File Nos. 333-____
811-5716
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. ( )
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ( )
Amendment No. 17 (X)
(Check appropriate box or boxes.)
PREFERRED LIFE VARIABLE ACCOUNT C
--------------------------------------
(Exact Name of Registrant)
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
---------------------------------------------------
(Name of Depositor)
152 West 57th Street, 18th Floor, New York, New York 10019
------------------------------------------------------- ---------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (212) 586-7733
Name and Address of Agent for Service
- --------------------------------------------
Eugene Long
Preferred Life Insurance Company of New York
152 West 57th Street, 18th Floor
New York, New York 10019
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Calculation of Registration Fee under the Securities Act of 1933:
Registrant is registering an indefinite number of securities under the
Securities Act of 1933 pursuant to Investment Company Act Rule 24f-2.
===========================================================================
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
CROSS REFERENCE SHEET
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
PART A
Item 1. Cover Page............................. Cover Page
Item 2. Definitions............................. Index of Terms
Item 3. Synopsis or Highlights................ Profile
Item 4. Condensed Financial Information....... Not Applicable
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies... Preferred Life, The
Separate Account,
Investment Options
Item 6. Deductions.............................. Expenses
Item 7. General Description of Variable
Annuity Contracts...................... The Valuemark IV Variable
and Fixed Annuity Contract
Item 8. Annuity Period......................... Annuity Payments
(The Income Phase)
Item 9. Death Benefit.......................... Death Benefit
Item 10. Purchases and Contract Value.......... Purchase
Item 11. Redemptions.............................. Access to Your Money
Item 12. Taxes.................................... Taxes
Item 13. Legal Proceedings....................... None
Item 14. Table of Contents of the Statement of
Additional Information.................. Table of Contents of the
Statement of Additional
Information
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
PART B
Item 15. Cover Page.............................. Cover Page
Item 16. Table of Contents....................... Table of Contents
Item 17. General Information and History........ Insurance Company
Item 18. Services.................................. Not Applicable
Item 19. Purchase of Securities Being Offered.. Not Applicable
Item 20. Underwriters.............................. Distributor
Item 21. Calculation of Performance Data........ Calculation of
Performance Data
Item 22. Annuity Payments......................... Annuity Provisions
Item 23. Financial Statements..................... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item so numbered, in Part C to this Registration Statement.
PROFILE OF THE VALUEMARK IV VARIABLE ANNUITY CONTRACT
_____________ , 1997
This Profile is a summary of some of the more important points that you should
consider and know before purchasing the Valuemark IV Variable Annuity
Contract. The Contract is more fully described in the prospectus which
accompanies this Profile. Please read the prospectus carefully.
1. THE VALUEMARK IV VARIABLE ANNUITY CONTRACT. The variable annuity contract
with a fixed account option offered by Preferred Life is a contract between
you, the owner, and Preferred Life Insurance Company of New York (Preferred
Life), an insurance company. The Contract provides a means for investing on a
tax-deferred basis in 23 funds of the Franklin Valuemark Funds, a series fund,
and a fixed account of Preferred Life. The Contract is intended for retirement
savings or other long-term investment purposes and provides for a death
benefit and guaranteed annuity income options.
The Contract has 24 investment options. There are 23 funds which are managed
by professional money managers. A list of the available funds is contained in
Section 4. Depending upon market conditions, you can make or lose money in the
funds.
The fixed account offers an interest rate that is guaranteed by Preferred
Life. The interest rate is set monthly and is guaranteed for 12 months. While
your money is in the fixed account, the interest your money will earn as well
as your principal is guaranteed by Preferred Life.
Preferred Life reserves the right to limit the number of funds which you may
invest in at any one time (now or in the future). Currently, you can put your
money in 10 investment options (which includes any of the 23 funds listed in
Section 4 and the Preferred Life fixed account).
Like all deferred annuity contracts, your Contract has two phases: the
accumulation phase and the income phase. During the accumulation phase, your
earnings accumulate on a tax-deferred basis and are based on the investment
performance of the fund(s) you selected and/or the interest rate earned on the
money you have in the fixed account. During the accumulation phase, the
earnings are taxed as income only when you make a withdrawal. The income
phase occurs when you begin receiving regular payments from your Contract. The
amount of the payments you may receive during the income phase depends in part
upon the amount of money you are able to accumulate in your Contract during
the accumulation phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE). You can receive monthly annuity
payments from your Contract by selecting one of the following annuity options
(all of these options assume you are the owner and the annuitant): (1)
payments for your life; (2) payments for your life, but if you die before
payments have been made for the guaranteed period you selected, payments will
continue for the remainder of the guaranteed period (5,10, 15 or 20 years);
(3) payments during the joint lifetime of you and the joint annuitant - when
either of you die, payments will continue as long as the survivor lives; (4)
payments during the joint lifetime of you and the joint annuitant, but if you
or the joint annuitant die before payments have been made for the guaranteed
period you selected, payments will continue for the remainder of the
guaranteed period (5, 10, 15 or 20 years); and (5) payments during your life
ending with the last payment due prior to your death with a guarantee that at
your death Preferred Life will make a refund to your beneficiary. Once you
begin receiving regular payments, you cannot change your annuity option or
surrender your contract.
During the income phase, you have the same investment choices you had during
the accumulation phase. You can choose to have payments come from the fixed
account, the funds or both. If you choose to have any part of your payments
come from the funds, the dollar amount of your annuity payments may go up or
down, depending on the investment performance.
3. PURCHASE. You can buy the Contract with $5,000 or more under most
circumstances. You can add $250 or more any time you like during the
accumulation phase. You and the annuitant cannot be older than 85 years old
at the time you buy the Contract.
4.INVESTMENT OPTIONS. You may invest in the Preferred Life fixed account or
the following funds of Franklin Valuemark Funds:
FUND SEEKING STABILITY OF PRINCIPAL AND INCOME:
Money Market
FUNDS SEEKING CURRENT INCOME:
High Income
Templeton Global Income Securities
The U.S. Government Securities
Zero Coupon - 2000, 2005 and 2010
FUNDS SEEKING GROWTH AND INCOME:
Growth and Income
Income Securities
Mutual Shares Securities
Real Estate Securities
Rising Dividends
Templeton Global Asset Allocation
Utility Equity
FUNDS SEEKING CAPITAL GROWTH:
Capital Growth
Mutual Discovery Securities
Precious Metals
Small Cap
Templeton Developing Markets Equity
Templeton Global Growth
Templeton International Equity
Templeton International Smaller Companies
Templeton Pacific Growth
The funds are fully described in the attached prospectus for Franklin
Valuemark Funds. You can make or lose money in the funds, depending upon
market conditions.
5. EXPENSES. The Contract has insurance features and investment features,
and there are costs related to each.
The annual insurance charges total 1.49% of the average daily value of your
Contract allocated to the funds during the accumulation period (1.40% during
the income phase). Each year Preferred Life deducts a $30 contract
maintenance charge from your Contract. Preferred Life currently waives this
charge if the cumulative value of all your Valuemark IV Contracts (registered
with the same social security number) are at least $50,000. There are also
annual fund charges which range from .40% to 1.41% of the average daily value
of the funds depending upon the fund(s) you invest in.
You can transfer between accounts up to 12 times a year without charge. After
12 transfers, the charge is $25 or 2% of the amount transferred, whichever is
less.
If you make a withdrawal from the Contract, Preferred Life may assess a
contingent deferred sales charge (withdrawal charge). The amount of the charge
depends upon how long Preferred Life has had your payment. The charge is:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of complete years from receipt 0 1 2 3 4 5 6 7 or more
Contingent deferred sales charge
(as a percentage of purchase payments) 6% 6% 6% 5% 4% 3% 2% 0%
</TABLE>
Under certain circumstances, after the first year, Preferred Life will permit
you to access your money in the contract without deducting a contingent
deferred sales charge: 1) if you become terminally ill; or 2) if you become
disabled. Also, if you are unemployed for at least 90 days, you can take up
to 50% of your money out without incurring a contingent deferred sales charge.
The State of New York does not impose a premium tax on purchase payments for
annuities.
We have provided the following chart to help you understand the charges in
your Contract. The column "Total Annual Charges" shows the total of the $30
contract maintenance charge (which is represented as .10% below), the 1.49%
insurance charges and the total annual fund charges for each fund. The next
two columns show you two examples of the charges, in dollars, you would pay
under a Contract. The examples assume that you invested $1,000 in a Contract
which earns 5% annually and that you withdraw your money: (1) at the end of
year 1, and (2) at the end of year 10. For year 1, the Total Annual Charges
are assessed as well as the contingent deferred sales charge. For year 10, the
Total Annual Charges are assessed but no contingent deferred sales charge is
deducted. The premium tax is assumed to be 0% in both examples. These are just
examples. Future expenses may be higher or lower than those shown.
EXAMPLES:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Total Total Total Expenses Expenses
Insurance Annual Fund Annual at end of at end of
Fund Charges Charges Charges 1 Year 10 Years
- ----------------------------------- ---------- ------------ -------- ---------- ----------
Money Market 1.59% .53% 2.12% $ 82 $ 245
High Income 1.59% .56% 2.15% $ 82 $ 248
Templeton Global Income Securities 1.59% .64% 2.23% $ 83 $ 256
The U.S. Government Securities 1.59% .52% 2.11% $ 81 $ 244
Zero Coupon 2000 1.59% .40% 1.99% $ 80 $ 231
Zero Coupon 2005 1.59% .40% 1.99% $ 80 $ 231
Zero Coupon 2010 1.59% .40% 1.99% $ 80 $ 231
Growth and Income 1.59% .52% 2.11% $ 81 $ 244
Income Securities 1.59% .51% 2.10% $ 81 $ 243
Mutual Shares Securities 1.59% .85% 2.44% $ 85 $ 278
Real Estate Securities 1.59% .59% 2.18% $ 82 $ 251
Rising Dividends 1.59% .78% 2.37 $ 84 $ 271
Templeton Global Asset Allocation 1.59% .90% 2.49% $ 85 $ 283
Utility Equity 1.59% .50% 2.09% $ 81 $ 242
Capital Growth 1.59% .79% 2.38% $ 84 $ 272
Mutual Discovery Securities 1.59% 1.05% 2.64% $ 87 $ 298
Precious Metals 1.59% .66% 2.25% $ 83 $ 258
Small Cap 1.59% .90% 2.49% $ 85 $ 283
Templeton Developing Markets Equity 1.59% 1.41% 3.00% $ 90 $ 332
Templeton Global Growth 1.59% .97% 2.56% $ 86 $ 290
Templeton International Equity 1.59% .92% 2.51% $ 85 $ 285
Templeton International Smaller
Companies 1.59% 1.10% 2.69% $ 87 $ 302
Templeton Pacific Growth 1.59% 1.01% 2.60% $ 86 $ 294
</TABLE>
The charges for the newly formed funds have been estimated. The charges for
some of the funds reflect expense reimbursement and/or fee waiver
arrangements. For more detailed information, see the Fee Table in the
prospectus for the Contract.
6. TAXES. Your earnings are not taxed until you take them out. In most cases,
if you take money out, earnings come out first and are taxed as income. If you
are younger than 59 when you take money out, you may be charged a 10%
federal tax penalty on the taxable amounts withdrawn. Payments during the
income phase are considered partly a return of your original investment. That
part of each payment is not taxable as income. If the contract is
tax-qualified, the entire payment may be taxable.
7. ACCESS TO YOUR MONEY. You may make a withdrawal at any time during the
accumulation phase. Any partial withdrawal must be for at least $50. You may
request a withdrawal in writing or by electing the Systematic Withdrawal
Program or Minimum Distribution Program which are briefly described in Section
10 of this Profile. After the first year, you can make multiple withdrawals up
to a total of 15% of the value of your Contract each year without charge from
Preferred Life. Withdrawals in excess of that amount will be subject to a
contingent deferred sales charge. After Preferred Life has had a payment for
7 years, there is no charge for withdrawals. Each purchase payment you add to
your Contract has its own 7 year charge period. Of course, you may also have
to pay income tax and a tax penalty on any money you take out.
8. PERFORMANCE OF THE FUNDS. The value of the Contract will vary up or down
depending upon the performance of the fund(s) you choose. From time to time,
Preferred Life may advertise total return figures for each fund. As of the
date of this prospectus, the sale of the Contracts has not begun. Therefore,
no performance is presented here.
9. DEATH BENEFIT. If you die during the accumulation phase, the person you
have selected as your beneficiary will receive a death benefit. This death
benefit will be the greater of: 1) the current value of your Contract, less
any taxes, on the day all claims proofs and payment election forms are
received by Preferred Life at the Valuemark Service Center; or 2) (if
applicable) the guaranteed minimum death benefit, less any taxes, as of the
day you die. The guaranteed minimum death benefit as of the date of death is
the greater of: A) payments you have made, less any money you have taken out
and charges paid on the money you have taken out; or B) the highest value of
the contract on each contract anniversary prior to the owner's 76th birthday,
increased by any payments made since that anniversary, less any money taken
out and charges paid on the money you have taken out since that anniversary.
10. OTHER INFORMATION.
Free Look. If you cancel the Contract within 10 days after receiving it
(or whatever period is required in your state), we will send your money back
without assessing a contingent deferred sales charge. You will receive
whatever your Contract is worth on the day we receive your request. This may
be more or less than your original payment.
No Probate. In most cases, when you die, your beneficiary will receive
the death benefit without going through probate.
Who should purchase the Contract? The Valuemark IV Variable Annuity
Contract is designed for people seeking long-term tax-deferred accumulation of
assets, generally for retirement or other long-term purposes. The
tax-deferred feature is most attractive to people in high federal and state
tax brackets. You should not buy this Contract if you are looking for a
short-term investment or if you cannot take the risk of getting back less
money than you put in.
Additional Features. The Contract offers additional features which you
might be interested in. These include:
Automatic Investment Plan - You can automatically add to your Contract on
a monthly or quarterly basis for as little as $100 by electronic transfer of
funds from your savings or checking account.
Dollar Cost Averaging - You can arrange to have a regular amount of
money automatically transferred to selected funds each month, theoretically
giving you a lower average cost per unit over time than a single one time
purchase. However, there are no guarantees that this will take place.
Flexible Rebalancing - Preferred Life will automatically readjust your
money among the funds to maintain your specified allocation mix. This can be
done quarterly, semi-annually or annually.
Systematic Withdrawal Program - You can elect to receive monthly or
quarterly payments from Preferred Life while your Contract is in the
accumulation phase. Of course, you may have to pay taxes on the money you
receive.
Minimum Distribution Program - You can arrange to have money sent to you
each month or quarter to meet certain required distribution requirements
imposed by the Internal Revenue Code.
These features may not be suitable for your particular situation.
11. INQUIRIES. If you have any questions about your Contract or need more
information, please contact us at:
Valuemark Service Center
300 Berwyn Park
P.O. Box 3031
Berwyn, PA 19312-0031
(800) 624-0197
THE VALUEMARK IV VARIABLE ANNUITY CONTRACT
ISSUED BY
PREFERRED LIFE VARIABLE ACCOUNT C
AND
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
This prospectus describes the Valuemark IV Variable Annuity Contract with a
fixed account option offered by Preferred Life Insurance Company of New York
(Preferred Life).
The annuity has 24 investment options - the 23 funds of Franklin Valuemark
Funds which are listed below and a fixed account option of Preferred Life.
You can put your money in 10 investment options (which includes any of the
funds listed below and the fixed account).
FUND SEEKING STABILITY OF PRINCIPAL AND INCOME
Money Market
FUNDS SEEKING CURRENT INCOME
High Income
Templeton Global Income Securities
The U.S. Government Securities
Zero Coupon - 2000, 2005 and 2010
FUNDS SEEKING GROWTH AND INCOME
Growth and Income
Income Securities
Mutual Shares Securities
Real Estate Securities
Rising Dividends
Templeton Global Asset Allocation
Utility Equity
FUNDS SEEKING CAPITAL GROWTH
Capital Growth
Mutual Discovery Securities
Precious Metals
Small Cap
Templeton Developing Markets Equity
Templeton Global Growth
Templeton International Equity
Templeton International Smaller Companies
Templeton Pacific Growth
Please read this prospectus before investing and keep it for future reference.
It contains important information about the Valuemark IV Variable Annuity
Contract with a fixed account option.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information (SAI) dated _______, 1997.
The SAI has been filed with the Securities and Exchange Commission (SEC) and
is incorporated by reference into this prospectus. The Table of Contents of
the SAI is on Page __ of this prospectus. For a free copy of the SAI, call us
at (800) 342-3863 or write us at: 1750 Hennepin Avenue, Minneapolis, Minnesota
55403-2195.
INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT TO RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
________________, 1997
TABLE OF CONTENTS
PAGE
INDEX OF TERMS
FEE TABLE
1. THE VALUEMARK IV VARIABLE ANNUITY CONTRACT
Contract Owner
Joint Owner
Annuitant
Beneficiary
Assignment
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Annuity Options
3. PURCHASE
Purchase Payments
Automatic Investment Plan
Allocation of Purchase Payments
Free Look
Accumulation Units
4. INVESTMENT OPTIONS
Transfers
Dollar Cost Averaging Program
Flexible Rebalancing
Voting Rights
Substitution
5. EXPENSES
Insurance Charges
Mortality and Expense Risk Charge
Administrative Charge
Contract Maintenance Charge
Contingent Deferred Sales Charge
Waiver of Contingent Deferred Sales Charge Benefits
Reduction or Elimination of the Contingent Deferred Sales Charge
Transfer Fee
Income Taxes
Fund Expenses
6. TAXES
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Withdrawals - Tax-Sheltered Annuities
Diversification
7. ACCESS TO YOUR MONEY
Systematic Withdrawal Program
Minimum Distribution Program
Suspension of Payments or Transfers
8. PERFORMANCE
9. DEATH BENEFIT
Upon Your Death
Death of Annuitant
10. OTHER INFORMATION
Preferred Life
The Separate Account
Distribution
Administration
Financial Statements
APPENDIX
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
INDEX OF TERMS
We have tried to make this prospectus as understandable for you as possible.
Below is a list of some of the technical terms used in this prospectus. They
are identified in the prospectus as capitalized terms. The page that is
indicated below is where you will find the definition for the word or term.
Page
Accumulation Phase.......................................................
Accumulation Unit........................................................
Annuitant................................................................
Annuity Options..........................................................
Annuity Payments.........................................................
Annuity Unit.............................................................
Beneficiary..............................................................
Contract Owner...........................................................
Fixed Account............................................................
Funds....................................................................
Income Date..............................................................
Income Phase.............................................................
Joint Owner..............................................................
Non-Qualified............................................................
Purchase Payment.........................................................
Qualified................................................................
Tax Deferral.............................................................
FEE TABLE
Contract Owner Transaction Fees
Contingent Deferred Sales Charge*
(as a percentage of purchase payments)
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Complete Years From Receipt Charge
---------------------------------------- -------
0 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 years or more 0%
Transfer Fee First 12 transfers in a Contract year
are free. Thereafter, the fee is $25
(or 2% of the amount transferred, if
less). Dollar Cost Averaging transfers
and Flexible Rebalancing transfers are
not counted.
Contract Maintenance Charge** 30 per Contract per year
Separate Account Annual Expenses
(as a percentage of average
account value)
Mortality and Expense Risk Charge***
1.34%
Administrative Charge .15%
-----
Total Separate Account Annual Expenses 1.49%
<FN>
* Each year after the first contract year, you may make multiple partial withdrawals of
up to a total of 15% of the value of your contract and no contingent deferred sales charge
will be assessed. See Section 7 - Access to Your Money for additional options.
** During the accumulation phase, the charge is waived if the value of your contract is at
least $50,000. If you own more than one Valuemark IV Contract (registered with the same
social security number), we will determine the total value of all your contracts. If the
total value of all your contracts is at least $50,000, the charge is waived.
*** The Mortality and Expense Risk Charge is 1.25% during the income phase.
</TABLE>
FRANKLIN VALUEMARK FUNDS' ANNUAL EXPENSES
(as a percentage of Franklin Valuemark Funds' average net assets)
The Management Fees for each fund are based on a percentage of that fund's
assets under management. See the prospectus for Franklin Valuemark Funds for
more information.
The "Management and Fund Administration Fees" below are the amounts that were
paid to the Managers and Fund Administrators for the 1995 calendar year except
for funds with fee waivers/expense reductions or newer funds without a full
year of operations as of December 31, 1995.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Other
and Fund Expenses Total
Administration (after expense Annual
Fees(1/) reductions) Expenses
Money Market Fund (2/) .51% .02% .53%
High Income Fund .53% .03% .56%
Templeton Global Income
Securities Fund (3/) .55% .09% .64%
The U.S. Government Securities Fund .49% .03% .52%
Zero Coupon Fund-2000 (4/) .37% .03% .40%
Zero Coupon Fund-2005 (4/) .37% .03% .40%
Zero Coupon Fund-2010 (4/) .37% .03% .40%
Growth and Income Fund .49% .03% .52%
Income Securities Fund .47% .04% .51%
Mutual Shares Securities Fund (5/) .75% .10% .85%
Real Estate Securities Fund .56% .03% .59%
Rising Dividends Fund .75% .03% .78%
Templeton Global Asset Allocation Fund (5/) .80% .10% .90%
Utility Equity Fund .47% .03% .50%
Capital Growth Fund (5/) .75% .04% .79%
Mutual Discovery Securities Fund (5/) .95% .10% 1.05%
Precious Metals Fund .61% .05% .66%
Small Cap Fund (5/) .75% .15% .90%
Templeton Developing Markets Equity Fund 1.25% .16% 1.41%
Templeton Global Growth Fund .93% .04% .97%
Templeton International Equity Fund .83% .09% .92%
Templeton International Smaller Companies
Fund (5/) 1.00% .10% 1.10%
Templeton Pacific Growth Fund .90% .11% 1.01%
<FN>
1/ The Fund Administration Fee is a direct expense for the Templeton Global Asset
Allocation Fund, the Templeton International Smaller Companies Fund, the Mutual
Discovery Securities Fund and the Mutual Shares Securities Fund; other funds pay for
similar services indirectly through the Management Fee. See the Franklin Valuemark Funds
prospectus for further information regarding these fees.
2/ Franklin Advisers, Inc. agreed to waive a portion of its Management Fee and to
pay certain expenses of the Money Market Fund during 1995. It is currently continuing
this arrangement in 1996. This arrangement may be terminated at any time. With this
reduction, the fund's total annual expenses for 1995 were 0.40% of the average daily net
assets of the fund.
3/ Prior to May 1, 1996, the Templeton Global Income Securities Fund was known as
the Global Income Fund.
4/ Although not obligated to, Franklin Advisers, Inc. has agreed to waive a portion
of its Management Fees and to pay certain expenses of the three Zero Coupon Funds
through at least December 31, 1996 so that the total expenses of the Zero Coupon Funds
will not exceed 0.40% of each fund's net assets. Absent the management fee waivers and
expense payments, for the year ended December 31, 1995, the Total Annual Expenses and
Management and Fund Administration Fees would have been as follows: Zero Coupon
Fund-2000, .63% and .60%; Zero Coupon Fund-2005, .66% and .63%; and Zero Coupon Fund-
2010, .66% and .63%.
5/ The Templeton Global Asset Allocation Fund began operations on May 1, 1995; the
Small Cap Fund began operations on November 1, 1995; the Capital Growth and Templeton
International Smaller Companies Funds began operations on May 1, 1996; and the Mutual
Shares Securities and Mutual Discovery Securities Funds began operations on November 8,
1996. The expenses shown above for these funds are therefore estimated for 1996.
</TABLE>
The purpose of this Fee Table is to show you the expenses you will incur
directly or indirectly with the contract. The Fee Table reflects expenses of
the Separate Account as well as the funds. The examples below should not be
considered a representation of past or future expenses. Actual expenses may be
greater or less than those shown. The $30 contract maintenance charge is
included in the Examples as a prorated charge of $1. Since the average
contract account size is greater than $1,000, the contract maintenance charge
is reduced accordingly. Premium taxes are not reflected in the Tables.
Premium taxes may apply. For additional information, see Section 5 - Expenses
and the Franklin Valuemark Funds prospectus.
EXAMPLES
You will pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if you surrender your Contract at the end of each
time period:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 3 5 10
Year Years Years Years
Money Market Fund $ 82 $ 117 $ 148 $ 245
High Income Fund $ 82 $ 118 $ 149 $ 248
Templeton Global Income Securities Fund $ 83 $ 121 $ 153 $ 256
The U.S. Government Securities Fund $ 81 $ 117 $ 147 $ 244
Zero Coupon Fund-2000# $ 80 $ 113 $ 141 $ 231
Zero Coupon Fund-2005# $ 80 $ 113 $ 141 $ 231
Zero Coupon Fund-2010# $ 80 $ 113 $ 141 $ 231
Growth and Income Fund $ 81 $ 117 $ 147 $ 244
Income Securities Fund $ 81 $ 117 $ 147 $ 243
Mutual Shares Securities Fund * $ 85 $ 127
Real Estate Securities Fund $ 82 $ 119 $ 151 $ 251
Rising Dividends Fund $ 84 $ 125 $ 161 $ 271
Templeton Global Asset Allocation Fund* $ 85 $ 129 $ 167 $ 283
Utility Equity Fund $ 81 $ 116 $ 146 $ 242
Capital Growth Fund* $ 84 $ 125 $ 161 $ 272
Mutual Discovery Securities * $ 87 $ 133
Precious Metals Fund $ 83 $ 121 $ 154 $ 258
Small Cap Fund** $ 85 $ 129 $ 167 $ 283
Templeton Developing Markets Equity Fund $ 90 $ 144 $ 192 $ 332
Templeton Global Growth Fund $ 86 $ 131 $ 170 $ 290
Templeton International Equity Fund $ 85 $ 129 $ 168 $ 285
Templeton International Smaller Companies
Fund* $ 87 $ 135 $ 177 $ 302
Templeton Pacific Growth Fund $ 86 $ 132 $ 172 $ 294
</TABLE>
* Estimated
# Calculated with waiver of fees and reimbursement of expenses
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if your contract is not surrendered or is
annuitized:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 3 5 10
Year Years Years Years
Money Market Fund $ 22 $ 66 $ 114 $ 245
High Income Fund $ 22 $ 67 $ 115 $ 248
Templeton Global Income Securities Fund $ 23 $ 70 $ 119 $ 256
The U.S. Government Securities Fund $ 22 $ 66 $ 113 $ 244
Zero Coupon Fund-2000# $ 20 $ 62 $ 107 $ 231
Zero Coupon Fund-2005# $ 20 $ 62 $ 107 $ 231
Zero Coupon Fund-2010# $ 20 $ 62 $ 107 $ 231
Growth and Income Fund $ 21 $ 66 $ 113 $ 244
Income Securities Fund $ 21 $ 66 $ 113 $ 243
Mutual Shares Securities Fund* $ 25 $ 76
Real Estate Securities Fund $ 22 $ 68 $ 117 $ 251
Rising Dividends Fund $ 24 $ 74 $ 127 $ 271
Templeton Global Asset Allocation Fund* $ 25 $ 78 $ 133 $ 283
Utility Equity Fund $ 21 $ 65 $ 112 $ 242
Capital Growth Fund* $ 24 $ 74 $ 127 $ 272
Mutual Discovery Securities Fund* $ 27 $ 82
Precious Metals Fund $ 23 $ 70 $ 120 $ 258
Small Cap Fund* $ 25 $ 78 $ 133 $ 283
Templeton Developing Markets Equity Fund $ 30 $ 93 $ 158 $ 332
Templeton Global Growth Fund $ 26 $ 80 $ 136 $ 290
Templeton International Equity Fund $ 25 $ 78 $ 134 $ 285
Templeton International Smaller Companies
Fund* $ 27 $ 84 $ 143 $ 302
Templeton Pacific Growth Fund $ 26 $ 81 $ 138 $ 294
</TABLE>
* Estimated
# Calculated with waiver of fees and reimbursement of other expenses
As of the date of this prospectus, no contracts have been sold. Therefore,
Allianz Life has not provided Condensed Financial Information.
1. THE VALUEMARK IV VARIABLE ANNUITY CONTRACT
This prospectus describes a variable annuity contract with a fixed account
option offered by Preferred Life.
An annuity is a contract between you, the owner, and an insurance company (in
this case Preferred Life), where the insurance company promises to pay you (or
someone else you choose) an income, in the form of annuity payments, beginning
on a designated date that is at least two years in the future. Until you
decide to begin receiving annuity payments, your annuity is in the
accumulation phase. Once you begin receiving annuity payments, your contract
switches to the income phase. The contract benefits from tax deferral.
Tax deferral means that you are not taxed on earnings or appreciation on the
assets in your contract until you take money out of your contract.
The contract is called a variable annuity because you can choose among 23
funds. Depending upon market conditions, you can make or lose money in any of
these funds. If you select the variable annuity portion of the contract, the
amount of money you are able to accumulate in your contract during the
accumulation phase depends in part upon the investment performance of the
fund(s) you select. The amount of the annuity payments you receive during the
income phase from the variable annuity portion of the contract also depends
upon the investment performance of the funds you select for the income phase.
The contract also contains a fixed account. The fixed account offers an
interest rate that is guaranteed for all deposits made within the twelve month
period by Preferred Life. This interest rate is set monthly and is guaranteed
for 12 months. Preferred Life guarantees that the interest credited to the
fixed account will not be less than 3% per year. If you select the fixed
account, your money will be placed with the other general assets of Preferred
Life. If you select the fixed account, the amount of money you are able to
accumulate in your contract during the accumulation phase depends upon the
total interest credited to your contract.
We will not make any changes to your contract without your permission except
as may be required by law.
CONTRACT OWNER . You as the contract owner, have all the rights under the
contract. The contract owner is as designated at the time the contract is
issued, unless changed. You may change contract owners at any time. This may
be a taxable event. You should consult with your tax adviser before doing
this.
JOINT OWNER . The contract can be owned by joint owners. Any joint owner
must be the spouse of the other contract owner (except in Pennsylvania and
Oregon). Upon the death of either joint owner, the surviving spouse will be
the designated beneficiary. Any other beneficiary designation at the time the
contract was issued or as may have been later changed will be treated as a
contingent beneficiary unless otherwise indicated.
ANNUITANT . You name an annuitant. You may change the annuitant at any time
before the income date unless the contract is owned by a non-individual (for
example, a corporation).
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued unless
changed at a later date. Unless an irrevocable beneficiary has been named,
you can change the beneficiary or contingent beneficiary.
ASSIGNMENT
You can assign the contract at any time during your lifetime. Preferred Life
will not be bound by the assignment until it receives the written notice of
the assignment. Preferred Life will not be liable for any payment or other
action we take in accordance with the contract before we receive notice of the
assignment. Any assignment made after the death benefit has become payable
can only be done with our consent. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
If the contract is issued pursuant to a qualified plan, there may be
limitations on your ability to assign the contract.
2. ANNUITY PAYMENTS (THE INCOME PHASE)
You can receive regular monthly income payments under your contract. You can
choose the month and year in which those payments begin. We call that date the
income date. Your income date must be the first day of a calendar month and
must be at least 2 years after you buy the contract. You can also choose among
income plans. We call those annuity options.
We ask you to choose your income date when you purchase the contract. You can
change it at any time before the income date with 30 days notice to us.
Annuity payments must begin by the annuitant's 90th birthday. The annuitant is
the person whose life we look to when we make annuity payments. You (or
someone you designate) will receive the annuity payments. You will receive
tax reporting on those payments.
If you do not choose an annuity option at the time you purchase the contract,
we will assume that you selected Option 2 which provides a life annuity with
10 years of guaranteed payments.
You may elect to receive your annuity payments as a variable payout, a fixed
payout, or a combination of both. Under a fixed payout, all of the annuity
payments will be the same dollar amount (equal installments). Under a
variable payout, you have the same investment choices you had during the
accumulation phase. If you do not tell us otherwise, your annuity payments
will be based on the investment allocations that were in place on the income
date.
If you choose to have any portion of your annuity payments come from the
fund(s), the dollar amount of your payment will depend upon three things: 1)
the value of your contract in the fund(s) on the income date, 2) the 5%
assumed investment rate used in the annuity table for the contract, and 3) the
performance of the fund(s) you selected. If the actual performance exceeds the
5% assumed rate, your annuity payments will increase. Similarly, if the actual
rate is less than 5%, your annuity payments will decrease.
Annuity Options
You can choose one of the following annuity options or any other annuity
option you want and that Preferred Life agrees to provide. After annuity
payments begin, you cannot change the annuity option.
OPTION 1. LIFE ANNUITY. Under this option, we will make monthly annuity
payments so long as the annuitant is alive. After the annuitant dies, we stop
making annuity payments.
OPTION 2. LIFE ANNUITY WITH 5, 10, 15 or 20 YEAR PAYMENTS GUARANTEED. Under
this option, we will make monthly annuity payments so long as the annuitant is
alive. However, if, when the annuitant dies, we have made annuity payments for
less than the selected guaranteed period, we will continue to make annuity
payments to you for the rest of the guaranteed period. If you do not want to
receive annuity payments, you can ask us for a single lump sum.
OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. Under this option, we will make
monthly annuity payments during the joint lifetime of the annuitant and the
joint annuitant. When the annuitant dies, if the joint annuitant is still
alive, we will continue to make annuity payments, so long as the joint
annuitant continues to live. The amount of the annuity payments we will make
to the survivor can be equal to 100%, 75% or 50% of the amount that we would
have paid if they both were alive. The monthly annuity payments will end when
the last surviving annuitant dies.
OPTION 4. JOINT AND LAST SURVIVOR ANNUITY WITH 5, 10, 15 or 20 YEAR PAYMENTS
GUARANTEED. Under this option, we will make monthly annuity payments during
the joint lifetime of the annuitant and the joint annuitant. When the
annuitant dies, if the joint annuitant is still alive, we will continue to
make annuity payments, so long as the surviving annuitant continues to live,
at 100% of the amount that would have been paid if they were both alive. If,
when the last death occurs, we have made annuity payments for less than the
selected guaranteed period, we will continue to make annuity payments to you
or any person you designate for rest of the guaranteed period. If you do not
want to receive annuity payments, you can ask us for a single lump sum.
OPTION 5. REFUND LIFE ANNUITY. Under this option, we will make monthly annuity
payments during the annuitant's lifetime. The last annuity payment will be
made before the annuitant dies with a guarantee that Preferred Life will pay
you a refund if the amount (units) annuitized has not been repaid.
3. PURCHASE
PURCHASE PAYMENTS
A purchase payment is the money you invest in the contract. The minimum
payment Preferred Life will accept is $5,000 when the contract is bought as a
non-qualified contract. If you enroll in the automatic investment plan (which
is described below), your purchase payment can be $2,000. If you are buying
the contract as part of an IRA (Individual Retirement Annuity), 401(k) or
other qualified plan, the minimum amount we will accept is $2,000. The maximum
we will accept without our prior approval is $1 million. You can make
additional purchase payments of $250 (or as low as $100 if you have selected
the automatic investment plan) or more to either type of contract. At the
time you buy the contract, you and the annuitant cannot be older than 85 years
old.
AUTOMATIC INVESTMENT PLAN
The Automatic Investment Plan (AIP) is a program which allows you to make
additional purchase payments to your contract on a monthly or quarterly basis
by electronic transfer of funds from your savings or checking account. You may
participate in this program by completing the appropriate form. We must
receive your form by the first of the month in order for AIP to begin that
same month. Investments will take place on the 20th of the month, or the next
business day. The minimum investment that can be made by AIP is $100. You may
stop AIP at any time you want. We need to be notified by the first of the
month in order to stop or change AIP that month. If AIP is used for a
qualified contract, you should consult your tax adviser for advice regarding
maximum contributions.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment to the
fixed account and/or one or more of the funds you have selected. We ask that
you allocate your money in either whole percentages or round dollars. You can
instruct us how to allocate additional purchase payments you make. If you do
not instruct us, we will allocate them in the same way as your previous
instructions to us. Preferred Life reserves the right to limit the number of
funds that you may invest in at one time. Currently, you may invest in 10
investment options at one time (which includes any of the 23 funds of Franklin
Valuemark Funds listed in Section 4 and the Preferred Life fixed account). We
may change this in the future. However, we will always allow you to invest in
at least five funds.
Once we receive your purchase payment, the necessary information and federal
funds (federal funds means monies credited to a bank's account with its
regional federal reserve bank), we will issue your contract and allocate your
first purchase payment within 2 business days. If you do not give us all of
the information we need, we will contact you to get it. If for some reason we
are unable to complete this process within 5 business days, we will either
send back your money or get your permission to keep it until we get all of the
necessary information. If you make additional purchase payments, we will
credit these amounts to your contract within one business day. Our business
day closes when the New York Stock Exchange closes, which is usually at 4:00
p.m. Eastern time.
FREE LOOK
If you change your mind about owning the contract, you can cancel it within 10
days after receiving it. Return of the contract by mail is effective on being
postmarked, properly addressed and postage prepaid. When you cancel the
contract within this time period, Preferred Life will not assess a contingent
deferred sales charge. You will receive back whatever your contract is worth
on the day we receive your request. If you have purchased the contract as an
IRA, we are required to give you back your purchase payment if you decide to
cancel your contract within 10 days after receiving it. If that is the case,
we have the right to put your purchase payment in the Money Market Fund for 15
days after we issue your contract. At the end of that period, we will
re-allocate those funds as you selected. Currently, however, we will directly
allocate your money to the funds and/or the fixed account as you have
selected.
ACCUMULATION UNITS
The value of the portion of your contract allocated to the funds will go up or
down depending upon the investment performance of the fund(s) you choose. The
value of your contract will also depend on the expenses of the contract. In
order to keep track of the value of your contract, we use a measurement called
an accumulation unit (which is like a share of a mutual fund). During the
income phase of the contract we call it an annuity unit.
Every business day we determine the value of an accumulation unit for a fund
by multiplying the accumulation unit value for the previous period by a factor
for each fund for the current period. The factor for each fund is determined
by:
1. dividing the value of a fund share at the end of the current period
by the value of a fund share for the previous period; and
2. multiplying it by one minus the daily amount of the insurance charges
and any charges for taxes.
The value of an accumulation unit may go up or down from day to day.
When you make a purchase payment, we credit your contract with accumulation
units. The number of accumulation units credited is determined by dividing the
amount of the purchase payment allocated to a fund by the value of the
accumulation unit for that fund.
We calculate the value of an accumulation unit for each fund after the New
York Stock Exchange closes each day and then credit your contract.
EXAMPLE:
On Wednesday we receive an additional purchase payment of $3,000 from you. You
have told us you want this to go to the Growth and Income Fund. When the New
York Stock Exchange closes on that Wednesday, we determine that the value of
an accumulation unit for the Growth and Income Fund is $12.50. We then divide
$3,000 by $12.50 and credit your contract on Wednesday night with 240
accumulation units for the Growth and Income Fund.
4. INVESTMENT OPTIONS
The Contract offers 23 funds of Franklin Valuemark Funds and a fixed account
option of Preferred Life. Additional funds may be available in the future.
YOU SHOULD READ THE FRANKLIN VALUEMARK FUNDS PROSPECTUS (WHICH IS ATTACHED TO
THIS PROSPECTUS) CAREFULLY BEFORE INVESTING.
Franklin Valuemark Funds is the mutual fund underlying your contract. Each
fund has its own investment objective. Franklin Advisers, Inc. serves as each
fund's investment manager (except the Templeton Global Growth Fund, the
Templeton Developing Markets Equity Fund, the Templeton Global Asset
Allocation Fund, the Templeton International Smaller Companies Fund, the
Rising Dividends Fund, the Mutual Shares Securities Fund and the Mutual
Discovery Securities Fund). The investment manager for the Templeton Global
Growth and the Templeton Global Asset Allocation Funds is Templeton Global
Advisors Limited. The investment manager for the Templeton Developing Markets
Equity Fund is Templeton Asset Management Ltd. The investment manager for the
Templeton International Smaller Companies Fund is Templeton Investment
Counsel, Inc. The investment manager for the Rising Dividends Fund is Franklin
Advisory Services, Inc.. The investment manager for the Mutual Shares
Securities and the Mutual Discovery Securities Funds is Franklin Mutual
Advisers, Inc. Certain managers have retained one or more subadvisers to help
them manage the funds.
Franklin Valuemark Funds serves as the underlying mutual fund for variable
life insurance policies offered by an affiliate of Preferred Life and other
variable annuity contracts offered by Preferred Life and its affiliates.
Franklin Valuemark Funds does not believe that offering its shares in this
manner will be disadvantageous to you.
The following is a list of the funds which are available under the contract:
FUND SEEKING STABILITY OF PRINCIPAL AND INCOME:
Money Market
FUNDS SEEKING CURRENT INCOME:
High Income
Templeton Global Income Securities
The U.S. Government Securities
Zero Coupon - 2000, 2005 and 2010
FUNDS SEEKING GROWTH AND INCOME:
Growth and Income
Income Securities
Mutual Shares Securities
Real Estate Securities
Rising Dividends
Templeton Global Asset Allocation
Utility Equity
FUNDS SEEKING CAPITAL GROWTH:
Capital Growth
Mutual Discovery Securities
Precious Metals
Small Cap
Templeton Developing Markets Equity
Templeton Global Growth
Templeton International Equity
Templeton International Smaller Companies
Templeton Pacific Growth
TRANSFERS
You can transfer money among the 23 funds and/or the fixed account. Preferred
Life currently allows you to make as many transfers as you want to each year.
Preferred Life may change this practice in the future. However, this product
is not designed for professional market timing organizations or other
individuals using programmed and frequent transfers. Such activity may be
disruptive to a fund. We reserve the right to stop or prohibit these types of
transfers if we determine that they could harm a fund.
Your contract provides that you can make 3 transfers every year without
charge. However, currently Preferred Life permits you to make 12 transfers
every year without charge. We measure a year from the anniversary of the day
we issued your contract. You can make a transfer to or from the fixed account
and to or from any fund. If you make more than 12 transfers in a year, there
is a transfer fee deducted. The fee is $25 per transfer or, if less, 2% of the
amount transferred. The following applies to any transfer:
1. The minimum amount which you can transfer is $1,000 or your entire
value in the fund or fixed account. This requirement is waived if the transfer
is in connection with the Dollar Cost Averaging Program or Flexible
Rebalancing (which are described below).
2. We may not allow you to make transfers during the free look period.
3. Your request for a transfer must clearly state which fund(s) or the
fixed account is involved in the transfer.
4. Your request for a transfer must clearly state how much the transfer
is for.
5. You cannot make any transfers within 7 calendar days prior to the date
your first annuity payment is due.
6. During the income phase, you may not make a transfer from a fixed
annuity option to a variable annuity option.
7. During the income phase, you can make at least one transfer from a
variable annuity option to a fixed annuity option.
Preferred Life has reserved the right to modify the transfer provisions
subject to the guarantees described above.
You can make transfers by telephone. We may allow you to authorize someone
else to make transfers by telephone on your behalf. If you own the contract
with a joint owner, unless Preferred Life is instructed otherwise, Preferred
Life will accept instructions from either one of you. Preferred Life will use
reasonable procedures to confirm that instructions given us by telephone are
genuine. If we do not use such procedures, we may be liable for any losses due
to unauthorized or fraudulent instructions. Preferred Life tape records all
telephone instructions.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount of money each month or quarter from any one fund or the fixed account
to up to eight of the other funds. By allocating amounts on a regularly
scheduled basis, as opposed to allocating the total amount at one particular
time, you may be less susceptible to the impact of market fluctuations. You
may only participate in this program during the accumulation phase.
You must participate in the program for at least six months (or two quarters)
and must transfer at least $500 each time (or $1,500 each quarter). Your
allocations can be in whole percentages or dollar amounts. The fund(s) you
transfer from may not be the fund(s) you transfer to in this program. You may
elect this program by properly completing the Dollar Cost Averaging forms
provided by Preferred Life.
All Dollar Cost Averaging transfers will be made on the 10th day of the month
unless that day is not a business day. If it is not, then the transfer will be
made the next business day.
Your participation in the program will end when any of the following occurs:
(1) the number of desired transfers have been made; (2) you do not have enough
money in the fund(s) or fixed account to make the transfer (if less money is
available, that amount will be dollar cost averaged and the program will end);
(3) you request to terminate the program (your request must be received by us
by the first of the month to terminate that month); (4) the contract is
terminated; or (5) we receive proof of the contract owner's death.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee.
You may not participate in the Dollar Cost Averaging Program and Flexible
Rebalancing at the same time.
FLEXIBLE REBALANCING
Once your money has been invested, the performance of the funds and the
earnings from the fixed account may cause your allocation to shift. Flexible
Rebalancing is designed to help you maintain your specified allocation mix
between the different funds. You can direct us to readjust your money
quarterly, semi-annually or annually to return to your original allocations.
Flexible Rebalancing transfers will be made on the 20th day of the month
unless that day is not a business day. If it is not, then the transfer will be
made on the previous day. If you participate in Flexible Rebalancing, the
transfers made under the program are not taken into account in determining any
transfer fee.
VOTING RIGHTS
Preferred Life is the legal owner of the fund shares. However, Preferred Life
believes that when a fund solicits proxies in conjunction with a shareholder
vote, it is required to obtain from you and other contract owners instructions
as to how to vote those shares. When we receive those instructions, we will
vote all of the shares we own in proportion to those instructions. This will
also include any shares that Preferred Life owns on its own behalf. Should
Preferred Life determine that it is no longer required to comply with the
above, we will vote the shares in our own right.
SUBSTITUTION
Preferred Life may be required to substitute one of the funds you have
selected with another fund. We would not do this without the prior approval of
the Securities and Exchange Commission. We will give you notice of our
intention to do this.
5. EXPENSES
There are charges and other expenses associated with the contract that will
reduce your investment return. These charges and expenses are:
INSURANCE CHARGES
Each day, Preferred Life makes a deduction for its insurance charges.
Preferred Life does this as part of its calculation of the value of the
accumulation units and the annuity units. The insurance charge has two parts:
1) the mortality and expense risk charge and 2) the administrative charge.
MORTALITY AND EXPENSE RISK CHARGE . During the accumulation phase, this charge
is equal, on an annual basis, to 1.34% of the average daily value of the
contract invested in a fund, after the deduction of expenses. During the
income phase, the charge is equal, on an annual basis, to 1.25% of the average
daily value of the contract invested in a fund, after the deduction of
expenses. This charge compensates us for all the insurance benefits provided
by your contract (for example, the guarantee of annuity rates, the death
benefits, certain expenses related to the contract, and for assuming the risk
(expense risk) that the current charges will be insufficient in the future to
cover the cost of administering the contract). The amount of the mortality and
expense risk charge is less during the income phase because Preferred Life
does not pay a death benefit separate from benefits under the annuity option
if you die during the income phase. If this charge is not sufficient, then
Preferred Life will bear the loss. Preferred Life does, however, expect to
profit from this charge. The mortality and expense risk charge cannot be
increased. Preferred Life may use any profits it makes from this charge to pay
for the costs of distributing the contract.
ADMINISTRATIVE CHARGE . This charge is equal, on an annual basis, to .15% of
the average daily value of the contract invested in a fund, after the
deduction of expenses. This charge, together with the contract maintenance
charge (which is explained below), is for all the expenses associated with the
administration of the contract. Some of these expenses include: preparation of
the contract, confirmations, annual reports and statements, maintenance of
contract records, personnel costs, legal and accounting fees, filing fees, and
computer and systems costs. Because this charge is taken out of every unit
value, you may pay more in administrative costs than those that are associated
solely with your contract. Preferred Life does not intend to profit from this
charge. However, if this charge and the contract maintenance charge are not
enough to cover the costs of the contracts in the future, Preferred Life will
bear the loss.
CONTRACT MAINTENANCE CHARGE
Every year on the anniversary of the date when your contract was issued,
Preferred Life deducts $30 from your contract as a contract maintenance
charge. This charge is for administrative expenses (see above). This charge
can not be increased.
However, during the accumulation phase, if the value of your contract is at
least $50,000 when the deduction for the charge is to be made, Preferred Life
will not deduct this charge. If you own more than one Valuemark IV contract,
Preferred Life will determine the total value of all your contracts. If the
total value of all contracts registered under the same social security number
is at least $50,000, Preferred Life will not assess the contract maintenance
charge. If the contract is owned by a non-natural person (e.g., a
corporation), Preferred Life will look to the annuitant to determine if it
will assess the charge.
If you make a complete withdrawal from your contract, the contract maintenance
charge will also be deducted. During the income phase, the charge will be
collected monthly out of each annuity payment.
CONTINGENT DEFERRED SALES CHARGE
Withdrawals may be subject to a contingent deferred sales charge. During the
accumulation phase, you can make withdrawals from your contract. Preferred
Life keeps track of each purchase payment you make. The amount of the
contingent deferred sales charge depends upon how long Preferred Life has had
your payment. The charge is:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of complete years from
receipt of payment: 0 1 2 3 4 5 6 7 or more
Contingent Deferred Sales Charge: 6% 6% 6% 5% 4% 3% 2% 0%
</TABLE>
However, after Preferred Life has had a purchase payment for 7 years, there is
no charge when you withdraw that purchase payment. For purposes of the
contingent deferred sales charge, Preferred Life treats withdrawals as coming
from the oldest purchase payments first. Preferred Life does not assess the
contingent deferred sales charge on any payments paid out as annuity payments
or as death benefits.
NOTE: For tax purposes, withdrawals are considered to have come from the last
money you put into the contract. Thus, for tax purposes, earnings are
considered to come out first.
FREE WITHDRAWAL AMOUNT - Each year after the first contract year, you can make
multiple withdrawals up to 15% of the value of your contract and no contingent
deferred sales charge will be deducted from the 15% you take out. Withdrawals
in excess of that free amount will be subject to the contingent deferred sales
charge.
You may also select to participate in the Systematic Withdrawal Program or the
Minimum Distribution Program which allow you to withdraw money without the
deduction of the contingent deferred sales charge under certain circumstances.
You cannot use these Programs and the 15% free withdrawal amount in the same
contract year. See Section 7 - Access to Your Money for a description of the
Systematic Withdrawal Program and the Minimum Distribution Program.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE BENEFITS
Under certain circumstances, after the first year, Preferred Life will permit
you to take your money out of the contract without deducting a contingent
deferred sales charge: 1) if you become terminally ill, which is defined as
life expectancy of 12 months or less (a full surrender of the contract will be
required); or 2) if you become totally disabled for at least 90 days.
Also, after the first year, if you become unemployed for at least 90 days, you
can take up to 50% of your money out without incurring a contingent deferred
sales charge. This benefit is available only once during the life of the
contract and you may not use both this benefit and the 15% free withdrawal
amount in the same contract year.
REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
Preferred Life will reduce or eliminate the amount of the contingent deferred
sales charge when the contract is sold under circumstances which reduce its
sales expenses. Some examples are: if there is a large group of individuals
that will be purchasing the contract or a prospective purchaser already had a
relationship with Preferred Life. Preferred Life will not deduct a contingent
deferred sales charge under a contract issued to an officer, director or
employee of Preferred Life or any of its affiliates. Any circumstances
resulting in reduction or elimination of the contingent deferred sales charge
requires prior approval of Preferred Life.
TRANSFER FEE
You can make 12 free transfers every year. We measure a year from the day we
issue your contract. If you make more than 12 transfers a year, we will deduct
a transfer fee of $25 or 2% of the amount that is transferred, whichever is
less, for each additional transfer.
If the transfer is part of the Dollar Cost Averaging Program or the Flexible
Rebalancing Program, it will not count in determining the transfer fee.
INCOME TAXES
Preferred Life will deduct from the contract for any income taxes which it may
incur because of the contract. Currently, Preferred Life is not making any
such deductions.
FUND EXPENSES
There are deductions from and expenses paid out of the assets of the various
funds which are described in the attached prospectus for Franklin Valuemark
Funds.
6. TAXES
NOTE: Preferred Life has prepared the following information on taxes as a
general discussion of the subject. It is not intended as tax advice. You
should consult your own tax adviser about your own circumstances. Preferred
Life has included additional information regarding taxes in the Statement of
Additional Information.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs -
usually retirement. Congress recognized how important saving for retirement
was and provided special rules in the Internal Revenue Code (Code) for
annuities.
Basically, these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax deferral. There are different rules regarding how you will
be taxed depending upon how you take the money out and the type of contract -
qualified or non-qualified (see following sections).
You, as the contract owner, will not be taxed on increases in the value of
your contract until a distribution occurs - either as a withdrawal or as
annuity payments. When you make a withdrawal you are taxed on the amount of
the withdrawal that is earnings. For annuity payments, different rules apply.
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
of the annuity payment will be treated as ordinary income. How the annuity
payment is divided between taxable and non-taxable portions depends upon the
period over which the annuity payments are expected to be made. Annuity
payments received after you have received all of your purchase payments are
fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than tax-qualified trusts), the
contract will generally not be treated as an annuity for tax purposes. This
means that the contract may not receive the benefits of tax-deferral. Income
may be taxed as ordinary income every year.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the contract under a qualified plan, your contract is referred
to as a qualified contract. Examples of qualified plans are: Individual
Retirement Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as
403(b) contracts), H.R. 10 Plans (sometimes referred to as Keogh Plans), and
pension and profit-sharing plans, which include 401(k) plans.
If you do not purchase the contract under a qualified plan, your contract is
referred to as a non-qualified contract.
WITHDRAWALS - NON-QUALIFIED CONTRACTS
If you make a withdrawal from your contract, the Code treats such a withdrawal
as first coming from earnings and then from your purchase payments. In most
cases, such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract
which is included in income may be subject to a tax penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts: (1)
paid on or after the taxpayer reaches age 59 1/2; (2) paid after you die; (3)
paid if the taxpayer becomes totally disabled (as that term is defined in the
Code); (4) paid in a series of substantially equal payments made annually (or
more frequently) for the life or life expectancy of the taxpayer; (5) paid
under an immediate annuity; or (6) which come from purchase payments made
prior to August 14, 1982.
WITHDRAWALS - QUALIFIED CONTRACTS
The above information describing the taxation of non-qualified contracts does
not apply to qualified contracts. There are special rules that govern
qualified contracts. A more complete discussion of withdrawals from qualified
contracts is contained in the Statement of Additional Information.
WITHDRAWALS - TAX-SHELTERED ANNUITIES
The Code limits the withdrawal of purchase payments made by contract owners
from certain Tax-Sheltered Annuities. Withdrawals can only be made when a
contract owner: (1) reaches age 59-1/2; (2) leaves his/her job; (3) dies; (4)
becomes disabled (as that term is defined in the Code); or (5) in the case of
hardship. However, in the case of hardship, the contract owner can only
withdraw the purchase payments and not any earnings.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Preferred Life believes that the funds are being managed so
as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the
degree of control you exercise over the underlying investments, and not
Preferred Life would be considered the owner of the shares of the funds. If
this occurs, it will result in the loss of the favorable tax treatment for the
contract. It is unknown to what extent under federal tax law contract owners
are permitted to select funds, to make transfers among the funds or the number
and type of funds owners may select from. If any guidance is provided which is
considered a new position, then the guidance would generally be applied
prospectively. However, if such guidance is considered not to be a new
position, it may be applied retroactively. This would mean that you, as the
owner of the contract, could be treated as the owner of the funds.
Due to the uncertainty in this area, Preferred Life reserves the right to
modify the contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
You can have access to the money in your contract: (1) by making a withdrawal
(either a partial or a total withdrawal); (2) by receiving annuity payments;
or (3) when a death benefit is paid to your beneficiary. Withdrawals can only
be made during the accumulation phase.
When you make a complete withdrawal you will receive the value of the contract
on the day you made the withdrawal less any applicable contingent deferred
sales charge, less any premium tax and less any contract maintenance charge.
(See Section 5 - Expenses for a discussion of the charges.)
Any partial withdrawal must be for at least $500 and, unless you instruct
Preferred Life otherwise, and will be made pro-rata from all the funds and the
fixed account you selected. Preferred Life requires that after you make a
partial withdrawal the value of your contract must be at least $2,000.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY
WITHDRAWAL YOU MAKE.
There are limits to the amount you can withdraw from a qualified plan referred
to as a 403(b) plan. For a more complete explanation see Section 6 - Taxes
and the discussion in the SAI.
SYSTEMATIC WITHDRAWAL PROGRAM
If the value of your contract is at least $25,000, Preferred Life offers a
plan which provides automatic monthly or quarterly payments to you each year.
The total systematic withdrawals which you can make each year without
Preferred Life deducting a contingent deferred sales charge is limited to 15%
of the value of your contract on the day the request is received. You may
withdraw any amount you want under this program if your payments are no longer
subject to the contingent deferred sales charge. You may not participate in
this program if you own a non-qualified contract and are under age 59 1/2. If
you make withdrawals under this plan, you may not also use the 15% free
withdrawal amount that year. For a discussion of the contingent deferred sales
charge and the 15% free withdrawal amount, see Section 5 - Expenses. all
systematic withdrawals will be made on the 9th day of the month unless that
day is not a business day. If it is not, then the withdrawal will be made the
previous business day.
INCOME TAXES MAY APPLY TO SYSTEMATIC WITHDRAWALS.
MINIMUM DISTRIBUTION PROGRAM
If you own a contract that is an Individual Retirement Annuity (IRA), you may
select the Minimum Distribution Program. Under this program, Preferred Life
will make payments to you that are designed to meet the applicable minimum
distribution requirements imposed by the Internal Revenue Code for IRAs. If
the value of your contract is at least $25,000, Preferred Life will make
payments to you on a monthly or quarterly basis. The payments will not be
subject to the contingent deferred sales charge and will be instead of the 15%
free withdrawal amount.
SUSPENSION OF PAYMENTS OR TRANSFERS
Preferred Life may be required to suspend or postpone payments for withdrawals
or transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of the fund shares
is not reasonably practicable or Preferred Life cannot reasonably value the
fund shares;
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of owners.
Preferred Life has reserved the right to defer payment for a withdrawal or
transfer from the fixed account for the period permitted by law but not for
more than six months.
8. PERFORMANCE
Preferred Life periodically advertises performance of the various funds.
Preferred Life will calculate performance by determining the percentage change
in the value of an accumulation unit by dividing the increase (decrease) for
that unit by the value of the accumulation unit at the beginning of the
period. This performance number reflects the deduction of the insurance
charges. It does not reflect the deduction of any applicable contingent
deferred sale charge and contract maintenance charge. The deduction of any
applicable contract maintenance charge and contingent deferred sales charges
would reduce the percentage increase or make greater any percentage decrease.
Any advertisement will also include average annual total return figures which
reflect the deduction of the insurance charges, contract maintenance charge,
contingent deferred sales charges and the expenses of the funds. Preferred
Life may also advertise aggregate total return information. Aggregate total
return is determined the same way except that the results are not annualized.
Certain funds have been in existence for some time and have investment
performance history. However, the contracts are new. In order to demonstrate
how the actual investment experience of the funds may affect your accumulation
unit values, Preferred Life has prepared hypothetical performance information
(Part A of the Appendix to this prospectus). The performance is based on the
performance of the funds, modified to reflect the charges and expenses of your
contract as if it had been in existence for the time periods shown. The
information is based upon the historical experience of the funds and does not
necessarily represent what your investment would earn in those funds.
The Mutual Shares Securities Fund and the Mutual Discovery Securities Fund
(New Valuemark funds) are newly created and therefore also do not yet have any
meaningful performance record. However, they have the same investment
objectives and portfolio managers and substantially the same investment
policies as two corresponding series of Franklin Mutual Series Fund Inc.
(formerly, Mutual Series Fund Inc.) which have been sold to the public (Public
Funds). In order to show how the performance of the Public Funds would have
affected accumulation unit values, hypothetical performance information was
developed. Part B of the Appendix shows the historical performance of the
Public Funds which reflects the deduction of the historical fees and expenses
paid by the Public Funds and not those paid by the New Valuemark funds. There
are hypothetical performance figures for the accumulation units which assume
the deduction of the mortality and expense risk charge, the administrative
charge and the fees and expenses that the Public Funds paid. There are also
hypothetical performance figures for the accumulation units which reflect the
deduction of the mortality and expense risk charge, the administrative
charge, the contract maintenance charge, the contingent deferred sales charge
and the fees and expenses that the Public Funds paid. The hypothetical
performance figures for the accumulation units have not been restated to
reflect the higher fees for the New Valuemark funds. If the higher fees were
used, the hypothetical performance shown would be lower. Future performance
may vary and the results shown are not necessarily representative of future
results.
Preferred Life may in the future also advertise yield information for one or
more of the funds. If it does, it will provide you with information regarding
how yield is calculated. More detailed information regarding how performance
is calculated is found in the SAI.
Any performance advertised will be based on historical data and does not
guarantee future results of the funds.
9. DEATH BENEFIT
UPON YOUR DEATH
If you die during the accumulation phase, a death benefit is payable to your
beneficiary (see below). No separate death benefit is paid during the income
phase. If you have a joint owner, and the joint owner dies, the surviving
owner will be considered the beneficiary. Joint owners must be spouses.
The death benefit will be the greater of: 1) the current value of your
contract, less any taxes on the day all claim proofs and payment election
forms are received by Preferred Life at the Valuemark Service Center; or 2)
(if applicable) as set forth in the enhanced death benefit endorsement to the
contract, the guaranteed minimum death benefit, less any taxes, as of the day
you die. Certain contract owners will not receive an enhanced death benefit
endorsement. For these contract owners, the death benefit is as set forth in
Item No. 1 above. The guaranteed minimum death benefit is equal to the greater
of: A) the payments you have made, less any money you have taken out and any
charges paid on the money you have taken out; or B) the highest value of the
contract on each contract anniversary prior to an owner's 76th birthday,
increased by any payments made since that anniversary, less any money taken
out and charges paid on the money you have taken out since that anniversary.
If you have a joint owner, the age of the oldest owner will be used to
determine the guaranteed minimum death benefit. The guaranteed minimum death
benefit will be reduced by any amounts withdrawn after the date of death. If
the contract is owned by a non-natural person, then all references to you mean
the annuitant.
A beneficiary may request that the death benefit be paid in one of the
following ways: (1) payment of the entire death benefit within 5 years of the
date of death; or (2) payment of the death benefit under an annuity option.
The death benefit payable under an annuity option must be paid over the
beneficiary's lifetime or for a period not extending beyond the beneficiary's
life expectancy. Payment must begin within one year of the date of death. If
the beneficiary is the spouse of the contract owner, he/she can choose to
continue the contract in his/her own name at the then current value, or if
greater, the death benefit value. If a lump sum payment is elected and all the
necessary requirements are met, the payment will be made within 7 days.
If you (or any joint owner) die during the income phase and you are not the
annuitant, any payments which are remaining under the annuity option selected
will continue at least as rapidly as they were being paid at your death. If
you die during the income phase, the beneficiary becomes the contract owner.
DEATH OF ANNUITANT
If the annuitant, who is not a contract owner or joint owner, dies during the
accumulation phase, you can name a new annuitant. If a new annuitant is not
named within 30 days of the death of the annuitant, you will become the
annuitant. However, if the contract owner is a non-natural person (e.g., a
corporation), then the death of the annuitant will be treated as the death of
the contract owner, and a new annuitant may not be named.
If the annuitant dies after annuity payments have begun, the remaining amounts
payable, if any, will be as provided for in the annuity option selected. The
remaining amounts payable will be paid to the contract owner at least as
rapidly as they were being paid at the annuitant's death.
10. OTHER INFORMATION
PREFERRED LIFE
Preferred Life Insurance Company of New York (Preferred Life), 152 West 57th
Street, 18th Floor, New York, NY 10019, was organized under the laws of the
state of New York. Preferred Life offers annuities and group life, group
accident and health insurance and variable annuity products. Preferred Life is
licensed to do business in 6 states. Preferred Life is a wholly-owned
subsidiary of Allianz Life Insurance Company of North America, which is a
wholly-owned subsidiary of Allianz Versicherungs AG Holding.
THE SEPARATE ACCOUNT
Preferred Life established a separate account, Preferred Life Variable Account
C (Separate Account), to hold the assets that underlie the contracts. The
Board of Directors of Preferred Life adopted a resolution to establish the
Separate Account under New York insurance law on February 26, 1988. Preferred
Life has registered the Separate Account with the Securities and Exchange
Commission as a unit investment trust under the Investment Company Act of
1940. The Separate Account is divided into sub-accounts. Each sub-account
invests in a fund.
The assets of the Separate Account are held in Preferred Life's name on behalf
of the Separate Account and legally belong to Preferred Life. However, those
assets that underlie the contracts, are not chargeable with liabilities
arising out of any other business Preferred Life may conduct. All the income,
gains and losses (realized or unrealized) resulting from these assets are
credited to or charged against the contracts and not against any other
contracts Preferred Life may issue.
DISTRIBUTION
NALAC Financial Plans, LLC (NFP), 1750 Hennepin Avenue, Minneapolis, MN 55403,
acts as the distributor of the contracts. NFP is an affiliate of Preferred
Life.
Commissions will be paid to broker-dealers who sell the contracts.
Broker-dealers will be paid commissions and expense reimbursements up to an
amount equal to 6.0% of purchase payments for promotional or distribution
expenses associated with marketing of the Contracts. The New York Insurance
Department now permits asset based compensation. Preferred Life may adopt an
asset based compensation program in addition to, or in lieu of, the present
compensation program. Commissions may be recovered from broker-dealers if a
full or partial surrender occurs within 12 months of a purchase payment.
ADMINISTRATION
Preferred Life has hired Delaware Valley Financial Services, Inc., 300 Berwyn
Park, Berwyn, Pennsylvania, to perform administrative services regarding the
contracts. The administrative services include issuance of the contracts and
maintenance of contract owner's records.
FINANCIAL STATEMENTS
The consolidated financial statements of Preferred Life and the Separate
Account have been included in the Statement of Additional Information.
APPENDIX
PERFORMANCE INFORMATION
The following information is based on the historical investment performance of
the funds. The results shown are not necessarily representative of future
performance.
PART A - FRANKLIN VALUEMARK FUNDS - EXISTING FUNDS
The funds of Franklin Valuemark Funds have been in existence for some time and
have investment performance history (except the Small Cap, Capital Growth,
Templeton International Smaller Companies, Mutual Shares Securities and Mutual
Discovery Securities Funds). In order to show you how investment performance
of the funds affects accumulation unit values, we have developed the following
hypothetical performance information.
The chart below shows the actual historical investment performance of the
funds and hypothetical accumulation unit performance. The hypothetical
accumulation unit performance assumes that the accumulation units were
invested in each of the funds for the same periods. The performance figures in
Column I reflect the deduction of the actual fees and expenses paid by the
funds. Column II represents hypothetical performance figures for the
accumulation units which reflects the deduction of the insurance charges and
the fees and expenses of the funds. Column III represents hypothetical
performance figures for the accumulation units which reflects the insurance
charges, the contract maintenance charge, the fees and expenses of the funds
and assumes that you make a withdrawal at the end of the period (therefore the
contingent deferred sales charge is reflected).
Total Return for the periods ended _______:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Column I Column II Column III
Fund Performance Hypothetical Accumulation Unit Performance
------------------------ ------------------------- ------------------------
Inception Since Since Since
--------- ------------------------ ------------------------- ------------------------
FUND Date 1 yr. 5 yrs. Inception 1 yr. 5 yrs. Inception 1 yr. 5 yrs. Inception
- ----------------------------------- --------- ------------------------ ------------------------- ------------------------
Money Market
High Income
Templeton Global Income Securities
The U.S. Government Securities
Zero Coupon - 2000
Zero Coupon - 2005
Zero Coupon - 2010
Growth and Income
Income Securities
Real Estate Securities
Rising Dividends
Templeton Global Asset Allocation
Utility Equity
Precious Metals
Templeton Developing Markets Equity
Templeton Global Growth
Templeton International Equity
Templeton Pacific Growth
</TABLE>
PART B - PUBLIC FUNDS
The Mutual Shares Securities Fund and Mutual Discovery Securities Fund ("New
Valuemark funds") are newly created series of Franklin Valuemark Funds and
have no performance record. The New Valuemark funds do, however, have the same
investment objective and portfolio managers,(1) and substantially the same
investment policies, as two corresponding series of Franklin Mutual Series
Fund Inc. (formerly "Mutual Series Fund Inc.") which have been sold directly
to the public ("Public Funds").
Chart 1 below shows the past performance of the Public Funds, in terms of
average annual total return over the periods indicated. Average annual total
return represents the average annual change in value of an investment over the
stated periods, assuming reinvestment of dividends and capital gains at net
asset value. These figures reflect the deduction of the historical fees and
expenses paid by the Public Funds, which have been sold without sales charges.
Chart 2 below shows hypothetical performance of accumulation units of the New
Valuemark funds, based on the past average annual total return of the Public
Funds and the deduction of all current recurring expenses of the Separate
Account. These figures do not reflect any contingent deferred sales charge or
annual contract maintenance charge, and have not been restated to reflect the
higher expenses of the New Valuemark funds; all of which would lower the
hypothetical performance shown.
Chart 3 below shows hypothetical performance of accumulation units of the New
Valuemark funds, based on the past average annual total return of the Public
Funds and the deduction of all current recurring expenses of the Separate
Account, as well as deduction of the applicable contingent deferred sales
charge and annual contract maintenance charge. These figures have not been
restated to reflect the higher expenses of the New Valuemark funds, and which
would lower the hypothetical performance shown.
Past performance cannot predict or guarantee future results of the New
Valuemark funds. In addition, the investment performance of the New Valuemark
funds will differ from the performance of the Public Funds because of product
and portfolio differences, including differences in portfolio size, the
investments held, the timing of purchases of similar investments, cash flows,
minor differences in certain investment policies, insurance product related
tax diversification requirements, state insurance regulations, and additional
administrative and insurance costs associated with insurance company separate
accounts. These figures are not adjusted for tax consequences.
_______________________
(1) In November 1996, Franklin Resources, Inc., parent company of the
investment managers of the Franklin Valuemark Funds, completed the acquisition
of Heine Securities Corporation, the investment manager of Mutual Series Fund
Inc. This transaction did not, however, change the individuals responsible for
the day-to-day operations of Franklin Mutual Series Fund Inc., who are also
responsible for the day-to-day operations of the New Valuemark funds.
<TABLE>
<CAPTION>
1. Public Funds' Historical Performance
Since Inception
Periods Ended: One-Year Five-Years Ten-Years Inception Date
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mutual Discovery Fund................. -- -- -- -- 12/31/92
Mutual Shares Fund.................... -- -- -- -- 7/1/49
</TABLE>
<TABLE>
<CAPTION>
2. Hypothetical Accumulation Unit Performance (includes all current recurring expenses of the Separate Account)
Since Inception
Periods Ended: One-Year Five-Years Ten-Years Inception Date
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mutual Discovery Securities
Sub-Account ......................... _____% -- -- _____% 12/31/92
Mutual Shares Securities
Sub-Account ......................... _____% _____% _____% -- 7/1/49
</TABLE>
<TABLE>
<CAPTION>
3. Hypothetical Accumulation Unit Performance (includes all current recurring expenses of the Separate
Account and deduction of the contingent deferred sales charge and annual contract maintenance charge)
Since Inception
Periods Ended 9/30/96: One-Year Five-Years Ten-Years Inception Date
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mutual Discovery Securities
Sub-Account.......................... _____% -- -- _____% 12/31/92
Mutual Shares Securities
Sub-Account.......................... ____% _____% _____% -- 7/1/49
</TABLE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Insurance Company
Experts
Legal Opinions
Distributor
Reduction or Elimination of the Contingent Deferred Sales Charge
Calculation of Performance Data
Annuity Provisions
Tax Status
Mortality and Expense Guarantee
Financial Statements
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS
ISSUED BY
PREFERRED LIFE VARIABLE ACCOUNT C
AND
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
____________________, 1997
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD
BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL FLEXIBLE
PAYMENT VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, CALL OR WRITE
THE INSURANCE COMPANY AT: 152 West 57th Street, 18th Floor, New York, NY
10019.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE
DATED ____________, 1997, AND AS MAY BE AMENDED FROM TIME TO TIME.
TABLE OF CONTENTS
PAGE
INSURANCE COMPANY
EXPERTS
LEGAL OPINIONS
DISTRIBUTOR
REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
CALCULATION OF PERFORMANCE DATA
TAX STATUS
ANNUITY PROVISIONS
MORTALITY AND EXPENSE RISK GUARANTEE
FINANCIAL STATEMENTS
INSURANCE COMPANY
Information regarding Preferred Life Insurance Company of New York ("Insurance
Company") is contained in the Prospectus.
The Insurance Company is rated A+e (Superior, Parent Rating) by A.M. BEST, an
independent analyst of the insurance industry. The financial strength of an
insurance company may be relevant insofar as the ability of a company to make
fixed annuity payments from its general account.
EXPERTS
The financial statements of Preferred Life Variable Account C and the
consolidated financial statements of Preferred Life Insurance Company of New
York as of and for the year ended December 31, 1995, included in this
Statement of Additional Information have been audited by ___________________,
independent auditors, as indicated in their reports included in this Statement
of Additional Information and are included herein in reliance upon such
reports and upon the authority of said firm as experts in accounting and
auditing.
LEGAL OPINIONS
Legal matters in connection with the Contracts described herein are being
passed upon by the law firm of Blazzard, Grodd & Hasenauer, P.C., Westport,
Connecticut.
DISTRIBUTOR
NALAC Financial Plans, LLC, an affiliate of the Insurance Company, acts as the
distributor. The offering is on a continuous basis.
REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
The amount of the Contingent Deferred Sales Charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals or
to a group of individuals in a manner that results in savings of sales
expenses. The entitlement to a reduction of the Contingent Deferred Sales
Charge will be determined by the Insurance Company after examination of the
following factors: 1) the size of the group; 2) the total amount of purchase
payments expected to be received from the group; 3) the nature of the group
for which the Contracts are purchased, and the persistency expected in that
group; 4) the purpose for which the Contracts are purchased and whether that
purpose makes it likely that expenses will be reduced; and 5) any other
circumstances which the Insurance Company believes to be relevant to
determining whether reduced sales or administrative expenses may be expected.
None of the reductions in charges for sales is contractually guaranteed.
The Contingent Deferred Sales Charge will be eliminated when the Contracts are
issued to an officer, director or employee of the Insurance Company or any of
its affiliates. In no event will any reduction or elimination of the
Contingent Deferred Sales Charge be permitted where the reduction or
elimination will be unfairly discriminatory to any person.
CALCULATION OF PERFORMANCE DATA
TOTAL RETURN
From time to time, the Insurance Company may advertise the performance data
for the Funds in advertisements and Contract Owner communications. Such data
will show the percentage change in the value of an accumulation unit based on
the performance of a fund over a stated period of time, usually a calendar
year, which is determined by dividing the increase (or decrease) in value for
that unit by the accumulation unit value at the beginning of the period.
Any such advertisement will include total return figures for the time periods
indicated in the advertisement. Such total return figures will reflect the
deduction of a 1.34% Mortality and Expense Risk Charge, a .15% Administrative
Charge, the fees of the fund being advertised and any applicable Contract
Maintenance Charge and Contingent Deferred Sales Charges.
The hypothetical value of a Contract purchased for the time periods described
in the advertisement will be determined by using the actual accumulation unit
values for an initial $1,000 purchase payment, and deducting any applicable
Contract Maintenance Charges and any applicable Contingent Deferred Sales
Charge to arrive at the ending hypothetical value. The average annual total
return is then determined by computing the fixed interest rate that a $1,000
purchase payment would have to earn annually, compounded annually, to grow to
the hypothetical value at the end of the time periods described. The formula
used in these calculations is:
n
P (1 + T) = ERV
<TABLE>
<CAPTION>
<S> <C> <C>
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the time periods used at the end of such time
periods (or fractional portion thereof).
</TABLE>
The Insurance Company may also advertise performance data which will be
calculated in the same manner as described above but which will not reflect
the deduction of the Contingent Deferred Sales Charge and the Contract
Maintenance Charge. The Company may also advertise aggregate and average total
return information over different periods of time.
Aggregate total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that no sales load is
deducted from the initial $1,000 payment at the time it is allocated to the
Funds and assumes that the income earned by the investment in the Fund is
reinvested.
Contract Owners should note that investment results will fluctuate over time,
and any presentation of total return for any period should not be considered
as a representation of what an investment may earn or what a Contract Owner's
total return may be in any future period.
YIELD
THE MONEY MARKET FUND. The Insurance Company may advertise yield information
for the Money Market Fund. The Money Market Fund's current yield may vary each
day, depending upon, among other things, the average maturity of the
underlying Fund's investment securities and changes in interest rates,
operating expenses, the deduction of the Mortality and Expense Risk Charge,
the Administrative Charge and the Contract Maintenance Charge and, in certain
instances, the value of the underlying Fund's investment securities. The fact
that the Fund's current yield will fluctuate and that the principal is
not guaranteed should be taken into consideration when using the Fund's
current yield as a basis for comparison with savings accounts or other fixed-
yield investments. The yield at any particular time is not indicative of what
the yield may be at any other time.
The Money Market Fund's current yield is computed on a base period return
of a hypothetical Contract having a beginning balance of one accumulation unit
for a particular period of time (generally seven days). The return is
determined by dividing the net change (exclusive of any capital changes) in
such accumulation unit by its beginning value, and then multiplying it by
365/7 to get the annualized current yield. The calculation of net change
reflects the value of additional shares purchased with the dividends paid by
the Fund, and the deduction of the Mortality and Expense Risk Charge, the
Administrative Charge and Contract Maintenance Charge. The effective yield
reflects the effects of compounding and represents an annualization of the
current return with all dividends reinvested.
(Effective yield = [(Base Period Return + 1)365/7]-1.)
The Insurance Company does not currently advertise any yield information for
the Money Market Fund.
OTHER FUNDS. The Insurance Company may also quote current yield in
advertisements and Contract Owner communications for the other Funds. Each
Fund (other than the Money Market Fund) will publish standardized total return
information with any quotation of current yield.
The yield computation is determined by dividing the net investment income per
accumulation unit earned during the period (minus the deduction for the
Mortality and Expense Risk Charge, Administrative Charge and the Contract
Maintenance Charge) by the accumulation unit value on the last day of the
period and annualizing the resulting figure, according to the following
formula:
6
Yield = 2 [[(a-b) + 1] - 1]
_____
cd
Where:
<TABLE>
<CAPTION>
<S> <C> <C>
a = net investment income earned during the period by the Fund
attributable to shares owned by the Fund.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of accumulation units outstanding during
the period.
d = the maximum offering price per accumulation unit on the last day
of the period.
</TABLE>
The above formula will be used in calculating quotations of yield, based on
specified 30-day periods identified in the advertisement or communication.
Yield calculations assume no sales load. The Insurance Company does not
currently advertise any yield information for any Fund.
PERFORMANCE RANKING
Total return may be compared to relevant indices, including U. S. domestic and
international taxable bond indices and data from Lipper Analytical Services,
Inc., Standard & Poor's Indices, or VARDS.
From time to time, evaluation of performance by independent sources may also
be used in advertisements and in information furnished to present or
prospective contract owners.
TAX STATUS
NOTE: The following description is based upon the Insurance Company's
understanding of current federal income tax law applicable to annuities in
general. The Insurance Company cannot predict the probability that any changes
in such laws will be made. Purchasers are cautioned to seek competent tax
advice regarding the possibility of such changes. The Insurance Company does
not guarantee the tax status of the Contracts. Purchasers bear the complete
risk that the Contracts may not be treated as "annuity contracts" under
federal income tax laws. It should be further understood that the following
discussion is not exhaustive and that special rules not described herein may
be applicable in certain situations. Moreover, no attempt has been made to
consider any applicable state or other tax laws.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code")
governs taxation of annuities in general. A Contract Owner is not taxed on
increases in the value of a Contract until distribution occurs, either in the
form of a lump sum payment or as annuity payments under the Annuity Option
elected. For a lump sum payment received as a total surrender (total
redemption) or death benefit, the recipient is taxed on the portion of the
payment that exceeds the cost basis of the Contract. For Non-Qualified
Contracts, this cost basis is generally the purchase payments, while for
Qualified Contracts there may be no cost basis. The taxable portion of the
lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion
amount is includable in taxable income. The exclusion amount for payments
based on a fixed annuity option is determined by multiplying the payment by
the ratio that the cost basis of the Contract (adjusted for any period certain
or refund feature) bears to the expected return under the Contract. The
exclusion amount for payments based on a variable annuity option is determined
by dividing the cost basis of the Contract (adjusted for any period certain or
refund guarantee) by the number of years over which the annuity is expected to
be paid. Payments received after the investment in the Contract has been
recovered (i.e. when the total of the excludable amounts equal the investment
in the Contract) are fully taxable. The taxable portion is taxed at ordinary
income rates. For certain types of Qualified Plans there may be no cost basis
in the Contract within the meaning of Section 72 of the Code. Contract Owners,
Annuitants and Beneficiaries under the Contracts should seek competent
financial advice about the tax consequences of any distributions.
The Insurance Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity
from the Insurance Company, and its operations form a part of the Insurance
Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not
adequately diversified in accordance with regulations prescribed by the United
States Treasury Department ("Treasury Department"). Disqualification of the
Contract as an annuity contract would result in imposition of federal income
tax to the Contract Owner with respect to earnings allocable to the Contract
prior to the receipt of payments under the Contract. The Code contains a safe
harbor provision which provides that annuity contracts such as the Contracts
meet the diversification requirements if, as of the end of each quarter, the
underlying assets meet the diversification standards for a regulated
investment company and no more than fifty-five percent (55%) of the total
assets consist of cash, cash items, U.S. government securities and securities
of other regulated investment companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The
regulations amplify the diversification requirements for variable contracts
set forth in the Code and provide an alternative to the safe harbor provision
described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable
contracts by Section 817(h) of the Code have been met, "each United States
government agency or instrumentality shall be treated as a separate issuer."
The Insurance Company intends that all Funds of Franklin Valuemark Funds
underlying the Contracts will be managed by the Managers for Franklin
Valuemark Funds in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner
control of the investments of the Separate Account will cause the Contract
Owner to be treated as the owner of the assets of the Separate Account,
thereby resulting in the loss of favorable tax treatment for the Contract. At
this time it cannot be determined whether additional guidance will be provided
and what standards may be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published
rulings issued by the Internal Revenue Service in which it was held that the
policy owner was not the owner of the assets of the separate account. It is
unknown whether these differences, such as the Contract Owner's ability to
transfer among investment choices or the number and type of investment choices
available, would cause the Contract Owner to be considered as the owner of the
assets of the Separate Account resulting in the imposition of federal income
tax to the Contract Owner with respect to earnings allocable to the Contract
prior to receipt of payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a
new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the
Contract Owner being retroactively determined to be the owner of the assets of
the Separate Account.
Due to the uncertainty in this area, the Insurance Company reserves the right
to modify the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are
issued within a calendar year period to the same contract owner by one company
or its affiliates are treated as one annuity contract for purposes of
determining the tax consequences of any distribution. Such treatment may
result in adverse tax consequences, including more rapid taxation of the
distributed amounts from such combination of contracts. Contract Owners should
consult a tax adviser prior to purchasing more than one non-qualified annuity
contract in any calendar year period.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on purchase payments
for the Contracts will be taxed currently to the Contract Owner if the Owner
is a non-natural person, e.g., a corporation or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust
or other entity as an agent for a natural person nor to Contracts held by
qualified plans. Purchasers should consult their own tax counsel or other tax
adviser before purchasing a Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Contract Owners
should therefore consult competent tax advisers should they wish to assign or
pledge their Contracts.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross
income of the Contract Owner are subject to federal income tax withholding.
Generally, amounts are withheld from periodic payments at the same rate as
wages and at the rate of 10% from non-periodic payments. However, the Contract
Owner, in most cases, may elect not to have taxes withheld or to have
withholding done at a different rate.
Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or Section 403(b) of the Code, which are not
directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity, are subject to a
mandatory 20% withholding for federal income tax. The 20% withholding
requirement generally does not apply to: a) a series of substantially equal
payments made at least annually for the life or life expectancy of the
participant or joint and last survivor expectancy of the participant and a
designated beneficiary, or for a specified period of 10 years or more; or b)
distributions which are required minimum distributions; or (c) the portion of
the distributions not includible in gross income (i.e. returns of after-tax
contributions). Participants should consult their own tax counsel or other tax
adviser regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate
purchase payments made, any amount withdrawn will be treated as coming first
from the earnings and then, only after the income portion is exhausted, as
coming from the principal. Withdrawn earnings are includible in gross income.
It further provides that a ten percent (10%) penalty will apply to the income
portion of any distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of
the Contract Owner; (c) if the taxpayer is totally disabled (for this purpose
disability is as defined in Section 72(m)(7) of the Code); (d) in a series of
substantially equal periodic payments made not less frequently than annually
for the life (or life expectancy) of the taxpayer or for the joint lives (or
joint life expectancies) of the taxpayer and his Beneficiary; (e) under an
immediate annuity; or (f) which are allocable to purchase payments made prior
to August 14, 1982.
The above information does not apply to Qualified Contracts. However,
separate tax withdrawal penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals - Qualified Contracts.")
QUALIFIED PLANS
The Contracts offered are designed to be suitable for use under various types
of Qualified Plans. Because of the minimum purchase payment requirements,
these Contracts may not be appropriate for some periodic payment retirement
plans. Taxation of participants in each Qualified Plan varies with the type of
plan and terms and conditions of each specific plan. Contract Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified
Plan may be subject to the terms and conditions of the plan regardless of the
terms and conditions of the Contracts issued pursuant to the plan. Some
retirement plans are subject to distribution and other requirements that are
not incorporated into the Insurance Company's administrative procedures.
Contract Owners, participants and Beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law. Following are general
descriptions of the types of Qualified Plans with which the Contracts may be
used. Such descriptions are not exhaustive and are for general informational
purposes only. The tax rules regarding Qualified Plans are very complex and
will have differing applications, depending on individual facts and
circumstances. Each purchaser should obtain competent tax advice prior to
purchasing a Contract issued under a Qualified Plan.
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Insurance Company in
connection with Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described
in this Statement of Additional Information. Generally, Contracts issued
pursuant to Qualified Plans are not transferable except upon surrender or
annuitization. Various penalty and excise taxes may apply to contributions or
distributions made in violation of applicable limitations. Furthermore,
certain withdrawal penalties and restrictions may apply to surrenders from
Qualified Contracts. (See "Tax Treatment of Withdrawals - Qualified
Contracts.")
a. H.R. 10 Plans
Section 401 of the Code permits self-employed individuals to establish
Qualified Plans for themselves and their employees, commonly referred to as
"H.R. 10" or "Keogh" plans. Contributions made to the Plan for the benefit of
the employees will not be included in the gross income of the employees until
distributed from the Plan. The tax consequences to participants may vary,
depending upon the particular Plan design. However, the Code places
limitations and restrictions on all Plans, including on such items as: amounts
of allowable contributions; form, manner and timing of distributions;
transferability of benefits; vesting and nonforfeitability of interests;
nondiscrimination in eligibility and participation; and the tax treatment of
distributions, withdrawals and surrenders. (See "Tax Treatment of Withdrawals
- - Qualified Contracts.") Purchasers of Contracts for use with an H.R. 10 Plan
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
b. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities"
by public schools and certain charitable, educational and scientific
organizations described in Section 501(c)(3) of the Code. These qualifying
employers may make contributions to the Contracts for the benefit of their
employees. Such contributions are not includable in the gross income of the
employee until the employee receives distributions from the Contract. The
amount of contributions to the tax-sheltered annuity is limited to certain
maximums imposed by the Code. Furthermore, the Code sets forth additional
restrictions governing such items as transferability, distributions,
nondiscrimination and withdrawals. (See "Tax Treatment of Withdrawals
Qualified Contracts" and "Tax-Sheltered Annuities - Withdrawal Limitations.")
Employee loans are not allowed under these Contracts. Any employee should
obtain competent tax advice as to the tax treatment and
suitability of such an investment.
c. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to
an IRA which may be deductible from the individual's gross income. These IRAs
are subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts.")
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of Contracts for use with IRAs are subject to special requirements
imposed by the Code, including the requirement that certain informational
disclosure be given to persons desiring to establish an IRA. Purchasers of
Contracts to be qualified as Individual Retirement Annuities should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
d. Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to establish
various types of retirement plans for employees. These retirement plans may
permit the purchase of the Contracts to provide benefits under the Plan.
Contributions to the Plan for the benefit of employees will not be includable
in the gross income of the employee until distributed from the Plan. The tax
consequences to participants may vary, depending upon the particular Plan
design. However, the Code places limitations and restrictions on all Plans,
including on such items as: amount of allowable contributions; form, manner
and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Participant loans are not allowed under the Contracts purchased in
connection with these Plans. (See "Tax Treatment of Withdrawals Qualified
Contracts.") Purchasers of Contracts for use with Corporate Pension or Profit-
Sharing Plans should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of
the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under the
retirement plan. Special tax rules may be available for certain distributions
from a Qualified Contract. Section 72(t) of the Code imposes a 10% penalty tax
on the taxable portion of any distribution from qualified retirement plans,
including Contracts issued and qualified under Code Sections 401 (H.R. 10 and
Corporate Pension and Profit-Sharing Plans), 403(b) (Tax-Sheltered Annuities)
and 408(b) (Individual Retirement Annuities). To the extent amounts are not
includible in gross income because they have been properly rolled over to an
IRA or to another eligible Qualified Plan, no tax penalty will be imposed. The
tax penalty will not apply to the following distributions: (a) if distribution
is made on or after the date on which the Contract Owner or Annuitant (as
applicable) reaches age 59 1/2; (b) distributions following the death or
disability of the Contract Owner or Annuitant (as applicable) (for this
purpose disability is as defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of substantially equal
periodic payments made not less frequently than annually for the life (or life
expectancy) of the Contract Owner or Annuitant (as applicable) or the joint
lives (or joint life expectancies) of such Contract Owner or Annuitant (as
applicable) and his designated beneficiary; (d) distributions to a Contract
Owner or Annuitant (as applicable) who has separated from service after he has
attained age 55; (e) distributions made to the Contract Owner or Annuitant (as
applicable) to the extent such distributions do not exceed the amount
allowable as a deduction under Code Section 213 to the Contract Owner or
Annuitant (as applicable) for amounts paid during the taxable year for medical
care; (f) distributions made to an alternate payee pursuant to a qualified
domestic relations order; and (g) distributions from an Individual Retirement
Annuity for the purchase of medical insurance (as described in Section
213(d)(1)(D) of the Code) for the Contract Owner and his or her spouse and
dependents if the Contract Owner has received unemployment compensation for at
least 12 weeks. This exception no longer applies after the Contract Owner has
been re-employed for at least 60 days. The exceptions stated in items (d) and
(f) above do not apply in the case of an Individual Retirement Annuity. The
exception stated in item (c) applies to an Individual Retirement Annuity
without the requirement that there be a separation from service.
Generally, distributions from a Qualified Plan must commence no later than
April 1 of the calendar year following the later of: (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
TAX-SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Contract Owner: (1) attains age 59 ;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract Value which represents contributions by the Contract Owner and does
not include any investment results. The limitations on withdrawals became
effective on January 1, 1989 and apply only to salary reduction contributions
made after December 31, 1988, and to income attributable to such contributions
and to income attributable to amounts held as of December 31, 1988. The
limitations on withdrawals do not affect rollovers and transfers between
certain Qualified Plans. Contract Owners should consult their own tax counsel
or other tax adviser regarding any distributions.
ANNUITY PROVISIONS
FIXED ANNUITY PAYOUT
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Insurance Company and do not vary with the investment experience
of a Fund. The Fixed Account value on the day immediately preceding the Income
Date will be used to determine the Fixed Annuity monthly payment. The monthly
Annuity Payment will be based upon the Contract Value at the time of
annuitization, the Annuity Option selected, the age of the annuitant and any
joint annuitant and the sex of the annuitant and joint annuitant where
allowed.
VARIABLE ANNUITY PAYOUT
A variable annuity is an annuity with payments which: (1) are not
predetermined as to dollar amount; and (2) will vary in amount with the net
investment results of the applicable Fund(s).
ANNUITY UNIT VALUE
On the Income Date, a fixed number of Annuity Units will be purchased as
follows:
The first Annuity Payment is equal to the Adjusted Contract Value, divided
first by $1,000 and then multiplied by the appropriate Annuity Payment amount
for each $1,000 of value for the Annuity Option selected. In each Fund the
fixed number of Annuity Units is determined by dividing the amount of the
initial Annuity Payment determined for each Fund by the Annuity Unit value on
the Income Date. Thereafter, the number of Annuity Units in each Fund remains
unchanged unless the Contract Owner elects to transfer between Funds. All
calculations will appropriately reflect the Annuity Payment frequency
selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum
of the Annuity Payments for each Fund. The Annuity Payment in each Fund is
determined by multiplying the number of Annuity Units then allocated to such
Fund by the Annuity Unit value for that Fund.
On each subsequent Valuation Date, the value of an Annuity Unit is determined
in the following way:
First: The Net Investment Factor is determined as described in the Prospectus
under "Purchase - Accumulation Units."
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a. the value of the Annuity Unit for the immediately preceding Valuation
Period.
b. multiplied by the Net Investment Factor for the current Valuation
Period;
c. divided by the Assumed Net Investment Factor (see below) for the
Valuation Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that the Insurance Company will use is 5%. However, the Insurance
Company may agree to use a different value.
MORTALITY AND EXPENSE RISK GUARANTEE
The Insurance Company guarantees that the dollar amount of each annuity
payment after the first annuity payment will not be affected by variations in
mortality and expense experience.
FINANCIAL STATEMENTS
The audited consolidated financial statements of the Insurance Company as of
and for the year ended December 31, ______, included herein should be
considered only as bearing upon the ability of the Insurance Company to meet
its obligations under the Contracts. The audited financial statements of the
Separate Account as of and for the year ended December 31, ______, are also
included herein.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial Statements
The financial statements of the Company and the Separate Account will
be filed by amendment.
b. Exhibits
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account
2. Not Applicable
3. Principal Underwriter Agreement (to be filed by Amendment)
4. Individual Variable Annuity Contract
4a. Waiver of Contingent Deferred Sales Charge Endorsement
4b. Enhanced Death Benefit Endorsement
5. Application for Individual Variable Annuity Contract
6.(i) Copy of Articles of Incorporation of the Company
(ii) Copy of the Bylaws of the Company (to be filed by Amendment)
7. Not Applicable
8. Form of Fund Participation Agreement
9. Opinion and Consent of Counsel (to be filed by Amendment)
10. Independent Auditors' Consent (to be filed by Amendment)
11. Not Applicable
12. Not Applicable
13. Calculation of Performance Information (to be filed be Amendment)
14. Company Organizational Chart
27. Financial Data Schedule (to be filed by Amendment)
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Officers and Directors of the Company:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Positions and Offices
Business Address with Depositor
- ----------------- ------------------------------
Lowell C. Anderson Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Howard E. Barnhill Director
The Mews
3726 Rachel Lane
Naples, FL 34103
Ronald L. Wobbeking Chairman, Chief Executive Officer and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Thomas G. Brown Director
One Liberty Plaza,
45th Floor
New York, NY 10006
Thomas Duncanson Director
12778 Mariner Court
Palm City, FL 34990
Edward J. Bonach Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Alan A. Grove Secretary and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Shannon Hendricks Treasurer
1750 Hennepin Avenue
Minneapolis, MN 55403
Dennis Marion Director
500 Valley Road
Wayne, NJ 07470
Reinhard Obermueller Director
560 Lexington Avenue
New York, NY 10022
Kenneth P. Schrapp Appointed Actuary
1750 Hennepin Avenue
Minneapolis, MN 55403
Robert S. James Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Eugene T. Wilkinson Director
14 Commerce Drive
Cranford, NJ 07016
Richard M. Murray Director
60 Remsen Street, Apt. 10C
Brooklyn Heights, NY 11201
Eugene Long Vice President of Operations
152 W. 57th Street and Director
18th Floor
New York, NY 10019
Thomas J. Lynch President, Chief
1750 Hennepin Avenue Marketing Officer
Minneapolis, MN 55403 and Director
Carol B. Shaw Second Vice President
152 W. 57th Street, 18th Floor
New York, NY 10019
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT
The Company organizational chart is attached as Exhibit 14.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable.
ITEM 28. INDEMNIFICATION
The Bylaws of the Company provide that:
Each person (and the heirs, executors, and administrators of such person) made
or threatened to be made a party to any action, civil or criminal, by reason
of being or having been a Director, officer, or employee of the corporation
(or by reason of serving any other organization at the request of the
corporation) shall be indemnified to the extent permitted by the laws of the
State of New York, and in the manner prescribed therein.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted for directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company 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,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
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 Company 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 29. PRINCIPAL UNDERWRITERS
a. NALAC Financial Plans LLC is the principal underwriter for the
Contracts. It also is the principal underwriter for:
Allianz Life Variable Account A
Allianz Life Variable Account B
b. The following are the officers and directors of NALAC Financial Plans
LLC:
<TABLE>
<CAPTION>
<S> <C>
Name & Principal Positions and Offices
Business Address with Underwriter
- ------------------ ------------------------
Alan A. Grove Director
1750 Hennepin Avenue
Minneapolis, MN 55403
James P. Kelso Director
1750 Hennepin Ave.
Minneapolis, MN 55403
Thomas B. Clifford President and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael T. Westermeyer Secretary and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael J. Yates Treasurer
1750 Hennepin Avenue
Minneapolis, MN 55403
Edward J. Bonach Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine L. Mielke Compliance Officer
1750 Hennepin Avenue
Minneapolis, MN 55403
</TABLE>
c. Not Applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Thomas Clifford, whose address is 1750 Hennepin Avenue, Minneapolis,
Minnesota, maintains physical possession of the accounts, books or documents
of the Variable Account required to be maintained by Section 31(a) of the
Investment Company Act of 1940, as amended, and the rules promulgated
thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never more than
sixteen (16) months old for so long as payment under the variable annuity
contracts may be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
d. Preferred Life Insurance Company of New York ("Company") hereby
represents that the fees and charges deducted under the Contract described in
the Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
REPRESENTATIONS
The Company hereby represents that it is relying upon a No-Action Letter
issued to the American Council of Life Insurance, dated November 28, 1988
(Commission ref. IP-6-88), and that the following provisions have been
complied with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase
the contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment
alternatives available under the employer's Section 403(b) arrangement to
which the participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant certifies that it has caused this
registration statement to be signed on its behalf in the City of Minneapolis
and State of Minnesota, on this 27th day of December, 1996.
PREFERRED LIFE VARIABLE ACCOUNT C
(Registrant)
By: PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
(Depositor)
By: /s/ ALAN A. GROVE
________________________________________________
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
By: /s/ ALAN A. GROVE
_______________________________________________
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on
the dates indicated.
Signature and Title
<TABLE>
<CAPTION>
<S> <C> <C>
Lowell C. Anderson* Director 12/27/96
- ------------------------ ---------
Lowell C. Anderson
Howard E. Barnhill* Director 12/27/96
- ------------------------ ---------
Howard E. Barnhill
Ronald L. Wobbeking* Chairman, Chief Executive 12/27/96
- ------------------------ ---------
Ronald L. Wobbeking Officer and Director
Shannon Hendricks* Treasurer 12/27/96
- ------------------------ ---------
Shannon Hendricks
/s/ ALAN A. GROVE Secretary and Director 12/27/96
- --------------------- ---------
Alan A. Grove
Thomas G. Brown* Director 12/27/96
- ------------------------ ---------
Thomas G. Brown
Thomas Duncanson* Director 12/27/96
- ------------------------ ---------
Thomas Duncanson
Edward J. Bonach* Director 12/27/96
- ------------------------ ---------
Edward J. Bonach
Robert S. James* Director 12/27/96
- ------------------------ ---------
Robert S. James
Thomas J. Lynch* Director 12/27/96
- ------------------------ ---------
Thomas J. Lynch
Dennis Marion* Director 12/27/96
- ------------------------ ---------
Dennis Marion
Richard M. Murray* Director 12/27/96
- ------------------------ ---------
Richard M. Murray*
Eugene T. Wilkinson* Director 12/27/96
- ------------------------ ---------
Eugene T. Wilkinson
Eugene Long* Director 12/27/96
- ------------------------ ---------
Eugene Long
Reinhard W. Obermueller* Director 12/27/96
- ------------------------ ---------
Reinhard W. Obermueller
</TABLE>
* By /S/ ALAN A. GROVE
____________________________________
Attorney-in-Fact
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Lowell C. Anderson, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint Alan
A. Grove, as my attorney and agent, for me, and in my name as a Director of
Preferred Life on behalf of Preferred Life or otherwise, with full power to
execute, deliver and file with the Securities and Exchange Commission all
documents required for registration of a security under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 31st day of March, 1992.
WITNESS:
/S/ TINA M. ERICKSON /S/ LOWELL C. ANDERSON
__________________________________ __________________________________
Tina M. Erickson Lowell C. Anderson
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Howard E. Barnhill, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 2nd day of April, 1992.
WITNESS:
/S/ ALAN A. GROVE /S/ HOWARD E. BARNHILL
__________________________________ __________________________________
Alan A. Grove Howard E. Barnhill
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Ronald L. Wobbeking, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 1st day of April, 1992.
WITNESS:
/S/ TINA M. ERICKSON /S/ RONALD L. WOBBEKING
__________________________________ __________________________________
Tina M. Erickson Ronald L. Wobbeking
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Shannon Hendricks, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 13th day of April, 1995.
WITNESS:
/S/ MICHAEL T. WESTERMEYER /S/ SHANNON HENDRICKS
__________________________________ __________________________________
Michael T. Westermeyer Shannon Hendricks
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Alan A. Grove, a Director of Preferred
Life Insurance Company of New York (Preferred Life), a corporation duly
organized under the laws of the State of New York, do hereby appoint Lowell C.
Anderson, as my attorney and agent, for me, and in my name as a Director of
Preferred Life on behalf of Preferred Life or otherwise, with full power to
execute, deliver and file with the Securities and Exchange Commission all
documents required for registration of a security under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 2nd day of April, 1992.
WITNESS:
/S/ TINA M. ERICKSON /S/ ALAN A. GROVE
__________________________________ __________________________________
Tina M. Erickson Alan A. Grove
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas G. Brown, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 2nd day of April, 1992.
WITNESS:
/S/ ALAN A. GROVE /S/ THOMAS G. BROWN
__________________________________ __________________________________
Alan A. Grove Thomas G. Brown
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas Duncanson, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 2nd day of April, 1992.
WITNESS:
/S/ ALAN A. GROVE /S/ THOMAS DUNCANSON
__________________________________ __________________________________
Alan A. Grove Thomas Duncanson
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Edward J. Bonach, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 30th day of March, 1992.
WITNESS:
/S/ MARGO JESKE /S/ EDWARD J. BONACH
__________________________________ __________________________________
Margo Jeske Edward J. Bonach
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Robert S. James, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 20th day of April, 1993.
WITNESS:
/S/ ROBERT S. JAMES
__________________________________ __________________________________
Robert S. James
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas J. Lynch, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 20th day of April, 1993.
WITNESS:
/S/ MICHAEL T. WESTERMEYER /S/ THOMAS J. LYNCH
__________________________________ __________________________________
Michael T. Westermeyer Thomas J. Lynch
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Dennis J. Marion, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 2nd day of April, 1992.
WITNESS:
/S/ ALAN A. GROVE /S/ DENNIS J. MARION
__________________________________ __________________________________
Alan A. Grove Dennis J. Marion
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Richard M. Murray, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 2nd day of April, 1992.
WITNESS:
/S/ ALAN A. GROVE /S/ RICHARD M. MURRAY
__________________________________ __________________________________
Alan A. Grove Richard M. Murray
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Eugene T. Wilkinson, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 2nd day of April, 1992.
WITNESS:
/S/ ALAN A. GROVE /S/ EUGENE T. WILKINSON
__________________________________ __________________________________
Alan A. Grove Eugene T. Wilkinson
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Eugene Long, a Director of Preferred
Life Insurance Company of New York (Preferred Life), a corporation duly
organized under the laws of the State of New York, do hereby appoint Lowell C.
Anderson and Alan A. Grove, each individually as my attorney and agent, for
me, and in my name as a Director of Preferred Life on behalf of Preferred Life
or otherwise, with full power to execute, deliver and file with the Securities
and Exchange Commission all documents required for registration of a security
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, and to do and perform each and every act that said
attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 13th day of April, 1995.
WITNESS:
/S/ CARL SHAW /S/ EUGENE LONG
__________________________________ __________________________________
Carl Shaw Eugene Long
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Reinhard W. Obermueller, a Director of
Preferred Life Insurance Company of New York (Preferred Life), a corporation
duly organized under the laws of the State of New York, do hereby appoint
Lowell C. Anderson and Alan A. Grove, each individually as my attorney and
agent, for me, and in my name as a Director of Preferred Life on behalf of
Preferred Life or otherwise, with full power to execute, deliver and file with
the Securities and Exchange Commission all documents required for registration
of a security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 23rd day of September, 1996.
WITNESS:
/S/ A. FRANCISCO /S/ REINHARD W. OBERMUELLER
__________________________________ __________________________________
A. Francisco Reinhard W. Obermueller
EXHIBITS
TO
FORM N-4
PREFERRED LIFE VARIABLE ACCOUNT C
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
INDEX TO EXHIBITS
EXHIBIT PAGE
EX-99.B1 Resolution of Board of Directors
EX-99.B4 Individual Variable Annuity Contract
EX-99.B4a Waiver of Contingent Deferred Sales Charge Endorsement
EX-99.B4b Enhanced Death Benefit Endorsement
EX-99.B5 Application for Individual Variable Annuity Contract
EX-99.B6(i) Copy of Articles of Incorporation
EX-99.B8 Form of Fund Participation Agreement
EX-99.B14 Company Organizational Chart
CERTIFICATION
The following resolutions were adopted at a meeting of the Board of Directors
of Preferred Life Insurance Company of New York on February 26, 1988.
RESOLVED: That this company is hereby authorized to establish one or more
separate accounts in accordance with state insurance laws and to issue variable
and fixed annuity contracts and variable and fixed life insurance policies with
the reserves for such contracts and policies being segregated in such separate
accounts or in the general accounts of this company in the manner specified in
such accounts.
RESOLVED FURTHER: That the President or Vice President - Operations of the
Company or such other executive officer of this company as shall be designated
by the President is hereby authorized to designate such separate accounts as may
be deemed necessary or convenient and to register such separate accounts and
those variable and fixed annuity contracts and life insurance policies
authorized hereby under such federal securities laws as are deemed appropriate.
RESOLVED FURTHER: That the President or Vice President - Operations of this
company or such other executive officer of this company as shall be designated
by the President is hereby authorized to invest such sums in any separate
account established hereby as may be deemed necessary or appropriate to comply
with requirements of applicable law.
RESOLVED FURTHER: That the President of this company and such other executive
officers of this company as may be appropriate, are hereby authorized to do any
act necessary or appropriate to carry out the intention of this resolution.
I, the undersigned, do hereby certify that I am the duly elected and qualified
Secretary and keeper of the records and corporate seal of Preferred Life
Insurance Company of New York, a corporation organized under the laws of the
State of New York, and that the foregoing is a full, true and correct copy of
the resolutions duly adopted at a meeting of the Board of Directors of said
Corporation, convened and held in accordance with the law and articles and
bylaws of said Corporation on the 26th day of February, 1988, and that said
resolution supersedes all resolutions previously adopted for the purpose stated
and is now in full force and effect.
Attest/s/ VICKI L. OSBAUGH /s/ ALAN A. GROVE
__________________________ ____________________________
Alan A. Grove, Secretary
[PREFERRED LIFE logo]
INSURANCE COMPANY OF NEW YORK
152 West 57th Street, 18th Floor
New York, New York 10019
This is a legal Contract between the Contract Owner (referred to in this
Contract as you and your) and Preferred Life Insurance Company of New York
(Preferred Life) (herein referred to as we, us and our). We will make Annuity
Payments as set forth in this Contract beginning on the Income Date.
This Contract is issued in consideration of the payment of the initial Purchase
Payment.
READ YOUR CONTRACT CAREFULLY
RIGHT TO EXAMINE. THIS CONTRACT MAY BE RETURNED WITHIN 10 DAYS AFTER YOU RECEIVE
IT. IT CAN BE MAILED OR DELIVERED TO EITHER US OR THE AGENT WHO SOLD IT. RETURN
OF THIS CONTRACT BY MAIL IS EFFECTIVE ON BEING POSTMARKED, PROPERLY ADDRESSED
AND POSTAGE PREPAID. THE RETURNED CONTRACT WILL BE TREATED AS IF WE HAD NEVER
ISSUED IT. WE WILL PROMPTLY REFUND THE CONTRACT VALUE AS OF THE DATE OF
SURRENDER. THIS MAY BE MORE OR LESS THAN THE PURCHASE PAYMENTS. WE HAVE THE
RIGHT TO ALLOCATE PAYMENTS TO THE MONEY MARKET FUND UNTIL THE EXPIRATION OF THE
RIGHT TO EXAMINE PERIOD. IF WE SO ALLOCATE PAYMENTS, WE WILL REFUND THE GREATER
OF THE PURCHASE PAYMENTS, LESS ANY SURRENDERS, OR THE CONTRACT VALUE.
This is a Variable Annuity Contract with Annuity Payments and Contract Values
increasing or decreasing depending on the experience of the Variable Account
which is set forth in the Contract Schedule.
Signed by the Company:
/s/ Alan A. Grove /s/ Thomas J. Lynch
Secretary President
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE ANNUITY
NONPARTICIPATING
Annuity payments will not decrease as long as the investment return of the
variable account assets equals or exceeds the Assumed Investment Return plus
1.34% plus the Administrative Expense Charge on an annual basis. Variable
Account expenses consist of a mortality and expense risk charge, an
administrative charge, a distribution expense charge, a contract maintenance
charge, and transfer fees. These are shown on the Contract Schedule Page.
The variable provisions can be found on pages 4, 5, 6, and 15 of this
contract.
TABLE OF CONTENTS
RIGHT TO EXAMINE
CONTRACT SCHEDULE
DEFINITIONS
PURCHASE PAYMENTS
PURCHASE PAYMENTS
CHANGE IN PURCHASE PAYMENTS
NO DEFAULT
ALLOCATION OF PURCHASE PAYMENTS
VARIABLE ACCOUNT
THE VARIABLE ACCOUNT
VALUATION OF ASSETS
ACCUMULATION UNITS
ACCUMULATION UNIT VALUE
NET INVESTMENT FACTOR
MORTALITY AND EXPENSE RISK CHARGE
ADMINISTRATIVE CHARGE
DISTRIBUTION EXPENSE CHARGE
MORTALITY AND EXPENSE GUARANTEE
CONTRACT VALUE
CONTRACT MAINTENANCE CHARGE
TRANSFERS
SURRENDER PROVISIONS
SURRENDERS
CONTINGENT DEFERRED SALES CHARGE
PROCEEDS PAYABLE ON DEATH
DEATH OF CONTRACT OWNER DURING THE ACCUMULATION PERIOD
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD
DEATH OF CONTRACT OWNER DURING THE ANNUITY PERIOD
DEATH OF ANNUITANT
PAYMENT OF DEATH BENEFIT
BENEFICIARY
CHANGE OF BENEFICIARY
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
CONTRACT OWNER, ANNUITANT, ASSIGNMENT PROVISIONS
CONTRACT OWNER
JOINT OWNER
ANNUITANT
ASSIGNMENT OF A CONTRACT
ANNUITY PROVISIONS
GENERAL
INCOME DATE
SELECTION OF AN ANNUITY OPTION
ANNUITY OPTIONS
OPTION 1 - LIFE ANNUITY
OPTION 2 - LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY ANNUITY
PAYMENTS GUARANTEED
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH 60, 120, 180, OR
240 MONTHLY ANNUITY PAYMENTS GUARANTEED
OPTION 5 - REFUND LIFE ANNUITY
ANNUITY
FIXED ANNUITY
VARIABLE ANNUITY
GENERAL PROVISIONS
THE CONTRACT
NON-PARTICIPATING IN SURPLUS
INCONTESTABILITY
MISSTATEMENT OF AGE OR SEX
CONTRACT SETTLEMENT
REPORTS
TAXES
EVIDENCE OF SURVIVAL
PROTECTION OF PROCEEDS
MODIFICATION OF CONTRACT
CONTRACT SCHEDULE
CONTRACT OWNER: [John Doe] CONTRACT NUMBER: [GA687456]
JOINT OWNER: [Jane Doe] ISSUE DATE: [04/15/96]
ANNUITANT: [John Doe] INCOME DATE: 04/15/06]
PURCHASE PAYMENTS:
INITIAL PURCHASE PAYMENT: [Non-Qualified: $5,000 or
$2,000 if you have selected AIP;
MINIMUM SUBSEQUENT
PURCHASE PAYMENT: [$250 or $100 if you have selected AIP]
MAXIMUM TOTAL
PURCHASE PAYMENTS: [$1 million; higher amounts may be accepted
with our prior approval]
ALLOCATION GUIDELINES:
[1. Currently, you can select all of the Funds and the Fixed
Account.
2. If allocations are made in percentages, whole numbers must
be used.
3. If the initial Purchase Payment and the forms required to
issue a Contract are in good order, the initial Purchase
Payment will be credited to your Contract within two (2)
business days after receipt at the Valuemark Service Center.
Additional Purchase Payments will be credited to your Contract
as of the Valuation Period when they are received in good
order.]
VARIABLE ACCOUNT: [Preferred Life Insurance Company
of New York Variable Account C]
ELIGIBLE INVESTMENTS:
[FRANKLIN VALUEMARK FUNDS ]
[CAPITAL GROWTH FUND]
[GROWTH AND INCOME FUND]
[HIGH INCOME FUND]
[INCOME SECURITIES FUND]
[MONEY MARKET FUND]
[PRECIOUS METALS FUND]
[REAL ESTATE SECURITIES FUND]
[RISING DIVIDENDS FUND]
[SMALL CAP FUND]
[TEMPLETON DEVELOPING MARKETS EQUITY FUND]
[TEMPLETON GLOBAL ASSET ALLOCATION FUND]
[TEMPLETON GLOBAL INCOME SECURITIES FUND]
[TEMPLETON GLOBAL GROWTH FUND]
[TEMPLETON INTERNATIONAL EQUITY FUND]
[TEMPLETON INTERNATIONAL SMALLER COMPANIES FUND]
[TEMPLETON PACIFIC GROWTH FUND]
[U.S. GOVERNMENT SECURITIES FUND]
[UTILITY EQUITY FUND]
[ZERO COUPON FUND 2000]
[ZERO COUPON FUND 2005]
[ZERO COUPON FUND 2010]
[PREFERRED LIFE INSURANCE COMPANY OF NEW YORK GENERAL ACCOUNT]
[PREFERRED LIFE FIXED ACCOUNT]
MORTALITY AND EXPENSE RISK CHARGE: During the Accumulation Period, the
Mortality and Expense Risk Charge is equal on an annual basis to [1.34%]
of the average daily net asset value of the Variable Account. During the
Annuity Period, the Mortality and Expense Risk is equal on an annual basis
to [1.25%] of the average daily net asset value of the Variable Account.
We may decrease this charge, but we may not increase it.
ADMINISTRATIVE CHARGE: Equal on an annual basis to [.15%] of the average
daily net asset value of the Variable Account.
DISTRIBUTION EXPENSE CHARGE: [None]
CONTRACT MAINTENANCE CHARGE: The Contract Maintenance Charge is currently
[$30.00] each Contract Year. The Contract Maintenance Charge will be deducted
from the Contract Value on each Contract Anniversary while this Contract is
in force. However, during the Accumulation Period, if your Contract Value on
a Contract Anniversary is at least [$50,000], then no Contract Maintenance
Charge is deducted. If a total surrender is made on other than a Contract
Anniversary and your Contract Value for the Valuation Period during which the
total surrender is made is less than [$50,000], the full Contract Maintenance
Charge will be deducted at the time of the total surrender. The Contract
Maintenance Charge will be deducted from the Funds [and the Fixed Account] in
the same proportion that the amount of the Contract Value in each Fund [and/or
Fixed Account] bears to the total Contract Value. During the Annuity Period,
the Contract Maintenance Charge will be collected pro rata from each Annuity
Payment. In the event you own more than one Contract, we will determine the
total Contract Value for all of the Contracts. If the total Contract Value
is at least [$50,000], we will not assess the Contract Maintenance Charge.
If the Contract Owner is not a natural person, we will look to the Annuitant
in determining the foregoing.
TRANSFERS:
NUMBER OF FREE TRANSFERS PERMITTED: Currently, there are no limits on
the number of transfers that can be made. We reserve the right to
change this, but you will always be allowed at least 3 free transfers
in any Contract Year. [Currently, you are allowed 12 free transfers
each Contract Year. This applies to transfers prior to and after the
Income Date.]
TRANSFER FEE: For each transfer in excess of the Free Transfers
Permitted, the Transfer Fee is the lesser of [$25] or 2% of the amount
transferred. Transfers made at the end of the Right to Examine period
by us and any transfers made pursuant to a regularly scheduled transfer
will not be counted in determining the application of the Transfer Fee.
MINIMUM AMOUNT TO BE TRANSFERRED: [$1,000 (from any Fund or the Fixed
Account) or your entire interest in the Fund or the Fixed Account, if
less.] This requirement is waived if the transfer is pursuant to a
pre-scheduled transfer.
SURRENDERS:
CONTINGENT DEFERRED SALES CHARGE: A Contingent Deferred Sales Charge
is assessed against Purchase Payments withdrawn. The Charge is
calculated at the time of each surrender. For partial surrenders, the
Charge is deducted from the remaining Contract Value and is deducted
from the Funds [and the Fixed Account] in the same proportion that the
amount of surrender from the Fund [or Fixed Account] bears to the total
of the partial surrender. The Contingent Deferred Sales Charge is
based upon the length of the time from receipt of the Purchase Payment.
Surrenders are deemed to have come from the oldest Purchase Payments
first. Each Purchase Payment is tracked as to its date of receipt and
the Contingent Deferred Sales Charges are determined in accordance with
the following.
[CONTINGENT DEFERRED SALES CHARGE
Number of Years
from Receipt Charge
____________ ______
0 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 years or more 0%]
[FREE SURRENDER AMOUNT: Each Contract Year after the first Contract
Year, on a non-cumulative basis, you can withdraw amounts from the
Contract Value without incurring a Contingent Deferred Sales Charge.
The amount not subject to the Contingent Deferred Sales Charge is 15%
of the Contract Value, less any previous Free Surrender Amount
withdrawn during that Contract Year.]
[If your Contract Value is $25,000 or more you can elect the Systematic
Withdrawal Option in lieu of the Free Surrender Option described above.
Systematic Withdrawals are available on a monthly or quarterly basis if
your Contract Value is $25,000 or more. The total of Systematic
Withdrawals in a Contract Year which can be made without incurring a
Contingent Deferred Sales Charge is limited to not more than 15% of the
Contract Value determined on the last Valuation Date prior to the
receipt of the Systematic Withdrawal Option request. There is no
limit to the amount or percentage of the Systematic Withdrawals if your
Purchase Payments are no longer subject to a Contingent Deferred Sales
Charge. If you have elected the Systematic Withdrawal Option, any
additional surrenders will be subject to any applicable Contingent
Deferred Sales Charge. We reserve the right to modify the eligibility
rules at any time, without notice.]
[If you have a Qualified Contract and your Contract Value is $25,000
or more, you can elect the Minimum Distribution Program with respect
to your Contract. Surrenders will be made on a monthly or quarterly
basis and will not be subject to a Contingent Deferred Sales Charge.
Such payments will be designed to meet the applicable minimum
distribution requirements imposed by the Internal Revenue Code on
Qualified Contracts. Withdrawals from your Qualified Contract
pursuant to the Minimum Distribution Program are in lieu of the Free
Surrender Amount described above. If you have elected the Minimum
Distribution Program, any additional surrenders will be subject to
any applicable Contingent Deferred Sales Charge.]
MINIMUM PARTIAL SURRENDER: [$500]
MINIMUM CONTRACT VALUE WHICH MUST REMAIN IN THE CONTRACT AFTER A
PARTIAL SURRENDER: [$2,000]
[FIXED ACCOUNT INITIAL RATE:] [X%]
We guarantee this rate for one year from the Issue Date.
RIDERS:
[Individual Retirement Annuity Endorsement]
[403 (b) Endorsement]
[Enhanced Death Benefit Endorsement]
[Unisex Endorsement]
[Declared Interest Rate Fixed Account Endorsement]
[Group Pension Plan Death Benefit Endorsement]
[Waiver of Contingent Deferred Sales Charge Endorsement]
SERVICE OFFICE: VALUEMARK SERVICE CENTER
[Lock Box Department - 3W
P.O. Box 11129
101 Barclay Street
New York, NY 10286-1129
800-624-0197]
DEFINITIONS
ACCUMULATION UNIT: An accounting unit of measure used to calculate the
Contract Value prior to the Income Date.
ACCUMULATION PERIOD: The period prior to the Income Date during which you
can make Purchase Payments.
ADJUSTED CONTRACT VALUE: The Contract Value less any applicable Premium Tax.
This amount is applied to the applicable Annuity Table to determine the
initial Annuity Payment.
AGE: Age last birthday unless otherwise specified.
ANNUITANT: The natural person upon whose continuation of life any Annuity
Payment involving life contingencies depends. You may change the Annuitant
at any time prior to the Income Date unless the Contract Owner is a
non-individual. On or after the Income Date, any reference to Annuitant
shall also include any Joint Annuitant.
ANNUITY OPTION: An arrangement under which Annuity Payments are made under
this Contract.
ANNUITY PAYMENTS: The series of payments made to you or any named payee
after the Income Date under the Annuity Option selected.
ANNUITY PERIOD: The period of time beginning on the Income Date during which
Annuity Payments are made.
ANNUITY RESERVE: The assets which support the Annuity Option you have
selected during the Annuity Period.
ANNUITY UNIT: An accounting unit of measure used to calculate Annuity
Payments after the Income Date.
ASSUMED INVESTMENT RETURN: The investment return upon which the Variable
Annuity Payments in the Contract are based.
AUTHORIZED REQUEST: A request, in a form satisfactory to the Company, which
is received by the Valuemark Service Center.
BENEFICIARY: The person(s) or entity(ies) who will receive any death
benefit payable under this Contract.
COMPANY: Preferred Life Insurance Company of New York.
CONTRACT ANNIVERSARY: An anniversary of the Issue Date of this Contract.
CONTRACT OWNER: The person(s) or entity(ies) entitled to the ownership
rights stated in this Contract. If Joint Owners are named, all references
to Contract Owner shall mean the Joint Owners.
CONTRACT SURRENDER VALUE: The Contract Value less any applicable Premium
Tax, less any Contingent Deferred Sales Charge and less any applicable
Contract Maintenance Charge.
CONTRACT VALUE: The dollar value as of any Valuation Date of all amounts
accumulated under this Contract.
CONTRACT YEAR: Any period of twelve (12) months commencing with the Issue
Date and each Contract Anniversary thereafter.
ELIGIBLE INVESTMENT(S): Those investments available under the Contract.
Current Eligible Investments are shown on the Contract Schedule.
FUND: A segment of an Eligible Investment which constitutes a separate
and distinct class of interests under an Eligible Investment.
GENERAL ACCOUNT: Our general investment account which contains all the
assets of the Company with the exception of the Variable Account and other
segregated asset accounts.
INCOME DATE: The date on which Annuity Payments are to begin.
ISSUE DATE: The date shown on the Contract Schedule on which the first
Contract Year begins.
JOINT OWNER: If there is more than one Contract Owner, each Contract Owner
shall be a Joint Owner of the Contract. Joint Owners have equal ownership
rights and must both authorize any exercising of those ownership rights unless
otherwise allowed by us. Any Joint Owner must be the spouse of the other
Contract Owner.
PREMIUM TAX: Any premium taxes owed to any governmental entity and assessed
against Purchase Payments or Contract Value.
PURCHASE PAYMENT: A payment made toward this Contract.
SUB-ACCOUNT: Variable Account assets are divided into Sub-Accounts. Assets
of each Sub-Account will be invested in shares of an Eligible Investment or
Fund. In this Contract, "Fund" may also refer to the Sub-Accounts from
which the Fund investment is made.
VALUATION DATE: The Variable Account will be valued each day that the New
York Stock Exchange is open for trading.
VALUATION PERIOD: The period commencing at the close of business of the
New York Stock Exchange on each Valuation Date and ending at the close of
business for the next succeeding Valuation Date.
VALUEMARK SERVICE CENTER: The office indicated on the Contract Schedule of
this Contract to which notices, requests and Purchase Payments must be sent.
All sums payable to us under the Contract are payable only at the Valuemark
Service Center.
VARIABLE ACCOUNT: A separate account maintained by us in which a portion of
our assets has been allocated for this and certain other contracts. It has
been designated on the Contract Schedule.
PURCHASE PAYMENTS
PURCHASE PAYMENTS: Purchase Payments are payable according to the frequency
and in the amount selected by you. The initial Purchase Payment is due on
the Issue Date. We reserve the right to decline any Purchase Payment. The
Minimum Subsequent Purchase Payment and the Maximum Total Purchase Payments
allowed are shown on the Contract Schedule.
CHANGE IN PURCHASE PAYMENTS: You may elect to increase or decrease or to
change the frequency of Purchase Payments.
NO DEFAULT: Unless surrendered, this Contract remains in force and will
not be in default if no additional Purchase Payments are made.
ALLOCATION OF PURCHASE PAYMENTS: Purchase Payments are allocated to one or
more of the Funds of the Variable Account [and/or the Fixed Account] in
accordance with your selection. The allocation of the initial Purchase
Payment is made in accordance with your selection made at the Issue Date.
Unless you inform us otherwise, subsequent Purchase Payments are allocated in
the same manner as the initial Purchase Payment. However, the Company has
reserved the right to allocate the initial Purchase Payment to the Money
Market Fund until the expiration of the Right to Examine period. All
allocations of Purchase Payments are subject to the Allocation Guidelines
shown on the Contract Schedule. We guarantee that you will be allowed to
select at least five Funds for allocation of Purchase Payments.
VARIABLE ACCOUNT
THE VARIABLE ACCOUNT: The Variable Account is designated on the Contract
Schedule. It consists of assets we have set aside and have kept separate
from the rest of our assets and those of our other separate accounts. The
assets of the Variable Account, equal to reserves and other liabilities of
your Contract and those of other Contract Owners, will not be charged with
liabilities arising out of any other business we may conduct.
The Variable Account assets are divided into Funds. The Funds which are
available under this Contract are listed on the Contract Schedule. The
assets of the Fund are allocated to the Eligible Investments (and/or the
Funds, if any, within an Eligible Investment) shown on the Contract Schedule.
We may add additional Eligible Investments or Funds to those shown. You may
be permitted to transfer your Contract Value or allocate Purchase Payments
to the additional Fund(s). However, the right to make such transfers or
allocations will be limited by any terms and conditions we may impose.
Should the shares of any Eligible Investment(s), or any Fund(s) within an
Eligible Investment, become unavailable for investment by the Variable
Account, or our Board of Directors deems further investment in the shares
inappropriate, we may limit further purchase of such shares or substitute
shares of another Eligible Investment or Fund for shares already purchased.
VALUATION OF ASSETS: Assets of Eligible Investments within each Fund will
be valued at their net asset value on each Valuation Date.
ACCUMULATION UNITS: Accumulation Units shall be used to account for all
amounts allocated to or withdrawn from the Funds of the Variable Account as
a result of Purchase Payments, surrenders, transfers, or fees and charges.
We will determine the number of Accumulation Units of a Sub-Account
purchased or canceled. This will be done by dividing the amount allocated to
(or the amount withdrawn from) the Sub-Account by the dollar value of one
Accumulation Unit of the Sub-Account as of the end of the Valuation Period
during which the transaction is processed at the Valuemark Service Center.
ACCUMULATION UNIT VALUE: The Accumulation Unit Value for each Fund was
arbitrarily set initially. Subsequent Accumulation Unit Values for each
Fund are determined by multiplying the Accumulation Unit Value for the
immediately preceding Valuation Period by the Net Investment Factor for the
Fund for the current period.
The Accumulation Unit value may increase or decrease from Valuation Period
to Valuation Period.
NET INVESTMENT FACTOR: The Net Investment Factor for each Fund is
determined by dividing A by B and multiplying by (1 - C) where:
A is (i) the net asset value per share of the Eligible Investment
or the Fund of an Eligible Investment held by the Fund at the
end of the current Valuation Period; plus
(ii) any dividend or capital gains per share declared on
behalf of such Eligible Investment or Fund that has an
ex-dividend date within the current Valuation Period.
B is the net asset value per share of the Eligible Investment or
Fund held by the Fund for the immediately preceding Valuation
Period.
C is (i) the Valuation Period equivalent of the daily Mortality and
Expense Risk Charge, for the Administrative Charge [and for the
Distribution Expense Charge, if any,] which are shown on the
Contract Schedule; plus
(ii) a charge factor, if any, for any taxes or any tax reserve
we have established as a result of the operation or maintenance
MORTALITY AND EXPENSE RISK CHARGE: Each Valuation Period, we deduct a
Mortality and Expense Risk Charge from the Variable Account which is equal,
on an annual basis, to the amount shown on the Contract Schedule. The
Mortality and Expense Risk Charge compensates us for assuming the mortality
and expense risks under this Contract.
ADMINISTRATIVE CHARGE: Each Valuation Period, we deduct an Administrative
Charge from the Variable Account which is equal, on an annual basis, to the
amount shown on the Contract Schedule. The Administrative Charge
compensates us for the costs associated with the administration of this
Contract and the Variable Account.
[DISTRIBUTION EXPENSE CHARGE: Each Valuation Period, we deduct a
Distribution Expense Charge from the Separate Account which is equal, on
an annual basis, to the amount shown on the Contract Schedule. The
Distribution Expense Charge compensates the Company for costs associated
with the distribution of Contracts.]
MORTALITY AND EXPENSE GUARANTEE: We guarantee that the dollar amount of
each annuity payment after the first will not be affected by variations in
mortality or expense experience.
CONTRACT VALUE
The Contract Value for any Valuation Period is equal to the total dollar
value accumulated under this Contract. The Contract Value in a Fund of the
Variable Account is determined by multiplying the number of Accumulation
Units allocated to the Contract Value for the Fund by the Accumulation Unit
Value. Purchase Payments, surrenders and transfers from or to a Fund will
result in the addition of or the cancellation of Accumulation Units in a
Fund.
CONTRACT MAINTENANCE CHARGE
We deduct an annual Contract Maintenance Charge shown on the Contract
Schedule. Prior to the Income Date, this will be deducted from the
Contract Value by canceling Accumulation Units to reimburse us for expenses
relating to maintenance of this Contract. The number of Accumulation Units
to be canceled will be from each applicable Fund is the ratio that the
value of each Fund bears to the total Contract Value.
TRANSFERS
You may transfer all or a part of your interest in a Fund to another Fund.
We reserve the right to charge for transfers if there are more than the
number of free transfers shown on the Contract Schedule. All transfers are
subject to the following:
1. The deduction of any Transfer Fee that may be imposed as shown on the
Contract Schedule. The Transfer Fee will be deducted from the Fund from
which the transfer is made. If the entire amount in the Fund is
transferred, then the Transfer Fee will be deducted from the amount
transferred. If there are multiple source Funds, it will be treated as
a single transfer. Any Transfer Fee will be deducted proportionally
from the source Funds if less than the entire amount in the Fund is
transferred.
2. We reserve the right to limit transfers until the expiration of the
Right to Examine period.
3. The minimum amount which can be transferred is shown on the Contract
Schedule.
4. No transfer will be effective within seven calendar days prior to the
date on which the first Annuity Payment is due.
5. Any transfer direction must clearly specify:
a. the amount which is to be transferred; and
b. the Funds which are to be affected.
6. After the Income Date, transfers may not be made from a fixed annuity
option to a variable annuity option.
7. After the Income Date, you can make at least one transfer from a variable
annuity option to a fixed annuity option. The number of Annuity Units
canceled from the variable annuity option will be equal in value to the
amount of the Annuity Reserve transferred out of the Variable Account.
The amount transferred will purchase fixed annuity payments under the
Annuity Option in effect and based on the age and sex of the Annuitant
at the time of the transfer where allowed.
8. We reserve the right to establish policies that limit or discourage
excessive trading that may be disruptive to the Fund, which may result
in limitations being placed on the Contract Owner's right to make
transfers.
9. We reserve the right at any time and without prior notice to any party
to modify the transfer provisions described above. However, if we do
modify these provisions we guarantee that they will not be any more
restrictive than the above.
If you elect to use this transfer privilege, we will not be liable for
transfers made in accordance with your instructions. All amounts and
Accumulation Units will be determined as of the end of the Valuation Period
during which the request for transfer is received at the Valuemark Service
Center.
SURRENDER PROVISIONS
SURRENDERS: During the Accumulation Period, you may, upon Authorized
Request, make a total or partial surrender of the Contract Surrender Value.
Surrenders will result in the cancellation of Accumulation Units from each
Fund in the ratio that the value of each Fund bears to the total Contract
Value. You must specify, by Authorized Request, which Accumulation Units
are to be canceled if other than the above mentioned method of cancellation
is desired.
The Company will pay the amount of any surrender from the Variable Account
within seven (7) days of receipt of a request in good order unless the
Suspension or Deferral of Payments Provision is in effect.
Each partial surrender must be for an amount which is not less than the
amount shown on the Contract Schedule. The minimum Contract Value which
must remain in the Contract after a partial surrender is shown on the
Contract Schedule.
CONTINGENT DEFERRED SALES CHARGE: Upon a surrender of Contract Value a
Contingent Deferred Sales Charge as set forth on the Contract Schedule may
be assessed. Under certain circumstances, we allow surrenders without the
Contingent Deferred Sales Charge as set forth on the Contract Schedule.
PROCEEDS PAYABLE ON DEATH
DEATH OF CONTRACT OWNER DURING THE ACCUMULATION PERIOD: Upon the death of the
Contract Owner, or any Joint Owner, during the Accumulation Period, the death
benefit will be paid to the Beneficiary(ies) designated by the Contract Owner.
Upon the death of a Joint Owner, the surviving Joint Owner, if any, will be
treated as the primary Beneficiary. Any other Beneficiary designation on
record at the time of death will be treated as a contingent Beneficiary.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will
be the Adjusted Contract Value determined as of the end of the Valuation
Period during which the Company receives both due proof of death and an
election for the payment method.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD: A Beneficiary may
request that the death benefit be paid under one of the Death Benefit Options
below. In addition, if the Beneficiary is the spouse of the Contract Owner,
he or she may elect to continue the Contract in his or her own name and
exercise all the Contract Owner's rights under the Contract. In this event,
the Contract Value for the Valuation Period during which this election is
implemented will be adjusted to equal the death benefit.
Option A - lump sum payment of the death benefit; or
Option B - the payment of the entire death benefit within 5 years of the
date of the death of the Contract Owner or any Joint Owner; or
Option C - payment of the death benefit under an Annuity Option over the
lifetime of the Beneficiary or over a period not extending beyond the
life expectancy of the Beneficiary with distribution beginning within
one year of the date of death of the Contract Owner or any Joint Owner.
Any portion of the death benefit not applied under Option C within one year
of the date of the Contract Owners' death, must be distributed within five
years of the date of death.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.
Payment to the Beneficiary, other than in a lump sum, may only be elected
during the sixty-day period beginning with the date of receipt of proof of
death.
DEATH OF CONTRACT OWNER DURING THE ANNUITY PERIOD: If you, or any Joint
Owner, dies during the Annuity Period, and you are not an Annuitant, any
remaining payments under the Annuity Option elected will continue at least
as rapidly as under the method of distribution in effect at such Contract
Owner's death. Upon your death during the Annuity Period, the Beneficiary
becomes the Contract Owner.
DEATH OF ANNUITANT: Upon the death of an Annuitant, who is not the Contract
Owner, during the Accumulation Period, you may designate a new Annuitant,
subject to our underwriting rules then in effect. If no designation is made
within 30 days of the death of the Annuitant, you will become the Annuitant.
If the Contract Owner is a non-individual, the death of the Annuitant will be
treated as the death of the Contract Owner and a new Annuitant may not be
designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit,
if any, will be as specified in the Annuity Option elected. Death benefits
will be paid at least as rapidly as under the method of distribution in effect
at the Annuitant's death.
PAYMENT OF DEATH BENEFIT: The Company will require due proof of death before
any death benefit is paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or
regulations governing death benefit payments.
BENEFICIARY: The Beneficiary designation in effect on the Issue Date will
remain in effect until changed. The Beneficiary is entitled to receive the
benefits to be paid at your death.
Unless you provide otherwise, the death benefit will be paid in equal shares
to the survivor(s) as follows:
1. to the primary Beneficiary(ies) who survive you and/or the
Annuitant's death, as applicable; or if there are none
2. to the contingent Beneficiary(ies) who survive you and/or the
Annuitant's death, as applicable; or if there are none
3. to your estate.
CHANGE OF BENEFICIARY: Subject to the rights of any irrevocable
Beneficiary(ies), you may change the primary Beneficiary(ies) or contingent
Beneficiary(ies). A change may be made by Authorized Request. The change
will take effect as of the date the Authorized Request is signed. The Company
will not be liable for any payment made or action taken before it records the
change.
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
The Company reserves the right to suspend or postpone payments from the
Variable Account for a surrender or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities
held in the Variable Account is not reasonably practicable or it is
not reasonably practicable to determine the value of the Variable
Account's net assets; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Contract Owners; provided
that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in
(2) and (3) exist.
CONTRACT OWNER, ANNUITANT, ASSIGNMENT PROVISIONS
CONTRACT OWNER: As the Contract Owner you have all the interest and rights
under this Contract. The Contract Owner is the person designated as such on
the Issue Date, unless changed.
You may change Owners of the Contract at any time by Authorized Request. A
change of Contract Owner will automatically revoke any prior designation of
Contract Owner. The change will become effective as of the date the
Authorized Request is signed. We will not be liable for any payment made or
action taken before the change is recorded.
JOINT OWNER: A Contract may be owned by Joint Owners. If Joint Owners are
named, any Joint Owner must be the spouse of the other Contract Owner. Upon
the death of either Contract Owner, the surviving spouse will be the primary
Beneficiary. Any other Beneficiary designation will be treated as a
contingent Beneficiary unless otherwise indicated in an Authorized Request.
ANNUITANT: The Annuitant is the person on whose life Annuity Payments are
based. The Annuitant is the person designated by you subject to our
underwriting rules then in effect. The Annuitant may not be changed in a
Contract which is owned by a non-individual.
ASSIGNMENT OF A CONTRACT: An Authorized Request specifying the terms of an
assignment of a Contract must be provided to the Valuemark Service Center.
We will not be liable for any payment made or action taken before we record
the assignment.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable
will be valid only with our consent.
If the Contract is assigned, your rights may only be exercised with the
consent of the assignee of record.
ANNUITY PROVISIONS
GENERAL: On the Income Date, the Adjusted Contract Value will be applied
under the Annuity Option you have selected. You may elect to have the
Adjusted Contract Value applied to provide a Fixed Annuity, a Variable
Annuity or a combination Fixed and Variable Annuity. If a combination is
elected, you must specify what part of the Adjusted Contract Value is to be
applied to the Fixed and Variable Annuity Options.
INCOME DATE: You select an Income Date at the time of issue. The Income
Date must always be the first day of a calendar month. The earliest Income
Date you can select is [two] years after the Issue Date. The latest Income
Date you can select is the later of the first day of the first calendar
month following the Annuitant's 90th birthday. You may, at any time prior
to the Income Date, change the Income Date by Authorized Request 30 days in
advance.
SELECTION OF AN ANNUITY OPTION: You can select an Annuity Option by
Authorized Request. If no Annuity Option is selected, Option 2, with 60
Monthly Payments Guaranteed, will automatically be applied. You may, at any
time prior to the Income Date, by Authorized Request 30 days in advance,
select and/or change the Annuity Option.
ANNUITY OPTIONS: This Contract provides for Annuity Payments under one of
the Annuity Options described below. Any other Annuity Option acceptable to
us may be selected.
OPTION 1 - LIFE ANNUITY. We will make monthly Annuity Payments during the
life of the Annuitant and ceasing with the last Annuity Payment due prior
to the Annuitant's death.
OPTION 2 - LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY ANNUITY PAYMENTS
GUARANTEED. We will make monthly Annuity Payments during the life of the
Annuitant with a guarantee that if at the Annuitant's death there have been
less than 60, 120, 180, or 240 monthly Annuity Payments made as selected,
monthly Annuity Payments will continue for the remainder of the guaranteed
period. You may elect to have the present value of the guaranteed monthly
Annuity Payments remaining, as of the date notice of the Annuitant's death
is received at the Valuemark Service Center, commuted at the Assumed
Investment Return selected for a Variable Annuity or for a Fixed Annuity
the Statutory Calendar Year Interest Rate based on the New York's Standard
Valuation Law for Single Premium Immediate Annuities corresponding to the
Income Date. We will require the return of this Contract and proof of death
prior to the payment of any commuted values.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY. We will make monthly Annuity
Payments during the joint lifetime of the Annuitant and the Joint Annuitant.
Upon the death of the Annuitant, if the Joint Annuitant is then living,
Annuity Payments will continue to be paid during the remaining lifetime of
the Joint Annuitant at a level of 100%, 75% or 50% of the previous level, as
selected. Monthly Annuity Payments cease with the final Annuity Payment due
prior to the last survivor's death.
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH 60, 120, 180, OR 240 MONTHLY
ANNUITY PAYMENTS GUARANTEED. We will make monthly Annuity Payments during
the joint lifetime of the Annuitant and the Joint Annuitant. Monthly Annuity
Payments will continue to be paid during the remaining lifetime of the Joint
Annuitant at 100% of the previous level, as selected. If at the last death
of the Annuitant and the Joint Annuitant, there have been less than 60, 120,
180, or 240 monthly Annuity Payments made as selected, monthly Annuity
Payments will continue to be made for the remainder of the guaranteed period.
You or your designated payee may elect to have the present value of the
guaranteed monthly Annuity Payments remaining, as of the date notice of the
Annuitant's death is received by us, commuted at the Assumed Investment
Return selected for a Variable Annuity or for a Fixed Annuity the Statutory
Calendar Year Interest Rate based on the New York's Standard Valuation Law
for Single Premium Immediate Annuities corresponding to the Income Date. We
will require the return of this Contract and proof of death prior to the
payment of any commuted values.
OPTION 5 - REFUND LIFE ANNUITY. We will make monthly Annuity Payments
during the lifetime of the Annuitant ceasing with the last Annuity Payment
due prior to the Annuitant's death with a guarantee that at the Annuitant's
death, you will receive a refund. For a Fixed Annuity the amount of the
refund will be any excess of the amount of the Adjusted Contract Value
applied under this Option over the total of all Annuity Payments made under
this Option. For a Variable Annuity the amount of the refund will be the
then dollar value of the number of Annuity Units equal to (1) the Adjusted
Contract Value applied to this Option divided by the Annuity Unit value used
to determine the first Annuity Payment, minus (2) the product of the number
of the Annuity Units represented by each monthly Annuity Payment and the
number of payments made. This calculation will be based upon the assumption
that the allocation of Annuity Units actually in-force at the time of the
Annuitant's death had been the allocation of Annuity Units at issue and at
all times thereafter. If the refund calculated above is not greater than
zero there will be no refund paid.
ANNUITY: If you select a Fixed Annuity, the Adjusted Contract Value is
allocated to the General Account and the Annuity is paid as a Fixed Annuity.
If you select a Variable Annuity, the Adjusted Contract Value will be
allocated to the Funds of the Variable Account in accordance with your
selection, and the Annuity will be paid as a Variable Annuity. Unless you
designate another payee, you will be the payee of the Annuity Payments. The
Adjusted Contract Value will be applied to the applicable Annuity Table
contained in this Contract based upon the Annuity Option you have selected.
We may offer more favorable rates than those guaranteed here at the time
your first annuity payment is calculated. Where permitted, Annuity
Payments will depend on the Age and sex of the Annuitant.
FIXED ANNUITY: You may elect to have the Adjusted Contract Value applied
to provide a Fixed Annuity. The dollar amount of each Fixed Annuity Payment
shall be determined in accordance with Annuity Tables contained in this
Contract which are based on the minimum guaranteed interest rate of 2 1/2%
per year.
<TABLE>
<CAPTION>
GUARANTEED MONTHLY PAYMENT PER $1,000 OF PROCEEDS
Fixed Payouts
<S> <C> <C> <C> <C> <C>
Age of Annt. Option 2 Option 2 Option 2 Option 2
Nearest BDay ____________ ____________ ____________ ____________ ____________
When 1st Pmt Option 1 5 Years 10 Years 15 Years 20 Years
is Made Minimum Minimum Minimum Minimum
Male Female Male Female Male Female Male Female Male Female
____________ ____________ ____________ ____________ ____________ ____________
30 2.84 2.71 2.84 2.71 2.84 2.71 2.84 2.71 2.83 2.71
31 2.87 2.74 2.87 2.73 2.87 2.73 2.86 2.73 2.86 2.73
32 2.90 2.76 2.90 2.76 2.89 2.76 2.89 2.75 2.88 2.75
33 2.92 2.78 2.92 2.78 2.92 2.78 2.92 2.78 2.91 2.77
34 2.95 2.80 2.95 2.80 2.95 2.80 2.95 2.80 2.94 2.80
35 2.98 2.83 2.98 2.83 2.98 2.83 2.98 2.82 2.97 2.82
36 3.02 2.85 3.02 2.85 3.01 2.85 3.01 2.85 3.00 2.85
37 3.05 2.88 3.05 2.88 3.05 2.88 3.04 2.88 3.03 2.87
38 3.09 2.91 3.09 2.91 3.08 2.91 3.08 2.91 3.06 2.90
39 3.12 2.94 3.12 2.94 3.12 2.94 3.11 2.93 3.10 2.93
40 3.16 2.97 3.16 2.97 3.16 2.97 3.15 2.96 3.13 2.96
41 3.20 3.00 3.20 3.00 3.20 3.00 3.19 3.00 3.17 2.99
42 3.25 3.04 3.24 3.04 3.24 3.03 3.23 3.03 3.21 3.02
43 3.29 3.07 3.29 3.07 3.28 3.07 3.27 3.06 3.25 3.06
44 3.34 3.11 3.33 3.11 3.33 3.10 3.31 3.10 3.29 3.09
45 3.39 3.15 3.38 3.15 3.37 3.14 3.36 3.14 3.33 3.13
46 3.44 3.19 3.43 3.19 3.42 3.18 3.41 3.18 3.38 3.16
47 3.49 3.23 3.49 3.23 3.48 3.22 3.45 3.22 3.42 3.20
48 3.55 3.27 3.54 3.27 3.53 3.27 3.51 3.26 3.47 3.24
49 3.60 3.32 3.60 3.32 3.58 3.31 3.56 3.30 3.52 3.29
50 3.66 3.37 3.66 3.37 3.64 3.36 3.62 3.35 3.57 3.33
51 3.73 3.42 3.72 3.42 3.71 3.41 3.67 3.40 3.62 3.38
52 3.80 3.47 3.79 3.47 3.77 3.46 3.73 3.45 3.68 3.42
53 3.87 3.53 3.86 3.53 3.84 3.52 3.80 3.50 3.74 3.48
54 3.94 3.59 3.93 3.59 3.91 3.58 3.86 3.56 3.79 3.53
55 4.02 3.65 4.01 3.65 3.98 3.64 3.93 3.62 3.85 3.58
56 4.10 3.72 4.09 3.71 4.06 3.70 4.00 3.68 3.91 3.64
57 4.19 3.79 4.18 3.78 4.14 3.77 4.08 3.74 3.98 3.70
58 4.28 3.86 4.27 3.86 4.23 3.84 4.16 3.81 4.04 3.76
59 4.38 3.94 4.37 3.93 4.32 3.91 4.24 3.88 4.11 3.82
60 4.49 4.02 4.47 4.02 4.42 3.99 4.32 3.95 4.17 3.88
61 4.60 4.11 4.58 4.10 4.52 4.08 4.41 4.03 4.24 3.95
62 4.72 4.20 4.69 4.19 4.63 4.16 4.50 4.11 4.31 4.02
63 4.84 4.30 4.82 4.29 4.74 4.26 4.59 4.19 4.38 4.09
64 4.98 4.41 4.95 4.39 4.86 4.36 4.69 4.28 4.44 4.16
65 5.12 4.52 5.09 4.50 4.98 4.46 4.79 4.37 4.51 4.23
66 5.28 4.64 5.24 4.62 5.11 4.57 4.89 4.47 4.58 4.31
67 5.44 4.76 5.39 4.75 5.24 4.69 4.99 4.57 4.64 4.38
68 5.61 4.90 5.56 4.88 5.38 4.81 5.09 4.67 4.70 4.45
69 5.80 5.04 5.73 5.02 5.53 4.94 5.19 4.78 4.76 4.53
70 6.00 5.20 5.92 5.17 5.68 5.07 5.30 4.88 4.82 4.60
71 6.21 5.37 6.12 5.34 5.84 5.22 5.40 4.99 4.88 4.67
72 6.43 5.55 6.32 5.51 6.00 5.37 5.50 5.11 4.93 4.74
73 6.66 5.75 6.54 5.70 6.16 5.53 5.60 5.22 4.97 4.80
74 6.91 5.96 6.77 5.90 6.33 5.69 5.70 5.34 5.02 4.86
75 7.18 6.18 7.01 6.11 6.50 5.87 5.79 5.45 5.06 4.92
76 7.49 6.43 7.28 6.34 6.69 6.05 5.89 5.56 5.09 4.97
77 7.80 6.69 7.55 6.58 6.86 6.23 5.97 5.67 5.12 5.01
78 8.13 6.97 7.83 6.84 7.04 6.42 6.05 5.78 5.15 5.06
79 8.49 7.27 8.13 7.11 7.22 6.61 6.13 5.88 5.17 5.09
80 8.87 7.60 8.44 7.40 7.39 6.81 6.20 5.97 5.20 5.13
81 9.27 7.95 8.77 7.71 7.57 7.01 6.26 6.06 5.21 5.15
82 9.70 8.33 9.10 8.03 7.73 7.21 6.32 6.14 5.23 5.18
83 10.16 8.74 9.45 8.38 7.90 7.40 6.37 6.21 5.24 5.20
84 10.65 9.18 9.81 8.74 8.05 7.59 6.42 6.28 5.25 5.22
85 11.18 9.66 10.19 9.12 8.20 7.77 6.46 6.34 5.26 5.23
</TABLE>
<TABLE>
<CAPTION>
GUARANTEED MONTHLY PAYMENT PER $1,000 OF PROCEEDS - cont'd.
Fixed Payouts
<S> <C>
Option 5
Male Female
____ ________
2.82 2.71
2.84 2.73
2.87 2.75
2.89 2.77
2.92 2.79
2.95 2.81
2.98 2.84
3.01 2.86
3.04 2.89
3.07 2.92
3.10 2.95
3.14 2.97
3.17 3.01
3.21 3.04
3.25 3.07
3.29 3.10
3.33 3.14
3.38 3.18
3.42 3.22
3.47 3.26
3.52 3.30
3.57 3.34
3.62 3.39
3.68 3.44
3.74 3.49
3.80 3.54
3.86 3.60
3.93 3.65
4.00 3.71
4.07 3.78
4.14 3.84
4.23 3.91
4.31 3.99
4.39 4.06
4.49 4.14
4.58 4.23
4.68 4.31
4.78 4.41
4.89 4.50
5.01 4.60
5.13 4.72
5.25 4.83
5.38 4.95
5.51 5.07
5.66 5.20
5.82 5.35
5.97 5.49
6.14 5.65
6.31 5.81
6.50 5.97
6.69 6.15
6.89 6.34
7.10 6.53
7.32 6.74
7.55 6.95
7.80 7.17
</TABLE>
GUARANTEED MONTHLY PAYMENT PER $1,000 OF PROCEEDS
FIXED PAYOUT
<TABLE>
<CAPTION>
OPTION 3
<S> <C> <C> <C> <C> <C> <C>
FEMALE AGE 30 40 50 60 70 80
MALE AGE ____________ ____________ ____________ ____________ ____________ ____________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.15
50 2.69 2.89 3.14 3.36 3.52 3.61
60 2.70 2.94 3.26 3.65 4.03 4.30
70 2.71 2.96 3.32 3.86 4.56 5.27
80 2.71 2.97 3.35 3.96 4.94 6.32
</TABLE>
<TABLE>
<CAPTION>
OPTION 4
5 YEARS MINIMUM
<S> <C> <C> <C> <C> <C> <C>
FEMALE AGE 30 40 50 60 70 80
MALE AGE ____________ ____________ ____________ ____________ ____________ ____________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.15
50 2.69 2.89 3.14 3.36 3.52 3.61
60 2.70 2.94 3.26 3.65 4.03 4.30
70 2.71 2.96 3.32 3.86 4.56 5.26
80 2.71 2.97 3.35 3.96 4.93 6.30
</TABLE>
<TABLE>
<CAPTION>
OPTION 4
10 YEARS MINIMUM
<S> <C> <C> <C> <C> <C> <C>
FEMALE AGE 30 40 50 60 70 80
MALE AGE ____________ ____________ ____________ ____________ ____________ ____________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.14
50 2.69 2.89 3.14 3.36 3.52 3.60
60 2.70 2.94 3.26 3.65 4.03 4.29
70 2.71 2.96 3.32 3.86 4.55 5.22
80 2.71 2.96 3.35 3.95 4.90 6.13
</TABLE>
<TABLE>
<CAPTION>
OPTION 4
15 YEARS MINIMUM
<S> <C> <C> <C> <C> <C> <C>
FEMALE AGE 30 40 50 60 70 80
MALE AGE ____________ ____________ ____________ ____________ ____________ ____________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.14
50 2.69 2.89 3.13 3.36 3.52 3.59
60 2.70 2.94 3.26 3.65 4.01 4.24
70 2.71 2.96 3.32 3.84 4.50 5.05
80 2.71 2.96 3.34 3.93 4.79 5.70
</TABLE>
<TABLE>
<CAPTION>
OPTION 4
20 YEARS MINIMUM
<S> <C> <C> <C> <C> <C> <C>
FEMALE AGE 30 40 50 60 70 80
MALE AGE ____________ ____________ ____________ ____________ ____________ ____________
30 2.61 2.70 2.77 2.81 2.83 2.83
40 2.66 2.82 2.96 3.06 3.11 3.13
50 2.69 2.89 3.13 3.35 3.50 3.56
60 2.70 2.94 3.25 3.63 3.97 4.14
70 2.71 2.95 3.31 3.81 4.38 4.74
80 2.71 2.96 3.33 3.87 4.57 5.06
</TABLE>
VARIABLE ANNUITY: You may elect to have the Adjusted Contract Value applied
to provide a Variable Annuity. Variable Annuity Payments reflect the
investment performance of the Variable Account in accordance with the
allocation of the Adjusted Contract Value to the Funds during the Annuity
Period. Variable Annuity Payments are not guaranteed as to dollar amount.
On the Income Date a fixed number of Annuity Units will be purchased as
follows:
The first Annuity Payment is equal to the Adjusted Contract Value, divided
first by $1000 and then multiplied by the appropriate Annuity Payment amount
for each $1000 of value for the Annuity Option selected. In each Fund the
fixed number of Annuity Units is determined by dividing the amount of the
initial Annuity Payment determined for each Fund by the Annuity Unit value on
the Income Date. Thereafter, the number of Annuity Units in each Fund remains
unchanged unless you elect to transfer between Funds. All calculations will
appropriately reflect the Annuity Payment frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum
of the Annuity Payments for each Fund. The Annuity Payment in each Fund is
determined by multiplying the number of Annuity Units then allocated to such
Fund by the Annuity Unit value for that Fund.
On each subsequent Valuation Date, the value of an Annuity Unit is determined
in the following way:
First: The Net Investment Factor is determined as described under "Variable
Account - Net Investment Factor" above.
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a. the value of the Annuity Unit for the immediately preceding
Valuation Period;
b. multiplied by the Net Investment Factor for the current Valuation
Period;
c. divided by the Assumed Net Investment Factor (see below) for the
Valuation Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that we will use is 5%. However, we may agree with you to use a
different value.
<TABLE>
<CAPTION>
GUARANTEED INITIAL MONTHLY PAYMENT PER $1,000 OF PROCEEDS
Variable Payouts Based on 5% AIR
<S> <C> <C> <C> <C> <C>
Age of Annt. Option 2 Option 2 Option 2 Option 2
Nearest BDay ____________ ____________ ____________ ____________ ____________
When 1st Pmt Option 1 5 Years 10 Years 15 Years 20 Years
is Made Minimum Minimum Minimum Minimum
Male Female Male Female Male Female Male Female Male Female
____________ ____________ ____________ ____________ ____________ ____________
30 4.46 4.36 4.46 4.36 4.46 4.35 4.45 4.35 4.44 4.35
31 4.48 4.37 4.48 4.37 4.48 4.37 4.47 4.37 4.46 4.36
32 4.50 4.39 4.50 4.39 4.50 4.38 4.49 4.38 4.48 4.38
33 4.52 4.40 4.52 4.40 4.52 4.40 4.51 4.40 4.50 4.39
34 4.55 4.42 4.55 4.42 4.54 4.42 4.53 4.41 4.52 4.41
35 4.57 4.44 4.57 4.44 4.57 4.44 4.56 4.43 4.55 4.43
36 4.60 4.46 4.60 4.46 4.59 4.45 4.58 4.45 4.57 4.45
37 4.63 4.48 4.63 4.48 4.62 4.48 4.61 4.47 4.60 4.46
38 4.66 4.50 4.66 4.50 4.65 4.50 4.64 4.49 4.62 4.49
39 4.69 4.52 4.69 4.52 4.68 4.52 4.67 4.51 4.65 4.51
40 4.72 4.55 4.72 4.55 4.71 4.54 4.70 4.54 4.68 4.53
41 4.76 4.57 4.75 4.57 4.75 4.57 4.73 4.56 4.71 4.55
42 4.79 4.60 4.79 4.60 4.78 4.60 4.76 4.59 4.74 4.58
43 4.83 4.63 4.83 4.63 4.82 4.62 4.80 4.62 4.77 4.60
44 4.88 4.66 4.87 4.66 4.86 4.65 4.84 4.64 4.80 4.63
45 4.92 4.69 4.91 4.69 4.90 4.69 4.87 4.68 4.84 4.66
46 4.97 4.73 4.96 4.73 4.94 4.72 4.91 4.71 4.88 4.69
47 5.01 4.76 5.01 4.76 4.99 4.75 4.96 4.74 4.92 4.72
48 5.06 4.80 5.06 4.80 5.04 4.79 5.00 4.78 4.96 4.76
49 5.12 4.84 5.11 4.84 5.09 4.83 5.05 4.81 5.00 4.79
50 5.17 4.88 5.16 4.88 5.14 4.87 5.10 4.85 5.04 4.83
51 5.23 4.93 5.22 4.93 5.19 4.91 5.15 4.89 5.09 4.87
52 5.30 4.98 5.28 4.97 5.25 4.96 5.20 4.94 5.13 4.91
53 5.36 5.03 5.35 5.02 5.31 5.01 5.26 4.98 5.18 4.95
54 5.43 5.08 5.42 5.08 5.38 5.06 5.32 5.03 5.23 4.99
55 5.51 5.14 5.49 5.13 5.45 5.11 5.38 5.08 5.28 5.04
56 5.58 5.20 5.57 5.19 5.52 5.17 5.44 5.14 5.33 5.09
57 5.67 5.26 5.65 5.26 5.60 5.23 5.51 5.19 5.39 5.14
58 5.76 5.33 5.74 5.32 5.68 5.30 5.58 5.25 5.44 5.19
59 5.85 5.41 5.83 5.40 5.76 5.37 5.65 5.32 5.50 5.24
60 5.95 5.48 5.93 5.47 5.85 5.44 5.73 5.38 5.56 5.30
61 6.06 5.57 6.03 5.55 5.95 5.52 5.81 5.45 5.62 5.36
62 6.18 5.65 6.15 5.64 6.05 5.60 5.89 5.52 5.67 5.42
63 6.30 5.75 6.27 5.73 6.16 5.68 5.97 5.60 5.73 5.48
64 6.44 5.85 6.40 5.83 6.27 5.78 6.06 5.68 5.79 5.54
65 6.58 5.96 6.53 5.94 6.38 5.87 6.15 5.76 5.85 5.60
66 6.74 6.07 6.68 6.05 6.51 5.98 6.24 5.85 5.91 5.67
67 6.90 6.20 6.83 6.17 6.63 6.09 6.33 5.94 5.96 5.73
68 7.08 6.33 7.00 6.30 6.77 6.20 6.42 6.03 6.02 5.80
69 7.27 6.47 7.17 6.44 6.91 6.32 6.52 6.13 6.07 5.86
70 7.46 6.63 7.35 6.59 7.05 6.45 6.61 6.23 6.12 5.92
71 7.68 6.80 7.55 6.75 7.20 6.59 6.70 6.33 6.17 5.98
72 7.90 6.98 7.75 6.92 7.35 6.74 6.79 6.43 6.21 6.04
73 8.14 7.18 7.97 7.11 7.50 6.89 6.88 6.54 6.25 6.10
74 8.39 7.39 8.19 7.30 7.66 7.05 6.97 6.64 6.29 6.15
75 8.66 7.62 8.43 7.52 7.82 7.21 7.06 6.74 6.32 6.20
76 8.99 7.87 8.70 7.74 8.00 7.38 7.14 6.85 6.35 6.24
77 9.30 8.13 8.97 7.98 8.16 7.56 7.22 6.94 6.38 6.28
78 9.64 8.42 9.25 8.24 8.33 7.74 7.29 7.04 6.40 6.32
79 9.99 8.72 9.54 8.51 8.49 7.92 7.36 7.13 6.42 6.35
80 10.38 9.06 9.84 8.80 8.65 8.11 7.42 7.21 6.44 6.38
81 10.79 9.41 10.16 9.10 8.82 8.29 7.48 7.29 6.46 6.41
82 11.23 9.80 10.49 9.43 8.97 8.48 7.53 7.36 6.47 6.43
83 11.69 10.22 10.83 9.77 9.12 8.66 7.58 7.43 6.48 6.45
84 12.19 10.68 11.19 10.13 9.27 8.83 7.62 7.49 6.49 6.46
85 12.73 11.17 11.55 10.50 9.41 9.00 7.66 7.54 6.50 6.47
</TABLE>
<TABLE>
<CAPTION>
GUARANTEED INITIAL MONTHLY PAYMENT PER $1,000 OF PROCEEDS - cont'
Variable Payouts Based on 5% AIR
<S> <C>
Option 5
Male Female
____ ________
4.46 4.36
4.48 4.38
4.50 4.39
4.52 4.41
4.54 4.43
4.57 4.44
4.59 4.46
4.62 4.48
4.64 4.50
4.67 4.52
4.70 4.55
4.73 4.57
4.76 4.60
4.80 4.62
4.83 4.65
4.87 4.68
4.91 4.71
4.95 4.75
4.99 4.78
5.04 4.82
5.08 4.85
5.13 4.89
5.19 4.94
5.24 4.98
5.30 5.03
5.37 5.08
5.43 5.13
5.50 5.19
5.57 5.25
5.65 5.31
5.73 5.38
5.81 5.45
5.90 5.52
6.00 5.60
6.10 5.69
6.20 5.77
6.31 5.87
6.43 5.97
6.55 6.07
6.67 6.18
6.81 6.30
6.95 6.43
7.10 6.56
7.26 6.70
7.42 6.85
7.60 7.01
7.78 7.18
7.97 7.35
8.18 7.54
8.39 7.74
8.61 7.95
8.85 8.17
9.09 8.40
9.36 8.65
9.63 8.91
9.92 9.17
</TABLE>
GUARANTEED INITIAL MONTHLY PAYMENT PER $1,000 OF PROCEEDS
VARIABLE PAYOUT BASED ON 5% AIR
<TABLE>
<CAPTION>
OPTION 3
<S> <C> <C> <C> <C> <C> <C>
FEMALE AGE 30 40 50 60 70 80
MALE AGE ____________ ____________ ____________ ____________ ____________ ____________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.70
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.51 4.76 5.09 5.44 5.72
70 4.35 4.53 4.82 5.29 5.93 6.63
80 4.35 4.54 4.86 5.40 6.31 7.65
</TABLE>
<TABLE>
<CAPTION>
OPTION 4
5 YEARS MINIMUM
<S> <C> <C> <C> <C> <C> <C>
FEMALE AGE 30 40 50 60 70 80
MALE AGE ____________ ____________ ____________ ____________ ____________ ____________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.70
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.51 4.76 5.09 5.44 5.72
70 4.35 4.53 4.82 5.29 5.93 6.62
80 4.35 4.54 4.86 5.40 6.31 7.63
</TABLE>
<TABLE>
<CAPTION>
OPTION 4
10 YEARS MINIMUM
<S> <C> <C> <C> <C> <C> <C>
FEMALE AGE 30 40 50 60 70 80
MALE AGE ____________ ____________ ____________ ____________ ____________ ____________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.69
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.50 4.76 5.09 5.43 5.70
70 4.35 4.53 4.82 5.28 5.91 6.56
80 4.35 4.54 4.86 5.39 6.26 7.43
</TABLE>
<TABLE>
<CAPTION>
OPTION 4
15 YEARS MINIMUM
<S> <C> <C> <C> <C> <C> <C>
FEMALE AGE 30 40 50 60 70 80
MALE AGE ____________ ____________ ____________ ____________ ____________ ____________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.69
50 4.32 4.47 4.65 4.83 4.98 5.07
60 4.34 4.50 4.75 5.08 5.42 5.64
70 4.35 4.53 4.82 5.27 5.86 6.37
80 4.35 4.54 4.84 5.36 6.13 6.96
</TABLE>
<TABLE>
<CAPTION>
OPTION 4
20 YEARS MINIMUM
<S> <C> <C> <C> <C> <C> <C>
FEMALE AGE 30 40 50 60 70 80
MALE AGE ____________ ____________ ____________ ____________ ____________ ____________
30 4.26 4.33 4.38 4.41 4.43 4.44
40 4.30 4.40 4.51 4.60 4.65 4.67
50 4.32 4.46 4.64 4.83 4.97 5.03
60 4.34 4.50 4.75 5.06 5.36 5.52
70 4.34 4.52 4.80 5.23 5.72 6.04
80 4.35 4.53 4.82 5.29 5.89 6.32
</TABLE>
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of this Contract, and any
attached application endorsements or riders. This Contract may be changed
or altered only by our President or Secretary. Any change, modification or
waiver must be made in writing.
NON-PARTICIPATING IN SURPLUS: This Contract does not share in any
distribution of our profits or surplus.
INCONTESTABILITY: We will not contest this Contract from its Issue Date.
MISSTATEMENT OF AGE OR SEX: We may require proof of Age of the Annuitant
before making any life contingent Annuity Payment provided for by this
Contract. If the Age or sex of the Annuitant has been misstated the amount
payable will be the amount that the Contract Value would have provided at the
true Age or sex.
Once Annuity Payments have begun, any underpayments will be made up in one sum
with the next Annuity Payment, and overpayments will be deducted from the
future Annuity Payments until the total is repaid.
CONTRACT SETTLEMENT: This Contract must be returned to us upon any
settlement.
Prior to any settlement as a death claim, due proof of death must be submitted
to us. Any paid-up annuity, cash surrender or death benefits that may be
available are not less than the minimum benefits required by statute.
REPORTS: We will furnish you with a report showing the Contract Value at
least once each calendar year. This report will be sent to your last known
address.
TAXES: Any taxes paid to any governmental entity will be charged against the
Contract Value. We will, in our sole discretion, determine when taxes have
resulted from: the investment experience of the Variable Account; receipt by
us of the Purchase Payment(s); or commencement of Annuity Payments. We may,
at our discretion, pay taxes when due and deduct that amount from the Contract
Value at a later date. Payment at an earlier date does not waive any right we
may have to deduct amounts at a later date. We reserve the right to establish
a provision for federal income taxes if we determine, in our sole discretion,
that we will incur a tax as a result of the operation of the Variable Account.
We will deduct for any income taxes incurred by it as a result of the
operation
of the Variable Account whether or not there was a provision for taxes and
whether or not it was sufficient. The Company will deduct any withholding
taxes required by applicable law.
EVIDENCE OF SURVIVAL: Where any benefits under this Contract are contingent
upon the recipient being alive on a given date, we may require proof
satisfactory to us that the condition has been met.
PROTECTION OF PROCEEDS: No Beneficiary may commute, encumber, alienate or
assign any payments under this Contract before they are due. To the extent
permitted by law, no payments will be subject to the debts, contracts or
engagements of any Beneficiary or to any judicial process to levy upon or
attach the same for payment thereof.
MODIFICATION OF CONTRACT: This Contract may not be modified by us without
your consent except as may be required by applicable law.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. This
Endorsement is effective on the Issue Date of the Contract to which this
Endorsement is attached. In the case of a conflict with any provisions in the
Contract, the provisions of this Endorsement will control. The following
provisions are hereby added to the Contract:
A. The Contingent Deferred Sales Charge will not apply under the following
conditions occurring after the first Contract Anniversary:
[1) Terminal Illness Benefit:
a) The Contract Owner or Joint Owner is diagnosed as having a
Terminal Illness; and
b) a licensed physician certifies in writing to such diagnosis.
Terminal Illness means an illness or physical condition which
results in the prognosis by a licensed physician that life
expectancy is 12 months or less. To utilize this benefit, you
must make a total surrender of the Contract. The Contract must be
returned to us before any proceeds will be paid.
This waiver will not apply if the Contract Owner or Joint Owner is
first diagnosed as having a Terminal Illness prior to the Issue
Date. Proof of diagnosis must be provided in a form satisfactory to
the Company.]
[2) Total Disability Benefit:
a) The Contract Owner or Joint Owner is disabled;
b) such disability lasts for a period of at least 90 consecutive
days; and
c) a licensed physician certifies to such disability.
Disability shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
to be of long-continued and indefinite duration. This waiver shall
not apply if the Contract Owner or Joint Owner was disabled on the
Issue Date. Proof of disability will be required in a form
satisfactory to the Company.
The proof required by the Company for any of the above Benefits
shall include, but not be limited to, written certification from a
licensed physician performing within the scope of his or her
license. The licensed physician must not be the Contract Owner,
Joint Owner, the Annuitant, or the spouse, parent or child of the
Contract Owner, Joint Owner or Annuitant.]
[B. Unemployment Benefit:
The amount of the Contract Value which can be withdrawn after the first
Contract Anniversary without incurring a Contingent Deferred Sales Charge
will be increased for one time only to [50%] of the Contract Value under the
following condition:
The Contract Owner or Joint Owner is unemployed for a continuous
period of at least 90 days.
Proof of unemployment must be provided in a form satisfactory to the Company
which proof will include but not be limited to a written statement from the
applicable state unemployment agency indicating that the Contract Owner or
Joint Owner qualifies for and is receiving unemployment benefits.]
[Withdrawals of amounts under the Contract may be subject to a 10% tax
penalty in addition to any income taxes due. You should consult your tax
advisor before making a withdrawal.]
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
/s/ Alan A. Grove /s/ Thomas J. Lynch
Secretary President
ENHANCED DEATH BENEFIT ENDORSEMENT
This endorsement forms a part of the Contract to which it is attached. The
Effective Date is the Issue Date shown in the Contract Schedule of the
Contract to which this Endorsement is attached. In the case of a conflict
with any provision in the Contract, the provisions of this Endorsement will
control. The following hereby amends and supersedes the section of the
Contract captioned "Proceeds Payable On Death - Death Benefit Amount During
The Accumulation Period."
PROCEEDS PAYABLE ON DEATH
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will be
the greater of:
1. The Contract Value, less any applicable Premium Tax, determined as
of the end of the Valuation Period during which we received at the Valuemark
Service Center both due proof of death and an election of the payment method;
or
2. The Guaranteed Minimum Death Benefit as defined below, less any
applicable Premium Tax, determined as of the end of the Valuation Period
during which we received at the Valuemark Service Center both due proof of
death and an election of the payment method.
The Guaranteed Minimum Death Benefit death is the greater of (a) and (b)
below:
a) The sum of all Purchase Payments made less any surrenders and any
Contingent Deferred Sales Charge paid on such surrenders.
b) The greatest Anniversary Value for Contract Anniversaries prior to
the deceased's attained age 76. The Anniversary Value is equal to the
Contract Value on a Contract Anniversary, increased by the dollar amount of
any Purchase Payments made since that Anniversary and decreased by the dollar
amount of any such surrenders and Contingent Deferred Sales Charges paid on
such surrenders since that Anniversary.
If Joint Owners are named, the Age of the older Owner will be used to
determine the Guaranteed Minimum Death Benefit. If the Contract is owned by a
non-natural person, then Contract Owner shall mean Annuitant.
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
FLEXIBLE PREMIUM VARIABLE ANNUITY APPLICATION NEW YORK
Issued by Preferred Life Insurance Company of New York GA__________
______________________________________________________________________________
1. OWNER Must be age 85 or younger
Name Last First Middle
_________________________________________________________________________
(If the Owner is a trust, please include Trust Name, Trust Date, and the
Trust Beneficial Owner(s))
Address Street Address Apartment Number
City State Zip Code
Social Security Number Date of Birth Sex ____Female
(If the owner is a trust, ____Male
Daytime Telephone ( ) list the date(s) of birth
for the beneficial owner(s))
______________________________________________________________________________
2. JOINT OWNER (Optional) Spouse Only-Must be age 85 or younger
Name Last First Middle
Social Security Number Date of Birth Sex ____Female
____Male
Daytime Telephone ( )
______________________________________________________________________________
3. ANNUITANT If different than owner. Must be age 85 or younger
Name Last First Middle
Address Street Address Apartment Number
City State Zip Code
Social Security Number Date of Birth Sex ____Female
____Male
Daytime Telephone ( ) Relationship to Owner
______________________________________________________________________________
4. PURCHASE PAYMENT
____Purchase Payment Enclosed ____This contract will be funded by a
with Application 1035 Exchange, Tax-Qualified Transfer/
Rollover, or Mutual Fund Redemption.
Purchase Payment Amount $__________________
______________________________________________________________________________
5. PURCHASE PAYMENT ALLOCATION
You may select up to TEN FUNDS. Use WHOLE PERCENTAGES. The allocations
you indicate below will become your allocations on all future payments
until such time as you notify us of a change.
MONEY MARKET FIXED ACCOUNTS
___Money Market Fund ___Preferred Life Fixed Account
INCOME FUNDS CAPITAL GROWTH FUNDS
___High Income Fund ___Capital Growth Fund
___Templeton Global Income ___Precious Metals Fund
Securities Fund ___Small Cap Fund
___U.S. Government Securities Fund ___Templeton Developing Markets
___Zero Coupon Fund - 2000 Equity Fund
___Zero Coupon Fund - 2005 ___Templeton Global Growth Fund
___Zero Coupon Fund - 2010 ___Templeton International Equity
Fund
GROWTH AND INCOME FUNDS ___Templeton International Smaller
___Growth and Income Fund Companies Fund
___Income Securities Fund ___Templeton Pacific Growth Fund
___Real Estate Securities Fund
___Rising Dividends Fund
___Templeton Global Asset
Allocation Fund
___Utility Equity Fund ___TOTAL (Must Equal 100%)
P40112
______________________________________________________________________________
6. DOLLAR COST AVERAGING (Optional)
Please Dollar Cost Average $_____($500 min.) ___Monthly for ___months/quarters
___Quarterly (6 month minimum)
___Until Sending Fund is depleted
FROM the following fund (PLEASE NOTE: YOU MUST ALREADY HAVE A PORTION OF YOUR
INVESTMENT IN SECTION 5 IN THE SENDING FUND):_________________________________
Indicate below how you would like to allocate your Dollar Cost Averaging
Funds. Use either dollar amounts or whole percentages. The Sending Fund may
not be chosen below:
MONEY MARKET FIXED ACCOUNTS
___Money Market Fund ___Preferred Life Fixed Account
INCOME FUNDS CAPITAL GROWTH FUNDS
___High Income Fund ___Capital Growth Fund
___Templeton Global Income ___Precious Metals Fund
Securities Fund ___Small Cap Fund
___U.S. Government Securities Fund ___Templeton Developing Markets
___Zero Coupon Fund - 2000 Equity Fund
___Zero Coupon Fund - 2005 ___Templeton Global Growth Fund
___Zero Coupon Fund - 2010 ___Templeton International Equity
Fund
GROWTH AND INCOME FUNDS ___Templeton International Smaller
___Growth and Income Fund Companies Fund
___Income Securities Fund ___Templeton Pacific Growth Fund
___Real Estate Securities Fund
___Rising Dividends Fund
___Templeton Global Asset Allocation
Fund
___Utility Equity Fund ___TOTAL (Must Equal 100% or Dollar
Cost Average Amount)
______________________________________________________________________________
7. INCOME DATE
Selected Income Date ___- 01 -___The Income Date (Annuitization Date)
may be no earlier than two years after
the issue date.
______________________________________________________________________________
8. REPLACEMENT
Is this Annuity intended to replace or change existing ___No
life insurance or annuity? ___Yes
______________________________________________________________________________
9. TAX QUALIFIED PLANS
For Tax Qualified Plans, please
indicate one of the following:
Is this annuity part of a Tax IRA:
Qualified Plan? ____ Yes ____No ___Transfer/Rollover ___403(b)TSA
___Regular Contribution ___401
for Tax Year __ (Corporate Plan)
___SEP IRA ___Other______
______________________________________________________________________________
10. BENEFICIARY(IES) DESIGNATION
Primary Beneficiary(ies):
(In the event of death of Name Relationship to Owner
the Owner, the surviving
Joint Owner becomes the Name Relationship to Owner
Primary Beneficiary.)
Contingent Beneficiary(ies): Name Relationship to Owner
Name Relationship to Owner
P40012
______________________________________________________________________________
11. BY SIGNING BELOW, THE OWNER UNDERSTANDS THAT OR AGREES TO
I received a Prospectus and have determined that the variable annuity applied
for is not unsuitable for my insurance investment objectives, financial
situation, and financial needs. It is a long term commitment to meet
insurance needs and financial goals. I understand that the annuity value for
payments allocated to the variable sub-accounts may increase or decrease
depending on the contract's investment results, and that no minimum cash value
is guaranteed on the variable sub-accounts. To the best of my knowledge and
belief, all statements and answers in this application are complete and true.
It is further agreed that these statements and answers will become a part of
any contract to be issued. No representative is authorized to modify this
agreement or waive any of Preferred Life's rights or requirements.
___________________________________ ______________________________________
Owner's Signature(or Trustee, if Joint Owner's Signature (or Trustee,
applicable) if applicable)
___________________________________ ______________________________________
Signed At (City and State) Date Signed
____Please send me a Statement of Additional Information
______________________________________________________________________________
12. BY SIGNING BELOW, THE REGISTERED REPRESENTATIVE/AGENT CERTIFIES THAT
I am NASD registered and state licensed for variable annuity contracts in the
state where this application is written and delivered; and
I provided the Owner(s) with the most current Prospectus; and
TO THE BEST OF MY KNOWLEDGE AND BELIEF, THIS APPLICATION ___DOES___DOES NOT
INVOLVE REPLACEMENT OF EXISTING LIFE INSURANCE OR ANNUITIES. IF REPLACEMENT,
ATTACH A COPY OF EACH DISCLOSURE STATEMENT AND A LIST OF COMPANIES INVOLVED.
___________________________________ ______________________________________
Registered Representative Name (Print) Registered Representative Name (Print)
___________________________________ ______________________________________
Registered Representative Signature Registered Representative Signature
___________________________________ ______________________________________
Broker Dealer Branch Telephone Number
______________________________________________________________________________
Branch Address
______________________________________________________________________________
13. MAIL APPLICATIONS TO
Preferred Life Insurance Company For Overnight Delivery:
of New York Preferred Life Insurance Company
P.O. Box 11129 of New York
Church Street Station Lock Box Department-3W
New York, NY 10286-1129 P.O. Box 11129
101 Barclay Street
New York, NY 10286-1129
______________________________________________________________________________
14. HOME OFFICE USE ONLY
If Preferred Life Insurance Company of New York makes a change in this
space in order to correct any apparent errors or omissions, it will be
approved by acceptance of this contract by the Owner(s); however, any material
change must be accepted in writing by the Owner(s).
CERTIFICATE OF AMENDMENT
OF CHARTER
OF
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Under Section 1205 of the Insurance Law of the State of New York and
Section 805 of the Business Corporation Law of the State of New York
Pursuant to the provisions of Section 1206 of the Insurance Law of the State
of New York, the undersigned President and Secretary of Preferred Life
Insurance Company of New York hereby certify:
1. The name of the Corporation is Preferred Life Insurance Company of New
York.
2. The Charter of the Corporation was filed with the Insurance Department of
the State of New York in December 21, 1982.
3. The amendment to the Charter effected by this certificate is to amend
Article V, Section 6, to effect a change in the director residency
requirements to conform to New York Law, Article 12, Section 1201.
4. In order to effect such amendment, Article V, Section 6 of the Charter is
amended in its entirety to read as follows:
SECTION 6: At all times a majority of the directors shall be citizens and
residents of the United States, not less than three (3) thereof, shall be
residents of the State of New York, and each director shall be at least
eighteen (18) years of age.
5. The amendment of the Charter of the Corporation was authorized by
unanimous consent of the Board of Directors of the Corporation at a meeting of
the Board held on September 16, 1988 at Minneapolis, Minnesota in accordance
with Section 1206 of the New York Insurance Law and Section 708(b) of the
Business Corporation Law of the State of New York, followed by the unanimous
consent of the sole shareholder of the Corporation at a special Shareholders
Meeting held on September 16, 1988 at Minneapolis, Minnesota in accordance
with Section 615(b) of the Business Corporation.
IN WITNESS WHEREOF, we hereunto sign our names and affirm that the statements
herein are true under the penalties of perjury this 5th day of October, 1988.
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
By: /s/ Ronald Wobbeking
_______________________
Ronald Wobbeking - President
Attest: /s/ Alan A Grove
________________________
Alan A Grove - Secretary
DECLARATION OF INTENTION AND CHARTER
OF
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
We, the undersigned, all being natural persons of full age, and at
least two-thirds of us citizens of the United States, and at least three (3)
of us being residents of the State of New York, do hereby declare our
intention to form a stock corporation for the purpose of doing the kinds of
insurance business authorized by Paragraphs "1", "2" and "3", respectively, of
Section 46 of the Insurance Law of the State of New York, and for that purpose
do hereby adopt the following charter:
CHARTER
ARTICLE I
The name of this Corporation shall be:
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
ARTICLE II
The principal office of this Corporation shall be located in the
County of New York in the State of New York.
ARTICLE III
SECTION 1. The kind or kinds of insurance to be transacted by
the Corporation are those kinds specified in Paragraphs "1", "2" and "3",
Section 46, of Article IV of the Insurance Law of the State of New York, as
follows:
1. "Life insurance," meaning every insurance upon the lives
of human beings and every insurance appertaining thereto. The business of
life insurance shall be deemed to include the granting of endowment benefits;
additional benefits in the event of death by accident or accidental means;
additional benefits operating to safeguard the contract from lapse, or to
provide a special surrender value, in the event of total and permanent
disability of the insured; and optional modes of settlement of proceeds.
Amounts paid to the Corporation for life insurance and proceeds applied under
optional modes of settlement or under dividend options may be allocated by
the Corporation to one or more separate accounts pursuant to section two
hundred twenty-seven.
2. "Annuities," meaning all agreements to make periodical
payments where the making or continuance of all or of some of a series of
such payments, or the amount of any such payment, is dependent upon the
continuance of human life, except payments made under the authority of
paragraph one. Amounts paid to the Corporation to provide annuities and
proceeds applied under optional modes of settlement or under dividend options
may be allocated by the Corporation to one or more separate accounts pursuant
to section two hundred twenty-seven.
3. "Accident and health insurance," meaning (a) Insurance
against death or personal injury by accident or by any specified kind or
kinds of accident and insurance against sickness, ailment or bodily injury,
including insurance providing disability benefits pursuant to article nine of
the workmen's compensation law, except as specified in subparagraph (b)
following; and
(b) Non-cancellable disability insurance, meaning
insurance against disability resulting from sickness, ailment or bodily
injury (but not including insurance solely against accidental injury) under
any contract which does not give the insurer the option to cancel or
otherwise terminate the contract at or after one year from its effective date
or renewal date.
SECTION 2. The Corporation may also engage in the reinsurance of
the kinds of insurance business it is authorized to do.
SECTION 3. The foregoing enumeration of specific kinds of
insurance shall not be held to limit or restrict the powers of the Corporation
to carry on any other business to the extent necessarily or properly
incidental to such kinds of insurance.
SECTION 4. The Corporation shall have full power and authority
to cede and assume reinsurance of any risks subject to the Insurance Law and
the rules and regulations of the Insurance Department of the State of New
York.
SECTION 5. The Corporation shall have and may exercise such
other powers as are conferred upon it by law.
ARTICLE IV
The mode and manner in which the corporate powers of the Corporation
shall be exercised is through a Board of Directors and through such Committees
of the Board of Directors, officers and agents as such Board and the By-Laws
of the Corporation shall empower.
ARTICLE V
SECTION 1. The number of the directors of the Corporation shall
be not less than thirteen (13) nor more than twenty-three (23) and shall be
determined by the provisions of the By-Laws. In no case shall the number of
directors be less than thirteen (13). In no case shall a decrease in the
number of directors shorten the term of any incumbent director.
SECTION 2. The directors shall be elected at each annual meeting
of the stockholders of the Corporation, and the directors so elected shall
hold office for one year and until their respective successors shall have been
elected and shall have qualified. The directors shall be chosen and elected
by a plurality of the whole number of shares voted.
SECTION 3. Any director may be removed with or without cause by
the majority vote of the stockholders present in person or by proxy at any
meeting of stockholders. Not less than one-third of the directors may call a
Special Meeting for the purpose of removing any director for cause and at such
Special Meeting so called, such director may be removed by the affirmative
vote of two-thirds of the remaining directors.
SECTION 4. Whenever any vacancy in the Board of Directors shall
occur by death, resignation, removal or otherwise, and whenever the number of
directors is increased, such vacancy may be filled and such additional
directors may be elected, for the remainder of the term in which such event
shall happen, by a majority vote of the directors then in office in such
manner as may be prescribed by the By-Laws.
SECTION 5. If the directors shall not be elected in any year at
the annual meeting of stockholders as hereinabove provided, or if, because of
a vacancy or vacancies on the Board of Directors, the number of the Board
shall be less than thirteen (13), the Corporation shall not for that reason be
dissolved, but every director shall continue to hold office and discharge his
duties until his successor shall have been elected.
SECTION 6. At all times a majority of the directors shall be
citizens and residents of the State of New York or of adjoining states, not
less than three (3) thereof shall be residents of the State of New York, and
each director shall be at least twenty-one (21) years of age.
ARTICLE VI
The annual meeting of shareholders shall be held on the Thursday
following the first Tuesday on or after the first day of April in each year,
if not a legal holiday, and if a legal holiday, then on the next succeeding
business day, at 10:30 o'clock a.m. or at such other hour as may from time to
time be designated by the Board of Directors.
ARTICLE VII
Except as otherwise provided by law, the presence in person or by
proxy at any meeting of stockholders of the holders of a majority of shares of
the capital stock of the Corporation issued and outstanding and entitled to
vote thereat shall constitute a quorum. If, however, such majority shall not
be represented at any meeting of the stockholders, the holders of a majority
of the shares present or represented and entitled to vote thereat shall have
power to adjourn the meeting from time to time without notice until the
requisite amount of shares entitled to vote at such meeting shall be
represented. At such adjourned meeting at which the requisite number of
shares entitled to vote thereat shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
ARTICLE VIII
The names and post office residence addresses of the directors who
shall serve until the first annual meeting of the Corporation, are as follows:
<TABLE>
<CAPTION>
<S> <C>
Post Office Residence Addresses
Lowell C Anderson 1731 S Victoria Road, Mendota Heights, MN
Howard E Barnhill 475 Highcroft Rd, Wayzata, MN
Alfred F Fox 64 Cotter Beech Rd, St James, NY
James J Furey 2 Wexler Court, Garnerville, NY
Alan A Grove 16385 Ringer Rd, Wayzata, MN
Thomas J Kilcher 19 Winding Hill Rd, Hopatcong, NJ
Edward A Magliaro 189 Valleyview Drive, Rockaway, NJ
Richard M. Martin 35 Skylark Lane, Stonybrook, NY
Edward A Monaco 31 N Nancy Place, N Massapequa, NY
Ralph I Oasheim 5168 Abercrombie Drive, Edina, MN
Ronald E Ryan 5909 Sun Road, Edina, MN
Wallace H Watkins RD 1 Box 666 Pequest RD, Andover, NJ
Ronald L Wobbeking 2645 Fountain Lane, Plymouth, MN
</TABLE>
ARTICLE IX
The duration of the corporate existence of this Corporation shall be
perpetual.
ARTICLE X
The holders of stock of the Corporation shall not have any
pre-emptive, preferential or other right to subscribe for or purchase or
acquire any shares of any class of stock or any other securities of the
Corporation, whether now or hereafter authorized, and whether or not
convertible into, or evidencing or carrying the right to purchase, shares of
stock of any class or any other securities now or hereafter authorized and
whether the same shall be issued for cash, services or property, or by way of
dividend, or otherwise, other than such right, if any, as the Board of
Directors in its discretion from time to time may determine; but all such
shares of stock or other securities may be issued and disposed of by the Board
of Directors, to the extent permitted by law, in such manner to such person or
persons, on such terms, for such consideration and for such corporate purposes
as the Board of Directors may deem advisable.
ARTICLE XI
The amount of the authorized capital of this Corporation shall be
TWO MILLION ($2,000,000) DOLLARS, to consist of TWO HUNDRED THOUSAND (200,000)
shares of stock of the par value of TEN ($10.00) DOLLARS per share.
ARTICLE XII
The Corporation may establish, maintain and operate offices and
agencies and conduct business outside of the State of New York and in other
states, countries, territories, dependencies, protectorates and in the
District of Columbia, in such form and manner as the Board of Directors may
determine.
ARTICLE XIII
The Board of Directors shall adopt By-Laws for its own regulation
and that of the conduct of the business of the Corporation , which By-Laws
shall not be inconsistent with this Charter or with the laws of the State of
New York, and which By-Laws may be modified, rescinded or amended from time to
time by majority vote of the Board of Directors at any special meeting called
for that purpose, or at any regular meeting.
IN WITNESS WHEREOF, we have hereunto subscribed our names and
affixed our seals this 26th day of August, 1982.
<TABLE>
<CAPTION>
<S> <C>
/s/ Lowell C Anderson /s/Richard M. Martin
________________________ ________________________
Lowell C. Anderson Richard M Martin
/s/ Howard E. Barnhill /s/ Edward A. Monaco
________________________ ________________________
Howard E Barnihll Edward A. Monaco
/s/ Alfred F. Fox /s/ Ralph I Oasheim
________________________ ________________________
Alfred F. Fox Ralph I Oasheim
/s/ James J. Furey /s/ Ronald E Ryan
________________________ _________________________
James J. Furey Ronald E Ryan
/s/ Alan A Grove /s/Wallace H Watkins
________________________ _________________________
Alan A Grove Wallace H Watkins
/s/Thomas J Kilcher /s/ Ronald L Wobbeking
________________________ _________________________
Thomas J Kilcher Ronald L Wobbeking
/s/Edward A Magliaro
________________________
Edward A Magliaro
</TABLE>
PARTICIPATION AGREEMENT
Between
FRANKLIN VALUEMARK FUNDS
and
NORTH AMERICAN LIFE AND CASUALTY COMPANY
THIS AGREEMENT, effective the 1st day of January, 1990 by and between North
American Life and Casualty Company, a Minnesota corporation (hereinafter the
"Company") on its own behalf and on behalf of one or more segregated asset
accounts of the Company or its affiliates (hereinafter the "Account"), and
Franklin Valuemark Funds, a Massachusetts business trust (hereinafter the
"Trust").
WHEREAS, the Trust engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by the Company
and its affiliates (hereinafter the "Company"); and
WHEREAS, the beneficial Interest in the Trust is divided into several series of
shares, each designated a "Fund" and each representing the interests in a
particular managed pool of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission, dated September 7, 1989 (File No. 812-7303), granting the Company
and variable annuity and variable life insurance separate accounts exemptions
from certain provisions of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and certain Rules thereunder, to the extent
necessary to permit shares of the Trust to be sold to and held by variable
annuity and variable life insurance separate accounts of the Company
(hereinafter the "Mixed Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the company has registered or will register certain variable annuity
and/or life insurance contracts under the 1933 Act (hereinafter "Contracts");
and
WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company, to
set aside and invest assets attributable to the aforesaid variable contracts
(the Contract(s) and the Account(s) covered by this Agreement, and the
corresponding Funds covered by this Agreement in which the Account(s) invest,
are specified in Schedule A attached hereto as may be modified from time to
time); and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in the Fund on behalf of the Account to
fund the Contracts;
NOW, THEREFORE, in consideration or their mutual promises, the Trust and the
Company agree as follows:
ARTICLE 1. SALE OF TRUST SHARES
1.1 The Trust agrees to sell to the company those shares of the Trust which the
Account orders, executing such orders on a daily basis at the net value next
computed after receipt by the Trust or its designee of the order for the shares
of the Trust. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders and receipt by such designee
shall constitute receipt by the Trust; provided that the Trust received notice
of such order by 9:30 a.m. New York time on the next following business day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Trust calculates its net asset value pursuant to
the rules of the Securities and Exchange Commission.
1.2. The Trust agrees to make Trust shares available for the duration or this
Agreement for purchase at the applicable net asset value per share by the
Company and its Account on those days on which the Trust calculates its net
asset value pursuant to rules of the Securities and Exchange Commission and the
Trust shall use reasonable efforts to calculate such net asset value on each day
on which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Trust (hereinafter the "Trustees") may
refuse to sell shares of any Funds to any person, or suspend or terminate the
offering of shares of any Fund if such action is required by law or regulatory
authorities having jurisdiction or is, in the sole discretion of the Trustees
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Fund.
1.3. The Trust agrees that shares of the Trust will be sold only to the Company
and their separate accounts. No shares of any Fund will be sold to the general
public.
1.4. The Trust agrees to redeem for cash, on the Company's request, any full or
fractional shares of the Trust held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by the Trust or
its designee of the request for redemption. For purposes of this Section 1.4,
the Company shall be the designee of the Trust for receipt of requests for
redemption and receipt by such designee shall constitute receipt by the Trust
provided that the Trust receives notice of such request for redemption by 9:30
a.m. New York time on the next following Business Day.
1.5. The company shall pay for the Trust shares on the next Business Day after
an order to purchase shares is made in accordance with the provisions of Section
1.1 hereof. Payment shall be in federal funds transmitted by wire or by a credit
for any shares redeemed.
1.6. Issuance and transfer of the Trust's shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Shares
ordered from the Trust will be recorded in an appropriate title for the Account
or the appropriate subaccount of the Account.
1.7. The Trust shall furnish same day notice (by wire or telephone followed by
written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Trust's shares. The Company hereby elects to
receive all such dividends and distributions as are payable on the Fund shares
in additional shares of that Fund. The Company reserves the right to revoke this
election and to receive all such dividends and distributions in cash. The Trust
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.8. The Trust shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6:30 p.m. New York time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act (or exempt therefrom), that the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws and that the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly organized
and in good standing under applicable law and that it has legally and validly
established the Account as a segregated asset account under Minnesota law and
has registered or, prior to any issuance or sale of the Contracts, will register
the Account as a unit investment trust in accordance with the provisions of the
1940 Act (unless exempt therefrom) to serve as a segregated investment account
for the Contracts.
2.2. The Trust represents and warrants that Trust shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with the laws or Massachusetts and all applicable federal
and state securities laws and that the Trust is and shall remain registered
under the 1940 Act. The Trust shall amend the Registration Statement for its
shares under the 1933 Act and the 1940 Act from time to time as required in
order to affect the continuous offering of its shares. The Trust shall register
and qualify the shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Trust.
2.3. The Trust represents that the Trust is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, (the
"Code") and that every effort will be made to maintain such qualifications
(under Subchapter M or any successor or similar provision) and that the Trust
will notify the Company immediately upon having a reasonable basis for believing
that the Trust has ceased to so qualify or that the Trust might not so qualify
in the future.
2.4. The Trust undertakes to have a Board of Trustees, a majority of whom are
not interested persons of the Trust, formulate and approve of any plan under
Rule 12b-1 to finance distribution expenses.
2.5. The Trust represents that it will sell and distribute the Trust shares in
accordance with all applicable state and federal securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.6. The Trust represents that it is lawfully organized and validly existing
under the laws of the State of Massachusetts and that it does and will comply
with the 1940 Act.
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. The Trust shall provide the Company (at the Trust's expense) with as many
copies of the Trust's current prospectus as the Company may reasonably request.
If requested by the Company in lieu thereof, the Trust shall provide such
documentation (including a final "camera ready" copy of the new prospectus as
set in type at the Trust's expense) and other assistance as is reasonably
necessary in order for the Company once a year (or more frequently if the
prospectus for the Trust is supplemented or amended) to have the prospectus for
the Contracts and the Trust's prospectus printed together in one document (such
printing to be at the Trust's expense).
3.2. The Trust's prospectus shall state that the Statement of Additional
Information for the Trust is available from the Trust. The Trust, at its
expense, shall print and provide such Statement free of charge to the Company
and to any owner of a contract or prospective owner who requests such Statement.
3.3. The Trust, at its expense, shall provide the Company with copies of its
proxy material, reports to stockholders and other communications to stockholders
in such quantity as the Company shall reasonably require for distributing to
Contract owners.
3.4. If and to the extent required by law (or the Mixed Funding Exemptive Order)
the Company shall:
1. solicit voting instructions from contract owners;
2. vote the Trust shares in accordance with instructions received from Contract
owners; and
3. vote Trust shares for which no instructions have been received in the same
proportion as Trust shares of such Fund for which instructions have been
received;
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges or
variable contract owners. The Company reserves the right to vote Trust shares
held in any segregated asset account in its own right, to the extent permitted
by law. The Company shall be responsible, with the guidance and assistance of
the Trust, assuring that each of their separate account participating in the
Trust calculates voting privileges in a manner consistent with the standards set
forth on Schedule B attached hereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or
its designee, each piece of sales literature or other promotional material in
which the Trust, its investment adviser or underwriter is named, a reasonable
time prior to its use. No such material shall be used if the Trust or its
designee object to such use within 15 Business Days after receipt of such
material.
4.2. The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus for the Trust shares, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports or proxy statements for the Trust, or in sales literature
or other promotional material approved by the Trust or its designee except with
the permission of the Trust.
4.3. The Trust shall furnish, or shall cause to be furnished, to the Company or
its designee, each piece of sales literature or other promotional material in
which the Company and/or its separate account(s), is named a reasonable time
prior to its use. No such material shall be used if the Company or its designee
object to such use within 15 Business Days after receipt or such material.
4.4. The Trust shall not give any information or make any representations on
behalf of the Company or concerning the Company, the Account, or the Contracts
other than information or representations contained in a registration statement
or prospectus for the Contracts, as such registration statement and prospectus
may be amended or supplemented from time to time, or in reports for the Account
approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Trust will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no action letters, and all amendments
to any of the above, that relate to the Trust or its shares, prior to or
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities. The Trust shall also
promptly inform the Company of the results or any examination by the Securities
and Exchange Commission (or other regulatory authorities), and shall provide the
Company with a copy of any "deficiency letter" or other correspondence or
written report regarding any such examination.
4.6. For purposes of this Article IV, the phrase "sales literature or other
promotional material" means advertisements (such as material published, or
designed for use in, a newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs or billboard),
and sales literature (such as brochures, circulars, market letters and form
letters), distributed or made generally available to customers or the public.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no Fee or other compensation to the Company under this
Agreement, and the Company shall pay no fee or other compensation to the Trust.
5.2. All expenses incident to performance by the Trust under this Agreement
shall be paid by the Trust. The Trust shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Trust, in accordance with
applicable state laws prior to their sale. The Trust shall bear the expenses for
the cost of registration and qualification of the Trust's shares, preparation
and filing of the Trust's prospectus and registration statement, proxy materials
and reports, setting the prospectus in type, setting in type and printing the
proxy materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by federal or state law, and all taxes on the issuance or
transfer of the Trust's shares.
5.3. The Trust shall bear the expenses of printing and distributing the Trust's
prospectus to owners of Contracts issued by the Company and or distributing the
Trust's proxy materials and reports to such Contract owners.
5.4. In the event the Trust adds one or more additional Funds and the Company
desires to make such Funds available to its Contract owners as an underlying
investment medium, a new Schedule A or an amendment to this Agreement shall be
executed by the parties authorizing the issuance of shares or the new Funds to
the Account.
ARTICLE VI. DIVERSIFICATION
6.1. The Trust represents, and warrants that the Trust will at all times invest
its assets in such a manner as to ensure that the Contracts will be treated as
annuity, endowment, or life insurance contracts under the code and the
regulations issued thereunder. Without limiting the scope of the foregoing, the
Trust will at all times comply with Section 817(h) of the Code and the
Regulations Section 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments or
other modifications to such Section or Regulation.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board of Trustees of the Trust (the "Board") will monitor the Trust for
the existence of any material irreconcilable conflict between the interest of
the Contract owners of all separate accounts investing in the Trust. A material
irreconcilable conflict may arise for a variety of reasons, including: (a) an
Action by any state insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no action or interpretive letter or any similar
action by insurance, tax or securities regulatory authorities (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Fund are being managed; (e) a difference in
voting instructions given by variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to disregard the
voting instructions or Contract owners. The Board shall promptly inform the
Company to determine that a material irreconcilable conflict exists and the
implications thereof.
7.2. If it is determined by a majority of the Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at its expense, and to the extent reasonably practicable (as
determined by a majority or the disinterested Trustees) take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up to and
including: (1) withdrawing the assets, allocable to some or all of the separate
accounts from the Trust or any Fund and reinvesting such assets in a different
investment medium, including (but not limited to) another Fund of the Trust, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity Contract owners or life insurance Contract
owners) that votes in favor of such Segregation, or offering to the affected
Contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.3. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the Account's
investment in the Trust and terminate this Agreement within six months after the
Board informs the Company in writing that it has determined that such decision
has created an irreconcilable material conflict, provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six month
period, the Trust shall continue to accept and implement orders by the Company
for the purchase and redemption of shares of the Trust.
7.4. For purposes of Section 7.2 though 7.4 of this Agreement, a majority of the
disinterested members of the Board shall determine whether or not any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Trust be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.2 to establish a new funding
medium for the Contracts, if an offer to do so has been declined by vote of a
majority or Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
ARTICLE VIII. INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Trust and each of
its Trustees and officers and each person, if any, who controls the Trust within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Trust's shares or the Contracts and:
1. arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the Registration Statement or
prospectus for the Contracts or contained in the Contracts or sales
literature for the Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to the Company
by or on behalf of the Trust for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
2. arise out of or as a result of statements or representations (other than
statements or representations contained in the Registration Statement,
prospectus or sales literature of the Trust not supplied by the Company, or
persons under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of the
Contracts or Trust Shares; or
3. arise out of any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement, prospectus, or sales literature
of the Trust or any amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon information furnished to
the Trust by or on behalf of the company; or
4. arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any other material breach of this Agreement by the Company,
except to the extent provided in Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations or duties under this Agreement or to the Trust,
whichever is applicable.
8.1(c) The Company shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
claim shall have been served upon such indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Company of any such claim shall not relieve
the Company from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will be not
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.l(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust Shares or the Contracts or the operation of
the Trust and the Indemnified Parties will provide the Company with all relevant
information and documents requested by the Company. For purposes of this Section
8.1(d), the "commencement" of proceedings shall include any informal or formal
communications from the Securities and Exchange Commission or its staff (or the
receipt of information from any other persons or entities) indicating that
enforcement action by said Commission or staff may be contemplated or
forthcoming.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws or Minnesota.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and 1940
Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Mixed Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate with respect to one, some, or all Funds for
one, some, or all Contracts or Accounts:
1. at the option of any party upon six month's advance written notice to the
other parties;
2. at the option of the Company to the extent that shares of Funds are not
reasonably available to meet the requirements of the Contracts or are not
appropriate funding vehicles for the Contracts, as determined by the
Company reasonably and in good faith. Prompt notice of the election to
terminate for such cause and an explanation or such cause shall be
furnished by the Company; or
3. as provided in Article VII.
10.2. The notice shall specify the Fund(s) and Contract(s) or Account(s) as to
which the Agreement is to be terminated.
10.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 1O.1 (a) may be exercised for cause
or for no cause.
10.4. Effect of Termination. Notwithstanding any termination of this Agreement,
the Trust shall at the option of the Company, continue to make available
additional shares of the Trust pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the existing contracts shall be permitted to
reallocate investments in the Trust, redeem investments in the Trust and/or
invest in the Trust upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.4 shall not apply to
any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
If to the Trust: Deborah Gatzek, Vice President
Franklin Resources, Inc.
777 Mariners Island Boulevard
San Mateo, California 94404
If to the Company: Mr. Robert S. James, President-Financial Markets
North American Life and Casualty Company 1750 Hennepin
Avenue
Minneapolis, Minnesota 55403
ARTICLE XII. MISCELLANEOUS
12.1. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as it may come into the public domain.
12.2. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.4. If any provision or this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.5. The Schedules attached hereto, as modified from time to time, are
incorporated herein by reference and are part of this Agreement.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitations the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
12.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
IN WITNESS WHEREOF, each of the parties has cause this Agreement to be executed
in its name and on its behalf by its duly authorized representative and its seal
to be hereunder affixed hereto as or the date specified below.
Company:
By two authorized officers,
By: /s/Robert S. James
Title: President, Financial Markets Division
Date: 5/24/92
By: /s/Michael T. Westermeyer
Title: Second Vice President and Senior Counsel
Date: 5/20/92
Trust:
By its authorized officers,
By: /s/Deborah Gatzek
Title: Secretary
Date: 3/31/92
SCHEDULE A
Franklin Valuemark Funds (Trust) is a diversified, open-end management
investment company consisting of the following separate Funds:
Adjustable U.S. Government Fund Equity Growth Fund Global Income Fund High
Income Fund Income Securities Fund Investment Grade Intermediate Bond Fund
Money Market Fund Precious Metals Funds Real Estate Securities Fund U.S.
Government Securities Fund Utility Equity Fund Zero Coupon Fund - 1995
Zero Coupon Fund - 2000 Zero Coupon Fund - 2005 Zero Coupon Fund - 2010
Effective March 1, 1992:
Rising Dividend Fund
International Equity Fund
Pacific Growth Fund
Amendment to Participation Agreement
Effective as of the dates specified below, Allianz Life Insurance Company of
North America, formerly known as North American Life and Casualty Company, a
Minnesota corporation, and Franklin Valuemark Funds, a Massachusetts business
trust, hereby amend Schedule A of their Participation Agreement effective
January 1, 1990, by adding the following language to the bottom of the list of
the Funds which make up the Franklin Valuemark Funds:
"Effective March 15, 1994:
Templeton Developing Markets Equity Fund
Templeton Global Growth Fund"
"Effective May 1, 1995:
Templeton Global Asset Allocation Fund"
IN WITNESS WHEREOF, each of the Parties has caused this Amendment to be executed
in its name and on its behalf by its duly authorized representatives as of the
date specified below.
Allianz Life Insurance Company of North America
By: /s/James P. Kelso
James P. Kelso
Title: Vice President,
Variable Products
Date: 6/30/95
Franklin Valuemark Funds
By: /s/Karen L. Skidmore
Karen L. Skidmore
Title: Assistant Vice President
& Assistant Secretary
Date: 6/16/95
Amendment to Participation Agreement
Effective as of the dates specified below, Allianz Life Insurance Company of
North America, formerly known as North American Life and Casualty Company, a
Minnesota corporation, and Franklin Valuemark Funds, a Massachusetts business
trust, hereby amend Schedule A of their Participation Agreement effective
January 1, 1990, by adding the following language to the bottom of the list of
the Funds which make up the Franklin Valuemark Funds:
"Effective November 1, 1995:
Small Cap Fund"
IN WITNESS WHEREOF, each of the Parties has caused this Amendment to be
executed in its name and on its behalf by its duly authorized representatives
as of the date specified below.
Allianz Life Insurance Company of North America
By: /s/James P. Kelso
James P. Kelso
Title: Vice President,
Variable Products
Franklin Valuemark Funds
By: /s/Karen L. Skidmore
Karen L. Skidmore
Title: Assistant Vice President
& Assistant Secretary
Amendment to Participation Agreement
Effective as of the dates specified below, Allianz Life Insurance Company of
North America, formerly known as North American Life and Casualty Company, a
Minnesota corporation, and Franklin Valuemark Funds, a Massachusetts business
trust, hereby amend Schedule A of their Participation Agreement effective
January 1, 1990, by adding the following language to the bottom of the list of
the Funds which make up the Franklin Valuemark Funds:
"Effective May 1, 1996:
Capital Growth Fund
Templeton International Smaller Companies Fund"
IN WITNESS WHEREOF, each of the Parties has caused this Amendment to be
executed in its name and on its behalf by its duly authorized representatives
as of the date specified below.
Allianz Life Insurance Company of North America
By: /s/James P. Kelso
James P. Kelso
Title: Vice President,
Variable Products
Franklin Valuemark Funds
By: /s/Karen L. Skidmore
Karen L. Skidmore
Title: Assistant Vice President
& Assistant Secretary
Organizational Chart
Allianz Aktiengesellschaft Holding (abbreviated as Allianz AG Holding), of
Munich, Germany, is the controlling owner of Allianz of America, Inc.
Allianz of America, Inc. is sole owner of Allianz Life Insurance Company
of North America.
Allianz Life is controlling owner of NALAC Financial Plans, LLC.
Allianz Life Insurance Company of North America is sole owner of Preferred
Life Insurance Company of New York.
