<PAGE>
As filed with the Securities and Exchange Commission on March 2, 2000
Registration No. 333-61135
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 3 TO
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 LIFE INSURANCE COMPANY
(Exact Name of Registrant)
PACIFIC 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)
(949) 219-3743
(Depositor's Telephone Number, including Area Code)
Diane N. Ledger
Vice President
Pacific 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, Esq.
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, D.C. 20006-2401
It is proposed that this filing will become effective on May 1 , 2000
pursuant to paragraph (a) of Rule 485.
Title of securities being registered: interests in the Separate Account under
M's Versatile Product Flexible Premium Variable Life Insurance Policies.
Filing fee: None
<PAGE>
Pacific Select Exec Separate Account of Pacific 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)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C>
1. (a) Name of trust................................. Prospectus front cover
(b) Title of securities issued.................... Prospectus front cover
2. Name and address of each depositor................. Prospectus front cover; Back cover
3. Name and address of trustee........................ N/A
4. Name and address of each principal underwriter..... About Pacific Life
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. Material Litigation................................ N/A
II. General Description of the Trust and Securities of the Trust
10. (a) Registered or bearer securities............... M's Versatile Product basics; The death benefit
(b) Cumulative or distributive securities......... M's Versatile Product basics; The death benefit
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(c) Withdrawal or redemption.......................................... Withdrawals, surrenders and loans
(d) Conversion, transfer, etc. ....................................... Withdrawals, surrenders and loans
(e) Periodic payment plan............................................. N/A
(f) Voting rights..................................................... Voting Rights
(g) Notice to security holders........................................ Reports we'll send you
(h) Consents required................................................. Voting Rights
(i) Other provisions.................................................. N/A
11. Type of securities comprising units................................... M's Versatile Product basics
12. Certain information regarding periodic payment plan certificates...... N/A
13. (a) Load, fees, expenses, etc. ....................................... Deductions from your premiums; Surrendering your policy
(b) Certain information regarding periodic payment plan certificates.. N/A
(c) Certain percentages............................................... Deductions from your premiums
(d) Difference in price............................................... N/A
(e) Certain other fees, etc. ......................................... Deductions from your premiums; Surrendering your policy
(f) Certain other profits or benefits................................. The death benefit; Your policy's accumulated value
(g) Ratio of annual charges to income................................. N/A
14. Issuance of trust's securities........................................ M's Versatile Product basics
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
15. Receipt and handling of payments from purchasers.......... How premiums work
16. Acquisition and disposition of underlying securities...... Your policy's accumulated value; Your investment options
17. Withdrawal or redemption.................................. Withdrawals, surrenders and loans
18. (a) Receipt, custody and disposition of income............ Your policy's accumulated value
(b) Reinvestment of distributions......................... N/A
(c) Reserves or special funds............................. N/A
(d) Schedule of distributions............................. N/A
19. Records, accounts and reports............................. Statements and Reports
20. Certain miscellaneous provisions of trust agreement:
(a) Amendment............................................. N/A
(b) Termination........................................... N/A
(c) and (d) Trustees, removal and successor............... N/A
(e) and (f) Depositors, removal and successor............. N/A
21. Loans to security holders................................. Withdrawals, surrenders and loans
22. Limitations on liability.................................. N/A
23. Bonding arrangements...................................... N/A
24. Other material provisions of trust agreement.............. N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
III. Organizations, Personnel and Affiliated Persons of Depositor
25. Organization of depositor....................................................... About Pacific Life
26. Fees received by depositor...................................................... See Items 13(a) and 13(e)
27. Business of depositor........................................................... About Pacific Life
28. Certain information as to officials and affiliated persons of depositor......... About Pacific Life
29. Voting securities of depositor.................................................. N/A
30. Persons controlling depositor................................................... N/A
31. Payments by depositor for certain services 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... N/A
34. Remuneration of other persons for certain services rendered to trust............ N/A
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
38. (a) Method of distribution............ How policies are distributed
(b) Underwriting agreements........... How policies are distributed
(c) Selling agreements................ How policies are distributed
39. (a) Organization of principal
underwriters...................... How policies are distributed
(b) N.A.S.D. membership of principal
underwriters...................... How policies are distributed
40. Certain fees received by principal
underwriters.......................... How policies are distributed
41. (a) Business of each principal
underwriter........................... How policies are distributed
(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............... Your policy's accumulated value
(b) Schedule as to offering price..... How premiums work
(c) Variation in offering price to
certain persons................... Monthly deductions
45. Suspension of redemption rights....... Timing of payments, forms and requests
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
46. (a) Redemption valuation.............. Withdrawals, surrenders and loans
(b) Schedule as to redemption price... Withdrawals, surrenders and loans
47. Maintenance of position in
underlying securities................. Your investment options
V. Information Concerning the Trustee
or Custodian
48. Organization and regulation N/A
of trustee............................
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............................ The death benefit
VII. Policy of Registrant
52. (a) Provisions of trust agreement
with respect to selection or
elimination of underlying
securities........................ How our accounts work
(b) Transactions involving elimination
of underlying securities.......... How our accounts work
(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................... Variable life insurance and your
taxes
VIII. Financial and Statistical Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
54. Trust's securities during last ten years... N/A
55. N/A
56. Certain information regarding periodic
payment plan certificates.................. N/A
57. N/A
58. N/A
59. Financial statements (Instruction 1(c)
of "Instructions as to the Prospectus" of
Form S-6).................................. Financial statements
</TABLE>
<PAGE>
M'S VERSATILE PRODUCT PROSPECTUS , 2000
M's Versatile Product is a flexible premium variable
life insurance policy issued by Pacific Life Insurance
Company.
This prospectus provides information that you should
know before buying a policy. It's accompanied by a
current prospectus for the Pacific Select Fund and the
M Fund, the funds that provide the underlying
portfolios for the variable investment options offered
under the policy. Please read these prospectuses
carefully and keep them for future reference.
Here's a list of all of the investment options
available under your policy:
This policy is not VARIABLE INVESTMENT OPTIONS
available in all Pacific Select Fund
states. This
prospectus is not Aggressive Equity Equity Index
an offer in any Emerging Markets Small-Cap Index
state or Diversified Research REIT
jurisdiction where Small-Cap Equity (formerly International Value (formerly
we're not legally called "Growth") called "International")
permitted to offer International Large-Cap Government Securities
the policy. Bond and Income Managed Bond
Equity Money Market
The policy is I-Net Tollkeeper High Yield Bond
described in detail Multi-Strategy Large-Cap Value
in this prospectus. Equity Income
The Pacific Select Growth LT
Fund and the M Fund Mid-Cap Value
are described in
their prospectuses M Fund
and in their Variable Account I: Brandes International Equity
Statements of Variable Account II: Turner Core Growth
Additional Variable Account III: Frontier Capital Appreciation
Information (SAI). Variable Account IV: Enhanced U.S. Equity
No one has the
right to describe FIXED OPTIONS
the policy, Pacific Fixed Account
Select Fund or the Fixed LT Account
M Fund any
differently than
they have been
described in these
documents.
You should be aware
that the Securities
and Exchange
Commission (SEC)
has not reviewed
the policy for its
investment merit,
and does not
guarantee that the
information in this
prospectus is
accurate or
complete. It's a
criminal offense to
say otherwise.
<PAGE>
YOUR GUIDE TO THIS PROSPECTUS
<TABLE>
<S> <C>
An overview of M's Versatile Product 4
- ------------------------------------------------------------------------------
M's Versatile Product basics 13
Owners, person insured by the policy, and beneficiaries 14
Policy date, monthly payment date, and policy anniversary date 15
Statements and reports we'll send you 16
Your right to cancel 16
Timing of payments, forms and requests 17
Telephone transactions 18
- ------------------------------------------------------------------------------
The death benefit 19
Choosing your death benefit option 19
Choosing a death benefit qualification test 20
Comparing the death benefit options 21
When we pay the death benefit 23
Changing your death benefit option 23
Changing the face amount 24
Optional riders 25
- ------------------------------------------------------------------------------
How premiums work 27
Planned periodic premium payments 27
Deductions from your premiums 28
Allocating your premiums 28
Limits on the premium payments you can make 29
- ------------------------------------------------------------------------------
Your policy's accumulated value 30
Calculating your policy's accumulated value 30
Monthly deductions 30
Lapsing and reinstatement 33
- ------------------------------------------------------------------------------
Your investment options 35
Variable investment options 35
Fixed options 39
Transferring among investment options 39
Transfer programs 40
- ------------------------------------------------------------------------------
Withdrawals, surrenders and loans 42
Making withdrawals 42
Taking out a loan 43
Ways to use your policy's loan and withdrawal features 44
Surrendering your policy 45
- ------------------------------------------------------------------------------
General information about your policy 47
- ------------------------------------------------------------------------------
Variable life insurance and your taxes 50
- ------------------------------------------------------------------------------
About Pacific Life 54
- ------------------------------------------------------------------------------
Appendices 62
Appendix A: Mortality and expense risk face amount charge: rates
per $1,000 of initial face amount 62
Appendix B: Surrender charge: current rates per $1,000 of initial
face amount 63
Appendix C: Death benefit percentages 64
- ------------------------------------------------------------------------------
Where to go for more information back cover
</TABLE>
2
<PAGE>
Terms used in this prospectus
We've tried to make this prospectus easy to read and
understand, but you may find some words and terms that
are new to you. We've identified some of these below
and the pages where you'll find an explanation of what
they mean.
If you have any questions, please ask your registered
representative or call us at1-800-800-7681.
<TABLE>
<S> <C>
Accumulated value 30
Accumulation units 37
Age 14
Allocation 28
Assignment 49
Beneficiary 15
Business day 17
Cash surrender value 45
Cash value accumulation
test 20
Contingent beneficiary 15
Cost of insurance rate 30
Death benefit 19
Death benefit percentage 20
Death benefit qualifica-
tion test 20
Face amount 19
Fixed account 39
Fixed LT account 39
Fixed options 39
General account 55
Guideline minimum death
benefit 20
Guideline premium limit 29
Guideline premium test 20
Illustration 16
In force 13
Income benefit 47
</TABLE>
<TABLE>
<S> <C>
Joint owners 14
Lapse 33
Loan account 43
Modified endowment con-
tract 52
Monthly payment date 15
Net amount at risk 31
Net cash surrender value 45
Net premium 27
Net single premium 20
Outstanding loan amount 43
Planned periodic premium 27
Policy anniversary 15
Policy date 15
Policy year 15
Portfolio 35
Proper form 17
Reinstatement 34
Riders 25
Separate account 55
Seven-pay limit 52
Tax code 50
Unit value 37
Variable account 35
Variable investment op-
tion 35
</TABLE>
In this prospectus,
you and your mean
the policyholder or
owner. Pacific
Life, we, us and
our refer to
Pacific Life
Insurance Company.
M Fund refers to M
Fund, Inc. Policy
means an M's
Versatile Product
variable life
insurance policy,
unless we state
otherwise.
3
<PAGE>
AN OVERVIEW OF M'S VERSATILE PRODUCT
This overview tells you some key things you should know
about your policy. It's designed as a summary only--
please read the entire prospectus and your policy for
more detailed information.
Some states have different rules about how life
insurance policies are described or administered. The
terms of your policy, or of any endorsement or rider,
prevail over what's in this prospectus.
---------------------------------------------------------
M's Versatile
Product basics
M's Versatile Product is a flexible premium variable
life insurance policy.
This policy may be . Flexible premium means you can vary the amount and
appropriate if you frequency of your premium payments.
want to provide a
death benefit for . Variable means the policy's value depends on the
family members or performance of the investment options you choose.
others or to help
meet other long- . Life insurance means the policy provides a death
term financial benefit to the beneficiary you choose.
objectives. It may
not be the right
kind of policy if In addition to providing a death benefit that is
you plan to generally free of federal income tax, any growth in
withdraw money for your policy's accumulated value is tax-deferred. You
short-term needs. can choose from 25 variable investment options, 21 of
which invest in a corresponding portfolio of the
Pacific Select Fund and four of which invest in a
corresponding portfolio of M Fund. You can also choose
Please discuss your from two fixed options, both of which provide a
insurance needs and guaranteed minimum rate of interest.
financial
objectives with
your registered You may choose to allocate net premium and accumulated
representative. value to no more than 20 investment options at any one
time.
M's Versatile Product is designed for long-term
You'll find more financial planning. Please take some time to read the
about the basics of information in this prospectus before you decide if
M's Versatile this life insurance policy meets your insurance needs
Product starting on and financial objectives.
page 13.
Your right to cancel
During the free look period, you have the right to
cancel your policy and return it to us or your
registered representative for a refund. The amount of
your refund may be more or less than the premium
payments you've made, depending on the state where you
signed your application. If you signed your application
in a state that requires us to refund premium payments,
we'll hold the net premiums in the Money Market
investment option until the free look transfer date.
4
<PAGE>
---------------------------------------------------------
The death benefit
You can choose one of three death benefit options
Your policy depending on what is more important to you: a larger
provides a death death benefit or building the accumulated value of your
benefit for your policy.
beneficiary after
the person insured The death benefit will always be the greater of the
by the policy has death benefit under the option you choose or the
died, as long as guideline minimum death benefit.
your policy is in
force. This policy offers two ways to calculate the guideline
minimum death benefit: the cash value accumulation test
You'll find more and the guideline premium test. These are called death
about the death benefit qualification tests. The test you choose will
benefit starting on generally depend on the amount of premiums you want to
page 19. pay. In general, you should choose the cash value
accumulation test if you do not want to limit the
amount of premiums you can pay into your policy.
You cannot change your death benefit qualification
test. But you can change your death benefit option and
increase or decrease your policy's face amount (with
certain restrictions) while your policy is in force.
Any of these changes may affect your policy charges.
Optional riders
There are nine optional riders that provide extra
benefits, some at additional cost. Not all riders are
available in every state, and some riders may only be
added when you apply for your policy.
---------------------------------------------------------
How premiums work
Deductions from your premiums
Your policy gives We deduct a premium load from each premium payment you
you the flexibility make. The premium load is made up of a sales load, a
to choose the state and local tax charge, and a federal tax charge.
amount and
frequency of your Limits on the premium payments you can make
premium payments Federal tax law puts limits on the premium payments you
within certain can make in relation to your policy's death benefit. We
limits. Each may refuse all or part of a premium payment you make,
premium payment or remove all or part of a premium from your policy and
must be at least return it to you under certain circumstances.
$50.
You'll find more
about how premiums
work starting on
page 27.
---------------------------------------------------------
Your policy's
accumulated value
Accumulated value is the value of your policy on any
Accumulated value business day. It is not guaranteed - it depends on the
is used as the performance of the investment options you've chosen,
basis for the premium payments you've made, policy charges, and
determining policy how much you've borrowed or withdrawn from the policy.
benefits and
charges. If there Monthly deductions
is not enough We deduct a monthly charge from your policy's
accumulated value accumulated value on each monthly payment date. The
to cover policy charge is made up of cost of insurance, an
charges, your administrative charge, and a mortality and expense risk
policy could lapse. charge. If you add any riders, we'll add any charges
for them to your monthly charge.
You'll find more
about accumulated Lapsing and reinstatement
value starting on If there is not enough accumulated value to cover the
page 30. monthly charge on the day we make the deduction, your
policy may lapse - which means you'll no longer have
any insurance coverage. If your policy is in danger of
lapsing, we'll give you a grace period of 61 days to
pay the required premium. If your policy lapses at the
end of the grace period, you have five years from the
day it lapses to apply for a reinstatement.
5
<PAGE>
AN OVERVIEW OF M'S VERSATILE PRODUCT
---------------------------------------------------------
Your investment
options
The investment You can choose from 25 variable investment options, 21
options you choose of which invest in a corresponding portfolio of the
will affect your Pacific Select Fund and four of which invest in a
policy's corresponding portfolio of the M Fund.
accumulated value,
and may affect the We're the investment adviser for the Pacific Select
death benefit. Fund. We oversee the management of all the fund's
portfolios and manage two of the portfolios directly.
We've retained other portfolio managers to manage the
Please review the other portfolios.
investment options
carefully and ask M Financial Investment Advisers, Inc. (MFIA) is the
your registered investment adviser for the M Fund, and has retained
representative to other firms to manage the M Fund's portfolios. MFIA and
help you choose the the M Fund's Board of Directors oversee the management
right ones for your of all of the M Fund's portfolios.
goals and risk
tolerance. The value of each portfolio will fluctuate with the
value of the investments it holds, and returns are not
You'll find more guaranteed.
about the
investment options You can also choose from two fixed options, the Fixed
starting on page account and the Fixed LT account, both of which provide
36. a guaranteed minimum annual interest rate of 3%. We may
offer a higher interest rate. If we do, we'll guarantee
that rate for one year.
We allocate your premium payments and accumulated value
to the investment options you choose. Your policy's
accumulated value will fluctuate depending on the
investment options you've chosen. You bear the
investment risk of any variable investment options you
choose.
In some states we'll hold your premium payments in the
Money Market investment option until the free look
transfer date. Please turn to Your right to cancel for
details.
You'll find out Transferring among investment options
more about our You can transfer among the investment options during
automatic transfer the life of your policy without paying any current
programs starting income tax. There is currently no charge for transfers.
on page 40.
You can make as many transfers as you like between
variable investment options. You can also make
Your policy's automatic transfers from one variable investment option
accumulated value to another using our dollar cost averaging or portfolio
may be allocated to rebalancing programs. These programs are not available
up to 20 investment for the fixed options.
options at any one
time. You can only make one transfer from each fixed option
in any 12-month period. For the Fixed account, each
transfer may be no more than $5,000 or 25% of the
accumulated value in the Fixed account, whichever is
greater. For the Fixed LT account, each transfer may be
no more than $5,000 or 10% of the accumulated value in
the Fixed LT account, whichever is greater. You can
only transfer to the fixed options in the policy month
right before each policy anniversary.
You can also make automatic transfers from the Fixed
account to other investment options during the first
policy year using our first year transfer program.
---------------------------------------------------------
Withdrawals,
surrenders and
loans
You can take out all or part of your policy's
Making a accumulated value while your policy is in force by
withdrawal, taking making withdrawals or surrendering your policy. You can
out a loan or take out a loan from us using your policy as security.
surrendering your You can also use your policy's loan and withdrawal
policy can change features to supplement your income, for example, during
your policy's tax retirement.
status, generate
taxable income, or Making withdrawals
make your policy You can withdraw part of your policy's net cash
more susceptible to surrender value starting on your policy's first
lapsing. Be sure to anniversary. This reduces your policy's accumulated
plan carefully value and could affect the face amount and death
before using these benefit.
policy benefits.
You'll find more
about withdrawals,
surrenders and
loans starting on
page 42.
6
<PAGE>
Taking out a loan
You can take out a loan from us using your policy's
accumulated value as security. You pay interest at an
annual rate of 3.25% on the amount you borrow. The
accumulated value used to secure your loan is set aside
in a loan account, where it earns interest at an annual
rate of 3%.
The amount in the loan account is not available to help
pay for any policy charges. Taking out a loan affects
the accumulated value of your policy because the amount
set aside in the loan account misses out on the
potential earnings available through the investment
options.
Surrendering your policy
You can surrender or cash in your policy for its net
cash surrender value while the person insured by the
policy is still living. If you surrender your policy
during the first 10 policy years, we'll apply a
surrender charge. If you increase your policy's face
amount and surrender your policy during the first 10
years after the increase, we'll apply a surrender
charge to the amount of the increase.
---------------------------------------------------------
Variable life Your beneficiary generally will not have to pay federal
insurance and your income tax on death benefit proceeds. You'll also
taxes generally not be taxed on any or all of your policy's
accumulated value unless you receive a cash
There are tax distribution by making a withdrawal or surrendering
issues to consider your policy.
when you own a life
insurance policy. If your policy is a modified endowment contract, all
These are described distributions you receive during the life of the policy
in detail starting may be subject to tax and a 10% penalty.
on page 50.
---------------------------------------------------------
About Pacific Life
Pacific Life is a life insurance company based in
When you buy a life California. We issue the policies. Pacific Mutual
insurance policy, Distributors, Inc., our subsidiary, is the distributor
you're relying on of the policies.
the insurance
company that issues How our accounts work
it to be able to We put your premium payments in our general and
meet its financial separate accounts. We own the assets in our accounts
obligations to you. and make the allocations to the investment options
you've chosen.
You'll find more
about Pacific Life, Amounts allocated to the fixed options are held in our
and our strength as general account. Our general account includes all of
a company, starting our assets, except for those held in our separate
on page 54. accounts. Our ability to meet our obligations under the
policy is backed by our strength as an insurance
We may use any company.
profit derived from
any charges under Amounts allocated to the variable investment options
the policy for any are held in our separate account. The assets in this
lawful purpose, account are kept separate from the assets in our
including our sales general account and our other separate accounts, and
and distribution are protected from our general creditors.
expenses.
7
<PAGE>
<TABLE>
<CAPTION>
AN OVERVIEW OF M'S VERSATILE PRODUCT
<S> <C>
This section of the overview explains the fees and expenses associated with your
M's Versatile Product policy.
--------------------------------------------------------------------------------------
Understanding policy expenses and YOUR PREMIUM
cash flow You make a
premium
The chart to the right illustrates how cash payment
normally flows through an M's Versatile
Product policy. We deduct a
premium load
The dark shaded boxes show the fees and
expenses you pay directly or indirectly NET PREMIUM
under your policy. These are explained in We allocate the
the pages that follow. net premium to
the investment
In some states we'll hold your net premium options you
payments in the Money Market investment choose PACIFIC SELECT
option until the free look transfer date. FUND
Please turn to Your right to cancel for The variable
details. investment
options invest
in the Pacific
Select Fund's
portfolios The funds
FIXED OPTIONS VARIABLE deduct advisory
We hold amounts INVESTMENT fees and other
you allocate OPTIONS fund expenses
to these We hold amounts from the
options in you allocate portfolios
our general to these
account options in our
separate account M FUND
The variable
investment We deduct:
options invest . cost of
in the M Fund's insurance
portfolios . administrative
charge
. mortality and
expense risk
We make monthly deductions charge
. rider charges
LOAN ACCOUNT ACCUMULATED We deduct a
Accumulated VALUE If you make a withdrawal withdrawal
value set aside The total value charge
to secure a of your policy
policy loan
We deduct a
If you surrender your policy surrender charge
. during the
first 10 policy
years
. during the
first 10 years
after you
increase the
face amount
</TABLE>
8
<PAGE>
---------------------------------------------------------
Deductions from
your premiums
We deduct a premium load from each premium payment you
The premium load is make. The load is made up of three charges:
explained in more
detail on page 28. Sales load - 3.5% of each premium payment.
State and local tax charge - 2.35% of each premium
payment.
Federal tax charge - 1.50% of each premium payment.
---------------------------------------------------------
Deductions from We deduct a monthly charge from your policy's
your policy's accumulated value in the investment options on each
accumulated value monthly payment date. This charge is made up of three
charges:
The monthly charge
is explained in Cost of insurance - We deduct a cost of insurance
more detail charge based on the cost of insurance rate for your
starting on page policy's initial face amount and for each increase you
30. make to the face amount. We calculate this charge by
multiplying the current cost of insurance rate by a
An example discounted net amount at risk at the beginning of each
For a policy that policy month. When the person insured by the policy
insures a male non- reaches age 100, the cost of insurance charge is zero--
smoker who is age in other words, you no longer pay any cost of insurance
45 when the policy charge.
is issued, with:
Administrative charge - We deduct a charge of $7.50 a
. a face amount of month. When the person insured by the policy reaches
$350,000 age 100, the administrative charge is zero -- in other
. accumulated value words, you no longer pay any administrative charge.
of $30,000 after
deducting any
outstanding loan Mortality and expense risk charge - The mortality and
amount. expense risk charge varies depending on your policy's
face amount, the age of the person insured by the
The monthly charge policy, and accumulated value. We deduct a charge based
for the M&E risk on your policy's initial face amount and on each
face amount charge increase to the face amount. The charge is made up of
is: two separate charges:
. $126.00 under . The M&E risk face amount charge, which we deduct
death benefit every month during the first 10 policy years at a
Option A and rate that is based on the age of the person insured
Option C by the policy on the policy date and each $1,000 of
(($350,000 / the initial face amount of your policy. If you
1,000) X 0.360) increase your policy's face amount, the charge for
the amount of the increase is based on the age of the
. $181.30 under person insured by the policy on the day of the
death benefit increase.
Option B
(($350,000 /
1,000) X 0.518) . The M&E risk asset charge, which we deduct every
month at a guaranteed maximum annual rate of:
The monthly charge . 0.45% (0.0375% monthly), of the first $25,000 of
for the M&E risk your policy's accumulated value in the investment
asset charge is options, plus
$9.58 (($25,000 X
0.0375%) plus
($5,000 X
0.0042%)).
Sample rates for . 0.05% (0.0042% monthly) of the accumulated value in
the M&E risk face the investment options that exceeds $25,000.
amount charge
appear in Appendix
A. We may charge a lower annual rate for the M&E risk
asset charge.
For the purposes of this charge, accumulated value is
calculated on the monthly payment date before we deduct
the monthly charge, but after we deduct any outstanding
loan amount or allocate any new net premiums,
withdrawals or loans. When the person insured by the
policy reaches age 100, the annual rate is 0% -- in
other words, you no longer pay this charge.
Riders - If you add any riders to your policy, we add
any charges for them to your monthly charge.
9
<PAGE>
AN OVERVIEW OF M'S VERSATILE PRODUCT
---------------------------------------------------------
Withdrawal and
surrender charges
You can withdraw part of your policy's net cash
Withdrawal and surrender value at any time starting on your policy's
surrender charges first anniversary. There is a $25 charge for each
are explained in withdrawal you make. We deduct this charge
more detail on proportionately from all of your investment options.
pages 42 and 45.
If you surrender or cash in your policy during the
An example first 10 years of owning the policy, we'll deduct a
For a policy: surrender charge. If you increase your policy's face
. that insures a amount and surrender your policy during the first 10
male non-smoker years after the increase, we'll apply a surrender
who is age 45 charge to the amount of the increase.
when the policy
is issued The surrender charge is assessed at a rate that is
. with an initial based on the age and risk class of the person insured
face amount of by the policy on the policy date, and each $1,000 of
$350,000. the initial face amount of your policy. The amount of
the surrender charge does not change during the first
For death benefit policy month. We reduce the charge by 0.8403% a month
Option A and until it reaches zero at the end of 10 policy years.
Option C, the
surrender charge If you increase your policy's face amount, each
is: increase has a surrender charge and maximum surrender
charge based on the amount of the increase. If you
. $724.50 at issue decrease the face amount, the decrease will not affect
(($350,000 / your policy's surrender charge or maximum surrender
$1,000) X 2.07) charge.
. $219.19 at the
end of the
seventh policy
year ($724.50 -
($724.50 X .8403%
X 83 months))
For death benefit
Option B, the
surrender charge
is:
. $1,029.00 at
issue (($350,000
/ $1,000) X 2.94)
. $311.32 at the
end of the
seventh policy
year ($1,029.00 -
($1,029.00
X .8403% X 83
months))
Sample rates for
the surrender
charge appear in
Appendix B.
10
<PAGE>
---------------------------------------------------------
Fees and expenses The Pacific Select Fund and the M Fund pay advisory
paid by the fees and other expenses. These are deducted from the
Pacific Select Fund assets of each portfolio and may vary from year to
and the M Fund year. They are not fixed and are not part of the terms
of your policy. If you choose a variable investment
You'll find more option, these fees and expenses affect you indirectly
about the Pacific because they reduce portfolio returns.
Select Fund
starting on page Fees and expenses paid by Pacific Select Fund
35, and in the Advisory fee
Pacific Select Pacific Life is the investment adviser to the Pacific
Fund's prospectus, Select Fund. The Pacific Select Fund pays an advisory
which accompanies fee to us for these services. The table below shows the
this prospectus. advisory fee as an annual percentage of each
portfolio's average daily net assets.
You'll find more
about the M Fund Other expenses
starting on page
35, and in the M The table also shows expenses the Pacific Select Fund
Fund's prospectus, paid in 1999 as an annual percentage of each
which accompanies portfolio's average daily net assets. To help limit
this prospectus. fund expenses, we've agreed to waive all or part of our
investment advisory fees or otherwise reimburse each
portfolio for expenses (not including advisory fees,
additional costs associated with foreign investing and
extraordinary expenses) that exceed 0.25% of its
average daily net assets. We do this voluntarily, but
do not guarantee that we'll continue to do so after
December 31, 2001. No reimbursement was necessary for
1999.
<TABLE>
----------------------------------------------------------------
<S> <C> <C> <C>
Pacific Select Fund
Portfolios Advisory fee Other expenses Total expenses+
----------------------------------------------------------------
Aggressive Equity
Emerging Markets
Diversified Research/2/
Small-Cap Equity
International Large-
Cap/2/
Bond and Income
Equity
I-Net Tollkeeper/2/
Multi-Strategy/1/
Equity Income/1/ [To be updated]
Growth LT
Mid-Cap Value
Equity Index
Small-Cap Index
REIT
International Value
Government Securities
Managed Bond
Money Market/1/
High Yield Bond/1/
Large-Cap Value
----------------------------------------------------------------
</TABLE>
/1/ Total net expenses for these portfolios in 1999,
after deduction of an offset for custodian credits,
was: % for Money Market Portfolio, % for High Yield
Bond Portfolio, % for Equity Income Portfolio, and
% for Multi-Strategy Portfolio.
/2/ Expenses are estimated. There were no actual
advisory fees or other expenses for these portfolios in
1999 because the portfolios started after December 31,
1999.
+ Effective January 1, 2000, the fund implemented a
brokerage enhancement 12b-1 plan, under which brokerage
transactions may be placed with broker-dealers in
return for credits that may be used to help promote
distribution of fund shares. There are no fees or
charges to any portfolio under this plan, although the
fund's distributor may defray expenses which it would
otherwise incur for distribution. If you assume the
credits are a direct fund expense, the expense would
have no effect on Other Expenses shown above.
11
<PAGE>
AN OVERVIEW OF M'S VERSATILE PRODUCT
Fees and expenses paid by the M Fund
Advisory fee
MFIA is the investment adviser to the M Fund. The M
Fund pays an advisory fee to MFIA for these services.
The table below shows the advisory fee as an annual
percentage of each portfolio's average daily net
assets.
Other expenses
The table also shows expenses the M Fund paid in 1999
as an annual percentage of each portfolio's average
daily net assets. MFIA has agreed to pay operating
expenses of the M Fund (not including brokerage or
other portfolio transaction expenses, expenses for
litigation, indemnification, taxes or other
extraordinary expenses) that exceed 0.25% of each
portfolio's average daily net assets. MFIA does this
voluntarily, but does not guarantee that it will
continue to do so after December 31, .
<TABLE>
------------------------------------------------------------------
<S> <C> <C> <C>
M Fund Portfolios/1/ Advisory fee Other expenses Total expenses
------------------------------------------------------------------
Brandes International
Equity
Turner Core Growth [to be updated]
Frontier Capital
Appreciation
Enhanced U.S. Equity
------------------------------------------------------------------
</TABLE>
/1/ Actual expenses in 1999 were: % for Brandes
International Equity, % for Turner Core Growth,
% for Frontier Capital Appreciation, and % for
Enhanced U.S. Equity. MFIA paid the difference.
12
<PAGE>
M'S VERSATILE PRODUCT BASICS
When you buy an M's Versatile Product life insurance
policy, you're entering into a contract with Pacific
Life Insurance Company. Your contract with us is made
up of your application, your policy, applications to
change or reinstate the policy, any amendments, riders
or endorsements to your policy, and specification
pages.
---------------------------------------------------------
Policy amendments When we approve your signed application, we'll issue
and endorsements your policy. If your application does not meet our
are a part of your underwriting requirements, we can reject it or ask you
policy and confirm for more information. Once we receive your first
changes you or we premium payment, the policy has been delivered to you
make to the policy. and any delivery requirements have been met, we'll
consider your policy to be in force. That's when our
Specification pages obligations under the policy begin.
summarize
information Your policy will be in force until one of the following
specific to your happens:
policy at the time . the person insured by the policy dies
the policy is . the grace period expires and your policy lapses, or
issued. . you surrender your policy.
If your policy is not in force when the person insured
Riders provide by the policy dies, we are not obligated to pay the
extra benefits, death benefit proceeds to your beneficiary.
some at additional
cost. Not all M's Versatile Product is a flexible premium variable
riders are life insurance policy that insures the life of one
available in every person and pays death benefit proceeds after that
state, and some person has died.
riders may only be
added when you Under a flexible premium life insurance policy, you
apply for your have the flexibility to choose the amount and frequency
policy. of your premium payments. You must, however, pay enough
premiums to cover the ongoing cost of policy benefits.
This policy may be
appropriate if you A premium load is deducted from each premium payment
want to provide a you make. The resulting net premium is allocated to the
death benefit for investment options you choose, and becomes part of your
family members or policy's accumulated value.
others or to help
meet other long- Charges are deducted from the accumulated value each
term financial month to help cover the cost of the policy's death
objectives. It may benefit and other expenses. If there is not enough
not be the right accumulated value to cover the monthly charge on the
kind of policy if day we make the deduction, your policy may lapse after
you plan to a grace period - which means you'll no longer have any
withdraw money for insurance coverage.
short-term needs.
Investment earnings will increase your policy's
Please discuss your accumulated value, while investment losses will
insurance needs and decrease it. The premium payments you'll be required to
financial make to keep your policy in force will be influenced by
objectives with the investment results of the investment options you've
your registered chosen.
representative.
In some states
we'll hold your net
premium payments in
the Money Market
investment option
until the free look
transfer date.
Please turn to Your
right to cancel for
details.
13
<PAGE>
M'S VERSATILE PRODUCT BASICS
---------------------------------------------------------
Owners, person Owners
insured by the The owner is the person named on the application who
policy, and makes the decisions about the policy and its benefits
beneficiaries while it's in force. You can own a policy by yourself
or with someone else. Two or more owners are called
Please consult your joint owners. You need the signatures of all owners for
financial advisor all policy transactions.
or a lawyer about
designating If one of the joint owners dies, the surviving owners
ownership will hold all rights under the policy. If the last
interests. joint owner dies, his or her estate will own the policy
unless you've given us other instructions.
If you would like
to change the owner A policy can also be owned by an institution, trust,
of your policy, corporation or group or sponsored arrangement. These
please contact us owners often buy more than one policy, which may
or your registered qualify them for reduced charges or lower premium
representative for payments.
a change of owner
form. We can We may reduce or waive the sales load or surrender
process the change charges on policies sold to our directors or employees,
only if we receive to any of our affiliates, or to trustees, employees or
your instructions affiliates of the fund.
in writing.
You can change the owner of your policy by completing a
change of owner form. Once we've received and recorded
your request, the change will be effective as of the
day you signed the change of owner form.
Person insured by the policy
Risk classes are This policy insures the life of one person who is age
usually based on 85 or younger at the time you apply for your policy,
age, gender, health and who has given us satisfactory evidence of
and whether or not insurability. Your policy refers to this person as the
the person to be insured. The policy pays death benefit proceeds after
insured by the this person has died.
policy smokes. Most
insurance companies The person to be insured by the policy is assigned an
use similar risk underwriting or insurance risk class which we use to
classification calculate cost of insurance and other charges. We
criteria. normally use the medical or paramedical underwriting
method to assign underwriting or insurance risk
When we refer to classes, which may require a medical examination. We
age throughout this may, however, use other forms of underwriting if we
prospectus, we're think it's appropriate.
using the word as
we've defined it When we use a person's age in policy calculations, we
here, unless we generally use his or her age as of the nearest policy
tell you otherwise. date, and we add one year to this age on each policy
anniversary date. For example, when we talk about
someone "reaching age 100", we're referring to the
policy anniversary date closest to that person's 100th
birthday, not to the day when he or she actually turns
100.
14
<PAGE>
Beneficiaries
The beneficiary is the person, people, entity or
entities you name to receive the death benefit
proceeds. Here are some things you need to know about
naming beneficiaries:
. You can name one or more primary beneficiaries who
each receive an equal share of the death benefit
proceeds unless you tell us otherwise. If one
beneficiary dies, his or her share will pass to the
surviving primary beneficiaries in proportion to the
share of the proceeds they're entitled to receive,
unless you tell us otherwise.
. You can also name a contingent beneficiary for each
primary beneficiary you name. The contingent
beneficiary will receive the death benefit proceeds
if the primary beneficiary dies.
If you would like
to change the . You can choose to make your beneficiary permanent
beneficiary of your (sometimes called irrevocable). You cannot change a
policy, please permanent beneficiary's rights under the policy
contact us or your without his or her permission.
registered
representative for . If none of your beneficiaries is still living when
a change of the death benefit proceeds are payable, you as the
beneficiary form. policy owner will receive the proceeds. If you're no
We can process the longer living, the proceeds will go to your estate.
change only if we
receive your . You can change your beneficiary at any time while the
instructions in person insured by the policy is still living, and
writing. while the policy is in force. The change will be
effective as of the day you signed the change of
beneficiary form.
---------------------------------------------------------
Policy date, Your policy date
monthly payment This is usually the day we approve your policy
date, policy application. It's also the beginning of your first
anniversary date policy year. Your policy's monthly, quarterly, semi-
annual and annual anniversary dates are based on your
In Massachusetts, policy date.
the policy date is
known as the issue The policy date is set so that it never falls on the
date. 29th, 30th or 31st of any month. We'll apply your first
premium payment as of your policy date or as of the day
we receive your premium, whichever is later.
Backdating your policy
In Ohio, your You can have your policy backdated up to six months, as
policy can be long as we approve it. Backdating in some cases may
backdated only lower your cost of insurance rates since these rates
three months. are based on the age of the person insured by the
policy. Your first premium payment must cover the
premium load and monthly charges for the period between
the backdated policy date and the day your policy is
issued.
Your monthly payment date
This is the day we deduct the monthly charges from your
policy's accumulated value. The first monthly payment
date is your policy date, and it's the same day each
month thereafter. Monthly charges are explained in the
section called Your policy's accumulated value.
Your policy anniversary date
This is the same day as your policy date every year
after we issue your policy. A policy year starts on
your policy date and each anniversary date, and ends on
the day before the next anniversary date.
15
<PAGE>
M'S VERSATILE PRODUCT BASICS
---------------------------------------------------------
Statements and We send the following statements and reports to policy
reports owners:
we'll send you
. a confirmation for many financial transactions,
usually including premium payments and transfers,
loans, loan repayments, withdrawals and surrenders.
Monthly deductions and scheduled transactions made
We can create under the dollar cost averaging, portfolio
customized rebalancing and first year transfer programs are
hypothetical reported on your quarterly policy statement.
illustrations of
benefits under your . a quarterly policy statement. The statement will tell
policy based on you the accumulated value of your policy by
different investment options, cash surrender value, the amount
assumptions. of the death benefit, the policy's face amount, and
any outstanding loan amount. It will also include a
We'll send you one summary of all transactions that have taken place
policy illustration since the last quarterly statement, as well as any
free of charge each other information required by law.
policy year if you
ask for one. We
reserve the right . supplemental schedules of benefits and planned
to charge $25 for periodic premiums. We'll send these to you if you
additional change your policy's face amount or change any of the
illustrations. policy's other benefits.
. financial statements, at least annually or as
required by law, of the separate account and Pacific
Select Fund, that include a listing of securities for
each portfolio of the Pacific Select Fund.
. any financial statements that we receive from M Fund.
---------------------------------------------------------
Your right to During the free look period, you have the right to
cancel cancel your policy and return it to us or your
registered representative for a refund.
There are special
rules for the free The amount of your refund may be more or less than the
look period in premium payments you've made, depending on the state
certain states. where you signed your application. We'll always deduct
Here are some any outstanding loan amount from the amount we refund
examples: to you.
. In California the
free look period You'll find a complete description of the free look
ends 30 days period that applies to your policy on the policy's
after you receive cover sheet, or on a notice that accompanied your
your policy if policy. Generally, the free look period ends 10 days
you're 60 years after you receive your policy. Some states may have a
old or over or if different free look period if you are replacing another
you're replacing life insurance policy.
another life
insurance policy. In most states, your refund will be based on the
. In Colorado the accumulated value of your policy. In these states,
free look period we'll allocate your net premiums to the investment
ends after 15 options you've chosen. If you exercise your right to
days. cancel, your refund will be:
. In North Dakota
the free look . any charges or taxes we've deducted from your
period ends after premiums
20 days. . the net premiums allocated to the fixed options
. the accumulated value allocated to the variable
Please call us or investment options
your registered . any monthly charges and fees we've deducted from your
representative if policy's accumulated value in the variable investment
you have questions options.
about your right to
cancel your policy.
16
<PAGE>
In some states we're required to refund the premium
payments you've made. If you sign your application in
one of these states, we'll hold the net premiums in the
Money Market investment option until the free look
transfer date. On that day, we'll transfer the
accumulated value in the Money Market investment option
to the investment options you've chosen.
The free look transfer date is the latest of the
following:
. 15 days after we issue your policy
. when we consider your policy to be in force.
---------------------------------------------------------
Effective date
The effective date of payments, forms and requests you
Timing of payments, send us is usually determined by the day and time we
forms and requests receive the item in proper form at the mailing address
that appears on the back cover of this prospectus.
A business day,
called a valuation Planned periodic premium payments, loan requests,
date in your transfer requests, loan payments or withdrawal or
policy, is any day surrender requests that we receive in proper form
that the New York before 4:00 p.m. Eastern time on a business day will
Stock Exchange and normally be effective as of the end of that day, unless
our life insurance the transaction is scheduled to occur on another
client services business day. If we receive your payment or request on
offices are open. or after 4:00 p.m. Eastern time on a business day, your
It usually ends at payment or request will be effective as of the end of
4:00 p.m. Eastern the next business day. If a scheduled transaction falls
time. on a day that is not a business day, we'll process it
as of the end of the next business day.
The New York Stock
Exchange is usually Other forms, notices and requests are normally
closed on weekends effective as of the next business day after we receive
and on the them in proper form, unless the transaction is
following days: scheduled to occur on another business day. Change of
owner and beneficiary forms are effective as of the day
. New Year's Day, you sign the change form, once we receive them in
Martin Luther proper form.
King, Jr. Day,
President's Day, Proper form
Good Friday, We'll process your requests once we receive all
Memorial Day, letters, forms or other necessary documents, completed
July Fourth, to our satisfaction. Proper form may require, among
Labor Day, other things, a signature guarantee or some other proof
Thanksgiving Day of authenticity. We do not generally require a
and Christmas signature guarantee, but we may ask for one if it
Day, and appears that your signature has changed, if the
signature does not appear to be yours, if we have not
. the Friday before received a properly completed application or
New Year's Day, confirmation of an application, or for other reasons to
July Fourth or protect you and us.
Christmas Day if
that holiday
falls on a
Saturday
. the Monday
following New
Year's Day, July
Fourth or
Christmas Day if
that holiday
falls on a Sunday
unless unusual
business conditions
exist, such as the
ending of a monthly
or the yearly
accounting period.
Our client services
offices are also
usually closed on
the following days:
. the Monday before
New Year's Day,
July Fourth, or
Christmas Day, if
any of these
holidays falls on
a Tuesday
. the Tuesday
before Christmas
Day if that
holiday falls on
a Wednesday
. the Friday after
New Year's Day,
July Fourth or
Christmas Day, if
any of these
holidays falls on
a Thursday
. the Friday after
Thanksgiving.
Call us or contact
your registered
representative if
you have any
questions about the
proper form
required for a
request.
17
<PAGE>
M'S VERSATILE PRODUCT BASICS
When we make payments and transfers
We'll normally send the proceeds of transfers,
withdrawals, loans, surrenders, exchanges and death
benefit payments within seven days after the effective
To request payment date of the request. We may delay payments and
of death benefit transfers, or the calculation of payments and transfers
proceeds, send us based on the value in the variable investment options
proof of death and under unusual circumstances, for example, if:
payment
instructions. . the New York Stock Exchange closes on a day other
than a regular holiday or weekend
. trading on the New York Stock Exchange is restricted
. an emergency exists as determined by the SEC, as a
result of which the sale of securities is not
practicable, or it is not practicable to determine
the value of a variable account's assets, or
. the SEC permits a delay for the protection of policy
owners.
We may delay transfers and payments from the fixed
options, including the proceeds from withdrawals,
surrenders and loans, for up to six months. We'll pay
interest at an annual rate of at least 3% on any
withdrawals or surrender proceeds from the fixed
options that we delay for 30 days or more.
We pay interest at an annual rate of at least 3% on
death benefit proceeds, calculated from the day the
person insured by the policy dies to the day we pay the
proceeds.
---------------------------------------------------------
Telephone You can make loans or transfers by telephone any time
transactions after the free look period as long as we have your
signed authorization form on file.
Here are some things you need to know about telephone
transactions:
. You must complete a telephone authorization form.
. If your policy is jointly owned, all joint owners
must sign the telephone authorization. We'll take
instructions from any owner.
. We may use any reasonable method to confirm that your
telephone instructions are genuine. For example, we
may ask you to provide personal identification or we
may record all or part of the telephone conversation.
We may refuse any transaction request made by
telephone.
We'll send you a written confirmation of each telephone
transaction.
Sometimes, you may not be able to make loans or
transfers by telephone, for example, if our telephone
lines are busy because of unusual market activity or a
significant economic or market change, or our telephone
lines are out of service during severe storms or other
emergencies. In these cases, you can send your request
to us in writing, or call us the next business day or
when service has resumed.
When you send us your telephone authorization form, you
agree that:
. we can accept and act upon instructions you give us
over the telephone
. neither we, any of our affiliates, the Pacific Select
Fund, or any director, trustee, officer, employee or
agent of ours or theirs will be liable for any loss,
damages, cost or expenses that result from
transactions processed because of a request by
telephone that we believe to be genuine, as long as
we have followed our own procedures
. you bear the risk of any loss that arises from your
right to make loans or transfers over the telephone.
18
<PAGE>
THE DEATH BENEFIT
We'll pay death benefit proceeds to your beneficiary
after the person insured by the policy dies while the
policy is still in force. Your beneficiary generally
will not have to pay federal income tax on death
benefit proceeds.
Your policy's This policy offers three death benefit options, Options
initial amount of A, B and C. The option you choose will generally depend
insurance coverage on which is more important to you: a larger death
is its initial face benefit or building the accumulated value of your
amount. We policy.
determine the face
amount based on This policy offers two ways to calculate the guideline
instructions minimum death benefit: the cash value accumulation test
provided in your and the guideline premium test. These are called death
application. benefit qualification tests. The test you choose will
generally depend on the amount of premiums you want to
The minimum face pay.
amount when a
policy is issued is Here are some things you need to know about the death
usually $50,000, benefit:
but we may reduce . You choose your death benefit option and death
this in some benefit qualification test on your policy
circumstances. application.
You'll find your
policy's face
amount, which
includes any . If you do not choose a death benefit option, we'll
increases or assume you've chosen Option A.
decreases, in the . If you do not choose a death benefit qualification
specification pages test, we'll assume you've chosen the guideline
in your policy. premium test.
. The death benefit will always be the greater of the
If you signed the death benefit under the option you choose or the
application for guideline minimum death benefit, calculated using the
your policy in death benefit qualification test you've chosen.
Florida, the death
benefit equals the . The death benefit will never be lower than the face
accumulated value amount of your policy if you've chosen Option A or B.
after the person Of course, the death benefit proceeds will always be
insured by the reduced by any outstanding loan amount.
policy reaches age
100. . We'll pay the death benefit proceeds to your
beneficiary when we receive proof of the death of the
person insured by the policy.
---------------------------------------------------------
Choosing your death You can choose one of the following three options for
benefit option the death benefit on your application.
Option A - the Option B - the face amount of
face amount of your policy plus its accumulated
your policy. value.
[ILLUSTRATION [ILLUSTRATION APPEARS HERE]
APPEARS HERE]
The death benefit changes as
your policy's accumulated value
changes. The better your
investment options perform, the
larger the death benefit will
be.
Option C - the
face amount of
your policy plus
the total premiums
you've paid minus
any withdrawals or
distributions
made.
[ILLUSTRATION
APPEARS HERE]
The more premiums
you pay and the
less you withdraw,
the larger the
death benefit will
be.
19
<PAGE>
THE DEATH BENEFIT
---------------------------------------------------------
Choosing a death This policy offers two death benefit qualification
benefit tests, which we use to calculate the guideline minimum
qualification test death benefit. You choose one of these tests on your
application. Once you choose a test, you cannot change
The guideline it.
minimum death
benefit is the In general, you should choose the cash value
minimum death accumulation test if you do not want to limit the
benefit needed for amount of premiums you can pay into your policy. If you
your policy to want to pay a premium that increases the net amount at
qualify as life risk, however, you need to provide us with satisfactory
insurance under evidence of insurability before we can increase the
Section 7702 of the death benefit.
Internal Revenue
Code. The guideline minimum death benefit will generally be
smaller under the guideline premium test than under the
Net amount at risk cash value accumulation test.
is the difference
between the death Cash value accumulation test
benefit that would
be payable if the The cash value accumulation test is available to
person insured by policies issued on or after February 1, 2000.
the policy died and
the accumulated If you choose the cash value accumulation test, your
value of your policy's guideline minimum death benefit will be the
policy. greater of:
. the minimum death benefit amount that's needed for
the policy to qualify as life insurance under the tax
code or
There are other . 101% of the policy's accumulated value.
limits on premiums
you can pay into This test determines what the death benefit should be
your policy, which in relation to your policy's accumulated value. In
are described in general, as your policy's accumulated value increases,
How premiums work. the death benefit must also increase to ensure that
your policy qualifies as life insurance under the tax
code.
The cash value
accumulation test
is defined in
Section 7702(b) of
the tax code.
An example
For a policy that Under the test, a policy's death benefit must be large
insures a male, age enough to ensure that its cash surrender value, as
45 when the policy defined in Section 7702 of the tax code (and which is
was issued, with a based on accumulated value, among other things), is
standard nonsmoking never larger than the net single premium that's needed
risk class, in to fund future benefits under the policy. The net
Policy Year 6 the single premium under your policy varies according to
guideline minimum the age, sex, and risk class of the person insured by
death benefit under your policy. It's calculated using an interest rate of
the cash value at least 4% and the guaranteed mortality charges as of
accumulation test the time the policy is issued. We'll use a higher
is calculated by interest rate if we've guaranteed it under your policy.
multiplying each
$1,000 of The death benefit determined by your policy's net
accumulated value single premium will be at least equal to the amount
by a "net single required for the policy to qualify as life insurance
premium factor" under the tax code.
of 2.4728.
Guideline premium test
The guideline If you choose the guideline premium test, we calculate
premium test is the guideline minimum death benefit by multiplying your
defined in Section policy's accumulated value by a death benefit
7702(a)(2) of the percentage.
tax code.
You'll find a table of death benefit percentages in
Death benefit Appendix C and in your policy. The death benefit
percentages are percentage is based on the guideline premium limit and
defined in Section the age of the person insured by the policy. It is 250%
7702(d) of the tax when the person is age 40 or younger, and reduces as
code. the person gets older.
Under this test, the total premiums you pay cannot
exceed your policy's guideline premium limit. You'll
find a more detailed discussion of the guideline
premium limit in How premiums work.
20
<PAGE>
---------------------------------------------------------
Comparing the death The tables below compare the death benefits provided by
benefit options the policy's three death benefit options. The examples
are intended only to show differences in death benefits
and net amounts at risk. Accumulated value assumptions
may not be realistic.
The example below is based on the following:
. the person insured by the policy is age 45 at the
time the policy was issued and dies at the beginning
of the sixth policy year
. face amount is $100,000
. accumulated value at the date of death is $25,000
. total premium paid into the policy is $30,000
. the guideline minimum death benefit under the
guideline premium test is $46,250 (assuming a
guideline premium test factor of 185% x accumulated
value)
. the guideline minimum death benefit under the cash
value accumulation test is $61,820.00 (assuming a net
single premium factor of $2.4728 for each $1,000 of
accumulated value)
<TABLE>
-----------------------------------------------------------------------------------
<CAPTION>
If you select the guideline
premium test, the death
benefit is the larger of
these two amounts
------------------------------
Death Death benefit Guideline Net amount at
benefit How it's under minimum risk used for cost
option calculated the option death benefit of insurance charge
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Option A Face amount $100,000 $46,250 $74,754.01
Option B Face amount plus
accumulated value $125,000 $46,250 $99,692.51
Option C Face amount plus
premiums less distributions $130,000 $46,250 $104,680.21
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
<CAPTION>
If you select the cash value
accumulation test, the death
benefit is the larger of
these two amounts
------------------------------
Death Death benefit Guideline Net amount at
benefit How it's under minimum risk used for cost
option calculated the option death benefit of insurance charge
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Option A Face amount $100,000 $61,820.00 $74,754.01
Option B Face amount plus
accumulated value $125,000 $61,820.00 $99,692.51
Option C Face amount plus
premiums less distributions $130,000 $61,820.00 $104,680.21
-----------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
THE DEATH BENEFIT
If the death Here's the same example, but with an accumulated value
benefit equals the of $75,000. Because accumulated value has increased,
guideline minimum the guideline minimum death benefit is now:
death benefit, any
increase in . $138,750 for the guideline premium test
accumulated value . $185,460 for the cash value accumulation test.
will cause an
automatic increase<TABLE>
in the death -----------------------------------------------------------------------------------
benefit. <CAPTION>
If you select the guideline
premium test, the death
benefit is the larger of
these two amounts
-----------------------------
Death Death benefit Guideline Net amount at
benefit How it's under minimum risk used for cost
option calculated the option death benefit of insurance charge
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Option A Face amount $100,000 $138,750 $63,408.68
Option B Face amount plus
accumulated value $175,000 $138,750 $99,569.51
Option C Face amount plus
premiums less distributions $130,000 $138,750 $63,408.68
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
<CAPTION>
If you select the cash value
accumulation test, the death
benefit is the larger of
these two amounts
-----------------------------
Death Death benefit Guideline Net amount at
benefit How it's under minimum risk used for cost
option calculated the option death benefit of insurance charge
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Option A Face amount $100,000 $185,460 $110,003.78
Option B Face amount plus
accumulated value $175,000 $185,460 $110,003.78
Option C Face amount plus
premiums less distributions $130,000 $185,460 $110,003.78
-----------------------------------------------------------------------------------
</TABLE>
These examples show that each death benefit option
provides a different level of protection. Keep in mind
that cost of insurance charges, which affect your
policy's accumulated value, increase with the amount of
the death benefit, as well as over time. The cost of
insurance is charged at a rate per $1,000 of the
discounted net amount at risk. As the net amount at
risk increases, your cost of insurance increases.
Accumulated value also varies depending on the
performance of the investment options in your policy.
22
<PAGE>
---------------------------------------------------------
When we pay the
death benefit
We calculate the amount of the death benefit proceeds
Your beneficiary as of the end of the day the person insured by the
can choose to policy dies. If that person dies on a day that is not a
receive the death business day, we calculate the proceeds as of the next
benefit proceeds in business day.
a lump sum or use
it to buy an income Your policy's beneficiary must send us proof that the
benefit. Please see person insured by the policy died while the policy was
the discussion in force, along with payment instructions.
about income
benefits in General Death benefit proceeds equal the total of the death
information about benefits provided by your policy and any riders you've
your policy. added, minus any outstanding loan amount, minus any
overdue charges.
It is important
that we have a We'll pay interest at an annual rate of at least 3% on
current address for the death benefit proceeds, calculated from the day the
your beneficiary so person insured by the policy dies to the day we pay the
that we can pay proceeds. In some states we may pay a higher rate of
death benefit interest if required by law.
proceeds promptly.
If we cannot pay
the proceeds to
your beneficiary
within five years
of the death of the
person insured by
the policy, we'll
be required to pay
them to the state.
---------------------------------------------------------
Changing your death
benefit option
You can change your death benefit option while your
policy is in force. Here's how it works:
We will not change . You can change the death benefit option once in any
your death benefit policy year.
option if it means
your policy will be . You must send us your request in writing.
treated as a
modified endowment . You can change to Option A or Option B.
contract, unless
you've told us in . You cannot change from any death benefit option to
writing that this Option C.
would be acceptable
to you. Modified . The change will become effective on the first monthly
endowment contracts payment date after we receive your request. If we
are discussed in receive your request on a monthly payment date, we'll
Variable life process it that day.
insurance and your
taxes. . The face amount of your policy will change by the
amount needed to make the death benefit under the new
option equal the death benefit under the old option
just before the change. We will not let you change
the death benefit option if doing so means the face
amount of your policy will become less than $50,000.
We may waive this minimum amount under certain
circumstances.
Net amount at risk
is the difference . Changing the death benefit option can also affect the
between the death monthly cost of insurance charge since this charge
benefit that would varies with the net amount at risk.
be payable if the
person insured by . The new death benefit option will be used in all
the policy died and future calculations.
the accumulated
value of your
policy.
23
<PAGE>
THE DEATH BENEFIT
---------------------------------------------------------
Changing the face
amount
You can increase or decrease your policy's face amount
If you change the starting on the first policy anniversary as long as we
face amount, we'll approve it. Here's how it works:
send you a
supplemental . You can change the face amount as long as the person
schedule of insured by the policy is still living.
benefits and
premiums. . You can only change the face amount once in any
policy year.
. You must send us your request in writing while your
policy is in force.
. The change will become effective on the first monthly
payment date after we receive your request. If we
If your policy's receive your request on a monthly payment date, we'll
death benefit is process it that day.
equal to the
guideline minimum . The person insured by the policy will also need to
death benefit, and agree to the change in face amount, if that person is
the net amount at someone other than you.
risk is more than
three times the . Increasing the face amount may increase the death
death benefit on benefit, and decreasing the face amount may decrease
the policy date, we the death benefit. The amount the death benefit
may reduce the changes will depend, among other things, on the death
death benefit by benefit option you've chosen and whether, and by how
requiring you to much, the death benefit is greater than the face
make a withdrawal amount before you make the change.
from your policy.
. Changing the face amount can affect the net amount at
If we require you risk, which affects the cost of insurance charge. An
to make a increase in the face amount may increase the cost of
withdrawal, we will insurance charge, while a decrease may decrease the
not charge you our charge.
usual $25
withdrawal fee, but . We can refuse your request to make the face amount
the withdrawal may less than $50,000. We can waive this minimum amount
be taxable. Please in certain situations, such as group or sponsored
turn to arrangements.
Withdrawals,
surrenders and Increasing the face amount
loans for Here are some additional things you should know about
information about increasing the face amount:
making withdrawals.
. You must give us satisfactory evidence of
insurability.
. Each increase you make to the face amount must be
$25,000 or more.
. We may charge you a fee of up to $100 for each
increase to cover the costs of processing the
request. We deduct the fee on the day the increase is
effective from all of your investment options in
proportion to the accumulated value you have in each
option.
. Increasing the face amount will increase the
mortality and expense risk charge.
Decreasing the face Decreasing the face amount
amount may affect Here are some additional things you should know about
your policy's tax decreasing the face amount:
status. To ensure
your policy . We'll apply any decrease in the face amount in the
continues to following order:
qualify as life . to the most recent increases you made to the face
insurance, we might amount in the order you made them
be required to . to the original face amount.
return part of your . We do not charge you for a decrease in face amount.
premium payments to . We can refuse your request to decrease the face
you if you've amount if making the change means:
chosen the . your policy will end because it no longer qualifies
guideline premium as life insurance
test, or make . the distributions we'll be required to make from
distributions from your policy's accumulated value will be greater
the accumulated than your policy's net cash surrender value
value, which may be . your policy will become a modified endowment
taxable. contract and you have not told us in writing that
this is acceptable to you.
For more
information, please
see Variable life
insurance and your
taxes.
24
<PAGE>
---------------------------------------------------------
Optional riders
There are nine optional riders that provide extra
Ask your registered benefits, some at additional cost. Not all riders are
representative for available in every state, and some riders may only be
more information added when you apply for your policy.
about the riders
available with the . Accidental death rider
policy, or about Provides additional insurance coverage in the event
other kinds of life of the accidental death of the person insured by the
insurance policies policy.
offered by Pacific
Life. . Children's term rider
Provides term insurance for the children of the
There may be tax person insured by the policy
consequences if you
exercise your . Annual renewable term rider
rights under the Provides annual renewal term insurance on the person
Accelerated living insured by the policy.
benefits rider.
Please see Variable . Annual renewable and convertible term rider
life insurance and Provides annual renewal term insurance on members of
your taxes for more the immediate family of the person insured by the
information. policy.
. Accounting benefit rider
Provides added protection benefit on the person
insured by the policy.
. Guaranteed insurability rider
Gives the right to buy additional insurance on the
Samples of the life of the person insured by the policy on certain
provisions for the specified dates without proof of insurability.
extra optional
benefits are . Waiver of charges rider
available from us Waives certain charges if the person insured by the
upon written policy becomes totally disabled before age 60.
request.
. Accelerated living benefits rider
Gives the policy owner access to a portion of the
policy's death benefit if the person insured by the
policy has been diagnosed with a terminal illness
resulting in a life expectancy of six months or less
(or longer than six months in some states).
. Disability benefit rider
Provides a monthly addition to the policy's
accumulated value when the person insured by the
policy has a qualifying disability, until he or she
reaches age 65.
We guarantee the amounts of the extra benefits when we
issue your rider. We'll add any rider charges to the
monthly charge we deduct from your policy's accumulated
value.
25
<PAGE>
THE DEATH BENEFIT
Things to keep in mind
We offer other variable life insurance policies which
provide insurance protection on the life of one person
or the lives of two people. The loads and charges on
these policies may be different. Combining a policy and
a rider, however, may be more economical than adding
another policy. It may also be more economical to
provide an amount of insurance coverage through a
policy alone.
Under certain circumstances, combining a policy with an
Annual renewable term rider or Accounting benefit rider
may result in a face amount equal to the face amount of
a single policy. Combining a policy and an Annual
renewable term rider will result in current charges
that are lower than for a single policy with the same
face amount.
However, your policy has guaranteed maximum charges.
Adding an Annual renewable term rider will result in
guaranteed maximum charges that are higher than for a
single policy with the same face amount.
Combining a policy with an Accounting benefit rider
could result in either higher or lower charges than
under a single policy. The timing of certain charges
for policies held for certain periods may also be
affected.
26
<PAGE>
HOW PREMIUMS WORK
Your policy gives you the flexibility to choose the
amount and frequency of your premium payments within
certain limits. Each premium payment must be at least
$50.
We deduct a premium load from each premium payment, and
then allocate your net premium to the investment
options you've chosen. Depending on the performance of
your investment options, and on how many withdrawals,
The amount, loans or other policy features you've taken advantage
frequency, and of, you may need to make additional premium payments to
period of time over keep your policy in force.
which you make
premium payments If we do not receive your first premium payment within
may affect whether 20 days after we issue your policy, we can cancel the
your policy will be policy and refund any partial premium payment you've
classified as a made. We may waive the 20 day requirement in some
modified endowment cases.
contract, or no
longer qualifies as
life insurance for
tax purposes. See
Variable life
insurance and your
taxes for more
information.
---------------------------------------------------------
Planned periodic You can schedule the amount and frequency of your
premium payments premium payments. We refer to scheduled premium
payments as your planned periodic premium. Here's how
Even if you pay all it works:
your premiums when
they're scheduled, . On your application, you choose a fixed amount of at
your policy could least $50 for each premium payment.
lapse if the
accumulated value, . You indicate whether you want to make premium
less any payments annually, semi-annually, or quarterly. You
outstanding loan can also choose monthly payments using our monthly
amount, is not Uni-check plan, which is described below.
enough to pay your
monthly charges. . We send you a notice to remind you of your scheduled
Turn to Your premium payment (except for monthly Uni-check
policy's payments, which are paid automatically). If you own
accumulated value more than one policy, we'll send one notice -- called
for more a listbill -- that reminds you of your payments for
information. all of your policies. You can choose to receive the
listbill every month. While you do not have to make
the premium payments you've scheduled, not making a
premium payment may have an impact on any financial
objectives you may have set for your policy's
accumulated value and death benefit, and could cause
your policy to lapse.
. We'll treat any payment you make during the life of
your policy as a loan repayment, not as a premium
payment, unless you tell us otherwise. When a
payment, or any portion of it, exceeds your
outstanding loan amount, we'll treat it as a premium
payment. Some states may require us to consider your
payments as premium payments if you have not given us
instructions to do otherwise.
27
<PAGE>
HOW PREMIUMS WORK
Monthly Uni-check plan
Once you've made your first premium payment, you can
make monthly premium payments using our Uni-check plan.
Here's how it works:
. you authorize us to withdraw a specified amount from
your checking account each month
. you can choose any day between the 4th and 28th of
the month
. if you do not specify a day for us to make the
withdrawal, we'll withdraw the premium payment on
your policy's monthly anniversary. If your policy's
monthly anniversary falls on the 1st, 2nd or 3rd of
the month, we'll withdraw the payment on the 4th of
each month.
---------------------------------------------------------
Deductions from
your premiums
We deduct a premium load from each premium payment you
Your net premium is make. The load is made up of three charges:
your premium
payment less the Sales load
premium load. We deduct a 3.5% sales load from each premium payment
you make.
This charge helps pay for the cost of distributing our
policies and is guaranteed not to increase. If our
sales and distribution expenses are more than the sales
load, we can recover these expenses from other charges,
such as the mortality and expense risk charge and the
surrender charge, and from any mortality gains.
State and local tax charge
We deduct 2.35% from each premium payment to pay state
and local premium and other taxes. The actual taxes we
pay vary from state to state, and in some instances,
among municipalities. We do not expect to profit from
this charge, and do not expect to change the rate
unless the rate we pay changes.
Federal tax charge
We deduct 1.50% from each premium payment to pay
federal taxes. We reserve the right to change this rate
to respond to changes in law.
---------------------------------------------------------
Allocating your
premiums
There are special We generally allocate your net premiums to the
restrictions when investment options you've chosen on your application on
allocating premiums the day we receive them. We currently limit your
to the Fixed LT allocations to 20 investment options at one time.
account.
When we allocate your first premium depends on the
state where you signed your policy application. If you
Please turn to Your signed your application in a state that requires us to
investment options return the premiums you've paid, we'll hold your net
for more premiums in the Money Market investment option until
information about the free look transfer date, and then transfer them to
the investment the investment options you've chosen.
options.
If you signed your application in a state that requires
refunds to be based on accumulated value, we allocate
net premiums to the investment options you've chosen on
the day we receive them.
28
<PAGE>
---------------------------------------------------------
Limits on the Federal tax law puts limits on the amount of premium
premium payments payments you can make in relation to your policy's
you can make death benefit. These limits apply in the following
situations:
Before you buy a
policy, you can ask . If you've chosen the guideline premium test as your
us or your death benefit qualification test and accepting the
registered premium means your policy will no longer qualify as
representative for life insurance for federal income tax purposes.
a personalized
illustration that The total amount you can pay in premiums and still have
will show you the your policy qualify as life insurance is your policy's
guideline single guideline premium limit. The sum of the premiums paid,
premium and less any withdrawals, at any time cannot exceed the
guideline level guideline premium limit, which is the greater of:
annual premiums.
. the guideline single premium or
. the sum of the guideline level annual premiums.
Your policy's guideline single premium and guideline
level annual premiums appear on your policy's
specification pages.
We may refuse to accept all or part of a premium
payment if, by accepting it, you will exceed your
policy's guideline premium limit. If we find that
you've exceeded your guideline premium limit, we may
remove all or part of a premium you've paid from your
policy as of the day we applied it, and return it to
you. We'll adjust the death benefit retroactively to
that date to reflect the reduction in premium payments.
You'll find a . If applying the premium in that policy year means
detailed discussion your policy will become a modified endowment
of modified contract.
endowment contracts
in Variable life A life insurance policy will become a modified
insurance and your endowment contract if the sum of premium payments made
taxes. during the first seven contract years, less a portion
of withdrawals, exceeds the seven-pay limit defined in
Section 7702A of the Internal Revenue Code.
Unless you've told us in writing that you want your
policy to become a modified endowment contract, we'll
remove all or part of the premium payment from your
policy as of the day we applied it and return it to
you. We'll also adjust the death benefit retroactively
to that date to reflect the reduction in premium
payments. If we receive such a premium within 20 days
before your policy anniversary, we'll hold it and apply
it to your policy on the anniversary date.
In both of these situations, if we remove an excess
premium from your policy, we'll return the premium
amount to you no later than 60 days after the end of
that policy year. We may adjust the amount for interest
or for changes in accumulated value that relate to the
amount of the excess premium payment we're returning to
you.
If we do not return the premium amount to you within
that time, we'll increase your policy's death benefit
retroactively, to the day we applied the premium, and
prospectively so that it's always the amount necessary
to ensure your policy qualifies as life insurance, or
to prevent it from becoming a modified endowment
contract. If we increase your death benefit, we'll
adjust cost of insurance or rider charges retroactively
and prospectively to reflect the increase.
Net amount at risk . If applying the premium payment to your policy will
is the difference increase the net amount at risk. This will happen if
between the death your policy's death benefit is equal to the guideline
benefit that would minimum death benefit or would be equal to it once we
be payable if the applied your premium payment.
person insured by
the policy died and We may choose to accept your premium payment in this
the accumulated situation, but before we do so, we may require
value of your satisfactory evidence of the insurability of the person
policy. insured by the policy.
We will not accept premium payments after the person
insured by the policy reaches age 100.
29
<PAGE>
YOUR POLICY'S ACCUMULATED VALUE
Accumulated value is the value of your policy on any
business day.
Accumulated value We use it to calculate how much money is available to
is used as the you for loans and withdrawals, and how much you'll
basis for receive if you surrender your policy. It also affects
determining policy the amount of the death benefit if you choose a death
benefits and benefit option that's calculated using accumulated
charges. value.
The accumulated value of your policy is not
guaranteed - it depends on the performance of the
investment options you've chosen, the premium payments
you've made, policy charges and how much you've
borrowed or withdrawn from the policy.
---------------------------------------------------------
Calculating your Your policy's accumulated value is the total amount
policy's allocated to the variable investment options and the
accumulated value fixed options, plus the amount in the loan account.
Please see Taking We determine the value allocated to the variable
out a loan for investment options on any business day by multiplying
information about the number of accumulation units for each variable
loans and the loan investment option credited to your policy on that day,
account. by the variable investment option's unit value at the
end of that day. The process we use to calculate unit
values for the variable investment options is described
in Your investment options.
---------------------------------------------------------
Monthly deductions
We deduct a monthly charge from your policy's
If there is not accumulated value in the investment options each
enough accumulated monthly payment date.
value to pay the
monthly charge, Unless you tell us otherwise, we deduct the monthly
your policy could charge from the investment options that make up your
lapse. The policy's accumulated value, in proportion to the
performance of the accumulated value you have in each option. This charge
investment options is made up of three charges:
you choose, not
making planned Cost of insurance
premium payments, This charge covers the cost of providing you with life
or taking out a insurance protection. We deduct a cost of insurance
loan all affect the charge based on the cost of insurance rate for your
accumulated value policy's initial face amount and for each increase you
of your policy. make to the face amount.
You'll find a There are maximum or guaranteed cost of insurance rates
discussion about associated with your policy. These rates are shown in
when your policy your policy's specification pages. When the person
might lapse, and insured by your policy reaches age 100, the guaranteed
what you can do to cost of insurance rate is zero - in other words, you no
reinstate it, later longer pay any cost of insurance.
in this section.
Unisex rates are The guaranteed rates include the insurance risks
used in the state associated with insuring one person. They are
of Montana. They calculated using 1980 Commissioners Standard Ordinary
are also used when Mortality Tables or the 1980 Commissioners Ordinary
a policy is owned Mortality Table B, which are used for unisex cost of
by an employer in insurance rates. The rates are also based on the age,
connection with gender and risk class of the person insured by the
employment-related policy unless unisex rates are required.
or benefit
programs. Our current cost of insurance rates are based on the
age, risk class, smoking status and gender (unless
unisex rates are required) of the person insured by the
policy. These rates generally increase as the person's
age increases, and they vary with the number of years
the policy has been in force. Our current rates are
lower than the guaranteed rates and they will not
exceed the guaranteed rates in the future.
30
<PAGE>
Choosing a guaranteed period
Our current cost of insurance rates are not guaranteed.
You may choose a guaranteed period during which we'll
guarantee our current cost of insurance rates.
If the person insured by the policy is age 65 or
younger and in our standard risk class when the policy
is issued, you may choose a ten-year guaranteed period.
If the person insured by the policy is older than 65,
or is not in our standard risk class, you may choose a
five-year guaranteed period. You can only do this when
the policy is issued and you cannot change the
guaranteed period later.
If you increase the face amount, the cost of insurance
rates associated with the increase will have the same
five-year or ten-year guaranteed period that you chose
when the policy was issued. This will be effective on
the day of the increase. However, if the person insured
by the policy is older than age 65 or no longer
qualifies for our standard risk class on the day of the
increase, you'll receive the five-year guaranteed
period.
There is no charge for choosing a guaranteed period.
---------------------------------------------------------
If you add an How we calculate cost of insurance
annual renewable
term or accounting We calculate cost of insurance by multiplying the
benefit rider to current cost of insurance rate by a discounted net
your policy, we amount at risk at the beginning of each policy month.
will include the
face amount of the Net amount at risk for the cost of insurance
rider in this calculation is the difference between a discounted
calculation of cost death benefit that would be payable if the person
of insurance. insured by the policy died and the accumulated value of
your policy at the beginning of the policy month before
the monthly charge is due.
First, we calculate the total net amount at risk for
your policy in two steps:
. Step 1: we divide the death benefit that would be
payable at the beginning of the policy month by
1.002466.
. Step 2: we subtract your policy's accumulated value
at the beginning of the policy month from the amount
we calculated in step 1.
Next, we allocate the net amount at risk in proportion
to the face amount and each increase that's in force as
of your monthly payment date.
We then multiply the amount of each allocated net
amount at risk by the cost of insurance rate for each
coverage. The sum of these amounts is your cost of
insurance charge.
31
<PAGE>
YOUR POLICY'S ACCUMULATED VALUE
Administrative charge
We deduct a charge of $7.50 a month to help cover the
costs of administering and maintaining our policies. We
guarantee that this charge will not increase. When the
person insured by the policy reaches age 100, the
administrative charge is zero - in other words, you no
longer pay any administrative charge.
Mortality and expense risk charge
Mortality risk is the chance that the people insured by
policies we've issued do not live as long as expected.
This means the cost of insurance charges specified in
the policies may not be enough to pay out actual
claims.
Expense risk is the chance that our actual
administrative and operating expenses are more than
expenses we expected.
The mortality and expense risk charge helps compensate
us for these risks. It has two components, which are
described in the following box. We guarantee this
charge will not increase.
---------------------------------------------------------
An example How we calculate the mortality and expense risk charge
For a policy that The mortality and expense risk charge has two separate
insures a male non- charges:
smoker who is age
45 when the policy . M&E risk face amount charge We deduct a face amount
is issued, with: charge every month during the first 10 policy years,
at a rate that is based on the age of the person
insured by the policy on the policy date and on a
face amount component factor per $1,000 of the
. a face amount of initial face amount of your policy. The rates for the
$350,000 face amount component are shown in Appendix A.
. accumulated value
of $30,000 after
deducting any If you increase the face amount, each increase will
outstanding loan have a corresponding face amount charge related to the
amount. amount of the increase. We'll specify these charges in
a supplemental schedule of benefits at the time of the
The monthly charge increase. We'll apply each charge for 10 years from the
for the M&E risk day of the increase. If you decrease the face amount,
face amount charge the charge will remain the same.
is:
. $126.00 under . M&E risk asset charge We deduct a risk asset charge
death benefit every month at a guaranteed maximum annual rate of
Option A and 0.45% (0.0375% monthly) on the first $25,000 of your
Option C policy's accumulated value in the investment options
(($350,000 / plus an annual rate of 0.05% (0.0042% monthly) of the
1,000) X 0.360). accumulated value in the investment options that
exceeds $25,000. We may charge a lower annual rate
. $181.30 under for the M&E risk asset charge. For the purposes of
death benefit this charge, the amount of accumulated value is
Option B calculated on the monthly payment date before we
(($350,000 / deduct the monthly charge, but after we deduct any
1,000) X 0.518). outstanding loan amount or allocate any new net
premiums, withdrawals or loans. When the person
The monthly charge insured by the policy reaches age 100, the annual
for the M&E risk rate is 0%--in other words, you no longer pay this
asset charge is charge.
$9.58 (($25,000 x
0.0375%) plus Charges for optional riders
($5,000 x If you add any riders to your policy, we add any
0.0042%)). charges for them to your monthly charge.
Sample rates for
the M&E risk face
amount charge
appear in
Appendix A.
32
<PAGE>
---------------------------------------------------------
Lapsing and Your policy will lapse if there is not enough
reinstatement accumulated value, after subtracting any outstanding
loan amount, to cover the monthly charge on the day we
make the deduction. Your policy's accumulated value is
affected by the following:
. loans or withdrawals you make from your policy
. not making planned premium payments
. the performance of your investment options
. charges under the policy.
There is no guarantee that your policy will not lapse
even if you pay your planned periodic premium.
If there is not enough accumulated value to pay the
total monthly charge, we deduct the amount that's
available and send you, and anyone you've assigned your
policy to, a notice telling you the minimum amount you
have to pay to keep your policy in force. This minimum
amount is equal to three times the monthly charge that
was due on the monthly payment date when there was not
enough accumulated value to pay the charge.
We'll give you a grace period of 61 days from when we
send the notice to pay the required premium. Your
policy will remain in force during the grace period.
If you do not make the minimum payment
If we do not receive your payment within the grace
period, your policy will lapse with no value. This
means we'll end your life insurance coverage.
Remember to tell us If you make the minimum payment
if your payment is
a premium payment. If we receive your payment within the grace period,
Otherwise, we'll we'll allocate your net premium to the investment
treat it as a loan options you've chosen and deduct the monthly charge
repayment. from your investment options in proportion to the
accumulated value you have in each option.
If your policy is in danger of lapsing and you have an
outstanding loan amount, you may find that making the
minimum payment would cause the total premiums paid to
exceed the maximum amount for your policy's face amount
under tax laws. In that situation, we will not accept
the portion of your payment that would exceed the
maximum amount. To stop your policy from lapsing,
you'll have to repay a portion of your outstanding loan
amount.
How to avoid future lapsing
To stop your policy from lapsing in the future, you may
want to make larger or more frequent premium payments
if tax laws permit it. Or if you have a loan, you may
want to repay a portion of it.
Paying death benefit proceeds during the grace period
If the person insured by the policy dies during the
grace period, we'll pay death benefit proceeds to your
beneficiary. We'll reduce the payment by any unpaid
monthly charges and any outstanding loan amount.
33
<PAGE>
YOUR POLICY'S ACCUMULATED VALUE
Reinstating a lapsed policy
If your policy lapses, you have five years from the end
of the grace period to apply for a reinstatement. We'll
reinstate it if you send us the following:
. a written application
. evidence satisfactory to us that the person insured
by the policy is still insurable
. a premium payment sufficient to keep your policy in
force for three months after the day your policy is
reinstated
. payment of all unpaid monthly charges that were due
in the grace period.
We'll reinstate your policy as of the first monthly
payment date on or after the day we approve the
reinstatement. Once we reinstate your policy, its
accumulated value will be the same as it was on the day
your policy lapsed. We'll allocate it according to your
most recent premium allocation instructions.
Reinstating a lapsed policy with an outstanding loan
amount
If you had an outstanding loan amount when your policy
lapsed, we will not pay or credit interest on it during
the period between the lapsing and reinstatement of
your policy. There are special rules that apply to
reinstating a policy with an outstanding loan amount:
. If we reinstate your policy on the first monthly
payment date that immediately follows the lapse,
we'll also reinstate the loan amount that was
outstanding the day your policy lapsed.
. If we reinstate your policy on any monthly payment
date other than the monthly payment date that
immediately follows the lapse, we'll deduct the
outstanding loan amount from your policy's
accumulated value. This means you will no longer have
an outstanding loan amount when your policy is
reinstated.
34
<PAGE>
YOUR INVESTMENT OPTIONS
This section tells you about the investment options
available under your policy and how they work.
You can change your We put your premium payments in our general and
premium allocation separate accounts. We own the assets in our accounts
instructions by and allocate your premiums, less any charges, to the
writing, sending a investment options you've chosen. Amounts allocated to
fax, or, if we have the fixed options are held in our general account.
your completed Amounts allocated to the variable investment options
telephone are held in our separate account.
authorization form
on file, by calling You choose your initial investment options on your
us at 1-800-800- application. If you choose more than one investment
7681. Or you can option, you must tell us the dollar amount or
ask your registered percentage you want to allocate to each option. You can
representative to change your premium allocation instructions at any
contact us. time.
You'll find The investment options you choose, and how they
information about perform, will affect your policy's accumulated value
when we allocate and may affect the death benefit. Please review the
premium payments to investment options carefully and ask your registered
your investment representative to help you choose the right ones for
options in How your goals and tolerance for risk. Make sure you
premiums work. understand any costs you may pay directly and
indirectly on your investment options because they will
affect the value of your policy.
---------------------------------------------------------
Variable investment
options
Variable investment You can choose from 25 variable investment options.
options are also Each variable investment option is set up as a variable
known as variable account under our separate account and invests in a
accounts. These corresponding portfolio of the Pacific Select Fund or
variable accounts the M Fund. Each portfolio invests in different
are divisions of securities and has its own investment goals, strategies
our separate and risks. The value of each portfolio will fluctuate
account. We bear with the value of the investments it holds, and returns
the direct are not guaranteed. Your policy's accumulated value
operating expenses will fluctuate depending on the investment options
of our separate you've chosen. You bear the investment risk of any
account. For more variable investment options you choose.
information about
how these accounts The following charts summarize the Pacific Select Fund
work, see About and M Fund portfolios. You'll find detailed
Pacific Life. descriptions of the portfolios in the Pacific Select
Fund and M Fund prospectuses that accompany this
prospectus. There's no guarantee that a portfolio will
We're the achieve its investment objective. You should read both
investment adviser the fund prospectuses carefully before investing.
for the Pacific
Select Fund. We
oversee the
management of all
the fund's
portfolios, and
manage two of the
portfolios
directly. We've
retained other
portfolio managers
to manage the other
portfolios.
MFIA is the
investment adviser
for the M Fund, and
has retained other
firms to manage the
M Fund's
portfolios. MFIA
and the M Fund's
Board of Directors
oversee the
management of all
of the M Fund's
portfolios.
We are not
responsible for the
operation of the M
Fund or any of its
portfolios. We are
also not
responsible for
ensuring that the M
Fund and its
portfolios comply
with any laws that
apply.
35
<PAGE>
YOUR INVESTMENT OPTIONS
<TABLE>
<CAPTION>
PORTFOLIO THE PORTFOLIO'S THE PORTFOLIO'S PORTFOLIO
INVESTMENT GOAL MAIN INVESTMENTS MANAGER
<S> <C> <C> <C>
Aggressive Equity Capital appreciation. Equity securities of small Alliance Capital
emerging-growth companies and Management L.P.
medium-sized companies.
Emerging Markets Long-term growth of Equity securities of companies Alliance Capital
capital. that are located in countries Management L.P.
generally regarded as "emerging
market" countries.
Diversified Research Long-term growth of Equity securities of U.S. Capital Guardian
capital. companies and securities whose Trust Company
principal markets are in the U.S.
Small-Cap Equity Growth of capital. Equity securities of smaller and Capital Guardian
(formerly called medium-sized companies. Trust Company
Growth)
International Large-Cap Long-term growth of Equity securities of non-U.S. Capital Guardian
capital. companies and securities whose Trust Company
principal markets are outside
of the U.S.
Bond and Income Total return and income A wide range of fixed income Goldman Sachs Asset
consistent with prudent securities with varying terms to Management
investment management. maturity, with an emphasis
on long-term bonds.
Equity Capital appreciation. Equity securities of large U.S. Goldman Sachs Asset
Current income is of growth-oriented companies. Management
secondary importance.
I-Net Tollkeeper Long-term growth of Equity securities of companies Goldman Sachs Asset
capital. which use, support, or relate Management
directly or indirectly to use of
the Internet. Such companies
include those in the media,
telecommunications, and
technology sectors.
Multi-Strategy High total return. A mix of equity and fixed income J.P. Morgan
securities. Investment
Management Inc.
Equity Income Long-term growth of capital Equity securities of large and J.P. Morgan
and income. medium-sized dividend-paying U.S. Investment
companies. Management Inc.
Growth LT Long-term growth of capital Equity securities of a large Janus Capital
consistent with the number of companies of any size. Corporation
preservation of capital.
Mid-Cap Value Capital appreciation. Equity securities of medium-sized Lazard Asset
U.S. companies believed to be Management
undervalued.
Equity Index Investment results that Equity securities of companies Mercury Asset
correspond to the total that are included in the Standard Management US
return of common stocks & Poor's 500 Composite Stock
publicly traded in the U.S. Price Index.
Small-Cap Index Investment results that Equity securities of companies Mercury Asset
correspond to the total that are included in the Russell Management US
return of an index of small 2000 Small Stock Index.
capitalization companies.
REIT Current income and long- Equity securities of real estate Morgan Stanley
term capital appreciation. investment trusts. Asset Management
International Value Long-term capital Equity securities of companies of Morgan Stanley
(formerly called appreciation primarily any size located in developed Asset Management
International) through investment in countries outside of the U.S.
equity securities of
corporations domiciled in
countries other than the
United States.
Government Securities Maximize total return Fixed income securities that are Pacific Investment
consistent with prudent issued or guaranteed by the U.S. Management Company
investment management. government, its agencies or
government-sponsored enterprises.
Managed Bond Maximize total return Medium and high-quality fixed Pacific Investment
consistent with prudent income securities with varying Management Company
investment management. terms to maturity.
Money Market Current income consistent Highest quality money market Pacific Life
with preservation of instruments believed to have
capital. limited credit risk.
High Yield Bond High level of current Fixed income securities with Pacific Life
income. lower and medium-quality credit
ratings and intermediate to long
terms to maturity.
Large-Cap Value Long-term growth of Equity securities of large U.S. Salomon Brothers
capital. Current income is companies. Asset Management
of secondary importance. Inc
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
M FUND THE PORTFOLIO'S THE PORTFOLIO'S PORTFOLIO
PORTFOLIO INVESTMENT GOAL MAIN INVESTMENTS MANAGER
<S> <C> <C> <C>
Brandes International Long-term capital Equity securities of foreign Brandes Investment
Equity appreciation. issuers, including common Partners, L.P.
stocks, preferred stocks and
securities that are convertible
into common stocks. Focuses on
stocks with capitalizations
of $1 billion or more
Turner Core Growth Fund Long-term capital Common stocks that show strong Turner Investment
appreciation. earnings potential and also Partners, Inc.
have reasonable valuations.
Frontier Capital Maximum capital Common stock of companies of Frontier Capital
Appreciation appreciation. all sizes with emphasis on Management Company,
stocks companies with Inc.
capitalizations of less than $3
billion.
Enhanced U.S. Equity Above-market total return. Common stocks of U.S. companies Franklin Portfolio
which the portfolio manager Associates LLC
believes have the potential for
higher rates of return than the
Standard & Poor's 500 Composite
Stock Price Index while having
risks similar to those of the
index.
</TABLE>
An example Calculating unit values
You ask us to When you choose a variable investment option, we credit
allocate $6,000 to your policy with accumulation units. The number of
the Government units we credit equals the amount we've allocated
Securities divided by the unit value of the variable account.
investment option Similarly, the number of accumulation units in your
on a business day. policy will be reduced when you make a transfer,
At the end of that withdrawal or loan from a variable investment option,
day, the unit value and when your monthly charges are deducted.
of the variable
account is $15. The value of an accumulation unit is the basis for all
We'll credit your financial transactions relating to the variable
policy with 400 investment options. We calculate the unit value for
units ($6,000 each variable account once every business day, usually
divided by $15). at or about 4:00 p.m. Eastern time.
The value of an Generally, for any transaction, we'll use the next unit
accumulation unit value calculated after we receive your written request.
is not the same as If we receive your written request before 4:00 p.m.
the value of a Eastern time, we'll use the unit value calculated as of
share in the the end of that business day. If we receive your
underlying request on or after 4:00 p.m. Eastern time, we'll use
portfolio. the unit value calculated as of the end of the next
business day.
For information
about timing of If a scheduled transaction falls on a day that is not a
transactions, see business day, we'll process it as of the end of the
M's Versatile next business day. For your monthly charge, we'll use
Product basics. the unit value calculated on your monthly payment date.
If your monthly payment date does not fall on a
business day, we'll use the unit value calculated as of
the end of the next business day.
The unit value calculation is based on the following:
. the investment performance of the underlying
portfolio
. any dividends or distributions paid by the underlying
portfolio
. any charges for any taxes that are, or may become,
associated with the operation of the variable
account.
The unit value of a variable account will change with
the value of its corresponding Pacific Select Fund or M
Fund portfolio. Changes in the unit value of a variable
account will not change the number of accumulation
units credited to your policy.
37
<PAGE>
YOUR INVESTMENT OPTIONS
A look at performance
Performance information may appear in advertisements,
sales literature, or reports to policy owners or
prospective buyers.
Information about the performance of any variable
account of the separate account reflects only the
performance of a hypothetical policy. The calculations
are based on allocating the hypothetical policy's
accumulated value to the variable account during a
particular time period.
Performance information is no guarantee of how a
variable account will perform in the future. You should
keep in mind 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 period of time that's
shown.
We may show performance information in any way that's
allowed under the law that applies to it. This may
include presenting a change in accumulated value due to
the performance of one or more variable accounts, or as
a change in a policy owner's death benefit.
We may show performance as a change in accumulated
value over time or in terms of the average annual
compounded rate of return on accumulated value. This
would be based on allocating premium payments for a
hypothetical policy to a particular variable account
over certain periods of time, including one year, or
from the day the variable account started operating. If
a portfolio has existed for longer than its
corresponding variable account, we may also show the
hypothetical returns that the variable account would
have achieved had it invested in the portfolio from the
day the portfolio started operating.
Performance may reflect the deduction of all policy
charges including premium load, the cost of insurance,
the administrative charge, and the mortality and
expense risk charge. The different death benefit
options will result in different expenses for the cost
of insurance, and the varying expenses will result in
different accumulated values.
Performance may also reflect the deduction of the
surrender charge, if it applies, by assuming the
hypothetical policy is surrendered at the end of the
particular period. At the same time, we may give other
performance figures that do not assume the policy is
surrendered and do not reflect any deduction of the
surrender charge.
In our advertisements, sales literature and reports to
policy owners, we may compare performance information
for a variable account to:
. other variable life separate accounts, mutual funds,
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
. the Consumer Price Index, to assess the real rate of
return from buying a policy by taking inflation into
consideration.
Reports and promotional literature may also contain our
rating or a rating of our claims-paying ability. These
ratings are set by firms that analyze and rate
insurance companies and by nationally recognized
statistical rating organizations.
Fees and expenses paid by the Pacific Select Fund and
the M Fund
You'll find more The Pacific Select Fund and the M Fund pay advisory
about Pacific fees and other expenses. These are deducted from the
Select Fund fees assets of each fund's portfolios and may vary from year
and expenses in An to year. They are not fixed and are not part of the
overview of M's terms of your policy. If you choose a variable
Versatile Product. investment option, these fees and expenses affect you
indirectly because they reduce portfolio returns. The
You'll find more Pacific Select Fund is governed by its own Board of
about M Fund fees Trustees. The M Fund is governed by its own Board of
and expenses in An Directors.
overview of M's
Versatile Product.
38
<PAGE>
---------------------------------------------------------
Fixed options
You can also choose from two fixed options: the Fixed
The fixed options account and the Fixed LT account. The fixed options
are not securities, provide a guaranteed minimum annual rate of interest.
so they do not fall The amounts allocated to the fixed options are held in
under any our general account.
securities act. For
this reason, the Here are some things you need to know about the fixed
SEC has not options:
reviewed the
disclosure in this . Accumulated value allocated to the fixed options
prospectus about earns interest on a daily basis, using a 365-day
these options. year. Our minimum annual interest rate is 3%.
However, other
federal securities . We may offer a higher annual interest rate on the
laws may apply to fixed options. If we do, we'll guarantee the higher
the accuracy and rate for one year.
completeness of the
disclosure about
these options. . There are no investment risks.
. There are limitations on when and how much you can
transfer from the fixed options. These limitations
are described below, in Transferring among investment
options.
For more
information about . We may limit the total amount you allocate to the
the general Fixed LT account for all Pacific Life policies you
account, see About own to $1,000,000 in any 12-month period, and
Pacific Life. transfer any amount over $1,000,000 to your other
investment options according to your most recent
instructions. We may increase the $1,000,000 limit at
any time at our sole discretion. You should contact
us to find out if a higher limit is in effect.
---------------------------------------------------------
Transferring among You can transfer among your investment options any time
investment options during the life of your policy without triggering any
current income tax. You can make transfers by writing
If your state to us, by making a telephone transfer, or by signing up
requires us to for one of our automatic transfer programs. You'll find
refund your more information about making telephone transfers in
premiums when you M's Versatile Product basics.
exercise your right
to cancel, you can Transfers will normally be effective as of the end of
make transfers and the business day we receive your written or telephone
use transfer request.
programs only after
the free look Here are some things you need to know about making
transfer date. For transfers:
more information,
please see M's
Versatile Product . Your policy's accumulated value may be invested in up
basics. to 20 investment options at one time.
. If you're making transfers between variable
investment options, there is no minimum amount
required and you can make as many transfers as you
If you live in like.
Connecticut,
Georgia, Maryland, . You can make transfers from the variable investment
North Carolina, options to the fixed options only in the policy month
North Dakota, or right before each policy anniversary.
Pennsylvania, you
can make transfers . You can only make one transfer from each fixed option
to the fixed in any 12-month period, except if you've signed up
options any time for the first year transfer program.
during the first 18
months of your . You can only transfer up to the greater of $5,000 or
policy. 25% of your policy's accumulated value in the Fixed
account in any 12-month period, except for scheduled
You'll find more transfers under the first year transfer program.
about the first
year transfer . You can only transfer up to the greater of $5,000 or
program later in 10% of your policy's accumulated value in the Fixed
this section. LT account in any 12-month period.
. Currently, there is no charge for making a transfer
but we may charge you in the future.
39
<PAGE>
YOUR INVESTMENT OPTIONS
. There is no minimum required value for the investment
option you're transferring to or from.
. You cannot make a transfer if your policy is in the
grace period and is in danger of lapsing.
. We can restrict or suspend transfers.
. We may choose to impose limits on transfer amounts,
the value of the investment options you're
transferring to or from, or the number and frequency
of transfers you can make.
---------------------------------------------------------
Transfer programs We offer three programs that allow you to make
automatic transfers of accumulated value from one
investment option to another. Under the dollar cost
averaging and portfolio rebalancing programs, you can
transfer among the variable investment options. Under
the first year transfer program, you can make transfers
from the Fixed account to the Fixed LT account and the
variable investment options.
Since the value of Dollar cost averaging program
accumulation units Our dollar cost averaging program allows you to make
can change, more scheduled transfers of $50 or more between variable
units are credited investment options without paying a transfer fee. It
for a scheduled does not allow you to make transfers to or from either
transfer when unit of the fixed options. Here's how the program works:
values are lower,
and fewer units . You can set up this program at any time while your
when unit values policy is in force.
are higher. This . You need to complete a request form to enroll in the
allows you to program.
average the cost of . You must have at least $5,000 in a variable
investments over investment option to start the program.
time. Investing . We'll automatically transfer accumulated value from
this way does not one variable investment option to one or more of the
guarantee profits other variable investment options you've selected.
or prevent losses.
. We'll process transfers as of the end of the business
day on your policy's monthly, quarterly, semi-annual
or annual anniversary, depending on the interval
you've chosen. We will not make the first transfer
until after the free look transfer date in states
that require us to return your premiums if you
exercise your right to cancel your policy.
. We will not charge you for the dollar cost averaging
program or for transfers made under this program,
even if we decide to charge you in the future for
transfers outside of the program, except if we have
to by law.
. We have the right to discontinue, modify or suspend
the program at any time.
. We'll keep making transfers at the intervals you've
chosen until one of the following happens:
. the total amount you've asked us to transfer has
been transferred
. there is no more accumulated value in the
investment option you're transferring from
. your policy enters the grace period and is in
danger of lapsing
. you tell us in writing to cancel the program
. we discontinue the program.
40
<PAGE>
Because the Portfolio rebalancing program
portfolio As the value of the underlying portfolios changes, the
rebalancing program value of the allocations to the variable investment
matches your options will also change. The portfolio rebalancing
original percentage program automatically transfers your policy's
allocations, we may accumulated value among the variable investment options
transfer money from according to your original percentage allocations.
an investment
option with Here's how the program works:
relatively higher . You can set up this program at any time while your
returns to one with policy is in force.
relatively lower . You enroll in the program by sending us a written
returns. signed request or a completed automatic rebalancing
form.
. Your first rebalancing will take place on the monthly
payment date you choose. You choose whether we should
make transfers quarterly, semi-annually or annually,
based on your policy date.
. If you cancel this program, you must wait 30 days to
begin it again.
. You cannot use this program if you're already using
the dollar cost averaging program.
. We do not currently charge for the portfolio
rebalancing program or for transfers made under this
program.
. We can discontinue, suspend or change the program at
any time.
This program allows First year transfer program
you to average the Our first year transfer program allows you to make
cost of investments monthly transfers during the first policy year from the
over your first Fixed account to the variable investment options or the
policy year. Fixed LT account. It does not allow you to transfer
Investing this way among variable investment options.
does not guarantee
profits or prevent Here's how the program works:
losses. . You enroll in the program when you apply for your
policy.
. You choose a regular amount to be transferred every
month for 12 months.
. We make the first transfer on the day we allocate
your first premium to the investment options you've
chosen. Each transfer will be made on the same day
every month.
. If you sign up for this program, we'll waive the
usual transfer limit for the Fixed account during the
first policy year.
. If we make the last transfer during the second policy
year, we will not count it toward the usual one
transfer per year limit for the Fixed account.
. If the accumulated value in the Fixed account is less
than the amount to be transferred, we'll transfer the
balance and then cancel the program.
. If there is accumulated value remaining in the Fixed
account at the end of the program, our usual rules
for the fixed account will apply.
. We do not currently charge for the first year
transfer program or for transfers made under this
program.
41
<PAGE>
WITHDRAWALS, SURRENDERS AND LOANS
You can take out all or part of your policy's
Making a accumulated value while your policy is in force by
withdrawal, taking making withdrawals or surrendering your policy. You can
out a loan or take out a loan from us using your policy as security.
surrendering your You can also use your policy's loan and withdrawal
policy can change features to supplement your income, for example, during
your policy's tax retirement.
status, generate
taxable income, or
make your policy
more susceptible to
lapsing. Be sure to
plan carefully
before using these
policy benefits.
If you withdraw a
larger amount than
you've paid into
your policy, your
withdrawal may be
considered taxable
income.
For more
information, see
Variable life
insurance and your
taxes.
---------------------------------------------------------
Making withdrawals You can withdraw part of your policy's net cash
surrender value starting on your policy's first
You can choose to anniversary. Here's how it works:
receive your . You must send us a written request that's signed by
withdrawal in a all joint owners.
lump sum or use it . Each withdrawal must be at least $200, and the net
to buy an income cash surrender value of your policy after the
benefit. Please see withdrawal must be at least $500.
the discussion
about income . If your policy has an outstanding loan amount, the
benefits in General maximum withdrawal you can take is the amount, if
information about any, by which the cash surrender value just before
your policy. the withdrawal exceeds the outstanding loan amount
divided by 90%.
We will not accept
your request to . We'll charge you $25 for each withdrawal you make.
make a withdrawal
if it will cause . If you do not tell us which investment options to
your policy to take the withdrawal from, we'll deduct the withdrawal
become a modified and the withdrawal charge from all of your investment
endowment contract, options in proportion to the accumulated value you
unless you've told have in each option.
us in writing that
you want your . The accumulated value, cash surrender value and net
policy to become a cash surrender value of your policy will be reduced
modified endowment by the amount of each withdrawal.
contract.
. If the person insured under the policy dies after
you've sent a withdrawal request to us, but before
we've made the withdrawal, we'll deduct the amount of
the withdrawal from any death benefit proceeds owing.
How withdrawals affect your policy's death benefit
Making a withdrawal will affect your policy's death
benefit in the following ways:
. if your policy's death benefit does not equal the
guideline minimum death benefit, the death benefit
will decrease by the amount of your withdrawal.
. if your policy's death benefit equals the guideline
minimum death benefit, the death benefit may decrease
by more than the amount of your withdrawal.
How withdrawals affect your policy's face amount
If you've chosen death benefit Option B or Option C,
making a withdrawal does not reduce your policy's face
amount.
If you've chosen death benefit Option A, a withdrawal
may reduce your face amount. You can make one
withdrawal during each of the first 15 policy years of
up to 10% of the total premium payments you've made
without reducing your policy's face amount. If you
withdraw a larger amount, or make additional
withdrawals, the face amount will be reduced by the
amount, if any, by which the face amount exceeds the
death benefit immediately before the withdrawal, minus
the amount of the withdrawal.
42
<PAGE>
---------------------------------------------------------
Taking out a loan
You can borrow money from us any time while your policy
The amount in the is in force either by sending us a request in writing,
loan account, plus or over the telephone. You'll find more information
any interest you about requesting a loan by telephone in M's Versatile
owe, is referred to Product basics.
throughout this
prospectus as your When you borrow money from us, we use your policy's
outstanding loan accumulated value as security. You pay interest on the
amount. Your policy amount you borrow. The accumulated value set aside to
refers to this secure your loan also earns interest. Here's how it
amount as policy works:
debt.
Taking out a loan . To secure the loan, we transfer an amount equal to
will affect the the amount you're borrowing from your accumulated
growth of your value in the investment options to the loan account.
policy's We'll transfer this amount from your investment
accumulated value, options in proportion to the accumulated value you
and may affect the have in each option, unless you tell us otherwise.
death benefit. . Interest owing on the amount you've borrowed accrues
daily at an annual rate of 3.25%. Interest that has
accrued during the policy year is due on your policy
An example anniversary. If you do not pay the interest when it's
For a policy in due, we'll add it to the amount of your loan and
policy year 5 with: begin accruing interest on it from the day it was
. accumulated value due. We'll also transfer an amount equal to the
of $100,000 interest that was due, from your policy's accumulated
. an outstanding value to the loan account. We'll transfer this amount
loan amount of from your investment options in proportion to the
$60,000 accumulated value you have in each option, unless you
. a most recent tell us otherwise.
monthly charge of
$225 . The amount in the loan account earns interest daily
at an annual rate of 3.0%. On your policy
The maximum amount anniversary, we transfer the interest that's been
you can borrow is credited to the loan account proportionately to your
the greater of: investment options according to your most recent
allocation instructions.
$25,500 ((90% X
($100,000 - How much you can borrow
$5,000)) - $60,000) The minimum amount you can borrow is $200, unless there
are other restrictions in your state. You can borrow up
or to the larger of the following amounts:
$32,076.51 . 90% of the accumulated value in the investment
(a X (b / c)) - d, options, less any surrender charges that would apply
where: if you surrendered your policy on the day you took
a = $92,300 out the loan.
($100,000 - . the result of a X (b / c) - d, where:
$5,000 - ($12 X a = the accumulated value of your policy less any
$225)) surrender charges that would have applied if you
surrendered your policy on the day you took out
b = 1.03 the loan, and less 12 times the most recent
c = 1.0325 monthly charge
d = $60,000)
b = 1.03
c = 1.0325
d = any outstanding loan amount.
Paying off your loan
You can pay off all or part of the loan any time while
your policy is in force. Unless you tell us otherwise,
we'll generally transfer any loan payments you make
proportionately to your investment options according to
your most recent allocation instructions. We may,
however, first transfer any loan payments you make to
the fixed options, up to the amount originally
transferred from the fixed options to the loan account.
We'll then transfer any excess amount to your variable
investment options according to your most recent
allocation instructions.
While you have an outstanding loan, we'll treat any
money you send us as a loan payment unless you tell us
otherwise in writing.
43
<PAGE>
WITHDRAWALS, SURRENDERS AND LOANS
Your outstanding What happens if you do not pay off your loan
loan amount could If you do not pay off your loan, we'll deduct the
result in taxable amount in the loan account, including any interest you
income if you owe, from one of the following:
surrender your
policy, if your . the death benefit proceeds before we pay them to your
policy lapses, or beneficiary
if your policy is a
modified endowment . the cash surrender value if you surrender your policy
contract. You
should talk to your . the amount we refund if you exercise your right to
tax advisor before cancel.
taking out a loan
under your policy. Taking out a loan, whether or not you repay it, will
See Taking out a have a permanent effect on the value of your policy.
loan in Variable For example, while your policy's accumulated value is
life insurance and held in the loan account, it will miss out on the
your taxes. potential earnings available through the variable
investment options. The amount of interest you earn on
the loan account may be less than the amount of
interest you would have earned from the fixed options.
These could lower your policy's accumulated value,
which could reduce the amount of the death benefit.
When a loan is outstanding, the amount in the loan
account is not available to help pay for any policy
charges. If, after deducting your outstanding loan
amount, there is not enough accumulated value in your
policy to cover the policy charges, your policy could
lapse. You may need to make additional premium payments
or loan repayments to prevent your policy from lapsing.
---------------------------------------------------------
You can use your policy's loan and withdrawal features
Ways to use your to supplement your income, for example, during
policy's loan and retirement.
withdrawal features
Using your policy to supplement your income does not
If you're change your rights or our obligations under the policy.
interested in using The terms for loans and withdrawals described in this
your life insurance prospectus remain the same.
policy to
supplement your Here are some things you should consider when setting
retirement income, up an income stream:
please contact us
for more . the rate of return you expect to earn on your
information. investment options
. how long you would like to receive regular income
We can provide you
with illustrations . the amount of accumulated value you want to maintain
that give you in your policy.
examples of how
this could affect Understanding the risks
the accumulated Setting up an income stream may not be suitable for all
value, net cash policy owners. It's important to understand the risks
surrender value and that are involved in using your policy's loan and
death benefit of withdrawal features.
your policy based
on different You must always leave enough accumulated value in your
hypothetical gross policy to help ensure your policy will continue to
rates of return. We qualify as life insurance and will not lapse. Your
will not use a policy will lapse if there is not enough accumulated
higher rate than value, after subtracting any outstanding loan amount,
12%, and will to cover the monthly charge on the day we make the
always compare it deduction and the grace period expires. If your policy
with a rate of 0% lapses, we'll end your life insurance coverage.
based on guaranteed
insurance costs. There are also charges associated with reinstating a
lapsed policy.
The hypothetical
rates of return are You should consult with your financial adviser and
illustrative of carefully consider how much you can withdraw and borrow
past or future from your policy each year to set up your income
results. Policy stream.
values and benefits
would be different Remember that the performance of your investment
from those shown in options also affects your policy's accumulated value.
the illustrations Poor performance can increase the danger of your policy
if: lapsing. And as the cost of insurance generally
increases with the age of the person insured by the
. the gross annual policy, this can also reduce the accumulated value.
rates of return
are different
from the
hypothetical
rates
. premiums were not
paid as
illustrated
. loan interest was
paid when due.
44
<PAGE>
You can also ask In addition, you should carefully review the policy
for accompanying statements we send you. Your statements will allow you
charts and graphs to monitor your policy's accumulated value, less your
that compare outstanding loan amount, to ensure your policy can
results from continue to support the income stream you have chosen.
various retirement
strategies. If your policy lapses or you surrender your policy
after you have taken out a loan, you could face
You can ask your significant income tax liability in the year of the
registered lapse or surrender. Any outstanding loan amount will
representative for automatically be repaid when your policy lapses or you
illustrations surrender your policy. You could be taxed to the extent
showing how policy that the net surrender value plus the outstanding loan
charges may affect amount repaid exceeds the cost basis of your policy.
existing
accumulated value Interest on a loan is due to us on each policy
and how future anniversary. If we do not receive the interest when
withdrawals and due, we'll add it to the outstanding loan amount and
loans may affect begins accruing interest on it from the day it was due.
the accumulated This has a compounding effect and can add to your
value and death income tax liability.
benefit.
If the person insured by the policy dies, we'll deduct
Tax issues are any outstanding loan amount from the death benefit.
described in detail This means the death benefit proceeds will be less than
in Variable the death benefit and may be less than the face amount.
insurance and your
taxes.
---------------------------------------------------------
Surrendering your
policy
You can surrender or cash in your policy at any time
You can choose to while the person insured by the policy is still living.
receive your money Your policy's cash surrender value is its accumulated
in a lump sum or value less any surrender charge that applies. The net
use it to buy an cash surrender value equals your policy's cash
income benefit. surrender value after deducting any outstanding loan
Please see the amount.
discussion about
income benefits in Here are some things you need to know about
General information surrendering your policy:
about your policy. . You must send us your policy and a written request.
. We'll send you the policy's net cash surrender value.
If you surrender your policy during the first 10
If you increase policy years, we'll deduct a surrender charge that
your policy's face helps cover our costs for underwriting, issuing and
amount, we'll send distributing our policies.
you a supplemental
schedule of . Your policy's surrender charge is based on the
benefits that initial face amount of your policy and will never be
shows the greater than the maximum surrender charge. The
surrender charge maximum surrender charge is calculated at a rate that
associated with is based on the age and risk class of the person
the increase. insured by the policy, and each $1,000 of initial
face amount.
. There's no surrender charge on the initial face
amount after 10 policy years.
. We guarantee the surrender charge rates will not
increase.
. If you increase your policy's face amount, each
increase has a surrender charge and maximum surrender
charge, based on the amount of the increase, for
10 years.
. If you decrease the face amount, the decrease will
not affect your policy's surrender charge or maximum
surrender charge.
45
<PAGE>
WITHDRAWALS, SURRENDERS AND LOANS
---------------------------------------------------------
Sample rates for How we calculate the surrender charge
the surrender The surrender charge is assessed against your policy's
charge appear in accumulated value. They are based on the age and risk
Appendix B. class of the person insured by the policy, as well as
the death benefit option you choose, for each $1,000 of
An example the initial face amount of your policy.
For a policy:
. that insures a The amount of the surrender charge does not change
male non-smoker during the first policy month. We reduce the charge by
who is age 45 0.8403% each month until it reaches zero at the end of
when the policy 10 policy years.
is issued
. with an initial
face amount of
$350,000.
The maximum surrender charge on the initial face amount
For death benefit of your policy will never be more than $6.00 per $1,000
Option A and of initial face amount.
Option C, the
surrender charge
is:
. $724.50 at issue
(($350,000 /
$1,000) X 2.07)
. $219.19 at the
end of the
seventh policy
year ($724.50 -
($724.50 X .8403%
X 83 months))
For death benefit
Option B, the
surrender charge
is:
. $1,029.00 at
issue (($350,000
/ $1,000) X 2.94)
. $311.32 at the
end of the
seventh policy
year ($1,029.00 -
($1,029.00 X
.8403% X 83
months))
46
<PAGE>
GENERAL INFORMATION ABOUT YOUR POLICY
This section tells you some additional things you
should know about your policy.
---------------------------------------------------------
Income benefit If you surrender or make a withdrawal from your policy,
you can use the money to buy an income benefit that
provides a monthly income. Your policy's beneficiary
can use death benefit proceeds to buy an income
benefit. In addition to the income benefit described
below, you can choose from other income benefits we may
make available from time to time.
The following is one income benefit available under the
M's Versatile Product policy:
. The income benefit is based on the life of the person
receiving the income. If the policy owner is buying
the income benefit, monthly income will be based on
the owner's life. If the policy's beneficiary buys
the income benefit, monthly income will be based on
the beneficiary's life.
. We'll pay a monthly income for at least 10 years
regardless of whether the person receiving the income
is still alive.
. After 10 years, we'll only pay the monthly income for
as long as the person receiving it is still alive.
. The minimum monthly income benefit calculated must be
at least $100.
. For this income benefit, the amount you receive will
always be at least as much as the amount guaranteed
by your policy.
---------------------------------------------------------
Substituting the Starting on your policy's first anniversary, you can
person insured by apply to substitute the person insured by your policy.
your policy You must apply in writing and we must receive
satisfactory evidence of insurability of the new person
If you substitute to be insured by the policy. You can only add riders on
the person insured the new person insured by the policy if we approve the
by the policy, addition of the riders.
we'll send you a
revised schedule of The substitution will become effective on the first
benefits. monthly payment date after we approve your request. We
may have to adjust the face amount, accumulated value,
surrender charge and policy charges to reflect the
substitution.
We can refuse your request to substitute if, among
other reasons:
. we would be required to end the policy in order to
comply with new guideline premium limits under tax
law
. we would be required to make distributions from your
policy's accumulated value that are greater than the
net cash surrender value.
47
<PAGE>
GENERAL INFORMATION ABOUT YOUR POLICY
---------------------------------------------------------
Paying the death If the person insured by the policy, whether sane or
benefit in the case insane, commits suicide within two years of the policy
of suicide date, death benefit proceeds will be the total of all
premiums you've paid, less any outstanding loan amount
and any withdrawals you've made.
If you've substituted the person insured by the policy
and that person, whether sane or insane, commits
suicide within two years of the day the substitution
was made, we'll calculate death benefit proceeds
differently. Proceeds will be limited to the net cash
surrender value of your policy as of the day the
substitution was made, less any increase in any
outstanding loan amount, any withdrawals you've made,
and any dividends we've paid in cash, since the day the
substitution was made.
---------------------------------------------------------
Replacement of life The term replacement has a special meaning in the life
insurance or insurance industry. Before you make a decision to buy,
annuities we want you to understand what impact a replacement may
have on your existing insurance policy.
A replacement occurs when you buy a new life insurance
policy or annuity contract, and a policy or contract
you already own has been or will be:
. lapsed, forfeited, surrendered or partially
surrendered, assigned to the replacing insurer, or
otherwise terminated
. converted to reduced paid-up insurance, continued as
extended term insurance, or otherwise reduced in
value by the use of nonforfeiture benefits or other
policy values
. amended to effect either a reduction in benefits or
in the term for which coverage would otherwise remain
in force or for which benefits would be paid
. reissued with any reduction in cash value, or
. pledged as collateral or subject to borrowing,
whether in a single loan or under a schedule of
borrowing over a period of time.
There are circumstances when replacing your existing
life insurance policy or annuity contract can benefit
you. As a general rule, however, replacement is not in
your best interest. You should carefully compare the
costs and benefits of your existing policy or contract
with those of the new policy or contract to determine
whether replacement is in your best interest.
---------------------------------------------------------
Errors on your
application
If the age or gender of the person insured by your
If unisex cost of policy is stated incorrectly on your application, the
insurance rates death benefit under your policy will be the greater of
apply to your the following:
policy, we will not
adjust the face . the amount of death benefit that would be purchased
amount if we by the most recent cost of insurance charge for the
discover that correct age and gender or
gender has been . the guideline minimum death benefit for the correct
stated incorrectly age and gender.
on your
application. We'll adjust the accumulated value by recalculating all
previous cost of insurance charges and other monthly
deductions based on the correct age and gender.
48
<PAGE>
---------------------------------------------------------
Contesting the We have the right to contest the validity of your
validity policy for two years from the policy date. Once your
of your policy policy has been in force for two years from the policy
date during the lifetime of the person insured by the
policy, we generally lose the right to contest its
validity.
We also have the right to contest the validity of a
policy that you reinstate for two years from the day
that it was reinstated. Once your reinstated policy has
been in force for two years from the reinstatement date
during the lifetime of the person insured by the
policy, we generally lose the right to contest its
validity. During this period, we may contest your
policy only if there is a material misrepresentation on
your application for reinstatement.
We have the right to contest the validity of an
increase in the face amount of a policy for two years
from the day the increase becomes effective. Once the
increased face amount has been in force for two years
during the lifetime of the person insured by the
policy, we generally lose the right to contest its
validity.
We also have the right to contest the validity of a
policy if there has been a substitution to the person
insured by the policy. We can contest a policy's
validity for two years from the day the substitution
becomes effective. Once the substitution has been in
force for two years during the lifetime of the person
insured by the policy, we generally lose the right to
contest its validity.
Regardless of the above, we can contest the validity of
your policy for failure to pay premiums at any time.
The policy will terminate upon successful contest with
respect to the person insured by the policy.
---------------------------------------------------------
Assigning your
policy as
collateral
You can assign your policy as collateral to secure a
Assigning a policy loan, mortgage, or other kind of debt. Here's how it
that's a modified works:
endowment contract
may generate . An assignment does not change the ownership of the
taxable income and policy.
a 10% penalty tax. . After the policy has been assigned, your rights and
the rights of your beneficiary will be subject to the
assignment. The entire policy, including any income
benefit, rider, benefit and endorsement, will also be
subject to the assignment.
. We're not responsible for the validity of any
assignment.
. We must receive and record a copy of the original
assignment in a form that's acceptable to us before
we'll consider it binding.
. Unless otherwise provided, the person or organization
you assign your policy to may exercise the rights
under the policy, except the right to change the
policy owner or the beneficiary or the right to
choose a monthly income benefit.
---------------------------------------------------------
Non-participating This policy will not share in any of our surplus
earnings.
49
<PAGE>
VARIABLE LIFE INSURANCE AND YOUR TAXES
This discussion about taxes is based on our
understanding of the present federal income tax laws as
they are currently interpreted by the Internal Revenue
Service (IRS). It's based on the Internal Revenue Code
of 1986, as amended, (the tax code) and does not cover
any state or local tax laws.
The tax This is not a complete discussion of all federal income
consequences of tax questions that may arise under the policy. There
owning a policy or are special rules that we do not include here that may
receiving proceeds apply in certain situations.
from it may vary by
jurisdiction and We do not know whether the current treatment of life
according to the insurance policies under current federal income tax or
circumstances of estate or gift tax laws will continue. We also do not
each owner or know whether the current interpretations of the laws by
beneficiary. the IRS or the courts will remain the same. Future
legislation may adversely change the tax treatment of
Speak to a life insurance policies, other tax consequences
qualified tax described in this discussion or tax consequences that
adviser for relate directly or indirectly to life insurance
complete policies.
information about
federal, state and We do not make any guarantees about the tax status of
local taxes that your policy, and you should not consider the discussion
may apply to you. that follows to be tax advice.
---------------------------------------------------------
Tax treatment of Definition of life insurance
life insurance We believe that the policy qualifies as life insurance.
policies That means it will receive the same tax advantages as a
conventional fixed life insurance policy. The two main
In order to qualify tax advantages are:
as a life insurance
contract for . In general, your policy's beneficiary will not be
federal income tax subject to federal income tax when he or she receives
purposes, the the death benefit proceeds. This is true regardless
policy must meet of whether the beneficiary is an individual,
the statutory corporation, or other entity.
definition of life . You'll generally not be taxed on any or all of your
insurance. policy's accumulated value unless you receive a cash
distribution by making a withdrawal, surrendering
Death benefits may your policy, or in some instances, taking a loan from
be excluded from your policy.
income under
Section 101(a) of The tax laws defining life insurance, however, do not
the tax code. cover all policy features. Your policy may have
features that could prevent it from qualifying as life
insurance. For example, the tax laws have yet to
address many issues concerning the treatment of
substandard risk policies and policies with term
insurance on the person insured by the policy. We can
make changes to your policy if we believe the changes
are needed to ensure that your policy continues to
qualify as a life insurance contract.
Tax regulations deal with allowable charges for
mortality costs and other expenses that are used in
calculating whether a policy qualifies as life
insurance. 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.
50
<PAGE>
The Treasury Department has issued proposed regulations
about reasonable standards for mortality charges. While
we believe that our mortality costs and other expenses
used in calculating whether the policy qualifies as
life insurance are reasonable under current laws, we
cannot be sure that the IRS agrees with us. We can
change our mortality charges if we believe the changes
are needed to ensure that your policy qualifies as a
life insurance contract.
Section 817(h) of Diversification rules and ownership of the separate
the tax code account
describes the Your policy will not qualify for the tax benefit of a
diversification life insurance contract unless the separate account
rules. follows certain rules requiring diversification of
investments underlying the policy. In addition, the IRS
For more requires that the policyholder does not have control
information about over the underlying assets.
diversification
rules, please see The Treasury Department has announced that the
Managing the diversification rules "do not provide guidance
Pacific Select Fund concerning the circumstances in which it will treat an
in the accompanying investor, rather than the insurance company, as the
Pacific Select Fund owner of the assets in a separate account." The IRS
prospectus and treats a variable policy owner as the owner of separate
Distributions and account assets if he or she has the ability to exercise
Taxes in the investment control over them. Owners of the assets are
accompanying M Fund taxed on any income or gains the assets generate.
prospectus. Although the Treasury Department announced it would
provide further guidance on the issue, it had not done
so when we wrote this prospectus.
No IRS rulings deal with policies that have exactly the
same ownership rights as your policy. Since you have
additional flexibility in allocating premiums and
policy values, it is possible the IRS would treat you
as the owner of your policy's proportionate share of
the assets of the separate account.
We do not know what will be in future Treasury
Department regulations. We cannot guarantee that the
portfolios of the Pacific Select Fund or the M Fund
will be able to operate as currently described in the
prospectus, or that either of the funds will not have
to change any portfolio's investment objective or
policies. We can modify your policy if we believe it
will prevent you from being considered the owner of
your policy's proportionate share of the assets of the
separate account.
Policy exchanges Policy exchanges
fall under Section If you exchange your entire policy for another one that
1035(a) of the tax insures the same person, it generally will be treated
code. as a tax-free exchange and, if so, will not result in
the recognition of gain or loss. If the person insured
by the policy is changed, the exchange will be treated
as a taxable exchange.
Change of ownership
You may have taxable income if you transfer ownership
of your policy, sell your policy, or change the
ownership of it in any way.
There are special Corporate owners
rules for There are special tax issues for corporate owners:
corporate-owned
policies. You . using your policy to fund deferred compensation
should consult your arrangements for employees has special tax
tax adviser. consequences
. corporate ownership of a policy may affect your
exposure to the alternative minimum tax and the
Section 59A of the environmental tax.
tax code deals with
the environmental
tax.
51
<PAGE>
VARIABLE LIFE INSURANCE AND YOUR TAXES
---------------------------------------------------------
Conventional life The tax treatment of your policy will depend upon
insurance policies whether it is a type of contract known as a modified
endowment contract. We describe modified endowment
Under Section 7702A contracts later in this section. If your policy is not
of the tax code, a modified endowment contract, it will be treated as a
policies that are conventional life insurance policy and will have the
not classified as following tax treatment:
modified endowment
contracts are taxed Surrendering your policy
as conventional When you surrender, or cash in, your policy, you'll
life insurance generally be taxed on the difference, if any, between
policies. the cash surrender value and the cost basis in your
policy.
The cost basis in
your policy is Making a withdrawal
generally the If you make a withdrawal after your policy has been in
premiums you've force for 15 years, you'll only be taxed on the amount
paid plus any you withdraw that exceeds the cost basis in the policy.
taxable
distributions less Special rules apply if you make a withdrawal within the
any withdrawals or first 15 policy years and it's accompanied by a
premiums previously reduction in benefits. In this case, there is a special
recovered that were formula under which you may be taxed on all or a
not taxable. portion of the withdrawal amount.
Taking out a loan
If you take out a loan, you will not pay tax on the
loan amount unless your policy is surrendered or lapses
and you have not repaid your outstanding loan amount.
The interest you pay, or that's accrued, on a loan is
generally nondeductible. Ask your tax adviser for more
information.
Loans and corporate-owned policies
If you borrow money to buy or carry certain life
insurance policies, tax law provisions may limit the
deduction of interest payable on loan proceeds. If the
taxpayer is an entity that's a direct or indirect
beneficiary of certain life insurance, endowment or
annuity contracts, a portion of the entity's deductions
for loan interest may be disallowed, even though this
interest may relate to debt that's completely unrelated
to the contract. There may be a limited exception that
applies to contracts issued on 20% owners, officers,
directors or employees of the entity. For more
information about this exception, you should consult
your tax adviser.
---------------------------------------------------------
Modified endowment A modified endowment contract is a special type of life
contracts insurance policy. If your policy is a modified
endowment contract, it will have the tax treatment
Section 7702A of described below. Any distributions you receive during
the tax code the life of the policy are treated differently than
defines a class of under conventional life insurance policies.
life insurance Withdrawals, loans, pledges, assignments and the
policies known as surrender of your policy are all considered
modified endowment distributions and may be subject to tax on an income-
contracts. Like first basis and a 10% penalty.
other life
insurance policies, When a policy becomes a modified endowment contract
the death benefit A life insurance policy becomes a modified endowment
proceeds paid to contract if, at any time during the first seven policy
your beneficiary years, the sum of actual premiums paid exceeds the
generally are not seven-pay limit. The seven-pay limit is the cumulative
subject to federal total of the level annual premiums (or seven-pay
income tax and your premiums) required to pay for the policy's future death
policy's and endowment benefits.
accumulated value
grows on a tax-
deferred basis
until you receive a
cash distribution.
If there is a
material change to
your policy, like a
change in the death
benefit, we may
have to retest your
policy and restart
the seven-pay
premium period to
determine whether
the change has
caused the policy
to become a
modified endowment
contract.
52
<PAGE>
For example, if the seven-pay premiums were $1,000 a
year, the maximum premiums you could pay 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, an M's Versatile Product
policy may or may not be a modified endowment contract,
depending on the amount of premiums paid during the
policy's first seven contract years or after a material
change has been made to the policy.
Surrendering your policy
If you surrender your policy, you're taxed on the
amount by which the cash surrender value exceeds the
cost basis in the policy.
Making a withdrawal or taking out a loan
If you make a withdrawal or take out a loan from a
modified endowment contract, you're taxed on the amount
of the withdrawal or loan that's considered income,
including all previously non-taxed gains. Income is the
difference between the cash surrender value and the
cost basis in your policy. It's unclear whether
interest paid, or accrued, on a loan is considered
interest for federal income tax purposes. If you borrow
money to buy or carry certain life insurance policies,
tax law provisions may limit the deduction of interest
payable on loan proceeds. You should consult your tax
adviser.
All modified endowment contracts we or our affiliates
issue to you in a calendar year are treated as a single
contract when we calculate whether a distribution
amount is subject to tax.
10% penalty tax
If any amount you receive from a modified endowment
contract is taxable, you may also have to pay a penalty
tax equal to 10% of the taxable amount.
A taxpayer will not have to pay the penalty tax if any
of the following exceptions apply:
. you're at least 59 1/2 years old
. you're receiving an amount because you've become
disabled
. you're receiving an amount that's part of a series of
substantially equal periodic payments, paid out at
least annually. These payments may be made for your
life or life expectancy or for the joint lives or
joint life expectancies of you and your
beneficiaries.
Distributions before a policy becomes a modified
endowment contract
If your policy fails the seven-pay test and becomes a
modified endowment contract, any amount you receive or
are deemed to have received during the two years before
it became a modified endowment contract may be taxable.
The distribution would be treated as having been made
in anticipation of the policy's failing to meet the
seven-pay test under Treasury Department regulations
which are yet to be prescribed.
---------------------------------------------------------
Policy riders
Accelerated living benefits rider
Please see the Amounts received under this rider should be generally
discussion of excluded from taxable income under Section 101(g) of
optional riders in the tax code.
The death benefit.
Benefits under the rider will be taxed, however, if
Please consult with they are paid to someone other than a person insured by
your tax adviser if the policy, and the person insured by the policy:
you want to
exercise your . is a director, officer or employee of the person
rights under this receiving the benefit, or
rider. . has a financial interest in a business of the person
receiving the benefit.
53
<PAGE>
ABOUT PACIFIC LIFE
Pacific Life Insurance Company is a life insurance
company based in California. Along with our
subsidiaries and affiliates, our operations include
life insurance, annuity, pension and institutional
products, group employee benefits, broker-dealer
operations, and investment advisory services. At the
end of 1999, we had over $ billion of individual
life insurance and total admitted assets of
approximately $ billion. In 1999, we were ranked
the largest life insurance carrier in the U.S. in
terms of admitted assets.
Pacific Life, together with its affiliated enterprises,
has total assets and funds under management of $
billion. We are authorized to conduct our life and
annuity business in the District of Columbia and in all
states except New York. Our principal office is at 700
Newport Center Drive, Newport Beach, California 92660.
---------------------------------------------------------
How we're organized Pacific Life was established on January 2, 1868 under
the name, Pacific Mutual Life Insurance Company of
California. It was reincorporated as Pacific Mutual
Life Insurance Company on July 22, 1936. On September
1, 1997, Pacific Life converted from a mutual life
insurance company to a stock life insurance company.
Pacific Life is a subsidiary of Pacific LifeCorp, a
holding company, which in turn is a subsidiary of
Pacific Mutual Holding Company, a mutual holding
company.
Under their charters, Pacific Mutual Holding Company
must always hold at least 51% of the outstanding voting
stock of Pacific LifeCorp. Pacific LifeCorp must always
own 100% of the voting stock of Pacific Life. Owners of
Pacific Life's annuity contracts and life insurance
policies have certain membership interests in Pacific
Mutual Holding Company. They have the right to vote on
the election of the Board of Directors of the mutual
holding company and on other matters. They also have
certain rights if the mutual holding company is
liquidated or dissolved.
---------------------------------------------------------
How policies are Pacific Mutual Distributors, Inc. (PMD), our
distributed subsidiary, is the distributor of our policies. PMD is
located at 700 Newport Center Drive, Newport Beach,
California 92660.
PMD is registered as a broker-dealer with the SEC and
is a member of the National Association of Securities
Dealers (NASD). We pay PMD for its services as our
distributor.
The policies are sold by registered representatives of
broker-dealers who have signed agreements with us and
PMD. Registered representatives must be licensed to
sell variable life insurance under the state insurance
and securities regulations that apply. Broker-dealers
must be registered with the SEC.
How we pay broker-dealers
We pay broker-dealers commission for promoting,
marketing and selling our policies. Broker-dealers pay
a portion of the commission to their registered
representatives, under their own arrangements.
54
<PAGE>
Commissions are based on "target" premiums we
determine. The commission we pay will vary with the
agreement, but the most common schedule of commissions
we pay is:
A target premium is
a hypothetical . 65% of premiums paid up to the first target premium
premium that is . 32% of premiums paid up to the second target premium
used only to . 12% of the premiums paid under targets 3-10
calculate . 3% of premiums paid in excess of the 10th target
commissions. It premium.
varies with the
death benefit We may pay broker-dealers an annual renewal commission
option you choose, of up to 0.20% of a policy's accumulated value less any
the age of the outstanding loan amount. We calculate the renewal
person insured by amount monthly and it becomes payable on each policy
the policy on the anniversary.
policy date, and
the gender (unless We may also pay override payments, expense and
unisex rates are marketing allowances, bonuses, wholesaler fees and
required) and risk training allowances.
class of the person
insured by the Registered representatives who meet certain sales
policy. levels can qualify for sales incentives programs we
sponsor. We may also pay them non-cash compensation
like expense-paid trips, expense-paid educational
seminars, and merchandise. They can choose to receive
A policy's target their compensation on a deferred basis.
premium will be
less than the
policy's guideline
level premiums.
---------------------------------------------------------
How our accounts We own the assets in our general account and our
work separate account. We allocate your net premiums to
these accounts according to the investment options
you've chosen.
General account
We can provide you Our general account includes all of our assets, except
with reports of our for those held in our separate accounts. We guarantee
ratings as an you an interest rate for up to one year on any amount
insurance company allocated to the fixed options. The rate is reset
and our ability to annually. The fixed options are part of our general
pay claims with account, which we may invest as we wish, according to
respect to our any laws that apply. We'll credit the guaranteed rate
general account even if the investments we make earn less. Our ability
assets. to pay these guarantees is backed by our strength as a
company.
The fixed options are not securities, so they do not
fall under any securities act. For this reason, the SEC
has not reviewed the disclosure in this prospectus
about the fixed options. However, other federal
securities laws may apply to the accuracy and
completeness of the disclosure about the fixed options.
Separate account
You'll find the Amounts allocated to the variable investment options
audited financial are held in our separate account. The assets in this
statements for the account are kept separate from the assets in our
Pacific Select Exec general account and our other separate accounts, and
separate account are protected from our general creditors.
later in this
section of the The separate account was established on May 12, 1988
prospectus. under California law under the authority of our Board
of Directors. It's registered with the SEC as a type of
This section of the investment company called a unit investment trust. The
prospectus also SEC does not oversee the administration or investment
includes the practices or policies of the account.
audited
consolidated The separate account is divided into variable accounts.
financial Each variable account invests in shares of a designated
statements for portfolio of the Pacific Select Fund or the M Fund. We
Pacific Life, which may add variable accounts that invest in other
we include to show portfolios of these funds or in other securities.
our strength as a
company and our
ability to meet our
obligations under
the policies.
55
<PAGE>
ABOUT PACIFIC LIFE
We're the legal owner of the assets in the separate
account, and pay its operating expenses. The separate
account is operated only for our variable life
insurance policies. We must keep enough money in the
account to pay anticipated obligations under the
insurance policies funded by the account, but we can
transfer any amount that's more than these anticipated
obligations to our general account. Some of the money
in the separate account may include charges we collect
from the account and any investment results on those
charges.
The separate We cannot charge the assets in the separate account
account is not the attributable to our reserves and other liabilities
only investor in under the policies funded by the account with any
the Pacific Select liabilities from our other business.
Fund or the M Fund.
Investment in the Similarly, the income, gains or losses, realized or
funds by other unrealized, of the assets of any variable account
separate accounts belong to that variable account and are credited to or
for variable charged against the assets held in that variable
annuity contracts account without regard to our other income, gains or
and variable life losses.
insurance contracts
could cause Making changes to the separate account
conflicts. For more We can add, change or remove any securities that the
information, please separate account or any variable account holds or buys,
see the Statements as long as we comply with the laws that apply.
of Additional
Information for the We can substitute shares of one Pacific Select Fund
Pacific Select Fund portfolio or M Fund portfolio with shares of another
and for the M Fund. portfolio or fund if:
. any portfolio is no longer available for investment
. our management believes that a portfolio is no longer
appropriate in view of the purposes of the policy.
We'll give you any required notice or receive any
required approval from policy owners or the SEC before
we substitute any shares. We'll comply with the filing
or other procedures established by insurance regulators
as required by law.
We can add new variable accounts, which may include
additional subaccounts of the separate account, to
serve as investment options under the policies. These
may be managed separate accounts or they may invest in
a new portfolio of the Pacific Select Fund or the
M Fund, or in shares of another investment company or
one of its portfolios, or in a suitable investment
vehicle with a specified investment objective.
We can add new variable accounts when we believe that
it's warranted by marketing needs or investment
conditions. We'll decide on what basis we'll make new
accounts available to existing policy owners.
We can also eliminate any of our variable accounts if
we believe marketing, tax or investment conditions
warrant it. We can terminate and liquidate any variable
account.
If we make any changes to variable accounts or
substitution of securities, we can make appropriate
changes to this policy or any of our other policies, by
appropriate endorsement, to reflect the change or
substitution.
56
<PAGE>
If we believe it's in the best interests of people
holding voting rights under the policies and we meet
any required regulatory approvals we can do the
following:
. operate the separate account as a management
investment company, unit investment trust, or any
other form permitted under securities or other laws
. register or deregister the separate account under
securities law
. combine the separate account with one of our other
separate accounts or our affiliates' separate
accounts
. combine one or more variable accounts
. create a committee, board or other group to manage
the separate account
. change the classification of any variable account.
Taxes we pay
We may be charged for state and local taxes. Currently,
we pay these taxes because they are small amounts with
respect to the policy. If these taxes increase
significantly, we may deduct them from the separate
account.
We may charge the separate account for any federal,
state and local taxes that apply to the separate
account or to our operations. This could happen if our
tax status or the tax treatment of variable life
insurance changes.
---------------------------------------------------------
Voting rights We're the legal owner of the shares of the Pacific
Select Fund and the M Fund that are held by the
variable accounts. We may vote on any matter at
shareholder meetings of the funds. However, we are
required by law to vote as you instruct on the shares
relating to your allocation in a variable investment
option. This is called your voting interest.
Your voting interest is calculated as of a day set by
the Board of Trustees of the Pacific Select Fund or the
Board of Directors of M Fund, called the record date.
Your voting interest equals the accumulated value in a
variable investment option divided by the net asset
value of a share of the corresponding portfolio.
Fractional shares are included. If allowed by law, we
may change how we calculate your voting interest.
We'll send you documents from the Pacific Select Fund
and the M Fund called proxy materials. They include
information about the items you'll be voting on and
forms for you to give us your instructions. We'll vote
shares held in the separate account for which we do not
receive voting instructions in the same proportion as
all other shares in the portfolio held by that separate
account for which we've received timely instructions.
We'll vote shares of any portfolio we hold in our
general account in the same proportion as the total
votes for all of our separate accounts, including this
separate account. We'll vote shares of any portfolio
held by any of our non-insurance affiliates in the same
proportion as the total votes for all of our separate
accounts and those of our insurance affiliates.
If the law changes to allow it, we can vote as we wish
on shares of the portfolios held in the separate
account.
When required by state insurance regulatory
authorities, we may disregard voting instructions that:
. would change a portfolio's investment objective or
subclassification
. would approve or disapprove an investment advisory
contract.
57
<PAGE>
ABOUT PACIFIC LIFE
We may disregard voting instructions on a change
initiated by policy owners that would change a
portfolio's investment policy, investment adviser or
portfolio manager if:
. our disapproval is reasonable
. we determine in good faith that the change would be
against state law or otherwise be inappropriate,
considering the portfolio's objectives and purpose,
and considering what effect the change would have on
us.
If we disregard any voting instructions, we'll include
a summary of the action we took and our reasons for it
in the next report to policy owners.
---------------------------------------------------------
Illustrations We will provide you with illustrations based on
different sets of assumptions upon your request. You
If you ask us, can request such illustrations at any time.
we'll provide you Illustrations may help you understand how your policy
with different values would vary over time based on different
kinds of assumptions. We have filed examples of such an
illustrations. illustration as an exhibit to the registration
statement that relates to the policy on file with the
SEC.
. Illustrations
based on
information you
give us about the
age of the person
to be insured by
the policy, their
risk class, the
face amount, the
death benefit and
premium payments.
. Illustrations
that show the
allocation of
premium payments
to specified
variable
accounts. These
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 that's
greater than 12%.
These are
available only to
certain large
institutional
investors.
---------------------------------------------------------
State regulation We're subject to the laws of the state of California
governing insurance companies and to regulations issued
by the Commissioner of Insurance of California. In
addition, we're subject to the insurance laws and
regulations of the other states and jurisdictions in
which we're 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.
58
<PAGE>
---------------------------------------------------------
Legal proceedings The separate account is not involved in any legal
and legal matters proceedings that would have a material effect on policy
owners.
Legal matters concerning the issue and sale of the life
insurance policies described in this prospectus, our
organization and authority to issue the policies under
California law, and the validity of the forms of the
policies under California law, have been passed upon by
our general counsel. Legal matters relating to federal
securities laws and federal income tax laws have been
passed upon by Dechert Price & Rhoads.
---------------------------------------------------------
Registration We've filed a registration statement with the SEC for
statement M's Versatile Product, under the Securities Act of
1933. The SEC's rules allow us to omit some of the
information required by the registration statement from
this prospectus. You can ask for it from the SEC's
office in Washington, D. C. They may charge you a fee.
---------------------------------------------------------
Management The following is a list of our directors and certain
officers, along with some information about their
business activities over the past five years. They do
not receive any compensation from the separate account
for services they provide to it nor do we pay any
separately allocable compensation for these services.
The business address of each of these people is c/o
Pacific Life Insurance Company, 700 Newport Center
Drive, Newport Beach, California 92660.
59
<PAGE>
ABOUT PACIFIC LIFE
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION DURING THE LAST FIVE YEARS
<S> <C>
Thomas C. Sutton Director, Chairman of the Board and Chief Executive Officer of Pacific Life;
Director, Chairman Director, Chairman of the Board and Chief Executive Officer of Pacific LifeCorp,
of the Board and August 1997 to present; Director, Chairman of the Board and Chief Executive Officer
Chief Executive of Pacific Mutual Holding Company, August 1997 to present; Trustee and Chairman of
Officer the Board and Former President of Pacific Select Fund; Director and Chairman of the
Board of Pacific Life & Annuity Company (formerly known as PM Group Life Insurance
Company); Management Board Member of PIMCO Advisors L.P., December 1997 to present;
Former Equity Board Member of PIMCO Advisors L.P.; Former Director of Pacific
Corinthian Life Insurance Company; Director of Newhall Land & Farming; The Irvine
Company; Edison International; and similar positions with other affiliated companies
of Pacific Life.
Glenn S. Schafer Director (since November 1994) and President (since January 1995) of Pacific Life;
Director and Executive Vice President and Chief Financial Officer of Pacific Life, April 1991 to
President January 1995; Director and President of Pacific LifeCorp, August 1997 to present;
Director and President of Pacific Mutual Holding Company, August 1997 to present;
President (since February 1999) and Former Trustee of Pacific Select Fund;
Management Board Member of PIMCO Advisors L.P., December 1997 to present; Former
Equity Board Member of PIMCO Advisors L.P.; Former Director of Pacific Corinthian
Life Insurance Company; Director of Pacific Life & Annuity Company; and similar
positions with other affiliated companies of Pacific Life.
Khanh T. Tran Director (since August 1997), Senior Vice President and Chief Financial Officer of
Director, Senior Pacific Life, June 1996 to present; Vice President and Treasurer of Pacific Life,
Vice President and November 1991 to June 1996; Senior Vice President and Chief Financial Officer of
Chief Financial Pacific LifeCorp, August 1997 to present; Senior Vice President and Chief Financial
Officer Officer of Pacific Mutual Holding Company, August 1997 to present; Chief Financial
Officer and Treasurer to other affiliated companies of Pacific Life.
David R. Carmichael Director (since August 1997), Senior Vice President and General Counsel of Pacific
Director, Senior Life; Senior Vice President and General Counsel of Pacific LifeCorp, August 1997 to
Vice President and present; Senior Vice President and General Counsel of Pacific Mutual Holding
General Counsel Company, August 1997 to present; Director of: Pacific Life & Annuity Company;
Association of California Life and Health Insurance Companies and Association of
Life Insurance Counsel.
Audrey L. Milfs Director (since August 1997), Vice President and Corporate Secretary of Pacific
Director, Vice Life; Vice President and Corporate Secretary of Pacific LifeCorp, August 1997 to
President and present; Vice President and Secretary of Pacific Mutual Holding Company, August 1997
Corporate Secretary to present; Secretary of Pacific Select Fund; similar positions with other
affiliated companies of Pacific Life.
Lynn C. Miller Executive Vice President, Individual Insurance, of Pacific Life, January 1995 to
Executive Vice present; Senior Vice President, Individual Insurance, of Pacific Life, 1989 to 1995;
President Executive Vice President of Pacific Life & Annuity Company.
Edward R. Byrd Vice President and Controller of Pacific Life; Vice President and Controller of
Vice President and Pacific LifeCorp, August 1997 to present; Vice President and Controller of Pacific
Controller Mutual Holding Company, August 1997 to present; and similar positions with other
affiliated companies of Pacific Life.
Brian D. Klemens Vice President and Treasurer of Pacific Life, December 1998 to present; Assistant
Vice President and Vice President, Accounting and Assistant Controller of Pacific Life, April 1994 to
Treasurer December 1998.
</TABLE>
60
<PAGE>
---------------------------------------------------------
Financial
statements The next several pages contain the audited financial
statements for the Pacific Select Exec Separate Account
as of December 31, 1999 and the two years then ended.
These are followed by the audited consolidated
financial statements for Pacific Life as of December
31, 1999 and 1998 and for the three years ended
December 31, 1999, which are included in this
prospectus only so you can assess our ability to meet
our obligations under the policies.
---------------------------------------------------------
Independent
Auditors The audited consolidated financial statements for
Pacific Life as of December 31, 1999 and 1998 and for
the three years ended December 31, 1999 and the audited
financial statements for Pacific Select Exec Separate
Account as of December 31, 1999 and for the two years
ended December 31, 1999 included in this prospectus
have been audited by , independent auditors,
as stated in their reports appearing herein, and have
been so included in reliance upon the reports of such
firm given upon their authority as experts in
accounting and auditing.
[Financials to be Updated]
61
<PAGE>
APPENDIX A - MORTALITY AND EXPENSE RISK FACE AMOUNT CHARGE: RATES PER
$1,000 OF INITIAL FACE AMOUNT
<TABLE>
<CAPTION>
Death Benefit Option A or C Death Benefit Option B
--------------------------------------- ---------------------------------------
Nonsmoker Smoker Nonsmoker Smoker
Issue ------------------- ------------------- ------------------- -------------------
age Male Female Unisex Male Female Unisex Male Female Unisex Male Female Unisex
- ----- ----- ------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 0.062 0.051 0.060 0.062 0.051 0.060 0.149 0.124 0.124 0.149 0.124 0.144
10 0.062 0.051 0.060 0.062 0.051 0.060 0.149 0.124 0.124 0.149 0.124 0.144
15 0.062 0.051 0.060 0.062 0.051 0.060 0.149 0.124 0.124 0.149 0.124 0.144
20 0.115 0.092 0.110 0.146 0.112 0.140 0.256 0.223 0.250 0.267 0.234 0.262
25 0.140 0.115 0.136 0.180 0.140 0.173 0.291 0.256 0.284 0.301 0.265 0.295
30 0.163 0.135 0.158 0.207 0.165 0.199 0.328 0.290 0.290 0.337 0.298 0.330
35 0.191 0.159 0.187 0.238 0.192 0.231 0.376 0.330 0.330 0.384 0.337 0.375
40 0.260 0.217 0.254 0.324 0.262 0.314 0.440 0.383 0.383 0.448 0.389 0.436
45 0.360 0.300 0.350 0.448 0.360 0.433 0.518 0.444 0.444 0.527 0.449 0.511
50 0.458 0.379 0.444 0.564 0.451 0.544 0.613 0.518 0.518 0.625 0.522 0.603
55 0.548 0.456 0.532 0.669 0.535 0.647 0.729 0.610 0.610 0.743 0.616 0.722
60 0.718 0.597 0.696 0.866 0.691 0.834 0.796 0.731 0.731 0.866 0.741 0.834
65 0.917 0.760 0.888 0.947 0.867 0.959 0.917 0.760 0.760 0.947 0.867 0.959
70 0.926 0.763 0.892 0.930 0.860 0.933 0.926 0.763 0.763 0.930 0.860 0.933
75 0.920 0.764 0.889 0.920 0.852 0.925 0.920 0.764 0.764 0.920 0.852 0.925
80 0.910 0.786 0.883 0.910 0.845 0.942 0.910 0.786 0.786 0.910 0.845 0.942
85 1.060 1.026 1.051 1.067 1.051 1.076 1.060 1.026 1.026 1.067 1.051 1.076
-- -------------------------------------- --------------------------------------
</TABLE>
If the person insured by the policy is assigned a risk classification other
than standard, a factor is applied to the M&E risk face amount charge according
to the nonstandard table rating assigned to that person insured. If the person
insured is assigned a nonstandard rating reflected in the table below, the rate
above that applies to the person insured is multiplied by the nonstandard table
factor below that applies.
NONSTANDARD TABLE FACTORS
<TABLE>
<CAPTION>
Nonstandard Table Number
Issue -------------------------------------------------------------------------------
age 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0-45 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55 1.60 1.65 1.70 1.75 1.80
50 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55 1.60 1.65 1.65 1.65 1.65
55 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35
60 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05
65-85 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
----- -------------------------------------------------------------------------------
</TABLE>
Representative figures shown. For issue ages not listed, please ask your
registered representative.
62
<PAGE>
APPENDIX B - SURRENDER CHARGE: CURRENT RATES PER $1,000 OF INITIAL FACE
AMOUNT
<TABLE>
<CAPTION>
Death Benefit Option A or C Death Benefit Option B
--------------------------------------- ---------------------------------------
Nonsmoker Smoker Nonsmoker Smoker
Issue ------------------- ------------------- ------------------- -------------------
age Male Female Unisex Male Female Unisex Male Female Unisex Male Female Unisex
- ----- ----- ------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 $0.33 $0.26 $0.32 $0.33 $0.26 $0.32 $0.89 $0.74 $0.87 $0.89 $0.74 $0.87
10 $0.33 $0.26 $0.32 $0.33 $0.26 $0.32 $0.89 $0.74 $0.87 $0.89 $0.74 $0.87
15 $0.33 $0.26 $0.32 $0.33 $0.26 $0.32 $0.89 $0.74 $0.87 $0.89 $0.74 $0.87
20 $0.66 $0.53 $0.64 $0.84 $0.64 $0.80 $1.51 $1.33 $1.49 $1.58 $1.39 $1.54
25 $0.82 $0.67 $0.79 $1.04 $0.80 $0.99 $1.71 $1.50 $1.66 $1.77 $1.55 $1.71
30 $0.96 $0.79 $0.93 $1.20 $0.95 $1.16 $1.93 $1.70 $1.89 $1.97 $1.75 $1.94
35 $1.11 $0.93 $1.08 $1.38 $1.11 $1.33 $2.18 $1.92 $2.13 $2.21 $1.96 $2.16
40 $1.51 $1.26 $1.47 $1.87 $1.50 $1.80 $2.53 $2.20 $2.47 $2.56 $2.23 $2.49
45 $2.07 $1.73 $2.01 $2.55 $2.05 $2.46 $2.94 $2.53 $2.85 $2.96 $2.55 $2.88
50 $2.67 $2.23 $2.59 $3.27 $2.62 $3.15 $3.54 $3.00 $3.42 $3.58 $3.01 $3.45
55 $3.25 $2.72 $3.16 $3.93 $3.16 $3.80 $4.27 $3.60 $4.16 $4.30 $3.60 $4.19
60 $4.25 $3.54 $4.12 $5.07 $4.07 $4.88 $4.70 $4.28 $4.76 $5.07 $4.31 $4.88
63 $4.95 $4.13 $4.80 $5.69 $4.69 $5.63 $4.95 $4.45 $4.80 $5.69 $4.69 $5.63
64 $5.22 $4.35 $5.06 $5.54 $4.93 $5.71 $5.22 $4.47 $5.06 $5.54 $4.93 $5.71
65 $5.37 $4.48 $5.20 $5.45 $5.06 $5.54 $5.37 $4.48 $5.20 $5.45 $5.06 $5.54
66 $5.47 $4.56 $5.30 $5.38 $5.14 $5.41 $5.47 $4.56 $5.30 $5.38 $5.14 $5.41
70 $5.31 $4.43 $5.15 $5.19 $4.94 $5.24 $5.31 $4.43 $5.15 $5.19 $4.94 $5.24
75 $5.09 $4.26 $4.94 $4.90 $4.69 $4.97 $5.09 $4.26 $4.94 $4.90 $4.69 $4.97
80 $4.61 $3.88 $4.47 $4.45 $4.21 $4.66 $4.61 $3.88 $4.47 $4.45 $4.21 $4.66
85 $3.79 $3.21 $3.67 $3.79 $3.38 $3.79 $3.79 $3.21 $3.67 $3.79 $3.38 $3.79
-- --------------------------------------------------- -------------------------
</TABLE>
If the person insured by the policy is assigned a risk classification other
than standard, a factor is applied to the surrender charge rate according to
the nonstandard table rating assigned to that person insured. If the person
insured is assigned a nonstandard rating reflected in the table of nonstandard
table factors at the bottom of Appendix A on the previous page, the rate above
that applies to the person insured is multiplied by the nonstandard table
factor that applies.
Representative figures shown. For issue ages not listed, please ask your
registered representative.
63
<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 >93 101
- ---------------- ---------------- ---------------- -----------------
</TABLE>
64
<PAGE>
M'S VERSATILE PRODUCT WHERE TO GO FOR MORE INFORMATION
The M's Versatile For more information about M's Versatile Product,
Product variable please call or write to us at the address below. You
life insurance should also use this address to send us any notices,
policy is forms or requests about your policy.
underwritten by
Pacific Life
Insurance Company.
---------------------------------------------------------
How to contact us Pacific Life Insurance Company
Client Services Department
700 Newport Center Drive
P.O. Box 7500
Newport Beach, California 92658-7500
1-800-800-7681
7 a.m. through 5 p.m. Pacific time
---------------------------------------------------------
How to contact the You can also find reports and other information about
SEC the policy and separate account from the SEC. The SEC
may charge you a fee for this information.
Public Reference Section of the SEC
Washington, D.C. 20549-6009
1-800-SEC-0330
Internet: www.sec.gov
<PAGE>
Underwritten by:
[LOGO OF PACIFIC LIFE APPEARS HERE]
Pacific Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
(800) 800-7681
Visit us at our web site: www.pacificlife.com
[LOGO OF IMSA APPEARS HERE]
*Membership promotes ethical market conduct
for individual life insurance and annuities
15-21390-01 5/99
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
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 64 pages (including illustrations).
The undertaking to file reports.
Representation pursuant to Section 26(e) of the Investment Company Act of 1940.
The Signatures.
Written consent of the following person (included in the exhibits shown below):
Dechert Price & Rhoads, Outside Counsel
The following exhibits:
1. (1) (a) 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. /1/
(b) Resolution of the Board of Directors of Pacific Life Insurance
Company authorizing conformity to the terms of the current
Bylaws. /1/
(2) Inapplicable
(3) (a) Distribution Agreement Between Pacific Life Insurance Company and
Pacific Mutual Distributors, Inc. (formerly known as Pacific Equities
Network) /1/
(b) Form of Selling Agreement Between Pacific Mutual Distributors, Inc.
and Various Broker-Dealers /2/
(4) Inapplicable
(5) (a) Flexible Premium Variable Life Insurance Policy /1/
(b) Annual Renewable Term Rider (form R98-ART) /1/
(c) Accounting Benefit Rider (form R98-ABR) /1/
(d) Accelerated Living Benefit Rider (form R92-ABR) /1/
(e) Spouse Term Rider (form R98-SPT) /1/
(f) Children's Term Rider (form R84-CT) /1/
(g) Waiver of Charges (form R98-WC) /2/
(h) Accidental Death Benefit (form R84-AD) /1/
(i) Guaranteed Insurability Rider (form R84-GI) /1/
(j) Disability Benefit Rider (form R84-DB) /1/
(k) M&E Risk Charge Endorsement /4/
(6) (a) Bylaws of Pacific Life Insurance Company /1/
(b) Articles of Incorporation of Pacific Life Insurance Company /1/
<PAGE>
(7) Inapplicable
(8) Inapplicable
(9) (a) Participation Agreement between Pacific Life Insurance Company and
Pacific Select Fund /4/
(b) M Fund, Inc. Participation Agreement with Pacific Life Insurance
Company /4/
(10) Application for Flexible Premium Variable Life Insurance Policy &
General Questionnaire /1/
2. Form of Opinion and consent of legal officer of Pacific Life as to
legality of Policies being registered /1/
3. Inapplicable
4. Inapplicable
5. Inapplicable
6. (a) Inapplicable
(b) Consent of Dechert Price & Rhoads /1/
7. (a) Opinion of Actuary
(b) Form of Illustration of Policy Benefits
8. Memorandum Describing Issuance, Transfer and Redemption Procedures /1/
9. Power of Attorney /4/
10. Inapplicable
11. Inapplicable
12. Inapplicable
13. Inapplicable
14. Inapplicable
15. Inapplicable
16. Inapplicable
17. Inapplicable
/1/ Filed as part of Registration Statement on Form S-6 via EDGAR on August 10,
1998, File No. 333-61135, Accession Number 0001017062-98-001706.
/2/ Filed as part of Pre-Effective Amendment No. 1 to the Registration Statement
on Form S-6 via EDGAR on November 19, 1999, File No. 333-61135, Accession
Number 0001017062-98-002349.
/3/ Filed as part of Post-Effective Amendment No. 1 to the Registration
Statement on Form S-6 via EDGAR on April 27, 1999, File No. 333-61135,
Accession Number 0001017062-99-000722.
/4/ Filed as part of Post-Effective Amendment No. 2 to the Registration
Statement on Form S-6 via EDGAR on February 29, 2000, File No. 333-61135,
Accession Number 0001017062-00-000579.
<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 maybe prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
REPRESENTATION PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF 1940
Pacific Life Insurance Company and Registrant represent that the fees and
charges to be deducted under the variable Life Insurance Policy ("Policy")
described in the prospectus contained in this registration statement are, in the
aggregate, reasonable in relation to the services rendered, the expenses to be
incurred, and the risks assumed in connection with the Policy.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Pacific Select Exec Separate Account of Pacific Life Insurance Company, has duly
caused this Post-Effective Amendment No. 3 to the Registration Statement on Form
S-6 to be signed on its behalf by the undersigned thereunto duly authorized in
the City of Newport Beach, and State of California, on this 2nd day of March,
2000.
PACIFIC SELECT EXEC SEPARATE ACCOUNT
(Registrant)
BY: PACIFIC LIFE INSURANCE COMPANY
(Depositor)
BY: _________________________________
Thomas C. Sutton*
Chief Executive Officer
*BY: /s/ DAVID R. CARMICHAEL
David R. Carmichael
as attorney-in-fact
(Power of Attorney is contained as Exhibit 9 in Post-Effective Amendment
No. 2 to the Registration Statement on Form S-6 for the Pacific Select Exec
Separate Account, File No. 333-61135, Accession Number 0001017062-00-000579,
and incorporated by reference herein.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Pacific Life
Insurance Company has duly caused this Post-Effective Amendment No. 3 to the
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 2nd day of March, 2000.
BY: PACIFIC LIFE INSURANCE COMPANY
(Registrant)
BY: _________________________________
Thomas C. Sutton*
Chief Executive Officer
*BY: /s/ DAVID R. CARMICHAEL
David R. Carmichael
as attorney-in-fact
(Power of Attorney is contained as Exhibit 9 in Post-Effective Amendment
No. 2 to the Registration Statement on Form S-6 for the Pacific Select Exec
Separate Account, File No. 333-61135, Accession Number 0001017062-00-000579,
and incorporated by reference herein.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 3 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
<C> <S> <C>
Signature Title Date
____________________ Director, Chairman of the Board __________ , 2000
Thomas C. Sutton* and Chief Executive Officer
____________________ Director and President __________ , 2000
Glenn S. Schafer*
____________________ Director, Senior Vice President and __________ , 2000
Khanh T. Tran* Chief Financial Officer
____________________ Director, Senior Vice President and __________ , 2000
David R. Carmichael* General Counsel
____________________ Director, Vice President and __________ , 2000
Audrey L. Milfs* Corporate Secretary
____________________ Vice President and Controller __________ , 2000
Edward R. Byrd*
____________________ Vice President and Treasurer __________ , 2000
Brian D. Klemens*
____________________ Executive Vice President __________ , 2000
Lynn C. Miller*
*BY: /s/ DAVID R. CARMICHAEL March 1, 2000
David R. Carmichael
as attorney-in-fact
</TABLE>
(Powers of Attorney are contained as Exhibit 9 in Post-Effective Amendment No. 2
to the Registration Statement on Form S-6 of Pacific Select Exec Separate
Account, File No. 333-61135, Accession Number 0001017062-00-000579, and
incorporated by reference herein.
<PAGE>
EXHIBIT 7.(a)
[Letterhead of Pacific Life]
March 2, 2000
PACIFIC LIFE INSURANCE COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
RE: M's Versatile Product Flexible Premium Variable Life Insurance Policy
To whom it may concern:
In my capacity as Assistant Vice President of the Product Design Department of
Pacific Life Insurance Company, I have provided actuarial advice concerning:
The preparation of the Post-Effective Amendment No. 3 to the Registration
Statement on Form S-6 filed by Pacific Life Insurance Company with the
Securities and Exchange Commission under the Securities Act of 1933 with respect
to variable life insurance policies (the "Registration Statement") and the
preparation of the policy forms for the variable life insurance policies
described in the Registration Statement (the "Policies").
It is my professional opinion that:
The illustration of death benefits, cash values and accumulated premiums shown
in this Post-Effective Amendment No. 3 to the Registration Statement on Form S-6
as Exhibit 7(b), based on the assumptions used illustrations, are consistent
with the provisions of the Policies. The rate structure of the Policies has not
been designed so as to make the relationship between premiums and benefits, as
shown in the illustrations, appear to be correspondingly more favorable to the
prospective purchaser of the Policies at age 45 in the underwriting classes
illustrated than to prospective purchasers of Policies at other ages or
underwriting classes.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ LAWRENCE M. HERSH
Lawrence M. Hersh, FSA, MAAA
Assistant Vice President
<PAGE>
EXHIBIT 7(b)
ILLUSTRATION 1
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
SUMMARY PAGE
<TABLE>
<CAPTION>
---CURRENT POLICY CHARGES--- -----------------GUARANTEED POLICY CHARGES---------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
-----6.00% (5.08% NET)----- -----0.00% (-0.87% NET)---- -----6.00% (5.08% NET)-----
NET NET NET NET NET NET
PREMIUMS ACCUM'D SURR'R DEATH ACCUM'D SURR'R DEATH ACCUM'D SURR'R DEATH
ANNUALIZED PLUS 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PREMIUM INTEREST (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY)
==== ========== ======== ======= ====== ======= ======= ====== ======= ======= ====== =======
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10000.00 $10,500 $7,513 $6,738 $412,377 $5,455 $4,681 $412,377 $5,887 $5,112 $412,377
2 10000.00 $21,525 $15,299 $14,610 $412,377 $10,716 $10,028 $412,377 $11,921 $11,232 $412,377
3 10000.00 $33,101 $23,378 $22,775 $412,377 $15,776 $15,174 $412,377 $18,102 $17,500 $412,377
4 10000.00 $45,256 $31,811 $31,294 $412,377 $20,633 $20,117 $412,377 $24,440 $23,924 $412,377
5 10000.00 $58,019 $40,634 $40,204 $412,377 $25,285 $24,854 $412,377 $30,951 $30,520 $412,377
6 10000.00 $71,420 $49,877 $49,532 $412,377 $29,732 $29,387 $412,377 $37,638 $37,294 $412,377
7 10000.00 $85,491 $59,564 $59,306 $412,377 $33,945 $33,687 $412,377 $44,485 $44,227 $412,377
8 10000.00 $100,266 $69,718 $69,546 $412,377 $37,905 $37,733 $412,377 $51,484 $51,312 $412,377
9 10000.00 $115,779 $80,359 $80,273 $412,377 $41,583 $41,497 $412,377 $58,619 $58,533 $412,377
10 10000.00 $132,068 $91,504 $91,504 $412,377 $44,948 $44,948 $412,377 $65,874 $65,874 $412,377
15 10000.00 $226,575 $165,309 $165,309 $412,377 $65,438 $65,438 $412,377 $114,390 $114,390 $412,377
20 10000.00 $347,192 $258,509 $258,509 $412,377 $74,535 $74,535 $412,377 $169,757 $169,757 $412,377
25 10000.00 $501,134 $379,333 $379,333 $440,026 $64,358 $64,358 $412,377 $233,789 $233,789 $412,377
30 10000.00 $697,607 $534,891 $534,891 $572,333 $18,008 $18,008 $412,377 $314,457 $314,457 $412,377
35 10000.00 $948,362 $734,238 $734,238 $770,950 ## ## ## $434,861 $434,861 $456,605
</TABLE>
## ADDITIONAL PREMIUM PAYMENTS REQUIRED TO MAINTAIN REQUESTED BENEFITS.
ALL VALUES EXCEPT PREMIUMS, LOANS, LOAN INTEREST AND WITHDRAWALS ARE VALUES AT
THE END OF THE POLICY YEAR. THE 'NET SURRENDER VALUE' IS EQUAL TO THE
ACCUMULATED VALUE, LESS ANY POLICY DEBT AND LESS ANY SURRENDER CHARGES. THE 'NET
DEATH BENEFIT' IS THE POLICY DEATH BENEFIT LESS ANY POLICY DEBT.
THE PREMIUM MODE ASSUMED IN THIS ILLUSTRATION IS ANNUAL.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS. PLEASE REFER
TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
INITIAL GUIDELINE SINGLE PREMIUM: $111,482.20
INITIAL GUIDELINE LEVEL PREMIUM: $10,000.10
INITIAL SEVEN PAY PREMIUM: $23,088.12
THIS IS AN ILLUSTRATION AND NOT A CONTRACT. ALTHOUGH THE INFORMATION CONTAINED
IN THIS ILLUSTRATION IS BASED ON CERTAIN TAX AND LEGAL ASSUMPTIONS, IT IS NOT
INTENDED TO BE TAX OR LEGAL ADVICE. SUCH ADVICE SHOULD BE OBTAINED FROM
APPLICANT'S OWN COUNSEL OR OTHER EXPERT.
THIS ILLUSTRATION MUST BE PRECEDED OR ACCOMPANIED BY THE CURRENT PROSPECTUSES
FOR THE SEPARATE ACCOUNT AND THE FUND. READ THE PROSPECTUSES CAREFULLY BEFORE
INVESTING OR SENDING MONEY.
---ASSUMED TAX BRACKET---
START END AMOUNT
1 35 31.00
THE CURRENT POLICY CHARGES AND COST OF INSURANCE RATES ARE SUBJECT TO CHANGE.
POLICY VALUES WILL VARY FROM THOSE ILLUSTRATED IF ACTUAL RATES DIFFER FROM THOSE
ASSUMED. CURRENT COST OF INSURANCE RATES ARE NOT DEPENDENT UPON FUTURE
IMPROVEMENTS IN UNDERLYING MORTALITY.
VALUES ILLUSTRATED UNDER THE GUARANTEED POLICY CHARGE COLUMNS ASSUME MAXIMUM
COST OF INSURANCE RATES. CURRENT COST OF INSURANCE RATES FOR THE BASE COVERAGE
ARE GUARANTEED FOR THE FIRST 5 YEARS.
HYPOTHETICAL FUTURE VALUES ARE BASED ON CURRENT COST OF INSURANCE RATES AND
HYPOTHETICAL GROSS EARNINGS RATE ASSUMPTIONS AS DESCRIBED BELOW.
THIS ILLUSTRATION ASSUMES THAT ALL PREMIUMS HAVE BEEN ALLOCATED TO THE VARIABLE
ACCOUNTS. THE HYPOTHETICAL RATES OF RETURN AND VALUES SHOWN ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED AS A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. THE ILLUSTRATED POLICY VALUES MIGHT NOT BE ACHIEVED IF ACTUAL RATES OF
RETURN OR POLICY CHARGES DIFFER FROM THOSE ASSUMED. 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 THE VARIABLE ACCOUNTS BY AN OWNER
AND THE EXPERIENCE OF THE ACCOUNTS. NO REPRESENTATION CAN BE MADE BY PACIFIC
LIFE, THE SEPARATE ACCOUNT, OR THE FUND THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE AMOUNTS SHOWN FOR THE DEATH BENEFITS, ACCUMULATED VALUES AND CASH SURRENDER
VALUES IN THIS ILLUSTRATION REFLECT AN AVERAGE DAILY INVESTMENT ADVISORY FEE
EQUIVALENT TO AN ANNUAL RATE OF 0.75% OF THE AGGREGATE AVERAGE DAILY NET ASSETS
OF THE FUND. THE POLICY VALUES ALSO REFLECT OPERATING EXPENSES (BEFORE ANY
OFFSET FOR CUSTODIAN CREDITS AND EXCLUDING ANY FOREIGN TAXES) AT AN ANNUAL RATE
OF 0.12% OF THE AGGREGATE AVERAGE DAILY NET ASSETS OF THE UNDERLYING PORTFOLIOS.
THE TOTAL AGGREGATE AVERAGE ANNUAL EXPENSES FOR THE YEAR ENDING DECEMBER 31,
1999 (INCLUDING INVESTMENT ADVISORY FEES AND EXCLUDING ANY FOREIGN TAXES) IS
0.87%.
THE HYPOTHETICAL GROSS ANNUAL EARNINGS RATE ASSUMPTION IS AFTER BROKERAGE
EXPENSES AND ANY FOREIGN TAXES. A PORTFOLIO'S FOREIGN INVESTMENTS MAY BE SUBJECT
TO FOREIGN TAXES. FOREIGN TAXES FROM INTEREST AND DIVIDEND INCOME ARE TREATED AS
A DEDUCTION FROM RELEVANT INCOME FOR ACCOUNTING PURPOSES RATHER THAN AS AN
EXPENSE.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS. PLEASE REFER
TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
THE AMOUNTS SHOWN FOR THE DEATH BENEFITS, ACCUMULATED VALUES AND CASH SURRENDER
VALUES REFLECT THE FACT THAT THE NET INVESTMENT RETURN ON THE VARIABLE ACCOUNTS
IS LOWER THAN THE GROSS RETURN ON THE ASSETS AS A RESULT OF CHARGES LEVIED
AGAINST THE ACCOUNTS.
AFTER DEDUCTION OF THESE AMOUNTS, HYPOTHETICAL ILLUSTRATED GROSS ANNUAL
INVESTMENT RETURNS OF 0.00% AND 6.00% CORRESPOND TO APPROXIMATE NET ANNUAL RATES
OF RETURN OF -0.87% AND 5.08% RESPECTIVELY.
NO CHARGE IS CURRENTLY IMPOSED UPON A TRANSFER OF ACCUMULATED VALUE BETWEEN
ACCOUNTS. HOWEVER, PACIFIC LIFE MAY ASSESS SUCH A CHARGE AT A FUTURE DATE
---DEATH BENEFIT OPTION---
START END OPTION
1 35 LEVEL
---BASE POLICY FACE AMOUNT---
START END AMOUNT
1 35 412,377
FUTURE ACTION REQUIRED BY POLICY OWNER
If you want to change the premium amount that you are billed, you must request
the change in writing.
DECREASES IN ART RIDER AMOUNTS MUST BE REQUESTED AT THE TIME OF THE DECREASE.
WHEN THE DEATH BENEFIT IS GREATER THAN THE FACE AMOUNT DUE TO ACCUMULATED VALUE
GROWTH, PAYMENT OF ADDITIONAL PREMIUM WILL BE SUBJECT TO APPROVAL.
UNDER CURRENT FEDERAL TAX LAW, THIS POLICY WILL QUALIFY AS LIFE INSURANCE ONLY
IF THE SUM OF PREMIUMS PAID AT ANY TIME DOES NOT EXCEED THE GREATER OF THE
GUIDELINE SINGLE PREMIUM OR THE SUM OF THE GUIDELINE LEVEL PREMIUMS AT SUCH
TIME. THE GUIDELINE PREMIUMS WILL CHANGE WHENEVER THERE IS A CHANGE IN THE FACE
AMOUNT OF INSURANCE OR IN OTHER POLICY BENEFITS
BASED ON OUR UNDERSTANDING OF THE INTERNAL REVENUE CODE AND THE ASSUMPTIONS IN
THIS ILLUSTRATION, THIS POLICY WOULD NOT BECOME A MODIFIED ENDOWMENT CONTRACT
(MEC). THE FEDERAL INCOME TAX CONSEQUENCES OF A MEC CAN BE SIGNIFICANT.
CONSULT YOUR TAX ADVISOR FOR FURTHER DETAILS.
ALL VALUES ASSUME PREMIUMS AND LOAN INTEREST ARE PAID WHEN DUE. IF A PAYMENT IS
RECEIVED WITHOUT BEING DESIGNATED AS A PREMIUM PAYMENT OR LOAN PAYMENT, AND
THERE IS AN OUTSTANDING LOAN, THE PAYMENT WILL BE APPLIED AS A LOAN PAYMENT.
THIS ILLUSTRATION WAS PREPARED FOR PRESENTATION IN THE STATE OF CALIFORNIA.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS.
PLEASE REFER TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
M'S VERSATILE PRODUCT IS DISTRIBUTED BY
PACIFIC MUTUAL DISTRIBUTORS, INC.,
MEMBER NASD & SIPC, A SUBSIDIARY OF PACIFIC LIFE
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS.
PLEASE REFER TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
ILLUSTRATION 2
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
SUMMARY PAGE
<TABLE>
<CAPTION>
---CURRENT POLICY CHARGES--- -----------------GUARANTEED POLICY CHARGES------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
-----12.00% (11.03% NET)---- ----0.00% (-0.87% NET)---- ----12.00% (11.03% NET)----
NET NET NET NET NET NET
PREMIUMS ACCUM'D SURR'R DEATH ACCUM'D SURR'R DEATH ACCUM'D SURR'R DEATH
ANNUALIZED PLUS 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PREMIUM INTEREST (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY)
==== ========== ======== ======= ====== ======= ======= ====== ======= ======= ====== =======
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10000.00 $10,500 $7,995 $7,220 $412,377 $5,455 $4,681 $412,377 $6,320 $5,545 $412,377
2 10000.00 $21,525 $16,757 $16,069 $412,377 $10,716 $10,028 $412,377 $13,181 $12,492 $412,377
3 10000.00 $33,101 $26,382 $25,779 $412,377 $15,776 $15,174 $412,377 $20,635 $20,033 $412,377
4 10000.00 $45,256 $37,016 $36,500 $412,377 $20,633 $20,117 $412,377 $28,767 $28,250 $412,377
5 10000.00 $58,019 $48,789 $48,358 $412,377 $25,285 $24,854 $412,377 $37,655 $37,224 $412,377
6 10000.00 $71,420 $61,835 $61,491 $412,377 $29,732 $29,387 $412,377 $47,385 $47,041 $412,377
7 10000.00 $85,491 $76,303 $76,045 $412,377 $33,945 $33,687 $412,377 $58,032 $57,774 $412,377
8 10000.00 $100,266 $92,350 $92,178 $412,377 $37,905 $37,733 $412,377 $69,692 $69,520 $412,377
9 10000.00 $115,779 $110,152 $110,066 $412,377 $41,583 $41,497 $412,377 $82,470 $82,384 $412,377
10 10000.00 $132,068 $129,901 $129,901 $412,377 $44,948 $44,948 $412,377 $96,484 $96,484 $412,377
15 10000.00 $226,575 $277,958 $277,958 $412,377 $65,438 $65,438 $412,377 $203,642 $203,642 $412,377
20 10000.00 $347,192 $528,077 $528,077 $644,254 $74,535 $74,535 $412,377 $389,113 $389,113 $474,718
25 10000.00 $501,134 $946,486 $946,486 $1,097,924 $64,358 $64,358 $412,377 $698,830 $698,830 $810,643
30 10000.00 $697,607 $1,647,430 $1,647,430 $1,762,751 $18,008 $18,008 $412,377 $1,208,121 $1,208,121 $1,292,689
35 10000.00 $948,362 $2,827,322 $2,827,322 $2,968,688 ## ## ## $2,056,591 $2,056,591 $2,159,420
</TABLE>
## ADDITIONAL PREMIUM PAYMENTS REQUIRED TO MAINTAIN REQUESTED BENEFITS.
ALL VALUES EXCEPT PREMIUMS, LOANS, LOAN INTEREST AND WITHDRAWALS ARE VALUES AT
THE END OF THE POLICY YEAR. THE 'NET SURRENDER VALUE' IS EQUAL TO THE
ACCUMULATED VALUE, LESS ANY POLICY DEBT AND LESS ANY SURRENDER CHARGES. THE 'NET
DEATH BENEFIT' IS THE POLICY DEATH BENEFIT LESS ANY POLICY DEBT.
THE PREMIUM MODE ASSUMED IN THIS ILLUSTRATION IS ANNUAL.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS. PLEASE REFER
TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
INITIAL GUIDELINE SINGLE PREMIUM: $111,482.20
INITIAL GUIDELINE LEVEL PREMIUM: $10,000.10
INITIAL SEVEN PAY PREMIUM: $23,088.12
THIS IS AN ILLUSTRATION AND NOT A CONTRACT. ALTHOUGH THE INFORMATION CONTAINED
IN THIS ILLUSTRATION IS BASED ON CERTAIN TAX AND LEGAL ASSUMPTIONS, IT IS NOT
INTENDED TO BE TAX OR LEGAL ADVICE. SUCH ADVICE SHOULD BE OBTAINED FROM
APPLICANT'S OWN COUNSEL OR OTHER EXPERT.
THIS ILLUSTRATION MUST BE PRECEDED OR ACCOMPANIED BY THE CURRENT PROSPECTUSES
FOR THE SEPARATE ACCOUNT AND THE FUND. READ THE PROSPECTUSES CAREFULLY BEFORE
INVESTING OR SENDING MONEY.
---ASSUMED TAX BRACKET---
START END AMOUNT
1 35 31.00
THE CURRENT POLICY CHARGES AND COST OF INSURANCE RATES ARE SUBJECT TO CHANGE.
POLICY VALUES WILL VARY FROM THOSE ILLUSTRATED IF ACTUAL RATES DIFFER FROM THOSE
ASSUMED. CURRENT COST OF INSURANCE RATES ARE NOT DEPENDENT UPON FUTURE
IMPROVEMENTS IN UNDERLYING MORTALITY.
VALUES ILLUSTRATED UNDER THE GUARANTEED POLICY CHARGE COLUMNS ASSUME MAXIMUM
COST OF INSURANCE RATES. CURRENT COST OF INSURANCE RATES FOR THE BASE COVERAGE
ARE GUARANTEED FOR THE FIRST 5 YEARS.
HYPOTHETICAL FUTURE VALUES ARE BASED ON CURRENT COST OF INSURANCE RATES AND
HYPOTHETICAL GROSS EARNINGS RATE ASSUMPTIONS AS DESCRIBED BELOW.
THIS ILLUSTRATION ASSUMES THAT ALL PREMIUMS HAVE BEEN ALLOCATED TO THE VARIABLE
ACCOUNTS. THE HYPOTHETICAL RATES OF RETURN AND VALUES SHOWN ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED AS A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. THE ILLUSTRATED POLICY VALUES MIGHT NOT BE ACHIEVED IF ACTUAL RATES OF
RETURN OR POLICY CHARGES DIFFER FROM THOSE ASSUMED. 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 THE VARIABLE ACCOUNTS BY AN OWNER
AND THE EXPERIENCE OF THE ACCOUNTS. NO REPRESENTATION CAN BE MADE BY PACIFIC
LIFE, THE SEPARATE ACCOUNT, OR THE FUND THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE AMOUNTS SHOWN FOR THE DEATH BENEFITS, ACCUMULATED VALUES AND CASH SURRENDER
VALUES IN THIS ILLUSTRATION REFLECT AN AVERAGE DAILY INVESTMENT ADVISORY FEE
EQUIVALENT TO AN ANNUAL RATE OF 0.75% OF THE AGGREGATE AVERAGE DAILY NET ASSETS
OF THE FUND. THE POLICY VALUES ALSO REFLECT OPERATING EXPENSES (BEFORE ANY
OFFSET FOR CUSTODIAN CREDITS AND EXCLUDING ANY FOREIGN TAXES) AT AN ANNUAL RATE
OF 0.12% OF THE AGGREGATE AVERAGE DAILY NET ASSETS OF THE UNDERLYING PORTFOLIOS.
THE TOTAL AGGREGATE AVERAGE ANNUAL EXPENSES FOR THE YEAR ENDING DECEMBER 31,
1999 (INCLUDING INVESTMENT ADVISORY FEES AND EXCLUDING ANY FOREIGN TAXES) IS
0.87%.
THE HYPOTHETICAL GROSS ANNUAL EARNINGS RATE ASSUMPTION IS AFTER BROKERAGE
EXPENSES AND ANY FOREIGN TAXES. A PORTFOLIO'S FOREIGN INVESTMENTS MAY BE SUBJECT
TO FOREIGN TAXES. FOREIGN TAXES FROM INTEREST AND DIVIDEND INCOME ARE TREATED AS
A DEDUCTION FROM RELEVANT INCOME FOR ACCOUNTING PURPOSES RATHER THAN AS AN
EXPENSE.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS. PLEASE REFER
TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
THE AMOUNTS SHOWN FOR THE DEATH BENEFITS, ACCUMULATED VALUES AND CASH SURRENDER
VALUES REFLECT THE FACT THAT THE NET INVESTMENT RETURN ON THE VARIABLE ACCOUNTS
IS LOWER THAN THE GROSS RETURN ON THE ASSETS AS A RESULT OF CHARGES LEVIED
AGAINST THE ACCOUNTS.
AFTER DEDUCTION OF THESE AMOUNTS, HYPOTHETICAL ILLUSTRATED GROSS ANNUAL
INVESTMENT RETURNS OF 0.00% AND 12.00% CORRESPOND TO APPROXIMATE NET ANNUAL
RATES OF RETURN OF -0.87% AND 11.03% RESPECTIVELY.
NO CHARGE IS CURRENTLY IMPOSED UPON A TRANSFER OF ACCUMULATED VALUE BETWEEN
ACCOUNTS. HOWEVER, PACIFIC LIFE MAY ASSESS SUCH A CHARGE AT A FUTURE DATE
---DEATH BENEFIT OPTION---
START END OPTION
1 35 LEVEL
---BASE POLICY FACE AMOUNT---
START END AMOUNT
1 35 412,377
FUTURE ACTION REQUIRED BY POLICY OWNER
If you want to change the premium amount that you are billed, you must request
the change in writing.
DECREASES IN ART RIDER AMOUNTS MUST BE REQUESTED AT THE TIME OF THE DECREASE.
WHEN THE DEATH BENEFIT IS GREATER THAN THE FACE AMOUNT DUE TO ACCUMULATED VALUE
GROWTH, PAYMENT OF ADDITIONAL PREMIUM WILL BE SUBJECT TO APPROVAL.
UNDER CURRENT FEDERAL TAX LAW, THIS POLICY WILL QUALIFY AS LIFE INSURANCE ONLY
IF THE SUM OF PREMIUMS PAID AT ANY TIME DOES NOT EXCEED THE GREATER OF THE
GUIDELINE SINGLE PREMIUM OR THE SUM OF THE GUIDELINE LEVEL PREMIUMS AT SUCH
TIME. THE GUIDELINE PREMIUMS WILL CHANGE WHENEVER THERE IS A CHANGE IN THE FACE
AMOUNT OF INSURANCE OR IN OTHER POLICY BENEFITS
BASED ON OUR UNDERSTANDING OF THE INTERNAL REVENUE CODE AND THE ASSUMPTIONS IN
THIS ILLUSTRATION, THIS POLICY WOULD NOT BECOME A MODIFIED ENDOWMENT CONTRACT
(MEC). THE FEDERAL INCOME TAX CONSEQUENCES OF A MEC CAN BE SIGNIFICANT.
CONSULT YOUR TAX ADVISOR FOR FURTHER DETAILS.
ALL VALUES ASSUME PREMIUMS AND LOAN INTEREST ARE PAID WHEN DUE. IF A PAYMENT IS
RECEIVED WITHOUT BEING DESIGNATED AS A PREMIUM PAYMENT OR LOAN PAYMENT, AND
THERE IS AN OUTSTANDING LOAN, THE PAYMENT WILL BE APPLIED AS A LOAN PAYMENT.
THIS ILLUSTRATION WAS PREPARED FOR PRESENTATION IN THE STATE OF CALIFORNIA.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS.
PLEASE REFER TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
M'S VERSATILE PRODUCT IS DISTRIBUTED BY
PACIFIC MUTUAL DISTRIBUTORS, INC.,
MEMBER NASD & SIPC, A SUBSIDIARY OF PACIFIC LIFE
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS.
PLEASE REFER TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
ILLUSTRATION 3
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
SUMMARY PAGE
<TABLE>
<CAPTION>
---CURRENT POLICY CHARGES--- -----------------GUARANTEED POLICY CHARGES---------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
-----6.00% (5.27% NET)----- -----0.00% (-0.87% NET)---- -----6.00% (5.27% NET)-----
NET NET NET NET NET NET
PREMIUMS ACCUM'D SURR'R DEATH ACCUM'D SURR'R DEATH ACCUM'D SURR'R DEATH
ANNUALIZED PLUS 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PREMIUM INTEREST (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY)
==== ========== ======== ======= ====== ======= ======= ====== ======= ======= ====== =======
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10000.00 $10,500 $7,528 $6,753 $412,377 $5,468 $4,694 $412,377 $5,900 $5,126 $412,377
2 10000.00 $21,525 $15,345 $14,656 $412,377 $10,752 $10,063 $412,377 $11,960 $11,272 $412,377
3 10000.00 $33,101 $23,470 $22,868 $412,377 $15,844 $15,241 $412,377 $18,180 $17,578 $412,377
4 10000.00 $45,256 $31,968 $31,451 $412,377 $20,741 $20,225 $412,377 $24,571 $24,054 $412,377
5 10000.00 $58,019 $40,876 $40,446 $412,377 $25,442 $25,012 $412,377 $31,149 $30,718 $412,377
6 10000.00 $71,420 $50,224 $49,880 $412,377 $29,947 $29,603 $412,377 $37,920 $37,576 $412,377
7 10000.00 $85,491 $60,041 $59,783 $412,377 $34,227 $33,968 $412,377 $44,870 $44,611 $412,377
8 10000.00 $100,266 $70,350 $70,178 $412,377 $38,260 $38,088 $412,377 $51,989 $51,817 $412,377
9 10000.00 $115,779 $81,173 $81,087 $412,377 $42,019 $41,932 $412,377 $59,267 $59,181 $412,377
10 10000.00 $132,068 $92,531 $92,531 $412,377 $45,471 $45,471 $412,377 $66,687 $66,687 $412,377
15 10000.00 $226,575 $168,015 $168,015 $412,377 $66,530 $66,530 $412,377 $116,500 $116,500 $412,377
20 10000.00 $347,192 $264,334 $264,334 $412,377 $76,403 $76,403 $412,377 $174,330 $174,330 $412,377
25 10000.00 $501,134 $390,411 $390,411 $452,876 $67,193 $67,193 $412,377 $242,961 $242,961 $412,377
30 10000.00 $697,607 $553,797 $553,797 $592,563 $22,010 $22,010 $412,377 $332,832 $332,832 $412,377
35 10000.00 $948,362 $765,060 $765,060 $803,312 ## ## ## $467,664 $467,664 $491,047
</TABLE>
## ADDITIONAL PREMIUM PAYMENTS REQUIRED TO MAINTAIN REQUESTED BENEFITS.
ALL VALUES EXCEPT PREMIUMS, LOANS, LOAN INTEREST AND WITHDRAWALS ARE VALUES AT
THE END OF THE POLICY YEAR. THE 'NET SURRENDER VALUE' IS EQUAL TO THE
ACCUMULATED VALUE, LESS ANY POLICY DEBT AND LESS ANY SURRENDER CHARGES. THE 'NET
DEATH BENEFIT' IS THE POLICY DEATH BENEFIT LESS ANY POLICY DEBT.
THE PREMIUM MODE ASSUMED IN THIS ILLUSTRATION IS ANNUAL.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS. PLEASE REFER
TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
INITIAL GUIDELINE SINGLE PREMIUM: $111,482.20
INITIAL GUIDELINE LEVEL PREMIUM: $10,000.10
INITIAL SEVEN PAY PREMIUM: $23,088.12
THIS IS AN ILLUSTRATION AND NOT A CONTRACT. ALTHOUGH THE INFORMATION CONTAINED
IN THIS ILLUSTRATION IS BASED ON CERTAIN TAX AND LEGAL ASSUMPTIONS, IT IS NOT
INTENDED TO BE TAX OR LEGAL ADVICE. SUCH ADVICE SHOULD BE OBTAINED FROM
APPLICANT'S OWN COUNSEL OR OTHER EXPERT.
THIS ILLUSTRATION MUST BE PRECEDED OR ACCOMPANIED BY THE CURRENT PROSPECTUSES
FOR THE SEPARATE ACCOUNT AND THE FUND. READ THE PROSPECTUSES CAREFULLY BEFORE
INVESTING OR SENDING MONEY.
---ASSUMED TAX BRACKET---
START END AMOUNT
1 35 31.00
THE CURRENT POLICY CHARGES AND COST OF INSURANCE RATES ARE SUBJECT TO CHANGE.
POLICY VALUES WILL VARY FROM THOSE ILLUSTRATED IF ACTUAL RATES DIFFER FROM THOSE
ASSUMED. CURRENT COST OF INSURANCE RATES ARE NOT DEPENDENT UPON FUTURE
IMPROVEMENTS IN UNDERLYING MORTALITY.
VALUES ILLUSTRATED UNDER THE GUARANTEED POLICY CHARGE COLUMNS ASSUME MAXIMUM
COST OF INSURANCE RATES. CURRENT COST OF INSURANCE RATES FOR THE BASE COVERAGE
ARE GUARANTEED FOR THE FIRST 5 YEARS.
HYPOTHETICAL FUTURE VALUES ARE BASED ON CURRENT COST OF INSURANCE RATES AND
HYPOTHETICAL GROSS EARNINGS RATE ASSUMPTIONS AS DESCRIBED BELOW.
THIS ILLUSTRATION ASSUMES THAT ALL PREMIUMS HAVE BEEN ALLOCATED TO THE VARIABLE
ACCOUNTS. THE HYPOTHETICAL RATES OF RETURN AND VALUES SHOWN ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED AS A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. THE ILLUSTRATED POLICY VALUES MIGHT NOT BE ACHIEVED IF ACTUAL RATES OF
RETURN OR POLICY CHARGES DIFFER FROM THOSE ASSUMED. 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 THE VARIABLE ACCOUNTS BY AN OWNER
AND THE EXPERIENCE OF THE ACCOUNTS. NO REPRESENTATION CAN BE MADE BY PACIFIC
LIFE, THE SEPARATE ACCOUNT, OR THE FUND THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
YOU HAVE REQUESTED THAT THIS ILLUSTRATION REFLECT YOUR SELECTION OF UNDERLYING
PORTFOLIOS. THE AMOUNTS SHOWN FOR THE DEATH BENEFITS, ACCUMULATED VALUES AND
CASH SURRENDER VALUES IN THIS ILLUSTRATION REFLECT YOUR SELECTION OF UNDERLYING
PORTFOLIOS AND ACTUAL FUND EXPENSES (EXCLUDING ANY FOREIGN TAXES) INCURRED BY
THE PORTFOLIOS FOR THE YEAR ENDING DECEMBER 31, 1999.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS. PLEASE REFER
TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
<TABLE>
<CAPTION>
PORTFOLIO SUBACCOUNT INVESTMENT OPERATING EXPENSES
ALLOCATION ADVISORY FEE
PERCENTAGES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGGRESSIVE EQUITY 2.87% 0.80% 0.05%
- ----------------------------------------------------------------------------------------------------------------
BOND AND INCOME 1.22% 0.60% 0.06%
- ----------------------------------------------------------------------------------------------------------------
DIVERSIFIED RESEARCH 0.06% 0.90% 0.05%
- ----------------------------------------------------------------------------------------------------------------
EMERGING MARKETS 1.34% 1.10% 0.31%
- ----------------------------------------------------------------------------------------------------------------
EQUITY INCOME 11.17% 0.65% 0.05%
- ----------------------------------------------------------------------------------------------------------------
EQUITY INDEX 14.93% 0.25% 0.04%
- ----------------------------------------------------------------------------------------------------------------
EQUITY 6.42% 0.65% 0.04%
- ----------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES 2.64% 0.60% 0.06%
- ----------------------------------------------------------------------------------------------------------------
HIGH YIELD BOND 2.77% 0.60% 0.05%
- ----------------------------------------------------------------------------------------------------------------
I-NET TOLLKEEPER 0.06% 1.50% 0.15%
- ----------------------------------------------------------------------------------------------------------------
INTERNATIONAL LARGE-CAP 0.06% 1.05% 0.15%
- ----------------------------------------------------------------------------------------------------------------
INTERNATIONAL VALUE 10.37% 0.85% 0.16%
- ----------------------------------------------------------------------------------------------------------------
LARGE-CAP VALUE 1.04% 0.85% 0.12%
- ----------------------------------------------------------------------------------------------------------------
GROWTH LT 22.53% 0.75% 0.04%
- ----------------------------------------------------------------------------------------------------------------
MANAGED BOND 6.72% 0.60% 0.05%
- ----------------------------------------------------------------------------------------------------------------
MID-CAP VALUE 0.66% 0.85% 0.12%
- ----------------------------------------------------------------------------------------------------------------
MONEY MARKET 6.51% 0.35% 0.04%
- ----------------------------------------------------------------------------------------------------------------
MULTI-STRATEGY 4.56% 0.65% 0.05%
- ----------------------------------------------------------------------------------------------------------------
REIT 0.31% 1.10% 0.18%
- ----------------------------------------------------------------------------------------------------------------
SMALL-CAP INDEX 0.71% 0.50% 0.25%
- ----------------------------------------------------------------------------------------------------------------
SMALL-CAP EQUITY 2.62% 0.65% 0.05%
- ----------------------------------------------------------------------------------------------------------------
BRANDES INTERNATIONAL 0.09% 0.86% 0.18%
- ----------------------------------------------------------------------------------------------------------------
TURNER CORE GROWTH 0.15% 0.45% 0.25%
- ----------------------------------------------------------------------------------------------------------------
FRONTIER CAPITAL 0.09% 0.90% 0.25%
- ----------------------------------------------------------------------------------------------------------------
ENHANCED U.S. 0.08% 0.40% 0.25%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
YOU HAVE SELECTED ALLOCATIONS IN THE UNDERLYING PORTFOLIOS AS STATED ABOVE. THE
AVERAGE ANNUAL EXPENSES WEIGHTED ACCORDING TO YOUR ALLOCATION PERCENTAGES ARE
EQUIVALENT TO AN ANNUAL RATE OF 0.62% FOR INVESTMENT ADVISORY FEES AND 0.07% FOR
OPERATING EXPENSES (BEFORE ANY OFFSET FOR CUSTODIAN CREDITS AND EXCLUDING ANY
FOREIGN TAXES) WHICH AMOUNTS TO A TOTAL OF 0.69%. THE OPERATING EXPENSES FOR
THE I-NET TOLLKEEPER, DIVERSIFIED RESEARCH AND INTERNATIONAL LARGE-CAP ARE
ESTIMATED. THE SMALL-CAP EQUITY PORTFOLIO WAS FORMERLY CALLED THE GROWTH
PORTFOLIO. THE INTERNATIONAL VALUE PORTFOLIO WAS FORMERLY CALLED THE
INTERNATIONAL PORTFOLIO. THIS ILLUSTRATION ASSUMES THAT THE ABOVE ALLOCATIONS
REMAIN UNCHANGED. IF YOU CHANGE YOUR ALLOCATIONS, WE RECOMMEND THAT YOU REQUEST
AN ILLUSTRATION REFLECTING THE NEW ALLOCATIONS.
THE AVERAGE ANNUAL EXPENSES FOR ALL AVAILABLE UNDERLYING PORTFOLIOS FOR THE YEAR
ENDING DECEMBER 31, 1999 ARE EQUIVALENT TO AN ANNUAL RATE OF 0.75% FOR
INVESTMENT ADVISORY FEES AND 0.12% FOR OPERATING EXPENSES (BEFORE ANY OFSET FOR
CUSTODIAN CREDITS AND EXCLUDING ANY FOREIGN TAXES) WHICH AMOUNTS TO A TOTAL OF
0.87%.
THE HYPOTHETICAL GROSS ANNUAL EARNINGS RATE ASSUMPTION IS AFTER BROKERAGE
EXPENSES AND ANY FOREIGN TAXES. A PORTFOLIO'S FOREIGN INVESTMENTS MAY BE SUBJECT
TO FOREIGN TAXES. FOREIGN TAXES FROM INTEREST AND DIVIDEND INCOME ARE TREATED AS
A DEDUCTION FROM RELEVANT INCOME FOR ACCOUNTING PURPOSES RATHER THAN AS AN
EXPENSE.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS.
PLEASE REFER TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
THE AMOUNTS SHOWN FOR THE DEATH BENEFITS, ACCUMULATED VALUES AND CASH SURRENDER
VALUES REFLECT THE FACT THAT THE NET INVESTMENT RETURN ON THE VARIABLE ACCOUNTS
IS LOWER THAN THE GROSS RETURN ON THE ASSETS AS A RESULT OF CHARGES LEVIED
AGAINST THE ACCOUNTS.
AFTER DEDUCTION OF THESE AMOUNTS, HYPOTHETICAL ILLUSTRATED GROSS ANNUAL
INVESTMENT RETURNS OF 0.00% AND 6.00% CORRESPOND TO APPROXIMATE NET
ANNUAL RATES OF RETURN OF -0.87% AND 5.27% RESPECTIVELY.
NO CHARGE IS CURRENTLY IMPOSED UPON A TRANSFER OF ACCUMULATED VALUE BETWEEN
ACCOUNTS. HOWEVER, PACIFIC LIFE MAY ASSESS SUCH A CHARGE AT A FUTURE DATE
---DEATH BENEFIT OPTION---
START END OPTION
1 35 LEVEL
---BASE POLICY FACE AMOUNT---
START END AMOUNT
1 35 412,377
FUTURE ACTION REQUIRED BY POLICY OWNER
If you want to change the premium amount that you are billed, you must request
the change in writing.
DECREASES IN ART RIDER AMOUNTS MUST BE REQUESTED AT THE TIME OF THE DECREASE.
WHEN THE DEATH BENEFIT IS GREATER THAN THE FACE AMOUNT DUE TO ACCUMULATED VALUE
GROWTH, PAYMENT OF ADDITIONAL PREMIUM WILL BE SUBJECT TO APPROVAL.
UNDER CURRENT FEDERAL TAX LAW, THIS POLICY WILL QUALIFY AS LIFE INSURANCE ONLY
IF THE SUM OF PREMIUMS PAID AT ANY TIME DOES NOT EXCEED THE GREATER OF THE
GUIDELINE SINGLE PREMIUM OR THE SUM OF THE GUIDELINE LEVEL PREMIUMS AT SUCH
TIME. THE GUIDELINE PREMIUMS WILL CHANGE WHENEVER THERE IS A CHANGE IN THE FACE
AMOUNT OF INSURANCE OR IN OTHER POLICY BENEFITS
BASED ON OUR UNDERSTANDING OF THE INTERNAL REVENUE CODE AND THE ASSUMPTIONS IN
THIS ILLUSTRATION, THIS POLICY WOULD NOT BECOME A MODIFIED ENDOWMENT CONTRACT
(MEC). THE FEDERAL INCOME TAX CONSEQUENCES OF A MEC CAN BE SIGNIFICANT.
CONSULT YOUR TAX ADVISOR FOR FURTHER DETAILS.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS.
PLEASE REFER TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
ALL VALUES ASSUME PREMIUMS AND LOAN INTEREST ARE PAID WHEN DUE. IF A PAYMENT IS
RECEIVED WITHOUT BEING DESIGNATED AS A PREMIUM PAYMENT OR LOAN PAYMENT, AND
THERE IS AN OUTSTANDING LOAN, THE PAYMENT WILL BE APPLIED AS A LOAN PAYMENT.
THIS ILLUSTRATION WAS PREPARED FOR PRESENTATION IN THE STATE OF CALIFORNIA.
M'S VERSATILE PRODUCT IS DISTRIBUTED BY
PACIFIC MUTUAL DISTRIBUTORS, INC.,
MEMBER NASD & SIPC, A SUBSIDIARY OF PACIFIC LIFE
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS.
PLEASE REFER TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
ILLUSTRATION 4
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
SUMMARY PAGE
<TABLE>
<CAPTION>
---CURRENT POLICY CHARGES--- -----------------GUARANTEED POLICY CHARGES---------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
-----12.00% (11.23% NET)---- -----0.00% (-0.87% NET)---- -------12.00% (11.23% NET)-------
NET NET NET NET NET NET
PREMIUMS ACCUM'D SURR'R DEATH ACCUM'D SURR'R DEATH ACCUM'D SURR'R DEATH
ANNUALIZED PLUS 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PREMIUM INTEREST (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY)
==== ========== ======== ======= ====== ======= ======= ====== ======= ======= ====== =======
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10000.00 $10,500 $8,011 $7,236 $412,377 $5,468 $4,694 $412,377 $6,334 $5,560 $412,377
2 10000.00 $21,525 $16,808 $16,119 $412,377 $10,752 $10,063 $412,377 $13,224 $12,536 $412,377
3 10000.00 $33,101 $26,488 $25,885 $412,377 $15,844 $15,241 $412,377 $20,725 $20,122 $412,377
4 10000.00 $45,256 $37,204 $36,688 $412,377 $20,741 $20,225 $412,377 $28,923 $28,406 $412,377
5 10000.00 $58,019 $49,089 $48,658 $412,377 $25,442 $25,012 $412,377 $37,902 $37,471 $412,377
6 10000.00 $71,420 $62,283 $61,939 $412,377 $29,947 $29,603 $412,377 $47,752 $47,407 $412,377
7 10000.00 $85,491 $76,943 $76,685 $412,377 $34,227 $33,968 $412,377 $58,553 $58,294 $412,377
8 10000.00 $100,266 $93,233 $93,061 $412,377 $38,260 $38,088 $412,377 $70,407 $70,234 $412,377
9 10000.00 $115,779 $111,339 $111,253 $412,377 $42,019 $41,932 $412,377 $83,425 $83,339 $412,377
10 10000.00 $132,068 $131,461 $131,461 $412,377 $45,471 $45,471 $412,377 $97,736 $97,736 $412,377
15 10000.00 $226,575 $283,019 $283,019 $412,377 $66,530 $66,530 $412,377 $207,704 $207,704 $412,377
20 10000.00 $347,192 $541,289 $541,289 $660,373 $76,403 $76,403 $412,377 $399,889 $399,889 $487,864
25 10000.00 $501,134 $977,224 $977,224 $1,133,579 $67,193 $67,193 $412,377 $722,801 $722,801 $838,450
30 10000.00 $697,607 $1,714,175 $1,714,175 $1,834,168 $22,010 $22,010 $412,377 $1,258,607 $1,258,607 $1,346,709
35 10000.00 $948,362 $2,965,909 $2,965,909 $3,114,205 ## ## ## $2,159,241 $2,159,241 $2,267,203
</TABLE>
## ADDITIONAL PREMIUM PAYMENTS REQUIRED TO MAINTAIN REQUESTED BENEFITS.
ALL VALUES EXCEPT PREMIUMS, LOANS, LOAN INTEREST AND WITHDRAWALS ARE VALUES AT
THE END OF THE POLICY YEAR. THE 'NET SURRENDER VALUE' IS EQUAL TO THE
ACCUMULATED VALUE, LESS ANY POLICY DEBT AND LESS ANY SURRENDER CHARGES. THE 'NET
DEATH BENEFIT' IS THE POLICY DEATH BENEFIT LESS ANY POLICY DEBT.
THE PREMIUM MODE ASSUMED IN THIS ILLUSTRATION IS ANNUAL.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS. PLEASE REFER
TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
INITIAL GUIDELINE SINGLE PREMIUM: $111,482.20
INITIAL GUIDELINE LEVEL PREMIUM: $10,000.10
INITIAL SEVEN PAY PREMIUM: $23,088.12
THIS IS AN ILLUSTRATION AND NOT A CONTRACT. ALTHOUGH THE INFORMATION CONTAINED
IN THIS ILLUSTRATION IS BASED ON CERTAIN TAX AND LEGAL ASSUMPTIONS, IT IS NOT
INTENDED TO BE TAX OR LEGAL ADVICE. SUCH ADVICE SHOULD BE OBTAINED FROM
APPLICANT'S OWN COUNSEL OR OTHER EXPERT.
THIS ILLUSTRATION MUST BE PRECEDED OR ACCOMPANIED BY THE CURRENT PROSPECTUSES
FOR THE SEPARATE ACCOUNT AND THE FUND. READ THE PROSPECTUSES CAREFULLY BEFORE
INVESTING OR SENDING MONEY.
---ASSUMED TAX BRACKET---
START END AMOUNT
1 35 31.00
THE CURRENT POLICY CHARGES AND COST OF INSURANCE RATES ARE SUBJECT TO CHANGE.
POLICY VALUES WILL VARY FROM THOSE ILLUSTRATED IF ACTUAL RATES DIFFER FROM THOSE
ASSUMED. CURRENT COST OF INSURANCE RATES ARE NOT DEPENDENT UPON FUTURE
IMPROVEMENTS IN UNDERLYING MORTALITY.
VALUES ILLUSTRATED UNDER THE GUARANTEED POLICY CHARGE COLUMNS ASSUME MAXIMUM
COST OF INSURANCE RATES. CURRENT COST OF INSURANCE RATES FOR THE BASE COVERAGE
ARE GUARANTEED FOR THE FIRST 5 YEARS.
HYPOTHETICAL FUTURE VALUES ARE BASED ON CURRENT COST OF INSURANCE RATES AND
HYPOTHETICAL GROSS EARNINGS RATE ASSUMPTIONS AS DESCRIBED BELOW.
YOU HAVE REQUESTED THAT THIS ILLUSTRATION REFLECT YOUR SELECTION OF UNDERLYING
PORTFOLIOS. THE AMOUNTS SHOWN FOR THE DEATH BENEFITS, ACCUMULATED VALUES AND
CASH SURRENDER VALUES IN THIS ILLUSTRATION REFLECT YOUR SELECTION OF UNDERLYING
PORTFOLIOS AND ACTUAL FUND EXPENSES (EXCLUDING ANY FOREIGN TAXES) INCURRED BY
THE PORTFOLIOS FOR THE YEAR ENDING DECEMBER 31, 1999.
THIS ILLUSTRATION ASSUMES THAT ALL PREMIUMS HAVE BEEN ALLOCATED TO THE VARIABLE
ACCOUNTS. THE HYPOTHETICAL RATES OF RETURN AND VALUES SHOWN ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED AS A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. THE ILLUSTRATED POLICY VALUES MIGHT NOT BE ACHIEVED IF ACTUAL RATES OF
RETURN OR POLICY CHARGES DIFFER FROM THOSE ASSUMED. 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 THE VARIABLE ACCOUNTS BY AN OWNER
AND THE EXPERIENCE OF THE ACCOUNTS. NO REPRESENTATION CAN BE MADE BY PACIFIC
LIFE, THE SEPARATE ACCOUNT, OR THE FUND THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS. PLEASE REFER
TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
PORTFOLIO SUBACCOUNT INVESTMENT OPERATING
ALLOCATION ADVISORY FEE EXPENSES
PERCENTAGES
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
AGGRESSIVE EQUITY 2.87% 0.80% 0.05%
- -------------------------------------------------------------------------------
BOND AND INCOME 1.22% 0.60% 0.06%
- -------------------------------------------------------------------------------
DIVERSIFIED RESEARCH 0.06% 0.90% 0.05%
- -------------------------------------------------------------------------------
EMERGING MARKETS 1.34% 1.10% 0.31%
- -------------------------------------------------------------------------------
EQUITY INCOME 11.17% 0.65% 0.05%
- -------------------------------------------------------------------------------
EQUITY INDEX 14.93% 0.25% 0.04%
- -------------------------------------------------------------------------------
EQUITY 6.42% 0.65% 0.04%
- -------------------------------------------------------------------------------
GOVERNMENT SECURITIES 2.64% 0.60% 0.06%
- -------------------------------------------------------------------------------
HIGH YIELD BOND 2.77% 0.60% 0.05%
- -------------------------------------------------------------------------------
I-NET TOLLKEEPER 0.06% 1.50% 0.15%
- -------------------------------------------------------------------------------
INTERNATIONAL LARGE-CAP 0.06% 1.05% 0.15%
- -------------------------------------------------------------------------------
INTERNATIONAL VALUE 10.37% 0.85% 0.16%
- -------------------------------------------------------------------------------
LARGE-CAP VALUE 1.04% 0.85% 0.12%
- -------------------------------------------------------------------------------
GROWTH LT 22.53% 0.75% 0.04%
- -------------------------------------------------------------------------------
MANAGED BOND 6.72% 0.60% 0.05%
- -------------------------------------------------------------------------------
MID-CAP VALUE 0.66% 0.85% 0.12%
- -------------------------------------------------------------------------------
MONEY MARKET 6.51% 0.35% 0.04%
- -------------------------------------------------------------------------------
MULTI-STRATEGY 4.56% 0.65% 0.05%
- -------------------------------------------------------------------------------
REIT 0.31% 1.10% 0.18%
- -------------------------------------------------------------------------------
SMALL-CAP INDEX 0.71% 0.50% 0.25%
- -------------------------------------------------------------------------------
SMALL-CAP EQUITY 2.62% 0.65% 0.05%
- -------------------------------------------------------------------------------
BRANDES INTERNATIONAL 0.09% 0.86% 0.18%
- -------------------------------------------------------------------------------
TURNER CORE GROWTH 0.15% 0.45% 0.25%
- -------------------------------------------------------------------------------
FRONTIER CAPITAL 0.09% 0.90% 0.25%
- -------------------------------------------------------------------------------
ENHANCED U.S. 0.08% 0.40% 0.25%
- -------------------------------------------------------------------------------
</TABLE>
YOU HAVE SELECTED ALLOCATIONS IN THE UNDERLYING PORTFOLIOS AS STATED ABOVE. THE
AVERAGE ANNUAL EXPENSES WEIGHTED ACCORDING TO YOUR ALLOCATION PERCENTAGES ARE
EQUIVALENT TO AN ANNUAL RATE OF 0.62% FOR INVESTMENT ADVISORY FEES AND 0.07% FOR
OPERATING EXPENSES (BEFORE ANY OFFSET FOR CUSTODIAN CREDITS AND EXCLUDING ANY
FOREIGN TAXES) WHICH AMOUNTS TO A TOTAL OF 0.69%. THE OPERATING EXPENSES FOR
THE I-NET TOLLKEEPER, DIVERSIFIED RESEARCH AND INTERNATIONAL LARGE-CAP ARE
ESTIMATED. THE SMALL-CAP EQUITY PORTFOLIO WAS FORMERLY CALLED THE GROWTH
PORTFOLIO. THE INTERNATIONAL VALUE PORTFOLIO WAS FORMERLY CALLED THE
INTERNATIONAL PORTFOLIO. THIS ILLUSTRATION ASSUMES THAT THE ABOVE ALLOCATIONS
REMAIN UNCHANGED. IF YOU CHANGE YOUR ALLOCATIONS, WE RECOMMEND THAT YOU REQUEST
AN ILLUSTRATION REFLECTING THE NEW ALLOCATIONS.
THE AVERAGE ANNUAL EXPENSES FOR ALL AVAILABLE UNDERLYING PORTFOLIOS FOR THE YEAR
ENDING DECEMBER 31, 1999 ARE EQUIVALENT TO AN ANNUAL RATE OF 0.75% FOR
INVESTMENT ADVISORY FEES AND 0.12% FOR OPERATING EXPENSES (BEFORE ANY OFSET FOR
CUSTODIAN CREDITS AND EXCLUDING ANY FOREIGN TAXES) WHICH AMOUNTS TO A TOTAL OF
0.87%.
THE HYPOTHETICAL GROSS ANNUAL EARNINGS RATE ASSUMPTION IS AFTER BROKERAGE
EXPENSES AND ANY FOREIGN TAXES. A PORTFOLIO'S FOREIGN INVESTMENTS MAY BE SUBJECT
TO FOREIGN TAXES. FOREIGN TAXES FROM INTEREST AND DIVIDEND INCOME ARE TREATED AS
A DEDUCTION FROM RELEVANT INCOME FOR ACCOUNTING PURPOSES RATHER THAN AS AN
EXPENSE.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS.
PLEASE REFER TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
THE AMOUNTS SHOWN FOR THE DEATH BENEFITS, ACCUMULATED VALUES AND CASH SURRENDER
VALUES REFLECT THE FACT THAT THE NET INVESTMENT RETURN ON THE VARIABLE ACCOUNTS
IS LOWER THAN THE GROSS RETURN ON THE ASSETS AS A RESULT OF CHARGES LEVIED
AGAINST THE ACCOUNTS.
AFTER DEDUCTION OF THESE AMOUNTS, HYPOTHETICAL ILLUSTRATED GROSS ANNUAL
INVESTMENT RETURNS OF 0.00% AND 12.00% CORRESPOND TO APPROXIMATE NET
ANNUAL RATES OF RETURN OF -0.87% AND 11.27% RESPECTIVELY.
NO CHARGE IS CURRENTLY IMPOSED UPON A TRANSFER OF ACCUMULATED VALUE BETWEEN
ACCOUNTS. HOWEVER, PACIFIC LIFE MAY ASSESS SUCH A CHARGE AT A FUTURE DATE
---DEATH BENEFIT OPTION---
START END OPTION
1 35 LEVEL
---BASE POLICY FACE AMOUNT---
START END AMOUNT
1 35 412,377
FUTURE ACTION REQUIRED BY POLICY OWNER
If you want to change the premium amount that you are billed, you must request
the change in writing.
DECREASES IN ART RIDER AMOUNTS MUST BE REQUESTED AT THE TIME OF THE DECREASE.
WHEN THE DEATH BENEFIT IS GREATER THAN THE FACE AMOUNT DUE TO ACCUMULATED VALUE
GROWTH, PAYMENT OF ADDITIONAL PREMIUM WILL BE SUBJECT TO APPROVAL.
UNDER CURRENT FEDERAL TAX LAW, THIS POLICY WILL QUALIFY AS LIFE INSURANCE ONLY
IF THE SUM OF PREMIUMS PAID AT ANY TIME DOES NOT EXCEED THE GREATER OF THE
GUIDELINE SINGLE PREMIUM OR THE SUM OF THE GUIDELINE LEVEL PREMIUMS AT SUCH
TIME. THE GUIDELINE PREMIUMS WILL CHANGE WHENEVER THERE IS A CHANGE IN THE FACE
AMOUNT OF INSURANCE OR IN OTHER POLICY BENEFITS
BASED ON OUR UNDERSTANDING OF THE INTERNAL REVENUE CODE AND THE ASSUMPTIONS IN
THIS ILLUSTRATION, THIS POLICY WOULD NOT BECOME A MODIFIED ENDOWMENT CONTRACT
(MEC). THE FEDERAL INCOME TAX CONSEQUENCES OF A MEC CAN BE SIGNIFICANT.
CONSULT YOUR TAX ADVISOR FOR FURTHER DETAILS.
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS.
PLEASE REFER TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
<PAGE>
M'S VERSATILE PRODUCT - GPT (FORM 98-52M)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Mr. Client PREMIUMS ALLOCATED TO VARIABLE ACCOUNT
SELECT NON-SMOKER MALE AGE 45 PRESENTED BY PL MARKETING SUPPORT (KD)
ALL VALUES ASSUME PREMIUMS AND LOAN INTEREST ARE PAID WHEN DUE. IF A PAYMENT IS
RECEIVED WITHOUT BEING DESIGNATED AS A PREMIUM PAYMENT OR LOAN PAYMENT, AND
THERE IS AN OUTSTANDING LOAN, THE PAYMENT WILL BE APPLIED AS A LOAN PAYMENT.
THIS ILLUSTRATION WAS PREPARED FOR PRESENTATION IN THE STATE OF CALIFORNIA.
M'S VERSATILE PRODUCT IS DISTRIBUTED BY
PACIFIC MUTUAL DISTRIBUTORS, INC.,
MEMBER NASD & SIPC, A SUBSIDIARY OF PACIFIC LIFE
THIS ILLUSTRATION SHOWS HOW THE PERFORMANCE OF THE UNDERLYING INVESTMENT
ACCOUNTS COULD AFFECT THE POLICY CASH VALUE AND DEATH BENEFIT. THE INFORMATION
IS HYPOTHETICAL AND MAY NOT BE USED TO PREDICT INVESTMENT RESULTS.
PLEASE REFER TO THE SUMMARY PAGE FOR A FULL EXPLANATION OF FEES AND EXPENSES.
PACIFIC LIFE INSURANCE COMPANY
SUMMARY PAGES
VERSION TIME GPT - NONGI DATE PAGE OF
