAY, HOWEVER, BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS
OF FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF
STATEMENTS MADE IN PROSPECTUSES.
You may choose to invest, either initially or by transfer, all or part of your
Contract Fund to a fixed-rate option. This amount becomes part of Prudential's
general account. The general account consists of all assets owned by Prudential
other than those in the Account and in other separate accounts that have been or
may be established by Prudential. Subject to applicable law, Prudential has
sole discretion over the investment of the general account assets. Contract
owners do not share in the investment experience of those assets. Instead,
Prudential guarantees that the part of the Contract Fund allocated to the fixed-
rate option will accrue interest daily at an effective annual rate that
Prudential declares periodically, but not less than an effective annual rate of
4%.
Currently, the following steps are taken for crediting interest rates: (1)
declared interest rates remain in effect from the date money is allocated to the
fixed-rate option until the first day of the same month in the following year;
(2) a new crediting rate will apply to that money until the first day of the
same month in the next year; (3) a new declared crediting rate will apply to
that money for the remainder of that calendar year; (4) a new crediting rate
will be declared each year for that money and it will remain in effect for the
entire calendar year. Prudential reserves the right to change this practice.
Prudential is not obligated to credit interest at a higher rate than 4%,
although it may do so. Different crediting rates may be declared for different
portions of the Contract Fund allocated to the fixed-rate option. On request,
you will be advised of the interest rates that currently apply to your Contract.
Transfers from the fixed-rate option are subject to strict limits, see
TRANSFERS, page 14. The payment of any cash surrender value attributable to the
fixed-rate option may be delayed up to six months, see WHEN PROCEEDS ARE PAID,
page 22.
WHICH INVESTMENT OPTION SHOULD BE SELECTED?
Historically, for investments held over relatively long periods, the investment
performance of common stocks has generally been superior to that of short or
long-term debt securities, even though common stocks have been subject to much
more dramatic changes in value over short periods of time. Accordingly,
portfolios such as the Stock Index, Equity Income, Equity, Prudential Jennison,
Global, AIM V.I. Value Fund, American Century VP Value Fund, Janus Growth, MFS
Emerging Growth Series or T. Rowe Price International Stock may be desirable
options if you are willing to accept such volatility in your Contract values.
Each of these equity portfolios involves different policies and investment
risks.
9
<PAGE>
You may prefer the somewhat greater protection against loss of principal (and
reduced chance of high total return) provided by the Diversified Bond Portfolio.
Or, you may want even greater safety of principal and may prefer the Money
Market Portfolio or the fixed-rate option, recognizing that the level of short-
term rates may change rather rapidly. If you are willing to take risks and
possibly achieve a higher total return, you may prefer the High Yield Bond
Portfolio, recognizing that the risks are greater for lower quality bonds with
higher yields. You may wish to divide your invested premium among two or more
of the portfolios. You may wish to obtain diversification by relying on
Prudential's judgment for an appropriate asset mix by choosing the Conservative
Balanced or Flexible Managed Portfolio.
Your choice should take into account how willing you are to accept investment
risks, how your other assets are invested, and what investment results you may
experience in the future. You should consult your Prudential representative from
time to time about the choices available to you under the Contract. Prudential
recommends AGAINST frequent transfers among the several options. Experience
generally indicates that "market timing" investing, particularly by non-
professional investors, is likely to prove unsuccessful.
DETAILED INFORMATION FOR
PROSPECTIVE CONTRACT OWNERS
REQUIREMENTS FOR ISSUANCE OF A CONTRACT
The Contract may generally be issued on insureds below the age of 81.
Currently, the minimum basic insurance amount that can be applied for is
$100,000. Prudential requires evidence of insurability, which may include a
medical examination, before issuing any Contract. Non-smokers are offered the
most favorable cost of insurance rates. A higher cost of insurance rate and/or
an additional amount is charged if an extra mortality risk is involved. These
are the current underwriting requirements. We reserve the right to change them
on a non-discriminatory basis.
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK"
Generally, you may return the Contract for a refund within 10 days after you
receive it. You can request a refund by mailing or delivering the Contract to
the representative who sold it or to the Home Office specified in the Contract.
A Contract returned according to this provision shall be deemed void from the
beginning. You will then receive a refund of all premium payments made with no
adjustment for investment experience.
TYPE OF DEATH BENEFIT
You may select either of two types of death benefit. Generally, a Contract with
a Type A (fixed) death benefit has a death benefit equal to the basic insurance
amount. This type of death benefit does not vary with the investment
performance of the investment options you selected, except in certain
circumstances. See HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL VARY,
page 19. The payment of additional premiums and favorable investment results of
the variable investment options to which the assets are allocated will generally
increase the cash surrender value. See HOW A CONTRACT'S CASH SURRENDER VALUE
WILL VARY, page 18.
A Contract with a Type B (variable) death benefit has a death benefit which will
generally equal the basic insurance amount plus the Contract Fund. Since the
Contract Fund is a part of the death benefit, favorable investment performance
and payment of additional premiums generally result in an increase in the death
benefit as well as in the cash surrender value. Over time, however, the
increase in the cash surrender value will be less than under a Type A (fixed)
Contract. This is because, given two Contracts with the same basic insurance
amount and equal Contract Funds, generally the cost of insurance charge for a
Type B (variable) Contract will be greater. See HOW A CONTRACT'S CASH SURRENDER
VALUE WILL VARY, page 18 and HOW A TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT
WILL VARY, page 20. Unfavorable investment performance will result in decreases
in the death benefit and in the cash surrender value. But, as long as the
Contract is not in default, the death benefit may not fall below the basic
insurance amount stated in the Contract.
In choosing a death benefit type, you should also consider whether you intend to
use the withdrawal feature. Contract owners of Type A (fixed) Contracts should
note that any withdrawal may result in a reduction of the basic insurance amount
and the deduction of any applicable surrender charges. In addition, we will not
allow
10
<PAGE>
you to make a withdrawal that will decrease the basic insurance amount
below the minimum basic insurance amount. See WITHDRAWALS, page 21.
CHANGING THE TYPE OF DEATH BENEFIT
You may change the type of death benefit on or after the first Contract
anniversary and subject to Prudential's approval. We will increase or decrease
the basic insurance amount so that the death benefit immediately after the
change matches the death benefit immediately before the change.
If you are changing your Contract's type of death benefit from Type A (fixed) to
Type B (variable), we will reduce the basic insurance amount by the amount in
your Contract Fund on the date the change takes place. The basic insurance
amount after the change may not be lower than the minimum basic insurance amount
applicable to the Contract. If you are changing from a Type B (variable) to a
Type A (fixed) death benefit, we will increase the basic insurance amount by the
amount in your Contract Fund on the date the change takes place. This is
illustrated in the following chart.
<TABLE>
<CAPTION>
CHANGING THE DEATH BENEFIT FROM CHANGING THE DEATH BENEFIT FROM
TYPE A . TYPE B TYPE B . TYPE A
(Fixed) (Variable) (Variable) (Fixed)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
BASIC INSURANCE
AMOUNT $ 300,000 - $250,000 $ 250,000 - $ 300,000
CONTRACT FUND $ 50,000 = $ 50,000 $ 50,000 = $ 50,000
DEATH BENEFIT $300,000 = $300,000 $ 300,000 = $ 300,000
- -----------------------------------------------------------------------------------------------------
</TABLE>
Changing your Contract's type of death benefit from Type A (fixed) to Type B
(variable) during the first 10 Contract years may result in the assessment of
surrender charges. In addition, we reserve the right to make an administrative
processing charge of up to $25 for any change in basic insurance amount,
although we do not currently do so. See CHARGES AND EXPENSES, page 15.
To request a change, fill out an application for change which can be obtained
from your Prudential representative or a Home Office. If the change is
approved, we will recompute the Contract's charges and appropriate tables and
send you new Contract data pages. We may require you to send us your Contract
before making the change.
PREMIUMS
The Contract is a flexible premium contract. The minimum initial premium is due
on or before the Contract date. Thereafter, you decide when to make premium
payments and, subject to a $25 minimum, in what amounts. We reserve the right
to refuse to accept any payment that increases the death benefit by more than it
increases the Contract Fund. See HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT
WILL VARY, page 19 and HOW A TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL
VARY, page 20. There are circumstances under which the payment of premiums in
amounts that are too large may cause the Contract to be characterized, under the
Internal Revenue Code, as a Modified Endowment Contract, which could be
significantly disadvantageous. See TAX TREATMENT OF CONTRACT BENEFITS, page 26.
The Contract has several types of "premiums" which are described below.
Understanding them will help you understand how the Contract works.
MINIMUM INITIAL PREMIUM -- the premium needed to start the Contract. There
is no insurance under the Contract unless the minimum initial premium is
paid.
GUIDELINE PREMIUMS -- the premiums that, if paid at the beginning of each
Contract year, will keep the Contract inforce for the lifetime of the insured
regardless of investment performance, assuming no loans or withdrawals.
These guideline premiums will be higher for a Type B (variable) Contract than
for a Type A (fixed) Contract. For a Contract with no riders or extra risk
charges, these premiums will be level. If
11
<PAGE>
certain riders are included, the guideline premium may increase each year.
Payment of guideline premiums at the beginning of each Contract year is one
way to achieve the Lifetime Death Benefit Guarantee Values shown on the
Contract data pages. See DEATH BENEFIT GUARANTEE, below. When you purchase a
Contract, your Prudential representative can tell you the amount[s] of the
guideline premium.
TARGET PREMIUMS -- the premiums that, if paid at the beginning of each
Contract year, will keep the Contract inforce during the Limited Death
Benefit Guarantee period regardless of investment performance, assuming no
loans or withdrawals. As is the case with the guideline premium, for a
Contract with no riders or extra risk charges, these premiums will be level.
If certain riders are included, the target premium may increase each year.
Payment of target premiums at the beginning of each Contract year is one way
to achieve the Limited Death Benefit Guarantee Values shown on the Contract
data pages. At the end of the Limited Death Benefit Guarantee period,
continuation of the Contract will depend on the Contract Fund having
sufficient money to cover all charges or meeting the conditions of the
Lifetime Death Benefit Guarantee. See DEATH BENEFIT GUARANTEE, below. When
you purchase a Contract, your Prudential representative can tell you the
amount[s] of the target premium.
TARGET LEVEL PREMIUM -- the target premium at issue minus any premiums
associated with riders or with aviation, avocation, occupational or temporary
extra insurance charges. We use the target level premium in calculating the
contingent deferred sales charges. See CHARGES AND EXPENSES, page 15.
We can bill you for the amount you select annually, semi-annually, quarterly or
monthly. Because the Contract is a flexible premium contract, there are no
scheduled premium due dates. When you receive a premium notice, you are not
required to pay this amount. The Contract will remain inforce if: (1) the
Contract Fund, less any applicable surrender charges, is greater than zero and
more than any Contract debt or (2) you have paid sufficient premiums, on an
accumulated basis, to meet the Death Benefit Guarantee conditions and Contract
debt is not equal to or greater than the Contract Fund, less any applicable
surrender charges. You may also pay premiums automatically through pre-
authorized monthly transfers from a bank checking account. If you elect to use
this feature, you choose the day of the month on which premiums will be paid and
the amount of the premiums paid.
When you apply for the Contract, you should discuss with your Prudential
representative how frequently you would like to be billed (if at all) and for
what amount.
DEATH BENEFIT GUARANTEE
Although you decide what premium amounts you wish to pay, sufficient premium
payments, on an accumulated basis, will guarantee that your Contract will not
lapse and a death benefit will be paid upon the death of the insured. This will
be true even if, because of unfavorable investment experience, your Contract
Fund value drops to zero. However, the guarantee is contingent upon Contract
debt not being equal to or greater than the Contract Fund less any applicable
surrender charges. See CONTRACT LOANS, page 25. You should consider the
importance of the Death Benefit Guarantee to you when deciding what amounts of
premiums to pay into the Contract.
For purposes of determining this guarantee, we generally calculate, and show in
the Contract data pages, two sets of amounts the Lifetime Death Benefit
Guarantee Values and Limited Death Benefit Guarantee Values. These are not cash
---
values that you can realize by surrendering the Contract, nor are they payable
death benefits. They are values used solely to determine if a Death Benefit
Guarantee is in effect. The Lifetime Death Benefit Guarantee Values are shown
for the lifetime of the Contract. The Limited Death Benefit Guarantee Values
are lower, but only apply for the length of the Limited Death Benefit Guarantee
period.
The length of the Limited Death Benefit Guarantee period is determined on a case
by case basis depending on things like the insured's age, sex, smoker/non-smoker
status, death benefit type and extra rating class, if any. The length of the
Limited Death Benefit Guarantee period applicable to your particular Contract is
shown on the Contract data pages. For certain insureds, generally those who are
older and/or in a substandard risk classification, the Limited Death Benefit
Guarantee period may be of short duration.
At the Contract date, and on each Monthly date, we calculate your Contract's
"Accumulated Net Payments" as of that date. Accumulated Net Payments equal the
premiums you paid, accumulated at an effective annual rate of 4%, less
withdrawals also accumulated at 4%.
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<PAGE>
At each Monthly date within the Limited Death Benefit Guarantee period, we will
compare your Accumulated Net Payments to the Limited Death Benefit Guarantee
Value as of that date. At each Monthly date after the Limited Death Benefit
Guarantee period, we will compare your Accumulated Net Payments to the Lifetime
Death Benefit Guarantee Value as of that date. If your Accumulated Net Payments
equal or exceed the applicable (Lifetime or Limited) Death Benefit Guarantee
Value and Contract debt does not equal or exceed the Contract Fund less any
applicable surrender charges, then the Contract is kept inforce, regardless of
the amount in the Contract Fund.
The Contract data pages show Lifetime Death Benefit Guarantee Values and Limited
Death Benefit Guarantee Values as of Contract anniversaries. Values for non-
anniversary Monthly dates will reflect the number of months elapsed between
Contract anniversaries.
Guideline and target premiums are premium levels that, if paid at the start of
each Contract year, correspond to the Lifetime and Limited Death Benefit
Guarantee Values, respectively (assuming no withdrawals or loans). See PREMIUMS,
page 11. They are one way of reaching the Death Benefit Guarantee Values; they
are certainly not the only way.
Here is a table of typical guideline and target premiums along with
corresponding Limited Death Benefit Guarantee periods. The examples assume the
insured is a male, non-smoker, with no extra risk or substandard ratings, and no
extra benefit riders added to the Contract.
<TABLE>
<CAPTION>
BASIC INSURANCE AMOUNT -- $250,000
Illustrative Annual Premiums
- ----------------------------------------------------------------------------------------------------------------
AGE OF TYPE OF GUIDELINE PREMIUM TARGET PREMIUM
INSURED AT DEATH CORRESPONDING TO CORRESPONDING TO THE
ISSUE BENEFIT THE LIFETIME DEATH LIMITED DEATH BENEFIT
CHOSEN BENEFIT GUARANTEE GUARANTEE VALUES AND
VALUES NUMBER OF YEARS OF
GUARANTEE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
35 Type A (fixed) $ 3,532.50 $ 2,007.50 for 35 years
35 Type B (variable) $ 12,037.50 $ 2,007.50 for 33 years
45 Type A (fixed) $ 5,462.50 $ 2,977.50 for 25 years
45 Type B (variable) $ 17,147.50 $ 2,977.50 for 23 years
55 Type A (fixed) $ 8,897.50 $ 5,770.00 for 20 years
55 Type B (variable) $ 25,607.50 $ 5,770.00 for 18 years
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The Death Benefit Guarantee allows considerable flexibility as to the timing of
premium payments. Your Prudential representative can supply sample illustrations
of various premium amount and frequency combinations that correspond to the
Death Benefit Guarantee Values.
You should consider carefully the value of maintaining the guarantee. If you
desire the death benefit guarantee for lifetime protection, you may prefer to
pay generally higher premiums in all years, rather than trying to make such
payments on an as needed basis. For example, if you pay only enough premium to
meet the Limited Death Benefit Guarantee Values, a substantial amount may be
-----------
required to meet the Lifetime Death Benefit Guarantee Values in order to
continue the guarantee at the end of the Limited Death Benefit Guarantee period.
In addition, it is possible that the payment required to continue the guarantee
after the Limited Death Benefit Guarantee period could cause the Contract to
become a Modified Endowment Contract. See TAX TREATMENT OF CONTRACT BENEFITS,
page 26.
CONTRACT DATE
When the first premium payment is paid with the application for a Contract, the
Contract date will ordinarily be the later of the application date or the
medical examination date. If the first premium is not paid with the
application, the Contract date will be the date on which the first premium is
paid and the
13
<PAGE>
Contract is delivered. Under certain circumstances, we may allow the Contract to
be backdated for the purpose of lowering the insured's issue age, but only to a
date not earlier than six months prior to the application date. This may be
advantageous for some Contract owners as a lower issue age may result in lower
current charges. For a Contract that is backdated, we will credit the initial
premium as of the date of receipt and will deduct any charges due on or before
that date.
ALLOCATION OF PREMIUMS
On the Contract date, the charge for sales expenses and the premium based
administrative charge are deducted from the initial premium. The remainder of
the initial premium will be allocated on the Contract date among the subaccounts
and/or the fixed-rate option according to your desired allocation, as specified
in the application form, and the first monthly deductions are made. If the
first premium is received before the Contract date, there will be a period
during which the Contract owner's initial premium will not be invested. See
CHARGES AND EXPENSES, page 15.
The charge for sales expenses and the premium based administrative charge also
apply to all subsequent premium payments. The remainder will be invested as of
the end of the valuation period in which it is received at a Home Office in
accordance with the allocation you previously designated. Provided the Contract
is not in default, you may change the way in which subsequent premiums are
allocated by giving written notice to a Home Office or by telephoning a Home
Office, provided you are enrolled to use the Telephone Transfer System. There
is no charge for reallocating future premiums. All percentage allocations must
be in whole numbers. For example, 33% can be selected but 33 1/3% cannot. Of
course, the total allocation to all selected investment options must equal 100%.
TRANSFERS
You may, up to 12 times each Contract year, transfer amounts from one subaccount
to another subaccount or to the fixed-rate option without charge. There is an
administrative charge of up to $25 for each transfer made exceeding 12 in any
Contract year. All or a portion of the amount credited to a subaccount may be
transferred.
Transfers will take effect as of the end of the valuation period in which a
proper transfer request is received at a Home Office. The request may be in
terms of dollars, such as a request to transfer $5,000 from one subaccount to
another, or may be in terms of a percentage reallocation among subaccounts. In
the latter case, as with premium reallocations, the percentages must be in whole
numbers. You may transfer amounts by proper written notice to a Home Office or
by telephone, provided you are enrolled to use the Telephone Transfer System.
You will automatically be enrolled to use the Telephone Transfer System unless
the Contract is jointly owned or you elect not to have this privilege.
Telephone transfers may not be available on Contracts that are assigned (see
ASSIGNMENT, page 29), depending on the terms of the assignment.
We will use reasonable procedures, such as asking you to provide certain
personal information provided on your application for insurance, to confirm that
instructions given by telephone are genuine. We will not be held liable for
following telephone instructions that we reasonably believe to be genuine.
Prudential cannot guarantee that you will be able to get through to complete a
telephone transfer during peak periods such as periods of drastic economic or
market change.
Only one transfer from the fixed-rate option will be permitted during each
Contract year. The maximum amount which may be transferred out of the fixed-
rate option each year is the greater of: (a) 25% of the amount in the fixed-
rate option; and (b) $2,000. Prudential may change these limits in the future.
We may waive these restrictions for limited periods of time in a non-
discriminatory way, (e.g., when interest rates are declining).
The Contract was not designed for professional market timing organizations,
other organizations, or individuals using programmed, large, or frequent
transfers. A pattern of exchanges that coincides with a "market timing"
strategy may be disruptive to the subaccounts and will be discouraged. If such
a pattern were to be found, we may be required to modify the transfer
procedures, including but not limited to, not accepting transfer requests of an
agent under a power of attorney on behalf of more than one Contract owner.
14
<PAGE>
DOLLAR COST AVERAGING
Under the Dollar Cost Averaging ("DCA") feature, either fixed dollar amounts or
a percentage of the amount designated for use under the DCA option will be
transferred periodically from the DCA Money Market Subaccount into other
subaccounts available under the Contract, excluding the fixed-rate option. You
may choose to have periodic transfers made monthly, quarterly, semi-annually or
annually.
Each automatic transfer will take effect as of the end of the valuation period
on the date coinciding with the periodic timing you designate, provided the New
York Stock Exchange is open on that date. If the New York Stock Exchange is not
open on that date, or if the date does not occur in that particular month, the
transfer will take effect as of the end of the valuation period which
immediately follows that date. Automatic transfers will continue until: (1) $50
or less remains of the amount designated for Dollar Cost Averaging, at which
time the remaining amount will be transferred; or (2) you give us notification
of a change in DCA allocation or cancellation of the feature. Currently, a
transfer that occurs under the DCA feature is not counted towards the 12 free
transfers permitted each Contract year; however, we reserve the right to change
this practice.
AUTO-REBALANCING
As an administrative practice, we are currently offering a feature called Auto-
Rebalancing. This feature allows you to automatically rebalance subaccount
assets at specified intervals based on percentage allocations that you choose.
For example, suppose your initial investment allocation of variable investment
options X and Y is split 40% and 60%, respectively. Then, due to investment
results, that split changes. You may instruct that those assets be rebalanced
to your original or different allocation percentages.
Auto-Rebalancing can be performed on a monthly, quarterly, semi-annual or annual
basis. Each rebalance will take effect as of the end of the valuation period on
the date coinciding with the periodic timing you designate, provided the New
York Stock Exchange is open on that date. If the New York Stock Exchange is not
open on that date, or if the date does not occur in that particular month, the
transfer will take effect as of the end of the valuation period which
immediately follows that date. The fixed-rate option cannot participate in this
administrative procedure. Currently, a transfer that occurs under the Auto-
Rebalancing feature is not counted towards the 12 free transfers permitted each
Contract year. We reserve the right to change this practice, modify the
requirements or discontinue the feature.
CHARGES AND EXPENSES
This section provides a detailed description of each charge that is described
briefly in the chart on page 3, and an explanation of the purpose of the charge.
In several instances we will use the terms "maximum charge" and "current
charge." The "maximum charge," in each instance, is the highest charge that
Prudential is entitled to make under the Contract. The "current charge" is the
lower amount that Prudential is now charging. However, if circumstances change,
Prudential reserves the right to increase each current charge, up to but to no
more than the maximum charge, without giving any advance notice.
DEDUCTIONS FROM PREMIUM PAYMENTS
(a) A charge of up to 7.5% is deducted from each premium as an administrative
charge. This charge is currently equal to 3.75% of each premium, of which
1.25% of the premium is used to cover a 1990 increase in Prudential's
federal income taxes measured by premiums.
(b) A charge of up to 4% is deducted from each premium payment for sales
expenses. This charge, often called a sales load, is deducted to compensate
us for the costs Prudential incurs in selling the Contracts, including
commissions, advertising and the printing and distribution of prospectuses
and sales literature.
Currently, the charge is equal to 4% of premiums paid in each Contract year
up to the amount of the target premium (see PREMIUMS, page 11) and 0% of
premiums paid in excess of this amount.
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Consequently, paying more than this amount in any Contract year could reduce
your total sales load. For example, assume that a Contract with no riders or
extra insurance charges has a target premium of $2,007.50 and the Contract
owner would like to pay 10 target premiums. If the Contract owner paid $4,015
(two times the amount of the target premium in every other Contract year up
to the ninth year (i.e. in years 1, 3, 5, 7, 9), the sales load charge would
be $401.50. If the Contract owner paid $2,007.50 in each of the first 10
Contract years, the total sales load would be $803. For additional
information, see INCREASES IN BASIC INSURANCE AMOUNT, page 21.
Attempting to structure the timing and amount of premium payments to reduce
the potential sales load may increase the risk that your Contract will lapse
without value. Delaying the payment of target premium amounts to later years
will adversely affect the Death Benefit Guarantee if the accumulated premium
payments do not reach the accumulated values shown under your Contract's
Limited Death Benefit Guarantee Values. See DEATH BENEFIT GUARANTEE, page 12
In addition, there are circumstances where payment of premiums that are too
large may cause the Contract to be characterized as a Modified Endowment
Contract, which could be significantly disadvantageous. See TAX TREATMENT OF
CONTRACT BENEFITS, page 26.
DEDUCTIONS FROM PORTFOLIOS
An investment advisory fee is deducted daily from each portfolio of the Funds at
a rate, on an annualized basis, from 0.35% for the Stock Index Portfolio to
1.05% for the T. Rowe Price International Stock Portfolio. The expenses
incurred in conducting the investment operations of the portfolios (such as
custodian fees and preparation and distribution of annual reports) are paid out
of the portfolio's income. These expenses also vary from portfolio to
portfolio.
The total expenses of each portfolio for the year 1997 expressed as a percentage
of the average assets during the year are shown below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
INVESTMENT OTHER TOTAL
PORTFOLIO ADVISORY FEE EXPENSES EXPENSES
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SERIES FUND
Money Market 0.40% 0.03% 0.43%
Diversified Bond 0.40% 0.03% 0.43%
Conservative Balanced 0.55% 0.01% 0.56%
Flexible Managed 0.60% 0.02% 0.62%
High Yield Bond 0.55% 0.02% 0.57%
Stock Index 0.35% 0.02% 0.37%
Equity Income 0.40% 0.01% 0.41%
Equity 0.45% 0.01% 0.46%
Prudential Jennison 0.60% 0.04% 0.64%
Global 0.75% 0.10% 0.85%
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Value Fund (4) 0.62% 0.08% 0.70%
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC. 1.00% 0.00% 1.00%
VP Value Portfolio (1)
Janus Aspen Series 0.65% 0.05% 0.70%
Growth Portfolio (2)
MFS(R) VARIABLE INSURANCE TRUSTSM 0.75% 0.12% 0.87%
Emerging Growth Series
T. ROWE PRICE INTERNATIONAL SERIES, INC. 1.05% 0.00% 1.05%
International Stock Portfolio (3)
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Fees are all-inclusive.
(2) The fees and expenses in the table above are based on gross expenses of the
Portfolio before expense offset arrangements for the fiscal year ended
December 31, 1997. The information for the Portfolio is net of fee waivers
or reductions from Janus Capital. Fee reductions for the Portfolio reduce
the management fee to the level of the corresponding Janus retail fund.
Other waivers, if applicable, are
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first applied against the management fee and then against other expenses.
Without such waivers or reductions, the Management Fee, Other Expenses and
Total Operating Expenses for the Portfolio would have been 0.74%, 0.04% and
0.78%, respectively. Janus Capital may modify or terminate the waivers or
reductions at any time upon at least 90 days' notice to the Trustees.
(3) The investment management fee includes the ordinary expenses of operating
the Fund.
(4) AIM may from time to time voluntarily waive or reduce its respective fees.
Effective May 1, 1998, the Fund will reimburse AIM in an amount up to 0.25%
of the average net asset value of the Fund for expenses incurred in
providing, or assuring that participating insurance companies provide,
certain administrative services. Currently, the fee only applies to the
average net asset value of each Fund in excess of the net asset value of
each Fund as calculated on April 30, 1998.
THE EXPENSES RELATING TO THE FUNDS (OTHER THAN THOSE OF THE SERIES FUND) HAVE
BEEN PROVIDED TO PRUDENTIAL BY THE FUNDS. PRUDENTIAL HAS NOT INDEPENDENTLY
VERIFIED THEM.
DAILY DEDUCTION FROM THE CONTRACT FUND
Each day a charge is deducted from the assets of each of the subaccounts in an
amount equivalent to an effective annual rate of up to 0.9%. Currently, we
intend to charge 0.6%. This charge is intended to compensate Prudential for
assuming mortality and expense risks under the Contract. The mortality risk
assumed is that insureds may live for shorter periods of time than Prudential
estimated when it determined what mortality charge to make. The expense risk
assumed is that expenses incurred in issuing and administering the Contract will
be greater than Prudential estimated in fixing its administrative charges. This
charge is not assessed against amounts allocated to the fixed-rate option.
MONTHLY DEDUCTIONS FROM CONTRACT FUND
Prudential deducts the following monthly charges proportionately from the dollar
amounts held in each of the subaccounts.
(a) An administrative charge based on the basic insurance amount is deducted.
The charge is intended to compensate us for things like processing claims,
keeping records and communicating with Contract owners. Currently, the
charge is equal to $10 per Contract plus $0.07 per $1,000 of basic insurance
amount in the first Contract year and $5 per Contract plus $0.01 per $1,000
of basic insurance amount in all subsequent years. Prudential reserves the
right, however to charge up to $10 per Contract plus $0.07 per $1,000 of
basic insurance amount in the first Contract year and $10 per Contract plus
$0.01 per $1,000 of basic insurance amount in all subsequent years.
For example, a Contract with a basic insurance amount of $250,000 would
currently have a charge equal to $10 plus $17.50 for a total of $27.50 per
month for the first Contract year and $5 plus $2.50 for a total of $7.50 per
month in all later years. The maximum charge for this same Contract would be
$10 plus $17.50 for a total of $27.50 per month during the first Contract
year. In later years, the maximum charge would be $10 plus $2.50 for a total
of $12.50 per month.
(b) A cost of insurance ("COI") charge is deducted. When an insured dies, the
amount payable to the beneficiary (assuming there is no Contract debt) is
larger than the Contract Fund -- significantly larger if the insured dies in
the early years of a Contract. The cost of insurance charges collected from
all Contract owners enables Prudential to pay this larger death benefit.
The maximum COI charge is determined by multiplying the "net amount at risk"
under a Contract (the amount by which the Contract's death benefit exceeds
the Contract Fund) by maximum COI rates. The maximum COI rates are based
upon the 1980 Commissioners Standard Ordinary ("CSO") Tables and an
insured's current attained age, sex, smoker/non-smoker status, and extra
rating class, if any. For an increase in basic insurance amount, maximum
COI rates are based upon 1980 CSO Tables, the age at the increase effective
date and the number of years since then, sex, smoker/nonsmoker status, and
extra rating class, if any. See INCREASES IN BASIC INSURANCE AMOUNT, page
21. At most ages, Prudential's current COI rates are lower than the maximum
rates.
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(C) A charge of $0.01 per $1,000 of basic insurance amount is made to compensate
Prudential for the risk we assume by providing the Death Benefit Guarantee
feature. See DEATH BENEFIT GUARANTEE, page 12.
(d) You may add one or more of several riders to the Contract. Some riders are
charged for separately. If you add such a rider to the basic Contract,
additional charges will be deducted.
(e) If an insured is in a substandard risk classification (for example, a person
in a hazardous occupation), additional charges will be deducted.
SURRENDER CHARGES
(a) An additional sales load is charged if during the first 10 Contract years
the Contract lapses, is surrendered or if the basic insurance amount is
decreased. It is not deducted from the death benefit if the insured should
die during this period. Upon lapse or surrender, for issue ages 76 or less,
this contingent deferred charge will be 26% of the lesser of: (a) the target
level premium for the Contract; and (b) the actual premiums paid. The rate
used in the calculation of this contingent deferred charge will be 22% for
issue ages 77-79, 16% for issue ages 80-83 and 13% for issue ages 84-85.
The rate used in the calculation of this contingent deferred charge will
remain level for six years. After six years, this charge will reduce
monthly at a constant rate until it reaches zero at the end of the 10th
year. If during the first 10 Contract years the basic insurance amount is
decreased [including as a result of a withdrawal or a change in the type of
death benefit from Type A (fixed) to Type B (variable)], we will deduct a
proportionate amount of the charge from the Contract Fund. The proportion
we use will be the amount by which the new basic insurance amount is less
than the basic insurance amount at issue (but not greater than the amount of
the decrease) divided by the basic insurance amount at issue.
(b) If during the first 10 Contract years the Contract lapses, is surrendered or
if the basic insurance amount is decreased, an administrative charge is
deducted to cover the cost of processing applications, conducting medical
examinations, determining insurability and the insured's rating class, and
establishing records. The charge is equal to the lesser of: (a) $5 per
$1,000 of basic insurance amount; and (b) $500. This charge is level for
six years. After six years, this charge will be reduced monthly at a
constant rate until it reaches zero at the end of the 10th year. If the
basic insurance amount is decreased [including as a result of a withdrawal
or a change in the type of death benefit from Type A (fixed) to Type B
(variable)] during the first 10 Contract years, we will deduct a
proportionate amount of the charge from the Contract Fund. The proportion
we use will be the amount by which the new basic insurance amount is less
than the basic insurance amount at issue (but not greater than the amount of
the decrease) divided by the basic insurance amount at issue.
TRANSACTION CHARGES
(a) An administrative processing charge, which is the lesser of: (a) $25 and;
(b) 2% of the withdrawal amount, is made in connection with each withdrawal.
(b) No administrative processing charge is currently being made in connection
with a change in basic insurance amount. We reserve the right to make such
a charge in an amount of up to $25 for any change in basic insurance amount.
(c) An administrative processing charge of up to $25 is made for each transfer
exceeding 12 in any Contract year.
HOW A CONTRACT'S CASH SURRENDER VALUE WILL VARY
You may surrender the Contract for its cash surrender value (referred to as net
cash value in the Contract). The Contract's cash surrender value on any date
will be the Contract Fund less any applicable surrender charges and less any
Contract debt. See CONTRACT LOANS, page 25. The Contract Fund value changes
daily, reflecting: (1) increases or decreases in the value of the Fund
portfolios in which the assets of the subaccount[s] have been invested; (2)
interest credited on any amounts allocated to the fixed-rate option; (3)
interest credited on any loan; and (4) the daily asset charge for mortality and
expense risks assessed against the variable investment options. The Contract
Fund value also changes to reflect the receipt of
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premium payments and the monthly deductions described under CHARGES AND
EXPENSES, page 15. Upon request, Prudential will tell you the cash surrender
value of your Contract. It is possible for the cash surrender value of a
Contract to decline to zero because of unfavorable investment performance or
outstanding Contract debt.
The tables on pages T1 through T4 of this prospectus illustrate approximately
what the cash surrender values would be for representative Contracts paying
target premium amounts (see PREMIUMS, page 11), assuming hypothetical uniform
investment results in the Fund portfolios. Two of the tables assume current
charges will be made throughout the lifetime of the Contract and two tables
assume maximum charges will be made. See ILLUSTRATIONS OF CASH SURRENDER
VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS, page 23.
HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL VARY
As described earlier, there are two types of death benefit available under the
Contract: Type A, a generally fixed death benefit and Type B, a variable death
benefit. A Type B (variable) death benefit varies with investment performance
while a Type A (fixed) death benefit does not, unless it must be increased to
comply with the Internal Revenue Code's definition of life insurance.
Under a Type A (fixed) Contract, the death benefit is generally equal to the
basic insurance amount. See CONTRACT LOANS, page 25. If the Contract is kept
inforce for several years, depending on how much premium you pay, and/or if
investment performance is reasonably favorable, the Contract Fund may grow to
the point where Prudential will increase the death benefit in order to ensure
that the Contract will satisfy the Internal Revenue Code's definition of life
insurance. Thus, the death benefit under a Type A (fixed) Contract will always
be the greater of: (1) the basic insurance amount; and (2) the Contract Fund
before the deduction of any monthly charges due on that date, multiplied by the
attained age factor that applies. A listing of attained age factors can be
found on the data pages of your Contract. The latter provision ensures that the
Contract will always have a death benefit large enough so that the Contract will
be treated as life insurance for tax purposes under current law.
The following table illustrates at different ages how the attained age factor
affects the death benefit for different Contract Fund amounts. The table
assumes a $250,000 Type A (fixed) Contract was issued when the insured was age
35.
TYPE A (FIXED) DEATH BENEFIT
<TABLE>
<CAPTION>
IF THEN
- ----------------------------------------------------------------------------------------------------
THE INSURED IS AND THE CONTRACT THE ATTAINED AGE THE CONTRACT FUND AND THE DEATH
AGE FUND IS FACTOR IS MULTIPLIED BY THE BENEFIT IS
ATTAINED AGE FACTOR IS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
40 $ 25,000 3.64 91,000 $250,000
40 $ 75,000 3.64 273,000 $273,000*
40 $100,000 3.64 364,000 $364,000*
- ----------------------------------------------------------------------------------------------------
60 $ 75,000 1.96 147,000 $250,000
60 $125,000 1.96 245,000 $250,000
60 $150,000 1.96 294,000 $294,000*
- ----------------------------------------------------------------------------------------------------
80 $150,000 1.28 192,000 $250,000
80 $200,000 1.28 256,000 $256,000*
80 $225,000 1.28 288,000 $288,000*
- ----------------------------------------------------------------------------------------------------
* Note that the death benefit has been increased to comply with the Internal
Revenue Code's definition of life insurance.
- ----------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
This means, for example, that if the insured has reached the age of 60, and the
Contract Fund is $150,000, the death benefit will be $294,000, even though the
original basic insurance amount was $250,000. In this situation, for every $1
increase in the Contract Fund, the death benefit will be increased by $1.96. We
reserve the right to refuse to accept any premium payment that increases the
death benefit by more than it increases the Contract Fund. If we exercise this
right, it may in certain situations result in the loss of the death benefit
guarantee.
HOW A TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY
Under a Type B (variable) Contract, while the Contract is inforce, the death
benefit will never be less than the basic insurance amount, but will also vary,
immediately after it is issued, with the investment results of the selected
investment options. The death benefit may be further increased to ensure that
the Contract will satisfy the Internal Revenue Code's definition of life
insurance. Thus, the death benefit will always be the greater of: (1) the basic
insurance amount plus the Contract Fund before the deduction of any monthly
charges due on that date; and (2) the Contract Fund before the deduction of any
monthly charges due on that date, multiplied by the attained age factor that
applies. For purposes of computing the death benefit, if the Contract Fund is
less than zero we will consider it to be zero. A listing of attained age
factors can be found on the data pages of your Contract. The latter provision
ensures that the Contract will always have a death benefit large enough so that
the Contract will be treated as life insurance for tax purposes under current
law.
The following table illustrates various attained age factors and Contract Funds
and the corresponding death benefits. The table assumes a $250,000 Type B
(variable) Contract was issued when the insured was age 35.
TYPE B (VARIABLE) DEATH BENEFIT
<TABLE>
<CAPTION>
IF THEN
- ----------------------------------------------------------------------------------------------------
THE INSURED IS AND THE CONTRACT THE ATTAINED AGE THE CONTRACT FUND AND THE DEATH
AGE FUND IS FACTOR IS MULTIPLIED BY THE BENEFIT IS
ATTAINED AGE FACTOR IS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
40 $ 25,000 3.64 91,000 $275,000
40 $ 75,000 3.64 273,000 $325,000
40 $100,000 3.64 364,000 $364,000*
- ----------------------------------------------------------------------------------------------------
60 $ 75,000 1.96 147,000 $325,000
60 $125,000 1.96 245,000 $375,000
60 $150,000 1.96 294,000 $400,000
- ----------------------------------------------------------------------------------------------------
80 $150,000 1.28 192,000 $400,000
80 $200,000 1.28 256,000 $450,000
80 $225,000 1.28 288,000 $475,000
- ----------------------------------------------------------------------------------------------------
* Note that the death benefit has been increased to comply with the Internal Revenue Code's
definition of life insurance.
- ----------------------------------------------------------------------------------------------------
</TABLE>
This means, for example, that if the insured has reached the age of 40, and the
Contract Fund is $100,000, the death benefit will be $364,000, even though the
original basic insurance amount was $250,000. In this situation, for every $1
increase in the Contract Fund, the death benefit will be increased by $3.64. We
reserve the right to refuse to accept any premium payment that increases the
death benefit by more than it increases the Contract Fund. If we exercise this
right, it may in certain situations result in the loss of the death benefit
guarantee.
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SURRENDER OF A CONTRACT
A Contract may be surrendered for its cash surrender value or for a fixed
reduced paid-up insurance benefit while the insured is living. To surrender a
Contract, we may require you to deliver or mail the Contract with a written
request in a form that meets our needs, to a Home Office. The cash surrender
value of a surrendered Contract will be determined as of the end of the
valuation period in which such a request is received in the Home Office. Fixed
reduced paid-up insurance provides paid-up insurance, the amount of which will
be paid when the insured dies. There will be cash values and loan values. The
loan interest rate for fixed reduced paid-up insurance is 5%. Upon surrender of
the Contract, the amount of fixed reduced paid-up insurance depends upon the
cash surrender value and the insured's issue age, sex, and the length of time
since the Contract date. Surrender of a Contract may have tax consequences.
See TAX TREATMENT OF CONTRACT BENEFITS, page 26.
WITHDRAWALS
Under certain circumstances, you may withdraw a portion of the Contract's cash
surrender value without surrendering the Contract. The withdrawal amount is
limited by the requirement that the cash surrender value after the withdrawal
may not be zero or less than zero after deducting the withdrawal charges. The
amount withdrawn must be at least $500. There is an administrative processing
fee for each withdrawal which is the lesser of: (a) $25 and; (b) 2% of the
withdrawal amount. An amount withdrawn may not be repaid except as a premium
subject to the applicable charges. Upon request, we will tell you how much you
may withdraw. Withdrawal of the cash surrender value may have tax consequences.
See TAX TREATMENT OF CONTRACT BENEFITS, page 26.
Whenever a withdrawal is made, the death benefit will immediately be reduced by
at least the amount of the withdrawal. For a Type B (variable) Contract, this
will not change the basic insurance amount. However, under a Type A (fixed)
Contract, the resulting reduction in death benefit usually requires a reduction
in the basic insurance amount. If the basic insurance amount is decreased to an
amount less than the basic insurance amount at issue, a surrender charge may be
deducted. See CHARGES AND EXPENSES, page 15. No withdrawal will be permitted
under a Type A (fixed) Contract if it would result in a basic insurance amount
of less than the minimum basic insurance amount. It is important to note,
however, that if the basic insurance amount is decreased at any time during the
life of the Contract, there is a possibility that the Contract might be
classified as a Modified Endowment Contract. See TAX TREATMENT OF CONTRACT
BENEFITS, page 26. Before making any withdrawal which causes a decrease in basic
insurance amount, you should consult with your tax adviser and your Prudential
representative.
When a withdrawal is made, the Contract Fund is reduced by the sum of the cash
withdrawn and the withdrawal fee. An amount equal to the reduction in the
Contract Fund will be withdrawn proportionally from the investment options
unless you direct otherwise.
Withdrawal of the cash surrender value increases the risk that the Contract Fund
may be insufficient to provide Contract benefits. If such a withdrawal is
followed by unfavorable investment experience, the Contract may go into default.
Withdrawals may also affect whether a Contract is kept inforce under the Death
Benefit Guarantee, since withdrawals decrease the accumulated net payments. See
DEATH BENEFIT GUARANTEE, page 12.
INCREASES IN BASIC INSURANCE AMOUNT
Subject to the underwriting requirements determined by Prudential, on or after
the first Contract anniversary, you may increase the amount of insurance by
increasing the basic insurance amount of the Contract. The following conditions
must be met: (1) you must ask for the change in a form that meets our needs; (2)
the amount of the increase must be at least equal to the minimum increase in
basic insurance amount shown under CONTRACT LIMITATIONS in the data pages of the
Contract; (3) you must prove to us that the insured is insurable for any
increase; (4) the Contract must not be in default; (5) we must not be paying
premiums into the Contract as a result of the insured's total disability; and
(6) if we ask you to do so, you must send us the Contract to be endorsed.
If we approve the change, we will send you new Contract data pages showing the
amount and effective date of the change and the recomputed charges, values and
limitations. If the insured is not living on the
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effective date, the change will not take effect. No administrative processing
charge is currently being made in connection with an increase in basic insurance
amount. We reserve the right to make such a charge in an amount of up to $25.
For sales load purposes, the target premiums are calculated separately for the
initial basic insurance amount and each increase in basic insurance amount.
Each target premium piece also includes the premium for extra insurance charges
associated to that piece of coverage. When premiums are paid, each payment is
allocated among the initial basic insurance amount and each increase in basic
insurance amount according to the target premiums. Currently, the sales load
charge for each piece is equal to 4% of the allocated premium paid in each
Contract year up to the target premium and 0% of allocated premiums paid in
excess of the target premium. See the definition of Contract year for an
increase in DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS, page 1.
Each Contract owner who elects to increase the basic insurance amount of his or
her Contract will receive a "free-look" right which will apply only to the
increase in basic insurance amount, not the entire Contract. This right is
comparable to the right afforded to a purchaser of a new Contract except that,
any cost of insurance charge for the increase in the basic insurance amount will
be returned to the Contract Fund instead of a refund of premium. See SHORT-TERM
CANCELLATION RIGHT OR "FREE LOOK", page 10. Generally, the "free-look" right
would have to be exercised no later than 10 days after receipt of the Contract
as increased.
An increase in basic insurance amount may impact the status of the Contract as a
Modified Endowment Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 26.
Therefore, before increasing the basic insurance amount, you should consult with
your tax adviser and your Prudential representative.
DECREASES IN BASIC INSURANCE AMOUNT
As explained earlier, you may make a withdrawal (see WITHDRAWALS, page 21). On
or after the first Contract anniversary, you also have the option of decreasing
the basic insurance amount of your Contract without withdrawing any cash
surrender value. Contract owners who conclude that, because of changed
circumstances, the amount of insurance is greater than needed will be able to
decrease their amount of insurance protection, and the monthly deductions for
the cost of insurance. The amount of the decrease must be at least equal to the
minimum decrease in basic insurance amount shown under Contract Limitations in
the data pages of your Contract. In addition, the basic insurance amount after
the decrease must be at least equal to the minimum basic insurance amount shown
under CONTRACT LIMITATIONS in the data pages of your Contract. If the basic
insurance amount is decreased to an amount less than the basic insurance amount
at issue, a surrender charge may be deducted. No administrative processing
charge is currently being made in connection with a decrease in basic insurance
amount. We reserve the right to make such a charge in an amount of up to $25.
See CHARGES AND EXPENSES, page 15. If we ask you to, you must send us your
Contract to be endorsed. The Contract will be amended to show the new basic
insurance amount, charges, values in the appropriate tables, and the effective
date of the decrease.
We may decline a reduction if we determine it would cause the Contract to fail
to qualify as "life insurance" for purposes of Section 7702 of the Internal
Revenue Code. A decrease will not take effect if the insured is not living on
the effective date.
It is important to note, however, that if the basic insurance amount is
decreased, there is a possibility that the Contract might be classified as a
Modified Endowment Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 26.
Before requesting any decrease in basic insurance amount, you should consult
with your tax adviser and your Prudential representative.
WHEN PROCEEDS ARE PAID
Prudential will generally pay any death benefit, cash surrender value, loan
proceeds or withdrawal within seven days after all the documents required for
such a payment are received at a Home Office. Other than the death benefit,
which is determined as of the date of death, the amount will be determined as of
the end of the valuation period in which the necessary documents are received at
a Home Office. However, Prudential may delay payment of proceeds from the
subaccount[s] and the variable portion of the death benefit due under the
Contract if the disposal or valuation of the Account's assets is not reasonably
22
<PAGE>
practicable because the New York Stock Exchange is closed for other than a
regular holiday or weekend, trading is restricted by the SEC or the SEC declares
that an emergency exists.
With respect to the amount of any cash surrender value allocated to the fixed-
rate option, Prudential expects to pay the cash surrender value promptly upon
request. However, Prudential has the right to delay payment of such cash
surrender value for up to six months. Prudential will pay interest of at least
3% a year if it delays such a payment for more than 10 days.
LIVING NEEDS BENEFIT
You may elect to add the LIVING NEEDS BENEFITSM to your Contract at issue.
There is no charge for adding the benefit to the Contract. However, an
administrative charge (not to exceed $150) will be made at the time the LIVING
NEEDS BENEFIT is paid.
The LIVING NEEDS BENEFIT allows you to elect to receive an accelerated payment
of all or part of the Contract's death benefit, adjusted to reflect current
value, at a time when certain special needs exist. The adjusted death benefit
will always be less than the death benefit, but will generally be greater than
the Contract's cash surrender value. The following options are available.
Terminal Illness Option. This option is available if the insured is diagnosed
as terminally ill with a life expectancy of six months or less. When
satisfactory evidence is provided, Prudential will provide an accelerated
payment of the portion of the death benefit selected by you as a LIVING NEEDS
BENEFIT. The benefit will be paid to you in a single sum.
Organ Transplant Option. This option is available if the insured is diagnosed
as having a life expectancy of six months or less unless the insured receives a
vital organ transplant. When satisfactory evidence is provided, Prudential will
provide an accelerated payment of the portion of the death benefit selected by
you as a LIVING NEEDS BENEFIT. The benefit will be paid to you in a single sum.
All or part of the Contract's death benefit may be accelerated under the LIVING
NEEDS BENEFIT. If the benefit is only partially accelerated, a death benefit of
at least $25,000 must remain under the Contract. Prudential reserves the right
to determine the minimum amount that may be accelerated.
No benefit will be payable if you are required to elect it in order to meet the
claims of creditors or to obtain a government benefit. Prudential can furnish
details about the amount of LIVING NEEDS BENEFIT that is available to an
eligible Contract owner, and the effect on the Contract if less than the entire
death benefit is accelerated.
You should consider whether adding this settlement option is appropriate in your
given situation. Adding the LIVING NEEDS BENEFIT to the Contract has no adverse
consequences; however, electing to use it could. With the exception of certain
business-related Contracts, the Health Insurance Portability and Accountability
Act of 1996 excludes from income the LIVING NEEDS BENEFIT if the insured is
terminally ill or chronically ill as defined in the tax law (although the
exclusion in the latter case may be limited). You should consult a qualified
tax adviser before electing to receive this benefit. Receipt of a LIVING NEEDS
BENEFIT payment may also affect your eligibility for certain government benefits
or entitlements.
ILLUSTRATIONS OF CASH SURRENDER VALUES, DEATH BENEFITS, AND
ACCUMULATED PREMIUMS
The following four tables show how the death benefit and cash surrender values
change with the investment experience of the Account. They are "hypothetical"
because they are based, in part, upon several assumptions, each of which is
described below. All four tables assume that a Contract with a basic insurance
amount of $250,000 has been bought by a 35 year old male, non-smoker, with no
extra risks or substandard ratings, and no extra benefit riders added to the
Contract. It is assumed that the target premium amount (see PREMIUMS, page 11)
is paid on each Contract anniversary and that no loans are taken. The first
table (page T1) assumes that a Type A (fixed) Contract has been purchased and
the second table (page T2) assumes that a Type B (variable) Contract has been
purchased. Both assume that the current charges will continue for the
indefinite future. The third and fourth tables (pages T3 and T4) are based
23
<PAGE>
upon the same assumptions except that it is assumed that the maximum contractual
charges have been made from the beginning. See CHARGES AND EXPENSES, page 15.
Another assumption is that the Contract Fund has been invested in equal amounts
in each of the 15 portfolios of the Funds and no portion of the Contract Fund
has been allocated to the fixed-rate option. Finally, there are four
assumptions, shown separately, about the average investment performance of the
portfolios. The first is that there will be a uniform 0% gross rate of return,
that is, that the average value of the Contract Fund will uniformly be adversely
affected by very unfavorable investment performance. The other three
assumptions are that investment performance will be at a uniform gross annual
rate of 4%, 8% and 12%. These, of course, are unrealistic assumptions since
actual returns will fluctuate from year to year. Nevertheless, these
assumptions help show how the Contract values will change with investment
experience.
The first column in the following tables shows the Contract year. The second
column, to provide context, shows what the aggregate amount would be if the
premiums had been invested in a savings account paying 4% compounded interest.
Of course, if that were done, there would be no life insurance protection. The
next four columns show the death benefit payable in each of the years shown for
the four different assumed investment returns. Note that a gross return (as
well as the net return) is shown at the top of each column. The gross return
represents the combined effect of income and capital appreciation of the
portfolios before any reduction is made for investment advisory fees or other
Fund expenses. The net return reflects average total annual expenses of the 15
portfolios of 0.68%, and the daily deduction from the Contract Fund of 0.6% per
year for the tables based on current charges and 0.9% per year for the tables
based on maximum charges. Thus, assuming current charges, gross returns of 0%,
4%, 8% and 12% are the equivalent of net returns of -1.24%, 2.76%, 6.76% and
10.76%, respectively. Assuming maximum charges, gross returns of 0%, 4%, 8% and
12% are the equivalent of net returns of -1.54%, 2.46%, 6.46% and 10.46%,
respectively. The death benefits and cash surrender values shown reflect the
deduction of all expenses and charges both from the Funds and under the
Contract.
Note that under the Type B (variable) Contract the death benefit changes to
reflect investment returns. While under the Type A (fixed) Contract the death
benefit increases only if the Contract Fund becomes large enough that an
increase in the death benefit is necessary. The death benefit is increased so
that the Contract will satisfy the Internal Revenue Code's definition of life
insurance. See TYPE OF DEATH BENEFIT, page 10.
Following these illustrations are two pages (pages T5 and T6) showing internal
rates of return (commonly referred to as IRRs) associated with the cash values
and death benefits shown on the preceding four pages. IRRs are often employed by
insurance companies to provide some indication of the rate of return that may be
thought of as earned upon your "investment" in the Contract (the aggregate
premiums paid) if the Contract were surrendered or if the insured was to die.
The IRR on the death benefit is equivalent to an interest rate (without
considering taxes) at which an amount equal to the premiums illustrated on the
preceding pages could have been invested to arrive at the death benefit of the
Contract. The IRR on the cash surrender value is equivalent to an interest rate
(without considering taxes) at which an amount equal to the illustrated premiums
could have been invested to arrive at the cash surrender value of the Contract.
The IRRs on page T5 are based on the Contract values shown on pages T1 and T2.
The IRRs on page T6 are based on the Contract values shown on pages T3 and T4.
If you are considering the purchase of a variable life insurance contract from
another insurance company, you should not rely upon these tables for comparison
purposes. A comparison between two tables, each showing values for a 35 year
old man, may be useful for a 35 year old man but would be inaccurate if made for
insureds of other ages or sex. Your Prudential representative can provide you
with a hypothetical illustration for your own age, sex, and rating class. You
can obtain an illustration using premium amounts and payment patterns that you
wish to follow. You may use assumed gross returns different than those shown in
the tables, although currently they may not be higher than 12%.
24
<PAGE>
VARIABLE UNIVERSAL LIFE
TYPE A (FIXED) DEATH BENEFIT
MALE NON-SMOKER AGE 35
$ 250,000 BASIC INSURANCE AMOUNT
$ 2,007.50 ANNUAL PREMIUM PAYMENT
USING CURRENT CONTRACTUAL CHARGES
<TABLE>
<CAPTION>
Death Benefit (1)
-----------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of
End of Accumulated -----------------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (-1.24% Net) ( 2.76% Net) ( 6.76% Net) (10.76% Net)
- ------ -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,088 $ 250,000 $ 250,000 $ 250,000 $ 250,000
2 $ 4,259 $ 250,000 $ 250,000 $ 250,000 $ 250,000
3 $ 6,517 $ 250,000 $ 250,000 $ 250,000 $ 250,000
4 $ 8,866 $ 250,000 $ 250,000 $ 250,000 $ 250,000
5 $ 11,308 $ 250,000 $ 250,000 $ 250,000 $ 250,000
6 $ 13,848 $ 250,000 $ 250,000 $ 250,000 $ 250,000
7 $ 16,490 $ 250,000 $ 250,000 $ 250,000 $ 250,000
8 $ 19,237 $ 250,000 $ 250,000 $ 250,000 $ 250,000
9 $ 22,095 $ 250,000 $ 250,000 $ 250,000 $ 250,000
10 $ 25,066 $ 250,000 $ 250,000 $ 250,000 $ 250,000
15 $ 41,805 $ 250,000 $ 250,000 $ 250,000 $ 250,000
20 $ 62,171 $ 250,000 $ 250,000 $ 250,000 $ 250,000
25 $ 86,948 $ 250,000 $ 250,000 $ 250,000 $ 322,959
30 $ 117,094 $ 250,000 $ 250,000 $ 250,000 $ 479,220
35 $ 153,771 $ 250,000 $ 250,000 $ 267,837 $ 707,721
40 $ 198,394 $ 250,000 $ 250,000 $ 334,107 $ 1,031,251
45 $ 252,685 $ 0(2) $ 250,000 $ 417,984 $ 1,516,215
50 $ 318,738 $ 0 $ 0(2) $ 522,262 $ 2,236,837
55 $ 399,102 $ 0 $ 0 $ 649,272 $ 3,295,188
60 $ 496,877 $ 0 $ 0 $ 801,213 $ 4,831,881
65 $ 615,835 $ 0 $ 0 $ 995,275 $ 7,148,494
</TABLE>
Cash Surrender Value (1)
-----------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Annual Investment Return of
-----------------------------------------------------------
0% Gross 4% Gross 8% Gross 12% Gross
(-1.24% Net) ( 2.76% Net) ( 6.76% Net) (10.76% Net)
-------------- -------------- -------------- --------------
$ 103 $ 161 $ 220 $ 279
$ 1,448 $ 1,618 $ 1,792 $ 1,972
$ 2,772 $ 3,109 $ 3,465 $ 3,841
$ 4,071 $ 4,634 $ 5,244 $ 5,904
$ 5,345 $ 6,191 $ 7,133 $ 8,180
$ 6,592 $ 7,781 $ 9,140 $ 10,692
$ 8,065 $ 9,656 $ 11,525 $ 13,716
$ 9,505 $ 11,560 $ 14,038 $ 17,025
$ 10,910 $ 13,488 $ 16,684 $ 20,643
$ 12,276 $ 15,439 $ 19,470 $ 24,604
$ 17,145 $ 24,162 $ 34,467 $ 49,628
$ 21,325 $ 33,788 $ 54,997 $ 91,317
$ 24,307 $ 43,984 $ 82,976 $ 160,676
$ 24,104 $ 52,883 $ 120,060 $ 272,284
$ 19,426 $ 59,258 $ 170,597 $ 450,778
$ 5,138 $ 58,475 $ 236,955 $ 731,384
$ 0(2) $ 42,531 $ 321,526 $ 1,166,319
$ 0 $ 0(2) $ 428,083 $ 1,833,473
$ 0 $ 0 $ 559,717 $ 2,840,679
$ 0 $ 0 $ 721,814 $ 4,353,046
$ 0 $ 0 $ 947,881 $ 6,808,090
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in year
42.
Based on a gross return of 4%, the Contract would go into default in year
50.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATE OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGE 0%, 4%, 8%, AND
12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUDENTIAL OR THE
FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
T1
<PAGE>
VARIABLE UNIVERSAL LIFE
TYPE B (VARIABLE) DEATH BENEFIT
MALE NON-SMOKER AGE 35
$ 250,000 BASIC INSURANCE AMOUNT
$ 2,007.50 ANNUAL PREMIUM PAYMENT
USING CURRENT CONTRACTUAL CHARGES
<TABLE>
<CAPTION>
Death Benefit (1)
-----------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of
End of Accumulated -----------------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (-1.24% Net) ( 2.76% Net) ( 6.76% Net) (10.76% Net)
- ------ -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,088 $ 251,122 $ 251,181 $ 251,240 $ 251,299
2 $ 4,259 $ 252,464 $ 252,633 $ 252,807 $ 252,986
3 $ 6,517 $ 253,782 $ 254,118 $ 254,473 $ 254,847
4 $ 8,866 $ 255,074 $ 255,634 $ 256,241 $ 256,898
5 $ 11,308 $ 256,337 $ 257,178 $ 258,115 $ 259,156
6 $ 13,848 $ 257,572 $ 258,753 $ 260,103 $ 261,644
7 $ 16,490 $ 258,775 $ 260,354 $ 262,208 $ 264,381
8 $ 19,237 $ 259,943 $ 261,978 $ 264,434 $ 267,392
9 $ 22,095 $ 261,071 $ 263,622 $ 266,785 $ 270,701
10 $ 25,066 $ 262,159 $ 265,284 $ 269,266 $ 274,336
15 $ 41,805 $ 266,849 $ 273,717 $ 283,796 $ 298,614
20 $ 62,171 $ 270,772 $ 282,832 $ 303,326 $ 338,383
25 $ 86,948 $ 273,353 $ 292,094 $ 329,150 $ 403,329
30 $ 117,094 $ 272,404 $ 298,996 $ 360,887 $ 507,117
35 $ 153,771 $ 266,653 $ 301,583 $ 399,088 $ 673,789
40 $ 198,394 $ 251,285 $ 293,633 $ 440,136 $ 969,784
45 $ 252,685 $ 0(2) $ 266,416 $ 477,239 $ 1,426,734
50 $ 318,738 $ 0 $ 0(2) $ 498,085 $ 2,105,652
55 $ 399,102 $ 0 $ 0 $ 477,128 $ 3,102,704
60 $ 496,877 $ 0 $ 0 $ 372,844 $ 4,550,365
65 $ 615,835 $ 0 $ 0 $ 0(2) $ 6,732,708
</TABLE>
Cash Surrender Value (1)
-----------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Annual Investment Return of
-----------------------------------------------------------
0% Gross 4% Gross 8% Gross 12% Gross
(-1.24% Net) ( 2.76% Net) ( 6.76% Net) (10.76% Net)
-------------- -------------- -------------- --------------
$ 100 $ 159 $ 218 $ 277
$ 1,442 $ 1,611 $ 1,785 $ 1,964
$ 2,760 $ 3,096 $ 3,451 $ 3,825
$ 4,052 $ 4,612 $ 5,219 $ 5,876
$ 5,315 $ 6,156 $ 7,093 $ 8,134
$ 6,550 $ 7,731 $ 9,081 $ 10,622
$ 8,008 $ 9,587 $ 11,441 $ 13,615
$ 9,432 $ 11,467 $ 13,923 $ 16,881
$ 10,816 $ 13,367 $ 16,530 $ 20,445
$ 12,159 $ 15,284 $ 19,266 $ 24,336
$ 16,849 $ 23,717 $ 33,796 $ 48,614
$ 20,772 $ 32,832 $ 53,326 $ 88,383
$ 23,353 $ 42,094 $ 79,150 $ 153,329
$ 22,404 $ 48,996 $ 110,887 $ 257,117
$ 16,653 $ 51,583 $ 149,088 $ 423,789
$ 1,285 $ 43,633 $ 190,136 $ 687,790
$ 0(2) $ 16,416 $ 227,239 $ 1,097,488
$ 0 $ 0(2) $ 248,085 $ 1,725,944
$ 0 $ 0 $ 227,128 $ 2,674,745
$ 0 $ 0 $ 122,844 $ 4,099,428
$ 0 $ 0 $ 0(2) $ 6,412,103
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in year
41.
Based on a gross return of 4%, the Contract would go into default in year
47.
Based on a gross return of 8%, the Contract would go into default in year
64.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATE OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGE 0%, 4%, 8%, AND
12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUDENTIAL OR THE
FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
T2
<PAGE>
VARIABLE UNIVERSAL LIFE
TYPE A (FIXED) DEATH BENEFIT
MALE NON-SMOKER AGE 35
$ 250,000 BASIC INSURANCE AMOUNT
$ 2,007.50 ANNUAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL CHARGES
<TABLE>
<CAPTION>
Death Benefit (1)
-----------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of
End of Accumulated -----------------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (-1.54% Net) ( 2.46% Net) ( 6.46% Net) (10.46% Net)
- ------ -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,088 $ 250,000 $ 250,000 $ 250,000 $ 250,000
2 $ 4,259 $ 250,000 $ 250,000 $ 250,000 $ 250,000
3 $ 6,517 $ 250,000 $ 250,000 $ 250,000 $ 250,000
4 $ 8,866 $ 250,000 $ 250,000 $ 250,000 $ 250,000
5 $ 11,308 $ 250,000 $ 250,000 $ 250,000 $ 250,000
6 $ 13,848 $ 250,000 $ 250,000 $ 250,000 $ 250,000
7 $ 16,490 $ 250,000 $ 250,000 $ 250,000 $ 250,000
8 $ 19,237 $ 250,000 $ 250,000 $ 250,000 $ 250,000
9 $ 22,095 $ 250,000 $ 250,000 $ 250,000 $ 250,000
10 $ 25,066 $ 250,000 $ 250,000 $ 250,000 $ 250,000
15 $ 41,805 $ 250,000 $ 250,000 $ 250,000 $ 250,000
20 $ 62,171 $ 250,000 $ 250,000 $ 250,000 $ 250,000
25 $ 86,948 $ 250,000 $ 250,000 $ 250,000 $ 250,000
30 $ 117,094 $ 250,000 $ 250,000 $ 250,000 $ 298,484
35 $ 153,771 $ 250,000 $ 250,000 $ 250,000 $ 417,880
40 $ 198,394 $ 0(2) $ 0(2) $ 250,000 $ 570,258
45 $ 252,685 $ 0 $ 0 $ 0(2) $ 775,012
50 $ 318,738 $ 0 $ 0 $ 0 $ 1,047,096
55 $ 399,102 $ 0 $ 0 $ 0 $ 1,403,925
60 $ 496,877 $ 0 $ 0 $ 0 $ 1,883,587
65 $ 615,835 $ 0 $ 0 $ 0 $ 2,430,417
</TABLE>
Cash Surrender Value (1)
-----------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Annual Investment Return of
-----------------------------------------------------------
0% Gross 4% Gross 8% Gross 12% Gross
(-1.54% Net) ( 2.46% Net) ( 6.46% Net) (10.46% Net)
-------------- -------------- -------------- --------------
$ 0 $ 0 $ 53 $ 108
$ 1,056 $ 1,207 $ 1,364 $ 1,525
$ 2,122 $ 2,418 $ 2,731 $ 3,062
$ 3,142 $ 3,628 $ 4,156 $ 4,730
$ 4,115 $ 4,836 $ 5,642 $ 6,540
$ 5,034 $ 6,035 $ 7,184 $ 8,501
$ 6,153 $ 7,478 $ 9,041 $ 10,882
$ 7,216 $ 8,907 $ 10,959 $ 13,445
$ 8,218 $ 10,317 $ 12,938 $ 16,204
$ 9,156 $ 11,704 $ 14,978 $ 19,177
$ 11,439 $ 16,788 $ 24,779 $ 36,707
$ 11,106 $ 20,001 $ 35,702 $ 63,368
$ 6,305 $ 19,042 $ 46,429 $ 104,464
$ 0 $ 9,780 $ 54,305 $ 169,593
$ 0 $ 0 $ 53,166 $ 266,166
$ 0(2) $ 0(2) $ 28,298 $ 404,438
$ 0 $ 0 $ 0(2) $ 596,163
$ 0 $ 0 $ 0 $ 858,275
$ 0 $ 0 $ 0 $ 1,210,280
$ 0 $ 0 $ 0 $ 1,696,925
$ 0 $ 0 $ 0 $ 2,314,683
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0% the cash surrender value would go to zero
in year 1 and in year 29 and later, but because the Target Premium is being
paid, the Contract is kept inforce through the Limited Death Benefit
Guarantee Period of 35 years. The Contract would go into default at the
beginning of year 36. Based on a gross return of 4% the cash surrender
value would go to zero in year 1 and in year 33 and later, but because the
Target Premium is being paid, the Contract is kept inforce through the
Limited Death Benefit Guarantee Period of 35 years. The Contract would go
into default at the beginning of year 36. Based on a gross return of 8%,
the Contract would go into default in year 43.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATE OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGE 0%, 4%, 8%, AND
12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUDENTIAL OR THE
FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
T3
<PAGE>
VARIABLE UNIVERSAL LIFE
TYPE B (VARIABLE) DEATH BENEFIT
MALE NON-SMOKER AGE 35
$ 250,000 BASIC INSURANCE AMOUNT
$ 2,007.50 ANNUAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL CHARGES
<TABLE>
<CAPTION>
Death Benefit (1)
-----------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of
End of Accumulated -----------------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (-1.54% Net) ( 2.46% Net) ( 6.46% Net) (10.46% Net)
- ------ -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,088 $ 250,965 $ 251,019 $ 251,073 $ 251,127
2 $ 4,259 $ 252,071 $ 252,222 $ 252,378 $ 252,539
3 $ 6,517 $ 253,131 $ 253,425 $ 253,737 $ 254,066
4 $ 8,866 $ 254,142 $ 254,625 $ 255,150 $ 255,720
5 $ 11,308 $ 255,103 $ 255,818 $ 256,618 $ 257,509
6 $ 13,848 $ 256,007 $ 256,999 $ 258,137 $ 259,441
7 $ 16,490 $ 256,853 $ 258,162 $ 259,708 $ 261,527
8 $ 19,237 $ 257,638 $ 259,307 $ 261,331 $ 263,782
9 $ 22,095 $ 258,360 $ 260,426 $ 263,005 $ 266,218
10 $ 25,066 $ 259,014 $ 261,516 $ 264,728 $ 268,848
15 $ 41,805 $ 261,084 $ 266,246 $ 273,949 $ 285,440
20 $ 62,171 $ 260,405 $ 268,744 $ 283,444 $ 309,317
25 $ 86,948 $ 255,176 $ 266,514 $ 290,886 $ 342,505
30 $ 117,094 $ 250,000 $ 255,524 $ 291,782 $ 386,929
35 $ 153,771 $ 0(2) $ 0(2) $ 277,178 $ 442,655
40 $ 198,394 $ 0 $ 0 $ 0(2) $ 505,686
45 $ 252,685 $ 0 $ 0 $ 0 $ 561,998
50 $ 318,738 $ 0 $ 0 $ 0 $ 585,569
55 $ 399,102 $ 0 $ 0 $ 0 $ 521,201
60 $ 496,877 $ 0 $ 0 $ 0 $ 285,625
61 $ 0 $ 0 $ 0 $ 0 $ 0(2)
</TABLE>
Cash Surrender Value (1)
-----------------------------------------------------------
Assuming Hypothetical Gross (and Net)
Annual Investment Return of
-----------------------------------------------------------
0% Gross 4% Gross 8% Gross 12% Gross
(-1.54% Net) ( 2.46% Net) ( 6.46% Net) (10.46% Net)
-------------- -------------- -------------- --------------
$ 0 $ 0 $ 51 $ 105
$ 1,049 $ 1,200 $ 1,356 $ 1,517
$ 2,109 $ 2,403 $ 2,715 $ 3,045
$ 3,120 $ 3,603 $ 4,128 $ 4,698
$ 4,081 $ 4,796 $ 5,596 $ 6,487
$ 4,985 $ 5,977 $ 7,115 $ 8,419
$ 6,086 $ 7,396 $ 8,941 $ 10,761
$ 7,127 $ 8,796 $ 10,820 $ 13,271
$ 8,105 $ 10,171 $ 12,750 $ 15,962
$ 9,014 $ 11,516 $ 14,728 $ 18,848
$ 11,084 $ 16,246 $ 23,949 $ 35,440
$ 10,405 $ 18,744 $ 33,444 $ 59,317
$ 5,176 $ 16,514 $ 40,886 $ 92,505
$ 0 $ 5,524 $ 41,782 $ 136,929
$ 0(2) $ 0(2) $ 27,178 $ 192,655
$ 0 $ 0 $ 0(2) $ 255,686
$ 0 $ 0 $ 0 $ 311,998
$ 0 $ 0 $ 0 $ 335,569
$ 0 $ 0 $ 0 $ 271,201
$ 0 $ 0 $ 0 $ 35,625
$ 0 $ 0 $ 0 $ 0(2)
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0% the cash surrender value would go to zero
in year 1 and in year 28 and later, but because the Target Premium is being
paid, the Contract is kept inforce through the Limited Death Benefit
Guarantee Period of 33 years. The Contract would go into default at the
beginning of year 34. Based on a gross return of 4% the cash surrender
value would go to zero in year 1 and in year 32 and later, but because the
Target Premium is being paid, the Contract is kept inforce through the
Limited Death Benefit Guarantee Period of 33 years. The Contract would go
into default at the beginning of year 34. Based on a gross return of 8%,
the Contract would go into default in year 39. Based on a gross return of
12%, the Contract would go into default in year 61.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATE OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGE 0%, 4%, 8%, AND
12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUDENTIAL OR THE
FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
T4
<PAGE>
VARIABLE UNIVERSAL LIFE
MALE NON-SMOKER AGE 35
$ 250,000 BASIC INSURANCE AMOUNT
$ 2,007.50 ANNUAL PREMIUM PAYMENT
USING CURRENT CONTRACTUAL CHARGES
FIXED INSURANCE AMOUNT
<TABLE>
<CAPTION>
Internal Rates of Return on Death (1) Internal Rates of Return on Surrender (1)
------------------------------------------------------ ------------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Annual Investment Return of Annual Investment Return of
End of ------------------------------------------------------ ------------------------------------------------------
Policy 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year (-1.24% Net) ( 2.76% Net) ( 6.76% Net) (10.76% Net) (-1.24% Net) ( 2.76% Net) ( 6.76% Net) (10.76% Net)
- ------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 135.66% 135.66% 135.66% 135.66% -20.31% -15.70% -11.18% -6.75%
10 44.34% 44.34% 44.34% 44.34% -9.18% -4.84% -0.56% 3.67%
15 23.96% 23.96% 23.96% 23.96% -7.44% -2.81% 1.67% 6.02%
20 15.44% 15.44% 15.44% 15.44% -6.51% -1.67% 2.91% 7.31%
25 10.88% 10.88% 10.88% 12.46% -6.17% -1.03% 3.67% 8.09%
30 8.09% 8.09% 8.09% 11.38% -6.83% -0.85% 4.14% 8.53%
35 6.24% 6.24% 6.54% 10.70% -9.06% -0.97% 4.49% 8.80%
40 4.93% 4.93% 6.06% 10.19% -28.09% -1.62% 4.72% 8.96%
45 (2) 3.96% 5.73% 9.86% (2) -3.72% 4.84% 9.04%
50 (2) 5.50% 9.62% (2) 4.91% 9.08%
55 5.33% 9.44% 4.93% 9.07%
60 5.17% 9.28% 4.92% 9.05%
65 5.07% 9.17% 4.97% 9.07%
</TABLE>
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0% the Contract would go into default in policy
year 42.
Based on a gross return of 4% the Contract would go into default in policy
year 50.
VARIABLE INSURANCE AMOUNT
<TABLE>
<CAPTION>
Internal Rates of Return on Death (1) Internal Rates of Return on Surrender (1)
------------------------------------------------------ ------------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Annual Investment Return of Annual Investment Return of
End of ------------------------------------------------------ ------------------------------------------------------
Policy 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year (-1.24% Net) ( 2.76% Net) ( 6.76% Net) (10.76% Net) (-1.24% Net) ( 2.76% Net) ( 6.76% Net) (10.76% Net)
- ------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 137.03% 137.21% 137.41% 137.63% -20.49% -15.87% -11.36% -6.93%
10 45.20% 45.41% 45.68% 46.02% -9.37% -5.03% -0.75% 3.47%
15 24.66% 24.94% 25.33% 25.88% -7.68% -3.05% 1.43% 5.78%
20 16.06% 16.40% 16.95% 17.80% -6.81% -1.96% 2.63% 7.03%
25 11.43% 11.84% 12.57% 13.81% -6.56% -1.38% 3.34% 7.79%
30 8.54% 9.01% 9.97% 11.67% -7.49% -1.37% 3.69% 8.24%
35 6.52% 7.07% 8.28% 10.49% -10.56% -1.79% 3.85% 8.54%
40 4.95% 5.56% 7.10% 9.97% -60.97% -3.28% 3.83% 8.74%
45 (2) 4.19% 6.18% 9.67% (2) -10.84% 3.62% 8.85%
50 (2) 5.36% 9.46% (2) 3.20% 8.91%
55 4.49% 9.29% 2.36% 8.93%
60 3.26% 9.15% 0.06% 8.92%
65 (2) 9.05% (2) 8.95%
</TABLE>
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0% the Contract would go into default in policy
year 41.
Based on a gross return of 4% the Contract would go into default in policy
year 47.
Based on a gross return of 8% the Contract would go into default in policy
year 64.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATE OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGE 0%, 4%, 8%, AND
12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUDENTIAL OR THE
FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
T5
<PAGE>
VARIABLE UNIVERSAL LIFE
MALE NON-SMOKER AGE 35
$ 250,000 BASIC INSURANCE AMOUNT
$ 2,007.50 ANNUAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL CHARGES
FIXED INSURANCE AMOUNT
<TABLE>
<CAPTION>
Internal Rates of Return on Death (1) Internal Rates of Return on Surrender (1)
------------------------------------------------------ ------------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Annual Investment Return of Annual Investment Return of
End of ------------------------------------------------------ ------------------------------------------------------
Policy 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year (-1.54% Net) ( 2.46% Net) ( 6.46% Net) (10.46% Net) (-1.54% Net) ( 2.46% Net) ( 6.46% Net) (10.46% Net)
- ------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 135.66% 135.66% 135.66% 135.66% -28.35% -23.42% -18.62% -13.95%
10 44.34% 44.34% 44.34% 44.34% -14.96% -10.10% -5.40% -0.83%
15 23.96% 23.96% 23.96% 23.96% -13.45% -7.73% -2.48% 2.44%
20 15.44% 15.44% 15.44% 15.44% -14.78% -7.24% -1.13% 4.17%
25 10.88% 10.88% 10.88% 10.88% -24.13% -8.62% -0.60% 5.26%
30 8.09% 8.09% 9.00% -16.98% -0.68% 6.04%
35 6.24% 8.48% -1.61% 6.52%
40 (2) (2) 4.93% 8.06% (2) (2) -6.13% 6.78%
45 (2) 7.75% (2) 6.91%
50 7.52% 6.95%
55 7.32% 6.94%
60 7.17% 6.93%
65 6.97% 6.87%
</TABLE>
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0% the Contract would go into default in policy
year 36.
Based on a gross return of 4% the Contract would go into default in policy
year 36.
Based on a gross return of 8% the Contract would go into default in policy
year 43.
VARIABLE INSURANCE AMOUNT
<TABLE>
<CAPTION>
Internal Rates of Return on Death (1) Internal Rates of Return on Surrender (1)
------------------------------------------------------ ------------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Annual Investment Return of Annual Investment Return of
End of ------------------------------------------------------ ------------------------------------------------------
Policy 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year (-1.54% Net) ( 2.46% Net) ( 6.46% Net) (10.46% Net) (-1.54% Net) ( 2.46% Net) ( 6.46% Net) (10.46% Net)
- ------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 136.77% 136.92% 137.09% 137.28% -28.61% -23.67% -18.88% -14.21%
10 44.98% 45.15% 45.37% 45.65% -15.27% -10.42% -5.72% -1.15%
15 24.43% 24.64% 24.95% 25.39% -13.95% -8.20% -2.92% 2.01%
20 15.76% 16.00% 16.42% 17.10% -15.73% -7.99% -1.77% 3.58%
25 11.01% 11.27% 11.82% 12.82% -27.94% -10.17% -1.62% 4.43%
30 8.20% 8.89% 10.32% -26.65% -2.48% 4.88%
35 (2) (2) 6.70% 8.73% (2) (2) -6.19% 5.06%
40 (2) 7.61% (2) 5.02%
45 6.71% 4.74%
50 5.84% 4.16%
55 4.74% 2.89%
60 2.56% -5.12%
65 (2) (2)
</TABLE>
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0% the Contract would go into default in policy
year 34.
Based on a gross return of 4% the Contract would go into default in policy
year 34.
Based on a gross return of 8% the Contract would go into default in policy
year 39.
Based on a gross return of 12% the Contract would go into default in policy
year 61.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATE OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGE 0%, 4%, 8%, AND
12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUDENTIAL OR THE
FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
T6
<PAGE>
CONTRACT LOANS
You may borrow from Prudential an amount up to the current loan value of your
Contract less any existing Contract debt using the Contract as the only security
for the loan. The loan value at any time is equal to the sum of (1) 90% of the
portion of the cash value attributable to the variable investment options, and
(2) the balance of the cash value. The cash value is equal to the Contract Fund
less any surrender charge. A Contract in default has no loan value. The
minimum loan amount you may borrow is $200.
Interest charged on a loan accrues daily. Interest is due on each Contract
anniversary or when the loan is paid back, whichever comes first. If interest
is not paid when due, it becomes part of the loan and we will charge interest on
it, too. Except in the case of preferred loans, we charge interest at an
effective annual rate of 5%.
A portion of any amount you borrow on or after the 10th Contract anniversary may
be considered a preferred loan if the Contract has not been surrendered for
fixed reduced paid-up insurance. The maximum preferred loan amount is the total
amount you may borrow minus the total net premiums paid (net premiums equal
premiums paid less total withdrawals, if any). If the net premium amount is
less than zero, we will, for purposes of this calculation, consider it to be
zero. Only new loans borrowed after the 10th Contract anniversary may be
considered preferred loans. Standard loans will not automatically be converted
into preferred loans. Preferred loans are charged interest at an effective
annual rate of 4.5% .
The Contract debt is the amount of all outstanding loans plus any interest
accrued but not yet due. If at any time the Contract debt equals or exceeds the
Contract Fund less any applicable surrender charges, the Contract will go into
default. See LAPSE AND REINSTATEMENT, page 28. If the Contract debt equals or
exceeds the Contract Fund less any applicable surrender charges and you fail to
keep the Contract inforce, the amount of unpaid Contract debt will be treated as
a distribution which may be taxable. See TAX TREATMENT OF CONTRACT BENEFITS,
page 26.
When a loan is made, an amount equal to the loan proceeds will be transferred
out of the Account and/or the fixed-rate option, as applicable. Unless you ask
us to take the loan amount from specific investment options and we agree, the
reduction will be made in the same proportions as the value in each subaccount
and the fixed-rate option bears to the total value of the Contract. While a
loan is outstanding, the amount that was so transferred will continue to be
treated as part of the Contract Fund. It will be credited with an effective
annual rate of return of 4%. On each Monthly date, we will increase the portion
of the Contract Fund in the investment options by interest credits accrued on
the loan since the last Monthly date. The net cost of a standard loan is 1% and
the net cost of a preferred loan is 1/2%.
A loan will not affect the Death Benefit Guarantee as long as Contract debt does
not equal or exceed the Contract Fund, less any applicable surrender charges.
Loans from Modified Endowment Contracts may be treated for tax purposes as
distributions of income. See TAX TREATMENT OF CONTRACT BENEFITS, page 26.
Any Contract debt will directly reduce a Contract's cash surrender value and
will be subtracted from the death benefit to determine the amount payable. In
addition, even if the loan is fully repaid, it may have an effect on future
death benefits because the investment results of the selected investment options
will apply only to the amount remaining invested under those options. The
longer the loan is outstanding, the greater the effect is likely to be. The
effect could be favorable or unfavorable. If investment results are greater
than the rate being credited on the amount of the loan while the loan is
outstanding, values under the Contract will not increase as rapidly as they
would have if no loan had been made. If investment results are below that rate,
Contract values will be higher than they would have been had no loan been made.
When you repay all or part of a loan, we will increase the portion of the
Contract Fund in the investment options by the amount of the loan you repay
using the investment allocation for future premium payments as of the loan
payment date, plus interest credits accrued on the loan since the last
transaction date. If loan interest is paid when due, it will not change the
portion of the Contract Fund allocated to the investment options. We reserve
the right to change the manner in which we allocate loan repayments.
25
<PAGE>
SALE OF THE CONTRACT AND SALES COMMISSIONS
Pruco Securities Corporation ("Prusec"), an indirect wholly-owned subsidiary of
Prudential, acts as the principal underwriter of the Contract. Prusec,
organized in 1971 under New Jersey law, is registered as a broker and dealer
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. Prusec's principal business address is
751 Broad Street, Newark, New Jersey 07102-3777. The Contract is sold by
registered representatives of Prusec who are also authorized by state insurance
departments to do so. The Contract may also be sold through other broker-
dealers authorized by Prusec and applicable law to do so. Registered
representatives of such other broker-dealers may be paid on a different basis
than described below.
Generally, representatives will receive a commission of no more than: (1) 50% of
the premiums received in the first year on premiums up to the target premium
(see PREMIUMS, page 11); (2) 5% of premiums received in years two through 10 on
premiums up to the target premium; and (3) 3% on premiums received in the first
10 years in excess of the target premium or received after 10 years. If the
basic insurance amount is increased, representatives will generally receive a
commission of no more than: (1) 25% of the premiums received up to the target
premium for the increase received in the first year; (2) 5% of the premiums
received up to the target premium for years two through 10; and (3) 3% on other
premiums received for the increase. Moreover, trail commissions of up to 0.025%
of the Contract Fund as of the end of each calendar quarter may be paid.
Representatives with less than 4 years of service may receive compensation on a
different basis. Representatives who meet certain productivity or persistency
standards may be eligible for additional compensation.
TAX TREATMENT OF CONTRACT BENEFITS
Prudential urges each prospective purchaser to consult a qualified tax adviser.
The following discussion is not intended as tax advice, and it is not a complete
statement of what the effect of federal income taxes will be under all
circumstances. Rather, it provides information about how Prudential believes
the tax laws apply in the most commonly occurring circumstances. There is no
guarantee, however, that the current federal income tax laws and regulations or
interpretations will not change.
TREATMENT AS LIFE INSURANCE. The Contract will be treated as "life insurance,"
as long as it satisfies certain definitional tests set forth in Sections 7702 of
the Internal Revenue Code (the "Code") and as long as the underlying investments
for the Contract satisfy diversification requirements under Section 817(h) of
the Code. (For further detail on diversification requirements, see the
corresponding sections on Dividends, Distributions, and Taxes in the attached
prospectuses for the Funds.)
Prudential believes that it has taken adequate steps to cause the Contract to be
treated as life insurance for tax purposes. This means that: (1) except as
noted below, the Contract owner should not be taxed on any part of the Contract
Fund, including additions attributable to interest, dividends or appreciation
until amounts are distributed under the Contract; and (2) the death benefit
should be excludible from the gross income of the beneficiary under Section
101(a) of the Code.
However, Section 7702 of the Code which defines life insurance for tax purposes
gives the Secretary of the Treasury authority to prescribe regulations to carry
out the purposes of the Section. In this regard, proposed regulations governing
mortality charges were issued in 1991 and proposed regulations relating to the
definition of life insurance were issued in 1992. None of these proposed
regulations has yet been finalized. Additional regulations under Section 7702
may also be promulgated in the future. Moreover, in connection with the
issuance of temporary regulations under Section 817(h), the Treasury Department
announced that such regulations do not provide guidance concerning the extent to
which Contract owners may direct their investments to particular divisions of a
separate account. Such guidance will be included in regulations or rulings
under Section 817(d) relating to the definition of a variable contract.
Prudential intends to comply with final regulations or rulings issued under
Sections 7702 and 817. Therefore, it reserves the right to make such changes as
it deems necessary to assure that the Contract continues to qualify as life
insurance for tax purposes. Any such changes will apply uniformly to affected
Contract owners and will be made only after advance written notice to affected
Contract owners.
26
<PAGE>
PRE-DEATH DISTRIBUTIONS. The taxation of pre-death distributions depends on
whether the Contract is classified as a Modified Endowment Contract. The
following discussion first deals with distributions under Contracts not so
classified, and then with Modified Endowment Contracts.
1. A surrender or lapse of the Contract may have tax consequences. Upon
surrender, the owner will not be taxed on the cash surrender value except
for the amount, if any, that exceeds the gross premiums paid less the
untaxed portion of any prior withdrawals. The amount of any unpaid
Contract debt will, upon surrender or lapse, be added to the cash surrender
value and treated, for this purpose, as if it had been received. The tax
consequences of a surrender may differ if the proceeds are received under
any income payment settlement option.
A withdrawal generally is not taxable unless it exceeds total gross premiums
paid to the date of withdrawal less the untaxed portion of any prior
withdrawals. However, under certain limited circumstances, in the first 15
Contract years all or a portion of a withdrawal may be taxable if the
Contract Fund exceeds the total premiums paid less the untaxed portions of
any prior withdrawals, even if total withdrawals do not exceed total
premiums paid to date.
Extra premiums for optional benefits and riders generally do not count in
computing gross premiums paid, which in turn determines the extent to which
a withdrawal might be taxed.
Loans received under the Contract will ordinarily be treated as indebtedness
of the owner and will not be considered to be distributions subject to tax.
However, there is some risk the Internal Revenue Service might assert that
the preferred loan should be treated as a distribution for tax purposes
because of the relatively low differential between the loan interest rate
and Contract's crediting rate. Were the Internal Revenue Service to take
this position, Prudential would take reasonable steps to avoid this result,
including modifying the Contract's loan provisions.
2. Some of the above rules are changed if the Contract is classified as a
Modified Endowment Contract under Section 7702A of the Code. It is
possible for this Contract to be classified as a Modified Endowment
Contract under at least two circumstances: premiums in excess of the 7-pay
premiums allowed under Section 7702A are paid or a decrease in the basic
insurance amount is made (or a rider removed). Moreover, the addition of a
rider or the increase in the basic insurance amount after the Contract date
may have an impact on the Contract's status as a Modified Endowment
Contract. Contract owners contemplating any of these steps, particularly a
withdrawal that would reduce the basic insurance amount, should first
consult a qualified tax adviser and their Prudential representative.
If the Contract is classified as a Modified Endowment Contract, then pre-
death distributions, including loans, assignment and pledges are includible
in income to the extent that the Contract Fund prior to surrender charges
exceeds the gross premiums paid for the Contract increased by the amount of
any loans previously includible in income and reduced by any untaxed amounts
previously received other than the amount of any loans excludible from
income. These rules may also apply to pre-death distributions, including
loans, made during the two year period prior to the Contract becoming a
Modified Endowment Contract.
In addition, pre-death distributions from such Contracts (including full
surrenders) will be subject to a penalty of 10% of the amount includible in
income unless the amount is distributed on or after age 59 1/2, on account
of the taxpayer's disability or as a life annuity. It is presently unclear
how the penalty tax provisions apply to Contracts owned by nonnatural
persons such as corporations.
Under certain circumstances, multiple Modified Endowment Contracts issued
during any calendar year will be treated as a single contract for purposes
of applying the above rules.
WITHHOLDING
If the Contract owner fails to elect that no taxes be withheld, or in certain
other circumstances, the taxable portion of any amounts received under the
Contract will be subject to withholding to meet federal income tax obligations.
Prudential will provide the Contract owner with forms and instructions
concerning the right to elect that no taxes be withheld from the taxable portion
of any payment. All recipients may be subject to penalties under the estimated
tax payment rules if withholding and estimated tax payments are insufficient.
27
<PAGE>
Contract owners who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Special withholding rules apply to payments to non-resident aliens.
OTHER TAX CONSIDERATIONS. Transfer of the Contract to a new owner or assignment
of the Contract may have gift, estate and/or income tax consequences depending
on the circumstances. In the case of a transfer of the Contract for a valuable
consideration, the death benefit may be subject to federal income taxes under
Section 101(a)(2) of the Code. In addition, a transfer of the Contract to or
the designation of a beneficiary who is either 37 1/2 years younger than the
Contract owner or a grandchild of the Contract owner may have Generation
Skipping Transfer tax consequences under Section 2601 of the Code.
In certain circumstances, deductions for interest paid or accrued on Contract
debt or on other loans that are incurred or continued to purchase or carry the
Contract may be denied under Sections 163 of the Code as personal interest or
under Section 264 of the Code. Contract owners should consult a tax adviser
regarding the application of these provisions to their circumstances.
Business-owned life insurance is subject to additional rules. Section 264(a)(1)
of the Code generally precludes business Contract owners from deducting premium
payments. Interest on Contract debt on a business-owned insurance contract is
generally not tax-deductible. An exemption permits the deduction of interest on
policy loans on contracts for up to 20 key persons. The interest deduction for
Contract debt on such loans is limited to a prescribed interest rate and a
maximum aggregate loan amount of $50,000 per insured key person. The Code also
imposes an indirect tax upon additions to the Contract Fund or the receipt of
death benefits under business-owned life insurance Contracts under certain
circumstances by way of the corporate alternative minimum tax.
The individual situation of each Contract owner or beneficiary will determine
the federal estate taxes and the state and local estate, inheritance and other
taxes due if the owner or insured dies.
LAPSE AND REINSTATEMENT
Prudential will determine the value of the Contract Fund on each Monthly date.
If the Contract Fund less any applicable surrender charges is zero or less, the
Contract is in default unless it remains inforce under the Death Benefit
Guarantee. See DEATH BENEFIT GUARANTEE, page 12. If the Contract debt ever
grows to be equal to or more than the Contract Fund less any applicable
surrender charges, the Contract will be in default. Should this happen,
Prudential will send you a notice of default setting forth the payment which we
estimate will keep the Contract inforce for three months from the date of
default. This payment must be received at a Home Office within the 61-day grace
period after the notice of default is mailed or the Contract will end and have
no value. A Contract that lapses and ends without value with an outstanding
Contract loan may have tax consequences. See TAX TREATMENT OF CONTRACT
BENEFITS, page 26.
A Contract that ended in default may be reinstated within 5 years after the date
of default if the following conditions are met: (1) renewed evidence of
insurability is provided on the insured; (2) submission of certain payments
sufficient to bring the Contract up to date plus a premium that we estimate will
cover all charges and deductions for the next three months; and (3) any Contract
debt with interest to date must be restored (if the debt with interest would
exceed the loan value of the reinstated Contract, the excess must be paid to us
before reinstatement) or paid back. The reinstatement date will be the Monthly
date that coincides with or next follows the date we approve your request. We
will deduct all the required charges from your payment and the balance will be
placed into your Contract Fund. If we approve the reinstatement, we will credit
the Contract Fund with an amount equal to the surrender charge applicable as of
the date of reinstatement.
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS-
The Contract generally employs mortality tables that distinguish between males
and females. Thus, premiums and benefits under Contracts issued on males and
females of the same age will generally differ. Employers and employee
organizations considering purchase of a Contract should consult their legal
advisers to determine whether purchase of a Contract based on sex-distinct
actuarial tables is consistent with Title VII of the Civil Rights Act of 1964 or
other applicable law.
28
<PAGE>
OTHER GENERAL CONTRACT PROVISIONS
ASSIGNMENT. This Contract may not be assigned if the assignment would violate
any federal, state or local law or regulation prohibiting sex distinct rates for
insurance. Generally, the Contract may not be assigned to an employee benefit
plan or program without Prudential's consent. Prudential assumes no
responsibility for the validity or sufficiency of any assignment. We will not
be obligated to comply with any assignment unless we received a copy at a Home
Office.
BENEFICIARY. The Contract owner designates and names the beneficiary in the
application. Thereafter, you may change the beneficiary, provided it is in
accordance with the terms of the Contract. Should the insured die with no
surviving beneficiary, the insured's estate will become the beneficiary.
INCONTESTABILITY. After the Contract has been inforce during the lifetime of
the insured for two years from the Contract date or, with respect to any change
in the Contract that requires Prudential's approval and could increase its
liability, after the change has been in effect during the insured's lifetime for
two years from the effective date of the change, assuming enough premium has
been paid to cover the required charges, Prudential will not contest its
liability under the Contract in accordance with its terms.
MISSTATEMENT OF AGE OR SEX. If the insured's stated age or sex or both are
incorrect in the Contract, Prudential will adjust each benefit and any amount to
be paid, as required by law, to reflect the correct age and sex. Any such
benefit will be based on what the most recent deductions from the Contract Fund
would have provided at the insured's correct age and sex.
SETTLEMENT OPTIONS. The Contract grants to most owners, or to the beneficiary,
a variety of optional ways of receiving Contract proceeds, other than in a lump
sum. Any Prudential representative authorized to sell this Contract can explain
these options upon request.
SUICIDE EXCLUSION. Generally, if the insured dies by suicide within two years
from the Contract date, the Contract will end and Prudential will return the
premiums paid, less any Contract debt, and less any withdrawals. Generally, if
the insured dies by suicide after two years from the issue date, but within two
years of the effective date of an increase in the basic insurance amount, we
will pay, as to the increase in amount, no more than the sum of the premiums
paid on and after the effective date of an increase.
RIDERS
Contract owners may be able to obtain extra fixed benefits which may require an
additional premium. These optional insurance benefits will be described in what
is known as a "rider" to the Contract. Charges applicable to the riders will be
deducted from the Contract Fund on each Monthly date.
One rider pays certain premiums into the Contract if the insured is totally
disabled within the meaning of the provision. Others pay an additional amount
if the insured dies within a stated number of years after issue; similar
benefits may be available if the insured's spouse or child should die. The
amounts of these benefits are fully guaranteed at issue; they do not depend on
the performance of the Account, although they will no longer be available if the
Contract should lapse. Certain restrictions may apply; they are clearly
described in the applicable rider.
Any Prudential representative authorized to sell the Contract can explain these
extra benefits further. Samples of the provisions are available from Prudential
upon written request.
PARTICIPATION IN DIVISIBLE SURPLUS
The Contract is eligible to be credited part of Prudential's divisible surplus
attributable to the Contracts, as determined by Prudential's Board of Directors.
That determination is made, with respect to the insurance Contracts issued by
Prudential, every year. However, Prudential does not expect to credit any
dividends upon these Contracts because favorable investment performance will be
reflected in Contract values and because Prudential intends, if experience
indicates that current charges will be greater than needed to cover expenses, to
reduce those charges further so that there will be no source of distributable
surplus attributable to these Contracts.
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VOTING RIGHTS
As described earlier, all of the assets held in the subaccounts will be invested
in shares of the corresponding portfolios of the Funds. Prudential is the legal
owner of those shares and as such has the right to vote on any matter voted on
at shareholders meetings of the Funds. However, Prudential will, as required by
law, vote the shares of the Funds in accordance with voting instructions
received from Contract owners at any regular and special shareholders meetings.
A Fund may not hold annual shareholders meetings when not required to do so
under the laws of the state of its incorporation or the Investment Company Act
of 1940. Fund shares for which no timely instructions from Contract owners are
received, and any shares attributable to general account investments of
Prudential, will be voted in the same proportion as shares in the respective
portfolios for which instructions are received. Should the applicable federal
securities laws or regulations, or their current interpretation, change so as to
permit Prudential to vote shares of the Funds in its own right, it may elect to
do so.
Generally, a Contract owner may give voting instructions on matters that would
result in changes in fundamental policies and any matter requiring a vote of the
shareholders of the Funds. With respect to approval of the investment advisory
agreement or any change in a portfolio's fundamental investment contract,
Contract owners participating in such portfolios will vote separately by
portfolio on the matter, pursuant to the requirements of Rule 18f-2 under the
Investment Company Act of 1940.
The number of Fund shares for which instructions may be given by a Contract
owner is determined by dividing the portion of the value of the Contract derived
from participation in a subaccount, by the value of one share in the
corresponding portfolio of the applicable Fund. The number of votes for which
each Contract owner may give Prudential instructions will be determined as of
the record date chosen by the Board of Directors of the applicable Fund.
Prudential will furnish Contract owners with proper forms and proxies to enable
them to give these instructions. Prudential reserves the right to modify the
manner in which the weight to be given voting instructions is calculated where
such a change is necessary to comply with current federal regulations or
interpretations of those regulations.
Prudential may, if required by state insurance regulations, disregard voting
instructions if they would require shares to be voted so as to cause a change in
the sub-classification or investment objectives of one or more of a Fund's
portfolios, or to approve or disapprove an investment advisory contract for a
Fund. In addition, Prudential itself may disregard voting instructions that
would require changes in the investment policy or investment adviser of one or
more of a Fund's portfolios, provided that Prudential reasonably disapproves
such changes in accordance with applicable federal regulations. If Prudential
does disregard voting instructions, it will advise Contract owners of that
action and its reasons for such action in the next annual or semi-annual report
to Contract owners.
SUBSTITUTION OF FUND SHARES
Although Prudential believes it to be unlikely, it is possible that in the
judgment of its management, one or more of the portfolios of the Funds may
become unsuitable for investment by Contract owners because of investment policy
changes, tax law changes, or the unavailability of shares for investment. In
that event, Prudential may seek to substitute the shares of another portfolio or
of an entirely different mutual fund. Before this can be done, the approval of
the SEC, and possibly one or more state insurance departments, may be required.
Contract owners will be notified of such substitution.
REPORTS TO CONTRACT OWNERS
Once each year, Prudential will send you a statement that provides certain
information pertinent to your own Contract. This statement will detail values
and transactions made and specific Contract data that apply only to your
particular Contract.
You will also be sent annual and semi-annual reports of the Funds showing the
financial condition of the portfolios and the investments held in each
portfolio.
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STATE REGULATION
Prudential is subject to regulation and supervision by the Department of
Insurance of the State of New Jersey, which periodically examines its operations
and financial condition. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business.
Prudential is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various jurisdictions
in which it does business to determine solvency and compliance with local
insurance laws and regulations.
In addition to the annual statements referred to above, Prudential is required
to file with New Jersey and other jurisdictions a separate statement with
respect to the operations of all its variable contract accounts, in a form
promulgated by the National Association of Insurance Commissioners.
EXPERTS
The financial statements included in this prospectus for the years ended
December 31, 1997 and December 31, 1996 have been audited by
PricewaterhouseCoopers LLP, independent accountants, as stated in their reports
appearing herein. Prudential is relying on PricewaterhouseCoopers' reports,
which are given on their authority as accounting and auditing experts. The
financial statements included in this prospectus for the second quarter ended
June 30, 1998, are unaudited and PricewaterhouseCoopers LLP, is not expressing
an opinion on these financial statements. PricewaterhouseCoopers LLP's principal
business address is 1177 Avenue of the Americas, New York, New York 10036.
The financial statements included in this prospectus for the year ended December
31, 1995 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing herein. Prudential is relying on Deloitte &
Touche LLP's reports, which are given on their authority as accounting and
auditing experts. Deloitte & Touche LLP's principal business address is Two
Hilton Court, Parsippany, New Jersey 07054-0319.
On March 12, 1996, Deloitte & Touche LLP was replaced as the independent
accountants of Prudential. There have been no disagreements with Deloitte &
Touche LLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which, if not resolved to
the satisfaction of the accountant, would have caused them to make reference to
the matter in their reports.
Actuarial matters included in this prospectus have been examined by Ching-Meei
Chang, MAAA, FSA, Actuarial Director of Prudential whose opinion is filed as an
exhibit to the registration statement.
LITIGATION
On October 28, 1996, Prudential entered into a Stipulation of Settlement in a
multidistrict proceeding involving allegations of various claims relating to
Prudential's life insurance sales practices. (In re Prudential Insurance
--------------------------
Company of America Sales Practices Litigation, D.N.J., MDL No. 1061, Master
- ---------------------------------------------
Docket No. 95-4704 (AMW)). On March 7, 1997, the United States District Court
for the District of New Jersey approved the Stipulation of Settlement as fair,
reasonable and adequate, and later issued a Final Order and Judgement in the
consolidated class actions before the court, 962 F. Supp. 450 (March 17, 1997,
as amended April 14, 1997). The Court's Final Order and Judgement approving the
class Settlement was appealed to the United States Court of Appeals for the
Third Circuit, which upheld the district court's approval of the Stipulation of
Settlement on July 23, 1998. As of now no further appeal has been taken.
Pursuant to the Settlement, Prudential agreed to provide and has begun to
implement an Alternative Dispute Resolution ("ADR") process for class members
who believe they were misled concerning the sale or performance of their life
insurance Contracts. Management now has information which allows for
computation of a reasonable estimate of losses associated with ADR claims.
Based on this information, management estimated the cost of remedying
policyholder claims in the ADR process before taxes to be approximately $2.05
billion. While management believes these to be reasonable estimates based on
information currently available, the ultimate amount of the total cost of
remedied policyholder claims is dependent on complex and varying factors,
including actual claims by eligible policyholders, the relief options chosen and
the dollar value of those options. There are also additional elements of the
ADR process
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which cannot be fully evaluated at this time (e.g., claims which may be
successfully appealed) which could increase this estimate.
In addition, a number of actions have been filed against Prudential by
policyholders who have excluded themselves from the Settlement; Prudential
anticipates that additional suits may be filed by other policyholders.
Also, on July 9, 1996, a Multi-State Life Insurance Task Force comprised of
insurance regulators from 29 states and the District of Columbia, released a
report on Prudential's activities. As of February 24, 1997, Prudential had
entered into consent orders or agreements with all 50 states and the District of
Columbia to implement a remediation plan, whose terms closely parallel the
Settlement approved in the MDL proceeding, and agreed to a series of payments
allocated to all 50 states and the District of Columbia amounting to a total of
approximately $65 million. These agreements are now being implemented through
Prudential's implementation of the class Settlement.
Litigation is subject to many uncertainties, and given the complexity and scope
of these suits, their outcome cannot be predicted. It is also not possible to
predict the likely results of any regulatory inquiries or their effect on
litigation which might be initiated in response to widespread media coverage of
these matters.
Accordingly, management is unable to make a meaningful estimate of the amount or
range of loss that could result from an unfavorable outcome of all pending
litigation and regulatory inquiries. It is possible that the results of
operations or the cash flow of Prudential, in particular quarterly or annual
periods, could be materially affected by an ultimate unfavorable outcome of
certain pending litigation and regulatory matters. Management believes,
however, that the ultimate outcome of all pending litigation and regulatory
matters referred to above should not have a material adverse effect on
Prudential's financial position, after consideration of applicable reserves.
YEAR 2000 COMPLIANCE
The services provided to the Contract owners by Prudential and Prusec depend on
the smooth functioning of their respective computer systems. The year 2000,
however, holds the potential for a significant disruption in the operation of
these systems. Many computer programs cannot distinguish the year 2000 from the
year 1900 because of the way in which dates are encoded. Left uncorrected, the
year "00" could cause systems to perform date comparisons and calculations
incorrectly that in turn could compromise the integrity of business records and
lead to serious interruption of business processes.
Prudential, Prusec's ultimate corporate parent, identified this issue as a
critical priority in 1995 and has established quality assurance procedures
including a certification process to monitor and evaluate enterprise-wide
conversion and upgrading of systems for "Year 2000" compliance. Prudential has
also initiated an analysis of potential exposure that could result from the
failure of major service providers such as suppliers, custodians and brokers, to
achieve Year 2000 compliance. Prudential expects to complete its adaptation,
testing and certification of software for Year 2000 compliance by December 31,
1998. During 1999, Prudential plans to conduct additional internal testing, to
participate in securities industry-wide test efforts and to complete major
service provider analysis and contingency planning.
The expenses of Prudential's Year 2000 compliance are allocated across its
various businesses, including those businesses not engaged in providing services
to Contract owners. Accordingly, while the expense is substantial in the
aggregate, it is not expected to have a material impact on Prudential's
abilities to meet its contractual commitments to Contract owners.
Prudential believes that it is well positioned to achieve the necessary
modifications and mitigate Year 2000 risks. However, if such efforts are not
completed on a timely basis, the Year 2000 issue could have a material adverse
impact on Prudential's operations, those of its subsidiary and affiliate
companies and/or the Account. Moreover, there can be no assurance that the
measures taken by Prudential's external service providers will be sufficient to
avoid any material adverse impact on Prudential's operations or those of its
subsidiary and affiliate companies.
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ADDITIONAL INFORMATION
Prudential has filed a registration statement with the SEC under the Securities
Act of 1933, relating to the offering described in this prospectus. This
prospectus does not include all the information set forth in the registration
statement. Certain portions have been omitted pursuant to the rules and
regulations of the SEC. The omitted information may, however, be obtained from
the SEC's principal office in Washington, D.C., upon payment of a prescribed
fee.
Further information may also be obtained from Prudential. The address and
telephone number are set forth on the inside front cover of this prospectus.
FINANCIAL STATEMENTS
The financial statements of the Account should be distinguished from the
consolidated financial statements of Prudential and subsidiaries, which should
be considered only as bearing upon the ability of Prudential to meet its
obligations under the Contracts.
The financial statements of Prudential that we show in this prospectus are those
as of the end of the most recent fiscal year. Prudential does not currently
prepare financial statements in accordance with generally accepted accounting
principals more often than annually and believes that any incremental benefit to
prospective Contract owners that may result from the inclusion of interim
financial statements, though unaudited, does not justify the additional cost
that would be incurred. In addition, Prudential represents that there have been
no adverse changes in the financial condition or operations of Prudential
between the end of the most current fiscal year and the date of this prospectus.
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DIRECTORS AND OFFICERS OF PRUDENTIAL
DIRECTORS OF PRUDENTIAL
FRANKLIN E. AGNEW -- Director since 1994 (current term expires April, 2000).
Member, Committee on Dividends; Member, Finance Committee; Member Corporate
Governance Committee. Business consultant since 1987. Senior Vice President,
H.J. Heinz from 1971 to 1986. Mr. Agnew is also a director of Bausch & Lomb,
Inc. John Wiley & Sons, Inc. and Erie Plastics Corporation. Age 63. Address: 600
Grant Street, Suite 660, Pittsburgh, PA 15219.
FREDERICK K. BECKER -- Director since 1994 (current term expires April, 1999).
Member, Auditing Committee, Member, Committee on Business Ethics; Member,
Corporate Governance Committee. President, Wilentz Goldman and Spitzer, P.A.
(law firm) since 1989, with firm since 1960. Age 62. Address: 90 Woodbridge
Center Drive, Woodbridge, NJ 07095.
GILBERT F. CASELLAS -- Director since 1998 (current term expires April, 2002).
Partner, McConnell Valdes, LLP since 1998. Chairman, U.S. Equal Employment
Opportunity Commission from 1994 to 1998. General Counsel, Department of Air
Force from 1993 to 1994. Mr. Casellas is also a director of the American
Arbitration Association and the Puerto Rican Legal Defense & Education Fund.
Age 46. Address: 1717 Pennsylvania Avenue, NW, Suite 625, Washington, DC 20006.
JAMES G. CULLEN -- Director since 1994 (current term expires April, 2001).
Member, Compensation Committee; Member, Committee on Business Ethics. President
& Chief Executive Officer, Telecom Group, Bell Atlantic Corporation, since 1997.
Vice Chairman, Bell Atlantic Corporation from 1995 to 1997. President, Bell
Atlantic Corporation from 1993 to 1995. Mr. Cullen is also a director of Bell
Atlantic Corporation and Johnson & Johnson. Age 55. Address: 1310 North Court
House Road, 11th Floor, Alexandria, VA 22201.
CAROLYNE K. DAVIS -- Director since 1989 (current term expires April, 2001).
Member, Finance Committee; Member Committee on Business Ethics; Member,
Compensation Committee. Independent Health Care Advisor. National and
International Health Care Advisor, Ernst & Young, LLP from 1985 to 1997. Dr.
Davis is also a director of Beckman Instruments, Inc., Merck & Co., Inc.,
Science Applications International Corporation, Minimed Incorporated, and
Beverley Enterprises. Age 65. Address: 751 Broad Street, 23rd Floor, Newark, NJ
07102.
ROGER A. ENRICO -- Director since 1994 (current term expires April, 2002).
Member, Committees on Nominations & Corporate Governance; Member, Compensation
Committee. Chairman and Chief Executive Officer, PepsiCo, Inc. since 1996.
Originally with PepsiCo, Inc. since 1971. Mr. Enrico is also a director of A.M.
Belo Corporation and Dayton Hudson Corporation. Age 53. Address: 700 Anderson
Hill Road, Purchase, NY 10577.
ALLAN D. GILMOUR -- Director since 1995 (current term expires April, 1999).
Member, Finance Committee; Member, Committee on Dividends. Retired since 1995.
Vice Chairman, Ford Motor Company, from 1993 to 1995. Mr. Gilmour originally
joined Ford in 1960. Mr. Gilmour is also a director of A.P. Automotive Systems,
Inc., Whirlpool Corporation, USWest, Inc., The Dow Chemical Company and DTE
Energy Company. Age 63. Address: 751 Broad Street, 23rd Floor, Newark, NJ 07102.
WILLIAM H. GRAY, III -- Director since 1991 (current term expires April, 2000).
Member, Executive Committee; Member, Finance Committee; Chairman, Committees on
Nominations & Corporate Governance. President and Chief Executive Officer, The
College Fund/UNCF since 1991. Mr. Gray served in Congress from 1979 to 1991. Mr.
Gray is also a director of Chase Manhattan Corporation, Municipal Bond Investors
Assurance Corporation, Rockwell International Corporation, Union Pacific
Corporation, Warner-Lambert Company, Westinghouse Electric Corporation, and
Electronic Data Systems. Age 56. Address: 8260 Willow Oaks Corp. Drive, Fairfax,
VA 22031-4511.
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JON F. HANSON -- Director since 1991 (current term expires April, 2003). Member,
Finance Committee; Member, Committee on Dividends. Chairman, Hampshire
Management Company since 1976. Mr. Hanson is also a director of United Water
Resources, Orange & Rockland Utilities, Inc., Consolidated Delivery and
Logistics, and Fleet Trust and Investments Services Company, N.A. Age 61.
Address: 235 Moore Street, Suite 200, Hackensack, NJ 07601.
GLEN H. HINER, JR. -- Director since 1997. (current term expires April, 2001).
Member, Compensation Committee. Chairman and Chief Executive Officer, Owens
Corning since 1991. Senior Vice President and Group Executive, Plastics Group,
General Electric Company from 1983 to 1991. Mr. Hiner is also a director of Dana
Corporation. Age 64. Address: One Owens Corning Parkway, Toledo, OH 43659.
CONSTANCE J. HORNER -- Director since 1994 (current term expires April, 2002).
Member, Auditing Committee; Member, Committees on Nominations & Corporate
Governance. Guest Scholar, The Brookings Institution since 1993. Ms. Horner is
also a director of Foster Wheeler Corporation, Ingersoll-Rand Company, and
Pfizer, Inc. Age 55. Address: 1775 Massachusetts Ave., N.W. Washington, D.C.
20036-2188.
GAYNOR N. KELLEY -- Director since 1997 (current term expires April, 2001).
Member, Auditing Committee. Retired since 1996. Former Chairman and Chief
Executive Officer, The Perkins Elmer Corporation from 1990 to 1996. Mr. Kelley
is also a director of Hercules Incorporated, and Alliant Techsystems. Age 66.
Address: 751 Broad Street, 23rd Floor, Newark, NJ 07102-3777.
BURTON G. MALKIEL -- Director since 1978 (current term expires April, 2002).
Chairman, Finance Committee; Member, Executive Committee; Member, Committee on
Dividends. Professor of Economics, Princeton University, since 1988. Dr. Malkiel
is also a director of Banco Bilbao Vizcaya, Baker Fentress & Company, The
Jeffrey Company, The Southern New England Telecommunications Company, and
Vanguard Group, Inc. Age 65. Address: Princeton University, 110 Fisher Hall,
Prospect Avenue, Princeton, NJ 08544-1021.
ARTHUR F. RYAN -- Chairman of the Board, President and Chief Executive Officer
of Prudential since 1994. President and Chief Operating Officer, Chase Manhattan
Corp. from 1990 to 1994, with Chase since 1972. Age 55. Address: 751 Broad
Street, Newark, NJ 07102.
IDA F.S. SCHMERTZ -- Director since 1997 (current term expires April, 2004).
Member, Finance Committee. Principal, Investment Strategies International since
1994. Age 63. Address: 751 Broad Street, 23rd Floor, Newark, NJ 07102.
CHARLES R. SITTER -- Director since 1995 (current term expires April, 1999).
Member, Finance Committee; Member, Committee on Dividends. Retired since 1996.
President, Exxon Corporation from 1993 to 1996. Mr. Sitter began his career with
Exxon in 1957. Age 67. Address: 5959 Las Colinas Boulevard, Irving, TX 75039-
2298.
DONALD L. STAHELI -- Director since 1995 (current term expires April, 1999).
Member, Compensation Committee; Member, Auditing Committee. Retired since 1997.
Chairman and Chief Executive Officer, Continental Grain Company from 1994 to
1997. President and Chief Executive Officer, Continental Grain Company from 1988
to 1994. Mr. Staheli is also director of Bankers Trust Company, Bankers Trust
New York Corporation, and Fresenius AG-Conti Financial Corporation. Age 66.
Address: 39 Locust Street, Suite 204, New Canaan, CT 06840.
RICHARD M. THOMSON -- Director since 1976 (current term expires April, 2000).
Chairman, Executive Committee; Chairman, Compensation Committee; Member,
Committee on Nominations & Corporate Governance. Chairman of the Board, The
Toronto-Dominion Bank since 1997. Chairman and Chief Executive Officer from 1978
to 1997. Mr. Thomson is also a director of CGC, Inc., INCO, Limited, S.C.
Johnson & Son, Inc., The Thomson Corporation, and Canadian Occidental Petroleum,
Ltd. Age 64. Address: P.O. Box 1, Toronto-Dominion Centre, Toronto, Ontario, M5K
1A2, Canada.
JAMES A. UNRUH -- Director since 1996 (current term expires April, 2000).
Member, Compensation Committee. Retired since 1997. Chairman and Chief Executive
Officer, Unisys Corporation, from 1990 to
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1997. Mr. Unruh is also a director of Ameritech Corporation. Age 55. Address:
Two Bala Plaza, Suite 300, Bala Cynwyd, PA 19004.
P. ROY VAGELOS, M.D. -- Director since 1989 (current term expires April, 2001).
Chairman, Auditing Committee; Member, Executive Committee; Member, Committees on
Nominations & Corporate Governance. Chairman, Regeneron Pharmaceuticals since
1995. Chairman and Chief Executive Officer, Merck & Co., Inc. from 1986 to 1994.
Dr. Vagelos is also a director of The Estee Lauder Companies, Inc., PepsiCo.,
Inc., and Regeneron Pharmaceuticals, Inc. Age 68. Address: One Crossroads Drive,
Building A, 3rd Floor, Bedminster, NJ 07921.
STANLEY C. VAN NESS -- Director since 1990 (current term expires April, 2002).
Chairman, Committee on Business Ethics; Member, Executive Committee; Member,
Auditing Committee. Counselor at Law, Picco Herbert Kennedy (law firm) from
1990. Mr. Van Ness is also a director of Jersey Central Power & Light Company.
Age 63. Address: 22 Chambers Street, Princeton, NJ 08542.
PAUL A. VOLCKER -- Director since 1988 (current term expires April, 2000).
Chairman, Committee on Dividends; Member, Executive Committee; Member, Committee
on Nominations & Corporate Governance. Consultant since 1996. Chairman, James D.
Wolfensohn, Inc. from 1988 to 1996. Chief Executive Officer, James D.
Wolfensohn, Inc. from 1995 to 1996. Mr. Volcker is also a public member of the
Board of Governors of the American Stock Exchange, a member of the Board of
Overseers of TIAA-CREF, and a director of Nestle, S.A., UAL Corporation, and
Bankers Trust New York Corporation. Age 70, Address: 610 Fifth Avenue, Suite
420, New York, NY 10020.
JOSEPH H. WILLIAMS -- Director since 1994 (current term expires April, 2002).
Member, Committee on Dividends; Member, Auditing Committee. Director, The
Williams Companies since 1971. Chairman & Chief Executive Officer, The Williams
Companies from 1979 to 1993. Mr. Williams is also a director of Flint
Industries, The Orvis Company, and MTC Investors, LLC. Age 64. Address: One
Williams Center, Tulsa, OK 74172.
PRINCIPAL OFFICERS OF PRUDENTIAL
ARTHUR F. RYAN -- Chairman, President and Chief Executive Officer since 1994;
prior to 1994, President and Chief Operating Officer, Chase Manhattan
Corporation, New York, NY. Age 55.
E. MICHAEL CAULFIELD -- Chief Executive Officer, Prudential Investments since
1996; Chief Executive Officer, Money Management Group from 1995 to 1996; prior
to 1995, President, Prudential Preferred Financial Services. Age 51.
MICHELE S. DARLING -- Executive Vice President Human Resources since 1997; prior
to 1997, Executive Vice President, Canadian Imperial Bank of Commerce, Toronto,
Canada. Age 44.
ROBERT C. GOLDEN -- Executive Vice President Corporate Operations and Systems
since 1997; prior to 1997, Executive Vice President, Prudential Securities, New
York, NY. Age 51.
MARK B. GRIER -- Executive Vice President, Financial Management since 1997;
Chief Financial Officer from 1995 to 1997; prior to 1995, Executive Vice
President, Chase Manhattan Corporation, New York, NY. Age 44.
RODGER A. LAWSON -- Executive Vice President, Marketing and Planning since 1996;
President and CEO, Van Eck Global, New York, NY, from 1994 to 1996; prior to
1994, President and CEO, Global Private Banking, Bankers Trust Company, New
York, NY. Age 50.
JOHN V. SCICUTELLA -- Chief Executive Officer, Individual Insurance Group since
1997; Executive Vice President Operations and Systems from 1995 to 1997; prior
to 1995, Executive Vice President, Chase Manhattan Corporation. Age 48.
JOHN R. STRANGFELD -- Chief Executive Officer, Private Asset Management Group
(PAMG) since 1998; President, PAMG, from 1996 to 1998; prior to 1996, Senior
Managing Director. Age 44.
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R. BROCK ARMSTRONG -- Senior Vice President, Individual Insurance Development
since 1997; prior to 1997, Executive Vice President, London Life Insurance
Company, London, Canada. Age 50.
JAMES J. AVERY, JR. -- Senior Vice President & Chief Actuary since 1997;
President Prudential Select from 1995 to 1997; prior to 1995, Chief Financial
Officer, Prudential Select. Age 46.
MARTIN A. BERKOWITZ -- Senior Vice President and Comptroller since 1995; prior
to 1995, Senior Vice President and CFO, Prudential Investment Corporation. Age
48.
WILLIAM M. BETHKE -- Chief Investment Officer since 1997; prior to 1997, Senior
Vice President. Age 50.
RICHARD J. CARBONE -- Senior Vice President and Chief Financial Officer since
1997. Controller, Salomon Brothers, New York, NY, from 1995 to 1997; prior to
1995, Controller, Bankers Trust, New York, NY. Age 50.
LEO J. CORBETT -- Senior Vice President, Individual Insurance Marketing since
1997; prior to 1997, Managing Director, Lehman Brothers, New York, NY. Age 49.
THOMAS W. CRAWFORD -- President and Chief Executive Officer, Prudential Property
and Casualty Company since 1996; prior to 1996, President and Chief Executive
Officer, Southern Heritage Insurance Company, Tucker, GA. Age 55.
MARK R. FETTING -- President, Prudential Retirement Services since 1996; prior
to 1996, President, Prudential Defined Contribution Services. Age 43.
WILLIAM D. FRIEL -- Senior Vice President and Chief Information Officer since
1993. Age 59.
JONATHAN M. GREENE -- President, Investment Management, Prudential Investments
since 1996; prior to 1996, Vice President, T. Rowe Price, Baltimore, MD. Age 54.
JEAN D. HAMILTON -- President, Diversified Group since 1995; prior to 1995,
President, Prudential Capital Group. Age 51.
RONALD P. JOELSON -- Senior Vice President, Guaranteed Products since 1997;
President, Prudential Investments Guaranteed Products from 1996 to 1998; prior
to 1996, Managing Director, Enterprise Planning Unit. Age 40.
IRA J. KLEINMAN -- Executive Vice President, International Insurance Group,
since 1997; prior to 1997, Senior Vice President. Age 51.
NEIL A. MCGUINNESS -- Senior Vice President, Marketing, Prudential Investments,
since 1996; prior to 1996, Managing Director, Putnam Investments, Boston, MA.
Age 51.
PRISCILLA A. MYERS -- Senior Vice President, Audit, Compliance and Investigation
since 1995. Vice President and Auditor from 1989 to 1995. Age 48.
RICHARD O. PAINTER -- President, Prudential Insurance & Financial Services since
1995; prior to 1995, Senior Vice President, New York Life, New York, NY. Age 50.
I. EDWARD PRICE -- Senior Vice President and Actuary since 1995; prior to 1995,
Chief Executive Officer, Prudential International Insurance. Age 55.
KIYOFUMI SAKAGUCHI -- President, International Insurance Group since 1995; prior
to 1995, Chairman and CEO, The Prudential Life Insurance Co., Ltd., Japan. Age
55.
BRIAN M. STORMS -- President, Mutual Funds and Annuities, Prudential Investments
since 1996; prior to 1996, Managing Director, Fidelity Investments, Boston. Age
43.
37
<PAGE>
ROBERT J. SULLIVAN -- Senior Vice President, Sales, Prudential Investments since
1997; prior to 1997, Managing Director, Fidelity Investments, Boston. Age 59.
SUSAN J. BLOUNT -- Vice President and Secretary since 1995; prior to 1995,
Assistant General Counsel. Age 40.
C. EDWARD CHAPLIN -- Vice President and Treasurer since 1995; prior to 1995,
Managing Director and Assistant Treasurer. Age 41.
Prudential officers are elected annually.
38
<PAGE>
VARIABLE UNIVERSAL LIFE
INSURANCE
[LOGO] PRUDENTIAL
The Prudential Insurance Company of America
751 Broad Street, Newark, NJ 07102-3777
Telephone 800 437-4016
PVUL-1 Ed. 11/98 CAT# ____________
39
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
REPRESENTATION WITH RESPECT TO CHARGES
The Prudential Insurance Company of America represents that the fees and charges
deducted under the Variable Universal Life Insurance Contracts registered by
this registration statement, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by Prudential.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
The Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
New Jersey, being the state of organization of Prudential Insurance Company of
America ("Prudential"), permits entities organized under its jurisdiction to
indemnify directors and officers with certain limitations. The relevant
provisions of New Jersey law permitting indemnification can be found in Section
14A:3-5 of the New Jersey Statutes Annotated. The text of Prudential's By-law
27, which relates to indemnification of officers and directors, is incorporated
by reference to Exhibit (6)(b) of this registration statement.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
- -------------------------------------------------------------------------
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 49 pages.
The undertaking to file reports.
The representation with respect to charges.
The undertaking with respect to indemnification.
The signatures.
Written consents of the following persons:
None.
The following exhibits:
- -----------------------
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2:
A. (1) (a) Resolution of Board of Directors of The Prudential Insurance
Company of America establishing The Prudential Variable
Appreciable Account. (Note 2)
(b) Authorization for Separate Account to Invest in Unaffiliated
Mutual Funds (Note 1)
(2) Not Applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between Pruco Securities Corporation
and The Prudential Insurance Company of America. (Note 1)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the Sale
of the Contracts. (Note 1)
(c) Schedules of Sales Commissions. (Note 5)
(d) Participation Agreements
(i) AIM Variable Insurance Funds, Inc., AIM V.I. Value Fund.
(Note 5)
(ii) American Century Variable Portfolios, Inc., VP Value
Portfolio. (Note 5)
(iii) Janus Aspen Series, Growth Portfolio. (Note 5)
(iv) MFS Variable Insurance Trust, Emerging Growth Series.
(Note 5)
(v) T. Rowe Price International Series, Inc., International
Stock Portfolio. (Note 5)
(4) Not Applicable.
(5) Variable Universal Life Insurance Contract: (Note 1)
(6) (a) Charter of The Prudential Insurance Company of America, as
amended November 14, 1995. (Note 3)
(b) By-laws of The Prudential Insurance Company of America, as
amended May 12, 1998. (Note 1)
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) (a) Application Form. (Note 1)
(b) Supplement to the Application. (Note 1)
(11) Not Applicable.
(12) Memorandum describing Prudential's issuance, transfer, and
redemption procedures for the Contracts pursuant to Rule 6e-
3(T)(b)(12)(iii) and method of computing adjustments in payments
and cash surrender values upon conversion to fixed-benefit
policies pursuant to Rule 6e-3(T)(b)(13)(v)(B). (Note 1)
II-2
<PAGE>
(13) Available Contract Riders and Endorsements:
(a) Rider for Payment of Premium Benefit Upon Insured's Total
Disability. (Note 1)
(b) 10 Year Level PremiumTerm Rider on Insured. (Note 5)
(c) 10 Year Level PremiumTerm Rider on Spouse. (Note 5)
(d) Children's Rider
(i) The dependent child is named in the application for the
contract and on the date of the application has not
reached his or her 18th birthday. (Note 5)
(ii) The dependent child just before the contract date of
the contract was insured under the earlier contract
that was converted or changed to this contract.
(Note 5)
(iii) The dependent child is named in the application for
change. (Note 5)
(iv) After-issue. (Note 5)
(e) Living Needs Benefit Rider
(i) for use in all approved jurisdictions except Florida.
(Note 2)
2. See Exhibit 1.A.(5).
3. Opinion and Consent of Clifford E. Kirsch, Esq. as to the legality of the
securities being registered. (Note 5)
4. None.
5. Not Applicable.
6. Opinion and Consent of Ching-Meei Chang, MAAA, FSA, as to actuarial matters
pertaining to the securities being registered. (Note 5)
7. Powers of Attorney.
(a) F. Agnew, F. Becker, M. Berkowitz, R.Carbone,
J.Cullen, C. Davis, R. Enrico, A. Gilmour,
W. Gray, III, J. Hanson, G. Hiner, C. Horner,
G. Kelley, B. Malkiel, A. Ryan, I. Schmertz,
C. Sitter, D. Staheli, R. Thomson, J. Unruh,
P. Vagelos, S. Van Ness, P. Volcker, J. Williams (Note 4)
(b) G. Casellas (Note 1)
27. Financial Data Schedule. (Note 5)
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Post-Effective Amendment No. 15 to Form
S-6, Registration No. 33- 20000, filed May 1, 1995 on behalf of The
Prudential Variable Appreciable Account.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 9 to Form S-
1, Registration No. 33-20083, filed April 9, 1997 on behalf of The
Prudential Variable Contract Real Property Account.
(Note 4) Incorporated by reference to Post-Effective Amendment No. 10 to
Form S-1, Registration No. 33-20083, filed April 9, 1998 on behalf of
The Prudential Variable Contract Real Property Account.
(Note 5) To be filed by Pre-Effective Amendment.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, the
Prudential Variable Appreciable Account, has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal hereunto affixed and attested, all in the city of
Newark and the State of New Jersey, on this 11th day of September, 1998.
(Seal) THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT
(Registrant)
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(Depositor)
Attest: /s/ Thomas C. Castano By: /s/ Esther H. Milnes
------------------------- -------------------------
Thomas C. Castano Esther H. Milnes
Assistant Secretary Vice President and Actuary
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated on this 11th day of September, 1998.
<TABLE>
<CAPTION>
<S> <C>
SIGNATURE AND TITLE
- ------------------------------------------------------------
/s/ *
- ------------------------------------------------------------
Arthur F. Ryan
Chairman of the Board, President, and Chief Executive
Officer
/s/ *
- ------------------------------------------------------------
Martin A. Berkowitz
Senior Vice President and Comptroller
/s/ *
- ------------------------------------------------------------
Richard J. Carbone *By: /s/ Thomas C. Castano
Chief Financial Officer -------------------------
Thomas C. Castano
(Attorney-in-Fact)
/s/ *
- ------------------------------------------------------------
Franklin E. Agnew
Director
/s/ *
- ------------------------------------------------------------
Frederic K. Becker
Director
- ------------------------------------------------------------
/s/
- ------------------------------------------------------------
Gilbert F. Casellas
Director
/s/ *
- ------------------------------------------------------------
James G. Cullen
Director
/s/ *
- ------------------------------------------------------------
Carolyne K. Davis
Director
/s/ *
- ------------------------------------------------------------
Roger A. Enrico
Director
/s/*
- ------------------------------------------------------------
Allan D. Gilmour
Director
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
/s/ *
- ------------------------------------------------------------
William H. Gray, III
Director
/s/ *
- ------------------------------------------------------------
Jon F. Hanson
Director
/s/ *
- ------------------------------------------------------------
Glen H. Hiner, Jr.
Director
/s/ *
- ------------------------------------------------------------
Constance J. Horner
Director
/s/ *
- ------------------------------------------------------------
Gaynor N. Kelley
Director
/s/ *
*By: /s/ Thomas C. Castano
- ------------------------------------------------------------ ----------------------
Burton G. Malkiel Thomas C. Castano
Director (Attorney-in-Fact)
/s/*
- ------------------------------------------------------------
Ida F. S. Schmertz
Director
/s/*
- ------------------------------------------------------------
Charles R. Sitter
Director
/s/*
- ------------------------------------------------------------
Donald L. Staheli
Director
/s/ *
- ------------------------------------------------------------
Richard M. Thomson
Director
/s/ *
- ------------------------------------------------------------
James A. Unruh
Director
/s/ *
- ------------------------------------------------------------
P. Roy Vagelos, M.D.
Director
/s/ *
- ------------------------------------------------------------
Stanley C. Van Ness
Director
/s/ *
- ------------------------------------------------------------
Paul A. Volcker
Director
/s/ *
- ------------------------------------------------------------
Joseph H. Williams
Director
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C>
1.A.(1)(b) Authorization for Separate Account to Invest in
Unaffiliated Mutual Funds Page II-7
1.A.(3)(a) Distribution Agreement between Pruco Securities
Corporation and The Prudential Insurance Company of America. Page II-10
1.A.(3)(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the Sale of Page II-15
the Contracts.
1.A.(5) Variable Universal Life Insurance Contract. Page II-22
1.A.(6)(b) By-laws of The Prudential Insurance Company of America,
as amended May 12, 1998. Page II-54
1.A.(10)(a) Application Form. Page II-63
1.A.(10)(b) Supplement to the Application. Page II-70
1.A.(12) Memorandum describing Prudential's issuance, transfer, Page II-71
and Redemption procedures for the Contracts pursuant
to Rule 6e-3(T)(b)(12)(iii) and method of computing adjustments
in payments and cash surrender values upon conversion to
fixed-benefit policies pursuant to Rule 6e- 3(T)(b)(13)(v)(B).
1.A.(13)(a) Rider for Payment of Premium Benefit Upon Insured's Total Page II-81
Disability.
7(b) Power of Attorney for G. Casellas. Page II-84
</TABLE>
II-6
<PAGE>
Exhibit 1.A.(1)(b)
On November 11, 1997 the Finance Committee of the Board of Directors of The
Prudential Insurance Company of America granted the following authority with
respect to The Prudential Variable Appreciable Account:
1. For the Variable Appreciable Account to invest, in addition to shares
of portfolios of The Prudential Series Fund, Inc., in the five mutual
funds from the fund companies listed on Exhibit A hereto.
2. For the proper officers of Prudential to do or cause to be done in the
name and on behalf of Prudential any and all acts and things,
including, but not limited to, requests to regulatory authorities for
approvals, exemptions and other actions and the execution and delivery
of documents, papers and instruments, all as any such officer or
officers may deem necessary, desirable or appropriate to execute the
purposes and intents of the forgoing actions.
II-7
<PAGE>
EXHIBIT A
---------
LIST OF FUNDS
Mutual Fund Company Name of Fund Investment Objective
(Strategy)
- -------------------------------------------------------------------------------
AIM Distributors, Inc. Aim V.I. Value Fund A diversified portfolio which
seeks to achieve long-term
growth of capital by investing
primarily in equity securities
judged by AIM to be undervalued
relative to the current or
projected earnings of the
companies issuing the
securities, or relative to
current market values of assets
owned by the companies issuing
the securities, or relative to
the equity markets generally.
Income is a secondary objective.
- -------------------------------------------------------------------------------
Twentieth Century Group VP Value Seeks long-term capital
appreciation, income is
secondary. (The fund usually
invests at least 80% of assets
in equity securities issued by
well-established medium and
large-size companies).
- -------------------------------------------------------------------------------
MFS MFS Emerging Seeks long-term growth of
Growth capital. Dividend and interest
Series income from portfolio
securities, if any, is
incidental to the investment
objective of long-term growth of
capital. (The portfolios will
invest primarily in common
stocks of emerging growth
companies).
- -------------------------------------------------------------------------------
II-8
<PAGE>
Mutual Fund Company Name of Fund Investment Objective
(Strategy)
- --------------------------------------------------------------------------------
T. Rowe Price T. Rowe Price Seeks long-term growth,
International principally by means of
Stock Portfolio investments in the common
stocks of established non-
U.S. companies. (The
Portfolio is diversified
with a focus upon those
areas and financial
instruments which appear
to offer good
opportunities for capital
appreciation.)
- --------------------------------------------------------------------------------
Janus Capital Janus Aspen Series Seeks long-term growth of
Corporation Growth Portfolio capital in a manner
consistent with
preservation of capital by
investing primarily in the
common stocks of companies
of any size. Generally,
the Portfolio emphasizes
larger, more established
issuers.
- --------------------------------------------------------------------------------
II-9
<PAGE>
Exhibit 1.A.(3)(a)
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made this _____ day of ____________, 1997, by and between The
Prudential Insurance Company of America, a New Jersey corporation ("Company"),
on its own behalf and on behalf of the Prudential Variable Appreciable Account
("Account"), and Pruco Securities Corporation, a New Jersey corporation
("Distributor").
WITNESSETH:
-----------
WHEREAS, the Company has established and maintains the Account, a separate
investment account, pursuant to the laws of New Jersey for the purpose of
selling variable universal life insurance contracts ("Contracts"), to commence
after the effectiveness of the Registration Statement relating thereto filed
with the Securities and Exchange Commission on Form S-6 pursuant to the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Account will be registered as a unit investment trust under
the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, Distributor is registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "Securities Exchange Act") and is a member of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the Company and the Distributor wish to enter into an agreement to
have the Distributor act as the Company's principal underwriter for the sale of
the Contracts through the Account;
NOW, THEREFORE, the parties agree as follows:
1. Appointment of the Distributor
------------------------------
The Company agrees that during the term of this Agreement it will take
all action which is required to cause the Contracts to comply as an insurance
product and a registered security with all applicable federal and state laws and
regulations. The Company appoints the Distributor and the Distributor agrees to
act as the principal underwriter for the sale of Contracts to the public, during
the term of this Agreement, in each state and other jurisdictions in which such
Contracts may lawfully be sold. Distributor shall offer the Contracts for sale
and distribution at premium rates set by the Company. Applications for the
Contracts shall be solicited only by representatives duly and appropriately
licensed or otherwise qualified for the sale of such Contracts in each state or
other jurisdiction. Company shall undertake to appoint Distributor's qualified
representatives as life insurance agents of Company. Completed applications for
Contracts shall be transmitted directly to the Company for acceptance or
rejection in accordance with underwriting rules established by the Company.
Initial premium payments under the Contracts shall be made by check payable to
the Company and shall be held at all times by Distributor or its representatives
in a fiduciary capacity and
II-10
<PAGE>
remitted promptly to the Company. Anything in this Agreement to the contrary
notwithstanding, the Company retains the ultimate right to control the sale of
the Contracts and to appoint and discharge life insurance agents of the Company.
The Distributor shall be held to the exercise of reasonable care in carrying out
the provisions of the Agreement.
2. Sales Agreements
----------------
Distributor is hereby authorized to enter into separate written
agreements, on such terms and conditions as Distributor may determine not
inconsistent with this Agreement, with one or more organizations which agree to
participate in the distribution of Contracts. Such organizations (hereafter
"Broker") shall be both registered as a broker/dealer under the Securities
Exchange Act and a member of NASD. Broker and its agents or representatives
soliciting applications for Contracts shall be duly and appropriately licensed,
registered or otherwise qualified for the sale of such Contracts (and the riders
and other policies offered in connection therewith) under the insurance laws and
any applicable blue-sky laws of each state or other jurisdiction in which the
Company is licensed to sell the Contracts.
Distributor shall have the responsibility for ensuring that Broker
supervises its representatives. Broker shall assume any legal responsibilities
of Company for the acts, commissions or defalcations of such representatives
insofar as they relate to the sale of the Contracts. Applications for Contracts
solicited by such Broker through its agents or representatives shall be
transmitted directly to the Company, and if received by Distributor, shall be
forwarded to Company. All premium payments under the Contracts shall be made by
check to Company and, if received by Distributor, shall be held at all times in
a fiduciary capacity and remitted promptly to Company.
3. Life Insurance Licensing
------------------------
Company shall be responsible for insuring that Brokers are duly
qualified, under the insurance laws of the applicable jurisdictions, to sell the
Contracts.
4. Suitability
-----------
Company wishes to ensure that Contracts sold by Distributor will be
issued to purchasers for whom the Contract will be suitable. Distributor shall
take reasonable steps to ensure that the various representatives appointed by it
shall not make recommendations to an applicant to purchase a Contract in the
absence of reasonable grounds to believe that the purchase of the Contract is
suitable for such applicant. While not limited to the following, a
determination of suitability shall be based on information furnished to a
representative after reasonable inquiry of such applicant concerning the
applicant's insurance and investment objectives, financial situation and needs,
and the likelihood that the applicant will continue to make the premium payments
contemplated by the Contracts.
II-11
<PAGE>
5. Promotion Materials
-------------------
Company shall have the responsibility for furnishing to Distributor
and its representatives sales promotion materials and individual sales proposals
related to the sale of the Contracts. Distributor shall not use any such
materials that have not been approved by Company.
6. Compensation
------------
Company shall arrange for the payment of commissions directly to those
registered representatives of Distributor who are entitled thereto in connection
with the sale of the Contracts on behalf of Distributor, in the amounts and on
such terms and conditions as Company and Distributor shall determine; provided
that such terms, conditions and commissions shall be as are set forth in or as
are not inconsistent with the Prospectus included as part of the Registration
Statement for the Contracts and effective under the 1933 Act.
Company shall arrange for the payment of commissions directly to those
Brokers who sell Contracts under agreements entered into pursuant to paragraph
2. hereof, in amounts as may be agreed to by the Company and specified in such
written agreements.
Company shall reimburse Distributor for the costs and expenses
incurred by Distributor in furnishing or obtaining the services, materials and
supplies required by the terms of the Agreement in the initial sales efforts and
the continuing obligations hereunder.
7. Records
-------
Distributor shall have the responsibility for maintaining the records
of representatives licensed, registered and otherwise qualified to sell the
Contracts. Distributor shall maintain such other records as are required of it
by applicable laws and regulations. The books, accounts and records of Company,
the Account and Distributor shall be maintained so as to clearly and accurately
disclose the nature and details of the transactions. All records maintained by
the Distributor in connection with this Agreement shall be the property of the
Company and shall be returned to the Company upon termination of this Agreement,
free from any claims or retention of rights by the Distributor. The Distributor
shall keep confidential any information obtained pursuant to this Agreement and
shall disclose such information, only if the Company has authorized such
disclosure, or if such disclosure is expressly required by applicable federal or
state regulatory authorities.
II-12
<PAGE>
8. Investigation and Proceeding
----------------------------
(a) Distributor and Company agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Contracts distributed under this Agreement. Distributor and
Company further agree to cooperate fully in any securities regulatory
investigation or proceeding or judicial proceeding with respect to Company,
Distributor, their affiliates and their agents or representatives to the extent
that such investigation or proceeding is in connection with Contracts
distributed under this Agreement. The Distributor shall furnish applicable
federal and state regulatory authorities with any information or reports in
connection with its services under this Agreement which such authorities may
request in order to ascertain whether the Company's operations are being
conducted in a manner consistent with any applicable law or regulations.
(b) In the case of a substantive customer complaint, Distributor and
Company will cooperate in investigating such complaint and any response to such
complaint will be sent to the other party to this Agreement for approval not
less than five business days prior to its being sent to the customer or
regulatory authority, except that if more prompt response is required, the
proposed response shall be communicated by telephone or telegraph.
9. Termination
-----------
This Agreement shall terminate automatically upon its assignment
without the prior written consent of both parties. This Agreement may be
terminated at any time by either party on 60 days' written notice to the other
party, without the payment of any penalty. Upon termination of this Agreement
all authorizations, rights and obligations shall cease except the obligation to
settle accounts hereunder, including commissions on premiums subsequently
received for Contracts in effect at times of termination, and the agreements
contained in paragraph 8. hereof.
10. Regulation
----------
This Agreement shall be subject to the provisions of the 1940 Act and
the Securities Exchange Act of the rules, regulations, and rulings thereunder
and of the applicable rules and regulations of the NASD, from time to time in
effect, and the terms hereof shall be interpreted and construed in accordance
therewith.
11. Severability
------------
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
II-13
<PAGE>
12. Applicable Law
--------------
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By _____________________
PRUCO SECURITIES CORPORATION
By _____________________
II-14
<PAGE>
Exhibit 1.A.(3)(b)
SELECTED BROKER AGREEMENT
AGREEMENT dated _____________________, by and between Pruco Securities
Corporation (Distributor), a New Jersey corporation and
_________________________ (Broker), a _______________ corporation.
WITNESSETH:
In consideration of the mutual promises contained herein, the parties
hereto agree as follows:
A. Definitions
(1) Contracts - Variable life insurance contracts and/or variable annuity
contracts described in Schedule A attached hereto which may be issued
and issued by any one of Pruco Life Insurance Company, Pruco Life
Insurance Company of New Jersey or The Prudential Insurance Company of
America (hereinafter collectively called the "Company") and for which
Distributor has been appointed the principal underwriter pursuant to
Distribution Agreements, copies of which have been furnished to
Broker.
(2) Accounts - Separate accounts established and maintained by Company
pursuant to the laws of Arizona or New Jersey, as applicable, to fund
the benefits under the Contracts.
(3) The Prudential Series Fund, Inc., or the Fund - An open-end management
investment company registered under the 1940 Act, shares of which are
sold to the Accounts in connection with the sale of the Contracts.
(4) Registration Statement - The registration statements and amendments
thereto relating to the Contracts, the Accounts, and the Fund,
including financial statements and all exhibits.
(5) Prospectus - The prospectuses included within the registration
Statements referred to herein.
(6) 1933 Act - The Securities Act of 1933, as amended.
(7) 1934 Act - The Securities Exchange Act of 1934, as amended.
(8) SEC - The Securities and Exchange Commission.
B. Agreements of Distributor
(1) Pursuant to the authority delegated to it by Company, Distributor
hereby authorizes Broker during the term of this Agreement to solicit
applications for Contracts from eligible persons provided that there
is an effective Registration Statement relating to such Contracts and
provided further that Broker has been notified by Distributor that the
Contracts are qualified for sale under all applicable securities and
insurance laws of the state or jurisdiction in which the application
will be solicited. In connection with the solicitation of applications
for Contracts, Broker is hereby authorized to offer riders that are
available with the Contracts in accordance with instructions furnished
by Distributor or Company.
II-15
<PAGE>
(2) Distributor, during the term of this Agreement, will notify Broker of
the issuance by the SEC of any stop order with respect to the
Registration Statement or any amendments thereto or the initiation of
any proceedings for that purpose or for any other purpose relating to
the registration and/or offering of the Contracts and of any other
action or circumstance that may prevent the lawful sale of the
contract in any state or jurisdiction.
(3) During the term of this Agreement, Distributor shall advise Broker of
any amendment to the Registration Statement or any amendment or
supplement to any Prospectus.
C. Agreements of Broker
(1) It is understood and agreed that Broker is a registered broker/dealer
under the 1934 Act and a member of the National Association of
Securities Dealers, Inc. and that the agents or representatives of
Broker who will be soliciting applications for the Contracts also will
be duly registered representatives of Broker.
(2) Commencing at such time as Distributor and Broker shall agree upon,
Broker agrees to use its best efforts to find purchasers for the
contract acceptable to Company. In meeting its obligation to use its
best efforts to solicit applications for Contracts, Broker shall,
during the term of this Agreement, engage in the following activities:
(a) Continuously utilize training, sales and promotional materials
which have been approved by Company;
(b) Establish and implement reasonable procedures for periodic
inspection and supervision of sales practices of its agents or
representatives and submit periodic reports to Distributor as may
be requested on the results of such inspections and the
compliance with such procedures.
(c) Broker shall take reasonable steps to ensure that the various
representatives appointed by it shall not make recommendations to
an applicant to purchase a Contract in the absence of reasonable
grounds to believe that the purchase of the Contract is suitable
for such applicant. While not limited to the following, a
determination of suitability shall be based on information
furnished to a representative after reasonable inquiry of such
applicant concerning the applicant's insurance and investment
objectives, financial situation and needs, and the likelihood
that the applicant will continue to make the premium payments
contemplated by the Contract.
(3) All payments for Contracts collected by agents or representatives of
Broker shall be held at all times in a fiduciary capacity and shall be
remitted promptly in full together with such applications, forms and
other required documentation to an office of the company designated by
Distributor. Checks or money orders in payment of initial premiums
shall be drawn to the order of the applicable one of "Pruco Life
Insurance Company", (for contracts issued by Pruco Life Insurance
Company and/or Pruco Life Insurance Company of New Jersey) or "The
Prudential Insurance Company of America". Broker acknowledges that the
Company retains the ultimate right to control the sale of the
Contracts and that the Distributor or Company shall have the
unconditional right to reject, in whole or part, any application for
the contract. In the event Company or Distributor rejects an
application, Company immediately will return all payments directly to
the purchaser and Broker will be notified of such action. In the event
that any purchaser of a Contract elects to return such Contract
pursuant to Rule 6e-2(b)(13)(viii) of the 1940 Act, the purchaser will
receive a refund of any premium payments, plus or minus any change due
to investment performance in the value of the invested portion of such
premiums; however,
II-16
<PAGE>
if applicable state law so requires, the purchaser who exercises his
short-term cancellation right will receive a refund of all payments
made, unadjusted for investment experience prior to the cancellation.
The Broker will be notified of any such action.
(4) Broker shall act as an independent contractor, and nothing herein
contained shall constitute Broker, its agents or representatives, or
any employees thereof as employees of Company or Distributor in
connection with the solicitation of applications for Contracts.
Broker, its agents or representatives, and its employees shall not
hold themselves out to be employees of Company or Distributor in this
connection or in any dealings with the public.
(5) Broker agrees that any material it develops, approves or uses for
sales, training, explanatory or other purposes in connection with the
solicitation of applications for Contracts hereunder (other than
generic advertising materials which do not make specific reference to
the Contracts) will not be used without the prior written consent of
Distributor and, where appropriate, the endorsement of Company to be
obtained by Distributor.
(6) Solicitation and other activities by Broker shall be undertaken only
in accordance with applicable laws and regulations. No agent or
representative of Broker shall solicit applications for the Contracts
until duly licensed and appointed by Company as a life insurance and
variable contract broker or agent of Company in the appropriate states
or other jurisdictions. Broker shall ensure that such agents or
representatives fulfill any training requirements necessary to be
licensed. Broker understands and acknowledges that neither it nor its
agents or representatives is authorized by Distributor or Company to
give any information or make any representation in connection with
this Agreement or the offering of the Contracts other than those
contained in the Prospectus or other solicitation material authorized
in writing by Distributor or Company.
(7) Broker shall not have authority on behalf of Distributor or Company
to: make, alter or discharge any Contract or other form; waive any
forfeiture, extend the time of paying any premium; receive any monies
or premiums due, or to become due, to Company, except as set forth in
Section C(3) of this Agreement. Broker shall not expend, nor contract
for the expenditure of the funds of Distributor, nor shall Broker
possess or exercise any authority on behalf of Broker by this
Agreement.
(8) Broker shall have the responsibility for maintaining the records of
its representatives licensed, registered and otherwise qualified to
sell the Contracts. Broker shall maintain such other records as are
required of it by applicable laws and regulations. The books, accounts
and records of Company, the Account, Distributor and Broker relating
to the sale of the Contracts shall be maintained so as to clearly and
accurately disclose the nature and details of the transactions. All
records maintained by the Broker in connection with this Agreement
shall be the property of the Company and shall be returned to the
Company upon termination of rights by the Broker. Nothing in this
Section C(8) shall be interpreted to prevent the Broker from retaining
copies of any such records which the Broker, in its discretion, deems
necessary or desirable to keep. The Broker shall keep confidential any
information obtained pursuant to this Agreement and shall disclose
such information, only if the Company has authorized such disclosure,
or if such disclosure is expressly required by applicable federal or
state regulatory authorities.
D. Compensation
(1) Pursuant to the Distribution Agreement between Distributor and
Company, Distributor shall cause Company to arrange for the payment of
commissions to Broker as compensation for
II-17
<PAGE>
the sale of each contract sold by an agent or representative of
Broker. The amount of such compensation shall be based on a schedule
to be determined by agreement of Company, Distributor and Broker.
Company shall identify to Broker with each such payment the name of
the agent or representative of Broker who solicited each Contract
covered by the payment.
(2) Neither Broker nor any of its agents or representatives shall have any
right to withhold or deduct any part of any premium it shall receive
for purposes of payment of commission or otherwise. Neither Broker nor
any of its agents or representatives shall have an interest in any
compensation paid by Company to Distributor, now or hereafter, in
connection with the sale of any Contracts hereunder.
E. Use of Insurance Agency Affiliate of Broker
It is understood and agreed that the registered representatives of
Broker engaged in the offer and sale of the Contracts
may be employed by
(________________), an affiliate of Broker which is licensed as an
insurance agency (hereinafter referred to as "Insurance Agency Affiliate"),
and whose shareholders, officers, and employees are "associated persons" of
Broker within the meaning of Section 3(a)(18) of the 1934 Act. It is
further understood and agreed that records relating to sales of Contracts
by such employees may be maintained by Insurance Company Affiliate. It is
further understood and agreed that commissions payable under this agreement
shall, if broker so directs, be paid to Insurance Agency Affiliate. Broker
agrees that, if the Contracts are sold through Insurance Agency affiliate:
(1) Broker will retain full responsibility for compliance with the
requirements of the 1933 Act and the 1934 Act, and will continue to
perform all obligations set forth in Section C above.
(2) Any books and records maintained by Insurance Agency Affiliate will be
deemed, for purposes of the 1934 Act, to be books and records of
Broker and will conform to the requirements of Section 17(a) of the
1934 Act and the rules thereunder. The manner in which the books and
records of Broker and Insurance Agency Affiliate are made and
maintained will permit supervisory personnel of Broker as well as
authorized examiners of the SEC or of another appropriate governmental
agency or self-regulatory organization to review data concerning
transactions in the Contracts effected through Insurance Agency
Affiliate to the same extent as if such transactions had been effected
through Broker itself. This may be accomplished either through
maintaining one set of books and records for Broker and Insurance
Agency Affiliate or by maintaining separate sets of books and records
with adequate integration, through cross-referencing or otherwise,
between records maintained by Broker and those maintained by Insurance
Agency Affiliate.
(3) Any receipt by Insurance Agency Affiliate of commissions for the sale
of the Contracts, and any payment by Insurance Agency Affiliate of
commissions for the sale of the Contracts to its sales personnel, will
be reflected in the FOCUS reports filed by Broker pursuant to Section
17(a) of the 1934 Act and the rules thereunder and in its fee
assessment reports filed with the National Association of Securities
Dealers, Inc.
(4) All premiums derived from the sale of the Contract through Insurance
Agency Affiliate will be sent directly to the Company by Insurance
Agency Affiliate customers or will be sent by them to Broker for
forwarding to the Company. Insurance Agency Affiliate will not receive
or accumulate customer funds nor will it receive or maintain custody
of customer securities.
II-18
<PAGE>
F. Complaints and Investigations
(1) Broker and Distributor jointly agree to cooperate fully in any
insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the Contracts marketed under
this Agreement. Broker and Distributor further agree to cooperate
fully in any securities regulatory investigation or proceeding or
judicial proceeding with respect to Broker, Distributor, their
affiliates and their agents or representatives to the extent that such
investigation or proceeding is in connection with Contract marketed
under this Agreement. Broker shall furnish applicable federal and
state regulatory authorities with any information or reports in
connection with its services under this Agreement which such
authorities may request in order to ascertain whether the Company's
operations are being conducted in a manner consistent with any
applicable law or regulation.
G. Term of Agreement
(1) This Agreement shall continue in force for one year from its effective
date and thereafter shall automatically be renewed every year for a
further one year period; provided that either party may unilaterally
terminate this Agreement upon thirty (30) days' written notice to the
other party of its intention to do so.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except (a) the agreements contained in Section
F hereof; (b) the indemnity set forth in Section H hereof; and (c) the
obligation to settle accounts hereunder, including commission payments
on premiums subsequently received for Contracts in effect at the time
of termination or issued pursuant to applications received by Broker
prior to termination.
H. Indemnity
(1) Broker shall be held to the exercise of reasonable care in carrying
out the provision of this Agreement.
(2) Distributor agrees to indemnify and hold harmless Broker and each
officer or director of Broker against any losses, claims, damages or
liabilities, joint or several, to which Broker or such officer or
director become subject, under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of material fact, required to be stated
therein or necessary to make the statements therein not misleading,
contained in any Registration Statement or any post-effective
amendment thereof or in the Prospectus or any amendment or supplement
to the Prospectus, or any sales literature provided by the Company or
by the Distributor.
(3) Broker agrees to indemnify and hold harmless Company and Distributor
and each of their current and former directors and officers and each
person, if any, who controls or has controlled Company or Distributor
within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages or liabilities to which Company or Distributor
and any such director or officer or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:
(a) Any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning the
Contracts by Brokers; or
II-19
<PAGE>
(b) Claims by agents or representatives or employees of Broker for
commissions, service fees, development allowances or other
compensation or renumeration of any type;
(c) The failure of Broker, its officers, employees, or agents to
comply with the provisions of this Agreement; and Broker will
reimburse Company and Distributor and any director or officer or
controlling person of either for any legal or other expenses
reasonably incurred by Company, Distributor, or such director,
officer of controlling person in connection with investigating or
defending any such loss, claims, damage, liability or action.
This indemnity agreement will be in addition to any liability
which Broker may otherwise have.
I. Assignability
This Agreement shall not be assigned by either party without the written
consent of the other.
J. Governing Law
This Agreement shall be governed by and Construed in accordance with the
laws of the State of New Jersey.
In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PRUCO SECURITIES CORPORATION
(Distributor)
By:_______________________________
President
__________________________________
(Broker)
By: ______________________________
II-20
<PAGE>
SELECTED BROKER AGREEMENT
SCHEDULE A
The following policies are the Contracts as defined in the Agreement made
and effective ________________, 19__, between Pruco Securities Corporation and
_____________________.
THE PRUDENTIAL LIFE INSURANCE COMPANY OF AMERICA
VARIABLE UNIVERSAL LIFE
(Flexible Premium Variable Life Policy)
II-21
<PAGE>
EXHIBIT 1.A.5
================================================================================
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
a mutual life insurance company
PRUDENTIAL PLAZA, NEWARK, NEW JERSEY 07102
The PRUDENTIAL [LOGO]
INSURED JOHN DOE XX XXX XXX POLICY NUMBER
AGENCY R-NK 1 JAN 1, 1997 CONTRACT DATE
================================================================================
Flexible Premium Variable Life Insurance Policy. Insurance payable only upon
death. Cash values reflect premium payments, investment results, and charges.
Eligible for annual dividends as stated under Dividends.
We will promptly pay the beneficiary the death benefit described under the Death
Benefit provision of this contract if we receive due proof that the Insured
died. We make this promise subject to all the provisions of this contract.
THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY BE FIXED OR VARIABLE, DEPENDING
ON THE PAYMENT OF PREMIUMS, THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS, ANY INTEREST CREDITED TO THE FIXED INVESTMENT OPTIONS, AND THE CHARGES
MADE.
THE CASH VALUE MAY INCREASE OR DECREASE DAILY, DEPENDING ON THE PAYMENT OF
PREMIUMS, THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS, ANY
INTEREST CREDITED TO THE FIXED INVESTMENT OPTIONS, AND THE CHARGES MADE. THERE
IS NO GUARANTEED MINIMUM CASH VALUE.
If there is ever a question about this contract, please see a Prudential
representative or contact one of our offices.
RIGHT TO CANCEL CONTRACT. You may return this contract to us within 10 days
after you receive it. All you have to do is take the contract or mail it to one
of our offices or to the representative who sold it to you. It will be canceled
and we will return your money in accordance with applicable law.
/s/ [SPECIMEN] /s/ [SPECIMEN]
Secretary President
PLEASE READ YOUR POLICY CAREFULLY; it is a legal contract between you and
Prudential.
================================================================================
VUL-97-NY
II-22
<PAGE>
================================================================================
GUIDE TO CONTENTS
CONTRACT DATA .............................................................. 3
Insured's Information; Rating Class; Basic Contract Information;
Notice; Type of Death Benefit; Life Insurance on the Insured; Minimum
Initial Premium; Contract Limitations; Other Benefits (if applicable);
Adjustments to Premium Payments; Adjustments to the Contract Fund;
Schedule of Maximum Surrender Charges; Monthly Deductions from the
Contract Fund for Other Benefits (if applicable); Investment Options;
The Prudential Variable Appreciable Account; Variable Investment
Options; Fixed Interest Rate Investment Option; Initial Allocation of
Invested Premium Amounts
TABLE OF DEATH BENEFIT GUARANTEE VALUES .................................... 4
TABLE OF MAXIMUM MONTHLY INSURANCE RATES ................................... 4
Per $1000
TABLE OF ATTAINED AGE FACTORS .............................................. 4
DEFINITIONS ................................................................ 5
THE CONTRACT ............................................................... 5
Entire Contract; Contract Modifications; Incontestability
OWNERSHIP .................................................................. 6
DEATH BENEFIT PROVISIONS ................................................... 6
Death Benefit; Additional Death Benefits; Method of Payment; Suicide
Exclusion; Interest on Death Benefit
CHANGE IN BASIC INSURANCE AMOUNT ........................................... 7
CHANGING THE TYPE OF DEATH BENEFIT ......................................... 8
BENEFICIARY ................................................................ 9
DIVIDENDS .................................................................. 9
Participation; Dividend Options
PREMIUM PAYMENT ............................................................ 10
Payment of Premiums; Invested Premium Amount; Crediting the
Initial Premium Payment; Allocations
CONTRACT FUND .............................................................. 10
Cash Value; Net Cash Value; Coverage Amount
DEFAULT .................................................................... 11
Excess Contract Debt Default; Cash Value Default; Notice of Default
DEATH BENEFIT GUARANTEE .................................................... 11
Death Benefit Guarantee; Guarantee Values
REINSTATEMENT .............................................................. 12
SEPARATE ACCOUNT ........................................................... 13
Separate Account; Variable Investments; Separate Account
Investments; Change in Investment Policy
FIXED INVESTMENTS .......................................................... 13
Page 2
(VUL-97)-NY
II-23
<PAGE>
Page
TRANSFERS ................................................................. 14
Class One Investments; Class Two Investments; Dollar Cost Averaging
SURRENDER ................................................................. 14
Cash Value Option; Fixed Reduced Paid-up Insurance
WITHDRAWALS ............................................................... 15
Effect on Contract Fund; Effect on Basic Insurance Amount
LOANS ..................................................................... 16
Loan Value; Contract Debt; Loan Requirements; Interest Charge;
Preferred Loan; Maximum Preferred Loan Amount; Effect
on Contract Fund; Deferral
GENERAL PROVISIONS ........................................................ 17
Annual Report; Payment of Death Claim; Currency; Misstatement of Age
or Sex; Assignment; Change in Plan; Factors Subject to Change;
Applicable Tax Law
BASIS OF COMPUTATION ...................................................... 18
Mortality Basis and Interest Rate; Minimum Legal Values
SETTLEMENT OPTIONS ........................................................ 19
Options Described; Interest Rate
SETTLEMENT OPTIONS TABLES ................................................. 20
A copy of the application and any riders or endorsements can be found
at the end of the contract.
Page 2A
(VUL-97)-NY
II-24
<PAGE>
CONTRACT DATA
INSURED
JOHN DOE Male, Issue Age 35
================================================================================
RATING CLASS
Select Standard
================================================================================
BASIC CONTRACT INFORMATION
Policy Number xx xxx xx
Contract Date January 1, 1997
Premium Period Life
Beneficiary Mary Doe, wife
================================================================================
NOTICE
The contract has no generally applicable guaranteed effective interest rate used
to determine contract values. The guaranteed interest rate credited on that
portion of the contract fund placed in the fixed interest rate investment option
is 4% a year. Excess interest credited on the fixed interest rate investment
option is not guaranteed and we have the right to change the interest rate from
time to time, but not less than the fixed interest rate investment option's
guaranteed interest rate.
Dividends are not guaranteed. We have the right to determine the amount of
dividends, if any, to be credited to the contract. This may result in total cash
values different from those illustrated.
================================================================================
TYPE OF DEATH BENEFIT (see Death Benefit Provisions)
Type B
================================================================================
LIFE INSURANCE ON THE INSURED (as of the Contract Date)
Basic Insurance Amount $50,000.00
================================================================================
MINIMUM INITIAL PREMIUM
The minimum initial premium due on the Contract Date is $68.13.
================================================================================
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3(97)(NY)
II-25
<PAGE>
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
CONTRACT LIMITATIONS
The minimum premium we will accept is $25.00.
The minimum basic insurance amount is $50,000.00.
The minimum increase in basic insurance amount is $10,000.00.
The minimum decrease in basic insurance amount is $10,000.00.
The minimum amount you may withdraw is $500.00.
The minimum amount you may borrow is $200.00.
The Surrender Charge Threshold is $50,000.00
================================================================================
ADJUSTMENTS TO PREMIUM PAYMENTS
From each premium paid we will:
Subtract an administrative charge of up to 7.5% of the premium (s)
paid.
Subtract a charge for sales expenses at a rate of up to 4% of the
premium(s) paid.
The remainder of the premium is the invested premium amount.
================================================================================
ADJUSTMENTS TO THE CONTRACT FUND
On the Contract Date the contract fund is equal to the invested premium amount
credited on that date, minus any of the charges described below which may be due
on that date.
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3A(97)(NY)
II-26
<PAGE>
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
On each day after the contract date, we will adjust the contract fund by:
adding any invested premium amounts.
adding any increase due to investment results of the variable investment
options.
adding guaranteed interest at an effective annual rate of 4% (0.01074598% a day)
on that portion of the contract fund that is not in a variable investment
option.
adding any excess interest on that portion of the contract fund that is in a
fixed interest rate investment option.
subtracting any decrease due to investment results of the variable investment
options.
subtracting a charge against the variable investment options at an effective
annual rate of not more than 0.90% (.00245475% a day) for mortality and expense
risks that we assume.
subtracting any withdrawals.
subtracting an administrative charge of up to $25.00 for any withdrawals.
subtracting an administrative charge of up to $25.00 for any change in basic
insurance amount.
subtracting an administrative charge of up to $25.00 for each transfer between
investment options exceeding twelve in any contract year.
subtracting any surrender charges that may result from a withdrawal, surrender,
or reduction in the basic insurance amount.
And on each monthly date, we will adjust the contract fund by:
subtracting a charge for the cost of insurance of up to the maximum monthly rate
(see Table of Maximum Monthly Insurance Rates) multiplied by the coverage amount
divided by $1000.00. The coverage amount is equal to the death benefit (See
Death Benefit) minus the value of the contract fund.
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3B (97)
II-27
<PAGE>
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
subtracting a charge for administrative expenses of up to $10.00 plus $0.07 per
$1000.00 of the basic insurance amount within the first contract year.
subtracting a charge for administrative expenses of up to $10.00 plus $0.01 per
$1000.00 of the basic insurance amount after the first contract year.
subtracting a charge of up to $0.01 per $1000.00 of the basic insurance amount
to guarantee the minimum death benefit.
================================================================================
SCHEDULE OF MAXIMUM SURRENDER CHARGES
For a full surrender at the beginning of the contract year indicated, the
maximum charge we will deduct from the contract fund is shown below. For a full
surrender at other times, the surrender charge will reflect the completed
contract months that have passed since the last anniversary.
<TABLE>
<CAPTION>
For a Surrender Occurring
At the Start of The Maximum Surrender
Contract Year Charge is
-------------------------------------------------------------------------
<S> <C>
1 $446.82
2 $446.82
3 $446.82
4 $446.82
5 $446.82
6 $446.82
7 $446.82
8 $335.12
9 $223.41
10 $111.71
11 and later $0.00
-------------------------------------------------------------------------
</TABLE>
We may also deduct a surrender charge when you change the basic insurance amount
or the type of death benefit, and when you make a withdrawal. (See Change In
Basic Insurance Amount, Changing The Type Of Death Benefit, and Withdrawals.)
================================================================================
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3C (97)
II-28
<PAGE>
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
INVESTMENT OPTIONS
THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT
This account is registered with the SEC under the Investment Company Act of
1940. Each investment option of this account invests in a specific portfolio of
The Prudential Series Fund, Inc., and such other funds as we may specify from
time to time. The Prudential Series Fund, Inc. and other funds identified below
are registered with the SEC under the Investment Company Act of 1940 as open-end
diversified management investment companies. We show below the available
investment options and the funds and fund portfolios they invest in.
These are Class One investments as described under Transfers.
VARIABLE INVESTMENT OPTIONS
Money Market
Diversified Bond
Conservative Balanced
Flexible Managed
High Yield Bond
Stock Index
Equity Income
Equity
Prudential Jennison
Global
FIXED INTEREST RATE INVESTMENT OPTION
The fixed interest rate investment option is funded by the general
account of the company. It is described in the Fixed Investments
provision of this contract. This is a Class Two investment as
described under Transfers.
================================================================================
INITIAL ALLOCATION OF INVESTED PREMIUM AMOUNTS
Fixed Interest Rate 40%
Money Market 60%
================================================================================
END OF CONTRACT DATA
Page 3D (97)(NY)
II-29
<PAGE>
POLICY NO. XX XXX XX
TABLE(S)
TABLE OF DEATH BENEFIT GUARANTEE VALUESP
These values are used to determine the death benefit guarantee as described
under Death Benefit Guarantee. The values on contract anniversaries are shown
below. On a date that falls between two anniversaries, the value will fall
between the values for those anniversaries considering the time that has passed
since the last anniversary.
The Limited Death Benefit Guarantee period is the first 32 contract years.
<TABLE>
<CAPTION>
LIMITED LIFETIME
CONTRACT DEATH BENEFIT DEATH BENEFIT
ANNIVERSARY GUARANTEE VALUE GUARANTEE VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Contract Date $0 $0
1st $787.28 $3,057.08
2nd $1,606.05 $6,236.44
3rd $2,457.57 $9,542.98
4th $3,343.15 $12,981.78
5th $4,264.16 $16,558.13
6th $5,222.01 $20,277.54
7th $6,218.17 $24,145.72
8th $7,254.18 $28,168.63
9th $8,331.63 $32,352.46
10th $9,452.18 $36,703.64
11th $10,617.55 $41,228.87
12th $11,829.53 $45,935.10
13th $13,089.99 $50,829.58
14th $14,400.87 $55,919.84
15th $15,764.18 $61,213.71
16th $17,182.03 $66,719.34
17th $18,656.59 $72,445.19
18th $20,190.13 $78,400.08
19th $21,785.02 $84,593.16
20th $23,443.70 $91,033.97
21st $25,168.73 $97,732.41
22nd $26,962.76 $104,698.79
23rd $28,828.55 $111,943.82
24th $30,768.97 $119,478.65
25th $32,787.01 $127,314.88
</TABLE>
TABLE(S) CONTINUED ON NEXT PAGE
Page 4 (97)
II-30
<PAGE>
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
<TABLE>
<CAPTION>
LIMITED LIFETIME
CONTRACT DEATH BENEFIT DEATH BENEFIT
ANNIVERSARY GUARANTEE VALUE GUARANTEE VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
26th $34,885.77 $135,464.56
27th $37,068.48 $143,940.22
28th $39,338.50 $152,754.91
29th $41,699.32 $161,922.19
30th $44,154.57 $171,456.16
31st $46,708.03 $181,371.49
32nd $49,363.63 $191,683.43
33rd $202,407.85
34th $213,561.24
35th $225,160.77
36th $237,224.28
37th $249,770.33
38th $262,818.22
39th $276,388.03
40th $290,500.63
41st $305,177.74
42nd $320,441.93
43rd $336,316.69
44th $352,826.44
45th $369,996.58
46th $387,853.52
47th $406,424.74
48th $425,738.81
49th $445,825.44
50th $466,715.54
51st $488,441.24
52nd $511,035.97
53rd $534,534.49
54th $558,972.95
55th $584,388.95
56th $610,821.59
57th $638,311.53
58th $666,901.07
59th $696,634.19
60th $727,556.64
61st $759,715.99
62nd $793,161.71
63rd $827,945.26
64th $864,120.15
65th $901,742.04
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
TABLE(S) CONTINUED ON NEXT PAGE
Page 4A (97)
II-31
<PAGE>
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
TABLE OF MAXIMUM MONTHLY INSURANCE RATES PER $1,000
<TABLE>
<CAPTION>
CONTRACT MAXIMUM CONTRACT MAXIMUM
YEAR MONTHLY RATE YEAR MONTHLY RATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1 $0.22667 26 $2.01750
2 $0.24333 27 $2.20083
3 $0.26417 28 $2.40750
4 $0.28750 29 $2.63833
5 $0.31417 30 $2.89083
6 $0.34500 31 $3.15833
7 $0.37833 32 $3.43833
8 $0.41500 33 $3.72833
9 $0.45500 34 $4.03250
10 $0.49917 35 $4.36252
11 $0.54583 36 $4.72667
12 $0.59417 37 $5.13583
13 $0.64667 38 $5.59833
14 $0.70333 39 $6.11083
15 $0.76500 40 $6.67250
16 $0.83333 41 $7.27250
17 $0.91083 42 $7.88583
18 $0.99833 43 $8.50167
19 $1.09750 44 $9.12417
20 $1.20583 45 $9.77500
21 $1.32167 46 $10.47583
22 $1.44417 47 $11.24667
23 $1.57333 48 $12.10083
24 $1.70917 49 $13.02417
25 $1.85500 50 $13.98583
</TABLE>
TABLE(S) CONTINUED ON NEXT PAGE
Page 4B (97)
II-32
<PAGE>
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
TABLE OF MAXIMUM MONTHLY INSURANCE RATES PER $1,000
<TABLE>
<CAPTION>
CONTRACT MAXIMUM CONTRACT MAXIMUM
YEAR MONTHLY RATE YEAR MONTHLY RATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
51 $14.95333 61 $29.32167
52 $15.90333 62 $35.08250
53 $16.87833 63 $45.08333
54 $17.89417 64 $62.09583
55 $18.90417 65 $83.33333
56 $19.92333
57 $20.98333
58 $22.21250
59 $23.78917
60 $25.93917
================================================================================
</TABLE>
We may charge less than the maximum monthly rates. At least once every five
years, but not more often than once a year, we will consider the need to change
the rates we charge. We describe the factors we use to determine such changes
under General Provisions.
See the Basis of Computation for a description of the basis we use to compute
these rates.
================================================================================
TABLE(S) CONTINUED ON NEXT PAGE
Page 4C (97)
II-33
<PAGE>
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
TABLE OF ATTAINED AGE FACTORS
These factors are used to determine your death benefit as described under Death
Benefit Provisions. These factors apply during each contract year starting on
the contract anniversary.
<TABLE>
<CAPTION>
INSURED'S INSURED'S
ATTAINED AGE FACTORS ATTAINED AGE FACTORS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
35 4.07 60 1.74
36 3.42 61 1.70
37 3.31 62 1.67
38 3.21 63 1.63
39 3.11 64 1.60
40 3.01 65 1.57
41 2.92 66 1.54
42 2.83 67 1.51
43 2.74 68 1.48
44 2.66 69 1.46
45 2.58 70 1.43
46 2.51 71 1.41
47 2.44 72 1.39
48 2.37 73 1.36
49 2.30 74 1.34
50 2.24 75 1.33
51 2.18 76 1.31
52 2.12 77 1.29
53 2.07 78 1.28
54 2.01 79 1.26
55 1.96 80 1.25
56 1.91 81 1.24
57 1.87 82 1.22
58 1.82 83 1.21
59 1.78 84 1.20
</TABLE>
TABLE(S) CONTINUED ON NEXT PAGE
Page 4D (97)
II-34
<PAGE>
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
<TABLE>
<CAPTION>
INSURED'S INSURED'S
ATTAINED AGE FACTORS ATTAINED AGE FACTORS
- --------------------------------------------------------------------------
<S> <C> <C> <C>
85 1.19 93 1.12
86 1.18 94 1.11
87 1.17 95 1.10
88 1.16 96 1.08
89 1.16 97 1.07
90 1.15 98 1.06
91 1.14 99 1.05
92 1.13 100 and above 1.00
- --------------------------------------------------------------------------
================================================================================
</TABLE>
END OF TABLE(S)
Page 4E (97)
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<PAGE>
================================================================================
DEFINITIONS
WE, OUR and US. The Prudential Insurance Company of America (Prudential).
YOU and YOUR. The owner(s) of the contract.
INSURED. The person named as the Insured on the first page. He or she need not
be the owner.
SEC. The Securities and Exchange Commission.
ISSUE DATE. The contract date shown on the first page.
ANNIVERSARY or CONTRACT ANNIVERSARY. The same day and month as the contract date
in each later year.
CONTRACT YEAR. A year that starts on the contract date or on an anniversary.
MONTHLY DATE. The contract date and the same day as the contract date in each
later month.
CONTRACT MONTH. A month that starts on a monthly date.
ATTAINED AGE. The Insured's attained age at any time is the issue age plus the
length of time since the contract date. You will find the Insured's issue age
near the top of page 3.
================================================================================
THE CONTRACT
ENTIRE CONTRACT
This policy and any attached copy of an application, including an application
requesting a change, form the entire contract. We assume that all statements in
an application are made to the best of the knowledge and belief of the person(s)
who make them; they are deemed to be representations and not warranties. We rely
on those statements when we issue the contract and when we change it. We will
not use any statement, unless made in an application, to try to void the
contract, to contest a change, or to deny a claim.
CONTRACT MODIFICATIONS
Only a Prudential officer with the rank or title of vice president may agree to
modify this contract, and then only in writing.
INCONTESTABILITY
Except as we state in the next sentence, we will not contest this contract after
it has been in force during the Insured's lifetime for two years from the issue
date. The exceptions are: (1) non-payment of enough premium to pay the required
charges; and (2) any change in the contract that requires our approval and that
would increase our liability. For any such change, we will not contest the
change after it has been in effect for two years during the lifetime of the
Insured.
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================================================================================
OWNERSHIP
Unless a different owner is named in the application, the owner of the contract
is the Insured. If a different owner is named, we will show that owner in an
endorsement to the contract. This ownership arrangement will remain in effect
unless you ask us to change it.
If you wish to change the ownership of the contract, your request must be in a
form that meets our needs. The change will take effect only when we file the
request; this will be after you send us the contract, if we require it to issue
an endorsement. Then any previous owner's interest will end as of the date of
the request, even if the Insured is not living when we file the request.
While the Insured is living, the owner, with no one else's consent, is entitled
to any contract benefit and value, and to the exercise of any right and
privilege granted by the contract or by us.
================================================================================
DEATH BENEFIT PROVISIONS
We will pay a benefit (described below) to the beneficiary at the Insured's
death if this contract is in force at the time of that death; that is, if it has
not been surrendered and it is not in default past the grace period.
If the contract is not in default, the amount we will pay will be the death
benefit determined as of the date of the Insured's death, increased by any
dividend credits and reduced by any contract debt (described under Loans).
If the contract is in default, and the Insured's death occurs in the grace
period (described under Default), we will pay the death benefit, increased by
any dividend credits and reduced by any contract debt and the amount needed to
pay charges through the date of death.
If the Insured's death occurs past the grace period, no death benefit is
payable.
DEATH BENEFIT
This contract has either a Type A or Type B death benefit. We show the type of
death benefit that applies to this contract under Type of Death Benefit in the
contract data pages.
If this contract has a Type A death benefit, the death benefit on any date is
equal to the greater of: (1) the basic insurance amount, and (2) the contract
fund before deduction of any monthly charges due on that date, multiplied by the
attained age factor that applies.
If this contract has a Type B death benefit, the death benefit on any date is
equal to the greater of: (1) the basic insurance amount plus the contract fund
before deduction of any monthly charges due on that date, and (2) the contract
fund before deduction of any monthly charges due on that date, multiplied by the
attained age factor that applies.
For the purposes of computing the death benefit, if the contract fund is less
than zero we will consider it to be zero. Your basic insurance amount and
attained age factors are shown in the contract data pages.
ADDITIONAL DEATH BENEFITS
This contract may provide additional benefits, which may be payable on an
Insured's death. If it does, they will be listed on a contract data page, and a
form describing the benefit will be included in this contract. Any such benefit
will be payable only if the contract is not in default past the grace period at
the time of the death.
METHOD OF PAYMENT
You may choose to have any death benefit paid in a single sum or under one of
the optional modes of settlement shown in the Settlement Options provision.
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<PAGE>
SUICIDE EXCLUSION
If the Insured dies by suicide within two years from the issue date, this
contract will end and we will return the premiums paid, less any contract debt,
and less any withdrawals.
If the Insured dies by suicide after two years from the issue date but within
two years of the effective date of an increase in the basic insurance amount, we
will pay, as to the increase in amount, no more than the sum of the premiums
paid on and after the effective date of the increase.
INTEREST ON DEATH BENEFIT
Any death benefit described above will be credited with interest from the date
of death in accordance with applicable laws.
================================================================================
CHANGE IN BASIC INSURANCE AMOUNT
You may change the basic insurance amount. You may do so subject to our approval
and all these conditions and the paragraphs that follow:
1. You must ask for the change in a form that meets our needs.
2. The amount of an increase or decrease must be at least equal to the minimum
increase or decrease in basic insurance amount shown under Contract
Limitations in the contract data pages.
3. The basic insurance amount after the decrease must be at least equal to the
minimum basic insurance amount shown under Contract Limitations in the
contract data pages.
4. If we ask you to do so, you must send us the contract to be endorsed.
5. You must prove to us that the Insured is insurable for any increase.
6. The contract must not be in default.
7. Any request for a change must be made on or after the first contract
anniversary.
8. We must not be paying premiums into the contract as a result of the
Insured's total disability.
We show under Contract Limitations a Surrender Charge Threshold. If you decrease
your basic insurance amount to an amount equal to or greater than this
threshold, we will not impose a surrender charge. If you decrease your basic
insurance amount below this threshold, we will subtract the new basic insurance
amount from the threshold amount. We will then multiply the surrender charge
(see Schedule of Maximum Surrender Charges) by the lesser of this difference and
the amount of the decrease and divide by the threshold amount. The result is the
maximum surrender charge we will deduct from the contract fund as a result of
this transaction.
We may decline the change if we determine it would cause the contract to fail to
qualify as life insurance under the applicable tax law. A change will take
effect only if we approve your request for it at our Home Office and will take
effect on the date we approve it. If we approve the change, we will also
recompute the contract's charges, values and limitations. A change in the basic
insurance amount may also affect the amount of any extra benefits this contract
might have. We will send you new contract data pages showing the amount and
effective date of the change and the recomputed charges, values and limitations.
If the Insured is not living on the effective date, the change will not take
effect. We may deduct the administrative charge (shown under Adjustments to the
Contract Fund) for the change.
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<PAGE>
================================================================================
CHANGING THE TYPE OF DEATH BENEFIT
This contract has either a Type A or Type B death benefit (see Death Benefit).
Subject to our approval, you may change the type of death benefit after the
first contract year. If you do so, we will adjust the basic insurance amount so
that the death benefit immediately after the change will remain the same as the
death benefit immediately before the change.
If you are changing from a Type B to a Type A death benefit, we will increase
the basic insurance amount by the amount in your contract fund on the date the
change takes effect.
If you are changing from a Type A to a Type B death benefit, we will reduce the
basic insurance amount by the amount in your contract fund on the date the
change takes effect. The basic insurance amount after the decrease must be at
least equal to the minimum basic insurance amount, which we show under Contract
Limitations in the contract data pages.
We show under Contract Limitations a Surrender Charge Threshold. If we decrease
your basic insurance amount to an amount equal to or greater than this
threshold, we will not impose a surrender charge. If we decrease your basic
insurance amount below this threshold, we will subtract the new basic insurance
amount from the threshold amount. We will then multiply the surrender charge
(see Schedule of Maximum Surrender Charges) by the lesser of this difference and
the amount of the decrease and divide by the threshold amount. The result is the
maximum surrender charge we will deduct from the contract fund as a result of
this transaction.
A change in the type of death benefit will take effect only if we approve your
request at our Home Office. If we approve the change, we will recompute the
contract's charges, values and limitations shown in the contract data pages. The
change will take effect on the monthly date that coincides with or next follows
the date we approve your request. We will send you new contract data pages
showing the amount and effective date of the change in basic insurance amount
and the recomputed charges, values and limitations.
Your request for a change must be in a form that meets our needs. We may require
you to send us this contract before we make the change.
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<PAGE>
================================================================================
BENEFICIARY
You may designate or change a beneficiary. Your request must be in a form that
meets our needs. The change will take effect only when we file the request at
our Home Office; this will be after you send the contract to us to be endorsed,
if we ask you for it. Then any previous beneficiary's interest will end as of
the date of the request, even if the Insured is not living when we file the
request. Any beneficiary's interest is subject to the rights of any assignee we
know of.
When a beneficiary is designated, any relationship shown is to the Insured,
unless otherwise stated. To show priority, we may use numbered classes, so that
the class with first priority is called class 1, the class with next priority is
called class 2, and so on. When we use numbered classes, these statements apply
to beneficiaries unless the form states otherwise:
1. One who survives the Insured will have the right to be paid only if no one
in a prior class survives the Insured.
2. One who has the right to be paid will be the only one paid if no one else
in the same class survives the Insured.
3. Two or more in the same class who have the right to be paid will be paid in
equal shares.
4. If none survives the Insured, we will pay in one sum to the Insured's
estate.
Before we make a payment, we have the right to decide what proof we need of the
identity, age, or other facts about any persons designated as beneficiaries. If
beneficiaries are not designated by name and we make payment(s) based on that
proof, we will not have to make the payment(s) again.
================================================================================
DIVIDENDS
PARTICIPATION
This contract will be eligible for a dividend on each contract anniversary if
the Insured is living. We will decide each year what part, if any, of our
surplus to credit to this contract as a dividend. We do not expect to credit any
dividends to this contract.
DIVIDEND OPTIONS
While the contract is in force, you may choose any of the uses we show below for
any dividend. You must ask us in a form that meets our needs.
1. Cash. We will pay it to you in cash.
2. Increase Contract Fund. We will use it to increase your contract fund.
3. Paid-Up Life Insurance Addition. We will use it at the net single premium
rate as of the anniversary to provide a paid-up life insurance addition.
If you have not made another choice by 31 days after the anniversary, we will
use any dividend as we state under dividend option 2.
Page 9
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<PAGE>
================================================================================
PREMIUM PAYMENT
PAYMENT OF PREMIUMS
The minimum initial premium shown in the contract data pages is due on or before
the contract date. There is no insurance under this contract until that premium
is paid. We may require an additional premium if adjustments to premium payments
plus any contract fund charges due on or before the payment date exceed the
minimum initial premium.
Subject to the limitations below, additional premiums may be paid at any time
during the Insured's lifetime as long as the contract is not in default beyond
the grace period. Premiums may be paid at one of our offices or to one of our
authorized representatives. We will give a signed receipt upon request. The
minimum premium we will accept is shown on a contract data page. We have the
right to refuse to accept a premium payment that would cause this contract to
fail to qualify as life insurance under applicable tax law. We also have the
right to refuse to accept any payment that increases the death benefit by more
than it increases the contract fund.
INVESTED PREMIUM AMOUNT
The invested premium amount is the portion of each premium you pay that we add
to the contract fund. It is equal to the premium paid minus the adjustments to
premium payments shown on a contract data page.
CREDITING THE INITIAL PREMIUM PAYMENT
If we receive the first premium payment on or before the contract date, we will
credit the invested premium amount to the contract fund on the contract date.
If we receive the first premium payment after the contract date, we will credit
the premium amount to the contract fund on the payment date.
ALLOCATIONS
You may allocate all or a part of your invested premium amount to one or more of
the investment options listed in the contract data pages. You may choose to
allocate nothing to a particular investment option. You may not choose a
fractional percentage.
The initial allocation of invested premium amounts is shown on a contract data
page. You may change the allocation for future invested premium amounts at any
time if the contract is not in default. To change your allocation, simply notify
us in a form that meets our needs. The change will take effect on the date we
receive your notice; we will send you a confirmation of the transaction.
================================================================================
CONTRACT FUND
When you make your first premium payment, the invested premium amount, less any
charges due on or before that day, becomes your contract fund. Amounts are added
and subtracted from the contract fund as shown under Adjustments to the Contract
Fund in the contract data pages. The amount in your contract fund is used to pay
charges under this contract and will determine, in part, whether this contract
will remain in force or go into default. The contract fund value is also used to
determine your loan and surrender values, the amount you may withdraw, and the
death benefit.
CASH VALUE
The cash value at any time is the contract fund less any surrender charge.
NET CASH VALUE
The net cash value at any time is the cash value less any contract debt.
If the contract is in default, the net cash value is zero.
COVERAGE AMOUNT
The coverage amount is used to determine the cost of insurance as described
under Adjustments to the Contract Fund. It is equal to the death benefit (see
Death Benefit) minus the value of the contract fund.
Page 10
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<PAGE>
================================================================================
DEFAULT
EXCESS CONTRACT DEBT DEFAULT
If contract debt ever grows to be equal to or more than the cash value, the
contract will have excess contract debt and will be in default.
CASH VALUE DEFAULT
On each monthly date, we will determine the cash value. If the cash value is
greater than zero and the contract has no excess contract debt, the contract
will remain in force until the next monthly date. If the cash value is zero or
less, the contract is in default unless it remains in force under the Death
Benefit Guarantee.
NOTICE OF DEFAULT
If the contract is in default, we will mail you a notice stating the amount we
will need to keep the contract in force. That amount will equal a premium which
we estimate will keep the contract in force for three months from the date of
default. We grant a 61-day grace period from the date we mail the notice to pay
this charge. The contract will remain in force during this period. If that
amount is not paid to us by the end of the 61-day grace period, the contract
will end and have no value.
================================================================================
DEATH BENEFIT GUARANTEE
DEATH BENEFIT GUARANTEE
On each monthly date while the contract is in force, we will:
1. Accumulate premium payments at 4% annual interest; and
2. Accumulate any withdrawal amounts at 4% annual interest.
We then subtract amount 2 from amount 1 and compare the result to the values
shown in or derived from the Table of Death Benefit Guarantee Values for such
monthly date. If the result is equal to or greater than the appropriate value
and the contract has no excess contract debt, the contract will remain in force
until the next monthly date. If the result is less than the appropriate value
and any of the events described under Default have occurred, the contract is in
default as described under Default.
GUARANTEE VALUES
We show the Limited Death Benefit Guarantee Period under the Table of Death
Benefit Guarantee Values in the contract data pages. When the monthly date
occurs within this period, we use the values shown in or derived from the
Limited Death Benefit Guarantee Value column to determine if the contract will
remain in force until the next monthly date. When the monthly date occurs after
this period, we use the values shown in or derived from the Lifetime Death
Benefit Guarantee Value column to determine if the contract will remain in force
until the next monthly date.
Page 11
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<PAGE>
================================================================================
REINSTATEMENT
If this contract ends without value, as described under Default, you may
reinstate it. The following conditions must be satisfied:
1. The contract must not have been in default for more than 5 years.
2. You must prove to us that the Insured is insurable for the contract.
3. You must pay us a charge equal to: (a) an amount, if any, required to bring
the cash value to zero on the date the contract went into default, plus (b)
the deductions from the contract fund during the grace period following the
date of default, plus (c) a premium that we estimate will be sufficient
after administrative charges to cover the deductions from the contract fund
for three monthly dates starting on the date of reinstatement.
4. Any contract debt (with interest to date at the rate(s) we set for loans as
we state under Loans) must be restored or paid back. If that debt with
interest would exceed the loan value of the reinstated contract, the excess
must be paid to us before reinstatement.
The date of reinstatement will be the beginning of the contract month that
coincides with or next follows the date we approve your request. We will deduct
all required charges from your payment and put the balance in your contract
fund. If we approve the reinstatement, we will credit the contract fund with a
refund of that part of any surrender charge deducted at the time of default
which would have been charged if the contract were surrendered immediately after
reinstatement.
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<PAGE>
================================================================================
SEPARATE ACCOUNT
SEPARATE ACCOUNT
The words separate account , when we use them in this contract without
qualification, mean any separate account we establish to support variable life
insurance contracts like this one. We list the separate accounts available to
you in the contract data pages. We may establish additional separate accounts.
We will notify you within one year if we do so.
VARIABLE INVESTMENTS
A separate account may offer one or more variable investment options. We list
them in the contract data pages. We may establish additional variable investment
options. We will notify you within one year if we do so. We may also eliminate
existing variable investment options, but only with the consent of the SEC and,
where required, of the insurance regulator of our state of domicile and/or where
this contract is delivered.
Income and realized and unrealized gains and losses from assets in each variable
investment option are credited to, or charged against, that variable investment
option. This is without regard to income, gains, or losses in other investment
options.
SEPARATE ACCOUNT INVESTMENTS
We may invest the assets of different separate accounts in different ways. But
we will do so only with the consent of the SEC and, where required, of the
insurance regulator of our state of domicile and/or where this contract is
delivered. The process for obtaining consent is on file with the insurance
regulator where this contract is delivered.
We will always keep assets in the separate accounts with a total value at least
equal to the amount of the variable investment options under contracts like this
one. To the extent those assets do not exceed that amount, we use them only to
support those contracts; we do not use those assets to support any other
business we conduct. We may use any excess over that amount in any way we
choose.
We will determine the value of the assets in each separate account and any
investment option on each day the New York Stock Exchange is open for business.
CHANGE IN INVESTMENT POLICY
A portfolio of the fund might make a material change in its investment policy.
In that case, we will send you a notice of the change. Within 60 days after you
receive the notice, or within 60 days after the effective date of the change, if
later, you may transfer to the Fixed Account any amounts in the investment
option investing in that portfolio.
No material change in investment policy of a portfolio shall be made unless we
have filed such change with the insurance regulator where this contract is
delivered.
================================================================================
FIXED INVESTMENTS
We list any fixed investment option available to you in the contract data pages.
We may establish additional fixed investment options. We will notify you within
one year if we do so. You may allocate all or part of your invested premium
amount to an available fixed investment option. As stated under Adjustments to
the Contract Fund, we credit fixed investment options with guaranteed interest
and we may credit them with excess interest.
Page 13
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<PAGE>
================================================================================
TRANSFERS
You have the right to transfer amounts into or out of investment options up to
twelve times in each contract year without charge if the contract is not in
default, subject to certain restrictions depending on an investment's class. We
may charge for additional transfers in any contract year as we state under
Adjustments to the Contract Fund. The investment class for each investment is
shown under Investment Options in the contract data pages. To make a transfer,
you must ask us in a form that meets our needs. Unless otherwise restricted, the
transfer will take effect on the date we receive your notice at our Home Office.
CLASS ONE INVESTMENTS
You may transfer amounts into or out of these investments.
CLASS TWO INVESTMENTS
You may transfer amounts into these investments. You may transfer out up to 25%
of the amount in these investments once each contract year. Additional transfers
out of these investments may be made only with our consent.
DOLLAR COST AVERAGING
You may elect to transfer money periodically from the Money Market Investment
Option into other variable investment options. The transfer can be either a
fixed dollar amount or a percentage of the amount you designate for this
purpose. The transfers may be made monthly, quarterly, semi-annually or
annually. It will take effect as of the end of the valuation period on the date
coinciding with the period you select. If the New York Stock Exchange is not
open on that date, or if that date does not occur in a particular month, the
transfer will take effect as of the end of the valuation period which
immediately follows that date. This feature will end when (1) $50 or less
remains of the amount you designated or (2) you ask us to cancel.
================================================================================
SURRENDER
You may surrender this contract for its net cash value or for a fixed reduced
paid-up insurance benefit. To do so, you must ask us in a form that meets our
needs. We may require you to send us the contract.
CASH VALUE OPTION
We will usually pay any net cash value within seven days after we receive your
request and the contract at our Home Office. But we have the right to postpone
paying you the part of the net cash value that is to come from any variable
investment option (provided by a separate account registered under the
Investment Company Act of 1940) if: (1) the New York Stock Exchange is closed;
or (2) the SEC requires that trading be restricted or declares an emergency. We
have the right to postpone paying you the remainder for up to six months. If we
do so for more than ten days, we will pay interest at the rate that then applies
to Option 3 (Interest Payment) of the Settlement Options provision.
FIXED REDUCED PAID-UP INSURANCE
THIS WILL BE PAID-UP LIFE INSURANCE ON THE INSURED'S LIFE. WE WILL PAY THE
amount of this insurance when the Insured dies. There will be cash values and
loan values. The loan interest rate will be 5%.
The amount of this insurance will be what is provided when we use the net cash
value at the net single premium rate. This rate depends on the Insured's issue
age and sex and on the length of time since the contract date.
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================================================================================
WITHDRAWALS
You may make withdrawals from the contract subject to all these conditions and
the paragraph that follows:
1. You must ask for the withdrawal in a form that meets our needs.
2. The net cash value after withdrawal may not be less than or equal to zero
after deducting any charges associated with the withdrawal.
3. You may not withdraw less than the minimum amount shown under Contract
Limitations.
4. The basic insurance amount after withdrawals must be at least equal to the
minimum basic insurance amount shown under Contract Limitations.
Any amount withdrawn may not be repaid except as a premium subject to charges.
EFFECT ON CONTRACT FUND
We will reduce your contract fund on the date we approve your request by the
withdrawal amount and any charges listed under Adjustments to the Contract Fund.
Unless you request otherwise and we agree, we will take any withdrawal
proportionately from all investment options that apply to the contract.
We may charge an administrative fee as stated under Adjustments to the Contract
Fund.
EFFECT ON BASIC INSURANCE AMOUNT
If you have a Type B death benefit, withdrawals will not affect the basic
insurance amount.
If you have a Type A death benefit and the withdrawal would cause the coverage
amount (see Contract Fund) to increase, we will reduce the basic insurance
amount and, consequently, your death benefit to offset this increase. The
reduction in the basic insurance amount will never be more than the withdrawal
amount. If we reduce the basic insurance amount, we will recompute the
contract's charges, values and limitations. We will send you new contract data
pages showing these changes.
We show under Contract Limitations a Surrender Charge Threshold. If we decrease
your basic insurance amount to an amount equal to or greater than this
threshold, we will not impose a surrender charge. If we decrease your basic
insurance amount below this threshold, we will subtract the new basic insurance
amount from the threshold amount. We will then multiply the surrender charge
(see Schedule of Maximum Surrender Charges) by the lesser of this difference and
the amount of the decrease and divide by the threshold amount. The result is the
maximum surrender charge we will deduct from the contract fund as a result of
this transaction.
We will usually pay any withdrawal amount within seven days after we receive
your request and the contract (if we require it) at our Home Office. But we have
the right to postpone paying you the part of the net cash value that is to come
from any variable investment option provided by a separate account registered
under the Investment Company Act of 1940 if: (1) the New York Stock Exchange is
closed; or (2) the SEC requires that trading be restricted or declares an
emergency. We have the right to postpone paying you the remainder for up to six
months. If we do so for more than ten days, we will pay interest at the rate of
3% a year.
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<PAGE>
================================================================================
LOANS
Subject to the minimum loan requirement and the requirements of this provision,
you may at any time borrow any amount up to the current loan value less any
existing contract debt.
LOAN VALUE
If the contract is not in default, the loan value at any time is equal to the
sum of (a) 90% of the portion of the cash value attributable to the variable
investment options, and (b) the balance of the cash value.
If the contract is in default, it has no loan value.
CONTRACT DEBT
Contract debt at any time means the loan on the contract at that time, plus the
interest we have charged that is not yet due and that we have not yet added to
the loan.
LOAN REQUIREMENTS
For us to approve a loan, the following requirements must be met: you must
assign this contract to us as sole security for the loan; the Insured must be
living; and the resulting contract debt must not be more than the loan value.
If there is already contract debt when you borrow from us, we will add the new
amount you borrow to that debt.
INTEREST CHARGE
We will charge interest daily on any loan. Interest is due on each contract
anniversary, or when the loan is paid back, whichever comes first. If interest
is not paid when due, it becomes part of the loan. Then we start to charge
interest on it, too. Except as stated below, we charge interest at an effective
annual rate of 5%.
PREFERRED LOAN
Unless you ask us otherwise, on or after the 10th contract anniversary, a
portion of the amount you may borrow will be considered a Preferred Loan up to
an amount equal to the maximum preferred loan amount described below. Preferred
Loans are charged interest at an effective annual rate of 4 1/2%.
MAXIMUM PREFERRED LOAN AMOUNT
The maximum preferred loan amount available starting on the 10th contract
anniversary is (A) minus (B), where (A) is the total amount you may borrow, and
(B) is the total premiums paid less total withdrawals, if any. If (B) is less
than zero, we will consider it to be zero.
EFFECT ON CONTRACT FUND
When you take a loan, the amount of the loan continues to be a part of the
contract fund and is credited with interest at an effective rate of 4% a year.
We will reduce the portion of the contract fund allocated to the investment
options by the amount you borrow, and by loan interest that becomes part of the
loan if it is not paid when due.
We will take any loan proportionately from all investment options that apply to
the contract unless you ask us otherwise and we agree.
On each monthly date, if there is a contract loan outstanding, we will increase
the portion of the contract fund in the investment options by interest credits
accrued on the loan since the last monthly date. When you repay all or part of a
loan, we will increase the portion of the contract fund in the investment
options and decrease the portion on which we credit the guaranteed interest rate
of 4% a year by the amount of loan you repay using your investment allocation
for future premium payments on file as of the loan payment date, plus interest
credits accrued on the loan since the last transaction date. We will not
increase the portion of the contract fund allocated to the investment options by
loan interest that is paid before we make it part of the loan. We reserve the
right to change the manner in which we allocate loan repayments. If we make such
a change, we will do so for all contracts like this one. We will send you notice
of any change.
For the possible effect of excess contract debt and/or failure to repay loans,
see Default on page 11.
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<PAGE>
DEFERRAL
We will usually pay any loan within seven days after we receive your request and
the contract at our Home Office. But we have the right to postpone paying you
the part of the net cash value that is to come from any variable investment
option (provided by a separate account registered under Investment Company Act
of 1940) if: (1) the New york Stock Exchange is closed; or (2) the SEC requires
that trading be restricted or declares an emergency. We have the right to
postpone paying you the remainder for up to six months. If we do so for more
than ten days, we will pay interest at the rate that then applies to Option 3
(Interest Payment) of the Settlement Options provision.
================================================================================
GENERAL PROVISIONS
ANNUAL REPORT
Once each contract year we will send you a report. It will show: the current
death benefit; the amount of the contract fund in each investment option; the
cash surrender value; any contract debt and the interest rate we are charging;
premiums paid, investment results, charges deducted, and withdrawals taken since
the last report. The report may also show any other data that may be required
where this contract is delivered.
PAYMENT OF DEATH CLAIM
If we settle this contract in one sum as a death claim we will usually pay the
proceeds within seven days after we receive at our Home Office proof of the
Insured's death and any other information we need to pay the claim. But we have
the right to postpone paying the part of the proceeds that is to come from a
variable investment option provided by a separate account registered under the
Investment Company Act of 1940 if: (1) the New York Stock Exchange is closed; or
(2) the SEC requires that trading be restricted or declares an emergency. We
have the right to postpone paying the remainder for up to six months.
CURRENCY
Any money we pay, or that is paid to us, must be in United States currency. Any
amount we owe will be payable at our Corporate Office.
MISSTATEMENT OF AGE OR SEX
If the Insured's stated age or sex or both are not correct, we will change each
benefit and any amount to be paid to what the most recent deductions from the
contract fund would have provided at the Insured's correct age and sex.
ASSIGNMENT
We will not be deemed to know of an assignment unless we receive it, or a copy
of it, at our Home Office. We are not obliged to see that an assignment is valid
or sufficient. This contract may not be assigned to any employee benefit plan or
program without our consent. This contract may not be assigned if such
assignment would violate any federal, state, or local law or regulation
prohibiting sex distinct rates for insurance.
CHANGE IN PLAN
You may be able to have this contract changed to another plan of life insurance.
Any change may be made only if we consent, and will be subject to conditions and
charges that are then determined.
FACTORS SUBJECT TO CHANGE
Charges deducted from premium payments and the contract fund may change from
time to time, subject to the maximums shown in the contract data pages. In
deciding whether to change any of these charges, we will periodically consider
factors such as mortality, persistency, expenses, taxes and interest and/or
investment experience to see if a change in our assumptions is needed.
Administrative charges attributable to premiums will be set at one rate for all
contracts like this one. Changes in other factors will be by class. All changes
will be determined only prospectively; that is, we will not recoup prior losses
or distribute prior gains by means of these changes. The procedure for computing
rates is on file with the Department of Insurance.
APPLICABLE TAX LAW
This contract has been designed to satisfy the definition of life insurance for
Federal income tax purposes under Section 7702 of the Internal Revenue Code of
1986, as amended. We reserve the right, however, to decline any change we
determine would cause this contract to fail to qualify as life insurance under
the applicable tax law. This includes changing the basic insurance amount,
withdrawals, and changing the type of death benefit. We also have the right to
change this contract, to require additional premium payments, or to make
distributions from this contract to the extent necessary to continue to qualify
this contract as life insurance.
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<PAGE>
================================================================================
BASIS OF COMPUTATION
MORTALITY BASIS AND INTEREST RATE
(A) We compute maximum monthly insurance rates using:
1. the Commissioners 1980 Standard Ordinary Mortality Table;
2. the issue age, sex, smoker and non-smoker status, and rating class of the
Insured and the length of time since the contract date;
3. age last birthday; and
4. an effective interest rate of 4% a year.
(B) We compute all net single premiums and values for fixed reduced paid-up
insurance using:
1. the Commissioners 1980 Standard Ordinary Mortality Table;
2. the Insured's issue age, sex, smoker and non-smoker status and the length
of time since the contract date;
3. continuous functions based on age last birthday; and
4. an effective interest rate of 4% a year.
MINIMUM LEGAL VALUES
The cash surrender values provided by this contract are at least as large as
those set by law where it is delivered. Where required, we have given the
insurance regulator a detailed statement of how we compute values and benefits.
Page 18
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<PAGE>
================================================================================
SETTLEMENT OPTIONS
OPTIONS DESCRIBED
You may choose to have the proceeds (that is, any death benefit or any amount
payable upon surrender of the contract) paid in a single sum or under one of the
optional modes of settlement described below.
If the person who is to receive the proceeds of this contract wishes to take
advantage of one of these optional modes, we will furnish, on request, details
of the options we describe below or any others we may have available at the time
the proceeds become payable.
OPTION 1 (INSTALMENTS FOR A FIXED PERIOD)
We will make equal payments for up to 25 years. The Option 1 Table shows the
minimum amounts we will pay.
OPTION 2 (LIFE INCOME)
We will make equal monthly payments for as long as the person on whose life the
settlement is based lives, with payments certain for 120 months or until the sum
of the payments equals the amount put under this option. The Option 2 Table
shows the minimum amounts we will pay. But, we must have proof of the date of
birth of the person on whose life the settlement is based. The settlement will
share in our surplus to the extent and in the way we decide.
OPTION 3 (INTEREST PAYMENT)
We will hold an amount at interest. We will pay the interest annually,
semi-annually, quarterly, or monthly.
OPTION 4 (INSTALMENTS OF A FIXED AMOUNT)
We will make equal annual, semi-annual, quarterly, or monthly payments for as
long as the available proceeds provide.
OPTION 5 (NON-PARTICIPATING INCOME)
We will make payments like those of any annuity we then regularly issue that:
(1) is based on United States currency; (2) is bought by a single sum; (3) does
not provide for dividends; and (4) does not normally provide for deferral of the
first payment. Each payment will be at least equal to what we would pay under
that kind of annuity with its first payment due on its contract date. If a life
income is chosen, we must have proof of the date of birth of any person on whose
life the option is based. Option 5 cannot be chosen more than 30 days before the
due date of the first payment.
INTEREST RATE
Payments under Options 1 and 4 will be calculated assuming an effective interest
rate of at least 3 % a year. Under Option 3 it will be at an effective rate of
at least 3% a year.
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<PAGE>
SETTLEMENT OPTIONS TABLES
OPTION 1 TABLE
- --------------------------------------------
MINIMUM AMOUNT OF MONTHLY PAYMENT FOR
EACH $1,000. THE FIRST PAYABLE IMMEDIATELY.
- --------------------------------------------
Number Monthly
of Years Payment
- --------------------------------------------
1 $84.65
2 43.05
3 29.19
4 22.27
5 18.12
6 15.35
7 13.38
8 11.90
9 10.75
10 9.83
11 9.09
12 8.46
13 7.94
14 7.49
15 7.10
16 6.76
17 6.47
18 6.20
19 5.97
20 5.75
21 5.56
22 5.39
23 5.24
24 5.09
25 4.96
- --------------------------------------------
Multiply the monthly amount by 2.989 for
quarterly, 5.982 for semi-annual or 11.804
for annual.
- --------------------------------------------
<TABLE>
<CAPTION>
OPTION 2 TABLE
- --------------------------------------------------------------------------------
MINIMUM AMOUNT OF MONTHLY PAYMENT FOR EACH $1,000. THE FIRST PAYABLE IMMEDIATELY
- --------------------------------------------------------------------------------
KIND OF LIFE INCOME KIND OF LIFE INCOME
------------------- -------------------
AGE 10-Year Instalment AGE 10-Year Instalment
LAST Certain Refund LAST Certain Refund
BIRTHDAY Male Female Male Female BIRTHDAY Male Female Male Female
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 $3.18 $3.11 $3.17 $3.10 45 $4.06 $3.82 $3.99 $3.78
and under
11 3.19 3.12 3.18 3.11 46 4.12 3.86 4.03 3.81
12 3.20 3.13 3.19 3.12 47 4.17 3.90 4.08 3.85
13 3.21 3.14 3.20 3.13 48 4.23 3.94 4.13 3.90
14 3.22 3.15 3.21 3.14 49 4.28 3.99 4.18 3.94
15 3.24 3.16 3.23 3.15 50 4.35 4.04 4.24 3.98
16 3.25 3.17 3.24 3.16 51 4.41 4.09 4.29 4.03
17 3.27 3.19 3.25 3.18 52 4.48 4.15 4.35 4.08
18 3.28 3.20 3.27 3.19 53 4.55 4.21 4.41 4.13
19 3.30 3.21 3.28 3.20 54 4.62 4.27 4.48 4.19
20 3.31 3.22 3.30 3.21 55 4.70 4.33 4.55 4.24
21 3.33 3.24 3.32 3.23 56 4.78 4.40 4.62 4.30
22 3.35 3.25 3.33 3.24 57 4.86 4.47 4.69 4.37
23 3.36 3.26 3.35 3.25 58 4.95 4.54 4.77 4.43
24 3.38 3.28 3.37 3.27 59 5.05 4.62 4.86 4.50
25 3.40 3.30 3.39 3.29 60 5.15 4.71 4.94 4.58
26 3.42 3.31 3.41 3.30 61 5.25 4.79 5.03 4.66
27 3.45 3.33 3.43 3.32 62 5.36 4.89 5.13 4.74
28 3.47 3.35 3.45 3.34 63 5.48 4.98 5.23 4.82
29 3.49 3.37 3.47 3.35 64 5.60 5.09 5.34 4.92
30 3.52 3.39 3.49 3.37 65 5.73 5.20 5.45 5.01
31 3.54 3.41 3.52 3.39 66 5.87 5.31 5.57 5.11
32 3.57 3.43 3.54 3.41 67 6.01 5.43 5.70 5.22
33 3.60 3.45 3.57 3.44 68 6.15 5.56 5.83 5.34
34 3.63 3.47 3.60 3.46 69 6.30 5.70 5.97 5.46
35 3.66 3.50 3.63 3.48 70 6.46 5.84 6.11 5.58
36 3.69 3.52 3.66 3.50 71 6.62 5.99 6.27 5.72
37 3.72 3.55 3.69 3.53 72 6.79 6.15 6.43 5.86
38 3.76 3.58 3.72 3.56 73 6.96 6.31 6.60 6.01
39 3.80 3.61 3.75 3.58 74 7.13 6.49 6.78 6.18
40 3.84 3.64 3.79 3.61 75 7.30 6.67 6.97 6.35
41 3.88 3.67 3.82 3.64 76 7.48 6.85 7.17 6.53
42 3.92 3.70 3.86 3.67 77 7.66 7.04 7.38 6.72
43 3.97 3.74 3.90 3.71 78 7.83 7.24 7.60 6.93
44 4.01 3.78 3.94 3.74 79 8.00 7.44 7.83 7.15
80 8.17 7.64 8.07 7.38
and over
- --------------------------------------------------------------------------------
</TABLE>
Page 20
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II-51
<PAGE>
Page 21
(VUL-97) II-52
<PAGE>
Flexible Premium Variable Life Insurance Policy. Insurance payable only upon
death. Cash values reflect premium payments, investment results, and charges.
Page 22
VUL-97 NY II-53
<PAGE>
Exhibit 1.A. (6)(b)
May 12, 1998
I hereby certify that the following "By-laws" numbered 1 to 28, inclusive, is a
true copy of the By-laws of the Prudential Insurance Company of America adopted
by the Directors August 10, 1943 as amended to and including May 12, 1998.
BY-LAWS OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
1. The business of the corporation shall be the making of insurance upon
the lives or health of persons and every insurance appertaining
thereto, the granting, purchasing and disposing of annuities, the
making of insurance against bodily injury or death by accident, the
making of legal services insurance, the assuming of risks through
extended reinsurance, and the providing of those kinds of services
that a domestic insurer is permitted to provide by Subtitle 3 of Title
17B, of the New Jersey Statutes; and, as incidental to such primary
objects and purposes, the investment and reinvestment from time to
time of its capital, surplus and other funds or any part thereof and
the funds of other persons in such manner as may be authorized or
permitted by law.
2. The business of the corporation shall be managed by a board of twenty-
three directors, except when different persons hold the offices of
Chairman of the Board and President and the Chairman of the Board and
not the President is the Chief Executive Officer of the corporation in
which case the number shall be twenty-four. All of the directors
shall be policyholders of the corporation. Six directors shall be
such persons as may be appointed by the Chief Justice of the Supreme
Court of New Jersey as public directors pursuant to the provisions of
Subtitle 3 of Title 17B, of the New Jersey Statutes, sixteen directors
shall be elected by the policyholders as provided by Subtitle 3 of
Title 17B, of the New Jersey Statutes; and in addition the Chairman of
the Board and Chief Executive Officer and the President elected and
holding office as such from time to time shall be ex officio
directors.
The public directors and elected directors shall be classified as
provided by law. If the office of any elected director shall become
vacant by reason of death, resignation, or any other cause, the Board
shall by a majority vote of its entire number as then constituted,
elect a successor who shall hold office for the unexpired term to
which such vacancy relates.
3. Directors of the corporation shall be elected by a majority of the
votes cast at the annual election of directors held at the principal
office of the corporation in the City of Newark, New Jersey on the
first Tuesday in April of each year conducted in the manner provided
by Subtitle 3 of Title 17B, of the New Jersey Statutes.
4. Regular meetings of the Board of Directors shall be held on the
second Tuesday of the month during those months of each calendar year
identified, no later than 30 days before the beginning of such
calendar year, by the Chairman of the Board and Chief Executive
Officer. . All meetings of the Board of Directors whether regular or
special shall be held at the principal office of the corporation in
the City of Newark, New Jersey, or at such other place as the Chairman
of the Board and Chief Executive Officer may direct upon notice as
prescribed by By-law 5. Eleven directors shall be necessary to
constitute a quorum for the transaction of business at any regular or
special meeting of the Board of Directors.
Where appropriate communication facilities are reasonably available,
any or all directors shall have the right to participate in all or any
part of a meeting of the Board or a Committee of the Board by means of
conference telephone or any other means of communication by which all
persons participating in the meeting are able to hear each other.
II-54
<PAGE>
Any action required or permitted to be taken pursuant to authorization
voted at a meeting of the Board or any Committee thereof may be taken
without a meeting if, prior or subsequent to the action, all members
of the Board or such Committee, as the case may be, consent thereto in
writing and the written consents are filed with the minutes of the
proceedings of the Board or Committee. Such consent shall have the
same effect as a unanimous vote of the Board or Committee for all
purposes.
5. Special meetings of the Board of Directors may be called at any time
by the Chairman of the Board and Chief Executive Officer, or may be
called at any time by five or more directors. Notice of any such
special meeting shall be given to each director either orally, by
mail, telephone, telegraph or otherwise, in time to afford to each
director time to attend such meeting if at the time of giving such
notice that director were at the place in which he or she usually
resides or does business. Such notice shall state the purpose of any
such special meeting.
6. (a) The officers of the corporation shall be a Chairman of the Board
and Chief Executive Officer, a President, one or more Vice
Presidents, one or more Secretaries, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, a
Comptroller, one or more Assistant Comptrollers, a Company
Actuary, and one or more Actuaries. Officers at the level of
Senior Vice President and above shall be elected by the Board of
Directors, and may in the discretion of the Board of Directors be
given the designation "Executive" or "Senior" Vice President,
Vice Chairman, General Counsel, Chief Investment Officer, Chief
Financial Officer, Chief Information Officer or such other title
as the Board of Directors deems appropriate, alone or in
combination. An elected officer shall hold office for the term
for which he or she is elected, subject, however to the power of
removal by the Board of Directors, and all matters pertaining to
titles and offices of such officers shall be determined by the
Board of Directors. The Board of Directors may at any time fill
vacancies in the elective offices, may at any time and from time
to time elect such additional persons as officers as it shall
deem necessary, and may at its pleasure and in its absolute
discretion, by a vote of not less than fourteen of its members,
remove any officer with or without cause and without notice.
(b) All officers at the level below Senior Vice President, including
those who are named officers for signatory purposes only, shall
be appointed by a proper officer of the corporation and, in the
case of an appointed Vice President, may be designated by such
officer as "Corporate," "Departmental," "Functional," "Second,"
or such other designation as may be deemed appropriate. All
matters pertaining to title and offices of such officers may be
determined by a proper officer of the corporation. An appointed
officer shall hold office for a specified term or until his or
her resignation or until revocation of his or her appointment,
with or without cause, by a proper officer.
(c) Any Vice President may be designated as the "President,"
"Secretary," "Treasurer," "Comptroller," or such other title or
designation with respect to a business unit of the corporation as
may be deemed appropriate by the Board of Directors or proper
offices of the corporation, as the case may be. Any assistant
officer may, in the discretion of the Board of Directors or a
proper officer, as the case may be, be designated "Associate,"
"Assistant," or "Deputy," as may be appropriate. Any person at
the level of Vice President may use either his or her Vice
Presidential designation or such other designation as he or she
has been given by the Board of Directors or a proper officer, as
the case may be, in conducting the corporation's business.
II-55
<PAGE>
(d) If the Board of Directors or a proper officer of the corporation,
as the case may be, shall deem it appropriate, any one person may
hold more than one of the foregoing offices simultaneously;
provided, however, that no single person can hold the offices of
President and Secretary simultaneously. No person shall be
deemed to be an officer of the corporation, unless he or she has
been elected or appointed and is holding office pursuant to the
provisions of this By-law 6.
(e) The several officers shall have such powers and authority and
perform such duties as commonly pertain to their respective
offices and as may be prescribed by the Board of Directors either
by virtue of these By-laws or otherwise or by the Chairman of the
Board and Chief Executive Officer, and the exercise of their
powers shall likewise be subject to such limitations as may be
imposed by the Board or by these By-laws or by the Chairman of
the Board and Chief Executive Officer, subject in all cases to
the authority of the Board. The Board of Directors shall fix the
compensation of all officers of the corporation at or above the
level of Executive Vice President. The Compensation Committee of
the Board of Directors shall establish the compensation for all
officers at the level of Senior Vice President. The compensation
of all other officers shall be fixed by the proper officer of the
corporation in accordance with the corporation's compensation
plans.
7. The Chairman of the Board and Chief Executive Officer shall preside at
all meetings of the Board of Directors. In case of the absence or
disability of the Chairman of the Board and Chief Executive Officer,
the President or a Vice Chairman designated by the Chairman of the
Board and Chief Executive Officer shall preside. In the case of a
vacancy in the office of the Chairman of the Board and Chief Executive
Officer, the Board shall make such designation and in case of a
vacancy in the offices of the Chairman of the Board and Chief
Executive Officer, the President, and all Vice Chairmen, the Board
shall choose its presiding officer. The Chairman of the Board and
Chief Executive Officer shall be ex officio a member of all standing
committees except the Compensation Committee and the Auditing
Committee. The Chairman of the Board and Chief Executive Officer
shall have absolute power to supervise and direct the business of the
corporation, subject only to the power and authority of the Board of
Directors. He or she also shall have power, subject to the power of
the Board, to appoint or remove all persons employed or to be employed
by the corporation in any capacity whatsoever except the officers
elected by the Board of Directors and shall have power to fix the
compensation of all persons employed or to be employed by the
corporation other than the compensation of officers whose compensation
shall be fixed by the Board of Directors as provided in these By-laws;
provided, however, that the payment of such compensation must be first
authorized by the Board of Directors when the amount to be paid any
person in any year is such that approval by the Board of Directors is
required under the laws of New Jersey or these By-laws.
8. The Chairman of the Board and Chief Executive Officer shall, with the
approval of the Board of Directors, designate the President, a Vice
Chairman or any other officer at or above the level of Senior Vice
President who, in the absence or disability of the Chairman of the
Board and Chief Executive Officer, shall be vested with the powers and
required to perform the duties of the Chairman of the Board and Chief
Executive Officer except those pertaining to ex officio membership on
the Board of Directors and on standing committees thereof. Such
designation shall be made in writing, presented to the Board of
Directors at the stated meeting in January of each year and shall be
filed with the Secretary. When so acting in the place of the Chairman
of the Board and Chief Executive Officer such person shall be
designated as "Acting Chairman of the Board and Chief Executive
Officer". The Chairman of the Board and Chief Executive Officer may
at any time in like manner and with like approval, change such
designation and may also designate one or more Vice Presidents to act
in succession in the order designated by him or her in the place of
any acting Chairman of the Board and Chief Executive Officer in case
of the latter's absence, disability or death. During a vacancy in the
office of Chairman of the Board and Chief Executive Officer, the Board
shall make such designation. In other respects, the President, each
Vice Chairman and each Vice President shall exercise such powers and
perform such duties as may be prescribed by the Chairman of the Board
and Chief
II-56
<PAGE>
Executive Officer or by the Board of Directors. The Chairman of the
Board and Chief Executive Officer, the President, each Vice Chairman,
and any one of the Vice Presidents shall have power to execute on
behalf of the corporation all instruments, deeds, contracts and other
corporate acts and papers, subject only to the provisions of By-law
25.
9. The Secretary shall be ex officio secretary of the Board of Directors
and of each of the standing committees, except the Auditing Committee.
The Secretary shall attend all sessions of the Board of Directors and
of the Executive Committee and of the Investment Committee and, when
requested, any other committees of the Board. The Secretary shall
keep full and accurate minutes of the proceedings of the Board and of
the Executive Committee and Investment Committee and shall enter
such minutes in books provided for that purpose. The Secretary shall
furnish to the Board of Directors and to all committees such corporate
accounts and papers as may be required by them. The Secretary shall
have charge of the corporate seal of the corporation and shall have
power to affix the same to corporate instruments and to attest the
same. The Secretary shall have power to execute on behalf of the
corporation such instruments as may be required to be executed by him
or her. The Secretary shall have custody of the books, papers and
records of the corporation, shall give all notices on behalf of the
corporation except such as may by any provision of the law be required
to be given by any other officer and shall conduct such correspondence
and perform such other duties as may be assigned to him or her by the
Chairman of the Board and Chief Executive Officer or by the Board of
Directors.
10. The corporation shall have a common seal making the following
impression:
11. Each Assistant Secretary shall have power to execute on behalf of the
corporation such instruments as may be required to be executed by the
Secretary and to affix the seal of the corporation to corporate
instruments and to attest the same, subject, however, to the
provisions of By-law 25. Each Assistant Secretary shall perform such
duties as may be assigned to him or her from time to time by the
Chairman of the Board and Chief Executive Officer or the Secretary,
subject, however, to the power of the Board of Directors in the
premises.
12. The Treasurer shall have custody of such funds of the corporation as
shall be placed in his or her keeping, shall open and maintain
accounts in banking institutions in the name of the corporation for
the deposit of such funds and may open and maintain accounts in the
names or titles of representatives of the corporation under such
conditions as he or she may deem appropriate, subject to supervision
by the Committee on Finance and Dividends. All funds shall be
disbursed only by instruments signed by two or more officials to be
designated by the Committee on Finance and Dividends or pursuant to
procedures approved by the Treasurer and the Comptroller. The
Treasurer shall have custody of such of the securities of the
corporation as shall be placed in his or her keeping and shall open
and maintain accounts in banking institutions in the name of the
corporation for the custody of other securities, including accounts
maintained for the purpose of participating in one or more securities
systems designed to permit the transfer of a security without physical
delivery of the certificate or other evidence of such security,
subject to supervision by the Committee on Finance and Dividends.
The Treasurer shall have the power to sell, assign or transfer
securities of the corporation on the authorization or direction of the
Committee on Finance and Dividends or to take such other action in
connection therewith as may be authorized or directed by the Committee
on Finance and Dividends, and shall have power to execute, on behalf
of the corporation, all instruments necessary or appropriate in the
premises. The Treasurer shall have the power to borrow funds on
II-57
<PAGE>
behalf of the corporation on the authorization of the Committee on
Finance and Dividends and perform such other duties as may be assigned
to him or her by the Chairman of the Board and Chief Executive Officer
or the Board of Directors. Each Assistant Treasurer shall have power
to perform, on behalf of the corporation, such duties as are or may be
required to be performed by the Treasurer, and shall perform such
other duties as may be assigned to him or her from time to time by the
Chairman of the Board and Chief Executive Officer or the Treasurer.
13. The Comptroller shall supervise the accounts of the corporation, shall
have supervision over and responsibility for the books, records,
accounting and system of accounting and auditing in each business unit
of the corporation, and shall perform such other duties as may be
assigned to him or her by the Chairman of the Board and Chief
Executive Officer or the Board of Directors. Each Assistant
Comptroller shall have the power to perform, on behalf of the
Corporation, such duties as are or may be required to be performed by
the Comptroller, and shall perform such other duties as may be
assigned to him or her from time to time by the Chairman of the Board
and Chief Executive Officer or by the Comptroller.
14. The Company Actuary shall represent the corporation in all actuarial
matters affecting the corporation's business not otherwise delegated
to a specific business unit, and shall have the authority to execute
on behalf of the corporation the statements that are filed annually
with the insurance regulators that describe the financial condition of
the corporation at the end of the year, and its business for that
year. The Company Actuary shall also perform such other duties as may
be assigned to him or her by the Chairman of the Board and Chief
Executive Officer, the Board of Directors or any of the committees.
Each business unit shall designate an Actuary who shall supervise the
designing and pricing of insurance and annuity products for such
Actuary's business unit, the valuation of the liabilities of the
corporation with respect to such products, the making of estimates as
may be required of the future financial results of the corporation,
and the conduct of research relevant to these duties.
15. The standing committees shall be:
i. An Executive Committee consisting of a Chairman to be appointed
by the Board of Directors, the Chairman of each of the other
standing committees, the Chairman of the Board and Chief
Executive Officer and such other members as the Board shall
appoint.
ii. An Investment Committee consisting of no fewer than five
directors in addition to the Chairman of the Board and Chief
Executive Officer.
iii. A Committee on Finance and Dividends consisting of no fewer than
five directors in addition to the Chairman of the Board and
Chief Executive Officer.
iv. A Committee on Nominations consisting of no fewer than five non-
officer directors.
v. A Corporate Governance Committee consisting of the members of
the Committee on Nominations and two additional directors who
shall be public directors. .
vi. A Compensation Committee consisting of no fewer than five non-
officer directors.
vii. An Auditing Committee consisting of no fewer than five non-
officer directors.
viii. A Committee on Business Ethics consisting of no fewer than three
non-officer directors in addition to the Chairman of the Board
and Chief Executive Officer.
II-58
<PAGE>
The Board of Directors shall determine the number and appoint the
members of each of the standing committees. All appointments to any
one of the standing committees shall be for such period as the Board
shall determine.
The Chairman of the Board and Chief Executive Officer may, in his or
her discretion from time to time, appoint any member of the Board to
serve temporarily upon any standing or special committee during the
absence or disability of any regular member thereof.
16. The Executive Committee shall have general supervision over the
business of the corporation and, in the intervals between meetings of
the Board of Directors, shall exercise the corporate powers of the
corporation including those delegated to other committees, except to
the extent that such powers are reserved to the Board of Directors
either by virtue of these By-laws or otherwise; provided, however,
that the Executive Committee may fill all vacancies in the elective
offices of the corporation except the office of the Chairman of the
Board and Chief Executive Officer, the President, and any Vice
Chairman until such time as the Board shall act thereon; and provided
further, the Executive Committee shall not exercise powers delegated
to any other committee unless the Chairman and Chief Executive Officer
shall determine that it is not possible or convenient to convene such
other committee within the time required for taking action. All
action of the Executive Committee shall be reported to the Board of
Directors and shall, except in cases in which the rights or acts of
third parties would be affected, be subject to the direction of the
Board.
17. The Investment Committee shall supervise the management and
disposition of the invested assets of the corporation and its health,
insurance, and investment subsidiaries, and the investment of the
corporation's pension fund. The Committee also shall review certain
investment risks and exposures for the corporation and its
subsidiaries, and periodically shall review the investment
performance of the products and accounts managed by the corporation
and its subsidiaries on behalf of third parties. All actions of the
Investment Committee shall be reported to the Board of Directors and
shall, except in cases in which the rights or acts of third parties
would be affected, be subject to the direction of the Board.
18. The Committee on Finance and Dividends shall oversee the capital
structure of the corporation and its subsidiaries, including the
incurrence and repayment of borrowings, the subsidiary structure of
the corporation (excluding investment subsidiaries), dividend levels
for participating policies, insurance reserve levels and adjustments,
major capital expenditures, funding of the corporation's pension fund
and supervision of the custody of funds and securities. All action of
the Committee on Finance and Dividends shall be reported to the Board
of Directors and shall, except in cases in which the rights or acts of
third parties would be affected, be subjected to the direction of the
Board.
19. The Auditing Committee shall assist the Board of Directors in
fulfilling its fiduciary responsibilities relating to the accounting,
reporting and control practices of the corporation. In so doing, the
Committee shall: review the adequacy of the corporation's system of
internal control; recommend to the Board the appointment of
independent auditors; review the independent auditors' annual audit
plan, its control comments and recommendations, and management's
response to the recommendations; review the effectiveness of the
internal audit function, approve the scope of the internal audit
program and review internal audit findings; and conduct such other
inquiries and review such other materials as the Committee deems
appropriate. In carrying out its responsibilities, the Committee may
employ such auditors or accountants as it deems advisable or may avail
itself of the services of the regular auditors or accountants of the
corporation. The Committee shall designate a Secretary and maintain
minutes of its meetings.
The Committee shall submit a report to the Board of Directors annually
describing the Committee's activities and containing any
recommendations which the Committee may have. The
II-59
<PAGE>
Committee shall discharge any additional responsibilities as may be
specified from time to time by the Board of Directors.
20. The Committee on Nominations shall annually not later than the regular
June meeting of the Board of Directors recommend to the Board for
nomination as directors the names of four persons to succeed the
directors whose terms of office shall expire at the time of the next
annual election. Whenever a vacancy occurs in the Board of Directors,
the Committee on Nominations shall recommend a suitable person to fill
such vacancy, except that whenever a vacancy results from the failure
of a candidate for election to the Board of Directors to be elected by
a majority of votes cast, the public directors then serving on the
Board of Directors shall be constituted as a special nominating
committee to recommend a suitable person to fill such vacancy.
21. The Corporate Governance Committee shall oversee and make
recommendations to the Board regarding corporate governance, review
and make recommendations with respect to the composition of the
standing committees of the Board, and make recommendations to the
Board for the appointment of chairpersons for the respective standing
committees and any committees appointed ad hoc.
22. The Compensation Committee shall recommend to the Board of Directors
the compensation to be paid to officers of the corporation at or above
the level of Executive Vice President. The Committee shall fix the
compensation of all officers at the level of Senior Vice President .
The Compensation Committee also shall have the authority to approve,
modify and rescind the corporation's compensation and employee
benefits plans and to make such decisions as are necessary to effect
their administration. The Committee shall have oversight
responsibility with respect to compensation and benefit plan
administration, and will review other human resources matters
pertaining to executive succession and such other policies and
procedures as may be relevant to examine periodically. The Committee
shall further discharge any additional responsibilities as may be
specified from time to time by the Board of Directors.
23. The Committee on Business Ethics shall have responsibility to review
the corporation's policies on business ethics and from time to time
make recommendations to the Board of Directors concerning the adoption
and amendment of the corporation's published statement on business
ethics. The Committee shall have responsibility for monitoring and
enforcing compliance with By-law 28 and the corporation's published
statement on business ethics. It shall have the authority to make
determinations of all questions that may arise thereunder, and to
interpret and enforce the requirements thereof by appropriate action.
The Committee shall also have the authority to grant exceptions
thereunder which in the Committee's judgment are appropriate or
desirable under the circumstances. The Committee shall further
discharge any additional responsibilities as may be specified from
time to time by the Board of Directors.
24. The fiscal year of the corporation shall commence on the first day of
January and end on the thirty-first day of December in each year.
25. Either the Chairman of the Board and Chief Executive Officer and the
Secretary or the President and the Secretary shall, except as
otherwise provided in the following sentence, execute all contracts of
insurance and annuity either by signing such contracts manually or by
causing to be thereto affixed their respective facsimile signatures
duly adopted by each of them for the purpose with the approval of the
Board of Directors. The Board of Directors, in its discretion, may
authorize the execution in the same manner of any such contracts
issued out of any office outside of the United States of America by
the proper officers of such office. In case any officer, as
aforesaid, who shall have signed a contract form or whose facsimile
signature shall have been affixed thereto shall cease to be such
officer by reason of death or otherwise before such contract shall
have been issued and delivered, such contract may nevertheless be
issued and delivered
II-60
<PAGE>
unless the Board of Directors shall otherwise determine, and any such
contract so issued and delivered shall be as binding upon the
corporation as though every officer who signed the same or whose
facsimile signature was affixed thereto, as aforesaid, had continued
to be such officer of the corporation.
26. These By-laws may be altered, amended or rescinded without notice at
any regular meeting of the Board of Directors, or, upon such notice as
is prescribed by By-law 5, at any special meeting of the Board of
Directors, but in either case only by the vote of not less than twelve
members of the Board of Directors.
27. Except as otherwise provided in this By-law, the corporation shall
have the power conferred by Section 14A:3-5 of the New Jersey Statutes
to indemnify directors, officers, employees, and all other corporate
agents defined therein.
Any indemnification under this By-law pursuant to Section 14A:3-5, New
Jersey Statutes, shall be made by the corporation as authorized in a
specific case upon its being determined that (A) the costs,
disbursements and counsel fees included in any expenses for which
indemnification is made are reasonable, (B) except for indemnification
required by subsection 14A:3-5(4), indemnification is proper in the
circumstances because the corporate agent (i) met the applicable
standard of conduct set forth in subsection 14A:3-5(2) or subsection
14A:3-5(3), as the case may be, and (ii) acted within what such agent
reasonably believed to be the scope of his or her employment and
authority, and (C) any necessary court order has been obtained.
Such determinations shall be made:
(a) With respect to a corporate agent who is or was a director or
officer of the corporation at or above the level of Senior Vice
President, or with respect to any other corporate agent if the
amount to be paid in indemnification to such corporate agent
exceeds $1 million:
(i) By the Board of Directors of the corporation, or a committee
thereof, acting by a majority vote of a quorum comprised of
directors who are not parties to or otherwise involved in
the proceedings;
(ii) If such a quorum is not obtainable, or, even if obtainable
and such quorum of the Board of Directors or committee by
majority vote of the disinterested directors so directs, by
independent legal counsel, in a written opinion, such
counsel to be designated by the Board of Directors.
(b) With respect to any determinations not required to be made
pursuant to (a), by the general counsel of the corporation.
Expenses reasonably incurred by a corporate agent in connection with a
proceeding may be paid by the corporation in advance of the final
disposition of the proceeding. In the case of a director, such
expenses shall be paid when incurred; in the case of any other
corporate agent, such expenses may be paid if authorized in the manner
provided above for determination that indemnification is proper. No
such expenses shall be paid until the corporate agent provides an
undertaking to repay any amount so advanced if it shall ultimately be
determined that he or she is not entitled to be indemnified as
provided in this By-law.
Any right to indemnification provided by or pursuant to the foregoing
provisions of this By-law shall not be exclusive of any other rights
to which a corporate agent may be entitled as a matter of law, by
agreement or otherwise.
II-61
<PAGE>
28. No director or employee of the corporation shall have any position
with, a substantial interest in or significant borrowing from any
other enterprise operated for profit, the existence of which would
conflict or might reasonably be supposed to conflict with the proper
performance of his or her responsibilities to the corporation, or
which might tend to affect his or her independence of judgment with
respect to transactions between the corporation and such other
enterprise.
Susan Blount
Secretary
<PAGE>
EXHIBIT 1.A(10)(a)
THE PRUDENTIAL [LOGO]
APPLICATION FOR LIFE INSURANCE
OR POLICY CHANGE
[X] The Prudential Insurance Company of America
[ ] Pruco Life Insurance Company of New Jersey
Policy No. XXXXXXXXXXXXXXXXXX A Subsidiary of
------------------ The Prudential Insurance Company of America
[ ] Check here if policy change. Corporate Offices, Newark, New Jersey
John Doe
- --------------------------------------------------------------------------------
Name of primary proposed Insured (or current Insured, if policy change) (first,
initial, last)
<TABLE>
<CAPTION>
PART 1
=============================================================================================================================
<S> <C> <C> <C> <C>
A. PERSONAL INFORMATION (PRIMARY PROPOSED INSURED)
1. Social Security No. 2. Sex: [ ] Male [ ] Female
--------------------
3. Marital Status: [ ] Single [ ] Married [ ] Widowed [ ] Separated [ ] Divorced
4. Date of Birth: Mo. 6 Day 15 Yr. 61 5. Age 35 6. State of Birth (Country if not U.S.) (Name of State)
---- ----- ----- ---- ----------------------
7. Billing Address (City, State and Zip) :
------------------------------------
123 Main St.. Any City Any State XXXXX
8. Home Address (if different):
-------------------------------------------------
9. Home Telephone Number (XXX) XXX-XXXX 10. Business Telephone Number (XXX) XXX-XXXX
----------------------- -------------------
11. Current Employer ABC Company
=============================================================================================================================
B. ALL OTHER PROPOSED INSUREDS (Include Applicant for Applicant's Waiver of Premium Benefit)
Name Relationship to Sex Date of Age State of Total Life Insurance
primary proposed Birth Birth (country in all companies
Insured (mo., day, yr.) if not U.S.)
</TABLE>
<TABLE>
<CAPTION>
=============================================================================================================================
<S> <C> <C> <C> <C>
C. COVERAGE INFORMATION
1. Plan of Insurance Variable Universal Life 2. Initial Amount $50,000
-------------------------------- ----------------
$If AL/VAL or if applicable to the product, check one: [ ] Level Death Benefit [X] Variable Death Benefit
3. SUPPLEMENTARY BENEFITS AND RIDERS (Please indicate amount where applicable)
[ ] Waiver of Premium [ ] Accidental Death Benefit $
--------------------------------
[ ] Living Needs Benefit [ ] Option to Purchase Additional Insurance $
-----------------
[ ] Applicant's Waiver of Premium [ ] Option to Purchase Paid Up Life Insurance Additions
[ ] Automatic Premium Loan (include details in special request)
OTHER RIDERS AND BENEFITS: (Please indicate amount where applicable)
-----------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
=============================================================================================================================
D. BENEFICIARIES/OWNERSHIP (If Trust, provide name of trust, trustee and date of trust.)
<S> <C> <C>
1. Beneficiary: Name Relationship to primary proposed Insured Age
Primary (Class 1) Mary Doe Spouse 35
-----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Contingent (Class 2) Robert Doe Son 10
-----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
2. Is the owner other than the primary proposed Insured? [ ] Yes [X] No
If yes: Name
-----------------------------------------------------------------------------------------------------
Address
-----------------------------------------------------------------------------------------------------
Owner's date of birth
-----------------------------------------------
-----------------------------------------------------------------------------------------------------
</TABLE>
ORD 96200-96
New York
II-63
<PAGE>
================================================================================
E. PAYMENT DETAILS
1. Within the last 12 months, has any proposed Insured had a heart attack,
stroke or cancer other than of the skin? [ ] Yes [X] No
2. Is a medical examination required on:
Primary Proposed Insured? [ ] Yes No [X]
Second Proposed Insured? [ ] Yes [X] No
3. Premium Payment Mode: (collect full modal premium if prepaid)
[X] Pru-matic [ ] Annual [ ] Semi-annual [ ] Quarterly [ ] Monthly
[ ] Payroll Budget [ ] Gov't Allotment
4. Amount paid with this application $ 68.13 [ ] None
-------------------------------
(Must be "None" if E1 is answered Yes, except Gibraltar products.)
5. DATE PREMIUM COLLECTED 1-1-97
-----------------------------------------------
F. REPLACEMENT
For any proposed Insured, would this insurance replace or cause a change in any
existing insurance or annuity in any company? [ ] Yes [X] No
(If yes, give insurance company, plan, amount and policy number(s). Enclose all
required state replacement forms.)
================================================================================
G. SPECIAL REQUESTS
================================================================================
H. BACKGROUND ON PROPOSED INSUREDS
1. Total Life Insurance on the primary proposed Insured in effect
___________________________________________________ Check here if None [X].
2. What are the primary proposed Insured's occupation and duties?
Manager & Administrative duties
---------------------------------
3. Has any proposed Insured participated in the following activities within the
last 2 years (or does anyone plan to do so in the future):
a.operated or had any duties aboard an aircraft, glider, balloon, or like
device? [ ] Yes [X] No
If yes, complete Aviation Questionnaire.
b. hazardous sports, such as auto, motorcycle, snowmobile or powerboat
competitions/exhibitions;
scuba diving; mountain climbing; parachuting; sky diving or any
other such sport or hobby? [ ] Yes [X] No
If yes, complete Avocation Questionnaire.
For any questions answered yes below, give the details in 8.
4. Is any proposed Insured applying for or requesting reinstatement or policy
change(s) of any other life or health
insurance policy? If yes, give insurance company, policy plan and amount.
[ ] Yes [X] No
5. Has any proposed Insured been convicted of, or currently charged with, the
commission of any criminal offense, other than the violation of a motor
vehicle law within the last 5 years? [ ] Yes [X] No
6. a. Primary Proposed Insured driver's license number and state of issue:
XXXXX-XXXXX-XXXXX (Name of State)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
b. Has any proposed Insured in the last 3 years:
(1.) had a driver's license denied, suspended or revoked? [ ] Yes [X] No
(2.) been convicted of driving under the influence of alcohol or drugs? [ ] Yes [X] No
(3.) been cited for 3 or more moving violations? [ ] Yes [X] No
(4.) been involved as a driver in 2 or more auto accidents? [ ] Yes [X] No
If yes, give details including type of violation, accident or
reason for denial, suspension or revocation.
</TABLE>
7. Does any proposed Insured plan to live or travel outside the United States
or Canada within the next 12 months? [ ] Yes [X] No
If yes, give countries, purpose and duration of each trip.
8. Details of yes answers for questions 4-7. Give question number, proposed
Insured's name and full details
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR ADDITIONAL DETAILS USE ANOTHER APPLICATION
- --------------------------------------------------------------------------------
I. DIVIDEND OPTION ELECTION - COMPLETE ONLY IF APPLYING TO THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA
[ ] Paid-up additions [ ] Accumulate at interest [ ] Cash
[ ] Reduce premiums (not available for monthly mode) [ ]
___________
================================================================================
ORD 96200-96
New York
II-64
<PAGE>
On this page the words "I" and "my" refer to the primary proposed Insured and
applicant, if different. The words "the Company" refer to the company checked
at the beginning of this application. If a policy change, "I" and "my" refer to
Insured or Owner, if other than Insured.
TERMS AND CONDITIONS
No new coverage requested in this application starts on any proposed Insured
until all required initial medical exams and tests agreed to are completed, even
if an amount has been paid to the Company.
When the Company gives a Limited Insurance Agreement form dated on the same date
shown below, coverage will start as written in that Agreement. Otherwise,
coverage will start on the policy date, provided:
. The Company issues a policy and I accept it; and
. the first premium is paid in full while all proposed Insureds'
health remains as stated in the application.
No agent can make or change a policy, or waive any of the Company's rights or
requirements.
The beneficiary named in the application (or in the policy if requesting a
policy change) is for insurance payable in either of the following cases:
. at the death of the primary Insured; and
. at the death of an Insured child after the death of the primary
Insured if there is no Insured spouse.
If this is a policy change and no beneficiary has been named in the application,
the beneficiary for any insurance payable will be carried over from the policy
that is being changed.
The owner of the policy is the primary proposed Insured or applicant if other
than the primary proposed Insured unless a different owner is named in the
application. If this is a policy change, the ownership arrangement will be
carried over from the policy that is being changed unless a different owner is
named in the application. This is subject to any provisions for the automatic
transfer of ownership stated in the policy. If joint owners are named, ownership
will be with the right of survivorship unless otherwise specified.
- --------------------------------------------------------------------------------
SIGNATURES
By signing below:
.I certify that to the best of my knowledge and belief the statements in this
application are complete, true and correctly recorded.
.I understand that new coverage could be invalidated if any information in the
application is materially misrepresented.
.I CONFIRM THAT IF I HAVE REQUESTED THE LIVING NEEDS BENEFIT, I HAVE READ THE
DISCLOSURES IN THE BROCHURE (ORD 87246NY); AND AM AWARE THAT (1) RECEIPT OF
ACCELERATED DEATH BENEFITS MAY AFFECT ELIGIBILITY FOR PUBLIC ASSISTANCE
PROGRAMS AND MAY BE TAXABLE; AND (2) A DISCOUNT IS APPLIED TO DETERMINE ANY
ACCELERATED DEATH BENEFIT PAYABLE AND A $150 ADMINISTRATIVE CHARGE WILL BE
DEDUCTED AT THE TIME OF PAYMENT.
.I agree to the Terms and Conditions shown above and on the Important Notice
About Your Application, which I have received and read.
Signed at: (Name of City, State) on Jan. 1, 1997
-------------------------------------------------------------------
(City/State) Date (month/day/year)
Signature of primary proposed Insured, if age 14 and six months
or over X John Doe or current Insured, if policy change
--------
Signature of Applicant, if different than primary proposed Insured
X Richard Roe
-----------
or if a policy change, Signature of Owner, if different than Insured
If applicant is a firm or corporation, give that company's name and have an
officer sign below.
Signature and title of Officer of firm or corporation X
________________________
Signature of Beneficiary, if policy change and rights are limited X
____________
Signature of Witness (Licensed Writing Representative must witness)
X Richard Roe
___________
- --------------------------------------------------------------------------------
LICENSED WRITING REPRESENTATIVE'S CERTIFICATION:
Do you have any information, other than what is stated in this application,
that indicates that any proposed Insured
may replace or change any current insurance or annuity in any company?
[ ] Yes [X] No
Witness (Licensed Writing Representative must witness) X Richard Roe
================================================================================
ORD 96200-96
New York
II-65
<PAGE>
PART 2 - MEDICAL INFORMATION
- --------------------------------------------------------------------------------
SECTION A - TO BE COMPLETED FOR ALL CATEGORY II CHANGES AND PLANS OTHER THAN
GIBRALTAR
<TABLE>
<CAPTION>
<S> <C>
1. Doctor Information:
--------------------
A. Primary Proposed Insured
Physician last consulted: Dr. Wm. Smith Primary Physician: Dr. Wm. Smith
----------------------- ----------------------------
Date last seen: 10-95 Date last seen: 10-95
-------------------------------- -------------------------------
Reason: Cold Reason: Cold
-------------------------------- -------------------------------
Address and Phone no.: 23 Main St. Address and Phone no.: 23 Main St.
------------------------- ------------------------
Anytown Anytown
- ------------------------------------------------- -------------------------------------------------
XXX-XXXX XXX-XXXX
- ------------------------------------------------- -------------------------------------------------
B. Second Proposed Insured or AWP Applicant
Physician last consulted: Primary Physician:
----------------------- ----------------------------
Date last seen: Date last seen:
-------------------------------- -------------------------------
Reason: Reason:
-------------------------------- -------------------------------
Address and Phone no.: Address and Phone no.:
------------------------- ------------------------
- ------------------------------------------------- -------------------------------------------------
- ------------------------------------------------- -------------------------------------------------
</TABLE>
2. Build: Height Weight
----- 5' 11" 180
--------- --------
a. Primary Proposed Insured
b. Second Proposed Insured or AWP Applicant
3. Has either the primary proposed Insured or second proposed Insured, if
proposed for coverage, ever used tobacco or other nicotine products?
[ ] Yes [X] No
If yes, give date last used: Cigarettes Any other nicotine product such
(Mo/Yr) as cigar, pipe, smokeless
tobacco, nicotine gum or
nicotine patch (Mo/Yr)
Primary Proposed Insured
------------------ -------------------------------
Second Proposed Insured
------------------ -------------------------------
<TABLE>
<S> <C>
4. Has anyone proposed for coverage been treated for or diagnosed as having:
a. chest pain, or any disorder of the heart or blood vessels? [ ] Yes [X] No
b. high blood pressure? [ ] Yes [X] No
c. cancer, tumor, leukemia, melanoma, or lymphoma? [ ] Yes [X] No
d. diabetes or high blood sugar? [ ] Yes [X] No
e. mental or psychiatric illness? [ ] Yes [X] No
f. AIDS or AIDS related complex, or other sexually transmitted diseases? [ ] Yes [X] No
g. asthma or any disorder of the lungs? [ ] Yes [X] No
h. any disorder of the brain or the nervous system? [ ] Yes [X] No
I. hepatitis or any disorder of the liver, stomach or intestines? [ ] Yes [X] No
j. any disorder of the kidney or urinary tract? [ ] Yes [X] No
5. Other than above, is anyone proposed for coverage currently taking
prescription medication? [ ] Yes [X] No
6. Other than above, has anyone proposed for coverage:
a. been a patient in a hospital or other medical facility? [ ] Yes [X] No
b. in the last 5 years, had or been advised to have surgery, medical tests
(other than HIV), or diagnostic procedures i.e. ECGs, stress tests,
X-rays, blood tests (other than HIV), urine tests, etc.? [ ] Yes [X] No
7. Has anyone proposed for coverage:
a. used or is now using cocaine, amphetamines, marijuana, heroin, or
other drugs except as prescribed by a health care provider? [ ] Yes [X] No
b. had or been advised to have treatment or counseling for alcohol or
drug use? [ ] Yes [X] No
8. Does anyone proposed for coverage have any disease, disorder or condition
not indicated above? [ ] Yes [X] No
9. Has anyone proposed for coverage had life or health insurance declined,
postponed, or issued with an increased premium? [ ] Yes [X] No
10. Has anyone proposed for coverage requested or received disability
or compensation benefits? [ ] Yes [X] No
</TABLE>
================================================================================
ORD 96200-96
New York
II-66
<PAGE>
================================================================================
11. Details of yes answers for questions 4-10.
<TABLE>
<CAPTION>
Question No. Illness, operation or other reason Dates and Name, address and telephone
and proposed for any check-up, health care provider's duration number of health care
Insured's name advice, treatment and medications of illness providers and hospitals
<S> <C> <C> <C>
4g John Cold 10-96 Dr. Wm. Smith
- ----------------- ---------------------------------------- ----------- --------------------------
23 Main St.
- ----------------- ---------------------------------------- ----------- --------------------------
Anytown, USA
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
- ----------------- ---------------------------------------- ----------- --------------------------
</TABLE>
FOR ADDITIONAL MEDICAL DETAILS USE ANOTHER APPLICATION
- --------------------------------------------------------------------------------
All the answers are, to the best of my knowledge and belief, complete, true and
correctly recorded. It is understood that any new coverage could be invalidated
if any information in the application is materially misrepresented. This Part 2
will be attached to and made a part of the policy when issued.
Jan. 1, 1997 X Richard Doe X John Doe
- -------------- -------------------------- --------------------
Date Witness Signature of primary proposed
Insured (if age 15 or over)
otherwise Applicant (or Owner, if
policy change)
ORD 96200-96
- ------------
New York
II-67
<PAGE>
================================================================================
PART 2 - MEDICAL INFORMATION
- --------------------------------------------------------------------------------
SECTION B - TO BE COMPLETED FOR CATEGORY I CHANGES ONLY
1.Has either the primary proposed Insured or second proposed Insured, if
proposed for coverage, ever used
tobacco or other nicotine products? [ ] Yes [ ] No
If yes, give date last used: Cigarettes Any other nicotine product such
as cigar, pipe, smokeless
(Mo/Yr) tobacco, nicotine gum or
nicotine patch (Mo/Yr)
Primary Proposed Insured ____________ _______________________________
Second Proposed Insured ____________ _______________________________
2.Has anyone proposed for coverage been declined or charged an increased premium
for new life insurance or reinstatement of life insurance? If yes, give
details. [ ] Yes [ ] No
3.Is anyone proposed for coverage currently unable to perform the normal
duties of their occupation and/or normal daily activities?
If yes, give details. [ ] Yes [ ] No
4.Within the last five (5) years, has anyone proposed for coverage:
a. taken prescription medication, or been treated for or diagnosed as having:
high blood pressure, any disease or disorder of the heart, arteries or
veins, diabetes, cancer, respiratory disorder (including asthma, recurrent
bronchitis, emphysema), a mental illness or psychiatric disorder or any
disease or disorder of the nervous system, alcohol or drug use?
[ ] Yes [ ] No
b. been treated for or diagnosed as having AIDS or AIDS related complex or
other sexually transmitted diseases? [ ] Yes [ ] No
5. Details of any "Yes" answer to question 4:
<TABLE>
<CAPTION>
Question No. Illness, operation or other reason Dates and Name, address and telephone
and proposed for any check-up, health care provider's duration number of health care
insured's name advice, treatment and medications of illness providers and hospitals
- ----------------- ---------------------------------------- ------------ ------------------------
<S> <C> <C> <C>
- ----------------- ---------------------------------------- ------------ ------------------------
- ----------------- ---------------------------------------- ------------ ------------------------
- ----------------- ---------------------------------------- ------------ ------------------------
- ----------------- ---------------------------------------- ------------ ------------------------
- ----------------- ---------------------------------------- ------------ ------------------------
- ----------------- ---------------------------------------- ------------ ------------------------
- ----------------- ---------------------------------------- ------------ ------------------------
</TABLE>
FOR ADDITIONAL MEDICAL DETAILS USE ANOTHER APPLICATION
All the answers are, to the best of my knowledge and belief, complete, true and
correctly recorded. It is understood that any new coverage could be invalidated
if any information in the application is materially misrepresented. This Part
2 will be attached to and made a part of the policy when issued.
X X
- ---------------- -------------------- ---------------------------------
Date Witness Signature of primary proposed
Insured (if age 15 or over)
otherwise Owner
===============================================================================
ORD 96200-96
New York
II-68
<PAGE>
================================================================================
PART 2 - MEDICAL INFORMATION
- --------------------------------------------------------------------------------
SECTION C - TO BE COMPLETED FOR GIBRALTAR PLANS ONLY
<TABLE>
<CAPTION>
1. Doctor Information:
--------------------
<S> <C> <C>
A. Primary Proposed Insured
Physician last consulted: Primary Physician:
----------------------- ----------------------------
Date last seen: Date last seen:
-------------------------------- -------------------------------
Reason: Reason:
-------------------------------- -------------------------------
Address and Phone no.: Address and Phone no.:
------------------------- ------------------------
- ------------------------------------------------- -------------------------------------------------
- ------------------------------------------------- -------------------------------------------------
B. Second Proposed Insured or AWP Applicant
Physician last consulted: Primary Physician:
----------------------- ----------------------------
Date last seen: Date last seen:
-------------------------------- -------------------------------
Reason: Reason:
-------------------------------- -------------------------------
Address and Phone no.: Address and Phone no.:
------------------------- ------------------------
- ------------------------------------------------- -------------------------------------------------
- ------------------------------------------------- -------------------------------------------------
</TABLE>
2. Build: Height Weight
----- --------- --------
a. Primary Proposed Insured
b. Second Proposed Insured or AWP Applicant
<TABLE>
<S> <C>
3. Has either the primary proposed Insured or second proposed Insured, if
proposed for coverage, ever used tobacco or other nicotine products? [ ] Yes [ ] No
If yes, give date last used: Cigarettes Any other nicotine product such
(Mo/Yr) as cigar, pipe, smokeless
tobacco, nicotine gum or
nicotine patch (Mo/Yr)
Primary Proposed Insured
------------------ -------------------------------
Second Proposed Insured
------------------ -------------------------------
4. Within the last five (5) years, has anyone proposed for coverage:
a.taken prescription medication, or been treated for or diagnosed as having:
high blood pressure, any disease or disorder of the heart, arteries or
veins, diabetes, cancer, respiratory disorder (including asthma, recurrent
bronchitis, emphysema), a mental illness or psychiatric disorder or any
disease or disorder of the nervous system, alcohol or drug use? [ ] Yes [ ] No
b.been treated for or diagnosed as having AIDS or AIDS related complex or
other sexually transmitted diseases? [ ] Yes [ ] No
5. Has anyone proposed for coverage been declined or charged an increased
premium for new life insurance or reinstatement of life insurance? [ ] Yes [ ] No
6. Is anyone proposed for coverage currently unable to perform the normal duties
of their occupation and/or normal daily activities? [ ] Yes [ ] No
</TABLE>
Please include the details of any "Yes" answer to questions 4-6:
--------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR ADDITIONAL MEDICAL DETAILS USE ANOTHER APPLICATION
================================================================================
All the answers are, to the best of my knowledge and belief, complete, true and
correctly recorded. It is understood that any new coverage could be invalidated
if any information in the application is materially misrepresented. This Part
2 will be attached to and made a part of the policy when issued.
X X
- ---------------- -------------------- ---------------------------------
Date Witness Signature of primary proposed
Insured (if age 15 or over)
otherwise Applicant
ORD 96200-96
New York
II-69
<PAGE>
EXHIBIT 1.A(10)(b)
================================================================================
Supplement to the Application
[X] The Prudential Insurance Company of America
[ ] Pruco Life Insurance Company of New Jersey
A Subsidiary of The Prudential Insurance Company of
America
No. XXXXXXXXXX
------------------------------
A Supplement to the Application for a variable contract in which John Doe
is named as the proposed Insured.
- ---------------
- --------------------------------------------------------------------------------
I BELIEVE THIS CONTRACT MEETS MY INSURANCE NEEDS AND FINANCIAL OBJECTIVES. I
ACKNOWLEDGE RECEIPT OF A CURRENT PROSPECTUS FOR THE CONTRACT. I UNDERSTAND THAT
THE CONTRACT'S VALUE AND DEATH BENEFIT MAY VARY DEPENDING ON THE CONTRACT'S
INVESTMENT EXPERIENCE...................................... YES [X] NO [ ]
An illustration of values is available upon request.
Date Signature of Applicant
January 1, 1997 John Doe
ORD 86218-96
New York
II-70
<PAGE>
Exhibit 1.A.(12)
Description of Prudential's Issuance, Increases
in or Addition of Insurance Benefits,
Transfer and Redemption Procedures for
Variable Universal Life Insurance Contracts
Pursuant to Rule 6e-3(T)(b)(12)(iii)
and
Method of Computing Adjustments in
Payments and Cash Surrender Values Upon
Conversion to Fixed Benefit Policies
Pursuant to Rule 6e-3(T)(b)(13)(v)(B)
-------------------------------------
This document sets forth the administrative procedures that will be followed by
The Prudential Life Insurance Company of America ("Prudential") in connection
with the issuance of its Variable Universal Life Insurance Contract
("Contract"), the increase in or addition of benefits, the transfer of assets
held thereunder, and the redemption by Contract owners of their interests in
said Contracts. The document also explains the method that Prudential will
follow in making a cash adjustment when a Contract is exchanged for a fixed
benefit insurance Contract pursuant to Rule 6e-3(T)(b)(13)(v)(B).
I. Procedures Relating to Issuance and Purchase of the Contracts and to the
------------------------------------------------------------------------
Increase in or Addition of Benefits
-----------------------------------
A. Premium Schedules and Underwriting Standards
--------------------------------------------
The Contract has Flexible Premiums - no premiums are required to be paid by a
certain date except for the minimum initial premium required to start the
Contract. The minimum initial premium for the Contract, and the charges from
the Contract Fund to reflect the cost of insurance, will not be the same for all
owners. Insurance is based on the principle of pooling and distribution of
mortality risks, which assumes that each owner is charged a cost commensurate
with the Insured's mortality risk as actuarially determined utilizing factors
such as age, sex (in most cases), smoking status, health and occupation.
Uniform
II-71
<PAGE>
premiums or charges for all Insureds would discriminate unfairly in favor of
those Insureds representing greater risks. However, for a given face amount of
insurance, Contracts issued on insureds in a given risk classification will have
the same minimum initial premium and charges.
The underwriting standards and premium processing practices followed by
Prudential are similar to those followed in connection with the offer and sale
of fixed-benefit life insurance, modified where necessary to meet the
requirements of the federal securities laws.
B. Application and Initial Premium Processing
------------------------------- ----------
Upon receipt of a completed application form from a prospective owner,
Prudential will follow certain insurance underwriting (i.e., evaluation of risk)
-----
procedures designed to determine whether the proposed Insured is insurable. The
process may involve such verification procedures as medical examinations and may
require that further information be provided by the proposed Insured before a
determination can be made. A Contract cannot be issued, i.e., physically issued
----
through Prudential's computerized issue system, until this underwriting
procedure has been completed.
These processing procedures are designed to provide immediate benefits to every
prospective owner who pays the minimum initial premium at the time the
application is submitted. Since a Contract cannot be issued until after the
underwriting process has been completed, we will provide immediate insurance
coverage through use of a Limited Insurance Agreement. This coverage is for the
total death benefit applied for, up to the maximum described by the Limited
Insurance Agreement.
The Contract Date is the date as of which the insurance age of the proposed
Insured is determined. It represents the first day of the Contract year and
therefore determines the Contract anniversary and also the Monthly dates. It
also represents the commencement of the suicide and contestable periods for
purposes of the Basic Insurance Amount.
Benefits begin to vary in accordance with the investment performance of the
selected investment option(s) on the later of the Contract Date and the date the
minimum initial premium is paid.
If the minimum initial premium is paid with the application and no medical
examination is required, the Contract Date will
II-72
<PAGE>
ordinarily be the date of the application. If an unusual delay is encountered
(for example, if a request for further information is not met promptly), the
Contract Date will be 21 days prior to the date on which the Contract is
physically issued. If an examination is required, the Contract Date will
ordinarily be the date the examination is completed, subject to the same
qualification as that noted above.
If the premium paid with the application is less than the minimum initial
premium, the Contract Date will be determined as described above. Upon receipt
of the balance of the minimum initial premium, the total premiums received will
be applied as of the date that the minimum initial premium was satisfied.
If no premium is paid with the application, the Contract Date will be the
Contract Date stated in the Contract, which will generally be the date the
minimum initial premium is received from the owner and the Contract is
delivered.
There is one principal variation from the foregoing procedure.
If permitted by the insurance laws of the state in which the Contract is issued,
the Contract may be back dated up to six months, provided that the backdating
results in a lower insurance age for the Insured. In any event, the Contract
may not be backdated before the product introduction date.
In situations where the Contract Date precedes the date that the minimum initial
premium is received, charges due prior to the initial premium receipt date will
be deducted from the initial premium.
C. Premium Processing
------------------
Whenever a premium is received, Prudential will subtract the front-end charges.
What is left will be invested in the selected investment option(s). Premiums
other than those received prior to the Contract Date, will be invested (less
front-end charges) as of the date received (or, if that is not a business day,
as of the next business day).
D. Reinstatement
-------------
The Contract may be reinstated within five years after default (this period will
be longer if required by state law). The Contract will not be reinstated if it
was surrendered for its
II-73
<PAGE>
cash surrender value. A Contract will be reinstated upon receipt by Prudential
of a written application for reinstatement, production of evidence of
insurability satisfactory to Prudential and payment of at least (a) any amount
required to bring the cash value to zero on the date the Contract went into
default, plus (b) the deductions from the Contract Fund during the grace period
following the date of default, plus (c) a premium that would be sufficient,
after front-end charges, to cover the deductions from the Contract Fund for
three Monthly dates starting on the date of reinstatement. In addition, any
Contract debt (with interest to date) must be restored or paid back. If debt
with interest exceeds the value of a loan that we would otherwise permit on the
reinstated Contract, the excess must be paid back to Prudential at the time of
reinstatement.
Except for any such loan repayments, Prudential will treat the amount paid upon
reinstatement as a premium. It will deduct the front-end charges plus any
amount required to bring the cash value to zero on the date the Contract went
into default plus any deductions from the Contract Fund that would have been
made during the grace period. The Contract Fund of the reinstated Contract
will, immediately upon reinstatement, be equal to this net premium payment plus
the part of any surrender charge (consisting of a deferred sales charge and a
deferred administrative charge) deducted at the time of default which would have
been charged if the Contract were surrendered immediately after reinstatement.
The reinstatement will take effect as of the Monthly date that coincides with or
next follows the date Prudential approves the request for reinstatement.
There is an alternative to this reinstatement procedure that applies only if
reinstatement is requested within three months after the Contract went into
default. In such a case evidence of insurability may not be required and the
amount of the required payment will be an amount Prudential estimates will keep
the Contract inforce for three months from the date of default.
E. Repayment of Loan
-----------------
A loan made under the Contract may be repaid with an amount equal to the moneys
borrowed plus interest which accrues daily at a fixed annual rate which depends
on whether the loan is a "regular loan" or "preferred loan." A regular loan is
available at any time and can equal up to the loan value (90% of the portion of
the cash value attributable to the variable investment options and 100% of the
balance of the cash value). The effective annual
II-74
<PAGE>
rate that we charge on regular loans is 5%. A preferred loan is available
starting on the tenth Contract anniversary, and can equal up to the maximum
amount that may still be borrowed (loan value less existing loans) less cost
basis (subject to a minimum of zero, premiums paid less total withdrawals). The
effective annual rate that we charge on preferred loans is 4.5%. A regular loan
remains a regular loan - it will not automatically rollover when a preferred
loan is available. However, any capitalization of interest on a regular loan
will be treated as a preferred loan IF the conditions for a preferred loan are
met.
When a loan is made, Prudential will transfer an amount equal to the loan from
the investment option(s). While a loan is outstanding, the amount of Contract
Fund attributable to the outstanding loans, whether they are regular loans or
preferred loans, will be credited with interest at an annual rate of 4%. On
each Monthly date, we will increase the portion of the Contract Fund in the
investment options by interest credits accrued on the loan since the last
Monthly date. Prudential thus will realize the difference between that rate and
the fixed loan interest rate(s), which will be used to cover the loan investment
expenses, income taxes, if any, and processing costs.
Upon repayment of Contract debt, the loan portion of the payment (i.e., not the
portion of the payment for accrued interest which has not yet been made part of
the loan) will be added to the investment option(s) using the investment
allocation currently in effect for premium payments, as selected by the Contract
owner. Prudential reserves the right to change the manner in which it allocates
loan repayments.
F. Increases in or Addition of Insurance Benefits
----------------------------------------------
After issue, Prudential may permit Owners to increase or add to the existing
insurance amounts in a way similar to our new business procedures outlined above
and in the prospectus.
II. Transfers
---------
Currently, fifteen subaccounts are available for investment by Contract owners
of The Prudential Variable Appreciable Account ("Account"), each of which is
invested in shares of a corresponding portfolio of The Prudential Series Fund,
Inc. or other such funds which we specify ("Funds"). The Funds are registered
under the 1940 Act as open-end diversified management investment companies. In
addition, a fixed-rate option is available.
II-75
<PAGE>
Provided the Contract is not in default, the owner may, up to twelve times in
each Contract year, transfer amounts from one subaccount to another subaccount
or to the fixed-rate option without charge. Additional transfers are subject to
an administrative charge deducted from the Contract Fund of up to $25.
Prudential currently charges $25. All or a portion of the amount credited to a
subaccount may be transferred.
In addition, the entire amount of the Contract Fund may be transferred to the
fixed-rate option during the first two Contract years, or at any time
thereafter. Contract owners who wish to convert their variable contract to a
fixed-benefit contract in this manner must request a complete transfer of funds
to the fixed-rate option and should also change their allocation instructions
regarding any future premiums.
Transfers among subaccounts will take effect at the end of the valuation period
in which a proper transfer request is received at a Prudential Home Office. The
request may be in terms of dollars, such as a request to transfer $5,000 from
one subaccount to another, or may be in terms of a percentage reallocation among
subaccounts. In the latter case, as with premium reallocations, the percentages
must be in whole numbers.
Only one transfer from the fixed-rate option will be permitted during the
Contract year and the maximum amount which may be transferred out of the fixed-
rate option each year is the greater of (a) 25% of the amount in the fixed-rate
option; and (b) $2,000. These limits are subject to change in the future.
Prudential may waive these restrictions for limited periods of time in a non-
discriminatory way.
III. "Redemption" Procedures: Surrender and Related Transactions
-----------------------------------------------------------
A. Surrender for Cash Surrender Value
----------------------------------
If the insured under a Contract is alive, Prudential will pay, within seven
days, the Contract's cash surrender value as of the date of receipt at its Home
Office of the Contract, a signed request for surrender, and any tax withholding
information required under federal or state law. Prudential reserves the right
to postpone paying that part of the cash surrender value that is to come from
any variable investment option (provided by a separate account registered under
the Investment Company Act of 1940) if; (1) the New York Stock Exchange is
closed; or (2) the SEC requires that trading be restricted or declares an
emergency. Prudential reserves the right to postpone paying the remainder
II-76
<PAGE>
for up to six months. If this is done for more than thirty days, Prudential will
pay interest at the rate of 3% a year. The Contract's cash surrender value is
the Contract Fund, minus any surrender charge, consisting of a deferred sales
charge and a deferred administrative charge, minus any Contract debt.
The deferred sales charge and deferred administrative charge are described in
the prospectus. The deferred administrative charge is designed to recover the
administrative expenses, such as underwriting expenses, incurred in connection
with the issuance of a Contract. As a result, in the early months after issue,
there may be no cash surrender value.
In lieu of the payment of the cash surrender value in a single sum upon
surrender of a Contract, an election may be made by the owner to apply all or a
portion of the proceeds under one of the fixed benefit settlement options
described in the Contract. The fixed benefit settlement options are subject to
the restrictions and limitations set forth in the Contract.
B. Withdrawals from the Contract Fund
----------------------------------
A withdrawal from the Contract may be made only if the following conditions are
satisfied. First, Prudential must receive a request for the withdrawal in a
form that meets its need. Second, the cash surrender value after withdrawal may
not be less than or equal to zero after deducting any charges associated with
the withdrawal. Third, the amount withdrawn must be at least $500. Fourth, the
basic insurance amount after withdrawal must be at least equal to the minimum
basic insurance amount shown in the Contract. There is a fee of up to $25 for
each withdrawal. We currently charge $10 for each withdrawal. An amount
withdrawn may not be repaid except as a premium subject to the Contract charges.
Whenever a withdrawal is made, the death benefit payable will immediately be
reduced by at least the amount of the withdrawal. This will not change the Basic
Insurance Amount (minimum face amount specified in the Contract) under a Type B
(variable) Contract. However, under a Type A (fixed) Contract, the resulting
reduction in death benefit usually requires a reduction in the Basic Insurance
Amount. No withdrawal will be permitted under a Type A (fixed) Contract if it
would result in a Basic Insurance Amount less than the minimum Basic Insurance
Amount of $250,000.
The Contract Fund is reduced by the sum of the cash withdrawn, any surrender
charge resulting from the withdrawal, and the fee
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<PAGE>
for the withdrawal. An amount equal to the reduction in the Contract Fund will
be withdrawn from the investment options.
C. Death Claims
------------
Prudential will pay a death benefit to the beneficiary at the insured's death if
the Contract is in force at the time of that death. The proceeds will be paid
within seven days after receipt at Prudential's Home Office of proof of death of
the Insured and all other requirements necessary to make payment. State
insurance laws impose various requirements, such as receipt of a tax waiver,
before payment of the death benefit may be made.
Prudential reserves the right to postpone payment of that part of the proceeds
that is to come from any variable investment option (provided by a separate
account registered under the Investment Company Act of 1940) if; (1) the New
York Stock Exchange is closed; or (2) the SEC requires that trading be
restricted or declares an emergency. Prudential reserves the right to postpone
paying the remainder for up to six months.
In addition, payment of the death benefit is subject to the provisions of the
Contract regarding suicide and incontestability. In the event Prudential should
contest the validity of a death claim, an amount up to the portion of the
Contract Fund in the variable investment options will be withdrawn, if
appropriate, and held in Prudential's general account.
If the Contract is not in default, the amount Prudential will pay will be the
death benefit determined as of the date of the Insured's death reduced by any
Contract debt.
There may be an additional amount payable from an extra benefit added to the
Contract by rider.
No death benefit is payable if the insured's death occurs past the grace period.
On any date, the death benefit under a Type A (fixed) Contract is the greater of
(1) the Basic Insurance Amount, and (2) the Contract Fund before deduction of
any monthly charges due on that date, multiplied by attained age factors. These
factors vary by the insured's attained age and are shown in the Contract.
On any date, the death benefit under a Type B (variable) Contract is the greater
of (1) the Basic Insurance Amount plus the Contract Fund before deduction of any
monthly charges due on that date, and (2) the Contract Fund before deduction of
any monthly
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<PAGE>
charges due on that date, multiplied by attained age factors. These factors vary
by the insured's attained age and are shown in the Contract. For the purposes of
this calculation, the Contract Fund will be considered to be zero if it is less
than zero.
The proceeds payable on death also will generally include interest (at a rate
determined by Prudential) from the date of death until the date of payment.
However, state insurance laws may impose additional or different requirements.
Prudential will make payment of the death benefit out of its general account,
and will transfer assets, if appropriate, from the Account to the general
account in an amount up to the Contract Fund.
In lieu of payment of the death benefit in a single sum, an election may be made
to apply all or a portion of the proceeds under one of the fixed benefit
settlement options described in the Contract or, with the approval of
Prudential, a combination of options. The election may be made by the owner
during the Insured's lifetime, or, at death, by the beneficiary. An option in
effect at death may not be changed to another form of benefit after death. The
fixed benefit settlement options are subject to the restrictions and limitations
set forth in the Contract.
D. Default and Options on Lapse
----------------------------
The Contract can go into default if either (1) the Contract debt ever grows to
be equal to or more than the cash value, or (2) on any Monthly date, the cash
value is equal to or less than zero UNLESS it remains in force under the Death
Benefit Guarantee. Monthly dates occur on the Contract Date and in each later
month on the same day of the month as the Contract Date. The Death Benefit
Guarantee will hold if the Contract has no excess Contract debt and if premiums
accumulated at 4% less withdrawals accumulated at 4% are greater than or equal
to values shown in the Contract (Limited Death Benefit Guarantee Values and
Lifetime Death Benefit Guarantee Values).
The Contract provides for a grace period extending 61 days after the mailing
date of the notice of default. The insurance coverage continues in force during
the grace period, but if the Insured dies during the grace period, any charges
due to the date of the death are deducted from the amount payable to the
beneficiary.
II-79
<PAGE>
E. Loans
-----
The Contract provides that an owner may take out a loan at any time a loan value
is available providing (1) the Contract is assigned to Prudential as the only
security for the loan, (2) the Insured must be living, and (3) the resulting
Contract debt must not be more than the loan value (90% of the portion of the
cash value attributable to the variable investment options and 100% of the
balance of the cash value).
The investment options will be debited in the amount of the loan on the date the
loan is approved. The percentage of the loan withdrawn from each investment
option will normally be equal to the percentage of the value of such assets held
in the investment option unless otherwise requested and Prudential agreed. An
owner may borrow up to the Contract's full loan value. The loan provision is
described in the Contract and in the prospectus.
A loan does not affect charges. When a loan is made, the Contract Fund is not
reduced, but the value of the assets relating to the Contract held in the
investment option(s) is reduced. Accordingly, the daily changes in the cash
surrender value will be different from what they would have been had no loan
been taken. Cash surrender values, and possibly death benefits, are thus
permanently affected by any Contract debt, whether or not repaid.
The guaranteed minimum death benefit is not affected by Contract debt. However,
on settlement the amount of any Contract debt is subtracted from the insurance
proceeds. If Contract debt ever becomes equal to or more than the cash value,
all the Contract's benefits will end 61 days after notice is mailed to the owner
and any known assignee, unless payment of an amount sufficient to end the
default is made within that period.
IV. Cash Adjustment Upon Exchange of Contract
-----------------------------------------
As described previously, so long as the Contract is not in default, the Owner
may transfer all amounts in the variable investment options into the fixed-rate
option. This option is provided in lieu of the option to exchange to a
comparable fixed benefit life insurance contract.
This option is also available following any increase in or addition of benefits
under the Contract.
II-80
<PAGE>
Exhibit 1.A.(13)(a)
================================================================================
RIDER FOR PAYMENT OF PREMIUM BENEFIT UPON INSURED'S TOTAL DISABILITY
This benefit is a part of this contract only if it is listed on a contract data
page.
TOTAL DISABILITY BENEFIT
Subject to the conditions and exceptions stated below, after we have approved a
claim, we will pay premiums into the contract on each monthly date while the
Insured is totally disabled. The amounts of these payments are shown under the
Schedule of Disability Benefits in this rider. This is subject to all the
provisions of this rider and the rest of this contract. We treat each payment
made by us as described under Premium Payment. Payments made by us will be used
to increase the accumulated premiums described in Death Benefit Guarantee.
TOTAL DISABILITY DEFINED
When we use the terms total disability and totally disabled in this benefit we
mean that: (1) until the Insured has stayed totally disabled for two years, the
Insured cannot, due to sickness or injury, engage in any occupation for
remuneration or profit or perform any of the duties of his or her regular
occupation; but (2) after the Insured has stayed totally disabled for two years,
the Insured cannot, due to sickness or injury, perform any gainful work for
which the Insured is reasonably fitted by education, training or experience.
Except for what we state in the next sentence, we will at no time regard an
Insured as totally disabled who is doing gainful work for which the Insured is
reasonably fitted by education, training, or experience. We will regard an
Insured as totally disabled, even if working or able to work, if the Insured
incurs, during a period in which premiums are eligible to be paid by us as we
describe below, one of the following: (1) permanent and complete blindness of
both eyes; or (2) physical severance of both hands at or above the wrists or
both feet at or above the ankles; or (3) physical severance of one hand at or
above the wrist and one foot at or above the ankle.
PREMIUMS ELIGIBLE TO BE PAID BY US
If the Insured becomes totally disabled before the first contract anniversary
following the Insured's 60th birthday and that total disability begins: (1) on
or after the first contract anniversary following the Insured's 5th birthday, if
the contract date was before that birthday; or (2) on or after the contract
date, if that date was on or after the Insured's 5th birthday, we will make
payments under this benefit on each monthly date while the Insured remains
totally disabled.
If the Insured becomes totally disabled on or after the first contract
anniversary after the Insured's 60th birthday, we will make payments under this
benefit on each monthly date before the first contract anniversary following the
Insured's 65th birthday and while the Insured remains totally disabled.
If the Insured becomes totally disabled on or after the first contract
anniversary after the Insured's 65th birthday, we will not make any payments
during that period of total disability.
CONDITIONS
We will not pay any premiums into the contract until we approve a claim. Once
approved, we will pay into the contract as of each monthly date the premiums
shown under the Schedule of Disability Benefits for monthly dates on and after
the onset of total disability and through the date of approval.
Before we will approve a claim, all of these conditions must be met: (1) The
Insured must become totally disabled while this contract is in force and not in
default past the last day of the grace period; (2) The Insured must be totally
disabled for a period of at least six continuous months while living; (3) We
must receive proof of total disability in a form satisfactory to us.
EXCEPTIONS
We will not pay any premiums into the contract if the Insured becomes totally
disabled from: (1) an injury the Insured causes to himself or herself, on
purpose; or (2) sickness or injury due to service on or after the date of this
rider in the armed forces of any country(ies) at war. The word war means
declared or undeclared war and includes resistance to armed aggression.
VL 100 B-97 NY
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SUCCESSIVE DISABILITIES
Here is what happens if the Insured has at least one payment made by us while
totally disabled, then gets well, and then becomes totally disabled again. In
this case, we will not apply the six-month continuous disability period that
would otherwise be required by Condition (2) and will consider the second period
of total disability to be part of the first period unless: (A) the Insured has
done gainful work, for which the Insured is reasonably fitted, for at least six
months between the periods; or (B) the Insured became totally disabled the
second time from an entirely different cause.
If we do not apply the six-month period required by Condition (2), we also will
not count the days when there was not total disability as part of the two year
period when total disability means the Insured cannot do any of the duties of
the Insured's regular occupation.
NOTICE AND PROOF OF CLAIM
Notice and proof of any claim should be given to us, if possible, while the
Insured is living and totally disabled. We may also require proof from time to
time that the Insured is still totally disabled. After the Insured has been
continuously totally disabled for two years, we will not ask for proof of
continued total disability more than once a year; and we will require no further
proof of continued total disability after the first contract anniversary
following the Insured's 65th birthday if the Insured has then been continuously
totally disabled for at least five years. As a part of any proof, we have the
right to require that the Insured be examined at our expense by doctors of our
choice.
CHANGES IN THE BASIC INSURANCE AMOUNT
The amounts shown in the Schedule of Disability Benefits are based on the
amounts in the Limited Death Benefit Guarantee column of the Table of Death
Benefit Guarantee Values. If the basic insurance amount changes, the amounts
shown in that table will change as well as the amounts of charges and benefits
under this rider.
If the basic insurance amount increases, the amounts shown in the Schedule of
Disability Benefits and the charges for this benefit will increase. If the basic
insurance amount decreases, the amounts shown in the Schedule of Disability
Benefits and the charges for this benefit will decrease.
When there is a change in the basic insurance amount, we will send you a new
Schedule of Disability Benefits and contract data pages reflecting the
recomputed charges and benefits.
If there is a change in the basic insurance amount which takes effect while the
Insured is totally disabled but before we have approved a claim for benefits
under this rider, we will pay premiums into the contract following an approval
of the claim in accordance with the Schedule of Disability Benefits that was in
effect immediately prior to the change of the basic insurance amount.
You may not change the basic insurance amount while we are making payments under
this benefit.
BENEFIT CHARGES
The monthly charge for this benefit is deducted on each monthly date from the
contract fund. The amount of that charge is stated under Adjustments to the
Contract Fund in the contract data pages.
PREMIUMS PAID DURING TOTAL DISABILITY
You may make premium payments if you wish, as provided in the Premium Payment
section of the contract even when we are making payments under this benefit.
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WHEN WE WILL STOP PAYING PREMIUMS
We will stop paying premiums if: (1) total disability ends; or (2) we ask for
proof that the Insured is totally disabled and we do not receive it by the date
requested; or (3) we require that the Insured be examined and the Insured fails
to do so; or (4) the Insured became totally disabled on or after the first
contract anniversary following his or her 60th birthday and the contract has
remained in force until the first contract anniversary following his or her 65th
birthday.
DEFAULT
This contract may go into default while we are making payments under this
benefit. In that event, we will continue to pay these premiums on each monthly
date during the grace period. But we will stop paying premiums when the grace
period ends if the amount needed to keep the contract in force is not paid.
TERMINATION
This benefit will end and we will pay no more premiums into the contract for you
on the earliest of:
1. the end of the grace period if the contract is in default;
2. the end of the day before the first contract anniversary that follows
the Insured's 65th birthday unless the Insured has stayed totally
disabled since before the first contract anniversary that follows the
60th birthday;
3. the date the contract ends for any other reason.
THIS SUPPLEMENTARY BENEFIT RIDER ATTACHED TO THIS CONTRACT ON THE CONTRACT DATE
The Prudential Insurance Company of America,
By /s/ [SPECIMEN]
Secretary
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Exhibit 7.(b)
POWER OF ATTORNEY
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Know all men by these presents:
That I, Gilbert F. Casellas, of Chevy Chase, Maryland, a member of the
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Board of Directors of The Prudential Insurance Company of America, do
hereby make, constitute and appoint as my true and lawful attorneys in fact
LEE D. AUGSBUGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CAREN A. CUNNINGHAM,
TIMOTHY P. HARRIS, DODIE KENT, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, KIRK
A. MONTGOMERY, BERNARD V. PETERSON, PETER T. SCOTT, C. CHRISTOPHER SPRAGUE
and ARTHUR D. WOODS III or any of them severally for me and in my name,
place and stead to sign, where applicable: Annual Reports of Form 10-K,
registration statements on the appropriate forms prescribed by the
Securities and Exchange Commission, and any other periodic documents and
reports required under the Investment Company Act of 1940, the Securities
Act of 1933 and all amendments thereto executed on behalf of The Prudential
Insurance Company of America and filed with the Securities and Exchange
Commission for the following:
The Prudential Variable Contract Account-2 and group variable annuity
contracts, to the extent they represent participating interests in said
Account;
The Prudential Variable Contract Account-10 and group annuity contracts, to
the extent they represent participating interests in said Account;
The Prudential Variable Contract Account-11 and group annuity contracts, to
the extent they represent participating interests in said Account;
The Prudential Variable Contract Account-24 and group annuity contracts, to
the extent they represent participating interests in said Account;
The Prudential Variable Contract Real Property Account and individual
variable life insurance and annuity contracts, to the extent they represent
participating interests in said Account;
Prudential's Investment Plan Account and Systematic Investment Plan
Contracts, to the extent they represent participating interests in said
Account, and shares of the Common Stock of Prudential's Gibraltar Fund;
Prudential's Annuity Plan Account and Variable Annuity Contracts, to the
extent they represent participating interests in said Account, and shares
of the Common Stock of Prudential's Gibraltar Fund;
Prudential's Annuity Plan Account-2 and Variable Annuity Contracts, to the
extent they represent participating interests in said Account, and shares
of the Common Stock of Prudential's Gibraltar Fund;
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The Prudential Individual Variable Contract Account and Individual Variable
Annuity Contracts, to the extent they represent participating interests in
said Account;
The Prudential Qualified Individual Variable Contract Account and
Individual Variable Annuity Contracts, to the extent they represent
participating interests in said Account;
The Prudential Variable Appreciable Account and Variable Life Insurance
Contracts, to the extent they represent participating interests in said
Account;
The Prudential Variable Life Insurance Account and Variable Life Insurance
Contracts, to the extent they represent participating interests in said
Account;
The Prudential Variable Contract Account GI-2 and Group Variable Life
Insurance Contracts, to the extent they represent participating interests
in said Account; and
The Prudential Discovery Select Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of April, 1998.
/s/ Gilbert F. Casellas
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Signature
State of ___Washington, DC________ )
) SS
County of ______________________ )
On this 27th day of April, 1998, before me personally appeared Gilbert F.
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Casellas, to me known to me to be the person mentioned and described in and who
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executed the foregoing instrument and duly acknowledged to me that (s)he
executed the same.
My commission expires: June 14, 2001
/s/ Noemi Lugo
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Notary Public
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