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As filed with the Securities and Exchange Commission on March 14, 1996
Registration No. 33-_______________
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
PACIFIC SELECT EXEC SEPARATE ACCOUNT OF
PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Exact Name of Registrant)
PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Name of Depositor)
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92660
(Address of Depositor's Principal Executive Office)
Diane N. Ledger
Assistant Vice President
Pacific Mutual Life Insurance Company
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92660
(Name and Address of Agent for Service of Process)
Copies to:
Jeffrey S. Puretz
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
Approximate date of proposed public offering: As soon as practicable after the
effective date of the Registration Statement.
Title of securities being registered: Interests in the Separate Account under
Pacific Select Estate Preserver Last Survivor Flexible Premium Variable Life
Insurance Policies.
Filing fee: $500.00
The Registrant is registering an indefinite number of securities under the
Securities Act of 1933
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pursuant to Rule 24f-2 under the Investment Company Act of 1940 and will file
its Rule 24f-2 Notice for the fiscal year ending December 31, 1996, on or before
March 1, 1997.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Pacific Select Exec Separate Account of Pacific Mutual Life Insurance Company
CROSS-REFERENCE SHEET
Pursuant to Rule 404(c) of Regulation C under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction as to the Prospectus in Form S-6)
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<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
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1. (a) Name of trust................................. Prospectus front cover
(b) Title of securities issues.................... Prospectus front cover
2. Name and address of each depositor................. Prospectus front cover
3. Name and address of trustee........................ N/A
4. Name and address of each principal underwriter..... Pacific Mutual Life Insurance
Company
5. State of organization of trust..................... Pacific Select Exec Separate
Account
6. Execution and termination of trust agreement....... Pacific Select Exec Separate
Account
7. Changes of name.................................... N/A
8. Fiscal year........................................ N/A
9. Litigation......................................... N/A
II. General Description of the Trust and Securities of the Trust
10. (a) Registered or bearer securities............... The Policy
(b) Cumulative or distributive securities......... The Policy
(c) Conversion, transfer, etc..................... Transfer of Accumulated Value;
Policy Loans; Surrender; Partial
Withdrawal Benefit; Systematic
Withdrawals; Right to Convert
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<TABLE>
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Policy
(d) Periodic payment plan......................... N/A
(e) Voting rights................................. Voting on Fund Shares
(f) Notice to security holders.................... Reports to Owners
(g) Consents required............................. Disregard of Voting Instructions;
Substitution of Investments
(h) Other provisions.............................. The Policy
11. Type of securities comprising units................ The Policy
12. Certain information regarding periodic
payment plan certificates.......................... N/A
13. (a) Load, fees, expenses, etc..................... Charges and Deductions
(b) Certain information regarding periodic
payment plan certificates..................... N/A
(c) Certain percentages........................... Charges and Deductions
(d) Certain other fees, etc....................... Charges and Deductions
(e) Certain other profits or benefits............. The Policy
(f) Ration of annual charges to income............ N/A
14. Issuance of trust's securities..................... The Policy
15. Receipt and handling of payments from
purchasers......................................... The Policy; Premiums
16. Acquisition and disposition of underlying
securities......................................... Introduction; Pacific Select Exec
Separate Account; The Policy
17. Withdrawal or redemption........................... Transfers of Accumulated Value;
Policy Loans; Surrender; Partial
Withdrawals
18. (a) Receipt, custody and disposition
of income..................................... The Policy
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(b) Reinvestment of distributions................. N/A
(c) Reserves or special funds..................... N/A
(d) Schedule of distributions..................... N/A
19. Records, accounts and reports...................... Reports to Owners
20. Certain miscellaneous provisions of trust
agreement
(a) Amendment..................................... N/A
(b) Termination................................... N/A
(c) and (d) Trustee, removal and successor......... N/A
(e) and (f) Depositors, removal and successor...... N/A
21. Loans to security holders.......................... Policy Loans
22. Limitations on liability........................... N/A
23. Bonding arrangements............................... N/A
24. Other material provisions of trust agreement....... N/A
III. Organizations, Personnel and Affiliated Persons of Depositor
25. Organization of depositor.......................... Pacific Mutual Life Insurance
Company
26. Fees received by depositor......................... See Items 13(a) and 13(e)
27. Business of depositor.............................. Pacific Mutual Life Insurance
Company
28. Certain information as to officials and affiliated
persons of depositor............................... More About Pacific Mutual
29. Voting securities of depositor..................... N/A
30. Persons controlling depositor...................... N/A
31. Payments by depositor for certain services
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rendered to trust................................. N/A
32. Payments by depositor for certain other services
rendered to trust................................. N/A
33. Remuneration of employees of depositor for
certain services rendered to trust................ Charges and Deductions
34. Remuneration of other persons for certain
services rendered to trust........................ Charges and Deductions
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities by states...... N/A
36. Suspension of sales of trust's securities......... N/A
37. Revocation of authority to distribute............. N/A
38. (a) Method of distribution....................... Distribution of the Policy
(b) Underwriting agreements...................... Distribution of the Policy
(c) Selling agreements........................... Distribution of the Policy
39. (a) Organization of principal underwriters....... See Item 25
(b) N.A.S.D. membership of principal
underwriters................................. See Item 25
40. Certain fees received by principal underwriters... See Items 13(a) and 13(e)
41. (a) Business of each principal underwriter....... See Item 27
(b) Branch offices of each principal
underwriter.................................. N/A
(c) Salesmen of each principal underwriter....... N/A
42. Ownership of trust's securities by certain persons N/A
43. Certain brokerage commissions received by
principal underwriters............................ N/A
44. (a) Method of valuation.......................... Determination of Accumulated
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<TABLE>
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Value
(b) Schedule as to offering price................ Charges and Deductions
(c) Variation in offering price to certain
persons...................................... Charges and Deductions
45. Suspension of redemption rights................... Surrender
46. (a) Redemption Valuation......................... See Items 10(c) and (d)
(b) Schedule as to redemption price.............. Surrender
47. Maintenance of position in underlying securities.. The Pacific Select Fund
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee............ N/A
49. Fees and expenses of trustees..................... N/A
50. Trustee's lien.................................... N/A
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's securities........ Pacific Mutual Life Insurance
Company; The Policy
52. (a) Provisions of trust agreement with respect
to selection or elimination of underlying
securities................................... Substitution of Investments
(b) Transactions involving elimination of
underlying securities........................ Substitution of Investments
(c) Policy regarding substitution or
elimination of underlying securities......... See Items 13(a) and 52(a)
(d) Fundamental policy not otherwise
covered...................................... N/A
53. Tax status of trust............................... Federal Income Tax Considerations
VIII. Financial and Statistical Information
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54. Trust's securities during last ten years.......... N/A
55. N/A
56. Certain information regarding periodic payment
plan certificates................................. Premiums
57. N/A
58. N/A
59. Financial statements (Instruction 1(c) of
"Instructions as to the Prospectus" of Form S-6).. To be filed by pre-effective
amendment
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PROSPECTUS
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PROSPECTUS
PACIFIC SELECT ESTATE PRESERVER
LAST SURVIVOR FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE POLICY
ISSUED BY PACIFIC MUTUAL LIFE INSURANCE COMPANY
700 NEWPORT CENTER DRIVE, NEWPORT BEACH, CALIFORNIA 92660
1-800-800-7681
This prospectus describes Pacific Select Estate Preserver -- a Last
Survivor Flexible Premium Variable Life Insurance Policy (individually, the
"Policy," and collectively, the "Policies") offered by Pacific Mutual Life
Insurance Company ("Pacific Mutual", "we", "us", or "our"). The Policy, for so
long as it remains in force, provides lifetime insurance protection on the lives
of two Insureds named in the Policy, with a death benefit payable when the last
surviving Insured dies while the Policy is in force. Four death benefit options
are available under the Policy. The Policy is designed to provide flexibility in
connection with premium payments and death benefits to permit a Policy Owner to
provide for changing insurance needs under a single insurance policy. A Policy
may be surrendered for its Cash Surrender Value, less outstanding Policy Debt.
Net premium payments may be allocated at the Policy Owner's discretion to
one or more of the Investment Options available under the Policy to the Owner.
Variable Investment Options are funded by one of our separate accounts, the
Pacific Select Exec Separate Account (the "Separate Account"), which is divided
into Variable Accounts. Each of the twelve Variable Accounts that are currently
available to the Owner invest in a corresponding portfolio of the Pacific Select
Fund (the "Fund"):
Money Market Portfolio Growth LT Portfolio
High Yield Bond Portfolio Equity Income Portfolio
Managed Bond Portfolio Multi-Strategy Portfolio
Government Securities Portfolio Equity Index Portfolio
Growth Portfolio International Portfolio
Aggressive Equity Portfolio Emerging Markets Portfolio
Net premium payments also may be allocated to the Fixed Account. The
Accumulated Value in the Fixed Account will accrue interest at an interest rate
that is guaranteed by us. This prospectus generally describes only the portion
of the Policy involving the Separate Account. For a brief summary of the Fixed
Account, see "The Fixed Account," page __.
To the extent that all or a portion of net premium payments are allocated
to the Separate Account, the Accumulated Value under the Policy will vary based
upon the investment performance of the Variable Accounts to which the
Accumulated Value is allocated. No minimum amount of Accumulated Value is
guaranteed.
The Policy insures the lives of two Insureds and is intended to provide
death benefits after the deaths of both of the Insureds. Prospective applicants
for the Policy should consult with their agent regarding the appropriateness of
the Policy, relative to a life insurance policy insuring the life of only one
person, for their financial planning goals.
It may not be advantageous to replace existing insurance with this Policy.
The Policy may be returned according to the terms of its Free-Look Right (see
"Right to Examine a Policy--Free-Look Right," page ___).
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THIS PROSPECTUS IS ACCOMPANIED BY THE CURRENT PROSPECTUS FOR THE PACIFIC
SELECT FUND. BOTH PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE
REFERENCE.
DATE: __________, 1996
----------------
THE POLICY IS NOT AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE.
NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN AS CONTAINED IN THIS PROSPECTUS, THE FUND'S PROSPECTUS, OR
THE STATEMENT OF ADDITIONAL INFORMATION OF THE FUND OR ANY SUPPLEMENT THERETO.
<PAGE>
TABLE OF CONTENTS
PAGE
IMPORTANT TERMS..................................................... 1
SUMMARY OF THE POLICY............................................... 4
PURPOSE OF THE POLICY....................................... 4
POLICY VALUES............................................... 4
THE DEATH BENEFIT........................................... 5
PREMIUM FEATURES............................................ 5
INVESTMENT OPTIONS.......................................... 5
TRANSFER OF ACCUMULATED VALUE............................... 6
POLICY LOANS................................................ 6
FREE-LOOK RIGHT............................................. 6
SURRENDER RIGHT............................................. 6
PARTIAL WITHDRAWALS......................................... 6
CHARGES AND DEDUCTIONS...................................... 6
TAX TREATMENT OF INCREASES IN ACCUMULATED VALUE............. 8
TAX TREATMENT OF DEATH BENEFIT.............................. 8
CONTACTING PACIFIC MUTUAL................................... 8
INFORMATION ABOUT PACIFIC MUTUAL, THE SEPARATE ACCOUNT,
AND THE FUND........................................................ 9
PACIFIC MUTUAL LIFE INSURANCE COMPANY....................... 9
PACIFIC SELECT EXEC SEPARATE ACCOUNT........................ 10
THE PACIFIC SELECT FUND..................................... 10
THE INVESTMENT ADVISER AND PORTFOLIO MANAGERS............... 13
THE POLICY.......................................................... 13
APPLICATION FOR A POLICY.................................... 13
PREMIUMS.................................................... 14
ALLOCATION OF NET PREMIUMS.................................. 15
DOLLAR COST AVERAGING OPTION................................ 16
PORTFOLIO REBALANCING....................................... 17
TRANSFER OF ACCUMULATED VALUE............................... 17
DEATH BENEFIT............................................... 18
CHANGES IN DEATH BENEFIT OPTION............................. 21
DECREASE IN FACE AMOUNT..................................... 22
POLICY VALUES............................................... 22
DETERMINATION OF ACCUMULATED VALUE.......................... 23
POLICY LOANS................................................ 24
SURRENDER................................................... 26
PARTIAL WITHDRAWALS......................................... 26
RIGHT TO EXAMINE A POLICY--FREE-LOOK RIGHT.................. 27
LAPSE....................................................... 28
REINSTATEMENT............................................... 28
CHARGES AND DEDUCTIONS.............................................. 29
PREMIUM LOAD................................................ 29
DEDUCTIONS FROM ACCUMULATED VALUE........................... 30
SURRENDER CHARGE............................................ 31
WITHDRAWAL CHARGE........................................... 33
CORPORATE PURCHASERS........................................ 33
OTHER CHARGES............................................... 33
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GUARANTEE OF CERTAIN CHARGES................................ 33
OTHER INFORMATION................................................... 34
FEDERAL INCOME TAX CONSIDERATIONS........................... 34
CHARGE FOR OUR INCOME TAXES................................. 39
VOTING OF FUND SHARES....................................... 39
DISREGARD OF VOTING INSTRUCTIONS............................ 40
REPORT TO OWNERS............................................ 40
SUBSTITUTION OF INVESTMENTS................................. 41
CHANGES TO COMPLY WITH LAW.................................. 42
PERFORMANCE INFORMATION............................................. 42
THE FIXED ACCOUNT................................................... 44
GENERAL DESCRIPTION......................................... 44
DEATH BENEFIT............................................... 44
POLICY CHARGES.............................................. 45
TRANSFERS, SURRENDERS, WITHDRAWALS, AND POLICY LOANS........ 45
MORE ABOUT THE POLICY............................................... 46
OWNERSHIP................................................... 46
BENEFICIARY................................................. 46
THE CONTRACT................................................ 46
PAYMENTS.................................................... 46
ASSIGNMENT.................................................. 47
ERRORS ON THE APPLICATION................................... 47
INCONTESTABILITY............................................ 48
PAYMENT IN CASE OF SUICIDE.................................. 48
DIVIDENDS................................................... 48
POLICY ILLUSTRATIONS........................................ 48
PAYMENT PLAN................................................ 48
OPTIONAL INSURANCE BENEFITS................................. 49
LIFE INSURANCE RETIREMENT PLANS............................. 49
RISKS OF LIFE INSURANCE RETIREMENT PLANS.................... 50
DISTRIBUTION OF THE POLICY.................................. 51
MORE ABOUT PACIFIC MUTUAL........................................... 52
MANAGEMENT.................................................. 52
STATE REGULATION............................................ 59
TELEPHONE TRANSFER AND LOAN PRIVILEGES...................... 59
LEGAL PROCEEDINGS........................................... 60
LEGAL MATTERS............................................... 60
REGISTRATION STATEMENT...................................... 60
INDEPENDENT ACCOUNTANTS..................................... 60
FINANCIAL STATEMENTS........................................ 60
ILLUSTRATIONS....................................................... 74
APPENDICES.......................................................... 85
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IMPORTANT TERMS
Accumulated Value--The total value of the amounts in the Investment Options for
the Policy, as well as any amount set aside in the Loan Account to secure Policy
Debt.
Age--Generally, age nearest birthday as of the Policy Date, increased by the
number of complete Policy Years elapsed.
Beneficiary--The person or persons named by you in the application or by proper
later designation to receive the death benefit proceeds upon the death of the
last surviving Insured.
Cash Surrender Value--The Accumulated Value less the surrender charge.
Planned Periodic Premium--The premium determined by you as a level amount
planned to be paid at fixed intervals over a specified period of time.
Face Amount--The minimum death benefit for so long as your Policy remains in
force. The Face Amount may be decreased under certain circumstances.
Fixed Account--An account that is part of our General Account to which all or a
portion of net premium payments may be allocated for accumulation at a
guaranteed annual effective rate of interest of 4.0%. We may at our sole
discretion pay interest in excess of the guaranteed amount.
General Account--All of our assets other than those allocated to the Separate
Account or to any other of our segregated separate accounts.
Guideline Minimum Death Benefit--The minimum death benefit that is sufficient
for the Policy to qualify as life insurance under Internal Revenue Code. It is
equal to your Policy's Accumulated Value times the applicable Death Benefit
Percentage shown in Appendix C.
Home Office--The Policy Benefits and Services Department at our main office at
700 Newport Center Drive, Newport Beach, California 92660.
Insured--One of two persons upon whose life your Policy is issued and whose
death may be the contingency upon which the death benefit proceeds are payable.
Investment Option--A Variable Account or the Fixed Account.
Joint Equal Age--An age determined under a calculation shown in Appendix A that
represents a blending of the age and insurance risks presented by two Insureds.
It is used in calculating the mortality and expense risk charge, the
underwriting surrender charge, the Sales Surrender Target, and the death benefit
under Option D. For example, the Joint Equal Age for a male Insured Age 55 and
a female Insured Age 55 is 53 assuming a standard nonsmoker or smoker
underwriting classification for each Insured.
Loan Account--An account to which amounts are transferred from the Investment
Options as collateral for Policy loans.
<PAGE>
Monthly Payment Date--The day each month on which the monthly deduction is due
against the Accumulated Value. The first Monthly Payment Date is the Policy
Date.
Net Cash Surrender Value--The Cash Surrender Value less Policy Debt.
Policy Date--The date used to determine the Monthly Payment Date, Policy Months,
Policy Years, and Policy Monthly, Quarterly, Semi-annual and Annual
Anniversaries. It is usually the date the initial premium is received at our
Home Office, although it will never be the 29th, 30th, or 31st of any month.
The term "Issue Date" is substituted for Policy Date with respect to Policies
issued to residents of the Commonwealth of Massachusetts.
Policy Debt--The unpaid Policy loan balance including accrued loan interest.
Policy Owner, Owner, you, or your--The person or persons who own the Policy. If
the Policy has been absolutely assigned, the assignee becomes the Owner. A
collateral assignee is not the Owner.
Sales Surrender Target--The maximum amount of premiums paid against which the
sales surrender charge may be applied. The Sales Surrender Target is equal to a
specified amount that varies with the Joint Equal Age of the Insureds for each
$1,000 of a Policy's initial Face Amount in accordance with schedule shown in
Appendix B.
Survivor--The Insured remaining alive after the first death of the two Insureds
that occurs while your Policy is in force.
Valuation Date--Each date on which the Separate Account is valued, which
currently includes each day that the New York Stock Exchange is open for trading
and on which our administrative offices are open. The New York Stock Exchange
is closed on weekends and on: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, July Fourth, Labor Day, Thanksgiving Day, and Christmas Day. Our
administrative offices are normally not open on the following: the Monday before
New Year's Day, July Fourth, or Christmas Day if any of these holidays falls on
a Tuesday; the Friday after New Year's Day, July Fourth or Christmas Day if any
of these holidays falls on a Thursday; and the Friday after Thanksgiving. If
any transaction or event is scheduled to occur on a day that is not a Valuation
Date, such transaction or event will be deemed to occur on the next following
Valuation Date unless otherwise specified.
Valuation Period--The period that starts at the close of a Valuation Date and
ends at the close of the next succeeding Valuation Date.
Variable Account--A separate account of ours or a subaccount of such a separate
account, which is used only to support the variable death benefits and policy
values of variable life insurance policies, and the assets of which are
segregated from our General Account and our other
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separate accounts. The Separate Account serves as the funding vehicle for the
Policies. The Money Market Variable Account, High Yield Bond Variable Account,
Managed Bond Variable Account, Government Securities Variable Account, Growth
Variable Account, Aggressive Equity Variable Account, Growth LT Variable
Account, Equity Income Variable Account, Multi-Strategy Variable Account, Equity
Index Variable Account, International Variable Account, and Emerging Markets
Variable Account are all subaccounts of the Separate Account.
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SUMMARY OF THE POLICY
This summary is intended to provide a brief overview of the more
significant aspects of the Policy. Further detail is provided in this
prospectus and in the Policy. Unless the context indicates otherwise, the
discussion in this summary and the remainder of the prospectus relates to the
portion of the Policy involving the Separate Account. The Fixed Account is
briefly described under "The Fixed Account," on page __ and in the Policy.
PURPOSE OF THE POLICY
Like traditional fixed life insurance, the Policy provides for a death
benefit equal to its Face Amount, accumulation of cash value, and surrender and
loan privileges. Unlike traditional fixed life insurance, your Policy offers a
choice of investment alternatives, and an opportunity for your Policy's
Accumulated Value and, if elected by you and under certain circumstances, its
death benefit to grow based on investment results. The Policy is a flexible
premium policy, so that, unlike many other life insurance policies and subject
to certain limitations, you may choose the amount and frequency of premium
payments.
Your Policy offers you lifetime insurance protection on the lives of
two Insureds for so long as your Policy is in force. The death benefit proceeds
under your Policy are payable upon the death of the last surviving Insured named
in your Policy. The Policy is intended for situations in which you desire to
provide a benefit to beneficiaries after the deaths of two persons. For
example, the Policy could be used where two spouses wish to provide an estate
benefit for their children after the death of both spouses. The Policy might
not be appropriate where one spouse wishes to provide a benefit to the other
spouse after the death of the first spouse. An insurance policy for a single
insured may be better in this situation. We offer variable life insurance
policies that provide protection for the life of one insured. Applicants should
consult their agent on the appropriateness of the Policy for their situation.
POLICY VALUES
You may allocate net premium payments among the various Investment
Options available to you.
You bear the investment risk on that portion of the net premiums and
Accumulated Value allocated to the Variable Accounts. The death benefit may or
may not increase or decrease depending upon several factors, including the death
benefit option you select, although the death benefit will never decrease below
the Face Amount provided your Policy is in force. There is no guarantee that
your Policy's Accumulated Value and death benefit will increase.
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Your Policy will remain in force until the earliest of the death of
the Survivor, lapse, or a full surrender of your Policy.
THE DEATH BENEFIT
You may elect one of four death benefit options under the Policy. The
amount of death benefit is the greater of the Policy's Guideline Minimum Death
Benefit or the death benefit under the option you select.
Option Death Benefit
------ -------------
Option A Face Amount
Option B Face Amount plus Accumulated Value
Option C Face Amount plus premiums paid minus
Partial Withdrawals
Option D Face Amount multiplied by the
applicable Death Benefit Factor
You may change the death benefit option to Option A or B subject to
certain conditions. See "Death Benefit" and "Changes in Death Benefit Option,"
pages __ and __, respectively.
PREMIUM FEATURES
We require you to pay an initial premium equal to at least 25% of an
annual premium that will be estimated by us. Thereafter, subject to certain
limitations, you may choose the amount and frequency of premium payments. The
Policy, therefore, provides you with the flexibility to vary premium payments to
reflect varying financial conditions.
INVESTMENT OPTIONS
You may choose to allocate net premium payments to one or more of the
thirteen Investment Options available to you.
The twelve Variable Accounts available to you invest in portfolios of
a mutual fund which offers you the opportunity to direct us to invest in
diversified portfolios of stocks, bonds, money market instruments, or a
combination of these securities, or in securities of foreign issuers. Each of
the available Variable Accounts invests exclusively in shares of a designated
Portfolio of the Fund. Each of the Portfolios of the Fund, which are shown in
the chart on page ___, has a different investment objective or objectives. See
"The Pacific Select Fund," page __.
You also may allocate all or a portion of net premium payments and
transfer Accumulated Value to the Fixed Account. We guarantee that the
Accumulated Value allocated to the Fixed Account will be credited
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<PAGE>
interest monthly at a rate equivalent to an effective annual rate of 4%, and may
in its sole discretion pay interest in excess of the guaranteed amount. See
"The Fixed Account," page __.
TRANSFER OF ACCUMULATED VALUE
Subject to certain limitations, you may transfer Accumulated Value
among the Variable Accounts and between the Variable Accounts and the Fixed
Account. See "Transfer of Accumulated Value," page __.
POLICY LOANS
You may borrow from us an amount up to the greater of (1) 90% of your
Policy's Accumulated Value allocated to the Variable Accounts and 100% of
Accumulated Value allocated to the Fixed Account, less any surrender charges
that would have been imposed if your Policy were surrendered on the date the
loan is taken, or (2) 100% of the product of (a X b/c - d) where (a) equals the
Policy's Accumulated Value less any surrender charge that would be imposed if
the Policy were surrendered on the date the loan is taken and less 12 times the
current monthly deduction; (b) equals 1 plus the annual loan interest rate
credited; (c) equals 1 plus the annual loan interest rate currently charged; and
(d) equals any existing Policy Debt. The minimum loan is $500. Your Policy will
be the only security required for a loan. The amount of any Policy Debt is
subtracted from the death benefit or from your Cash Surrender Value upon
surrender. See "Policy Loans," page __.
FREE-LOOK RIGHT
A Policy Owner may obtain a full refund of the premium paid if the
Policy is returned within 10 days after the Owner receives it (30 days if the
Owner is a resident of California and is age 60 or older), within 10 days after
we mail or deliver the notice of right of withdrawal, or within 45 days after
the application for the Policy is completed, whichever is later (the "Free-Look
Transfer Date"). See "Right to Examine a Policy -- Free-Look Right," page __.
SURRENDER RIGHT
You can surrender the Policy while either Insured is living and
receive your Net Cash Surrender Value, which is equal to your Policy's
Accumulated Value less the surrender charge and less any outstanding Policy
Debt.
PARTIAL WITHDRAWALS
After the first Policy Anniversary and subject to certain
restrictions, you may make Partial Withdrawals of Net Cash Surrender Value. A
withdrawal fee of $25 will be assessed upon a Partial Withdrawal. A Partial
Withdrawal might decrease the Face Amount on a Policy. See "Partial
Withdrawals," page __.
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CHARGES AND DEDUCTIONS
. Premium Load
A premium load is deducted from each premium payment under a Policy
prior to allocation of the net premium to the Policy Owner's Accumulated Value.
The premium load consists of the following items:
-- A sales load equal to 5% of each premium paid during the first ten Policy
Years and 3% of each premium paid thereafter. (For information on the
sales surrender charge, see page __.)
-- A state and local premium tax charge equal to 2.35% of each premium paid.
-- A federal tax charge equal to 1.50% of each premium paid.
. Deductions from Accumulated Value
A charge called the monthly deduction is deducted from the Policy's
Accumulated Value on each Monthly Payment Date. The monthly deduction consists
of the following items:
-- Cost of Insurance: The amount of the charge is equal to a current cost of
insurance rate multiplied by the net amount at risk under a Policy at the
beginning of the Policy Month.
-- Administrative Charge. A monthly administrative charge is deducted equal
to $16 in each of the first five Policy Years, and thereafter at a rate
equal to $6 per month.
-- Mortality and Expense Risk Charge. The mortality and expense risk charge
consists of two components:
(1) Face Amount Component - During the first ten Policy Years, the Face
Amount Component will be assessed at a rate determined with reference
to the Joint Equal Age of the Insureds and the initial Face Amount of
the Policy. This component is not assessed after the tenth Policy Year.
(2) Accumulated Value Component - The Accumulated Value Component is
assessed at an annual rate equal to .30% of Accumulated Value in the
first 20 Policy Years and an annual rate equal to .10% of Accumulated
Value thereafter. For purposes of this component, the Accumulated Value
is determined after the deduction of the cost of insurance charge and
charges for any optional insurance Riders or Benefits added to the
Policy.
-- Optional Insurance Benefits Charges: The monthly deduction will include
charges for any optional insurance Riders or Benefits added to the Policy.
- 7 -
<PAGE>
. Surrender Charge
We will assess a surrender charge against Accumulated Value upon surrender
of a Policy until the tenth Policy Anniversary. The surrender charge consists
of two charges: an underwriting surrender charge and a sales surrender charge.
-- Underwriting Surrender Charge: The underwriting surrender charge is equal
to a specified amount that varies with the Joint Equal Age of the Insureds
for each $1,000 of a Policy's initial Face Amount in accordance with a
schedule shown in Appendix B. After the first Policy Year, the charge
decreases by 0.9259% per month until it reaches zero at the end of the
120th Policy Month.
-- Sales Surrender Charge: During the first Policy Year, the sales surrender
charge is equal to 25% of the lesser of the premiums paid under the Policy
or the Sales Surrender Target. The Sales Surrender Target is equal to a
specified amount that varies with the Joint Equal Age of the Insureds for
each $1,000 of a Policy's initial Face Amount in accordance with a schedule
shown in Appendix B. After the first Policy Year, the sales surrender
charge as calculated above is adjusted by a reduction factor. This
reduction factor is equal to 99.0741% in the 13th month and reduces by
0.9259% per month until it reaches zero at the end of the 120th Policy
Month.
The operating expenses of the Separate Account are paid by us. Investment
advisory fees and operating expenses of the Fund are paid by the Fund. For a
description of these charges, see "Charges and Deductions," page __.
TAX TREATMENT OF INCREASES IN ACCUMULATED VALUE
We believe that the Accumulated Value under the Policy is currently subject
to the same federal income tax treatment as the cash value under traditional
fixed life insurance. Therefore, generally you will not be deemed to be in
constructive receipt of your Accumulated Value unless and until you are deemed
to be in receipt of a distribution from your Policy. For information on the tax
treatment of the Policy and on the tax treatment of a surrender, a Partial
Withdrawal, or a Policy loan, see "Federal Income Tax Considerations," page __.
TAX TREATMENT OF DEATH BENEFIT
We believe that the death benefit under the Policy is currently subject to
federal income tax treatment consistent with that of traditional fixed life
insurance. Therefore, generally the death benefit will be fully excludable from
the gross income of the Beneficiary under the Internal Revenue Code. See
"Federal Income Tax Considerations," page __.
- 8 -
<PAGE>
CONTACTING PACIFIC MUTUAL
All written requests, notices, and forms required by the Policies, and any
questions or inquiries should be directed to our Policy Benefits and Services
Department at 700 Newport Center Drive, P.O. Box 7500, Newport Beach, California
92658-7500.
The effective date of certain notices or of instructions is determined by
the date and time on which Pacific Mutual "receives" the notice or instructions.
Unless otherwise stated, we "receive" this information only when it arrives
"properly completed" at our Home Office. Premium payments after your initial
premium payment, transfer requests, and withdrawal requests we receive before
4:00 p.m. Eastern time (or the close of the New York Stock Exchange, if earlier)
will normally be effective as of the end of the Valuation Day that we receive
them "properly completed," unless the transaction or event is scheduled to occur
on another day. Transactions are effected as of the end of the Valuation Date on
which they are effective. "Properly completed" may require, among other things,
a signature guarantee or other verification of authenticity. We do not generally
require a signature guarantee unless it appears that your signature may have
changed over time or due to other circumstances. Requests regarding death
benefits must be accompanied by both proof of death and instructions regarding
payment satisfactory to us. You should call your registered representative or
Pacific Mutual if you have questions regarding the required form of a request.
INFORMATION ABOUT PACIFIC MUTUAL, THE SEPARATE ACCOUNT,
AND THE FUND
PACIFIC MUTUAL LIFE INSURANCE COMPANY
We are a mutual life insurance company organized under the laws of the
State of California. We were authorized to conduct business as a life insurance
company on January 2, 1868, as Pacific Mutual Life Insurance Company of
California, and were reincorporated under our present name on July 22, 1936.
We offer a complete line of life insurance policies and annuity contracts,
as well as financial and retirement services. We are admitted to do business in
the District of Columbia and in all states except New York. As of the end of
1995, we had $____ billion of life insurance in force and total assets of
$____ billion. We and our subsidiaries and affiliated enterprises together had
total assets and funds under management of over $_____ billion as of the end of
1995. We have been ranked according to assets as the 24th largest life insurance
carrier in the nation for 1994.
The principal underwriter for the Policies is Pacific Mutual Distributors,
Inc. ("PMD"), (formerly Pacific Equities Network) one of our wholly owned
subsidiaries. PMD is registered as a broker-dealer with the Securities and
Exchange Commission ("SEC").
- 9 -
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
The Separate Account is a separate investment account of ours that is used
only to support the variable death benefits and policy values of variable life
insurance policies. The assets in the Separate Account are kept separate from
our General Account assets and our other separate accounts.
We own the assets in the Separate Account and are required to maintain
sufficient assets in the Separate Account to meet anticipated obligations of the
insurance policies funded by the Account. The Separate Account is divided into
subaccounts called Variable Accounts. The income, gains, or losses, realized or
unrealized, of each Variable Account are credited to or charged against the
assets held in the Variable Account without regard to our other income, gains,
or losses. Assets in the Separate Account attributable to the reserves and other
liabilities under the variable life insurance policies funded by the Separate
Account are not chargeable with liabilities arising from any other business that
we conduct. However, we may transfer to our General Account any assets which
exceed anticipated obligations of the Separate Account. All obligations arising
under the Policy are our general corporate obligations. We may accumulate in
the Separate Account proceeds from various policy charges and investment results
applicable to those assets.
The Separate Account was established on May 12, 1988 under California law
under the authority of our Board of Directors. The Separate Account is
registered as a unit investment trust with the SEC. Such registration does not
involve any supervision by the SEC of the administration or investment practices
or policies of the Account.
Each Variable Account available to you invests exclusively in shares of a
designated Portfolio of the Fund. We may in the future establish additional
Variable Accounts within the Separate Account, which may invest in other
Portfolios of the Fund or in other securities.
THE PACIFIC SELECT FUND
The Fund is a diversified, open-end management investment company of the
series type, generally known as a mutual fund. The Fund is registered with the
SEC under the Investment Company Act of 1940. The Fund currently offers twelve
separate Portfolios that fund the Variable Investments Options available to you.
Each Portfolio pursues different investment objectives and policies. The shares
of each Portfolio are purchased by us for the corresponding Variable Account at
net asset value, i.e., without sales load. All dividends and capital gains
----
distributions received from a Portfolio are automatically reinvested in such
Portfolio at net asset value, unless we, on behalf of the Separate Account,
elect otherwise. Fund shares will be redeemed by us at their net asset value to
the extent necessary to make payments under the Policies.
- 10 -
<PAGE>
Shares of the Fund currently are offered only to separate accounts of ours
and an affiliated insurer to serve as an investment medium for variable life
insurance policies and variable annuity contracts issued or administered by
these insurers. Shares of the Fund may also be sold in the future to separate
accounts of other insurance companies, either affiliated or not affiliated with
us. Investment in the Fund by other separate accounts in connection with
variable annuity and variable life insurance contracts may potentially create
conflicts. See "MORE ON THE FUND'S SHARES" in the accompanying prospectus of
the Fund.
The chart below summarizes some basic data about each Portfolio of the Fund
offered to the Separate Account. There can be no assurance that any Portfolio
will achieve its objective. This chart is only a summary. You should read the
more detailed information which is contained in the accompanying prospectus of
the Fund, including information on the risks associated with the investments and
investment techniques of each of the Portfolios.
THE FUND'S PROSPECTUS ACCOMPANIES THIS PROSPECTUS AND SHOULD BE READ
CAREFULLY BEFORE INVESTING.
- 11 -
<PAGE>
<TABLE>
<CAPTION>
Primary Investments Investment
(under normal Adviser/Portfolio
Portfolio Objective circumstances) Manager
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Current income Highest quality money Pacific Mutual
consistent with market instruments
preservation of capital
- --------------------------------------------------------------------------------------------
High-Yield High level of current Intermediate and long- Pacific Mutual
Bond income term, high-yielding,
lower and medium quality
(high risk) fixed-income
securities
- --------------------------------------------------------------------------------------------
Managed Bond Maximize total return Investment grade Pacific Investment
consistent with prudent marketable debt Management Company
investment management securities. Will
normally maintain an
average portfolio
duration of 3-6 years.
- --------------------------------------------------------------------------------------------
Government Maximize total return U.S. Government Pacific Investment
Securities consistent with prudent securities including Management Company
investment management futures and options
thereon and high-grade
corporate debt
securities. Will
normally maintain an
average portfolio
duration of 3-6 years.
- --------------------------------------------------------------------------------------------
Growth Growth of capital Common stock Capital Guardian
Trust Company
- --------------------------------------------------------------------------------------------
Aggressive Capital appreciation Stocks of small- and Columbus Circle
Equity medium-sized companies Investors
that utilize or
provide and service
innovative technologies
- --------------------------------------------------------------------------------------------
Growth LT Long-term growth of Common stock Janus Capital
capital consistent with Corporation
the preservation of
capital
- --------------------------------------------------------------------------------------------
Equity Income Long-term growth of Dividend paying common J.P. Morgan
capital and income stock Investment
Management Inc.
- --------------------------------------------------------------------------------------------
Multi-Strategy High total return Equity and fixed-income J.P. Morgan
securities Investment
Management Inc.
- --------------------------------------------------------------------------------------------
Equity Index Provide investment Stocks included in the Bankers Trust
results that correspond S&P 500 Company
to the total return
performance of common
stocks publicly traded
in the U.S.
- --------------------------------------------------------------------------------------------
International Long-term capital Equity securities of Templeton
appreciation corporations domiciled Investment
outside the United Counsel, Inc.
States
- --------------------------------------------------------------------------------------------
Emerging Long-term capital Common stocks in Blairlogie Capital
Markets appreciation companies domiciled in Management
emerging markets
countries
- --------------------------------------------------------------------------------------------
</TABLE>
- 12 -
<PAGE>
THE INVESTMENT ADVISER AND PORTFOLIO MANAGERS
We serve as Investment Adviser to each Portfolio of the Fund. We are
registered with the SEC as an Investment Adviser. For ten of the Portfolios, we
and the Fund have engaged other firms to serve as Portfolio Managers, which are
shown in the chart above.
THE POLICY
The variable life insurance benefits provided by the Policies are funded
through the Policy Owner's Accumulated Value in the Separate Account and the
Fixed Account. The information included below describes the benefits, features,
charges, and other major provisions of the Policies.
APPLICATION FOR A POLICY
The Policy is designed to meet the needs of individuals by insuring the
lives of two Insureds. Anyone wishing to purchase the Policy may submit an
application to us. A Policy can be issued on the life of Insureds for Ages 20
through Age 85 with evidence of insurability satisfactory to us. An Insured's
Age is calculated for most purposes as of the Insured's birthday nearest the
Policy Date. Acceptance is subject to our underwriting rules, and we reserve
the right to request additional information and to reject an application.
Each Policy is issued with a Policy Date. If your application is
accompanied by all or a portion of the initial premium and is accepted by us,
your Policy Date is usually the date the application and premium payment were
received at our Home Office, although your Policy Date will never be the 29th,
30th, or 31st of any month. If your application is not accompanied by all or a
portion of the initial premium payment, your Policy Date is usually the date
your application is accepted by us. We first become obligated under your Policy
on the date your total initial premium is received or on the date your
application is accepted, whichever is later. Any monthly deductions due will be
taken on the Monthly Payment Date on or next following the date we become
obligated. Your initial premium must be received within 20 days after your
Policy is issued, although we may waive the 20 day requirement at our
discretion. If your initial premium is not received or your application is
rejected by us, your Policy will be cancelled and any partial premium received
will be refunded.
Subject to our approval, your Policy may be backdated, but your Policy Date
may not be more than six months prior to the date of your application.
Backdating can be advantageous if the Insureds' lower issue
- 13 -
<PAGE>
Ages results in lower cost of insurance rates. If your Policy is backdated, the
minimum initial premium required will include sufficient premium to cover the
backdating period. Monthly deductions will be made for the period your Policy
Date is backdated.
Insureds are assigned to underwriting (insurance risk) classes which are
used in calculating the cost of insurance charges. In assigning Insureds to
underwriting classes, we will normally use the medical or paramedical
underwriting method, which may require a medical examination of a proposed
Insured, although other forms of underwriting may be used when deemed
appropriate by us.
PREMIUMS
The Policy is a flexible-premium policy, and it provides considerable
flexibility, subject to the limitations described below, to pay premiums at your
discretion. We usually require you to pay a minimum initial premium equal to at
least 25% of the sum of your Policy's monthly deductions plus premium load for
the first year, which will be based upon your Policy's Face Amount and the Age,
smoking status, gender (unless unisex cost of insurance rates apply, see "Cost
of Insurance," page __), and underwriting classes of the Insureds. Thereafter,
subject to the limitations described below, you may choose the amount and
frequency of premium payments. The Policy, therefore, provides the Policy Owner
with the flexibility to vary premium payments to reflect varying financial
conditions.
When applying for a Policy, you will determine a Planned Periodic Premium
that provides for the payment of level premiums at fixed intervals over a
specified period of time. You will receive a premium reminder notice annually,
semi-annually, or quarterly; however, you are not required to pay Planned
Periodic Premiums. Premiums may be paid monthly under the Uni-check electronic
funds transfer plan where you authorize us to withdraw premiums from your
checking account each month. The minimum initial premium required must be paid
before the Uni-check plan will be accepted by us. You may elect the day each
month on which premiums are paid under the Uni-check plan, provided the day
elected is between the 4th and the 28th day of the month. If no day is elected
by you, the day on which premiums are paid will be the Monthly Anniversary.
- 14 -
<PAGE>
Payment of the Periodic Planned Premium will not guarantee that your Policy
will remain in force. Instead, the continuation of your Policy depends upon
your Policy's Accumulated Value. Even if Periodic Planned Premiums are paid,
your Policy will lapse any time Accumulated Value less Policy Debt is
insufficient to pay the current monthly deduction and a grace period expires
without sufficient payment. See "Lapse," page __.
Any premium payment must be for at least $50.00. We also may reject or
limit any premium payment that would result in an immediate increase in the net
amount at risk under the Policy, although such a premium may be accepted with
satisfactory evidence of insurability. See "Cost of Insurance," page __. A
premium payment would result in an immediate increase in the net amount at risk
if the death benefit under your Policy is, or upon acceptance of the premium
would be, equal to your Guideline Minimum Death Benefit. See "Death Benefit,"
page __. If satisfactory evidence of insurability is not received, the payment,
or portion thereof, may be returned. All or a portion of a premium payment will
be rejected and returned to you if it would exceed the maximum premium
limitations prescribed by federal tax law. We also reserve the right to make
distributions from your Policy to the extent we deem it necessary to continue to
qualify your Policy as life insurance under the Internal Revenue code.
The amount, frequency, and period of time over which you pay premiums might
affect whether your Policy will be classified as a modified endowment contract,
which is a type of life insurance contract subject to different tax treatment
for certain pre-death distributions than conventional life insurance contracts.
In order for your Policy to avoid being treated as a modified endowment
contract, the sum of the premiums paid less a portion of any Partial Withdrawals
may not exceed the "seven pay premium" limit as defined in the Internal Revenue
Code. (See "Federal Income Tax Considerations"). If we receive any premium
payment that we believe, if applied to your Policy in that Policy year, would
cause your Policy to become a modified endowment contract, the portion of the
payment that we believe would cause your Policy to become a modified endowment
contract will not be applied to your Policy but will be returned to you, unless
you have previously notified us that payments that cause your Policy to become a
modified endowment contract may be accepted by us and applied to your Policy.
However, for premium payments received by us at our Home Office within 20 days
before the upcoming Annual Anniversary of your Policy, we may apply the portion
of the premium payment that we believe would cause your Policy to become a
modified endowment contract to your Policy on the upcoming Annual Anniversary.
Certain charges will be deducted from each premium payment. See "Charges
and Deductions," page __. The remainder of the premium, known as the net
premium, will be allocated as described below under "Allocation of Net
Premiums." Additional payments will first be treated as premium payments unless
you request otherwise.
ALLOCATION OF NET PREMIUMS
In your application for the Policy, you select the Investment Options to
which net premium payments will be allocated. When your application is approved
and your Policy is issued, your Accumulated Value will be automatically
allocated according to your instructions contained in your application, or more
recent written instructions, if any (except for amounts allocated to the Loan
Account to secure any Policy Debt). For residents of states that require a
refund of premium to an Owner who returns the Policy during the Free-Look
Period, net premiums received by
- 15 -
<PAGE>
us before the Free-Look Transfer Date will be allocated to the Money Market
Variable Account (except for amounts allocated to the Loan Account to secure any
Policy loan). The Free-Look Transfer Date is the later of 15 days after the
Policy is issued or 45 days after the application is signed, or, if longer, upon
receipt of the minimum initial premium. Net premiums received after the Free-
Look Transfer Date will be allocated upon receipt among the Investment Options
according to your most recent instructions.
You may change the allocation of net premiums by submitting a proper
written request to our Home Office. Changes in net premium allocation
instructions may be made by telephone if a properly completed Authorization for
Telephone Requests is on file at our Home Office. We reserve the right to
suspend or discontinue telephone net premium allocation instructions.
DOLLAR COST AVERAGING OPTION
We currently offer an option under which you may dollar cost average your
allocations in the available Variable Accounts under your Policy by authorizing
us to make periodic allocations of Accumulated Value from any one Variable
Account to one or more of the other Variable Accounts. Dollar cost averaging is
a systematic method of investing under which securities are purchased at regular
intervals in fixed dollar amounts so that the cost of the securities gets
averaged over time and possibly over various market values. The option will
result in the allocation of Accumulated Value to one or more Variable Accounts,
and these amounts will be credited at the Accumulation Unit values as of the end
of the Valuation Dates on which the transfers are processed. Since the value of
Accumulation Units will vary, the amounts allocated to a Variable Account will
result in the crediting of a greater number of units when the Accumulation Unit
value is low and a lesser number of units when the Accumulation Unit value is
high. Dollar cost averaging does not guarantee profits, nor does it assure that
a Policy Owner will not have losses.
A Dollar Cost Averaging Request Form is available upon request. To elect
the Dollar Cost Averaging Option, the Accumulated Value in the Variable Account
from which the Dollar Cost Averaging transfers will be made must be at least
$5,000. After we have received a Dollar Cost Averaging Request in proper form
at our Home Office, we will transfer Accumulated Value in amounts you designate
from the Variable Account from which transfers are to be made to the Variable
Account or Accounts you choose. The minimum amount that may be transferred to
any one Variable Account is $50. After the Free-Look Period, the first transfer
will be effected on your Policy's Monthly, Quarterly, Semi-Annual, or Annual
Anniversary, whichever corresponds to the period selected by you, on or next
following receipt at our Home Office of a Dollar Cost Averaging Request in
proper form. Subsequent transfers will be effected on the following Monthly,
Quarterly, Semi-Annual, or Annual Anniversary for so long as you designate until
the total amount elected has been transferred, until Accumulated Value in the
Variable Account from which transfers are made has been depleted, or until your
Policy enters the grace period. Amounts periodically transferred under this
option will
- 16 -
<PAGE>
not be subject to any transfer charges that may be imposed by us in the future,
except as may be required by applicable law.
You may instruct us at any time to terminate this option by written request
to our Home Office. We may discontinue, modify, or suspend the Dollar Cost
Averaging Option at any time.
PORTFOLIO REBALANCING
You may direct us to automatically re-set the percentage of your
Accumulated Value allocated to each Variable Account at a predetermined level.
This process is called portfolio rebalancing. (The Fixed Account is not
available for portfolio rebalancing.) Over time, the variations in each Variable
Account's investment results will shift the percentage allocations of your
Accumulated Value. The portfolio rebalancing feature will automatically transfer
your Accumulated Value among the Variable Accounts back to the preset
percentages. Rebalancing can be made quarterly, semi-annually or annually,
measured from your Policy Date ("frequency period"). Rebalancing may result in
transferring amounts from a Variable Account with relatively higher investment
performance to a Variable Account with relatively lower investment performance.
You may initiate portfolio rebalancing by sending our Home Office a signed,
written request in good form or a properly completed Automatic Portfolio
Rebalancing form. You must specify the frequency for rebalancing and a
beginning date. The first rebalancing will usually occur on your Monthly
Payment Date that starts the frequency period you elected and that occurs on or
follows the beginning date you elected. If you stop portfolio rebalancing, you
must wait 30 days to begin again. Portfolio rebalancing cannot be used with the
Dollar Cost Averaging Option.
We may modify, terminate or suspend the portfolio rebalancing feature at
any time.
TRANSFER OF ACCUMULATED VALUE
Accumulated Value may be transferred among the Variable Accounts by the
Policy Owner upon proper written request to our Home Office. Transfers may not
be made until after the Free-Look Transfer Date if you reside in a state that
requires us to refund premiums if you exercise your Free-Look Right. Transfers
(other than transfers in connection with the Dollar Cost Averaging Option) may
be made by telephone if a properly completed Authorization For Telephone
Requests is on file at our Home Office. Currently, there are no limitations on
the number of transfers between Variable Accounts, no minimum amount required
for a transfer, nor any minimum amount required to be remaining in a given
Variable Account after a transfer (except as required under the Dollar Cost
Averaging Option). No transfer may be made if your Policy is in the grace period
and a payment required to avoid lapse is not paid. See "Lapse," page __. No
- 17 -
<PAGE>
charges are currently imposed upon such transfers. We reserve the right,
however, at a future date to limit the size of transfers and remaining balances,
to assess transfer charges, to limit the number and frequency of transfers, and
to impose other reasonable limits or suspend or discontinue telephone transfers.
Accumulated Value may also be transferred after the Free-Look Transfer Date
from the Variable Accounts to the Fixed Account; however, such a transfer will
only be permitted in the Policy Month preceding your Policy Anniversary, except
that if you reside in Connecticut, Georgia, Maryland, North Carolina, or
Pennsylvania, you may make such a transfer at any time during the first 18
Policy Months. Transfers from the Fixed Account to the Variable Accounts are
restricted as described in "The Fixed Account," page __.
DEATH BENEFIT
When your Policy is issued, we will determine the initial amount of
insurance based on the instructions provided in the application. That amount
will be shown on the specifications page of your Policy and is called the "Face
Amount." The minimum Face Amount at issuance of a Policy is $100,000. We may
reduce the minimum Face Amount required at issuance under certain circumstances.
For so long as your Policy remains in force, we will, upon proof of the
death of both Insureds, pay death benefit proceeds to a named Beneficiary.
Death benefit proceeds will consist of the death benefit under the Policy, plus
any insurance proceeds provided by Rider, reduced by any outstanding Policy Debt
(and, if in the grace period, any overdue charges).
Each Policy Owner may select one of four death benefit options: Option A,
Option B, Option C, or Option D. Generally, you designate the death benefit
option in your application. If no option is designated, Option A will be
assumed by us to have been selected. Subject to certain restrictions, you may
change the death benefit option selected to Option A or B.
The death benefit upon the death of the Survivor will be equal to the death
benefit option selected or, if greater, the Guideline Minimum Death Benefit,
which is Accumulated Value (determined as of the end of the Valuation Period
during which the Survivor dies) multiplied by the Death Benefit Percentage. The
Death Benefit Percentage varies according to the Age of the younger Insured and
will be at least equal to the cash value corridor in Section 7702 of the
Internal Revenue Code, which addresses the definition of a life insurance policy
for tax purposes. The Death Benefit Percentage is 250% for an Insured at Age 40
or under, and it declines for older Insureds. A table showing the Death Benefit
Percentages is in Appendix C to this prospectus and in the Policy. Under any
option, for so long as your Policy remains in force, the death benefit will
never be less than the Face Amount of your Policy and will
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<PAGE>
always be sufficient to qualify the Policy as life insurance under Section 7702
of the Internal Revenue Code.
Option A. Under Option A, the death benefit will be equal to the Face
Amount of your Policy.
Option B. Under Option B, the death benefit will be equal to the Face
Amount of your Policy plus the Accumulated Value. The death benefit under
Option B will always vary as Accumulated Value varies.
Option C. Under Option C, the death benefit will be equal to the Face
Amount of your Policy plus the total premiums paid minus the sum of any partial
withdrawals taken and any other distribution of Accumulated Value.
Option D. Under Option D, the death benefit will be equal to the Face
Amount of the Policy multiplied by a Death Benefit Factor. Death Benefit
Factors for Joint Equal Ages and Policy years, each at 5 year intervals, are
shown in Appendix D; a complete chart is contained in your Policy. Generally,
the Death Benefit Factor is a number from 1.0 to 2.0. The factor that applies to
a Policy varies with the Joint Equal Age of the Insureds and the number of
completed Policy Years, and changes on each Policy Anniversary. Generally, the
Death Benefit Factor will reach the maximum of 2.0 when the sum of the Joint
Equal Age and the number of completed Policy Years is between 85 and 90, so that
the minimum death benefit at that time would be equal to twice the amount of the
Face Amount.
Choosing Among the Options. Options A through D are intended to provide
flexibility in the amount of insurance protection provided under a Policy.
Option A provides for the smallest amount of insurance protection, in that the
death benefit is equal to the Face Amount (assuming that the Guideline Minimum
Death Benefit is not greater than the Face Amount). Under this option,
favorable investment performance will be reflected in increasing Accumulated
Value rather than insurance protection. Options B and C provide for a greater
degree of insurance protection, in that the death benefit under Option B
includes Accumulated Value, and the benefit under Option C includes the amount
of premiums paid minus withdrawals and any other distributions of Accumulated
Value. As between Options B and C, the death benefit under Option B will reflect
the value of growth in Accumulated Value due to performance, and Option C will
not (assuming that Guideline Minimum Death Benefit is not greater than the death
benefit otherwise determined). Option D provides some assurance that the death
benefit will increase gradually over time without regard to the investment
performance of the Investment Options.
Examples of Death Benefit Options. The following examples demonstrate the
determination of death benefits under Options A through D. The examples show
eight hypothetical Policies, each with a Face Amount of $1,000,000 and where the
two Insureds are male and female nonsmokers, each Age 45 at the time of issue,
and assuming that there is
- 19 -
<PAGE>
no outstanding Policy Debt, that no withdrawals have been taken, and the other
assumptions shown below. (The examples are intended to portray differences in
death benefits; Accumulated Value assumptions may not be realistic.)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Assumptions Policy I Policy II Policy III Policy IV
- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Face Amount $1,000,000 $1,000,000 $1,000,000 $1,000,000
Accumulated Value on Date of Death $ 600,000 $ 900,000 $1,200,000 $1,800,000
Total Premium Paid on Date of Death $ 300,000 $ 400,000 $ 500,000 $ 700,000
Youngest Age on Date of Death 65 65 65 65
Death Benefit Percentage 120% 120% 120% 120%
Death Benefit Factor (Option D) 108.4% 108.4% 108.4% 108.4%
Death Benefits Options
- ----------------------
Death Benefit Under Option A $1,000,000 $1,080,000 $1,440,000 $2,160,000
Death Benefit Under Option B $1,600,000 $1,900,000 $2,200,000 $2,800,000
Death Benefit Under Option C $1,300,000 $1,400,000 $1,500,000 $2,160,000
Death Benefit Under Option D $1,084,000 $1,084,000 $1,440,000 $2,160,000
- -----------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------
Assumptions Policy V Policy VI Policy VII Policy VIII
- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Face Amount $1,000,000 $1,000,000 $1,000,000 $1,000,000
Accumulated Value on Date of Death $ 600,000 $ 900,000 $1,200,000 $1,800,000
Total Premium Paid on Date of Death $ 300,000 $ 400,000 $ 500,000 $ 700,000
Youngest Age on Date of Death 90 90 90 90
Death Benefit Percentage 105% 105% 105% 105%
Death Benefit Factor (Option D) 200% 200% 200% 200%
Death Benefits Options
- ----------------------
Death Benefit Under Option A $1,000,000 $1,000,000 $1,260,000 $1,890,000
Death Benefit Under Option B $1,600,000 $1,900,000 $2,200,000 $2,800,000
Death Benefit Under Option C $1,300,000 $1,400,000 $1,500,000 $1,890,000
Death Benefit Under Option D $2,000,000 $2,000,000 $2,000,000 $2,000,000
- -----------------------------------------------------------------------------------------
</TABLE>
The death benefit shown in these examples is based upon the Guideline Minimum
Death Benefit for the following examples; Policy II, Option A; Policy III,
Options A and D; Policy IV, Options A, C, and D; Policy VII, Option A; and
Policy VIII, Options A and C.
If the death benefit is equal to the Guideline Minimum Death Benefit, we
reserve the right to reduce the death benefit by requiring Partial Withdrawals
be made in order to maintain the net amount at risk at a level that will not
exceed three times the death benefit on the Policy Date.
The Policy is intended to qualify as a life insurance contract under the
Internal Revenue Code for Federal tax purposes, and the death benefit under the
Policy is intended to qualify for the income tax exclusion under the Internal
Revenue Code. Unless otherwise specified by you in writing, it is intended that
the Policy will not be treated as a modified endowment contract under the
Internal Revenue Code. To these ends, the provisions of the Policy, including
any other Rider, Benefit, or endorsement, are to be interpreted to ensure such
tax qualification and to prevent the Policy from being treated as a modified
endowment contract, notwithstanding any other provisions to the contrary.
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<PAGE>
If at any time the premiums paid under your policy exceed the amount
allowable for such tax qualification, such excess amount shall be removed from
the Policy as of the date of its payment, and any appropriate adjustment in the
death benefit shall be made as of such date. The excess amount shall be
refunded to you no later than 60 days after the end of the applicable Policy
Year. The excess amount removed from the Policy and refunded to you may be
adjusted for interest or for changes in Accumulated Value attributable to the
excess amount. If for some reason this excess amount is not refunded by then,
the death benefit under this Policy shall be increased retroactively and
prospectively so that at no time is the death benefit ever less than the amount
needed to ensure such tax qualification. To the extent that the death benefit as
of any time is increased by this provision, appropriate adjustments shall be
made retroactively in any cost of insurance or supplemental benefits as of that
time that are consistent with such an increase.
If at any time the premiums or other amounts paid under the Policy exceed
the limit for avoiding modified endowment contract treatment, and you have not
specified in writing that such treatment is acceptable to you, such excess
amount shall be removed from the Policy as of the date of its payment, and any
appropriate adjustment in the Policy's death benefit shall be made as of such
date. This excess amount shall be refunded to you no later than 60 days after
the end of the applicable Policy Year. The excess amount removed from the
Policy and refunded to you may be adjusted for interest or for changes in
Accumulated Value attributable to the excess amount. If this excess amount is
not refunded by then, the death benefit under your Policy shall be increased
retroactively and prospectively to the minimum amount necessary so that at no
time is the death benefit ever less than the amount needed to avoid modified
endowment contract treatment. To the extent the death benefit as of any time is
increased by this provision, appropriate adjustments shall be made,
retroactively or otherwise, in any cost of insurance or supplemental benefits as
of that time that are consistent with such an increase.
All calculations of death benefit will be made as of the end of the
Valuation Period during which the Survivor dies. We will pay interest on death
benefit proceeds from the date of the Survivor's death to the date of payment at
an annual rate of not less than 4% or if higher, the interest rate required by
applicable state law. Death benefit proceeds may be paid to the Beneficiary in a
lump sum or under a payment plan offered under the Policy. Your Policy should be
consulted for details.
CHANGES IN DEATH BENEFIT OPTION
After the fifth Policy Year, you may request that the death benefit option
under your Policy be changed to Option A or B. Changes to Option C or D will
not be available. Changes in the death benefit option may be made only once per
Policy Year and should be made in writing to our Home Office. The effective
date of any such change shall be the next Monthly
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<PAGE>
Payment Date on or next following the date we receive your written request at
our Home Office.
A change in the death benefit under a Policy will result in a change in the
Face Amount of the Policy so that the death benefit under the new death benefit
option will equal the death benefit under the former option immediately prior to
the change. From that point on, the change in option will affect the
determination of the death benefit. In addition, a change in death benefit
option may affect the monthly cost of insurance charge since this charge varies
with the net amount at risk, which generally is the amount by which the death
benefit exceeds Accumulated Value. A change will not be permitted if it would
result in a Face Amount of less than $100,000, although we reserve the right to
waive this minimum under certain circumstances.
Unless otherwise specified by you in writing, any request for a death
benefit option change will not be accepted by us if the option change would
cause your Policy to be treated as a modified endowment contract.
DECREASE IN FACE AMOUNT
You may request a decrease in the Face Amount under your Policy subject to
approval from us. A decrease in Face Amount may only be made once per Policy
Year and only after the first Policy Year. Decreasing the Face Amount could
decrease the death benefit. The amount of change in the death benefit will
depend, among other things, upon the death benefit option chosen by you and
whether, and the degree to which, the death benefit under your Policy exceeds
the Face Amount prior to the change. Changing the Face Amount could affect the
subsequent level of the death benefit while your Policy is in force and the
subsequent level of Policy values. A decrease in Face Amount may decrease the
net amount at risk, which may decrease your cost of insurance charge.
Any request for a decrease in Face Amount must be made by written
application to our Home Office. It will become effective on the Monthly Payment
Date on or next following the date we receive your written request at our Home
Office.
A decrease will not be permitted if the Face Amount would fall below
$100,000, although we reserve the right to waive the minimum Face Amount under
certain circumstances, such as for group or sponsored arrangements. A decrease
in Face Amount during the first ten Policy Years will result in surrender
charges being deducted from the Accumulated Value. See "Surrender Charges,"
page __. If a decrease in the Face Amount would result in total premiums paid
exceeding the premium limitations prescribed under tax law to qualify your
Policy as a life insurance contract, we may refund to you the amount of such
excess above the premium limitations.
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<PAGE>
We reserve the right to disallow a requested decrease, and will not permit
a requested decrease, among other reasons, (1) if compliance with the guideline
premium limitations under tax law resulting from the requested decrease would
result in immediate termination of your Policy, (2) if, to effect the requested
decrease, payments to you would have to be made from Accumulated Value for
compliance with the guideline premium limitations, and the amount of such
payments would exceed the Net Cash Surrender Value under your Policy, or (3) if
the decrease would cause your Policy to be treated as a modified endowment
contract and you have not specified in writing that such treatment is acceptable
to you.
POLICY VALUES
Accumulated Value. The Accumulated Value is the sum of the amounts under
the Policy held in each Investment Option, as well as the amount set aside in
our Loan Account to secure any Policy Debt.
On each Valuation Date, the portion of your Accumulated Value allocated to
any particular Variable Account will be adjusted to reflect the investment
experience of that Variable Account. On each Monthly Payment Date, the portion
of the Accumulated Value allocated to a particular Investment Option also will
be adjusted to reflect the assessment of the monthly deduction. See
"Determination of Accumulated Value," page __. No minimum amount of Accumulated
Value is guaranteed. You bear the risk for the investment experience of
Accumulated Value allocated to the Variable Accounts.
Cash Surrender Value. The Cash Surrender Value of your Policy equals the
Accumulated Value less the surrender charge. Thus, the Accumulated Value will
exceed your Policy's Cash Surrender Value by the amount of the surrender charge.
Once the surrender charge has expired, the Accumulated Value will equal the Cash
Surrender Value.
Net Cash Surrender Value. The Net Cash Surrender Value of your Policy
equals the Cash Surrender Value less any outstanding Policy Debt. You can
surrender your Policy at any time while either Insured is living and receive its
Net Cash Surrender Value. See "Surrender," page __.
DETERMINATION OF ACCUMULATED VALUE
Although the death benefit under your Policy can never be less than the
Policy's Face Amount, your Accumulated Value will vary to a degree that depends
upon several factors, including investment performance of the Variable Accounts
to which Accumulated Value has been allocated, payment of premiums, the amount
of any outstanding Policy Debt, Partial Withdrawals, and the charges assessed in
connection with your Policy. There is no guaranteed minimum Accumulated Value,
and you bear the entire investment risk relating to the investment performance
of Accumulated Value allocated to the Variable Accounts.
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<PAGE>
The amounts allocated to the Variable Accounts will be invested in shares
of the corresponding Portfolio of the Fund. The investment performance of the
Variable Accounts will reflect increases or decreases in the net asset value per
share of the corresponding Portfolio and any dividends or distributions declared
by a Portfolio. Any dividends or distributions from any Portfolio of the Fund
will be automatically reinvested in shares of the same Portfolio, unless we, on
behalf of the Separate Account, elect otherwise.
Assets in the Variable Accounts are divided into accumulation units, which
are a measure of value used for bookkeeping purposes. When you allocate net
premiums to a Variable Account, the Policy is credited with accumulation units.
In addition, other transactions including loans, a surrender, Partial
Withdrawals, transfers, and assessment of charges against your Policy affect the
number of accumulation units credited to your Policy. The number of units
credited or debited in connection with any such transaction is determined by
dividing the dollar amount of such transaction by the unit value of the affected
Variable Account. The unit value of each Variable Account is determined on each
Valuation Date. The number of units credited will not change because of
subsequent changes in unit value.
The accumulation unit value of each Variable Account's unit initially was
$10. The unit value of a Variable Account on any Valuation Date is calculated
by adjusting the unit value from the previous Valuation Date for (1) the
investment performance of the Variable Account, which is based upon the
investment performance of the corresponding Portfolio of the Fund, (2) any
dividends or distributions paid by the corresponding Portfolio, and (3) the
charges, if any, that may be assessed by us for income taxes attributable to the
operation of the Variable Account.
POLICY LOANS
You may borrow money from us using your Policy as the only security for the
loan by submitting a proper written request to our Home Office. We may in our
discretion permit loans to be made by telephone if a properly completed
Authorization For Telephone Requests has been filed at our Home Office. A loan
may be taken any time your Policy is in force. The minimum loan that can be
taken at any time is $500. The maximum amount that can be borrowed at any time
is the greater of (1) 100% of your Accumulated Value in the Fixed Account plus
90% of your Accumulated Value in the Variable Accounts, less any surrender
charges that would have been imposed if the Policy were surrendered on the date
the loan is taken, or (2) 100% of the product of (a X b/c - d) where (a) equals
the Policy's Accumulated Value less any surrender charge that would be imposed
if the Policy were surrendered on the date the loan is taken and less 12 times
the current monthly deduction; (b) equals 1 plus the annual loan interest rate
credited; (c) equals 1 plus the annual loan interest rate currently charged; and
(d) equals any existing Policy Debt.
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<PAGE>
When you take a loan, an amount equal to the loan is transferred out of
your Accumulated Value in the Investment Options into the Loan Account to secure
the loan. Unless you request otherwise, loan amounts will be deducted from the
Investment Options in the proportion that each bears to your Accumulated Value
less Policy Debt.
The Policy loan interest rate is 4.50% for years one through ten, and 4.25%
thereafter. We will credit interest monthly on amounts held in the Loan Account
to secure the loan at an annual effective rate of 4.00%.
You may repay all or part of the loan at any time while your Policy is in
force. Interest on a loan is accrued daily and is due for the prior year on
each Policy Anniversary. If interest is not paid when due, it will be added to
the amount of the loan principal and interest will begin accruing thereon from
that date. An amount equal to the loan interest charged will be transferred to
the Loan Account from the Investment Options on a proportional basis.
Unless you request otherwise, any loan repayment will be transferred into
the Investment Options in accordance with the most recent premium allocation
instructions. In addition, on each Policy Anniversary any interest earned on
the loan balance held in the Loan Account will be transferred to each of the
Investment Options in accordance with your most recent premium allocation
instructions. Any payment we receive from you while you have a loan outstanding
will be first considered a premium payment, unless you tell us in writing it is
a loan repayment.
While the amount to secure the loan is held in the Loan Account, you forgo
the investment experience of the Variable Accounts and the current interest rate
of the Fixed Account on the loaned amount. Thus a loan, whether or not repaid,
will have a permanent effect on your Policy's values and might have an effect on
the amount and duration of the death benefit. If not repaid, the Policy Debt
will be deducted from the amount of death benefit upon the death of the
Survivor, the Cash Surrender Value upon surrender, or the refund of premium upon
exercise of the Free-Look Right.
A loan may affect the length of time your Policy remains in force. Your
Policy will lapse when Accumulated Value minus Policy Debt is insufficient to
cover the monthly deduction against your Policy's Accumulated Value on any
Monthly Payment Date and the minimum payment required is not made during the
grace period. Moreover, your Policy may enter the grace period more quickly
when a loan is outstanding, because the loaned amount is not available to cover
the monthly deduction. Additional payments or repayment of a portion of Policy
Debt may be required to keep your Policy in force. See "Lapse," page __.
A loan will not be treated as a distribution from your Policy and will not
result in taxable income to you unless your Policy is a modified
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<PAGE>
endowment contract, in which case a loan will be treated as a distribution that
may give rise to taxable income.
For information on the tax treatment of loans, see "Federal Income Tax
Considerations," page __.
SURRENDER
You may fully surrender your Policy at any time during the life of either
Insured. The amount received in the event of a full surrender is your Policy's
Net Cash Surrender Value, which is equal to its Accumulated Value less any
applicable surrender charge and less any outstanding Policy Debt.
You may surrender your Policy by sending a written request together with
your Policy to our Home Office. The proceeds will be determined as of the end
of the Valuation Period during which the request for a surrender is received.
You may elect to have the proceeds paid in cash or applied under a payment plan
offered under the Policy. See "Payment Plan," page __. For information on the
tax effects of a surrender of a Policy, see "Federal Income Tax Considerations,"
page __.
PARTIAL WITHDRAWALS
A Policy Owner may make Partial Withdrawals of Net Cash Surrender Value
starting on the first Policy Anniversary. The portion of the first Partial
Withdrawal in each of the first 15 Policy Years of up to the lesser of $10,000
or 10% of the Cash Surrender Value will not reduce the Face Amount under your
Policy. The excess of any Partial Withdrawal over this amount may cause a
reduction in Face Amount if the death benefit option is Option A or D, as
described below.
Partial Withdrawals must be for at least $500, and your Policy's Net Cash
Surrender Value after the withdrawal must be at least $500. If there is any
Policy Debt, the maximum Partial Withdrawal is limited to the excess, if any, of
your Cash Surrender Value immediately prior to the withdrawal over the result of
the Policy Debt divided by 90%. If you do not make a Partial Withdrawal during
one of the first 15 Policy Years, the amount that you could have withdrawn
without affecting Face Amount does not carry over in the following year.
You may make a Partial Withdrawal by submitting a proper written request to
our Home Office. As of the effective date of any withdrawal, your Accumulated
Value, Cash Surrender Value, and Net Cash Surrender Value will be reduced by the
amount of the withdrawal. The amount of the withdrawal will be allocated
proportionately to your Accumulated Value in the Investment Options unless you
request otherwise. If the Survivor dies after the request for a withdrawal is
sent to us and prior to the withdrawal being effected, the amount of the
withdrawal will be deducted from the death benefit proceeds, which will be
determined without taking
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<PAGE>
into account the withdrawal. A withdrawal fee of $25 will be charged for a
Partial Withdrawal. (See "Charges and Deductions".)
Except as noted above, when a Partial Withdrawal is made on a Policy on
which you have selected death benefit Option A or D, the Face Amount under your
Policy is decreased by the excess, if any, of the Face Amount over the result of
the death benefit immediately prior to the Partial Withdrawal minus the amount
of the Partial Withdrawal. A Partial Withdrawal will not change the Face Amount
of your Policy if you have selected death benefit Option B or C. However,
assuming that the death benefit is not equal to the Guideline Minimum Death
Benefit, the Partial Withdrawal will reduce the death benefit by the amount of
the Partial Withdrawal. To the extent the death benefit is the Guideline
Minimum Death Benefit to the Insureds, a Partial Withdrawal may cause the death
benefit to decrease by an amount greater than the amount of the Partial
Withdrawal. See "Death Benefit," page __.
Unless otherwise specified by you in writing, no Partial Withdrawal request
will be accepted by us if the Partial Withdrawal would cause your Policy to be
treated as a modified endowment contract.
For information on the tax treatment of Partial Withdrawals, see "Federal
Income Tax Considerations," page __.
RIGHT TO EXAMINE A POLICY--FREE-LOOK RIGHT
You have a Free-Look Right, under which your Policy may be returned within
10 days after you receive it (30 days if you are a resident of California and
are age 60 or older), within 10 days after we mail or deliver a notice of the
right of withdrawal, or within 45 days after you complete the application for
insurance, whichever is later. It can be mailed or delivered to us or our
agent. The returned Policy will be treated as if we never issued it, except as
indicated below, and we will refund any charges deducted from premiums received,
any net premium allocated to the Fixed Account, plus the sum of your Accumulated
Value allocated to the Variable Accounts plus any Policy Charges and Fees
deducted from your Accumulated Value in the Variable Accounts. If you reside in
a state that requires us to return premium payments to Policy Owners who
exercise the Free-Look Right, we will refund the amount of the premium paid. If
you have taken a loan during the Free-Look Period, the Policy Debt will be
deducted from the amount refunded. When the application is approved and the
Policy is issued, net premiums will be allocated according to your instructions,
unless the Policy is sold to a resident of a state that requires a refund of
premium, in which case, until the Free-Look Transfer Date, net premiums received
by us will be allocated to the Money Market Variable Account (except for amounts
allocated to the Loan Account to secure a Policy loan). See "Allocation of Net
Premiums," page __.
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<PAGE>
LAPSE
Your Policy will remain in force until the earliest of the death of the
Survivor or a full surrender of your Policy, unless before either of these
events, Accumulated Value less Policy Debt is insufficient to pay the current
monthly deduction on a Monthly Payment Date and a grace period expires without
sufficient additional premium payment or loan repayment by your Policy Owner.
If your Accumulated Value less Policy Debt is insufficient to cover the current
monthly deduction on a Monthly Payment Date, you must pay during the grace
period a minimum of three times the full monthly deduction due on the Monthly
Payment Date when the insufficiency occurred to avoid termination of your
Policy. We will not accept any payment if it would cause your total premium
payments to exceed the maximum permissible premium for your Policy's Face Amount
under the Internal Revenue Code. This is unlikely to occur unless you have
outstanding Policy Debt, in which case you could repay a sufficient portion of
the Policy Debt to avoid termination. In this instance, you may wish to repay a
portion of Policy Debt to avoid recurrence of the potential lapse. If premium
payments have not exceeded the maximum permissible premiums for your Policy's
Face Amount, you may wish to make larger or more frequent premium payments to
avoid recurrence of the potential lapse.
If your Accumulated Value less Policy Debt is insufficient to cover the
monthly deduction on a Monthly Payment Date, we will deduct the amount that is
available. We will notify you (and any assignee of record) of the payment
required to keep your Policy in force. You will then have a "grace period" of
61 days, measured from the date the notice is sent, to make the required
payment. Your Policy will remain in force through the grace period. Failure to
make the required payment within the grace period will result in termination of
coverage under your Policy, and your Policy will lapse with no value. If the
required payment is made during the grace period, any premium paid will be
allocated among the Investment Options in accordance with your current premium
allocation instructions. Any monthly deduction due will be charged to the
Investment Options on a proportionate basis. If the Survivor dies during the
grace period, the death benefit proceeds will equal the amount of the death
benefit immediately prior to the commencement of the grace period, reduced by
any unpaid monthly deductions and any Policy Debt.
REINSTATEMENT
We will reinstate a lapsed Policy (but not a Policy which has been
surrendered for its Net Cash Surrender Value) at any time within five years
after the end of the grace period provided we receive the following: (1) a
written application from the Policy Owner; (2) evidence of insurability
satisfactory to us for each Insured; and (3) payment of all monthly deductions
that were due and unpaid during the grace period, and payment of a premium at
least sufficient to keep the Policy in force for three months after the date of
reinstatement.
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<PAGE>
When your Policy is reinstated, the Accumulated Value will be equal to your
Accumulated Value on the date of the lapse subject to the following: If your
Policy is reinstated after the first Monthly Payment Date following lapse, the
Accumulated Value will be reduced by the amount of Policy Debt on the date of
lapse and no Policy Debt will exist on the date of the reinstatement. If your
Policy is reinstated on the Monthly Payment Date next following lapse, any
Policy Debt on the date of lapse will also be reinstated. No interest on
amounts held in our Loan Account to secure Policy Debt will be paid or credited
between lapse and reinstatement. Reinstatement will be effective as of the
Monthly Payment Date on or next following the date of approval by us, and
Accumulated Value minus, if applicable, Policy Debt will be allocated among the
Investment Options in accordance with your most recent premium allocation
instructions.
CHARGES AND DEDUCTIONS
PREMIUM LOAD
A premium load is deducted from each premium payment under a Policy prior
to allocation of the net premium to the Policy Owner's Accumulated Value. The
premium load consists of the following items:
Sales Load. The sales load is equal to 5% of each premium paid during the
first ten Policy Years and 3% of each premium paid thereafter.
The sales load is deducted to compensate us for the cost of distributing
the Policies. The amount derived by us from the sales load is not expected to
be sufficient to cover the sales and distribution expenses in connection with
the Policies. If surrendered within 10 years after issuance, the Policy will
also be subject to a sales surrender charge, which is described on page __. To
the extent that sales and distribution expenses exceed sales loads and any
amounts derived from the sales surrender charge, such expenses may be recovered
from other charges, including amounts derived from the charge for mortality and
expense risks and from mortality gains.
We may reduce or waive the sales load on Policies sold to our directors or
employees or any of our affiliates or to trustees or any employees of the Fund.
State and Local Premium Tax Charge. A charge equal to 2.35% is assessed
against each premium to pay applicable state and local premium taxes. Premium
taxes vary from state to state, and in some instances, among municipalities.
The 2.35% rate approximates the average tax rate expected to be paid on premiums
from all states. We reserve the right to change the premium tax charge to
reflect any changes in the law.
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<PAGE>
Federal Tax Charge. A charge equal to 1.50% is assessed against each
premium to pay applicable Federal Tax. We reserve the right to change the
Federal Tax charge to reflect any changes in the law.
DEDUCTIONS FROM ACCUMULATED VALUE
A charge called the monthly deduction is deducted from a Policy's
Accumulated Value in the Investment Options beginning on the Monthly Payment
Date on or next following the date we first become obligated under the Policy
and on each Monthly Payment Date thereafter. The monthly deduction consists of
the following items:
Cost of Insurance. This monthly charge compensates us for the anticipated
cost of paying death benefits in excess of Accumulated Value to Beneficiaries of
joint Insureds who die. The amount of the charge is equal to a current cost of
insurance rate multiplied by the net amount at risk under a Policy at the
beginning of the Policy Month. We may use any profit we derive from this charge
for any lawful purpose, including the cost of claims processing and
investigation. The net amount at risk for these purposes is equal to the amount
of death benefit payable at the beginning of the Policy Month divided by
1.00327374 (a discount factor to account for return deemed to be earned during
the month) less the Accumulated Value at the beginning of the Policy Month.
Each Policy contains guaranteed cost of insurance rates that may not be
increased. The guaranteed rates are intended to reflect the insurance risk
associated with joint Insureds. They are based on certain of the 1980
Commissioners Standard Ordinary Mortality Tables (and where unisex cost of
insurance rates apply, the 1980 Commissioners Ordinary Mortality Table B), and
the Ages, gender (where permissible), and underwriting classes of the Insureds.
As of the date of this prospectus, we charge "current rates" that are lower
(i.e., less expensive) than the guaranteed rates, and we may also charge current
---
rates in the future. Like the guaranteed rates, the current rates also vary
with the Ages, gender (where permissible), and underwriting classes of the
Insureds. They also vary with the number of completed Policy Years. The cost
of insurance rates generally increase with the Ages of the Insureds.
Administrative Charge. A monthly administrative charge is deducted equal
to $16 in each of the first 60 Policy Months and $6 per month thereafter. The
administrative charge is assessed to reimburse us for the expenses associated
with administration and maintenance of the Policies. The administrative charge
is guaranteed never to exceed $16 during the first 60 Policy Months and $6 per
month thereafter. We do not expect to profit from this charge.
The monthly administrative charges will be waived on the second or
subsequent Policies acquired by you on the lives of the Insureds who are the
same Insureds as on your initial Policy, and that Policy is in force.
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<PAGE>
However, we deduct $200 from the initial premium to cover processing costs.
Mortality and Expense Risk Charge. A monthly charge is deducted for
mortality and expense risks assumed by us. The mortality and expense risk
charge consists of two components: a Face Amount Component and an Accumulated
Value Component.
During the first ten Policy Years, the Face Amount Component will be
assessed at a rate determined with reference to the initial Face Amount of the
Policy. The rate will be equal to a Face Amount Component Factor per $1,000 of
initial Face Amount. Face Amount Component Factors are shown in Appendix B, and
they are based upon the Joint Equal Age of the Insureds at the Policy Date. For
example, for a Policy where the Joint Equal Age attributable to the Insureds is
50 on the Policy Date, and where the Face Amount is $100,000, the Face Amount
Component Factor would be 0.102, and the monthly Face Amount Component for the
first ten Policy Years would be $10.20. This component is not assessed after
the tenth Policy Year.
In addition, a monthly Accumulated Value Component is assessed at an annual
rate equal to .30% of Accumulated Value during the first twenty Policy Years and
.10% of Accumulated Value thereafter. For purposes of this component, the
Accumulated Value is based upon its value on the Monthly Payment Date after the
deduction of the cost of insurance charge and charges for any optional insurance
Riders or Benefits added.
The mortality and expense risk charge is assessed to compensate us for
assuming certain mortality and expense risks under the Policies. The mortality
risk assumed is that Insureds, as a group, may live for a shorter period of time
than estimated and, therefore, the cost of insurance charges specified in the
Policy will be insufficient to meet actual claims. The expense risk assumed is
that other expenses incurred in issuing and administering the Policies and
operating the Separate Account will be greater than the charges assessed for
such expenses. We will realize a gain from this charge to the extent it is not
needed to provide the mortality benefits and expenses under the Policies, and
will realize a loss to the extent the charge is not sufficient. We may use any
profit derived from this charge for any lawful purpose, including any
distribution expenses not covered by the sales load or sales surrender charge.
See "Surrender Charge," below.
Optional Insurance Benefits Charges. The monthly deduction will include
charges for any optional insurance Riders or Benefits added to the Policy. See
"Optional Insurance Benefits," page __.
SURRENDER CHARGE
We will assess a Surrender Charge against Accumulated Value upon surrender
of a Policy within ten years after its issuance. The Surrender
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<PAGE>
Charge consists of two charges: an underwriting surrender charge and a sales
surrender charge.
Underwriting Surrender Charge. The underwriting surrender charge will be
assessed at a rate determined with reference to the Joint Equal Age of the
Insureds on the Policy Date for each $1,000 of a Policy's initial Face Amount in
accordance with the schedule shown in Appendix A:
The amount of the charge remains level for the first Policy Year. After the
first Policy Anniversary, the charge decreases by 0.9259% per month until it
reaches zero at the end of the 120th Policy Month.
The charge is based upon the Joint Equal Age of the Insureds and the Face
Amount on the Policy Date, and it does not increase as the Insureds get older or
with increases in the Face Amount. For example, if Insureds of Joint Equal Age
50 purchase a Policy with an initial Face Amount of $100,000 and surrender the
Policy at the end of the third Policy Year, the underwriting surrender charge
would be $404.45.
The underwriting surrender charge is designed to cover the administrative
expenses associated with underwriting and issuing a Policy, including the costs
of processing applications, conducting medical examinations, determining
insurability and the Insureds' underwriting class, and establishing policy
records. We do not expect to profit from the underwriting surrender charge.
Sales Surrender Charge. During the first Policy Year, the sales surrender
charge is equal to 25% of the lesser of the premiums paid under the Policy or of
the Sales Surrender Target. The Sales Surrender Target is equal to a specified
amount that varies with the Joint Equal Age of the Insureds for each $1000 of a
Policy's initial Face Amount in accordance with a schedule shown in Appendix B.
After the first Policy Year, the charge as calculated above is adjusted by a
reduction factor. This reduction factor is equal to 99.0741% in the 13th Policy
Month and reduces by 0.9259% per month until it reaches zero at the end of the
120th Policy Month. The Sales Surrender Target does not increase as the Insureds
get older or with increases in the Face Amount due to a death benefit option
change.
For example, if Insureds of Joint Equal Age 50 purchase a Policy with a
Face Amount of $100,000, the Sales Surrender Target, based upon the assumptions
described above, would be $905. The maximum sales surrender charge during the
first Policy Year would be 25% of this amount, or $226.25.
The purpose of the sales surrender charge is to reimburse us for some of
the expenses of distributing the Policies.
We may reduce or waive the sales surrender charge on Policies sold to our
directors or employees or any of our affiliates or to trustees or any employees
of the Fund.
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A Surrender Charge (sales and underwriting) may also be deducted on a
decrease in Face Amount in an amount that reflects, as a fractional amount of
the total Surrender Charge that would be applied if the Policy were fully
surrendered, the amount of the decrease relative to the Face Amount immediately
prior to the decrease. Such a Surrender Charge will reduce the Accumulated Value
and will be allocated proportionately to the Accumulated Value in the Investment
Options. After the decrease, the total Surrender Charge is reduced. The new
total Surrender Charge will be determined by dividing the Face Amount after the
decrease by the Face Amount immediately prior to the decrease and multiplying
the result by the total Surrender Charge that would have applied based on the
Face Amount before the decrease.
WITHDRAWAL CHARGE
A withdrawal fee of $25 will be deducted proportionately from the
Accumulated Value in the Investment Options each time a Partial Withdrawal
occurs.
CORPORATE PURCHASERS
The Policy is available for individuals and for corporations and other
institutions. For corporations or other group or sponsored arrangements
purchasing one or more Policies, we may reduce the amount of the sales surrender
charge, underwriting surrender charge, or other charges where the expenses
associated with the sale of the Policy or Policies or the underwriting or other
administrative costs associated with the Policy or Policies are reduced. Sales,
underwriting or other administrative expenses may be reduced, for reasons such
as expected economies resulting from a corporate purchase or a group or
sponsored arrangements, from the amount of the initial premium payment or
payments, or the amount of projected premium payments.
OTHER CHARGES
We will bear the direct operating expenses of the Separate Account. Each
Variable Account available to you purchases shares of the corresponding
Portfolio of the underlying Fund. The Fund and each of its Portfolios incur
certain charges, including the investment advisory fee, and certain operating
expenses. The Fund is governed by its Board of Trustees. The Fund's expenses are
not fixed or specified under the terms of the Policy and these expenses may vary
from year to year. The advisory fees and other expenses are more fully described
in the prospectus of the Fund.
GUARANTEE OF CERTAIN CHARGES
We guarantee that certain charges will not increase. This includes the
charge for mortality and expense risks, the administrative charge with respect
to the guaranteed rates described above, the premium load, the guaranteed cost
of insurance rates, and the surrender charge.
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OTHER INFORMATION
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion provides a general description of the federal
income tax considerations relating to the Policy. This discussion is based upon
our understanding of the present federal income tax laws as they are currently
interpreted by the Internal Revenue Service ("IRS"). This discussion is not
intended as tax advice. Because of the inherent complexity of such laws and the
fact that tax results will vary according to the particular circumstances of the
individual involved, tax advice may be needed by a person contemplating the
purchase of the Policy. It should, therefore, be understood that these comments
concerning federal income tax consequences are not an exhaustive discussion of
all tax questions that might arise under the Policy and that special rules which
are not discussed herein may apply in certain situations. Moreover, no
representation is made as to the likelihood of continuation of federal income
tax or estate or gift tax laws or of the current interpretations by the IRS or
the courts. Future legislation may adversely affect the tax treatment of life
insurance policies or other tax rules described in this discussion or that
relate directly or indirectly to life insurance policies. Finally, these
comments do not take into account any state or local income tax considerations
which may be involved in the purchase of the Policy.
While we believe that the Policy meets the statutory definition of life
insurance under Section 7702 of the Internal Revenue Code ("IRC") and hence will
receive federal income tax treatment consistent with that of traditional fixed
life insurance, the area of the tax law relating to the definition of life
insurance does not explicitly address all relevant issues (including, for
example, the treatment of substandard risk policies, policies with term
insurance on the Insureds, and certain tax requirements relating to joint
survivorship life insurance policies). We reserve the right to make changes to
the Policy if changes are deemed appropriate by us to attempt to assure
qualification of the Policy as a life insurance contract. If a Policy were
determined not to qualify as life insurance, the Policy would not provide the
tax advantages normally provided by life insurance. The discussion below
summarizes the tax treatment of life insurance contracts.
The death benefit under a Policy should be excludable from the gross income
of the Beneficiary (whether the Beneficiary is a corporation, individual or
other entity) under IRC Section 101(a)(1) for purposes of the regular federal
income tax and you generally should not be deemed to be in constructive receipt
of the cash values, including increments thereof, under the Policy until a full
surrender thereof or a Partial Withdrawal. In addition, certain Policy loans
may be taxable in the case of Policies that are modified endowment contracts.
Prospective Policy Owners that intend to use Policies to fund deferred
compensation arrangements for their employees are urged to consult their tax
advisors with respect to the tax consequences of such arrangements. Prospective
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corporate Owners should consult their tax advisors about the treatment of life
insurance in their particular circumstances for purposes of the alternative
minimum tax applicable to corporations and the environmental tax under IRC
Section 59A. Changing the Policy Owner may also have tax consequences.
Exchanging a Policy for another involving the same Insureds generally will not
result in the recognition of gain or loss according to Section 1035(a) of the
IRC. Changing the Insureds under a Policy will, however, not be treated as a
tax-free exchange under Section 1035, but rather as a taxable exchange.
Diversification Requirements. To comply with regulations under Section
817(h) of the IRC, each Portfolio of the Fund is required to diversify its
investments. For details on these diversification requirements, see "What is
the Federal Income Tax Status of the Fund" in the Fund's prospectus.
The IRS has stated in published rulings that a variable contract owner will
be considered the owner of separate account assets if the contract owner
possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. In those circumstances, income and
gains from the separate account assets would be includable in the variable
policy owner's gross income. The Treasury Department also announced, in
connection with the issuance of regulations concerning diversification, that
those regulations "do not provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may cause the
investor [i.e., the Policy Owner], rather than the insurance company, to be
---
treated as the owner of the assets in the account." This announcement also
stated the guidance would be issued by way of regulations or rulings on the
"extent to which policyholders may direct their investments to particular
subaccounts without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
The ownership rights under your Policy are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policy owners were not owners of separate account assets. For
example, you have additional flexibility in allocating premium payments and
Policy values. These differences could result in your being treated as the
owner of your Policy's pro rata portion of the assets of the Separate Account.
In addition, we do not know what standards will be set forth, if any, in the
regulations or ruling which the Treasury Department has stated it expects to
issue. We therefore reserve the right to modify the Policy, as deemed
appropriate by us, to attempt to prevent you from being considered the owner of
your Policy's pro rata share of the assets of the Separate Account. Moreover,
in the event that regulations are adopted or rulings are issued, there can be no
assurance that the Portfolios will be able to operate as currently described in
the Prospectus, or that the Fund will not have to change any Portfolio's
investment objective or investment policies.
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Tax Treatment of Policies. IRC Section 7702A defines a class of life
insurance contracts referred to as modified endowment contracts. Under this
provision, the Policies will be treated for tax purposes in one of two ways.
Policies that are not classified as modified endowment contracts will be taxed
as conventional life insurance contracts, as described below. Taxation of pre-
death distributions from Policies that are classified as modified endowment
contracts and that are entered into on or after June 21, 1988 is somewhat
different, as described below.
A life insurance contract becomes a "modified endowment contract" if, at
any time during the first seven contract years, the sum of actual premiums paid
exceeds the sum of the "seven-pay premium." Generally, the "seven-pay premium"
is the level annual premium, such that if paid for each of the first seven
years, will fully pay for all future death and endowment benefits under a life
insurance contract. For example, if the "seven-pay premiums" were $1,000, the
maximum premiums that could be paid during the first seven years to avoid
"modified endowment" treatment would be $1,000 in the first year; $2,000 through
the first two years and $3,000 through the first three years, etc. Under this
test, a Select Estate Preserver Policy may or may not be a modified endowment
contract, depending on the amount of premiums paid during each of the Policy's
first seven contract years. Changes in the Policy, including changes in death
benefits, may require "retesting" of a Policy to determine if it is to be
classified as a modified endowment contract.
Conventional Life Insurance Policies. If a Policy is not a modified
endowment contract, upon full surrender for its Net Cash Surrender Value, the
excess, if any, of the Net Cash Surrender Value plus any outstanding Policy Debt
over the cost basis under a Policy will be treated as ordinary income for
federal income tax purposes. Such a Policy's cost basis will usually equal the
premiums paid less any premiums previously recovered in Partial Withdrawals.
Under IRC Section 7702, if a Partial Withdrawal occurring within 15 years of the
Policy Date is accompanied by a reduction in benefits under the Policy, special
rules apply to determine whether part or all of the cash received is paid out of
the income of the Policy and is taxable. Cash distributed to a Policy Owner on
Partial Withdrawals occurring more than 15 years after the Policy Date will be
taxable as ordinary income to the Policy Owner to the extent that it exceeds the
cost basis under a Policy.
We also believe that loans received under Policies that are not modified
endowment contracts will be treated as indebtedness of the Owner for Federal
income tax purposes, and that no part of any loan under the Policy will
constitute income to the Owner unless the Policy is surrendered or matures or
lapses. Consult with your tax advisor on whether interest paid (or accrued by an
accrual basis taxpayer) on a loan under a Policy that is not a modified
endowment contract may be deductible.
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Tax law provisions may limit the deduction of interest payable on loan proceeds
that are used to purchase or carry certain life insurance policies.
Modified Endowment Contracts. Pre-death distributions from modified
endowment contracts may give rise to taxable income. Upon full surrender or
maturity of the Policy, the Policy Owner would recognize ordinary income for
federal income tax purposes equal to the amount by which the Net Cash Surrender
Value plus Policy Debt exceeds the investment in the Policy (usually the
premiums paid plus certain pre-death distributions that were taxable less any
premiums previously recovered that were excludable from gross income). Upon
Partial Withdrawals and Policy loans, the Policy Owner would recognize ordinary
income to the extent allocable to income (which includes all previously non-
taxed gains) on the Policy. The amount allocated to income is the amount by
which the Accumulated Value of the Policy exceeds investment in the Policy
immediately before the distribution. If two or more policies which are
classified as modified endowment contracts are purchased from any one insurance
company, including us, during any calendar year, all such policies will be
aggregated for purposes of determining the portion of the pre-death
distributions allocable to income on the policies and the portion allocable to
investment in the policies.
Amounts received under a modified endowment contract that are included in
gross income are subject to an additional tax equal to 10% of the amount
included in gross income, unless an exception applies. The 10% additional tax
does not apply to any amount received: (I) when the taxpayer is at least 59
1/2 years old; (ii) which is attributable to the taxpayer becoming disabled; or
(iii) which is part of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and his
or her beneficiary.
If a Policy was not originally a modified endowment contract but becomes
one, under Treasury Department regulations which are yet to be prescribed, pre-
death distributions received in anticipation of a failure of a Policy to meet
the seven-pay premium test are to be treated as pre-death distributions from a
modified endowment contract (and, therefore, are to be taxable as described
above) even though, at the time of the distribution(s) the Policy was not yet a
modified endowment contract. For this purpose, pursuant to the IRC, any
distribution made
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within two years before the Policy is classified as a modified endowment
contract shall be treated as being made in anticipation of the Policy's failing
to meet the seven-pay premium test.
It is unclear whether interest paid (or accrued by an accrual basis
taxpayer) on Policy Debt with respect to a modified endowment contract
constitutes interest for federal income tax purposes. Consult your tax adviser.
Tax law provisions may limit the deduction of interest payable on loan proceeds
that are used to purchase or carry certain life insurance policies.
Reasonableness Requirement for Charges. Another provision of the tax law
deals with allowable charges for mortality costs and other expenses that are
used in making calculations to determine whether a contract qualifies as life
insurance for federal income tax purposes. For life insurance policies entered
into on or after October 21, 1988, these calculations must be based upon
reasonable mortality charges and other charges reasonably expected to be
actually paid. The Treasury Department has issued proposed regulations and is
expected to promulgate temporary or final regulations governing reasonableness
standards for mortality charges. Under the proposed regulations, the standards
applicable to joint survivor life insurance policies are not entirely clear.
While we believe under IRS pronouncements currently in effect that the mortality
costs and other expenses used in making calculations to determine whether the
Policy qualifies as life insurance meet the current requirements, complete
assurance cannot be given that the IRS would necessarily agree. It is possible
that future regulations will contain standards that would require us to modify
the mortality charges used for the purposes of the calculations in order to
retain the qualification of the Policy as life insurance for federal income tax
purposes, and we reserve the right to make any such modifications.
Accelerated Living Benefits. An Accelerated Living Benefit Rider is
available in connection with the Policy. Benefits under the Accelerated Living
Benefit Rider may be taxable. The Internal Revenue Service has issued proposed
regulations and is expected to issue final regulations in the near future under
which accelerated living benefits that meet the requirements set forth in the
regulations can be received without incurring a Federal income tax. The precise
requirements which will be incorporated in the final regulations are not known.
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In some cases, there may be a question as to whether a life insurance
policy that has an accelerated living benefit rider can meet certain technical
aspects of the definition of "life insurance contract" under the Code. The IRS
regulations mentioned above are expected to set forth the requirements under
which a policy with an accelerated living benefits rider will be deemed to meet
the definitional requirements of a life insurance contract. Pacific Mutual
reserves the right to (but is not obligated to) modify the Rider to conform with
requirements under the final regulations. Owners considering adding an
Accelerated Living Benefit Rider or exercising rights under the rider should
first consult a qualified tax advisor.
Split Policy Option Rider. This Rider permits a Policy to be split into two
individual policies. A Policy split could have adverse tax consequences. For
example, a Policy split may be treated as a taxable exchange that would result
in the recognition of taxable income in an amount up to any gain in the Policy
at the time of the split. Owners considering adding a Split Policy Option Rider
or exercising rights under this Rider should first consult a qualified tax
adviser.
Other. Federal estate and gift and state and local estate, inheritance,
and other tax consequences of ownership or receipt of Policy proceeds depend on
the jurisdiction and the circumstances of each Owner or Beneficiary.
For complete information on federal, state, local and other tax
considerations, a qualified tax adviser should be consulted.
WE DO NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF ANY POLICY.
CHARGE FOR OUR INCOME TAXES
For federal income tax purposes, variable life insurance generally is
treated in a manner consistent with traditional fixed life insurance. We will
review the question of the charge to the Separate Account for our federal income
taxes periodically. A charge may be made for any federal income taxes incurred
by us that are attributable to the Separate Account or to our operations with
respect to the Policy. A charge might become necessary if our tax treatment is
ultimately determined to be other than what we currently believe it to be, if
there are changes made in the federal income tax treatment of variable life
insurance at the insurance company level, or if there is a change in our tax
status.
Under current laws, we may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant.
If there is a material change in applicable state or local tax laws, we reserve
the right to charge the Account for such taxes, if any, attributable to the
Account.
VOTING OF FUND SHARES
In accordance with our view of present applicable law, we will exercise
voting rights attributable to the shares of each Portfolio of the Fund held in
the Variable Accounts at any regular and special meetings of the shareholders of
the Fund on matters requiring shareholder voting under the Investment Company
Act of 1940. We will exercise these voting rights based on instructions
received from persons having the voting interest in corresponding Variable
Accounts of the Separate Account. However, if the Investment Company Act of 1940
or any
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regulations thereunder should be amended, or if the present interpretation
thereof should change, and as a result we determine that we are permitted to
vote the shares of the Fund in our own right, we may elect to do so.
You are the person having the voting interest under a Policy. Unless
otherwise required by applicable law, the number of votes as to which you will
have the right to instruct will be determined by dividing your Accumulated Value
in a Variable Account by the net asset value per share of the corresponding
Portfolio of the Fund. Fractional votes will be counted. The number of votes
as to which a Policy Owner will have the right to instruct will be determined as
of the date coincident with the date established by the Fund for determining
shareholders eligible to vote at the meeting of the Fund. If required by the
SEC, we reserve the right to determine in a different fashion the voting rights
attributable to the shares of the Fund based upon the instructions received from
Policy Owners. Voting instructions may be cast in person or by proxy.
If there are shares of a Portfolio held by a Variable Account for which we
do not receive timely voting instructions, we will vote those shares in the same
proportion as all other shares of that Portfolio held by that Variable Account
for which we have received timely voting instructions. If we hold shares of a
Portfolio in our General Account, we will vote those shares in the same
proportion as other votes cast by all of our separate accounts in the aggregate.
DISREGARD OF VOTING INSTRUCTIONS
We may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that voting rights be exercised
so as to cause a change in the subclassification or investment objective of a
Portfolio or to approve or disapprove an investment advisory contract. In
addition, we may disregard voting instructions of changes initiated by Policy
Owners in the investment policy or the investment adviser (or portfolio manager)
of a Portfolio, provided that our disapproval of the change is reasonable and is
based on a good faith determination that the change would be contrary to state
law or otherwise inappropriate, considering the Portfolio's objectives and
purpose, and considering the effect the change would have on us. In the event
we do disregard voting instructions, a summary of that action and the reasons
for such action will be included in the next report to Policy Owners.
REPORT TO OWNERS
A statement will be sent quarterly to you setting forth a summary of the
transactions which occurred during the Policy Quarter and indicating the death
benefit, Face Amount, Accumulated Value, Cash Surrender Value, and any Policy
Debt. In addition, the statement will indicate the allocation of Accumulated
Value among the Investment Options
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and any other information required by law. Confirmations will be sent out upon
unscheduled premium payments and transfers, loans, loan repayments, withdrawals,
and surrenders. Confirmation of scheduled transactions under dollar cost
averaging and portfolio rebalancing will appear on your quarterly statement.
You will also be sent annual financial statements for the Separate Account
and the Fund, the latter of which will include a list of the portfolio
securities of the Fund, as required by the Investment Company Act of 1940,
and/or such other reports as may be required by federal securities laws.
SUBSTITUTION OF INVESTMENTS
We reserve the right, subject to compliance with the law as then in effect,
to make additions to, deletions from, or substitutions for the securities that
are held by the Separate Account or any Variable Account or that the Separate
Account or any Variable Account may purchase. If shares of any or all of the
Portfolios of the Fund should no longer be available for investment, or if, in
the judgment of our management, further investment in shares of any or all
Portfolios of the Fund should become inappropriate in view of the purposes of
the Policies, we may substitute shares of another Portfolio of the Fund or of a
different fund for shares already purchased, or to be purchased in the future
under the Policies.
Where required, we will not substitute any shares attributable to a Policy
Owner's interest in a Variable Account or the Separate Account without notice,
Policy Owner approval, or prior approval of the SEC and without following the
filing or other procedures established by applicable state insurance regulators.
We also reserve the right to establish additional Variable Accounts of the
Separate Account, each of which would invest in a new Portfolio of the Fund, or
in shares of another investment company, a portfolio thereof, or suitable
investment vehicle, with a specified investment objective. New Variable
Accounts may be established when, in our sole discretion, marketing needs or
investment conditions warrant, and any new Variable Accounts will be made
available to existing Policy Owners on a basis to be determined by us. We may
also eliminate one or more Variable Accounts if, in our sole discretion,
marketing, tax, or investment conditions so warrant. We may also terminate and
liquidate any Variable Account.
In the event of any such substitution or change, we may, by appropriate
endorsement, make such changes in this and other policies as may be necessary or
appropriate to reflect such substitution or change. If deemed by us to be in the
best interests of persons having voting rights under the Policies, the Separate
Account may be operated as a management investment company under the Investment
Company Act of 1940 or any other form permitted by law, it may be deregistered
under that Act in the event such registration is no longer required, or it may
be
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combined with other separate accounts of our or an affiliate of ours. Subject to
compliance with applicable law, we also may combine one or more Variable
Accounts and may establish a committee, board, or other group to manage one or
more aspects of the operation of the Separate Account.
CHANGES TO COMPLY WITH LAW
We reserve the right to make any change without your consent to the
provisions of the Policy to comply with, or give you the benefit of, any federal
or state statute, rule, or regulation, including but not limited to requirements
for life insurance contracts and modified endowment under the IRC, under
regulations of the United States Treasury Department or any state.
PERFORMANCE INFORMATION
Performance information for the Variable Accounts of the Separate Account
may appear in advertisements, sales literature, or reports to Policy Owners or
prospective purchasers. Performance information in advertisements or sales
literature may be expressed in any fashion permitted under applicable law, which
may include presentation of a change in a Policy Owner's Accumulated Value
attributable to the performance of one or more Variable Accounts, or as a change
in a Policy Owner's death benefit. Performance quotations may be expressed as a
change in a Policy Owner's Accumulated Value over time or in terms of the
average annual compounded rate of return on the Policy Owner's Accumulated
Value, based upon a hypothetical Policy in which premiums have been allocated to
a particular Variable Account over certain periods of time that will include one
year or from the commencement of operation of the Variable Account. If a
Portfolio has been in existence for a longer period of time than its
corresponding Variable Account, we may also present hypothetical returns that
the Variable Account would have achieved had it invested in its corresponding
Portfolio for periods through the commencement of operation of the Portfolio.
For the period that a particular Variable Account has been in existence, the
performance will be actual performance and not hypothetical in nature. Any such
quotation may reflect the deduction of all applicable charges to the Policy
including premium load, the cost of insurance, the administrative charge, and
the mortality and expense risk charge. The quotation may also reflect the
deduction of the surrender charge, if applicable, by assuming a surrender at the
end of the particular period, although other quotations may simultaneously be
given that do not assume a surrender and do not take into account deduction of
the surrender charge or other charges.
Performance information for a Variable Account may be compared, in
advertisements, sales literature, and reports to Policy Owners, to: (i) other
variable life separate accounts or investment products tracked by research
firms, ratings services, companies, publications, or persons who rank separate
accounts or investment products on overall performance or other criteria; and
(ii) the Consumer Price Index (measure for inflation)
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to assess the real rate of return from the purchase of a Policy. Reports and
promotional literature may also contain our rating or a rating of our claim-
paying ability as determined by firms that analyze and rate insurance companies
and by nationally recognized statistical rating organizations.
Performance information for any Variable Account of the Separate Account
reflects only the performance of a hypothetical Policy whose Accumulated Value
is allocated to the Variable Account during a particular time period on which
the calculations are based. Performance information should be considered in
light of the investment objectives and policies, characteristics and quality of
the Portfolio of the Fund in which the Variable Account invests, and the market
conditions during the given period of time, and should not be considered as a
representation of what may be achieved in the future.
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THE FIXED ACCOUNT
You may allocate all or a portion of your net premium payments and transfer
Accumulated Value to our Fixed Account. Amounts allocated to the Fixed Account
become part of our "General Account," which supports insurance and annuity
obligations. Because of exemptive and exclusionary provisions, interests in the
Fixed Account have not been registered under the Securities Act of 1933, and the
Fixed Account has not been registered as an investment company under the
Investment Company Act of 1940. Accordingly, neither the Fixed Account nor any
interest therein is generally subject to the provisions of these Acts and, as a
result, the staff of the SEC has not reviewed the disclosure in this prospectus
relating to the Fixed Account. Disclosures regarding the Fixed Account may,
however, be subject to certain generally applicable provisions of the federal
securities laws relating to the accuracy and completeness of statements made in
the prospectus. For more details regarding the Fixed Account, see the Policy
itself.
GENERAL DESCRIPTION
Amounts allocated to the Fixed Account become part of our General Account,
which consists of all assets owned by us other than those in the Separate
Account and other separate accounts of ours. Subject to applicable law, we have
sole discretion over the investment of the assets of our General Account.
You may elect to allocate net premium payments to the Fixed Account, the
Separate Account, or both. You may also transfer Accumulated Value from the
Variable Accounts to the Fixed Account, or from the Fixed Account to the
Variable Accounts, subject to the limitations described below. We guarantee
that the Accumulated Value in the Fixed Account will be credited with a minimum
interest rate of .32737% per month, compounded monthly, for a minimum effective
annual rate of 4%. Such interest will be paid regardless of the actual
investment experience of the Fixed Account. In addition, we may at our sole
discretion declare current interest in excess of the 4%, which will be
guaranteed for one year. (The portion of your Accumulated Value that has been
used to secure Policy Debt will be credited with an interest rate of .32737% per
month, compounded monthly, for an effective annual rate of 4%.)
We bear the full investment risk for the Accumulated Value allocated to the
Fixed Account.
DEATH BENEFIT
The death benefit under the Policy will be determined in the same fashion
for a Policy Owner who has Accumulated Value in the Fixed Account as for a
Policy Owner who has Accumulated Value in the Variable Accounts. See "Death
Benefit," page __.
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POLICY CHARGES
Policy charges will be the same whether you who allocate net premiums or
transfer Accumulated Value to the Fixed Account or allocate net premiums to the
Variable Accounts. These charges consist of the premium load, including the
sales load, state and local premium tax charge, and federal tax charge; the
deductions from Accumulated Value, including the charges for the cost of
insurance, administrative charge, mortality and expense risk charge, the charge
for any optional insurance benefits added by rider, any death benefit change
charge; the surrender charge; and the withdrawal charge. Any amounts that we
pay for income taxes allocable to the Variable Accounts will not be charged
against the Fixed Account. In addition, the operating expenses of the Variable
Accounts, as well as the investment advisory fee charged by the Fund, will not
be paid directly or indirectly by you to the extent your Accumulated Value is
allocated to the Fixed Account; however, to such extent, you will not
participate in the investment experience of the Variable Accounts.
TRANSFERS, SURRENDERS, WITHDRAWALS, AND POLICY LOANS
Amounts may be transferred from the Variable Accounts to the Fixed Account
and from the Fixed Account to the Variable Accounts, subject to the following
limitations. If you reside in states that require us to refund premiums to
Owners who return their Policies during the Free Look Period, you may not make
transfers until after the Free Look Transfer Date. No transfer may be made if
the Policy is in a grace period and the required premium has not been paid. You
may not make more than one transfer from the Fixed Account to the Variable
Accounts in any 12-month period. Further, you may not transfer more than the
greater of 25% of your Accumulated Value in the Fixed Account or $5,000 in any
year. Currently there is no charge imposed upon transfers; however, we reserve
the right to assess such a charge in the future and to impose other limitations
on the number of transfers, the amount of transfers, and the amount remaining in
the Fixed Account or Variable Accounts after a transfer. Transfers from the
Variable Accounts to the Fixed Account may be made in the Policy Month preceding
a Policy Anniversary, except that if you reside in Connecticut, Georgia,
Maryland, North Carolina, or Pennsylvania, you may make such a transfer at any
time during the first eighteen Policy Months.
You may also make full surrenders and Partial Withdrawals from the Fixed
Account to the same extent as an Owner who has invested in the Variable
Accounts. See "Surrender," page __, and "Partial Withdrawals," page __. You may
borrow up to the greater of (1) 90% of your Accumulated Value in the Variable
Accounts and 100% of your Accumulated Value in the Fixed Account, less any
surrender charges that would have been imposed if your Policy were surrendered
on the date the loan is taken, or (2) 100% of the product of (a X b/c -d) where
(a) equals the Policy's Accumulated Value less any surrender charge that would
be imposed if the Policy were surrendered on the date the loan is taken and less
12 times the current monthly deductions; (b) equals 1 plus the annual loan
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interest rate credited; (c) equals 1 plus the annual loan rate currently
charged; and (d) equals any existing Policy Debt. See "Policy Loans," page __.
Transfers, surrenders, and withdrawals payable from the Fixed Account, and the
payment of Policy loans allocated to the Fixed Account, may be delayed for up to
six months.
MORE ABOUT THE POLICY
OWNERSHIP
The Policy Owner is the individual named as such in the application or in
any later change shown in our records. While the Insureds are living, the
Policy Owner alone has the right to receive all benefits and exercise all rights
that the Policy grants or we allow.
Joint Owners. If more than one person is named as Policy Owner, they are
joint Owners. Any Policy transaction requires the signature of all persons
named jointly. Unless otherwise provided, if a joint Owner dies, ownership
passes to the surviving joint Owner(s). When the last joint Owner dies,
ownership passes through that person's estate, unless otherwise provided.
BENEFICIARY
The Beneficiary is the individual named as such in the application or any
later change shown in our records. You may change the Beneficiary at any time
during the life of either Insured by written request on forms provided by us,
which must be received by us at our Home Office. The change will be effective
as of the date this form is signed. Contingent and/or concurrent Beneficiaries
may be designated. You may designate a permanent Beneficiary, whose rights under
your Policy cannot be changed without his or her consent. Unless otherwise
provided, if no designated Beneficiary is living upon the death of the Survivor,
you are the Beneficiary, if living; otherwise your estate is the Beneficiary.
We will pay the death benefit proceeds to the Beneficiary. Unless
otherwise provided, in order to receive proceeds at the Survivor's death, the
Beneficiary must be living at the time of the Survivor's death.
THE CONTRACT
This Policy is a contract between the Owner and us. The entire contract
consists of the Policy, a copy of the initial application, all subsequent
applications to change the Policy, any endorsements, any Riders and Benefits,
and all additional Policy information sections (specification pages) added to
the Policy.
PAYMENTS
We ordinarily will pay death benefit proceeds, Net Cash Surrender Value on
surrender, Partial Withdrawals, and loan proceeds based on
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allocations made to the Variable Accounts, and will effect a transfer between
Variable Accounts or from a Variable Account to the Fixed Account within seven
days after we receive all the information needed to process a payment or, if
sooner, any other period required by law.
However, we can postpone the calculation or payment of such a payment or
transfer of amounts based on investment performance of the Variable Accounts if:
. The New York Stock Exchange is closed on other than customary weekend and
holiday closing or trading on the New York Stock Exchange is restricted as
determined by the SEC; or
. An emergency exists, as determined by the SEC, as a result of which
disposal of securities is not reasonably practicable or it is not reasonably
practicable to determine the value of a Variable Account's net assets; or
. The SEC by order permits postponement for the protection of Policy Owners.
ASSIGNMENT
You may assign a Policy as collateral security for a loan or other
obligation. No assignment will bind us unless the original, or a copy, is
received at our Home Office, and will be effective only when recorded by us. An
assignment does not change the ownership of the Policy. However, after an
assignment, the rights of any Owner or Beneficiary will be subject to the
assignment. The entire Policy, including any attached payment option, Rider,
Benefit, and endorsement, will be subject to the assignment. We will not be
responsible for the validity of any assignment. Unless otherwise provided, the
assignee may exercise all rights this Policy grants except (a) the right to
change the Policy Owner or Beneficiary; and (b) the right to elect a payment
option. Assignment of a Policy that is a modified endowment contract may
generate taxable income. (See "Federal Income Tax Considerations," page __.)
ERRORS ON THE APPLICATION
If the Age or sex of either Insured has been misstated, the Face Amount
shall be adjusted as follows in order to reflect the correct Age or sex: the
Face Amount before the adjustment will be multiplied by the monthly cost of
insurance rate used in the Policy Year in which the misstatement is discovered,
based on the misstated Age or sex, and the result will be divided by the monthly
cost of insurance rate for the Policy Year in which the misstatement is
discovered, based on the correct Age and sex. For all Policy Months following
the discovery of the misstatement, Accumulated Value will be calculated using
cost of insurance charges, Rider charges and Benefit charges based on the
correct Age and sex, but Accumulated Value for all Policy Months through the
Month in which the misstatement is discovered will not be recalculated.
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Surrender charges and mortality and expense risk charges will not be
recalculated. If unisex cost of insurance rates apply, no adjustment will be
made for a misstatement of sex. See "Cost of Insurance," page __.
INCONTESTABILITY
We may contest the validity of your Policy if any material misstatements
are made in the application. However, your Policy will be incontestable after
the expiration of the following: the initial Face Amount cannot be contested
with respect to a given Insured after the Policy has been in force during the
Insured's lifetime for two years from the Policy Date; and reinstatement cannot
be contested after it has been in force during an Insured's lifetime for two
years from the date of reinstatement.
PAYMENT IN CASE OF SUICIDE
If either Insured dies by suicide, while sane or insane, within two years
from the Policy Date, we will limit the death benefit proceeds to the premium
payments less any withdrawal amounts, dividends paid by us in cash, and Policy
Debt.
DIVIDENDS
The current dividend scale is zero and we do not anticipate that dividends
will be paid. Any dividends that do become payable will be paid in cash.
POLICY ILLUSTRATIONS
Upon request, we will send you an illustration of future benefits under
your Policy based on both guaranteed and current cost factor assumptions.
However, we reserve the right to charge a $25 fee for requests for illustrations
in excess of one per Policy year.
PAYMENT PLAN
Surrender or withdrawal benefits may be used to purchase a payment plan
providing monthly income for the lifetime of the Insureds, and death benefit
proceeds may be used to purchase a payment plan providing monthly income for the
lifetime of the Beneficiary. The monthly payments consisting of proceeds plus
interest will be paid in equal installments for at least ten years. The
purchase rates for the payment plan are guaranteed not to exceed those shown in
the Policy, but current rates that are lower (i.e., providing greater income)
----
may be established by us from time to time. This benefit is not available if
the income would be less than $100 a month. Surrender or withdrawal benefits or
death benefit proceeds may be used to purchase any other payment plan that we
make available at that time.
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OPTIONAL INSURANCE BENEFITS
Subject to certain requirements, you may elect to add one or more of the
following optional insurance benefits to the Policy by a Rider at the time of
application for your Policy (subject to approval of state insurance
authorities). These optional benefits are: guaranteed payment of a specified
coverage amount upon the death of the Survivor, subject to stated conditions;
provision for level or varying coverage on the same two Insureds; renewable
level or varying term insurance on either Insured, or individually on the
Insureds; allowance to split the Policy into individual policies for each
Insured without evidence of individual insurability; allowance to split the
Policy into individual policies for each Insured subject to evidence of
individual insurability; and Policy Owner access to a portion of the Policy's
proceeds if an Insured has been diagnosed with a terminal illness resulting in a
life expectancy of six months or less (or such other period that may be required
by state insurance authorities). The cost of any additional insurance benefits
will be deducted as part of the monthly deduction against Accumulated Value.
See "Charges and Deductions," page __. The amounts of these benefits are fully
guaranteed at issue. Certain restrictions may apply and are described in the
applicable Rider or Benefit. Under certain circumstances, a Policy can be
combined with an added protection benefit to result in a combined coverage
amount (face amount) equal to the same Face Amount that could be acquired under
a single Policy. For given Insureds, combining a Policy and a benefit may result
in a Face Amount component of the mortality and expense risk charge and an
underwriting surrender charge for a Policy that are lower than the single Policy
providing the same Face Amount. An insurance agent authorized to sell the Policy
can describe these extra benefits further. Samples of the provisions are
available from us upon written request.
LIFE INSURANCE RETIREMENT PLANS
Any Policy Owners or applicants who wish to consider using the Policy as a
funding vehicle for (non-qualified) retirement purposes may obtain additional
information from us. An Owner could pay premiums under a Policy for a number of
years, and upon retirement, could utilize a Policy's loan and partial withdrawal
features to access Accumulated Value as a source of retirement income for a
period of time. This use of a Policy does not alter an Owner's rights or our
obligations under a Policy; the Policy would remain a life insurance contract
that, so long as it remains in force, provides for a death benefit payable when
the Survivor dies.
Ledger illustrations are available upon request that portray how the Policy
can be used as a funding mechanism for (non-qualified) retirement plans,
referred to herein as "life insurance retirement plans," for individuals. Ledger
illustrations provided upon request show the effect on Accumulated Value, Net
Cash Surrender Value, and the net death benefit of premiums paid under a Policy
and Partial Withdrawals and loans taken for retirement income; or reflecting
allocation of premiums to specified Variable Accounts. This information will be
portrayed at hypothetical rates of return that are requested. Charts and graphs
presenting the results of the ledger illustrations or a comparison of retirement
strategies will also be furnished upon request. Any graphic presentations and
retirement strategy charts must be accompanied by a corresponding ledger
illustration; ledger illustrations must always include or be accompanied by
comparable information that is based on guaranteed cost of insurance rates and
that presents a hypothetical gross rate of return of 0%. Retirement
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illustrations will not be furnished with a hypothetical gross rate of return in
excess of 12%.
The hypothetical rates of return in ledger illustrations are illustrative
only and should not be interpreted as a representation of past or future
investment results. Policy values and benefits shown in the ledger
illustrations would be different if the gross annual investment rates of return
were different from the hypothetical rates portrayed, if premiums were not paid
when due, and loan interest was paid when due. Withdrawals or loans may have an
adverse effect on Policy benefits.
RISKS OF LIFE INSURANCE RETIREMENT PLANS
Using the Policy as a funding vehicle for retirement income purposes
presents several risks, including the risk that if the Policy is insufficiently
funded in relation to the income stream from the Policy, the Policy can lapse
prematurely and result in significant income tax liability to the Owner in the
year in which the lapse occurs. Other risks associated with borrowing from the
Policy also apply. Loans will be automatically repaid from the gross death
benefit at the death of the Survivor, resulting in the estimated payment to the
Beneficiary of the net death benefit, which will be less than the gross death
benefit and may be less than the Face Amount. Upon surrender, the loan will be
automatically repaid, resulting in the payment to you of the Net Surrender
Value. Similarly, upon lapse, the loan will be automatically repaid. The
automatic repayment of the loan upon lapse or surrender will cause the
recognition of taxable income to the extent that Net Surrender Value plus the
amount of the repaid loan exceeds your basis in the Policy. Thus, under certain
circumstances, surrender or lapse of the Policy could result in tax liability to
you. In addition, to reinstate a lapsed Policy, you would be required to make
certain payments as described under "Reinstatement," page __. Thus, you should
be careful to fashion a life insurance plan so that the Policy will not lapse
prematurely under various market scenarios as a result of withdrawals and loans
taken from the Policy.
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The Policy will lapse if your Accumulated Value less Policy Debt is
insufficient to cover the current monthly deduction on any Monthly Payment Date,
and a grace period expires without your making a sufficient payment. To avoid
lapse of your Policy, it is important to fashion a payment stream that does not
leave your Policy with insufficient Accumulated Value. Determinations as to the
amount to withdraw or borrow each year warrant careful consideration. Careful
consideration should also be given to any assumptions respecting the
hypothetical rate of return, to the duration of withdrawals and loans, and to
the amount of Accumulated Value that should remain in your Policy upon its
maturity. Poor investment performance can contribute to the risk that your
Policy may lapse. In addition, the cost of insurance generally increases
with the Age of the Insured, which can further erode existing Accumulated Value
and contribute to the risk of lapse.
Further, interest on a Policy loan is due to us for any Policy Year on the
Policy Anniversary. If this interest is not paid when due, it is added to the
amount of the outstanding Policy Debt, and interest will begin accruing thereon
from that date. This can have a compounding effect, and to the extent that the
outstanding loan balance exceeds your basis in the Policy, the amounts
attributable to interest due on the loans can add to your federal (and possibly
state) income tax liability.
You should consult with your attorney and financial advisers in designing a
life insurance retirement plan that is suitable. Further, you should continue
to monitor the Accumulated Value net of loans remaining in a Policy to assure
that the Policy is sufficiently funded to continue to support the desired income
stream and so that it will not lapse. In this regard, you should consult your
periodic statements to determine the amount of their remaining Accumulated Value
minus the outstanding loan balance. Illustrations showing the effect of charges
under the Policy upon existing Accumulated Value or the effect of future
withdrawals or loans upon the Policy's Accumulated Value and death benefit are
available from your agent. Consideration should be given periodically to
whether the Policy is sufficiently funded so that it will not lapse prematurely.
Because of the potential risks associated with borrowing from a Policy, use
of the Policy in connection with a life insurance retirement plan may not be
suitable for all Policy Owners. These risks should be carefully considered
before borrowing from the Policy to provide an income stream.
DISTRIBUTION OF THE POLICY
PMD is principal underwriter (distributor) of the Policies. PMD is
registered as a broker-dealer with the SEC and is a member of the National
Association of Securities Dealers, Inc. ("NASD"). We pay PMD for acting as
principal underwriter under a Distribution Agreement. PMD is a wholly-owned
subsidiary of Pacific Mutual.
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We and PMD have sales agreements with various broker-dealers under which
the Policy will be sold by registered representatives of the broker-dealers.
The registered representatives are required to be authorized under applicable
state regulations to sell variable life insurance. The broker-dealers are
required to be registered with the SEC and members of the NASD. We pay
compensation directly to broker-dealers for promotion and sales of the Policy.
The compensation payable to a broker-dealer for sales of the Policy may vary
with the Sales Agreement, but is not expected to exceed 90% of premiums paid up
to the first sales surrender target premium, 8% of the premiums paid under sales
surrender targets 2 and 3; and on the premium in excess of the sum of sales
surrender targets 1-3, 4% of premiums paid in Policy years 1-10 and 2% of
premiums paid thereafter. Broker-dealers may also receive annual renewal
compensation of up to .20% of Accumulated Value less Policy Debt. The annual
renewal compensation will be computed monthly and payable on each Policy
Anniversary. In addition, we may also pay override payments, expense
allowances, bonuses, wholesaler fees, and training allowances. Registered
representatives earn commissions from the broker-dealers with whom they are
affiliated for selling our Policies. Compensation arrangements vary among
broker-dealers. In addition, registered representatives who meet specified
production levels may qualify, under sales incentive programs adopted by us, to
receive non-cash compensation such as expense-paid trips, expense-paid
educational seminars and merchandise. We make no separate deductions, other
than as previously described, from premiums to pay sales commissions or sales
expenses.
MORE ABOUT PACIFIC MUTUAL
MANAGEMENT
Our directors and officers are listed below together with information as to
their principal occupations during the past five years and certain other current
affiliations. Unless otherwise indicated, the business address of each director
and officer is c/o Pacific Mutual Life Insurance Company, 700 Newport Center
Drive, Newport Beach, California 92660.
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Principal Occupation During
Name and Position the Last Five Years
- ----------------- ---------------------------
Thomas C. Sutton Director, Chairman of the Board and
Director and Chairman of the Board Chief Executive Officer of Pacific
and Chief Executive Officer Mutual; Equity Board Member of PIMCO
Advisors, L.P.; Director of: Newhall
Land & Farming; The Irvine Company;
The Edison Company. Pacific
Corinthian Life Insurance Company;
similar positions with other
subsidiaries of Pacific Mutual.
Glenn S. Schafer Director and President of Pacific
Director and President Mutual, January 1995 to present;
Executive Vice President and Chief
Financial Officer of Pacific Mutual,
March 1991 to January 1995; Equity
Board Member of PIMCO Advisors, L.P.;
Director of Pacific Corinthian Life
Insurance Company; similar positions
with other subsidiaries of Pacific
Mutual
Harry G. Bubb Director and Chairman Emeritus of
Director and Chairman Emeritus Pacific Mutual.
Richard M. Ferry Director of Pacific Mutual,
Director President, Director and Chairman of
Korn/Ferry International; Director
of: Avery Dennison Corporation,
ConAM Management; First Business
Bank, Northwestern Restaurants, Inc.;
Dole Food Co. Address: 1800 Century
Park East, Suite 900, Los Angeles,
California 90067.
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Donald E. Guinn Director of Pacific Mutual, Chairman
Director Emeritus and Director of Pacific
Telesis Group; Director of: The Dial
Corp.; Bank of America NT & SA; Bank
America Corporation. Address:
Pacific Telesis Center, 130 Kearny
Street, Room 3719, San Francisco,
California 94108-4818.
Ignacio E. Lozano, Jr. Director of Pacific Mutual; Chairman
Director and Editor-in-Chief of La Opinion;
Director of: Bank America
Corporation; Bank of America NT & SA;
The Walt Disney Company; Pacific
Enterprises. Address: 411 West Fifth
Street, 12th Floor, Los Angeles,
California 90013.
Charles A. Lynch Director of Pacific Mutual; Chairman
Director and Chief Executive Officer Fresh
Choice, Inc.; Director of: Nordstrom,
Inc.; PST Vans, Inc.; SRI
International, Inc.; Age Wave;
Artmaster, Inc.; Bojangles
Acquisition Corp.; Cucina Holdings,
Inc.; Dakin, Inc.; Greyhound Lines,
Inc.; Krh' Thermal Systems; La Salsa
Restaurants; Mid Peninsula Bank;
Syntex Corporation; Former Chairman
of Market Value Partners Company.
Address: 2901 Tasman Drive, Suite
109, Santa Clara, California
95054-1169.
Dr. Allen W. Mathies, Jr. Director of Pacific Mutual; Director
Director and President Emeritus, Huntington
Memorial Hospital; Director of
Occidental College; former President
and Chief Executive Officer of
Huntington Memorial Hospital.
Address: 100 West California
Boulevard, Pasadena, California
91109-7013.
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Charles D. Miller Director of Pacific Mutual; Director,
Director Chairman, and Chief Executive Officer
of Avery Dennison Corporation;
Director of: Great Western Financial
Corporation; Nationwide Health
Properties, Inc.; Southern California
Edison Company. Address: 150 North
Orange Grove Boulevard, Pasadena,
California 91103.
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Donn B. Miller Director of Pacific Mutual, Director,
Director and Chief Executive President, and Chief Executive Officer
Officer of Pearson-Sibert Oil Co. of Texas;
Director of: The Irvine Company;
Automobile Club of Southern California;
St. John's Hospital & Health Center
Foundation; former Senior Partner with
the law firm of O'Melveny & Meyers.
Address: 136 El Camino, Suite 216,
Beverly Hills, California 90212.
Jacqueline C. Morby Director of Pacific Mutual, February
1996 to present; Managing Director of TA
Associates; Director of: Ontrack
Computer Systems Inc., Axent
Technologies Inc., ANSYS, Inc., and
Spectrum Associates Inc., Smith Gardner
and Associates. Board of Trustees of
Chatham College; Former Director of BMC
Software, Inc., System Software
Associates, Sierra On-Line Inc., and AI
Corp., and the New England Venture
Capital Association. Member of:
Massachusetts Governors' Council on
Economic Growth and Technology; the
Committee of 200, and the International
Women's Forum. Address: High Street
Tower, Suite 2500, 125 High Street,
Boston, Massachusetts 02110 .
J. Fernando Niebla Director of Pacific Mutual, May 1995 to
present; Director, Chairman and Chief
Executive Officer of Infotec
Development, Inc.; Director of: Bank of
California; Defense Policy Advisory
Commission on Trade; California
Commission on Science and Technology;
Center for Occupational Research and
Development. Address: 3611 South Harbor
Boulevard, Suite 260, Santa Ana,
California 92704.
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<PAGE>
Susan Westerberg Prager Director of Pacific Mutual; Dean of
Director the UCLA School of Law at the
University of California at Los
Angeles; Director of Lucille Salter
Packard Children's Hospital of
Stanford. Address: 405 Hillgard
Avenue, Room 3374, Los Angeles,
California 90095-1476.
Richard M. Rosenberg Director of Pacific Mutual, November
1995 to present; Chairman and Chief
Executive Officer Bank America
Corporation; Bank of America NT & SA;
Director of: Airborne Express
Corporation; Northrop Grumman
Corporation; Potlatch Corporation;
Pacific Telesis Group. Address: 555
California Street, 40th Floor, San
Francisco, California 94107 .
James R. Ukropina Director of Pacific Mutual, Partner with
Director the law firm of O'Melveny & Meyers;
Director, former Chairman and Chief
Executive Officer of Pacific
Enterprises; Director of Lockheed
Corporation; Trustee of Stanford
University. Address: 400 South Hope
Street, 16th Floor, Los Angeles,
California 90071-2899.
Raymond L. Watson Director of Pacific Mutual, Vice
Director Chairman and Director of The Irvine
Company; Director of: The Walt Disney
Company; The Mitchell Energy and
Development Company. Address: 550
Newport Center Drive, 9th Floor,
Newport Beach, California 92660.
Lynn C. Miller Executive Vice President, Individual
Executive Vice President Insurance, of Pacific Mutual, January
1995 to present; Senior Vice
President, Individual Insurance, of
Pacific Mutual 1989-1995.
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David R. Carmichael Senior Vice President and General
Senior Vice President and Counsel of Pacific Mutual, April 1992
General Counsel to present; Vice President and
Investment Counsel of Pacific Mutual,
1989 to April 1992; Director of:
Pacific Corinthian Life Insurance
Company; PM Group Life Insurance
Company; Association of California
Life Insurance Companies.
Marilee Roller Senior Vice President, Corporate
Senior Vice President Finance and Administration, of
Pacific Mutual, January 1995 to
present; President and Chief
Operating Officer of Pacific
Corinthian Life Insurance Company,
1992 to present; Vice President of
Pacific Mutual, 1994 and 1995; Vice
President and Controller of Pacific
Mutual, 1990 to 1992; similar
positions with other subsidiaries of
Pacific Mutual.
Audrey L. Milfs Vice President and Corporate
Vice President and Corporate Secretary of Pacific Mutual; similar
Secretary positions with other subsidiaries of
Pacific Mutual.
Edward Byrd Vice President and Controller of
Vice President and Controller Pacific Mutual, June 1992 to present;
Vice President, Corporate Audit and
Financial Planning of Pacific Mutual,
November 1991 to June 1992; Assistant
Vice President, Corporate Audit of
Pacific Mutual, May 1990 to November
1991.
Khanh T. Tran Vice President and Treasurer of
Vice President and Treasurer Pacific Mutual, November 1991 to
present; Assistant Vice President and
Treasurer of Pacific Mutual,
September 1990 to November 1991;
Treasurer to other subsidiaries of
Pacific Mutual.
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No officer or director listed above receives any compensation from the
Separate Account. No separately allocable compensation has been paid by us or
any of our affiliates to any person listed for services rendered to the Separate
Account.
STATE REGULATION
We are subject to the laws of the state of California governing insurance
companies and to regulation by the Commissioner of Insurance of California. In
addition, we are subject to the insurance laws and regulations of the other
states and jurisdictions in which we are licensed or may become licensed to
operate. An annual statement in a prescribed form must be filed with the
Commissioner of Insurance of California and with regulatory authorities of other
states on or before March 1st in each year. This statement covers our
operations for the preceding year and our financial condition as of December
31st of that year. Our affairs are subject to review and examination at any
time by the Commissioner of Insurance or his agents, and subject to full
examination of our operations at periodic intervals.
TELEPHONE TRANSFER AND LOAN PRIVILEGES
A Policy Owner may request a transfer of Accumulated Value or a Policy Loan
by telephone if a properly completed Authorization for Telephone Requests
("Telephone Authorization") has been filed at our Home Office. All or part of
any telephone conversation with respect to transfer or loan instructions may be
recorded by us. Telephone instructions received by us by 1:00 P.M. Pacific
time, or the close of the New York Stock Exchange, if earlier, on any Valuation
Date will be processed as of the end of that Valuation Date in accordance with
your instructions, (presuming that the Free-Look Period has expired). We
reserve the right to deny any telephone transfer or loan request. If all
telephone lines are busy (which might occur, for example, during periods of
substantial market fluctuations), Policy Owners might not be able to request
transfers and loans by telephone and would have to submit written requests.
We have established procedures to confirm that instructions communicated by
telephone are genuine. Under the procedures, any person requesting a transfer
by telephone must provide certain personal identification as requested by us,
and we will send a written confirmation of all transfers requested by telephone
within 7 days of the transfer. Upon the submission of a Telephone
Authorization, you authorize us to accept and act upon telephone instructions
for transfers or loans involving your Policy, and agree that neither we, any of
our affiliates, Pacific Select Fund, nor any of our or their directors,
trustees, officers, employees or agents, will be liable for any loss, damages,
cost, or expense (including attorney's fees) arising out of any requests
effected in accordance with the Telephone Authorization and believed by us to be
genuine, provided that we have complied with its
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procedures. As a result of this policy on telephonic requests, you will bear
the risk of loss arising from the telephone transfer and loan privileges.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Separate Account is a
party, or which would materially affect the Separate Account.
LEGAL MATTERS
Legal matters in connection with the issue and sale of the Policies
described in this Prospectus and our organization, our authority to issue the
Policies under California law, and the validity of the forms of the Policies
under California law have been passed on by our General Counsel.
Legal matters relating to the federal securities and federal income tax
laws have been passed upon by Dechert Price & Rhoads.
REGISTRATION STATEMENT
A registration statement under the Securities Act of 1933 has been filed
with the SEC relating to the offering described in this prospectus. This
prospectus does not include all of the information set forth in the registration
statement, as portions have been omitted pursuant to the rules and regulations
of the SEC. The omitted information may be obtained at the SEC's principal
office in Washington, D.C., upon payment of the SEC's prescribed fees.
INDEPENDENT ACCOUNTANTS
The audited financial statements for the Separate Account and for Pacific
Mutual included in this prospectus and in the registration statement have been
audited by ____________________, independent certified public accountants, as
indicated in their report hereon, and are included in reliance upon the
authority of said firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
The audited financial statements for the Separate Account as of December
31, 1995 and for the years ended December 31, 1995 and 1994 are set forth
herein, starting on page ____. Pacific Mutual's audited financial statements as
of and for the years ended December 31, 1995 and 1994 are set forth herein
starting on page ___.
The financial statements of the Separate Account and of Pacific Mutual have
been audited by _____________________. Our financial statements should be
distinguished from the financial statements of the Separate Account and should
be considered only as bearing upon our ability to meet our obligations under the
Policies.
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ILLUSTRATIONS
The following tables illustrate how the death benefits, Accumulated Values
and Net Cash Surrender Values of a hypothetical policy may vary over an extended
period of time assuming hypothetical rates of return equivalent to constant
gross annual rates of 0%, 6% and 12%.
The Policies are illustrated based on the Guideline Premium Test and
include the following:
Death Benefit Option A, Face Amount $1,500,000, Annual Premium $16,410, male
nonsmoker, issue Age 55, and female nonsmoker, issue Age 55, current cost of
insurance rates:
Death Benefit Option A, Face Amount $1,500,000, Annual Premium $16,410, male
nonsmoker, issue Age 55, and female nonsmoker, issue Age 55, guaranteed cost of
insurance rates:
Death Benefit Option B, Face Amount $1,500,000, Annual Premium $16,410, male
nonsmoker, issue Age 55, and female nonsmoker, issue Age 55, current cost of
insurance rates:
Death Benefit Option B, Face Amount $1,500,000, Annual Premium $16,410, male
nonsmoker, issue Age 55, and female nonsmoker, issue Age 55, guaranteed cost of
insurance rates:
Death Benefit Option C, Face Amount $1,500,000, Annual Premium $16,410, male
nonsmoker, issue Age 55, and female nonsmoker, issue Age 55, current cost of
insurance rates:
Death Benefit Option C, Face Amount $1,500,000, Annual Premium $16,410, male
nonsmoker, issue Age 55, and female nonsmoker, issue Age 55, guaranteed cost of
insurance rates:
Death Benefit Option D, Face Amount $1,500,000, Annual Premium $16,410, male
nonsmoker, issue Age 55, and female nonsmoker, issue Age 55, current cost of
insurance rates:
Death Benefit Option D, Face Amount $1,500,000, Annual Premium $16,410, male
nonsmoker, issue Age 55, and female nonsmoker, issue Age 55, guaranteed cost of
insurance rates:
- 61 -
<PAGE>
The values would be different from those shown if the gross annual
investment rates of return averaged 0%, 6% or 12% over a period of years, but
also fluctuated above or below those averages for individual policy years.
The second column of each table, labeled "Total Premiums Paid Plus Interest
at 5%," shows the amount which would accumulate if an amount equal to the annual
premium (after taxes) were invested to earn interest at 5% compounded annually.
All premium payments are illustrated as if they were made at the beginning of
the year. These illustrations assume that no Policy loans have been made.
The amounts shown for the death benefits, Accumulated Values and Net Cash
Surrender Values reflect the fact that the net investment return on the Variable
Accounts is lower than the gross investment return on the assets as a result of
charges levied against the Variable Accounts. These values also take into
account the premium loads, the administrative charges and the mortality and
expense risk charges. The daily investment advisory fee is assumed to be
equivalent to an annual weighted rate of 0.64% of the aggregate average daily
net assets of the Fund. This hypothetical rate is representative of the weighted
average investment advisory fee applicable to the twelve Portfolios of the Fund
available as options under the Policy. The amounts shown would differ if unisex
rates were used or if the Insureds were females and female rates were used. On
those illustrations assuming current rates, the amounts would also differ if
either Insured were a smoker and smoker rates were used.
The tables also reflect other expenses of the Fund at the weighted rate of
____% of the average daily net assets of a Portfolio, which amounts to ____% of
the average daily net assets of a Portfolio including the investment advisory
fees and foreign taxes. For the year ended December 31, 1995, the total
expenses of each Portfolio were the following percentages of the average daily
net assets of the Portfolios: ____% for the Money Market Portfolio; ____% for
the Equity Income; ____% Multi-Strategy Portfolios; ____% for the International
Portfolio; ____% for the Managed Bond Portfolio; ____% for the Government
Securities; ____% High Yield Bond Portfolios; ____% for the Growth Portfolio;
____% for the Growth LT Portfolio; and ____% for the Equity Index Portfolio. For
Aggressive Equity and Emerging Markets Portfolios, which had not commenced
operations as of December 31, 1995, it is estimated that operating expenses,
including advisory fees and foreign taxes, after the expense limitation
described below, will be ____% and ____% of average daily net assets,
respectively. We have agreed, until at least December 31, 1997, to waive our
fees or otherwise reimburse each Portfolio for its operating expenses to the
extent that such expenses, exclusive of advisory fees, additional custodial
charges associated with holding foreign securities, foreign taxes on dividends,
interest and gains, and extraordinary expenses, exceed 0.25% of any Portfolio's
average daily net assets. We began this expense reimbursement policy in April
1989. Such expenses of the Portfolios for the year ending December 31, 1995 did
not exceed the 0.25% expense caps. In the absence of this policy, it is
- 62 -
<PAGE>
estimated that the Emerging Markets Portfolios' total expenses, including
advisory fees and foreign taxes for the Fund's current year ending December 31,
1996 will be ____%. There can be no assurance that the expense reimbursement
arrangement will continue after December 31, 1997, and any unreimbursed expenses
would be reflected in the Policy Owner's Accumulated Value and in some
instances, the death benefit.
After deduction of the charges and Fund expenses described above, the
illustrated gross annual investment rates of return of 0%, 6%, and 12%
correspond to approximate net annual rates of return of -0.90%, 5.05%, and
10.99%. The hypothetical values shown in the tables do not reflect any charges
against the Variable Accounts for income taxes that may be attributable to the
Variable Accounts in the future, since we are not currently making these
charges.
We will furnish upon request a comparable illustration reflecting the
proposed Insureds' Ages, underwriting classes, Face Amount, death benefit and
premium amounts requested. In addition, upon request, illustrations will be
furnished reflecting allocation of premiums to specified Variable Accounts.
Such illustrations will reflect the expenses of the Portfolio of the Fund in
which the Variable Account invests. Illustrations that use a hypothetical gross
rate of return in excess of 12% are available to certain large institutional
investors upon request.
- 63 -
<PAGE>
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON CURRENT COST OF INSURANCE CHARGES
DEATH BENEFIT OPTION: A FACE AMOUNT: $1,500,000
MALE NONSMOKER ISSUE AGE 55 FEMALE NONSMOKER ISSUE AGE 55
GUIDELINE PREMIUM TEST ANNUAL PREMIUM: $16,410
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ---------- ----------- ----------
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- ----------------------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE DEATH BENEFITS, ACCUMULATED VALUES AND THE CASH SURRENDER VALUES
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNT OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE INTERPRETED AS
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. 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 TO
VARIABLE ACCOUNTS BY THE OWNER AND THE EXPERIENCE OF THE ACCOUNTS.
NO REPRESENTATION CAN BE MADE BY PACIFIC MUTUAL, THE SEPARATE ACCOUNT
OR THE FUND THAT THESE HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- 64 -
<PAGE>
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON GUARANTEED COST OF INSURANCE CHARGES
DEATH BENEFIT OPTION: A FACE AMOUNT: $1,500,000
MALE NONSMOKER ISSUE AGE 55 FEMALE NONSMOKER ISSUE AGE 55
GUIDELINE PREMIUM TEST ANNUAL PREMIUM: $16,410
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ---------- ----------- ----------
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- ----------------------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE DEATH BENEFITS, ACCUMULATED VALUES AND THE CASH SURRENDER VALUES
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNT OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE INTERPRETED AS
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. 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 TO
VARIABLE ACCOUNTS BY THE OWNER AND THE EXPERIENCE OF THE ACCOUNTS.
NO REPRESENTATION CAN BE MADE BY PACIFIC MUTUAL, THE SEPARATE ACCOUNT
OR THE FUND THAT THESE HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- 65 -
<PAGE>
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON CURRENT COST OF INSURANCE CHARGES
DEATH BENEFIT OPTION: B FACE AMOUNT: $1,500,000
MALE NONSMOKER ISSUE AGE 55 FEMALE NONSMOKER ISSUE AGE 55
GUIDELINE PREMIUM TEST ANNUAL PREMIUM: $16,410
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ---------- ----------- ----------
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- ----------------------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE DEATH BENEFITS, ACCUMULATED VALUES AND THE CASH SURRENDER VALUES
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNT OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE INTERPRETED AS
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. 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 TO
VARIABLE ACCOUNTS BY THE OWNER AND THE EXPERIENCE OF THE ACCOUNTS.
NO REPRESENTATION CAN BE MADE BY PACIFIC MUTUAL, THE SEPARATE ACCOUNT
OR THE FUND THAT THESE HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- 66 -
<PAGE>
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON GUARANTEED COST OF INSURANCE CHARGES
DEATH BENEFIT OPTION: B FACE AMOUNT: $1,500,000
MALE NONSMOKER ISSUE AGE 55 FEMALE NONSMOKER ISSUE AGE 55
GUIDELINE PREMIUM TEST ANNUAL PREMIUM: $16,410
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ---------- ----------- ----------
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- ----------------------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE DEATH BENEFITS, ACCUMULATED VALUES AND THE CASH SURRENDER VALUES
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNT OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE INTERPRETED AS
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. 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 TO
VARIABLE ACCOUNTS BY THE OWNER AND THE EXPERIENCE OF THE ACCOUNTS.
NO REPRESENTATION CAN BE MADE BY PACIFIC MUTUAL, THE SEPARATE ACCOUNT
OR THE FUND THAT THESE HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- 67 -
<PAGE>
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON CURRENT COST OF INSURANCE CHARGES
DEATH BENEFIT OPTION: C FACE AMOUNT: $1,500,000
MALE NONSMOKER ISSUE AGE 55 FEMALE NONSMOKER ISSUE AGE 55
GUIDELINE PREMIUM TEST ANNUAL PREMIUM: $16,410
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ---------- ----------- ----------
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- ----------------------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE DEATH BENEFITS, ACCUMULATED VALUES AND THE CASH SURRENDER VALUES
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNT OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE INTERPRETED AS
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. 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 TO
VARIABLE ACCOUNTS BY THE OWNER AND THE EXPERIENCE OF THE ACCOUNTS.
NO REPRESENTATION CAN BE MADE BY PACIFIC MUTUAL, THE SEPARATE ACCOUNT
OR THE FUND THAT THESE HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- 68 -
<PAGE>
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON GUARANTEED COST OF INSURANCE CHARGES
DEATH BENEFIT OPTION: C FACE AMOUNT: $1,500,000
MALE NONSMOKER ISSUE AGE 55 FEMALE NONSMOKER ISSUE AGE 55
GUIDELINE PREMIUM TEST ANNUAL PREMIUM: $16,410
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ---------- ----------- ----------
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- ----------------------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE DEATH BENEFITS, ACCUMULATED VALUES AND THE CASH SURRENDER VALUES
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNT OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE INTERPRETED AS
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. 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 TO
VARIABLE ACCOUNTS BY THE OWNER AND THE EXPERIENCE OF THE ACCOUNTS.
NO REPRESENTATION CAN BE MADE BY PACIFIC MUTUAL, THE SEPARATE ACCOUNT
OR THE FUND THAT THESE HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- 69 -
<PAGE>
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON CURRENT COST OF INSURANCE CHARGES
DEATH BENEFIT OPTION: D FACE AMOUNT: $1,500,000
MALE NONSMOKER ISSUE AGE 55 FEMALE NONSMOKER ISSUE AGE 55
GUIDELINE PREMIUM TEST ANNUAL PREMIUM: $16,410
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ---------- ----------- ----------
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- ----------------------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE DEATH BENEFITS, ACCUMULATED VALUES AND THE CASH SURRENDER VALUES
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNT OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE INTERPRETED AS
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. 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 TO
VARIABLE ACCOUNTS BY THE OWNER AND THE EXPERIENCE OF THE ACCOUNTS.
NO REPRESENTATION CAN BE MADE BY PACIFIC MUTUAL, THE SEPARATE ACCOUNT
OR THE FUND THAT THESE HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- 70 -
<PAGE>
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE
ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND NET CASH SURRENDER VALUES
BASED ON GUARANTEED COST OF INSURANCE CHARGES
DEATH BENEFIT OPTION: D FACE AMOUNT: $1,500,000
MALE NONSMOKER ISSUE AGE 55 FEMALE NONSMOKER ISSUE AGE 55
GUIDELINE PREMIUM TEST ANNUAL PREMIUM: $16,410
TOTAL
PREMIUMS END OF YEAR DEATH BENEFIT ASSUMING
END OF PAID PLUS HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF
POLICY INTEREST AT ----------------------------------------------
YEAR 5% 0% 6% 12%
------ ----------- ---------- ----------- ----------
<TABLE>
<CAPTION>
END OF YEAR ACCUMULATED VALUE END OF YEAR NET CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL
END OF INVESTMENT RETURN OF INVESTMENT RETURN OF
POLICY ---------------------------------- ------------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- ----------------------
All premium payments are illustrated as if made at the beginning of the policy
year.
This illustration assumes no policy loans have been made.
*Additional payment will be required to prevent policy termination.
THE DEATH BENEFITS, ACCUMULATED VALUES AND THE CASH SURRENDER VALUES
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNT OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RATES SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE INTERPRETED AS
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. 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 TO
VARIABLE ACCOUNTS BY THE OWNER AND THE EXPERIENCE OF THE ACCOUNTS.
NO REPRESENTATION CAN BE MADE BY PACIFIC MUTUAL, THE SEPARATE ACCOUNT
OR THE FUND THAT THESE HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
- 71 -
<PAGE>
APPENDIX A
Description of Joint Equal Age Calculation
1. A Joint Equal Age (JEA) conversion changes many possible combinations of
Ages, risk classes, substandard ratings and sexes for two lives into a "two
life status" in which both Insureds are assumed to have the same Age, sex
(both always male), and risk class (both nonsmoker, or smoker).
2. Certain Policy charges are based on the JEA determined at issue.
JEA eliminates many of the tables needed when Age rates are used.
JEA will be used to determine the rates per $1000 of initial Face Amount for
the Sales Surrender Target, underwriting surrender charge and the Face
Amount component of the mortality and expense risk charge. JEA determined at
issue is also used to determine the death benefit under Death Benefit
Option D. Age is used for cost of insurance rates, both current and
guaranteed.
3. To calculate JEA, the two Ages are each converted to an adjusted Age, the
difference in adjusted Ages is converted to an Age add-on, and the Age add-
on is added to the younger adjusted Age. The steps are as follows:
a. Smoker Age Adjustment:
If both Insureds are smoker or both Insureds are nonsmoker, no
smoker adjustment is made. If exactly one Insured is a smoker, the
Age of the smoker is adjusted as follows:
Number of Smokers Smoker Age Add-on
------------------- -----------------
0 0
1 female +4
1 male +6
1 unisex +5
2 0
b. Sex Age Adjustment:
Each female Insured has a 5 year Age reduction. Each male
Insured has a 0 year Age reduction. Each unisex Insured has a 1 year
Age reduction.
c. Table rating Age adjustment:
The substandard Table ratings represent a multiple of standard
mortality rates. An Age adjustment will be added to each Insured
with a substandard Table rating as follows:
Table Rating Age Adjustment
Table Rating 0 A B C D E F H J L N P
--------------------------------------------------
Age Adjustment 0 2 4 6 8 10 12 14 15 16 18 19
The adjusted Age for substandard is capped at Age 100.
For uninsurable Insureds, the adjusted Age will always be 100,
independently of the Age and sex of the uninsurable Insureds.
(We reserve the right to reject an application for a policy.)
- 72 -
<PAGE>
d. After the Ages are adjusted for sex, smoker, and table ratings, the
younger adjusted Age is subtracted from the older adjusted Age. The
difference is used to determine an adjusted Age add-on.
Difference in Add to younger Difference in Add to younger
adjusted Age adjusted Age adjusted Age adjusted Age
0 0 40-44 12
1-2 1 45-47 13
3-4 2 48-50 14
5-6 3 51-53 15
7-9 4 54-56 16
10-12 5 57-60 17
13-15 6 61-64 18
16-18 7 65-69 19
19-23 8 70-75 20
24-28 9 76-82 21
29-34 10 83-91 22
35-39 11 92-100 23
e. Add the Age add-on factor from step d to the younger adjusted Age.
This is the Joint Equal Age, or JEA.
EXAMPLE: Assuming a male smoker, Age 65, and a female nonsmoker, Age 55, Table D
substandard rating, JEA is calculated as follows:
Male Female
---- ------
Age 65 55
Step a - Smoker Age Adjustment 71 55
Step b - Sex Age Adjustment 71 50
Step c - Table Rating Age Adjustment 71 58
Step d - Subtract Younger from Older 71-58=13
Step e - Add Adjusted Age Add-On 58+6=64 JEA
- 73 -
<PAGE>
APPENDIX B
RATES PER $1000 OF INITIAL FACE AMOUNT
<TABLE>
<CAPTION>
FACE FACE
AMOUNT AMOUNT
COMPONENT COMPONENT
JOINT SALES UNDERWRITING OF M&E JOINT SALES UNDERWRITING OF M&E
EQUAL SURRENDER SURRENDER RISK EQUAL SURRENDER SURRENDER RISK
AGE TARGET CHARGE CHARGE AGE TARGET CHARGE CHARGE
----- --------- ------------ --------- ----- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
15 2.28 2.0 0.051 58 16.74 7.0 0.208
16 2.35 2.1 0.052 59 18.04 7.3 0.230
17 2.43 2.1 0.053 60 19.35 7.6 0.253
18 2.50 2.2 0.054 61 20.64 7.9 0.275
19 2.57 2.3 0.055 62 21.89 8.2 0.298
20 2.65 2.3 0.056 63 23.08 8.5 0.320
21 2.73 2.4 0.056 64 24.20 8.9 0.341
22 2.81 2.4 0.057 65 25.26 9.3 0.362
23 2.89 2.5 0.058 66 26.25 9.7 0.382
24 2.98 2.6 0.059 67 27.20 10.1 0.401
25 3.07 2.7 0.060 68 28.12 10.5 0.420
26 3.16 2.8 0.061 69 29.00 10.9 0.439
27 3.25 2.9 0.062 70 29.87 11.3 0.457
28 3.35 3.0 0.063 71 30.73 11.7 0.475
29 3.45 3.1 0.064 72 31.59 12.1 0.492
30 3.55 3.2 0.065 73 32.46 12.5 0.510
31 3.66 3.3 0.066 74 33.35 12.9 0.528
32 3.77 3.4 0.067 75 34.26 13.3 0.547
33 3.88 3.5 0.068 76 35.19 13.7 0.566
34 4.04 3.6 0.069 77 36.14 14.1 0.585
35 4.21 3.7 0.070 78 37.09 14.5 0.605
36 4.38 3.8 0.072 79 38.06 14.9 0.626
37 4.56 3.9 0.073 80 39.04 15.3 0.647
38 4.75 4.0 0.074 81 40.02 15.7 0.668
39 4.95 4.1 0.075 82 41.01 16.1 0.689
40 5.15 4.2 0.076 83 42.00 16.5 0.711
41 5.37 4.3 0.078 84 43.00 16.9 0.733
42 5.59 4.4 0.079 85 44.00 17.3 0.756
43 5.82 4.5 0.080 86 45.00 17.7 0.778
44 6.20 4.6 0.082 87 46.00 18.1 0.801
45 6.60 4.7 0.085 88 47.00 18.5 0.824
46 7.03 4.8 0.087 89 48.00 18.9 0.848
47 7.49 4.9 0.090 90 49.00 19.3 0.871
48 7.98 5.0 0.093 91 50.00 19.7 0.895
49 8.50 5.1 0.097 92 51.00 20.1 0.919
50 9.05 5.2 0.102 93 52.00 20.5 0.944
51 9.64 5.3 0.107 94 53.00 20.9 0.968
52 10.27 5.4 0.113 95 54.00 21.3 0.993
53 10.94 5.5 0.120 96 55.00 21.7 1.018
54 11.94 5.8 0.134 97 56.00 22.1 1.044
55 13.03 6.1 0.150 98 57.00 22.5 1.069
56 14.21 6.4 0.168 99 58.00 22.9 1.095
57 15.45 6.7 0.188 100 59.00 23.3 1.121
</TABLE>
- 74 -
<PAGE>
APPENDIX C
DEATH BENEFIT PERCENTAGES
<TABLE>
<CAPTION>
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
- ------- ---------- --- ---------- --- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
0-40 250% 50 185% 60 130% 70 115%
41 243 51 178 61 128 71 113
42 236 52 171 62 126 72 111
43 229 53 164 63 124 73 109
44 222 54 157 64 122 74 107
45 215 55 150 65 120 75-90 105
46 209 56 146 66 119 91 104
47 203 57 142 67 118 92 103
48 197 58 138 68 117 93 102
49 191 59 134 69 116 greater than 93 101
</TABLE>
- 75 -
<PAGE>
APPENDIX D
Death Benefit Factor Table
Rate per $1.00 of Face Amount
<TABLE>
<CAPTION>
Joint
Equal
Age Policy Years*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75+
15 1.000 1.000 1.000 1.001 1.002 1.005 1.010 1.022 1.048 1.102 1.210 1.415 1.702 1.957 2.000
20 1.000 1.000 1.001 1.002 1.004 1.009 1.021 1.046 1.100 1.207 1.411 1.700 1.957 2.000 2.000
25 1.000 1.000 1.001 1.003 1.008 1.019 1.044 1.097 1.204 1.408 1.697 1.956 2.000 2.000 2.000
30 1.000 1.001 1.003 1.007 1.018 1.042 1.094 1.200 1.404 1.694 1.955 2.000 2.000 2.000 2.000
35 1.000 1.002 1.006 1.016 1.039 1.091 1.197 1.400 1.692 1.954 2.000 2.000 2.000 2.000 2.000
40 1.001 1.005 1.014 1.036 1.087 1.192 1.395 1.688 1.953 2.000 2.000 2.000 2.000 2.000 2.000
45 1.002 1.011 1.032 1.081 1.185 1.388 1.682 1.952 2.000 2.000 2.000 2.000 2.000 2.000 2.000
50 1.006 1.025 1.072 1.174 1.376 1.674 1.949 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
55 1.015 1.058 1.157 1.358 1.660 1.945 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
60 1.035 1.128 1.327 1.636 1.936 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
65 1.079 1.274 1.595 1.920 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
70 1.175 1.519 1.891 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
75 1.357 1.822 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
80 1.620 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
85 1.894 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
90 1.969 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
95 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
99 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000
</TABLE>
* Factors are portrayed for both Joint Equal Ages and Policy Anniversaries, at
five year intervals. See your Policy for one year increments in Death Benefit
factors.
- 76 -
<PAGE>
PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet.
The cross-reference sheet.
The Prospectus consisting of 79 pages (including illustrations).
The undertaking to file reports.
Notice pursuant to Paragraph (b)(13)(i) under Rule 6e-3(T).
Representation pursuant to Paragraph (b)(13)(iii)(F) under Rule 6e-3(T).
The signatures.
The following exhibits:
1. (1) Resolution of the Board of Directors of the Depositor dated November
22, 1989 and copies of the Memoranda concerning Pacific Select Exec
Separate Account dated May 12, 1988 and January 26, 1993.
(2) Inapplicable
(3) (a) Distribution Agreement Between Pacific Mutual Life Insurance
Company and Pacific Equities Network
(b) Form of Selling Agreement Between Pacific Equities Network and
Various Broker-Dealers
(4) Inapplicable
(5) (a) Last Survivor Flexible Premium Variable Life Insurance
Policy (Draft)
(b) Accelerated Living Benefit Rider
(c) Policy Split Option Rider
(d) Last Survivor Added Protection Benefit (Draft)
(e) Individual Annual Renewable Term Rider (Draft)
(f) Enhanced Policy Split Option Rider (Draft)
(6) (a) Articles of Incorporation of Pacific Mutual Life Insurance
Company
(b) Bylaws of Pacific Mutual Life Insurance Company
(7) Inapplicable
(8) Inapplicable
(9) Participation Agreement between Pacific Mutual Life Insurance
Company and Pacific Select Fund
(10) Applications and General Questionnaire
2. See Exhibit 1.(5)
3. Form of Opinion and consent of legal officer of Pacific Mutual as to
legality of Policies being registered
<PAGE>
4. Inapplicable
5. Inapplicable
6. (a) Consent of Independent Accountants*
(b) Consent of Dechert Price & Rhoads*
7. Opinion of Actuary*
8. Memorandum Describing Issuance, Transfer, and Redemption Procedures
9. Powers of Attorney
_______________________
* To be filed by pre-effective amendment.
<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.
NOTICE PURSUANT TO PARAGRAPH (b)(13)(i) UNDER RULE 6e-3(T)
Registrant hereby notifies the Securities and Exchange Commission that it
elects to be governed by subparagraph (A) of Rule 6e-3(T)(b)(13)(i) for purposes
of determining the maximum permitted sales load.
REPRESENTATIONS, DESCRIPTION AND UNDERTAKINGS PURSUANT TO PARAGRAPH
(b)(13)(iii)(F) OF RULE 6e-3(T) UNDER THE INVESTMENT COMPANY ACT OF 1940
Registrant makes the following representations:
(1) Section 6e-3(T)(b)(13)(iii)(F) is being relied upon.
(2) The level of the mortality and expense risk charge is reasonable
in relation to the risks assumed under the flexible premium
variable life insurance policies described in the prospectus
contained in this Registration Statement ("Policies").
(3) Pacific Mutual has concluded that there is reasonable likelihood
that the distribution financing arrangement of the Pacific Select
Exec Separate Account relating to the Policies will benefit the
Separate Account and the Policy Owners.
(4) The Separate Account will invest only in management companies
which have undertaken to have a board of directors, a majority
of whom are not interested persons of the company, formulate and
approve any plan under Rule 12b-1 to finance distribution
expenses.
The methodology used to support the representation made in paragraph (2)
above involved an analysis of the potential costs associated with the mortality
and expenses risks assumed by Pacific Mutual under the Policies in relation to
the potential proceeds from the mortality and expense risk charge under
assumptions under which adverse mortality and expense experience are realized.
Registrant undertakes to keep and make available to the Commission on
request the documents used to support the representation in paragraph (2) above
and a memorandum setting forth the basis for the representation in paragraph (3)
above.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities act of 1933, Pacific Mutual
Life Insurance Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized, all in the City of
Newport Beach, and State of California, on this 13th day of March, 1996.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Depositor)
BY: _____________________________________
Thomas C. Sutton*
Chairman & Chief Executive Officer
*BY: /s/DAVID R. CARMICHAEL
David R. Carmichael
as attorney-in-fact
(Power of attorney is contained as Exhibit 10 in this Registration Statement.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Pacific Select Exec Separate Account of Pacific Mutual Life Insurance Company,
has duly caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, all in the City of Newport Beach, and
State of California, on this 13th day of March, 1996.
PACIFIC SELECT EXEC SEPARATE ACCOUNT
(Registrant)
BY: PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Depositor)
BY: _____________________________________
Thomas C. Sutton*
Chairman & Chief Executive Officer
*BY: /s/DAVID R. CARMICHAEL
David R. Carmichael
as attorney-in-fact
(Power of Attorney is contained in Exhibit 10 of this Registration Statement.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
Signature Title Date
Thomas C. Sutton* Director, Chairman ____________, 1996
of the Board and
Chief Executive Officer
Glenn S. Schaefer* President ____________, 1996
Edward Byrd* Vice President and
Controller ____________, 1996
Harry G. Bubb* Director and ____________, 1996
Director Emeritus
Richard M. Ferry* Director ____________, 1996
Donald E. Guinn* Director ____________, 1996
Ignacio E. Lozano, Jr.* Director ____________, 1996
Charles A. Lynch* Director ____________, 1996
Dr. Allen W. Mathies, Jr.* Director ____________, 1996
Charles D. Miller* Director ____________, 1996
Donn B. Miller* Director ____________, 1996
Jacqueline C. Morby Director ____________, 1996
J. Fernando Niebla* Director ____________, 1996
Susan Westerberg Prager* Director ____________, 1996
Richard M. Rosenberg Director ____________, 1996
James R. Ukropina* Director ____________, 1996
Raymond L. Watson* Director ____________, 1996
<PAGE>
*BY: /s/DAVID R. CARMICHAEL ____________, 1996
David R. Carmichael
as attorney-in-fact
(Powers of Attorney are contained as Exhibit 10 in this Registration Statement.)
<PAGE>
EXHIBIT 99.1(1)
Resolution of the Board of Directors of the Depositor
dated November 22, 1989 and copies of the Memoranda
concerning Pacific Select Exec Separate Account
dated May 12, 1988 and January 26, 1993
<PAGE>
SECRETARY'S CERTIFICATE
PACIFIC MUTUAL LIFE INSURANCE COMPANY
RESOLVED, that the Board of Directors of this Corporation hereby authorizes this
Corporation to obtain approval from the appropriate regulatory authorities of an
amendment to its Certificate of Authority to issue variable life insurance
policies and variable annuity contracts and any derivative thereof being herein
collectively referred to as "variable contracts"; and
RESOLVED FURTHER, that the Board of Directors of this Corporation hereby
authorizes and directs the establishment of Separate Accounts ("Separate
Accounts") that may be required to which the amounts received by this
Corporation in connection with the sale of the Contracts shall be allocated; and
RESOLVED FURTHER, that within the Separate Accounts there may be a number of
Variable Accounts with different investment policies and objectives into which a
policyowner may direct his interests in the Separate Accounts and the Variable
Accounts; and
RESOLVED FURTHER, that the Separate Accounts are to be established and
maintained in accordance with the provisions of Section 10506 of the California
Insurance Code and the regulations promulgated under that Section; and
RESOLVED FURTHER, that any Officer of this Corporation is authorized and
directed to take whatever action may be necessary or advisable to establish and
maintain such Separate Accounts and to register, file, or qualify the Contracts
for sale, including, but not limited to, determining the states or other
jurisdictions in which necessary or advisable action shall be taken to qualify,
file, or register the Contracts for sale, performing any and all acts as such
Officer deems necessary or advisable to comply with the applicable laws of any
such state or jurisdiction including making any required filings with the
California Insurance Department or any other regulatory authority in California
or any other regulatory authority in any state or jurisdiction having
jurisdiction over the insurance activities of the Company or over the Contracts;
performing any and all acts as such Officer deems necessary or advisable to
comply with the applicable laws of the United States including, but not limited
to, preparing and filing registration statements with the Securities and
Exchange Commission to register the Contracts or interests therein under the
Securities Act of 1933 and the Investment Company Act of 1940 and to register
the Separate Account under the Investment Company Act of 1940, and to file an
exemptive application if necessary or advisable under the Investment Company Act
of 1940 and to make such other filings or seek any interpretations that are
necessary or advisable from the Securities and Exchange Commission or any other
agency of the United States Government; or making any filings, seek any
interpretations, or make other submissions that such Officer deems necessary or
advisable with other regulatory authorities having jurisdiction over the offer
and sale of the Contracts; and to execute and file all requisite papers and
documents, including, but not limited to, applications, reports, surety bonds,
irrevocable consents, powers of attorneys, and appointments of agents for
service of process, and the paying of all necessary fees and expenses as
<PAGE>
in such Officer's judgment may be necessary or advisable.
*****
I, AUDREY L. MILFS, do hereby certify that I am the duly elected, qualified and
acting Secretary of Pacific Mutual Life Insurance Company, a California
corporation, and I do hereby further certify that the foregoing is a true and
correct copy of a resolution adopted at a meeting of the Executive Committee of
the Board of Directors of said corporation held on November 22, 1989, at which a
quorum was present and voted in favor thereof, and that said resolution has not
been revoked or amended and is now in full force and effect.
IN, WITNESS WHEREOF, I have executed this certificate as Secretary of said
Corporation on this 13th day of January, 1993.
Audrey L. Milfs, Secretary
#4427
<PAGE>
OFFICE MEMORANDUM
DATE
May 12, 1988
TO
Harry G. Bubb
FROM
Clement B. Penrose
SUBJECT
PACIFIC SELECT EXEC SEPARATE ACCOUNT
RECOMMENDATION:
- --------------
That you authorize the establishment of the Pacific Select Exec Separate
Account, as requested in the attached May 11, 1988 memo from Ms. Ledger and Mr.
Hezzelwood.
WHY RECOMMENDATION IS SUBMITTED AT THIS TIME:
- --------------------------------------------
Documentation of this authorization must accompany the registration filing about
to be made with the Securities and Exchange Commission for the Pacific Select
Exec Individual Flexible Premium Variable Life Insurance Policy.
BACKGROUND:
- ----------
General Management has approved the development of a second variable life
product, Pacific Select Exec Individual Flexible Premium Life Insurance Policy.
Amounts received by Pacific Mutual in connection with the sale of this new
product will be allocated to the Pacific Select Exec Separate Account, and among
its eight subaccounts, at the policyowners' direction.
On November 20, 1986, the Board of Directors of Pacific Mutual adopted a
resolution authorizing any officer of the corporation to take whatever action is
necessary to establish and maintain Separate Accounts which may be required in
connection with variable life insurance policies. Outside counsel for our
variable life products recommends that this authorization for the new Separate
Account be obtained from the Chief Executive Officer of Pacific Mutual.
OTHERS CONSULTED:
- ----------------
Mr. Joanning concurs in this recommendation.
Clement B. Penrose
mva
cc: Mr. Joanning
Establishment of
<PAGE>
Pacific Select Exec Separate Account
Is Authorized:
5-12-88
Harry G. Bubb Date
Chief Executive Officer
<PAGE>
OFFICE MEMORANDUM
DATE: January 26, 1993
TO: Mr. Thomas C. Sutton
FROM: Arthur Kesselhaut
SUBJECT: Pacific Select Exec Separate Account Variable Life Products
RECOMMENDATION:
That you authorize that, in addition to the Pacific Select Exec Flexible Premium
Variable Life Insurance policy, the Pacific Select Exec Separate Account may be
used in connection with additional variable life insurance products that Pacific
Mutual may develop and establish.
WHY RECOMMENDATION IS REQUESTED:
Documentation of this authorization must accompany variable life insurance
product registration filings made with the Securities and Exchange Commission
and the California Insurance Department.
BACKGROUND:
On November 20, 1986 and on November 22, 1989, the Board of Pacific Mutual Life
Insurance Company adopted resolutions authorizing any Officer of the Corporation
to take whatever action necessary to establish and maintain Separate Accounts
and to register, file or qualify variable life insurance policies for sale. The
Pacific Select Exec Separate Account was established pursuant to the November
20, 1986 resolution and a Memorandum dated May 12, 1988.
The original authorization for the Pacific Select Exec Separate Account referred
specifically to the Pacific Select Exec Flexible Premium Variable Life Insurance
product, however, Pacific Mutual intends to develop and establish additional
variable life insurance products that may utilize the Pacific Select Exec
Separate Account.
OTHERS CONSULTED:
Mr. Lynn Miller and Ms. Sharon Cheever concur in this recommendation.
AUTHORIZATION:
On behalf of Pacific Mutual Life Insurance Company, the Pacific Select Exec
Separate Account is hereby authorized to be used in connection with additional
variable life insurance products that Pacific Mutual may develop and establish.
<PAGE>
Thomas C. Sutton
Chairman & Chief Executive Officer
<PAGE>
EXHIBIT 99.1(3)(a)
Distribution Agreement between Pacific Mutual
Life Insurance Company and Pacific Equities Network
<PAGE>
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made this 7th day of September, 1988, by and between Pacific Mutual
Life Insurance Company, a California company, ("Pacific Mutual") on its own
behalf and on behalf of the Pacific Select Exec Separate Account ("Separate
Account"), and Pacific Equities Network, a California corporation, ("PEN").
WHEREAS, Pacific Mutual has established and maintains the Separate Account, a
separate investment account, for the purpose of selling variable life 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"), through
PEN, acting as general agent of Pacific Mutual;
WHEREAS, the Separate Account is registered as a unit investment trust under the
Investment Company Act of 1940 ("the 1940 Act");
WHEREAS, PEN 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, Pacific Mutual desires to retain PEN as the Distributor and Principal
Underwriter to provide for the sale and distribution to the public of the
Contracts issued by Pacific Mutual and funded by interests in the General
Account of Pacific Mutual and in the Separate Account and PEN is willing to
render such services:
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
1. Principal Underwriter. Pacific Mutual hereby appoints PEN, during the term
of this Agreement, subject to the registration requirements of the 1933 Act and
the 1940 Act and the provisions of the Securities Exchange Act, to be the
Distributor and Principal Underwriter for the sale of Contracts to the public in
each state and other jurisdictions in which the Contracts may be lawfully sold.
Pacific Mutual also appoints PEN as its independent General Agent for sale of
its Contracts (including any riders which Pacific Mutual may make available in
connection therewith or any contracts for which the Contracts may be exchanged
or converted) and for sale of such other insurance contracts or annuity
contracts as Pacific Mutual may, from time to time, authorize in writing by
amendment thereto. PEN shall offer the Contracts for sale and distribution at
premium rates set by Pacific Mutual.
2. Selling Agreements. PEN is hereby authorized to enter into separate written
agreements, on such terms and conditions as PEN determines are not inconsistent
with this Agreement, with such organizations which agree to participate as a
general agent and/or broker-dealer in the distribution of the Contracts and to
use their best efforts to solicit applications for Contracts. Any such broker-
dealer (hereinafter "Broker") shall be both registered as a broker-dealer under
the Securities
<PAGE>
Exchange Act and a member of the NASD. PEN shall be responsible for ensuring
that Broker and its agents or representatives and general agent and its sub-
agents soliciting applications for Contracts shall be duly and appropriately
licensed, registered and otherwise qualified for the sale of the Contracts (and
the riders and other contracts offered in connection therewith) under the
insurance laws and any applicable blue sky laws of each state or other
jurisdiction in which such policies may be lawfully sold and in which Pacific
Mutual is licensed to sell such Contracts. Pacific Mutual shall undertake to
appoint Broker's qualified agents or representatives and general agent's sub-
agents as life insurance agents of Pacific Mutual, provided that Pacific Mutual
reserves the right to refuse to appoint any proposed representative, agent, or
sub-agent, or once appointed, to terminate such appointment. PEN shall be
responsible for ensuring that Broker and general agent supervise its agents,
representatives, or sub-agents.
PEN is also authorized to enter into separate written agreements, on such terms
and conditions as PEN determines are not inconsistent with this Agreement, with
such organizations ("wholesalers") that agree to participate in the distribution
of the Contracts and to use their best efforts to solicit Brokers and general
agents that, in turn, will solicit applications of the Contracts.
3. Life Insurance Agents. Pacific Mutual shall be responsible for ensuring
that Broker and its agents or representatives and general agent and its sub-
agents meet all qualifications and hold any licenses or authorizations that may
be required for the solicitation or sale of the Contracts under the insurance
laws of the applicable jurisdictions.
4. Suitability. Pacific Mutual desires to ensure that Contracts will be sold
to purchasers for whom the Contract will be suitable. PEN shall take reasonable
steps to ensure that the various representatives of Broker and sub-agents of
general agents shall not make recommendations to an applicant to purchase a
Contract in the absence of reasonable grounds to believe 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 or sub-agent after reasonable inquiry of such applicant
concerning the applicant's other security holdings, insurance and investment
objectives, financial situation and needs, and the likelihood that the applicant
will continue to make any premium payments contemplated by the Contracts and
will keep the Policy in force for a sufficient period of time so that Pacific
Mutual's acquisition costs are amortized over a reasonable period of time.
5. Conformity With Registration Statement and Approved Sales Materials. In
performing its duties as Distributor, PEN will act in conformity with the
Prospectus and with the instructions and directions of Pacific Mutual, the
requirements of the 1933 Act, the 1940 Act, the Securities Exchange Act, and all
other applicable federal and state laws and regulations. PEN shall not give any
information nor make any representations, concerning any aspect of the Contract
or of Pacific Mutual's operations to any persons or entity unless such
information or representations are contained in the Registration Statement and
the pertinent prospectus filed with the Securities and Exchange Commission, or
are contained in sales or promotional literature approved by Pacific Mutual.
PEN will not use and will take reasonable steps to ensure Broker will not use
any sales promotion material and advertising which has not been previously
approved by Pacific Mutual.
<PAGE>
6. Expenses. During the term of this Agreement, PEN will bear all of its
expenses in complying with this Agreement, including the following expenses:
(a) costs of sales presentations, mailings, sales promotion materials,
advertising, and any other marketing efforts by PEN in connection with the
distribution or sale of the Contracts; and
(b) any compensation paid to employees of PEN and to wholesalers, Brokers
and general agents in connection with the distribution or sale of the
Contracts.
Notwithstanding any other provision of this Agreement, it is understood and
agreed that Pacific Mutual shall at all times retain the ultimate responsibility
for and control of all functions performed pursuant to this Agreement, and for
marketing the Contract, and reserves the right to direct, approve or disapprove
any action hereunder taken on its behalf by PEN.
7. Applications. Completed applications for Contracts solicited by such Broker
through its agents or representatives or by general agent through its sub-agents
shall be transmitted directly to Pacific Mutual. All payments under the
Contracts shall be made by check to Pacific Mutual or by other method acceptable
to Pacific Mutual, and if received by PEN, shall be held at all times in a
fiduciary capacity and remitted promptly to Pacific Mutual. All such payments
will be the property of Pacific Mutual. Pacific Mutual has the sole authority
to approve or reject such applications or payments and maintains ultimate
responsibility for underwriting. Anything in this Agreement to the contrary
notwithstanding, Pacific Mutual retains the ultimate right to control the sale
of the Contracts and to appoint and discharge life insurance agents of Pacific
Mutual.
8. Standard of Care. PEN shall be responsible for exercising reasonable care
in carrying out the provisions of this Agreement.
9. Reports. PEN shall be responsible for maintaining the records of Broker and
general agent and their agents, representatives or sub-agents who are licensed,
registered and otherwise qualified to sell the Contracts; calculating and
furnishing the fees payable to Brokers or general agents; and for furnishing
periodic reports to Pacific Mutual as to the sale of Contracts made pursuant to
this Agreement.
10. Records. Pen shall maintain and preserve such records as are required of
it by applicable laws and regulations. The books, accounts and records of
Pacific Mutual, the Separate Account and PEN shall be maintained so as to
clearly and accurately disclose the nature and details of the transactions,
including such accounting information as necessary to support the reasonableness
of the amounts to be paid by Pacific Mutual hereunder.
11. Compensation. For the services rendered and product development in the
initial sales efforts and continuing obligations under this Agreement, Pacific
Mutual shall pay PEN in the amounts set forth in Schedule A, which schedule is
incorporated herein. Pacific Mutual shall arrange for the payment of
commissions, through PEN, to those Brokers and general agents that sell
Contracts under agreements entered into pursuant to Section 2, hereof, and to
wholesalers that solicit brokers and
<PAGE>
general agents to sell Contracts under agreements entered into pursuant to
Section 2, hereof, in amounts as may be agreed to by Pacific Mutual and PEN
specified in such written agreements.
12. Investigation and Proceedings. PEN and Pacific Mutual agree to cooperate
fully in any insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the Contracts distributed under this
Agreement. PEN further agrees to furnish regulatory authorities with any
information or reports in connection with such services which may be requested
in order to ascertain whether the operations of Pacific Mutual and the Separate
Account are being conducted in a manner consistent with applicable laws and
regulations. PEN and Pacific Mutual further agree to cooperate fully in any
securities regulatory investigation or proceeding with respect to Pacific
Mutual, PEN, their affiliates and their agents or representatives to the extent
that such investigation or proceeding is in connection with Contracts
distributed under this Agreement. Without limiting the foregoing:
(a) PEN will be notified promptly of any customer complaint or notice of
any regulatory investigation or proceeding or judicial proceeding received
by Pacific Mutual with respect to PEN or any agent, representative, or sub-
agent of a Broker or general agent or which may affect Pacific Mutual's
issuance of any Contract sold under this Agreement; and
(b) PEN will promptly notify Pacific Mutual of any customer complaint or
notice of any regulatory investigation or proceeding received by PEN or its
affiliates with respect to PEN or any agent, representative, or sub-agent
of a Broker or general agent in connection with any Contract distributed
under this Agreement or any activity in connection with any such Contract.
In the case of a meritorious customer complaint, PEN and Pacific Mutual will
cooperate in investigating such complaint and any response 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
a more prompt response is required, the proposed response shall be communicated
by telephone or telegraph.
13. Indemnification. Pacific Mutual hereby agrees to indemnify and hold
harmless PEN and its officers and directors, and employees for any expenses
(including legal expenses), losses, claims, damages, or liabilities incurred by
reason of any untrue or alleged untrue statement or representation of a material
fact or any omission or alleged omission to state a material fact required to be
stated to make other statements not misleading, if made in reliance on any
prospectus, registration statement, post-effective amendment thereof, or sales
materials supplied or approved by Pacific Mutual or the Separate Account.
Pacific Mutual shall reimburse each such person for any legal or other expenses
reasonably incurred in connection with investigating or defending any such loss,
liability, damage, or claim. However, in no case shall Pacific Mutual be
required to indemnify for any expenses, losses, claims, damages, or liabilities
which have resulted from the willful misfeasance, bad faith, negligence,
misconduct, or wrongful act of PEN.
PEN hereby agrees to indemnify and hold harmless Pacific Mutual, its officers,
directors, and employees, and the Separate Account for any expenses, losses,
claims, damages, or liabilities arising
<PAGE>
out of or based upon any of the following in connection with the offer or sale
of the contracts: 1) except for such statements made in reliance on any
prospectus, registration statement or sales material supplied or approved by
Pacific Mutual or the Separate Account, any untrue or alleged untrue statement
or representation made; 2) any failure to deliver a currently effective
prospectus; 3) the use of any unauthorized sales literature by any officer,
employee, agent, or sub-agent of PEN, Broker or general agent; or 4) any willful
misfeasance, bad faith, negligence, misconduct or wrongful act. PEN shall
reimburse each such person for any legal or other expenses reasonably incurred
in connection with investigating or defending any such loss, liability, damage,
or claim.
Promptly after receipt by a party entitled to indemnification ("indemnified
party") of notice of the commencement of any action, if a claim for
indemnification in respect thereof is to be made against Pacific Mutual or PEN
("indemnifying party") such indemnified party will notify indemnifying party in
writing of the commencement thereof, but failure to notify the indemnifying
party of any claim shall not relieve it from any liability which it may have to
the person against whom such action is brought otherwise than on account of this
agreement contained in this Section 13. The indemnifying party will be entitled
to participate in the defense of the indemnified party and such participation
will not relieve such indemnifying party of the obligation to reimburse the
indemnified party for reasonable legal and other expenses incurred by such
indemnified party in defending himself.
14. Agent of Pacific Mutual or Separate Account. Any person, even though also
an officer, director, employee, or agent of PEN, who may be or become an
officer, director, employee, or agent of Pacific Mutual or the Separate Account
shall be deemed when rendering services to Pacific Mutual or the Separate
Account or acting in any business of Pacific Mutual or the Separate Account, to
be rendering such services to or acting solely for Pacific Mutual or the
Separate Account and not as an officer, director, employee, or agent or one
under the control or direction of PEN even though paid by PEN. Likewise, any
person even though also an officer, director, employee, or agent of Pacific
Mutual or the Separate Account, who may be or become an officer, director,
employee, or agent of PEN shall be deemed, when rendering services to PEN or
acting in any business of PEN, to be rendering such services to or acting solely
for PEN and not as an officer, director, employee, or agent or one under the
control or direction of Pacific Mutual or the Separate Account even though paid
by Pacific Mutual or the Separate Account.
15. Books and Records. It is expressly understood and agreed that all
documents, reports, records, books, files and other materials relating to this
Agreement and the services to be performed hereunder shall be the sole property
of Pacific Mutual and the Separate Account and that such property shall be held
by PEN as agent, during the effective term of this Agreement. This material
shall be delivered to Pacific Mutual upon the termination of this Agreement free
from any claim or retention of rights by PEN. During the term of this Agreement
and for a period of three years from the date of termination of this Agreement,
PEN will not disclose or use any records or information and will regard and
preserve as confidential all information related to the business of Pacific
Mutual or the Separate Account that may be obtained by PEN from any source as a
result of this Agreement and will disclose such information only if Pacific
Mutual or the Separate Account has authorized such disclosure, or if such
disclosure is expressly required by applicable federal or state regulatory
authorities. PEN further acknowledges and agrees that, in the event of a breach
or threatened breach by it of the provisions of this article, Pacific Mutual
will have no adequate remedy in moneys or
<PAGE>
damages and, accordingly, Pacific Mutual shall be entitled in its discretion to
seek an injunction against such breach. However, no specification in this
Agreement of a specific legal or equitable remedy shall be construed as a waiver
or prohibition against any other legal or equitable remedy in the event of a
breach of a provision of this Agreement.
16. Employees. PEN will not employ, except with the prior written approval of
the Commissioner of Insurance of the state of California, in any material
connection with the handling of the Separate Account's assets any person who, to
the knowledge of PEN:
(a) in the last 10 years has been convicted of any felony or misdemeanor
arising out of conduct involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, or involving violations of
Sections 1341, 1342, or 1343 of Title 18, United States Code; or
(b) within the last 10 years has been found by any state regulatory
authority to have violated or has acknowledged violation of any provision
of any state insurance law involving fraud, deceit, or knowing
misrepresentation; or
(c) within the last 10 years has been found by any federal or state
regulatory authorities to have violated or have acknowledged violation of
any provision of federal or state securities laws involving fraud, deceit,
or knowing misrepresentation.
17. 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, for any reason, 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 time of
termination, and the agreements contained in Sections 12 and 13 hereof.
18. Regulation. This Agreement shall be subject to the provisions of the 1940
Act and the Securities Exchange Act and the rules, regulations and rulings
thereunder, and of the applicable rules and regulations of the NASD, and
applicable state insurance law and other applicable law, from time to time in
effect, and the terms hereof shall be interpreted and construed in accordance
therewith.
19. Independent Contractor. PEN shall act as an independent contractor and
nothing herein contained shall constitute PEN or its agents, officers or
employees as agents, officers, or employees of Pacific Mutual in connection with
the sale of the Contracts.
20. Notices. Notices of any kind to be given to PEN by Pacific Mutual or the
Separate Account shall be in writing and shall be duly given if mailed, first
class postage prepaid, or delivered to PEN at 800 Newport Center Drive, Suite
300, Newport Beach, California 92660, or at such other address or to such
individual as shall be specified by PEN. Notices of any kind to be given to
Pacific Mutual or the Separate Account shall be in writing and shall be duly
given if mailed, first class postage prepaid, or delivered to them at 700
Newport Center Drive, Post Office Box 9000, Newport
<PAGE>
Beach, California 92660, or at such other address or to such individual as
shall be specified by Pacific Mutual.
If any provisions 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.
21. Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
ATTEST: By: /s/TC SUTTON
PRESIDENT
/s/AUDREY L. MILFS
SECRETARY
PACIFIC EQUITIES NETWORK
By: /s/RICHARD F. HANLY
PRESIDENT
/s/DIANE N. LEDGER
ASSISTANT VICE PRESIDENT
<PAGE>
EXHIBIT 99.1(3)(b)
Form of Selling Agreement between Pacific Mutual,
PEN and Various Broker-Dealers
<PAGE>
SELLING AGREEMENT
AGREEMENT by and between PACIFIC MUTUAL LIFE INSURANCE COMPANY ("Pacific
Mutual"), a California corporation; PACIFIC EQUITIES NETWORK ("PEN"), a
California corporation, a broker-dealer registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (the "1934 Act"),
and a member of the National Association of Securities Dealers, Inc. ("NASD");
_______________________________________________________________________________
_______________________________________________________________________________
("Selling Broker-Dealer"), also a broker-dealer registered under the 1934 Act
and a member of the NASD; and each of the undersigned General Agents jointly and
severally referred to herein as "General Agent".
W I T N E S S E T H:
WHEREAS, Pacific Mutual issues certain insurance and annuity contracts listed
in Schedule B (the "Contracts"), some of which are registered ("Securities
Registered Contracts") under the Securities Act of 1933 (the "1933 Act");
WHEREAS, Pacific Mutual has authorized PEN, as principal underwriter of the
Contracts, to enter into agreements, subject to the consent of Pacific Mutual,
with broker-dealers and general agents for the distribution of the Contracts;
WHEREAS, PEN has agreed to secure duly qualified broker-dealers and general
agents to contract with Pacific Mutual and PEN for the distribution of the
Contracts, assist these broker-dealers and general agents in obtaining licenses,
registrations and appointments to enable their registered representatives and
sub-agents to sell the Contracts, and provide educational meetings to
familiarize these broker-dealers and general agents and their registered
representatives and sub-agents with the provisions and features of the
Contracts; and
WHEREAS, Selling Broker-Dealer and General Agent have been selected by PEN to
distribute the contracts and Selling Broker-Dealer and General Agent wish to
participate in the distribution of the Contracts.
NOW THEREFORE, in consideration of the promises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
I.
APPOINTMENT
Subject to the terms and conditions of this Agreement, Pacific Mutual and PEN
hereby appoint Selling Broker-Dealer and General Agent for the solicitation of
applications for the purchase of the Contracts.
Selling Broker-Dealer and General Agent accept such appointment and each
agrees to use its best efforts to find purchasers for the Contracts acceptable
to Pacific Mutual. Selling Broker-Dealer and General Agent will seek purchasers
of Securities Related Contracts only while the registration statement relating
to such contracts is effective under the 1933 Act.
<PAGE>
II.
AUTHORITY AND DUTIES OF GENERAL AGENT
A. LICENSING AND APPOINTMENT OF SUB-AGENTS
General Agent is authorized to appoint sub-agents ("Sub-agents") to solicit
sales of the Contracts. General Agent agrees to fulfill all requirements set
forth in the General Letter of Recommendation attached as Schedule A hereto in
conjunction with its submission of licensing and appointment papers for all Sub-
agents.
General Agent warrants that it and all of its Sub-agents appointed pursuant to
this Agreement shall not solicit nor aid, directly or indirectly, in the
solicitation of any application for any Contract until they are fully licensed
by the proper authorities under the applicable insurance laws within the
applicable jurisdictions where General Agent and Sub-agents propose to offer the
Contracts, where Pacific Mutual is authorized to conduct business and where the
Contracts may be lawfully sold.
General Agent shall periodically provide Pacific Mutual with a list of all
Sub-agents appointed by General Agent and the jurisdictions where such Sub-
agents are licensed to solicit sales of the Contracts. Pacific Mutual shall
periodically provide General Agent with a list which shows; (i) the
jurisdictions where Pacific Mutual is authorized to do business; and (ii) any
limitations on the availability of the Contracts in any of such jurisdictions.
General Agent shall prepare and transmit the appropriate appointment forms to
Pacific Mutual. General Agent shall pay all fees to state insurance regulatory
authorities in connection with obtaining necessary licenses and authorizations
for Sub-agents to solicit and sell the Contracts. Pacific Mutual will pay
appointment fees for General Agent and resident appointment fees for Sub-agents.
Non-resident appointment fees for Sub-agents will be paid by the General Agent.
All renewal appointment fees will be paid by the General Agent for Sub-agents
who have generated less than $20,000 target premium within the prior 12 months.
Pacific Mutual may refuse for any reason to apply for the appointment of a Sub-
agent and may cancel any existing appointment at any time.
B. REJECTION OF SUB-AGENT
Pacific Mutual or PEN may refuse for any reason, by written notice to General
Agent, to permit any Sub-agent the right to solicit applications for the sale of
any of the Contracts. Upon receipt of such notice, General Agent immediately
shall cause such Sub-agent to cease such solicitations of sales and cancel the
appointment of any Sub-agent under this agreement.
C. SUPERVISION OF SUB-AGENTS
General Agent shall supervise all Sub-agents appointed pursuant to this
Agreement to solicit sales of the Contracts and bear responsibility for all acts
and omissions of each Sub-agent. General Agent shall comply with and exercise
all responsibilities required by applicable federal and state law and
regulations. General Agent shall train and supervise its Sub-agents to ensure
that purchase of a Contract is not recommended to an applicant in the absence of
reasonable grounds to believe the purchase of the Contract is suitable for that
applicant. While not limited to the following, a determination of suitability
shall be based on information furnished to a Sub-agent 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 any premium payments contemplated by the Contracts and
will keep the Contract in force for a sufficient period of time so that Pacific
Mutual's acquisition costs are amortized over a reasonable period of time.
Nothing contained in this Agreement or otherwise shall be deemed to make any
Sub-agent appointed by General Agent an employee or agent of Pacific Mutual or
PEN. Pacific Mutual and PEN shall not have any responsibility for the training
and supervision of any Sub-agent or any other employee of General Agent. If the
act or omission of a Sub-agent or any other employee of General Agent is the
proximate cause of claim, damage or liability (including reasonable attorneys'
fees) to Pacific Mutual or PEN, General Agent shall be responsible and liable
therefor.
2
<PAGE>
III.
AUTHORITY AND DUTIES OF SELLING BROKER-DEALER
Selling Broker-Dealer agrees that it has full responsibility for the training
and supervision of all persons, including Sub-agents of General Agent,
associated with Selling Broker-Dealer who are engaged directly or indirectly in
the offer or sale of Securities Regulated Contracts. All such persons shall be
registered representatives of Selling Broker-Dealer and shall be subject to the
control of Selling Broker-Dealer with respect to their securities regulated
activities. Broker-Dealer shall: (i) train and supervise Sub-agents, in their
capacity as registered representatives, in the sale of Securities Regulated
Contracts; (ii) use its best efforts to cause such Sub-agents to qualify under
applicable federal and state laws to engage in the sale of Securities Regulated
Contracts; (iii) provide Pacific Mutual and PEN to their satisfaction with
evidence of Sub-agents' qualifications to sell Securities Regulated Contracts;
(iv) notify Pacific Mutual if any of such Sub-agents ceases to be a registered
representative of Selling Broker-Dealer; and (v) train and supervise Sub-agents
to ensure compliance with applicable federal and state securities laws, rules,
regulations, statements of policy thereunder and with NASD rules. Selling
Broker-Dealer shall train and supervise Sub-agents to ensure that purchase of a
Contract is not recommended to an applicant in the absence of reasonable grounds
to believe the purchase of the Contract is suitable for that applicant. While
not limited to the following, a determination of suitability shall be based on
information furnished to a Sub-agent after reasonable inquiry of such applicant
concerning the applicant's other security holdings, financial situation and
needs. Selling Broker-Dealer shall ensure that any offer of a Securities
Regulated Contract made by a Sub-agent will be made by means of a currently
effective prospectus.
Pacific Mutual and PEN shall not have any responsibility for the supervision
of any registered representative or any other employee or affiliate of Selling
Broker-Dealer. If the act or omission of a registered representative or any
other employee or affiliate of Selling Broker-Dealer is the proximate cause of
any claim, damage or liability (including reasonable attorney's fees) to Pacific
Mutual or PEN, Selling Broker-Dealer shall be responsible and liable therefor.
Selling Broker-Dealer at all times shall be duly registered as a broker-dealer
under the 1934 Act, a member in good standing of the NASD and duly licensed in
all states and jurisdictions where required to perform pursuant to this
agreement. Selling Broker-Dealer shall fully comply with the requirements of
the 1934 Act and all other applicable federal or state laws and with the rules
of the NASD. Selling Broker-Dealer shall establish such rules and procedures as
may be necessary to cause diligent supervision of the securities activities of
the Sub-agents including ensuring compliance with the prospectus delivery
requirements of the 1933 Act.
IV.
AUTHORITY AND DUTIES OF
GENERAL AGENT AND SELLING BROKER-DEALER
A. CONTRACTS
The securities and insurance regulated Contracts issued by Pacific Mutual to
which this Agreement applies are listed in Schedule B, which may be amended from
time to time by Pacific Mutual. Pacific Mutual, in its sole discretion, with
prior or concurrent written notice to Selling Broker-Dealer and General Agent,
may suspend distribution of any Contract. Pacific Mutual also has the right to
amend any Contract at any time.
B. SECURING APPLICATIONS
Each application for a Contract shall be made on an application form provided
by Pacific Mutual, and all payments collected by Selling Broker-Dealer, General
Agent or any registered representative and Sub-agent shall be remitted promptly
in full, together with such application form and any other required
documentation, directly to Pacific Mutual at the address indicated on such
application or to such other address as may be designated by Pacific Mutual.
All such payments and documents shall be the property of Pacific Mutual.
Selling Broker-Dealer and
3
<PAGE>
General Agent shall review all such applications for completeness and for
compliance with the conditions herein, including the suitability and prospectus
delivery requirements set forth above under Sections II.C and III. Check or
money order in payment of such Contracts should be made payable to the order of
"Pacific Mutual". All applications are subject to acceptance or rejection by
Pacific Mutual in its sole discretion.
C. RECEIPT OF MONEY
All money payable in connection with any of the Contracts, whether as premium,
purchase payment or otherwise and whether paid by or on behalf of any contract
owner or anyone else having an interest in the Contracts, is the property of
Pacific Mutual and shall be transmitted immediately in accordance with the
administrative procedures of Pacific Mutual without any deduction or offset for
any reason including, but not limited to, any deduction or offset for
compensation claimed by Selling Broker-Dealer or General Agent, unless there has
been a prior arrangement for net wire transmissions between Pacific Mutual and
Selling Broker-Dealer or General Agent.
D. NOTICE OF SUB-AGENT'S NONCOMPLIANCE
Selling Broker-Dealer shall immediately notify PEN and General Agent in the
event a Sub-agent fails or refuses to submit to the supervision of Selling
Broker-Dealer or General Agent in accordance with this Agreement, the agreement
between Selling Broker-Dealer, General Agent and Sub-agent referred to in
Section IV.H, below, or otherwise fails to meet the rules and standards imposed
by Selling Broker-Dealer or its registered representatives or General Agent or
its Sub-agents. Selling Broker-Dealer or General Agent shall also immediately
notify such Sub-agent that he or she is no longer authorized to sell the
Contracts, and both Selling Broker-Dealer and General Agent shall take whatever
additional action may be necessary to terminate the sale activities of such Sub-
agent relating to the Contracts.
E. SALES PROMOTION, ADVERTISING AND PROSPECTUSES
No sales promotion materials, circulars, documents or any advertising relating
to any of the Contracts shall be used by Selling Broker-Dealer, General Agent or
any Sub-agents unless the specific item has been approved in writing by PEN and
Pacific Mutual prior to use. Selling Broker-Dealer shall be provided, without
any expense to Selling Broker-Dealer, with prospectuses relating to Securities
Regulated Contracts. Selling Broker-Dealer and General Agent shall be provided
with such other material as PEN determines necessary or desirable for use in
connection with sales of the Contracts. Nothing in these provisions shall
prohibit Selling Broker-Dealer or General Agent from advertising life insurance
and annuities on a generic basis.
Selling Broker-Dealer, General Agent and Sub-agents shall make no material
representations relating to the Securities Regulated Contracts, other than those
contained in the relevant registration statement, as may be amended, or in sales
promotion or other materials approved by Pacific Mutual and PEN as provided in
this section.
F. CONFIDENTIALITY
Selling Broker-Dealer and General Agent shall keep confidential all
information obtained pursuant to this Agreement, including, without limitation,
names of the purchasers of the Policies, and shall disclose such information,
only if Pacific Mutual or PEN have authorized such disclosure in writing, or if
such disclosure is expressly required by applicable federal or state regulatory
authorities.
G. RECORDS
Selling Broker-Dealer and General Agent shall have the responsibility for
maintaining the records of its Sub-agents and representatives licensed,
registered and otherwise qualified to sell the Contracts. Selling Broker-Dealer
and General Agent shall maintain such other records as are required of them by
applicable laws and regulations. The books, accounts and records of Selling
Broker-Dealer and General Agent relating to the sale of the Contracts shall be
maintained so as to clearly and accurately disclose the nature and details of
the transactions. Selling Broker-Dealer and General Agent each agree to make
the books and records relating to the sale of the Contracts available to Pacific
Mutual or PEN upon their written request.
4
<PAGE>
H. SUB-AGENT AGREEMENTS
Before a Sub-agent is permitted to sell the Contracts, General Agent, Selling
Broker-Dealer and Sub-agent shall have entered into a written agreement pursuant
to which: (i) Sub-agent is appointed a Sub-agent of General Agent and a
registered representative of Selling Broker-Dealer; (ii) Sub-agent agrees that
his or her selling activities relating to Securities Regulated Contracts shall
be under the supervision and control of Selling Broker-Dealer; and (iii) that
Sub-agent's right to continue to sell such Contracts is subject to his or her
continued compliance with such agreement and any procedures, rules or
regulations implemented by Selling Broker-Dealer or General Agent.
V.
COMPENSATION
A. COMMISSIONS AND FEES
Commissions and fees payable to General Agent or any Sub-agent in connection
with the Contracts shall be paid by Pacific Mutual through PEN to General Agent,
or as otherwise permitted by law or regulation. General Agent shall pay Sub-
agents. PEN will provide Selling Broker-Dealer and General Agent with a copy of
its current Compensation Schedule(s), attached hereto as Schedule B. Unless
otherwise provided in Schedule B, compensation will be paid as a percentage of
premiums or purchase payments (collectively, "Payments") received in cash or
other legal tender and accepted by Pacific Mutual on applications obtained by
the various Sub-agents appointed by General Agent hereunder. Upon termination
of this Agreement, all compensation to General Agent hereunder shall cease.
However, General Agent shall be entitled to receive compensation for all new and
additional premium payments which are in process at the time of termination, and
shall continue to be liable for any charge-backs pursuant to the provisions of
said Schedule B, or for any other amount advanced by or otherwise due Pacific
Mutual or PEN hereunder. Pacific Mutual reserves the right not to pay
compensation on a policy or contract for which the premium is paid in whole or
in part by the loan or surrender value of any other life insurance policy or
annuity contract issued by Pacific Mutual.
PEN shall deduct any chargebacks from compensation otherwise due General Agent
or Selling Broker-Dealer. If any amount to be deducted exceeds compensation
otherwise due, General Agent and/or Selling Broker-Dealer shall promptly pay
back the amount of the excess following a written demand by PEN or Pacific
Mutual. General Agent and Selling Broker-Dealer are jointly and severally
liable for such chargebacks.
Pacific Mutual reserves the right to reduce first year commissions and renewal
commissions, if necessary, on any life policies sold to residents of the State
of Kentucky and paid for after May 1, 1991. Such reduction shall be in an
amount sufficient to cover any premium tax levied by cities and counties within
the State of Kentucky which is over and above the premium tax paid by Pacific
Mutual to the State of Kentucky.
Pacific Mutual recognizes the Contract owners' right on issued Contracts to
terminate Selling Broker-Dealer and/or change a Selling Broker-Dealer, provided
that the Contract owner notifies PEN in writing. When a Contract owner
terminates Selling Broker-Dealer, no further compensation on any payments due or
received, or on any increases in face amount in the existing policy after
termination, shall be payable to that Selling Broker-Dealer in accordance with
Schedule B after the notice of termination is received and accepted by PEN.
However, when a Contract owner designates a Selling Broker-Dealer other than the
Selling Broker-Dealer of record, compensation on any payments due or received,
or on any increases in face amount in the existing Contract after the change,
shall be payable to the new Selling Broker-Dealer in accordance with Schedule B
in effect at the time of issuance of the Contract.
5
<PAGE>
A change of Selling Broker-Dealer request shall be honored only if there
exists a valid Selling Agreement between Pacific Mutual, PEN and the new
Selling Broker-Dealer and (1) the Contract owner(s) requests in writing that the
Sub-agent remains as representative of record, or (2) both the former and future
Selling Broker-Dealers direct Pacific Mutual and PEN in a joint writing to
transfer all policies and future compensation to the new Selling Broker-Dealer,
or (3) the NASD approves and effects a bulk transfer of all representatives to a
new Selling Broker-Dealer.
B. TIME OF PAYMENT
PEN will pay any commissions due General Agent at least twice monthly in
accordance with Schedule B of this Agreement, as it may be amended from time to
time.
C. AMENDMENT OF SCHEDULES
PEN may amend Schedule B upon at least ten (10) days' prior written notice to
Selling Broker-Dealer and General Agent. The submission of an application for
the Contracts by Selling Broker-Dealer or General Agent after the effective date
of any such amendment shall constitute agreement to such amendment. Any such
amendment shall apply to compensation due on applications received by Pacific
Mutual after the effective date of such notice.
D. Prohibition Against Rebates
Pacific Mutual or PEN may terminate this Agreement if Selling Broker-Dealer,
General Agent or any Sub-agent rebates, offers to rebate or withholds any part
of any Payment on the Contracts. If Selling Broker-Dealer, General Agent or any
Sub-agent of General Agent shall at any time induce or endeavor to induce any
owner of any Contract issued hereunder to discontinue payments or to relinquish
any such Contract, except under circumstances where there is reasonable grounds
for believing the Contract is not suitable for such person, any and all
compensation due General Agent hereunder shall cease and terminate.
E. INDEBTEDNESS AND RIGHT OF SET OFF
Nothing contained in this Agreement shall be construed as giving Selling
Broker-Dealer or General Agent the right to incur any indebtedness on behalf of
Pacific Mutual or PEN. Selling Broker-Dealer and General Agent hereby authorize
PEN and Pacific Mutual to set off liabilities of Selling Broker-Dealer and
General Agent to Pacific Mutual and PEN against any and all amounts otherwise
payable to Selling Broker-Dealer or General Agent.
VI.
GENERAL PROVISIONS
A. Waiver
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed to be, or shall
constitute, a waiver of any other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver.
6
<PAGE>
B. LIMITATIONS
The Selling Broker-Dealer and General Agent are independent contractors with
respect to Pacific Mutual and PEN. No party other than Pacific Mutual and or
PEN, as the case may be, shall have the authority to: (i) make, alter or
discharge any Contract issued by Pacific Mutual; (ii) waive any forfeiture or
extend the time of making any payments; (iii) enter into any proceeding in a
court of law or before a regulatory agency in the name of or on behalf of
Pacific Mutual or PEN; (iv) contract for the expenditure of funds of Pacific
Mutual or PEN; (v) alter the forms which PEN prescribes, or substitute other
forms in place of those prescribed by PEN.
C. FIDELITY BOND AND OTHER LIABILITY COVERAGE
Selling Broker-Dealer and General Agent each represent that all directors,
officers, agents, employees and Sub-agents who are licensed pursuant to this
Agreement as Pacific Mutual agents for state insurance law purposes or who have
access to funds of Pacific Mutual, including but not limited to, funds submitted
with applications for the Contracts are and shall be covered by a blanket
fidelity bond, including coverage for larceny and embezzlement, issued by a
reputable bonding company. This bond shall be maintained by Selling Broker-
Dealer or General Agent at their expense. Such bond shall be, at a minimum, of
the form, type, and amount required under NASD Rules, endorsed to extend
coverage to transactions relating to the Contracts. Pacific Mutual may require
evidence, satisfactory to it, that such coverage is in force and Selling Broker-
Dealer or General Agent, as the case may be, shall give prompt written notice to
Pacific Mutual of any notice of cancellation of the bond or change of coverage.
Selling Broker-Dealer and General Agent hereby assign any proceeds received
from a fidelity bonding company, error and omissions or other liability
coverage, to Pacific Mutual or PEN as their interest may appear, to the extent
of their loss due to activities covered by the bond, policy or other liability
coverage. If there is any deficiency amount, whether due to a deductible or
otherwise, Selling Broker-Dealer or General Agent shall promptly pay such
amounts on demand. Selling Broker-Dealer and General Agent hereby indemnify and
hold harmless Pacific Mutual and PEN from any such deficiency and from the costs
of collection thereof (including reasonable attorneys' fees).
D. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns provided that neither
Selling Broker-Dealer nor General Agent may assign this Agreement or any rights
or obligations hereunder without the prior written consent of Pacific Mutual.
E. REGULATIONS
All parties agree to observe and comply with the existing laws and rules or
regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
F. INDEMNIFICATION
Pacific Mutual and PEN agree to indemnify and hold harmless Selling Broker-
Dealer and General Agent, their officers, directors, agents and employees,
against any and all losses, claims, damages or liabilities to which they may
become subject under the 1933 Act, the 1934 Act, or other federal or state
statutory law or regulation, at common law 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 a material
fact or any omission or alleged omission to state a material fact required to be
stated or necessary to make the statements made not misleading in the
registration statement for the Contracts or for the shares of Pacific Select
Fund (the "Fund") filed pursuant to the 1933 Act, or any prospectus included as
a part thereof, as from time to time amended and supplemented, or in any
advertisement or sales literature approved in writing by Pacific Mutual and PEN
pursuant to Section IV.E. of this Agreement
7
<PAGE>
Selling Broker-Dealer and General Agent agree to indemnify and hold harmless
Pacific Mutual, the Fund and PEN, their officers, directors, agents and
employees, against any and all losses, claims, damages or liabilities to which
they may become subject under the 1933 Act, the 1934 Act, or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon; (a) any oral or written misrepresentation by Selling
Broker-Dealer or General Agent or their officers, directors, employees or agents
unless such misrepresentation is contained in the registration statement for the
Contracts or Fund shares, any prospectus included as a part thereof, as from
time to time amended and supplemented, or any advertisement or sales literature
approved in writing by Pacific Mutual and PEN pursuant to Section IV.E. of this
Agreement, (b) the failure of Selling Broker-Dealer or General Agent or their
officers, directors, employees or agents to comply with any applicable
provisions of this Agreement or (c) claims by Sub-agents or employees of General
Agent or Selling Broker-Dealer for payments of compensation or remuneration of
any type. Selling Broker-Dealer and General Agent will reimburse Pacific Mutual
or PEN or any director, officer, agent or employee of either entity for any
legal or other expenses reasonably incurred by Pacific Mutual, PEN, or such
officer, director, agent or employee in connection with investigating or
defending any such loss, claims, damages, liability or action. This indemnity
agreement will be in addition to any liability which Broker-Dealer may otherwise
have.
G. NOTICES
All notices or communications shall be sent to the following address for
Pacific Mutual or PEN, or to such other address as Pacific Mutual or PEN may
request by giving written notice to the other parties:
Pacific Mutual Life Insurance Company Pacific Equities Network
700 Newport Center Drive 700 Newport Center Drive
Newport Beach, CA 92660 Newport Beach, CA 92660
All notices or communications to the Selling Broker-Dealer or General Agent
shall be sent to the last address known to Pacific Mutual or PEN for that party,
or to such other address as Selling Broker-Dealer or General Agent may request
by giving written notice to the other parties.
H. Governing Law
This Agreement shall be construed in accordance with and governed by the laws
of California.
I. AMENDMENT OF AGREEMENT
PEN may amend this Agreement upon at least ten (10) days' prior written notice
to Selling Broker-Dealer and General Agent. The submission of an application
for the Contracts by Selling Broker-Dealer or General Agent after the effective
date of any such amendment shall constitute agreement to such amendment.
Additional General Agents may be added as parties to this Agreement at any
time by a written amendment signed by Pacific Mutual, PEN, Selling Broker-Dealer
and such additional General Agents. All General Agents which are parties to
this Agreement at the time of such amendment hereby consent and agree in advance
to the addition of such additional General Agents.
J. GENERAL AGENT AS BROKER-DEALER
Selling Broker-Dealer and General Agent shall not have the other entity's
authority and shall not be responsible for the other entity's duties hereunder
unless Selling Broker-Dealer and General Agent are the same entity. If Selling
Broker-Dealer and General Agent are the same person or legal entity, such person
or legal entity shall have the rights and obligations hereunder of both Selling
Broker-Dealer and General Agent and this Agreement shall be binding and
enforceable by and against such person or legal entity in both capacities.
8
<PAGE>
K. COMPLAINTS AND INVESTIGATIONS
Pacific Mutual, PEN, Selling Broker-Dealer and General Agent agree to
cooperate fully in any insurance regulatory investigation or proceeding or
judicial proceeding arising in connection with the Contracts distributed under
this Agreement. Pacific Mutual, PEN, Selling Broker-Dealer and General Agent
further agree to cooperate fully in any securities regulatory investigation or
proceeding with respect to Pacific Mutual, PEN, Selling Broker-Dealer and
General Agent, their affiliates and their agents or representatives to the
extent that such investigation or proceeding is in connection with the Contracts
distributed under this Agreement. Without limiting the foregoing:
(a) Selling Broker-Dealer or General Agent will be notified promptly of any
customer complaint or notice of any regulatory investigation or proceeding or
judicial proceeding received by Pacific Mutual or PEN with respect to Selling
Broker-Dealer or General Agent or any Sub-agent or which may affect Pacific
Mutual's issuance of any contracts sold under this Agreement; and
(b) Selling Broker-Dealer and General Agent will promptly notify Pacific
Mutual and PEN of any customer complaint or notice of any regulatory
investigation or proceeding received by Selling Broker-Dealer, General Agent
or their affiliates with respect to Selling Broker-Dealer, General Agent or
any Sub-agent in connection with any Contracts distributed under this
Agreement or any activity in connection with any such policies.
In the case of a substantive customer complaint, Pacific Mutual, PEN, Selling
Broker-Dealer and General Agent will cooperate in investigating such complaint
and any response 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 a more prompt response is required, the
proposed response shall be communicated by telephone or telegraph.
L. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty (30)
days' prior written notice. This Agreement also may be terminated, for cause,
by any party immediately. This Agreement shall be terminated immediately if PEN
or Selling Broker-Dealer shall cease to be a registered Broker-Dealer under the
1934 Act or a member in good standing of the NASD, or if there occurs the
dissolution, bankruptcy or insolvency of Selling Broker-Dealer or General Agent.
Sections VI F and K shall survive termination of this Agreement.
Upon termination of this Agreement, Selling Broker-Dealer and General Agent
shall each use their best efforts to have all property of Pacific Mutual and PEN
in Selling Broker-Dealer, General Agent or Sub-agents' possession promptly
returned to Pacific Mutual or PEN, as the case may be. Such property includes
prospectuses, applications and other literature supplied by Pacific Mutual or
PEN.
THIS SPACE INTENTIONALLY LEFT BLANK
9
<PAGE>
M. EXCLUSIVITY
Selling Broker-Dealer and General Agent each agree that no territory is
assigned exclusively hereunder and that Pacific Mutual and PEN reserve the right
in their discretion to establish one or more agencies in any jurisdiction in
which Selling Broker-Dealer and General Agent transact business hereunder.
This Agreement shall be effective as of __________________________________.
PACIFIC EQUITIES NETWORK -------------------------------------
(SELLING BROKER-DEALER)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
PACIFIC MUTUAL LIFE INSURANCE COMPANY -------------------------------------
(GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
10
<PAGE>
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
- --------------------------------------- -------------------------------------
(GENERAL AGENT) (GENERAL AGENT)
By: By:
------------------------------------ ----------------------------------
(Signature) (Signature)
Title: Title:
--------------------------------- -------------------------------
Date: Date:
--------------------------------- -------------------------------
11
<PAGE>
SCHEDULE A
----------
GENERAL LETTER OF RECOMMENDATION
General Agent hereby certifies to Pacific Mutual that all of the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as Sub-agents ("applicant")
submitted by General Agent. General Agent will, upon request, forward proof of
compliance with same to Pacific Mutual in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence and business reputation and declare that
each applicant is personally known to us, has been examined by us, is known to
be of good moral character, has a good business reputation, is reliable, is
financially responsible and is worthy of a license. Each individual is
trustworthy, competent, and qualified to act as an agent for Pacific Mutual, and
to hold himself out in good faith to the general public. We vouch for each
applicant.
2. We have on file a B-300, B-301 or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements for
the registration of each applicant as a registered representative through our
NASD member firm, and each applicant is presently registered as an NASD
registered representative.
The above information in our files indicates no fact or condition which would
disqualify the applicant from receiving a license, and all the findings of all
investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state in which each applicant is requesting a license, and that all such persons
have fulfilled the appropriate examination, education and training requirements.
4. If the applicant is required to submit his or her picture, signature, and
securities registration in the state in which he or she is applying for a
license, we certify that those items forwarded to Pacific Mutual are those of
the applicant and the securities registration is a true copy of the original.
5. We hereby warrant that the applicant is not applying for a license with
Pacific Mutual in order to place insurance chiefly or solely on his or her life
or property, lives or property of his or her relatives, or property or liability
of his or her associates.
6. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will be
properly protected.
7. We will not permit any applicant to transact insurance as an agent until
duly licensed therefor. No applicants have been given a contract or furnished
supplies, nor have any applicants have permitted to write, solicit business or
act as an agent in any capacity, and they will not be so permitted until the
certificate of authority or license applied for is received.
8. We certify that General Agent, Selling Broker-Dealer and applicant shall
have entered into a written agreement pursuant to which: (i) applicant is
appointed a Sub-agent of General Agent and a registered representative of
Selling Broker-Dealer; (ii) applicant agrees that his or her selling activities
relating to securities regulated Contracts shall be under the supervision and
control of Selling Broker-Dealer and his or her selling activities relating to
all Contracts shall be under the supervision and control of General Agent; and
(iii) that applicant's right to continue to sell such Contracts is subject to
his or her continued compliance with such agreement and any procedures, rules or
regulations implemented by Selling Broker-Dealer or General Agent.
12
<PAGE>
SCHEDULE B
COMPENSATION SCHEDULE TO PACIFIC MUTUAL SELLING AGREEMENT
FOR PACIFIC SELECT ESTATE PRESERVER, LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
POLICY FORM 96-56
(TO BE INSERTED LATER)
<PAGE>
EXHIBIT 99.1(5)(A)
Last Survivor Flexible Premium Variable Life Insurance Policy (DRAFT)
<PAGE>
[LETTERHEAD OF PACIFIC MUTUAL LIFE INSURANCE COMPANY]
LAST SURVIVOR
FLEXIBLE PREMIUM
VARIABLE LIFE
INSURANCE POLICY
. BENEFITS WILL VARY BASED
ON INVESTMENT EXPERIENCE
. FACE AMOUNT CAN BE
DECREASED
READY YOUR POLICY CAREFULLY. This is a legal contract between you, the Owner,
and us, Pacific Mutual Life Insurance Company, a mutual company.
We agree to pay the benefits of this policy according to its provisions.
The consideration for this policy is the application for it, a copy of which is
attached, and payment of the premiums.
VARIABLE ACCOUNT CASH SURRENDER VALUES MAY INCREASE OR DECREASE DEPENDING UPON
VARIABLE ACCOUNT INVESTMENT EXPERIENCE, SUBJECT TO ANY MINIMUM GUARANTEES. THERE
IS NO GUARANTEED VARIABLE ACCOUNT CASH SURRENDER VALUE.
THE AMOUNT OR DURATION OF THE DEATH BENEFIT MAY BE VARIABLE OR FIXED DEPENDING
UPON VARIABLE ACCOUNT INVESTMENT EXPERIENCE. THE AMOUNT OF THE DEATH BENEFIT
WILL NEVER BE LESS THAN THE FACE AMOUNT AS LONG AS YOUR POLICY IS IN FORCE. SEE
THE DEATH BENEFITS OPTIONS PROVISION FOR DETAILS.
POLICY LOAN VALUE IS LESS THAN ONE HUNDRED PERCENT (100%) OF THE POLICY'S CASH
SURRENDER VALUE.
FREE LOOK RIGHT - YOU MAY RETURN THIS POLICY WITHIN (1) 10 DAYS AFTER YOU
RECEIVE IT, (2) 10 DAYS AFTER WE MAIL OR DELIVER A NOTICE OF THE RIGHT OF
WITHDRAWAL, OR (3) 45 DAYS AFTER YOU SIGN THE APPLICATION, WHICHEVER IS LATER.
TO DO SO, DELIVER OR MAIL IT TO US OR OUR AGENT. THIS POLICY WILL THEN BE DEEMED
VOID FROM THE BEGINNING AND WE WILL REFUND THE PREMIUMS PAID.
Signed at our Home Office, 700 Newport Center Drive, Newport Beach, California
92660.
/s/ TL Sutton
Chairman and Chief Executive Officer
/s/ Audrey L. Milfs
Secretary
Form 96-56
<PAGE>
INDEX
<TABLE>
<CAPTION>
SUBJECT PAGE
<S> <C>
Accumulated Value........................................ 9
Administrative Charge.................................... 11
Age...................................................... 5
Assignment............................................... 5
Basis of Values.......................................... 14
Beneficiary.............................................. 5
Cash Surrender Value..................................... 11
Compliance............................................... 14
Cost of Insurance Rates.................................. 10
Decrease Provision....................................... 8
Definitions.............................................. 5
Dividends................................................ 13
Face Amount.............................................. 3
General Provisions....................................... 13
Grace Period and Lapse................................... 6
Income Benefits.......................................... 12
Incontestability......................................... 13
Interest................................................. 9
Misstatement............................................. 13
Mortality and Expense Risk Charge........................ 10
Other Deductions......................................... 11
Owner.................................................... 3, 5
Payments................................................. 14
Policy Benefits.......................................... 7
Policy Date.............................................. 3, 5
Policy Illustrations..................................... 14
Policy Loans............................................. 12
Premium Limitation....................................... 6
Premium Load............................................. 10
Premiums................................................. 5
Reinstatement............................................ 6
Reports.................................................. 14
Suicide Exclusion........................................ 13
Surrender Charge......................................... 11
Transfers................................................ 10
Variable Accounts........................................9, 14, 15
Withdrawals.............................................. 12
Withdrawal Fee........................................... 11
</TABLE>
<PAGE>
POLICY SPECIFICATIONS
BASIC POLICY: LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PREMIUMS: PLANNED PERIODIC PREMIUM PAYMENT = $X,XXX,XXX.XX
GUIDELINE SINGLE PREMIUM = $X,XXX,XXX.XX
GUIDELINE LEVEL PREMIUM = $X,XXX,XXX.XX
ACCOUNT ALLOCATIONS AVAILABLE:
FIXED EQUITY INCOME MONEY MARKET
GROWTH EQUITY INDEX MULTI-STRATEGY
GROWTH LT MANAGED BOND GOVERNMENT SECURITIES
INTERNATIONAL HIGH YIELD BOND AGGRESSIVE EQUITY
EMERGING MARKETS VARIABLE ACCOUNT I VARIABLE ACCOUNT II
VARIABLE ACCOUNT III VARIABLE ACCOUNT IV
INTEREST ON THE FIXED ACCOUNT IS GUARANTEED TO BE NOT LESS THAN 4.00% ANNUALLY.
IN ADDITION, ANY EXCESS INTEREST DECLARED BY US WILL BE GUARANTEED FOR ONE YEAR.
POLICY NUMBER: 1234567-0 INSURED #1: LELAND STANFORD
POLICY DATE: XXXX XX, XXXX RISK CLASSIFICATION: MALE / NONSMOKER
MATURITY DATE: XXXX XX, XXXX
INITIAL FACE AMOUNT: $100,000 AGE ON POLICY DATE: 35
INSURED #2: MARY STANFORD
OWNER(S): LELAND STANFORD RISK CLASSIFICATION: FEMALE / NONSMOKER
AGE ON POLICY DATE: 35
MONTHLY PAYMENT DATE IS THE 1ST DAY OF EACH POLICY MONTH.
NOTE: IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE MATURITY DATE SHOWN
IF THE ACCUMULATED VALUE IS INSUFFICIENT TO PAY THE CHARGES ASSESSED ON A
MONTHLY PAYMENT DATE. ACCUMULATED VALUE MAY BE BASED ON THE INVESTMENT RESULTS
OF THE SEPARATE ACCOUNT. THE PAYMENT OF INITIAL AND SUBSEQUENT PREMIUMS WILL
NOT GUARANTEE THAT THE POLICY WILL REMAIN IN FORCE OR THAT THERE WILL BE
ACCUMULATED VALUE AT MATURITY.
PAGE 3.0
<PAGE>
POLICY SPECIFICATIONS 1234567-0
- --------------------------------------------------------------------------------
SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
96-56: BASIC COVERAGE FACE AMOUNT: $100,000
INSURED #1: LELAND STANFORD
AGE AT ISSUE: 35
RISK CLASSIFICATION: MALE / NONSMOKER
INSURED #2: MARY STANFORD
AGE AT ISSUE: 35
RISK CLASSIFICATION: FEMALE / NONSMOKER
- --------------------------------------------------------------------------------
R96-LSAPB: LAST SURVIVOR ADDED PROTECTION BENEFIT
COVERAGE AMOUNT: $50,000 VARYING
INSURED #1: LELAND STANFORD
RISK CLASSIFICATION: MALE / NONSMOKER
INSURED #2: MARY STANFORD
RISK CLASSIFICATION: FEMALE / NONSMOKER
- --------------------------------------------------------------------------------
R96-ART INDIVIDUAL ANNUAL RENEWABLE TERM RIDER
FACE AMOUNT: $50,000 VARYING
COVERAGE CEASE DATE: XXXX XX, XXXX
INSURED: LELAND STANFORD
RISK CLASSIFICATION: MALE / NONSMOKER
- --------------------------------------------------------------------------------
R96-EPSO ENHANCED POLICY SPLIT OPTION RIDER
</TABLE>
PAGE 3.1
<PAGE>
POLICY SPECIFICATIONS 1234567-0
- --------------------------------------------------------------------------------
PREMIUM A 5% SALES LOAD OF PREMIUMS PAID IN THE FIRST TEN POLICY YEARS;
LOAD: 3% SALES LOAD OF PREMIUMS PAID THEREAFTER; A LOAD OF 2.35% FOR
PREMIUM TAXES; AND 1.50% FEDERAL TAX.
ADMINISTRATIVE $16 PER MONTH FOR THE FIRST FIVE POLICY YEARS; AND A
CHARGE: MONTHLY CHARGE NOT EXCEEDING $6.00 PER MONTH THEREAFTER.
UNDERWRITING $370.00 REMAINS LEVEL FOR THE FIRST POLICY YEAR;
AND SURRENDER CHARGE: THEN DECREASES BY $3.43 PER MONTH TO ZERO AT THE END
OF THE 120TH MONTH.
SALES SURRENDER $420.80 REMAINS LEVEL FOR ALL POLICY YEARS.
TARGET:
MORTALITY AND EXPENSE M&E RATE OF $0.0705 PER MONTH PER $1000 OF INITIAL
RISK CHARGE RATE: BASE FACE AMOUNT FOR POLICY YEARS 1-10; 0% THEREAFTER.
REFER TO CONTRACT FOR DETAILS.
- --------------------------------------------------------------------------------
PAGE 3.2
<PAGE>
POLICY SPECIFICATIONS 1234567-0
- --------------------------------------------------------------------------------
SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE
- --------------------------------------------------------------------------------
LAST SURVIVOR ADDED PROTECTION BENEFIT
VARYING SCHEDULE
INSURED #1: LELAND STANFORD
RISK CLASSIFICATION: MALE / NONSMOKER
INSURED #2: MARY STANFORD
RISK CLASSIFICATION: FEMALE / NONSMOKER
<TABLE>
<CAPTION>
POLICY TARGET POLICY TARGET
YEAR AMOUNT YEAR AMOUNT
- ------ ------- ------ -------
<S> <C> <C> <C>
1 100,000 35 145,000
2 105,000 36 145,000
3 110,000 37 145,000
4 115,000 38 145,000
5 120,000 39 145,000
6 125,000 40 145,000
7 130,000 41 145,000
8 135,000 42 145,000
9 140,000 43 145,000
10 145,000 44 145,000
11 145,000 45 145,000
12 145,000 46 145,000
13 145,000 47 145,000
14 145,000 48 145,000
15 145,000 49 145,000
16 145,000 50 145,000
17 145,000 51 145,000
18 145,000 52 145,000
19 145,000 53 145,000
20 145,000 54 145,000
21 145,000 55 145,000
22 145,000 56 145,000
23 145,000 57 145,000
24 145,000 58 145,000
25 145,000 59 145,000
26 145,000 60 145,000
27 145,000 61 145,000
28 145,000 62 145,000
29 145,000 63 145,000
30 145,000 64 145,000
31 145,000 65 145,000
32 145,000
33 145,000
34 145,000
</TABLE>
PAGE 3.3
<PAGE>
POLICY SPECIFICATIONS 1234567-0
- --------------------------------------------------------------------------------
SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE
- --------------------------------------------------------------------------------
INDIVIDUAL ANNUAL RENEWABLE TERM RIDER
VARYING SCHEDULE
INSURED: LELAND STANFORD
RISK CLASSIFICATION: MALE / NONSMOKER
<TABLE>
<CAPTION>
ATTAINED FACE ATTAINED FACE
AGE AMOUNT AGE AMOUNT
- -------- ------- -------- -------
<S> <C> <C> <C>
35 100,000 73 145,000
36 105,000 74 145,000
37 110,000 75 145,000
38 115,000 76 145,000
39 120,000 77 145,000
40 125,000 78 145,000
41 130,000 79 145,000
42 135,000 80 145,000
43 140,000 81 145,000
44 145,000 82 145,000
45 145,000 83 145,000
46 145,000 84 145,000
47 145,000 85 145,000
48 145,000 86 145,000
49 145,000 87 145,000
50 145,000 88 145,000
51 145,000 89 145,000
52 145,000 90 145,000
53 145,000 91 145,000
54 145,000 92 145,000
55 145,000 93 145,000
56 145,000 94 145,000
57 145,000 95 145,000
58 145,000 96 145,000
59 145,000 97 145,000
60 145,000 98 145,000
61 145,000 99 145,000
62 145,000
63 145,000
64 145,000
65 145,000
66 145,000
67 145,000
68 145,000
69 145,000
70 145,000
71 145,000
72 145,000
</TABLE>
PAGE 3.4
<PAGE>
POLICY SPECIFICATIONS 1234567-0
- --------------------------------------------------------------------------------
SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE
- --------------------------------------------------------------------------------
DEATH BENEFIT OPTION D FACTOR TABLE
BASIC COVERAGE AMOUNT: $100,000
<TABLE>
<CAPTION>
POLICY POLICY
YEAR FACTOR YEAR FACTOR
- ------ ------ ------ ------
<S> <C> <C> <C>
1 1.000 40 1.400
2 1.000 41 1.457
3 1.000 42 1.515
4 1.000 43 1.575
5 1.000 44 1.634
6 1.000 45 1.692
7 1.001 46 1.748
8 1.001 47 1.859
9 1.001 48 1.911
10 1.002 49 1.954
11 1.002 50 1.985
12 1.003 51 2.000
13 1.004 52 2.000
14 1.005 53 2.000
15 1.006 54 2.000
16 1.007 55 2.000
17 1.009 56 2.000
18 1.011 57 2.000
19 1.013 58 2.000
20 1.016 59 2.000
21 1.019 60 2.000
22 1.023 61 2.000
23 1.028 62 2.000
24 1.033 63 2.000
25 1.039 64 2.000
26 1.047 65 2.000
27 1.055 66 2.000
28 1.065 67 2.000
29 1.077 68 2.000
30 1.091 69 2.000
31 1.107 70 2.000
32 1.126 71 2.000
33 1.147 72 2.000
34 1.170 73 2.000
35 1.197 74 2.000
36 1.227 75+ 2.000
37 1.262
38 1.302
39 1.349
</TABLE>
PAGE 3.5
<PAGE>
POLICY SPECIFICATIONS 1234567-0
- --------------------------------------------------------------------------------
TABLE OF COST OF INSURANCE RATES
--------------------------------
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 APPLICABLE
TO BASE POLICY COVERING BOTH LIVES.
<TABLE>
<CAPTION>
POLICY MONTHLY POLICY MONTHLY
YEAR RATE YEAR RATE
- ------ ----------- ------ -----------
<S> <C> <C> <C>
1 0.000003482 40 0.024482452
2 0.000011323 41 0.028693133
3 0.000020827 42 0.033458637
4 0.000032425 43 0.038742384
5 0.000046816 44 0.044533067
6 0.000064484 45 0.050944872
7 0.000086342 46 0.058183026
8 0.000112410 47 0.066452427
9 0.000143392 48 0.075988489
10 0.000179787 49 0.086946533
11 0.000222957 50 0.099181939
12 0.000272648 51 0.112530024
13 0.000330421 52 0.126813784
14 0.000397822 53 0.141911522
15 0.000476854 54 0.157745612
16 0.000568867 55 0.174324323
17 0.000677897 56 0.191755700
18 0.000806955 57 0.210269278
19 0.000961874 58 0.230357932
20 0.001143286 59 0.252947232
21 0.001352630 60 0.280532802
22 0.001592203 61 0.318233937
23 0.001859073 62 0.376289060
24 0.002156666 63 0.475179579
25 0.002493932 64 0.655859026
26 0.002883788 65 1.000000000
27 0.003345721
28 0.003901719
29 0.004581119
30 0.005390600
31 0.006333320
32 0.007406826
33 0.008609673
34 0.009936668
35 0.011437955
36 0.013184598
37 0.015262747
38 0.017782939
39 0.020843705
</TABLE>
PAGE 4.0
<PAGE>
POLICY SPECIFICATIONS 1234567-0
- --------------------------------------------------------------------------------
TABLE OF COST OF INSURANCE RATES
--------------------------------
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 APPLICABLE TO LAST
SURVIVOR ADDITIONAL PROTECTION BENEFIT COVERING BOTH LIVES.
<TABLE>
<CAPTION>
POLICY MONTHLY POLICY MONTHLY
YEAR RATE YEAR RATE
- ------ ----------- ------ -----------
<S> <C> <C> <C>
1 0.000003482 40 0.024482452
2 0.000011323 41 0.028693133
3 0.000020827 42 0.033458637
4 0.000032425 43 0.038742384
5 0.000046816 44 0.044533067
6 0.000064484 45 0.050944872
7 0.000086342 46 0.058183026
8 0.000112410 47 0.066452427
9 0.000143392 48 0.075988489
10 0.000179787 49 0.086946533
11 0.000222957 50 0.099181939
12 0.000272648 51 0.112530024
13 0.000330421 52 0.126813784
14 0.000397822 53 0.141911522
15 0.000476854 54 0.157745612
16 0.000568867 55 0.174324323
17 0.000677897 56 0.191755700
18 0.000806955 57 0.210269278
19 0.000961874 58 0.230357932
20 0.001143286 59 0.252947232
21 0.001352630 60 0.280532802
22 0.001592203 61 0.318233937
23 0.001859073 62 0.376289060
24 0.002156666 63 0.475179579
25 0.002493932 64 0.655859026
26 0.002883788 65 1.000000000
27 0.003345721
28 0.003901719
29 0.004581119
30 0.005390600
31 0.006333320
32 0.007406826
33 0.008609673
34 0.009936668
35 0.011437955
36 0.013184598
37 0.015262747
38 0.017782939
39 0.020843705
</TABLE>
PAGE 4.1
<PAGE>
POLICY SPECIFICATIONS 1234567-0
- --------------------------------------------------------------------------------
TABLE OF COST OF INSURANCE RATES
--------------------------------
THE GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1,000 APPLICABLE TO
INDIVIDUAL ANNUAL RENEWABLE TERM COVERING ONE LIFE.
INSURED: LELAND STANFORD
<TABLE>
<CAPTION>
POLICY MONTHLY POLICY MONTHLY POLICY MONTHLY
YEAR RATE YEAR RATE YEAR RATE
- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
0 0.00034900 39 0.00023280 78 0.00727588
1 0.00008921 40 0.00025202 79 0.00792387
2 0.00008254 41 0.00027458 80 0.00863521
3 0.00008170 42 0.00029715 81 0.00943078
4 0.00007920 43 0.00032307 82 0.01033895
5 0.00007503 44 0.00034984 83 0.01137350
6 0.00007169 45 0.00037996 84 0.01251384
7 0.00006669 46 0.00041093 85 0.01373773
8 0.00006336 47 0.00044442 86 0.01502185
9 0.00006169 48 0.00047960 87 0.01635661
10 0.00006085 49 0.00051898 88 0.01773789
11 0.00006419 50 0.00056089 89 0.01917199
12 0.00007086 51 0.00061038 90 0.02067765
13 0.00008254 52 0.00066577 91 0.02228714
14 0.00009588 53 0.00072875 92 0.02406347
15 0.00011090 54 0.00080018 93 0.02611993
16 0.00012592 55 0.00087672 94 0.02881300
17 0.00013927 56 0.00096005
18 0.00014845 57 0.00104684
19 0.00015513 58 0.00113962
20 0.00015847 59 0.00123925
21 0.00015931 60 0.00134998
22 0.00015764 61 0.00147355
23 0.00015513 62 0.00161341
24 0.00015179 63 0.00177217
25 0.00014762 64 0.00194909
26 0.00014428 65 0.00214342
27 0.00014261 66 0.00235100
28 0.00014178 67 0.00257276
29 0.00014261 68 0.00280882
30 0.00014428 69 0.00306532
31 0.00014845 70 0.00335367
32 0.00015263 71 0.00368199
33 0.00015931 72 0.00406029
34 0.00016682 73 0.00449620
35 0.00017600 74 0.00498352
36 0.00018686 75 0.00551331
37 0.00020022 76 0.00607653
38 0.00021525 77 0.00666569
</TABLE>
PAGE 4.2
<PAGE>
DEFINITIONS
Company or PM or we or us - refers to Pacific Mutual Life Insurance Company.
Monthly payment date - is the day each month on which certain policy charges are
deducted from the Accumulated Value. This day is shown on page 3. The first
monthly payment date is the Policy Date.
Home Office - means the Company's office located at 700 Newport Center Drive,
Newport Beach, California 92660.
You, your or owner - refers to the owner(s) of this policy as specified in the
application unless changed as provided for in the policy.
Policy Date - is shown on page 3. Policy months, years and anniversaries are
measured from this date.
Free Look Transfer Date - The date which is the later of 15 days after the
policy is issued or 45 days after the application is signed.
Age - generally means age nearest birthday as of the policy date, increased by
the number of complete policy years elapsed.
Effective Date - is the date revised coverage begins after a change in the Face
Amount of the base policy or any rider, a change in the target amount of any
benefit, or addition of riders or benefits after the policy date.
Evidence of Insurability - is information, including medical information,
satisfactory to the Company that is used to determine each insured's risk
classification.
Debt - means all unpaid policy loans plus accrued interest on such loans.
Face Amount - is the amount used to determine the policy's death benefit. The
initial Face Amount is shown on page 3.
Survivor - is the insured remaining alive after the first death of the two
insureds that occurs while this policy is in force.
Written request - is a request in writing signed by you that is satisfactory to
PM and filed at its Home Office.
Separate Account - refers to the Pacific Select Exec Separate Account which is a
separate account of PM that consists of subaccounts, which may be referred to as
Variable Accounts. Each Variable Account may invest its assets in a separate
class of shares of a designated investment company or companies.
Variable Account - A separate account of PM or a subaccount of a PM separate
account in which assets of PM are segregated from its assets in PM's general
account and other separate accounts and to which premiums and Accumulated Value
under this policy may be allocated for variable accumulation.
OWNER AND BENEFICIARY
Owner- The owner of this policy is shown on the policy specifications pages. A
change of owner may be made by written request on forms provided by PM. A
change of owner will take place only when recorded at our
<PAGE>
Home Office. When recorded, such change will take effect as of the date the
written request was signed. If there are two or more owners, they will own this
policy as joint tenants with right of survivorship unless otherwise stated.
Assignment - This policy may be assigned at any time. PM is not bound by any
assignment unless it is in writing and recorded at our Home Office. We are not
responsible for the validity of any assignment.
Beneficiary - The beneficiary is named by you in the application to receive the
death benefit proceeds. The payment of the death benefit proceeds to any
beneficiary will be subject to any assignment.
A change of beneficiary may be made by written request on forms provided by PM
while either insured is living. The change will take place as of the date the
request is signed.
The interest of a beneficiary who does not survive to receive payment will pass
to the surviving beneficiaries in proportion to their share in the proceeds,
unless otherwise provided. If no beneficiaries survive to receive payment, the
death benefit proceeds will pass to the owner, or the owner's estate if the
owner does not survive to receive payment.
PREMIUMS
Premiums - This policy will not be in force before the initial premium is paid.
No premium may be less than $50. Premiums may be paid at any time subject to
the limitations described in the Premium Limitation provision. Premiums are
payable either at our Home Office or to an agent of the Company. Upon written
request, we will give you a premium receipt signed by a Company officer.
Premium Allocation - The initial premium, less the Premium Load, will be
allocated to the Money Market Variable Account on the date it is received and
accepted by us.
Any additional premiums received by us prior to the Free Look Transfer Date,
less the Premium Load, will be allocated to the Money Market Variable Account.
The Accumulated Value in the Money Market Variable Account on the Free Look
Transfer Date, and any subsequent premiums less the Premium Load, will be
allocated to the Fixed and Variable Accounts according to the premium allocation
specified in the application or your most recent instructions received by us, if
any.
Upon written request, you may change the premium allocation. Subsequent premiums
received by us, less the Premium Load, will be allocated to the Fixed and
Variable Accounts according to your most recent instructions.
Premium Limitation - We reserve the right to require evidence of insurability,
satisfactory to us, for any premium payment that would result in an immediate
increase in the difference between the death benefit and the Accumulated Value.
In order for this policy to be treated as life insurance under the Internal
Revenue Code, the sum of the premiums paid less a portion of any Withdrawals as
defined in the Internal Revenue Code may not exceed the greater of:
- the Guideline Single Premium; or
- the sum of the Guideline Level Premiums to the date of payment.
<PAGE>
The amounts of the Guideline Premiums are shown on the policy specifications
pages. The Guideline Premiums will change whenever there is a change in the Face
Amount of insurance or in other policy benefits. Such Guideline Premium changes
will be shown in a supplemental schedule of benefits and premiums that we will
send to you.
The Guideline Premiums are determined according to the rules applicable to this
policy set forth in the Internal Revenue Code. The Guideline Premiums will be
adjusted to conform to any changes in the Internal Revenue Code.
In the event that a premium payment would exceed the Guideline Premium limits,
we reserve the right to refund the excess payment to the owner. Further, we
reserve the right to make distributions from the policy to the extent we deem it
necessary to continue to qualify this policy as life insurance under the
Internal Revenue Code.
In order for this policy to avoid being treated as a Modified Endowment Contract
(MEC), the sum of premiums paid less a portion of any Withdrawals may not exceed
the 7-Pay limit as defined in the Internal Revenue Code. In the event that a
premium payment would exceed the 7-Pay limit, we reserve the right to refund the
excess payment to the owner, unless the owner has previously notified us in
writing that payments that cause this policy to become a MEC may be accepted by
us and applied to the policy.
Grace Period and Lapse - If the Accumulated Value less debt on a monthly payment
date is not sufficient to cover the current monthly deduction, a grace period of
61 days will be allowed for the payment of sufficient premium to keep your
policy in force.
We will send a notice at the start of the grace period to you at your last known
address and to any assignee of record. The grace period will end 61 days after
we mail you the notice. The notice will state the due date and the amount of
premium required to keep your policy in force. A minimum of three times the
monthly deduction due when the insufficiency occurred must be paid. Upon receipt
of payment, we will allocate the premium payment, less the Premium Load, to the
Variable Accounts and Fixed Account according to your most recent premium
allocation instructions. Your policy will remain in force during the grace
period. If sufficient premium is not paid by the end of the grace period, a
lapse will occur. We will send you and any assignee of record, a written notice
30 days prior to lapse. Upon lapse, the policy will terminate with no value.
Reinstatement - If it has not been surrendered, this policy may be reinstated
not more than five years after the end of the grace period. To reinstate this
policy you must provide us with:
- a written application;
- evidence of insurability satisfactory to us for each insured living as of
the beginning of the grace period;
- payment of sufficient premium to cover all monthly deductions that were
due and unpaid during the grace period; plus
- payment of sufficient premium to keep the policy in force for three
months after the date of reinstatement.
When this policy is reinstated, the Accumulated Value will be equal to the
Accumulated Value on the date of lapse subject to the following. We will
allocate the Accumulated Value and your premium payment, less the Premium Load,
to the Fixed and Variable Accounts according to your most recent premium
allocation instructions.
<PAGE>
If the policy is reinstated after the first monthly payment date following
lapse, the Accumulated Value will be reduced by the amount of any debt on the
date of lapse and no policy debt will exist on the date of reinstatement. If
the policy is reinstated on the first monthly payment date following lapse, any
debt on the date of lapse will also be reinstated, with the corresponding
portion of the Accumulated Value allocated to the Loan Account as described in
the Policy Loans provision.
The effective date of the reinstated policy will be the first monthly payment
date on or following the date we approve your reinstatement application.
POLICY BENEFITS
Death Benefit Options - The death benefit for this policy will be one of the
following:
Option A- The death benefit is the greater of:
- the Face Amount; or
- the Guideline Minimum Death Benefit.
Option B- The death benefit is the greater of:
- the Face Amount plus the Accumulated Value on the date of death; or
- the Guideline Minimum Death Benefit.
Option C- The death benefit is the greater of:
- the Face Amount plus the sum of the premiums paid to the date of death
minus the sum of any partial withdrawals taken and any other distribution
of the Accumulated Value to the date of death; or
- the Guideline Minimum Death Benefit.
Option D- The death benefit is the greater of:
- the Face Amount times the death benefit factor for the current policy
year as shown on the policy specifications pages; or
- the Guideline Minimum Death Benefit.
The owner elects the Death Benefit Option in the application. If no option is
elected, Option A is the automatic option. The original election of the Death
Benefit Option may not be changed until after completion of the fifth policy
year. Thereafter, the Death Benefit Option may be changed to Option A or B upon
written request once per policy year. Changes to Option C or D will not be
permitted. After any such change, the Face Amount will be that amount which
results in the death benefit after the change being equal to the death benefit
before the change. The change will be effective on the monthly payment date on
or next following the day the written request is received by us at PM's Home
Office.
Unless specified otherwise by you in writing, any request for a death benefit
option change will not be processed if the option change would cause the policy
to be treated as a MEC.
The Guideline Minimum Death Benefit at any time is the Accumulated Value
multiplied by the Death Benefit Percentage shown below:
<PAGE>
<TABLE>
<CAPTION>
Death Benefit Death Benefit
Age Percentage Age Percentage
<S> <C> <C> <C>
0-40 250% 60 130%
41 243 61 128
42 236 62 126
43 229 63 124
44 222 64 122
45 215 65 120
46 209 66 119
47 203 67 118
48 197 68 117
49 191 69 116
50 185 70 115
51 178 71 113
52 171 72 111
53 164 73 109
54 157 74 107
55 150 75-90 105
56 146 91 104
57 142 92 103
58 138 93 102
59 134 >93 101
</TABLE>
The age is the age of the younger insured at issue, increased by the number of
complete policy years elapsed.
PM reserves the right to reduce the Guideline Minimum Death Benefit by requiring
partial withdrawals be made in order to maintain the net amount at risk at a
level that will not exceed three times the Death Benefit on the Policy Date.
The net amount at risk is the difference between the Death Benefit and the
Accumulated Value.
This policy is intended to qualify as a life insurance contract under the
Internal Revenue Code for Federal tax purposes, and the death benefit under this
policy is intended to qualify for the income tax exclusion under the Internal
Revenue Code. To that end, the provisions of this policy, including any other
rider, benefit, or endorsement, are to be interpreted to ensure such tax
qualification, notwithstanding any other provisions to the contrary.
If at any time the premiums paid under this policy exceed the amount allowable
for such tax qualification, such excess amount shall be removed from the policy
as of the date of its payment, and any appropriate adjustment in the death
benefit shall be made as of such date. This excess amount shall be refunded to
the Owner no later than 60 days after the end of the applicable contract year.
We shall adjust the excess amount refunded for interest from the date of its
payment or for changes in Accumulated Value attributable to the excess amount.
If the excess amount is not refunded by then, the death benefit under this
policy shall be increased retroactively and prospectively so that at no time is
this death benefit ever less than the amount needed to ensure such tax
qualification. To the extent that the death benefit as of any time is increased
by this provision, appropriate adjustments shall be made retroactively in any
cost of insurance or supplemental benefits as of that time that are consistent
with such an increase.
<PAGE>
Unless specified otherwise by you in writing, it is intended that this policy
will not be treated as a Modified Endowment Contract (MEC) under the Internal
Revenue Code. To that end, the provisions of this policy, including any other
rider, benefit or endorsement, are to be interpreted to prevent the policy from
being subject to such treatment, notwithstanding any other provisions to the
contrary.
If at any time the premiums or other amounts paid under the policy exceed the
limit for avoiding such MEC treatment, unless otherwise specified in writing by
you that such MEC treatment is acceptable, such excess amount shall be removed
from the policy as of the date of its payment, and any appropriate adjustment in
the policy's death benefit shall be made as of such date. This excess amount
shall be refunded to the owner no later than 60 days after the end of the
applicable contract year. We shall adjust the excess amount refunded for
interest from the date of its payment or for changes in Accumulated Value
attributable to the excess amount. If the excess amount is not refunded by then,
the death benefit under the policy shall be increased retroactively and
prospectively to the minimum amount necessary (e.g., to the end of any test
period) so that at no time is this death benefit ever less than the amount
needed to avoid such MEC treatment. To the extent that the death benefit as of
any time is increased by this provision, appropriate adjustments shall be made,
retroactively or otherwise, in any cost of insurance or supplemental benefits as
of that time that are consistent with such an increase.
Death Benefit Proceeds - When we receive proof that both insureds' deaths
occurred while this policy was in force, we will pay the death proceeds in
effect for this policy as of the date of the survivor's death. If both insureds
die either simultaneously or in circumstances where it is not clear which
insured died first, the older of the two insureds will be deemed to be the
survivor. Proof of death of each insured should be sent to the Home Office or to
an agent of the Company within 90 days of death.
We will pay the death benefit proceeds to the beneficiary. The death benefit
proceeds are equal to the death benefit provided by your policy, as of the date
of death, less any debt and less any due and unpaid monthly deductions occurring
during the grace period. The actual death benefit proceeds paid are subject to
the conditions and adjustments defined in other policy provisions, such as
General Provisions, Withdrawals and Policy Loans.
We will pay interest on death benefit proceeds from the date of the survivor's
death to the date of payment at a date not less than 4%, or if higher, the
interest rate required by the state in which this policy is issued.
Decrease Provision - Subject to PM's approval, the owner may decrease the Face
Amount of insurance if such request is made:
- while either or both insureds are living;
- after the first policy year;
- no more often than once in any policy year; and
- in writing while this policy is in force.
The effective date of the decreased Face Amount will be the first monthly
payment date on or following the date the written request is received by us.
A decrease in Face Amount during the first ten policy years will result in
surrender charges being deducted from the Accumulated Value. For more
information, see the Surrender Charge provision.
<PAGE>
A supplemental schedule of benefits and premiums will be issued. This schedule
will include the following information:
- the effective date of the decreased Face Amount;
- the amount of the decrease and the decreased Face Amount; and
- the new Guideline Premiums.
The request for a decrease in the face amount will be subject to the Guideline
Premiums Limitation as defined in the Internal Revenue Code. This may result in
a refund of premiums and/or the distribution of Accumulated Value in order to
maintain compliance with such limitations. Such request will not be allowed if
the resulting Guideline Premiums could cause an amount in excess of the Net Cash
Surrender Value to be distributed from the policy. The Face Amount of this
policy may not be decreased to less than our minimum issue limit in effect on
the date of the request.
Unless specified otherwise by you in writing, no request for a face amount
decrease will be processed if the decrease would cause the policy to be treated
as a MEC.
ACCUMULATED VALUE
Accumulated Value - The Accumulated Value on any date is the sum of your
policy's Accumulated Value in the Fixed and Variable Accounts, plus the amount
set aside in the Loan Account to secure any policy debt and any interest
credited thereon.
The amount set aside to secure debt in the Loan Account on each policy
anniversary is equal to the amount of debt. During each policy year, the amount
in the Loan Account on any date is:
- the amount in the Loan Account on the prior anniversary increased by
interest;
- plus any loan taken since the prior anniversary increased by interest;
and
- minus any loan amount repaid since the prior anniversary increased by
interest.
Fixed Account - The Accumulated Value in the Fixed Account on any date is:
- the Accumulated Value in the Fixed Account on the prior monthly payment
date increased by interest;
- plus the amount of any premiums less Premium Load received and allocated
to the Fixed Account since the last monthly payment date, increased by
interest;
- minus the monthly deduction and other deductions due, if any, and
assessed against the Fixed Account increased by interest;
- minus the amount of any withdrawals, or transfers from the Fixed Account,
including transfers to the Loan Account, since the last monthly payment
date, increased by interest; and
- plus the amount of any transfer to the Fixed Account, including transfers
from the Loan Account, since the last monthly payment date, increased by
interest.
Variable Accounts - Assets in the Variable Accounts are divided into
accumulation units, which are a measure of value used for bookkeeping purposes.
We credit your policy with accumulation units in each Variable Account as a
result of:
- the amount of any premiums less Premium Load received and allocated to
the Variable Account; and
<PAGE>
- transfers of Accumulated Value to the Variable Account, including
transfers from the Loan Account.
We debit accumulation units in each Variable Account as a result of:
- transfers from the Variable Account, including transfers to the Loan
Account;
- withdrawals from the Variable Account; and
- the monthly deduction and other deductions due, if any, and assessed
against the Variable Account.
To determine the number of accumulation units debited or credited in connection
with a transaction, we divide the dollar amount of the transaction by the unit
value of the affected Variable Account. The unit value of each Variable Account
is determined on each Valuation Date. The number of units in each Variable
Account will not change because of subsequent changes in unit value.
To calculate the unit value of a Variable Account on any Valuation Date, we
adjust the unit value from the previous Valuation Date, for:
- the investment performance of the Variable Account;
- any dividends or distributions paid to the Variable Account;
- charges, if any, that may be assessed by us for income taxes attributable
to the operation of the Variable Account.
A Valuation Date is each day required by applicable law and currently includes
each day that both the New York Stock Exchange is open for trading and Pacific
Mutual's administrative offices are open. If any transaction or event is
scheduled to occur on a day that is not a Valuation Date, such transaction or
event will be deemed to occur on the next following Valuation Date unless
otherwise specified.
To determine your Accumulated Value in each Variable Account, we multiply the
number of units in the Variable Account by the unit value of such account.
Interest - We will credit interest on the Accumulated Value in the Fixed Account
at a rate not less than .32737% per month, compounded monthly. This is
equivalent to an annual effective rate of 4%. At our discretion, we may credit
a higher rate of interest periodically. We will credit interest on the amount in
the Loan Account at a rate of .32737% per month, compounded monthly. This is
equivalent to an annual effective rate of 4%.
On each policy anniversary, any interest earned and held in the Loan Account
will be transferred to the Fixed and Variable Accounts in accordance with your
most recent premium allocation instructions.
Transfers - On and after the Free Look Transfer Date and while your policy is in
force, you may, upon written request, transfer your Accumulated Value, or a part
of it, among the Fixed and Variable Accounts subject to the following. No
transfer may be made if the policy is in a grace period and the required premium
has not been paid. Only one transfer from the Fixed Account may be made in any
twelve month period.
Transfers from the Fixed Account to the Variable Accounts will be limited to the
greater of 25% of the Accumulated Value in the Fixed Account or $5,000 in any
year. Transfers from the Variable Accounts to the Fixed Account may be made only
during the policy month preceding each policy anniversary.
No charges are currently imposed upon a transfer. We reserve the right at a
future date to limit the size of transfers and remaining balances, to assess
transfer charges and to limit the number and frequency of transfers.
<PAGE>
POLICY CHARGES
Monthly Deduction - A Monthly Deduction for a policy month is due on each
monthly payment date and is equal to the sum of the following items:
- the monthly Cost of Insurance Charge;
- the Administrative Charge;
- the Mortality and Expense Risk Charge; and
- the monthly charge of any riders or benefits.
The Monthly Deduction will be charged proportionately to the Accumulated Value
in each Variable Account and the Fixed Account on the monthly payment date.
Cost of Insurance Charge - Beginning on the policy date and monthly thereafter,
there will be a charge equal to the Cost of Insurance applicable to the policy
face amount.
The monthly Cost of Insurance Charge for the death benefit payable under this
policy is determined as follows: (1) is multiplied by the result of (2) minus
(3), where:
- (1) is the applicable monthly Cost of Insurance Rate;
- (2) is the death benefit at the beginning of the policy month divided by
1.00327374; and
- (3) is the Accumulated Value at the beginning of the policy month before
the Monthly Deduction due, including any interest credited to the Loan
Account.
Cost of Insurance Rates - The Cost of Insurance Rates are based on the policy's
duration and on the two insureds' ages and risk classifications on the policy
date. The current monthly Cost of Insurance Rates will be determined by us.
These rates will not exceed the guaranteed maximum monthly Cost of Insurance
Rates shown on the policy specifications pages. Any changes in the Cost of
Insurance Rates will apply uniformly to all pairs of insureds of the same ages,
risk classifications and duration under this policy.
Mortality and Expense Risk Charge - The Mortality and Expense Risk Charge is to
compensate us for the risk we assume that mortality and expenses will be greater
than estimated. The Mortality and Expense Risk Charge consists of the following:
- a maximum monthly charge of .00025 (.30% annually) in the first 20 policy
years; and .000083333 (.10% annually) thereafter, multiplied by the
result of the Accumulated Value at the beginning of the policy month less
the Cost of Insurance Charge and less the monthly charge for any riders
or benefits.
- during the first 10 policy years, a monthly charge equal to the rates
shown in the policy specifications pages, multiplied by the Face Amount
of the policy at issue.
Administrative Charge - Beginning on the policy date and monthly thereafter,
there will be an Administrative Charge against the Accumulated Value. The amount
of this charge will not exceed the amount shown on the policy specifications
pages.
If you already own a policy under PM form 96-56, we will waive the
Administrative Charges of this policy while Administrative Charges are being
paid under the other policy, if the insureds of both policies are the same.
However, we will deduct a charge of $200 from the initial premium of this
policy.
<PAGE>
Premium Load - A Premium Load will be charged each time a premium is paid to
cover state premium tax, federal tax and contribute towards covering our sales
and distribution expenses. The Premium Load consists of the following:
- a sales load equal to 5% in the first ten policy years and 3% thereafter;
- a charge of 2.35% for state premium taxes; and
- a charge of 1.50% for federal taxes.
The Premium Load associated with each premium will be immediately deducted from
the premium paid.
We reserve the right to increase the Premium Load with respect to the load for
state premium taxes and federal taxes. We will only increase the Premium Load if
the effective taxes paid by us increase.
Surrender Charge - A surrender charge will be deducted from the Accumulated
Value upon surrender of the policy. The surrender charge is needed to help pay
for underwriting, policy issue and sales costs.
The total surrender charge is equal to the sum of an underwriting surrender
charge and a sales surrender charge.
The underwriting surrender charge is shown on the policy specifications pages.
It remains level for the first policy year and then decreases by 0.9259% per
month to zero at the 120th month.
The sales surrender charge is equal to 25% of the premiums paid up to the sales
surrender target. The sales surrender target is shown on the policy
specifications pages. The sales surrender charge increases as premiums are paid
until the sales surrender target is reached. After the first policy year, the
sales surrender charge, as calculated above, is adjusted by multiplying by a
reduction factor. This reduction factor is equal to 99.0741% in the 13th month
and reduces by .9259% per month to zero at the 120th month.
A surrender charge may also be deducted on a decrease in Face Amount. In the
event of a decrease, the surrender charge deducted is a portion of the charge
that would apply to a full surrender of the policy. The surrender charge
deducted will be determined by dividing the amount of the decrease by the Face
Amount immediately prior to the decrease and multiplying the result by the
surrender charge.
Surrender charges resulting from Face Amount decreases will reduce the
Accumulated Value. They will be allocated proportionately to the Accumulated
Value in the Fixed and Variable Accounts at the time of the Face Amount
decreases.
After a Face Amount decrease, the total surrender charge schedule is reduced.
The new total surrender charge schedule will be determined by dividing the Face
Amount after the decrease by the Face Amount immediately prior to the decrease
and multiplying the result by the total surrender charge schedule in effect
before the decrease.
Withdrawal Fee - A withdrawal fee of $25 will be deducted from the Accumulated
Value each time a partial withdrawal occurs. The withdrawal fee will be
deducted from the Fixed and Variable Accounts in the same proportion as the
partial withdrawal.
Other Deductions - In addition to the charges imposed under Premium Load and
elsewhere, we reserve the right to make a charge for federal, state or local
taxes that may be attributable to the Variable Accounts or to our operations
with respect to this policy if we incur any such taxes.
<PAGE>
SURRENDER AND WITHDRAWAL OF VALUES
Surrender - Upon written request while either insured is living you may
surrender this policy for its Net Cash Surrender Value. The policy will
terminate on the date the request is received at the Home Office.
Net Cash Surrender Value - The Net Cash Surrender Value is the Cash Surrender
Value less any policy debt.
Cash Surrender Value - The Cash Surrender Value is the Accumulated Value less
any surrender charge.
Withdrawals - Withdrawals of the Net Cash Surrender Value may be taken as
follows:
Upon written request on or after the first policy anniversary while either
insured is living, you may withdraw a portion of the Net Cash Surrender Value of
this policy as a partial withdrawal. The Withdrawal Fee described above will
apply.
A partial withdrawal may cause a decrease in the Face Amount if the Death
Benefit Option is A or D. The Face Amount will be reduced by the excess, if
any, of the Face Amount over the result of (a) minus (b) where:
- (a) is the death benefit immediately prior to the partial withdrawal; and
- (b) is the amount of the partial withdrawal.
However, for the first withdrawal in each of the first 15 policy years, the Face
Amount will be reduced only to the extent that the withdrawal exceeds the lesser
of $10,000 or 10% of the Cash Surrender Value.
Partial withdrawals will be subject to the following conditions: The amount of
each withdrawal must be at least $500 and the Net Cash Surrender Value remaining
after each withdrawal must be at least $500. Also, if there is any policy debt
at the time of each withdrawal, the amount of the withdrawal is limited to the
excess, if any, of the Cash Surrender Value immediately prior to the withdrawal
over the result of the debt divided by 90%.
The amount of each withdrawal will be allocated proportionately to the
Accumulated Value in the Fixed and Variable Accounts unless otherwise requested
by you. If the survivor dies after the request for a withdrawal is sent to us
and prior to the withdrawal being paid, the amount of the withdrawal will be
deducted from the death benefit proceeds.
Unless specified otherwise by you in writing, no request for a partial
withdrawal will be processed if the partial withdrawal would cause the policy to
be treated as a MEC.
INCOME BENEFITS
Income Benefits - Surrender or withdrawal benefits may be used to purchase a
lifetime monthly income. Death benefits may be used to purchase a monthly income
for the lifetime of the beneficiary. Monthly income payments will automatically
be guaranteed to continue for at least ten years, unless another form of payment
is requested. Under the automatic form of payment, if the income recipient dies
before the end of the ten-year period, payments will continue to the end of the
ten-year period to a person designated by the income recipient in writing.
Other options of monthly income benefits are available upon request. We may
require evidence of the income recipient's survival when monthly income payments
have been made for more than ten years.
<PAGE>
The purchase rates for the monthly income will be set periodically by the
Company. However, under the automatic form, the monthly income bought by each
$1000 of benefit amount will always be at least as large as that shown below.
<TABLE>
<CAPTION>
Single-Life Single-Life
10-Years Certain 10-Years Certain
Age Monthly Income Age Monthly Income
<S> <C> <C> <C>
30 $3.12 54 $4.15
32 3.17 56 4.30
34 3.23 58 4.47
36 3.29 60 4.66
38 3.35 62 4.87
40 3.42 64 5.10
42 3.50 66 5.36
44 3.58 68 5.65
46 3.67 70 5.97
48 3.78 72 6.32
50 3.89 74 6.69
52 4.01 75 6.89
</TABLE>
Monthly income amounts for ages not shown are halfway between the two amounts
for the nearest two ages which are shown.
Guaranteed amounts for ages under 30 are the same as those for age 30;
guaranteed amounts for ages over 75 are the same as those for age 75. Amounts
shown are based on 1983 Table a mortality with interest at 3%. This benefit is
not available if the income would be less than $100 a month.
POLICY LOANS
Policy Loans - You may obtain loans by written request while this policy is in
force on the sole security of the amount in the Loan Account for this policy.
Amount Available - The amount available for a loan is equal to 100% of the
Accumulated Value in the Fixed Account plus 90% of the Accumulated Value in the
Variable Accounts, less any surrender charges that would be imposed if the
policy were surrendered on the date the loan is taken. The amount of a loan
must be at least $500.
PM may defer a loan for up to six months from the date of request. However, we
will not defer payment of any loan if it is to be used to pay the premium on any
policy currently in force and issued by the company.
Loan Interest - Interest will accrue daily and is payable in arrears at the
annual rate of:
- 4.50% for years one through ten; and
- 4.25% for years eleven and after.
Any loan interest not paid when due will be added to the loan principal and bear
interest at the same rate of interest.
<PAGE>
Loan Account - When a loan is taken, an amount equal to the loan is transferred
from the Fixed and Variable Accounts into the Loan Account to secure the loan.
Unless you request otherwise, loan amounts will be deducted from the Fixed and
Variable Accounts on a proportionate basis, up to the amount available. We will
credit interest monthly on amounts in the Loan Account at a rate equivalent to
an annual effective rate of 4%.
On each policy anniversary, if the amount in the Loan Account exceeds policy
debt, the excess will be transferred from the Loan Account to the Fixed and
Variable Accounts according to your most recent instructions. If policy debt
exceeds the amount in the Loan Account, an amount equal to such excess will be
transferred from the Fixed and Variable Accounts on a proportionate basis to the
Loan Account.
Repayment - Loans may be repaid at any time prior to lapse of this policy. An
amount equal to the portion of any loan repaid, but not more than the amount in
the Loan Account, will be transferred from the Loan Account to the Fixed and
Variable Accounts according to your most recent instructions.
Any payment we receive from you while you have a loan will be first considered a
premium payment, unless you tell us in writing it is a loan payment.
GENERAL PROVISIONS
Entire Contract - This policy is a contract between the Owner and PM. This
policy, the attached copy of the initial application, any applications for
reinstatement, all subsequent applications to change the policy, any
endorsements, riders or benefits are the entire contract.
Only the Chief Executive Officer, President or Secretary of PM is permitted to
change this contract or waive any of its terms. The change must be in writing.
All statements in the application shall, in the absence of fraud, be deemed
representations and not warranties. PM will not use any statement to contest
this policy or defend a claim on grounds of misrepresentation unless the
statement is in the application or any subsequent applications.
Incontestability - Except for failure to pay premiums, this policy cannot be
contested after the expiration of the following time period:
- The initial Face Amount cannot be contested with respect to a given
insured after the policy has been in force during that insured's lifetime
for two years from the policy date.
If this policy has been reinstated, it cannot be contested with respect to a
given insured after it has been in force during that insured's lifetime for two
years from the date of reinstatement. Except for failure to pay premiums, in no
event will a contest be made after reinstatement unless there is a material
misrepresentation in the reinstatement application.
This policy will terminate upon successful contest with respect to either
insured.
Dividends - The current dividend scale is zero and it is not expected that
dividends will be paid. Any dividends that do become payable will be paid in
cash annually.
Suicide Exclusion - If either insured dies by suicide, while sane or insane,
within two years of the policy date, no death benefit proceeds will be paid.
Instead, we will return the sum of the premiums paid, less the sum of any debt,
any partial withdrawal amounts, and any dividends paid by us in cash.
<PAGE>
Misstatement - If there is a misstatement of either insured's age or sex in the
application, the Face Amount shall be adjusted as follows in order to reflect
the correct age or sex. The adjusted Face Amount shall equal (a) times (b)
divided by (c) where:
(a) is the Face Amount before this adjustment;
(b) is the monthly Cost of Insurance Rate actually used to calculate Cost
of Insurance Charges in the policy year in which the misstatement is
discovered, based on the misstated age or sex; and
(c) is the monthly Cost of Insurance Rate for the policy year in which the
misstatement is discovered, based on the correct age and sex.
For all policy months after the policy month in which the misstatement is
discovered, the Accumulated Value will be calculated using Cost of Insurance
Charges, Rider Charges and Benefit Charges based on the correct age and sex.
The Accumulated Value for the policy months through the month in which the
misstatement is discovered will not be recalculated. Surrender Charges and
Mortality and Expense Risk Charges will not be recalculated.
If unisex Cost of Insurance Rates apply, no adjustment will be made for a
misstatement of sex.
Reports - A report will be mailed to you at the end of each policy quarter to
your last known address. This report will include the following information for
the policy quarter:
-the Accumulated Value;
-the Cash Surrender Value;
-the current death benefit;
-transactions that occurred during the policy quarter;
-existing debt;
-changes in the Guideline Premiums;
-surrender charges; and
-any information required by law.
In addition to the above reports, we will send you annual financial statements
for the Separate Account and annual and semi-annual financial statements for the
designated investment company or companies in which the Separate Account
invests, the latter of which will include a list of the portfolio securities of
the investment company, as required by the Investment Company Act of 1940 and/or
any other reports as required by federal securities law.
Policy Illustrations - Upon request we will give you an illustration of the
future benefits under this policy based upon both guaranteed and current cost
factor assumptions. However, if you ask us to do this more than once in any
policy year, we reserve the right to charge you a fee, not to exceed $25.00, for
this service.
Basis of Values - A detailed statement showing how values are determined has
been filed with the state insurance department. No values are less than the
minimums required by the Standard Nonforfeiture Law and by the law in the state
in which this policy is delivered. All guaranteed values and the guaranteed
maximum monthly Cost of Insurance Rates are based on the 1980 CSO Mortality
Table (ANB) and interest at the rate of 4% per year. For policies that are
issued on a unisex basis, the 1980 CSO Mortality Table B (ANB) applies.
<PAGE>
Ownership of Assets - We have the exclusive and absolute control of our assets,
including all assets in the Separate Account.
Compliance - We reserve the right to make any change to the provisions of this
policy to comply with, or give you the benefit of, any federal or state statute,
rule, or regulation, including but not limited to requirements for life
insurance contracts under the Internal Revenue Code or any state.
We will provide you with a copy of any such change, and will also file such a
change with the insurance supervisory official of the state in which this policy
is delivered. You have the right to refuse any such change.
PAYMENTS
Variable Accounts - We will calculate the Net Cash Surrender Value on surrender,
partial withdrawals, and loan proceeds based on allocations made to the Variable
Accounts, and unless transfers are restricted, transfers between Variable
Accounts or from Variable Accounts to the Fixed Account based on allocations
made to the Variable Accounts as of the end of the Valuation Date on or next
following the day on which such instructions are received. We will calculate
death benefit proceeds based on allocations made to the Variable Accounts as of
the end of the Valuation Date on or next following the day on which the
survivor's death occurs. We will pay such amounts and will effect a transfer
between Variable Accounts within seven days after we receive all the information
needed to process a payment or transfer.
However, we may postpone the calculation or payment of such a payment or
transfer of amounts based on investment performance of the Variable Accounts if:
The New York Stock Exchange is closed on other than customary weekend and
holiday closings or trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission (SEC); or
An emergency exists, as determined by the SEC, as a result of which
disposal of securities is not reasonably practicable to determine the value
of the Account assets; or
The SEC by order permits postponement for the protection of policy owners.
Fixed Account - As to amounts allocated to the Fixed Account, we may defer
payment of any Net Cash Surrender Value on surrender, partial withdrawals, or
loan amounts or defer transfers from the Fixed Account for up to six months
after we receive a request for it. We will credit interest, at a rate of at
least 4% annually, on any Net Cash Surrender Value or withdrawal benefit derived
from the Fixed Account that we defer for 30 days or more. However, we will not
defer payment of any such amounts if they are to be used to pay the premium on
any policy issued by the company.
SEPARATE ACCOUNT PROVISIONS
Separate Account - We established the Separate Account and maintain it under the
laws of California. The separate Account is divided into subaccounts, called
Variable Accounts. Realized and unrealized gains and losses from the assets of
each Variable Account are credited or charged against it without regard to our
other income, gains, or losses. Assets may be put in our Separate Account to
support this policy and other variable life insurance policies. Assets may be
put in our Separate Account for other purposes, but not to support contracts or
policies other than variable life contracts or policies.
<PAGE>
The assets of our Separate Account are our property. The portion of its assets
equal to the reserves and other policy liabilities with respect to our Separate
Account will not be chargeable with liabilities arising out of any other
business we conduct. We may transfer assets of a Variable Account in excess of
the reserves and other liabilities with respect to that account to another
Variable Account or to our general account. All obligations arising under the
policy are general corporate obligations of Pacific Mutual. We do not hold
ourselves out to be trustees of the Separate Account assets.
Variable Accounts - Each Variable Account may invest its assets in a separate
class of shares of a designated investment company or companies. The Variable
Accounts of our Separate Account that were available for your initial
allocations, are shown on the policy specifications pages. The allocations that
you initially choose are shown on the copy of the application attached to this
Policy. From time to time we may make other Variable Accounts available to you.
We will provide you with written notice of all material details including
investment objectives and all charges.
We reserve the right, subject to compliance with the law then in effect, to:
- change or add designated investment companies;
- add, remove or combine Variable Accounts;
- add, delete or make substitutions for the securities that are held or
purchased by the Separate Account or any Variable Account;
- register or deregister any Variable Account under the Investment Company
Act of 1940;
- to change the classification of any Variable Account;
- operate any Variable Account as a managed investment company or as a unit
investment trust;
- combine the assets of any Variable Account with other separate accounts
or subaccounts thereof of PM or an affiliate thereof;
- transfer the assets of any Variable Account to other separate accounts or
subaccounts thereof of PM or an affiliate thereof;
- run any Variable Account under the direction of a committee, board, or
other group;
- restrict or eliminate any voting rights of policy owners with respect to
any Variable Account, or other persons who have voting rights as to any
Variable Account. Also, unless required by law or regulation, an
investment policy may not be changed without our consent;
- change the allocations permitted under the policy;
- terminate and liquidate any Variable Account; and
- comply with law.
If any of these changes result in a material change in the underlying
investments of a Variable Account of our Separate Account, we will notify you of
such change.
We will not change the investment policy of the Separate Account without
following the filing and other procedures of the Insurance Commissioner in the
State of California and without following the filing and other procedures
established by insurance regulators of the state of issue.
<PAGE>
[LETTERHEAD OF PACIFIC MUTUAL LIFE INSURANCE COMPANY]
Form 96-56
<PAGE>
EXHIBIT 99.1(5)(b)
Accelerated Living Benefit Rider
<PAGE>
ACCELERATED LIVING BENEFIT RIDER
THIS RIDER IS ATTACHED TO AND MADE PART OF YOUR POLICY.
ISSUE DATE: _________________________________
POLICY NUMBER: ____________________________
AN ACCELERATED BENEFIT RECEIVED UNDER THIS RIDER MAY BE TAXABLE. YOU SHOULD
CONSULT YOUR PERSONAL TAX ADVISOR PRIOR TO REQUESTING THIS BENEFIT.
ANY BENEFIT RECEIVED UNDER THIS RIDER MAY IMPACT YOUR ELIGIBILITY FOR MEDICAID
OR OTHER GOVERNMENT BENEFITS.
This rider is not meant to cause involuntary access to proceeds ultimately
payable to the beneficiary. Therefore, this benefit is not available:
a) if either the owner or insured is required by law to use this benefit to meet
the claims of creditors, whether in bankruptcy or otherwise; or
b) if either the owner or insured is required by a government agency to use this
benefit in order to apply for, obtain or otherwise keep a government benefit or
entitlement.
ACCELERATED BENEFIT
The owner may elect to receive, while the insured is living, a portion of the
policy's proceeds. We will pay an Accelerated Benefit if an insured has been
diagnosed with a non-correctable terminal illness and has a life expectancy of 6
months or less.
DEFINITIONS
ACCELERATED BENEFIT PAYMENT is the actual dollar amount of benefit you will
receive under this rider.
REQUESTED PORTION is the amount of the policy proceeds the owner requests. The
Requested Portion divided by the Eligible Coverage will be called the Requested
Percentage. The Requested Portion cannot exceed the lesser of a) 50% of the
Eligible Coverage, or b) $250,000 for all policies in force with us.
ELIGIBLE COVERAGE is the portion of the policy proceeds which will qualify for
determining the Accelerated Benefit under this rider.
The Eligible Coverage includes:
- the base policy death benefit;
- any paid-up additions; and
- any term rider, term policy, or term coverage on the primary insured that
has at least two years of coverage remaining. For coverage amounts that
vary by year, the lowest coverage amount during the remaining two year
period will be used.
- Survivor Life policies will be eligible for acceleration only after the
death of the first insured and the surviving insured has been diagnosed as
terminally ill. Any term rider, term policy or term coverage on the
surviving insured that has at least two years of coverage remaining, will
be eligible for acceleration. For coverage amounts that vary by year, the
lowest coverage amount during the remaining two year period will be used.
R92-ABR 1
<PAGE>
Eligible Coverage does not include:
- any insurance provided under the policy on the life of someone other than
the insured;
- the face amount of any scheduled increase(s) in insurance as provided by an
additional benefit rider during the 12 month period after the date the
accelerated payment is requested;
- the amount of any accidental death benefit.
The minimum Accelerated Benefit Payment amount is $500. The Accelerated Benefit
will be paid either in a lump sum or any other payment plan available at the
time of payment. WE WILL PAY THE ACCELERATED BENEFIT AMOUNT ONLY ONCE PER
INSURED. If a settlement option is selected and the insured dies before all
payments are made, the remaining amount will be paid to the beneficiary.
ACCELERATED BENEFIT PAYMENT
The Accelerated Benefit Payment will be determined as of the date we approve
your written request. Your Accelerated Benefit Payment will equal the Requested
Portion less the following adjustments:
1. An actuarial discount will apply to the Requested Portion. This
discount reflects the early payment of the Requested Portion of your policy.
The discount will be based on an annual interest rate declared by us and
which is in effect as of the date we approve your written request.
2. If there is a policy loan outstanding on your policy as of the date we
approve your written request, we will reduce the Requested Portion in order
to repay a portion of the outstanding policy loan equal to the Requested
Percentage times the outstanding loan.
3. A reduction to the Requested Portion will be applied to any premiums
due and unpaid if the policy has entered the Grace Period at the time we
approve your request.
4. An administrative charge not to exceed $150.
We will refund the amounts discussed in 1. and 4. above should the death of the
Insured occur within 30 days of the Accelerated Benefit Payment.
IMPACT ON POLICY
After an Accelerated Benefit Payment is made, the policy and all riders will
remain in force subject to the following adjustments. The policy death benefit,
any cash value, any paid-up additions, Accumulated Value, if any, and any term
insurance eligible to be accelerated under this rider, and any required premium
payments will be reduced by the Requested Percentage. Any outstanding policy
loan will be reduced as specified in the Accelerated Benefit Payment Section.
Any adjustment in Accumulated Value will be allocated to the Fixed Account and
Variable Accounts on a prorata basis. Cost of Insurance Charges will be
adjusted to reflect the reduction in the death benefit.
ELIGIBILITY
The following conditions must be met prior to any Accelerated Benefit Payment:
- The policy must be in force on the date the Accelerated Benefit Payment is
approved. If you have a term insurance policy or your policy is on Extended
Term, a minimum period of two years of coverage must be remaining in order
to qualify for an Accelerated Benefit Payment.
- We must receive written proof satisfactory to us that the insured's or for
Survivor Life policies the surviving insured's life-expectancy is 6 months
or less from the date of the written request. Proof will include the
certification by a licensed physician, who is not yourself or a member of
your family. Such proof should include documentation supported by clinical,
radiological or laboratory evidence of the condition. We reserve the right
to obtain a second medical opinion from a physician of our choice at our
expense.
R92-ABR 2
<PAGE>
- Owner or legal guardian must apply in writing for this benefit on a form
supplied by us.
- Written consent from any irrevocable beneficiary is required in order to
apply for accelerated benefits.
- Written consent from any assignee must be obtained.
INCONTESTABILITY
This rider is subject to the Incontestability provision of the base policy to
which it is attached.
EFFECTIVE DATE
This rider is effective on the issue date specified.
GENERAL PROVISIONS
There will be an administrative charge, not to exceed $150, which will be
deducted from the Accelerated Benefit.
This rider will terminate:
- on your written request;
- on lapse or termination of the policy; or
- when an Accelerated Benefit is paid under this rider.
Pacific Mutual Life Insurance Company
Chairman and Chief Executive Officer Secretary
R92-ABR 3
<PAGE>
EXHIBIT 99.1(5)(c)
Policy Split Option Rider
<PAGE>
POLICY SPLIT OPTION RIDER
BENEFIT - You may exchange this policy for two new individual policies, one on
each of the two insureds, subject to this rider's terms.
EXCHANGE CONDITIONS - To exercise this option, you must:
- request the exchange in writing on a form that we will provide;
- return the base policy; and
- provide evidence of insurability satisfactory to us for both insureds.
A $200 Administrative Charge will be deducted from the Accumulated Value of the
base policy on the day prior to the Exchange Date. This charge is to cover
expenses associated with the evaluation of the evidence of insurability.
We reserve the right to deduct a charge from the base policy's Accumulated Value
to cover PM's expenses arising from any state or federal taxes generated by the
exchange.
EXCHANGE DATE - The exchange will be effective on the Exchange Date, which is
the date all of the above exchange conditions are met.
NEW POLICIES - The exchange may be to any individual flexible premium adjustable
life policy that we regularly issue at the time of exchange, subject to our
approval. The policy date of each of the two new individual policies will be
the Exchange Date. The new policy on each insured will be based on that
insured's age and risk classification as of the Exchange Date. The new policies
will only take effect once the original policy has terminated and will not
provide any insurance until such time.
The Accumulated Value less the Surrender Charge under the original policy on the
day prior to the Exchange Date will be divided and allocated to the two new
individual policies in proportion to their face amounts. Any policy debt under
the original policy on the day prior to the Exchange Date will also be divided
and allocated to the new policies in proportion to their face amounts. This
will result in the Cash Surrender Value of each new policy being equal to the
Cash Surrender Value in the original policy multiplied by the face amount of the
new policy and divided by the sum of the face amounts of the two new policies.
The face amount of each new individual policy may be for any amount you elect,
provided that the sum of the face amounts of the two now policies does not
exceed the sum, as of the Exchange Date, of the base policy's Death Benefit plus
the Coverage Amount under the Last Survivor Added Protection Benefit, if such
benefit is attached to the base policy. Your signature of consent is required
if the face amounts of the two new individual policies are not equal.
Subject to our approval, riders or benefits may be added to the new policies
where available.
ASSIGNMENT - Any assignment of this policy will apply to each new individual
policy.
EFFECTIVE DATE - This rider is effective on the policy date unless otherwise
stated.
TERMINATION - Coverage under this rider will terminate on the earliest of:
- your written request; or
- the date that the first death of the two insureds occurs; or
- termination of the base policy; or
- the policy anniversary nearest the 80th birthday of the older of the two
insureds; or
- exercise of the option to exchange this policy under this rider.
1
<PAGE>
GENERAL CONDITIONS - This rider is part of the base policy to which it is
attached. All terms of the base policy which do not conflict with this rider's
terms apply to this rider.
In the event of any conflict between the terms of this rider and the terms of
the base policy, the terms of this rider shall prevail over the terms of the
base policy.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Chairman and Chief Executive Officer Secretary
2
<PAGE>
EXHIBIT 99.1(5)(d)
Last Survivor Added Protection Benefit (DRAFT)
<PAGE>
LAST SURVIVOR ADDED PROTECTION BENEFIT
COVERAGE - When we receive proof that the survivor's death occurred while this
benefit was in force, we will pay the Coverage Amount in effect, if any, under
this benefit on the date of the survivor's death.
COVERAGE AMOUNT - The Coverage Amount provided by this benefit in any policy
year is the amount you specified in the application for that policy year. This
Coverage Amount is also shown in the policy specifications pages; such amount
may be level or varying by policy year. Unscheduled increases or decreases in
the Coverage Amount may take place after the policy date as described below.
The initial Coverage Amount is the Coverage Amount on this benefit's effective
date.
UNSCHEDULED INCREASE IN COVERAGE AMOUNT - You may request an unscheduled
increase in the Coverage Amount subject to the following conditions:
- you provide evidence of insurability satisfactory to us for both insureds;
- both insureds consent to the increase;
- the effective date of the increase is after the first policy year;
- no previous increase became effective during the same policy year;
- the Coverage Amount is increased by at least $10,000; and
- we receive your written request for the increase while this policy is in
force.
The effective date of the unscheduled increase in the Coverage Amount will be
the first monthly payment date on or following the date all of the above
conditions are met.
An Administrative Charge of $200 will be deducted from the base policy's
Accumulated Value on the effective date of any unscheduled increase in the
Coverage Amount. This charge is to cover expenses associated with the
evaluation of the evidence of insurability.
Upon approval of any unscheduled increase, we will issue a supplemental schedule
of coverage, which will include the following information:
- the effective date of the increase in the Coverage Amount;
- the amount of the increase;
- each insured's risk classification for the increase; and
- the Guaranteed Maximum Monthly Cost of Insurance Rates applicable to the
increase.
UNSCHEDULED DECREASE IN COVERAGE AMOUNT - You may request an unscheduled
decrease in the Coverage Amount subject to the following conditions:
- you request the decrease while either or both insureds are living;
- the effective date of the decrease is after the first policy year;
- no previous decrease became effective during the same policy year; and
- we receive your written request for the decrease while this policy is in
force.
The effective date of the unscheduled decrease in the Coverage Amount will be
the first monthly payment date on or following the date all of the above
conditions are met. The existing Coverage Amount will be decreased or
eliminated in the following order:
- first, the most recent increase in the Coverage Amount;
R96-LSAPB 1
<PAGE>
- then, the next most recent increases successively; and
- finally, the initial Coverage Amount.
In the case of a Coverage Amount that varies by policy year, any unscheduled
decrease in the Coverage Amount which you request for any policy year will
require equivalent decreases in the Coverage Amount for future policy years.
You will be informed of such equivalent future decreases, and your consent will
be obtained before your requested decrease becomes effective.
Upon approval of any unscheduled decrease, we will issue a supplemental schedule
of coverage, which will include the following information:
- the effective date of the decrease in the Coverage Amount;
- the amount of the decrease; and
- the resulting Coverage Amount remaining in force after the decrease.
BENEFIT CHARGES - The monthly charge for this benefit is equal to the sum of the
Benefit Charges applicable to the following portions of the Coverage Amount:
- initial Coverage Amount remaining in force for that month; plus
- each increase in the Coverage Amount remaining in force for that month.
The Benefit Charge for each portion of the Coverage Amount noted above is
obtained by multiplying the applicable monthly Cost of Insurance Rate by the
appropriate portion of the Coverage Amount at the beginning of the policy month
divided by 1.00327374.
If there has been an unscheduled decrease in the Coverage Amount, see the
Unscheduled Decrease in Coverage Amount provision for a description of the order
in which the existing Coverage Amount has been decreased or eliminated.
COST OF INSURANCE RATES - The Cost of Insurance Rates for the initial Coverage
Amount are based on the policy duration and on the two insured's ages and risk
classifications on the policy date. The Cost of Insurance Rates for each
increase in the Coverage Amount are based on the policy duration applicable to
the increase and on the two insured's ages and risk classifications on the
effective date of the increase.
The current monthly Cost of Insurance Rates will be determined by the
Company and are subject to change by us at any time, but will not exceed the
Guaranteed Maximum Monthly Cost of Insurance Rates for this benefit shown on the
policy specifications pages. Any change in the current Cost of Insurance
Rates will apply uniformly for all pairs of insureds of the same ages, risk
classifications and policy duration under this benefit form.
The Cost of Insurance Rates used to calculate the Cost of Insurance Charges for
an increase in coverage necessary to meet the Guideline Minimum Death Benefit
will be the same as those used for the most recent Coverage Amount in force
under this benefit.
DEATH BENEFIT - The death benefit of the policy to which this benefit is
attached is modified to include the Coverage Amount under this benefit. The
death benefit for this policy will be determined by the death benefit option
selected for the base policy and will be one of the following:
OPTION A - The death benefit is the greater of:
- the base policy face amount plus this benefit Coverage Amount; or
- the Guideline Minimum Death Benefit.
R96-LSAPB 2
<PAGE>
OPTION B - The death benefit is the greater of:
- the base policy face amount plus this benefit Coverage Amount, plus the
Accumulated Value on the date of death; or
- the Guideline Minimum Death Benefit.
OPTION C - The death benefit is the greater of:
- the base policy face amount plus this benefit Coverage Amount, plus the sum
of the premiums paid to date minus the sum of any partial withdrawals taken
and any other distribution of the Accumulated Value to the date of death;
or
- the Guideline Minimum Death Benefit.
OPTION D - The death benefit is the greater of:
- the result of the base policy face amount plus this benefit Coverage
Amount, times the death benefit factor for the current policy year as shown
on the policy specifications pages; or
- the Guideline Minimum Death Benefit.
DECREASE/WITHDRAWALS
DECREASE - The Decrease provision of the policy to which this benefit is
attached is modified to include this benefit. This benefit will always be
decreased or eliminated before any decrease is applied to the base policy face
amount in effect on the policy date. For further details, please see the
Decrease provision of your contract.
WITHDRAWALS - The Withdrawals provision of the policy, to which this benefit is
attached, is modified to include this benefit. For the purpose of the
Withdrawals provision, the Last Survivor Added Protection Benefit is considered
part of the face amount of the policy. This benefit will always be decreased or
eliminated before any decrease is applied to the base policy face amount in
effect on the policy date. For details, please see the Withdrawals provision of
your contract.
MISSTATEMENT - The Misstatement provision of the policy, to which this benefit
is attached, is modified to include this benefit. For the purpose of the
Misstatement provision, the Last Survior Added Protection Benefit is considered
part of the face amount of the policy. For further details please see the
Misstatement provision of your contract.
RENEWAL - Coverage under this benefit is renewable annually until terminated as
described below under the Termination provision.
EFFECTIVE DATE - This benefit is effective on the policy date unless otherwise
stated.
TERMINATION - Coverage under this benefit will terminate on the earlier of:
- your written request;
- termination of the base policy; or
- upon the survivor's death.
GENERAL CONDITIONS - This benefit is part of the base policy to which it is
attached. As applied to this benefit, the periods stated in the base policy's
Incontestability and Suicide Exclusion provisions will start with this benefit's
effective date and any future increases in the Coverage Amount under this
benefit. All terms of the base policy which do not conflict with this benefit's
terms apply to this benefit.
In the event of any conflict between the terms of this benefit and the terms of
the base policy, the terms of this benefit shall prevail over the terms of the
base policy.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Chairman and Chief Executive Officer Secretary
R96-LSAPB 3
<PAGE>
EXHIBIT 99.1(5)(e)
Individual Annual Renewable Term Rider (DRAFT)
<PAGE>
INDIVIDUAL ANNUAL RENEWABLE TERM RIDER
COVERED PERSON - As used in this rider, "Covered Person" means any of the
individuals covered under this rider on the policy date. Covered Persons may be
deleted from or, with evidence of insurability satisfactory to us, added to this
rider. When this occurs, we will send you revised policy specifications pages.
This rider is only available to the two insureds under the base policy.
COVERAGE - When we receive proof that a Covered Person's death occurred while
this rider was in force, we will pay the Face Amount in effect on that Covered
Person under this rider on the date of that Covered Person's death.
FACE AMOUNT - The Face Amount provided by this rider may be level or varying by
policy year and is shown on the policy specifications pages. Unscheduled
increases or decreases in the Face Amount may take place after the policy date
as described below.
UNSCHEDULED INCREASE in FACE AMOUNT - You may request an unscheduled increase in
the Face Amount of this rider for any Covered Person subject to the following
conditions:
- you provide evidence of insurability satisfactory to us for that Covered
Person;
- that Covered Person consents to the increase;
- the effective date of the increase is after the first policy anniversary;
- no previous increase has been effective during the same policy year;
- the Face Amount is increased by at least $10,000; and
- we receive your written request for the increase while this policy is in
force.
The effective date of the unscheduled increase in the Face Amount will be the
first monthly payment date on or following the date all of the above conditions
are met.
An Administrative Charge of $100 will be deducted from the base policy's
Accumulated Value on the effective date of any unscheduled increase in the Face
Amount of this rider for any Covered Person.
This charge is to cover expenses associated with the evaluation of the evidence
of insurability.
Upon approval of any unscheduled increase, we will issue a supplemental schedule
of coverage, which will include the following information:
- the effective date of the increase in the Face Amount;
- the amount of the increase;
- the risk classification for the increase; and
- the Guaranteed Maximum Monthly Cost of Insurance Rates applicable to the
increase.
UNSCHEDULED DECREASE IN FACE AMOUNT - You may request an unscheduled decrease in
the Face Amount of this rider for any Covered Person subject to the following
conditions:
- you request the decrease while that Covered Person is living;
- the effective date of the decrease is after the first policy year;
- we receive your written request for the decrease while this policy is in
force; and
- no previous decrease has been effective in the same policy year.
The effective date of the unscheduled decrease in the Face Amount will be the
first monthly payment date on or following the date all of the above conditions
are met. The existing Face Amount will be decreased or eliminated in the
following order:
- first, the most recent increase in the Face Amount on that Covered Person;
R96-ART 1
<PAGE>
- second, the next most recent increases on that Covered Person successively;
and
- finally, the initial Face Amount on that Covered Person.
In the case of a Face Amount that varies by policy year, any unscheduled
decrease in the Face Amount which you request for any policy year will require
associated decreases in the Face Amount for future policy years. You will be
informed of such associated future decreases, and your consent will be obtained
before your requested decrease becomes effective.
Upon approval of any unscheduled decrease, we will issue a supplemental schedule
of coverage, which will include the following information:
- the effective date of the decrease in the Face Amount; and
- the amount of the decrease; and
- the resulting Face Amount remaining in force after the decrease.
RIDER CHARGES - The monthly charge for this rider is calculated separately for
each Covered Person. The monthly charge for each Covered Person is equal to the
sum of the Rider Charges applicable to the following portions of the Face
Amount:
- the portion of the initial Face Amount on that Covered Person remaining in
force for that month; plus
- any portion of each increase in the Face Amount on that Covered Person
remaining in force for that month.
The Rider Charge for each portion of the Face Amount noted above is obtained by
multiplying the applicable monthly Cost of Insurance Rate by the appropriate
Face Amount.
If there has been an unscheduled decrease in the Face Amount, see the
Unscheduled Decrease in Face Amount provision for a description of the order in
which the existing Face Amount has been decreased or eliminated.
COST OF INSURANCE RATES - The Cost of Insurance Rates for the initial Face
Amount are based on each Covered Person's age and risk classification on the
policy date. The Cost of Insurance Rates for each increase in the Face Amount
are based on each Covered Person's age and risk classification on the effective
date of the increase.
The nonguaranteed monthly Cost of Insurance Rates will be determined by the
Company and are subject to change by us at any time, but will not exceed the
Guaranteed Maximum Monthly Cost of Insurance Rates for this rider shown on the
policy specifications pages. Any change in the nonguaranteed Cost of Insurance
Rates will apply uniformly for all insureds of the same age and risk
classification under this rider form.
RENEWAL - Coverage under this rider is renewable annually until terminated as
described below under the Termination provision.
EFFECTIVE DATE - This rider is effective on the policy date unless otherwise
stated.
TERMINATION - Coverage under this rider will terminate for all Covered Persons
on the earlier of:
- your written request; or
- termination of the base policy.
In addition, coverage under this rider on any individual Covered Person will
terminate on the earlier of:
- death of that Covered Person; or
- the date that Covered Person reaches age 100.
R96-ART 2
<PAGE>
GENERAL CONDITIONS This rider is part of the base policy to which it is
attached. As applied to this rider, the periods stated in the base policy's
Incontestability and Suicide Exclusion provisions will start with this rider's
effective date and the date of any future increases in Face Amount under this
rider. All terms of the base policy which do not conflict with this rider's
terms apply to this rider.
In the event of any conflict between the terms of this rider and the terms of
the base policy, the terms of this rider shall prevail over the terms of the
base policy.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Chairman and Chief Executive Officer Secretary
R96-ART 3
<PAGE>
EXHIBIT 99.1(5)(f)
Enhanced Policy Split Option Rider (DRAFT)
<PAGE>
ENHANCED POLICY SPLIT OPTION RIDER
BENEFIT - While both insureds under the base policy are living, you may exchange
this policy for two new individual policies, one on each of the two insureds,
subject to this rider's terms. Evidence of insurability will not be required to
exercise this option.
EXCHANGE CONDITIONS - To exercise this option, you must request the exchange in
writing on a form that we will provide, and you must return the base policy
within 90 days after a change in the Federal Estate Tax Law which results in any
of the following:
1. complete removal or material limitation of . the Unlimited Marital
Deduction, as defined in the Internal Revenue Code. A material limitation
is defined as one which meets at least one of the following two conditions:
a. if the limitation is expressed as a percentage of the estate, the
limitation must cap the Unlimited Marital Deduction at 50"/'o or less
of the value of the estate;
b. if the limitation is expressed as a dollar amount, the limitation
must cap the Unlimited Marital deduction at an amount which is less
than the base policy face amount plus any Target Amount under the Last
Survivor Added Protection Benefit. if such benefit is attached to the
base policy.
2. reduction by 50% or more in the dollar amount of the Federal Unified
Credit, as defined in the Internal Revenue Code; or
3. subtraction of 25% or more from the percentage Federal Estate Tax rate
that would be applicable to the estate of the surviving spouse.
We reserve the right to deduct a charge from the base policy's Accumulated Value
to cover PM's expenses arising from any state -or federal taxes generated by
the,exchange.
EXCHANGE DATE - The exchange will be effective on the Exchange Date, which is
the date all of the above Exchange Conditions are met.
NEW POLICIES - The exchange may be to any individual flexible premium adjustable
life policy that we regularly issue at the time of exchange, subject to our
approval. The policy date of each of the two new individual policies will be
the Exchange Date. The new policy on each insured will be based on that
insured's age as of the Exchange Date, and risk classification as of the date of
the most recent increase in any rider face amount or benefit target amount, or
if there has been no such increase, as of the policy date. The new policies
will only take effect once the original policy has terminated and will not
provide any insurance until such time.
If either insured's risk classification under this policy is select nonsmoker
and you exchange to a policy that does not have the select nonsmoker risk
classification, the new policy will be issued as nonsmoker.
The Accumulated Value less the Surrender Charge under the original policy on the
day prior to the Exchange Date will be divided and allocated to the two new
individual policies in proportion to their face amounts. Any pol icy debt under
the original policy on the day prior to the Exchange Date will also be divided
and allocated to the new policies in proportion to their face amounts. This
will result in the Cash Surrender Value of each new policy being equal to the
Cash Surrender Value in the original policy multiplied by the face amount of the
new policy and divided by the sum of the face amounts of the two new policies.
The face amount of each new individual policy may be for any amount you elect,
up to one half of the sum as of the Exchange Date of the base policy's Death
Benefit plus the Coverage Amount under the Last Survivor Added Protection
Benefit, if such benefit is attached to the base policy. Your signature of
consent is required if the face amounts of the two new individual policies are
not equal.
R96-EPSO Page 1
<PAGE>
Subject to availability, riders or benefits may be continued or may be added to
the new policies only upon the provision of evidence of insurability
satisfactory to us.
SUICIDE EXCLUSION AND INCONTESTABILITY - The Suicide Exclusion and
Incontestability provisions will not apply to the new policies provided that
they have expired under the original policy.
If these provisions have not expired under the original policy, the time
remaining under these provisions will be transferred to each new policy.
Any new riders or new benefits added to the new policies will be subject to the
Suicide Exclusion and Incontestability provisions of the base policies.
ASSIGNMENT - Any assignment of this policy will apply to each new individual
policy.
EFFECTIVE DATE - This rider is effective on the policy date.
Termination - Coverage under this rider will terminate on the earliest of:
- your written request; or
- the date that the first death of the two insureds occurs under this
policy; or
- termination of the base policy; or
- the policy anniversary nearest the 80th birthday of the older of the two
insureds; or
- exercise of the option to exchange this policy under this rider.
GENERAL CONDITIONS - This rider is part of the base policy to which it is
attached. All terms of the base policy which do not conflict with this rider's
terms apply to this rider.
In the event of any conflict between the terms of this rider and the terms of
the base policy, the terms of this rider shall prevail over the terms of the
base policy.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Chairman and Chief Executive Officer Secretary
R96-EPSO Page 2
<PAGE>
EXHIBIT 99.1(6)(a)
Pacific Mutual's Articles of Incorporation
<PAGE>
ARTICLES OF INCORPORATION
of
PACIFIC MUTUAL LIFE INSURANCE COMPANY
ONE: The name of this corporation is
PACIFIC MUTUAL LIFE INSURANCE COMPANY.
TWO: The purposes for which this corporation is formed are:
(a) To transact the business of life insurance, including insurance upon the
lives of persons or appertaining thereto, and the granting, purchasing and/or
disposing of annuities; to transact the business of disability insurance,
including insurance appertaining to injury, disablement or death resulting to
the insured from accidents, and appertaining to disablements resulting to the
insured from sickness.
(b) To issue its policies and contracts of insurance upon a legal reserve basis,
including, but not limited to, participating insurance policies and contracts.
(c) To purchase, take in exchange, or by gift or otherwise, hold, own, maintain,
work, develop, subdivide, improve, sell, convey, encumber by mortgage, deed of
trust or otherwise, lease or otherwise acquire and dispose of, real and/or
personal property and any interest or right therein as provided by law; to
acquire, hold, erect, remodel, repair, operate, maintain, lease and sell
buildings of any and every kind and description as provided by law.
(d) To lend or borrow money and incur indebtedness as provided by law, to issue
bonds, debentures, coupons, notes and other negotiable or non-negotiable
instruments and/or securities, and to secure the same by mortgage, pledge, deed
of trust or otherwise as provided by law.
(e) To acquire the capital stock of other corporations, or any other property,
rights or franchise as provided by law; to hold, purchase or otherwise acquire,
sell, assign, transfer, mortgage, pledge, hypothecate or otherwise dispose of
shares of the capital sock of other evidences of indebtedness created by any
other corporation, or any other property rights or franchises as provided by
law; to aid in any manner any corporation whose stock, bonds, or other
obligations are held or are guaranteed in any manner by the corporation hereby
created, and to do any other acts or things for the preservation, protection,
improvement or enhancement of the value of any such stock, bonds or other
obligations as provided by law; and while the owner of any stock of other
corporations to exercise all of the rights and privileges of such ownership,
including the right to vote thereon, to the same extent as a natural person
might or could do as provided by law.
(f) To acquire all or any part of the assets of any other corporation authorized
to transact an insurance
<PAGE>
business, either from such corporation directly or from its conservator,
liquidator or receiver, and in connection with such acquisition to reinsure or
assume any or all of the obligations of such corporation to its policyholders or
other creditors and to execute such agreements with, or in favor of such
corporation, its conservator, liquidator or receiver, or its policyholders,
creditors or stockholders, as may be approved by the board of directors of this
corporation.
(g) Generally to carry on any other business necessarily or impliedly incidental
to or in any way connected with the foregoing purposes, or any of them; to have
and exercise all of the powers conferred by the laws of the State of California
upon corporations; to do any or all of the things hereinbefore set forth, either
as principal or as agent, and to the same extent as natural persons might or
could do; to enter into, make, perform and carry out contracts of every sort and
kind with any person, firm, association or corporation, private, public or
municipal, or body politic, or with the Government of the United States, or any
state or territory thereof, or any foreign government or municipal corporation
or body politic; to exercise all or any of its said powers and own and hold
property and to transact business in the State of California and elsewhere
within and without the United States; and, for the purpose of attaining or
furthering any of its objects, to do any and all other acts and things, and to
exercise all or any other powers, which a natural person could do or exercise,
which now or hereafter may be authorized by law.
(h) To carry on any other business or businesses not prohibited to domestic life
insurance companies, either as principal, partner, or agent, which this
corporation deems proper or convenient whether in connection with any of the
foregoing purposes or otherwise, or which may be calculated directly or
indirectly to promote the interest of this corporation or to enhance the value
of its property or business.
The foregoing clauses contained in this statement of purposes shall be construed
as purposes, objects and powers, and the statement contained in any clause shall
not be limited or restricted in any way by reference to or inference from the
terms of any other clause. Each such object, purpose and power shall be
regarded as an independent object, purpose or power, and shall be in furtherance
and not in limitation of each and/or every other object, purpose and power.
THREE: The county in the State of California where the principal office for the
transaction of the business of this corporation is to be located is Orange
County.
FOUR: This corporation shall be a nonstock life and disability insurance
corporation, conducted for the benefit of its members who shall be the
policyholders of the Participating and Non-Participating Life classes.
FIVE: (There is no article five).
SIX: (a) The number of the directors of this corporation shall be fifteen (15);
(b) The names and addresses of the persons who are appointed to act as the first
directors of this corporation are:
<PAGE>
Name Address
HARRY J. BAUER Edison Building, Los Angeles, CA
ASA V. CALL Pacific Mutual Building, Los Angeles, CA
ANDREW M. CHAFFEY California Bank Building, Los Angeles, CA
H. S. DUDLEY 19433 Roosevelt Highway, Los Angeles, CA
CAREY GROETEN 1472 Beaudry Blvd., Glendale, CA
GEORGE GUND The Riverside, Reno, Nevada
H. W. O'MELVENY 433 South Spring St., Los Angeles, CA
T. RUSSELL HARRIMAN 537 South Euclid Ave., Pasadena, CA
ALFRED G. HANN Pacific Mutual Building, Los Angeles, CA
A. N. KEMP Pacific Mutual Building, Los Angeles, CA
H. S. MacKAY, Jr. 458 South Spring St., Los Angeles, CA
D. C. McEWEN Pacific Mutual Building, Los Angeles, CA
HENRY S. McKEE 650 South Spring Street, Los Angeles, CA
LAWRENCE MORGAN 537 Las Palmas, Los Angeles, CA
HENRY M. ROBINSON Pacific Southwest Bldg., Los Angeles, CA
SEVEN: This corporation expressly reserves the right to amend its articles of
incorporation from time to time in such manner and for such purposes as may at
the time be permitted by law.
IN WITNESS WHEREOF, for the purpose of forming this corporation under the laws
of the State of California, we, the undersigned, constituting the incorporators
of this corporation and the persons named hereinabove as the first directors
thereof, have executed these articles of incorporation this 21st day of July,
1936.
Harry J. Bauer
Asa V. Call
Andrew M. Chaffey
<PAGE>
H. S. Dudley
Carey Groeten
George Gund
H. W. O'Melveny
T. Russell Harriman
Alfred G. Hann
H. S. MacKay, Jr.
D. C. McEwen
Henry S. McKee
Lawrence Morgan
Henry M. Robinson
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
On this 21st day of July, 1936, before me, E. W. MUHSFELD, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared HARRY J. BAUER, known to me to be the person whose name is
subscribed to the foregoing Articles of Incorporation, and acknowledged to me
that he executed the same.
WITNESS my hand and official seal.
E. W. MUHSFELD
Notary Public in and for the County of
Los Angeles, State of California. My
Commission expires June 27, 1940.
(Seal)
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
<PAGE>
On this 21st day of July, 1936, before me, E. W. MUHSFELD, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared ANDREW M. CHAFFEY, known to me to be the person whose name
is subscribed to the foregoing Articles of Incorporation, and acknowledged to me
that he executed the same.
WITNESS my hand and official seal.
E. W. MUHSFELD
Notary Public in and for the County of
Los Angeles, State of California. My
Commission expires June 27, 1940.
(Seal)
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
On this 21st day of July, 1936, before me, E. W. MUHSFELD, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared HENRY S. McKEE, known to me to be the person whose name is
subscribed to the foregoing Articles of Incorporation, and acknowledged to me
that he executed the same.
WITNESS my hand and official seal.
E. W. MUHSFELD
Notary Public in and for the County of
Los Angeles, State of California. My
Commission expires June 27, 1940.
(Seal)
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
On this 21st day of July, 1936, before me, E. W. MUHSFELD, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared HENRY M. ROBINSON, known to me to be the person whose name
is subscribed to the foregoing Articles of Incorporation, and acknowledged to me
that he executed the same.
WITNESS my hand and official seal.
E. W. MUHSFELD
Notary Public in and for the County of
Los
<PAGE>
Angeles, State of California. My
Commission expires June 27, 1940.
(Seal)
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
On this 21st day of July, 1936, before me, MILTON A. TAYLOR, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared ASA V. CALL, GEORGE GUND, H. W. O'MELVENY and H. S. MacKAY,
JR., known to me to be the persons whose names are subscribed to the foregoing
Articles of Incorporation, and acknowledged to me that they executed the same.
WITNESS my hand and official seal.
MILTON A. TAYLOR
Notary Public in and for the County of
Los Angeles, State of California.
(Seal)
STATE OF CALIFORNIA, ss:
COUNTY OF LOS ANGELES
On this 21st day of July, 1936, before me, E. W. MUHSFELD, a notary public in
and for said county and state, residing therein, duly commissioned and sworn,
personally appeared H. S. DUDLEY, CAREY GROETEN, T. RUSSELL HARRIMAN, ALFRED G.
HANN, A. N. KEMP, D. C. McEWEN and LAWRENCE MORGAN, known to me to be the
persons whose names are subscribed to the foregoing Articles of Incorporation,
and acknowledged to me that they executed the same.
WITNESS my hand and official seal.
E. W. MUHSFELD
Notary Public in and for the County of
Los Angeles, State of California. My
Commission expires June 27, 1940.
(Seal)
<PAGE>
EXHIBIT 99.1(6)(b)
BYLAWS
OF
PACIFIC MUTUAL LIFE INSURANCE COMPANY
AS AMENDED NOVEMBER 27, 1991
<PAGE>
BYLAWS
For the Regulation, Except As
Otherwise Provided by Statute
Or Its Articles of Incorporation,
of
Pacific Mutual Life Insurance Company
Article I. - OFFICES
SECTION 1. Principal Office. - The principal office for the transaction
of business of the corporation is hereby fixed and located at 700 Newport Center
Drive, City of Newport Beach, County of Orange, State of California.
SEC. 2. Other Offices. - Branch or subordinate offices may at any time
be established by the board of directors at any place or places where the
corporation is qualified to do business.
Article II. - MEETINGS OF MEMBERS
SECTION 1. - Place of Meetings. - The annual meeting of members shall be
held at 700 Newport Center Drive, Newport Beach, California. All other meetings
of members shall be held at any place within or without the State of California
designed by the board of directors pursuant to authority hereinafter granted to
said board. In the absence of any such designation, such meetings shall be held
at 700 Newport Center Drive, Newport Beach, California.
1
<PAGE>
SEC. 2. Annual Meetings. - The annual meetings of members shall be held
on the fourth Wednesday of March of each year at 9:00 a.m. of said day.
Written notice of each annual meeting may be given to each member
entitled to vote thereat either personally or by mail or other means of written
communication, charges prepaid, addressed to such member at his address
appearing on the books of the corporation or given by him to the corporation for
the purpose of notice. At the option of the corporation such notice may be
imprinted on premium notices or receipts or on both. If a member gives no
address, notice shall be deemed to have been given if sent by mail or other
means of written communication addressed to the place where the principal office
of the corporation is situated, or if published at least once in some newspaper
of general circulation in the county in which said office is located. All such
notices shall be sent to each member entitled thereto not less than seven (7)
days before each annual meeting and shall specify the place, the day and the
hour of such meeting and the general nature of the business to be transacted;
provided that, notwithstanding anything to the contrary contained in these
bylaws, notice of an annual meeting to be held at the time and place specified
in Section 11532.1 of the California Insurance Code shall be sufficiently given
if published at least once in each of four successive weeks in a newspaper of
general circulation in the county in which the principal office of the
corporation is located, and if so published no other notice of such meeting
shall be required.
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SEC. 3. Special Meetings. - Special meetings of members, for any
purpose or purposes whatsoever, may be called at any time by the chairman of the
board, the president or by the board of directors or by any two or more members
thereof or by one or more members holding not less than one-fifth of the voting
power of the corporation. Notices of special meetings shall be sent to each
member entitled thereto not less than seven (7) days before each such special
meeting and shall specify, in addition to the place, day and hour of the
meeting, the general nature of the business to be transacted.
SEC. 4. Adjourned Meetings and Notice Thereof. - Any members' meeting,
annual or special, whether or not a quorum is present, may be adjourned from
time to time by the vote of a majority of the members who are either present in
person or represented by proxy thereat, but in the absence of a quorum no other
business may be transacted at any such meeting.
When any members' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Save as aforesaid, it shall not be necessary
to give any notice of the time and place of the adjourned meeting or of the
business to be transacted at an adjourned meeting, other than by announcement at
the meeting at which said adjournment is taken.
SEC. 5. Entry of Notice. - Whenever any member entitled to vote has
been absent from any meeting of members, whether annual or special, an entry in
the minutes to the effect that notice has been duly given shall be conclusive
and incontrovertible evidence that due
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notice of such meeting was given to such member as required by law and the
bylaws of the corporation.
SEC. 6. Voting. - At all meetings of members each member entitled to
vote, and either present in person or by proxy thereat, shall have only one vote
regardless of the number of policies or the amount of insurance that each such
member holds. Such vote may be viva voce or by ballot; provided, however, that
all elections for directors shall be by ballot upon demand made by a member at
any election and before the voting begins.
SEC. 7. Quorum. - The presence in person or by proxy of the holders of
five percent (5%) of the members entitled to vote at any meeting shall
constitute a quorum for the transaction of business. The members present at a
duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough members to
leave less than a quorum.
SEC. 8. Proxies. - Each member entitled to vote or execute consents
shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such member or his duly authorized
agent and filed with the secretary of the corporation; provided that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution unless the member executing it specifies therein the length of
time for which such proxy is to continue in force, which in no case shall exceed
seven (7) years from the date of its execution. Any proxy duly executed is not
revoked, and continues in full force
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and effect, until an instrument revoking it, or a duly executed proxy bearing a
later date, is filed with the secretary.
SEC. 9. Inspectors of Election. - In advance of any meeting of members,
the board of directors shall appoint one or three inspectors of election to act
at such meeting or any adjournment or adjournments thereof. The inspector or
inspectors of election shall determine the number of members present or
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes, ballots or consents, hear and
determine all challenges and questions in any way arising in connection with the
right to vote, count and tabulate all votes or consents, determine the result of
and do such acts as may be proper to conduct the election or vote with fairness
to all members. The inspector or inspectors of elections shall perform their
duties impartially, in good faith, to the best of their ability and as
expeditiously as is practical. On request of the chairman of the meeting or of
any member or his proxy, the inspector or inspectors shall make a report in
writing of any challenge or question or matter determined by them and execute a
certificate of any fact found by them. If there be three inspectors of
election, the decision, act or certificate of a majority shall be effective in
all aspects as the decision, act or certificate of all, an shall be final and
conclusive as to all matters passed upon and determined. If there be one
inspector of election, his decision, act or certificate shall be final and
conclusive as to all matters passed upon and determined. In case any person
appointed as inspector fails to appear or fails or refuses to act, the vacancy
may be filled by appointment made by the board of directors in advance of the
convening of the meeting, or at the meeting by the person or officer acting as
chairman.
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Article III. - BOARD OF DIRECTORS
SECTION 1. Powers. - Subject to limitations of the articles of
incorporation and of the bylaws, and of any statutory provisions as to action to
be authorized or approved by the members, all corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the directors shall have the following powers, to-wit:
First. Corporate Business. - To conduct, manage and control all the
business and affairs of the corporation, and to make such rules and regulations
therefor not inconsistent with law, the articles of incorporation or the bylaws,
as they may deem best.
Second. Select and Remove Officers, Agents and Employees. - To select
and remove all officers of the corporation, as more fully provided for in
Article V hereof, and to select and remove all agents and employees of the
corporation, and to prescribe such duties and powers for its officers, agents
and employees as may not be inconsistent with law, the articles of incorporation
or the bylaws, fix or change their salaries, compensation and emoluments, and if
the board of directors deem it necessary, require of them security for faithful
service, including surety bonds, and from time to time thereafter require of
them other and different security for faithful service, including surety bonds
in different amounts and with different
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sureties. The board of directors may delegate to the executive committee or
other committee and/or to any officer or officers its power hereunder to select
or remove officers appointed under the provisions of Section 3 of Article V and
agents or employees, and to fix or change their respective salaries,
compensation or emoluments.
Third. Appoint Committees. - To appoint an executive committee and other
committees, and to delegate, by resolution or resolutions, to such committee any
of the powers and authority of the board of directors in the management of the
business and affairs of the corporation, except the power to declare dividends
on policies of insurance and adopt, amend or repeal bylaws; to fix and
prescribe, by resolution or resolutions, the powers and duties of committees
appointed by it; and to fix, by resolution or resolutions, the quorum for the
transaction of business of committees, other than the executive committee, which
may be less than a majority, but not less than one-third of the authorized
number of committee members.
Fourth. Incur Indebtedness. - To borrow money and incur indebtedness for
the purposes of the corporation and to cause to be executed and delivered
therefor, in the corporate name, promissory notes, bonds, debentures, deeds of
trust, pledges, hypothecations, or other evidences of debt and securities
therefor.
Fifth. Participating and Non-Participating Insurance. - To determine
which agreements and policies of insurance made by the corporation shall be upon
the basis of full or partial participation in the profits or without any
participation therein.
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Sixth. Dividends. - To declare dividends or to provide other
participation in the profits in the case of policies of insurance entitled to
such dividends or participation at such times and in such amounts as in its
opinion the condition of the affairs of the corporation shall render it
advisable.
Seventh. Miscellaneous. - To designate any place within or without the
State of California for the holding of any members' meeting or meetings, other
than the annual meeting.
SEC. 2. Number of Directors.
(a) Authorized Number of Directors. - The authorized number of directors
of the corporation shall be not less than fifteen (15) nor more than eighteen
(18).
(b) Exact Number of Directors. - The exact number of directors is hereby
fixed at Sixteen (16).
SEC. 3. Term of Office and Election. - The directors shall be divided into
three classes, as nearly equal in number as possible, and the terms of office of
the respective classes shall expire at annual intervals and at the times fixed
for successive annual meetings of members. The directors in office at the time
this bylaw becomes effective shall be divided by lot into one
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class of six directors and two classes of five directors each, and the terms of
office of the class composed of six directors shall expire at the time fixed for
the first annual meeting of members to be held after the annual meeting of
members in 1990 and the terms of office of the classes composed of five
directors each shall expire at the time of the second and third annual meeting
of members to be held after the annual meeting of members in 1990. Each director
thereafter elected at annual or special meetings of members shall hold office
for a term expiring at the time fixed for the third annual meeting of members to
be held after the meeting of members at which he was elected provided that if
any election would put more than six directors in the class whose terms expire
at such annual meeting, then the excess shall be chosen serially by lot and
allocated serially to the class or classes next in order whose terms expire at
the second and first annual meetings respectively and whose membership shall be
less than six to bring the membership of such class or classes up to six.
At each annual meeting of members, directors in number equal to the
number of directors whose terms expire at the time fixed for such meeting, shall
be elected, but if any such annual meeting of members is not held, or if
directors are not elected thereat, directors may be elected at any special
meeting of members held for the purpose of electing directors.
All directors shall hold office for the term for which they are elected
and until their respective successors are elected and qualified, except that
each director who attains age 72 during the term for which elected shall hold
office only until the next annual meeting of members following attainment of age
72 at which time a person may be elected as director to
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complete the unexpired term of office, if any, for which the director attaining
age 72 had been elected.
SEC. 4. Resignation. - Any director may resign at any time by giving written
notice to the board of directors or to the chairman of the board or to the
secretary of the corporation. Any such resignation shall take effect at the
date of receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SEC 5. Vacancies. - Each director elected to fill a vacancy caused by the
death, resignation or removal of a director shall hold office for a term which
will complete the unexpired term of office of such deceased, resigned or removed
director. Each director elected to fill a vacancy created by an increase in the
authorized number of directors or by failure of the members to elect the full
authorized number of directors shall hold office for a term expiring at the time
fixed for the third annual meeting of members to be held after the election
which fills the vacancy provided that if any election would put more than six
directors in the class whose terms expire at such annual meeting, then the
excess shall be chosen serially by lot and allocated serially to the class or
classes next in order whose terms expire at the second and first meetings,
respectively, and whose membership shall be less than six to bring the
membership of such class or classes up to six.
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SEC 6. Place of Meetings. - Regular meetings of the board of directors shall be
held at any place within or without the State of California which has been
designated from time to time by resolution of the board of directors or by
written consent of all members of the board. In the absence of such
designation, regular meetings, other than the annual meeting, shall be held at
700 Newport Center Drive, Newport Beach, California, unless not less than ten
(10) days prior to said meeting, a written notice designating another location
is mailed to each director at the address as shown upon the records of the
corporation. Special meetings of the board may be held either at a place so
designated or at 700 Newport Center Drive, Newport Beach, California.
SEC. 7 Regular Annual Meetings. - Immediately following each annual meeting of
members, the board of directors shall hold a regular annual meeting for the
purpose of organization, election of officers, and the transaction of other
business. The regular annual meeting shall be held at 700 Newport Center Drive,
Newport Beach, California. Notice of such meeting is hereby dispensed with.
SEC 8. Other Regular Meetings. - Other regular meetings of the board of
directors shall be held without call, on the fourth Wednesday of February, May,
August, October and November. All meeting shall be held at the hour of 9:00
o'clock A.M., except in the month in which the regular annual meeting of the
board of directors is held. Should any meeting day for a meeting of the board
of directors fall upon a legal holiday, then said meeting shall be
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held at the same time on the next day thereafter ensuing which is not a legal
holiday. Notice of all such regular meetings of the board of directors is hereby
dispensed with.
SEC 9. Special Meetings. - Special meetings of the board of directors for any
purpose or purposes shall be called at any time by the chairman of the board, or
if he is absent or unable or refuses to act, by the president, or, if he is
absent or unable or refuses to act, by any three (3) directors.
Written notice of the time and place of special meetings shall be
delivered personally to each director or sent to each director by mail or other
form of written communication, charges prepaid, addressed to him at his address
as it is shown upon the records of the corporation, or, if it is not so shown on
such records and is not readily ascertainable, at the place in which the
meetings of the directors are regularly held. In case such notice is mailed or
telegraphed, it shall be deposited in the United States mail or delivered to the
telegraph company at least twenty-four (24) hours prior to the time of the
holding of the meeting. In case such notice is delivered as above provided, it
shall be so delivered at least twelve (12) hours prior to the time of the
holding of the meeting. Such mailing, telegraphing or delivery as above
provided shall be due, legal and personal notice to such director.
SEC. 10. Adjournment. - A quorum of the directors may adjourn any directors'
meeting to meet again at a stated day and hour; provided, however, that in the
absence of a quorum, a
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majority of the directors present at any directors' meeting, either regular or
special, may adjourn from time to time or until the time fixed for the next
regular meeting of the board.
SEC. 11. Notice of Adjournment. - Notice of the time and place of holding an
adjourned meeting need not be given to absent directors if the time and place be
fixed at the meeting adjourned.
SEC. 12. Entry of Notice. - Whenever any director has been absent from any
special meeting of the board of directors, an entry in the minutes to the effect
that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such special meeting was given to such director as
required by law and the bylaws of the corporation.
SEC. 13. Waiver of Notice. - The transactions of any meeting of the board of
directors, however called and noticed or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice if a quorum be
present and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice of or consent to holding such meeting
or an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
SEC. 14. Quorum. - Eight directors shall be necessary to constitute a quorum
for the transaction of business, except to adjourn, as provided in Section 10 of
this article. Every act
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or decision done or made by a majority of the directors at a meeting duly held,
at which a quorum is present, shall be regarded as an act of the board of
directors, unless a greater number be required by law or by the articles of
incorporation.
SEC. 15. Fees and Compensation. - The directors shall, by resolution of the
board, determine from time to time the manner and amount of compensation payable
for their services as directors, with or without expenses of attendance at
meetings. Directors who are salaried officers of the corporation shall not
receive additional fees or compensation for their services as directors.
Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity as an officer, agent, employee, or
otherwise, and receiving compensation therefor.
Article IV. - EXECUTIVE COMMITTEE
SECTION 1. Powers and Duties. - The executive committee shall have and
exercise, to the extent provided in a resolution or resolutions of the board of
directors, such powers and authority of the board of directors in the management
of the business and affairs of the corporation, except the power to declare
dividends on policies of insurance or adopt, amend or repeal bylaws, as the
board of directors may delegate to it.
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SEC. 2. Number of Members. - The authorized number of members of the
executive committee shall be seven (7), in addition to ex officio members, until
changed by a resolution of the board of directors.
SEC. 3. Qualifications. - Each member of the executive committee shall
be a member of the board of directors.
SEC 4. Appointment and Term of Office. - The members of the executive
committee shall be appointed at each annual meeting of the board of directors,
but if any such annual meeting is not held or the members are not appointed
thereat, the members may be appointed at any subsequent meeting of the board of
directors. All members of the executive committee shall hold office until their
respective successors are appointed.
SEC. 5. Resignation. - Any member of the executive committee may resign
at any time by giving written notice to the board of directors or to the
chairman of the board or to the secretary of the corporation. Any such
resignation shall take effect at the date of receipt of such notice or at any
later time, specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SEC. 6. Vacancies. - Vacancies in the executive committee shall be
filled by appointment by the board of directors and each member so appointed
shall hold office until his successor is appointed.
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SEC. 7. Organization, etc. - The chairman of the executive committee
shall be as designated, the chairman of the board shall be vice chairman of the
executive committee, and the secretary of the corporation, or in his absence
such other officer or employee as the chairman of the executive committee may
designate, shall act as secretary. The executive committee shall keep a record
of its acts and proceedings and report the same from time to time to the board
of directors.
SEC. 8. Regular Meetings. - A regular meeting of the executive committee
shall be held without call or notice upon the day and at such hours and place as
the committee shall from time to time determine or at such other place as
designated by the chairman of the executive committee in a written notice to the
members thereof. Should the day so selected by the committee fall upon a legal
holiday, then the meeting shall be held at the same time on the next day which
is not a legal holiday.
SEC. 9. Special Meetings. - Special meetings of the executive committee
for any purpose or purposes shall be held at such place as shall be called by
the chairman of the executive committee, the chairman of the board, the
president, or secretary or any three (3) members of the executive committee.
Notice of each special meeting of the executive committee shall be sent by mail,
telegraph or telephone, or be delivered personally to each member of said
committee not later than twelve (12) hours before the day on which such meeting
is to be held.
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SEC. 10. Waiver of Notice. - The transactions at any meeting of the
executive committee, however called and noticed or whenever held, shall be as
valid as though had at a meeting duly held after regular call and notice if a
quorum be present and if, either before or after the meeting, each of the
members not present sign a written waiver of notice of or consent to holding
such meeting or an approval of the minutes thereof. All such waivers, consents,
or approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
SEC. 11. Quorum. - Any three (3) members of the executive committee,
either regular or ex officio, shall constitute a quorum for the transaction of
business. Every act or decision done or made by a majority of the members at a
meeting duly held, at which a quorum is present, shall be regarded as an act of
the executive committee.
SEC 12. Adjournment. - A quorum of the members may adjourn any executive
committee meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum the majority of members present at any executive
committee meeting, either regular or special, may adjourn from time to time or
until the time fixed for the next regular meeting of the executive committee.
SEC. 13. Inspection of Records. - The record or records of the acts and
proceedings of the executive committee, including its minutes, shall at all
times be open to inspection by any
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member of the board of directors or any committee or any person appointed by the
board of directors for that purpose and such inspection shall include the right
to make extracts.
SEC. 14. Fees. - Each member of the executive committee, except those
members who are salaried officers of the corporation, shall receive such fee, if
any, as shall be fixed by the board of directors for their respective attendance
at each meeting. Members of the executive committee who are salaried officers
of this corporation shall not receive additional fees or compensation for their
respective attendance at executive committee meetings.
Article V. - OFFICERS
SECTION 1. Number and Qualifications. - The officers of the corporation
shall be a chairman of the board who shall be a member of the board of
directors; a president; one or more executive vice presidents, senior vice
presidents, vice presidents, and 2nd vice presidents as the board of directors
may from time to time determine; a secretary, treasurer, general counsel,
corporate actuary, controller, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article. One person may
hold any two offices and perform the duties thereof except that of chairman and
secretary and except that of president and secretary.
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SEC. 2 Election, Term of Office. - Each officer, except such officers as
may be appointed in accordance with the provisions of Section 3 of this Article
V, shall be chosen annually by the board of directors and shall hold his office
until his successor shall have been duly chosen and shall have qualified, or
until his death, or until he shall resign, or until he shall have been removed
in the manner hereinafter provided.
SEC. 3. Other Officers, etc. - The Board of directors may appoint such
assistant vice presidents, assistant secretaries, assistant treasurers, and
other officers as the business of the corporation may require, each of whom
shall hold office for such period and have such authority and perform such
duties as are provided in these bylaws or as the board of directors may from
time to time determine. The board of directors may delegate to the executive
committee, or any officer or officers, the power to appoint any officer or
officers provided for in this Section 3 of Article V.
SEC. 4. Removal. - Any officer chosen under Section 2 of this Article V
may be removed, either with or without cause, by a two-thirds vote of the
directors present at any regular meeting of the board of directors. Any
officer, except an officer chosen by the board of directors pursuant to Section
2 of this Article V, may also be removed at any time, with or without cause, by
the executive committee or any officer or officers upon whom such powers of
removal may be conferred by the board of directors.
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SEC. 5. Resignation. - Any officer may resign at any time by giving
written notice to the board of directors or to the chairman of the board or to
the chief executive officer or to the secretary of the corporation. Any such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SEC. 6. Vacancies. - A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the bylaws for regular election or appointment to such
office.
SEC. 7. Chairman of the Board. - The chairman of the board shall be the
chief executive officer of the corporation and shall have supervision, direction
and control of the business and affairs of the corporation and shall consult
with the president and the executive vice presidents as to policies laid down or
defined by the board of directors and major policy decisions relating to the
policies laid down or defined by the board of directors and major policy
decisions relating to the conduct of the affairs of the corporation. He shall
preside at all meetings of the members of the board of directors and in the
absence or disability of the chairman of the executive committee, he shall
exercise the powers and perform the duties of the chairman of the executive
committee. He shall be an ex officio member of all committees, and shall have
such other powers and duties as may be prescribed from time to time by the board
of directors or elsewhere in these bylaws.
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SEC. 8. Vice Chairman. - The vice chairman shall also be the chief
investment officer and shall have such powers and duties as may be prescribed
from time to time by the board of directors, the chairman of the board, or
elsewhere in these bylaws. He shall be an ex officio member of all committees.
In the absence or disability of the chairman of the board, he shall exercise the
powers and perform the duties of the chairman of the board. In the absence or
disability of both the chairman of the board and vice chairman, an officer
designated by the chairman of the board shall exercise the powers and perform
the duties of the vice chairman.
SEC. 9. Executive Vice Presidents. - The executive vice presidents shall
assist the chairman of the board and the president in the exercise of their
powers and duties and shall have such other powers and perform such other duties
as may be prescribed from time to time by the chairman of the board, the
president, the board of directors, or elsewhere in these bylaws.
SEC. 10. Senior Vice President, Vice Presidents and 2nd Vice Presidents.
- - The senior vice presidents, vice presidents and 2nd vice presidents shall
assist the chairman of the board, the president and the executive vice
presidents in the exercise of their powers and duties and shall have such other
powers and perform such other duties as may be prescribed from time to time by
the chairman of the board, the president, the executive vice presidents, the
board of directors or elsewhere in these bylaws.
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SEC. 11. Secretary. - The secretary shall keep, or cause to be kept, a
book of minutes at the principal office, or such other place as the board of
directors may order, of all meetings of the directors, executive committee and
members with the time and place of holding, whether regular or special, and if
special, how authorized, the notice thereof given, the names of those present at
directors' and executive committee meetings, the number of members present or
represented at members meetings and the proceedings thereof.
The secretary shall give, or cause to be given, notice of all meetings of
the members, the board of directors and the executive committee, required by the
bylaws or bylaw to be given; and he shall keep the seal of the corporation in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the chairman of the board, the president, the executive
vice presidents, the board of directors or elsewhere in these bylaws.
SEC. 12. Treasurer. - The treasurer shall have custody of all funds,
securities and other valuables of the corporation which may have or shall come
into his hands. He shall have such powers and perform such duties as may be
prescribed by the chairman of the board, the president, the executive vice
presidents, the board of directors or elsewhere in these bylaws, and in addition
thereto shall:
(a) Deposit or cause to be deposited all funds, securities and other
valuables in the name of and to the credit of the corporation in its own or with
such depositaries as shall be designated in accordance with the provision of
Section 4, Article VI of these bylaws.
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(b) Be responsible for the due and proper disbursement of the funds
of the corporation.
(c) When necessary or proper, endorse on behalf of this corporation
for collection, checks, notes and other obligations.
(d) Make a report each month to the board of directors of such cash
receipts and disbursements as shall have occurred during the period of the
report and, in addition, shall render to the board of directors, the chairman of
the board, or the president, whenever requested, an account of all his
transactions as treasurer.
(e) Record regularly, full and accurate accounts of all monies
received and paid by him on account of the corporation.
SEC. 13. General Counsel. - The general counsel shall have the general
powers and duties usually vested in such officer and shall have such other
powers and duties as may be prescribed by the chairman of the board, the
president, the executive vice presidents, the board of directors or elsewhere in
these bylaws.
SEC. 14. Corporate Actuary. - The corporate actuary's duties shall be to
coordinate the actuarial bases of the company's operations, to maintain
surveillance of the financial
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performance of the company and its subsidiaries, to maintain surveillance of tax
and regulatory compliance, to direct the auditing of the various accounts and
records, and to have such other duties and responsibilities as may from time to
time be assigned to him by the chairman of the board, the president, the
executive vice presidents, the board of directors or elsewhere in these bylaws.
SEC. 15. Controller. - The controller's duties shall be to direct the
maintenance of the various accounts and other accounting media of the
corporation, to supervise expenses and operating efficiencies of the company and
its subsidiaries, and to have such further duties and responsibilities as may
from time to time be assigned to him by the chairman of the board, the
president, the executive vice presidents, the board of directors or elsewhere in
these bylaws.
SEC. 16. Assistant Vice Presidents. - The assistant vice presidents
shall have such powers and perform such duties as may from time to time be fixed
and prescribed for them by the board of directors, the chairman of the board,
the president, the executive vice presidents or elsewhere in these bylaws.
SEC. 17. Assistant Secretaries and Assistant Treasurers. - The assistant
secretaries and the assistant treasurers shall have such powers and perform such
duties as are assigned to them by these bylaws and shall have such other powers
and perform such other duties not inconsistent with these bylaws as may from
time to time be assigned to them by the secretary or the treasurer,
respectively, or by the board of directors.
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Article VI. - INSURANCE POLICIES, CONTRACTS, CHECKS,
DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Insurance Policies, How Signed. - All policies issued by this
corporation shall be signed by the chairman or president and countersigned by
the secretary either personally or by facsimile.
SEC. 2. Checks, Drafts, etc. - All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, except as in these
bylaws otherwise provided, issued in the name of or payable to the corporation
shall be signed or endorsed by such person or persons and in such manner as from
time to time shall be determined by resolution of the board of directors or by
resolution of the executive committee, if the board of directors delegate such
authority to it.
SEC. 3. Contracts, etc., How Executed. - The board of directors, or the
executive committee if such authority is delegated to it by the board of
directors, except as by law or in the bylaws otherwise provided, may authorize
any officer or officers, agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to special instances; and unless so
authorized, no officer, agent or employee shall have any power or authority to
bind the corporation by any
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contract or engagement or to pledge its credit to render it liable for any
purpose or to any amount.
SEC. 4. Bank Accounts. - All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation,
and in its name, in such banks, trust companies, or other depositaries as the
board of directors may select or as may be selected by any committee, officer or
officers, agent or agents of the corporation to whom such powers may from time
to time be delegated by the board of directors; and for the purpose of such
deposits the chairman of the board, the president, any vice president, the
secretary, the treasurer, or any other officer or agent or employee of the
corporation to whom such power may be delegated by the board of directors or by
the executive committee, if such authority be delegated to it by the board of
directors, may endorse, assign and deliver checks, drafts and other orders for
the payments of monies which are payable to the order of the corporation.
SEC. 5. Departmentalization. - So long as the corporation maintains two
or more departments, the corporation may apportion among them their fair and
equitable share of expenses; may exchange assets between such departments on a
fair and equitable basis; and may, at customary reinsurance rates, reinsure
business between such departments.
Article VII. - INVESTMENTS
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SECTION 1. Investments in the Corporation's Name. - All investments of
the corporation shall be made in the name of Pacific Mutual Life Insurance
Company or its nominee.
SEC. 2. Investments by the Corporation. - The corporation shall invest
as much of its capital, surplus and accumulations as the board of directors or
the executive committee, if such authority is delegated to it by the board of
directors, may determine in the purchase of or loans upon any of the securities
specified by law, which investment or investments shall be approved by the
executive committee, if such authority is delegated to it by the board of
directors, and by a vote of two-thirds of all the directors of the corporation,
unless such latter approval is not required by law, and any such approval by the
board of directors shall be entered upon the records or minutes of the
corporation which must show the fact of making such investment or investments,
the amount thereof, the name of each director voting to approve the same, the
amount, character and value of the security purchased or taken as collateral
and, if the investment be a loan, the name of the borrower, the rate of interest
thereon, and the date when the loan will become due or payable.
Article VIII. - MEMBERS
SECTION 1. Members Defined. - The words "member" and "members" as used in these
bylaws are hereby defined to include only those policyholders of the
Participating and Non-
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Participating Life classes. In any case where a Participating or Non-
Participating Life policy names two or more persons as joint insureds, payees,
owners or holders thereof, the persons so named shall be deemed collectively to
be but one member for the purposes of these bylaws. In any case where such a
policy shall have been assigned by assignment absolute on its face to an
assignee other than the corporation, and such assignment shall have been filed
at the principal office of the corporation at least thirty days prior to the
date of any election or meeting referred to in these bylaws, then such assignee
shall be deemed to be the member entitled to vote at such election or meeting.
SEC. 2. One Class of Members. - There shall be but one class of members
of the corporation.
Article IX. - CORPORATE RECORDS, ANNUAL REPORT
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
SECTION 1. Inspection of Bylaws. - The corporation shall keep in its principal
office for the transaction of business the original or a copy of the bylaws as
amended or otherwise altered to date, certified by the secretary, which shall be
open to inspection by the members at all reasonable times during office hours.
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SEC. 2. Inspection of Corporate Records. - The books of account, and
minutes of proceedings of the members, of the board of directors and of the
executive committee shall be open to inspection upon the written demand of any
member at any reasonable time and for a purpose reasonably related to his
interests as a member and shall be exhibited at any time when required by the
demand of ten percent (10%) of the members entitled to vote at any members'
meeting shall be made in writing upon the chairman of the board, the president,
secretary or assistant secretary of the corporation.
SEC. 3. Representation of Shares of Other Corporations. - The chairman
of the board, the president or any vice president and the secretary or any
assistant secretary of this corporation are authorized to vote, represent and
exercise on behalf of this corporation all rights incident to any and all share
or other evidence of ownership of any other business entities such as
corporations, business trusts and partnerships standing in the name of this
corporation. The authority herein granted to said officers to vote or represent
on behalf of this corporation any and all such evidences of ownership held by
this corporation may be exercised either by such officers n person or by any
person authorized so to do by proxy or power of attorney duly executed by said
officers.
Article X. - AMENDMENTS
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SECTION 1. Powers of Members. - A bylaw or bylaws may be adopted,
amended, or repealed by the vote of members entitled to exercise a majority of
the voting power of the corporation or by the written assent of such members.
SEC. 2. Power of Directors. - Subject to the rights of the members, as
provided in Section I of this Article, to adopt, amend or repeal a bylaw or
bylaws, other than a bylaw or amendment thereof changing the authorized number
of directors, may be adopted, amended, or repealed by the board of directors.
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EXHIBIT 99.1(9)(a)
Fund Participation Agreement
<PAGE>
FUND PARTICIPATION AGREEMENT
This AGREEMENT is made this 6th day of November, 1992, by and between Pacific
Mutual Life Insurance Company (the "Company"), a life insurance company
domiciled in California, on its behalf and on behalf of the segregated asset
accounts of the Company listed on Exhibit A to this Agreement (the "Separate
Accounts"); Pacific Select Fund (the "Fund"), a Massachusetts business trust;
and Pacific Equities Network ("Distributor"), a California corporation.
WITNESSETH
WHEREAS, the Fund is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended ("1940 Act") and the Fund is authorized to issue
separate classes of shares of beneficial interests ("shares"), each representing
an interest in a separate portfolio of assets known as a "series" and each
series has its own investment objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its series to
separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts") and to serve as
an investment medium for Variable Contracts offered by insurance companies that
have entered into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is currently
comprised of nine separate series, and other series may be established in the
future; and
WHEREAS, the Fund has obtained an order from the SEC granting Participating
Insurance Companies, separate accounts funding Variable Contracts of
Participating Insurance Companies, and the Fund exemptions from the provisions
of sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and paragraph (b)(15)
of Rule 6e-3(T) under the 1940 Act, to the extent necessary to permit such
persons to rely on the exemptive relief provided under paragraph (b)(15) of Rule
6e-3(T), even though shares of the Fund may be offered to and held by separate
accounts funding variable annuity contracts or scheduled or flexible premium
variable life insurance contracts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934, as amended ("1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company wishes to purchase shares of one or more of the Fund's series on
behalf of its Separate Accounts to serve as an investment medium for Variable
Contracts funded by the Separate Accounts, and the Distributor is authorized to
sell shares of the Fund's series;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE I. Sale of Fund Shares
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1.1. The Distributor agrees to sell to the Company those shares of the series
offered and made available by the Fund and identified on Exhibit B ("Series")
that the Company orders on behalf of its Separate Accounts, and agrees to
execute such orders on each day on which the Fund calculates its net asset value
pursuant to rules of the SEC ("business day") at the net asset value next
computed after receipt and acceptance by the Fund or its agent of the order for
the shares of the Fund.
1.2. The Fund agrees to make available on each business day shares of the
Series for purchase at the applicable net asset value per share by the Company
on behalf of its Separate Accounts' provided, however, that the Board of
Trustees of the Fund may refuse to sell shares of any Series to any person, or
suspend or terminate the offering of shares of any Series, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Trustees, acting in good faith and in light of the
Trustees' fiduciary duties under applicable law, necessary in the best interests
of the shareholders of any Series.
1.3. The Fund and the Distributor agree that shares of the Series of the Fund
will be sold only to Participating Insurance Companies, their separate accounts,
and other persons consistent with each Series being adequately diversified
pursuant to Section 817(h) of the Internal Revenue Code of 1986, as amended
("Code") and the regulations thereunder. No shares of any Series will be sold
directly to the general public.
1.4. The Fund and the Distributor will not sell shares of the Series to any
insurance company or separate account unless an agreement containing provisions
substantially the same as this Agreement is in effect to govern such sales.
1.5. Upon receipt of a request for redemption in proper form from the Company,
the Fund agrees to redeem any full or fractional shares of the Series held by
the Company, ordinarily executing such requests on each business day at the net
asset value next computed after receipt and acceptance by the Fund or its agent
of the request for redemption, except that the Fund reserves the right to
suspend the right of redemption, consistent with Section 22(e) of the 1940 Act
and any rules thereunder. Such redemption shall be paid consistent with
applicable rules of the SEC and procedures and policies of the Fund as described
in the current prospectus.
1.6. The Company agrees to purchase and redeem the shares of each Series in
accordance with the provisions of the current prospectus for the Fund.
1.7. The Company shall pay for shares of the Series on the same day that it
places an order to purchase shares of the Series. Payment shall be in federal
funds transmitted by wire.
1.8. Issuance and transfer of shares of the Series will be by book entry only
unless otherwise agreed by the Fund. Stock certificates will not be issued to
the Company or the Separate Accounts unless otherwise agreed by the Fund.
Shares ordered from the Fund will be recorded in an appropriate title for the
Separate Accounts or the appropriate subaccounts of the Separate Accounts.
1.9. The Fund shall promptly furnish notice (by wire or telephone, followed by
written confirmation) to the Company of any income dividends or capital gain
distributions payable on the
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shares of the Series. The Company hereby elects to reinvest in the Series all
such dividends and distributions as are payable on a Series' shares and to
receive such dividends and distributions in additional shares of that Series.
The Company reserves the right to revoke this election in writing and to receive
all such dividends and distributions in cash. The Fund shall notify the Company
of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall instruct its recordkeeping agent to advise the Company on
each business day of the net asset value per share for each Series as soon as
reasonably practical after the net asset value per share is calculated.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it is taxed as an
insurance company under Subchapter L of the Code.
2.2. The Company represents and warrants that it has legally and validly
established each of the Separate Accounts as a segregated asset account under
the ________________________ Insurance Code, and that each of the Separate
Accounts is a validly existing segregated asset account under applicable federal
and state law.
2.3. The Company represents and warrants that the Variable Contracts issued by
the Company or interests in the Separate Accounts under such Variable Contracts
(1) are or, prior to issuance, will be registered as securities under the
Securities Act of 1933 ("1933 Act") or, alternatively (2) are not registered
because they are properly exempt from registration under the 1933 Act or will be
offered exclusively in transactions that are properly exempt from registration
under the 1933 Act.
2.4. The Company represents and warrants that each of the Separate Accounts (1)
has been registered as a unit investment trust in accordance with the provisions
of the 1940 Act or, alternatively (2) has not been registered in proper reliance
upon an exclusion from registration under the 1940 Act.
2.5. The Company represents that it believes, in good faith, that the Variable
Contracts issued by the Company are currently treated as annuity contracts or
life insurance policies (which may include modified endowment contracts),
whichever is appropriate, under applicable provisions of the Code.
2.6. The Company represents and warrants that any of its Separate Accounts that
fund variable life insurance contracts and that are registered with the SEC as
investment companies rely on the exemptions provided by Rule 6e-3(T), or any
successor thereto, and not on Rule 6e-2 under the 1940 Act.
2.7. The Fund represents and warrants that it is duly organized as a business
trust under the laws of the Commonwealth of Massachusetts, and is in good
standing under applicable law.
2.8. The Fund represents and warrants that the shares of the Series are duly
authorized for issuance
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in accordance with applicable law and that the Fund is registered as an open-end
management investment company under the 1940 Act.
2.9. The Fund represents that it believes, in good faith, that the Series
currently comply with the diversification provisions of Section 817(h) of the
Code and the regulations issued thereunder relating to the diversification
requirements for variable life insurance policies and variable annuity
contracts.
2.10. The Distributor represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
ARTICLE III. General Duties
3.1. The Fund shall take all such actions as are necessary to permit the sale
of the shares of each Series to the Separate Accounts, including maintaining its
registration as an investment company under the 1940 Act, and registering the
shares of the Series sold to the Separate Accounts under the 1933 Act for so
long as required by applicable law. The Fund shall amend its Registration
Statement filed with the SEC under the 1933 Act and the 1940 Act from time to
time as required in order to effect the continuous offering of the shares of the
Series. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states to the extent deemed necessary by the Fund
or the Distributor.
3.2. The Fund shall make every effort to maintain qualification of each Series
as a Regulated Investment Company under Subchapter M of the Code (or any
successor or similar provision) and shall notify the Company immediately upon
having a reasonable basis for believing that a Series has ceased to so qualify
or that it might not so qualify in the future.
3.3. The Fund shall make every effort to enable each Series to comply with the
diversification provisions of Section 817(h) of the Code and the regulations
issued thereunder relating to the diversification requirements for variable life
insurance policies and variable annuity contracts and any prospective amendments
or other modifications to Section 817 or regulations thereunder, and shall
notify the Company immediately upon having a reasonable basis for believing that
any Series has ceased to comply.
3.4. The Fund shall be entitled to receive and act upon advice of its General
Counsel or its outside counsel in meeting the requirements specified in Sections
3.2 and 3.3 hereof.
3.5 The Company shall take all such actions as are necessary under applicable
federal and state law to permit the sale of the Variable Contracts issued by the
Company, including registering each Separate Account as an investment company to
the extent required under the 1940 Act, and registering the Variable Contracts
or interests in the Separate Accounts under the Variable Contracts to the extent
required under the 1933 Act, and obtaining all necessary approvals to offer the
Variable Contracts from state insurance commissioners.
3.6. The Company shall make every effort to maintain the treatment of the
Variable Contracts issued
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<PAGE>
by the Company as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code, and shall notify the Fund
and the Distributor immediately upon having a reasonable basis for believing
that such Variable Contracts have ceased to be so treated or that they might not
be so treated in the future.
3.7. The Company shall offer and sell the Variable Contracts issued by the
Company in accordance with applicable provisions of the 1933 Act, the 1934 Act,
the 1940 Act, the NASD Rules of Fair Practice, and state law respecting the
offering of variable life insurance policies and variable annuity contracts.
3.8. The Distributor shall sell and distribute the shares of the Series of the
Fund in accordance with the applicable provisions of the 1933 Act, the 1934 Act,
the 1940 Act, the NASD Rules of Fair Practice, and state law.
3.9. A majority of the Board of Trustees of the Fund shall consist of persons
who are not "interested persons" of the Fund ("disinterested Trustees"), as
defined by Section 2(a)(19) of the 1940 Act, except that if this provision of
this Section 3.9 is not met by reason of the death, disqualification, or bona
fide resignation of any Trustee or Trustees, then the operation of this
provision shall be suspended (a) for a period of 45 days if the vacancy or
vacancies may be filled by the Fund's Board; (b) for a period of 60 days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
3.10. The Company agrees to provide, as promptly as possible, notice to the
Fund and to the Distributor if the Company has reason to know about a meeting of
some or all of the owners of the Variable Contracts or shareholders of the Fund,
where the agenda or purpose of the meeting relates, in whole or in part, to the
Fund and that has not been called by the Fund's Board of Trustees (and which
shall not include a vote of Variable Contract Owners having an interest in a
Separate Account to substitute shares of another investment company for
corresponding shares of the Fund or a Series, as described in Section 9(e) and
to which the notice provision of Section 9.2 shall apply). In such an event,
the Company agrees to distribute proxy statements and any additional
solicitation materials upon the request of the Fund or the Distributor to the
owners of the Variable Contracts issued by the Company at least 30 days prior to
the meeting. The Company further agrees that it shall take no action, directly
or indirectly, in furtherance of shareholders of the Fund or Contract Owners
taking any action with respect to the Fund by written consent and without a
meeting.
3.11. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction (including, without
limitation, the SEC, the NASD, and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
ARTICLE IV. Potential Conflicts
4.1. The Fund's Board of Trustees shall monitor the Fund for the existence of
any material irreconcilable conflict (1) between the interests of owners of
variable annuity contracts and variable
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<PAGE>
life insurance policies, and (2) between the interests of owners of Variable
Contracts ("Variable Contract Owners") issued by different Participating
Insurance Companies that invest in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretive letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of the Fund or any Series are being managed; or (e) a decision by a
Participating Insurance Company to disregard the voting instructions of Variable
Contract Owners.
4.2. The Company agrees that it shall be responsible for reporting any
potential or existing conflicts to the Fund's Board of Trustees. The Company
will be responsible for assisting the Board of Trustees of the Fund in carrying
out its responsibilities under this agreement, by providing the Board with all
information reasonably necessary for the Board to consider any issues raised.
This includes, but is not limited to, an obligation by the Company to inform the
Board whenever Variable Contract Owner voting instructions are disregarded. The
Company shall carry out its responsibility under this Section 4.2 with a view
only to the interests of the Variable Contract Owners.
4.3. The Company agrees that in the event that it is determined by a majority
of the Board of Trustees of the Fund or a majority of the Fund's disinterested
Trustees that a material irreconcilable conflict exists, the Company shall, to
the extent reasonably practicable (as determined by a majority of the
disinterested Trustees of the Board of the Fund), take whatever steps are
necessary to eliminate the irreconcilable material conflict, including: (1)
withdrawing the assets allocable to some or all of the Separate Accounts from
the Fund or any Series and reinvesting such assets in a different investment
medium, which may include another series of the Fund, or submitting the question
of whether such segregation should be implemented to a vote of all affected
Variable Contract Owners and, as appropriate, segregating the assets of any
appropriate group (i.e., Contract Owners of Variable Contracts issued by one or
more Participating Insurance Companies) that votes in favor of such segregation,
or offering to the affected Variable Contract Owners the option of making such a
change; and (2) establishing a new registered management investment company or
managed separate account. If a material irreconcilable conflict arises because
of the Company's decision to disregard Variable Contract Owners' voting
instructions and that decision represents a minority position or would preclude
a majority vote, the Company shall be required, at the Fund's election, to
withdraw the Separate Accounts' investment in the Fund, and no charge or penalty
will be imposed as a result of such withdrawal. The Fund shall neither be
required to bear the costs of remedial actions taken to remedy a material
irreconcilable conflict nor shall it be requested to pay a higher investment
advisory fee for the sole purpose of covering such costs. In addition, no
Variable Contract Owner shall be required directly or indirectly to bear the
direct or indirect costs of remedial actions taken to remedy a material
irreconcilable conflict. A new funding medium for any Variable Contract need
not be established pursuant to this Section 4.3, if an offer to do so has been
declined by vote of a majority of Variable Contract Owners materially adversely
affected by the irreconcilable material conflict. All reports received by the
Fund's Board of Trustees of potential or existing conflicts, and all Board
action with regard to determining the existence of a conflict, notifying
Participating Insurance Companies and the Fund's investment adviser of a
conflict, and determining whether any proposed action adequately remedies a
conflict, shall be properly recorded
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in the minutes of the Board of Trustees of the Fund or other appropriate
records, and such minutes or other records shall be made available to the SEC
upon request. The Company and the Fund shall carry out their responsibilities
under this Section 4.3 with a view only to the interests of the Variable
Contract Owners.
4.4. The Board of Trustees of the Fund shall promptly notify the Company in
writing of its determination of the existence of an irreconcilable material
conflict and its implications.
ARTICLE V. Prospectuses and Proxy Statements; Voting
5.1. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Fund to the owners of Variable Contracts issued by the
Company as required to be distributed to such Variable Contract Owners under
applicable federal or state law.
5.2. The Distributor shall provide the Company with as many copies of the
current prospectus of the Fund as the Company may reasonably request. If
requested by the Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type or
in camera-ready copy) and other assistance as is reasonably necessary in order
for the Company to print together in one document the current prospectus for the
Variable Contracts issued by the Company and the current prospectus for the
Fund. The Fund shall bear the expense of printing copies of its current
prospectus that will be distributed to existing Variable Contract Owners, and
the Company shall bear the expense of printing copies of the Fund's prospectus
that are used in connection with offering the Variable Contracts issued by the
Company.
5.3. The Fund and the Distributor shall provide (1) at the Fund's expense, one
copy of the Fund's current Statement of Additional Information ("SAI") to the
Company and to any owner of a Variable Contract issued by the Company who
requests such SAI, (2) at the Company's expense, such additional copies of the
Fund's current SAI as the Company shall reasonably request and that the Company
shall require in accordance with applicable law in connection with offering the
Variable Contracts issued by the Company.
5.4. The Fund, at its expense, shall provide the Company with copies of its
proxy material, periodic reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require for
purposes of distributing to owners of Variable Contracts issued by the Company.
The Fund, at the Company's expense, shall provide the Company with copies of its
periodic reports to shareholders and other communications to shareholders in
such quantity as the Company shall reasonably request for use in connection with
offering the Variable Contracts issued by the Company. If requested by the
Company in lieu thereof, the Fund shall provide such documentation (including a
final copy of the Fund's proxy materials, periodic reports to shareholders and
other communications to shareholders, as set in type or in camera-ready copy)
and other assistance as reasonably necessary in order for the Company to print
such shareholder communications for distribution to owners of Variable Contracts
issued by the Company.
5.5. For so long as the SEC interprets the 1940 Act to require pass-through
voting by Participating Insurance Companies whose Separate Accounts are
registered as investment companies under the
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1940 Act, the Company shall vote shares of each Series of the Fund held in a
Separate Account or a subaccount thereof, whether or not registered under the
1940 Act, at regular and special meetings of the Fund in accordance with
instructions timely received by the Company (or its designated agent) from
owners of Variable Contracts funded by such Separate Account or subaccount
thereof having a voting interest in the Series. The Company shall vote shares
of a Series of the Fund held in a Separate Account or a subaccount thereof that
are attributable to the Variable Contracts as to which no timely instructions
are received, as well as shares held in such Separate Account or subaccount
thereof that are not attributable to the Variable Contracts and owned
beneficially by the Company (resulting from charges against the Variable
Contracts or otherwise), in the same proportion as the votes cast by owners of
the Variable Contracts funded by that Separate Account or subaccount thereof
having a voting interest in the Series from whom instructions have been timely
received. The Company shall vote shares of each Series of the Fund held in its
general account, if any, in the same proportion as the votes cast with respect
to shares of the Series held in all Separate Accounts of the Company or
subaccounts thereof, in the aggregate.
5.6. The Fund shall disclose in its prospectus that (1) shares of the Series of
the Fund are offered to affiliated or unaffiliated insurance company separate
accounts which fund both annuity and life insurance contracts, (2) due to
differences in tax treatment or other considerations, the interests of various
Variable Contract Owners participating in the Fund or a Series might at some
time be in conflict, and (3) the Board of Trustees of the Fund will monitor for
any material conflicts and determine what action, if any, should be taken. The
Fund hereby notifies the Company that prospectus disclosure may be appropriate
regarding potential risks of offering shares of the Fund to separate accounts
funding both variable annuity contracts and variable life insurance policies and
to separate accounts funding Variable Contracts of unaffiliated life insurance
companies.
ARTICLE VI. Sales Material and Information
6.1. The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material in
which the Fund (or any Series thereof) or its investment adviser or the
Distributor is named, and no such sales literature or other promotional material
shall be used without the approval of the Fund and the Distributor or the
designee of either.
6.2. The Company agrees that neither it nor any of its affiliates or agents
shall give any information or make any representations or statements on behalf
of the Fund or concerning the Fund other than the information or representations
contained in the Registration Statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or its designee
and by the Distributor or its designee, except with the permission of the Fund
or its designee and the Distributor or its designee.
6.3. The Fund or the Distributor or the designee of either shall furnish to the
Company or its designee, each piece of sales literature or other promotional
material in which the Company or its Separate Accounts are named, and no such
material shall be used without the approval of the Company or its designee.
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6.4. The Fund and the Distributor agree that each and the affiliates and agents
of each shall not give any information or make any representations on behalf of
the Company or concerning the Company, the Separate Accounts, or the Variable
Contracts issued by the Company, other than the information or representations
contained in a registration statement or prospectus for such Variable Contracts,
as such registration statement and prospectus may be amended or supplemented
from time to time, or in reports for the Separate Accounts or prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by the Company or its designee, except with
the permission of the Company.
6.5. The Fund will provide to the Company at least one complete copy of all
prospectuses, Statements of Additional Information, reports, proxy statements
and other voting solicitation materials, and all amendments and supplements to
any of the above, that relate to the Fund or its shares, promptly after the
filing of such document with the SEC or other regulatory authorities.
6.6. The Company will provide to the Fund at least one complete copy of all
prospectuses (which shall include an offering memorandum if the Variable
Contracts issued by the Company or interests therein are not registered under
the 1933 Act), Statements of Additional Information, reports, solicitations for
voting instructions, and all amendments or supplements to any of the above, that
relate to the Variable Contracts issued by the Company or the Separate Accounts
promptly after the filing of such document with the SEC or other regulatory
authority.
6.7. For purposes of this Article VI, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, computerized media, or other public
media), sales literature (i.e., any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees.
ARTICLE VII. Indemnification
7.1. Indemnification By The Company
7.1(a). The Company agrees to indemnify and hold harmless the Fund, each of its
Trustees and officers, any affiliated person of the Fund within the meaning of
Section 2(a)(3) of the 1940 Act, and the Distributor (collectively, the
"Indemnified Parties" for purposes of this Section 7.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation expenses (including legal and
other expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or litigation expenses are related to the sale or
acquisition of the Fund's shares or the Variable Contracts issued by the Company
and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material
9
<PAGE>
fact contained in the registration statement or prospectus (which shall include
an offering memorandum) for the Variable Contracts issued by the Company or
sales literature for such Variable Contracts (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or on behalf
of the Fund for use in the registration statement or prospectus for the Variable
Contracts issued by the Company or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of such Variable
Contracts or Fund shares; or
(ii) arise out of or as a result of any statement or representation (other than
statements or representations contained in the registration statement,
prospectus or sales literature of the Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company or any of its
affiliates, employees or agents with respect to the sale or distribution of the
Variable Contracts issued by the Company or the Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature of the Fund or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon information furnished to
the Fund by or on behalf of the Company;
except to the extent provided in Sections 7.1(b) and 7.1(c) hereof.
7.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation expenses
to which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his or her
duties or by reason of his or her reckless disregard of obligations or duties
under this Agreement or to the Fund.
7.1(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such Party
shall have notified the Company in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such Party
shall have received notice of such service on any designated agent), but failure
to notify the Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the Company shall be
entitled to participate, at its own expense, in the defense of such action. The
Company also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Company to
such party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
Agreement for
10
<PAGE>
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.1(d). The Indemnified Parties shall promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Variable Contracts issued by the
Company or the operation of the Fund.
7.2 Indemnification By the Distributor
7.2(a). The Distributor agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who is an affiliated
person of the Company within the meaning of Section 2(a)(3) of the 1940 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor) or litigation
expenses (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or litigation expenses are related to
the sale or acquisition of the Fund's shares or the Variable Contracts issued by
the Company and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
prospectus or sales literature of the Fund (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Distributor or the Fund
or the designee of either by or on behalf of the Company for use in the
registration statement or prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection with the sale of the
Variable Contracts issued by the Company or Fund shares; or
(ii) arise out of or as a result of any statement or representation (other than
statements or representations contained in the registration statement,
prospectus or sales literature for the Variable Contracts not supplied by the
Distributor or any employees or agents thereof) or wrongful conduct of the Fund
or Distributor, or the affiliates, employees, or agents of the Fund or the
Distributor with respect to the sale or distribution of the Variable Contracts
issued by the Company or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature covering the Variable Contracts issued by the Company, or any
amendment thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Company by or on
behalf of the Fund;
except to the extent provided in Sections 7.2(b) and 7.2(c) hereof.
11
<PAGE>
7.2(b). The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his or
her duties or by reason of his or her reckless disregard of obligations and
duties under this Agreement or to the Company or the Separate Accounts.
7.2(c). The Distributor shall not be liable under this indemnification
provision with respect to any claim made against the Indemnified Party unless
such Party shall have notified the Distributor in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Party shall have received notice of such service on any designated agent),
but failure to notify the Distributor of any such claim shall not relieve the
Distributor from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
Indemnification Provision. In case any such action is brought against the
Indemnified Parties, the Distributor will be entitled to participate, at its own
expense, in the defense thereof. The Distributor also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Distributor to such party of the Distributor's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Distributor
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
7.2(d). The Company shall promptly notify the Distributor of the commencement
of any litigation or proceedings against it or any of its officers or directors
in connection with the issuance or sale of the Variable Contracts issued by the
Company or the operation of the Separate Accounts.
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of California.
8.2. This Agreement shall be subject to the provisions of the 1933, 1934, and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE IX. Termination
9.1. This Agreement shall terminate:
(a) at the option of any party upon 180 days advance written notice to the other
parties; or
(b) at the option of the Company if shares of the Series are not reasonably
available to meet the requirements of the Variable Contracts issued by the
Company, as determined by the Company, and upon prompt notice by the Company to
the other parties; or
12
<PAGE>
(c) at the option of the Fund or the Distributor upon institution of formal
proceedings against the Company or its agent by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the Variable
Contracts issued by the Company, the operation of the Separate Accounts, or the
purchase of the Fund shares; or
(d) at the option of the Company upon institution of formal proceedings against
the Fund or the Distributor by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; or
(e) upon requisite vote of the Variable Contract Owners having an interest in
the Separate Accounts (or any subaccounts thereof) to substitute the shares of
another investment company for the corresponding shares of the Fund or a Series
in accordance with the terms of the Variable Contracts for which those shares
had been selected to serve as the underlying investment media; or
(f) in the event any of the shares of a Series are not registered, issued or
sold in accordance with applicable state and/or federal law, or such law
precludes the use of such shares as the underlying investment media of the
Variable Contracts issued or to be issued by the Company; or
(g) by any party to the Agreement upon a determination by a majority of the
Trustees of the Fund, or a majority of its disinterested Trustees, that an
irreconcilable conflict exists; or
(h) at the option of the Company if the Fund or a Series fails to meet the
diversification requirements specified in Section 3.3 hereof.
9.2. Each party to this Agreement shall promptly notify the other parties to
the Agreement of the institution against such party of any such formal
proceedings as described in Sections 9.1(c) and (d) hereof. The Company shall
give 60 day's prior written notice to the Fund of the date of any proposed vote
of Variable Contract Owners to replace the Fund's shares as described in Section
9.1(e) hereof.
9.3. Except as necessary to implement Variable Contract Owner initiated
transactions, or as required by state insurance laws or regulations, the Company
shall not redeem Fund shares attributable to the Variable Contracts issued by
the Company (as opposed to Fund shares attributable to the Company's assets held
in the Separate Accounts), and the Company shall not prevent Variable Contract
Owners from allocating payments to a Series, until 60 days after the Company
shall have notified the Fund or Distributor of its intention to do so.
9.4. If this Agreement terminates, any provision of this Agreement necessary to
the orderly windup of business under it will remain in effect as to that
business, after termination.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
13
<PAGE>
If to the Fund:
Pacific Select Fund
Attn: SEC Regulatory Compliance Department
700 Newport Center Drive
P.O. Box 7500
Newport Beach, CA 92260
If to the Distributor:
Pacific Equities Network
Attn: Compliance Officer
700 Newport Center Drive, NB-4
Newport Beach, CA 92660
If to the Company:
Pacific Mutual Life Insurance Company
Attn: SEC Regulatory Compliance Department
700 Newport Center Drive
P.O. Box 7500
Newport Beach, CA 92660
ARTICLE XI. Miscellaneous
11.1. The Fund and the Company agree that if and to the extent Rule 6e-3(T)
under the 1940 Act is amended or if Rule 6e-3 is adopted in final form, to the
extent applicable, ,the Fund and the Company shall each take such steps as may
be necessary to comply with the Rule as amended or adopted in final form.
11.2. A copy of the Fund's Agreement and Declaration of Trust is on file with
the Secretary of the Commonwealth of Massachusetts and notice is hereby given
that the Agreement has been executed on behalf of the Fund by a Trustee of the
Fund in his or her capacity as Trustee and not individually. The obligations of
this Agreement shall only be binding upon the assets and property of the Fund
and shall not be binding upon any Trustee, officer or shareholder of the Fund
individually.
11.3. Nothing in this Agreement shall impede the Fund's Trustees or
shareholders of the shares of the Fund's Series from exercising any of the
rights provided to such Trustees or shareholders in the Fund's Agreement and
Declaration of Trust, as amended, a copy of which will be provided to the
Company upon request.
11.4. It is understood that the name "Pacific", "Pacific Mutual", "Pacific
Select" or any derivative thereof or logo associated with that name is the
valuable property of the Distributor and its affiliates, and that the Company
has the right to use such name (or derivative or logo) only so long as this
Agreement is in effect. Upon termination of this Agreement the Company shall
forthwith cease to
14
<PAGE>
use such name (or derivative or logo).
11.5. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
11.6. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.7. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
11.8. This Agreement may not be assigned by any party to the Agreement except
with the written consent of the other parties to the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PACIFIC SELECT FUND
ATTEST: BY:
Name: AUDREY L. MILFS Name: THOMAS C. SUTTON
Title: SECRETARY Title: PRESIDENT
PACIFIC EQUITIES NETWORK
ATTEST: BY:
Name: AUDREY L. MILFS Name: ARTHUR M. KESSELHAUT
Title: SECRETARY Title: PRESIDENT
PACIFIC MUTUAL LIFE INSURANCE CO.
ATTEST: BY:
Name: AUDREY L. MILFS Name: WILLIAM D. CVENGROS
Title: SECRETARY Title: CHIEF INVESTMENT OFFICER
15
<PAGE>
EXHIBIT A
PACIFIC SELECT SEPARATE ACCOUNT
PACIFIC SELECT EXEC SEPARATE ACCOUNT
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
PACIFIC COLI SEPARATE ACCOUNT
SEPARATE ACCOUNT A
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to be executed
by their Officers designated below on this 3rd day of January, 1995.
PACIFIC SELECT FUND
Attest: By:
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: By:
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: By:
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: President
17
<PAGE>
EXHIBIT B
MONEY MARKET SERIES
MANAGED BOND SERIES
GOVERNMENT SECURITIES SERIES
HIGH YIELD BOND SERIES
GROWTH SERIES
GROWTH LT SERIES
EQUITY INCOME SERIES
MULTI-STRATEGY SERIES
EQUITY SERIES
BOND AND INCOME SERIES
EQUITY INDEX SERIES
INTERNATIONAL SERIES
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit B to be executed
by their Officers designated below on this 3rd day of January, 1995.
PACIFIC SELECT FUND
Attest: By:
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: By:
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: By:
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: President
19
<PAGE>
EXHIBIT 99.1(10)
Applications and General Questionnaire.
<PAGE>
[LOGO OF PACIFIC MUTUAL]
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
Application for Life Insurance
Instructions to Soliciting Agent(s)
GENERAL INSTRUCTIONS
. Every appropriate section of the application must be fully completed prior to
signing the application. A blank application must never be signed.
. The application is color coded for easy completion. The following indicates
who must complete the various colored sections:
Blue Applicant
Gray Applicant or Agent must complete for non-variable life products only
Green Applicant or Agent must complete for variable life products only
Burgundy Agent
. Changes noted on this application must be lined out and the new information
must be indicated and initiated by the Applicant in Sections A - E, Proposed
Insured(s) in Section F and Agent in Sections G - J. Changes made any other
way will be amended.
. The Disclosure Notice To Applicants must be detached and given to the
Applicant. If the Disclosure Notice To Applicants is not detached when the
application is received at Pacific Mutual, written verification that the
Notice was given to the Applicant will be required before the underwriting
process can begin.
. For "Survivor Life" type policies, the Second Insured is considered the
Additional Insured. All Additional Insured sections must be completed.
IMPORTANT SIGNATURE REQUIREMENTS
. The party initiating the application for life insurance is considered the
Applicant. Depending on the situation, the Applicant may also be the Insured
or Owner.
. The following parties must sign page 6 of the application:
Applicant
Proposed Insured (if other than Applicant)
Other Adult Proposed Insured (if applicable)
Child of age 18 and older (required in Pennsylvania)
Owner (if other than Proposed Insured or Applicant)
Soliciting Agent
. The Authorization on page 7 must be signed and dated by the Proposed Insured
and Other Adult Proposed Insured (if applicable). Underwriting cannot begin
without a signed Authorization.
. The Soliciting Agent(s) must sign on pages 6 and 10.
. If multiple Owners, then all Owners must sign on page 6 of the application.
. For corporate signatures, the signature and title of any authorized officer
other than the Proposed Insured is required and the full name of the
corporation must be shown on page 6.
. If policy is trust owned, trustee(s) must sign on page 6 of application on
the Signature of Applicant line indicating the title "Trustee" after the
signature. Owner designation, on page 1, must include name of trust, date of
trust, trustee(s) name, with the wording "successor or successors in trust."
UNDERWRITING REQUIREMENTS
. Underwriting requirements are based on the age of the Proposed Insured(s) and
amount applied for. Refer to the Life Underwriting Requirements Chart (not
attached) to determine the appropriate requirements.
. The Non-Medical is NOT part of this application. APPLICATION, PART II,
Non-Medical (AP9500-P2) must be obtained separately. Note: Certain states
will have their own version.
- -------------------------------------------------------------------------------
AP9500 15-19503-00 10/95
<PAGE>
INSTRUCTIONS SOLICITING AGENT(S)
- -------------------------------------------------------------------------------
SECTION A - CLIENT INFORMATION
. Complete all questions, unless a question does not apply.
. If submitting money with the application, complete question 31A, B and
C on page 1. Also submit a Temporary Insurance Agreement (TIA) with the
application. The date on the application, check and TIA must all be the
same date.
. Money and the TIA must not be taken if:
a) any health question on the TIA is answered "yes;"
b) the proposed insured is under 15 days of age or is over 70 years old
(nearest birthday) on the date of the application.
If the face amount applied for is greater than the TIA maximum binding
limit, complete the application in the following manner:
1) Indicate the total face amount as applied for in question 31C. Also
indicate all applied for Optional Benefits here. If additional space
is needed, use Remarks section on page 2 or 3.
2) On page 2 (for non-variable products) or page 3 (for variable products),
question 3, complete with the maximum binding limit as noted on the
TIA. Leave question 5 "Optional Benefits" blank.
SECTION B - POLICY INFORMATION FOR NON-VARIABLE LIFE PRODUCTS
. Indicate product desired, base face amount, initial APB amount (if applied
for) and Total Initial Coverage in question 3. Whether APB is level or
varying, always indicate initial APB amount. This information can be found
on the Producer/Home Office Administration Worksheet page of the illustration.
. Indicate all other optional benefits in question 5.
. Complete only those questions that relate to the product (term/fixed or
flexible premium) applied for.
. If requesting an alternate or additional policy, complete the
Alternate/Additional Policy section on page 2.
SECTION C - POLICY INFORMATION FOR VARIABLE LIFE PRODUCTS
. Indicate product desired, base face amount, initial APB amount (if applied
for) and Total Initial Coverage in question 3. Whether APB is level or
varying, always indicate initial APB amount. This information can be found
on the Producer/Home Office Administration Worksheet page of the
illustration.
. Indicate all other optional benefits in question 5.
. Answer all Suitability questions and include the date of the current Separate
Account prospectus and Fund prospectus.
. If requesting an alternate or additional policy, complete the
Alternate/Additional Policy section on page 3. All suitability questions
must also be completed.
SECTION D - MEDICAL CERTIFICATION
. Complete only when submitting a medical examination from another insurance
company.
SECTION E - ADDITIONAL INSURED
. Complete if requesting an optional benefit such as APB, ART or SITR on
an Additional Insured. This section is also completed for "Survivor Life"
type policies.
SECTION F - GENERAL INFORMATION
. Complete every question of this section for the Proposed Insured and
Additional Insured (if applicable).
. If Proposed Insured or Additional Insured (if applicable) participates
in a hazardous occupation/sport, complete a General Questionnaire form
(not attached) for each insured that participates.
SECTION G - UNI-CHECK (AUTOMATIC BANK WITHDRAWAL)
. The Uni-Check billing method is available on a monthly payment frequency
for automatic checking account deductions. Complete this section if electing
Uni-Check. Also complete Uni-Check method and monthly mode on page 1,
questions 30A and 30B. A voided check must be submitted with the application.
SECTION H - BUSINESS INSURANCE
. Complete only if applying for Business Insurance.
SECTION I - FOR PROPOSED INSURED UNDER THE AGE OF 16.
. Complete this section if the application is submitted on a non-medical
basis and the Proposed Insured is under age 16. If the application is
submitted on a medical basis, a medical exam is necessary. Refer to the
Life Underwriting Requirements Chart to determine the appropriate
requirements.
SECTION J - AGENT INFORMATION
. Complete every question of this section.
. The signature of the Soliciting Agent(s) is required at the bottom of
page 10.
. Commissions are paid in accordance with the information presented at the
bottom of page 10. The Agent listed first is the Servicing Agent, unless
indicated otherwise in the remarks section. Always include Agent Code
for prompt payment of commissions.
- -------------------------------------------------------------------------------
AP9500 15-19503-00 10/95
<PAGE>
NEWBS APPLC
[LOGO] PACIFIC MUTUAL
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
No. 814031
APPLICATION FOR LIFE INSURANCE, PART I
Any person who knowingly and with intent to defraud any insurance company or
other person files an application for insurance or statement of claim containing
any materially false information or conceals for the purpose of misleading,
information concerning any fact material thereto commits a fraudulent insurance
act, which is a crime and subjects such person to criminal and civil penalties.
- --------------------------------------------------------------------------------
SECTION A | CLIENT INFORMATION
- --------------------------------------------------------------------------------
PROPOSED INSURED
- --------------------------------------------------------------------------------
1. Full Name (PRINT AS TO APPEAR IN POLICY / FIRST, MIDDLE, LAST) _____________
2. Sex: [_] Male [_] Female
3. State of Birth ____________
4. Date of Birth MO. __ __ DAY __ __ YR. __ __
- --------------------------------------------------------------------------------
5. Insurance Age _____
6. Drivers License No. & State ____________________
7. Social Security No. or Taxpayer I.D. No. _______________
8. Telephone No. (______) ______________
- --------------------------------------------------------------------------------
9. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) ____________________________
10. How Long ___________
11. Employer Name and Address (STREET, CITY, COUNTY, STATE, ZIP CODE) __________
12. How Long ___________
13. Occupation ____________________
14. Type of Business ______________________
- --------------------------------------------------------------------------------
OWNER IF OTHER THAN PROPOSED INSURED
- --------------------------------------------------------------------------------
15. Full Name (PRINT AS TO APPEAR IN POLICY / FIRST, MIDDLE, LAST) ____________
16. Date of Birth _________________
17. Relationship __________________
18. Telephone No. (______) ______________
19. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) ___________________________
20. Social Security No. or Taxpayer I.D. No. _______________
- --------------------------------------------------------------------------------
BENEFICIARY
- --------------------------------------------------------------------------------
21. Primary Beneficiary (PRINT FULL NAME / FIRST, MIDDLE, LAST) ________________
22. Relationship __________________
23. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) ___________________________
24. Contingent Beneficiary (PRINT FULL NAME / FIRST, MIDDLE, LAST) _____________
25. Relationship __________________
26. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) ___________________________
- --------------------------------------------------------------------------------
PREMIUM NOTICES
- --------------------------------------------------------------------------------
27. Send to: [_] Insured [_] Owner at [_] Residence [_] Business
or [_] Other (INDICATE BELOW)
28. Name _______________________________________
29. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) ___________________________
- --------------------------------------------------------------------------------
BILLING INFORMATION
- --------------------------------------------------------------------------------
30A. Method
[_] Single Premium
[_] Direct (annual, semi-annual or quarterly only)
[_] List Bill (3 or more lives)
[_] Uni-Check - Attach a Voided Check and Complete Uni-check Section on
Page 6. (monthly only.)
30B. Frequency of Premium Reminder Notice or Premium Payment
[_] Annual
[_] Semi-Annual
[_] Quarterly
[_] Monthly
- --------------------------------------------------------------------------------
AMOUNT PAID WITH THIS APPLICATION
- --------------------------------------------------------------------------------
31A. Is cash or check tendered with this application? [_] Yes [_] No
If Yes, show amount $___________________
If no, do not complete question below
B. Do you understand, accept and agree to the terms of the Temporary Insurance
Agreement (TIA)? [_] Yes [_] No
C. If Yes, and a policy face amount is applied for which is larger than that
which Pacific Mutual will insure under TIA, complete the following
statement:
If approved, please issue a policy for a face amount of $__________________
- --------------------------------------------------------------------------------
SPECIAL DATING REQUESTED
- --------------------------------------------------------------------------------
32. [_] Date to Save Age
[_] Specific Date Month ________ Day ________ Year ________
- --------------------------------------------------------------------------------
AP9500 15-19503-00 10/95
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION B POLICY INFORMATION (COMPLETE FOR NON-VARIABLE LIFE INSURANCE)
- ------------------------------------------------------------------------------------------------------------------------------------
Check one: [_] TERM/FIXED PREMIUM [_] FLEXIBLE PREMIUM
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Policy Name 2. Total Modal Premium or Expected Annual Premium
$
- ------------------------------------------------------------------------------------------------------------------------------------
3. Face Amount (Base only) $________________ Plus Initial APB Amount $________________ = Total Initial Coverage $________________
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED PREMIUM LIFE INSURANCE ONLY FLEXIBLE PREMIUM LIFE INSURANCE ONLY
Yes No
4A. Automatic Premium Loan [_] [_] 4A. Check one: [_] Option A (Level)
B. Variable Loan Interest Rate: [_] [_] [_] Option B (Increasing)
C. Dividend Option (Check one): B. Dividend Option (Check one):
[_] Cash [_] Add to Policy Value [_] Other [_] Cash [_] Increased Accumulated Value [_] Other
5. OPTIONAL BENEFITS 5. OPTIONAL BENEFITS
A. [_] ADB [$ ] A. [_] ADB [$ ]
B. [_] AVR/AVP [$ ] B. [_] ART/APB/SITR on Other Covered Person for [$ ]
C. [_] ART on Other Covered Person [$ ] C. [_] ART on Proposed Insured for [$ for years]
D. [_] Children's Term (units) [ ] (Complete Part II, Section C) D. [_] Children's Term (units) [ ] (Complete Part II, Section C)
E. [_] Exchange of Insured E. [_] Exchange of Insured
F. [_] Guaranteed Insurability [$ ] F. [_] Guaranteed Insurability [$ ]
G. [_] Increasing Death Benefit G. [_] Disability Benefit [$ ]
H. [_] Preliminary Term [_] 1 Yr. [_] 2 Yr. [ ] No. of Months H. [_] Preliminary Term [_] 1 Yr. [_] 2 Yr. [ ] No. of Months
Effective Date [ ] Effective Date [ ]
I. [_] Premium Waiver I. [_] Waiver of Charges
J. [_] Payor Premium Waiver (Complete Part II, Section C) J. [_] Payor Waiver of Charges (Complete Part II, Section C)
K. [_] Owner Premium Waiver (Complete Part II, Section C) K. [_] Owner Waiver of Charges (Complete Part II, Section C)
L. [_] Other ______________________________ L. [_] Other ______________________________
M. [_] Other ______________________________ M. [_] Other ______________________________
N. [_] Other ______________________________ N. [_] Other ______________________________
O. [_] Other ______________________________ O. [_] Other ______________________________
- ------------------------------------------------------------------------------------------------------------------------------------
6. If any optional benefit applied for cannot be approved, should the policy be issued without it? [_] Yes [_] No
- ------------------------------------------------------------------------------------------------------------------------------------
Complete this section if applying for (check one): [ ] Additional Policy or
[ ] Alternate Policy
- ------------------------------------------------------------------------------------------------------------------------------------
7. Policy Name 8. Total Modal Premium or Expected Annual Premium
$
- ------------------------------------------------------------------------------------------------------------------------------------
9. Face Amount (Base only) $________________ Plus Initial APB Amount $________________ = Total Initial Coverage $________________
- ------------------------------------------------------------------------------------------------------------------------------------
10. Optional Benefits:
A. ________________________________________ B. ______________________________________ C. ________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
11. Complete for FIXED PREMIUM LIFE INSURANCE ONLY 12. Complete for FLEXIBLE PREMIUM INSURANCE ONLY
Yes No A. Check one:
A. Automatic Premium Loan [_] [_] [_] Option A (Level)
B. Variable Loan Interest Rate: [_] [_] [_] Option B (Increasing)
C. Dividend Option: [ ] B. Dividend Option: [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
AP9500 15-19503-00 10/95
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
SECTION C. POLICY INFORMATION (COMPLETE FOR VARIABLE LIFE INSURANCE)
- ------------------------------------------------------------------------------------------------------------------------------------
VARIABLE LIFE
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1. Policy Name 2. Planned Annual Premium
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3. Face Amount (Base only) $ Plus Initial APB Amount $ = Total Initial Coverage $
-------- -------- --------
- ------------------------------------------------------------------------------------------------------------------------------------
4. Check one: [_] Option A (Level) [_] Option B (Increasing)
- ------------------------------------------------------------------------------------------------------------------------------------
OPTIONAL BENEFITS
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
5. A. [_] ART on Other Covered Person for [$_____________] E. [_] Guaranteed Insurability [$_____________]
B. [_] ADB [$_____________] F. [_] Waiver of Charges
C. [_] Children's Term (units) [______________] (Complete Part II, Section C) G. [_] Other _______________________
D. [_] Disability Benefit [$_____________] H. [_] Other _______________________
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
6. If any optional benefit applied for cannot be approved, should the policy be issued without it? [_] Yes [_] No
- ------------------------------------------------------------------------------------------------------------------------------------
PREMIUM ALLOCATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
7. INDICATE ALLOCATIONS. THE TOTAL OF THE PERCENTAGES MUST BE 100% (USE WHOLE NUMBERS)
Fixed Account: _________________% Growth LT:________________% Multi-Strategy:__________%
Equity Income: _________________% High Yield Bond:__________% Other:_______ ___________%
Equity Index:___________________% International:____________% Other:_______ ___________%
Government Securities:__________% Managed Bond:_____________% Other:_______ ___________%
Growth:_________________________% Money Market:_____________% Other:_______ ___________%
- ------------------------------------------------------------------------------------------------------------------------------------
SUITABILITY
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Yes No
8. DO YOU BELIEVE THAT THIS POLICY WILL MEET YOUR INSURANCE NEEDS AND FINANCIAL OBJECTIVES?................... [_] [_]
9. DO YOU UNDERSTAND THAT THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY VARY, DEPENDING ON THE
INVESTMENT PERFORMANCE OF THE VARIABLE ACCOUNTS IN THE SEPARATE ACCOUNT?................................... [_] [_]
10. DO YOU UNDERSTAND THAT THE POLICY VALUES MAY INCREASE OR DECREASE, DEPENDING ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNTS IN THE SEPARATE ACCOUNT?............................................... [_] [_]
11. DID YOU RECEIVE THE SEPARATE ACCOUNT PROSPECTUS AND THE FUND PROSPECTUS FOR THE POLICY APPLIED FOR?........ [_] [_]
If Yes, give date shown on prospectuses: [Separate Account Fund ]
- ------------------------------------------------------------------------------------------------------------------------------------
POLICY VALUES MAY INCREASE OR DECREASE, AND MAY EVEN BE REDUCED TO ZERO, IN ACCORDANCE WITH THE EXPERIENCE OF THE VARIABLE ACCOUNTS
IN THE SEPARATE ACCOUNT (SUBJECT TO ANY SPECIFIED MINIMUM GUARANTEES). THE DEATH BENEFIT MAY BE VARIABLE OR FIXED UNDER SPECIFIED
CONDITIONS. CURRENT ILLUSTRATIONS OF BENEFITS, INCLUDING DEATH BENEFITS AND CASH SURRENDER VALUES, ARE AVAILABLE UPON REQUEST.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
COMPLETE THIS SECTION IF APPLYING FOR (Check one): [_] ADDITIONAL POLICY or [_] ALTERNATE POLICY
(COMPLETE SUITABILITY QUESTIONS ABOVE)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
12. Policy Name 13. Planned Annual Premium
$
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
14. Face Amount (Base only) $ Plus Initial APB Amount $ = Total Initial Coverage $
-------- -------- --------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
15. Optional Benefits 17. Premium Allocations:
A. __________________________ Fixed Account:__________________% High Yield Bond:__________%
B. __________________________ Equity Income:__________________% International:____________%
C. __________________________ Equity Index:___________________% Managed Bond:_____________%
Government Securities:__________% Money Market:_____________%
16. Check one: Growth:_________________________% Multi-Strategy:___________%
[_] Option A (Level) Growth LT:______________________% Other:____________________%
[_] Option B (Increasing)
- ------------------------------------------------------------------------------------------------------------------------------------
REMARKS
AP9500 15-19503-00 10/95
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION D | MEDICAL CERTIFICATION (NOT APPLICABLE IN THE STATE OF PENNSYLVANIA)
- -----------------------------------------------------------------------------------------------------------------------------------
COMPLETE WHEN SUBMITTING MEDICAL EXAMINATION OF ANOTHER INSURANCE COMPANY
1. The attached examination is on the life of:
<S> <C> <C>
Proposed Insured Name | Name of the other Insurance Company | Date of Examination
- -----------------------------------------------------------------------------------------------------------------------------------
Additional Insured Name | Name of the other Insurance Company | Date of Examination
- -----------------------------------------------------------------------------------------------------------------------------------
Additional Insured Name | Name of the other Insurance Company | Date of Examination
- -----------------------------------------------------------------------------------------------------------------------------------
Additional Insured Name | Name of the other Insurance Company | Date of Examination
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Proposed Insured Additional Insured
<S> <C> <C> <C> <C>
2. To the best of your knowledge and belief, are the statements in the examination true [_] Yes [_] No [_] Yes [_] No
as of today?
3. Has the person who was examined consulted a doctor or their practitioner or received [_] Yes [_] No [_] Yes [_] No
medical or surgical advice since the date of the examination? (If yes, explain in remarks)
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION E | ADDITIONAL INSURED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(PRINT AS TO APPEAR IN POLICY/FIRST, MIDDLE, LAST) | | |
1. Full Name | 2. Sex: [_] Male | 3. State of Birth | 4. Date of Birth
| [_] Female | | | MO. | DAY | YR.
| | | | | | | | | |
- -----------------------------------------------------------------------------------------------------------------------------------
5. Insurance Age | 6. Drivers License No. & State | 7. Social Security No. or Taxpayer I.D. No. | 8. Telephone No.
| | | ( )
- -----------------------------------------------------------------------------------------------------------------------------------
9. Address (STREET, CITY, COUNTY, STATE, ZIP CODE) | 10. How Long
|
- -----------------------------------------------------------------------------------------------------------------------------------
11. Employer Name and Address (STREET, CITY, COUNTY, STATE, ZIP CODE) | 12. How Long
|
- -----------------------------------------------------------------------------------------------------------------------------------
13. Occupation | 14. Type of Business
- -----------------------------------------------------------------------------------------------------------------------------------
15. Relationship to Primary Insured
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY TO ADDITIONAL INSURED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
16. Primary Beneficiary (PRINT FULL NAME/FIRST, MIDDLE, LAST) | Relationship
|
- -----------------------------------------------------------------------------------------------------------------------------------
18. Contingent Beneficiary (PRINT FULL NAME/FIRST, MIDDLE, LAST) | Relationship
|
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION F | GENERAL INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
1. Give details of life insurance in force in other companies on PROPOSED INSURED.
If none (or if conversion application) check this box [_]
Company | Year Taken | Plan | Life Amount | Acc. Death Amount
<S> <C> <C> <C> <C>
- -----------------------------------------------|--------------|------------------------|-------------------|-----------------------
- -----------------------------------------------|--------------|------------------------|-------------------|-----------------------
- -----------------------------------------------|--------------|------------------------|-------------------|-----------------------
- -----------------------------------------------|--------------|------------------------|-------------------|-----------------------
- -----------------------------------------------|--------------|------------------------|-------------------|-----------------------
</TABLE>
<TABLE>
<CAPTION>
2. Give details of life insurance in force in other companies on ADDITIONAL INSURED.
If none (or if conversion application) check this box [_]
Company | Year Taken | Plan | Life Amount | Acc. Death Amount
<S> <C> <C> <C> <C>
- -----------------------------------------------|--------------|------------------------|-------------------|-----------------------
- -----------------------------------------------|--------------|------------------------|-------------------|-----------------------
- -----------------------------------------------|--------------|------------------------|-------------------|-----------------------
- -----------------------------------------------|--------------|------------------------|-------------------|-----------------------
- -----------------------------------------------|--------------|------------------------|-------------------|-----------------------
REMARKS
- -----------------------------------------------------------------------------------------------------------------------------------
AP9500 15-19503-00 10/95
- 4 -
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------
SECTION F | GENERAL INFORMATION CONTINUED
- -------------------------------------------------------------------------------------------
PROPOSED INSURED | COMPLETE EACH QUESTION BELOW FOR THE PROPOSED | ADDITIONAL INSURED
YES NO | INSURED AND ANY ADDITIONAL INSURED. | YES NO
- -------------------------------------------------------------------------------------------
| | A. Is the Proposed/Additional Insured married? | |
- -------------------------------------------------------------------------------------------
$ | B. Income of spouse, if any. | $
- -------------------------------------------------------------------------------------------
$ | C. Amount of insurance in force on spouse. | $
- -------------------------------------------------------------------------------------------
$ | D. Annual earned income from occupation (after | $
| deduction of business expenses). |
- -------------------------------------------------------------------------------------------
$ | E. Other income (state source in remarks). | $
- -------------------------------------------------------------------------------------------
$ | F. Net Worth. | $
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
PROPOSED INSURED | | ADDITIONAL INSURED
YES NO | | YES NO
| |
[_] [_] | 4. Does any Proposed Insured/Additional Insured | [_] [_]
| contemplate leaving the U.S.A. for travel or |
| residence? (If yes, explain in remarks) |
- -------------------------------------------------------------------------------------------
| 5. Within the last 2 years has any Proposed/ |
| Additional Insured: |
[_] [_] | A. Flown or plan to fly as a pilot, student pilot | [_] [_]
| or crew member? |
[_] [_] | B. Engaged in parachute jumping, scuba diving, | [_] [_]
| auto, motor boat or motorcycle racing, hang |
| gliding, mountain climbing or other hazardous |
| sport? (If yes to A. or B., complete a |
| separate General Questionnaire for each |
| Proposed/Additional Insured) |
- -------------------------------------------------------------------------------------------
[_] [_] | 6. Has any Proposed/Additional Insured ever had | [_] [_]
| insurance declined, rated, modified, cancelled |
| or not renewed? (DO NOT ANSWER THIS QUESTION |
| IN MISSOURI) (If yes, explain in remarks) |
- -------------------------------------------------------------------------------------------
[_] [_] | 7. Has any Proposed/Additional Insured been | [_] [_]
| convicted of a felony within the past 5 years? |
| (If yes, explain in remarks) |
- -------------------------------------------------------------------------------------------
[_] [_] | 8. Has any Proposed/Additional Insured had a | [_] [_]
| drivers license restricted or revoked or been |
| charged with 3 or more moving violations within |
| the past 5 years? (If yes, explain in remarks) |
- -------------------------------------------------------------------------------------------
[_] [_] | 9. Has any other insurance been applied for within | [_] [_]
| the last 3 months on any Proposed/Additional |
| Insured? (If yes, explain in remarks) |
- -------------------------------------------------------------------------------------------
[_] [_] | 10. Will the policy applied for replace or change | [_] [_]
| any existing insurance or annuity on any |
| Proposed/Additional Insured? (If yes, agent |
| must complete state replacement notice, if |
| applicable) |
- ------------------ --------------------
[_] [_] | A. Is this a 1035 Exchange? | [_] [_]
- ------------------ --------------------
[_] [_] | B. Will a loan be carried over? | [_] [_]
- -------------------------------------------------------------------------------------------
[_] [_] | 11. Have you smoked a cigarette(s) in the last | [_] [_]
| 12 months? |
| |
Date:___________ | If yes, give date last smoked. | Date:___________
- -------------------------------------------------------------------------------------------
[_] [_] | 12. Have you used tobacco in any other form within | [_] [_]
| the last 24 months? |
| |
Type:___________ | If yes, specify type and date last used. | Type:___________
Date:___________ | | Date:___________
- -------------------------------------------------------------------------------------------
REMARKS
- -------------------------------------------------------------------------------------------
AP9500 15-19503-00 10/95
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
SECTION G UNI-CHECK
- -------------------------------------------------------------------------------
1. [ ] Bank Account No. [ ] 2. Bank Account in Name of [ ]
3. [ ] If other than policy date, complete day of the month you want draft to
draw from bank account.
(Must be between the 4th and 28th) [ ]
As a convenience to me, I request and authorize you to pay and charge to the
above account any debit entries on that account by and payable to the order of
Pacific Mutual Life Insurance Company, provided there are sufficient collected
funds in said account to pay the same upon presentation. I agree that your
rights in respect to each such debit shall be the same as if it were a debit
drawn on you and signed personally by me. This authority is to remain in effect
until revoked by me in writing, and until you actually receive such notice I
agree that you shall be fully protected in honoring any such debit.
- -------------------------------------------------------------------------------
REMARKS
- -------------------------------------------------------------------------------
HOME OFFICE ENDORSEMENT
(NOT APPLICABLE IN KENTUCKY, PENNSYLVANIA, WEST VIRGINIA)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DECLARATIONS
- -------------------------------------------------------------------------------
I represent that the foregoing answers and statements contained in Parts I and
II are correctly recorded, complete, and true to the best of my knowledge and
belief. I understand that:
1. Except as otherwise provided in any Temporary Insurance Agreement, no
insurance will take effect before the policy for such insurance is
delivered and the first premium paid during the lifetime(s) and before any
change in the health of the Proposed Insured(s). Upon such delivery and
payment, insurance will take effect if the answers and statements in this
application are then true.
2. Acceptance of a life insurance policy will be ratification of any
administrative change with respect to such policy made by Pacific Mutual
Life Insurance Company, the "Company," in the space entitled "Home Office
Endorsements," where permitted by state law. All other changes, including
policy type and amount of insurance, benefits, classification or age at
issue, must be accepted in writing.
3. No agent or medical examiner is authorized to make or modify contracts or
to waive any of the Company's rights or requirements.
Signed and Dated by Applicant in:
On
- --------------------------------------- --------------------------------------
City State Mo. Day Year Signature of Applicant
--------------------------------------
Signature of Proposed Insured
(IF OTHER THAN APPLICANT OR PARENT
IF PROPOSED INSURED IS UNDER AGE 16 OR
AGE 18 IN PENNSYLVANIA)
--------------------------------------
Signature of Other Adult Proposed
Insured
--------------------------------------
Signature of Child age 18 and older
(REQUIRED IN PENNSYLVANIA)
--------------------------------------
Signature of Owner
(IF OTHER THAN PROPOSED INSURED
OR APPLICANT)
IF OWNER IS A CORPORATION, THE SIGNATURE AND TITLE OF ANY AUTHORIZED OFFICER
OTHER THAN THE PROPOSED INSURED IS REQUIRED AND THE FULL NAME OF THE CORPORATION
MUST BE SHOWN.
I certify that I have truly and accurately recorded hereon the information
supplied.
- -------------------------- --------------------------- ----------------------
Signature of Soliciting Please Print Soliciting State License ID
Agent Agent Name Number
(Required in Florida)
AP9500 15-19503-00 10/95
-6-
<PAGE>
- -------------------------------------------------------------------------------
AUTHORIZATION TO OBTAIN INFORMATION
- -------------------------------------------------------------------------------
I authorize any physician, medical practitioner, hospital, clinic, other medical
or medically related facility, insurance company, the Medical Information
Bureau, consumer reporting agency or employer to release to Pacific Mutual Life
Insurance Company, its subsidiaries, its reinsurer(s) or its legal
representative any information they may have as to diagnosis, treatment and
prognosis of any physical or mental condition including drug and/or alcohol
abuse and/or any other information of me, my spouse and my minor children.
I understand that any information obtained will be used to determine eligibility
for insurance and will not be released to any person or organization except
reinsurer(s), the Medical Information Bureau, and other persons or organizations
performing business or legal services in connection with my application, or as
may be otherwise lawfully required, or as I may further authorize. I also
understand that I may revoke this authorization as it applies to drug and/or
alcohol abuse information at anytime, except to the extent it will not affect
any action taken or information released prior to the revocation. Such
revocation may cause the denial of this application. I know that I may request
to receive a copy of this authorization. I also acknowledge receipt of
Disclosure Notice to Applicants for Insurance.
A photographic copy of this Authorization shall be as valid as the original and
shall be valid for two years from the date shown below.
Signed and Dated by Proposed Insured In:
On
- -------------------------------------- ---------------------------------------
City State Mo. Day Year Signature of Proposed Insured
(OR PARENT IF PROPOSED INSURED IS UNDER
AGE 16 OR AGE 18 IN PENNSYLVANIA)
---------------------------------------
Signature of Other Adult Proposed
Insured
---------------------------------------
Signature of Child age 18 and older
(REQUIRED IN PENNSYLVANIA)
AP9500
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(DETACH-LEAVE WITH APPLICANT)
DISCLOSURE NOTICE TO APPLICANTS FOR INSURANCE
This brief description of our underwriting process is designed to help you to
understand how an application for insurance is handled, the types and sources of
information we may collect about you, the circumstances under which we may
disclose that information to others and your right to learn the nature and
substance of that information upon written request. The purpose of the
underwriting process is to make sure you qualify for insurance under Pacific
Mutual's rules, and assuming you do, establish the proper premium charge for
that insurance. This process - the evaluation of risks - assures that the cost
of insurance is distributed equitably among all policyowners, and that each
individual pays his or her fair share. To determine your insurability, we must
consider such factors as your medical history, physical condition, occupation
and hazardous avocations. We get this information from various sources.
SOURCES OF INFORMATION
Application and Medical Records - Your application, including the medical
history, is the primary source of information in the evaluation process. In
addition, we may ask you to take a physical examination or other special test
such as an electrocardiogram. We may also ask for a report from your doctor or
hospital, another insurance company, or the Medical Information Bureau. When we
do so, we will use the authorization form you signed with your application.
MIB, Inc., (Medical Information Bureau) - MIB, Inc., is a non-profit corporation
which operates an information exchange on behalf of member life insurance
companies. As a member company, we will ask the MIB if it has a record
concerning you. If you previously applied to a member company for insurance, MIB
may have information about you in its file. The purpose of the MIB is to protect
member companies and their policyowners from those who would conceal significant
facts relevant to their insurability. The information which is obtained from MIB
may be used only as an alert to the possible need for further independent
investigation. It cannot be used as a basis in making a final underwriting
decision.
Information regarding your insurability will be treated as confidential. Pacific
Mutual, its subsidiaries or its reinsurer(s) may, however, make a brief report
to the MIB. If you later apply to another MIB member company for life or health
insurance coverage, or a claim for benefits is submitted to such a company, the
MIB, upon request, will supply the company with the information it may have
about you in its file. Pacific Mutual, its subsidiaries or its reinsurer(s) may
also release information in its file to other life insurance companies to whom
you may apply for life or health insurance, or to whom a claim for benefits may
be submitted.
At your request, the MIB will arrange disclosure of any information it may have
about you in its file. If you question the accuracy of information on file, you
may contact the MIB and seek a correction in accordance with the procedures set
forth in the federal Fair Credit Reporting Act. The address of the information
office of MIB, Inc. is Post Office Box 105, Essex Station, Boston, Massachusetts
02112, telephone number (617) 426-3660.
Investigative Consumer Report - As part of our underwriting procedure, we may
request an investigative consumer report from a consumer reporting agency.
Because you may want to know more about the nature and scope of such a report,
we are providing this information on the reverse side as part of this Notice.
(Continued on reverse side)
AP9500 15-19503-00 10/95
<PAGE>
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DISCLOSURE NOTICE TO APPLICANTS FOR INSURANCE (continued)
A consumer report confirms and supplements the information on your application
pertaining to employment and residence verification, smoking habits, marital
status, occupation, hazardous avocations and general health. This report may
also cover information concerning your general reputation, personal
characteristics and mode of living, (except as may be related directly or
indirectly to your sexual orientation) including drug and alcohol use, motor
vehicle driving record and any criminal activity. This information may be
obtained through personal interviews with you, your family, friends, neighbors
and business associates. If a report is required and you wish to be personally
interviewed, please let us know and we will notify the consumer reporting
agency.
The information contained in the report may be retained by the consumer
reporting agency and subsequently disclosed to other companies to the extent
permitted by the Fair Credit Reporting Act.
Investigative consumer reports are held in strict confidence and used only to
evaluate your application on a fair and equitable basis. You have a right to
inspect and obtain a copy of the report from the consumer reporting agency.
These reports may have an adverse affect on an individual's eligibility for
insurance. If it should, however, we will notify you in writing and identify
the reporting agency.
DISCLOSURE TO OTHERS
Personal information obtained about you during the underwriting process is
confidential and will not be disclosed to other persons or organizations without
your written authorization except to the extent necessary for the conduct of our
business. Examples of situations where we may share information about you are as
follows:
1. The agent may retain a copy of your application.
2. If reinsurance is required, the reinsurance company would have access to
our application file.
3. We may release information to another life insurance company to whom you
have applied for life or health insurance or to whom you have submitted
a claim for benefits, if you have authorized it to obtain such
information.
4. As stated earlier, we may report information to the Medical Information
Bureau.
5. We will disclose information to government regulatory officials, law
enforcement authorities and others where required by law.
DISCLOSURE TO YOU
In general, you have a right to learn the nature and substance of any personal
information about you in our file upon written request. Whenever an adverse
underwriting decision is made, we will notify you of the reason(s) for the
decision and the source of the information upon which our action is based.
Medical record information, however, will normally be given only to a licensed
physician of your choice. Please refer to the section on MIB, Inc., for that
organization's disclosure procedure.
Should you feel that any information we have is inaccurate or incomplete, please
write to the Manager, Risk Selection Department, Pacific Mutual Life Insurance
Company, 700 Newport Center Drive, Newport Beach, California 92660. Your
comments will be carefully considered and corrections made where justified.
We hope this Notice will help you to understand how we obtain and use personal
information in the underwriting process, and the ways you can learn about this
information. We are concerned with insuring privacy as well as lives, and the
collection, use and disclosure of personal information is limited to those
specified in this Notice.
AP9500 15-19503-00 10/95
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
SECTION H | BUSINESS INSURANCE (COMPLETE THIS SECTION IF APPLYING FOR BUSINESS INSURANCE)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Purpose of this Insurance:
A. [_] Buy & Sell D. [_] Split Dollar
B. [_] Employee Fringe Benefit E. [_] Key Employee
C. [_] Deferred Compensation F. [_] Other (Explain in remarks)
- ---------------------------------------------------------------------------------------------------------------------------------
2. Name of Principal Officers, | | | Amount of Insurance
Partners or Key Employees | Position | % of Business Owned | Owned By Business
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
3. What is the current fair market value of the business? [$_________________________]
4. What is the annual net profit (before taxes) of business? [Last Year $____________ 2 Years Ago $_______________]
5. Are other officers, partners or key employees proportionately insured? [_] Yes [_] No (If no, explain in remarks)
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
SECTION I | COMPLETE THIS SECTION IF PROPOSED INSURED IS UNDER AGE 16
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Did you personally observe the Proposed Insured? [_] Yes [_] No (If no, explain in remarks)
- ---------------------------------------------------------------------------------------------------------------------------------
2. Are Proposed Insured's brothers and sisters insured for equal amounts? [_] Yes [_] No (If no, explain in remarks)
- ---------------------------------------------------------------------------------------------------------------------------------
3. Person on whom Proposed Insured depends for support:
A. Name | B. Relationship
- ---------------------------------------------------------------------------------------------------------------------------------
C. Estimated annual income | D. Estimated net worth | E. Estimated amount of life insurance
$ | $ | $
- ---------------------------------------------------------------------------------------------------------------------------------
4. Information on Applicant:
A. Name | B. Relationship
- ---------------------------------------------------------------------------------------------------------------------------------
C. Purpose of insurance | D. Amount of life insurance in force
| $
- ---------------------------------------------------------------------------------------------------------------------------------
REMARKS
- ---------------------------------------------------------------------------------------------------------------------------------
AP9500 15-19503-00 10/95
</TABLE>
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION J COMPLETE FOR ALL APPLICATIONS-AGENT INFORMATION
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
1. How well do you know Proposed Insured? 2. How well do you know Additional Insured?
(or Applicant if Proposed Insured is under age 16)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
3. Have you personally asked all applicable questions in this application? Proposed Insured Additional Insured
(if no, explain in remarks) [_] Yes [_] No [_] Yes [_] No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
4. Are you aware of any information not given in the application which might affect the insurability of:
Proposed Insured [_] Yes [_] No Additional Insured [_] Yes [_] No (If yes, explain in remarks)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
5. Did the Proposed Insured or Applicant make the initial inquiry which led to the sale of this insurance?
[_] Yes [_] No (If yes, explain in remarks)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
6. Has the Proposed Insured changed name within the last 5 years? [_] Yes [_] No
7. Has the Additional Insured changed name within the last 5 years? [_] Yes [_] No (If yes, give former name in remarks)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
8. To the best of your knowledge, does any policy applied for either replace, involve a change in, or involve use of value from
any existing life insurance policy or annuity? Proposed Insured Additional Insured
(IF "YES", GIVE COMPANY AND POLICY NUMBER IN "REMARKS" ON PAGE 5. IF PM POLICY,
THEN GIVE POLICY NUMBER AND HOW VALUES ARE TO BE APPLIED IN "REMARKS") [_] Yes [_] No [_] Yes [_] No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
9. If this policy is a tax qualified plan indicate type: [_] Pension/Profit sharing [_] HR-10 [_] Other
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
10. Is application submitted on a: Proposed Insured Additional Insured
YES NO YES NO
(A) Medical Basis? [_] [_] [_] [_]
(B) Non-Medical Basis? (Submit Part 2) [_] [_] [_] [_]
(C) Guaranteed Issue Basis? [_] [_] [_] [_]
(D) Guaranteed to Issue Basis? [_] [_] [_] [_]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11. Check appropriate items which have been ordered:
Proposed Insured Additional Insured Proposed Insured Additional Insured
Yes No Yes No Yes No Yes No
Medical Exam [_] [_] [_] [_] H.O. Specimen [_] [_] [_] [_]
Paramedical Exam [_] [_] [_] [_] APS_________ [_] [_] [_] [_]
EKG [_] [_] [_] [_] ____________ [_] [_] [_] [_]
Blood Profile [_] [_] [_] [_] ____________ [_] [_] [_] [_]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
I certify that to the best of my knowledge and belief: Yes No
A. I have presented to the Company all pertinent facts and have correctly and completely recorded all required answers... [_] [_]
B. I have given the Proposed Insured (or Parent for Juvenile insurance) a copy of the Fair Credit Reporting Act and MIB
Disclosure Notice, and any other disclosure notice or statement required by state or federal law...................... [_] [_]
C. I have fully explained the terms and conditions of the Temporary Insurance Agreement(s) to the Proposed Insured
(or Applicant) and have given it to him/her (them).................................................................... [_] [_]
D. I have complied with state and federal laws on disclosure, cost comparison and replacement............................ [_] [_]
E. I have reviewed the purchase of this insurance policy as to suitability............................................... [_] [_]
Signature(s) Of Soliciting Agent(s). Pay Commission as Indicated Below.
X______________________________________________________________ X__________________________________________________________________
First Name Listed Below Will Be The Servicing Agent
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AGENT NAME PHONE FAX AGENCY AGENT COMM %
NUMBER NUMBER NUMBER CODE
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Broker/Dealer Name (if applicable):_________________________________________________________________________________________________
AP9500 15-19503-00 10/95
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPLICATION, PART II RS NONMED
TO PACIFIC MUTUAL LIFE INSURANCE COMPANY
NON-MEDICAL 700 Newport Center Drive, Newport Beach, California 92660 (Logo of Pacific Mutual)
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION A | COMPLETE ON PROPOSED INSURED (AGE 16 OR OVER)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Full Name | 2a. Date of Birth | 2b. Height | 2c. Weight
| MO. DAY YR. | |
| | FT. IN. | LBS.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
3. a. Name and address of personal physician, practitioner or health facility last visited:
<C> <S> <C>
-----------------------------------------------------------------------------------------------------------------------------
(IF NONE, SO STATE)
b. Date: c. Reason consulted:
------------------------- ---------------------------|-------------------------------------------
MO. YR. Yes No | Details of "Yes" answers. (Identify
d. Did any symptoms prompt consultation?................................. [_] [_] | question, and include diagnoses, dates,
e. Was any treatment given or medication prescribed?..................... [_] [_] | duration and names and addresses of all
(IF "D" OR "E" ANSWERED "YES", GIVE DETAILS) | attending physicians and medical
4. To the best of your knowledge and belief, during the past 10 years, have | facilities. Use an additional sheet if
you had, or been told that you had, or been treated by a member of the | necessary.)
medical profession for: |
(CIRCLE APPLICABLE ITEMS AND GIVE DETAILS) |
a. Disorder of the eyes, ears, nose, or throat?.......................... [_] [_] |
b. Dizziness, fainting, convulsions, headaches, speech defect, |
paralysis or stroke, or mental or nervous disorder?................... [_] [_] |
c. Hoarseness or cough, blood spitting, asthma, pneumonia, emphysema, |
tuberculosis, or other respiratory system disorder?................... [_] [_] |
d. Chest pain, high blood pressure, rheumatic fever, murmur, heart |
attack or other disorder of the heart or blood vessels?............... [_] [_] |
e. Jaundice, intestinal bleeding, ulcer, colitis, diverticulitis, |
hepatitis, or other disorder of the liver, gallbladder, stomach, or |
intestines?........................................................... [_] [_] |
f. Sugar, albumin, or blood in urine, venereal disease, stone or other |
disorder of kidney, bladder, prostate, breasts or reproductive organs? [_] [_] |
g. Diabetes; thyroid or other endocrine disorders?....................... [_] [_] |
h. Neuritis, sciatica, arthritis, gout, or disorder of the muscles or |
bones, including the spine, back, or joints?.......................... [_] [_] |
i. Cancer, cyst, tumor or disorder of skin, blood or lymph glands?....... [_] [_] |
j. Any disorder(s) of the Immune System, including AIDS (Acquired |
Immune Deficiency Syndrome) and ARC (AIDS Related Complex)?........... [_] [_] |
5. a. Have you within the past 5 years been a patient in a hospital, clinic, |
sanitarium or other medical facility?................................. [_] [_] |
b. Are you now under regular medical observation or taking treatment?.... [_] [_] |
6. a. Except as prescribed by a physician, have you used heroin, morphine |
or other narcotic drugs in the last 10 years?......................... [_] [_] |
b. Except as prescribed by a physician, have you used cocaine, LSD, |
marijuana or other hallucinogenic agents, or barbiturates, sedatives, |
tranquilizers or any amphetamines in the last 5 years?................ [_] [_] |
c. In the last 5 years have you received treatment for or joined an |
organization because of alcoholism or drug addiction?................. [_] [_] |
7. Other than as stated in answers above, have you within the past 5 years: |
a. Had a checkup, consultation, illness, injury or operation?............ [_] [_] |
b. Had an electrocardiogram, blood test, other test or X-ray?............ [_] [_] |
c. Been advised to have any diagnostic test, hospitalization or surgery |
which was not completed?.............................................. [_] [_] |
8. Have you had any change in weight in the past year?...................... [_] [_] |
9. Have either of your parents, brothers or sisters had diabetes, cancer, |
high blood pressure, heart disease, or mental illness?................... [_] [_] |
(IF "YES", STATE CONDITION, GIVE RELATIONSHIP AND AGE AT ONSET) |
10. Parents' Record (COMPLETE BELOW): |
</TABLE>
<TABLE>
<CAPTION>
- -----------|-------------------------------------|--------------------------------------|
| IF LIVING | IF DECEASED |
- -----------|-----------|-------------------------|-------------|------------------------|
| | | AGE AT | |
| AGE | STATE OF HEALTH | DEATH | CAUSE OF DEATH |
- -----------|-----------|-------------------------|-------------|------------------------|
<S> <C> <C> <C> <C>
Father | | | | |
- -----------|-----------|-------------------------|-------------|------------------------|
Mother | | | | |
- -----------|-----------|-------------------------|-------------|------------------------|
</TABLE>
<TABLE>
<CAPTION>
The above statements are true and complete to the best of my knowledge and belief. I agree that such statements and answers shall be
a part of the application.
<S> <C> <C>
Dated at on X
-------------------------------- -------------------------------- -----------------------------------------------------
CITY STATE MO. DAY YR. SIGNATURE OF PROPOSED INSURED
- ---------------------------------------------------------------------------
WITNESS
Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or
statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any
fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties.
-1-
AP9500-P2 15-19536-00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPLICATION, PART II RS NONMED
TO PACIFIC MUTUAL LIFE INSURANCE COMPANY
NON-MEDICAL 700 Newport Center Drive, Newport Beach, California 92660 (Logo of Pacific Mutual)
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION B | COMPLETE ON ADDITIONAL INSURED (AGE 16 OR OVER)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Full Name | 2a. Date of Birth | 2b. Height | 2c. Weight
| MO. DAY YR. | |
| | FT. IN. | LBS.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
3. a. Name and address of personal physician, practitioner or health facility last visited:
-----------------------------------------------------------------------------------------------------------------------------
(IF NONE, SO STATE)
b. Date: c. Reason consulted:
------------------------- ---------------------------|-------------------------------------------
<S> <C> <C> <C>
MO. YR. Yes No | Details of "Yes" answers. (Identify
d. Did any symptoms prompt consultation?................................. [_] [_] | question, and include diagnoses, dates,
e. Was any treatment given or medication prescribed?..................... [_] [_] | duration and names and addresses of all
(IF "D" OR "E" ANSWERED "YES", GIVE DETAILS) | attending physicians and medical
4. To the best of your knowledge and belief, during the past 10 years, have | facilities. Use an additional sheet if
you had, or been told that you had, or been treated by a member of the | necessary.)
medical profession for: |
(CIRCLE APPLICABLE ITEMS AND GIVE DETAILS) |
a. Disorder of the eyes, ears, nose, or throat?.......................... [_] [_] |
b. Dizziness, fainting, convulsions, headaches, speech defect, |
paralysis or stroke, or mental or nervous disorder?................... [_] [_] |
c. Hoarseness or cough, blood spitting, asthma, pneumonia, emphysema, |
tuberculosis, or other respiratory system disorder?................... [_] [_] |
d. Chest pain, high blood pressure, rheumatic fever, murmur, heart |
attack or other disorder of the heart or blood vessels?............... [_] [_] |
e. Jaundice, intestinal bleeding, ulcer, colitis, diverticulitis, |
hepatitis, or other disorder of the liver, gallbladder, stomach, or |
intestines?........................................................... [_] [_] |
f. Sugar, albumin, or blood in urine, venereal disease, stone or other |
disorder of kidney, bladder, prostate, breasts or reproductive organs? [_] [_] |
g. Diabetes; thyroid or other endocrine disorders?....................... [_] [_] |
h. Neuritis, sciatica, arthritis, gout, or disorder of the muscles or |
bones, including the spine, back, or joints?.......................... [_] [_] |
i. Cancer, cyst, tumor or disorder of skin, blood or lymph glands?....... [_] [_] |
j. Any disorder(s) of the Immune System, including AIDS (Acquired |
Immune Deficiency Syndrome) and ARC (AIDS Related Complex)?........... [_] [_] |
5. a. Have you within the past 5 years been a patient in a hospital, clinic, |
sanitarium or other medical facility?................................. [_] [_] |
b. Are you now under regular medical observation or taking treatment?.... [_] [_] |
6. a. Except as prescribed by a physician, have you used heroin, morphine |
or other narcotic drugs in the last 10 years?......................... [_] [_] |
b. Except as prescribed by a physician, have you used cocaine, LSD, |
marijuana or other hallucinogenic agents, or barbiturates, sedatives, |
tranquilizers or any amphetamines in the last 5 years?................ [_] [_] |
c. In the last 5 years have you received treatment for or joined an |
organization because of alcoholism or drug addiction?................. [_] [_] |
7. Other than as stated in answers above, have you within the past 5 years: |
a. Had a checkup, consultation, illness, injury or operation?............ [_] [_] |
b. Had an electrocardiogram, blood test, other test or X-ray?............ [_] [_] |
c. Been advised to have any diagnostic test, hospitalization or surgery |
which was not completed?.............................................. [_] [_] |
8. Have you had any change in weight in the past year?...................... [_] [_] |
9. Have either of your parents, brothers or sisters had diabetes, cancer, |
high blood pressure, heart disease, or mental illness?................... [_] [_] |
(IF "YES", STATE CONDITION, GIVE RELATIONSHIP AND AGE AT ONSET) |
10. Parents' Record (COMPLETE BELOW): |
</TABLE>
<TABLE>
<CAPTION>
- -----------|-------------------------------------|--------------------------------------|
| IF LIVING | IF DECEASED |
- -----------|-----------|-------------------------|-------------|------------------------|
| | | AGE AT | |
| AGE | STATE OF HEALTH | DEATH | CAUSE OF DEATH |
- -----------|-----------|-------------------------|-------------|------------------------|
<S> <C> <C> <C> <C>
Father | | | | |
- -----------|-----------|-------------------------|-------------|------------------------|
Mother | | | | |
- -----------|-----------|-------------------------|-------------|------------------------|
</TABLE>
<TABLE>
<CAPTION>
The above statements are true and complete to the best of my knowledge and belief. I agree that such statements and answers shall be
a part of the application.
<S> <C> <C>
Dated at on X
-------------------------------- -------------------------------- -----------------------------------------------------
CITY STATE MO. DAY YR. SIGNATURE OF ADDITIONAL INSURED
- ---------------------------------------------------------------------------
WITNESS
Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or
statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any
fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties.
-2-
AP9500-P2 15-19536-00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPLICATION, PART II RS NONMED
TO PACIFIC MUTUAL LIFE INSURANCE COMPANY PACIFIC MUTUAL
NON-MEDICAL 700 Newport Center Drive, Newport Beach, California 92660
___________________________________________________________________________________________________________________________________
SECTION C COMPLETE IF APPLYING FOR OWNER PREMIUM WAIVER, PAYOR WAIVER,
CHILDREN'S TERM RIDER AND IF PROPOSED INSURED IS UNDER AGE 16.
___________________________________________________________________________________________________________________________________
| RELATIONSHIP | | | | | AMOUNT OF | AMT. OF INS.
1. NAME OF PERSON TO BE COVERED | TO PROPOSED | DATE OF BIRTH | STATE OF | HEIGHT | WEIGHT | INSURANCE | CURRENTLY
| INSURED | (MO./DAY/YR.) | BIRTH | (FT./IN.) | (POUNDS) | NOW IN FORCE | APPLIED FOR
__________________________________|_________________|_______________|__________|___________|__________|______________|_____________
<S> |<C> |<C> |<C> | <C> |<C> |<C> |<C>
__________________________________|_________________|_______________|__________|___________|__________|______________|_____________
| | | | | | |
__________________________________|_________________|_______________|__________|___________|__________|______________|_____________
| | | | | | |
__________________________________|_________________|_______________|__________|___________|__________|______________|_____________
</TABLE>
<TABLE>
<CAPTION>
Note: If payor or owner waiver of charges is being applied for, please indicate the individual's occupation and the employer's name
and address:_________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
2a. Name and address of your personal physician, practitioner or health facility
___________________________________________________________________________________________________________________________________
b. Date: | c. Reason for and results of last visit
____________________|______________________________________________________________________________________________________________
3. Has any person named in Question 1 during the past 10 years had or been told that he or she had, or been treated for:
(CIRCLE APPLICABLE ITEMS AND GIVE DETAILS)
<S> <C> <C>
Yes No
A. Diabetes, cancer or epilepsy?.............................................................................. [ ] [ ]
B. Heart murmur, high blood pressure or any heart condition?.................................................. [ ] [ ]
C. Any disorder(s) of the Immune System, including AIDS (Acquired Immune Deficiency Syndrome) and ARC (AIDS
Related Complex)?.......................................................................................... [ ] [ ]
4. Has any person named in Question 1:
A. Been in a hospital, sanitarium or other institution for diagnosis, treatment or a surgical operation within
the past 5 years?.......................................................................................... [ ] [ ]
B. Had any medical consultation or treatment within the past 3 years, other than as stated in any answer
above?..................................................................................................... [ ] [ ]
GIVE DETAILS BELOW FOR EACH "YES" ANSWER IN QUESTIONS 3 AND 4:
____________________________________________________________________________________________________________________________________
QUESTION NO. | FIRST NAME | REASON FOR CONSULTATION | DATE | DURATION - RESULT | NAME AND ADDRESS OF PHYSICIAN
_______________|_________________|_____________________________|___________|_______________________|________________________________
_______________|_________________|_____________________________|___________|_______________________|________________________________
_______________|_________________|_____________________________|___________|_______________________|________________________________
_______________|_________________|_____________________________|___________|_______________________|________________________________
_______________|_________________|_____________________________|___________|_______________________|________________________________
DECLARATIONS
____________________________________________________________________________________________________________________________________
I represent that the foregoing answers and statements are correctly recorded, complete, and true to the best of my knowledge and
belief.
I understand that:
1. Except as otherwise provided in any Temporary Insurance Agreement, no insurance will take effect before the policy for such
insurance is delivered and the first premium paid during the lifetime(s) and before any change in the health of the Proposed
Insured(s). Upon such delivery and payment, insurance will take effect if the answers and statements in this application are
then true.
2. Acceptance of a life insurance policy will be ratification of any administrative change with respect to such policy made by the
Company in the space entitled "Home Office Endorsements," where permitted by state law. All other changes, including policy
type and amount of insurance, benefits, classification or age at issue, must be accepted in writing.
3. No agent or medical examiner is authorized to make or modify contracts or to waive any of the Company's rights or requirements.
Signed and Dated in:
________________________________________ on _________________________ X_________________________________________________________
CITY STATE MO. DAY YR. Signature of Proposed Insured (OR PARENT, IF PROPOSED
INSURED IS UNDER AGE 16)
X_________________________________________________________
Signature of Owner/Payor
IF OWNER IS A CORPORATION, THE SIGNATURE AND TITLE OF AN AUTHORIZED OFFICER OTHER THAN THE PROPOSED INSURED IS REQUIRED AND THE
FULL NAME OF THE CORPORATION MUST BE SHOWN.
I certify that I have truly and accurately recorded hereon the information supplied.
________________________________________ _______________________________________ _______________________________________
Signature of Soliciting Agent Please Print Soliciting Agent Name State License ID Number
(Required in Florida)
</TABLE>
Any person who knowingly and with intent to defraud any insurance company or
other person files an application for insurance or statement of claim containing
any materially false information or conceals for the purpose of misleading,
information concerning any fact material thereto commits a fraudulent insurance
act, which is a crime and subjects such person to criminal and civil penalties.
AP9500-P2
-3-
<PAGE>
GENERAL QUESTIONNAIRE [LOGO OF PACIFIC MUTUAL]
PACIFIC MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
FULL NAME (PRINT) | DATE OF BIRTH
|
| MO. DAY YR.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
| SECTION A | AUTOMOBILE, MOTORCYCLE AND/OR POWERBOAT RACING |
- --------------------------------------------------------------------------------
1. Type of racing? [_] Midget [_] Go-Kart [_] Sports Car
[_] Modified Stock [_] Drag Racing [_] Motorcycle [_] Powerboat
[_] Other (explain) _________________________________________________________
2. Make? _______________ Model? _______________ Displacement? ______________
Class? ______________ Engine Make & Model? _______________ HP? __________
3. (a) Number of races 12-24 months ago? ________ (b) Past 12 months? ________
(c) Date of last race? ________________ (d) Est. next 12 months? __________
4. Type of race? [_] Midget [_]Sports Car [_] Stock Car [_] Championship
[_] Drag [_] Kart [_] Hillclimb [_] Cross Country [_] Hound & Hare
[_] Moto-Cross [_] Other (explain) ________________________________________
_____________________________________________________________________________
5. Type of course? [_] Paved [_] Dirt [_] Drag Strip [_] Oval
[_] Other (explain) ________________________________________________________
_____________________________________________________________________________
6. Where do you race? [_] Local? If not, where? __________________________
7. Competition against? [_] Other Cars [_] Clock [_] Straightaway
[_] _________________________________________________________________________
8. Average Speed? ____________________ Top Speed? ____________________
Average miles per race? ____________________
9. Is your racing? [_] Professional [_] Amateur
[_] Other (explain) ________________________________________________________
- --------------------------------------------------------------------------------
| SECTION B | UNDERWATER DIVING (SKIN OR SCUBA) |
- --------------------------------------------------------------------------------
1. What type equipment do you use? _____________________________________________
2. Location of diving activities? _________________ Diving for pleasure? _____
Pay? _____
3. Do you belong to a club or association? _____ Do you ever dive alone? _____
4. Depth of Dives
--------------
<TABLE>
<CAPTION>
---------------------------------------------------------------------
| During Past 12 Months | Expected Next 12 Months |
---------------------------------------------------------------------
| No. Dives | Average Time | No. Dives | Average Time |
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
a. Less than 40 feet | | | | |
---------------------------------------------------------------------
b. 40 feet to 60 feet | | | | |
---------------------------------------------------------------------
c. 60 feet & over | | | | |
---------------------------------------------------------------------
d. Maximum depth obtained | | | | |
---------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
| SECTION C | PARACHUTE JUMPING AND SKY DIVING |
- --------------------------------------------------------------------------------
1. Are you now a member of any parachute or sky diving club or association? ____
2. Are all of your jumps made under auspices of your club or association? ______
3. (a) Number of jumps 12-24 months ago? ________ (b) Past 12 months? ________
(c) Next 12 months? ________
4. Do you participate in delayed chute opening competition or other stunts? ____
5. Location of jump areas? __________________ Date of last jump? _____________
- --------------------------------------------------------------------------------
| SECTION D | IDENTIFY SECTION AND QUESTION |
- --------------------------------------------------------------------------------
________________________________________________________________________________
I represent that the foregoing answers and statements are correctly recorded,
complete, and true to the best of my knowledge and belief.
Date _____________________________ X________________________________________
MO. DAY YR. SIGNATURE OF PROPOSED INSURED (OR PARENT
IF PROPOSED INSURED IS UNDER AGE 15)
__________________________________
SIGNATURE OF SOLICITING AGENT
_______________
AGENCY NO.
AP7503 15-07503-01 2/90
<PAGE>
<TABLE>
<S> <C>
GENERAL QUESTIONNAIRE
PACIFIC MUTUAL LIFE INSURANCE COMPANY [PACIFIC MUTUAL LOGO]
- -----------------------------------------------------------------------------------------------------------------------------------
FULL NAME (print) DATE OF BIRTH
MO. DAY YR.
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION D Aviation
- -----------------------------------------------------------------------------------------------------------------------------------
1. Type of aviation activity For Civilian and Military Pilots:
HOURS FLOWN
LAST 12 12-24 MO. ALL PRIOR EST. NEXT
MONTHS AGO YEARS 12 MO.
------- --------- ---------- ---------- 5. A. Type of license/certificate/rating held
Civilian Pilot [check appropriate boxes):
------- --------- ---------- ---------- [_] Student [_] Private [_] Commercial [_] ATR [_] IFR
Military Pilot [_] Instructor [_] Other (Specify "Remarks")
------- --------- ---------- ---------- B. Date of last renewal:__________________________________________
Member of Crew C. Purpose of flights:
------- --------- ---------- ---------- ------------------------------------------------------------------
2. Have you ever done or do you intend to engage
in flying for the purpose of exhibition, D. Total flying hours to date:____________________________________
endurance tests, racing, stunt flying, testing, E. Date of last flight:___________________________________________
air cargo operations, crop dusting or spraying, Yes No
or instruction of student pilots?.............. [_] [_] FOR CREW MEMBERS:
3. A. Have you ever flown or do you intend to 6. A. Duties aboard aircraft:_____________________________________
fly outside the United States?.............. [_] [_] _______________________________________________________________
B. Have you ever been involved in any B. Purpose of flights:_________________________________________
accident due to flying activities?.......... [_] [_] ---------------------------------------------------------------
C. Have you ever been charged with any C. Date of last flight:________________________________________
violation of air regulations?............... [_] [_] D. Do you plan to take instructions as a pilot? Yes [_] No [_]
(if "yes" to questions 2, 3A or 3C, explain in (if "yes", explain in "remarks".)
"remarks".) 7. If aviation activity does not permit standard, unrestricted
coverage, please issue as follows:
FOR PILOTS AND CREW MEMBERS OF MILITARY AIRCRAFT: [_] Full aviation coverage, if available, with appropriate
4. Describe type of aircraft flown in (including extra premium.
alphabetic & numeric code). [_] Aviation exclusion rider.
- -----------------------------------------------------------------------------------------------------------------------------------
REMARKS identify section and question
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
I represent that the foregoing answers and statements are correctly recorded, complete, and true to the best of my knowledge and
belief.
Date__________________________________________________________ X_________________________________________________________________
MO. DAY YR. Signature of proposed insured (or parent if proposed insured is
under age 15)
______________________________________________________________
Signature of Solicitating Agent
___________________________________
Agency No.
AP7503
</TABLE>
<PAGE>
EXHIBIT 99.3
Form of Opinion and consent of
legal officer of Pacific Mutual as
to legality of policies being
registered
<PAGE>
[PACIFIC MUTUAL LOGO]
March 12, 1996
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Post Office Box 9000
Newport Beach, California 92660
Dear Sirs:
In my capacity as Senior Vice-President and General Counsel of Pacific Mutual
Life Insurance Company ("Pacific Mutual") I, or attorneys employed by Pacific
Mutual under my general supervision, have supervised the establishment of
Pacific Select Exec Separate Account of Pacific Mutual Life Insurance Company
which has been authorized by resolutions of the Board of Directors of Pacific
Mutual adopted November 20, 1986 and November 22, 1989 and Memoranda dated
May 12, 1988 and July 26, 1993 concerning Pacific Select Exec Separate Account
as the separate account for assets applicable to Select Estate Preserver Last
Survivor Flexible Premium Variable Life Insurance Policies ("Policies"),
pursuant to the provisions of Section 10506 of the Insurance Code of the State
of California. Moreover, I have been associated with the preparation of the
Registration Statement on Form S-6 ("Registration Statement") filed by Pacific
Mutual and Pacific Select Exec Separate Account with the Securities and Exchange
Commission (File No. 33-57908 and File No. 811-5563), under the Securities Act
of 1933, as amended, for the registration of interests in the Pacific Select
Exec Separate Account funding the Policies.
I have made such examination of the law and examined such corporate records and
such other documents as in my judgment are necessary and appropriate to enable
me to render the following opinion that:
1. Pacific Mutual has been duly organized under the laws of the State of
California and is a validly existing corporation.
2. Pacific Select Exec Separate Account is duly created and validly existing as
a separate account, pursuant to the aforesaid provisions of California law.
3. The portion of the assets to be held in Pacific Select Exec Account equal to
the reserves and other liabilities under the Policies is not chargeable with
liabilities arising out of any other business Pacific Mutual may conduct,
pursuant to the aforesaid provision of California law.
<PAGE>
4. The Policies have been duly authorized by Pacific Mutual and, when issued as
contemplated by the Registration Statement, will constitute legal, validly
issued and binding obligations of Pacific Mutual, except as limited by
bankruptcy and insolvency laws effecting the rights of creditors generally.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
David R. Carmichael
Senior Vice President and
General Counsel
DRC/kjh
<PAGE>
EXHIBIT 99.8
Memorandum Describing Issuance, Transfer and Redemption Procedures
<PAGE>
PACIFIC MUTUAL LIFE INSURANCE COMPANY'S
DESCRIPTION OF ISSUANCE, TRANSFER AND REDEMPTION
PROCEDURES FOR POLICIES PURSUANT TO
RULE 6e-3(T)(b)(12)(iii)
This document sets forth the administrative procedures that will be
followed by Pacific Mutual Life Insurance Company ("Pacific Mutual") in
connection with the issuance of its Pacific Select Estate Preserver Flexible
Premium Joint Survivorship Variable Life Insurance Policy ("Policy"), the
transfer of assets held under the Policies, and the redemption by Policy owners
of their interests in said Policies.
I. PURCHASE AND RELATED TRANSACTIONS
A. Premium Schedules and Underwriting Standards
--------------------------------------------
The Policy is a flexible premium joint survivorship variable life insurance
policy. The Policy provides lifetime insurance protection on the lives of two
insureds named in the Policy, with a death benefit payable when the last
surviving insured dies while the Policy is in force. A Policy owner may elect
one of four options to calculate the amount of death benefit payable under the
Policy. The Policy will be offered and sold pursuant to an established
mortality structure and underwriting standards in accordance with state
insurance laws which prohibit unfair discrimination among Policy owners, but
allow cost of insurance rates to be based upon factors such as age, health or
occupation.
The minimum initial premium to purchase a Policy must be equal to at least
25% of the sum of the Policy's monthly deductions plus premium load for the
first year, which will be based upon the Policy's face amount and the age,
smoking status, gender, and underwriting classes of the Insureds. Thereafter, a
Policy owner may choose the amount and frequency of premium payments. Pacific
Mutual may reduce the minimum initial premium required under certain
circumstances.
B. Application and Initial Premium Processing
------------------------------------------
Upon receipt of a completed application for a Policy, Pacific Mutual will
follow certain insurance underwriting (i.e., evaluation of risk) procedures
---
designed to determine whether the proposed insureds are insurable. This process
may involve verification procedures and may require that further information be
provided by the applicant before a determination can be made. Pacific Mutual
will first become obligated under a Policy when the total initial premium is
received or on the date the application is accepted by Pacific Mutual, whichever
is later.
After the Policy is issued, insurance coverage under the Policy will be
deemed to have begun as of the Policy date. The Policy date is usually the date
the premium is received at Pacific Mutual's home office, or, if later, the date
the application is accepted. The Policy date is the date used to determine
Policy years, Policy months, and Policy monthly, quarterly, semi-annual and
annual anniversaries.
1
<PAGE>
C. Additional Premium Payments
---------------------------
The Policy is a flexible premium policy, and it provides flexibility to pay
premiums at the Policy owner's discretion. When applying for a Policy, a Policy
owner will determine an planned periodic premium that provides for the payment
of level premiums of fixed intervals over a specified period of time. Each
Policy owner will receive a premium reminder notice on either an annual, semi-
annual, or quarterly basis, at the option of the Policy owner; however, the
Policy owner is not required to pay planned periodic premiums.
Payment of the planned periodic premium will not guarantee that a Policy
will remain in force. Instead, the duration of the Policy depends upon the
Policy's accumulated value. Even if planned periodic premiums are paid, the
Policy will lapse any time accumulated value less Policy debt is insufficient to
pay the current monthly deduction and a grace period expires without sufficient
payment. Any premium payment must be for at least $50.00. Pacific Mutual also
may reject or limit any premium payment that would result in an immediate
increase in the net amount at risk under the Policy, although such a premium may
be accepted with satisfactory evidence of insurability.
D. Premium Allocation
------------------
A Policy owner may allocate net premiums among the variable accounts and/or
the fixed account. When an application is approved and a Policy is issued, the
Accumulated Value will be automatically allocated according to the Policy
owner's instructions in the application or more recent instructions if any
(except for amounts allocated to the Loan Account to secure any Debt). The
initial allocation must be made in the application for the Policy. For
residents of states that requires a refund of premium, during the free-look
period (a limited period of time during which the Policy owner may return and
cancel the Policy for a full refund of premiums paid (Free Look Right)), all net
premiums are allocated to the Money Market Variable Account. The accumulated
value is allocated according to the Policy owner's instructions the later of 15
days after the Policy is issued or 45 days after the application is signed, or
if longer, upon receipt of the minimum initial premium (the Free Look Transfer
Date).
Additional net premium payments will be allocated among the investment
alternatives according to the Policy owner's instructions (after the Free-Look
Transfer Date if the owner resides in a state that requires refund of premium if
the owner exercises his or her Free Look Right). A Policy owner may change the
allocation of accumulated value by submitting a proper written request to
Pacific Mutual's home office.
E. Reinstatement
-------------
Pacific Mutual will reinstate a lapsed Policy (see "Policy Lapsation,"
Section III.C. on page 6 of this document) at any time within five years after
the end of the grace period, provided Pacific Mutual receives the following:
(1) a written application of the Policy owner; (2) evidence of insurability
satisfactory to Pacific Mutual for each insured; and (3) payment of all monthly
charges
2
<PAGE>
and deductions that were due and unpaid during the grace period, and payment of
a premium at least equal to three times the most recent monthly deduction.
When the Policy is reinstated, the accumulated value will be equal to the
accumulated value on the date of the lapse subject to the following: (1) If the
Policy is reinstated after the first monthly payment date following lapse, the
accumulated value will be reduced by the amount of Policy debt on the date of
lapse and no Policy debt will exist on the date of reinstatement; (2) If the
Policy is reinstated on the monthly payment date next following lapse, any
Policy debt on the date of lapse will also be reinstated; and (3) No interest on
amounts held in Pacific Mutual's Loan Account to secure Policy debt will be paid
or credited between lapse and reinstatement.
Reinstatement will be effective as of the monthly payment date on or next
following the date of approval by Pacific Mutual, and accumulated value minus
Policy debt will be allocated among the variable accounts and the fixed account
in accordance with the Policy owner's current premium allocation instructions.
F. Policy Loans
------------
A Policy owner may borrow from Pacific Mutual an amount up to the greater
of (1) 100% of accumulated value allocated to the fixed account and 90% of the
Policy's accumulated value allocated to the variable accounts, less any
outstanding Policy debt and less the amount of any surrender charge that would
be imposed if the Policy were surrendered on the date the loan was taken, or (2)
100% of the product of (a X b/c - d) where (a) equals the Policy's Accumulated
Value less any surrender charge that would be imposed if the Policy were
surrendered on the date the loan is taken and less 12 times the current monthly
deduction; (b) equals 1 plus the annual loan interest rate credited; (c) equals
1 plus the annual loan interest rate currently charged; and (d) equals any
existing Policy Debt. The minimum loan that may be taken is $500. A Policy is
the only security required for a loan.
When a Policy owner takes a loan, an amount equal to the loan is
transferred out of the Policy owner's accumulated value in the variable accounts
and the fixed account on a proportional basis, unless the Policy owner instructs
Pacific Mutual otherwise.
The interest rate on loans is 4.50% for years one through twenty, and 4.25%
thereafter. Pacific Mutual will credit interest monthly on amounts held in the
Loan Account to secure the loan at an annual rate of 4.0%. The owner may repay
all or part of the loan at any time while the Policy is in force. If not
repaid, the Policy debt will reduce the amount of death proceeds paid upon the
death of the surviving insured, the cash surrender value paid upon surrender, or
the refund of premium upon exercise of the free-look right.
A loan may affect the length of time the Policy remains in force. The
Policy will lapse when accumulated value minus Policy debt is insufficient to
cover the monthly deduction against the Policy's accumulated value on any
monthly payment date and the minimum payment required is not made during the
grace period. Moreover, the Policy may enter the grace period more quickly when
a loan is outstanding, because the loaned amount is not available to cover
monthly deductions.
3
<PAGE>
II. TRANSFER AMONG INVESTMENT DIVISIONS
The Pacific Select Exec Separate Account (the "Separate Account") is a
separate investment account of Pacific Mutual used to support the variable death
benefits and policy values of Pacific Mutual's life insurance policies. The
Separate Account currently is made up of twelve variable accounts which invest
in shares of a corresponding portfolio of Pacific Select Fund (the "Fund"), the
investment vehicle of the Separate Account. The Fund is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940 as
an open-end management investment company of the series type. The portfolios of
the Fund, each of which has a different investment objective, are the Money
Market Portfolio, the High Yield Bond Portfolio, the Managed Bond Portfolio, the
Government Securities Portfolio, the Growth Portfolio, the Growth LT Portfolio,
the Equity Income Portfolio, the Multi-Strategy Portfolio, the Aggressive Equity
Portfolio, the Equity Index Portfolio, the International Portfolio, and the
Emerging Markets Portfolio.
A Policy owner may allocate accumulated value among the variable accounts
in any way he or she chooses. No transfers are allowed during the grace period
if the required premium has not been paid. There is currently no charge imposed
upon transfers, and no limit to the number and frequency of transfers permitted.
Accumulated value may also be transferred from the variable accounts to the
fixed account. However, such a transfer will only be permitted in the Policy
month preceding a Policy anniversary. Transfers from the fixed account to the
variable account are also permitted, subject to the following restrictions:
(1) The Policy owner may not make more than one transfer from the fixed account
to the variable accounts in any 12-month period; and (2) Until June 1, 1996 if a
Policy owner has $1,000 or more in the fixed account, the Policy owner may not
transfer more than 20% of such amount to the variable accounts in any year.
Effective June 1, 1996, a Policy owner may transfer no more than the greater of
25% of the Accumulated Value in the Fixed Account of $5000.
III. REDEMPTION PROCEDURES: SURRENDER AND RELATED TRANSACTIONS
A. Surrender for Net Cash Surrender Value
--------------------------------------
A Policy owner can make partial withdrawals of the net cash surrender value
of the Policy starting on the first Policy anniversary. During the first
fifteen Policy years, the portion of a partial withdrawal of up to the lesser of
$10,000 or 10% of cash surrender value will not reduce the face amount under the
Policy.
A partial withdrawal must be for at least $500, and the Policy's net cash
surrender value after the withdrawal must be at least $500. If there is any
Policy debt, the maximum partial withdrawal amount is limited to the excess, if
any, of the cash surrender value immediately prior to the withdrawal over the
result of the Policy debt divided by 90%. In addition, the amount of a partial
withdrawal may be further limited so that face amount will not be less than
$100,000.
4
<PAGE>
When a partial withdrawal is made on a Policy on which the owner has
selected Death Benefit Option A or Death Benefit Option D, the face amount under
the Policy is decreased by the excess, if any, of the face amount over the
result of the death benefit immediately prior to the partial withdrawal minus
the amount the partial withdrawal. A partial withdrawal will not change the
face amount of a Policy on which the owner has selected Death Benefit Option B
or Death Benefit Option C. However, assuming that the death benefit is not
equal to accumulated value times a death benefit percentage, the partial
withdrawal will reduce the death benefit by the amount of the partial
withdrawal. To the extent the death benefit is based upon the accumulated value
times the death benefit percentage applicable to the insureds, a partial
withdrawal may cause the death benefit to decrease by an amount greater than the
amount of the partial withdrawal.
B. Death Claims
------------
Upon the death of both insureds, Pacific Mutual will pay to a named
beneficiary death benefit proceeds, either in a lump sum or under a payment plan
offered under the Policy. The proceeds will be the death benefit under the
Policy, plus any insurance proceeds provided by rider, reduced by adjustments
for any outstanding Policy debt (and, if in the grace period, any overdue
charges).
The death benefit will be the greater of accumulated value multiplied by a
death benefit percentage, or one of the following four options: (1) Death
Benefit Option A - the face amount of the Policy; (2) Death Benefit Option B -
the face amount of the Policy plus the accumulated value; (3) Death Benefit
Option C - the face amount of the Policy plus the total premiums paid minus
total withdrawals; or (4) Death Benefit Option D - the face amount of the Policy
multiplied by a death benefit factor shown on a Policy's specifications pages.
The specified death benefit percentages vary according to the age of the younger
insured, and are shown in a table in the Policy. Because the specified
percentage is applied to a Policy owner's accumulated value, an increase in
accumulated value may increase the death benefit. However, because the death
benefit will never be less than the face amount while the Policy is in force, a
decrease in the accumulated value may decrease the death benefit but never below
the face amount while the Policy is in force.
The face amount of the Policy may be decreased by the Policy owner. A
decrease in face amount may only be made after the first Policy year. Such a
change may change the death benefit, depending, among other things, upon the
death benefit option chosen by the owner and whether, and the degree to which,
the death benefit under a Policy exceeds the face amount prior to the change. A
change in the face amount may affect the net amount at risk under a Policy,
which may affect a Policy owner's cost of insurance charge. For these purposes,
the net amount at risk is equal to the death benefit less the Policy owner's
accumulated value.
Any request for a change in face amount must be by written application to
Pacific Mutual's home office. A Policy owner may make only one such request per
Policy year.
5
<PAGE>
C. Policy Lapsation
----------------
If the accumulated value less Policy debt of a Policy is insufficient to
cover deductions and charges on a monthly payment date, Pacific Mutual will give
written notice to the Policy owner that if an amount shown in the notice (which
will be sufficient to cover the deduction amount(s) due) is not paid within 61
days (the "grace period"), the Policy owner faces a danger of lapse. The Policy
will remain in force through the grace period, but if no payment is forthcoming,
it will terminate at the end of the grace period. In order to avoid
termination, the Policy owner must pay an amount equal to three times the
charges and deductions due on the monthly payment date in which the
insufficiency occurred.
If the required payment is made during the grace period, such payment will
be allocated among the variable accounts and the fixed account in accordance
with the Policy owner's allocation instructions. If the survivor dies during
the grace period, the death benefit proceeds will equal the amount of the death
benefit immediately prior to the commencement of the grace period, reduced by
any unpaid monthly deductions and charges dues and any Policy debt.
A lapsed Policy may be reinstated at any time within five years after the
end of the grace period but before the maturity date. See "Reinstatement,"
Section I.E. on page 2 of this document.
D. Policy Loans
------------
See Section I.F. on page 3 of this document.
6
<PAGE>
EXHIBIT 99.9
Powers of Attorney
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9/13/94 Thomas C. Sutton
Chairman of the Board
and Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 1/3/95 Glenn S. Schafer
Director and President
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9-13-94 Edward Byrd
Controller
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9-15-94 Harry G. Bubb
Director and
Chairman Emeritus
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9/13/94 Richard M. Ferry
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9-16-94 Donald E. Guinn
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9/15/94 Ignacio E. Lozano, Jr.
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9-14-94 Charles A. Lynch
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: Sept 14, 1994 Dr. Allen W. Mathies, Jr.
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: Sept 15, 1994 Charles D. Miller
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 9/15/94 Donn B. Miller
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: 6/23/95 J. Fernando Niebla
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: Sept 14, 1994 Susan Westerberg Prager
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: Sept. 14, 1994 James R. Ukropina
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N.
Ledger, Jeffrey S. Puretz, Paul F. Roye and Robin Yonis Sandlaufer his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements applicable to Pacific Select Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Exec Separate Account of Pacific
Mutual Life Insurance Company, Pacific Select Variable Annuity Separate Account
of Pacific Mutual Life Insurance Company and Separate Account A of Pacific
Mutual Life Insurance Company and any amendments or supplements thereto, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: Sept. 26, 1994 Raymond L. Watson
Director
