<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 2000
REGISTRATION NO. 33-58303
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
POST EFFECTIVE AMENDMENT NO. 5
TO
REGISTRATION STATEMENT
ON FORM S-1
UNDER
THE SECURITIES ACT OF 1933
------------------------
MERRILL LYNCH LIFE INSURANCE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ARKANSAS
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
6312
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
91-1325756
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(609) 282-1429
(ADDRESS INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
------------------------
BARRY G. SKOLNICK, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
MERRILL LYNCH LIFE INSURANCE COMPANY
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(609) 282-1429
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE OF AGENT FOR SERVICE)
------------------------
COPY TO:
STEPHEN E. ROTH, ESQ.
KIMBERLY J. SMITH, ESQ.
SUTHERLAND ASBILL & BRENNAN LLP
1275 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box [X].
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus contained
herein also relates to Registration Statement Nos. 33-26322, 33-46827, 33-52254
and 33-60290.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PROSPECTUS
MAY 1, 2000
MERRILL LYNCH ASSET I (SM)
GROUP MODIFIED GUARANTEED ANNUITY CONTRACT
ISSUED BY
MERRILL LYNCH LIFE INSURANCE COMPANY
Home Office: Little Rock, Arkansas 72201
Service Center: P.O. Box 44222, Jacksonville, Florida 32231-4222
4804 Deer Lake Drive East, Jacksonville, Florida 32246
Phone: (800) 535-5549
OFFERED THROUGH
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
This prospectus describes a GROUP MODIFIED GUARANTEED ANNUITY contract issued by
Merrill Lynch Life Insurance Company.
An ANNUITY contract provides for a series of payments that are
made in regular intervals beginning on a specified date. A
MODIFIED GUARANTEED ANNUITY contract additionally provides that
fixed rates of interest will be credited to the contract for
specified periods of time (called guarantee periods). If you
make a withdrawal prior to the end of those periods, we will
adjust the value of the contract to reflect the difference
between the guaranteed interest rates and the interest rates
being offered at that time.
To purchase a Certificate, you must complete an application and pay a single
premium. You must then allocate your premium among one or more subaccounts that
grow at a specified guaranteed rate of interest for the guarantee period.
PURCHASING THIS CERTIFICATE INVOLVES CERTAIN RISKS. WE WILL APPLY A WITHDRAWAL
CHARGE AND A MARKET VALUE ADJUSTMENT IF YOU MAKE A WITHDRAWAL OR ANNUITIZE
BEFORE THE END OF A GUARANTEE PERIOD. THE MARKET VALUE ADJUSTMENT MAY BE EITHER
POSITIVE OR NEGATIVE. ACCORDINGLY, THE VALUE OF YOUR CERTIFICATE COULD EITHER
INCREASE OR DECREASE AND YOU COULD LOSE A SUBSTANTIAL PORTION OF THE PREMIUM YOU
INVESTED. YOU SHOULD CAREFULLY CONSIDER YOUR INCOME NEEDS BEFORE PURCHASING A
CERTIFICATE.
WHEN YOU TAKE WITHDRAWALS FROM A SUBACCOUNT, A FEDERAL INCOME TAX IS IMPOSED ON
THE ENTIRE GAIN IN YOUR CERTIFICATE AND NOT JUST THE GAIN FROM THAT SUBACCOUNT.
WITHDRAWALS BEFORE AGE 59 1/2 MAY ALSO INCUR A 10% FEDERAL PENALTY TAX.
CAREFULLY DISCUSS YOUR PERSONAL TAX SITUATION WITH YOUR ADVISORS BEFORE YOU
PURCHASE A CERTIFICATE.
------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED
OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------------------------------
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CAPSULE SUMMARY............................................. 3
DESCRIPTION OF THE CONTRACT................................. 5
THE GROUP CONTRACT/CERTIFICATE......................... 5
APPLICATION AND PREMIUMS............................... 5
SUBACCOUNTS AND SUBACCOUNT VALUES...................... 5
Choices at the End of the Subaccount Guarantee
Period (the Renewal Date)......................... 6
How We Determine the Guaranteed Interest Rates for
Subaccounts....................................... 6
WITHDRAWALS............................................ 7
CHARGES................................................ 8
Market Value Adjustment ("MVA")................... 8
Withdrawal Charge................................. 10
Premium Taxes..................................... 11
DEATH BENEFIT PAYMENTS AND BENEFICIARIES............... 12
Beneficiaries..................................... 12
Death Before the Annuity Date..................... 12
Death After the Annuity Date...................... 13
ANNUITY PROVISIONS (ANNUITIZATION)..................... 14
OTHER PROVISIONS....................................... 16
Assignment........................................ 16
Notices and Elections............................. 16
Amendment of Group Contract and Certificate....... 16
Free Look Right................................... 16
Guarantee of Group Contract and Certificate....... 17
DISTRIBUTION OF THE CONTRACTS............................... 17
FEDERAL INCOME TAXES........................................ 17
LEGAL PROCEEDINGS........................................... 21
LEGAL MATTERS............................................... 21
EXPERTS..................................................... 22
REGISTRATION STATEMENT...................................... 22
APPENDIX.................................................... A-1
</TABLE>
2
<PAGE> 4
CAPSULE SUMMARY
THE GROUP CONTRACT AND CERTIFICATE
This prospectus describes a group modified guaranteed annuity contract issued by
Merrill Lynch Life Insurance Company ("we" or "us"). We issue group contracts to
certain groups such as employers. However, we maintain specific accounts for
each individual in the group. A Certificate of Participation summarizes your
rights and benefits under the group contract. Merrill Lynch, Pierce, Fenner &
Smith Incorporated qualifies as a group in most states. Therefore, you can
purchase Certificates in those states through Merrill Lynch, Pierce, Fenner &
Smith, Incorporated.
APPLICATION
To purchase a Certificate, you must complete and return an application to our
Service Center. We have the right to reject any application.
PREMIUMS
We issue one Certificate for each single premium payment you make. Your single
premium must be at least $5,000.
SUBACCOUNTS
We maintain one or more subaccounts for the value of your Certificate. Each
subaccount grows at a specified interest rate. We guarantee that we will credit
that interest rate for a specified period, called a Guarantee Period, that
corresponds to the subaccount. Currently, we offer Guarantee Periods of one to
ten years. You must tell us how much of your premium payment you want us to put
in each subaccount. You must allocate at least $5,000 to each subaccount you
choose. At the end of the Guarantee Period (on the Renewal Date), you may
transfer the value of that subaccount to one or more subaccounts at the interest
rates then in effect.
CHARGES
WITHDRAWAL CHARGE
If you take a withdrawal from a subaccount before the end of the
Guarantee Period, we will deduct a withdrawal charge generally equal to
six months of interest on the amount withdrawn at the guaranteed interest
rate. We do not deduct a withdrawal charge when the annuitant dies or you
die. We also currently do not deduct a withdrawal charge when we begin to
make annuity payments.
MARKET VALUE ADJUSTMENT ("MVA")
If you take a withdrawal from a subaccount before the end of the
Guarantee Period, we will apply an MVA. We will also apply an MVA at the
time we begin to make annuity payments if any subaccount has not reached
the end of its Guarantee Period. The MVA may be positive or negative and
can affect the value of your Certificate. Generally, if the interest
rates for a new Certificate are higher than the guaranteed rates of your
Certificate, the MVA will be negative. If the interest rates for a new
Certificate are lower than the guaranteed rates of your Certificate, the
MVA will be positive. For death benefit payments, we only credit a
positive MVA; we do not deduct any negative MVA.
PREMIUM TAXES
We deduct any applicable premium taxes when you annuitize. Premium tax
rates vary from jurisdiction to jurisdiction and currently range from 0%
to 5%. In those jurisdictions that do not allow an insurance company to
reduce its current taxable premium income by the amount of any
withdrawal, surrender, or death benefit paid, we will also deduct a
charge for these taxes on any withdrawal, surrender, or death benefit
payment.
3
<PAGE> 5
ANNUITY PAYMENTS
You choose the date that you want us to begin to make annuity payments (the
annuity date). You also choose the method under which we make these payments
(the annuity option). You may change the annuity date or annuity option any time
before we begin to make annuity payments. You cannot make full or partial
withdrawals after we begin to make annuity payments.
PAYMENT ON DEATH ("DEATH BENEFIT")
BEFORE THE ANNUITY DATE
If you or the annuitant dies prior to the annuity date, we will pay the
designated beneficiary the value of the Certificate plus any positive
MVA.
AFTER THE ANNUITY DATE
If you die after we begin making annuity payments, we will continue to
make annuity payments to your beneficiary. If the annuitant dies after we
begin to make annuity payments, the annuitant's designated beneficiary
may request that we either continue to make any remaining guaranteed
annuity payments or pay the present value of those payments in a lump
sum.
WITHDRAWALS
You may take withdrawals any time before we begin to make annuity payments or
before the annuitant's death, whichever is earlier. Withdrawals are subject to
tax and if taken prior to age 59 1/2 may also be subject to a penalty tax.
Certain CHARGES and minimums apply to withdrawals.
FREE LOOK
When you receive your Certificate, you should review it carefully to make sure
it is what you intended to purchase. You may return the Certificate for a
premium refund within ten days after you receive it. Some states allow a longer
period to return the Certificate. To receive a premium refund, you must return
the Certificate to our Service Center or to your Merrill Lynch Financial
Consultant.
MERRILL LYNCH LIFE INSURANCE COMPANY
We issue the Certificates. Our home office is in Little Rock, Arkansas. Our
Service Center's address and phone number are P.O. Box 44222, Jacksonville,
Florida 32231-4222, (800) 535-5549.
You should address all communications concerning your Certificate to our Service
Center.
4
<PAGE> 6
DESCRIPTION OF THE CONTRACT
THE GROUP CONTRACT/CERTIFICATE
We issue group modified guaranteed annuity contracts to certain groups such as
employers. A member of the group may purchase a Certificate. Merrill Lynch,
Pierce, Fenner & Smith Incorporated qualifies as a group in most states.
Therefore, if you are a client of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, you can purchase a Certificate in those states. In states that
recognize clients of Merrill Lynch, Pierce, Fenner & Smith Incorporated as a
group, we issue group contracts either directly to Merrill Lynch, Pierce, Fenner
& Smith Incorporated or to Asset Group Trust (Sussex Trust Company, Georgetown,
Delaware, Trustee).
The Certificate describes your rights and benefits under the group contract. You
can exercise these rights and benefits at any time. However, the owner of the
group contract can modify these rights and benefits. We reserve the right to
terminate a Certificate if you are no longer a member of a group.
We will issue Certificates in connection with non-qualified retirement plans or
plans qualifying for special tax treatment such as "H.R. 10" plans, Individual
Retirement Annuities or Accounts, corporate pension and profit-sharing plans, or
Tax-Sheltered Annuities.
The tax advantages typically provided by an annuity are already available with
tax-qualified plans, including IRAs and Roth IRAs. You should carefully consider
the advantages and disadvantages of owning an annuity in a tax-qualified plan,
including the costs and benefits of the Certificate (including the annuity
income benefits), before you purchase the Certificate in a tax-qualified plan.
APPLICATION AND PREMIUM
You can purchase a Certificate by completing an application and paying a
premium. The minimum premium you can pay is $5,000. The maximum premium you can
pay without our consent is $500,000. You must send the application and premium
to our Service Center.
We issue a separate Certificate for each premium you pay. You must complete a
new application for each premium payment. You can only purchase one Certificate
a day. We can reject any application.
SUBACCOUNTS AND SUBACCOUNT VALUES
Your Certificate consists of one or more subaccounts. You must tell us how to
distribute your single premium among these subaccounts. The minimum amount you
can put in a subaccount is $5,000.
Each subaccount grows at a specified guaranteed rate of interest. The initial
rates that will apply to your subaccounts are those in effect on the day we
receive your premium. We guarantee that we will credit a particular interest
rate to the subaccount for the designated number of years you select called the
Guarantee Period. Currently, we offer ten Guarantee Periods ranging from one to
ten years. We can change the number of the Guarantee Periods we offer. The end
of the Guarantee Period for a subaccount is its Renewal Date. You cannot change
the Guarantee Period or make a transfer to a different subaccount prior to the
Renewal Date.
We credit the guaranteed interest rate for a subaccount daily (except on
February 29th). The Subaccount Value initially equals the amount of premium that
you allocate to or the amount you reinvest in a subaccount. The Subaccount Value
fluctuates depending on the interest credited to that subaccount, any Market
Value Adjustment (see MVA) and any withdrawals and Withdrawal Charges (see
WITHDRAWALS). The total of all the Subaccount Values is your Certificate Value.
We will compound interest on each Certificate anniversary.
The following is an example of how you can allocate a $15,000 single premium on
May 1, 2000 among three subaccounts, and shows Subaccount Values as of the
Renewal Date assuming no withdrawals.
<TABLE>
<CAPTION>
SUBACCOUNT SUBACCOUNT VALUE
AMOUNT ALLOCATED INTEREST RATE GUARANTEE PERIOD RENEWAL DATE AS OF RENEWAL DATE
<S> <C> <C> <C> <C>
$5,000 4.75% One Year May 1, 2001 $5,237.50
$5,000 5.20% Two Years May 1, 2002 $5,533.52
$5,000 5.60% Six Years May 1, 2006 $6,933.52
</TABLE>
5
<PAGE> 7
CHOICES AT THE END OF THE SUBACCOUNT GUARANTEE PERIOD (THE RENEWAL DATE)
We will send you a notice 45 days before a subaccount's Renewal Date.
Currently, you may notify us no later than five business days after the
Renewal Date that you wish to transfer the Subaccount Value to one or
more new subaccounts. You can choose any of the Guarantee Periods offered
on the Renewal Date. You must transfer at least $5,000 to any one
subaccount or the entire Subaccount Value if less than $5,000. The
transfer will be effective as of the Renewal Date. The interest rate(s)
for the Guarantee Period(s) you choose will be those in effect for a new
Certificate on the Renewal Date.
If your Certificate's annuity date is less than one year from the Renewal
Date, we will transfer the Subaccount Value to a new subaccount with a
one-year Guarantee Period. You may change your annuity date so that the
Guarantee Period of the new subaccount will end on or prior to the
annuity date. See CHANGE OF ANNUITY DATE, ANNUITANT OR ANNUITY OPTION for
more information.
If we do not receive timely transfer instructions, we will transfer that
Subaccount Value to the one year subaccount. If, however, you have chosen
the Maximum Guarantee Period Option and we do not receive timely transfer
instructions, we will transfer the Subaccount Value to the subaccount
with the longest Guarantee Period that we offer at that time that:
1. is available on the Renewal Date;
2. is not longer than your longest Guarantee Period immediately
before transfer; and
3. ends on or before the annuity date.
For example, you allocate your premium as of May 1, 2000 among
three subaccounts with Renewal Dates of May 1, 2001; May 1,
2002; and May 1, 2006. If you do not select the Maximum
Guarantee Period Option and we do not receive timely transfer
instructions on or within five business days after the first
Renewal Date (May 1, 2001), we will transfer that Subaccount
Value to the one-year subaccount. If you have selected the
Maximum Guarantee Period Option, we will transfer that
Subaccount Value to the subaccount with the May 1, 2007
Renewal Date.
HOW WE DETERMINE THE GUARANTEED INTEREST RATES FOR SUBACCOUNTS
We have no specific formula for setting the guaranteed interest rates.
Rates will be influenced by, but not necessarily correspond to, interest
rates available on fixed income investments that we may acquire with the
amounts we receive as premiums. You will have no direct or indirect
interest in the investments we make with the premiums. We will invest
these amounts primarily in investment-grade fixed income securities
including:
- securities issued by the United States Government or its
agencies or instrumentalities, which may or may not be
guaranteed by the United States Government;
- debt securities that have an investment grade, at the
time of purchase, within the four highest grades assigned
by Moody's Investor Services, Inc. (Aaa, Aa, A or Baa),
Standard & Poor's Corporation (AAA, AA, A or BBB) or any
other nationally recognized rating service;
- mortgage-backed securities collateralized by real estate
mortgage loans, or securities collateralized by other
assets, that are insured or guaranteed by the Federal
Home Loan Mortgage Association, the Federal National
Mortgage Association or the Government National Mortgage
Association, or that have an investment grade at the time
of purchase within the four highest grades described
above;
6
<PAGE> 8
- other debt instruments;
- commercial paper; and
- cash or cash equivalents.
We will also consider other factors in determining the guaranteed rates,
including regulatory and tax requirements, sales commissions and
administrative expenses that we must pay, general economic trends and
competitive factors. WE WILL MAKE THE FINAL DETERMINATION OF THE
GUARANTEED RATES WE DECLARE. WE CANNOT PREDICT OR GUARANTEE THE LEVEL OF
FUTURE INTEREST RATES.
WITHDRAWALS
You may make a withdrawal of all or part of Net Certificate Value or Net
Subaccount Value any time before the earliest of:
1. the annuity date;
2. your death; or
3. the annuitant's death.
Withdrawals must meet the following requirements:
1. We must receive a written request
from you at our Service Center
(unless you have submitted a
telephone authorization form --
see NOTICES AND ELECTIONS).
2. You must return your Certificate
to us if you want to make a full
withdrawal.
3. You must specify the subaccounts
from which you want to make the
withdrawal. If you have
two or more subaccounts with the same Guarantee Period, we will first
take the withdrawal from the subaccount with the shortest period of
time remaining in its Guarantee Period to the maximum extent
possible.
NET SUBACCOUNT VALUE equals
the Subaccount Value after
adjustment for any MVA and
withdrawal charge which we
would apply on a full withdrawal,
annuitization or the payment
of death benefits on the death
of the participant or annuitant
prior to the annuity date.
4. The minimum partial withdrawal you can make is $500 and any remaining
Net Subaccount Value must be at least $1,000.
5. You can withdraw any Subaccount Value that is less than $500 but you
cannot leave any remaining amount in that subaccount.
6. The remaining Certificate Value after a partial withdrawal must be at
least $5,000.
WITHDRAWALS ARE SUBJECT TO INCOME TAXES. IF
THE WITHDRAWAL IS MADE PRIOR TO AGE 59 1/2,
YOU MAY ALSO HAVE TO PAY A FEDERAL PENALTY
TAX OF 10% OR MORE.
We will send you a notice at least 45 days, but not more than 75 days, prior to
the Renewal Date of a subaccount. This notice will inform you that you must
notify us within five days after the Renewal Date if you intend to make a
withdrawal from the subaccount without application of an MVA or withdrawal
charge on the Renewal Date.
We reserve the right to defer payments of withdrawals for up to six months. If
you take a partial withdrawal, we will pay you the amount you request. We then
deduct any Withdrawal Charge directly from and apply any MVA to the subaccount
from which the partial withdrawal is made (see WITHDRAWAL CHARGE and MVA for
more details regarding how charges are applied to withdrawals). If you withdraw
an entire Subaccount Value, we adjust the amount withdrawn for any applicable
withdrawal charge or MVA. This may reduce the amount you receive.
Under qualified plans, withdrawals may be permitted only under the circumstances
specified in the plan, the consent of your spouse may be required, and under
Tax-Sheltered Annuities and certain Section 401 plans, withdrawals attributable
to contributions made under a salary reduction agreement may be made only after
you reach age 59 1/2 and in other limited circumstances.
NET CERTIFICATE VALUE equals the
sum of all Net Subaccount
Values.
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<PAGE> 9
CHARGES
We impose two types of charges: a Market Value Adjustment and a Withdrawal
Charge. We may also deduct any applicable premium taxes.
MARKET VALUE ADJUSTMENT ("MVA")
We impose an MVA in three circumstances:
1. WITHDRAWALS TAKEN FROM A SUBACCOUNT BEFORE THE END OF ITS GUARANTEE
PERIOD: We will not apply an MVA if we receive your withdrawal
instructions by the fifth business day after the Renewal Date. In
this case, we consider the withdrawal to be effective as of the
Renewal Date.
2. ANNUITIZATION: If the annuity date (the date we begin making annuity
payments) precedes the end of a Guarantee Period, we apply an MVA on
the annuity date. We may also deduct any applicable premium taxes. We
apply the MVA before any annuity payments are calculated.
---------------------------------------------------------------------
For Certificates issued prior to January 9, 1995, and
for Certificates issued on or after that date but
before state approval, we will not apply an MVA on the
annuity date if:
(i) the combined MVAs of all affected
subaccounts would reduce your
Certificate Value; and
(ii) annuity payments will be made for at
least ten years or you choose a life
contingency or life expectancy annuity
option.
You should refer to your Certificate to determine if
this applies to you.
---------------------------------------------------------------------
3. DEATH BENEFIT
PAYMENTS: We apply any
net positive MVA to
payments made at the time
of your death or the
annuitant's death prior
to the annuity date. If
the net MVA is negative,
we will not deduct it.
- ---------------------------------------------------
NET MVA refers to the sum of the MVAs on all
subaccounts, some of which may be positive and
some of which may be negative. If the sum is
positive, it is referred to as a NET POSITIVE MVA.
- ---------------------------------------------------
The MVA reflects the relationship on a given day between interest rates
offered to new Certificates and the guaranteed interest rates of your
Certificate. The greater the difference in interests rates, the greater
the effect the MVA will have on your subaccount value. The amount of time
remaining in a Guarantee Period also affects the MVA. The MVA can be
positive or negative and can substantially impact the values in your
Certificate. If the guaranteed interest rate for your subaccount is lower
than the interest rate offered to new Certificates for a period equal to
the remaining time in your subaccount, the MVA will decrease your
subaccount value. If the guaranteed interest rate for your subaccount is
higher than the interest rates offered to new Certificates for a period
equal to the remaining time in your subaccount, the MVA will increase
your subaccount value. If the adjustment is positive, we will credit the
additional amount to the subaccount; if negative, we will deduct the
amount from the subaccount value. You directly bear any investment risk
of the MVA.
We determine the MVA based on the following formula:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1 + B n/365
A X [ 1- ( ------- ) ]
1 + C
</TABLE>
8
<PAGE> 10
Where:
<TABLE>
<S> <C> <C> <C>
A = i. the amount withdrawn in the case of partial withdrawals, or
ii. Net Subaccount Value, in the case of full withdrawals,
annuitizations, or payments due to your death or the
annuitant's death prior to the annuity date;
</TABLE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
NET SUBACCOUNT VALUE =
Subaccount Value
------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Guaranteed Interest Rate 1 + Current Interest Rate n/365
( ------------------------ ) ( ---------------------------- )
2 + 1 + Guaranteed Interest Rate
</TABLE>
<TABLE>
<S> <C> <C> <C>
Where "n" is the number of days remaining in the Guarantee
Period of the subaccount, but not less than 365.
- -------------------------------------------------------------------------------------------------
n = the number of days remaining in the Guarantee Period of the
subaccount(s) we are adjusting;
B = the current guaranteed interest rate offered to Guarantee Periods in
years equal to "n"/365;
C = the guaranteed interest rate for your subaccount.
</TABLE>
If the remaining period of time in the Guarantee Period is not a whole
number of years, we base the current interest rate for "B" on the
guaranteed interest rates currently offered for the Guarantee Periods
nearest the remaining period of time. We make this determination by
straight-line interpolation, except where the remaining period of time is
less than one year, in which case we use the current guaranteed rate for
a Guarantee Period of one year.
9
<PAGE> 11
The following example illustrates calculation of the MVA.
ASSUMPTIONS.
- a withdrawal of $20,000 is made;
- from a subaccount with 4.75 years (1,734 days) remaining in the
Guarantee Period; and
- a guaranteed interest rate of 5.20%.
Assume also that the guaranteed interest rates currently offered are:
- 5.3% for a Guarantee Period of 4 years; and
- 5.5% for a Guarantee Period of 5 years.
DETERMINING THE VALUE OF "B". Because the remaining period of time in
the Guarantee Period is not a whole number of years, we base the
current interest rate for "B" on straight-line interpolation. The
interpolated guaranteed interest rate equals the sum of one-fourth of
the four year rate and three-fourths of the five year rate. Since the
four year rate is 5.3% and the five year rate is 5.5%, the interpolated
rate for "B" equals 5.45% (5.3% times 0.25 plus 5.5% times 0.75).
CALCULATING THE MVA. To calculate the MVA, we divide the sum of 1 and
"B", 1.0545, by the sum of 1 and the guaranteed interest rate for the
affected subaccount, 1.0520. The resulting figure, 1.0023764, is then
taken to the "n"/365 power, or 4.75 (1,734/365), which is 1.0113384. We
subtract 1.0113384 from 1 and multiply the resulting figure, -.0113384,
by the amount of the withdrawal, $20,000, to give -$226.77. Because
this figure is a negative number, we subtract it from the remaining
subaccount value together with any applicable Withdrawal Charge.
If "B" had been 4.95%, instead of 5.45%, the MVA would have been
+224.76, which we would have added to the remaining subaccount value.
GREATER DIFFERENCES IN INTEREST RATES RESULT IN LARGER MVAS. IF IN THE
ABOVE EXAMPLE "B" HAD BEEN 6%, 7%, AND 8%, THE MARKET VALUE ADJUSTMENT
WOULD HAVE BEEN -$732.81, -$1,678.45 AND -$2,657.82, RESPECTIVELY. THE
MARKET VALUE ADJUSTMENT IS ALSO AFFECTED BY THE REMAINING PERIOD IN THE
GUARANTEE PERIOD OF THE SUBACCOUNT FROM WHICH THE WITHDRAWAL IS MADE,
WHICH IS "N" IN THE FORMULA. THUS, IF IN THE FIRST EXAMPLE ABOVE
"N"/365 WERE 2.5 OR 1.5, THE MARKET VALUE ADJUSTMENT WOULD BE -$119.03
OR -$71.34, RESPECTIVELY.
THE APPENDIX CONTAINS TABLES THAT SHOW THE APPLICATION OF THE MVA IN THE
CONTEXT OF FULL WITHDRAWALS FROM A HYPOTHETICAL SUBACCOUNT.
WITHDRAWAL CHARGE
We will deduct a Withdrawal Charge if you make a full or partial
withdrawal from a subaccount prior to the end of its Guarantee Period. We
will not deduct a Withdrawal Charge for withdrawals made at the end of
the Guarantee Period (on the Renewal Date). To avoid the Withdrawal
Charge, we must receive your written instructions (unless you have
submitted a telephone authorization form -- see NOTICES AND ELECTIONS) to
take a withdrawal from a subaccount(s) no later than five business days
after the Renewal Date of the subaccount. You can send your written
instructions to our Service Center. If we receive your written
instructions within this time period, we will process the withdrawal
effective on the Renewal Date and we will not impose a Withdrawal Charge.
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The Withdrawal Charge
equals six months of
interest on the amount
withdrawn (in the case of
partial withdrawals) or
the net subaccount value
(in the case of full
withdrawals).
Specifically, we calculate
the Withdrawal Charge by
multiplying the withdrawn
amount by 1/2 of the
guaranteed interest rate
for the subaccount from
which the withdrawal is
made.
For example, if you make a withdrawal from a
subaccount with a guaranteed interest rate of
5.5%, we will apply a Withdrawal Charge of 2.75%
(1/2 of 5.5%) to the amount you withdraw from
that subaccount if you make a partial
withdrawal or to the net subaccount value if
you make a full withdrawal.
For full withdrawals, we deduct the
Withdrawal Charge from the proceeds
of the withdrawal.
Withdrawal Charge =
Guaranteed Interest Rate
Net Subaccount Value X ------------------------
2
For partial withdrawals, we deduct
a Withdrawal Charge directly from
the subaccount.
Withdrawal Charge =
Guaranteed Interest Rate
Amount Withdrawn X ------------------------
2
The following example illustrates how the MVA and Withdrawal Charge are
applied to a withdrawal:
Your contract has two subaccounts:
- - a five-year guarantee period with a guaranteed interest rate of 5.5% and
- - a three-year guarantee period with a guaranteed interest rate of 5.3%.
Each subaccount has a value of $5,000.
You withdraw $7,000 and instruct us to take this withdrawal from the five-year
subaccount to the maximum extent possible and the rest from the three-year
subaccount. The maximum amount you can withdraw from the five-year subaccount is
$4,500 ($5,000 less $376.25 MVA and $123.75 Withdrawal Charge (5.5% / 2 X
$4,500)). The remaining $2,500 is deducted from the three-year subaccount
leaving $2,308.75 in the three-year subaccount ($5,000 minus $2,500 withdrawal
minus $125.00 MVA minus $66.25 Withdrawal Charge (5.3% / 2 X $2,500)).
Currently, we do not deduct a Withdrawal Charge at annuitization.
However, we reserve the right to do so on any subaccount with a Guarantee
Period that extends beyond the annuity date. We do not deduct a
Withdrawal Charge from death benefit payments or annuity payments.
PREMIUM TAXES
We deduct any applicable premium taxes when you annuitize. If a
jurisdiction does not allow us to reduce our current taxable premium
income by the amount of withdrawals, surrenders or death benefit
payments, we also deduct a charge for premium taxes when we make those
payments.
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DEATH BENEFIT PAYMENTS AND BENEFICIARIES
We will pay a death benefit to the designated beneficiary after we receive proof
of your death or the death of the annuitant. Acceptable proof may include a
certified copy of a death certificate, beneficiary claim statement, and any
other documents we may require. We will pay the death benefit in a lump sum
unless the beneficiary chooses an annuity option within 60 days from our receipt
of the proof of death.
BENEFICIARIES
When you complete the application, you must select a beneficiary to
receive the death benefit in the event you die. You also must select a
beneficiary to receive the death benefit in the event the annuitant dies.
If you are also the annuitant, the beneficiaries must be the same.
You can designate a beneficiary as revocable or irrevocable. If you name
a revocable beneficiary, you can change that beneficiary at any time
prior to your death. If you designate an irrevocable beneficiary, that
beneficiary must approve any beneficiary change in writing.
If no beneficiary survives the annuitant, payment will be made to you, if
living, or to your estate. If your beneficiary dies before you, the death
benefit payable at your death will be paid to your estate.
The estate or heirs of the annuitant's beneficiary or your beneficiary
have no rights under the Certificate if the beneficiary dies before the
annuitant or you, respectively.
DEATH BEFORE THE ANNUITY DATE
Your Death
If you die before the annuity date, we will pay the death benefit
to your beneficiary. The death benefit equals the Certificate
Value plus any net positive MVA as of the date of payment. Your
beneficiary may select a payment option under which payments begin
within one year of your death and do not extend beyond the
beneficiary's life expectancy. If no payment is selected, we will
pay this death benefit in a lump sum within five years of your
death.
If there is more than one participant under the same Certificate,
we pay the death benefit to the designated beneficiary when the
first such participant dies. If a surviving spouse is also the
beneficiary, he or she can choose to become the new participant
and continue the Certificate with the same rights and benefits as
the deceased participant had before death. Thereafter, the
surviving spouse will be the participant and the annuitant. If the
surviving spouse chooses to become the new participant and
continue the Certificate, no death benefit will be paid until he
or she dies.
Death of the Annuitant
If the annuitant (other than you) dies before the annuity date
(unless you have selected a contingent annuitant as described
below), we will pay the designated beneficiary the Certificate
Value plus any net positive MVA as of the date of payment. We will
pay this death benefit in a lump sum unless the beneficiary
selects an annuity option.
If you are not the annuitant, you can irrevocably select a
contingent annuitant. You must make this selection before the
annuity date and the death of the annuitant. If you elect this
option, we will not pay a death benefit when the primary annuitant
dies. The contingent annuitant will become the annuitant upon the
death of the original annuitant before the annuity date. This
option is only available when you and any other participants under
the same Certificate are "natural persons" or with certain
qualified plans entitled to special tax treatment under Sections
401 or 408 of the Internal Revenue Code ("IRC"). If any
participant of a non-qualified Certificate is not an individual,
we treat the death of any annuitant as the death of a participant
and we pay the death benefit.
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<PAGE> 14
DEATH AFTER THE ANNUITY DATE
Your Death
If you or any other participant under the same Certificate dies
after the annuity date, we will continue to make annuity payments
to your beneficiary in the same manner as before your death.
Death of the Annuitant
If the annuitant dies after the annuity date, the annuitant's
beneficiary can request that we continue to make the annuity
payments for the period of time required under the chosen annuity
option or until the amount guaranteed has been paid (see ANNUITY
PROVISIONS). Alternatively, the designated beneficiary can request
that we pay the remaining guaranteed payments in a lump sum based
on the present value. This payment will be less than the sum of
the remaining guaranteed payments. We determine this payment based
on the interest rate used in determining the annuity payments.
If the annuitant's beneficiary dies while guaranteed amounts
remain unpaid, we will pay the present value of the remaining
guaranteed payments to the estate of the annuitant's beneficiary
in a lump sum.
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<PAGE> 15
ANNUITY PROVISIONS (ANNUITIZATION)
We make annuity payments to you commencing on the annuity date designated in
your Certificate. In calculating annuity payments, we apply an MVA to any
subaccount that has a Guarantee Period that extends beyond the annuity date. We
also deduct any applicable premium taxes. In this section, we refer to the
Certificate Value plus or minus the MVA and minus premium taxes as the Net
Certificate Value.
-----------------------------------------------------------------
Net Certificate Value = Certificate Value +/- MVA - premium taxes
-----------------------------------------------------------------
We calculate annuity payments by applying the Net Certificate Value to the
annuity option you choose using our annuity rates in effect at that time. These
rates are guaranteed not to be lower than the minimum guaranteed annuity rates
shown in the applicable annuity table in your Certificate.
---------------------------------------------------------------------------
The tables in your Certificate show the minimum guaranteed amount of each
monthly annuity payment for each $1,000 applied according to the age and
sex of the annuitant on the annuity date. We based these tables on the 1983
Table "a" projected forward to 1995 for Individual Annuity Valuation with
current mortality adjustments. When required by state law, we will not
differentiate by sex. The Certificate contains a formula for adjusting the
age of the annuitant based on the annuity date in order to determine
minimum monthly annuity payments. An age adjustment results in a reduction
in the minimum monthly annuity payments that would otherwise be made.
Therefore, if the rates we are using are the minimum rates shown in the
annuity tables in the Certificate, you may want to select an annuity date
that immediately precedes the date on which an age adjustment would occur.
For example, the annuity payment rates in the annuity tables for an
annuitant with an annuity date in the year 2010 are the same as those for
an annuity date twelve months earlier, even though the annuitant is one
year older, because the new decade results in the annuitant's age being
reduced by an additional year. Current annuity rates, unlike the guaranteed
rates, do not involve any age adjustment.
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For Certificates issued prior to January 9, 1995, and for Certificates
issued on or after that date but before state approval, we will not apply
an MVA at the annuity date if:
(i) the combined MVAs of all affected subaccounts would reduce the
value of your Certificate; and
(ii) annuity payments will be made for at least ten years or you
choose a life contingency or life expectancy annuity option.
You should refer to your Certificate to determine if this applies to you.
---------------------------------------------------------------------------
We will send your annuity payments monthly unless you choose to have payments
made less frequently or choose the Qualified Plan Option. Each annuity payment
must be at least $50 or we can change the frequency of the annuity payments so
that they are at least $50. If your Net Certificate Value is less than $5,000
($3,500 for certain qualified Certificates) on the annuity date, we can pay such
amount to you in a lump sum.
You select the annuity date, annuitant, and annuity option at the time of the
application.
ANNUITY DATE
We will make payments to you beginning on the annuity date. The annuity
date can be any day of a calendar month. However, it cannot be later than
the first day of the month after the annuitant's 85th birthday. If you do
not select an annuity date at the time of application, the annuity date
will be the first day of the month after the annuitant's 75th birthday.
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<PAGE> 16
For qualified Certificates other than IRAs, the annuity date generally
may not be later than April 1 of the calendar year after the later of the
calendar year in which the annuitant attains age 70 1/2 or retires. For
IRAs, the annuity date generally may not be later than April 1 of the
calendar year after the calendar year in which the annuitant attains age
70 1/2.
ANNUITANT
You can select one or two annuitants. If co-annuitants are selected, we
consider the annuitant's death to occur at the last surviving annuitant's
death. Annuity payments are based on the annuitant's age and sex. We may
require proof of age, sex or survival from the annuitant. If you give us
incorrect information, we will adjust the amount of the annuity payments
to reflect the correct age and sex. If previous payments were overpaid,
we will deduct the overpaid amount from the next payments due. If
previous payments were underpaid, we will add the underpaid amount to the
next payment.
ANNUITY OPTIONS
You can select any one of the following annuity options. We can offer
additional annuity options. If you do not select an annuity option, we
will choose a life annuity with payments guaranteed for 10 years. Once
you begin to receive annuity payments, you cannot change the annuity
option, payment amount, or the payment period.
1. Payments of a Fixed Amount: You can choose the amount of each
annuity payment. We will make equal payments of the amount chosen
until the Net Certificate Value is gone. The Net Certificate Value
must be sufficient so that we can make payments for at least five
years.
2. Payments for a Fixed Period: You can choose a time period during
which you wish to receive annuity payments. We will pay the Net
Certificate Value in equal payments over this time period. The period
for these payments cannot be less than five years.
3. *Life Annuity: We will make payments as long as the annuitant lives.
Payments will stop at the last payment due before the death of the
annuitant. The Net Certificate Value will be applied to determine the
amount of the annuity payments based on the annuitant's age, sex and
life expectancy.
4. Life Annuity with Payments Guaranteed for 10 or 20 Years: We will
make payments for the guaranteed period chosen (10 or 20 years) and
as long thereafter as the annuitant lives.
5. Life Annuity with Guaranteed Return of Net Certificate Value: We
will make annuity payments until the total of the annuity payments
equals the Net Certificate Value applied to this option, and as long
thereafter as the annuitant lives.
6. *Joint and Survivor Life Annuity: Payments will be made for as long
as the annuitant and co-annuitant live. We will not make any payments
after the death of the last surviving annuitant. We apply the Net
Certificate Value based on the annuitant's and co-annuitant's ages,
sex and life expectancy to determine the amount of the annuity
payments.
7. Qualified Plan Option: This option is available only under qualified
Certificates. Payments may be based on:
(a) the life expectancy of the annuitant,
(b) the joint life expectancy of the annuitant and his or her spouse,
or
(c) the life expectancy of the surviving spouse if the annuitant dies
before the annuity date.
Payments will be made annually. Each payment equals the Net
Certificate Value on the first day of the calendar year divided by
applicable current life expectancy based on Internal
*CAUTION: THESE OPTIONS ARE "PURE" LIFE ANNUITIES. THEREFORE, IT IS
POSSIBLE FOR THE PAYEE TO RECEIVE ONLY ONE ANNUITY PAYMENT IF THE
PERSON (OR PERSONS) ON WHOSE LIFE (LIVES) PAYMENT IS BASED DIES AFTER
ONLY ONE PAYMENT OR TO RECEIVE ONLY TWO ANNUITY PAYMENTS IF THAT
PERSON (THOSE PERSONS) DIES AFTER ONLY TWO PAYMENTS, ETC. CAREFULLY
CONSIDER YOUR NEEDS BEFORE YOU CHOOSE THIS OPTION.
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<PAGE> 17
Revenue Service regulations. We make each subsequent payment on the
anniversary of the annuity date. We credit interest at our then
current rate for this option. The rate will not be less than the rate
shown in the Contract. On the death of the measuring life or lives, we
will pay any unpaid Net Certificate Value to the beneficiary in a lump
sum.
CHANGE OF ANNUITY DATE, ANNUITANT OR ANNUITY OPTION
In order to change the annuity date, the annuitant, and/or the annuity
option, we must receive your written instructions no later than 30
days before the existing annuity date. You can send your written
instructions to our Service Center. You can also make annuity date and
annuity option changes via telephone if you have submitted a proper
telephone authorization form. See NOTICES AND ELECTIONS.
Changes of the annuity date are subject to federal tax restrictions.
OTHER PROVISIONS
ASSIGNMENT
You may assign your rights under a Certificate to a creditor as security for a
debt. Any irrevocable beneficiary must consent to such an assignment. This does
not change the ownership of your Certificate. The rights of the creditor take
precedence over the rights of a beneficiary. If the Certificate is issued
pursuant to a qualified plan, your rights under the Certificate may not be
assigned, pledged or transferred, unless permitted by law.
We assume no responsibility for the validity of any assignment or for any
actions we take prior to receipt of written notice of an assignment.
An assignment of the Certificate may have federal income tax consequences.
NOTICES AND ELECTIONS
You must send any changes, notices, and/or choices for your Certificate to our
Service Center. These requests must be in writing and signed unless you have
submitted a telephone authorization form. We will effect any request regarding
beneficiary changes or choices as of the date you sign the request, unless we
already acted in reliance on your prior status before receiving your notice. If
you have submitted a telephone authorization form, you may make the following
choices via telephone:
1. subaccount selections at the end of a Guarantee Period, including
election of the Maximum Guarantee Period Option;
2. subaccounts from which you wish to make partial withdrawals;
3. annuity date changes; and
4. annuity option changes.
We will use reasonable procedures to confirm that a telephone request is proper.
These procedures may include possible tape recording of telephone calls and
obtaining appropriate identification before effecting any telephone
transactions. We do not have any liability if we act on a request that we
reasonably believe is proper.
AMENDMENT OF GROUP CONTRACT AND CERTIFICATE
We may amend any group contract or Certificate at any time if required to comply
with applicable law, regulation or ruling issued by a governmental agency.
FREE LOOK RIGHT
You should carefully review your Certificate when you receive it to make sure it
is what you intended to purchase. You may return the Certificate for a refund of
premium within ten days after you receive it. Some states allow a longer time to
return the Certificate. You must return the Certificate to either our Service
Center or your Merrill Lynch Financial Consultant within this time period in
order to receive a refund of your premium. We will then deem your Certificate
void from the beginning. If you cancel your Certificate under this provision,
you cannot submit another application for a Certificate for at least 90 days.
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<PAGE> 18
GUARANTEE OF GROUP CONTRACT AND CERTIFICATE
Neither the federal government nor its instrumentalities guarantee the group
contract or your Certificate. We stand behind the guarantees in the Certificate.
DISTRIBUTION OF THE CONTRACTS
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") is the principal
underwriter of the group contract. MLPF&S was organized in 1958 under the laws
of the state of Delaware and is registered as a broker-dealer under the
Securities Exchange Act of 1934. It is a member of the National Association of
Securities Dealers, Inc. ("NASD"). The principal business address for MLPF&S is
World Financial Center, 250 Vesey Street, New York, New York 10281.
Registered representatives (Financial Consultants) of MLPF&S sell these
Certificates. These Financial Consultants are also licensed through various
Merrill Lynch Life Agencies ("MLLA") as our insurance agents. We have entered
into a distribution agreement with MLPF&S and companion sales agreements with
MLLA. These agreements allow Financial Consultants to sell Certificates and
receive compensation. The maximum commission MLLA pays to the Financial
Consultant is 2.3% of each premium. In addition, the maximum compensation MLLA
pays to the Financial Consultant for each reinvestment is 2.1% of Subaccount
Value reinvested.
The maximum commission we will pay to the applicable insurance agency to be used
to pay commissions to Financial Consultants is 4.5% of each premium. In
addition, the maximum compensation we will pay to the applicable insurance
agency to be used to pay compensation to Financial Consultants for reinvestment
is 3.2% of Subaccount Value reinvested. We may pay compensation in the form of
non-cash compensation, consistent with applicable regulatory requirements.
MLPF&S may arrange for sales of the group contract or Certificate by other
broker-dealers who are registered under the Securities Exchange Act of 1934 and
are members of the NASD.
FEDERAL INCOME TAXES
The following summary discussion is based on our understanding of current
federal income tax law as the Internal Revenue Service (IRS) now interprets it.
We can't guarantee that the law or the IRS's interpretation won't change. It
does not purport to be complete or to cover all tax situations. This discussion
is not intended as tax advice. Counsel or other tax advisors should be consulted
for further information.
We haven't considered any applicable federal gift, estate or any state or other
tax laws. Of course, your own tax status or that of your beneficiary can affect
the tax consequences of ownership or receipt of distributions.
When you invest in an annuity contract, you usually do not pay taxes on your
investment gains until you withdraw the money--generally for retirement
purposes. If you invest in an annuity as part of an Individual Retirement
Account ("IRA"), Simplified Employee Pension (SEP) IRA, Roth IRA, SIMPLE IRA,
tax sheltered annuity, pension plan or employer-sponsored retirement program,
your contract is called a QUALIFIED Contract. If your annuity is independent of
any formal retirement or pension plan, it is termed a NON-QUALIFIED Contract.
The tax rules applicable to Qualified Contracts vary according to the type of
retirement plan and the terms and conditions of the plan. The ultimate effect of
federal income taxes on the amounts held under an annuity contract, on annuity
payments, and on the economic benefit to the participant, the annuitant or the
beneficiary depends on the type of retirement plan, on the tax status of the
individual concerned and on our tax status.
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TAX STATUS OF THE CONTRACTS
REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for Federal income tax
purposes, Section 72(s) of the IRC requires any Non-Qualified Contract to
contain certain provisions specifying how a participant's interest in the
Certificate will be distributed in the event of his or her death.
Specifically, Section 72(s) requires that (a) if any participant dies on
or after the annuity starting date, but prior to the time the entire
interest in the contract has been distributed, the entire interest in the
contract will be distributed at least as rapidly as under the method of
distribution being used as of the date of such participant's death; and
(b) if any participant dies prior to the annuity starting date, the
entire interest in the contract will be distributed within five years
after the date of such participant's death. These requirements will be
considered satisfied as to any portion of a participant's interest which
is payable to or for the benefit of a designated beneficiary and which is
distributed over the life of such designated beneficiary or over a period
not extending beyond the life expectancy of that beneficiary, provided
that such distributions begin within one year of the participant's death.
The designated beneficiary refers to a natural person designated by the
participant as a beneficiary and to whom ownership of the contract passes
by reason of death. However, if the designated beneficiary is the
surviving spouse of the deceased participant, the contract may be
continued with the surviving spouse as the new participant.
Non-Qualified Contracts contain provisions that are intended to comply
with these requirements, although no regulations interpreting these
requirements have yet been issued. We intend to review such provisions
and modify them, if necessary, to assure that they comply with the
applicable requirements when such requirements are clarified by
regulation or otherwise.
Other required distribution rules may apply to Qualified Contracts.
TAXATION OF ANNUITIES
IN GENERAL
IRC Section 72 governs annuity taxation generally. We believe that a
participant who is a natural person usually won't be taxed on increases
in the value of a contract until there is a distribution (i.e., the
participant withdraws all or part of the accumulation or takes annuity
payments). Assigning, pledging, or agreeing to assign or pledge any part
of the accumulation usually will be considered a distribution.
Withdrawals of accumulated investment earnings are taxable as ordinary
income. Generally under the IRC, withdrawals are first allocated to
investment earnings.
A participant of any annuity contract who is not a natural person
generally must include in income any increase in the excess of the
accumulation over the "investment in the contract" during the taxable
year. There are some exceptions to this rule and a prospective
participant that is not a natural person may wish to discuss them with a
competent tax advisor.
The following discussion applies generally to Contracts owned by a
natural person.
PARTIAL WITHDRAWALS AND SURRENDERS
When a withdrawal from a Non-Qualified Contract occurs, the amount
received generally will be treated as ordinary income subject to tax up
to an amount equal to the excess (if any) of the Certificate Value
immediately before the distribution over the investment in the contract
(generally, the premiums or other consideration paid for the Certificate,
reduced by any amount previously distributed from the Certificate that
was not subject to tax) at that time. The Certificate Value immediately
before a withdrawal may have to be increased by any net positive MVA
which results from a withdrawal.
YOU SHOULD NOTE THAT THIS IS AN INTEGRATED ANNUITY CONTRACT FOR IRC
PURPOSES. THEREFORE, WHEN WE DETERMINE THE EXTENT TO WHICH A WITHDRAWAL
FROM ONE SUBACCOUNT IS TAXABLE, WE WILL USE THE CERTIFICATE VALUE AND
"INVESTMENT IN THE CONTRACT" FOR THE ENTIRE CERTIFICATE AND NOT JUST OF
THE SUBACCOUNT FROM WHICH THE WITHDRAWAL IS MADE.
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<PAGE> 20
If you withdraw your entire accumulation under a Certificate, you will be
taxed only on the part that exceeds your investment in the contact.
ANNUITY PAYMENTS
Although tax consequences may vary depending on the payout option elected
under an annuity contract, a portion of each annuity payment is generally
not taxed and the remainder is taxed as ordinary income. The non-taxable
portion of an annuity payment is generally determined in a manner that is
designed to allow you to recover your investment in the contract ratably
on a tax-free basis over the expected stream of annuity payments, as
determined when annuity payments start. Once your investment in the
contract has been fully recovered, however, the full amount of each
annuity payment is subject to tax as ordinary income. For a contract
issued as a Qualified Contract, your investment in the contract may be
zero.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be paid from a contract because a participant, the annuitant
or the co-annuitant has died. If the payments are made in a lump sum,
they're taxed the same way a full withdrawal from the contract is taxed.
If they are distributed as annuity payments, they're taxed as annuity
payments.
PENALTY TAX ON SOME WITHDRAWALS
You may have to pay a penalty tax (10% of the amount treated as taxable income)
on some withdrawals. However, there is usually no penalty on distributions:
1. on or after you reach age 59 1/2;
2. after you die (or after the annuitant dies, if the owner isn't an
individual);
3. on account of becoming disabled; or
4. that are part of a series of substantially equal periodic (at least
annual) payments for your life (or life expectancy) or the joint lives
(or life expectancies) of you and your beneficiary.
Other exceptions may be applicable under certain circumstances and special rules
may be applicable in connection with the exceptions enumerated above. Also,
additional exceptions apply to distributions from a Qualified Contract. You
should consult a tax adviser with regard to exceptions from the penalty tax.
TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF A CONTRACT
Transferring or assigning ownership of the contract, designating an annuitant,
payee or other beneficiary who is not also the participant, or exchanging a
contract can have other tax consequences that we don't discuss here. If you're
thinking about any of those transactions, contact a tax advisor.
WITHHOLDING
Annuity distributions usually are subject to withholding for the recipient's
federal income tax liability at rates that vary according to the type of
distribution and the recipient's tax status. However, recipients can usually
choose not to have tax withheld from distributions.
MULTIPLE CONTRACTS
All non-qualified deferred annuity contracts that we (or our affiliates) issue
to the same owner during any calendar year are treated as one annuity contract
for purposes of determining the amount includible in such owner's income when a
taxable distribution occurs. This could affect when income is taxable and how
much is subject to tax and the 10% penalty discussed above.
POSSIBLE CHANGES IN TAXATION
Although the likelihood of legislative change is uncertain, there is always the
possibility that the tax treatment of the contracts could change by legislation
or other means. It is also possible that any change could be retroactive (that
is, effective prior to the date of the change). A tax adviser should be
consulted with respect to legislative developments and their effect on the
contract.
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TAXATION OF QUALIFIED CONTRACTS
The tax rules applicable to Qualified Contracts vary according to the type of
retirement plan and the terms and conditions of the plan. Your rights under a
Qualified Contract may be subject to the terms of the retirement plan itself,
regardless of the terms of the Qualified Contract. Adverse tax consequences may
result if you do not ensure that contributions, distributions and other
transactions with respect to the contract comply with the law.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
IRAs, as defined in Section 408 of the IRC, permit individuals to make
annual contributions of up to the lesser of $2,000 or 100% of adjusted
gross income. The contributions may be deductible in whole or in part,
depending on the individual's income. Distributions from certain pension
plans may be "rolled over" into an IRA on a tax-deferred basis without
regard to these limits. Amounts in the IRA (other than nondeductible
contributions) are taxed when distributed from the IRA. A 10% penalty tax
generally applies to distributions made before age 59 1/2, unless certain
exceptions apply.
SIMPLE IRAS
A Certificate is available for purchase by an individual who has
separately established a SIMPLE IRA custodial account with Merrill Lynch,
Pierce, Fenner & Smith Incorporated. SIMPLE IRAs permit certain small
employers to establish SIMPLE plans as provided by Section 408(p) of the
IRC, under which employees may elect to defer to a SIMPLE IRA a
percentage of compensation up to $6,000 (as increased for cost of living
adjustments). The sponsoring employer is required to make matching or
non-elective contributions on behalf of employees. Distributions from
SIMPLE IRAs are subject to the same restrictions that apply to IRA
distributions and are taxed as ordinary income. Subject to certain
exceptions, premature distributions prior to age 59 1/2 are subject to a
10% penalty tax, which is increased to 25% if the distribution occurs
within the first two years after the commencement of the employee's
participation in the plan.
SIMPLIFIED EMPLOYEE PENSION (SEP) IRAS
SEP IRAs may be established by employers under section 408(k) of the IRC
to provide IRA contributions on behalf of their employees. In addition to
all of the general rules of the IRC governing IRAs, such plans are
subject to certain requirements regarding participation and amounts of
contributions.
ROTH IRAS
A Certificate is available for purchase by an individual who has
separately established a Roth IRA custodial account with Merrill Lynch,
Pierce, Fenner & Smith Incorporated. Roth IRAs, as described in Section
408A of the IRC, permit certain eligible individuals to make
non-deductible contributions to a Roth IRA in cash or as a rollover or
transfer from another Roth IRA or other IRA. A rollover from or
conversion of an IRA to a Roth IRA is generally subject to tax and other
special rules apply. You may wish to consult a tax adviser before
combining any converted amounts with any other Roth IRA contributions,
including any other conversion amounts from other tax years.
Distributions from a Roth IRA generally are not taxed, except that, once
aggregate distributions exceed contributions to the Roth IRA, income tax
and a 10% penalty tax may apply to distributions made (1) before age
59 1/2 (subject to certain exceptions) or (2) during the five taxable
years starting with the year in which the first contribution is made to
any Roth IRA. A 10% penalty tax may apply to amounts attributable to a
conversion from an IRA if they are distributed during the five taxable
years beginning with the year in which the conversion was made.
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Section 401(a) of the IRC allows corporate employers to establish various
types of retirement plans for employees, and self-employed individuals to
establish qualified plans for themselves and
20
<PAGE> 22
their employees. Adverse tax consequences to the retirement plan, the
participant or both may result if the Contract is transferred to any
individual as a means to provide benefit payments, unless the plan
complies with all the requirements applicable to such benefits prior to
transferring the Contract.
TAX SHELTERED ANNUITIES
Tax Sheltered Annuities under Section 403(b) of the IRC allow employees
of certain Section 501(c)(3) organizations and public schools to exclude
from their gross income the premium payments made, within certain limits,
on a contract that will provide an annuity for the employee's retirement.
These premium payments may be subject to FICA (Social Security) tax.
Distributions of (1) salary reduction contributions made in years
beginning after December 31, 1988; (2) earnings on those contributions;
and (3) earnings on amounts held as of the last year beginning before
January 1, 1989, are not allowed prior to age 59 1/2, separation from
service, death or disability. Salary reduction contributions may also be
distributed upon hardship, but would generally be subject to penalties.
OTHER TAX ISSUES
Qualified Contracts have minimum distribution rules that govern the
timing and amount of distributions. You should refer to your retirement
plan, adoption agreement, or consult a tax advisor for more information
about these distribution rules.
Distributions from Qualified Contracts generally are subject to
withholding for the participant's federal income tax liability. The
withholding rate varies according to the type of distribution and the
participant's tax status. The participant will be provided the
opportunity to elect not have tax withheld from distributions.
"Eligible rollover distributions" from Section 401(a) and 403(b) plans
are subject to a mandatory federal income tax withholding of 20%. An
eligible rollover distribution is the taxable portion of any distribution
from such a plan, except certain distributions such as distributions
required by the IRC or distributions in a specified annuity form. The 20%
withholding does not apply, however, if the participant chooses a "direct
rollover" from the plan to another tax-qualified plan or IRA.
LEGAL PROCEEDINGS
We are not aware of any material pending litigation against us or involving our
property. We are also not aware of any legal proceedings contemplated by any
governmental authorities against us.
LEGAL MATTERS
Barry G. Skolnick, our Senior Vice President and General Counsel, has approved
our organization, our authority to issue the group contracts and Certificates,
and the validity of the group contract form and Certificate form. Sutherland
Asbill & Brennan LLP of Washington, D.C., provided advice on certain matters
relating to federal securities laws.
EXPERTS
Deloitte & Touche LLP, independent auditors, audited our financial statements
that are incorporated by reference into this Prospectus. The financial
statements are as of December 31, 1999 and 1998 and for each of the three years
in the period ended December 31, 1999, as stated in their auditors' report in
the statements. We have incorporated our financial statements in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing. Deloitte & Touche LLP's principal business address is Two World
Financial Center, New York, New York 10281-1433. Other financial statements
incorporated by reference into this Prospectus are unaudited.
21
<PAGE> 23
REGISTRATION STATEMENT
We have filed registration statements with the Securities and Exchange
Commission under the Securities Act of 1933 that relate to the group contract
and the Certificate. This prospectus does not contain all of the information in
the registration statements as permitted by Securities and Exchange Commission
regulations. You can obtain the omitted information from the Securities and
Exchange Commission's principal office in Washington, D.C., upon payment of a
prescribed fee.
22
<PAGE> 24
APPENDIX
The tables below are designed to show the impact of the MVA and withdrawal
charge on a single premium of $10,000. Table 1 assumes the premium is allocated
to a subaccount with a 10 year Guarantee Period with a guaranteed rate of
interest of 6.0%. Table 2 assumes the premium is allocated to a subaccount with
a 5 year Guarantee Period with a guaranteed rate of 5.5%. The MVAs are based on
interpolated current interest rates (defined in the Contract as "B") of 4.0%,
6.0% and 8.0% in the 10 year guarantee table (see Table 1 below) and 3.5%, 5.5%
and 7.5% in the 5 year guarantee table (see Table 2 below). The net subaccount
values shown in the tables are the maximum amount available as cash withdrawals.
Although the withdrawal charge is in each case a fixed percentage of the amount
withdrawn, the amount of the charge for withdrawals made at the end of each year
varies as a result of the MVA. Values shown in the tables have been rounded to
the nearest dollar, and therefore the figures under the net subaccount value
columns may not precisely equal amounts set forth in the subaccount value, plus
the MVA, less the withdrawal charge columns.
TABLE 1
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENTS, WITHDRAWAL CHARGES AND NET SUBACCOUNT VALUE BASED ON
INTERPOLATED CURRENT INTEREST RATES OF:
-----------------------------------------------------------------------------------------------------------
4.0% 6.0% 8.0%
- -----------------------------------------------------------------------------------------------------------------------------------
MARKET NET MARKET NET MARKET NET
END OF SUB- VALUE WITH- SUB- VALUE WITH- SUB- VALUE WITH- SUB-
CERTIFICATE ACCOUNT ADJUST- DRAWAL ACCOUNT ADJUST- DRAWAL ACCOUNT ADJUST- DRAWAL ACCOUNT
YEAR VALUE MENT CHARGE VALUE MENT CHARGE VALUE MENT CHARGE VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,600 1,914 364 12,150 -0- 309 10,291 (1,601) 262 8,737
2 11,236 1,787 379 12,644 -0- 327 10,909 (1,521) 283 9,432
3 11,910 1,643 395 13,158 -0- 347 11,563 (1,423) 305 10,181
4 12,625 1,479 411 13,693 -0- 368 12,257 (1,304) 330 10,991
5 13,382 1,294 427 14,249 -0- 390 12,992 (1,162) 356 11,864
6 14,185 1,088 445 14,828 -0- 413 13,772 (994) 384 12,807
7 15,036 857 463 15,430 -0- 438 14,598 (797) 415 13,824
8 15,938 600 482 16,057 -0- 464 15,474 (568) 448 14,922
9 16,895 315 501 16,709 -0- 492 16,403 (304) 483 16,108
10 17,908 -0- -0- 17,908 -0- -0- 17,908 -0- -0- 17,908
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TABLE 2
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENTS, WITHDRAWAL CHARGES AND NET SUBACCOUNT VALUE BASED ON
INTERPOLATED CURRENT INTEREST RATES OF:
-----------------------------------------------------------------------------------------------------------
3.5% 5.5% 7.5%
- -----------------------------------------------------------------------------------------------------------------------------------
MARKET NET MARKET NET MARKET NET
END OF SUB- VALUE WITH- SUB- VALUE WITH- SUB- VALUE WITH- SUB-
CERTIFICATE ACCOUNT ADJUST- DRAWAL ACCOUNT ADJUST- DRAWAL ACCOUNT ADJUST- DRAWAL ACCOUNT
YEAR VALUE MENT CHARGE VALUE MENT CHARGE VALUE MENT CHARGE VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,550 815 304 11,061 -0- 282 10,268 (744) 262 9,543
2 11,130 639 315 11,454 -0- 298 10,832 (594) 282 10,254
3 11,742 445 326 11,862 -0- 314 11,428 (422) 303 11,018
4 12,388 233 338 12,283 -0- 332 12,057 (224) 326 11,838
5 13,070 -0- -0- 13,070 -0- -0- 13,070 -0- -0- 13,070
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-1
<PAGE> 25
The formulas used in determining the amounts shown in the above tables are as
follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(1) Net Subaccount Value = Subaccount Value
--------------------------------------------------------------------------------
Guaranteed Interest Rate 1 + Current Interest Rate
( ------------------------ ) + ( ---------------------------- ) n/365
2 1 + Guaranteed Interest Rate
</TABLE>
Where "n" is the number of days remaining in the Guaranteed Period of the
subaccount, but not less than 365.
<TABLE>
<S> <C>
Guaranteed Interest Rate
(2) Withdrawal Charge = Net Subaccount Value X --------------------------
2
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1 + Current Interest Rate n/365
(3) Market Value Adjustment = Net Subaccount Value X [ 1 - ( ----------------------------- ) ]
1 + Guaranteed Interest Rate
</TABLE>
Where "n" is the number of days remaining in the Guarantee Period of the
subaccount, but not less than 365.
A-2
<PAGE> 26
REPORTS TO CONTRACT OWNERS. At least once each year prior to the annuity date,
we will send you a report outlining your Certificate Value, Subaccount Values,
Guarantee Periods, Withdrawal Charges and MVAs, if any, applied during the year.
The report will not include financial statements.
DOCUMENTS INCORPORATED BY REFERENCE. Our Annual Report on Form 10K for the year
ended December 31, 1999 is incorporated herein by reference. This prospectus
also incorporates by reference all documents or reports we file pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") after the date of this prospectus and prior to the
termination of this offering. Such documents or reports will be a part of this
prospectus from the date such documents are filed.
REQUESTING DOCUMENTS. You may request a free copy of any or all of the
information incorporated by reference into the prospectus (other than
exhibits not specifically incorporated by reference into the text of such
documents). Please direct any oral or written requests for such documents
to our Service Center at:
P.O. BOX 44222
JACKSONVILLE, FLORIDA 32231-4222
TELEPHONE: 1-800-535-5549 (TOLL FREE)
PUBLIC INFORMATION. We are required to file certain reports pursuant to Section
15(d) of the Exchange Act. We file our Exchange Act documents and reports,
including our annual and quarterly reports on Form 10-K and Form 10-Q,
electronically pursuant to EDGAR under CIK No. 0000845091.
The Securities and Exchange Commission ("SEC") maintains a web site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The address of the site
is http://www.sec.gov.
You can also review and copy any materials filed with the SEC at its Public
Reference Room at 450 Fifth Street, N.W., Washington D.C., 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
<PAGE> 27
PART II
INFORMATION NOT REQUIRED IN A PROSPECTUS
<PAGE> 28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not applicable.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The following provisions regarding the Indemnification of Directors and Officers
of the Registrant are applicable:
AMENDED AND RESTATED BY-LAWS OF MERRILL LYNCH LIFE INSURANCE COMPANY, ARTICLE VI
Sections 1, 2, 3 and 4--Indemnification of Directors, Officers, Employees
and Incorporators
Section 1. Actions Other Than by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that he
is or was a director, officer or employee of the Corporation, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 2. Actions by or in the Right of the Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer or employee of the Corporation, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery or the Court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other Court shall deem proper.
Section 3. Right to Indemnification. To the extent that a director, officer or
employee of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 1 and 2 of
this Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 4. Determination of Right to Indemnification. Any indemnification under
Sections 1 and 2 of this Article (unless ordered by a Court) shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, or employee is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Sections 1 and 2 of this Article. Such determination shall be made (i) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if such a quorum is
not obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders.
II-1
<PAGE> 29
BY-LAWS OF MERRILL LYNCH & CO., INC.
Section 2--Indemnification by Corporation
Any persons serving as an officer, director or trustee of a corporation, trust,
or other enterprise, including the Registrant, at the request of Merrill Lynch
are entitled to indemnification from Merrill Lynch, to the fullest extent
authorized or permitted by law, for liabilities with respect to actions taken or
omitted by such persons in any capacity in which such persons serve Merrill
Lynch or such other corporation, trust, or other enterprise. Any action
initiated by any such person for which indemnification is provided shall be
approved by the Board of Directors of Merrill Lynch prior to such initiation.
DIRECTORS' AND OFFICERS' INSURANCE
Merrill Lynch has purchased from Corporate Officers' and Directors' Assurance
Company directors' and officers' liability insurance policies which cover, in
addition to the indemnification described above, liabilities for which
indemnification is not provided under the By-Laws. The Company will pay an
allocable portion of the insurance premium paid by Merrill Lynch with respect to
such insurance policy.
ARKANSAS BUSINESS CORPORATION LAW
In addition, Section 4-26-814 of the Arkansas Business Corporation Law generally
provides that a corporation has the power to indemnify a director or officer of
the corporation, or a person serving at the request of the corporation as a
director or officer of another corporation or other enterprise against any
judgments, amounts paid in settlement, and reasonably incurred expenses in a
civil or criminal action or proceeding if the director or officer acted in good
faith in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation (or, in the case of a criminal action or
proceeding, if he or she in addition had no reasonable cause to believe that his
or her conduct was unlawful).
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
1(a) Underwriting Agreement Between Merrill Lynch Life Insurance
Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated. (Incorporated by Reference to Registrant's
Form S-1 Registration No. 33-58303, Filed March 29, 1995.)
1(b) Amendment 1 to Underwriting Agreement Between Merrill Lynch
Life Insurance Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated. (Incorporated by Reference to
Registrant's Form S-1 Registration No. 33-58303, Filed March
29, 1995.)
2(a) Merrill Lynch Life Insurance Company Board of Directors
Resolution in Connection With the Merger Between Merrill
Lynch Life Insurance Company and Tandem Insurance Group,
Inc. (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 4 to Form S-1 Registration No.
33-26322, Filed September 5, 1991.)
</TABLE>
II-2
<PAGE> 30
<TABLE>
<S> <C>
2(b) Plan and Agreement of Merger Between Merrill Lynch Life
Insurance Company and Tandem Insurance Group, Inc.
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 4 to Form S-1 Registration No. 33-26322, Filed
September 5, 1991.)
3(a) Articles of Amendment, Restatement and Redomestication of
the Articles of Incorporation of Merrill Lynch Life
Insurance Company (Incorporated by Reference to Merrill
Lynch Life Variable Annuity Separate Account A's
Post-Effective Amendment No. 10 to
Form N-4, Registration No. 33-43773, Filed December 10,
1996.)
3(b) Amended and Restated By-laws of Merrill Lynch Life Insurance
Company (Incorporated by Reference to Merrill Lynch Life
Variable Annuity Separate Account A's Post-Effective
Amendment No. 10 to Form N-4, Registration No. 33-43773,
Filed December 10, 1996.)
4(a)(1) Group Modified Guaranteed Annuity Contract, ML-AY-361
(Incorporated by Reference to Registrant's Pre-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
February 23, 1989.)
4(a)(2) Group Modified Guaranteed Annuity Contract, ML-AY-361/94
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 3 to Form S-1 Registration No. 33-60290, Filed
December 7, 1994.)
4(b)(1) Individual Certificate, ML-AY-362 (Incorporated by Reference
to Registrant's Pre-Effective Amendment No. 1 to Form S-1
Registration No. 33-26322, Filed February 23, 1989.)
4(b)(2) Individual Certificate, ML-AY-362 KS (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 1 to
Form S-1 Registration No. 33-26322, Filed March 9, 1990.)
4(b)(3) Individual Certificate, ML-AY-378 (Incorporated by Reference
to Registrant's Post-Effective Amendment No. 1 to Form S-1
Registration No. 33-26322, Filed March 9, 1990.)
4(b)(4) Individual Certificate, ML-AY-362/94 (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 3 to
Form S-1 Registration No. 33-60290, Filed December 7, 1994.)
4(c)(1) Individual Tax-Sheltered Annuity Certificate, ML-AY-372
(Incorporated by Reference to Registrant's Pre-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
February 23, 1989.)
4(c)(2) Individual Tax-Sheltered Annuity Certificate, ML-AY-372 KS
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
March 9, 1990.)
4(c)(3) Individual Tax-Sheltered Annuity Certificate, ML-AY-372/94
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 3 to Form S-1 Registration No. 33-60290, Filed
December 7, 1994.)
4(d)(1) Qualified Retirement Plan Certificate, ML-AY-373
(Incorporated by Reference to Registrant's Form S-1
Registration No. 33-26322, Filed January 3, 1989.)
4(d)(2) Qualified Retirement Plan Certificate, ML-AY-373 KS
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
March 9, 1990.)
4(d)(3) Qualified Retirement Plan Certificate, ML-AY-373/94
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 3 to Form S-1 Registration No. 33-60290, Filed
December 7, 1994.)
4(e)(1) Individual Retirement Annuity Certificate, ML-AY-374
(Incorporated by Reference to Registrant's Form S-1
Registration No. 33-26322, Filed January 3, 1989.)
4(e)(2) Individual Retirement Annuity Certificate, ML-AY-374 KS
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
March 9, 1990.)
</TABLE>
II-3
<PAGE> 31
<TABLE>
<S> <C>
4(e)(3) Individual Retirement Annuity Certificate, ML-AY-375 KS
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
March 9, 1990.)
4(e)(4) Individual Retirement Annuity Certificate, ML-AY-379
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
March 9, 1990.)
4(e)(5) Individual Retirement Annuity Certificate, ML-AY-374/94
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 3 to Form S-1 Registration No. 33-60290, Filed
December 7, 1994.)
4(f)(1) Individual Retirement Account Certificate, ML-AY-375
(Incorporated by Reference to Registrant's Pre-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
February 23, 1989.)
4(f)(2) Individual Retirement Account Certificate, ML-AY-380
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
March 9, 1990.)
4(f)(3) Individual Retirement Account Certificate, ML-AY-375/94
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 3 to Form S-1 Registration No. 33-60290, Filed
December 7, 1994.)
4(g)(1) Section 457 Deferred Compensation Plan Certificate,
ML-AY-376 (Incorporated by Reference to Registrant's Form
S-1 Registration No. 33-26322, Filed January 3, 1989.)
4(g)(2) Section 457 Deferred Compensation Plan Certificate,
ML-AY-376 KS (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 1 to Form S-1 Registration No.
33-26322, Filed March 9, 1990.)
4(g)(3) Section 457 Deferred Compensation Plan Certificate,
ML-AY-376/94 (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 3 to Form S-1 Registration No.
33-60290, Filed December 7, 1994.)
4(h)(1) Tax-Sheltered Annuity Endorsement, ML-AY-366 (Incorporated
by Reference to Registrant's Form S-1 Registration No.
33-26322, Filed January 3, 1989.)
4(h)(2) Tax-Sheltered Annuity Endorsement, ML-AY-366 190
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
March 9, 1990.)
4(h)(3) Tax-Sheltered Annuity Endorsement, ML-AY-366 1096
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 2 to Form S-1 Registration No. 33-58303, Filed
March 27, 1997.)
4(i)(1) Qualified Retirement Plan Endorsement, ML-AY-364
(Incorporated by Reference to Registrant's Form S-1
Registration No. 33-26322, Filed January 3, 1989.)
4(i)(2) Qualified Retirement Plan Endorsement, ML-AY-364 190.
(Incorporated by Reference to Registrant's Form S-1
Registration No. 33-26322, Filed March 9, 1990.)
4(j)(1) Individual Retirement Annuity Endorsement, ML-AY-368
(Incorporated by Reference to Registrant's Form S-1
Registration No. 33-26322, Filed January 3, 1989.)
4(j)(2) Individual Retirement Annuity Endorsement, ML-AY-368 190
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
March 9, 1990.)
4(j)(3) Individual Retirement Annuity Endorsement, ML009
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-60290, Filed
March 31, 1994.)
4(k)(1) Individual Retirement Account Endorsement, ML-AY-365
(Incorporated by Reference to Registrant's Form S-1
Registration No. 33-26322, Filed January 3, 1989.)
</TABLE>
II-4
<PAGE> 32
<TABLE>
<S> <C>
4(k)(2) Individual Retirement Account Endorsement, ML-AY-365 190
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-26322, Filed
March 9, 1990.)
4(l)(1) Section 457 Deferred Compensation Plan Endorsement,
ML-AY-367 (Incorporated by Reference to Registrant's Form
S-1 Registration No. 33-26322, Filed January 3, 1989.)
4(l)(2) Section 457 Deferred Compensation Plan Endorsement,
ML-AY-367 190 (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 1 to Form S-1 Registration No.
33-26322, Filed March 9, 1990.)
4(m)(1) Qualified Plan Endorsement, ML-AY-369 (Incorporated by
Reference to Registrant's Form S-1 Registration No.
33-26322, Filed January 3, 1989.)
4(m)(2) Qualified Plan Endorsement, ML-AY-448 (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 1 to
Form S-1 Registration No. 33-26322, Filed March 9, 1990.)
4(m)(3) Qualified Plan Endorsement, ML-AY-448/94 (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 3 to
Form S-1 Registration No. 33-60290, Filed December 7, 1994.)
4(n) Application for Group Modified Guaranteed Annuity Contract
(Incorporated by Reference to Registrant's Form S-1
Registration No. 33-26322, Filed January 3, 1989.)
4(o) Application for Individual Certificate Under Modified
Guaranteed Annuity Contract (Incorporated by Reference to
Registrant's Form S-1 Registration No. 33-26322, Filed
January 3, 1989.)
4(p) Form of Company name change endorsement (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 4 to
Form S-1 Registration No. 33-26322, Filed September 5,
1991.)
5 Opinion of Barry G. Skolnick, Esq. and Consent to its use as
to the legality of the securities being registered.
10(a) Management Services Agreement Between Merrill Lynch Life
Insurance Company and Family Life Insurance Company
(Incorporated by Reference to Registrant's Form S-1
Registration No. 33-26322, Filed January 3, 1989.)
10(b) General Agency Agreement Between Merrill Lynch Life
Insurance and Merrill Lynch Life Agency, Inc. (Incorporated
by Reference to Registrant's Pre-Effective Amendment No. 1
to Form S-1 Registration No. 33-26322, Filed February 23,
1989.)
10(c) Amended Service Agreement Between Merrill Lynch Life
Insurance Company and Merrill Lynch Insurance Group, Inc.
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 1 to Form S-1 Registration No. 33-60290, Filed
March 31, 1994.)
10(d) Indemnity Reinsurance Agreement Between Merrill Lynch Life
Insurance Company and Family Life Insurance Group
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 2 to Form S-1 Registration No. 33-26322, Filed
March 13, 1991.)
10(e) Amendment No. 1 to Indemnity Reinsurance Agreement Between
Merrill Lynch Life Insurance Company and Family Life
Insurance Group (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 3 to Form S-1 Registration No.
33-26322, Filed April 24, 1991.)
10(f) Assumption Reinsurance Agreement Between Merrill Lynch Life
Insurance Company, Tandem Insurance Group, Inc. and Royal
Tandem Life Insurance Company and Family Life Insurance
Company (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 4 to Form S-1 Registration No.
33-26322, Filed September 5, 1991.)
10(g) Amended General Agency Agreement Between Merrill Lynch Life
Insurance Company and Merrill Lynch Life Agency Inc.
(Incorporated by Reference to Registrant's Form S-1
Registration No. 33-46827, Filed March 30, 1992.)
</TABLE>
II-5
<PAGE> 33
<TABLE>
<S> <C>
10(h) Indemnity Agreement Between Merrill Lynch Life Insurance
Company and Merrill Lynch Life Agency Inc. (Incorporated by
Reference to Registrant's Form S-1 Registration No.
33-46827, Filed March 30, 1992.)
10(i) Management Agreement Between Merrill Lynch Life Insurance
Company and Merrill Lynch Asset Management, Inc.
(Incorporated by Reference to Registrant's Form S-1
Registration No. 33-46827, Filed March 30, 1992.)
23(a) Written Consent of Sutherland Asbill & Brennan LLP
23(b) Written Consent of Deloitte & Touche LLP, independent
auditors.
24(a) Power of Attorney from Joseph E. Crowne. (Incorporated by
Reference to Registrant's Form S-1 Registration No.
33-58303, Filed March 29, 1995.)
24(b) Power of Attorney from David M. Dunford. (Incorporated by
Reference to Registrant's Form S-1 Registration No.
33-58303, Filed March 29, 1995.)
24(c) Power of Attorney from John C.R. Hele. (Incorporated by
Reference to Registrant's Form S-1 Registration No.
33-58303, Filed March 29, 1995.)
24(d) Power of Attorney from Allen N. Jones. (Incorporated by
Reference to Registrant's Form S-1 Registration No.
33-58303, Filed March 29, 1995.)
24(e) Power of Attorney from Barry G. Skolnick. (Incorporated by
Reference to Registrant's Form S-1 Registration No.
33-58303, Filed March 29, 1995.)
24(f) Power of Attorney from Anthony J. Vespa. (Incorporated by
Reference to Registrant's Form S-1 Registration No.
33-58303, Filed March 29, 1995.)
24(g) Power of Attorney from Gail R. Farkas. (Incorporated by
Reference to Registrant's Form S-1 Registration No.
33-58303, Filed March 26, 1996.)
</TABLE>
II-6
<PAGE> 34
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-7
<PAGE> 35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, and has duly caused this amendment to its
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Plainsboro, State of New Jersey, on this 5th day
of April, 2000.
<TABLE>
<S> <C>
ATTEST: MERRILL LYNCH LIFE INSURANCE COMPANY
(Registrant)
/s/ EDWARD W. DIFFIN, JR. By: /s/ BARRY G. SKOLNICK
- ----------------------------------------------------- ---------------------------------------------------
Edward W. Diffin, Jr. Barry G. Skolnick
Vice President Senior Vice President
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the registration statement has been signed below by the following persons in the
capacities indicated on this 5th day of April, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Chairman of the Board, President, and Chief Executive
- ----------------------------------------------------- Officer
Anthony J. Vespa
* Director, Senior Vice President, Chief Financial
- ----------------------------------------------------- Officer, Chief Actuary, and Treasurer
Joseph E. Crowne, Jr.
* Director, Senior Vice President, and Chief Investment
- ----------------------------------------------------- Officer
David M. Dunford
* Director and Senior Vice President
- -----------------------------------------------------
Gail R. Farkas
*By: /s/ BARRY G. SKOLNICK In his own capacity as Director, Senior Vice
President, and General Counsel and as
- ----------------------------------------------------- Attorney-in-Fact
Barry G. Skolnick
</TABLE>
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<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
------- ----------- ----
<S> <C> <C>
5 Opinion of Barry G. Skolnick, Esq. and Consent to its use as
to the legality of the securities being registered..........
23(a) Written Consent of Sutherland Asbill & Brennan LLP .........
23(b) Written Consent of Deloitte & Touche LLP, independent
auditors....................................................
</TABLE>
<PAGE> 1
EXHIBIT 5
April 5, 2000
[MERRILL LYNCH LIFE INSURANCE COMPANY LETTERHEAD]
Board of Directors
Merrill Lynch Life Insurance Company
425 West Capitol Avenue, Suite 1800
Little Rock, Arkansas 72201
Ladies and Gentlemen:
In my capacity as General Counsel of Merrill Lynch Life Insurance Company
("Company"), I have supervised the preparation of Post-Effective Amendment No. 5
to the registration statement on Form S-3 (File No. 33-58303) for the ASSET I
group modified guaranteed annuity contract ("Contract") to be filed by the
Company with the Securities and Exchange Commission under the Securities Act of
1933.
I am of the following opinion:
(1) The Company was organized in accordance with the laws of the
State of Washington and redomesticated in accordance with the
laws of the State of Arkansas and is a duly authorized stock life
insurance company under the laws of Arkansas and the laws of
those states in which the Company is admitted to do business;
(2) The Company is authorized to issue the Contracts in those states
in which it is admitted and upon compliance with applicable local
law; and
(3) The Contracts, when issued in accordance with the prospectus
contained in the aforesaid registration statement and upon
compliance with applicable local law, will be legal and binding
obligations of the Company in accordance with their terms.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.
I hereby consent to the filing of this opinion as an exhibit to the aforesaid
registration statement and to the reference to me under the caption "Legal
Matters" in the prospectus contained in said registration statement.
Sincerely,
/s/ Barry G. Skolnick
Barry G. Skolnick
Senior Vice President and
General Counsel
<PAGE> 1
EXHIBIT 23(A)
[SUTHERLAND ASBILL & BRENNAN LLP LETTERHEAD]
CONSENT OF SUTHERLAND ASBILL & BRENNAN LLP
We consent to the reference to our firm under the heading "Legal Matters" in the
prospectus included in Post-Effective Amendment No. 5 to the Registration
Statement on Form S-3 (File No. 33-58303) for certain modified guaranteed
annuity contracts issued by Merrill Lynch Life Insurance Company. In giving this
consent, we do not admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933.
SUTHERLAND ASBILL & BRENNAN LLP
By: /s/ KIMBERLY J. SMITH
------------------------------------
Kimberly J. Smith
Washington, D.C.
April 5, 2000
<PAGE> 1
EXHIBIT 23(b)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 5 to Registration
Statement No. 33-58303 of Merrill Lynch Life Insurance Company on Form S-3 of
our report dated February 28, 2000, incorporated by reference in the Prospectus,
which is a part of such Registration Statement, and to the reference to us under
the heading "Experts" in the Prospectus.
/s/ Deloitte & Touche LLP
New York, New York
April 5, 2000
