File Nos. 333-____
811-5716
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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. 16 (X)
(Check appropriate box or boxes.)
PREFERRED LIFE VARIABLE ACCOUNT C
-------------------------------------
(Exact Name of Registrant)
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
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(Name of Depositor)
152 West 57th Street, 18th Floor, New York, New York 10019
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(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: $500 -
Registrant is registering an indefinite number of securities under the
Securities Act of 1933 pursuant to Investment Company Act Rule 24f-2.
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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)
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ITEM NO. LOCATION
PART A
Item 1. Cover Page.................................. Cover Page
Item 2. Definitions................................. Definitions
Item 3. Synopsis or Highlights...................... Highlights
Item 4. Condensed Financial Information............. Not Applicable
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies.......... The Company; The
Variable Account;
Franklin Valuemark
Funds
Item 6. Deductions.................................. Charges and
Deductions
Item 7. General Description of Variable The Contracts
Annuity Contracts...........................
Item 8. Annuity Period.............................. Annuity Provisions
Item 9. Death Benefit............................... The Contracts;
Annuity Provisions
Item 10. Purchases and Contract Value................ Purchase Payments
and Contract Value
Item 11. Redemptions................................. Surrenders
Item 12. Taxes....................................... Tax Status
Item 13. Legal Proceedings........................... Legal Proceedings
Item 14. Table of Contents of the Statement of
Additional Information Table of Contents
of the Statement of
Additional
Information
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ITEM NO. DEFINITION
PART B
Item 15. Cover Page................................... Cover Page
Item 16. Table of Contents............................ Table of Contents
Item 17. General Information and History.............. The 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
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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.
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
HOME OFFICE: VIP SERVICE CENTER:
152 West 57th Street, 18th Floor P.O. Box 30343
New York, NY 10019 Tampa, FL 33630-3343
(800) 542-5427 (800) 774-5001
INDIVIDUAL IMMEDIATE
VARIABLE ANNUITY CONTRACTS
ISSUED BY
PREFERRED LIFE VARIABLE ACCOUNT C
AND
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
________________, 199_
The Individual Immediate Variable Annuity Contracts (the "Contracts")
described in this Prospectus provide lifetime income to the Annuitant and
Joint Annuitant, if any, under the Annuity Option selected. The Annuitant is
the Contract Owner. The Contract Owner selects the Annuity Option and the
frequency of payment (e.g., monthly, quarterly, semi-annually, annually).
The Contracts are available for retirement plans which do not qualify for the
special federal tax advantages available under the Internal Revenue Code
("Non-Qualified Contracts"). They can also be purchased as a "Qualified
Contract" that is an Individual Retirement Annuity with contributions
rolled-over from tax-qualified plans such as 403(b) plans, 401 plans, or IRAs.
The Contracts are acquired by the payment of a single purchase payment
("Single Purchase Payment"). The Single Purchase Payment for the Contracts
will be allocated to a segregated investment account of Preferred Life
Insurance Company of New York (the "Company") which account has been
designated Preferred Life Variable Account C (the "Variable Account").
The Variable Account invests in shares of Franklin Valuemark Funds (the
"Trust"). The Trust is a series fund with twenty-three Funds, fifteen of which
are currently available in connection with the Contracts offered under this
Prospectus: the Money Market Fund, the Growth and Income Fund, the Income
Securities Fund, the Mutual Shares Securities Fund, the Rising Dividends Fund,
the Templeton Global Asset Allocation Fund, the Utility Equity Fund, the
Capital Growth Fund, the Mutual Discovery Securities Fund, the Small Cap Fund,
the Templeton Developing Markets Equity Fund, the Templeton Global Growth
Fund, the Templeton International Equity Fund, the Templeton International
Smaller Companies Fund and the Templeton Pacific Growth Fund. See "Highlights"
and "Tax Status" for a discussion of owner control of the underlying
investments in a variable annuity contract.
Under certain circumstances, Contract Owners may make withdrawals after the
Income Date other than the Annuity Payments they will receive under the
Contract. See "Annuity Provisions - Contract Withdrawals (Liquidations)" for
more information regarding the ability to make withdrawals under the Contract.
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. INVESTMENT IN THE CONTRACT IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE
OF THE CONTRACT OWNER'S INVESTMENT TO FLUCTUATE, AND WHEN THE CONTRACTS ARE
RETURNED WITHIN THE FREE LOOK PERIOD, THE REFUND MAY BE HIGHER OR LOWER THAN
THE PURCHASE PAYMENT.
This Prospectus concisely sets forth the information a prospective investor
should know before investing. Additional information about the Contracts is
contained in the "Statement of Additional Information," which is available at
no charge. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
The Table of Contents of the Statement of Additional Information can be found
on the last page of this Prospectus. For the Statement of Additional
Information, call or write the VIP Service Center address shown above.
INQUIRIES: Any inquiries can be made by telephone or in writing to the Company
at the VIP Service Center phone number or address listed above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS MUST BE ACCOMPANIED BY OR PRECEDED BY A CURRENT PROSPECTUS FOR
FRANKLIN VALUEMARK FUNDS.
This Prospectus and the Statement of Additional Information are dated
__________, 199_, and may be amended from time to time.
This Prospectus should be kept for future reference.
TABLE OF CONTENTS
PAGE
DEFINITIONS
HIGHLIGHTS
FEE TABLE
THE COMPANY
THE VARIABLE ACCOUNT
FRANKLIN VALUEMARK FUNDS
General
Substitution of Securities
Voting Rights
CHARGES AND DEDUCTIONS
Deduction for Mortality and Expense Risk Charge
Deduction for Administrative Expense Charge
Deduction for Income Taxes
Deduction for Trust Expenses
ANNUITY PROVISIONS
Income Date
Annuity Options
Contract Withdrawals (Liquidations)
Determination of Annuity Payments
THE CONTRACTS
Ownership
Assignment
Beneficiary
Change of Beneficiary
Death of Beneficiary
Annuitant
PROCEEDS PAYABLE AT DEATH
PURCHASE PAYMENTS AND CONTRACT VALUE
Single Purchase Payment
Allocation of Single Purchase Payment
Contract Value
VIP Unit
Transfers
DISTRIBUTOR
Delay of Payments
ADMINISTRATION OF THE CONTRACTS
PERFORMANCE DATA
Money Market Sub-Account
Other Sub-Accounts
Performance Ranking
TAX STATUS
General
Diversification
Multiple Contracts
Tax Treatment of Distributions - Non-Qualified Contracts
Qualified Plans
Tax Treatment of Distributions - IRA Contracts
Tax Treatment of Assignments
Income Tax Withholding
FINANCIAL STATEMENTS
LEGAL PROCEEDINGS
APPENDIX A - ILLUSTRATION OF VALUES
APPENDIX B - PERFORMANCE INFORMATION
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
DEFINITIONS
AGE - Age to the nearest month unless otherwise specified.
ANNUITANT - The primary person upon whose continuation of life any annuity
payment involving life contingencies depends. The Contract Owner is the
Annuitant. See also, Joint Annuitant.
ANNUITY CALCULATION DATE - The date on which the first annuity payment is
calculated which will be no more than 10 business days prior to the Income
Date.
ANNUITY OPTION - An arrangement under which annuity payments are made under
the Contract.
ANNUITY UNIT - An accounting unit of measure used to calculate annuity
payments after the Annuity Calculation Date.
ASSUMED INVESTMENT RETURN - The investment return upon which the annuity
payments in the Contract are based.
COMPANY - Preferred Life Insurance Company of New York at its VIP Service
Center shown on the cover page of this Prospectus.
CONTRACT ANNIVERSARY - An anniversary of the Effective Date of the Contract.
CONTRACT OWNER - The person who owns the Contract as named in the Company's
records. The Annuitant is the Contract Owner.
CONTRACT VALUE - The dollar value as of any Valuation Date prior to the
Annuity Calculation Date of all amounts accumulated under the Contract.
EFFECTIVE DATE - The date on which the Net Purchase Payment is allocated to
the Variable Account.
ELIGIBLE INVESTMENT(S) - An investment entity which can be selected by the
Contract Owner to be the underlying investment of the Contract.
FUND - A segment of an Eligible Investment which constitutes a separate and
distinct class of interests under an Eligible Investment.
INCOME DATE - The date on which annuity payments are to begin.
Joint Annuitant - A person other than the Annuitant on whose life annuity
payments may also be based.
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 the Company. Each Joint Owner must be either an Annuitant
or Joint Annuitant.
NET ASSET VALUE - The total value of the shares of the Eligible Investment or
Fund less the liabilities of the Eligible Investment or Fund held by the
Sub-Account, as of the close of trading on a Valuation Date.
NON-QUALIFIED CONTRACTS - As used herein, Contracts issued under Non-Qualified
Plans which do not receive favorable tax treatment under Section 408 of the
Internal Revenue Code of 1986, as amended (the "Code").
QUALIFIED CONTRACTS - As used herein, Contracts issued under Qualified Plans
which receive favorable tax treatment under Section 408 of the Code.
SUB-ACCOUNT - A segment of the Variable Account. Each Sub-Account is invested
in shares of a Fund of an Eligible Investment.
VALUATION DATE - The Variable Account will be valued each day that the New
York Stock Exchange is open for trading, which is Monday through Friday,
except for normal business holidays.
VALUATION PERIOD - The period beginning 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.
VARIABLE ACCOUNT - A separate investment account of the Company, designated as
Preferred Life Variable Account C, in which a portion of the Company's assets
has been allocated for the Contracts and certain other contracts.
VIP UNIT - An accounting unit of measure used to calculate the Contract Value
prior to the Annuity Calculation Date.
HIGHLIGHTS
Purchase Payments for the Contracts will be allocated to a segregated
investment account of Preferred Life Insurance Company of New York (the
"Company") which has been designated Preferred Life Variable Account C (the
"Variable Account").
The Variable Account invests in shares of Franklin Valuemark Funds (the
"Trust"). (See "Franklin Valuemark Funds.") CONTRACT OWNERS BEAR THE
INVESTMENT RISK FOR ALL AMOUNTS ALLOCATED TO THE VARIABLE ACCOUNT.
The Contract may be returned within 10 days after it is received (the
"Free-Look Period"). It can be mailed or delivered to either the Company or
the agent who sold it. Return of the Contract by mail is effective on being
postmarked, properly addressed and postage prepaid. The returned Contract will
be treated as if the Company had never issued it. The Company will promptly
refund the net amount allocated to the Variable Account modified for
investment experience plus any taxes deducted less any benefits paid. This may
be more or less than the Single Purchase Payment. Once the Free-Look Period
expires, under certain circumstances, Contract Owners may make withdrawals
after the Income Date other than the Annuity Payments they will receive under
the Contract. See "Annuity Provisions - Contract Withdrawals (Liquidations)"
for more information regarding the ability to make withdrawals under the
Contract. The Company has the right to allocate the Single Purchase Payment to
the Money Market Sub-Account until the expiration of the Free-Look Period. If
the Company does so allocate the Single Purchase Payment, it will refund the
Single Purchase Payment, less any benefits paid. It is the Company's current
practice to directly allocate the Single Purchase Payment to the
Sub-Account(s) (see "Purchase Payments and Contract Value - Allocation of
Purchase Payment") designated by the Contract Owner.
There is a Mortality and Expense Risk Charge which is equal, on an annual
basis, to 1.25% of the average daily net assets of the Variable Account. This
charge compensates the Company for assuming the mortality and expense risks
under the Contracts. (See "Charges and Deductions - Deduction for Mortality
and Expense Risk Charge.")
There is an Administrative Expense Charge which is equal, on an annual basis,
to 0.15% of the average daily net assets of the Variable Account. This charge
compensates the Company for costs associated with the administration of the
Contracts and the Variable Account. (See "Charges and Deductions - Deduction
for Administrative Expense Charge.")
Under certain circumstances, there is a ten percent (10%) federal income tax
penalty that may be applied to the income portion of any distribution from the
Contracts. (See "Tax Status - Tax Treatment of Distributions - Non-Qualified
Contracts" and "Tax Status - Tax Treatment of Distributions - IRA Contracts.")
For a further discussion of the taxation of the Contracts, see "Tax Status."
The Treasury Department has indicated that guidelines may be forthcoming under
which a variable annuity contract will not be treated as an annuity contract
for tax purposes if the owner of the contract has excessive control over the
investments underlying the contract. The issuance of such guidelines may
require the Company to impose limitations on a Contract Owner's right to
control the investments. It is not known whether any such guidelines would
have a retroactive effect (see "Tax Status - Diversification").
The Company also offers deferred variable annuity contracts and reserves the
right to permit exchange of those contracts for the Contracts offered by this
Prospectus.
PREFERRED LIFE VARIABLE ACCOUNT C FEE TABLE*
CONTRACT OWNER TRANSACTION FEES None
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Charge..................... 1.25%
Administrative Expense Charge......................... .15%
--------
Total Variable Account Annual Expenses................ 1.40%
*Applies to all Sub-Accounts of the Variable Account.
The effects of the charges shown above are reflected in the illustrations of
annuity income contained in the Appendix on Page __. The illustrations are
intended to assist the purchaser in assessing the effects of these charges and
the effect of investment performance on the amount of variable annuity income.
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 "Franklin Valuemark Funds" in this Prospectus and
"Management" in the Trust prospectus.
The "Management and Fund Administration Fees" below include investment
advisory and other management and administrative fees not included as "Other
Expenses" that were paid to the Managers and Fund Administrators by each Fund
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 (see explanatory footnotes below). The purpose of the Table is to assist
the Contract Owner in understanding the various costs and expenses that a
Contract Owner will incur, directly or indirectly, on amounts allocated to the
Variable Account.
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MANAGEMENT
AND FUND TOTAL
ADMINISTRATION OTHER ANNUAL
FEES(1) EXPENSES EXPENSES
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Money Market Fund(2).................... 0.51% 0.02% 0.53%
Growth and Income Fund.................. 0.49% 0.03% 0.52%
Utility Equity Fund..................... 0.47% 0.03% 0.50%
Income Securities Fund.................. 0.47% 0.04% 0.51%
Rising Dividends Fund................... 0.75% 0.03% 0.78%
Templeton International Equity Fund..... 0.83% 0.09% 0.92%
Templeton Pacific Growth Fund........... 0.90% 0.11% 1.01%
Templeton Global Growth Fund............ 0.93% 0.04% 0.97%
Templeton Developing Markets Equity
Fund..................................... 1.25% 0.16% 1.41%
Templeton Global Asset Allocation
Fund(3)............................. 0.80% 0.10% 0.90%
Small Cap Fund(4)....................... 0.75% 0.15% 0.90%
Templeton International Smaller
Companies Fund(5)....................... 1.00% 0.10% 1.10%
Capital Growth Fund(5).................. 0.75% 0.04% 0.79%
Mutual Discovery Securities Fund(6)..... 0.95% 0.10% 1.05%
Mutual Shares Securities Fund(6)........ 0.75% 0.10% 0.85%
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(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
"Management" in the Trust Prospectus for further information regarding Management and
Fund Administration Fees.
(2) Franklin Advisers, Inc. agreed in advance to waive a portion of its Management
Fee and to make certain payments to reduce expenses of the Money Market Fund during
1995 and is currently continuing this arrangement in 1996. This arrangement may be
terminated at any time. With this reduction, actual Management Fees and Total Annual
Expenses of the Money Market Fund for 1995 were 0.38% and 0.40%, respectively of the
average daily net assets of the Fund.
(3) The Templeton Global Asset Allocation Fund commenced operations May 1, 1995. The
expenses shown are estimated expenses for the Fund for 1996.
(4) The Small Cap Fund commenced operations November 1, 1995. The expenses shown are
estimated expenses for the Fund for 1996.
(5) The Templeton International Smaller Companies Fund and the Capital Growth Fund
commenced operations May 1, 1996. The expenses shown are estimated expenses for the
Funds for 1996.
(6) The Mutual Discovery Securities Fund and the Mutual Shares Securities Fund
commenced operations November 8, 1996. The expenses shown are estimated expenses for
the Funds for 1996.
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THE COMPANY
Preferred Life Insurance Company of New York (the "Company") is a stock life
insurance company organized under the laws of the State of New York. The
Company is a wholly-owned subsidiary of Allianz Life Insurance Company of
North America ("Allianz Life"). Allianz Life is headquartered in Minneapolis,
Minnesota. The Company is authorized to do direct business in six states,
including New York. The Company offers group life, group accident and health
insurance and variable annuity products.
NALAC Financial Plans LLC is an affiliate of the Company. It provides
marketing services for the Company and is the principal underwriter of the
Contracts. NALAC Financial Plans LLC is reimbursed for expenses incurred in
the distribution of the Contracts.
Administration for the Contract is provided at the Company's VIP Service
Center: P.O. Box 30343, Tampa, FL 33630-3343, (800) 774-5001.
THE VARIABLE ACCOUNT
The Variable Account was established pursuant to a resolution of the Board of
Directors on February 26, 1988. The Variable Account is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940, as amended (the "1940 Act").
The assets of the Variable Account are the property of the Company. However,
the assets of the Variable Account equal to the reserves, and other contract
liabilities with respect to the Variable Account, are not chargeable with
liabilities arising out of any other business the Company may conduct. Income,
gains and losses, whether or not realized, are, in accordance with the
Contracts, credited to or charged against the Variable Account without regard
to other income, gains or losses of the Company. The Company's obligations
arising under the Contracts are general corporate obligations.
The Variable Account meets the definition of a "separate account" under the
federal securities laws.
The Variable Account is divided into Sub-Accounts with the assets of each
Sub-Account invested in one of the Funds of Franklin Valuemark Funds.
FRANKLIN VALUEMARK FUNDS
FIFTEEN OF THE TWENTY-THREE FUNDS CURRENTLY AVAILABLE CONSTITUTING THE
FRANKLIN VALUEMARK FUNDS ARE AVAILABLE UNDER THE CONTRACTS DESCRIBED IN THIS
PROSPECTUS. Franklin Valuemark Funds (the "Trust") is an open-end management
investment company registered under the 1940 Act. The investment objectives of
each Fund and a discussion of potential risks are found in the accompanying
prospectus for the Trust, which is included with this Prospectus and
incorporated herein by reference.
PURCHASERS SHOULD READ THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS FOR THE
TRUST CAREFULLY BEFORE INVESTING.
Franklin Advisers, Inc. ("Advisers"), serves as each Fund's (except the Rising
Dividends Fund, the Templeton Global Growth Fund, the Templeton Developing
Markets Equity Fund, the Templeton Global Asset Allocation Fund, the Templeton
International Smaller Companies Fund, the Mutual Shares Securities Fund and
the Mutual Discovery Securities Fund) investment manager. The investment
manager for the Templeton Global Growth Fund and the Templeton Global Asset
Allocation Fund 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
Mutual Shares Securities Fund and the Mutual Discovery Securities Fund is
Franklin Mutual Advisers, Inc. Franklin Advisory Services, Inc. replaced
Advisers as the Manager for the Rising Dividends Fund on July 1, 1996. Certain
Managers have retained one or more subadvisers. All investment managers,
advisers or subadvisers are referred to collectively as "Managers."
The Managers are direct or indirect wholly-owned subsidiaries of Franklin
Resources, Inc., a publicly-owned holding company. The Managers, subject to
the overall policies, control, direction, and review of the Board of Trustees
of the Trust, are responsible for recommending and providing advice with
respect to each Fund's investments, and for determining which securities will
be purchased, retained or sold as well as for execution of portfolio
transactions.
Franklin Templeton Services, Inc. ("Fund Administrator"), provides certain
administrative facilities and services for the Funds.
Franklin Templeton Investor Services, Inc., also a wholly-owned subsidiary of
Franklin Resources, Inc., maintains the records of the Trust's shareholder
accounts, processes purchases and redemptions of shares, and serves as each
Fund's dividend paying agent.
THE FOLLOWING FUNDS ARE AVAILABLE:
FUND SEEKING STABILITY OF PRINCIPAL AND INCOME
Money Market Fund
FUNDS SEEKING GROWTH AND INCOME
Growth and Income Fund
Income Securities Fund
Mutual Shares Securities Fund
Rising Dividends Fund
Templeton Global Asset Allocation Fund
Utility Equity Fund
FUNDS SEEKING CAPITAL GROWTH
Capital Growth Fund
Mutual Discovery Securities Fund
Small Cap Fund
Templeton Developing Markets Equity Fund
Templeton Global Growth Fund
Templeton International Equity Fund
Templeton International Smaller Companies Fund
Templeton Pacific Growth Fund
GENERAL
There is no assurance that the investment objectives of any of the Funds will
be met. Contract Owners bear the complete investment risk.
Additional Funds and/or additional Eligible Investments may, from time to
time, be made available as investments to underlie the Contract. However, the
right to make such selections will be limited by the terms and conditions
imposed on such transactions by the Company. (See "Purchase Payments and
Contract Value Allocation of Purchase Payment.")
SUBSTITUTION OF SECURITIES
If the shares of any Fund of the Trust should no longer be available for
investment by the Variable Account or if, in the judgment of the Company, the
substitution of shares of any Fund for another would be in the best interests
of Contract Owners in view of the purpose of the Contract, the Company may
substitute shares of another Eligible Investment (or Fund within the Trust).
No substitution of securities in any Sub-Account may take place without prior
approval of the Securities and Exchange Commission and under such requirements
as it may impose.
VOTING RIGHTS
In accordance with its view of present applicable law, the Company will vote
the shares of the Trust held in the Variable Account at special meetings of
the shareholders of the Trust in accordance with instructions received from
persons having the voting interest in the Variable Account. The Company will
vote shares for which it has not received instructions, as well as shares
attributable to it, in the same proportion as it votes shares for which it has
received instructions. The Trust does not hold regular meetings of
shareholders.
The number of shares which a person has a right to vote will be determined as
of a date to be chosen by the Company not more than sixty (60) days prior to
the meeting of the Trust. Voting instructions will be solicited by written
communication at least fourteen (14) days prior to the meeting.
Trust shares are issued and redeemed only in connection with variable annuity
contracts and variable life insurance policies issued through separate
accounts of the Company and its affiliates. The Trust does not foresee any
disadvantage to Contract Owners arising out of the fact that the Trust may be
made available to separate accounts which are used in connection with both
variable annuity and variable life insurance products. Nevertheless, the
Trust's Board of Trustees intends to monitor events in order to identify any
material irreconcilable conflicts which may possibly arise and to determine
what action, if any, should be taken in response thereto. If such a conflict
were to occur, one of the separate accounts might withdraw its investment in
the Trust. This might force the Trust to sell portfolio securities at
disadvantageous prices.
CHARGES AND DEDUCTIONS
Various charges and deductions are made from the Single Purchase Payment and
the Variable Account. These charges and deductions are:
DEDUCTION FOR MORTALITY AND EXPENSE RISK CHARGE
The Company deducts on each Valuation Date a Mortality and Expense Risk Charge
which is equal, on an annual basis, to 1.25% of the average daily net assets
of the Variable Account. The mortality risks assumed by the Company arise from
its contractual obligation to make annuity payments for the life of the
Annuitant in accordance with annuity rates guaranteed in the Contracts. The
expense risk assumed by the Company is that all actual EXPENSES involved in
administering the Contracts, including Contract maintenance costs,
administrative costs, mailing costs, data processing costs, legal fees,
accounting fees, filing fees, and the costs of other services may exceed the
amount recovered from the Administrative Expense Charge.
If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by the Company. Conversely, if the amount
deducted proves more than sufficient, the excess will be a profit to the
Company. The Company expects to profit from this charge.
The Mortality and Expense Risk Charge is guaranteed by the Company and cannot
be increased.
The Mortality and Expense Risk Charge is assessed both before and after the
Income Date. The Company will continue to assess the Mortality and Expense
Risk Charge during payment of an Annuity Option that does not involve a life
contingency even though it no longer bears any mortality risk on such payment
obligation.
DEDUCTION FOR ADMINISTRATIVE EXPENSE CHARGE
The Company deducts on each Valuation Date an Administrative Expense Charge
which is equal, on an annual basis, to 0.15% of the average daily net assets
of the Variable Account. This charge is to reimburse the Company for the
EXPENSES it incurs in the establishment and maintenance of the Contracts and
the Variable Account. These EXPENSES include, but are not limited to:
preparation of the Contracts, confirmations, annual reports and statements,
maintenance of Contract records, maintenance of Variable Account records,
administrative personnel costs, mailing costs, data processing costs, legal
fees, accounting fees, filing fees, the costs of other services necessary for
Contract servicing, and all accounting, valuation, regulatory and reporting
requirements. The Company does not intend to profit from this charge. This
charge will be reduced to the extent that the amount of this charge is in
excess of that necessary to reimburse the Company for its administrative
EXPENSES. Should this charge prove to be insufficient, the Company will not
increase this charge and will incur the loss.
DEDUCTION FOR INCOME TAXES
While the Company is not currently maintaining a provision for federal income
taxes, the Company has reserved the right to establish a provision for income
taxes if it determines, in its sole discretion, that it will incur a tax as a
result of the operation of the Variable Account. The Company 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.
DEDUCTION FOR TRUST EXPENSES
There are other deductions from, and EXPENSES paid out of, the assets of
Franklin Valuemark Funds, which are described in the accompanying Trust
Prospectus.
ANNUITY PROVISIONS
INCOME DATE
The Income Date is the date on which annuity payments begin. The Contract
Owner selects an Income Date at the time of issue. The Income Date must be the
first or fifteenth day of a calendar month and not later than 60 days from the
Effective Date.
ANNUITY OPTIONS
The Contract provides for an Annuity under any of the Annuity Options
described below, provided the Annuitant or any Joint Annuitant is alive on the
Income Date. Except for Annuity Option 6, once selected the Option is
irrevocable. The amount of each payment depends upon the Annuity Option chosen
and for Annuity Options 1-5, the Annuitant's and any Joint Annuitant's Age on
the Annuity Calculation Date. Additionally, annuity payments under all Options
will vary with the investment experience of the Sub-Accounts of the Variable
Account and may be either higher or lower than the first payment.
The Annuity Options currently available are:
OPTION 1 - LIFE ANNUITY. Monthly annuity payments are paid during the
life of the Annuitant ceasing with the last annuity payment due prior to the
Annuitant's death.
OPTION 2 - LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY PAYMENTS
GUARANTEED. Monthly annuity payments are paid during the life of an Annuitant
with a guarantee that if, at the Annuitant's death, annuity payments have been
made for less than a 60, 120, 180 or 240 month period as elected, then annuity
payments will be continued thereafter to the Beneficiary for the remainder of
the guaranteed period. The Beneficiary may elect to have the present value
(determined as set forth in the Contract) of the guaranteed annuity payments
remaining commuted at the Assumed Investment Return and paid in a lump sum,
less the applicable commutation fee of 5% of the proceeds in Contract Years 1
and 2 reducing by 1% per year until it is 1% for Contract Year 6 and
thereafter (subject to applicable state law and regulation). The Company will
require the return of the Contract and proof of death prior to the payment of
any commuted values.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY. Monthly annuity payments are
paid during the joint lifetime of the Annuitant and the Joint Annuitant. Upon
the death of the Annuitant, if the Joint Annuitant is then living, payments
will be paid thereafter during the remaining lifetime of the Joint Annuitant
at a level of 100%, 75% or 50% of the original level as elected. Monthly
payments cease with the final annuity payment due prior to the survivor's
death.
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH 60, 120, 180 OR 240
MONTHLY PAYMENTS GUARANTEED. Monthly annuity payments are paid during the
joint lifetime of the Annuitant and the Joint Annuitant. Monthly payments are
paid thereafter during the remaining lifetime of the Joint Annuitant at 100%
of the original level. If, after the death of both the Annuitant and the Joint
Annuitant, annuity payments have been made for less than a 60, 120, 180 or 240
month period as elected, then annuity payments will be continued thereafter
to the Beneficiary for the remainder of the guaranteed period. The Beneficiary
may elect to have the present value (determined as set forth in the Contract)
of the guaranteed annuity payments remaining commuted at the Assumed
Investment Rate and paid in a lump sum, less the applicable commutation fee of
5% of the proceeds in Contract Years 1 and 2 reducing by 1% per year until it
is 1% for Contract Year 6 and thereafter (subject to applicable state law and
regulation). The Company will require the return of the Contract and proof of
death prior to the payment of any commuted values.
OPTION 5 - UNIT REFUND LIFE ANNUITY. Monthly annuity payments are paid
during the life 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, the Beneficiary will receive a single cash payment (refund) equal to
the then dollar value of the number of Annuity Units equal to (1) the total
net amount applied to purchase the Annuity 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 payment and the number of
payments made. This calculation will be made 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 this value is negative, a zero result occurs.
OPTION 6 - SPECIFIED PERIOD CERTAIN ANNUITY. Monthly annuity payments are paid
for a specified period of time. The Specified Period Certain is elected by the
Contract Owner and must be specified as a whole number of years from 5 to 30.
If at the time of the death of the last Annuitant and any Joint Annuitant, the
annuity payments actually made have been for less than the Specified Period
Certain, then annuity payments will be continued thereafter to the Beneficiary
for the remainder of the Specified Period Certain. OPTION 6 IS NOT AVAILABLE
UNTIL APPROVED BY THE NEW YORK INSURANCE DEPARTMENT.
After the first Contract Anniversary, an Option 6 payout can be exchanged for
a life contingent payout (Options 1-5) if the Total Withdrawal Value is at
least $25,000 and in the case of a Non-Qualified Contract the Contract Owner
has attained age 59 1/2 and in the case of a Qualified Contract the exchange
is made after the later of the Contract Owner attaining age 59 1/2 or 5 years
from the date of the first annuity payment, and prior to the year in which the
Contract Owner reaches age 70 1/2. The annuity purchase rates used will be
those that were in effect as of the original Effective Date of the Option 6
Contract. A new Contract will be exchanged for the existing Contract which
must be returned to the Company. The Contract Owner/Annuitant and Joint
Annuitant, if any, must be the same under both Contracts.
CONTRACT WITHDRAWALS (LIQUIDATIONS)
Annuity Options 2 and 4
If the Contract Owner has selected Annuity Option 2 or 4, partial withdrawals
from the Contract may be made after the first Contract Year as follows. During
the lifetime of the Annuitant(s) and while the number of annuity payments made
is less than the guaranteed number of payments elected, the Contract Owner may
once each Contract Year request a withdrawal representing a partial
liquidation of the Total Withdrawal Value. The Total Withdrawal Value is equal
to the present value of the remaining guaranteed annuity payments, to the end
of the period certain, commuted at the Assumed Investment Return less a
commutation fee of 5% of the amount withdrawn in Contract Year 2 and reducing
by 1% per year until it is 1% for Contract Year 6 and thereafter. The
commutation fee is a charge collected by the Company equal to a percentage of
the Total Withdrawal Value liquidated. Partial liquidations will be processed
on the next Annuity Calculation Date following the Contract Owner's written
request. After a partial liquidation, the subsequent monthly annuity payment
during the guaranteed period certain will be reduced by the percentage of the
Total Withdrawal Value liquidated, including the commutation fee. After the
guaranteed number of payments has been paid, the number of Annuity Units used
in calculating the monthly payments will be restored to their original value
as if no liquidations had taken place. The total amount allowed to be
liquidated as a cumulative percentage of the Total Withdrawal Value cannot
exceed 25% of the Total Withdrawal Value. The minimum allowable partial
liquidation is the lesser of $2,500 or the remaining portion of the Total
Withdrawal Value available to be liquidated. PARTIAL WITHDRAWALS ARE NOT
AVAILABLE UNTIL APPROVED BY THE NEW YORK INSURANCE DEPARTMENT.
Annuity Option 6
If the Contract Owner has selected Annuity Option 6, withdrawals from the
Contract may be made as follows. A withdrawal may be made at least once per
Contract Year up to the Total Withdrawal Value in the Contract. The Total
Withdrawal Value is equal to the present value of the remaining annuity
payments, to the end of the Specified Period Certain, commuted at the Assumed
Investment Return, less a commutation fee of 1% of the amount withdrawn in the
first Contract Year. The Company reserves the right to restrict the amount of
a partial withdrawal to a minimum of $2,500. The Company may require a
complete withdrawal if the remaining Total Withdrawal Value after a requested
partial withdrawal would be less than $35,000. Partial withdrawals will be
processed on the next Annuity Calculation Date following the Contract Owner's
written request. The Company will require the return of the Contract prior to
the payment of the entire commuted value.
See "Tax Status - Tax Treatment of Distributions - Non-Qualified Contracts"
and "Tax Status - Tax Treatment of Distributions - IRA Contracts" for a
discussion of the tax treatment of withdrawals from the Contracts.
DETERMINATION OF ANNUITY PAYMENTS
On the Annuity Calculation Date, a fixed number of Annuity Units will be
purchased, determined as follows:
The first annuity payment is equal to the Contract Value allocated to the
Variable Account 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 Sub-Account the fixed number of Annuity Units is
determined by dividing the amount of the initial annuity payment determined
for each Sub-Account by the Annuity Unit value on the Annuity Calculation
Date. Thereafter, the number of Annuity Units in each Sub-Account remains
unchanged unless the Contract Owner elects to transfer between Sub-Accounts.
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 determined for each Sub-Account. The annuity payment
in each Sub-Account is determined by multiplying the number of Annuity Units
then allocated to such Sub-Account by the Annuity Unit value for that
Sub-Account. See the Statement of Additional Information for a more detailed
discussion on how Annuity Units are valued.
For each Sub-Account, the value of an Annuity Unit was initially set
arbitrarily. On each subsequent Valuation Date the value of an Annuity Unit is
determined in the following way:
FIRST: The Net Investment Factor is determined by dividing (a) by (b) and
adding (c) to the result, where:
a. is the net increase or decrease in the Net Asset Value per share of
the Fund (or other Eligible Investment) plus the per share amount of any
dividend or capital gain distribution paid by the Fund (or Eligible
Investment) during the Valuation Period, plus or minus a per share charge or
credit for any taxes incurred by or reserved for in the Sub-Account as of the
end of the current Valuation Period which the Company determines to have
resulted from maintenance of the Sub-Account; and
b. is the Net Asset Value per share of the Fund (or other Eligible
Investment) at the beginning of the Valuation Period, plus or minus a per
share charge or credit for any taxes incurred by or reserved for in the
Sub-Account as of the end of the immediately preceding Valuation Period which
the Company determines to have resulted from maintenance of the Sub-Account;
and
c. is the net result of 1.000 less the Valuation Period deduction for the
charges to the Sub-Account.
The Net Investment Factor may be more or less than one.
SECOND: The value of an Annuity Unit for a Valuation Date is equal to:
a. the value of the Annuity Unit on the immediately preceding Valuation
Date;
b. multiplied by the Net Investment Factor for the Valuation Period
ending on the current Valuation Date;
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. For example, with a 5%
Assumed Investment Return, the Assumed Net Investment Factor for a one-year
Valuation Period would be 1.05. For a one-day Valuation Period, the Assumed
Net Investment Factor would be 1.00013368062.
The Assumed Investment Return is the investment return upon which annuity
payments are based. Income will increase from one annuity Income Date to the
next if the annualized net rate of return during that time is greater than the
Assumed Investment Return and will decrease if the annualized net rate of
return is less than the Assumed Investment Return.
A Contract Owner may choose either a 5% or a 3% Assumed Investment Return. If
the Contract Owner does not choose one, the 5% Assumed Investment Return
automatically applies. Choosing the 5% Assumed Investment Return instead of
the 3% Assumed Investment Return will result in a higher initial amount of
income, but income will increase more slowly during periods of good investment
performance of the Trust and decrease more rapidly during periods of poor
investment performance.
The variable annuity benefits provided for under the Contract are based upon:
(a) the 1983(a) Blended Unisex Mortality Table with 50% female content,
projected to the year 2000 with Projection Scale G; (b) the Assumed Investment
Return, and (c) any applicable taxes.
THE CONTRACTS
OWNERSHIP
The Annuitant is the Contract Owner. The Contract Owner exercises all the
rights of the Contract, subject to the rights of (1) any assignee under an
assignment filed with the Company's VIP Service Center, and (2) any
irrevocably named Beneficiary.
Upon the death of the Contract Owner, the Joint Annuitant, if not already a
Joint Owner, will become the Contract Owner. On or after the Income Date, if
there is no Joint Annuitant or upon the death of the Joint Annuitant, the
Beneficiary(ies) become the Owner(s) of their respective shares.
If the Contract Owner dies before the Income Date and there is no Joint
Annuitant, the Contract will be treated as if it had never been issued and the
Company will return the Single Purchase Payment to the Contract Owner's
estate.
ASSIGNMENT
The Contract Owner may assign the Contract. A copy of any assignment must be
filed with the Company's VIP Service Center. The Company is not responsible
for the validity of any assignment. If the Contract is assigned, the Contract
Owner's rights and those of any revocably-named person will be subject to the
assignment. An assignment will not affect any payments the Company may make or
actions it may take before such assignment has been recorded at its VIP
Service Center.
If the Contract is issued pursuant to a qualified plan, it may not be
assigned, pledged or otherwise transferred except as may be allowed under
applicable law.
BENEFICIARY
One or more Beneficiaries and/or Contingent Beneficiaries are named by the
Contract Owner and are entitled to receive any death benefits to be paid.
CHANGE OF BENEFICIARY
The Contract Owner may change a Beneficiary or Contingent Beneficiary by
filing a written request with the Company at its VIP Service Center unless an
irrevocable Beneficiary designation was previously filed. After the change is
recorded, it will take effect as of the date the request was signed. If the
request reaches the VIP Service Center after the Contract Owner dies but
before any payment to a Beneficiary is made, the change will be valid. The
Company will not be liable for any payment made or action taken before it
records the change.
DEATH OF BENEFICIARY
Unless the Contract Owner provided otherwise, any amount payable after his/her
death and that of any Joint Annuitant will be payable:
(1) in respective shares to such Beneficiaries as are then living;
(2) if no Beneficiary is then living, payment will be made in respective
shares to such Contingent Beneficiaries as are then living;
(3) if no Beneficiary or Contingent Beneficiary is then living, payment
will be made to the Contract Owner's estate.
ANNUITANT
The Annuitant is the primary person upon whose continuation of life any
annuity payment involving life contingencies depends. The Contract Owner is
the Annuitant. A Joint Annuitant is a person other than the Annuitant on whose
life annuity payments may also be based. The Annuitant, and any Joint
Annuitant, must be a natural person.
PROCEEDS PAYABLE AT DEATH
If the Contract Owner dies before the Income Date and there is no Joint
Annuitant, the Contract will be treated as if it had never been issued and the
Company will return the Single Purchase Payment to the Contract Owner's
estate.
If the Contract Owner has chosen either Option 3, Option 4 or Option 6 with a
Joint Annuitant and either the Contract Owner or the Joint Annuitant dies
before the Income Date, the Annuity Option will be changed to Option 2 with
120 monthly payments guaranteed. If the life expectancy of the survivor is
less than 120 months, the period of guaranteed payments will be 60 months.
If the Contract Owner or Joint Annuitant die on or after the Income Date, the
death benefit, if any, will be payable under the selected Annuity Option. The
Company will require proof of death.
PURCHASE PAYMENTS AND CONTRACT VALUE
SINGLE PURCHASE PAYMENT
The Single Purchase Payment is paid to the Company at its VIP Service Center.
The minimum purchase payment the Company will accept is $35,000. Contract
Owners can acquire more than one Contract and the Single Purchase Payment for
each need not be $35,000 if the average purchase payment for each Contract is
$35,000 or more.
ALLOCATION OF SINGLE PURCHASE PAYMENT
The Single Purchase Payment is allocated to one or more of the Sub-Accounts of
the Variable Account on the Effective Date. The requested allocation to each
Sub-Account is made in percentages of the Single Purchase Payment. Whole
percentages must be used and each must be at least 10%. The Company has the
right to allocate the Single Purchase Payment to the Money Market Sub-Account
until the expiration of the Free-Look Period. Thereafter, the allocations will
be made to one or more of the Sub-Accounts as selected by the Contract Owner.
The Company reserves the right to limit the number of Sub-Accounts that a
Contract Owner may invest in at any one time. Currently, the Contract Owner
may select up to ten Sub-Accounts.
When all forms required to issue the Contract are received and in good order,
the Company will apply the Single Purchase Payment to the Variable Account and
credit the Contract with VIP Units within two business days of receipt.
In addition to the underwriting requirements of the Company, good order means
that the Company has received federal funds (monies credited to a bank's
account with its regional Federal Reserve Bank). The Company requires
proof, satisfactory to it, of the Age of the Annuitant and any Joint
Annuitant. The Company will not issue a Contract if either the Annuitant or
the Joint Annuitant are over Age 90. If the required forms for the Contract
are not in good order, the Company will attempt to get them in good order or
the Company will return the form(s) and the purchase payment within five
business days. The Company will not retain the Single Purchase Payment for
more than five business days while processing incomplete forms unless it has
been so authorized by the purchaser.
CONTRACT VALUE
The Purchase Payment is allocated among the various Sub-Accounts within the
Variable Account. For each Sub-Account, the Purchase Payment is converted into
VIP Units. The Contract Value on or before the Annuity Calculation Date is the
sum of the values for the Contract within each Sub-Account. The value within
each Sub-Account is determined by multiplying the number of VIP Units
attributable to the Contract in the Sub-Account by the VIP Unit value for the
Sub-Account. On the Annuity Calculation Date, the Contract Value is converted
to annuity payments. After the Annuity Calculation Date, there is no Contract
Value.
VIP UNIT
When the Purchase Payment is allocated to the Variable Account, the amount
allocated to each Sub-Account is converted to VIP Units. The number of VIP
Units credited to each Sub-Account is determined by dividing the portion of
the Purchase Payment that is allocated to the Sub-Account by the value of the
VIP Unit for the Sub-Account as of the Effective Date. The VIP Unit value for
each Sub-Account was arbitrarily set initially. The VIP Unit value for any
later Valuation Period on or before the Annuity Calculation Date is determined
by subtracting (b) from (a) and dividing the result by (c) where:
a. is the net result of
1) the assets of the Sub-Account attributable to VIP Units (i.e.,
the aggregate value of the underlying Eligible Investments held
at the end of such Valuation Period); plus or minus
2) the cumulative charge or credit for taxes reserved which is
determined by the Company to have resulted from the operation of
the Sub-Account;
b. is the cumulative unpaid charge for the Mortality and Expense Risk
Charge and for the Administrative Expense Charge (See "Charges and
Deductions"); and
c. is the number of VIP Units outstanding at the end of such Valuation
Period.
The VIP Unit value may increase or decrease from Valuation Period to Valuation
Period.
TRANSFERS
The Contract Owner may transfer all or part of the Contract Owner's interest
in a Sub-Account to another Sub-Account without the imposition of any fee or
charge.
Neither the Variable Account nor the Trust is designed for professional market
timing organizations, other entities, or individuals using programmed, large,
or frequent transfers. A pattern of exchanges that coincides with a "market
timing" strategy may be disruptive to a Fund and may be refused. Accounts
under common ownership or control may be aggregated for purposes of transfer
limits. In coordination with the Trust, the Company reserves the right to
restrict the transfer privilege or reject any specific purchase payment
allocation request for any person whose transactions seem to follow a timing
pattern.
All transfers are subject to the following:
a. no partial transfer will be made if it would result in any selected
Sub-Account providing less than 10% of the benefits under the Contract.
b. transfers will be effected during the Valuation Period next following
receipt by the Company of a written transfer request (or by telephone, if
authorized) containing all required information. No transfers may occur until
the end of the Free-Look Period. (See "Highlights.")
c. any transfer direction must clearly specify the new allocation
percentage(s) and the Sub- Accounts which are to be re-allocated.
d. the Company reserves the right to limit the number of transfers among
Sub-Accounts to not fewer than 6 transfers per calendar year. The Company also
reserves the right at any time and without prior notice to any party to modify
the transfer provisions described above, subject to applicable state law and
regulation.
A Contract Owner may elect to make transfers by telephone. To elect this
option the Contract Owner must do so in writing to the Company. If there are
Joint Owners, unless the Company is informed to the contrary, instructions
will be accepted from either one of the Joint Owners. The Company will use
reasonable procedures to confirm that instructions communicated by telephone
are genuine. If it does not, the Company may be liable for any losses due to
unauthorized or fraudulent instructions. The Company tape records all
telephone instructions.
DISTRIBUTOR
NALAC Financial Plans LLC ("NFP"), 1750 Hennepin Avenue, Minneapolis,
Minnesota, acts as the distributor of the Contracts. NFP is an affiliate of
the Company. The Contracts are offered on a continuous basis. NFP has
subcontracted with Franklin Advisers, Inc. ("Advisers") for it and/or certain
of its affiliates to provide certain marketing support services and NFP
compensates these entities for their services. Commissions and expense
reimbursements will be paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commissions at the time of purchase up to 4% of
the Single Purchase Payment. Amounts paid to broker-dealers by the Company
will be paid out of general assets of the Company which may include proceeds
derived from the Mortality and Expense Risk Charge the Company deducts from
the Variable Account.
DELAY OF PAYMENTS
The Company reserves the right to suspend or postpone payments 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.
The applicable rules and regulations of the Securities and Exchange Commission
will govern as to whether the conditions described in 2 and 3 exist.
ADMINISTRATION OF THE CONTRACTS
While the Company has primary responsibility for all administration of the
Contracts, it has retained the services of Templeton Funds Annuity Company
("TFAC" or "VIP Service Center") pursuant to an Administration Agreement. Such
administrative services include issuance of the Contracts and maintenance of
Contract Owners' records. The Company pays all fees and charges of TFAC. TFAC
is an indirect wholly-owned subsidiary of Franklin Resources, Inc. which is
also the ultimate parent of all Managers to the Trust. TFAC will enter into a
reinsurance agreement with the Company with respect to certain risks under the
Contracts.
PERFORMANCE DATA
MONEY MARKET SUB-ACCOUNT
From time to time, the Company or NFP may advertise the "yield" and "effective
yield" of the Money Market Sub-Account. Both yield figures will be based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Money Market Sub-Account refers to the income generated by
Contract Values in the Money Market Sub-Account over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the Contract Values in the Money Market Sub-Account. The
"effective yield" is calculated similarly but, when annualized, the income
earned by Contract Values in the Money Market Sub-Account is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The
computation of the yield calculation includes a deduction for the Mortality
and Expense Risk Charge and Administrative Expense Charge.
OTHER SUB-ACCOUNTS
From time to time, the Company or NFP may publish the current yields and total
returns of the other Sub-Accounts in advertisements and communications to
Contract Owners. The current yield for each Sub-Account will be calculated by
dividing the annualization of the interest income earned by the underlying
Fund during a recent 30-day period by the maximum VIP Unit value at the end of
such period. Total return information will include the Sub-Account's average
annual total return over the most recent four calendar quarters, the period
from the Sub-Account's inception of operations, and, for Sub-Accounts in
existence for five years or more, for five years. The average annual total
return is based upon the value of the VIP Units acquired through a
hypothetical $1,000 investment of the VIP Unit value at the beginning of the
specified period and the value of the VIP Unit at the end of such period,
assuming reinvestment of all distributions and the deduction of the Mortality
and Expense Risk Charge and the Administrative Expense Charge. Each
Sub-Account may also advertise cumulative and total return information over
different periods of time.
The Company or NFP may, in addition, advertise or present yield or total
return performance information computed on a different basis, or for the
Funds. Contract Owners should note that the investment results of each
Sub-Account will fluctuate over time, and any presentation of a Sub-Account's
current yield or total return for any prior period should not be considered as
a representation of what an investment may earn or what a Contract Owner's
yield or total return may be in any future period.
Hypothetical performance illustrations for a hypothetical contract may be
prepared for sales literature or advertisements. See "Calculation of
Performance Data" in the Statement of Additional Information.
The Appendix to this Prospectus contains performance information that you
might find informative. 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
VIP Unit values, the Company has prepared hypothetical performance
information. This information is contained in Part 1 in Appendix B to this
Prospectus. The performance is based on the performance of the Funds, modified
to reflect the charges and expenses of the 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 a
Contract Owner's 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 do not yet have their
own 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 VIP
Unit values, hypothetical performance information was developed.
Chart 1 of Part 2 in Appendix B 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. Chart 2 shows
hypothetical performance figures for the VIP Units which assume the deduction
of the Mortality and Expense Risk Charge, the Administrative Expense Charge
and the fees and EXPENSES that the Public Funds paid. Chart 3 shows
hypothetical monthly income which assumes the deduction of the Mortality and
Expense Risk Charge, the Administrative Expense Charge and the fees and
EXPENSES that the Public Funds paid. This hypothetical illustration shows how
annuity income can fluctuate based on investment performance assuming a
Contract with an Assumed Investment Return of 5%, providing an initial monthly
annuity income of $500, was purchased at the beginning of each period
illustrated. The hypothetical performance figures 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.
PERFORMANCE RANKING
The performance of each or all of the Sub-Accounts of the Variable Account may
be compared in its advertising and sales literature to the performance of
other variable annuity issuers in general or to the performance of particular
types of variable annuities investing in mutual funds, or series of mutual
funds with investment objectives similar to each of the Sub-Accounts of the
Variable Account or indices. Lipper Analytical Services, Inc. ("Lipper") and
the Variable Annuity Research and Data Service ("VARDS") are independent
services which monitor and rank the performance of variable annuity issuers in
each of the major categories of investment objectives on an industry-wide
basis.
Lipper's rankings include variable life issuers as well as variable annuity
issuers. VARDS rankings compare only variable annuity issuers. The performance
analyses prepared by Lipper and VARDS rank such issuers on the basis of total
return, assuming reinvestment of distributions, but do not take sales charges,
redemption fees or certain expense deductions at the separate account level
into consideration. In addition, VARDS prepares risk adjusted rankings, which
consider the effects of market risk on total return performance. This type of
ranking may address the question as to which funds provide the highest total
return with the least amount of risk. Other ranking services may be used as
sources of performance comparison, such as CDA/Weisenberger and Morningstar.
TAX STATUS
NOTE: The following description is based upon the Company's understanding of
current federal income tax law applicable to annuities in general. The 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 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 in this Prospectus 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 annuity payments, the portion of a payment includable in income equals the
excess of the payment over the exclusion amount. The exclusion amount for
payments based on a variable annuity option is determined by dividing the
investment in the Contract (adjusted for any period certain or refund
guarantee) by the number of years over which the annuity is expected to be
paid (determined by Treasury Regulations). Payments received after the
investment in the Contract has been recovered (i.e. the total of the
excludable amounts equal the investment in the Contract) are fully taxable.
The taxable portion of an annuity payment 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 Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Variable Account is not a separate entity from the
Company, and its operations form a part of the 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 the 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 Company intends that all Funds of the Trust underlying the Contracts will
be managed by the Managers for the Trust 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 Variable Account will cause the Contract
Owner to be treated as the owner of the assets of the Variable 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 Variable 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 Variable Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
Section 72(e)(11) of 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. The
legislative history of Section 72(e)(11) indicates that it was not intended to
apply to immediate annuities. However, the legislative history also states
that no inference is intended as to whether the Treasury Department, under its
authority to prescribe rules to enforce the tax laws, may treat the
combination purchase of a deferred annuity contract with an immediate annuity
contract as a single contract for purposes of determining the tax consequences
of any distribution.
TAX TREATMENT OF DISTRIBUTIONS - 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 includable 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) paid in a
series of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the taxpayer and his
Beneficiary; (e) as an annuity payment 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 Distributions -IRA Contracts.")
The availability of total or partial withdrawals from an immediate annuity is
not expressly provided for in the Code or Treasury Regulations. The only tax
guidance currently available for such issue is a Private Letter Ruling holding
that the right to make withdrawals does not prevent a contract from qualifying
as an immediate annuity. However, the Private Letter Ruling does not address
the issue of whether the making of a withdrawal would adversely affect the
favorable tax treatment of annuity payments made before or after such partial
withdrawal because of the requirement that all immediate annuity payments must
be "substantially equal". The loss of favorable tax treatment would mean that
the income portion of each annuity payment received prior to the taxpayer's
attaining age 59 1/2 would be subject to a 10% penalty tax unless another
exception to the penalty tax applies. While the Company currently believes
that such withdrawals will not adversely affect the favorable tax treatment of
annuity payments received before or after a withdrawal and the Company intends
to perform its tax reporting functions accordingly, there can be no assurance
that the Internal Revenue Service will not take a contrary position. Contract
Owners should obtain competent tax advice prior to making a partial or total
withdrawal.
QUALIFIED PLANS
The Contracts offered by this Prospectus may also be used with a plan
qualified under Section 408(b) of the Code ("IRA Contracts"). Contract Owners,
Annuitants and Beneficiaries are cautioned that benefits under an IRA Contract
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. The following
discussion of IRA Contracts is not exhaustive and is for general informational
purposes only. The tax rules regarding IRA Contracts are very complex and will
have differing applications depending on individual facts and circumstances.
Each purchaser should obtain competent tax advice prior to purchasing IRA
Contracts.
IRA Contracts include special provisions restricting Contract provisions that
may otherwise be available as described in this Prospectus. Generally, IRA
Contracts 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 distributions from IRA Contracts. (See
"Tax Treatment of Distributions - IRA Contracts".)
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. IRA Contracts will utilize annuity tables which do
not differentiate on the basis of sex because of the use of the IRA Contracts
in a Simplified Employee Pension. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
Under applicable limitations, certain amounts may be contributed to an IRA
Contract which will be deductible from the individual's gross income. These
IRAs are subject to limitations on eligibility, contributions, transferability
and distributions. (See "Tax Treatment of Distributions - IRA 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
Contract. Sales of Contracts for use as IRA Contracts 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.
TAX TREATMENT OF DISTRIBUTIONS - IRA 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 IRA Contracts. To
the extent amounts are not includible in gross income because they have been
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
Annuitant reaches age 59 1/2; (b) distributions following the death or
disability of the Annuitant (for this purpose disability is as defined in
Section 72(m)(7) of the Code); (c) distributions that are part of a series of
substantially equal periodic payments made not less frequently than annually
for the life (or life expectancy) of the Annuitant or the joint lives (or
joint life expectancies) of the Annuitant and his or her designated
Beneficiary; (d) 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; or (e) 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. If the series of substantially equal periodic payments
is modified before the later of the Annuitant attaining age 59 1/2 or 5 years
from the date of the first annuity payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used. A partial withdrawal may result in the
modification of the series of annuity payments made after such withdrawal and
therefore could result in the imposition of the 10% penalty tax and interest
for the period as described above. Competent tax advice should be obtained
prior to making any withdrawals from an IRA Contract. Any amounts distributed
will only be paid to the Annuitant, Joint Annuitant or Beneficiary. The
Company will not transfer or pay such amounts to another IRA or tax qualified
plan.
Generally, distributions from an IRA Contract must commence no later than
April 1 of the calendar year, following the year in which the employee attains
age 70 1/2. Generally, required distributions must be over a period not
exceeding the life or 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 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
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.
FINANCIAL STATEMENTS
Audited consolidated financial statements of the Company and audited financial
statements of the Variable Account as of and for the year ended December 31,
199_ are included in the Statement of Additional Information.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account or the
Distributor is a party or to which the assets of the Variable Account are
subject. The Company is not involved in any litigation that is of material
importance in relation to its total assets or that relates to the Variable
Account.
APPENDIX A - ILLUSTRATION OF VALUES
The following tables have been prepared to show how investment performance
affects variable annuity income over time. The variable annuity income amounts
reflect three different assumptions for a constant investment return before
all expenses: 0%, 6% and 12%. These are hypothetical rates of return and, of
course, the Company does not guarantee that the Contract will earn these
returns for any one year or any sustained period of time. The tables are for
illustrative purposes only and do not represent past or future investment
returns.
The variable annuity income may be more or less than the income shown if the
actual returns of the Eligible Investments are different than those
illustrated. Since it is very likely that investment returns will fluctuate
over time, the amount of variable annuity income will also fluctuate. The
total amount of annuity income ultimately received will depend on cumulative
investment returns and how long the Annuitant lives and the option chosen.
Another factor which determines the amount of variable annuity income is the
Assumed Investment Return. Income will increase from one annuity Income Date
to the next if the annualized Net Rate of Return during that time is greater
than the Assumed Investment Return, and will decrease if the annualized Net
Rate of Return is less than the Assumed Investment Return.
Two illustrations follow. The first is based on a 3% Assumed Investment
Return, and the second is based on a 5% Assumed Investment Return.
The income amounts shown reflect the deduction of all fees and expenses.
Actual Trust fees and expenses will vary from year to year and from Fund to
Fund and may thus be higher or lower than the assumed rate. The illustrations
assume that each Fund of the Trust will incur expenses at an annual rate of
0.76% of the average daily net assets of the Fund. This is the average in
1995, weighted by Fund net assets as of 12/31/95. The Mortality and Expense
Risk Charge and Administrative Expense Charge are calculated, in the
aggregate, at an annual rate of 1.40% of the average daily net assets of the
Variable Account. After taking these expenses and charges into consideration,
the illustrated gross investment returns of 0%, 6% and 12% are approximately
equal to net rates of -2.14%, 3.73% and 9.60%, respectively.
VALUEMARK INCOME PLUS ILLUSTRATION
ANNUITANT: John Doe ANNUITY PURCHASE AMOUNT: $100,000
DATE OF BIRTH: 1/1/27 EFFECTIVE DATE: 12/1/96
ANNUITY INCOME OPTION: Single Life Annuity FIRST ANNUITY INCOME DATE: 1/1/97
PREMIUM TAX: 0% FREQUENCY OF ANNUITY INCOME: Monthly
ASSUMED INVESTMENT RETURN: 3%
The amount of monthly variable annuity income shown in the table below and the
graph that follows assumes a constant annual investment return. The amount of
variable annuity income that is actually received will depend on the
investment performance of the underlying Fund(s) selected. The variable
annuity income can go up or down and no minimum dollar amount of variable
annuity income is guaranteed. The amounts shown are based on a 3% Assumed
Investment Return. Income will remain constant at $625 per month when the
annualized net rate of return after expenses is 3%.
MONTHLY ANNUITY PAYMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Annual rate of return before expenses: 0% 6% 12%
Annuity Income Date Age Annual rate of return after expenses: -2.14% 3.73% 9.60%
- ------------------- --- -------------------------------------- ------ ----- -------
January 1, 1997 70 $ 622 $ 625 $ 628
January 1, 1998 71 591 629 668
January 1, 1999 72 561 634 711
January 1, 2000 73 533 638 757
January 1, 2001 74 507 643 805
January 1, 2006 79 392 666 1,099
January 1, 2011 84 304 690 1,499
January 1, 2016 89 235 715 2,045
January 1, 2021 94 182 741 2,790
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY AND
SHOULD NOT BE DEEMED TO REPRESENT PAST OR FUTURE INVESTMENT PERFORMANCE.
ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS.
The following table summarizes Annuity Income with an Assumed Investment
Return of 3%. This table is presented graphically in the printed prospectus.
MONTHLY PAYMENT AMOUNT
<TABLE>
<CAPTION>
<S> <C> <C> <C>
-2.14% 3.73% 9.60%
Annual Rate Annual Rate Annual Rate
of Return of Return of Return
Year After Expenses After Expenses After Expenses
- ---- ---------------- ---------------- ----------------
1 $ 622 $ 625 $ 628
2 591 629 668
3 561 634 711
4 533 638 757
5 507 643 805
6 481 647 857
7 457 652 912
8 435 657 970
9 413 661 1,032
10 392 666 1,099
11 373 671 1,169
12 354 675 1,244
13 336 680 1,324
14 320 685 1,409
15 304 690 1,499
16 288 695 1,595
17 274 700 1,697
18 260 705 1,806
19 247 710 1,922
20 235 715 2,045
21 223 720 2,176
22 212 725 2,316
23 202 730 2,464
24 192 735 2,622
25 182 741 2,790
</TABLE>
VALUEMARK INCOME PLUS ILLUSTRATION
ANNUITANT: John Doe ANNUITY PURCHASE AMOUNT: $100,000
DATE OF BIRTH: 1/1/27 EFFECTIVE DATE: 12/1/96
ANNUITY INCOME OPTION: Single Life Annuity FIRST ANNUITY INCOME DATE: 1/1/97
PREMIUM TAX: 0% FREQUENCY OF ANNUITY INCOME: Monthly
ASSUMED INVESTMENT RETURN: 5%
The amount of monthly variable annuity income shown in the table below and the
graph that follows assumes a constant annual investment return. The amount of
variable annuity income that is actually received will depend on the
investment performance of the underlying Fund(s) selected. The variable
annuity income can go up or down and no minimum dollar amount of variable
annuity income is guaranteed. The amounts shown are based on a 5% Assumed
Investment Return. Income will remain constant at $742 per month when the
annual rate of return after expenses is 5%.
MONTHLY ANNUITY PAYMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Annual rate of return before expenses: 0% 6% 12%
Annuity Income Date Age Annual rate of return after expenses: -2.14% 3.73% 9.60%
- ------------------- --- -------------------------------------- ------ ----- -------
January 1, 1997 70 $ 738 $ 741 $ 745
January 1, 1998 71 687 732 778
January 1, 1999 72 641 724 812
January 1, 2000 73 597 715 847
January 1, 2001 74 557 706 884
January 1, 2006 79 391 664 1,096
January 1, 2011 84 275 625 1,358
January 1, 2016 89 193 588 1,683
January 1, 2021 94 136 554 2,086
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY AND
SHOULD NOT BE DEEMED TO REPRESENT PAST OR FUTURE INVESTMENT PERFORMANCE.
ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON
A NUMBER OF FACTORS.
The following table summarizes Annuity Income with an Assumed Investment
Return of 5%. This table is presented graphically in the printed prospectus.
MONTHLY PAYMENT AMOUNT
<TABLE>
<CAPTION>
<S> <C> <C> <C>
-2.14% 3.73% 9.60%
Annual Rate Annual Rate Annual Rate
of Return of Return of Return
Year After Expenses After Expenses After Expenses
- ---- ---------------- ---------------- ----------------
1 $ 738 $ 741 $ 745
2 687 732 778
3 641 724 812
4 597 715 847
5 557 706 884
6 519 698 923
7 483 689 964
8 451 681 1,006
9 420 673 1,050
10 391 664 1,096
11 365 656 1,144
12 340 648 1,194
13 317 641 1,247
14 295 633 1,301
15 276 625 1,358
16 256 618 1,418
17 239 610 1,480
18 223 603 1,545
19 208 596 1,613
20 193 588 1,683
21 180 581 1,757
22 168 574 1,834
23 157 567 1,914
24 146 560 1,998
25 136 554 2,086
</TABLE>
APPENDIX B - PERFORMANCE INFORMATION
PART 1 - PERFORMANCE INFORMATION FOR EXISTING FUNDS
The following information is based on the historical investment performance of
the Funds. The results shown are not necessarily representative of future
performance.
The Funds of Franklin Valuemark Funds have been in existence for some time
(except the Small Cap, Capital Growth, Templeton International Smaller
Companies, Mutual Shares Securities and Mutual Discovery Securities Funds) and
have investment performance history. In order to show you how investment
performance of the Funds affects VIP Unit values, the Company has developed
the following hypothetical performance information.
The chart below shows the actual historical investment performance of the
Funds and hypothetical VIP Unit performance. The hypothetical VIP Unit
performance assumes that the VIP 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 VIP Units which reflects the
deduction of the Mortality and Expense Risk Charge and Administrative Expense
Charge and the fees and EXPENSES paid by the Funds. Column III illustrates
hypothetical monthly income based on past performance of the Funds and the
deduction of all current recurring EXPENSES of the Variable Account. This
hypothetical illustration shows how annuity income can fluctuate based on
investment performance assuming a Contract with an Assumed Investment Return
("AIR") of 5%, providing an initial monthly annuity income of $500, was
purchased at the beginning of each period illustrated. Annuity income
increases for a given month if the annualized Net Rate of Return for that
month is higher than the AIR, and decreases for a given month if the
annualized Net Rate of Return is lower than the AIR.
The Single Purchase Payment necessary for an initial monthly annuity income of
$500 will vary depending on the age of the Annuitant (and Joint Annuitant, if
any), the annuity income option chosen and the first Income Date. Suppose a 70
year old who lives in a state that does not charge a premium tax (e.g., New
York) wishes to purchase $500 of initial monthly annuity income beginning on
the Income Date. If there is no Joint Annuitant and no guarantee period and he
chooses a 5% AIR, the Single Purchase Payment needed would be $____.
Total Return for the periods ended _____________.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Column I Column II Column III
Hypothetical VIP Hypothetical Illustration
Fund Performance Unit Performance of Monthly Income
------------------------ ------------------------ -------------------------
Inception Since Since Since
--------- ------------------------ ------------------------ -------------------------
FUND Date 1 yr. 5 yrs. Inception 1 yr. 5 yrs. Inception 1 yr. 5 yrs. Inception
- ----------------------------------- --------- ------------------------ ------------------------ -------------------------
Money Market
Growth and Income
Utility Equity
Income Securities
Rising Dividends
Templeton Developing Markets Equity
Templeton Global Growth
Templeton International Equity
Templeton Pacific Growth
</TABLE>
PART 2 - PERFORMANCE INFORMATION OF SELECTED 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"). Thus, the performance of the Public Funds may
be considered relevant by investors.
Part 1 of the chart 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.
Part 2 shows hypothetical performance of VIP 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 Variable Account. These
figures have not been restated to reflect the higher EXPENSES of the New
Valuemark funds which would lower the hypothetical performance shown.
Part 3 illustrates hypothetical monthly income based on past performance of
the Public Funds and the deduction of all current recurring EXPENSES of the
Variable Account. These figures have not been restated to reflect the higher
EXPENSES of the New Valuemark funds and which would lower the hypothetical
annuity income shown. This hypothetical illustration shows how annuity income
can fluctuate based on investment performance assuming a Contract with an
Assumed Investment Return ("AIR") of 5%, providing an initial monthly annuity
income of $500, was purchased at the beginning of each period illustrated.
Annuity income increases for a given month if the annualized Net Rate of
Return for that month is higher than the AIR, and decreases for a given month
if the annualized Net Rate of Return is lower than the AIR.
The Single Purchase Payment necessary for an initial monthly annuity income of
$500 will vary depending on the age of the Annuitant (and Joint Annuitant, if
any), the annuity income option chosen and the first Income Date. Suppose a 70
year old who lives in a state that does not charge a premium tax (e.g., New
York) wishes to purchase $500 of initial monthly annuity income beginning on
the Income Date. If there is no Joint Annuitant and no guarantee period and he
chooses a 5% AIR, the Single Purchase Payment needed would be $69,659.
______________
(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.
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. PUBLIC FUNDS' HISTORICAL PERFORMANCE
Since Inception
Periods Ended 9/30/96: One-Year Five-Years Ten-Years Inception Date
- ----------------------------------------------- ---------- ------------ ----------- ----------- ---------
Mutual Discovery Fund................. 18.52% -- -- 21.90% 12/31/92
Mutual Shares Fund ................... 13.59% 17.47% 14.87% -- 7/1/49
2. HYPOTHETICAL VIP UNIT PERFORMANCE
(includes all current recurring EXPENSES
of the Variable Account)
Since Inception
Periods Ended : One-Year Five-Years Ten-Years Inception Date
- ----------------------------------------------- ---------- ------------ ----------- ----------- ---------
Mutual Discovery Securities
Sub-Account ......................... _____% -- -- _____% 12/31/92
Mutual Shares Securities
Sub-Account ......................... _____% _____% _____% -- 7/1/49
3. HYPOTHETICAL ILLUSTRATION OF MONTHLY INCOME
(includes all current recurring EXPENSES
of the Variable Account)
Since Inception
Periods Ended : One-Year Five-Years Ten-Years Inception Date
- ----------------------------------------------- ---------- ------------ ----------- ----------- ---------
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
ITEM PAGE
Company ....................................................... 3
Experts ....................................................... 3
Legal Opinions ............................................... 3
Distributor ................................................... 3
Calculation of Performance Data ............................ 3
Total Return ............................................ 3
Yield .................................................... 4
Performance Ranking ..................................... 5
Performance Information ................................. 5
Annuity Income .......................................... 5
Annuity Provisions ........................................... 6
Variable Annuity Payout ................................ 6
Annuity Unit Value....................................... 6
Financial Statements ......................................... 7
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL IMMEDIATE
VARIABLE ANNUITY CONTRACTS
ISSUED BY
PREFERRED LIFE VARIABLE ACCOUNT C
AND
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL IMMEDIATE 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 COMPANY AT: 152 West 57th Street, 18th Floor, New York, NY 10019. (800)
542-5427.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED
_______________, 199_, AND AS MAY BE AMENDED FROM TIME TO TIME.
TABLE OF CONTENTS
CONTENTS PAGE
Company ....................................................... 3
Experts ....................................................... 3
Legal Opinions ............................................... 3
Distributor ................................................... 3
Calculation of Performance Data ............................ 3
Total Return ............................................ 3
Yield .................................................... 4
Performance Ranking ..................................... 5
Performance Information ................................. 5
Annuity Income .......................................... 5
Annuity Provisions ........................................... 6
Variable Annuity Payout ................................ 6
Annuity Unit Value....................................... 6
Financial Statements ......................................... 7
COMPANY
Information regarding Preferred Life Insurance Company of New York (the
"Company") and its ownership is contained in the Prospectus. The Company is
rated A+ (Superior) by A.M. BEST, an independent analyst of the insurance
industry.
EXPERTS
The financial statements of Preferred Life Variable Account C and the
financial statements of the Company 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 Company, acts as the
distributor. The offering is on a continuous basis.
CALCULATION OF PERFORMANCE DATA
TOTAL RETURN
From time to time, the Company may advertise the performance data for the
Sub-Accounts in advertisements and Contract Owner communications. Such data
will show the percentage change in the value of a VIP Unit based on the
performance of a Sub-Account 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 VIP 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 1.25% Mortality and Expense Risk Charge, a 0.15% Administrative
Expense Charge and the fees of the Funds being advertised.
The hypothetical value of a Contract purchased for the time periods described
in the advertisement will be determined by using the actual VIP Unit Values
for an initial $1,000 purchase payment. 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
where:
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 purchase
payment made at the beginning of the period at the
end of the period.
The Company may also advertise cumulative and total return information over
different periods of time. Cumulative total return is calculated in a similar
manner as described above except that the results are not annualized.
YIELD
The Money Market Sub-Account. The Company may advertise yield information for
the Money Market Sub-Account. The Money Market Sub-Account'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 Expense Charge and, in certain instances, the value of the
underlying Fund's investment securities. The fact that the Sub-Account's
current yield will fluctuate and that the principal is not guaranteed should
be taken into consideration when using the Sub-Account'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 Sub-Account's current yield is computed on a base period
return of a hypothetical Contract having a beginning balance of one VIP 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 VIP 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 and the Administrative
Expense Charge.
The effective yield reflects the effects of com-pounding and represents an
annualization of the current return with all dividends reinvested. (Effective
yield = [(Base Period Return + 1)365/7]-1.)
For the seven-day period ending on ________, the Money Market Sub-Account had
a current yield of ____% and an effective yield of ____%.
Other Sub-Accounts. The Company may also quote current yield in advertisements
and Contract Owner communications for the other Sub-Accounts. Each Sub-Account
(other than the Money Market Sub-Account) will publish standardized total
return information with any quotation of current yield.
The yield computation is determined by dividing the net investment income per
VIP Unit earned during the period (minus the deduction for the Mortality and
Expense Risk Charge and Administrative Expense Charge) by the VIP Unit Value
on the last day of the period and annualizing the resulting figure, according
to the following formula:
Yield = 2 [((a-b) + 1)6 - 1]
-----
cd
where:
a = net investment income earned during the period by the Fund
attributable to shares owned by the Sub-Account;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of VIP Units outstanding during the period;
d = the maximum offering price per VIP Unit on the last day of the
period.
The above formula will be used in calculating quotations of yield, based on
specified 30-day periods identified in the advertisement or communication. The
Company does not currently advertise yield information for any Sub-Account
(other than the Money Market Sub-Account).
PERFORMANCE RANKING
Total return information for the Sub-Accounts 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.
PERFORMANCE INFORMATION
Total returns quoted in advertising reflect all aspects of a Sub-Account's
return, including the automatic reinvestment by Preferred Life Variable
Account C of all distributions and any change in a Sub-Account's value over
the period.
The Company may also present performance information computed on a different
basis.
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.
ANNUITY INCOME
Periodic annuity income amounts may be illustrated using the historical
performance of the Sub-Accounts, the Standard & Poor's 500 Composite Stock
Price Index or other recognized investment benchmark portfolios. All
illustrations will reflect the 1.25% annual Mortality and Expense Risk Charge
and the 0.15% Administrative Expense Charge and actual or assumed Fund
EXPENSES.
ANNUITY PROVISIONS
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 Sub-Account(s) of the Variable Account.
Annuity payments also depend upon the Age of the Annuitant and any Joint
Annuitant and the Assumed Net Investment Factor utilized. On the Annuity
Calculation Date, the Contract Value in each Sub-Account will be applied to
the applicable Annuity Tables. The Annuity Table used will depend upon the
Annuity Option chosen. Unisex Annuity Tables are utilized by the Company. The
dollar amount of annuity payments after the first is determined as follows:
1. The dollar amount of the first annuity payment is divided by the
value of an Annuity Unit as of the Annuity Calculation Date. This establishes
the number of Annuity Units for each monthly payment. The number of Annuity
Units remains fixed during the annuity payment period.
2. For each Sub-Account, the fixed number of Annuity Units is multiplied
by the Annuity Unit value on each subsequent annuity payment date. This result
is the dollar amount of the payment for each Sub-Account.
3. The total dollar amount of each Variable Annuity variable payout is
the sum of all Sub-Account Variable Annuity payments.
FINANCIAL STATEMENTS
The audited consolidated financial statements of the Company as of and for the
year ended _________________ included herein should be considered only as
bearing upon the ability of the Company to meet its obligations under the
Contracts. The audited financial statements of the Variable Account as of and
for the year ended ______________ 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 Variable 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 Immediate Variable Annuity Contract
4a. Joint Owners Endorsement
4b. Period Certain and Partial Liquidation Endorsement
5. Application for Individual Immediate 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 by 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
1750 Hennepin Avenue and Director
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 Marketing Officer
1750 Hennepin Avenue and Director
Minneapolis, MN 55403
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 9th 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 12/9/96
- ----------------------- -------
Lowell C. Anderson
Howard E. Barnhill* Director 12/9/96
- ----------------------- -------
Howard E. Barnhill
Ronald L. Wobbeking* Chairman, Chief Executive 12/9/96
- ----------------------- -------
Ronald L. Wobbeking Officer and Director
Shannon Hendricks* Treasurer 12/9/96
- ----------------------- -------
Shannon Hendricks
/S/ ALAN A. GROVE Secretary and Director 12/9/96
- ----------------------- -------
Alan A. Grove
Thomas G. Brown* Director 12/9/96
- ----------------------- -------
Thomas G. Brown
Thomas Duncanson* Director 12/9/96
- ----------------------- -------
Thomas Duncanson
Edward J. Bonach* Director 12/9/96
- ----------------------- -------
Edward J. Bonach
Robert S. James* Director 12/9/96
- ----------------------- -------
Robert S. James
Thomas J. Lynch* Director 12/9/96
- ----------------------- -------
Thomas J. Lynch
Dennis Marion* Director 12/9/96
- ----------------------- -------
Dennis Marion
Richard M. Murray* Director 12/9/96
- ----------------------- -------
Richard M. Murray*
Eugene T. Wilkinson* Director 12/9/96
- ----------------------- -------
Eugene T. Wilkinson
Eugene Long* Director 12/9/96
- ----------------------- -------
Eugene Long
Richard W. Obermueller* Director 12/9/96
- ----------------------- -------
Richard 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/ TINA M. ERICKSON /S/ HOWARD E. BARNHILL
__________________________________ __________________________________
Tina M. Erickson 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/ TINA M. ERICKSON /S/ SHANNON HENDRICKS
__________________________________ __________________________________
Tina M. Erickson 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 Immediate Variable Annuity Contract
EX-99.B4a Joint Owners Endorsement
EX-99.B4b Period Certain and Partial Liquidation Endorsement
EX-99.B5 Application for Individual Immediate 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
A Stock Company
(Herein Called the Company)
This is a legal Contract between you (referred to in this Contract as you and
your) and Preferred Life Insurance Company of New York (herein referred to as
- - we, us, and our). We will pay benefits to you, the Annuitant or Joint
Annuitant, if any, if either of you are living on the Income Date. The manner
in which the dollar amounts of annuity payments are determined is described in
this Contract. The First annuity payment will be paid on the Income Date and
subsequent payments will be made on the corresponding day of each month (or
other agreed to intervals) thereafter in accordance with the Annuity Option
selected.
This Contract is issued in consideration of the payment of the Single Purchase
Payment.
READ YOUR CONTRACT CAREFULLY
RIGHT TO CANCEL THIS CONTRACT
THIS CONTRACT MAY BE RETURNED WITHIN 10 DAYS AFTER YOU RECEIVE IT (THE
"FREE-LOOK PERIOD"). 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 PRE-PAID. WE WILL PROMPTLY REFUND THE NET
AMOUNT ALLOCATED TO THE VARIABLE ACCOUNT MODIFIED FOR INVESTMENT EXPERIENCE,
IN STATES WHERE PERMITTED, PLUS ANY TAXES DEDUCTED LESS ANY BENEFITS PAID.
THIS MAY BE MORE OR LESS THAN THE SINGLE PURCHASE PAYMENT. WE HAVE THE RIGHT
TO ALLOCATE THE SINGLE PURCHASE PAYMENT TO THE MONEY MARKET SUB-ACCOUNT UNTIL
THE EXPIRATION OF THE FREE-LOOK PERIOD. IF WE SO ALLOCATE THE PURCHASE
PAYMENT, WE WILL REFUND THE SINGLE PURCHASE PAYMENT, LESS ANY BENEFITS PAID.
THIS IS A VARIABLE ANNUITY CONTRACT WITH ANNUITY PAYMENTS AND OTHER ANNUITY
BENEFITS INCREASING OR DECREASING DEPENDING ON THE EXPERIENCE OF THE VARIABLE
ACCOUNT WHICH IS SET FORTH IN THE CONTRACT SCHEDULE.
Signed by the Company:
INDIVIDUAL IMMEDIATE 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
1.25% plus the Administrative Expense Charge on an annual basis. Variable
Account expenses consist of a mortality and expense risk charge and an
administrative charge. These are shown on the Contract Schedule page.
The Variable provisions can be located on pages 4, 5, 6, & 7 of this Contract.
TABLE OF CONTENTS
RIGHT TO CANCEL THIS CONTRACT
CONTRACT SCHEDULE
INTRODUCTION
DEFINITIONS
Age
Annuitant
Annuity Calculation Date
Annuity Option
Annuity Unit
Assumed Investment Return
Contract Anniversary
Contract Owner
Contract Value
Effective Date
Eligible Investment(s)
Fund
Income Date
Joint Annuitant
Net Asset Value
Valuation Date
Valuation Period
Variable Account
VIP Unit
GENERAL PROVISIONS
The Contract
Modification of Contract
Non-Participating in Surplus
Incontestability
Misstatement of Age
Reports
Taxes
Evidence of Survival
Protection of Proceeds
OWNERSHIP PROVISIONS
Ownership
Assignment
BENEFICIARY PROVISIONS
Beneficiary
Change of Beneficiary
Death of Beneficiary
PURCHASE PAYMENT PROVISIONS
Single Purchase Payment
Net Purchase Payment
Allocation of Net Purchase Payment
VARIABLE ACCOUNT
General Description
Investment Allocations to the Variable Account
Valuation of Assets
VIP Unit
Contract Value
Transfers
Mortality and Expense Risk Charge
Administrative Expense Charge
Mortality and Expense Guarantee
ANNUITY PROVISIONS
Income Date
Annuity Options
Option 1 - Life Annuity
Option 2 - Life Annuity with 60, 120, 180, or 240 Monthly Payments Guaranteed
Option 3 - Joint and Last Survivor Annuity
Option 4 - Joint and Last Survivor Annuity with 60, 120, 180, or 240 Monthly
Payments Guaranteed
Option 5 - Unit Refund Life Annuity
Determination of Annuity Payments
Basis for Purchase of Annuity
PROCEEDS PAYABLE ON DEATH
DELAY OF PAYMENTS
CONTRACT SCHEDULE
ANNUITANT: (JOE DOE) SINGLE PURCHASE PAYMENT: ($50,000)
DATE OF BIRTH:(JANUARY 1, 1941)
JOINT ANNUITANT: (JANE DOE) ANNUITY OPTION SELECTED: ( )
DATE OF BIRTH: (JANUARY 1, 1940)
CONTRACT NUMBER: (********)
EFFECTIVE DATE: (12/20/1993)
INCOME DATE: (1/15/1994)
MORTALITY AND EXPENSE RISK CHARGE: Equal on an annual basis
to 1.25% of the average daily net assets of the Variable Account.
ADMINISTRATIVE EXPENSE CHARGE: Equal on an annual basis to .15%
of the average daily net assets of the Variable Account.
BASIS OF ANNUITY TABLE: (1983(a) Blended Unisex Mortality Table,
with 50% female content projected to the year 2000 with Projection
Scale G.)
ASSUMED INVESTMENT RETURN: (5%)
ELIGIBLE INVESTMENTS: The Franklin Valuemark Funds
(- CAPITAL GROWTH FUND) (- TEMPLETON DEVELOPING MARKETS EQUITY FUND)
(- GROWTH & INCOME FUND) (- TEMPLETON GLOBAL ASSET ALLOCATION FUND)
(- INCOME SECURITIES FUND) (- TEMPLETON GLOBAL GROWTH FUND)
(- MONEY MARKET FUND) (- TEMPLETON INTERNATIONAL EQUITY FUND)
(- RISING DIVIDENDS FUND) (- TEMPLETON INTERNATIONAL SMALLER COMPANIES FUND)
(- SMALL CAP FUND) (- TEMPLETON PACIFIC GROWTH FUND)
(- UTILITY EQUITY FUND)
VARIABLE ACCOUNT: (Preferred Life Variable Account C)
INCOME ANNUITY SERVICE OFFICE:
Preferred Life Insurance Company of New York
(700 Central Avenue)
(St. Petersburg, FL 33701)
((800) 774-5001)
FOR USE WITH (PREFERRED LIFE VARIABLE ACCOUNT C)
A SEPARATE INVESTMENT ACCOUNT OF
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
INTRODUCTION
THIS CONTRACT IS ISSUED ON THE LIFE OF THE ANNUITANT AND THE JOINT ANNUITANT,
IF ANY. THE ANNUITANT IS ALSO THE CONTRACT OWNER.
IF YOU DIE BEFORE THE INCOME DATE AND THERE IS NO JOINT ANNUITANT, THE
CONTRACT WILL BE TREATED AS IF WE HAD NEVER ISSUED IT AND WE WILL RETURN THE
SINGLE PURCHASE PAYMENT TO YOUR ESTATE.
DEFINITIONS
AGE - Age to the nearest month unless otherwise specified.
ANNUITANT - The primary person upon whose continuation of life any annuity
payment involving life contingencies depends. The Contract Owner is the
Annuitant. See also, Joint Annuitant.
ANNUITY CALCULATION DATE - The date on which the first annuity payment is
calculated which will be no more than 10 business days prior to the Income
Date.
ANNUITY OPTION - An arrangement under which annuity payments are made under
this Contract.
ANNUITY UNIT - An accounting unit of measure used to calculate annuity
payments after the Annuity Calculation Date.
ASSUMED INVESTMENT RETURN - The investment return upon which the initial
annuity payment is based.
CONTRACT ANNIVERSARY - An anniversary of the Effective Date of this Contract.
CONTRACT OWNER - The person who owns the Contract as named in our records.
The Annuitant is the Contract Owner of this Contract.
CONTRACT VALUE - The dollar value as of any Valuation Date prior to the
Annuity Calculation Date of all amounts accumulated under this Contract.
EFFECTIVE DATE - The date on which the Net Purchase Payment is allocated to
the Variable Account.
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.
INCOME DATE - The date on which annuity payments are to begin.
JOINT ANNUITANT - A person other than the Annuitant on whose life annuity
payments may also be based.
NET ASSET VALUE - The total value of the shares of the Eligible Investment or
Fund less the liabilities of the Eligible Investment or Fund held by the
sub-account, as of the close of trading on a Valuation Date.
VALUATION DATE - The Variable Account will be valued each day that the New
York Stock Exchange is open for trading.
VALUATION PERIOD - The period beginning 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.
VARIABLE ACCOUNT - A separate investment 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.
VIP UNIT - An accounting unit of measure used to calculate the Contract Value
prior to the Annuity Calculation Date.
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.
MODIFICATION OF CONTRACT: This Contract may not be modified by us without
your consent except as may be required by applicable law.
NON-PARTICIPATION IN SURPLUS - This Contract does not share in any
distribution of our profits or surplus.
INCONTESTABILITY - We will not contest this Contract from its Effective Date.
MISSTATEMENT OF AGE - We require proof of your Age and that of any Joint
Annuitant before making any life contingent annuity payment provided for by
this Contract. If your Age or that of any Joint Annuitant has been misstated,
the amount payable will be adjusted to reflect the amount that would have been
provided at the true Age.
Any underpayments plus a percent interest equal to the assumed investment
return 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.
REPORTS - We will furnish you with a semi-annual and an annual report of the
Variable Account. This report will be sent to your last known address.
TAXES - Any Taxes paid to any governmental entity, including any premium
taxes, will be charged against the Contract. We will, at our sole discretion,
determine when Taxes have resulted from: the
investment experience of the Variable Account; receipt by us of the Single
Purchase Payment; or commencement of annuity payments.
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 payee 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 payee or to any judicial process to levy upon or attach the same for
payment thereof.
OWNERSHIP PROVISIONS
OWNERSHIP - The Annuitant is the Contract Owner. The Contract Owner exercises
all the rights of this Contract, subject to the rights of:
1. any assignee under an assignment filed with our Service Office, and
2. any irrevocably named Beneficiary.
Upon your death, the Joint Annuitant, if any, will become the Owner. On or
after the Income Date, if there is no Joint Annuitant or upon the death of the
Joint Annuitant, the Beneficiary(ies) become the Owner(s) of their respective
shares.
ASSIGNMENT - You may assign this Contract. A copy of any assignment must be
filed with our Service Office. We are not responsible for the validity of any
assignment. If you assign this Contract, your rights and those of any
revocably-named person will be subject to the assignment. An assignment will
not affect any payments we may make or actions we may take before such
assignment has been recorded at our Service Office.
BENEFICIARY PROVISIONS
BENEFICIARY - The Beneficiary and any Contingent Beneficiary are named by the
Contract Owner.
CHANGE OF BENEFICIARY - The Contract Owner may change the Beneficiary. A
written request, dated and signed by the Contract Owner, must be filed at our
Service Office. After the change is recorded, it will take effect as of the
date the request was signed. If the request reaches our Service Office after
the Contract Owner dies but before any payment to a Beneficiary, the change
will be valid.
DEATH OF BENEFICIARY - Unless you have provided otherwise, any amount payable
after your death and that of any Joint Annuitant will be payable;
1. in respective shares to such Beneficiaries as are then living;
2. if no Beneficiary is then living, payment will be made in respective
shares to such Contingent Beneficiaries as are then living;
3. if no Beneficiary or Contingent Beneficiary is then living, payment
will be made to the Contract Owner's estate.
PURCHASE PAYMENT PROVISIONS
SINGLE PURCHASE PAYMENT - The Single Purchase Payment is paid to the Company
at its Annuity Service Office.
NET PURCHASE PAYMENT - The Net Purchase Payment is equal to the Single
Purchase Payment less any Taxes levied.
ALLOCATION OF NET PURCHASE PAYMENT - The Net Purchase Payment is allocated to
one or more of the sub-accounts of the Variable Account on the Effective Date.
The allocation to each sub-account is made in percentages of the Net Purchase
Payment. Whole percentages must be used and each must be at least 10%. We have
the right to allocate the Net Purchase Payment to the Money Market sub-account
until the expiration of the free-look period. Thereafter, the allocations will
be made to the sub-accounts as selected by the Contract Owner. We reserve the
right to limit the number of allocations that you can have at any time.
VARIABLE ACCOUNT
GENERAL DESCRIPTION - The name of the Variable Account is shown in the
Contract Schedule. The assets of the Variable Account are our property but are
not chargeable with the liabilities arising out of any other business we may
conduct, except to the extent that the assets of the Variable Account exceed
the liabilities of the Variable Account arising under the Contracts supported
by the Variable Account.
INVESTMENT ALLOCATIONS TO THE VARIABLE ACCOUNT - The assets of the Variable
Account are segregated by Eligible Investments or Funds and where appropriate
by Funds within the Eligible Fund, thus establishing a series of sub-accounts
within the Variable Account.
We may, from time to time, add additional Eligible Investments or Funds. In
such event, you may be permitted to select from these other Eligible
Investments or Funds limited by the terms and conditions we may impose on such
transactions.
We may also substitute other Eligible Investments or Funds. The investment
policy of the Variable Account will not be changed without approval pursuant
to the insurance laws of the State of New York.
VALUATION OF ASSETS - Assets of Eligible Investments within each sub-account
will be valued at their Net Asset Value on each Valuation Date.
VIP UNIT - When the Net Purchase Payment is allocated, the amount
allocated to each sub-account is converted to VIP Units. The number of VIP
Units credited to each sub-account is determined by dividing the portion of
the Net Purchase Payment allocated to the sub-account by the value of the VIP
Unit for the sub-account as of the Effective Date. The VIP Unit value for each
sub-account was initially set arbitrarily. The VIP Unit value for any later
Valuation Period on or before the Annuity Calculation Date is determined by
subtracting (2) from (1) and dividing the result by (3) where:
1. is the net result of:
a. the assets of the sub-account attributable to VIP Units; plus or
minus
b. the cumulative charge or credit for Taxes reserved which is
determined by us to have resulted from the operation of the
sub-account;
2. is the cumulative unpaid charge for the Mortality and Expense Risk
Charge and for the Administrative Expense Charge, which are shown on the
Contract Schedule; and
3. is the number of VIP Units outstanding at the end of the Valuation
Period.
The VIP Unit value may increase or decrease from Valuation Period to Valuation
Period.
CONTRACT VALUE - The Contract Value on or before the Annuity Calculation Date
is the sum of the values for the Contract within each sub-account. The value
within each sub-account is determined by multiplying the number of VIP Units
attributable to this Contract in the sub-account by the VIP Unit value for the
sub-account. On the Annuity Calculation Date the Contract Value is converted
to annuity payments. After the Annuity Calculation Date, there is no Contract
Value.
TRANSFERS - You may transfer all or part of your interest in a sub-account to
another sub-account. All transfers are subject to the following:
1. No partial transfer will be made if it would result in any selected
sub-account providing less than 10% of the benefits under the Contract.
2. Transfers will take effect during the Valuation Period next following
receipt by us of a written transfer request containing all required
information. No transfers may occur until the end of the free-look
period.
3. Any transfer direction must clearly specify:
a. the new allocation percentage(s); and
b. the sub-accounts which are to be re-allocated.
4. We reserve the right to limit the number of transfers among
sub-accounts to not fewer than six transfers per calendar year.
We also reserve the right at any time and without prior notice to any
party to modify the transfer provisions described above.
MORTALITY AND EXPENSE RISK CHARGE - We deduct a Mortality and Expense Risk
Charge 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 EXPENSE CHARGE - We deduct an Administrative Expense Charge
equal, on an annual basis, to the amount shown on the Contract Schedule. The
Administrative Expense Charge compensates us for some of the costs associated
with the administration of this Contract and the Variable Account.
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.
ANNUITY PROVISIONS
INCOME DATE - You select an Income Date at the time of issue. The Income Date
must be the first or fifteenth day of a calendar month and not later than 60
days from the Effective Date.
ANNUITY OPTIONS - This Contract provides an Annuity under one of the Annuity
Options described below, provided the Annuitant or any Joint Annuitant are
alive on the Income Date. The Annuity Option selected is shown on the Contract
Schedule. Once selected the option is irrevocable. The amount of each payment
depends upon the Annuity Option chosen and the Annuitant's and any Joint
Annuitant's Age on the Annuity Calculation Date. Additionally, annuity
payments under all Options will vary with the investment experience of the
sub-account(s) of the Variable Account and may be either higher or lower than
the first payment.
OPTION 1 - LIFE ANNUITY - Monthly annuity payments are paid during the life of
the Annuitant ceasing with the last annuity payment due prior to the
Annuitant's death.
OPTION 2 - LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY PAYMENTS GUARANTEED
- - Monthly annuity payments are paid during the life of an Annuitant with a
guarantee that if, at the Annuitant's death, annuity payments have been made
for less than a 60, 120, 180, or 240 month period as elected then annuity
payments will be continued thereafter to the Beneficiary for the remainder of
the guaranteed period. The Beneficiary may elect to have the present value of
the guaranteed annuity payments remaining, as of the date notice of death is
received by us, commuted at the Assumed Investment Return and paid in a lump
sum. The Company will require the return of the Contract and proof of death
prior to the payment of any commuted values.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY - Monthly annuity payments are paid
during the joint lifetime of the Annuitant and the Joint Annuitant. Upon the
death of the Annuitant, if the Joint Annuitant is then living, payments will
be paid thereafter during the remaining lifetime of the Joint Annuitant at a
level of 100%, 75%, or 50% of the original level as elected. Monthly 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
PAYMENTS GUARANTEED - Monthly annuity payments are paid during the joint
lifetime of the Annuitant and the Joint Annuitant. Monthly payments are paid
thereafter during the remaining lifetime of the Joint Annuitant at 100% of the
original level. If at the last death of the Annuitant and the Joint Annuitant,
annuity payments have been made for less than a 60, 120, 180 or 240 month
period as elected then annuity payments will be continued thereafter to the
Beneficiary for the remainder of the guaranteed period. The Beneficiary may
elect to have the present value of the guaranteed Annuity Payments remaining,
as of the date notice of death is received by us, commuted at the Assumed
Investment Return and paid in a lump sum. The Company will require the return
of the Contract and proof of death prior to the payment of any commuted
values.
OPTION 5 - UNIT REFUND LIFE ANNUITY - Monthly annuity payments are paid during
the life 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, the
Beneficiary will receive, in a single cash sum, the then dollar value of the
number of Annuity Units equal to (1) total net amount applied to purchase the
Annuity 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 payment and the number of payments made. No payment will be made if
the difference of (1) minus (2) is negative. This calculation will be made
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.
DETERMINATION OF ANNUITY PAYMENTS - On the Annuity Calculation Date, a fixed
number of Annuity Units will be purchased, determined as follows:
The first annuity payment is equal to the 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 sub-account the fixed
number of Annuity Units is determined by dividing the amount of the initial
annuity payment determined for each sub-account by the Annuity Unit value on
the Annuity Calculation Date. Thereafter, the number of Annuity Units in each
sub-account remains unchanged unless you elect to transfer between
sub-accounts. All calculations shall appropriately reflect the annuity payment
frequency selected.
On each subsequent annuity payment date, the total annuity payment is the sum
of the annuity payments determined for each sub-account. The annuity payment
in each sub-account is determined by multiplying
the number of Annuity Units then allocated to such sub-account by the Annuity
Unit value for that sub-account.
For each sub-account, the value of an Annuity Unit was initially set
arbitrarily. On each subsequent Valuation Date the value of an Annuity Unit is
determined in the following way:
FIRST: The Net Investment Factor is determined by dividing (a) by (b) and
adding (c) to the result, where:
a. is the net increase or decrease in the Net Asset Value per share of the
Fund (or other Eligible Investment) plus the per share amount of any
dividend or capital gain distribution paid by the Fund (or Eligible
Investment) during the Valuation Period, plus or minus a per share charge
or credit for any Taxes incurred by or reserved for in the sub-account as
of the end of the current Valuation Period which the Company determines
to have resulted from maintenance of the sub-account; and
b. is the Net Asset Value per share of the Fund (or other Eligible
Investment) at the beginning of the Valuation Period, plus or minus
a per share charge or credit for any Taxes incurred by or reserved for
in the sub-account as of the end of the immediately preceding Valuation
Period which the Company determines to have resulted from maintenance
of the sub-account; and
c. is the net result of 1.000 less the Valuation Period deduction for the
charges to the sub-account.
The Net Investment Factor may be more or less than one.
SECOND: The value of an Annuity Unit for a Valuation Date is equal to:
a. the value of the Annuity Unit on the immediately preceding Valuation
Date;
b. multiplied by the Net Investment Factor for the Valuation Period ending on
the current Valuation Date;
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. For example, with a 5%
Assumed Investment Return, the Assumed Net Investment Factor for a one-year
Valuation Period would be 1.05. For a one-day Valuation Period, the Assumed
Net Investment Factor would be 1.000133.
The value of an Annuity Unit as of any date other than a given Valuation Date
is equal to its value on the next succeeding Valuation Date.
BASIS FOR PURCHASE OF ANNUITY - The annuity benefits, provided for under this
Contract are based upon:
a. MORTALITY. The mortality table as set forth on the Contract Schedule.
b. INTEREST. Assumed Investment Return as set forth on the Contract Schedule.
c. TAXES. Any applicable taxes.
PROCEEDS PAYABLE AT DEATH
If you die before the Income Date and there is no Joint Annuitant, the
Contract will be treated as if we had never issued it and we will return the
Single Purchase Payment to your estate.
If you have chosen either Option 3 or Option 4 and either you or the Joint
Annuitant dies before the Income Date, the Annuity Option will be changed to
Option 2 with 120 monthly payments guaranteed. If the life expectancy of the
survivor, based on the mortality table as set forth on the Contract Schedule,
is less than 120 months, the period of guaranteed payments will be 60 months.
If you or any Joint Annuitant die on or after the Income Date, the death
benefit, if any, will be payable under the selected Annuity Option. We will
require proof of death.
DELAY OF PAYMENTS
We will make any payments under this Contract within seven days of a request
received in good order. We reserve the right to suspend or postpone any type
of payment from the Variable Account for any period when:
1. the New York Stock Exchange is closed for 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 it is not reasonably practicable
to dispose of securities held in the Variable Account or determine their
value; or
4. the Securities and Exchange Commission so permits delay for the protection
of security holders.
The applicable rules of the Securities and Exchange Commission will govern as
to whether the conditions in (2) or (3) exist.
INDIVIDUAL IMMEDIATE VARIABLE ANNUITY
NONPARTICIPATING
Secretary President
P30028 (8-94) 1
P30028 (8-94)
P30028 (8-94)
L40098 (3-96)
2
P30028 (8-94)
3
P30028 (8-94)
4
P30028 (8-94)
5
P30028 (8-94)
6
P30028 (8-94)
7
P30028 (8-94)
8
P30028 (8-94)
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
JOINT OWNERS ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. The
effective date of this Endorsement is the Date of Issue shown on the Contract
Schedule.
Any Joint Owner must be the spouse of the Owner.
Any Joint Owner must be a Joint Annuitant.
If Joint Owners are named, all references to Contract Owner shall mean the
Joint Owners.
All other terms and conditions of the Contract remain unchanged.
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Secretary President
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
PERIOD CERTAIN AND
PARTIAL LIQUIDATION ENDORSEMENT
This Endorsement modifies and forms a part of the Contract to which it is
attached. The Effective Date is the Effective Date shown on 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 sections of the
Contract as set forth below:
The ANNUITY OPTIONS section is deleted and replaced with the following:
ANNUITY OPTIONS - This Contract provides an Annuity under any of the Annuity
Options described below, provided the Annuitant or any Joint Annuitant is alive
on the Income Date. The Annuity Option selected is shown on the Contract
Schedule. Once selected the option is irrevocable. The amount of each payment
depends upon the Annuity Option chosen and, for Annuity Options 1-5, the
Annuitant's and any Joint Annuitant's Age on the Annuity Calculation Date.
Additionally, annuity payments under all Options will vary with the investment
experience of the sub-accounts of the Variable Account and may be either higher
or lower than the first payment.
The following Annuity Option is to be added to the "Annuity Provisions" section
on page 6 of the contract immediately preceding DETERMINATION OF ANNUITY
PAYMENTS:
OPTION 6 - SPECIFIED PERIOD CERTAIN ANNUITY - Monthly annuity payments
are paid for a specified period of time. The Specified Period Certain is
elected by the Contract Owner and must be specified as a whole number of
years from 5 to 30. If at the time of the last death of the Annuitant
and any Joint Annuitant, the annuity payments actually made have been
for less than the Specified Period Certain, then annuity payments will
be continued thereafter to the Beneficiary for the remainder of the
Specified Period Certain. A withdrawal may be made at least once per
contract year up to the Total Withdrawal Value in the Contract. The
Total Withdrawal Value is equal to the present value of the remaining
annuity payments, to the end of the Specified Period Certain, commuted
at the Assumed Investment Return less a commutation fee. The commutation
fee is a percentage of the amount withdrawn as shown on the Contract
Schedule. We reserve the right to restrict the amount of a partial
withdrawal to a minimum of $2,500 and a maximum amount that would result
in the remaining Total Withdrawal Value of the contract as shown on the
Contract Schedule after the partial withdrawal is processed. Partial
withdrawals will be processed on the next Annuity Calculation Date
following your written request. The company will require the return of
the contract prior to the payment of the entire commuted value.
Additionally, the following contract Provision is to be added following the
"Annuity Provisions" section, directly preceding the PROCEEDS PAYABLE AT DEATH
section of the Contract.
PARTIAL LIQUIDATION PROVISION
This provision will apply under Annuity Options 2 and 4. During the
lifetime of the Annuitant(s) and while the number of annuity payments
made is less than the guaranteed number of payments elected, the
Contract Owner may request a withdrawal representing a partial
liquidation of the Total Withdrawal Value. The Total Withdrawal Value is
equal to the present value of the remaining guaranteed annuity payments,
to the end of the period certain, commuted at the Assumed Investment
Return less a commutation fee. The commutation fee is a charge collected
by the company equal to a percentage of the Total Withdrawal Value
liquidated as shown on the Contract Schedule. Partial Liquidations will
be processed on the next Annuity Calculation Date following your written
request.
After a partial liquidation the subsequent monthly annuity payments
during the guaranteed period certain will be reduced by the percentage
of the Total Withdrawal Value liquidated, including the commutation fee.
After the guaranteed number of payments has been paid the number of
annuity units used in calculating the monthly payments will be restored
to their original values as if no liquidations had taken place.
PARTIAL LIQUIDATION PROVISION GUARANTEES - The Company guarantees to
make this provision available to the Contract Owner at least once per
contract year starting no later than the first Contract Anniversary. The
total amount allowed to be liquidated as a cumulative percentage of the
Total Withdrawal Value is guaranteed to be no less than 25%. The minimum
allowable partial liquidation will be the lesser of $2,500 or the
remaining portion of the Total Withdrawal Value available to be
liquidated.
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
[GRAPHIC OMITTED]
Secretary President
VALUEMARK NEW YORK
INCOME Application for An Individual Immediate Variable Annuity
PLUS Issued by PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
1. Annuitant/Owner (Please provide proof of age) For Home Use Only
Name Sex [ ] M [ ] F
_______________________________________________
First Middle Last
Address Date of Birth
___________________________________________ _________
City State Zip Code
___________________________ ___________________ ________
Social Security # Daytime Phone ( )
_______________________ ________________
2. Joint Annuitant (Optional) (Please provide proof of age)
Name Sex [ ] M [ ] F
_________________________________________________
First Middle Last
Social Security # Date of Birth
____________________________________ _______
Relationship to Annuitant:
________________________________________________
Will the Joint Annuitant be an Owner? [ ] Yes [ ]No
Note: If the Contract is an IRA
the Joint Annuitant cannot be an Owner.
3. Beneficiary (Please give name(s) and relationship to the Annuitant/Owner.)
Primary Beneficiary Relationship
_________________________________________________________________________
Contingent Beneficiary Relationship
_________________________________________________________________________
Unless otherwise stated, Beneficiaries of like classes shall share equally
with right of survivorship. The Annuitant/Owner reserves the right to change
the Beneficiary(ies) unless indicated above.
4. Purchase Payment
Single Purchase Payment $ (make check payable to Preferred Life.)
___________
5. Annuity Income Date
A. Income Date: B. Payment frequency:
[ ]1st or [ ]15th [ ] Monthly [ ] Quarterly [ ] Semi-annually [ ] Annually
6. Plan Information
[ ] Non - Qualified [ ] Qualified IRA [ ]Transfer [ ]Direct Rollover
[ ]Rollover (within 60 days of
receipt of funds)
[ ]Other
7. Home Office Use Only
8. Replacement Information
This annuity [ ]will [ ]will not replace any existing life insurance or
annuities.
9. Annuity Options (Select by checking one box.)
Assumed Investment Return (select one): [ ]3 percent [ ]5 percent
(If no Assumed Investment Return is indicated, the default will be 5%)
_______________________________________________________________________________
[ ] OPTION 1 - Single Life Annuity (Payable only during the lifetime of the
Annuitant/Owner. Covers one Annuitant/Owner who will receive
payments for as long as he or she lives. All benefits cease at
the death of the Annuitant/Owner; therefore, there is no
beneficiary.)
[ ] OPTION 2 - Single Life Annuity (Payable during the lifetime of the
Annuitant/Owner with a guaranteed minimum number of payments).
(select one) [ ] 60 months (5 yr) [ ] 120 months (10 yr)
[ ] 180 months (15 yr) [ ] 240 months (20 yr)
[ ] OPTION 3 - Joint and Last Survivor Life Annuity (Payable during
the lifetime of the Annuitant/Owner and Joint Annuitant with
continuing payments to Joint Annuitant using percentage
selected). (select one) [ ] 100% [ ] 75% [ ] 50%
[ ] OPTION 4 - Joint and Last Survivor Life Annuity (with a guaranteed
minimum number of payments during the joint lifetime of the
Annuitant/Owner and Joint Annuitant with no reduction in the
amount after the death of the first Joint Annuitant).
(select one) [ ] 60 months (5 yr) [ ] 120 months (10 yr)
[ ] 180 months (15 yr) [ ] 240 months (20 yr)
[ ] OPTION 5 - Unit Refund Life Annuity (Payable during the lifetime of the
Annuitant/Owner with refund of unpaid guaranteed units at the
time of death).
[ ] OPTION 6- Specified Period Certain Annuity (Payable to the
Annuitant/Owner and Joint Annuitant for a specified number of
years. Payments will continue to the beneficiary for the
remainder of the Specified Period Certain after the death of
the Annuitant/Owner and Joint Annuitant.)
Specified Period Certain: years (Choose a whole number from
5 to 30).
10. Initial Purchase Payment Allocation
PREFERRED LIFE VARIABLE ACCOUNT C. Each fund allocation must be at least 10%.
Use whole percentages
___% Capital Growth Fund ___% Utility Equity Fund
___% Growth & Income Fund ___% Templeton Developing Markets Equity
Fund
___% Income Securities Fund ___% Templeton Global Asset Allocation
Fund
___% Money Market Fund ___% Templeton Global Growth Fund
___% Mutual Discovery Securities Fund ___% Templeton International Equity Fund
___% Mutual Shares Securities Fund ___% Templeton International Smaller
Companies Fund
___% Rising Dividends Fund ___% Templeton Pacific Growth Fund
___% Small Cap Fund ___% Other
___% TOTAL (must equal 100%)
11. Special Instructions:
13. Agreement and Acknowledgment
BY SIGNING BELOW THE ANNUITANT/OWNER(S) UNDERSTANDS THAT:
A) THE ANNUITY PAYMENTS MAY INCREASE OR DECREASE DEPENDING ON THE CONTRACT'S
INVESTMENT RESULTS;
B) THE VARIABLE ANNUITY APPLIED FOR IS SUITABLE FOR THE ANNUITANT/OWNER(S)
FINANCIAL SITUATION AND NEEDS; AND
C) THEY HAVE RECEIVED A CURRENT PROSPECTUS.
Each Annuitant/Owner agrees that to the best of their 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 part of any
Contract to be issued. No representative is authorized to modify this
agreement or waive any of Allianz Life's rights or requirements. If
Allianz Life makes a change in the space designated Home Office Use Only
in order to correct any apparent errors or omissions, it will be approved
by acceptance of the Contract; however, any material changes must be
accepted in writing by Annuitant/Owner(s).
I have read and understand the Agreement and Acknowledgment Section.
[ ]Please send the Statement of Additional Information.
Signed a____________________________________________ on___________________
City State Date
X__________________ X______________________________ X____________________
Annuitant/Owner Joint Annuitant (if applicable) Witness & Registered
Rep/Agent
________________________________________ _________________________________
Broker-Dealer (print) Print Name of Registered Rep/Agent
________________________________________ ( )______________________________
Branch Office (print) Registered Rep/Agent Telephone
Number
REGISTERED REP/AGENT CERTIFICATION;
By signing above, the Registered Rep/Agent certifies that:
1. The questions contained in this application were asked of the Annuitant/
Owner and the answers duly recorded; that this application is complete and
true to the best of my knowledge and belief; and
2. I am NASD registered and state licensed for variable annuity contracts where
this application is written and delivered; and
3. This annuity [ ] will [ ] will not replace or change in whole or in part any
life insurance or annuities now in force, (if yes, provide details and any
necessary forms); and
4. I have received $____________________________ as the Single Purchase Payment.
MAIL FOR OVERNIGHT
APPLICATION DELIVERIES
TO: Preferred Life Insurance MAIL TO: Preferred Life, Variable
Company of New York Products
VIP Service Center VIP Service Center
P.O. Box XXXXX Attention: Mail Code XXXXXX
XXXXXX, XX XXXXX XXXXX XXXXXXX XXXXX
XXXXXX, XX XXXXX
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 I. 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 10.1 (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.
