As filed with the Securities and Exchange Commission on March 2, 2000.
- -------------------------------------------------------------------------------
File Nos. 333-93871
811-06116
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 2
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 28
NORTHBROOK VARIABLE ANNUITY ACCOUNT II
(Exact Name of Registrant)
NORTHBROOK LIFE INSURANCE COMPANY
(Name of Depositor)
MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
NORTHBROOK LIFE INSURANCE COMPANY
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
847/402-2400
(Name and Complete Address of Agent for Service)
COPIES TO:
ANGELA M. KING, ESQUIRE DANIEL J. FITZPATRICK, ESQUIRE
ALLSTATE LIFE INSURANCE COMPANY DEAN WITTER REYNOLDS INC.
3100 SANDERS ROAD, SUITE J5B TWO WORLD TRADE CENTER
NORTHBROOK, ILLINOIS 60062 NEW YORK, NEW YORK 10048
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: CONTINUOUS
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
__ immediately upon filing pursuant to paragraph (b) of Rule 485
__ on (date) pursuant to paragraph (b) of Rule 485
X 60 days after filing pursuant to paragraph (a)(1) of Rule 485
__ on (date) pursuant to paragraph (a)(1) of Rule 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
__ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
TITLE OF SECURITIES BEING REGISTERED: Units of Interest in the Northbrook
Variable Annuity Account II under Deferred Variable Annuity Contracts.
<PAGE>
Explanatory Note
Registrant is filing this post-effective amendment ("Amendment") for the sole
purpose of amending the registration statement to reflect (a) the substitution
of a new income benefit option and (b) the substitution of a new income and
death benefit option, both of which Registrant proposes to make available on or
about May 1, 2000 under the contracts described in the registration statement.
The Amendment is not intended to amend or delete any part of the registration
statement, except as specifically noted herein. Prior to May 1, 2000, Registrant
intends to file a subsequent post-effective amendment, including revised
prospectuses and a statement of additional information, that will incorporate
the changes set out in this Amendment.
<PAGE>
PART A
- -------
The prospectus contained in the registration statement is amended as follows:
1. The following terms shall be added to the section entitled "Important
Terms":
Income and Death Benefit Combination Option
Income Benefit Combination Option
The following terms shall be deleted from the section entitled "Important
Terms":
Performance Benefit Combination Option
Performance Income Benefit Option
2. In the section entitled "The Contract at a Glance," the language contained
in the first bullet under the heading "Expenses" shall be replaced with the
following:
o Total Variable Account annual fees equal to .70% of average daily net
assets (.83% if you select the Performance Death Benefit Option, .94%
if you select the Death Benefit Combination Option, 1.00% if you
select the Income Benefit Combination Option, and 1.20% if you select
the Income and Death Benefit Combination Option)
3. The information contained under the heading "Variable Account Annual
Expenses" in the expense table shall be replaced with the following:
Mortality and Expense Risk Charge 0.60%*
-------------------------------------------------------
Administrative Expense Charge 0.10%
-------------------------------------------------------
Total Variable Account Annual Expenses 0.70%
-------------------------------------------------------
* If you select the Performance Death Benefit Option, the
mortality and expense risk charge is 0.73%. If you select the
Death Benefit Combination Option, the mortality and expense
risk charge is 0.84%. If you select the Income Benefit
Combination Option, the mortality and expense risk charge is
0.90%, and if you select the Income and Death Benefit
Combination Option, the mortality and expense risk charge is
1.10%.
4. The example following the expense table shall include the following charts
(to be completed by amendment):
(With Income Benefit Combination Option )
Name of Sub-Account 1 Year 3 Years 5 Years 10 Years
------------------- ------ ------- ------- --------
(With Income and Death Benefit Combination Option )
Name of Sub-Account 1 Year 3 Years 5 Years 10 Years
------------------- ------ ------- ------- --------
The language contained in the last bullet under the heading "Example" shall
be replaced with the following:
o elected the Death Benefit Combination Option.
The fourth and fifth sentences of the paragraph following the example shall
be replaced with the following:
The above example assumes the election of the Death Benefit
Combination Option, with a mortality and expense risk charge of 0.84%.
If this option were not elected, the expense figures shown above would
be slightly lower.
5. The second sentence of the third paragraph under the heading "Accumulation
Unit Values" shall be replaced with the following:
We also determine a separate set of Accumulation Unit Values that
reflect the cost of the Performance Death Benefit Option, a third
set of Accumulation Unit Values that reflect the cost of the
Death Benefit Combination Option, a fourth set of Accumulation
Unit Values that reflect the cost of the Income Benefit
Combination Option, and a fifth set of Accumulation Unit Values
that reflect the cost of the Income and Death Benefit Combination
Option.
6. The first sentence of the first paragraph under the heading "Mortality and
Expense Risk Charge" shall be replaced with the following:
We deduct a mortality and expense risk charge daily at an annual
rate of 0.60% of the average daily net assets you have invested
in the Variable Sub-Accounts (0.73% if you select the Performance
Death Benefit Option, 0.84% if you select the Death Benefit
Combination Option, 0.90% if you select the Income Benefit
Combination Option, and 1.10% if you select the Income and Death
Benefit Combination Option).
The last sentence of the first paragraph under the heading "Mortality and
Expense Risk Charge" shall be replaced with the following:
We charge an additional amount for the Death Benefit Options, the
Income Benefit Combination Option and the Income and Death
Benefit Combination Option to compensate us for the additional
risk that we accept by providing these Options.
7. The section entitled "Performance Income Benefit" shall be replaced with
the following:
INCOME BENEFIT COMBINATION OPTION
The Income Benefit Combination is an optional benefit that you
may add to your Contract.
To exercise your Income Benefit Combination Option, you must
apply it to an Income Plan. The Payout Start Date you select must
begin on or after the tenth anniversary of the Rider Date, and
within 30 days after a Contract Anniversary. In addition, you
must apply your Income Benefit Combination Option to an Income
Plan that provides guaranteed payments for either a single or
joint life for at least:
1. 10 years, if the youngest Annuitant's age is 80 or less on the date
you apply the Benefit, or
2. 5 years, if the youngest Annuitant's age is greater than 80 on the
date you apply the Benefit.
If your current Contract Value is higher than the Performance
Income Benefit, you can apply the Contract Value to any Income
Plan. The Income Benefit Combination Option may not be available
in all states.
Income Base
The Income Base is the greater of Income Base A or Income Base B.
Income Base is used solely for the purpose of calculating the
Guaranteed Income Benefit and does not provide a Contract Value or
guarantee performance of any investment option.
<PAGE>
Income Base A
o On the Rider Date, Income Base A is equal to the Contract Value
o After the Rider Date, Income Base A is recalculated as follows on the
Contract Anniversary and when a purchase payment or withdrawal is made
o For purchase payments, Income Base A is equal to the most recently
calculated Income Base A plus the purchase payment
o For withdrawals, Income Base A is equal to the most recently calculated
Income Base A reduced by a withdrawal adjustment (described below)
o On each Contract Anniversary, Income Base A is equal to the greater of the
Contract Value or the most recently calculated Income Base A.
In the absence of any withdrawals or purchase payments, Income Base A will
be the greatest of the Contract Value on the Rider Date and all Contract
Anniversary Contract Values between the Rider Date and the Payout Start
Date.
We will recalculate Income Base A as described above until the
first Contract Anniversary after the 85th birthday of the oldest
Contract owner or Annuitant (if the Contract owner is not a
natural person). After age 85, we will only recalculate the
Performance Income Benefit to reflect additional purchase
payments and withdrawals.
Income Base B
On the Rider Date, Income Base B is equal to the Contract Value. After the
Rider Date, Income Base B plus any subsequent purchase payments and less a
withdrawal adjustment (described below) for any subsequent withdrawals will
accumulate daily at a rate equivalent to 5% per year until the first
Contract Anniversary after the 85th birthday of the oldest owner or
Annuitant (if the Contract owner is not a natural person).
Withdrawal Adjustment
The adjustment is equal to (1) divided by (2), with the result multiplied
by (3) where:
(1) = the withdrawal amount
(2) = the Contract Value
(3) = the most recently calculated Income Base
The guaranteed income benefit amount is determined by applying the Income
Base less any applicable taxes to the guaranteed rates for the Income Plan
you elect. The Income Plan you elect must satisfy the conditions described
above.
You may also elect the Income and Death Benefit Combination Option which
combines the features of the Income Benefit Combination Option with the
features of the Death Benefit Combination Option (described below).
8. The section entitled "Performance Benefit Combination Option" under the
heading "Death Benefit Options" shall be replaced with the following:
Income and Death Benefit Combination Option. You may also
elect the Income and Death Benefit Combination Option which
combines the features of the Income Benefit Combination
Option (described above) with the features of the Death
Benefit Combination Option.
The last paragraph under the heading "Death Benefit Options" shall be
replaced with the following:
None of the Enhanced Death Benefit, the Performance Death
Benefit, the Income and Death Benefit Combination, or the
Death Benefit Combination will ever be greater than the
maximum death benefit allowed by any nonforfeiture laws
which govern the Contract.
PART B
- ------
The statement of additional information contained in the registration statement
is amended as follows:
1. The section entitled "Performance Information" shall include the following
sentence:
The Income Benefit Combination Option and Income and Death Benefit
Combination Option were first made available on May 1, 2000.
Accordingly, performance figures for Contracts with the Income Benefit
Combination Option or Income and Death Benefit Combination Option for
periods prior to that time are based on the actual historical
performance of the Sub-Accounts or Portfolios, adjusted to reflect the
fee associated with the respective Option.
2. The following sentence shall be added to the end of the third paragraph of
the section entitled "Standardized Total Returns":
In addition, performance figures for periods prior to the availability
of the Income Benefit Combination Option or the Income and Death
Benefit Combination Option have been adjusted to reflect the current
charge for such features as if they had been available throughout the
periods shown.
3. The tables in the section entitled "Standardized Total Returns" shall be
deleted and replaced with the following tables(to be completed by
amendment):
(WITHOUT AN OPTIONAL DEATH BENEFIT PROVISION OR INCOME BENEFIT COMBINATION
OPTION)
10 Years or
Variable Sub-Account One Year Five Years Since Inception
--------------------------------------------------
(WITH AN OPTIONAL DEATH BENEFIT PROVISION)
10 Years or
Variable Sub-Account One Year Five Years Since Inception
--------------------------------------------------
(WITH THE DEATH BENEFIT COMBINATION OPTION)
10 Years or
Variable Sub-Account One Year Five Years Since Inception
--------------------------------------------------
(WITH THE INCOME BENEFIT COMBINATION OPTION)
10 Years or
Variable Sub-Account One Year Five Years Since Inception
--------------------------------------------------
(WITH THE INCOME AND DEATH BENEFIT COMBINATION OPTION)
10 Years or
Variable Sub-Account One Year Five Years Since Inception
--------------------------------------------------
4. The following sentence shall be added at the end of the first paragraph of
the section entitled "Adjusted Historical Total Returns":
Where the returns included in the following tables give effect to
the Income Benefit Combination Option or the Income and Death
Benefit Combination Option, the performance figures have been
adjusted to reflect the current charge for the feature as if that
feature had been available throughout the periods shown.
5. The tables in the section entitled "Adjusted Historical Total Returns"
shall be deleted and replaced with the following tables(to be completed by
amendment):
(WITHOUT AN OPTIONAL DEATH BENEFIT PROVISION OR INCOME BENEFIT COMBINATION
OPTION)
10 Years or
Variable Sub-Account One Year Five Years Since Inception
--------------------------------------------------
(WITH AN OPTIONAL DEATH BENEFIT PROVISION)
10 Years or
Variable Sub-Account One Year Five Years Since Inception
--------------------------------------------------
(WITH THE DEATH BENEFIT COMBINATION OPTION)
10 Years or
Variable Sub-Account One Year Five Years Since Inception
--------------------------------------------------
(WITH THE INCOME BENEFIT COMBINATION OPTION)
10 Years or
Variable Sub-Account One Year Five Years Since Inception
--------------------------------------------------
(WITH THE INCOME AND DEATH BENEFIT COMBINATION OPTION)
10 Years or
Variable Sub-Account One Year Five Years Since Inception
--------------------------------------------------
<PAGE>
PART C
Part C is hereby amended to include the following exhibits:
Item 24(b). EXHIBITS
(4) Form of Contract Riders and Amendment
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement, as amended, to be
signed on its behalf by the undersigned, thereunto duly authorized, and its seal
to be hereunto affixed and attested, all in the Township of Northfield, State of
Illinois, on the 2nd day of March, 2000.
NORTHBROOK VARIABLE ANNUITY ACCOUNT II
(REGISTRANT)
BY: NORTHBROOK LIFE INSURANCE COMPANY
(DEPOSITOR)
(SEAL)
By: /s/MICHAEL J. VELOTTA
--------------------------
Michael J. Velotta
Vice President, Secretary and
General Counsel
As required by the Securities Act of 1933, this Registration Statement, as
amended, has been duly signed below by the following Directors and Officers of
Northbrook Life Insurance Company on the 2nd day of March, 2000.
*/THOMAS J. WILSON, II President and Chief Operating Officer
- ----------------------
Thomas J. Wilson, II
/s/MICHAEL J. VELOTTA Vice President, Secretary, General Counsel
- ---------------------- and Director
Michael J. Velotta
*/JOHN R. HUNTER Vice President and Director
- ----------------
John R. Hunter
*/KEVIN R. SLAWIN Vice President and Director
- ------------------ (Principal Financial Officer)
Kevin R. Slawin
*/CASEY J. SYLLA Chief Investment Officer and Director
- -----------------
Casey J. Sylla
*/SAMUEL H. PILCH Controller
- ---------------------- (Principal Accounting Officer)
Samuel H. Pilch
*/ By Michael J. Velotta, pursuant to Power of Attorney, previously filed.
<PAGE>
EXHIBIT LIST
The following exhibit is filed herewith:
EXHIBIT NO. DESCRIPTION
(4) Form of Contract Riders Amendment
Page 1
NLU919 (2/00)
NORTHBROOK LIFE INSURANCE COMPANY
(herein called "we" or "us")
Income Benefit Combination Rider 2
This rider was issued because you selected the Income Benefit Combination Rider
2.
As used in this rider, "Contract" means the Contract or Certificate to which
this rider is attached.
For purposes of this rider, "Rider Date" is the date this rider was issued as a
part of your Contract: xx/xx/xxxx
The following changes are made to your Contract.
Qualifications
On the Payout Start Date, the Owner may choose to receive income payments
defined in the Income Benefit Combination provision if all of the following
conditions are met.
o The Owner elects a Payout Start Date that is on or after the tenth
anniversary of the Rider Date;
o The Payout Start Date occurs during the 30 day period following a Contract
anniversary;
o The Income Base is applied to Fixed Amount Income Payments or Variable
Amount Income Payments as we may permit from time to time for all owners
who choose to receive Income Payments under this rider; and
o The selected Income Plan provides payments guaranteed for either single or
joint life with a period certain of at least:
o 10 years, if the youngest Annuitant's age is 80 or less on the date the
amount is applied, or
o 5 years, if the youngest Annuitant's age is greater than 80 on the date the
amount is applied.
Throughout the PAYOUT PHASE section of your Contract, the term "Cash Value" is
replaced with "the greater of the Cash Value or the Income Benefit Combination".
If the amount applied to an Income Plan is the Cash Value, then the Income Plan
may be any plan then offered by us.
Income Base
The Income Base is the greater of Income Base A or Income Base B.
Income Base is used solely for the purpose of calculating the Guaranteed Income
Benefit and does not provide a Cash Value or guarantee performance of any
investment option.
Income Base A.
o On the Rider Date, Income Base A is equal to the Cash Value.
o After the Rider Date, Income Base A is recalculated as follows on the
Contract anniversary and when a purchase payment or withdrawal is made.
<PAGE>
o For purchase payments, Income Base A is equal to the most recently
calculated Income Base A plus the purchase payment.
o For withdrawals, Income Base A is equal to the most recently calculated
Income Base A reduced by a withdrawal adjustment.
o On each Contract anniversary, Income Base A is equal to the greater of the
Cash Value or the most recently calculated Income Base A.
In the absence of any withdrawals or purchase payments, Income Base A will
be the greatest of the Cash Value on the Rider Date and all Contract
anniversary Cash Values between the Rider Date and the Payout Start Date.
Income Base A will be recalculated for purchase payments, for withdrawals
and on Contract anniversaries until the first Contract anniversary after
the 85th birthday of the oldest Owner or, if no Owner is a living
individual, the oldest Annuitant.
After that date, Income Base A will be recalculated only for purchase
payments and withdrawals.
Income Base B.
On the Rider Date, Income Base B is equal to the Cash Value. After the
Rider Date, Income Base B plus any subsequent purchase payments and less a
withdrawal adjustment for any subsequent withdrawals will accumulate daily
at a rate equivalent to 5% per year until the first Contract anniversary
after the 85th birthday of the oldest Owner, or, if the Owner is not a
living individual, the oldest Annuitant.
Withdrawal Adjustment
The adjustment is equal to (1) divided by (2), with the result multiplied by
(3), where:
(1) = the withdrawal amount.
(2) = the Cash Value
(3) = the most recently calculated Income Base.
Guaranteed Income Benefit
The Guaranteed Income Benefit amount is determined by applying the Income Base
less any applicable taxes to the guaranteed rates for the Income Plan elected by
the Owner. The Income Plan selected must satisfy the conditions defined in
Qualifications above. The rates are the guaranteed rates defined in the Income
Payment Tables section of the Contract for either a single or joint life with a
period certain.
On the Payout Start Date, the income payment will be the greater of the
Guaranteed Income Benefit and the income payment provided in the Payout Phase
section of the Contract.
<PAGE>
Page 3
NLU919 (2/00)
Mortality and Expense Risk Charge The Mortality and Expense Risk Charge
provision of your Contract is modified as follows:
On and after the Rider Date, the maximum annualized Mortality and Expense Risk
Charge is increased by 0.30% for this rider.
Except as amended, the Contract remains unchanged.
Michael J. Velotta Thomas J. Wilson
Secretary Chairman and Chief Executive Officer
<PAGE>
Page 3
NLU922 (2/00)
NORTHBROOK LIFE INSURANCE COMPANY
(herein called "we" or "us")
Income and Death Benefit Combination Rider 2
This rider was issued because you selected the Death Benefit Combination and the
Income Benefit Combination.
As used in this rider, "Contract" means the Contract or Certificate to which
this rider is attached.
For purposes of this rider, "Rider Date" is the date this rider was issued as a
part of your Contract: xx/xx/xxxx
The following changes are made to your Contract.
Death Benefit Combination The Death Benefit provision of your Contract is
modified as follows:
If the Owner is a natural person, the Death Benefit Combination applies only to
the death of the Owner. If the Owner is not a natural person, the Death Benefit
Combination applies only to the death of the Annuitant. This is unlike the death
benefit defined in the Death Benefit provision of your Contract which may apply
to the death of the Annuitant even if the Owner is a natural person.
The Death Benefit will be the greatest of the values stated in your Contract, or
the value of the Death Benefit Combination.
The Death Benefit Combination is equal to the greater of two separately
calculated death benefits, Death Benefit A and Death Benefit B, as defined
below.
After the Rider Date, the Death Benefit Combination is recalculated when a
purchase payment or withdrawal is made or on a Contract anniversary as follows:
Death Benefit A
o On the Rider Date, Death Benefit A is equal to the Cash Value.
o After the Rider Date, Death Benefit A is recalculated when a purchase
payment or a withdrawal is made or on a Contract anniversary as follows:
o For purchase payments for all ages, Death Benefit A is equal to the most
recently calculated Death Benefit A plus the purchase payment.
o For withdrawals for all ages, Death Benefit A is equal to the most recently
calculated Death Benefit A reduced by a withdrawal adjustment defined
below.
o Death Benefit A will be recalculated for purchase payments, for withdrawals
and on Contract anniversaries until the first Contract anniversary after
the 85th birthday of the oldest Owner or, if the Owner is not a living
individual, the oldest Annuitant.
In the absence of any withdrawals or purchase payments, Death Benefit A will be
the greater of the Cash Value on the Rider Date and all Contract anniversary
Cash Values between the Rider Date and the date we calculate the Death Benefit.
Death Benefit B
<PAGE>
On the Rider Date, Death Benefit B is equal to the Cash Value. After the
Rider Date, Death Benefit B plus any subsequent purchase payments and less
a withdrawal adjustment for any subsequent withdrawals will accumulate
daily at a rate equivalent to 5% per year until the first Contract
anniversary after the 85th birthday of the oldest Owner or, if the Owner is
not a living individual, the oldest Annuitant.
Withdrawal Adjustment
The withdrawal adjustment is equal to (1) divided by (2) with the result
multiplied by (3) where:
(1) = the withdrawal amount.
(2) = the Cash Value immediately prior to the withdrawal.
(3) = the most recently calculated Death Benefit A or B, as applicable
Income Benefit Combination The following is added to your Contract:
Qualifications
On the Payout Start Date, the Owner may choose to receive income payments
defined in the Income Benefit Combination provision if all of the following
conditions are met.
o The Owner elects a Payout Start date that is on or after the Rider Date;
o The Payout Start Date occurs during the 30 day period following the
Contract anniversary;
o The Income Base is applied to Fixed Account Income Payments or Variable
Amount Income Payments as we may permit from time to time for all owners
who choose to receive Income Payments under this rider; and
o The selected Income Plan provides payments guaranteed for either single or
joint life with a period certain of at least:
o 10 years, if the youngest Annuitant's age is 80 or less on the date the
amount is applied, or
o 5 years, if the youngest Annuitant's age is greater than 80 on the date the
amount is applied.
Throughout the PAYOUT PHASE section of your Contract, the term "Cash Value" is
replaced with "The greater of the Cash Value or the Income Benefit Combination."
If the amount applied to an Income Plan is the Cash Value, then the Income Plan
may be any plan then offered by us.
Income Base
The Income Base is the greater of Income Base A or Income Base B.
Income base is used solely for the purpose of calculating the Income Benefit
Combination and does not provide a Cash Value or guarantee performance of any
investment option.
<PAGE>
Income Base A.
o On the Rider Date, Income Base A is equal to the Cash Value.
o After the Rider Date, Income Base A is recalculated as follows on the
Contract anniversary and when a purchase payment or withdrawal is made.
o For the purchase payments, Income Base A is equal to the most recently
calculated Income Base A plus the purchase payment.
o For withdrawals, Income Base A is equal to the most recently calculated
Income Base A reduced by a withdrawal adjustment.
o On each Contract anniversary, Income Base A is equal to the greater of the
Cash Value or the most recently calculated Income Base A.
In the absence of any withdrawals or purchase payments, Income Base A will
be the greatest of the Cash Value on the Rider Date and all Contract
anniversary Cash Values between the Rider Date and the Payout Start Date.
Income Base A will be recalculated for purchase payments, for withdrawals
and on Contract anniversaries until the first Contract anniversary after
the 85th birthday of the oldest Owner or, if no Owner is a living
individual, the oldest Annuitant.
After that date, Income Base A will be recalculated only for purchase
payments and withdrawals.
Income Base B.
On the Rider Date, Income Base B is equal to the Cash Value. After the
Rider Date, Income Base B plus any subsequent purchase payments and less a
withdrawal adjustment for any subsequent withdrawals will accumulate daily
at a rate equivalent to 5% per year until the first Contract anniversary
after the 85th birthday of the oldest Owner or, if the Owner is not a
living individual, the oldest Annuitant.
Withdrawal Adjustment
The adjustment is equal to (1) divided by (2), with the result multiplied by (3)
where:
(1) = the withdrawal amount.
(2) = the Cash Value immediately prior to the withdrawal.
(3) = the most recently calculated Income Base.
Guaranteed Income Benefit
The Guaranteed Income Benefit amount is determined by applying the Income Base
less any applicable taxes to the guaranteed rates for the Income Plan elected by
the Owner. The Income Plan selected must satisfy the conditions defined in
Qualifications above. The rates are the guaranteed rates defined in the Income
Payment Tables section of the Contract for either a single or joint life with a
period certain.
On the Payout Start Date, the income payment will be the greater of the
Guaranteed Income Benefit and the income payment provided in the Payout Phase
section of the Contract.
<PAGE>
Mortality and Expense Risk Charge The Mortality and Expense Risk Charge
provision of your Contract is modified as follows:
On and after the Rider Date, the maximum annualized Mortality and Expense Risk
Charge is increased by 0.50% for this rider.
Except as amended by this rider, the Contract remains unchanged.
Michael J. Velotta Thomas J. Wilson
Secretary Chairman and Chief Executive Officer
<PAGE>
NLU918 Page 6
(2/00)
NORTHBROOK LIFE INSURANCE COMPANY
(herein called "we" or "us")
Amendment to Master Policy for Income Benefit Combination Rider 2 and Income and
Death Benefit Combination Rider 2
For purposes of this benefit "Rider Date" is the date the Income Benefit
Combination Rider 2 or Income and Death Benefit Combination Rider 2 was made a
part of the Owner's Contract.
As used in this rider, "Contract" means the Contract or Certificate to which
this rider is attached.
The following provision is added to the Master Policy.
INCOME BENEFIT COMBINATION
Qualifications
On the Payout Start Date, the Owner may choose to receive income payments
defined in the Income Benefit Combination provision if all of the following
conditions are met.
o The owner elects a Payout Start Date that is on or after the tenth
anniversary of the Rider Date;
o The Payout Start Date occurs during the 30 day period following a Contract
anniversary;
o The Income Base is applied to Fixed Amount Income Payments or Variable
Amount Income Payments as we may permit from time to time for all owners
who choose to receive Income Payments under this rider; and
o The selected Income Plan provides payments guaranteed for either single or
joint life with a period certain of at least:
o 10 years, if the youngest Annuitant's age is 80 or less on the date the
amount is applied, or
o 5 years, if the youngest Annuitant's age is greater than 80 on the date the
amount is applied.
Throughout the PAYOUT PHASE section of your Contract, the term "Cash Value" is
replaced with "the greater of the Cash Value or the Income Benefit Combination".
If the amount applied to an Income Plan is the Cash Value, then the Income Plan
may be any plan then offered by us.
Income Base
The Income Base is the greater of the Income Base A or Income Base B.
Income Base is used solely for the purpose of calculating the Guaranteed Income
Benefit and does not provide a Cash Value or guarantee performance of any
investment option.
<PAGE>
Income Base A.
o On the Rider Date, Income Base A is equal to the Cash Value.
o After the Rider Date, Income Base A is recalculated as follows on the
Contract anniversary and when a purchase payment or withdrawal is made.
o For purchase payments, Income Base A is equal to the most recently
calculated Income Base plus the purchase payment.
o For withdrawals, Income Base A is equal to the greater of the Cash Value or
the most recently calculated Income Base A.
In the absence of any withdrawals or purchase payments, Income Base A will
be the greatest of the Cash Value on the Rider Date and all Contract
anniversary Cash Values between the Rider Date and the Payout Start Date.
Income Base A will be recalculated for purchase payments, for withdrawals
and on Contract anniversaries until the first Contract anniversary after
the 85th birthday of the oldest Owner or, if no Owner is a living
individual, the oldest Annuitant.
After that date, Income Base A will be recalculated only for purchase
payments and withdrawals.
Income Base B.
On the Rider Date, Income Base B is equal to the Cash Value. After the
Rider Date, Income Base B plus any subsequent purchase payments and less a
withdrawal adjustment for any subsequent withdrawals will accumulate daily
at a rate equivalent to 5% per year until the first Contract anniversary
after the 85th birthday of the oldest Owner, or, if the Owner is not a
living individual, the oldest Annuitant.
Withdrawal Adjustment
The adjustment is equal to (1) divided by (2), with the result multiplied by
(3), where:
(1) = the withdrawal amount.
(2) = the Cash Value
(3) = the most recently calculated Income Base.
Guaranteed Income Benefit
The Guaranteed Income Benefit amount is determined by applying the Income Base
less any applicable taxes to the guaranteed rates for the Income Plan elected by
the Owner. The Income Plan selected must satisfy the conditions defined in
Qualifications above. The rates are the guaranteed rates defined in the Income
Payment Tables section of the Contract for either a single or joint life with a
period certain.
On the Payout Start Date, the income payment will be the greater of the
Guaranteed Income Benefit and the income payment provided in the Payout Phase
section of the Contract.
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Mortality and Expense Risk Charge The Mortality and Expense Risk Charge
provision of the Master Policy is modified as follows:
On and after the Rider Date, the maximum annualized Mortality and Expense Risk
Charge is increased by 0.30% for the Performance Income Benefit.
INCOME AND DEATH BENEFIT COMBINATION
The Income and Death Benefit Combination option, if selected, effects the
following changes to the Owner's Contract:
As used in this rider, "Contract" means the Contract or Certificate to which
this rider is attached.
For purposes of this benefit "Rider Date" is the date the Income and Death
Benefit Combination was made a part of the Owner's Contract.
The following provision is added to the Master Policy.
Death Benefit Combination The Death Benefit provision of the Owner's Contract is
modified as follows:
If the Owner is a natural person, the Death Benefit Combination applies only to
the death of the Owner. If the Owner is not a natural person, the Death Benefit
Combination applies only to the death of the Annuitant. This is unlike the death
benefit defined in the Death Benefit provision of the Owner's Contract which may
apply to the death of the Annuitant even if the Owner is a natural person.
The Death Benefit Combination will be the greatest of the values stated in the
Owner's Contract, or the value of the Death Benefit Combination.
The Death Benefit Combination is equal to the greater of two separately
calculated death benefits, Death Benefit A and Death Benefit B, as defined
below.
After the Rider Date, the Death Benefit Combination is recalculated when a
purchase payment or withdrawal is made or on a Contract anniversary as follows:
After the Rider Date, the Performance Death Benefit is recalculated when a
purchase payment or withdrawal is made or on a Contract anniversary as follows:
Death Benefit A
o On the Rider Date, Death Benefit A is equal to the Cash Value.
o After the Rider Date, Death Benefit A is recalculated when a purchase
payment or a withdrawal is made or on a Contract anniversary as follows:
o For purchase payments for all ages, Death Benefit A is equal to the most
recently calculated Death Benefit B plus the purchase payment.
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o For withdrawals for all ages, Death Benefit A is equal to the most recently
calculated Death Benefit A is equal to the most recently calculated Death
Benefit A reduced by a withdrawal adjustment defined below.
o Death Benefit A will be recalculated for purchase payments, for withdrawals
and on Contract anniversaries until the first Contract anniversary after
the 85th birthday of the oldest Owner or, if the Owner is not a living
individual, the oldest Annuitant.
In the absence of any withdrawals or purchase payments, Death Benefit A will be
the greater of the Cash Value on the Rider Date and all Contract anniversary
Cash Values between the Rider Date and the date we calculate the Death Benefit.
Death Benefit B
On the Rider Date, Death Benefit B is equal to the Cash Value. After the
Rider Date, Death Benefit B plus any subsequent purchase payments and less
a withdrawal adjustment for any subsequent withdrawals will accumulate
daily at a rate equivalent to 5% per year until the first Contract
anniversary after the 85th birthday of the oldest Owner or, if the Owner is
not a living individual, the oldest Annuitant.
Withdrawal Adjustment
The withdrawal adjustment is equal to (1) divided by (2) with the result
multiplied by (3) where:
(1) = the withdrawal amount.
(2) = the Cash Value immediately prior to the withdrawal.
(3) = the most recently calculated Death Benefit A or B, as applicable
Performance Income Benefit The following is added to the Owner's Contract.
Qualifications
On the Payout Start Date, the Owner may choose to receive income payments
defined in the Performance Income Benefit provision if all of the following
conditions are met.
o The owner elects a Payout Start Date that is on or after the tenth
anniversary of the Rider Date;
o The Payout Start Date occurs during the 30 day period following a Contract
anniversary;
o The Income Base is applied to Fixed Amount Income Payments or Variable
Amount Income Payments as we may permit from time to time for all owners
who choose to receive Income Payments under this rider; and
o The selected Income Plan provides payments guaranteed for either single or
joint life with a period certain of at least:
o 10 years, if the youngest Annuitant's age is 80 or less on the date the
amount is applied, or
o 5 years, if the youngest Annuitant's age is greater than 80 on the date the
amount is applied.
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Throughout the PAYOUT PHASE section of your Contract, the term "Cash Value' is
replaced with "the greater of the Cash Value or the Performance Income Benefit.
If the amount applied to an Income Plan is the Cash Value, then the Income Plan
may be any plan then offered by us.
Income Base
The Income Base is the greater of Income Base A or Income Base B.
Income Base is used solely for the purpose of calculating the Guaranteed Income
Benefit and does not provide a Cash Value or guarantee performance of any
investment option.
Income Base A.
o On the Rider Date, Income Base A is equal to the Cash Value.
o After the Rider Date, Income Base A is recalculated as follows on the
Contract anniversary and when a purchase or withdrawal is made.
o For the purchase payments, Income Base A is equal to the most recently
calculated Income Base A plus the purchase payment.
o For withdrawals, Income Base A is equal to the most recently calculated
Income Base A reduced by a withdrawal adjustment.
o On each Contract anniversary, Income Base A is equal to the greater of the
Cash Value or the most recently calculated Income Base A.
In the absence of any withdrawals or purchase payments, Income Base A will
be the greatest of the Cash Value on the Rider Date and all Contract
anniversary Cash Values between the Rider Date and the Payout Start Date.
Income Base A will be recalculated for purchase payments, for withdrawals
and on Contract anniversaries until the first Contract anniversary after
the 85th birthday of the oldest Owner or, if no Owner is a living
individual, the oldest Annuitant.
After that date, Income Base A will be recalculated only for purchase
payments and withdrawals.
Income Base B.
On the Rider date, Income Base B is equal to the Cash Value. After the
Rider Date, Income Base B plus any subsequent purchase payments and less a
withdrawal adjustment for any subsequent withdrawals will accumulate daily
at a rate equivalent to 5% per year until the first Contract anniversary
after the 85th birthday of the oldest Owner, or, if the Owner is not a
living individual, the oldest Annuitant.
Withdrawal Adjustment
The adjustment is equal to (1) divided by (2), with the result multiplied by (3)
where:
(1) = the withdrawal amount.
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(2) = the Cash Value immediately prior to the withdrawal.
(3) = the most recently calculated Income Base.
Guaranteed Income Benefit
The Guaranteed Income Benefit amount is determined by applying the Income Base
less any applicable taxes to the guaranteed rates for the Income Plan elected by
the Owner. The Income Plan selected must satisfy the conditions defined in
Qualifications above. The rates are the guaranteed rates defined in the Income
Payment Tables section of the Contract for either a single or joint life with a
period certain.
On the Payout Start Date the income payment will be the greater of the
Guaranteed Income Benefit and the income payment provided in the Payout Phase
section of the Contract.
Mortality and Expense Risk Charge The Mortality and Expense Risk Charge
provision of the Owner's Contract is modified as follows:
On and after the Rider Date, the maximum annualized Mortality and Expense Risk
Charge is increased by 0.50% for the Performance Benefit Combination.
Michael J. Velotta Thomas J. Wilson
Secretary Chairman and Chief Executive Officer
