File Nos.333-
811-05716
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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. 35 (X)
(Check appropriate box or boxes.)
PREFERRED LIFE VARIABLE ACCOUNT C
---------------------------------
(Exact Name of Registrant)
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
---------------------------------------------
(Name of Depositor)
152 West 57th Street, 18th Floor, New York, New York 10019
---------------------------------------------------- ---------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (212) 586-7733
Name and Address of Agent for Service
- - -------------------------------------
Eugene Long
Preferred Life Insurance Company of New York
152 West 57th Street, 18th Floor
New York, New York 10019
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Title of Securities Registered:
Group Deferred Variable Annuity Contracts and Certificates
================================================================================
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)
Item No. Location
- -------- --------
PART A
Item 1. Cover Page. Cover Page
Item 2. Definitions. Index of Terms
Item 3. Synopsis or Highlights Profile
Item 4. Condensed Financial Information Not Applicable
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies Preferred Life,
The Separate
Account, Investment
Options
Item 6. Deductions Expenses
Item 7. General Description of Variable
Annuity Contracts The Franklin Valuemark IV
Variable and Fixed
Annuity Contract
Item 8. Annuity Period Annuity Payments
(The Payout Phase)
Item 9. Death Benefit Death Benefit
Item 10. Purchases and Contract Value Purchase
Item 11. Redemptions. Access to Your
Money
Item 12. Taxes Taxes
Item 13. Legal Proceedings None
Item 14. Table of Contents of the Statement of
Additional Information Table of Contents of
the Statement of
Additional Information
PART B
Item 15. Cover Page Cover Page
Item 16. Table of Contents Table of Contents
Item 17. General Information and History Insurance Company
Item 18. Services Not Applicable
Item 19. Purchase of Securities Being Offered Not Applicable
Item 20. Underwriters Distributor
Item 21. Calculation of Performance Data Calculation of
Performance Data
Item 22. Annuity Payments Annuity Provisions
Item 23. Financial Statements Financial Statements
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.
THE FRANKLIN VALUEMARK CHARTER VARIABLE ANNUITY CONTRACT
issued by
PREFERRED LIFE VARIABLE ACCOUNT C
and
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
This prospectus describes the Franklin Valuemark Charter Variable Annuity
Contract with a Fixed Account offered by Preferred Life Insurance Company of New
York (Preferred Life).
The annuity has 22 Variable Options, each of which invests in one of the
Portfolios of Franklin Templeton Variable Insurance Products Trust listed below
and a Fixed Account of Preferred Life. You can select up to 10 investment
choices (which includes any of the Variable Options and the Fixed Account).
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST:
PORTFOLIO SEEKING CAPITAL PRESERVATION AND INCOME
Money Market Fund
PORTFOLIOS SEEKING INCOME
High Income Fund
Templeton Global Income Securities Fund
U.S. Government Securities Fund
PORTFOLIOS SEEKING GROWTH AND INCOME
Global Utilities Securities Fund
Growth and Income Fund
Income Securities Fund
Mutual Shares Securities Fund
Real Estate Securities Fund
Rising Dividends Fund
Templeton Global Asset Allocation Fund
Value Securities Fund
PORTFOLIOS SEEKING CAPITAL GROWTH
Capital Growth Fund
Global Health Care Securities Fund
Mutual Discovery Securities Fund
Natural Resources 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
Please read this prospectus before investing and keep it for future reference.
It contains important information about the Franklin Valuemark Charter Variable
Annuity Contract with a Fixed Account.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information (SAI) dated _________, 1999. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
legally a part of this prospectus. The Table of Contents of the SAI is on page
__ of this prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference and other information about
companies that file electronically with the SEC. For a free copy of the SAI,
call us at (800) 342-3863, or write us at: 152 West 57th Street, 18th Floor, New
York, New York 10019.
The Franklin Valuemark Charter Variable Annuity Contracts:
* are not bank deposits
* are not federally insured
* are not endorsed by any bank or government agency
* are not guaranteed and may be subject to loss of principal
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This prospectus is not an offering of the securities in any state, country, or
jurisdiction in which we are not authorized to sell the Contracts. You should
rely only on the information contained in this prospectus or that we have
referred you to. We have not authorized anyone to provide you with information
that is different.
Dated: ________, 1999
TABLE OF CONTENTS
Page
INDEX OF TERMS
SUMMARY
FEE TABLE
1. THE FRANKLIN VALUEMARK CHARTER
VARIABLE ANNUITY CONTRACT
Owner
Joint Owner
Annuitant
Beneficiary
Assignment
2. ANNUITY PAYMENTS (THE PAYOUT PHASE)
Annuity Options
3. PURCHASE
Purchase Payments
Automatic Investment Plan
Allocation of Purchase Payments
Free Look
Accumulation Units
4. INVESTMENT OPTIONS
Transfers
Dollar Cost Averaging Program
Flexible Rebalancing
Financial Advisers - Asset Allocation Programs
Voting Privileges
Substitution
5. EXPENSES
Insurance Charges
Mortality and Expense Risk Charge
Administrative Charge
Contract Maintenance Charge
Transfer Fee
Premium Taxes
Income Taxes
Portfolio Expenses
6. TAXES
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Multiple Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Withdrawals - Tax-Sheltered Annuities
Diversification
7. ACCESS TO YOUR MONEY
Systematic Withdrawal Program
Minimum Distribution Program
Suspension of Payments or Transfers
8. PERFORMANCE
9. DEATH BENEFIT
Upon Your Death
Death of Annuitant
10. OTHER INFORMATION
Preferred Life
Year 2000 Matters
The Separate Account
Distribution
Administration
Financial Statements
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
INDEX OF TERMS
This prospectus is written in plain English to make it as understandable as
possible. However, there are some technical terms used which are capitalized in
the prospectus. The page that is indicated below is where you will find the
definition for the word or term.
Page
Accumulation Phase
Accumulation Unit
Annuitant
Annuity Options
Annuity Payments
Annuity Unit
Beneficiary
Contract
Fixed Account
Income Date
Joint Owner
Non-Qualified
Owner
Payout Phase
Portfolios
Purchase Payment
Qualified
Tax Deferral
Variable Option
SUMMARY
The sections in this summary correspond to sections in this prospectus which
discuss the topics in more detail.
The Annuity Contract: The Franklin Valuemark Charter annuity contract offered by
Preferred Life provides a means for investing on a tax-deferred basis in 22
Portfolios of Franklin Templeton Variable Insurance Products Trust and the
Preferred Life Fixed Account. The contract is intended for retirement savings or
other long-term investment purposes. The Contract provides for a death benefit
and guaranteed annuity income options.
Annuity Payments: If you want to receive regular income from your annuity, you
can choose an Annuity Option. You can choose whether to have payments come from
the Fixed Account, the available Portfolios or both. If you choose to have any
part of your payments come from the Portfolios, the dollar amount of your
payments may go up or down.
Purchase: You can buy the contract with $25,000 or more under most
circumstances. You can add $250 or more any time you like during the
Accumulation Phase.
Investment Options: You can put your money in the Variable Options which invest
in the Portfolios of Franklin Templeton Variable Insurance Products Trust or the
Preferred Life Fixed Account. The investment returns on the Portfolios are not
guaranteed. You can make or lose money. You can make transfers between
investment choices.
Expenses: The contract has insurance features and investment features, and there
are costs related to each.
Each year, Preferred Life deducts a $40 contract maintenance charge from your
Contract. Preferred Life currently waives this charge if the value of your
Contract is at least $100,000.
Preferred Life deducts a mortality and expense risk charge which varies
depending upon whether you select the Traditional Death Benefit or the Enhanced
Death Benefit. The charge is equal, on an annual basis, to 1.00% of the average
daily value of the Contract invested in a Variable Option if you select the
Traditional Death Benefit and 1.20% of the average daily value of the Contract
invested in a Variable Option if you select the Enhanced Death Benefit.
Preferred Life also deducts an administrative charge which is equal , on an
annual basis, to .15% of the value of the Contract invested in a Variable
Option.
Preferred Life does not assess a withdrawal charge or a contingent deferred
sales charge if you make a withdrawal (partial or total) from your Contract.
There are also daily investment charges which range, on an annual basis, from
.74% to 1.66% of the average daily value of the Portfolio, depending upon the
Portfolio.
Taxes: Your earnings are not taxed until you take them out. If you take money
out during the Accumulation Phase, earnings come out first and are taxed as
income. If you are younger than 59 1/2 when you take money out, you may be
charged a 10% federal tax penalty.
Access to Your Money: You can take money out of your Contract during the
Accumulation Phase. You may have to pay income tax and a tax penalty on any
money you take out.
Death Benefit: If you die before moving to the Payout Phase, the person you have
chosen as a Beneficiary will receive a death benefit. The amount of the death
benefit depends on whether you select the Traditional Death Benefit or the
Enhanced Death Benefit.
Free-Look: You can cancel the contract within 10 days after receiving it.
Preferred Life will refund the value of your Contract on the day it receives
your request to cancel the Contract. This may be more or less than your original
payment. If you have purchased the Contract as an individual retirement annuity,
Preferred Life will refund the Purchase Payment.
FEE TABLE
The purpose of this Fee Table is to help you understand the costs of investing,
directly or indirectly, in the Contract. The Fee Table reflects expenses of the
Separate Account as well as the Portfolios.
<TABLE>
<CAPTION>
Contract Owner Transaction Fees
<S> <C>
Transfer Fee ........................................The first 12 transfers in a Contract year are free.
Thereafter, the fee is $25 or 2% of the amount
transferred, if less. Dollar Cost Averaging transfers
and Flexible Rebalancing transfers are not counted.
Contract Maintenance Charge* ....................... $40 per Contract per year
Separate Account Annual Expenses
(as a percentage of average account value)
Contracts with Contracts with
Traditional Enhanced
Death Benefit Death Benefit
------------- -------------
Mortality and Expense Risk Charge ................ 1.00% 1.20%
Administrative Charge ............................ .15% .15%
----------- ---------
Total Separate Account Annual Expenses 1.15% 1.35%
<FN>
* During the Accumulation Phase, the charge is waived if the value of your
Contract is at least $100,000. If you own more than one Franklin Valuemark
Charter Contract (registered with the same social security number), we will
determine the total value of all your Contracts. If the total value of all
your Contracts is at least $100,000, the charge is waived.
</FN>
</TABLE>
Franklin Templeton Variable Insurance Products Trust's Annual Expenses: Class 2
Shares (as a percentage of Franklin Templeton Variable Insurance Products
Trust's average net assets)
The Management and Portfolio Administration Fees for each Portfolio are based on
a percentage of that Portfolio's net assets. Class 2 shares have a distribution
plan which is referred to as a Rule 12b-1 plan. See the accompanying prospectus
for Franklin Templeton Variable Insurance Products Trust for a description of
these fees and the Rule 12b-1 plan. While the maximum amount payable under each
Portfolio's Class 2 Rule 12b-1 plan is .35% per year of the Portfolio's average
daily net assets, the Board of Trustees of Franklin Templeton Variable Insurance
Products Trust has set the current rate at .25% per year. Prior to July 1, 1999,
the Class 2 shares had Rule 12b-1 plan expenses of .30%. Because Class 2 shares
are relatively new, the figures below (other than 12b-1 fees) are based on the
expenses of each Portfolio's Class 1 shares for the most recent fiscal year,
except as noted. Future Portfolio expenses may differ.
<TABLE>
<CAPTION>
Management Total
and Portfolio 12b-1 Other Annual
Administration Fees 1 Fees Expenses Expenses
--------------------- ---- -------- --------
<S> <C> <C> <C> <C>
Capital Growth Fund .75% .25% .02% 1.02%
Global Health Care .75% .25% .09% 1.09%
Securities Fund2
Global Utilities Securities .47% .25% .03% .75%
Fund
Growth and Income Fund .47% .25% .02% .74%
High Income Fund .50% .25% .03% .78%
Income Securities Fund .47% .25% .02% .74%
Money Market Fund .51% .25% .02% .78%
Mutual Discovery .95% .25% .05% 1.25%
Securities Fund
Mutual Shares Securities .74% .25% .03% 1.02%
Fund
Natural Resources .62% .25% .02% .89%
Securities Fund
Real Estate Securities Fund .52% .25% .02% .79%
Rising Dividends Fund .70% .25% .02% .97%
Small Cap Fund .75% .25% .02% 1.02%
Templeton Developing 1.25% .25% .16% 1.66%
Markets Equity Fund
Templeton Global Asset .80% .25% .04% 1.09%
Allocation Fund
Templeton Global Growth .83% .25% .05% 1.13%
Fund
Templeton Global Income .57% .25% .06% .88%
Securities Fund
Templeton International .80% .25% .08% 1.13%
Equity Fund
Templeton International 1.00% .25% .10% 1.35%
Smaller Companies Fund
Templeton Pacific Growth .99% .25% .11% 1.35%
Fund
U.S. Government Securities .48% .25% .02% .75%
Fund
Value Securities Fund2 .75% .25% .08% 1.08%
</TABLE>
1. The Portfolio Administration Fee is a direct expense for the Global Health
Care Securities Fund, the Mutual Discovery Securities Fund, the Mutual
Shares Securities Fund, the Templeton Global Asset Allocation Fund, the
Templeton International Smaller Companies Fund, and the Value Securities
Fund; other Portfolios pay for similar services indirectly through the
Management Fee. See the accompanying Franklin Templeton Variable Insurance
Products Trust prospectus for further information regarding these fees.
2. The Global Health Care Securities Fund and the Value Securities Fund
commenced operations May 1, 1998. The expenses shown above for these
Portfolios are therefore estimated for 1999.
Examples
o There are two sets of examples below. The examples in Chart 1 assume you
have selected the traditional death benefit. The examples in Chart 2 assume
you have selected the enhanced death benefit. The examples below should not
be considered a representation of past or future expenses. Actual expenses
may be greater or less than those shown.
o The $40 contract maintenance charge is included in the examples as a
prorated charge of $1. Since the average Contract size is greater than
$1,000, the contract maintenance charge is reduced accordingly.
o For additional information, see Section 5 - "Expenses" and the Franklin
Templeton Variable Insurance Products Trust prospectus.
<TABLE>
<CAPTION>
Chart 1 - Contracts with Traditional Death Benefit Option
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return on
your money regardless of whether you surrender your Contract at the end of each time period:
Variable Option 1 Year 3 Years 5 Years 10 Years
- --------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Capital Growth $23 $71 $121 $260
Global Health Care Securities* $24 $73 $125 $267
Global Utilities Securities $20 $63 $108 $232
Growth and Income $20 $62 $107 $231
High Income $21 $64 $109 $235
Income Securities $20 $62 $107 $231
Money Market $21 $64 $109 $235
Mutual Discovery Securities $25 $78 $133 $284
Mutual Shares Securities $23 $71 $121 $260
Natural Resources Securities $22 $67 $115 $247
Real Estate Securities $21 $64 $110 $236
Rising Dividends $23 $69 $119 $255
Small Cap $23 $71 $121 $260
Templeton Developing Markets Equity $29 $90 $153 $324
Templeton Global Asset Allocation $24 $73 $125 $267
Templeton Global Growth $24 $74 $127 $272
Templeton Global Income Securities $22 $67 $114 $246
Templeton International Equity $24 $74 $127 $272
Templeton International Smaller Companies $26 $81 $138 $294
Templeton Pacific Growth $26 $81 $138 $294
U.S. Government Securities $20 $63 $108 $232
Value Securities* $24 $73 $124 $266
<FN>
*Estimated
</FN>
</TABLE>
<TABLE>
<CAPTION>
Chart 2 - Contracts with Enhanced Death Benefit Option
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return on
your money regardless of whether you surrender your Contract at the end of each time period:
Variable Option 1 Year 3 Years 5 Years 10 Years
- --------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Capital Growth $25 $77 $132 $281
Global Health Care Securities* $26 $79 $135 $288
Global Utilities Securities $22 $69 $118 $253
Growth and Income $22 $68 $117 $252
High Income $23 $70 $119 $256
Income Securities $22 $68 $117 $252
Money Market $23 $70 $119 $256
Mutual Discovery Securities $27 $84 $143 $303
Mutual Shares Securities $25 $77 $132 $281
Natural Resources Securities $24 $73 $125 $267
Real Estate Securities $23 $70 $120 $257
Rising Dividends $25 $75 $129 $276
Small Cap $25 $77 $132 $281
Templeton Developing Markets Equity $31 $98 $163 $343
Templeton Global Asset Allocation $26 $79 $135 $288
Templeton Global Growth $26 $80 $137 $292
Templeton Global Income Securities $24 $73 $124 $266
Templeton International Equity $26 $80 $137 $292
Templeton International Smaller Companies $28 $87 $148 $313
Templeton Pacific Growth $28 $87 $148 $313
U.S. Government Securities $22 $69 $118 $253
Value Securities* $26 $79 $135 $287
<FN>
*Estimated
</FN>
</TABLE>
THE FRANKLIN VALUEMARK CHARTER VARIABLE ANNUITY CONTRACT
This prospectus describes a variable deferred annuity contract with a Fixed
Account offered by Preferred Life.
An annuity is a contract between you, the owner, and an insurance company (in
this case Preferred Life), where the insurance company promises to pay you (or
someone else you choose) an income, in the form of Annuity Payments. The Annuity
Payments must begin on a designated date that is at least two years in the
future. Until you decide to begin receiving Annuity Payments, your annuity is in
the Accumulation Phase. Once you begin receiving Annuity Payments, your Contract
switches to the Payout Phase.
The Contract benefits from Tax Deferral. Tax Deferral means that you are not
taxed on any earnings or appreciation on the assets in your Contract until you
take money out of your Contract.
You have 23 investment choices - the 22 Variable Options each of which invests
in one of the Portfolios of Franklin Templeton Variable Insurance Products Trust
and the Fixed Account of Preferred Life. The Contract is called a variable
annuity because you can choose among 22 Variable Options and, depending upon
market conditions, you can make or lose money in the Contract based on the
investment performance of the Portfolios of Franklin Templeton Variable
Insurance Products Trust. The Portfolios are designed to offer a better return
than the Fixed Account. However, this is not guaranteed. If you select the
variable annuity portion of the Contract, the amount of money you are able to
accumulate in your Contract during the Accumulation Phase depends in large part
upon the investment performance of the Portfolio(s) you select. The amount of
the Annuity Payments you receive during the Payout Phase from the variable
annuity portion of the Contract also depends in large part upon the investment
performance of the Portfolios you select for the Payout Phase.
The Contract also contains a Fixed Account. The Fixed Account offers an interest
rate that is guaranteed by Preferred Life for all deposits you make within a
twelve month period. Your initial interest rate is set on the date when your
money is invested in the Fixed Account and remains effective for one year.
Initial interest rates are declared monthly. Preferred Life guarantees that the
interest credited to the Fixed Account will not be less than 3% per year. If you
select the Fixed Account, your money will be placed with the other general
assets of Preferred Life. Preferred Life may change the terms of the Fixed
Account in the future - please contact Preferred Life for the most current
terms.
If you select the Fixed Account, the amount of money you are able to accumulate
in your Contract during the Accumulation Phase depends upon the total interest
credited to your Contract.
We will not make any changes to your Contract without your permission except as
may be required by law.
Owner
The Contract is a group variable deferred annuity contract with a Fixed Account
option. The group contract is issued to a contract holder, for the benefit of
the participants in the group. You are a participant in the group and will
receive a certificate evidencing your ownership. You, as the owner of the
certificate, have all the rights and privileges of ownership. As used in this
prospectus, the term Contract refers to your certificate.
The Owner is as designated at the time the Contract is issued, unless changed.
You may change Owners at any time. This may be a taxable event. You should
consult with your tax adviser before doing this.
Joint Owner
The Contract can be owned by Joint Owners. Upon the death of either Joint Owner,
the surviving Joint Owner will be the primary Beneficiary. Any other Beneficiary
designation at the time the Contract was issued or as may have been later
changed will be treated as a contingent Beneficiary unless otherwise indicated.
Annuitant
The Annuitant is the natural person on whose life we base Annuity Payments. You
name an Annuitant. You may change the Annuitant at any time before the Income
Date unless the Contract is owned by a non-individual (for example, a
corporation).
Beneficiary
The Beneficiary is the person(s) or entity you name to receive any death
benefit. The Beneficiary is named at the time the Contract is issued unless
changed at a later date. Unless an irrevocable Beneficiary has been named, you
can change the Beneficiary or contingent Beneficiary.
Assignment
You can assign the Contract at any time during your lifetime. Preferred Life
will not be bound by the assignment until it receives the written notice of the
assignment. Preferred Life will not be liable for any payment or other action we
take in accordance with the Contract before we receive notice of the assignment.
Any assignment made after the death benefit has become payable can only be done
with our consent. An assignment may be a taxable event.
If the Contract is issued pursuant to a Qualified plan, you may be unable to
assign the Contract.
2. ANNUITY PAYMENTS (THE PAYOUT PHASE)
You can receive regular monthly income payments under your Contract. You can
choose the month and year in which those payments begin. We call that date the
Income Date. Your Income Date must be the first day of a calendar month and must
be at least 2 years after you buy the Contract. You can also choose among income
plans. We call those Annuity Options.
We ask you to choose your Income Date when you purchase the Contract. You can
change it at any time before the Income Date with 30 days notice to us. Annuity
Payments must begin by the Annuitant's 90th birthday. This limitation may not
apply when the Contract is issued to a charitable remainder trust. You (or
someone you designate) will receive the Annuity Payments. You will receive tax
reporting on those payments. If you do not choose an Annuity Option prior to the
Income Date, we will assume that you selected Option 2 which provides a life
annuity with 5 years of monthly payments guaranteed .
You may elect to receive your Annuity Payments as a variable payout, a fixed
payout, or a combination of both. Under a fixed payout, all of the Annuity
Payments will be the same dollar amount (equal installments). If you choose a
variable payout, you can select from the available Variable Options. If you do
not tell us otherwise, your Annuity Payments will be based on the investment
allocations that were in place on the Income Date.
If you choose to have any portion of your Annuity Payments based on the
investment performance of the Variable Option(s), the dollar amount of your
payments will depend upon three things:
1) the value of your Contract in the Variable Option(s) on the Income
Date,
2) the assumed investment rate (AIR) used in the annuity table for the
Contract, and
3) the performance of the Variable Option(s) you selected.
You can choose a 3% or 5% AIR. If the actual performance exceeds the AIR you
select, your Annuity Payments will increase. Similarly, if the actual rate is
less than the AIR you select, your Annuity Payments will decrease.
Annuity Options
You can choose one of the following Annuity Options or any other Annuity Option
you want and that Preferred Life agrees to provide. After Annuity Payments
begin, you cannot change the Annuity Option.
Option 1. Life Annuity. Under this option, we will make monthly Annuity Payments
so long as the Annuitant is alive. After the Annuitant dies, we stop making
Annuity Payments.
Option 2. Life Annuity with 5, 10, 15 or 20 Years of Monthly Payments
Guaranteed. Under this option, we will make monthly Annuity Payments so long as
the Annuitant is alive. However, if the Annuitant dies before the end of the
selected guaranteed period, we will continue to make Annuity Payments to you or
any person you designate for the rest of the guaranteed period. If you do not
want to receive Annuity Payments after the Annuitant's death, you can ask us for
a single lump sum.
Option 3. Joint and Last Survivor Annuity. Under this option, we will make
monthly Annuity Payments during the joint lifetime of the Annuitant and the
joint Annuitant. When the Annuitant dies, if the joint Annuitant is still alive,
we will continue to make Annuity Payments, so long as the joint Annuitant
continues to live. The amount of the Annuity Payments we will make to you can be
equal to 100%, 75% or 50% of the amount that was being paid when both Annuitants
were alive. The monthly Annuity Payments will end when the last surviving
Annuitant dies.
Option 4. Joint and Last Survivor Annuity with 5, 10, 15 or 20 Years of Monthly
Payments Guaranteed. Under this option, we will make monthly Annuity Payments
during the joint lifetime of the Annuitant and the joint Annuitant. When the
Annuitant dies, if the joint Annuitant is still alive, we will continue to make
Annuity Payments, so long as the surviving Annuitant continues to live, at 100%
of the amount that was being paid when both were alive. If, when the last death
occurs, we have made Annuity Payments for less than the selected guaranteed
period, we will continue to make Annuity Payments to you or any person you
designate for the rest of the guaranteed period. If you do not want to receive
Annuity Payments after the Annuitant's death, you can ask us for a single lump
sum.
Option 5. Refund Life Annuity. Under this option, we will make monthly Annuity
Payments during the Annuitant's lifetime. The last Annuity Payment will be made
before the Annuitant dies and if the value of the Annuity Payments made is less
than the value applied to the Annuity Option, then you will receive a refund as
set forth in the Contract.
3. PURCHASE
Purchase Payments
A Purchase Payment is the money you invest in the Contract. The minimum payment
Preferred Life will accept is $25,000. The maximum amount we will accept without
our prior approval is $1 million. You can make additional Purchase Payments of
$250 or more (or as low as $100 if you have selected the Automatic Investment
Plan). Preferred Life may, at its sole discretion, waive the minimum payment
requirements. We reserve the right to decline any Purchase Payment. At the time
you buy the Contract, you and the Annuitant cannot be older than 85 years old.
This product is not designed for professional market timing organizations, other
entities, or persons using programmed, large or frequent transfers.
Automatic Investment Plan
The Automatic Investment Plan (AIP) is a program which allows you to make
additional Purchase Payments to your Contract on a monthly or quarterly basis by
electronic transfer of monies from your savings or checking account. You may
participate in this program by completing the appropriate form. We must receive
your form by the first of the month in order for AIP to begin that same month.
Investments will take place on the 20th of the month, or the next business day.
The minimum investment that can be made by AIP is $100. You may stop AIP at any
time you want. We need to be notified by the first of the month in order to stop
or change AIP that month. If AIP is used for a Qualified Contract, you should
consult your tax adviser for advice regarding maximum contributions.
Allocation of Purchase Payments
When you purchase a Contract, we will allocate your Purchase Payment to the
Fixed Account and/or one or more of the Variable Options you have selected. We
ask that you allocate your money in either whole percentages or round dollars.
Transfers do not change the allocation instructions for payments. You can
instruct us how to allocate additional Purchase Payments you make. If you do not
instruct us, we will allocate them in the same way as your previous instructions
to us. You may change the allocation of future payments without fee, penalty or
other charge upon written notice or telephone instructions to the Valuemark
Service Center. A change will be effective for payments received on or after we
receive your notice or instructions. Preferred Life reserves the right to limit
the number of Variable Options that you may invest in at one time. Currently,
you may invest in up to 10 investment choices at any one time (which includes
any of the 22 Variable Options which invest in the Portfolios of Franklin
Templeton Variable Insurance Products Trust listed in Section 4 and the
Preferred Life Fixed Account). We may change this in the future. However, we
will always allow you to invest in at least five Variable Options.
Once we receive your Purchase Payment and the necessary information we will
issue your Contract and allocate your first Purchase Payment within 2 business
days. If you do not give us all of the information we need, we will contact you
or your registered representative to get it. If for some reason we are unable to
complete this process within 5 business days, we will either send back your
money or get your permission to keep it until we get all of the necessary
information. If you make additional Purchase Payments, we will credit these
amounts to your Contract within one business day. Our business day closes when
the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern time.
Free Look
If you change your mind about owning the Contract, you can cancel it within 10
days after receiving it. You will receive back whatever your Contract is worth
on the day we receive your request. If you have purchased the Contract as an
IRA, we are required to refund your Purchase Payment if you decide to cancel
your Contract within 10 days after receiving it. If that is the case, we reserve
the right to allocate your initial Purchase Payment in the Money Market Fund for
15 days after we receive your first Purchase Payment. At the end of that period,
we will re-allocate your money as you selected. Currently, however, we will
directly allocate your money to the Variable Options and/or the Fixed Account as
you have selected.
Accumulation Units
The value of the portion of your Contract allocated to the Variable Options will
go up or down based upon the investment performance of the Variable Options you
choose. The value of your Contract will also depend on the expenses of the
Contract. In order to keep track of the value of your Contract, we use a
measurement called an Accumulation Unit (which is like a share of a mutual
fund). During the Payout Phase of the Contract we call it an Annuity Unit.
Every business day we determine the value of an Accumulation Unit for each
Variable Option by multiplying the Accumulation Unit value for the previous
period by a factor for the current period. The factor is determined by:
1. dividing the value of a Portfolio at the end of the current period by
the value of a Portfolio for the previous period; and
2. multiplying it by one minus the daily amount of the insurance charges
and any charges for taxes.
The value of an Accumulation Unit may go up or down from day to day.
When you make a Purchase Payment, we credit your Contract with Accumulation
Units for any portion of your Purchase Payment allocated to a Variable Option.
The number of Accumulation Units credited is determined by dividing the amount
of the Purchase Payment allocated to a Variable Option by the value of the
corresponding Accumulation Unit.
We calculate the value of each Accumulation Unit after the New York Stock
Exchange closes each day and then credit your Contract.
Example:
On Wednesday we receive an additional Purchase Payment of $3,000 from you. You
have told us you want this to go to the Growth and Income Fund. When the New
York Stock Exchange closes on that Wednesday, we determine that the value of an
Accumulation Unit based on an investment in the Growth and Income Fund is
$12.50. We then divide $3,000 by $12.50 and credit your Contract on Wednesday
night with 240 Accumulation Units.
4. INVESTMENT OPTIONS
The Contract offers Variable Options, which invest in Class 2 shares of 22
Portfolios of Franklin Templeton Variable Insurance Products Trust. The Contract
also offers a Fixed Account of Preferred Life. Additional Portfolios may be
available in the future.
You should read the Franklin Templeton Variable Insurance Products Trust
prospectus (which is attached to this prospectus) carefully before investing.
Franklin Templeton Variable Insurance Products Trust (Trust) (formerly Franklin
Valuemark Funds) is the mutual fund underlying your Contract. Each Portfolio has
its own investment objective. The Trust issues two classes of shares which are
described in the accompanying Trust prospectus. Only Class 2 shares are
available in connection with the Franklin Valuemark Charter Variable Annuity
Contract. Class 2 shares have Rule 12b-1 Plan expenses. Investment managers for
each Portfolio are listed in the table below and are as follows: Franklin
Advisers, Inc. (FA), Franklin Advisory Services, LLC (FAS), Franklin Mutual
Advisers, LLC (FMA), Templeton Asset Management Ltd. (TAM), Templeton Global
Advisors Limited (TGA), and Templeton Investment Counsel, Inc. (TIC). Certain
managers have retained one or more affiliated subadvisers to help them manage
the Portfolios.
The following is a list of the Portfolios available under the Contract:
Investment
Available Portfolios Managers
- -------------------- --------
PORTFOLIO SEEKING CAPITAL
PRESERVATION AND INCOME
Money Market Fund FA
PORTFOLIOS SEEKING INCOME
High Income Fund FA
Templeton Global Income Securities Fund FA
U.S. Government Securities Fund FA
PORTFOLIOS SEEKING GROWTH
AND INCOME
Global Utilities Securities Fund FA
Growth and Income Fund FA
Income Securities Fund FA
Mutual Shares Securities Fund FMA
Real Estate Securities Fund FA
Rising Dividends Fund FAS
Templeton Global Asset Allocation Fund TGA
Value Securities Fund FAS
PORTFOLIOS SEEKING CAPITAL GROWTH
Capital Growth Fund FA
Global Health Care Securities Fund FA
Mutual Discovery Securities Fund FMA
Natural Resources Securities Fund FA
Small Cap Fund FA
Templeton Developing Markets
Equity Fund TAM
Templeton Global Growth Fund TGA
Templeton International Equity Fund FA
Templeton International Smaller
Companies Fund TIC
Templeton Pacific Growth Fund FA
Franklin Templeton Variable Insurance Products Trust serves as the underlying
mutual fund for variable life insurance policies offered by Allianz Life and
other variable annuity contracts offered by Preferred Life and its affiliates.
Franklin Templeton Variable Insurance Products Trust does not believe that
offering its shares in this manner will be disadvantageous to you.
Transfers
You can transfer money among the 22 Variable Options and/or the Fixed Account.
Preferred Life currently allows you to make as many transfers as you want to
each year. Preferred Life may change this practice in the future. However, this
product is not designed for professional market timing organizations or other
persons using programmed, large, or frequent transfers. Such activity may be
disruptive to a Portfolio. We reserve the right to reject any specific Purchase
Payment allocation or transfer request from any person, if in the Portfolio
managers' judgment, a Portfolio would be unable to invest effectively in
accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected.
The following applies to any transfer:
1. You are permitted 12 free transfers a year. After that, Preferred Life
deducts a transfer fee.
2. The minimum amount which you can transfer is $1,000 or your entire
value in the Variable Option or Fixed Account, if less. This
requirement is waived if the transfer is in connection with the Dollar
Cost Averaging Program or Flexible Rebalancing (which are described
below).
3. We may not allow you to make transfers during the free look period.
4. Your request for a transfer must clearly state:
* which Variable Option(s) or the Fixed Account is involved in the
transfer; and
* how much the transfer is for.
5. You cannot make any transfers within 7 calendar days prior to the date
your first Annuity Payment is due.
6. During the Payout Phase, you may not make a transfer from a fixed
Annuity Option to a variable Annuity Option.
7. During the Payout Phase, you can make at least one transfer from a
variable Annuity Option to a fixed Annuity Option.
Preferred Life has reserved the right to modify the transfer provisions subject
to the guarantees described above and subject to applicable state law. In
addition, Preferred Life has the right to establish policies that may limit or
discourage excessive trading that may be disruptive to a Portfolio.
You can make transfers by telephone. We may allow you to authorize someone else
to make transfers by telephone on your behalf. If you own the Contract with a
Joint Owner, unless Preferred Life is instructed otherwise, Preferred Life will
accept instructions from either one of you. Preferred Life will use reasonable
procedures to confirm that instructions given to it by telephone are genuine. If
Preferred Life does not use such procedures, it may be liable for any losses due
to unauthorized or fraudulent instructions. Preferred Life tape records all
telephone instructions.
Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount of money each month or quarter from any one Variable Option or the Fixed
Account to up to eight of the other Variable Options. The Variable Option(s) you
transfer from may not be the Variable Option(s) you transfer to in this program.
By allocating amounts on a regularly scheduled basis, as opposed to allocating
the total amount at one particular time, you may be less susceptible to the
impact of market fluctuations. You may only participate in this program during
the Accumulation Phase.
Dollar Cost Averaging requires a $3,000 minimum investment and participation for
at least six months (or two quarters). All Dollar Cost Averaging transfers will
be made on the 10th day of the month unless that day is not a business day. If
it is not, then the transfer will be made the next business day. You may elect
this program by properly completing the Dollar Cost Averaging form provided by
Preferred Life.
Your participation in the program will end when any of the following occurs:
* the number of desired transfers have been made;
* you do not have enough money in the Variable Option(s) or the Fixed
Account to make the transfer (if less money is available, that amount
will be transferred under the program and the program will end);
* you request to terminate the program (your request must be received by
us by the first of the month to terminate that month); or
* the Contract is terminated.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee.
You may not participate in the Dollar Cost Averaging Program and Flexible
Rebalancing at the same time.
Flexible Rebalancing
Once your money has been invested, the performance of the Portfolios may cause
your chosen allocation to shift. Flexible Rebalancing is designed to help you
maintain your specified allocation mix among the different Variable Options. You
can direct us to readjust your Contract value on a quarterly, semi-annual or
annual basis to return to your original Variable Option allocations. Flexible
Rebalancing transfers will be made on the 20th day of the month unless that day
is not a business day. If it is not, then the transfer will be made on the
previous day. If you participate in Flexible Rebalancing, the transfers made
under the program are not taken into account in determining any transfer fee.
The Fixed Account is not permitted to be part of Flexible Rebalancing.
Financial Advisers - Asset Allocation Programs
Preferred Life understands the importance of advice from a financial adviser
regarding your investments in the Contract (asset allocation program). Certain
investment advisers have made arrangements with us to make their services
available to you. Preferred Life has not made any independent investigation of
these advisers and is not endorsing such programs. You may be required to enter
into an advisory agreement with your investment adviser to have the fees paid
out of your Contract during the Accumulation Phase.
Preferred Life will, pursuant to an agreement with you, make a partial
withdrawal from the value of your Contract to pay for the services of the
investment adviser. If the Contract is Non-Qualified, the withdrawal will be
treated like any other distribution and may be included in gross income for
federal tax purposes and, if you are under age 59 1/2, may be subject to a tax
penalty. If the Contract is Qualified, the withdrawal for the payment of fees
may not be treated as a taxable distribution if certain conditions are met. You
should consult a tax adviser regarding the tax treatment of the payment of
investment adviser fees from your Contract.
Voting Privileges
Preferred Life is the legal owner of the Trust's Class 2 Portfolio shares.
However, when a Portfolio solicits proxies in conjunction with a shareholder
vote which affects your investment, Preferred Life will obtain from you and
other affected Contract Owners instructions as to how to vote those shares. When
we receive those instructions, we will vote all of the shares we own in
proportion to those instructions. This will also include any shares that
Preferred Life owns on its own behalf. Should Preferred Life determine that it
is no longer required to comply with the above, we will vote the shares in our
own right.
Substitution
Preferred Life may substitute one of the Variable Options you have selected with
another Variable Option. We would not do this without the prior approval of the
Securities and Exchange Commission. We will give you notice of our intention to
do this. We may also limit further investment in a Variable Option if we deem
the investment inappropriate.
5. EXPENSES
There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:
Insurance Charges
Each day, Preferred Life makes a deduction for its insurance charges. Preferred
Life does this as part of its calculation of the value of the Accumulation Units
and the Annuity Units. The insurance charge has two parts: 1) the mortality and
expense risk charge, and 2) the administrative charge.
Mortality and Expense Risk Charge. The amount of the Mortality and Expense
Risk Charge for your Contract depends upon the death benefit option you
select when you buy the Contract. If you choose the traditional death
benefit option, this charge is equal, on an annual basis, to 1.00% of the
average daily value of the Contract invested in a Variable Option, after
the deduction of expenses. If you choose the enhanced death benefit option,
this charge is equal, on an annual basis, to 1.20% of the average daily
value of the Contract invested in a Variable Option, after the deduction of
expenses. This charge compensates us for all the insurance benefits
provided by your Contract (for example, our contractual obligation to make
Annuity Payments, the death benefits, certain expenses related to the
Contract, and for assuming the risk (expense risk) that the current charges
will be insufficient in the future to cover the cost of administering the
Contract).
Administrative Charge. This charge is equal, on an annual basis, to .15% of
the average daily value of the Contract invested in a Variable Option,
after the deduction of expenses. This charge, together with the contract
maintenance charge (which is explained below), is for all the expenses
associated with the administration of the Contract. Some of these expenses
include: preparation of the Contract, confirmations, annual statements,
maintenance of Contract records, personnel costs, legal and accounting
fees, filing fees, and computer and systems costs.
Contract Maintenance Charge
Every year, at each Contract anniversary, Preferred Life deducts $40 from your
Contract as a contract maintenance charge. This charge is for administrative
expenses (see above). This charge can not be increased.
However, during the Accumulation Phase, if the value of your Contract is at
least $100,000 when the deduction for the charge is to be made, Preferred Life
will not deduct this charge. If you own more than one Franklin Valuemark Charter
Contract, Preferred Life will determine the total value of all your Franklin
Valuemark Charter Contracts. If the total value of all Franklin Valuemark
Charter Contracts registered under the same social security number is at least
$100,000, Preferred Life will not assess the contract maintenance charge. If the
Contract is owned by a non-natural person (e.g., a corporation), Preferred Life
will look to the Annuitant to determine if it will assess the charge.
If you make a complete withdrawal from your Contract, the contract maintenance
charge will also be deducted. During the Payout Phase, the charge will be
collected monthly out of each Annuity Payment.
Transfer Fee
You can make 12 free transfers every year. We measure a year from the day we
issue your Contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 or 2% of the amount that is transferred, whichever is less,
for each additional transfer. Preferred Life will deduct the transfer fee from
the Variable Option or the Fixed Account from which the transfer is made. If you
transfer the entire amount in the Variable Option or Fixed Account, then we will
deduct the transfer fee from the amount transferred. If you make a transfer from
more than one account, the fee will be deducted pro rata from each account if
less than the entire amount in the account is transferred.
If the transfer is part of the Dollar Cost Averaging Program or Flexible
Rebalancing, it will not count in determining the transfer fee.
Income Taxes
Preferred Life reserves the right to deduct from the Contract for any income
taxes which it may incur because of the Contract. Currently, Preferred Life is
not making any such deductions.
Portfolio Expenses
There are deductions from the assets of the various Portfolios for operating
expenses (including management fees), which are described in the Fee Table in
this prospectus and the accompanying prospectus for Franklin Templeton Variable
Insurance Products Trust.
6. TAXES
Note: Preferred Life has prepared the following information on taxes as a
general discussion of the subject. It is not intended as tax advice. You should
consult your own tax adviser about your own circumstances. Preferred Life has
included additional information regarding taxes in the Statement of Additional
Information.
Annuity Contracts in General
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Basically, these rules provide that you will not be taxed on any earnings on the
money held in your annuity Contract until you take the money out. This is
referred to as Tax Deferral. There are different rules regarding how you will be
taxed depending upon how you take the money out and the type of Contract -
Qualified or Non-Qualified (see following sections).
You, as the Owner, will not be taxed on increases in the value of your Contract
until a distribution occurs either as a withdrawal or as Annuity Payments. When
you make a withdrawal, you are taxed on the amount of the withdrawal that is
earnings. For Annuity Payments, different rules apply. A portion of each Annuity
Payment you receive will be treated as a partial return of your Purchase
Payments and will not be taxed. The remaining portion of the Annuity Payment
will be treated as ordinary income. How the Annuity Payment is divided between
taxable and non-taxable portions depends upon the period over which the Annuity
Payments are expected to be made. Annuity Payments received after you have
received all of your Purchase Payments are fully includible in income.
When a Non-Qualified Contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than a trust holding the Contract as
an agent for a natural person), the Contract will generally not be treated as an
annuity for tax purposes. This means that the Contract may not receive the
benefits of Tax Deferral. Income may be taxed as ordinary income every year.
Qualified and Non-Qualified Contracts
If you purchase the Contract under a Qualified plan, your Contract is referred
to as a Qualified Contract. Examples of Qualified plans are: Individual
Retirement Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as
403(b) contracts) and pension and profit-sharing plans, which include 401(k)
plans and H.R. 10 plans. If you do not purchase the Contract under a Qualified
plan, your Contract is referred to as a Non-Qualified Contract.
Multiple Contracts
The Code provides that multiple Non-Qualified annuity contracts which are issued
within a calendar year period to the same 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. For purposes of this rule, Contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange. You
should consult a tax adviser prior to purchasing more than one Non-Qualified
annuity contract in any calendar year period.
Withdrawals - Non-Qualified Contracts
If you make a withdrawal from your Contract, the Code treats such a withdrawal
as first coming from earnings and then from your Purchase Payments. In most
cases, such withdrawn earnings are includible in income. The Code also provides
that any amount received under an annuity contract which is included in income
may be subject to a tax penalty. The amount of the penalty is equal to 10% of
the amount that is includible in income. Some withdrawals will be exempt from
the penalty. They include any amounts:
* paid on or after the taxpayer reaches age 59 1/2;
* paid after you die;
* paid if the taxpayer becomes totally disabled (as that term is defined
in the Code);
* paid in a series of substantially equal payments made annually (or
more frequently) for life or a period not exceeding life expectancy;
* paid under an immediate annuity; or
* which come from purchase payments made prior to August 14, 1982.
Withdrawals - Qualified Contracts
The above information describing the taxation of Non-Qualified Contracts does
not apply to Qualified Contracts. There are special rules that govern Qualified
Contracts. A more complete discussion of withdrawals from Qualified Contracts is
contained in the Statement of Additional Information.
Withdrawals - Tax-Sheltered Annuities
The Code limits the withdrawal of amounts attributable to Purchase Payments made
pursuant to a salary reduction agreement made by Owners from Tax-Sheltered
Annuities. Withdrawals can only be made when an Owner:
* reaches age 59 1/2;
* leaves his/her job;
* dies;
* becomes disabled (as that term is defined in the Code); or
* in the case of hardship.
However, in the case of hardship, the Owner can only withdraw the Purchase
Payments and not any earnings.
Diversification
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Preferred Life believes that the Portfolios are being managed
so as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Preferred Life,
would be considered the owner of the shares of the Portfolios. If you are
considered the owner of the shares, it will result in the loss of the favorable
tax treatment for the Contract. It is unknown to what extent under federal tax
law Owners are permitted to select Portfolios, to make transfers among the
Portfolios or the number and type of Portfolios Owners may select from without
being considered the owner of the shares. If any guidance is provided which is
considered a new position, then the guidance would generally be applied
prospectively. However, if such guidance is considered not to be a new position,
it may be applied retroactively. This would mean that you, as the owner of the
Contract, could be treated as the owner of the Portfolios.
Due to the uncertainty in this area, Preferred Life reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
You can have access to the money in your Contract:
* by making a withdrawal (either a partial or a total withdrawal);
* by receiving Annuity Payments; or
* when a death benefit is paid to your Beneficiary.
Withdrawals can only be made during the Accumulation Phase.
When you make a complete withdrawal you will receive the value of the Contract
on the day you made the withdrawal
* less any premium tax, and
* less any contract maintenance charge.
Any partial withdrawal must be for at least $500 and, unless you instruct
Preferred Life otherwise, will be made pro-rata from all the Variable Options
and the Fixed Account you selected. Preferred Life requires that after you make
a partial withdrawal the value of your Contract must be at least $5,000.
We will pay the amount of any withdrawal from the Variable Options within seven
(7) days of when we receive your request in good order unless the Suspension of
Payments or Transfers provision is in effect (see below).
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
There are limits to the amount you can withdraw from a Qualified plan referred
to as a 403(b) plan. For a more complete explanation see Section 6 - "Taxes" and
the discussion in the SAI.
Systematic Withdrawal Program
Preferred Life offers a program which provides automatic monthly or quarterly
payments to you each year. All systematic withdrawals will be made on the 9th
day of the month unless that day is not a business day. If it is not, then the
surrender will be made the previous business day.
Income taxes, tax penalties and certain restrictions may apply to systematic
withdrawals.
Minimum Distribution Program
If you own a Contract that is an Individual Retirement Annuity (IRA), you may
select the Minimum Distribution Program. Under this program, Preferred Life will
make payments to you from your Contract that are designed to meet the applicable
minimum distribution requirements imposed by the Code for IRAs. If the value of
your Contract is at least $25,000, Preferred Life will make payments to you on a
monthly or quarterly basis.
You cannot participate in the Systematic Withdrawal Program and the Minimum
Distribution Program in the same Contract year.
Suspension of Payments or Transfers
Preferred Life may be required to suspend or postpone payments for withdrawals
or transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of the Portfolio
shares is not reasonably practicable or Preferred Life cannot
reasonably value the Portfolio shares;
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Owners.
Preferred Life has reserved the right to defer payment for a withdrawal or
transfer from the Fixed Account for the period permitted by law but not for more
than six months.
8. PERFORMANCE
Preferred Life periodically advertises performance of the Variable Options.
Preferred Life will calculate performance by determining the percentage change
in the value of an Accumulation Unit by dividing the increase (decrease) for
that unit by the value of the Accumulation Unit at the beginning of the period.
This performance number reflects the deduction of the insurance charges and the
Portfolio expenses. It may not reflect the deduction of any applicable contract
maintenance charge. The deduction of any applicable contract maintenance charge
would reduce the percentage increase or make greater any percentage decrease.
Any advertisement will also include average annual total return figures which
reflect the deduction of the insurance charges, contract maintenance charge and
the expenses of the Portfolios. Preferred Life may also advertise cumulative
total return information. Cumulative total return is determined the same way
except that the results are not annualized. Performance information for the
underlying Portfolios may also be advertised; see the Franklin Templeton
Variable Insurance Products Trust prospectus for more information.
Certain Portfolios have been in existence for some time and have investment
performance history. However, the Contracts are new. In order to demonstrate how
the historical investment experience of the Portfolios may affect your
Accumulation Unit values, Preferred Life has prepared performance information
which can be found in the SAI. There is performance shown which is based on the
historical performance of the Portfolios' Class 1 shares, modified to reflect
the current charges and expenses of your Contract as if the Contract had been in
existence for the time periods shown. Class 2 shares are relatively new (since
January 6, 1999) and currently have Rule 12b-1 plan expenses of .25% per year
which will affect future performance. Prior to July 1, 1999, Class 2 shares had
Rule 12b-1 plan expenses of .30% per year. The information is based upon the
historical experience of the Portfolios' Class 1 shares and does not represent
past performance or predict future performance.
Preferred Life may in the future also advertise yield information. If it does,
it will provide you with information regarding how yield is calculated. More
detailed information regarding how performance is calculated is found in the
SAI.
Any performance advertised will be based on historical data and does not
guarantee future results of the Portfolios.
9. DEATH BENEFIT
Upon Your Death
If you die during the Accumulation Phase, Preferred Life will pay a death
benefit to your Beneficiary (see below). No death benefit is paid if you die
during the Payout Phase.
The amount of the death benefit depends upon which death benefit option you
select. You must choose a death benefit option (traditional death benefit or
enhanced death benefit) when you purchase the Contract. Once selected, you
cannot change the death benefit option. The Mortality and Expense Risk Charge
for Contracts with the enhanced death benefit option is higher than for
Contracts with the traditional death benefit option.
If you select the traditional death benefit option, the amount of the death
benefit will be the greater of:
(1) the value of your Contract; or
(2) the guaranteed death benefit which is equal to any payments you have
made, less any withdrawals.
If you select the enhanced death benefit option, the amount of the death benefit
will be the greater of:
(1) the value of your Contract, determined at the end of the business day
when Preferred Life receives proof of death and an election of the
payment method; or
(2) the "guaranteed minimum death benefit."
The "guaranteed minimum death benefit" is the greater of:
(a) the sum of all payments you have made, less any withdrawals; or
(b) the greatest value of your Contract Anniversaries prior to your 86th
birthday (your Contract Anniversaries equal the value of your Contract
on a Contract anniversary, increased by the amount of any payments you
have made since that anniversary, less the amount of any withdrawals
you have made since that anniversary).
Preferred Life determines the amount of the death benefit as of the end of the
business day during which it receives both proof of death and an election for
the payment method. When the guaranteed minimum death benefit is the amount
payable, the Contract value will automatically be increased to the guaranteed
minimum death benefit regardless of which payment option is elected. When the
Beneficiary elects an option other than a lump sum payment, the death benefit
amount will remain in the Variable Option and/or the Fixed Account until
distribution begins. From the time Preferred Life determines the death benefit
until the time it makes a complete distribution, any amounts in the Variable
Options will be subject to investment risk which will be borne by the
Beneficiary.
If you have a Joint Owner, the age of the oldest Contract Owner will be used to
determine the guaranteed minimum death benefit. The guaranteed minimum death
benefit will be reduced by any amounts withdrawn after the date of death. If the
Contract is owned by a non-natural person, then all references to you mean the
Annuitant.
The death benefits described above may not be available until approved by the
New York Insurance Department. In addition, only one of the options may be
approved. If neither death benefit is available, the death benefit will be equal
to the value of your Contract on the close of the business day that Preferred
Life receives proof of the death and payment instructions.
In the case of Joint Owners, if a Joint Owner dies, the surviving Joint Owner
will be considered the Beneficiary.
A Beneficiary may request that the death benefit be paid in one of the following
ways: (1) payment of the entire death benefit within 5 years of the date of
death; or (2) payment of the death benefit under an Annuity Option. The death
benefit payable under an Annuity Option must be paid over the Beneficiary's
lifetime or for a period not extending beyond the Beneficiary's life expectancy.
Payment must begin within one year of the date of death. If the Beneficiary is
the spouse of the Owner, he/she can choose to continue the Contract in his/her
own name at the then current value, or if greater, the death benefit value. If a
lump sum payment is elected and all the necessary requirements, including any
required tax consent from some states, are met, the payment will be made within
7 days. Payment of the death benefit may be delayed pending receipt of any
applicable tax consents and/or forms from the state of New York.
If you (or any Joint Owner) die during the Payout Phase and you are not the
Annuitant, any payments which are remaining under the Annuity Option selected
will continue at least as rapidly as they were being paid at your death. If you
die during the Payout Phase, the Beneficiary becomes the Owner.
Death of Annuitant
If the Annuitant, who is not an Owner or Joint Owner, dies during the
Accumulation Phase, you can name a new Annuitant. If a new Annuitant is not
named within 30 days of the death of the Annuitant, you will become the
Annuitant. However, if the Owner is a non-natural person (e.g., a corporation),
then the death of the Annuitant will be treated as the death of the Owner, and a
new Annuitant may not be named.
If the Annuitant dies after Annuity Payments have begun, the remaining amounts
payable, if any, will be as provided for in the Annuity Option selected. The
remaining amounts payable will be paid to the Owner at least as rapidly as they
were being paid at the Annuitant's death.
10. OTHER INFORMATION
Preferred Life
Preferred Life Insurance Company of New York (Preferred Life) is a stock life
insurance company organized under the laws of the state of New York. Preferred
Life is a wholly-owned subsidiary of Allianz Life Insurance Company of North
America (Allianz Life). Allianz Life is headquartered in Minneapolis, Minnesota.
Preferred Life is authorized to do direct business in six states, including New
York. Preferred Life offers group life, group accident and health insurance and
variable annuity products.
Year 2000 Matters
Preferred Life has initiated programs to ensure that all of the computer systems
utilized to provide services and administer policies will function properly in
the year 2000. An assessment of the total expected costs specifically related to
the year 2000 conversion has been completed; the total amounts to be expensed
are not expected to have a significant effect on Preferred Life's financial
position or results of operations. Preferred Life believes it has taken steps
that are reasonably designed to address the potential failure of computer
systems used by its service providers and to ensure its year 2000 program is
completed on a timely basis. There can be no assurance, however, that the steps
taken by Preferred Life will be adequate.
The Separate Account
Preferred Life established a separate account, Preferred Life Variable Account C
(Separate Account), to hold the assets that underlie the Contracts, except
assets allocated to the Fixed Account. The Board of Directors of Preferred Life
adopted a resolution to establish the Separate Account under New York insurance
law on February 26, 1988. Preferred Life has registered the Separate Account
with the Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940. The Separate Account is divided into Variable
Options (also known as sub-accounts). Each Variable Option invests in one Class
of shares of a Portfolio.
The assets of the Separate Account are held in Preferred Life's name on behalf
of the Separate Account and legally belong to Preferred Life. However, those
assets that underlie the variable Contracts are not chargeable with liabilities
arising out of any other business Preferred Life may conduct. All the income,
gains and losses (realized or unrealized) resulting from these assets are
credited to or charged against the Contracts and not against any other contracts
Preferred Life may issue.
Distribution
NALAC Financial Plans, LLC (NFP), 1750 Hennepin Avenue, Minneapolis, MN 55403,
acts as the distributor of the Contracts. NFP is affiliated with Preferred Life.
NFP has subcontracted with Franklin Advisers, Inc. for it and/or certain of its
affiliates to provide certain marketing support services and NFP compensates
these entities for their services.
Commissions will be paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commissions up to 2% of Purchase Payments and
quarterly trail commissions at an annual rate of 1% beginning 13 months after
the Contract is issued. In addition, Preferred Life and Franklin Advisers, Inc.
and/or their affiliates may pay certain sellers for other services not directly
related to the sale of the Contracts (such as special marketing support
allowances). Commissions may be recovered from a broker-dealer if a surrender
occurs within 12 months of a Purchase Payment.
Administration
Preferred Life has hired Delaware Valley Financial Services, Inc. (DVFS), 300
Berwyn Park, Berwyn, Pennsylvania, to perform certain administrative services
regarding the Contracts. The administrative services include issuance of the
Contracts and maintenance of Owner's records.
Financial statements
The financial statements of Preferred Life and the Separate Account have been
included in the Statement of Additional Information.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Insurance Company
Experts
Legal Opinions
Distributor
Calculation of Performance Data
Federal Tax Status
Annuity Provisions
Mortality and Expense Risk Guarantee
Financial Statements
STATEMENT OF ADDITIONAL INFORMATION
FRANKLIN VALUEMARK CHARTER
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACTS
issued by
PREFERRED LIFE VARIABLE ACCOUNT C
and
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
______________, 1999
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, CALL OR WRITE THE
INSURANCE COMPANY AT: 152 West 57th Street, 18th Floor, New York, NY 10019,
(800) 342-3863.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED
___________, 1999, AND AS MAY BE AMENDED FROM TIME TO TIME.
Table of Contents
Contents Page
Insurance Company ...............................
Experts .................................................
Legal Opinions .....................................
Distributor ...........................................
Calculation of Performance Data .........
Federal Tax Status ..............................
Annuity Provisions ..............................
Mortality and Expense Risk Guarantee..
Financial Statements ............................
Insurance Company
- --------------------------------------------------------------------------------
Information regarding Preferred Life Insurance Company of New York ("Insurance
Company") is contained in the Prospectus.
The Insurance Company is rated A+ (Superior, Group Rating) by A.M. BEST, an
independent analyst of the insurance industry. The financial strength of an
insurance company may be relevant insofar as the ability of a company to make
fixed annuity payments from its general account.
Experts
- --------------------------------------------------------------------------------
The financial statements of Preferred Life Variable Account C and the financial
statements of the Insurance Company as of and for the year ended December 31,
1998, 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
- --------------------------------------------------------------------------------
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided advice on
certain matters relating to the federal securities and income tax laws in
connection with the Contracts.
Distributor
- --------------------------------------------------------------------------------
NALAC Financial Plans, LLC, an affiliate of the Insurance Company, acts as the
distributor. The offering is on a continuous basis.
Calculation of Performance Data
- --------------------------------------------------------------------------------
Total Return
From time to time, the Insurance Company may advertise the performance data for
the Contract's accumulation unit values in sales literature, advertisements,
personalized hypothetical illustrations, and Contract Owner communications. Such
data will show the percentage change in the value of an accumulation unit based
on the performance of a Portfolio over a stated period of time which is
determined by dividing the increase (or decrease) in value for that unit by the
accumulation unit value at the beginning of the period.
Any such performance data will include total return figures for the one, five,
and ten year (or since inception) time periods indicated. Such total return
figures will reflect the deduction of the Mortality and Expense Risk Charge, the
Administrative Charge, the operating expenses of the underlying Portfolios'
Class 2 shares and any applicable Contract Maintenance Charge ("Standardized
Total Return"). For periods before January 6, 1999, when the Class 2 shares
commenced operations, performance will be based on historical results of Class 1
shares. Performance after January 6, 1999 will reflect Class 2's higher annual
fees and expenses resulting from its 12b-1 fees which are currently equal to
.25% per year. Prior to July 1, 1999, the Class 2 Rule 12b-1 fees were .30% per
year. Two sets of standardized total returns will be presented (one calculated
with a 1.00% Mortality and Expense Risk Charge and the other with a 1.20%
Mortality and Expense Risk Charge). The Contract Maintenance Charge deductions
are calculated assuming a Contract is surrendered at the end of the reporting
period.
The hypothetical value of a Contract purchased for the time periods described
will be determined by using the actual accumulation unit values for an initial
$1,000 purchase payment, and deducting any applicable Contract Maintenance
Charges to arrive at the ending hypothetical value. The average annual total
return is then determined by computing the fixed interest rate that a $1,000
purchase payment would have to earn annually, compounded annually, to grow to
the hypothetical value at the end of the time periods described. The formula
used in these calculations is:
n
P(1 + T) = ERV
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 payment made
at the beginning of the time periods used at the end of such time
periods (or fractional portion thereof).
The Insurance Company may also advertise performance data which will be
calculated in the same manner as described above but which will not reflect the
deduction of the Contract Maintenance Charge. The Insurance Company may also
advertise cumulative and average total return information over different periods
of time. The Company may also present performance information computed on a
different basis ("Non-Standardized Total Return").
Cumulative total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that no sales load is
deducted from the initial $1,000 payment at the time it is allocated to the
Portfolios and assumes that the income earned by the investment in the Portfolio
is reinvested.
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 an Owner's total return
may be in any future period.
Yield
The Money Market Sub-Account. The Insurance 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 Portfolio's investment securities and changes in
interest rates, operating expenses, the deduction of the Mortality and Expense
Risk Charge, the Administrative Charge, the Contract Maintenance Charge and the
expenses of the underlying Portfolios' Class 2 shares and, in certain instances,
the value of the underlying Portfolio's investment securities. The fact that the
Portfolio's current yield will fluctuate and that the principal is not
guaranteed should be taken into consideration when using the Portfolio'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 will be computed on a base period
return of a hypothetical Contract having a beginning balance of one accumulation
unit for a particular period of time (generally seven days). The return will be
determined by dividing the net change (exclusive of any capital changes) in such
accumulation unit by its beginning value, and then multiplying it by 365/7 to
get the annualized current yield. The calculation of net change will reflect the
value of additional shares purchased with the dividends paid by the Portfolio,
and the deduction of the Mortality and Expense Risk Charge, the Administrative
Charge and Contract Maintenance Charge. The effective yield will reflect the
effects of compounding and represents an annualization of the current return
with all dividends reinvested. (Effective Yield = [(Base Period Return +
1)365/7] - 1.)
For the seven-day period ending on _______, the Money Market Sub-Account had a
current yield of ____% and an effective yield of _____% for contracts with the
traditional death benefit and a current yield of ____% and an effective yield of
_____ for contracts with the enhanced death benefit. The yield information
assumes that the Sub-Account was invested in the Money Market Fund for the time
period shown.
Other Sub-Accounts. The Insurance Company may also quote yield in sales
literature, advertisements, personalized hypothetical illustrations, and 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
accumulation unit earned during the period (minus the deduction for the
Mortality and Expense Risk Charge, Administrative Charge and Contract
Maintenance Charge) by the accumulation unit value on the last day of the period
and annualizing the resulting figure, according to the following formula:
6
Yield = 2 [((a-b) + 1) - 1]
-----
cd
where:
a = net investment income earned during the period by the Portfolio
attributable to shares owned by the Sub-Account;
b = expenses accrued for the period (net of reimbursements, if
applicable);
c = the average daily number of accumulation units outstanding
during the period;
d = the maximum offering price per accumulation unit on the last
day of the period.
The above formula will be used in calculating quotations of yield, based on
specified 30-day periods (or one month) identified in the sales literature,
advertisement, or communication. Yield calculations assume no sales load. The
Insurance Company does not currently advertise yield information for any
Portfolio (other than the Money Market Fund).
Performance Ranking
Total return may be compared to relevant indices, including U.S. domestic and
international indices and data from Lipper Analytical Services, Inc., Standard &
Poor's Indices, or VARDS(R). From time to time, evaluation of performance by
independent sources may also be used.
Performance Information
The Portfolios of Franklin Templeton Variable Insurance Products Trust have been
in existence for some time and have investment performance history. In order to
show how investment performance of the Portfolios affects accumulation unit
values, the following performance information was developed.
The charts below show accumulation unit performance which assume that the
accumulation units were invested in each of the Portfolios for the same periods.
Because the Portfolios' Class 2 shares (in which the Contract invests) are
relatively new (since January 6, 1999), the performance below is based on the
historical performance of the Portfolios' Class 1 shares. Class 2 shares have
Rule 12b-1 plan expenses currently equal to .25% per year, which will affect
future performance. Prior to July 1, 1999, the Class 2 shares had Rule 12b-1
plan expenses of .30% per year. The performance figures in Chart I represent
performance figures for the accumulation units which reflect the deduction of
the Mortality and Expense Risk Charge of 1.00% (for Contracts with the
traditional death benefit option), the Administrative Charge, and the operating
expenses of the Portfolios. Chart II presents performance figures for the
accumulation units which are identical to Chart I except the Mortality and
Expense Risk Charge is calculated as 1.20% (for Contracts with the enhanced
death benefit option). Chart III represents performance figures for the
accumulation units which reflects the Mortality and Expense Risk Charge (of
1.00%), the Administrative Charge, the Contract Maintenance Charge and the
operating expenses of the Portfolios. Chart IV presents performance figures for
the accumulation units which are identical to Chart III except the Mortality and
Expense Risk Charge is calculated as 1.20%. Past performance does not guarantee
future results.
Total Return for the periods ended ______________:
<TABLE>
<CAPTION>
Chart I - Contracts with traditional death benefit
(reflects mortality and expense risk charge, administrative charge and portfolio expenses.)
Portfolio
Inception Since
Variable Option Date One Year Three Years Five Years Inception
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Growth
Global Health Care Securities
Global Utilities Securities
Growth and Income
High Income
Income Securities
Money Market+
Mutual Discovery Securities
Mutual Shares Securities
Natural Resources Securities
Real Estate Securities
Rising Dividends
Small Cap
Templeton Developing Markets Equity
Templeton Global Asset Allocation
Templeton Global Growth
Templeton Global Income Securities
Templeton International Equity
Templeton International Smaller Companies
Templeton Pacific Growth
U.S. Government Securities
Value Securities
<FN>
+ Calculated with waiver of fees.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Chart II - Contracts with enhanced death benefit
(reflects mortality and expense risk charge, administrative charge and portfolio expenses.)
Portfolio
Inception Since
Variable Option Date One Year Three Years Five Years Inception
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Growth
Global Health Care Securities
Global Utilities Securities
Growth and Income
High Income
Income Securities
Money Market+
Mutual Discovery Securities
Mutual Shares Securities
Natural Resources Securities
Real Estate Securities
Rising Dividends
Small Cap
Templeton Developing Markets Equity
Templeton Global Asset Allocation
Templeton Global Growth
Templeton Global Income Securities
Templeton International Equity
Templeton International Smaller Companies
Templeton Pacific Growth
U.S. Government Securities
Value Securities
<FN>
+ Calculated with waiver of fees.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Chart III - Contracts with traditional death benefit
(reflects mortality and expense risk charge, administrative charge, contract
maintenance charge and portfolio expenses.)
Portfolio
Inception Since
Variable Option Date One Year Three Years Five Years Inception
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Growth
Global Health Care Securities
Global Utilities Securities
Growth and Income
High Income
Income Securities
Money Market+
Mutual Discovery Securities
Mutual Shares Securities
Natural Resources Securities
Real Estate Securities
Rising Dividends
Small Cap
Templeton Developing Markets Equity
Templeton Global Asset Allocation
Templeton Global Growth
Templeton Global Income Securities
Templeton International Equity
Templeton International Smaller Companies
Templeton Pacific Growth
U.S. Government Securities
Value Securities
<FN>
+ Calculated with waiver of fees.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Chart IV - Contracts with enhanced death benefit
(reflects mortality and expense risk charge, administrative charge, contract
maintenance charge and portfolio expenses.)
Portfolio
Inception Since
Variable Option Date One Year Three Years Five Years Inception
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Growth
Global Health Care Securities
Global Utilities Securities
Growth and Income
High Income
Income Securities
Money Market+
Mutual Discovery Securities
Mutual Shares Securities
Natural Resources Securities
Real Estate Securities
Rising Dividends
Small Cap
Templeton Developing Markets Equity
Templeton Global Asset Allocation
Templeton Global Growth
Templeton Global Income Securities
Templeton International Equity
Templeton International Smaller Companies
Templeton Pacific Growth
U.S. Government Securities
Value Securities
<FN>
+ Calculated with waiver of fees.
</FN>
</TABLE>
Federal Tax Status
- --------------------------------------------------------------------------------
Note: The following description is based upon the Insurance Company's
understanding of current federal income tax law applicable to annuities in
general. The Insurance Company cannot predict the probability that any changes
in such laws will be made. Purchasers are cautioned to seek competent tax advice
regarding the possibility of such changes. The Insurance Company does not
guarantee the tax status of the Contracts. Purchasers bear the complete risk
that the Contracts may not be treated as "annuity contracts" under federal
income tax laws. It should be further understood that the following discussion
is not exhaustive and that special rules not described herein may be applicable
in certain situations. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
General
Section 72 of the Internal Revenue Code of 1986, as amended ("Code") governs
taxation of annuities in general. A Contract Owner is not taxed on increases in
the value of a Contract until distribution occurs, either in the form of a lump
sum payment or as annuity payments under the Annuity Option elected. For a lump
sum payment received as a total surrender (total redemption) or death benefit,
the recipient is taxed on the portion of the payment that exceeds the cost basis
of the Contract. For Non-Qualified Contracts, this cost basis is generally the
purchase payments, while for Qualified Contracts there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. The exclusion amount
for payments based on a variable annuity option is determined by dividing the
cost basis of the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e. when the
total of the excludible amounts equal the investment in the Contract) are fully
taxable. The taxable portion is taxed at ordinary income rates. For certain
types of Qualified Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Contract Owners, annuitants and beneficiaries
under the Contracts should seek competent financial advice about the tax
consequences of any distributions. The Insurance Company is taxed as a life
insurance company under the Code. For federal income tax purposes, the Separate
Account is not a separate entity from the Insurance Company, and its operations
form a part of the Insurance Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Owner with respect to earnings allocable to the Contract prior to the receipt of
payments under the Contract. The Code contains a safe harbor provision which
provides that annuity contracts such as the Contracts meet the diversification
requirements if, as of the end of each quarter, the underlying assets meet the
diversification standards for a regulated investment company and no more than
fifty-five percent (55%) of the total assets consist of cash, cash items, U.S.
government securities and securities of other regulated investment companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Insurance Company intends that all Portfolios of Franklin Templeton Variable
Insurance Products Trust underlying the Contracts will be managed by the
investment managers for Franklin Templeton Variable Insurance Products 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 Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of 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 Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the 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 Owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, the Insurance Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year period to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences, including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year period.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on purchase payments
for the Contracts will be taxed currently to the Owner if the Owner is a
non-natural person, e.g., a corporation or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust or
other entity as an agent for a natural person nor to Contracts held by qualified
plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a Contract to be owned by a non-natural person.
Tax Treatment of Assignments
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of the 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 Owner, in most cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary, or for a specified period of 10
years or more; or b) distributions which are required minimum distributions; or
c) the portion of the distributions not includible in gross income (i.e. returns
of after-tax contributions); or d) hardship withdrawals. Participants should
consult their own tax counsel or other tax adviser regarding withholding
requirements.
Tax Treatment of Withdrawals - Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any distribution. However, the penalty is not imposed on amounts received: (a)
after the taxpayer reaches age 59 1/2; (b) after the death of the Owner; (c) if
the taxpayer is totally disabled (for this purpose disability is as defined in
Section 72(m)(7) of the Code); (d) in a series of substantially equal periodic
payments made not less frequently than annually for the life (or life
expectancy) of the taxpayer or for the joint lives (or joint life expectancies)
of the taxpayer and his beneficiary; (e) under an immediate annuity; or (f)
which are allocable to purchase payments made prior to August 14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic 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.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts.")
Qualified Plans
The Contracts offered by the Prospectus are designed to be suitable for use
under various types of Qualified Plans. Because of the minimum purchase payment
requirements, these Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified Plan varies with
the type of plan and terms and conditions of each specific plan. Owners,
annuitants and beneficiaries are cautioned that benefits under a Qualified Plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the Contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into the Insurance Company's administrative procedures. Owners,
participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are general descriptions of the
types of Qualified Plans with which the Contracts may be used. Such descriptions
are not exhaustive and are for general informational purposes only. The tax
rules regarding Qualified Plans are very complex and will have differing
applications, depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
Qualified Plan.
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Insurance Company in
connection with Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
the prospectus and this Statement of Additional Information. Generally,
Contracts issued pursuant to Qualified Plans are not transferable except upon
surrender or annuitization. Various penalty and excise taxes may apply to
contributions or distributions made in violation of applicable limitations.
Furthermore, certain withdrawal penalties and restrictions may apply to
withdrawals from Qualified Contracts. (See "Tax Treatment of Withdrawals -
Qualified Contracts.")
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employee until the
employee receives distributions from the Contract. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals - Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations.") Employee loans are not allowed under these Contracts.
Any employee should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
b. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which may be deductible from the individual's taxable income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts.") Under
certain conditions, distributions from other IRAs and other Qualified Plans may
be rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be qualified
as Individual Retirement Annuities should obtain competent tax advice as to the
tax treatment and suitability of such an investment.
Roth IRAs
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues to apply to all
of a taxpayer's IRA contributions, including Roth IRAs and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. However, for rollovers in 1998, the
individual may pay that tax ratably over the four taxable year periods beginning
with tax year 1998.
Purchasers of Contracts to be qualified as a Roth IRA should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
c. Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employee until distributed from the
Plan. The tax consequences to participants may vary, depending upon the
particular Plan design. However, the Code places limitations and restrictions on
all Plans, including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions and withdrawals.
Participant loans are not allowed under the Contracts purchased in connection
with these Plans. (See "Tax Treatment of Withdrawals - Qualified Contracts.")
Purchasers of Contracts for use with Pension or Profit-Sharing Plans should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
Tax Treatment of Withdrawals - Qualified Contracts
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b) (Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been properly rolled over to an IRA or to another eligible Qualified
Plan, no tax penalty will be imposed. The tax penalty will not apply to the
following distributions: (a) if distribution is made on or after the date on
which the Contract Owner or Annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the Contract Owner or
Annuitant (as applicable) (for this purpose disability is as defined in Section
72(m)(7) of the Code); (c) after separation from service, distributions that are
part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Contract Owner or Annuitant
(as applicable) or the joint lives (or joint life expectancies) of such Contract
Owner or Annuitant (as applicable) and his or her designated beneficiary; (d)
distributions to a Contract Owner or Annuitant (as applicable) who has separated
from service after he or she has attained age 55; (e) distributions made to the
Contract Owner or Annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
Contract Owner or Annuitant (as applicable) for amounts paid during the taxable
year for medical care; (f) distributions made to an alternate payee pursuant to
a qualified domestic relations order; (g) distributions from an Individual
Retirement Annuity for the purchase of medical insurance (as described in
Section 213(d)(1)(D) of the Code) for the Contract Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Contract Owner or
Annuitant (as applicable) has received unemployment compensation for at least 12
weeks (this exception no longer applies after the Contract Owner or Annuitant
(as applicable) has been re-employed for at least 60 days); (h) distributions
from an Individual Retirement Annuity made to the Owner or Annuitant (as
applicable) to the extent such distributions do not exceed the qualified higher
education expenses (as defined in Section 72(t)(7) of the Code) of the Owner or
Annuitant (as applicable) for the taxable year; and (i) distributions from an
Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
which are qualified first-time home buyer distributions (as defined in Section
72(t)(8) of the Code). The exceptions stated in items (d) and (f) above do not
apply in the case of an Individual Retirement Annuity. The exception stated in
item (c) applies to an Individual Retirement Annuity without the requirement
that there be a separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic 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.
Generally, distributions from a Qualified Plan must commence no later than April
1 of the calendar year following the later of: (a) the year in which the
employee attains age 70 1/2, or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
Tax-Sheltered Annuities - Withdrawal Limitations
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Contract Owner: (1) attains age 59 1/2;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract Value which represents contributions by the Contract Owner and does not
include any investment results. The limitations on withdrawals became effective
on January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, and to income attributable to such contributions and to
income attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers and transfers between certain Qualified
Plans. Contract Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
Annuity Provisions
- --------------------------------------------------------------------------------
Fixed Annuity Payout
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Insurance Company and do not vary with the investment experience
of a Portfolio. The Fixed Account value on the day immediately preceding the
Income Date will be used to determine the Fixed Annuity monthly payment. The
monthly Annuity Payment will be based upon the Contract Value at the time of
annuitization, the Annuity Option selected, the age of the Annuitant and any
joint Annuitant and the sex of the Annuitant and joint Annuitant where allowed.
Variable Annuity Payout
A variable annuity is an annuity with payments which: (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable Portfolio(s).
Annuity Unit Value
On the Income Date, a fixed number of Annuity Units will be purchased as
follows:
The first Annuity Payment is equal to the Adjusted Contract Value, divided first
by $1,000 and then multiplied by the appropriate Annuity Payment amount for each
$1,000 of value for the Annuity Option selected. In each Portfolio the fixed
number of Annuity Units is determined by dividing the amount of the initial
Annuity Payment determined for each Portfolio by the Annuity Unit value on the
Income Date. Thereafter, the number of Annuity Units in each Portfolio remains
unchanged unless the Contract Owner elects to transfer between Portfolios. All
calculations will appropriately reflect the Annuity Payment frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum of
the Annuity Payments for each Portfolio. The Annuity Payment in each Portfolio
is determined by multiplying the number of Annuity Units then allocated to such
Portfolio by the Annuity Unit value for that Portfolio.
On each subsequent Valuation Date, the value of an Annuity Unit is determined in
the following way:
First: The Net Investment Factor is determined as described in the Prospectus
under "Purchase - Accumulation Units."
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a. the value of the Annuity Unit for the immediately preceding Valuation
Period.
b. multiplied by the Net Investment Factor for the current Valuation Period;
c. divided by the Assumed Net Investment Factor (see below) for the Valuation
Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. You may choose a 3%, 5% or
7% Assumed Investment Return. The Insurance Company may agree to use a different
value.
Mortality and Expense Risk Guarantee
- --------------------------------------------------------------------------------
The Insurance Company guarantees that the dollar amount of each annuity payment
after the first annuity payment will not be affected by variations in mortality
and expense experience.
Financial Statements
- --------------------------------------------------------------------------------
The audited financial statements of the Insurance Company as of and for the year
ended December 31, 1998, included herein should be considered only as bearing
upon the ability of the Insurance Company to meet its obligations under the
Contracts. The audited financial statements of the Separate Account as of and
for the year ended December 31, 1998 are also included herein.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial Statements
The financial statements of the Company will be filed by Amendment.
The financial statements of the Separate Account will be filed by
Amendment.
b. Exhibits
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account (1)
2. Not Applicable
3. Principal Underwriter Agreement (to be filed by Amendment)
4a. Group Variable Annuity Contract
4b. Variable Annuity Certificate
4c. Charitable Remainder Trust Endorsement
4d. Enhanced Death Benefit Endorsement
4e. Enhanced Death Benefit Endorsement (Traditional)
4f. Unisex Endorsement
4g. Pension Plan Death Benefit Endorsement
5. Application for Group Variable Annuity Contract
6. (i) Copy of Articles of Incorporation of the Company (1)
(ii) Copy of the Bylaws of the Company (2)
7. Not Applicable
8. Form of Fund Participation Agreement (1)
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. Not Applicable
14. Company Organizational Chart (1)
27. Not Applicable
(1) Incorporated by reference to Registrant's N-4 filing (File Nos. 333-19699
and 811-05716) as electronically filed on January 13, 1997.
(2) Incorporated by reference to Registrant's Pre-Effective Amendment No. 2 to
Form N-4 (File Nos. 333-19699 and 811-05716 electronically filed on May 29,
1997.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Officers and Directors of the Company:
Name and Principal Positions and Offices
Business Address with Depositor
- ----------------- ------------------------------
Lowell C. Anderson Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Ronald L. Wobbeking Chairman, Chief Executive Officer and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Thomas G. Brown Director
One Liberty Plaza,
45th Floor
New York, NY 10006
Edward J. Bonach Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Thomas D. Barta Treasurer
1750 Hennepin Avenue
Minneapolis, MN 55403
Dennis Marion Director
500 Valley Road
Wayne, NJ 07470
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
Eugene Long Vice President of Operations
152 W. 57th Street and Director
18th Floor
New York, NY 10019
Thomas J. Lynch President and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Reinhard W. Obermueller Director
560 Lexington Ave
New York, NY 10022
Stephen R. Herbert Director
900 Third Avenue
New York, NY 10022
Jack F. Rockett Director
140 East 95th Street, Ste 6A
New York, NY 10129
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT
The Company organizational chart was filed as Exhibit 14 to Registrant's N-4
(File Nos. 333-19699 and 811-05716) as filed on January 13, 1997 and is
incorporated herein by reference.
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(managers) and directors(Board of
Governors) of NALAC Financial Plans LLC:
Name & Principal Positions and Offices
Business Address with Underwriter
- ---------------------- ----------------------
James P. Kelso Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Thomas B. Clifford Chief Manager and Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael T. Westermeyer Secretary and Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael J. Yates Treasurer
1750 Hennepin Avenue
Minneapolis, MN 55403
Edward J. Bonach Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine L. Mielke Compliance Officer
1750 Hennepin Avenue
Minneapolis, MN 55403
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 16th day of June, 1999.
PREFERRED LIFE VARIABLE
ACCOUNT C
(Registrant)
By: PREFERRED LIFE INSURANCE
COMPANY OF NEW YORK
(Depositor)
By: /s/ Michael T. Westermeyer
-------------------------
PREFERRED LIFE INSURANCE
COMPANY OF NEW YORK
(Depositor)
By: /s/ Michael T. Westermeyer
-------------------------
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
Lowell C. Anderson* Director
Lowell C. Anderson 6-16-99
Ronald L. Wobbeking* Chairman, Chief Executive
Ronald L. Wobbeking Officer and Director 6-16-99
Thomas D. Barta* Treasurer
Thomas D. Barta 6-16-99
Thomas G. Brown* Director
Thomas G. Brown 6-16-99
Edward J. Bonach* Director
Edward J. Bonach 6-16-99
Robert S. James* Director
Robert S. James 6-16-99
Thomas J. Lynch* President and Director
Thomas J. Lynch 6-16-99
Dennis Marion* Director
Dennis Marion 6-16-99
Eugene T. Wilkinson* Director
Eugene T. Wilkinson 6-16-99
Eugene Long* Director
Eugene Long 6-16-99
Reinhard W. Obermueller*Director
Reinhard W. Obermueller 6-16-99
Stephen R. Herbert* Director
Stephen R. Herbert 6-16-99
Jack F. Rockett* Director
Jack F. Rockett 6-16-99
* By /S/ Michael T. Westermeyer
--------------------------
Attorney-in-Fact
Secretary and Director
EXHIBITS
TO
FORM N-4
PREFERRED LIFE VARIABLE ACCOUNT C
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
INDEX TO EXHIBITS
EXHIBIT PAGE
EX-99.B4a. Group Variable Annuity Contract
EX-99.B4b. Variable Annuity Certificate
EX-99.B4c. Charitable Remainder Trust Endorsement
EX-99.B4d. Enhanced Death Benefit Endorsement
EX-99.B4e. Enhanced Death Benefit Endorsement (Traditional)
EX-99.B4f. Unisex Endorsement
EX-99.B4g. Pension Plan Death Benefit Endorsement
EX-99.B5 Application for Group Variable Annuity Contract
[LOGO]
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
152 West 57th Street, 18th Floor
New York, New York 10019
This is a legal Contract between the Contract Owner (referred to in this
Contract as you and your) and Preferred Life Insurance Company of New York
(Preferred Life) (herein referred to as we, us and our). We will make Annuity
Payments and pay other benefits as set forth in each Certificate issued under
this Contract, subject to the provisions of this Contract.
This Contract is issued in, and is governed by, the laws of the state of New
York applicable to contracts delivered in such state.
READ YOUR CONTRACT CAREFULLY
RIGHT TO EXAMINE: Each Certificate Owner may cancel his or her Certificate by
returning it within 10 days after receipt. It can be mailed or delivered to
either us or the agent who sold it. Return of a Certificate by mail is effective
on being postmarked, properly addressed and postage prepaid. The returned
Certificate will be treated as if we had never issued it. We will promptly
refund the Certificate Value as of the date of surrender. This may be more or
less than the Purchase Payments. We have the right to allocate payments to the
Money Market Fund until the expiration of the Right to Examine period. If we so
allocate payments, we will refund the greater of the Purchase Payments, less any
surrenders, or the Certificate Value.
This is a Variable Annuity Contract with Annuity Payments and Certificate Values
increasing or decreasing depending on the experience of the Variable Account
which is set forth in the Contract Schedule.
Signed by the Company:
/s/MICHAEL T. WESTERMEYER /s/THOMAS J. LYNCH
Secretary President
GROUP FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACT
NONPARTICIPATING
Annuity payments will not decrease as long as the investment return of the
variable account assets equals or exceeds 6.4% (assuming a 5% Assumed Investment
Return) on an annual basis. Variable Account expenses consist of a Mortality and
Expense Risk Charge, an Administrative Charge, a Distribution Expense Charge, a
Certificate Maintenance Charge, and Transfer Fees. These are shown on the
Certificate's Certificate Schedule Page. The variable provisions can be found on
pages 4, 5, 6, and 16 of this Contract.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RIGHT TO EXAMINE..................................................................................................1
CONTRACT SCHEDULE.................................................................................................i
DEFINITIONS.......................................................................................................2
PURCHASE PAYMENTS.................................................................................................4
PURCHASE PAYMENTS........................................................................................4
CHANGE IN PURCHASE PAYMENTS..............................................................................4
NO DEFAULT...............................................................................................4
ALLOCATION OF PURCHASE PAYMENTS..........................................................................4
VARIABLE ACCOUNT..................................................................................................4
THE VARIABLE ACCOUNT.....................................................................................4
VALUATION OF ASSETS......................................................................................5
ACCUMULATION UNITS.......................................................................................5
ACCUMULATION UNIT VALUE..................................................................................5
NET INVESTMENT FACTOR....................................................................................5
MORTALITY AND EXPENSE RISK CHARGE........................................................................6
ADMINISTRATIVE CHARGE....................................................................................6
DISTRIBUTION EXPENSE CHARGE..............................................................................6
MORTALITY AND EXPENSE GUARANTEE..........................................................................6
CERTIFICATE VALUE.................................................................................................6
CERTIFICATE MAINTENANCE CHARGE....................................................................................6
TRANSFERS.........................................................................................................6
SURRENDER PROVISIONS..............................................................................................7
SURRENDERS...............................................................................................7
CONTINGENT DEFERRED SALES CHARGE.........................................................................8
PROCEEDS PAYABLE ON DEATH.........................................................................................8
DEATH OF CERTIFICATE OWNER DURING THE ACCUMULATION PERIOD................................................8
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD......................................................8
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD.....................................................8
DEATH OF CERTIFICATE OWNER DURING THE ANNUITY PERIOD.....................................................9
DEATH OF ANNUITANT.......................................................................................9
PAYMENT OF DEATH BENEFIT.................................................................................9
BENEFICIARY..............................................................................................9
CHANGE OF BENEFICIARY...................................................................................10
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION.....................................................................10
CERTIFICATE OWNER, ANNUITANT, ASSIGNMENT PROVISIONS..............................................................10
CERTIFICATE OWNER........................................................................................10
JOINT OWNER..............................................................................................10
ANNUITANT................................................................................................10
ASSIGNMENT OF A CERTIFICATE..............................................................................10
ANNUITY PROVISIONS...............................................................................................11
GENERAL.................................................................................................11
INCOME DATE.............................................................................................11
SELECTION OF AN ANNUITY OPTION..........................................................................11
ANNUITY OPTIONS.........................................................................................11
OPTION 1 - LIFE ANNUITY...........................................................................11
OPTION 2 - LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY ANNUITY PAYMENTS GUARANTEED.............11
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY........................................................11
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH 60, 120, 180, OR 240 MONTHLY ANNUITY PAYMENT
GUARANTEED..................................................................................... 12
OPTION 5 - REFUND LIFE ANNUITY....................................................................12
ANNUITY.................................................................................................12
FIXED ANNUITY...........................................................................................13
VARIABLE ANNUITY........................................................................................16
GENERAL PROVISIONS...............................................................................................19
THE CONTRACT............................................................................................19
NON-PARTICIPATING IN SURPLUS............................................................................19
INCONTESTABILITY........................................................................................19
MISSTATEMENT OF AGE OR SEX..............................................................................19
CERTIFICATE SETTLEMENT..................................................................................19
REPORTS.................................................................................................19
TAXES...................................................................................................19
EVIDENCE OF SURVIVAL....................................................................................19
PROTECTION OF PROCEEDS..................................................................................19
MODIFICATION OF CONTRACT OR CERTIFICATE.................................................................20
</TABLE>
CONTRACT SCHEDULE
CONTRACT SCHEDULE
CONTRACT SCHEDULE
CONTRACT SCHEDULE
DEFINITIONS
ACCUMULATION UNIT: An accounting unit of measure used to calculate a
Certificate's Certificate Value prior to the Income Date.
ACCUMULATION PERIOD: The period prior to the Income Date during which a
Certificate Owner can make Purchase Payments.
ADJUSTED CERTIFICATE VALUE: A Certificate's Certificate Value less any
applicable Premium Tax. This amount is applied to the applicable Annuity Table
to determine the initial Annuity Payment.
AGE: Age last birthday unless otherwise specified.
ANNUITANT: The natural person upon whose continuation of life any Annuity
Payment involving life contingencies depends. A Certificate Owner may change the
Annuitant under a Certificate at any time prior to the Income Date unless the
Certificate Owner is a non-individual. On or after the Income Date, any
reference to Annuitant shall also include any Joint Annuitant.
ANNUITY OPTION: An arrangement under which Annuity Payments are made under a
Certificate.
ANNUITY PAYMENTS: The series of payments under a Certificate made to a
Certificate Owner or any named payee after the Income Date under the Annuity
Option selected.
ANNUITY PERIOD: The period of time beginning on the Income Date during which
Annuity Payments are made.
ANNUITY RESERVE: The assets which support the Annuity Option which a Certificate
Owner has selected during the Annuity Period.
ANNUITY UNIT: An accounting unit of measure used to calculate Annuity Payments
after the Income Date.
ASSUMED INVESTMENT RETURN: The investment return upon which the Variable Annuity
Payments under a Certificate are based.
AUTHORIZED REQUEST: A request, in a form satisfactory to the Company, which is
received by the Valuemark Service Center.
BENEFICIARY: The person(s) or entity(ies) who will receive any death benefit
payable under a Certificate.
COMPANY: Preferred Life Insurance Company of New York.
CONTRACT: This Group Annuity Contract.
CERTIFICATE ANNIVERSARY: An anniversary of the Issue Date of a Certificate.
CERTIFICATE OWNER: The person(s) or entity(ies) entitled to the ownership rights
stated in a Certificate. If Joint Owners are named, all references to
Certificate Owner shall mean the Joint Owners.
CERTIFICATE SURRENDER VALUE: A Certificate's Certificate Value less any
applicable Premium Tax, less any Contingent Deferred Sales Charge and less any
applicable Certificate Maintenance Charge.
CERTIFICATE VALUE: The dollar value as of any Valuation Date of all amounts
accumulated under a Certificate.
CERTIFICATE YEAR: Any period of twelve (12) months commencing with the Issue
Date of a Certificate and each Certificate Anniversary thereafter.
ELIGIBLE INVESTMENT(S): Those investments available under a Certificate. Current
Eligible Investments are shown on the Contract Schedule and on each Certificate
Owner's Certificate Schedule.
FUND: A segment of an Eligible Investment which constitutes a separate and
distinct class of interests under an Eligible Investment.
GENERAL ACCOUNT: Our general investment account which contains all the assets of
the Company with the exception of the Variable Account and other segregated
asset accounts.
INCOME DATE: The date on which Annuity Payments are to begin under a
Certificate.
ISSUE DATE: The date shown on a Certificate Schedule on which the first
Certificate Year begins.
JOINT OWNER: If there is more than one Certificate Owner, each Certificate Owner
shall be a Joint Owner of the Certificate. There can only be two Joint Owners.
Joint Owners have equal ownership rights and must both authorize any exercising
of those ownership rights unless otherwise allowed by us.
PREMIUM TAX: Any premium taxes owed to any governmental entity and assessed
against Purchase Payments or a Certificate's Certificate Value.
PURCHASE PAYMENT: A payment made toward a Certificate.
SUB-ACCOUNT: Variable Account assets are divided into Sub-Accounts. Assets of
each Sub-Account will be invested in shares of an Eligible Investment or Fund.
In a Certificate, "Fund" may also refer to the Sub-Accounts from which the Fund
investment is made.
VALUATION DATE: The Variable Account will be valued each day that the New York
Stock Exchange is open for trading.
VALUATION PERIOD: The period commencing at the close of business of the New York
Stock Exchange on each Valuation Date and ending at the close of business for
the next succeeding Valuation Date.
VALUEMARK SERVICE CENTER: The office indicated on the Certificate Schedule of a
Certificate to which notices, requests and Purchase Payments must be sent. All
sums payable to us under a Certificate are payable only at the Valuemark Service
Center.
VARIABLE ACCOUNT: A separate account maintained by us in which a portion of our
assets has been allocated for Certificates. It has been designated on the
Contract Schedule.
PURCHASE PAYMENTS
PURCHASE PAYMENTS: Purchase Payments toward a Certificate are payable according
to the frequency and in the amount selected by the Certificate Owner. The
initial Purchase Payment is due on the Certificate's Issue Date. We reserve the
right to decline any Purchase Payment. The Minimum Subsequent Purchase Payment
and the Maximum Total Purchase Payments allowed are shown on the Certificate
Schedule.
CHANGE IN PURCHASE PAYMENTS: A Certificate Owner may elect to increase or
decrease or to change the frequency of Purchase Payments.
NO DEFAULT: Unless surrendered, a Certificate remains in force and will not be
in default if no additional Purchase Payments are made.
ALLOCATION OF PURCHASE PAYMENTS: Purchase Payments are allocated to one or more
of the Funds of the Variable Account in accordance with the Certificate Owner's
selection. The allocation of the initial Purchase Payment is made in accordance
with such Certificate Owner's selection made at the Issue Date. Unless the
Certificate Owner informs us otherwise, subsequent Purchase Payments are
allocated in the same manner as the initial Purchase Payment. However, the
Company has reserved the right to allocate the initial Purchase Payment to the
Money Market Fund until the expiration of the Right to Examine period. All
allocations of Purchase Payments are subject to the Allocation Guidelines shown
on the Certificate Schedule. We guarantee that a Certificate Owner will be
allowed to select at least five Funds for allocation of Purchase Payments.
VARIABLE ACCOUNT
THE VARIABLE ACCOUNT: The Variable Account is designated on the Certificate
Schedule. It consists of assets we have set aside and have kept separate from
the rest of our assets and those of our other separate accounts. The assets of
the Variable Account, equal to reserves and other liabilities of each
Certificate and those of other Certificate Owners, will not be charged with
liabilities arising out of any other business we may conduct.
The Variable Account assets are divided into Funds. The Funds which are
available under each Certificate are listed on the Certificate Schedule. The
assets of the Fund are allocated to the Eligible Investments (and/or the Funds,
if any, within an Eligible Investment) shown on the Certificate Schedule. We may
add additional Eligible Investments or Funds to those shown. A Certificate Owner
may be permitted to transfer his or her Certificate Value or allocate Purchase
Payments to the additional Fund(s). However, the right to make such transfers or
allocations will be limited by any terms and conditions we may impose.
Should the shares of any Eligible Investment(s), or any Fund(s) within an
Eligible Investment, become unavailable for investment by the Variable Account,
or our Board of Directors deems further investment in the shares inappropriate,
we may limit further purchase of such shares or substitute shares of another
Eligible Investment or Fund for shares already purchased.
VALUATION OF ASSETS: Assets of Eligible Investments within each Fund will be
valued at their net asset value on each Valuation Date.
ACCUMULATION UNITS: Accumulation Units shall be used to account for all amounts
allocated to or withdrawn from the Funds of the Variable Account as a result of
Purchase Payments, surrenders, transfers, or fees and charges. We will determine
the number of Accumulation Units of a Sub-Account purchased or canceled. This
will be done by dividing the amount allocated to (or the amount withdrawn from)
the Sub-Account by the dollar value of one Accumulation Unit of the Sub-Account
as of the end of the Valuation Period during which the transaction is processed
at the Valuemark Service Center.
ACCUMULATION UNIT VALUE: The Accumulation Unit Value for each Fund was
arbitrarily set initially. Subsequent Accumulation Unit Values for each Fund are
determined by multiplying the Accumulation Unit Value for the immediately
preceding Valuation Period by the Net Investment Factor for the Fund for the
current period.
The Accumulation Unit value may increase or decrease from Valuation Period to
Valuation Period.
NET INVESTMENT FACTOR: The Net Investment Factor for each Fund is determined by
dividing A by B and multiplying by (1 - C) where:
A is (i) the net asset value per share of the Eligible Investment or the
Fund of an Eligible Investment held by the Fund at the end of the
current Valuation Period; plus
(ii) any dividend or capital gains per share declared on behalf of
such Eligible Investment or Fund that has an ex-dividend date
within the current Valuation Period.
B is the net asset value per share of the Eligible Investment or Fund
held by the Fund for the immediately preceding Valuation Period.
C is (i) the Valuation Period equivalent of the daily Mortality and
Expense Risk Charge, for the Administrative Charge and for the
Distribution Expense Charge, if any, which are shown on the
Certificate Schedule; plus
(ii) a charge factor, if any, for any taxes or any tax reserve we have
established as a result of the operation or maintenance of the
Fund.
MORTALITY AND EXPENSE RISK CHARGE: Each Valuation Period, we deduct a Mortality
and Expense Risk Charge from the Variable Account which is equal, on an annual
basis, to the amount shown on a Certificate's Certificate Schedule. The
Mortality and Expense Risk Charge compensates us for assuming the mortality and
expense risks under a Certificate Owner's Certificate.
ADMINISTRATIVE CHARGE: Each Valuation Period, we deduct an Administrative Charge
from the Variable Account which is equal, on an annual basis, to the amount
shown on a Certificate's Certificate Schedule. The Administrative Charge
compensates us for the costs associated with the administration of a Certificate
Owner's Certificate and the Variable Account.
DISTRIBUTION EXPENSE CHARGE: Each Valuation Period, we deduct a Distribution
Expense Charge from the Separate Account which is equal, on an annual basis, to
the amount shown on a Certificate's Certificate Schedule. The Distribution
Expense Charge compensates us for costs associated with the distribution of
Certificates.
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.
CERTIFICATE VALUE
The Certificate Value for any Valuation Period is equal to the total dollar
value accumulated under a Certificate. The Certificate Value in a Fund of the
Variable Account is determined by multiplying the number of Accumulation Units
allocated to the Certificate Value for the Fund by the Accumulation Unit Value.
Purchase Payments, surrenders and transfers from or to a Fund will result in the
addition of or the cancellation of Accumulation Units in a Fund.
CERTIFICATE MAINTENANCE CHARGE
We deduct an annual Certificate Maintenance Charge shown on the Certificate
Schedule. During the Accumulation Period, this will be deducted from the
Certificate Value by canceling Accumulation Units to reimburse us for expenses
relating to maintenance of a Certificate. The number of Accumulation Units to be
canceled will be from each applicable Fund and is the ratio that the value of
each Fund bears to the total Certificate Value. During the Annuity Period, the
Certificate Maintenance Charge will be collected pro rata from each Annuity
Payment. However, the result will not be less than the Annuity Payment
guarantees defined in the Annuity Provisions section of the Certificate.
TRANSFERS
A Certificate Owner may transfer all or a part of his or her interest in a Fund
to another Fund. We reserve the right to charge for transfers if there are more
than the number of free transfers shown on the Certificate Schedule.
Pre-scheduled transfer programs may be available. All transfers are subject to
the following:
1. The deduction of any Transfer Fee that may be imposed as shown on the
Certificate Schedule. The Transfer Fee will be deducted from the Fund from
which the transfer is made. If the entire amount in the Fund is
transferred, then the Transfer Fee will be deducted from the amount
transferred. If there are multiple source Funds, it will be treated as a
single transfer. Any Transfer Fee will be deducted proportionally from the
source Funds if less than the entire amount in the Fund is transferred.
2. We reserve the right to limit transfers until the expiration of the Right
to Examine period.
3. The minimum amount which can be transferred is shown on the Certificate
Schedule.
4. No transfer will be effective within seven calendar days prior to the date
on which the first Annuity Payment is due.
5. Any transfer direction must clearly specify:
a. the amount which is to be transferred; and
b. the Funds which are to be affected.
6. After the Income Date, transfers may not be made from a fixed annuity
option to a variable annuity option.
7. After the Income Date, a Certificate Owner can make at least one transfer
from a variable annuity option to a fixed annuity option. The number of
Annuity Units canceled from the variable annuity option will be equal in
value to the amount of the Annuity Reserve transferred out of the Variable
Account. The amount transferred will purchase fixed annuity payments under
the Annuity Option in effect and based on the age and sex of the Annuitant
at the time of the transfer where allowed.
8. We reserve the right to establish policies that limit or discourage
excessive trading that may be disruptive to the Fund.
9. We reserve the right at any time and without prior notice to any party to
modify the transfer provisions described above. However, if we do modify
these provisions we guarantee that they will not be any more restrictive
than the above.
If a Certificate Owner elects to use this transfer privilege, we will not be
liable for transfers made in accordance with such Certificate Owner's
instructions. All amounts and Accumulation Units will be determined as of the
end of the Valuation Period during which the request for transfer is received at
the Valuemark Service Center.
SURRENDER PROVISIONS
SURRENDERS: During the Accumulation Period, a Certificate Owner may, upon
Authorized Request, make a total or partial surrender of the Certificate
Surrender Value. Surrenders will result in the cancellation of Accumulation
Units from each Fund in the ratio that the value of each Fund bears to the total
Certificate Value. A Certificate Owner must specify, by Authorized Request,
which Accumulation Units are to be canceled if other than the above mentioned
method of cancellation is desired.
The Company will pay the amount of any surrender from the Variable Account
within seven (7) days of receipt of a request in good order unless the
Suspension or Deferral of Payments Provision is in effect.
Each partial surrender must be for an amount which is not less than the amount
shown on the Certificate Schedule. The minimum Certificate Value which must
remain in a Certificate after a partial surrender is shown on the Certificate
Schedule.
CONTINGENT DEFERRED SALES CHARGE: Upon a surrender of Certificate Value, a
Contingent Deferred Sales Charge as set forth on the Certificate Schedule may be
assessed. Under certain circumstances, we allow surrenders without the
Contingent Deferred Sales Charge as set forth on the Certificate Schedule.
PROCEEDS PAYABLE ON DEATH
DEATH OF CERTIFICATE OWNER DURING THE ACCUMULATION PERIOD: Upon the death of a
Certificate Owner, or any Joint Owner, during the Accumulation Period, the death
benefit will be paid to the Beneficiary(ies) designated by the Certificate
Owner. Upon the death of a Joint Owner, the surviving Joint Owner, if any, will
be treated as the primary Beneficiary. Any other Beneficiary designation on
record at the time of death will be treated as a contingent Beneficiary.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will be
the Adjusted Certificate Value determined as of the end of the Valuation Period
during which the Company receives both due proof of death and an election for
the payment method.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD: A Beneficiary may request
that the death benefit be paid under one of the Death Benefit Options below. In
addition, if the Beneficiary is the spouse of the Certificate Owner, he or she
may elect to continue the Certificate in his or her own name and exercise all
the Certificate Owner's rights under the Certificate. In this event, the
Certificate Value for the Valuation Period during which this election is
implemented will be adjusted to equal the death benefit.
Option A - lump sum payment of the death benefit; or
Option B - the payment of the entire death benefit within 5 years of the
date of the death of the Certificate Owner or any Joint Owner; or
Option C - payment of the death benefit under an Annuity Option over the
lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one year
of the date of death of the Certificate Owner or any Joint Owner.
Any portion of the death benefit not applied under Option C within one year of
the date of the Certificate Owners' death, must be distributed within five years
of the date of death.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect. Payment to the Beneficiary, other
than in a lump sum, may only be elected during the sixty-day period beginning
with the date of receipt of proof of death.
DEATH OF CERTIFICATE OWNER DURING THE ANNUITY PERIOD: If a Certificate Owner, or
any Joint Owner, dies during the Annuity Period, and such Certificate Owner is
not an Annuitant, any remaining payments under the Annuity Option elected will
continue at least as rapidly as under the method of distribution in effect at
such Certificate Owner's death. Upon a Certificate Owner's death during the
Annuity Period, the Beneficiary becomes the Certificate Owner.
DEATH OF ANNUITANT: Upon the death of an Annuitant who is not the Certificate
Owner, during the Accumulation Period, the Certificate Owner may designate a new
Annuitant, subject to our underwriting rules then in effect. If no designation
is made within 30 days of the death of the Annuitant, the Certificate Owner will
become the Annuitant. If the Certificate Owner is a non-individual, the death of
the Annuitant will be treated as the death of the Certificate Owner and a new
Annuitant may not be designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit, if
any, will be as specified in the Annuity Option elected. Death benefits will be
paid at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
PAYMENT OF DEATH BENEFIT: The Company will require due proof of death before any
death benefit is paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
BENEFICIARY: The Beneficiary designation in effect on a Certificate's Issue Date
will remain in effect until changed. The Beneficiary is entitled to receive the
benefits to be paid at the Certificate Owner's death.
Unless the Certificate Owner provides otherwise, the death benefit will be paid
in equal shares to the survivor(s) as follows:
1. to the primary Beneficiary(ies) who survive the Certificate Owner
and/or the Annuitant's death, as applicable; or if there are none
2. to the contingent Beneficiary(ies) who survive the Certificate Owner
and/or the Annuitant's death, as applicable; or if there are none
3. to the Certificate Owner's estate.
CHANGE OF BENEFICIARY: Subject to the rights of any irrevocable
Beneficiary(ies), the Certificate Owner may change the primary Beneficiary(ies)
or contingent Beneficiary(ies). A change may be made by Authorized Request. The
change will take effect as of the date the Authorized Request is signed. The
Company will not be liable for any payment made or action taken before it
records the change.
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
The Company reserves the right to suspend or postpone payments from the Variable
Account for a surrender or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held
in the Variable Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Variable
Account's net assets; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Contract Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
CERTIFICATE OWNER, ANNUITANT, ASSIGNMENT PROVISIONS
CERTIFICATE OWNER: A Certificate Owner has all the interest and rights under his
or her Certificate. The Certificate Owner is the person designated as such on
the Certificate's Issue Date, unless changed.
A Certificate Owner may change Owners of the Certificate at any time by
Authorized Request. A change of Certificate Owner will automatically revoke any
prior designation of Certificate Owner. The change will become effective as of
the date the Authorized Request is signed. We will not be liable for any payment
made or action taken before the change is recorded.
JOINT OWNER: A Certificate may be owned by Joint Owners. Upon the death of
either Joint Owner, the surviving Joint Owner, if any, will be the primary
Beneficiary. Any other Beneficiary designation will be treated as a contingent
Beneficiary unless otherwise indicated in an Authorized Request.
ANNUITANT: The Annuitant is the person on whose life Annuity Payments are based.
The Annuitant is the person designated by the Certificate Owner subject to our
underwriting rules then in effect. The Annuitant may not be changed in a
Certificate which is owned by a non-individual.
ASSIGNMENT OF A CERTIFICATE: An Authorized Request specifying the terms of an
assignment of a Certificate must be provided to the Valuemark Service Center. We
will not be liable for any payment made or action taken before we record the
assignment.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with our consent.
If a Certificate is assigned, the Certificate Owner's rights may only be
exercised with the consent of the assignee of record.
ANNUITY PROVISIONS
GENERAL: On the Income Date, the Adjusted Certificate Value will be applied
under the Annuity Option selected by the Certificate Owner. The Certificate
Owner may elect to have the Adjusted Certificate Value applied to provide a
Fixed Annuity, a Variable Annuity or a combination Fixed and Variable Annuity.
If a combination is elected, the Certificate Owner must specify what part of the
Adjusted Certificate Value is to be applied to the Fixed and Variable Annuity
Options.
INCOME DATE: A Certificate Owner selects an Income Date at the time of issue.
The Income Date must always be the first day of a calendar month. The earliest
Income Date a Certificate Owner can select is two years after the Issue Date.
The latest Income Date a Certificate Owner can select is the later of the first
day of the first calendar month following the Annuitant's 90th birthday. A
Certificate Owner may, at any time prior to the Income Date, change the Income
Date by Authorized Request 30 days in advance.
SELECTION OF AN ANNUITY OPTION: A Certificate Owner can select an Annuity Option
by Authorized Request. If no Annuity Option is selected, Option 2, with 60
Monthly Payments Guaranteed, will automatically be applied. A Certificate Owner
may, at any time prior to the Income Date, by Authorized Request 30 days in
advance, select and/or change the Annuity Option.
ANNUITY OPTIONS: Each Certificate provides for Annuity Payments under one of the
Annuity Options described below. Any other Annuity Option acceptable to us may
be selected.
OPTION 1 - LIFE ANNUITY. We will make monthly Annuity Payments during the life
of the Annuitant and ceasing with the last Annuity Payment due prior to the
Annuitant's death.
OPTION 2 - LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY ANNUITY PAYMENTS
GUARANTEED. We will make monthly Annuity Payments during the life of the
Annuitant with a guarantee that if at the Annuitant's death there have been less
than 60, 120, 180, or 240 monthly Annuity Payments made as selected, monthly
Annuity Payments will continue for the remainder of the guaranteed period. A
Certificate Owner may elect to have the present value of the guaranteed monthly
Annuity Payments remaining, as of the date notice of the Annuitant's death is
received at the Valuemark Service Center, commuted at the Assumed Investment
Return selected for a Variable Annuity or for a Fixed Annuity the Statutory
Calendar Year Interest Rate based on the New York's Standard Valuation Law for
Single Premium Immediate Annuities corresponding to the Income Date. We will
require the return of the Certificate and proof of death prior to the payment of
any commuted values.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY. We will make monthly Annuity
Payments during the joint lifetime of the Annuitant and the Joint Annuitant.
Upon the death of the Annuitant, if the Joint Annuitant is then living, Annuity
Payments will continue to be paid during the remaining lifetime of the Joint
Annuitant at a level of 100%, 75% or 50% of the previous level, as selected.
Monthly Annuity Payments cease with the final Annuity Payment due prior to the
last survivor's death.
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH 60, 120, 180, OR 240 MONTHLY
ANNUITY PAYMENTS GUARANTEED. We will make monthly Annuity Payments during the
joint lifetime of the Annuitant and the Joint Annuitant. Monthly Annuity
Payments will continue to be paid during the remaining lifetime of the Joint
Annuitant at 100% of the previous level, as selected. If at the last death of
the Annuitant and the Joint Annuitant, there have been less than 60, 120, 180,
or 240 monthly Annuity Payments made as selected, monthly Annuity Payments will
continue to be made for the remainder of the guaranteed period. The Certificate
Owner or the Certificate Owner's designated payee may elect to have the present
value of the guaranteed monthly Annuity Payments remaining, as of the date
notice of the Annuitant's death is received by us, commuted at the Assumed
Investment Return selected for a Variable Annuity or for a Fixed Annuity the
Statutory Calendar Year Interest Rate based on the New York's Standard Valuation
Law for Single Premium Immediate Annuities corresponding to the Income Date. We
will require the return of the Certificate and proof of death prior to the
payment of any commuted values.
OPTION 5 - REFUND LIFE ANNUITY. We will make monthly Annuity Payments during the
lifetime of the Annuitant ceasing with the last Annuity Payment due prior to the
Annuitant's death with a guarantee that after the Annuitant's death, the
Certificate Owner will receive a refund. For a Fixed Annuity the amount of the
refund will be any excess of the amount of the Adjusted Certificate Value
applied under this Option over the total of all Annuity Payments made under this
Option. For a Variable Annuity the amount of the refund will depend on the
current fund allocation and will be the sum of Refund Amounts attributable to
each fund. The Refund Amount for a given Fund is calculated using the following
formula:
(1) x {[(2) x (3) x (4)/(5)] - [(4) x (6)]}
where:
(1) = Annuity Unit value of that given Fund when claim proofs are
received.
(2) = Total Adjusted Certificate Value at the time of annuitization.
(3) = Allocation percentage in that given Fund (in decimal form) when
claim proofs are received.
(4) = Current number of Annuity Units used in determining each Annuity
Payment attributable to that given Fund.
(5) = Dollar value of first Annuity Payment.
(6) = Number of Annuity Payments made since annuitization.
This calculation will be based upon the allocation of Annuity Units actually
in-force at the time claim proofs are received at the Valuemark Service Center.
There will be no refund paid if the total refund determined using the above
calculations is less than or equal to zero.
ANNUITY: If a Certificate Owner selects a Fixed Annuity, the Adjusted
Certificate Value is allocated to the General Account and the Annuity is paid as
a Fixed Annuity. If a Certificate Owner selects a Variable Annuity, the Adjusted
Certificate Value will be allocated to the Funds of the Variable Account in
accordance with the Certificate Owner's selection, and the Annuity will be paid
as a Variable Annuity. Unless the Certificate Owner designates another payee,
the Certificate Owner will be the payee of the Annuity Payments. The Adjusted
Certificate Value will be applied to the applicable Annuity Table contained in
the Certificate based upon the Annuity Option the Certificate Owner has
selected. We may offer more favorable rates than those guaranteed here at the
time the first annuity payment is calculated. Where permitted, Annuity Payments
will depend on the Age and sex of the Annuitant. The Annuity Payments will be at
least as favorable as those that would be provided by the application of an
amount to purchase any single premium immediate annuity contract offered by us
at the time for the same class of Annuitants.
FIXED ANNUITY: The Certificate Owner may elect to have the Adjusted Certificate
Value applied to provide a Fixed Annuity. The dollar amount of each Fixed
Annuity Payment is guaranteed to be at least an amount equal to the Adjusted
Certificate Value, divided first by $1000 and then multiplied by the appropriate
Annuity Payment amount for each $1000 of value for the Annuity Option selected.
The guaranteed rates contained in the Annuity Tables in the Certificate are
based on an interest rate of 2 1/2% per year and the 1983(a) Individual Annuity
Mortality Table with mortality improvement projected 30 years using Mortality
Projection Scale G.
<TABLE>
<CAPTION>
Guaranteed Monthly Payment Per $1,000 of Proceeds
Fixed Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2
5 Yr 5 Yr 10 Yr 10 Yr 15 Yr 15 Yr 20 Yr 20 Yr
Opt 1 Opt 1 Minim Minim Minim Minim Minim Minim Minim Minim Opt 5 Opt 5
Age* M F M F M F M F M F M F
______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______
30 2.84 2.71 2.84 2.71 2.84 2.71 2.84 2.71 2.83 2.71 2.82 2.71
31 2.87 2.74 2.87 2.73 2.87 2.73 2.84 2.73 2.86 2.73 2.84 2.73
32 2.90 2.76 2.90 2.76 2.89 2.76 2.86 2.75 2.88 2.75 2.87 2.75
33 2.92 2.78 2.92 2.78 2.92 2.78 2.89 2.78 2.91 2.77 2.89 2.77
34 2.95 2.80 2.95 2.80 2.95 2.80 2.92 2.80 2.94 2.80 2.92 2.79
35 2.98 2.83 2.98 2.83 2.98 2.83 2.95 2.82 2.97 2.82 2.95 2.81
36 3.02 2.85 3.02 2.85 3.01 2.85 2.98 2.85 3.00 2.85 2.98 2.84
37 3.05 2.88 3.05 2.88 3.05 2.88 3.01 2.88 3.03 2.87 3.01 2.86
38 3.09 2.91 3.09 2.91 3.08 2.91 3.04 2.91 3.06 2.90 3.04 2.89
39 3.12 2.94 3.12 2.94 3.12 2.94 3.08 2.93 3.10 2.93 3.07 2.92
40 3.16 2.97 3.16 2.97 3.16 2.97 3.11 2.96 3.13 2.96 3.10 2.95
41 3.20 3.00 3.20 3.00 3.20 3.00 3.15 3.00 3.17 2.99 3.14 2.97
42 3.25 3.04 3.24 3.04 3.24 3.03 3.19 3.03 3.21 3.02 3.17 3.01
43 3.29 3.07 3.29 3.07 3.28 3.07 3.23 3.06 3.25 3.06 3.21 3.04
44 3.34 3.11 3.33 3.11 3.33 3.10 3.27 3.10 3.29 3.09 3.25 3.07
45 3.39 3.15 3.38 3.15 3.37 3.14 3.31 3.14 3.33 3.13 3.29 3.10
46 3.44 3.19 3.43 3.19 3.42 3.18 3.36 3.18 3.38 3.16 3.33 3.14
47 3.49 3.23 3.49 3.23 3.48 3.22 3.41 3.22 3.42 3.20 3.38 3.18
48 3.55 3.27 3.54 3.27 3.53 3.27 3.45 3.26 3.47 3.24 3.42 3.22
49 3.60 3.32 3.60 3.32 3.58 3.31 3.51 3.30 3.52 3.29 3.47 3.26
50 3.66 3.37 3.66 3.37 3.64 3.36 3.56 3.35 3.57 3.33 3.52 3.30
51 3.73 3.42 3.72 3.42 3.71 3.41 3.62 3.40 3.62 3.38 3.57 3.34
52 3.80 3.47 3.79 3.47 3.77 3.46 3.67 3.45 3.68 3.42 3.62 3.39
53 3.87 3.53 3.86 3.53 3.84 3.52 3.73 3.50 3.74 3.48 3.68 3.44
54 3.94 3.59 3.93 3.59 3.91 3.58 3.80 3.56 3.79 3.53 3.74 3.49
55 4.02 3.65 4.01 3.65 3.98 3.64 3.86 3.62 3.85 3.58 3.80 3.54
56 4.10 3.72 4.09 3.71 4.06 3.70 3.93 3.68 3.91 3.64 3.86 3.60
57 4.19 3.79 4.18 3.78 4.14 3.77 4.00 3.74 3.98 3.70 3.93 3.65
58 4.28 3.86 4.27 3.86 4.23 3.84 4.16 3.81 4.04 3.76 4.00 3.71
59 4.38 3.94 4.37 3.93 4.32 3.91 4.24 3.88 4.11 3.82 4.07 3.78
60 4.49 4.02 4.47 4.02 4.42 3.99 4.32 3.95 4.17 3.88 4.14 3.84
61 4.60 4.11 4.58 4.10 4.52 4.08 4.41 4.03 4.24 3.95 4.23 3.91
62 4.72 4.20 4.69 4.19 4.63 4.16 4.50 4.11 4.31 4.02 4.31 3.99
63 4.84 4.30 4.82 4.29 4.74 4.26 4.59 4.19 4.38 4.09 4.39 4.06
64 4.98 4.41 4.95 4.39 4.86 4.36 4.69 4.28 4.44 4.16 4.49 4.14
65 5.12 4.52 5.09 4.50 4.98 4.46 4.79 4.37 4.51 4.23 4.58 4.23
66 5.28 4.64 5.24 4.62 5.11 4.57 4.89 4.47 4.58 4.31 4.68 4.31
67 5.44 4.76 5.39 4.75 5.24 4.69 4.99 4.57 4.64 4.38 4.78 4.41
68 5.61 4.90 5.56 4.88 5.38 4.81 5.09 4.67 4.70 4.45 4.89 4.50
69 5.80 5.04 5.73 5.02 5.53 4.94 5.19 4.78 4.76 4.53 5.01 4.60
70 6.00 5.20 5.92 5.17 5.68 5.07 5.30 4.88 4.82 4.60 5.13 4.72
71 6.21 5.37 6.12 5.34 5.84 5.22 5.40 4.99 4.88 4.67 5.25 4.83
72 6.43 5.55 6.32 5.51 6.00 5.37 5.50 5.11 4.93 4.74 5.38 4.95
73 6.66 5.75 6.54 5.70 6.16 5.53 5.60 5.22 4.97 4.80 5.51 5.07
74 6.91 5.96 6.77 5.90 6.33 5.69 5.70 5.34 5.02 4.86 5.66 5.20
75 7.18 6.18 7.01 6.11 6.50 5.87 5.79 5.45 5.06 4.92 5.82 5.35
76 7.49 6.43 7.28 6.34 6.69 6.05 5.89 5.56 5.09 4.97 5.97 5.49
77 7.80 6.69 7.55 6.58 6.86 6.23 5.97 5.67 5.12 5.01 6.14 5.65
78 8.13 6.97 7.83 6.84 7.04 6.42 6.05 5.78 5.15 5.06 6.31 5.81
79 8.49 7.27 8.13 7.11 7.22 6.61 6.13 5.88 5.17 5.09 6.50 5.97
80 8.87 7.60 8.44 7.40 7.39 6.81 6.20 5.97 5.20 5.13 6.69 6.15
81 9.27 7.95 8.77 7.71 7.57 7.01 6.26 6.06 5.21 5.15 6.89 6.34
82 9.70 8.33 9.10 8.03 7.73 7.21 6.32 6.14 5.23 5.18 7.10 6.53
83 10.16 8.74 9.45 8.38 7.90 7.40 6.37 6.21 5.24 5.20 7.32 6.74
84 10.65 9.18 9.81 8.74 8.05 7.59 6.42 6.28 5.25 5.22 7.55 6.95
85 11.18 9.66 10.19 9.12 8.20 7.77 6.46 6.34 5.26 5.23 7.80 7.17
<FN>
*Age equals age of annuitant nearest birthday when first payment is made
</FN>
</TABLE>
<TABLE>
<CAPTION>
Guaranteed Monthly Payment per $1,000 of Proceeds
Fixed Payout
Option 3
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.15
50 2.69 2.89 3.14 3.36 3.52 3.61
60 2.70 2.94 3.26 3.65 4.03 4.30
70 2.71 2.96 3.32 3.86 4.56 5.27
80 2.71 2.97 3.35 3.96 4.94 6.32
</TABLE>
<TABLE>
<CAPTION>
Option 4
5 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.15
50 2.69 2.89 3.14 3.36 3.52 3.61
60 2.70 2.94 3.26 3.65 4.03 4.30
70 2.71 2.96 3.32 3.86 4.56 5.26
80 2.71 2.97 3.35 3.96 4.93 6.30
</TABLE>
<TABLE>
<CAPTION>
Option 4
10 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.14
50 2.69 2.89 3.14 3.36 3.52 3.60
60 2.70 2.94 3.26 3.65 4.03 4.29
70 2.71 2.96 3.32 3.86 4.55 5.22
80 2.71 2.96 3.35 3.95 4.90 6.13
</TABLE>
<TABLE>
<CAPTION>
Option 4
15 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.14
50 2.69 2.89 3.13 3.36 3.52 3.59
60 2.70 2.94 3.26 3.65 4.01 4.24
70 2.71 2.96 3.32 3.84 4.50 5.05
80 2.71 2.96 3.34 3.93 4.79 5.70
</TABLE>
<TABLE>
<CAPTION>
Option 4
20 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.83
40 2.66 2.82 2.96 3.06 3.11 3.13
50 2.69 2.89 3.13 3.35 3.50 3.56
60 2.70 2.94 3.25 3.63 3.97 4.14
70 2.71 2.95 3.31 3.81 4.38 4.74
80 2.71 2.96 3.33 3.87 4.57 5.06
</TABLE>
VARIABLE ANNUITY: A Certificate Owner may elect to have the Adjusted Certificate
Value applied to provide a Variable Annuity. Variable Annuity Payments reflect
the investment performance of the Variable Account in accordance with the
allocation of the Adjusted Certificate Value to the Funds during the Annuity
Period. The initial Variable Annuity Payment is guaranteed to be at least the
amount determined in accordance with the Annuity Tables contained in the
Certificate which are based on the 1983(a) Individual Mortality Table with
mortality improvement projected 30 years using Mortality Projection Scale G.
Variable Annuity Payments are not guaranteed as to dollar amount.
On the Income Date a fixed number of Annuity Units will be purchased as follows:
The first Annuity Payment is equal to the Adjusted Certificate Value, divided
first by $1000 and then multiplied by the appropriate Annuity Payment amount for
each $1000 of value for the Annuity Option selected, less any Certificate
Maintenance Charge due. In each Fund the fixed number of Annuity Units is
determined by dividing the amount of the initial Annuity Payment determined for
each Fund by the Annuity Unit value on the Income Date. Thereafter, the number
of Annuity Units in each Fund remains unchanged unless the Certificate Owner
elects to transfer between Funds. All calculations will appropriately reflect
the Annuity Payment frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum of
the Annuity Payments for each Fund less any Certificate Maintenance Charge due.
The Annuity Payment in each Fund is determined by multiplying the number of
Annuity Units then allocated to such Fund by the Annuity Unit value for that
Fund.
On each subsequent Valuation Date, the value of an Annuity Unit is determined in
the following way:
First: The Net Investment Factor is determined as described under "Variable
Account - Net Investment Factor" above.
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a. the value of the Annuity Unit for the immediately preceding Valuation
Period;
b. multiplied by the Net Investment Factor for the current Valuation
Period;
c. divided by the Assumed Net Investment Factor (see below) for the
Valuation Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that we will use is 5%. However, we may agree with the Certificate Owner
to use a different value.
<TABLE>
<CAPTION>
Guaranteed Initial Monthly Payment Per $1,000 of Proceeds
Variable Payouts Based on 5% AIR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2
5 Yr 5 Yr 10 Yr 10 Yr 15 Yr 15 Yr 20 Yr 20 Yr
Opt 1 Opt 1 Minim Minim Minim Minim Minim Minim Minim Minim Opt 5 Opt 5
Age* M F M F M F M F M F M F
______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______
30 4.46 4.36 4.46 4.36 4.46 4.35 4.45 4.35 4.44 4.35 4.46 4.36
31 4.48 4.37 4.48 4.37 4.48 4.37 4.47 4.37 4.46 4.36 4.48 4.38
32 4.50 4.39 4.50 4.39 4.50 4.38 4.49 4.38 4.48 4.38 4.50 4.39
33 4.52 4.40 4.52 4.40 4.52 4.40 4.51 4.40 4.50 4.39 4.52 4.41
34 4.55 4.42 4.55 4.42 4.54 4.42 4.53 4.41 4.52 4.41 4.54 4.43
35 4.57 4.44 4.57 4.44 4.57 4.44 4.56 4.43 4.55 4.43 4.57 4.44
36 4.60 4.46 4.60 4.46 4.59 4.45 4.58 4.45 4.57 4.45 4.59 4.46
37 4.63 4.48 4.63 4.48 4.62 4.48 4.61 4.47 4.60 4.46 4.62 4.48
38 4.66 4.50 4.66 4.50 4.65 4.50 4.64 4.49 4.62 4.49 4.64 4.50
39 4.69 4.52 4.69 4.52 4.68 4.52 4.67 4.51 4.65 4.51 4.67 4.52
40 4.72 4.55 4.72 4.55 4.71 4.54 4.70 4.54 4.68 4.53 4.70 4.55
41 4.76 4.57 4.75 4.57 4.75 4.57 4.73 4.56 4.71 4.55 4.73 4.57
42 4.79 4.60 4.79 4.60 4.78 4.60 4.76 4.59 4.74 4.58 4.76 4.60
43 4.83 4.63 4.83 4.63 4.82 4.62 4.80 4.62 4.77 4.60 4.80 4.62
44 4.88 4.66 4.87 4.66 4.86 4.65 4.84 4.64 4.80 4.63 4.83 4.65
45 4.92 4.69 4.91 4.69 4.90 4.69 4.87 4.68 4.84 4.66 4.87 4.68
46 4.97 4.73 4.96 4.73 4.94 4.72 4.91 4.71 4.88 4.69 4.91 4.71
47 5.01 4.76 5.01 4.76 4.99 4.75 4.96 4.74 4.92 4.72 4.95 4.75
48 5.06 4.80 5.06 4.80 5.04 4.79 5.00 4.78 4.96 4.76 4.99 4.78
49 5.12 4.84 5.11 4.84 5.09 4.83 5.05 4.81 5.00 4.79 5.04 4.82
50 5.17 4.88 5.16 4.88 5.14 4.87 5.10 4.85 5.04 4.83 5.08 4.85
51 5.23 4.93 5.22 4.93 5.19 4.91 5.15 4.89 5.09 4.87 5.13 4.89
52 5.30 4.98 5.28 4.97 5.25 4.96 5.20 4.94 5.13 4.91 5.19 4.94
53 5.36 5.03 5.35 5.02 5.31 5.01 5.26 4.98 5.18 4.95 5.24 4.98
54 5.43 5.08 5.42 5.08 5.38 5.06 5.32 5.03 5.23 4.99 5.30 5.03
55 5.51 5.14 5.49 5.13 5.45 5.11 5.38 5.08 5.28 5.04 5.37 5.08
56 5.58 5.20 5.57 5.19 5.52 5.17 5.44 5.14 5.33 5.09 5.43 5.13
57 5.67 5.26 5.65 5.26 5.60 5.23 5.51 5.19 5.39 5.14 5.50 5.19
58 5.76 5.33 5.74 5.32 5.68 5.30 5.58 5.25 5.44 5.19 5.57 5.25
59 5.85 5.41 5.83 5.40 5.76 5.37 5.65 5.32 5.50 5.24 5.65 5.31
60 5.95 5.48 5.93 5.47 5.85 5.44 5.73 5.38 5.56 5.30 5.73 5.38
61 6.06 5.57 6.03 5.55 5.95 5.52 5.81 5.45 5.62 5.36 5.81 5.45
62 6.18 5.65 6.15 5.64 6.05 5.60 5.89 5.52 5.67 5.42 5.90 5.52
63 6.30 5.75 6.27 5.73 6.16 5.68 5.97 5.60 5.73 5.48 6.00 5.60
64 6.44 5.85 6.40 5.83 6.27 5.78 6.06 5.68 5.79 5.54 6.10 5.69
65 6.58 5.96 6.53 5.94 6.38 5.87 6.15 5.76 5.85 5.60 6.20 5.77
66 6.74 6.07 6.68 6.05 6.51 5.98 6.24 5.85 5.91 5.67 6.31 5.87
67 6.90 6.20 6.83 6.17 6.63 6.09 6.33 5.94 5.96 5.73 6.43 5.97
68 7.08 6.33 7.00 6.30 6.77 6.20 6.42 6.03 6.02 5.80 6.55 6.07
69 7.27 6.47 7.17 6.44 6.91 6.32 6.52 6.13 6.07 5.86 6.67 6.18
70 7.46 6.63 7.35 6.59 7.05 6.45 6.61 6.23 6.12 5.92 6.81 6.30
71 7.68 6.80 7.55 6.75 7.20 6.59 6.70 6.33 6.17 5.98 6.95 6.43
72 7.90 6.98 7.75 6.92 7.35 6.74 6.79 6.43 6.21 6.04 7.10 6.56
73 8.14 7.18 7.97 7.11 7.50 6.89 6.88 6.54 6.25 6.10 7.26 6.70
74 8.39 7.39 8.19 7.30 7.66 7.05 6.97 6.64 6.29 6.15 7.42 6.85
75 8.66 7.62 8.43 7.52 7.82 7.21 7.06 6.74 6.32 6.20 7.60 7.01
76 8.99 7.87 8.70 7.74 8.00 7.38 7.14 6.85 6.35 6.24 7.78 7.18
77 9.30 8.13 8.97 7.98 8.16 7.56 7.22 6.94 6.38 6.28 7.97 7.35
78 9.64 8.42 9.25 8.24 8.33 7.74 7.29 7.04 6.40 6.32 8.18 7.54
79 9.99 8.72 9.54 8.51 8.49 7.92 7.36 7.13 6.42 6.35 8.39 7.74
80 10.38 9.06 9.84 8.80 8.65 8.11 7.42 7.21 6.44 6.38 8.61 7.95
81 10.79 9.41 10.16 9.10 8.82 8.29 7.48 7.29 6.46 6.41 8.85 8.17
82 11.23 9.80 10.49 9.43 8.97 8.48 7.53 7.36 6.47 6.43 9.09 8.40
83 11.69 10.22 10.83 9.77 9.12 8.66 7.58 7.43 6.48 6.45 9.36 8.65
84 12.19 10.68 11.19 10.13 9.27 8.83 7.62 7.49 6.49 6.46 9.63 8.91
85 12.73 11.17 11.55 10.50 9.41 9.00 7.66 7.54 6.50 6.47 9.92 9.17
<FN>
*Age equals age of annuitant nearest birthday when first payment is made
</FN>
</TABLE>
<TABLE>
<CAPTION>
Guaranteed Initial Monthly Payment per $1,000 of Proceeds
Variable Payout Based on 5% AIR
Option 3
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.70
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.51 4.76 5.09 5.44 5.72
70 4.35 4.53 4.82 5.29 5.93 6.63
80 4.35 4.54 4.86 5.40 6.31 7.65
</TABLE>
<TABLE>
<CAPTION>
Option 4
5 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.70
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.51 4.76 5.09 5.44 5.72
70 4.35 4.53 4.82 5.29 5.93 6.62
80 4.35 4.54 4.86 5.40 6.31 7.63
</TABLE>
<TABLE>
<CAPTION>
Option 4
10 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.69
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.50 4.76 5.09 5.43 5.70
70 4.35 4.53 4.82 5.28 5.91 6.56
80 4.35 4.54 4.86 5.39 6.26 7.43
</TABLE>
<TABLE>
<CAPTION>
Option 4
15 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.69
50 4.32 4.47 4.65 4.83 4.98 5.07
60 4.34 4.50 4.75 5.08 5.42 5.64
70 4.35 4.53 4.82 5.27 5.86 6.37
80 4.35 4.54 4.84 5.36 6.13 6.96
</TABLE>
<TABLE>
<CAPTION>
Option 4
20 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.43 4.44
40 4.30 4.40 4.51 4.60 4.65 4.67
50 4.32 4.46 4.64 4.83 4.97 5.03
60 4.34 4.50 4.75 5.06 5.36 5.52
70 4.34 4.52 4.80 5.23 5.72 6.04
80 4.35 4.53 4.82 5.29 5.89 6.32
</TABLE>
GENERAL PROVISIONS
THE CONTRACT: The entire contract consists of this Group Annuity Contract, the
Certificates issued under such Contract, and any attached applications,
endorsements or riders. This Group Annuity Contract may be changed or altered
only by our President or Secretary. Any change, modification or waiver must be
made in writing.
NON-PARTICIPATING IN SURPLUS: Neither this Contract or any Certificate share in
any distribution of our profits or surplus.
INCONTESTABILITY: We will not contest any Certificate from its Certificate Date.
MISSTATEMENT OF AGE OR SEX: We may require proof of Age of the Annuitant before
making any life contingent Annuity Payment provided for by a Certificate. If the
Age or sex of the Annuitant has been misstated the amount payable will be the
amount that the Certificate Value would have provided at the true Age or sex.
Once Annuity Payments have begun, any underpayments will be made up in one sum
with the next Annuity Payment, and overpayments will be deducted from the future
Annuity Payments until the total is repaid. The annual interest rate to be used
in the calculation of the adjustments for underpayments and overpayments is 5%.
CERTIFICATE SETTLEMENT: The Certificate must be returned to us upon any
settlement. Prior to any settlement as a death claim, due proof of death must be
submitted to us. Any paid-up annuity, cash surrender or death benefits that may
be available are not less than the minimum benefits required by any statute of
the state in which the Certificate is delivered.
REPORTS: We will furnish the Certificate Owner with a report showing the
Certificate Value at least once each calendar year. This report will be sent to
the Certificate Owner's last known address.
TAXES: Any taxes paid to any governmental entity will be charged against a
Certificate's Certificate Value. We will, in our sole discretion, determine when
taxes have resulted from: the investment experience of the Variable Account;
receipt by us of the Purchase Payment(s); or commencement of Annuity Payments.
We may, at our discretion, pay taxes when due and deduct that amount from the
Certificate Value at a later date. Payment at an earlier date does not waive any
right we may have to deduct amounts at a later date. We reserve the right to
establish a provision for federal income taxes if we determine, in our sole
discretion, that we will incur a tax as a result of the operation of the
Variable Account. We will deduct for any income taxes incurred by it as a result
of the operation of the Variable Account whether or not there was a provision
for taxes and whether or not it was sufficient. The Company will deduct any
withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL: Where any benefits under a Certificate are contingent upon
the recipient being alive on a given date, we may require proof satisfactory to
us that the condition has been met.
PROTECTION OF PROCEEDS: No Beneficiary may commute, encumber, alienate or assign
any payments under a Certificate before they are due. To the extent permitted by
law, no payments will be subject to the debts, contracts or engagements of any
Beneficiary or to any judicial process to levy upon or attach the same for
payment thereof.
MODIFICATION OF CONTRACT OR CERTIFICATE: This Contract may not be modified by us
without your consent except as may be required by applicable law. No Certificate
will be modified by us without such Certificate Owner's consent except as may be
required by applicable law.
[LOGO]
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
152 West 57th Street, 18th Floor
New York, New York 10019
This Certificate is a legal contract between the Certificate Owner (referred to
in this Certificate as you and your) and Preferred Life Insurance Company of New
York (Preferred Life) (herein referred to as we, us and our). We will make
Annuity Payments and pay other benefits as set forth in this Certificate,
subject to its provisions.
This Certificate is issued in consideration of the attached application and of
the payment of the initial Purchase Payment. This Certificate is delivered in,
and is governed by, the laws of the state of New York.
READ YOUR CERTIFICATE CAREFULLY
RIGHT TO EXAMINE: This Certificate may be returned within 10 days after you
receive it. It can be mailed or delivered to either us or the agent who sold it.
Return of this Certificate by mail is effective on being postmarked, properly
addressed and postage prepaid. The returned Certificate will be treated as if we
had never issued it. We will promptly refund the Certificate Value as of the
date of surrender. This may be more or less than the Purchase Payments. We have
the right to allocate payments to the Money Market Fund until the expiration of
the Right to Examine period. If we so allocate payments, we will refund the
greater of the Purchase Payments, less any surrenders, or the Certificate Value.
This is a Variable Annuity Certificate with Annuity Payments and Certificate
Values increasing or decreasing depending on the experience of the Variable
Account which is set forth in the Certificate Schedule.
Signed by the Company:
/s/MICHAEL T. WESTERMEYER /s/THOMAS J. LYNCH
--------- ---------
Secretary President
FLEXIBLE PAYMENT VARIABLE ANNUITY
NONPARTICIPATING
Annuity payments will not decrease as long as the investment return of the
variable account assets equals or exceeds 6.4% (assuming a 5% Assumed Investment
Return) on an annual basis. Variable Account expenses consist of a Mortality and
Expense Risk Charge, an Administrative Charge, a Distribution Expense Charge, a
Certificate Maintenance Charge, and Transfer Fees. These are shown on the
Certificate Schedule Page. The variable provisions can be found on pages 4, 5,
6, and 15 of this Certificate.
P30046
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RIGHT TO EXAMINE..................................................................................................1
CERTIFICATE SCHEDULE..............................................................................................i
DEFINITIONS.......................................................................................................2
PURCHASE PAYMENTS.................................................................................................4
PURCHASE PAYMENTS........................................................................................4
CHANGE IN PURCHASE PAYMENTS..............................................................................4
NO DEFAULT...............................................................................................4
ALLOCATION OF PURCHASE PAYMENTS..........................................................................4
VARIABLE ACCOUNT..................................................................................................4
THE VARIABLE ACCOUNT.....................................................................................4
VALUATION OF ASSETS......................................................................................5
ACCUMULATION UNITS.......................................................................................5
ACCUMULATION UNIT VALUE..................................................................................5
NET INVESTMENT FACTOR....................................................................................5
MORTALITY AND EXPENSE RISK CHARGE........................................................................5
ADMINISTRATIVE CHARGE....................................................................................5
DISTRIBUTION EXPENSE CHARGE..............................................................................6
MORTALITY AND EXPENSE GUARANTEE..........................................................................6
CERTIFICATE VALUE.................................................................................................6
CERTIFICATE MAINTENANCE CHARGE....................................................................................6
TRANSFERS.........................................................................................................6
SURRENDER PROVISIONS..............................................................................................7
SURRENDERS...............................................................................................7
CONTINGENT DEFERRED SALES CHARGE.........................................................................7
PROCEEDS PAYABLE ON DEATH.........................................................................................8
DEATH OF CERTIFICATE OWNER DURING THE ACCUMULATION PERIOD................................................8
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD......................................................8
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD.....................................................8
DEATH OF CERTIFICATE OWNER DURING THE ANNUITY PERIOD.....................................................8
DEATH OF ANNUITANT.......................................................................................8
PAYMENT OF DEATH BENEFIT.................................................................................9
BENEFICIARY..............................................................................................9
CHANGE OF BENEFICIARY....................................................................................9
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION......................................................................9
CERTIFICATE OWNER, ANNUITANT, ASSIGNMENT PROVISIONS..............................................................10
CERTIFICATE OWNER........................................................................................10
JOINT OWNER..............................................................................................10
ANNUITANT................................................................................................10
ASSIGNMENT OF A CERTIFICATE..............................................................................10
ANNUITY PROVISIONS...............................................................................................10
GENERAL.................................................................................................10
INCOME DATE.............................................................................................10
SELECTION OF AN ANNUITY OPTION..........................................................................11
ANNUITY OPTIONS.........................................................................................11
OPTION 1 - LIFE ANNUITY...........................................................................11
OPTION 2 - LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY ANNUITY
PAYMENTS GUARANTEED...............................................................................11
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY........................................................11
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH 60, 120, 180, OR 240 MONTHLY ANNUITY PAYMENTS GUARANTEED 11
OPTION 5 - REFUND LIFE ANNUITY...................................................................12
ANNUITY.................................................................................................12
FIXED ANNUITY...........................................................................................12
VARIABLE ANNUITY........................................................................................15
GENERAL PROVISIONS...............................................................................................18
THE CONTRACT............................................................................................18
NON-PARTICIPATING IN SURPLUS............................................................................18
INCONTESTABILITY........................................................................................18
MISSTATEMENT OF AGE OR SEX..............................................................................18
CERTIFICATE SETTLEMENT..................................................................................18
REPORTS.................................................................................................18
TAXES...................................................................................................18
EVIDENCE OF SURVIVAL....................................................................................18
PROTECTION OF PROCEEDS..................................................................................18
MODIFICATION OF CERTIFICATE.............................................................................19
</TABLE>
<TABLE>
<CAPTION>
CERTIFICATE SCHEDULE
<S> <C> <C> <C>
CERTIFICATE OWNER: [John Doe] CERTIFICATE NUMBER: [GA687456]
JOINT OWNER: [Jane Doe] ISSUE DATE: [04/15/96]
ANNUITANT: [John Doe] INCOME DATE: [04/15/06]
</TABLE>
<TABLE>
<CAPTION>
PURCHASE PAYMENTS:
<S> <C>
INITIAL PURCHASE PAYMENT: [$25,000]
MINIMUM SUBSEQUENT
PURCHASE PAYMENT: [$250 or $100 if you have selected AIP]
MAXIMUM TOTAL
PURCHASE PAYMENTS: [$1 million; higher amounts may be accepted with
our prior approval]
</TABLE>
ALLOCATION GUIDELINES:
[1. Currently, you can select 10 of the Funds including the Fixed
Account, at any one time.
2. If allocations are made in percentages, whole numbers must be
used.
3. If the initial Purchase Payment and the forms required to
issue a Certificate are in good order, the initial Purchase
Payment will be credited to your Certificate within two (2)
business days after receipt at the Valuemark Service Center.
Additional Purchase Payments will be credited to your Certificate
as of the Valuation Period when they are received in good order.]
VARIABLE ACCOUNT: [Preferred Life Variable Account C]
ELIGIBLE INVESTMENTS:
[Franklin Valuemark Funds:]
[CAPITAL GROWTH FUND]
[GLOBAL HEALTH CARE SECURITIES FUND]
[GLOBAL UTILITIES SECURITIES FUND]
[GROWTH AND INCOME FUND]
[HIGH INCOME FUND]
[INCOME SECURITIES FUND]
[MONEY MARKET FUND]
[MUTUAL DISCOVERY SECURITIES FUND]
[MUTUAL SHARES SECURITIES FUND]
[NATURAL RESOURCES SECURITIES FUND]
[REAL ESTATE SECURITIES FUND]
[RISING DIVIDENDS FUND]
[SMALL CAP FUND]
[TEMPLETON DEVELOPING MARKETS EQUITY FUND]
[TEMPLETON GLOBAL ASSET ALLOCATION FUND]
[TEMPLETON GLOBAL INCOME SECURITIES FUND]
[TEMPLETON GLOBAL GROWTH FUND]
[TEMPLETON INTERNATIONAL EQUITY FUND]
[TEMPLETON INTERNATIONAL SMALLER COMPANIES FUND]
[TEMPLETON PACIFIC GROWTH FUND]
[U.S. GOVERNMENT SECURITIES FUND]
[VALUE SECURITIES FUND]
Preferred Life General Account:
PREFERRED LIFE FIXED ACCOUNT (is part of the Preferred Life General Account)
MORTALITY AND EXPENSE RISK CHARGE: During the Accumulation and Annuity Periods,
the Mortality and Expense Risk Charge is equal on an annual basis to [1.20%] of
the average daily net asset value of the Variable Account. We may decrease this
charge, but we may not increase it.
ADMINISTRATIVE CHARGE: Equal on an annual basis to .15% of the average daily net
asset value of the Variable Account.
DISTRIBUTION EXPENSE CHARGE: None
CERTIFICATE MAINTENANCE CHARGE: The Certificate Maintenance Charge is currently
$40.00 each Certificate Year. The Certificate Maintenance Charge will be
deducted from the Certificate Value on each Certificate Anniversary while this
Certificate is in force. However, during the Accumulation Period, if your
Certificate Value on a Certificate Anniversary is at least [$100,000], then no
Certificate Maintenance Charge will be deducted. If a total surrender is made on
other than a Certificate Anniversary and your Certificate Value for the
Valuation Period during which the total surrender is made is less than
[$100,000], the full Certificate Maintenance Charge will be deducted at the time
of the total surrender. The Certificate Maintenance Charge will be deducted from
the Funds and the Fixed Account in the same proportion that the amount of the
Certificate Value in each Fund and/or Fixed Account bears to the total
Certificate Value. During the Annuity Period, the Certificate Maintenance Charge
will be collected pro rata from each Annuity Payment. We may decrease this
charge, but we may not increase it. In the event you own more than one
Certificate issued by us, we will determine the total Certificate Value for all
such Certificates. If the total of all such Certificate Values is at least
[$100,000], we will not assess the Certificate Maintenance Charge. If the
Certificate Owner is not a natural person, we will look to the Annuitant in
determining the foregoing.
TRANSFERS:
NUMBER OF FREE TRANSFERS PERMITTED: You are allowed no less than [12] free
transfers each Certificate Year. In no instance will this be less than 12.
This applies to transfers prior to and after the Income Date.
TRANSFER FEE: For each transfer in excess of the Free Transfers Permitted,
the Transfer Fee is the lesser of $25 or 2% of the amount transferred.
Transfers made at the end of the Right to Examine period by us and any
transfers made pursuant to a regularly scheduled transfer will not be
counted in determining the application of the Transfer Fee.
MINIMUM AMOUNT TO BE TRANSFERRED: [$1,000] (from any Fund or the Fixed
Account) or your entire interest in the Fund or the Fixed Account, if less.
This requirement is waived if the transfer is pursuant to a pre-scheduled
transfer.
SURRENDERS:
CONTINGENT DEFERRED SALES CHARGE: None
FREE SURRENDER AMOUNT: All withdrawals are free of Contingent Deferred
Sales Charges.
Systematic Withdrawals are available on a monthly or quarterly basis. We
reserve the right to modify the eligibility rules at any time, without
notice.
If you have a Qualified Certificate, you can elect the Minimum Distribution
Program with respect to your Certificate. Withdrawals will be made on a
monthly or quarterly basis. Such payments will be designed to meet the
applicable minimum distribution requirements imposed by the Internal
Revenue Code on Qualified Certificates. You cannot elect both the
Systematic Withdrawal Option and the Minimum Distribution Program in the
same Certificate Year.
MINIMUM PARTIAL SURRENDER: [$500]
MINIMUM CERTIFICATE VALUE WHICH MUST REMAIN IN THE CERTIFICATE AFTER A
PARTIAL SURRENDER: [$5,000]
FIXED ACCOUNT INITIAL RATE: [3%]
We guarantee this rate for one year from the Issue Date.
RIDERS:
[Individual Retirement Annuity Endorsement]
[Roth Individual Retirement Annuity Endorsement]
[403 (b) Endorsement]
[Enhanced Death Benefit Endorsement (Traditional)]
[Enhanced Death Benefit Endorsement]
[Unisex Endorsement]
[Declared Interest Rate Fixed Account Endorsement]
[Pension Plan Death Benefit Endorsement]
[Charitable Remainder Trust Endorsement]
[Pension Plan and Profit Sharing Plan Endorsement]
SERVICE OFFICE: VALUEMARK SERVICE CENTER
[300 Berwyn Park
P.O. Box 3031
Berwyn, PA 19312-0031
800-624-0197]
DEFINITIONS
ACCUMULATION UNIT: An accounting unit of measure used to calculate the
Certificate Value prior to the Income Date.
ACCUMULATION PERIOD: The period prior to the Income Date during which you can
make Purchase Payments.
ADJUSTED CERTIFICATE VALUE: The Certificate Value less any applicable Premium
Tax. This amount is applied to the applicable Annuity Table to determine the
initial Annuity Payment.
AGE: Age last birthday unless otherwise specified.
ANNUITANT: The natural person upon whose continuation of life any Annuity
Payment involving life contingencies depends. You may change the Annuitant at
any time prior to the Income Date unless the Certificate Owner is a
non-individual. On or after the Income Date, any reference to Annuitant shall
also include any Joint Annuitant.
ANNUITY OPTION: An arrangement under which Annuity Payments are made under this
Certificate.
ANNUITY PAYMENTS: The series of payments made to you or any named payee after
the Income Date under the Annuity Option selected.
ANNUITY PERIOD: The period of time beginning on the Income Date during which
Annuity Payments are made.
ANNUITY RESERVE: The assets which support the Annuity Option you have selected
during the Annuity Period.
ANNUITY UNIT: An accounting unit of measure used to calculate Annuity Payments
after the Income Date.
ASSUMED INVESTMENT RETURN: The investment return upon which the Variable Annuity
Payments in the Certificate are based.
AUTHORIZED REQUEST: A request, in a form satisfactory to the Company, which is
received by the Valuemark Service Center.
BENEFICIARY: The person(s) or entity(ies) who will receive any death benefit
payable under this Certificate.
COMPANY: Preferred Life Insurance Company of New York.
CERTIFICATE ANNIVERSARY: An anniversary of the Issue Date of this Certificate.
CERTIFICATE OWNER: The person(s) or entity(ies) entitled to the ownership rights
stated in this Certificate. If Joint Owners are named, all references to
Certificate Owner shall mean the Joint Owners.
CERTIFICATE SURRENDER VALUE: The Certificate Value less any applicable Premium
Tax, less any Contingent Deferred Sales Charge and less any applicable
Certificate Maintenance Charge.
CERTIFICATE VALUE: The dollar value as of any Valuation Date of all amounts
accumulated under this Certificate.
CERTIFICATE YEAR: Any period of twelve (12) months commencing with the Issue
Date and each Certificate Anniversary thereafter.
ELIGIBLE INVESTMENT(S): Those investments available under this Certificate.
Current Eligible Investments are shown on the Certificate Schedule.
FUND: A segment of an Eligible Investment which constitutes a separate and
distinct class of interests under an Eligible Investment.
GENERAL ACCOUNT: Our general investment account which contains all the assets of
the Company with the exception of the Variable Account and other segregated
asset accounts.
INCOME DATE: The date on which Annuity Payments are to begin.
ISSUE DATE: The date shown on the Certificate Schedule on which the first
Certificate Year begins.
JOINT OWNER: If there is more than one Certificate Owner, each Certificate Owner
shall be a Joint Owner of the Certificate. There can only be two Joint Owners.
Joint Owners have equal ownership rights and must both authorize any exercising
of those ownership rights unless otherwise allowed by us.
PREMIUM TAX: Any premium taxes owed to any governmental entity and assessed
against Purchase Payments or Certificate Value.
PURCHASE PAYMENT: A payment made toward this Certificate.
SUB-ACCOUNT: Variable Account assets are divided into Sub-Accounts. Assets of
each Sub-Account will be invested in shares of an Eligible Investment or Fund.
In this Certificate, "Fund" may also refer to the Sub-Accounts from which the
Fund investment is made.
VALUATION DATE: The Variable Account will be valued each day that the New York
Stock Exchange is open for trading.
VALUATION PERIOD: The period commencing at the close of business of the New York
Stock Exchange on each Valuation Date and ending at the close of business for
the next succeeding Valuation Date.
VALUEMARK SERVICE CENTER: The office indicated on the Certificate Schedule of
this Certificate to which notices, requests and Purchase Payments must be sent.
All sums payable to us under the Certificate are payable only at the Valuemark
Service Center.
VARIABLE ACCOUNT: A separate account maintained by us in which a portion of our
assets has been allocated for this Certificate and certain other certificates
and contracts. It has been designated on the Certificate Schedule.
PURCHASE PAYMENTS
PURCHASE PAYMENTS: Purchase Payments are payable according to the frequency and
in the amount selected by you. The initial Purchase Payment is due on the Issue
Date. We reserve the right to decline any Purchase Payment. The Minimum
Subsequent Purchase Payment and the Maximum Total Purchase Payments allowed are
shown on the Certificate Schedule.
CHANGE IN PURCHASE PAYMENTS: You may elect to increase or decrease or to change
the frequency of Purchase Payments.
NO DEFAULT: Unless surrendered, this Certificate remains in force and will not
be in default if no additional Purchase Payments are made.
ALLOCATION OF PURCHASE PAYMENTS: Purchase Payments are allocated to one or more
of the Funds of the Variable Account in accordance with your selection. The
allocation of the initial Purchase Payment is made in accordance with your
selection made at the Issue Date. Unless you inform us otherwise, subsequent
Purchase Payments are allocated in the same manner as the initial Purchase
Payment. However, the Company has reserved the right to allocate the initial
Purchase Payment to the Money Market Fund until the expiration of the Right to
Examine period. All allocations of Purchase Payments are subject to the
Allocation Guidelines shown on the Certificate Schedule. We guarantee that you
will be allowed to select at least five Funds for allocation of Purchase
Payments.
VARIABLE ACCOUNT
THE VARIABLE ACCOUNT: The Variable Account is designated on the Certificate
Schedule. It consists of assets we have set aside and have kept separate from
the rest of our assets and those of our other separate accounts. The assets of
the Variable Account, equal to reserves and other liabilities of your
Certificate and those of other Certificate Owners and individual contract
owners, will not be charged with liabilities arising out of any other business
we may conduct.
The Variable Account assets are divided into Funds. The Funds which are
available under this Certificate are listed on the Certificate Schedule. The
assets of the Fund are allocated to the Eligible Investments (and/or the Funds,
if any, within an Eligible Investment) shown on the Certificate Schedule. We may
add additional Eligible Investments or Funds to those shown. You may be
permitted to transfer your Certificate Value or allocate Purchase Payments to
the additional Fund(s). However, the right to make such transfers or allocations
will be limited by any terms and conditions we may impose.
Should the shares of any Eligible Investment(s), or any Fund(s) within an
Eligible Investment, become unavailable for investment by the Variable Account,
or our Board of Directors deems further investment in the shares inappropriate,
we may limit further purchase of such shares or substitute shares of another
Eligible Investment or Fund for shares already purchased.
VALUATION OF ASSETS: Assets of Eligible Investments within each Fund will be
valued at their net asset value on each Valuation Date.
ACCUMULATION UNITS: Accumulation Units shall be used to account for all amounts
allocated to or withdrawn from the Funds of the Variable Account as a result of
Purchase Payments, surrenders, transfers, or fees and charges. We will determine
the number of Accumulation Units of a Sub-Account purchased or canceled. This
will be done by dividing the amount allocated to (or the amount withdrawn from)
the Sub-Account by the dollar value of one Accumulation Unit of the Sub-Account
as of the end of the Valuation Period during which the transaction is processed
at the Valuemark Service Center.
ACCUMULATION UNIT VALUE: The Accumulation Unit Value for each Fund was
arbitrarily set initially. Subsequent Accumulation Unit Values for each Fund are
determined by multiplying the Accumulation Unit Value for the immediately
preceding Valuation Period by the Net Investment Factor for the Fund for the
current period.
The Accumulation Unit value may increase or decrease from Valuation Period to
Valuation Period.
NET INVESTMENT FACTOR: The Net Investment Factor for each Fund is determined by
dividing A by B and multiplying by (1 - C) where:
A is (i) the net asset value per share of the Eligible Investment or the
Fund of an Eligible Investment held by the Fund at the end of the
current Valuation Period; plus
(ii) any dividend or capital gains per share declared on behalf of
such Eligible Investment or Fund that has an ex-dividend date
within the current Valuation Period.
B is the net asset value per share of the Eligible Investment or Fund
held by the Fund for the immediately preceding Valuation Period.
C is (i) the Valuation Period equivalent of the daily Mortality and
Expense Risk Charge, for the Administrative Charge and for the
Distribution Expense Charge, if any, which are shown on the
Certificate Schedule; plus
(ii) a charge factor, if any, for any taxes or any tax reserve we have
established as a result of the operation or maintenance of the
Fund.
MORTALITY AND EXPENSE RISK CHARGE: Each Valuation Period, we deduct a Mortality
and Expense Risk Charge from the Variable Account which is equal, on an annual
basis, to the amount shown on the Certificate Schedule. The Mortality and
Expense Risk Charge compensates us for assuming the mortality and expense risks
under this Certificate.
ADMINISTRATIVE CHARGE: Each Valuation Period, we deduct an Administrative Charge
from the Variable Account which is equal, on an annual basis, to the amount
shown on the Certificate Schedule. The Administrative Charge compensates us for
the costs associated with the administration of this Certificate and the
Variable Account.
DISTRIBUTION EXPENSE CHARGE: Each Valuation Period, we deduct a Distribution
Expense Charge from the Separate Account which is equal, on an annual basis, to
the amount shown on the Certificate Schedule. The Distribution Expense Charge
compensates us Company for costs associated with the distribution of
Certificates.
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.
CERTIFICATE VALUE
The Certificate Value for any Valuation Period is equal to the total dollar
value accumulated under this Certificate. The Certificate Value in a Fund of the
Variable Account is determined by multiplying the number of Accumulation Units
allocated to the Certificate Value for the Fund by the Accumulation Unit Value.
Purchase Payments, surrenders and transfers from or to a Fund will result in the
addition of or the cancellation of Accumulation Units in a Fund.
CERTIFICATE MAINTENANCE CHARGE
We deduct an annual Certificate Maintenance Charge shown on the Certificate
Schedule. During the Accumulation Period, this will be deducted from the
Certificate Value by canceling Accumulation Units to reimburse us for expenses
relating to maintenance of this Certificate. The number of Accumulation Units to
be canceled will be from each applicable Fund and is the ratio that the value of
each Fund bears to the total Certificate Value. During the Annuity Period, the
Certificate Maintenance Charge will be collected pro rata from each Annuity
Payment. However, the result will not be less than the Annuity Payment
guarantees defined in the Annuity Provisions section of this Certificate.
TRANSFERS
You may transfer all or a part of your interest in a Fund to another Fund. We
reserve the right to charge for transfers if there are more than the number of
free transfers shown on the Certificate Schedule. Pre-scheduled transfer
programs may be available. All transfers are subject to the following:
1. The deduction of any Transfer Fee that may be imposed as shown on the
Certificate Schedule. The Transfer Fee will be deducted from the Fund from
which the transfer is made. If the entire amount in the Fund is
transferred, then the Transfer Fee will be deducted from the amount
transferred. If there are multiple source Funds, it will be treated as a
single transfer. Any Transfer Fee will be deducted proportionally from the
source Funds if less than the entire amount in the Fund is transferred.
2. We reserve the right to limit transfers until the expiration of the Right
to Examine period.
3. The minimum amount which can be transferred is shown on the Certificate
Schedule.
4. No transfer will be effective within seven calendar days prior to the date
on which the first Annuity Payment is due.
5. Any transfer direction must clearly specify:
a. the amount which is to be transferred; and
b. the Funds which are to be affected.
6. After the Income Date, transfers may not be made from a fixed annuity
option to a variable annuity option.
7. After the Income Date, you can make at least one transfer from a variable
annuity option to a fixed annuity option. The number of Annuity Units
canceled from the variable annuity option will be equal in value to the
amount of the Annuity Reserve transferred out of the Variable Account. The
amount transferred will purchase fixed annuity payments under the Annuity
Option in effect and based on the age and sex of the Annuitant at the time
of the transfer where allowed.
8. We reserve the right to establish policies that limit or discourage
excessive trading that may be disruptive to the Fund.
9. We reserve the right at any time and without prior notice to any party to
modify the transfer provisions described above. However, if we do modify
these provisions we guarantee that they will not be any more restrictive
than the above.
If you elect to use this transfer privilege, we will not be liable for transfers
made in accordance with your instructions. All amounts and Accumulation Units
will be determined as of the end of the Valuation Period during which the
request for transfer is received at the Valuemark Service Center.
SURRENDER PROVISIONS
SURRENDERS: During the Accumulation Period, you may, upon Authorized Request,
make a total or partial surrender of the Certificate Surrender Value. Surrenders
will result in the cancellation of Accumulation Units from each Fund in the
ratio that the value of each Fund bears to the total Certificate Value. You must
specify, by Authorized Request, which Accumulation Units are to be canceled if
other than the above mentioned method of cancellation is desired.
The Company will pay the amount of any surrender from the Variable Account
within seven (7) days of receipt of a request in good order unless the
Suspension or Deferral of Payments Provision is in effect.
Each partial surrender must be for an amount which is not less than the amount
shown on the Certificate Schedule. The minimum Certificate Value which must
remain in the Certificate after a partial surrender is shown on the Certificate
Schedule.
CONTINGENT DEFERRED SALES CHARGE: Upon a surrender of Certificate Value a
Contingent Deferred Sales Charge as set forth on the Certificate Schedule may be
assessed. Under certain circumstances, we allow surrenders without the
Contingent Deferred Sales Charge as set forth on the Certificate Schedule.
PROCEEDS PAYABLE ON DEATH
DEATH OF CERTIFICATE OWNER DURING THE ACCUMULATION PERIOD: Upon the death of the
Certificate Owner, or any Joint Owner, during the Accumulation Period, the death
benefit will be paid to the Beneficiary(ies) designated by the Certificate
Owner. Upon the death of a Joint Owner, the surviving Joint Owner, if any, will
be treated as the primary Beneficiary. Any other Beneficiary designation on
record at the time of death will be treated as a contingent Beneficiary.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will be
the Adjusted Certificate Value determined as of the end of the Valuation Period
during which the Company receives both due proof of death and an election for
the payment method.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD: A Beneficiary may request
that the death benefit be paid under one of the Death Benefit Options below. In
addition, if the Beneficiary is the spouse of the Certificate Owner, he or she
may elect to continue the Certificate in his or her own name and exercise all
the Certificate Owner's rights under the Certificate. In this event, the
Certificate Value for the Valuation Period during which this election is
implemented will be adjusted to equal the death benefit.
Option A - lump sum payment of the death benefit; or
Option B - the payment of the entire death benefit within 5 years of the
date of the death of the Certificate Owner or any Joint Owner; or
Option C - payment of the death benefit under an Annuity Option over the
lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one year
of the date of death of the Certificate Owner or any Joint Owner.
Any portion of the death benefit not applied under Option C within one year of
the date of the Certificate Owners' death, must be distributed within five years
of the date of death.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.
Payment to the Beneficiary, other than in a lump sum, may only be elected during
the sixty-day period beginning with the date of receipt of proof of death.
DEATH OF CERTIFICATE OWNER DURING THE ANNUITY PERIOD: If you, or any Joint
Owner, dies during the Annuity Period, and you are not an Annuitant, any
remaining payments under the Annuity Option elected will continue at least as
rapidly as under the method of distribution in effect at such Certificate
Owner's death. Upon your death during the Annuity Period, the Beneficiary
becomes the Certificate Owner.
DEATH OF ANNUITANT: Upon the death of an Annuitant who is not the Certificate
Owner, during the Accumulation Period, you may designate a new Annuitant,
subject to our underwriting rules then in effect. If no designation is made
within 30 days of the death of the Annuitant, you will become the Annuitant. If
the Certificate Owner is a non-individual, the death of the Annuitant will be
treated as the death of the Certificate Owner and a new Annuitant may not be
designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit, if
any, will be as specified in the Annuity Option elected. Death benefits will be
paid at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
PAYMENT OF DEATH BENEFIT: The Company will require due proof of death before any
death benefit is paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
BENEFICIARY: The Beneficiary designation in effect on the Issue Date will remain
in effect until changed. The Beneficiary is entitled to receive the benefits to
be paid at your death.
Unless you provide otherwise, the death benefit will be paid in equal shares to
the survivor(s) as follows:
1. to the primary Beneficiary(ies) who survive you and/or the Annuitant's
death, as applicable; or if there are none
2. to the contingent Beneficiary(ies) who survive you and/or the
Annuitant's death, as applicable; or if there are none
3. to your estate.
CHANGE OF BENEFICIARY: Subject to the rights of any irrevocable
Beneficiary(ies), you may change the primary Beneficiary(ies) or contingent
Beneficiary(ies). A change may be made by Authorized Request. The change will
take effect as of the date the Authorized Request is signed. The Company will
not be liable for any payment made or action taken before it records the change.
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
The Company reserves the right to suspend or postpone payments from the Variable
Account for a surrender or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held
in the Variable Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Variable
Account's net assets; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Certificate Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
CERTIFICATE OWNER, ANNUITANT, ASSIGNMENT PROVISIONS
CERTIFICATE OWNER: As the Certificate Owner you have all the interest and rights
under this Certificate. The Certificate Owner is the person designated as such
on the Issue Date, unless changed.
You may change Owners of the Certificate at any time by Authorized Request. A
change of Certificate Owner will automatically revoke any prior designation of
Certificate Owner. The change will become effective as of the date the
Authorized Request is signed. We will not be liable for any payment made or
action taken before the change is recorded.
JOINT OWNER: A Certificate may be owned by Joint Owners. Upon the death of
either Joint Owner, the surviving Joint Owner, if any, will be the primary
Beneficiary. Any other Beneficiary designation will be treated as a contingent
Beneficiary unless otherwise indicated in an Authorized Request.
ANNUITANT: The Annuitant is the person on whose life Annuity Payments are based.
The Annuitant is the person designated by you subject to our underwriting rules
then in effect. The Annuitant may not be changed in a Certificate which is owned
by a non-individual.
ASSIGNMENT OF A CERTIFICATE: An Authorized Request specifying the terms of an
assignment of a Certificate must be provided to the Valuemark Service Center. We
will not be liable for any payment made or action taken before we record the
assignment.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with our consent.
If a Certificate is assigned, the Certificate Owner's rights may only be
exercised with the consent of the assignee of record.
ANNUITY PROVISIONS
GENERAL: On the Income Date, the Adjusted Certificate Value will be applied
under the Annuity Option you have selected. You may elect to have the Adjusted
Certificate Value applied to provide a Fixed Annuity, a Variable Annuity or a
combination Fixed and Variable Annuity. If a combination is elected, you must
specify what part of the Adjusted Certificate Value is to be applied to the
Fixed and Variable Annuity Options.
INCOME DATE: You select an Income Date at the time of issue. The Income Date
must always be the first day of a calendar month. The earliest Income Date you
can select is two years after the Issue Date. The latest Income Date you can
select is the later of the first day of the first calendar month following the
Annuitant's 90th birthday. You may, at any time prior to the Income Date, change
the Income Date by Authorized Request 30 days in advance.
SELECTION OF AN ANNUITY OPTION: You can select an Annuity Option by Authorized
Request. If no Annuity Option is selected, Option 2, with 60 Monthly Payments
Guaranteed, will automatically be applied. You may, at any time prior to the
Income Date, by Authorized Request 30 days in advance, select and/or change the
Annuity Option.
ANNUITY OPTIONS: This Certificate provides for Annuity Payments under one of the
Annuity Options described below. Any other Annuity Option acceptable to us may
be selected.
OPTION 1 - LIFE ANNUITY. We will make monthly Annuity Payments during the life
of the Annuitant and ceasing with the last Annuity Payment due prior to the
Annuitant's death.
OPTION 2 - LIFE ANNUITY WITH 60, 120, 180, OR 240 MONTHLY ANNUITY PAYMENTS
GUARANTEED. We will make monthly Annuity Payments during the life of the
Annuitant with a guarantee that if at the Annuitant's death there have been less
than 60, 120, 180, or 240 monthly Annuity Payments made as selected, monthly
Annuity Payments will continue for the remainder of the guaranteed period. You
may elect to have the present value of the guaranteed monthly Annuity Payments
remaining, as of the date notice of the Annuitant's death is received at the
Valuemark Service Center, commuted at the Assumed Investment Return selected for
a Variable Annuity or for a Fixed Annuity the Statutory Calendar Year Interest
Rate based on the New York's Standard Valuation Law for Single Premium Immediate
Annuities corresponding to the Income Date. We will require the return of this
Certificate and proof of death prior to the payment of any commuted values.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY. We will make monthly Annuity
Payments during the joint lifetime of the Annuitant and the Joint Annuitant.
Upon the death of the Annuitant, if the Joint Annuitant is then living, Annuity
Payments will continue to be paid during the remaining lifetime of the Joint
Annuitant at a level of 100%, 75% or 50% of the previous level, as selected.
Monthly Annuity Payments cease with the final Annuity Payment due prior to the
last survivor's death.
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH 60, 120, 180, OR 240 MONTHLY
ANNUITY PAYMENTS GUARANTEED. We will make monthly Annuity Payments during the
joint lifetime of the Annuitant and the Joint Annuitant. Monthly Annuity
Payments will continue to be paid during the remaining lifetime of the Joint
Annuitant at 100% of the previous level, as selected. If at the last death of
the Annuitant and the Joint Annuitant, there have been less than 60, 120, 180,
or 240 monthly Annuity Payments made as selected, monthly Annuity Payments will
continue to be made for the remainder of the guaranteed period. You may elect to
have the present value of the guaranteed monthly Annuity Payments remaining, as
of the date notice of the Annuitant's death is received by us, commuted at the
Assumed Investment Return selected for a Variable Annuity or for a Fixed Annuity
the Statutory Calendar Year Interest Rate based on the New York's Standard
Valuation Law for Single Premium Immediate Annuities corresponding to the Income
Date. We will require the return of this Certificate and proof of death prior to
the payment of any commuted values.
OPTION 5 - REFUND LIFE ANNUITY. We will make monthly Annuity Payments during the
lifetime of the Annuitant ceasing with the last Annuity Payment due prior to the
Annuitant's death with a guarantee that after the Annuitant's death, you will
receive a refund. For a Fixed Annuity the amount of the refund will be any
excess of the amount of the Adjusted Certificate Value applied under this Option
over the total of all Annuity Payments made under this Option. For a Variable
Annuity the amount of the refund will depend on the current fund allocation and
will be the sum of Refund Amounts attributable to each fund. The Refund Amount
for a given Fund is calculated using the following formula:
(1) x {[(2) x (3) x (4)/(5)] - [(4) x (6)]}
where:
(1) = Annuity Unit value of that given Fund when claim proofs are
received.
(2) = Total Adjusted Certificate Value at the time of annuitization.
(3) = Allocation percentage in that given Fund (in decimal form) when
claim proofs are received.
(4) = Current number of Annuity Units used in determining each Annuity
Payment attributable to that given Fund.
(5) = Dollar value of first Annuity Payment.
(6) = Number of Annuity Payments made since annuitization.
This calculation will be based upon the allocation of Annuity Units actually
in-force at the time claim proofs are received at the Valuemark Service Center.
There will be no refund paid if the total refund determined using the above
calculations is less than or equal to zero.
ANNUITY: If you select a Fixed Annuity, the Adjusted Certificate Value is
allocated to the General Account and the Annuity is paid as a Fixed Annuity. If
you select a Variable Annuity, the Adjusted Certificate Value will be allocated
to the Funds of the Variable Account in accordance with your selection, and the
Annuity will be paid as a Variable Annuity. Unless you designate another payee,
you will be the payee of the Annuity Payments. The Adjusted Certificate Value
will be applied to the applicable Annuity Table contained in this Certificate
based upon the Annuity Option you have selected. We may offer more favorable
rates than those guaranteed here at the time your first annuity payment is
calculated. Where permitted, Annuity Payments will depend on the Age and sex of
the Annuitant. The Annuity Payments will be at least as favorable as those that
would be provided by the application of an amount to purchase any single premium
immediate annuity contract offered by us at the time for the same class of
Annuitants.
FIXED ANNUITY: You may elect to have the Adjusted Certificate Value applied to
provide a Fixed Annuity. The dollar amount of each Fixed Annuity Payment is
guaranteed to be at least an amount equal to the Adjusted Certificate Value,
divided first by $1000 and then multiplied by the appropriate Annuity Payment
amount for each $1000 of value for the Annuity Option selected. The guaranteed
rates contained in the Annuity Tables in this Certificate are based on an
interest rate of 2 1/2% per year and the 1983(a) Individual Annuity Mortality
Table with mortality improvement projected 30 years using Mortality Projection
Scale G.
<TABLE>
<CAPTION>
Guaranteed Monthly Payment Per $1,000 of Proceeds
Fixed Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2
5 Yr 5 Yr 10 Yr 10 Yr 15 Yr 15 Yr 20 Yr 20 Yr
Opt 1 Opt 1 Minim Minim Minim Minim Minim Minim Minim Minim Opt 5 Opt 5
Age* M F M F M F M F M F M F
______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______
30 2.84 2.71 2.84 2.71 2.84 2.71 2.84 2.71 2.83 2.71 2.82 2.71
31 2.87 2.74 2.87 2.73 2.87 2.73 2.84 2.73 2.86 2.73 2.84 2.73
32 2.90 2.76 2.90 2.76 2.89 2.76 2.86 2.75 2.88 2.75 2.87 2.75
33 2.92 2.78 2.92 2.78 2.92 2.78 2.89 2.78 2.91 2.77 2.89 2.77
34 2.95 2.80 2.95 2.80 2.95 2.80 2.92 2.80 2.94 2.80 2.92 2.79
35 2.98 2.83 2.98 2.83 2.98 2.83 2.95 2.82 2.97 2.82 2.95 2.81
36 3.02 2.85 3.02 2.85 3.01 2.85 2.98 2.85 3.00 2.85 2.98 2.84
37 3.05 2.88 3.05 2.88 3.05 2.88 3.01 2.88 3.03 2.87 3.01 2.86
38 3.09 2.91 3.09 2.91 3.08 2.91 3.04 2.91 3.06 2.90 3.04 2.89
39 3.12 2.94 3.12 2.94 3.12 2.94 3.08 2.93 3.10 2.93 3.07 2.92
40 3.16 2.97 3.16 2.97 3.16 2.97 3.11 2.96 3.13 2.96 3.10 2.95
41 3.20 3.00 3.20 3.00 3.20 3.00 3.15 3.00 3.17 2.99 3.14 2.97
42 3.25 3.04 3.24 3.04 3.24 3.03 3.19 3.03 3.21 3.02 3.17 3.01
43 3.29 3.07 3.29 3.07 3.28 3.07 3.23 3.06 3.25 3.06 3.21 3.04
44 3.34 3.11 3.33 3.11 3.33 3.10 3.27 3.10 3.29 3.09 3.25 3.07
45 3.39 3.15 3.38 3.15 3.37 3.14 3.31 3.14 3.33 3.13 3.29 3.10
46 3.44 3.19 3.43 3.19 3.42 3.18 3.36 3.18 3.38 3.16 3.33 3.14
47 3.49 3.23 3.49 3.23 3.48 3.22 3.41 3.22 3.42 3.20 3.38 3.18
48 3.55 3.27 3.54 3.27 3.53 3.27 3.45 3.26 3.47 3.24 3.42 3.22
49 3.60 3.32 3.60 3.32 3.58 3.31 3.51 3.30 3.52 3.29 3.47 3.26
50 3.66 3.37 3.66 3.37 3.64 3.36 3.56 3.35 3.57 3.33 3.52 3.30
51 3.73 3.42 3.72 3.42 3.71 3.41 3.62 3.40 3.62 3.38 3.57 3.34
52 3.80 3.47 3.79 3.47 3.77 3.46 3.67 3.45 3.68 3.42 3.62 3.39
53 3.87 3.53 3.86 3.53 3.84 3.52 3.73 3.50 3.74 3.48 3.68 3.44
54 3.94 3.59 3.93 3.59 3.91 3.58 3.80 3.56 3.79 3.53 3.74 3.49
55 4.02 3.65 4.01 3.65 3.98 3.64 3.86 3.62 3.85 3.58 3.80 3.54
56 4.10 3.72 4.09 3.71 4.06 3.70 3.93 3.68 3.91 3.64 3.86 3.60
57 4.19 3.79 4.18 3.78 4.14 3.77 4.00 3.74 3.98 3.70 3.93 3.65
58 4.28 3.86 4.27 3.86 4.23 3.84 4.16 3.81 4.04 3.76 4.00 3.71
59 4.38 3.94 4.37 3.93 4.32 3.91 4.24 3.88 4.11 3.82 4.07 3.78
60 4.49 4.02 4.47 4.02 4.42 3.99 4.32 3.95 4.17 3.88 4.14 3.84
61 4.60 4.11 4.58 4.10 4.52 4.08 4.41 4.03 4.24 3.95 4.23 3.91
62 4.72 4.20 4.69 4.19 4.63 4.16 4.50 4.11 4.31 4.02 4.31 3.99
63 4.84 4.30 4.82 4.29 4.74 4.26 4.59 4.19 4.38 4.09 4.39 4.06
64 4.98 4.41 4.95 4.39 4.86 4.36 4.69 4.28 4.44 4.16 4.49 4.14
65 5.12 4.52 5.09 4.50 4.98 4.46 4.79 4.37 4.51 4.23 4.58 4.23
66 5.28 4.64 5.24 4.62 5.11 4.57 4.89 4.47 4.58 4.31 4.68 4.31
67 5.44 4.76 5.39 4.75 5.24 4.69 4.99 4.57 4.64 4.38 4.78 4.41
68 5.61 4.90 5.56 4.88 5.38 4.81 5.09 4.67 4.70 4.45 4.89 4.50
69 5.80 5.04 5.73 5.02 5.53 4.94 5.19 4.78 4.76 4.53 5.01 4.60
70 6.00 5.20 5.92 5.17 5.68 5.07 5.30 4.88 4.82 4.60 5.13 4.72
71 6.21 5.37 6.12 5.34 5.84 5.22 5.40 4.99 4.88 4.67 5.25 4.83
72 6.43 5.55 6.32 5.51 6.00 5.37 5.50 5.11 4.93 4.74 5.38 4.95
73 6.66 5.75 6.54 5.70 6.16 5.53 5.60 5.22 4.97 4.80 5.51 5.07
74 6.91 5.96 6.77 5.90 6.33 5.69 5.70 5.34 5.02 4.86 5.66 5.20
75 7.18 6.18 7.01 6.11 6.50 5.87 5.79 5.45 5.06 4.92 5.82 5.35
76 7.49 6.43 7.28 6.34 6.69 6.05 5.89 5.56 5.09 4.97 5.97 5.49
77 7.80 6.69 7.55 6.58 6.86 6.23 5.97 5.67 5.12 5.01 6.14 5.65
78 8.13 6.97 7.83 6.84 7.04 6.42 6.05 5.78 5.15 5.06 6.31 5.81
79 8.49 7.27 8.13 7.11 7.22 6.61 6.13 5.88 5.17 5.09 6.50 5.97
80 8.87 7.60 8.44 7.40 7.39 6.81 6.20 5.97 5.20 5.13 6.69 6.15
81 9.27 7.95 8.77 7.71 7.57 7.01 6.26 6.06 5.21 5.15 6.89 6.34
82 9.70 8.33 9.10 8.03 7.73 7.21 6.32 6.14 5.23 5.18 7.10 6.53
83 10.16 8.74 9.45 8.38 7.90 7.40 6.37 6.21 5.24 5.20 7.32 6.74
84 10.65 9.18 9.81 8.74 8.05 7.59 6.42 6.28 5.25 5.22 7.55 6.95
85 11.18 9.66 10.19 9.12 8.20 7.77 6.46 6.34 5.26 5.23 7.80 7.17
<FN>
*Age equals age of annuitant nearest birthday when first payment is made
</FN>
</TABLE>
<TABLE>
<CAPTION>
Guaranteed Monthly Payment per $1,000 of Proceeds
Fixed Payout
Option 3
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.15
50 2.69 2.89 3.14 3.36 3.52 3.61
60 2.70 2.94 3.26 3.65 4.03 4.30
70 2.71 2.96 3.32 3.86 4.56 5.27
80 2.71 2.97 3.35 3.96 4.94 6.32
</TABLE>
<TABLE>
<CAPTION>
Option 4
5 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.15
50 2.69 2.89 3.14 3.36 3.52 3.61
60 2.70 2.94 3.26 3.65 4.03 4.30
70 2.71 2.96 3.32 3.86 4.56 5.26
80 2.71 2.97 3.35 3.96 4.93 6.30
</TABLE>
<TABLE>
<CAPTION>
Option 4
10 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.14
50 2.69 2.89 3.14 3.36 3.52 3.60
60 2.70 2.94 3.26 3.65 4.03 4.29
70 2.71 2.96 3.32 3.86 4.55 5.22
80 2.71 2.96 3.35 3.95 4.90 6.13
</TABLE>
<TABLE>
<CAPTION>
Option 4
15 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.14
50 2.69 2.89 3.13 3.36 3.52 3.59
60 2.70 2.94 3.26 3.65 4.01 4.24
70 2.71 2.96 3.32 3.84 4.50 5.05
80 2.71 2.96 3.34 3.93 4.79 5.70
</TABLE>
<TABLE>
<CAPTION>
Option 4
20 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.83
40 2.66 2.82 2.96 3.06 3.11 3.13
50 2.69 2.89 3.13 3.35 3.50 3.56
60 2.70 2.94 3.25 3.63 3.97 4.14
70 2.71 2.95 3.31 3.81 4.38 4.74
80 2.71 2.96 3.33 3.87 4.57 5.06
</TABLE>
VARIABLE ANNUITY: You may elect to have the Adjusted Certificate Value applied
to provide a Variable Annuity. Variable Annuity Payments reflect the investment
performance of the Variable Account in accordance with the allocation of the
Adjusted Certificate Value to the Funds during the Annuity Period. The initial
Variable Annuity Payment is guaranteed to be at least the amount determined in
accordance with the Annuity Tables contained in this Certificate which are based
on the 1983(a) Individual Mortality Table with mortality improvement projected
30 years using Mortality Projection Scale G. Variable Annuity Payments are not
guaranteed as to dollar amount.
On the Income Date a fixed number of Annuity Units will be purchased as follows:
The first Annuity Payment is equal to the Adjusted Certificate Value, divided
first by $1000 and then multiplied by the appropriate Annuity Payment amount for
each $1000 of value for the Annuity Option selected, less any Certificate
Maintenance Charge due. In each Fund the fixed number of Annuity Units is
determined by dividing the amount of the initial Annuity Payment determined for
each Fund by the Annuity Unit value on the Income Date. Thereafter, the number
of Annuity Units in each Fund remains unchanged unless you elect to transfer
between Funds. All calculations will appropriately reflect the Annuity Payment
frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum of
the Annuity Payments for each Fund less any Certificate Maintenance Charge due.
The Annuity Payment in each Fund is determined by multiplying the number of
Annuity Units then allocated to such Fund by the Annuity Unit value for that
Fund.
On each subsequent Valuation Date, the value of an Annuity Unit is determined in
the following way:
First: The Net Investment Factor is determined as described under "Variable
Account - Net Investment Factor" above.
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a. the value of the Annuity Unit for the immediately preceding Valuation
Period;
b. multiplied by the Net Investment Factor for the current Valuation
Period;
c. divided by the Assumed Net Investment Factor (see below) for the
Valuation Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that we will use is 5%. However, we may agree with you to use a different
value.
<TABLE>
<CAPTION>
Guaranteed Initial Monthly Payment Per $1,000 of Proceeds
Variable Payouts Based on 5% AIR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2
5 Yr 5 Yr 10 Yr 10 Yr 15 Yr 15 Yr 20 Yr 20 Yr
Opt 1 Opt 1 Minim Minim Minim Minim Minim Minim Minim Minim Opt 5 Opt 5
Age* M F M F M F M F M F M F
______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______
30 4.46 4.36 4.46 4.36 4.46 4.35 4.45 4.35 4.44 4.35 4.46 4.36
31 4.48 4.37 4.48 4.37 4.48 4.37 4.47 4.37 4.46 4.36 4.48 4.38
32 4.50 4.39 4.50 4.39 4.50 4.38 4.49 4.38 4.48 4.38 4.50 4.39
33 4.52 4.40 4.52 4.40 4.52 4.40 4.51 4.40 4.50 4.39 4.52 4.41
34 4.55 4.42 4.55 4.42 4.54 4.42 4.53 4.41 4.52 4.41 4.54 4.43
35 4.57 4.44 4.57 4.44 4.57 4.44 4.56 4.43 4.55 4.43 4.57 4.44
36 4.60 4.46 4.60 4.46 4.59 4.45 4.58 4.45 4.57 4.45 4.59 4.46
37 4.63 4.48 4.63 4.48 4.62 4.48 4.61 4.47 4.60 4.46 4.62 4.48
38 4.66 4.50 4.66 4.50 4.65 4.50 4.64 4.49 4.62 4.49 4.64 4.50
39 4.69 4.52 4.69 4.52 4.68 4.52 4.67 4.51 4.65 4.51 4.67 4.52
40 4.72 4.55 4.72 4.55 4.71 4.54 4.70 4.54 4.68 4.53 4.70 4.55
41 4.76 4.57 4.75 4.57 4.75 4.57 4.73 4.56 4.71 4.55 4.73 4.57
42 4.79 4.60 4.79 4.60 4.78 4.60 4.76 4.59 4.74 4.58 4.76 4.60
43 4.83 4.63 4.83 4.63 4.82 4.62 4.80 4.62 4.77 4.60 4.80 4.62
44 4.88 4.66 4.87 4.66 4.86 4.65 4.84 4.64 4.80 4.63 4.83 4.65
45 4.92 4.69 4.91 4.69 4.90 4.69 4.87 4.68 4.84 4.66 4.87 4.68
46 4.97 4.73 4.96 4.73 4.94 4.72 4.91 4.71 4.88 4.69 4.91 4.71
47 5.01 4.76 5.01 4.76 4.99 4.75 4.96 4.74 4.92 4.72 4.95 4.75
48 5.06 4.80 5.06 4.80 5.04 4.79 5.00 4.78 4.96 4.76 4.99 4.78
49 5.12 4.84 5.11 4.84 5.09 4.83 5.05 4.81 5.00 4.79 5.04 4.82
50 5.17 4.88 5.16 4.88 5.14 4.87 5.10 4.85 5.04 4.83 5.08 4.85
51 5.23 4.93 5.22 4.93 5.19 4.91 5.15 4.89 5.09 4.87 5.13 4.89
52 5.30 4.98 5.28 4.97 5.25 4.96 5.20 4.94 5.13 4.91 5.19 4.94
53 5.36 5.03 5.35 5.02 5.31 5.01 5.26 4.98 5.18 4.95 5.24 4.98
54 5.43 5.08 5.42 5.08 5.38 5.06 5.32 5.03 5.23 4.99 5.30 5.03
55 5.51 5.14 5.49 5.13 5.45 5.11 5.38 5.08 5.28 5.04 5.37 5.08
56 5.58 5.20 5.57 5.19 5.52 5.17 5.44 5.14 5.33 5.09 5.43 5.13
57 5.67 5.26 5.65 5.26 5.60 5.23 5.51 5.19 5.39 5.14 5.50 5.19
58 5.76 5.33 5.74 5.32 5.68 5.30 5.58 5.25 5.44 5.19 5.57 5.25
59 5.85 5.41 5.83 5.40 5.76 5.37 5.65 5.32 5.50 5.24 5.65 5.31
60 5.95 5.48 5.93 5.47 5.85 5.44 5.73 5.38 5.56 5.30 5.73 5.38
61 6.06 5.57 6.03 5.55 5.95 5.52 5.81 5.45 5.62 5.36 5.81 5.45
62 6.18 5.65 6.15 5.64 6.05 5.60 5.89 5.52 5.67 5.42 5.90 5.52
63 6.30 5.75 6.27 5.73 6.16 5.68 5.97 5.60 5.73 5.48 6.00 5.60
64 6.44 5.85 6.40 5.83 6.27 5.78 6.06 5.68 5.79 5.54 6.10 5.69
65 6.58 5.96 6.53 5.94 6.38 5.87 6.15 5.76 5.85 5.60 6.20 5.77
66 6.74 6.07 6.68 6.05 6.51 5.98 6.24 5.85 5.91 5.67 6.31 5.87
67 6.90 6.20 6.83 6.17 6.63 6.09 6.33 5.94 5.96 5.73 6.43 5.97
68 7.08 6.33 7.00 6.30 6.77 6.20 6.42 6.03 6.02 5.80 6.55 6.07
69 7.27 6.47 7.17 6.44 6.91 6.32 6.52 6.13 6.07 5.86 6.67 6.18
70 7.46 6.63 7.35 6.59 7.05 6.45 6.61 6.23 6.12 5.92 6.81 6.30
71 7.68 6.80 7.55 6.75 7.20 6.59 6.70 6.33 6.17 5.98 6.95 6.43
72 7.90 6.98 7.75 6.92 7.35 6.74 6.79 6.43 6.21 6.04 7.10 6.56
73 8.14 7.18 7.97 7.11 7.50 6.89 6.88 6.54 6.25 6.10 7.26 6.70
74 8.39 7.39 8.19 7.30 7.66 7.05 6.97 6.64 6.29 6.15 7.42 6.85
75 8.66 7.62 8.43 7.52 7.82 7.21 7.06 6.74 6.32 6.20 7.60 7.01
76 8.99 7.87 8.70 7.74 8.00 7.38 7.14 6.85 6.35 6.24 7.78 7.18
77 9.30 8.13 8.97 7.98 8.16 7.56 7.22 6.94 6.38 6.28 7.97 7.35
78 9.64 8.42 9.25 8.24 8.33 7.74 7.29 7.04 6.40 6.32 8.18 7.54
79 9.99 8.72 9.54 8.51 8.49 7.92 7.36 7.13 6.42 6.35 8.39 7.74
80 10.38 9.06 9.84 8.80 8.65 8.11 7.42 7.21 6.44 6.38 8.61 7.95
81 10.79 9.41 10.16 9.10 8.82 8.29 7.48 7.29 6.46 6.41 8.85 8.17
82 11.23 9.80 10.49 9.43 8.97 8.48 7.53 7.36 6.47 6.43 9.09 8.40
83 11.69 10.22 10.83 9.77 9.12 8.66 7.58 7.43 6.48 6.45 9.36 8.65
84 12.19 10.68 11.19 10.13 9.27 8.83 7.62 7.49 6.49 6.46 9.63 8.91
85 12.73 11.17 11.55 10.50 9.41 9.00 7.66 7.54 6.50 6.47 9.92 9.17
<FN>
*Age equals age of annuitant nearest birthday when first payment is made
</FN>
</TABLE>
<TABLE>
<CAPTION>
Guaranteed Initial Monthly Payment per $1,000 of Proceeds
Variable Payout Based on 5% AIR
Option 3
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.70
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.51 4.76 5.09 5.44 5.72
70 4.35 4.53 4.82 5.29 5.93 6.63
80 4.35 4.54 4.86 5.40 6.31 7.65
</TABLE>
<TABLE>
<CAPTION>
Option 4
5 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.70
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.51 4.76 5.09 5.44 5.72
70 4.35 4.53 4.82 5.29 5.93 6.62
80 4.35 4.54 4.86 5.40 6.31 7.63
</TABLE>
<TABLE>
<CAPTION>
Option 4
10 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.69
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.50 4.76 5.09 5.43 5.70
70 4.35 4.53 4.82 5.28 5.91 6.56
80 4.35 4.54 4.86 5.39 6.26 7.43
</TABLE>
<TABLE>
<CAPTION>
Option 4
15 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.69
50 4.32 4.47 4.65 4.83 4.98 5.07
60 4.34 4.50 4.75 5.08 5.42 5.64
70 4.35 4.53 4.82 5.27 5.86 6.37
80 4.35 4.54 4.84 5.36 6.13 6.96
</TABLE>
<TABLE>
<CAPTION>
Option 4
20 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
Female Age 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.43 4.44
40 4.30 4.40 4.51 4.60 4.65 4.67
50 4.32 4.46 4.64 4.83 4.97 5.03
60 4.34 4.50 4.75 5.06 5.36 5.52
70 4.34 4.52 4.80 5.23 5.72 6.04
80 4.35 4.53 4.82 5.29 5.89 6.32
</TABLE>
GENERAL PROVISIONS
THE CONTRACT: The entire contract consists of this Certificate, the Group
Annuity Contract, and any attached application, endorsements or riders. This
Certificate may be changed or altered only by our President or Secretary. Any
change, modification or waiver must be made in writing. Nothing in the Group
Annuity Contract or any attached endorsements thereto invalidates or impairs any
right granted to the Certificate Owner by New York law or this Certificate.
NON-PARTICIPATING IN SURPLUS: This Certificate does not share in any
distribution of our profits or surplus.
INCONTESTABILITY: We will not contest this Certificate from its Issue Date.
MISSTATEMENT OF AGE OR SEX: We may require proof of Age of the Annuitant before
making any life contingent Annuity Payment provided for by this Certificate. If
the Age or sex of the Annuitant has been misstated the amount payable will be
the amount that the Certificate Value would have provided at the true Age or
sex.
Once Annuity Payments have begun, any underpayments will be made up in one sum
with the next Annuity Payment, and overpayments will be deducted from the future
Annuity Payments until the total is repaid. The annual interest rate to be used
in the calculation of the adjustments for underpayments and overpayments is 5%.
CERTIFICATE SETTLEMENT: This Certificate must be returned to us upon any
settlement. Prior to any settlement as a death claim, due proof of death must be
submitted to us. Any paid-up annuity, cash surrender or death benefits that may
be available are not less than the minimum benefits required by any statute of
the state in which this Certificate is delivered.
REPORTS: We will furnish you with a report showing the Certificate Value at
least once each calendar year. This report will be sent to your last known
address.
TAXES: Any taxes paid to any governmental entity will be charged against the
Certificate Value. We will, in our sole discretion, determine when taxes have
resulted from: the investment experience of the Variable Account; receipt by us
of the Purchase Payment(s); or commencement of Annuity Payments. We may, at our
discretion, pay taxes when due and deduct that amount from the Certificate Value
at a later date. Payment at an earlier date does not waive any right we may have
to deduct amounts at a later date. We reserve the right to establish a provision
for federal income taxes if we determine, in our sole discretion, that we will
incur a tax as a result of the operation of the Variable Account. We will deduct
for any income taxes incurred by it as a result of the operation of the Variable
Account whether or not there was a provision for taxes and whether or not it was
sufficient. The Company will deduct any withholding taxes required by applicable
law.
EVIDENCE OF SURVIVAL: Where any benefits under this Certificate are contingent
upon the recipient being alive on a given date, we may require proof
satisfactory to us that the condition has been met.
PROTECTION OF PROCEEDS: No Beneficiary may commute, encumber, alienate or assign
any payments under this Certificate before they are due. To the extent permitted
by law, no payments will be subject to the debts, contracts or engagements of
any Beneficiary or to any judicial process to levy upon or attach the same for
payment thereof.
MODIFICATION OF CERTIFICATE: This Certificate may not be modified by us without
your consent except as may be required by applicable law.
CHARITABLE REMAINDER TRUST ENDORSEMENT
This Endorsement modifies and forms a part of the Certificate to which it is
attached. The Effective Date is the Issue Date shown on the Certificate Schedule
of the Certificate to which this Endorsement is attached. In the case of a
conflict with any provision in the Certificate, the provisions of this
Endorsement will control.
The following hereby amends and supersedes the section of the Certificate
captioned "ANNUITY PROVISIONS - INCOME DATE".
ANNUITY PROVISIONS
INCOME DATE: A Certificate Owner selects an Income Date at the time of issue.
The Income Date must always be the first day of a calendar month. The earliest
Income Date a Certificate Owner can select is two years after the Issue Date.
The latest Income Date a Certificate Owner can select is the earlier of the
first day of the first calendar month following the Annuitant's 100th birthday,
or the maximum date permitted under law. A Certificate Owner may, at any time
prior to the Income Date, change the Income Date by authorized request 30 days
in advance.
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
/s/MICHAEL T. WESTERMEYER /s/THOMAS J. LYNCH
--------- ---------
Secretary President
ENHANCED DEATH BENEFIT ENDORSEMENT
This Endorsement forms a part of the Certificate to which it is attached. The
Effective Date is the Issue Date shown on the Certificate Schedule of the
Certificate to which this Endorsement is attached. In the case of a conflict
with any provision in the Certificate, the provisions of this Endorsement will
control. The following hereby amends and supersedes the section of the
Certificate captioned "Proceeds Payable On Death - Death Benefit Amount During
The Accumulation Period."
PROCEEDS PAYABLE ON DEATH
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will be
the greater of:
1. The Certificate Value, less any applicable Premium Tax, determined as
of the end of the Valuation Period during which we received at the
Valuemark Service Center both due proof of death and an election of
the payment method; or
2. The Guaranteed Minimum Death Benefit as defined below, less any
applicable Premium Tax, determined as of the date of death.
The Guaranteed Minimum Death Benefit is the greater of (a) or (b) below:
a) The sum of all Purchase Payments made less any surrenders.
b) The greatest Anniversary Value for Certificate Anniversaries prior to
the Certificate Owner's attained age 86. The Anniversary Value is
equal to the Certificate Value on a Certificate Anniversary, increased
by the dollar amount of any Purchase Payments made since that
Anniversary and decreased by the dollar amount of any surrenders since
that Anniversary.
If Joint Owners are named, the Age of the older Certificate Owner will be used
to determine the Guaranteed Minimum Death Benefit. If the Certificate is owned
by a non-natural person, then Certificate Owner shall mean Annuitant.
The amount of the death benefit is determined as of the end of the Business Day
during which we receive both proof of death and an election for the payment
method. When the Guaranteed Minimum Death Benefit is the amount payable, the
Certificate Value will automatically be increased to the Guaranteed Minimum
Death Benefit regardless of the payment option elected. When the Beneficiary
elects an option other than a lump sum distribution, the death benefit amount
remains in the Sub-Account and/or Fixed Account until distribution begins. From
the time the death benefit is determined until complete distribution is made,
any amount in the Sub-Account will be subject to investment risk which is borne
by the Beneficiary.
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
/s/MICHAEL T. WESTERMEYER /s/THOMAS J. LYNCH
--------- ---------
Secretary President
ENHANCED DEATH BENEFIT ENDORSEMENT
(TRADITIONAL)
This Endorsement forms a part of the Certificate to which it is attached. The
Effective Date is the Issue Date shown on the Certificate Schedule of the
Certificate to which this Endorsement is attached. In the case of a conflict
with any provision in the Certificate, the provisions of this Endorsement will
control. The following hereby amends and supersedes the section of the
Certificate captioned "Proceeds Payable On Death - Death Benefit Amount During
The Accumulation Period."
PROCEEDS PAYABLE ON DEATH
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will be
the greater of:
1. The Certificate Value, less any applicable Premium Tax; or
2. The Guaranteed Death Benefit equal to the Purchase Payments less any
surrenders, any Contingent Deferred Sales Charge paid on such
surrenders and any applicable Premium Tax.
The Death Benefit is determined as of the end of the Valuation Period during
which we received at the Valuemark Service Center both due proof of death and an
election of the payment method.
The amount of the death benefit is determined as of the end of the Business Day
during which we receive both proof of death and an election for the payment
method. When the Guaranteed Minimum Death Benefit is the amount payable, the
Certificate Value will automatically be increased to the Guaranteed Minimum
Death Benefit regardless of the payment option elected. When the Beneficiary
elects an option other than a lump sum distribution, the death benefit amount
remains in the Sub-Account and/or Fixed Account until distribution begins. From
the time the death benefit is determined until complete distribution is made,
any amount in the Sub-Account will be subject to investment risk which is borne
by the Beneficiary.
If the Certificate is owned by a non-natural person, then Certificate Owner
shall mean Annuitant.
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
/s/MICHAEL T. WESTERMEYER /s/THOMAS J. LYNCH
--------- ---------
Secretary President
UNISEX ENDORSEMENT
This Endorsement modifies the Certificate to which it is attached for use in
connection with a retirement plan which receives favorable income tax treatment
under Sections 401, 403, 408 of the Internal Revenue Code. In the case of a
conflict with any provision in the Certificate, the provisions of this
Endorsement will control. The Company may further amend the Certificate from
time to time to meet any requirements applicable to such plans. The effective
date of this Endorsement is the Issue Date shown on the Certificate Schedule.
The provisions of the Certificate are modified as follows:
1. Deleting any reference to sex; and
2. Deleting any Certificate charges uniquely applicable to females. Male
Certificate charge rates shall apply to both males and females; and
3. Deleting the settlement option rates applicable to males. Female settlement
option rates shall apply to both males and females.
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
/s/MICHAEL T. WESTERMEYER /s/THOMAS J. LYNCH
--------- ---------
Secretary President
Pension Plan Death Benefit Endorsement
This Endorsement forms a part of the Certificate to which it is attached. The
Effective Date of this Endorsement is the Issue Date shown on the Certificate
Schedule of this Certificate. In the case of a conflict with any provision in
the Certificate, the provisions of this Endorsement will control.
This Endorsement applies only to a Certificate owned by a Trust exempt from tax
under Section 501 of the Internal Revenue Code ("Code") on behalf of a pension
or profit sharing plan qualified under Section 401(a) of the Code. In such
event, the Trust may change the Annuitant at any time prior to the Income Date
and upon the death of the Annuitant may designate a new Annuitant and continue
the Certificate in force.
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
/s/MICHAEL T. WESTERMEYER /s/THOMAS J. LYNCH
--------- ---------
Secretary President
Franklin Valuemark Charter A Flexible Premium Variable Annuity
Issued by Preferred Life Insurance Company of New York GA__________
______________________________________________________________________________
1.OWNER Must be age 85 or younger
Name Last First Middle
________________________________________________________________________
(If the Owner is a trust, please include Trust Name, Trust Date, and the
Trust Beneficial Owner(s))
Address Street Address Apartment Number
City State Zip Code
Social Security Number Date of Birth Sex ____Female
(If the owner is a trust, ____Male
Daytime Telephone ( ) list the date(s) of birth
for the beneficial owner(s))
______________________________________________________________________________
2.JOINT OWNER(Optional)Must be the Spouse of the Owner-Must be age 85 or younger
Name Last First Middle
Social Security Number Date of Birth Sex ____Female
____Male
Daytime Telephone ( )
______________________________________________________________________________
3.ANNUITANT Must be age 85 or younger. Must complete if different than owner.
Name Last First Middle
Address Street Address Apartment Number
City State Zip Code
Social Security Number Date of Birth Sex ____Female
____Male
Daytime Telephone Relationship to Owner
______________________________________________________________________________
4.BENEFICIARY(IES) DESIGNATION
Primary Beneficiary(ies):
(In the event of death of Name Relationship to Owner
the Owner, the surviving
Joint Owner becomes the Name Relationship to Owner
Primary Beneficiary.)
Contingent Beneficiary(ies) Name Relationship to Owner
Name Relationship to Owner
______________________________________________________________________________
5. REPLACEMENT
Is this Annuity intended to replace or change existing life insurance or
annuity? ___Yes ____No
If checked yes, please include the appropriate forms.
______________________________________________________________________________
6. TAX QUALIFIED PLANS
Is this annuity part of a Tax For Tax Qualified Plans, please
Qualified Plan? ____ Yes ____No indicate one of the following:
___IRA ___403(b)TSA
___Roth IRA ___401 (Corporate Plan)
___SEP IRA ___Other _______________
______________________________________________________________________________
7.PURCHASE PAYMENT Minimum Initial Purchase Payment Must Be $25,000.
____Purchase Payment Enclosed with Application
Purchase Payment Amount $_____________________
____This certificate will be funded by a 1035 Exchange, Tax Qualified
Transfer/Rollover, CD or Mutual Fund Redemption. (If checked, please
attach the appropriate forms).
______________________________________________________________________________
8.PURCHASE PAYMENT ALLOCATION
You may select up to 10 funds. Use whole percentages. The allocations
you indicate below will become your allocations on all future payments
until you notify us of a change.
CAPITAL GROWTH FIXED
___%Capital Growth Fund ___%Preferred Life Fixed Account
___%Global Health Care
Securities Fund INCOME
___%Mutual Discovery Securities Fund ___%High Income Fund
___%Natural Resources Securities Fund ___%Templeton Global Income Securities
___%Small Cap Fund Fund
___%Templeton Developing Markets ___%U.S. Government Securities Fund
Equity Fund
___%Templeton Global Growth Fund
___%Templeton International Equity
Fund
___%Templeton International Smaller CAPITAL PRESERVATION AND INCOME
Companies Fund ___%Money Market Fund
___%Templeton Pacific Growth Fund
GROWTH AND INCOME
___%Global Utilities Securities Fund ___TOTAL (Must Equal 100%)
___%Growth and Income Fund
___%Income Securities Fund
___%Mutual Shares Securities Fund
___%Real Estate Securities Fund
___%Rising Dividends Fund
___%Templeton Global Asset Allocation
Fund
___%Value Securities Fund
______________________________________________________________________________
9. Death Benefit Election
Franklin Valuemark Charter automatically includes a "Traditional Death Benefit
that is applicable to certificates owned for the benefit of an individual. The
Traditional Death Benefit is equal to the greater of : 1)Certificate Value or 2)
Purchase Payments less surrenders.
Check the following box if you want to choose the "Enhanced Death Benefit". An
additional charge is assessed to the Owner for this feature. Upon making this
selection, it cannot be changed. This selection can only be made at the time of
initial premium payment. Refer to the Prospectus for additional information.
___Enhanced Death Benefit is equal to the greater of: 1)Certificate Value or 2)
Purchase Payments less surrenders or 3) The highest Anniversary Value prior to
the Owner's 86th birthday. The Anniversary Value is the Certificate Value on a
Certificate anniversary adjusted by subsequent premiums and surrenders.
______________________________________________________________________________
10. INCOME DATE
Selected Income Date ___- 01 -___ The Income Date (Annuitization Date) may be
no earlier than two full certificate years
after the issue date. (If no date is
selected, the Income Date will default to
the later of one month after the Annuitants
90th birthday.)
______________________________________________________________________________
11. BY SIGNING BELOW, THE OWNER UNDERSTANDS THAT OR AGREES TO
I received a Prospectus and have determined that the variable annuity applied
for is not unsuitable for my insurance investment objectives, financial
situation, and financial needs. It is a long term commitment to meet insurance
needs and financial goals. I understand that the annuity value for payments
allocated to the variable sub-accounts may increase or decrease depending on the
certificate's investment results, and that no minimum cash value is guaranteed
on the variable sub-accounts. To the best of my knowledge and belief, all
statements and answers in this application are complete and true. It is further
agreed that these statements and answers will become a part of any certificate
to be issued. No representative is authorized to modify this agreement or waive
any of Preferred Life's rights or requirements.
___________________________________ ______________________________________
Owner's Signature(or Trustee, if Joint Owner's Signature (or Trustee,
applicable) if applicable)
___________________________________ ______________________________________
Signed At (City, State) Date Signed
____Please send me a Statement of Additional Information
______________________________________________________________________________
12.BY SIGNING BELOW, THE REGISTERED REPRESENTATIVE/AGENT CERTIFIES THAT
- -I am NASD registered and state licensed for variable annuity certificates in
the state where this application is written and delivered; and
- -I provided the Owner(s) with the most current Prospectus; and
- -To the best of my knowledge and belief, this application ___DOES___DOES NOT
involve replacement of existing life insurance or annuities. If replacement,
attach a copy of each disclosure statement and list of companies involved.
___________________________________ ______________________________________
Registered Representative Name (Print) Registered Representative Name (Print)
___________________________________ ______________________________________
Registered Representative Signature Registered Representative Signature
___________________________________ ______________________________________
Broker Dealer Name Authorized signature of Broker Dealer
if required
______________________________________________________________________________
Branch Address Branch Telephone Number
______________________________________________________________________________
13.MAIL APPLICATIONS TO
Preferred Life-Valuemark Service Center For Overnight Delivery:
c/o PNC Bank Preferred Life Valuemark Service Center
Box 820478 c/o PNC Bank
Philadelphia, PA 19182-0478 Attn: Box 0478
Route 38 and East Gate Drive
Moorestown, NJ 08057-0478
______________________________________________________________________________
14.HOME OFFICE USE ONLY
If Preferred Life Insurance Company of New York makes a change in this space in
order to correct any apparent errors or omissions, it will be approved by
acceptance of this certificate by the Owner(s); however, any material change
must be accepted in writing by the Owner(s).
