<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 26, 1999
REGISTRATION NO. 33-41830
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 8
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------
MERRILL LYNCH VARIABLE LIFE SEPARATE ACCOUNT
(EXACT NAME OF TRUST)
MERRILL LYNCH LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
BARRY G. SKOLNICK, ESQ.
Senior Vice President & General Counsel
MERRILL LYNCH LIFE INSURANCE COMPANY
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE)
------------------------
COPY TO:
STEPHEN E. ROTH, ESQ.
KIMBERLY J. SMITH, ESQ.
SUTHERLAND ASBILL & BRENNAN LLP
1275 PENNSYLVANIA AVENUE, NW
WASHINGTON, DC 20004-2415
------------------------
It is proposed that this filing will become effective (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on April 15, 1999 pursuant to paragraph (a)(1) of Rule 485
[ ] 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 Flexible Premium
Variable Life Insurance Contracts.
Check box if it is proposed that the filing will become effective on (date)
at (time) pursuant to Rule 487 [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
MERRILL LYNCH VARIABLE LIFE SEPARATE ACCOUNT
MERRILL LYNCH LIFE INSURANCE COMPANY
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-8B-2
<TABLE>
<CAPTION>
N-8B-2 ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
<C> <S>
1 Cover Page
2 Cover Page
3 Summary of the Contract (The Investment Divisions); Facts
About the Separate Account, the Funds, the Zero Trusts and
Merrill Lynch Life
4 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About the Contract (Selling the Contracts)
5 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About Merrill Lynch Life Insurance Company
6 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About the Separate Account and its Divisions (Charges to
Fund Assets)
7 Not Applicable
8 Not Applicable
9 More About Merrill Lynch Life Insurance Company (Legal
Proceedings)
10 Summary of the Contract; Facts About the Contract; More
About the Contract; More About the Separate Account and its
Divisions
11 Summary of the Contract (The Investment Divisions); Facts
About the Separate Account, the Funds, the Zero Trusts and
Merrill Lynch Life; More About the Separate Account and its
Divisions (About the Separate Account; the Zero Trusts)
12 Summary of the Contract (The Investment Divisions); Facts
About the Separate Account, the Funds, the Zero Trusts and
Merrill Lynch Life; More About the Separate Account and its
Divisions
13 Summary of the Contract (Loans; Fees and Charges); Facts
About The Contract [Charges Deducted from your Investment
Base; Charges to the Separate Account; Guarantee Period; Net
Cash Surrender Value; Loans; Partial Withdrawals; Death
Benefit Proceeds; Payment of Death Benefit Proceeds; Your
Right to Cancel ("Free Look" Period) or Exchange]; More
About the Contract; More About the Separate Account and its
Divisions (Charges to Fund Assets)
14 Facts About the Contract (Purchasing a Contract; Planned
Payments); More About the Contract (Other Contract
Provisions)
15 Summary of the Contract (Availability and Payments); Facts
About the Contract (Initial Payment; Making Additional
Payments); More About the Contract (Income Plans)
16 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life; More About the Separate Account and
its Divisions
17 Summary of the Contract [Net Cash Surrender Value and Cash
Surrender Value; Right to Cancel ("Free Look" Period) or
Exchange; Partial Withdrawals]; Facts About the Contract
[Net Cash Surrender Value; Partial Withdrawals; Right to
Cancel ("Free Look" Period) or Exchange]; More About the
Contract (Some Administrative Procedures)
18 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life; More About the Separate Account and
its Divisions
19 More About Merrill Lynch Life Insurance Company
20 More About the Separate Account and its Divisions (Charges
Within the Account; Charges to Fund Assets)
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
N-8B-2 ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
<C> <S>
21 Summary of the Contract (Loans); Facts About the Contract
(Loans)
22 Not Applicable
23 Not Applicable
24 Not Applicable
25 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About Merrill Lynch Life Insurance Company
26 Not Applicable
27 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About Merrill Lynch Life Insurance Company
28 More About Merrill Lynch Life Insurance Company
29 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S)
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S)
36 Not Applicable
37 Not Applicable
38 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About the Contract (Selling the Contracts)
39 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About the Contract (Selling the Contracts)
40 Not Applicable
41 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About the Contract (Selling the Contracts)
42 Not Applicable
43 Not Applicable
44 Facts About the Contract; More About the Contract
45 Not Applicable
46 Summary of the Contract; Facts About the Contract (Net Cash
Surrender Value; Partial Withdrawals)
47 Summary of the Contract (The Investment Divisions); Facts
About the Separate Account, the Funds, the Zero Trusts and
Merrill Lynch Life; More About the Separate Account and its
Divisions
48 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About the Contract (Selling the Contracts)
49 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About the Contract (Selling the Contracts)
50 Not Applicable
51 Facts About the Contract; More About the Contract
52 Facts About the Separate Account, the Funds, the Zero Trusts
and Merrill Lynch Life (Merrill Lynch Life and MLPF&S); More
About the Contract (Selling the Contracts)
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
N-8B-2 ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
<C> <S>
53 More About the Contract (Tax Considerations; Merrill Lynch
Life's Income Taxes)
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 More About Merrill Lynch Life Insurance Company (Financial
Statements)
</TABLE>
<PAGE> 5
PROSPECTUS
MAY 1, 1999
MERRILL LYNCH VARIABLE LIFE SEPARATE ACCOUNT
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT
ISSUED BY
MERRILL LYNCH LIFE INSURANCE COMPANY
HOME OFFICE: LITTLE ROCK, ARKANSAS 72201
SERVICE CENTER: P.O. BOX 9025
SPRINGFIELD, MASSACHUSETTS 01102-9025
1414 MAIN STREET
SPRINGFIELD, MASSACHUSETTS 01144-1007
PHONE: (800) 354-5333
OFFERED THROUGH
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
This Prospectus describes contracts which generally are modified endowment
contracts under federal tax law. Most distributions will have tax consequences
and/or penalties.
Generally, through the first 14 days following a Contract's in force date, we
will invest your initial payment in the investment division of the Merrill Lynch
Variable Life Separate Account (the "Separate Account") investing in the Money
Reserve Portfolio. Afterward, you may reallocate your investment base to any
five of the investment divisions of the Separate Account. We then invest each
investment division's assets in corresponding portfolios of the following:
<TABLE>
<S> <C>
- - MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - Natural Resources Portfolio
- Basic Value Focus Fund - Global Strategy Portfolio
- Global Bond Focus Fund - Balanced Portfolio
- Global Utility Focus Fund - AIM VARIABLE INSURANCE FUNDS, INC.
- International Equity Focus Fund - AIM V.I. Capital Appreciation Fund
- Developing Capital Markets Focus Fund - AIM V.I. Value Fund
- Special Value Focus Fund - ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
- Index 500 Fund - Premier Growth Portfolio
- MFS VARIABLE INSURANCE TRUST
- - MERRILL LYNCH SERIES FUND, INC. - MFS Emerging Growth Series
- Money Reserve Portfolio - MFS Research Series
- Intermediate Government Bond Portfolio - MERRILL LYNCH FUND OF STRIPPED ("ZERO") U.S.
- Long-Term Corporate Bond Portfolio TREASURY SECURITIES
- High Yield Portfolio sixteen annual maturity dates from
- Capital Stock Portfolio February 15, 2000 - February 15, 2015
- Growth Stock Portfolio
- Multiple Strategy Portfolio
</TABLE>
Currently, you may change your investment allocation as often as you like.
<PAGE> 6
We guarantee that regardless of investment results, insurance coverage will
continue for the insured's life, or, as you may select, for a shorter time if
the face amount chosen is above the minimum face amount required for the initial
payment. During this guarantee period, we will terminate the Contract only if
any loan debt exceeds certain contract values. After the guarantee period ends,
the Contract will remain in effect as long as the cash surrender value is
sufficient to cover all charges due. While the Contract is in effect, the death
benefit may vary to reflect the investment results of the investment divisions
chosen, but will never be less than the initial face amount.
You may:
- - make additional payments subject to certain conditions
- - change the face amount of your Contract subject to certain conditions
- - redeem the Contract for its net cash surrender value
- - make partial withdrawals
The net cash surrender value will vary with the investment results of the
investment divisions chosen. We don't guarantee any minimum cash surrender
value.
Within certain limits, you may return the Contract or exchange it for a contract
with benefits that don't vary with the investment results of a separate account.
It may not be advantageous to replace existing insurance with the Contract.
PURCHASING THIS CONTRACT INVOLVES CERTAIN RISKS. INVESTMENT RESULTS CAN VARY
BOTH UP AND DOWN AND CAN EVEN DECREASE THE VALUE OF PREMIUM PAYMENTS. THEREFORE,
YOU COULD LOSE ALL OR PART OF THE MONEY YOU INVEST. EXCEPT FOR THE GUARANTEED
DEATH BENEFIT WE PROVIDE, YOU BEAR ALL INVESTMENT RISKS. WE DO NOT GUARANTEE HOW
ANY OF THE INVESTMENT DIVISIONS OR FUNDS WILL PERFORM.
LIFE INSURANCE IS INTENDED TO BE A LONG TERM INVESTMENT. YOU SHOULD EVALUATE
YOUR INSURANCE NEEDS AND THE CONTRACT'S LONG-TERM INVESTMENT POTENTIAL AND RISKS
BEFORE PURCHASING THE CONTRACT.
CURRENT PROSPECTUSES FOR THE MERRILL LYNCH SERIES FUND, INC; THE MERRILL LYNCH
VARIABLE SERIES FUNDS, INC.; THE AIM VARIABLE INSURANCE FUNDS, INC.; THE
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.; THE MFS VARIABLE INSURANCE TRUST;
AND THE MERRILL LYNCH FUND OF STRIPPED ("ZERO") U.S. TREASURY SECURITIES MUST
ACCOMPANY THIS PROSPECTUS. PLEASE READ THESE DOCUMENTS CAREFULLY AND RETAIN
THEM FOR FUTURE REFERENCE.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THESE CONTRACTS OR
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
2
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
IMPORTANT TERMS..........................................................................................5
SUMMARY OF THE CONTRACT..................................................................................7
Availability and Payments...........................................................................8
The Investment Base.................................................................................8
The Investment Divisions............................................................................8
Illustrations.......................................................................................8
Replacement of Existing Coverage....................................................................8
Right to Cancel ("Free Look" Period) or Exchange....................................................9
Distributions From The Contract.....................................................................9
Fees and Charges....................................................................................9
Joint Insureds.....................................................................................10
FACTS ABOUT MERRILL LYNCH LIFE, MERRILL LYNCH, PIERCE,
FENNER & SMITH INC......................................................................................10
Merrill Lynch Life.................................................................................10
Merrill Lynch, Pierce, Fenner & Smith Inc. (MLPF&S)...............................................10
The Separate Account...............................................................................11
Net Rate of Return for an Investment...............................................................11
Changes Within the Account.........................................................................12
THE FUNDS...............................................................................................12
The Series Fund....................................................................................12
The Variable Series Funds..........................................................................14
The AIM V.I. Funds.................................................................................14
The Alliance Fund..................................................................................15
The MFS Trust......................................................................................15
Special Risks In Certain Funds.....................................................................16
The Operation of the Funds.........................................................................17
The Zero Trusts....................................................................................19
FACTS ABOUT THE CONTRACT................................................................................20
Who May be Covered.................................................................................20
Initial Payment....................................................................................20
Right to Cancel ("Free Look" Period)...............................................................21
Making Additional Payments.........................................................................21
Changing the Face Amount...........................................................................24
Investment Base....................................................................................25
Charges Deducted from the Investment Base..........................................................26
Charges to the Separate Account....................................................................27
Charges to Fund Assets.............................................................................28
Guarantee Period...................................................................................29
Net Cash Surrender Value...........................................................................29
Partial Withdrawals................................................................................30
Loans..............................................................................................31
Death Benefit Proceeds.............................................................................32
Payment of Death Benefit Proceeds..................................................................34
</TABLE>
3
<PAGE> 8
<TABLE>
<S> <C>
Right to Exchange Contract.........................................................................34
Income Plans.......................................................................................34
Reports to Contract Owners.........................................................................35
MORE ABOUT THE CONTRACT.................................................................................35
Using the Contract.................................................................................35
Other Contract Provisions..........................................................................38
Group or Sponsored Arrangements....................................................................39
Unisex Legal Considerations for Employers..........................................................39
Selling the Contracts..............................................................................40
Tax Considerations.................................................................................40
Merrill Lynch Life's Income Taxes..................................................................42
Reinsurance........................................................................................43
ILLUSTRATIONS...........................................................................................43
Illustrations of Death Benefits, Investment Base, Cash Surrender Values and Accumulated
Payments...........................................................................................43
JOINT INSUREDS..........................................................................................55
MORE ABOUT MERRILL LYNCH LIFE INSURANCE COMPANY.........................................................59
Directors and Executive Officers...................................................................59
Services Arrangement...............................................................................60
State Regulation...................................................................................60
Year 2000..........................................................................................61
Legal Proceedings..................................................................................61
Experts............................................................................................61
Legal Matters......................................................................................61
Registration Statements............................................................................61
Financial Statements...............................................................................62
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE HAVE NOT AUTHORIZED ANY PERSON TO
MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS.
4
<PAGE> 9
IMPORTANT TERMS
attained age: is the issue age of the insured plus the number of full years
since the contract date.
cash surrender value: is equal to the net cash surrender value plus any debt.
contract anniversary: is the same date of each year as the contract date.
contract date: is used to determine processing dates, contract years and
contract anniversaries. It is usually the business day next following the
receipt of the initial payment at the Service Center. It is also referred to as
the policy date.
debt: is the sum of all outstanding loans on a Contract plus accrued interest.
face amount: is the minimum death benefit as long as the Contract remains in
force. The face amount will change if the change in face amount option is
chosen; it may increase as a result of an additional payment; or it may decrease
as a result of a partial withdrawal.
fixed base: On the contract date, the fixed base equals the cash surrender
value. From then on, the fixed base is calculated like the cash surrender value
except that the calculation substitutes 4% for the net rate of return, and
substitutes the guaranteed maximum cost of insurance rates for the current
rates. In addition, the fixed base is calculated without taking into account
loans or repayments. The fixed base is equivalent to the cash surrender value
for a comparable fixed benefit contract with the same face amount and guarantee
period. After the guarantee period, the fixed base is zero. We use the fixed
base to limit the mortality cost deduction and our right to cancel the Contract
during the guarantee period.
guarantee period: is the time guaranteed that the Contract will remain in force
regardless of investment experience, unless the debt exceeds certain values. It
is the period that a comparable fixed life insurance contract (same face amount,
payments made, guaranteed mortality table and loading) would remain in force if
credited with 4% interest per year.
in force date: is the date when the underwriting process is complete, the
initial payment is received and outstanding contract amendments (if any) are
received at the Service Center.
investment base: is the amount available under a Contract for investment in
the Separate Account at any time.
issue age: is the insured's age as of his or her birthday nearest the
contract date.
net amount at risk: is the excess of the death benefit over the cash
surrender value.
net cash surrender value: is equal to the investment base less the balance of
any deferred contract loading not yet recouped and, depending on the date it is
calculated, less all or a portion of certain other charges not yet deducted.
net single premium factor: is used to determine the amount of death benefit
purchased by $1.00 of cash surrender value. Merrill Lynch Life uses this factor
in the calculation of the variable insurance amount to make sure that the
Contract always meets the guidelines of what constitutes a life insurance
contract under the Internal Revenue Code.
processing dates: are the contract date and the first day of each contract
quarter thereafter. Processing dates after the contract date are the days when
Merrill Lynch Life deducts charges from the investment base.
5
<PAGE> 10
processing period: is the period between consecutive processing dates.
variable insurance amount: is computed daily by multiplying the cash surrender
value by the net single premium factor.
6
<PAGE> 11
SUMMARY OF THE CONTRACT
WHAT THE CONTRACT PROVIDES
The contract offers a choice of investments and an opportunity for the
Contract's investment base, net cash surrender value and death benefit to grow
based on investment results.
We don't guarantee that contract values will increase. Depending on the
investment results of the investment divisions you select, the investment base,
net cash surrender value and death benefit may go up or down on any day. You
bear the investment risk for any amount allocated to an investment division.
Death Benefit. The death benefit equals the face amount or variable insurance
amount, whichever is larger. The variable insurance amount increases or
decreases depending on the investment results of the investment divisions you
select. We will reduce any death benefit proceeds by any loan debt.
Tax Benefits and Tax Considerations. The Contract provides the minimum death
benefit required under federal tax law. By satisfying this requirement, the
Contract provides two important tax benefits:
1) Its death benefit is not subject to income tax;
2) Any increases in the Contract's Cash Surrender Value are not taxable
until distributed from the Contract. (However, withdrawals and loans
from, or a full surrender of, the Contract are subject to tax, and, if
taken before you reach age 59 1/2, may also be subject to a 10% federal
penalty tax.)
We provide the minimum death benefit to maximize investment returns (if any),
especially in the early years of the Contract. The death benefit may go up or
down, depending on investment performance. However, it will never drop below the
initial face amount.
Guarantee Period. Generally, during the guarantee period you select, we
guarantee the Contract will remain in effect and provide the death benefit
regardless of investment performance (See page ___ explaining how any loan debt
affects the Contract's value). You may select a guarantee period to last for the
insured's lifetime or a shorter period. As the chart below shows, your selected
guarantee period length affects the face amount of your contract (assuming the
same premium).
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Insured Male Age 60
Initial Premium 100,000
Length of Guarantee Period (Years) Face Amount
---------------------------------- -----------
<S> <C>
5
10
20
30
Insureds lifetime
- -------------------------------------------------------------------------------
</TABLE>
Choosing a guarantee period for the insured's lifetime provides certainty.
However, the face amount is lower than for shorter guarantee periods. Your own
individual insurance needs and risk tolerance should determine your choice in
guarantee period length.
You should purchase the Contract for its death benefit. You may use the
Contract's net cash surrender value, as well as its death benefit, to provide
proceeds for various individual and business planning purposes. However, loans
and partial withdrawals will affect the net cash surrender value and death
benefit proceeds, and may cause the Contract to terminate. Because the Contract
is designed to provide benefits on a long-term basis, before purchasing a
Contract in connection with a specialized purpose, you should consider whether
the long-term nature of the Contract, its investment risks, and the potential
impact of any contemplated loans and partial withdrawals, are consistent with
the purposes you may be considering.
7
<PAGE> 12
Moreover, using a Contract for a specialized purpose may have tax consequences.
(See "Tax Considerations".)
AVAILABILITY AND PAYMENTS
We will issue a Contract for an insured up to age 75 (or up to age 80 for joint
insureds). We will consider issuing Contracts for insureds above age 75 on an
individual basis. A Contract can be purchased with a single payment. The minimum
single payment for a Contract is the lesser of (a) $5,000 for an insured under
age 20 and $10,000 for an insured age 20 and over, or (b) the payment required
to purchase a face amount of at least $100,000 (but that payment may not be less
than $2,000).
Subject to state regulation, contract owners may pay planned periodic payments
instead of a single payment. If you elect planned periodic payments, the minimum
initial planned periodic payment is $2,000 provided that the initial payment
plus the planned payments will total $10,000 or more during the first five
contract years.
We will not accept an initial payment that provides a guarantee period of less
than one year.
Subject to certain conditions, you may make additional unplanned payments (See
"Making Additional Payments.")
The Contract is not available to insure residents of certain municipalities in
Kentucky where premium taxes in excess of a certain level are imposed.
THE INVESTMENT BASE
A Contract's investment base is the amount available for investment at any time.
On the contract date (usually the next business day after our Service Center
receives your initial payment), the investment base is equal to the initial
payment. Afterwards, it varies daily based on the investment performance of your
selected investment divisions. You bear the risk of poor investment performance
and receive the benefit of favorable investment performance. You may wish to
consider diversifying your investment in the Contract by allocating the
investment base to two or more investment divisions.
THE INVESTMENT DIVISIONS
Payments are invested in investment divisions of the Separate Account.
Generally, through the first 14 days following the in force date, the initial
payment will be invested only in the investment division of the Separate Account
investing in the Money Reserve Portfolio. Afterwards, the investment base will
be reallocated to up to five of the investment divisions. (See "Changing the
Allocation".)
ILLUSTRATIONS
Illustrations in this Prospectus or used in connection with the purchase of the
Contract are based on hypothetical investment rates of return. We don't
guarantee these rates. They are illustrative only, and not a representation of
past or future performance. Actual rates of return may be more or less than
those shown in the illustrations. Actual values will be different than those
illustrated.
REPLACEMENT OF EXISTING COVERAGE
Generally, it is not advisable to purchase an insurance contract as a
replacement for existing coverage. Before you buy a Contract, ask your Merrill
Lynch Financial Consultant if changing, or adding to, current insurance coverage
would be advantageous. Don't base your decision to replace existing coverage
solely on a comparison of contract illustrations.
8
<PAGE> 13
RIGHT TO CANCEL ("FREE LOOK" PERIOD) OR EXCHANGE
Once you receive the Contract, review it carefully to make sure it is what you
want. Generally, you may return a Contract for a refund within ten days after
you receive it. Some states allow a longer period of time to return the
Contract. If required by your state, you may return the Contract within the
later of ten days after receiving it or 45 days from the date the application is
completed. If you return the Contract during the "free look" period, we will
refund the payment without interest.
You may also exchange your Contract within 18 months for a contract with
benefits that do not vary with the investment results of a separate account.
DISTRIBUTIONS FROM THE CONTRACT
Partial Withdrawals. Beginning in Contract year two, you may withdraw up to
80% of the net cash surrender value. (See "Partial Withdrawals".)
Surrenders. You may surrender your Contract at any time and receive the net
cash surrender value. The net cash surrender value equals the investment base
minus:
- The balance of any deferred contract loading not yet deducted;
and
- Other contract charges not yet deducted.
Loans. You may borrow money from us, using your Contract as collateral. We
deduct loan debt from the amount payable on surrender of the Contract and from
any death benefit payable. Loan interest accrues daily and, IF IT IS NOT PAID
EACH YEAR, IT IS CAPITALIZED AND ADDED TO THE OUTSTANDING LOAN AMOUNT. With a
modified endowment contract, both the loan amount and the amount of capitalized
interest are treated as taxable distributions. Depending upon investment
performance of the investment divisions and the amounts borrowed, loans may
cause a Contract to lapse. If the Contract lapses with loan debt outstanding,
adverse tax consequences may result. (See "Loans" and "Tax Considerations -- Tax
Treatment of Loans and Other Distributions".)
FEES AND CHARGES
Investment Base Charges. We invest the entire amount of all premium payments
in the Separate Account. We then deduct certain charges from your investment
base on processing dates. These charges are:
- DEFERRED CONTRACT LOAD equal to 9% of each payment. It consists of a
sales load of 4.5%, a charge for federal taxes of 2% and a state and
local premium tax charge of 2.5%. For joint insureds the deferred
contract load equals 11% of each payment and consists of a sales load of
6.5%, a charge for federal taxes of 2% and a state and local premium tax
charge of 2.5%. We deduct the deferred contract load in equal
installments of .90% (1.1% for joint insureds) of each payment. We make
this deduction on the ten contract anniversaries following the date we
receive and accept the payment. However, in determining a Contract's net
cash surrender value, we subtract the balance of the deferred contract
load not yet deducted.
- MORTALITY COST -- on all quarterly processing dates after the contract
date, we deduct a cost for the life insurance coverage we provide (see
"Mortality Cost"); and
- NET LOAN COST -- on each contract anniversary, if there has been any
debt during the prior year, we deduct a net loan cost. It equals a
maximum of 2.0% of the debt per year (see "Charges Deducted From the
Investment Base" and "Net Loan Cost").
Separate Account Charges. We deduct certain charges daily from the investment
results of the investment divisions in the Separate Account. These charges are:
9
<PAGE> 14
- a MORTALITY AND EXPENSE RISK CHARGE deducted from all investment
divisions. It is equivalent to .90% annually at the beginning of the
year; and
- a TRUST CHARGE deducted from only those investment divisions investing
in the Zero Trusts. It is currently equivalent to .34% annually at the
beginning of the year. It will never exceed .50% annually.
Advisory Fees. The portfolios in the Funds pay monthly advisory fees and other
expenses. (See "Charges to Fund Assets".)
JOINT INSUREDS
The Contract can provide coverage on the lives of two insureds with a death
benefit payable upon the death of the last surviving insured. Most of the
discussions in this Prospectus referencing a single insured may also be read as
though the single insured were the two insureds under a joint Contract. Those
discussions which are different for joint insureds are noted. (See "Joint
Insureds.")
This summary provides only a brief overview of the more significant aspects of
the Contract. This Prospectus and the Contract provide further detail. You
should retain the Contract together with its attached applications, medical
exam(s), amendments, riders, and endorsements. These are the entire agreement
between you and us.
For the definitions of some important terms used in this Prospectus, see
"Important Terms."
FACTS ABOUT MERRILL LYNCH LIFE, MERRILL LYNCH, PIERCE, FENNER & SMITH
INC.,
THE SEPARATE ACCOUNT, THE FUNDS, AND
THE ZERO TRUSTS
MERRILL LYNCH LIFE
Merrill Lynch Life is a stock life insurance company organized under the laws
of the State of Washington in 1986 and redomesticated under the laws of the
State of Arkansas in 1991. We are an indirect wholly owned subsidiary of
Merrill Lynch & Co., Inc. We are authorized to sell life insurance and
annuities in 49 states, Guam, the U.S. Virgin Islands and the District of
Columbia. We are also authorized to sell variable life insurance and variable
annuities in most jurisdictions.
MERRILL LYNCH, PIERCE, FENNER & SMITH INC. ("MLPF&S")
MLPF&S provides a world-wide broad range of securities brokerage and investment
banking services. It provides marketing services for us and is the principal
underwriter of the Contracts issued through the Separate Account. We retain
MLPF&S to provide services relating to the Contracts under a distribution
agreement. (See "Selling the Contracts".)
- ------------------------------------------------------------------------------
CMA ACCOUNT REPORTING
If you have a Merrill Lynch Cash Management Account(R),* you may elect to have
your Contract linked electronically to your CMA account. We call this the CMA
Insurance Service. With this service, you will have certain Contract information
included as part of your regular monthly CMA account statement. It will list the
investment base allocation, death benefit, net cash surrender value, debt and
any CMA account activity affecting the Contract during the month.
- ------------------------------------------------------------------------------
10
<PAGE> 15
*Cash Management Account and CMA are registered trademarks of Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
THE SEPARATE ACCOUNT
We established the Separate Account, a separate investment account, on November
16, 1990. It is registered with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. This registration
does not involve any supervision by the Securities and Exchange Commission over
the investment policies or practices of the Separate Account. The Separate
Account meets the definition of a separate account under the federal securities
laws. We use the Separate Account to support the Contract as well as other
variable life insurance contracts we issue. The Separate Account is also
governed by the laws of the State of Arkansas, our state of domicile.
We own all of the assets in the Separate Account. We keep the Separate Account's
assets apart from our general account and any other separate accounts we may
have. Arkansas insurance law provides that the Separate Account's assets, to the
extent of its reserves and liabilities, may not be charged with liabilities
arising out of any other business we conduct.
Obligations to contract owners and beneficiaries that arise under the Contract
are our obligations. Income, gains, and losses, whether or not realized, from
assets allocated to the Separate Account are, in accordance with the Contracts,
credited to or charged against the Separate Account without regard to our other
income, gains or losses. The assets in the Separate Account will always be at
least equal to the reserves and other liabilities of the Separate Account. If
the Separate Account's assets exceed the required reserves and other Contract
liabilities, (which will always be at least equal to the aggregate contract
value allocated to the Separate Account under the Contracts), we may transfer
the excess to our general account.
There are currently 37 investment divisions in the Separate Account. Seven
invest in Class A shares of a specific portfolio of the Merrill Lynch Variable
Series Funds, Inc. (the "Variable Series Funds"). Ten invest in shares of a
specific portfolio of the Merrill Lynch Series Fund, Inc. (the "Series Fund").
Two invest in shares of a specific portfolio of the AIM Variable Insurance
Funds, Inc. (the "AIM V.I. Funds"). One invests in shares of a specific
portfolio of the Alliance Variable Products Series Fund, Inc. (the "Alliance
Fund"). Two invest in shares of a specific portfolio of the MFS Variable
Insurance Trust (the "MFS Trust"). Fifteen invest in specific units of The
Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury Securities (the "Zero
Trust"). You'll find complete information about the Funds and the Zero Trusts,
including the risks associated with each portfolio (including specific risks
associated with investment in the High Yield Portfolio of the Series Fund) in
the accompanying prospectuses. They should be read along with this Prospectus.
Although the investment objectives and policies of certain Funds are similar to
the investment objectives and policies of other portfolios that may be managed
or sponsored by the same investment adviser, manager, or sponsor, nevertheless,
we do not represent or assure that the investment results will be comparable to
any other portfolio, even where the investment advisors or manager is the same.
Differences in portfolio size, actual investments held, fund expenses, and other
factors all contribute to differences in fund performance. For all of these
reasons, you should expect investment results to differ. In particular, certain
Funds available only through the Contract have names similar to funds not
available through the Contract. The performance of any fund not available
through the Contract is not indicative of performance of the similarly named
fund available through the Contract.
NET RATE OF RETURN FOR AN INVESTMENT DIVISION
Each investment division has a distinct unit value (also referred to as "price"
or "separate account index" in reports we furnish to you). When we allocate your
payments or investment base to an investment division, we purchase units based
on the value of a unit of the investment division as of the end of the valuation
period during which the allocation occurs. When we transfer or deduct amounts
out of an investment
11
<PAGE> 16
division, we redeem units in a similar manner. A valuation period is each
business day together with any non-business days before it. A business day is
any day the New York Stock Exchange is open or there's enough trading in
portfolio securities to materially affect the net asset value of an investment
division.
For each investment division, the separate account index was initially set at
$10.00. The separate account index for each subsequent valuation period
fluctuates based upon the net rate of return for that period. We determine the
net rate of return of an investment division at the end of each valuation
period. The net rate of return reflects the investment performance of the
investment division for the valuation period and the charges to the Separate
Account.
For investment divisions investing in the Funds, shares are valued at net asset
value and reflect reinvestment of any dividends or capital gains distributions
declared by the Funds.
For investment divisions investing in the Zero Trusts, units of each Zero Trust
are valued at the sponsor's repurchase price, as explained in the prospectus for
the Zero Trusts.
CHANGES WITHIN THE SEPARATE ACCOUNT
We may add new investment divisions. We can also eliminate investment
divisions, combine two or more investment divisions, or substitute a new
portfolio for the portfolio in which an investment division invests. A
substitution may become necessary if, in our judgment, a portfolio no longer
suits the purposes of the Contracts. This may happen due to a change in laws or
regulations, or a change in a portfolio's investment objectives or
restrictions, or because the portfolio is no longer available for investment,
or for some other reason. If necessary, we would get prior approval from the
Arkansas State Insurance Department and the Securities and Exchange Commission
and any other required approvals before making such a substitution.
Subject to any required regulatory approvals, we can transfer assets of the
Separate Account or of any of the investment divisions to another separate
account or investment division.
When permitted by law, we also can:
- deregister the Separate Account under the Investment Company Act of 1940;
- operate the Separate Account as a management company under the Investment
Company Act of 1940;
- restrict or eliminate any voting rights of contract owners, or other
persons who have voting rights as to the Separate Account; and
- combine the Separate Account with other separate accounts.
THE FUNDS
Below we list the funds into which the investment divisions may invest. There is
no guarantee that any fund or portfolio will be able to meet its investment
objective.
THE SERIES FUND
The Series Fund is registered with the Securities and Exchange Commission as an
open-end management investment company and its investment adviser is Merrill
Lynch Asset Management, L.P. ("MLAM"). All
12
<PAGE> 17
of its ten mutual fund portfolios are currently available through the Separate
Account. The investment objectives and certain investment policies of the Series
Fund portfolios are described below.
Money Reserve Portfolio seeks to preserve capital, maintain liquidity and
achieve the highest possible current income consistent with those objectives by
investing in short-term money market securities.
Intermediate Government Bond Portfolio seeks to obtain the highest level of
current income consistent with the protection of capital afforded by investing
in intermediate-term debt securities issued or guaranteed by the U.S. Government
or its agencies. The Portfolio will invest in such securities with a maximum
maturity of 15 years.
Long-Term Corporate Bond Portfolio primarily seeks to provide as high a level of
current income as is believed to be consistent with prudent investment risk. In
addition, the Portfolio seeks the preservation of capital. In seeking to achieve
these objectives, under normal circumstances the Portfolio invests at least 80%
of the value of its total assets in debt securities that have a rating within
the three highest grades of Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Ratings Group ("Standard & Poor's").
High Yield Portfolio primarily seeks as high a level of current income as is
believed to be consistent with prudent management. Secondarily, the Portfolio
seeks capital appreciation when consistent with its primary objective. The
Portfolio seeks to achieve its investment objective by investing principally in
fixed income securities rated in the lower categories of the established rating
services or in unrated securities of comparable quality (including securities
commonly known as "junk bonds").
Capital Stock Portfolio seeks long-term growth of capital and income, plus
moderate current income. It generally invests in equity securities considered to
be of good or improving quality or considered to be undervalued based on
criteria such as historical price/book value and price/earnings ratios.
Growth Stock Portfolio seeks long-term growth of capital by investing in a
diversified portfolio of securities, primarily common stocks, of aggressive
growth companies considered to have special investment value.
Multiple Strategy Portfolio seeks a high total investment return consistent with
prudent risk through a fully managed investment policy utilizing equity
securities, intermediate and long-term debt securities and money market
securities.
Natural Resources Portfolio seeks long-term growth of capital and protection of
the purchasing power of shareholders' capital by investing primarily in equity
securities of domestic and foreign companies with substantial natural resource
assets.
Global Strategy Portfolio seeks high total investment return by investing
primarily in a portfolio of equity and fixed-income securities, including
convertible securities, of U.S. and foreign issuers.
Balanced Portfolio seeks a level of current income and a degree of stability of
principal not normally available from an investment solely in equity securities
and the opportunity for capital appreciation greater than that normally
available from an investment solely in debt securities by investing in a
balanced portfolio of fixed-income and equity securities.
MLAM is indirectly owned and controlled by Merrill Lynch & Co., Inc. and is a
registered adviser under the Investment Advisers Act of 1940. The Series Fund,
as part of its operating expenses, pays an investment advisory fee to MLAM. (See
"Charges to Fund Assets".)
13
<PAGE> 18
THE VARIABLE SERIES FUNDS
The Variable Series Funds is registered with the Securities and Exchange
Commission as an open-end management investment company and its investment
adviser is MLAM. Class A shares of seven of its portfolios are currently
available through the Separate Account. The investment objectives and certain
investment policies of the seven available Variable Series Funds portfolios are
described below.
Basic Value Focus Fund seeks capital appreciation and, secondarily, income by
investing in securities, primarily equities, that management of the Fund
believes are undervalued and therefore represent basic investment value. The
Fund seeks special opportunities in securities that are selling at a discount,
either from book value or historical price-earnings ratios, or seem capable of
recovering from temporarily out of favor considerations. Particular emphasis is
placed on securities that provide an above-average dividend return and sell at a
below-average price/earnings ratio.
Global Bond Focus Fund (formerly the World Income Focus Fund) seeks to provide
high total investment return by investing in a global portfolio of fixed income
securities denominated in various currencies, including multinational currency
units. The Fund will invest in fixed income securities that have a credit rating
of A or better by Standard & Poor's or by Moody's or commercial paper rated A-1
by Standard & Poor's or Prime-1 by Moody's or obligations that MLAM has
determined to be of similar creditworthiness.
Global Utility Focus Fund seeks both capital appreciation and current income
through investment of at least 65% of its total assets in equity and debt
securities issued by domestic and foreign companies which are, in the opinion of
MLAM, primarily engaged in the ownership or operation of facilities used to
generate, transmit or distribute electricity, telecommunications, gas or water.
International Equity Focus Fund seeks capital appreciation and, secondarily,
income by investing in a diversified portfolio of equity securities of issuers
located in countries other than the United States. Under normal conditions, at
least 65% of the Fund's net assets will be invested in such equity securities
and at least 65% of the Fund's total assets will be invested in the securities
of issuers from at least three different foreign countries.
Developing Capital Markets Focus Fund seeks long-term capital appreciation by
investing in securities, principally equities, of issuers in countries having
smaller capital markets. For purposes of its investment objective, the Fund
considers countries having smaller capital markets to be all countries other
than the four countries having the largest equity market capitalizations.
Special Value Focus Fund (formerly the Equity Growth Fund) seeks long-term
growth of capital by investing in a diversified portfolio of securities,
primarily common stocks, of relatively small companies that management of the
Variable Series Funds believes have special investment value, and of emerging
growth companies regardless of size. Companies are selected by management on the
basis of their long-term potential for expanding their size and profitability or
for gaining increased market recognition for their securities. Current income is
not a factor in the selection of securities.
Index 500 Fund seeks to provide investment results that, before expenses,
correspond to the aggregate price and yield performance of the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500 Index").
The Variable Series Funds, as part of its operating expenses, pays an investment
advisory fee to MLAM. (See "Charges to Fund Assets".)
THE AIM V.I. FUNDS
The AIM V.I. Funds is registered with the Securities and Exchange Commission as
an open-end management investment company and its investment adviser is A I M
Advisors, Inc. ("AIM"). Two of its
14
<PAGE> 19
mutual fund portfolios are currently available through the Separate Account. The
investment objectives of the two available AIM V.I. Funds portfolios are
described below.
AIM V.I. Capital Appreciation Fund seeks capital appreciation through
investments in common stocks, with emphasis on medium-sized and smaller emerging
growth companies. The portfolio is primarily comprised of securities of two
basic categories of companies: (1) "core" companies, which AIM considers to have
experienced above-average and consistent long-term growth in earnings with
excellent prospects for outstanding future growth, and (2) "earnings
acceleration" companies which AIM believes are currently enjoying a dramatic
increase in profits.
AIM V.I. Value Fund seeks to achieve long-term growth of capital by investing
primarily in equity securities judged by AIM to be undervalued relative to the
current or projected earnings of the companies issuing the securities, or
relative to current market values of assets owned by the companies issuing the
securities or relative to the equity markets generally. Income is a secondary
objective. The investment division corresponding to this Fund should not be
selected by contract owners who seek income as their primary investment
objective.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, is a wholly owned
subsidiary of A I M Management Group Inc., a holding company engaged in the
financial services business and an indirect wholly owned subsidiary of AMVESCAP
PLC. The AIM V.I. Funds, as part of its operating expenses, pays an investment
advisory fee to AIM. (See "Charges to Fund Assets".)
THE ALLIANCE FUND
The Alliance Fund is registered with the Securities and Exchange Commission as
an open-end management investment company and its investment adviser is Alliance
Capital Management L.P. ("Alliance"). One of its mutual fund portfolios is
currently available through the Separate Account. The investment objective of
the available Alliance Fund portfolio is described below.
Premier Growth Portfolio seeks growth of capital by pursuing aggressive
investment policies. Since investments will be made based upon their potential
for capital appreciation, current income will be incidental to the objective of
capital growth. Because of the market risks inherent in any investment, the
selection of securities on the basis of their appreciation possibilities cannot
ensure against possible loss in value.
Alliance is a Delaware limited partnership with principal offices at 1345 Avenue
of the Americas, New York, New York 10105. Alliance Capital Management
Corporation ("ACMC"), the sole general partner of Alliance, is an indirect
wholly owned subsidiary of The Equitable Life Assurance Society of the United
States, which is in turn a wholly owned subsidiary of the Equitable Companies
Incorporated, a holding company which is controlled by AXA, a French insurance
holding company. The Alliance Fund, as part of its operating expenses, pays an
investment advisory fee to Alliance. (See "Charges to Fund Assets".)
THE MFS TRUST
The MFS Trust is registered with the Securities and Exchange Commission as an
open-end management investment company and its investment adviser is
Massachusetts Financial Services Company ("MFS"). Two of its mutual fund
portfolios are currently available through the Separate Account. The investment
objectives of the available MFS Trust portfolios are described below.
MFS Emerging Growth Series seeks to provide long-term growth of capital by
investing primarily (i.e., at least 80% of its assets under normal
circumstances) in common stocks of emerging growth companies. Emerging growth
companies include companies that MFS believes are early in their life cycle but
which have the potential to become major enterprises. Dividend and interest
income from portfolio securities, if any, is incidental to the Fund's objective
of long-term growth of capital.
15
<PAGE> 20
MFS Research Series seeks to provide long-term growth of capital and future
income. The portfolio securities of the MFS Research Series are selected by a
committee of investment research analysts. This committee includes investment
analysts employed not only by the Adviser but also by MFS International (U.K.)
Limited, a wholly owned subsidiary of MFS. The Series' assets are allocated
among industries by the analysts acting together as a group. Individual analysts
are then responsible for selecting what they view as the securities best suited
to meet the Series' investment objective within their assigned industry
responsibility.
MFS, a Delaware corporation, 500 Boylston Street, Boston, Massachusetts 02116,
is a subsidiary of Sun Life of Canada (U.S.), which, in turn, is a wholly owned
subsidiary of Sun Life Assurance Company of Canada. The MFS Trust, as part of
its operating expenses, pays an investment advisory fee to MFS. (See "Charges to
Fund Assets".)
SPECIAL RISKS IN CERTAIN FUNDS
Investment in lower-rated debt securities, such as those in which the High Yield
Portfolio of the Series Fund, and the Developing Capital Markets Focus and
International Equity Focus Funds of the Variable Series Funds, expect to invest,
entails relatively greater risk of loss of income or principal. The Developing
Capital Markets Focus Fund of the Variable Series Funds has no established
rating criteria for the debt securities in which it may invest, and will rely on
MLAM's judgment in evaluating the creditworthiness of an issuer of such
securities. In an effort to minimize risk, these portfolios will diversify
holdings among many issuers. However, there can be no assurance that
diversification will protect these portfolios from widespread defaults during
periods of sustained economic downturn.
In seeking to protect the purchasing power of capital, the Natural Resources
Portfolio of the Series Fund reserves the right, when management anticipates
significant economic, political, or financial instability, such as high
inflationary pressures or upheaval in foreign currency exchange markets, to
invest a majority of its assets in companies that explore for, extract, process
or deal in gold or in asset-based securities indexed to the value of gold
bullion. The Natural Resources Portfolio will not concentrate its investments in
such securities until it has been advised that the Contracts' federal tax status
will not be adversely affected as a result.
In selecting investments for the AIM V.I. Capital Appreciation Fund, AIM is
particularly interested in companies that are likely to benefit from new or
innovative products, services or processes that should enhance such companies'
prospects for future growth in earnings. As a result of this policy, the market
prices of many of the securities purchased and held by this portfolio may
fluctuate widely. Any income received from securities held by the portfolio will
be incidental, and a contract owner should not consider a purchase of shares of
the portfolio as equivalent to a complete investment program.
For the MFS Emerging Growth Series, the nature of investing in emerging growth
companies involves greater risk than is customarily associated with investments
in more established companies. Emerging growth companies often have limited
product lines, markets or financial resources, and they may be dependent on
one-person management. In addition, there may be less research available on many
promising small and medium sized emerging growth companies, making it more
difficult to find and analyze these companies. The securities of emerging growth
companies may have limited marketability and may be subject to abrupt or erratic
market movements than securities of larger, more established growth companies or
the market averages in general. Shares of the MFS Emerging Growth Series,
therefore, are subject to greater fluctuation in value than shares of a
conservative equity fund or of a growth fund which invests entirely in proven
growth stocks.
Investment in these portfolios entails relatively greater risk of loss of income
or principal. In addition, as described in the accompanying prospectus for the
portfolios, many portfolios should be considered a long-
16
<PAGE> 21
term investment and a vehicle for diversification, and not as a balanced
investment program. It may not be appropriate to allocate all payments and
investment base to a single investment division.
THE OPERATION OF THE FUNDS
Buying and Redeeming Shares. The Funds sell and redeem their shares at net asset
value. Any dividend or capital gain distribution will be reinvested at net asset
value in shares of the same portfolio.
Voting Rights. We are the legal owner of all Fund shares held in the Separate
Account. We have the right to vote on any matter put to vote at the Funds'
shareholder meetings. However, we will vote all Fund shares attributable to
Contracts according to instructions we receive from contract owners. We will
vote shares attributable to Contracts for which we receive no voting
instructions in the same proportion as shares in the respective investment
divisions for which we receive instructions. We will also vote shares not
attributable to Contracts in the same proportion as shares in the respective
divisions for which we received instructions. We may vote Fund shares in our own
right if any federal securities laws or regulations, or their present
interpretation, change to permit us to do so.
We determine the number of shares attributable to you by dividing your
Contract's investment base in a division by the net asset value of one share of
the corresponding portfolio. We count fractional votes.
Under certain circumstances, state regulatory authorities may require us to
disregard voting instructions. This may happen if following the instructions
would mean voting to change the sub-classification or investment objectives of
the portfolios, or to approve or disapprove an investment advisory contract.
We may also disregard instructions to vote for changes in the investment policy
or the investment adviser if it disapproves of the proposed changes. We would
disapprove a proposed change only if it was:
- contrary to state law;
- prohibited by state regulatory authorities; or
- decided by management that the change would result in overly
speculative or unsound investments.
If we disregard voting instructions, we will include a summary of our actions in
the next semi-annual report.
Resolving Material Conflicts. Shares of the Series Fund are available for
investment by us, ML Life Insurance Company of New York (an indirect wholly
owned subsidiary of Merrill Lynch & Co., Inc.) and Monarch Life Insurance
Company (an insurance company not affiliated with us or Merrill Lynch & Co.,
Inc.). Shares of the Variable Series Funds, the AIM V.I. Funds, the Alliance
Fund, and the MFS Trust are sold to separate accounts of ours, ML Life Insurance
Company of New York, and insurance companies not affiliated with us or Merrill
Lynch & Co., Inc. to fund benefits under variable life insurance and variable
annuity contracts, and may be sold to certain qualified plans.
It is possible that differences might arise between our Separate Account and one
or more of the other separate accounts which invest in the Funds. In some cases,
it is possible that the differences could be considered "material conflicts."
Such a "material conflict" could also arise due to changes in the law (such as
state insurance law or federal tax law) which affect these different variable
life insurance and variable annuity separate accounts. It could also arise by
reason of differences in voting instructions from our contract owners and those
of the other insurance companies, or for other reasons. We will monitor events
to determine how to respond to conflicts. If a conflict occurs, we may need to
eliminate one or more investment divisions of the Separate Account which invest
in the Funds or substitute a new portfolio for a portfolio in which a division
invests. In responding to any conflict, we will take the action we believe
necessary to protect you consistent with applicable legal requirements.
17
<PAGE> 22
Administrative Service Arrangements. MLAM has entered into an agreement with
Merrill Lynch Insurance Group, Inc. ("MLIG"), our parent, for administration
services for the Series Fund and the Variable Series Funds in connection with
the Contracts and other variable life insurance and variable annuity contracts
issued by Merrill Lynch Life. Under this agreement, MLAM compensates MLIG in an
amount equal to a portion of the annual gross investment advisory fees paid by
the Series Fund and the Variable Series Funds to MLAM attributable to variable
contracts issued.
AIM V.I. Funds has entered into an Administrative Services Agreement with AIM,
under which AIM has agreed to provide certain accounting and other
administrative services to the AIM V.I. Funds, including the services of a
principal financial officer and related staff. As compensation to AIM for its
services under the Administrative Services Agreement, the AIM V.I. Funds
reimburse AIM for expenses incurred by AIM or its affiliates in connection with
such services. AIM has entered into an agreement with us for administrative
services for the AIM V.I. Funds in connection with the Contracts. Under this
agreement, AIM compensates us in an amount equal to a percentage of the average
net assets of the AIM V.I. Funds attributable to the Contracts.
Alliance Fund Distributors, Inc. ("AFD"), an affiliate of Alliance, has entered
into an agreement with us for administrative services for the Alliance Fund in
connection with the Contracts. Under this agreement, AFD compensates us in an
amount equal to a percentage of the average net assets of the Alliance Fund
attributable to the Contracts.
MFS has entered into an agreement with MLIG for administrative services for the
MFS Trust in connection with the Contracts and certain contracts issued by ML
Life Insurance Company of New York. Under this agreement, MFS pays compensation
to MLIG in an amount equal to a percentage of the average net assets of the MFS
Trust attributable to such contracts.
18
<PAGE> 23
THE ZERO TRUSTS
The Zero Trusts are intended to provide safety of capital and a competitive
yield to maturity. The Zero Trusts purchase at a deep discount U.S.
Government-backed investments which make no periodic interest payments. When
held to maturity the investments should receive approximately a fixed yield. The
value of Zero Trust units before maturity varies more than it would if the Zero
Trusts contained interest-bearing U.S. Treasury securities of comparable
maturities.
The Zero Trust portfolios consist mainly of:
- bearer debt obligations issued by the U.S. Government stripped of their
unmatured interest coupons;
- coupons stripped from U.S. debt obligations; and
- receipts and certificates for such stripped debt obligations and coupons.
The Zero Trusts currently available are shown below:
<TABLE>
<CAPTION>
TARGETED RATE OF RETURN TO
MATURITY AS
ZERO TRUST MATURITY DATE OF _____, 1999
---------- ------------- --------------
<S> <C> <C>
2000 February 15, 2000 ____%
2001 February 15, 2001 ____%
2002 February 15, 2002 ____%
2003 August 15, 2003 ____%
2004 February 15, 2004 ____%
2005 February 15, 2005 ____%
2006 February 15, 2006 ____%
2007 February 15, 2007 ____%
2008 February 15, 2008 ____%
2009 February 15, 2009 ____%
2010 February 15, 2010 ____%
2011 February 15, 2011 ____%
2013 February 15, 2013 ____%
2014 February 15, 2014 ____%
</TABLE>
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of
Merrill Lynch & Co., Inc., is the sponsor for the Zero Trusts. The sponsor will
sell units of the Zero Trusts to the Separate Account and has agreed to
repurchase units we need to sell them to pay benefits and make reallocations. We
pay the sponsor a fee for these transactions and are reimbursed through the
trust charge assessed to the divisions investing in the Zero Trusts. (See
"Charges to Divisions Investing in the Zero Trusts".)
Targeted Rate of Return to Maturity. Because the underlying securities in the
Zero Trusts will grow to their face value on the maturity date, we can
estimate a compound rate of return to maturity for the Zero Trust units. But
because the Separate Account held the units, we need to take into account the
asset charge and the trust charge (described in "Charges to the Separate
Account") in estimating the net rate of return. It depends on the compound rate
of return adjusted for these charges. It does not, however, represent the
actual return on a payment that we might receive under the Contract on that
date, since it does not reflect the charges for deferred contract load,
mortality costs and any net loan cost deducted from a Contract's investment
base (described in "Charges Deducted from the Investment Base").
19
<PAGE> 24
Since the value of the Zero Trust units will vary daily to reflect the market
value of the underlying securities, the compound rate of return to maturity for
the Zero Trust units and the net rate of return to maturity for the Separate
Account will vary correspondingly.
FACTS ABOUT THE CONTRACT
WHO MAY BE COVERED
You may apply for a Contract for an insured up to issue age 75. We will consider
issuing Contracts for insureds above age 75 on an individual basis. The
insured's issue age is his or her age as of the birthday nearest the contract
date. Before we'll issue a Contract, the insured must meet our medical and other
underwriting and insurability requirements.
We use two methods of underwriting:
- simplified underwriting, with no physical exam; and
- para-medical or medical underwriting with a physical exam.
If the contract owner and the insured are different persons, we will determine
whether the contract owner has an insurable interest in the insured. Generally,
family members have insurable interests in each other. An insurable interest can
also exist in various kinds of business relationships.
The initial payment amount plus any planned periodic payments elected and the
age and sex of the insured determine whether we'll do underwriting on a
simplified or medical basis. The chart below shows the maximum initial payment
plus any planned payments that we'll underwrite on a simplified basis:
<TABLE>
<CAPTION>
AGE MAXIMUM
------ -------
<S> <C>
0-29.................................... $ 25,000
30-39................................... 40,000
40-49................................... 50,000
50-59................................... 100,000
60-75................................... 120,000
</TABLE>
However, if the face amount is above the minimum face amount required for an
initial payment (see "Selecting the Initial Face Amount" below), we will also
take "the net amount at risk" into account in determining the method of
underwriting. The net amount at risk is the death benefit minus the cash
surrender value.
We assign insureds to underwriting classes in calculating mortality cost
deductions. In assigning insureds to underwriting classes, we distinguish
between those insureds underwritten on a simplified basis and those on a
para-medical or medical basis. Under both the simplified and medical
underwriting methods we may issue Contracts either in the standard or non-smoker
underwriting class. We may also issue Contracts on insureds in a "substandard"
underwriting class. Individuals in substandard classes have health or lifestyle
factors less favorable than the average person. For a discussion of the effect
of underwriting classification on mortality cost deductions, see "Mortality
Cost".
For joint insureds, see "Joint Insureds".
INITIAL PAYMENT
Minimum. To purchase a Contract, you must complete an application and make a
payment. We require the payment to put the Contract into effect. The minimum
single payment for a Contract is the lesser of (a)
20
<PAGE> 25
$5,000 for an insured under age 20 and $10,000 for an insured age 20 and over,
or (b) the payment required to purchase a face amount of at least $100,000 (but
that payment may not be less than $2,000). We won't, however, accept an initial
payment for a specified face amount that will provide a guarantee period of less
than one year. You may make additional payments. (See "Making Additional
Payments".)
Temporary Insurance. Insurance coverage generally begins on the contract date.
This is usually the next business day following receipt of the initial payment
at our Service Center. We may provide temporary life insurance coverage under a
temporary insurance agreement. Under our underwriting rules, in most states,
temporary life insurance coverage may not exceed $300,000 and may not last more
than 90 days.
Backdating. As provided for under state insurance law, you may backdate the
Contract to preserve the insured's age. However, you can't backdate more than
six months before the date the application was completed. We deduct cost of
insurance charges for the backdated period on the first processing date after
the contract date.
For joint insureds, see "Joint Insureds".
Selecting the Initial Face Amount. Your initial payment provides a face amount.
For a given initial payment you may choose your initial face amount. The minimum
face amount is the amount which will provide a guarantee period for the
insured's entire life. If the face amount you choose exceeds the minimum, the
guarantee period will be shorter.
Initial Guarantee Period. We determine the initial guarantee period for a
Contract be based on the initial payment and face amount. The guarantee period
is the period of time we guarantee that the Contract will remain in force
regardless of investment experience unless the debt exceeds certain values. We
base the guarantee period on the guaranteed maximum cost of insurance rates in
the Contract, the deferred contract load and a 4% interest assumption. This
means that for a given initial payment and face amount different insureds will
have different guarantee periods depending on their age, sex and underwriting
class. For example, an older insured will have a shorter guarantee period than a
younger insured of the same sex and in the same underwriting class.
RIGHT TO CANCEL ("FREE LOOK" PERIOD)
You may cancel your Contract during the "free look" period by returning it for a
refund. Generally, the "free look" period ends 10 days after you receive the
Contract. Some states allow a longer period of time to return the Contract. If
required by your state, the "free look" period ends the later of 10 days after
you receive the Contract and 45 days from the date you complete the application.
To cancel the Contract during the "free look" period, you must mail or deliver
the Contract to our Service Center or to the Financial Consultant who sold it.
We will refund your payment without interest. We may require you to wait six
months before applying for another contract.
MAKING ADDITIONAL PAYMENTS
After the end of the "free look" period, you may make additional payments. You
may make payments under a periodic plan. You may also make unplanned Payments.
In Kentucky, you cannot make additional payments until after the first contract
year.
Payments Under a Periodic Plan. Planned periodic payments are subject to our
rules. Failure to pay planned payments will not necessarily cause a Contract to
lapse. Conversely, unless the guarantee period is in effect, PAYING ALL PLANNED
PAYMENTS ON A TIMELY BASIS WILL NOT NECESSARILY PREVENT A CONTRACT FROM LAPSING.
After the end of the guarantee period, we may cancel a Contract if the cash
surrender value on a processing date is negative. (See "Guarantee Period".)
21
<PAGE> 26
You may elect the amount, duration and frequency of the planned payments, but
the minimum planned payment (including the initial payment) is $2,000 per
contract year and the amounts elected must be level. In any one year the maximum
amount of the planned payments elected cannot exceed the initial payment.
Currently, the duration of a plan cannot exceed five years.
Under a periodic payment plan, as long as the initial payment plus the planned
payments elected will total $10,000 or more during the first five contract
years, the minimum initial payment is $2,000.
You may elect a periodic plan in the application. The amount and duration of the
payments elected, as well as other factors, such as the face amount specified
and the insured's age and sex, will affect whether we will underwrite on a
simplified or medical basis. Once we approve the plan, any planned payment may
be made without any additional evidence of insurability unless it increases the
face amount.
You may elect a periodic plan later than the time of the application. The amount
and duration of the payments elected, as well as other factors such as the
current death benefit and the insured's age and sex, will affect whether we will
require additional evidence of insurability. Currently, we won't allow the later
election of a plan where additional evidence of insurability would put the
insured in a different underwriting class with different guaranteed or higher
current cost of insurance rates.
You may elect to make planned payments annually, semiannually or quarterly. You
may also make payments on a monthly basis if you authorize us to deduct the
payment from your checking account (pre-authorized checking) or to withdraw the
payment from your CMA account. We reserve the right to change or discontinue
payment deduction procedures. If you have the CMA Insurance Service, planned
payments under any of the above frequencies may be withdrawn automatically from
your CMA account and transferred to your Contract. The withdrawals will continue
under the plan specified until we are notified otherwise. For planned payments
not made under pre-authorized checking or withdrawn from a CMA account, we will
send you reminder notices.
You may change the frequency, duration and the amount of planned payments by
sending a written request to our Service Center. You may request one change in
the amount, one change in the duration and one change in the frequency of
payments each contract year. We may require satisfactory evidence of
insurability before you increase the duration or the amount of planned payments.
Payments Not Under a Periodic Plan. You may make additional payments not under a
periodic payment plan provided the attained age of the insured is not over 80.
You may make additional payments up to four times each contract year. You need
to use an Application for Additional Payment. The minimum payment is $500. You
may make these unplanned payments whether or not you're making planned payments.
We may require satisfactory evidence of insurability before we accept a payment:
1. if the payment immediately increases the net amount at risk under the
Contract, or
2. if the contract owner is already making planned payments, or
3. if the guarantee period at the time of the payment is one year or less.
Currently, we won't accept an additional payment which is not under a periodic
plan where the evidence of insurability would put the insured in a different
underwriting class with different guaranteed or higher current cost of insurance
rates.
If an additional payment requires evidence of insurability, we will invest that
payment in the division investing in the Money Reserve Portfolio. Once we
complete the underwriting and accept the payment, we will allocate the payment
either according to instructions or, if we don't get instructions,
proportionately to the investment base in the Contract's investment divisions.
22
<PAGE> 27
Effect of Additional Payments. Currently, we will generally accept any
additional payment not requiring evidence of insurability the day we receive it.
On the date we accept an additional payment we will:
- increase the Contract's investment base by the amount of the payment;
- increase the deferred contract load (see "Deferred Contract Load");
- reflect the payment in the calculation of the variable insurance amount
(see "Variable Insurance Amount"); and
- increase the fixed base by the amount of the payment less the deferred
contract load applicable to the payment (see "The Contract's Fixed Base").
If an additional payment requires evidence of insurability, once we complete
underwriting and accept the payment, the additional payment will be reflected in
contract values as described above, as of the next business day after our
Service Center receives the payment.
As of the processing date on or next following receipt and acceptance of an
additional payment, we will increase either the guarantee period or face amount
or both. If the guarantee period before acceptance of an additional payment is
less than for life, we will first use payments to extend the guarantee period.
Any amount greater than that required to extend the guarantee period to the
insured's lifetime or any subsequent additional payment will be used to increase
the Contract's face amount.
The Examples below show the effect of additional payments.
If the guarantee period is for the insured's entire life at the time we receive
and accept an additional payment, as of the processing date on or next following
the date of the additional payment, we will increase the face amount to the
amount that the Contract's fixed base, as of such processing date, would support
for the life of the insured.
Under these circumstances the amount of the increase in face amount will depend
on the amount of the additional payment and the contract year in which we
receive and accept it. If you make additional payments of different amounts at
the same time to equivalent Contracts, the Contract to which the larger payment
is applied would have a proportionately larger increase in face amount. And if
you make additional payments of the same amounts in earlier and later years,
those made in the later years would result in smaller increases to the face
amount.
Example 1 shows the effect on face amount of a $2,000 additional payment
received and accepted at the beginning of contract year two. Example 2 shows the
effect of a $4,000 additional payment received and accepted at the beginning of
contract year two. Example 3 shows the effect of a $2,000 additional payment
received and accepted at the beginning of contract year five. All three examples
assume that the guarantee period at the time of the additional payment is for
life and assume no other contract transactions have been made.
Male Issue Age: 55
Initial Payment: $30,000 Face Amount: $58,438
<TABLE>
<CAPTION>
EXAMPLE 1
---------
--------------------------------------------------------------------
CONTRACT ADDITIONAL CHANGE IN NEW FACE
YEAR PAYMENT FACE AMOUNT AMOUNT
---- ------- ----------- ------
<S> <C> <C> <C>
2 $ 2,000 $ 3,790 $ 62,228
<CAPTION>
EXAMPLE 2
---------
--------------------------------------------------------------------
CONTRACT ADDITIONAL CHANGE IN NEW FACE
YEAR PAYMENT FACE AMOUNT AMOUNT
---- ------- ----------- ------
<S> <C> <C> <C>
2 $ 4,000 $ 7,580 $ 66,018
<CAPTION>
EXAMPLE 3
---------
--------------------------------------------------------------------
CONTRACT ADDITIONAL CHANGE IN NEW FACE
YEAR PAYMENT FACE AMOUNT AMOUNT
---- ------- ----------- ------
<S> <C> <C> <C>
5 $ 2,000 $ 3,499 $ 61,937
</TABLE>
23
<PAGE> 28
Unless you specify otherwise, if there is any debt, we will apply any unplanned
payment made first as a loan repayment with any excess applied as an additional
payment. (See "Loans".)
For joint insureds, see "Joint Insureds".
CHANGING THE FACE AMOUNT
After the first contract year, if the insured is in a standard or non-smoker
underwriting class, you may request a change in the face amount of your Contract
without making an additional payment, subject to the rules and conditions
discussed below. We won't permit a change in face amount if the insured's
attained age is over 80. The minimum change in face amount is $10,000, and only
one change may be made each contract year. A change in face amount may affect
the mortality cost deduction. (See "Mortality Cost".)
The effective date of the change will be the next processing date following the
receipt and acceptance of a written request, provided our Service Center
receives it at least seven days before the processing date.
Increasing the Face Amount. To increase the face amount of a Contract, we may
require satisfactory evidence of insurability. When the face amount is
increased, the guarantee period is decreased. The maximum increase in face
amount is the amount that provides the minimum guarantee period for which we
would issue a Contract at the time of the request based on the insured's
attained age. Currently, we won't permit an increase in face amount where
evidence of insurability, if required, would put the insured in a different
underwriting class with different guaranteed or higher current cost of insurance
rates.
Decreasing the Face Amount. When you decrease the face amount of a Contract, we
increase the guarantee period. The maximum decrease in face amount is that
decrease which would provide the minimum face amount for which we would issue a
Contract at the time of the request based on the insured's attained age and sex.
We won't permit a decrease in face amount below the amount required to keep the
Contract qualified as life insurance under federal income tax laws.
Determining the New Guarantee Period. As of the effective date of any change in
face amount, we use the fixed base on that date and, based on the attained age
and sex of the insured and the new face amount, we redetermine the guarantee
period. We use a 4% interest assumption and the guaranteed maximum cost of
insurance rates in these calculations.
The Examples below show the effect of changing the face amount. Examples 1 and 2
show the effect on the guarantee period of an increase in face amount of $10,000
and $20,000 made at the beginning of contract year five. Example 3 shows the
effect on the guarantee period of an increase in face amount of $10,000 made in
contract year eight. All three examples assume that the guarantee period at the
time of the requested increase in face amount is for life and assume no other
Contract transactions have been made.
24
<PAGE> 29
Male Issue Age: 55
Initial Payment: $30,000 Face Amount: $58,438
<TABLE>
<CAPTION>
EXAMPLE 1
---------------------------------------------------------
DECREASE IN
CONTRACT INCREASE IN GUARANTEE
YEAR FACE AMOUNT PERIOD
---- ----------- ------
<S> <C> <C>
5 $ 10,000 16.00 years
<CAPTION>
EXAMPLE 2
---------------------------------------------------------
DECREASE IN
CONTRACT INCREASE IN GUARANTEE
YEAR FACE AMOUNT PERIOD
---- ----------- ------
<S> <C> <C>
5 $ 20,000 19.75 years
<CAPTION>
EXAMPLE 3
---------------------------------------------------------
DECREASE IN
CONTRACT INCREASE IN GUARANTEE
YEAR FACE AMOUNT PERIOD
---- ----------- ------
<S> <C> <C>
8 $ 10,000 15.50 years
</TABLE>
For joint insureds, see "Joint Insureds".
INVESTMENT BASE
A Contract's investment base is the sum of the amounts invested in each of the
investment divisions. On the contract date, the investment base equals the
initial payment. We adjust the investment base daily to reflect the investment
performance of the investment divisions you've selected. (See "Net Rate of
Return for an Investment Division".) The investment performance reflects the
deduction of Separate Account charges. (See "Charges to the Separate Account".)
Deductions for deferred contract load, mortality cost, and net loan cost, and
partial withdrawals and loans, decrease the investment base. (See "Charges
Deducted from the Investment Base", "Partial Withdrawals", and "Loans".) Loan
repayments and additional payments increase it. You may elect from which
investment divisions loans and partial withdrawals are taken and to which
investment divisions repayments and additional payments are added. If you don't
make an election, we will allocate increases and decreases proportionately to
your investment base in the investment divisions selected. (For special rules on
allocation of additional payments which require evidence of insurability, see
"Payments Not Under a Periodic Plan".)
Initial Investment Allocation and Preallocation. Generally, during the first 14
days following the in force date, the initial payment will remain in the
division investing in the Money Reserve Portfolio. Afterward, we'll reallocate
the investment base to the investment divisions you've selected. You may invest
in up to five of the investment divisions.
Changing the Allocation. Currently, you may change investment allocations as
often as you wish. However, we may limit the number of changes permitted but not
to less than five each contract year. We'll notify you if we impose any
limitations. To change your investment base allocation, call or write our
Service Center. (See "Some Administrative Procedures".)
Zero Trust Allocations. If your investment base is in any of the Zero Trusts,
we'll notify you 30 days before that Trust matures. Tell us in writing at least
seven days before the maturity date how to reinvest the proceeds. If you don't
tell us, we'll move the proceeds to the investment division investing in the
Money Reserve Portfolio. When we receive a request for allocation, units of a
specific Zero Trust may no longer
25
<PAGE> 30
be available. Should this occur, we'll attempt to notify you immediately so that
you can change the request.
Allocation to the Division Investing in the Natural Resources Portfolio. We
reserve the right to suspend the sale of units of the investment division
investing in the Natural Resources Portfolio in response to conditions in the
securities markets or otherwise.
CHARGES DEDUCTED FROM THE INVESTMENT BASE
We deduct the charges described below to cover costs and expenses, services
provided, and risks assumed under the Contracts. The amount of a charge may not
necessarily correspond to the costs associated with providing the services or
benefits indicated by the designation of the charge or associated with the
particular Contract. For example, the deferred contract load may not fully cover
all of the sales and distribution expenses we actually incur. We may use
proceeds from other charges, including the mortality and expense risk charge, in
part to cover such expenses.
We deduct these charges pro-rata from the investment base on processing dates.
We also deduct certain asset and trust charges daily from the investment results
of each investment division in the Separate Account in determining its net rate
of return. Currently the asset and trust charges are equivalent to .90% and .34%
annually at the beginning of the year. (See "Charges to the Separate Account".)
The portfolios in the Funds also pay monthly advisory fees and other expenses.
(See "Charges to Fund Assets".)
Deferred Contract Load. We assess a deferred contract load charge of 9% of each
payment. This charge consists of a sales load, a charge for federal taxes and a
state and local premium tax charge.
The sales load is equal to 4.5% of each payment. We may reduce the sales load if
cumulative payments are sufficiently high to reach certain breakpoints (2% of
payments in excess of $1.5 million and 0% of payments in excess of $4 million)
and in certain group or sponsored arrangements.
The charge for federal taxes is equal to 2% of each payment.
The state and local premium tax charge is equal to 2.5% of each payment.
Although chargeable to each payment, we advance the amount of the deferred
contract load to the investment divisions as part of your investment base. We
then take back these funds in equal installments of .90% on the ten contract
anniversaries following the date we receive and accept a payment. However, in
determining the amount payable on surrender of the Contract, we subtract from
the investment base the balance of the deferred contract load chargeable to any
payment made that has not yet been deducted.
For joint insureds, see "Joint Insureds".
Mortality Cost. We deduct a mortality cost from the investment base on each
processing date after the contract date. This charge compensates us for the cost
of providing life insurance coverage on the insured. It is based on the
insured's underwriting class, sex and attained age, and the Contract's net
amount at risk.
To determine the mortality cost, we multiply the current cost of insurance rate
by the Contract's net amount at risk. The net amount at risk is the difference,
as of the previous processing date, between the death benefit and the cash
surrender value.
Current cost of insurance rates may be equal to or less than the guaranteed cost
of insurance rates. For all insureds, current cost of insurance rates
distinguish between insureds in the simplified underwriting class and medical
underwriting class. For insureds age 20 and over, current cost of insurance
rates also distinguish between insureds in a smoker (standard) underwriting
class and insureds in a non-smoker underwriting class. For Contracts issued on
insureds under the same underwriting method, current cost of
26
<PAGE> 31
insurance rates are lower for non-smokers than for smokers. Also, current cost
of insurance rates are lower for an insured in a medical underwriting class than
for a similarly situated insured in a simplified underwriting class. The
simplified current cost of insurance rates are higher because we perform less
underwriting and therefore we incur more risk.
We guarantee that the current cost of insurance rates will never exceed the
maximum guaranteed rates shown in the Contract. The maximum guaranteed rates for
Contracts (except those issued on a substandard basis) do not exceed the rates
based on the 1980 Commissioners Standard Ordinary Mortality Table (1980 CSO
Table). We may use rates that are equal to or less than these rates, but never
greater. The maximum rates for Contracts issued on a substandard basis are based
on a multiple of the 1980 CSO Table. Any change in the cost of insurance rates
will apply to all insureds of the same age, sex and underwriting class whose
Contracts have been in force for the same length of time.
During the period between processing dates, the net cash surrender value takes
the mortality cost into account on a pro-rated basis. Thus, we deduct a pro-rata
portion of the mortality cost in determining the amount payable on surrender of
the Contract if the date of surrender is not a processing date.
For joint insureds, see "Joint Insureds".
Maximum Mortality Cost. During the guarantee period, we limit the deduction for
mortality cost if investment results are unfavorable. This is done by
substituting the fixed base for the cash surrender value in determining the net
amount at risk. We will deduct this alternate amount from the investment base
when it is less than the mortality cost that would normally have been deducted.
(See "The Contract's Fixed Base".)
Net Loan Cost. The net loan cost is explained under "Loans".
CHARGES TO THE SEPARATE ACCOUNT
Each day we deduct an asset charge from each division of the Separate Account.
The total amount of this charge is .90% annually at the beginning of the year.
Of this amount, .75% is for
- the risk we assume that insureds as a group will live for a shorter time
than actuarial tables predict. As a result, we would be paying more in
death benefits than planned; and
- the risk we assume that it will cost us more to issue and administer the
Contracts than expected.
The remaining amount, .15%, is for
- the risks we assume for potentially unfavorable investment results. One
risk is that the Contract's cash surrender value cannot cover the charges
due during the guarantee period. The other risk is that we may have to
limit the deduction for mortality cost (see "Maximum Mortality Cost"
above).
If the asset charge is not enough to cover the actual expenses of mortality,
maintenance, and administration, we will bear the loss. If the charge exceeds
the actual expenses, the excess will be added to our profit and may be used to
finance distribution expenses. We cannot increase the total charge.
Charges to Divisions Investing in the Zero Trusts. We assess a daily trust
charge against the assets of each division investing in the Zero Trusts. This
charge reimburses us for the transaction charge paid to MLPF&S when units are
sold to the Separate Account. The trust charge is currently equivalent to .34%
annually at the beginning of the year. We may increase it, but it won't exceed
.50% annually at the beginning of the year. The charge is based on cost with no
expected profit.
27
<PAGE> 32
Tax Charges. We have the right under the Contract to impose a charge against
Separate Account assets for its taxes, if any. We don't currently impose such a
charge, but we may in the future. Also, see above for a discussion of tax
charges included in deferred contract load.
CHARGES TO FUND ASSETS
Charges to Series Fund Assets. The Series Fund incurs operating expenses and
pays a monthly advisory fee to MLAM. This fee equals an annual rate of:
- .50% of the first $250 million of the aggregate average daily net assets
of the Series Fund;
- .45% of the next $50 million of such assets;
- .40% of the next $100 million of such assets;
- .35% of the next $400 million of such assets; and
- .30% of such assets over $800 million.
We have agreed to reimburse the Series Fund so that the ordinary expenses of
each portfolio (which include the monthly advisory fee) do not exceed .50% of
the portfolio's average daily net assets. We have also agreed to reimburse MLAM
for any amounts it pays under the investment advisory agreement, as described
below. These reimbursement obligations will remain in effect so long as the
advisory agreement remains in effect and cannot be amended or terminated without
Series Fund approval.
Charges to Variable Series Funds Assets. The Variable Series Funds incurs
operating expenses and pays a monthly advisory fee to MLAM at an annual rate of
the average daily net assets of each portfolio. The fee for each is shown as
follows:
<TABLE>
<CAPTION>
PORTFOLIO NAME ADVISORY FEE
- -------------- ------------
<S> <C>
Basis Value Focus Fund .60%
Global Bond Focus Fund .60%
Index 500 Fund .30%
International Equity Focus Fund .75%
Developing Capital Markets Focus Fund 1.00%
Special Value Focus Fund .75%
</TABLE>
MLAM and Merrill Lynch Life Agency, Inc. have entered into agreements which
limit the operating expenses, exclusive of any distribution fees imposed on
Class B shares, paid by each fund in a given year to 1.25% of its average daily
net assets. These reimbursement agreements provide that any such expenses
greater than 1.25% of average daily net assets will be reimbursed to the fund by
MLAM which, in turn, will be reimbursed by Merrill Lynch Life Agency, Inc.
Charges to AIM V.I. Funds Assets. The AIM V.I. Funds incurs operating expenses
and pays a monthly advisory fee to AIM at an annual rate of .65% of the first
$250 million of each fund's average daily net assets and .60% of each fund's
average daily net assets in excess of $250 million.
Effective May 1, 1998, the AIM V.I. Funds reimburse AIM in an amount up to 0.25%
of the average net asset value of each fund, for expenses incurred in providing,
or assuring that participating insurance companies provide, certain
administrative services. Currently the fee only applies to the average net asset
value of each fund in excess of the net asset value of each fund as calculated
on April 30, 1998.
28
<PAGE> 33
Charges to Alliance Fund Assets. The Alliance Fund incurs operating expenses and
pays a monthly advisory fee to Alliance at an annual rate of 1.00% of the
Alliance Premier Growth Portfolio's average daily net assets.
Charges to MFS Trust Assets. The MFS Trust incurs operating expenses and pays a
monthly advisory fee to MFS at an annual rate of .75% of the average daily net
assets of each of the MFS Emerging Growth Series and MFS Research Series.
GUARANTEE PERIOD
Subject to certain conditions, we guarantee that regardless of investment
performance the Contract will stay in effect for the guarantee period. The
guarantee period will be affected by a requested change in the face amount and
may also be affected by additional payments. A partial withdrawal may affect the
guarantee period in certain circumstances. We won't cancel the Contract during
the guarantee period unless any loan debt exceeds certain contract values. We
hold a reserve in our general account to support this guarantee.
When the Guarantee Period is Less Than for Life. After the end of the guarantee
period, we will cancel the Contract if the cash surrender value on a processing
date is negative. We will consider this negative cash surrender value an overdue
charge. (See "Charges Deducted from the Investment Base".)
We will notify you before cancelling the Contract. You will then have 61 days to
pay these overdue charges. If we haven't received the required payment by the
end of this grace period, we'll cancel the Contract.
Subject to state regulation, if we cancel a Contract, it may be reinstated while
the insured is still living if:
- You request the reinstatement within three years after the end of the
grace period;
- We receive satisfactory evidence of insurability; and
- You pay the reinstatement payment. The reinstatement payment is the
minimum payment for which we would then issue a Contract for the minimum
guarantee period with the same face amount as the original Contract, based
on the insured's attained age and underwriting class as of the effective
date of the reinstated Contract.
The effective date of a reinstated contract is the processing date on or next
following the date the reinstatement application is approved. Thus, if the
insured dies before the effective date of the reinstated Contract, we won't pay
a death benefit.
For joint insureds, see "Joint Insureds".
NET CASH SURRENDER VALUE
Because investment results vary daily, we don't guarantee any minimum net cash
surrender value. On a processing date the net cash surrender value equals:
- the Contract's investment base on that date;
- minus the balance of the 9% deferred contract load which has not yet been
deducted from the investment base (see "Deferred Contract Loading").
If the date of calculation is not a processing date, we also subtract a pro-rata
portion of the mortality cost which would otherwise be deducted on the next
processing date.
29
<PAGE> 34
Cancelling to Receive Net Cash Surrender Value. A contract owner may cancel the
Contract at any time while the insured is living to receive the net cash
surrender value. You must make the request in writing in a form satisfactory to
us. All rights to death benefits will end on the date you send the written
request to us.
For joint insureds, see "Joint Insureds".
PARTIAL WITHDRAWALS
Currently, beginning in the second Contract year, and subject to state
regulation, you may make partial withdrawals up to the withdrawal value by
submitting a request in a form satisfactory to us. The withdrawal value is
determined by adding to the current net cash surrender value all prior
withdrawals, multiplying the result by 80%, and subtracting from the result all
prior withdrawals:
The amount of any partial withdrawal may not exceed the loan value less any
debt.
The effective date of the withdrawal is the valuation date our Service Center
receives a withdrawal request.
You may make one partial withdrawal each contract year.
The minimum amount for each partial withdrawal is $500. A partial withdrawal may
not be repaid.
Effect on Investment Base, Fixed Base, and Variable Insurance Amount. As of the
effective date of the withdrawal, we reduce the investment base and fixed base
by the amount of the partial withdrawal. Unless you tell us differently, we
allocate this reduction proportionately to the investment base in your
investment divisions. In addition, we reduce the variable insurance amount on a
proportional basis to the amount of the withdrawal. This means the reduction in
the variable insurance amount will always be greater than the amount of the
withdrawal.
Effect on Guaranteed Benefits. As of the processing date on or next following a
partial withdrawal, we reduce the Contract's face amount. We do this by taking
the fixed base as of that processing date and determining what face amount that
fixed base would support for the Contract's guarantee period. If this produces a
face amount below the minimum face amount for the Contract, we will reduce the
face amount to that minimum, and then reduce the guarantee period, based on the
reduced face amount, the fixed base and the insured's sex, attained age and
underwriting class. The minimum face amount for a Contract is the greater of the
minimum face amount for which we would then issue the Contract, based on the
insured's sex, attained age, and underwriting class, and the minimum amount
required to keep the Contract qualified as life insurance under applicable tax
law.
The examples below show the effect of partial withdrawals. The amount of the
reduction in the face amount will depend on the amount of the partial
withdrawal, the guarantee period at the time of the withdrawal and the contract
year in which the withdrawal is made. If made at the same time to equivalent
Contracts, a larger withdrawal would result in a greater reduction in the face
amount than a smaller withdrawal. The same partial withdrawal made at the same
time from Contracts with the same face amounts but with different guarantee
periods would result in a greater reduction in the face amount for the Contract
with the longer guarantee period. A partial withdrawal made in a later contract
year would result in a smaller decrease in the face amount than if the same
amount was withdrawn in an earlier year.
Examples 1 and 2 show the effect on the face amount of partial withdrawals for
$500 and $1,000 taken at the beginning of contract year three. Example 3 shows
the effect on the face amount of a $500 partial withdrawal taken at the
beginning of contract year eight. All three examples assume that the guarantee
period was for the lifetime of the insured before the partial withdrawal and
assume no other contract transactions have been made.
30
<PAGE> 35
Male Issue Age: 55
Initial Payment: $30,000 Face Amount: $58,438
<TABLE>
<CAPTION>
EXAMPLE 1
---------
------------------------------------------------------
CONTRACT PARTIAL
YEAR WITHDRAWAL FACE AMOUNT
---- ---------- -----------
<S> <C> <C>
3 $ 500 $ 57,425
<CAPTION>
EXAMPLE 2
---------
------------------------------------------------------
CONTRACT PARTIAL
YEAR WITHDRAWAL FACE AMOUNT
---- ---------- -----------
<S> <C> <C>
3 $ 1,000 $ 56,411
<CAPTION>
EXAMPLE 3
---------
------------------------------------------------------
CONTRACT PARTIAL
YEAR WITHDRAWAL FACE AMOUNT
---- ---------- -----------
<S> <C> <C>
8 $ 500 $ 57,547
</TABLE>
If the reduction in face amount would be below the minimum face amount for a
Contract, we will reduce the face amount to the minimum face amount, and then
reduce the guarantee period by taking the Contract's fixed base as of the
processing date and determining how long that fixed base would support the
reduced face amount.
LOANS
You may use the Contract as collateral to borrow funds from us. The minimum loan
is $1,000 unless you are borrowing to make a payment on another Merrill Lynch
Life variable life insurance contract. In that case, you may borrow the exact
amount required even if it's less than $1,000. You may repay all or part of the
loan any time during the insured's lifetime. Each repayment must be for at least
$1,000 or the amount of the debt, if less. Certain states won't permit a minimum
amount that can be borrowed or repaid.
When you take a loan, we transfer from your investment base the amount of the
loan and hold it as collateral in our general account. When a loan repayment is
made, we transfer the amount of the repayment from the general account to the
investment divisions. You may select the divisions you want to borrow from, and
the divisions you want to repay (including interest payments). If you don't
specify, we'll take the borrowed amounts proportionately from and make
repayments proportionately to your investment base as then allocated to the
investment divisions.
If you have the CMA Insurance Service, you can transfer loans and loan
repayments to and from your CMA account.
Effect on Death Benefit and Cash Surrender Value. Whether or not you repay a
loan, taking a loan will have a permanent effect on a Contract's cash surrender
value and may have a permanent effect on its death benefit. This is because the
collateral for a loan does not participate in the performance of the investment
divisions while the loan is outstanding. If the amount credited to the
collateral is more than what is earned in the investment divisions, the cash
surrender value will be higher as a result of the loan, as may be the death
benefit. Conversely, if the amount credited is less, the cash surrender value
will be lower, as may be the death benefit. In that case, the lower cash
surrender value may cause the Contract to lapse sooner than if no loan had been
taken.
Loan Value. The loan value of a Contract equals 90% of its cash surrender value.
The sum of all outstanding loan amounts plus accrued interest is called debt.
The maximum amount that can be borrowed at any time is the difference between
the loan value and the debt. The cash surrender value is the net cash surrender
value plus any debt.
31
<PAGE> 36
Interest. While a loan remains unpaid, we charge interest of 5% annually,
subject to state regulation. Interest accrues each day and payments are due at
the end of each contract year. IF YOU DON'T PAY THE INTEREST WHEN DUE, WE ADD IT
TO THE UNPAID LOAN AMOUNT. Policy debt is considered part of total cash value
used to calculate gain. SINCE THIS IS A MODIFIED ENDOWMENT CONTRACT, THE UNPAID
INTEREST ADDED TO THE UNPAID LOAN AMOUNT IS TAXABLE INCOME.
The amount held in our general account as collateral for a loan earns interest
at a minimum rate of 4% annually.
Net Loan Cost. In addition to the loan interest we charge, on each contract
anniversary we reduce the investment base by the net loan cost (the difference
between the interest charged and the earnings on the amount held as collateral
in the general account) and add that amount to the amount held in the general
account as collateral for the loan. Since the interest charged is 5% and the
collateral earnings on such amounts are 4%, the current net loan cost on loaned
amounts is 1%. We take the net loan cost into account in determining the net
cash surrender value of the Contract if the date of surrender is not a contract
anniversary.
Cancellation Due to Excess Debt. If the debt exceeds the larger of the cash
surrender value and the fixed base on a processing date, INCLUDING A PROCESSING
DATE DURING THE GUARANTEE PERIOD, we will cancel the Contract 61 days after we
mail a notice of intent to terminate the Contract to you unless we have received
at least the minimum repayment amount specified in the notice.
DEATH BENEFIT PROCEEDS
We will pay the death benefit proceeds to the beneficiary when we receive all
information needed to process the payment, including due proof of the insured's
death. When we first receive reliable notification of the insured's death by a
representative of the owner or the insured, we may transfer the investment base
to the division investing in the Money Reserve Portfolio, pending payment of
death benefit proceeds.
Amount of Death Benefit Proceeds. The death benefit proceeds are the larger of
the face amount and the variable insurance amount, less any debt.
The values used in calculating the death benefit proceeds are as of the date of
death. If the insured dies during the grace period, the death benefit proceeds
equal the death benefit proceeds in effect immediately before the grace period
minus any overdue charges. (See "When the Guarantee Period is Less Than for
Life".)
32
<PAGE> 37
Variable Insurance Amount. We determine the variable insurance amount daily by
multiplying the cash surrender value by the net single premium factor.
Net Single Premium Factor
We use the net single premium factor
to determine the amount of death benefit
purchased by $1.00 of cash surrender
value. It is based on the insured's sex,
underwriting class, and attained age on
the date of calculation. It decreases
daily as the insured's age increases. As
a result, the variable insurance amount
as a multiple of the cash surrender
value will decrease over time. Also, net
single premium factors may be higher for
a woman than for a man of the same age.
Your contract contains a table of net
single premium factors as of each
anniversary.
Table of Illustrative Net Single Premium Factors
on Anniversaries
Standard Underwriting Class
<TABLE>
<CAPTION>
ATTAINED
AGE MALE FEMALE
--- ---- ------
<S> <C> <C>
5 10.26609 12.37715
15 7.41160 8.96255
25 5.50386 6.47763
35 3.97199 4.64820
45 2.87751 3.36402
55 2.14059 2.48932
65 1.65787 1.87555
75 1.35396 1.45951
85 1.18028 1.21264
</TABLE>
For joint insureds, see "Joint Insureds".
33
<PAGE> 38
PAYMENT OF DEATH BENEFIT PROCEEDS
We will generally pay the death benefit proceeds to the beneficiary within seven
days after our Service Center receives all the information needed to process the
payment. We may delay payment, however, if we are contesting the Contract or
under the circumstances described in "Using the Contract" and "Other Contract
Provisions".
We will add interest from the date of the insured's death to the date of payment
at an annual rate of at least 4%. The beneficiary may elect to receive the
proceeds either in a single payment or under one or more income plans described
below.
For joint insureds, see "Joint Insureds".
RIGHT TO EXCHANGE CONTRACT
Within 18 months of the issue date you may exchange your Contract for a contract
with benefits that do not vary with the investment results of a separate
account. Your request must be in writing. Also, you must return the original
Contract to our Service Center.
The new contract will have the same owner and beneficiary as those of the
original Contract on the date of the exchange. It will also have the same issue
age, issue date, face amount, cash surrender value, benefit riders and
underwriting class as the original Contract on the date of the exchange. Any
debt will be carried over to the new contract.
We won't require evidence of insurability to exchange for a new "fixed"
contract.
For joint insureds, see "Joint Insureds".
INCOME PLANS
We offer several income plans to provide for payment of the death benefit
proceeds to the beneficiary. Payments under these plans do not depend on the
investment results of a separate account. You may choose one or more income
plans at any time during the insured's lifetime. If you haven't selected a plan
when the insured dies, the beneficiary has one year to apply the death benefit
proceeds either paid or payable to one or more of the plans.
In addition, if you cancel the Contract for its net cash surrender value, you
may also choose one or more income plans for payment of the proceeds. We need to
approve any plan where any income payment would be less than $100.
For joint insureds, see "Joint Insureds".
Income plans include:
- Annuity Plan. An amount can be used to purchase a single premium immediate
annuity. (Annuity purchase rates will be enhanced by 3%.)
- Interest Payment. You can leave amounts with us to earn interest at an
annual rate of at least 3%. Interest payments can be made annually,
semi-annually, quarterly or monthly.
- Income for a Fixed Period. We make payments in equal installments for up
to a fixed number of years.
34
<PAGE> 39
- Income for Life. We make payments in equal monthly installments until the
death of a named person or the end of a designated period, whichever is
later. The designated period may be for 10 or 20 years. Other designated
periods and payment schedules may be available on request.
- Income of a Fixed Amount. We make payments in equal installments until
proceeds applied under this option and interest on the unpaid balance at
not less than 3% per year are exhausted.
- Joint Life Income. We make payments in monthly installments as long as at
least one of two named persons is living. Other payment schedules may be
available on request. While both are living, full payments are made. If
one dies, payments of at least two-thirds of the full amount are made.
Payments end completely when both named persons die.
UNDER THE INCOME FOR LIFE AND JOINT LIFE INCOME OPTIONS, OUR CONTRACTUAL
OBLIGATION MAY BE SATISFIED WITH ONLY ONE PAYMENT IF AFTERWARD THE NAMED PERSON
OR PERSONS DIES. IN ADDITION, ONCE IN EFFECT, SOME OF THE INCOME PLANS MAY NOT
PROVIDE ANY SURRENDER RIGHTS.
REPORTS TO CONTRACT OWNERS
After the end of each processing period, we will send you a statement showing
the allocation of your investment base, death benefit, cash surrender value, any
debt and, if there has been a change, new face amount and guarantee period. All
figures will be as of the end of the immediately preceding processing period.
The statement will show the amounts deducted from or added to the investment
base during the processing period. The statement will also include any other
information that may be currently required by your state.
You will receive confirmation of all financial transactions. These confirmations
will show the price per unit of each of your investment divisions, the number of
units you have in the investment division and the value of the investment
division computed by multiplying the quantity of units by the price per unit.
(See "Net Rate of Return for an Investment Division".)
We will also send you an annual and a semi-annual report containing financial
statements and a list of portfolio securities of the Funds, as required by the
Investment Company Act of 1940.
MORE ABOUT THE CONTRACT
USING THE CONTRACT
Ownership. The contract owner is usually the insured, unless someone other than
the insured has been named as the owner in the application. The contract owner
has all rights and options described in the Contract.
If you are not the insured, you may want to name a contingent owner. If you die
before the insured, the contingent owner will own your interest in the contract
and have all your rights. If you don't name a contingent owner and you die
before the insured, your estate will then own your interest in the Contract.
If there is more than one contract owner, we will treat the owners as joint
tenants with rights of survivorship unless the ownership designation provides
otherwise. We may require completion of additional forms. The owners must
exercise their rights and options jointly, except that any one of the owners may
reallocate the Contract's investment base by phone if the owner provides the
personal identification number as well as the Contract number. One contract
owner must be designated, in writing, to receive all notices, correspondence and
tax reporting to which contract owners are entitled under the Contract.
35
<PAGE> 40
Changing the Owner. During the insured's lifetime, you have the right to
transfer ownership of the Contract. However, if you've named an irrevocable
beneficiary, that person will need to consent. The new owner will have all
rights and options described in the Contract. The change will be effective as of
the date the notice is signed, but will not affect any payment we've made or
action we've taken before our Service Center receives the notice of the change.
Changing the owner may have tax consequences. (See "Tax Considerations".)
Assigning the Contract as Collateral. You may assign the Contract as collateral
security for a loan or other obligation. This does not change the ownership.
However, your rights and any beneficiary's rights are subject to the terms of
the assignment. You must give satisfactory written notice at our Service Center
in order to make or release an assignment. We are not responsible for the
validity of any assignment.
For a discussion of the tax issues associated with a collateral assignment, see
"Tax Considerations".
Naming Beneficiaries. We will pay the primary beneficiary the death benefit
proceeds of the Contract on the insured's death. If the primary beneficiary has
died before the insured, we will pay the contingent beneficiary. If no
contingent beneficiary is living, we will pay the insured's estate.
You may name more than one person as primary or contingent beneficiaries. We
will pay proceeds in equal shares to the surviving beneficiaries unless the
beneficiary designation provides differently.
You have the right to change beneficiaries during the insured's lifetime.
However, if your primary beneficiary designation is irrevocable, the primary
beneficiary must consent when certain contract rights and options are exercised.
If you change the beneficiary, the change will take effect as of the date the
notice is signed, but will not affect any payment we've made or action we've
taken before our Service Center receives the notice of the change.
Changing the Insured. If permitted by state regulation, and subject to certain
requirements, you may request a change of insured once each contract year. We
must receive a written request signed by you and the proposed new insured.
Neither the original nor the new insured can have attained ages as of the
effective date of the change of less than 21 or more than 75. The new insured
must have been alive at the time the Contract was issued. We will also require
evidence of insurability for the proposed new insured. The proposed new insured
must qualify for a standard or better underwriting classification. Outstanding
debt must first be repaid and the Contract cannot be under a collateral
assignment. If we approve the request for change, insurance coverage on the new
insured will take effect on the processing date on or next following the date of
approval, provided the new insured is still living at that time and the Contract
is still in force.
We will change the Contract as follows on the effective date:
- the issue age will be the new insured's issue age (the new insured's age
as of the birthday nearest the contract date);
- the guaranteed maximum cost of insurance rates will be those in effect on
the contract date for the new insured's issue age, sex and underwriting
class;
- we will deduct a charge for changing the insured from the Contract's
investment base on the effective date. This charge will also then be
reflected in the Contract's fixed base. The charge will equal $1.50 per
$1,000 of face amount with a minimum charge of $200 and a maximum of
$1,500. This charge may be reduced in certain group or sponsored
arrangements;
- the variable insurance amount will reflect the change of insured; and
- the Contract's issue date will be the effective date of the change.
36
<PAGE> 41
We may also change the face amount or guarantee period on the effective date
depending on the new insured's age, sex and underwriting class. The new
guarantee period cannot be less than the minimum guarantee period for which we
would then issue a Contract based on the new insured's attained age as of the
effective date of the change.
This option is not generally available for joint insureds.
For a discussion of the tax issues associated with changing the insured, see
"Tax Considerations".
Maturity Proceeds. The maturity date is the contract anniversary nearest the
insured's 100th birthday. On the maturity date, we will pay you the net cash
surrender value, provided the insured is still living at that time and the
Contract is in effect at that time.
When We Make Payments. We generally pay death benefit proceeds, partial
withdrawals, loans and net cash surrender value within seven days after our
Service Center receives all the information needed to process the payment.
However, we may delay payment if it isn't practical for us to value or dispose
of Trust units or Fund shares because:
- the New York Stock Exchange is closed, other than for a customary weekend
or holiday; or
- trading on the New York Stock Exchange is restricted by the Securities and
Exchange Commission; or
- the Securities and Exchange Commission declares that an emergency exists
such that it is not reasonably practical to dispose of securities held in
the Separate Account or to determine the value of their assets; or
- the Securities and Exchange Commission by order so permits for the
protection of contract owners.
For joint insureds, see "Joint Insureds".
SOME ADMINISTRATIVE PROCEDURES
We reserve the right to modify or eliminate the procedures described below. For
administrative and tax purposes, we may from time to time require that specific
forms be completed for certain transactions. These include reallocations, loans
and partial withdrawals.
Personal Identification Number. We will send you a four-digit personal
identification number ("PIN") shortly after the Contract is placed in force and
before the end of the "free look" period. You must give this number when you
call the Service Center to get information about the Contract, to make a loan
(if an authorization is on file), or to make other requests.
Reallocating the Investment Base. Contract owners can reallocate their
investment base either in writing or by telephone. If you request the
reallocation by telephone, you must give your PIN as well as your Contract
number. We will give a confirmation number over the telephone and then follow up
in writing.
Requesting a Loan. You may request a loan in writing or, if all required
authorization forms are on file, by telephone. Once our Service Center receives
the authorization, you can call the Service Center, give your Contract number,
name and PIN, and tell us the loan amount and the divisions from which the loan
should be taken.
37
<PAGE> 42
Upon request, we will wire the funds to the account at the financial institution
named on your authorization. We will generally wire the funds within two working
days of receipt of the request. If you have the CMA Insurance Service, funds may
be transferred directly to that CMA account.
Requesting Partial Withdrawals. Beginning in the second contract year, you may
request partial withdrawals in writing or by telephone if all required telephone
authorization forms are on file. Once our Service Center receives the
authorization, you can call the Service Center, give your Contract number, name
and PIN, and tell us how much to withdraw and from which investment divisions.
Upon request, we will wire the funds to the account at the financial institution
named on your authorization. We will usually wire the funds within two working
days of receipt of the request. If you have the CMA Insurance Service, funds can
be transferred directly to that CMA account.
Telephone Requests. A telephone request for a loan, partial withdrawal or a
reallocation received before 4 p.m. (ET) generally will be processed the same
day. A request received at or after 4 p.m. (ET) will be processed the following
business day. We reserve the right to change or discontinue telephone transfer
procedures.
We will employ reasonable procedures to confirm that instructions communicated
by telephone are genuine. These procedures may include, but are not limited to,
possible recording of telephone calls and obtaining appropriate identification
before effecting any telephone transactions. We will not be liable for following
telephone instructions that we reasonably believe to be genuine.
OTHER CONTRACT PROVISIONS
In Case of Errors in the Application. If an age or sex stated in the application
is wrong, it could mean that the face amount or any other Contract benefit is
wrong. We will pay the correct benefits for the true age or sex.
Incontestability. We will rely on statements made in the applications. We can
contest the validity of a Contract if any material misstatements are made in the
application. We can also contest the validity of any change in face amount
requested if any material misstatements are made in any application required for
that change. In addition, we can contest any amount of death benefit
attributable to an additional payment if any material misstatements are made in
the application required with the additional payment.
Subject to state regulation, we won't contest the validity of a Contract after
it has been in effect during the insured's lifetime for two years from the date
of issue. We won't contest any change in face amount after the change has been
in effect during the insured's lifetime for two years from the date of the
change. Nor will we contest any amount of death benefit attributable to an
additional payment after the death benefit has been in effect during the
insured's lifetime for two years from the date the payment was received and
accepted.
Payment in Case of Suicide. Subject to state regulation, if the insured commits
suicide within two years from the Contract's issue date, we will pay only a
limited death benefit. The benefit will be equal to the amount of the payments
made.
Subject to state regulation, if the insured commits suicide within two years of
the effective date of any increase in face amount requested, any amount of death
benefit attributable to the increase in the face amount will be limited to the
amount of mortality cost deductions made for the increase.
If the insured commits suicide within two years of any date an additional
payment is received and accepted, any amount of death benefit attributable to
the additional payment will be limited to the amount of the payment.
38
<PAGE> 43
The death benefit will be reduced by any debt.
Contract Changes -- Applicable Federal Tax Law. To receive the tax treatment
accorded to life insurance under federal income tax law, the Contract must
qualify initially and continue to qualify as life insurance under the Internal
Revenue Code or successor law. To maintain this qualification to the maximum
extent of the law, we reserve the right to return any additional payments that
would cause the Contract to fail to qualify as life insurance under applicable
federal tax law as we may interpret. Further, we reserve the right to make
changes in the Contract or its riders or to make distributions from the Contract
to the extent necessary to continue to qualify the Contract as life insurance.
Any changes will apply uniformly to all Contracts that are affected and you will
be given advance written notice of such changes.
State Variations. Certain Contract features, including the "free look" right,
are subject to state variation. You should read your Contract carefully to
determine whether any variations apply in the state in which the Contract is
issued.
For joint insureds, see "Joint Insureds".
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the deferred load,
cost of insurance rates and the minimum payment, and may modify underwriting
classifications and requirements.
Group arrangements include those in which a trustee or an employer, for example,
purchases Contracts covering a group of individuals on a group basis. Sponsored
arrangements include those in which an employer allows us to sell Contracts to
its employees on an individual basis.
Costs for sales, administration, and mortality generally vary with the size and
stability of the group and the reasons the Contracts are purchased, among other
factors. We take all these factors into account when reducing charges. To
qualify for reduced charges, a group or sponsored arrangement must meet certain
requirements, including requirements for size and number of years in existence.
Group or sponsored arrangements that have been set up solely to buy Contracts or
that have been in existence less than six months will not qualify for reduced
charges.
We make any reductions according to rules in effect when an application for a
Contract or additional payment is approved. We may change these rules from time
to time. However, reductions in charges will not discriminate unfairly against
any person.
UNISEX LEGAL CONSIDERATIONS FOR EMPLOYERS
In 1983 the Supreme Court held in Arizona Governing Committee v. Norris that
optional annuity benefits provided under an employee's deferred compensation
plan could not, under Title VII of the Civil Rights Act of 1964, vary between
men and women. In addition, legislative, regulatory or decisional authority of
some states may prohibit use of sex-distinct mortality tables under certain
circumstances.
The Contracts offered by this Prospectus are based on mortality tables that
distinguish between men and women. As a result, the Contract pays different
benefits to men and women of the same age. Employers and employee organizations
should check with their legal advisers before purchasing these Contracts.
Some states prohibit the use of actuarial tables that distinguish between men
and women in determining payments and contract benefits for contracts issued on
the lives of their residents. Therefore, Contracts offered in this Prospectus to
insure residents of these states will have unisex payments and benefits which
are based on actuarial tables that do not differentiate on the basis of sex. You
should disregard references made in this prospectus to such sex-based
distinctions.
39
<PAGE> 44
SELLING THE CONTRACTS
Role of Merrill Lynch, Pierce, Fenner & Smith, Inc. MLPF&S is the principal
underwriter of the Contract. It was organized in 1958 under the laws of the
state of Delaware and is registered as a broker-dealer under the Securities
Exchange Act of 1934. It is a member of the National Association of Securities
Dealers, Inc. ("NASD"). The principal business address of MLPF&S is World
Financial Center, 250 Vesey Street, New York, New York 10281. MLPF&S also acts
as principal underwriter of other variable life insurance and variable annuity
contracts we issue, as well as variable life insurance and variable annuity
contracts issued by ML Life Insurance Company of New York, an affiliate of ours.
MLPF&S also acts as principal underwriter of certain mutual funds managed by
Merrill Lynch Asset Management, the investment adviser for the Series Fund and
the Variable Series Funds.
MLPF&S may arrange for sales of the Contract by other broker-dealers who are
registered under the Securities Exchange Act of 1934 and are members of the
NASD. Registered representatives of these other broker-dealers may be
compensated on a different basis than MLPF&S Financial Consultants.
Role of Merrill Lynch Life Agencies. Contracts are sold by registered
representatives of MLPF&S who are also licensed through various Merrill Lynch
Life Agencies as insurance agents for us. We have entered into a distribution
agreement with MLPF&S and companion sales agreements with the Merrill Lynch Life
Agencies through which the Contracts and other variable life insurance contracts
issued through the Separate Account are sold and the registered representatives
are compensated by Merrill Lynch Life Agencies and/or MLPF&S. The amounts paid
under the distribution and sales agreements for the Separate Account for the
year ended December 31, 1997, December 31, 1996, and December 31, 1995 were
$15,107,535, $10,059,108, and $8,375,065, respectively.
Commissions. The maximum commission we will pay to the applicable insurance
agency to be used to pay commissions to Financial Consultants is 7.1% of each
premium. Additional annual compensation of no more than 0.10% of the investment
base may also be paid to your FC. FCs may elect to receive a lower commission as
a percent of each premium in exchange for higher compensation as a percent of
the investment base. In such a case, the maximum additional annual compensation
is 0.30% of the investment base. Commissions may be paid in the form of non-cash
compensation.
For sales of Contracts to Merrill Lynch employees FCs receive reduced
commissions.
TAX CONSIDERATIONS
INTRODUCTION. The following summary discussion is based on our understanding of
current Federal income tax law as the Internal Revenue Service (IRS) now
interprets it. We can't guarantee that the law or the IRS's interpretation won't
change. It does not purport to be complete or to cover all tax situations. This
discussion is not intended as tax advice. Counsel or other tax advisors should
be consulted for further information.
We haven't considered any applicable federal gift, estate or any state or other
tax laws. Of course, your own tax status or that of your beneficiary can affect
the tax consequences of ownership or receipt of distributions.
TAX STATUS OF THE POLICY. In order to qualify as a life insurance contract for
Federal income tax purposes and to receive the tax treatment normally accorded
life insurance contracts under Federal tax law, a Policy must satisfy certain
requirements which are set forth in the Internal Revenue Code (IRC). Guidance as
to how these requirements are to be applied is limited. Nevertheless, Merrill
Lynch Life believes that a Policy issued on the basis of a standard risk class
should satisfy the applicable requirements. There is less guidance with respect
to Policies issued on a substandard basis (i.e., a premium class involving a
higher than standard mortality risk), and it is not clear whether such a Policy
would satisfy the applicable requirements, particularly if the owner pays the
full amount of premiums permitted under the Policy. If it
40
<PAGE> 45
is subsequently determined that Policy does not satisfy the applicable
requirements, Merrill Lynch Life may take appropriate steps to bring the Policy
into compliance with such requirements and reserve the right to restrict Policy
transactions in order to do so.
DIVERSIFICATION REQUIREMENTS. IRC section 817(h) and the regulations under it
provide that separate account investments underlying a Policy must be
"adequately diversified": for it to qualify as a life insurance contract under
IRC section 7702. The separate account intends to comply with the
diversification requirements of the regulations under section 817(h). This will
affect how we make investments.
In certain circumstances, owners of variable life policies have been considered
for Federal income tax purposes to be the owners of the assets of the separate
account supporting their policies due to their ability to exercise investment
control over those assets. Where this is the case, the policy owners have been
currently taxed on income and gains attributable to the separate account assets.
There is little guidance in this area, and some features such as the flexibility
of an owner to allocate premium payments and transfer policy accumulation values
have not been explicitly addressed in published rulings. While Merrill Lynch
Life believes that the policies do not give owners investment control over
Variable account assets, Merrill Lynch Life reserves the right to modify the
Policies as necessary to prevent an owner from being treated as the owner of the
Variable account assets supporting the Policy.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
TAX TREATMENT OF POLICY BENEFITS
IN GENERAL. Merrill Lynch Life believes that the Death Benefit under a Policy
should be excludible from the gross income of the Beneficiary. Federal, state
and local transfer, and other tax consequences of ownership or receipt of Policy
proceeds depend on the circumstances of each Owner or Beneficiary. A tax advisor
should be consulted on these consequences. In recent years, Congress has adopted
new rules relating to life insurance owned by businesses. Any business
contemplating the purchase of a new Policy or a change in an existing Policy
should consult a tax advisor.
Generally, the Owner will not be deemed to be in constructive receipt of the
Policy Account Value until there is a distribution. When distributions from a
Policy occur, or when loans are taken out from or secured by (e.g., by
assignment), a Policy, the tax consequences depend on whether the Policy is
classified as a "Modified Endowment Contract."
"MODIFIED ENDOWMENT CONTRACT". Under the IRC, certain life insurance contracts
are classified as "Modified Endowment Contracts," with less favorable tax
treatment than other life insurance contracts. In most cases the Policy will be
classified as a Modified Endowment Contract. Any Policy issued in exchange for a
Modified Endowment Contract will be a Modified Endowment Contract. A Policy
issued in exchange for a life insurance contract that is not a Modified
Endowment Contract will generally not be treated as a Modified Endowment
Contract. The payment of additional premiums at the time of or after the
exchange or certain charges to the Policy after it is issued may, however, cause
the Policy to become a Modified Endowment Contract. A prospective Owner should
consult a tax advisor before effecting an exchange.
DISTRIBUTIONS FROM MODIFIED ENDOWMENT CONTRACTS. Policies classified as Modified
Endowment Contracts are subject to the following tax rules:
(1) All pre-death distributions, (including partial withdrawals, loans,
collateral assignments, capitalized interest or complete surrender) will
be treated as ordinary income on an income first basis up to the amount
of any income in the Policy (the cash surrender value less the Owner's
investment in the Policy) immediately before the distribution.
41
<PAGE> 46
(2) A 10 percent additional income tax is imposed on the amount included in
income except where the distribution (including loans, capitalized
interest, assignments, partial withdrawals or complete surrender) is made
when the Owner has attained age 59 1/2 or is disabled, or where the
distribution is part of a series of substantially equal periodic payments
for the life (or 1ife expectancy) of the Owner or the joint lives (or
joint life expectancies) of the Owner and the Owner's Beneficiary.
DISTRIBUTIONS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS.
Distributions from a Policy that is not a Modified Endowment Contact are
generally treated first as a recovery of an Owner's investment in the Policy
and, only after the recovery of all investment in the Policy, as taxable income.
However, certain distributions which must be made in order to enable the Policy
to continue to qualify as a life insurance contract for Federal income tax
purposes, if Policy benefits are reduced during the first 15 Policy Years, may
be treated in whole or in part as ordinary income subject to tax.
Loans from or secured by a Policy that is not a Modified Endowment Contract are
generally not treated as distributions. Finally, neither distributions from nor
loans from or secured by a Policy that is not a Modified Endowment Contract are
subject to the 10 percent additional tax
POLICY LOANS. In general, interest on a loan from a Policy will not be
deductible. Before taking out a Policy loan, an Owner should consult a tax
advisor as to the tax consequences.
MULTIPLE POLICIES. All Modified Endowment Contracts that are issued by Merrill
Lynch Life (or its affiliates) to the same Owner during any calendar year are
treated as one Modified Endowment Contract for purposes of determining the
amount includible in the Owner's income when a taxable distribution occurs.
POSSIBLE TAX LAW CHANGES. Although the likelihood of legislative changes is
uncertain, there is always the possibility that the tax treatment of the Policy
could change by legislation or otherwise. For instance, the President's 1999
Budget Proposal recommended legislation that, if enacted, would adversely modify
the federal taxation of this Policy. It is possible that any legislative change
could be retroactive (that is, effective prior to the date of the change).
Consult a tax advisor with respect to legislative developments and their effect
on the Policy.
We don't make any guarantee regarding the tax status of any Contract or any
transaction regarding the Contract.
The above discussion is not intended as tax advice. For tax advice you should
consult a competent tax adviser. Although this tax discussion is based on our
understanding of federal income tax laws as they are currently interpreted, wt
can't guarantee that those laws or interpretations will remain unchanged.
MERRILL LYNCH LIFE'S INCOME TAXES
Insurance companies are generally required to capitalize and amortize certain
policy acquisition expenses over a ten year period rather than currently
deducting such expenses. This treatment applies to the deferred acquisition
expenses of a Contract and will result in a significantly higher corporate
income tax liability for us in early contract years. We make a charge, included
in the Contract's deferred contract load, to compensate us for the anticipated
higher corporate income taxes that result from the sale of a Contract. (See
"Deferred Contract Load".)
We currently make no other charges to the Separate Account for any federal,
state or local taxes that we incur that may be attributable to the Separate
Account or to the Contracts. We reserve the right, however, to make a
charge for any tax or other economic burden resulting from the application of
tax laws that we determine to be properly attributable to the Separate Account
or to the Contracts.
42
<PAGE> 47
REINSURANCE
We intend to reinsure some of the risks assumed under the Contracts.
ILLUSTRATIONS
ILLUSTRATIONS OF DEATH BENEFITS, INVESTMENT BASE, CASH SURRENDER VALUES AND
ACCUMULATED PAYMENTS
The tables below demonstrate the way in which the Contract works. The tables are
based on the following ages, face amounts, payments and guarantee periods and
assume maximum mortality charges.
1. The illustration on page ___ is for a Contract issued to a male age 5
in the standard-simplified underwriting class with a single payment of $10,000,
a face amount of $93,421 and a guarantee period for life.
2. The illustration on page ___ is for a Contract issued to a female age
40 in the standard-simplified underwriting class with a single payment of
$25,000, a face amount of $89,668 and a guarantee period for life.
3. The illustration on page ___ is for a Contract issued to a male age 55
in the standard-simplified underwriting class with a single payment of $30,000,
a face amount of $58,438 and a guarantee period for life.
4. The illustration on page ___ is for a Contract issued to a male age 65
in the standard-simplified underwriting class with a single payment of $35,000,
a face amount of $52,803 and a guarantee period for life.
5. The illustration on page ___ is for a Contract issued to a male age 65
and a female age 65 in the standard-simplified underwriting class with a single
payment of $35,000, a face amount of $67,012 and a guarantee period for life.
The tables show how the death benefit, investment base and cash surrender value
may vary over an extended period of time assuming hypothetical rates of return
(i.e., investment income and capital gains and losses, realized or unrealized)
equivalent to constant gross annual rates of 0%, 6% and 12%.
The death benefit, investment base and cash surrender value for a Contract would
be different from those shown if the actual rates of return averaged 0%, 6% and
12% over a period of years, but also fluctuated above or below those averages
for individual contract years.
The amounts shown for the death benefit, investment base and cash surrender
value as of the end of each contract year take into account the daily asset
charge in the Separate Account equivalent to .90% (annually at the beginning of
the year) of assets attributable to the Contracts at the beginning of the year.
The amounts shown in the tables also assume an additional charge of .52%. This
charge assumes that investment base is allocated equally among all investment
divisions and is based on the 1997 expenses (including monthly advisory fees)
for the Funds, and the current trust charge. This charge also reflects expense
reimbursements made in 1997 to certain portfolios by the investment adviser to
the respective portfolio. These reimbursements, amounted to .17% and .09% of the
average daily net assets of the Developing Capital Markets Focus Fund and the
Natural Resources Portfolio, respectively. (See "Charges to Fund Assets" on page
___.) The actual charge under a Contract for Fund expenses and the trust charge
will depend on the actual allocation of the investment base and may be higher or
lower depending on how the investment base is allocated.
43
<PAGE> 48
Taking into account the .90% asset charge in the Separate Account and the .52%
charge described above, the gross annual rates of investment return of 0%, 6%
and 12% correspond to net annual rates of --1.42%, 4.53%, and 10.48%,
respectively. The gross returns are before any deductions and should not be
compared to rates which reflect deduction of charges.
The hypothetical returns shown on the tables are without any income tax charges
that may be attributable to the Separate Account in the future (although they do
reflect the charge for federal income taxes included in the deferred contract
loading, see "Deferred Contract Load"). In order to produce after tax returns of
0%, 6% and 12%, the Funds would have to earn a sufficient amount in excess of 0%
or 6% or 12% to cover any tax charges attributable to the Separate Account.
The second column of the tables shows the amount which would accumulate if an
amount equal to the payments were invested to earn interest (after taxes) at 5%
compounded annually.
We will furnish upon request a personalized illustration reflecting the proposed
insured's age, face amount and the payment amounts requested. The illustration
will also use current cost of insurance rates and will assume that the proposed
insured is in a standard underwriting class.
44
<PAGE> 49
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT
MALE ISSUE AGE 5
$10,000 INITIAL PAYMENT FOR STANDARD-SIMPLIFIED UNDERWRITING CLASS
FACE AMOUNT: $93,421 GUARANTEE PERIOD: FOR LIFE
BASED ON MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
END OF YEAR
TOTAL DEATH BENEFIT (2)
PAYMENTS ASSUMING HYPOTHETICAL GROSS
MADE PLUS ANNUAL INVESTMENT RETURN OF
INTEREST AT 5% AS -----------------------------------------------
CONTRACT YEAR PAYMENTS (1) OF END OF YEAR 0% 6% 12%
- ------------- ------------ -------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
1.................................... $ 10,000 $ 10,500 $ 93,421 $ 94,304 $ 100,187
2.................................... 0 11,025 93,421 95,139 107,255
3.................................... 0 11,576 93,421 95,929 114,649
4.................................... 0 12,155 93,421 96,677 122,395
5.................................... 0 12,763 93,421 97,384 130,522
6.................................... 0 13,401 93,421 98,053 139,060
7.................................... 0 14,071 93,421 98,687 148,039
8.................................... 0 14,775 93,421 99,288 157,496
9.................................... 0 15,513 93,421 99,858 167,465
10.................................... 0 16,289 93,421 100,399 177,984
15.................................... 0 20,789 93,421 102,993 240,923
20 (age 25)........................... 0 26,533 93,421 105,654 326,114
30 (age 35)........................... 0 43,219 93,421 111,180 597,272
60 (age 65)........................... 0 186,792 93,422 129,570 3,675,056
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR END OF YEAR
INVESTMENT BASE (2) CASH SURRENDER VALUE (2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
-------------------------------------------- ------------------------------------------
CONTRACT YEAR 0% 6% 12% 0% 6% 12%
- ----------------- ------------ ------------- ------------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1................................... $ 9,691 $ 10,284 $ 10,875 $ 8,881 $ 9,474 $ 10,065
2................................... 9,390 10,583 11,839 8,670 9,863 11,119
3................................... 9,100 10,903 12,908 8,470 10,273 12,278
4................................... 8,818 11,240 14,087 8,278 10,700 13,547
5................................... 8,541 11,593 15,384 8,091 11,143 14,934
6................................... 8,270 11,965 16,818 7,910 11,605 16,458
7................................... 8,001 12,349 18,390 7,731 12,079 18,120
8................................... 7,729 12,745 20,111 7,549 12,565 19,931
9................................... 7,448 13,143 21,981 7,358 13,053 21,891
10................................... 7,159 13,546 24,014 7,159 13,546 24,014
15................................... 6,030 16,115 37,698 6,030 16,115 37,698
20 (age 25).......................... 4,903 19,196 59,252 4,903 19,196 59,252
30 (age 35).......................... 3,019 27,991 150,371 3,019 27,991 150,371
60 (age 65).......................... 0 78,155 2,216,734 0 78,155 2,216,734
</TABLE>
- ---------------------------------------
(1) All payments are illustrated as if made at the beginning of the contract
year.
(2) Assumes no loan has been made.
45
<PAGE> 50
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE INVESTMENT PERFORMANCE. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE ILLUSTRATED AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATIONS SELECTED, PREVAILING INTEREST RATES AND RATES OF
INFLATION. THE DEATH BENEFIT, INVESTMENT BASE AND CASH SURRENDER VALUE WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN AVERAGED 0%, 6%
AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY
MERRILL LYNCH LIFE OR THE FUNDS OR THE ZERO TRUSTS THAT THESE HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
46
<PAGE> 51
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT
FEMALE ISSUE AGE 40
$25,000 INITIAL PAYMENT FOR STANDARD-SIMPLIFIED UNDERWRITING CLASS
FACE AMOUNT: $89,668 GUARANTEE PERIOD: FOR LIFE
BASED ON MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
END OF YEAR
DEATH BENEFIT (2)
TOTAL ASSUMING HYPOTHETICAL GROSS
PAYMENTS ANNUAL INVESTMENT RETURN OF
END OF MADE PLUS -------------------------------------------------
CONTRACT YEAR PAYMENTS (1) INTEREST AT 5% 0% 6% 12%
- -------------------- ------------ -------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
1......................... $ 25,000 $ 26,250 $ 89,668 $ 90,515 $ 96,160
2......................... 0 27,563 89,668 91,315 102,941
3......................... 0 28,941 89,668 92,074 110,038
4......................... 0 30,388 89,668 92,791 117,475
5......................... 0 31,907 89,668 93,471 125,280
6......................... 0 33,502 89,668 94,115 133,482
7......................... 0 35,178 89,668 94,724 142,110
8......................... 0 36,936 89,668 95,302 151,196
9......................... 0 38,783 89,668 95,850 160,773
10......................... 0 40,722 89,668 96,370 170,876
15......................... 0 51,973 89,668 98,859 231,302
20 (age 60)................ 0 66,332 89,668 101,415 313,120
30 (age 70)................ 0 108,049 89,668 106,727 573,960
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR END OF YEAR
INVESTMENT BASE (2) CASH SURRENDER VALUE (2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF --------------------------------------------------- -------------------------------------------------
CONTRACT YEAR 0% 6% 12% 0% 6% 12%
- -------------------- ---------------- -------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1.................. $ 24,259 $ 25,741 $ 27,220 $ 22,234 $ 23,716 $ 25,195
2.................. 23,517 26,503 29,648 21,717 24,703 27,848
3.................. 22,772 27,283 32,299 21,197 25,708 30,724
4.................. 22,027 28,086 35,198 20,677 26,736 33,848
5.................. 21,280 28,910 38,366 20,155 27,785 37,241
6.................. 20,531 29,757 41,828 19,631 28,857 40,928
7.................. 19,781 30,628 45,613 19,106 29,953 44,938
8.................. 19,028 31,523 49,746 18,578 31,073 49,296
9.................. 18,272 32,441 54,262 18,047 32,216 54,037
10.................. 17,515 33,386 59,198 17,515 33,386 59,198
15.................. 14,741 39,713 92,918 14,741 39,713 92,918
20 (age 60)......... 11,737 47,016 145,164 11,737 47,016 145,164
30 (age 70)......... 4,610 64,808 348,528 4,610 64,808 348,528
</TABLE>
- ---------------------------------------------
(1) All payments are illustrated as if made at the beginning of the contract
year.
(2) Assumes no loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE INVESTMENT
47
<PAGE> 52
PERFORMANCE. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE ILLUSTRATED
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS
SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT,
INVESTMENT BASE AND CASH SURRENDER VALUE WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL GROSS RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS,
BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS.
NO REPRESENTATIONS CAN BE MADE BY MERRILL LYNCH LIFE OR THE FUNDS OR THE ZERO
TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
48
<PAGE> 53
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT
MALE ISSUE AGE 55
$30,000 INITIAL PAYMENT FOR STANDARD-SIMPLIFIED UNDERWRITING CLASS
FACE AMOUNT: $58,438 GUARANTEE PERIOD: FOR LIFE
BASED ON MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
END OF YEAR
TOTAL DEATH BENEFIT (2)
PAYMENTS ASSUMING HYPOTHETICAL GROSS
MADE PLUS ANNUAL INVESTMENT RETURN OF
INTEREST AT 5% AS --------------------------------------------------
CONTRACT YEAR PAYMENTS (1) OF END OF YEAR 0% 6% 12%
- -------------------- ------------ -------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
1............................ $ 30,000 $ 31,500 $ 58,438 $ 58,991 $ 62,675
2............................ 0 33,075 58,438 59,515 67,104
3............................ 0 34,729 58,438 60,012 71,741
4............................ 0 36,465 58,438 60,483 76,602
5............................ 0 38,288 58,438 60,929 81,705
6............................ 0 40,203 58,438 61,353 87,069
7............................ 0 42,213 58,438 61,753 92,711
8............................ 0 44,324 58,438 62,133 98,653
9............................ 0 46,540 58,438 62,493 104,917
10 (age 65)................... 0 48,867 58,438 62,833 111,523
15............................ 0 62,368 58,438 64,460 151,051
20............................ 0 79,599 58,438 66,130 204,634
30............................ 0 129,658 58,438 69,605 375,849
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR END OF YEAR
INVESTMENT BASE (2) CASH SURRENDER VALUE (2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
------------------------------------------------ ------------------------------------------
CONTRACT YEAR 0% 6% 12% 0% 6% 12%
- -------------------- ------------- ------------ ---------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
1............................ $ 28,982 $ 30,758 $ 32,527 $ 26,552 $ 28,328 $ 30,097
2............................ 27,956 31,523 35,267 25,796 29,363 33,107
3............................ 26,923 32,297 38,240 25,033 30,407 36,350
4............................ 25,883 33,081 41,465 24,263 31,461 39,845
5............................ 24,835 33,873 44,963 23,485 32,523 43,613
6............................ 23,778 34,673 48,753 22,698 33,593 47,673
7............................ 22,712 35,479 52,858 21,902 34,669 52,048
8............................ 21,631 36,286 57,297 21,091 35,746 56,757
9............................ 20,535 37,094 62,093 20,265 36,824 61,823
10 (age 65)................... 19,422 37,900 67,269 19,422 37,900 67,269
15............................ 14,904 43,335 101,549 14,904 43,335 101,549
20............................ 9,777 48,842 151,137 9,777 48,842 151,137
30............................ 0 58,973 318,440 0 58,973 318,440
</TABLE>
- ----------------------------------------------
(1) All payments are illustrated as if made at the beginning of the contract
year.
(2) Assumes no loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE INVESTMENT PERFORMANCE. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE ILLUSTRATED AND WILL DEPEND ON A
49
<PAGE> 54
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS SELECTED, PREVAILING
INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT, INVESTMENT BASE AND
CASH SURRENDER VALUE WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATIONS CAN BE MADE BY MERRILL LYNCH LIFE OR THE FUNDS OR THE ZERO
TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
50
<PAGE> 55
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT
MALE ISSUE AGE 65
$35,000 INITIAL PAYMENT FOR STANDARD-SIMPLIFIED UNDERWRITING CLASS
FACE AMOUNT: $52,803 GUARANTEE PERIOD: FOR LIFE
BASED ON MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
END OF YEAR
TOTAL DEATH BENEFIT (2)
PAYMENTS ASSUMING HYPOTHETICAL GROSS
MADE PLUS ANNUAL INVESTMENT RETURN OF
INTEREST AT 5% AS -----------------------------------------------
CONTRACT YEAR PAYMENTS (1) OF END OF YEAR 0% 6% 12%
- -------------------- -------------- ------------------ ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
1 .......................... $ 35,000 $ 36,750 $ 52,803 $ 53,304 $ 56,637
2 .......................... 0 38,588 52,803 53,779 60,647
3 .......................... 0 40,517 52,803 54,231 64,848
4 .......................... 0 42,543 52,803 54,660 69,254
5 .......................... 0 44,670 52,803 55,066 73,880
6 .......................... 0 46,903 52,803 55,452 78,742
7 .......................... 0 49,249 52,803 55,817 83,858
8 .......................... 0 51,711 52,803 56,163 89,245
9 .......................... 0 54,296 52,803 56,490 94,923
10 (age 75).................. 0 57,011 52,803 56,799 100,912
15 .......................... 0 72,762 52,803 58,272 136,746
20 .......................... 0 92,865 52,803 59,784 185,344
30 .......................... 0 151,268 52,803 62,929 340,637
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR END OF YEAR
INVESTMENT BASE (2) CASH SURRENDER VALUE (2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------- -----------------------------------------
CONTRACT YEAR 0% 6% 12% 0% 6% 12%
- -------------------- ---------- ------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 .......................... $ 33,660 $ 35,727 $ 37,784 $ 30,825 $ 32,892 $ 34,949
2 .......................... 32,307 36,450 40,783 29,787 33,930 38,263
3 .......................... 30,944 37,169 44,014 28,739 34,964 41,809
4 .......................... 29,570 37,884 47,495 27,680 35,994 45,605
5 .......................... 28,186 38,595 51,243 26,611 37,020 49,668
6 .......................... 26,789 39,299 55,275 25,529 38,039 54,015
7 .......................... 25,377 39,991 59,606 24,432 39,046 58,661
8 .......................... 23,946 40,668 64,251 23,316 40,038 63,621
9 .......................... 22,491 41,322 69,221 22,176 41,007 68,906
10 (age 75).................. 21,010 41,950 74,531 21,010 41,950 74,531
15 .......................... 14,810 46,422 108,937 14,810 46,422 108,937
20 .......................... 8,106 50,653 157,034 8,106 50,653 157,034
30 .......................... 0 58,641 317,423 0 58,641 317,423
</TABLE>
- ------------------------------------------
(1) All payments are illustrated as if made at the beginning of the contract
year.
(2) Assumes no loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE INVESTMENT PERFORMANCE. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE ILLUSTRATED AND WILL DEPEND ON A
51
<PAGE> 56
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS SELECTED, PREVAILING
INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT, INVESTMENT BASE AND
CASH SURRENDER VALUE WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATIONS CAN BE MADE BY MERRILL LYNCH LIFE OR THE FUNDS OR THE ZERO
TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
52
<PAGE> 57
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT
JOINT INSUREDS: FEMALE ISSUE AGE 65/MALE ISSUE AGE 65
$35,000 INITIAL PAYMENT FOR STANDARD-SIMPLIFIED UNDERWRITING CLASS
FACE AMOUNT: $67,012 GUARANTEE PERIOD: FOR LIFE
BASED ON MAXIMUM MORTALITY CHARGES
<TABLE>
<CAPTION>
END OF YEAR
TOTAL DEATH BENEFIT (2)
PAYMENTS ASSUMING HYPOTHETICAL GROSS
MADE PLUS ANNUAL INVESTMENT RETURN OF
INTEREST AT 5% AS -------------------------------------------------
CONTRACT YEAR PAYMENTS (1) OF END OF YEAR 0% 6% 12%
- ----------------- ------------ -------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
1 ........................... $ 35,000 $ 36,750 $ 67,012 $ 67,715 $ 72,020
2 ........................... 0 38,588 67,012 68,373 77,229
3 ........................... 0 40,517 67,012 68,990 82,661
4 ........................... 0 42,543 67,012 69,568 88,335
5 ........................... 0 44,670 67,012 70,110 94,273
6 ........................... 0 46,903 67,012 70,618 100,499
7 ........................... 0 49,249 67,012 71,096 107,037
8 ........................... 0 51,711 67,012 71,543 113,909
9 ........................... 0 54,296 67,012 71,964 121,145
10 (age 75)................... 0 57,011 67,012 72,358 128,769
15 ........................... 0 72,762 67,012 74,230 174,358
20 ........................... 0 92,865 67,012 76,153 236,201
30 ........................... 0 151,268 67,012 80,156 433,911
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR END OF YEAR
INVESTMENT BASE (2) CASH SURRENDER VALUE (2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
--------------------------------------- ------------------------------------------
CONTRACT YEAR 0% 6% 12% 0% 6% 12%
- ----------------- ----------- ---------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 .......................... $ 34,107 $ 36,187 $ 38,268 $ 30,642 $ 32,722 $ 34,803
2 .......................... 33,197 37,399 41,844 30,117 34,319 38,764
3 .......................... 32,268 38,631 45,752 29,573 35,936 43,057
4 .......................... 31,318 39,881 50,016 29,008 37,571 47,706
5 .......................... 30,342 41,146 54,663 28,417 39,221 52,738
6 .......................... 29,339 42,422 59,721 27,799 40,882 58,181
7 .......................... 28,303 43,705 65,215 27,148 42,550 64,060
8 .......................... 27,229 44,987 71,171 26,459 44,217 70,401
9 .......................... 26,111 46,259 77,610 25,726 45,874 77,225
10 (age 75).................. 24,941 47,514 84,555 24,941 47,514 84,555
15 .......................... 20,083 55,395 130,117 20,083 55,395 130,117
20 .......................... 13,565 62,564 194,051 13,565 62,564 194,051
30 .......................... 0 74,580 403,724 0 74,580 403,724
</TABLE>
- ------------------------------------------
(1) All payments are illustrated as if made at the beginning of the contract
year.
(2) Assumes no loan has been made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE INVESTMENT PERFORMANCE. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE ILLUSTRATED AND WILL DEPEND ON A
53
<PAGE> 58
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS SELECTED, PREVAILING
INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT, INVESTMENT BASE AND
CASH SURRENDER VALUE WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATIONS CAN BE MADE BY MERRILL LYNCH LIFE OR THE FUNDS OR THE ZERO
TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
54
<PAGE> 59
JOINT INSUREDS
The Contract can insure two lives. Some of the discussions in this Prospectus
applicable to the Contract apply only to a Contract on a single insured. Set out
below are the modifications to the designated sections of this Prospectus for
joint insureds. Except in the sections noted below, the discussions in this
Prospectus referencing a single insured can be read as applying to two insureds.
AVAILABILITY AND PAYMENTS (REFERENCE PAGE CAPSULE SUMMARY)
A Contract may be issued for insureds up to age 80. The minimum initial payment
for a Contract is $5,000 if either insured is under age 20. If neither insured
is under age 20 the minimum initial payment is $10,000.
We will not accept an initial payment that will provide a guarantee period of
less than the minimum guarantee period for which we would then issue a Contract
based on the age of the younger insured. This minimum will range from 10 to 40
years depending on the age of the younger insured.
WHO MAY BE COVERED (REFERENCE PAGE ___)
We will issue a Contract on the lives of two insureds provided the relationship
among the applicant and the insureds meets our insurable interest requirements
and provided neither insured is over age 80 and no more than one insured is
under age 20. We will determine the insureds' issue ages using their ages as of
their birthdays nearest the contract date.
The initial payment, or the planned periodic payments elected, and the average
age of the insureds determine whether underwriting will be done on a simplified
or medical basis. The maximum amount underwritten on a simplified basis for
joint insureds depends on our administrative rules in effect at the time of
underwriting.
Under both simplified and medical underwriting methods, Contracts may be issued
on joint insureds in a standard underwriting class only.
INITIAL PAYMENT (REFERENCE PAGE ___)
The minimum initial payment for a Contract is $5,000 if either insured is under
age 20. If neither insured is under age 20 the minimum initial payment is
$10,000.
We will not accept an initial payment for a specified face amount that will
provide a guarantee period of less than the minimum guarantee period for which
we would then issue a Contract based on the age of the younger insured. The
minimum will range from 10 to 40 years depending on the age of the younger
insured.
MAKING ADDITIONAL PAYMENTS
Payments Not Under a Periodic Plan (reference page ___). You may make additional
payments which are not under a periodic payment plan only if both insureds are
living and the attained ages of both insureds are not over 80.
Payments Under a Periodic Plan (reference page ___). You may change the
frequency and the amount of planned payments provided both insureds are living.
Planned payments must be received while at least one insured is living and not
more than 30 days before or 30 days after the date specified for payment.
Effect of Additional Payments (reference page ___). If the guarantee period
prior to receipt and acceptance of an additional payment is less than for the
life of the last surviving insured, the payment will first be used to extend the
guarantee period to the whole of life of the younger insured.
55
<PAGE> 60
CHANGING THE FACE AMOUNT
Increasing the Face Amount (reference page ___). You may increase the face
amount of your Contract only if both insureds are living. A change in face
amount is not permitted if the attained age of either insured is over 80.
Decreasing the Face Amount (reference page ___). You may decrease the face
amount of your Contract if either insured is living.
CHARGES DEDUCTED FROM THE INVESTMENT BASE
Deferred Contract Loading (reference page ___). The deferred contract load
equals 11.0% of each payment. This charge consists of a sales load, a charge for
federal income taxes measured by premiums and a state and local premium tax
charge.
The sales load, equal to 6.5% of each payment, compensates us for sales
expenses. The sales load may be reduced if cumulative payments are sufficiently
high to reach certain breakpoints (4% of payments in excess of $1.5 million and
2% of payments in excess of $4 million). The charge for federal taxes is equal
to 2% of each payment. (See "Merrill Lynch Life's Income Taxes".) The state and
local premium tax charge, equal to 2.5% of payments, compensates us for state
and local premium taxes that must be paid when a payment is accepted.
We deduct an amount equal to 1.1% of each payment from the investment base on
each of the ten contract anniversaries following payment.
Mortality Cost (reference page ___). For Contracts issued on joint insureds,
current cost of insurance rates are equal to the guaranteed maximum cost of
insurance rates set forth in the Contract. Those rates are based on the 1980
Commissioners Aggregate Mortality Table and do not distinguish between insureds
in a smoker underwriting class and insureds in a non-smoker underwriting class.
The cost of insurance rates are based on an aggregate class which is made up of
a blend of smokers and non-smokers.
GUARANTEE PERIOD
When the Guarantee Period is Less Than for Life (reference page ___). If we
cancel a Contract, you may reinstate it only if neither insured has died between
the date the Contract was terminated and the effective date of the reinstatement
and you meet the other conditions listed.
NET CASH SURRENDER VALUE
Cancelling to Receive Net Cash Surrender Value (reference page ___). You may
cancel your Contracts at any time while either insured is living.
DEATH BENEFIT PROCEEDS (REFERENCE PAGE ___)
We will pay the death benefit proceeds to the beneficiary when our Service
Center receives all information needed to process the payment, including due
proof of the last surviving insured's death. We must receive proof of death for
both insureds. There is no death benefit payable at the first death. When we are
first provided reliable notification of the last surviving insured's death by a
representative of the owner or the insured, we may transfer the investment base
to the division investing in the Money Reserve Portfolio, pending payment of
death benefit proceeds.
If one of the insureds should die within two years from the Contract's issue
date, within two years from the effective date of any increase in face amount
requested or within two years from the date an additional
56
<PAGE> 61
payment was received and accepted, proof of the insured's death should be sent
promptly to our Service Center since we may only pay a limited benefit or
contest the Contract. (See "Incontestability" and "Payment in Case of Suicide"
on pages 31 and 32.)
Net Single Premium Factor (reference page ___). The net single premium factors
are based on the insureds' sexes and underwriting classes and the attained ages
on the date of calculation.
PAYMENT OF DEATH BENEFIT PROCEEDS (REFERENCE PAGE ___)
If payment is delayed, we will add interest from the date of the last surviving
insured's death to the date of payment at an annual rate of at least 4%.
RIGHT TO CANCEL ("FREE LOOK" PERIOD) OR EXCHANGE
Exchanging the Contract (reference page ___). You may exchange your Contract for
a joint and last survivor Contract with benefits that don't vary with the
investment results of a separate account.
USING THE CONTRACT
Ownership (reference page ___). The contract owner is usually one of the
insureds, unless another owner has been named in the application.
The contract owner may want to name a contingent owner in the event the contract
owner dies before the last surviving insured. The contingent owner would then
own the contract owner's interest in the Contract and have all the contract
owner's rights.
Naming Beneficiaries (reference page ___). We pay the primary beneficiary the
proceeds of this Contract upon the last surviving insured's death. If no
contingent beneficiary is living, we pay the last surviving insured's estate.
Changing the Insured (reference page ___). Not available for joint insureds.
Maturity Proceeds (reference page 30). The maturity date is the contract
anniversary nearest the younger insured's 100th birthday. On the maturity date,
we will pay the net cash surrender value to you, provided either insured is
living.
OTHER CONTRACT PROVISIONS
Incontestability (reference page ___). We won't contest the validity of a
Contract after it has been in effect during the lifetimes of both insureds for
two years from the issue date. We won't contest any change in face amount
requested after the change has been in effect during the lifetimes of both
insureds for two years from the date of the change. Nor will we contest any
amount of death benefit attributable to an additional payment after the death
benefit has been in effect during the lifetimes of both insureds for two years
from the date the payment has been received and accepted.
Payment in Case of Suicide (reference page 32). If either insured commits
suicide within two years from the issue date, we will pay only a limited benefit
and terminate the Contract. The benefit will be equal to the payments made
reduced by any debt.
If either insured commits suicide within two years of the effective date of any
increase in face amount requested, the coverage attributable to the increase
will be terminated and a limited benefit will be paid. The benefit will be
limited to the amount of mortality cost deductions made for the increase.
57
<PAGE> 62
If either insured commits suicide within two years of any date an additional
payment is received and accepted, the coverage attributable to the payment will
be terminated and only a limited benefit will be paid. The benefit will be equal
to the payment less any debt attributable to amounts borrowed during the two
years from the date the payment was received and accepted.
Establishing Survivorship (Only Applicable to Joint Insureds). If we are unable
to determine which of the insureds was the last survivor on the basis of the
proofs of death provided, we will consider insured No. 1 as designated in the
application to be the last surviving insured.
INCOME PLANS (REFERENCE PAGE 32)
If no plan has been chosen when the last surviving insured dies, the beneficiary
has one year to apply the death benefit proceeds either paid or payable to him
or her to one or more of the income plans.
58
<PAGE> 63
MORE ABOUT MERRILL LYNCH LIFE INSURANCE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers and their positions with us are as follows:
<TABLE>
<CAPTION>
NAME POSITION(S) WITH THE COMPANY
---- ----------------------------
<S> <C>
Anthony J. Vespa Chairman of the Board, President, and
Chief Executive Officer
Joseph E. Crowne, Jr. Director, Senior Vice President, Chief
Financial Officer, Chief Actuary, and
Treasurer
Barry G. Skolnick Director, Senior Vice President, General
Counsel, and Secretary
David M. Dunford Director, Senior Vice President, and
Chief Investment Officer
Gail R. Farkas Director and Senior Vice President
Robert J. Boucher Senior Vice President, Variable Life
Administration
</TABLE>
Each director is elected to serve until the next annual meeting of shareholders
or until his or her successor is elected and shall have qualified. Each has held
various executive positions with insurance company subsidiaries of our indirect
parent, Merrill Lynch & Co., Inc. The principal positions of our directors and
executive officers for the past five years are listed below:
Mr. Vespa joined Merrill Lynch Life in January 1994. Since February 1994, he has
held the position of Senior Vice President of MLPF&S. From February 1991 to
February 1994, he held the position of District Director and First Vice
President of MLPF&S.
Mr. Crowne joined Merrill Lynch Life in June 1991.
Mr. Skolnick joined Merrill Lynch Life in November 1990. Since May 1992, he has
held the position of Assistant General Counsel of Merrill Lynch & Co., Inc. and
First Vice President and Assistant General Counsel of MLPF&S.
Mr. Dunford joined Merrill Lynch Life in July 1990.
Ms. Farkas joined Merrill Lynch Life in August 1995. Prior to August 1995, she
held the position of Director of Market Planning of MLPF&S.
Mr. Boucher joined Merrill Lynch Life in May 1992.
59
<PAGE> 64
No shares of Merrill Lynch Life are owned by any of its officers or directors,
as it is a wholly owned subsidiary of MLIG. The officers and directors of
Merrill Lynch Life, both individually and as a group, own less than one percent
of the outstanding shares of common stock of Merrill Lynch & Co., Inc.
SERVICES ARRANGEMENT
Merrill Lynch Life and MLIG are parties to a service agreement pursuant to which
MLIG has agreed to provide certain data processing, legal, actuarial,
management, advertising and other services to Merrill Lynch Life, including
services related to the Separate Account and the Contracts. We reimburse
expenses incurred by MLIG under this service agreement on an allocated cost
basis. Charges billed to Merrill Lynch Life by MLIG under the agreement were
$43.0 million for the year ended December 31, 1997.
STATE REGULATION
We are subject to the laws of the State of Arkansas and to the regulations of
the Arkansas Insurance Department (the "Insurance Department"). We file a
detailed financial statement in the prescribed form (the "Annual Statement")
with the Insurance Department each year covering our operations for the
preceding year and our financial condition as of the end of that year.
Regulation by the Insurance Department includes periodic examination to
determine contract liabilities and reserves so that the Insurance Department may
certify that these items are correct. Our books and accounts are subject to
review by the Insurance Department at all times. A full examination of our
operations is conducted periodically by the Insurance Department and under the
auspices of the National Association of Insurance Commissioners. We are also
subject to the insurance laws and regulations of all jurisdictions in which
we are licensed to do business.
60
<PAGE> 65
YEAR 2000
Many computer systems were designed using only two digits to designate years.
These systems may not be able to distinguish the Year 2000 from the Year 1900
(commonly known as the "Year 2000 Problem"). Like other investment companies and
financial and business organizations, the Separate Account could be adversely
affected if the computer systems we or the other service providers use do not
properly address this problem before January 1, 2000. Merrill Lynch & Co., Inc.
has established a dedicated group to analyze these issues and to implement any
systems modifications necessary to prepare for the Year 2000. Substantial
resources are being devoted to this effort. It is difficult to predict whether
the amount of resources ultimately devoted, or the outcome of these efforts,
will have any negative impact on us. Currently, we don't anticipate that the
transition to the 21st century will have any material impact on our ability to
continue to service the Contracts at current levels. In addition, we have sought
assurances from the other service providers that they are taking all necessary
steps to ensure that their computer systems will accurately reflect the Year
2000. We will continue to monitor the situation. At this time, however, we
cannot give assurance that the other service providers have anticipated every
step necessary to avoid any adverse effect on the Separate Account attributable
to the Year 2000 Problem.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. We and MLPF&S are engaged
in various kinds of routine litigation that, in our judgment, is not material to
our total assets or to MLPF&S.
EXPERTS
The financial statements of Merrill Lynch Life as of December 31, 1997 and 1996
and for each of the three years in the period ended December 31, 1997 and of the
Separate Account as of December 31, 1997 and for the periods presented, included
in this Prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein, and have been so included
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing. Deloitte & Touche LLP's principal business address
is Two World Financial Center, New York, New York 10281-1433.
Actuarial matters included in this Prospectus have been examined by Joseph E.
Crowne, Jr., F.S.A., Chief Actuary and Chief Financial Officer of Merrill Lynch
Life, as stated in his opinion filed as an exhibit to the registration
statement.
LEGAL MATTERS
The organization of the Company, its authority to issue the Contract, and the
validity of the form of the Contract have been passed upon by Barry G. Skolnick,
Merrill Lynch Life's Senior Vice President and General Counsel. Sutherland
Asbill & Brennan LLP of Washington, D.C. has provided advice on certain matters
relating to federal securities laws.
REGISTRATION STATEMENTS
Registration statements have been filed with the Securities and Exchange
Commission under the Securities Act of 1933 and the Investment Company Act of
1940 that relate to the Contract and its investment options. This Prospectus
does not contain all of the information in the registration statements as
permitted by Securities and Exchange Commission regulations. The omitted
information can be obtained from the Securities and Exchange Commission's
principal office in Washington, D.C., upon payment of a prescribed fee.
61
<PAGE> 66
FINANCIAL STATEMENTS
The financial statements of Merrill Lynch Life, included herein, should be
distinguished from the financial statements of the Separate Account and should
be considered only as bearing upon the ability of Merrill Lynch Life to meet its
obligations under the Contracts.
62
<PAGE> 67
PART II. OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
The Insurance Company's By-Laws provide, in Article VI, Section 1, 2, 3 and
4, as follows:
Section 1. Actions Other Than by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that he
is or was a director, officer or employee of the Corporation, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 2. Actions by or in the Right of the Corporation. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Corporation to procure a judgement in its favor by reason of the fact
that he is or was a director, officer or employee of the Corporation, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery or the Court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other Court shall deem proper.
Section 3. Right to Indemnification. To the extent that a director,
officer of employee of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections 1
and 2 of this Article, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him in connection therewith.
Section 4. Determination of Right to Indemnification. Any indemnification
under Sections 1 and 2 of this Article (unless ordered by a Court) shall be made
by the Corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, or employee is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Sections 1 and 2 of this Article. Such determination shall be made (i) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if such a quorum is
not obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders.
Any persons serving as an officer, director or trustee of a corporation,
trust, or other enterprise, including the Registrant, at the request of Merrill
Lynch are entitled to indemnification from Merrill Lynch, to the fullest extent
authorized or permitted by law, for liabilities with respect to actions taken or
omitted by such
II-1
<PAGE> 68
persons in any capacity in which such persons serve Merrill Lynch or such other
corporation, trust, or other enterprise. Any action initiated by any such person
for which indemnification is provided shall be approved by the Board of
Directors of Merrill Lynch prior to such initiation.
DIRECTORS' AND OFFICERS' INSURANCE
Merrill Lynch has purchased from Corporate Officers' and Directors'
Assurance Company directors' and officers' liability insurance policies which
cover, in addition to the indemnification described above, liabilities for which
indemnification is not provided under the By-Laws. The Company will pay an
allocable portion of the insurance premium paid by Merrill Lynch with respect to
such insurance policies.
ARKANSAS BUSINESS CORPORATION LAW
In addition, Section 4-26-814 of the Arkansas Business Corporation Law
generally provides that a corporation has the power to indemnify a director or
officer of the corporation, or a person serving at the request of the
corporation as a director or officer of another corporation or other enterprise
against any judgments, amounts paid in settlement, and reasonably incurred
expenses in a civil or criminal action or proceeding if the director or officer
acted in good faith in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation (or, in the case of a criminal
action or proceeding, if he or she in addition had no reasonable cause to
believe that his or her conduct was unlawful).
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
REPRESENTATION PURSUANT TO SECTION 26(e)
Merrill Lynch Life Insurance Company hereby represents that the fees and
charges deducted under the Contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by Merrill Lynch Life Insurance Company.
II-2
<PAGE> 69
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The Prospectus consisting of 62 pages.
Undertaking to file reports.
Rule 484 Undertaking.
Representation Pursuant to Section 26(e).
The signatures.
Written Consents of the Following Persons:
(a) Barry G. Skolnick, Esq.
(b) Joseph E. Crowne, Jr., F.S.A.
(c) Sutherland, Asbill & Brennan LLP
(d) Deloitte & Touche LLP, Independent Auditors
The following exhibits:
<TABLE>
<S> <C>
1.A. (1) Resolution of the Board of Directors of Merrill Lynch Life
Insurance Company establishing the Separate Account
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 8 to Form S-6 Registration No. 33-55472 Filed
April 29, 1997)
(2) Not applicable
(3) (a) Distribution Agreement between Merrill Lynch Life Insurance
Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 8 to Form S-6 Registration No.
33-55472 Filed April 29, 1997)
(b) Amended Sales Agreement between Merrill Lynch Life Insurance
Company and Merrill Lynch Life Agency Inc. (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 8 to
Form S-6 Registration No. 33-55472 Filed April 29, 1997)
(c) Schedules of Sales Commissions. See Exhibit A(3)(b)
(d) Indemnity Agreement between Merrill Lynch Life Insurance
Company and Merrill Lynch Life Agency, Inc. (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 8 to
Form S-6 Registration No. 33-55472 Filed April 29, 1997)
(4) Not applicable
(5) (a) (1) Flexible Premium Variable Life Insurance Policy
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 6 to Form S-6 Registration No. 33-41829 Filed
April 29, 1997)
(2) Flexible Premium Joint and Last Survivor Variable Life
Insurance Policy (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 6 to Form S-6 Registration No.
33-41829 Filed April 29, 1997)
(b) (1) Backdating Endorsement (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 6 to Form S-6
Registration No. 33-41829 Filed April 29, 1997)
(2) (a) Guarantee of Insurability Rider for Flexible Premium
Variable Life Insurance Policy (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 6 to Form S-6
Registration No. 33-41829 Filed April 29, 1997)
(b) Guarantee of Insurability Rider for Flexible Premium Joint
and Last Survivor Variable Life Insurance Policy
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 6 to Form S-6 Registration No. 33-41829 Filed
April 29, 1997)
(3) (a) Single Premium Immediate Annuity Rider for Flexible Premium
Variable Life Insurance Policy (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 6 to Form S-6
Registration No. 33-41829 Filed April 29, 1997)
</TABLE>
II-3
<PAGE> 70
<TABLE>
<S> <C>
(b) Single Premium Immediate Annuity Rider for Flexible Premium
Joint and Last Survivor Variable Life Insurance Policy
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 6 to Form S-6 Registration No. 33-41829 Filed
April 29, 1997)
(4) Flexible Premium Joint and Last Survivor Partial Withdrawal
Rider for use with Flexible Premium Joint and Last Survivor
Variable Life Insurance Policy (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 6 to Form S-6
Registration No. 33-41829 Filed April 29, 1997)
(5) Flexible Premium Partial Withdrawal Rider for use with
Flexible Premium Variable Life Insurance Policy
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 6 to Form S-6 Registration No. 33-41829 Filed
April 29, 1997)
(6) Change of Insured Rider for use with Flexible Premium
Variable Life Insurance Policy (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 6 to Form S-6
Registration No. 33-41829 Filed April 29, 1997)
(6) (a) Articles of Amendment, Restatement, and Redomestication of
the Articles of Incorporation of Merrill Lynch Life
Insurance Company (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 8 to Form S-6 Registration No.
33-55472 Filed April 29, 1997)
(b) Amended and Restated By-Laws of Merrill Lynch Life Insurance
Company (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 8 to Form S-6 Registration No.
33-55472 Filed April 29, 1997)
(7) Not applicable
(8) (a) Agreement between Merrill Lynch Life Insurance Company and
Merrill Lynch Series Fund, Inc. (Incorporated by Reference
to Registrant's Post-Effective Amendment No. 8 to Form S-6
Registration No. 33-55472 Filed April 29, 1997)
(b) Agreement between Merrill Lynch Life Insurance Company and
Merrill Lynch Funds Distributor, Inc. (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 8 to
Form S-6 Registration No. 33-55472 Filed April 29, 1997)
(c) Agreement between Merrill Lynch Life Insurance Company and
Merrill Lynch, Pierce, Fenner & Smith Incorporated
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 8 to Form S-6 Registration No. 33-55472 Filed
April 29, 1997)
(d) Participation Agreement among Merrill Lynch Life Insurance
Company, ML Life Insurance Company of New York and Monarch
Life Insurance Company (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 8 to Form S-6
Registration No. 33-55472 Filed April 29, 1997)
(e) Management Agreement between Merrill Lynch Life Insurance
Company and Merrill Lynch Asset Management, Inc.
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 8 to Form S-6 Registration No. 33-55472 Filed
April 29, 1997)
(f) Form of Participation Agreement among Merrill Lynch Life
Insurance Company, ML Life Insurance Company of New York and
Family Life Insurance Company (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 8 to Form S-6
Registration No. 33-55472 Filed April 29, 1997)
(g) Form of Participation Agreement Among Merrill Lynch Life
Insurance Company, Alliance Capital Management L.P., and
Alliance Fund Distributors, Inc. (Incorporated by Reference
to Merrill Lynch Life Variable Annuity Separate Account A's
Post-Effective Amendment No. 10 to Form N-4 Registration No.
33-43773 Filed December 10, 1996)
(h) Form of Participation Agreement Among MFS Variable Insurance
Trust, Merrill Lynch Life Insurance Company, and
Massachusetts Financial Services Company (Incorporated by
Reference to Merrill Lynch Life Variable Annuity Separate
Account A's Post-Effective Amendment No. 10 to Form N-4
Registration No. 33- 43773 Filed December 10, 1996)
</TABLE>
II-4
<PAGE> 71
<TABLE>
<S> <C>
(i) Participation Agreement By and Among AIM Variable Insurance
Funds, Inc., AIM Distributors, Inc., and Merrill Lynch Life
Insurance Company (Incorporated by Reference to Merrill
Lynch Life Variable Annuity Separate Account A's Post-
Effective Amendment No. 11 to Form N-4 Registration No.
33-43773 Filed April 24, 1997)
(9) Service Agreement among Merrill Lynch Insurance Group, Inc.,
Family Life Insurance Company and Merrill Lynch Life
Insurance Company (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 8 to Form S-6 Registration No.
33-55472 Filed April 29, 1997)
(10) (a) Variable Life Insurance Application(Incorporated by
Reference to Registrant's Post-Effective Amendment No. 6 to
Form S-6 Registration No. 33-41829 Filed April 29, 1997)
(b) Variable Life Insurance Supplemental Application 1
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 6 to Form S-6 Registration No. 33-41829 Filed
April 29, 1997)
(c) Application for Additional Payment for Variable Life
Insurance (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 6 to Form S-6 Registration No.
33-41829 Filed April 29, 1997)
(d) Application for Reinstatement (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 6 to Form S-6
Registration No. 33-41829 Filed April 29, 1997)
(e) Variable Life Insurance Application, Part 1 (Form No. A1016)
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 4 to Form S-6 Registration No. 33-41830 Filed
April 28, 1995)
(f) Variable Life Insurance Application, Part 2 (Form No. A1011)
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 4 to Form S-6 Registration No. 33-41830 Filed
April 28, 1995)
(g) Temporary Insurance Agreement (Form No. A1010) (Incorporated
by Reference to Registrant's Post-Effective Amendment No. 4
to Form S-6 Registration No. 33-41830 Filed April 28, 1995)
(h) Flexible Premium Variable Life Insurance Policy (Form No.
MFP87) (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 4 to Form S-6 Registration No.
33-41830 Filed April 28, 1995)
(i) Flexible Premium Joint and Last Survivor Variable Life
Insurance Policy (Form No. MFPLS87) (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 4 to
Form S-6 Registration No. 33-41830 Filed April 28, 1995)
(j) Variable Life Insurance Application (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 8 to
Form S-6 Registration No. 33-55472 Filed April 29, 1997)
(11) (a) Memorandum describing Merrill Lynch Life Insurance Company's
Issuance, Transfer and Redemption Procedures (Incorporated
by Reference to Registrant's Post-Effective Amendment No. 2
to Form S-6 Registration No. 33-41830 Filed March 1, 1994)
(b) Supplement to Memorandum describing Merrill Lynch Life
Insurance Company's Issuance, Transfer and Redemption
Procedures (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 8 to Form S-6 Registration No.
33-55472 Filed April 29, 1997)
2. See Exhibit 1.A.(5)
3. Opinion and Consent of Barry G. Skolnick, Esq. as to the
legality of the securities being registered (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 5 to
Form S-6 Registration No. 33-41830 Filed April 25, 1996)
4. Not applicable
5. Not applicable
6. Opinion and Consent of Joseph E. Crowne, Jr., F.S.A. as to
actuarial matters pertaining to the securities being
registered (to be filed by amendment)
</TABLE>
II-5
<PAGE> 72
<TABLE>
<S> <C>
7. (a) Power of Attorney of Joseph E. Crowne, Jr. (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 2 to
Form S-6 Registration No. 33-55472 Filed March 1, 1994)
(b) Power of Attorney of David E. Dunford (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 2 to
Form S-6 Registration No. 33-55472 Filed March 1, 1994)
(c) Power of Attorney of Gail R. Farkas (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 6 to
Form S-6 Registration No. 33-55472 Filed February 29, 1996)
(d) Power of Attorney of John C.R. Hele (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 2 to
Form S-6 Registration No. 33-55472 Filed March 1, 1994)
(e) Power of Attorney of Allen N. Jones (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 2 to
Form S-6 Registration No. 33-55472 Filed March 1, 1994)
(f) Power of Attorney of Barry G. Skolnick (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 2 to
Form S-6 Registration No. 33-55472 Filed March 1, 1994)
(g) Power of Attorney of Anthony J. Vespa (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 2 to
Form S-6 Registration No. 33-55472 Filed March 1, 1994)
8. (a) Written Consent of Barry G. Skolnick, Esq. (to be filed by
amendment)
(b) Written Consent of Joseph E. Crowne, Jr., F.S.A. (See
Exhibit 6)
(c) Written Consent of Sutherland Asbill & Brennan LLP (to be
filed by amendment)
(d) Written Consent of Deloitte & Touche LLP, Independent
Auditors (to be filed by amendment)
</TABLE>
II-6
<PAGE> 73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Merrill Lynch Variable Life Separate Account, has duly caused this
Post-Effective Amendment No. 8 to the Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in the City of Plainsboro and the State of New Jersey,
on the 22nd day of January 1999.
MERRILL LYNCH VARIABLE LIFE SEPARATE ACCOUNT
(Registrant)
By: MERRILL LYNCH LIFE INSURANCE COMPANY
(Depositor)
<TABLE>
<S> <C>
Attest: /s/ EDWARD W. DIFFIN, JR. By: /s/ BARRY G. SKOLNICK
---------------------------------------------- -------------------------------------------------
Edward W. Diffin, Jr. Barry G. Skolnick
Vice President Senior Vice President
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 8 to the Registration Statement has been signed
below by the following persons in the capacities indicated on January 22, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Chairman of the Board, President, and Chief
- ----------------------------------------------------- Executive Officer
Anthony J. Vespa
* Director, Senior Vice President, Chief
- ----------------------------------------------------- Financial Officer, Chief Actuary, and
Joseph E. Crowne, Jr. Treasurer
* Director, Senior Vice President, and Chief
- ----------------------------------------------------- Investment Officer
David M. Dunford
* Director and Senior Vice President
- -----------------------------------------------------
Gail R. Farkas
*By: /s/ BARRY G. SKOLNICK In his own capacity as Director, Senior Vice
---------------------------------------------- President, General Counsel, Secretary and as
Barry G. Skolnick Attorney-In-Fact
</TABLE>
II-7
